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Security vs. States' Rights

Will Congress dare to put local wires under federal control?

Fortnightly Magazine - July 2009

the energy-related dilemmas that contributed so much to getting us into this fix in the first place. Desperate times often call for desperate measures, but unfortunately, desperate measures usually yield unintended consequences.

Green Dawn

To put a fine point on it, most of the Obama administration’s energy policy priorities depend on the smart grid. From integrating variable, distributed and non-dispatchable power supplies, to improving efficiency and resource utilization, to serving a future fleet of electric vehicles, the smart grid promises an enabling platform for easing dependence on greenhouse-gas emitting energy sources in general, and on imported petroleum in particular. As such, the smart grid has become the ultimate green-energy gauntlet; build the smart grid, and a green day will dawn. Fail to build it, and history will blame utilities for preventing that green dawn.

In the real world, of course, it’s not that simple. But from a political and strategic perspective, securing the smart grid isn’t just about maintaining system reliability. It’s also about making the future safe for green energy.

On May 7, FERC’s McLelland told the Senate Energy and Natural Resources Committee, “As the ‘smart grid’ effort moves forward, steps will need to be taken to ensure that cyber security protections are in place prior to its implementation.” Further, McClelland expressed support for legislation that “gives the Commission authority to issue rules or orders that are necessary to protect critical electric infrastructure from weaknesses or flaws in the design or operation of electric devices or networks that expose critical electric infrastructure to a cyber security threat.” Additionally, McClelland said legislation should provide FERC authority “to address not only cyber security threats but also other national security threats to reliability.”

Alarmed by the prospect of federal control over distribution systems, industry groups are scrambling to reach consensus on smart-grid interoperability and security standards, as well as peer-driven enforcement mechanisms. Such consensus remains elusive, however. A 300-page EPRI report published on June 17 by the National Institute of Standards and Technology (NIST) is notably silent on the issue of enforcement, except to reiterate that FERC’s authority doesn’t cover distribution systems, and to suggest that, “The standard cost-benefit analyses made by regulators need to address broader economic and stakeholder issues.”

Given the smart grid’s political status as the foundation for America’s energy future, federal lawmakers probably won’t wait for the industry to reach consensus. Instead, they’ll move ahead with a new set of regulations, either with specific direction from Congress, or failing that, possibly a declaration from the White House’s new cyber security czar that utility distribution systems represent infrastructure critical to America’s national security.

And frankly, that’s exactly what should happen, because let’s face it: Electric distribution infrastructure is critical to America’s national security—both in terms of keeping the lights on from one hour to the next, and also in terms of carrying America’s economy into the 21st century. The fact NERC omitted distribution assets from its Critical Infrastructure Protection (CIP) standards has nothing to do with the functional importance of the wires, but has everything to do with the historic bright-line