The hearing will explore how to increase the reliability and security of the nation’s electric grid from cyber and physical attacks.
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Chair Mary LandrieuU.S. Senator
Good morning. I thank everyone for joining usfor this important hearing this morning entitled, “Keeping the Lights On: Are We Doing Enough to Ensure the Reliability and Security of the Electric Grid?” I’m pleased to chair the first oversight hearing that this committee has had in quite some time on this important subject. This subject is important to many members of the Senate as recently indicated by letters sent on a variety of different issues as well as members of this committee. And I thank the members for joining us this morning.
Affordability and reliability of electricity is so commonplace in America today that most people spend little time even thinking about it except, of course, when power goes out and when the lights go off—whether for a few minutes, a few days or a few weeks. It can be inconvenient, it can be maddening, and it can be also life threatening.
In a small neighborhood just a few blocks from the New York Stock Exchange in 1882, Thomas Edison’s Pearl Street Station in Lower Manhattan illuminated 400 lamps in homes, offices and businesses, for the first time, for 85 customers. It was indeed a glimmer of how electricity would come to dramatically change and improve and strengthen our country and make our daily lives more convenient and more prosperous.
The US electrification rate steadily increased from there, from a few percentage points in the early 1900s to about 70% in the early 1930s. But, at that point, only 10% of rural households in America had electricity, compared to 90% of urban homes. With government action and great effort on the part of many parties, rural electrification ramped up and wasnear 100% by 1960.
During the 20th century, electricity production in the US shifted from being produced primarily from coal and hydropower, to a diverse mix of coal, natural gas, nuclear, petroleum and recently, other renewables. And, with the rapid development of new technologies, 50 years from now, we can be certain there will be even more diversity in energy sources to power our country.
However, as the economy and technology rapidly evolve, our dependence on electricity only grows. Think about your average day and how much we all rely on electricity: the alarm clock or charged cell phone that wakes you up in the morning, the coffee pot that brews your morning coffee, the toaster that warms a bagel, refrigerators that keep fresh fruit, the traffic lightsthat make your commute to work safer or the phone that you use to stay in contact with friends and family to conduct important business.
And that’s just to mention a few. They are just a few of the ways we rely on electricity in our daily lives.
A power outage of even a few minutes can be aterrible inconvenience, it can be a costly occurrence, or it could be a real threat to public health, particularly when temperatures are very high or very low, or in the aftermath of storms, disasters, hurricanes, floods, tornadoes, mudslides, fires.
In Louisiana, we felt the impacts of long-term power outages after natural disasters, which—while understandable—is still extremely difficult to deal with. Today, our committee is here to receive testimony about what both the public and private organizations that have responsibly for this grid are doing to maintain it and to prevent brownouts or blackouts.
Our first panel will focus on new and emerging cyber threats as well as long-standing physical threats to the electricity grid.
This Committee has already taken steps to address this issue by including in the Energy Policy Act of 2005 a first-of-its-kind provision to establish reliability standards, including ones to address cyber threats to the nation’s electric grid. In fact, the electricity sector is still the only part of our national critical infrastructure that is subject to binding cyber threat standards. We will discuss some of that today.
As far as the physical threat to the electricity grid is concerned, the attack last year on the Metcalf substation in California’s Silicon Valley was the most serious attack ever on the U.S. electricity system. Fortunately, Metcalf did not result in a blackout in Silicon Valley. horrors of which could only be imagined.
But the incident, as it has been reported, came very close to causing the shutdown of a large portion of the Western Grid.
I commend the electricity industry and its federal and state partners involved for the significant improvements they have made to reduce the risks of a physical attack on since that took the place. I also know that last month FERC voted to direct NERC, the North American Electric Reliability Corporation, to directsome additional standards and gave it 90 days to do so. Grid reliability is the responsibility of the electricity industry as well as state and federal agency partners. Each of us has a role to play.
In my view, it is essential that information regarding an attack, or threat of an attack, be transmitted to others that need that information in a timely, secure and actionable fashion.
I’d like at this time to submit a letter regarding the Feinstein letter to the record and the response by Chairman LeFleur on this subject that we will go into in more detail. Without objection, it will be submitted.
I believe that we must take very seriously these issues and develop appropriate responses to these threats. But the responsemust fit the size and the nature of the threat. One size does not fit all.
In Louisiana, we have two large utilities, Entergy and CLECO, as well as a number of relatively small rural coops and of course municipal utilities. It just doesn’t make sense for small coops with minimal critical infrastructure to be subject to the same requirements as larger suppliers. We must keep that in view.
Entergy and CLECO, which own massive amounts of critical energy infrastructure. Today’s hearing will examine this issue to ensure we have appropriate standards based on real threats to the grid.
Our second panel will focus on different aspects of the reliability challenge: whether or not there is sufficient generation and unfettered transmission to keep the lights on when electricity demand peaks throughout the country.
Senator Manchin and Senator Franken have beenparticularly focused on this issue. The adequacy of power generation differs a great deal from region to region, state to state. So rather than tackling the entire issue at once, at the request of Senator Manchin, who is here today. We will look at the impact of coal fired generation requirements in the PJM system on reliability during the “polar vortex” earlier this year. I appreciate all the senators concerns regarding the threat to reliability from coal-fired plant retirements caused by new environmental standards as well as competition from the gas market.
The question of the cause of coal retirements is multifaceted and there are different perspectives that will be shared today. I look forward to a lively discussion on this question with the second panel.
So, in closing, we have a panel of expert witnesses here today to discuss these issues. Senator Murkowski, I thank you for your help in planning this hearing today and for your cooperation from you and your staff. And I want to thank all of you who travelled a great distance to be with us today. And I will now turn it over to Senator Murkowski for her opening statement.
Ranking Member Lisa MurkowskiU.S. Senator
Thank you, Madam Chair, for convening this morning’s oversight hearing. Our hearing title – Are We Doing Enough to Ensure the Reliability and Security of the U.S. Electric Grid? – is the central question we have posed today. But really, everyone in this room already knows the answer: we can always do more. The next and more important question is: how should we prioritize those efforts?
We can judge by the size of our audience this morning just how important this issue has become. When we’ve got standing room only on electric reliability, I think that says something about the importance of this issue. And we can judge from recent press reports that our first commitment should be to “do no harm.” Or, at least, no further harm. Recent stories about last year’s Metcalf incident and a FERC report detailing critical energy infrastructure information have served to sensationalize the issue of physical grid security. Instead of helping to protect the grid from attack, the disclosures we have seen potentially increase its physical vulnerability.
Last month, Chair Landrieu and I wrote asked the Energy Department’s Inspector General to review both the handling of this sensitive, non-public information and how it came to be published in the Wall Street Journal. Late yesterday, Inspector General Friedman issued a formal Management Alert informing FERC to the fact that this information should have been classified and protected from release at the time it was created. This revelation, with its national security implications, is extremely troubling. I commend Chair LaFleur for taking swift action in response to this report to secure this classified information.
Regardless of how sensitive, national security information was handled at FERC or found its way to a reporter – and we’ve asked the Inspector General to find out – the owners of the grid and their regulators are quick to respond to incidents such as Metcalf. Making use of the regulatory framework established by Congress in the 2005 Energy Policy Act, NERC provided needed information in a timely fashion. A number of government agencies, including FERC, DHS, and the FBI, undertook significant work with industry to promote mitigation measures. And last month, under the leadership of Chair LaFleur, FERC directed NERC to develop a mandatory standard on physical security within 90 days. Even before the standard setting process was underway, lessons learned from Metcalf were being applied.
As experts have recognized for some time, it is likely impossible to ensure that every part of the grid could withstand physical or cyber attack. Thus we need to redouble a properly-scaled and continuously-improving approach to grid reliability and security. After the facts about the universe of today’s threats are clear – or at least, clearer – we can debate whether new legislation is necessary.
Some are interested in empowering FERC to direct emergency actions to protect the grid. I have my own thoughts on that but clearly the Commission must do better going forward to protect non-public information from disclosure. But I will say it has been apparent for some time that we may need to empower FERC to protect the grid from our own federal actions. This sort of ‘everyday vigilance’ is not and need not be high profile, but it is vitally important. And we should never lose sight that for the electric grid, reliability and affordability must remain our core considerations. The challenge before us is how to maintain and improve reliability and affordability while keeping environmental performance in balance.
We have an impressive group of panelists before us today. I particularly want to thank Chairwoman Cheryl LaFleur for her steady leadership at FERC. Your extensive experience in the energy industry is indispensable as we tackle the myriad issues before FERC, including cyber and physical security concerns.
Thank you, as well, Madam Chair.
Witness Panel 1
The Honorable Cheryl LaFleurChairmanFederal Energy Regulatory Commission
Mr. Gerry CauleyPresident and CEONorth American Electric Reliability Corporation
Ms. Sue KellyPresident and CEOAmerican Public Power Association
The Honorable Colette HonorablePresidentNational Association of Regulatory Utility Commissioners Chairman
Witness Panel 2
The Honorable Philip D. MoellerCommissionerFederal Energy Regulatory Commission
Mr. Michael J. KormosExecutive Vice President-OperationsPJM Interconnection
Mr. Nicholas AkinsChairman, President, and CEOAmerican Electric Power
Mr. Thad HillPresident and Chief Operating OfficerCalpine
Ms. Cheryl RobertoAssociate Vice President, Clean EnergyEnvironmental Defense Fund
Mr. Jim HunterUtilities DirectorInternational Brotherhood of Electrical Workers