SPONSORED:

Proposed rules to protect bulk power grid from foreign targeting raise concerns

Proposed rules to protect bulk power grid from foreign targeting raise concerns
© iStock

Energy industry owners and operators are growing increasingly nervous about new rules proposed by the Trump administration in an effort to limit foreign threats to the grid.

The rules, proposed by an executive order to protect the bulk power system signed by President Trump in May, could severely restrict the ability for grid equipment and other critical technology to be manufactured in countries deemed threats, such as China. 

With utilities supporting digital communication and modern life becoming even more essential during the COVID-19 pandemic, the potential for an upset to the supply chain is becoming a concern, particularly as tensions spike between the U.S. and China. 

ADVERTISEMENT

“The recognition that certain assets in the system are used on the grid should not be supplied by a certain adversarial country, that concept makes a lot of sense,” Tobias Whitney, vice president of Energy Security Solutions at Fortress Information Security, told The Hill. 

“I completely understand that, but one of the challenges with looking at it in a black and white, very straightforward way, is there is a tremendous amount of influence on how our global multinational companies are structured,” Whitney added. “What does it mean if a company is based in Europe, but they have manufacturing in China?” 

Under the executive order, the secretary of Energy was tasked with creating a list of “pre-qualified” vendors that U.S. companies can work with, along with identifying which equipment currently in use in the power system poses a security risk and should be replaced. 

The order also prohibits any acquisition, import, transfer, or installation of bulk power system electric equipment with connections to a foreign nation that poses a national security risk. 

The Department of Energy (DOE) asked for industry feedback on vulnerabilities in the supply chain of the bulk power system, giving interested stakeholders until Aug. 24 to submit comments. In its request for comments, the agency noted that “foreign adversaries” of concern were Russia, China, Iran, North Korea, Cuba and Venezuela. 

Many organizations utilized the comment process to air strong concerns over what the order would mean for supply chains. 

ADVERTISEMENT

The U.S. Chamber of Commerce wrote in an official comment that the executive order “has been promoted as an effort to protect against infiltration and operational threats to the U.S. power grid by ‘foreign adversaries,’ yet the undefined scope of the order could halt or delay the nationwide installation, operations, and maintenance of a wide variety of critical bulk power system equipment during a time of multifaceted challenges.”

Securing America’s Energy Future (SAFE) asked the agency to clarify exactly what equipment would be considered a national security threat.

“SAFE is concerned that the government might inadvertently prohibit some equipment or components that do not pose a security threat (e.g., that lack 'intelligence,' connectivity, or telemetry) from being imported,” the group wrote in its official comment. “Continuing imports of equipment that do not pose a security threat is important for the secure 'grid of the future.'" 

The Edison Electric Institute pointed out that there are sometimes “limited” numbers, or none, of domestic or foreign alternative companies that produce certain equipment, with the finances of switching vendors likely to have a negative impact on costs and reliability. 

The concerns come on the heels of over a year of scrutiny by the Trump administration of Chinese telecommunications groups Huawei and ZTE, with the Federal Communications Commission designating both as national security threats, and the Commerce Department effectively blacklisting the companies by adding them to the “entity list.”

Pressure has built to rip out and replace existing equipment from the companies, a similar initiative to language in the executive order. 

Jim Cunningham, the executive director of Protect Our Power, acknowledged that replacing equipment would be “expensive,” and argued during an interview with The Hill that foreign components did not necessarily have to pose a risk as long as certain security controls were put in place. 

“Foreign components are okay, and should be acceptable provided there is what I call a genealogy track, so we know what has gone into those components,” Cunningham said. “I think obviously as the order says we have to be very sensitive to those products that [come] from countries that are known to be not to have our best interest at heart.”

The Department of Energy and other federal officials are aware of the concerns, and told The Hill that industry feedback is integral to the process. 

“DOE is currently processing and reviewing the submitted comments,” a DOE official told The Hill. “The Department anticipates publishing a notice of proposed rulemaking later this year, at which time interested parties will have another opportunity to provide comments.”

A spokesperson for Senate Energy and Natural Resources Committee Chairwoman Lisa MurkowskiLisa Ann MurkowskiAlaska Senate race sees cash surge in final stretch Bitter fight over Barrett fuels calls to nix filibuster, expand court The Hill's Morning Report - Sponsored by Facebook - Justice Barrett joins court; one week until Election Day MORE (R-Alaska) told The Hill that Murkowski is also keeping a close eye on the proceedings. 

“Protecting supply chains for critical infrastructure, like the bulk power system — which is routinely targeted by foreign adversaries — is a national security priority,” the spokesperson said. “Administration officials have assured Senator Murkowski and her team they are working closely with electric utilities, vendors, and manufacturers of bulk power system equipment to ensure the Department’s regulations are appropriately tailored.” 

Protecting the bulk power system has become an area of increasing concern over the past decade as the sector has fielded targeting by cyber adversaries.  

Last year, a successful denial of service cyberattack on a Western utility company caused a grid disruption, while officials warned the Senate Energy and Natural Resources Committee last month that the COVID-19 pandemic had exposed critical infrastructure to greater cyber risks. 

Steven Conner, the president of Siemens Energy, Inc., which produces energy equipment that supports one third of the nation’s daily energy needs, testified during that hearing that “we get attacked thousands of times per day.” 

Cunningham underlined the risks faced by the bulk power system, advocating for a “national plan” to address the full scope of threats to the system. 

“What keeps me up at night is the awareness of the fact that we are vulnerable, we are working at closing that gap, so that’s encouraging,” Cunningham said. “We really need a national program where the states and the feds decide together that this is what we need to do to make the system more secure.”

He added that the executive order was a good step in the direction of securing the grid, despite industry concerns over the potential final rules. 

ADVERTISEMENT

“It provided ideas that are provoking a serious discussion, and that alone makes it a very valuable tool, that it’s provoking this discussion,” Cunningham said of the order. “It’s trying to get to some sort of a common ground so we can have a more secure system.”  

-Updated at 11:50 a.m.