By Rich Heidorn Jr.
WASHINGTON — The transportation bill President Obama signed last week includes provisions intended to protect the grid from terrorist attacks and natural disasters, giving the secretary of energy emergency powers and creating a Strategic Transformer Reserve.
The legislation, which will provide $305 billion in highway funding over five years, cleared the Senate 83-16 on Thursday, following a 359-65 vote in the House. Obama signed the bill Friday.
The bill represents both a vindication and a rebuke of former FERC Chairman Jon Wellinghoff’s controversial campaign to raise awareness of the grid’s vulnerability to sabotage.
It also checked off an item on current Chairman Norman Bay’s wish list. Testifying before the House Energy and Power Subcommittee last Tuesday, Bay said it was essential that the government have emergency powers to respond to a cyberattack.
“That emergency authority does not need to reside with FERC. It could reside elsewhere in the federal government,” Bay said. “But someone needs to have it.”
Presidential Declaration
Title 55 of the bill includes five “Energy Security” sections, including Section 61003, which authorizes the president to declare a grid security emergency in response to a geomagnetic storm, electromagnetic pulse, or cyber or physical attack. Such a declaration would authorize the energy secretary to issue emergency orders to protect or restore electric infrastructure critical to “national security, economic security, public health or safety.”
The emergency orders could apply to the North American Electric Reliability Corp., regional entities and owners and operators of critical electric infrastructure.
The bill gives the secretary six months to develop rules of procedure regarding the exercise of emergency authority. FERC would be permitted to order cost recovery for such actions assuming the costs were “prudently incurred and cannot reasonably be recovered through regulated rates or market prices.”
Entities complying with emergency orders would not be liable for violating the Federal Power Act, FERC orders or reliability standards as long as they did not act in a “grossly negligent manner.”
Another provision, Section 61002, clarifies that generators won’t be liable for exceeding emissions limits while operating under emergency orders. Such orders would be required to minimize environmental impacts and limited to 90 days but could be renewed.
Strategic Transformer Reserve
Section 61004 requires the secretary to submit a plan to Congress within a year for the development of a Strategic Transformer Reserve, including enough large transformers (100 MVA or higher) and trailer-mounted emergency mobile substations “to temporarily replace critically damaged large power transformers and substations that are critical electric infrastructure or serve defense and military installations.”
Wellinghoff a Lightning Rod
The provisions are a response to the April 2013 attack on Pacific Gas and Electric’s substation in Metcalf, Calif.
At least two gunmen were believed involved in the attack on the 500/230-kV substation near San Jose, causing more than $15 million in damage that idled the substation for nearly a month. The gunmen targeted transformer radiators, firing an estimated 150 rounds and hitting 10 of 11 banks.
Wellinghoff, who served as FERC chairman from 2009 to 2013, called the Metcalf attack “the most significant incident of domestic terrorism involving the grid” to date.
The former chairman found himself under fire after The Wall Street Journal quoted him in articles about a confidential FERC analysis that concluded the country’s entire grid could be shut down for weeks or months by disabling only nine critical substations. Transformers are typically custom designed and can take 18 to 36 months to replace.
The newspaper did not identify the locations of those substations or its source for the study, but it quoted Wellinghoff saying “there are probably less than 100 critical high voltage substations on our grid in this country that need to be protected from a physical attack.”
NERC, members of Congress and Wellinghoff’s former FERC colleagues complained that the disclosures had jeopardized, not improved, security.
Wellinghoff also came under scrutiny in February, when Department of Energy Inspector General Gregory Friedman warned that FERC’s protection of information on the vulnerability of the grid is “severely lacking” and suggested that Wellinghoff had not been truthful when questioned about the disclosures. (See DOE IG Warns FERC Information Security ‘Severely Lacking.’)
Critical Electric Infrastructure Information
Section 61003 requires FERC to develop regulations governing how it classifies information as critical electric infrastructure information (CEII), including “appropriate sanctions … for commissioners, officers, employees or agents of the commission who knowingly and willfully disclose critical electric infrastructure information in a manner that is not authorized.” The section also exempts CEII from disclosure under federal, state or local public records laws.
The former chairman, currently a partner at the energy law firm of Stoel Rives, did not respond to a request for comment.
Pipeline Drills
The bill echoes steps taken by FERC and RTOs to improve gas-electric coordination following the 2014 polar vortex, when some fossil fuel plants had to shut down for lack of fuel.
It requires the energy secretary to improve DOE’s assessments of supply chain problems and to streamline processes for obtaining temporary regulatory relief to speed up emergency response. It also mandates emergency drills involving state and federal officials and oil and gas pipelines. (Section 61001, Emergency preparedness for energy supply disruptions.)
The final energy section, 61005, requires the secretary to propose within one year a method for evaluating how government policies impact energy supply and diversity, competitive energy markets, the U.S. balance of trade and national security.
The provision appears to be at least in part a response to complaints that EPA’s Clean Power Plan will weaken fuel diversity by replacing coal-fired generation with gas and renewables. Its sponsor, Rep. Richard Hudson (R-N.C.), opposes the EPA rule.
More to Do
In her own testimony before the House subcommittee last week, Commissioner Cheryl LaFleur suggested policymakers have more work to do.
“I think that the [reliability] standards that we’ve put in place, which require every transmission owner to identify the most critical facilities and protect them, are an important step,” she said. “But I think beyond that, a lot of the protection has to come from how we build the grid — building more redundancy so we kind of ‘de-criticalize’ those places so that a physical attack won’t cause as much damage, and building in more standardization so if something goes wrong we can share transformers more rather than having to build a custom one in every place.”
