Cyberthreats justify federal intervention, DOE tells panel

Source: Peter Behr, E&E News reporter • Posted: Monday, June 11, 2018

Energy Department Assistant Secretary Bruce Walker yesterday on Capitol Hill singled out cybersecurity threats to pipelines that supply gas-fired power plants in defending the department’s polarizing proposal to channel payments to at-risk coal and nuclear plants to prevent their retirements.

Pressed by several Democrats on the House Science, Space and Technology Committee who branded the plan a political payoff to the coal industry, Walker warned of potentially cascading power outages if gas generators’ pipelines were taken down through cyber breaches.

“We have now reached a point where — different than 20 or 30 year ago — if I lose the wrong gas pipelines I can lose tens of thousands of megawatts of generation simultaneously,” Walker said.

Walker, a former grid security executive in New York, pulled off his reading glasses to look intently at the House members.

“[T]oday we deal with very significant risks, every day,” he said. “While some may say it’s a low probability, we deal with tens of thousands of cyber intrusions on a daily basis. It’s just a matter of time before the sophistication level increases and those penetrations become real.”

The draft DOE policy statement that leaked last Friday stressed the growing importance of natural gas-fired generation to the nation’s electricity supply. But it branded gas a less secure, “just-in-time” power plant fuel as opposed to coal plants that pile fuel on site and nuclear reactors that can run for up to two years between refueling.

The plan is being vetted by the White House National Security Council and will have to be approved by President Trump.

In the draft, DOE said 13,000 megawatts of generation in New England depended on a single pipeline connection, while 12,000 megawatts of gas-fired plants in the Mid-Atlantic are supplied by one connection.

An analysis by ICF International on behalf of the Nuclear Energy Institute, filed with the Federal Energy Regulatory Commission, concluded that nearly 19,000 megawatts of gas generation serving an area from northern Delaware to New York City would be forced offline if gas deliveries on a single interstate pipeline were blocked.

Still, some committee Democrats contended DOE was manufacturing a crisis for political reasons.

“The Trump administration is inventing emergencies to bail out coal and nuclear plants,” said Rep. Marc Veasey (D-Texas), “an easy way to try to fulfill campaign promises, which is very bad, very unsound.”

Rep. Don Beyer (D-Va.) quoted Exelon Corp.’s CEO as saying that retirements of coal and nuclear plants don’t create a grid emergency justifying federal intervention. Payments to these plants would raise electricity costs, with particular harm to U.S. manufacturers, Beyer said.

No price tag

Another committee witness, Rob Gramlich, president of the Grid Strategies consulting firm, cited his estimate of the cost of supporting coal and nuclear plants that have announced plans to retire or are considered at risk of closing.

A DOE proposal last year to subsidize money-losing coal and nuclear plants was estimated to cost customers served by PJM Interconnection — the grid operator in the Mid-Atlantic and eastern Great Lakes region — between $3 billion and $32 billion per year, with a midpoint estimate of $13 billion.

Since PJM supplies about 20 percent of the entire U.S. power demand, a nationwide subsidy for at-risk coal and nuclear units could come to around $65 billion annually, Gramlich said.

Beyer jumped on that issue. “Have you calculated the costs to American manufacturing?” he asked Walker.

Walker looked down for a moment, then answered, “I have not.”

Beyer then asked whether DOE had estimated costs to U.S. taxpayers.

“I have not,” Walker repeated.

Beyer asked Walker to get those figures for the committee, then lectured DOE for its “false narrative.”

The administration is moving ahead, “perhaps, unfortunately, because someone contributed to the campaign,” Beyer said. The financial support for coal and nuclear plants “does not actually help out coal country. This is a short-term talking point that does nothing to create good paying jobs, resilient jobs, for the families in Appalachia,” he asserted.

Gramlich cited other strategies to reduce threats of cascading grid outages from directed attacks or natural disasters rather than giving subsidies to coal or nuclear plants. They included building high-voltage direct-current power lines to create a more redundant matrix of interstate power flows and strategic investments in microgrids with power storage for critical military and civilian installations.

“Although the leaked [DOE] memo warns that natural gas pipelines are vulnerable to cyberattacks, it ignores the fact that all power plants [including coal and nuclear] and control rooms are similarly vulnerable to cyberthreats,” Gramlich said.

While Congress put DOE in charge of directing emergency operations in national grid crises, Congress also gave FERC day-to-day responsibility for grid security, which the commission has delegated to the North American Electric Reliability Corp., an industry-led grid monitor.

“Their role needs to be respected,” Gramlich said of FERC’s charter. “I think what we’re seeing with this presidential directive is, under the guise of national security, a nationalization of the electric system.”

‘Absolutely no justification’

The DOE analysis had stung the U.S. natural gas industry, which could normally expect to find a sympathetic ear in a Republican administration.

The Interstate Natural Gas Association of America said yesterday it was “deeply troubled by the Trump administration’s apparent move to scapegoat natural gas to prop up uneconomic coal and nuclear plants.”

“There is absolutely no justification for the extreme intervention in energy markets suggested in the draft National Security Council memo,” said INGAA President and CEO Don Santa in a statement.

The Natural Gas Council, the gas industry’s umbrella lobbying arm, added to the argument yesterday, saying, “The natural gas system is characterized by multiple fail-safes, redundancies and back-ups. Functions are divided across networks so that they are isolated from one another, a feature that further secures systems.”

Not clear is why the U.S. gas sector did not do more publicly to buttress its cybersecurity posture, knowing that the Trump administration was taking aim at pipeline vulnerabilities.

High-voltage transmission companies and generators on these networks must comply with FERC’s mandatory cyber regulations. Gas pipeline cybersecurity, on the other hand, is subject to voluntary reviews by the Transportation Security Administration. “There is little reason why the approach by TSA and FERC to these cross-industry topics needs to be so diverse,” PJM commented to FERC this year.

Several leading U.S. senators last year suggested the value of confidential monitoring or independent benchmarking of individual pipeline companies’ preparedness, but that approach was not mentioned in the industry responses yesterday.

“The assertion that this administration is attempting to ‘punish’ natural gas is absurd,” DOE spokesperson Shaylyn Hynes said, citing DOE efforts to expand gas production and open new markets for U.S. gas exports abroad.

“DOE also recognizes that there are serious threats and vulnerabilities to critical infrastructure nationwide, including pipelines,” she said. “The resilience of the nation’s electric grid is influenced by everything from cyberthreats to the availability of solar power and the retirement of fuel secure units.”

“This administration believes we need all available energy resources,” she added. It’s conducting a comprehensive review of grid security. “We encourage others to do the same.”