As Congress considers a major infrastructure bill, and the Administration searches for another big
legislative win, there is key infrastructure investment that is apparently not in the draft bill but could pay
dividends for decades and help ensure the availability of a resource vital to the U.S. economy: upgrading
the nation’s electric grid.

With 200,000 miles of high-voltage transmission lines and 5.5 million miles of distribution lines bringing
power to millions of U.S. homes and businesses every day, securing the country’s critical electricity
infrastructure must become a national security priority.

Looking back at 2017, five key facts about the electric grid are clear, and looking forward into 2018, five
key actions clearly need to be taken – a combined Top 10 list for the electric grid.

What’s obvious:

1. The electric grid is highly vulnerable. In 2017 we saw a significant rise in cyber-attacks and
hacking, massive damage caused by natural disasters, and Puerto Rico’s stark illustration of the
human and economic consequences of not being adequately prepared to rapidly rebuild electric
delivery systems.

2. The steady rise of natural gas and alternative electricity generation sources, primarily wind and
solar, will continue, as will the slow but inevitable decline of coal. Market forces seem to have
shifted in the last several years and momentum favors the trend toward less carbon-intense
energy. This transition in generation sources will require an electric grid with ever greater
flexibility, adaptability and access points, and that increased access heightens significantly the
need for preventive security measures.

3. Advances in energy technology, and greater use of distributed energy resources, will drive even
further changes in the grid. Microgrids, for example, can add resilience to the larger grid by
offering reliable integration of renewable energy sources, while also being grid independent and
able to reduce the risk of widespread outages by isolating grid components, if necessary. In a
world of rising threats, advanced monitoring, control and automation systems offer utilities and
independent power producers’ new, efficient and effective ways to enhance grid reliability,
resilience and security.

4. While growth in electricity demand has been relatively flat for some time, power consumption is
projected to increase over time, driven in part by such things as large-scale data collection and
storage, the rise of electric vehicles, even the advent of crypto currencies, all of which have the
potential to place greater demand on existing grid and grid-related systems. One illustration: it
is estimated that Bitcoin and other crypto currency “mining” could require up to 140 terawatt-
hours of electricity in 2018, or about 0.6 percent of the global total, according to Morgan Stanley.
That’s more electricity than the expected demand from electric vehicles in 2025.

5. Efforts to modernize the grid face a daunting bureaucracy. The U.S. Departments of Energy,
Homeland Security and Defense, the National Security Agency, the Federal Energy Regulatory
Commission (FERC), the North American Electric Reliability Corporation (NERC), numerous inter-
agency and public-private task forces and industry trade associations, hundreds of private utility

companies, and regulators in all 50 U.S. states have a role in determining electricity policy and
security, and allocating costs. But no single entity is in charge, or clearly in the lead, and the bulk
of the U.S. grid is owned and operated by private utilities.

What’s needed:

1. Protecting and upgrading the U.S. electric grid must become a national security priority.
Electricity is our nation’s lifeblood. Every U.S. President since 1990 has acknowledged that U.S.
infrastructure risks are high, and that the threats are real, but little has been done.

2. The grid needs to keep pace with the rate of technological advancement in the overall electricity
sector. Whether it is efficiently integrating new power sources, building in enhanced protection
against cyber-attacks, or further increasing the resilience and efficiency of our electricity supply
systems, widely deploying currently available technology provides the greatest short-term
opportunity to protect our power, our economy and our national security:

3. Infrastructure legislation should, at a minimum, include:

• Funding for an independent, thorough and candid assessment of exactly where grid
  improvements and upgrades are needed, in order of priority. This will provide the basis for a
  national plan that will drive short- and long-term grid improvements.
• Authorizing initial public funding that can supplement private funding for grid
  improvements. The potential use of tax-exempt government bonds to raise the necessary
  financing in an equitable manner should be explored. It will cost money to upgrade the grid,
  and it is critical to incentivize public and private investment in grid enhancements.
• Requiring the Departments of Homeland Security and Energy, Congress and the power
  industry to be more aggressive in finding ways to produce and stockpile key electrical
  equipment, such as high-voltage transformers, so power can be restored more rapidly in the
  event of a major outage.

4. Cyber-attacks are the most likely to occur and the hardest to detect and prevent. The vast cyber-
security expertise that is available in U.S. federal agencies must be made readily available to
electric grid owners responsible for fending off cyber-attacks. And while cyber-attack detection
and prevention must be at the forefront, shifting some focus to containment and response will
help make grid operators more able to control the impact of a successful cyber-breach and
restore power quickly.

5. Within the mix of players, FERC has the legal authority and is the logical agency to drive the
establishment of a large-scale public-private partnership that brings together the necessary
expertise – utilities, system operators and technology companies – and financing – Congress,
regulators and the private markets – to focus on making the electric grid more robust and
resilient in the near-term. FERC can also guide the development of improved, uniform practices
for the North American bulk power system that rise to the level of detail and rigor required to
meet the threats we face.

The time for strong federal leadership and the forging of a robust public-private partnership to drive critically needed grid improvements is now.  As Homeland Security and the FBI recently warned, rogue nation-states and criminal hackers pose major cyber-attack threats to our grid every day, and natural disasters are a constant concern.  Congress and FERC must act in the national interest, before it is too late.