[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
EMPOWERING CONSUMERS AND PROMOTING
INNOVATION THROUGH THE SMART GRID
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON TECHNOLOGY AND INNOVATION
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 8, 2011
__________
Serial No. 112-32
__________
Printed for the use of the Committee on Science, Space, and Technology
Available via the World Wide Web: http://science.house.gov
U.S. GOVERNMENT PRINTING OFFICE
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COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
HON. RALPH M. HALL, Texas, Chair
F. JAMES SENSENBRENNER, JR., EDDIE BERNICE JOHNSON, Texas
Wisconsin JERRY F. COSTELLO, Illinois
LAMAR S. SMITH, Texas LYNN C. WOOLSEY, California
DANA ROHRABACHER, California ZOE LOFGREN, California
ROSCOE G. BARTLETT, Maryland BRAD MILLER, North Carolina
FRANK D. LUCAS, Oklahoma DANIEL LIPINSKI, Illinois
JUDY BIGGERT, Illinois GABRIELLE GIFFORDS, Arizona
W. TODD AKIN, Missouri DONNA F. EDWARDS, Maryland
RANDY NEUGEBAUER, Texas MARCIA L. FUDGE, Ohio
MICHAEL T. McCAUL, Texas BEN R. LUJAN, New Mexico
PAUL C. BROUN, Georgia PAUL D. TONKO, New York
SANDY ADAMS, Florida JERRY McNERNEY, California
BENJAMIN QUAYLE, Arizona JOHN P. SARBANES, Maryland
CHARLES J. ``CHUCK'' FLEISCHMANN, TERRI A. SEWELL, Alabama
Tennessee FREDERICA S. WILSON, Florida
E. SCOTT RIGELL, Virginia HANSEN CLARKE, Michigan
STEVEN M. PALAZZO, Mississippi VACANCY
MO BROOKS, Alabama
ANDY HARRIS, Maryland
RANDY HULTGREN, Illinois
CHIP CRAVAACK, Minnesota
LARRY BUCSHON, Indiana
DAN BENISHEK, Michigan
VACANCY
------
Subcommittee on Technology and Innovation
HON. BENJAMIN QUAYLE, Arizona, Chair
LAMAR S. SMITH, Texas VACANCY
JUDY BIGGERT, Illinois JOHN P. SARBANES, Maryland
RANDY NEUGEBAUER, Texas FREDERICA S. WILSON, Florida
MICHAEL T. McCAUL, Texas DANIEL LIPINSKI, Illinois
CHARLES J. ``CHUCK'' FLEISCHMANN, GABRIELLE GIFFORDS, Arizona
Tennessee BEN R. LUJAN, New Mexico
E. SCOTT RIGELL, Virginia
RANDY HULTGREN, Illinois
CHIP CRAVAACK, Minnesota EDDIE BERNICE JOHNSON, Texas
RALPH M. HALL, Texas
C O N T E N T S
Thursday, September 8, 2011
Page
Witness List..................................................... 2
Hearing Charter.................................................. 3
Opening Statements
Statement by Representative Benjamin Quayle, Chairman,
Subcommittee on Technology and Innovation, Committee on
Science, Space, and Technology, U.S. House of Representatives.. 8
Written Statement............................................ 9
Statement by Representative John P. Sarbanes, Subcommittee on
Technology and Innovation, Committee on Science, Space, and
Technology, U.S. House of Representatives...................... 9
Written Statement............................................ 11
Witnesses:
Dr. George Arnold, National Coordinator for Smart Grid
Interoperability, National Institute of Standards and
Technology
Oral Statement............................................... 12
Written Statement............................................ 14
The Honorable Donna Nelson, Chairman, Public Utility Commission
of Texas
Oral Statement............................................... 20
Written Statement............................................ 21
Mr. John Caskey, Assistant Vice President, Industry Operations,
National Electrical Manufacturers Association
Oral Statement............................................... 24
Written Statement............................................ 24
Mr. Rik Drummond, Chief Executive Officer and Chief Scientist,
The Drummond Group
Oral Statement............................................... 29
Written Statement............................................ 31
Appendix I: Answers to Post-Hearing Questions
Dr. George Arnold, National Coordinator for Smart Grid
Interoperability, National Institute of Standards and
Technology..................................................... 52
The Honorable Donna Nelson, Chairman, Public Utility Commission
of Texas....................................................... 55
Mr. John Caskey, Assistant Vice President, Industry Operations,
National Electrical Manufacturers Association.................. 58
Mr. Rik Drummond, Chief Executive Officer and Chief Scientist,
The Drummond Group............................................. 51
EMPOWERING CONSUMERS AND PROMOTING
INNOVATION THROUGH THE SMART GRID
----------
THURSDAY, SEPTEMBER 8, 2011
House of Representatives,
Subcommittee on Technology and Innovation,
Committee on Science, Space, and Technology,
Washington, DC.
The Subcommittee met, pursuant to call, at 10:11 a.m., in
Room 2318 of the Rayburn House Office Building, Hon. Benjamin
Quayle [Chairman of the Subcommittee] presiding.
hearing charter
COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY
SUBCOMMITTEE ON TECHNOLOGY AND INNOVATION
U.S. HOUSE OF REPRESENTATIVES
Empowering Consumers and Promoting
Innovation through the Smart Grid
thursday, september 8, 2011
10:00 a.m.--12:00 p.m.
2318 rayburn house office building
1. Purpose
On Thursday, September 8, 2011 the Subcommittee on Technology and
Innovation of the Committee on Science, Space, and Technology will hold
a hearing to examine the status of efforts to develop open standards
for smart grid technologies and drive innovation within smart grid
development. This hearing will provide the Subcommittee with an update
on current standards development accomplishments, as well as the
actions needed to empower and protect consumer interests while
promoting innovation through the growth of the smart grid.
2. Witnesses
Dr. George Arnold, National Coordinator for Smart Grid
Interoperability, National Institute of Standards and Technology
The Honorable Donna Nelson, Chairman, Public Utility
Commission of Texas
Mr. John Caskey, Assistant Vice President Industry
Operations, National Electrical Manufacturers Association
Mr. Rik Drummond, Chief Executive Officer and Chief
Scientist, The Drummond Group, Inc.
3. Brief Overview
The hearing will examine efforts led by the National Institute of
Standards and Technology (NIST) to coordinate the development of a
common framework and standards necessary to ensure a secure and
interoperable nationwide smart grid. The smart grid is a planned
nationwide network that uses information technology to deliver
electricity efficiently, reliably, and securely. The smart grid is
designed to improve the transmission of electricity from power plants
to consumers, provide grid operators with information about conditions
of the electricity system, integrate new technologies into the grid,
and allow consumers to receive more information about electricity
prices and availability from the electricity system. This represents a
leap from a one-way, analog system of disconnected power suppliers to a
two-way, digital, interoperable national network. As envisioned, the
smart grid is a more efficient way to distribute and diversify power
sources, creating capabilities to make the grid more efficient by
reducing demand peaks and increasing capacity utilization while
providing consumers with innovative tools to reduce energy usage,
potentially saving them money.
4. Background
The electric grid has changed little since the end of the
nineteenth century. Since President Roosevelt directed the Rural
Electric Administration to electrify the continent, electricity and
information has flowed in one direction; from generator to end user.
Electricity has to be used the moment it is generated, and because the
capacity for the generation of power matches the consumption of power,
the electricity supply system must be sized to generate enough
electricity to meet the maximum anticipated demand. A modern smart grid
is designed to change this completely. The smart grid is envisioned to
operate with a two-way flow of electricity and information capable of
monitoring everything from power plants to customer's individual
appliances. This will provide utility operators and consumers the data
necessary to better manage energy usage, allowing for better control of
costs and lower electric bills.
The Energy Independence and Security Act of 2007 (EISA) (P.L. 110-
140) set requirements for a ``reliable and secure electricity
infrastructure.'' Under EISA, NIST has ``primary responsibility to
coordinate development of a framework that includes protocols and model
standards for information management to achieve interoperability of
smart grid devices and systems.'' NIST supports one of the key roles in
the growth of the smart grid--bringing together manufacturers,
consumers, energy providers, and regulators to develop ``interoperable
standards.'' In other words, NIST is responsible for making sure the
many pieces of the smart grid are able to work together.
The American Recovery and Reinvestment Act (ARRA) invested
approximately $4.5 billion, matched by $5.5 billion in private funding,
to modernize energy infrastructure in America. The ARRA included
funding for NIST to conduct its work on interoperability standards for
the smart grid. Interoperability, the ability of diverse systems and
their components to work together, is vitally important to the
performance of the smart grid at every level. It enables integration,
effective cooperation, and two-way communication among the many
interconnected elements of the electric power grid.
Because the smart grid will touch so many aspects of life in the
twenty-first century, the development of standards involves a wide
range of national and international stakeholders, from both the private
and public sectors. Stakeholders include appliance and consumer
electronics providers; municipal electric utility companies; standards
development organizations; and state and local regulators. NIST has
identified 22 stakeholder groups-each of whom has representation in the
standards development process. NIST's work will cover the entire
electricity system including generation, transmission, distribution,
and end-user equipment and devices.
Standards Development
NIST's work on the smart grid has been enabled by funding from both
the ARRA and NIST's annual appropriations. ARRA funds totaled $17
million to bring together stakeholders to develop a framework for the
smart grid and coordinate the development of standards, including $12
million provided by the Department of Energy and an additional $5
million from ARRA funds appropriated directly to NIST. To support the
NIST Smart Grid program, Congress appropriated a total of $2.3 million
in fiscal year (FY) 2009, $5 million in FY10, and $8.3 million in FY11.
The President's budget request for FY12 includes a $22.8 million
initiative entitled ``Interoperability Standards for Emerging
Technologies,'' which would include an additional $9.1 million to
support NIST's Smart Grid program.
NIST has been driving the creation of a smart grid architectural
framework, and interoperability standards in a three-phased plan. Phase
one (complete) engaged stakeholders to identify applicable standards
and requirements, gaps in currently available standards, and priorities
for additional standardization activities. Phase two (ongoing)
established a public/private partnership called the Smart Grid
Interoperability Panel (SGIP) to continue development of
interoperability standards and drive longer-term progress. Phase three
(ongoing) is the development of a testing and certification framework
for smart grid standards.
In January 2010, the NIST-led process published the Release 1.0
Framework and Roadmap for Smart Grid Interoperability \1\, which
provided an initial foundation for an interoperable and secure smart
grid. The framework included a high-level conceptual reference model,
the identification of 75 existing families of standards applicable to
the ongoing development of the smart grid, and 16 high-priority action
plans to fill gaps in the standards portfolio (three have been added to
the original 16 listed in the Release 1.0 NIST framework). NIST is
updating the framework based on work carried out since Release 1.0, and
expects to publish Release 2.0 by the end of 2011.
---------------------------------------------------------------------------
\1\ NIST Framework and Roadmap for Smart Grid Interoperability
Standards, Release 1.0. January 2010. http://www.nist.gov/public--
affairs/releases/upload/FERC-letter-10-6-2010.pdf
---------------------------------------------------------------------------
The Smart Grid Interoperability Panel (SGIP)
The SGIP is a private/public partnership that engages stakeholders
from the entire smart grid community in a participatory public process
to identify applicable standards, gaps in currently available
standards, and priorities for new standardization activities for the
evolving smart grid. Membership in the SGIP has grown to over 680
organizations, including private companies, universities, research
institutes, industry associations, standards setting organizations,
laboratories, and Federal, state, and local government agencies. Almost
1800 individuals participate in the committees and working groups, and
an elected 27-member governing board representing 22 different
stakeholder groups oversees the SGIP.
The SGIP is executing 19 priority action plans to fill standards
gaps, and is also continuing work on the Catalog of Standards \2\,
which contains descriptive information about standards deemed relevant
to the smart grid through the SGIP consensus process. The first six
entries have been approved by the SGIP membership and have been entered
into the catalogue. Each standard considered for inclusion in the
catalogue goes through a cybersecurity review by the SGIP Cybersecurity
Working Group, to identify potential vulnerabilities and necessary
mitigation actions.
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\2\ Available at: http://collaborate.nist.gov/twiki-sggrid/bin/
view/SmartGrid/SGIPCatalogOfStandards.
---------------------------------------------------------------------------
The SGIP is also working on the development of a testing and
certification framework for the smart grid. The SGIP Testing and
Certification Committee published the Interoperability Process
Reference Manual, Release 1 \3\, which provided the structure and
processes for testing and certification programs relevant to the smart
grid.
---------------------------------------------------------------------------
\3\ Interoperability Process Reference Manual, Release 1.0.
November 2010. http://collaborate.nist.gov/twiki-
---------------------------------------------------------------------------
To guide future planning for NIST's work on the smart grid, NIST
also established a Smart Grid Federal Advisory Committee. The
Committee's input to NIST helps guide long-term SGIP activities and
also assists in directing research and standards activities at NIST.
The Committee provides input to NIST on smart grid standards,
priorities and gaps, and on the overall direction, status, and health
of smart grid implementation by the smart grid industry. The
Committee's first report, focused on the long-term direction of NIST's
smart grid work is expected near the end of this year.
Regulation
EISA directs the Federal Energy Regulatory Commission (FERC) to
institute a rulemaking to adopt such standards and protocols as may be
necessary to insure smart grid functionality and interoperability in
interstate transmission of electric power, and regional and wholesale
electricity markets'' at any time after NIST's work has led to
``sufficient consensus'' in the Commission's judgment. In the past, few
interoperability standards have been adopted in regulation for national
infrastructures. The vast majority of standards in these industries are
used on a voluntary basis.
Based on work conducted by the SGIP, NIST notified FERC in October
2010 that it had identified five families of existing voluntary
consensus standards as ready for consideration by regulators. FERC
hosted a Technical Conference to invite public discussion of whether
sufficient consensus was found to institute a rulemaking proceeding. On
July 20, 2011 FERC issued an Order in which it found there was
insufficient consensus to institute a rulemaking proceeding at that
time to adopt the initial five families of standards.
``The Commission finds there is insufficient consensus for the five
families of standards under consideration. For this reason, the
Commission will not institute a rulemaking proceeding at this time with
respect to these standards. The Commission encourages stakeholders to
actively participate in the NIST interoperability framework process to
work on the development of interoperability standards and to refer to
that process for guidance on smart grid standards.''
The five families of existing voluntary consensus standards were
``foundational'' standards covering common information models and
protocols for utility energy management systems, substations,
distribution systems, and intercontrol center communications. The five
standards were among the most mature standards identified in the NIST
Framework, and the ``insufficient consensus'' conclusion of FERC calls
into question whether voluntary standards for smart grid may be
sufficient without a mandatory rulemaking process.
5. Issues for Examination
Enabling Cost-Effective Smart Grid Investments
The development and adoption of standards for the smart grid has
been an unprecedented, complex undertaking, enabling electric utilities
to deploy and use technology advancements in an accelerated manner.
There has been significant investment in the smart grid, with many
smart grid related technologies, such as smart meters, deployed with
ARRA funds despite the fact that many standards have not been set.
Given the scale of possible future investment and the need to retrofit
existing technologies, interoperability is imperative. The Subcommittee
has requested that witnesses address the need to ensure investments in
the smart grid are cost-effective to keep electricity affordable. This
includes discussing how the interoperability standards being developed
through the NIST framework process ensure present investments in new
technologies generate future value through interoperability and
upgradability.
Unlocking the Potential of Innovation in the Electricity Sector
Transforming the electricity grid to a modern smart grid can help
spur the creation and deployment of new products and services in the
electric sector, boosting economic growth and job creation. Building an
updated transmission infrastructure including modern information and
communications technologies provides a foundation for innovation.
Witnesses have been asked to address how the development of open,
interoperable standards can help create the markets for smart grid
technologies essential to America's ability to lead and create jobs.
International coordination on smart grid standards will reduce trade
barriers in smart grid technologies, helping drive international trade
and investment. Witnesses have also been asked to discuss the
importance of working to cooperate with other nations on smart grid
interoperability standards, which is critical to increasing market
opportunities for American industry.
Empowering Consumers
Providing consumers information about energy use and consumption
helps them to better understand how they are using electricity,
allowing for better management of that use. The Subcommittee has asked
witnesses to address how encouraging the development of a portfolio of
smart grid technologies and programs, including innovative third-party
applications, can help consumers save energy and encourage the
development of a market for smart grid technologies. It is important to
provide consumers with information and to allow innovation to flourish,
but it is also important to protect that data to ensure consumer
privacy. Consumers need to be adequately informed about the benefits,
costs, and risks associated with smart grid systems.
Securing the Grid
The Subcommittee has requested that witnesses address the complex
cybersecurity challenge that smart grid technologies pose. With
advanced metering infrastructure, smart appliances, and third-party
service providers, there are a great number of entry points through
which to stage cyber attacks. By exploiting loopholes in cybersecurity,
attackers could breach the privacy of customer power usage data and
could potentially overload systems or cause false readings. It is
especially important to ensure that the evolution of standards and
guidelines keep pace with the evolving cyber threat in order to protect
the grid from cyber attacks, improve recoverability, and ensure the
Nation's security and economic prosperity.
Chairman Quayle. The Subcommittee on Technology and
Innovation will come to order.
Good morning, and welcome to today's hearing, entitled
``Empowering Consumers and Promoting Innovation through the
Smart Grid.'' I want to thank all of you for coming. Mr.
Sarbanes from Maryland is stuck in traffic due to our weather,
and I thank you for braving the weather this morning. In front
of you are packets containing the written testimony,
biographies and Truth in Testimony disclosures for today's
witnesses. I will now recognize myself for five minutes for an
opening statement.
Today's hearing will evaluate the progress that has been
made on the development and implementation of a nationwide
smart grid. The blackout that darkened the Northeast in the
summer of 2003 opened our eyes to the vulnerability and age of
our electrical system. One of the planned improvements is to
modernize our electrical grid to create a system that can
communicate information and relay electricity in two
directions: both to and from the consumer. The smart grid has
the potential to improve the reliability of electric power
delivery, and promote economic growth through the development
of new technologies. Given the scale and complexity of our
electric grid, this transition will require systems that can
seamlessly communicate.
In 2007, the Energy and Independence Security Act directed
the National Institute of Standards and Technology to
coordinate the development of a common framework, including
protocols and model standards for the implementation of smart
grid technologies. NIST plays a key role--bringing together
manufacturers, consumers, energy providers and regulators to
develop interoperable standards to ensure that the smart grid's
many pieces are able to work together.
As a non-regulatory agency, NIST has a long history of
collaborating with industry to develop voluntary standards.
However, the Energy Independence and Security Act empowers the
Federal Energy Regulatory Commission to initiate a rulemaking
process to adopt standards where it believes a sufficient
consensus has been achieved. I am concerned with the prospect
of mandating standards and the effect such mandates could
potentially have on innovation. There may be parts of the smart
grid where formal regulation is unnecessary and a consensus
standard is sufficient to ensure interoperability. I generally
believe that we should avoid imposing regulations on industry
and innovators, when a collaborative product is possible
through NIST's non-regulatory process.
The Committee on Science, Space, and Technology has held a
series of hearings assessing the transformation of our electric
delivery system to a smart grid. Today's hearing will further
detail the progress that has been made by examining the status
of efforts to develop the open standards that are necessary to
support cost-effective deployment of smart grid technologies.
We should not underestimate the value of standards. Open,
consensus-based standards help facilitate the development of
new innovative technologies by promoting plug-and-play
operability for smart grid devices in both the national and
international markets. I am especially interested in how a
smarter grid could enable small companies to develop new
products based on a transparent standards platform that is
available to all innovators. With the many renewable energy
companies in my home state of Arizona, I am also interested in
how the updated grid could allow small generators and
intermittent renewable energy sources to play a larger role in
our electrical system.
I would like to thank all of our witnesses for their
participation today.
[The prepared statement of Mr. Quayle follows:]
Prepared Statement of the Subcommittee on Technology and Innovation
Chairman Ben Quayle
Good Morning. I would like to welcome everyone to today's hearing,
evaluating the progress that has been made on the development and
implementation of a nationwide smart grid.
The blackout that darkened the Northeast in the summer of 2003
opened our eyes to the vulnerability and age of our electrical system.
One of the planned improvements is to modernize our electrical grid to
create a system that can communicate information and relay electricity
in two directions--both to and from the consumer. The smart grid has
the potential to improve the reliability of electric power delivery,
and promote economic growth through the development of new
technologies. Given the scale and complexity of our electric grid, this
transition will require systems that can seamlessly communicate.
In 2007, The Energy and Independence Security Act directed the
National Institute of Standards and Technology (NIST) to coordinate the
development of a common framework, including protocols and model
standards for the implementation of smart grid technologies. NIST plays
a key role-bringing together manufacturers, consumers, energy
providers, and regulators to develop ``interoperable standards'' to
ensure that the smart grid's many pieces are able to work together.
As a non-regulatory agency, NIST has a long history of
collaborating with industry to develop voluntary standards. However,
the Energy and Independence Security Act empowers the Federal Energy
Regulatory Commission (FERC) to initiate a rulemaking process to adopt
standards where it believes a sufficient consensus has been achieved. I
am concerned with the prospect of mandating standards and the effect
such mandates could potentially have on innovation. There may be parts
of the smart grid where formal regulation is unnecessary and a
consensus standard is sufficient to ensure interoperability. I
generally believe that we should avoid imposing regulations on industry
and innovators, when a collaborative product is possible through NIST's
non-regulatory process.
The Committee on Science, Space and Technology has held a series of
hearings assessing the transformation our electric delivery system to a
smart grid. Today's hearing will further detail the progress that has
been made by examining the status of efforts to develop the open
standards that are necessary to support cost-effective deployment of
smart grid technologies.
We should not underestimate the value of standards. Open,
consensus-based standards help facilitate the development of new
innovative technologies by promoting plug-and-play operability for
smart grid devices in both the national and international markets. I am
especially interested in how a smarter grid could enable small
companies to develop new products based on a transparent standards
platform that is available to all innovators. With the many renewable
energy companies in my home state of Arizona, I am also interested in
how the updated grid could allow small generators and intermittent
renewable energy sources, to play a larger role in our electrical
system.
I would like to thank all of our witnesses for their participation.
I would also like to welcome and thank the gentleman from Maryland, Mr.
Sarbanes, for his role in the hearing today. I now recognize him for
five minutes for an opening statement.
Chairman Quayle. I would also like to welcome and thank the
gentleman from Maryland, Mr. Sarbanes, for his role in the
hearing today, and I now recognize him for five minutes for an
opening statement.
Mr. Sarbanes. Thank you very much, Mr. Chairman. I
appreciate you calling this hearing. This is a critical
hearing. We are looking forward to hearing from our witnesses
today with respect to the progress that is being made in this
standard setting.
Putting in place a smart grid for the country is a huge
priority, and of course, if you look at the Energy Independence
and Security Act, that was one of its premier objectives back
in 2007. There was a real boost to your efforts, of course,
with the American Recovery and Reinvestment Act in terms of
dollars being put behind this effort. The effort is well
underway.
I have only come to this Committee recently but I
understand there was a hearing about a year ago that examined
the progress that was being made, and I take it that there is
really three phases that this effort represents. The first
phase was setting up this framework and roadmap for the smart
grid interoperability. The second phase is to get this panel
working, and I know we will hear about that today, and then the
third phase is really to go out and test this and certify it
and make sure that it is really working. There is a lot of
tentacles involved in this. You are pulling in a lot of
different input from many, many different sources, of course:
the private sector, prior public standards efforts that have
been in place and so forth.
So we are looking forward to this update and we want to
know what we can do to help facilitate the progress that you
are making both in terms of tools that you have and the
resources that are available to you.
We all want a grid that is more reliable and resilient,
that is more efficient and cost-effective, and you can read
into that last phrase ``not wasteful,'' and one that is secure.
That is obviously a key concern these days as well.
Now, we can look at this through various lenses. I mean, we
just went through this tremendous weather event here on the
East Coast with the hurricane. In Maryland, we had hundreds and
hundreds of thousands of people that were without power for
days on end. The systems we have for reporting outages and
attending to them are in some ways antiquated when you compare
it against the smart grid vision that we have, and when we get
to that kind of place, you are going to be able to identify
where these outages have occurred, respond to them more
quickly, figure out how to bypass transformers and other parts
of the grid that may be down so that you can keep power in
place for as many of the customers, whether they be businesses
or individuals, as possible. So that is certainly one lens to
look at this smart grid enterprise through.
Another I bring, which is, I guess, somewhat parochial but
my district pretty much surrounds the NSA organization in
Baltimore, which is located at Fort Meade, and there have been
concerns over the last few years by leaders at NSA about
whether just the power source is going to be there to sustain
their operations over time. So that goes to the question of
whether you have a reliable source of power for these critical
assets that exist out there, and so we are obviously very
interested in the reliability, in the efficiency of these
operations and the security, which I think is something that
you will get to in our discussion.
So we know that there is a lot left to do. I do want to
commend NIST. From my understanding of the progress you've
already made, there is a lot of different balls in the air here
and of course everyone wants to get this in place as quickly as
we can.
So I appreciate the testimony that you will present here
today. We are looking forward to it.
Thank you, Mr. Chairman, for calling the hearing, and I
will yield back my time.
[The prepared statement of Mr. Sarbanes follows:]
Prepared Statement of Representative John P. Sarbanes
Good morning. I want to thank our witnesses for being here with us
today for this important status update on the smart grid standards
effort. And Chairman Quayle, thank you for holding this hearing.
As many of you may know, the subcommittee held a similar hearing
just over a year ago. At that point in time, the smart grid standards
development process was still in its relative infancy. NIST had
recently published the Framework and Roadmap for Smart Grid
Interoperability - Release 1.0, and the Smart Grid Interoperability
Panel (or SGIP) was just getting its feet off the ground.
Since this smart grid effort is as fast-paced as it is vast, I
believe it is appropriate and prudent for us to check in on how this
NIST-led effort has unfolded over the last year and learn more about
where we are and where we are headed.
I think we would all agree that our electricity grid is in
desperate need of modernization. There is no doubt that the United
States would be better served by an electric grid that is more reliable
and resilient, more efficient and cost effective, and more secure. And
our nation will be closer to energy independence if our grid can
accommodate the addition of more renewable energy resources and provide
information that helps us reduce energy use and minimize energy waste.
A smart grid has the potential to deliver all of this for us at a
fraction of the price that is already projected to be spent on grid
modernization and expansion.
A smart grid will incorporate two-way communication capabilities
into the electric grid, facilitating a constant flow of information
between electricity suppliers and consumers. This will enable better
alignment between electricity supply and demand, improving our ability
to prevent power blackouts and brownouts which cost the U.S. economy
$80 billion per year.
It will provide grid operators with immediate and detailed
information on the power disruptions that do occur so that power can be
restored more quickly and efficiently. It can also reduce the cost of
electricity by providing consumers access to real-time information on
the current market price of electricity, offering people the choice to
use energy when it is cheaper.
The scale and complexity of developing a smart grid is astounding.
And the investments--both public and private--that will be needed to
make it a reality are significant. That is why we need to make sure
that we do this right and that all of the various pieces will work
together. We can help ensure that the investments that are made today
will continue to pay off long into the future if everyone involved in
this important endeavor is playing by the same rule book. And that's
where standards come in.
I think we will all be impressed by the work that has already taken
place and is currently under way on the standards that are needed to
help us realize a true smart grid.
And I think we will be equally impressed by the work that remains
to be done to make the smart grid goal a reality.
Certainly, the task with which NIST has been charged is a daunting
one. By all accounts, the progress that has been made in such a short
period of time is staggering, and NIST's effort to keep the train
moving with everyone on board has been a remarkable accomplishment.
It's essential that we continue to build on this momentum and keep
our eye on the ball. For this reason, I look forward to hearing from
our witnesses whether there is anything more that we here in Congress
can or should do to ensure that progress continues and that those
participating in this process have the tools that they need to see this
effort through.
Thank you, again, for being here today. I look forward to your
testimony.
Chairman Quayle. Thank you, Mr. Sarbanes.
If there are Members who wish to submit additional opening
statements, your statements will be added to the record at this
point.
At this time I would like to introduce our witnesses, and
then we will proceed to hear from each of them in order.
Our first witness is Dr. George Arnold, the National
Coordinator for Smart Grid Interoperability at NIST. Next, we
will hear from the Hon. Donna Nelson, Chairman of the Texas
Public Utility Commission. Our third witness is Mr. John
Caskey, Assistant Vice President of Industry Operations at the
National Electrical Manufacturers Association. Our final
witness is Mr. Rik Drummond, CEO and Chief Scientist at The
Drummond Group.
Thanks again to our witnesses for being here this morning.
As our witnesses should know, spoken testimony is limited to
five minutes each. After all witnesses have spoken, Members of
the Committee will have five minutes each to ask questions.
The Chair now recognizes our first witness, Dr. Arnold.
STATEMENT OF DR. GEORGE ARNOLD,
NATIONAL COORDINATOR FOR SMART GRID INTEROPERABILITY,
NATIONAL INSTITUTE OF STANDARDS AND TECHNOLOGY
Dr. Arnold. Chairman Quayle, Ranking Member Sarbanes and
Members of the Subcommittee, I would like to thank you for the
opportunity to discuss NIST's progress in accelerating the
development of standards for the smart grid, which as you
noted, is central to the Nation's efforts to promote
innovations that increase the reliability, efficiency and
security of the electric delivery system and provide benefits
to consumers.
The basic structure of today's grid has changed little over
its 100-year history. The U.S. grid is operated by over 3,200
utilities using equipment and systems from hundreds of
suppliers with little past emphasis on standardization,
resulting in many proprietary systems that do not interoperate.
The successful transformation of this aging infrastructure will
have important economic and consumer benefits.
As you have noted, under the Energy Independence and
Security Act of 2007, Congress assigned NIST the primary
responsibility to coordinate the development of standards for
the smart grid. NIST is providing strong national and
international leadership in carrying out this assignment.
In April 2009, NIST announced a three-phase plan to carry
out its responsibilities. The initial phase resulted in the
January 2010 publication of the NIST Framework and Roadmap for
Smart Grid Interoperability Standards, Release 1. This document
described a reference model for the smart grid, identified 75
initial standards and specified 16 high-priority action plans
to fill gaps. Another significant milestone was the September
2010 publication of the NIST Guidelines for Smart Grid
Cybersecurity, Release 1, which provides foundational guidance
for the cybersecurity of the grid.
The second phase of the NIST effort established the Smart
Grid Interoperability Panel, or SGIP. The panel's membership
has grown to over 680 private and public sector organizations
with almost 1,800 individuals participating in its committees
and working groups. The SGIP also provides a forum for
international collaboration, benefiting U.S. exports of smart
grid products. The SGIP has achieved many significant
accomplishments since its formation, which are described in my
written testimony. The SGIP is making progress in developing a
smart grid testing and certification framework, the third phase
of NIST's effort, which is chaired by my colleague, Mr.
Drummond. To date, five private sector organizations have
announced testing and certification programs following the
SGIP's guidelines. NIST is in the process of updating the smart
grid framework, and we anticipate publication of Release 2.0 by
the end of 2011.
NIST's smart grid work has been enabled by funding from
both the Recovery Act and NIST's annual appropriations. A
significant portion of NIST's smart grid budget has been used
to fund the administration and operation of the SGIP. In the
longer term, our vision is that the SGIP will mature into an
independent organization funded primarily by the private sector
to evolve the standards framework after NIST's coordination
role is complete. However, it will take several years for the
SGIP to develop a business model and private sector funding
sources that are self-sustaining.
To guide the longer-term planning for NIST's work, NIST has
established a Smart Grid Federal Advisory Committee whose first
report is expected in November 2011.
Throughout this process, NIST had worked closely with the
Department of Energy and federal and state regulators. EISA
directs FERC to institute a rulemaking to adopt standards as
necessary after NIST's work has led to sufficient consensus.
However, voluntary use of consensus standards rather than
regulation may be sufficient in most cases to ensure the
interoperability of the smart grid.
In other national infrastructure such as the
telecommunications system and the Internet, few, if any,
interoperability standards have been mandated through
regulation. In 2011, a FERC decision found that there was
insufficient consensus to institute a rulemaking proceeding and
expressed support for the NIST process and referred
stakeholders to the NIST process for guidance on smart grid
standards.
Our standards efforts play an important role in promoting
innovation that will benefit consumers. The standards help
avoid stranded utility investments by facilitating
interoperability and upgradeability. The standards promote
vendor competition and economies of scale that will result in
lower costs for consumers. The standards help enable the
development of innovative third-party applications and smart
appliances to help consumers save energy and reduce peak usage
and overall usage. Finally, through this work, NIST is leading
the development of rigorous open standards and guidelines for
cybersecurity and data privacy through public-private
cooperation.
NIST is proud to have been given an important role in this
initiative, and I thank you for the opportunity to testify
today. I would be happy to answer any questions you may have.
[The prepared statement of Mr. Arnold follows:]
Prepared Statement of Dr. George Arnold, National Coordinator for Smart
Grid Interoperability, National Institute of Standards and Technology
Introduction
Chairman Quayle and Members of the Subcommittee, I am George
Arnold, the National Coordinator for Smart Grid Interoperability at the
Department of Commerce's National Institute of Standards and Technology
(NIST).
Thank you for the opportunity to appear before you today to discuss
NIST's progress in accelerating the development of standards needed to
realize a secure and interoperable nationwide Smart Grid. I last
testified about our progress and plans before the Subcommittee on
Technology and Innovation on July 1, 2010. \1\ Today, I would like to
update you on our accomplishments, where we are going, and some of the
key actions needed to ensure protection of consumer interests,
including cost and privacy, while driving innovation within Smart Grid
development.
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\1\ Testimony of George Arnold before the House Committee on
Science and Technology Subcommittee on Technology and Innovation United
States House of Representatives, July 1, 2010, available at http://
gop.science.house.gov/Media/hearings/ets10/july1/Arnold.pdf
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The Smart Grid, which will modernize the United States electric
power delivery system, is central to the Nation's efforts to increase
the reliability, efficiency and security of the electric delivery
system and also to help build the infrastructure that will facilitate
clean energy sources to American homes and businesses. The Smart Grid
utilizes advanced information and communications technologies to enable
a two-way flow of electricity and information. This marriage of energy
and information technologies will create capabilities to make the grid
more efficient by reducing demand peaks and increasing capacity
utilization and providing consumers with tools to reduce energy usage
and potentially save money. It can also increase reliability, enable
more widespread use of distributed and renewable energy sources, and
facilitate electrification of vehicles.
The Smart Grid is an important contributor to the Administration's
overall goal of fostering innovation and creating jobs in a clean
energy economy through policies that catalyze private sector
investments to modernize the nation's electrical infrastructure. NIST's
mission--to advance innovation and U.S. industrial competitiveness--
fits well with this goal, and we are committed to helping make that
vision a reality. As former Commerce Secretary Gary Locke noted, ``If
we get this right, if government and business can team up effectively,
we have an almost unprecedented opportunity to change how we use
electricity, reduce greenhouse gas emissions, and create new jobs in an
emerging industry.'' \2\
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\2\ Commerce Secretary remarks at Jobs and Competitiveness Round
Table, Durham, NC, June 13, 2011, available at http://www.commerce.gov/
news/secretary-speeches/2011/06/13/remarks-jobs-and-competitiveness-
round-table-durham-north-carolin
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Modernizing and digitizing the nation's electrical power grid--the
largest interconnected machine on Earth--is an enormous challenge and a
tremendous opportunity. Several years ago, the National Academy of
Engineering described electric power and the electric grid as the
greatest engineering achievement of the 20th century, and the largest
industrial investment in the history of humankind. \3\ The basic
structure of the present grid has changed little over its hundred-year
history. The U.S. grid, which is operated by over 3200 electric
utilities using equipment and systems from hundreds of suppliers, has
historically not had much emphasis on interoperability or
standardization, and thus has incorporated many proprietary interfaces
and technologies that result in the equivalents of stand-alone silos.
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\3\ Nat'l Acad. Eng., Greatest Engineering Achievements of the 20th
Century (2003), available at http://www.greatachievements.org.
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The successful transformation of this infrastructure into an
interoperable system would support the Administration's vision of a
highly reliable electrical grid that uses a diverse suite of energy
resources, including distributed and renewable resources, energy
efficiency, and supports electric vehicles. This 21st century grid
would be a significant engineering achievement with important economic
and environmental impacts.
NIST's Standards Role: A Framework for Interoperability
A nationwide, interoperable and secure Smart Grid would optimally
be harmonized with international standards. Under the Energy
Independence and Security Act of 2007 (EISA), Congress assigned the
NIST the ``primary responsibility to coordinate development of a
framework that includes protocols and model standards for information
management to achieve interoperability of Smart Grid devices and
systems . . . '' [EISA, Section 1305]. That Act further specifies that
the interoperability framework should be ``flexible, uniform, and
technology neutral.'' Congress instructed that the framework should
accommodate ``traditional, centralized generation and transmission
resources'' while also facilitating incorporation of new, innovative
technologies, such as distributed and renewable energy resources and
energy storage.
NIST is providing national and international leadership to drive
the creation of interoperability standards needed to help make the
Smart Grid a reality. We are engaging industry, government, and
consumer stakeholders in an open and public process. We have published
a first Release of a standards framework for the Smart Grid, \4\ are
nearing the completion of a second Release, and, together with the
private sector, have made significant progress in creating an ongoing
public/private partnership that will provide a process for the
continuing development and maintenance of Smart Grid standards needed
to support the electric grid for decades to come.
---------------------------------------------------------------------------
\4\ NIST Special Publication 1108, ``NIST Framework and Roadmap for
Smart Grid Interoperability Standards, Release 1.0,'' January 2010,
available at http://www.nist.gov/public_affairs/releases/upload/
smartgrid_interoperability_final.pdf.
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Our work to establish protocols and standards for the Smart Grid
has been carried out with a great sense of urgency. Deployment of
various Smart Grid elements, including smart sensors on distribution
lines and smart meters in homes, and of distributed sources of
renewable energy is already under way, and has been accelerated as a
result of Department of Energy (DOE) Smart Grid Investment Grants and
Smart Grid Demonstration Projects and other programs supporting
renewable energy generation. Without standards, there is the potential
for technologies developed or implemented with sizable public and
private investments to become obsolete prematurely or to be implemented
without measures necessary to ensure security.
While we are driving this program with a strong sense of urgency,
we must also keep in mind that the foundation we lay with these
standards likely will establish the basic architecture of the grid for
decades. Any fundamental mistakes made at this stage may be difficult
and costly to correct later. We especially cannot afford to make
incorrect architectural choices or adopt weak standards that would
compromise the security, reliability or stability of the grid. We need
to work both quickly and carefully.
I would like to provide a brief overview of our efforts and
accomplishments to date.
In April 2009, NIST announced a three-phase plan to carry out its
EISA responsibilities. In May 2009, the Secretaries of Commerce and
Energy convened a meeting of nearly 70 top executives from the power,
information technology, and other industries, and asked those
executives whether their organizations would commit to support the
process established by NIST.
The NIST process had three phases:
Phase 1, which took place from April 2009 to January
2010, engaged stakeholders in a participatory public process to
identify applicable standards and requirements, gaps in the currently
available standards, and priorities for additional standardization
activities.
Phase 2, which began in November 2009 and is ongoing,
established a public/private partnership called the Smart Grid
Interoperability Panel (SGIP) to continue development of
interoperability standards and drive longer-term progress.
Phase 3, which is also ongoing, is developing a testing
and certification framework for Smart Grid standards. \5\
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\5\ Opening Remarks of George Arnold, Smart Grid Interoperability
Standards Technical Conference, held on 1/31/11 at FERC Headquarters
available at: http://elibrary.ferc.gov/idmws/
File_list.asp?document_id=13888084
The NIST plan has received broad support and active participation
from industry. In a letter, the U.S. Chamber of Commerce commended NIST
for its ``willingness to reach out to the private sector on these
issues.'' The Chamber described the NIST-led process as ``transparent
and inclusive.'' \6\
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\6\ U.S. Chamber of Commerce's Response to Notice requesting public
comments on the second draft of NISTIR 7628, the Smart Grid Cyber
Security Strategy and Requirements (75 Federal Register pages 18819-
18823 at http://edocket.access.gpo.gov/2010/pdf/2010-8415.pdf, Docket
Number: 100202060-0143-01). Comments available at: http://
collaborate.nist.gov/twiki-sggrid/bin/view/SmartGrid/
NISTIR7628Draft2CommentsReceived
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In January of 2010, the NIST-led process reached a major milestone
with the publication of the Release 1.0 Framework and Roadmap for Smart
Grid Interoperability (NIST Special Publication 1108). \7\ This
document provides an initial foundation for an interoperable and secure
Smart Grid and has been widely cited by the Smart Grid stakeholder
community, both domestically and internationally. The Release 1.0
Framework described a high-level conceptual reference model for the
Smart Grid, identified 75 existing families of standards that are
applicable to the ongoing development of the Smart Grid, and specified
16 high-priority action plans to fill gaps in the standards portfolio
with new or revised standards.
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\7\ Supra, note 3.
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Another significant milestone in the development of the NIST
framework was the publication of NIST Interagency Report (IR) 7628,
``Guidelines for Smart Grid Cyber Security,'' in September 2010. \8\
This three-volume document, which has also been widely cited by
industry and regulators, provides the foundational requirements and
guidance for efforts to ensure cybersecurity in the Smart Grid.
---------------------------------------------------------------------------
\8\ Available at http://csrc.nist.gov/publications/
PubsNISTIRs.html#NIST-IR-7628.
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The Smart Grid Interoperability Panel (SGIP), established by NIST
in November 2009, is a public/private partnership. The SGIP provides a
mechanism for NIST to ``solicit input and cooperation from private
entities and other stakeholders,'' as directed by EISA. In the long
term, NIST envisions that the SGIP will mature into a permanent, stand-
alone organization that will support the continuing evolution of the
Smart Grid standards framework after NIST's EISA-directed coordination
role has been completed.
During its first two years of operation, the SGIP has focused its
efforts on establishing processes and procedures for its work;
overseeing and expediting the completion of the Priority Action Plans
established in the NIST Release 1.0 Framework; creating additional
action plans as needed; developing the cybersecurity guidelines for the
Smart Grid including a methodology for reviewing the cybersecurity
aspects of standards; and developing a testing and certification
framework.
Membership in the SGIP has grown to over 680 organizations,
including private companies, universities, research institutes,
industry associations, standards setting organizations, testing
laboratories, and government agencies at the Federal, state and local
levels. Almost 1800 individuals participate in the committees, working
groups, and priority action plan teams working under the panel,
representing these hundreds of organizations. An elected 27-member
governing board, representing 22 different stakeholder groups,
including electric utilities, electric equipment manufacturers,
building automation providers, information and communications
technology companies, state regulators, and venture capital firms,
oversees the SGIP.
While the vast majority of participants in the SGIP are from the
private sector, members of NIST's technical staff and management also
play a role as technical contributors and leaders in the various boards
and committees of the SGIP, working alongside their private sector
counterparts. The NIST participants bring to the SGIP technical
expertise in standards and measurement science in the areas of power
engineering, information technology, industrial control systems,
building energy management, communications, and cybersecurity.
The international partnerships that NIST has built with the
governments of other countries have resulted in global recognition of
SGIP's role. The SGIP provides a forum for international collaboration
on smart grid standards development. The number of international
participants in the SGIP has increased significantly over the last year
and these efforts are designed to reduce barriers to trade in smart
grid technologies and services around the world. International
coordination on smart grid standards will help drive international
trade and investment in this fast growing sector and U.S. exporters of
smart grid products will benefit as a result. The SGIP has achieved
many significant accomplishments since its formation. I would like to
highlight a few.
The SGIP has been executing 19 priority action plans to fill
standards gaps (three were added to the original 16 identified in the
Release 1.0 NIST framework). These action plans have resulted in a
number of key standards deliverables, which include:
A Smart Meter Upgradeability Standard, published by
National Electrical Manufacturers Association, that will ensure that
many of the large number of meters to be installed over the next
several years can be upgraded to accommodate anticipated updates to
metering standards.
Internet Engineering Task Force Request for Comments
(RFC) 6272, which specifies the various Internet protocols to be used
in the Smart Grid.
Publication of NIST IR 7761, which provides guidelines
for utilities and their suppliers to assess wireless communications
standards for use in various Smart Grid applications.
A customer energy usage information data standard,
published by the North American Energy Standards Board (NAESB), that
enables entrepreneurs to develop third party applications to help
customers to monitor their energy usage and save money.
The selection of three standards published by Society for
Automotive Engineers (SAE) International to support electric vehicle
charging.
Publication of an ``SEP 1.x to 2.0 Transition and
Coexistence'' guideline, which will ensure that millions of meters that
have already been deployed using early versions of the Zigbee Smart
Energy Profile (SEP) will be able to interoperate with future IP-based
home area networks. This is especially important to states like Texas
that have pioneered in the early deployment of smart meter technology.
Another key early deliverable from the SGIP is the Catalog of
Standards, \9\ containing descriptive information about standards
deemed relevant to the Smart Grid through the SGIP's consensus process.
This catalog will provide key input to future releases of the NIST
framework.
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\9\ Available at http://collaborate.nist.gov/twiki-sggrid/bin/
view/SmartGrid/SGIPCoSStandardsInformationLibrary
---------------------------------------------------------------------------
A critical element of the SGIP's process is a cybersecurity review
of each standard considered for inclusion in the catalog. The SGIP
Cybersecurity Working Group, which is chaired by a NIST staff member,
reviews each candidate standard against the requirements in NIST IR
7628 to identify potential vulnerabilities and necessary mitigation
actions.
Phase 3 of the NIST plan is the development of a testing and
certification framework for the Smart Grid. In December 2010, the SGIP
Testing and Certification Committee, which is co-chaired by a NIST
staff member, published the ``Interoperability Process Reference
Manual, Release 1,'' \10\ providing an important foundation for this
phase of the plan. This document specifies the structure and processes
for testing and certification programs relevant to the Smart Grid. To
date, five private sector organizations have announced testing and
certification programs conforming to this guide. The most recent such
program, established by a consortium of four industry alliances to test
and certify using the Smart Energy Profile 2.0 protocol, will certify
interoperability of consumer appliances with the Smart Grid to reduce
or delay energy usage when the grid is overloaded.
---------------------------------------------------------------------------
\10\ SGIP Interoperability Process Reference Manual, Version 1.0,
available at: http://collaborate.nist.gov/twiki-sggrid/pub/SmartGrid/
SGTCCIPRM/SGTCC_IPRM_Version_1.0_Updated.pdf.
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NIST is in the process of updating the Smart Grid framework based
on work carried out since Release 1.0 was published in January 2010.
NIST has posted a draft of Release 2.0 \11\ and invited public
comments, and we anticipate publication of Release 2.0 by the end of
2011.
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\11\ Available at http://collaborate.nist.gov/twiki-sggrid/bin/
view/SmartGrid/IKBFramework.
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NIST's work on the Smart Grid has been enabled by funding from both
the American Recovery and Reinvestment Act of 2009 \12\ (Recovery Act)
and NIST's annual appropriations. The Recovery Act funds totaled $17
million, including $12 million provided by DOE and an additional $5
million from Recovery Act funds appropriated directly to NIST. More
than half of NIST's work through the end of FY11 was supported by the
Recovery Act funds, which will have been completely expended by the end
of this fiscal year.
---------------------------------------------------------------------------
\12\ Pub. L. No. 111-5, available at http://www.gpo.gov/fdsys/pkg/
PLAW-111publ5/pdf/PLAW-111publ5.pdf.
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To support the NIST Smart Grid program, Congress has appropriated a
total of $2.3 million in FY09, $5 million in FY10, and $8.3 million in
FY11. The FY12 President's Budget sustains NIST's Smart Grid efforts by
providing funding to accelerate development of needed standards through
priority action plans, establish the testing and certification
framework, and ensure smart grid cybersecurity standards and guidelines
stay ahead of evolving threats.
A significant portion of NIST's Smart Grid budget has been used to
fund private sector contractors that support the administration and
operation of the SGIP. In the long term, our vision is for the SGIP to
mature into an independent organization, funded primarily by the
private sector that will continue to support the evolution of the Smart
Grid standards framework after NIST's EISA coordination role is
complete. However, it will take several years for the SGIP to develop a
business model and private sector funding sources that are self-
sustaining.
To guide future planning for NIST's work on the Smart Grid, NIST
established a Smart Grid Federal Advisory Committee in September 2010.
The first report of this committee is expected in November of 2011, and
it will provide important input to guide the longer-term direction for
NIST's Smart Grid work.
Engagement with Regulators
EISA directs FERC to ``institute a rulemaking to adopt such
standards and protocols as may be necessary to insure smart-grid
functionality and interoperability in interstate transmission of
electric power, and regional and wholesale electricity markets'' at any
time after NIST's work has led to ``sufficient consensus'' in the
Commission's judgment.
The development and adoption of standards for the Smart Grid is an
unprecedented, complex undertaking. In the past, few, if any,
interoperability standards have been adopted in regulation for national
infrastructures such as the electric grid, the telecommunications
system, or the Internet. The vast majority of standards in these and
many other industries are used on a purely voluntary basis, without
government regulatory action. Similarly, voluntary consensus
interoperability standards may be sufficient in many cases to insure
the functionality and interoperability of the Smart Grid in interstate
power transmission and regional/wholesale electricity markets, without
government regulation.
In the first exercise of its type under EISA, NIST notified FERC in
October 2010 that it had identified five families of existing voluntary
consensus standards as ready for consideration by regulators. \13\ To
invite public discussion of whether there were sufficient consensus to
institute a rulemaking proceeding, FERC hosted a Technical Conference
on January 31, 2011, followed by a supplemental notice on February 16,
2011 soliciting written comments from interested parties. \14\
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\13\ NIST letter to FERC Chairman Jon Wellinghoff, October 6, 2010,
available at: http://www.nist.gov/public_affairs/releases/upload/FERC-
letter-10-6-2010.pdf
\14\ Federal Energy Regulatory Commission (FERC) Notice of
Technical Conference re Smart Grid Interoperability Standards under
RM11-2. December 21, 2010, available at: http://elibrary.ferc.gov/
idmws/File_list.asp?document_id=13875396
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On July 20, 2011, FERC issued an Order, \15\ in which it found that
there was insufficient consensus to institute a rulemaking proceeding
at that time to adopt the initial five families of standards. At the
same time, FERC's Order expressed support for the NIST process:
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\15\ 136 FERC 61,039, Order, ``Smart Grid Interoperability
Standards,'' Docket No. RM11-2-000, issued July 19, 2011, available at:
http://elibrary.FERC.gov/idmws/file_list.asp?accession_num=20110719-
3029.
``We believe that the best vehicle for developing smart grid
interoperability standards is the NIST interoperability framework
process, including the work of the SGIP and its committees and working
groups . . . The Commission recognizes and appreciates the
comprehensiveness of the smart grid interoperability framework process
developed by NIST . . . Therefore, we encourage utilities, smart grid
product manufacturers, regulators, and other smart grid stakeholders to
actively participate in the NIST interoperability framework process to
work on the development of interoperability standards and to refer to
that process for guidance on smart grid standards.'' \16\
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\16\ Id.
NIST believes that FERC's action is consistent with NIST's public
comments to the Commission that it can send appropriate signals to the
marketplace by recommending use of the NIST Framework. \17\
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\17\ Comments of US National Institute of Standards and Technology
in response to the Commission's Supplemental Notice Requesting comments
under RM11-2, April 7, 2011, available at: http://elibrary.ferc.gov/
idmws/File_list.asp?document_id=13909438
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FERC's decision is also consistent with the Administration's
``Policy Framework for a 21st Century Grid,'' \18\ released on June 13,
2011, which recommended to FERC that in order ``to enable the
development and implementation of smart grid standards, merely
embracing the standards as best practices in the field--rather than as
mandatory ones--is sufficient . . . '' FERC's support of the NIST
Interoperability Framework could encourage utility companies looking
for smart grid solutions to rely on the framework for guidance, but
leave it to individual utilities to decide how to best comply.
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\18\ White House. ``A Policy Framework for the 21st Century Grid:
Enabling Our Secure Energy Future.'' June 13, 2011, available at:
http://www.whitehouse.gov/sites/default/files/microsites/ostp/nstc-
smart-grid-june2011.pdf
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NIST believes that FERC's decision did not close the door to the
possibility of future rulemaking if it is determined that adoption of
certain standards is necessary to ensure their deployment to ensure
interoperability.
Testimonies, comments and reply comments received from the FERC
technical conference were valuable sources of input to NIST and the
SGIP. Based on our evaluation of this input, several steps are being
taken to improve NIST and SGIP processes. For example, SGIP has
initiated a task group to consider how to add reviews of reliability
and implementation issues within the SGIP.
Ensuring Protection of Consumer Interests
Let me conclude with a discussion of critical actions being taken
to ensure protection of consumer interests, highlighted in the
Administration's ``Policy Framework for a 21st Century Grid.''
Regulators and utilities need to ensure that their investments in a
Smart Grid are cost-effective to keep electricity affordable. The
standards being developed through the NIST program play a critical role
in this respect. They will help ensure that present investments in new
technologies will generate future value for rate-payers by facilitating
interoperability and upgradeability. These standards will also reduce
market fragmentation and help create economies of scale, providing
consumers greater choice and lower costs. They will help promote
healthy vendor competition that will result in lower costs for
utilities and, ultimately, for consumers.
Policymakers should ensure that residential and small business
consumers have access to a portfolio of easy-to-use Smart Grid
programs, technologies, and policies that empower them to manage their
energy use effectively. The standards being developed through the NIST
program will help enable timely consumer access to data that can help
them control their energy usage. The standards will encourage the
development of innovative third-party applications to help consumers
save energy and encourage development of a market for smart appliances
that can reduce energy usage during peak demand periods. The standards
will also offer policymakers a solid framework for protecting consumer
data privacy.
Finally, the Federal government must continue to facilitate the
development of rigorous, open standards and guidelines for
cybersecurity through public-private cooperation. Cooperation between
stakeholders can help identify and address the diversity of cyber risks
the electric power sector faces. The Federal government will work with
the private sector to provide the appropriate level of support for the
continuing evolution of those standards and guidelines, to keep pace
with the evolving threat. The three-volume report, NIST IR 7628,
Guidelines for Smart Grid Cyber Security, \19\ presents a framework
that organizations should use to develop effective cybersecurity
strategies tailored to their particular combinations of Smart Grid-
related characteristics, risks, and vulnerabilities. Volume 2 of NIST
IR 7628 is devoted to privacy guidelines for Smart Grid data, and NAESB
is in the process of developing a business practice standard for data
privacy consistent with the NIST guidelines. Organizations in the
diverse community of Smart Grid stakeholders--from utilities to
providers of energy management services to manufacturers of electric
vehicles and charging stations--can use the methods and supporting
information presented in the report as guidance for assessing and
mitigating risks. This approach recognizes that as the Smart Grid comes
online, the electric grid will rapidly change from a relatively closed
system to a complex, highly interconnected environment. Each
organization's cyber security requirements should evolve as technology
advances and as threats to grid security inevitably multiply and
diversify.
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\19\ Supra, n. 7.
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Conclusion
The Smart Grid, with the unique investment opportunity afforded by
the Recovery Act, represents a great opportunity to renew and modernize
one of the Nation's most important infrastructures. NIST is proud to
have been given an important role in this initiative, and is committed
to achieving the Administration's vision of a cleaner, more reliable,
more efficient and effective electricity grid that creates jobs and
helps reduces our dependence on oil.
Thank you for the opportunity to testify today on NIST's work on
Smart Grid interoperability. I would be happy to answer any questions
you may have.
Chairman Quayle. Thank you, Dr. Arnold.
The Chair now recognizes Chairman Donna Nelson to present
her testimony.
STATEMENT OF THE HONORABLE DONNA NELSON, CHAIRMAN, PUBLIC
UTILITY COMMISSION OF TEXAS
Chairman Nelson. Thank you, Chairman Quayle. Good morning,
and good morning to Ranking Member Sarbanes and Members of the
Subcommittee. I am Donna Nelson, Chairman of the Public Utility
Commission of Texas. Thank you for the opportunity to appear
before you today to discuss the progress that we have made in
Texas in implementing a smart grid. I would like to highlight
several things that I think have made our program in Texas
successful.
To tell the story of the smart grid in Texas is to tell the
story of the success of the competitive electric market in
Texas. The ERCOT region of Texas--and ERCOT stands for Electric
Reliability Council of Texas--is located entirely within the
state of Texas, and that makes Texas different than any other
state in the continental United States in that it represents 85
percent of the electric load in the state. The ERCOT region has
a successful competitive market. We have competitive
generation, we have competitive retail providers, which we call
REPs, but the TDUs, transmission and distribution utilities,
the ones that own the wires and poles, are still regulated by
the commission, and the competitive market has served us well
in Texas. It spurred a lot of investment and it ultimately
spurred the installment of smart meters.
In the mid-2000s, though, natural gas prices were rising;
Texas is a natural gas on the margin state, and our state was
growing and so policy leaders in Texas have a view that they
really want everything to be able to provide electricity. We
need all resources. And one of those resources is of course the
demand response that you can get from the smart grid
technology.
Against this backdrop, the state legislature wanted Texas
to have that tool so they passed legislation encouraging the
implementation of advanced meters and directed us, the PUC, to
establish a cost-recovery mechanism for utilities. We did that.
We adopted a rule, and it covered customer and REP access to
data, minimum standards for advanced meter system deployment,
cost-recovery and utility deployment plans. The four major
utilities in ERCOT, that would be CenterPoint, Oncor, AEP and
Texas New Mexico Power, have received approval from the
commission for deployment of smart meters in their service
territories. They have, to-date deployed 4 million smart meters
and are scheduled to deploy a total of 7 million by the end of
2013.
I would like to touch on a few key components that we
believe have allowed for fast deployment. First, the state
legislature encouraged deployment but did not mandate it.
Second, the legislature explicitly provides that customers own
their own smart meter data and are in control of authorizing
access to an entity other than their retail provider. Third,
the Texas PUC has overseen an implementation initiative in
order to make the smart grid a reality. The initiative is
comprised of a stakeholder collaborative with representatives
from utilities, vendors, REPs and consumers. And finally, REP
strongly supported the rollout of the smart grid technology
because in a highly competitive retail market, they wanted to
have a competitive advantage over other companies.
State commissions maintain jurisdiction over the
distribution grid and have the ultimate responsibility for
adoption and enforcement of rules relating to utilities and
retail markets. It is important that the processes at NIST and
at the FERC continue to recognize the role of state
commissions. We believe that the creation of open national
standards can create a level playing field across industry,
sectors and the markets. In the long term, standards should
ensure interoperability of devices across utility service
territories and across the country. I want to stress that a
balance must be struck between existing standards that enable
deployment and allow for benefits to reach consumers today
while working to refine and create future standards to address
the smart grid of tomorrow.
Let me close by stating that regardless of whether a state
has restructured its electric industry as Texas has done, there
are many benefits to be realized from the smart grid. Many
customers want more information about their electricity bills.
Currently, two of our largest utilities are conducting pilots
and they are finding that customers are responding very well to
the smart grid and are reducing their electric usage. And
standards are constantly evolving because technology does not
wait. Policy at the federal and state level should continue to
recognize the need for customer choice and control and provide
guidelines for the smart grid, not mandates.
Thank you so much for the opportunity to testify today and
share the Texas experience.
[The prepared statement of Ms. Nelson follows:]
Prepared Statement of The Honorable Donna Nelson, Chairman, Public
Utility Commission of Texas
Introduction
Chairman Quayle and Members of the Subcommittee, I am Donna Nelson,
Chairman of the Public Utility Commission of Texas (Texas PUC). Thank
you for the opportunity to appear before you today to discuss the
progress we have made in Texas regarding the adoption and
implementation of a smart grid. I would like to highlight several
things that I believe have made Texas a leader in deploying smart grid
technology and in delivering the benefits of that technology to
consumers.
To tell the story of the Smart Grid in Texas is to tell the story
of the competitive electricity market in ERCOT. The Electric
Reliability Council of Texas (ERCOT) region is located entirely within
the state of Texas and includes approximately 75% of the state's
geographic area, 85% of the electric load, and 22 million consumers.
The Texas legislature restructured the electric industry in the ERCOT
region in 1999. As a result of that restructuring, Retail Electric
Providers (REPs) provide electric service to consumers at prices that
are not regulated by the Texas PUC, while the Texas PUC continues to
regulate the rates of transmission and distribution utilities (TDUs)
pursuant to traditional rate of return regulation.
The competitive model has served Texas well. Today, prices in the
competitive areas are lower for consumers than they were in 2001 before
the competitive market opened. Consumers can shop from a myriad of
product including prepaid service, time of use pricing, fixed and
variable pricing, and renewable energy. The Texas PUC oversees a
website at PowerToChoose.com that allows consumers to shop for electric
service from among hundreds of product offerings. The competitive ERCOT
market has also spurred the investment of $36.5 billion in new
generation, and Texas leads the nation in installed wind generation
capacity.
Smart Grid Initiatives
State legislation has encouraged the implementation of advanced
metering by directing the Texas PUC to establish a cost recovery
mechanism for utilities that deploy smart meters and related networks.
The Texas PUC adopted a rule in May 2007 related to smart meter
deployment. \1\ The rule addressed customer and REP access to data,
minimum standards for advanced metering systems (AMS) deployed, cost
recovery, and utility deployment plans. Four utilities in ERCOT
(CenterPoint Energy, Oncor Electric Delivery, American Electric Power-
Texas and Texas New Mexico Power) have received approval for the
deployment of smart meters in their service territories. Those
utilities have presently deployed approximately four million advanced
meters and are scheduled to deploy a total of approximately seven
million by the end of 2013. The Texas PUC has approved over $2 billion
dollars in Smart Grid investment in the ERCOT region.
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\1\ 1 See PUC SUBST. R. Sec. 25.130, available online at: http://
www.puc.state.tx.us/rules/subrules/electric/25.130/25.130ei.cfm
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CenterPoint Energy was awarded a $200 million stimulus grant from
the DOE. CenterPoint Energy will use $150 million of this grant to the
accelerate the deployment of 2.2 million smart meters that were
originally scheduled for completion in 2014 and are now scheduled to be
completed by mid-2012. CenterPoint Energy is using the remaining $50
million to fund an Intelligent Grid initiative, which will automate 15%
of CenterPoint Energy's service territory with advanced distribution
management capabilities. This will include a ``self-healing'' system
that will automatically identify outages, isolate faulted sections, re-
route power, and improve overall reliability performance. This has also
enabled CenterPoint Energy to provide proactive alerts to customers via
email, text message, and phone for issues such as outages and storm
preparation. CenterPoint Energy has created or retained 550 jobs as a
result of the DOE grant.
By the end of 2013, Texas will have nearly seven million smart
meters installed within the ERCOT region. In its smart meter
rulemaking, the Texas PUC mandated a robust set of functionality--and
did not mandate technology. These meters are home area network (HAN)
enabled, record and transmit data in 15-minute increments, and are
required to adhere to open standards. Energy management devices that
are connected to the meter and the utility system are also being
provided to customers on a voluntary basis.
The installation of smart meters and the associated systems are a
core component of the smart grid. Meters with a robust set of
functionality are the building block to achieving significant
improvements in customer service and lower costs. To fully realize the
benefits of this technology, providers and their customers need access
to information that shows how much electricity the customers use and
when they use it. In approving utility deployment plans, the Texas PUC
authorized the development of a web site that makes smart meter
information available to customers, REPs, and other energy service
providers. This web site, SmartMeterTexas.com, enables customers with a
smart meter installed in any of the four utility territories to go to
one location and view their electricity usage on a 15-minute basis.
This website is also compliant with the American Disabilities Act.
One of the major challenges with implementing the smart grid is
that the realization of benefits does not occur overnight. The smart
grid, comprised of a ``system of systems,'' takes years. In Texas, we
recognized that realization of the benefits will require revisions to
the existing framework--including market processes, utility and REP
systems, retail and wholesale systems at the ERCOT ISO, and Texas PUC
rules.
I would like to touch on a few key components that we believe have
allowed for faster adoption and realization of benefits of this
technology. First, a progressive state policy led by the legislature
has encouraged deployment, not mandated it. Second, the statute
explicitly states that customers own their smart meter data and are in
control of authorizing access to an entity other than their REP. This
has ensured that customers have access to their smart meter information
allowing them to have more choice and control. Customers can also
access their data on a real-time basis with a device installed inside
their home. Third, the Texas PUC has overseen an implementation
initiative in order to make the smart grid a reality. The initiative is
comprised of a stakeholder collaborative with representatives from
utilities, vendors, REPs and consumers. This stakeholder process has
addressed issues relating to customer privacy, changes in wholesale and
retail markets, customer protection rules, access to data, changes to
utility systems, the development of the SmartMeterTexas.com web site,
and the requirements for the home area network. The work resulting from
this process has allowed REPs and other energy service providers to
take advantage of the new functionality from the utility systems--
thereby developing products for customers at a faster pace. And,
finally, REPs strongly supported the roll out of smart grid technology,
because, in a highly competitive retail market, they wanted to have a
competitive advantage over other REPs.
Retail products with features including usage comparisons, smart
phone apps, online web tools and analysis, and other innovative
services all are leveraging the ongoing smart grid investment. Further
supporting the development of new choices for consumers includes an
initiative by Reliant Energy. Reliant Energy received a $20 million
stimulus grant from the DOE. More than 250,000 customers are
benefitting from at least one Smart Energy product or service, such as
those listed above, that Reliant offers. Reliant will enroll 500,000
consumers on Smart Energy Products and Services by March of 2013.
National Standards Effort
The Smart Grid is an emergent technological ecosystem that offers
many possibilities to many different stakeholders. Participation in
developing standards is paramount to: defining interoperable
requirements connecting the different software components and
technologies comprising the Smart Grid; ensuring reliability, safety,
security and privacy are adequately addressed; assisting in optimizing
value and avoiding limiting Smart Grid potential; assisting in defining
reasonable and necessary component performance characteristics
comprising the Smart Grid; assisting in defining common ground for
interaction between new groups of stakeholders participating in the
Smart Grid; and providing the opportunity for educating participants in
developing and supplying components for building and/or operating the
Smart Grid.
The creation of open, national standards can create a level playing
field across industry sectors and the market. In the long term,
standards should ensure interoperability of devices across utility
service territories and across the country. This national set of
standards should recognize and encourage an ecosystem of existing and
evolving standards. A balance must be struck between existing standards
that enable deployment and allow for benefits to reach consumers today,
while working to refine and create future standards to address the
Smart Grid of tomorrow. This process should result in the creation of a
national set of standards that can provide direction for utilities,
industry and market participants.
State commissions maintain jurisdiction over the distribution grid
and have the ultimate responsibility for adoption and enforcement of
rules relating to utilities and the retail markets, including the
functions and operations of electronic equipment that is a part of the
distribution network or metering infrastructure. It is important that
the processes at NIST and at the FERC continue to recognize the
important role of state commissions. The Smart Grid Interoperability
Panel (SGIP) has provided an excellent forum for those presenting
different views to meet and develop common standards and
recommendations sufficiently broad to define Smart Grid.
The development of standards is the subject of much discussion at
all levels of government. Standards are not static but are constantly
evolving. Once a standard is adopted, there are revisions to improve
the standard based on real world applications. While some have
advocated for a federal package of mandatory standards for adoption, we
do not believe that the federal government should take action to
mandate standards. If we settled on standards when the internet was
first created--the internet likely would not have evolved to where it
is today.
Conclusion
Many residential energy customers are technically savvy. Use of the
internet, smart phones and smart technology is increasing. As a result,
an interest in products such as pay-as-you-go, time of use rates, and
access to information is growing. Policy makers must recognize that it
is vital that consumers have the ability to understand their energy
usage and costs. While the traditional utility model provides this
information thirty days after the fact, the smart grid, if implemented
properly, will make this information available to consumers on the next
day or the same day, depending on the technology.
Regardless of whether a state has restructured its electricity
industry, there are many benefits to be realized from the Smart Grid.
Customers require more information about their energy bills. Experience
continues to show that customers will take advantage of this
information. Policy at the federal and state level should continue to
recognize the need for customer choice and control, and provide
guidelines for the smart grid, not mandates.
Thank you for the opportunity to testify today and share the Texas
experience.
Chairman Quayle. Thank you, Chairman Nelson.
The Chair now recognizes Mr. Caskey for five minutes to
present his testimony.
STATEMENT OF MR. JOHN CASKEY,
ASSISTANT VICE PRESIDENT, INDUSTRY OPERATIONS, NATIONAL
ELECTRICAL MANUFACTURERS ASSOCIATION
Mr. Caskey. Good morning, Chairman Quayle and Members of
the Subcommittee. My name is John Caskey, and I am the
Assistant Vice President of Operations and the Director of the
Power Equipment Division at the National Electrical
Manufacturers Association, NEMA. Thank you for providing me the
opportunity to testify today. My testimony today is informed by
more than 30 years of experience in the energy field. As the
Director of the Power Equipment Division at NEMA, I work
directly with the manufacturers that produce products that make
up the electric grid and the evolving smart grid. In addition,
I am the Vice Chair of the Governing Board of the Smart Grid
Interoperability Panel, SGIP, and the Chair of the SGIP Vision/
Mission/Roadmap Task Team. On the SGIP Governing Board, I
represent the standards development organizations and the
specifying organizations.
NEMA is the trade association for the electrical and
medical imaging manufacturing industry. Founded in 1926 and
headquartered in Rosslyn, Virginia, our member companies
manufacture products used in the generation, transmission and
distribution, control and end use of electricity that exceeds
$120 billion in worldwide sales.
One of NEMA's primary missions--of particular relevance to
today's hearing--is that we are a standards development
organization, or SDO, accredited by the American National
Standards Institute.
NEMA member companies are technology leaders and have been
researching, developing, and deploying Smart Grid technologies
for many years. In most cases, the technology needed to support
smart grid are already available and have been deployed on a
limited basis across the country. However, what has been
missing is a complete set of standards and associated testing
and certification requirements that ensure interoperability of
the different components of the grid. This is our greatest
challenge.
The Energy Independence and Security Act of 2007, in which
this Committee played a critical role, blazed new trails in the
development of smart grid. Title XIII of EISA charged the
National Institute of Standards and Technology with the lead
role in coordinating the development of a framework and model
standards to ensure interoperability in the smart grid. NEMA is
one of the non-government agencies named in EISA to work with
NIST on the implementation of the interoperability framework of
standards for smart grid.
One example of NEMA's role as an SDO is the development of
the NEMA smart meter upgradeability standard. This standard was
developed and approved through an ANSI-accredited process
within 90 days of NIST's request for NEMA's help. This standard
was accomplished through the cooperation and work of five major
meter manufacturers, several utilities, the Department of
Energy, and NIST. NIST's formation and funding of the SGIP
public-private partnerships has been crucial for bringing all
the smart grid stakeholders together to develop needed
standards.
NEMA believes that the Federal Government should continue
to serve as a partner with industry in the effort to establish
smart grid standards. These standards are ultimately what will
empower the consumer and drive cybersecurity, improved
reliability and cost minimization. In addition, promoting these
U.S. smart grid standards internationally is one way to
strengthen the export market for U.S.-manufactured products.
NEMA has taken the lead with the assistance from the Department
of Commerce to promote the U.S. smart grid roadmap in Mexico
and Canada. In addition to a U.S. trade and development agency
program, NEMA is promoting the U.S. smart grid roadmap in
China. As these countries and others adopt their smart grid
architecture and standards, it opens the market for American
manufacturers and creates the opportunity for more American
jobs.
Three additional thoughts I would like to leave with you
today. Number one, the next major step for the SGIP is to
create a roadmap that will lead the organization forward for
the next three years. The NIST framework has led us this far by
identifying the most immediate standards work that needed to be
completed over the first two years of the SGIP. Now the SGIP
leadership needs to focus on providing direction for the next
phase of smart grid development.
Item two is, there continues to be confusion about the
definition of consensus and the possibility for mandatory smart
grid standards. Many people, including myself, define consensus
as a product or policy that everyone can live with. Others feel
that a consensus requires a super majority such as 75 percent.
Still others feel that passing a simple majority of 51 percent
signifies consensus. NEMA believes that the SGIP should work
with FERC and NIST to resolve this issue before any standards
are made mandatory by any federal agency.
The third point is that smart grid standards are radically
more complex than most existing standards. Smart grid standards
require an evolution from simple physical standards such as
defining the physical attributes of an everyday 120-volt
electric appliance plug to very complicated communication and
protocol standards that may offer hundreds of variations in the
application of those standards. This issue radically changes
the meaning of compliance and our understanding of the concepts
of interoperability and plug-and-play. This may be the first
time that commissions and consumers will be exposed to the
realization that you can have two products that meet the same
standard that do not talk to one another and do not provide the
same functionality.
I am happy to address these issues in more detail and
answer any questions you may have. Thank you, Mr. Chairman, for
inviting me here to testify today.
[The prepared statement of Mr. Caskey follows:]
Prepared Statement of John Caskey, Assistant Vice President, Industry
Operations, National Electrical Manufacturers Association
Good morning, Chairman Quayle and Members of the Subcommittee. My
name is John Caskey and I am Assistant Vice President of Operations and
Director of the Power Equipment Division at the National Electrical
Manufacturers Association (NEMA). I want to thank you for providing me
the opportunity to testify today.
My testimony today is informed by over 30 years of experience in
the energy field. As the Director of the Power Equipment Division at
NEMA, I work directly with the manufacturers that make products that
comprise the electric grid and the evolving smart grid. I have had the
opportunity to work with National Institute of Standards and Technology
(NIST) and most of the other stakeholders in the Smart Grid community
since the signing of the Energy Independence and Security Act of 2007
(EISA).
I serve as the Vice-Chair of the Governing Board of the Smart Grid
Interoperability Panel (SGIP), Chair of the SGIP Vision/Mission/Roadmap
Task Team, and a member of the SGIP Business and Operating Procedure
Working Group.
NEMA is the trade association of choice for the electrical and
medical imaging manufacturing industry. Founded in 1926 and
headquartered in Rosslyn, Virginia, our member companies manufacture
products used in the generation, transmission and distribution,
control, and end use of electricity that exceed $120 billion in
worldwide sales. These products are used in utility, medical imaging,
industrial, commercial, institutional, and residential applications. In
addition to our headquarters in Rosslyn, Virginia, NEMA also has
offices in Beijing and Mexico City.
One of NEMA's primary missions--of particular relevance to today's
hearing--is that we are a Standards Development Organization, or SDO,
accredited by the American National Standards Institute (ANSI). A NEMA
standard defines a product, process, or procedure with reference to one
or more of the following: nomenclature, composition, construction,
dimensions, tolerances, safety, operating characteristics, performance,
rating, testing, and the service for which the products are designed.
NEMA believes that standards play a vital part in the design,
production, and distribution of products and systems destined for both
national and international commerce. Sound technical standards benefit
the user, as well as the manufacturer, by improving safety, bringing
about economies in manufacturing processes, eliminating
misunderstandings between manufacturer and purchaser, and assisting the
purchaser in selecting and obtaining the proper product for his
particular need.
NEMA member companies are technology leaders and had been
researching, developing, and deploying Smart Grid technologies for many
years, well before the term Smart Grid was even coined. However, as
technological advances accelerated across the power equipment and
telecommunications industries, the need to establish a set of
interoperability standards for the Smart Grid became increasingly
important.
The Energy Independence and Security Act of 2007 (EISA), in which
this Committee played a critical role, has blazed new trails in the
development of the Smart Grid. Title XIII of EISA charged the National
Institute of Standards and Technology (NIST) with the lead role in with
coordinating the development of a framework and model standards to
ensure interoperability in the Smart Grid. NEMA is one of the non-
government organizations named in EISA to work with NIST on the
implementation of the ``Interoperability Framework'' of standards for
Smart Grid.
From the perspective of an organization with more than 85 years of
experience with standards development, NEMA applauds the work done thus
far by the National Institute of Standards and Technology, the Smart
Grid Interoperability Panel (SGIP), and the National Coordinator for
Smart Grid Interoperability.
The benefits we will see as a result of the development of a Smart
Grid are extraordinary. Layering on communications and other
technologies to improve the intelligence of the electrical delivery
system will increase grid reliability, improve power quality, reduce
the frequency and duration of outages, promote economic growth through
development of new technologies and an improved electric
infrastructure, bolster efficiency by giving grid operators and
utilities greater situational awareness, and--as the name of today's
hearing indicates--empower the ratepayer to become an active
participant in the electricity delivery system.
Legal Authority
As you know, the House Science, Space, and Technology Committee was
instrumental in creating the foundational legislation that has put our
nation on a course to develop a Smart Grid.
EISA Section 1305 states:
``The Director of the National Institute of Standards and
Technology shall have primary responsibility to coordinate the
development of a framework that includes protocols and model standards
for information management to achieve interoperability of smart grid
devices and systems. Such protocols and standards shall further align
policy, business, and technology approaches in a manner that would
enable all electric resources, including demand-side resources, to
contribute to an efficient, reliable electricity network. In developing
such protocols and standards--
(1) the Director shall seek input and cooperation from the
Commission, the Office of Electricity Delivery and Energy Reliability
and its Smart Grid Task Force, the Smart Grid Advisory Committee, other
relevant Federal and State agencies; and
(2) the Director shall also solicit input and cooperation from
private entities interested in such protocols and standards, including
but not limited to the Gridwise Architecture Council, the International
Electrical and Electronics Engineers, the National Electric Reliability
Organization recognized by the Federal Energy Regulatory Commission,
and National Electrical Manufacturers Association.
Standards and the Role of the Federal Government
Before I go on to describe the work that has been done as a result
of EISA, I would like to address a few more basic questions. What are
standards, why do we need them, and why is it important that the
federal government be involved?
The interoperable, or smart, electrical grid consists of many
different products, woven into a complex ``system of systems'' that
must seamlessly provide sufficient and cost-effective electrical energy
to power our homes, offices, schools, and businesses.
The scale, complexity, and interconnectedness of the electrical
grid require that everyone and everything involved in developing and
managing it are ``playing from the same sheet of music.'' The Smart
Grid is managed and coordinated by modern communications and control
software which, in order to work optimally together, must share a
common language and common understanding of the operational details of
the many interconnected elements of the power grid. Reliable and
effective interoperability requires a foundation of standards.
Now, why is it beneficial to have the federal government involved?
While only a handful of areas in the U.S. were electrified in 1900, by
the time we reached the 21st Century, electricity had become the
cornerstone of the American way of life. Without electricity today, we
could not pump our water, feed our citizens, charge our electronic
devices, operate our military, or provide almost any of the vast
variety of vital government services. The electric grid is clearly the
most critical piece of our national infrastructure.
In the U.S., standards are typically developed by the private
sector with varying degrees of participation by the government. EISA
has opened the door to a more active government role providing an
``umbrella'' under which the private sector defines standards for Smart
Grid products and systems.
A successful Smart Grid implementation mandates interoperability
between utility operators which will transcend current jurisdictional
boundaries. For as long as utility companies have been regulated
entities, tensions have existed between state and federal regulators.
Now, as Smart Grid applications like demand response can reach from the
meter of a homeowner in one state to the hydroelectric dam operator in
another, there are a number of new challenges which will rise to the
federal level. One issue that is already gaining attention at the
federal level is cyber security of the Smart Grid as utilities wrestle
with the prospect of securing their operations across state boundaries
and varied utility commission service areas.
Implementation of the Energy Independence and Security Act of 2007
(EISA)
NIST's leadership in the development of a Smart Grid has been
exemplary and NEMA has been extremely pleased with the way in which the
provisions in EISA have been carried out.
Once NIST received its initial funding, the agency spent time
evaluating the Smart Grid environment and inventorying available Smart
Grid-related standards as directed by EISA. NIST then established the
Smart Grid Interoperability Panel (SGIP) in November 2009. According to
its charter, the mission of the SGIP is to ``provide an open process
for stakeholders to participate in providing input and cooperating with
NIST in the ongoing coordination, acceleration and harmonization of
standards development for the Smart Grid.''
The SGIP serves as an unparalleled forum where private industry can
gather to discuss the future of the Smart Grid.
Participation of so many stakeholders across the Smart Grid
spectrum in the SGIP is a testament to its importance. The SGIP
comprises 22 stakeholder categories representing the breadth of the
electrical industry and includes over 600 organizations and more than
1,800 individual participants. Current membership in the SGIP includes
a variety of international interests from several countries across the
globe, but most importantly from our trading partners in Canada and
Mexico, both of whom sell electricity to U.S. utilities. In addition,
the SGIP has a governing board structure elected from the stakeholders
plus three at-large members. The SGIP is organized through a charter
and bylaws to cover operating policy and provides membership
opportunities for domestic and international interests. Indeed, the
SGIP has also functioned as a conduit to its international peers for
Smart Grid activity across the globe.
NEMA has been fully engaged in the progression of the SGIP.
Representatives from NEMA-member companies as well as NEMA staff have
served in numerous elected positions of the SGIP. NEMA's objective for
the future of Smart Grid is to continue to provide quality leadership
and make sure that the human capital required to run the SGIP is well
supported by both NEMA staff and member companies.
While the first few months of the SGIP were devoted to getting the
organization up and running, its members are now addressing critical
issues around cyber security, smart metering, home area networks, in-
home communication standards, etc. By identifying a consolidated list
of technology gaps, referred to as ``Priority Actions Plans'' or PAPs,
some of the most pressing needs have already been address through new
standards developed by the SDOs participating in the SGIP. This will
continue to be an ongoing process with a lot of this work completed in
the remaining months of 2011 and into 2012.
It was, and continues to be, NEMA's belief that the federal
government can serve as a partner with industry in the effort to
establish Smart Grid standards. As the convener of the SGIP, NIST-
funded resources have provided a valuable administrative role, allowing
free public access to the proceedings and enabling the industry to
focus their resources on the work of identifying and developing
standards. Relative to the subtleties of the NIST-SGIP relationship, it
is important to note that these are NOT government contractors simply
executing NIST's vision for the Smart Grid. Instead, NIST's funding
provides a democratic forum in which the industry's vision for the grid
can be developed and mature on its own with the NIST staff getting a
front-row seat to the process and immediate access to the results.
At the same time, the NIST Framework and Roadmap for the
Development of Smart Grid Interoperability Standards (NIST Special
Publication 1108, dated January 2010) provides a playbook that any
interested party can use to get involved with Smart Grid. Over the last
two years, as part of a program with the U.S. Department of Commerce
the NEMA staff has had an opportunity to meet with several trade
delegations from other countries about their Smart Grid efforts.
NEMA encouraged the formation of the International Electrotechnical
Commission (IEC) Strategy Group on Smart Grid in 2008, which brought
Smart Grid experts together from 14 different nations to develop a
framework for international smart grid protocols and model standards to
achieve interoperability of Smart Grid devices and systems. A roadmap
has now been released based on existing international standards that
can be used consistently for today's utility projects in many parts of
the world. The NIST effort is coordinating with IEC to encourage
adoption of global standards that reflect U.S. practices wherever it
makes sense.
Smart Grid standards are a particular challenge. They will require
an evolution from simple physical standards, such as defining the key
features of an everyday 120-volt plug, to very complicated
communication and protocol standards that may offer hundreds or
possibly thousands of future features. Further complicating this effort
is that any given utility may choose to implement a different subset of
those features. This issue radically changes the meaning of
``compliance'' and our understanding of the concepts of
``interoperability'' and ``plug and play.''
Meter Upgradeability Standard
With all the general discussion thus far, it may be beneficial to
highlight a specific example of the type of standards accomplished
under NIST and the SGIP.
One of the critical issues facing electric utilities and regulators
is the need to guarantee that technologies or solutions that are
selected and installed by utility companies today will be interoperable
and in compliance with future national standards-in other words,
``future-proof.'' In order to preserve their investments, utilities
want to be sure that the systems they select will allow for evolution
and growth as Smart Grid standards evolve.
One of the first and largest Smart Grid investments being made by
many utilities is deployment of advanced metering infrastructure (AMI),
with smart meters being the main component, as the primary connection
between the consumer and the utility which will allow for greater
participation in energy management by the ratepayer.
As a result, NIST identified the need for a meter upgradeability
standard as a high priority requiring immediate attention. The
objective was to define requirements for smart meter firmware
upgradeability in the context of an AMI system for industry
stakeholders, such as regulators, utilities, and vendors.
As noted earlier, EISA requested that NEMA support NIST in the
Smart Grid effort. Even before the SGIP was created, NIST called on
NEMA to develop a standard to address meter upgradeability. The NEMA SG
AMI-1 smart meter upgradeability standard was developed and approved
through an ANSI-accredited development process within 90 days of when
NEMA's assistance was requested. This could not have been accomplished
without the cooperation and work of the five major U.S. meter
manufacturers, the utilities, the DOE and NIST. The success of NEMA SG
AMI-1 demonstrates that standards development can be far more
responsive than has historically been the case where it has often taken
many years.
Promoting Exports through Standardization
The efforts made by NEMA in Smart Grid are also aimed at
strengthening the export market for U.S. manufactured products. As
referenced earlier in my testimony, NEMA has taken the lead, with
assistance from the Department of Commerce, to promote the U.S. Smart
Grid roadmap in Mexico and Canada. NEMA is also working through the
U.S. Trade and Development Agency on a Smart Grid roadmap with China.
As these countries adopt the U.S. Smart Grid architecture and
standards, it opens the market for U.S.-manufactured products and
technologies.
Consensus One issue that recently surfaced within the SGIP, NIST,
and FERC relates to the definition of consensus. And this definition
has implications on whether and how any given standard derived through
the NIST process is made mandatory by regulators, as authorized in
EISA. NEMA has been vocal about our contention that any standard coming
out of an accredited standards development organization should satisfy
the ``sufficient consensus'' clause in EISA. The procedures that NEMA
must follow in order to maintain our ANSI accreditation ensure that
consensus is built into every standard we publish.
Consensus is defined in many different ways. Many people, including
myself, define consensus as a product or policy that ``everyone can
live with.'' Others feel that consensus is just a super majority, such
as 75%. Still others may define consensus as unanimity.
EISA states:
At any time after the Institute's work has led to sufficient
consensus in the Commission's judgment, the Commission shall institute
a rulemaking proceeding to adopt such standards and protocols as may be
necessary to insure smart-grid functionality and interoperability in
interstate transmission of electric power, and regional and wholesale
electricity markets.
As stated above, in the fall of 2010, NIST sent the first five
families of standards to FERC for its consideration, as directed by
EISA. While the five families of standards, which dealt largely with
cybersecurity, that were sent to FERC were not sanctioned by SGIP, they
had been considered by NIST with significant input from stakeholders.
In January 2011, FERC held a technical conference to receive feedback
on these standards.
It is NEMA's view that most if not all of the Smart Grid community
felt that these five families of standards were a very good starting
point. During FERC's Technical Conference, the question of whether
these standards represented the consensus of the industry was responded
to with skepticism by witnesses.
I believe some clarification is in order. Some may interpret the
testimony presented at the Technical Conference as evidence that NIST
had not fulfilled its responsibilities vis-a-vis consensus under EISA.
Nothing could be further from the truth. No panelist said that the five
families of standards under consideration should not be part of the
Smart Grid. Further, no panelist suggested that the five families of
standards did not achieve certain Smart Grid functionality. Instead, it
is my view that the mere fact that it was FERC--a regulatory agency--
asking the question about whether or not these standards represented
consensus raised witnesses' concerns that FERC was leaning toward
mandating these standards in some form.
Now, let me be clear. NEMA does not believe inclusion of a standard
in the NIST Catalog of Standards should make that standard mandatory.
And at least in this case, FERC agreed; in July 2011, FERC concluded it
would not take action on the first five families of standards. But,
NEMA does believe a standard in the Catalog is something that FERC, as
well as state utility commissions, can point to as a repository of good
ideas for grid operators looking for Smart Grid solutions. Indeed, the
SGIP Governing Board believes the Catalog of Standards is a source, but
not necessarily the sole source, for Smart Grid implementers.
What's Next?
The next area of focus for NIST and the SGIP is to establish a
Roadmap for standards activities for 2012-2014. Now that the work on
the first set of critical standards is under control, we need to
develop a roadmap for the next three years. This has proven to be much
more difficult than expected because technologies, regulations,
consumer participation really occur in stages. We need to develop an
organized plan to create standards to support that staged evolution.
For example, electric vehicles represent a new and unique set of
challenges to grid operators. For the first time in our electricity
history, utility companies have to deal with a mobile component to the
nation's electricity load. The same EV that charges in a homeowner
garage overnight, could, in all likelihood, appear as a load element in
an office garage or retail parking lot in a completely different part
of the grid at some point later in the day. Additionally, during peak
demand periods or emergencies that same vehicle could be used to return
power to the grid. This kind of variability, introduced at the fringes
of the grid (the utility to consumer connection) may require new
standards and regulations to be seamlessly integrated with existing
grid operations.
NIST's greatest role in this respect is as a resource for
regulators. Given their mission and history in metrology, NIST is
uniquely situated and qualified to define metrics that work for
regulators and utilities and enable them to tie incentives for Smart
Grid to well-defined parameters. If our objective is to promote the
adoption of Smart Grid, we first have to admit that in a regulatory
setting it would be virtually impossible to define the concept of
``smartness;'' other metrics clearly need to be defined. NEMA also
encourages NIST to continue to refine its guidance in the Interagency
Report on Cybersecurity. Further, NIST can work with utilities to
create implementable cybersecurity plans. And NIST can work with
regulators to define functional cybersecurity regulation.
Summary
Standards development for the Smart Grid is a unique and massive
effort. NEMA supports the continued collaboration between the Federal
government and industry to address the many standards challenges that
lie ahead, including the evolution from straightforward physical
standards to those requiring communications protocols and information
technology.
NEMA believes NIST has responded appropriately and impressively to
its responsibilities under the Energy Independence and Security Act of
2007. It has become the key facilitator for the development of Smart
Grid standards.
NIST and the SGIP should continue to serve as a credible source of
model standards for industry as well as the federal and state
governments.
While consensus can be defined in numerous ways, NEMA believes
regulatory agencies must exercise extreme caution in making the leap
from a consensus standard to mandatory application of such standard.
The efforts to establish Smart Grid standards, both domestically
and internationally, will create certainty, interoperability,
upgradeability, and as a result will drive adoption of Smart Grid
technologies, generating economic growth and creating jobs.
NEMA looks forward to working with NIST and the SGIP to develop a
roadmap that will guide our standards work over the next three years.
Chairman Quayle. Thank you, Mr. Caskey.
The Chair now recognizes our final witness, Mr. Drummond,
for five minutes.
STATEMENT OF MR. RIK DRUMMOND, CHIEF EXECUTIVE OFFICER AND
CHIEF SCIENTIST, THE DRUMMOND GROUP
Mr. Drummond. Chairman Quayle, Congressman Sarbanes and
other Committee Members, I am Rik Drummond, CEO of Drummond
Group Inc., a GridWise Architecture Council member, a board
member of SGIP and the chair of SGIP Testing and certification
Committee. Drummond Group has been heavily involved in the
smart grid since 2004 when I became the initial chair of the
DOE-sponsored Smart Grid Architecture Council in 2005-2006.
Smart Grid Architecture Council was the initial group that
started socializing the need for general interoperability among
software and hardware to solve the known and projected problems
of the United States power grid. The interoperability
requirement is in EISA 2007 legislation and is the basis for
the Smart Grid Interoperability Panel's objectives.
The challenges the SGIP Testing and Certification Committee
faces in working together to develop an interoperability
framework for testing and certification are best elucidated by
discussing the key components of the SGIP interoperability
testing framework, which we call the interoperability Process
Reference Manual, or IPRM. The first version of this was
released in January 2011, about nine months after the start of
SGIP, and I'll go through the four sections very briefly here.
The first section is, how do we enhance testing lab
processes for quality and repeatability. We chose to base these
on the ISO international standards 17025, which talks about
quality for test labs. Our challenge here is that I expect that
this will probably increase testing costs by about 25 percent,
and we are working that within the committee.
The second section defines requirements for certifying test
lab results by trusted third parties. This section is again
based on the ISO 65 guide. The challenge is that many product
vendors and associations question the need for additional costs
associated with paying for third parties to certify test lab
results. These first two sections, by the way, parallel the
efforts going on in Health and Human Services' testing and
certification endeavor for implementing EHR meaningful use
across Medicaid and Medicare.
Section three provides guidance for testing for
cybersecurity mechanisms within a software product. Security
testing of cybersecurity mechanisms and interoperability
testing are normally at odds philosophically. Security attempts
to restrict available functionality depending on the
authorization while interoperability attempts to remove the
restrictions so information flows between entities. Testing for
both of these at the same time, where we can, will save cost
and money.
The last section provides guidance on how to achieve
interoperability in testing. Currently, many test labs do not
verify interoperability. They only verify conformance of a
product to a standard and assume that conformance includes
interoperability. Frequently, conformance does not ensure
interoperability. Interoperability must be verified during
testing, and this has been a challenging point to get across.
As you can see, our challenges are many but they are being
solved through negotiation and collaboration.
A question you asked me, Chairman Quayle, in the invitation
letter was, what can the Federal Government do to help
facilitate interoperability in cybersecurity and the smart
grid, and after much thought, I am going to suggest one thing
here. The Federal Government could ensure that wide
availability of conformant interoperable products are in the
marketplace by requiring all products purchased by the Federal
Government have been verified through testing and certification
procedures much like that in the interoperability process
reference manual. Since the Federal Government is about 25
percent of GDP, this would have a sizable impact on the smart
grid and other industries.
In summary, the Smart Grid Interoperability Panel and
Testing and Certification Committee is making significant
progress in achieving the wide availability of high-quality
conformant and interoperable products in the smart grid
marketplace as specified in EISA 2007. The frameworks, the
testing framework, the IPRM, and full implementation within the
industry will take years to accomplish. That is as it should.
As the power grid industry segment moves to better
understanding of interoperability solutions, the
interoperability testing framework and its purpose and
benefits. Thank you.
[The prepared statement of Mr. Drummond follows:]
Prepared Statement of Rik Drummond, Chief Executive Officer and Chief
Scientist, The Drummond Group, Inc.
Introduction
Chairman Quayle and Members of the Subcommittee, I am Rik Drummond,
CEO of Drummond Group Inc, a testing and certification server provider.
I am a board member of the NIST sponsored Smart Grid Interoperability
Panel and the Chairperson of the Smart Grid Interoperability Panel's
Testing and Certification Committee.
Thank you for the invitation and opportunity to appear before you
today to discuss Drummond Group's involvement in Smart Grid testing and
certification as well as the Smart Grid Interoperability Panel (SGIP)
Testing and Certification Committee's (SGTCC) endeavors to solve
Interoperability issues in Smart Grid products and services. I will
focus on our accomplishments, our direction, and some of the key items
needed to ensure protection of consumer privacy and the maintenance of
cost/benefit for current services, while driving innovation within
Smart Grid development.
1. Drummond Group Activities, Testing Challenges
A _ Describe Drummond Group activities related to testing and
certification of smart grid technologies and modernization of the
electric grid.
Drummond Group has been heavily involved in the Smart Grid since
2004, when I became the initial Chair of the DoE sponsored Smart Grid
Architectural Council in 2005-2006. Smart Grid Architectural Council
was the initial group to start socializing the need for general
Interoperability among software and hardware to solve the known and
projected problems on the USA Power Grid as we moved to the Smart Grid.
In 2009 Drummond Group was selected as the Interoperability
Specialist subcontractor to the Center for Commercialization of
Electric Technology (CCET) on ``Discovery Across Texas: Technology
Solutions for Wind Integration in ERCOT DE-OE0000194.''
Drummond Group continues to work with CCET on this endeavor. We are
currently focused on the third party privacy issue for shared
information for the purpose of enhancing the consumer experience in the
Smart Grid. The focus is on third party providers that help the
consumer manage their electrical power consumptions more effectively
and efficiently while ensuring existing privacy rules and regulations
are implemented.
I am on my second term as chairman of the NIST sponsored Smart Grid
Interoperability Panel Testing and Certification Committee (SGTCC). I
am also on my second term as a board member of the Smart Grid
Interoperability Panel. Our focus this year in SGTCC is: 1) Speeding
the off-the-shelf productization of standards based interoperable
products in the market place, 2) increasing the consistency of
interoperability testing and certification services across all products
implementing the 100+ technical standards used to integrate the Smart
Grid systems, and 3) decreasing the cost to service providers and
consumers in implementing and integrating products within their
portions of the Smart Grid network.
SGTCC released the initial voluntary interoperability policies and
procedures in December 2010, nine months after the kick-off working
meeting of the SGIP in March 2010. These voluntary, predominantly
ISO9001 based policies and procedures are enshrined in the SGIP's
``Interoperability Process Reference Manual'' version 1 (IPRM). We are
currently working on the release of version 2. This second version will
increase clarity, fill in gaps identified by the six initial users of
the Manual and streamline the implementation process by the testing and
certification community. Version 2's anticipated released date is
January 2012 for general use by the Smart Grid culture. While the focus
of the IPRM is to enhance interoperability in products based on a
single standard, there are interoperability issues the IPRM will not
solve. It will not solve those issues of integrating multiple products,
based on multiple standards in support of a service provider's workflow
or technical or business process. An SGIP workgroup exists to solve
these issues which are currently called internally, for lack of a
better name, End-2-End Testing Workgroup.
End-2-End Testing normally takes place in the pre-production roll-
out of Smart Grid infrastructure by the Transmission and Distribution
Service Providers (TDSP). Many suppliers of electricity, Transmission
and Distribution Service Providers, generally, repeat in a large
degree, the end-2-end testing and integration verification that was
previously accomplished at other service providers. Of course, there
are differences in the configuration of products between service
providers, but SGTCC believes that commonalities far out weigh the
differences. The focus of our End-2-End Testing Work Group is to
facilitate the sharing of these test data results and techniques to
speed the implementation of new technologies and services across the
Smart Grid. The thinking is: since another Service Provider has already
accomplished it, why not leverage their findings to facilitate
integration in one's own network area?
B _ What are the greatest technical challenges of testing and
certifying Smart Grid technologies in the market with few standards in
place to support interoperability?
Article by Drummond: ``How the GridWise Interoperability Framework Can
Save Time and Money''
Coming to Grips with a Definition
Smart Grid interoperability means different things to different
people. Some view it as a low-level technical topic. Others view it as
a standard with an obscure name. Both are components of
interoperability, but there are many other aspects.
The GridWise Interoperability Framework aids the discussion of
those many aspects by breaking the problem into bite-sized pieces. This
article is the first in a series that will explore each aspect in more
detail. The goal is to clarify interoperability and to determine what
needs to be agreed upon so that systems can play together with the
least amount of effort and cost.
Wikipedia's definition of interoperability is: ``the ability of
diverse systems and organizations to work together (inter-operate).''
It further states that ``the IEEE defines interoperability as: the
ability of two or more systems or components to exchange information
and to use the information that has been exchanged.'' It is interesting
to note that Wikipedia says the term can be used technically or broadly
in a way that takes into account ``social, political, and
organizational factors that impact system to system performance.''
Anyone that has observed interoperability efforts in other
industries can confirm that social, political and organizational
factors have at least as much impact as purely technical issues! Past
decades have witnessed interoperability conflicts over things such as
Betamax vs. VHS, HD vs. Blu-Ray, systems-oriented architecture (SOA)
and (just now beginning) iPhone vs. the Google mobile phone standard.
For every battle that shows up in the headlines, there are dozens of
others known only to insiders, but with similar consequences: delay,
confusion, higher costs and higher risks for end users.
The Expanded GridWise Definition
The GridWise Interoperability Framework exists to minimize that
kind of pain and delay. It adds to previous definitions of
interoperability with the following characteristics:
An exchange of meaningful, actionable information between
two or more systems across organizational boundaries.
A shared understanding of the exchanged information.
An agreed expectation for the response to the information
exchange.
A requisite quality of service: reliability, fidelity,
and security.
There are many paths to interoperability. They range from
expensive, custom integration projects to plug-and-play architectures.
Scott Neumann describes this variability as the ``distance to
integrate.'' (See drawing.)
As an illustration, the flash drive in your pocket is a plug-and-
play device. It conforms to the USB specification as a specific type of
USB device, which is recognized by the operating system to have
specific properties and behavior. If the flash drive does not conform
to these specifications (or if the correct device driver is not
installed in the operating system) then plug-and-play becomes plug-and-
pray or plug-and-slay (as in urge to kill).
The Four Levels of Interoperability
Plug-and-play (at the bottom of the drawing) is usually reserved
for interfaces in wide-spread, commodity use. Product
interchangeability is supported by rigorous specifications and
strenuous testing. The high cost of achieving this level of integration
requires a large market to apportion the costs.
The next level (second from bottom) involves systems that use a
common information model but with differing technical transports,
transaction sequences and data encoding. Integrating such systems
requires time and effort--but at least they are talking the same
language. System design, software development and testing at the
information level are still needed, as they are for the underlying
technical transports and data encoding. As the GridWise
Interoperability Framework reminds us, interoperability means all
layers must work together from technical to informational to
organizational.
At the next level up, some interfaces use different information
models and the data must be mapped or translated before it can be used.
Think about currency and exchange rate. If you know the exchange rate
between the US and France then it's easy to map dollars to francs.
If such translations are not available, then you are at the top-
most level and it's time to pull out the checkbook. The old adage
applies: ``Anything is possible with software, given enough time and
money.'' There is a thriving systems integration market for providing
custom (and costly) interoperability solutions. Money can either be
spent each time an end-user attempts to integrate or on a one-time
interoperability/conformance test at the product level. It typically
costs much less to do a one-time interoperability/ conformance test at
the product level.
Now that we understand the definition of interoperability and the
distance to integrate, we can start implementing specifics for the
Smart Grid.
2. SGIP -- Represents Testing and Certification Vendors
A _ Describe the process of testing for conformance and Interop.
Article by Drummond: ``Six Steps to Achieve Interoperable Networks,
Systems, and Devices in the Smart Grid on any Standard''
Conformance is not Interoperability
The program must clearly convey the different meanings between
conformance of an implementation to a standard, and interoperability
between two or more implementations of the standard. Confusion
regarding this aspect is currently a major hindrance to the success of
conformance and interoperability programs. This misunderstanding of the
differences between conformance and interoperability in the
marketplace, testing, and at times, the program authors themselves,
results in confusion as to what is meant by successfully passing the
testing program. Conformance means that an implementation adheres to
the dictates of the standard.
(I will not discuss profiling of standards at this time)
While one might think that all programs that completely adhere to a
standard (conformant) would be interoperable, in practice they often
are not. Interoperability means that implementations adhere to the
dictates of the standard and intercommunicate appropriately with other
implementations that adhere to that same standard. (I will forgo the
discussion of gateway standards at this time.) Interoperability adds
one more requirement over and above conformance.
The problem is that many testing programs test only for conformance
and then unceremoniously presume and declare it interoperable.
Stakeholders in the marketplace believe they are receiving
interoperable implementations because they have been told so, but they
are getting only conformant products. Conformant implementations may
not be interoperable among themselves. This is especially the case in
more complex software and hardware systems. This leads to the first
aspect discussed above in which ``certified'' implementations now
require debugging when they are installed by the end-user, thus
damaging the credibility of the test program. And they slow ongoing
Smart Grid implementation. Once the compromising of the testing
program's credibility starts, it can take a few of years to correct the
perception by the marketplace of end-users. This is why the test
program must be thought of as a stakeholder in the process early on.
B _ What is the importance of testing and certification in the
implementation of standards of Smart Grid devices, systems, and
processes?
Interoperability Verified not presumed
The program must verify, not just assume, interoperability among
the various product implementations of a standard. There are many
different types of standards. Some are device oriented. Some are
business-to-business. Some are written from the ground-up, detailing
all the software and firmware with dependencies on other standards to
achieve their purpose. Other standards are focused on communication
protocols, while others are focused on the semantic meaning of the
data. Only testing the conformance of any of these standards may
achieve different levels of 'near' or 'actual' interoperability.
Depending on a number of factors, including the standard, the testing
regime, the software/firmware under test, and others, conformance
testing may produce interoperable implementations. Such a result is
good in that no additional testing steps are required to achieve
interoperability. However, there remains a problem. It is rarely known
that a conformance test has produced interoperable product
implementations unless verification is performed with an additional
test step to prove that the implementations are indeed interoperable.
There are only two points in the timeline as a standard evolves from
formation to product implementation where implementations can be
verified as actually interoperable:
1. The product implementations may verify interoperability in
concert with conformance testing; or
2. When the end-user is attempting to deploy the product
implementation in the field.
The first case represents the testing program and the stamp of
approval of `certified' by the program and demonstrates that products
are both conformant and interoperable. In the second case, the
conformant and presumed interoperable implementations are released to
the marketplace where the end-user is expected to validate
interoperability and correct any shortcomings in the testing program.
It is well known from studies over the past 20 years that errors found
in software products after field deployment may cost as much as 40
times the amount to correct than if those errors are found before the
implementation is released to the marketplace. This additional cost
does not include the original cost, frustrations and loss of good will
by the end-users.
Not verifying that conformant implementations are interoperable
when they are given a 'certified' grade in a conformance and
interoperability testing program often cause the program to become
irrelevant as we have seen in other industries. When this happens,
interoperability often stalls for that standard in the industry--
sometimes for years.
Summary
Success of a conformance and interoperability program is about
methodologies, market positioning and securing success for all the
stakeholders. The program must be focused on supporting the
implementations in the field for not only the product lifecycle, but
also the lifecycle of the standard. The program must clearly identify
what it is offering to the all the stakeholders as it identifies
certified implementations. Are the products verified conformant or are
the products verified conformant and interoperable? The program
designers must anticipate its growth and demise as conformance and
interoperability become institutionalized in the implementations over
their lifetimes. All of these issues should be anticipated for a
successful testing program irrespective of the standard. Not doing so
may greatly reduce the introduction of conformant and interoperable
implementations of the standard into the industry--stalling
interoperability.
C _ What challenges has the SGIP faced in working together to develop a
framework to ensure interoperability of Smart Grid products?
The first versions of the IPRM went into place in January 2011 for
SGIP members. The framework covered 4 broad area:
1. Enhancing Testing Lab process quality and repeatability. These
processes are based on ISO 9001 requirements and are elucidated in the
ISO 17025:2005 guide. Currently only a portion of the test labs used in
the Smart Grid use these guides as the basis for their internal testing
processes. Many others do not. Quality of the test results from labs is
currently spotty. Interoperability is a 100% endeavor. Test Lab
producing quality a 99% causes problems. Getting everyone in the Smart
Grid to understand the need for consistent quality output for tested
products has been problematic. The main inhibitor to solving this
problem is the added cost for the implementation of ISO 17025 for
product vendors to test products. I personally estimate a cost increase
of 25 to 40% over pre ISO 17025 testing.
2. Requirements for Certifying Test Lab results by a trusted third
party. These certification processes are currently being modified to
fit ISO 9001. They will be elucidated in the forth coming ISO 17065
guide. Currently, the working guide is ISO 65. Currently, many product
vendors question the need for the additional cost associated with
paying for a third party to certify test lab results produce
interoperable products.
3. Guidance on testing of cyber security mechanisms within a
software product. Security testing of cyber security mechanisms and
interoperability testing are normally at odds philosophically. Security
attempts to restrict available functionality depending on authorization
while interoperability attempts to remove restrictions so that
information flows between entities appropriately. Conducting cyber
security testing distinct from interoperability testing does and will
cause problems. Tightening cyber security may make the product non-
interoperable. And the converse, ensuring interoperability may
inadvertently break cyber security mechanism. Conducting a single test
of products, covering both cyber security mechanisms and
interoperability requirement will allow these clashes to be resolved
during the test. Thus a product or products will be released from the
test lab that meets both the cyber security and the interoperability
requirements at an anticipated lower cost.
4. Guidance on how to achieve interoperability in testing.
Currently may test labs do not test for interoperability. They only
test for conformance of a product to a standard and assume that
conformance includes interoperability. A conformant product may not be
completely interoperable with other conformant products. The
introduction of conformant products in the market place which are only
assumed to be interoperable moves the burden of getting products to
intercommunicate to the persons installing the products in the field.
They may have to fix non-interoperability problems that should have
been fixed before the products were released to the market place. This
greatly slows the introduction of new capabilities and products
installed in the Smart Grid. Many test labs and service providers do
not understand that conformance does not ensure interoperability within
a set of products.
3. Federal Government Role
What do you believe are the most important actions for the Federal
Government to take to ensure the protection of consumer interest,
including cost and privacy while driving innovation within the smart
grid development?
Since the United States is a federation of states, with attributed
states rights, unlike just about any other country, what the Federal
Government may do versus what would be helpful to do are not always the
same. States differ in their regulations as to privacy of consumer
data, security, allowable charges to the consumer and et cetera.
1. Ensure Cyber Security on the smart grid is a top down approach.
Piece meal implementation across the Smart Grid will make the
verification of security problematic for the USA power Grid.
2. Ensure the population in the USA understands the cost/benefits
of the Smart Grid implementation. Increased Consumer cost for power is
going to be problematic. Cost is going up significantly because of new
EPA regulations on coal-fired plants and less significantly because of
the implementations of smart grid technologies. I predict the
consumers, especially those within one of the largest voting blocks,
baby boomers on a fixed income, will react negatively to even minor
cost increases caused by various regulations and technical enhancements
to the power grid.
3. Ensure the implementation of the logic or verbatim use by the
Federal Government of the Interoperability Process Reference Manual
(IPRM v2) by including it within new versions of the FIPS. This would
mean approximately 25% of the GDP would be required to increase
software and hardware product quality, consistency, reproducibility and
interoperability within the IT markets, thus partially, yet
significantly, funding the efforts of Test Labs, Certification Bodies
and product vendors to implement quality and consistency for
Interoperability across all sectors of the economy including Smart
Grid. Health and Human Services is implementing the Test Lab and
Certification body quality requirements as part of the EHR Meaningful
Use requirements for Medicaid and Medicare providers. While these
currently do not focus on Interoperability as such they are
implementing the quality framework to support Interoperable products
within the market place. I would use the FIPS to prime the pump not new
regulations on the private sector. The uncertain regulatory environment
is slowing growth of the private sector.
Chairman Quayle. Thank you, Mr. Drummond, and I would like
to thank all the witnesses for their testimony. I just want to
remind Members that the Committee rules limit questioning to
five minutes, and the Chair will at this point open the round
of questions. I recognize myself for five minutes.
Mr. Caskey, the Energy Independence and Security Act of
2007 required that FERC initiate a formal rulemaking process to
adopt interoperability standards when it was satisfied that a
consensus was actually met. Do you believe that a formal
rulemaking process is necessary or do you think that a
consensus could be achieved without that formal rulemaking
process?
Mr. Caskey. I think that they are two different things. I
think reaching a consensus on the standards that need to be
applied for smart grid is one thing, and we are working towards
that and I think we are meeting those requirements within the
SGIP and the Governing Board of the SGIP. In terms of a
rulemaking process, I personally do not think that it is
necessary at this time and really doesn't benefit the
development and the innovation going on in smart grid at this
point. At some point in the future it may be more appropriate.
Chairman Quayle. So do you think that within the rulemaking
process that those standards that could have been achieved,
that there could be potentially harmful for innovation going
forward? Is that----
Mr. Caskey. I am sorry. Say that one more time.
Chairman Quayle. You said that possibly the rulemaking
process could have a detrimental effect on innovation going
forward. Is that what you're saying?
Mr. Caskey. Yes. I don't think we are to the point yet of
locking in any particular standards and making those standards
mandatory. We are still growing those standards and modifying
those standards, and at some point in the future having
mandatory standards or rulemaking on those standards makes
sense, but not right now from my perspective.
Chairman Quayle. Okay. Thank you.
Chairman Nelson, in your testimony you described all the
progress that Texas has made, and you mentioned you had put
forward about 4 million smart meters onto the marketplace.
Texas is obviously a unique state in that it produces most of
its own energy. Do you think that putting out these types of
smart meters prior to the standards being set is putting the
cart before the horse, or do you think it is a push to spur
that process going forward?
Chairman Nelson. Well, I do recognize that it is a delicate
balance. I think that if a state were to implement a smart grid
program like Texas did and it were to do it in a way where you
have open architecture and you made sure that whatever--however
you implemented it would be in conformance with things moving
forward, I think that you could do it, but it is difficult. It
is difficult to do it without standards.
Chairman Quayle. Dr. Arnold, in January of 2011, the GAO
noted that the federal--that FERC doesn't have the authority to
enforce standards and recognized that a regulatory divide
exists between federal, state and local entities on various
aspects of smart grid interoperability and cybersecurity. The
GAO further stated that such standards remain voluntary unless
regulators use other authorities to enforce compliance. What
really distinguishes the process of developing voluntary
consensus standards from developing standards likely to be
mandated and enforceable?
Dr. Arnold. Well, I think it is instructive to look at some
other examples in other infrastructure such as the
telecommunications network, and there, as I noted, the vast
majority of standards are voluntary consensus standards which
are used by industry because there is a benefit to industry in
doing that. One example where it made sense to mandate a
functionality or a standard was number portability, where to
promote competition in the local exchange market, the FCC
mandated the ability for consumers to take their telephone
numbers when they switched carriers. There was no incentive for
the service providers to implement that capability because it
was costly, and why would they want to promote competition. So
there was a case where in order to have that policy objective
implemented, it made sense to mandate it. I think at this
point, in my opinion, it is too early to tell whether there are
such analogs in the smart grid but if there are, then it may
make sense in selective cases like that.
Chairman Quayle. Thank you very much.
The Chair now recognizes Mr. Sarbanes for five minutes.
Mr. Sarbanes. Thank you, Mr. Chairman. Thank you all for
your testimony.
I am trying to get my head around the notion that there are
parts of the grid that are already smart. I mean, we talk about
a smart grid but Chairman Nelson, you sort of alluded to in
your testimony the fact that there are parts of our national
grid that you would view as being smart, and I don't know if
anybody is in a position to quantify that somehow but maybe you
could try and tell me. What percentage, knowing what you know
and knowing what kind of aspirational standards you are working
on, what percentage of the grid now is smart, or is that not a
helpful way to at least get a baseline perspective on this?
Anybody?
Chairman Nelson. I guess I would say it is very hard to
quantify. In Texas, the way we started is, we started out with
a rollout of the advance meters to the customers because we
felt to have--if you are going to be spending money, you want
to have customer acceptance and you want them to see the
benefits. So we have that, and we are slowly making the rest of
the grid smart and also that you can have things like self-
healing distribution lines and transmission lines. So I would
say at this point it is hard to quantify just because I don't
know if you give the meters more of a percentage than the
lines. It would just be difficult to quantify it.
Mr. Sarbanes. Dr. Arnold, do you have a perspective on
that?
Dr. Arnold. Well, there are so many different technologies
that apply in an end-to-end system that I think the fact that
we have 50 states that each can in their unique environments
apply these technologies allows us to benefit from those
experiences and roll them out nationally based on best
practices. Certainly, the automation that is now being deployed
in the transmission network with phasor measurement units,
which will provide wide area visibility, will have tremendous
benefits in reliability of the bulk power system, and that is
well underway with Recovery Act funding. The application of
smart meters in addition to the benefit in terms of energy
savings that consumers can have through access to information
also provides that visibility to the utilities for restoration
after power outages. So I think it would be a mistake to try to
deploy everything at once because these are new technologies
that need to be proven in and the approach that we are taking
of having nationally the ability to benefit from the different
state deployments as well as the deployments in the bulk power
system is a very good way forward.
Mr. Sarbanes. One of the themes that we have heard already
in your testimony and the questions that Chairman Quayle just
asked is this notion of kind of a mandatory versus voluntary
approach over time, and it sounds, Mr. Drummond, like you
believe that the biggest nut to crack, the toughest problem is
the interoperability issue, and we see that across the board. I
mean the 9/11 Commission just came back, the chairmen, to talk
about the remaining challenges of interoperability there, even
though that was the number 1 priority years ago in the wake of
that disaster to try to cure those problems. And maybe humans
are innately inoperable, non-interoperable, if that is a word.
But that would seem like an area where mandating some things
would be called for, and I just would like to get your reaction
to that.
Mr. Drummond. Interoperability has a lot of meanings. The
way we focused on it in SGIP testing and certification is, is
that we see it as a need to be market-driven. Businesses who
buy products need to understand the cost-benefit tradeoffs from
buying interoperably verified certified products versus buying
those which have not been that way. An example, I have been
doing this for a long time and I remember back eight or nine
years ago in a different standard, we were doing
interoperability testing and people who would those which had
been certified would be able to install it within two or three
days and make it work. Those who didn't might spend 6 months
trying to get the product to work interoperably with someone
else. So the key here is, is we need to put products in the
marketplace that people can be assured are interoperable
easily--that is why I keep saying the word ``certified,'' by
certified third parties--so the marketplace can see the cost-
benefit and start putting those in place. We can make anything
computer-wise interoperable. It is when you have hundreds of
things happening over and over again, you do not want to keep
repeating the same development cycle of integration. You want
to make it much easier because it has done before because it
has already been testified and certified.
I really think the market can drive this well, and the
suggestion I had before was not so much going into regulations
or anything else, it was thinking about if the Federal
Government has so much buying clout out there and if you all
saw it was beneficial to start buying certified interoperable
products using testing, as we are recommending, that would push
multiple industries, not just this one, into a more
interoperable, more cost-efficient model than we have right now
as we put things in place.
The last point is, if I buy interoperable products, I
reduce my perceived risk as a manager and executive in a
corporation if I know they are interoperable and I will move
faster to implement new things in the network if that risk is
reduced. When I still do not know my risk because I don't have
certified products out there, I take much longer to move to the
next phase of the network, the more intelligent network,
because the risk is too high for me to move very quickly
without doing a lot of due diligence. Does that answer your
question?
Mr. Sarbanes. Thank you very much.
Chairman Quayle. Thank you, Mr. Sarbanes.
The Chair now recognizes the gentlelady from Illinois, Mrs.
Biggert, for five minutes.
Mrs. Biggert. Thank you, Mr. Chairman, and thank you for
holding this hearing today, and I commend the witnesses for all
the collaborative work that you are doing on this issue.
My question is related to the type of technology that the
standards development process will eventually allow, and do you
see room for variable types of smart grid technologies? The
reason for this is that some of my constituents have raised
privacy or health concerns with the smart grid devices,
especially the wireless technologies, and this is from a
community that has been working on this since 2005 and to
develop the smart grid and the smart meters, and so this has
come up from some of the constituents, and what happened here
is actually that they did a survey and everyone agreed to have
mandatory technology. So do you see that there is a mix of
technologies being deployed that can address their concerns and
still meet the goals of an interoperable smart grid? Mainly it
is the two issues. One is the health concerns and also privacy
when they have the meters in their homes. I would like all of
you to address this.
Dr. Arnold. Well, there are two aspects to that. In terms
of privacy, this is a very important issue in the smart grid,
and we are paying very strong attention to it. In fact, in our
700 page cybersecurity guidelines, we have a whole volume that
is devoted to privacy issues and that volume includes an
analysis of data privacy issues in the smart grid, a summary of
applicable laws and regulations at the federal and state level,
and provides guidance on how to apply business practices and
technology to ensure data privacy. There are also some specific
business practice standards consistent with those guidelines
that are now under development by the North American Energy
Standards Board, so this is an area that we are actively
addressing.
On the health aspects of wireless communications, I would
say that is a little bit outside of our jurisdiction because
the FCC sets requirements on emission levels for wireless
devices. To the best of my knowledge, the devices that are
being used in smart grid applications, they have to comply with
the FCC requirements, so----
Mrs. Biggert. Well, this community is having 15 gigawatts
of energy, and it is a lot stronger than what they are doing
right now as far as they put this into effect. They are worried
about that, so maybe Chairman Nelson, could you address that
since you are also putting these in?
Chairman Nelson. Well, let me just start out by talking
about the privacy aspect. In Texas, our legislature made that
determination by saying customers own their own data, and so in
Texas now, the commission is in the process of fleshing that
out because one of the things that we found most critical as
you go forward in installing smart meters is that customers
understand what is happening, and so we want to make sure that
the process where third parties come in and contact them is a
fair process.
In terms of the safety issue, I think there is a lot of
evidence that the systems are safe. In terms of whether you can
use--whether one system should be mandated, that is not the way
that Texas went. We went with an option of letting the
companies choose the technology, the transmission and
distribution utilities.
Mrs. Biggert. Mr. Caskey?
Mr. Caskey. Yes, a couple different points. One is dealing
with technology, I think that the connection with the consumer
is often at the meter, so often consumers are first concerned
about that. I have read various studies by the Electric Power
Research Institute and other organizations, and at least so far
they have not found any evidence between any health concerns
and the radio-type receivers and transmitters used in the smart
grid and the smart meter deployment. Certainly, if there are
issues associated with that or there are perceived issues
associated with that, you can potentially take that out but
then you lose some of the features and the benefits of those
meters so the may not be very cost-effective once you take away
that two-way communication aspect of those smart meters. Also
in terms of technologies, there is a wide variety of
technologies including at the generation of power that Dr.
Arnold had referenced and the transmission and distribution
grid. There are lots of different technologies that make up the
smart grid. There are literally hundreds of various
technologies that will be applied to get the whole smart grid
to work effectively together.
Mrs. Biggert. Thank you.
Mr. Drummond?
Mr. Drummond. I am of the opinion generally that we in the
architecture realm, which is what we are talking about now, the
smart grid is an architecture or framework, need to put in
place the philosophical principles behind it and what should
work together, what shouldn't--that would be for privacy and
technology--and let the lower levels, those who are dealing
with the implementation and those sort of things, start making
decisions in more detail, and if you do it in that manner, that
means you can change over time easily as new standards happen.
You can use slightly different standards for exactly the same
reason in different areas because they would work best in those
areas. So I think in answer to your initial question, there is
a lot of variety out there you can go do. There is always this
tradeoff about how much you mandate specific standard to go
this which will actually reduce risk a whole lot, from my risk
thing earlier, but it also squashes innovation. So you have
this--you are kind of sitting on the head of a pin here trying
to avoid both of those sort of things at once, and I think we
are doing that well in SGIP right now, by the way.
Mrs. Biggert. Thank you very much.
Mr. Chairman, I yield back.
Chairman Quayle. Thank you, Mrs. Biggert.
The Chair now recognizes the gentleman from New Mexico, Mr.
Lujan, for five minutes.
Mr. Lujan. Thank you very much, Mr. Chairman.
Dr. Arnold, I want to talk a little bit about distributed
generation and what that means to a nationwide interoperable
grid. Distributed generation can reduce pollution. It can
increase energy efficiency, promote the use of renewable
generation and power homeowners and business owners. It has
been suggested that when we have had blackouts or brownouts in
some of the most urban metro areas of the country, that if
there would have been a more elaborate distributed generation
system, that we could have alleviated some of that load.
One of the principal barriers to the deployment of
distributed generation is the process of connecting to the
utility grid, the interconnection or the interoperability, if
you will. We need common standards for interconnecting DG
devices into the grid system. This year I have introduced a
bill promoting net metering and establishing interconnection
standards for net metering.
Like Chairman Nelson, I once chaired the New Mexico Public
Regulation Commission, which is the equivalent of the public
utility commissions around the country, and it was an honor to
serve there. Everything that I learned there was that you
needed to have those interconnection standards in order to push
distributed generation and make it a reality so that one thing
could talk to another, making it smart, I guess. Can you
discuss efforts to develop common standards that support
distributed generation that help empower consumers?
Dr. Arnold. Certainly. Well, first I can tell you that
supporting distributed generation in the smart grid is one of
the key requirements from the beginning in our effort, and we
have a number of standards in our framework that provide
technical capability for this including the metering standards,
which have to support two-way measurement, and the electrical
information connection standards. There is a standard known as
IEEE 1547 that has been enhanced to support this, and I would
also note that we have been successful in getting the IEC to
adopt that as an international standard so that we are leading
the global approach on this.
There is a lot more that needs to be done, though, because
as the growth of these resources increases, the ability for
utilities to know how much distributed generation is feeding
into the grid and be able to forecast that becomes critical to
maintain the reliability of the grid, and so to address the
information management standards to support this, the SGIP is
in the process of forming a new working group specifically
looking at this whole suite of standards for distributed
generation and storage, and I believe the official approval of
this working group is going to take place this afternoon at the
Governing Board meeting, so this has been a major area of focus
and will continue to be.
Mr. Lujan. That is encouraging, Dr. Arnold, that those
conversations are taking place, again, working with an industry
group, with IEEE, associated with seeing how you can establish
some of these interconnection standards so that way there is
more certainty out there. Many states have adopted net metering
standards. It is one that I hope we can continue to see more
states do and maybe some formal recognition by the government
or encouraging them. I think that that is the way to go.
You know, truly as talk about minimum standards, I don't
think that what is being suggested is pushing one technology or
one software platform above another. When we talk about cloud
computing now, something that just a few years ago no one
imagined that would be part of a smart grid conversation,
hardware and software. I think what is key is that we find a
way where you can plug something in to something else and that
they can talk to one another and that those software apparatus,
whether we talk about Mac or we talk about PCs, Microsoft,
Apple, it is amazing how software that is written today, how it
doesn't matter what system you are on, you can work with one
another. I think that is all that we are suggesting. And if
there is a way to encourage what I am hearing today through the
testimony that we can find a way to have interconnection
standards, we can have a way to have interoperable standards
associated with making these things talk to one another but
then the gamut runs as it may and the market is going to
develop the most efficient and effective tools to allow this to
happen, to empower consumers, to make sure utilities know the
certainty of what is happening with loads, to prevent power
outages, and hopefully like in New Mexico we prevent natural
gas outages as we saw in Texas with rolling blackouts recently,
and it gives those tools more so that the commissions are
working closely with the utility companies, the utility
companies are working closely with the businesses, and we are
saving money in the end. This is going to put more money in
people's pockets. It is going to put more money in small
businesses' pockets and it is going to save money associated
with the impact that dramatically happens in a community when
we have these power outages.
So I am encouraged by this hearing and I think there is a
lot of promise here, and I think there is actually a lot of
common ground between all of our colleagues here in the
Congress with wanting to do the right here, so I appreciate it
again, Mr. Chairman. Thank you very much for my time.
Chairman Hall. [Presiding] Thank you. The gentleman's time
is expired. I will recognize myself for five minutes but I
won't take five minutes because I know Chairman Quayle has
already recognized all of you, and thanks you, but I would feel
bad if I didn't thank the Texans out there. Rik Drummond, small
business leader, thank you, and of course, I always save the
best for last. Chairman Nelson, I really came down here to see
if she is as attractive and intelligent as everybody always
says she is, and we are glad to have each of you. Thank you for
what you are doing. Don't judge our interest in you by the
empty seats because everybody has two or three committees, and
this goes into a permanent record and they will all have
copies, and thank you very much.
I yield the balance of my time to Mr. Rohrabacher. For
those who are present today, he is my favorite in the entire
Committee that are Republicans. The Chair recognizes Mr.
Rohrabacher.
Mr. Rohrabacher. How do I follow that?
You know, I have been hearing about the smart grid and the
grid, and we have to do something about the grid for so long. I
mean, it just--over the years it just--and quite frankly, I am
not an engineer and I don't understand all of the aspects of
some of these things you have been talking about today. Some of
them are a little bit above my pay grade. But there are some
things that we do have to know here, and that is about the
spending of government money and how it is being utilized to
accomplish goals in the various departments and agencies.
When will the smart grid be available and be actually being
utilized by the public? Whoever wants to answer that.
Mr. Caskey. I will attempt to answer that. When you picture
the entire smart grid working effectively and interoperating,
We are literally talking about an evolution that is going to
take 20 years or more. But we see parts of that today as you
see various substations automated, you see the transmission
grid automated, you see----
Mr. Rohrabacher. Tell me, how far in the evolution have we
come? Would you say we are year at 15, I mean, outside 15? Are
we 15 years in or one year in? What are we in?
Mr. Caskey. I think we discussed that a little bit earlier;
is there a percentage on how smart the grid is today? I think
the answer to that really depends on the individual utilities
and those utilities know how much automation and how much
smartness they have added to their localized grid, if you will,
but in terms of a nation, I have not heard a figure thrown out
there to say whether we are 20 percent smart today or 25
percent or what that is. So I don't know that.
Mr. Rohrabacher. Smart as compared to what we were, let us
say, 20 years ago, so--and the smart grid will save us energy,
the smart grid will ensure more security, et cetera, and how
much will in the end the smart grid cost us to have in place as
compared to what we were spending ten years ago?
Mr. Caskey. I don't have the answer to that question.
Chairman Nelson. Let me just state in Texas what we have
done is, the customers who get the advanced meters are the ones
who pay for it, so it is not through a tax. It is a fee on
their bill. And even with that fee, our rates are lower in
Texas than they were in 2001.
I view smart grid ultimately as a cost-savings tool
because, one, it gives customers the ability to reduce their
usage and under the current technology, you get your electric
bill 45 days and sometimes after you----
Mr. Rohrabacher. I understand. When you succeed--I can't
tell you how many times we have heard that when this program is
in place, it is actually going to pay for itself so there is
really no cost at all involved, and so absent that mindset,
which I understand and it is not just smart grid that believes
that stuff, but a lot of other people who come before us.
Let us then look, how much money--Dr. Arnold, the American
Recovery and Reinvestment Act invested how much money in this
effort and how much has been spent?
Dr. Arnold. The Recovery Act funds totaled $17 million and
all of that will have been spent by the end of this fiscal
year.
Mr. Rohrabacher. Seventeen million?
Dr. Arnold. I am sorry -- yes, $17 million in terms of the
NIST work on the interoperability standards, so that is just
the Recovery Act funds and that represents about half of the
total funds. The rest was from the NIST normal STRS
appropriations.
Mr. Rohrabacher. So $17 million were spent in the last
year, you're saying?
Dr. Arnold. Since about mid-2009.
Mr. Rohrabacher. And that money was matched of course by
the money that was already allocated for this project. Is that
right?
Dr. Arnold. Well, approximately the same, a little bit
less. I believe it is about $15 million will have been spent
through the end of this fiscal year out of NIST's STRS normal
funding.
Mr. Rohrabacher. And once the recovery, the ARRA money is
all gone, and it sounds like it is, the budget goes down back
to what it was normally. Is that what is happening?
Dr. Arnold. Well, to sustain the effort at the current
pace, we would have to increase the STRS component. If we
continue with flat funding on the STRS, it is going to imply a
significant reduction in the level of activity.
Mr. Rohrabacher. And so when we were trying to figure out
the total amount that NIST is spending, it is not 17, it is 35
million?
Dr. Arnold. Well, through the end of fiscal year 2011, it
is about 17 plus 15--you can do the math--over that period.
Mr. Rohrabacher. Okay. So that is $32 million. And that
level, that $32 million level then will be cut back to what--
basically in half. Is that correct? Is that what we are
hearing?
Dr. Arnold. Well, the President's budget request for fiscal
year 2012 included an increase in the STRS component to
maintain a level of effort that is at a level that we need to
sustain progress, but if those funds are not available, there
will be a significant reduction and probably a slowdown in our
effort.
Mr. Rohrabacher. Thank you, Mr. Chairman. I will wait to
see if there is a second round to see if this money is being
spent in the most efficient way. Thank you.
Chairman Hall. Your 10 minutes is expired.
Mr. Rohrabacher. Thank you.
Chairman Hall. The gentleman always asks good questions,
and we will come back to you if we--Mr. Lipinski, the gentleman
from Maryland, is recognized for five minutes or whatever you
really need. You are a good man to work with this on this
Committee.
Mr. Lipinski. Thank you, Mr. Chairman. I am not from
Maryland, but Illinois, it is close.
Chairman Hall. Your hometown is Maryland, Illinois, right?
Mr. Lipinski. You know, if you want that to be--if you want
me to say that, yes, it is, as long as I get my five minutes of
question time.
Dr. Arnold, I am pleased to see your section in your
testimony about protecting consumer interest. Now, Mr.
Rohrabacher had just said he is not an engineer. He started out
his questions with that. Well, I am trained as an engineer,
although I won't try to claim that I know everything about the
smart grid, but what I do know, I am excited about the
potential benefits. You know, we can have a more robust,
resilient power system. We can diminish peak usage. We can give
consumers more control. These are all great things that we can
get from a smart grid.
But right now in my home state of Illinois, there is a
tough legislative fight going on over who is going to pay for
the new technology and who gets the benefit. AARP is strongly
opposing the Illinois Infrastructure Modernization Act because
of the potential for automatic rate increases. The Governor of
Illinois, Governor Quinn, the Attorney General, Lisa Madigan,
have also expressed concerns about this bill. Now, I share some
of these concerns, and I think it is my job to make sure that
the seniors in my district, you know, someone living on a fixed
income is protected, and I worry that the push for a smart grid
could just mean installing smart meters at consumer expense so
utilities can then go ahead and lay off their meter readers. So
as I said, I know the potential is there for great benefits.
What can you tell me, Dr. Arnold, about what elements of
NIST standards will help consumers control their energy usage
and save money and what can we do--and I don't know if--this
probably isn't for NIST to make the determination on this but
my concern is, how do we make sure that this information is
going to be used by consumers to save money or how do we make
that as likely as possible? We can't guarantee anything. We
can't guarantee anyone does anything but we have to make that
likely. But first, Dr. Arnold, what will help consumers control
their energy usage and save money with the smart grid?
Dr. Arnold. So in terms of saving money and controlling
usage, there are two elements of that. One is wasting less
energy, so reducing your overall usage, and the other element
is reducing your usage during peak periods when it is very
expensive for the system to generate that energy. In terms of
consumers wasting less energy, the fact that consumers have no
knowledge today about how much they are consuming, is an issue,
and with the smart grid, consumers will be able to,as they do
in cases like in Texas, see how much they are using on a near-
real-time basis.
Mr. Lipinski. That is one thing I was wondering. Will I--if
I have a smart meter hooked up in my home, will I be able to
hook that up to my computer and see in real time my usage or
will I have to wait for the utility company to get me the
information?
Dr. Arnold. The technical capability is there to transit
that data to either the utility where you can get it on the Web
or locally so it can be broadcast to a display within your home
so you can see that in real time. I have such a meter, which
enables me to do that in my home.
The other aspect in terms of reducing usage during peak
periods, which benefits everyone because you need to provide
less generation capacity and transmission capacity, my
expectation is that technology will allow this to be done
automatically where you will be able to push a green button on
your appliance to tell it you want to run in eco mode, and it
will automatically figure out the best time to run. Obviously a
consumer will always be able to override that if they need to
have something done at a certain time but the technology will
be there to allow this to be automated so the consumer can set
it and then forget it.
Mr. Lipinski. Very quickly, Chairman Nelson, how do you
believe in Texas you were able to institute this and have the
consumers save money with it? Were there specific provisions
that you put into the law that helped this to occur?
Chairman Nelson. Yes, sir. The Texas legislature passed
legislation in 2005 and 2007 encouraging the deployment of
smart meters and they set up a system for how it would be paid
for which as you indicated it was a controversial issue and
continues to be but they addressed that.
Mr. Lipinski. But how do you get people to--if the Chairman
will allow me, how do you--you can give people information. How
do you maximize the likelihood that they will use this
information to help save electricity and money?
Chairman Nelson. Well, there is a big customer education
component of this where customers have to be aware of what they
are doing, so we rolled it out. We are in the process right now
of doing a test where CenterPoint and Oncor, our two biggest
utilities in Houston and Dallas, are doing a pilot with 500 in-
home devices and educating customers about it. We have retail
providers in the Texas market, and that market is competitive
and so they want to get customers and so they are trying to
give a value-added thing and so they are working with customers
to provide them information. Like some of them send out a once-
a-week note to their customers by email and say this is how you
are spending, this is what you have spent, if you continue
using at the same level, your bill will be this, or some
customers use every day but when we have a hot summer like we
had this summer where in Austin our August temperature average
was 105, in spite of the fact that we have got low rates, those
bills are big and I think the larger the bill gets, the more
the customer has an incentive to shave some of that off if they
can.
Mr. Lipinski. I thank you very much, and I thank the
Chairman for your indulgence here.
Chairman Hall. The gentleman's time has expired. The
Ranking Member has indicated he has no objection to Mr.
Rohrabacher asking one more question. The Chairman recognizes--
--
Mr. Rohrabacher. Thank you very much, Mr. Chairman.
In talking about standards and, again, I plead guilty of
not having the expertise of having the in-depth questions that
you probably deserve, but let me just ask, when you have new
standards, and that is what we are talking about with NIST, and
it is a major part of this whole operation's success is the
standards of what you are going to be required to have to have
a smart grid, that means, of course, there is going to have to
be new technologies. Now, I note that the Department of Energy
where you are spending $35 million, they are spending $3.4
billion on smart grid technology development. Are you confident
that we are going to be able to have the technology necessary,
number one, to meet the standards, and will this equipment be
available, do you believe, by American manufacturers rather
than having us being dependent on overseas sources?
Dr. Arnold. So I would like to address that. The
stakeholders in our process involve industry. They are really
the biggest part of the process and they are at the table
because they want the standards so that they can build the
products and the utilities can use them. We have tried where we
can, rather than reinventing the wheel, to pick up standards
that have been used in other applications and modify them for
the smart grid to allow these things to get deployed most
quickly. In areas where there is entirely new functionality,
you have to do something new, and we are always looking for the
best way to do that. We have placed major emphasis on being in
a leadership posture with respect to the international
standards so rather than our picking standards that others are
developing, we are developing them here, bringing them to the
international standards organizations and we are having a great
deal of success in getting the standards adopted
internationally. I can tell you that in other parts of the
world that are behind us in developing their frameworks for the
smart grid, they recognize our leadership and are using the
results of our standards work as the basis for their efforts.
We are doing that specifically to maximize the export
opportunities for U.S. suppliers.
Mr. Rohrabacher. So you are confident that what you are
doing is going to actually be a boon to American manufacturers
and American technology corporations and not--is that something
that you have in mind or is this something that you are just
confident of?
Dr. Arnold. We have that very much in mind. I would point
to the International Energy Agency, which estimates over the
next 20 years, $10 trillion will be spent globally on
modernization and build-out of electrical grids. The estimate
as far as I can tell for the United States is about $2
trillion, so the market opportunity outside of the United
States is much greater than it is in the United States and so
we have very much in mind creating a standards framework that
will allow U.S. manufacturers to not only build the U.S. grid
but also export that technology to other parts of the world.
Mr. Rohrabacher. Well, thank you very much.
Mr. Chairman, that does answer my question and I appreciate
you giving me that last chance.
Chairman Hall. Thank you. The gentleman's time has expired.
I want to thank the witnesses for their very valuable
testimony and the Members for their questions. The Members of
the Subcommittee might have additional questions for the
witnesses, and we will ask you to respond to these in writing.
The record will remain open for two weeks for additional
comments and statements from Members. The witnesses are now
excused. We are adjourned.
[Whereupon, at 11:25 a.m., the Subcommittee was adjourned.]
Appendix I:
----------
Answers to Post-Hearing Questions
Answers to Post-Hearing Questions
Responses by Dr. George Arnold, National Coordinator for Smart Grid,
National Institute of Standards and Technology
Questions submitted by Chairman Ben Quayle
Q1. What is the future smart grid standards development plan for both
the National Institute of Standards and Technology (NIST) and the Smart
Grid Interoperability Panel? How many additional standards need to be
developed? Can NIST maintain the necessary pace for standards
development to keep up with smart grid implementation into the future?
How much funding is NIST requesting annually to continue these
activities?
A1. NIST continues to execute its three-phase plan for leading and
sustaining the accelerated pace of smart grid interoperability and
security standards development. Phase I is completed (initial NIST
roadmap and identification of standards) and Phase II (Smart Grid
Interoperability Panel) and III (Smart Grid Testing and Certification
Framework, developed as part of SGIP) are ongoing, including
international outreach and coordination efforts. While much progress
has been made to date (see www.nist.gov/smartgrid for NIST and SGIP
programmatic highlights and accomplishments), significant work
continues to be needed to develop new standards, evaluate and revise
existing standards, coordinate and map different standards to each
other within a common architectural and cybersecurity framework, and to
help drive these standards into implementation supported by
interoperability testing and certification support and incorporation of
``lessons learned'' back into the standards development process. This
work is being undertaken through NIST and SGIP structured activities,
including new and existing Priority Action Plans focused on
requirements for standards development and Working Groups that are
evaluating standards and framework elements, identifying new needs, and
leading dialog with stakeholders including the regulatory community.
While it is difficult to estimate the number of new and revised
standards that will be needed to support the future smart grid with new
functionalities, based on our experience to date, at a minimum it will
be several times greater than the initial 75 standards identified by
NIST in its Framework Release 1.0--that is, in the hundreds.
The pace of progress in coordinating development of smart grid
standards has been accelerated in part due to ability to jump-start
NIST's smart grid program using approximately $17 million of ARRA
funding over the past two years; $12 million from the Department of
Energy, and $5 million from the Department of Commerce. In addition,
NIST spent $8.5 million of its annual STRS appropriation in FY11. The
$17 million ARRA funding has been exhausted. NIST requested $17.6
million in the FY 2012 President's Budget to maintain the current
accelerated pace for standards development.
Q2. NIST identified 75 existing standards, in January of 2010, as
likely immediately applicable to an interoperable grid. NIST submitted
five of these standards to the Federal Energy Regulatory Commission in
October 2010. Why does this process take so long? When will NIST's
responsibilities per the Energy Independence and Security Act of 2007
(EISA) be completed? Do you think EISA should be amended to possibly
clarify that a formal rulemaking process is not always necessary?
A2. Of the 75 standards identified in the NIST Framework Release 1.0,
25 standards were identified for initial implementation and 50
standards were identified as needing further review. NIST and the SGIP
have been developing additional guidelines and procedures for standards
review and evaluation, including development of the NISTIR 7628
Guidelines for Smart Grid Cyber Security and establishment of SGIP
Cyber Security Working Group (CSWG) and Smart Grid Architecture
Committee (SGAC) review processes. With the availability of the NISTIR
7628 published in August 2010, the volunteer-based CSWG standards
review team was able to use NISTIR 7628 requirements as the basis for
its standards review process, including for its evaluation of the 5
standards identified in October 2010 as ready for consideration by
regulators. This team has continued to make steady progress towards
evaluating the 25 standards identified for initial implementation, plus
many additional standards or requirements that have been developed or
evaluated as part of Priority Action Plans. In parallel to the CSWG
cyber security review process, NIST engaged in numerous collaborative
discussions with FERC staff to revise standards review templates to
help support regulatory interest and understanding of smart grid
interoperability standards. This constructive dialog resulted in a more
comprehensive review process, and contributed to the increased timeline
for the initial standards review. In addition, utilities and others
have requested that additional standards reviews be established with
respect to implementability and reliability issues, and work is
underway to incorporate such reviews within the SGIP and its Catalog of
Standards process.
NIST is actively engaged in leading the acceleration of the smart
grid standardization process to meet its EISA responsibilities. In the
long term, NIST envisions that the SGIP will mature into a permanent
organization to evolve and maintain the Smart Grid standards framework
and that NIST will reduce its active standards coordination role.
However this will require that the SGIP develop a business model and
funding sources that are self-sustaining. Continued NIST funding at the
level requested in the President's Fiscal Year 2012 budget will allow
NIST to complete and implement the NIST smart grid standards framework
and develop a robust testing and certification infrastructure. With
this foundation in place, NIST will then be in a position to continue
to engage in the SGIP at a lower level while transitioning some of its
resources and staff to address key smart grid measurement and research
needs, also part of NIST's mission. NIST established a Smart Grid
Federal Advisory Committee in late 2010 to provide advice and input to
NIST on such issues, including input to help guide Smart Grid
Interoperability Panel activities and also assist NIST with its smart
grid research and standards activities. The Committee's initial report
is expected to be completed in November 2011.
With respect to clarifying the role of formal rulemaking in EISA,
the language ``as may be necessary to insure smart-grid functionality
and interoperability in interstate transmission of electric power, and
regional and wholesale electricity markets'' is already included in
EISA under FERC's responsibilities, and may provide sufficient
flexibility to FERC to address evolving needs without need for
amendment.
Q3. A January 2011 Government Accountability Office (GAO) report
assessing the progress of NIST smart grid cybersecurity guidelines
identified remaining challenges regarding cybersecurity and physical
threats to the smart grid. What steps are being taken to ensure that
the standards upon which smart grid architecture is based do not lead
to a greater cybersecurity risk on the national transmission grid?
A3. A multi-pronged approach is being taken to support enhanced
cybersecurity for the Smart Grid. The NIST-led Cyber Security Working
Group (CSWG) is providing foundational cybersecurity guidance, first
through the issuance of NISTIR 7628, ``Guidelines for Smart Grid Cyber
Security'' which was published in August 2010 and most recently in
collaboration with DOE and NERC, NIST assisted in the development of
the newly issued DOE Draft ``Electricity Sector Cybersecurity Risk
Management Process Guideline.'' This document is the result of a
public-private collaboration to develop a foundational cybersecurity
risk management guideline that provides a consistent, repeatable, and
adaptable process for the electricity sector. Now the CSWG is
developing an assessment guide that contains criteria for testing and
examining the implementation of the NISTIR 7628 high level security
requirements. The high level security requirements are also being
augmented with specific security requirements for the advanced metering
infrastructure. NIST, through the CSWG is facilitating security
functionality in existing Smart Grid standards and for those standards
under development. To date, over twenty-five standards or requirements
have been assessed against the high level security requirements. The
CSWG will be hosting a cyber-physical security workshop in April 2012
to review recent work and developments that have occurred in the cyber-
physical areas across multiple industries. The goal of the workshop is
to determine if there are security requirements that are unique to
cyber-physical systems.
While NIST has the federal responsibility for developing the
standards framework, DOE is responsible for grid modernization. Through
the Advanced Security Acceleration Project for the Smart Grid (ASAP-
SG), DOE is partnering with several utilities to accelerate the
development of Smart Grid cybersecurity requirements. These profiles
provide asset owners, operators, and vendors with detailed requirements
for the secure design, deployment and operation of resilient Smart Grid
systems. Four security profiles have been completed--advanced metering
infrastructure (AMI), third-party data access, distribution management
systems and most recently, wide-area monitoring, protection, and
control applications, (i.e., synchrophasors). The AMI security profile
is being used by the CSWG and the Advanced Metering Infrastructure
Security (AMI-SEC) Task Force within the Utility Communications
Architecture International Users Group (UCAIug). In FY12, ASAP-SG plans
to develop a profile for the home area network.
In another joint effort to improve smart grid security, DOE formed
the National Electric Sector Cybersecurity Organization Resource
(NESCOR). NESCOR is focusing on the testing and development of secure
technologies for the smart grid. NESCOR is currently working with the
CSWG to develop guidelines that will address the security gaps and
potential vulnerabilities of the SEP 1.x and provide recommendations on
how the SEP 1.x profile should be implemented in deployments.
DOE has also partnered with the private sector to broadly enhance
cybersecurity in the electric sector through the development of the
2011 Roadmap To Achieve Energy Delivery Systems Cybersecurity, an
update of the 2006 Roadmap. Both industry-led Roadmaps were developed
through a public-private collaboration of energy sector stakeholders.
DOE facilitated the Roadmap development through the private-sector
Energy Sector Cybersecurity Working Group (ESCSWG). The U.S. Energy
Secretary Steven Chu, White House Cybersecurity Coordinator Howard A.
Schmidt, and the North American Electric Reliability Corporation
President and Chief Executive Officer Gerry Cauley all publicly
recognized this public-private collaborative Roadmap effort focused on
ensuring the security and reliability of energy delivery systems.
Questions Submitted by the Represenative John Sarbanes
Q1. Can you please clarify how much funding NIST has requested in the
Fiscal Year 2012 budget for continuing its smart grid standards work?
How does this requested funding level compare to the levels of funding
NIST has provided to these smart grid standards efforts over the last
several years?
A1. The President's budget request for Fiscal Year 2012 includes an
initiative for Interoperability Standards for Emerging Technologies,
which would provide an additional $9.1 million to support the NIST
smart grid program, for a total of $17.6 million. NIST contributed $1.6
million from the STRS appropriation and $5 million from the NIST ARRA
funding on smart grid in FY 2009 and another $5 million in FY 2010,
which was the first direct appropriation for the smart grid program. In
the FY 2011 spend plan, NIST's budget for smart grid was $8.5 million.
The external component of NIST's smart grid program, including the
contracted administration of the Smart Grid Interoperability Panel, was
supported by ARRA funding totaling $17 million; $12 million provided
through DOE and the $5 million from NIST's own ARRA appropriation as
described above. Thus more than half of NIST's work through the end of
Fiscal Year 2011 was supported by the ARRA funding, which have now been
completely expended.
Responses by The Honorable Donna Nelson, Chairman, Public Utility
Commission
of Texas
Responses by Mr. John Caskey, National Electrical Manufacturers
Association
Questions submitted by Chairman Ben Quayle
Q1. You mention in your testimony that U.S. standards are typically
developed by the private sector with varying degrees of participation
by the government. The Energy Independence and Security Act of 2007
(EISA) opened the door to a more active government role, providing an
``umbrella'' under which the private sector defines standards for Smart
Grid products and systems. From a standards developing organization
perspective, how has this process, with the National Institute of
Standards and Technology acting as a leader, versus its usual convener
role, been managed? Do you feel that the National Electrical
Manufacturers Association's participation on the Smart Grid
Interoperability Panel has been sufficient?
A1. NIST (National Institute of Standards & Technology) is named in
EISA ``to coordinate the development of a framework that includes
protocols and model standards for information management to achieve
interoperability of smart grid devices and systems.'' NIST has used
this authority to form the Smart Grid Interoperability Panel (SGIP), a
public-private partnership, to do the real work of standards
development. NIST's leadership in establishing the policies and
procedures of SGIP--designing it for inclusion of all stakeholders,
funding the National Coordinator for Smart Grid Interoperability, and
identifying initial priorities for the SGIP to consider--has been
instrumental to the progress made thus far.
NIST's leadership in this area should not be construed to mean that
NIST is ``sitting at the head of the table,'' steering the standards
development process. To its credit, through the establishment of the
SGIP, NIST is promoting private sector-driven outcomes. Also, the
National Technology Transfer and Advancement Act of 1995 (NTTAA, PL
104-113) and its implementation via the Office of Management and Budget
Circular A-119 requires standards that are endorsed or adopted by the
U.S. Government to be developed by formally accredited standards
developing organizations (SDOs) like NEMA, IEEE, and others. In that
respect, the greatest function that NIST and the government can perform
is to continue to provide forums and foster an environment where the
various SDOs and stakeholder entities can come together and maintain
progress toward the performance objectives for Smart Grid that were
established in EISA.
NEMA staff and its member companies continue to have sufficient and
appropriate levels of involvement across several of the stakeholder
groups and the various priority action plans. NEMA staff has held a
number of leadership positions within the SGIP and the manufacturers'
perspectives around the table have been an integral part of the
decision-making process.
Q2. In your testimony, you highlight the National Electrical
Manufacturers Association's view that most, if not all of the Smart
Grid community felt that the five families of standards considered
during the Federal Energy Regulatory Commission's (FERC) Technical
Conference were a very good starting point. However, you state that
because it was a regulatory agency asking the question about whether or
not these standards represented consensus, witnesses were concerned
that FERC was leaning toward mandating these standards in some form.
Based on your experience with the suite of standards submitted, what is
the difference in the way that industry interfaces with the National
Institute of Standards and Technology, versus how it interacts with
FERC?
A2. NEMA maintains good relationships with both NIST and FERC.
Congressionally-imposed mandates of the agencies themselves, however,
create different dynamics between these two agencies and the private
sector. The key difference is that NIST is not a regulatory agency
while FERC is.
As a science-based organization with no regulatory mandate, NIST
has earned the confidence of industry. NIST serves a partner with the
private sector as the private sector drives the standards discussion.
For all of its various definitions, ``consensus,'' as discussed within
the SGIP and the standards development community in general, means
agreement on a standard that works for most everyone-and on a voluntary
basis.
On the other hand, EISA gave FERC the authority to mandate consensus
standards.
``At any time after the Institute's work has led to sufficient
consensus in the Commission's judgment, the Commission shall institute
a rulemaking proceeding to adopt such standards and protocols as may be
necessary to insure smart-grid functionality and interoperability in
interstate transmission of electric power, and regional and wholesale
electricity markets.''
EISA gives FERC the ability to determine for itself what
``sufficient consensus'' means and if it has been achieved. And with
its definition, it can move a voluntary industry standard into a
government mandate. This authority is certainly one way in which the
interface with the two agencies can differ.
Q3. What do you see as the most important actions to ensure that the
transformation of the American electric delivery system to a Smart Grid
is a process that empowers and protects consumers? Can the equipment
needs of the Smart Grid be met by U.S. manufacturers? How will existing
technologies and equipment fit in with the standards being developed
for the Smart Grid? Do you envision any additional costs to the private
sector or consumers in conforming with the standards?
A3. As far as standards are concerned, the most important action that
can be taken to ensure the successful transformation of the electric
grid into a Smart Grid is to allow industry to continue to drive
standards development. That is, exercise great caution in the federal
agencies before making a given standard mandatory. The standards
development process is one that must be given the time and freedom to
work its will, to ensure the standard leads to the best result for
manufacturers, consumers, and every American who depends on a reliable
source of electricity.
Policies that provide support for manufacturing innovation will
promote the development of products that make the grid smarter. A
smarter grid, with its two-way communication protocol designed to
improve reliability, cost-effectiveness, energy efficiency, and
consumer engagement and control, empowers consumers and gives them the
information to make wise decisions about their electricity usage and
take charge of their electric bill.
U.S. manufacturers are ready. In 2009, according to the Census,
manufacturers in the United States shipped $6 billion of transformers
and other power equipment, $10.6 billion of switchgear and switchboard
equipment, $5.5 billion of storage batteries, and $10.1 billion of wire
and cable, totaling more than $30 billion in equipment that is being
used to modernize the electric utility grid.
Development of the Smart Grid is a gradual process which is already
underway. It is not a wholesale swap of the old grid for the Smart
Grid. The electric grid is a complex web of equipment and control
systems that requires varying degrees of change for conversion into a
Smart Grid.
Part of this answer also ties in to the previous question about the
difference between the way the industry interacts with FERC and NIST.
If, through the regulatory process some form of standard becomes
mandatory, the utility interests would have no choice but to implement
the requirements of that regulation. In certain instances, that may
mean they have to replace devices on the grid in order to comply. In
the end, the only true mechanism that utility companies have to replace
equipment in the grid is the rate case which directly affects consumers
of all stripes; residential, industrial, and commercial.
Many utilities have incorporated transmission and distribution
equipment into their systems which conform to current standards. From
smart meters to substation automation to gathering greater intelligence
of the loads on power lines through phasor measurement units, utilities
are deploying Smart Grid technologies today. They are doing so by
layering on new technologies to existing equipment, upgrading to Smart
Grid technologies as part of the natural cycling out of old equipment,
or by proactively replacing functioning equipment with more modern
technologies.
Through the SGIP, we are refining existing standards and helping
utilities convert to new standards, bearing in mind the characteristics
of the equipment already in the field. The Smart Meter Upgradeability
standard is a prime example of the SGIP being responsive to the most
critical needs of the industry. As many utilities have demanded smart
meters, they also want the confidence of knowing that if they buy smart
meters today, new smart meters standards will not result in stranded
investments. Indeed, utilities are more likely to invest in those
aspects of the Smart Grid for which the applicable standards are
interoperable and upgradeable--the essential mission of the SGIP.
The cost-benefit picture for the Smart Grid is complex, but the
benefits of the Smart Grid--increased reliability, more efficient
operation, energy savings through greater intelligence and consumer
control, and the reduced need for more generation capacity--
significantly outweigh its costs by any measure.
For instance, as consumers replace older goods with newer ones,
such as home area networks or appliances, they are acquiring new
``smarter'' features compliant with existing standards. In the case of
smart meters, utilities provide a business case for the investment by
analyzing return on investment. Two-way communication enables outage
reporting, remote turn on and turn off, fewer truck rolls to visually
inspect and monitor the grid, power quality monitoring, and the
consumer's engagement. In high-population areas, utilities will invest
in automation of transmission and distribution systems due to benefits
it gives ratepayers. The Smart Grid in general provides improved
reliability and a positive economic impact through fewer and shorter
outages.
Questions Submitted by the Represenative John Sarbanes
Q1. As a representative of a private sector standards development
organization that has been very active and involved in the NIST
process, you are very complimentary of how NIST has carried out its
Smart Grid standards responsibilities. In your opinion, why has this
been such a successful endeavor between NIST and standards development
organizations? What lessons have been learned and what best practices
have been gleaned through this effort that we ought to keep in mind
should we decide to replicate this public-private model in the future
in other areas?
A1. First, the quality of the organization in this case has led to many
early successes. NIST, as an independent, objective, science-based
agency, enjoys credibility with industry for its expertise and
performance. As a result, industry is eager to participate in the NIST
and SGIP activities.
Second, the people involved in this particular effort are of a high
quality and have demonstrated the character and seriousness of purpose
needed for this to be a successful partnership.
Third, the nature of the Smart Grid and the need for standards at
this point in time make a partnership such as this timely, as evidenced
by the participation of over 600 organizations and over 1,800
individuals.
We have learned what a successful approach to this sort of
partnership looks like and now have some tangible results that can
serve as a model for similar future efforts. NIST's decision to include
a broad base of stakeholders has been essential to the SGIP's success.
The work of NIST and the SGIP in establishing many of the procedures
and policies before the partnership began, such as committee structure
and ground rules, facilitated the process moving forward quickly. And
once the bylaws and procedures were established, they have been
enforced which has strengthened the relationship. Since that point,
NIST's role has been one of facilitation and service--they are now the
main interface between the SGIP and rest of the federal government. The
greatest value they now bring is to help the SGIP set priorities that
are consistent with those of other federal agencies and the
Administration.
Responses by Mr. Rik Drummond, Chief Executive Officer and Chief
Scientist,
The Drummond Group, Inc.
Questions Submitted by Chairman Ben Quayle
Q1. From the perspective of a small business, how has the smart grid
standards development process been managed?
A1. It is a totally volunteer effort with both small and large business
participating equally. With respect to federal funding to small and
large business participating in the FOA 36 projects the interface to
the government is burdensome and has significant overhead. Larger
organizations often have the internal legal and procedural expertise to
fully understand all of the federal regulations and contractual issues.
Small businesses often do not have the upfront moneys for initial
investment in this expertise. Additionally, I expect from experience,
the procedural overhead to interface the federal contracts adds 10-25%
to the costs on some contracts.
Q2. With so many organizations participating, do you feel that the
small business concerns have been sufficiently incorporated?
A2. I would say that most small businesses that do not specialize in
interfacing to the federal government, will find incorporation into
these contracts very burdensome and problematic. They will need to work
through larger firms as subcontractors and will not bid directly to the
federal government in many cases. Generally, doing business for
significant amounts of moneys ($100,000s+) with the federal government
is a real hassle. Most of the business experiences used to service
clients in the private sector do not apply to servicing federal
contracts.
Questions Submitted by Represenative Randy Neugebauer
Q1. In your testimony, you mention the consistency of interoperability
testing and certification across all products implementing the 100+
technical standards used to integrate smart grid systems:
a. What certainty do we have that the existing technologies
perform as claimed?
A1. The Smart Grid Interoperability Panel's Testing and Certification
Committee, which I am the Chairperson, is implementing an
``Interoperability Process Reference Manual.'' The manual specifies
that for a smart grid standard to be ``SGIP approved'' it must have
followed international Guidelines for standards-based product testing
and certifying the test results. These two standards are named ISO/IEC
17025 and ISO/IEC 65 (forthcoming new version is ISO/IEC 17065.
These two Guidelines help ensure that products, as tested,
``perform as claimed.'' At this time the buying market place does no
know if products ``perform as claimed.''
As part of this effort Smart Grid Interoperability Panel's Testing
and Certification Committee is working with Amerian National Standards
Institute (ANSI) to accredit the testing labs and the certification
authorities used to do all products in the SGIP related smart grid.
Q2. How can the failure of a product to be interoperable slow ongoing
smart grid implementation?
A2. The smart grid standards support information flow in a secure
manner. The user sees the information flow as the implementation of
technical (managing devices) or business (bidding for electricity for
tomorrow) processes necessary to execute the business' objectives. Two
cases of products failing to interoperate:
Case 1: standards based products are purchased and assumed to be
interoperate with other products based on that standard and they do not
`initially' work or they are implemented and show failures later, this
breaks the business or technical process they support. Fixes take time
and slow overall implementation within the Smart Grid.
Case 2: The buyer of the standard based product assumes, as is
the case normally currently, they have to test the product with other
products to ensure that it works ``as advertised.'' This internal
testing takes days, weeks, months, or years. This delays the
implementation of the process in the business and among business and
slows interoperability across parts of the smart grid.
Q3. What is the status of the work the National Institute of Standards
and Technology is undertaking to further the testing and evaluation
framework for smart grid technology to ensure that products sold
perform as intended?
A3. See the first question for the answer. It is all focused on the
output of the Testing and Certification Committee, the Architecture
committee and the Cyber Security Work Group. These three together chose
the appropriate standards, test and certify products based on those
standards and ensure the implementations meet the cyber security
requirements.
Q4. From your experience, is NIST adequately focused on supporting
conformance and interoperability testing on the smart grid technologies
that are being used already?
A4. Yes, the best they can. Unlike HHS' mandate, that gives them the
power to ensure conformance and interoperability within EHR products
(via moneys from Center of Medicaid and Medicare) NIST was not given
this ability within the EISA 2007 act. Because of that implementers of
interoperable smart grid products must fund the effort themselves.