Energy Sector and Domestic Economy are Especially Vulnerable to Cyber Attacks

by | Aug 31, 2016

cyber securityElectricity is the lifeblood of the global economy. And it is especially the thing that energizes the American economy, now that the US leads the world in oil and shale gas production, and is on well on its way to expanding its use of renewable energy. What could threaten such advances?

In testimony before the US Congress, Energy Secretary Ernest Moniz said that cyber threats and natural disasters could seriously put the electric grid at risk and has thus listed some measures to mitigate disruptions and the economic harm that would flow from that. Generally speaking, he said that the country needs emergency response systems that kick in when fuel supplies are threatened and that the infrastructure needs to be modernized to sustain systemic shocks.

“The reliance of all of our critical energy infrastructures on electricity places a very high premium on a reliable, modern and hardened electric grid, as well as our efforts to understand, develop and evolve our emergency response capability to ever-changing and evolving cyber-threats,” Moniz testified before the US Senate Committee on Energy and Natural Resources, last week.

He said that the lurking dangers are even greater than before now that the Internet of Things is connecting 50 billion devices, all of which need electricity. The Internet of Things is a network of connected devices, which then communicates with various divisions within an enterprise so that operators can make better decisions. Oftentimes, such information is stored in the so-called cloud where people with authorization can gain access — or people without such permission.

Nearly every segment of the American economy can now access the Internet of Things where information is stored in distant services, and not on site. That’s finance, health care and telecommunications. Preventing thieves from gaining such vital information is one thing. And stopping hackers from disrupting electricity grid that facilitates the use of that data is another. 

“(T)here should be no doubt in our minds that there are nation-states and groups that have the capability to enter our systems …and to shut down…our ability to operate our basic infrastructures…whether its generating power, moving water and fuel,” Moniz said during his testimony, quoting the commander of U.S. Cyber Command and Director, andNational Security Agency. 

He goes on to discuss how natural disasters can impede the flow of electricity and economics, saying how our infrastructure is all linked. Hurricanes Katrina and Rita, for example, knocked out 85,000 utility poles, 800 distribution stations and thousands of miles of transmission lines.

What to do?  For their part, utilities are already required under the Energy Policy Act of 2005 to certify with the Federal Energy Regulatory Commission that they have developed robust systems that can continue to generate and deliver power if attacked. To comply, they are describing their potential risks based on historical accounts. Meantime, nuclear operators have their own separate requirements that they follow and that they report to the Nuclear Regulatory Commission.

It’s estimated that a single brownout can cost as much as $10 billion, which comes in the form direct losses as well as forsaken opportunities, according to the Federal Energy Regulatory Commission, or FERC. Current efforts to protect the transmission system from cyber attacks are comprised of voluntary actions that have been recommended by the North American Electric Reliability Corp

A lasting fix is a must: The electrical transmission network serves more than 300 million people and it is comprised of 200,000 miles of wires, says a congressional study. It is valued at more than $1 trillion — assets that are primarily owned and operated by private entities and ones that are interwoven into the fabric of the entire American economy.

The US is further along that it has been. But so are the hackers and those with bad intentions. Given the level of sophistication on both sides, it will remain a game of cat-and-mouse.

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