Good morning, Mr. Chairman and Commissioners,
Draft order E-27 would direct the North American Electric Reliability Corporation, or NERC, to conduct a study evaluating the need for improvements to Reliability Standard CIP-014-3, which pertains to physical security for the electric grid.
In broad terms, the Physical Security Reliability Standard requires transmission owners to perform risk assessments on a periodic basis to identify their transmission stations and transmission substations that, if rendered inoperable or damaged, could result in instability, uncontrolled separation, or cascading within an Interconnection. The Standard includes criteria to identify the transmission stations and substations for which the transmission owner must perform a risk assessment. The Standard also applies to those primary control centers that operationally control the transmission stations and substation identified in the risk assessment. The transmission owner must have an unaffiliated third party verify the risk assessment. Applicable transmission owners or operators must then conduct an evaluation of the potential threats and vulnerabilities of a physical attack to each transmission station, substation, and associated primary control center identified in the risk assessment, followed by the development and implementation of a documented physical security plan. The evaluation and physical security plan are also subject to unaffiliated, third-party review.
In recent months, there has been an increase in reports of physical attacks on electric substations that in some incidents have resulted in thousands of customer outages. Prominently, on December 3, 2022, a physical attack on two substations in Moore County, North Carolina caused severe damage to the facilities and resulted in forty-five thousand customer outages.
In light of the need for continued vigilance against physical threats to the Bulk-Power System, the draft order would require NERC to provide an assessment of the effectiveness of the Physical Security Reliability Standard that considers, but is not limited to, the potential risks highlighted by recent events. Specifically, the draft order would direct NERC to conduct a study evaluating:
- the adequacy of the Applicability criteria set forth in the Physical Security Reliability Standard;
- the adequacy of the required risk assessment set forth in the Physical Security Reliability Standard; and
- whether a minimum level of physical security protections should be required for all Bulk-Power System transmission stations and substations and primary control centers.
The draft order would direct NERC to submit a report to the Commission on the study’s findings and recommendations within 120 days of the date of the order.
This concludes my presentation. I am happy to take any questions you may have.