Federal Energy Regulatory Commission June Cyber Security and Reliability Standards Regis F. Binder Director, Division of Logistics & Security Federal Energy Regulatory Commission

June The views expressed in this presentation do not represent the views of the Federal Energy Regulatory Commission or of the United States Disclaimer

Federal Energy Regulatory Commission June Increased Cyber Security Concerns Automation & Data Gathering Connectivity of Control Systems –To Corporate Computers –To Vendors Use of Wireless Communications Interest of –Nation States – the equalizer –Hackers –Criminals –To Internet –To Remote Maintenance

Federal Energy Regulatory Commission June Cyber Security and Reliability Standards Historically – Voluntary Standards Urgent Action Standard 1200 –Voluntary –Adopted by NERC Summit 2003 –Replaced by CIP thru CIP-009-1, June 2006

Federal Energy Regulatory Commission June Enforcement of Reliability Standards Western Electricity Coordinating Council Midwest Reliability Organization Southwest Power Pool Regional Entity Texas Regional Entity Northeast Power Coordinating Council Reliability First Corp SERC Reliability Corp. Florida Reliability Coordinating Council NERC has regional delegation agreements with 8 Regional Entities

Federal Energy Regulatory Commission June 20096

Federal Energy Regulatory Commission June Standards Development Process Standard Authorization Request Drafting Team Formed Proposed Standard Developed Comments Solicited Ballot –Quorum: 75% of Ballot Pool –Approval: 2/3 of Weighted Segment Votes Re-ballot? Board of Trustees Approval FERC & Canadian Approvals (w/ Public Comments)

Federal Energy Regulatory Commission June Canada & Mexico 7 Canadian Provinces Interconnect With U.S.A. Different Laws – Information Protection NERC Works With Provinces to: –Establish Standards –Enforce Standards Mexico – Northwest Corner of Mexico

Federal Energy Regulatory Commission June Users, Owners & Operators of BPS NERC Compliance Registry Region FRCC MRO NPCC RFC SERC SPP TRE WECC TOTAL # of Registered Entities

Federal Energy Regulatory Commission June FERC Concerns With Reliability Standards Development Process Emergency & Security Issues Process is: –Public –Slow –Uncertain on Outcome

Federal Energy Regulatory Commission June Areas Addressed by CIP Standards Identification of critical assets & critical cyber assets –Generating stations –Transmission stations –Control Centers

Federal Energy Regulatory Commission June CIP Standards Continued I. Management involvement Security of sensitive information Cyber security training Personnel risk

Federal Energy Regulatory Commission June CIP Standards Continued II. Physical security of critical cyber assets Change control Access control Electronic security perimeters

Federal Energy Regulatory Commission June CIP Standards Continued III. Incident response Recovery plans

Federal Energy Regulatory Commission June Critical Assets Facilities, systems, and equipment which, if destroyed, degraded, or otherwise rendered unavailable, would affect the reliability or operability of the Bulk Electric System. NERC April 7, 2009 Letter to Industry –Self-certification compliance survey –Results “raise concern” about identifying Critical Assets and Critical Cyber Assets –63% of Transmission Owners had at least one Critical Asset –Only 29% of Generation Owners and Generation Operators had at least one

Federal Energy Regulatory Commission June FERC Approval of CIP Standards Order No. 706 January 18, 2008 Required many modifications –Critical Asset identification – required a wide-area oversight –Exceptions to Compliance – required oversight & approval mechanism –Reasonable Business Judgment language – required removal –Defense in Depth –Revoke Access Authorization

Federal Energy Regulatory Commission June Order No. 706 Modifications Phase I (Version 2 of CIP Standards) Low-hanging fruit Reasonable Business Judgment language removed Approved by Ballot Body & NERC BoT Filed with FERC May 22 Expect two more phases

Federal Energy Regulatory Commission June Compliance & Enforcement Regional Entities are front line Ways of monitoring –Compliance Audits –Self-Certifications –Spot Checking –Compliance Violation Investigations –Complaints Nuclear Stations – Order No B –Self-Reporting –Periodic Data Submittals –Exception Reporting

Federal Energy Regulatory Commission June Enforcement Actions Mitigation Plan Remedial Action Directive Sanctions –Monetary –Other FERC Oversight FERC Can Originate

Federal Energy Regulatory Commission June Smart Grid A smarter grid would permit two-way communication between the electric system and a much larger number of devices located outside of controlled utility environments Interoperability standards and protocols leave no gaps in cyber or physical security