Subsidies to Power Plants Are No Substitute for a National-Security Plan

In an effort to deal with the market and non-market forces inflicting economic losses on coal- and nuclear-power plants, the Trump administration is seeking through regulation to force state and regional grid operators to purchase bulk power from coal- and nuclear-power producers to slow the (early) retirements of those facilities. The administration is justifying this policy on national-security grounds: “The Nation’s security and defensive capabilities . . . depend on an electric grid that can withstand and recover from a major disruption, whether from an adversarial attack or a natural disaster.” And: “Resources that have a secure on-site fuel supply . . . are essential to support the Nation’s defense facilities . . . and other critical infrastructure.”

It is true — and unsurprising — that foreign powers would test their ability to disrupt the U.S. power grid, a crucial component of the economy generally and of our national-defense infrastructure in particular. Nor are natural threats to that infrastructure unimportant. The question is whether this indirect measure — federal intervention in wholesale electricity markets — to address this national-security problem is a sound substitute for federal policies designed to deal with those threats directly. Moreover, states have nontrivial incentives to address reliability and resiliency threats so as to minimize the possibility of blackouts or service disruptions. Is it obvious that the federal intervention proposed by the Trump administration would yield an improved national-security outcome?

It is hardly the case that the federal government, state and regional authorities, and the private sector are ignoring this problem. Are there strong reasons to believe that ongoing and expected actions are insufficient? Nowhere has the Trump administration attempted to make that argument. Indeed, even the Department of Energy has responded to the cybersecurity threat, with its “Multiyear Plan for Energy Sector Cybersecurity” (March 2018). Does the federal government’s right hand know what its left hand is doing?

More generally, it is clear that pipeline operators recognize the importance of the cybersecurity threat to the resiliency of the natural-gas/power-grid nexus and are working with federal officials to address cybersecurity threats through planning efforts and investments. The gas industry last year participated for the first time in the GridEx IV training exercise, in which industry participants were tested with a set of simulated cyber and armed assaults on U.S. electric networks. In March, the Transportation Security Administration (TSA) released an updated version of its pipeline-security guidelines, in which it outlines the measures that should be taken to protect pipeline assets in the cybersecurity context.

It must be the case that TSA has access to the same classified information on cyber and physical threats that is available to the Department of Energy. It is far from clear that a new DoE regulatory policy on power purchases would improve on the evolving policy of the TSA, particularly since the latter is designed specifically in terms of the threats, while the Energy Department proposal is a far cruder effort, one designed merely to keep the coal and nuclear generating plants open. It is the TSA guidelines that are consistent with the security objectives and standards established by the government’s National Institute of Standards and Technology, which in April updated its official framework of cybersecurity objectives and standards that includes protection, defense, resilience, and recovery methods.