Electricity generation. U. S. and Canadian Electricity Suppliers We Contacted Have Identified Information about GMD Effects, but Have Less Information about HEMP Effects

		Electricity Suppliers Have General Information about GMD Effects and Some Selected Suppliers Have Taken Steps to Evaluate Their Networks

U.S. and Canadian government and industry organizations have studied  and publicly reported on potential GMD effects on the electric grid. These  studies have covered the general threats to the nation’s electric grid from  GMD but do not cover the unique aspects of individual suppliers’  generation and transmission networks that could potentially make them  more or less vulnerable to GMD events. NERC  has identified two predominant risks to the system: (1) potential voltage  instability in the transmission system caused by insufficient reactive  power support and (2) possible damage to system components. Government and Industry Are Taking Steps to Better Understand Effects of HEMP on the Grid

According to U.S. government and industry officials we spoke with,  completed research and available information on the vulnerability of the  grid to HEMP, along with its potential effects, is less extensive and lags  behind industry understanding of GMD. Two of these three suppliers reported studying the  potential impact of HEMP events on their network in conjunction with  these suppliers’ design of hardened control centers expected to be  resistant to HEMP and other hazards. Further, all eight suppliers who stated they had not  performed any studies of the potential impact of HEMP on their networks  also noted a lack of key information on the nature and risk of the HEMP  threat that would allow them to complete studies of their networks and  develop corresponding mitigation measures. U.S. and Canadian Electricity Suppliers Have Made Improvements to Provide Protection against GMD and HEMP Events, Including Some That NERC Requires and Monitors

		Selected Suppliers Have Made Technology Improvements Primarily to Enhance Overall Network Reliability which Can Also Help Protect Against GMD and HEMP Events

Overall, 10 of the 13 selected suppliers we contacted reported making  technological improvements to provide a range of system reliability  benefits, some of which can also provide collateral benefits for protecting  against GMD and HEMP events. In the future, suppliers could face increased costs for protecting against  GMD, depending on the corrective actions needed to address  vulnerabilities, which suppliers are to identify in accordance with reliability  standard TPL-007-1. Regulated U.S. Suppliers’ Costs for Protecting against GMD are Generally Recoverable, but Cost Recovery is Less Certain for HEMP Events

			Federal and State Regulators Have Made Specific Assurances about Recovering GMD-Related Costs

At the federal level, in FERC’s September 22, 2016, order approving  NERC’s TPL-007-1 reliability standard, FERC stated that cost recovery  for prudent costs associated with or incurred to comply with the standard  would be available to suppliers for whom FERC approves rates. However, one supplier said that their state regulators prioritize reliability,  and they expect the regulators would allow recovery of costs for HEMP  protection if suppliers determined such protection was needed. Independent Generators May Face Challenges Recovering Costs for Protecting Against GMD and EMP Events

Independent generators—generators that sell power in wholesale  electricity markets and are not part of an integrated utility—do not have a  mechanism assuring cost recovery for reliability improvements, including  such as GMD and HEMP protection. Agency Comments

We provided a draft of this report to DOE, DHS, NOAA, NRC, FERC, and  NERC for their review and comment. To determine the extent to which U.S. and Canadian electricity suppliers  have identified information about the effects of GMD and HEMP on the  electric grid, we reviewed selected U.S. and Canadian government  studies issued—or commissioned by—DHS, DOE, U.S. National  Laboratories, Natural Resources Canada, the Federal Energy Regulatory  Commission (FERC), and NERC since 2010 regarding, among other  things, the vulnerability of transmission and generation infrastructure and  equipment to GMD and HEMP events, possible measures to mitigate the  effects of GMD and HEMP, and areas requiring further research. We also  interviewed officials from 13 U.S. and Canadian electricity suppliers to  identify steps they had taken to comply with NERC reliability standards as  well as any additional actions to prepare for and mitigate potential GMD  and HEMP effects, such as replacement of older equipment or investment  in spare transformer programs. Appendix IV: Select Government and Industry Studies on Electromagnetic Events

An electromagnetic event can result from a naturally occurring, large- scale geomagnetic disturbance (GMD), caused by severe solar weather,  or from human-made sources, such as the high-altitude detonation of a  nuclear device to create a high-altitude electromagnetic pulse (HEMP). For example, as shown in the table, the  North American Electric Reliability Corporation’s (NERC) and the  Department of Energy’s (DOE) June 2010 report included a plan to form a  task force of government and industry efforts to examine GMD.
Why GAO Did This Study

A severe GMD or HEMP event could potentially have significant impacts— including power outages—on the nation's electric grid, which could affect other sectors that depend on electricity, such as communications. In response, NERC created two regulatory standards requiring certain U.S. and Canadian suppliers to assess their vulnerability to GMD and take appropriate steps in response.
GAO was asked to review electricity industry actions to prepare for and mitigate electromagnetic risks. This report examines, among other things, (1) to what extent U.S. and Canadian electricity suppliers have identified information about GMD and HEMP effects on the grid, (2) what steps selected U.S. and Canadian suppliers have taken to protect against GMD and HEMP, and (3) what opportunities exist for U.S. suppliers to recover costs for protecting against GMD and HEMP.
GAO examined government and industry studies and interviewed federal and industry officials about potential GMD and HEMP effects on grid infrastructure; reviewed regulatory standards, monitoring processes, and NERC compliance audit data from April 2015 through August 2017; reviewed federal regulations and interviewed state regulators on cost recovery issues; and interviewed officials from a nongeneralizable sample of 13 U.S. and Canada electricity suppliers, selected based on factors such as GMD experience and preparation for GMD and HEMP events.
GAO provided a draft of this report to five federal agencies and NERC. Technical comments provided were incorporated as appropriate.

What GAO Found

U.S. and Canadian electricity suppliers—electricity generation and transmission owners and operators—have identified information on the potential effects of a severe geomagnetic disturbance (GMD), resulting from a solar storm, but have identified less information about the potential effects of a high-altitude electromagnetic pulse (HEMP), resulting from the detonation of a nuclear device, on the electric grid. There is general agreement that more research is needed on both GMD and HEMP. Government and industry have publicly reported on the potential impacts of GMD on the grid. For example, one study identified two main risks: (1) potential voltage instability, causing power system collapse and blackouts; and (2) possible damage to key system components. However, these studies do not address the unique aspects of individual suppliers' networks. Recognizing this, 11 of the 13 selected suppliers GAO contacted said they had assessed their network vulnerability; of these 11, 6 expected GMD effects to be relatively small. In contrast, Department of Energy (DOE) and industry officials told GAO that information on HEMP effects is limited in that suppliers lack key information to fully understand HEMP effects on their networks. Historically, study of HEMP effects focused on impacts to military equipment rather than the commercial electric grid. Recently, DOE and industry began research to better understand HEMP effects. Of the 11 suppliers who responded to GAO about their HEMP efforts, 3 reported having studied the impact of HEMP on their networks and 2 of the 11 had integrated, or planned to integrate, HEMP-resistant features into new control centers.
Of the 13 selected suppliers GAO contacted, 10 reported making technological and operational improvements to enhance overall network reliability that also provided some protection against GMD and HEMP risks. For example, suppliers reported making technological improvements such as replacement of some older transformers and unprotected control centers. As of May 2017, all 13 suppliers stated they had complied with a GMD regulatory standard issued by the North American Electric Reliability Corporation (NERC)—the federally designated regulatory authority responsible for developing and enforcing reliability standards–-to develop operating procedures to mitigate GMD effects. A second regulatory standard—which is to be implemented in phases through 2022—will generally require suppliers to further assess their vulnerability to GMD.
Selected U.S. suppliers told GAO that costs they have incurred to protect against GMD and HEMP have been relatively small so far and they expect to recover those costs through customer rates. Suppliers could face future increased costs depending on corrective actions needed to comply with the second GMD regulatory standard. Federal and state regulators indicated that regulated U.S. suppliers' costs for protecting against GMD are generally recoverable through customer rates, but recovery is less certain for protection against HEMP because less is known about HEMP risks. Further, some suppliers could face challenges to cost recovery. Specifically, independent owners of power plants—those that sell power in wholesale electricity markets and are not part of an integrated utility—must recover reliability improvement costs through their sales of electricity and are not assured of cost recovery; federal regulators told GAO they are aware this could be a challenge for these independent owners.