and potential cyber security challenges Valentine Emesih April

and potential cyber security challenges Valentine Emesih April

and potential cyber security challenges Valentine Emesih April 4, 2013 Who is CenterPoint Energy? A domestic energy delivery company Natural gas sales and delivery Competitive gas services (CES) Over 2.2 million meters in the Houston area 17.2 GW peak demand Interstate natural gas pipelines

Over 25,000 commercial, industrial and wholesale customers across central U.S. Electric transmission and distribution Over 3.2 million residential, commercial and industrial customers in six states Two pipelines in the mid-U.S., connecting to over 20 other pipelines Natural gas gathering and processing 150 separate systems in major producing fields in Arkansas, Louisiana, Oklahoma and Texas 2 The Texas electric market

Restructured in 2002 for retail competition Retail Electric Providers (REPs) Unregulated Power Generating Companies Compete for customers Bill customers Issue disconnect , reconnect orders to TDUs Unregulated Transmission and Distribution Utilities (TDUs) Regulated Own and

maintain lines power Step-down Substation Deliver power to customers Read Commercial Customer meters Restore power after outages Execute Service

Residential Customer Orders 3 Smart Grid Conceptual Model - NIST Electricity Distribution Customer Operations Market

System of Systems Power and Energy Layer IT/Computer Layer Communication Layer CenterPoint Energys smart grid Advanced Metering System 2.2 + million meters installed 219+ million meter reads / day 97% service orders electronic 4 million remote service orders

293,000 gallons of gas saved / yr 2,500 tons of CO2 prevented / yr Distribution Automation Field equipment 600,000 Texans get 15-minute usage data 15,000 In-Home Displays in TX Automated switching devices Line monitors Substation monitoring Implement Advanced Distribution Management System (ADMS) Leverage AMS investment

Usage data - Consumers save $35 million in fees Common telecommunications network for AMS and IG AMS meter data feeds outage analysis module of ADMS 4 CNPs Advanced Metering System View construction at Data Collection Engine (Itron DCE 3.0

SP1) Digital Communications Backhaul Meter Data Management System (eMeter MDM 6.2) Itron Open Way HW 2.0 SR 3.0 Legacy Systems Wireless Communications Environment (GE WiMax with GSM Backup) Legend Existing Smart Meter Texas Portal

Recently Deployed Combined with back office computer systems and integration, our AMS provides: Daily register reads Remote connect / disconnect / on-demand reads Daily 15 minute interval reads Access to data via Smart Meter Texas portal 11 AMS Successes Meter Deployment is Complete

Meters - Provisioned, accepted and approved 2,283,012 Cell Relays - Installed in production 5,434 Take Out Points - Installed in production 140 (132 AMS, 8 IG) Service orders completed electronically 4,073,075 96.9% of service orders successfully executed electronically Significantly reduced windshield time for readings and service orders Average electric service order completion time is 30 minutes Enabled extended working hours & shortened order execution times Smart Meter Texas Portal makes consumption data available to Retail Electric Providers (REP) Over 2 million customers in the CNP service territory Over 600,000 consumers get consumption data directly from SMT or indirectly, for example in an email from their REP 12 Consumer benefits of smart meters

Available NOW Available SOON Remote meter reading, on demand re-reads, fewer estimated reads Faster, cheaper automated move-in/out, switching Pre-paid service, time-of-use rates 15-minute usage data to promote energy conservation via Energy analysis and cost comparison tools Easier integration of distributed generation and renewables Automatic outage notification

Available in the FUTURE Support for plug-in hybrid electric vehicles Consumer remote control of thermostats and appliances (HAN) Energy management systems 6 Some Components of our Intelligent Grid (IG) Combined with back office computer systems, our IG technology, when fully deployed, will automatically identify the location of power outages, isolate faulted sections of the main feeder portion of the network and re-route power from other sources, essentially automatically restoring as much of the system as possible. 14 2010-2014 Deployment of the Intelligent Grid IG Infrastructure

Automate up to 29 substations Smart Relays & Transformer Monitors 18 substations complete through 9/30/12, remainder by YE 2013 Install about 625 intelligent grid switching devices (IGSD) on about 230 distribution circuits Provide Remote/Automated Switching Capabilities Include Distribution Line Monitoring, Dual Communications Capabilities, Physical & Cyber Security Provisions, etc. 293 IGSDs installed through 9/30/12, 374 by YE 2012, Remainder in 2013 Implement an Advanced Distribution Management System (ADMS) Leverage AMS Communications Investment Common telecommunications backhaul network for AMS and IG AMS meter data feeds outage analysis module of ADMS While Phase 1 covers about 15 percent of CenterPoint Energys service area, some of the improvements will benefit consumers in the entire system. 15 Consumer Benefits of Intelligent Grid View demo at

Initial Benefits More precise identification of outage locations, resulting in faster restoration of electric service Reduction in time required to perform circuit switching to isolate fault Long-term Benefits Improved reliability and faster restoration, especially during major weather events Enhanced and improved customer communications and notifications

Following Hurricane Ike in 2008, the Mayors Task Force concluded that a smart grid offers the best return-on-investment for improving grid resilience and enabling storm recovery system-wide and that [f]inding the means to accelerate CenterPoint Energys deployment of intelligent grid technology in the Houston area is the Task Forces strongest recommendation. It has been estimated that full intelligent grid 16 functionality could improve reliability by up to 30%. Home Area Network (HAN) Enabled by AMS communications system Water Heater Smart Thermostat Utility Apps Retail Apps Portal

Customer Self-Service RF RF(Radio (Radio Frequency) Frequency) Zigb Zigb ee ee Pool Pump Compressor Energy Management and Conservation via a HAN for in home devices 17 Challenges

First-of-a-kind deployment Performance at operational scale Knowledge transfer Volume of data Business transformation Process change activities Subject matter expertise Need to consistently engage employees Consumer education and myth-busting 13

Consumer / Data Privacy Statutes and rules state that meter data belongs to the customer Market rules also recognize various market participants need for meter data in order for the market to function Usage data, including historic data, is available to customer, TDU, and the retailer of record Data is available to other parties only with customer permission Personal information such as social security number is not in the system 15 Components of Cyber Security Strategy

Prevention Detection Identify anomalous behavior Detect malicious code and other events Gather digital evidence Response Reduce risks and vulnerabilities Intervene and stop attempted occurrences Mitigate effects

Address short-term direct effects of incident (public safety et al) Recovery Restore normal operation & Address issues CenterPoint Energys Cyber Security Perspective Collaboration is Key: cyber threats are evolving and require collaboration, information sharing with the government and continued collaboration with the industry to effectively protect the nations critical infrastructure. Our goal is to focus our resources on facing the cyber threat. Our Cyber efforts parallel our corporate philosophy:

Public Safety Energy Delivery Reliability Customer Service Cyber Security Efforts We are entrenching a strong cyber security culture: Protection of customer privacy, and other essential information Cyber security is incorporated into our process, procedures, and operation through various mechanisms over time We have evolved from perimeter defense to defense-in-depth

and maturing to an agile defense posture Established talents and tools to assist our current efforts Continuously educating our workforce Be aware and be the first line of defense We recognize our efforts need to evolve to match ever-changing threats Enhancing system resiliency to cyber incidents Identifying and coordinating activities with the right stakeholders Cyber Security Participant Observations Shared Goals Risk Based Approach Information Sharing and Situational Awareness Leveraging Tools and Techniques Security Clearance

Cyber Security Regime Incident Management Collaboration 24 Whats Next? Smart Meters Are Just The Beginning Smart Meters Smart Meter Texas Portal HAN Devices Smart Appliances Phase 1: Customer Insight Intelligent Grid Price control / load control Electric vehicles Phase 3: Customer Co-Creator of Value 2010

2011 2012 Storage Phase 2: Customer Engagement Micro Grids Advanced Grid Aggregated Demand Management 2013 2014 2020 24 Conclusion

We take seriously the responsibility of protecting our customers, employees, assets, and communities in which we operate, and thus cyber security is a top priority for CenterPoint Energy. We also recognize the importance of critical infrastructure to our national security. Because cyber threats are constantly changing and evolving, we support voluntary programs that encourage partnership, collaboration, sharing of information and technology, and the preparedness necessary to mitigate and respond to the ever changing nature of cyber attacks. Gary W. Hays, VP & CIO Centerpoint Energy DOE Acknowledgement and Disclaimer Per the DOE Grant Agreement,: If you publish or otherwise make publicly available the results of the work conducted under the award, an acknowledgment of Federal Support and a disclaimer must appear in the publication of any material, whether copyrighted or not, based on or developed under this project, as follows: Acknowledgment: This material is based upon work supported by the Department of Energy under Award Number [DE-OE0000210] Disclaimer: This report was prepared as an account of work sponsored by an agency of the United States Government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product,

or process disclosed, or represents that its use would not infringe privately owned rights. Referenced herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof. The views and opinion of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof. 32 [email protected] Appendix Lessons learned / keys to success Strong governance processes:

Risk-, Change-, and Financial management Project planning/scheduling, metrics/benefits reporting Technical architecture, etc. Integrate and align project team, vendors and support functions Well defined standards and deployment plan Consumer engagement plan Early planning of transition from project to operations Strong industry collaboration EEI EPRI DOE SGIP 17 Smart meters are accurate and secure CenterPoint Energy takes the accuracy of its meters very seriously, which is why we have in place a rigorous testing and quality assurance process:

Meter testing by the manufacturer at the plant and by CenterPoint Energy Comparison testing of smart meters vs. traditional meters Independent third-party accuracy tests Digital photos of removed meters to verify final readings Individual smart meter accuracy tests upon customer demand Independent meter software review Comprehensive cyber security program based on national standards

Energy usage data belongs to the consumer: shared only when authorized in writing by the customer or authorized by regulatory authorities as necessary to conduct business (such as for billing). Most likely cause of high bills is increased usage (e.g. heating/cooling) 14 Health and safety cell phone Exposure to RF emissions from digital meters is much less than:

Televisions and remote controls Cellular telephones Bluetooth earpieces and USB Cordless telephones Laptop computers WiFi routers and base stations Wireless smoke detectors Microwave ovens Remote garage door openers Remote keyless automobile systems Motion detectors Hair dryers Wireless baby monitors

smart meter 16 Successes and recognition Sharing our experience with the industry More than 730 tours of our Energy InSightsm technology center Articles, white papers, webinars, presentations, documentaries Intelligent Utility, Transmission & Distribution World, Energy Central World Energy Council, the White House, GridWise, Distributech, PBS Collaborations

Take a virtual tour at Smart Grid Energy Training Coalition Itron OpenWay Executive Forum EEI Smart Grid Advisory Group Smart Grid Consumer Collaborative U.S. Dept. of Energy cyber security, green button 2011 survey of CNP customers shows 80% approval of smart meters CenterPoint Energy is on the point of the spear in teaching the rest of the United States and the world how we can work with consumers to enhance their electrical usage U.S. Secretary of the Interior Ken Salazar 18 The future

Integrated advanced transmission, distribution, and meter management and control system Advanced analytical applications which create new operations-, customer-, and market-based solutions Two-way, real-time customer engagement/communication system Business transformation initiatives that advance processes and create new business outcomes Aggregated demand response platform to enable virtual supply of generation 19 Some collaboration stakeholders

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