RE: NERC Statements on Impact of Security Threats on RTOs

I agree with Joe. The IOUs will point to NERC as an "objective third party" on these issues.

-----Original Message-----
From: Connor, Joe
Sent: Friday, September 28, 2001 3:05 PM
To: Ingersoll, Richard; Shapiro, Richard; Rodriquez, Andy; Nicolay, Christi L.; Steffes, James D.; Robertson, Linda; Shelk, John; Yeung, Charles; Novosel, Sarah; Fulton, Donna; Alvarez, Ray; Roan, Michael; Maurer, Luiz; Walton, Steve; Comnes, Alan; Perrino, Dave; Staines, Dan; Fromer, Howard; Allegretti, Daniel; Hoatson, Tom; Twiggs, Thane; Shortridge, Pat
Subject: RE: NERC Statements on Impact of Security Threats on RTOs

Dick, maybe it is an over reaction, but like you said, we cannot afford to let statements like those made by "high" NERC officials stand or you can bet every IOU in the SE will be sending copies to their PSCs, governors and congressmen as proof that FERC is going too far too fast, especially in this time of war.

-----Original Message-----
From: Ingersoll, Richard
Sent: Fri 9/28/2001 11:38 AM
To: Connor, Joe; Shapiro, Richard; Rodriquez, Andy; Nicolay, Christi L.; Steffes, James D.; Robertson, Linda; Shelk, John; Yeung, Charles; Novosel, Sarah; Fulton, Donna; Alvarez, Ray; Roan, Michael; Maurer, Luiz; Walton, Steve; Comnes, Alan; Perrino, Dave; Staines, Dan; Fromer, Howard; Allegretti, Daniel; Hoatson, Tom; Twiggs, Thane; Shortridge, Pat
Cc:
Subject: RE: NERC Statements on Impact of Security Threats on RTOs

I THINK OUR RESPONSES TO THE NERC STATEMENTS ON SECURITY THREATS ARE OVER REACTION BUT I DO THINK WE NEED TO ADDRESS ANY STATEMENTS THAT RELATE TO THE LARGE RTO'S BEING LESS RELIABLE. THERE IS NOT ANY DATA TO SUPPORT SUCH A CONCLUSION.

-----Original Message-----
From: Connor, Joe
Sent: Thursday, September 27, 2001 9:02 AM
To: Shapiro, Richard; Rodriquez, Andy; Nicolay, Christi L.; Steffes, James D.; Robertson, Linda; Shelk, John; Yeung, Charles; Ingersoll, Richard; Novosel, Sarah; Fulton, Donna; Alvarez, Ray; Roan, Michael; Maurer, Luiz; Walton, Steve; Comnes, Alan; Perrino, Dave; Staines, Dan; Fromer, Howard; Allegretti, Daniel; Hoatson, Tom; Twiggs, Thane; Shortridge, Pat
Subject: RE: NERC Statements on Impact of Security Threats on RTOs

I think you also need to consider having someone contact R. J. Rudden about Steve Garwood's statements concerning the large RTOs jeopardizing reliability. His statement was really amateurish. Rudden's web page ( www.rjrudden.com) <http://www.rjrudden.com)< includes a list of clients, including the following that should be concerned: Calpine, Enron, ISO NE, Midwest ISO, NY ISO, PJM, Southern Energy, and U.S. Gen.

Concerning Christi's question on whether we need a computer group looking at the question of redundancy of systems, I don't think we need it at this point. It is a given that a complete backup system for all commercial aspects of the systems will be required, along with a handoff protocol for emergency control over all transmission operational aspects of the systems. The specifics of these need to be decided when the hierarchy of each RTO is determined.

-----Original Message-----
From: Shapiro, Richard
Sent: Thu 9/27/2001 9:15 AM
To: Rodriquez, Andy; Nicolay, Christi L.; Steffes, James D.; Robertson, Linda; Shelk, John; Yeung, Charles; Ingersoll, Richard; Novosel, Sarah; Fulton, Donna; Alvarez, Ray; Roan, Michael; Maurer, Luiz; Connor, Joe; Walton, Steve; Comnes, Alan; Perrino, Dave; Staines, Dan; Fromer, Howard; Allegretti, Daniel; Hoatson, Tom; Twiggs, Thane; Shortridge, Pat
Cc:
Subject: RE: NERC Statements on Impact of Security Threats on RTOs

Having watched the whole string of e-mails on this issue, I fully agree with Andy's observations and those of others who have made similar statements. In response to Andy's(and Dave Perrino's) question as to whether we respond to the BS of NERC, absolutely..We should call them on this shameless use of an American tragedy...we should correct them on the facts and use this as an opportunity to highlight their inexcusable and baseless manipulation of the WTC tragedy. NERC ought to be ashamed of itself.

-----Original Message-----
From: Rodriquez, Andy
Sent: Thursday, September 27, 2001 2:17 AM
To: Nicolay, Christi L.; Shapiro, Richard; Steffes, James D.; Robertson,
Linda; Shelk, John; Yeung, Charles; Ingersoll, Richard; Novosel, Sarah;
Fulton, Donna; Alvarez, Ray; Roan, Michael; Maurer, Luiz; Connor, Joe;
Walton, Steve; Comnes, Alan; Perrino, Dave; Staines, Dan; Fromer,
Howard; Allegretti, Daniel; Hoatson, Tom; Twiggs, Thane; Shortridge, Pat
Subject: RE: NERC Statements on Impact of Security Threats on RTOs

Christi,

This is probably one of the stupidest things I have ever heard. NERC is about as secure as a convenience store at two in the morning. They have almost no experience dealing with security, either cyber or otherwise. They are using the terrorist attacks on the 11th as a reason to blow the dust off all their old Y2K contingency plans and cash in on people's fears to strengthen their position.

In any case, I would suspect that a large RTO with a significant budget is much more likely to be secure than a dues based NERC. Look at NERC's offices. They are in a shopping mall. How secure is that? Last time I visited, they didn't even have any sort of identity cards or badge system or anything - the whole place was wide open. Anyone could walk in off the street and shut down a large portion of NERC's infrastructure by just randomly unplugging computers.

Contrast that with places like ISO-NE and NY-ISO, who have significant levels of security in their systems that are extremely sophisticated and complex. Or compare that with the MISO's hardened facility, capable of withstanding an F-4 tornado hit. You tell me whether NERC or RTOs are going to be more secure.

Dave is right on with his classification of the idea of NIMDA being an attack on the electric utility industry as preposterous. That's akin to saying that a chain letter is an attack on the banking industry because bank statements come in the mail. And Dan points out a more valid thing to consider - a terrorist isn't going to attack a tariff desk, market system, or security coordinator; they will attack nuclear units, substations, and other installations that actually matter.

I echo Dave's question - do we want to "call" NERC on this issue? It would be a very simple exercise to point to NERC's many security failings, including some initiatives they are currently sitting on. Bringing up the right details in the right forums could really undermine their reputation and nip this positioning in the bud.

(By the way - am I the only one who got a kick out of that article pointing out this 3rd grade cleverness of "NIMDA is ADMIN spelled backwards"? Gotta love journalists - always trying to find an angle. Next they'll say that the 60 in "2600" refers to the frequency of the interconnection!)

Andy Rodriquez
Regulatory Affairs - Enron Corp.
andy.rodriquez@enron.com
713-345-3771

-----Original Message-----
From: Nicolay, Christi L.
Sent: Wednesday, September 26, 2001 11:11 AM
To: Shapiro, Richard; Steffes, James D.; Robertson, Linda; Shelk, John;
Yeung, Charles; Ingersoll, Richard; Rodriquez, Andy; Novosel, Sarah;
Fulton, Donna; Alvarez, Ray; Roan, Michael; Maurer, Luiz; Connor, Joe;
Walton, Steve; Comnes, Alan; Perrino, Dave; Staines, Dan; Fromer,
Howard; Allegretti, Daniel; Hoatson, Tom; Twiggs, Thane; Shortridge, Pat
Subject: FW: NERC Statements on Impact of Security Threats on RTOs

Our NERC folks should be able to shed more light on why NERC is making statements that on their face look anti-large RTO (the other emails and comments in these document look more like "this should be reviewed".)

Do we (and other market participants) need to have a computer systems group perform a study that includes redunancy issues, etc. to counter this? Certainly, Pat Wood and Nora Brownell's testimony to Congress indicate that they believe that large RTOs will bring more security and reliability (we have included this in our SE RTO mediation comments.)

-----Original Message-----
From: Michael Reddy [ <mailto:Mreddy@epsa.org<]
Sent: Tuesday, September 25, 2001 4:09 PM
To: acomnes@enron.com; Hawkins, Bernadette; Nersesian, Carin; Yeung,
Charles; Nicolay, Christi L.; Fulton, Donna; Scheuer, Janelle; Hartsoe,
Joe; Shelk, John; Jsteffe@enron.com; Noske, Linda J.; Robertson, Linda;
Alvarez, Ray; Shapiro, Richard; Novosel, Sarah; Mara, Susan; Lindberg,
Susan; Hoatson, Tom
Subject: NERC Statements on Impact of Security Threats on RTOs

MEMORANDUM

TO: Legislative Affairs Committee
Regulatory Affairs Committee
NAERO Working Group

FROM: Scott Weiner, Legislative Affairs Committee Chair
Jim Steffes, Regulatory Affairs Committee Chair
Mark Bennett, Senior Manager of Policy
Donn Salvosa, Manager of Government Affairs

DATE: September 25, 2001

RE: NERC Statements on Impact of Security Threats on RTOs

The attached e-mail in Microsoft Word form contains statements that NERC made during a recent meeting with members of the national press. The statements concern NERC's view of the implications of terrorist threats for FERC's " Four RTO policy" set forth in its July 12th Order. The statements also may bear upon the effort to establish a new standards setting organization, particularly the possibility that NERC's responsibilities could be shifted to EISB. Also attached is an article containing the views of R.J. Rudden Associates, Inc. that discusses the risks associated with centralizing control center operations.

Specifically, NERC representatives informed the press that on September 11 "the grid was the target of an insidious cyber attack that shut down some facilities...from an information administration standpoint." They noted that this resulted in service denials, although it is not clear whether they indicated where or how much. This event was attributed to the so-called "NIMBA virus".

NERC's statements suggest a new strategy to preserve the role they've played not only in security matters, but possibly other aspects pertaining to "reliability standards." They warn against any immediate transition to fewer RTOs as envisioned in FERC's July 12th Order. Moreover, it is likely that NERC will argue that, given its expertise and experience, recent events make transitioning to a new standards organization (EISB?) ill advised.

It is unclear what, if any, impact all this may have on RTO development, the legislative effort to establish a new reliability standards body or the NERC Board's consideration of pending reform proposals at its October meeting. However, we can expect security related issues to be included in future discussions of these matters.

Please provide your reactions to the NERC statements to Mark Bennett at 202-628-8200 or mbennett@epsa.org