Smart Grid and Advanced Metering Infrastructure technologies have been publicized in recent years as having the capability to “modernize” the power grid. In fact some stories would have you believe that the Smart Grid is more beneficial than the wheel.  Even with the perceived benefits of the Smart Grid, these emerging technologies will introduce new vulnerabilities with potentially significant ramifications to reliability and security.  However, before we tackle the security of the Smart Grid, we should first look at how we actually got to this point.

In the mid to late 90s, several states deregulated the “monopoly” of the electric utility.  Previous to deregulation, utilities owned all the generation, transmission, and distribution assets. In exchange for allowing the monopoly, states heavily regulated the utilities while setting the rate of return of profit based on cost of service and future power needs. Despite the overall reliability of the electric grid, states deregulated pointing to the airline industry where competition significantly drove down prices, and phone companies where deregulation spawned an era of technological advancements, which might have been suppressed if the phone company was allowed to continue as a monopoly.  With these comparisons in mind, consumers were promised lower rates and newer services as deregulation would allow private companies to build lower cost plants. Ten to fifteen years later, the reality is that consumers have never had access to truly competitive rates; independent generation operators have gone bankrupt and the only major advancement seen by the consumer is a “smart” meter at the house benefiting the utility more than the consumer.

This finally brings us to the present day. Advancements in chip size, data storage, and wireless technologies are enabling two-way communication between the utility and the consumer. At first glance, there is an immediate benefit to the utility. With intelligent AMI endpoints, Smart Meters, the utility can create new revenue streams leveraging time-of-use (TOU) billing and reduce operating costs by pinpointing outages and mobilizing restoration crews.   These new technologies are also enabling the next generation of alternative sources of clean energy, distributed generation, solar, and wind.  The consumer is also benefiting with the influx of smart appliances and electric vehicles. Although, many of these technologies may not reduce utility rates, they are affecting people’s behavior and enabling social change with respect to energy impact. However, none of this is possible without the transmission and storage of information; as we have seen from credit card companies and cell phones it is the security of that information that is most important. So at the end of the day, the comparison to phone company deregulation is not that far off because the same security issues that cell phone users are experiencing will more than likely affect the utility customer in the near future.