Smart meters are the devices at which individual electric power consumers will interact with utility suppliers on the proposed American smart grid. When Craig Miller, an energy consultant who works on creating the smart grid, introduced himself to a Pennsylvania utility lineman, he got an unpleasant surprise. “Smart meters,” the man informed Miller, “are a plot by Obama to spy on us.”

For a smart grid advocate like Miller, it was a painful encounter. Miller is among those who believe the smart grid is absolutely necessary to take the nation’s energy industry well into the twenty-first century. Among other things (Miller and others say), the smart grid will be an essential to enable utilities to meet increasingly complex power demand, identify and repair problems faster, work with consumers to lower their electricity bills, and reduce the environmental impact of electricity production. Yet even the most ardent advocates are coming to realize that they have to take smart grid privacy and security concerns seriously. Put most simply, the old power grid was dumb – in the sense of silent. Via the smart grid, households talk – to the utilities and, potentially, to any number of third parties. What do they say? What do they reveal? And who is listening?

Level of Concern
In November 2010, AT&T commissioned the Ponemon Institute to conduct a survey of 25,000 U.S. adults concerning ‘Perceptions about Privacy on the Smart Grid.’ The report found ‘consumers… equally split about the affect the smart grid will have on the privacy of their energy consumption records. Thirty-nine percent of respondents believe the smart grid will diminish their privacy. Twenty-four percent… are unsure as to the impact and 37 believe it will not impact or improve their privacy.’ Most significant was that among respondents who professed to know the most about the smart grid, concern about privacy was the highest. Their greatest concern was the misuse of personal information by the government and by third-party companies, which might fail to protect their personal information.

What Is the Smart Grid?
The U.S. electric power grid is the interconnected network of power plants, transmission lines, substations, transformers, and other equipment that delivers electricity to homes and businesses. Its construction dates from the early twentieth century, long before the digital age, and, therefore, most of it is a one-way power transmission system. The advent of the Internet and associated digital communication devices has made it possible to transform this one-way delivery system into an interactive system, in which (according to EEI, a power industry advocacy organization) ‘telecommunications and information technology infrastructure’ will monitor energy usage, supply, and demand to make the system ‘more reliable by automatically taking actions to help reduce service disruptions – or to minimize the effect of disruptions when they do occur.’ Additional benefits claimed for the smart grid are reduced ‘need for electric companies to build more power plants’ and reduced costs to consumers. The installation of digital smart meters, which provide two-way communication between customers and electric companies, will (it is claimed) ‘allow customers to better understand their electricity usage and to manage their electric bills more effectively.’ Yet another consumer-oriented feature, promised for the smart grid is the ability of users who have their own generating capacity—solar, wind, biomass – to sell surplus power back into the system.

Although electric utilities are the principle advocates for the smart grid, the technology has the support of the federal government via the Energy Independence and Security Act of 2007, which was enacted as Public Law 110-140 on December 19, 2007. By 2009, the U.S. smart grid industry was valued at about $21.4 billion and by 2014 is expected to hit $42.8 billion. Although various utilities have rolled out portions of the technology – including the installation of some 15 million smart meters – the conversion to a large-scale smart grid in the United States and elsewhere is still in its early stages. An extensive pilot project in Fayetteville, North Carolina, does provide a glimpse of what a fully developed smart grid may look like. The pilot project claims the ability to monitor and manage more than 250 individual ‘devices’ within each customer’s home. Such management includes the ability to ‘selectively’ reduce demand among its 80,000 customers by turning off devices in homes that are part of the smart grid program.

An Inventory of Risks
Those skeptical about or frankly opposed to smart grid technology assert two categories of risk – security and privacy.

Security Risks
Although the present-day U.S. power grid is not yet a smart grid – not yet extensively interactive –its operation does nevertheless depend heavily on the Internet. All aspects of electric power, from generation to distribution, are computer controlled. SCADA (Supervisory Control and Data Acquisition) systems remotely manage generating, buying, selling, and transmission of electric power. These systems are intensively networked via the public Internet, sometimes wirelessly. This interface between cyberspace and physical space – an ‘Internet of things’ – is vulnerable to attack by hackers who may be criminals, terrorists, or agents of foreign governments and militaries. Richard A. Clarke is just one of many security experts who have identified the power grid as a major national security vulnerability. “The… designers of the electric power grid… didn’t think about people… turning their systems into weapons… The easiest thing a nation-state cyber attacker could do today to have a major impact on the U.S. would be to shut down sections of the Eastern or Western Interconnects, the two big grids that cover the U.S. and Canada’ (Richard A. Clarke, Cyber War: The Next Threat to National Security and What to Do about It).

The smart grid would use the Internet far more intensively than the already vulnerable ‘dumb’ grid. In July 2013, the Department of Homeland Security reported that “the number of cyberattacks against the energy sector rose to 111 incidents during the first half of 2013, compared with 81 incidents for all of 2012.” The smarter the grid becomes, the more attractive – and vulnerable – it may appear to would-be attackers. After all, if each smart meter communicates with the grid, potentially any smart meter may be hacked and hijacked as a route of attack.

Privacy
The digital infrastructure at the heart of the smart grid will tell consumers a great deal about their daily energy use, not just in the aggregate, but on the level of each individual appliance. The benefits of this, as pointed out, are greater user control over energy costs and, for society as a whole, more efficient electricity generation that will significantly reduce greenhouse gas emissions. The downside is that the home – traditional bastion of personal privacy – will be in continuous automatic communication with utility companies and exposed to third parties to an unprecedented degree. The granularity of the information communicated, while potentially helpful to the consumer, will be highly revealing to whatever individuals and entities receive or intercept it.

On October 25, 2013, the National Institute of Standards and Technology (NIST) issued its first draft Guidelines for Smart Grid Cybersecurity, volume 2 of which specifically addresses Privacy and the Smart Grid. Key issues raised include:

• Specific ‘appliances and generators may potentially be identified from the signatures they exhibit in electric information at the meter… This more detailed information expands the possibility of intruding on consumers’ and other individuals’ privacy expectations.’
• Smart meters ‘and associated devices and technology will result in the collection, transmittal and maintenance of personally identifiable data related to the nature and frequency of personal energy consumption.’
• Based on smart meter data, ‘behavioral inferences… can be drawn’ concerning members of a particular household.
• ‘Smart meter data also raises potential surveillance issues relating to the methods by which the data is collected and transmitted (electronic collection transmittal rather than manual meter reading and compilation).’
• As ‘Smart grid technologies collect more detailed data about households, law enforcement requests to access that data for criminal investigations may include requests for this more detailed energy usage data.’ (There is ample precedent for law enforcement use of electricity consumption data in criminal investigations, as in Kyllo v. United States, 358 533 U.S. 27 (2001), in which the government used monthly electrical utility records to develop a case against a suspected marijuana grower.)

Two monitoring issues raise even more complex privacy concerns:

• Most smart meters transmit their data wirelessly. Some are equipped with a second radio intended to enable a Home Area Network (HAN). If the HAN is enabled by the utility, it will allow continuous real-time polling of energy use. The intention is to feed an in-home display for use by the consumer; however, the HAN could conceivably be monitored by third parties (such as law enforcement) to provide a real-time picture of electricity usage on an appliance-by appliance level, thereby providing a high degree of covert surveillance.
• An area of special concern is the smart grid monitoring of electric and hybrid-electric vehicle charging. Geolocation data will certainly be collected and recorded in this process. With this, it will be possible to determine when a vehicle was charged (and therefore present) at a particular residence or other charging station location. Researchers at the MIT Geospatial Data Center have posed the following privacy-related questions: (1) “Will a charging vehicle’s location be shared with the utility operator?” and (2) “In ‘authenticating’ charged vehicles for billing purposes, will the authentication scheme… address the privacy and security issues?” We would add, would geolocation data be available to third parties, such as advertising networks, marketers, law enforcement, private investigators, or media organizations? And will it be vulnerable to illicit interception by criminals or espionage agents?

Depending on the individual consumer’s contract with the utility, smart metering may allow the utility to restrict or automatically disconnect certain household appliances at specified times or during periods of high electric demand. How intrusive will this be? What safeguards will exist – for the use of in-home medical devices, for example, such as dialysis equipment? To what degree will the consumer be able to override automatic scheduled or non-scheduled shut offs? And will landlords who participate in a utility load-management program have authority to disconnect tenant appliances at will?

Finally, the IT researchers pose other privacy and security questions well worth asking. Among these are:

• What happens when a smart meter detects a meter bypass? ‘While this technology will reduce theft, will it produce false positives and expose innocent individuals to possible fines or criminal proceedings?’
• ‘Will data collection and communication be secure? Will the utility develop proper policies and procedures for maintaining data privacy?’
• With regard to in-home devices (such as HANs), intended to communicate usage data to the customer, “Will these devices also share data with third parties, and if so, on what basis?” Will such third-party sharing require the customer’s consent? Additionally, will energy-related information accessible to the customer (via a user name and password) be kept secure? Or can it be readily captured by third parties?
• Will smart grid fault detection systems ‘have access to personal information regarding electricity use in real time, without direct interface with the consumer?’
• Will smart grid load management systems give generators ‘direct access to electricity demand information, and if so, could individual household electricity be discernible?’
• When smart grid data is used to monitor ‘distributed’ or ‘on-site’ generation (such as individual solar, wind, or biomass systems), will customer information and transactions – as when the customer provides power back to the grid – be kept private and secure?

Credibility Gap
Clearly, the work of safeguarding the security of the smart grid and the security and privacy of data on the smart grid must be a collaborative effort of the utility industry and the government. Such an effort is possible and even feasible, but is it likely?

We have doubts and concerns.

As Richard A. Clarke (cited earlier) and others point out, the security of the existing “dumb” power grid remains inadequate and has been inadequate for a long time. As for the privacy and security of consumer information on the Internet, the private sector – e-commerce providers, advertising nets, advertisers, and marketers – have been steadfastly resistant to government regulation and have provided transparency and control to consumers grudgingly, if at all.

As for the U.S. government, its approach to regulation has been gingerly at best, and such recent events as the Snowden revelations concerning the omnivorous surveillance practices of the NSA and other U.S. (and British) intelligence agencies have opened up a ‘credibility gap’ possibly even wider – and apparently even more thoroughly institutionalized – than what existed during the administrations of Lyndon B. Johnson (the Vietnam War) and Richard M. Nixon (Vietnam and a host of White House criminal misdeeds).

The real crisis presented by the emergence of the smart grid may actually be less an issue of endangered security and privacy – though these dangers are certainly real and significant – than a crisis of public faith in the motives of companies and, even more, of government. As a result of this crisis of credibility, the development and deployment of the smart grid, with all the benefits it does offer, may be retarded and/or curtailed. If it is, Americans will be deprived of an important modernization of our obsolescent infrastructure.

There is no question that protecting the security and the privacy of a smart grid will require not only collaboration between private industry and the government, but the passage of laws and regulations with teeth. In the current landscape of justifiable cynicism and outright distrust, the credibility gap will almost certainly discourage and impede both the necessary legislation and the further development of smart grid technology.
 

About the Author

Siobhan MacDermott, CIPP/IT, CIPM is one of the foremost experts on the future of the Internet, cybersecurity, privacy, and business-government relations globally. MacDermott is currently Chief Information Officer at Utilidata, a digital technology company providing solutions for electric distribution grids.

As both advisor and executive to some of the best global technology brands, she helped direct strategy, communications, investor relations, government relations, issue management and policy for companies such as Intel-McAfee, AVG Technologies, Oracle, HP, RSA Security, Betrusted and Sprint PCS. She has experience working global policy issues, and has worked extensively with Boards of Directors to lead successful initiatives to engage governments, stakeholders, policymakers, NGOs, and global institutions on regulatory issues. She has created and executed successful communications strategies to shape policy outcomes in China, the U.S. and the E.U.

She is widely published, appears frequently in the media and speaks at conferences around the world – working with and participating in the World Economic Forum and the Clinton Global Initiative. She has authored white papers and articles on privacy, children’s safety, consumer dynamics, cyber security and critical infrastructure protection.

Ms. MacDermott is an EU and U.S. citizen, has worked on four continents and speaks five languages. She has an MBA from Thunderbird, and a Global Master of Arts in Law and Diplomacy from the Fletcher School at Tufts University and advises and serves on several Board of Directors.