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Electrical 'Smart Grid' Not Yet Smart Enough to Block Hackers

President Obama's plans to accelerate the development of an electrical "smart grid" could leave the nation's power supply dangerously vulnerable to attacks by computer hackers, security analysts are warning.

The "smart grid" is projected to be a nationwide system of automated meters and advanced sensors that integrates new alternative-energy sources with traditional power plants.

Once online, utilities will be able to adjust their rates to the immediate supply and demand for power, and customers will be able to choose to operate their appliances during the hours when consumption — and prices — are at their lowest.

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Obama's economic stimulus package allocates $4.5 billion to modernize the nation's electricity system and put smart-grid technology on the fast track.

But creating a two-way line of communication between homes and the grid — however "smart" it may be — has its risks, experts say.

"With smart grid, anybody with an eBay account and $80 can go and buy a smart meter, reverse-engineer it and figure out how to attack the grid," said Josh Pennell, president and CEO of IOActive, a technology research firm in Seattle, who testified before the Department of Homeland Security last week.

On the other hand, he said, "If people are going to attack a power grid right now, it would need to be a very well-funded operation."

Pennell envisions low-level hackers trying to steal customer data for the purposes of fraud — or an international terrorist group infiltrating the grid and causing a massive power blackout.

There have already been several instances of hackers breaking into foreign power grids and holding the electricity supply for ransom, a CIA analyst told a conference of utility engineers last year, according to the Associated Press.

Hank Kenchington, deputy assistant secretary of research and development at the Department of Energy, said officials are taking steps to secure the "smart grid" as it goes online.

"This isn't the first time we're hearing about this," he said. "We're addressing these issues with the utilities."

Among computer security experts, there is a general understanding that no system is foolproof.

Data encryption and other technologies must constantly evolve to stay ahead of hackers, said Ron Ambrosio, a senior researcher within IBM's energy and utilities division, who works on "smart grid" projects around the world.

But the idea that "smart grid" networks are lagging behind is simply wrong, he said.

"The smart grid is about leveraging information technology, and there's a lot that's been done in the IT industry already," he said. "We don't have to reinvent everything from scratch."

The great hope of a "smart grid" is that it will not only help reduce the nation's energy consumption, but that it will provide an avenue for transmitting mass quantities of electricity from one side of the country to another — something that is impossible with the current grid.

"Today, the electricity we use is carried along a grid of lines and wires that date back to Thomas Edison," Obama told a crowd in Denver last month.

He called the smart grid "an investment that takes the important first step towards a national transmission superhighway that will connect our cities to the windy plains of the Dakotas and the sunny deserts of the Southwest."

In Boulder, Colo., more than half the city's homes are already being fitted with "smart meters," along with various other devices to help residents conserve energy, in a pilot project that could soon see "smart grid" extending across eight states.

Construction on the first wave of government-funded "smart grid" projects is expected to begin this summer, Kenchington said.

But it's the speed of the deployment that concerns Pennell and his colleagues, who say not enough time is being left for security tests.

"In any kind of emerging market this is typical. People are racing to see who can get their products out faster," Pennell said, calling for further scrutiny of the risks involved in digitizing the country's electrical grid.

"It's time to do it now before [smart meters are] bolted onto every house in the country."