…and potential cyber security challenges

Valentine EmesihApril 4, 2013

Natural gas sales and delivery Over 3.2 million residential, commercial and

industrial customers in six states

Competitive gas services (CES) Over 25,000 commercial, industrial and

wholesale customers across central U.S.

Electric transmission and distribution Over 2.2 million meters in the Houston area 17.2 GW peak demand

Interstate natural gas pipelines 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

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Who is CenterPoint Energy?A domestic energy delivery company

The Texas electric marketRestructured in 2002 for retail competition

Retail Electric Providers (REPs)

Power Generating Companies

Transmission and Distribution Utilities (TDUs)

Regulated

Own and maintain power lines

Deliver power to customers

Read meters

Restore power after outages

Execute Service Orders

Residential Customer

CommercialCustomer

Step-downSubstation

Unregulated

UnregulatedCompete for customersBill customers Issue

disconnect ,reconnect orders

to TDUs

3

http://smartgrid.ieee.org/ieee-smart-grid/smart-grid-conceptual-model

Smart Grid Conceptual Model - NIST

http://smartgrid.ieee.org/ieee-smart-grid/smart-grid-conceptual-model

Electricity Distribution

Customer

http://smartgrid.ieee.org/ieee-smart-grid/smart-grid-conceptual-model

Operations

Market

http://smartgrid.ieee.org/ieee-smart-grid/smart-grid-conceptual-model

Communication Layer

IT/Computer Layer

Power and Energy Layer

System of Systems

CenterPoint Energy’s smart grid

Advanced Metering System 2.2 + million meters installed 219+ million meter reads / day 97% service orders electronic

Consumers save $35 million in fees

4 million remote service orders 293,000 gallons of gas saved / yr 2,500 tons of CO2 prevented / yr

Usage data - smartmetertexas.com 600,000 Texans get 15-minute

usage data

15,000 In-Home Displays in TX

Distribution Automation Field equipment

Automated switching devices Line monitors Substation monitoring

Implement Advanced Distribution Management System (ADMS)

Leverage AMS investment Common telecommunications

network for AMS and IG AMS meter data feeds outage

analysis module of ADMS4

CNP’s Advanced Metering SystemView construction at YouTube.com/CenterPointEnergyVid

Combined with back office computer systems and integration, our AMS provides: Daily register reads Daily 15 minute interval reads

· Remote connect / disconnect / on-demand reads· Access to data via Smart Meter Texas portal

Data Collection Engine

(Itron DCE 3.0 SP1)

Digital Communications

Backhaul

Meter Data Management

System(eMeter MDM 6.2)

Legacy Systems

Wireless Communications Environment

(GE WiMax with GSM Backup)

Smart Meter Texas PortalExisting

Recently Deployed

Legend

Itron Open WayHW 2.0 SR 3.0

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• 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

AMS SuccessesMeter Deployment is Complete

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Consumer benefits of smart meters

Available NOW 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

www.SmartMeterTexas.com Energy analysis and cost comparison tools Easier integration of distributed generation and renewables

Available SOON 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

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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

While Phase 1 covers about 15 percent of CenterPoint Energy’s service area, some of the improvements will benefit consumers in the entire system.

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

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Consumer Benefits of Intelligent GridView demo at YouTube.com/CenterPointEnergyVid

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 Mayor’s 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 Energy’s deployment of intelligent grid technology in the Houston area is the Task Force’s strongest recommendation.”

It has been estimated that full intelligent grid functionality could improve reliability by up to 30%.16

Ret ai l A

pp

s

Customer Self-Service

Utili ty A

pp

s

Portal

WaterHeater

ZigbeeZigbee

Compressor

PoolPump

SmartThermostat

Energy Management and Conservation via a HAN for in home devices

RF (Radio Frequency)

RF (Radio Frequency)

Home Area Network (HAN)Enabled by AMS communications system

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Challenges

● First-of-a-kind deployment● Performance at operational scale● Knowledge transfer

Subject matter expertise

● Volume of data● Business transformation● Process change activities

Need to consistently engage employees

● Consumer education and myth-busting

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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

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Components of Cyber Security Strategy

Prevention Reduce risks and vulnerabilities Intervene and stop attempted occurrences Mitigate effects

Detection Identify anomalous behavior Detect malicious code and other events Gather digital evidence

Response Address short-term direct effects of incident (public safety et al)

Recovery Restore normal operation & Address issues

CenterPoint Energy’s 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 nation’s 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

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What’s Next?Smart Meters Are Just The Beginning

HAN Devices Smart Appliances

Smart Meter Texas Portal

Intelligent Grid

Phase 1:Customer Insight

Smart Meters

StorageElectric vehicles

Phase 2:CustomerEngagement

Micro Grids

Aggregated Demand Management

Phase 3:Customer

Co-Creator of Value

2010 20202014201320122011

Price control / load control

Advanced Grid

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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.”

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VALENTINE.EMESIH@CENTERPOINTENERGY.COMYoutube.com/CenterPointEnergyVid

Twitter.com/energyinsightsFacebook.com/CenterPointEnergy

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

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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

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

cell phone

smart meter

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Successes and recognitionSharing our experience with the industry

• More than 730 tours of our Energy InSightsm technology center Take a virtual tour at YouTube.com/CenterPointEnergyVid.

• Articles, white papers, webinars, presentations, documentaries Intelligent Utility, Transmission & Distribution World, Energy Central … World Energy Council, the White House, GridWise, Distributech, PBS

• Collaborations 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 Salazar18

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

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Some collaboration stakeholders