1. …and potential cyber security challenges
Valentine Emesih
April 4, 2013

2. Who is CenterPoint Energy? A domestic energy delivery company
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 2

3. The Texas electric market Restructured in 2002 for retail competition
Retail Electric Providers (REPs)
Power Generating Companies
Unregulated
Compete for customers
Bill customers
Issue disconnect , reconnect orders to TDUs
Unregulated
Transmission and Distribution Utilities (TDUs)
Regulated
Own and maintain power lines
Deliver power to customers
Read meters
Restore power after outages
Execute Service Orders
Step-down Substation
 In the Texas electric industry, retail competition began in January 2002, so residential and business consumers can now shop for electricity. Retail Electric Providers (REPs) (or Competitive Retailers - CRs) compete to sell electricity to homes and businesses.
CenterPoint Energy does not sell electricity. With the 2002 restructuring, we shifted from generating, marketing and providing power for over 2.2 million customers to delivering electricity to those same consumers on behalf of the REPs/CRs.
Commercial Customer
Residential Customer 3

4. Smart Grid Conceptual Model - NIST
“The National Institute of Standards and Technology (NIST) Smart Grid Conceptual Model provides a high-level framework for the smart grid that defines seven important domains: Bulk Generation, Transmission, Distribution, Customers, Operations, Markets and Service Providers. It shows all the communications and energy/electricity flows connecting each domain and how they are interrelated. Each individual domain is itself comprised of important smart grid elements that are connected to each other through two-way communications and energy/electricity paths. These connections are the basis of the future, intelligent and dynamic power electricity grid.”

5. Electricity Distribution
“The Distribution domain distributes the electricity to and from the end customers in the smart grid. The distribution network connects the smart meters and all intelligent field devices, managing and controlling them through a two-way wireless or wireline communications network. It may also connect to energy storage facilities and alternative distributed energy resources at the distribution level.”
Centerpoint Energy in 2012 completed deployment of Smartmeters. In 2014 we will complete installation of a field, and substation devices, as well as other back office systems to support Intelligent Grid.

6. Customer
“The Customer domain of the smart grid is where the end-users of electricity (home, commercial/building and industrial) are connected to the electric distribution network through the smart meters. The smart meters control and manage the flow of electricity to and from the customers and provide energy information about energy usage and patterns. Each customer has a discrete domain comprised of electricity premise and two-way communications networks. A customer domain may also generate, store and manage the use of energy, as well as the connectivity with plug-in vehicles.”

7. Operations
“The Operations domain manages and controls the electricity flow of all other domains in the smart grid. It uses a two-way communications network to connect to substations, customer premises networks and other intelligent field devices. It provides monitoring, reporting, controlling and supervision status and important process information and decisions. Business intelligence processes gather data from the customer and network, and provide intelligence to support the decision-making.”

8. Market
The Markets domain operates and coordinates all the participants in electricity markets within the smart grid. It provides the market management, wholesaling, retailing and trading of energy services. The Markets domain interfaces with all other domains and makes sure they are coordinated in a competitive market environment. It also handles energy information clearinghouse operations and information exchange with third-party service providers. For example, roaming billing information for inter-utility plug-in-vehicles falls under this domain.

9. System of Systems Power and Energy Layer IT/Computer Layer
At IEEE, the smart grid is seen as a large "System of Systems," where each NIST smart grid domain is expanded into three smart grid foundational layers: (i) the Power and Energy Layer, (ii) the Communication Layer and (iii) the IT/Computer Layer. Layers (ii) and (iii) are enabling infrastructure platforms of the Power and Energy Layer that makes the grid "smarter."
Communication Layer

10. 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 ADMS 4

11. CNP’s Advanced Metering System View construction at YouTube
CNP’s Advanced Metering System View construction at YouTube.com/CenterPointEnergyVid
Digital Communications Backhaul
Data Collection Engine
(Itron DCE 3.0 SP1)
Meter Data Management System
(eMeter MDM 6.2)
Itron Open Way
HW 2.0 SR 3.0
Legacy Systems
Wireless Communications Environment
(GE WiMax with GSM Backup)
Existing
Recently Deployed
Legend
Smart Meter Texas Portal
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 11

12. AMS Successes Meter Deployment is Complete
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 from their REP 12

13. 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
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 6

14. Some Components of our Intelligent Grid (IG)
The Intelligent Grid consist of smart sensors, switching devices, transformer monitors and systems that will help detect, locate and isolate faults automatically. The devices and systems that make up the Intelligent Grid will eventually combine to produce a “self-restoring” electric distribution grid.
CenterPoint’s Intelligent Grid strategy centers on an increased visibility into the electric distribution grid.
Remote switching and monitoring devices are installed along distribution circuits and in substations, to provide insight into the real time behavior of the grid and it’s components.
An Advanced Distribution Management System (ADMS) transforms the data collected from the monitoring devices into information that is utilized to control costs,
improve reliability and performance,
manage maintenance activities,
realize operational efficiencies
and enhance consumer value.
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

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

16. Consumer Benefits of Intelligent Grid View demo at YouTube
Consumer Benefits of Intelligent Grid View 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

17. Home Area Network (HAN) Enabled by AMS communications system
Retail Apps
Customer Self-Service
Utility Apps
Portal
Water
Heater
Smart
Thermostat
RF (Radio Frequency)
The meters will also establish a ZigBee wireless Home Area Network on the premise. This HAN will enable communications to various appliances / devices, such as Smart Thermostats.
Zigbee
Pool
Pump
Compressor 17
Energy Management and Conservation via a HAN for in home devices

18. 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 13

19. 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 15

20. 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

21. 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

22. 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

23. 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

24. What’s Next? Smart Meters Are Just The Beginning24
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
Storage
Electric vehicles
Phase 2:
Engagement
Micro Grids
Aggregated Demand Management
Phase 3:
Co-Creator
of Value
2010
2020
2014
2013
2012
2011
Price control / load control
Advanced Grid 24

25. 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

26. 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-OE ]” 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.” 32

27.
Youtube.com/CenterPointEnergyVid
Twitter.com/energyinsights
Facebook.com/CenterPointEnergy

28. Appendix

29. 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
Standards, security elements, installation plan 17

30. 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)
CenterPoint Energy takes the accuracy of its meters very seriously, which is why we have in place a rigorous testing and quality assurance process.
Itron, manufacturer of CenterPoint Energy’s OpenWay meter, tests 100% of all meters shipped to CenterPoint Energy plus has an extensive quality assurance process which sample tests meters after manufacturing.
CenterPoint, which has validated Itron’s testing process in person, also randomly tests meters before they are installed, according to ANSI (American National Standards Institute) standards.
Comparison testing of smart meters versus traditional meters shows that smart meters record electric usage more accurately than traditional electromechanical meters. In some cases, the old meter has been running too slow. If your bill rises after the installation of your meter it is not because of the meter but likely due to increased usage driven by cooling or heating as the next slide will show.
We also agreed to independent testing, to help give consumers the same high level of trust in our meters as we have. Of thousands of CenterPoint Energy smart meters tested by Navigant Consulting at the request of the Public Utility Commission of Texas, none were found to be inaccurate by ANSI standards.
We even take digital photos of the final reading on the old meter to make sure there are no errors in the transition. We will also perform accuracy tests of a smart meter to any customer who requests a test [if it’s found to be inaccurate, there is no charge]. Navigant also tested our meter software to ensure that customers’ usage data is accurately transmitted to the market.
We understand the importance of security and privacy to consumers. Without compromising the security of our system, I can assure you we maintain a cyber security program based on national standards followed by leading companies in the energy, defense, and financial industries.
By Texas law, energy usage data belongs to the consumer and can be shared only when authorized in writing by the consumer or authorized by regulatory authorities as necessary to conduct business (such as for billing). We will protect customer usage data as we always have. 14

31. Health and safety
cell phone
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
smart meter 16

32. Successes and recognition Sharing 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 Salazar 18

33. 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 19

34. Some collaboration stakeholders
“ First, we believe that participation with industry coalitions is critical. Our collaboration with
fellow energy sector members allows us to continually learn and incorporate leading practices,
provide mutual assistance and educate stakeholders and policy makers of real risks and
possible solutions.
Second, collaboration between the public and private sector is a vital part of cyber protection.
Deployment of the SmartGrid in Houston presented us with the opportunity to work with DOE,
DHS and other federal agencies in order to successfully deliver advanced metering capabilities.
Other examples illustrating the success of public‐private partnerships are the joint industry and
governmental initiatives that developed the electric sector cyber security Capability Maturity
Model…
.. And, finally, cyber security collaboration must take into account the entire life cycle and supply
chain. Therefore, we must recognize the essential participation of our vendors and suppliers in
this effort. They have worked with us to provide products and solutions to meet the demands
of this challenge. Our joint goals and efforts focus on design, testing, and improvement of
products to understand quality, integrity, risks, threats, mitigations and management of these
solutions in our operating environment.”
- Excerpt from Testimony before House Committee on Homeland Security, March 6, 2013 by Gary W. Hays (Division VP & Chief Information Office, Centerpoint Energy)