1. Security Benefits of Energy R&D Presented to the Conference on Estimating the Benefits of Government-Sponsored Energy Technology R&D March 4, 2002 Margie Tatro Director, Energy and Transportation Security Center Sandia National Laboratories (505) 844-3154 Sandia is a multiprogram laboratory operated by Sandia Corporation, a Lockheed Martin Company, for the United States Department of Energy under contract DE-AC04-94AL85000.

2. Issues to Explore Energy Security – Definition to Consider Measures of Energy Security Possible Benefits Indicators

3. What is Energy Security? Measured by: –Investor and consumer confidence –Time to restore service following a disruption and other reliability metrics Secondary indicators: –Energy trade deficit, imports versus domestic production, diversity of sources and delivery mechanisms, and others Includes Physical and Cyber Perspectives Energy is available WHEN needed at a predictable price.

4. How Can We Measure Energy Security? Confidence – feeling, must poll people –Price/earnings ratio for investors Reliability – can measure, for electricity: –Transmission reliability (voltage, frequency) –Wholesale market performance (price deltas, transmission load relief) –Customer outages (number of customers, unserved energy, economic impact, time to restore service) Diversity of supply – fraction from each fuel source, can measure Diversity of delivery mechanisms - options, can measure Number of cyber attacks – can measure

5. Frequency Excursions are One Measure Electric Power Reliability SOURCE: Report from NERC Performance Subcommittee to Operating Committee – 1Q2001 Over frequency Under frequency

6. Oil / Gas Compressor Station Fuel Supply Electric Power Substation Power Plant Power Supply Communications End Office Switching Office Transportation Transport Traffic Light Reservoir Substation Water Fire station Hospital Emergency Call Center Ambulance Emergency Services Check Processing Center Bank Federal Reserve ATM Energy Outages Impact Many Other National Operations Military Installations Pension/Service Payments Treasury Dept. Legislative Offices Continuity of Gov’t Services Banking Finance

7. COMPARISON OF ECONOMIC IMPACT -------- Houston, Scenario #1 - Series of Small Disruptions - One Month Apart/Short but Regular -------- Houston, Scenario #2 - Short-Lived but Large Disruption

8. The Challenge – Energy Security Measures are Influenced by Factors Other Than DOE Activities Benefit Options to Consider Ask infrastructure owners and operators if DOE efforts have helped them Follow confidence, reliability, diversity metrics and watch for trends in areas where DOE R&D is underway Others?