Market News

 October 04, 2013
In government shutdown, who keeps the lights on?

 Amid the government shutdown, at least two departments are keeping the lights on -- for now.

The US Department of Energy (DOE) and the Federal Energy Regulatory Commission (FERC) continue to operate under "normal conditions" Thursday, according to officials from the two agencies. An extended shutdown, however, would force a reduction of staff at the two agencies that work together to ensure the security and reliability of the nation's electric grid. It's an important task.

"This infrastructure underpins our economy, our quality of life and everything we depend on," Massoud Amin, professor and director of the University of Minnesota's Technological Leadership Institute, said in a telephone interview. "Unfortunately, we often take it for granted and we only notice it when it fails. And we completely forget about it a few months after that failure and move on to the most pressing issues of the day."

State-level commissions and private companies operate the vast majority of the grid's day-to-day operations, but in emergencies and in the long term both federal agencies play an important role. The Energy Department conducts research and offers funding for enhancements to an aging grid. FERC regulates interstate electricity sales, oil pipelines, and energy markets. Both agencies coordinate with the Department of Homeland Security on long-term cybersecurity issues.

That partnership between private industry and public agencies is critical to the medium-term and long-term stability of the nation's electrical grid, Dr. Amin said.

If the shutdown continues, could DOE and FERC successfully protect the nation's grid from internal disruptions and external threats?

"Even if the shutdown extended for some period of time I am absolutely confident the government would step in to make sure funding is available for any kind of critical infrastructure," Mark Weatherford, former deputy under secretary for cybersecurity at the Department of Homeland Security and a principal at security consultancy Chertoff Group. "The utilities could operate without DOE or FERC. They're going to continue making and delivering kilowatts."

Still some analysts are concerned a shutdown of federal energy agencies would disrupt the federal government's longterm ability to coordinate among the many agencies, commissions, and private companies that keep electricity flowing. And in the event of an emergency, there is some question of how an agency working at limited capacity would respond.

"In day-to-day operation, if there is no major event, we may be OK for a short time," Amin said in a telephone interview, "but if there is an event, like a disaster or attack that needs government assistance and disaster assistance, then the response will require that partnership in full gear."

For now, both DOE and FERC are using carryover funds from previous years to function normally during a lapse of appropriations. But those funds will only last "for a short period" after Sept. 30, according to a DOE official. After that, the agencies will begin to implement their shutdown plans.