Integration of smart grid devices, and other new and emerging technologies reliant on communications to control operations of the device pose a threat to the reliability of the electric grid, according to a new report released by the North American Electric Reliability Corporation (NERC). Providing a 10-year outlook on the North American electric industry, the new '2011 Long Term Reliability Assessment' report released by NERC evaluates key reliability indicators and dives into the impact of regulations and other issues on bulk power system reliability. The key issues discussed in the report were: the decrease in projected generation resources; the growing dependence on natural gas as a primary fuel source of on-peak capacity; the increased demand for integrating and delivering new resources and the subsequent growth of transmission; and the cumulative effect from environmental regulations may reduce reserve margins in ways that could affect bulk power system reliability, depending on the scope and timing of final regulation implementation.

This issue of the four Environmental Protection Agency (EPA) regulations and their impact on the grid is most politically contentious. NERC President and CEO Gerry Cauley said that there will be "considerable operational challenges to complete, coordinate and schedule the necessary environmental retrofits." Congress, the Federal Energy Regulatory Commission (FERC) and the EPA have all responded to these findings in the NERC report with concern. At FERC's Technical Conference on the same issue of grid reliability, EPA's air chief Gina McCarthy stated that, "In the 40-year history of the Clean Air Act, EPA rules have never caused the lights to go out. And the lights will not go out, and we won't let it happen going forward." McCarthy noted that the EPA was ready to work with FERC to address this issue. The Department of Energy also released a separate statement noting that the EPA rules "wont crash the power grid." Meanwhile, FERC commissioners appear split on whether pending EPA regulations could paralyze the electric grid, with some Commissioners, most prominently Commissioner Philip Moeller, pushing for FERC to conduct an assessment of the EPA rules. At the same time, FERC Commissioner John Norris said that the most pressing threat to grid reliability comes from cybersecurity, but instead the EPA regulations have been caught in the political debates about reliability. 
The NERC report also draws attention to the physical and cyber security aspects of reliability, specifically in the context of emerging two-way 'smart grid' communications systems. The report states that increasing reliance on automated devices and technologies to promote reliability can increase attack vectors - which may or may not be with malicious intent. Critical Infrastructure Protection (CIP) needs to develop beyond regional standardization to a continental and transcontinental view. Further study is ongoing at NERC, via its Technical Committees that have been tasked by the Electricity Sub Sector Coordinating Council (ESCC), to determine the impact of a large coordinated physical and cyber attack, as well as from a strong geo-magnetic storm, and the implications to restoration and asset availability. The report also recommends NERC and NERC stakeholders to closely follow the Critical Infrastructure Strategic Coordinated Action Plan and remain involved in the development of the next version of the CIP standards that is currently underway.