In response to what was described as a “flood of cheap, poor-quality Mexican electrons crossing our border”, the US government has decided to “level the playing field” by requiring Mexican entities that generate or transmit electric power to comply with the NERC CIP Reliability Standards.
According to a White House spokesman, “The US electric power industry has suffered too long from unfair competition from Mexico. Millions and millions of workers have already lost their jobs because Mexican electrons are manufactured[i] by low-cost workers and then dumped over our border. We believe the best solution to this problem is to impose the same regulatory costs on the Mexican power industry that our industry faces.
“While there are a lot of regulations that apply in the US but not in Mexico, probably the fastest-growing is the NERC CIP standards for cyber security. One semi-reliable blogger has stated that there are at least a few large utilities – and many more smaller ones - that have spent in excess of 25 times as much on CIP version 5 compliance as they did on the previous version 3 (and don’t ask us what happened to version 4. I assume it was dropped because of unfair Mexican competition as well). Moreover, the amount spent will continue to grow as the scope of CIP is expanded. Enforcing NERC CIP in Mexico will bring their industry’s costs much closer to ours, so our wonderful American workers can once again compete.”
To learn more about this, I talked with Professor Sebastian Tombs of the University of Southern North Dakota at Velma, where he teaches part-time in the Extension Division. Professor Tombs said “I’ve been waiting for this to happen for a long time. For at least the last few years, it’s been clear to a number of us in the academic community that NERC CIP could be weaponized. It has sucked up a lot of resources at US and Canadian utilities, and it will clearly have the same effect in Mexico or any other country in which it might be deployed. I do think this is a drastic step to take, but I guess there are worse ones, such as invasion or use of nuclear weapons.”
I was also very fortunate to be granted a short interview with a senior White House official, who asked to remain anonymous. He said, “Don’t get me wrong. Mexicans are wonderful people. We’re not doing this because we don’t like Mexicans. But we have to protect our workers –they’re the world’s best, and they can make electrons like nobody else can. I would have preferred there were some sort of ‘extreme vetting’ procedure we could use for these Mexican electrons, so that only those that were the highest quality would be allowed into the US. But my people say – and believe me, I have the best minds working for me – that this would be very impractical. There are just too many electrons coming in.
“So we had to come up with another measure, and someone brought up NERC CIP. I of course had never heard of it, but when I learned about the huge burdens it’s placing on US utilities and independent generators, I thought it was only fair that the Mexicans should have to follow it, too. I realize it will cause a lot of suffering there, just as it has here. It would be nice if it could be reformed so that it were more cost-effective, as I’ve heard some blogger is advocating. Maybe I’ll get to NERC CIP reform once I’m finished with health care and tax reform, although I’m told that those two will seem like a piece of cake compared to CIP reform. But in the meantime, we need to make sure that our competitors don’t have an unfair advantage.”
At last report, the Mexican government was considering building a wall along the border to keep out the NERC auditors.
The views and opinions expressed here are my own and don’t necessarily represent the views or opinions of Deloitte.
[i] Note from Tom: I would like to correct the White House and point out that electrons can be neither manufactured nor destroyed. I tried to call them, but I was unable to find a science advisor to talk to. I was told that my message sounded like "fake science".