Distributors

President Trump Signs Executive Order on Bulk Power Systems

President Trump Signs Executive Order on Bulk Power Systems

NAED has worked closely with the Palmer Schoening and Alex Ayers of the Family Business Coalition over the past two months, especially as we focus on events in Washington, D.C. that are related to the COVID-19 crisis. Last week, the Trump Administration issued an Executive Order on bulk power systems. Ayers provided the following briefing so NAED members will understand what the order means for all of us.

Last week the Trump Administration announced a new Executive Order designed to safeguard the U.S. electric grid from outside interference. The EO, called the “Securing the United States Bulk-Power System” limits government contracts and private U.S. acquisitions from foreign adversaries with the intent to increase national security.

According to the administration, the U.S. has been buying bulk power systems using low bid contracts, opening up bidding to companies from foreign sources that could be used by adversaries to sabotage the U.S. power grid. Specifically, the EO “prohibits Federal agencies and U.S. persons from acquiring, transferring, or installing [bulk power systems] equipment in which any foreign country or foreign national has any interest and the transaction poses an unacceptable risk to national security or the security and safety of American citizens. Evolving threats facing our critical infrastructure have only served to highlight the supply chain risks faced by all sectors, including energy, and the need to ensure the availability of secure components from American companies and other trusted sources.”

The order directs the Secretary of Energy to identify safe vendors and flag prohibited equipment that should be replaced to secure the power grid. In addition to identifying these variables, the Department of Energy is required to set up a task force to develop a new procurement process that protects national security. This task force is expected to work with the electrical industry including manufacturers and suppliers of bulk power systems to determine possible threats.

Distributors should expect to see no immediate impact caused by this Executive Order as DOE begins the process starting the task force and identifying possible threats. The order seems to be focused on components manufactured in China, but the list of flagged countries is expected to be larger and include Russia and other foreign adversaries. The EO will look at all foreign sources, but should quickly white-list products manufactured in our closest trading partners including Canada and Mexico. Additionally, products that are used by both bulk power systems and small-scale power distribution are still allowed for small scale uses, since the order only affects products when installed for use in bulk power systems.

NAED looks forward to working with the task force to ensure our critical infrastructure is protected and the supply of electrical materials continues to glow with maximum efficiency. We will continue to keep members informed about potential future impacts of the EO.

You can click here to read the entire Executive Order.

Update as of 5pm, Monday, May 4:

Politico is reporting the Commerce Department is launching a Section 232 investigation into whether imported part in transformers are a risk to national security and should be part of trade restrictions. The investigation will review steel used to make the parts has been a part of past trade cases. The investigation will be conducted by the Bureau of Industry and Security.

 

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