Trump’s Grid Order Baffles Utilities Over What They Can Buy

U.S. utilities are scrutinizing their suppliers of transformers and other power-grid equipment for ties to China as they await details on President Donald Trump’s order to crack down on imports from overseas adversaries. Electric companies are trying to preemptively identify any components and manufacturers that could ultimately be barred once the U.S. Energy Department determines how to enforce Trump’s May 1 order to secure the nation’s grids, according to lawyers and consultants working with utilities. In some cases, lenders are requiring cyber-security audits to head off any scrutiny.

The uncertainty over the order, which doesn’t specify what equipment or nations it will cover, threatens to delay the push by utilities to modernize power grids and slash emissions by retiring aging coal plants and expanding renewable power. In the long term, the directive could also mean higher costs if companies are forced to find new suppliers and reshape supply chains.

“It seems unavoidable that companies will have to pause to take stock of their procurements,” said Keith Bradley, a partner at Squire Patton Boggs who is advising companies on how to respond to the order. “That alone is going to cause some amount of disruption and delay.”

Large U.S. utilities including Duke Energy Corp., NextEra Energy Inc. and Dominion Energy Inc. either declined to comment or said it’s too early to say how the order may impact projects. A spokesman for the Edison Electric Institute, an industry trade group, said power companies are “being cautious” and working closely with the Energy Department. And three lawyers and consultants working with companies said the directive is prompting them to review supply chains.

In a recent blog post, Energy Secretary Dan Brouillette wrote that the nation’s power grids are overly dependent on foreign equipment, leaving them vulnerable to cyber-attacks. “This state of affairs imperils our national and economic security,” Brouillette wrote. “The first step must involve identifying vulnerabilities to those threats.”

Trump’s order comes as U.S.-China relations are already strained over the coronavirus and an ongoing trade war. The president, who has long pushed for ways to revive domestic manufacturing, recently ramped up his rhetoric against Beijing, threatening a “complete decoupling” of the U.S.’s economic relationship to China.

The president’s directive restricts utilities from buying power-grid equipment that has a nexus with any foreign adversary and poses an undue risk to national security. The order, however, doesn’t cite specific nations, manufacturers or components. The Energy Department has until Sept. 28 to provide clarification.

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