The electric utility industry operates as an integrated system of generation, transmission, and distribution facilities to deliver electric power to consumers. In the United States, this system consists of over 9,000 electric generating units connected to over 200,000 miles of high-voltage transmission lines strung between large towers and rated at 230 kilovolts (kV) or greater. This network is interspersed with hundreds of large electric power transformer substations whose function is to adjust electric voltage as needed to move power across the network ( Figure 1 ). High voltage (HV) transformer units make up less than 3% of transformers in U.S. power substations, but they carry 60% or more of the nation's electricity. Because they serve as vital transmission network nodes and carry bulk volumes of electricity, HV transformers are critical elements of the nation's electric power grid. The U.S. electric power grid has historically operated with such high reliability that any major disruption caused by weather, operational errors, or sabotage, makes news headlines. The various parts of the electric power system are all vulnerable to failure due to natural, operational, or manmade events. Such outages can have considerable negative impacts on business, government services, and daily life. Notwithstanding its high reliability overall, the U.S. power grid has periodically experienced major regional outages. Recent examples include the Northeast Blackout of 2003 (which affected 55 million customers in eight states and Canada) and extended outages in the New York/New Jersey area after Superstorm Sandy in 2012. For reasons discussed below, however, HV transformers are considered by many experts to be the most vulnerable to intentional damage from malicious acts. The physical security of HV transformers and associated policy issues are the subject of this report. Congress has long been concerned about grid security in general, but recent security exercises, together with a 2013 physical attack on transformers in Metcalf, CA, have focused congressional interest on the physical security of HV transformers, among other specific aspects of the grid. They have also prompted new grid security initiatives by utilities and federal regulators. Legislative proposals including the Enhanced Grid Security Act of 2015 ( S. 1241 ), the Critical Electric Infrastructure Protection Act ( H.R. 2271 ), the Terrorism Prevention and Critical Infrastructure Protection Act of 2015 ( H.R. 85 ), a House bill to establish a strategic transformer reserve program ( H.R. 2244 ), and the Grid Modernization Act of 2015 ( S. 1243 ) would expand these activities by strengthening federal efforts to prevent or recover from a physical attack on the U.S. grid. The main risk from a physical attack against the electric power grid—primarily towers and transformers—is a widespread power outage lasting for days or longer. Utilities regularly experience damage to transmission towers due to both weather and malicious activities; they are able to recover from this damage fairly rapidly. Thus, while occasionally causing blackouts, physical attacks on towers generally have not resulted in widespread or long-lasting outages. The power industry also has experienced mechanical failure of individual HV transformers within a single control area resulting in blackouts lasting hours. However, no region in the United States has experienced simultaneous failures of multiple HV transformers. Experts have long asserted that a coordinated and simultaneous attack on multiple HV transformers could have severe implications for reliable electric service over a large geographic area, crippling its electricity network and causing widespread, extended blackouts. Such an event would have serious economic and social consequences. This section discusses in more detail HV transformer characteristics and physical security risks associated with them. Utility transformers control the voltage of electricity so that it can be synchronized with other power supplies, transmitted long distances, and distributed to customers. Transformers range in size from small, pole-mounted units that may serve a dozen homes to transmission units that serve an entire city. The larger the transformer, the higher the voltage the transformer can handle. Utility transformers, regardless of size, fundamentally consist of copper wire wrapped around a metallic "core" within an insulated protective housing covered with a 5/8 to 3/4-inch mild steel tank. They are linked to the power grid by protruding metal and (usually) ceramic connectors called "bushings" which resemble giant spark plugs. Larger transformers generate waste heat during operation (like all transformers), so they are cooled by a system comprised of internally circulating oil and external radiators, analogous to the cooling system in a car engine. Large transformers are located in network substations along with transmission lines, associated electric equipment, and system controls. These substations may be found in remote locations or near urban centers, depending upon regional transmission needs. Many are located alongside electric generation plants, linking those plants to the grid. High-voltage transformers, especially units above 345 kV, are physically large and extraordinarily heavy. For example, Figure 3 shows a new 345 kV transformer many times larger than the pickup truck parked alongside. This transformer unit weighs 435 tons, including 29,000 gallons of cooling oil. (Note that the vertical bushings are not yet connected to transmission lines because the unit is being moved.) This is a three-phase unit, with one bushing for each of the three phases. Some substations alternatively employ separate single-phase transformers in sets of three. Generally, the higher the transformer's voltage, the larger the transformer. A three-phase 765kV transformer could be 45 feet tall and occupy a footprint of 2,200 square feet—about the size of an average new single-family house. Most HV transformers are unique—designed and manufactured to custom specifications for a specific network application. In 2010, the lead time between an HV transformer order and delivery ranged from 5 to 12 months for U.S. manufacturers and 6 to 16 months for foreign manufacturers, although lead times well over 20 months could be required in certain situations. This process may include three to four months for the engineering design alone. Since manufacturing generally occurs on a single production line with just-in-time component supplies, advanced production scheduling is important for managing delivery. Physical assembly is labor intensive, requiring manual winding of the copper wire around the transformer core and frequent engineering checks during manufacturing. Extensive testing of completed units also contributes to HV transformer manufacturing time. The installed cost for an HV transformer depends heavily on its configuration and specific design requirements. New HV transmission substations can cost well in excess of $10 million, including the cost of transformers and other station equipment. According to the U.S. Department of Energy (DOE), the factory prices for HV transformers typically range from $2 million for a 230 kV unit to $7.5 million for a 765 kV unit, before transportation and installation costs. From 1950 to 1970, utility construction of large generation plants and associated transmission networks fueled a robust U.S. manufacturing market for large transformers. During this period, the United States (and Canada) accounted for approximately 40% of global demand for such units. After 1970, however, utility investment in transmission infrastructure began falling off due to perceived overcapacity, public resistance to transmission siting, and greater regulatory scrutiny of capital expenditures. Beginning in the late 1980s, uncertainty about industry restructuring and the introduction of competition made grid owners even less willing to invest in new transmission. This decline in U.S. transmission investment greatly reduced domestic demand for large transformers, especially HV transformers. By the late 1990s, the United States and Canada accounted for only 20% of global large transformer sales. Demand in the United States has subsequently increased, however. For example, between 2005 and 2013, the total value of large transformers (including medium- and high-voltage units) imported to the United States more than doubled, from $284 million (363 units) to $676 million (496 units). At the same time, global demand for transformers continued to grow and more foreign manufacturers entered the market. According to U.S. industry representatives, many of these foreign manufacturers benefited from dramatically lower labor costs, so they could underbid U.S. transformer makers for the remaining U.S. demand. Some of these foreign manufacturers may have been protected by import barriers which effectively closed their home markets to U.S. transformer imports. Today, there is limited manufacturing capacity in the United States for HV transformers. Five U.S. facilities state that they can manufacture transformers rated 345 kV or above, although it is not clear how many units in this range they have actually produced. Canada and Mexico have five additional HV manufacturing plants. While limited domestic HV transformer manufacturing may increase delivery time, utilities have not reported difficulty in obtaining needed equipment. There are several thousand HV transformers operating in the United States. Approximately 2,100 are very large units rated 345 kV and above. Investor-owned utilities own most of these, although public utilities such as the Power Marketing Administrations (i.e., Bonneville Power Administration and Western Area Power Administration), Tennessee Valley Authority, and the Los Angeles Department of Water and Power own many HV transformers as well. HV transformer substations are distributed throughout the electric grid, as shown in Figure 1 , with the greatest number in the eastern part of the country. Because HV transformers carry so much electricity, the destruction of even a small number could seriously reduce the transmission capacity of a regional electric power grid and lead to extended blackouts. The impact of such a failure would depend on the electricity flows in that part of the grid, congestion from major network bottlenecks, and the status of other key facilities such as power plants, transmission lines, and other substations. Power grid planners generally anticipate the possible loss of a single HV transformer substation and are prepared to reroute power flows as necessary to maintain regional electric service.