Three years ago, when electric grid operators were starting to talk about the need to protect critical infrastructure from cyberattacks, few utilities had even hired a chief information security officer.

Then came Stuxnet.

In 2010, that malware, widely reported to have been created by the U.S. and Israel, reportedly destroyed 1,000 centrifuges that Iran was using to enrich uranium after taking over the computerized systems that operated the centrifuges.

Gen. Michael Hayden, principal at security consultancy The Chertoff Group, was director of the National Security Agency, and then the CIA, during the years leading up to the event. "I have to be careful about this," he says, "but in a time of peace, someone deployed a cyberweapon to destroy what another nation would describe as its critical infrastructure." In taking this step, the perpetrator not only demonstrated that control systems are vulnerable, but also legitimized this kind of activity by a nation-state, he says.

The attack rattled the industry. "Stuxnet was a game-changer because it opened people's eyes to the fact that a cyber event can actually result in physical damage," says Mark Weatherford, deputy undersecretary for cybersecurity in the National Protection Programs Directorate at the U.S. Department of Homeland Security.

In another development that raised awareness of the threat of cyberwar, the U.S. government in October accused Iran of launching distributed denial-of-service (DDoS) attacks against U.S. financial institutions. In a speech intended to build support for stalled legislation known as the Cybersecurity Act that would enable greater information sharing and improved cybersecurity standards, Defense Secretary Leon Panetta warned that the nation faced the possibility of a "cyber Pearl Harbor" unless action was taken to better protect critical infrastructure.

"Awareness of the problem has been the biggest change" since the release of Stuxnet, says Tim Roxey, chief cybersecurity officer for the North American Electric Reliability Corp. (NERC), a trade group serving electrical grid operators. He noted that job titles such as CISO and cybersecurity officer are much more common than they once were, new cybersecurity standards are now under development, and there's a greater emphasis on information sharing, both within the industry and with the DHS through sector-specific Information Sharing and Analysis Centers. (Read our timeline of critical infrastructure attacks over the years.)

On the other hand, cybersecurity is still not among the top five reliability concerns for most utilities, according to John Pescatore, an analyst at Gartner. Says Roxey: "It's clearly in the top 10." But then, so is vegetation management.

Compounding the challenge is the fact that regulated utilities tend to have tight budgets. That's a big problem, says Paul Kurtz, managing director of international practice at security engineering company CyberPoint International and former senior director for critical infrastructure protection at the White House's Homeland Security Council. "We're not offering cost-effective, measurable solutions," he says. "How do you do this without hemorrhaging cash?"