12. Assignment of Proceeding

Timothy Alan Simon is the assigned Commissioner and Jeffrey P. O'Donnell is the assigned Administrative Law Judge in this proceeding.

Findings of Fact

1. As described herein, the Commission has completed the tasks specified in AB 2393.

2. Implementation rates for the Best Practices are 98% for large LECs, 73% for small LECs, 91% for wireless and 93% for cable.

3. For the Best Practices related only to backup generator deployment, the implementation rates are 98% for large LECs, 70% for small LECs, 90% for wireless and 90% for cable.

4. The great majority of the Best Practices are considered by the providers to be effective to some degree while almost half of the responses indicate they are very effective.

5. Most providers consider the Best Practices to be costly to implement. The responses also indicate that the responding service providers have less understanding of the cost of implementing the Best Practices than they do of their effectiveness or the extent of their implementation.

6. For the diesel backup power, the installed first costs range from about $800 to about $1,400 per kw, while the fuel cell cost estimates vary from about $4,000 to over $20,000 per kw. Even with a 50% improvement in installed first cost, fuel cells are many times more expensive. Annual recurring expense estimates for diesel range from about $5 to about $79 per kw, while the fuel cell expense estimates vary from about $473 to about $504 per kw.

7. Existing fuel cells have limited capacities while most typical telecommunications applications require capacities in the 30 kw (for wireless radio sites) to 1,000 kw (for wireline central offices). In addition, their long term reliability is unproven.

8. Customers whose telephone is incapable of operating during a power outage without battery backup must be made aware of this limitation and educated about the available options for backup power.

9. There should be a customer education plan to provide necessary information to customers regarding backup power on the customer's premises.

Conclusions of Law

1. The Commission has satisfied the requirements of AB 2393.

2. The Commission should adopt the FAR for transmittal to the Legislature.

3. Regarding implementation of the Best Practices, there is some room for improvement by the small LECs and we encourage their implementation.

4. There is no apparent reason to believe that fuel cells should be a preferred means of providing backup power at this time.

5. The category of this proceeding is quasi-legislative and hearings are not necessary.

6. This order should be effective immediately.

ORDER

IT IS ORDERED that:

1. The Final Analysis Report, included herein as Attachment A, is adopted for transmittal to the Legislature.

2. The Commission's Executive Director shall cause a copy of this decision, with Attachment A, to be provided to the appropriate entities within the Legislature.

3. Rulemaking 07-04-015 .remains open for further consideration of the need for rules pertaining to backup power systems installed on a residential or small commercial customer's premises and whether rules for informing customers regarding backup power are necessary.

This order is effective today.

Dated September 4, 2008, at San Francisco, California.

Commissioners

/s/ MICHAEL R. PEEVEY

President

/s/ RACHELLE B. CHONG

Commissioner

ATTACHMENT A

Final Analysis Report

There are no revisions to the original Attachment. This Report can be retrieved at:

http://docs.cpuc.ca.gov/PUBLISHED/GRAPHICS/84115.PDF

Concurrence of President Michael R. Peevey and

Commissioner Rachelle Chong

Decision Addressing Standards for Telecommunications Backup Power Systems and Emergency Notification Systems Pursuant to Assembly Bill 2393

Item 35

September 4, 2008

We concur in this revised decision as it removes aspects that we had found initially objectionable, primarily the conclusion that the Commission should require certain voice providers to provide eight hours of back up power on the customer's premises. This conclusion did not meet the required statutory cost-benefit test pursuant to Pub. Util. Code § 776.30 We support the current version in which this Commission will continue the rulemaking to focus on consumer education related to back up batteries and take a fresh look at the need for an eight hour back up battery rule for customer premises equipment.

This proceeding raises complex and challenging technical and jurisdictional issues. At the heart of the issue is that the technology of how voice communications service is being delivered is changing. There is no longer one black landline telephone, powered from the central office using commercial power (or, when the commercial power is out, through a system of batteries and diesel generators). Instead, our California consumers today receive voice service using many modern technologies and platforms, including wireless, fiber-optic and coaxial cable. The latter two technologies require back up power systems in the network and at the customer's premises for the phone to work in a power outage.

There are many areas in this proceeding on which we agree with our colleagues. We agree that consumers need to be educated on emergency backup power issues as to the voice technology they pick. In this regard, the decision correctly recognizes that consumer education on battery back up issues is an important piece and should be focused on first in the next phase of the proceeding.

It is our hope that the carriers and the staff can work together to develop an accurate, voluntary consumer education plan for the Commission's use on our consumer website and community based organization (CBO) outreach efforts, such as the Telecommunications Education and Assistance in Multiple-languages (TEAM) program. We also would expect that the carriers will agree to actively educate consumers on the back up power issues at time of sale and upon installation. Carriers compete on this issue of back up power, and there is no reason why the carriers will not agree to providing clear information on this aspect during their marketing efforts. This Commission has worked well with the carriers in our implementation of our Consumer Protection Initiative, and we have no doubt that we will continue to work together in good faith on consumer education.

The decision also correctly finds that California does not need to establish a standardized emergency notification system and protocols in light of existing federal action in this area pursuant to the (Warning Alert and Response Network) WARN Act and the establishment of the Commercial Mobile Service Alert Advisory Committee. This Advisory Committee has developed recommendations on technical standards and protocols to facilitate commercial mobile radio service (CMRS) transmission of emergency alerts, and the FCC adopted them in April. In May, FEMA agreed to be the unified aggregator/gateway role for this Commercial Mobile Alert System, so steady progress is being made. We commend the CMRS carriers for their active participation in this FCC process. California looks forward to this emergency notification system being implemented within our state's borders. Given our many fires and earthquakes in this state, emergency notification systems have tremendous potential to help authorities notify people who may be in harm's way.

We also agree with the decision's conclusion that there is no need at this time for California to separately establish back up power requirements for central offices, cell sites, remote switches, and digital loop carrier system remote terminals, due to development of federal requirements which are on appeal in the courts system. We should wait and see how the federal rules develop, and how they impact our actions at a state level.

The decision also correctly declines to take action at this time on the issue of the feasibility of zero green house gas emission fuel cell systems for back up power for telecommunications service providers' facilities. This is an area where costs did not exceed benefits, and a California-only requirement for fuel cell backup power systems made no sense when viewed on a national level. We do, however, encourage the carriers to review the evolving fuel cell technologies to see where they may benefit their facilities, particularly in remote communications sites.

There is one issue where we remain concerned about the decision's approach, and that is the issue of whether California-specific standards for battery back up power at the customer premises of small businesses and residents are necessary. This is clearly an important public safety issue because, in emergencies, consumers must be able to call 9-1-1 for help on fiber system and cable VOIP phones.

AB 2393 gave us clear guidance that we need to consider the need for California-specific back up battery standard using a cost benefit analysis. And so, because the majority of my colleagues want to continue to look at whether rules are necessary in this rulemaking proceeding, we point out that the cost benefit standard has been set by law, and our record should satisfy this statutory standard.

We have had over a year to develop the record. We hired a consultant, Telcordia that worked with us through three technical workshops and several informational requests and developed the Final Analysis Report. The Final Analysis Report was unable to find that the benefits of a customer premise battery backup standard exceed the costs of implementing such a standard. Again, this is the critical assessment that is required by the statute before we can adopt any standard.

Upon closer inquiry, Telecordia found that nearly all the carriers have between four and 20 hours of reserve battery back up power at the customer premises. The service providers indicated they provide up to 8 hours of back up battery power at the customer's premises. The average power outage in the U.S. according to JD Power and Associates was 7.9 hours for 2007.

Thus, it appears that current practices delivering 8 hours of back up power to customer's premises should be generally adequate to provide emergency voice service during typical power outages. We would have found that the current carrier practice is adequate and rules are not necessary, but would consider monitoring technological advances in back up battery on an ongoing basis to ensure our carriers keep up with best practices on a national level.

Further, the record indicates that the implementation of battery backup power standards would be costly and administratively difficult to implement. Additional battery back up costs for fiber systems may layer on additional costs of $15-$50 which will be passed on to consumers. There is no data in the record on costs for cable systems.

Moreover, the FCC's Katrina Order - which dictates a federal standard for network-side power - is on appeal and its status is in flux. If this FCC order is overturned, it could have a significant impact on the cost-benefit analysis required for adopting a standard for customer-premises power. Obviously, if there is no power on the network side, whether there is power on the customer premises side becomes irrelevant. We believe this appeal should be closely monitored.

Further, the universe of consumers impacted is relatively small. According to the FCC, as of June 2007, 30.3 million Californians - that's about 80% of all our residents -- have wireless phones and can use those to call 9-1-1. And 18.5 million incumbent phone company customers don't have this back up power issue.

Today, consumers purchase and replace batteries for their smoke detectors, cell phones, and cordless phones without difficulty. Once consumers understand there is a battery involved, they can easily learn to replace the battery. It is not difficult. We ask our colleagues to proceed with regulatory restraint in this back up battery area, remembering that our commitment to a level playing field in this competitive world of telecommunications and more flexible regulations.

For these reasons, we support and concur in this item today.

San Francisco, California

September 4, 2008

30 AB 2393 (Ch.776, Stats 2006) added Sections 776, 2872.5 and 2892.1 to the Public Utilities Code.

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