WPC 2BEJ Z Courier c-#XR  P7jQXP#HP LaserJet 4_230_1HPLAS4.PRS 4x  @\oeX@2K 6F / 3|wCourierCG Times"i~'K2^$(8<><q*"xxxxWWxxxWWkkxxx " 0*((7"  q> x4. The first complete and timely CPS complaint in East Whiteland Township, CUID No. PA1849, was completed and served on Harron on October 12, 1993 and received by the Commission on October 15, 1993. x5. Harron filed an FCC Form 393 for East Whiteland Township, CUID No. PA1849 on November 15, 1993. Harron amended its justification on February 17, 1995, in response  Yv-to a Commission letter which requested further clarification of Harron's showing. vx4 Y-#XR  P7jQ}XP#э Letter from Peter G. Wolfe, FCC, toGardner F. Gillespie, Esq., Counsel for Harron  Y-(Feb. 14, 1995).#XR  P7jQ}XP# Harron submitted additional information on February 7, 1995 in response to a Cable Services Bureau  YH-Public Notice offering operators the opportunity to make optional supplemental filings.+ Hbx4 Y[ -#XR  P7jQ}XP#э Public Notice: Cable Services Bureau Announces Optional Procedures with Respect to  YF -Pending PreMay 15 Benchmark Cases, DA 941556 (Dec. 29, 1994) ("Public Notice"); see also Public Notice: Cable Services Bureau Announces Extension of Time to File Under  Y-Optional Procedures Plan with Respect to Pending PreMay 15 Benchmark Cases, DA 9587  Y-(Jan. 20, 1995). #XR  P7jQ}XP# +  X - Discussion x6. Harron asserts that its monthly CPS tier price is justified by its benchmark filing because its price is equal to the maximum permitted charge of $10.78, as calculated in the filing. Upon review of Harron's Form 393 filing, we have found that Harron has not correctly calculated its maximum permitted price, and it is therefore appropriate to make the following adjustments to Harron's calculations in Form 393: x` ` a. In Column G of Schedules A and C of Part III of its FCC Form 393, xHarron did not report any income tax expense. Harron is a Subchapter C corporation  Y4-xand is therefore required to pay corporate income tax. 4x4 Y-#Xw PE37}XP#э See Harron's filing on FCC Form 1205, page 1, filed August 15, 1994. By omitting its tax entries in xColumn G, an operator reduces its effective rate of return on equipment and  Y- xinstallations and thereby could increase its CPS price. We therefore calculate xHarron's federal income tax allowance on Column G of Schedules A and C on the  Y-xbasis of a 35% corporate tax rate._p x4 Y!-#Xw PE37}XP#э Id._ Furthermore, the Commission has stated that tax Y-xpaying business entities must grossup their tax entries in Column G of Schedules A (#(#X Y-xand C (i.e., calculate the tax as a percentage of return on investment plus tax). # x4 Y~%-#XR  P7jQ}XP#э First Order on Reconsideration, Second Report and Order, and Third Notice of  Yi&-Proposed Rulemaking, MM Docket No. 92266, FCC 93428, 9 FCC Rcd 1164, 1196 n. 92 (1993) ("Our provision to grossup the return amount for income taxes applies to all tax"T'0*((m'" paying business entities to the extent that they have a state or federal income tax obligation.")  Wy-See also Cable Television Rate Regulation Questions and Answers Relating to FCC Form  Yb-393, Question and Answer No. 14 (released July 30, 1993) ("The federal tax expense should be calculated based upon a pretax return on investment.")  In"60*((" xaccordance with this principle, we recalculate Column G of Schedules A and C (and xsubsequent steps) using a grossedup federal income tax rate of 53.85% of Harron's xreturn on investment.   Y- x` ` b. In its Form 393 filing of February 7, 1995, Harron incorrectly calculated xthe Inflation Adjustment Factor (Form 393, Part II, Worksheet 1, Line 127, and  Yv-xForm 393, Part II, Worksheet 4, Line 401).  Lines 122 and 125 of Form 393 require xthe operator to enter Gross National Product Price Index ("GNPPI") data for the xlatest quarter for which data is available that ended before the date through which the xInflation Adjustment Factor is calculated. On its most recent Form 393, Harron xcalculated the Inflation Adjustment Factor through October 1993. However, Harron xcompleted Lines 122 and 125 using updated GNPPI data for the first quarter of x1993, rather than the third quarter of 1993. Harron's calculation of the Inflation xAdjustment Factor is therefore incorrect. Xx` ` c. We must therefore recalculate the Inflation Adjustment Factor on the basis  Y-of the most accurate data currently available for the date for which Harron filed.E6x4 Yw-#XR  P7jQ}XP#э See 47 C.F.R.  76.922(b)(9)(iii) (if a cable operator fails to justify its rates, rates  Y`-must be adjusted in accordance with the most accurate data available at the time of analysis).#x6X@`7X@#E On its most recent Form 393, Harron entered 13 months on Line 124, indicating that its filing was as of the end of October 1993. On July 29, 1994, the Department of Commerce released corrected inflation data including GNPPI figures of 122.3 for the third quarter of 1992 and 125.7 for the third quarter of 1993. Using these GNPPI figures, we calculate an Inflation Adjustment Factor of 1.030 through October 1993. (# 7. Because of these errors, we conclude that Harron has failed to demonstrate that its price for the CPS tier was not unreasonable. We will therefore set a price for this tier, incorporating the adjustments discussed above. These adjustments have the effect of reducing the maximum permitted monthly CPS tier price from $10.78 to $10.58.  X|- Conclusions  x8. Upon review of the record herein, we conclude that Harron's showing supports the maximum reasonable CPS tier price of $10.58 (plus franchise fee) for the period from"70*(("  Y-October 15, 1993 to May 14, 1994.Yxx4 Yy-#XR  P7jQ}XP#э This finding is based solely on the representations of Harron listed in paragraph 5,  Yb-supra, and the modifications described in paragraph 6, supra. Should information come to our attention that these representations were materially inaccurate, we reserve the right to take appropriate action. This Order is not to be construed as a finding that we have accepted as correct any specific entry, explanation or argument made by any party to this proceeding not specifically addressed herein.Y We further determine that we will order appropriate refunds pursuant to Section 76.957 of the Commission's Rules, 47 C.F.R.  76.957, in order to reimburse subscribers for the amount they paid in excess of a reasonable price. x x9. We further conclude that Harron must reflect in its FCC Form 1200 rate filing for the period after May 14, 1994 the fact that Harron's price during the earlier period was unreasonable. We reserve the right to make further adjustments to Harron's price for the period after May 14, 1994, upon completion of our review of Harron's FCC Form 1200 rate filings. x10. We further conclude that Harron has submitted in good faith a timely optional  Y -supplemental filing in response to our Public Notice. As provided in the Public Notice, we will relieve Harron of its obligation to obtain advance Commission approval of adjustments to its CPS prices for one year following the release of this Order. x11. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's Rules, 47 C.F.R.  0.321, that the complaint filed October 15, 1993 against the cable programming service price charged by Harron Communications Corp. in the Township of East Whiteland, Pennsylvania, CUID No. PA1849, and all other complaints in this franchise area related to the same price, ARE GRANTED TO THE EXTENT INDICATED HEREIN. x12. IT IS FURTHER ORDERED that the benchmark filing submitted by Harron Communications Corp. with respect to the Township of East Whiteland, Pennsylvania, CUID No. PA1849, for the period beginning on October 15, 1993 and ending on May 14, 1994 justifies the maximum price of $10.58 (plus franchise fee) per month for Harron Communications Corp.'s cable programming service tier. x13. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's Rules, 47 C.F.R.  76.961, that Harron Communications Corp. shall refund to subscribers that portion of the amounts paid for cable programming service for the period from October  YP-15, 1993Px4 Y $-#XR  P7jQ}XP#э Our jurisdiction to order a refund dates from the earliest date a valid complaint is filed with the Commission. 47 C.F.R.  76.961(b). to May 14, 1994 which exceeded $10.58 (plus franchise fee) per month and was thus unreasonable, plus interest to the date of the refund. "" 0*(("Ԍx14. IT IS FURTHER ORDERED that Harron Communications Corp. shall promptly determine the overcharges to CPS subscribers for the stated period, and shall within 30 days of the release of this Order file a report with the Chief, Cable Services Bureau, stating the cumulative refund amount so determined (including franchise fees and interest), describing the calculation thereof, and describing its plan to implement the refund within 60 days of Commission approval thereof.T x15. IT IS FURTHER ORDERED, pursuant to Section 76.922(b)(4)(C) of the Commission's rules, 47 C.F.R.  76.922(b)(4)(C), that Harron Communications Corp. shall, within 30 days of the release of this Order, revise its Form 1200 filing with respect to the Township of East Whiteland, Pennsylvania, CUID No. PA1849, for the period beginning May 15, 1994, to reduce the monthly charge per tier as of March 31, 1994 for Tier 2 (Line A6b) to equal $10.58 (plus franchise fee). x16. IT IS FURTHER ORDERED that Harron Communications Corp. shall place into effect, within 30 days after its submission of the revised Form 1200 filing required above, a  Y-price that reflects the reduction in the CPS rate determined in this Order.xx x` `  x17. IT IS FURTHER ORDERED, pursuant to Section 76.960 of the Commission's rules, 47 C.F.R.  76.960, that Harron Communications Corp. shall not be required to obtain advance approval of adjustments to its CPS price in East Whiteland Township, Pennsylvania, CUID No. PA1849, for one year following the release of this Order. x` `  FEDERAL COMMUNICATIONS COMMISSION x` `  Meredith J. Jones x` `  Chief, Cable Services Bureau"N0*(( "