FOR RECORD ONLY $//ORDER Granting Stay in Barkhamsted, CT, et al, DA 95-567//$ $/76.922 Rates for the basic service tier/$ $/76.923 Rates for equipment and installation/$ $/1.45(d) Request for Stay/$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 DA 95-567 In the Matter of: ) Barkhamsted, CT ) Colebrook, CT PEGASUS COMMUNICATIONS, L.P. ) Goshen, CT D/B/A PEGASUS CABLE TELEVISION ) Harwinton, CT ) New Hartford, CT Petition for Stay of Local Rate Orders) West Hartland, CT of the State of Connecticut ) Winchester, CT Department of Public ) Utility Control ) ORDER Adopted: March 21, 1995 Released: March 22, 1995 By the Chief, Cable Services Bureau: I. Introduction 1. On December 23, 1994, Pegasus Communications, L.P., d/b/a Pegasus Cable Television ("Pegasus") timely filed an Emergency Petition for Stay and Request for Ex Parte Disposition of rate orders of the State of Connecticut Department of Public Utility Control ("DPUC"). Pegasus is subject to two local cable rate orders issued by the DPUC. The local rate orders were issued by the DPUC on November 28, 1994. 2. The DPUC's local rate orders address the rates Pegasus charged for basic cable service, associated equipment and installations for the period of time from September 1, 1993 to May 15, 1994 ("Phase I"), and the period subsequent to May 15, 1994 ("Phase II"). In the DPUC rate proceedings, Pegasus elected to use the cost of service approach in order to justify its rates. 3. The DPUC conducted extensive cost of service proceedings and issued two comprehensive decisions. In the decisions at issue here, the DPUC found that Pegasus' basic service rates exceeded the company's costs, and ordered the company to reduce its rates and refund to subscribers the overcharges levied since September 1, 1993. Pegasus states that the DPUC's local rate orders could require Pegasus to refund approximately $141,000 for the period of time beginning September 1, 1993. Pegasus seeks a stay of the local rate orders pending the resolution of its Appeal on the merits. The DPUC has not filed an opposition to Pegasus' stay request. II. Standard of Review 4. The Commission evaluates petitions for stays under well-settled principles. To support a stay, a petitioner must demonstrate: (1) that it is likely to prevail on the merits; (2) that it will suffer irreparable harm if a stay is not granted; (3) that other interested parties will not be harmed if the stay is granted; and (4) that the public interest favors the granting of a stay. As discussed below, resolution of this stay petition centers primarily on the strength of Pegasus' argument regarding the third prong of this test. III. Discussion 5. The Commission's rules permit operators to implement refunds in either of the following methods: (1) by returning overcharges directly to those subscribers who actually paid the overcharges; or (2) by means of a prospective percentage reduction in the rates for the basic service tier or associated equipment for current subscribers via a specifically identified, one-time credit. Thus, the Commission's rules are structured so that individuals who were actually overcharged might not receive refunds in the future. Thus, a delay in the implementation of the refunds owed by Pegasus will not harm any interested party, since if Pegasus must implement refunds, it can choose to do so by way of credits to the then-current class of subscribers. 6. A stay of the local rate orders would prevent Pegasus from being subjected to the irreparable economic harm it would face by issuing refunds to subscribers that it could not later recoup. Accordingly, given our findings herein, and the fact that the DPUC has not opposed Pegasus' Petition for Stay, we will grant Pegasus' request that the DPUC orders in the above-referenced proceedings be stayed pending our full review of this case on the merits. During the period of this stay, Pegasus must deposit in an interest-bearing escrow account the total amount of money that the DPUC has ordered Pegasus to refund to its customers. Alternatively, Pegasus may elect to post a bond for the benefit of the DPUC. The amount of the bond shall be the total amount of money that the DPUC has ordered Pegasus to refund to its customers, plus interest on that amount for a twelve (12) month period from the date of this Order. The bond shall provide that if Pegasus is unable to fulfill its refund obligations for any reason, then the surety will fulfill that obligation to the DPUC, on behalf of Pegasus' subscribers. IV. Ordering Clauses 7. Accordingly, IT IS ORDERED that the Petition for Stay filed by Pegasus is GRANTED pending the resolution of Pegasus' Appeal on the merits. 8. IT IS FURTHER ORDERED that the total amount of money that the DPUC has ordered Pegasus to refund to its customers SHALL BE PLACED by Pegasus in an interest-bearing escrow account, OR SHALL BE SECURED by the posting of a bond for the benefit of the DPUC for the total amount of money that the DPUC has ordered Pegasus to refund to its customers, plus interest on that amount for a twelve (12) month period from the date of this Order. Proof of Pegasus' compliance with this Order shall be filed with the Commission within thirty (30) days of the release of this Order. Interest shall accrue, or be computed, at the prevailing U.S. Internal Revenue Service Rate for tax refunds and additional tax payments. 9. This action is taken by the Chief, Cable Services Bureau, pursuant to authority delegated by Section 0.321 of the Commission's rules. 47 C.F.R. 0.321. FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau