FOR FCC RECORD ONLY $/ORDER remanding local rate order of North Huntingdon, PA, DA 95-735/$ $/76.922 Basic Tier Rates/$ $/76.923 Rates for equipment and installation/$ $/76.942 Refunds/$ $/76.933 Franchising Authority Review of basic cable rates and equipment costs/$ $/76.944 Commission Review of Franchising Authority Rate Decision/$ $/1.45(d)Request for Stay/$ Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20554 In the Matter of: ) ) TCI OF GREENSBURG ) DA 95-735 ) Appeal of Local Rate ) Order of Township of ) North Huntingdon, PA ) ORDER Adopted: April 4, 1995 Released: April 6, 1995 By the Chief, Cable Services Bureau: I. INTRODUCTION 1. On January 13, 1995, TCI of Greensburg ("TCI"), the franchisee in the above- matter, filed a Petition for Review ("appeal") of a local rate order adopted by its franchising authority, the Township of North Huntingdon, Pennsylvania ("the Township"), on December 14, 1994. On January 17, 1995, TCI filed a Request for Emergency Stay pending Commission review of its appeal. The Township did not file an opposition to either the stay petition or appeal. Because we are resolving this dispute on the merits presented in the appeal, the petition for stay has been rendered moot. The Township's local rate order requires TCI to establish a new rate schedule for its basic service tier and associated equipment and installations and to issue refunds to subscribers for charges in excess of the newly established rates for the time period beginning September 1, 1993 and ending July 15, 1994. 2. TCI raises five issues in its appeal: (1) that the Township unlawfully ordered subscriber refunds even though its authority to order refunds had expired; (2) that the Township improperly imposed refund liability dating back to September 1993 and failed to follow the mathematical formula required by the Commission for calculating refunds; (3) that the Township improperly ordered TCI to issue refunds to both present and former subscribers; (4) that the Township improperly reduced TCI's installation rates by 17%; and (5) that the Township improperly required TCI to provide external cost information "by channel." TCI claims that each of these actions resulted in a misapplication of the Commission's rate regulations and violated the 1992 Cable Act. We address each issue in turn. II. DISCUSSION 3. Under our rules, rate orders made by local franchising authorities may be appealed to the Commission. In ruling on appeals of local rate orders, the Commission will not conduct a de novo review, but instead will sustain the franchising authority's decision as long as there is a reasonable basis for that decision. Therefore, the Commission will reverse a franchising authority's decision only if it determines that the franchising authority acted unreasonably in applying the Commission's rules in rendering its local rate order. If the Commission reverses a franchising authority's decision, it will not substitute its own decision but instead will remand the issue to the franchising authority with instructions to resolve the case consistent with the Commission's decision on appeal. A. Refund Liability 4. When a cable operator files either a benchmark or cost-of-service rate justification, the Commission's rules provide a franchising authority 30 days in which to review the rate filing before the proposed rates become effective. In cases involving benchmark filings (i.e., filings based on FCC Form 393), a franchising authority may toll this deadline for an additional 90 days if it needs more time to review the filing, giving the franchising authority a total of 120 days to issue an order before the proposed rates go into effect. At the end of the 120-day period (the original 30 days plus the additional 90 days), the proposed rates will go into effect if the franchising authority has not issued a rate decision. The franchising authority, however, may still preserve its authority to order subscriber refunds based on the new rates by issuing an accounting order, directing the cable operator to keep an accurate account of its financial records. If a franchising authority has not rendered a decision within the available 120-day review period and has not issued an accounting order before that period has expired, the franchising authority may not later order subscriber refunds under our rules. We wish to be clear that our rules provide that the issuance of an accounting order is necessary only to preserve refund authority. A franchising authority that does not issue an accounting order before its allowable period of review expires may still prescribe rates and order a prospective rate reduction. 5. Because the Township did not issue an accounting order before the conclusion of its review period, it lost the authority to order subscriber refunds. As a result of the Township's failure to issue an accounting order, the other refund-related issues raised by TCI; namely, that the Township improperly imposed refund liability back to September 1993, failed to follow the Commission's rate formula in calculating its refund liability and ordered TCI to issue refunds to both present and former subscribers, are rendered moot. We note, however, that, although TCI is not liable for the refunds ordered by the Township with regard to its rates set under Form 393, in effect from September 1, 1993 until July 15, 1994, this order has no effect upon the Township's authority to order subscriber refunds subsequent to July 15, 1994. B. Installation Rates 6. TCI next contends that the Township improperly required TCI to lower all of its installation rates by 17%. Maximum permitted rates for equipment and installation are based on actual cost and are calculated in Part III of the Form 393. Equipment rates are derived from capital and maintenance costs per unit of equipment. Installation rates are derived from the calculation of a hourly service charge and application of that charge to different types of installations. Under our regulations, the maximum permitted rates are deemed to be reasonable, as required by the 1992 Cable Act. Requiring cable operators to set all or some of their rates for equipment or installation below their maximum permitted levels would force them to charge rates at levels below those specifically allowed under our rules. 7. If a franchising authority does not dispute the bases for the figures presented in a cable operator's Form 393 or has not discovered any mathematical errors in the form, the franchising authority should then approve the operator's maximum permitted rates, as derived by the form. A franchising authority should not require the operator to set a particular rate for equipment or installation at any rate less than its maximum permitted rate, even if its current or actual rate is below its maximum permitted rate. Instead, the franchising authority should allow the operator to charge up to its maximum permitted rates, as derived by Form 393. In this proceeding, while the record is not clear, it appears that the Township did not dispute either the validity of the figures used in TCI's Form 393 or the accuracy of the calculations in the form. Under such circumstances, the Township must allow TCI to charge its maximum permitted rates, as derived by the Form 393. We are therefore remanding this issue to the Township so that it can reconsider its ruling in a manner consistent with our findings. C. Per Channel Programming Costs 8. TCI next states that the Township's rate order "criticizes" it for failing to sufficiently justify its request for an external cost adjustment and "implicitly threatens" to reject the Form 1210 rate increase on that basis. Since the Township has taken no action that injures TCI, this issue is not ripe for resolution and we therefore dismiss it. III. Ordering Clauses 9. Accordingly, IT IS ORDERED that the appeal of the local rate order adopted by the Township of North Huntingdon, Pennsylvania, with respect to TCI's refund liability, installation rates and per channel programming costs, IS REMANDED to the local franchising authority for further proceedings consistent with this opinion. 10. IT IS FURTHER ORDERED that TCI's appeal, with respect to per channel programming costs, IS DISMISSED. 11. 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 (1993). FEDERAL COMMUNICATIONS COMMISSION Meredith J. Jones Chief, Cable Services Bureau