WPC 2BJ Z Courier3|x Times New Roman@`7X@HP LaserJet 4_230_1HPLAS4.PRS 4x  @\oeX@26 F 3|x"i~'^:DPddDDDdp4D48dddddddddd88pppX|pDL|pp||D8D\dDXdXdXDdd88d8ddddDL8ddddX`(`lD4l\DDD4DDDDDDDDd8XXXXXX|X|X|X|XD8D8D8D8ddddddddddXdbdddpdXXXXXlX~|X|X|X|XdddldldD8DdDDDdplld|8|P|D|D|8dvddddDDDpLpLpLpl|T|8|\ddddddl|X|X|Xd|DdpL|Dd~4ddC$CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxH\dDXddddd8@d<@d<DDXXdDDxddzHxxHvppDXd<"dxtldpxxdCourierCG Times907_1HPLAS4SI.PRSx  @\s EX@2%'f )TK(",tB^ f ^;C]ddCCCdCCCCddddddddddCCY~~vCN~sk~CCCddCYdYdYCdd88d8ddddJN8ddddYYdYd4dddddCddddddddd8YYYYYY~Y~Y~Y~YC8C8C8C8ddddddddddYdddddsdXdXXXddx|X~d~d|XdddddddC8ddddCdoddd|8|H~d<|8dtddddHHdlLlLlLkd|H|8~ddddddddXXXd~ddkd~ddxCddCCCWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNdddCYQQddddddFddddFCChhd44ddzzdddvooChdF"dhd9dCCzCddoddCdYds]zUvdYYCCCCz~ozoY~NYdYC8YooYdYzsdzdd~YYzozzz~CdzYzzzzCCdddddddzCsdYC\   pxtll\tll@\@\`LCourierCG TimesTimes New RomanTimes New Roman ItalicTimes New Roman Bold ItalicR8wC;,Xw PE37XPS7jC:,Xj\  P6G;XPW!@(#,h@\  P6G;hPd|DdpL|Dd~4ddC$CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxH\dDXddddd8@d<@d<DDXXdDDxddzHxxHvppDXd<"dxtldpxxd"i~'^:DPddDDDdp4D48dddddddddd88pppX|pDL|pp||D8D\dDXdXdXDdd88d8ddddDL8ddddX`(`lD4l\DDD4DDDDDDDDd8XXXXXX|X|X|X|XD8D8D8D8ddddddddddXdbdddpdXXXXXlX~|X|X|X|XdddldldD8DdDDDdplld|8|P|D|D|8dvddddDDDpLpLpLpl|T|8|\ddddddl|X|X|Xd|DdpL|Dd~4ddC$CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxH\dDXddddd8@d<@d<DDXXdDDxddzHxxHvppDXd<"dxtldpxxd2vWpk=ka8DocumentgDocument Style StyleXX` `  ` a4DocumentgDocument Style Style . a6DocumentgDocument Style Style GX  a5DocumentgDocument Style Style }X(# 2nEvt`a2DocumentgDocument Style Style<o   ?  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A. a.(1)(a) i) a)DocumentgPleadingHeader for Numbered Pleading PaperE!n    X X` hp x (#%'0*,.8135@8:lO?$O@lRTechnical 2Technical 2= Technical 3Technical 3> Technical 4Technical 4?` hp x (#X` hp x (# X` hp x (#` hp x (#Technical 1Technical 1@ 2;[A$RB$TCVDYTechnical 7Technical 7A` hp x (#X` hp x (# X` hp x (#` hp x (#Technical 8Technical 8B` hp x (#X` hp x (# X` hp x (#` hp x (#toc 1toc 1C` hp x (#!(#B!(#B` hp x (#toc 2toc 2D` hp x (#` !(#B` !(#B` hp x (#2cEm[F]G_Hatoc 3toc 3E` hp x (#` !(# ` !(# ` hp x (#toc 4toc 4F` hp x (# !(#  !(# ` hp x (#toc 5toc 5G` hp x (#h!(# h!(# ` hp x (#toc 6toc 6H` hp x (#!(#!(#` hp x (#2jIvdJdKfLhtoc 7toc 7I toc 8toc 8J` hp x (#!(#!(#` hp x (#toc 9toc 9K` hp x (#!(#B!(#B` hp x (#index 1index 1L` hp x (#` !(# ` !(# ` hp x (#27pMkN7mOvUoPloindex 2index 2M` hp x (#` !(#B` !(#B` hp x (#toatoaN` hp x (#!(# !(# ` hp x (#captioncaptionO _Equation Caption_Equation CaptionP 2wQripKp8&sKquendnote referenceendnote referenceQ "i~'^#)0<><q*"xxxxWWxxxWWkkxxx{|K Y-ԍ NATOA Comments at 3.> NATOA states that operators will not face a permanent delay in cost recovery since operators will be able to include any previously unaccounted for cost increases in their second annual Form 1240 filing. In addition, NATOA argues that operators can minimize the amount of cost increases that occur within the time period for which actual cost data is unavailable, because both the Form 1240 filing date and events (such as channel  Y1-changes) that may trigger cost changes are largely within the control of the operator.91,|K Y-ԍ Id. at 2.9 Finally, NATOA contends that granting the waiver request may impose additional and unnecessary burdens on local regulatory authorities. According to NATOA, separate calculations reflecting projected cost changes for the period at issue create a "third layer" of  Y -calculations for local authorities to review.9 |K Ye-ԍ Id. at 3.9  Y -x` `  11. In its reply, TCI agrees that the costs incurred during the previous year's regulatory review period (and the period just prior to the Form 1240 filing) can be accrued by the operator and then accounted for in an operators next annual filing. However, TCI states that because these accrued costs will incur interest during the period prior to the  YK-next annual filing, subscribers would ultimately bear that interest expense.BK|K Y-ԍ TCI Repy Comments at 11.B In addition, TCI states that a permanent cost recovery delay remains because the second filing will, in turn, fail to account for costs incurred during the second regulatory review period (and the period  Y-just prior to the second Form 1240 filing).;C |K Y-ԍ Id. at 68.; Finally, TCI disagrees that the waiver creates additional burdens on local authorities. TCI responds that no matter when these costs are ultimately recovered, the local regulatory authority will have to review and verify those same costs. TCI states that the waiver does not create a method of cost recovery which is  Y-otherwise foreign to the Form 1240 review process.= |K YQ$-ԍ Id. at 1213.=  X-x` `  X|-IV.xDISCUSSION "e 0*(("Ԍ Y-x` `  12. The 1992 Cable Act directed the Commission to "seek to reduce administrative burdens on subscribers, cable operators, franchising authorities and the Commission" in meeting its mandate of creating regulations that insure that subscriber rates for regulated services are not unreasonable. The Commission created the annual rate adjustment system in order to further streamline the rate review process in a way that benefits subscribers, cable operators and local regulatory authorities. Annual adjustments limit subscriber confusion and frustration because subscribers will not have to contend with numerous rate adjustments each year. Regulatory authorities also benefit because the annual system minimizes the amount of rate adjustments reviewed each year. In addition, the Commission intended the annual system to address concerns raised by cable operators that the quarterly adjustment system resulted in delayed cost recovery.  Y -x` `  13. The Commission would not have wanted its true up rules to create significant delays in cost recovery. However, as both NATOA and TCI agree, as a result of those requirements, the costs incurred before the effective date of an operator's first annual filing (during the period beginning with the last date for which actual cost data is available and ending on the effective date of the new rates) generally would not be recoverable until  Yy-the effective date of the rates justified by an operators second annual filing. We believe that this delay in cost recovery could act as a disincentive for the operators to begin using the annual rate adjustment methodology, and the potential benefits of the new streamlined system would go unrealized.  Y-x` `  14. However, we disagree with TCI that this initial delay becomes a permanent impediment to full cost recovery. TCI's contention that costs incurred just prior to an operator's subsequent annual rate adjustment (during the same period for which actual cost data was not yet available) are not recoverable until the following filing, fails to recognize that costs incurred during this period would have been includible (if reasonably certain and reasonably quantifiable) in the operator's projections in its previous filing. Thus, recovery based on these projections would have already been permitted. In the absence of the waiver, such recovery is only precluded in an operator's first annual filing because there is no previous filing that would have permitted the operator to project and account for these costs. Therefore, we believe that this cost recovery delay is a one time event for companies that are transitioning to the annual system, and that incur costs during the period just prior to the first annual rate adjustment for which actual cost data was not yet available.  Y-x` ` 15. We believe that the proposed waiver would only add incrementally to any burden the operators' local franchising authorities would experience when reviewing the new form. Any additional burden the waiver creates initially is outweighed by the benefits the waiver offers to both subscribers and operators. With the waiver, the operators will not be in a position of having to absorb and accrue cost increases that occur during the period in question. Local franchising authority review of projected cost data is already a component of the Form 1240 for cost increases expected to occur after the date the 1240 is filed. Furthermore, we note that the waiver request is for a one time exception to the requirement that only actual cost data can be used to perform a true up calculation. Thus, we do not"#' 0*((P(" believe that allowing the operators' first Form 1240 filings to include data based on projected costs in their first true up calculation will produce significant additional burdens on their local franchising authorities. Finally, consumers will be protected because, as NCTA notes, any rate adjustment based on projected costs must be trued up during the second rate  Y-adjustment period. As stated in the Order, any overcharges must be returned to subscribers, with interest.  Ya-x` ` 16. To some extent, we agree with NATOA that operators can minimize the amount of cost increases which occur within the time period just prior to the date the rates are scheduled to go into effect (for which actual cost data is not available). Increases in programming costs, for example, often occur in the course of annual contract renewal between operators and programmers. However, the timing of other external cost increases may not be as predictable as programming cost increases. In addition, we note that while operators are permitted to select the filing date for the Form 1240, local franchising authorities are permitted to reject this date with good cause. If a mutually acceptable alternative filing date can not be agreed upon, the franchising authority may set the filing  Y-date up to 60 days later than the date chosen by the cable operator.P|K Y -ԍ  See 47 U.S.C.  76.922(e)(2).P Accordingly, even if the operators could always predict the timing of cost increases, the operators still would not have full control over the filing date of the Form 1240.  Y6-x` ` 17. Therefore, we grant TCI and TKR's requested waiver of the requirement that only costs that have actually been incurred may be included in their first true up period. Specifically, TCI and TKR, when filing their first Form 1240, will be permitted to include projected changes in costs, inflation, channels and subscriber information attributable to the period between the last full month for which actual cost data is available and the effective date of the new rates. TCI and TKR must include a separate  Y-calculation and explanation of the basis for the costs with their projections.2{|K Y-ԍ These estimated cost adjustments (for the period between the last full month for which actual cost data is available and the effective date of the new rate) must be submitted in accordance with the guidelines set forth in Appendix A.  Y- 2 This waiver applies solely to TCI and TKR's first Form 1240 filing; true ups in their subsequent filings  Y~-will only include actual cost data.a~|K Y"-ԍ In our Notice in this proceeding (DA 952462, released December 13, 1995), we requested comments on whether the waiver, if granted, should extend beyond 1996. NCTA supports the operators' waiver request, and states that the waiver should not be restricted to 1996 filers of Form 1240 because the reasons for the waiver apply regardless of when they make their first filing (NCTA Comments at note 1). We agree that the operators could experience a delay in cost recovery regardless of when their first fling takes place. We therefore do not limit the waiver to the operators that file their first Form 1240s in 1996.  "~ 0*((^"  X-V.xORDERING CLAUSES  Y-x` ` 18. Accordingly, IT IS ORDERED that the TeleCommunications, Inc.  Y-and TKR Cable Company waiver request IS GRANTED .  Y-x` ` 19. 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. x` `  hhFEDERAL COMMUNICATIONS COMMISSION XxX` ` X XXhh/Signed by Gregory Vogt for/(#h XxX` ` X XXhh(#h x` `  hhMeredith J. Jones x` `  hhChief, Cable Services Bureau" 0*(("  X-, Appendix A ĐTP s cB  xIn order for the operators to implement the Commission's waiver of the requirement that only actual cost data may be included in the operator's first annual rate adjustment filing (for the time period just prior to the effective date of the new rate), the operators must adhere to the following guidelines. In order to use the cost estimations permitted by the waiver in the first annual Form 1240 filing, the operator may incorporate the calculations directly into its Form 1240, or the calculations may be reflected in an alternative manner, provided the calculations are performed in conformance with the "General Guidelines" as set forth in Section 1 below, and provided the appropriate regulatory authority agrees to the manner in which the alternative showing is made. Section 2 below sets forth the steps necessary to incorporate the calculations into the operators' first Form 1240 filing.  Y -x1)  General Guidelines. In the initial filing of the Form 1240, the period of time for which actual data is available (the "Actual TrueUp Period") must be separated from the period of time for which actual data is not available (the "Estimated TrueUp Period"). A separate Maximum Permitted Rate for the TrueUp Period should be calculated for each of these periods. This is done so that when the system files its second Form 1240 and performs a trueup on the Estimated TrueUp Period a second time, the effects of the trueup performed in the initial filing can be taken into account. xThere are two elements of the first filing which must be accounted for in the second filing. First, the Inflation Segment for the Estimated TrueUp Period in the first filing must be removed from the Base Rate of the second filing. Second, the adjustment calculated in Module H of the form (and the interest earned on that adjustment) for the Estimated TrueUp Period must be removed from the Total TrueUp Adjustment in the second filing. xBelow are a set of instructions describing how to use the existing Form 1240 in conjunction with this waiver. If a system is using an alternative method for performing a trueup on the Estimated TrueUp Period, it should make sure that it follows the same general procedures.  Y -x 2) Guidelines for Operators that use Form 1240. xThe following instructions are to be used by the operators that choose to take advantage of the waiver by using Form 1240 instead of an alternative method.   X"- #Xj\  P6G;yoXP# xInitial Filing of Form 1240#X\  P6G; ɓP#:  X#-# Xj\  P6G;yoXP#  Vj$- x Module E: Timing Information XxWhen completing Form 1240, Module E is used to define which parts of True Up Periods 1 and 2 are eligible to receive interest. This information is then entered into the formulas in Module H. In a standard filing, TrueUp Period 2 is only used if TrueUp Period 1 is longer than 12 months, and the instructions are written with that"( 0*0*0*)" assumption. Systems filing in accordance with this waiver may have a TrueUp Period 1 which is less than 12 months long. Therefore, Module E should be completed following the methodology used in the following example.(# XxAn operator intends to file on March 1, 1996 to set a new rate starting on June 1, 1996 with an Actual TrueUp Period running from July 1, 1995 to December 31, 1995 (six months) and an Estimated TrueUp Period running from January 1, 1996 to May 31, 1996 (five months). Lines E2, E3, E4, and E5 should be all be completed. Line E1 should be left blank. Line E2 (the length of the Actual TrueUp Period) should equal 6. Line E3 (the length of time between the end of the Actual TrueUp Period and the beginning of the Projected Period, which is another way of saying the length of the Estimated TrueUp Period) should equal 5. Line E4 (the portion of the Estimated TrueUp Period eligible for interest) should also equal 5. Because all of the Estimated TrueUp Period is eligible for interest, line E5 should be 0.(#  V - x Modules F and G: Maximum Permitted Rate for the TrueUp Period XxComplete Module F (which is normally used to calculate the Maximum Permitted Rate for TrueUp Period 1) for the Actual TrueUp Period. Complete Module G (which is normally used to calculate the Maximum Permitted Rate for TrueUp Period 2) for the Estimated TrueUp Period.(#  V- x Module H: TrueUp Adjustment Calculation XxIn Module H (which calculates the Total TrueUp Adjustment), complete to Lines H1 through H8 and lines H12 through H14 of Module H. The instructions for lines H1, H2, and H4 set forth two formulas; the first formula should be used for each of those three lines. Lines H1 through H4 calculate the total amount by which subscribers were over or undercharged (and the interest on that amount) during the Actual TrueUp Period. Lines H5 through H8 calculate the total amount by which subscribers were over or undercharged (and the interest on that amount) during the Estimated TrueUp Period.(#  X - #Xj\  P6G;yoXP# xSecond Filing of Form 1240#Xj\  P6G;yoXP#: xThree numbers from the initial filing of Form 1240 are needed for the second filing. These numbers are found in the initial filing of the form on lines G6 (Inflation Segment for TrueUp Period 1), H7 (TrueUp Period 2 Adjustment Eligible For Interest), and H8 (Interest on Period 2 Adjustment). xAssuming the second filing occurred on March 1, 1997, the TrueUp Period would run from January 1, 1996 to December 31, 1996, overlapping the Estimated TrueUp Period from the first filing. To avoid any overlap, complete the two steps described below. "#' 0*((%"ԌXx1) Module F will calculate an Inflation Segment which covers the same period s cB X` ` included in the Inflation Segment calculated for the Estimated TrueUp Period. Since the Inflation Segment calculated the second time is based on actual data and is the correct figure, the value in line G5 from the first filing should be subtracted from line D8 on the second filing.(# Xx2) When the system completes Module H in the second filing, the resulting Total TrueUp Adjustment will include the amount already claimed in the first filing. To correct for this, the sum of lines H7 and H8 from the first filing should be subtracted from line H13 of the second filing.(#  X - #Xj\  P6G;yoXP#The Spreadsheet Version of Form 1240 #Xj\  P6G;yoXP# xIt is important to note that the spreadsheet versions of Form 1240 have some automated formulas which may make it difficult to perform some of these calculations (particularly in Module H and in the worksheets). Therefore, these calculations may have to be shown separately, and the results of the calculations entered into the spreadsheet by hand.