WPCy 2MBVRKZ3|X7jC:,9Xj\  P6G;XP"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$CWxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxNHxxH\dDXddddd8@d<@d<DDXXdDDxddzHxxHvppDXd<"dxtldpxxdHP4Si (Additional); Rm. 907_1; LPT2HPLA4SAD.PRSXj\  P6G;\! 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If the Commission finds the rate  X- x$unreasonable, it shall determine the correct rate and any refund liability.g XK-ԍ  #X\  P6G;IP#See 47 U.S.C. Section 543(c) (1993). The  X- xTelecommunications Act of 1996 ("1996 Act")s{g X-ԍ #X\  P6G;IP#Pub. L. No. 104104, 110 Stat. 56.s and our rules implementing the new legislation,,g X- xԍ#X\  P6G;IP# See #X\  P6G;IP#Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996, 11 FCC Rcd  {O -5937 ("Interim Rules").  xrequire that complaints against the CPST rates be filed with the Commission by a local  xLfranchising authority ("LFA") that has received subscriber complaints. An LFA may not file a  xCPST rate complaint unless, within 90 days after such increase becomes effective, it receives more than one subscriber rate complaint.  X1- x3.To justify rates for the period beginning May 15, 1994 through a benchmark showing,  X - xoperators must use the FCC Form 1200 series. } g Xr- xԍ #X\  P6G;IP#47 C.F.R. Section 76.922(b)(6); see also Second Order on Reconsideration, Fourth Report and Order, and  {O[- xFifth Notice of Proposed Rulemaking, MM Docket No. 92266, FCC 9438, 9 FCC Rcd 4119, 4190 (1994) ("Second  {O%-Order on Reconsideration"). Operators may justify adjustments to their rates  xon an annual basis using FCC Form 1240 to reflect reasonably certain and quantifiable changes  x-in external costs, inflation, and the number of regulated channels that are projected for the twelve  X - xmonths following the rate change. { g Xr- xxЍ#X\  P6G;IP# See In the Matter of Sections of the Cable Television Consumer Protection and Competition Act of 1992:  {O[- x Rate Regulation, MM Docket No. 92266, Thirteenth Order on Reconsideration ("Thirteenth Reconsideration Order"),  yO%-11 FCC Rcd 388, 391 (1995). Any incurred cost that is not projected may be accrued with  X - xinterest and added to rates at a later time.l / g X-Ѝ#X\  P6G;IP#  Id. at 392.l If actual and projected costs are different during the  X - xirate year a "trueup" mechanism is available to correct estimated costs with actual cost changes.d g X8-Ѝ#X\  P6G;IP# Id.d x   x4. On February 27, 1997, the LFA filed a complaint regarding the January 1, 1997  Xb- xyincrease in Operator's CPST rate in the abovereferenced community. In its complaint, the LFA  xasserts that it has received more than one subscriber complaint against Operator's CPST rate  xincrease, thereby triggering the Commission's jurisdiction to review this complaint. The valid  xmcomplaint from the LFA triggers an obligation on behalf of the cable operator to file a  X- xjjustification of its CPST rates with the LFA.l g XH&-ԍ#X\  P6G;IP# 47 C.F.R. Section 76.1402. l Thus, in this case, Operator is required to justify  xthe increase in its CPST rate which is the subject of the LFA's complaint. In its response,"B ,N(N(ZZ "  xzOperator asserts that its January 1, 1997 rate increase is justified by the FCC Form 1240 filed along with the LFA's complaint on February 27, 1997.   @x5. Upon review of Operator's FCC Forms 1240, we find that Operator has incorrectly  xcalculated its maximum permitted rate ("MPR") effective February 1, 1996 to December 31,  X- x1996, and that Operator charged in excess of its corrected MPR, beginning January 1, 1997.  g yO- x#X\  P6G;IP#э This finding is based solely on the representations of Operator. Should information come to our attention that  x;these representations were materially inaccurate, we reserve the right to take any appropriate action. This Order is  xnot 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.   xTo justify a CPST rate of $15.83, for the period February 1, 1996 to December 31, 1996,  X_- xjOperator filed an amended FCC Form 1240Yy_g X - xԍ#X\  P6G;IP# Originally, operator filed four versions of this FCC Form 1240 with different maximum permitted rates. Our  xKreview is based on the last FCC Form 1240 filed with the Cable Services Bureau to justify rates for this particular period. Y on March 18, 1997. Operator included calculations  xin Module G: Maximum Permitted Rate for TrueUp Period 2. Operator, however, did not have  xa TrueUp Period 2. Consequently, we removed the calculations from Module G and adjusted  xLine I4 accordingly. Our adjustments to Operator's FCC Form 1240 resulted in a reduction of  X - xthe MPR for the CPST to $16.36. Consequently, Operator's CPST rate of $15.83, for the period  X -February 1, 1996 to December 31, 1996 is justified.  X - x6.Operator filed a second FCC Form 1240 to justify a CPST rate of $17.83, effective  xJanuary 1, 1997. Upon review of this FCC Form 1240, we find that Operator has not correctly  xcalculated its MPR. We adjusted Module A, Line A1 of this FCC Form 1240 to reflect the  xcorrected MPR of $16.36 brought forward from the prior FCC Form 1240. We have also  xadjusted Module D, Line D6 (Current TrueUp Segment) to correspond with Module I, Line I8  x>(TrueUp Segment for Projected Period) of the corrected prior FCC Form 1240; and we have  xLadjusted Line D7 (Current Inflation Segment) to correspond with Line I5 (Inflation Segment for Projected Period) of the corrected prior FCC Form 1240.  X- x7.Upon further review of Operator's second FCC Form 1240, we find that Operator has  ximade trueup adjustments through to the effective date of the rate increase. This is incorrect. The  xannual adjustment afforded by FCC Form 1240 allows operators to project changes in external  xcosts, inflation, and the number of regulated channels. This structure avoids the delay some  xoperators experienced in recouping costs through multiple rate adjustments throughout the year.  xLBecause projections will not reflect the costs that actually occur, the Commission provided, as  xpart of the annual adjustment, a "trueup" to correct projected cost changes with the actual cost  xchanges. However, the Commission has noted that, as FCC Form 1240 must be filed 90 days  xbefore an increase is to take effect, the period for the trueup will not coincide with the previous  X - xzyear's projections. g X&-ԍ#X\  P6G;IP# Thirteenth Reconsideration Order, 11 FCC Rcd 388, 420 fn 151 (1995). The trueup data is intended to indicate real, not projected data.\  g X-ԍ #X\  P6G;IP# Id.\ This" y,N(N(ZZ\"  X-policy is reflected in the instructions accompanying FCC Form 1240.yg X*-ԍ #X\  P6G;IP# See FCC Form 1240 Instructions for Timing at 34.  X- |x8.Based on this instruction and considering evidence in the filing,*g X- xЍ #X\  P6G;IP#Operator, for instance, did not reflect in its trueup the inflation factor for the second quarter of 1996 released  {O- xYby the Commission in November 1996. See Public Notice, "Inflation Adjustment Figures for Cable Operators Using  x=FCC Forms 1210 and 1240 Now Available", DA 961986, (November 27, 1996). Had this been available to  xOperator at time of filing, Operator would have been required to include the factor released (2.22%) for all months  x;after March 1996 and for its projection period. Instead, Operator used the previous factor (2.39%) for all inflation  xadjustments and projections. It is evident, therefore, that Operator did not have November 1996 data available at the time it completed its FCC Form 1240.  reasonable time for  xclosing accounts and completing forms, we have adjusted Operator's trueup period from 11  xmonths to 8 months. This adjustment required that we refresh Operator's inflation factors to 2.22  x.for the second quarter of 1996 and to 2.21 for the third quarter of 1996 and adjust Worksheet 1  xaccordingly. As a result, the trueup inflation factor in Module C, Line C1 for the 8 month  xperiod was corrected to 1.0151 instead of the 1.0219 used by the Operator for an 11 month  xperiod. We have adjusted Module E, and have corrected the number of months on Line E2 to  x8 months and Line E3 to 3 months. We have also adjusted the inflation segment in Module F,  x!Line F5 to reflect the corrections made in Line C1. This has resulted in a corresponding adjustment on Line F9 (MPR for TrueUp Period 1).  X - x9.The reduction in the length of the trueup period also results in a reduction in Line  xH2 (Revenue From MPR for Period 1). This results in a corresponding reduction in Line I8  x(TrueUp Segment for the Projected Period). In total, our adjustments to Operator's FCC Form  X- x1240 result in a reduction of the MPR for the Projected Period to $17.27 (Line I9).A g X- xԍ#X\  P6G;IP# Information regarding the specific adjustments made to Operator's FCC Form 1240 filing can be found in  x,the public file for the community referenced above which is available in the Cable Services Bureau's public reference  xI room, or through the Commission's copy contractor, International Transcription Services (ITS), 1919 M Street, N.W., Washington, DC 20554, or by calling ITS at (202) 8573800. Thus,  xOperator has failed to demonstrate that its January 1, 1997 rate of $17.83 for its CPST was not  x<unreasonable. To the extent that external costs from the three months disallowed from Operator's  XK- xtrueup period{Kg X!-ԍ#X\  P6G;IP# As found on Operator's Worksheets 7 and 8.{ have been averaged into the rates charged in the nine months allowed in  xKOperator's trueup period, and have not been removed by our adjustments, we will order Operator  xto make a monthbymonth accounting of such external costs. Such accounting shall allow a  xcomparison of the actual external costs for the permitted eightmonth trueup period with the  xrecovery of external costs afforded by the external cost segment for that period as calculated on  xLWorksheet 7. We will order the removal of any overrecovery, plus interest, identified thereby  xin Operator's next FCC Form 1240 filed with the Commission. Any such overrecovery of"G,N(N(ZZq"  xLexternal costs shall be added to the amount otherwise reportable on Line H1 of Operator's next  X-FCC Form 1240 rate calculation.  X- x10.Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules,  xO47 C.F.R.  0.321, that the CPST rate of $15.83, for the period from February 1, 1996 to December 31, 1996, IS NOT UNREASONABLE.  Xv-  X_- x11.IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules,  x/47 C.F.R.  0.321, that the CPST rate of $17.83, implemented by Operator on January 1, 1997 in the community referenced above, IS UNREASONABLE.  X -   |x12. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules,  x[47 C.F.R.  0.321, that the complaint against the January 1, 1997 CPST rate increase charged by Operator in the community referenced above, IS GRANTED.  X - x 13. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules,  x47 C.F.R.  76.961, that Operator shall refund to subscribers in the community referenced above  x/that portion of the amount paid in excess of the maximum permitted CPST rate of $17.27 per  xLmonth (plus franchise fees), plus interest to the date of the refund, for the period from the date  xthe first complaint was received by LFA, January 7, 1997, to the day before Operator implements the maximum permitted rate of $17.27.  X-  x14. IT IS FURTHER ORDERED that Operator shall promptly determine the overcharges  xto CPST subscribers for the stated periods, and shall within 30 days of the release of this Order,  xMfile a report with the Chief, Cable Services Bureau, stating the cumulative refund amount so  xdetermined (including franchise fees and interest), describing the calculation thereof, and describing its plan to implement the refund within 60 days of Commission approval of the plan.  X-  X|- x15.IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules,  xM47 C.F.R.  0.321, that Operator revise the calculation of its maximum permitted CPST rate in  xjits next FCC Form 1240 filing in accordance with our findings in this order and, in addition, that  xOperator attach to its next FCC Form 1240 filing a monthbymonth accounting of its external  xcosts from Operator's eightmonth trueup period as found on Operator's Worksheets, and that  xOperator adjust its rates in its next FCC Form 1240 filing for any overrecovery of external costs, plus interest, identified thereby. x hh@FEDERAL COMMUNICATIONS COMMISSION x hh@Meredith J. Jones x hh@Chief, Cable Services Bureau