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A. 1. a.(1)(a) i) a) I. 1. 1. a.(1)(a) i) a)x1.` ` In this Order we consider complaints against the November 1, 1995 and November  X- x15, 1996 rate increases that the abovecaptioned operator ("Operator")Z# yOk-  Ѝ On April 11, 1996, pursuant to 47 C.F.R. 76.400, the Federal Communications Commission received notification  {O3-  of a change in the system name from Cox Cable Pensacola, Inc. to Cox Communications Pensacola, Inc. (See letter from Peter H. Feinberg, Esq., to the Federal Communications Commission, dated April 11, 1996.) implemented for its cable  xyprogramming services tier ("CPST") in the community set forth above. Operator has attempted  xto justify its CPST rate increases through benchmark showings on FCC Forms 1210 and 1240.  x?We have already issued an order which resolved complaints filed against Operator from  X- xNSeptember 1, 1993 through June 30, 1995 ("Settlement Order").# {O1- xЍ See In the Matter of Cox Communications, Inc. and Times Mirror Cable Television, Inc., 11 FCC Rcd 1972 (1995). Accordingly, this Order  x-addresses the reasonableness of the Operator's CPST rate increases of $1.80, effective November 1, 1995, and $1.51, effective November 15, 1996.  X:- ` x2.` ` The Communications Act:D# {O/!-Ѝ Section 623(c) of the Communications Act of 1934, as amended, 47 U.S.C. Section 543(c)(3) (1996). authorizes the Federal Communications Commission  xy("Commission") to review the CPST rates of cable systems not subject to effective competition  xxto ensure that rates charged are not unreasonable. If the Commission finds the rate unreasonable,  X- xMit shall determine the correct rate and any refund liability.M# {O|%-ԍ See 47 C.F.R. Section 76.957.M The Cable Television Consumer  X- xyProtection and Competition Act of 1992 ("1992 Cable Act")Uh # yO'-ԍ Pub. L. No. 102385, 106 Stat. 1460 (1992).U requires the Commission to review  xCPST rates upon the filing of a valid complaint by a subscriber or local franchise authority" ,))ZZ["  X- x("LFA"). The Telecommunications Act of 1996 ("1996 Act")T yOy-ԍ Pub. L. No. 104104, 110 Stat. 56 (1996). T and our rules implementing the  X- xnew legislation ("Interim Rules"),X {O- xЍ See Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996, 11 FCC Rcd 5937 (1996). require that complaints against CPST rates be filed with the  xjCommission by a franchising authority that has received subscriber complaints. A franchising  xauthority may not file a CPST rate complaint unless, within 90 days after such increase becomes effective, it receives more than one subscriber complaint.  Xv- ` x3.` ` The Commission's original rate regulations took effect on September 1, 1993.v yO - x Ѝ Order in MM Docket No. 92266, Implementation of Sections of the Cable Consumer Protection and Competition Act of 1992: Rate Regulation, FCC 93372, 58 Fed. Reg. 41042 (Aug. 2, 1993).  X_- xThe Commission revised its rate regulations effective May 15, 1994.j ^_  {O- xЍ 47 C.F.R. Section 76.922(b); see also Second Order on Reconsideration, Fourth Report and Order, and Fifth  {O- xKNotice of Proposed Rulemaking, MM Docket No. 92266, FCC 9438, 9 FCC Rcd 4119, 4190 (1994) ("Second  {O-Order on Reconsideration").j Cable operators attempting  x.to justify rates for the period beginning May 15, 1994 through a benchmark showing must use  X1- xthe FCC Form 1200 series. 10  {O-Ѝ 47 C.F.R. Section 76.922 (b)(6); see also Second Order on Reconsideration, 9 FCC Rcd at 4189 n. 195. Cable operators may also justify rate increases based on the  xaddition and deletion of channels, changes in certain external costs, and inflation, by filing FCC  X - xForm 1210.G   yOv-ԍ 47 C.F.R. Section 76.922 (d).G FCC Form 1210 must be filed at least 30 days before new rates are scheduled to  xgo into effect where the Commission has found the CPST rate to be unreasonable less than one  X -year prior to the filing, or where there is a pending complaint against the CPST rate.O R  yO-ԍ 47 C.F.R. Sections 76.958 and 76.960.O  X - ` x4.` ` Cable operators may justify adjustments to their rates on an annual basis using  xFCC Form 1240 to reflect reasonably certain and quantifiable changes in external costs, inflation,  xand the number of regulated channels that are projected for the twelve months following the rate  Xb- xchange. \b {O - xЍ See 47 C.F.R. Section 76.960; see In the Matter of Implementation of Sections of the Cable Television Consumer  xProtection and Competition Act of 1992: Rate Regulation, MM Docket No. 92266, Thirteenth Order on  {O"-Reconsideration, ("Thirteenth Reconsideration Order") 11 FCC Rcd 388, 391 (1995). Any incurred cost that is not projected may be accrued with interest and added to rates"b ,-(-(ZZ"  X- xat a later time.\ {Oy-ԍ See Thirteenth Reconsideration Order at 392.\ If actual and projected costs are different during the rate year a "trueup"  X-mechanism is available to correct estimated costs with actual cost changes.3Z {O-ԍ Id.3   X- ` }x5.` ` On January 22, 1996, the Commission received valid complaints against Operator's  X- xNovember 1, 1995 CPST rate increase.MX yOA - xЍ The complaints regarding the November 1, 1995 rate increase were accepted in accordance with "Public Notice:  xLProcedures For The Filing Of Documents That Were Due During The Government Shutdown Or During The Weather Emergency," 11 FCC Rcd 2417 (1996).M On March 18, 1997 the local franchising authority  x("LFA") filed a complaint against Operator's November 15, 1996 CPST rate increase. The LFA  Xv- xjhas certified that it has complied with the Interim Rules.sv  {O3-ԍ See FCC Form 329 Complaint filed by the LFA dated February 3, 1997.s Operator submitted FCC Forms 1210  xand 1240 for the community set forth above to justify the rate increases that went into effect on  XH- xNovember 1, 1995 and November 15, 1996.{H yO- xЍ In a letter dated March 21, 1997, Operator submitted its amended FCC Form 1240 for the period November 1,  x1995 to October 31, 1996 which Operator used in conjunction with its previously filed FCC Form 1210 for the  xperiod January 1, 1995 to September 30, 1995 to justify its November 1, 1995 CPST rate increase. Operator also  xhsubmitted its FCC Form 1240 to justify its November 15, 1996 CPST rate increase. In addition, Operator submitted its November 1, 1995 and November 15, 1996 channel line up cards. { Therefore, we have jurisdiction to review the CPST rate increases pursuant to the 1992 Cable Act and the 1996 Act. x  X - ` x6.` ` Upon review of Operator's amended FCC Form 1240 filed to justify its November  x15, 1995 CPST rate of $14.64, we have corrected Operator's starting rate on Line A1 to reflect  xthe correct transitional rate pursuant to the Settlement Order. Because Operator's transition rate  X - xLcontains excess inflation, N  {O- xЍ  See Public Notice, Cable Rates Adjustment For Inflation Applied To Transition Rates (released: November 9, 1995). we have adjusted Operator's amended FCC Form 1240 to reflect the  xjcorrect inflation figure for Operator's CPST rate consistent with our Public Notice of November  x9, 1995. This results in a corrected maximum permitted rate ("MPR") of $14.64. Therefore, Operator's CPST rate of $14.64, effective November 1, 1995, is justified and is not unreasonable.  XK- ` x7.` ` Our review of Operator's FCC Form 1240 to justify its CPST rate of $16.15,  X4- xeffective November 15, 1996, indicates that Operator has miscalculated its MPR. 4 yO#- xЍ These findings are based solely on the representations of Operator. Should information come to our attention  xthat these representations were materially inaccurate, we reserve the right to take any appropriate action. This Order  xis 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. We have  xcorrected Operator's starting rate on Line A1 to reflect the MPR of $14.64 that was calculated",-(-(ZZG"  xon Operator's prior FCC Form 1240. In addition, Operator made trueup adjustments through  x[to the effective date of the rate increase. This is incorrect. The annual adjustment afforded by  x[FCC Form 1240 allows operators to project changes in external costs, inflation, and the number  xof regulated channels. This structure avoids the delay some operators experienced in recouping  x<costs through multiple rate adjustments throughout the year. Because projections will not reflect  x<the costs that actually occur, the Commission provided, as part of the annual adjustment, a "true xup" to correct projected cost changes with the actual cost changes. However, the Commission  xLhas noted that, as FCC Form 1240 must be filed 90 days before an increase is to take effect, the  XH- xyperiod for the trueup will not coincide with the previous year's projections.nH yO -ԍ Thirteenth Reconsideration Order, 11 FCC Rcd 388, 420 fn 151 (1995).n The trueup data  X1- xMis intended to indicate real, not projected data.31X {O: -ԍ  Id.3 This policy is reflected in the instructions  X -accompanying FCC Form 1240.a  {O-ԍ  See FCC Form 1240 Instructions for Timing at 34.a  X - ` x8.` ` Based on this instruction and considering evidence in the filing, reasonable time  xfor closing accounts and completing forms, we have adjusted Operator's trueup period from 12  xmonths to 9 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 9 month  xperiod was corrected to 1.0171 instead of the 1.0232 used by the Operator for a 12 month period.  xWe have adjusted Module E, and have corrected the number of months on Line E2 to 9 months  x[and Line E3 to 3 months. We have also adjusted the inflation segment in Module F, Line F5 to  xreflect 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 $15.55 (Line I9). | yO- xЍ Information regarding the specific adjustments made to Operator's FCC Form 1240 filings can be found in the  xpublic 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 November 15, 1996 rate of $16.15 was not  x<unreasonable. To the extent that external costs from the three months disallowed from Operator's  Xe- xtrueup periodTed  yOz%-ԍ As found on Operator's Worksheets 7 and 8.T 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"7 ,-(-(ZZ"  xcomparison of the actual external costs for the permitted ninemonth 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  xLexternal costs shall be added to the amount otherwise reportable on Line H1 of Operator's next FCC Form 1240 rate calculation.  X_- ` x10.` ` Accordingly, IT IS ORDERED, pursuant to Section 0.32l of the Commission's  xrules, 47 C.F.R. Section 0.321 that Operator's CPST rate of $14.64, effective November 1, 1995, in the community set forth above, IS REASONABLE.  X - ` x11.` ` IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules,  x47 C.F.R. Section 0.321 that Operator's CPST rate of $16.15, effective November 15, 1996, in the community set forth above, IS UNREASONABLE.  X - ` x12.` ` IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules,  x47 C.F.R. Section 0.321, that the complaints referenced herein against the rate increase effective November 1, 1995 charged by Operator in the community set forth above, ARE DENIED.  XK- ` 4x13.` ` IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's  xrules, 47 C.F.R. Section 0.321 that the complaint referenced herein against the rate increase  xeffective November 15, 1996 charged by Operator in the community set forth above, IS GRANTED.  X- ` x14.` ` IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's  x[rules, 47 C.F.R.  76.961, that Operator shall refund to subscribers in the community referenced  xabove that portion of the amount paid in excess of the maximum permitted CPST rate of $15.55  xper month (plus franchise fee) plus interest during the period from November 15, 1996 to the day before Operator reduces its CPST rate to $15.55.  XN- ` 4x15.` ` IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's  xrules, 47 C.F.R.  0.321, that Operator revise the calculation of its maximum permitted CPST  x0rate in its next FCC Form 1240 filing in accordance with our findings in this order and, in  xaddition, that Operator attach to its next FCC Form 1240 filing a monthbymonth accounting of  xits external costs from Operator's ninemonth trueup period as found on Operator's Worksheets,  xand that Operator adjust its rates in its next FCC Form 1240 filing for any overrecovery of external costs, plus interest, identified thereby. "3r " ,-(-(ZZ"   px16. IT IS FURTHER ORDERED, that Operator shall promptly determine the  xyovercharges to CPST subscribers for the stated periods, and shall within 30 days of the release  xof this Order, file a report with the Chief, Cable Services Bureau, stating the cumulative refund  x-amounts so determined (including franchise fees and interest), describing the calculation thereof,  xand describing its plan to implement the refund within 60 days of the Commission approval of the plan. x` `  FEDERAL COMMUNICATIONS COMMISSION x` `  Meredith J. Jones x` `  Chief, Cable Services Bureau