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ORDER ă  S -x Adopted: July 8, 1997 hh@hpp Released: July 9, 1997  By the Chief,  "A Cable Services Bureau:  S2- `  I. A. 1. a.(1)(a) i) a) I. 1. 1. a.(1)(a) i) a)x1.` ` In this Order we consider a complaint against the November 15, 1996 rate increase that  S - xthe abovecaptioned operator ("Operator")"  yOr-#X\  P6G;IP#э On April 11, 1996, pursuant to 47 C.F.R. 76.400, the Federal Communications Commission received notification of a change in the system name from Cox Cable Pensacola, Inc. to Cox Communications Pensacola,  {O-Inc. (See letter from Peter H. Feinberg, Esq., to the Federal Communications Commission, dated April 11, 1996.) implemented for its cable programming services tier ("CPST")  S- x/in the community set forth above. Operator has attempted to justify its CPST rate increase through  S- xbenchmark showings on FCC Forms 1210 and 1240. We have already issued an order which resolved  S- x{complaints filed against Operator from September 1, 1993 through June 30, 1995 ("Resolution"). {O-#X\  P6G;IP#э See In the Matter of Cox Communications, Inc. and Times Mirror Cable Television, Inc., 11 FCC Rcd  yO-1972 (1995).#Xj\  P6G;+XP#  Sj- xAccordingly, this Order addresses the reasonableness of the Operator's CPST rate of $16.15, effective November 15, 1996.  S- ` x2.` ` The Communications Act  {O-#X\  P6G;IP#э Section 623(c) of the Communications Act of 1934, as amended, 47 U.S.C. Section 543(c) (1996).#Xj\  P6G;+XP# authorizes the Federal Communications Commission  x("Commission") to review the CPST rates of cable systems not subject to effective competition to ensure  xjthat rates charged are not unreasonable. If the Commission finds the rate unreasonable, it shall determine  Sz- xthe correct rate and any refund liability.tz {O"-#X\  P6G;IP#э See 47 C.F.R. Section 76.957.t The Telecommunications Act of 1996 ("1996 Act")z0  yOJ$-#X\  P6G;IP#Ѝ Pub. L. No. 104104, 110 Stat. 56 (1996). and our  SR- x.rules implementing the new legislation ("Interim Rules"),R  {O&- x#X\  P6G;IP#Ѝ See Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996, 11 FCC Rcd  yO|'-5937 (1996).#Xj\  P6G;+XP# require that complaints against CPST rates be  x!filed with the Commission by a franchising authority that has received subscriber complaints. A"*,))IIN"  xfranchising authority may not file a CPST rate complaint unless, within 90 days after such increase  S-becomes effective, it receives more than one subscriber complaint.  S- ` Rx3.` ` The Commission's original rate regulations took effect on September 1, 1993.` yO-#X\  P6G;IP#э 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). The  S`- xCommission revised its rate regulations effective May 15, 1994.[\` ` {O -#X\  P6G;IP#э 47 C.F.R. Section 76.922(b); see also Second Order on Reconsideration, Fourth Report and Order, and Fifth Notice of Proposed Rulemaking, MM Docket No. 92266, FCC 9438, 9 FCC Rcd 4119, 4190 (1994)  {O -("Second Order on Reconsideration").[ Cable operators attempting to justify  xrates for the period beginning May 15, 1994 through a benchmark showing must use the FCC Form 1200  S- xseries. D` {O -#X\  P6G;IP#э 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 addition and deletion of channels,  S- xchanges in certain external costs, and inflation, by filing FCC Form 1210.n ` yO^-#X\  P6G;IP#э 47 C.F.R. Section 76.922 (d).n FCC Form 1210 must be filed  x\at least 30 days before new rates are scheduled to go into effect where the Commission has found the  xjCPST rate to be unreasonable less than one year prior to the filing, or where there is a pending complaint  Sp-against the CPST rate. pf ` {Ov-#X\  P6G;IP#э 47 C.F.R. Section 76.958; see also Second Order on Reconsideration, 9 FCC Rcd at 4190.  S - ` _x4.` ` Cable operators may justify adjustments to their rates on an annual basis using FCC Form  x.1240 to reflect reasonably certain and quantifiable changes in external costs, inflation, and the number of  S - xregulated channels that are projected for the twelve months following the rate change. \ ` {Oh- x#X\  P6G;IP#Ѝ See 47 C.F.R. Section 76.960; see In the Matter of Implementation of Sections of the Cable Television  xConsumer Protection 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).#Xj\  P6G;+XP# Any incurred  S - xcost that is not projected may be accrued with interest and added to rates at a later time. ` {Od-#X\  P6G;IP#Ѝ See Thirteenth Reconsideration Order at 392. If actual and  xprojected costs are different during the rate year a "trueup" mechanism is available to correct estimated  SX-costs with actual cost changes.ZX` {O-#X\  P6G;IP#э Id.Z   S- ` x5.` ` On April 11, 1997 the local franchising authority ("LFA") refiled@` yO"-#X\  P6G;IP#э The LFA originally filed its complaint on March 25, 1997. its complaint against  S- xOperator's November 15, 1996 CPST rate increase.` yOP%-#X\  P6G;IP#э The first subscriber complaint concerning the CPST rate increase was received by the LFA on November 15, 1996. The LFA has certified that it has complied with the"(,>(>(II"  S- xInterim  "A Rules.` {Oh-#X\  P6G;IP#Ѝ See LFA FCC Form 329 Complaint, dated February 13, 1997. Operator submitted FCC Form 1240 for the community set forth above to justify its  S- x.CPST rate increase.Z` yO- x#X\  P6G;IP#Ѝ In a letter dated March 12, 1997, Operator submitted its FCC Form 1240 to the LFA to justify its November 15, 1996 CPST rate increase. Therefore, we have jurisdiction to review the CPST rate increases pursuant to the 1996 Act.  S`- ` x6.` ` On April 8, 1996, Operator filed FCC Form 1210 for the period January 1, 1995 through  xMSeptember 30, 1995 with the Commission. We have corrected Operator's starting rate on Line A1 to  xreflect the correct transitional rate of $12.80 pursuant to the Resolution. Because Operator has claimed  xexcess inflation, we have adjusted Operator's FCC Form 1210 to reflect the correct inflation figure.  S- xTherefore, we have corrected Operator's inflation rate on Line I5 and Line J5 to 1.0296.Z` yO -#X\  P6G;IP#э Because Operator agreed in the Resolution not to seek additional compensation for services which were provided during the period prior to June 30, 1995, Operator is not entitled to any inflation factor other than  {O-1.0296, the inflation factor for the period July 1, 1994 to June 30, 1995. See Resolution at IV.12(a). This resulted in a revised maximum permitted rate ("MPR") of $14.21, effective October 1, 1995.  SH - ` x7.` ` Upon review of Operator's amended FCC Form 1240 for the projected period November  x1, 1995 through October 31, 1996, we have corrected Operator's starting rate on Line A1 to reflect the  xcorrected MPR of $14.21 from Operator's FCC Form 1210. Because Operator claimed only a 1 month  xtrueup period, we have adjusted Operator's trueup period on Worksheet 1 from 4 months to 1 month.  xAs a result, the trueup inflation factor in Module C, Line C1 for the 1 month period was corrected to  x1.0019 instead of the 1.0074 used by the Operator for a 4 month period. We also corrected the current  x.inflation factor to 1.0239 instead of 1.0296 used by the Operator in Module C, Line C3. This results in a corrected MPR of $14.57, effective November 1, 1995.  S- ` x8.` ` Our review of Operator's FCC Form 1240 to justify its CPST rate of $16.15, for the  x[projected period November 1, 1996 through October 31, 1997, indicates that Operator has miscalculated  xits MPR. We have corrected Operator's starting rate on Line A1 to reflect the MPR of $14.57 that was  xcalculated on Operator's prior FCC Form 1240. In addition, Operator made trueup adjustments through  xto the effective date of the rate increase. This is incorrect. The annual adjustment afforded by FCC Form  x1240 allows operators to project changes in external costs, inflation, and the number of regulated channels.  xThis structure avoids the delay some operators experienced in recouping costs through multiple rate  xadjustments throughout the year. Because projections will not reflect the costs that actually occur, the  xCommission provided, as part of the annual adjustment, a "trueup" to correct projected cost changes with  xthe actual cost changes. However, the Commission has noted that, as FCC Form 1240 must be filed 90  xdays before an increase is to take effect, the period for the trueup will not coincide with the previous"P,>(>(II"  S- xyear's projections.` yOh-#X\  P6G;IP#э Thirteenth Reconsideration Order, 11 FCC Rcd 388, 420 fn 151 (1995). The trueup data is intended to indicate real, not projected data.ZX` {O-#X\  P6G;IP#э  Id.Z This policy is  S-reflected in the instructions accompanying FCC Form 1240.` {Ob-#X\  P6G;IP#э  See FCC Form 1240 Instructions for Timing at 34.  S- ` %x9.` ` Based on this instruction and considering evidence in the filing, reasonable time for  xclosing accounts and completing forms, we have adjusted Operator's trueup period from 12 months to  x9 months. This adjustment required that we refresh Operator's inflation factors to 2.22 for the second  xquarter of 1996 and to 2.21 for the third quarter of 1996 and adjust Worksheet 1 accordingly. As a result,  xythe trueup inflation factor in Module C, Line C1 for the 9 month period was corrected to 1.0171 instead  xof the 1.0232 used by the Operator for a 12 month period. In addition, we have adjusted Module C, Line  xC3 to 1.0222 instead of 1.0240 used by Operator. Furthermore, we have corrected Module D, Line D2  x(Current External Costs Segment), Line D6 (Current TrueUp Segment), Line D7 (Current Inflation  x{Segment). We have adjusted Module E, and have corrected the number of months on Line E2 to 9  xmonths 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).  S - ` $x10.` ` The reduction in the length of the trueup period also results in a reduction in Line H2  x(Revenue From MPR for Period 1). This results in a corresponding reduction in Line I8 (TrueUp  xSegment for the Projected Period). In total, our adjustments to Operator's FCC Form 1240 result in a  S- xreduction of the MPR for the Projected Period to $15.40 (Line I9). |` yO$-#X\  P6G;IP#э Information regarding the specific adjustments made to Operator's FCC Form 1240 filings can be found in the public file for the community referenced above which is available in the Cable Services Bureau's public reference 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, Operator has failed to  S- xdemonstrate that its November 15, 1996 rate of $16.15 was not unreasonable. d ` yO-#X\  P6G;IP#э These findings are based solely on the representations of Operator. Should information come to our attention that these representations were materially inaccurate, we reserve the right to take any appropriate action. This Order is 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. To the extent that external  S- xcosts from the three months disallowed from Operator's trueup period{L ` yO -#X\  P6G;IP#э As found on Operator's Worksheets 7 and 8.{ have been averaged into the rates  xcharged in the nine months allowed in Operator's trueup period, and have not been removed by our  x[adjustments, we will order Operator to make a monthbymonth accounting of such external costs. Such  x\accounting shall allow a comparison of the actual external costs for the permitted ninemonth trueup  xlperiod with the recovery of external costs afforded by the external cost segment for that period as  xcalculated on Worksheet 7. We will order Operator to incorporate this accounting report into its refund  xplan and refund any overrecovery, plus interest, to subscribers. We will also order Operator to submit  xan FCC Form 1240 for the projected period November 1, 1996 to October 31, 1997 which incorporates our revisions and the adjustments described above."x,>(>(II"Ԍ S- ` ԙx11.` ` Accordingly, IT IS ORDERED, pursuant to Section 0.32l of the Commission's rules, 47  xC.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.  S`- ` `x12.` ` IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules, 47  xC.F.R. Section 0.321, that the complaint referenced herein against the rate increase charged by Operator in the community set forth above, IS GRANTED.  S- ` x13.` ` IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47  xC.F.R.  76.961, that Operator shall refund to subscribers in the community referenced above that portion  xof the amount paid in excess of the maximum permitted CPST rate of $15.40 per month (plus franchise  xfee) plus interest for the period from November 15, 1996 to the day before Operator reduces its CPST rate to $15.40.  S - ` x14.` ` IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47  xC.F.R.  0.321, that Operator shall conduct a monthbymonth accounting of its external costs from  xOperator's ninemonth trueup period as found on Operator's Worksheets, and that Operator shall file,  xzwithin 30 days of the release of this Order, a report detailing the overrecovery of external costs, plus interest, with the Chief, Cable Services Bureau.   x15. IT IS FURTHER ORDERED, that Operator shall promptly determine the overcharges to  xjCPST subscribers for the stated periods, including any overrecovery as detailed in its accounting report,  xLand shall file, within 30 days of the release of this Order, a report with the Chief, Cable Services Bureau,  xstating the cumulative refund amounts so determined (including franchise fees and interest), describing  xthe calculation thereof, and describing its plan to implement the refund within 60 days of the Commission approval of the plan. x` `   x16. IT IS FURTHER ORDERED, that Operator shall revise its FCC Form 1240 for the projected  xperiod November 1, 1996 through October 31, 1997 incorporating the changes detailed in this order and  xkshall file such amended FCC Form 1240 with the Chief, Cable Services Bureau within 30 days of the release of this Order.   X` hp x (#%'0*,.8135@8: