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S-#&a\  P6G;&P#  Federal Communications Commission`}(#DA 971448 ă  yxdddy )v3 Before the Ċ Ã Federal Communications Commission  yO} Washington, D.C. 20554 X01Í ÍX01Í  Í#&a\  P6G;&P#у  SX-T ă  S0- x` `  hh@)  S-In the Matter of hh@)hCUID No. FL0597 (East Hernando County)  S-x` `  hh@)hpp  S-Time Warner Cable hh@)hpp  S-x` `  hh@)hpp  Sh-Complaint Regarding hh@)hpp  S@-Cable Programming Services Tier Rates@)hpp  S -x` `  hh@)hpp x` `  hh@)  px` `   S -< ORDER TP  SP -X` hp x (#%'0*,.8135@8: -ԍ Pub. L. No. 104104, 110 Stat. 56 (1996).S and our rules implementing the new  S- xlegislation ("Interim Rules"),) {O"- xԍ See Implementation of Cable Act Reform Provisions of the Telecommunications Act of 1996, 11 FCC Rcd 5937 (1996). require that complaints against the CPST rates be filed with the Commission  S-by a local franchising authority ("LFA") that has received more than one subscriber complaint.h ) {O%-ԍ See Communications Act, Section 623(c), as amended, 47 U.S.C. Section 543(c) (1996).  S- ` x3.` ` The LFA for the franchise area referenced above filed a complaint with the Commission  xon April 15, 1997. The LFA verified that it received more than one subscriber complaint for the franchise"X ,**88"  xarea and that the first valid complaint was received by the LFA on January 2, 1997. The filing of a  xcomplete and timely LFA complaint triggers an obligation upon the cable operator to file a justification  S- xof its CPST rates.? yO-ԍ 47 C.F.R. 76.956.? The Operator has the burden of demonstrating that the CPST rates complained about  S-are reasonable.3X {O-ԍ Id.3  S8- ` 3x4.` ` To justify rates for the period beginning May 15, 1994 through a benchmark showing,  S- xoperators must use the FCC Form 1200 series.f  yO -ԍ#X\  P6G;P# 47 C.F.R. 76.922.f Operators are permitted to make changes to their rates  S- x<on a quarterly basis using FCC Form 1210.Z z {O -ԍ#X\  P6G;P#  Id.Z Operators may alternatively justify adjustments to their rates  xon an annual basis using FCC Form 1240 to reflect reasonably certain and quantifiable changes in external  x.costs, inflation, and the number of regulated channels that are projected for the twelve months following  Sp- xthe rate change.Z p  {O-ԍ#X\  P6G;P#  Id.Z Any incurred cost that is not projected may be accrued with interest and added to rates  SH -at a later time. H  {O-ԍ#X\  P6G;P#  Id.#Xj\  P6G;9XP#с x  S - ` x5.` ` Upon review of Operator's FCC Form 1240 for the projected period January 1, 1996  xthrough December 31, 1996, we find Operator's calculated maximum permitted rate ("MPR") of $13.98 for the projected period to be reasonable.  SX- ` x6.` ` Upon review of Operator's FCC Form 1240 for the projected period January 1, 1997  xthrough December 31, 1997, we find that Operator has not correctly calculated its MPR. Specifically, we  xadjusted Operator's Line A1 to reflect Operator's MPR of $13.98 from the previous FCC Form 1240.  xAlso, Operator made trueup adjustments through to the effective date of the rate increase. This is  xzincorrect. The annual adjustment afforded by FCC Form 1240 allows operators to project changes in  x external costs, inflation, and the number of regulated channels. This structure avoids the delay some  xoperators experienced in recouping costs through multiple rate adjustments throughout the year. Because  x=projections will not reflect the costs that actually occur, the Commission provided, as part of the annual  x\adjustment, a "trueup" to correct projected cost changes with the actual cost changes. However, the  xyCommission has noted that, as FCC Form 1240 must be filed 90 days before an increase is to take effect,  S- xthe period for the trueup will not coincide with the previous year's projections. ^0  {O"- xԍ See In the Matter of Implementation of Sections of the Cable Television Consumer Protection and Competition  {Ob#- xAct of 1992: Rate Regulation, MM Docket No. 92266, Thirteenth Order on Reconsideration ("Thirteenth  {O,$-Reconsideration Order"), 11 FCC Rcd 388, 420 at n.151 (1996). The trueup data is"V ,p(p(88"  S- xintended to indicate real, not projected data.3 {Oh-ԍ Id.3 This policy is reflected in the instructions accompanying  S-FCC Form 1240.dZ {O-ԍ See FCC Form 1240 Instructions, "Timing" at pp. 34.d  S- ` x7.` ` Based on this instruction and considering evidence in the filing,z yO- xJЍ 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  xFCC Forms 1210 and 1240 Now Available", DA 961986 (November 27, 1996). Had this been available to Operator  xat the time of filing, Operator would have been required to include the factor released (2.22%) for all months after  xMarch 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 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 1.0239 used by the Operator for a 12 month period. We have adjusted Module E, and have  xcorrected the number of months on Line E2 to 9 months and Line E3 to 3 months. We have also adjusted  x=the inflation segment in Module F, Line F5 to reflect the corrections made to Line C1. This has resulted in a corresponding adjustment to Line F9 (MPR for TrueUp Period 1).  S - ` 3x8.` ` The reduction in the length of the trueup period also results in a reduction of Line H2  x(Revenue From MPR for Period 1). This results in a corresponding reduction of Line I8 (TrueUp  x[Segment for the Projected Period). Finally, we adjusted Operator's Lines D6 and D7 to correspond with  xthe previous FCC Form 1240, in accordance with the FCC Form 1240 instructions. These calculations  xresulted in a revised MPR for the projected period of $16.12 rather than Operator's MPR for the projected  xperiod of $16.62. Because Operator's actual CPST rate of $16.60 exceeds its revised MPR for the  xLprojected period of $16.12, we find Operator's actual CPST rate of $16.60, effective January 1, 1997, to  S-be unreasonable.x.  yO- x,ԍ These findings are based solely on the representations of Operator. Should information come to our attention  xYthat these representations were materially inaccurate, we reserve the right to take 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  xby any party to this proceeding not specifically addressed herein. Information regarding the specific adjustments  xmade to Operator's filings can be found in the public file for CUID No. FL0597, which is available in the Cable  x,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.  S- ` x9.` ` To the extent that external costs from the three months disallowed from Operator's trueup  Sh- xperiodThn yOv%-ԍ As found on Operator's Worksheets 7 and 8.T have been averaged into the rates charged in the nine months allowed in Operator's trueup  xperiod, and have not been removed by our adjustments, we will order Operator to make a monthbymonth  xaccounting of such external costs. Such accounting shall allow a comparison of the actual external costs",p(p(88D"  x=for the permitted ninemonth trueup period with the recovery of external costs afforded by the external  S- xcost segment for that period as calculated on Worksheet 7. We will order Operator to incorporate this  xaccounting report into its refund plan and refund any overrecovery, plus interest, to subscribers. We will  xLalso order Operator to submit an FCC Form 1240 for the projected period January 1, 1997 to December 31, 1997 which incorporates our revisions and the adjustments described above.  S- ` x10.` ` Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47  xC.F.R.  0.321, that the CPST rate of $16.60, charged by Operator in the franchise area referenced above,  S-effective January 1, 1997, IS UNREASONABLE. x  Sp- ` x11.` ` IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the referenced complaint IS GRANTED.  S - ` x12.` ` 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 $16.12 per month (plus franchise  xfee) plus interest to the date of the refund for the period January 2, 1997 through the day before Operator implements the maximum permitted CPST rate of $16.12.  S- ` x13.` ` 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.  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 promptly determine the overcharges to CPST subscribers for the stated  xLperiods, including any overrecovery as detailed in its accounting report, and shall file, within 30 days of  xthe release of this Order, a report with the Chief, Cable Services Bureau, stating the cumulative refund  xamounts so determined (including franchise fees and interest), describing the calculation thereof, and describing its plan to implement the refund within 60 days of the Commission approval of the plan.  S- ` x15.` ` IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47  xC.F.R.  0.321, that Operator shall revise its FCC Form 1240 for the projected period January 1, 1997  xthrough December 31, 1997 incorporating the changes detailed in this order and shall file such amended FCC Form 1240 with the Chief, Cable Services Bureau within 30 days of the release of this Order. x` `  hh@FEDERAL COMMUNICATIONS COMMISSION x` `  hh@Meredith J. Jones x` `  hh@Chief, Cable Services Bureau