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L. No. 104104, 110 Stat. 56 (1996). and our  S- xjrules implementing the new legislation ("Interim Rules"),Ū {O"- x#X\  P6G;IP#Ѝ 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  xbe filed with the Commission by a local franchising authority ("LFA") that has received subscriber  xcomplaints. An LFA may not file a CPST rate complaint unless, within 90 days after such increase becomes effective, it receives more than one subscriber complaint. "Xh ,))ZZ"Ԍ S- ` 3x3.` ` To justify rates for the period beginning May 15, 1994 through a benchmark showing,  S- xoperators must use the FCC Form 1200 series.^ {O@- xY#X\  P6G;IP#э 47 C.F.R. Section 76.922(b)(6); 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"). Operators may justify adjustments to their rates on an  xannual basis using FCC Form 1240 to reflect reasonably certain and quantifiable changes in external costs,  xinflation, and the number of regulated channels that are projected for the twelve months following the rate  S`- xchange.\` {O- xy#X\  P6G;IP#э 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). Any incurred cost that is not projected may be accrued with interest and added to rates at a later  S8- xtime.8 {O -#X\  P6G;IP#Ѝ See Thirteenth Reconsideration Order at 392. If actual and projected costs are different during the rate year a "trueup" mechanism is available  S-to correct estimated costs with actual cost changes.Z  {OT-#X\  P6G;IP#э Id.Z   S- ` x4.` ` On June 6, 1997, the LFA filed a complaint regarding the January 1, 1997 increase in  xOperator's CPST rate in the community referenced above. In its complaint, the LFA asserts that it has  xreceived more than one subscriber complaint against Operator's CPST rate increase, thereby triggering  SH - xthe Commission's jurisdiction to review this complaint. H 6  yO-#X\  P6G;IP#э The first subscriber complaint was received by the LFA on January 22, 1997. The valid complaint from the LFA triggers an  S - xobligation by the cable operator to file a justification of its CPST rates with the LFA.k  yO-#X\  P6G;IP#э 47 C.F.R. Section 76.1402.k Thus, in this case,  xLOperator is required to justify the increase in its CPST rate which is the subject of the LFA's complaint.  S - ` x5.` ` Operator submitted modified FCC Forms 1240 pursuant to the terms of the Social Contract  S - x("Social Contract") between Time Warner Cable ("Time Warner") and the Commission V  {Ov-#X\  P6G;IP#э See Social Contract for Time Warner, 11 FCC Rcd 2788 (1996). for the  SX- x community set forth above to justify the rate increase that went into effect on January 1, 1997. X {O- x#X\  P6G;IP#Ѝ See Letter from Seth A. Davidson, Counsel for Time Warner to the Commission, dated May 6, 1997 ("Davidson Letter"). In  S0- xaddition to its FCC Form 1240, Operator raises several affirmative defenses to the LFA's complaint.f0B {O"-#X\  P6G;IP#э  Id.f  xSpecifically, Operator claims that its rates are not subject to regulation because the Operator is subject to  S- xeffective competition in the community set forth above.G\ {OT%- xk#X\  P6G;IP#э See letter from Ann L. Burr, President, Time Warner Rochester Division to John A. Wright, Chief  x<Accountant, Cable Analysis and Evaluation, Communication Division, State of New York Department of Public  {O&- xService, dated February 21, 1997. See also Petition of Time Warner Cable for Declaration of Effective Competition,"&,-(-('" CSR4829E (filed September 12, 1996) and Davidson Letter.G We denied Operator's Petition For Effective"X,-(-(ZZ"  S- xCompetition on June 5, 1997.X {O-#X\  P6G;IP#э See In the Matter of Cox Communications Hampton Roads, Inc. et al. (DA 971175, released June 5, 1997). Operator also argues, as an affirmative defense, that the CPST rate  xLcharged in the community set forth above was established as part of a systemwide, revenueneutral rate  S- xstructuring$ {O:- x#X\  P6G;IP#э See #X\  P6G;IP#Petition for Special Relief filed by Operator for approval of an uniform rate structure for its Rochester  xand Finger Lakes, New York cable systems, CSR5051R and CSR5052R, (dated June 25, 1997) and Davidson  {O- xLetter. See also Public Notice, "Time Warner Cable Seeks Commission Approval For the Implementation of  yO -Uniform Rate Structures For its Rochester and Finger Lakes, New York Systems," DA 971614, (August 1, 1997). ę that comports with the Commission's recently adopted uniform ratesetting methodology  S- x>("Uniform Rate Rules").\ {O - x#X\  P6G;IP#э #X\  P6G;IP#See In the Matter of Implementation of Sections of the Cable Television Consumer Protection and Competition  xAct of 1992 Rate Regulation, Uniform RateSetting Methodology, CS Docket No. 95174, FCC 9786 (March  {O -14, 1997). See also 47 C.F.R Section 76.922(n).  If the Commission is unable to reach a determination regarding Operator's  xaffirmative defense within the 90day statutory deadline for resolving the complaint filed by the LFA,  xLOperator requests that any adverse determination regarding Operator's CPST rate be suspended pending  S-resolution of its defenses.k  {O-#X\  P6G;IP#э See Davidson Letter.k  S- ` x6.` ` On June 3, 1997, the Commission adopted an Order denying Operator's Effective  S- xCompetition Petition for the community referenced above.  {O-#X\  P6G;IP#э  See In the Matter of Cox Communications Hampton Roads, Inc. et al. (DA 971175, released June 5, 1997). Therefore, Operator's effective competition  xNaffirmative defense is moot. We will therefore review Operator's FCC Form 1240 to determine if Operator has correctly calculated its maximum permitted rate ("MPR") for its CPST.  S - ` x7.` ` Upon review of Operator's revised FCC Form 1240 for the projected period January 1,  x1996 to December 31, 1996, we find that Operator has correctly calculated its MPR of $20.15. Pursuant to the Social Contract, Operator carried forward its settlement rate on Line A1.  SX- ` x8.` ` Upon review of Operator's FCC Form 1240 for the projected period January 1, 1997 to  S0- x.December 31, 1997, we find that Operator has incorrectly calculated its MPR.& 0 yO- xi#X\  P6G;IP#э This finding is 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 by any party to this proceeding not specifically addressed herein.& In particular, Operator  xmade trueup adjustments through to the effective date of the rate increase. This is incorrect. The annual  xadjustment afforded by FCC Form 1240 allows operators to project changes in external costs, inflation,  xMand the number of regulated channels. This structure avoids the delay some operators experienced in  x<recouping 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 "trueup" to  xcorrect projected cost changes with the actual cost changes. However, the Commission has noted that,  xas FCC Form 1240 must be filed 90 days before an increase is to take effect, the period for the trueup",-(-(ZZS"  S- xywill not coincide with the previous year'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  S-projected data.ZX {O-#X\  P6G;IP#э  Id.Z This policy is 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,z| yO - x#X\  P6G;IP#э Operator, for instance, did not reflect in its trueup the inflation factor for the second quarter of 1996 released  {Ol - xYby the Commission in November 1996. See Public Notice, "Inflation Adjustment Figures for Cable Operators Using  xFCC Form 1210 and 1240 Now Available," DA 961986, (November 27, 1996). Had this been available to Operator  xat 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 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 $21.90 (Line I9).   yO- x#X\  P6G;IP#Ѝ 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  x,room, or through the Commission's copy contractor, International Transcription Services (ITS), 1231 20th Street, N.W., Washington, DC 20036, or by calling ITS at (202) 8573800. Thus, Operator has failed to  x-demonstrate that its January 1, 1997 rate of $22.47 was not unreasonable. To the extent that external costs  S0- x>from the three months disallowed from Operator's trueup period{0 yOv -#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 January 1, 1997 to December 31, 1997 which incorporates our revisions and the adjustments described above."6,-(-(ZZ%"Ԍ S- ` }ԙx11.` ` As indicated above, Operator requests that any adverse determination regarding Operator's  xCPST rate be suspended, pending resolution of Operator's Petition for Special Relief for Uniform Rates  x.("Petition") in its Rochester, New York cable system. We find that it would serve the public interest to  xhold the refund liability of Operator in abeyance pending a decision on Operator's Petition. There is an  xadministrative burden on Operator to implement a refund plan, which we seek to avoid, if we subsequently  xgrant Operator's Petition in the Rochester, New York cable system, which includes the community set  xforth above, and essentially seeks retroactive approval of its rate. The interests of subscribers will be  xsafeguarded if Operator's Petition is denied because this Order imposes refund liability on Operator for  xits overcharge on the CPST. Therefore, we will hold in abeyance Operator's obligation to issue refunds until 30 days of the release of an order denying Operator's Petition in the Rochester cable system.  SH - ` x12.` ` Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47  xC.F.R.  0.321, that Operator's CPST rate of $22.47 effective January 1, 1997 in the community set forth above, IS UNREASONABLE.   X` hp x (#%'0*,.8135@8: