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This Order addresses the reasonableness of Operator's CPST rates in effect beginning February 1, 1996.  S- ` #x2.` ` The Communications Act,} {OH$-ԍ Communications Act, Section 623(c), as amended, 47 U.S.C.  543(c) (1996).} authorizes the Commission to review the CPST rates of cable  Sp- xsystems not subject to effective competition to ensure that rates charged are not unreasonable. The  SH- xjTelecommunications Act of 1996 ("1996 Act")H {O'-ԍ Pub. L. 104104, 110 Stat. 56 (Feb. 8, 1996), codified at 47 U.S.C.  151 et seq. and our rules implementing the new legislation ("Interim"H4 ,))II"  S- x=Rules"), {Oh- xԍ 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 3#S   3#S the Commission by a local franchising  xyauthority ("LFA") that has received subscriber complaints. An LFA may not file a CPST rate complaint  x?unless it receives more than one subscriber complaint within 90 days after such increase becomes  S- xeffective.H" yOJ-ԍ 47 C.F.R.  76.1402 (1966).H If the Commission finds the rate unreasonable, it shall determine the correct rate and any  S`-refund liability.S` {O -ԍ  47 C.F.R.  76.957 (1996).S  S- ` Rx3.` ` The Commission's original rate regulations took effect on September 1, 1993. D {O - xԍ Order in MM Docket No. 92266, Implementation of Sections of the Cable Consumer Protection and  {O -Competition Act of 1992: Rate Regulation, FCC 93372, 58 Fed. Reg. 41042 (Aug. 2, 1993). The  S- xCommission subsequently revised its rate regulations effective May 15, 1994.k ^ {O(- xԍ 47 C.F.R.  76.922(b) (1996); see also Second Order on Reconsideration, Fourth Report and Order, and Fifth  {O- xxNotice of Proposed Rulemaking, MM Docket No. 92266, FCC 9438, 9 FCC Rcd. 4119, 4190 (1994) ("Second  {O-Order on Reconsideration").k Cable operators must use  xthe FCC Form 1200 series to justify their rates through a benchmark showing for the period beginning  S- xMay 15, 1994.f \  {O- xԍ 47 C.F.R.  76.922(b)(6) (1996); see Second Order on Reconsideration, supra at 4183, paras. 135138, and  {O- xat 4190, n.136; see also Public Notice "Questions and Answers on Cable Television Rate Regulation" (April 26, 1994).f 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  SH - xregulated channels that are projected for the twelve months following the rate change.& H  {O- xԍ See In the Matter of Sections of the Cable Television Consumer Protection and Competition Act of 1992:  {O-Rate Regulation, MM Docket No. 92266, Thirteenth Order on Reconsideration, 11 FCC Rcd. 388, 391 (1996).& Any incurred cost  S - xthat is not projected may be accrued with interest and added to rates at a later time.; F {O-ԍ Id. at 392.; If actual and  x=projected costs are different during the rate year, a "trueup" mechanism is available to correct estimated  S - x[costs with actual cost changes.3  {OH -ԍ Id.3 The "trueup" requires operators to decrease their rates or alternatively  xzpermits them to increase their rates to make an adjustment for over or under estimations of these cost changes.  S0-  lx4. On July 8, 1997, the LFA filed a complaint against Operator's January 1, 1997 rate increase.0j yO:%- x[ԍ The LFA stated that it received its first valid subscriber complaint regarding the CPST rate increase on January 12, 1997. "0,_(_(IIY"  S- xThe LFA certified that it has complied 3#S   3#S with the Interim Rules.R {Oh-ԍ See 47 C.F.R.  76.1402 (1996).R Operator filed an FCC Form 1240 to  xjustify its CPST rate of $17.52, effective February 1, 1996, and a second FCC Form 1240 to justify its CPST rate of $19.05, effective January 1, 1997.  S`- ` Bx5.` ` Upon review of Operator's first FCC Form 1240, for the projected period February 1,  x\1996 to December 31, 1996, we find that Operator's MPR of $18.26 was not unreasonable. Because  x\Operator's actual CPST rate of $17.52 did not exceed its MPR, we find that Operator's CPST rate of $17.52, effective February 1, 1996, was not unreasonable.  S- ` x6.` ` Upon review of Operator's second FCC Form 1240, for the projected period January 1,  xj1997 to December 31, 1997, we found that Operator began its trueup adjustments with the same month  xthat it had used as the final month of its trueup period in its first FCC Form 1240. Operator is not  S - xpermitted to perform a trueup on a particular period of time more than once.U Z yO-ԍ FCC Form 1240 Instructions for Timing at 4.U For this reason, we  xeliminated the first month from Operator's trueup period, reducing it from 11 months to 10 months. We  xalso found that Operator made trueup adjustments through to the month prior to the effective date of the  x[rate increase. This is incorrect. The annual adjustment afforded by FCC Form 1240 allows operators to  xproject changes in external costs, inflation, and the number of regulated channels. This structure avoids  xthe delay some operators experienced in recouping costs through multiple rate adjustments throughout the  xyear. Because projections will not reflect the costs that actually occur, the Commission provided, as part  xof the annual adjustment, a "trueup" to correct projected cost changes with the actual cost changes.  xHowever, the Commission has noted that, as FCC Form 1240 must be filed 90 days before an increase  S- xis to take effect, the period for the trueup will not coincide with the previous year's projections.s {OB-ԍ Thirteenth Reconsideration Order, 11 FCC Rcd 388, 420 n.151 (1995).s The  S- xtrueup data is intended to indicate real, not projected data.3| {O-ԍ Id.3 This policy is reflected in the instructions  Sh-accompanying FCC Form 1240.ah {O-ԍ See FCC Form 1240 Instructions for Timing at 34.a  S- ` x7.` ` Based on this instruction and considering evidence in the filingz yOX- xЍ 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.  and reasonable time for  xclosing accounts and completing forms, we have further adjusted Operator's trueup period from 10  xLmonths to 8 months. These adjustments required that we refresh Operator's inflation factors to 2.22 for  xLthe second quarter of 1996 and to 2.21 for the third quarter of 1996 and adjust Worksheet 1 accordingly.  xAs a result, the trueup inflation factor in Module C, Line C1 for the 8 month period was corrected to"x,_(_(II"  x1.0151 instead of the 2.19 percent (1.0219) used by the Operator for an 11 month period. We have  xadjusted Module E, and have corrected the number of months on Line E2 to 8 months and Line E3 to 3  xmonths. We have also adjusted the inflation segment in Module F, Line F5 to reflect the corrections made"(P ,_(_(II"  xin Line C1. This has resulted in a corresponding adjustment on Line F9 (MPR for TrueUp Period 1).  xThe reduction in the length of the trueup period also results in a reduction in Line H2 (Revenue From  xMPR for Period 1). This results in a corresponding reduction in Line I8 (TrueUp Segment for the Projected Period).  S- ` x8.` ` To the extent that external costs from the three months disallowed from Operator's trueup  S- xperiodT yO -ԍ As found on Operator's Worksheets 7 and 8.T have been averaged into the rates charged in the eight 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  xjfor the permitted eightmonth trueup period with the recovery of external costs afforded by the external  xcost segment for that period as calculated on Worksheet 7. We will also order Operator to submit an FCC  xForm 1240 for the projected period January 1, 1997 to December 31, 1997 which incorporates our revisions and the adjustments described above.  SX- ` x9.` ` In total, our adjustments to Operator's FCC Form 1240 result in an MPR for the Projected  S0- xPeriod, Line I9, of $19.98, rather than Operator's MPR for the projected period of $20.33. 0X yO(- xԍ 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. Because  xOperator's actual CPST rate of $19.05 is less than its revised MPR of $19.98 for the projected period, we  S-find that Operator's actual CPST rate of $19.05, effective January 1, 1997, is not unreasonable. @ yO- x-ԍ The findings herein are based solely on the representations of Operator. Should information come to our  xYattention that these representations were materially inaccurate, we reserve the right to take any appropriate action.  xxThis 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.   X` hp x (#%'0*,.8135@8: