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A. 1. a.(1)(a) i) a) I. 1. 1. a.(1)(a) i) a)1.` ` In this Order we consider a complaint against the January 21, 1997 rate increase that the  d(#Labovecaptioned operator ("Operator") implemented for its cable programming services tier ("CPST") in  d(#the community set forth above. Operator has attempted to justify its CPST rate increases through  S-benchmark showings on FCC Forms 1240.Ū yO- d(##X\  P6G;IP#э Initially, Operator requested small system relief and attempted to justify an 1996 CPST rate increase on FCC  d(#Form 1230. After Operator filed its small system rate justification, the Commission denied Operator's request for  {Oy- d(#small system relief in several other communities. See In the Matter of CTEC Cable System of Michigan, 11 FCC  d(#JRcd 6189 (1996). On June 19, 1996, Operator filed a Petition for Reconsideration of our Order in that proceeding.  {O - d(#ZSee In the Matter of CTEC Cable Systems of Michigan, Inc., Petition for Reconsideration dated June 19, 1996.  d(#[Consequently, Operator submitted FCC Forms 1240 to justify its CPST rate increase in the abovereferenced  {O- d(#community, pending a decision on Operator's Petition for Reconsideration.  See letter from Daniel. E. Ferreri,  d(#iFinance Manager, CTEC Cable Systems of Michigan, Inc., to Assistant City Manager, Grand Haven, dated May  yO/-8, 1997 ("Ferreri Letter"). #Xj\  P6G;+XP#  S1-  2.` ` The Communications Act1Ū {Oo-#X\  P6G;IP#э Section 623(c) of the Communications Act of 1934, as amended, 47 U.S.C. Section 543(c) (1996). authorizes the Federal Communications Commission  d(#("Commission") to review the CPST rates of cable systems not subject to effective competition to ensure  d(#jthat rates charged are not unreasonable. If the Commission finds the rate unreasonable, it shall determine  S- d(#the correct rate and any refund liability.~0 Ū {O"-#X\  P6G;IP#э See 47 C.F.R. Section 76.957.~ The Telecommunications Act of 1996 ("1996 Act") Ū yO$-#X\  P6G;IP#э Pub. L. No. 104104, 110 Stat. 56 (1996). and our  S- d(#.rules implementing the new legislation ("Interim Rules"),R Ū {O&- d(##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 CPST rates be  d(#{filed with the Commission by a Local Franchising Authority ("LFA") that has received subscriber"i,))ZZ}"  d(#complaints. 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.  S-  _3.` ` Cable operators may justify adjustments to their rates on an annual basis using FCC Form  d(#.1240 to reflect reasonably certain and quantifiable changes in external costs, inflation, and the number of  S8- d(#regulated channels that are projected for the twelve months following the rate change.\8 {O- d(#y#X\  P6G;IP#э See 47 C.F.R. Section 76.960; see In the Matter of Implementation of Sections of the Cable Television  d(#Consumer Protection and Competition Act of 1992: Rate Regulation, MM Docket No. 92266, Thirteenth Order on  {O2-Reconsideration, ("Thirteenth Reconsideration Order") 11 FCC Rcd 388, 391 (1995). Any incurred cost  S- d(#lthat is not projected may be accrued with interest and added to rates at a later time. {O -#X\  P6G;IP#Ѝ See Thirteenth Reconsideration Order at 392. If actual and  d(#projected costs are different during the rate year a "trueup" mechanism is available to correct estimated  S- d(#[costs with actual cost changes.Z~ {O -#X\  P6G;IP#э Id.Z The "trueup" requires Operators to decrease their rates or alternatively  d(#permits them to increase their rates to make an adjustment for over or under estimations of these costs  Sp-changes.   S -  ~4.` ` On July 11, 1997, the LFA filed a complaint regarding the Operator's January 21, 1997  S - d(#CPST rate increase for the community set forth above.d   {O- d(##X\  P6G;IP#э #X\  P6G;IP#The previously filed complaint by the LFA against Operator's CPST rate has been withdrawn.  See In the matter of Withdrawal of FCC Form 329 Rate Complaints against CTec Cable Systems, 10 FCC Rcd 2499 (1994).d The LFA asserts that it has received more than  d(#>one subscriber complaint against Operator's CPST rate increase, thereby triggering the Commission's  S - d(#jurisdiction to review this complaint.  j  yO- d(##X\  P6G;IP#э #X\  P6G;IP#The first subscriber complaint regarding the CPST rate increase received by the LFA was on January 25, 1997. The valid complaint from the LFA triggers an obligation on the  d(#cable operator to file a justification of its CPST rate with the LFA. Thus, in this case, Operator is  d(#required to justify the increase in its CPST rate which is the subject of the LFA's complaint. In its  d(#response to the LFA complaint, Operator asserts that its January 21, 1997 rate increase is justified by two  d(#FCC Forms 1240, one for the projected period February 1, 1996 to January 31, 1997 ("First Form 1240"),  S- d(#and the other for the projected period February 1, 1997 to January 31, 1998 ("Second Form 1240").x   {OB- d(#-#X\  P6G;IP#э Initially, Operator relied on its FCC Form 1230 to justify its CPST rate increase. See letter from Gardner  d(#F. Gillespie and Jacqueline P. Cleary, Attorneys for CTEC Cable Systems of Michigan, Inc., to William F. Caton,  d(#\Acting Secretary, Federal Communications Commission (dated December 20, 1996). However, Operator  {O - d(#subsequently submitted to the LFA its FCC Form 1240 to justify its January 21, 1997 CPST rate increase. See Ferreri letter. x We note that Operator provides service on two CPSTs, CPST1 and CPST2.  Sh-  5.` ` The FCC Form 1240 allows the operator to use, as its beginning rate on Line A1, the  d(#maximum permitted rate ("MPR") calculated on a series of Forms 1200, 1210, and 1240, even if the MPR  d(#has never been put into effect by the operator. Consequently, we allow Operator to use as the starting  d(#rate on its First Form 1240, Line A1, the rate that Operator was charging prior to the January 21, 1996"v ,-(-(ZZ4"  d(#CPST rate increase. Operator may then use the MPR calculated in the First Form 1240 as the starting rate on Line A1 of its Second FCC Form 1240.  S- Q6.` ` Upon review of Operator's First Form 1240, we have made the following adjustments.  d(#Because Operator was not previously subject to CPST regulation and because Operator did not file a series  d(#of FCC Forms 1200 and 1210s to justify a trueup, Operator was not entitled to claim a trueup period  S- d(#in this FCC Form 1240.  {Ox-#X\  P6G;IP#э See FCC Form 1240 Instructions at p. 16.Ď Consequently, we disallowed the sevenmonth trueup period claimed in this  d(# FCC Form 1240. This adjustment reduced Operator's MPR for CPST1 from $11.32 to $10.93 and  d(#-reduced Operator's MPR for CPST2 from $6.27 to $6.15. Consequently, we find that Operator's CPST1  d(#krate of $11.00 is not justified and Operator's CPST2 rate of $4.95 is justified. Because there is not a  d(#valid complaint against Operator's CPST1 rate increase effective January 21, 1996, Operator incurs no refund liability for the period beginning January 21, 1996.  S - 7.` ` Operator increased its CPST1 and CPST2 rates to $11.10 and $6.15, respectively,  d(#effective January 21, 1997. Because Operator's CPST1 rate of $11.10, effective January 21, 1997  d(#Lexceeds its MPR of $10.93 of the First Form 1240, we find that Operator's CPST1 rate is unreasonable  d(#and not justified. However, Operator's CPST2 rate of $6.15, effective January 21, 1997, does not exceed  d(#{its MPR of $6.15. Consequently, we find that Operator's CPST2 rate of $6.15 is justified and is reasonable.  S- #8.` ` Upon review of Operator's Second Form 1240, for the projected period February 1, 1997  d(#.to January 31, 1998, we adjusted the starting rates at Line A1 for CPST1 and CPST2 to conform with  d(#the MPRs from the previous FCC Form 1240. Because of this adjustment, we also corrected the Current  d(#=FCC Inflation Factor at Line C3 to 1.0132. We also corrected line D6 (Current TrueUp Segment), Line  d(#yD7 (Current Inflation Segment) and Line F8 (TrueUp Segment For TrueUp Period 1) to conform to the  d(#0previous FCC Form 1240 for the projected period February 1, 1996 to January 31, 1997. These  d(#=adjustments reduced the MPR for CPST1 from $11.12 to $10.30 and the MPR for CPST2 from $7.80  d(#=to $7.47, effective February 1, 1997. Consequently, we find that Operator's rate of $11.10 for CPST1  S-continues to be unreasonable and Operator's rate of $6.15 for CPST2 continues to be reasonable. @Z yO- d(#w#X\  P6G;IP#э These findings are based solely on the representations of Operator. Should information come to our attention  d(#that these representations were materially inaccurate, we reserve the right to take any appropriate action. This Order  d(#is not to be construed as a finding that we have accepted as correct any specific entry, explanation or argument made  d(#xby any party to this proceeding not specifically addressed herein. Information regarding the specific adjustments  d(#made to Operator's FCC Form 1240 filings can be found in the public file for the community referenced above  d(#which is available in the Cable Services Bureau's public reference room, or through the Commission's copy  d(#contractor, International Transcription Services (ITS), 1231 20th Street, N.W., Washington, DC 20554, or by calling ITS at (202) 8573800.   SP- 9.` ` Accordingly, IT IS ORDERED, pursuant to Section 0.32l of the Commission's rules, 47  d(#yC.F.R. Section 0.321 that Operator's CPST rate of $11.10 for CPST1, effective January 21, 1997, in the community set forth above, IS UNREASONABLE. 8#0K<   8#0K< "b ,-(-(ZZ"Ԍ S- `10.` ` IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules, 47  d(#C.F.R. Section 0.321 that Operator's CPST rate of $6.15 for CPST2, effective January 21, 1997, in the community set forth above, IS REASONABLE.  S`- `11.` ` IT IS FURTHER ORDERED, pursuant to Section 0.32l of the Commission's rules, 47  d(#C.F.R. Section 0.321, that the complaint referenced herein against the rate increase charged by Operator in the community set forth above, effective January 21, 1997, IS GRANTED.  S- 12.` ` IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47  d(#C.F.R.  76.961, that Operator shall refund to subscribers in the community referenced above that portion  d(#of the amount paid in excess of the maximum permitted CPST1 rate of $10.93 per month (plus franchise fee) plus interest to the date of the refund, for the period from January 25, 1997 to January 31, 1997.  S - 13.` ` IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47  d(#C.F.R.  76.961, that Operator shall refund to subscribers in the community referenced above that portion  d(#of the amount paid in excess of the maximum permitted CPST1 rate of $10.30 per month (plus franchise  d(#yfee) plus interest to the date of the refund, for the period from February 1, 1997 the day before Operator reduces its CPST rate to $10.30  S- A14.` ` IT IS FURTHER ORDERED, that Operator shall promptly determine the overcharges to  d(#yCPST subscribers for the stated period, and shall within 30 days of the release of this Order, file a report  d(#with the Chief, Cable Services Bureau, stating the cumulative refund amounts so determined (including  d(#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. X` hp x (#%'0*,.8135@8: