Before the Federal Communications Commission Washington, D.C. 20554 In the Matter of ) ) Time Warner Cable ) CUID No. NC0222 (Rockingham County) ) Petition for Reconsideration ) and Refund Plan ) ORDER ON RECONSIDERATION AND REFUND PLAN ORDER Adopted: July 29, 1999 Released: July 30, 1999 By the Deputy Chief, Cable Services Bureau: 1. In this Order we consider a petition for reconsideration of a rate order concerning the January 1, 1998 rate increase of the above-referenced operator ("Operator") for its cable programming services tier ("CPST") in the community referenced above. On June 18, 1998, we issued a rate order concerning Operator's January 1, 1998 CPST rate increase ("Prior Order"). On July 20, 1998, Operator filed a petition for reconsideration of our Prior Order ("Petition") as well as a refund plan ("Refund Plan"). This Order addresses Operator's Petition and its Refund Plan. 2. Under the Communications Act, the Federal Communications Commission ("Commission") is authorized to review the CPST rates of cable systems not subject to effective competition to ensure that rates charged are not unreasonable. The Telecommunications Act of 1996 ("1996 Act") and our rules implementing the legislation ("Interim Rules"), require that a complaint against the CPST rate be filed with the Commission by a local franchising authority ("LFA") that has received more than one subscriber complaint. 3. The filing of a complete and timely complaint triggers an obligation upon the cable operator to file a justification of its CPST rates. The Operator has the burden of demonstrating that the CPST rates complained about are reasonable. If the Commission finds a rate to be unreasonable, it shall determine the correct rate and any refund liability. 4. To justify rates for the period beginning May 15, 1994, operators must use the FCC Form 1200 series. Operators are permitted to make changes to their rates on a quarterly basis using FCC Form 1210. Operators may justify their rates on an annual basis using FCC Form 1240 to reflect reasonably certain and quantifiable changes in external costs, inflation, and the number of regulated channels that are projected for the twelve months following the rate change. Any incurred cost that is not projected may be accrued with interest and added to rates at a later time. 5. In our Prior Order, we stated that we adjusted Lines 801 through 804 of Worksheet 8 (True-Up Rate Charged) of Operator's 1996 FCC Form 1240 to conform to the actual rate charged. In its Petition, Operator requests that we reconsider that adjustment. Operator has provided evidence of the actual rate charged for the appropriate period. We find Operator's argument compelling and we will grant Operator's Petition to that extent. Operator attached revised FCC Form 1240s to its Petition which include the adjustment to Worksheet 8. Upon review of Operator's revised forms, we find that Operator has not correctly calculated its maximum permitted rate ("MPR") for the projected period January 1, 1997 through December 31, 1997. We adjusted Operator's Line D2 (Current External Costs Segment) to conform with Line I7 (External Costs Segment for Projected Period) of Operator's 1996 FCC Form 1240. Our adjustment reduced Operator's MPR from $13.15 to $13.11, for the projected period January 1, 1997 through December 31, 1997. 6. Upon review of Operator's FCC Form 1240 for the projected period January 1, 1998 through December 31, 1998, we adjusted Lines A1 (Current Maximum Permitted Rate), D6 (Current True-Up Segment), D7 (Current Inflation Segment) and F8 (True-Up Segment for True-Up Period 1) to conform to the prior revised FCC Form 1240. We also revised Line C5 (Current FCC Inflation Factor) to 1.0114. Our adjustments resulted in a revised MPR of $13.85 rather than Operator's calculated MPR of $13.94, effective January 1, 1998. Because Operator's actual CPST rate of $14.21 exceeds its revised MPR, we find Operator's actual CPST rate of $14.21 to be unreasonable. 7. Upon review of Operator's Refund Plan filed pursuant to our Prior Order and Operator's Petition, we find that the Refund Plan does not fulfill the requirements of our Prior Order, nor as it is modified herein. Therefore we will not accept Operator's Refund Plan and will require Operator to file a new Refund Plan in accordance with this order. 8. Accordingly, IT IS ORDERED, pursuant to Section 1.106 of the Commission's rules, 47 C.F.R. 1.106, that Operator's Petition for Reconsideration IS GRANTED TO THE EXTENT INDICATED HEREIN. 9. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. 0.321, that In the Matter of Time Warner Cable, DA 98-1147, 13 FCC Rcd 16658 (1998), IS VACATED TO THE EXTENT INDICATED HEREIN. 10. IT IS FURTHER ORDERED, pursuant to Sections 0.321 and 76.962 of the Commission's rules, 47 C.F.R. 0.321 and 76.962, that Operator's Refund Plan IS NOT APPROVED. 11. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's rules, 47 C.F.R.  76.961, that Operator shall refund to subscribers in the community referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $13.85 per month (plus franchise fees), plus interest to the date of the refund, for the period January 23, 1998 (the date of the first subscriber complaint) through the day before Operator implements the maximum permitted CPST rate of $13.85 or March 31, 1999, whichever is sooner. 12. IT IS FURTHER ORDERED that Operator shall promptly determine the overcharges to CPST subscribers for the stated periods, and shall within 30 days of the release of this Order, file a report with the Chief, Cable Services Bureau, stating the cumulative refund amount so determined (including franchise fees and interest), describing the calculation thereof, and describing its plan to implement the refund within 60 days of Commission approval of the plan. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau