******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect or Word to ASCII Text format. Content from the original version of the document such as headers, footers, footnotes, endnotes, graphics, and page numbers will not show up in this text version. All text attributes such as bold, italic, underlining, etc. from the original document will not show up in this text version. Features of the original document layout such as columns, tables, line and letter spacing, pagination, and margins will not be preserved in the text version. If you need the complete document, download the WordPerfect version or Adobe Acrobat version, if available. ***************************************************************** Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of: ) ) Mickelson Media, Inc., ) CSB-A-0380 d/b/a Century Communications ) CUID NM0085 ) Appeal of Local Rate Order ) of the County of Los Alamos, New Mexico ) MEMORANDUM OPINION AND ORDER Adopted: December 8, 1999 Released: December 10, 1999 By the Deputy Chief, Cable Services Bureau: I. introduction 1. Mickelson Media, Inc., d/b/a Century Communications, operator of the cable system serving Los Alamos, New Mexico, ("Century") filed an appeal of the local rate order adopted by the County of Los Alamos, New Mexico, on January 31, 1997. The County filed an opposition to the appeal, and Century filed a reply. II. background 3. Under the Commission's rules, rate orders issued by local franchising authorities may be appealed to the Commission. In ruling on an appeal of a local rate order, the Commission will sustain the franchising authority's decision provided there is a reasonable basis for that decision, and will reverse a franchising authority's decision only if the franchising authority unreasonably applied the Commission's rules in its local rate order. If the Commission reverses a franchising authority's decision, it will not substitute its own decision but will remand the issue to the franchising authority with instructions to resolve the case consistent with the Commission decision on appeal. 4. An operator proposing an increase in basic service tier ("BST"), equipment or installation rates bears the burden of demonstrating that the proposed increase conforms with our rules. In determining whether the operator's proposed increase conforms with our rules, a franchising authority may direct the operator to provide supporting information. After reviewing an operator's rate forms and any other additional information submitted, the franchising authority may approve the operator's requested rate increase or issue a written decision explaining why the operator's rate is not reasonable. If the franchising authority determines that the operator's proposed rate exceeds the maximum permitted rate as determined by the Commission's rules, it may prescribe a rate different from the proposed rate provided that it explains why the operator's rate is unreasonable and the prescribed rate is reasonable. 5. Cable operators may justify adjustments to 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. If actual and projected costs are different during the rate year, a "true-up" mechanism is available to correct estimated costs with actual cost changes. VI. discusion and analysis 7. Century submitted an FCC Form 1240 to the County on February 1, 1996 to establish a maximum permitted basic service tier ("BST") rate of $25.83, which the County adjusted to a $25.63 maximum permitted BST rate effective from May 1, 1996, in the January 31, 1997 rate order on appeal here. This rate adjustment was based on the County's correction of the maximum permitted rate entered on Line A1 of the Form 1240 from $22.65 to the $22.55 rate permitted in the County's September 16, 1996 rate order in which Century's immediately previous Form 1210 rate filing was reviewed. Century claims the County erred in not also correcting Worksheet 8 of the Form 1240 to reflect the Form 1210 permitted $22.55 rate as well. Century claims this further correction was required because of the refund plan submitted to the County in response to the Form 1210 rate order. Century argues that its refund proposal in combination with the County's failure to adjust Worksheet 8 effectively subjected it to a double refund obligation. 8. The County opposes Century's appeal on the grounds that its Line A1 adjustment and its determination not to adjust the entry on Worksheet 8 is consistent with the Instruction for FCC Form 1240. The County asserts that Century entered on Worksheet 8 the rate from its rate card, and that this figure was not changed as part of its Form 1240 review. The County contends the Cable Services Bureau has not permitted the kind of adjustment requested by Century when it reviews Forms 1240 in cable programming service tier ("CPST") rate cases, and argues that such an adjustment would be improper in this case. The County also contends that Century has not made any refunds as a result of the Form 1210 review, but instead has only submitted a refund plan that proposes refund offsets that are not permitted with respect to rates set by means of Form 1210. Accordingly, the County argues that the determination not to adjust Century's entry on Worksheet 8 is correct despite the refund plan submitted by Century. 9. In reply, Century asserts that the Cable Services Bureau has made adjustments to Worksheet 8 consistent with its adjustments to Line A1, and points to the figure appearing on Line H1 of the corrected Form 1240 prepared by the Bureau in TKR Cable Company. Century states that the entry on Line H1 of the Bureau staff's corrected Form 1240 in that case is derived from the Form 1210 permitted rate with which the Bureau staff adjusted the Line A1 entry on the corrected Form 1240. Century reiterates its contention that the County's failure similarily to adjust the Worksheet 8 true-up rate figure to reflect the earlier Form 1210 permitted rate effectively subjects it to a double refund obligation "once through the Form 1210 refund order and once through the Form 1240 true-up calculation." 10. Century's appeal will be denied. As noted above, the instructions for Worksheet 8 require the entry of "the rate which was in effect for each month of [the True- Up Period] . The rate used should be the figure from your rate card at the time." The record shows that the County followed these instructions. The County did not adjust the Worksheet 8 filed by Century to reflect the operator's Form 1210 determined BST maximum permitted rate. Instead, the County reviewed Century's Form 1240 with Worksheet 8 showing the actual rate as indicated on Century's rate card. Given a record showing that the County followed the Form 1240 instructions with respect to Worksheet 8, we find the County's determination not to make the adjustment to Worksheet 8 to be reasonable. 11. We reject Century's argument that the County's determination not to adjust Worksheet 8 results in a double refund obligation for Century. The record shows that Century has not made any refunds of overcharges determined by the County in its review of Century's Form 1210. The record further shows that, although Century submitted to the County a refund plan, that plan includes a proposal for an impermissable offsetting of refunds. Century's refund plan proposes an aggregation of "all receipts for basic service and regulated customer equipment," with that total "compared to the total permitted charges." As the County points out, an offsetting of receipts from BST charges with receipts from equipment charges is not permitted under the Commission's rules relating to rates established pursuant to Forms 1210 and 1240. While the Commission has allowed an operator to conform its true-up to an approved refund plan, or to account for the payment of refund liability, contingent on timely actual payments of refunds, the County's determination not to adjust the true-up where the previously ordered refund is unpaid and disputed is not unreasonable. Nothing herein prevents the County from allowing the operator to reflect in its refund plan the refund liability that has been incorporated in a projected period true-up calculation, or to reflect approved refunds in the next true-up. IV. ORDERING CLAUSE 12. For the foregoing reasons, IT IS HEREBY ORDERED, pursuant to authority delegated by Section 0.321 of the Commission's rules, that the Petition for Review of the Local Rate Order of the County of Los Alamos, New Mexico, (CSB-A-0380), filed by Mickelson Media, Inc., d/b/a Century Communications on March 3, 1997, IS DENIED. FEDERAL COMMUNICATIONS COMMISSION William H. Johnson Deputy Chief, Cable Services Bureau