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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 ) ) Multi - Channel TV Cable Company ) d/b/a Adelphia Cable Communications ) CUID No. VA0075 (Albemarle County) ) ) ) Complaint Regarding ) Cable Programming Services Tier ) Rate Increase ) ORDER Adopted: January 15, 1997 Released: January 21, 1997 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider a complaint filed concerning the rates of Multi - Channel TV Cable Company d/b/a Adelphia Cable Communications ("Adelphia") for its cable programming services tiers ("CPST") CPST-1 and CPST-2 in Albemarle County, Virginia, CUID No. VA0075. Adelphia has chosen to justify its CPST rates through a cost of service showing on FCC Form 1220, an FCC Form 1210, and an FCC Form 1240. This Order addresses the reasonableness of Adelphia's CPST rates from October 1993 to present. 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. If the Commission finds the rate to be unreasonable, it shall determine the correct rate and any refund liability. The Commission received a valid complaint concerning Adelphia's CPST rates in effect in October 1993. Accordingly, this complaint triggers the Commission's jurisdiction to review Adelphia's CPST rates. 3. Adelphia's FCC Form 1220, 1210, and 1240 filings seek to establish that its CPST rates, including subsequent increases on October 1, 1995 and August 1, 1996 are below the maximum permitted rates and are justified based on its cost of providing regulated cable service. According to information provided by Adelphia in its cost of service showing, the franchise area comprised approximately 7,135 subscribers on CPST-1 and 5,791 subscribers on CPST-2 and Adelphia provided 33 CPST channels at the time of its cost of service filing. In this review process, we analyzed Adelphia's CPST cost of service showing, and FCC Form 1210 and 1240 filings, to ensure that the initial CPST rate, and subsequent rate increases, were not unreasonable and to determine any associated refund liability. 4. In reviewing the cost of service showing, we evaluated Adelphia's Asset Valuation, Capitalized Losses and Accumulated Amortization, Assignments, Cost Allocations, Rate of Return and use of Equivalent Billing Units to determine whether Adelphia should be permitted to recover those items. Where a certain rate base or expense element was not justified under our rules, such cost was disallowed in whole or in part. Where reported costs were disallowed, we have made appropriate adjustments. Even with our adjustments and disallowances, however, we find that Adelphia's monthly CPST rates of $7.75 and $5.00 for CPST-1 and CPST-2 respectively, in effect on October 1, 1993 have been justified and are reasonable. 5. Based on our review of Adelphia's FCC Form 1210, we find that Adelphia incorrectly reported its transition and permitted charge for CPST-1 and CPST-2. In addition, Adelphia incorrectly calculated the per channel adjustment factor for channel additions. Accordingly, we have adjusted Adelphia's FCC Form 1210, Lines A1 and A2 and Module G to reflect the correct transition rate and permitted charge and to eliminate a calculation computed under the CAP Method. Notwithstanding, these adjustments, Adelphia's rates of $7.83 for CPST-1 and $7.18 for CPST-2, respectively, effective October 1, 1995 are justified and reasonable. 6. Based on our review of Adelphia's FCC Form 1210, we have adjusted Adelphia's FCC Form 1240, Line A1 to reflect the correct maximum permitted rates. Notwithstanding our adjustment, Adelphia's rate increases of $2.25 and $1.37 for CPST-1 and CPST-2, respectively, effective August 1, 1996 are justified and reasonable. 7. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the monthly CPST rates of $7.75 and $5.00 for CPST-1 and CPST-2, respectively, charged from October 1, 1993 to September 30, 1995; the monthly CPST rates of $7.83 and $7.18 for CPST-1 and CPST-2, respectively, charged from October 1, 1995 through July 31, 1996; and the monthly CPST rate increases of $2.25 and $1.37 for CPST-1 and CPST-2, respectively, implemented on August 1, 1996, ARE NOT UNREASONABLE. 8. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the complaint for the period under review with respect to CUID No. VA0075, IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau