******************************************************** NOTICE ******************************************************** This document was converted from WordPerfect 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 ) ) Southeast Florida Cable, Inc., ) d/b/a Adelphia Cable Communications ) CUID No. FL0605 (Unincorp. Martin County) ) ) ) Cost of Service Showing to Support ) Cable Programming Services Tier ) Rate and Rate Increases ) ORDER Adopted: February 25, 1997 Released: March 4, 1997 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider complaints filed concerning the rates of the above- captioned operator ("Operator") for its cable programming services tier ("CPST") in the above- referenced community. Operator 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 Operator's CPST rates from February 1, 1994 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. 3. The Commission received valid complaints concerning Operator's CPST rates in effect from February 1, 1994 through September 30, 1995, and against the CPST rate increase that Operator implemented on October 1, 1995. Accordingly, these complaints trigger the Commission's jurisdiction to review Operator's CPST rates. 4. Operator's FCC Form 1220, 1210, and 1240 filings seek to establish that its CPST rate, including subsequent increases, is below the maximum permitted rate and is justified based on its cost of providing regulated cable service. According to information provided by Operator in its cost of service showing, the franchise area comprised approximately 27,684 CPST subscribers and Operator provided 30 CPST channels at the time of its filing. In this review process, we analyzed Operator'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. 5. In reviewing its cost of service showing on FCC Form 1220, we evaluated Operator's Asset Valuation, Capitalized Losses and Accumulated Amortization, Assignments, Cost Allocations, Rate of Return and use of Equivalent Billing Units to determine whether Operator 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 Operator's monthly CPST rate of $13.45 in effect on February 1, 1994 has been justified. 6. Based on our review of Operator's FCC Form 1210, we find that Operator incorrectly reported its permitted charge. In addition, Operator incorrectly calculated the per channel adjustment factor for channel additions. Operator also incorrectly included an inflation adjustment to which it is not entitled for the period covered by its FCC Form 1210 because Operator's cost of service filing covered this period for inflation. Accordingly, we have adjusted Operator's FCC Form 1210, Module A Line A2, Module G Line G7, and Module I Line 15, and Module J, Line J5. Our adjustments reflect the correct permitted charge, eliminate a calculation computed under the Markup Method, and eliminate the inflation adjustment. Notwithstanding these adjustments, Operator's CPST rate of $15.54 effective October 1, 1995 has been justified and is reasonable. 7. Based on our review of Operator's FCC Form 1240, we find that Operator incorrectly reported its current maximum permitted rate and true-up period. Operator also claimed an inflation adjustment to which it was not entitled as discussed above. Accordingly, we have adjusted Operator's FCC Form 1240 Module A, Lines A1, to reflect the correct maximum permitted rate. We have also adjusted Module C, Line C1 to eliminate the inflation adjustment for the period July 1, 1994 to June 30, 1995. We also adjusted Line C1 to reflect the inflation rate of 1.0222 for the period October 1995 to December 1995 and the inflation rate of 1.0239 for the period January 1996 to February 1996. In addition, we adjusted Module C, Line C3 to reflect the inflation factor of 1.0239. Finally, we adjusted Operator's FCC Form 1240, Module E, Line E3 to reflect the correct true-up period of 3 months. Notwithstanding our adjustments, Operator's CPST rate of $17.23 effective June 1, 1996 has been justified and is reasonable. 8. Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that Operator's monthly CPST rate of $13.45 charged from February 1, 1994 to September 30, 1995; Operator's monthly CPST rate of $15.54 charged from October 1, 1995 to May 31, 1996; and Operator's monthly CPST rate of $17.23 implemented on June 1, 1996, in the community referenced above, ARE NOT UNREASONABLE. 9. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R. Section 0.321, that the complaints for the period under review with respect to CUID No. FL0605, ARE DENIED. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau