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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 ) ) Robinson Plum Cablevision, L.P. ) CUID No. PA1391 (Plum) d/b/a Adelphia Cable Communications ) ) Complaint Regarding ) Cable Programming Services Tier ) Rate Increase ) ORDER Adopted: January 14, 1998 Released: January 16, 1998 By the Chief, Financial Analysis and Compliance Division, Cable Services Bureau: 1. In this Order we consider a complaint against the August 1, 1997 rate increase that the above-captioned operator ("Operator") implemented for its cable programming services tier ("CPST") in the community referenced above. Operator has attempted to justify its CPST rate increase through a benchmark showing on FCC Form 1240. We have already issued a separate order ("1995 Order") on May 9, 1995, which found that Operator's rates in effect before May 15, 1994 were not unreasonable. On January 17, 1996, we released another order granting the previous owner of the system, Plum Cable TV, small system relief while finding that its rates in effect from May 15, 1994, to January 17, 1996, as justified on FCC Form 1230 ("Form 1230 Order"), were not unreasonable. On April 11, 1997, we released another order which found that Operator's CPST rate increase, effective August 1, 1996, was unreasonable ("1997 Order"). On May 16, 1997, Operator filed a refund plan ("Refund Plan") as required by the 1997 Order. On December 23, 1997, Operator filed a revised refund plan ("Revised Refund Plan"). In this Order we address Operator's Revised Refund Plan and the reasonableness of the Operator's CPST rate effective August 1, 1997. 2. We first address Operator's Revised Refund Plan. Our review of the Revised Refund Plan reveals that it does not comply with the requirements of our 1997 Order. Our 1997 Order found that Operator raised its CPST rate to $18.81, effective August 1, 1996, then lowered its CPST rate to $17.85, effective October 1, 1996, and then raised its CPST rate to $18.31, effective February 1, 1997. Our 1997 Order further found that Operator only provided sufficient evidence to support a CPST rate of $16.42, effective August 1, 1996, and we ordered Operator to refund to subscribers in the community referenced above "that portion of the amount paid in excess of the maximum permitted CPST rate of $16.42 per month (plus franchise fees), plus interest to the date of the refund, for the period of August 8, 1996 to the day before the Operator implements the maximum permitted CPST rate of $16.42." Operator has not disputed the determination in our 1997 Order that Operator's maximum permitted rate ("MPR") for its CPST was $16.42 effective August 1, 1996. 3. According to the Revised Refund Plan, Operator implemented the maximum permitted CPST rate of $16.42 on July 1, 1997. Accordingly, Operator was required to refund CPST subscribers in the community referenced above that portion of the amount paid in excess of the maximum permitted CPST rate of $16.42 per month (plus franchise fees), plus interest to the date of the refund, for the period beginning August 8, 1996 through June 30, 1997. Operator states that it paid a "previous refund to CPS subscribers of $.86 per month for four months" and that this refund "was provided to subscribers as a one-time credit of $3.52 in subscribers' March, 1997 bills." Upon review, we find that the amount of $3.52 was actually a refund to basic service tier ("BST") subscribers, not CPST subscribers, which Operator was required to pay BST subscribers due to Operator's overcharges on the BST during, but not limited to, the period October 1996 through January 1997. In its Revised Refund Plan, Operator has applied this BST refund as an inter-tier offset against the CPST overcharge for the period October 1996 through January 1997 based upon what appears to be the net of a BST overcharge and a purported CPST undercharge. The methodology used by Operator to calculate the inter-tier offset is incorrect. In any event, this issue is moot because Operator may not apply an inter-tier offset in calculating the refund. 4. The Commission has addressed the issue of inter-tier offsets in Cencom Cable Income Partners ("Cencom"). In Cencom, the Commission determined that such inter-tier offsets are "inconsistent with the Commission's conclusion in the [Implementation of Sections of the Cable Television Consumer Protection and Competition Act of 1992, Rate Regulation, MM Docket 92-266, Report and Order and Further Notice of Proposed Rulemaking] that cable operators should not balance low BST rates with CPST rates that exceed the maximum permitted rate for the tier." Based on the Commission's holding in Cencom we reject Operator's inter-tier offset. 5. Operator's calculations of franchise fees in its Revised Refund Plan are also incorrect. Operator has truncated its franchise fee amount calculations rather than correctly rounding them to the nearest cent. In addition, Operator's calculation of the number of days to which interest is applied to the refund amounts is slightly understated. Accordingly, we will deny Operator's Revised Refund Plan and order Operator to refile a refund plan revised pursuant to this Order. 6. The Communications Act authorizes the Federal Communications Commission ("Commission") 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 unreasonable, it shall determine the correct rate and any refund liability. The Telecommunications Act of 1996 ("1996 Act"), and our rules, require that complaints against the CPST rates be filed with the Commission by a franchising authority that has received subscriber complaints. A franchising authority may not file a CPST rate complaint unless, within 90 days after such increase becomes effective, it receives more than one subscriber complaint. 7. Cable operators attempting to justify their rates for the period beginning May 15, 1994 using a benchmark showing must complete and file the FCC Form 1200 series. Cable operators may also justify rate increases based on the addition and deletion of channels, changes in certain external costs, and inflation, by filing FCC Form 1210. FCC Form 1210 must be filed at least 30 days before new rates are scheduled to go into effect where the Commission has found the cable programming service rate to be unreasonable less than one year prior to the filing, or where there is a pending complaint against the CPST rate. 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. 8. On October 22, 1997, the LFA filed its complaint against Operator's August 1, 1997 CPST rate increase. In its complaint, the LFA asserts that it has received more than one subscriber complaint against Operator's CPST rate increase, thereby triggering the Commission's jurisdiction to review this complaint. The valid complaint from the LFA triggers an obligation on behalf of the cable operator to file a justification of its CPST rates with the LFA. Thus, in this case, Operator is required to justify the increase in its CPST rate which is the subject of the LFA's complaint. Operator filed FCC Form 1240 with the LFA as justification for this rate increase. Along with its complaint, the LFA submitted a Supplement to FCC Form 329 ("Supplement"). Because the Supplement is simply a restatement of the issues raised by the LFA in its Partial Application, we will address these issues in a separate order at a later date. 9. Upon review of Operator's FCC Form 1240, for the projected period August 1, 1997 to July 31, 1998, we find that Operator has not correctly calculated its maximum permitted rate ("MPR"). We have adjusted the true-up time period stated by Operator on the first page of its FCC Form 1240 to reflect the correct true-up time period indicated by Operator on Worksheet 1 of its FCC Form 1240. The corrected true-up time period is from May 1, 1996 to April 30, 1997. We have adjusted Module D, Line D6 (Current True-Up Segment) from -$0.6149 to -$0.6081 to reflect corrections made to the previous FCC Form 1240. We have also adjusted Module F, Line F8 (True-Up Segment for True-Up Period 1) from -$0.6150 to -$0.6082 to reflect corrections made to the previous FCC Form 1240. 10. The adjustments to the true-up period also result in a reduction in Line H13 (Total True- Up Adjustment) and Line H14 (Amount of True-Up Being Claimed This Projected Period). This results in a corresponding reduction in Line I8 (True-Up Segment for Projected Period). In total, our adjustments to Operator's FCC Form 1240 result in a reduction of the MPR for the Projected Period to $19.84. Thus, Operator has failed to demonstrate that its August 1, 1997 MPR rate of $19.85 was justified. Even with our adjustments, however, we find that Operator has justified its CPST rate of $18.56, effective August 1, 1997. 11. Accordingly, IT IS ORDERED, pursuant to Section 76.962 of the Commission's Rules, 47 C.F.R.  76.962, that Operator's Revised Refund Plan IS NOT ACCEPTED. 12. IT IS FURTHER ORDERED, pursuant to Section 76.961 of the Commission's Rules, 47 C.F.R.  76.961, that Operator revise its Revised Refund Plan as detailed herein and resubmit its plan to the Chief, Cable Services Bureau, within thirty days of the release of this Order. 13. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Operator's monthly CPST rate of $18.56, effective August 1, 1997, in the community set forth above, IS NOT UNREASONABLE. 14. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that Operator revise the calculations of its maximum permitted CPST rates in its next FCC Form 1240 filing in accordance with this order. 15. IT IS FURTHER ORDERED, pursuant to Section 0.321 of the Commission's rules, 47 C.F.R.  0.321, that the complaint referenced herein against the CPST rate charged by Operator in the community referenced above IS DENIED. FEDERAL COMMUNICATIONS COMMISSION Elizabeth W. Beaty Chief, Financial Analysis and Compliance Division Cable Services Bureau