RES-1995-007 Resolution of BOCC Approving Transfer of Franchise From Time Warner Entertainment Co,, L.P., to TW Entertainment Advance/Newhouse Partnership

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a STATE OF NORTH CAROLINA ORANGE COUNTY BEFORE ORANGE COUNTY IN THE MATTER OF: ) Review of Basic Cable Service, Equipment and ) ORDER APPROVING Installation Rates and A La Carte Offerings ) COST OF SERVICE RATE Filed by Cablevision Industries, ) Inc., d/b/a CVI, NC-0256 ) BY ORANGE COUNTY WHEREAS, Orange County has been duly certified to regulate basic cable rates for CVI within the jurisdiction of Orange County; and, WHEREAS, on August 23, 1994, CVI filed its form FCC-1220/1205/1215 request for cable service, equipment and installation rate approval; and, WHEREAS, the current FCC benchmark rate for basic service for CVI applicable in Orange County is $7.78, and CVI's current rate in effect in Orange County is $8.58; and, WHEREAS, Orange County has retained the Triangle J Council of Governments, and the City of Raleigh, as its rate consultants, and Triangle J Council of Governments and City of Raleigh filed a report which has evaluated CVI's Cost of Service rate filing. Although CVI has requested a rate of return of 15%, the FCC's current rules for Cost of Service rate filings create a presumption that only a 11.25% rate of return on the rate base is reasonable. CVI's intangible assets consititute 78.71% of its Orange County rate base and may not be appropriately amoritized. Therefore, CVI's filing may not be justified for the full amount of its Cost of Service rate. However, after adjusting for discrepancies, there appears to be adequate justification for a Cost of Service rate equal to CVI's current basic rate; and, WHEREAS, CVI has indicated that it is only requesting a Cost of Service rate for its basic service at the same level as the current rate in effect, and will retain said rate in effect for a minimum of two (2)years, except for adjustments for external expenses, such as program costs and inflation.