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Agenda - 05-03-2005-5j
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Agenda - 05-03-2005-5j
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Last modified
9/2/2008 12:03:16 AM
Creation date
8/29/2008 10:19:05 AM
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BOCC
Date
5/3/2005
Document Type
Agenda
Agenda Item
5j
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RES-2005-036 Adoption of 2005 Rate Order for Cable Services in Unincorporated Orange County
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\Board of County Commissioners\Resolutions\2000-2009\2005
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I(v <br />-13- <br />subscribers are not paying for unregulated service costs- The rules are designed to "exclude from <br />[regulated] rates, any costs that exceed what would have been incurred in a competitive <br />environment or that are not related to regulated services.."" Costs are therefore allocated between <br />regulated and unregulated services, so that regulated subscribers are not charged for benefits they <br />do not receive.'SCosts aze divided into three categories "basic service (BST)," "cable <br />programming service (CPST)," and "all other,"''-9 the latter two which now represent unregulated <br />services. <br />Because the lazgest portion of an operator's rate base is its plant in service, the FCC developed a <br />"used and useful" standard to ensure that regulated subscribers pay for only those portions of <br />plant that are used and useful in the provision ofregulated cable services.30 If a cable operator <br />chooses to recover its investment in such used and useful plant, it must remove from the rate base <br />any accumulated depreciation,31 in addition to which the FCC provided depreciation schedules.32 <br />Plant determined not "used and useful" is deemed "excess" capacity, and operators are only <br />permitted to include excess capacity in the ratebase "if it is fatty constructed plant that will be <br />used to provide regulated services within 12 months." 33 <br />TWC was not required to file a form 12.35, but it chose to do so to overcome the capital recovery <br />ceiling imposed by federal government pursuant to the "Social Contract."" <br />Because TWC included upgrade capital expense recovery (the fonn12:35 "Add-on" charge) as <br />'-See 1994 Report and Order at ~~18, page I D <br />'$"As noted, the interim rules also allow the operator to recover all operating expenses normally incurred by <br />cable operators in the provision of regulated cable service. An operator may not recover through regulated rates <br />other expenses, such as costs associated with non-regulated service, lobbying expenses, or club memberships. 1996 <br />Cost of Service Final Report and Order at ¶I I . <br />'-9See 1996 Cost of Service Final Report and Order at ¶121, page 50. This is a reduction from the 5 <br />categories created in the 1994 Report and Order: "BST", "CPST" "non-regulated cable programming service", <br />"other cable acti~~ties" and "non-cable activities." <br />30See 1994 Report and Order at ¶26 <br />3t See 47 CFR 76.922 (6)(n <br />32See 1994 Cost of Service Report and Order, Attachment B, 1996 Cost of Service Fina] Report and Order, <br />Attachment C. <br />33See 1996 Cost of Service Final Report and Order at ¶26. <br />3a <br />See Time Warner Social Contract, FCC 95-478 at ¶I-5. The FCC adopted the Social Contract on <br />November 30, 1995 to provide rate stability, improve the quality of cable service, and provide TW C incentive to <br />upgrade its cable systems and make other improvements. Under its terms, Time Warner was to invest $4 billion to <br />upgrade its domestic cable systems over the life of the Social Contract and any such investment recovery was capped <br />at $1 per year (cumulative to $1 SO/customer) over its 5-yeaz term. In addition, the Socia] Contract was to resolve <br />over 900 rate cases against TWC and approximately $4 7 million plus interest to TWC customers. <br />
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