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9 <br />-6- <br />b. On October 4, 2000, the FCC released the 2000 second quarter inflation figure of <br />2.4% for April through June, 2000. Pursuant to FCC rules, Time Warner was not <br />required to use this rate. It was required only to use the most recently published <br />rate of 3% when it completed its FCC 1240 filing. As stated in a recent FCC <br />Order, the FCC "does not find a rate unreasonable solely because more accurate <br />inflation data has become available by the time it [or local franchising authority] <br />makes its review" of the rate filing. ' Thus, Time Warner is correct to use the <br />earlier, higher inflation figure. <br />c. Recalculation of Inflation Adjustments <br />(1) The consultant recalculated Time Warner's rate filings using the 2.4% <br />inflation factor for the last three quarters of the 2000 true up period, and <br />also for the entire 12-month 2001 projected period. This resulted in a <br />maximum permitted rate decrease of $.08 for Chapel Hill system subscribers <br />($9.91- $9.83); and $.09 ($9.92 - $9.83) for Durham subscribers. <br />(2) The same recalculation for franchise NC-0256, Carrboro system subscribers, <br />resulted in a decrease of the maximum permitted rate by $.09 ($10.62 - <br />$10.53). <br />d. The company's selected rates would remain unchanged even with the <br />recalculations in all three systems, because Time Warner's "selected" rates fall <br />below the consultant's recalculated ma;dmum permitted rates. Nonetheless, it <br />would be in the public interest if Tune Warner (prior to submitting in September <br />2001 its FCC 1240 filing for 2002) amended its 2001 FCC 1240 rate filing by <br />"refreshing" the inflation figures so they correspond with the more recent FCC <br />published inflation figures. <br />e. Local governments that choose to regulate cable rates are charged. with protecting <br />subscribers from paying unreasonable BST rates, while also providing system <br />operators with a fair return. The County can only compel Time Warner to refresh <br />its inflation adjustments if Time Warner is required to recalculate its FCC 1240 to <br />address other issues. Absent these issues, the County cannot compel Time <br />Warner to amend the rate filing in 2001 to account for updated inflation data, but <br />it can request the company to do so. <br />''In the Matter of BmLW-amff C le Petiti n for Reconsid do CUID No. NC -0065, <br />Town of Clayton (June 4, 1999). <br />Action Audi LLC Franchise Fee U-Tax Auditing & Telecommunication Administration <br />101 Pocono Lane, Cary, North Carolina 27513-5316 Voice # 919.467.5392 Fax # 919.460.6868