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customers. <br />Time Warner did not have the latest inflation data available at the time it completed its FCC <br />Form 1240 for 2000. Therefore, TWC should file an amended FCC 1240 for 2001 at the time <br />the FCC 1240 for 2001 is submitted to compensate for the over collection (~$.O1/month) and <br />adjust its 2001 rates accordingly. <br />In recalculating the maximum permitted rates for BST service, staffused the current inflation <br />values. In the interest of consumer protection, currently available information was applied to the <br />rate recalculation to eliminate overchazges which otherwise would be carried forwazd into 2001. <br />A similaz problem last yeaz resulted in TWC calculating a MPR greater than that permissible <br />under the FCC's rules. Staff used the corrected MPR values as the going forward "Current <br />maximum Permitted Rate" in the FCC1240 cell Al which resulted lower Ma$imum Permitted_ <br />Rates. <br />Cable System Upgrade Costs <br />Time Warner Cable submitted an abbreviated Cost of Service Filing for Cable Network <br />Upgrades. Under the FCC's rules, the cable operator is allowed to recover its investment from <br />subscribers on a tier by tier basis. The rules require upgrade capital expenditures to be <br />apportioned among each of the cable service tiers, basic, standazd, new product, premium and <br />other program tier. The "Add-on" chazge ranges from $1.81 to $2.11 monthly. <br />System Upgrade .Expense Allacation/tier Add -on chazge <br />Carrboro Customers $0 0.00% $0.00 <br />Chapel Hi11 Customers $426,045 21.95% $1.81 <br />Durham Customers $2,471 25.64% $2.11 <br />Recommendation <br />The consultant staff recommends that the maximum permitted BST rate adjustment contained <br />within the three (3) FCC 1240 filing submitted by Time Warner Cable be found reasonable, and <br />be approved conditioned upon the understanding that any over/underage in the BST rate due to <br />the fourth quarter 1998 inflation factor be adjusted commensurate with the FCC 1240 filing for <br />2000. This treatment of any BST rate adjustment attributable to changing fourth quarter inflation <br />statistics is consistent with the FCC's ruling in such matters. <br />4 <br />