Ordinance No. 8,730Published in The .Baytown Sun: 991028 -2
uesday, November 2, 1999, and
ednesday, November 3, 1999
ORDINANCE NO. 8730
® AN ORDINANCE ESTABLISHING THE MAXIMUM HOURLY SERVICE
CHARGE TO BE USED TO DEVELOP THE EQUIPMENT AND
INSTALLATION RATES FOR TEXAS CABLE PARTNERS, L.P.;
ESTABLISHING THE MAXIMUM PERMITTED RATES, FOR .EQUIPMENT
AND INSTALLATION CHARGES; DISALLOWING THE PROPOSED FIELD
COLLECTION CHARGE; SETTING FORTH OTHER PROVISIONS
RELATED TO THE SUBJECT; PROVIDING A REPEALING CLAUSE;
CONTAINING A SAVINGS CLAUSE; PRESCRIBING A MAXIMUM
PENALTY OF FIVE HUNDRED AND NO /100 DOLLARS ($500.00); AND
PROVIDING FOR THE PUBLICATION AND THE EFFECTIVE DATE
THEREOF.
WHEREAS, the City of Baytown, Texas (the "City "), is certified to regulate basic cable
rates pursuant to the 1992 Cable Act (the "Act ") and the Federal Communication Commission
( "FCC ") rules; and
WHEREAS, on or about March 1, 1999, Texas Cable Partners, L.P. ( "TCP "), submitted
to the City an FCC Form 1205 with a proposed schedule of equipment and installation rates
(hereinafter "Form 1205 "); and
WHEREAS, on or about April 20, 1999, TCP submitted to the City a revised Form 1205;
and
WHEREAS, the FCC rules allow the City ninety (90) days to review the proposed
schedule of equipment and installation rates after which time the operator may implement such
rates, subject to a prospective rate reduction and refund if the City subsequently issues a written
decision disapproving any portion of such rates; and
WHEREAS, at the City's request, C2 Consulting Services, Inc. ( "C2 "), has reviewed
TCP's proposed schedule of equipment and installation rates, and based on its review of TCP's
revised Form 1205, C2 submitted its report explaining its analysis, findings and conclusions,
which is attached hereto as Exhibit "A" and incorporated herein for all intents and purposes; and
WHEREAS, a public hearing was held to hear public comments on the proposed
schedule of equipment and installation rates of TCP; and
WHEREAS, the City Council has now concluded its review of TCP's proposed schedule
of equipment and installation rates, and made certain determinations; NOW THEREFORE
BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN,
TEXAS:
n
991028 -2a
0 Section 1: That the City Council hereby adopts and affirms the findings and recitals
set forth in the preamble to this Ordinance.
Section-2: - That the.. City Council having reviewed TCP's proposed schedule of
equipment and installation rates and the report submitted by C2, hereby finds and determines that
TCP's proposed equipment and installation rates with the exception of the "field collection
charge," are reasonable.
Section 3: That TCP is hereby ordered to reduce its Hourly Service Charge for
installation, maintenance and repair of equipment to an amount not to exceed $26.49 per hour,
commencing on the date of adoption of this Ordinance. This Hourly Service Charge rate was
derived by using FCC rules, regulations and instructions for calculating the Hourly Service
Charge as further explained in the report from C2 attached hereto as Exhibit "A." Based upon
this Hourly Service Charge, TCP is further ordered to reduce its equipment and installation rates
to an amount not to exceed the "Consultant Recommended Maximum Permitted Rates" set forth
in "Attachment A" of the C2 report dated May 12, 1999, attached hereto as Exhibit "A" (the
maximum permitted rates "). TCP is hereby further ordered to refund to subscribers, within
forty -five (45) days of the adoption of this Ordinance, the difference between the maximum
permitted rates established herein and the actual charges to the extent that the actual charges
have exceeded such maximum permitted rates, plus interest on such amounts calculated in
accordance with FCC rules. Although the rates established hereby are the maximum permitted
rates, TCP is allowed and encouraged to implement the lower "TCP Amended Proposed
Operator Selected Rates" set forth in Attachment A of the C2 report attached hereto as Exhibit
"A
Section 4: That the City Council hereby finds and determines that, based upon the
report from C2, TCP's proposed "field collection charge" is an unreasonable charge and hereby
rejects such "field collection charge." TCP is hereby ordered to refund to subscribers, within
forty -five (45) days of the adoption of this Ordinance, all amounts collected from subscribers as
"field collection charges," plus interest on such amounts as calculated in accordance with FCC
rules.
Section 5: That the City Council hereby finds and determines that the rates
established hereby are reasonable.
Section 6: That in adopting this Ordinance, the City Council of the City of Baytown
is not approving or acquiescing in any way whatsoever to cost data and/or methodologies not
specifically addressed in this Ordinance. Furthermore, the City Council is not waiving any rights
to which it is entitled.
Section 7: All ordinances or parts of ordinances inconsistent with the terms of this
ordinance are hereby repealed; provided, however, that such repeal shall be only to the extent of
such inconsistency and in all other respects this ordinance shall be cumulative of other
ordinances regulating and governing the subject matter covered by this ordinance.
991028 -2b
® Section 8: If any provision, section, exception, subsection, paragraph, sentence,
clause or phrase of this ordinance or the application of same to any person or the set of
circumstances, shall for any reason be held unconstitutional, void or invalid, such invalidity shall
not affect the validity of the remaining provisions of this ordinance or their application to other
persons or sets of circumstances and to this end all provisions of this ordinance are declared to be
severable.
n
Section 9: Pursuant to the authority granted to the City under Section 76.943(a), Title
47 of the Code of Federal Regulations and Section 54.001 of the Texas Local Government Code,
should TCP fail to comply with any provision of this ordinance, TCP shall be guilty of a
misdemeanor and, upon conviction, shall be punished by a fine not exceeding FIVE HUNDRED
AND NO /100 DOLLARS ($500.00). Each act of violation and each day upon which any such
violation shall occur shall constitute a separate offense.
Section 10: This ordinance shall take effect from and after ten (10) days from its
passage by the City Council. The City Clerk is hereby directed to give notice of this ordinance
to TCP by sending a copy hereof by first -class mail and is further directed to give notice hereof
by causing the caption of this ordinance to be published in the official newspaper of the City of
Baytown at least twice within ten (10) days after passage of this ordinance.
INTRODUCED, READ, and PASSED by the affirmative vote of the City Council of the
City of Baytown, this the 28th day of October, 1999.
ATTEST:
EILEEN P. HALL, City Clerk
APPROVED AS TO FORM:
ACIO RAMIREZ, R City Attorney
PETE C. ALFARO, Mayor
c:k1h202\ Council\ 0rdinances\ SettingmaxHourlySery iceCharge4Equ ipment&InstallationRates
9
ONSULTING SERVICES, INC.
7801 Pencross
Dallas. Texas 75248
May 12, 1999
(972) 726 -7216
(972) 726 -0212 (tax)
Ms. Eugenia Cano Mr. Ron Cox
City Attorney City Manager
City of Alvin City of Friendswood
216 West Sealy Street 910 South Friendswood Drive
Alvin, Texas 77511 Friendswood, Texas 77546 -4856
Mr. Tommy Cones
Ms. Donna Sams
Administrative Assistant
Controller
City of Nassau Bay
City of Baytown
1800 Nasa Road One
2401 Market Street
Nassau Bay, Texas 77058
Baytown, Texas 77522
Ms. Jean Raffetto
The Honorable Einar Goerland
City Secretary
Mayor
City of El Lago
City of Taylor Lake Village
98 Lakeshore Drive
500 Kirby
El Lago, Texas 77586 -6398
Taylor Lake Village, Texas 77586 -5298
Ms. Carol McLemore Mr. Ron Wrobleski
City Manager Assistant to the City Manager
City of La Marque City of League City
1 I I I Bayou 300 West Walker
La Marque, Texas 77568 League City, Texas 77573
Mr. Tom Pedersen
Mr. Ron Wicker
City Secretary
City Manager
City of Texas City
City of Seabrook
1801 9th Avenue North
1700 First Street
Texas City, Texas 77592
Seabrook, Texas 77586
Mr. Don Taylor
Ms. Cheryl Wilson
City Manager
Olson & Olson
City of Dickinson
3485 Three Allen Center
2716 Main Street
333 Clay Street
Dickinson, Texas 77539
Houston, Texas 77002
Mr. Joe Dickson
City Manager
City of Santa Fe
PO Box 950
Santa Fe, Texas
Dear City Representatives:
is C2 Consulting Services, Inc. ( "C2 ") has completed the evaluation of the FCC Form 1205 filed by
Texas Cable Partners LP ( "'I -CP" or the "Company ") with the Cities on or about March 1, 1999.
EXHIBIT A
City Representatives
May 12, 1999
® Page 2
This is TCP's first year to file its proposed changes in equipment monthly lease rates and
installation and maintenance charges. As you recall, the Form 1205 is to be filed once each year,
is to be based on the most recent fiscal year costs /data, and is to be filed simultaneously with the
Form 1240. The Cities have original jurisdiction with respect to the review and regulation of
charges resulting from the Form 1205 computations.
This study does not constitute an examination of the financial condition of TCP or its parent
company. As such, C2 cannot and does not express any position with regard to the accuracy or
validity of the financial information provided by TCP during the course of the analyses.
BACKGROUND
As you recall, TCP took over the operation of the your respective systems in December 1998.
Therefore, the vast majority of the 1998 regulated annual costs were incurred by the prior
operator (TCI).
In compliance with FCC filing requirements, TCP filed a Form 1205 along with its Form 1240
filings, but chose to file on the basis of the TCI's Form 1205 submitted last year (based on a fiscal
year ended December 1997). Therefore, TCP's originally proposed maximum permitted
equipment and installation rates equaled TCI's proposal from 1998.1 TCP's original operator
selected rates also were equal in most cases with the main exception being the monthly lease rates
for non -basic only converters:
1998 OSRs 1999 OSRs
$3.25 $3.49
On or about April 20, 1999, TCP filed an amended filing with the Cities that reflected rates based
on system specific costs for the fiscal year ended December 1998, rather than a nationally derived
TCI filing with 1997 data. The amended filing reflects the following maximum permitted and
operator selected rates:
MPR
OSR
Converter Box (Basic Service Only)
$2.31
$1.55
Converter Box (Non -Basic Service)
$4.86
$3.49
Remotes
$0.37
$0.30
Install - Unwired home
$39.63
$39.50
Install - Prewired
$21.20
$21.00
Install - Additional Connect Initial
$12.36
$12.00
Install - Additional Connect Separate
$19.69
$18.75
Other Install - Relocate Outlet
$18.99
$18.75
Other Install - Upgrade non- addressable
$25.35
$12.95
Other Install - Downgrade non - addressable
$8.33
$6.95
Connect VCR Initial
$6.05
$0.00
Connect VCR Separate
$12.86
$12.85
Field Collection Charge
$13.25
$13.20
Hourly Service Charge
$26.49
$26.49
1
As you recall, TCI implemented its Operator Selected Rates for 1998
on June 1, 1998 and only began
implementation of the Cities' ordered rates in December 1998.
City Representatives
May 12, 1999
Page 3
® ANALYSES OF THE FILINGS
Project Objectives and Activities
The project objectives are three fold:
1. Assessment of the completeness of the filings (both original and amended) with
regard to the information and documentation that must be filed with the Cities.
2. Assessment of the reasonableness of the proposed computations in light of Cities'
prior rate decisions, FCC regulation and recent FCC rulings.
3. Assessment of the reasonableness of the proposed computations in light of the recent
acquisition of the systems by TCP.
Given these objectives, C2 conducted the following project activities:
• Review of the filings to assess the completeness based on the FCC Form instructions
• Review of the filings to identify any issues with respect to the data and/or
methodologies employed by TCP, particularly with respect to the original use of
TCI's 1998 filing information
• Submission of follow -up data requests and subsequent review of TCP's responses
• Review of recent. FCC decisions that may have an impact on TCP's proposed
methodologies or the Cities' alternative actions
• Development of potential alternatives available to the Cities in establishing
maximum permitted equipment and installation rates
Summary of Findings
C2 identified two main issues with respect to TCP's proposed computations of equipment and
installation rates. The issues are:
• The original filing submitted by TCP was not based on the most recent fiscal year data
with respect to regulated activities within the systems.
• The Company continues to propose a Field Collection Charge that results in "double
recovery" of costs.
A. Inappropriate Fiscal Year
As noted above, TCP's original filing was based on TCI's filing submitted to the Cities on or
about March 1, 1998. This filing reflects costs for the fiscal year ended December 1997. The
FCC regulations are clear: the Form 1205 is to be based on the most recent fiscal year prior to the
filing. Given the March 1999 filing date, TCP should have based its Form 1205 on 1998 data.
During the discovery process, C2 requested that the Company provide a Form 1205 that reflected
the system -wide operations within the Cities' franchise areas. Because of the recent transfer,
TCP stated that such data would have to come from TCI.
11
I
City Representatives
May 12, 1999
Page 4
The data that was ultimately provided was based on three of the sample systems selected in TCI's
1999 aggregated filing.2 These systems are:
• Houston
• Houston Bay
• Fort Bend
C2's analysis of these three filings was premised on the extent to which TCI had continued to
incorporate costs that had been identified, in prior analyses, as inappropriate. Such cost
categories included:
• Security devices and repair
• Self Insurance already embedded in programming service rates
• Tap audits
• Disconnects
• Converter Retrieval
Based on C2's analysis of these three system Form 1205s, none of the above costs have been
included by TCI in its 1999 aggregated computations. Therefore, in C2's opinion, the
combination of these three systems is not only reflective of the most recent fiscal year costs for
your respective jurisdictions, but also does not incorporate inappropriate costs to be passed on to
the subscriber.
B. Proposed "Field Collection Charge"
In the instant filing, TCP is apparently proposing to use the HSC to charge for activities related to
"Field Collection." As you recall, during the analysis of TCI's 1998 filing, C2 determined that
the costs incurred for "Field Collection" were also being recovered in other rates. Therefore, any
additional charge for this activity would produce a "double recovery." 3
In C2's opinion, since the Form 1205 analysis is based on the data and computations provided by
TCI, it seems logical to assume that during 1998, TCI continued to recover field collection related
activities in other established rates. Therefore, since the amended Form 1205 is based on
historical information (i.e., TCI's costs), C2 recommends that the field collection charge be
disallowed as a means of "double recovery."
SUMMARY OF RECOMMEDATIONS
Based on the above findings and conclusions, the Cities should consider taking the following
actions:
Establish an Hourly Service Charge of $26.49 to be used in the
2 As you recall, TCI aggregates many of its Form 1205 costs on the basis of Form 1205s that are computed
for forty (40) sample systems. These three systems were selected in the process even though they were
transferred at the end of the year. TCP also provided the actual capital costs related to converters and
remotes for these systems.
3 See C2 Report dated April 29, 1998, pp. I 1 -12
City Representatives
May 12, 1999
Page 5
development of the installation and equipment rates.
2. Adopt installation and equipment rates as shown on Attachment A.
3. Disallow the requested "Field Collection Charge."
C2 appreciates having this opportunity to work with the Cities in review of the Form 1205 rates.
If you have any questions regarding this report or need clarifications as to the recommendations,
please contact Ms. Connie Cannady at (972) 726 -7216.
Very truly yours,
C2 Consulting Services, Inc.
C7
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