HomeMy WebLinkAbout18339 ORD - 07/17/1984AN ORDINANCE
AMENDING ORDINANCE NO. 13193 TO PROVIDE A NEW SCHEDULE OF
RATES FOR MONTHLY CABLE TELEVISION SERVICES BY ATHENA
CABLEVISION OF CORPUS CHRISTI, INC.
WHEREAS, on January 10, 1984, Athena Cablevision of Corpus Christi,
Inc. (Athena) filed its request for an increase in basic cable television
service rates pursuant to the rate revision provision set forth in Section 23 of
the franchise granted by the City Council by Ordinance No. 16133; and
WHEREAS, on January 10, 1984, the City Council acknowledged receipt of
Athena's petition for rate revision, authorized the hiring of Touche Ross and
Company as rate consultants, and authorized the Cable Communications Commission
to conduct a special performance evaluation pursuant to Section 28 of the
franchise and to make written recommendation to the City Council prior to the
Council's public hearing on Athena's rate request; and
WHEREAS, the Cable Communications Commission held its public hearing
and special performance evaluation on May 30-31, 1984, and filed its written
recommendation to the City Council on June 20, 1984; and
WHEREAS, on June 26, 1984, the City Council held its public hearing on
Athena's request for an increase in basic service rates pursuant to Section 23
of the franchise ordinance; and
WHEREAS, at such hearing the City Council received and considered the
evidence and comments concerning Athena's investment in the system, Athena's
general financial condition, the cost of rendering services, and other matters
relevant to a determination of proper rates; and
WHEREAS, the City Council finds that based upon clear and convincing
evidence presented to the Cable Communications Commission at its public hearing
and the City Council at its public hearing that the monthly basic
cabletelevision service rates charged by Athena Cablevision of Corpus Christi
should be increased in accordance with the recommendations of the Cable
Communications Commission as contained in its written recommendations to the
City Council, dated June 20, 1984:
NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
CORPUS CHRISTI, TEXAS:
SECTION 1. That the "Monthly Services Rate" portion of Section 1 of
Ordinance No. 13193, passed and approved by the City Council on May 26, 1976, be
and is hereby amended to read as follows:
1®339`
SEP 2 81984
Monthly Basic Service Rate
Customer Class
Residential
First Outlet
Additional Outlet, ea
F.M., ea
Multi -family Residential
First Outlet
Additional Outlet, ea.
F,M., ea
Hotel/Motel/Commercial (non-residential)
First Outlet
Additional Outlet, ea.
F.M., ea
Other
Public Schools
Colleges
Non-profit Hospitals
Municipal Buildings
Rate
$8.55
3.11
2.50
8.55
3.11
2.50
8.55
3.11
3.00
No Charge
No Charge
No Charge
No Charge
SECTION 2. That the remaining provisions of Ordinance No. 13193
remain in effect.
SECTION 3. That the provisions of Ordinance No. 16859 (the converter
rate ordinance) passed and approved by the City Council on February 10, 1982,
remain in effect. That the recommendations of the Cable Communications
Commission contained in its letter dated June 20, 1984, attached hereto as
Exhibit A, is adopted herein by reference.
SECTION 4. That nothing herein shall be construed to alter or amend
the provisions of Ordinance No. 16133 (Athena's franchise ordinance).
SECTION 5. That Athena pays the City 50 percent of the City's
expenses incurred in employing the rate consulting firm of Touche Ross and
Company for this rate case in accordance with Section 230(4) of the franchise.
SECTION 6. If, for any reason, any section, paragraph, subdivision,
clause, phrase, word, or provision of this ordinance shall be held invalid or
unconstitutional by final judgment of a court of competent jurisdiction, it
shall not affect any other section, paragraph, subdivision, clause, phrase,
word, or provision of this ordinance for it is the definite intent of this City
Council that every section, paragraph, subdivision, clause, phrase, word, or
provision hereof be given full force and effect for that purpose.
SECTION 7. Publication shall be made one time in the official
publication of the City of Corpus Christi, by publishing the caption of this
ordinance and the rate schedule set forth in Section 1 of this ordinance.
City of Corpus Christi
June 20, 1984
Mayor and Members of the City Council
City of Corpus Christi
P. 0. Box 9277
Corpus Christi, Texas 78469
Re: Cable Communications Commission's
Recommendation - Request for Rate Increase
of Athena Cablevision of Corpus Christi, Inc.
Dear Mayor and Members of the City Council:
IO
On 10, 1984, Athena Cablevision of Corpus Christi, Inc. (Athena) filed
its request for an increase in basic cable television service rates
pursuant to the rate revision provisions set forth in Section 23 of the
franchise granted by, the City Council by Ordinance No. 16133 passed and
approved on March 25, 1981. On January 18, 1984, the City Council (1)
acknowledged receipt of Athena's petition for rate revision, (2) authorized
the City Manager to hire Touche Ross & Company as rate consultants, (3)
authorized the Cable Communications Commission to conduct a special
performance evaluation pursuant to Section 28 of the franchise and make
written recommendations to the City Council prior to the Council's public
hearing on Athena's rate request, (4) denied Athena's request for rate
deregulation, and (5) tabled Athena's request for approval of an interim
basic service rate increase.
BACKGROUND
Pursuant to the Council's authorization and the provisions of Section 28 of
the franchise, the Cable Communications Commission held its public hearing
and special performance evaluation, beginning Wednesday, May 30, 1984, at
7:30 p.m. in the Bayfront Plaza Convention Center, Room 227. The public
hearing was called to order at 7:40 p.m. with Commissioners Wyatt, Fuller,
Rangel, Viamonte, Etheridge, and Irby present. Commissioner Littleton was
absent. This hearing was publicly announced by newspaper legal notice and
by announcement on at least two channels of Athena's system between the
hours of 7:00 and 9:00 p.m. for five consecutive days preceding the session
as required by the franchise.
PERFORMANCE EVALUATION
Randy Grimes, General Manager of Athena Cablevision of Corpus Christi gave
a report on the performance of Athena in meeting its franchise commitments.
The City staff through Grace McNett and Jay Doegey, and the City
consultant, Touche Ross & Company through Greg Tarasar, commented on the
performance of Athena. The Commission found that Athena has substantially
302 South Shoreline - P.O. Box 9277 - Corpus Christi,TX 78469 (512) 884-3011
City of Corp sti
performed its commitments under the franchise. Particularly noteworthy was
a significant drop in the number of service complaints since November,
1983. However, the Commission noted a lack of significant marketing effort
by Athena in trying to increase subscribership for both basic and pay
services. The carriage of KHTV continues to be a significant problem
because of poor signal quality caused by the present microwave signal relay
system's susceptibility to weather pattern interference.
CONSULTANTS' PRESENTATIONS
Athena's consultant, Frederick Bolte, described the revenue requirement he
felt was necessary to provide the Company with a fair return on investment.
Athena's request is for an increase in basic cable service rates of
$1,180,600 which represents a 32.7% increase over current basic service
revenues. In its request, Athena contends that an even greater increase in
basic service revenue is needed to provide a fair return on investment.
However, Mr. Bolte explained that Athena proposed the smaller increase
because the larger increase would result in unacceptably high rates for the
Corpus Christi market. The last basic service rate increase occurred in
May, 1976 as authorized by Ordinance No. 13193. Converter rates are
established by Ordinance No. 16859, passed in February, 1982 when the cable
system expanded beyond 12 -channel capacity pursuant to Phase I of the
system rebuild and activation, described in Section 22 of the franchise.
Appendix A is a summary comparison of the existing, Athena -proposed, and
the Touche Ross recommended schedule of rates by customer class.
Mr. Bolte explained that Athena proposes a 24% return on equity. He recom-
mended that 90% of Athena's gross value of tangible property, accumulated
depreciation, and operating costs should be allocated to basic cable
television service and 10% to pay service. Mr. Bolte explained that this
allocation is based upon the number of channels used to provide pay TV as a
percentage of 54 -channel capacity system. Athena also proposes to provide
converters to its customers without additional charge so that each customer
would be able to receive all basic service channels without having to
purchase or rent a converter.
The City's consultant, Touche Ross & Company, represented by Greg Tarasar
and Ann Seybolt, reviewed the Touche Ross recommendation. Touche Ross
recommended that Athena be granted an increase in basic service revenues
which would provide an overall rate of return of 13.69% and a 20% return on
equity. Touche Ross also recommended a 70% allocation to basic cable
television service and a 30% allocation to pay service. This recommenda-
tion is based on the average number of subscribers and activated system
channels. Touche Ross also recommended that the present converter rental
system should continue. Mr. Tarasar explained that increasing the monthly
basic rate in order to provide free converters would result in a majority
of the subscribers subsidizing the .converter cost for those who would use
it. Mr. Tarasar also explained that residential and multi -family customer
rates should be the same. Further, each multi -family customer should be
billed at the first outlet rate plus additional outlet charges for
additional hookups within the customer's dwelling unit. Touche Ross also
recommended that hotel/motel customers continue to be charged for one
primary connection and charged the additional outlet rate for each unit
outlet. Mr. Tarasar and Ms. Seybolt pointed out that the Touche Ross
City of Corpt .sti
recommendation represented only a $174,900 decrease from Athena's request
and would provide Athena with a 27.9% increase over current basic service
revenues. They felt that such an increase would provide Athena with a fair
profit on its operations.
Mr. Bolte contended that rate analysis calculations should include an
adjustment for price elasticity which assumes a loss of 1% of subscribers
for each 10% increase in the proposed rate. The City staff, through Mr.
Doegey, contended that an adjustment for price elasticity was not warranted
since the last rate increase occurred in 1976, the quality of service and
type of service had changed substantially from that time, that additional
marketing could have some off -setting effect, and that the record lacked
evidence to support any price elasticity adjustment.
PUBLIC COMMENTS
Five persons in the audience addressed the Cable Commission. Mr. Earl
Aldridge and Mr. Ed Novak stated that they opposed Athena's proposal to
include "free" converters as part of its rate request. They felt that this
was unfair to people who had already purchased converters or owned cable
ready television sets. Mr. Novak added that converters cannot be readily
used by the handicapped. Mrs. George Clark stated religious access
programming should be moved from Channel 10 to another channel so that the
Christian Broadcasting Network could fully occupy the programming time on
Channel 10. Ms. Alice Lopez described how cable reception had improved
greatly in the past year and half, but she complained of a billing problem
and cut-off notice she recently received. Mr. Grimes stated that he would
look into the problem and correct it as necessary. Mr. Lee Bergada
complained of intermittent loss of KHTV signal, particularly at night.
COMMISSION MOTIONS
Commissioner Viamonte moved and Commissioner Fuller seconded that the
Touche Ross recommendation be accepted and recommended to the City Council.
The motion failed by a vote of 2 (Viamonte, Fuller) to 4 (Etheridge,
Rangel, Wyatt, and Irby) after a number of Commissioners expressed the need
for some additional information and a desire to give the consultants for
the company and the City an opportunity to compare methodology and
calculations. Commissioner Etheridge moved that the Commission recommend
to the City Council a $2 rate increase, but the motion failed for lack of a
second. The meeting was recessed and reconvened in Room 226 the next day
at 6:00 p.m. for further discussion. Commissioners Rangel, Wyatt, Irby,
Fuller, and Viamonte were present and Commissioners Etheridge and Littleton
were absent. After additional questions, responses, and statements of
Athena and the City staff and consultants, the public hearing was closed.
Commissioner Viamonte moved and Chairman Irby seconded that the Commission
vote on the recommendations as a package. This motion failed 1 (Viamonte)
to 4 (Fuller, Wyatt, Rangel, and Irby). Commissioner Irby then moved and
Commissioner Wyatt seconded that the Commission accept the City's staff
recommendation concerning the rate of return, i.e., that Athena be granted
an increase in basic service revenues which would provide an overall rate
of return of 13.69% and a 20% return on equity. The motion passed
unanimously.
City of Corp isti
Next, Commissioner Viamonte moved and Commission Rangel seconded that the
Commission accept the City's staff recommendation concerning allocation to
basic service, i.e., that 70% of Athena's gross value of tangible property,
accumulated depreciation, and operating costs should be allocated to basic
cable television service, based on the average number of subscribers and
activated system channels. This motion passed by a vote of 3 (Viamonte,
Wyatt, and Rangel) to 2 (Fuller and Irby).
Commissioner Rangel moved and Commissioner Fuller seconded that the
Commission accept the City's staff recommendation concerning converters,
i.e., that the present converter rental system should continue. This
motion passed unanimously.
Next, Commissioner Wyatt moved and Commissioner Viamonte seconded that the
Commission accept the City's staff recommendation concerning uniformity of
residential and multi -family customer rates and billing of multi -family
customers, i.e., that residential and multi -family customers should be
charged the same rates, and that all multi -family customers should be
billed at the first outlet rate plus additional outlet charges for addi-
tional hookups within each unit. This motion did not pass by a vote of 2
(Viamonte and Wyatt) to 3 (Fuller, Irby, and Rangel). Commissioner
Viamonte then moved and Commissioner Rangel seconded that the maximum
authorized rates for residential and multi -family customers shall be set at
the same levels. This motion passed by a vote of 4 (Viamonte, Fuller,
Irby, and Rangel) to 1 (Wyatt). Commissioner Viamonte then moved and
Commissioner Wyatt seconded that within a multi -family complex, first
outlets shall be charged equally and additional outlets within an
individual unit shall be charged equally. This motion passed unanimously.
Commissioner Viamonte moved and Commissioner Wyatt seconded that the
Commission accept the City's staff recommendations concerning the rates to
be authorized, i.e., that Athena should be authorized to charge the rates
recommended by Touche Ross & Company and the City staff as set forth in
Appendix A. This motion passed unanimously.
Finally, Commissioner Rangel moved and Commissioner Wyatt seconded that the
Commission recommend to the City Council that within one year the
Commission study the price elasticity factor which was not sufficiently
substantiated at the time of this hearing. This motion passed unanimously.
COMMISSION RECOMMENDATIONS
The Cable Communications Commission recommends to the City Council of the
City of Corpus Christi, Texas that:
(1) Athena be granted an increase in basic service revenues which
would provide an overall rate of return of 13.69% and a 20%
return on equity.
(2) Seventy percent of Athena's gross value of tangible property,
accumulated depreciation, and operating costs be allocated to
basic cable television service based on the average number of
subscribers and activated system channels.
City of Corp. sti
(3) The present converter rental system continue.
(4) The maximum authorized rates for residential and multi -family
customers be set at the same level.
(5) Within a multi -family complex, first outlets be charged equally
and additional outlets within an individual unit be charged
equally.
(6) Athena be authorized to charge the following described monthly
rates by customer class.
Residential
First Outlet $8.55
Additional Outlet 3.11
Multi -family
First Outlet 8.55
Additional Outlet 3.11
Hotel/Motel
First Outlet 8.55
Additional Outlet 3.11
Converter Rental 2.50
(7) The Cable Communications Commission be authorized to hold a
special performance evaluation to study within one year the
effect, if any, of price elasticity with respect to any rate
increase by this proceeding.
The meeting adjourned at 10:00 on May 31, 1984.
A copy of the proposed minutes of the above meeting is attached for your
consideration. These minutes will be submitted for approval at the next
meeting of the Cable Communications Commission.
Very truly yours,;
Mary Wya , Chair an Pro Tem
Cable Communications Commission
JD/mb
xc: Edward A. Martin, City Manager
Randy Grimes, General Manager
Athena Cablevision of Corpus Christi, Inc.
That the foregoing ordinance Avas read for t f fi st time and p s d to its
second reading on this the day of j � , , 19 c, by the
following vote:
Luther Jones
Betty N. Turner
David Berlanga, Sr.
Welder Brown
That the foregoing ordinance w read for second time and sed to its
third reading on this the day of , 19 rf , by the
following vote:
Leo Guerrero
Dr. Charles W. Kennedy
Joe McComb
Frank Mendez
Mary Pat Slavik
Luther Jones
Betty N. Turner
David Berlanga, Sr.
Welder Brown
That the fore ogpg ordinance *:s read for th hird time and passed finally
on this the /77A -day of /�� , 198? , by the followin vote:
Leo Guerrero
Dr. Charles W.
Joe McComb
Frank Mendez
Mary Pat Slavik
Kennedy
Luther Jones
Betty N. Turner
David Berlanga, Sr.
Welder Brown
Leo Guerrero
Dr. Charles W. Kennedy
Joe McComb
Frank Mendez
Mary Pat Slavik
PASSED AND APPROVED, this the ITWA- day of
ATTEST:
APPROVED:
DAY OF lr , 19/14:
J. BRUCE AYCOCK, CITY ATTORNEY
By
Ass istar�
MAYOR
THE CI Y OF CORPUS CHRISTI, TEXAS
18.139
STATE OF TEXAS, tss:
County of Nueces. J
PUBLISHER'S AFFIDAVIT
N 33'7
Before me, the undersigned, a Notary Public, this day personally came...._._.______._..
MARGARET RAMAGE who being first duly sworn, according to law. says that he is the
COMMUNITY RELATIONS SUPERVISOR of the Corpus Christi Caller and The Corpus Christi Mmes.
Daily Newspapers published at Corpus Christi, Texas,, in said County and State, and that the publication of
NOTICE OF PASSAGE OF ORDINANCE NO. 18337 AMENDING ORDINANCE NO. 13193
of which the annexed is a true copy, was published in CALLER -TIMES PUBLISHING CO.
on the.54.N.D day of .— .T»y. 19.84.., and once each__day. .__..._..thereafter for r e
consecutive da,. ....................._...._...
_ONE_ .Times.
45.10 MARFARET RAMAGE
Subscribed and sworn to before me this ?3rd .
EDNA KOSTER 11-30-84
of JULY •
19_ 84
ary Public, N1Lec4a County, Texas
rNOTICE OF PASSAGE
OF,,��RRDINP.ICE NO 1833
AMLNDING ORDINANCE NO.
13193 TO PROVIDE A NEW
SCHEDULE OF RATES FOR
MONTHLY CABLE TELEVI-
SION SERVICES BY ATHENA
CABLEVISION OF CORPUS
CHRISTI, INC., PROVIDING
FOR AN EFFECTIVE DATE OF
SEPTEMBER 1, 1984.
Customer Class Rate
Residential
Fast Outlet $8.55
Additional Outlet, ea. 3.11
RAM , ea 2.50
Multi-family Residential
First Outlet S8 55
FAdditional Outlet. ea. 3.11
F M., ea. 2.50
Hotel/Motel/Commercial
(non-residential
First Outlet $8 55
Additional Outlet, ea. 3.11
M.,ea 300
Other
Public School no charge
Colleges no charge
Non-profit Hospitals no
charge
Municipal Buildings no charge',
Was passed and approved
by the City Council of the City
of Corpus Christi, Texas on
the 17th day of July, 1984.
The full text of said ordinance
is available to the public in the
Office of the City Secretary.
-s-Bill G. Read,
City Secretary,
Corpus Christi, Texas