February 9, 2004
TOWN OF EASTON, MARYLAND
Cable Rate Case Workshop
Councilmember Maureen Scott-Taylor
Also in attendance were Easton Utilities President and CEO Mr. Hugh Grunden, Vice President of Finance and CFO Mr. George Roberts, Cable & Communications Department Manager Mr. Bill Russell, Director of Corporate Communications Mr. Geoffrey Oxnam and Town Clerk Robert Karge.
The President of the Council called the workshop meeting to order at 6:00 p.m.
WORKSHOP MEETING
Mr. Grunden thanked the Council for their time.
Ms. Jackson-Amis arrived at 6:05 p.m.
Mr. Grunden presented a Power Point Presentation with the following agenda:
Ø Spiraling programming costs is a national issue being addressed by Congress
Ø Since last rate case (2002), programming costs have increased 22.4%
Ø Easton Cable rates have increased at half the rate of national averages.
Ø No “mark-up” on programming.
Ø Easton Cable rates are 30-40% less per channel than other regional providers.
Ø Operating and maintenance costs continue to rise.
Ø Standard rate-making practice.
Ø Pass through changes in programming cost (without markup).
Ø Each year (March 1), rates will change to reflect only changes in programming costs.
Ø Auditable report filed with Town Council.
Ø Other “base rate” costs will be handled through a rate case hearing.
Ø Broadcast Basic remains $9.95
Ø Tier 1 remains $19.95
Ø Tier 2 increases $2.95 to $32.90 (programming only).
Ø Digital remains the same.
Ø Base rates should increase by $3 (discussion with Council).
Ø Increase reconnection charge to $25.
Ø Increase NSF check charge to $25.
Ø Implement an annual programming cost adjustment pass-through.
Ø Since 2002, Tier 2 programming costs have increased by $2.97 per subscriber.
Ø News +17.7%
Ø Variety +19.7%
Ø Sports +31.9%
All but two of the channels have increased in cost.
Mr. Grunden stated that they joined a cooperative to present themselves to the market as a bigger player and buy as much through the coop.
Ms. Scott-Taylor asked how many channels they can negotiate with. There are approximately 15 individual contracts; the rest are bought through national cable television.
Mr. Russell discussed negotiations with individual contracts and penalties incurred by providers.
Mr. Grunden discussed Cable Rate Comparisons.
Ms. Jackson-Amis asked if Easton Utilities lost customers when the rate was increased the last time. Mr. Grunden stated that he does not know if they lost any. He discussed Direct TV being a viable competitor.
Mr. Grunden discussed the advantages of programming cost adjustment.
Ø Timely response to changes in cost.
Ø Fewer rate cases.
Ø Matching costs with changes.
Ø Increase Tier 2 $2.95 to $32.90 (programming only).
Ø Increase reconnection charge to $25 (to make it the same as the other departments).
Ø Increase NSF check charge to $25 (to make it the same as the other departments).
Ø Implement an annual programming cost adjustment pass-through.
Ø Consensus on approach to base rate increase ($3).
Mr. Bond arrived at 6:21 p.m.
Mr. Kehoe arrived at 6:48 p.m.
Ms. Jackson-Amis departed at 6:48 p.m.
Mr. Jensen arrived at 6:55 p.m.
Mrs. Scott-Taylor discussed her concerns with the programming costs adjustment. Mrs. Scott-Taylor asked if Adnet could offset any of the expenses and if they had a recent increase.
Discussion occurred on the Digital Cable service and the number of subscribers.
Continued discussed occurred on:
Ø February 16 Publish public hearing
Ø February 17 Council sets public hearing
Ø February 18 Issue press release
Ø March 1 Public hearing
Ø March 2 Issue press release
Ø March 15 Council vote on resolution
Ø April 1 Bill with new rates for service rendered – May 1
Mr. Ford stated that he is comfortable and encourages public discussion about the PCA. He stated that he would like to have a menu of options that are being considered as part of the Public Hearing presentation.
Mrs. Scott-Taylor stated that if the Program Cost Adjustment is implemented, she would like to see some type of customer education component. She stated that she is not sure the Council should not just have a consensus among them instead of bringing it to the public hearing.
Mr. Jensen and Mrs. Scott-Taylor stated that they are not in favor of the PCA.
Mr. Roberts stated that they can prepare two different alternative scenarios; one that might ask for a little less and anticipate that they come back more frequently than we are under the other scenario. He stated that the costs they can control, they can project accurately how long this will last before they have to come back.
Mr. Wendowski stated he would go along with the consensus of the Council.
ADJOURNMENT
There being no further discussion, the President of the Council adjourned the workshop at 7:23 p.m.
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Town Clerk