How is the Maximum Permitted Rate calculated?
• The Base Rate — The base rate is a rate calculated using current, known cost components, serving as the foundation on which to evaluate inflation impacts, cost changes, projections, and true-up adjustments. When comparing the calculation of the maximum permitted rate to last years filing, the same base rate is used as a starting point. From this common point between rate periods, the cable provider documents additional cost drivers that would impact the new price paid by Basic Cable subscribers. • Inflation Adjustments –This adjustment, typically an increase, accounts for the impacts of simple cost inflation incurred during the current rate period and projected for the coming year. This two-step adjustment for inflation helps to ensure that the rate calculation does not include compounding layers of costs driven by projections: The cable operators calculation must always back out any inflation projections from the prior years filing and insert actual inflation. • True-Up Adjustment
