,
iiECTIVE!USPS-T-30
,BEFORE THE
POSTAL
RATE COMMISSION
WASHINGTON,
DC 20268-0001
Postal
Rate and
Fee Changes,
1997
/-
DIRECT TESTIMONY
OF
DONALD
J. O’HARA
ON BEHALF OF
UNITED STATES
POSTAL
SERVICE
JjL
IO
3 11 FH.
‘97
D’ST?i F1,TCrry:.,i<‘,gr,
5; ~;.<j<C~~;‘la~‘f
,j;;,,,
Docket
No. R97-1
CONTENTS
AUTOBIOGRAPHICAL
PURPOSE
/-
/--
SKETCH
OF TESTIMONY
.........
.............
111
1
.
I. GENERAL
DISCUSSION
A. Criteria
of 39 U.S.C. s,3622(b)
B. Discussion
of Criteria
1. Fairness
and Equity
2. Value of Service
3. cost
4. Effect of Rate Increases
,,
5. Available
Alternatives
6. Degree of Preparation
.............
7. Simplicity
.....................
8. ECSI
......................................
9. Other Factors
...............................
...................................
C. Preferred
Rates
D. Attributable
Cost, Incremental
Cost, and Volume-.Variable
‘Cost
......................
1. The Cost-Floor
Requirement
2. Rate Levels
.................................
...
E. Nlark-ups
and Coverages
After A Reduction
in Measured
Cost
F. Ramsey Prices ....................................
2
2
3
3
4
5
6
7
7
9
10
10
10
11
12
13
16
20
II.
22
22
22
25
26
28
29
29
32
32
32
34
34
36
37
37
38
39
41
RATE LEVELS - MAIL CLASSES
AND SPECIAL
SERVICES
A. First-Class
Mail ...................................
....................................
l.Letters
2. Cards
.....................................
B. Priority
Mail
.....................................
C. Express Mail .....................................
D. Periodicals
......................................
1. Regular
....................................
2. Preferred-Rate
...............................
E. Standard
A Mail ...................................
1. Regular
....................................
2. Nonprofit
...................................
.........................
3. Enhanced
Carrier Route
..................
4. Nonprofit
Enhanced
Carrier Route
F. Standard
E Mail ...................................
1. Parcel Post
.................................
..........................
2. Bound Printed Matter
3. Special
....................................
...........
i ........................
4. Library
‘G. Special
EXHIBITS
.
IExhibit
Fxhibit
IExhibit
Exhibit
Fxhibit
Fxhibit
Exhibit
Services
..__.........................._............._
USPS30A.
Estimated
USPS3OB.
Estimated
USPS-30C.
Proposed
USPS30D.
Proposed
USPS-30E.
Proposed
USPS-30F.
Test-year
USPS30G.
Test-year
.
41
Fiscal Year 1998 Before-rates
Finances
Fiscal Year 1998 After-rates
Finances
Cost Coverages
for Special Services.
Percentage
Changes
in Rates
Percentage
Changes
in Fees
After-rates
Cost Adjustments
After-rates
Volume
Adjustments
ii
---
42
42
43
44
45
46
47
49
AUTOBIOGRAPHICAL
1
SKETCH
2
My name
3
4
since
1981.
5
Department,
6
planning
7
and implementation
8
measurement
9
project.
is Donald
For most
where
process.
of this
During
In the
10
Rate
Commission.
11
testimony
12
Reform
13
for Nonprofit
Periodicals.
14
and Product
Development
I received
15
16
Angeles
in 1971,
17
Rochester,
18
as an Associate
19
Commission
first
time,
1992
previous
appearances
Reform
Earlier
as an Assistant
Professor.
for a National
Productivity
Mail,
I became
Manager
Systems
Department.
Professor
In 1980-81,
on rates
the University
1980
I taught
of Economics
I served
for the Eighties.
111
before
the Postal
I provided
and in Classification
this
from
(TFP)
No. MC95-I),
testimony
until
Agenda
role in the development
I provided
a PhD in Economics
Planning
in the strategic
in proceedings
for First-Class
year,
Service
I moved1 to the reclassification
I (Docket
in the Marketing
1970
Factor
Postal
in the
used
a major
Total
by the
Economist
and analyses
reorganization,
and classifications
and from
a Principal
Service’s
No. MC96-2),
employed
I also played
In Classification
on rates
II (Docket
this
two
I was
been
information
of the Postal
made
I have
period
I produced
system.
I have
J. O’Hara.
and classifications
of Classification
of California
at the
University
(through
on the staff
at Los
of
1976),
of the
and then
President’s
1
r
1
PURPOSE
OF TESTIMONY
2
3
This
presents
4
become
5
coverages,
and the proposed
6
percentage
changes.
7
Service’s
8
Reorganization
9
r--
testimony
standard
practice,
proposed
Service’s
the proposed
proposed
rate levels
rate levels
subclass,
conform
rate levels.
are described
rate and fee increases
For each
in terms
are presented
the testimony
describes
to the rate-making
criteria
As has
of cost
in the
how
form
the
of the
of
Postal
Postal
Act.
My testimony
show
concludes
10
USPS-30B
11
subclass
12
shows
13
USPS30D
and USPS-30E
14
percentage
increase
15
the test-year
16
the Postal
basis
with
the test-year
before
finances
and after
the proposed
cost
show
cost
Exhibits.
of the Postal
the proposed
coverages
or decrease
after-rates
seven
the proposed
and volume
Service
rate changes.
for the various
basis.
Exhibi,ts
Exhibits
Special
rate changes
USPS3OF
adjustments.
USPS30A
and
on a subclass-byExhibit
Services.
USPS-30C
Exhibits
and fee changes
and USPS30G
on a
show
2
1
I. GENERAL
DISCUSSION
2
A. Criteria
of 39 U.S.C.
s.3622(b)
3
The
Postal
Reorganization
Act
criteria
that
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
nine
-7
are to be considered
sets forth,
in section
in determining
3622(b),.
postal
and maintenance
the following
rate and fee levels:
1.
the establishment
schedule;
2.
the value of the mail service
actually
provided
each class
type of mail service to both the sender and the recipient
including,
but not limited to the collection,
mode of
transportation,
and priority
of delivery;
3.
the requirement
that each class of mail bear the direct and
indirect
postal costs attributed
to that class plus. that portion
of all other costs of the Postal Service reasonably
assignable
to such class or type;
4.
the effect of rate increases
upon the general public,
business
mail users, and enterprises
in the private sector of the
economy
engaged
in the delivery
of mail matter other than
letters;
5.
the available
alternative
means of sending
and other mail matter at reasonable
costs.
6.
the degree of preparation
of mail for delivery
into the postal
system
and its effect upon reducing
costs to the Postal
Service.
7.
simplicity
of structure
for the entire schedule
and simple,
identifiable
relationships
between
the rates or fees charged
various
classes of mail for the postal services;
8.
the educational,
cultural,
scientific
the recipient
of mail matter;
and
9.
such
other
factors
as the Commission
of a fair and equitable
and receiving
and informational
may deem
or
letters
value
the
to
appropriate.
.-
1
2
To facilitate
conventional
reference
abbreviated
following
to these
forms
criteria
in subsequent
of the criteria
are often
discussion,
utilizsd,
the
as sho,wn
in the
table:
PRICING
CRITERION
CRITERIA
NUMBER
ABBREVIATED
1
2
3
4
5
6
7
8
9
6
7
8
9
10
11
12
13
14
15
16
FORM
FAIRNESS
AND EQUITY
VALUE OF SERVICE
COST
EFFECT OF RATli INCREASES
AVAILABLE
ALTERNATIVES
DEGREE OF PREIPARATION
SIMPLICITY
ECSI
OTHER FACTORS
.17
B. Diswssion
18
I.
19
Fairness
20
21
proposals
22
They
form
23
other
criteria
24
to the proper
25
these
26
27
Fairness
and Equity
and equity
in this
case,
are fundamental
and they
the foundation
other
balance
have
on which
are considered
and they
among
objectives
been
considered
the more-specific
provide
the sometimes
of the
Postal
throughout
factors
Service’s
its preparation.
iaddressecl
a basis
for arriving
conflicting
directions
in the
at a judgment
indicated
as
by
criteria.
Fairness
E of this
of Criteria
Chapter,
and equity
of which
also play a key role in my discussion,
cost
measure
should
be used
in Sections
in setting
D and
rate and fee
1
levels,
and of how
,2
costing
ilnformation
cost
coverages
provided
should
in this
be adjusted
in response
to the new
case.
3
4
2.
5
Subsection
6
provided
7
mode
8
identifiable
9
referred
‘I 0
of mail.
Value
of Service
3622(b)(Z)
to both
the sender
of transportation,
aspects
A.nother
aspect
declines
and the recipient,
of the service
‘I 2
service
‘13
value
14
demand,
that
15
increasie
in price.
16
higher
17
individual
18
6) and Dr. Musgrave
19
1.
of value
This
the value
The
to price
lower
value
price
are the long-run
(USPS-T-8).
and other
classes
value)
elasticities
elasticities
For convenience
specifically
provided
to which
referred
collection,
of mail
of the service
is the degree
in usage
(in absolute
These
often
actually
mentioning
to different
measured
decline
The
specifically
increases,
is conventionally
of service.
subclasses
provided
of service
is, the percentage
of the mail service
of delivery.
to the intrinsic
in response
of service.
to the value
and priority
to as contributing
11
refers
usage
results
the own-price
mentioned
provided
they
to a class
of the
to as the economic
by the own-price
that
are often
from
elasticity
of
a one percent
elastic:ity,
the
in my discussion
by Dr. Tolley
are collected
of
(USPS-Tin Table
B-
5
T--
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
Table
Long-run
Priority
Express
Mail
-0.771
-1.534
Regular
Periodicals
-0.143
3.
equal
31
summarize
32
possible
33
from
how
-0.168
-0.944
-0.382
-0.598
-0.965
-0.335
-0.362
Matter
Priority
and Express
all others,
USPS-T-6.
requires
that
attributable
the
to that
the provision
an improved
each class
-0.863
Mail,
USPS-T-8;
cost
criterion
the costs
Elasticities
-0.189
-0.289
A Regular
A ECR
Source:
30
Demand
-0.232
Parcel Post
Bound Printed
Special
This
Own-Price
First-Class
Letters
Single-piece
Work-shared
First-Class
Cards
Postal
Private
Standard
Standard
29
34
B-l.
revenues
class.
In Section
of additional
application
of this
from
cost
each
clirss
D of this
information
“cost-floor”
of mail at least
Chapter,
II-I this
requirement
I
case makes
for the revenues
of mail.
The improved
cost
35
measured
volume-variable
36
discussed
in Section
information
costs
E of this
introduced
of different
Chapter,
in this
case also
mail classes
the rate ,levels
affects
to differing
proposed
the
degrees.
by the Postal
As
6
1
Service
2
percentage
3
indicates
4
cost
5
Postail
6
up indices
based
7
the elffect
of rate increases
8
that
9
Commission
10
recognize
changes
rate increases
that
than
Service
this
share
under
will
to review
cost
This
(criterion
under
time,
applying
opportunity
for other
coverage
the methods
underlying
the new
cost
new
the
or mark-
both
in view
parties
the
however,
is appropriate
4) and also
higher
information
is higher
At the same
of mechanically
information.
somewhat
cost
cost
the first
any longer-term
in that
the improved
method.
on mailers
provide
levels,
of volume-variable
far short
on previous
cost
when
the previous
has stopped
case
in relative
are proposed
a subclass’s
Imethods
consider
these
in view
of
of the fact
and the
information
and
implications.
11
?
4.
12
This
13
14
both
criterion
mailers
16
inflation
17
are useful
provides
in the economy
19
considered
20
them
for consideration
competitors
the percentage
of the effect
of the
rate increase
and relative
Postal
relative
to the rate increases
of rate
increases
on
Service.
to the overis
for other
rate of
classes
of mail
indicators.
In developing
18
of Rate Increases
and private-sector
For mailers,
15
21
Effect
the effect
to avoid
unfair
its proposals
in this
of its proposed
price
competition.
case,
the Postal
rate increases
Service
on competitors,
has also
examining
7
1
5.
2
This
Available
criterion
3
means
4
availability
5
competition
6
firms
for periodicals
7
other
media,
8
advertising
Alternatives
considers
of sending
the availability,
and receiving
of similar
letters
services
in the expedited
from
such
radio,
and ,the various
such
delivery
matter.
cost,
mail matter.
providers,
and package
as newspapers,
messages,
and other
other
and advertising
at reasonable
This
and alternate
It may also include
electronic
includes
the
as private-sector
markets
and television,
of alternate
delivery
the availability
for the delivery
alternatives
of
of
for Firsi.-Class
Mail.
9
6.
10
11
This
Degree
criterion
of Preparation
addresses
the degree
to which
the mailer
has prepared
the
,./--12
mail
before
presenting
13
reducing
14
introduced
15
degree
16
directly
17
As a consequence,
this
18
design
subclass.
19
MC95-1,
20
Service
proposed
21
reflected
greater
22
been
postal
it to the Postal
costs.
a significant
of preparation
reflected
within
the practice
the past
number
several
now
Moreover,
Services
“passthroughs”
--
Postal
preparation
Service
much
role at the level
Reform
Reform,
No. MC96-31,
also true
that
differences
of the Postal
more
of rate
(Dockets
rate designs
cost
the
of preparation.
in Classification
Docket
in
has
so that
is now
degrees
an important
recommended
was
of this
discounts,
on costs
differing
of the worksharing
This
the
worksharing
with
plays
and the Commission
previously.
rate cases
and its effects
paid by mail
criterion
and Special
and the effec-t
of additional
by the mailer
in the rates
each
MC96-2,
Over
Service
Service’s
No.
the
Postal
generally
than
had
proposals
8
1
in Parcel
Classification
subsequently
current
Reform
withdrawn,
(Docket
but many
No. MC97-2);
of its basic
that
proposals
Request
was
are re-introduced
in the
case.
It is also worth
5
time,
all else equal,
6
increases.
This
noting
that
the coverage
is true
as the degree
required
for the system
of preparation
to obtain
the
as a whole
increases
same
as well
over
contribution
also
as for an individual
subclass.
For example,
8
9
of 10 cents
for a total
10
$5 billion,
11
these
12
attribiutable
13
worksharing
14
billion
15
percent
16
but leaves
17
worksharing
18
expected
19
all else equal,
20
21
22
23
24
if total
of 150
convert
cost
drop
savings)
(=
cost
percent
needed
institutional
increases,
billion
billion,
a cost
(50 billion
will
takes
unchanged.
the percentage
then
of total
of six cents
pieces
require
If half
that
cost
are
of
per piece
a coverage
overall
a cost
costs
To obtain
costs
as the
system-average
with
per piece,
x $0.04
decline.
cost
each
to breakeven.
attributable
Thus,
pieces,
and institutional
be required
or a 20 percent
Worksharing
and the required
of $10
with
to breakeven
costs
is 100
will
by $2 billion
to $8 billion,
(8 + 5) / 8).
to shrink’
volume
to worksharing,
will
contribution
‘It has
increasing
direction,,
decreases
this latter
attributable
a coverage
pieces
system
the
$5
of 163
out o.f the system
level
of
is attributable
coverage
can be
will
increase,
been suggested
that, over time, improved
cost analysis
should permit an
percentage
of total costs to be attributed.
Working
in the opposite
however,
has been the trend toward
increased
worksharing,
which
the percentage
of costs that are in fact attributable.
It may well be lhat
effect has outweighed
the former.
Similarly,
to maintain
greater-than-average
increase
system-average
4
example
5
cost
9
that
30 percent,
contribution,
cost
500)
which
/700),
a contribution
or a 150
suppose
average
For example,
making
of $1 billion,
percent
worksharing
to $700
coverage
11
contribution
would
12
burdened
will
to increase
suppose
that
one subclass
of $500
million
coverage
(the
reduces
was,
fall to $438
million
initial
costs
with
relative
average).
by a greater-than$500
million
( = (700
of 163 percent.
set equal
to the
system
and other
subclasses
to the
its attributable
rise to 171 percent
average
a
in the above
system
its previous
must
system
as before,
above
its attributable
To maintain
the new
of a subclass
need
for the subclass
is above
the subclass
cost
million.
coverage
10
the coverage
in worksharing
coverage.
is initially
f’urther
its contribution,
If instead
average,.
would
+
its
be unfairly
..with
additional
contribution
requirements.
13
7.
14
This
15
Simplicity
criterion
16
schedule
17
rates
18
the preparation
19
rate schedules
20
detailed
21
these
22
structures
points
as a whole
and fees.
and of simple,
Over time,
with
of bulk-entered
for such
recognition
mailers,
to the desirability
and preparation
identifiable
mail,
the
mail has increased,
may
requirements
in the
acceptable
degree
and it has been
by the
by moving
across
subclasses.
different
and software
of complexity
possible
mailer
toward
rate
between
use of computers
of preparation
be furthered
of simplicity
relationships
the increased
to the degree
simplicity
both
parallel
For the
in the
to give
(criterion
in
6).
rate
individual
more
For
10
1
mailer,
2
rates
however,
remain
simple
rate
as important
schedules
and understandable
relationships
between
as ever.
3
8.
4
ECSI
5
This
criterion
directs
that
6
informational
value
to the
recipient
7
mail.
8
First-Class
9
degree,
10
In the
past,
Mail
the
proposals
Commission
letters,
Standard
conform
the educational,
Regular
cultural,
be considered
has applied
Periodicals,
6 Bound
Printed
to this
practice.
rates
factor
in settirrg
this
The
and
in setting
Standard
Matter.
scientific,
B Special
Postal
for each
rate levels
and,
Service’s
type
of
for
to some
rate-level
11
9.
12
Finally,
13
14
provides
15
Commission
Other
Factors
in addition
to the eight
for the consideration
in setting
rate
specific
of any other
criteria
factors
discussed
above,
deemed
appropriate
are now
governed
provides
that
the
Act
by the
levels.
16
17
C. Preferred
Rates
18
Rate levels
for the
preferred
Reform
Act
19
Reveniue
20
each
21
closely
22
final
Forgone
preferred
rate subclass
corresponding
year
of which
(RFRA).
The
RFRA
is to be determined
commercial
will
rate subclasses
be FY 1999,
subclass.
each
Over
preferred
from
the mark-up
the mark-up
a six-year
1993
for
for the most
phasinlg
rate mark-up
by the
process,
is to rise from
the
11
1
one-twelfth
2
mark-up.
3
the corresponding
The rates
that
the
4
recommendation
are the
5
the commercial
mark-ups.
6
of the phasing
7
that
Postal
Service
“full”
process,
correspond
commercial
mark-up
to one-half
proposes
or Step
6 rates,
for Commission
with
mark-ulps
However,
because
the test-year
the test-year
financial
analysis
to the Postal
Service’s
the commercial
proposed
equal
corresponds
utilizes
Step
to one-half
to Step
the Step
5
5 rates
6 rates.
8
D. Attributable
9
In the past,
10
11
to attributable
12
cost.
13
against
14
somewhat
15
requirement
16
cross-subsidy
17
guidance
18
should
19
attributable
20
21
.J--,,
Cost,
the Commission
cost,
For each
distinct
that
in determining
be distributed
cost
distinct
cost
as the sum
of Section
revenues
how
among
has been
testifies,
measures
“cost
3622(b).
criterion
the subclasses.
used
for both
these
are used.
two
ratio
three
has been
embody
imposes
costs,
the total
In the past,
of these
purposes
For purposes
revenue
‘cost and specific-fixed
the nine criteria
of meeting
Cost
by comparing
criteria
attributable
Second,
the burden
coverage”
These
or exceed
subclasses.
rate levels
of volume-variable
First,
equal
and Volume-Variable
has assessed
considerations.
between
Cost,
the resulting
criteria
As Dr. Panzar
two
defined
subclass,
the nine
Incremental
evaluated
two
a definite
thus
preventing
jointly
provide
revenue
the ratio
any
requirement
of revenue
to
purposes.
are actually
of avoiding
better
served
cross--subsidy,
if
the
12
1
appropriate
2
assessing
the burden
3
comparison
is the
4
especially
5
test
is whether
of meeting
ratio
Sections
measures.
I believe
7
not a major
(departure.
8
attributable
cost
9
for most
subclasses
11
unaffected
the revenue
of revenue
rate
6
judgements
is at least
equal
to incremental
requirement,
to volume-variable
cost.>
For
the appropriate
cost.
See USPS-T-l
1,
I.A and I.B.
In evaluating
10
revenue
this
for individual
is an improvement
This
have
is because,
as a practical
have
required
by the
levels
been very
in setting
inclusion
subclasses,
over
previous
in the past,
matter
small
rate levels
or exclusion
I employ
been
(often
of specific-fixed
cost
the
been
cost
and
specific-fixed
Thus,
to have
these
but it is clearly
variable
similar;
zero).3
are likely
practice,
volume
quite
both
costs
qualitative
largely
costs.
12
I. The
13
14
Cost-Floor
For the cost-floor
‘I 5
to attributable
cost
16
and volume-variable
requirement
in that
cost4
Requirement
of criterion
it incorporates
However,
three,
information
for each
subclass,
incremental
on both
instead
cost
specific-fixed
of simply
is similar
cost
adding
‘I 7
‘I 8
‘I 9
20
*Recognizing
this, the Commission
has specifically
recommended
that the
Postal Service develop
incremental
cost estimates
to allow it to perform
the crosssubsidy
test.
See Opinion
and Recommended
Decision,
Docket No. R94-1,
Appendix
F at paragraph
170.
21
22
23
‘In FY 1996,
Express
Mail was the only subclass
for which speciftc-fixed
constituted
more than a few percentage
points of attributable
cost; in that
specific-fixed
cost made up 19% of attributable
costs.
24
25
26
‘Due to the introduction
of new
first time able to provide
incremental
Postal Service
provided
incremental
costing
methods,
the Postal
cost data for all subclasses.
cost for certain subclasses,
cost
case,
Service is for the
In Fi87-1, the
but the
13
1
to its specific-fixed
2
incremental
3
would
4
incremental
were
cost
cost
change
incorporates
as volume
cost
If revenue
8
there
9
that
10
decreased
(holding
(witness
Postal
subclasses
its current
is the cost
that
cost
at current
unit
volume-variable
level
to zero.
would
,
cost
Thus,
be elilminated
of mail in other
volume,
the
ii’ the subclass
subclasses
constant),
See
Takis).
from
a subclass
in fact
equals
any excess
Service’s
but
as to how
from
the volume
is no cross-subsidy;
the
of its volume-variable
information
of a subclass
discontinued
USPS-T-41
the amount
provision
benefits
or exceeds
of revenue
of that
its incremental
over
subclass
cost,
incrermental
does
cost
not burden
then
means
other
them.
11
,--2. Rate Levels
12
I noted
13
14
subclass,
15
that
with
the previous
Express
Mail,
for which
percentage
points
from
volume-variable
16
differences
between
17
larger
18
9 percent.
19
levels
20
-
above
21
22
23
subclasses.
with
Thus,
respect
For the
attributable
volume-variable
For example,
the choice
explained
in Dr. Panzar’s
---
costing
cost
letters,
more
testimony,
to be useful, such
and Recommended
arise
than
only
one
a few
methods,
for more
the difference
to be used
of the Act becomes
Commission
indicated
its belief that,
available
for all subclasses.
Opinion
‘I, at 102-l 03.
--~
Mail
was
by more
the new
and incremental
concept
there
differed
With
for First-Class
of the cost
methods,
cost
cost.
cost
to the criteria
reasons
costing
in evaluating
and
is about
rate
important.
I believe
information
Decision,
that
the ratio
needed to be
Docket No. R87-
14
1
of revenue
2
purpose.
This
3
this
namely
4
highlights
5
about
6
its value
7
deposited,
8
makers
9
unit
to volume-variable
Iratio,
is perhaps
the ratio
much
clearly
of price
piece
a contribution
volume-variable
to other
costs
any rate-setting
costs,
12
variable
and specific-fixed
13
incremental
14
accurately
15
in response
16
economic
the same
19
cost
whether
cost,
form
costs
form
of the
mailer’s
piece
(or unit
volume-variable
equal
This
an additional
to its price
for this
an equivalent
of an individual
deposit
costs
of
ratlo
decrsion
of mail
revenue);
only
if
once
on the system
to the difference
rates.6
inefficiency,
consequences
This
will
between
on something
(calculated
and thus
price
and
in which
for simplicity
with
previous
on a cost
to result
concept
are two
criteria,
to be 150
that
volume-
of volume-
practice)
in both
by the following
there
othter than
as the sum
of the decisions
tend
on all the non-cost
assumed
cost
its rates
as illustrated
a situation
evaluation
based
in accordance
be constructing
the cost
to those
process
it be attributable
will
reflect
czoverage,
c0st.s
concept
cost,
variable
18
equal
unit
cost
seen by considering
will
imposes
II
Consider
appropriate
to marginal
A mailer
to him or her is at least
this
IS the more
and consequences
to mail.
Therefore,
17
more
the determinants
how
10
cost
or
that
mailers
unfairness
does
not
will
make
and
example.
postal
products,
and hence
percent.
price
deserving
Assume
equals
unit
both
the
that
revenue
having
sarne
for one
20
21
‘Thiis is simply the per-piece
form of the ratio;
marginal
cost equals unit volume-variable
cost.
and
22
23
‘Of course,
if specific-fixed
costs are zero, as has previously
been the case for
many subclasses,
then attributable
costs and volume-variable
costs are identical.
.-
15
P
1
product
the attributable
2
variable
cost
3
variable
cost.’
4
(or incremental)
and that
If both
for the other
products
5
set by applying
6
will
7
an additional
8
additional
9
other
the
be priced
have
150
percent
at $0.30.
unit
cost
this
factor
of both
cost
will
its volume-
below
its volume-
of ~$0.20,
and rates
to volume-variable
products
its users
on the system
above
is 10 percent
volume-variable
product,
impose
is 10 percent
cost
coverage
The users
of either
they
a unit
cost
will
pay
and will
cost,
be equally
$0.20
make
each
treated.
to offset
a $0.10
are
For
the
contribution
to
costs.
10
In contrast,
if rates
11
(or incremelltal)
cost,
12
and the second
product
13
product
14
first
15
additional
16
contribution
17
products
are set by applying
the first
product
will
the coverage
be priced
factor
to attributable
10 percent
higher,
or $0.33.
/--
18
T-‘
19
20
21
22
23
24
25
10 percent
will
still
impose
product
will
be making
unit
while
ratio
received
Rate-setting
$0.20
users
of almost
equal
based
lower,
in additional
a $0.13
This
evaluations
cost
contribution
of the second
2-to-l.
or $0.27.
on the
system,
to other
contribute
seems
to me unfair,
unit
of either
but users
costs
product
on the non-cost
on attributable
An ad’ditional
of the
for each
only
$0.07,
given
a
that
the two
criteria.
(or incremental)
cos:t instead
of volume-
7The discussion
that follows
would be more complicated,
but its conclusions
unchanged,
if both products
had incremental
cost above volume-variable
cost but
by different
percentages.
In fact, for most postal products,
incremental
cost does
exceed volume-variable
cost; for example,
for First-Class
Mail letters incremental
cost is 9% above volume-variable
cost.
However,
there are several
Special
Services
for which the reverse is true; for example,
the incremental
cost for
Certified
Mail is 9% below its volume-variable
cost.
.--
16
1
variable
2
both
3
applications
4
be expanded
5
basis
6
sacrificing
7
cents
8
or 28 cents.
9
Thus,
cost
products
also
has unfortunate
have
where
until
the same
marginal
it is worth
at least
the last
of attributable
10
of revenue
11
individual
is worth
product
while
would
of the second
for the cost-floor
requirement
costs
in the
that
remainder
will
Thus,
has the effect,
that
although
be limited
use of the other
27 cents.’
applications
to volume-variable
subclasses
only
of the first
efficiency;
use of one product
33 cents
cost
to allow
except
unit
for economic
cost,
(or incremental)
applications
in order
implications
have
product
that
worth
are worth
three,
I use in my discussion
will
on the
Iunintentional,
been
of criterion
product
rate-setting
perhaps
to
of
32 (or 31
only
29
it is the ratio
of rate-levels
for
of my testimony.
12
13
E. Mark-ups
14
In this
15
improvements
16
important
17
Bradley
18
100 percent
19
variability.
20
21
22
23
and Coverages
proceeding,
the
in its costing
for cost
(USPS-T-1
volume
segment
Postal
three,
A Reduction
Service
methods.
4) and Brehm
variability
After
has introduced
These
improvements
as described
(USPS-T-21
has been
in Measured
significant
are especially
in the testimonies
), where
replaced
Costs
the previous
by an analysis
of witnesses
assumption
of actual
of
volume
‘This inefficiency
will be larger, the larger is the two products’
price-elasticity
(the same for both in this example,
by the assumed
equal evaluation
for all noncost cri-teria) and the larger the differences
between
incremental
and volumevariable
cost.
17
As a consequence
1
analysis,
of replacing
2
variability
3
variable
declines.
4
revenue
generation
5
cost-coverage
ratios
6
coverage
significantly.
rises
A natural
7
8
developed
9
determining
example
11
coverage
12
introductiol-r
13
Products
14
133
15
mark-up
differently,
must
is now
larger.
question
two
Panel
of the new
A and B each
respectively,
This
the new
possible
I of the table
costing
have
a cost
that
is some
to arrive
costing
at a starting
The revenue
previously
E-l
and the system-average
index,
for
a simple
and (2) a
the
requirement
coverage
at least,
uses
before
but coverages
the use of
point,
Table
for
system-average
to utilize
the situation
that
through
(1) a mark:-up
describes
of 33.3,
cost
the required
way
with
to be volume
of “other”
method.
approaches:
method.
found
to subclasses
means
there
assumptions
costs
amount
be assigned
coverages
under
Service
the total
is whether
and cost
to investigate
percent
of Postal
purposes
rate levels
index.
percentage
Stated
mark-ups
10
is 100,
of 167
percent
and
is 150
percent
or a
of 50 percent.
In Panels
16
the
100 percent-variability
17
measured
cost
18
costs
19
an unchanged
20
is now
formerly
200
II and Ill, a new
for each
costing
product
method
to 25 (leaving
thought
to be volume-variable
revenue
requirement
percent,
or a 100
percent
21
-
of 100,
is introduced
total
system
are shifted
the required
mark-up.
which
cost
to “other
reduces
the
unchanged;
costs”).
sys,tem-average
With
coverage
18
Table
E-l.
Effect of Holding
Mark-up
With Changes
in Measured
a
I. Initial
ii
10
11
12
13
14
15
16
18
19
;;
36
37
38
39
40
41
42
33.3
33.3
66.7
Requirement
55.6
44.4
100.0
100.0
22.2
11.1
33.3
Reduction
in Measured
VolumeVariable
Contricost
bution
Product
E\
B
Total
25.0
25.0
50.0
III. Equal
Costs,
Coverage
58.3
41.7
100.0
233%
167%
200%
In Panel
44
ups for each
45
to -the new
46
percent.
47
these
product.
For example,
system-average
Similarly,
mark-ups,
index
Product
the revenue
from
Product
(100
B’s new
mark-up
generated
.Applied
Mark-up
Index
= Initial
1.17
0.83
1 .oo
1.33
0.67
1.00
index Applied
Coverage
Index
=: Initial
Mark-up
Mark-up
index
Mark-up
133%
67%
100%
122%
78%
100%
mark-up
percent)
from
1.33
0.67
1 .oo
1.11
0.89
1.00
I is used to calculate
A’s
mark-up
1.11
0.89
1 .oo
Coverage
Index
222%
178%
200%
Panel
Mark-up
index
Coverage
Coverage
55.6
44.4
100.0
30.6
19.4
50.0
II, the mark-up
Previous
Index
Constant,
Coverage
Index
67%
33%
50%
Mark-up
Revenue
33.3
16.7
50.0
25.0
25.0
50.0
167%
133%
150%
Previous
Reduction
in Measured
Costs,
VolumeVariable
ContriIcost
bution
Revenue
Product
A
B
Total
43
Inldex
Costs
Situation,
Before Changes in Cost Measurement
VolumeVariable
Contricost
bution
Revenue
Coverage
Mark-up
Product
A
I3
Total
Revenue
II. Equal
$2
24
25
26
27
28
29
30
Index or Coverage
Volume-Variable
new
of 1.33
to get its mark-up
is calculated
Product
index
1.22
0.78
1 .oo
markis applied
of 133
to be 67 percent.
A is 58.3,
compared
With
to 55.6
19
1
in Panel
I, or a rate
2
the new
mark-up
3
rate decrease
A
measured
5
method,
6
distinctly
unequal
7
fairness
and equity.
9
of 4.9
generates
of 6.7
costs
on their
III presents
A’s
10
average
coverage
(200
11
Product
B’s new
coverage
12
coverages,
13
in effect,
14
requirement
in Panel
1).
of the
rates.
a parallel
Product
than
A and B are equally
application
effects
For Product
( = (41.7/44.4)
of Products
I. For example,
percent.
less revenue
percent
a straightforward
Panel
8
increase
calculation
coverage
percent)
hardly
seems
B thus
gets
though
index
of 1 .l 1 is applied
in costing
produces
with
index
from
to the new
of 222
percent.
percent.
With
a
the
consistent
the covelrage
to be 178
hand,
by the chanige
I mark-up
to get its coverage
is determined
even
affected
using
index
I; Product
Thus,
Panel
This
5, on the other
Panel
system-
Similarly,
these
P
15
the
both
revenue
from
each
product
products
get an equal
turns
out to be the same
rate increase
(zero,
since
as in Panel
the revenue
is unchanged).
This
suggests
16
information,
the
17
mark-up
index.
18
revenue
for each
19
(volume
does
20
adjustments
21
from
22
starting
coverage
Since
applying
for setting
index
as before,
not change).
Therefore,
in response
rate
provides
the cost
subclass
the change
point
cost
to me that,
levels
a better
coverage
this
system-average
methods;
one can simply
for developing
new
rates
point
results
than
in the
to unchanged
cost
the
same
rates
is no need for mechanicai
to the higher
in costing
on the new
starting
index
is equivalent
there
based
and rate-levels
cost
coverage
use existing
under
resulting
rates
an increased
as the
revenue
I;
20
--,
1
2
Naturally,
3
for each
4
subc:lasses
5
other
6
increases
7
in their
the new
subclass
by an equal
have
things
costing
been
reflected
methods
percentage.
to propose
coverages
for those
subclasses
that
volume-variable
reduce
The differential
in the Postal
equal,
measured
did not in fact
Service’s
that
reductions
proposals
result
experienced
measured
costs
for different
by a tendency,
in lower-than-average
greater-than-average
rate
reductions
cost.
8
9
F. Ramsey
10
One issue
Prices
that
11
pricing.
12
of thiis approach
13
the effects
of different
14
price:5 that
reduce
15
Postal
16
recognizes
17
factors,
18
19
20
21
22
23
24
25
26
Although
Service
that
generally
the
Postal
to pricing,
arises
Service
it does
pricing
burden
on a breakeven
basis.
not all of which
directs
does
provide
decisions
the excess
the Act
in postal
that
are directed
rate proceedings
not advocate
a useful
of raising
toward
time,
ratemaking
economic
of Ramsey
application
for demonstrating
a sense
the revenue
At the same
postal
a mechanistic
framework
and provides
is that
of direction
needed
the Postal
consider
toward
to operate
the
Service
a variety
of
efficiency.
‘Of course, existing
rates are only the starting
point. In the light of the new
costing
information,
rate levels may need to be considered
afresh against
the
criteria in the Act.
It should be noted, however,
that the existing
rates, when
evaluated
relative to the new costs, do preserve
whatever
trade-offs
between
economic
efficiency
and other objectives
were reflected
in their original
selection.
For example,
if Product
A’s price was below the Ramsey price derived
from the
originai costs, it will also be below the Ramsey price derived from the new costs.
This is because the coverage
index preserves
the relative
positions
of various
prodlucts
in terms of their ratios of price to marginal
cost.
.-
21
1
I make
2
in USPS-T-31
3
rates
4
particular
5
prices
6
levels.
7
to keep the
8
possible,
9
information
10
no formal
In general,
in the direction
Ramsey
rate
was
use of the Ramsey
level
however,
of Ramsey
would
move
one of the many
In this
case,
increase
given
prices
rates
closer
the modest
overall
a major
equal,
close
restraint
effect
by witness
I view
away
in evaluating
increase,
from,
a’verage
the new
of movement
toward
on my conclusions.
a
Ramsey
potential
in reflecting
of
whether
the Postal
to the overall
Bernstein
movement
Therefore,
to, or farther
I considered
the consideration
did not have
developed
to be beneficial.
factors
to exercise
in rate levels,
prices
all else being
for all subclasses
and its desire
prices
rate
Ser,vice’s
desire
where
costing
or away
from
22
1
2
Il.
FiA,TE LEVELS
In the following
3
4
to develop
5
Forgone
6
determined
7
RFRA,
10
rate level
Reform
from
proposals
Act
low,
relatively
AND
SERVICES
how
I have
for the subclasses
(RFRA).
Coverages
for the
and the rate
subclasses
increases
the
to the
preferred-rate
in the appropriate
rate increase
applied
not subject
commercial
mentioned
percentage
narrow
SPECIAL
I discuss
the corresponding
The overall
historically
CLASSES
subsections,
and are simply
8
9
MAIL
nine
criteria
Revenue
subclasses
are
in accormdance
with
the
subsection.
requested
in this
for individual
procee’ding
subclasses
is
also fall within
a
range.
11
--.
12
A. First-Class
13
1. Letters
14
The
Postal
15
Class
16
for the subclass
17
including
18
the addlitional
19
Reply
,20
average
21
22
Mail
fvlail letters.
This
Mail
ounce
corresponds
rate,
is 4.5
of service
a cost
coverage
to an average
For single-piece
increase
and Qualified
increase
int:rinsic
is proposing
as a whole.
a one-cent
Value
both
Service
and a new
Business
rate,
first-ounce
Reply
rate
letters
in the first-ounce
Mail.
of 200
percent
increase
for First-
of c3.3 percent
the increase
is 2.5 percent,
to 33 cents,
no change
of 30 cents
for Prepaid
rate
For work-shared
lettelrs,
in
the
percent.
(criterion
and economic
2) for First-Class
measures.
It benefits
Mail
from
letters
is high
the extensive
in terms
collecticln
of
1
system,
2
travelling
3
against
which
is designed
longer
distances,
inspection
4
that
Mail
indicating
this
9
than
10
three
economy
11
for First-Class
it receives
also
have
economic
years
of rate stability.
and is also below
average
For many
mailers,
the
available
are quite
limited.
In addition
elasticity
Express
and will
is well
price
(criterion
only
below
of demand
be acknowledged
Statutes.
4) is certainly
go into
overall
requested
It is sealed
charge.
but it must
to the Private
This
the
low
by air when
of delivery.
additional
of service,
percent
it .travels
priority
a relatively
rate increase
is 3.2
Mail,
without
value
of the proposed
rate increase
a high
forwarding
may be due in part
The effect
The proposed
letters
a high
elasticity
8
and
and receives
First-Class
(-0.231,
primarily
modest.
effect
after
inflation
more
in the
increase.
alternatives
(criterion
5) to First-Class
Mail
/12
letters
13
Express
14
have few
15
transmitting
16
availability
17
growth
18
households
19
electronic
20
Prepaid
21
letters
22
Statutes,
considerations
practical
of cost
alternatives
in the
number
with
access
payment
Reply
more
Mail
of facsimile
Mail
machines,
to the internet,
Somewhat
will
and affordable
of preparation
and accessibility
letters
is clearly
increased
counterbalancing
have
the effect
for certain
by the mailer
letters
Nevertheless,
in the number
and with
by the Private
mrean that
Mail
and bill payments.
to First-Class
rate category
convenient
The degree
bills,
options.
imposed
to the use of First-Class
correspondence,
of alternatives
to the restrictions
many
mailers
for
the
expanding,
with
of businesses
,availability
this,
of making
and
of
the proposed
First-Class
new
Mail
uses.
and its effect
on reducing
Postal
24
1
Service
2
array
3
Mail
and
4
who
is the
costs
(criterion
of discounts
for mail that
Q,ualified
party
Business
making
In a lbroader
5
6
Reply
Mail
7
participating
8
cost
9
exclusion
6) is reflected
postage,
buih
this
11
Service,
but on the difficulties
12
recently
summarized
13
Envelope
14
and expects
15
to Prepaid
The
16
portion
over
Reply
Mail.
Reply
degree
of clomplexity
18
minimizes
tile
19
additional
convenience
informational
:22
the great
majority
mail,
Mail
impact
of this
to the individual
Mail
is applied
courtesy
Business
Reply
to the Postal
system
that
are most
on the Courtesy
Postal
Service
hopes
reply
mail will
convert
Mail
rates
do add a
71, but do so in a way
complexity
and actually
that
provides
mailer
the Commission
of the business
postage
the
the postage
Service’s
the payment
Indeed,
Prepaid
on the bill if the
the Postal
Decision
(criterion
pays
having
a two-stamp
is now
to the rate schedule
of First-Class
Thus,
makes
No. MC95-1.
and Qualified
Reply
by the recipient,
line item
for which
on who
of what
Prepaid
the sender
through
4 of the Governors’
much
proceedings,
value
that
a separate
of administering
administrative
In recent
:2 1
time
reply
an
Service.
or service.
not hinge
of Docket
that
17
.20
does
on page
Prepaid
product
provides
The
preparation
one can argue
rate of courtesy
by the sender,
reflect
to do so, or implicitly
of the
directly
rates
through
which
and presorted.
to the Postal
explicitly
10
Mail
Mail
of course,
chooses
into the price
from
Reply
either
business
is prebarcoded
payment
sense,
in the rate structure,
has also
and personal
letters
recognized
correspondence
(criterion
the
that
8). and the Postal
constitutes
Service
-
25
proposal
reflects
this
At projected
estimated
6
test-year
after-rates
cost
is s 18,329
incremental
incremental
cost
(criterion
The proposed
5
careful
as well.
million,
revenue
so that
is $33,615
revenue
million
clearly
and
exceeds
31.”
rate level
consideration
volumes,
is fair and equitable
of the Section
3622(b)
(criterion
I);
it reflects
a
criteria.
7
8
2. Cards
9
Service
Mail
lower
Class
11
an average
rate increase
of 5.9
12
piece
the increase
is one cent
13
Prepaid
Reply
14
average
inczrease
cards
ways
17
their
18
elasticity
19
value
21
22
Mail
mirrors
limited
is 7.9
message
Mail
of l(34
letters.
for the subclass
to 2.1 cents,
Business
of service
Reply
capacity
is much
(criterion
Mail
letters,
and lesser
higher
than
percent
This
corresponds
as a whole.
with
a new
Mail.
for First-
percent,
to
For single-
rate of 18 cents
For work-shared
for
cards,
2) for First-Class
although
degree
for letters,
Mail
cards
the
it is somewhat
of privacy.
implying
reduced
At -0.86,
is lower
in many
the percentage
rate increase
for cards
economic
from my Exhibit
Exhibit
USPS-41
is above
USPS-3OB,
B (witness
by
the price
as well.
“For each subclass,
revenue
is taken
(estimated
incremental
cost is taken from
--
coverage
for First-Class
percent
of First-Class
for cards
At 5.9
that
a cost
percent.
value
that
of service
than
and Qualified
The intrinsic
16
20
cards,
is proposing
10
15
_-.
The Postal
average.
and
Takis)
26
1
This
2
a one-cant
3
does
4
the first
overall
5
increase
on mailers
is partly
due to the whole-cent
increase
Fir:st-Class
6
represents
Mail
letter
increase
a larger
rates.
in card
is clearly
The availability
rounding
since
acceptable
of alternatives
,than for First-Class
broader
8
alternatives
mentioned
in the discussion
9
for personal
messages
and Standard
announcements
and other
11
volume
than
im cards
13
Mail
letters,
14
simplicity
16
revenue
17
million
criteria:
(criterion
(A) Mail
which
for First-Class
considerations
million
fact
that
No. R90-1,
this
than
will
the effect
it
be
of this
4).
Mail
5).
cards
is somewhat
In addition
First-Class
can be used
are a more
to the electronic
letters
for many
(can be used
of the sale
significant
portion
of
Mail
of mailer
cards
parallels
preparation
that
for First-Class
(criterion
6) and
after-rates
exceeds
their
volumes,
estimated
the First-Class
incremental
Mail
cost
cards
of $609
3).
The proposed
18
Docket
of letters,
advertising,
test-year
of $1,089
(criterion
of the
rates
7) are also parallel.
At projected
15
19
so that
(criterion
letters
on card
rate;
in letters.
‘Thie rate structure
12
Mail
in view
(criterion
for the single-piece
increase
for First-Class
7
10
percentage
However,
rates
constraint
rate level
it is fair and equitable
reflects
(criterion
a balanced
consideration
of all the relevant
1).
20
21
B. Priority
22
The
Postal
Mail
Service
is proposing
a cost
coverage
of 198
percent
for Priority
-.
27
Mail,
which
coverage
corresponds
and the rate increase
Priority
enjoys
Mail
the same
clearly
priority
5
use of air transportation
6
metropolitan
7
unzoned
8
The
9
to its intrinsic
areas,
elasticity
11
lower
The
7.4
13
in the economy
14
mailers
15
with
16
the
unzoned
rates
19
an understandable
20
rate structure
21
discount,
Delivery
and thus
At the same,
margin
Mail
between
At projected
even
standard
a large
Confirmation
than
re’ceives
hand,
that
the
greater
between
most
system
share
Service
2). It
for the
of its volume.
will
Prior-ity
of First-Class
also contribute
Mail
price
Mail,
indicatrng
a
be further
has seen
test-year
though
above-average,
should
not have
revenue
is still
below
an unacceptable
significant
effect
rate increase,
and incremental
cost,
inflation
means
on
together
that
to competitors.
pounds,
weight-
which
letters,
(criterion
of the collelction
the relatively
rate structure
up to five
will
higher
of service
constitute
the
average,
service
On the other
rate increase,
is not unfair
The Priority
18
22
4).
rate increase
as First-Class
Both
of-service.
as a whole,
the significant
17
proposed
percent
(criterion
value
the convenience
of service.
value
intrinsic
that
of 7.4. percent.
the system
of the two-day
is considerably
economic
12
of delivery
rate packages
value
(-0.77)
has a high
and enjoys
of the
rate increase
are above
in view
two-pound
availability
10
to an average
is relatively
where
much
and distance-based
simplified
relatively
simple
of the volume
structure
by the proposed
little
after-rates
(criterion
7), with
is concentrated,
for heavier
elimination
pieces.
of the
and
The
presort
use.
volumes,
revenue
is $4,353
million
and
28
1
estimated
2
above
incremental
cost
cost
The proposed
3
4
incremental
fair and equlitable
is $2,598
(criterion
rate level
(criterion
million,
so that
revenues
are comfortably
3).
is appropriate
1) to both
in the
mailers
light
of all relevant
criteria;
it is
and competitors.
5
6
C. Express
Mail
7
The
Service
8
percent,
Postal
which
9
Express
10
factors
11
transportation,
12
general
13
tracking
14
well
15
special
16
indicates
1 .O in absolute
an extremely
modest
20
increase,
(criterion
growth
(less than
the
will
value
have
Express
2 percent
Classroom
Periodicals
when
priority,
proposes
intrinsic
extensive
air
not as extensive
from
price-elasticity,
so among
as the
a
at -1 .53,
the subclasses
rate levels.”
and
This
of service.
a modest
Mail’s
should
high
of ii04
percent.
It also benefits
Mail’s
and clearly
small
in FY 1996)
rate increase
coverage
of 3.7
though
Mail.
Express
Service
economic
Given
delivery
and is uniquely
Postal
increase
4).
the proposed
-1.18,
value.
the
low
percent
hand,
cost
2) is very
system,
by First-Class
value,
for which
(criterion
collection
used
Mail
rate increase
the highest
On the other
services
‘I 9
of service
It receives
system
capability.
on mailers
22
value
an Express
to an average
and a significant
The 3.7
“At
absolute
Mail’s
collection
‘I 8
2 1
corresponds
are considered.
above
‘17
is proposing
not
own-price
market
even
have
acceptable
share
and its quite
in the absence
an unfair
elasticity
effect
effect
of a rate
on
also exceeds
1 .O in
is
29
.-.
1
competitors.
2
There
are a number
3
users
(criterion
4
who
now
5
only
be available
6
5).
appear
However,
for the bulk
at a higher
price,
airport,
8
constitutes
Mail,
as provided
9
of preparation
At projected
10
estimated
11
cost
12
test-year
irncremental
by $131
consideration
14
and Express
by.the
Mail,
with
pick-up
Mail
business
users
mailer
these
alternatives
additioinal
servic,e
reduces
(criterion
volumes,
postal
office
costs
or
and
6).
revenue
so that
may
features.
of mail at the post
schedules,
million,
to Express
is: $841
revenues
million
exceed
and
incremental
3).
rate level
of all the relevant
Mail
rate
is $710
(criterion
also
and/or
after-rates
cost
million
The proposed
13
the deposit
available
and small-volume
of Express
though
for in separate
a form
alternatives
for the individuals
to account
For Express
7
of private-sector
is fair and equitable
criteria,
(criterion
including
I),
the effect,s
reflecting
on both
a
competitors
users.
15
16
D. Periodicals
17
1. Regular
The
18
19
Periodicals,
20
Postal
in terms
22
Mail,
is proposing
or an average
The value
21
Service
since
they
rate increase
of service
of intrinsic
service
receive
a cost
(criterion
of 3.5
percent
2) received
characteristics,
much
coverage
percent
for Regular
for the subclass.
by Periodicals
although
less air transportation
of 107
not as high
is moderately
as First-Class
and no collection
system,
high
30
1
and receive
2
have
3
Period#icals
is very
4
the Private
Express
5
otherwise
6
of service.
7
forwarding
a~higher
at no additional
priority
of delivery
low
would
be.
This
.The educational,
Periodicals
has historically
9
this
has been
10
lower
that
considered
in setting
cost
elasticity
Mail,
the elasticity
quite
high
and informational
low
Periodicals
of First-Class
a correspondingly
scientific,
period.
The own-price
act to make
led to relatively
fully
Mail.
than
presumably
indicates
for a shorter
Standard
even
cultural,
8
factor
than
(-0.14),
Statutes
charge
the proposed
for which
less than
ec#onomic
value
coverages
for
it
value
(criterion
for this
Regular
8) of
mail,
and
Periodicals
coveralge.
11
In this
case,
12
to consideration
13
consideration,
14
much
15
the C:ommission
16
was
17
in a rate
18
proposed,
19
coverage
20
however,
of the
the
hiigher
large
21
may
have
22
Periodicals.
in unit
No. R94-1
to test-year
approximately
and any
upward
only
Postal
Rather
nine
adjustment
intensify
Service
contributed
coverage
cost
rate increases.
Applied
increase
proposed
of rate increases
increase
in Docket
157 percent).
The
effect
percentage
would
the
(criterion
Without
for Periodicals
For example,
was
4).
116
costs,
percentage
to reflect
(when
coverage
points
have
the increased
led to
iapproved
by
the system-average
would
higher
due
this
the coverage
percent
this
would
reduced
have
than
resulted
actually
system-average
the problem.
is undertaking
to increases
than
has been further
mechanically
an analysis
in flats
to understand
mail processing
reflecting
the full
costs,
cost
what
factors
especially
increase
for
in rates,
I
31
1
believe
it is appropriate
2
a result
of the additional
3
expected
over
4
1l.B.
approach
5
increases
This
fact
that
smaller
experienced
8
Reform
also taken
was
Non-postal
10
newsstand
11
alternatives
proceeding
14
conform
15
definitions,
16
whether
17
area.
18
understandable
21
million
22
trends
can be reversed
and operational
changes
(witness
for mailers
that
Moden)
to prepare
as
are
at Section
for future
revised
account
under
(criterion
5) include
to which
circulation
of Classification
four.
alternate
different
definitions
is far from
of presort
delivery
publications
Periodicals
the rate paid by a 3-digit
presorted
particular
change
3-digit
will
firms
can utilize
relationships
the estimated
improve
between
and
these
test-year
piece
incremental
(criterion
cost
of $1,601
that
Under
will
3-digit
after-rates
in this
are propsosed
the degree
rates
However,
processed.
area is a “unique
somewhat
at projected
simple.
categories
is actually
(criterion
dispersed
as a result
criterion
mail
that
The
into
geographically
rate increases
rate structure
to the way
This
significant
with
considerably.
Periodicals
Revenue
exceeds
cost
See USPS-T-4
more time
but the degree
varies
13
20
years.
publications
alternatives
sales,
The
19
several
these
deployment
also provides
had recently
12
equipment
the next
7
9
see whether
if necessary.
The
6
to first
no longer
city”
will
the
revised
depend
or some
to which
rate
level
is fair and equitable
on
(other 3-digit
there
are simple,
7).
volumes
million
is $1,689
million,
by a margin
(criterion
which
of $88
3).
proposed
better
1); it has been
32
1
develoiped
2
effect
3
coveraNges
4
why
after
ton users
they
a careful
that
would
to current
have
consideration
result
Periodicals
grown
from
costs,
so rapidly
of all the criteria,
the immediate
pending
taking
into
application
an improved
in the past several
account
the
of previous
cost
understanding
of
years.
5
2. Preferred-Rate
6
The
7
8
Periodicals
9
full
rates,
10
will
apply,
11
results
12
respectlively.”
RFRA requires
each
have
or a cost
with
that
Within
a mark-up
coverage
a mark-up
in rate increases
County,
equal
of 103.5
equal
averaging
Nonprofit,
to one-half
percent.
that
and Classroom
of Regular
Periodicals
For the test-year,
to five-twelfths
that
3.4 percent,
of Regular
3.9 percent,
Step
5 rates
Periodicals;
and 4.8
for
this
percent
.-.
13
E. Standard
14
1. Regular
15
The
16
17
18
‘I 9
20
21
22
23
24
25
A Mail
Regular
Postal
subclass,
In common
Service
which
with
is proposing
results
other
a cost
in an average
Standard
coverage
of 154
rate increase
subclasses,
Regular
percent
of 4.1
for the
percent.
has a relatively
low
“Witness
Kaneer (USPS-T-35)
describes
why, given the difficulties,
in
accuratel,y
measuring
cost for very small subclasses,
applying
Nonprofit
Periodicals
rates to Classroom
mail is appropriate
pending
further
analysis
to develop
an
improved
cost framework
to apply the RFRA mark-ups
to Classroom.
The financial
summary
in my workpapers,
which
relies strictly
on the test-year
cost developed
from reported
FY 1996 cost data, reflects
the fact that this cost is greater
than
after-rates
revenues.
-,
,/--
33
intrinsic
value
of service
transportation,
Service
time
5
mailer
6
elasticity
7
of Enhanced
attempts
frame,
these
in order
8
9
and lack
often
4
(criterion
to satisfy
Route,
The 4.1 percent
small
10
thlat it is only
slightly
11
with
12
targeted
than
average
that
for delivery
of First-Class
letters
of Regular
below
mail
but
that
The price
lower
than
value
of service.
inflation
and will
(criterion
system-average
indicates
by the
requests.
economic
is well
Postal
a specific
delivery
percent
coverage,
within
of these
rate increase
ground
the
and coorclination
an intermediate
the 4.5
While
planning
on the users
below
cost
advance
for delivery,
system.
requests
suggesting
impact
154 percent
mailer
the achievement
is higher
Carrier
to the collection
involve
to facilitate
for Regular
the
of access
typically
an acceptably
2) due to its deferability
4).
have
The fact
increase,
competitors
that
together
are not unfairly
,,---.
by this
increase.
The Regular
13
subclass
is somewhat
14
commercial
messages
15
more
to geographic
16
alternatives
(criterion
17
alternatives
for demographically
18
interest
19
suited
magazines,
and the Enhanced
targeting.
the
Regular
preparation
(criterion
61, with
21
digit
Overall,
however,
22
Enhanced
areas.
Carrier
Route.
some
suited
reason,
advertising
channels,
subclass
subclass
the
but
exist,
and internet
not have
both
of
including
special-
web
degree
of
of
a number
prebarcoded
the same
targeting
is somewhat
availability
all has a substantial
of it being
it does
to demographic
Route
less for Regular,
targeted
television
20
Carrier
For this
5) is somewhat
cable
The mail within
more
sites.
degree
of mailer
and sorted
of preparation
to 5
as
34
1
At projected
2
the subclass
3
(criterion
easily
test-year
after-rates
volumes,
exceeds
its estimated
the
$8,022
incremental
cost
million
revenue
of $5,305
from
million
3).
The proposed
4
5
balances
6
competitors.
rate level
all the relevant
is fair
criteria,
and equitable
including
(criterion
the effects
1); it appropriately
on both
users
and
7
2. Nonprofit
8
Under
9
the
10
mark-up
equal
11
of ‘I 27 percent.
12
to five-twelfths
13
Nonprofit
costs,
14
increalse
is well
15
mitigaition.
RFRA,
the Standard
to one-half
that
A Nonprofit
of Standard
For the test-year,
that
of Standard
it results
above
Step
A Regular
5 rates
A Regular;
in a rate
increase
the system
subclass
will
when
for full
apply,
this
of 15.1
average,
is required
rates,.
with
the RFRA provides
a
or a coverage
a mark-up
mark-up
percent.
to have
is applied
Although
equal
to
this
no mechanism
for
16
3. Enhanced
17
18
The
Route
Postal
Service
is proposing
Carrier
Route
(ECR) subclass,
19
Enhanced
20
rate inicrease.
21
reflecting
22
Carrier
This
a desire
In common
is somewhat
to lower
with
below
the very
Regular,
a cost
the
high
which
coverage
results
the system-wide
cost
intrinsic
coverage
value
of 228
percent
in a 3.2 percent
average
of this
of service
for the
average
irrcrease,
subclass.
(criterion
2) for ECR
35
1
is relatively
2
receives
3
Postal
Service
4
specific
time
5
planning.
For the high-density
6
facilitated
by the
7
The price-elasticity
8
letters,
9
well.
(criterion
ground
2), since
transportation,
frame,
this
well
below
12
the very
13
result
high;
16
newspaper
inserts
17
advertising
message.
18
mailer
19
and the high-density
20
At projected
estimated
22
incremental
preparation,
low
of the ECR subclass,
this
and
are deposited.
value
rate
on mailers
a
is also
A Regular,
the average
its effect
wi~thin
this
mailings
economic
the
coordination,
categories,
of Standard
letters,
limiting
(criterion
concentration,
provide
Also,
6); even
First-Class
of service
increase
(criterion
rate increase
this
cost
by a wide
ways
rate category
as
for ECR is
4).
does
Given
not
is $1,969
(criterion
delivery
high
degree
firms
and
the same
Iof preparation
be line-of-travel
by the
sequenced,
are walk-sequlsnced.
volumes,
million,
of ECR mail is relatively
of delivering1
must
categories
after-rates
margin
alternate
mail has a very
the basic
test-year
5) for users
both
alternative
and saturation
incremental
cost
a relatively
for delivery
of these
that
Where
for its competitors.
due to its geographic
(criterion
than
of alternatives
may
rate
many
for First-Class
competition
15
21
which
indicating
The availability
14
with
coverage
mailer
system,
be deferred.
requests
and saturation
of ECR is higher
cost
in unfair
requires
to the collection
may
mailer
often
the rate of inflation,
high
access
and its delivery
again
regularity
or Periodicals,
11
it lacks
is able to accommodate
Like the increase
10
,,-
low
revenue
so that
3).
is $4,304
revenue!
exceeds
million
and
36
1
While
than
most
that
of the factors
2
lower
actually
3
greater
4
increases
proposed,
5
would
6
rate in Standard
7
movlement
of ECR basic
8
case since
at least
9
Postial
rate increases
around
have
10
on other
the modest
made
it more
In view
of ,this overall
work-shared
13
for ECR satisfies
Also,
rates
rate categories
this
rate,
even
the subclass,
and equity
for ECR
encouraging
5-digit
the
As has been
operational
Moden)
objective
smaller
of
the Automation
mailstream.
(witness
coverage
by imposing
coverage
is an important
and equity
with
within
the fairness
so that
a cost
the range
a lower
the automation
fairness
percent,
widening
the ECR basic
into
indicate
be achieved
thereby
See USPS-T-4
of 3.2
would
only
to design
No. MC95-1,
management.
12
could
average.
below
letters
Docket
above
subclasses,
overall
was
Service
ECR rate increase
this
difficult
Regular
11
considered
goal
at Section
I believe
average
for the more
the rate level
of
ll.A.3.
and the modest
increases
the
highly
proposed
criterion.
14
4. Nonprofit
15
16
Under
17
to have
18
coverage
19
equal
20
Nonprofit
21
Step
22
the
RFRA,
a mark-up
164
‘%ee
percent.
Nonprofit
that
of commercial
the
(witness
Step
RFRA
Route
Enhanced
For the test-year,
and full
are below
Carrier
to one-half
that
ECR costs
USPS-T-36
the
equal
to five-twelfths
5 rates
Enhanced
6 rates
Route
of commercial
Step
5 rates
ECR.
When
are imposed
phasing-period
Moeller)
Carrier
at Section
ECR for full
will
this
apply,
or a
a mark-up
is applied
rate cells
for nonletters,’
and Section
is required
rates,
,with
mark-up
for those
rate-floor
VII.B
subclass
VIII.
to
where
the
37
i-
1
result
is a 4.8
percent
decrease
in average
rates.
2
3
F. Standard
4
1. Parcel
The
5
6
percent,
7
subclass.
it has a low
10
increased
11
system.
12
indicating
Parcel
delivery
a low
this
15
Post (criterion
16
that
17
increase.
18
current
19
affect
and will
4).
Parcel
Post
21
volume
22
uniformly
business
average
undoubtedly
rates,
of 103
percent
of service
transportation.
a’ccess
below
to the collection
1 .O (in absolute
value),
rate increase
is one of the highest
some
on mailers
effect
who
and the need
cost,
there
was
little
been
able to compe1.e
percent
very
rate increase
room
in
use Parcel
to ensure
to mitigate
successfully
will
2);
Due to
increases
have
for the
(criterion
due to cost
and a 10.2
this
at
not adversely
position.
alternatives
shippers.
accessible.
of 10.2
its former
is just
have
competitors
competitive
In one sense,
20
percent
incremental
Post
elasticity
of service.
co’verage
value
ground
enjoys
value
Unfortunately,
covered
Parcel
their
10.2
intrinsic
primarily
it no longer
its own-price
Post cost
rate increase
a low
and uses
economic
proceeding,
revenue
Post exhibits
concerns,
proposed
a Parcel
to an average
priority
Moveover,
14
is proposing
corresponds
security
The
Post
Service
In general,
13
,-
Postal
which
8
9
B Mail
Direct
to Parcel
For individuals,
access
Post
are plentiful,
however,
to competitor’s
these
services
especially
for large-
alternatives
are not
may
be limited
to a
38
1
few
2
have
3
comipetitors’
4
be no practical
locations,
while
increased
retail
substantially
standard
6
estirnated
7
incremental
rates.
cost
(criterion
years,
may
for mailers
to Parcel
services,
charge
in more
vvhose
a premium
remote
numbers
over
locations,
the
there
may
Post.
after-rates
cost
The proposed
8
And
test-year
incremental
and receiving
in recent
alternative
At projected
5
mail sending
is $769
volumes,
million,
revenue
so that
is $783
million
is just
above
revenue
and
3).
rate level
is fair and equitable
(criterion
9
balanced
consideration
of the relevant
criteria
IO
interests
of the diverse
users
Post and its competitors.
of Parcel
and takes
1); it reflects
into
a
consideration
the
11
2. Bound
12
13
14
The
Printed
Postal
Matter
Service
(BPM);
In common
15
16
Matt’er
is relatively
17
-0.34,
or little
18
a moderately
20
percent
21
have
22
this
with
low
high
is proposing
this
results
Parcel
economic
Post,
an acceptable
together
effect
with
2).
value
than
of 152
rate increase
value
On the other
that
percent
of 5 percent.
of service
hand,
for Bound
its own-price
of Standard
for Bound
A Reglular,
Printed
elasticity
is
suggesting
of service.
the 4.5
percent
for BPM is well
on the users
the
coverage
the intrinsic
value)
above
proposed
a cost
in an average
(criterion
slightly
increase
increase,
Matter
less (in absolute
Although
19
Printed
152
system-average
below
of BPM
percent
overall
inflation
(criterion
cost
increase,
coverage,
4).
the
and thus
At the same
indicates
that
5
should
time,
actual
39
1
and potential
competitors
The alternatives
2
of books,
available
3
mailers
4
catalogs
and telephone
5
potential
alternative,
6
such
firms
7
The
Commission
9
consideration
does
12
estimated
13
cost
incremental
(criterion
appropriate
provide
portion
number
and the
(criterion
at this
Postal
of
all least
a
efforts
by
of BPM.
of books
the subclass
For
have
been
mailed
as
:some ECSI
Service
proposal
revenue
is $525
in this
8).
after-rates
volumes,
million;
revenue
is well
iabove
million
and
incremental
3).
The proposed
14
firms
5).
For mailers
targeted
rate levels,
is $348
an alternative.
to be widespread
has given
cost
(critenon
do not appear
an increasing
test-year
somewhat
delivery
accordingly
so as well
At projected
alternate
offerings
of years,
vary
provides
there
service
in setting
proceeding
11
directories,
to develop
targeted.
to BPM users
subclass
although
a period
BPM.
15
the Special
Over
8
10
are not unfairly
balance
rate
level
among
is fair and equitable
all the criteria
(criterion
of Section
1); it reflects
an
3622(b).
16
3. Special
17
The
18
19
Special
20
subclass.
21
22
Postal
Service
subclass;
this
In common
with
for the Special
subclass
is proposing
translates
other
into
a cost
a zero
Standard
is relatively
coverage
percent
average
B subclasses,
low
(criterion
of 13’7 percent
rate
the intrinsic
2).
Its price
for the
increase
for the
value
of service
elasticity
is -0.36,
40
1
near that
2
of service.
3
of Bound
Printed
The zero percent
4
users
5
effective
rate increase
6
following
paragraph.
7
subclass
8
alternatives
of the Special
9
provides
increase
subclass
have
11
account
in setting
12
increase.
13
Library
subclass
coverage
14
Special
subclass
helps
15
with
16
rates,
17
Special.
18
the effective
rate increase
19
Library
to Special
a significant
21
$258
22
cost
by $94
the Special
users
of the
Special
5). but for many
and similar
(criterion
with
the
in the
subcl;sss,
individual
subclass
cost
the
RFRA,
to mitigate
the
rate
RFRA-driven
the BPM
users
holding
zero
taken
rate
the
the zero
percent
increase
for Library.
for Library
increase
will
will
experience
for the
MoIreover,
be above
mail is expected
for Special
into
percent
determines
the rate
mail
has been
directly
of Library
Library
in the Special
coverage
majority
that
mailed
accompanying
increase
rates
matter
81, and this
the
through
the new
to zero
even
Special
to migrate
also
in moving
to
mitigates
from
current
rates.
test-year
and revenue
million
as explained
users,
value
on current
subclass
recordings,
coverage
and the overwhelming
million
effect
also help to mlitigate
business
ECSI value
its cost
At projected
20
an unacceptable
economic
41, and it will
(criterion
sound
subclass
rates
high
limited.
films,
Therefore,
a moderately
have
Library
For many
10
effect,
not
(criterion
for current
are more
Because
suggesting
will
an alternative
The books,
this
Matter,
(criterion
after-rates
is $352
3).
million,
volumes,
so that
estimated
revenue
incremental
exceeds
cost
incremental
is
41
1
2
The proposed
rate
is fair and equitable
level
reflects
(criterion
a careful
consideration
of all the criteria;
it
1).
3
4
4. Library
5
Under
the RFRA,
6
mark-up
7
119
8
five-twelfths
that
9
up on Library
costs
equal
to one-half
percent.
that
this
11
subclass.
Therefore,
12
vast
13
When
14
Mail
15
percent.
majority
be 107
that
percent,
are generally
is required
for full
apply,
with
than
Adra
those
corresponds
mark-
for the Special
rates
will
on what
to an average
to
(USPS-T-38).
recognizes
to mail at Special
coverage
equal
the required
of Witness
the actual
a
or a coverage
a mark-up
corresponding
higher
to have
rates,
in my workpapers
is eligible
account,
which
will
Rates
summary
mail that
into
5 rates
in the testimony
the financial
is taken
subclass
B Special
A Regular.
in rates
of Library
shift
Step
are developed
results
B Library
of Standard
of Standard
However,
will
Standard
For the test-year,
IO
this
the
that
the
do so.
is now
rate increase
Library
of 14
16
17
G. Special
18
Exhibit
Services
USPS-30C
19
the various
Special
20
described
21
have
reviewed
22
they
are consistent
Services.
in USPS-T-39
these
summarizes
The
(witness
testimonies
with
the
Postal
detailed
Needham)
Service’s
development
3622(b)
of these
and USPS-T-40
and the proposed
the Section
proposed
criteria.
fee levels,
fee levels
fee levels
ilwitness
for
is
Plunkett).
and I conclude
I
that
Exhibit
42
USPS-30A
Exhibit
,-
43
USPS-30B
44
Exhibit USPS-30C
Proposed
SPECIAL
Cost Coverages
-,
for Special Services
SERVICES
Post Office Boxes and Caller Service
Certified Mail
,C.O.D.
Insurance
Money Orders
Registered Mail
Stamped Cards
Stamped Envelopes
SE:RVICES ASSIGNED
115%
133%
106%
154%
205%
160%
251"?
13O"h
TO CLASSES
127%
1 14%
Address Correction
Business Reply
Certificates of Mailing
Ficst Class Presort Fees
Standard (B) Special Presort
Parcel Airlift
Peiriodicals Applications
Special Handling
Standard (A) Presort
132%
113%
113%
N/A
129%
102%
113%
OTHER SERVICES
Correction of Mailing Lists
Furnishing Address Changes
Election Boards
Merchandise Return
On--Site Meter Setting
Permit Imprint
Zip-Coding of Mailing Lists
Return Receipts
Restricted Delivery
1249'a
to
124%
128%
130%
113%
118%
1470/o
159%
-,
. ..-
45
Exhibit USPS30D
Proposed
ICLASSIFICATION
Percentage
Changes
in Rates
PERCENT
CHANGE
IFirst Class Mail
Letters
Cards
3.2%
Priority Mail
7.4%
Express
3.7%
Mail
Periodicals
In County
Nonprofit
Classroom
Regular Rate
Standard Mail A
Commercial Regular
Commercial Enhanced
Nonprofit
Nonprofit Enhanced
Standard Mail B
Parcel Post
Bound Printed Matter
Special
Library
5.9%
3.4%
,3.9%
,4.8%
f3.5%
4.1%
:3.2%
15.1%
-4.8%
10.2%
5.0%
0.0%
13.1%
46
Erhiblt
Proposed
SPECIAL
Percent Changes
SERVICES
PERCENT
F’ost Office Boxes and Caller Service
Certified Mail
C.O.D.
Insurance
Money Orders
R,egistered Mail
Stamped Cards
Stamped Envelopes
SERVICES
ASSIGNED
in Special Service
Fees
CHANGE
18%
15%
12%
17%
0%
51%
new fee
16%
TO CLASSES
0%
51%
15%
18%
18%
13%
-1%
221%
18%
AIddress Correction
Business Reply
Clertificates of Mailing
First Class Presort Fees
Standard (B) Special Presort
Parcel Airlift
Periodicals Applications
Special Handling
Standard (A) Presort
OTHER SERVICES
Correction of Mailing Lists
Fulrnishing Address Changes
Boards
Merchandise Return
On-Site Meter Setting
Permit Imprint
Zip-Coding of Mailing Lists
Return Receipts
Restricted Delivery
USPS-30E
18%
to Election
18%
0%
1.5%
18%
17%
32%
0%
47
Exhibit USPS-30F
P
Test ‘Year After-Rates Cost Adiustments
($000’s)
.
Classification
First Class Mail
Single Letters 8 Parcels
Worksharing Letters
Total Letters
Single Cards
Worksharing Cards
Total Cards
Total First Class Mail
Priority Mail
Express Mail
CRA Roll Forward
Total Adjustments
Total Cost
12.500,050
4,021,521
16,521,571
432,970
158,633
591,603
17,113,174
157,789
157,789
-4,540
0
-4,540
153,249
12,657,839
4,021,521
16,679,360
428,430
158,633
587,063
17,266,423
2,068,016
104,840
2,172,856
413,661
4,498
409,163
0
503
0
503
Periodicals
In County
Nonprofit
Classroom
Regular Rate
Total Periodicals
80,554
328,440
12,637
1,563,362
1,984,993
0
0
0
0
0
80,554
328,440
12,637
1,563,362
1,984,993
Standard Mail A
Single Piece
Commercial Regular
Commercial Enhanced
Commercial Total
Nonprofit
Nonprofit Enhanced
Nonprofit Total
Total Standard Mail A
222,080
5,365,333
1,898,382
7,263,715
1,122,147
128,227
1,250,374
8,736,169
-222,080
-223,806
-31,667
,-255,473
-25,538
4,344
-29,882
.-507,435
5141,527
1.866.715
7.008,242
1,096,609
123,883
1,220,492
8,228,734
739,062
329,298
14,548
13,443
753,610
342,741
Mailgrams
Standard Mail B
Parcel Post
Bound Printed Matter
0
48
Exhibit USPS3OF
Cllassification
Special
Library
Total Standard
Free Mail-,Blind,
International
CRA Roll Forward
Total Cost
Mail B
255,068
48,615
12372,043
-698
IO
27,302
254,370
48,625
1,399,345
Hndc&Serv
31,465
0
31,465
1,195,166
0
1,195,166
Mail
Special Services
Registry
Certified
Insurance
COD
Money Orders
Stamped Envelopes
Special IHandling
Post Office Box
Stamped Cards
Other
Total Special Services
TOTAL
Total Adjustments
76,018
326,677
41,224
16,820
145,906
12,186
1,270
589,954
0
155,167
1,365,222
33,053,278
0
-3,865
6,585
0
0
0
0
0
4540
56.144
63.404
-163,137
76,018
322,812
47,809
16,820
145,906
12,1:36
1,2~70
589,954
4,540
211,311
1,428,6:?6
32,890,141
_-
_--
49
Exhibit LISPS30G
Test-Year
Classification
First Class Mail
Single Letters & Parcels
Worksharing
Letters
Total Letters
Single Cards
Worksharing Cards
Total Cards
Total First Class Mail
Priority Mail
Express
Mail
Mailgrams
After-Rates Volume Adjustments
($000’s)
Volume
Forecast
Total Volume
54,413.387
40,993.006
95,406,393
2,476,656
2,463,385
4,940,041
100,346,434
144.591
54,517,802
41,033,182
95,550.984
2,476,656
2,463.385
4,940,041
100,491,025
1,087,829
64,584
1,152,413
63,410
-689
62,721
4,757
0
4,757
Periodicals
In County
Nonprofit
Classroom
Regular Rate
Total Periodicals
901,870
2,161,077
47,452
7,147,574
10,257,973
Standard Mail A
Single Piece
Commercial Regular
Commercial Enhanced
Commercial Total
Nonprofit
Nonprofit Enhanced
Nonprofit Total
Total Standard Mail A
161,574
37,627,554
28,686,181
66,313,735
10,550,968
2,571,283
13,122,251
79397,560
Standard Mail B
Parcel Post
Bound Printed Matter
Total Adjustments
104,415
40,176
144,591
0
0
0
901,870
2,161,077
47,452
7,147,574
10,257,973
-'161,574
0
1
0
1
0
0
0
231,879
561,718
--
-'161,573
377627,555
28,686,181
66,313,736
10,550,968
2,571,283
13,122,251
79,435,987
2,781
13,024
234,660
574,742
50
Exhibit
Classification
Special
Library
Total Standard
Free Mail-Blind,
International
CRA Roll Forward
HndcBServ
Mail
Special Services
Registry
Certiitied
Insulrance
COD
Money Orders
Stamped Envelopes
Special Handling
Post Office Box
Stamped Cards
Other
1.otal Special Services
TOTAL
Total Adjustments
zoo,51 1
28,709
Mail B
USPS-30G
Total Cost
0
19
15,805
56,390
0
1,006,682
0
14,288
293,118
30,600
3,886
236.570
0
-398
0
0
0
460,000
200,511
28,728
1,038.641
56,390
1,006,682
14,288
292,720
30,600
3,686
236,570
460,000
0
0
0
0
578,462
459,602
.1,038,064
0