DOCKET SECTlON BEFORE THE POSTAL RATE COMMISSION WASHINGTON, D.C. 20266-0001 POSTAL RATE AND FEE CHANGES, 1997 I?ECE’IVE,D Ocr 1 ‘i 46 PM‘97 Docket No. R97-1 RESPONSES OF THE UNITED STATES POSTAL SERVICE TO INTERROGATORIES OF THE OFFICE OF THE CONSUMER ADVOCATE AND MOTION FOR LATE ACCEPTANCE (OCAlUSPS-T32-12 THROUGH 16,36, 65,77,126) The United States Postal Service hereby files its responses to the following interrogatories of the Office of the Consumer Advocate: OCAiUSPS-T32-12 through 16 and 36, filed August 15, 1997 (due August 29, 1997); OCA/USPS-T32-65 and 77, filed September 2, 1997(due September OCAIUSPS-T32-126, filed September These interrogatories Service for response. 16, 1997); 10, 1997 (due September 24, 1997). have been redirected from witness Fronk to the Postal Each interrogatory is stated verbatim and is followed by the response, As reflected in the due dates listed above, these responses are long overdue. In some instances (T32-12 through 16, 36, 126), preparation of the responses required identification of and consultation with representatives different Headquarters departments. sometimes took longer than expected. redundant interrogatories from various components Identifying the appropriate of representatives Persons coordinating the responses to requesting the same or similar information were then contacted to ensure an overall coordinated response. In one instance, the original source of information could only be identified by reconstructing the chain of communication hands of witness Fronk (T32-65). which ultimately put the information in the The search was stalled for a time by the absence of one link in the chain who was out with the flu Finally, one interrogatory (T32-77) apparently just fell through the cracks The Postal Service regrets the delay in providing these responses Respectfully submitted, UNITED STATES POSTAL SERVICE By its attorneys: Daniel J. Foucheaux. Jr. Chief Counsel, Ratemaking ‘, ’ .-v / : ; ‘I A,&. L.c;!. i Michael T. Tidwell 475 L’Enfant Plaza West, SW. Washington, D.C. 20260-I 137 October 1, 1997 RESPONSE OF U.S. POSTAL SERVICE TO INTERROGATORIES OF THE OFFICE OF THE CONSUMER ADVOCATE REDIRECTED FROM WITNESS FRONK OCA/USPS-T32-12. Please describe all evidence that exists showrng that households underpay or overpay postage for First-Class mail. a. Submit all documents that relate to this question. b. Describe the Postal Service’s enforcement and auditing procedures for ensuring payment of correct First-Class mail postage. RESPONSE: (a) None (b) Please see responses to OCAIUSPS-25 and 27 RESPONSE OF U.S. POSTAL SERVICE TO INTERROGATORIES OF THE OFFICE OF THE CONSUMER ADVOCATE REDIRECTED FROM WITNESS FRONK OCAIUSPS-T32-13. Please describe all evidence that exists showing that households underpay or overpay postage for the additional ounce rate for Frrst-Class mail. Please especially describe all evidence on the incidence of households affixing an additronal 32 cent stamp to pay the additional ounce rate a. Submit all documents that relate to this question. b. Describe the Postal Service’s enforcement and auditing procedures seeking to ensure payment of correct First-Class mail postage. RESPONSE: (a) None. (b) Please see responses to OCAIUSPS-25 and 27 RESPONSE OF U.S. POSTAL SERVICE TO INTERROGATORIES OF THE OFFICE OF THE CONSUMER ADVOCATE REDIRECTED FROM WITNESS FRONK OCAJJSPS-T32-14. Please describe all evidence that exists showing that households underpay or overpay postage for single-piece cards. Please especially describe all evidence on the incidence of households affixing a 32 cent stamp to pay for single-piece card mailings. a. Submit all documents that relate to this question. b. Describe the Postal Service’s enforcement and auditing procedures seeking to ensure payment of correct First-Class mail postage RESPONSE: (a) None. (b) Please see responses to OCAIUSPS-25 and 27 RESPONSE OF U.S. POSTAL SERVICE TO INTERROGATORIES OF THE OFFICE OF THE CONSUMER ADVOCATE REDIRECTED FROM WITNESS FRONK OCAIUSPS-T32-15. Please describe all evidence that exists showing that households underpay or overpay postage for the nonstandard surcharge for First-Class mail. Submit all documents that relate to this question. Describe the Postal Service’s enforcement and auditing procedures Z: seeking to ensure payment of correct First-Class mail postage. RESPONSE: (a) None. (b) Please see responses to OCAIUSPS-25 and 27 RESPONSE OF U.S. POSTAL SERVICE TO INTERROGATORIES OF THE OFFICE OF THE CONSUMER ADVOCATE REDIRECTED FROM WITNESS FRONK OCAIUSPS-T32-16. Please separately quantify revenues lost and revenues gained by any of the underpayments or overpayments queried about in USPST32-12 through 15 during the most recent fiscal year for which such data is available. If no information is available, please explain why not. RESPONSE: households. None. l-he Postal Service has not had a need for such data for RESPONSE OF U.S. POSTAL SERVICE TO INTERROGATORIES OF THE OFFICE OF THE CONSUMER ADVOCATE REDIRECTED FROM WITNESS FRONK * OCAJJSPS-T32-36. Please refer again to the above-cited portion of the CEM Declslon. Does the Postal Service think that the American household public is not a. honest enough to be trusted with an active role In a modified PRM system such as MPRM (e.g., deliberately using 30 cent stamps on non-barcoded mail)? If the answer to (a) is affirmative, to what proportion of the American b. household public would this apply7 Cite empirical evidence for any affirmative response to (a) or (b). z: Describe all the methods by which an unscrupulous person may alter the mail piece or perform other practices to underpay First-Class postage that would be relevant to the Postal Service’s concerns here. Does the Postal Service have the legal authority to seek to prosecute e. persons who alter mail pieces in order to underpay postage? Please describe. If the answer to (e) is affirmative, does the Postal Service ever seek to f. prosecute such persons? Please explain. RESPONSE: (a)-(c) Answered by witness Fronk. (d) The Postal Service has conducted no analysis of CEM since the conclusion of Docket No MC95-1. underpayment However, the more obvious general methods of of First-Class Mail postage on stamped/metered letters include affixing either no postage, insufficient postage, foreign postage, or forged or facsimile “postage stamps” to domestic mail pieces. They can also include applying insufficient postage via postage meter or applying a wash of meter ink phosphor solution to lower-denomination stamps to avoid facer-canceler kick- out. The Postal Service dose not claim to be aware of all methods by which the unscrupulous among us may be underpaying postage on stamped and metered First-Class Mail (e)-(f) It is not sure what methods of mail piece alteration are being asked about. Ultimately, the decision to pursue cnminal prosecution for short payment of postage would turn on such issues as the amount of underpayment involved, the RESPONSE OF U.S. POSTAL SERVICE TO INTERROGATORIES OF THE OFFICE OF THE CONSUMER ADVOCATE REDIRECTED FROM WITNESS FRONK RESPONSE to OCAfUSPS-T32-36 ability to identify the perpetrator, (continued) the sufficrency of evidence of willful or intentional conduct, the feasibility of alternative administrative and the availability of prosecutorial resources or civil remedies, RESPONSE OF UNITED STATES POSTAL SERVICE TO INTERROGATORIES OF THE OCA REDIRECTED FROM WITNESS FRONK OCA/USPS-T32-65. At page 10 of the report, it is stated that: “Estimates indicate that only 5% of the envelopes enclosed with bills are prepaid.” Please describe the empirical basis for this assertion, including any information the Postal Service gave to the report’s author. RESPONSE: The empirical basis for thus estimate, given by the contractor in the report on the Prepaid Reply Mail (PRM) product concept, is preliminary data from the FY 1996 Household Diary Study, the final version of which is currently under production. The attached tables 116 and 117 are produced by that study. Please note that all figures on the table represent pieces per week and are in hundred thousands (add 5 zeros). Table 116 shows that 37.700,OOO reply envelopes per week were provided by electric, gas, and water companies. Table 117 shows that, of those reply envelopes, 1,900,OOO were prepaid, which is exactly 5% of the total. The electric, gas, and water group of companies was selected for the estimate because the mail pieces sent to households from those groups would be predominantly bills rather than solicitations Almost all of the other categories had greater percentages of prepaid envelopes enclosed in their mailings, but many of them are likely to be solicitations rather than bills. UNYEIWTEO HOUSEHOLDS NO DON’T KNOW/ND )INSYER TOTAL . . . . . 5300 FIRST-CLASS YAlL RECEIVE0 - lND”STRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . FUN GAM COL ERAL BAGE, LEC HONES ELEC. COYPU TRASH TlON EXTER / B”R LET TOTAL YE01 OTHER SURE C&BLE TER CRAFT SER AGEN MINI I&L NOTO* SER PHONE GAS SUN “ICE CY TOR MATER CAL PROF. WI?“. TV REL. PLTS CLUB “ICES co. . . ..I ..I.. 1.1.. . . . . . . . . . . . . . . . . . ..I . . . . . . . . . . . . . . . 11.1. . . . . . . . . . . 11.1. 5300 5300 5300 5300 5300 5300 5300 5300 5300 5300 5300 5300 s3cJo 5300 “.S.P.S, HOUSEHOLD 0,Ll-t” TliiLE 116 FIPST-CLASS NAIL RECEIVED 0~ 10 WAS A RETURN EN”ELOPE/C*RD (EaSED TO FIRST-CLASS NAIL ONLY) STUO” - DIARY - FISCAL “EAR ,996 WITH ADJUSTYENT ENCLOSED FIRST-CLASS Y&IL RECEIVED IND”STT(” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DELI” CD” / L-3, TOTAL “NYE,WTED HO”SEHoLDS “NIEIWTEO PIECES “ElOHTED HOUSEHOLDS VE,G”TEO PIECES TOTAL SEll “,CES STOR AGE 6!1ESd EARCH PHOTO SER GRA “ICES PHEO PHOTO SER “,CES NESS ENGER SER “ICES SEC”!? 1,” SYSTEYS CIA” CIRE (BASE) “ES 0.03 CHlLTDN I(ESEARCH SERVICES Ho. 57.6 APra,L 19.97 0.01 0.10 FACTORS (SEPT. 18. 1995 - SEPT. 1s. 1996, U.S.P.S. KWSEHOLD DIIRY TIBLE 116 F,RST-CLASS MAIL ITECEIVED 10 “IS A RETURN EN”ELOPE,CARD 0 (B&SE0 TO F,RST-CLASS MALL ONLY) “NYEIOHTED HOUSEHOLDS “NYE1OHTED PIECES TOTAL . . . . . 6300 STUD” - 01AR” - FISCAL “Em ,996 “ITH ADJUSTYENT FACTORS (SEPT. HOUSEHOLDS “ElGHTED PIECES ,995 ENCLOSED FIRST-CLASS YA,L RECEIVED INDUSTF!” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .. AUTO SER LIND RLS TOTAL DEPT. DEAL “ICE *UC “Eli STORE MAIL OTHER P”BLl PROYO TIU TION SHER T,DN RANT ER STN. CHANT DISC. OROER STORE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6300 6300 5300 s300 5300 5300 5300 5300 5300 5300 43 WElCHTED 16. 996 100.0 ............ CON SUYER OIST . . . . . 5300 SUPER NAR KETS . . . . . 5300 66 30 996 ~00.0 996 100.0 6 (BASE) loo.0 0. 1.6 0.01 0.14 0.01 0. II 12 100.0 6 100.0 1 11.9 44.: - SEPT. 15. 1996) L1.S.P.S. WiiSEHOLD DiAR” IC 116 ,,LST-CLASS MAIL l?ECEI”EO 0, 10 - “AS A RETWN EN”ELOPE,CAKI (BASED TO FIIST-CLASS “AIL ONL”) UNVEIUITED HOUSEHOLDS LlNIE,GHTED PIECES YElWTED TOTAL 1.1.. 6900 STUD” - Dl*It” - FISCAL CH,L,ON ANSYER RESEARCH SERVICES No. “IT” lOJ”STYENT FACTORS (SEPT. FIRST-CLASS MAIL RECEIVED - INDUSTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,................. REAL TOTAL INSUR EST. IT” NONE” AWE MOOT TOT&L FED ST&TE SOCL. IT 5.e.L LOCAL CHIK BfaKR NKT. co. GAGE GOVT. ER.L ClAL CARD C.U. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I.... . ..I. 5300 5300 smo 5300 5300 5300 5300 5300 5300 5300 5300 HOUSEHOLDS KNOW/NO ,996 18. ENCLOSED NO DON’, “EAR 5746 APRIL 1991 TOT&L YIN” FAC TUIIER . . . . . 5.300 ,995 SEPT. 45. 1996) U.S.P.S. HO”SEHOL0 OIAII” SWO” - 01.17” - FISCAL TABLE (17 FIRST-CLASS YAlL RECEIVED I, DID THE RETURN ENVELOPE/CARD REOUIIIE POSTAGE 0 JCx” &NSWaEO IF 4 lTET”RN ENVELOPE/CARD Y&S ENCLOSED) CEO TO FIRST-CLASS MAIL ONL”) “EAR ,996 WITH AOJUSTYENT FACTORS (SEPT. 18. ,995 - SEPT. 15.1 ,996) FIRST-CLISS MAIL RECEIVED INOUSTR” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . T0T.L SEll “ICES TOTAL . “NYElWTEO WUSEHOLOS “NYEIWTEO PlECES YELGHTEO HO”SEHOLOS WE,GHTEO PIECES (BASE) “AS PRESTAYPEO POSTAGE PAID NEEDED DON’T . . . 367 I 100.0 76, 21.3 100.0 21.3 06 . . . . . ,186 100.0 I12 9.3 14.7 3.1 ELEC. G&S “&TER PWNE co. . . . . . . 366 too.0 33 9.0 4.3 0.0 .I... YE01 C&L 1.1.. 377 loo.0 5:: 2.6 0.5 . 220 loo.0 18 6.7 1.5 0.6 LEI SURE SERV. OTHER PROF. . . . . . . . 23 loo.0 . 32 loo.0 5 20.0 0.6 0.1 . 14 43.1 1.6 h-4 COYPU TEL! REL. CA.BLE TV . . . . . 120 loo.0 5 3.8 0 6 0.1 1.1.. CRAFT SYAN OAFI BAGE/ 7R.S” SER “ICE . . . . . 1, too.0 57.: 0.6 0.2 . . . . s loo.0 14.; 0.2 COL LEC TION AGEN C” . -11.. 6 100~0 EXTER YIN. TOR . . . 6 100-o . . FUN FP.1 HOYE s , BUR IAL PLTS MOTOR CLUB . . . . 2 loo.0 . . . . . . I ,ix.o 0. 5.9 led 26.: 0.3 0.1 A STAYP KHOY/M ANSWER 7.4 1 .o MEAN ST0 DE” ST0 EmOIl SIG”l EACH CELL CONThINS: COUNT “EWICAL PEWZENT H0~IZclNT.L PEKENT CELL PERCENT CHILTON RESEARCH SERVICES No. S7.6 APT(IL 1997 “EIGHTED NUMBERS ARE REPORTED IN HUNOREO THOUSANDS u S.P.S. Ho”SEHoL0 DIARY STUD” - OIIll” FISCAL TIBLE 117 FIRST-CLASS MAIL RECEIVED I, - DID THE RETUIIN ENVELOPE/CARD REOULllE POSTIGE 0 (ONLY ANSWERED IF A RETURN ENVELOPE/CARD WAS ENCLOSED) (BASED TO FIRST-CLASS “AIL ONL”) HOUSEHOLDS “NYEIOHTEO PTECES WEIWTEO HOUSEHOLDS WEIGHTED PIECES (BASE) “AS PREST&YPEO POSTAGE PAID NEEDED DON’T 1.996 YlTH AOJUSTYENT TOTAL . . . . . 6300 FIRST-CLASS MAIL RECEIVED - INDUSTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . DELI” ER”/ RESMESS SECUR EARCH PHOTO PHOTO ENCER TOTAL IT” STOII SER GRA SE@ SE@ SEF! DA” svsVlCES ACE “ICES PHER “ICES “ICES CARE TEYS . . . . . 11.1. . ..I. .I... I.... . . . . . ..I.. . . . . . 6300 5303 5300 6300 5300 5300 5300 5300 357 1 loo.0 llEl5 loo.0 ‘3 “WEIGHTED “EAR OR 112 8.3 14.7 3. I - 3 100.0 - I loo.0 3 0. 0. loo.0 - loo.0 0. tm.0 FACTORS (SEPT 16. NUYBERS ARE 1995 SEPT. IS. 1996) 6 loo.0 - 100.0 0.4 0.1 ,,.A 0.1 A STAYP KNOW/~ ANSWER 20 1.7 JO.6 0.6 YEAN ST0 DE” ST0 ERROR SIWI 1 10.5 0.9 1.20 1.39 0.01 - ,195 loo.0 - 0.06 0.03 0.01 0.02 0.02 0.0, 0.06 3 loo.0 I too.0 0. 1M.O 0. loo.0 0. loo.0 6 loo.0 EACH CELL CONTAINS: COUNT VERTICAL PERCENT HOR1ZONTAL PERCENT CELL PERCENT WILTON RESEAKzH SERVICES No. 57.6 *PT(IL ,997 YEIGHTEO REPORTED IN HUNDRED THOUSANDS -31.c - DIAR” - FISCAL u.S.P.S. HOUSEHOLD DIARY STUD” 11, ‘- ~>IL I(ECEI”E0 ‘C RETURN ENVELOPE/CARD REOUIRE POSTIGE IF A RETURN ENVELOPE/CARD “AS ENCLOSED) IST-CLASS MAIL ONLY) UNYE,GHTEO HOUSEHOLDS “NlElOHTED PIECES “EIGHTED WUSE~OLOS VElGHTED PIECES KNOY/MO ,996 WITH AOJUSTYENT FACTORS (SEPT. 1.9. 1995 - SEPT. 15. ,996) FIRST-CLISS MAIL RECElVEO - lNO”STR” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . AUTO SER LAND RES CON SUPER TOTAL DEPT. NER STORE MAIL OTHER PUBLl PRO,40 TAU 0:;’ :;KE WC SUYER MAR SHER TlON RANT TlON 0157 KETS CHANT OLSC. OROER STORE . . . . . . . . . . . . . . . . . . . . i.... . . . . . ..I.. ..I.. . . . . . . . . . . . . . . . . . . . . 5300 5300 5,300 5300 5300 5300 5300 5300 5300 5300 5300 5300 (BASE) Y&S PRESTAYPED POSTCIGE PAID DON’T TOT&L . . . . . 5300 “EAR OR .NSYER MEIN ST0 DE” ST0 ERROR 111 100.0 SIONC. 54 100.0 225 100.0 4 loo.0 0. loo.0 EACH CELL CONTAINS: COUNT “ERTlCAL PERCENT HORlZONTlL PERCENT CELL PERCENT CHlLTON RESEARCH SERVICES NO. 57.6 APRIL ,997 YEIGHTEO NUMBERS ARE REPORTED IN HUNOREO THOUSPINOS - DIARY FISCAL U.S.P.S. “OUSEMLO OIAR” STUD” TABLE 117 FIRST-CLASS MAIL RECEIVE0 0. 11 - 010 THE RETURN ENVELOPE/CARD REWIRE POSTAGE (ONLY A.NSYERED IF A RETURN ENVELOPE/CARD “AS ENCLOSED) (BASED TO FIPST-CLASS “AIL ONLY) FACTORS (SEPT. 18. 1995 SEPT, 15. ,996) <“USEHOLDS 357 ,oo.o “AS PRESTAYPEO POST&GE PALO I AOJLISTYENT PIECES ~ / WITH HDUSEHDLOS “‘--T?HTEO NEEDED ,996 FIRST-CLASS MAIL RECEIVED - IHDUSTR” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . REAL TOTAL TOTAL CREO BAN)( SECUR TOTAL YAW INSUR EST. 5 & L IT” YONE” ANCE “OR” TOT&L FED STITE SOCL. FlWN IT FAC CllL CARD C.U. BRKR MT. GAGE GOVT. ERAL LOCAL CHAR. TURER CO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 . . . . . . . . . . . ..I. TOTAL . . . . . “NrElGHTEO “EAR I 1 1.64 100.0 802 loo.0 208 loo.0 80 loo.0 s 100.0 320 1oc.o 40 loo.0 87 87 loo.0 IM.0 172 1ocxo 26 loo.0 OR STAW YEAN ST0 DE” ST0 ERROR 67 1.S 100.0 1,s 31 2.1 46.7 0.0 16 1-n 23.4 0.4 3.58 3. IS 0.05 1.47 1 .a0 0.02 357 ,oo.o SIGN. I 1.6. lcm.0 4 2 2.1 6,. 0.1 3.1 3.7 0.1 0.81 1.19 0.01 0.22 0.54 0.01 0.08 0.4, 0.01 so2 loo.0 208 loo.0 6 1.9 9.2 0.2 0.01 0.14 - 80 loo.0 e loo.0 0.32 0.69 0.01 320 loo.0 2 5.4 3.2 0.1 2 0.05 0.2. - 0,09 0.34 0.01 40 loo,0 2 1 8 2.3 1.8 2.3 87 loo.0 0.09 0 34 0.01 - 87 loo.0 3 I .8 4.7 0.1 0.17 0.56 0.01 172 loo.0 0~ 1~2 0.5 0 02 0.18 26 loo.0 E&C” CELL CONTAINS: COUNT VERTICAL PERCENT HoPIZOIlTAL PEllCENT CELL PERCENT CHlLTON RESEARCH SERVICES No. 6746 YEIGHTEO WWERS ARE REPORTED LN HUNDRED THOUSANDS RESPONSE OF U.S. POSTAL SERVICE TO INTERROGATORIES OFFICE OF THE CONSUMER ADVOCATE REDIRECTED FROM WITNESS FRONK OF THE OCAIUSPS-T32-77 How will accounting systems currently in place for ERM be improved for the proposed QBRM, and for the proposed PRM? RESPONSE: The current accounting for prebarcoded the 2-cents per piece rate will be used for QBRM. BRM which qualifies for For PRM, the PRM recipient will perform the accounting, subject to verification and audit by the Postal Service. RESPONSE OF U.S. POSTAL SERVICE TO INTERROGATORIES OCA REDIRECTED FROM WITNESS FRONK OF THE OCAIUSPS-T32-126. When the Postal Service adopts higher postage fees for Frrst-Class Mail, what does it do to ensure that mailers are affixing the correct postage after the new rate goes into effect, other than make educational efforts? Please discuss. RESPONSE: Please see responses to OCA/USPS-25 and 27. CERTIFICATE OF SERVICE I hereby certify that I have this date served the foregoing document upon all participants of record in this proceeding in accordance with section 12 of the Rules of Practice. hnichael T. Tidwell 475 L’Enfant Plaza West, S.W. Washington, D.C. 20260-I 145 October I, 1997
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