DOCKET SECTION
BEFORE THE
POSTAL RATE COMMISSION
WASHINGTON, D.C. 20268-0001
E; c : 1v c 11
Postal Rate and Fee Changes, 1997
NEWSPAPER ASSOCIATION OF AMERICA
WITNESS SHARON CHOWN
ANSWERS TO INTERROGATORIES
OF
II+= NATIONA’ N’-‘JSPAPEWN~N~
February 11,1998
-T1 w1-Q
The Newspaper Association of America hereby provides the answer of witness
Sharon Chown to the interrogatories
of the National Newspaper Association filed on
January 28, 1998. Each interrogatory
A declaration
iS stated verbatim and is followed by the answer.
is attached.
Respectfully submitted,
NRNSPAPERASSOCIATIONOF AMERICA
By:
Robert J. Brinkmann
NEWSPAPERASSXIATION OF AMERICA
529 14th Street, N.W.
Suite 440
Washington, DC.
(202) 6384792
CERTIFICATE
WILEY, REIN 8 FIELDING
1776 K Street, N.W.
Washington, DC 20006-2304
(202) 429-7255
OF SERVICE
I hereby certify that I have this date served the instant document on all
participants of record in this proceeding in accordance with section 12 of the Rules of
February 11,1998
William B. Baker
NEWSPAPER ASSOCIATION OF AMERICA
WITNESS SHARON CHOWN
ANSWERS TO INTERROGATORIES
OF
THE NATIONAL NEWSPAPER ASSOCIATION (NNA/NAA-Tl-l-6)
Please examine Footnote 1 on page 2 of your testimony
NNAINAA-Tl-l .
where it is stated.. .“[l]nstitutional costs incurred to provide a particular function should
be paid by the subclasses of mail that use that function.” Do you consider these
“institutional costs” to be service-related costs? If not, please explain the difference
between your metric and service-related costs.
No. My proposal has nothing to do with ‘service-related
The term “service-related
proceedings
costs.”
costs” has been used in past
to refer to “the fixed delivery costs that could be saved in the
absence of published delivery standards for the preferential classes.”
(Opinion and Recommended Decision, Docket No. R&l-l,1
3057) In
Dockets No. R77-1 and R80-1, the Commission ‘attributed” these setvicerelated costs to the preferential classes of mail that were thought to cause
these costs.
Unlike service-related
cost proposals, I am not proposing to
attribute any institutional costs to particular subclasses of mail.
NEWSPAPER ASSOCIATION OF AMERICA
WITNESS SHARON CHOWN
ANSWERS TO INTERROGATORIES
OF
THE NATIONAL NEWSPAPER ASSOCIATION (NNAINAA-Tl-1-6)
Please state whether you consider weighted attributable
NNAINAA-Tl-2.
costs to be a part of the “direct or indirect postal costs attributable” to a mail class that
the Commission is required to consider under 39 U.S.C. 5 3622 (b)(3). Please explain
your answer fully.
Answer:
My weighted attributable costs are not a substitute for the actual attributable
costs to be recovered from a subclass of mail, as required by 39 U.S.C. § 3622 (b)(3). I
propose weighted attributable costs as a metric for assigning institutional costs only, not
as a new attributiin
Commission
attributable
methodology.
The institutional cost contribution detemined
by the
using this approach would then be added to the actual (unweighted)
costs to arrive at the revenues for a subclass.
UPSINAA-Tl-1,
ADVOINAA-Tl-6(a),
Please see my answers to
and ADVOINAA-Tl-7(d).
‘2
NEWSPAPER ASSOCIATION OF AMERICA
WITNESS SHARON CHOWN
ANSWERS TO INTERROGATORIES
OF
THE NATIONAL NEWSPAPER ASSOCIATION (NNAINAA-Tl-1-6)
If your answer to Interrogatory No. 2 is yes, please state
NNA/NAA-Tl-3.
whether you believe a failure to consider weighted attributable costs as the basis for a
markup could lead the Commission to approving below-cost rates for a subclass with a
small markup.
Not applicable.
that the Commission
costs on/y.
As explained in my response to NNAINAA-Tl-2,
I recommend
use weighted attributable costs for the assignment of institutional
As long as the revenues for a subclass exceed its actual (unweighted)
attributable costs, the subclass will make a positive contribution to the institutional costs
of the Postal Service.
‘3
NEWSPAPER ASSOCIATION OF AMERICA
WITNESS SHARON CHOWN
ANSWERS TO INTERROGATORIES
OF
THE NATIONAL NEWSPAPER ASSOCIATION (NNAINAA-Tl-1-6)
If your answer to Interrogatory No. 3 is yes, please state
NNAINAA-T1-4.
whether you are recommending that weighted attributable costs as you define them
should be considered incremental costs by the Commission.
Not applicable.
Please see my response to NNAfNAA-Tl-2.
NEWSPAPER ASSOCIATION OF AMERICA
WITNESS SHARON CHOWN
ANSWERS TO INTERROGATORIES OF
THE NATIONAL NEWSPAPER ASSOCIATION (NNAJNAA-Tl-1-6)
Please examine the chart attached to this interrogatory and
NNA/NAA-Tld.
labeled “Table 1. Comparison of Attributable Cost and Weighted Attributable Cost.”
Please confirm that the markup proposed in your testimony would result in an increase
in institutional costs for within-county mail from $2.385 million to $3.666 million. If you
do not confirm, please explain why and provide the percentage increase in markup that
you are proposing for within-county and regular rate periodicals.
Answer:
Not confirmed.
I do not propose any specific markups in my direct testimony.
Nor do I propose a specific dollar amount of institutional cost contribution for any
subclass of mail. I simply provide a better metric to which the Commission can apply its
judgment to determine the appropriate institutional cost contributions.
The increase in institutional costs for within-county
mail shown in your chart
results from applying the Postal Service’s proposed markups to my weighted
attributable costs. This is not my recommendation.
Sla.nLu
4.e87Y
Wm.746
Uul
n0.m
6m204
17.qta
1936.085
7,416.m
16406.021
226.761
267.643
4m.m
17.3W.616
2.006.4n
611.666.346
4.666.7w
16.466.0(8
660.462
166,046
060.62?
17.161.6n
68280.085
7.416.826
16.666.021
226.761
267,643
4m.664
17366,616
78~0%
1(u.6%
1022%
46.7%
138.6%
71 3%
1888%
*11.86&346
4.588.70(
16.466.049
6w462
186.046
69g.627
17.161.67*
66.148.668
6.371.468
16,.%,25-l
284.663
327.831
663.687
17.mo.370
1663%
00.4x
4827x
1.343.633
433.166
848
1.237.246
.64.363
6,841
3.664
12,360
-2.038
110.288
128.678
430262
4.166
82.a
104.an
a.69‘
1343.633
433,166
040
2.066,476
410.662
4.166
61.30
331.471
Gm6
12nM6
2.063.4?6
2.305
11.166
-2316
11,.067
122,307
z.6n
3.4x
-17.4Y
7.0%
6.1%
128.461
366.61.
11.m
t.667.121
2.076.074
2.306
11.m
-2216
1t1.057
122.367
16%
3.on
-16~6%
71%
6.8%
128.10,
366.616
11.736
1,%7.121
2,676.6,4
-2m
6.16lA74
c.666246
7.076.624
1.107.1~
126,121
12322%
(.a660
286
2.636.371
2.416.766
6246.426
244226
76.267
320,616
6170,MO
-106w
646%
126.3x
74.2%
22.196
61.0%
%.on
67.m
0
6.764817
3.111.633
6.666.M6
uO7.ys
166.778
1203.702
10266.613
2%
2.636.3,1
2116.766
6.246.426
244,326
76.267
320.616
6.6rn.046
NA
4aB2u
11.7%
682%
202%
.l,lY
23,mb
643%
Cl
6.764.817
3.,,,.033
6.666.060
1207.663
186.778
1.383.762
18.256.613
0
3.13&846
3.881.42,
6.616.016
266.818
113.186
382.646
6,6,,.245
763.327
M6.0*3
26o.m
40266
1A66.266
28.663
176.m
m.470
3.342
%6.8m
3.8%
61,6%
372n
66%
21~6%
631 .I67
362.471
221.1.3
37,623
1.142263
28.668
176.666
86170
3.342
xm.886
66%
667n
43.2%
68%
248%
631.76,
362C71
*21,1.3
37.823
1.142.883
20.666
161.826
62.186
7.582
218.685
31.767
1206.036
1.264264
34.316.672
-31.167
437.614
EA.762
26267.863
~1ciaW
S~3Y
68 6%
T&7%
27.621
662.742
1288.067
Y.316,‘,2
-31.76,
437,614
764.762
24.“7.663
116.X
75 1%
668%
76.7%
27.621
582.742
,.288087
34.3,5.072
-21.521
211.54,
713.224
28.688213
666
1 ou3
Tab, Cosl
‘W-IA
a, 6
‘NM-IE
‘NAbID
73.6%
16x3%
106.on
628%
167.3%
63.6n
666%
71~67.
NEWSPAPER ASSOCIATION OF AMERICA
WITNESS SHARON CHOWN
ANSWERS TO INTERROGATORIES
OF
THE NATIONAL NEWSPAPER ASSOCIATION (NNA/NAA-Tl-1-6)
For the purpose of this interrogatory, please assume: (1) a
NNA/NAA-Tl-6.
law requires that the markup on Class B be equal to one half of the markup on Class A;
(2) Class A’s markup, stated as a percentage of attributable costs, is ‘IO percent; and,
(3) Class A’s markup, stated as a percentage of weighted attributable costs, is 6
percent. What should be the markup on Class B? Please state the markup as a
percentage of attributable cost or as a percentage of weighted attributable cost and
explain your answer.
In your question, if the law defines markup as the percentage of institutional cost
contribution
relative to actual (unweighted)
attributable costs, then Class B’s markup
should be 5 percent of its actual (unweighted)
to DMAINAA-T1-6
attributable costs. See also my answers
and VP-CWINAA-Tl -10.
6
DECLARATION
I, Sharon L. Chown, declare under penalty of perjury that the foregoing
answers are true and correct, to the best of my knowledge, information and
belief.