BEFORE THE
POSTAL RATE COMMISSION
WASHINGTON,
D.C. 20268-0001
RECEIVE!)
4 41 Pi ‘97
SEP 2
POST&i“ATT GoMK!;:‘;IGM
OFF,CEG~
IHE SCCHETARY
I
,
POSTAL RATE AND FEE CHANGES, 1997
RESPONSE
TO PRESIDING
~
Docket No. R97-1
OF UNITED STATES POSTAL SERVICE
OFFICERS
INFORMATION
REQUEST INO. 2
(September 2, 1997)
The United States Postal Service hereby provides
Officer’s
Information
stated verbatim
Request
its response
No. 2, issued on August
and <arefollowed
by the answers,
19. 1997.
The questions
with declarations
Respectfully
UNITED
to Presiding
from the witnesses
submitted,
STATES
POSTAL
By its attorneys:
Daniel J. Foucheaux. Jr.
Chief Counsel, Ratemaking
Eric P. Koetting
475 L’Enfant Plaza West, SW.
Washington,
DC. 20260-I 137
(202) 268-2970;
Fax -5402
September 2, 1997
are
SERVICE
Response of United States Postal Service Witness Degen
to Presiding Officer’s information
Request No. 2
Question 1, Before filing the Docket No. R97-1 Request with the ‘Commission,
did
the Postal Service attempt to analyze the reasons why the attributable
costs for
library rate mail have risen so much faster than the costs for special rate mail? If
so, please provide that analysis.
If not, please analyze that question now, and
provide the results of that analysis.
Question
1 Response:
It is my understanding
Library
rate mail since R94-1,
released,
Library
the Postal Service
rate costs
examined
Library
has not conducted
rose from
Over the 1990-l
Attachment
Special
rate by year along with
rise sharply
(Segment
decline
1 shows
(Segment
in 199i
transportation
In response
in 1996,
which
statistics
but return
detail.
in 1990
Library
to the 1993 level by 1996.
segment
of Library
and 1996
implies
rate costs.
that
in 1995,
from
$1 .53 to
for Librarv
and
rate mail
These costs
Transportation
Transportation
The consistency
a decline
we have
is the same as the 1993
and total unit costs
the cost segment
been
in
VVe observe
rate unit costs declined
to the level they had been in 1990.
costs
996.
per piece in 1990 to $1.89
to $1.73
volume
of the increase
to this request
1990-l
of
have only recently
3) are nearly half of the total each year.
14) the next largest
in 1996
$1.24
996 period Special
$1 .31,
costs
the unit costs
any analysis
rate over the period
the unit c:ost declines
processing
for R97-1.
for Library
rate unit costs
has monitored
but since the BY 1996 costs
in preparation
the costs
however,
value.
that the Postal Service
is
costs
of nominal
in real transportation
costs
Response of United States Postal Service Witness Degen
to Presiding Officer’s Information
Request No. 2
which
is consistent
decline
total
with the observed
in proportion
costs
to weight
per piece f-.22)
Most of the remainder
decline
is consistent
decline
and cube.
is caused
in weight
For Special
by a decline
of the decline
and cube, but costs do not
rate nearly harlf the decline
in mail processing
is due to transportation
with the declines
in weight
t-.08).
in
cost (-.09).
Again,
the
and cube, but not in the same
proportion.
We have looked
at the tallies
for Library
This may seem like a lot relative
Classroom,
rate.
which
had 31, however,
and unit cost since tallies
embody
80.4
underlying
and Classroom
proportional
Library
rate costs,
volume
and the nature
should
These tallies
volumes
like Classroom,
In 1995
there are 152 tallies
to other small cal:egories
occur in proportion
like
to volume
to units in time and higher cost categories
If we look at tallies
has 163.2.
to the relative
tallies
correspond
more time per piece.
Library rate.
per dollar of unit cost,
per dollar of unit cost are
in these two classes.
suffer
Our conmclusion is that
from some instability
of the IOCS sampling
Library
procedure.
due to the small
has
Sbnmd
(B) Litmry
Rah Unih GxM
MlOOO
Shr&rd
Pinam (tblmmdr)
wwt
w p*o m-=4
w*i#rl
For cubis fed (pauh)
Weight in pour.9 (-b)
chic M (maunh)
Ml891
Ml992
0.01
0.07
0.55
0.m
0.m
0.M
0.07
O.oJ
0.W
0.06
0.01
0.m
0.38
0.06
0.02
0.m
0.04
1.24
(nainm
FYlaw
0.01
0.05
0.41
0.01
0.05
0.42
0.00
0.M
0.03
O.CO
0.06
0.01
(B) &-m-y
I-1998
dd*n)
Mlw4
FYlW5
Ml806
0.01
0.07
0.63
0.01
0.1%
0 n
0.01
0.M
0.63
0.05
0.m
0.08
0.m
0.08
0.02
0.03
0.07
0.01
0.02
0.W
0.09
0.01
0.m
0.03
0.06
0.01
0.00
0.W
0.02
0.04
0.08
0.m
0.46
a.05
0.02
0.08
O.C4
0.m
0.35
0.E
0.03
0.m
0.u
0.00
1.33
Rm
0.12
0.M
0.07
0.04
0.14
0.E
0,41
0.M
0.04
0,13
0.05
1.43
1.73
1.61
CRA Vdurm
Nlwa
Nlaa1
40.5d7
5&l
14.5
142.162
0.m
40.226
46.6
13.4
117,641
6,TTl
0.01
0.07
0.68
0.00
Sbtbtia
Mlw2
42,im
41.3
13.5
l-93
6.065
O.Cll
0.00
0.4
0.m
0.m
0.w
0.02
0.M
0.10
0.01
0.m
0.30
0.05
0.13
0.07
0.M
0.11
146
1.73
198016S6
Ml683
38,693
U.6
13.5
105.&2
7,657
Ml004
35.F.6
454
13.5
101,476
7.550
Ml995
20.500
36.!8
13.d
71,m
5,3i5
Film6
30,133
271
13.5
54.671
3.762
cortsegment
Ml990
p/1991
s*g. 1
SW.2
sag.3
SW.4
SW.667
seg. 6
SW. 10
sag 11
s9g.12
Sag.13
S.w.14
sop, 15
s*g. 16
sw.1.6
ssp.20
0.01
0.07
0.59
0.00
0.09
0.03
0.03
0.08
0.01
0.00
0.35
0.07
0.03
0.12
0.03
0.01
0.07
0.59
0.00
0.09
0~02
0.03
0.08
0.01
0.00
031
0.66
0.03
0.12
0.08
TotalUnitCat
1.53
1.48
FYI992
0.01
0 08
0.61
0.00
Ml993
FY 1994
FY 1995
FYI846
0~03
0.03
0 08
0.01
0.00
0.30
0.08
0.03
0.13
0.05
0.01
0.08
0.73
0.00
0.11
0.02
0.02
0.08
0.01
0.00
0.28
0.08
0.04
014
0.05
0.01
0.015
0.53
0.00
0.v
0.02
0.02
0.07
0.01
0.00
0.2i
0.041
0.03
0.11
0.04
0.01
0.06
0.50
0.00
0.08
0.02
0.02
0.06
0.01
0.00
0.23
0.04
0.05
0.05
0.08
0.01
0.06
0.50
0.00
0.10
0.02
0.02
0.07
0.01
0.00
0.27
0.04
0.05
0.06
0.08
1 so
1.63
1.32
1.21
1.31
0.09
Con Segment
M IQSO
M lee1
MlSOt
Fy1893
Ml044
Ml995
NW96
Piecr(thouaand8)
Wsightperpiece(ouncn)
W~ghtpcrcutic~oot(poun~)
WeightIn poundr(thouunds)
cubic fad (thourma)
149,433
36.4
10.6
340.248
32,205
153,138
32.2
10.3
306,611
3o.od4
165,152
32.7
10.7
337.175
31,538
164,763
29.5
10.6
x)4.266
20,742
190,667
26.2
10.6
335.802
31,728
217,761
25.4
10.6
34&257
32.706
169,793
X.8
106
319,402
30,169
Response of United States Postal Service Witness Degen
to Presiding Officer’s Information
Request No, 2
Question 2. In Docket R94-1, the Commission
concluded that as the processing
library rate and special rate pieces should be similar, data showing that the
attributable
costs for these two subclasses were similar was not surprising.
Describe significant
differences
in the processing of these two subclasses and
relate those differences
to the variations in reported costs.
Question
2 Response:
It is my understanding
from Special
containerized
that the operating
rate mail, however,
by presort
unit costs.
Special
operations
because
to the extent
level, we would
the identical
difference
the expected
expect
or very similar
difference
is not unreasonable,
ILibrary rate mail
that Special is bulk-entered
Special
or barcode.
in unit costs,
and
rate’ mail to exhibit
rate mail may also enjoy higher productivities
orient the pieces to read the address
to quantify
plan does not segregate
lower
in sortation
pieces allow
keyers to more easily
No studies
have been undertaken
but the average
observed
of
Response of United States Postal Service Witness Degen
to Presiding Officer’s Information
Request No. 2
Question 3. Discuss the extent to which the relatively small volume
mail may reduce the reliability .of the unit cost Information
developed
Service data collection systems.
Response
to Question
Please see my response
of library rate
from Postal
3:
to question
1 and my testimony
in MC96-2
(USPS-CT-2).
DECLARATION
I, Carl G. Degen,
answers
declare
are true and correct,
under penalty
of perjury
that the foregoing
to the best of my knowledge,
and belief.
/
Carl G.
information,
Response of United States Postal Service Witness Adra
to Presiding Officer’s Information Request No. 2
4.
In Docket No. MC96-2. the Postal Service suggested a temporary means
of ameliorating the impact of variations in reported unit costs for a small
volume subclass (Classroom mall) in order to make cost estimates more
reliable over time. Was any consideration given to explorilng the
justification for a similar proposal for library rate mail? If so, please
describe the factors considered.
RESPONSE:
4.
In preparation
reported
for R97-1, I did give consideration
costs for Library mail had on the proposed
traditional
relationship
between
“Classroom-type”
rates, as they changed
Library and Special Standard
felt that the impact could be mitigated
migrate to Special Standard
for most mailers,
and pay the relatively
solution for two reasons.
in Classroom
be adopted
where I understand
for both Classroom
increase
I
I did not adopt a
This is in contrast
that one preferred
Second,
from current Library rates.
to the
rate schedule
Classroorn
could
mailers were
than most Library mail custolmers
be, since they will be able to use the Special Standard
the effective
However,
First, the markup for Library is
and Non-profit.
faced with much larger rate increases
rates.
the
since they will be able to
lower rates.
required to be half of the markup for Special Standard.
situation
to the impact that the
rates and thereby
would
mitigate
DECLARATION
I, Mohammad
Adra. declare
under penalty of perjury that the foregoing
are true and correct, to the best of my knowledge,
information,
/
,
Dated:
and belief.
J/
.-J b&-
,’
answers
CERTIFICATE
OF SERVICE
I hereby certify that I have this day served the foregoing
participants
of record in this proceeding
Practice.
475 L’Enfant Plaza West. SW.
Washington,
D.C. 20260-I 137
September 2, 1997
in accordance
document
with section
upon all
12 of the Rules of