DOCKET SECTION
BEFORE THE
p,E.; 5I:' Lil
POSTAL RATE COMMISSION
WASHINGTON, D.C. 20268 FE8 I] 10 '(7 :I; '59
POSTAL RATE AND FEE CHANGES,
Docket
1997
No. R97-1
TRIAL BRIEF OF THE
AMERICAN PUBLIC POWERASSOCIATION
Eugene E. Threadgill
Suite 200
1493 Chain Bridge Rd.
22101
McLean, Virginia,
(703)
(703)
February
10, 1998
734-1918
734-1943
I.
The American
the
proposed
all
card
rates
than
government-owned
service
possible
cost.
gas,
businesses
broad
array
public
impacted
service
and
services
round
receive
of
increases
electricity,
owned service
at
those
public
lowest
provide
residents,
se:rvices.
purposes.
Some
There
entities
which
at the lowest
possible
entities
will
in card rates.
a very
low cost
businesses
to
the
secure
the
to their
billing
commercial
small
of
be
is a
try
to
cost.
severely
The USPS should
postal
bill
service
for
customers
for
rendered.
have already
costs,
and the
and
APPA members
citizens
customers
for
for
increases
p.1)
the
local
is to provide
and commercial
to the
agencies
postal
MC95-1;
use cards
and
and town governments
customers
services
Card billers
their
city,
to make available
government
essential
bill
by the proposed
be directed
and
in
for
State
the
objective
owners
of governmental
basic
These
Their
by
and sewage services
to
also
other
of
Automation
organization
(APPA-T-1,
owned
their
water,
use cards
and
all
reductions
and all
service
utilities.
Many county,
small
provide
to
presort,
municipal
they serve.
(APPA) opposes
and requests
national
entities
electric
electricity,
the
electric
which
rates,
Basic
2,000
not-for-profit
communities
card
(single-piece,
more
many
Power Association
in
APPA is
nation's
and
Public
increases
categories).
are
STATEMENT OF POSITION
as a result
USPS proposes,
which
will
gas , water
providers,
suffered
major
recent
increases
of the reclassification
in
this
adversely
case,
impact
and sewer services
and other
1
small
to
in
in Docket
impose
the
a second
customers
who
from municipally
businesses.
The
eligibility
obstacles
to automation
which
use cards
rate
categories.
eligibility
digit
(See
have a very
the carrier
carrier
effectively
19
rate
(APPA-~-1,
rate
for
The national
basic
postal
lowest
for
many
cards
rate
by the
of
interest
of conditions
cards
1996
requires
for
for
billing
12.5% - from
Presort
line
statutory
by those
with
rate
the
of 18.0
an unjustified
statutory
historical
Basic
be established
rate
Presort
in the single-piece
for
of 20 cents
by the
rate
the
at the
relationships,
established
standards.
2
the rates
single-piece
standards
The present
increase
the
that
public
The present
also
the proposed
to
of
eligibility
of
to the Basic
to the general
Act.
reject
in
prior
Presort.
Reorganization
excessive
from
users
and
elimination
The USPS is now requesting
levels.
out
cents,
16
and the imposition
the
area,
Most of them were
of
bills
1996 for
electricity,
a market
mail.
a very
in
providing
in
3 and 5in
increase
rate
increase
of 16 cents,
services
is
rate
billing
card
many of
public
possible
excessive
bar
Basic
the
of reclassification's
category,
p.3)
Automation
resulted
users
presort
rate
a dramatic
presort
cent
route
categories,
experienced
cents.
their
As a result
presort
automation
for
2).
of
categories,
all
to the Automated
p.
agencies
impose
many of the mailers,
abolition
postal
serve
high density
reclassification.
carrier
with
services,
to use the
which
combined
Government
and sewer
able
APPA-T-1,
rate
cards
access
Exhibit
presort
billers.
Automated
from having
and unanticipated,
card
for
have prevented
billing,
carrier
substantial,
water
for
which
conditions,
and
most
conditions
and
Postal
of 18 cents
The Commission
card rate,
is
should
and the
second
increase
card
rates
in
the presorted
are
card
excessive
rate.
and
All
should
of
be
the existing
reduced,
not
increased.
II. RATE HISTORY
RESTORE THE POSTCARD/LETTER RELATIONSHIP
Throughout
government
most
provided
communication.
in effect
for
complete
rate,
about
Service
is a very
the postal
and
the
annually
by
postal
any
increases
salaries
of
to reflect
in
in postal
inflation.
service
industry.
annual
supervisory
But the
rates.
similar
discriminatory
increases
not
the very
the
Commission
approved
in First
Class
increase
The
one
compounds
the
inequitable
and it
should
cent
policy
to that
in
post
See APPA-T-1,
proposed
in
3
An
on
offset
through
to recover
increase
in
the
in all
in R94-1,
R90-1,
where
and a
15%
p. 7.
case
in R90-1
18
adjusted
costs,
cards
this
base established
be rejected.
a~lso
implemented
implemented
contracts
adjustments,
passed
percentage
a 21% increase
letters.
Its
are
be
proper
is an across-the-board
The Postal
in labor
must
productivity,
letter
the basis
of living
employees
and categories,
classes
cost
Those increases
COLA.
increases
rate
actions,
require
A
rate.
sustaining",
has been
intensive
unions
cost of inflation
increase
labor
to
p. 5.
became "self
rates
letter
card",
1920
and the single-piece
APPA-T-1,
Service
the
post
and from
1918
of
card rate,
on Exhibit
in
with
one-third
me.sns of public
"penny
until
1886
Federal
the
cost
traditional,
from
or
history,
as the lowest
standing,
65 years,
the Postal
nation's
cards
of the post
is displayed
increases
our
one-half
history
Since
for
post
The long
was only
1952,
of
cent
card
for
cards
and earlier
rate
would
restore
the historical
inexpensive
relationship
Section
the criteria
is
which the Commission
An examination
and cards
excessive
reduced,
class
is
private
statutory
and Standard
against
Communication
3.
Demand
quantitative
elasticity,
rate
rate
should
be
First-class
provides
in
First-
letters
like
are
Standard
no possibility
the
economic
of
world,
- The quantity
(4 double-sided
which
should
of information
that
pag,es)
that
letter
can be written
has from 4 to
rate
One of
most
on a
percent
17
not have a postal
is
that
of
is
60+
rate.
Price
Elasticity
measures of value
As witness
between
But a card,
as much as information
letter
markups and coverage
P. 4)
card
of
value.
Quantity
of a letter
of the
is that
has value
A means of communication
percent
in value
postal
and costs
20 cent
difference
a card
by a one ounce
from 6 to 24 times
the capacity
values
and that
Privacy
has no privacy
can be conveyed
card.
in evaluating
criteria,
inspection.
view;
communication.
2.
Act establishes
the present
Letters
open to public
and the card
address
the relative
that
- The primary
Privacy
and sealed
mail,
an
increased.
Letters
private
Reorganization
must
of
demonstrates
by the
not
1.
with
THE RATE MAKING CRITERIA SUPPORT
A DECREASE IN CARD RATES
3622 (b) of the Postal
levels.
letters
the public
means of communication.
III.
rate
and provide
-
of service
is the price
O'Hara
the higher
is
elasticity
has testified,
the value
4
the
significant
used in establishing
of demand.
the
lower
of the service
the
cost
(USPS-T-30,
own-price
provided.
The
"Long-run
O'Hara
Own-Price
Demand Elasticities",
(USPS-T-30
p.5)
price
cards
elastic
service
letter
value.
clearly
-0.232
-0.944
(those
not printed
as First-Class
provided
for
cards
a far
by the USPS) are 4 times
letters;
is
The dramatic
requires
by witness
are as follows:
First-class
letters
Private
cards
Private
as reported
in
that
the
range
difference
lower
indicates
of
that
one-fourth
in demand price
cost
coverage
for
cards
than
for
for
uses "Ramsey Pricing"
as a methodology
designing
rate
from variable
The testimony
Witness
Roger Sherman demonstrates
that
would
be generated
far
exceeds
(by almost
revenue
That
under
rates,
the
cards,
0.28,
except
for
also
average
of communication,
and totally
for
single-piece
standard,
cards
rate
for
letter
rate.
with
- privacy/lack
differences
are totally
as compared with
per piece
(19.72
cents)
permissible
See OCA--T-300,
Loss for
the
of
p. 21.
proposed
card
contribution
very
other
for
subclass
impacts
the
Consequently,
5
elasticity
33 cent
by every
Single
proposed
that
Increases
The present
excessive,
the proposed
quantity
- demonstrate
of a letter.
unjustified.
is quite
of privacy,
in demand price
Ramsey pricing
cards
of OCA
p. 35).
of "value"
of line
rates
per dollar
does not have 60+% of the value
the rates
class
(Id.
tremendous
out
that,
Loss"
revenue
the higheat
cents).
(13.97
the Welfare
mail.
card
per piece)
demonstrates
would exceed
These aspects
a card
6 cents
"Welfare
Express
the total
by the proposed
Ramsey pricing
testimony
that
the
elasticity
USPS regularly
costs.
the
of
letters.
mark-ups
as
20 cent
statutory
piece
increase
in
Firstin
the
single-piece
card
and a 33 cent
historical
rate
should
letter
rate,
relationship
IV.
be rejected;
would
and with
automated
(Exhibit
cards)
the
282.29% cost
above any other
cost
coverage
The
of
projected
and Presort
cards
costs
of 11.24 cents.
Presort
a
cent
rate,
mail
imposes
than single-piece
mail,
there
If
The Postal
and unacceptable
the
"cost
rejected
that
"cost
p.
rate,
on the
should
which
and a
19
to system
clear,
it
is that
postal
system
contribution
not
exceed
the
to
unit
mail.
theoretical
for
presorted
a totally
Commission
methodology,
split
as to what benchmark
methodology
6
(USPS-T-29C,
costs,
per-piece
has advanced
avoidance"
is
contribution
burden
A
cards
card
discounts"
The
and far
Piece
cents.
a significant
avoidance"
differences.
Single
and the Commission
Service
slightly
is unjustified.
to system
piece
"worksharing
cost
cards
of
the unit
single
only
"mailgrams").
than
a unit
piece
267.11%.
(other
is absolutely
has been
recorded
is
coverage
7.7568
cost
and that
coverage
single-piece
one fact
less
of presorted
letters,
contribution
far
Service
calculating
is
producing
of comparable
Class mail.
with
worksharing
Cost
cents
21
a presorted
the Postal
to use for
a cost
for
Unit
years,
is
worksharing
Basic
between
rate,
aggregate
cost
for
cents
For
That
total
by
(the
267.11%
a 9.75
contribution
standards.
service
provide
costs
statutory
of
would
system
more consistent
cards
coverage
The USPS proposes
presorted
be far
category
estimated
cents,
11.2429
1)
the
USPS-30B, p. 43).
below
card
WORKSHARINGCARD RATES ARE EXCESSIVE
In the case of "worksharing"
and
an IS cent
that
has
and
First
hypothetical
ignores
actual
consistently
developed
its
"Appendix
"cost
F" "cost
difference"
significant
everyone
of
the postal
the
with
presorted
operations
desks
public
must be carried
mail
is dumped on culling
facer/cancellers
outgoing
-
impose
cost
major
carriers
by trucks
and
to
racks;
out
pieces
of
burdens
the
collect
in-office
where
17-18)
system
investments
All
in,
mail
the
to destination
of
those
non-work-sharing
postal
the
to
pp.
trucks,
offices,
be carried
MMA-T-1,
of,
single-piece
remaining
sorted
workers,
and the
and the
are
on the
must
go through
they
and process
burdens
of
can't
stream,
on postal
boxes,
post
that
knows
(carriers
mail
and must
where
and replacement
maintenance,
drops,
analyses",
system
Postal
to originating
(See Exh.
requirements
cost
Those bags and boxes
operations
centers.
postal
mail.
facerfcancellers,
sorting
sectional
less
from mail
are pulled
go through
far
single-piece
of businesses.
mail
pieces
imposes
and
public.
"cost
the
mail
conditions,
so-called
of
many
between
by the general
complex,
mail
differences
and automation
the operations
mail
But the Commission's
from consideration
cost
system
very
than
up general
front
recorded
to meet presort
familiar
bulk,
pick
also excludes
into
Regardless
System
methodology
by mailers
delivered
that
methodology.
and substantial
prepared
mail
difference"
boxes,
mail
labor
-
time
by
repair,
and
buildings
and
equipment.
Mail
trays
for
presorted
to loading
the purchase
collection
the complex
to destination
docks,
offices,
makes no use of the
and sale of stamps,
and out-going
"cost
post
mail
avoidance/cost
retail
and bypasses
processing
operations.
difference"
7
and delivered
postal
almost
system
all
of the
Leaving
techniques,
in
aside
fairness
dictates
that
presorted
the unit
cards
by Single-piece
per-piece
should
not
cards.
The unit
are totally
out of line.
make a unit
contribution
Basic
Presort
(6.74)
even though
system
than
Presort
rate
"discount"
piece
the
piece
cent
have
cents,
Bentley
analyzed
cost
burden
for
(MMA-T-1)
to the
Basic
single
and James Clifton
between
clearly
worksharing
on the
the
subsidy
exhibits
cent
14.5
a work-sharing
differences
and their
would
contribution
less
representing
makes a small
("discount")
unit
a
As a "transition",
Richard
mail,
differential
15
rate
of 6.76 cents;
far
by
by the USPS
card
make a similar
card.
which
Witnesses
and presorted
single-piece
costs
contribution
proposed
card provides
piece
3 cents,
(ABA/EEI/NAPM-1)
would
be set at
per-piece
contributions
a presorted
single
to "system"
the unit
An 18 cent
rate
could
rate.
exceed
to system costs
card
of
contribution
single-
support
a 3
cards.
V. REVENUE IMPACTS OF CARD RATE REDUCTIONS
WILL BE MINIMAL
The projected
Fiscal
total
result
to a revenue
fiscal
little
profits
years,
most a 2.6% reduction
or
USPS-30A)
of about
reported
a 2 cent
card
in revenues,
8
an increase
in
in the card rate
of at most $29 million,
With
1.3%.
in card rates
could
In
loss.
by the
for
and the After-Rates
reduction
of revenue
no revenue
Cards revenue
USPS-30B),
A one cent
reduction
a reduction
Total
(Exh.
in a maximum loss
in
significant
(Exh.
$1,088,979,000
$29,136,000.
elasticity,
resulting
three
is
of only
amounting
price
$1,059,843,000
revenue
revenue
would
is
1998
Before-Rate-increase
Postal
the high
increase
the
Service
context
for
volumes,
of
the
generating
rate
reduction,
would
he inconsequential.
own
the
last
at
The benefits
all
card
to the public
rates
would
VI.
be very
card
has an address
complete
11
digit
billing
5-digits
cards
send
for
mail
centers,
to
where
should
with
only
the
for
last
5-digit
of
a 4.25"
piece
with
card rate
the
a rate
long
standards,
communication
elasticity
able
rounds
centers
the
to carriers
to destination
barcodes
in
should
code
offices
automation
the
that
destination
of the automation
sorted
to
to 3 or
first
equipment
rates
address.
also
An
be explored.
SUMMARY
Card Rate - APPA's recommended 18 cent single-
would be 54.5% of a 33 cent
standing
relationship
the
At
digits
x 7" card,
of cards
been
sectional
delivered
VIII.
A. Single-Piece
not
the
automation
Cards presorted
and carrier
6 digits
possibly
alternative,
have
by automation
cards
contain
Many users
1)
rates.
five
to
services
for
destinations.
Therefore,
be eligible
p.
purposes
the first
for
eligibility
at the originating
5-digit
and to walk sequences,
narrow
do not go through
is sorted
mail
are irrelevant.
APPA-1,
routes,
3 and
too
for
automation
processing
customers
is
required
business
or to carrier
of automation
billing
that
(See Exhibit
and other
their
for
stub
barcode
categories.
qualify
in
substantial.
used
rendered
for
reduction
PRESENT AUTOMATION CONDITIONS ARE BURDENSOME
The standard
rate
of an across-the-board
letter/card
would
considering
capacity,
that
be
more
cards
8.5%
9
rate,
consistent
historical
relationship.
consistent
with
have zero
privacy,
weight,
of letters:
letter
and
4
times
Such
the
statutory
very
the
limited
price
Comparison of Letters
and Cards
At APPA Recommended Rates
Letter
Card
Card/Letter
Ratio
33 cents
18 cents
54.5%
Sealed
Open
Zero
8 pages
113 page
1 oz.
?5%
l/l2
oz.
--0.232
-0.944
400 %
Criteria
Rate
Privacy
Communication
Weight
Elasticity
B. Basic
Presort
more consistent
with
proposed
- APPA's recommended rate
the rate
making
Rate
Unit cost
Unit contribution
A Basic
unit
costs
card
rate
a
cent
(7.7568
would
19
7.757
11.243
rate
of 15 cents
cents)
of almost
make a unit
15 cent
of
Basic
7.2
contribution,
even though
"discount"
for
the rate
The Basic
"discount"
C. Automation
scale
analysis
of
for
the
qualifying
of
should
Eligibility
the use of cards
problems
required
the
billing
cards
single-piece
to
system
costs
of
rate
would
make
a unit
impact
purposes,
for
the
card
imposes
is punitive
it
is their
far
less
two
and fails
to
standards.
to 3 cents.
APPA has not
of automation
6.8
single-piece
The present
card.
be increased
automation
10
than
by the statutory
- Although
of total
An 18 cent
higher
a presorted
presorted
differential
Presort
card
the single-piece
basic
15
1.757
7.243
would have a mark-up
100%.
slightly
cents,
Presxt
18
11.243
6.757
contribution
Presort
on the System than
provide
broad
is far
the USPS
Sinale-piece
Presort
21
11.243
9.157
Presort
contribution
burden
than
cents
Comparison of Mark-Ups of Cards
At USPS Proposed and APPA Recommended Rates
APPA
USPS
Sinsle-piece
unit
criteria
15
cents:
19
Criteria
cents;
of
made any
conditions
upon
perception
that
have driven
some card
users
to envelope
use cards
use,
have experienced
costs.
It
consider
some modification
would
presorted
to
destination
cards
11
ramifications
be in
5-digits
3 or
presorted
the full
and many of
digit
significant
the
5 digit
barcode.
which
public
interest
carrier
It might
of an enlargement
also
and
order
rate
USPS would
for
cards
delivered
to
to
those
allow
cards
a
without
to consider
the
to 7 inches.
submitted,
Public
Power Association
1493
Chain Bridge
McLean, Virginia,
(703)
(703)
to
postal
categories,
of permissible
American
the
be useful
Respectfully
their
conditions
in
automation
in
if
routes,
postoffice,
for
have continued
increases
of the Automation
and
to qualify
those
Rd. Ste.200
22101
734-1918
734-1943
CERTIFICATE OF SERVICE
counsel for the American Public Power
I, Eugene E. Threadgill,
this 10th day of February,
1998,
Association,
hereby certify
that,
six copies of the foregoing
document have been served upon the
and a copy has been served upon all
United States Postal Service,
parties
on the Secretary's
list
of intervenors
in this proceeding,
in accordance with Section
12 of the Rules of Practice.
11