,
BEFORETHE
POSTAL RATE COMMISSION
WASHINGTON, D.C. 20266-0001
POSTALRATE AND FEE CHANGES, 2000
RECEIVEI)
hy
8
Docket No. R2000-1
REVISED RESPONSE OF THE UNITED STATES POSTAL SERVICE TO
INTERROGATORY OF MAJOR MAILERS ASSOCIATION
(MMAIUSPS-T32-2) (ERRATUM)
The United States Postal Service hereby files its revised to the following
interrogatory of Major Mailers Association, redirected from witness Mayes:
MMA/USPS-T32-2.
The original response was filed in April 19,200O. The
revised response filed today supersedes that response.
The revised response addresses issues raised by the May 3,2000, MMA
Motion to Compel.
The interrogatory is stated verbatim and is followed by the response.
Respectfully submitted,
UNITED STATES POSTAL SERVICE
By its attorneys:
Daniel J. Foucheaux. Jr.
Chief Counsel, Ratemaking
CSWQ
Michael ?. Ttiwell
475 L’Enfant Plaza West, S.W.
Washington, DC. 20260-l 137
(202) 268-2998 Fax -6402
May 6,200O
4 38 f’jj ‘00
RNISED
RESPONSE
OF UNITED STATES POSTAL SERVICE TO MMA INTERROGATORY
REDIRECTED FROM WITNESS MAYES
MMAIUSPS-T32-2 Please refer to your response to Interrogatory MMANSPS-T32-1.
There you explain where to find postal costs under the Commission’s cost methodology
for the test year.
64
Please confirm the following cost figures (in $000’s) including
contingency (but not prior year losses) for the test year before rates. if you
cannot confirm these cost figures, please provide the correct cost figures
and the derivation and/or source thereof.
(1)
Variable COSts
Institutional Cost: 3
Total CIosts
(2)
PRC TY SR
USPS N BR
LR-I-131. Vol H, Table E
Exhibit USPS-32A
I
1
(3)
Difference
I
I
:;
$1
0)
If you confim, the cost figures in pan (a), please explain why the total
costs reported using the Commission’s cost methodology are $162.357
million higher than the total costs reported using the Postal Service’s GOSting
methodology. If you did not confirm the cost figures in part (a), please
explain any difference in the total costs for your corrected cost figures, if
there is a difference.
(4
Please confirm the following cost figures (in $000’s) including
contingency (but not prior year losses) for the test year after rates. If you
cannot confirm these cost figures, please provide the correct cost figures
and the derivation and/or source thereof.
Variable Costs
Institutional Costs
Total Costs
(1)
PRC TY AR
USPS(2)
TY AR
LR-I-131. Vol J. Table E
Exhlbll USPS-328
$ 44,307,115
$ 24,564,124
$ 68,971,239
$ 40,891,695
$ 27,978,701
$ 68,870.396
Diff~%ce
0
0
$ ’ $95,420
$ (3,394,577)
100,843
$
If you confirm the cost figures in part (c), please explain why the total
costs incurred reported by using the Commission’s cost methodology are
$100.643 million higher than if reported by using the Postal Service’s costing
methodology. If you did not confirm the cost figures in part (c), please
explain any difference in the total costs for your corrected cost figures, if
there is a difference.
REVISED RESPONSE OF UNITED STATES POSTAL SERVICE TO MMA INTERROGATORY
REDIRECTED FROM WITNESS MAYES
Response to MMAIUSPS-T32-2:
(a)
Not confim%ad. The revised amounts are shown below.
(1)
Variable Costs
Institutional Costs
Total Costs
(2)
PRC TY BR
USPS N BR
See Attachment
to this Response
Exhibit USPf32A
Revised 4121100
$ 45,200,186
$ 24,592,812
$ 69,792,998
$ 41647,946
$ 27.992,970
$ 69,640,916
(3)
Difference
(V-W
$ 3,552.240
$ (3,400,158) _
152,082
$
There are two sources of the revised amounts, The first source is the errata filed
by witness Mayes, USPS-T32, on April 21,200O. The second source is the
USPS-LR-I-131, Table E, equivalent that appears as an attachment to this
response. The Table E equivalent is the result of the single input change to the
Final Adjustment amount for the single-piece portion of First Class Mail Letters &
Parcels. The adjustment was calculated by using the same method described at
page 8 of USPS-LR-I-169 (witness Fronk workpaper), as revised 4/17/00.
Co)
To understand the Commission’s costing methodology, please refer to the
Opinion and Recommended Decision, Docket No. R97-1 and PRC library
references PRC LR4, LR-5 and LR-19 from Docket No. R97-1.
To understand the Postal Service’s costing methodology in the R2000-1
proposal, please refer to the testimonies of postal witnesses Maehan (USPS-Tii), Kashani (USPS-T-14), Bono (USPS-T-15), Degen (USPS-T-16) Baron
(USPS-T-12). Pickett (USPS-T-19). Bradley (USPS-T-18), Stevens (USPS-T-20)
Smith (USPS-T-21) Raymond (USPS-T-13) among others.
REVISED RESPONSE
OF UNITED STATES POSTAL SERVICE TO MMA INTERROGATORY
REDIRECTED FROM WITNESS MAYES
The following illustration may be helpful to understand how different
methodologies yield different results. If mail processing volume variability is less
than one hundred percent in the Postal Service’s cost model and the mail
processing volume variability is one hundred percent in the Commission’s cost
model, whenever the same mail volume effect is applied to mail processing, the
results will be different. Arithmetically this can be seen in the following
hypothetical example in which base year costs are 100, volume is projected to
increase 5 percent, and the Postal Service and Commission variabilities are 80
percent and 100 percent, respectively:
Postal cost model
1. Base Year Mail processing cost
2. Volume Variability
3. Volume Variable cost (I X 2)
4. Mail Volume Effect
5. Mail Volume cost change (3 X 4)
6. Test Year Mail processing cost (1 + 5)
PRC
100
0.80
80
0.05
4
104
100
1.00
100
0.05
5
105
The difference between 104 and 105 in this example is purely the result of
utilizing different volume variabilities.
(4
Not confirmed. The revised amounts are shown below.
(1)
PRC TY AR
SeeAttachment
to tbls Response
Variable Costs
Institutional Costs v
, Total Costs
$ 44,267,641
$ 68,851,965
(2)
USPS TY AR
Exhibit USPS-%?A
Revised 4121100
$ 40.780,380 $
$ 27,978,701
$ 68,759,081
(3)
Difference
(l)-(2)
$ (3.394‘576):
92,884
0
The sources and explanation are provided in part (b) of this response.
(4
Please refer to the response to subpart (b) above.
Final
Fka1-clasr f&it
mm
6 Pafcwls
Preti
Ltr 6 Pd
sing* Piece cads
PmsatPN1Pcs
Total Firsf
14336.724
5.523.756
593,739
184.981
20,639.200
Continw~y
0.025
63,094 14.4l9.516
-203,024
5.320322
A.177
589,562
124.981
0
-124.117 20.515.063
Product Specific
Including
cciltinpenw
Total
lndudinp
ConUllgEnCy
Volume Varfable
Total Including
cmtingsncy
560.495
133,016
14.739
4.625
512,677
14.766.313
SI53.740
6M.301
169,606
2f.027.960
0
0
0
0
0
14.780.313
5c53.740
604,301
18%6OS
21.027.860
3.399.051
125,401
3.524.452
88.111
3.612.563
-56.768
695.423
0
695.423
17.388
712,609
-13,519
699.290
1.105
0
1.105
26
1.133
0
1.133
82.913
0
62,913
2,073
84.9%
0
84.966
2.0%..675
382,606
14,743
2.576.139
0
0
0
0
2.095.675
382.808
14.743
2,576,139
52,392
9,570
369
84,403
2.146.C67
392.376
15.lf2
2.640542
0
0
0
0
2.146.067
392.378
15,112
2.640.542
0
0
0
0
3555.775
0
0
0
2.611.957
7.692.373
10.564.330
16,804
-353.091
-336.287
2.626.761
7.539282
lO.W6,C43
65.719
188.402
264.201
2,694,464
7,727,764
10.422.2U
0
0
0
2.694.460
7.727.764
10.422.244
212.502
I,420340
w40.642
t2.145.172
8.161
-32,224
-24.043
-.360.330
220.663
1.3%.116
1.616.789
11.764.642
5.517
34.803
40,420
234,521
225.200
1,431.OlB
1.657218
f2,079,463
0
0
0
0
226.200
1,431*019
l.657.218
12.079.463
11)81.5%
463,414
367.068
46,487
lsM.575
27.040
12.665
7,671
1.212
46,014
1.108.626
495.499
314,765
4w99
l.se8.539
0
0
0
0
0
1.108.825
465.499
314.765
49,699
1.968.589
1.102.673
463.414
3Q7.osa
46,467
l.W1.%2
298,853
42,395
u27.297
64.153
527.111
76.072
16.488
1
164,e12
3.366
12.164
I.019
573.5%
193.316
1.654.%2
44,919.439
23.549.126
I,
Adiusted
41.261
0
0
0
-21.267
0
-296.653
0
0
-1%
J.654
-357
-49
0
0
0
0
0
0
-592
2.4sS
474.688
266.853
42,395
1.527xa7
83.042
536.765
77,715
16,439
1
164.912
3.360
12.164
1,619
573,5%
192.724
1857446
0
0
0
0
I.%0
43.455
0
43,455
WI02
1.565.479
2.099
%,041
13,268
1,943
411
0
4.123
64
304
45
14,340
4.616
4f,435
544.034
79,658
16.850
1
169.035
SAU
12.466
I.654
587,939
197.542
1.698.676
48.985
0
0
0
0
0
-11,391
0
0
0
0
0
-11.3991
1,496,493
86.041
544.034
78,655
t6.m
1
157,644
3.444
12.468
1.864
567,939
197.542
1.687.465
44.244.751
1.106.11g
45.350870
-150.684
45.2fm.l%
23.645.979
6%.149
24442.126
15%%4
24.592812
1.702266
6S.792.%9
%A66565
-377.635 66.066.736
"lghllghbd ce" Fll, c&s* Mail Lafbn a Palate Ffnlf Adjustmam Is 6w onfy chanpd
0
InDot
69.792.996
latlowency
t3ibCmr
Mail:
Lenen h Pmc%lS
PmwrtLtr&,pd
Shgk Pi
cards
PmmPMPCs
TOW First
Prbky
Expssr
Mail
Mail
fkiirams
.qecowaM
Mail:
wmill cwnty
chwia county:
Fug Rate Pub
Nmpmfll Pub
C&am-m Pub
Total Second
14252,ea
5,5lD*l82
577.859
180.971
20.530,878
358,323
132209
14.341
4,524
509.397
14.591.253
5.420.559
587.977
185,495
20,885.m
0
0
0
0
0
3.3c6.351
82.659
3.389.020
-56.788
701.773
17.544
719.317
13.516
80.054 14.332.930
-230.@32 5.288.350
-4,223
573,536
0
180,971
-154.991 2.0.375.887
3.189.719
115.s42
14,691.253
5.420.559
587.977
185.495
20.885.284
3.332132
701.773
0
I.106
0
1,106
28
1.134
0
1.134
e.2.087
0
82,087
2.052
84.139
0
84.139
2.044.419
401.790
14.487
2.542.783
0
0
0
0
2,044.41*
401.780
14.407
2.542.783
51.110
10.045
362
53,570
2.995529
411.835
14849
2.805.353
0
0
0
0
2.035.529
4H.e3S
14.849
2.605.353
0
0
2.555.480
7.574.915
10.130.395
15.137
-353.023
-338,886
208.705
1.410.777
1.827.482
H.757.077
a.006
-27.877
.19.871
-356.757
-35,856
0
0
0
-35,556
297.$17
-297.117
42.440
1.483.481
0o.m
491,76(
75.560
15.367
1
158.545
3.3%0
12.189
1,814
565,570
193.435
1.601.571
0
0
0
0
2.571.617
7221.892
9.793.509
64290
faosb?
244.838
2,535,9'37
7.402.439
10838.2-l7
0
0
0
2.635.807
7.402.439
10.038.347
215.711
1.390.909
1.807.511
11.491.120
5.410
34,773
40.1m
265.028
222,129
1.425.573
f.847.801
11.5m.~~
0
0
0
0
222,129
1.425.573
M47.801
11486.148
1.055807
459.565
303As2
47.537
1.875282
2%390
11,740
7.586
1.191
46,907
1.081.997
401,328
311.038
48.828
1.923.189
0
1.091253
459,586
303,452
47.537
1.91 Is38
705.801
1.081.937
481.328
311.038
48.828
1,923.189
0
0
0
0
0
42.440
1,061
43.501
0
43.501
0 r.uumi
37.007
1,520.571
0
-149
3,397
-352
40
0
0
0
0
0
0
-512
2,338
e.Od40
495.158
75m
15.319
1
159.545
3.3%
12.189
lLl4
5865,570
192,923
1.803.907
2.019
G379
1.905
408
0
3.989
04
304
45
14.142
4.e23
40.088
44.050.686 -725.543
43,335.143
1.083.379
297.117
23.637506
595,930
-428.428
677.1729849
~,579.315
82.759
507.537
70,113
18.727
1
183.534
s.vr(
12.473
1J359
579.812
197,746
1.544.005
UCl8.522
24.433.444
6(1.851.865
1,451.885
68.985
0
0
0
0
0
-11,391
0
0
0
0
0
-11,391
82.759
507,537
78.113
15.727
1
152.(43
3.444
1i;473
1.059
579.812
197,745
1432.5l4
-150.581
44.267.841
150.681
24304.125
0
fm5we5
,
CERTIFICATE OF SERVICE
I hereby c&ii that I have this day served the foregoing document upon
all participants of record in this proceeding in accordance with section 12 of the
Rules of Practice.
Michael T. Tidwell
475 L’Enfant Plaza West, S.W.
Washington, DC. 20260-I 137
(202) 268-2998 Fax -6402
May 8,200O