REr;EIVE,D
BEFORETHE
POSTAL RATE COMMISSION
WASHINGTON, D.C. 20266-0001
POSTALRATEANDFEE CHANGES,2000
1
hR 30 J 45 m ‘00
P().$?,,l,
RI!:;‘;L’i”:.;i;:,f2N
OFFICE
N THESICHETARY
Docket No. R2000-1
RESPONSE OF UNITEP STATES POSTAL SERVICE
WITNESS MAYO TO :INTERROGATORIES OF
THE OFfICE OF THE CONSUMER ADVOCATE
(OCA/USPS-T39+3-Q-8,1
I-16)
The United States Postal Service hereby provides the responses of witness
Mayo to the following interrogatories of the Office of the Consumer Advocate:
O&I/USPS-T39+b-c)-6,
and 11-16, filed on March 16.2000. The Postal Service filed
partial objections to interrogatories OCAIUSPS-T3QIO and 12 on March 29,200O.
Interrogatories OCAAJSPS-T39-3 and 4(a) have been redirected to witness Davis.
Interrogatory OCAIUSPS-T39-9 has been redirected to witness Campbell.
Interrogatory OCAIUSPS-T39-IO has been redirected to the Postal Service.
Each interrogatory is stated verbatim and is followed by the response.1
Respectfully submitted,
UNITED STATES POSTAL SERVICE
By its attorneys:
Daniel J. Foucheaux, Jr.
Chief Counsel,Ratemaking
David H. Rubin
475 L’Enfant Plaza West, S.W.
Washington, D.C. 20260-I 137
(202) 268-2988 Fax -6187
March 30.2000
RESPONSE OF POSTAL sERVlCE WITNESS MAYO TO
INTERROGATORIES OF THE OFFICE OF THE CONSUMER ADVOCATE
(OCAIUSPS-T39-3~16)
OCAIUSPS-T394. Please refer to your testimony at page 60.
a.
Please explain the reason for the large increase In costs for insurance which
caused you to propose a 59% increase .in the rate for Unnumbered Insurance up
to $50.
b.
As a rate/fee design witness, did this large increase disturb/alarm you? Please
explain.
C.
Did this large increase cause you to investigate further? Why or why not?
RESPONSE:
a. Redirected to witness Davis.
b. I was actually not shocked by the cost increase. I suspected that the costs were too
low in the last rate case. Although it is not desirable to propose a fee increase of
this magnitude, it was necessary to cover the costs for this service that had been
under-reported in the past.
c. I discussed the cost increase with witness Davis, was not surprised by the cost
increase, and did not feel any further investigation was necessary.
RESPONSE OF POSTAL SERVICE WITNESS MAYO TO
INiERRGGATGRlES DF THE OFFICE OiTHi CONSUMER ADVOCATE
(OCAWPS-T39-3-16)
OCAIUSPS-T39-5. In prior dockets, a workpaper detailing indemnity costs was filed
and’used to aid in the setting of fees for insurance.
a.
b.
Did you use such a document? If not, why not?.
Please provide an indemnity analysis.
RESPONSE:
a. Yes.
b. Please see the attached indemnity analysis.
AU-t
to Response to OGWUSPS-7345
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Altachment
to Response to OCANSPS-T345
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2012
RESPONSE CF POSTAL~SERVICF VITNESS MAYO TO
INTERROGATORIES QF THE OFFfCE OF THE CONSUMER ADVOCATE
(OCAIUSPS-T39-3-16)
OCAIUSPS-T39-6. Please explain in detail what caused you to propose an increase in
the incremental fee of 95 cents.
RESPONSE:
Please see my testimony at pages 63-64 that discusses both the fee design and pricing
criteria for insurance. Additionally, the increase in the fee for the incremental value level
worked in conjunction with the Increase in the base price to provide a reasonable cost
coverage for this service.
RESPONSE OF POSTAL SERVICE WITNESS MAYO TO
lNTERROGATORlES OF THE OFFICE OF THE CONSUMER ADVOCATE
(OCAIUSPS-T393-16)
OCAIUSPS-T39-7. Please refer to your testimony at page 40.
a.
Was your statement that This reflects the change to electronic signature capture
for accountable mail services . :, .” meant to explain your proposed 50%
increase for certified mail?
b.
if SO,do you think that customers will consider the electronic signature an
menhancement” of certified mailservice? Please explain.
C.
Do you thlnk that it Is possible/probable that customers would prefer a service
that was 50% less expensive to a service with an electronic signature? Please
explain.
RESPONSE:
a. No. This sentence explains the proposed classification change to the DMCS
references for retaining delivery records, and not the proposed fee change for
certified mail.
b-c. Not applicable. See my response to part (a).
RF~SPONSE OF PGSTAL,SERVtC,E WlTNESS MAYO TO
INTERROGATORIES~OF THE GFFICE OF TRR’CONSUMER ADVOCATE
(OCAIUSPS-T39-3-16)
GCAILJSPS-T39-S. Please refe,r to your testimony at page 40. There you state “the
Postal Servlce’will be scanning signatures for a certjfied database, rather than storing
hard copy signatures at each offIce of delivery.” The implication seems to be that the
Postal ~Serviceis instituttng electronic signature scanning, for its convenience not the
customers. Your testimony. at page 43 states: “There is no question that a fee increase
of this magnitude’wili have an adverse impact on users (Criterion 4).” Please explain
why customers should suffer .an adverse impact” from the proposed 50% fee increase
for the convenience of the Postal Service.
RESPONSE:
Please see my response to 7(a). The electronic signature capture process, along with
the proposed classification change with respect to the retention of delivery records,
have very little to do with my proposed fee for certified mail.
RESPONSE OF ?GSTAL SERVICE WtTNESS MAYO TO
INTERROGATORIES ‘OF THE GFFl’CE OF THE CONSUMER ADVOCATE
(OCAIUSPS-T39-3~16)
OCA/lJSPS%39-11. Please explain why the Postal Service believes that it needs to
spend this amount to advertise money orders when it is generally widely known that the
Postal Service provides this service.
RESPONSE:
I don’t believe that it is generally widely known that the Postal Service sells money
orders. With the increasing popularity of purchasing goods over the Internet, there is a
new customer base for money orders, and this customer base may not be aware of the
Postal Service’s offering. Please see my testimony at page 78.
RESPONSE OF POSTAL SERVICE WTNESS MAYO TO
INTERROGATORIES~OF THE OFFICE OF THE CONSUMER ADVOCATE
(OCAktSPS-T393-16)
OCARtSPS-T39-12. Did. the Postal Service conduct any research or survey of
competitors in the money order business orof alternatives to the use of postal money
o&s?
If so, provide all documents relating to such research or studies; if not, explain
why not.
RESPONSE:
Partial objection filed. My understanding is the Postal Service has conducted such
research.
RESPONSEOF POSTAL SERVICE WITNESS MAYO TO
INTERROCATORIRS @F THE OFFiCE OF THECONSUMER ADVOCATE
(OCAIUSPS-T39-3-10)
DCA/lJSPS-T39-13. Please explain why the Postal Service is proposing an increase in
the fee for money orders when many of its competitors provide a similar service for as
little as 28 cents.
RESPONSE:
The Postal Service is proposing increases to the fees for money orders for the reasons
described in my testimony at pages 77-79. Competiiors offer money orders for various
fees, and it is my understanding that these fees are based on the dollar value of the
money order. I am not aware of any competitors that offer money orders valued up to
$700 for 28 cents.
RESPQNSE 0,F POSTAL ~SERVfCE WITNESS MAYO TO
INTERROGATORIES OF THE CFFICE OF THE CONSUMER ADVOCATE
(OCA/USPS-T39-3-16)
OCAIUSPS-T39-14. Is the non-fee revenue provided by money order float, nonredeemed money orders and commiss,ion on international money orders revenue to the
Postal Service in the same sense that fee revenue is revenue to the Postal Service?
Please explain in detail.
RESPONSE:
Non-fee money order revenue is not revenue to the Postal Service in the same sense
as fee revenue. See my response to OCAAJSPS-T39-15.
RESPONSE OF POSTAL SERVlCE.,WlTNESS MAYO TO
INTERROGATORIFS OF THE ,CFFlCE OF THE CONSUMER ADVOCATE
(OCAiUSPS-T39-3-16)
OCAIUSPS-T39-15. At page 7.8 of your testimony you state that: ‘It is important to
remember that the money order revenue used to calculate the cost coverage also
includes non-fee revenue.* Please exptain why this is important.
RESPONSE:
Please see page 73, lines 7 to 9, and footnote 37, of my testimony. Using non-fee
revenue in the calculation of the cost coverage does not provide for a pure cost
coverage in that more than just the revenue from the fees were used in the calculation.
In that sense, for purposes of fee design it is important to examine the cost coverage
without the non-fee revenue, since the fee revenue is directly tied to the volume of
money orders and the non-fee revenue can vary significantly from year to year
depending upon financial market behaviors.
RESPONSE OF POSTAL SERVlCE,~WlTNESS MAYO TO
IN~ERR&ATOR&S
OF THE OFFICE OF ti4E CONSUMER ADVOCATE
(ObVUSPS-T39-3.16)
OCAIUSPS-T39-16. Please explain whether it is postal employees or military/civilian
personnel who sell and redeem money orders at APO and FPO facilities.
RESPONSE:
I have been informed that military personnel sell and redeem money orders at APO and
FPO facilities.
DECLARATION
I. SusanW. Mayo, declareunderpenaltyof perjury that the foregoing answersaretrue
and correct, to the bestof my knowledge,information,and belief.
Dated:
CERTIFICATE OF SERVICE
I hereby certify 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.
L 91. czJ!&
David H. Rubin
475 L’Enfant Plaza West, S.W.
Washington, D.C. 20280-l 137
March 30,200O