BEFORE THE
POSTAL RATE COMMISSION
WASHINGTON, D.C. 20266-0001
POSTALRATEANDFEE CHANGES,2000
1
Docket No. R2000-1
RESPONSE OF UNITED STATES POSTAL SERVICE
‘WITNESS OKAYTO INTERROGATORY OF
THE ASSGCIATION OF PRIORITY MAIL USERS, INC.
(APMUIUSPS-T23-I)
The United States Postal Service hereby provides the response of witness Kay
to the following interrogatory of the Association of Priority Mail Users, Inc.:
APMUIUSPS-T23-1,
filed on March 23,200O.
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
Eric P. Koetting
475 L’Enfant Plaza West, S.W.
Washington, D.C. 20260-l 137
(202) 266-2992 Fax -6402
April 62000
RESPCNSE OF UNITED STATES POSTAL SERVICE WITNESS KAY TO
INTERROGATORY OF ASSOCIATICR CF PRIORITY MAIL USERS
APMUIUSPS-T23-I. Please refer to witness Kashani’s response to MPA/USPSTl4-2, both at pages 8-10 of the narrative response as well as Attachment I (Mail
Processing Adjustment for,Redistribution of Rehabilitation Program), pages l-2.
Witness Kashani,explains that the costs associated with the Rehabilitation
program “were erroneousty distributed to Priority Mail in mail processing in FY
2600. This miscalculation overstates’Priority Mail costs by~approximately $46
million in that year.. . * Witness Kashani then makes what he calls a ‘Priority Mail
Correction,” reducing Priority Mail costs by $46.350 million. Please provide a
similar correction to-the incremental costs of Priority Mail.
RESPONSE
Attachment 1 to this response estimates the effect of witness Kashani’s
correction on incremental cost estimates for all classes of mail, including Priority
Mail. The correction is estimated to reduce Priority Mail incremental cost by
$46.509 million in Test Year 2001 (After Rates). Column 1 of Attachment 1
shows the BY, 1998 volume variable cost for mail processing, as shown in USPSLR-I-150, folder IC ModellROO-1, file ICSummaryxls, tab Independent WC,
column 7. Column 2 of Attachment 1 shows the BY 1998 volume-related
incremental cost for mail processing, as shown in USPS-LR-I-150. folder IC
ModellROO-1, file ICSummaryxls, tab ‘IC Independent’. column 4, minus product
specific costs show on tab ‘Prod Spec’. column 1. Column 3 of Attachment I
shows total Test Year 2001 (Before Rates) incremental cost, from Table 1A of
my testimony. Column 4 of Attachment 1 shows total Test Year 2001 (After
Rates) incremental cost, also from Table 1A of my testimony. Columns 5 and 6
are the estimated dollar impact on Test Year 2001 (Before Rates) and Test Year
2001 (After Rates) volume variable cost, from USPS LR-I-198. Column 7
calculates the estimated dollar impact on Test Year 2001 Before Rates
1
RESPONSE OF UNiTE,D STATES.POSTAL SERVICE WITNESS KAY TO
~tWTERROGATORY OF ASSOCIATION OF PRIORITY MAIL USERS
incremental cost. This is calculated as the ratio of Base Year 1998 volumerelated incremental cost divided by Base Year 1998 volume variable cost times
the Test Year 2001 (Before Rates) dollar impact on volume variable cost from
column ,5. Column 8 calculates the estimated dollar impact on Test Year 2001
(After Rates) incremental cost, calculated in a similar fashion. Columns 9 and 10
show what total incremental cost for Test Year 2001 (Before Rates) and Test
Year 2001 (After Rates) would be if these estimates were incorporated into the
analysis.
2
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RESPONSE OF WED
STATES POSTAL SERWX WITNESS KAY TO INTERROGATORY OF ASSOCIATICN OF WTY
ATTACHMEMT~. WPACTOFCORRECTWGUSTRlWllON
MAJL USERS
OFREHASHlTATKWPROt3RAMOYITESTYSARlNCREWWALCOST
,::I
3
DECLARATION
I, Nancy R. Kay, declare under penalty of perjury that the foregoing
answers are true and correct, to the best of my knowledge, information, and
belief.
$G--00
Dated:
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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.
Eric P. Koetting
475 L’Enfant Plaza West, S.W.
Washington, D.C. 20260-I 137
(202) 268-2992 Fax -5402
April 6,200O