BEFORE THE
POSTAL RATE COMMISSION
WASHINGTON, D.C. 20268-0001
POSTAL RATE AND FEE CHANGES, 2000
/
Docket No. R2000-1
RESPONSE OF THE UNITED STATES POSTAL SERVICE TO PRESIDING
OFFICER’S INFORMATION REQUEST NO. 12, QUESTIONS 2 THROUGH 5
(May 25.2000)
The United States Postal Service hereby provides its response tomPresiding
Officer’s Information Request No. 12, Questions 2 through 5. filed on May 15, 2000.
Each question is stated verbatim and is followed by the response.
The response to Question 1 is being filed separately to facilitate copying.
Respectfully submitted,
UNITED STATES POSTAL SERVICE
By its attorneys:
Daniel J. Foucheaux. Jr.
Chief Counsel, Ratemaking
. /’
; -[ 7-G:d-,
Eric P. Koetting
475 L’Enfant Plaza West, SW.
Washington, D.C. 20260-l 137
(202) 268-2992; Fax -6402
May 25,200O
1
Response of United States Postal Service Witness Kashani
To
Presiding Officer’s Information Request No. 12
POIR 12-2
2.
Please refer to the response to question 1 of Presiding Officer’s
Information Request No. IO. The response says that there is an error
in the mail volume effect of component 907, the computer forwarding
system distribution key. The response also says that this key is used
to develop the distribution keys for space (component 1099) and rental
value (component 1199) costs in the “B” repott. The respurrse also
includes spreadsheets showing the effect of correcting the error on
cost distributions as reported in the “B” report. A review of the PESSA
cost distributions shows that component 907 is also used in the
development of other cost distribution keys. First, component 907 is
used to create component 1258 that is the distribution key for mail
processing equipment maintenance. Component 1258 is part of the
development of the space and rental related distribution key
components 1099 and 1199. Second, Component 907 is also used in
the development of the capital factors distribution key, component
1229. The Capital Factors distribution key is used to distribute the
costs of Component 232, Equipment Depreciation.
Please provide updated worksheets showing the effect on cost
distributions from using a corrected component 907 in the
development of components 1258 and 1229.
Response
The attached spreadsheets (an electronic version is provided in the
Question 2 directory of USPS-LR-I-384, Materials Provided in Response to POIR
No. 12, Items 2 and 3) show the effect of correcting this error on cost
distributions as reported in the ‘B Report for FY 1999, FY 2000, the test year
before rates, and the test year after rates. Component 1258 impacts
components 1045 and 1145, which are used to create components 1099 and
1199, respectively. Pages 1 - 7 show the development of the differences for
component 1099, pages 8 - 15 show the development of the differences for
Response of United States Postal Service Witness Kashani
To
Presiding Officer’s Information Request No. 12
POIR 12-2
component 1199, pages 16 - 23 show the development of the differences for
component 1229, and page 24 shows the combined impact of components 1099,
1199. and 1229.
‘i
I
I
,
n
n
I
I
i
I
I
I
,
I
Response of United States Postal Service Witness Kashani
To
Presiding Officer’s Information Request No. 12
POIR 12-3
3.
Please refer to the response to question 2 of Presiding Officers
Information Request 10. Witness Kashani says that the rollforward
was intended to account for the migration of Standard A Single Piece
to First-Class single piece and Priority Mail for all components. He
also says that “The proper method of reflecting this migration in the
aforementioned rollfoward distribution keys is to include the migrated
amounts for First-Class and Priority Mail in the VBLl file in
FY99rcc.. .“. While the response was referring to the distribution key
components 1439 through 1453, would the proper method of reflecting
the Standard A Single Piece migration noted in the response also
apply to all of the distribution key components that make up the space
and rental value distribution keys (Components 1099 and 1199) the
mail processing equipment maintenance distribution key (component
1258) and the capital factors distribution key (component 1229)?
If the answer is in the affirmative, please provide the entries into the
VBLI file to accomplish this adjustment. The VBLl entries should be
in the same format as the BEN2FACT file in FY99rcc.
‘I
Response
The attached spreadsheet spmdk.xls shows migration of Standard A
Single Piece to First-Class and Priority Mail for the rollforward distribution keys
which were not included in my testimony (an electronic version is provided in the
Question 3 directory of USPS-LR-I-384, Materials Provided in Response to POIR
No. 12, Items 2 and 3). As requested, I have created BEN2FACT and VBLI
ACSII files illustrating distribution of Standard A Single Piece to First-Class and
Priority Mail. Please note that the mail volume adjustment for Single Piece in
VBL2 of FY99RCC had already removed Standard A Single Piece from all
components and distribution keys.
Figure 1
Standard A Single Piece Cost shift to First-Class 8 Priority Mail in FY 1999
Number
8
9
25
26
27
28
29
30
3,
32
33
34
35
36
3i
38
39
40
::
43
44
45
46
47
48
49
50
51
52
53
54
58
57
58
1439
1440
1441
,442
,443
1444
,446
,446
,447
1446
1449
1450
1451
1452
,453
907
908
909
911
912
913
914
915
971
916
917
918
919
920
922
923
924
925
929
930
931
932
933
934
936
936
937
938
939
642
943
944
902
947
1307
1363
,314
,371
,315
13'16
,317
,316
1319
Name
Computer Fomarding Sys
Mail Processing BCS
Delivery BCS
Function 4 Kev
FacedCancel& Letters
Culling
Small Parcel Bundle Sorter
RBCS
sorting to Letter cases
Sorting to Flat Cases
OCR
Generat and Logistical - BMC
General and Logistic.?1 - NONBMC
c,arder sequence ECS
Parcel Sorting 8 NM0 Machines
Computer Fomarding Sys
Bulk Mall Acceptance Unit
Registry
Other Accountable4
Other Non-Acwunlilbles
OCR
Mail Proutasing ECS
Delivery BCS
carrier Bequencs BCS
LSM
FSM
Parcel Soning 8 NM0 Machiws
FacedCameler L&em
FacerlCanceler Flats
Sack Sorting Machine
Small Parcai Bundle Sorter
Remote Sarccds System
Mulnslide
OtherEquipment
sorting to Louercase.¶
So”ing to Flat Caws
Soticg to Han&g Sack8
Sorting to Rolling Container
6orling to Pal*,8
other Bating OFamacnS
REWRAP
Postage DUO
othsr Manual operatim*
my carder
Aca”MablO Cage
PlMlW,l
Gfria spa09
othar Equipmant Maim
Employw Facilitlsr
Computer Fonvarding Sys
OCR
Mail PnDc BCS
carrier Bequenu, BCS
Dellvery BCS
LSM
FSM
Parcel Sorting B NM0 Machines
FacarlCancelar Lenen
Page 1 Of 4
1.275
390
404
8.061
40
64
20
20
403
2
,211
370
364
7.656
36
1275
390
404
8.061
40
615
50
1.773
1,654
235
1.152
11,486
68
606
345
62
323
149
68
235
360
404
68
13
1.195
604
40
27
184
616
60
52
233
1.773
1.654
444
663
27
40,
I6
314
316
7.298
146
29
1.561
31
3
69
93
12
66
574
3
30
17
3
16
7
3
12
564
47
1.664
1,761
223
1,094
10.914
66
576
326
59
307
142
65
223
370
364
65
12
1,135
676
36
26
176
664
47
49
221
1.684
1,761
422
839
26
361
17
296
615
50
1.773
1.854
235
1.152
11.488
66
608
345
62
323
149
66
236
390
404
66
13
1.195
606
40
27
184
615
50
52
233
1.773
1.664
40,731
345
236
360
6s
404
13
1.195
606
40
2,037
17
12
20
3
20
1
60
30
2
20.
20
3
1
60
30
2
I
9
31
3
3
12
89
93
22
44
1
20
1
16
32
7
1
79
6.::
139
26
1,502
36.694
328
223
370
66
364
12
1,136
578
444
663
27
401
3::
316
7.296
146
29
40.731
346
235
390
13
1.195
606
40
Figure 1
Standard A Single Piece Cost shift to First-Class 8 Priority Mail in FY 1999
Component
Number
Component
Name
[ Std A Single Piece 1 I”‘““*,,I
DK11512
59
60
61
62
63
54
65
66
67
66
69
70
71
72
75
74
75
76
/
I
63
64
65
88
67
66
89
90
91
92
93
94
95
98
97
98
99
100
101
102
103
104
105
106
to7
106
109
110
111
112
113
114
115
116
1320
1322
1323
,324
1365
1364
1366
1330
1331
1001
too5
too7
1006
1009
101,
tot2
1013
1014
to15
1064
1016
1017
1016
,019
1020
,022
1023
1024
1025
1029
1030
1031
1032
,033
1034
1035
1036
1037
1036
1039
1040
1042
1043
1044
1045
1047
1048
1052
,101
1105
,107
,108
1103
,111
,112
,113
FacarlCanceler Flats
Sack Swting Machine
Small Parcel Bundle Sorter
RBCS
Strapping
Powered Transport Equip
General 8 Logistical. BMC
Genenl (L Lcgistical _ NON SMC
sorting to Letter cases
Sordng lo Flat Cases
Window Service%
Express Mail
Computer Forwarding Sys
Sulk Mail Acceptance Unit
Regisby
Other Accountables
Other Non-Accountables
OCR
Mail Pm BCS
Delivery BCS
Carrier Sequence BCS
LSM
FSM
Parcel Satina 6 NM0 Machines
FacerlCa”&r
Letters
Facer/Canceler Flats
Sack Soning Machine
Small Pama, Bundle Sorter
Remote Barccde System
Multislide
Other Equipment
Soding to Letter cases
SorUng to Flat Cares
Baling to Hanging Sacks
Sxtiyl to Rolling Container
Sorting to Paltot
Ouw Bming opentbns
REWRAP
postage oua
omer Manual OpraUonr
City Omler
Run, Cmier
Accountabk Cage
PhltfOflll
of6w space
Mail Proc EquipMain1
Employee Facilities
“MF
-Mail Tnnswrt Equip Centers
Total Spa&a Key
Window Services
Express Mail
Computer Forwarding Sys
Bulk Mail Acc8ptanw Unit
Registry
other Acwuntablss
Other NowAccou”tables
OCR
I/
27
164
615
50
35
65
1.152
11,466
6.339
6,626
949
246
1,110
1.102
1.495
968
250
935
1.146
2,624
565
36
2.167
4.664
140
3,153
3,673
314
617
2.013
I.642
4,367
4.358
‘510
720
174
734
1,868
6,572
249
968
32,369
5,474
1,659
6.646
1,463
636
104.216
1.008
266
1.000
1,072
1,505
982
264
645
Page 2 Of 4
DK=1513
1
9
31
3
2
4
66
674
317
331
47
12
56
55
75
46
13
47
57
141
26
2
10.9
234
21
7
156
194
16
41
101
62
216
216
230
26
36
9
37
93
329
12
46
1.616
274
63
332
73
32
5.211
54
I4
50
54
75
49
13
42
I]
OK=1511
(3)
(4)
26
175
564
47
33
81
1,094
10.914
6,022
6,295
902
236
1,054
1.047
1,420
920
237
666
1,091
2,663
537
34
2.049
4.450
401
133
2.995
3,679
298
776
1.912
I.560
4,149
4.140
4,376
464
664
165
697
1,773
6,243
237
918
30.751
5,200
1.576
6.314
1.3w
606
99.w5
958
274
960
1.018
1,430
933
251
27
184
615
50
35
66
1.152
11.488
6.339
6,626
949
246
1.110
1.102
1.495
250
935
1.146
2,624
565
36
2.167
4.664
140
3.153
3,673
314
617
2.013
1,642
4,367
4.358
4.606
510
720
$74
734
1,666
6.572
966
32.369
5,474
1,659
6.646
1.483
636
104.216
1,006
1.ooc
1,072
I.505
982
264
Figure I
Standard A Single Piece Cost shift to First-Class B Priority Mail In FY 1999
Component
Component
Name
1 Std A Single Piece]
DK= 1512
I”‘““:,I
,I
I,
DK-,513
(2)
117
116
119
120
121
122
123
124
125
126
127
i26
129
:
131
132
133
134
135
136
137
136
139
140
141
142
143
144
145
146
147
146
149
150
161
152
163
154
155
1%
157
158
159
160
161
162
163
164
165
1%
167
166
169
170
171
172
173
174
,114
,115
1154
,116
,117
1116
,119
,120
,122
1123
1124
1125
1129
,130
1131
1132
,133
1134
,135
,136
,137
,136
1139
1140
,142
1143
,144
1145
1147
1146
1152
,199
1201
1202
1204
1205
1206
,207
1206
1209
1210
1211
1213
1214
1216
1217
,222
1216
1219
1229
,231
1233
1234
,235
,236
1237
,236
1239
Mail Proc SCS
Delivery SCS
carrier Sequent* BCS
LSM
FSM
Parcel Sating 8 NM0 M*chin*s
FacedCanceler Letters
FacedCanceler Flats
Sack Sorting Machine
Small Psrcel Bundle Sortor
Remote Barcode System
Multislide
Other Equipment
sorting 10 Letter cases
SorUng to Flat Cares
Sorting to Hanging Sacks
Sorting to Rolling Container
Sorting to Pallets
Other Sorting Operations
REWRAP
Pootage Due
other Manual op*ration*
City Carder
RumI Carter
Acw”“tab~
cage
PUfOml
ofrw space
Mail Prcc Equip Maint
Employee Facilities
VMF
Mail Transpwt Equip Centers
Total Rental Key
Computer Fomarding Sys
OCR
Mail Prcc BCS
Car& Sequence BCS
Mivwy BCS
LSM
FSM
Parcal Saiina 6 NM0 Machine*
Faw/Carai&
L*Mn
FacerlCanceler Ftab
sack Borting Machine
1,030
2.57,
600
32
1.941
4,406
379
117
2,676
3.346
744
722
1,629
1.597
4.327
4,096
4.605
421
739
r5
1.614
7.535
250
1.085
23,767
6.363
1,571
6,786
I.546
600
94,551
494
11.722
3,093
3.091
20.636
21
7.049
6.464
2.765
26
3.59;
10.157
6,297
766
3,367
25.010
10.033
113.601
2.656
9.601
7.463
849
21.029
175
10,052
7.‘(70
SmallParcelBucd* Sotier
RemoteSamde System
Stmviw
PoweredTranrparrEquip
Genenl &kgisti
- BMC
General&Logistical-Non BMC
Total CapilalKey
ComputerForwardingSys
OCR
Mail Pmc BCS
carder sequence BCS
Delivery SCS
LSM
FSM
P*rcaI Sorting 6 NM0 Machlnsr
Page3of4
52
129
30
2
97
220
19
6
144
167
37
36
91
80
216
205
230
21
37
6
36
91
377
13
54
1,166
266
79
339
77
30
4.728
25
566
155
155
1,027
1
352
323
136
1
1%
506
265
39
1%
1.251
502
5,675
143
480
374
42
1,051
9
503
-1
DK-161,
(3)
970
2,442
570
30
I.844
4.166
360
111
2,734
3.161
707
666
1,736
1.517
4.111
3.690
4,375
400
702
156
689
1,723
7,166
237
1.031
22,579
5.095
1,492
6,447
1,469
570
89.623
469
11.136
2.938
2,936
19,609
20
6.697
6,141
2,627
25
3.411
9,649
5,032
746
3.199
23,759
9.531
107,626
2.715
9,121
7,109
607
19.976
1%
9.549
6.611
(4
1,030
2.571
600
32
1,941
4.406
379
117
2,678
3,346
744
722
1,629
1,697
4,327
4.0%
4.606
421
739
164
725
1.614
7.535
250
1,065
23.767
5;363
1,571
6.766
1.646
94,651
494
11.722
3.093
3.091
20,538
21
7.049
6,464
2.765
26
3,591
10,167
6.297
3.387
25.010
10.033
113.501
2,656
9,601
7,463
849
21,029
175
10,062
7.170
Figure 1
Standard A Single Piece Cost shift to First-Class 8 Priority Mail In FY 1999
Component
INumber
Component
khna
.-. ._
I/
(1)
179
160
161
182
183
164
165
166
487
188
189
190
191
192
193
194
1%
‘I
197
196
199
200
201
202
203
204
205
206
1,
1240
1241
1243
1244
1246
1247
1252
4248
1249
1250
1245
1258
1259
1261
1262
1264
1265
1266
1267
1268
1269
1270
127,
1273
1274
1275
1277
1282
1278
1279
$280
1289
El
(2)
(3)
- ._
I
DK = 1512
176
177
176
DK-IdlJ
1 Std A Single Piece 1 Ej
Facer/Cancaler Letters
Facer/Canc&r
Flats
Sack Sorting Machine
Small Parcel Bundle Sorter
ACES
Sbapping
Powered TranspoR Equip
General 8 Logistical. BMC
General 8 Logistical-Non BMC
Mail Transport Equip Centers
Rmwte Barcede system
Mail Prccersing Subtotal Key
Total Maintenance Labor Key
Computer Forwarding Sys
OCR
Mail Pmc BCS
carrier sequencs BCS
Daalive‘ly ECS
LSM
FSM
Parcel Sortim 6 NM0 Machines
Facet/Can&r
Letter8
Facar/ca”cder
nats
Sack SorUng Machine
Small Parcel Bundle Sorter
Remote Barozde System
Strapping
pavered Tmnspon Equip
Genenl8 Lcgisbcal . SMC
General 8 Logistical. Non EMC
Mail Transport Equip Centers
Total Parts 8 Supplies Key
3,697
193
7.812
a.260
165
10
391
414
2.885
144
387
318
192
6.351
3,843
4.284
2.580
106.688
1 t ,663
a.705
5.599
214
129
5,344
5,344
563
436
260
14.524
59
5.366
41.115
3.239
726
3
268
2.0%
162
106.666
97
7,158
17.770
2,406
a.192
26.126
3.029
243.960
404,674
5
356
669
120
110
410
1,306
151
12.196
FCM
95%
mc=151,
3.512
163
7.421
7.866
3.697
193
7.812
6,280
2.741
7.359
6.033
3,651
4.070
2.451
101.544
101.544
ll.060
a.270
5.319
3,462
13,796
58
5.098
39.g59
3.077
92
6.800
waal
2.2%
2.091
7.782
24.820
2,676
231.762
364,630
2.865
7.746
6.351
3.a43
4.284
For Single Piece Standard A. components 1439 mmugh 1453. see Kashani. Appendix A. workbook apa99.xls, spmadshwt
For all other c~mpqnenb 907 6vtwgh 1269. see Kashani. WP 8. Part II, Table 6. pager 3 mmugh 91.
pagll4 of 4
2.580
106.886
106.888
11,663
6.705
5.5%
3.665
14.524
59
5,366
41,115
3.239
97
7.158
17,770
2.4%
2.201
a.192
26.126
3,029
243.960
404,874
FY99dkr.
*0000000*4000000000
~000000020000000000
r000000020000000000
~000000403000000000
r000000002000000000
~oqoooooooooooooooo
~000000031000000000
,000000043000000000
~000000089000000000
k000000093000000000
r000000012000000000
,000000058000000000
~000000574000000000
1000000003000000000
1000000030000000000
,000000017000000000
1000000003000000000
1000000016000000000
~000000007000000000
1000000003000000000
i0000000l2000000000
1000000020000000000
iooooooo*oooooooooo
,000000003000000000
i00000000l000000000
1000000060000000000
,000000030000000000
i000000002000000000
,00000000l000000000
1000000009000000000
1000000031000000000
1000000003000000000
1000000003000000000
1000000012000000000
~000000089000000000
1000000093000000000
r000000022000000000
r0000000440o0000000
~000000001000000000
,000000020000000000
,000000001000000000
,000000016000000000
r000000016000000000
,000000365000000000
,000000007000000000
,000000001000000000
,000000079000000000
,oooooooooooooooooo
*000002037000000000
,000000017000000000
*000000012000000000
,000000020000000000
,000000003000000000
+000000020000000000
,000000001000000000
t000000060000000000
t000000030000000000
1
2
3
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12
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20
21
22
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24
25
26
27
28
29
30
31
32
33
34
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36
37
38
39
40
41
42
43
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47
48
49
50
51
52
53
54
55
56
57
+000000002000000000
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58
59
60
61
62
63
64
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72
73
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79
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92
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96
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100
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103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
119
1319
1320
1322
1323
1324
1365
1364
1366
1367
1330
1331
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+000000002000000000
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+000000097000000000
+0000002*0000000000
+000000019000000000
+000000006000000000
+000000144000000000
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+000000091000000000129 1129
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+OOOOOPOaOOOOOOOOOO
+000000215000000000131 1131
+000000205000000000132 1132
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142
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+000000079000000000144
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148
+0000047*8000000000
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150
+000000586000000000
151
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152
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153
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154
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156
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156
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157
+oooooonaooooooooo
158
+000000001000000000
159
+oooooo~aoooooooooo
160
+000000508000000000
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163
+ooooooi6aooooooooo
164
+000001*51000000000
165
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166
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167
+000000143000000000
168
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169
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170
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171
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1144
1145
1147
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1152
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1213
1214
1215
1217
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1219
1229
1231
1233
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1235
1236
1237
1238
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1239
1240
1241
1243
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+000000i44000000000
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~+000001306000000000
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la0
1.91
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183
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188
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190
191
192
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194
195
196
197
198
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200
201
202
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207
208
209
210
211
212
213
214
215
216
217
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219
220
221
222
223
224
225
226
227
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229
230
231
232
233
234
235
236
237
238
239
240
1247
1252
1248
1249
1250
1245
1258
1259
1261
1262
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1265
1266
1267
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1274
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1282
1278
1279
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1444
1445
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1448
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1450
1451
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908
909
911
912
913
914
915
971
916
917
918
919
920
922
923
924
925
929
NA
NA
NA
NA
NA
*A
ti*
NA
ti*
NA
NA
NA
NA
NA
NA
NA
*A
NA
NA
NA
ti*
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NA
NA
WI
NA
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NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
WI
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
*A
NA
NA
NA
NA
NA
NA
+000001684000000000
+000001761000000000
+000000422000000000
+0000008,9000000000
+000000026000000000
+000000381000000000
+000000017000000000
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241
242
243
244
245
246
247
248
249
250
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931
932
933
934
935
936
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251 942
+000000*2a000000000
252 943
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253 944
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254 902
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255 947
+000000,28000000000
256 1307
+000000223000000000
257 1363
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+000000370000000000
258 1314
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259 1371
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260 1315
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261 1316
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262 1317
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263 1318
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264 1319
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266 1320
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266 1322
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267 132,
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268 1324
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269 1365
+oooooooalooooooooo
270 1364
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271 1366
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272 1367
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273 1330
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274 1331
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275 1001
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276 1005
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277 1007
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278 iooa
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279 1009
1011
+000000920000000000
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+000000*37000000000
281 1012
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282 1013
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283 1014
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+000002683000000000
*a*
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285 1054
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286 1016
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287 1017
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288 101s
+000000401000000000
289 1019
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290 lo*0
+00000*995000000000
291 1022
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292 102,
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293 1024
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294 1025
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295 1029
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296 1030
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297 1031
+000004~40000000000
298 1032
+000004376000000000
299 1033
+000000464000000000
300 1034
+000000684000000000
301 10,s
NA
ti*
NA
NA
NA
NA
1511
NA
i-i*
NA
NR
NA
NA
NA
NA
NA
NA
Ii*
NA
NA
NA
NA
NA
NA
NA
NA
NA
NJL
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NP
Nd
NA
NA
w
Nd
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
---_---
.~_--~.l--
--
+000000165000000000
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302
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304
305
306
307
308
309
310
311
312
313
314
315
316
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318
319
320
321
122
323
324
325
326
327
328
329
330
131
132
133
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335
336
337
338
339
340
341
342
343
344
345
346
347
348
349
350
351
352
353
354
355
356
357
358
359
360
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1039
1040
1042
1043
1044
1045
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1052
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1122
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1147
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1204
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NA
NA
NA
NA
*iI
NA
NA
NA
*A
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
WI
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
Nil
NA
NA
NA
NA
*A
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
+000002627000000000
363
+00000002500000~0000 364
+000003411000000000
365
+000009649000000000
366
+000005032000000000
367
+000000746000000000
368
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369
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370
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372
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373
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374
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375
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376
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377
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376
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379
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380
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381
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382
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383
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384
+OOOOOOOOOOOOOOOOOO
365
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386
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387
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388
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389
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390
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391
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392
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393
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394
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395
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396
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397
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398
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399
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400
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401
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402
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403
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404
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405
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407
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408
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409
+000002878000000000
410
+000231762000000000
411
+000384630000000000
412
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1211
1213
1214
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1217
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1229
1231
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1237
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1264
1265
1266
1267
1268
1269
1270
1271
1273
1274
1275
1277
1282
1278
1279
lzao
1289
NA
NA
WI
NA
NA
*A
NA
NA
m
NA
NA
NA
NA
NA
NA
NA
NA
1’ NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
ti*
NA
1511
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0029 0920
0030 0922
0031 0923
0032 0924
0033 0925
0034.0929
0035 0930
0036 0931
0037 0932
0038 0933
0039 0934
0040 0935
0041 0936
0042 0937
0043 0938
0044 0939
0045 0942
0046 0943
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DECLARATION
I, Cameron Kashani, declare under penalty of perjury that the foregoing
answers are true and correct, to the best of my knowledge, information, and
belief.
I
,
Dated: ~5 -c;)c
*b
RESPONSE OF UNITED STATES POSTAL SERVICE WlTNESS YACOBUCCI
TO PRESIDING OFFICERS INFORMATION REQUEST NO. 12
Question 4. In response to POIR No. 5, question 4. witness Miller stated, using
First-Class as an example, that witness Yacobucci’s cost savings relied on only
one CRA unit cost for First-Class flats. For this reason, witness Miller concluded
that “[as] a result of this fact, the flats worksharing related savings results would
not have changed had witness Yacobucci used a third cost pool classification
similar to that in my testimony.”
In Standard A Regular Subclass, witness Moeller calculates a rate differential
between letters and flats based on witness Miller’s mail processing cost for
letters and witness Yacobucci’s mail processing cost for flats. Both the letter and
flat costs include nonworksharing-related costs. Excluding nonworksharingrelated costs from both letters and flats, would affect the size of the cost
differential unless, by coincidence, the per-piece nonworksharing-related cost for
letters and flats are equal.
a. Please provide actual average and normalized automation-related cost
savings for flats that reflect worksharing-related costs only, i.e.,
excluding nonworksharing-related costs.
b. Please provide revised pages’34, 35, and 36 of USPS LR-I-90
reflecting three columns (1) worksharing related - proportional, (2)
worksharing related - fixed per piece, and (3) not worksharing related
- fixed per piece.
‘,
c. Please provide revised electronic spreadsheets for USPS LR-I-90
incorporating the changes described in (a) and (b).
RESPONSE:
This response considers the modifications described in subparts (a) and (b)
jointly.
The following modifications are made to USPS LR-I-90, Flats Mail Processing
Cost Model. The modified model is filed as USPS LR-I-382, Modified Flats Mail
Processing Cost Model in Response to POIR No. 12, Question 4.
Worksheet
All worksheets
Modification
Header modified to reflect POIR No. 12, Question 4.
‘Control Sheer
Option added to exclude Not Worksharing-Related (Fixed)
costs. A 1 in cell 017 excludes Not Worksharing-Related
RESPONSE OF UNITED STATES POSTAL SERVICE WlTNESS YACOBUCCI
TO PRESIDING OFFICER’S INFORMATION REQUEST NO. 12
(Fixed) costs. A 0 in cell 017 includes Not WorksharingRelated (Fixed) costs.
‘Cost Averaging’
Cell D68 modified to note if Not Worksharing-Related (Fixed)
costs are excluded.
‘Scenario Costs’
CRA-adjustment methodology modified to reflect
Worksharing-Related (Proportional), Worksharing-Related
(Fixed), and Not Worksharing-Related (Fixed) CRA costs.
Cell I58 modified to note if Not Worksharing-Related (Fixed)
costs are excluded.
‘CRA Cost Pools
CRA cost calculations modified to reflect WorksharingRelated (Proportional), Worksharing-Related (Fixed), and Not
Worksharing-Related (Fixed) CRA costs.
I
(a) The following tables present “cost averages-actual’ and “cost averagesnormalized auto-related savings” that reflect worksharing-related costs only,
i.e., exclude Not Worksharing-Related (Fixed) costs. These numbers were
developed using USPS LR-I-382 and entering a 1 in cell D17 in the
worksheet entitled ‘Control Sheet.’
Subtracting one cost average-actual from another when holding
automationlnonautomation characteristics constant yields presortationrelated mail processing cost differences. Subtracting one cost averagenormalized auto-related savings from another when holding the presort
category constant yields isolated barcode-related savings.
Please note that presortation-related mail processing cost differences and
isolated barcode-related savings do not change merely by the inclusion or
exclusion of Not Worksharing-Related (Fixed) costs. The nature of Not
Worksharing-Related (Fixed) costs is that they do not affect worksharing-
RESPONSE OF UNITED STATES POSTAL SERVICE WlTNESS YACOBUCCI
TO PRESIDING OFFICER’S INFORMATION REQUEST NO. 12
related savings. As the reclassification of CRA mail processing costs in
response to subpart (b) of this request has no impact, the presortation-related
mail processing cost differences and isolated barcode-related savings remain
unchanged between this response and USPS-T-25. For example, the
isolated barcode-related savings for Periodicals Regular 3-Digit flats is 1.514
cents based upon this response (14.409 cents minus 12.895 cents) and
1.514 cents based upon USPS-T-25 (19.269 cents minus 17.755 cents;
USPS-T-25, p. 4, Table 11-2).
It is my understanding that there is merit in using total CRA mail processing
costs to develop a shape-based cost differential between letters and flats; If
one were to consider only worksharing-related costs in computing a shapebased cost differential, then certain shape-based cost differences would be
ignored. For example, platform costs are considered to be Not WorksharingRelated (Fixed) in regards to presortation or barcoding. However, platform
costs do vary with respect to shape. Flats, being larger than letters, may
require more containers and, therefore, more container handlings on the
platform. A shape-based cost differential based upon total CRA mail
processing costs, then, appropriately captures all shape-based cost
differences.
FIRST-CLASS
Basic, Nonautomation
Basic, Automation
3-Digit, Automation
5-Digit, Automation
Cost Averages Actual
29.495 (cents)
36.655
32.774
18.907
Cost Averages - Normalized
Auto-Related Savings
43.942 (cents)
38.841
29.560
18.938
RESPONSE OF UNITED STATES POSTAL SERVICE WITNESS YACOBUCCI
TO PRESIDING OFFICER’S INFORMATION REQUEST NO. 12
PERIODICALS REGULAR
Basic, Nonautomation
Rack Automation
_, .-.. - -.-...--.-.
* tomation
%Digit, Nonautomation
5-Digit, Automation
Carrier Route
Cost Averages Actual
17.921 (cents~
16.633
I
Cost Averages - Normalized
Auto-Related Savings
19.255 (cents)
13.472
13.038
8.273
8.712
3.780
12.895
8.860
8.605
n/a
PERIODICALS NONPROFIT
Basic, Nonautomation
Basic, Automation
3-Digit, Nonautomation
3-Digit, Automation
5-Digit, Nonautomation
5-Digit, Automation
Carrier Route
1 Cost Averages 1Actual
11.2:24 (cents)
9~05%
i._-8.504
7.590
5.022
5.106
2.075
I Cost Averages - Normalized 1
I
Auto-Relatid.Savinge ,
11.465 (ce”+II,*
10.15a
..~~-d
8.800
7.761
5.208
5.024
n/a
STANDARD MAIL (A) REGULAR
Basic, Nonautomation
Basic, Automation
3/5-Digit, Nonautomation
3/5-Digit, Automation
Cost Averages Actual
14.282 (cents)
13.975
8.668
8.181
Cost Averages - Normalized
Auto-Related Savings
16.341 (cents)
14.431
8.520
7.973
RESPONSE OF UNITED STATES POSTAL SERVICE WITNESS YACOBUCCI
TO PRESlDtNG OFFICER’S INFORMATION REQUEST NO. 12
STANDARD MAIL (A) NONPROFIT
Cost Averages -
Cost Averages - Normalized
A~~+n-Qd~+nrlCatrinnS
(b) Please refer to Attachment 1 to this subpart which depicts the worksheet
entitled ‘CRA Cost Pools’ (pages 34, 35, and 36 of USPS LR-I-90) as
modified to reflect three columns (1) Worksharing-Related (Proportional), (2)
Worksharing-Related (Fixed), and (3) Not Worksharing-Related (Fixed).
USPS LR-I-382, though providing the structural capability of classifying CRA
‘I’
mail processing costs as above, does not classify any CRA mail processing
unit costs as Worksharing-Related (Fixed).
Witness Miller has distinct automation and nonautomation CRA mail
processing unit cost categories (“CRA cost categories” or distinct CRA mail
processing unit costs for specific groupings of mail). Witness Miller, then,
develops presortation-related savings within the CRA cost categories and
automation-related savings across certain CRA cost categories. For
example, witness Miller develops presortation-related savings for Standard
Mail (A) Regular nonautomation letters by comparing rate category costs
within the nonautomation presort CXA cost category. Witness Miller
develops automation-related savings for Standard Mail (A) Regular letters by
comparing rate category costs across nonautomation presort and
automation, non-carrier route CRA cost categories.
By contrast, USPS LR-l-90 does not have separate automation and
nonautomation CRA cost categories. Instead, it develops presortationrelated savings and automation-related savings within the CRA cost
RESPONSE OF UNITED STATES POSTAL SERVICE WtTNESS YACOBUCCI
TO PRESIDING OFFICER’S INFORMATION REQUEST NO. 12
categories. For example, USPS LR-I-90 develops presortation-related
savings and automation-related savings for Standard Mail (A) Regular flats
within the Standard Mail (A) Regular CRA cost category.
Worksharing-Related (Proportional) costs vary with respect to the particular
worksharing activity or activities under consideration within and across CRA
cost categories. These costs proportionally affect the savings related to the
particular worksharing activity or activities under consideration, For example,
witness Miller treats the MODS BCS/ cost pool and USPS LR-I-90 treats the
MODS FSMl cost pool as Worksharing-Related (Proportional) because these
costs vary with respect to presortation and automation.
Worksharing-Related (Fixed) costs vary with respect to the particular
worksharing activity under consideration across CRA cost categories but not
to the particular worksharing activity under consideration within the CRA cost
category. These costs are added equally to the particular worksharing
activity within the CRA cost category, so any cost differences, or
worksharing-related savings, of the particular worksharing activity under
consideration within the CRA cost category are not affected by these costs.
However, these costs affect the worksharing-related savings across the CRA
cost categories. Any difference of these costs across the CRA cost
categories will be considered in the savings related to the particular
worksharing activity under consideration across CRA cost categories.
For example, witness Miller treats the MODS SPBS OTH cost pool as
Worksharing-Related (Fixed) within the Standard Mail (A) Regular
automation, non-carrier route presort CRA cost category because these costs
do not vary with respect to presortation within automation mail. However,
these costs do vary with respect to automation. Any difference of these costs
across the Standard Mail (A) Regular nonautomation presort and automation,
RESPONSE OF UNITED STATES POSTAL SERVICE WlTNESS YACOBUCCI
TO PRESIDING OFFICER’S INFORMATION REQUEST NO. 12
non-carrier route presort cost categories will be considered in the automationrelated savings.
USPS LR-I-90 does not treat any cost pool as Worksharing-Related (Fixed)
because it does not develop any worksharing-related savings across distinct
CF!A cost categories. Each cost pool either,does or does not vary with
respect to presortation and/or automation.
Not Worksharing-Related (Fixed) costs do not vary with respect to any
particular worksharing activities under consideration within and across CRA
cost categories. These costs are added equally to all particular worksharing
activities under consideration, so any cost differences, or worksharing-related
savings, between all particular worksharing activities under consideration are
not affected by these costs. For example, witness Miller and USPS LR-I-90
5
treat MODS 1PLATFRM costs as Not Worksharing-Related (Fixed) because
these costs do not vary with respect to presortation or automation.
(c) Please refer to USPS LR-I-382 for the electronic file that incorporates the
changes described in this response.
x
x
:
x
:
x
0.794
0,011
0.328
I .024
3.811
0.034
o.oyl
o.w2
0.596
0.030
I.361
DECLARATION
I. David Yacobucci, declare under penalty of perjury that the foregoing
answers are true and correct, to the best of my knowledge, information, and belief.
hva YLAL
DAVID YACOBUCCI
Dated:
RESPONSE OF UNITED STATES POSTAL SERVICE WITNESS EGGLESTON
TO PRESIDING OFFICERS INFORMATION REQUEST NO. 12, QUESTION 5
5. In the calculation of the CRA cost adjustment for letters, witness Miller treats
the platform cost pool as nonworksharing fixed. USPS-T-24. For the CRA
adjustment factor for flats witness Yacobucci also treats the platform costs as
nonworksharing fixed. USPS-T-25. For parcel post, however, witness
Eggleston treats the platform costs as proportional in calculating the CRA
adjustment factor. USPS-T-26, attachment A. pg. 2. Please explain why the
platform costs are considered proportional in parcel post and fixed, nonworksharing for flats and letters.
RESPONSE:
It is my understanding that witness Miller and witness Yacobucci assume that
the platform cost pool is fixed and not related to worksharing because platform
costs do not vary with the worksharing rate categories found in their testimonies.
For example, an automation 3-digit and an automation 5digit piece could both
be entered at the destination PD8C. Both of these pieces would incur the same
I
platform costs. Therefore, there is no platform cost savings associated with
more finely presorted mail.
On the contrary, the Parcel Post cost models presented in my testimony
estimate the cost savings between rate categories that do incur different
platform costs. For example, an inter-BMC parcel will pass through two BMCs
and will incur more platform costs than an intra-BMC parcel that will pass
through only one BMC. In addition, platform costs will vary between machinable
and non-machinable parcels due to different container profiles and conversion
factors. Since platform costs do vary between Parcel Post rate categories, the
platform costs pool is assumed to be variable.
DECLARATION
I, Jennifer
answers
Eggleston,
are true and correct,
declare under penalty of perjury that the foregoing
to the best of my knowledge,
information,
and belief.
cJ,l&G+oL&*
’ JENWER
L. EGGLESTON
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.
“CJ, /I
/f-
Eric P. Koetting
475 L’Enfant Plaza West, SW.
Washington, DC. 20260-l 137
(202) 266-2992; Fax -5402
May 25,200O
;:; -.\
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