BEFORE THE
POSTAL RATE COMMISSION
POSTAL RATE AND FEE CHANGES,
2000
RECEIVEC
POSTAL RATECOH~,~,$~~~
DOCKET NO. ,=@U@@trl+i
:
SECRETbH'r
COMMENTS OF UNITED PARCEL SERVICE
ON RECONSIDERATION
(January 12,200l)
United Parcel Service (“UPS”) submits these comments on reconsideration
pursuant to Commission
UPS anticipates
Commission
requested
“exceeded
Order No. 1301 (December
that a number of parties will address the question whether the
its lawful authority” when it reduced the Postal Service’s
revenue requirement.
Service on the Recommended
and Fee Changes,
11,200O).
Decision of the Governors
Decision of the Postal Rate Commission
Docket No. R2000-1, at 1 (December
wish to burden the Commission
of the United States Postal
with additional
4,200O).
actions must be based on substantial
Postal Service’s requested
contingency
(although,
has the authority to adjust
as always, the Commission’s
evidence in the record).
UPS’s position on the
provision has already been set forth in the
Initial Brief of United Parcel Service filed with the Commission
(at page 92).
Since we do not
argument on that point, we limit our
comments to observing that, in UPS’s view, the Commission
the Postal Service’s revenue requirement
on Postal Rate
on’september
13, 2000
In their decision, the Governors
Commission’s
recommendation
expressed
Governors
recommendation
handling cost into the surcharge
to extend the surcharge,
Standard Mail issues.
nonmachinable
Commission
apparently
of this aspect of the Commission’s
(emphasis
have not requested
decision.
When the Governors
Decision at 13, 14
Mail additional ounces, Bound Printed Matter, and Nonprofit
The Governors did not do so with respect to the Parcel Post
surcharges.
Governors
Decision at 14 concerning
also seems to be unsure whether
reconsideration
that issue. Order No. 1301 at 2 (“The Governors
increased
the full additional
Id. In the Governors’ view,
they expressly ask for it. See Governors
the First-Class
endorsed
should be phased in over time. Id.
Despite their concern, the Governors
desire reconsideration,
surcharge to
but at the same time
chose to incorporate
all at once in this case.”
the full amount of the required surcharges
concerning
Decision at 14. The Governors
their concern “that the Commission
reconsideration
among other things, the
to extend the Parcel Post nonmachinable
intra-BMC and DBMC parcels.
the Commission’s
also addressed,
Parcel Post. The
was being requested
on
also protest that rates should be
, possibly, to allow for a reduction in certain parcel post surcharges”)
added).
Any doubt on that score seems to have been resolved by the Postal Service’s
comments
in response to Order No. 1301. The Postal Service there states that, in
addition to the revenue requirement
where reconsideration
issue, “the Governors
and adjustment
might be warranted.”
United States Postal Service on Reconsideration
(December
identified three other matters
Memorandum
of the
and Request for Expedition
20, 2000) at 3-4. The Postal Service did not include the Parcel Post
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nonmachinable
surcharges
among those matters.
nonmachinable
surcharges
are not before the Commission
But even if the Parcel Post nonmachinable
Commission,
the surcharges
recommended
effect by the Governors are fully supported
important ratemaking
requirement
Thus, it appears that the Parcel Post
surcharges
nonmachinable
by the record.
contained
findings concerning
Parcel Post intra-BMC
noted, “No participant oppose[d]
488. Consequently,
discounts
and
surcharges”
on reconsideration
(Comments
surcharge,
sense; the methodology
The Governors do not
the additional
costs caused by
And as the Commission
Commission
of the cost estimates
of Parcel Shippers Association
Decision at
underlying
cited by the Parcel Shippers Association
and DBMC surcharges
BMC nonmachinable
Perhaps the single most
the proposed surcharges.”
on January 9, 2001, at 4) (“PSA Comments”)
intra-BMC
and allowed to take
in the statute is that each class “or type” of
and DBMC pieces.
the alleged “uncertainty
are now before the
by the Commission
mail cover the costs caused by it. 39 U.S.C. § 3622(b)(3).
contest the Commission’s
on reconsideration.
in its comments
on Reconsideration
just does not exist.
filed
Indeed, because the
represent an extension of the long-standing
they are not even “new” surcharges
used to calculate a nonmachinability
the [new]
inter-
in the usual
surcharge
for Parcel Post
is well-established.
PSA’s attempt to argue that “There is no evidence in the record to suggest that
mailers who send nonmachinable
machinable
parcels” (PSA Comments
stated in its Recommended
reasonable
parcels are different than mailers who send
at 4) misses the point. When the Commission
Decision that the increased surcharges
would “strike a
balance among affected mailers” (Opinion at 482) it was undoubtedly
referring to the fact that surcharges
nonmachinability
surcharges
which reflect all of the added costs of
are more equitable than ones which do not, since inadequate
result in cross-subsidies.
As noted above, the evidence in the record on the amount of the additional costs
caused by nonmachinable
intra-BMC
assertion on page 5 of its Comments,
cost bases and the consequences
presented
by the Postal Service.
the Commission
surcharges
and DBMC parcels is uncontested.
PSA had ample opportunity
of’ surcharges
Contrary to its
to “address both the
reflecting the cost differences
It just chose not to do so, in the apparent belief that
would merely “rubber stamp” the Postal Service’s proposed
despite the clear evidence that the proposed surcharges
would be well
below cost. Given PSA’s failure at the hearings to introduce even one iota of evidence
to suggest that the substantial
overstated,
cost differences
its belated speculations
mailers, and the “Competitive
concerning
presented
the “Cost Basis,” the “Impact” on
Impact” of the surcharges
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by the Postal Service are
come far too late.
The Commission
was correct to adopt surcharges
costs of intra-BMC and DBMC nonmachinable
parcels.
which cover the full additional
It should reaffirm that decision
on reconsideration.’
Respectfully
submitted,
cJ/-A-s:*d
Jofi E. McKeever
Phillip E. Wilson, Jr.
Attorneys for United Parcel Service
Piper Marbury Rudnick 8 Wolfe LLP
3400 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103-2762
(215) 656-3310
(215) 656-3301 (FAX)
and
1200 Nineteenth Street, NW
Washington, DC 20036-2430
(202) 861-3900
Of Counsel.
1.
Indeed, were the Commission to reduce those surcharges, the Commission
would have to recommend increases in other Parcel Post rates, so that Parcel
Post would continue to cover its attributable costs plus its proper share of
institutional costs as determined by the Commission.
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