UNITED STATES OF AMERICA
POSTAL RATE COMMISSION
WASHINGTON, DC 20268-0001
PoSTAl ifAT; :;. ;:t,+: -:.:,i
WICC oi i,(l' Stilii-,,(l;v
Edward J. Gleiman, Chairman;
George A. Omas, Vice Chairman;
Dana B. Covington; Ruth Y. Goldway;
and W.H. “Trey” LeBlanc Ill
Before Commissioners:
Docket No. R2000-1
Postal Rate and Fee Changes
NOTICE OF INQUIRY NO. 2 CONCERNING
BASE YEAR DATA
(Issued April 21, 2000)
On February 2, 2000, the Commission
issued Notice of Inquiry No. 1 Concerning
Base Year Data. The Notice of Inquiry noted that the Postal Service Request uses FY
1998 costs as the base for projection to test year costs, and that audited FY 1999 data
would become available soon. It asked participants
utilizing
to comment on the desirability
of
FY 1999 data in this case.
Participants
were given the opportunity
to comment on this subject at the
prehearing
conference
held on February 16, 2000, and invited to submit written
comments
on or before February 23, 2000. Those choosing to comment generally
recognized
the benefits of using more recent data as a base for projections,
but also
indicated it would be wise to await the actual publication of the more recent data so that
its suitability for any specific purpose could be evaluated.
The Postal Service filed its FY 1999 Cost and Revenue Analysis on April 4, 2000
(Library Reference
LR-I-275)
and the supporting
billing determinants
on March 31,
Docket No. RZOOO-1
-2-
2000 (Library Reference
LR-I-259).’
The Cost Segments and Components
has been filed, on April 4,200O (Library Reference
LR-I-276).’
Now that these data have been provided, and participants
opportunity
Report also
have had the
to review this material, it is important to promptly resolve whether this data
should be used in this proceeding,
might be appropriate,
and if so to what extent.
Several possible outcomes
for example: (1) use FY 1999 as the base year for all analyses;
(2) use the estimates of FY 1999 costs initially submitted by the Postal Service rather
than the actual data; or (3) some other result that one or more participants
suggest that
can be justified as yielding reliable results while protecting the due process rights of
participants.
Any use of actual FY 1999 cost data will entail some additional calculations
for example,
audited FY 1999 costs attributed in Commission-approved
not yet been calculated
methods have
and made part of the record in this case. All participants,
especially the Postal Service, should include in their comments
of additional
in order to allow this case to be completed within the statutory 10 month
period, and how that factor bears on their advice to the Commission.
are preparing
evidentiary
where appropriate,
presentations
Participants
while this matter is under consideration
be given the opportunity
In order to assist participants
to amend their presentations
to evaluate the significance
recently published
by the Postal Service, the Commission
three attachments
to this Notice of Inquiry.
estimated
and
an estimate of whether,
and to what extent, the use of FY 1999 data will require the commitment
resources
as,
that
will,
as necessary.
of the actual data
has had its staff prepare the
They show the difference between
FY 1999 and actual FY 1999 costs by subclass and service using estimated
and actual FY 1999 cost data, applying both the Postal Service’s proposed,
current Commission-established
and the
attribution methods. To derive the latter comparison,
’ Billing determinants for Express Mail and parcel post were omitted. They were provided as a
supplement to LR-I-259 on April 19, 2000.
* Related workpapers A and B were filed April 5, 2000 as Library References LR-I-277 and
LR-I-278, respectively.
-3-
Docket No. R2000-1
the Commission
used unaudited
information
provided pursuant to Rule 103 to develop
the FY 1999 costs reflecting existing attribution methods.
Attachment
1 is a table showing the unit costs for the estimated
interim year FY
1999 and the actual FY 1999 under both the Postal Service’s proposed cost
methodology
in R2000-1 and the Commission’s
three (3) columns of attachment
The first
1 are unit costs by class and subclass under the Postal
Service’s proposed cost methodology.
estimated
R97-1 cost methodology.
The first column shows the unit costs for
interim year 1999. The second column is the unit costs for actual FY 1999.
The third column shows the percent increase or decrease in unit costs of actual FY
1999 over the estimated
interim year 1999 unit costs in the first column.
Columns four through six show the same information
as the first three columns
with the difference being that the unit costs in columns four, five, and six are based on
the Commission’s
Attachment
R97-1 costing methodology.
2 details the derivation of the unit costs shown in attachment
first two pages of attachment
segments
and components,
Service in R2000-1.
2 detail costs by class and subclass from the cost
after final adjustments,
as originally filed by the Postal
The actual FY 1999 costs are from Library Reference
is the actual FY 1999 Cost Segments and Components
attachment
report.
R97-1 cost methodology,
Library Reference
l-276, which
Pages 3 and 4 of
2 show the costs by class and subclass, after final adjustments
Commission’s
1. The
under the
as prepared by the Postal Service and filed as
l-l 31. The actual FY 1999 costs are taken from the preliminary
1999 Cost Segments
and Components
FY
report - PRC Version filed as Exhibit 4 in
Docket No. IM2000-1.
An adjustment
had to be made in the PRC version of the estimated interim
year 1999 from Library Reference
reflect the Alaskan air adjustment.
methodology
l-131
Segment 14 air transportation
costs do not
However, costs under the Postal Service’s
and the actual FY 1999 Cost Segments and Components
Version filed in IM2000-1 did reflect the adjustment.
Attachment
report - PRC
3 details the
Docket No. R2000-1
adjustment
-4-
made to the PRC version interim year 1999 costs by class and subclass of
mail as shown in LR-I-131.
Participants
are requested to comment on the appropriate
results in this case on or before May 8, 2000.
Reply comments
use of actual FY 1999
may be filed by May 15,
2000.
By the Commission.
(SEAL)
fIrLfpz&
Cvril J. Pittack
Acting Secretary
Attachment
1
Page 1 of 1
USPS RZOOO-1
e
PRC R97-1
% Difference
Act. FY 99
e
Est.--
Regular
Nonprofit
Classroom
Standard (A):
Single-Piece Rate
Commercial Standard:
Enhanced Carrier Rte.
Regular
Aggregate Nonprofit:
Nonprofit Enhanced Carr. Rte.
Nonprofit Regular
Standard (8):
Parcels Zone Rate
Bound Printed Matter
Special Rate
Library Rate
U.S. Postal Service
Free for the Blind
International Mail
Total Mail
Special Services:
Registry
Certified
Insurance
COD
Money Orders
Total Volume Variable
a/ Attachment 2, Page l-2. Col. 6
bl Attachment 2, Page -21. Col. 9
cl (WI.2 - col.l)/col.l
e
Est.--
(1)
a/
First-Class Mail:
Single-Piece Letters
Presort Letters
Total Letters
Single-Piece Cards
Presort Cards
Total Cards
Priority Mail
Express Mail
Periodicals:
In-County
Outside County:
6
% Difference
Act. FY 99
(2)
bl
23.59
10.40
17.74
17.99
23.51
10.50
17.74
17.88
5.97
12.44
224.03
614.53
6.06
12.42
232.13
585.89
8.62
25.08
17.54
23.77
(3)
cl
-0.33%
1.04%
0.03%
-0.65%
I .47%
141
dl
Gil
el
16)
fl
-0.11%
1.13%
0.20%
0.08%
26.03
11.25
26.00
11.38
-0.18%
3.62%
-4.66%
19.47
19.76
6.41
13.60
247.53
935.10
19.51
19.78
6.49
13.65
263.34
954.44
9.35
8.45%
8.93
9.88
10.68%
24.87
17.63
24.48
-0.87%
0.50%
3.00%
26.57
18.61
25.21
26.29
18.77
25.40
-1.04%
0.88%
0.73%
231.51
1.16%
0.32%
6.39%
2.07%
292.76
6.81
15.73
7.13
15.00
4.62%
-4.64%
7.28
17.10
7.61
16.33
4.60%
-4.54%
6.78
10.96
6.36
11.16
-6.14%
7.23
11.85
6.60
12.14
-6.78%
2.46%
284.13
83.93
134.71
153.90
286.70
85.67
156.23
171.85
0.90%
290.30
84.42
139.20
158.56
294.06
88.58
163.60
175.61
1.30%
4.93%
17.53%
65.30
124.13
51.27
127.60
70.75
131.80
56.14
137.35
17.76
17.80
19.39
19.53
558.14
82.16
156.28
274.93
61.27
18.43
640.73
79.81
158.99
299.09
65.18
la.47
1.89%
2.07%
15.98%
11.66%
-21.48%
2.79%
0.22%
14.80%
-2.86%
1.73%
8.79%
6.37%
0.24%
517.65
90.35
159.23
306.81
65.37
20.10
d/ Attachment 2. Page
e/ Attachment 2. Page
fl (col. 5 - COI. 4)lCOl.4
494.46
87.79
164.11
333.81
71.34
20.25
3-4, Col. 6
3-4. Col. 9
10.76%
-20.65%
4.21%
0.76%
-4.48%
-2.83%
3.06%
8.80%
9.14%
0.74%
Attachment
2
Page 1 of 4
Docket No. RZOOO-1
Docket No. RZOOO-1
InWm
Year 1999 - USPS PrQpnsal
Total
cost per
A&alFY
Total
I!kzccf
First-Class Mail:
Single-Piece Letters
Presort Letters
Total Letters
Single-Piece Cards
Presort Cards
Total Cards
Total First-Class
Priority Mail
Express Mail
Mailgrams
(1)
(2)
12,685,093
4.455.799
17,140.892
512,957
145.830
658,787
17,799,679
53,783,619
42,859.119
96,642,738
2,850,770
2,442,946
5,293,716
101,936,454
2,664,735
(3)
1999 - USPS Propasal
(4)
cost per
Yolumesel
(5)
(‘3)
23.585
10.396
17.736
17.994
5.969
12.445
17.462
12,643,541
4,502.OOO
17.145.541
509,621
147,972
657,593
17,803,134
53,783,619
42,859,119
96,642.738
2,850,770
2,442,946
5,293,716
101.936,454
23.508
10.504
17.741
17.877
6.057
12.422
17.465
1,189,469
224.027
422,018
1,100
68,673
4,087
614.533
26.915
2,761,136
402,347
919
1,189.469
68,673
4,087
232.132
585.888
22.486
77,005
893,454
8.619
83.514
893,454
9.347
1,842.442
346,552
14.085
2,280,084
7,345,117
1,975,997
59,259
10,273,827
25.084
17.538
23.769
22.193
1,790,473
373,761
14,580
2,262,328
7.200,355
2,120,463
59,555
10,273,827
24.866
17.626
24.402
22.020
97,318
42,037
231.506
Periodicals:
In-County
Outside County:
Regular
Nonprofit
Classroom
Total Periodicals
Standard (A):
Single-Piece Rate
Commercial Standard:
Enhanced Carrier Rte.
Regular
Total Commercial
Aggregate Nonprofit:
Nonprofit Enhanced C
Nonprofit Regular
Total Aggregate Nonp
Total Standard (A)
Standard (B):
Parcels Zone Rate
Bound Printed Matter
Special Rate
Library Rate
Total Standard (B)
42,037
2,232,237
6,135,143
8,367,380
32,755,962
38,996.265
71,752,247
6.815
15.733
11.661
2,335,311
5,850,752
8,186,063
32.755,982
38.996,265
71.752,247
7.129
15.003
11.409
197,751
1,199,649
1,397,400
2,917.830
10,949.596
13,867,426
85,661,710
6.777
10.956
10.077
11.399
185,605
1,222,333
1,407,938
9,691,319
2.917.830
10.949,596
13.867,426
85.661,710
6.361
11.163
10.153
11.313
318,982
495,662
284.133
83.934
200,404
28.077
1,043,125
134.709
153.902
156.792
914,529
424,658
313,097
48.250
1,700,534
318,982
495,662
200,404
28.077
1.043,125
286.702
85.675
156.233
171.849
163.023
9,764,780
906,332
416,027
269,962
43,211
1,635,532
Attachment
2
Page 2 of 4
Docket No. R2000-1
lnkria
Docket No. R2000-1
Year 1999 - USPS Pcowsal
Total
iTAxka!Volumes
(1)
U.S. Postal Service
Free for the Blind
International
Mail
Total Mail
Special Services:
Registry
Certified
Insurance
COD
Special Delivery
Money Orders
Stamped Cards
Stamped Envelopes
Special Handling
PO Box
Other
Total Special Servic
Total Volume Variable
Other Costs
Total Costs
% Volume Variable
a/ USPS Exh. 14C
bl USPS Exh. 14A at 9
cl COI llcol.2
cost per
LF!k!xd
(3)
c-4
Ac!uaLFY 1999 - USPS Propnsal
Total
(4)
cost per
Volumes(5)
382,283
(6)
34,757
362,283
53,227
65.300
27,290
53,227
51.271
1,195.945
963,425
124.135
1.229,339
963,425
127.601
35,798,630
201,576,280
17.759
35,878,346
201,576,280
17.799
94,326
404.721
75,968
15,418
1
135,338
3,136
16,900
492,629
48,610
5,608
558.142
82.155
156.281
274.929
108,283
393,151
77,263
16,773
16,900
492,629
48,610
5,608
640.728
79.807
158.986
299.091
220.878
61.273
143,959
3.188
11,120
2.128
504.118
94.861
1,354,864
220.878
65.176
201,576,280
18.428
12.529
30.956
37,233,210
25,158.632
62,391,842
60.1%
201,576,280
18.471
12.481
30.952
11,380
2,297
502,726
101,766
1,347,077
37,145.707
25,254.661
62,400.368
60.1%
201,576.280
201,576.280
el USPS LR-I-275. FY 1999 Cost and Revenue Analysis
report at 3-4
fl col.4/COl.5
dl USPS LR-I-276. FY 1999 Cost Segments and Components
Report, D report after final adjustments
Attachment
2
Page 3 of 4
Docket No. R2000-1
lokim
Docket No. R2000-1
Year 1999 - PRC MetI&
Actual FY 1999 - PRC hdefhpd
cost per
Total
Total
Cost per
Pi2xiLd
First-Class Mail:
Single-Piece Letters
Presort Letters
Total Letters
Single-Piece Cards
Presort Cards
Total Cards
Total First-Class
Priority Mail
Express Mail
Mailgrams
Periodicals:
In-County
Outside County:
Regular
Nonprofit
Classroom
Total Periodicals
Standard (A):
Single-Piece Rate
Commercial Standard:
Enhanced Carrier Rte.
Regular
Total Commercial
Aggregate Nonprofit:
Nonprofit Enhanced C
Nonprofit Regular
Total Aggregate Nonp
Total Standard (A)
i?!iadl
(1)
(7.)
13.997.858
4.822.436
18.820.294
563,347
156,714
26.026
11.252
19.474
19.761
6.415
13.602
19.169
13,981,947
43876,852
18.858,799
563,807
156,536
722,343
19,581.142
53,783.619
42.859.119
96,642.738
2,850.770
2.442.946
25.997
11.379
19.514
19.777
6.490
720,061
19240,355
53,783,619
42,859,119
96,642,738
2.850,770
2,442,946
5,293,716
101.936,454
5.293,716
101,936.454
13.645
19.209
2,944.313
642,159
1,254
1.189,469
68,673
4,087
247.532
935.097
30.693
3,132.354
655,440
1,136
1.189.469
69,673
4,087
263.341
954.436
27.795
79,758
893,454
8.927
88,273
893,454
9.880
1,951,655
367,699
14,940
2.414.052
7,345.117
1.975,997
59,259
10,273,827
26.571
18.608
25.212
23.497
1.893,303
398,042
15,124
2,394,742
7,200,355
2,120.463
59,555
10.273.827
26.295
18.771
25.395
23.309
123,068
42,037
292.761
(3)
42,037
(4)
(5)
(‘3)
2.383.236
6.669,811
9.053,047
32,755,982
38.996.265
71.752.247
7.276
17.104
12.617
2,492,941
6.366.766
8.859.707
32,755.982
38,996,265
71,752,247
7.611
16.327
12.348
211,052
1.297.732
2,917.830
10,949.596
13.867.426
85.661.710
7.233
11.852
192,518
1,329.675
1.522.193
10.504.968
2,917,830
10,849.596
13,867,426
85,661,710
6.598
12.144
1.508,784
10,561,831
10.880
12.330
10.977
12.263
Attachment
2
Page 4 of 4
Docket No. R2000-1
1999 - PRC Mu
Parcels Zone Rate
Bound Printed Matter
Special Rate
Library Rate
Total Standard (B)
U.S. Postal Service
Free for the Blind
International
Mail
Total Mail
Special Services:
Registry
Certified
Insurance
COD
Special Delivery
Money Orders
Stamped Cards
Stamped Envelopes
Special Handling
PO Box
Other
Total Special Servic
Total Volume Variable
Other Costs
Total Costs
% Volume Variable
al
bl
cl
dl
Docket No. R2000-1
Actual FY 1999 - PRC Method
Total
cost per
-Volumes
EzieGed
(2)
Total
cost per
Volumes-
f-3)
(1)
926,012
418,430
278,955
44,518
1,667,914
318.982
495,662
200,404
28.077
1,043,125
(3)
290.302
84.418
139.196
158.556
159.896
(4)
938,012
439,055
327,865
49,306
1,754,238
37,660
382,283
53,227
70.754
29,882
53,227
56.141
1,289,813
963,425
131.802
1.323,306
963,425
137.354
39,079,159
201,576,280
19.387
39,377,208
201,576,280
19.535
87,483
445,085
77,400
17,206
1
144,387
3,136
11,319
294.064
88.580
163.602
175.610
168.171
382,283
-
16,900
492,629
48,610
5,608
517.651
90.349
159.226
306.812
83,563
432,481
79,772
18,720
16,900
492,629
48,610
5,608
494.456
87.790
164.106
333.809
220,878
65.370
157,579
3.188
11,076
1,203
496.805
152,957
1.437.344
220,878
71.342
201.576,280
20.100
10.868
30.968
40.814.552
21.577.283
62,391,835
65.9%
1,760
494,294
155,506
1.437,577
40,516,736
21,907,456
62,424.192
65.7%
(5)
318,982
495,662
200,404
28,077
1,043,125
201.576,280
201,576,280
201,576,280
20.248
10.704
30.952
Attachment 3. Col. 4
e/ USPS LR-I-275. FY 1999 Cost and Revenue Analysis
USPS Exh. 14A at 9
report at 3-4
col.l/col.2
w co1 4/col.5
Docket No. IM2000-1. Exh. 4. Preliminary Cost Segments
and Components Report, FY 1999-PRC Version at 7-8
Attachment
3
Page 1 of 2
Unadjusted
Est. FY 99
Alaskan
Line
NO.
4
5
6
7
Single-Piece Cards
Presort Cards
Total Cards
Total First-Class
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
(2)
(1)
1
2
3
Priority Mail
Express Mail
Mailgrams
Periodicals:
In-County
Outside County:
Regular
Nonprofit
Classroom
Total Periodicals
Standard (A):
Single-Piece Rate
Commercial Standard:
Enhanced Carrier Rte.
Regular
Total Commercial
Aggregate Nonprofit:
Nonprofit Enhanced Car. Rte.
Nonprofit Regular
Total Aggregate Nonprofit
Total Standard (A)
Unadjusted
Est. FY 99
Total
Adjusted
Est. FY 99
Total
(3)
(4)
13,997,992
4,822,436
18,820,428
563,347
156,714
720,061
19,540,489
13.997,056
4.822,436
18.820.294
563,347
156,714
720,061
2,945.067
642,159
1,254
2,944.313
642,159
79,758
79,758
Aid
ahi
First-Class Mail:
Single-Piece Letters
Presort Letters
Total Letters
Adjusted
Est. FY 99
146
12
146
12
146
12
819
65
19540,355
1,254
142
35
2
179
11
3
0
14
1,951,766
367,731
14,942
2.414,217
1,951,655
367,699
14,940
2.414.052
546
559
1,105
43
44
87
2,383,739
6,670.326
2,363,236
6.669,811
9.053,047
2
20
22
1,127
0
2
2
211,054
1,297,750
1,508,804
10,562,869
211,052
1.297.732
1.508.784
89
10,561,831
Attachment
3
Page 2 of 2
Unadjusted
Est. FY 99
Alaskan
Line
NO.
Biral
Unadjusted
Est. FY 99
Total
Adjusted
Est. FY 99
Total
(3)
(4)
Ai&
(2)
(1)
Standard (8):
24 Parcels Zone Rate
96,560
7,619
1,014,953
926,012
25
26
27
28
122
114
23
96,819
10
9
2
7,639
418,542
279,060
44,539
1,757.094
418,430
278,955
44,518
1,667,914
208
16
37,660
37,660
1,269,813
1,269,813
39,170,622
39,079,159
Bound Printed Matter
Special Rate
Library Rate
Total Standard (B)
29 U.S. Postal Service
30 Free for the Blind
31 International
Mail
32 Total Mail
33
34
35
36
37
38
39
40
41
42
43
44
99,298
7,835
Special Services:
Registry
Certified
Insurance
COD
Special Delivery
Money Orders
Stamped Envelopes
Stamped Cards
Special Handling
PO Box
Other
Total Special Services
45 Total Attributable
46 Other Costs
99,298
47 Total Costs
99,298
48 Alaska Air Adjust.
a/
b/
cl
d/
el
Adjusted
Est. FY 99
Alaskan
USPS LR-I-131. Vol.D, Table D at 45-46
L.47 ~01.2 x 1.48 ~01.2
Distributed on basis of Col. 1
USPS LR-I-131, Vo1.D. Table E at 1-2
(0~1.2 - Col.1) + Col.3
7,835
91,463
99.298
bi
87,483
445.085
77,400
17,206
1
87,483
445,085
77,400
17,206
1
144,387
3,136
11,319
1,760
494,294
155,506
1,437,577
144,387
3,136
11,319
1,760
40,608,199
21,815,993
62,424,192
7.890% fl
W USPS LR-I-59. Sect. 7 at 3
494,294
155,506
1,437,577
40,516,736
21,907,456
62.424,192