-.
..
BEFORE THE
POSTAL RATE COMMISSION
20268-0001
WASHINGTON, D.C.
Special
Services
Docket No. MC96-3
Fees and Classifications
ANSWERSOF THE OFFICE OF THE CONSUMERADVOCATE
TO INTERROGATORIESOF UNITED STATES POSTAL SERVICE
WITNESS: JAMES F. CALLOW (USPS/OCA-T300-l-17)
(OCTOBER25, 1996)
The Office
of the Consumer Advocate
of James F. Callow
to interrogatories
October
The answers
11, 1996.
interrogatories
interrogatory
verbatim
submits
USPS/OCA-T300-l-,17,
assume that
are to OCA-T-300,
is stated
hereby
as revised
all
references
October
and is followed
Respectfully
the answers
dated
in the
El, 1996.
Each
by the response.
submitted,
&tde&?+.DA&
SHELLEY S. DREIFUSS
Attorney
Office of the Consumer Advocate
ANSWERSOF OCA WITNESS JAMES F. CALLOW
TO INTERROGATORIESUSPS/OCA-T300-l-17
USPS/OCA-T300-1.
Please refer
to our [sic]
testimony
at page
4, lines
17-19.
administrative
Do you agree that "these greater
burdens" would represent
extra costs?
If no, please exp1aj.n
fully.
A.
The quoted
associated
Service
with
phrase
non-resident
has not
quantified
associated
with
providing
residents,
or provided
causing
behaviors
know whether
cost
to quantify
difference
to greater
there
administrative
box service.
Since
any attributable
cost
box service
any studies
of residents
versus
non-residents,
for
providing
The fact
that
the Postal
Service
any alleged
cost
differences
insignificant.
versus
frequency
costs
is
Postal
differences
to residents
on the
burdens
the
are any extra
to non-residents.
fit
refers
suggests
non-
of costI do not
box service
has not
seen
that
such a
ANSWERSOF OCA WITNESS JAMES F. CALLOW
TO INTERROGATORIESUSPS/OCA-T300-l-17
Please refer
to your testimony
at page 8,
USPS/OCA-T300-2.
Is it possible
lines
18-20 and to Transcript
volume 3, page 691.
to justify
a fee on the basis of "cost-causing"
behavior
by nonresidents
even if you cannot determine
the precise
amount of the
cost?
If your response is in the negative,
please explain
fully.
A.
No.
any cost
The Postal
differences
non-residents
fee should
extra
costs
Commission
Service
associated
vis-a-vis
bear
with
residents.
not
demonstrated
providing
Moreover,
some relationship
of non-resident
would
has not
to costs.
box service
know where to set
costs.
-
that
box service
are
to
the non-resident
Since
are unknown,
the
there
the
alleged
the
fee in relation
to
ANSWERSOF OCA WITNESS JAMES F. CALLOW
TO INTERROGATORIESUSPS/OCA-T300-l-17
USPS/OCA-T300-3.
Please refer to
lines
13-15.
Is it your claim that
on newspaper articles
to "establish
unavailability
of post office
boxes
A.
I ,only know what witness
NO.
reviewed
pages
numerous
references
newspaper
articles
later
obtained
25-31
in witness
anecdotal
concerning
appeared
in the
supplemental
3/716-17
and 738.
unavailability
possible
with
relied
Although
Landwehr's
of post
she
respect
may
office
have relied
to Elaine,
upon by witness
which
WA.
she relied
testimony.
non-resident
response
Needham did
not
testimony
concerning
the
and non-resident
I am not
Needham for
Needham
and
to OCA/USPS-T?-38.
on witness
this
were
box usage which
witness
boxes
I
of
Witness
from postmasters
on.
There
is comprised
box service.
information
managers
witness
Needham's
office
district
mention
Needham said
to LR-SSR-105,
on post
your testimony
at page 9,
witness Needham relied
m
a link between the
and non-resident
usage?“
Landwehr
aware
of other
purpose.
specifically
usage,
for
See Tr.
this
it
is
purpose
information
ANSWERSOF OCA WITNESS JAMES F. CALLOW
TO INTERROGATORIESUSPS/OCAT300-1-17
USPS/OCA-T300-4.
Please refer
to your testimony
at page 10,
lines
2-4.
In what way(s) would non-residents
be forced to move their
(a)
box service
under the Postal Service's
proposal?
Please
provide
all evidentiary
support
for your response.
you have to support a c:laim
that
(b) Provide all information
"forcing
non-residents
to move would [sic]
simply
shifyt box
shortages
to other post offices.“
A.
a.-b.
The quoted
incomplete.
is that
shortages
non-residents
to other
Under
boxholders
face
local
the
post
boxholders,
To the extent
could
Needham did
The Postal
Service
has provided
boxholders
is a matter
of
proposal.
logic.
not
proposal,
simply
shift
box
that
non-resident
not
obtain
no information
might
post
this
from
offices.
possibility.
on the number of
become resident
I have no evidence
at thei,r
become resident
in other
consider
not pay
box service
non-residents
occur
fee;
boxholders
or no longer
witness
of its
to demonsitrate
pay the non-resident
Apparently
a result
Needham fails
Service's
office;
box shortages
non-resident
from page 10 is
offices."
choices:
Service.
testimony
to move would
Postal
three
my
fee and become resident
delivery
Postal
post
the
the non-resident
of
"What witness
I said:
forcing
portion
boxholders
on this
point;
as
it
ANSWERSOF 00. WITNESS JAMES F. CALLOW
TO INTERROGATORIESUSPS/OCA-T300-1-17
USPS/OCA-T300-5.
3 to 7 of your testimony,
Please refer
to page 11, lines
(a)
where you refer
to witness
Lion's
finding
that 38 percfent of
postal
facilities
have all boxes in use for at least csne
size ca,tegory.
Please confirm
that such a situation
does
present
a "post office
box shortage
problem"
fclr the
customer that wants a box of the particular
size that is
unavailable,
at the prescribed
fee for that box size.
If
you do not confirm,
please explain.
Please refer
to your testimony
at page 12, lineis 3-5, where
(b)
you state that "a more realistic
measure [sic]
is to c:ount
only [sic]
where no boxes of any size are available"
(emphasis added).
Please explain
why this is a more
realistic
measure for those customers interested
in a
particular
box size at the specified
price.
Witness
A.
a.
post
office
figure.
boxes
This
For box size
this
size
5 are,
Table
for
1, 10 percent
are in use.
Thus,
a box size
office
3.
basis
of post
with
offices
The percentages
for
the unavailability
his
for
report
a potential
(and no, other),
where all
boxholder
the highest
boxes
all
box sizes
12 and 5 percent.
of
38-,percent.
See OCA-T-300
of my testimony.
13, 22,
box size
a post
exaggerated
on a nationwide
respectively,
particular
grossly
is the point
6, at 9.
finding
Lion
boxes
at 11.
of
2, 3, 4 and
See USPS-T-,4,
who desire::
a
probability
of
are in use is
22 percent
ANSWERSOF OCA WITNESS JAMES F. CALLOW
TO INTERROGATORIESUSPS/OCA-T300-l-17
.
CONTINUATION OF ANSWER TO USPS/OCA-T300-5:
b.
is,
This
is
a misquote
"A more realistic
to count
only
of my testimony.
measure
those
offices
of resident
The complete
boxholder
quote
hardship
where no boxes of any size
is
are
available."
For a resident
local
delivery
preclude
resident
probability
about
words,
post
office,
that
5 percent.
the
offices
more realistic
boxholders.
fact
seeking
box service
the absence
box service.
of any boxes
Using
any one resident
that
a resident
could
of hardship
walk
this
data,
situation
of OCA-LR-2.
into
and obtain
for
resident's
available
Service
face
to Notice
from the PO Box Study
measure
Postal
would
See Attachment
at the
potential
95 percent
would
the
is
In other
of all
a box seems to me a
resident
ANSWERSOF OCA WITNESS JAMES F. CALLOW
TO INTERROGATORIESUSPS/OCA-T300-l-17
Please refer
to your testimony
at page 11,
USPS/OCA-T300-6.
lines
12-13.
any evidence you have to support
your
(a) Please provide
assertion
that potential
boxholders
in post offices
where
all size 1 boxes are in use may still
be willing
to use a
size 2 or size 3 box.
that the potential
boxholder
would not care
(b) Do you believe
about the facts that size 2 boxes are at least 45 percent
more expensive
than size 1 boxes, and size 3 boxes are over
150 percent
more expensive
than size 1 boxes.
A.
problem
exists
offices.
at only
USPS-T-4,
problem
priced
than
See USPS-T-4,
a.-b.
would
care.
CMRA boxes
a size
service
1 box.
Table
10 percent
Table
6.
However,
is between
11.
(not
first
38 percent)
A potential
boxholder
the average
fee for
203 and 503 percent
Compared to paying
at a CMPA, a post
Note
office
even higher
box size
attractive.
-,
that
this
of post
facing
the
this
lowest-
more expensive
fees
2 or 3 would
for
be
box
ANSWERSOF OCA WITNESS JAMES F. CALLOW
TO INTERRCGATORIESUSPS/OCA-T300-1-17
USPS/OCA-T300-7.
Please refer
to page 12, lines
12-14 of your
testimony.
why there is "no nationwide
box availability
(a) Please explain
problem"
for those customers at facilities
that have no
boxes or that have boxes only in a size not wanted.
A.
a.
Potential
obtaining
boxholders
box service
at the post
nationwide
basis.
constitute
a nationwide
potential
office
post
OCA-T-300
boxholder.
probability
for
offices
same
If
is almost
Even for
price
of obtaining
choice
is
88 percent
there
chance
of their
ch.oice
In my view,
that
problem
for
is no non-resident
of choice
is even higher.
l-the
on
a
does not
any
fee,
the
at a! nearby
In the
most popular
of
post
case of two
box size-the
99 percent.
potential
chance
at 12.
the box size
and box size
probability
office
box availability
of obtaining
the
have a 95-percent
boxholders
this
box size
seeking
only
at the post
box size
office
1, the
of their
(l-.11667*100).'
Proportion
Of
1 See Attachment
to Notice
of OCA-LR-2.
Compare Table:
Proportion
Of
Facilities
With No Boxes Available
(line
5) with
the Table:
Table
6 from USPSFacilities
With All
Boxes Rented
(line
5). which replicates
The probability
of no boxes of size
1 being
available
(11.667
percent)
T-4.
is not the same as the probability
of all
boxes size
1 rented
(10 percent).
there
can be no size
1 boxes available
at an office
where none
For example,
are installed.
ANSWERSOF OCA WITNESS JAMES F. CALLOW
TO INTERROGATORIESUSPS/OCA-T300-l-17
Please refer
to your testimony
at page 15,
USPS/OCA-T300-8.
lines
20-21, and page 16, lines
l-2.
Group I fees with subgroups A, B, and C
(a) Are the current
If no, please explain
fully.
discriminatory?
Since
Group
I
and
Group
II
both
offer
carrier
delivery,
is
(b)
the large fee discrepancy
between these two groups
If no, please explain
fully.
discriminatory?
A.
II,
Yes.
Both within
Group I and between
Groups
are large,
unexplained
disparities
coverage.
a.-b.
there
Group IC pays a much higher
box service
than
institutional
tried
costs
to reduce
However,
redefinition
Groups
a real
in cost
to this
for
Group II
In developing
the disparity
of groups.
coverage
IA and IB.
at all.
solution
cost
in cost
the
same level
of
pays no
my fee proposal,
coverage
problem
I and
would
by group.
require
I
ANSWERSOF OCA WITNESS JAMES F. CALLOW
TO INTERROGATORIESUSPS/OCA-T300-l-17
USPS/OCA-T300-9.
Please refer
to your testimony
at page 16,
lines
13-15, witness
Carlson's
testimony,
and LR-SSR-105.
Carlson anywhere in his testimony
provide
(a) Does witness
reasons why customers desire non-resident
box service?
Please identify
all cites.
reasons why customers desire non(b) Does LR-SSR-105 provide
Please identify
all cites.
resident
box service?
A.
a.
respect
cited
I cited
witness
to the value
nor
examined
Carlson
of box service
witness
Carlson's
in my testimony
at page 27 with
I have neither
generally.
testimony
for
the purpose
requested.
b.
I cited
LR-SSR-105
the unavailability
I have neither
requested.
of post
cited
in my testimony
office
nor examined
boxes
at page 9 concerning
and non-resident
LR-SSR-105
for
usage.
the purpose
ANSWERSOF OCA WITNESS JAMES F. CALLOW
TO INTERROGATORIESUSPS/OCA-T300-1-17
USPS/OCA-T300-10.
Please refer
to your testimony
at page 24,
lines
10-13.
Why would proposed fees that are below the fees
recommended by the Commission and approved by the Gc'vernors in
Docket No. R94-1 be "presumptively
fair and equitable"?
A.
The fees
I propose
by the Con-mission
unquestionably
lower
than
the
the Governors
boxes,
where
that
and approved
recommended by the Commission
fees
are well
coverage
is
Commission
equal
by proposed
below
to the cost
i.e.,
I propose
increases
cost.
I propose
fee schedule;
and approved
The fees
reconmended
are
fees
are balanced
the current
by the Governors
and equitable.
and decreases
under
from those
fair
fee increases
that
are unchanged
that
and approved
for
Group II
The combination
produces
coverage
that
by the Governors
a teat
in the
test
recommended
in Docket
are
of the
year
cost
year
by the
No. R94-,l.
by
ANSWERSOF OCA WITNESS JAMES F. CALLOW
TO INTERROGATORIESUSPS/OCA-T300-1-17
USPS/OCA-T300-11.
Please refer to your testimony
at page 24,
lines
19-21.
Assume you proposed the Postal Service's
proposed
box fees for Subgroups IA and IB.
Could your proposed Group IC
fees have then been adjusted
down from the Postal Service's
proposal
to move the Subgroup IC cost coverage closer
to the
Subgroups IA and IB cost coverages?
A.
The mathematical
However,
I rejected
my fee proposal.
revenue
cost
fees.
gain
coverage
exercise
this
This
option
option
and a cost
in the
you describe
test
on policy
would
coverage
year
is possible.
grounds
have resulted
greater
than
when developing
in a large
100 percent-the
at the Commission's
recommended
ANSWERSOF OCA WITNESS JAMES F. CALLOW
TO INTERROGATORIESUSPS/OCA-T300-l-17
USPS/OCA-T300-12.
Please refer
to your testimony
at page 25,
lines
15-20 and your Table 2. Why do you feel it is necessary
to
propose a cost coverage
below 100 percent
for Subgroup IA, sizes
4 and 5, and Subgroup IB, sizes 4 and 5?
A.
I did
every
not
attempt
box size.
balance
In developing
several
goals
One was to reduce
also
attempted
box size
fees.
to propose
to,
5 closer
while
a 100 percent
my
fee proposals,
maintaining
the disparity
and succeeded
to 100 percent
cost
in,
than
I attempted
contribution
in cost
coverage
moving
it
for
to
neutrality.
by box size.
the cost
would
coverage
coverage
be under
current
I
for
ANSWERSOF OCA WITNESS JAMES F. CALLOW
TO INTERROGATORIESUSPS/OCA-T300-l-17
USPS/OCA-T300-13.
Please refer
to your testimony
at page 26,
lines
6-10.
Would the disparity
between Group I and Group II
fees still
be reduced under the Postal Service's
proposal.
Please explain
your answer fully.
A.
for
However,
Yes.
in contrast
Group IC and Group II
smaller
disparity
consequence
current
of my proposal
levels.
the
disparity
However,
a real
solution
of groups.
my proposal
Service's
results
Group IC and Group II
to reduce
My fee proposal
addresses
redefinition
between
fees,
to the Postal
in cost
to this
for
proposal
in a much
fees.
Group IC box fees
This
from
Group IC and Group II
coverages
problem
by group
would
is a
also
and box size.
require
ANSWERSOF OCA WITNESS JAMES E. CALLOW
TO INTERROGATORIESUSPS/OC?-T300-l-17
USPS/OCA-T300-14.
testimony.
Please explain
(a)
relatively
low
Does
this
mean
(b)
Does this imply
(c)
A.
a.
lines
refer
to page 26,
line
19 of your
why "post office
box service
offers
value".
low relative
to alternatives
such as QQ$.s.
a low or high price elasticity?
See OCA-T-300,
page 26,
lines
19-21
through
page 27,
l-5.
b.
My comparison
However,
CMRAs.
post
suite
office
was to carrier
box service
CMRAs offer
service,
services
such as call-in
or box address
Although
C.
that
Please
price
value.
marginal
not
There
checking
I am not
for
is
that
is,
or marginal
elasticity
servicze
actually
compare
the value
means of receiving
with
mail,
an economist,
a measure
is no necessary
values;
low value
available
relative
post
to
office
notaries
box
public,
and
two different
value.
My
actually
their
mail.
value.
between
functions
testimony
My
of total
total
and
can have the
makes no reference
of the value
to senders
provided
is my understanding
considerations
relationship
as a measure
provided
it
of marginal
to a. and b. above involve
same slope,
to price
offers
service.
numbers.
elasticity
responses
delivery
of posit office
and recipients.
to recipients
Rather,
of various
box
I
ANSWERSOF OCA WITNESS JAMES F. CALLOW
TO INTEPRCGATORIES USPS/OCA-T300-1-17
USPS/OCA-T300-15.
Witness Sherman at page 29, lines
19-21 of
his testimony
argues that it "would not be unreasonable"
to raise
Group II fees to cover costs.
Sherman's statement?
If not,
(a) Do you agree with witness
please explain.
(b) Why are you proposing
Group II box fees that are below cost?
A.
a.
Yes.
It
is not unreasonable,
b.
A 100 percent
and I treated
it
as a
goal.
have required
The goal
fee
cost
percent.
redefinition
coverage,
A real
ranging
increase
in Group II
from
fees
of the
fee increases
Also,
a large
coverage
Group II
by consideration
on boxholders.
year
increases
of increasing
some extent,
produced
cost
171 to over
to cover
impact
cost
of groups.
to this
thereby
problem
was offset,
magnitude
would
fees,
of
require
to
increases
would
exceeding
at Commission-recommended
solution
330 percent.
of such fee
of this
in revenue,
boxes would
the
100
have
test
ANSWERSOF OCA WITNESS JAMES F. CALLOW
TO INTERROGATORIESUSPS/OCA-T300-l-17
USPS/OCA-T300-16.
Please refer to your testimony
at page 27,
lines
15-17.
hfhy do you propose a lower cost coverage for post office
box
(al
and caller
service
than the 115 percent
cost coverage
recommended by the Commission in Docket No. R94-l?
hlhat changes in post office
box service
justify
this
(b)
decrease in cost coverage?
Do you believe
that post office
box and caller
service
have
(c)
al lower value of service
now than during Docket No. R94-l?
Has the Commission ever recommended a cost coverage for post
(d)
office
box and caller
service
as low as the 115 percent
cost
coverage recommended by the Commission in Docket No. R94-l?
Please explain
why there should be no markup to cover
(e)
institutional
costs on post office
box and caller
service.
A.
a.-c.
and e.
contribution
explained
My proposed
neutral
in the
premise
testimony
The Commission's
No. R94-1
for
post
This
is clearly
being
equated
100 percent
resulting
relevant.
office
not
with
cost
are in keeping
of classification
as
recommended
coverage
boxes
is not
in the
is not
cost
a legitimate
EY 96 cost
R94-1 recommended
this
reform,
the
Sherman and Thompson.
a case in which
coverage
with
of OCA witnesses
from the Commission's
Since
fees
test
cost
year
rate
benchmark.
coverages
coverages.
of this
R94-1 recommended
a general
in Docket
are
Only the
proceeding
fees
proceeding,
is
I make no
ANSWERSOF OCA WITNESS JAMES F. CALLOW
TO INTERROGATORIESUSPS/OCA-T300-l-17
CONTINUATION OF ANSWERUSPS/OCA-T300-16:
reference
to the Commission's
different
test
office
year.
box service
equal
to the
recommended
d.
year
Note:
as follows:
a cost
cost
As per
coverage
a telephone
on October
a cost
the Commission
call
I propose
in a
:for post
of 100 percent
for
that
is
R94-1
subpart
post
office
cost
Postal
Service
(d) has been revised
docket,]
box and caller
coverage
recommended
by
No. R94-l?"
I do not
recommended
between
in any other
115 percent
in Docket
Answer.
know.
decisions
recommended
by the Commission
this
a general
is not
coverage
at the Commission's
1996,
18,
coverage
as low as the
Commission
fees
coverage
"Has the Commission[,
recommended
appropriate.
the
cost
fees.
and OCA counsel
service
Moreover,
produce
test
recommended
rate
I have not
to determine
for
case,
post
office
no such review
reviewed
the
cost
prior
coverages
box service.
was necessary
As
or
ANSWERSOF OCA WITNESS JAMES F. CALLOW
TO INTERROGATORIESUSPS/OCA-T300-1-17
How does your post office
box fee proposal
USPS/OCA-T300-17.
as presented
by witness Needham (IJSPS-T-7 at
reflect
the fact,
charge considerably
more for boxes
11-131, that CMRAs generally
than t:he Postal Service.
A.
See OCA-T-300,
alternatives.
Since
result:ing
takes
the
I propose
from current
into
account
current
approved
page 28, where
fees
the
which
fees
level
a cost
in the test
coverage
year,
of CMRA fees
the available
equal
to that
my fee proposal
to the
same extent
were recommended by the Commission
by the Governors
.-
I discuss
in Docket
No. R94-1.
and
as
DECLARATION
I,
James F. Callow,
answers
Postal
to interrogatories
Service
information
Execut:ed
are true
declare
USPS/OCA-T300-1-17
and correct,
and belief.
Ok
25,
under penalty
/m
of perjury
of the United
to the best
that
the
States
of my knowledge,
CERTIFICATE OF SERVICE
I hereby
certify
document upon all
accordance
with
that
I have this
participants
section
3.B(3)
of record
date
in this
of the special
#!&I+,
served
the foregoing
proc'eeding
rules
in
of practice.
-$. &lL$L&
SHELLEY S. DREIFUSS
Attorney
Office of the Consumer Advocate
Washington,
DC 20268-0001
October 25, 1996