BEFORE THE
'RECEIVELI
POSTAL PATE COMMISSION
WASHINGTON, D.C.
20268-0001Nov
6 12 o3 p/j '96
Special
Services
Fees and Classifications
Docket No. MC96-3
ANSWERSOF THF. OFFICE OF THE CONSUMERADVOCATE
TO INTERROGATORIES OF UNITED STATES POSTAL SERVICE
WITNESS: ROGER SHERMAN (USPS/OCA-TlOO-23-36)
(NOVEMBER6, 1996)
The Office
of the Consumer Advocate
of Roger Sherman to interrogatories
October
followed
23, 1996.
submits
USPS/OCA-TlOO-23-36,
Each interrogatory
is stated
verbatim
the answers
dated
and is
by the response.
Witness
filed
hereby
Sherman is out of town and his
~~
declaration
will
later.
Respectfully
submitted,
EMMETTRAND COSTICH
Assistant
Director
Office of the Consumer Advocate
be
,&,
.c:
ANSWERSOF OCA WITNESS ROGER SHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
USPS/OCA-TlOO-23.
At page 17, lines 5 through 9 of your
testimony,
you compare the revenue per transaction
for registry
in
Exhibits
USPS-T-l, WP-E, page 2.
a.
Is it your understanding
that the revenue per
transaction
figures
reported
in Exhibits
USI?S-T-5G and J
are comparable with those reported
in USPS-T-l, WP-E,
page 2? Please explain
in detail.
b.
Please explain
your understanding
of what is included
in
the registry
revenues reported
in the Cost and Revenue
Analysis
Report?
Please explain your understanding
of what is included
in
C.
the registry
revenues reported
in USPS-T-l, WP-E, page
2.
A.
a.
At page 17, lines
to the
fact
that
to increase
under
transaction
point
is
was that
increase
effect
that
same for
revenue
(or even stay
would
registry
the
per
transaction
the new rates,
in parentheses,
noted,
that
revenue
5-9 of my testimony
both
and after
before
might
I pointed
because
I assume all
in the audited
C.
and after
new rates,
out,
only
fall
appropriate
registry
estimate
is included
of
1996
rather
a small
revenues
per
My main
however,
from USPS-T-l,
Cost and Revenue Analysis
I assume an
also
rates.
I do not know the detailed
would make USPS-T-5G and J differ
b.
I also
WP-E, page ;I, revenue
be great
would be affected.
is projected
in USPS-T-l,
per transaction
not
registry
attention
based on USPS-T-5G and J.
the same).
probably
for
I called
than
that
part
the
of
differences
WP-E, page 2.
are
included
Report.
registry
in USPS-T-l,
revenues,
WP-E, page 2.
before
ANSWERSOF OCA WITNESS ROGERSHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
USPS/OCA-TlOO-24.
At page 18, lines 7-10 of your testimony;
you
state your understanding
"that
the Postal Service historically
has included
return
receipt
revenue but not return
receipt
cost
in the cost coverage calculation
for certified
mail,
but that it
is not doing so in this case."
You then go on to state,
"Perhaps
Witness Patelunas
used the historical
practice."
a.
Please explain
in detail
your understanding
of "the
historical
practice"
referred
to in the immediately
preceding
sentence.
b.
Is it your understanding
that historically
the Postal
Service has included
return
receipt
revenues in
certified
mail revenues?
Please explain
your
understanding
of what the Postal Service has
historically
included
in certified
mail revenues in
detail.
C.
Is [sic]
your understanding
that historically
the
Postal Service has included
return
receipt
costs in
certified
mail costs?
Please explain
your
understanding
of what the Postal Service has
historically
included
in certified
mail costs in
detail.
A.
a.
As a fuller
my understanding
first
quote
whole
was drawn
is
quoted
part
part
sentence
reports
from Witness
page
cost
coverage
not
doing
so in
that
the
on
71)
receipt
calculation
this
case."
based on the following
quote
line
revenue
for
This
of
6)
the
Postal
not
certified
18,
The
to this
lines
"Witness
Service
return
mail,
sentence
from Witness
testimony.
7-10,
my understanding.
reads:
but
make clear,
in the preamble
from my page
source
that
should
Needham's
appears
a sentence
omits
return
the
of
(beginning
(USPS-T-E,
has included
of my testimony
from my testimony
interrogatory
and the
reading
from
Needham
historically
receipt
but
The
cost
in
it
is
that
my testimony
Needham (USPS-T-E,
page
is
ANSWERSOF OCA WITNESS ROGER SHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
CONTINUATION OF ANSWERTO USPS/OCA-TlOO-24:
71):
"In
historic
this
proceeding,
practice
return
of
receipt
receipt
in
Including
costs
would
so departing
expected
to lower
the cost
my next
sentence
historical
quote
coverage
The full
used
Witness
Needham
reports
lower
rates
cost
and would
reported
earlier
Witness
Patelunas
mail
at current
proposed
rates
be
coverage
page
the
is
146 percent
on that
historic
calculated
only
of
202.2
of 271.0 percent."
not
only
107 percent
proposed
2-5):
cost
pr,actice
can be
certified
mail.
reads:
because
claiming
under
the
current
rates."
I
had
cost
report
of
"The
coverage
and a cost
of
used the
practice,
coverages,
percent,
mail
Patelunas
cost
(lines
return
the beginning
historical
under
not
coverage
from my testimony
(USPS-5G, 55) shows a cost
rates
for
witness
sentence
Patelunas
but
the
but
cost
revenue
this
"Perhaps
Witness
mail
revenue
from my testimony,
"Perhaps
certified
receipt
mail
changing
to make the certified
from
is provided:
practice."
is
receipt
appear
larger,
Service
certified
return
clearly
second
return
the
coverage
In the
Postal
including
costs
calculation."
the
for
certified
coverage
under
ANSWERSOF OCA WITNESS ROGERSHERMAN
TO INTERROGATORIES~~S%/OCA-~100-23-36
CONTINUATION OF ANSWERTO USPS/OCA-TlOO-24:
b.
See answer
Needham's
See answer
C.
Needham's
costs
testimony
testimony,
to
quoted
to
calculations.
-
My understanding
comes from
Witness
comes from
Witness
there.
a.
quoted
were not consistently
coverage
a.
My understanding
in a.,
treated
that
return
in historic
receipt
certified
revenues
mail
and
cost
ANSWERSOF OCA WITNESS ROGERSHERMAN
TO INTERROGATORIESii~PS/0~~-Tl00-23-36
USPS/OCA-TlOO-25.
At
you state,
"If there is
have been evaluated
for
should be demonstrated
correct
costs."
Please explain
a.
Please explain
b.
incorrect
in
A.
a.
Witness
indicates
that
and revenues
certified
yield
what you mean by "correct
costs."
in detail
which costs are, in your
this docket.
Needham' s
has
led
coverage
treatment
historically
Correct
(USPS-T-E,
testimony
an inconsistent
mail.
cost
page 18, lines
15-18 of your testimony,
a longstanding
error
in the way costs
pricing
certified
mail service,
that
and new rates might be proposed based on
to
costs
would
calculations
for
of
return
faulty
cost
match
costs
certified
view,
71)
page
receipt
costs
coverages
with
mail
for
revenues
that
to
would
be
correct.
Witness
b.
including
the
return
certified
much higher
whether
change
for
Witness
price
cost
Witness
change in the certified
return
not
for
however,
in
certified
leading
This
would make it
leads
coverages
rate.
as
this
mail
the
are
historic
testimony
very
for
are
difficult
Yet
mail.
a reason
in
in
me to wonder
one to wonder
is
of
costs
changed
Patelunas's
certified
practice
receipt
being
coverages
in Witness
increase
mail
historic
Needham described
them as correct
of cost
"the
is
Needham's,
has been proposed.
in treatment
but
calculation"
coverages
accepting
any
cost
what
that
revenue
Patelunas's
than
Cost
that
increase
mail
he used
practice.
argue
receipt
Witness
docket.
high
Needham testified
so
to
a price
whether
proposing
the
a
ANSWERSOF OCA WITNESS ROGER SHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
uSPS/OCA-TlOO-26;
At page 18, lines
18-20 of your testimony,
you state,
"At present
the argument is not put explicitly
and the
reason for the increase
-- cost increases
or previously
incorrect
costs -- is not clear."
What "argument
is not put explicitly?"
Please explain
a.
in detail.
Please explain
in detail
the "cost increases"
to which
b.
you are referring.
Over what period of time have these
"cost increases"
occurred?
Is it your testimony
that
certified
mail
unit costs have increased?
If so,
please cite the source for your conclusion.
Please explain
in detail
the "previously
incorrect
C.
Is it your
costs, II to which you are referring.
testimony
that certified
mail costs have been incorrect
How have they been "incorrect?"
previously?
For what
previous
periods
of time have they been "incorrect?"
A.
Changing
a.
receipt
revenue
coverage
to
from
a basis
for
above),
certified
requesting
increase
practice
and why and how it
It
increase
given
is
not
lines
as a reason
requirement
is explicitly
is being
clear
in the certified
for
why the
mail
rate
must be greater
for
to
mail
cost
lower
coverage
certified
mail.
made, showing
cost
the
cost
might
be
But no
the previous
corrected.
Postal
rate.
increases,
to cover
return
Needham (see answer
can be expected
a price
including
in certified
by Witness
The corrected
along
of
costs
mail.
argument
b.
these
practice
receipt
as described
USPS/OCA-TlOO-24-a.
for
historic
but not return
calculations,
coverage
the
Service
is
requesting
an
Increases
in costs
are often
usually
because
a revenue
increased
costs.
My quoted
ANSWERSOF OCA WITNESS ROGERSHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
CONTINUATION OF ANSWERTO USPS/OCA-TlOO-26:
testimony
noted
and raises
whether
that
the
the
the
question
reason
whether
new and corrected
for
a rate
cost
basis
increase
increases
for
are
calculating
is
the
cost
not
clear
reason
or
coverage
is the reason.
C.
incorrectness
See answer
to
is
the
Needham described
in
merely
USPS/OCA-TlOO-24,
cost
coverage
as "historic."
part
calculation
a.,
above.
which
The
Witness
ANSWERSOF OCA WITNESS ROGER SHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
18-22 of your testimony,
USPS/OCA-TlOO-27.
At page 23, lines
you refer
to the "remarkable
difference
in processing
cost
cards being
between postal
cards and private
cards" with postal
You cite to
"at least $0.08 per piece less" than private
cards.
Is it your
Exhibit
USPS-T-5C at 10 for this conclusion.
testimony
that Exhibit
USPS-T-5C at 10 reflects
only processing
Please explain
in detail.
costs?
A.
I
intended
"processing,"
processing
attributable
when
cost
costs
is the observation
no
special
I
referred
between
postal
narrow
meaning
to
"remarkable
difference
and
private
cards."
for
postal
the
cards
are simply
much lower
I intended
to make.
for
the
cards,
word,
in
The
and that
ANSWERSOF OCA WITNESS ROGER SHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
USPS/OCA-TlOO-28.
At page 23, line 22 - page 24, line 2, you
discuss what you term "plausible
sources"
of the cost difference
between postal
cards and private
cards mentioned
in Witness
Patelunas's
response to interrogatory
OCA/USPS-TS-11, Tr. 2/25253.
You cite to "greater
compatibility
of postal
cards with
mechanization
and automation
due in part to their
uniform
size
and shape.“
You also mention cleaner
addresses.
a.
Please confirm
that in his response to interrogatory
OCA/USPS-T5-11,
Tr. 2/252-53,
Witness Patelunas
also
states
that it is possible
"that
postal
cards are
misidentified
as private
cards during data collection."
If you do not confirm,
please explain
in detail.
b.
Do you have any basis to dispute
witness
Patelunas's
statement
that it is possible
"that postal
cards are
misidentified
as private
cards during data collection."
If so, please explain
in detail.
A.
a.-b.
I did
include
explanation
I discussed
explanation
and can always
results.
However,
if
misidentification
because
Patelunas
is
difference
in unit
costs
not
overstated.
it
kind
actually
for
postal
and the volume
the
cost
for
unit
cost
way reported
unit
costs
for
postal
cards
too
cards
postal
reported
to explain
for
for
low is
and private
private
there
cards
is
too
could
reported
is
collectors
in both
systems,
is basically
cards
the
data
cards
estimating
private
described
cards
if
as private
cards
if
peculiar
then
Specifically,
estimating
unit
seem to be a revealing
occurring,
postal
reported
not
in the
of "misidentification"
are misclassifying
systems
did
be offered
the
by witness
understated,
-~-----
not
the
then
cost
the
undistorted,
low.
The only
be too high
were inconsistent
but
and
ANSWERSOF OCA WITNESS ROGERSHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
CONTINUATION OF ANSWER TO USPS/OCA-TlOO-28:
misidentification
private
cards
by data
collectors,
and volumes
to postal
such as assigning
cards.
This
costs
seems unlikely.
to
ANSWERSOF OCA WITNESS ROGERSHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
USPS/OCA-TlOO-29.
3-5 of your testimony,
you
At page 24, lines
state,
"It is unfortunate
that costs are not provided,
to show
the effects
of these possible
influences."
do you mean the uniform
size
By "possible
influences"
a.
and shape of postal
cards?
do you mean the cleaner
By "possible
influences"
b.
addresses of postal
cards as compared to private
cards?
do you mean the possibility
By "possible
influences"
C.
of data collection
misidentification?
To what other "possible
influences"
are you referring?
d.
How would costs be "provided
to show the effects
of
e.
Please explain
in detail.
these possible
influences?"
f.
Would showing "the effects
of these possible
influences"
also include
an assessment of possible
data
If not, please explain
collection
misidentification?
in detail
why not.
A.
a.
of cards
b.
of cards
C.
it
Yes,
would be useful
would affect
it
Yes,
their
would
would affect
I
did
misidentification,
to know how the
and shapes
costs.
be useful
their
sizes
to know how the
address
quality
costs.
specifically
not
refer
but
information
to
on how it
data
might
collection
affect
costs
would be useful.
d.
All
have been noted
e.
the
already,
Some separate
on a sample basis,
--.--
possible
influences
so there
cost
to determine
I mentioned
is no other
collection
these
would
costs.
in my testimony
to be expected.
be needed,
Costs
could
at
be
least
ANSWERSOF OCA WITNESS ROGERSHERMAN
TO INTERROGATORIESUSPS/OCA-TIOO-23-36
CONTINUATION OF ANSWERTO USPS/OCA-TlOO-29:
collected
only
by size
two categories
f.
Of course
data collection
category
and by address
quality,
perhaps
with
to know how significant
is
in each case.
it
would
misidentification
be useful
and what is
its
effect
-
on costs.
ANSWERSOF OCA WITNESS ROGER SHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
USPS/OCA-TlOO-30.
8-9 of your testimony,
you
At page 24, lines
state,
"And these effects
may be stronger
than is currently
being
assumed."
a.
do you mean the uniform
size and
BY "these effects"
shape of postal
cards as compared to private
cards?
b.
By "these effects"
do you mean the cleaner
addresses
of postal
cards as compared to private
cards?
C.
By "these effects"
do you mean the possibility
of data
collection
misidentification.
d.
To what other "effects"
are you referring?
e.
Upon what evidence do you base your statement
that the
effects
"may be stronger
than is currently
being
assumed?"
Please explain
in detail.
f.
What is your understanding
of what is being "assumed?"
Please explain
in detail.
Is it your testimony
that "these effects"
are currently
g.
reflected
in the unit cost difference
between postal
cards and private
cards?
If not, please explain
in
"be stronger
than
detail.
If so, how could the effects
Would not any "stronger"
is currently
being assumed?"
influence
also be reflected
in the unit cost difference
between postal
cards and private
cards?
A.
a.-d.
sentence
from my testimony
interrogatory
is:
effective
price
of a Postal
at the
"But
of
same time
noted
that
it
offering
this
"effects"
of
the
following
paragraph
high-cost
cards
is
card
may be stronger
the preamble
sentence
ends
effect
than assumed.
to this
raise
that
of postal
preceding
the
of
the
the
to process,
a service
which
to
discourage
so little
on quantities
why the
preceding
uneconomic
the use of
sentence,
explains
in
and thereby
costs
immediately
quoted
quoted
surely
is the effects
in
is
that
encouraging
It
immediately
sentence
the postal
Service
to process.II
cards
The
No.
use
while
costs
more
and private
that
a paragraph.
encouraging
are
the
The
use of
ANSWERSOF OCA WITNESS ROGERSHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
CONTINUATION OF ANSWERTO USPS/OCA-TlOO-30:
e.
I
base
private
card
assumed"
on the
of demand for
postal
my
volumes
lack
postal
and private
the quote
statement
that
"may be
stronger
of new evidence
cards
cards
interrogatory,
group.
It
to
of -0.17
that
is as if
private
cards
from line
not
close
the private
card volume.
that
would
stronger
___.-_.
-
--
is
the
cards
substitute,
card price
it
The demand for postal
make the
than
effects
is currently
following
the price
using
for
the
all
when both
which
cards
be realized
are
that
the postal
to a greater
as a
postal
and
of
versus
assumed.
private
course
private
decline
of
cards
separated
card
14
extremely
in
cards
price
but
in postal
cards may be more elastic.
on postal
being
elasticities
to raising
Once postal
may lead
being
10 on page 24 to line
increase,
and raising
currently
immediately
was obtained
should
versus
of demand between
estimated
same rate
postal
as to
has been estimated
in the past.
from private
are a very
$.22
estimate
experienced
is what happened
price
that
is
presented
The response
10 percent
low elasticity
than
(See discussion
on page 25 of my testimony.)
postal
on
or cross-elasticities
cards.
in this
effects
card
And
volumes
ANSWERSOF OCA WITNESS ROGERSHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
CONTINUATION OF ANSWERTO USPS/OCA-TlOO-30:
f.
A price
is being
The
concern
cards
of
effects
volume
than
are
responses
contributions
between postal
volume
of
demand for
postal
cards
of
-0.17
my answer
to
a.
can
seriously
assumed.
g.
affect
elasticity
to
contribution
price
changes.
costs
cards.
cards
than
cost,
is
because private
that
because
of cost
decline
contribution
and there
assumed,
cards
They
A greater
assumed can worsen
have low attributable
private
in
to overhead
and private
is
explained
which
They
differences
in postal
because
postal
may be a greater
would
have higher
also
attributable
card
volume
worsen
that
cost.
ANSWERSOF OCA WITNESS ROGERSHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
USPS/OCA-TlOO-31.
At page 24, lines
17-19, you state "the
possibility
that more of the postal
card volume will
move to the
very close -- and now lower priced
-- substitute,
private
cards.
a.
What do you mean by "lower priced?"
Please quantify.
b.
In making the above statement,
did you take into
account the cost of a [sic]
purchasing
a private
card?
Please explain
in detail.
C.
What is the current
average purchase price of a private
card?
d.
Assume that the average purchase price of a private
card is 5 cents.
With postage,
the total
cost of
purchasing
and mailing
a private
card is 25 cents,
correct?
A.
Private
a.
Under
$.20.
price
of
of
the
$.22,
changes
the
has been present
now bear
proposal,
cards
will
account
the
postal
cards
remain
at the
changed
relationship
be a cost
the
the
same price:
will
private
have a
lower
price
cards
under
priced."
price
in
cards
I mean when I describe
into
There will
result
private
is what
I take
cards.
card
as "now lower
the proposal
b.
and postal
stamped
while
That
$.20.
which
cards
between
of buying
past
price
in
postal
the private
and appears
postal
unlikely
cards,
and private
card,
to
but
change
that
as a
of the stamped card proposed.
I
C.
purchase
have
price
as a result
no
basis
of a private
for
card,
estimating
but
it
of the stamped card proposal.
in volumes what is important
the
appears
current
unlikely
average
to change
For anticipating
is the change in relative
prices.
changes
ANSWERSOF OCA WITNESS ROGERSHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
CONTINUATION OF ANSWERTO USPS/OCA-TlOO-31:
d.
cards
cost
I
for
can
about
obtain
2 cents
of purchasing
But these
of the
costs
changes.
per
and mailing
of mailing
of private
and that
is
in
that
could
a store.
a private
a private
card
The price
cards,
what
cards
card
stamped card proposal.
to the price
proposal,
index
will
serve
On that
can be expected
basis,
the
card
would
be 22 cents.
will
not
change because
of postal
increase
as private
under
cards,
relative
the stamped card
to bring
about
volume
ANSWERSOF OCA WITNESS ROGERSHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
USPS/OCA-TlOO-32.
At page 27, lines
l-4 of your testimony,
you
indicate
that the Postal Service's
post office
box pricing
proposal
did not "explicitly"
consider
"that
there may be a cost
savings in delivery
to a post office
box rather
than to a
business
or residence."
a.
Is it your testimony
that the Postal Service's
post
office
box pricing
proposal
implicitly
considered
a
possible
cost savings in delivery
to a post office
box
rather
than to a business
or residence?
If so, please
explain
in detail.
b.
In making the statement
contained
in the preamble to
this question,
did you review and/or consider
Appendix
B to USPS-T-5?
If so , what is your understanding
of
the results
of Appendix B? If not, why not?
C.
Please explain
in detail
your understanding
of the
types of costs included
under post office
box
attributable
costs in the Cost and Revenue Analysis
Report.
In making the statement
contained
in the preamble to
d.
this question,
did you review Exhibit
USPS-T-5A?
If
what
is
your
understanding
of
the
types
of
costs
so,
included
under post office
box attributable
costs in
the Cost Segments and Components Report?
If not, why
not?
In making the statement
contained
in the preamble to
e.
this question,
did you review pages 34-35 of USPS-T-4?
If so, what is your understanding
of the types of costs
included
in Witness Lion's
allocation
of post office
box attributable
costs?
If not, why not?
f.
In making the statement
contained
in the preamble to
this question,
did you review and/or consider
the
Commission's
Distribution
of PO Box Cost Adjustment
contained
in PRC-LR-2?
If so, what is your
understanding
of the results
of the Commission's
Distribution
of PO Box Cost Adjustment?
If not, why
not?
If you did not review and/or consider
the Commission's
g.
cost methodology
as set forth
in PRC-LR-1 and 2, why
did you need an extension
of time from September 25,
your
1996 to September 30, 1996 to prepare and file
testimony?
---
...--.____
ANSWERSOF OCA WITNESS ROGER SHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
ANSWERTO USPS/OCA-TlOO-32:
A.
a.
In
appear
setting
prices
to be any explicit
realized
by
delivery
implicit
consideration
consequences
of
determinant
consider
through
for
in
the
the
types
and
of
of Witness
on proper
cost
records.
Yes,
I reviewed
"all
other"
pages.
custodial
(including
Lion
categories
expenses,
and
does not
might
I
box rate
B to
be
know of
no
USPS-T-5
traces
It
not
increases.
increases,
however,
the
post
office
Analysis
Report
(USPS-T-5A).
that
is
a
and I did not
are
box
Report
or
I
whom I trust
pages
of Witness
34-35
"space
costs
while
heating
which
are defined
include
rents,
services
and
and cooling),
relied
Lion's
in
on the
in
turn
testimony
provision,"
and
on the referenced
interest,
and
costs
supplies,
fuel,
Cost
know
relied
support"
"space
the
do not
"space
support,"
attributable
in
I
included.
(USPS-T-4),
building
elevators,
that
boxes.
Revenue
of cost,
"Space provision"
depreciation
Appendix
use
He includes
in USPS-T-4.
that
price
costs
testimony
e.
of savings
office
office
not
and Components
Segments
there
reason.
did
Cost
boxes
post
is
post
that
I
C.-d.
office
either.
of the proposed
it
detail
the
post
consideration
My understanding
b.
costs
for
include
maintenance
power and water,
ANSWERSOF OCA WITNESS ROGER SHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
CONTINUATION OF ANSWERTO USPS/OCA-TlOO-32:
and protection
for
sorting
f.
it
mail
No.
complied
g.
October.
activities.
other"
to boxes and supervisory
I attended
with
I
The "all
was
Postal
to Postal
of
any
includes
labor
activities.
Service
Rate Commission
unaware
category
testimony
and assumed
requirements.
extension
of
time
until
early
ANSWERSOF OCA WITNESS ROGER SHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
USPS/OCA-TlOO-33.
Please refer
to page 32, lines
3-4 of your
"there
is
little
doubt
that
testimony,
where you assert
alternative
box services
are more costly"
[than post office
boxes].
a.
Please explain
the basis for this assertion.
b.
Assuming the existence
of "economies
of scope" is the
reason for your assertion,
please define
this term and
explain
how it should be measured in this case.
is there a significant
difference
in
In your opinion,
C.
labor costs between CMRA employees and Postal Service
in quantitative
terms if
employees?
Please explain,
possible.
If labor costs at CMRAs are significantly
lower, would
d.
that affect
your conclusion?
Please explain.
A.
The Postal
a.
office
boxes
and can blend
location,
that
USPS-T-4,
explicit
Postal
comparison
CMRA rates
production
Table
Service
in
of
set
up
a
other
separate
shows
for
Witness
Lion,
example,
CMRA rates
page
higher
are
one service
that
Witness
rates.
12,
may be compared
Needham provides
Table
IV,
which
than Postal
Service
economies
that
in a single
firm.
of producing
the
are both
produced
in a single
firm
specialized,
firm,
in a separate,
at
post
Evidence
the cost
is produced
into
in with
boxes
If
example.
when they
straight
to be more costly.
for
scope
mail
box services
to
USPS-T-7,
of more than
two-product
11,
office
See,
costly.
to be substantially
Economies
b.
product
more
page 22,
proposed
lower
post
which one would expect
CMRA's are
with
can deliver
CMRA's have
services.
postal
Service
an
shows
rates.
attend
Consider
two products
than
then
the
a
is
when each
ANSWERSOF OCA WITNESS ROGERSHEPMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
CONTINUATION OF ANSWERTO USPS/OCA-TlOO-33:
economies
of
scope
circumstances
ideal
might
is
a
of independently
would give
office
box
the Postal
the
service
for
of
adding
second
Service
the
service
this
providers
these
only
second
cost
attempt
one
service
with
the
cost
another
of economies
cost
cost
would
the
through
would experience
incremental
in
producing
incremental
one would
The advantage
independent
that
setting,
versus
service.
cost
cost
costs
what is needed in an
of the significance
Service
boxes,
point
providing
Measuring
Essentially,
Comparing
an indication
Postal
that
exist.
incremental
be estimated.
cost
to
reference
Then the
In the
said
can be difficult.
case
service.
are
firm
of scope.
to determine
if
it
offered
of providing
offers
over
be a measure
of
the
no post
post
office
provision
by
economies
of
scope.
C.
employees
d.
_.-_--
I
do
not
and Postal
No.
know how
Service
My conclusion
testimony
referred
to
in
comparison
of labor
costs.
labor
costs
compare
between
CMRA
employees.
is
based
my answer
largely
to
part
on the
a.
above,
evidence
not
in
on a
ANSWERSOF OCA WITNESS ROGER SHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
7-9 of your testimony,
you
USPS/OCA-TlOO-34.
At page 33, lines
state that "the idea that delivery
into a post office
box costs
less than delivery
to a remote
location
is not explicitly
considered."
a.
How should the Commission consider
this under the
Please
criteria
of the Postal Reorganization
Act?
explain
in detail.
b.
How should cost of delivery
to a post office
box versus
cost of delivery
to "a remote location"
be accounted
Please explain
in
for under 39 U.S.C. § 3622(b) (3)?
detail.
C.
Is it your testimony
that the cost of delivery
to a
post office
box versus the cost of delivery
to "a
remote location"
should be accounted
for under one of
the non-cost
criteria
of the Postal Reorganization
Act?
If so, please specify
which criterion
or criteria
and
explain
your rationale
in detail.
A.
Suppose data were presented
a.
delivery
cost
delivery
cost
less
than
would
providing
service
calculated
if
that
effect
was converted
achieve
a true
cost
of post
mean there
a
office
post
on delivery
of that
to
office
part
a.
box service
is
in
cost
of
would
be
a lower
than
pricing
office
Once the
box cost,
to
under
the
criteria
as in any other
The effect
and then
should
the
box
saving
were ignored.
in post
cost,
office
That
box
cost
a reduction
post
delivery.
Act would be applied
See answer
b.
the
into
rendering
Reorganization
means of
essentially
through
savings
Postal
other
to show that
case.
be traced
criteria
to
can be
applied.
C.
this
matter.
No.
There
is no need for
The question
involves
non-cost
criteria
the determination
to deal
of a
with
ANSWERSOF OCA WITNESS ROGER SHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
CONTINUATION OF ANSWERTO USPS/OCA-TlOO-34:
service's
lowers
taken
true
the
into
cost.
If
of
delivering
cost
account
in setting
a customer's
mail,
the post
use of
that
office
cost
a post
savings
box rate.
office
should
box
be
ANSWERSOF OCA WITNESS ROGERSHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
In
USPS/OCA-TlOO-35.
indicate
that private
manufacturing
costs of
manufacturing
costs of
postage paid by users
do not confirm,
please
A.
Not
Collins'
..---
confirmed.
your response to USPS/OCA-TlOO-11(d),
you
card mailers
do not "support
the
Please confirm
that the
postal
cards.“
postal
cards are covered by the ZO-cent
If
you
of the cards subclass
as a whole.
explain
in detail.
For
a
detailed
answer to USPS/OCA-T400-13,
part
explanation,
a.
see
Witness
ANSWERSOF OCA WITNESS ROGER SHERMAN
TO INTERROGATORIESUSPS/OCA-TlOO-23-36
USPS/OCA-TlOO-36.
In your response to USPS/OCA-TlOO-13,
you
"I do not claim delivery
cost savings attend the provision
state,
I suggest that there may be a savings
of post office
box service;
and if so they would be worth identifying."
Is it your testimony
that Appendix B to USPS-T-5 does not identify
delivery
cost
savings due to use of post office
boxes?
Please explain
in
detail.
A.
I do not think
savings,
in a form
Appendix
that
from post
office
service.
The savings
to determine
for
that
pricing
can be readily
box service
effects
B to USPS-T-5 identifies
in order
must be imputed
on prices
purpose.
for
converted
into
to affect
the price
to the post
them,
delivery
and data
office
cost
cost
savings
of
that
box units
are not presented
DECLARATION
I,
'Roger Sherman,
answers
to interrogatories
Postal
Service
information
are true
and belief.
declare
under penalty
USPS/OCA-TlOO-23-36
and correct,
of perjury
that
of the United
to the best
the
States
of my knowledge,
CERTIFICATE OF SERVICE
I hereby
certify
document upon all
accordancte
with
that
I have this
participants
section
3.B(3)
of record
date
served
in this
of the special
20268-0001
foregoing
proceeding
rules
&lAmZ@~~
EMMETTRAND COSTICH
Attorney
Washington,
D.C.
November 6, 1996
the
in'
of practice.