[Federal Register Volume 74, Number 159 (Wednesday, August 19, 2009)]
[Notices]
[Pages 41947-41948]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-19854]
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POSTAL REGULATORY COMMISSION
[Docket No. R2009-5; Order No. 276]
Postal Service Price Changes
AGENCY: Postal Regulatory Commission.
ACTION: Notice.
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SUMMARY: This document discusses the Commission's establishment of a
docket to a Postal Service request to adjust prices for a temporary
First-Class Mail Incentive Program.
DATES: Comments are due August 31, 2009.
ADDRESSES: Submit comments electronically via the Commission's Filing
Online system at http://www.prc.gov.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel,
202-789-6820 and [email protected].
SUPPLEMENTARY INFORMATION:
I. Overview
II. Postal Service Filing
III. Commission Action
IV. Ordering Paragraphs
I. Overview
On August 11, 2009, the Postal Service filed with the Commission a
notice announcing its intention, pursuant to 39 U.S.C. 3622 and 39 CFR
part 3010, to adjust prices for certain First-Class Mail presorted
letters, flats and cards sent by qualifying mailers.\1\ The Postal
Service characterizes the planned adjustment as a temporary First-Class
Mail Incentive Program (Program) to spur volume growth during the
current recession. Key elements of the Program include a 20 percent
rebate on qualifying incremental volume; certain volume thresholds; and
a 3-month duration, extending from October 1, 2009 through December 31,
2009. Id. at 2-3.
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\1\ United States Postal Service Notice of Market-Dominant Price
Adjustment, August 11, 2009 (Notice). The Postal Service also refers
to the qualifying presorted pieces as non-parcel First-Class Mail.
See, for example, Id. at 4.
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The Notice addresses plans for public notice; program description
and administration; price cap compliance; statutory objectives and
factors; workshare discounts; and impact on preferred rates. A schedule
of the new temporary prices and conforming revisions to Mail
Classification Schedule language appear in Appendix A to the Notice in
compliance with Commission rules 3010.14(a)(1) and 3010.14(b)(9).
II. Postal Service Filing
Program description. The Postal Service asserts that the proposed
Program will give eligible companies a 20 percent postage rebate on
qualifying presort letter, flat and card volumes mailed between October
1, 2009 and December 31, 2009. Id. Qualifying volume is defined as a
single company's First-Class Mail volume over and above a predetermined
threshold. Id. at 3.
Eligibility; rebate threshold. To be eligible to participate in the
Program, a company must have mailed 500,000 or more non-parcel First-
Class Mail pieces between October 1 and December 31 in both 2007 and
2008 through company-owned permit accounts or through permits set up on
the company's behalf by a Mail Service Provider. Id. Participants must
then exceed a company-specific threshold during October 1, 2009 through
December 31, 2009 to qualify for the incentive rebate.\2\ Incremental
volume mailed by an eligible, participating company above the
calculated threshold will earn a 20 percent rebate.
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\2\ This threshold is determined by computing the ratio of the
October 1-December 31, 2008 non-parcel First-Class Mail presorted
volume to the October 1-December 31, 2007 non-parcel First-Class
Mail presorted volume. The result is then multiplied by the
company's October 1-December 31, 2008 non-parcel First-Class Mail
presorted volume. Id.
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Rebate calculation; credit. The rebate will be calculated as the
average revenue per piece for all eligible mail volume during the
program period multiplied by the incremental volume above the threshold
during the program period. It will be credited to the company's permit
trust account. Id.
Program intent. The stated intent of the Program is to provide an
incentive for customers to increase non-parcel First-Class Mail
presorted volume above the volume they otherwise would have sent. To
protect this core element of the Program, the Postal Service includes
provisions to address the possibility of strategic shifting or
withholding of volume. Id. at 4.
Program administration. The Notice addresses several aspects of
program administration, including methods for contacting eligible
mailers; procedures for establishing company thresholds and crediting
rebates to permit trust accounts; data collection and reporting
(including filing some data under seal); financial impact; and risk.
See generally id. at 4-8.
Under the data collection plan, the Postal Service will submit
Program-related data to the Commission 90 days after the payment of
incentive rebates. The Notice describes specific components of the
plan, notes that some participant data will be filed under seal, and
states that actual administrative costs will be identified. Id. at 6.
With respect to the financial aspects of the Program, the Postal
Service expects, based on the 20 percent rebate and the expressed
interest of customers, a contribution increase of around $24 million
and a revenue increase, net of the 20 percent rebate, of $43 million.
It anticipates new volume of about 103 million pieces, which it says
will generate about $31 million in additional revenue and $16 million
in contribution. It also expects about 103 million pieces to ``buy up''
from Standard Mail, providing an additional $12 million in revenue and
$8 million in contribution. Id. at 7. Administrative costs are expected
to total $809,000, and to be easily covered by the contribution
generated from additional volume. Id.
The Postal Service's primary measure of success will be incremental
revenue and volume growth over the threshold for participating
customers, but qualitative aspects, such as the Postal
[[Page 41948]]
Service's ability to efficiently and effectively administer the program
and customer feedback, also will be monitored. Id. at 5-6.
Conformance with public notice and other requirements. In
conformance with rule 3010.14(a), the Postal Service certifies that it
will inform customers of the planned price adjustments in numerous
ways. Id. at 1. In addition to the formal Notice filed with the
Commission, these include notice via USPS.com, the Postal Explorer
website, the DMM Advisory, the P&C Weekly, a press release, PCC
Insider, MailPro, the Postal Bulletin, and the Federal Register. Id. at
1-2. The Postal Service identifies Greg Dawson as the official contact
for Commission queries. Id. at 2.
Impact on the price cap. The Postal Service proposes to treat the
Program, for purposes of price cap compliance, in a manner it
characterizes as ``mathematically analogous to the procedure described
in Rule 3010.24.'' Id. at 8. It explains that this means it intends to
ignore the effect of the price decrease resulting from the program on
the price cap for both future and current prices, and therefore has
made no calculation of cap or price changes described in rule
3010.14(b)(1) through (4). Id.
Statutory objectives and factors. The Notice further provides, in
compliance with rules 3010.14(b)(5) through 3010.14(b)(8), the Postal
Service's assessment of how the planned Program helps achieve the
objectives of 39 U.S.C. 3622(b) and properly takes into account the
factors of 39 U.S.C. 3622(c). See generally id. at 8-13. With respect
to statutory objectives, this includes the Postal Service's conclusion
that to a large extent, the establishment of the Program either does
not substantially alter the degree to which the First-Class Mail prices
already address the statutory objectives, or its belief that those
objectives are addressed by the design of the system itself. Id. at 10.
The Postal Service also observes that establishment of this Program,
which is designed to encourage First-Class Mail presort letters, flats
and cards volume growth during a recession, is an example of the
increased flexibility provided to the Postal Service under the Postal
Accountability and Enhancement Act (PAEA) of 2006. Id. It further
states that the fact that the program will provide an incentive for
profitable new mail and provide a boost to a key customer segment will
enhance the financial position of the Postal Service.
In terms of statutory factors, the Postal Service asserts that, as
with the objectives, the establishment of the Program does not
substantially alter the degree to which First-Class Mail prices address
many of them. Id. at 12. It adds that the Program is ``a prime example
of how the Postal Service can utilize the pricing flexibility provided
under the PAEA in order to encourage increased mail volume.'' Id. It
maintains that the Program will help to counteract the effect of the
current recession on business mailers, and provide a boost to a key
customer segment. It also says that although the rebates are material,
the Program will not affect the ability of First-Class Mail to cover
its attributable costs, and that as a result of the Program, First-
Class Mail as a whole will make an increased contribution toward
overhead costs. Id. at 12-13.
Workshare discounts. The Postal Service states that to the extent
the Program affects discounts between presort categories, it will
shrink them, but asserts that the Program itself is not worksharing,
nor should its effects be considered a modification of, or change to,
First-Class Mail worksharing discounts. Id. at 13. It asserts that the
Program is a temporary incentive intended to drive additional First-
Class Mail presort volume and, as such, is not tied to any specific
mail preparation or induction practice. Id. It suggests that the
discounts, in this sense, are similar to the incremental discounts the
Commission has approved in a number of negotiated service agreements or
the IMb discount that will take effect in the fall. Id.
Preferred rates. The Postal Service asserts that the Program will
have no impact on any preferred rates.
III. Commission Action
Establishment of docket; comments. Pursuant to its rules
implementing the PAEA, the Commission establishes Docket No. R2009-5 to
consider all matters related to the Notice. 39 CFR 3010.13(a). It also
issues the instant Order to provide notice of the Postal Service's
filing. Therein, consistent with provision of a 20-day comment period,
starting from the date the Postal Service filed its Notice, the
Commission directs that comments are due no later than August 31, 2009.
39 CFR 3010.13(a)(5). Interested persons may express views and offer
comments on whether the planned price adjustment is consistent with the
policies of 39 U.S.C. 3622 and with applicable requirements of 39 CFR
part 3010.
Public representative. Commission rule 3010.13(a)(4), which
implements 39 U.S.C. 505, requires the Commission to identify, in its
notice addressing the Postal Service's filing, an officer of the
Commission to represent the interests of the general public in this
docket. In satisfaction of this requirement, the Commission appoints
Richard A. Oliver.
Other matters. Pursuant to rule 3010.13(c), the Commission will
issue its determination in this proceeding by September 14, 2009.
IV. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket No. R2009-5 to consider
matters raised in the Postal Service's August 11, 2009 filing.
2. Interested persons may submit comments on the planned price
adjustments. Comments are due August 31, 2009.
3. Pursuant to 39 U.S.C. 505, the Commission appoints Richard A.
Oliver to represent the interests of the general public in this
proceeding.
4. The Commission directs the Secretary of the Commission to
arrange for prompt publication of this document in the Federal
Register.
By the Commission.
Ann C. Fisher,
Acting Secretary.
[FR Doc. E9-19854 Filed 8-18-09; 8:45 am]
BILLING CODE 7710-FW-P