[Federal Register Volume 74, Number 205 (Monday, October 26, 2009)]
[Notices]
[Pages 55075-55076]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-25750]
[[Page 55075]]
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POSTAL REGULATORY COMMISSION
[Docket No. R2010-1; Order No. 318]
Postal Service Price Adjustment
AGENCY: Postal Regulatory Commission.
ACTION: Notice.
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SUMMARY: The Commission is noticing a recently-filed Postal Service
request to establish a Move Update assessment charge for First-Class
Mail. This notice addresses procedural steps associated with this
filing.
DATES: Comments are due November 4, 2009.
ADDRESSES: Submit comments electronically via the Commission's Filing
Online system at http://www.prc.gov. Commenters who cannot submit their
views electronically should contact the person identified in FOR
FURTHER INFORMATION CONTACT by telephone for advice on alternatives to
electronic filing.
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 October 15, 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 establish a Move Update assessment charge for First-Class
Mail.\1\ The Notice describes related pricing and classification
information specifying how the Move Update assessment will be applied
to First-Class Mail. The Notice also announces classification changes
which revise the way the Move Update assessment will be applied to
Standard Mail. The Postal Service intends to implement these changes on
January 4, 2010. Id. at 1.
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\1\ United States Postal Service Notice of Market Dominant Price
Adjustment and Classification Changes, October 15, 2009 (Notice).
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The Notice addresses plans for public notice; a description of the
price and classification changes; price cap compliance; the statutory
objectives and factors; workshare discounts; and preferred rates. The
changes described in the Notice are supported by Appendix A (hard
copy), and Appendices B1, B2, and B3 (electronic format). Appendix A
specifies proposed Mail Classification Schedule (MCS) language. The B
appendices provide the following information: B1--Calculation of
Percentage of Mail Expected to Pay a Move Update Assessment, B2--
Calculation of Revenue Estimate for First Class Mail, and B3--
Calculation of Revenue Estimate for Standard Mail. The Notice and all
appendices are available for review on the Commission's Web site at
http://www.prc.gov.
II. Postal Service Filing
Background. In Docket No. R2009-2, Notice of Market Dominant Price
Adjustment, filed February 10, 2009, the Postal Service provided notice
that, at acceptance, Standard Mail mailings that fail a Move Update
verification would be assessed an additional 7 cents per piece for each
piece in the mailing. First-Class Mail mailings that fail a Move Update
verification would be charged the single-piece rate on all pieces in
the mailing. In March 2009, the Postal Service notified the Commission
of its decision to delay the implementation of the Standard Mail Move
Update assessment until January 2010. Id. at 2-3.
Price and classification description. In this docket, the Postal
Service proposes to revise Move Update assessments at acceptance.
First, the Postal Service indicates that the 7-cent per-piece Move
Update assessment will be applicable to First-Class Mail.\2\ Id. at 3.
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\2\ These assessments are applicable only to customers who
certify that their mail meets Move Update requirements. Customers
who do not certify that their mail meets Move Update requirements or
are determined not to have met the requirements are subject to
single-piece First-Class Mail prices on all pieces in the mailing.
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Second, for both First-Class Mail and Standard Mail, the Postal
Service intends to apply the Move Update assessment to a smaller
percentage of a mailing (above an established tolerance) than was
previously proposed in Docket No. R2009-2. At acceptance, a sample of
mail will be used to calculate the ratio of addresses that the mailer
failed to update based on customer-supplied Change of Address orders,
to the number of Change of Address orders on record. If the ratio is
above the specified tolerance, an assessment would apply based on the
percentage of the sample above this tolerance. Initially, the Postal
Service will use a tolerance of 30 percent which is equivalent to a
threshold of 70 percent. This tolerance will be reduced over time after
providing appropriate public notice. Id. at 3-4.
Revenue. The Postal Service estimates that 0.096 percent of
Standard Mail volume will be subject to the assessment. This would
result in an estimated $4.6 million in additional Standard Mail
revenue. This estimate is a downward revision from the $7 million
estimate revenue provided in Docket No. R2009-2. Id. at 4.
The Postal Service estimates that 0.136 percent of presorted First-
Class Mail volume will be subject to the assessment. This would result
in an estimated $4.4 million in presorted First-Class Mail revenue.
This is less than what currently is paid given that the mailpieces
otherwise would have to pay the full single-piece rate. Id. at 4-5.
Mail Classification Schedule. The Postal Service proposes Mail
Classification Schedule language to add the 7-cent per-piece assessment
to the appropriate First-Class Mail sections. New to the First-Class
Mail sections and as a change to the Standard Mail sections, the Postal
Service changes the name of the assessment from ``Move Update
Noncompliance Charge'' to ``Move Update Assessment Charge.'' This
reflects the fact that Performance Based Verification by itself does
not establish compliance or noncompliance with Move Update standards.
Finally, language changes are proposed to indicate that the application
of the assessment is only to a percentage of the pieces that fail a
Move Update verification. Id. at 5.
Conformance with public notice and other requirements. In
conformance with rule 3010.14(a)(3), the Postal Service certifies that
it will inform customers of the planned price adjustments in numerous
ways. Id. at 1-2. In addition to the formal Notice filed with the
Commission, these include notice via http://www.USPS.com, the Postal
Explorer Web site, the DMM Advisory, the P&C Weekly, and the RIBBS Web
site. Id. at 1-2. The Postal Service identifies Don O'Hara as the
official contact for Commission queries. Id. at 2.
Impact on the price cap. The Postal Service asserts that the
proposed adjustments have no impact on price cap issues. Therefore, it
has made no calculation of cap or price changes described by rule
3010.14(b)(1) through (4). For First-Class Mail, the Postal Service
explains that the new price represents a price decrease. Previously,
First-Class Mail that failed a Performance Based Verification would pay
the First-Class Mail single-piece rate which is greater than the newly
proposed 7 cent per-piece assessment. Furthermore, the Postal Service
contends that this adjustment is outside of the annual CPI-cap price
change and that Commission's price cap rules do
[[Page 55076]]
not specifically address the case of a price decrease. No price change
is proposed for Standard Mail. Thus, for Standard Mail the Postal
Service argues that cap compliance calculations are even less
appropriate. Id. at 5-7.
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 8-12.
With respect to statutory objectives, the Postal Service concludes
that the price adjustment and classification changes do not
substantially alter the degree to which First-Class Mail and Standard
Mail prices already address the statutory objectives, or how they are
addressed by the design of the system itself. It argues that by
mitigating the assessments, the proposed changes reflect the Postal
Service's use of pricing flexibility (Objective 4) to address mailer
concerns, and at most, only cause a slight decrease in revenue while
still providing proper incentives (Objective 5). The Postal Service
argues that high quality service will improve by encouraging use of
Move Update (Objective 3). Finally, parallel assessment of 7 cents per
piece for both First-Class Mail and Standard Mail is transparent and
keeps administration of the assessment simple (Objective 6). Id. at 9.
In terms of statutory factors, the Postal Service asserts that, as
with the objectives, the price and classification changes do not
substantially alter the degree to which First-Class Mail and Standard
Mail address the factors of 39 U.S.C. 3622(c). The Postal Service
asserts that the Move Update adjustments will encourage mailers to
adopt Move Update while reasonably taking the impact of price changes
into account (factors 3 and 7). The Postal Service uses the adjustments
as an example of enhancing operational efficiency by reducing
undeliverable-as-addressed mail through the use of customer supplied
Change of Address orders (factors 7 and 12). Finally, the Postal
Service contends that the adjustments should not materially affect the
cost coverage of either First-Class Mail or Standard Mail (factor 2).
Id. at 12.
Workshare discounts. The Postal Service asserts that the Move
Update assessment revisions do not constitute a change to workshare
discounts. The Postal Service states that all passthrough values should
be similar to those reviewed in Docket No. R2009-2. Id. at 12-13.
Preferred rates. The Postal Service contends that the program will
have no impact on preferred rates in Standard Mail, and is not expected
to affect the 60 percent ratio between nonprofit and commercial
Standard Mail prices. Id. at 13.
III. Commission Action
Establishment of docket; comments. The Commission establishes
Docket No. R2010-1 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. Interested persons may express views and
offer comments on whether the planned price adjustments and
classification changes are consistent with the policies of 39 U.S.C.
3622 and with applicable requirements of 39 CFR part 3010. Consistent
with the Commission's rules, 39 CFR 3010.13(a)(5), comments are due no
later than November 4, 2009.
Public representative. Pursuant to 39 U.S.C. 505, the Commission
appoints Jeremy L. Simmons to serve as the Public Representative to
represent the interests of the general public in this docket.
IV. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket No. R2010-1 to consider
matters related to the Postal Service's October 15, 2009 filing.
2. Interested persons may submit comments on the planned
classification changes and price adjustments. Comments are due November
4, 2009.
3. Pursuant to 39 U.S.C. 505, the Commission appoints Jeremy L.
Simmons to represent the interests of the general public in this
proceeding.
4. The Commission directs the Secretary of the Commission to
arrange for publication of this document in the Federal Register.
By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. E9-25750 Filed 10-23-09; 8:45 am]
BILLING CODE 7710-FW-P