[Federal Register Volume 76, Number 211 (Tuesday, November 1, 2011)]
[Notices]
[Pages 67500-67503]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-28214]
[[Page 67500]]
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POSTAL REGULATORY COMMISSION
[Docket No. R2012-3; Order No. 921]
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 price adjustments for market dominant products by
amounts which, on average, are at or below the statutory price cap of
2.133 percent for each class of mail. This notice addresses procedural
steps associated with this filing.
DATES: November 7, 2011: Comments are due.
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,
[email protected] or (202) 789-6820.
SUPPLEMENTARY INFORMATION:
I. Overview
II. The Commission's Role
III. Summary by Class of Mail
IV. Preferred Mail and Worksharing Discounts
V. MCS Schedule
VI. Administrative Actions
VII. Ordering Paragraphs
I. Overview
A. Index-Based Price Changes for Market Dominant Classes of Mail
On October 18, 2011, the Postal Service filed an Adjustment Notice
pursuant to 39 U.S.C. 3622 and 39 CFR part 3010.\1\ The Adjustment
Notice presents the Postal Service's plans to adjust prices for market
dominant products by amounts which, on average, are at or below the
statutory price cap of 2.133 percent for each class of mail. Adjustment
Notice at 3. The planned adjustments affect both domestic and
international market dominant products.
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\1\ United States Postal Service Notice of Market-Dominant Price
Adjustment, October 18, 2011. (Adjustment Notice). This is a Type 1-
A adjustment under Commission rules.
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The Postal Service notes that the most recently available data from
the Bureau of Labor Statistics provides the Postal Service with
inflation-based price adjustment authority of 2.133 percent.\2\ Id. at
3. The following table presents class-specific averages.
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\2\ Specifically, the U.S. Department of Labor's Consumer Price
Index for All Urban Consumers, U.S. All Items (the ``CUUROOOOSA0)
series.
Table 1--2012 Price Change Percentage by Class of Mail
------------------------------------------------------------------------
Planned
Market dominant class percentage
change
------------------------------------------------------------------------
First-Class Mail........................................ 2.133
Standard Mail........................................... 2.124
Periodicals............................................. 2.133
Package Services........................................ 2.133
Special Services........................................ -0.663
------------------------------------------------------------------------
Id. at 5.
The Adjustment Notice states that the overall average for Special
Services is a result of large price reductions for Delivery
Confirmation and Confirm services. Id. at 26. In addition, price
adjustments for products within other classes may vary from the
average, sometimes substantially. These variances typically reflect
several considerations consistent with the Postal Service's pricing
flexibility under the Postal Accountability and Enhancement Act (PAEA)
of 2006.
Classification changes. The Adjustment Notice identifies a wide
range of classification changes. Some involve reformatting and minor
editorial revisions. Others concern product transfers approved in prior
Commission proceedings. Id. at 50-52.
Effective date. The Postal Service plans to implement its planned
price and classification changes for Mailing Services on January 22,
2012 at 12:01 a.m. Id. at 1. It notes this is a departure from past
practice, but says it is consistent with the implementation date for
planned rate changes for its competitive Shipping Services. Id. at 9.
B. Context and Format of Adjustment Notice
The Adjustment Notice includes a brief introductory section, three
enumerated parts, and three attachments. The Postal Service also
submitted separate workpapers supporting the planned changes. The
introductory section includes the Postal Service's certification, in
accordance with rule 3010.14(a)(3), that it will provide widespread
notice of the planned adjustments prior to the planned implementation
date. Id. at 1. It identifies Scott J. Davis as the Postal Service
official who will respond to queries from the Commission. Id. at 2.
Part I presents a discussion of compliance with the price cap. Id.
at 2-6. Part II discusses prices in detail, including workshare
discounts. It also explains the consistency of the prices with the
objectives and factors of 39 U.S.C. 3622 and the preferential pricing
requirements of 39 U.S.C. 3626. Id. at 6-50. Part III describes related
Mail Classification Schedule (MCS) changes. Id. at 50-52.
Attachment A presents MCS changes in legislative format and
includes schedules of the new prices. Attachment B presents workshare
discounts and related information. Attachment C contains the Postal
Service's price cap calculation. This includes, in conformance with
rule 3010.22(b), an adjustment to the moving average because less than
12 months have passed since the most recent price change (filed on
January 13, 2011).
The workpapers are designated as follows:
First Class Mail: USPS-R2012-3/1.
First Class Mail International: USPS-R2012-3/NP1.
Standard Mail: USPS-R2012-3/2.
Periodicals: USPS-R2012-3/3.
Package Services: USPS-R2012-3/4.
Special Services: USPS-R2012-3/5.
Each set of workpapers includes a preface which provides an
overview, a discussion of any necessary adjustments to the billing
determinants for the four quarters ending Q3 FY 2011, and an
explanation of the revenue calculations.
Basis for adjustments. The Adjustment Notice was filed under the
PAEA's revised approach to postal pricing. In brief, this approach
generally limits increases at the class level to an annual price cap,
although the Postal Service may elect, but is not required, to draw on
unused pricing authority generated as a result of previous adjustments.
In this case, the Postal Service elects not to draw on that authority.
It is, instead, relying only on the price cap authority. However, the
Postal Service's approach to Standard Mail and Special Services in this
case adds to the unused pricing authority from previous cases. The
following table identifies the total unused pricing authority that will
be available following the changes in this case.
Table 2--Postal Service's Calculation of Total Unused Pricing Authority
Available Following Docket No. R2012-3
------------------------------------------------------------------------
Total unused
Class pricing
authority (%)
------------------------------------------------------------------------
First-Class Mail...................................... -0.530
Standard Mail......................................... -0.463
[[Page 67501]]
Periodicals........................................... -0.562
Package Services...................................... -0.551
Special Services...................................... 2.324
------------------------------------------------------------------------
Id. at 6 (adapted from the Table 4 in the Adjustment Notice).
II. The Commission's Role
This marks the fourth time the Commission will review index-based
changes for market dominant classes under authority established in the
PAEA. The filing of the Adjustment Notice triggers a PAEA requirement
that the Commission establish a formal docket to review, within 45
days, the consistency of the Postal Service's planned adjustments with
the price cap and related requirements. The Commission must also
provide public notice that the Postal Service has filed a price
adjustment case; publish the notice in the Federal Register; appoint an
officer of the Commission (Public Representative) to represent the
interests of the general public, and provide a 20-day public comment
period.
Issuance of this Notice and Order (Order) allows the Commission to
fulfill these obligations. This Order provides an overview of the
Postal Service's plans. Interested persons may obtain more detail by
reference to the Adjustment Notice, the related workpapers, and review
of subsequent errata, if any.
III. Summary by Class of Mail
A. First-Class Mail
The following table identifies the Postal Service's planned
percentage price changes for its First-Class Mail products.
Table 3--First-Class Mail Price Changes
------------------------------------------------------------------------
Percent
First-class mail product change
(%)
------------------------------------------------------------------------
Single-Piece Letters and Cards............................... 2.468
Presort Letters and Cards.................................... 1.580
Flats........................................................ 1.605
Parcels...................................................... 10.882
International*............................................... 4.679
Overall...................................................... 2.133
------------------------------------------------------------------------
Id. at 12.
The first-ounce First-Class Mail price. The price of a stamp for
the first-ounce of single-piece letter mail, including the Forever
stamp, increases by one cent under the Postal Service's plan, going
from 44 cents to 45 cents. Id.
Single-Piece Letters and Cards. The overall increase of 2.468
percent for Single-Piece Letters and Cards includes a 3 cent increase
in the price for Single-Piece Cards. Id.
Presort Letters and Cards. The Postal Service acknowledges that the
overall increase for this product is below the overall average for
First-Class Mail, and explains its rationale for this outcome. Id. at
13. It presents a comparison of First-Class Mail First-Ounce Prices.
Id. at 14, Table 6.
In an effort to retain certain types of volume, the Postal Service
proposes to expand the lightest weight step (currently, one ounce) for
First-Class Mail Automation and Nonautomation Presort Letters by
increasing the maximum qualifying weight of an automation letter from 1
ounce to 2 ounces. This ``free ounce'' will be available only to pieces
weighing 2 ounces or less. A 3-ounce piece will pay for additional
ounces the traditional way. Id. at 15. The Postal Service presents the
percentage price change First-Class Automation Letters/2-ounce Pieces.
Id. at 16, Table 7.
Flats. The Postal Service notes, among other things, that prices
for Nonautomation Presort and Mixed ADC Automation flats will increase
by less than 1 percent. Id. ADC, 3-digit, and 5-digit automation flats
increase at a higher percentage than the overall increase in Flats, as
well as the overall increase in First-Class Mail. Id.
Parcels (including Keys and Identification Devices). The Postal
Service acknowledges that the 10.8 percent increase for parcels is
higher than the overall increase for this class, but asserts that it
expects this to improve the cost coverage for the parcels that remain
in the market dominant stream. Id. at 17. It notes that as a result of
Docket No. MC2011-22, Commercial Base and Commercial Plus parcels are
now classified as competitive, and that its January 2012 prices for
these parcels will be provided in a notice filed later this fall. Id.
at 16. The Retail portion of single-piece parcels remains in the market
dominant First-Class Mail class. Id. See also id. at 12-13.
International. The Postal Service increases Outbound Single-Piece
First Class Mail International (FCMI) by 4.9 percent overall. Id. at
17. The rationale for an increase for FCMI Letters ``significantly
above'' the First-Class Mail average is to address cost coverage
problems. Id. For FCMI Letters, Flats, and Parcels, the overall
increases are 6.6 percent, 3.7 percent, and 4.0 percent. Id.
B. Standard Mail
The following table presents the Postal Service's planned changes
for Standard Mail products.
Table 4--Standard Mail Price Changes
------------------------------------------------------------------------
Percent
Standard mail product change
(%)
------------------------------------------------------------------------
Letters...................................................... 1.867
Flats........................................................ 2.209
Parcels...................................................... 2.864
High Density/Saturation Letters.............................. 2.298
High Density/Saturation Flats and Parcels.................... 2.878
Carrier Route Letters, Flats and Parcels..................... 2.425
Overall...................................................... 2.124
------------------------------------------------------------------------
Id. at 18.
The Postal Service attributes its lower-than-average increase for
Standard Letters to above-cap increases for Flats and Parcels; a price
increase for Detached Address Labels (DALs); and a price reduction for
nonprofit letters that was needed to achieve the required nonprofit to
commercial revenue per-piece ratio. Id.
The Standard Mail price adjustment also reflects classification
changes to the Postal Service's NFMs/Parcels product. This involves
restructuring parcels offerings to address the different needs of
fulfillment parcels and marketing parcels. Id. at 19. The
restructuring, in brief, involves a transfer of commercial machinable
and irregular parcels to the competitive product list, in accordance
with the Commission's conditional approval in Docket No. MC2010-36. Id.
at 19-20. It also involves eliminating the NFMs category and replacing
it with a new Marketing Parcels category. Id. at 21. Additional details
about these classification changes are provided in the Postal Service's
filing. See id. at 21-22.
DALs used with Flats. The Postal Service is increasing the
surcharge for DALs used with Flats from 1.7 cents per piece to 5.0
cents and dividing DALs into two categories. Id. at 22. One category is
for labels with advertising; the other is for labels with no
advertising. Id. at 22-23.
DALs used with Parcels. The Postal Service is eliminating the
surcharge for DALs used with parcels based on its belief that DALs
eliminate the need to keep bulky parcels sequenced before
[[Page 67502]]
and during the delivery operation. Id. at 23.
C. Periodicals
The following table presents the Postal Service's planned changes
for the Periodicals class.
Table 5--Periodicals Price Changes
------------------------------------------------------------------------
Percent
Periodicals product change
(%)
------------------------------------------------------------------------
Outside County............................................... 2.136
Within County................................................ 2.054
Overall...................................................... 2.133
------------------------------------------------------------------------
Id. at 23.
The Postal Service asserts, among other things, that this price
change ``refines price relationships to encourage efficiency and
containerization, while limiting the price increases for individual
publications.'' Id. It is adding one rate cell for Origin Mixed Area
Distribution Center (ADC) pallets to allow mailers who enter mail at
origin to be more efficient by using origin-entered mixed ADC pallets.
Id. at 24. It says this will encourage palletization rather than
sacking where feasible. Workpaper USPS-R2012-3/3 provides more details.
Id.
D. Package Services
The following table presents the Postal Service's planned
percentage changes for the Package Services class.
Table 6--Package Services Price Changes
------------------------------------------------------------------------
Percentage
Package services product change
------------------------------------------------------------------------
Single-Piece Parcel Post................................... 2.472
Bound Printed Matter Flats................................. 0.504
Bound Printed Matter Parcels............................... 1.886
Media Mail and Library Mail................................ 2.581
Inbound Surface Parcel Post................................ 1.958 *
Overall.................................................... 2.133
------------------------------------------------------------------------
* Prices for Inbound Surface Parcel Post (at UPU rates) are determined
by the Universal Postal Union and are not under the Postal Service's
control. These prices are adjusted by the Postal Operations Council.
Id. at 24 n.11.
Id.
The Postal Service identifies its overall goal in Package Services
as improving product profitability. Id. The Postal Service
characterizes the adjustment for Single-Piece Parcel Post as slightly
larger than average for the class, but not as high as for Media/Library
Mail, reflecting the fact that this product does not cover cost, but
has a higher cost coverage than Media/Library Mail. Id. The Postal
Service is eliminating the 3-cent barcode discount for Media Mail,
Library Mail, and Bound Printed Matter. It asserts that this discount
will become obsolete when all mail will be required to have a barcode.
Also, the Postal Service says this discount is unnecessary with the
mandatory requirement of the Intelligent Mail Package barcode for
commercial customers in 2013. Id.
Package Intercept. The Postal Service is adding Package Intercept
service as an optional feature for First-Class Mail, Standard Mail, and
Package Services. Id. at 26. It anticipates proposing this service as a
new competitive product in the market-dominant section of the MCS, but
includes the related changes in the market-dominant section of the MCS
filed in this docket for administrative ease. Id.
Bound Printed Matter. For BPM Flats, the price increase is lower
than products with lower cost coverage, given the Postal Service's
assessment that this product ``already has healthy cost coverage'' and
the need to offset higher price increases for lower-performing
products. Id. at 25. The Postal Service says this continues the shape-
based de-averaging that began in Docket No. R2011-1 and reflects the
lower costs of processing and delivery flats relative to parcels. Id.
E. Special Services
The Adjustment Notice does not present a table of percentage price
increases for the products in this class. The Postal Service asserts
that it designed fee increases to be close to the cap percentage for
most of them, while maintaining consistency with historical rounding
constraints that simplify transactions for customers.\3\ Id. The Postal
Service states that the overall increase for Special Services is -0.663
percent due to its plan to include Delivery Confirmation as an integral
part of several parcel offerings at no additional fee. Id. The Special
Services workpapers provide information on price changes and resulting
percentage changes. See USPS-R2012-3/5.
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\3\ The Postal Service identifies these products as: Ancillary
Services; International Ancillary Services; Address Management
Services; Caller Service; Change-of-Address Credit Card
Authentication; Confirm; International Reply Coupon Service;
International Business Reply Mail Service; Money Orders; Post Office
Box Service; Stamp Fulfillment Services; and Customized Postage. Id.
at 26.
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The Postal Service presents a detailed discussion of planned
changes to individual products within Special Services. For more
information refer to the Adjustment Notice and workpaper USPS-R2012-3/
5. Id. at 26-29.
IV. Preferred Mail and Worksharing Discounts
Preferred mail. The Adjustment Notice includes the Postal Service's
explanation that it implemented section 3626 pricing requirements in
the same manner as in the Docket No. R2011-2 price change, and notes
the Commission concluded the Postal Service's interpretation of section
3626 is appropriate. Id. at 29. The Postal Service identifies each of
the preferred products or components (Within County Periodicals,
Nonprofit and Classroom Periodicals, Science of Agriculture Periodicals
advertising pounds, Nonprofit Standard Mail, and Library Mail) and
describes how the planned adjustments comport with applicable statutory
factors. Id. at 29-31.
Consistency with 39 U.S.C. 3627 and 3629. The Adjustment Notice
observes that neither of these sections are implicated by the price
change, as the Postal Service does not seek to alter free rates
(section 3627) or change the eligibility requirements for nonprofit
rates.
Workshare discounts. The Adjustment Notice includes the Postal
Service's justification and explanation, in accordance with rules
3010.14(b)(5) and (6), for workshare discounts that exceed 100 percent
of avoided costs or that are substantially below 100 percent. It is
presented by class and, where appropriate, by individual product. Id.
at 31-50.
V. MCS Schedule
The Adjustment Notice, in conformance with rule 3010.14(b)(9),
identifies numerous changes to the MCS. See id. at 50-52.
VI. Administrative Actions
The Commission hereby establishes a formal docket, captioned Docket
No. R2012-3, Notice of Price Adjustment, to conduct the review of the
Postal Service's planned price adjustments mandated in 39 U.S.C. 3622.
It already has posted the Adjustment Notice on the Commission's Web
site (http://www.prc.gov), and has made the Adjustment Notice available
for copying and inspection during the agency's regular business hours
of 8 a.m. to 4:30 p.m. weekdays, except Federal holidays. Additional
Postal Service and Commission filings in this docket, as well as
written comments or filings by others, will also be posted on the
Commission's Web site and made available for inspection and copying at
the Commission during the business hours referred to above.
Public comment period. The Commission`s rules provide a period of
[[Page 67503]]
20 days from the date of the Postal Service's filing for public
comment. 39 CFR 3010.13(a)(5). Comments by interested persons are due
no later than November 7, 2011.
Commission rule 3010.13(b) further provides that public comments
are to focus primarily on whether the planned price adjustments comply
with the following mandatory requirements under the PAEA:
(1) Whether the planned rate adjustments measured using the
formula established in section 3010.23(b) are at or below the annual
limitation established in section 3010.11; and
(2) whether the planned rate adjustments measured using the
formula established in section 3010.23(b) are at or below the
limitations established in section 3010.28.
Participation and designated filing method. Participation in some
Commission proceedings requires interested persons to file notices of
intervention prior to, or in conjunction with, submitting other
documents. This approach does not apply in this type of case. Instead,
interested persons are to submit comments electronically via the
Commission's Filing Online system, unless a waiver is obtained.
Instructions for obtaining an account to file documents online may be
found on the Commission's Web site (http://www.prc.gov), or by
contacting the Commission's Docket Section staff at (202) 789-6846.
Persons without access to the Internet or otherwise unable to file
documents electronically may request a waiver of the electronic filing
requirement by filing a motion for waiver with the Commission. The
motion may be filed along with any comments the person may wish to
submit in this docket. Persons requesting a waiver may file hardcopy
documents with the Commission either by mailing or by hand delivery to
the Office of the Secretary, Postal Regulatory Commission, 901 New York
Avenue NW., Suite 200, Washington, DC 20268-0001 during regular
business hours by the date specified for such filing. Any person
needing assistance in requesting a waiver may contact the Docket
Section at (202) 789-6846. Hardcopy documents will be scanned and
posted on the Commission's Web site.
Official publication. The Commission directs the Secretary to
arrange for prompt publication of this order in the Federal Register.
Appointment of Public Representative. In conformance with 39 U.S.C.
505, the Commission appoints Cassandra L. Hicks to represent the
interests of the general public in this proceeding.
VII. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket No. R2012-3 to consider
planned price adjustments in rates and fees for market dominant postal
products and services identified in the Postal Service's October 18,
2011 Adjustment Notice.
2. Comments by interested persons on the planned price adjustments
are due no later than November 7, 2011.
3. Pursuant to 39 U.S.C. 505, the Commission appoints Cassandra L.
Hicks 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 notice in the Federal Register.
By the Commission.
Shoshana M. Grove,
Secretary.
[FR Doc. 2011-28214 Filed 10-31-11; 8:45 am]
BILLING CODE 7710-FW-P