[Federal Register Volume 78, Number 226 (Friday, November 22, 2013)]
[Notices]
[Pages 70080-70084]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-28000]
=======================================================================
-----------------------------------------------------------------------
POSTAL REGULATORY COMMISSION
[Docket No. R2013-10; Order No. 1842]
Market Dominant Price Adjustment
AGENCY: Postal Regulatory Commission.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: The Commission is noticing a recently-filed Postal Service
notice announcing a proposal to adjust prices for market dominant
products. The adjustments are scheduled to take effect January 26,
2014. This notice addresses procedural steps associated with this
filing.
DATES: Comment date: October 16, 2013. The Commission's policy is to
accept comments otherwise subject to a filing date that falls during a
lapse in appropriations if they are submitted via Filing Online when
operations resume. Contact the person identified in the FOR FURTHER
INFORMATION CONTACT section if additional information on the
Commission's acceptance policy is needed.
ADDRESSES: Submit comments electronically by accessing the ``Filing
Online'' link in the banner at the top of the Commission's Web site
(http://www.prc.gov) or by directly accessing the Commission's Filing
Online system at https://www.prc.gov/prc-pages/filing-online/login.aspx. Commenters who cannot submit their views electronically
should contact the person identified in the FOR FURTHER INFORMATION
CONTACT section as the source for case-related information for advice
on alternatives to electronic filing.
FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel,
at 202-789-6820 (case-related information) or [email protected]
(electronic filing assistance).
SUPPLEMENTARY INFORMATION: Order No. 1842 was issued September 27,
2013, and included a date for filing comments that occurred during the
subsequent suspension of Commission operations. At the time the
Commission suspended operations, it posted a notice on its Web site
concerning its policy with respect to accepting comments subject to
filing dates that occurred during the suspension. That policy allowed
commenters to file their submissions upon resumption of Commission
operations. The text of Order No. 1842 as issued on September 27, 2013,
follows.
Table of Contents
I. Overview
II. Promotions
III. Summary of Price Changes by Class of Mail
IV. Preferred Mail and Worksharing Discounts
V. MCS Changes
VI. Administrative Actions
VII. Ordering Paragraphs
I. Overview
A. Index-Based Price Changes for Market Dominant Classes of Mail
On September 26, 2013, the Postal Service filed notice, pursuant to
39 U.S.C. 3622 and 39 CFR part 3010, of plans to adjust prices for its
market dominant products.\1\ The planned adjustments affect both
domestic and international market dominant products and are scheduled
to take effect January 26, 2014.\2\ Concomitant with its filing, the
Postal Service renewed its exigent rate request filed in Docket No.
R2010-4R that would be added to the rates requested with this
Notice.\3\
---------------------------------------------------------------------------
\1\ United States Postal Service Notice of Market-Dominant Price
Adjustment, September 26, 2013 (Notice).
\2\ The Postal Service represents that it is filing its Notice
along with the Renewed Exigent Request of the United States Postal
Service in Response to Commission Order No. 1059 (Exigent Request).
\3\ Docket No. R2010-4R, Renewed Exigent Request of the United
States Postal Service in Response to Commission Order No. 1059,
September 26, 2013.
---------------------------------------------------------------------------
The Postal Service states that it has inflation-based price
adjustment authority of 0.636 percent for Special Services and 1.696
percent for all other mail classes based on the Consumer Price Index
for All Urban Consumers, U.S. All Items (the ``CUUR0000SA0'') series
(CPI-U). Notice at 3.
The Postal Service also states that it has unused rate authority as
indicated in the following table. Id.
Table 1--Available Unused Price Adjustment Authority by Mail Class
------------------------------------------------------------------------
Unused
Market dominant class authority (%)
------------------------------------------------------------------------
First-Class Mail........................................ -0.544
Standard Mail........................................... -0.441
Periodicals............................................. -0.556
Package Services........................................ -0.555
Special Services........................................ 3.678
------------------------------------------------------------------------
Id.
The Postal Service asserts that it is authorized to raise prices
for each class by the percentages in the following table.
Table 2--Price Adjustment Authority by Class
------------------------------------------------------------------------
Price
Market dominant class adjustment
authority (%)
------------------------------------------------------------------------
First-Class Mail........................................ 1.696
Standard Mail........................................... 1.696
Periodicals............................................. 1.696
Package Services........................................ 1.696
Special Services........................................ 2.636
------------------------------------------------------------------------
Id. at 4.
The following table presents the Postal Service's planned
percentage price changes by class.
Table 3--2013 Price Change Percentage by Mail Class
------------------------------------------------------------------------
Price change
Market dominant class (%)
------------------------------------------------------------------------
First-Class Mail........................................ 1.587
Standard Mail........................................... 1.609
Periodicals............................................. 1.569
[[Page 70081]]
Package Services........................................ 1.565
Special Services........................................ 2.500
------------------------------------------------------------------------
Id. at 5.
Price adjustments for products within classes vary from the
average, sometimes substantially. Interested persons are encouraged to
review the Notice and workpapers for specific details.
Unused authority after the proposed price change. The following
table identifies the unused price adjustment authority the Postal
Service calculates as available following the proposed price change.
Table 4--Unused Pricing Authority Available Following Docket No. R2013-1
Price Changes
------------------------------------------------------------------------
Percentage
Class points
------------------------------------------------------------------------
First-Class Mail:
R2013-1............................................... -0.544
R2013-10.............................................. 0.109
---------------
Total............................................... -0.435
Standard Mail:
R2013-1............................................... -0.441
R2013-10.............................................. 0.087
---------------
Total............................................... -0.354
Periodicals:
R2013-1............................................... -0.556
R2013-10.............................................. 0.127
---------------
Total............................................... -0.429
Package Services:
R2013-1............................................... -0.555
R2013-10.............................................. 0.131
---------------
Total............................................... -0.424
Special Services:
R2013-7............................................... 3.678
R2013-10.............................................. -1.864
---------------
Total............................................... 1.814
------------------------------------------------------------------------
Id. at 6 (notes omitted).
Classification changes. The Notice identifies numerous
classification changes. See id. at 56-57. The Postal Service has
included all price and classification changes in a legislative markup
of the Mail Classification Schedule. Id. Attachment A.
B. The Postal Service's Filing
The Notice includes an introductory section followed by four parts.
There are four attachments to the Notice. The introductory section
includes a certification, in accordance with rule 3010.14(a)(3), that
the Postal Service will provide widespread notice of the planned
adjustments prior to the planned implementation date. Id. at 1. It
identifies Mr. Steve Monteith as the Postal Service official who will
respond to queries from the Commission. Id. at 2.
Part I discusses compliance with the price cap. Id. at 2-6. Part II
describes several temporary promotions that it is proposing as part of
the filing. Id. at 6-11. Part III discusses Flats Sequencing System
(FSS) pricing and prices by class in detail, including workshare
discounts. It also addresses the consistency of prices with the
objectives and factors of 39 U.S.C. 3622 and with sections 3626, 3627,
and 3629. Id. at 11-56. Part IV describes Mail Classification Schedule
(MCS) changes. Id. at 56-57.
Attachment A presents MCS changes in legislative format and new
price schedules. Attachment B presents workshare discounts and related
information. Attachment C presents the Postal Service's price cap
calculation. The price cap calculation 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. Attachment D
presents the 2014 Mailing Promotions and Incentives Calendar. The
Postal Service filed six sets of workpapers:
First-Class Mail Workpapers: USPS-LR-R2013-10/1
Standard Mail Workpapers: USPS-LR-R2013-10/2
Periodicals Workpapers: USPS-LR-R2013-10/3
Package Services Workpapers: USPS-LR-R2013-10/4
Special Services Workpapers: USPS-LR-R2013-10/5
First-Class Mail International Workpapers: USPS-LR-R2013-10/NP1
Id. at 4-5.
Each set of workpapers includes a preface with an explanation of
its contents. Id. at 5. In addition, the preface for the first five
workpapers provides an overview, a discussion of adjustments to the
billing determinants for the four quarters ending FY 2013, quarter 3,
and an explanation of revenue calculations. Id.
II. Promotions
Similar to the price adjustments proposed in Docket No. R2013-1,
the Postal Service seeks approval of eight promotions and one incentive
during calendar year 2014.\4\ The following table identifies the
promotions/incentive and timeframe.
---------------------------------------------------------------------------
\4\ The Postal Service states that it seeks approval for these
promotions and price incentives in this price adjustment to address
customers' concern about not having sufficient time to fully
participate in the promotions. Id. at 7.
Table 5--Calendar Year 2014 Promotion Timeframe
------------------------------------------------------------------------
Promotion/incentive Timeframe
------------------------------------------------------------------------
High Density and Saturation January-December 2014.
Incentive Program.
Branded Color Mobile Technology February-March 2014.
Promotion.
EDDM Coupon Program............ March-December 2014.
Premium Advertising Promotion.. April-June 2014.
Earned Value Reply Mail April-June 2014.
Promotion.
Mail and Digital May-June 2014.
Personalization Promotion.
Emerging Technology Promotion: August-September 2014.
Featuring Near Field
Communication.
Color Print in First-Class Mail August-December 2014.
Transactions Promotion.
Mail Drives Mobile Commerce November-December 2014.
Promotion.
------------------------------------------------------------------------
Id. at 7-10.
The Postal Service states that it will only seek to preserve the
additional cap
[[Page 70082]]
space approved in Docket No. R2013-1 \5\ by continuing to offer similar
mobile technology promotions and the Earned Value Reply Mail promotion
in 2014. Accordingly, it represents that no changes in cap space are
justified based on these promotions. Id. at 10-11.
---------------------------------------------------------------------------
\5\ Nine million for First-Class Mail and Twenty-four million
for Standard Mail.
---------------------------------------------------------------------------
III. Summary of Price Changes by Class of Mail
A. FSS Pricing
The Postal Service explains that it is taking three steps regarding
FSS pricing. First, it plans to require FSS preparation for all flat-
shaped mail pieces destinating in FSS zones. Second, it is proposing
separate FSS pricing for presorted flat-shaped pieces in Standard Mail,
Outside County Periodicals, and Bound Printed Matter Flats that
destinate in FSS zones. These proposed prices are designed to minimize
changes in postage for flats mailers. Third, it is proposing to
introduce discounts for mail on FSS scheme pallets entered at the
location of the destinating FSS machine (DFSS). Id. at 16.
B. First-Class Mail
The following table identifies the Postal Service's planned
percentage price changes for its First-Class Mail products.
Table 6--First-Class Mail Price Changes
------------------------------------------------------------------------
Percent change
First-class mail product (%)
------------------------------------------------------------------------
Single-Piece Letters/Cards.............................. 1.141
Presort Letters/Cards................................... 1.615
Flats................................................... 1.267
Parcels................................................. 6.335
First-Class Mail International.......................... 5.994
Overall................................................. 1.587
------------------------------------------------------------------------
Id. at 17.
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, from 46
cents to 47 cents. Id.
Single-Piece Letters and Cards. The overall increase of 1.141
percent for single-piece letters and cards reflects continuation of
current prices for metered letters and single-piece cards, which is
largely responsible for the average increase for single-piece mail
being lower than the increase for presorted mail. Id. The proposed
price increase will increase the per-piece price differential between
letters and flats, and between letters and parcels. Id. at 18. The new
proposed price differential between a single-piece letter and single-
piece flats increases from 46 cents to 47 cents. The letter-parcel
differential increases from $1.61 to $1.76. Id.
Metered Mail. In this docket, the Postal Service is introducing a
new price for single-piece metered letters. The proposed metered mail
category includes single-piece letters with postage affixed by meter,
information-based indicia (IBI), permit imprint, or pre-cancelled
stamps. Only pieces bearing non-cancelled stamps or postal validation
imprint (PVI) indicia \6\ would remain in the stamped mail category.
Id. at 18. The stated purpose is to encourage the adoption of metered
mail by small businesses. Id. at 19.
---------------------------------------------------------------------------
\6\ PVI includes payment indicia printed out by the Automated
Postal Center (APC) equipment.
---------------------------------------------------------------------------
Residual Single-Piece Letters. In Docket No. R2013-1, the Postal
Service introduced a new single-piece price for residual letters
presented as part of a presort mailing. Id. at 20. In this docket, the
Postal Service proposes a new single-piece price structure for residual
letters as follows--residuals from uniform 1-ounce presort letter
mailings will pay the 1-ounce metered rate of 46 cents; residuals from
uniform 2-ounce presort letter mailings will pay the 2-ounce metered
rate of 66 cents; and residuals from mixed mailings will pay the
Residual rate of 48 cents. Id. at 21.
Presort Letters/Postcards. The Postal Service states that the
overall increase for this product is slightly above the overall average
for First-Class Mail. The unit price for the least presorted automation
category increases by 1 cent while the other categories increase by 0.5
to 0.6 cents. The price increases for Mixed AADC, AADC, 3-Digit, and 5-
Digit automation presort letters are 2.5 percent, 1.3 percent, 1.3
percent, and 1.7 percent, respectively. The Postal Service continues to
price AADC and 3-Digit letters and cards at the same level, and the
free second-ounce continues for all presort First-Class Mail letters
(Non-automation and Automation). Id.
Flats. The overall increase for Flats is 1.267 percent. Id. at 22.
Price changes within this product vary. Id.
Parcels. First-Class Mail Parcels receive a 6.335 percent increase,
higher than the overall increase for First-Class Mail. Id. The Postal
Service states that this above-average increase is expected to improve
cost coverage for this product, which it considers low by First-Class
Mail standards. Id.
International. Prices for Outbound Single-Piece First-Class Mail
International (FCMI) increase by 2.192 percent, above the First-Class
Mail average of 1.587 percent. Id. at 22. The Postal Service asserts
that the increase is necessary to increase contribution and improve
cost coverage for FCMI Flats. Id.
C. Standard Mail
The following table presents the Postal Service's planned
percentage price changes for Standard Mail products.
Table 7--Standard Mail Price Changes
------------------------------------------------------------------------
Percent change
Standard mail product (%)
------------------------------------------------------------------------
Letters................................................. 1.614
Flats................................................... 1.809
Parcels................................................. 1.820
High Density and Saturation Letters..................... 1.322
High Density and Saturation Flats Parcels............... 1.412
Carrier Route........................................... 1.666
Every Door Direct Mail--Retail.......................... 5.000
Overall................................................. 1.609
------------------------------------------------------------------------
Id. at 24.
Flats receive an above-average price increase, pursuant to the
three-year schedule of above-average CPI increases for Flats proposed
by the Postal Service in the 2012 Annual Compliance Report. Id. at 24.
The Postal Service is also proposing new FSS pricing for Flats, High
Density flats, High Density plus flats, and Carrier Route flats. Id.
Standard Mail Parcels receive an above-average price increase to
continue the Postal Service's previously announced plan to move the
product toward full cost coverage while also recognizing that Standard
Mail Parcels are underpriced in the marketplace. Id. at 25. The
proposed prices for AADC and 3-Digit presort letters will continue to
be equal in 2014 until the Postal Service is able to determine which
preparation standard will be most consistent with the redesigned
processing network. Id.
The Postal Service is continuing the Simple Samples initiative this
year. Id. It is also reducing the price of Customized Market Mail and
introducing new prices for Every Door Direct Mail--Commercial. It is
increasing the price of Every Door Direct Mail Retail to 16.8 cents and
retaining the current approved price of 2 cents for a picture permit
indicia on Standard Mail. Id. at 26-27. It will moderately increase the
price of Detached Address Labels (DAL).
[[Page 70083]]
D. Periodicals
The following table presents the Postal Service's planned
percentage price changes for the Periodicals class.
Table 8--Periodicals Price Changes
------------------------------------------------------------------------
Percent change
Periodicals product (%)
------------------------------------------------------------------------
Outside County Periodicals.............................. 1.563
In-County Periodicals................................... 1.705
Overall................................................. 1.569
------------------------------------------------------------------------
Id. at 28.
The Postal Service states that despite Periodicals' continued
failure to cover costs, it recognizes the value of this class to the
public. Accordingly, the proposed price change refines price
relationships to encourage efficiency and containerization, while
limiting the price increases for individual publications. It is also
requiring FSS preparation for Periodicals in DFSS zones. The DFSS
prices will be the same as the DCSF pound prices. It is introducing FSS
prices at the bundle level, sack level, and pallet level at all entry
points. To encourage FSS preparation and destination entry, there will
be a price of zero for FSS pallets brought to a DFSS. Id.
E. Package Services
The following table presents the Postal Service's planned
percentage price changes for the Package Services class.
Table 9--Package Services Price Changes
------------------------------------------------------------------------
Percent change
Package services product (%)
------------------------------------------------------------------------
Alaska Bypass Service................................... 2.440
Bound Printed Matter Flats.............................. 0.314
Bound Printed Matter Parcels............................ 1.680
Media Mail/Library Mail................................. 2.061
Inbound Surface Parcel Post *........................... 2.152
Overall................................................. 1.565
------------------------------------------------------------------------
* 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 30.
F. Special Services
The overall increase for Special Services is 2.500 percent. Id. at
32. The Postal Service states that for most of the products, fee
increases were designed to be close to 2.509 percent, while maintaining
consistency with historical rounding constraints (to simplify
transactions for customers). Id. The following table, based on price
changes identified in the body of the Notice, indicates the differing
effects of the Postal Service's Special Services pricing decisions.
Table 10--Special Services Price Changes
------------------------------------------------------------------------
Percent change
Special services (%)
------------------------------------------------------------------------
Collect on Delivery..................................... 4.2
Special Handling Prices................................. 5.5
Stamp Fulfillment Services.............................. 0.0
USPS Tracking (formerly Delivery Confirmation Service).. 10.4
Stamped Cards........................................... 0.0
Address Management Services............................. 12.5
Credit Card Authentication.............................. 0.0
Customized Postage...................................... 3.175
Money Order............................................. 0.017
International Certificates of Mailing................... 5.48
------------------------------------------------------------------------
Id. at 33-35.
IV. Preferred Mail and Worksharing Discounts
Preferred mail. The Notice includes the Postal Service's
explanation that it implemented section 3626 pricing requirements in
the same manner as in the Docket No. R2013-1 price change, and notes
the Commission concluded the Postal Service's interpretation of section
3626 is appropriate. Id. at 35. The Postal Service identifies each of
the preferred products or components (In-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 35-37.
Consistency with 39 U.S.C. 3627 and 3629. The Notice observes that
neither of these sections is 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. Id. at 37.
Workshare discounts. The 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 for each affected
class or individual product. Id. at 37-56.
V. MCS Changes
The Notice, in conformance with rule 3010.14(b)(9), identifies
numerous changes to the MCS. Certain substantive changes are identified
by the Postal Service. Id. at 56-57. Attachment A to the Notice
presents the price and classification changes to the Mail
Classification Schedule in legislative format. Id. at 56. Changes to
the MCS may alter the rights and responsibilities of mailers and
reviewers are advised to review this material carefully.
VI. Administrative Actions
The Commission hereby establishes a formal docket, captioned Docket
No. R2013-10, Notice of Market Dominant Price Adjustment, to conduct
the review of the Postal Service's planned price adjustments mandated
in 39 U.S.C. 3622. The Commission has posted the Notice on the
Commission's Web site (http://www.prc.gov), and has made the Notice
available for copying and inspection during the agency's regular
business hours of 8:00 a.m. to 4:30 p.m. weekdays, except Federal
holidays.
Public comment period. The Commission's rules provide a period of
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 October 16, 2013.\7\ Interested persons are encouraged to
review the Postal Service's Notice and workpapers in their entirety.
---------------------------------------------------------------------------
\7\ See Notice of Erratum, September 30, 2013.
---------------------------------------------------------------------------
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 Postal
Accountability and Enhancement Act (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.
Parties are also encouraged to comment on proposed Mail
Classification changes, particularly whether these changes have any
rate implications.
Participation and designated filing method. Interested persons may
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.
[[Page 70084]]
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 filed in this docket will
be scanned and posted on the Commission's Web site.
Appointment of Public Representative. In conformance with 39 U.S.C.
505, the Commission appoints Kenneth E. Richardson to represent the
interests of the general public in this proceeding.
VII. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket No. R2013-10 to consider
planned price adjustments in rates, fees and classifications for market
dominant postal products and services identified in the Postal
Service's September 26, 2013 Notice.
2. Comments by interested persons on the planned price adjustments
are due no later than October 16, 2013.
3. Pursuant to 39 U.S.C. 505, the Commission appoints Kenneth E.
Richardson 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.
Ruth Ann Abrams,
Acting Secretary.
[FR Doc. 2013-28000 Filed 11-21-13; 8:45 am]
BILLING CODE 7710-FW-P