Table of Contents SUMMARY i Chapter I: Introduction 1 Chapter II: Revenue Requirement 15 A. Bases of Test Year Cost and Revenue Estimates 15 B. Volume Models and Forecasting Methodology 18 1. The Service's Volumes Worksheets 18 2. The Postal Service's Econometric Models 27 3. The Postal Service's Forecasting Methodology 28 4. The Postal Service's Forecasts During PFY 2000 30 5. The Postal Service and Commission Forecasts for the Test Year 31 C. Changes and Adjustments to Test Year Costs and Revenues 32 1. Supervisor Cost Reduction Program 32 2. Proposed Disallowance for Inefficient Processing of Flats 34 3. Summary of Non-Update Changes and Adjustments 37 D. Provision for Contingencies 38 Chapter III: Costing 79 A. Mail Processing 79 1. Apportioning Segment 3 Costs to Components 80 a. Migration of Window Service and Administrative Costs. 81 b. Development of New Cost Pools for Non-MODS Offices. 84 c. Consolidating Four MODS Mail Processing Cost Pools into Two. 84 2. Variability of Mail Processing Labor 85 a. Summary 85 b. Operational Findings 92 c. Econometric Findings 97 3. Distributing Mail Processing Labor Costs to Subclasses 98 a. The Commission's Docket No. R97-1 Distribution. 98 b. Treatment of Allied Mixed Mail Costs. 101 c. Treatment of Allied Not Handling Costs. 104 d. Distributing Support Costs. 106 e. Drawing Inferences from IOCS Questions 18 and 19. 107 B. City Delivery Carrier Street Time Costs 109 1. Summary 109 2. Postal Service Engineered Standards (ES) Data Proposals 110 a. Use of Engineered Standards (ES) Data for Street Time Proportions 112 b. Use of Engineered Standards (ES) Data for Route-level Variabilities 120 3. The Established Load Time Variability Model 123 a. Stop-level Load Time Sub-model 124 b. System-level Load Time Sub-model 128 c. Relationship Between the Stop- and System-Level Sub-models 132 4. Postal Service Methodological Proposals 136 a. Fixed Load Time per Stop 137 b. The Deliveries Effect 142 c. Elemental Volume Variability and Other Issues 143 5. Elemental Load Parcel Distribution Key 147 a. UPS Proposal 148 b. Postal Service Opposition 149 c. Commission Analysis 149 6. Runtime Variability 150 7. Motorized Letter Route Volume Variable Costs 155 a. Witness Nelson's Proposal in R2000-1 156 b. Postal Service Rebuttal 157 c. Commission Analysis 158 8. Vehicle Loading Time Variability for Parcel Shaped Mail 159 a. UPS Proposal to Treat Parcel Handling as In-Office Time 160 b. Postal Service Rebuttal 161 c. Commission Analysis 161 9. Special Purpose Route Proposal. 161 a. UPS Proposal 162 b. Postal Service Opposition 162 c. Commission Analysis 163 C. Rural Carriers 164 D. Purchased Transportation 167 1. Highway Transportation 167 a. A Note on Methods Used 168 b. Background for this Docket 170 c. Witness Bradley's Analysis 171 d. Witness Ball's Analysis 172 e. Witness Nelson's Analysis 173 2. Distribution of Transportation Costs 181 a. The Transportation Cost System 181 b. Alaska Air Adjustment 187 c. Air Transportation Network 187 Chapter IV: Pricing 193 A. Introduction 193 B. Pricing Overview 200 1. First Ounce Rate 200 2. Increasing Costs 205 3. Legislation 208 C. Ramsey Pricing 210 D. Incremental Cost 212 Chapter V: Rates and Rate Design 217 A. Express Mail 217 B. First-Class Mail 222 1. Letters and Sealed Parcels Rates and Classifications 226 a. Preliminary Considerations 226 b. Rates for Single-Piece (Nonpresorted) Letter Mail 228 c. Proposals Affecting Rates and Discounts for Workshared Mail(Letters and Flats) 235 d. Automation Flats 244 e. Additional-Ounce Rate Proposals 246 f. Heavyweight Discount Proposal 250 g. First-Class Mail Nonstandard Surcharge Proposals 252 h. Rate Summary 256 2. Letters and Sealed Parcels Classification Proposals 258 a. Single-Piece Automation CompatibleClassification Proposals: CEM and IBIP 258 b. Meter Technology Discount Proposal 274 c. "P" Rate Proposal 282 d. Rates Working Group Proposal 285 e. First-Class Single Piece Rate Stability Proposal 286 f. Proposal to Provide Mailers with 10 One-Cent Make Up Stamps 291 3. Cards 292 4. Priority Mail 297 a. Introduction 297 b. Postal Service Proposal 299 c. Attributable Costs 300 d. Cost Coverage 300 e. Proposed Classification Changes 313 f. Rate Design 325 g. Consistency with Statutory Criteria 326 C. Standard A Mail 328 1. Introduction and Summary 328 2. Preliminary Considerations 336 a. Background 336 b. Docket No. R2000-1 Rate Design Approach 338 c. Pricing and Cost Support 340 3. The Service's Classification Proposals 342 a. Automation-related Discount for Certain Prebarcoded Parcels 342 b. Eligibility of Automation Letters for Minimum Per Piece Rates 344 c. The 3.3 Ounce Breakpoint 345 4. Rate Design for the Commercial Subclasses (Regular and ECR) 347 a. Introduction 347 b. Regular Subclass Proposal 347 c. Proposed Changes Affecting the Residual Shape Surcharge 352 d. Standard A Enhanced Carrier Route Subclass 358 e. ECR Pound Rate Discussion 362 f. Witness Haldi's "Heavy Letter" Letter Adjustment in ECR 393 g. Witness Lubenow's Rate Design Suggestions 395 5. Impact of Legislation on Preferred Subclasses (Nonprofit and Nonprofit ECR) 396 a. Background 396 b. Commission's Rate Design 398 D. Periodicals 401 1. Introduction and Summary 401 2. Preliminary Considerations 405 a. Background 405 b. Mail Processing Cost Trends 407 c. Post-filing Adjustments 412 d. Cost Support 426 3. Outside County Subclass 429 a. Merger Implementing New Legislation 429 b. Rate Design 433 c. Cost coverage 443 4. Within County 446 a. Proposal and Recommendation 446 b. Eligibility for Destination Delivery Unit Discount 451 5. Other Matters 453 a. Rate Grid Concept (MPA witness O'Brien) 453 b. Proposed Pallet Discount (TW witness Stralberg) 455 E. Package Services Mail (Standard Mail (B)) 457 1. Parcel Post Subclass 457 a. Introduction 457 b. RPW Parcel Post Estimates 458 c. Postal Service Proposal 467 d. Cost Coverage 468 e. Rate Design 474 2. Bound Printed Matter 492 a. Introduction 492 b. Postal Service Proposal 492 c. Intervenor Proposals 495 d. Due Process Claims Are Without Substance 497 e. Cost Coverage 501 f. Rate Design 505 g. Recommendation 511 3. Media Mail 512 a. Introduction 512 b. Postal Service Proposal 512 c. Intervenor Proposals 514 d. Recommendation 515 e. Cost Coverage 517 f. Rate Design 518 4. Library Mail 519 a. Introduction 519 b. Postal Service Proposal 520 c. Intervenor Proposals 521 d. Recommendation 521 F. Special Services 522 1. Address Correction Service (Schedule 911) 526 2. Mailing List Services (Schedule 912) 527 a. ZIP Coding of Mailing Lists 527 b. Correction of Mailing Lists 528 c. Address Changes for Election Boards and Registration Commissions 529 d. Arrangement of Address Cards in Carrier Delivery Sequence 529 3. Post Office Boxes, Caller Service, and Reserve Call Numbers (Schedule 921) 530 4. Business Reply Mail (Schedule 931) 540 5. Merchandise Return (Schedule 932) 558 6. On-Site Meter Settings (Schedule 933) 559 7. Bulk Parcel Return Service (Schedule 935) 561 8. Shipper Paid Forwarding (Schedule 936) 568 9. Certified Mail (Schedule 941) 569 10. Registered Mail (Schedule 942) 573 11. Insurance (Schedule 943) 573 12. Collect on Delivery (Schedule 944) 576 13. Return Receipt (Schedule 945) 577 14. Restricted Delivery (Schedule 946) 579 15. Certificates of Mailing (Schedule 947) 580 16. Delivery Confirmation (Schedule 948) 582 17. Signature Confirmation (Schedule 949) 585 18. Parcel Airlift (Schedule 951) 587 19. Special Handling (Schedule 952) 587 20. Stamped Envelopes (Schedule 961) 588 21. Stamped Cards (Schedule 962) 591 22. Money Orders (Schedule 971) 593 23. Mailing Online (Schedule 981) 596 24. Annual Permit Fees (Schedule 1000) 596 25. Special Services DMCS Proposals 597 Recommended Decision Concurring Opinion of Chairman GleimanCommissioner Goldway And Commissioner Omas Appendix One Appendix Two Abbreviations and Acronyms Technical Appendices
