From Postcom.org

At the Postal Regulatory Commission: (focus: testimony of Stephen J. Masse, V.P. Finance and Planning, USPS)

• The Postal Regulatory Commissioners started the day by acknowledging the contributions of the late senator from Alaska, Ted Stevens, who died in a plane crash yesterday.

• In response to modest gains in mail volume, largely in quarter one, the USPS’ workhours are up compared to plan.

• Twelve FSS machines are operating in five locations thus far. Massey said the USPS is still working on the equipment and fine tuning it.

• Massey told the Commission that, in the near-term, the greatest benefit to the USPS could come from changes to its pre-funding requirements. He said the exigency increase won’t be of any help until QII in FY2011, and, even at that, the benefit will be only on the order of $2 billion.

• He said the exigency increase won’t be of any help until QII in FY2011, and, even at that, the benefit will be only on the order of $2 billion.

• Massey said that the USPS would need to raise prices over one-to-two years by 25% if the Postal Service were to use the exigency provision to satisfy the USPS’ immediate needs.

• The USPS had considered filing an exigent price increase request last year, but demurred because of the recession, and because such an increase wouldn’t be the “silver bullet” for meeting the USPS’ longer term needs.

• The Postal Service had been operating under the assumption that mail volume would return after the recession.

• Massey said he believed postal customers had received some benefit from the nation’s very modest economic recovery. [His answer came in response to a question from Commissioner Blair as to whether Massey thought that customers would do equally well in the face of a double-dip # recession. The implication? They can afford it. It’s a matter of “sharing the pain.”]

• Massey implied that the USPS cannot successfully operate under the current law in the face of economic downturns.

• He said “only time would tell” whether the USPS would be back asking for yet another exigency rate increase if the economy were to go sour.

• Massey said that if the USPS got some measure of relief from Congress, it would not be facing a liquidity crisis through FY2011. The USPS actually would not be facing a liquidity crisis until 2015.

• Commissioner Blair said that it appeared as if this case was merely “papering over” some other more significant issues before the Postal Service. It would seem, he said, that “extraordinary or exceptional” was going to be the new way of postal life. Massey said that “only time will tell.” [EdNote: Seems as if Senator Collins is correct in her contention that the USPS seems to lurch from one fiscal “crisis” to another, and will continue to do so in the future.]

• Massey said that any exigent increases that might be approved will remain in place even at the time of any future PAEA-permitted inflation-based price changes.

• Commission Langley noted that postal forecasts are questionable, since they are based largely on retrospective perspectives, rather than those that are more consistent with changing postal market realities.

• Massey said that the present exigent request is both an effort to address an immediate anda longer-term planning need.

• Massey acknowledged that underlying this case is the belief that these prices are what the market is willing to bear.#

• * Commissioner Acton said that he had a problem with the Postal Service asking mailers to pay after they’ve already paid what was required of them to the Civil Service Retirement Fund and the pre-funding of retiree health benefits.

• Massey said that even though rate payers already have paid on these obligations, even if all these payments were appropriately credited, the USPS would still be facing a financial crisis.

• Massey said that the marketing initiatives the USPS currently has planned would not be sufficient to meet the USPS’ financial needs.

• Employee-related costs still account for 80% of all postal costs. All reductions in career employees have been actualized via attrition. There are now no specific plans for voluntary separation incentives.

• PRC Chairman Goldway said that it appeared as if the USPS has not taken full advantage of all the possibilities afforded by PAEA.[EdNote: She and her colleagues have absolutely gotten that right.]