RESPONSE OF THE UNITED STATES POSTAL SERVICE TO PRC ORDER NO. 1890 (Full-Service Intelligent Mail® barcode (IMb) requirements
The United States Postal Service hereby provides its response to Order No. 1890, which was issued on November 21, 2013. In that Order, the Commission determined that the rates proposed for First-Class Mail, Standard Mail, and Periodicals1 would be inconsistent with the annual price cap limitation as calculated under 39 C.F.R. § 3010, if they were concurrently implemented with the planned Full-Service Intelligent Mail® barcode (IMb) requirements.2 To address the Commission’s finding, the Postal Service was given two options: 1) to implement the Full-Service IMb requirement contemporaneously with the proposed rates and submit revised billing determinants/prices accordingly; or 2) to not implement the Full Service IMb requirement contemporaneously with the proposed rates, thus allowing the proposed prices to take effect without further adjustment.3 The Postal Service was directed to notify the Commission of how it planned to address the Commission’s finding no later than November 29, 2013.4 As discussed below, the Postal Service is electing to defer the implementation date that the Full-Service IMb requirement would change access to automation rates, until a date after 2014.As noted above, and in compliance with Order No. 1890, the Postal Service has chosen to defer the implementation date of the Full-Service IMb requirement (for access to automation rates) until a later date after 2014.6 The Postal Service is attaching (as Attachment C) a draft of the Federal Register notice it intends to publish, announcing the deferral of the Full-Service IMb requirement. Accordingly, pursuant to Order No. 1890, the Postal Service will implement the proposed prices for First-Class Mail, Standard Mail, and Periodicals on January 26, 2014 without further revision, other than the revisions set forth in Section III below.
Although the Postal Service is complying with the Commission’s directive, it believes that the Commission’s finding – that the Full-Service IMb requirement, by changing the basic characteristics of the mailing, constitutes the redefinition of a rate cell – oversteps its authority and improperly involves it in the operations of the Postal Service. The intent of the Congress in passing the Postal Accountability and Enhancement Act was to afford the Postal Service true pricing flexibility, unencumbered by the Commission’s own vestigial views on pricing. The Commission’s findings on the Full-Service IMb issue ignore that Congressional intent, inappropriately expand the scope of the price cap, and erode whatever pricing flexibility the Postal Service purportedly enjoys.
Though the Postal Service plans to defer the requirement that mailers use Full-Service IMb in order to access automation rates, the Postal Service will move forward will all other requirements discussed in the Full-Service IMb rule (78 FR 23137) published on April 18, 2013.
III. Commercial and Nonprofit Discounts for 5-digit Automation Flats
At page 84 of Order No. 1890, the Commission requested that the Postal Service equalize the commercial and nonprofit discounts for Standard Mail 5-digit automation flats. To achieve the equalization of these commercial and nonprofit discounts, the Postal Service decreased the commercial discount to 9.0 cents. This was done by increasing the commercial 5-Digit automation flats per piece price at all dropship levels.
These revised prices raise the average price increase to 2.078 percent for the Standard Mail Flats product, which is appreciably greater than the revised average price increase for the Standard Mail class (1.642 percent) and the CPI-U price cap (1.696 percent). No other Standard Mail prices were changed as a result of the commercial 5-Digit automation flats revisions. Revised workshare tables (Attachment B) and updated Standard Mail workpapers (CAPCALC-STD-R2013-10_REMAND_USPS.xls) are being filed with this Pleading.7/
As explained above, the Postal Service has complied with the Commission’s directives in Order No 1890. Accordingly, the Postal Service respectfully requests that the Commission expeditiously approve the revised rates for Standard Mail 5-digit automation Flats. All other proposed prices will take effect without further revision on January 26, 2014 pursuant to Order No. 1890.