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Chapter 1 Compliance with Statutory Policies
on shape. The Postal Service supported its request with a wide range of financial, operational, and other studies, including testimony and exhibits of 41 expert witnesses. The PRC is expected to submit its Recommended Decision to the Governors in March 2007.
2. Parcel Return Service: Docket No. MC2006-1
On October 17, 2005, The Postal Service filed a request with the PRC seeking a recommendation establishing Parcel Return Service (PRS) as a permanent classification. In its request, the Postal Service proposed the same rates and fees that were implemented January 8, 2006, as a result of Docket No. 2005-1. The Postal Service had implemented PRS as a 2-year experiment as a result of Docket No. MC2003-2. PRS provides a low-cost, user-friendly method by which a retail customer of a mail-order or online merchant may return a purchased item. The customer need only complete a merchant-supplied mailing form and deposit the item with the Postal Service. Then, the merchant or its agent collects the returned item at a designated delivery unit or bulk mail center.
The proposal for permanent PRS was similar to the experimental service, except that it did not include Bound Printed Matter (BPM) return service since no customers used PRS for BPM during the experiment. On January 17, 2006, the Postal Service filed an unopposed Stipulation and Agreement settling the case. The PRC issued an Opinion and Recommended Decision approving the Stipulation and Agreement on March 3, 2006. The Governors approved the PRC’s recommendation on March 22, 2006, and PRS was implemented as a permanent classification on April 2, 2006.
3. Repositionable Notes Minor Classification Change: Docket No. MC2006-2
On January 12, 2006, the Postal Service filed a request with the PRC to extend the authorized period for the Repositionable Notes (RPNs) experimental classification for up to 1-year beyond the original April 3, 2006, expiration date. RPNs are Post-It type labels that mailers affix to the outside of mailpieces. In Docket No. MC2004-5, the Postal Service requested and received approval to charge a fee for RPNs during a 1-year experiment. On January 12, the Postal Service filed a request to extend the RPN experiment’s term for an additional year to allow evaluation of a PRC-commissioned white paper on RPN pricing. The PRC approved the request to extend the term of the RPN experiment on March 20, 2006. The Governors approved the PRC recommendation on March 22, 2006, and it was implemented on April 2, 2006.
4. Washington Mutual Bank Negotiated Service Agreement: Docket No. MC2006-3
On March 29, 2006, the Postal Service filed a request with the PRC asking that it recommend classifications, rates, and fees associated with a proposed baseline negotiated service agreement (NSA) with Washington Mutual Bank, Inc. The NSA establishes declining block discounted rates for First-Class Mail volume. Unlike prior NSAs, the Washington Mutual Bank NSA does not establish a cost-savings cap. Instead, the NSA incorporates risk mitigation features, including a penalty-backed solicitation mail volume guarantee, as well as a penalty-backed First-Class Mail volume guarantee for the first year of the agreement. The NSA also provides incentives for the substitution of electronic notices for physical return of undeliverable-as-addressed pieces. On August 17,
2006, the PRC’s Office of the Consumer Advocate (OCA) proposed that the Commission recommend the application of an alternative financial model to evaluate the effects of the Washington Mutual NSA. The model was proposed initially by the Commission in its Opinion and Further Recommended Decision on the Bank One Corp. NSA, see item 14 Complaint on Stamped Stationary: Docket No. MC2004-3.
5. Express Mail Second Day Service Classification Clarification: Docket No. MC2006-4
On April 18, 2006, the PRC instituted Docket No. MC2006-4 to clarify the Domestic Mail Classification Schedule (DMCS) language pertaining to Express Mail second-day service. The Postal Service provides guaranteed Express Mail service to certain locations on the second-day after mailing in situations where overnight service is not available. In some cases, delivery service is not available on the second-day after mailing (generally when the second-day after mailing is a Sunday or holiday), so the guarantee applies to the first delivery day following the second-day after mailing. The PRC proposed that the DMCS be changed to clarify the nature of the guarantee. On May 10, 2006, the Postal Service proposed language to clarify the nature of the guarantee and remove any ambiguities in existing DMCS language. The PRC recommended the Postal Service’s proposed DMCS language changes on June 21, 2006. The Governors approved the PRC recommendation on June 30, 2006, and the language changes were implemented on July 1, 2006.
6. Periodicals Nominal Rate Minor Classification Change: Docket No. MC2006-5
On July 6, 2006, the Postal Service filed a request for a PRC Recommended Decision to relax one of the factors used in qualifying for Periodicals rates. The Postal Service proposed counting as paid circulation any subscription that pays at least 30% of the basic annual subscription rate (rather than the current 50%). The proposed change would enhance marketing and pricing flexibility for Periodicals publications and help the creation of new publications. On August 30, 2006, the PRC recommended the Postal Service’s proposal, consistent with a settlement agreement. The Governors approved the recommended change on September 12, 2006 and it was implemented on September 13, 2006.
7. Extension of Capital One Negotiated Service Agreement: Docket No. MC2006-6
On July 26, 2006, the Postal Service filed a request with the PRC asking that it recommend a 1-year extension of an existing NSA with Capital One Services, Inc. The existing NSA established declining block discounted rates for First-Class Mail volume and provided incentives for the substitution of electronic notices for the physical return of undeliverable-as-addressed pieces. Because the agreement had been mutually beneficial to the Postal Service and Capital One, the parties favored extending the agreement for one additional year while negotiating a modified agreement to be filed in 2007. The proceeding was the first of its kind filed under the Commission’s rules for extensions of an existing NSA agreement. On August 25, 2006, the PRC issued an Opinion and Recommended Decision recommending a 1-year extension of the NSA. The Governors approved the Commission’s recommendations, and the extension was implemented on September 13, 2006. The NSA, as extended, may remain in effect until September 1, 2007.