Field Implementation Kit

General Overview

On April 8, 2005, the Postal ServiceTM filed a rate case with the Postal Rate Commission (PRC) seeking an expedited recommended decision to raise prices approximately 5.4 percent for almost all categories. The filing was unique in that the decision to seek the increase was due to the Postal Service's legal obligation to fund the $3.1 billion escrow requirement imposed by Public Law (PL) 108-18, The Postal Civil Service Retirement System Act, enacted in 2003. The proposal called for an almost uniform 5.4 percent rate and fee increase spread over all classes and subclasses of mail and extra services. No rate eligibility or classification-related changes were proposed.

The PRC issued its Opinion and Recommended Decision on November 1, 2005. The Governors reviewed the PRC's Opinion and Recommended Decision and accepted the rates on November 14, 2005, and set Sunday, 12:01 A.M., January 8, 2006, as the implementation date for the new prices and fees.

The new price for a 1-ounce single-piece First-Class Mail® letter is $0.39 - a $0.02 increase. The Priority Mail® 1-pound rate and flat-rate envelope will be $4.05. The Express Mail® half-pound rate and flat-rate envelope will be $14.40.

At the same time, the Postal Service is adopting new international mail postage rates and fees. The total international rate increase is 5.9 percent. To the extent possible, the targeted increase is 5.4 percent across-the-board, consistent with our domestic rate change. In addition, there are changes for mail going to the Republic of the Marshall Islands and the Federated States of Micronesia. Mail to these destinations now falls under international rate schedules. Both international notices were published in the November 23, 2005, Federal Register. The international changes take effect at the same time as the domestic pricing change, January 8, 2006.

Since Postal Service price changes affect virtually every individual and every business, there are many factors involved in this rate implementation. This Field Implementation Kit contains important information that has been designed specifically to share with employees and customers.

Elements of this kit include standup talks and answers to frequently asked questions to assist in responding to customers. Also included is a quick-tip sheet that can be used as a guide to prepare for rate implementation.

Please review the Field Implementation Kit carefully and share this information, as appropriate, with all employees and customers. Informed employees and customers are key to a smooth transition to new rates.

Communications

Introduction

Here is a brief description of the information included in this kit which is designed to help you effectively communicate price changes to employees and customers.

Quick Tips for Retail Units - Rate Implementation

Useful tips are outlined to prepare you for rate implementation. Also included are retail rate implementation action items and checklists for Retail Operations, Self Service Vending, Automated Postal Centers® (APCs®), Stamps by Mail® (SBM), Stamps on Consignment (SOC), contract postal units (CPUs), and integrated retail terminals (IRTs).

Standup Talks

Two standup talks are provided to communicate the pricing changes to employees. There is a talk for all employees and one for business mail entry unit employees. The talks will assist you in conveying the changes to employees and ensure a smooth transition to the new prices. Standup talks should be delivered as soon as possible so that employees are informed and prepared to answer questions.

Frequently Asked Questions

The kit provides two sets of frequently asked questions. The first set is provided to answer questions that employees may have concerning the new prices. The second set of questions and answers are intended to assist employees in answering questions from our customers.

Quick Tips for Retail Units

Preparing Your Staff

• Conduct standup talks provided in the Field Implementation Kit.

• Ensure retail employees have a sufficient supply of (new) $0.39 stamps as well as $0.01 and $0.02 stamps.

Preparing Your Office

• Take inventory of $0.01 and $0.02 stamps on hand. Place special orders with your stamp distribution office (SDO), if more are needed.

• Confirm that automatic distributions of $0.39 stamps have been received from your SDO. Contact your SDO if shipment is not received by December 8 or if additional shipments are needed.

• Ensure vending equipment is stocked with $0.39 nondenominated stamp booklets on December 15. Check vending machine inventories several times per day and restock as needed and just before closing.

• Staff all retail units appropriately to handle increased customer demand in lobbies, especially prior to and immediately after January 8, 2006.

• Ensure that postmasters, station managers, and supervisors monitor the lobby and assist customers.

• Review Retail Rate Implementation Action items for Retail Operations, Self Service Vending, Automated Postal Centers, Stamps on Consignment, Stamps by Mail, Stamps by Fax, CPUs, and IRTs, all of which are found in this kit.

• Remove all old rate information and replace with new rate information prior to January 8, 2006. Ensure updated signage is installed in lobby and that menuboards and parcel slides (if applicable) are updated.

• Ensure retail employees are informed and ready to answer customer questions on the new rates.

Preparing Your Customers

• Inform customers of the new rates and suggest purchasing new rate postage prior to January 8, 2006. Be sure to inform all CPUs, commercial mail receiving agencies (CMRAs), universities, colleges, hotels, and other large stamp order customers of the changes and make arrangements for them to buy stamps in advance.

Frequently Asked Questions for Employees

Why are rates going up now?

The Postal Service filed the 5.4 percent rate case solely to meet the mandated escrow payment required by Public Law (PL) 108-18, The Postal Civil Service Retirement System Act, enacted in 2003. This law requires the Postal Service to establish a $3.1 billion escrow account.

Will international prices change?

Yes. International prices will change simultaneously with domestic prices.

Will there be enough $0.02 stamps available for sale?

Yes, more than 2.5 billion $0.02 stamps were produced. To ensure that sufficient quantities are available at every retail unit, one automatic distribution from the SDO is scheduled. Backup supplies are available at your local Stamp Distribution Office (SDO) to meet local needs.

What promotion(s) are planned to encourage customers to purchase $0.02 stamps early?

Retail associates are being asked to offer $0.02 stamps in lieu of change during the weeks preceding the rate change. Associates are also being asked to advise customers of the rate change starting December 8, so that customers have the option of purchasing nondenominated $0.39 stamps and avoiding a return trip in January.

Will there be sufficient stamp stock for vending?

Yes, sufficient quantities will be available. Additional packets of new-rate postage are being produced based on previous orders and usage. However, this is not an automatic shipment and offices with vending equipment must order the product they need.

Will updates for IRTs, APCs, RAMM 60s, and POS ONE units be available on time?

Yes, disks for updating IRTs will be sent via Express Mail® service to district IRT coordinators in late December. These items should be received in early January. POS ONE and APC updates will occur over the network. RAMM-60 CPUs will receive an update chip for the RAMM-60 rate change via the mail directly from the meter vendor with instructions for installation.

How will eMOVES updates be completed?

eMOVES updates will be done by the St. Louis ASC and will occur over the network prior to the price change.

How will SPORT money order configuration be completed?

The SPORT money order configuration file will be updated over the network.

Electronic scales are located in our lobbies for customer use. These require a chip containing new rates. How do we obtain updated chips?

Headquarters is not supporting any scales during this price change because of the variety of scales in use. Each office will need to contact the manufacturer of its specific scale to find out what is available for the rate change.

What are we supposed to do with excess stock we receive with the automatic shipments?

After implementation of the rate change, excess stock may be returned as long as it is in the original package. The seal must be intact. Communicate with your SDO prior to returning any stock. Note: In the future, special instructions will be issued by Headquarters, Revenue and Field Accounting, as to temporary stock limits.

Retail Operations Time Line

Retail Operations Lobby Scale Upgrade Information

Individual offices will be responsible for updating their scales in Post Offices. Headquarters will not coordinate any support for scales. Contact your specific scale manufacturer to find out what is available for the rate change.

Retail Service Equipment - IRT Time Line

Retail Service Equipment - Vending Time Line

Prices for the Single Stamp Vending Machines

Sample Label 223, December 2005

Label 223 is used in single stamp machines to identify the available stamps. New Label 223 can be downloaded from the Web site at http://eagnmnsg10d/vfo/vfo_2006RateCase.htm.

Item Prices for Rate Change Vending Products

Vending Scales

Electronic 30-pound Lobby Scales and Rate Change Chips

Headquarters will not support lobby scales. Post Offices are instructed to contact the manufacturer of the scales to find out what is available for the rate change.

Vending Model and Instructions

Rate change instructions for vending models can be found on the Retail Service Equipment Web site at http://eagnmnsg10d/vfo/vfo_2006RateCase.htm for the following vending machines:

• PBM-2A.

• PBM-6.

• PBM-7.

• PBSM-624.

• PBSM-624B.

• PCM-1625B.

• PSM-22.

• PSM-22B.

• PSM-53C Modified.

• PSM-53D.

Obsolete machines will not have instructions and you will have to use instructions of current model counterparts. It is recommended that obsolete models be replaced with current models.

Rate Change Booklets (20 Stamps)

As of December 8, 2005, all vending sites may stock and sell the new nondenominated Lady Liberty & U.S. Flag stamp for the rate change effective January 8, 2006. These stamps are in 20-stamp booklets at a cost of $7.80.

All shipments have been completed and are available at accountable paper depositories (APDs), stamp distribution offices (SDOs), and stamp service centers (SSCs). Stock booklets in postal book/stamp machine (PBSM) models PBSM-624 and PBSM-624B, and in postal commodity machine (PCM) models PCM-1625A and PCM-1625B. These stamps will not be an automatic shipment. You will need to order the appropriate stock for your vending machines.

From December 15, 2005, to January 7, 2006, stock these machines with both the nondenominated Lady Liberty & U.S. Flag stamp and the existing 37-cent booklet. Beginning Sunday, January 8, 2006, 37-cent booklets must be removed and replaced with the Lady Liberty & U.S. Flag stamps.

Use the numbers from the following tables when ordering these vending products from your SDO.

Nondenominated

37-cent Denominated

As other vending products become available, an announcement will be made in the Postal Bulletin.

Setting Prices in Postal Commodity and Postal Booklet and Stamp Machines

PCM-1625A and PCM-1625B must have the new prices entered into the control board via the keypad. Procedures for price setting are in section two of Handbook MS-121, Postal Commodity Machine PCM-1625, in section two of Handbook MS-134, Postal Commodity Machine PCM-1625B, and in PCM-1625B Operator's Handbook.

PBSM-624 and PBSM-62B must have the new prices entered into the control board via the keypad. Procedures for price setting are in section two of Handbook MS-139, Postal Booklet and Stamp Machine PCM-1625, and in PBSM-624 Operator's Handbook.

Retail Service Equipment - Automated Postal Center

As of December 15, 2005, all APC sites may stock the new Automated Postal Center (APC) nondenominated Lady Liberty & U.S. Flag stamp for the price change effective January 8, 2006.

All shipments have been completed and are available at APD, SDO, and SSC locations.

The Lady Liberty & U.S. Flag stamps are nondenominated and available in 18-stamp sheetlets at a cost of $7.02. From December 15, 2005, to January 7, 2006, sheetlets should remain in the APC Stamp Repository until January 8, 2006.

Beginning January 8, 2006, and after the software update has been completed, all 37-cent sheetlets must be removed from the APC kiosk and replaced with the new nondenominated Lady Liberty & U.S. Flag stamps.

Use the number provided below when ordering the APC sheetlet from your SDO.

Retail Service Equipment - Automated Postal Center Time Line

Retail Access Channels - Stamps by Mail Time Line

Retail Access Channels - Stamps by Mail Template, Attachment A

Retail Access Channels - Stamps by Mail Customers Template for Postal Service Letterhead, Attachment B

Dear Stamps by Mail Customer:

The Postal ServiceTM is changing rates and fees for all classes of mail and extra services effective Sunday, January 8, 2006.

We have received your Stamps by Mail® order; however, you placed your order prior to the rate change. Rather than return your order to you unfulfilled, we have enclosed the value of new stamps equal to your payment. We also are enclosing an order form with the new rates. When you are ready to place another order, please use the enclosed order form.

Thank you for your continued use of our Stamps by Mail program. We look forward to serving you in the future.

Sincerely,

Name
Title

Retail Access Channels - Stamps by Mail General Information for Retail Managers and Postmasters, Attachment C

The first Stamps by Mail (SBM) order forms to support the new rates will be available between December 1 and December 24. The old SBM order forms should not be used after the rate change, January 8, 2006, unless you have included a template with the rates or a rate change (brochure) order form.

If the SBM form with the new rates is not available on time, there are several things to be done to ensure customers can continue to use this service and are aware of the rate change:

• Copy the SBM rate change template provided by the area and include with all orders.

• Do not plan any further saturation mailings of the current SBM forms unless you can include the rate change template with the form.

• Ensure that SBM forms with the old rate are not in the lobbies beginning January 8, 2006, unless you can include the rate change template with the form.

• If you have a lobby director, have this person distribute SBM order forms with the rate change template to customers in the lobby.

Retail Access Channels - Stamps on Consignment

The local Stamps on Consignment (SoC) program (formerly known as Stamps to Go®) was officially closed in December 2004 when a Rescission of Delegation of Authority was issued by the Vice President of Supply Management. National SoC vendors must secure stamps from the national vendor, American Bank Note (ABN).

Existing local consignments and all potential leads from local Post Offices should be referred to the Stamps on Consignment program office (stampsonconsignment@ usps.gov) for follow-up contact by the national program supplier, ABN. To be a potential lead, a local Postal Service employee with knowledge of the consignment program should discuss the basic concepts of the program with a contact person working at the potential lead location or company headquarters. The lead information sent to the SoC program office should include, at a minimum, the company name, contact person name and title/position, contact telephone number, and the name of the Postal Service person who initiated the lead contact including the date of the discussion. Leads provided to ABN via the program office will be contacted within 24 hours of receipt.

Retail Access Channels - Approved Shipper

Customers participating in the new Approved Shipper Program will receive updated signage and Product Guides from the Headquarters program office. These vendors will need to work through their normal channels to secure any stamps that they may purchase for miscellaneous use.

Retail Access Channels - Contract Postal Units

RAMM-60 CPUs will be receiving a chip update with the new rates prior to the rate change for the RAMM-60 meter. This chip will also include other program updates and enhancements. A separate document will be released regarding the stamp exchange policies for RAMM-60 CPUs via Kansas City SFS and ABN.

All other CPUs will exchange their stamps through the SDO following the policies outlined herein. Excess stock may be returned as long as it is in its original package with the seal intact. Contact your SDO prior to returning any stock.

CPUs with a meter (other than the RAMM-60 meter) will need to contact their meter manufacturer for specific instructions on rate updates. CPUs with an IRT should follow the guidelines set for IRT rate changes contained in this kit.

Standup Talk

All Employees
Postage rates to increase on January 8, 2006

The Postal Service will be raising postage rates on January 8, 2006. The price of a First-Class stamp will be $0.39 - an increase of $0.02. Most other domestic rates will increase by about 5.4 percent. International rates will go up by a total of 5.9 percent, with many services increasing only 5.4 percent.

The Postal Service has not raised domestic postage rates since June 2002 - 3 1/2 years ago. International rates haven't gone up in 5 years. In that time, other delivery companies have raised their rates a number of times - in some cases every year - and some even added a surcharge for fuel and residential delivery.

Like other organizations, the Postal Service has faced rising costs, such as the price of fuel, over the last several years. With your help, we have worked very hard and very successfully to reduce spending and to increase revenue. That has allowed us to absorb rising costs without increasing prices or adding a fuel surcharge to the price of a stamp.

However, in 2003, a law was passed that requires us to place $3.1 billion into a special account in 2006. The new rates will generate the money needed to fund this account. We are not raising rates because of increases in the usual costs of doing business. Without the $3.1 billion payment, we would not have to raise the price of postage in 2006.

It's important that you - and our customers - understand the reason for this rate increase. We have done a very good job of managing our business. And we will continue to do that.

More information about the new rates is on its way to every Postal Service facility. Stamps that cover the new rates - including an ample supply of $0.02 stamps for customers who have $0.37 stamps on hand - are also on the way.

A new stamp, the Lady Liberty & U.S. Flag stamp, picturing the Statue of Liberty with the American Flag in the background, is being issued to cover the new, basic First-Class letter rate. The price will not be printed on the stamp, but it will sell for $0.39. The stamp will be good for domestic and international postage.

New stamps will be available through all channels: in postal lobbies, postal vending machines, Automated Postal Centers, the Postal Store at www.usps.com, Stamps by Mail, Stamps by Fax, and through other retailers who participate in our Stamps on Consignment program.

This special Postal Bulletin has complete information about the new rates. These rates are also posted on our Web site, www.usps.com/ratecase.

Here are some of the new rates:

• First-Class Mail^®

- The new one-ounce letter rate - the basic First- Class stamp price - is going up $0.02, to $0.39.

- The new rate for each additional ounce is $0.24, an increase of $0.01.

- The new rate for First-Class postcards is $0.24. Stamped cards will be $0.26.

• Priority Mail^®

- The new Priority Mail 1-pound rate is $4.05.

- The new Priority Mail flat-rate envelope is $4.05.

- The new price for the Priority Mail flat-rate box is $8.10.

• Express Mail^®

- The new Post Office to Addressee half-pound rate is $14.40.

- The new price for the Express Mail flat-rate envelope - also Post Office to Addressee - is $14.40.

- Express Mail will continue to have a $100 indemnity for merchandise and documents included in its basic price. Customers can purchase additional Express Mail merchandise insurance. The new cost is $1.05 for each $100 increase. The limit for this insurance is $5,000.

• Extra Services

- The fees for most extra services are increasing as well. This includes Delivery ConfirmationTM and Signature ConfirmationTM services purchased at retail units. Prices for Certified MailTM and return receipt services are also rising. While domestic money order fees are going up, the fee for APO and FPO money orders will remain the same - $0.25.

• Post Office Boxes

- Post Office box fees are also increasing. But the new fees only apply to new rentals and renewals. Current boxholders will not have to begin paying the new fees until their current rental period expires and it is time for them to renew.

Even with our new rates, mail continues to offer a great value for our customers. Our service has never been better. Customer satisfaction scores have never been higher. We've made it quick, easy, and convenient to take advantage of our products and services. It's all about being the best.

Standup Talk

Business Mail Entry Unit Employees
New Postage Rates Effective January 8, 2006

As you are aware, new domestic and international postage rates will be effective January 8, 2006. The domestic changes call for an almost uniform 5.4 percent rate and fee increase spread over all classes and subclasses of mail as well as extra (special) services. International increases are 5.9 percent. No domestic rate eligibility or classification-related changes were proposed. There are limited international classification changes. There are no "container labeling" changes. We will go over some key points related to this change.

The new rates increase an average 5.4 percent across the board, with a few exceptions:

Registered Mail + 5.6%
In-County Periodicals - 2.3%
Media Mail + 12.7%
Library Mail + 12.6%
Nonprofit Standard Mail + 3.0%
Nonprofit Standard ECR + 12.3%

Fee Changes

• All of the following annual fees increase from $150 to $160: bulk parcel return service fee; business reply mail annual permit fee; merchandise return service fee; and permit imprint application fee.

• All annual accounting fees increase from $475 to $500.

• Quarterly fee for high-volume qualified business reply mail (QBRM) goes from $1,800 to $1,900.

• Business reply mail weight-averaged monthly maintenance fee goes from $750 to $790.

New business reply mail "per-piece charges" (in addition to postage) are as follows:

• Basic - from $0.60 to $0.65.

• Regular high-volume - from $0.10 to $0.11.

Business reply mail "per-piece charges" (in addition to postage) that do not change:

• QBRM low-volume - remains $0.06.

• QBRM high-volume - remains $0.008

• Bulk weight averaged - remains $0.01.

Periodicals Fees

• Original entry - from $375 to $395.

• Additional entry - from $60 to $65.

• Re-entry - from $40 to $45.

• Registered News agent - remains at $40.

Postage Statements

All mailings deposited on or after January 8, 2006, must be reported on (revised) January 2006 editions.

Implementation Support Materials

On the following pages are two easy-to-duplicate rate charts. The first chart contains the most frequently requested domestic rates and fees. It can be used as a "quick glance" for employees in offices without electronic terminals and can be displayed in lobbies until the printed materials arrive. The second chart is a stamp combination matrix and contains often- used stamp combinations.

[DLINK]

The rate implementation items listed below will be printed and distributed in various quantities to all Post Offices, stations, and branches:

• Large Lobby Poster - 18" x 24" Cling.

• Handouts/leaflets.

Distribution to all locations will begin in mid- to late- December. Instructions on the use and display of these items will be included with the shipment.

Samples of the handout/leaflet pictured below are not scaled to actual size.

Point of Purchase Rate Change Support

New point of purchase (POP) elements to support the rate change will be shipped automatically to arrive in offices during the week of January 2, 2006.

Rate change POP elements will include the following:

*Space permitting

Frequently Asked Questions for Customers

Why are prices going up?

This increase in prices and fees is needed to fulfill the requirement of Public Law (PL) 108-18, The Postal Civil Service Retirement System Act, enacted in 2003. This law requires the Postal Service to place $3.1 billion in an escrow account. Domestic rates and fees have not increased since June 2002. This price adjustment was proposed based solely on this requirement.

When will the new prices take effect?

The new prices and fees go into effect January 8, 2006.

Why don't you make the price of a stamp an even $0.40?

No one should have to pay more than necessary. We want to make sure the mail remains a great value. An increase of more than $0.02 in the price of a First-Class Mail stamp would impose an unfair share of the burden of operating the Postal Service on First-Class Mail users. A $0.02 increase results in a more equitable distribution of postal costs among all mail classes.

Also, the majority of retail customers purchase their stamps not in singles but in booklets of 10 or 20 stamps, so pennies are not usually involved in the transaction. A booklet of 10 stamps will increase only $0.20 from $3.70 to $3.90, and the booklet of 20 stamps will increase from $7.40 to $7.80.

When will new stamps be available?

New nondenominated $0.39 First-Class Mail stamps will be available for sale on December 8. A $0.02 stamp that can be added to the $0.37 stamp to make up the First-Class Mail letter rate will also be available.

Buy stamps as early as possible. There are many convenient stamp-purchasing options - by fax, by mail, by phone at 800-STAMP24, at the Post Office, through retail lobby vending equipment, or over the Internet at www.usps.com.

Why are rates going up now?

The Postal Service filed the 5.4 percent rate case solely to meet the mandated escrow payment required by law.

Will International prices also increase?

Yes. International prices are determined separately from domestic prices. There has not been an increase in international prices since January 2001. To the extent possible, the targeted increase was 5.4 percent, consistent with our domestic rate filing with the Postal Rate Commission. The implementation of international price adjustments will coincide with the domestic price change.

Where can I find additional information regarding the new prices?

Additional information is available on the Web site at www.usps.com/ratecase/ or by calling 800-ASK-USPS (800-275-8777).

What is the new price of a Priority Mail flat-rate envelope?

The new price for the flat-rate envelope is $4.05.

What is the new price of a Priority Mail flat-rate box?

The new price for the flat-rate box is $8.10.

What is the new price of an Express Mail flat-rate envelope?

The new price for the Express Mail half-pound and flat-rate envelope is $14.40.

Are there any changes to Delivery Confirmation service or Signature Confirmation service?

Yes. The fees for these services have been increased. The new fee for Delivery Confirmation service on Priority Mail is $0.50 for the retail option. The new fee for Delivery Confirmation service on First-Class Mail parcels and Package Services parcels is $0.60 for the retail option. The new fee for Delivery Confirmation service on First-Class Mail parcels, Package Services parcels, and Standard Mail items subject to the residual surcharge is $0.14 for the electronic option. Delivery Confirmation service on Priority Mail and Parcel Select items will remain free for the electronic option. The new fee for Signature Confirmation service on Priority Mail items, First-Class Mail parcels, and Package Services parcels is $1.90 for the retail option. The new fee for Signature Confirmation service on Priority Mail items, First-Class Mail parcels, and Package Services parcels is $1.35 for the electronic option.

Are the fees for Premium Forwarding Service increasing?

The weekly reshipment fee for Premium Forwarding Service (PFS) is rising from $10 to $10.40. However, the enrollment fee remains $10.

No PFS customer is required to pay the new weekly reshipment fee ($10.40) for PFS until the end of the current service period, and no retroactive adjustment is to be made for a payment received before the date of the change. The "service period" is defined as the start and end dates listed in item number 15 and 16 of the PFS Application (Form 8176). The $10.40 weekly fee is only collected for customers initially enrolling (or extending) and paying on or after January 8, 2006.

Additional Resources for Rate Information (for Employees and Customers)

www.usps.com/ratecase/ - New price information and rate charts

www.prc.gov - Postal Rate Commission Web site

800-ASK-USPS (275-8777)

- Implementation and Outreach,
Pricing and Classification, 12-1-05