Chapter I      Compliance with Statutory Policies go to the 2001 Comprehensive Statement on Postal Operations front page go to the table of contents go to the previous page go to the next page
D. Postal Cost Apportionment and Postal Ratemaking Developments
(39 U.S.C. 101(d))

    1. Omnibus Rate Case: Docket No. R2001-1
On September 24, 2001, the Postal Service filed a request with the Postal Rate Commission for a recommended decision on changes in rates and fees. The proposed overall percentage change was 8.7 percent and included a 3-cent (or 8.8 percent) increase from the current 34-cent basic First-Class Mail rate. The proposed increase was designed to provide an additional $4.3 billion in annual revenue, based on a test period of FY 2003.

The filing also included numerous classification changes that would be responsive to customer needs and the changing environment. For example, the Postal Service proposed that Delivery Confirmation service be expanded to First-Class Mail parcels, and that delivery information be available for certified First-Class Mail letters and flats; it proposed a new drop ship discount and a new pallet discount for Periodicals mailers; it proposed an incentive for customers to enter large, heavy parcels at the destination Sectional Center Facility; and it proposed including Delivery Confirmation as a Parcel Select feature. Also, the Postal Service proposed continuing the restructuring of post office box grouping and fees that was begun in the previous omnibus case to better reflect the local cost of providing the service.

On October 25, 2001, Chairman Omas of the Postal Rate Commission suggested that the participants pursue settlement discussions with the goal of terminating the case before the end of the ten-month litigation schedule typically experienced in omnibus rate cases. Commissioner Omas proposed settlement in light of recent events, including the September 11 terrorist attacks and the anthrax mailings, that had precipitated a greater need for revenues than had been reflected in the Postal Service’s filing. An early termination of the case would allow the Postal Service to implement rate and fee changes earlier, and would result in greater overall revenues.

The Postal Service and the other participants undertook extensive settlement negotiations involving two general settlement conferences and numerous discussions in smaller groups. Eventually, the participants reached a settlement agreement that would permit most of the Postal Service’s original proposals to be implemented as early as June 30, 2002. The agreement also incorporated several relatively minor changes in the proposed rates and fees. A total of 56 out of 62 parties in the case signed the agreement. Only one party, the American Postal Workers Union, opposed it, challenging the proposed discounts for First-Class Mail presort and automation letters. The Commission scheduled hearings to consider APWU’s opposing testimony.

When the hearings are completed, the Commission must evaluate the settlement agreement and submit a recommended decision to the Postal Service’s Governors.

Greetings from Indiana

go to the 2001 Comprehensive Statement on Postal Operations front page go to the table of contents go to the previous page go to the next page   continue...