Chapter 2 Our Customers
PRC Proceedings
• Regulations Establishing Systems of Ratemaking: Docket No. RM2007-1
The Postal Act of 2006 directed the PRC to establish a modern system for regulating rates and mail classes. On January 30, the PRC opened a Rulemaking to establish these regulations. After two rounds of comments and reply comments, the PRC issued on August 15, Order No. 26, setting forth its proposed rules and requesting additional comments and reply comments. On September 24, as requested by the PRC, the Postal Service filed its proposed Mail Classification Schedule to delineate the products. Reply comments were filed on October 9. Final rules were filed by the PRC as Order No. 43 on October 29, and were effective December 10.
• Postal Rate and Fee Changes: Docket No. R2006-1
On May 3, 2006, the Postal Service filed an omnibus rate case with the PRC requesting an Opinion and Recommended Decision for changes in postal rates and fees. Changes were intended to cover a projected revenue shortfall of about $5.9 billion in 2008. The Postal Service also proposed a new classification for a Forever Stamp, which would remain valid for the first ounce of First-Class Mail letters regardless of subsequent rate changes; new pricing for certain Priority Mail pieces based on the size of the mailpiece as well as its weight; and a more detailed rate design for First-Class Mail including shape-based rates to reflect different costs for letters, flats, and parcels. The Postal Service supported its request with a wide range of financial, operational, and other studies, including testimony and exhibits of 41 expert witnesses.
On February 26, the PRC issued its Opinion and Recommended Decision. The PRC recommended a 41-cent rate for the first ounce of First-Class Mail letters, 1 cent lower than proposed, and corresponding increases in other mail categories, such as a $4.60 rate for Priority Mail weighing up to 1 pound, restructuring Periodicals rates and increasing rates for flat-shaped mail and some parcel categories. On March 19, the Governors allowed the Recommended Decision to take effect and ordered the implementation of the recommended rates, but returned three matters to the PRC for reconsideration. Most rates took effect on May 14, except Periodicals rates, which took effect two months later on July 15.
On April 27, the PRC issued its Opinion and Recommended Decision Upon Reconsideration, and recommended a minor classification change suggested by the Postal Service for the nonmachinable surcharge for First-Class Mail letters, and a slight reduction in the previously recommended rate for the Priority Mail Flat Rate Box. On May 25, the PRC issued its Second Opinion and Recommended Decision Upon Reconsideration. In that document, the PRC declined to recommend any permanent rebalancing of the rates recommended for flat-shaped Standard Mail, but instead recommended a temporary reduction in rates. The Governors, on June 19, declined to adopt that recommendation. Consequently, the rates for flat-shaped Standard Mail remained as recommended by the PRC on February 26.
• Baseline Negotiated Service Agreement with Life Line Screening: Docket No. MC2007-5
On August 8, the Postal Service filed a Request with the PRC for a Recommended Decision on Classification and Rates associated with a proposed baseline NSA with Life Line Screening. The Agreement provides Life Line Screening with declining block rates for Standard Mail letters soliciting new and existing customers for direct-toconsumer preventive health screenings. This matter continues to be litigated.
• Functionally Equivalent Negotiated Service Agreement with The Bradford Group: Docket No. MC2007-4
On August 3, the Postal Service filed a Request with the PRC for a Recommended Decision on Classification and Rates to implement a functionally equivalent NSA with The Bradford Group. The Agreement provides The Bradford Group with declining block rates for Standard Mail letters and flats soliciting new and existing customers for collectibles and other gift items. This matter continues to be litigated.
• Premium Forwarding Service: Docket No. MC2007-3
On July 31, the Postal Service filed a Request with the PRC proposing to convert Premium Forwarding Service (PFS) from an experimental to a permanent offering. PFS is designed for residential customers who want to receive substantially all their mail at a temporary domestic address via Priority Mail. A settlement agreement has been filed with the PRC. This matter continues to be litigated.
• Repositionable Notes Minor Classification Change: Docket No. MC2007-2
On April 2, the Postal Service filed a request to extend the expiration date of the provisional Repositionable Note (RPN) service. The Postal Service began offering provisional RPN service as a test on April 3, 2005. This service allows bulk mailers of letters and flats to mechanically attach removable, self-adhesive notes to the outside of their mailpieces for a small additional charge.
On June 14, the PRC issued its Opinion and Recommended Decision on Repositionable Notes Minor Classification Change. The PRC recommended that the expiration date of the RPN provisional service be changed from April 3, 2007, to April 3, 2008. The Governors approved the Recommended Decision on June 27, with implementation on June 29.
• Baseline Negotiated Service Agreement with Bank of America Corporation: Docket No. MC2007-1
On February 7, the Postal Service filed a Request with the PRC for a Recommended Decision on Classifications, Rates and Fees to implement a baseline NSA with Bank of America Corporation. The NSA provides performance-based incentives to encourage Bank of America to undertake certain mailing activities to reduce Postal Service costs associated with processing Bank of America’s letter-rated First-Class Mail and Standard Mail. The Agreement requires multiple operational commitments from Bank of America: Implementing Intelligent Mail barcode, OneCode ACS, CONFIRM, Seamless Acceptance, FAST and eDropship; and waiving the physical return of certain First-Class Mail and Standard Mail for the acceptance of electronic information.
The Postal Service agreed to provide rate discounts from otherwise established rates for improvements in address quality and mail processing performance. The PRC provided its recommendation on October 3. The Governors approved it on December 10.