Other key components of the legislation included authorizing the Postal Service Governors to establish rates and classes for products in the competitive categories of mail. The bills also addressed the financial burden imposed by the escrow account established by the Postal Civil Service Retirement System Funding Reform Act of 2003. Each repealed a provision of P.L.108-18 that addressed the disposition of savings caused by that Act, modified our contributions to the Civil Service Retirement and Disability Fund (CSRDF), and established a Postal Service Retiree Health Benefits Fund.

The bills were reported out of Committee unanimously but were unable to be considered before the end of the 108^th Congress. The sponsors of the bills have indicated their intention to reintroduce the bills in the 109^th Congress, which will convene in January 2005.

Products

The Postal Service is the centerpiece of the U.S. mailing industry. We provide a wide variety of products and services to meet almost any mailing need. Some of our major products and services are:

First-Class Mail - Postcards or letters, up to 13 ounces, can be sent using First-Class Mail. This service (or Express Mail or Priority Mail) is required for personal correspondence, handwritten or typewritten letters, and bills or statements of account. It also may be used for any mailable item, including advertisements and lightweight merchandise.

Priority Mail - This 2–3-day, nonguaranteed service is typically used to send documents, gifts, and merchandise.

Express Mail - This money-back guaranteed overnight to two-day service includes tracking, proof of delivery, and insurance up to $100. Delivery to most destinations is available 365 days a year with no extra charge for Saturday, Sunday, and holiday delivery.

Periodicals - Typical Periodicals are newspapers, magazines, and newsletters. This service requires prior authorization by the Postal Service.

Standard Mail - Letters containing mailable items weighing less than 16 ounces not required to be sent using First-Class Mail can be sent using Standard Mail. Standard Mail is typically used for advertisements and flyers. There are no postcard rates for Standard Mail, but postcards can be mailed at the letter rates. Additional content restrictions must be met for authorized nonprofit mailers.

Package Services - Includes Parcel Post, Bound Printed Matter and Media Mail.

Special Services - In addition to these and other classes of mail, we offer a variety of enhancements that add value to mail by providing additional security, proof of delivery, or loss recovery. These product enhancements include: Certified Mail, Registered Mail, Delivery Confirmation, Signature Confirmation, Click-N-Ship, and insurance.

Rate-Making Activity

Until 1971, Congress set postage rates through legislation, and the relationship between the revenue from those rates and the actual costs of operating the postal system varied greatly. Since 1971, however, the Postal Reorganization Act has required the Postal Service to establish postal rates that cover the cost of operating the postal system.

We must submit a request for any changes in postage rates and classification to the PRC, an independent establishment of the executive branch of the federal government. Our request may be minor, for such things as specific classification changes, extensions of current service classifications, adjustment to or introduction of specific rates or requests to proceed with experimental product offerings. At any point in time, the PRC may be considering several minor requests. In 2004, the PRC issued two Opinions and Recommended Decisions on minor cases, with three minor requests still pending.

We may also submit an omnibus rate request that involves a comprehensive revision of postage rates as well as major classification changes. In an omnibus case, postage rates are revised so that there will be sufficient revenue to allow us to break even in a prospective test year. Adjudication of an omnibus rate request is a lengthy and complicated process that begins when we determine that rate changes are consistent with the policies of the Postal Reorganization Act and in the public interest. With the approval of the Board of Governors, we submit a request to the PRC for a recommended decision on rate and fee changes. We include with our request detailed rate proposals supported by extensive testimony and lengthy documentation.

The PRC's proceedings in an omnibus rate case take up to 10 months and include public hearings in which interested parties such as mailers, competitors, and consumer representatives are authorized to submit their own testimony and proposals, as well as to challenge or support our proposals. At the conclusion of the proceedings, the PRC sends its recommended decision to the Governors. The Governors may approve, reject, allow under protest, or, under certain limited circumstances after more proceedings, modify the PRC's recommendations.