RESERVISTS’ PAY

There were several bills that were introduced in the 109th Congress that sought to address the issue of federal employees who are reservists or members of the National Guard who suffer a diminution in federal pay during their period of military service. The financial impact on the Postal Service has been estimated to be $35 to $40 million annually. While the Senate has repeatedly approved amendments on this subject, the amendments have been excluded from the final conference reports.

APPROPRIATIONS

In November 2005, House and Senate Appropriation Committees approved an appropriations bill for 2006 that provides the Postal Service with $29 million for revenue forgone and $87 million to provide free mail for the blind and overseas voters. No funding was provided to complete our emergency preparedness funding. Postal funds, however, may be subject to an across-the-board budget cut, which legislators were discussing at press time.

ENERGY

On August 8, 2005, President Bush signed the comprehensive Energy Policy Act of 2005 (P.L.109-58) into law. The Act sets forth an energy research and development program for the nation. The law requires federal agencies, including the Postal Service, to reduce energy consumption in buildings to meet new energy efficiency goals that will be administered by the Department of Energy.

Provisions in P.L.109-58 will likely impact postal transportation operations, notably by amending the existing Energy Policy Act (EPAct) requirement regarding Flexible Fuel Vehicles (FFVs). P.L.109-58 encourages federal agencies that purchase FFVs in order to comply with EPAct, to actually use alternative fuels by narrowing existing exemptions available to the agencies. Flexible Fuel Vehicles can run on both conventional gasoline and alternative fuel, usually ethanol. Our studies have found ethanol to be 27% less fuel efficient than gasoline when used in postal vehicles. Thus, this provision could impose substantial costs on the Postal Service, including pending vehicle purchases.

IDENTITY THEFT

Several federal identity theft and security breach notification bills were introduced in Congress in 2005. There is growing concern among federal legislators that additional protections to prevent identity theft and notify consumers about personal data being compromised should be enacted. Past experience from the state of California’s security breach notification requirement has demonstrated that companies typically notify consumers via the mail. Businesses believe that some federal bill to address these issues will be enacted in 2006.

Transformation Plan

Our 2002 Transformation Plan has helped us become a leaner, more effective and modern organization. Under this Plan, we attained record levels of service and customer satisfaction and achieved our goal of $5 billion in cost reductions ahead of our 5-year target. The cumulative cost savings under the Plan are over $15 billion.

Postage rates have been stable since 2002 as a result of improvements in productivity and a legislative change that reduced our payments to the Civil Service Retirement Fund. Additionally, we have eliminated outstanding debt from $11.1 billion at the close of 2002 to zero at the end of 2005. Under the 2002 Transformation Plan, we have been using the flexibility available within current law to think beyond what was perceived as possible only a few years ago.

The Strategic Transformation Plan 2006–2010, published in September 2005, is our blueprint for the future. Like the Transformation Plan, published in 2002, it describes how we will improve the value of mail and, by doing so, help sustain a financially stable enterprise that best serves the nation’s mailing needs as it provides affordable and reliable universal service. The Plan is organized around our four strategic goals: Generate Revenue; Reduce Costs; Achieve Results with a Customer-Focused, Performance-Based Culture; Improve Service.