Presort letters and cards.The Postal Service states that the overall increase for this product is slightly below the overall average for First-Class Mail. The Postal Service continues to price Automated Area Distribution Center (AADC) and 3-Digit letters at the same level and extends this structure to Presort Automation Postcards.Id.at 16. The Postal Service continues to offer the free second ounce for all Presort First-Class Mail letters.Id.at 16.
Flats.The overall increase for Flats is 2.675 percent, slightly above the CPI-U cap of 2.57 percent.Id.Price changes within this product vary.Id.
Parcels.Single-Piece (Retail) Parcels (which are the only parcel-shaped First-Class Mail pieces that remain as market dominant) receive a 4.971 percent increase, higher than the overall increase for First-Class Mail.Id.The Postal Service states that this above-average increase is expected to improve cost coverage for this product, which it considers low by First-Class Mail standards.Id.at 17-18.
Promotions—revenue forgone implications.The Adjustment Notice includes a summary of the methodology the Postal Service plans to use to recover some of the revenue forgone resulting from its 2013 First-Class Mail promotions.Id.at 18-19. Thediscussion includes identification of the four promotional categories that will be included in recovery of revenue forgone and related data and information.Id.at 18-19.
International.Prices for Outbound Single-Piece First-Class Mail International (FCMI) increase by 14.3 percent, significantly above the First-Class Mail average of 2.570 percent.Id.at 19. The Postal Service asserts that the increase is necessary to increase contribution and improve cost coverage for FCMI letters at the one-ounce weight step and to accommodate introduction of the International Forever stamp.Id.The International Forever stamp will be sold at the price of a single-piece FCMI first ounce machinable letter and have a postage value equivalent to the price of a single-piece FCMI first ounce machinable letter in effect at time of use.Id.
B. Standard Mail
The following table presents the Postal Service's planned percentage price changes for Standard Mail products.
Table 7—Standard Mail Price Changes
Standard mail product
High Density/Saturation Letters
High Density/Saturation Flats and Parcels
Letters receive an above-average increase; Flats receive an average (at cap) increase.Id.at 20. The Adjustment Notice includes a discussion of the Postal Service's rationale for this approach, including reference to the Commission's finding of noncompliance for Standard Mail Flats in the 2010 Annual Compliance Report.Id.at 20-25. The Adjustment Notice also addresses other Standard Mail pricing.Id.at 25. This includes a new Simple Samples Initiative and a new High Density Plus price tier.Id.at 26. Detached Address Labels prices increase from 3.0 cents to 3.1 cents.Id.The Postal Service is not proposing any price changes for Every Door Direct Mail (which will remain at 16 cents) or for optional picture permit indicia (which will remain at 2 cents).Id.at 27. However, the Postal Service is extending the availability of picture permits to flats.Id.
The Postal Service states that the methodology for recovering promotion-related revenue forgone in Standard Mail follows the approach for First-Class Mail.Id.at 26-27.
The following table presents the Postal Service's planned percentage price changes for the Periodicals class.
Table 8—Periodicals Price Changes
The Postal Service states that the Periodicals price change reflects recognition of this product's value, despite cost coverage shortfall.Id.at 27-28. It states that it cannot use its pricing authority to fully cover costs, as both Periodicals are failing to cover costs by substantially more than the cap.Id.at 28.
D. Package Services
The following table presents the Postal Service's planned percentage price changes for the Package Services class.
Table 9—Package Services Price Changes
Package services product
Alaska Bypass Service
Bound Printed Matter Flats
Bound Printed Matter Parcels
Media Mail and Library Mail
Inbound Surface Parcel Post*
* Prices for Inbound Surface Parcel Post (at UPU rates) are determined by the Universal Postal Union and are not under the Postal Service's control. These prices are adjusted by the Postal Operations Council.
E. Special Services
The overall increase for Special Services is 2.850 percent.Id.at 29. The Postal Service states that for most of the products, fee increases were designed to be close to 4.5 percent, while maintaining consistency with historical rounding constraints (to simplify transactions for customers).Id.at 30. The following table, based on price changes identified in the body of the Adjustment Notice, indicates the differing effects of the Postal Service's Special Services pricing decisions.
Table 10—Special Services Price Changes
Special services product
Collect on Delivery
Express Mail Insurance
Special Handling Prices
Stamp Fulfillment Services
Delivery Confirmation Service
Prices remain at zero.
Periodicals Additional Entry Fee Application
Periodicals Original Entry Fee Application
Post Office Boxes
5 percent overall; no increase for Size 1 boxes; increases for larger boxes.
International Certificates of Mailing
Set equal to equivalent domestic service.
* Based in part on setting the fee for retail Delivery Confirmation service (for Package Services and Priority) and the fee for electronic Delivery Confirmation service (for Parcel Post) at zero.
IV. Preferred Mail and Worksharing Discounts
Preferred mail.The Adjustment Notice includes the Postal Service's explanation that it implemented section 3626 pricing requirements in the same manner as in the Docket No. R2012-3 price change, and notes the Commission concluded the Postal Service's interpretation of section 3626 is appropriate.Id.at 32. The Postal Service identifies each of the preferred products or components (Within County Periodicals, Nonprofit and Classroom Periodicals, Science of Agriculture Periodicals advertising pounds, Nonprofit Standard Mail, and Library Mail) and describes how the planned adjustments comport with applicable statutory factors.Id.at 32-33.
Consistency with 39 U.S.C. 3627 and 3629.The Adjustment Notice observes that neither of these sections is implicated by the price change, as the Postal Service does not seek to alter free rates (section 3627) or change the eligibility requirements for nonprofit rates.Id.at 34.
Workshare discounts.The Adjustment Notice includes the Postal Service's justification and explanation, in accordance with rules 3010.14(b)(5) and (6), for workshare discounts that exceed 100 percent of avoided costs or that are substantially below 100 percent for each affected class or individual product.Id.at 34-53.
V. MCS Changes
The Adjustment Notice, in conformance with rule 3010.14(b)(9), identifies numerous changes to the MCS. Certain substantive changes are identified by the Postal Service.Id.at 54-55. Attachment A to the Adjustment Notice presents price and classification changes.Id.at 53.
VI. Administrative Actions
The Commission hereby establishes a formal docket, captioned Docket No. R2013-1, Notice of Market-Dominant Price Adjustment, to conduct the review of the Postal Service's planned price adjustments mandated in 39 U.S.C. 3622. The Commission has posted the Adjustment Notice on the Commission's Web site(http://www.prc.gov),and has made the Adjustment Notice available for copying and inspection during the agency's regular business hours of 8:00 a.m. to 4:30 p.m. weekdays, except Federal holidays.
Public comment period.The Commission`s rules provide a period of 20 days from the date of the Postal Service's filing for public comment. 39 CFR 3010.13(a)(5). Comments by interested persons are due no later than October 31, 2012. Interested persons are encouraged to review the Postal Service's Adjustment Notice and workpapers in their entirety.
Commission rule 3010.13(b) further provides that public comments are to focus primarily on whether the planned price adjustments comply with the following mandatory requirements under the Postal Accountability and Enhancement Act (PAEA):
(1) Whether the planned rate adjustments measured using the formula established in section 3010.23(b) are at or below the annual limitation established in section 3010.11; and
(2) Whether the planned rate adjustments measured using the formula established in section 3010.23(b) are at or below the limitations established in section 3010.28.
Participation and designated filing method.Interested persons are not required to file a notice of intervention prior to submitting comments. Instead, they are to submit comments electronically via the Commission's Filing Online system, unless a waiver is obtained. Instructions for obtaining an account to file documents online may be found on the Commission's Web site(http://www.prc.gov),or by contacting the Commission's Docket Section staff at 202-789-6846.
Persons without access to the Internet or otherwise unable to file documents electronically may request a waiver of the electronic filing requirement by filing a motion for waiver with the Commission. The motion may be filed along with any comments the person may wish to submit in this docket. Persons requesting a waiver may file hardcopy documents with the Commission either by mailing or by hand delivery to the Office of the Secretary, Postal Regulatory Commission, 901 New York Avenue NW., Suite 200, Washington, DC 20268-0001 during regular business hours by the date specified for such filing. Any person needing assistance in requesting a waiver may contact the Docket Section at 202-789-6846. Hardcopy documents will be scanned and posted on the Commission's Web site.
Appointment of Public Representative.In conformance with 39 U.S.C. 505, the Commission appoints Kenneth E. Richardson to represent the interests of the general public in this proceeding.
VII. Ordering Paragraphs
It is ordered:
1. The Commission establishes Docket No. R2013-1 to consider planned price adjustments in rates, fees and classifications for market dominant postal products and services identified in the Postal Service's October 11, 2012 Adjustment Notice.
2. Comments by interested persons on the planned price adjustments are due no later than October 31, 2012.
3. Pursuant to 39 U.S.C. 505, the Commission appoints Kenneth E. Richardson to represent the interests of the general public in this proceeding.
4. The Commission directs the Secretary of the Commission to arrange for prompt publication of this notice in theFederal Register.
By the Commission.
Shoshana M. Grove,