2010-179. Periodic Reporting

AGENCY:

Postal Regulatory Commission.

ACTION:

Proposed rule; notice of availability of rulemaking petition.

SUMMARY:

The Postal Service has proposed adjustments to the methodology of a key element in the Parcel Select cost model. If adopted, the adjustments could affect the cost differences between certain Parcel Select price categories. The Commission is establishing a docket to consider this proposal and invites public comment.

DATES:

Comments are due: January 8, 2010.

ADDRESSES:

Submit comments electronically via the Commission's Filing Online system at http://www.prc.gov. Commenters who cannot file their views electronically should contact the person identified in “FOR FURTHER INFORMATION CONTACT” by telephone for advice on alternatives to electronic filing.

FOR FURTHER INFORMATION CONTACT:

Stephen L. Sharfman, General Counsel, at 202-789-6824 or [e-mail].

SUPPLEMENTARY INFORMATION:

I. Background

II. Commission Analysis

III. Ordering Paragraphs

I. Background

On December 22, 2009, the Postal Service filed a petition to initiate an informal rulemaking proceeding to consider changes in the analytical methods approved for use in periodic reporting.¹ Proposal Thirty would modify the billing determinants that are inputs to the cost models used to calculate the cost differences between the following price categories of Parcel Select: Inter-BMC, Intra-BMC, DBMC, DSCF, and DDU.

The Postal Service explains that during FY 2009, the Inter-BMC and Intra-BMC price categories of Parcel Select were merged into a “Nonpresort” category. It notes that the Commission approved a conforming change to the mail processing and transportation cost models for Parcel Select/PRS whereby billing determinant data that reflects the mail processing and transportation costs of the new Nonpresort price category are recorded and used.² As a result, the Postal Service explains, the billing determinant data used in these cost models consist of volume data for the Inter-BMC and Intra-BMC price categories for Quarters 1 through 3, and volume data for the new Nonpresort category in Quarter 4. Petition at 1.

The Postal Service therefore proposes to recast Quarter 4 billing determinants for the Nonpresort price category to be consistent with the disaggregated classification structure and cost models that prevailed during the first three quarters of FY 2009. It would do this by assigning the Quarter 4 Nonpresort volumes for zones 6 through 8 to the Inter-BMC volume distribution table in the billing determinants. The Quarter 4 Nonpresort volumes for zones 1 through 5 would be assigned to the Inter- and Intra-BMC categories in the same proportion that these categories exhibited in Quarters 1 through 3. See Proposal Thirty supporting material attached to the Petition.

The Postal Service explains that imputing the disaggregated volume distribution of Quarters 1 through 3 to Quarter 4 will approximately annualize the results of the classification structure that prevailed during most of FY 2009. It notes that the overall effect of Parcel Select results will be small because the Inter- and Intra-BMC categories account for a very small proportion of total FY 2009 Parcel Select volume. Id.

II. Commission Analysis

Proposal Thirty is a technical change to input data used in the Parcel Select cost models. It is designed to accommodate the transition of Parcel Select to a less disaggregated price structure. It is a one-time adjustment that will have no impact on cost estimation for Parcel Select going forward. The volume affected is small and unlikely to materially influence the financial results for Parcel Select for purposes of the FY 2009 Annual Compliance Report.

The Commission sets January 8, 2010 as the due date for public comments. Since Proposal Thirty does not appear to raise substantive issues, Proposal Thirty will be adopted as a final rule for purposes of reporting FY 2009 results if no adverse public comments are received by that date.

III. Ordering Paragraphs

It is ordered:

1. The Petition of the United States Postal Service Requesting Initiation of a Proceeding to Consider a Proposed Change in Analytic Principles (Proposal Thirty), filed December 22, 2009, is granted.

2. The Commission establishes Docket No. RM2010-7 to consider the matters raised in the Postal Service's Petition.

3. Interested persons may submit comments on Proposal Thirty no later than January 8, 2010.

4. John Klingenberg is designated to serve as the Public Representative representing the interests of the general public.

5. The Secretary shall arrange for publication of this Notice in the Federal Register.

By the Commission.

Shoshana M. Grove,

Secretary.

Footnotes

1.  Petition of the United States Postal Service Requesting Initiation of a Proceeding to Consider a Proposed Change in Analytic Principles (Proposal Thirty), December 22, 2009 (Petition).

2.  See Docket No. RM2009-10, Order on Analytical Principles Used in Periodic Reporting (Proposals Three through Nineteen), November 13, 2009, at 36-38.