Postal Regulatory Commission Submitted 5/28/2021 2:57:21 PM Filing ID: 118170 Accepted 5/28/2021 BEFORE THE POSTAL REGULATORY COMMISSION WASHINGTON, D.C. 20268-0001 MARKET-DOMINANT PRICE CHANGE Docket No. R2021-2 UNITED STATES POSTAL SERVICE NOTICE OF MARKET-DOMINANT PRICE CHANGE By its attorneys: Nabeel Cheema Chief Counsel, Pricing & Product Support Nickolas Card Michael Gross Amanda Hamilton Christopher Meyerson Valerie Pelton 475 L'Enfant Plaza, SW Washington, D.C. 20260 (202) 268-7574 [email protected] May 28, 2021 TABLE OF CONTENTS I. Overview of Price Case ...................................................................................................... 1 A. Postal Service Official Responsible for Commission Inquiries ............................... 2 B. Price Case Structure ..................................................................................................... 2 II. Price Cap Compliance ........................................................................................................ 2 A. Annual CPI Based Cap Space .................................................................................... 2 B. Unused Cap Space from Previous Years .................................................................. 3 C. Density Rate Authority .................................................................................................. 3 D. Retirement-Based Rate Authority ............................................................................... 3 E. Rate Authority for Non-Compensatory Classes ........................................................ 4 F. Total Available Cap Space ........................................................................................... 4 G. Percentage Change in Rates ...................................................................................... 4 H. Unused Cap Space After Price Change .................................................................... 5 III. Discussion of New Rates .................................................................................................... 6 A. First-Class Mail .............................................................................................................. 6 1. Summary of Price Changes ..................................................................................... 6 a. Descriptions of Price Changes by Product and Rate Category ...................... 6 2. Workshare Discounts .............................................................................................. 10 3. Adjustments to Billing Determinants ..................................................................... 11 - ii - B. USPS Marketing Mail .................................................................................................. 12 1. Summary of Price Changes ................................................................................... 12 2. Workshare Discounts .............................................................................................. 14 a. Marketing Mail Letters ......................................................................................... 14 b. Marketing Mail Flats & Parcels Dropship ......................................................... 15 c. Marketing Mail Parcels ........................................................................................ 18 d. Marketing Mail High Density and Saturation Letters ...................................... 19 e. Marketing Mail High Density and Saturation Flats .......................................... 19 3. Adjustments to Billing Determinants ..................................................................... 19 C. Periodicals .................................................................................................................... 20 1. Summary of Price Changes ................................................................................... 20 2. Workshare Discounts .............................................................................................. 22 3. Adjustments to Billing Determinants ..................................................................... 24 D. Package Services ........................................................................................................ 24 1. Summary of Price Changes ................................................................................... 24 2. Workshare Discounts .............................................................................................. 25 3. Adjustments to Billing Determinants ..................................................................... 26 E. Special Services .......................................................................................................... 26 1. Summary of Price Changes ................................................................................... 26 - iii - 2. Workshare Discounts .............................................................................................. 29 3. Adjustments to Billing Determinants ..................................................................... 29 F. Promotions .................................................................................................................... 29 1. Earned Value Reply Mail ........................................................................................ 31 2. Emerging & Advanced Technology ....................................................................... 31 3. Informed Delivery ..................................................................................................... 32 4. Mobile Shopping ...................................................................................................... 32 5. Personalized Color Transpromo ............................................................................ 33 6. Tactile, Sensory and Interactive Engagement .................................................... 33 G. Preferential Rates ........................................................................................................ 34 IV. MCS Changes .................................................................................................................... 36 V. Library References ............................................................................................................ 36 I. Overview of Price Case The Governors of the United States Postal Service have determined to adjust rates for market-dominant products. The adjusted rates will take effect at 12:01 a.m. on August 29, 2021. The Postal Service hereby submits the new rates for regulatory review and demonstrates their compliance with applicable law. This price case is the first to follow the Postal Regulatory Commission’s adoption of an amended ratemaking system in Order No. 5763. As a result of the new system, the Postal Service has available approximately 6.8 percent of pricing authority for compensatory classes and approximately 8.8 percent of pricing authority for non- compensatory classes. The Governors have determined to use virtually all of this authority at this time. The Postal Service’s Delivering for America ten-year plan sets forth a balanced array of initiatives to achieve financial sustainability and service excellence, and this price case is an integral component of that plan. Given the recent adoption of the Commission’s amendments to the ratemaking system and the urgent need to begin addressing the Postal Service’s financial challenges through implementation of more rational pricing, after many years of a prior system that the Commission appropriately found to be a barrier to financial sustainability, the Governors have determined to shift from the Postal Service’s previous January implementation schedule for annual price increases to an August timeline for 2021.1 The Governors have not yet determined whether this timeline shift will apply to future years.2 1 The Postal Service submits that this decision satisfies 39 C.F.R. 3030.102(d). 2 39 C.F.R. 3030.102(c) is therefore not implicated. - 2 - A. Postal Service Official Responsible for Commission Inquiries The Postal Service identifies Samie Rehman as the official available to respond to Commission inquiries:3 Samie Rehman, Manager, Pricing 475 L’Enfant Plaza SW, Room 4136 Washington, D.C. 20260 B. Price Case Structure The remainder of this Notice is structured as follows. Part II details compliance with the price cap.4 Part III discusses the new rates and workshare discounts and their compliance with applicable statutes and regulations.5 Part IV describes associated changes to the Mail Classification Schedule (MCS).6 The schedule of new rates can be found in Attachment A.7 II. Price Cap Compliance A. Annual CPI Based Cap Space The amount of price cap space generated by the change in the Bureau of Labor Statistics’ Consumer Price Index for All Urban Consumers (CPI-U) since the last market-dominant rate case is listed in the table below.8 3 39 C.F.R. 3030.122(e). 4 Part II is intended to satisfy subparts (b) through (f) of Rule 3030.123. 5 Part III is intended to satisfy subparts (g) through (k) of Rule 3030.123. 6 Part IV is intended to satisfy subpart (d) of Rule 3030.122. 7 The prices are set forth in Mail Classification Schedule format in order to satisfy subpart (d) of Rule 3030.122. 8 Available Market Dominant Rate Authority, (May 12, 2021), available at https://www.prc.gov/sites/default/files/Available%20Rate%20Authority%2005-12-21.pdf, at 1. - 3 - Table 1 Price Cap Space Generated by the Change in CPI-U Class CPI-U Cap Space Generated