RESPONSE OF USPS JAMES KIEFER TO PRESIDING OFFICER’S INFORMATION REQUEST
“… the Postal Service used its business judgment to determine the relative price increases each category should be asked to bear. This judgment was informed by knowledge of the industries that use these products, and our customers for these products. This knowledge was gained by regular contact with customers and industry representatives, as well as information gathered through meetings, conferences, consultation with experts, and the media that cover these industries and customers. Using this knowledge the Postal Service made an informed judgment as to the appropriate prices for these and other price categories.”
From Postcom.org: USPS answer to PRC presiding officer:
Q. The discussion of the proposed price changes for First-Class Mail states that “the Postal Service does not believe that the erosion of single-piece mail through electronic diversion can be materially affected by limiting the growth of the stamp price….Please provide all studies and analyses underlying the conclusion that electronic diversion of single-piece mail is essentially unaffected by price”
A. No specific study underlies this conclusion….Postal Service demand models do not estimate separate equations for various shapes, such as flats and parcels. The Postal Service does not have sufficient information to confirm or reject the proposition that “First-Class Mail presort flats . . . . are not as susceptible to price-driven electronic diversion as presort letters . . . .”
Q. The response to CHIR No. 2 question 6, states that one reason for proposing an 11.9 percent increase for First-Class Mail presort flats “is the desire of the Postal Service to improve cost coverage for flats.” While acknowledging the “unprecedented challenges” facing the periodicals industry, the Postal Service proposes an 8 percent increase for Periodicals Mail to improve its cost coverage. Statement of James M. Kiefer at 39. In contrast, the Postal Service proposes a much smaller 5.1 percent increase for Standard Mail Flats, due to concern for the delicate financial position of the catalogue industry. Id. at 28-30. Please provide all studies and analyses relied upon to evaluate and compare the relative financial health of the periodicals industry, the catalogue industry, and industries that use First-Class presort flats.
A. The Postal Service did not conduct studies or analyses to evaluate and compare the relative financial health of the periodicals industry, the catalogue industry and industries that use First-Class Mail presort flats. Also, the Postal Service did not conduct studies or analyses to evaluate the relative ability of each industry to withstand postal rate increases of various sizes.
Q. Has the Postal Service determined the own-price elasticity for Standard Mail Flats?
A. The Postal Service has not yet been able to produce own-price elasticity estimates for Standard Mail Flats.
[Postcom EdNote: And upon this lack of knowledge the Postal Regulatory Commission is supposed to approve the Postal Service’s exigency increases? About the only thing the Postal Service found time to do since the March 2nd announcement of its “plan” was to figure how to jack up postal rates and get customers to pay for what the USPS itself has failed to do…or even try.]