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The R2006-1 Rate Case. PRC Recommendation “Cost-Based Rates”. Cost-Based Rates. Efficient Component Pricing (ECP) Shape-Based Rates Rate Structures Reflective of Cost Causation. ECP. Worksharing Discount = Cost Avoided Sends proper price signal

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The r2006 1 rate case

The R2006-1 Rate Case

PRC Recommendation

“Cost-Based Rates”


Cost based rates
Cost-Based Rates

  • Efficient Component Pricing (ECP)

  • Shape-Based Rates

  • Rate Structures Reflective of Cost Causation


ECP

  • Worksharing Discount = Cost Avoided

    • Sends proper price signal

    • Results in more efficient processing and transportation practices

  • Many existing rates deviate significantly from ECP rates

    • Thus, large variation in rate increase


ECP

  • Per-Piece Standard Mail DBMC Discount

    • Current: 2.2 cents

    • Recommended: 3.3 cents

  • New Standard Mail Flat Presort Discounts

    • MADC to ADC: 5.3 cents

    • 3D to 5D: 5.7 cents


Shape based rates
Shape-Based Rates

  • PRC: Same “ECP” principle should be applied to other mail characteristics, including shape

    • Promotes efficiency

    • “Fundamentally fair”


Shape based rates1
Shape-Based Rates

USPS Proposal Did Not Fully Reflect Cost Differences


Periodicals cost drivers
Periodicals Cost Drivers

  • Entry Point

  • Containerization

  • Bundling

  • Piece Characteristics

All of these are reflected to some extent in Periodicals rates today, but not in a way that tracks how USPS costs are incurred.


Prc recommendation
PRC Recommendation

  • “Grid” rate structure reflecting USPS cost incurrence

    • Editorial Pound Dropship Discounts

    • Container Charge

    • Bundle Charges

    • Machinable/Nonmachinable Rates

    • Rate for DBMC Entry

  • Deviates from ECP to moderate impact

  • Reduced emphasis on weight


Prc recommendation1

Per-Container Charge

Entry Point

Container Type

Container Presort

Per-Bundle Charge

Container Presort

Bundle Presort

Edit Dropship Discount

Retains unzoned editorial pound rate for Zones 1-8

Nonmachinable Rates

For Non-CR Flats

PRC Recommendation


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