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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
slide3
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
slide4
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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