Exigency Update! Commission declines request by the Postal Service to revisit “new normal” and “count once”

07/29/2015


The PRC has responded to the USPS request to revisit the “new normal” and “count once” and has declined that request.

That unit contribution methodology was not disturbed by the Court and the Commission finds no compelling reason to revise its earlier decision. When applied to the increased mail volume losses calculated under the Postal Service’s methodology, the unit contribution methodology previously used by Order No. 1926 entitles the Postal Service to collect $1.191 of additional contribution through the exigent rate adjustment.

It is estimated that the exigency amounts to about an additional eight months.

R2013-11 Order No. 2623 – Order Resolving Issues on Remand

Link: http://www.prc.gov/docs/92/92973/Order%20No.%202623.docx

http://www.prc.gov/docs/92/92973/Order%20No.%202623.pdf

Key Points:

New Normal – Commission Analysis

In this section, the Commission declines to revisit the “new normal” analysis in Order No. 1926 that was affirmed by the ANM Court. The Postal Service has not identified any newly available evidence or other basis for reopening the issue at this late stage of the proceedings. The Commission declines to revise the “new normal” analysis of Order No. 1926 and make the adjustments to the “new normal” cutoff for each class of market dominant mail as advocated by the Postal Service.

Count Once – Commission Analysis

The purpose of quantifying the net adverse financial impact of the Great Recession is to ensure “that an exigent rate adjustment is limited to the adverse effects of the exigent circumstances as opposed to other, non-exigent factors.”[1] In analyzing the methodology proposed to quantify the total mail volume lost due to the Great Recession, the Commission looks to whether the methodology is supported, reasonable, and technically sound. After reviewing the proposed methods, the Commission finds that the Postal Service’s cumulative method approach is consistent with the Court’s decision in ANM and results in a reasonable measure of the total volume loss due to the Great Recession. In order to quantify the total volume loss from the exigent circumstance, the Commission applies the methodology proposed by the Postal Service for counting the total lost mail volumes due to the Great Recession. As analyzed in Section III.A supra, the Commission declines to apply this approach to extend the “new normal” cutoffs as advocated by the Postal Service and will only apply the cumulative method to the yearly volume loss determination set forth by the Commission in Order No. 1926.[2] This approach allows the Postal Service to recover for lost mail volumes until the point in time when the “new normal” began by class.

[1] See Docket No. R2010-4R, Order No. 864, Order Resolving Issues on Remand, September 20, 2011, at 48.

[2] By proposing that the Commission calculate the total volume loss for additional time periods beyond those set by the Commission for each class of mail in Order No. 1926, the Postal Service again challenges the Commission’s “new normal” finding. As discussed in Section III.A. supra, the Commission declines to revisit this issue.