BEFORE THE I?ECE’IVE,D POSTAL RATE COMMISSION … · BEFORE THE I?ECE’IVE,D POSTAL RATE COMMISSION WASHINGTON, D.C. 20266-0001 Ocr 1 ‘i 46 PM ‘97 POSTAL ... Submit all documents

DOCKET SECTlON

BEFORE THE I?ECE’IVE,D POSTAL RATE COMMISSION

WASHINGTON, D.C. 20266-0001 Ocr 1 ‘i 46 PM ‘97

POSTAL RATE AND FEE CHANGES, 1997 Docket No. R97-1

RESPONSES OF THE UNITED STATES POSTAL SERVICE TO INTERROGATORIES OF THE OFFICE OF THE CONSUMER ADVOCATE

AND MOTION FOR LATE ACCEPTANCE (OCAlUSPS-T32-12 THROUGH 16,36, 65,77,126)

The United States Postal Service hereby files its responses to the following

interrogatories of the Office of the Consumer Advocate:

OCAiUSPS-T32-12 through 16 and 36, filed August 15, 1997 (due August 29, 1997);

OCA/USPS-T32-65 and 77, filed September 2, 1997(due September 16, 1997);

OCAIUSPS-T32-126, filed September 10, 1997 (due September 24, 1997).

These interrogatories have been redirected from witness Fronk to the Postal

Service for response. Each interrogatory is stated verbatim and is followed by the

response,

As reflected in the due dates listed above, these responses are long overdue. In

some instances (T32-12 through 16, 36, 126), preparation of the responses required

identification of and consultation with representatives from various components of

different Headquarters departments. Identifying the appropriate representatives

sometimes took longer than expected. Persons coordinating the responses to

redundant interrogatories requesting the same or similar information were then

contacted to ensure an overall coordinated response.

In one instance, the original source of information could only be identified by

reconstructing the chain of communication which ultimately put the information in the

hands of witness Fronk (T32-65). The search was stalled for a time by the absence of

one link in the chain who was out with the flu

Finally, one interrogatory (T32-77) apparently just fell through the cracks

The Postal Service regrets the delay in providing these responses

Respectfully submitted,

UNITED STATES POSTAL SERVICE

By its attorneys:

Daniel J. Foucheaux. Jr. Chief Counsel, Ratemaking

475 L’Enfant Plaza West, SW. Washington, D.C. 20260-I 137 October 1, 1997

’ / : ‘I ‘,

.-v ; A,&. L.c;!. i Michael T. Tidwell

RESPONSE OF U.S. POSTAL SERVICE TO INTERROGATORIES OF THE OFFICE OF THE CONSUMER ADVOCATE

REDIRECTED FROM WITNESS FRONK

OCA/USPS-T32-12. Please describe all evidence that exists showrng that households underpay or overpay postage for First-Class mail. a. Submit all documents that relate to this question. b. Describe the Postal Service’s enforcement and auditing procedures for

ensuring payment of correct First-Class mail postage.

RESPONSE:

(a) None

(b) Please see responses to OCAIUSPS-25 and 27



OCAIUSPS-T32-13. Please describe all evidence that exists showing that households underpay or overpay postage for the additional ounce rate for Frrst-Class mail. Please especially describe all evidence on the incidence of households affixing an additronal 32 cent stamp to pay the additional ounce rate a. Submit all documents that relate to this question. b. Describe the Postal Service’s enforcement and auditing procedures

seeking to ensure payment of correct First-Class mail postage.

RESPONSE:

(a) None.




OCAJJSPS-T32-14. Please describe all evidence that exists showing that households underpay or overpay postage for single-piece cards. Please especially describe all evidence on the incidence of households affixing a 32 cent stamp to pay for single-piece card mailings. a. Submit all documents that relate to this question. b. Describe the Postal Service’s enforcement and auditing procedures

seeking to ensure payment of correct First-Class mail postage

RESPONSE:

(a) None.




OCAIUSPS-T32-15. Please describe all evidence that exists showing that households underpay or overpay postage for the nonstandard surcharge for First-Class mail.

Z: Submit all documents that relate to this question. Describe the Postal Service’s enforcement and auditing procedures seeking to ensure payment of correct First-Class mail postage.

RESPONSE:

(a) None.




OCAIUSPS-T32-16. Please separately quantify revenues lost and revenues gained by any of the underpayments or overpayments queried about in USPS- T32-12 through 15 during the most recent fiscal year for which such data is available. If no information is available, please explain why not.

RESPONSE: None. l-he Postal Service has not had a need for such data for

households.


REDIRECTED FROM WITNESS FRONK *

OCAJJSPS-T32-36. Please refer again to the above-cited portion of the CEM Declslon.

a. Does the Postal Service think that the American household public is not honest enough to be trusted with an active role In a modified PRM system such as MPRM (e.g., deliberately using 30 cent stamps on non-barcoded mail)?

b. If the answer to (a) is affirmative, to what proportion of the American household public would this apply7

z: Cite empirical evidence for any affirmative response to (a) or (b). Describe all the methods by which an unscrupulous person may alter the mail piece or perform other practices to underpay First-Class postage that would be relevant to the Postal Service’s concerns here.

e.

f.

Does the Postal Service have the legal authority to seek to prosecute persons who alter mail pieces in order to underpay postage? Please describe. If the answer to (e) is affirmative, does the Postal Service ever seek to prosecute such persons? Please explain.

RESPONSE:

(a)-(c) Answered by witness Fronk.

(d) The Postal Service has conducted no analysis of CEM since the conclusion

of Docket No MC95-1. However, the more obvious general methods of

underpayment of First-Class Mail postage on stamped/metered letters include

affixing either no postage, insufficient postage, foreign postage, or forged or

facsimile “postage stamps” to domestic mail pieces. They can also include

applying insufficient postage via postage meter or applying a wash of meter ink

phosphor solution to lower-denomination stamps to avoid facer-canceler kick-

out. The Postal Service dose not claim to be aware of all methods by which the

unscrupulous among us may be underpaying postage on stamped and metered

First-Class Mail

(e)-(f) It is not sure what methods of mail piece alteration are being asked about.

Ultimately, the decision to pursue cnminal prosecution for short payment of

postage would turn on such issues as the amount of underpayment involved, the



RESPONSE to OCAfUSPS-T32-36 (continued)

ability to identify the perpetrator, the sufficrency of evidence of willful or

intentional conduct, the feasibility of alternative administrative or civil remedies,

and the availability of prosecutorial resources

RESPONSE OF UNITED STATES POSTAL SERVICE TO INTERROGATORIES OF THE OCA REDIRECTED FROM WITNESS FRONK

OCA/USPS-T32-65. At page 10 of the report, it is stated that: “Estimates indicate that only 5% of the envelopes enclosed with bills are prepaid.” Please describe the empirical basis for this assertion, including any information the Postal Service gave to the report’s author.

RESPONSE: The empirical basis for thus estimate, given by the contractor in the report

on the Prepaid Reply Mail (PRM) product concept, is preliminary data from the FY 1996

Household Diary Study, the final version of which is currently under production. The

attached tables 116 and 117 are produced by that study. Please note that all figures on

the table represent pieces per week and are in hundred thousands (add 5 zeros).

Table 116 shows that 37.700,OOO reply envelopes per week were provided by

electric, gas, and water companies. Table 117 shows that, of those reply envelopes,

1,900,OOO were prepaid, which is exactly 5% of the total. The electric, gas, and water

group of companies was selected for the estimate because the mail pieces sent to

households from those groups would be predominantly bills rather than solicitations

Almost all of the other categories had greater percentages of prepaid envelopes

enclosed in their mailings, but many of them are likely to be solicitations rather than

bills.

UNYEIWTEO HOUSEHOLDS

NO

DON’T KNOW/ND )INSYER

FIRST-CLASS YAlL RECEIVE0 - lND”STRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

FUN GAM COL ERAL

BAGE, LEC HONES TOTAL ELEC. LET COYPU TRASH TlON EXTER / B”R

SER PHONE GAS YE01 OTHER SURE C&BLE TER CRAFT SER AGEN MINI I&L NOTO* TOTAL “ICES co. MATER CAL PROF. WI?“. TV REL. SUN “ICE CY TOR PLTS CLUB . . . . . . . . . . . . . . . 11.1. . . ..I . . . . . . . . . . . . . . . 11.1. . . ..I ..I.. 1.1.. . . . . . . . . . . . . . . .

5300 s3cJo 5300 5300 5300 5300 5300 5300 5300 5300 5300 5300 5300 5300 5300

“.S.P.S, HOUSEHOLD 0,Ll-t” STUO” - DIARY - FISCAL “EAR ,996 WITH ADJUSTYENT FACTORS (SEPT. 18. 1995 - SEPT. 1s. 1996, TliiLE 116 FIPST-CLASS NAIL RECEIVED 0~ 10 WAS A RETURN EN”ELOPE/C*RD ENCLOSED (EaSED TO FIRST-CLASS NAIL ONLY)

“NYE,WTED HO”SEHoLDS

“NIEIWTEO PIECES

“ElOHTED HOUSEHOLDS

VE,G”TEO PIECES (BASE)

“ES

FIRST-CLASS Y&IL RECEIVED IND”STT(” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

DELI” CD” / L-3,

6!1ESd NESS SEC”!? TOTAL EARCH PHOTO PHOTO ENGER 1,”

SEll STOR SER GRA SER SER CIA” SYS- TOTAL “,CES AGE “ICES PHEO “,CES “ICES CIRE TEYS

CHlLTDN I(ESEARCH SERVICES Ho. 57.6 APra,L 19.97

- 0.01 0.03 0.10

U.S.P.S. KWSEHOLD DIIRY STUD” - 01AR” - FISCAL “Em ,996 “ITH ADJUSTYENT FACTORS (SEPT. 16. ,995 - SEPT. 15. 1996) TIBLE 116 F,RST-CLASS MAIL ITECEIVED 0 10 “IS A RETURN EN”ELOPE,CARD ENCLOSED (B&SE0 TO F,RST-CLASS MALL ONLY)

“NYEIOHTED HOUSEHOLDS

“NYE1OHTED PIECES

WElCHTED HOUSEHOLDS

FIRST-CLASS YA,L RECEIVED INDUSTF!” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

TOTAL DEPT. LIND RLS AUTO SER “Eli STORE MAIL OTHER P”BLl PROYO TIU DEAL “ICE

TOTAL CHANT DISC. OROER STORE SHER T,DN RANT ER STN. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

6300 6300 6300 5300 s300 5300 5300 5300 5300 5300

. . . . . . . . . . . . . . . . . CON SUPER

*UC SUYER NAR TION OIST KETS

. . . . . . . . . . . . . . . 5300 5300 5300

43 66 30

996 996 996 100.0 ~00.0 100.0

6 12 6 loo.0 100.0 100.0

“ElGHTED PIECES (BASE)

0.01 0.14

0. 1.6

0.01 0. II

1 11.9 44.:

L1.S.P.S. WiiSEHOLD DiAR” STUD” - Dl*It” - FISCAL “EAR ,996 “IT” lOJ”STYENT FACTORS (SEPT. 18. ,995 SEPT. 45. 1996) IC 116

,,LST-CLASS MAIL l?ECEI”EO 0, 10 - “AS A RETWN EN”ELOPE,CAKI ENCLOSED (BASED TO FIIST-CLASS “AIL ONL”)

FIRST-CLASS MAIL RECEIVED - INDUSTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,.................

TOT&L TOTAL YIN”

ST&TE SOCL. FAC LOCAL CHIK TUIIER . . . . . . . . . . . . . . .

5300 5300 5.300 UNVEIUITED HOUSEHOLDS

LlNIE,GHTED PIECES

YElWTED HOUSEHOLDS

NO

DON’, KNOW/NO ANSYER

REAL INSUR EST.

IT 5.e.L IT” NONE” AWE MOOT TOT&L FED TOTAL ClAL CARD C.U. BfaKR NKT. co. GAGE GOVT. ER.L 1.1.. . ..I. . . . . . . . . . . I.... . . . . . . . . . . . . . . . . . . . . . . . . .

6900 smo 5300 5300 5300 5300 5300 5300 5300 5300

CH,L,ON RESEARCH SERVICES No. 5746 APRIL 1991

U.S.P.S. HO”SEHOL0 OIAII” SWO” - 01.17” - FISCAL “EAR ,996 WITH AOJUSTYENT FACTORS (SEPT. 18. ,995 - SEPT. 15.1 ,996) TABLE (17 FIRST-CLASS YAlL RECEIVED 0 I, DID THE RETURN ENVELOPE/CARD REOUIIIE POSTAGE JCx” &NSWaEO IF 4 lTET”RN ENVELOPE/CARD Y&S ENCLOSED)

CEO TO FIRST-CLASS MAIL ONL”)

FIRST-CLISS MAIL RECEIVED INOUSTR” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

FUN OAFI COL FP.1

BAGE/ LEC HOYE s T0T.L ELEC. LEI COYPU 7R.S” TION EXTER , BUR

SEll PWNE G&S YE01 OTHER SURE CA.BLE TEL! CRAFT SER AGEN YIN. IAL MOTOR TOTAL “ICES co. “&TER C&L PROF. SERV. TV REL. SYAN “ICE C” TOR PLTS CLUB . . . . . . . . . . . . . . . .I... 1.1.. . . . . . . . . . . . . . . . 1.1.. . . . . . . . . . . -11.. . . . . . . . . . . . . . . .

“NYElWTEO WUSEHOLOS

“NYEIWTEO PlECES

YELGHTEO HO”SEHOLOS

WE,GHTEO PIECES (BASE)

“AS PRESTAYPEO 06 POSTAGE PAID

NEEDED A STAYP

DON’T KHOY/M ANSWER

MEAN ST0 DE” ST0 EmOIl

SIG”l

EACH CELL CONThINS: COUNT “EWICAL PEWZENT H0~IZclNT.L PEKENT CELL PERCENT

367 I ,186 366 377 220 23 32 120 1, s 6 6 2 I 100.0 100.0 too.0 loo.0 loo.0 loo.0 loo.0 loo.0 too.0 loo.0 100~0 100-o loo.0 ,ix.o led

76, I12 33 18 5 14 5 0. 21.3 9.3 9.0 5:: 6.7 20.0 43.1 3.8 57.: 14.; 5.9 26.:

100.0 14.7 4.3 2.6 1.5 0.6 1.6 0 6 0.6 0.2 0.3 21.3 3.1 0.0 0.5 0.6 0.1 h-4 0.1 0.2 0.1

7.4 1 .o

CHILTON RESEARCH SERVICES No. S7.6 APT(IL 1997 “EIGHTED NUMBERS ARE REPORTED IN HUNOREO THOUSANDS

u S.P.S. Ho”SEHoL0 DIARY STUD” - OIIll” FISCAL “EAR 1.996 YlTH AOJUSTYENT FACTORS (SEPT 16. 1995 SEPT. IS. 1996) TIBLE 117 FIRST-CLASS MAIL RECEIVED 0 I, - DID THE RETUIIN ENVELOPE/CARD REOULllE POSTIGE (ONLY ANSWERED IF A RETURN ENVELOPE/CARD WAS ENCLOSED) (BASED TO FIRST-CLASS “AIL ONL”)

‘3

“WEIGHTED HOUSEHOLDS

“NYEIOHTEO PTECES

WEIWTEO HOUSEHOLDS

WEIGHTED PIECES (BASE)

“AS PREST&YPEO OR POSTAGE PAID

NEEDED A STAYP

DON’T KNOW/~ ANSWER

YEAN ST0 DE” ST0 ERROR

SIWI

EACH CELL CONTAINS: COUNT VERTICAL PERCENT HOR1ZONTAL PERCENT CELL PERCENT

FIRST-CLASS MAIL RECEIVED - INDUSTRY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

DELI” ER”/

RES- MESS SECUR TOTAL EARCH PHOTO PHOTO ENCER IT”

SE@ STOII SER GRA SE@ SEF! DA” svs- TOTAL VlCES ACE “ICES PHER “ICES “ICES CARE TEYS . . . . . . . . . . 11.1. . ..I. .I... I.... . . . . . ..I.. . . . . .

6300 6300 5303 5300 6300 5300 5300 5300 5300

357 1 llEl5 - 3 I 0. 0. 0. 6 loo.0 loo.0 100.0 loo.0 loo.0 loo.0 tm.0 loo.0

112 - 3 - - 8.3 100.0 ,,.A

14.7 0.4 0.1 3. I 0.1

20 1 1.7 10.5

JO.6 0.9 0.6

1.20 - 0.0, 1.39 - 0.06 0.03 0.01 0.02 0.02 0.06 0.01 - -

,195 - 3 I 0. 0. 0. 6 loo.0 loo.0 too.0 1M.O loo.0 loo.0 loo.0

WILTON RESEAKzH SERVICES No. 57.6 *PT(IL ,997 YEIGHTEO NUYBERS ARE REPORTED IN HUNDRED THOUSANDS

u.S.P.S. HOUSEHOLD DIARY STUD” - DIAR” - FISCAL “EAR ,996 WITH AOJUSTYENT FACTORS (SEPT. 1.9. 1995 - SEPT. 15. ,996) -31.c 11,

‘- ~>IL I(ECEI”E0 ‘C RETURN ENVELOPE/CARD REOUIRE POSTIGE

IF A RETURN ENVELOPE/CARD “AS ENCLOSED) IST-CLASS MAIL ONLY)

UNYE,GHTEO HOUSEHOLDS

“NlElOHTED PIECES

“EIGHTED WUSE~OLOS

VElGHTED PIECES (BASE)

Y&S PRESTAYPED OR POSTCIGE PAID

DON’T KNOY/MO .NSYER

MEIN ST0 DE” ST0 ERROR

SIONC.

EACH CELL CONTAINS: COUNT “ERTlCAL PERCENT HORlZONTlL PERCENT CELL PERCENT

111 100.0

54 100.0

225 100.0

4 0. loo.0 loo.0

FIRST-CLISS MAIL RECElVEO - lNO”STR” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . TOTAL DEPT. LAND RES AUTO SER CON SUPER

NER STORE MAIL OTHER PUBLl PRO,40 TAU TOT&L CHANT OLSC. OROER STORE SHER TlON RANT

0:;’ :;KE WC SUYER MAR TlON 0157 KETS

. . . . . . . . . . . . . . . . . . . . . . . . . i.... . . . . . ..I.. ..I.. . . . . . . . . . . . . . . . . . . . . 5300 5300 5300 5,300 5300 5300 5300 5300 5300 5300 5300 5300 5300

CHlLTON RESEARCH SERVICES NO. 57.6 APRIL ,997 YEIGHTEO NUMBERS ARE REPORTED IN HUNOREO THOUSPINOS

U.S.P.S. “OUSEMLO OIAR” STUD” - DIARY - FISCAL “EAR ,996 WITH AOJLISTYENT FACTORS (SEPT. 18. 1995 SEPT, 15. ,996) TABLE 117 FIRST-CLASS MAIL RECEIVE0 0. 11 - 010 THE RETURN ENVELOPE/CARD REWIRE POSTAGE (ONLY A.NSYERED IF A RETURN ENVELOPE/CARD “AS ENCLOSED) (BASED TO FIPST-CLASS “AIL ONLY)

“NrElGHTEO HDUSEHDLOS

“‘--T?HTEO PIECES

~ <“USEHOLDS

“AS PRESTAYPEO OR POST&GE PALO

NEEDED I STAW

/

YEAN ST0 DE” ST0 ERROR

I SIGN.

E&C” CELL CONTAINS: COUNT VERTICAL PERCENT HoPIZOIlTAL PEllCENT CELL PERCENT

FIRST-CLASS MAIL RECEIVED - IHDUSTR” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

REAL TOTAL TOTAL CREO BAN)( SECUR INSUR EST. TOTAL YAW FlWN IT 5 & L IT” YONE” ANCE “OR” TOT&L FED STITE SOCL. FAC

TOTAL CllL CARD C.U. BRKR MT. CO. GAGE GOVT. ERAL LOCAL CHAR. TURER . . . . . . . . . . . ..I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 . . . . .

357 1 1.64 802 208 80 s 320 40 87 87 172 26 ,oo.o 100.0 loo.0 loo.0 loo.0 100.0 1oc.o loo.0 loo.0 IM.0 1ocxo loo.0

67 31 16 4 2 6 2 2 2 3 0~ 1.S 2.1 1-n 2.1 3.1 1.9 5.4 1.8 1 8 I .8 1~2

100.0 46.7 23.4 6,. 3.7 9.2 3.2 2.3 2.3 4.7 0.5 1,s 0.0 0.4 0.1 0.1 0.2 0.1 0.1

3.58 1.47 0.81 0.22 0.08 0.01 0.32 0.05 0,09 3. IS 1 .a0 1.19 0.54 0.4, 0.14 0.69 0.2. 0.34 0.05 0.02 0.01 0.01 0.01 - 0.01 - 0.01

0.09 0.17 0 02 0 34 0.56 0.18 0.01 0.01

357 I 1.6. so2 208 80 e 320 40 87 - 87 172 26 ,oo.o lcm.0 loo.0 loo.0 loo.0 loo.0 loo.0 loo,0 loo.0 loo.0 loo.0 loo.0

CHlLTON RESEARCH SERVICES No. 6746 YEIGHTEO WWERS ARE REPORTED LN HUNDRED THOUSANDS



OCAIUSPS-T32-77 How will accounting systems currently in place for ERM be improved for the proposed QBRM, and for the proposed PRM?

RESPONSE: The current accounting for prebarcoded BRM which qualifies for

the 2-cents per piece rate will be used for QBRM. For PRM, the PRM recipient

will perform the accounting, subject to verification and audit by the Postal

Service.

RESPONSE OF U.S. POSTAL SERVICE TO INTERROGATORIES OF THE OCA REDIRECTED FROM WITNESS FRONK

OCAIUSPS-T32-126. When the Postal Service adopts higher postage fees for Frrst-Class Mail, what does it do to ensure that mailers are affixing the correct postage after the new rate goes into effect, other than make educational efforts? Please discuss.

RESPONSE: Please see responses to OCA/USPS-25 and 27.

CERTIFICATE OF SERVICE

I hereby certify that I have this date served the foregoing document upon all participants of record in this proceeding in accordance with section 12 of the Rules of Practice.

hnichael T. Tidwell

475 L’Enfant Plaza West, S.W. Washington, D.C. 20260-I 145 October I, 1997

Documents

BEFORE THE I?ECE’IVE,D POSTAL RATE COMMISSION … · BEFORE THE I?ECE’IVE,D POSTAL RATE COMMISSION WASHINGTON, D.C. 20266-0001 Ocr 1 ‘i 46 PM ‘97 POSTAL ... Submit all documents