applicability of proposed subpart I. Proposed § 3010.261 sets forth the upper and lower limits for passthroughs applicable to each class. Proposed § 3010.262 provides for a grace period to bring noncompliant passthroughs (existing and new) into compliance with the applicable band. Proposed § 3010.262 also requires the Postal Service to submit a plan to bring the noncompliant passthroughs into compliance with the applicable band. To conform with this proposed change, the Commission proposes to delete existing § 3010.12(b)(6). To reflect the deletion of § 3010.12(b)(6), the Commission also proposes a conforming deletion in § 3050.20(c). Proposed § 3010.123(f) retains existing § 3010.12(b)(5)’s requirements for the schedule of workshare discounts. Proposed § 3010.123(g) retains existing § 3010.12(c)’s requirements pertaining to the contents of a Postal Service’s request to review a notice of rate adjustment that establishes a new workshare discount. Conclusion The proposal to require that workshare discount passthroughs conform to the applicable bands, subject to a 3-year grace period, is necessary to achieve Objective 1. Workshare discounts set substantially above or below avoided costs send inefficient pricing signals and are inconsistent with ECP. Such discounts contribute to the system having not achieved efficient prices, which may have contributed to the Postal Service’s poor financial health by disrupting incentives for the Postal Service to right size its network and for mailers to enter volume that best conforms to the network. Proposed subpart I requires the Postal Service to gradually phase out these problematic practices and set more efficient prices. This proposed approach will also allow for continued pricing flexibility for the Postal Service.
applicability of proposed subpart I. Proposed § 3010.261 sets forth the upper and lower limits for passthroughs applicable to each class. Proposed § 3010.262 provides for a grace period to bring noncompliant passthroughs (existing and new) into compliance with the applicable band. Proposed § 3010.262 also requires the Postal Service to submit a plan to bring the noncompliant passthroughs into compliance with the applicable band. To conform with this proposed change, the Commission proposes to delete existing § 3010.12(b)(6). To reflect the deletion of § 3010.12(b)(6), the Commission also proposes a conforming deletion in § 3050.20(c). Proposed § 3010.123(f) retains existing § 3010.12(b)(5)’s requirements for the schedule of workshare discounts. Proposed § 3010.123(g) retains existing § 3010.12(c)’s requirements pertaining to the contents of a Postal Service’s request to review a notice of rate adjustment that establishes a new workshare discount. Conclusion The proposal to require that workshare discount passthroughs conform to the applicable bands, subject to a 3-year grace period, is necessary to achieve Objective 1. Workshare discounts set substantially above or below avoided costs send inefficient pricing signals and are inconsistent with ECP. Such discounts contribute to the system having not achieved efficient prices, which may have contributed to the Postal Service’s poor financial health by disrupting incentives for the Postal Service to right size its network and for mailers to enter volume that best conforms to the network. Proposed subpart I requires the Postal Service to gradually phase out these problematic practices and set more efficient prices. This proposed approach will also allow for continued pricing flexibility for the Postal Service.
Order4258.docx