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The R2006-1 Rate Case

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

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  1. The R2006-1 Rate Case PRC Recommendation “Cost-Based Rates”

  2. Cost-Based Rates • Efficient Component Pricing (ECP) • Shape-Based Rates • Rate Structures Reflective of Cost Causation

  3. 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

  4. 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

  5. Shape-Based Rates • PRC: Same “ECP” principle should be applied to other mail characteristics, including shape • Promotes efficiency • “Fundamentally fair”

  6. Shape-Based Rates USPS Proposal Did Not Fully Reflect Cost Differences

  7. 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.

  8. 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

  9. 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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