US Postal Service 2004 Annual Report Download - page 21

financial review
2004 annual report united states postal service | 19
Other฀key฀components฀of฀the฀legislation฀included฀authorizing฀
the฀Postal฀Service฀Governors฀to฀establish฀rates฀and฀classes฀
for฀products฀in฀the฀competitive฀categories฀of฀mail.฀The฀bills฀
also฀addressed฀the฀financial฀burden฀imposed฀by฀the฀escrow฀
account฀established฀by฀the฀Postal฀Civil฀ Service฀Retirement฀
System฀Funding฀Reform฀Act฀of฀2003.฀Each฀repealed฀a฀provi-
sion฀of฀P.L.108-18฀that฀addressed฀the฀disposition฀of฀savings฀
caused฀by฀that฀Act,฀modified฀ our฀contributions฀ to฀ the฀ Civil฀
Service฀Retirement฀and฀Disability฀Fund฀(CSRDF),฀and฀estab-
lished฀a฀Postal฀Service฀Retiree฀Health฀Benefits฀Fund.
The฀bills฀were฀reported฀out฀of฀Committee฀unanimously฀ but฀
were฀unable฀to฀be฀considered฀before฀the฀end฀of฀the฀108th฀
Congress.฀The฀sponsors฀of฀the฀bills฀have฀indicated฀their฀inten-
tion฀to฀reintroduce฀the฀bills฀in฀the฀109th฀Congress,฀which฀will฀
convene฀in฀January฀2005.
Products฀
The฀Postal฀Service฀is฀the฀centerpiece฀of฀the฀U.S.฀mailing฀indus-
try.฀We฀provide฀a฀wide฀variety฀of฀products฀and฀services฀to฀meet฀
almost฀any฀mailing฀need.฀Some฀of฀our฀major฀products฀and฀
services฀are:
First-Class฀ Mail฀ —฀Postcards฀or฀ letters,฀up฀to฀13฀ounces,฀
can฀be฀sent฀using฀First-Class฀Mail.฀This฀service฀(or฀Express฀
Mail฀or฀Priority฀Mail)฀is฀required฀for฀personal฀correspondence,฀
handwritten฀or฀typewritten฀letters,฀and฀bills฀or฀statements฀of฀
account.฀It฀also฀may฀be฀used฀for฀any฀mailable฀item,฀including฀
advertisements฀and฀lightweight฀merchandise.
Priority฀Mail฀—฀This฀2–3-day,฀nonguaranteed฀service฀is฀typi-
cally฀used฀to฀send฀documents,฀gifts,฀and฀merchandise.
Express฀Mail฀—฀This฀money-back฀guaranteed฀overnight฀to฀
two-day฀service฀includes฀tracking,฀proof฀of฀delivery,฀and฀insur-
ance฀up฀to฀$100.฀Delivery฀to฀most฀destinations฀is฀available฀
365฀days฀a฀year฀with฀no฀extra฀charge฀for฀Saturday,฀Sunday,฀
and฀holiday฀delivery.฀
Periodicals฀—฀Typical฀Periodicals฀are฀newspapers,฀magazines,฀
and฀newsletters.฀This฀service฀requires฀prior฀authorization฀by฀the฀
Postal฀Service.฀
Standard฀Mail฀—฀Letters฀containing฀mailable฀items฀weighing฀
less฀than฀16฀ounces฀not฀required฀to฀be฀sent฀using฀First-Class฀
Mail฀can฀be฀sent฀using฀Standard฀Mail.฀Standard฀Mail฀is฀typi-
cally฀used฀for฀advertisements฀and฀flyers.฀There฀are฀no฀postcard฀
rates฀for฀Standard฀Mail,฀but฀postcards฀can฀be฀mailed฀at฀the฀
letter฀rates.฀Additional฀content฀restrictions฀must฀be฀met฀for฀
authorized฀nonprofit฀mailers.
Package฀ Services฀—฀Includes฀Parcel฀Post,฀Bound฀Printed฀
Matter฀and฀Media฀Mail.
Special฀Services฀—฀In฀addition฀to฀these฀and฀other฀classes฀
of฀mail,฀we฀offer฀a฀variety฀of฀enhancements฀that฀add฀value฀to฀
mail฀by฀providing฀additional฀security,฀proof฀of฀delivery,฀or฀loss฀
recovery.฀These฀product฀enhancements฀include:฀Certified฀Mail,฀
Registered฀Mail,฀Delivery฀Confirmation,฀Signature฀Confirmation,฀
Click-N-Ship,฀and฀insurance.
Rate-Making฀Activity
Until฀1971,฀Congress฀set฀postage฀rates฀through฀legislation,฀and฀
the฀relationship฀between฀the฀revenue฀from฀those฀rates฀and฀the฀
actual฀costs฀of฀operating฀the฀postal฀system฀varied฀greatly.฀Since฀
1971,฀however,฀the฀Postal฀Reorganization฀Act฀has฀required฀the฀
Postal฀Service฀to฀establish฀postal฀rates฀that฀cover฀the฀cost฀of฀
operating฀the฀postal฀system.฀
We฀must฀submit฀a฀request฀for฀any฀changes฀in฀postage฀rates฀and฀
classification฀to฀the฀PRC,฀an฀independent฀establishment฀of฀the฀
executive฀branch฀of฀the฀federal฀government.฀Our฀request฀may฀
be฀minor,฀for฀such฀things฀as฀specific฀classification฀changes,฀
extensions฀of฀current฀service฀classifications,฀adjustment฀to฀
or฀introduction฀of฀specific฀rates฀or฀requests฀to฀proceed฀with฀
experimental฀product฀offerings.฀At฀any฀point฀in฀time,฀the฀PRC฀
may฀be฀considering฀several฀minor฀requests.฀In฀2004,฀the฀PRC฀
issued฀two฀Opinions฀and฀Recommended฀Decisions฀on฀minor฀
cases,฀with฀three฀minor฀requests฀still฀pending.
We฀may฀also฀submit฀an฀omnibus฀rate฀request฀that฀involves฀
a฀comprehensive฀revision฀of฀postage฀rates฀as฀well฀as฀major฀
classification฀changes.฀In฀ an฀ omnibus฀ case,฀postage฀ rates฀
are฀revised฀so฀that฀there฀will฀be฀sufficient฀revenue฀to฀allow฀
us฀to฀break฀even฀in฀a฀prospective฀test฀year.฀Adjudication฀of฀an฀
omnibus฀rate฀request฀is฀a฀lengthy฀and฀complicated฀process฀
that฀begins฀when฀we฀determine฀that฀rate฀changes฀are฀consis-
tent฀with฀the฀policies฀of฀the฀Postal฀Reorganization฀Act฀and฀in฀
the฀public฀interest.฀With฀the฀approval฀of฀the฀Board฀of฀Governors,฀
we฀submit฀a฀request฀to฀the฀PRC฀for฀a฀recommended฀decision฀
on฀rate฀and฀fee฀changes.฀We฀include฀with฀our฀request฀detailed฀
rate฀proposals฀supported฀by฀extensive฀testimony฀and฀lengthy฀
documentation.฀
The฀PRC’s฀proceedings฀in฀an฀omnibus฀rate฀case฀take฀up฀to฀10฀
months฀and฀include฀public฀hearings฀in฀which฀interested฀parties฀
such฀as฀mailers,฀competitors,฀and฀consumer฀representatives฀
are฀authorized฀to฀submit฀their฀own฀testimony฀and฀proposals,฀as฀
well฀as฀to฀challenge฀or฀support฀our฀proposals.฀At฀the฀conclusion฀
of฀the฀proceedings,฀the฀PRC฀sends฀its฀recommended฀decision฀
to฀the฀Governors.฀The฀Governors฀may฀approve,฀reject,฀allow฀
Part I
In฀2004,฀we฀ranked฀6th฀on฀Fortune฀
magazine’s฀list฀of฀the฀“50฀Best฀
Companies฀for฀Minorities.”