USPS-LR-R2017-1/4
Docket No. R2017-1
USPS-LR-R2017-1/4
Package Services Workpapers
PREFACE
Revisions of 10/20/16 are explained in BOLD at the end of this document. Revisions to tables within this document are highlighted in yellow.
- Overview of the Workpapers
The Package Services workpapers consist of twoExcel workbooks:CAPCALC-PACKSERV-R2017-1.xlsx and Crosswalk FSS Rollback Package Services.xlsx. For purposes of calculating the percentage change in prices, Package Services includes Alaska Bypass Service, Bound Printed Matter Flats, Bound Printed Matter Parcels, and Media Mail/Library Mail.
Workbook CAPCALC-PACKSERV-R2017-1.xlsx performs all the revenue calculations required to determine the overall average price increase for Package Services resulting from the prices in this docket.For this filing, hybrid billing determinantsfor Quarter 4, FY2015 through Quarter 3,FY 2016 are used.
The calculations in CAPCALC-PACKSERV-R2017-1.xlsx are arranged by product and are summarized as follows:
•The first section of CAPCALC-PACKSERV-R2017-1.xlsx is the “All Package Services Summary” worksheet. This worksheet contains the price change calculation for all Package Services. It shows the revenues at current prices and the revenues at the new R2017-1 prices. It then calculates the percent change in the Package Services average price. This worksheet also calculates the new unused price change authority for Package Services. Details are supplied in Section B, below, and in the “All Package Services Summary” worksheet.
• Alaska Bypass Service: The revenue calculations are contained in three worksheets. The first, titled “Alaska Bypass BD,”shows the hybrid billing determinantsfor Alaska Bypass for Quarter 4, FY 2015 through Quarter 3, FY 2016. The second worksheet, “Alaska Bypass @ Curr Prices,” shows the revenue based on the Quarter 4, FY 2015 through Quarter 3, FY 2016 hybrid billing determinants and the current prices. The thirdworksheet, “Alaska Bypass Rev @ New Prices”, shows the calculatedprojected revenue based on the hybrid billing determinants for Quarter 4, FY 2015 through Quarter 3, FY 2016 and the proposed prices in this Docket.
• BPM Flats: This section consists of eight worksheets. The first two are the hybrid billing determinants for Quarter 4, FY 2015 through Quarter 3, 2016for Single-piece and Presort flats. The next two contain the current prices for Single-Piece and Presort Flats followed by two worksheets with the new prices for Single-piece and PresortFlats. The final two worksheets contain the calculations of Single-piece and PresortFlats revenues at currentprices and at the prices proposed in this Docket. Additional details concerning these calculations are discussedbelow, in Section B, and in the Excel workbook CAPCALC-PACKSERV-R2017-1.xlsx, in the “BPM Flats” worksheet.
• BPM Parcels: This section consists of eight worksheets. The first two are the hybrid billing determinants forQuarter 4, FY 2015 through Quarter 3, FY 2016 for Single-piece and Presort Parcels. The next two contain the current prices for Single-piece and Presort Parcels, followed by two additional worksheets with the new R2017-1 prices for Single-piece and Presort Parcels. The final two worksheets contain the calculations of Single-piece and Presort Parcels revenues at current prices and at the new R2017-1 prices. Additional details concerning these calculations are contained below, in Section B, and in the Excel workbook CAPCALC-PACKSERV-R2017-1.xlsx, in the “BPM Parcels” worksheet.
• Media Mail and Library Mail: This section consists of five worksheets. The firstcontains the Media Mail and Library Mail hybrid billing determinants for Quarter 4, FY 2015 through Quarter 3, FY 2016. The second sheet contains the currentprices. The next worksheet has the new R2017-1prices for Media Mail and Library Mail. The final two worksheets contain the calculations of revenues at currentprices and at the new R2017-1prices. Additional details concerning these calculations are contained below, in Section B, and in the Excel workbookCAPCALC-PACKSERV-R2017-1.xlsx workbook, in the “MM-LM” worksheet.
B. The Revenue Calculations
1. All Package Services
Worksheet “Package Services Summary” in CAPCALC-PACKSERV-R2017-1.xlsx contains revenues at currentand new prices for the products in Package Services. The values populating the cell in this worksheet are linked directly to their respective revenue calculation worksheets in R2017-1 Package Services Cap Calculations.xls. Details are contained in worksheet “All Package Services Summary.” The new prices in this Docketincrease the average Package Services class price by 1.007 percent.
2. Alaska Bypass
The billing determinants, currentand new prices, and revenue calculations for Alaska Bypassare presented in Excel workbookCAPCALC-PACKSERV-R2017-1.xlsx. Revenues at current prices are calculated by multiplying the total volumes for each zoneand weight by the current prices for each zone and weight. Revenues at the proposed prices are calculated by multiplying the same volumes times the proposed prices for each zone and weight.
3. BPM Flats
The billing determinants, current and new prices, and revenue calculations for BPM Flats are presented in Excel workbook CAPCALC-PACKSERV-R2017-1.xlsx. Revenues at current prices are calculated by multiplying the total volumes for each zone and weight by the current prices for each zone and weight. Revenues at the proposed prices are calculated by multiplying the same volumes times the proposed prices for each zone and weight.
4. BPM Parcels
The billing determinants, current and new prices, and revenue calculations for BPM Parcels are presented in Excel workbook CAPCALC-PACKSERV-R2017-1.xlsx. Revenues at current prices are calculated by multiplying the total volumes for each zone and weight by the current prices for each zone and weight. Revenues at the proposed prices are calculated by multiplying the same volumes times the proposed prices for each zone and weight.
5. Media Mail and Library Mail
The billing determinants, current and new prices, and revenue calculations for Media/Library Mail are presented in Excel workbook CAPCALC-PACKSERV-R2017-1.xlsx. Revenues at current prices are calculated by multiplying the total volumes for each zone and weight by the current prices for each zone and weight. Revenues at the proposed prices are calculated by multiplying the same volumes times the proposed prices for each zone and weight.
- Adjustment to Billing Determinants
- BPM Flats
In R2015-4the Postal Service created rate cells for machinable BPM flats destinating in FSS Zones. This rate cell merged, by entry discount, the rate cells created in R2013-10 for Presort machinable flats destinating in FSS Zones and Carrier Route machinable flats designating in FSS Zones. In the present docket the Postal Service seeks to reverse this merger and migrate the volume in the FSS rate cells back to the Presort Flats and Carrier Route Flats rate cells. To develop the estimates forthis migration the Postal Service used the historical distributions of FSS BPM flats across the Presort and Carrier Route categories, by entry discount, using RPW data by the Mail Category codes created from Docket No. R2015-4.
- Calculations of FSS Volume Rollback
Unlike the current BPM Flats rate structure, FSS rates will no longer exist for presort flats at the Origin, DNDC, DSCF, and DFSS entry levels. Moving forward, the volume occupying these cells will pay the same Carrier Route or Basic Presort prices as all other BPM Flats pieces. To migrate the volumes from the existing rate cells to the proposed rate cells, the Postal Service used the historical distributions of BPM FSS pieces to spread this volume across the new Presort and Carrier Route categories. The distribution key used to perform this migration was obtained from thevolumes from the most recent fiscal quarters during which BPM flats were charged the same price, regardless of whether they were to be processed on FSS equipment. These quarterswere Quarter 4 of FY 2014, Quarter 1 of FY 2015, and Quarter 2 of FY 2015. Quarter 2 of FY 2015 was used twice to replace Quarter 3 of FY 2015, because the prices approved in Docket No. R2015-4 were implemented in the middle of this quarter, on May 31, 2015. A price change in the middle of a fiscal quarter, especially one that included changes to the BPM price structure, has the potential to alter the volume distributions. Excel workbook Crosswalk FSS Rollback Package Services.xlsx explains how the calculationswere performed for eachof the below steps.
Step 1.
The Postal Service isolated the FSS volume, from Quarter 4, FY 2015 through Quarter 3, FY 2016which can be found in the “FSS Volume” tab in Excel workbookCrosswalk FSS Rollback Package Services.xlsx.
Step 2.
The Postal Service next applied the distribution key obtained from Quarter 4, FY 2014 through Quarter 2, FY 2015, and used it to distribute the hybrid year FSS Flatsvolume from the current FSS Scheme rate cells to the new Carrier Route and Basic Presort rate cells. The supporting calculations can be found in the “Distribution Key” tab in Excel workbook Crosswalk FSS Rollback Package Services.xlsx.
Step 3.
By multiplying the FSS volume in the distribution key by the actual volume for the last 4 Quarters (Quarter 4, 2015 through Quarter 3, 2016) the Postal Service is able to appropriately re-distribute the FSS volume into the Presort and Carrier Route categories. The calculations are found in the “Final Volume Distribution” tab in Excel workbook Crosswalk FSS Rollback Package Services.xlsx.
In addition, it should be noted that the RPW volume totalfor the Origin Entry category was higher thanthe volume shown in the distribution key above by 1,288 pieces. As a result of this slight discrepancy, which occurred in Quarter 4, FY 2015, the Postal Serviceused the RPW total for Origin Entry as the primary source for volume and revenue data.
Revisions of October 21, 2016
Excel filesCrosswalk FSS Rollback Package Services.xlsx and CAPCALC-PACKSERV-R2017-1.xlsxwere revised in response to CHIR No. 2, Questions 4(b), (c), and (d). With respect to 1,288 pieces referenced in CHIR No. 2, Question 4(c), the Postal Service has determined that the data in the hybrid year billing determinants matches the RPW data. Upon further investigation, the Postal Service discovered that the 1,288 piece discrepancy between the two data sets occurred due to an error in the v-lookup formula used to obtain the volume that needed to bedistributed from the Q4 FY 2015 RPW extract file. Excel fileCrosswalk FSS Rollback Package Services.xlsxwas revised to match the information in the billing determinants and in Excel file CAPCALC-PACKSERV-R2017-1.xlsx.
To add clarity, and to comply with the CHIR No. 2 request to provide detailed versions of the calculations, the Postal Service has added 2 tabs to Excel file Crosswalk FSS Rollback Package Services.xlsx. The first of these tabs is “FSS Volume Distr,” which distributes the volume for Origin Entry and DNDC Dropship through the zones. The second tab, “Final Vol Distr Zone,” shows the final step in adjusting the billing determinants, as reflected in the revised Excel file CAPCALC-PACKSERV-R2017-1 Rev 10-21.xlsx.
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