What the USPS 10-year plan may have to say about future rate increases, Steve Hutkins at “Save The Post Office“

The mailers were probably disappointed that the Postal Service’s new 10-year plan released yesterday, “Delivering for America,” did not reveal how big of a rate increase the Postal Service intends to make using the new authority it was granted by the Postal Regulatory Commission. While they wait in suspense, here’s a guess: 3.6 percent.

We already know that the calculations the Postal Service submitted to the PRC in February indicate the hike could be as large as 5.56 percent (on top of the CPI increase), but the new system allows some of the rate authority to be banked for future years, so the increase could be smaller. And that is just what the following analysis suggests.

This analysis is based on two tables and a couple of comments that appear in the 10-year plan. The tables show revenue and expenses under two scenarios, a base case using the status quo and an alternative that uses the revenue and cost savings under the Delivering for America plan. The tables contain numbers for projected volumes and revenues over the next ten years that can be used to estimate what the Postal Service is planning for future price increases under the new rate authority.

Steve Hutkins at Save The Post Office continues with the documentation of issues and occurrences at the USPO. Steve presents a good take-down of what DeJoy’s plan is going forward. He is predicting a 3.6% increase on top of a CPI increase.

There are two alternatives being presented, the Base case and the “Delivering for America” Case. The “Delivering for America” Case uses the new rate authority to make its calculations (Figure 35, p. 51). It projects that revenues in 2030 will fall to $37.2 billion (as opposed to $32.2 billion in the Base Case). I am duplicating what is in Steve’s Report. Best if you read it for yourself.

What the USPS 10-year plan may have to say about future rate increases, Steve Hutkins, Save The Post Office

The mailers were probably disappointed that the Postal Service’s new 10-year plan released yesterday, “Delivering for America,” did not reveal how big of a rate increase the Postal Service intends to make using the new authority it was granted by the Postal Regulatory Commission. While they wait in suspense, here’s a guess: 3.6 percent.

We already know that the calculations the Postal Service submitted to the PRC in February indicate the hike could be as large as 5.56 percent (on top of the CPI increase), but the new system allows some of the rate authority to be banked for future years, so the increase could be smaller. And that is just what the following analysis suggests.

This analysis is based on two tables and a couple of comments that appear in the 10-year plan. The tables show revenue and expenses under two scenarios, a base case using the status quo and an alternative that uses the revenue and cost savings under the Delivering for America plan. The tables contain numbers for projected volumes and revenues over the next ten years that can be used to estimate what the Postal Service is planning for future price increases under the new rate authority.

It is undecided yet, as to whether a newly assembled Board of Governors would jointly act under the leadership of Ron Bloom, a Democrat and former Obama administration appointee, to dismiss PMG Louis DeJoy. President Biden has appointed three additional members to the Board including;

– Ron Stroman, formerly the deputy postmaster general (resigned);

– Amber McReynolds, a voting rights activist; and

– Anton Hajjar, a former American Postal Workers Union official,

to fill the three vacancies currently open. The Senate still has to approve their appointments.

If confirmed, the board of governors would have all nine seats occupied for the first time in more than a decade. It would consist of a balanced makeup of four Republicans, four Democrats, and one independent. 

It was thought that the Board would fire PMG Louis DeJoy. The Board is the only ones who can do such regardless of whether Congress stamps calls for such to happen. It also appears, the existing members appointed by former President Trump show little interest in firing DeJoy.

Democrat, Obama appointee, and Chair of the Board Ron Bloom has shown little interest in taking such action. Indeed, he reiterated recently he had worked with DeJoy on the 10-year business plan and he would support it. Previously. Ron Bloom helped write a helped write a National Association of Letters Carriers report castigating postal management for proposing to slash services and standards.

Chairman Bloom is serving in a holdover year which will expire in December. He approved of DeJoy’s appointment last year (2020).  Campaign- minded Biden, vowed to fill the board vacancies, put the Postal Service on firmer financial footing, help postal employees join unions, and defend the agency’s obligation to deliver to every address in the country. 

The postal board can only have five presidential-appointed members from the same party by law. Four board slots will expire in the next two years. Biden has an opportunity to take USPS leadership in a different direction in his first term if needed.

Perhaps I am wrong; but, I believe Biden will sit this one out for a bit while he handles other pressing issues with the pandemic, McConnell, the economy, and getting as much done before the next election in 2022. 

Biden’s Postal Board Nominees Unlikely to Spell Quick End to Postmaster General’s Tenure – Government Executive (govexec.com)

Dozens of Lawmakers Call on Biden to Replace Entire USPS Board – Government Executive (govexec.com)

Steve Hutkins at Save The Post Office continues his dialogue on planned changes to USPS operations with one change amongst the others resulting in later deliveries of first class mail. The Washington Post was the first to report on this change as well as other changes. You may be able to catch portions of Louis DeJoy’s planned changes at other sources as well.

Congressional Action:

The House Committee on Oversight and Reform has just posted a discussion draft of postal reform legislation in advance of Wednesday’s hearing with Postmaster General DeJoy and the Chairman of the Board of Governors, Ron Bloom. The draft has three main sections — one about creating a Postal Service health benefits program that includes Medicare, one on reforming the Retiree Health Benefit Fund obligation, and a third on service standards for on-time delivery.

The section on service standards comes first, and it is obviously a response to all the problems with poor service over the past seven months. It includes more stringent service performance reporting than currently shared with the Postal Regulatory Commission and the public, a tougher line on what happens when the Postal Service fails to meet the standards, and changes to the PRC’s advisory opinion process for reviewing a change in standards (including a report to Congress). The draft legislation concludes this section as follows:

“The United States Postal Service may not revise the service standards for market-dominant products in effect on the day before the date of enactment of this Act in a manner that lengthens delivery times before the date on which the report required by subsection (c) is submitted to Congress.”

The Committee’s meeting on Wednesday (24th) is clearly going to address the past problems with service performance and what to do about them moving forward. (There’s more about the delays here.) It’s also clear that the Committee is aware of the Postmaster General’s plans to change service standards, as was reported recently in a great scoop by the Washington Post, and the Committee wants to head the PMG off at the pass.

Steve Hutkins at Save the Post Office

Continued discussions between the mailers who are faced with higher rates, PMG Louis DeJoy, and Congress. The mailers are in court as we read Steve’s excellent review of what is taking place.

Also, PMG DeJoy has plans of increased prices for mailers also includes slower service and higher prices for First Class mail. The February 12th edition of the Washington Post exposed the PMG plans to increase prices for First Class Mail and slower deliveries of First Class Mail going from 2 days to 3 to five days. More information can be found at WaPo or truthout.

Earlier this week a group of mailers’ associations continued their effort to convince the DC Circuit Court to stop the Postal Service from increasing rates under the new authority it was recently granted by the Postal Regulatory Commission.

The Postmaster General has told the mailers that another rate increase, based on the new authority, is “imminent.” The exact size of the increase has not yet been revealed, but the Postal Service’s calculations indicate it could be as large as 5.56 percent. Market Dominant revenues in 2020 were about $42 billion, so a full increase could mean $2.3 billion in additional costs for mailers.

In December, the Mailers filed appeals on the PRC’s order approving the new system in the DC Circuit. On January 27, 2021, they proceeded to file a request for a stay seeking to prevent the order from being implemented while the court heard the appeal. On February 8, the Commission filed its brief opposing the request for a stay, and the Postal Service filed its own opposition as well. On Tuesday of this week (February 16), the Mailers filed their reply. (For more background about the case, see this previous post and this one too.)

Steve Hutkins at Save The Post Office, The 2020 Mail Delays: Stats & Charts

Preface

The inventor of MRPII, Oliver Wight, coined a term for management deliberately obstructing the implementation of MRPII calling them “Cement Heads.” In Louis DeJoy’s case, rather than work with today’s postal system; DeJoy is deliberately sabotaging it with his changes. The end result will lead to its demise and subsequent takeover by private enterprise.

Having been on the manufacturing side for decades, I found understanding a present process is necessary in order to implement changes to improve operations. DeJoy has no intention of understanding anything and he uses change to promote the destruction of the USPS. He is trump’s paid assassin.

The following charts, graphs, and commentary by Steve Hutkins defines problems in USPS functionality as measured by data. The data points in a direction needing to be further analyzed to determine whether the direction chosen by DeJoy is leading to the destruction of the USPS. I believe it does.

Annual Compliance Review – Steve Hutkins

The Postal Regulatory Commission’s annual compliance review ordinarily focuses on postal rates, but this year, due to widespread reports of mail delays over the past several months, the Commission has been scrutinizing on-time service performance. Over the past few weeks, the Commission and its newly appointed Chairman have filed a number of information requests seeking data from the Postal Service about the scope and causes of delays.

According to the service performance data provided by the Postal Service, the delays began at a modest level in March 2020 when the pandemic started, deepened noticeably in July when the Postal Service implemented cost-cutting operational changes, improved modestly in the fall, and then got much worse in December with the holiday mail crush.

As for the causes of the delays, the Postal Service has blamed COVID — the surge in packages, employee availability problems, more dependence on surface transportation because of a lack of available space on aircraft, and so on. It has also cited bad weather, the need to prioritize election mail and other factors. The Postmaster General has acknowledged that operational changes made in July caused delays, but the Postal Service says the system adjusted to these changes in a matter of weeks and they were not a factor in the delays that followed.

Angry Bear has been featuring the words of Steve Hutkins and Mark Jamison for a good bit of time now. They are the go-to people outside of the USPS on issues associated with it and the Congress which impacts it. We exchange emails and stories from time to time.

Save the Post Office is edited and administered by Steve Hutkins, a retired English professor who taught place studies and travel literature at the Gallatin School of New York University.

Expected Rate Increases Beyond CPI

On November 30, 2020, the Postal Regulatory Commission issued a 484-page order revising the rate system for Market Dominant products. Under the new system, the Postal Service will be able to raise rates beyond the Consumer Price Index, which it was prevented from doing (aside from the provision for an exigent increase) by the Postal Accountability and Enhancement Act of 2006. (See this previous post for more about the order.)

Last week, the Postal Service gave the PRC its calculations for the two new authorities crafted by the Commission. The Notice of Calculations of Future Rate Authorities indicates that the density-based rate authority will be 4.5 percent, and the retirement-based rate authority will be 1.06 percent, for a total of 5.56 percent.

Those potential increases are on top of the approximately 1.8 percent increase for First-Class Mail and 1.5 percent increase for other categories the Postal Service has already proposed for 2021. If the Postal Service were to exercise its full rate authority, the total increase would thus be over 7 percent. The new system also gives the Postal Service authority for an additional 2 percent increase for products that don’t cover their attributable costs.

Fact: Contrary to what President Trump claims, the Postal Service can’t solve its financial problems by raising “the price of a package by approximately four times.”

Steve Hutkins at Save The Post Office discusses the financial issues facing the United States Postal Service and why the Postal Regulatory Commission  new plans to increase prices may be problematic. By no means is this a new topic. It has been brought up repeatedly by members of Congress and this administration as well as earlier administrations. The USPS was not meant to be profitable and its present situation is the result of the Postal Accountability and Enhancement Act.

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The Postal Regulatory Commission has spent the past four years working on a revision of the rate system for Market Dominant products. Yesterday the Commission issued its final rule on the changes. The order is here. The PRC’s press release is here. The media kit contains a useful FAQ.

The process of reviewing the rate system involved the Commission, the Postal Service, and an extensive list of stakeholders and commenters.  And even though it’s been going on since December 2016, it’s not over yet, not by a long shot. Given that many of the mailers have fought the changes that were finally approved, it’s widely expected that some stakeholders will appeal the PRC’s order to the D.C. Circuit.

Steve Hutkins of Save the Post Office has been live blogging and providing updates to the 12 federal district court cases filed. In the November 6, 2020 Update Steve discusses the delivery updates being filed in court and which are being used by some news outlets to show the USPS has been delivering ballots late and not on Election Day. Steve cautions against the use of this data as actual delivery dates are different than processing dates.

November 6, 2020 Update

The Postal Service’s daily reports on service performance, election mail, and late/extra trips (submitted as part of the Joint Order from the courts in Richardson, Vote Forward, and NAACP) can be found here.

Steve Hutkins: One note about these daily reports on election mail. Some news reports are looking at these reports and misinterpreting the data and saying things like this:

“The data based on scans of ballot envelopes that were filed in Sullivan’s court Wednesday suggested that in South Florida, just 85.12% of the mail-in-ballots were delivered on Election Day and in central Pennsylvania, just 61.3% of the mail-ballots in the postal system were delivered on time both of which were based on the scan data in the court filing shown. In Philadelphia, slightly more than 66% of the mail-in ballots had been delivered on Election Day. In Atlanta 82.2% percent of the mail-in ballots were delivered on Election Day, the court filing shows.”

The daily numbers being reported do not indicate how much of the mail was delivered on time, i.e., within the service standard of two or three days. These numbers are  processing  scores, i.e., the percent of the ballots that went through the processing network on time. They do not encompass;

the “first mile” (the step between a voter dropping a ballot in the mail and its arrival at a processing center) or the “last mile” (from post office to letter carrier to destination).

Steve Hutkins on-line live blogging at Save the Post Office has been updating the progress of the “Lawsuits against DeJoy, USPS & Trump with relation to mail delays and election mail. This is the sweep ordered by the court for the USPS to perform to discover and report via the  “sweep of facilities”  how many ballots (were) are being delayed due to the USPS. The twitter link in the Afternoon Update has numerous comments on the delay by the USPS delaying the Sweep. In the Morning Update (below) there are multiple various commentary by news outlets.

More to come.

November 5, 2020

Afternoon Update: Judge Sullivan presided over another hearing today. One of the questions on the table was how many ballots may have been delivered late or are still in the system and not delivered yet. The Postal Service shared some specific numbers, as reported in a great “live” twitter thread on the hearing by @USPostOffice911.

Looking a ballots without a destination scan, the Postal Service says that in the Central PA district, there are 1524 total, and of these USPS has confidence that 979 were expedited, while 545 require further investigation.  In Greensboro, 3087 total, 1752 expedited, 1335 to investigate. In the Carolina district, 2404 total without destination scans, 1204 confidence they were expedited, 1200 to investigate. In Philadelphia, 2496 total, 1682 expedited, 814 to investigate. The Postal Service said that there is no evidence yet that the ballots in the “investigated” category were not delivered.

In a separate filing, the Postal Service provided a list of the number of ballots that were delivered Express in each district over the three days Nov. 1- Nov. 3. The total appears to be about 10,655.

The plaintiffs have presented two proposed orders, which Judge Sullivan appears to have ordered.