1. Pierce Myers, Executive Vice President & Counsel
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2017 PRC Review October 26, 2017
Pierce Myers, Executive Vice President & Counsel

2. The Law (1) Sec. 3622. Modern rate regulation
“(a) The Postal Regulatory Commission shall, within 18 months after [December 20, 2006], by regulation establish (and may from time to time thereafter by regulation revise) a modern system for regulating rates and classes for
market-dominant products.’

3. The Law (2)
The PRC shall “review the system . . .established under this section. If the Commission determines [the system is not meeting the factors and objectives] the Commission may, by regulation, make such modification or adopt such alternative system for regulating rates and classes for market-dominant products as necessary to achieve the objectives.” 39 U.S.C 3622(d)(3)

4. Status of the Review Awaiting the next Shop to Drop
Review Began 12/20/16—RM2017-3
Achieving Objectives?
Comments Filed 3/20/16—70+parties
Procedural Skirmishes
1/18/17 Challenge to Procedural Framework
Discovery and phased approach suggested—denied
Awaiting the next Shop to Drop
Proposed regulations-comments

5. Objectives
Objective 1 (“maximize incentives to reduce costs and increase efficiency”), in addition to cost reductions and efficiencies driven by the price cap, there are opportunities to maximize efficiencies through better regulation of workshare discounts.
Objective 5 provides that the system for regulating market dominant product should “assure adequate revenues, including retained earnings, to maintain financial stability.”

6. PSA’S CHECKLIST Existing system works well
Price cap—Should be continued, but may be modified
“Appropriate share” (institutional costs)—Should be eliminated
Last mile model/Worksharing Rules—fully compensatory discounts
Cost attribution, allocation, distribution—no change; continued PRC review for improvement
Stronger confidentiality rules FOR NSAs

7. Conclusion
“The process and procedures and the price cap system implemented in 2007 have worked well. There is no cause for the Commission to adopt an alternative system of rates and classifications for market dominant products. The Commission, however, should explore changes in the areas discussed herein that could enable the system to better achieve objectives.”

8. What’s Next PRC order (proposed regulations) imminent
Several months of comments and reply comments
Final order with implementation date (January 2019?)
Requests for Reconsideration and court appeals

9. Questions/Comments?