GAO: Postal Reform Would Improve Ratemaking Data

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Current postal reform legislation would create new oversight mechanisms and enhance regulatory authority over the quality of ratemaking data, the U.S. General Accountability Office said in a report July 28.


The report, "U.S. Postal Service: Improving Ratemaking Data Quality Through Postal Service Actions and Postal Reform Legislation," follows up on a 1999 USPS data quality study.


The GAO did the new study because though the postal service agreed at the time to make improvements, "questions remain about USPS's actions to improve ratemaking data quality and how proposed legislation will address longstanding issues in this area," the report said.


Of reform bills H.R. 22 and S. 662, the "legislation would transform the Postal Rate Commission into a new postal regulator that would prescribe what ratemaking data USPS must report annually, review these data and determine whether USPS had complied with ratemaking requirements," the report said. "The regulator could initiate proceedings to improve the quality of ratemaking data."


To conduct its expanded duties, the regulator would get the authority to subpoena; the authority to order the USPS to take actions to comply with laws and regulations; and the authority to impose sanctions for noncompliance.


Under the current structure, regulatory oversight generally is conducted during rate cases, which only the USPS can initiate, the report said.


The bills also would eliminate disincentives to ratemaking data quality, "including the litigious ratemaking process, the breakeven requirement that creates incentives to shift costs from one type of mail to another, and the lack of adequate oversight mechanisms to address data quality issues," the report said.


The House of Representatives has passed H.R. 22 while S. 662 awaits action by the full Senate.


However, if the legislation is enacted, the outcome likely would depend on how the regulator used its discretion to define and implement the new ratemaking structure. Key questions would remain, including what regulatory criteria and requirements would apply to ratemaking data.


In its comments, the USPS differed on the GAO finding that the legislation likely would improve ratemaking data quality, saying "breakthrough improvements" were unlikely without a significant increase in costs.


The GAO said that the USPS took several actions that were responsive to the study's findings. First, the postal service changed its in-office cost system to improve the quality of data on the mail subclasses that are handled by postal employees and the activities they are performing.


"Personnel costs represent more than three-quarters of USPS costs; therefore, information on postal employees' handling of mail is necessary to estimate the costs of handling each subclass of mail," the report said.


Similarly, the USPS made changes to improve the accuracy of data on mail subclasses, including data on the revenue, volume and weight of each subclass. The postal service also conducted the City Carrier Street Time Study to gather more complete and consistent data on letter carrier activities; increased the precision of ratemaking data by collecting a larger quantity of data; and revised documentation of the transportation cost system, which the study had criticized as inadequate.


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