*Postal Rate Case Opponents to Begin Rebuttal

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The Postal Rate Commission today begins sifting through testimony from interveners who disagree with the U.S. Postal Service's current rate case. It is the next step in what has already become a contentious process.

Mailers from all industries are closely watching the rate case this year because the postal service has asked for increases of 15 percent or higher for many types of mail categories. The USPS wants the increases to go into effect come January.

For direct marketers, the average increase is 7.7 percent. The largest increase in this category -- 14 percent -- would be for some automation flats, or catalogs, because of the increased cost of processing flat mail. Direct marketers and magazine publishers continue to have high hopes that the requested rates will be lowered.

Over the last few months, USPS witnesses presented their case to interveners, or objectors, who filed preliminary written testimony against the rate case. Today, all interveners will file new testimony, which will include their rebuttal to evidence presented by the postal service and will contain direct evidence suggesting how they think the PRC should respond. At the same time, the discovery period will begin so that interveners can file clarifying, written questions to other interveners.

The Direct Marketing Association, for example, is expected today to present testimony suggesting cuts to the USPS' revenue requirement.

"The postal service has asked for new rates [that] would bring $3.4 billion," said Jerry Cerasale, senior vice president of government affairs at the DMA. "What we are trying to do is cut $1.3 billion off of that number."

In general, Cerasale said, DMA officials think that "the postal service has asked for too much" and that the increases should be lower. Instead of an average 6.4 percent rate increase, it should be less than 5 percent, he said.

The Periodical Coalition -- which includes the American Business Media, National Newspaper Association, Alliance of Nonprofit Mailers and the Magazine Publishers Association -- also is expected to present testimony today. The central piece will be from Rita Cohen, vice president of economic and legislative analysis at the MPA.

Jim Cregan, executive vice president of government affairs at the MPA, said Cohen's testimony will demonstrate "that the revenue the postal service needs from the periodicals class is considerably lower than what is contained in [its] request. As a result, the increase for the periodical class should certainly be no greater than the system-wide average of 6.4 percent."

The postal service is asking for a 15 percent increase in the periodical rate.

Some interveners will take the witness stand this summer to answer questions from the USPS, the PRC and other interveners. On July 31, all participants will be able to file rebuttals to testimony that already has been challenged. Objecting parties must submit their final briefs by September. The PRC then will prepare its recommended decision, which must be completed by Nov. 13. The PRC will present the recommendation to the postal service's Board of Governors.

Interveners are offering testimony that questions how the USPS:

* determined its revenue requirement;

* decided upon its cost contingency allowance;

* attributed certain costs to specific subclasses of mail;

* and chose the rate design of the case, which involves how much it should charge for bar-coding discounts and presort discounts.

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