Congress did a good thing! In this encouraging episode, learn about a new law that saved the Postal Service from financial doom without spending one extra penny in taxpayer money. Then, listen to the highlights from a recent hearing about the electrification of the Postal Service’s vehicle fleet. Louis DeJoy may not have sabotaged the 2020 election, but is he sabotaging the effort to transition the Postal Service away from fossil fuels?
Executive Producers: Stephen McMahan and Jose Huerta
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House Vote Breakdown: 342-92 (All no votes GOP)
Senate Vote Breakdown: 79-19 (All no votes GOP)
Became law on December 20, 2006
House Committee on Oversight and Reform
April 5, 2022
The Committee on Oversight and Reform held a hearing to examine the benefits, opportunities, and challenges of electrifying the Postal Service fleet through the acquisition of the Next Generation Delivery Vehicle (NGDV).
Tammy L. Whitcomb, Inspector General, U.S. Postal Service Office of Inspector General
Victoria K. Stephen, Executive Director, Next Generation Delivery Vehicle, USPS
Kenny Stein, Director, Policy, Institute for Energy Research
Jill Naamane, Acting Director, Physical Infrastructure Team, General Services Administration
Joe Britton, Executive Director, Zero Emission Transportation Association
10:00 Rep. James Comer (R-KY): While Republicans are not against the Postal Service acquiring electric vehicles, we’re against mandates that ignore the business needs and the financial situation of the Postal Service. Republicans believe the postal service must be self funded. This means the Postal Service should pay for its own capital needs, like purchasing new vehicles. Meanwhile, Americans can’t afford to fill up their gas tanks, let alone buy an electric vehicle. But that isn’t stopping Democrats from demanding your mailman has one.
26:30 Tammy L. Whitcomb: Last February, the Postal Service awarded a contract to produce and deploy up to 165,000 new delivery vehicles over the next 10 years. While the contract allows for both electric and gasoline powered vehicles, the Postal Service’s current plan is for most of the new vehicles to be gasoline powered. We have two recent reports related to this purchasing decision. One of our reports was a research paper that identified the opportunities and challenges for the Postal Service in adopting these electric vehicles. We found electric vehicles are well suited for most postal routes, and there are clear benefits to their adoption. For example, a large fleet of electric vehicles would help the Postal Service decrease its greenhouse gas emissions and encourage the growth of the electric vehicle market in the United States. Additionally, electric vehicles are more mechanically reliable than gas powered vehicles and require less scheduled maintenance. They would also result in the Postal Service incurring lower and more reliable and stable energy costs. However, there are challenges associated with adopting an electric vehicle fleet. The upfront costs are significantly higher than gasoline powered vehicles. The Postal Service would need to pay a higher per vehicle price and incur the cost of installing the charging infrastructure. The Postal Service has over 17,000 delivery units that may host electric vehicles and the cost and issues associated with installing charging infrastructure will vary by each depending on the parking layout, power availability and required upgrades. Good planning along with early and consistent communication with local governments and utility companies could help overcome these challenges. We found the Postal Service could save money in the long term by deploying electric vehicles on certain routes. For example on longer routes in in areas of the country where gas prices are traditionally higher. The Postal Service might also be able to lower the costs associated with electric vehicles by exploring different mixes of the type and number of chargers. Because many delivery routes are short, it is unlikely that every vehicle would need to plug into a charger every night. There are two other factors that could significantly change the cost benefit analysis of purchasing electric vehicles: federal funding and local incentives. The Postal Service has stated it could achieve full electrification of its delivery fleet if Congress provided $6.9 billion. Incentive programs by local utility companies might also help offset costs.
33:57 Victoria Stephen: Any mix of replacement vehicles will deliver significant reductions in emissions and improvements in fuel economy over our existing long-life vehicles. I would note, however, that we have 12,500 routes over 70 miles in length that are not candidates for electrification today, and another 5000 that require all wheel drive vehicles due to extreme climate conditions. Electrification also comes with the challenge of installing infrastructure at a multitude of postal facilities.
42:36 Jill Naamane: Last month, the Postal Service ordered 50,000 new delivery vehicles including about 10,000 that will be electric. To inform its decision, USPS conducted a total cost of ownership analysis of a range of types of vehicles. information in this analysis included the maintenance and fuel costs of each vehicle. It also developed a model that recommends the lowest cost vehicle for each delivery route, and a mix of vehicles to purchase each year. The model is based on a set of assumptions including information from the total cost of ownership analysis and details on individual delivery routes.
43:28 Jill Naamane: Our preliminary analysis of the model raises questions about the way in which certain assumptions estimate the costs and benefits of the gas and electric vehicles. I’ll highlight a few examples. First, the model we reviewed used a 2020 gas price that is almost $2 per gallon less than the current national average.
43:57 Jill Naamane: Second, the model appears to assume maintenance would be more expensive for electric vehicles than gas. This is inconsistent with research we have identified, our interviews with private delivery companies, and Postal Service documents that show electric vehicles are expected to be less expensive to maintain.
44:16 Jill Naamane: Third, the total cost of ownership analysis does not include a reduction in emissions as a benefit of electric vehicles. A separate USPS Environmental Impact Statement found that with no tailpipe emissions, electric vehicles would have this benefit.
44:40 Jill Naamane: I’ll turn now to factors that have so far affected the widespread acquisition of electric vehicles in federal fleets. We’ve previously reported that these factors include the higher upfront costs of electric vehicles and uncertainties around the cost and installation of charging infrastructure. Our ongoing work indicates that these factors remain relevant. For example, USPS officials said the higher upfront cost was a key factor in their decision making. They estimate that the new electric and gas delivery vehicles will not cost the same until 2031. In addition, USPS estimates a range in the cost of installing chargers depending on the site and it is uncertain whether older facilities have sufficient power capacity to support the charging infrastructure.
51:50 Rep. Carolyn Maloney (D-NY): On March 24, the Postal Service placed its first purchase order of 50,000 vehicles with Oshkosh. And although the Postal Service initially insisted it could buy only 5000 electric vehicles in this first order, it doubled that amount to 10,000 after this committee and others began to ask questions. So I’d first like to ask Miss Steven, can you briefly explain what changed the Postal Service’s analysis to allow for the increase of EVs in this purchase order? Victoria Stephen: Yes, thank you for the question. The first thing that that it’s important to note is that the Postal Service has committed to continuing to reassess changes in the market. And so the point that you and some of the other speakers have made today about changing fuel prices…$2.19 was the price at the time that we prepared the analysis, we have continued to do ongoing analysis on changing fuel prices and sensitivity analysis to determine if that change is our mix. It certainly does. The gas prices are higher today than they were when we prepared the initial analysis. So that’s one factor. The other key factor is that through the efforts of you and your colleagues, postal reform is making a big difference for the Postal Service. It allows us the flexibility to consider our capital position differently than prior to the passage of postal reform. So between those two key variables, we were able to go back and assess our ability to increase the proportion of electric vehicles within our financial resources and within our means, and we’re happy to do that.
1:44:00 Rep. Clay Higgins (R-LA): What would the Postal Service do right now if a postal service vehicle runs out of fuel on its route? Victoria Stephen: A conventional vehicle today? Rep. Clay Higgins (R-LA): Yes, yes, ma’am. Victoria Stephen: Yeah, we will call our local team and they would— Rep. Clay Higgins (R-LA): And you’d bring in gas pretty quick, wouldn’t you? Victoria Stephen: That’s right. Rep. Clay Higgins (R-LA): What do you what are you going to do it for the electric postal service vehicle runs out of juice? Victoria Stephen: It’s more challenging— Rep. Clay Higgins (R-LA): You’re gonna have to tow it. So listen, I say to my colleagues across the aisle, maybe the time has come for this discussion, but let’s have it honestly. It’s not going to work. We’re spending billions of dollars of the people’s treasury to accomplish some dream. Not to mention what my colleague has brought up: the raw materials for these batteries being mined by child slave labor overseas. That raw product bought by China is assembled into the finished product by slave labor in China. Do we support that? For God’s sakes, let’s take a step back. As a committee, we owe it to the American people that we serve to take a hard look at this thing.
2:01:06 Rep. Glen Grothman (R-WI): Some of my colleagues proposed requiring 75% of the vehicles to be electric. Do you think that’s a reasonable possibility? Do you think that’s really something that could be handled right now? Victoria Stephen: I think it’s a bit beyond what our estimates say is possible. When we were asked by some of the congressional committee members and staff throughout the last year to assess how far we could go with our electrification, the response we provided was 70% of our delivery fleet acquisitions over the course of the decade could be electrified if resources were made available.
3:16:05 Rep. Jared Huffman (D-CA): And then there’s the problem with the Postal Service assumptions about EV range, a 70 mile vehicle range. In your extensive work in this field, including the vehicles that companies like GM, Ford and rivian? are providing to private fleets, did USPS use the correct assumption about battery range? Joe Britton: No, it is far inconsistent with what we’re seeing in the marketplace and I’ll give you a couple examples. The Ford eTransit van? gets nearly two miles per kilowatt hour in the battery pack. The workhorse C Series? gets one and a half miles per kilowatt hour in the battery pack. The Arrival van that is being contracted with UPS gets 1.7 miles per kilowatt hour in the battery pack. The USPS assumption is that this vehicle gets seven tenths of a mile per kilowatt hour in the battery pack. The only other vehicle that we have seen that has that inefficient of an electric drive train would be a Class A tractor trailer or semi truck fully weighted down. It is impossible [unintelligible] — Rep. Jared Huffman (D-CA): And if the model used the correct range assumptions, wouldn’t that significantly affect the total cost of ownership analysis, including the number of charging stations needed to support these vehicles? Joe Britton: That’s correct. You would not need nearly as many charging stations as the Postal Service is asserting.
3:20:12 Rep. James Comer (R-KY): It’s a worthy cause to try to change to try to transfer from fossil fuels to electric vehicles. But the policies in the Biden administration are making that even more difficult than the economics of it. For example, the Biden administration war on coal is making it more difficult to mine coal and to burn coal. I know that from being from a coal burning state and a coal producing state. You have to have coal to make electricity. You also have to have natural gas to make electricity. We have a lot of problems with our energy policy in America from the Biden administration. And he’s gonna make electrifying vehicles even more difficult.
February 8, 2022
20:40 Sen. Mike Lee (R-UT): Because the Postal Service is required to deliver to every American even on unprofitable routes. The postal service may be charging lower than market rates in its service contracts with private companies. This may not only shortchange the Postal Service making further taxpayer bailouts likely, but it could also distort competition in the package delivery market.
22:45 Sen. Mike Lee (R-UT): Senator Scott’s amendment would alleviate some of the financial burdens that this bill would impose on taxpayers and the Medicare program by forcing the Postal Service to reimburse Medicare for all of the additional costs that would be created by requiring future postal retirees to enroll in Medicare.
2:38:33 Sen. Rob Portman (R-OH): I would also like to note what this bill does not do because there has been some misinformation out there. One, it does not appropriate new funds to the post office, period. Two, it does not change the accounting or costing structure for packages and letters so it does not disadvantage private-sector carriers. That is very important to me. This is the status quo that we are putting in place here. It does not change the accounting or costing structure for packages and letters. Third, it does not allow the Postal Service to enter into new commercial services like postal banking. That is also very important to me. And contrary to the claims of this bill’s opponents, this bill does not impact the solvency of the Medicare hospital trust fund. That is the trust fund we all talk about. It is going belly-up in 2026. It does not affect it, period. CBO has actually written us something saying that, but it just makes sense. People are already in Part A. And this bill does not increase the Medicare Part B and Part D premiums based on the CBO analysis. Why? Partly because it is such a small number of people. Only 25 percent of postal employees were not already in Part B and Part D, so additional ones make very little difference. But part of it is they are paying their premiums.
February 8, 2022
37:10 Rep. Darrell Issa (R-CA): The fact is they haven’t made a profit since 2006 as they are mandated. The truth is, the post office isn’t lacking liquidity, it is bankrupt and nothing in this bill will make the post office truly solvent. It simply wipes out and wipes away debts and shifts the burden onto taxpayers. The bill forgives $46 billion in debts owed by the Postal Service, forcing the taxpayers to pay it.
May 13, 2021
44:45 Rep. Speier (D-CA): Believe it or not, prohibition has been over for 90 years, but somehow, we never fixed it so that the US Postal Service could be in a position to mail and process liquor and wine. So for 90 years, they have had their hands tied, while others were able to do that task. We can’t have the Postal Service break even or even become profitable if we keep tying its hands. So we also have an interest in protecting small businesses, micro breweries, small retail establishments, small wineries. They cannot ship their product because they either have to have the sanctions of the wholesalers or they don’t ship.
Hearing: Examining the Finances and Operations of the United States Postal Service During COVID-19 and Upcoming Elections
Senate Homeland Security and Governmental Affairs Committee
August 21, 2020
12:30 Louis DeJoy: Our business model established by the Congress requires us to pay our bills through our own efforts. I view it as my personal obligation to put the organization in a position to fulfill that mandate. With action from the Congress and our regulator, and significant effort by the Postal Service, we can achieve this goal. This year, the Postal Service will likely be reported loss of more than $9 billion. Without change, our losses will only increase in the years to come. It is vital that Congress enact reform legislation that addresses our unaffordable retirement payments. Most importantly, Congress must allow the postal service to integrate our retiree health benefits program with Medicare.
Senate Homeland Security and Governmental Affairs Committee
August 6, 2009
John Potter, Former Postmaster General
David Williams, Former Inspector General, USPS
46:10 David Williams: The Postal accountability and Enhancement Act of 2006 requires the postal service to make 10 annual payments of $5 billion each in addition to the $20 billion already set aside for pre funding its retiree health benefits, the size of the $5 billion payments has little foundation and the current payment method is damaging to the financial viability of the Postal Service even in profitable times. The payment amounts were not actuarially based instead, the required payments were built to ensure that the Postal Act did not affect the federal budget deficit. This seems inexplicable since the Postal Service is not part of the federal budget, does not receive an appropriation for operations and makes its money from the sale of postal services. The payment amounts are fixed through 2016 and do not reflect the funds earnings. Estimates of the Postal Service liability as a result of changing economic circumstances, declining staff size or developments in health Care and pharmaceutical industries. The payments do not take into account the Postal Service’s ability to pay and are too challenging even in normal times.
1:10:10 John Potter: And when I look around the world and see what other posts are, if you’re in Australia and you want to update your driver’s license, renew it, you go to the post office. If you’re in Italy and you go into a bank, more than likely going to the post office, if you’re in Japan and you want to buy insurance, more than likely you’re going to the post office. And if you’re in France and you have a cell phone issue, more than likely, again, you’re going to the post office.
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