Changes to Access Contracts
In line with Tariff 2014, we are changing the price plans of the Access Letters Contract to respond to changes in the market and reflect up-to-date information on costs. These changes are part of a longer term programme to adjust Access Contracts so that they better reflect the way the Universal Service Obligation delivery network is structured and operated and the costs of maintaining that network, against the backdrop of a continuing decline in letter volumes.

In summary, the changes to the price plans are:

1. different levels of price change by service to reflect customer requirements and developments in our operation;

2. the introduction of a price differential of 1.2% between the National Price Plan One (NPP1) and the national Averaged Price Plan Two (APP2)/ the Zonal Price Plan (ZPP3). This reflects the cost benefits to Royal Mail of receiving advance information about posting volumes at the local level, which NPP1 customers provide but APP2 and ZPP3 customers do not, as well as the value to customers of the greater flexibility they enjoy under APP2 and ZPP3; and

3. changes to the differential between zonal Access prices in response to changing market conditions.

Additionally, we are revising some of the criteria and permitted variances for NPP1. These are detailed in Customer Change Notices 3-4. Some of these changes will not take effect until 4 August 2014.