Error with 2023-24 Dynamic Baseline for NPP1 APP2 and Regional Price Plan

Dynamic baselines were introduced at customers’ request into the Access Letters Contract (ALC) from 1 April 2023 for NPP1, APP2 and Regional Price Plan customers.  They enable Royal Mail to create a baseline built around the most recent data, rather than using historical data.

In practice, after each quarter we publish an updated dynamic baseline using the most recent 12 months’ posting data, such that at the end of any financial year NPP1, APP2 and Regional Price Plan customers’ profiles are measured against the Royal Mail baseline for that financial year.

We have identified an error in the dynamic baseline files which we published throughout 2023/24.  We then looked into all the input data and found no issues. On deeper investigation we found that the error was caused by incorrect mapping of a single column of input data through to a calculation spreadsheet. The effect of this was an over-representation of Retail volume versus Wholesale in the National Spread Benchmark (NSB) calculation. The national spread profile for all SSCs were affected to varying degrees. To rectify this error, we have today published on our pricing page, the correct dynamic baseline for end of year 2023/24.  Appendix 1 provides a summary of the difference between the published and corrected end of year NSB profiles.

We apologise for this mistake.  To be clear, the error only impacts the NSB which is applicable to NPP1 customers.

We understand that publishing the incorrect NSB may have had an adverse impact on your planning through 2023/24. In recognition of the error Royal Mail will waive all NSB profile adjustment charges incurred by NPP1 customers for 2023/24. Urban Density profile adjustment charges for NPP1 customers and all profile adjustment charges for APP2 and Regional Price Plan customers for 2023/24 still apply.

We will directly contact NPP1 customers who received NSB profile adjustment charges to discuss their charge. Unless we communicate to you otherwise, any profile adjustment charges which you incurred for 2023/24 are correct and therefore, rightly charged.

We assure you that Royal Mail takes matters such as this very seriously. We understand the importance of having an accurate and reliable Dynamic Baseline. With this in mind we have commissioned an independent 3rd party auditor to review the Dynamic Baseline model and we will follow best practice guidance to ensure this type of error does not happen again.