New proposal might mean U.S. postal rate hike

Written on Dec 14, 2017

Postal rates could climb as much as 40% during the next five years under a proposal by the Postal Regulatory Commission (PRC).

In a congressionally-mandated review a decade after postal reform, the PRC said the ratemaking system had been "largely successful in achieving goals related to the ratemaking system but has not increased pricing efficiency," "maintained the financial health" of the United States Postal Service (USPS) and maintained high quality service standards.

The PRC issued a Notice of Proposed Rulemaking to address the shortcomings identified in the Dec. 1 report. The Postal Accountability and Enhancement Act (PAEA), established in 2006, required the PRC to review the system for regulating rates and cases for postal products.

A 90-day comment period will end March 1, and then the PRC will allow 30 days for reply comments submitted no later than March 30. That puts a potential vote before the PRC sometime in the spring.

The proposed rulemaking changes would keep the current Consumer Price Index (CPI) cap on rate increases but add four more potential avenues for a hike:

  • A 2% surcharge on all mail for the next five years
  • An additional 1% if USPS meets certain goals related to efficiency and service
  • Another 2% for products that are considered “underwater,” or not covering their costs, which tend to be periodicals and Marketing Mail (formerly Standard Mail) flats, such as catalogs and calendars

In a statement, the Postal Service said it agreed with the PRC’s conclusion that the current CPI price cap does not work and needs to be changed.

"We are analyzing the commission’s alternative price cap proposal to determine the extent to which it advances this goal… We seek a regulatory system that gives the Postal Service the flexibility to adopt the pricing innovations that will be critical to our ability to compete in the marketplace and to create business value for our customers both today and in the future, and we will continue to work with the commission and our customers to ensure that the mail remains a valued means of commerce and communications," Postmaster Megan Brennan said. "We are analyzing the commission’s alternative price cap proposal to determine the extent to which it advances this goal."

"We continue to believe that any price cap is unnecessary in the rapidly evolving postal marketplace, for which all our customers have alternatives to using the mail," she added. "We seek a regulatory system that gives the Postal Service the flexibility to adopt the pricing innovations that will be critical to our ability to compete in the marketplace and to create business value for our customers … and we will continue to work … to ensure that the mail remains a valued means of commerce and communications."

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