After the enactment of the Postal Enhancement and Accountability Act of 2006, the Postal Service has been authorized to increase its rates each year by the annual increase in the Consumer Price Index. This year, on January 26, 2014, the Postal Service will be implementing a larger increase, thanks to a December 24, 2013 decision issued by the Postal Regulatory Commission (PRC).
In its Order and Decision, the PRC approved the Postal Service’s request for an across-the-board exigent rate increase of 4.3%, in order to make up for losses caused by the Great Recession of 2008. The Postal Service hopes to recover $1.8 billion a year through this rate increase, which is on top of the usual inflation-based increase. Together, these increases will move the first-class stamp to 49 cents, and other rates also will be adjusted upward in a similar manner.
The Postal Service initially sought this exigent rate increase in 2010, but the Commission denied the request due to the Postal Service’s introduction of insufficient documentation regarding the effects of the Great Recession. The Postal Service re-filed the request with additional documentation in September 2013. Seventeen interested parties submitted comments in the proceeding – of these, only the NPMHU supported the Postal Service’s request. In its comments, the NPMHU argued that the Postal Service has already cut its costs to the bone, particularly in its mail processing operations, and further cost-cutting measures would negatively impact service. We also noted that postal employees already have contributed their fair share to fix the USPS financial issues, and it was time for the major mailers to do likewise.
In its Order, the Commission disagreed with the Postal Service’s estimate that the Great Recession caused a loss of 189.7 billion mail pieces over a five-year period, finding instead that the Great Recession caused a loss of only 25.3 billion mail pieces (equal to $2.766 billion in financial losses). Due to this $2.766 billion financial loss, the Commission found that the exigent rate increase is “necessary to enable the Postal Service, under best practices of honest, efficient, and economical management, to maintain and continue the development of needed postal services.” Importantly, the Commission held open the question of how long this 4.3% increase may remain in effect, and ordered the Postal Service to report to it by May 1, 2014 with a plan to phase out this 4.3% rate increase once the rate increase has produced the revenues necessary to make up for the losses due to the Great Recession. The NPMHU will continue to monitor these proceedings and intervene or comment as necessary.
