Postal Regulators Propose Significant Rate Increases

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David LeDuc, SIIA's Senior Director, Public Policy, reports the following:

On Friday, Dec. 1, the Postal Regulatory Commission (PRC) issued a long-awaited conclusion resulting from its year-long Review of the System for Regulating Rates and Classes for Market Dominant Products.  The review was required by the Postal Accountability and Enhancement Act (PAEA), enacted in 1996, which stipulated that after ten years, the PRC was required to conduct a review of the ratemaking system established under the Act to determine if the goals of the legislation were being met.  According to the PRC’s announcement on Friday, the system has not maintained the financial health of the Postal Service as intended by the PAEA. Specifically, the PRC concluded that, “while the Postal Service has generally achieved short-term financial stability, both medium-term and long-term financial stability measures have not been achieved,” and that [h]igh quality service standards have not been maintained during the past 10 years under the PAEA.” As a result, the PRC has initiated a notice of proposed rulemaking (NPRM) that includes the following: 

  • Retention of a price cap based system
  • USPS gains additional 2% pricing authority above CPI for next 5 years after which the PRC will evaluate the financial health of USPS
  • USPS may gain additional 1% pricing authority if service and operational targets are met
  • Products that are not covering attributable costs must have price increases at least 2% more than the average for their class
  • For periodicals all workshare passthroughs must be between 75% and 125%
  • For all other products passthroughs must be between 85% and 115%
  • Non-compliant workshare discounts will be subject to a three-year grace period

As feared, this proposal could result in significant rate increase for Periodicals mailers.  SIIA is assessing the details of this PRC proposal and we will provide further information for members in the near future.  We will also plan to submit comments, which are due by the end of March 2018.

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Ronn Levine began his career as a reporter for The Washington Post and has won numerous writing and publications awards since. Most recently, he spent 12 years at the Newspaper Association of America covering a variety of topics before joining SIPA in 2009 and SIIA in 2013 as editorial director…