PRC Recommends 7.6% Rate Increase

In a surprising decision, the Postal Rate Commission has recommended rates that are either equal to or below those requested by the U.S. Postal Service, while still providing the agency with sufficient revenue to meet all its needs.

The decision was made by Dan G. Blair, the new chairman of the new Postal Regulatory Commission. The recommendation, which was delivered a week before deadline, came as a unanimous decision.

• The rates recommended in this decision fully fund every expense the Postal Service identified, including $768 million for contingencies. However, the Commission identified calculation errors in USPS documentation, and conceptual errors in its proposed rates, that allowed the Commission to recommend smaller increases than requested-on average 7.6% vs. the requested 8.1%.
  
  
• The Commission recommended a 2¢ increase in the retail rate for First-Class one-ounce letters, and lowered the second-ounce rate to 17 cents. On average, First-Class Mail rates increase 6.9%. The PRC also recommended the "Forever Stamp" and the separate shape-based rate schedules. The Commission rejected the USPS rate design proposal to "de-link" single-piece from worksharing rates, saying "it would expand discounts beyond avoided costs, and unfairly shift the burden of this rate increase on to single-piece mailers. The Commission believes that mailers who workshare should be rewarded, and recommends discounts that fully reflect the costs avoided by worksharing."
  
  
• The Commission supported separate shape-based rate schedules for Standard Mail, with rates that vary from those suggested by the Postal Service; smaller increases are recommended for the more efficient (lower cost) pieces, while some less efficient pieces face larger increases. On average, Standard Mail rates increase 9.3%.
  
  
• For Periodicals, the PRC noted that costs have risen disproportionately in recent years, in part because current rates send such poor signals regarding efficient mailpiece design. For example, the PRC said, Periodicals is the only class where no rate penalty is applied to nonmachinable pieces. So, the Commission recommended a new design, drawn from proposals by the Postal Service and Time Warner Inc., that recognize only a limited portion of the costs in order to moderate the impact on mailers. Nonetheless, the Commission expects that these rates will foster more efficient, less costly Periodicals mail. On average, Periodicals rates will increase 11.8%.
  
  
• The Commission did not recommended new rate designs for the Postal Service's competitive products, so rates for Express, Priority and Parcel Post include adjustments to better reflect costs, but otherwise are largely as suggested by the Postal Service.
  

See the complete ruling of the PRC, please visit prc.gov.

—DM News and MFSA