Postal Rates To Drop 4.3% In April
February 29, 2016 Mark Hrywna
More than two years after it first went into effect, the 4.3-percent surcharge on postal rates will disappear as of April 10. Barring any congressional or court action, it would be just the third time in its history that the United States Postal Service (USPS) lowered postage rates.
A four-page notice of a removal of the exigent surcharge was filed yesterday with the Postal Regulatory Commission (PRC), citing the specific date. The USPS estimates that it collected $4.347 billion in surcharge revenue as of Feb. 14, and at $6-million a day, projects April 9 as the day it will reach the $4.634 billion limit set by the PRC. The surcharge went into effect in January 2014.
USPS announced the move would worsen its financial condition by reducing revenue and increasing net losses by about $2 billion per year. “The exigent surcharge granted to the Postal Service last year only partially alleviated our extreme multi-year revenue declines resulting from the Great Recession, which exceeded $7 billion in 2009 alone,” Postmaster General and CEO Megan J. Brennan said. “Removing the surcharge and reducing our prices is an irrational outcome considering the Postal Service’s precarious financial condition,” she said.
The USPS ended Fiscal Year 2015 in October with $68.9 billion in total revenue against total operating expenses of $73.8 billion, for a net loss of $5 billion. The net loss follows losses of $5.5 billion in 2014 and $4.9 billion in 2013.
Most mailing rates will come down, including classes and categories heavily used by nonprofits, such as nonprofit Standard Mail and Periodicals, according to Stephen Kearney, executive director of the Alliance for Nonprofit Mailers (ANM).
The rollback of the exigent case is rational because it follows the rule of law and the regulatory process as affirmed by the U.S. Court of Appeals, Kearney said. “It also makes common sense that businesses and nonprofit organizations must adjust their operations and cost structures to economic cycles,” he said, including the 2007-09 recession.
“On the other hand, it’s hard to blame anyone for trying to get a $2 billion lifetime annuity valued at $60 billion. It’s just not in the cards,” Kearney said, hoping the reduction will stimulate more use of the mail. “We think nonprofits will mail more,” he said.
The USPS announced adjusted rates on Feb. 5 and was required to provide 45 days’ notice before any switch. First-Class postage for a letter, for instance, will drop from 49 cents to 47 cents. The Postal Service filed with the PRC for a 4.3-percent surcharge in 2010, ultimately granted and put into effect in January 2014 but capped at $4.6 billion.