Postal Service Delays Rate Hike

March 31, 2015       Patrick Sullivan      

Nonprofit mailers have gotten a reprieve from potentially ruinous rate increases for periodicals. The U.S. Postal Service would have implemented new rates on April 26, but the Postal Regulatory Commission remanded—sent back—some of the increase requests for a second time.

Nonprofit publications such as Consumer Reports, Ranger Rick and others would have been hit particularly hard. Those periodicals faced a potential increase of up to 16 percent. The postal service will announce the new date of implementation when next it files with the PRC.

“These publications, which are relatively lightweight and have little or no advertising content, face postage increases of as much as 16 percent – almost eight times the 2-percent Consumer Price Index (CPI) cap. Affected nonprofits already are considering phasing entire titles out of the mail or, at a minimum, reducing their frequency,” Stephen Kearney, executive director of the Washington, D.C.-based Alliance of Nonprofit Mailers, wrote in The NonProfit Times.

The PRC first issued a remand in early March due in part to discrepancies between nonprofit and commercial workshare discounts and an uneven ratio of nonprofit to commercial rates. The USPS fixed these issues, and the PRC issued a new remand for problems in the standard mail class that do not affect nonprofit mailers. Because the second remand came within 45 days of the implementation date, the USPS would have had to stagger the rate implementations, and instead decided to delay all implementations.

“This decision was primarily motivated by a desire to eliminate potential adverse impacts on postal customers that might result from a staggered implementation of our new prices,” according to a USPS statement.

Kearney noted that the periodical rate increases were not among the issues that caused the two remands, and as such, the PRC is not requiring the USPS to reduce those increases. “It’s not really a violation but more of a business decision,” Kearney said. Kearney believes the huge increases in nonprofit periodical rate are a mistake due to the complexities of rate-setting for periodicals.

While the Alliance made both USPS staff and Postmaster General Megan Brennan aware of the rate shock, Kearney said there is not much precedent for the USPS changing rates when it is not required to do so by the PRC. “We hope that the postal service will fix that in the next filing, but it’s not something the PRC told them they had to fix,” said Kearney. But, he added, lowering the rates on nonprofit periodicals is “a rational business decision that’s completely with in the postal service’s authority to make. They don’t want to create rate shock and push more publications out of the mail.”