USPS Will Have To Provide Notice, Rate Estimates

January 13, 2015       Mark Hrywna      

The United States Postal Service (USPS) will have to give 45 days notice before it rolls back a year-old exigent surcharge and provide bi-weekly estimates in the final three months of the temporary 4.3-percent rate.

The Postal Regulatory Commission (PRC) yesterday filed an order outlining the timeline and requirements of the exigent case. The 16-page order also stipulates how the USPS adjusts the exigent threshold to account for Forever stamps purchased – but not yet used – during the surcharge period. It also ruled that no re-examination of workshare discount requirements is necessary when the surcharge is removed as long as the surcharge complied with them.

The PRC in December 2013 granted a request by USPS for an average postage increase of 4.3 percent until it collected $3.2 billion to make up for losses suffered in 2008-09 during the Great Recession. The USPS is likely to reach the $3.2-billion level toward the end of the current fiscal year in September. The exigent increase, which USPS unsuccessfully sought to make permanent, went into effect in January 2014, along with an inflation-based increase of 1.7 percent.

It’s an imperfect science of hitting that cap and PRC probably proposed the best compromise solution to ensure USPS gets as close as possible to the cap, said Stephen Kearney, executive director of the Alliance of Nonprofit Mailers (ANM). The PRC ruled that USPS could time the next inflation-based price increase at the same time that the exigent rates are rolled back, as long as they are treated as two separate rate cases so figures are calculated separately. “It makes sense to time the changes,” he said.

The Direct Marketing Association (DMA) issued a statement supporting the reporting requirements. “Although we do not agree with every point of the PRC’s order, DMA and its members are pleased that a procedure has been established for the Postal Service to eliminate the exigent postal surcharge once it has recovered the losses due to the Great Recession,” said Peggy Hudson, DMA’s senior vice president of government affairs. “We particularly applaud the bi-weekly reporting requirement on revenues as the time for elimination of the surcharge approaches. This procedure will help avoid the overcharging of the American public,” she said.