The second postal rate hike of this year is on track to take effect at the end of next month following approval this week by the Postal Regulatory Commission (PRC).
The United States Postal Service (USPS) filed notice with the PRC in May and the new rates will become effective Aug. 29, barring a legal effort to stop the increase. Average rates are expected to jump 6.9%. Nonprofit Marketing Mail would experience an average increase of 7.8%, ranging from 5.7% to 14.6%, depending on the category and class.
“As the regulator designed the new rates authority, this became an exercise in checking the math for the specific rate cells USPS published on May 28,” said Stephen Kearney, executive director of the Alliance of Nonprofit Mailers (ANM).
The alliance continues to battle the looming rate hikes in the U.S. Court of Appeals for the District of Columbia. The Washington, D.C.-based advocacy group this week filed a reply brief to the PRC’s brief in its litigation against the rate hikes as did the USPS. Final briefs are due July 26. Oral arguments are scheduled Sept. 13 with an appeals court decision to follow, according to Kearney.
It would be the second rate hike this calendar year. New postal rates went into effect in January, with an overall average 1.8% increase for First-Class mail and 1.5% for other categories. That increase came a year after rates went up an average of 1.9% overall in January 2020.
The August increase is part of “Delivering for America,” the Postal Service’s 10-year plan to achieve “financial sustainability and service excellence,” released in March.
The plan diverges from increases capped at the rate of inflation, which has been the case for more than a decade. The Postal Accountability and Enhancement Act (PAEA) of 2006 capped price increases for mailing services at the Consumer Price Index (CPI) except for exigent cases filed by the USPS. In November, the PRC announced new rules of market-dominant prices, allowing inflation price increases on the basis of certain factors and allowing USPS higher rate authority in establishing prices above the rate of inflation.
The PRC also this week issued a 230-page advisory opinion on the Postal Services’ proposal to revise service standards. USPS wants to increase the service standards by up to two additional days for some categories of First-Class Mail and Periodicals.
“The Postal Service’s proposal appears to target mail that consistently fails to meet service performance goals and has the most opportunity for improvement. However, the Commission is concerned that the Postal Service did not conduct any operational or pilot testing of its proposed service standard changes,” according to the advisory opinion. Also, the PRC found that the estimated annual savings for the changes would be eliminated by additional costs associated with the growth in packages.
“Anyone who expected the regulator to actually express a strong opinion that the service diminution should not be done will be disappointed,” Kearney said, noting that the service standard would impact 38.5% of First-Class Mail and 7% of Periodicals.