USPS Denied Postage Rate Increase

As previously reporter, the United States Postal Service requested an average 5.6 percent rate increase that would take affect in 2011. The Postal Regulatory Commission (PRC) has rejected this request.

The PRC confirmed and agreed that revenue and overall demand volume for USPS has decreased significantly over the past few years. However, PRC rejected the rate increase unanimously under the Postal Accountability and Enhancement Act of 2006 (PAEA), the first time that has ever happened on an exigent rate case. PRC says the request was rejected because the USPS cash flow problem, "would have occurred whether the recession took place or not." PRC Chairman, Ruth Goldway, explained that the rate increase request by USPS "represents an attempt to address long-term structural problems not caused by the recent recession."

The PRC found that although USPS proved the recession affected revenue, they failed to show any real quantifiable evidence of impact on their finances and how or to what extent change or loss in revenue was caused by loss of mail volume due to the recession. Also, according to PRC analysis, as the economy begins to rebound, mail volume appears to rebound as well.

Businesses of all kinds, specifically those in The Affordable Mail Alliance, a group formed after the filing of the USPS rate case in July by businesses, consumer groups, and nonprofits, are thrilled at the ruling of the case. Affordable Mail Alliance spokesperson, Tony Conway, says, "The PRC today has helped countless businesses stay competitive and saved tens of thousands of jobs."

The Postal Service has already reduced their cost by over 6 million dollars since last year and still ended this quarter with a more that 3 billion dollar loss. The USPS is looking toward its next move, either appeal the ruling, re-file a new request, or file for a regular rate increase within the CPI. Postmaster General, John Potter, said in a statement released after the ruling, "Clearly, the Postal Service is a viable business. Maintaining that status requires elimination of several legislatively imposed constraints that hamper our ability to operate efficiently and profitably." Listing six things that the Postal Service should be allowed to do and that legislation for has been introduced to Congress to address including altering frequency of delivery and closing unprofitable post offices. PRC Chairman, Goldway, said that since the USPS announced in March their decision to file the exigent case, commissioners knew that it was previously unprecedented and any decision made would be impactful and controversial.