Postal Updates

PRC ruling keeps 49¢ stamp around for eight more months

Jul 30, 2015, 4 AM

By Bill McAllister, Washington Correspondent

The cash-hungry United States Postal Service has won what is described as an eight-month extension on its current stamp prices.

That is the effect of a July 29 ruling by the Postal Regulatory Commission, which held that the USPS is entitled to an additional $1.191 billion under the emergency price hike it was granted on Dec. 24, 2013.

Several postal groups said that the effect of that decision will be to extend stamp prices for another eight months.

The Save the Post Office website said that means the 49¢ stamp will remain on sale until “sometime in April 2016” instead of ending in August.

“We appreciate that the Postal Regulatory Commission provided some additional pricing relief to the Postal Service,” the USPS said in a statement.

“However, the recent decision does not fully restore the Postal Service for the significant mail volume and revenues losses associated with the great recession.  

“We look forward to working with the commission, mailers and other stakeholders to fully address the pricing need of the Postal Service when it reviews the current rate system for market-dominant products in 2017.”

The decision fell far short of the $8.6 billion in additional revenues the Postal Service had sought from its regulator after a federal appeals court ruling that held mail losses from the 2007 recession were deeper than the commission had held.

Mailers had argued for a much smaller increase, saying the USPS was due only $60 million more than the $2.766 billion the commission had granted the Postal Service on Dec. 24, 2013, as a result of tremendous losses in mail volume as a result of the 2007 recession.

Stephan Kearney, executive director of the Alliance of Nonprofit Mailers, said the group hopes the commission order “will be the last word on the campaign by the United States Postal Service to receive above-inflation revenue from its customers to compensate for volume losses caused by the 2007-09 recession.”

He urged postal management not to continue to litigate the emergency rate increase.

“We believe that ending the exigent chapter will be good not only for customers of the USPS, but it also will enable the Postal Service to retain more of those customers and to focus on more long-term strategic issues,” Kearney said.

“We also suggest that the Postal Service announce soon that it will have only one mail-related price adjustment next year, combining its Consumer Price Index increase authority with the exigent surcharge removal in March or April 2016,” he said. “The more visibility and advice the USPS can give its customers about when and how the 2016 price adjustment will occur, the better.”

The USPS is allowed to make annual price increases to its products provided the increases to not exceed the rate of inflation.

The temporary increases ordered on Christmas Eve 2013 were considered emergency increases and thus allowed to be above the rate of inflation for the previous year.

The five-member commission had approved an emergency increase that boosted first-class stamp prices to 49¢. The higher rates were supposed to last about 2 years.

The Postal Service appealed that decision to the federal courts, arguing that the Christmas Eve price increases should be made permanent and that the PRC had underestimated the impact the recession had on mail.

In a June 5 ruling, the U.S. Court of Appeals for the District of Columbia largely approved of the PRC’s emergency rate decision, but it sent the matter back to the PRC, saying the commission needed to clarify what the Postal Service’s new post-recession mail volumes were.  

A commission rule that the USPS could blame the recession for a loss of volume only once was rejected by the court.

One issue for the commission was to establish what the “new normal” volumes were.

In its deliberations, however, the commission declined a Postal Service request to reopen its “new normal” decision and make revisions to its proposed dates for establishing new mail levels by class.

“The court deemed the ‘new normal’ to be well reasoned and grounded in the evidence before the commission in its previous proceedings,” the PRC said in a news release.

The next step is up to the Postal Service, which could return to the courts, arguing that the PRC’s latest decision is out of step with the June 5 ruling.