Postal Regulatory Commission lays out new rules for U.S. Postal Service

Washington Postal Scene by Bill McAllister

For years the United States Postal Service has railed against its regulator, the Postal Regulatory Commission, saying the Postal Service — not the Postal Regulatory Commission — is best able to set prices for stamps and postal services.

On Nov. 30, the Postal Regulatory Commission gave its long-awaited answer to the problem, granting the USPS some new pricing freedoms but retaining its dominant role over postal issues.

The new rules will allow some postal rates to rise faster than the rate of inflation, warning that “individual customers and small business users of postal products and services may experience price increases above” previous rates.

Stamp collectors could be among those seeing higher prices.

That is because one of the eight areas the commission highlighted as having “non-compensatory products” is the Stamp Fulfillment Services center in Kansas City, Mo. It operates the Postal Service’s stamps by mail program and counts stamp collectors among its primary clients.

The commission defined the eight non-compensatory programs as postal “products for which attributable costs exceed revenues.”

Under the new rules, these areas could get an annual rate increase 2 percent above the rates allowed for other postal services.

In addition to Stamp Fulfillment Services, the 2-percent increase would apply to the following: in-county periodicals, outside-county periodicals, marketing mail flats, marketing mail parcels, marketing mail carrier route mail, inbound foreign mail letters and media mail/library rate mail.

The PRC’s 484-page order, the product of four years of study, details how the new rate system should work.

It says the commission can directly order the changes to become effective without additional proceedings.

The USPS had no immediate comment on the new plan, although it clearly seems to have fallen short of what the agency sought.

The new order was set in motion by a review of the 2006 Postal Accountability and Enhancement Act, a measure Congress passed with promises it could resolve problems the USPS was having with the loss of first-class mail due to increased communications via the internet.

But as the PRC noted, the USPS made a profit of $11.3 billion in the 10 years before the 2006 law. The USPS lost $59.1 billion in the 10 years after the act was passed.

That was the result of a recession and one of the act’s provisions, which required the USPS to pay in advance for the health care benefits its future employees could earn, the PRC said.

The commission said it found “the system had not maintained the financial health of the Postal Service” as the 2006 law intended.

“While the Postal Service had generally achieved short-term financial stability, both medium-term and long-term stability measures had not been achieved,” it said.

The report also criticized postal management, saying “high-quality service standards had not been maintained during the 10 years” following the law’s enactment.

The Postal Regulatory Commission’s report also faulted the agency for not setting the “work sharing discounts” given to large mailers “as close as practical to their avowed costs” and for having “likely overstated” cost savings of other programs.

The order puts in place two mechanisms to address the Postal Service’s continuing financial woes.

One would address a decline in the amount of mail being delivered by adjusting the current price cap.

The other would deal with the large retiree health care payments the USPS must make by also adjusting the price cap.

Pricing decisions as to which products will bear the increases remain under the control of the Postal Service’s board of governors, the PRC said. The governors are appointed by the president and confirmed by the Senate.

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