On Monday the Board of Governors is expected to ask the Postal Rate Commission to accept the rate-case settlement reached earlier this week between postal officials and mailer groups.
Friday Dan Foucheaux, the postal service's chief ratemaking counsel said he would recommend postal governors acceptance of the settlement agreement after he updates them on the settlement’s terms as well as the PRC's hearings in the rate case.
Acceptance of the settlement agreement, by the PRC would reduce the length of its proceedings from 10 months, as required by law, to less than five months. This will allow the PRC to file its recommendations on the proposed rate increase with postal governors early February and late March instead of late May or early June. The agreement was signed by more than 30 of the active participants in the case.
It will be the first time that a major rate case has been resolved in this manner.
The rate case began last Sept. 11 when the USPS asked the PRC to endorse a rate increase. The increase would generate $1.6 billion in new revenue through a 7.3% increase in Standard (advertising) Mail rates; a 10% hike in periodical rates; a 13.5% increase in Priority Mail rates; an 8.2% rise in Express Mail rates and a jump in the price of a first class stamp to 37 cents from 34 cents. The overall increase would average 8.7%.
After months of negotiations, which were proposed by PRC Chairman George Omas because of the extraordinary events on Sept. 11 and the discovery of anthrax-laced letters in the mail stream, the USPS agreed to delay implementing the new rates. It also agreed to wait at least until after its new fiscal year before asking for another rate increase. The new fiscal year begins in late September.
Although the settlement agreement has been praised by industry groups such as the Direct Marketing Association, the Association for Postal Commerce and the Association of Nonprofit Mailers, as well as postal officials, Vermont-based postal consultant Bill Hoyt said he has "mixed feelings" about it.
Observing that the USPS "got what it wanted, which basically means it will get the additional revenue it wanted sooner than it would have gotten otherwise," he said questions still remain about when postal officials will seek another rate case and what they will do about product redefinition.
"I think if mailers gave in on the first part, giving the postal service new revenue sooner than it wanted, [the USPS has] to give in on something," he said referring to postal service plans the USPS to develop a mail reclassification program in 2004.
If the program, which is still in the early planning stage, is endorsed by the PRC and approved by postal governors, it would mark the second time in more than a century that the USPS changed its mail classifications.
The last change, on July 1, 1995, merged third and forth class mail into Standard Mail and changed the name of second class mail to Periodicals and Publications.
