The U.S. Postal Service’s Board of Governors announced Tuesday that some action on the long-anticipated rate case to be filed with the Postal Rate Commission would be taken up at next month’s public meeting scheduled for Jan. 11.
The USPS is expected to seek a rate increase next year.
The announcement came on the same day the USPS announced that it is anticipating at least a $100 million surplus for fiscal 2000–its fifth consecutive surplus–after ending the current fiscal year with a $363 million surplus.
Einar V. Dyhrkopp, who chairs the postal service’s Board of Governors, acknowledged only that the rate hike was on the agenda for the board’s closed-door meeting Monday. There is, however, growing speculation within the mailing community that the board will authorize the filing between January and April, so the rate increase could take effect Jan. 1, 2001.
Preliminary work on the rate case, in which the USPS is expected to seek PRC support for an increase averaging 4% to 6% for most mailers and between 10% and 15% for catalogs and other periodicals, began in early summer.
Less than a month ago, Chief Financial Officer and Executive Vice President M. Richard Porras predicted that the USPS could end its first year of the new millennium with a $200 million loss, resulting from sluggish growth of mail volumes and revenue and an aggressive capital improvement program.
In his report to postal governors, Porras said that while fiscal 1999 income totaled $62.7 billion, up $2.7 billion from a year earlier, expenses increased to $60.6 billion from $57.7 billion; meanwhile debt service (interest on loans) dropped slightly, resulting in the $363 million surplus.
He attributed the surplus to the $700 million cost-cutting initiatives earlier in the year by Postmaster General William J. Henderson, which included shaving $50 million from the postal service’s $300 million marketing and advertising budget.
Porras said the surplus would have been greater had the USPS not waited until January to implement the last rate increase, averaging 3%, spent $300 million for Y2K computer improvements and shelled out another $100 million in health-benefit expenses.
He noted that for the first time, the USPS processed more than 2 billion pieces of mail. Volume for the year totaled 201 billion pieces, he said. He did not provide a class-by-class breakdown.
However, it was learned that Standard A (advertising) mail dropped slightly below expectations, largely because of a cutback in mailings by direct mail sweepstakes operators and federal legislation tightening government controls over the sweeps mailers.
