Governors OK Two New Rates; Mail Groups Not Happy

The Postal Regulatory Commission’s decision to change two of its original rate increase recommendations has drawn angry reactions from mailer groups some of whom fear the USPS may be gearing up to file another rate case under the former system which it can do until the middle of 2008.

At its monthly meeting Wednesday, the U.S. Postal Service Board of Governors accepted the PRC’s latest decision to modify two of its earlier rate case recommendations: to lower the price of the priority mail flat-rate box to $8.95 from $9.15 and to extend the nonmachinable surcharge to all single piece and presorted first-class mail letters, regardless of weight.

The PRC is still reconsidering its decision relating to standard mail flats (catalogs) but has not set a date for that decision.

“This is the nightmare we feared,” said Bob McLean, executive director of the Mailers Council. “Mailers have already prepared, printed, manufactured and shipped all their materials with the new rates and now they all contain incorrect information and this will cost mailers millions of dollars because they have to replace all the materials they’ve already sent.

“And this is the result of having too few days between rate decision and rate implementation” he continued.

He also said he hoped there would never be another rate case” under the system established under the 1970 Postal Reorganization Act.

Despite the passage last December of the Postal Accountability and Enhancement Act (PAEA), the USPS can still file one more rate case under the earlier system until the middle of 2008 and many in the industry expect the USPS to do just that.

“The other thing to come out of the Governors meeting was the postal service’s second quarter results,” said Tony Conway, executive director of the Alliance of Nonprofit Mailers, who noted this may be a tactic to file one more rate case under the 1970 system. “We don’t think this is necessary,” said Conway.

In the meeting, the USPS reported a $925 million net loss during the second quarter of the fiscal year (Jan. 1 — March 31) which it attributed largely to expenses relating to the implementation of the PAEA.

The USPS reported revenue for the quarter of $18.5 billion, a decrease of 0.8% from the same period last year. The USPS attributed this to a 0.6% decrease in mail volume for the second quarter. Expenses totaled $19.4 billion, an increase of $1.6 billion, or 9.2%, over last year. The USPS said the largest contributor to the expense increase was $1.35 billion for the funding of retiree health benefits required by the PAEA.

All new rates are scheduled to take effect May 14, except those for periodicals (magazines and newspapers), which are scheduled to go into effect July 15.