USPS® Files Exigency Rate Increase
The United States Postal Service® filed an exigency rate case with the Postal Regulatory Commission (PRC) on July 6, 2010. In this case, the USPS is asking for an average price increase of 5.6%, with an effective date of January 2, 2011.
What is Exigency?
In the Postal Accountability and Enhancement Act of 2006, the rate making process for the USPS was changed significantly. The act provided for more modest, annual increases rather than larger increases every 2 to 4 years, and allowed for the increases to be announced with no less than 45 days notice. As part of this modification, the USPS was limited to increases no larger than the Consumer Price Index (CPI), except in cases of exigency. According to the language in the act, exigency means "either extraordinary or exceptional circumstances" and that in these cases, it provides for rates to be increased in an expedited manner "provided that the Commission determines, after notice and opportunity for a public hearing and comment, and within 90 days after any request by the Postal Service, that such adjustment is reasonable and equitable and necessary to enable the Postal Service, under best practices of honest, efficient, and economical management, to maintain and continue the development of postal services of the kind and quality adapted to the needs of the United States." The USPS cited the economic crisis and corresponding deep declines in mail volume and revenue as being extraordinary and exceptional circumstances.
Average vs. Across The Board
While the USPS asked for an average increase of 5.6%, that does NOT mean that all classes or sub-categories of mail will see the same level increase. For example, First-Class Mail® would see an average increase of 5.417%, but Periodicals would see an average increase of 8.035%, while Package Services would see an increase of 6.7%. There are
some sub-categories of mail, such as Standard Mail® Not Flat Machineables/Parcels that would increase by over 23%!
Just because the USPS filed this exigent rate case, it does not mean it will be approved. The filing must be approved by the PRC, and there is a 90-day process involved. During this time, many mailing organizations and associations will be fighting against this rate increase, citing that the circumstances do not meet the criteria of "extraordinary or exceptional" and the amount of the increases and restructuring of some of the prices are not equitable.
What Should Mailers Do?
To be conservative, mailers should plan for the worst-case scenario, and budget for the proposed increase in rates for your specific classes of mail, effective January 2, 2011. Mailers should also work with mailing associations to become familiar with the details of the proposed increases and to formulate comments, either for or against the proposals. It is vitally important that the USPS, and more importantly, the PRC, hear the opinions of mailers who will be impacted by these increases. Time is of the essence, however, because the approval process only lasts for 90 days.
For more information on the rate filing, you may access the Federal Register Notice on Domestic Mail, the Federal Register Notice on International Mail, and the price charts in Excel format.