The Postal Regulatory Commission issued a notice of proposed rulemaking on Friday, calling for U.S. Postal Service price increases beyond the rate of inflation.
Although the U.S. Postal Service has generally achieved short-term financial stability, both medium-term and long-term financial stability have not been achieved, the Postal Regulatory Commission said.
The Postal Regulatory Commission, the federal agency that oversees the U.S. Postal Service (USPS), issued a notice of proposed rulemaking on Friday, calling for price increases beyond the rate of inflation.
The Commission unveiled its decision as part of a 10-year review of the U.S. Postal Service’s stamp rates.
The Commission found that the ratemaking system has not increased pricing efficiency, and that although the U.S. Postal Service has generally achieved short-term financial stability, both medium-term and long-term financial stability measures have not been achieved. In addition, the Commission said it found that high quality service standards have not been maintained over the past 10 years under the Postal Accountability and Enhancement Act (PAEA).
The Commission’s notice of proposed rulemaking included “a two-pronged approach to complement, rather than replace, the CPI-U price cap by providing discrete, clearly defined amounts of additional authority,” the Commission said.
It calls for 2 percentage points of rate authority per class of mail per calendar year for each of the first five full calendar years after the effective date of the proposed rules, along with up to 1 percentage point of rate authority per class of mail per calendar year, contingent on the U.S. Postal Service meeting or exceeding an operational efficiency-based standard and adhering to service standard quality criteria.
The Commission’s proposal also calls for a mandatory rate increase for any non-compensatory product of a minimum of 2 percentage points above the percentage increase for the class. “The proposed solution does not mandate immediate full cost coverage for non-compensatory classes, but rather seeks to narrow the coverage gap and move prices towards full cost coverage over time and thereby achieve reasonable and efficient rates as envisioned by the PAEA,” the Commission said.
In addition, the proposal calls for the creation of two bands – ranges with upper and lower limits – for workshare discount passthroughs, with a band range of plus or minus 25 percent for periodicals, and a band range of plus or minus 15 percent for all other classes. “Non-compliant passthroughs would be subject to a 3-year grace period,” the Commission said.
Commenting on the Commission’s actions, U.S. Postal Service Postmaster General and CEO Megan Brennan said, “The Postal Service agrees with the conclusion of the Postal Regulatory Commission that the current CPI price cap does not work and needs to be changed, because it does not enable us to achieve our mission of providing prompt, reliable, and efficient universal postal services to the American people in a financially sustainable manner.
“We are analyzing the Commission’s alternative price cap proposal to determine the extent to which it advances this goal,” she added. “We continue to believe that any price cap is unnecessary in the rapidly evolving postal marketplace, for which all of our customers have alternatives to using the mail. We seek a regulatory system that gives the Postal Service the flexibility to adopt the pricing innovations that will be critical to our ability to compete in the marketplace and to create business value for our customers both today and in the future, and we will continue to work with the Commission and our customers to ensure that the mail remains a valued means of commerce and communications.”