USPS's Action Delays Announcement of New Postal Rates

Because the Postal Service is seeking a ruling on how to calculate its rate cap, mailers will probably have to wait a few weeks before learning what rate increases are in store for next year.

USPS asked the Postal Regulatory Commission yesterday to determine “the amount of unused rate adjustment authority when rate adjustments are more than 12 months apart.” The issue is especially murky because the PRC’s rules for determining the inflation-based price cap on most postal rates (including First Class, Standard, and Periodicals) did not anticipate periods of deflation, as occurred in late 2008.

“If amendment to the Commission’s rules is necessary to give effect to the Commission’s determination, then the Postal Service asks that the Commission take such action,” the USPS petition said.

Assuming the Postal Service will await the PRC’s decision before issuing new rates for the “market-dominant” classes, the petition probably puts off any rate announcement for a couple of weeks – or longer if the PRC decides to hold a hearing or to entertain legal briefs. A rule change would probably require even more time.

The PRC has indicated it is sympathetic to the Postal Service’s financial plight, so it might expedite the decision. But it is also trying to complete an advisory ruling this month on the complex and contentious five-day delivery issue.

Informal guidance last month from the PRC’s chief lawyer said the rate cap could be calculated by comparing the recent monthly Consumer Price Indices to those from 2008 because most postal rates have not changed since then. But the Affordable Mail Alliance objected on both procedural grounds and also because that would unfairly ignore the fact that the average CPI in 2009 was lower than in 2008.

Rate increases that are within the CPI-based rate cap can be implemented in as little as 45 days (See the Nov. 12 update explaining the change from this article's original language), but USPS has usually given at least 90 days so that providers of presort software can rejigger their programs.