PRC files brief in exigency rate case appeal

The Postal Regulatory Commission has filed its brief in the appeal of its decision granting the USPS only a temporary “exigent” rate increase to make up for the impact of the “Great Recession”. The USPS had argued that it was entitled to a permanent increase, while mailers had opposed any price hike.

Here is the PRC’s summary of its argument:

prcThe Postal Regulatory Commission authorized the Postal Service to increase its prices temporarily to recover revenue losses associated with the volume declines caused by the Great Recession. The Commission’s order reflects legal and econometric analysis that preserves the balance that Congress struck in the Postal Accountability and Enhancement Act, giving effect to Congress’s decision to allow prices to increase faster than the rate of inflation only to the extent necessary to compensate for the effects of extraordinary or exceptional circumstances.

The Postal Service urges that the Commission should have authorized an indefinite price increase. A group of mailers, conversely, urges that the temporary surcharge that the Commission authorized was not justified by the record. The Commission’s intermediate approach was well supported by the record and fully consistent with the statute that the Commission is charged with administering.

The Postal Service implausibly suggests that the entire acceleration in mail volume decline since 2008 is attributable to the recession, and that the effect of the recession is not only ongoing, but still increasing, to this day.

The Commission properly rejected the Postal Service’s request to treat every downward trend in mail volume that began around the time of the Great Recession as attributable to the recession, particularly given that other factors, such as increasing use of electronic communications instead of mail, were known to be contributing to declines in mail volume. The Commission also appropriately placed temporal limits on the price increases; the Commission was not obligated to treat volume declines as attributable to extraordinary circumstances indefinitely.

The Commission isolated the features of the Postal Service’s request that were analytically problematic, and refused to allow the Postal Service to raise prices to compensate for lost revenues that the Postal Service failed to adequately connect to the recession. But because the Postal Service made the requisite showing as to some portion of the revenue lost, the Commission authorized a price increase of limited duration. The mailers’ challenge to that more limited relief fails to account for the corrections that the Commission made to the Postal Service’s analysis, and essentially amounts to second-guessing the Commission’s technical judgments that are amply supported in the record.