PMG: Loss of exigent surcharge will cost USPS $2 billion a year

From the US Postal Service:

WASHINGTON — Absent Congressional or court action to extend or make permanent an existing exigent surcharge for mailing products and services – including the Forever stamp — the Postal Service will be required to reduce certain prices on Sunday, April 10, 2016. This mandatory action will worsen the Postal Service’s financial condition by reducing revenue and increasing its net losses by approximately $2 billion per year.

“The exigent surcharge granted to the Postal Service last year only partially alleviated our extreme multi-year revenue declines resulting from the Great Recession, which exceeded $7 billion in 2009 alone,” said Postmaster General and CEO Megan J. Brennan. “Removing the surcharge and reducing our prices is an irrational outcome considering the Postal Service’s precarious financial condition.”

prcAn order from the Postal Regulatory Commission (PRC) requires the 4.3 percent exigent surcharge to be reversed after the Postal Service has collected surcharges totaling $4.6 billion. As outlined in a notice filed with the PRC today, that amount is expected to be reached by April 10th.

Postal Service prices for Mailing Services are capped by law at the rate of inflation as measured by the Consumer Price Index for all urban consumers (CPI-U). However, the law does allow for exigent pricing (price increases beyond the CPI-U cap) due to extraordinary or exceptional circumstances. That was the case when the Postal Service sought and ultimately received approval for the current exigent pricing, citing the severe effects of the Great Recession on Postal Service mail volume.

However, the PRC did not accept the views of the Postal Service concerning the extent of the harm resulting from the Great Recession, and the PRC strictly limited the period of time that the Postal Service could continue to collect the exigent surcharge. While the Postal Service has experienced rapid growth in package volume over the past few years, it is not nearly enough to offset the decline in revenues from Market-Dominant products, especially First-Class Mail.

Brennan added that the Postal Service’s current pricing system, where products that generate roughly 76 percent of its revenues fall under the statutory price cap, is fundamentally unsuited to the Postal Service’s current business environment in which First-Class Mail volume continues to decline and the network costs required to provide universal service continue to rise.

According to Brennan, “our current pricing regime is unworkable and should be replaced with a system that provides greater pricing flexibility and better reflects the economic challenges facing the Postal Service.”

The surcharge removal means these First-Class Mail prices will be adjusted to the following:

Current Mandated Reduction
• Letters (1 oz.) 49 cents 47 cents
• Letters additional ounces 22 cents 21 cents
• Letters to all international destinations $1.20 $1.15
• Postcards 35 cents 34 cents

Commercial prices will also decrease. A complete listing of the new prices, effective April 10, is available at www.usps.com.

Nonprofit mailers: New exigent appeal shows USPS places customers last

From Postcom:

The Alliance of Nonprofit Mailers has told its members that:

Unfortunately, but not surprisingly, the USPS on Friday, August 28, filed a Petition for Review of Postal Regulatory Commission (PRC) Order Number 2623 that a month ago ruled that the exigent surcharge of 4.3 percent could be extended until next spring but then must end. Many expected this move, not because the USPS is likely to have strong legal grounds to overturn a very well done PRC decision, but more for political reasons to support action in Congress that would overrule both the regulator and the U.S. Court of Appeals by making the surcharge permanent. It could take months to resolve.

It is very difficult for customers to realize that with this USPS they do not come first, but rather last. Once again, litigation and legislation come before the organizations and companies that pay the freight and stay with the Postal Service through thick and thin.

Source: Postal news from around the world

PRC Establishes Procedural Schedule for Exigency Remand; Suspends 45 Day Notice Requirement for Removal of Exigent Surcharge

prcWashington, DC – The Postal Regulatory Commission today issued Order No. 2540, establishing Docket No. R2013-11R to consider issues on remand related to the exigency surcharge. All comments and other documents must be filed under this docket.

The Commission also suspends the requirement that the Postal Service file a 45 day notice of intent to remove the exigent rate surcharge pending further review of the case and issuance of its order.

Initial comments are due at the Commission no later than June 26, 2015. Reply comments are due at the Commission no later than July 6, 2015.

A copy of the Commission’s order in its entirety is located on the website:www.prc.gov.

Source: PRC Establishes Procedural Schedule for Exigency Remand; Suspends 45 Day Notice Requirement for Removal of Exigent Surcharge | Postal Regulatory Commission

Carper says he backs Appeals Court decision

Senator Tom Carper, the ranking Democrat on the Senate committee that oversees the US Postal Service, says he agrees with yesterday’s Appeals Court decision that said the PRC acted correctly in making the exigent rate hike temporary. Last year Carper was backing legislation that would have made the rate hike permanent. The Carper bill would also have increased the cap on USPS price increases. Carper was a co-author of the 2006 PAEA law that helped create the “financial challenges” he refers to in his statement:

Thomas_CarperIt’s no secret that the U.S. Postal Service continues to face serious financial challenges that threaten its future and long-term growth. Nearly two years ago, the Postal Regulatory Commission (PRC) put into place a temporary emergency surcharge on postal rates to help the Postal Service make ends meet. Since then, this increase in rates has served as a life preserver for the struggling Postal Service and has helped the institution keep its head above water as it continues to lose money. I agree with today’s decision by the U.S. Court of Appeals for the District of Columbia Circuit to remand the rate determination to the PRC, and call on the body to reexamine how the emergency rate was calculated. Regardless of what the PRC ultimately decides, piecemeal efforts like this, while helpful, are not enough on their own to fundamentally fix the Postal Service’s severe financial problems. I believe the best way to help the Postal Service gain a sustainable financial footing is through comprehensive postal reform legislation. I will continue to work with my colleagues in Congress, the Administration, and stakeholders to fix the serious, but solvable challenges facing the Postal Service.

Carper’s proposed legislation had the backing of Senator Tom Coburn, who was the ranking GOP member on the committee in the last Congress. Such a bipartisan effort is unlikely in the current Senate- Coburn has retired, and new Committee Chairman Ron Johnson, a Tea Party Senator from Wisconsin, would prefer to eliminate the USPS altogether.

Source: Minority Media| Homeland Security & Governmental Affairs Committee| Homeland Security & Governmental Affairs Committee

PRC wants to know why USPS ignored exigency revenue reporting requirements

The Postal Regulatory Commission has been getting tough with the postal service lately, rejecting a negotiated service agreement with Discover that didn’t make financial sense, and twice returning USPS requests for rate adjustments that the PRC said were “riddled with errors”.

Now the PRC wants to know why the USPS hasn’t bothered to file a report on revenue from the exigency rate adjustment that was due over a month ago:

prcThe Postal Service has not filed the report that was due February 16, 2015, and as of today it is 36 days late.

The Commission is concerned about the Postal Service’s failure to comply with Order No. 2075, failure to inform the Commission and mailers when its report will be filed, and failure to explain the circumstances that gave rise to the omission… The Postal Service’s delays to date, especially the most recent delay in providing this information, cause the Commission to question the Postal Service’s ability to submit necessary reports on the exigent surcharge revenue collection in the future.

Therefore, the Commission orders the Postal Service to: comply with Order No. 2075 by filing the quarterly surcharge revenue collection update as soon as practicable, but no later than March 27, 2015; explain, as soon as practicable, but no later than March 27, 2015, the circumstances giving rise to the delay; and provide, as soon as practicable, but no later than April 3, 2015, its plan to ensure that future submissions, including the quarterly reports and the future bi-weekly estimates, will be timely and in compliance with Order Nos. 2075 and 2319.

Document Details | Postal Regulatory Commission.

PRC approves USPS First Class Mail Price Adjustments

prcWashington, DC – Today the Postal Regulatory Commission issued Order No. 2365­­­­­­ on Price Adjustments for First-Class Mail finding the Postal Service pricing proposals to be consistent with the Consumer Price Index based price cap under the Postal Accountability and Enhancement Act of 2006, 39 U.S.C. 3622(d)(1)(A). The new prices will take effect April 26, 2015.

The Commission did not delay the review and approval of First-Class Mail despite incomplete information filed by the Postal Service for other classes of Market Dominant mail.

The Commission has approved the following actions that will affect domestic mail:

  • The Postal Service will maintain the price of the First-Class Mail stamp, which includes the Forever stamp, at 49 cents.
  • The single-piece additional ounce for letters will increase from 21 to 22 cents.
  • The price of Postcards will increase to 35 cents.

The following changes affect international mail:

  • Outbound Single-Piece First-Class Mail (first ounce) will increase by 5 cents to $1.20.
  • Non-machinable Outbound Single-Piece First-Class Mail will increase to $1.42.
  • Outbound Single-Piece Postcards will increase to $1.20.

All Commission documents pertaining to price changes for 2015 are located on the Commission’s website at www.prc.gov, under Docket No. R2015-4.

All of the prices above include the current exigent surcharge approved in Docket No. R2013-11.