01/19/2018

PRC Proposes New Ratemaking System

The USPS has been struggling with declining mail volumes and mounting financial losses for years

The Postal Rate Commission (PRC) last month proposed a new rate system that would allow the struggling U.S. Postal Service (USPS) to raise postal rates significantly for each of the next five years.

The PRC has the authority to review and change the rate system and, while there is no strong consensus on the commission, the new rules put out last month for public comment would retain a pricing system tied to the Consumer Price Index (CPI) but allow the Postal Service substantial rate-making authority on top of that. For example, according to policy analysts who have studied the PRC proposal, mailers could see rate increases on periodicals of approximately 5-7 percent each year for the next five years, beginning in 2019.

The USPS has been struggling with declining mail volumes and mounting financial losses for years and Congress has so far been unable to pass legislation that would reform how the agency operates its business. The Alliance of Nonprofit Mailers said the PRC’s proposal “does not work on its face.”

“In a world where most business and nonprofit costs and revenues are limited to less than the Consumer Price Index, the concept that they will stay in the U.S. Mail with these kinds of increases, to any degree close to current volumes, is a non-starter,” the alliance opined.

Should the proposal move forward unchanged, it could be challenged in federal court. The PRC is providing an opportunity for comments before announcing final rules, due by March 1.

This article was provided to OSAE by the Power of A and ASAE's Inroads.