PRC’s New Postage Proposal Could Push up USPS Prices

USPS

Brace yourself for higher U.S. Postal Service rates following the Postal Regulatory Commission’s revised proposal to amend the mailing agency’s current pricing system.

The PRC, which is responsible for overseeing the Postal Service, found that the agency’s current system failed to maintain its financial health and contributed to its poor performance.

In its new proposal, the PRC suggested that the costs of delivering mail in less populated areas, as well as the costs of mandated payments for the mailing agency’s retirees, be factored into the calculation of the postage rates of USPS.

The PRC also revised its proposed rules in 2017, including for the 1% performance-based price adjustment.

Initially, it required USPS to meet certain metrics for the adjustment, but PRC’s new proposal states that the agency should satisfy all of the requirements to qualify.

Aside from that, the PRC changed its proposed rules on work-sharing discounts for mailers that sort, barcode, and transport mail.

Allowing USPS a Little Leeway

Although USPS Postmaster General Megan Brennan acknowledged PRC’s observation on the current business model of the Postal Service, her tepid response to the regulator’s initial proposal reflected her dissatisfaction.

She stressed that the mailing agency should be given the authority to regulate its own prices.

To address this concern, PRC scrapped its suggestion from the original proposal to set a price cap and opted to allow the Postal Service to increase prices on certain products by 2%.

This would allow USPS to raise its rates above inflation and ensure long-term financial stability.

However, mailer groups aren’t sold on PRC’s revised proposal, saying it will have a negative impact because customers won’t enjoy the price hike.

PRC admitted that price increases will hurt some customers, but the new rules will improve the rate-making system of USPS, as well as its financial health and quality of service.

“Individual customers and small business users of postal products and services may experience price increases above what the previous [inflation] rate authority provided due to the proposed categories of additional rate authority. However, as previously mentioned, the Postal Service’s Board of Governors will continue to set prices for all products and services offered by the Postal Service. As a result, exact future prices are not known at this time.”

Postal Regulatory Commission 

The PRC is required by law to review the postage rate-making system to see if it meets the objectives created by Congress through the Postal Accountability and Enhancement Act (PAEA) of 2006.

What do you think of the PRC’s new proposal on USPS’s pricing system?

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READ MORE: PRC Approves USPS Postal Rate Increases

 

 

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