USPS FAQ For 2012 Domestic and International Mailing Services Price Change
USPS released the following “Frequently Asked Questions” on Prices Changes effective January 22,2012
On October 18, 2011, the Postal Service™ announced new prices and product features for the following domestic and international mailing services:
- First-Class Mail®.
- First-Class Mail International®.
- Periodicals.
- Standard Mail®.
- Package Services:
- Bound Printed Matter.
- Media Mail®/Library Mail.
- Parcel Post®.
- Extra Services and Fees.
The new prices take effect January 22, 2012.
According to the Postal Accountability and Enhancement Act of 2006, on average, Mailing Services prices can increase no more than the rate of inflation based on the Consumer Price Index (CPI). Mailing Services prices will increase by an average of 2.1 percent across each class of mail. Individual prices within a mail class may have an increase that is higher or lower than 2.1 percent.
Highlights of Changes
Single-piece, 1-ounce First-Class Mail letters will increase $0.01, to $0.45 (additional ounces remain at $0.20). The price for mailing a First-Class Mail postcard will increase $0.03 to $0.32, and the cost of stamped postcards will increase $0.03 to $0.35. Read more
Affordable Mail Alliance Argues PRC Ruling Allows USPS To Exploit The Unused Rate Authority
Filed under: postage rates, postal, postal news, rate increase, usps
Affordable Mail Alliance Comments on informal ruling issued by a Postal Regulatory Commission lawyer Oct 12, 2010 regarding USPS possibly raising postage rates.
THE OCTOBER 12 LETTER-RULING OF THE OFFICE OF GENERAL COUNSEL IS EITHER UNLAWFUL OR INEFFECTIVE.
The OGC letter, if treated as a binding substantive ruling, violates the due process rights of AMA and its members. AMA’s members have a substantial economic interest in the CPI price cap formula. The methodology adopted in the OGC letter for computing the Postal Service’s unused rate authority under the CPI cap could subject users of market-dominant products to approximately $360 million per year in extra postage and fees compared with the computation of the price cap formula that AMA and the Postal Service believed was in effect until recently.2 As interested parties, AMA’s
The price cap provisions of Section 3622(d) are designed to protect mailers and the public by limiting price increases to changes in the rate of inflation over time. Order No. 547 at 10-14.
Maintaining the integrity of this structure requires that the price cap reflect periods of deflation as well as inflation. Recognizing increases in the CPI, while disregarding the “additional unused rate authority” accrued under Rule 3010.26(c)(2) whenever its value is negative, would allow the Postal Service to ratchet up its prices over time faster than inflation by refraining from rate adjustments following intervals of deflation.
The resulting distortion in price levels would be large. The difference between unused rate authority of 1.447 percent and unused authority of 0.873 percent, or 0.604 percent, is approximately $360 million per year. Moreover, postal price levels inflated by the use of an excessive rate adjustment factor would become the base rates for future price cap adjustments; hence, the original overcharge would recur in perpetuity (and would be inflated to reflect future changes in the CPI).
Moreover, the divergence between postal rates and the CPI would tend to widen over time. Recurring periods of deflation are not unlikely in the current economies of the United States and the world.5 If the economy alternates between periods of inflation and deflation that leave the CPI roughly flat, selective timing of CPI-based price adjustments could result in postal price increases substantially outpacing inflation over time.
Allowing the Postal Service to exploit the “unused rate authority for the 12 months represented by the annual limitation” (Rule 3010.26(c)(1)), while ignoring the negative “additional unused rate authority” accrued during earlier periods (i.e., the “additional unused rate authority” established under Rule 3010.26(c)(2)), would also violate 39 U.S.C. § 3622(d)(2)(C)(iii)(III), a provision of the PAEA included by Congress to prevent the Postal Service from gaming the price cap through selective application of unused rate authority from prior periods. The provision establishes a first-in-first-out rule: the Postal Service must “use the unused rate adjustment authority from the earliest year such authority first occurred and then each following year.” Id., (emphasis added). The approach embraced in the October 12 letter-ruling of the OGC turns this rule of priority on its head—allowing the Postal Service to exploit its unused rate adjustment authority from the most recent 12-month period first, while leaving implementation of negative unused rate adjustment authority from earlier periods for last—or, more likely, never.
No reviewing court is likely to find this nonsensical outcome consistent with the plain language of 39 U.S.C. § 3622(d)(2)(C)(iii)(III) or the policies of Section 3622(d). Having negative “unused rate adjustment authority” amounts to maintaining rates in excess of the CPI cap. The OGC’s interpretation of the rules would allow the Postal Service to maintain—and increase further—rates in excess of the CPI cap indefinitely.C.
Conclusion
The method of calculating the price cap limitation for the next notice of market-dominant rate adjustment that comports best with the language and structure of the Commission’s rules, and the policies underlying 39 U.S.C. § 3622(d) and the PAEA generally, is to add the interim unused rate authority to the annual price cap limitation, following the calculation method prescribed in 39 C.F.R. § 3010.26. Accordingly, the Commission should clarify that the Postal Service should use the method of calculating the price cap described in these comments—the same method that the Postal Service used in its July 6, 2010 Request in this docket.
Dead Tree Edition: Mailers Alliance Fights ‘Nonsensical’ Price-Cap Ruling
PRC Ruling A Victory For NALC
Filed under: NALC, postal, postal news, PRC, press releases, usps
Commission backs NALC on definition of exigent circumstances,faults USPS case
PRC rejects exigent rate increase,
punts financial crisis to Congress
Noting that the U.S. Postal Service and its employees had successfully adapted to the adverse effects of the Great Recession—cutting costs enough to more than offset the loss in mail revenue due to the recession—the Postal Regulatory Commission on Sept. 30 rejected the Service’s request for a 5.6 percent “exigent” rate increase.
The PRC did not dispute that the severity of the recession constituted “extraordinary or exceptional” circumstances, but it concluded that the Postal Service had failed to demonstrate that its recent financial losses were “due to” the Great Recession. Rather, the Commission argued —ss the NALC has for the past two years—that recent large financial losses are the direct result of the congressional mandate to massively pre-fund retiree health benefits.
The USPS filed for the emergency increase in July.
“Congress and the Obama administration should sit up and listen to what the PRC is saying,” National Association of Letter Carriers President Fredric V. Rolando said. “The time for delay is over. We must adopt Congressman Stephen Lynch’s bill [H.R. 5746] and repeal the pre-funding provisions of the law as soon as possible.”
The Lynch bill would allow the USPS to pre-fund its future retiree health benefit costs with the massive postal surplus in the Civil Service Retirement System, calculated by independent experts for both the PRC and the USPS Office of Inspector General.
The NALC called on Congress to adopt Rep. Lynch’s legislation during the so-called “lame duck” session of Congress after the mid-term elections, which would lay the groundwork for repeal of the annual pre-funding payments now currently in the law in the early days of the next Congress.
“Contrary to the irresponsible rhetoric of hyper-partisan leaders in the Republican party, the Lynch bill does not involve any taxpayer money and cannot honestly be called a ‘taxpayer bailout,’” Rolando added. “We want to use our own money—excess pension funds amassed over decades as a result of employee and employer contributions to the CSRS—to pre-fund our future retiree health benefits.”
Ruling a victory for NALC
“The Commission finds that the Postal Service has shown the recent recession to be an exigent circumstance but it has failed both to quantify the impact of the recession on its finances and to show how its rate request relates to the resulting loss of mail volume,” said PRC Chair Ruth Goldway. “Therefore, we unanimously deny its exigent rate request.”
Although NALC did not take a formal position for or against the exigent rate case, it did intervene to ensure the proper implementation of the exigent rate case provision of the law. In so doing, we argued that the events of recent years clearly complied with the definition of “extraordinary or exceptional” circumstances set out in the law.
The union also fought a motion by the Affordable Mail Alliance (AMA), a coalition of mailers, to limit the definition of exigent circumstances to those involving terrorist attacks and similar disasters.
“We are gratified that the whole Commission endorsed our view and rejected that of the self-selected group of mailers that formed the AMA,” President Rolando said.
In July, the Postal Service had asked for the PRC’s permission, under the terms of the 2006 Postal Accountability and Enhancement Act, to raise postage and parcel rates to offset revenue shortfalls that it said were brought on by the “extraordinary or exceptional” mail volume declines resulting from the Great Recession. The Service had argued that without such an increase, it would be unable to make its scheduled pre-funding payments into the Postal Service Retiree Health Benefit Fund as mandated by the PAEA.
For the next three months, the Commission heard testimony on the subject from a variety of sources and reviewed hundreds of comments from the public. Ultimately, the PRC concluded in its findings “that the recent recession and its impact on postal volumes” indeed qualified as “an ‘extraordinary or exceptional’ circumstance” as defined by the PAEA.
“The recent recession [was] unique in kind and severity in post-war America,” the Commission said. “The credit crisis disproportionately damaged the very economic sectors on which demand for postal services depends most—real estate, banking, mortgage lending, credit card lending, insurance and advertising.”
However, the Commission determined that the Service would have had serious money problems even if the recession had never happened, thanks to what it called the “overly ambitious requirement for the Postal Service to pre-fund its future retiree health benefit premiums” mandated by the PAEA.
“The Commission’s ruling confirms what we have been saying for more than a year now,” President Rolando said, “that the key to the Postal Service’s financial future lies in relieving the onerous requirement to fully fund its retiree health benefit fund within a 10-year time frame by paying $5.5 billion a year—a requirement foisted upon no other corporation or government agency in America.” The account already contains more than $37 billion—enough to handle the needs of current and future retirees for decades, he added.
The Postal Service “has been unable to fund this obligation from operations, and has instead used up all of its retained earnings and drawn down from its $15 billion borrowing authority,” the Commission’s report noted. “Even with the requested increase, the Postal Service would be unable to meet this annual obligation either in 2011, or in succeeding years.”
The report wasn’t all gloom and doom, however. Indeed, the Commission recognized that the USPS had slashed expenses by $6 billion last year, and that Postal Service cost-cutting has stayed ahead of mail volume declines over the last 12 months.
“The Postal Service is making up lost ground, reducing hours far in excess of the declines,” the report said. “This offers a positive outlook for the future.” The Commission also sounded another upbeat note—that as the effects of the recession are fading, mail volume appears to be rebounding.
“We continue to press Congress to pass H.R. 5746, which calls for refunding the decades of Postal Service overpayment into the Civil Service Retirement System—worth between $50 billion and $75 billion—and transfer the resulting surplus into the Postal Service Retiree Health Benefit Fund to offset the PAEA’s pre-funding requirement,” President Rolando said. “We remain hopeful that our friends in both the House and Senate will draw upon the PRC’s findings and use them to get this law passed in Congress’ ‘lame duck’ session before the end of the year.”
Statement of Postmaster General John Potter on PRC Ruling
Filed under: postal, postal news, PRC, press releases, usps
Fully Paying Retiree Health Benefit Mandate
We are disappointed to learn that the Postal Regulatory Commission (PRC) has denied our price filing. But we are encouraged by their acknowledgment and understanding of the larger financial risk we face through the mandated prefunding of Retiree Health Benefits.
Clearly, the Postal Service is a viable business. Maintaining that status requires elimination of several legislatively-imposed constraints that hamper our ability to operate efficiently and profitably.
Specifically: 1) enable us to alter frequency of delivery consistent with use of the mail; 2) allow us to close unprofitable post offices; 3) restructure our obligation under a 2006 law to prefund retiree health benefits, an obligation not applicable to any other private or government entity; 4) permit us to create and offer products and services beyond mail; 5) assure that arbitrators consider the financial health of the Postal Service when agreement cannot be reached with our labor unions; and 6) resolve overfunding of our pension systems. Legislation has been introduced in Congress to address these issues.
We will need to take a much closer look at the ruling from the PRC in order to make an informed decision about what options we have and what may be the best course of action for our customers, our employees, our stakeholders and the American public.
The Postal Service ends the current fiscal year with approximately $2 billion cash and available credit, meeting all our end-of-year financial obligations, including a $5.5 billion payment to the Retiree Health Benefit Fund as required by law.
As we have stated repeatedly throughout the year, the Postal Service sought a deferral of this $5.5 billion payment to minimize the risk of defaulting on our financial obligations in Fiscal Year 2011. Unfortunately, no legislative action has been taken at this time.
The financial risk remains. We will carefully manage every dollar we spend in the upcoming fiscal year. Our current forecast shows that we will not have sufficient cash to make the $5.5 billion payment due on Sept. 30, 2011, and any major disruption, whether in volume loss or unforeseen circumstances, could cause us to default on financial obligations earlier in FY11.
In the midst of financial and regulatory challenges, the Postal Service achieved record productivity gains in 2010 and a reduction of over 100,000 career employees and cost savings of over $10 billion during the last three years.
As always, service to our customers remains our number one priority. No financial challenge or uncertainty will change that. We will continue to work with Congress and our stakeholders to implement necessary changes to ensure a viable Postal Service for decades to come.
John E. Potter
Postmaster General of the United States
CEO of the U.S. Postal Service
Breaking News: Postal Regulatory Commission Denies USPS Rate Increase Request
The Postal Regulatory Commission announced its decision rejecting the requested price hike at a news conference Thursday.
“After careful consideration, the Commission agreed with the Postal Service that the recent severe recession, and the decline in mail volume experienced during the recession, do qualify as an extraordinary or exceptional circumstance under the law. However, the Commission finds that the requested exigent rate adjustments are not due to the recent recession, or its impact on mail volume. Rather, they represent an attempt to address long-term structural problems not caused by the recent recession. The Commission finds, therefore, that the Postal Service has failed to meet its burden under the law and the Commission is unanimous in denying its request for an exigent rate increase..”
The new rates would have taken effect next Jan. 2.
Text of the Postal Regulatory Commission’s press release:
Washington, DC – The Postal Regulatory Commission today issued Order No. 547 in Docket
R2010-4 denying a Postal Service request for an average 5.6 percent rate increase. The Commission
found that the Postal Service failed to justiff rate increases in excess of its statutory CPI price cap.
“The Commission finds that the Postal Service has shown the recent recession to be an exigent
circumstance but it has failed both to quantifo the impact of the recession on its finances and to show
how its rate request relates to the resulting loss of mailvolume; therefore, we unanimously deny its
exigent rate request,” said Chairman Ruth Y. Goldway.
The law requires the Postal Service to demonstrate that any exigent rate adjustments are due to the
identified exceptional circumstances. This prevents a bona fide extraordinary or exceptional
circumstance from being used as a general rate increase mechanism that would circumvent the price
cap system.
The Postal Service’s recent volume losses and multi-billion dollar shortfalls are recognized. However,
Commission analysis confirms that the Postal Service’s cash flow problem is not a result of the
recession and would have occurred whether or not the recession took place. lt is the result of other,
unrelated structural problems and the proposed exigent rate adjustments would neither solve nor
delay those problems.
The Postal Service may be unable to continue to meet a statutory 1O-year payment schedule -
averaging roughly $5.5 billion per year – to create a fund to pay future retiree health benefit
premiums. lt has been unable to fund this obligation from operations, and has instead used up all of
its retained earnings and drawn down from its $15 billion borrowing authority. Even with the
requested increase, the Postal Service would be unable to meet this annual obligation either in 2011,
or in succeeding years.
The Postal Service achieved over $6 billion in cost reductions in 2009. While volume declines
outstripped cost reductions during the actual recession, Postal Service cost containment programs
are producing results and work hours have declined faster than volumes in 2010.
Goldway also said that the USPS could implement a 1.6-2% increase under the normal price cap process.
Statement of PRC Chairman Ruth Goldway
PRC Releases Tentative Schedule To Hear USPS Request For Rate Hike
“The June 16, 2010 conference has provided the Commission with a number of potentially useful suggestions and comments. One of the suggestions was that the Commission include a tentative schedule in the Commission’s initial order.”
The following schedule responds to that suggestion.
- July 6, 2010 Exigent Request filed.
- July 19, 2010 First Technical Conference (topics to be determined), to start at 2:00 p.m.
- July 23, 2010 Second Technical Conference (if needed).
- July 27, 2010 Third Technical Conference (if needed).
- August 5, 2010 Deadline for filing suggested questions to be asked of the Postal Service during the public hearing. 39 CFR 3010.65(c).
- August 10-12, 2010 Public Hearings.
- August 17, 2010 Deadline for filing initial comments.39 CFR 3010.65(f).
- September 2, 2010 Deadline for filing reply comments.39 CFR 3010.65(g).
- October 4, 2010 Deadline for Commission determination.39 CFR 3010.66.
see full press release: http://prc.gov/Docs/68/68812/Order485.pdf
Affordable Mail Alliance Forms to Fight Major Postal Service Rate Hikes Announced Today
Filed under: postage rates, postal, press releases, rate increase, usps
New coalition of mail customers call on Postal Regulatory Commission to reject rate increases
Washington, DC – The Affordable Mail Alliance, an unprecedented coalition of Postal customers, is today calling on the Postal Regulatory Commission to reject the United States Postal Service’s new proposal to increase postal rates by ten times the rate permissible by law. The new coalition includes charities, large and small businesses, American household names and the customers who use the Post Office every day – customers that will suffer if USPS successfully raises rates again.
“This proposed rate increase amounts to another tax imposed on Americans at a time when the economy can least afford it,” said Tony Conway, Executive Director of the Alliance of Nonprofit Mailers and Spokesperson for the Affordable Mail Alliance. “Consumers everywhere will pay more for the letters and packages they need to send; struggling businesses – large and small – will suffer and even more jobs will be lost.”
The Postal Service claims that a rate increase is essential to maintaining its solvency. However, USPS has done little to improve its business model. For example, the average USPS employee is paid substantially more than comparable private sector jobs. In 2009, USPS volume went down 13%, but labor costs only went down 1%. Because of work force issues, many USPS employees are under-used or sit idly, forcing consumers to subsidize them.
This rate increase will decrease mail volume, making the USPS’ economic situation even worse through declining number of customers. And that, in turn, will be multiplied into job losses to publishers, printers, paper manufacturers, marketers – jobs that can hardly afford to be lost in this economy.
While the USPS retained consulting companies to create a plan to tackle the crisis, little has been done to implement the cost saving recommendations. For example, facility consolidation is moving at a glacial pace.
“The first rule of business is if you’re in the hole, stop digging,” said Conway. “Increasing rates won’t put the Postal Service back on track – it will just drive more customers away, making their situation even worse. USPS needs to stop avoiding the difficult decisions and stop taking out their problems on the customers they desperately need.”
“Rather than gouging its customers with ten times the rate permissible by law, USPS should be eliminating its costs; inflation in postal costs was over 6% in 2009,” said Jerry Cerasale, Senior Vice President, Government Affairs and Spokesperson for the Affordable Mail Alliance. “They should be making the hard business decisions and not raising rates.”
The Postal Service is asking the five-person Postal Regulatory Commission to waive a rule requiring that postal rate increases stay in line with inflation – a law designed to protect Americans from just this kind of rate hike. The Affordable Mail Alliance is calling on Postal Regulatory Commissioners not to exploit a legal loophole to let the USPS make egregious rate hikes.
For more information on the Affordable Mail Alliance, contact Jessica McCreight (202) 464-6959; jmccreight@skdknick.com