Rate Case Decision Expected Next Week

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The U.S. Postal Service said it likely will scrap plans for a rate case settlement this week if there is much opposition from industry groups.

"We'll have to assess whatever responses we get by [Dec. 28] as to whether people are signing onto the settlement agreement or not," said Dan Foucheaux, chief counsel for the USPS and settlement coordinator. "If parties are reluctant, or can't let us know by that date, I'm afraid we'll have to make a decision to go ahead without a settlement."

Under the settlement proposal, rates would rise 8.7 percent overall effective June 2. Otherwise, the next increase likely would be in September or October but would be much larger, postal officials warn.

Participants in the discussions include the Direct Marketing Association, ADVO Inc., McGraw-Hill, Postcom and the Alliance of Nonprofit Mailers. Though most groups in the talks have agreed to an earlier date for the next rate increase, some with a fiscal year ending June 30 want the increase to take effect later in the summer. Those businesses argue that a June 2 increase would come when their budgets have no room for added costs.

Mailers also want a commitment that another rate case won't follow quickly. Currently, the USPS would be free to file for another rate increase the day after the implementation of the settlement agreement.

Some have said a settlement is impossible without changes in the proposed rate structure. American Business Media and McGraw-Hill, for example, oppose the USPS' plan to eliminate the flat editorial pound rate for periodicals.

"The key is who is going to oppose it, and how many proceedings are we going to need to accommodate those people who will oppose it," Foucheaux said. "It just all depends on whether or not the parties are willing to sign on our terms."

The proposal goes to the Postal Rate Commission if the postal service decides to proceed with it.

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