USPS high-density decrease approved, questions of cap on decrease raised

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Commercial and nonprofit mailers of US Postal Service Standard Mail high-density flats, mail pieces delivered to each address on a delivery route, will enjoy new minimum per-piece prices decreases of 0.1 cent. The decreases kick in on July 19. In addition, mailers will see decreases to the pound price element that match the Standard Mail Saturation rate. The Postal Regulatory Commission approved the rate on July 1, potentially setting a new precedent on how to address a rate decrease in a period of deflation.

This was the first time under the Postal Accountability and Enhancement Act of 2006 that a decrease in postal rates was sought, reflecting a steady decline in the consumer price index over the last few months. One commenter on the price adjustment, identified in the decision as the public representative, contended that the price cap does not apply to price decreases. The US Postal Service supported this position in their statements noting “the legislative history of the PAEA indicates that Congress was concerned about capping the extent to which the Postal Service could increase prices, not decrease prices.”

The PRC responded by suggesting a future rate increase could be larger than it otherwise would be if the cap calculation and unused rate adjustment authority remained unset.

“If the Postal Service continues to exercise its pricing flexibility in a similar manner in the future (small increases or decreases in rates), this rounding problem could become more pernicious,” the PRC decision said.

The PRC has approved the rate adjustment, but also maintained that the new rates will be used as the base rates for the next cap calculation for the Standard Mail class.
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