USPS Hopes to Push Through Fast Rate Case

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The Direct Marketing Association is signaling that a proposed postal rate increase could take effect as soon as Jan. 16, though the U.S. Postal Service has yet to announce a date. Meanwhile, buoyed by hopes of a rate case settlement, the Postal Rate Commission is aiming for an October finish to the current case.


The DMA has heard that a Jan. 16 implementation is possible if all goes according to plan, Jerry Cerasale, senior vice president of government relations at the DMA, said at last week's Annual Catalog Conference in Orlando, FL.


Talk of such a short rate case is significant because rate cases typically take 18 months from filing to implementation. In April, the postal service filed for the increase, which would raise rates 5.4 percent across the board.


However, several factors still could influence the implementation date, Cerasale said, including the fact that a few groups have raised concerns over settling the current expedited rate case. Those groups include the American Postal Workers Union, the American Bankers Association, the Consumer Advocate of the Postal Rate Commission and Valpak.


Also, the USPS is doing better than postal officials expected and, therefore, may be able to reduce the proposed increase or delay it until later in 2006. With or without postal reform, another rate case likely will be filed next year to take effect in 2007, Cerasale said, and would be in the 4 percent to 5 percent range.


If the current rate case doesn't go through as proposed, that next case would be more than 10 percent, he said.


Nevertheless, the PRC has issued an abbreviated schedule for the current rate case, and the USPS is confident that a settlement is possible because no participants have expressed outright opposition, the PRC said.


The USPS is pursuing ways to reduce the need for cross-examination in an effort to shorten the time needed for the case, the PRC said. The full schedule of the rate case, along with the PRC's comments, is available at prc.gov/docs/44/44263/POIR_No._5.doc.


The postal service has always had a goal of January 2006 to implement the rate increase, USPS spokesman Jim Quirk told DM News. The rates need to increase by then for the postal service to meet its obligation to put $3.1 billion into an escrow account by Sept. 30, 2006, under the Postal Civil Service Retirement System Funding Reform Act of 2003.


Postal supporters in Congress are trying to overturn that obligation under the act, but the White House is opposing those efforts. The USPS has said that without the escrow obligation, the current rate case would be unnecessary.


The USPS must abide by the schedule set by the PRC, Quirk said. The speed with which the current rate case is completed depends upon postal customers cooperating with settlement efforts.


"The only timetable we have is the one set by the PRC," Quirk said. "Until they send over their recommendation to the Board of Governors, the governors can't vote on it."


Also last week, The Hill, a Washington-based newsweekly covering Congress, reported that House Majority Whip Roy Blunt, R-MO, considered postal reform one of several "top priorities" during the summer session. Blunt included reform in a list of legislative priorities that was circulated to Republican aides and lobbyists, The Hill said.
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