Expect Rate-Case Decision in July

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The Postal Rate Commission's rate case recommendations have been analyzed and discussed in mail rooms, board rooms and cafeterias, but the question on everyone's mind -- when the rates will go into effect -- still is up in the air.


And a U.S Postal Service spokesman said not to expect an announcement until the board of governors' June 29-30 meeting at the earliest.


Laine Ropson, national postal services manager at Moore Business Communications Service, Vernon Hills, IL, and a member of the Major Mailers Association, which represents large First-Class mailers, said the increase won't affect these mailers' bottom lines very much.


"I think [First-Class] mailers have all been prepared for the fact that there are going to be rate increases," she said.


Most bulk First-Class mailers who may see an increase said it's a fair decision. If accepted by the governors, the recommendation will let these mailers see the average letter rate increase by 1.7 percent vs. the USPS' proposed 3.2 percent. In fact, most of the PRC's recommendations came in below the USPS' proposed rates.


However, most bulk First-Class mailers, who generally send out 1-ounce bills, will see a 3.1 percent increase. And because the PRC recommended decremental rates, over-1-ounce First-Class mail rates will either stay the same or decrease as they get heavier. For example, the PRC proposed adding 22 cents to every ounce over the proposed 1-ounce 33-cent rate. So, a 2-ounce letter will cost 55 cents to mail (which is the current rate), a 3-ounce letter will cost 77 cents (vs. the current 78 cents), and a 4-ounce letter will cost 99 cents (vs. the current $1.01).


Mailers of heavier-weight presorted pieces also received a break as the PRC decided to maintain the 4.6 percent heavy-piece First-Class discount.


"The [PRC] felt this would, in a way, balance [the rates] among the users of First-Class mail," said Steven Sharfman, legal adviser for the PRC.


Sharfman said the PRC is careful to balance the rates in the First-Class subclass because, as a whole, "this class of mail provides the lion's share of revenue to the postal service."


Ropson said the PRC's recommendations are fair.


"Overall, the postal rate commission increased the postal service's proposed discounts so that it really, in essence, maintained or very closely maintained the percentage discounts that are currently available," she said.


Michael F. Cavanagh, executive director of the National Postal Policy Council, Alexandria, VA, whose members include First-Class remittance mailers, agreed.


Other First-Class mailers are more concerned that the PRC approved the Prepaid Reply Mail plan, a service that would let consumers return bills and other material without paying postage.


The proposal, drawn up by the postal service and backed by the governors, would give postage discounts to businesses such as credit-card and utility companies that supply prepaid envelopes to customers. Participating First-Class mailers must pay $1,000 per month to the postal service, which allows them to send printed, addressed, barcoded, postage-paid reply envelopes to their customers. These mailers also receive a 3-cent discounted rate on the return mail and would be responsible for counting the pieces received by customers.


However, earlier this year, several organizations -- including the American Bankers Association, American Financial Services Association and the National Postal Policy Council -- told the governors and the PRC that the plan would create hardships and force many to pursue less expensive electronic billing systems.


"In the end, [Prepaid Reply Mail] is going to end up costing the industry far, far more than what consumers would save," Ropson said, "and that means consumers are going to pay for it through other means, such as higher prices."


Major associations have written to the governors asking them either to reject Prepaid Reply Mail or delay it.


"A few years ago, there was a public automation rate approved by the PRC, but the board never implemented it," Ropson said. "This is basically what we are going for now."
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