Postal Board Asks for 4.3% Exigent Increase

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Postal Board Chairman Barnett
Postal Board Chairman Barnett

In a letter to mailers today, Postal Board of Governors Chairman Mickey Barnett announced that the U.S. Postal Service will file a request with the Postal Regulatory Commission (PRC) for a 4.3% increase in Standard Mail. If approved, the exigent increase will come in addition to the standard Consumer Price Index hike of 1.6%, totaling a 5.9% rise in rates for mailers.

“We believe seeking a 4.3 percent adjustment above the CPI-U increase for market-dominant products is a moderate course of action given the financial challenges we face,” Barnett wrote. “Despite an uncertain legislative process, we are hopeful that legislation can be enacted this year. Nevertheless, without the legal authority to close the budget gap, the price adjustments announced today are necessary.”

Once it receives the request, the PRC has 90 days to review whether the request meets the criteria of exceptional need for exceeding the cap as set down in the Postal Accountability and Enhancement Act of 2006. In 2010 the PRC shot down a 5.6% exigent increase requested by the Postal Service, and PRC Chairman Ruth Goldway appeared to be anti-exigency in testimony she gave before the Senate Homeland Security and Governmental Affairs committee last week.

“We believe that the price cap regime has created the stability and transparency and accountability that's given mailers some assurance in a time of real transition and have given the nation's users some sense of trust in the mail, which is very important to [the USPS's] brand and their future,” Goldway testified.

Her sentiments were matched by committee chairman and coauthor of the Senate Postal Reform Act, Tom Carper (D-DE), in a statement released today. “Today's decision by the Board of Governors reiterates the serious nature of the Postal Service's financial condition and further underscores the need for Congress to move quickly to pass comprehensive postal reform legislation,” Carper said.

The Direct Marketing Association was more forceful in its opposition, issuing a statement saying it was it was “extremely disappointed” by the action of the Postal board. “DMA is seriously concerned that this action will significantly harm the Postal Service and the mailing industry in the very near future,” the statement read. “Rather than lowering prices at times of weak sales—a common practice in businesses across the United States—the Board of Governors has misguidedly decided that raising prices will help cure its lack of sales. On the contrary, the problem of decreased mail volume will only worsen as mailers cease to rely upon the United States Mail to reach consumers.”

DMA and ACMA Statements on Exigency Filing

Excerpts from trade associations' official reactions to the Postal Board's exigency filing.

Click for the full scoop.

Marketers will be affected immediately by the board's request, whether or not the increase ultimately goes through, noted the head of the American Catalog Mailers Association (ACMA). “It causes marketers, currently planning next year's budgets, to react defensively and take all actions to reduce mail volume and focus on alternatives,” says Hamilton Davison, the group's President and Executive Director. “ACMA will fight this exigency request through all means possible, alone, or in collaboration with any other mailer group aligned with us.”

While Barnett made clear in his letter that the board, too, preferred legislative reform, he added that the 4.3% hike was justified to add $2 billion in revenues toward closing a $20 billion budget gap at USPS. “We believe this prudent price adjustment request is reasonable, equitable, and necessary, and it is far less than the double-digit increase that is authorized under the law to help the Postal Service to recover from the extraordinary and exceptional circumstances that have confronted us,” he wrote.

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