PRC OKs Postal Increase; Rates Would Increase 7.7 Percent

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The Postal Rate Commission approved an unusual settlement today that will allow postal rates to increase 7.7 percent as early as June 30.


The increase will generate $4.16 billion in additional revenue for the U.S. Postal Service, the PRC said. Next, the USPS' Board of Governors must vote, and a decision is expected be announced at the board's April 8-9 meeting. The governors are expected to approve the settlement.


If approved, regular Standard Mail rates would increase an average of 7.8 percent; Nonprofit Standard, 6.6 percent; Commercial Enhanced Carrier Route Standard Mail, 6.2 percent; and Nonprofit Enhanced Carrier Route Standard Mail, 6.5 percent. This would be the third round of increases in 18 months, following increases in January and July 2001.


"This decision will allow the postal service an immediate influx of revenue, while holding rate increases to a reasonable percentage for postal customers," said PRC chairman George Omas, adding that the extra money should provide some needed breathing room for the USPS.


This is the first time a rate case has been resolved through settlement. Normally, the numerous conflicting interests engage in complex litigation to determine whether rate increases are justified.


"While we are never pleased when rates increase, we are gratified that the mailing community, the postal service, and the Postal Rate Commission could work together to reach this agreement," H. Robert Wientzen, president/CEO of the Direct Marketing Association, said in a statement. "It is also my hope that this round of increases will buy us time to achieve needed legislative reforms."


The PRC also approved a 3-cent increase on the price of a First-Class stamp, which equates to an 7.7 percent increase; 6.4 percent for Parcel Post; 10.3 percent for periodicals sent outside counties; 13.5 percent for Priority Mail; 9.4 percent for Express Mail; and 9.0 percent for Bound Printed Matter.


All of the rates that were originally proposed by the USPS in September have stayed the same, despite the fact that the average increase is now being called 7.7 percent instead of the original 8.7 percent.


In other news last week, President Bush asked Congress for up to an extra $27.1 billion for the battle against terrorism and to enhance homeland security. The request includes $87 million for the USPS for security measures and the cleaning up of anthrax. Postmaster general John E. Potter told a House subcommittee earlier this month that the $675 million already allocated to the USPS was not enough. He said he will need a total of $1.7 billion over the next two years.


The USPS received $175 million from the White House for postal security soon after the Sept. 11 terrorist attacks and another $500 million as part of the $318 billion defense appropriations bill in January.


Congress won't start working on the package until it returns from a two-week recess in early April.


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