PRC recommends 7.6 percent rate increase

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In a surprising decision, the Postal Rate Commission today has recommended rates that are either equal to or below those requested by the U.S. Postal Service, while still providing the agency with sufficient revenue to meet all its needs.

The decision was made by Dan G. Blair, the new chairman of the new Postal Regulatory Commission. The recommendation, which was delivered a week before deadline, came as a unanimous decision.

"In nearly every category of mail, including nonprofits, the Commission approved rate increases equal to or below the postal service's request, while still meeting the Service's revenue requirement," Mr. Blair said.

The decision follows an administrative proceeding involving mailers, employee organizations, consumer representatives and competitors. While the rate increase will impact numerous classes of mail to varying degrees, the average rate increase will be 7.6 percent. The rates proposed by the postal service equate, on average, to an 8.1 percent increase.

The USPS filed May 3 with the PRC for an average 8.5 percent rate increase, explaining it would otherwise lose $5.9 billion in 2008. The PRC found additional income necessary to satisfy the "breakeven" requirement that postal revenues match costs.

The PRC, for example, has recommended a 2 cents rather than 3 cents increase in the price of a First-Class stamp. The PRC adopted USPS proposal for Standard Mail shape-based rates.

The PRC also approved the USPS' "Forever Stamp" proposal specifically designed to ease the public's transition to new single-piece letter rates. Forever Stamps will be sold in reasonably limited quantities for the price of a First-Class one-ounce letter and continue to be worth the price of a First-Class, one-ounce letter even if that price changes.

"This is a prime example of the Postal Regulatory Commission working together with the postal service in the best interests of the citizen mailer," Mr. Blair said.

The USPS governors can either accept the decision and the recommendation, protest it and implement the rates, or protest it and go back to the commission and ask for a second decision. Historically, the board of governors has tended to accept the PRC's decisions, though on occasion they have made small changes to them.

While no final date has been announced regarding the governors' decision, Postmaster General John E. Potter told USPS customers last year that they should prepare for a possible May 6 rate change date.

"The postal service has a minimum of 60 days before they can implement rates" Mr. Blair said. "The earliest will be May."

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