Delaying rate case costs USPS $450 million each month, speaker says

WASHINGTON – It costs the U.S. Postal Service $450 million for each month that the rate case is delayed beyond the projected implementation date, said H. Glen Walker, chief financial officer and executive vice president of the USPS.

Mr. Walker made the statement at a presentation Nov. 1 about the agency’s 2007 integrated financial plan made public at the quarterly Mailers’ Technical Advisory Committee meeting at postal headquarters.

While the Board of Governors of the USPS makes the final decision, Postmaster general John E. Potter told USPS business customers earlier this year that the agency must prepare for a possible May 6 rate change date.

Mr. Walker discussed the costs while discussing the fact that there is a potential for more risk and uncertainty in the achievement of the agency’s fiscal year 2007 plan compared to recent years.

As Mr. Walker had discussed at the USPS’ board meting in September, the plan includes cost reduction programs totaling $1.1 billion, including a planned decrease of 40 million work hours from the estimated fiscal year 2006 level. Savings will come from automation improvements and implementation of additional “breakthrough productivity” initiatives.

The postal service’s 2007 fiscal year begins Oct. 1, 2006 and ends Sept. 30, 2007. Besides the rate recommendation from the Postal Rate Commission and its implementation, Mr. Walker said other risks and uncertainties this year include the economy, inflation, aggressive work hour reductions, and the outcome of postal legislation.

“A big uncertainty is how the agency will come out on its labor negotiations,” Mr. Walker said.

In August the agency began contract negotiations with its four largest unions. Current contracts with the National Association of Letter Carriers, AFL-CIO, American Postal Workers Union, AFL-CIO, National Rural Letter Carriers’ Association and National Postal Mail Handlers Union expire at midnight Nov. 20.

This is the first time the agency has separately negotiated new contracts with all these unions at the same time.

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