*PRC Comes Through for Direct Mailers

After a 10-month statutory review period that included 156 pieces of testimony, 449 library references and support documents and thousands of pages of transcripts from 111 expert witnesses and 84 parties, the Postal Rate Commission filed its recommended decision on the R-97-1 rate case on May 11.

In a press conference in Washington, PRC chairman Ed Gleiman announced that it had slashed by nearly one-third the $2.4 billion increase sought by the USPS in its July 1997 proposal for higher postal rates. The cut largely reflects the benefits of lower-than-expected inflation since the postal service filed its request. With a year-to-date surplus of more than $1.3 billion, the PRC said, the USPS seriously misestimated its need for a rate hike and is unlikely to incur the $1.4 billion loss it predicted for FY 1998.

Specifically, to reflect the shared benefits of the lower-than-projected inflation and the 1997 revenue surplus, the PRC recommended a lower USPS-proposed rate increase for Standard-A commercial mail. The USPS’ proposed rate was a 1.8 percent increase — the PRC recommended a 1.2 percent increase. In addition, the proposed USPS increase for Standard-A commercial enhanced carrier-route was 3 percent, and the PRC recommended a 2.2 percent increase.

The PRC accepted the USPS’ proposal to institute new worksharing discounts and to deepen the existing ones based largely on new analyses of transportation costs.

Gleiman, who said this rate case “was the most technically complex case ever filed,” also said, “the commission sees no reason why any of the rate changes should be put into effect before January 1999, at the earliest.” This is especially so given the strength of the economy and the upswing in mail volume that traditionally begins in late summer, he said.

The PRC, however, has no jurisdiction over when rates are implemented. That decision will be made by the USPS’ Board of Governors and the successor to outgoing Postmaster General Marvin Runyon.

Sam Winters, chairman of the Board of Governors, commended “Gleiman and the other commissioners for completing the commission’s statuary obligations within their allotted 10 months. The governors and I look forward to reviewing the recommendation and then choosing an appropriate course of action.”

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