Sunday’s the Day the Exigent Rate Goes Away

The U.S. Postal Service today issued an official announcement that the 4.3% exigent surcharge in force since January 2014 will be lifted this Sunday.The emergency increase was granted by the Postal Regulatory Commission to recover an estimated $4.6 billion in revenues lost to USPS due to the Great Recession, and the last dollar will be collected this week.

Big mailers had originally expected the surcharge to be removed last August, when the original recovery figure of $2.8 billion would have been hit. But the Postal Service filed a petition with the D.C. Circuit Court of Appeals arguing that the Recession’s effects lasted longer than originally anticipated. The Court asked the PRC to reexamine the books, and PRC agreed with the higher estimate.

The Postal Service’s announcement read like a funeral notice, beginning, “The Postal Service will lose approximately $2 billion in annual revenue resulting from a price reduction mandated by the PRC.” Considering financial burdens of health benefit pre-funding that continue to be shouldered by USPS for lack of postal reform, that sentiment can be understood. The Postmaster General elaborated on the theme.

“Given our precarious financial condition and ongoing business needs, the price reduction required by the PRC exacerbates our losses,” PMG Megan J. Brennan said. “This unfortunate decision heightens the importance of the review of our rate-making system, which our regulator is required to conduct later this year.”

As one might expect, Sunday will be welcomed more merrily by mailers. “Nonprofit mailers have a sense of relief that the long ordeal with the exigent surcharge is about to end. Many plan to use the pricing reduction as an opportunity to grow their mailings and increase contributions,” said Stephen Kearney, executive director of the Alliance of Nonprofit Mailers.

Kearney identified what he saw as a positive for the Postal Service in the development. “In the coming days and weeks,” he suggested, “the Postal Service has the opportunity to employ a successful business strategy of building the business with a general price reduction.”

First Class Mail stamp prices will drop two cents to 47 cents on Sunday, postcards decline by a penny to 34 cents, and international letters go down a nickel to $1.15. A full listing of rollback pricing files for all mail classes can be found here: http://pe.usps.com/.

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