The U.S. Postal Service Governors have decided that the current Standard Mail Flat prices will remain in effect.
In a vote during the Board of Governors’ closed meeting on June 19, the Governors decided not to implement a temporary change to Standard Mail Regular and Nonprofit Flat prices recommended in the latest Postal Regulatory Commission’s decision on reconsideration. On March 19, the Governors asked the PRC to reconsider some of the prices originally recommended on Feb. 26 and implemented on May 14.
“We appreciate the [PRC’s] thorough review of this matter and its creative recommendations to implement temporary rate reductions for mailers of Standard mail flats,” James C. Miller, chairman of the USPS Board of Governors, wrote in the final decision. “We are concerned, however, that approving those recommendations would not be legally sound or practically prudent.”
The PRC’s “Second Opinion and Recommended Decision on Reconsideration,” issued May 25, established a transitional temporary rate reduction of 3 cents for all Standard Mail Regular flats and 2 cents for Standard Regular nonprofit flats. In its reconsideration proposal, the USPS had asked for a 3-cent reduction in piece rates for Standard Regular flats offset by a 0.7 cent increase in piece rates for most Standard Mail Regular letters, the USPS reasoned that this was appropriate because under the breakeven requirement of the Postal Reorganization Act, lower rates for similar categories must be offset by higher rates for others.
“The approach suggested by the [PRC] would result in breakeven within the test year, but only by proposing to modify effective dates for selected rate changes outside of the test year,” Mr. Miller said. “This is the first time such a step has been recommended in an omnibus rate case and even the [PRC] recognized that ‘the Governors may determine that it is necessary to reject this recommendation.'”
Mr. Miller continued: “We are troubled by the potential consequences of this approach in terms of disparate treatment for mailers and by the [PRC’s] acknowledged lack of authority to circumvent the Board’s control over the timing of rate changes.”
Mr. Miller wrote that the PRC estimated that the cost to the USPS of its recommendation would be $100 million.
“That amount of money is substantial,” Mr. Miller wrote, “and its financial effect cannot be discounted … . [D]espite our agreement that mitigation of rate shock is indeed a worthwhile objective, we are not inclined to approve the means recommended by the [PRC] to achieve this end.”
Mr. Miller also wrote that it would have been difficult to implement the PRC’s recommendation.
“Given the amount of lead time necessary to develop the software changes required to support these rate changes, the actual number of weeks in which the reduced rates might be in effect would be minimal,” he wrote. “Such a short time frame of relief doing the low mailing season for a catalog industry that makes plans months in advance is not likely to mitigate rare shock significantly.”
At the meeting, the Governors also approved a PRC recommendation on the price structure for Premium Stamped Stationery and Premium Stamped Cards. The stationery, sold in pads consisting of 12 sheets of quality stock paper and imprinted with postage, can be priced between three and four times the First-Class Mail Letters first-ounce single-piece rate, currently 41 cents, times the number of sheets.
The total price for the cards, sold in packets of 10 to 20 and imprinted with postage and matching designs, can be priced between two and three times the First-Class Mail Cards Regular single-piece rate, currently 26 cents, times the number of cards.
