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USPS Rate Requests Fail a Second Time

Not satisfied with alterations made to a rate change request submitted earlier this month, the Postal Regulatory Commission has once again returned the request to the U.S. Postal Service for further accounting.

Back on March 6, PRC sent back proposed adjustments to rates on Standard Mail, Periodicals, and Package Services to USPS, citing lack of compliance with Title 39 regulations on several fronts. Among items in question were unequal discounts between nonprofit and commercial mailers, Standard Mail work-sharing discounts exceeding 100% of avoided costs, and improperly calculated adjustments made in new Flats Sequencing System (FSS) price cells.

The PRC contended in yesterday’s order that USPS failed to explain why it used non-FSS volumes as a proxy for determining adjustments for certain FSS classes. The Postal Service was allowed to do this, but only if it provided an adequate explanation of why the use of available Q4 data on FSS volume was not possible, which it did not, according to the PRC.

In addition, the PRC said it identified several inconsistencies in the work papers the Postal Service presented to justify the rate changes.

Aside from finding the lesser discount for nonprofits unlawful, the PRC’s order demanded that USPS provide the calculations it used to set exigent surcharges for FSS categories and to submit amendments that show Standard Mail price adjustments are compliant with Title 39.

A statement issued by the American Catalog Mailers Association (ACMA) at the time of the first submission said that this was the Postal Service’s most poorly prepared rate request in memory, containing mixed pricing signals and shifts of workload that could create inefficiencies for mailers. ACMA questioned whether the Postal Service could make appropriate changes in time for new rates to be implemented as scheduled on April 26. Now the PRC’s second rejection puts the planned effective date further in jeopardy.

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