USPS Wants 2% Rate Hike for Market Dominant Products

The U.S. Postal Service today filed a request with the Postal Regulatory Commission (PRC) for a 1.966% rate adjustment based on the Consumer Price Index. This increase applies only to market-dominant products, such as Standard Mail, that is the primary postage class of direct mailers.

USPS has asked that the increase take effect on April 26 and estimates that it will generate an additional $900 million in “contribution”—or net income—on an annualized basis. Should the PRC agree to meet the Postal Service’s timeline, contribution for USPS’s fiscal year 2015, which concludes at the end of September, will be around $400 million.

The CPI case includes a separate pricing structure for Standard Mail run through the Flats Sequencing System. Under the proposal, FSS pricing will no longer exist for carrier route, high density, or high density plus categories. In their place a five-digit carrier route pallet price will be created. Rates for Standard Flats will increase by 2.465%

Prices of Forever stamps will remain at 49 cents in the new rate base. International letters will increase by a nickel to $1.20 and postcards will go up a penny to 35 cents.

Earlier this week, the PRC issued an order for the removal of the exigent surcharge put in place in December 2013, laying out a plan to phase out the 4.3% emergency increase as the Postal Service nears receipt of the $3.2 billion in additional revenue it was meant to provide. The Postal Service had delayed asking for its annual inflationary adjustment pending the outcome its petition to the D.C. Court of Appeals to make the exigent increase permanent. The court’s decision is still forthcoming.

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