The Postal Regulatory Commission (PRC) has denied the request by the U.S. Postal Service (USPS) to increase postage rates in January 2011 by an amount in excess of the current inflation rate.
In its decision, the PRC ruled that the growing financial losses of the USPS driving the requested rate increase were the result of "long-term structural problems" within the mail agency, rather than the recession.
By law, the Postal Service may not increase prices for postage and other postal services beyond the inflation rate unless it can prove to the PRC that the increase is warranted by "exceptional or extraordinary circumstances." In July the USPS requested such a rate increase, arguing that the recession represented an extraordinary circumstance that had resulted in reduced mail volume. In its ruling, the PRC agreed, but found the requested rate increase would not fix the recession or increase mail volumes.
"A majority of the Commission finds that the recent recession, and the declining mail volume experienced during the recession, do qualify as ns extraordinary or exceptional circumstance," wrote the PRC. "However, the Commission finds that the requested exigent rate adjustments are not designed to respond to the recent recession, or its impact on mail volume. Rather, they represent an attempt to address long-term structural problems not caused by the recent recession."
As a result of the PRC's decision, First-class and other stamp prices will not increase in January 2011.
Adding to the financial woes of the USPS, the PRC also ruled the mail agency had to make its full annual $5.5 billion payment to the postal employee Retiree Health Benefit Fund as required by law.
In response to the ruling, Postmaster General John E. Potter said the USPS would have to "take a much closer look" at the PRC decision before deciding how to proceed.
"As always, service to our customers remains our number one priority," said Postmaster Potter in press release. "We will continue to work with Congress and our stakeholders to implement necessary changes to ensure a viable Postal Service for decades to come."
Also See:
Postal Service Loses $3.5 Billion in Third Quarter of 2010
Only Congress Can Save the Postal Service: GAO
End of Saturday Mail on Horizon
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