PRC Suggests Postal Rate Case Revamp

Washington–Postal Rate Commission (PRC) vice chairman George Omas is advising that both the U.S. Postal Service and mailers rethink the postal rate case that the USPS announced on Sept. 11. In an Oct. 25 prehearing conference for the rate case, Omas suggested that “participants concerned with the justification for the request currently before the Commission consider the potential for new information that might justify higher rates.” Omas also advised “that the Postal Service consider steps it could take to ease the impact of large increases and minimize disruption.”

Omas said that the USPS and mailers should consider a settlement to the rate case, because “recent events make it appropriate to think about alternative ways for us to do our jobs. None of us want to be here in May arguing about this case, knowing that the Postal Service is at risk and is preparing to file an additional request to make up for losses incurred while this docket was going forward. I urge all participants to recognize that extraordinary times warrant extraordinary acts.”

Omas said he was appointing USPS chief counsel, ratemaking, Dan Foucheaux to be settlement coordinator, asking Foucheaux to give rate case participants through the weekend to consider his suggestion. Although he asked Foucheaux to report to the PRC on Nov. 2 whether a settlement would be possible and what steps the PRC could take to make it possible, the PRC plans to hold another conference with rate case participants on Oct. 30. At that time, the agency may have enough feedback to help foster a decision on the rate case’s format going forward.

Omas went on to suggest that rate case participants consider whether phased rates and expected implementation dates would allow mailers and the USPS “to focus on more important problems in the coming months. If the Postal Service is not financially sound after this crisis is over, it will not be the fault of the statutory system for changing rates. Any fault will lie with those people who fail to recognize that innovative action was both possible and necessary.” (President Bush authorized $175 million in emergency funds to the USPS on Oct. 23. And Postmaster General Jack Potter plans to request additional funding from Congress.)

“At a time when both the USPS and postal customers should be working together to protect and enhance the value of the mail, a protracted legal battle would be unseemly,” says Neal Denton, executive director of the Washington-based Alliance of Nonprofit Mailers.

Mailers and the USPS, he adds, need to be working together on Capitol Hill to ensure Congressional action to address the necessary funding required to repair and replace lost facilities due to the September 11 attacks, improve the security of mail collection and processing, and address dramatic USPS revenue losses due to economic conditions resulting from acts of terrorism. Denton believes that “it’s very likely” mailers will consider Omas’s suggestion “if the USPS doesn’t attempt to overreach.”

As PRC general counsel Steve Sharfman explains, the agency has been discussing “all kinds of options” since the terrorist attacks and anthrax taintings. While mailers already struggling through a sluggish period “were very concerned about the impact of large postage increases, the Postal Service says it doesn’t have time to plan out a strategy for phasing rates in.”

A settlement rate case, which would take less time than the typical 10-month rate case, would only focus on the overall revenue the USPS needs, rather than issues that may come up during a usual rate case. Issues in which mailers think the Postal Service is asking for more money than justified would be “put on hold,” Sharfman says, in favor of phased-in rates that could minimize the impact on mailers’ business while still generating revenue to the USPS. It could also lead to a delay in the implementation date—possibly as late as November 2002, according to the Alliance’s Denton.

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