USPS Says Recession Cost $2.34B

Nov 23, 2011 8:47 PM  By

In defense of a bid for an exigent rate increase next year, the U.S. Postal Service claims the recession impacted its finances to the tune of $2.34 billion during fiscal years 2008-09, according to a Nov. 21 filing with the Postal Regulatory Commission.

Given the fact that Congress hasn’t agreed to any financial rescue plan for the U.S. Postal Service, the USPS is moving ahead with its exigent rate case proposal.

Postal rates will increase 2.1% on Jan. 22, 2012. If the exigent rate case is approved by the PRC, it is unclear how much the increase would be.

Under the Postal Accountability and Enhancement Act of 2006 (PAEA), postal rate hikes are capped at inflation as measured by the Consumer Price Index (CPI). This would mean rate hikes would be capped at an estimated 0.6%.

Jerry Cerasale, senior vice president of government affairs for the Direct Marketing Association, says the Nov. 21 USPS filing means the exigent rate case continues and the possibility of exigent rate increases remains alive. “So uncertainty of future postage increases remains,” he says. “That uncertainty diminishes marketers’ plans for mail volume.”

An exigent rate adjustment must meet the following three provisions: due to either extraordinary or exceptional circumstances; reasonable, equitable, and necessary under best practices of honest, efficient, and economical management; and necessary to maintain and continue the development of postal services of the kind and quality adapted to the needs of the U.S.

A precipitous drop in mail volume, massive annual payments for retiree health benefits, and an oversized service network are a few of the key ingredients of the USPS financial mess.