New York—In an exclusive interview with CATALOG AGE on April 12, Deputy Postmaster General John Nolan said that despite the financially strapped U.S. Postal Service’s efforts to find alternatives, there’s only an “outside chance” that the agency will not file for another rate increase this July. On the other hand, he said that the figure that’s been kicked around since the beginning of this year–a 10%-15% increase–isn’t a given either.
“I don’t know for sure if we can hold off filing for another rate case,” he said prior to giving a speech before the Direct Marketing Club of New York. “We are running the numbers right now and expect to have a good idea over the next 30 days,” he added, referring to yesterday’s decision by the Postal Rate Commission (PRC) not to alter the most recent rate case, for which the USPS was seeking an additional increase. “But we disagree with the PRC on that rate case; now it’s up to the Board of Governors [BOG] to decide to overrule their decision or not.”
Nolan added that, as some mailers have been suggesting, the USPS may find a way to tweak the current rates a little–most notably, raising the price of the second ounce for first class–which could eliminate the need for a 2002 rate hike. A July rate case filing, would result in new rates by next summer.
Under the Postal Reorganization Act of 1970, the BOG has the right to overrule the PRC after resubmitting a rate case back to it, provided that all nine presidentially appointed governors agree. But as Nolan pointed out, that’s never happened before.
Currently being considered as replacement for PMG William Henderson, who departs at the end of May, Nolan noted that the USPS’s biggest hurdle over the next couple of years is its borrowing limits. By law, the USPS can’t borrow more than $15 billion in a given year; it also can’t borrow more than $3 billion more than it did in a prior year. “We’re challenging that law in court,” he said.