PRC gets rate case settlement agreement; eyes March decision

Jan 18, 2002 10:30 PM  By

(Direct Newsline)The Postal Rate Commission is expected to decide by mid-March whether it will accept the rate case settlement agreement negotiated between the U.S. Postal Service and mailers. Last Thursday, the USPS formally petitioned the PRC to consider the agreement, which was signed by 50 rate case participants. Signatories include such industry groups as the Direct Marketing Association; Association for Postal Commerce, Alliance of Nonprofit Mailers; Mail Order Association of America. Major Mailers Association, Continuity Shippers Association and Parcel Shippers Association, in addition to the PRC’s Office of Consumer Advocate, United Parcel Service and the Newspaper Association of America. In that agreement the USPS agreed to delay its plans to increase its rates until after June 30. Although the USPS plans to raise rates by an average of 8.7% to generate some $1.6 billion in new revenue, Standard (advertising) Mail rates would go up 7.3%; periodicals rates would increase by 10%; Priority Mail rates would jump by 13.5% and Express Mail rates would increase by 8.2%. The price of a first class stamp would go to 37 cents from 34 cents. In another part of the agreement, the USPS agreed not to seek another rate increase until the start of its new fiscal year in September. The American Postal Workers Union (APWU) opposes the agreement saying it would give unfair first class mail discounts to high-volume mailers at the expense of other mail users. The union was ordered to explain why it opposes those discounts – 3.40 cents instead of 3.45 cents for business reply mail, and 2.94 cents and 2.78 cents each for first class letters presorted by 3-digit and 5-digit Zip code, respectively — by Jan. 30. In a previous statement opposing the settlement the union accused the USPS of “buying off major mailers” with first class mail discounts of up to 6.5 cents while forcing the public to pay 37 cents for a first class letter. Rejection of the union’s arguments against the settlement would clear the way for the PRC to file a recommendations on the proposed rate increase with the postal service’s Board of Governors by mid-to-late March for consideration at their April meeting in Washington. At the same time it would mark the first time that a major rate case was resolved by mutual agreement between the USPS and mailers in five months instead of 10 months as required by law.