PRC Stands Pat on January Postage Increase

Apr 11, 2001 9:30 PM  By

Washington—On April 10, the Postal Rate Commission (PRC) turned down a second request of the U.S. Postal Service Board of Governors (BOG) to reconsider its request to increase rates over and above the Jan. 8 rate hike. “The Postal Service steadfastly determined not to provide new evidence,” says commissioner Ruth Goldway, “so our decision was relatively easy. We continued with a decision we were initially comfortable with based on the same evidence we had initially.”

Among postal watchdogs contacted, Neal Denton, executive director for the Washington-based Alliance of Nonprofit Mailers, says that while the PRC decision is “no surprise at all, it’s good news and very reasonable.” As of press time, the BOG hadn’t yet prepared a comment.

As for what happens next, the BOG could take the PRC to appeals court to challenge the latter’s right to approve USPS revenue requirements—the overall capital the USPS seeks in rate cases—and particularly its contingency requests.

“The Postal Service believes that its revenue requirement and contingency needs shouldn’t be considered by the PRC,” Denton says. “But that’s ludicrous, because the USPS could ask for something like $10 billion in contingency and the PRC wouldn’t be able to question it.”

The BOG might also vote unilaterally to override the PRC and raise some or all rates beyond the levels of the Jan. 8 increase. Sources say that the second-ounce rate in first class is most likely to get hit if the BOG goes this route.

“I don’t think the BOG would raise all rates, but they could raise the first class second-ounce rate with some scattered increases in other classes,” Denton says. “But in a difficult economic downturn, this is the exact wrong time to raise rates.” The USPS has been threatening to launch another massive rate case this summer, which Denton and other mailer representatives have been fighting against.