After lying dormant for a couple of years, the multi-industry Affordable Mail Alliance was reorganized on Friday to fend off expected "exigent" (higher than inflation) rate increases for the ailing Postal Service. The group started rallying mailers today to contact members of the USPS Board of Governors, which is rumored to be discussing such rate increases when it meets next week.
The alliance was formed in 2010 when USPS sought to solve its financial problems by sidestepping the inflation-based cap on rate increases for First-Class, Standard, and Periodicals mail. That attempt failed, but this time the Postal Service is in more dire circumstances, perhaps only months from running out of cash.
When the Board of Governors backed down in April from a money-saving plan to curtail Saturday delivery, it asked postal management to examine options for increasing revenue. It specifically mentioned the possibility of exigent increases, especially for supposedly unprofitable classes like Standard flats and Periodicals.
One scenario being discussed among mailers is an exigent increase of 5% to 7% for all market-dominant classes plus an additional 3% for the unprofitable classes. That's on top of the usual inflation-based increase, which could be close to 2% in January.
Annual rate hikes for the market-dominant classes are generally capped by changes in the Consumer Price Index. But the law also has a provision “whereby rates may be adjusted on an expedited basis due to either extraordinary or exceptional circumstances.”
The law, however, does not provide the Postal Regulatory Commission clear guidelines as to what constitutes "extraordinary or exceptional circumstances" justifying a special rate hike.
Mailers have questioned whether exigent rate increases would actually backfire by shaking confidence in USPS and the stability of postage rates, which would accelerate the shift to other media.
In a related matter, the PRC today rejected the Postal Service's proposal to use a one-time "Technology Credit"to justify rate increases, a gambit described in New Postal Incentive Could Backfire for Mailers.
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