Friday, October 22, 2010

Rate-Case Appeal Is a No-Lose Venture for USPS

The U.S. Postal Service’s decision, announced today, to appeal the Postal Regulatory Commission's exigency-rate ruling could backfire, and yet in a way the Postal Service can’t lose.

The appeal could backfire if the appeals court decides that hardship to USPS caused by an economic recession is not grounds for breaching the inflation-based price cap on most postal rates. The PRC said the recent recession did in fact justify emergency rate increases but that postal officials failed to tie their request to the recession.

Regardless of what happens in the Court of Appeals for the District of Columbia, the appeal is likely to be a winner in the court that really matters for the Postal Service – Congress. Win, lose, or draw, there’s not enough money at stake in the exigency case (“only” $2.3 billion) to fix the Postal Service’s finances.

The only potential solutions big enough to stanch the bleeding seem to be reforming retirement-benefits payments that shift money from USPS to the federal government, reducing days of delivery, or some kind of radical downsizing. Congress is the key, or rather the roadblock, to all of those.

To get Congress to remove any of those roadblocks, postal executives need to show Congress that they have done everything possible within current law to balance the books. They can’t afford to be second-guessed regarding why they didn’t appeal the PRC’s Sept. 30 ruling, even if the court’s ruling closes a door (a revised exigency rate request) that the PRC left open.

The Postal Service's announcement did not provide much detail regarding the basis for its appeal, other than that it "disagrees with the PRC’s interpretation of the statutory language and believes that the PRC applied an incorrect standard in evaluating the request for anexigent price increase."

It added, "The Postal Service believes we need clarity regarding the exigent price increase rules under current law should the Postal Service find itself in a similar situation in the future."

The appeal will have no impact on USPS’s ability to seek an inflation-based increase, which could happen any day.

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M. Jamison said...

This would seem to be less a matter of the Postal Service doing everything it can than an attempt to undermine the authority and role of the PRC.
The BOG and the PMG are convinced that their approach to solving the Postal Service's problems is not only the right one but the only one.
If the USPS were a corporation the stockholders could judge if the approach was correct and either stay or flee. Unfortunately the Postal Service has no such ultimate accountability to the market. The Postal Service is, ultimately, an asset owned by the American people. The PRC has done a good job of acting in the public's interests to force some degree of accountability on the Postal Service.
The management of the USPS has an unwarranted arrogance. It demonstrates this in its dealings with employees, customers, Congress and the public in general. A good demonstration is their initial brief in the Six-Five day case. For an opposing view see:
Basically, it would seem that postal management resents and resists its obligation to be held accountable or even to explain itself. A challenge to the PRC ruling is more about eliminating dissenting views.

Anonymous said...

Once again, the PO is trying to solve its problems the wrong way. They have reduced the carrier workforce by 100,000, the clerks down to a bare minimum and taken away the word SERVICE out of the picture. Increasing the rate will not encourage the public to mail. When will they start eliminating people from the top down? This is where they can save BIG bucks.

Anonymous said...

I have not seen anyone hold jack potter accountable for any of the USPS screwups. Until someone shows him the door, there will be no end to the downward spiral going on in the USPS. I have no confidence that anyone will get SERVICE back to its rightfull place in the eyes of the american people.

Anonymous said...

re: M. Jamison - thank you for continuing to point out the rural carrier situation. Closing offices on Saturday would dramatically impact the rural craft and a Postmaster's ability to adequately staff a regular rural carrier who calls in sick or takes a vacation. This is an important issue, and you continue to state it with eloquence.

dryMAILman said...

She announced, therefore, that D. Eadward Tree must be none other than Patrick R. Donahoe, the #2 man at the U.S. Postal Service. Donahoe reportedly laughed but issued no denials.

Congratulations on your promotion! Now please stop confiscating my equipment. :)