Monday, December 8, 2014

USPS May Seek a Rate Hike After All

Please see the update to this article, Legal Trick Means No Postage Increase -- For Now.

Barely two months after deciding to skip the usual January price increases, the U.S. Postal Service appears close to announcing that prices will rise in the spring. As usual, the do-nothing Congress is to blame.

The Association for Postal Commerce (aka PostCom), a multi-industry trade group for business mailers, reports that USPS is readying itself for the next postal price change to be effective April 26, 2015." PostCom's "heard it through the grapevine" reports on Postal Service doings are usually right on the mark.

Rates could rise nearly 1.7% for the "market-dominant" mail classes, such as First-Class, Standard, and Periodicals. That could mean a one-cent increase in the price of Forever Stamps, to an even 50 cents.

What's driving the agency's change of plans, according to PostCom, is that Congress has failed to act on five nominations to USPS's Board of Governors, which oversees the Postal Service and must approve any rate changes. If Congress doesn't approve some of the nominations before its holiday recess, scheduled to start later this week, the board will lack a quorum until next month -- and maybe much longer if Congress deadlocks or is too busy naming post offices to act on the nominations.

With no quorum, no rate increases could be enacted. It's not completely clear whether the governors, while still having a quorum, could approve a rate increase but leave it to management's discretion when, or even whether, to file the new rates with the Postal Regulatory Commission.

The Board of Governors announced Oct. 1 that it would forgo the usual inflation-based January rate increase "in part because of the uncertainty regarding the exigent price increase." (See The Postal Service Giveth, and the Paper Market Taketh Away.)

The exigent surcharge of 4.3%, intended to compensate USPS for its losses during the Great Recession, is scheduled to expire next summer, but the agency has gone to court to increase and extend the surcharge.And some politicians have talked of making it permanent.

Also prompting the Postal Service's change of plans may be declining oil prices, which could lead to decreases in the Consumer Price Index. Normal increases in market-dominant rates are limited to changes in the CPI.

The current CPI-based ceiling of 1.678% may be the largest USPS will see for at least a few months if petroleum prices keep dropping. Unless USPS files for an increase, the ceiling will be recalculated Dec. 17 (not Dec. 15, as I originally mis-stated) when the Labor Department reveals the CPI for November.


Robert Mitchell said...

If the exigency case zeroed the bank and my calculations are right, 0.179 percentages points from the bank (deposited due to the delay) can be added to the 1.678%.

Barbara Shepherd said...

Please clarify: What is Congress to blame for? The necessity for a price increase, or the timing of the price increase?

D. Eadward Tree said...

To Barbara Shepherd: The Board of Governors decided two months ago that a rate increase early next year was not a good idea, but they wanted to keep their options open. Now they can't do that. They are forced to act, knowing that this could be the Postal Service's last chance, for who knows how long, to increase rates. Congress is solely to blame for this problem because it hasn't gotten around to voting on the candidates nominated to serve on the board.

Sandy Simmons said...

Why doesn't someone investigate the USPO which, when they are crying broke, are making sure it is out of money by spending multi-millions of OUR TAXPAYER/CITIZEN money in 2013 for TV advertising over a 2-week period to support some Politician's SPECIAL INTEREST in the US Open Tennis in New York? It was posted for the world to see on Closing Day. So We need to be paying more so someone can keep throwing our money into private donations??? Give us a break. Find the criminals who are using our monoey for self promotion and get rid of them! Relevant? If no one notices after the deed is done and the USPO IS BROKE - and if someone can kill any mention of it so people will get interested, how can we ever expect anything to change. But what would that say about the persons who determine "if relevant"?
I dont know how you end this because I just found this site. But let's hope the comment was not in vain.