Alliance Alert–New Law Takes 0.286% Off July Rate Hikes


March 14, 2022

New Law Takes 0.286% Off July Rate Hikes

USPS today filed a letter at the Postal Regulatory Commission saying that the retirement rate authority should go from 1.0714% to 0.785% with the passage of legislation. So, the Postal Reform Act of 2022 will save mailers 0.286% of the upcoming postage rate increase for Mid-July.

I think it is very unlikely USPS will choose to defer, or “bank,” any of the available rate authority. They do not need the extra money now, and they know large rate increases will drive mail volume away, but as a monopolist with a plan, the agency has a strong inclination to use all the rate authority given by the five Postal Regulatory Commissioners.

USPS illustrates how anxious it is to implement the new rate hikes in today’s letter: “Finally, as we indicated in our January 11, 2022 filing of our Schedule for Regular and Predictable Rate Adjustments, we expect to file our next market-dominant price case in early April 2022. The last scheduled meeting of the Governors prior to April is expected to occur on March 30, 2022. The Postal Service therefore respectfully requests that the Postal Regulatory Commission complete its review of our rate authority calculations by the time it issues the Annual Compliance Determination on March 29, 2022.”

The table shows the new expected average rate increases of just over 6.5% for compensatory mail and 8.5% for non-compensatory mail, chiefly Periodicals and Marketing Mail Flats.


                                                                        USPS 3/14 Revision

CPI                                                                            5.135%

Density                                                                     0.583%

Retirement                                                                0.785%

Compensatory                                                   6.503%

Non-Comp Penalty                                                 2.000%

Non-Compensatory                                          8.503%