Alliance Alert–PRC Initiates Rate Review & Senate to Hold USPS Hearing

April 5, 2024

Dear Members & Sponsors of the Alliance of Nonprofit Mailers:

Today we have two significant announcements that should lead to solutions to the currently untenable situation with the USPS.

PRC Rate Review

First, the Postal Regulatory Commission initiated a new proceeding to comprehensively review the new pricing rules that the United States Postal Service has been using since the regulator initiated them in November 2020. The Alliance and other mailers have called for an earlier review than the promised five-year reconsideration. We will certainly participate actively in this critical proceeding. The PRC gave the following reasons for starting earlier:

F. The Initiation of this Review

The regulations set forth in Order No. 5763 that provide for multiple forms of rate
authority have been in effect for 3 years. See Order No. 5763 at 1, 370. Although the
Commission planned for a review after 5 years under the new regulatory framework, it
also recognized that certain conditions and circumstances could merit a review sooner.
See id. at 267.

In recent dockets, commenters have raised a substantial number of concerns
related to the effects of the modifications to the ratemaking system adopted in Order No.
5763, including: the magnitude of recent and future price increases, the frequency of rate
adjustment proceedings, the Postal Service’s service performance, whether the
objectives of 39 U.S.C. § 3622(b) are being achieved, the effects that recent rate
adjustments have had on mailers, the Postal Service’s overall finances and financial
stability, the Postal Service’s ability to collect adequate data, the Postal Service’s
business reputation, and Market Dominant mail volumes declines. See, e.g., Order No.
6814 at 2, 18. Notably, Market Dominant volume declined from 121.6 billion pieces in FY
2021 (when the modified ratemaking system was adopted) to 109.5 billion pieces in FY
2023.35 On March 23, 2021, after the implementation of the modified ratemaking system,
the Postal Service issued the DFA Plan. See supra note 14. Since issuing and beginning
to implement its DFA Plan, the Postal Service has made major changes in pricing tactics,
operations, service standards, and capital investment.

Since FY 2021 a significant number of Market Dominant products have failed to
meet their service performance targets.37 In FY 2023 less than half of the Market
Dominant products met their targets. FY 2023 ACD at 2. In addition, the Postal Service’s
financial situation has also failed to improve significantly in the years since
implementation of the modified ratemaking system. In FY 2021, the Postal Service had a
net loss of $4.930 billion.38 In FY 2023, the net loss was $6.478 billion.

The PRC is inviting comments by July 9, 2024, and reply comments by August 13, 2024, with some guidance about what the regulator would like addressed:


Interested persons are invited to provide written comments to facilitate the
Commission’s review of the ratemaking system. Commenters are encouraged to
comment as generally or specifically as they deem appropriate. Below, the Commission
identifies specific topics on which it would particularly appreciate comment. However,
commenters are not limited to addressing these identified topics—the Commission will
consider all comments that fall within the scope of this proceeding.

1. Is the ratemaking system achieving the statutory objectives, while taking into
account the statutory factors? Why or why not?

2. If the ratemaking system is not achieving the statutory objectives, while taking into
account the statutory factors, should modifications be made or an alternative
system be adopted to achieve the statutory objectives?

a. Why or why not?

b. If so, what modifications to the ratemaking system should be made or what
alternative system should be adopted?

Senate Hearing

The Senate Homeland Security and Governmental Affairs Committee will hold a hearing on the USPS on April 16, 2024. We understand that witnesses will include Michael Kubayanda, Chairman of the Postal Regulatory Commission and Tammy Hull, Inspector General, United States Postal Service.