Counting the Days to 2015 Rates

Blending Rates Increase with Decrease Looks Increasingly Likely

When the United States Postal Service (USPS) notified the Postal Regulatory Commission (PRC) that it will delay all of the 2015 Consumer Price Index (CPI) postage rate increases until further notice, it said that the notice will be announced “in the coming weeks.”

There are very good reasons to defer that decision. One is that if they notified today, for example, the 45 days later implementation would occur on May 20, which is during the USPS’s premier customer event of the year, the National Postal Forum in Anaheim with the theme, Growing Together. We’re pretty sure that Postmaster General (PMG) Megan Brennan does not want to cast such a pall over her first Forum as PMG.

An even more important reason to defer the notice of a rate increase is that it would happen a very short period of time before the PRC-mandated pullback of the 4.3% exigent surcharge on all postal rates. With the announcement that USPS had reached almost $2 billion in exigent revenue by December 31, the $3.2 billion cap will be reached most likely in July or August. We don’t think the Postal Service wants to create a rates roller coaster for itself or its customers.

What the PMG is probably waiting for is the decision by the U.S. Court of Appeals for the D.C. Circuit. This will determine whether the $3.2 billion cap holds or changes. The three-judge panel will either uphold the decision of the PRC, or remand the case back to the regulator. The court has so far taken 209 days (9/9/14-4/6/15) to issue its decision, longer than the 186 days (9/26/13-12/24/14) that the PRC took to render its order in the request by the USPS for an exigent surcharge.

It is increasingly looking as though the court will uphold the PRC order; if not, it is giving the regulator very little time to redo the exigent case on remand before the $3.2 billion cap is reached in July or August. If it does receive a remand, the PRC will want to marshal all of its resources to finish the rework before the exigent cap is reached. It will not want to have to work on lots of additional filings such as the CPI-cap case.

If the court reaffirms the PRC, the USPS will most likely have the 1.966% CPI increase coincide with the rescission of the 4.3% surcharge, leading to a net reduction of rates by about 2.3% on average. This scenario would be in the best business interests of the USPS and its customers.

Also in our mutual best interest would be for Megan Brennan to tell her staff to use this extra time to rework the Periodicals rate changes that, without corrections, will have a very devastating effect on many nonprofit publications.

The new PMG has an outstanding opportunity to demonstrate very clearly that she values her customers  and understands that keeping them in the mail is critical to the future of the Postal Service.