May 12, 2021

Rate-paying mailers and their private sector service providers are anticipating a filing for mail price increases of 5.5 percent to 7.5 percent above inflation this month.

The recent open USPS Board of Governors meeting revealed that postal management presented a proposed set of higher rates to the strategic planning and innovation committee which made suggestions.  Then management presented the rate hikes to the full board with the suggested changes.  No word on whether the six Governors voted to approve the new pricing, but that is likely.

USPS previously tipped its hand in a PRC filing that it plans to unveil its new rates on or around May 28.  Implementation would be about 90 days later, perhaps August 29.

We can think of several reasons why the agency that is beating plan by $3 billion this year, and sitting on record cash, and can bank this year’s authority for future use, would go ahead with prohibitive rate increases as its customers continue to struggle with pandemic-related impacts:

• USPS has been advocating above-CPI for over a decade.
• The agency waged a four-year regulatory litigation to win the authority.
• The ten-year plan assumes the rate increases, and the USPS repeats a mantra that it needs the whole plan to succeed.
• Mailers have taken a strong case to the U.S. Court of Appeals that the PRC might lose.
• If the regulator loses in court, USPS would have to roll back the increases, but not return the ill-gotten gains it receives before the court ruling.
• The court case could be appealed to the Supreme Court.
• The time value of money dictates that the agency takes as much cash as it can, as early as it can.
• Inside L’Enfant Plaza, there is a strong belief that netting positive revenue gains in spite of causing volume declines is the right business decision.
• It’s the decision most private sector monopolists would make if they could get away with it.