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POSTAGE RATE HIKE WITH POSTAL REFORM: 2% Increase When Law Signed

The minute the Postal Service Reform Act of 2017 is signed into law, business mailers will see a 2.15% rate hike — no PRC approval required.

That’s because the new law authorizes the rate hike for all market-dominant products. It is rougly half of what the exigent rate hike was and is designed specifically to make-up revenue lost in the exigent rate repeal last April.

A 2.15% increase would be an increase of 1 cent on a First-Class Stamp.

The USPS needs more revenue and higher postage rates, Postmaster General Megan Brennan testified before the House Oversight Committee earlier this month. And she urged the PRC to abolish the CPI price cap, which holds annual postage rate increases to the rate of inflation.

“We are now entering the 11th year since the enactment of the Postal Accountability and Enhancement Act of 2006 (PAEA). At the time the PAEA was enacted, we had just finished fiscal year 2006, in which we delivered 213 billion pieces of mail; last year, we delivered 154 billion pieces — a 28 percent decline. Unfortunately, the PAEA did not establish a business model with sufficient flexibility to enable us to effectively respond to this precipitous volume decline,” the PMG told the committee.

gao-graph-2-first-class-mail-volume-1972-2016

“Our business was severely impacted by the Great Recession. First-Class Mail — our most profitable product — declined by 36 percent since 2007 and is expected to continue to decline as a result of divergence to digital communications and the increase in online transactions. Marketing Mail likewise saw a significant volume drop due to a significant reduction in advertising spending caused by the recession. This decline in volume has eroded our financial stability, and reduced our revenue available to help pay for the nationwide retail, processing, transportation and delivery network that we are required to maintain in order to provide universal service,” she said.

“We will therefore urge the PRC to replace the current (price-cap) system with a regulatory structure that enables us to effectively respond to the challenges and opportunities presented by a dynamic marketplace,” she said. “The current price cap has clearly failed to achieve the objectives.”

Last October the PMG made the case for restoring the exigent hike last. She said the USPS was working to have the 4.3 % exigent postage price hikes restored by Congress.
The proposed postal reform law gives the USPS half of that amount.

Click for PMG’s Testimony On Postal Service Reform Act of 2017

Click for PMG LeHigh Valley story here

Click for Postal Reform Act story here