U.S. Postmaster General Megan Brennan will get the money she says the Postal Service so desperately needs, following the PRC’s announcement of a new rate-setting system on December 1.
At first blush, the preservation of the rate cap seems like a home run for mailers and a strike against USPS desires to set its own rates. But go through the PRC’s proposed new system and the USPS has ample ability to raise rates beyond the rate of inflation.
For the next five years, the Post will be able to tack 2% annually on top of any increase in inflation. It also can add up to another 1% if it meets service standards. And the new system also allows for raising prices on “underwater” products another 2%. Plus unknown changes in worksharing discounts could impact mailers on the sub-class level.
Mailers won the battle to keep the inflation cap. But the USPS won the war in gaining new revenue.
Here is PMG Brennan’s statement on the PRC decision:
“The Postal Service agrees with the conclusion of the Postal Regulatory Commission that the current CPI price cap does not work and needs to be changed, because it does not enable us to achieve our mission of providing prompt, reliable, and efficient universal postal services to the American people in a financially sustainable manner. We are analyzing the Commission’s alternative price cap proposal to determine the extent to which it advances this goal. We continue to believe that any price cap is unnecessary in the rapidly evolving postal marketplace, for which all of our customers have alternatives to using the mail. We seek a regulatory system that gives the Postal Service the flexibility to adopt the pricing innovations that will be critical to our ability to compete in the marketplace and to create business value for our customers both today and in the future, and we will continue to work with the Commission and our customers to ensure that the mail remains a valued means of commerce and communications.”