Breaking News: PRC Denies USPS Exigent Rate Case

With a surprising and unanimous decision, the Postal Regulatory Commission has thrown out the USPS request to increase postal rates by 5.4%.

What does this mean for businesses dependent on the USPS?  It means no postal rate increases at all until May of next year.  I suspect there will be no changes to the DMM (Domestic Mail Manual) and that NFMs are not going away so quickly.

http://www.prc.gov/prc-docs/home/whatsnew/Chairman%27s%20Statement%20R2010-4%20decision_1391.pdf

The Postal Regulatory Commission, an independent agency responsible for regulatory oversight of the USPS, painted a crystal-clear picture of why they have denied the rate hike. “…The Postal Service has made significant strides over the past few years to contain its costs in response to falling mail volumes caused by the recession and the ongoing electronic diversion of the mail. The Postal Service achieved over $6 billion in cost reductions in 2009. These results indicate that the Price Cap is working and providing the right signals for the Postal Service to reduce costs and improve efficiency.”

The briefing states that the primary cause of the liquidity crisis is directly tied to its onerous requirement for the Postal Service to pre-fund its future retiree health benefit premiums.

This dramatic update certainly brings up many additional questions.  We will see what comes in the next few days, and we’ll post answers to these questions as fast as we can get them.  Stay tuned.

-Bob Makofsky at bmakofsky@conformerinc.com

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