Yesterday the Postal Regulatory Commission (PRC) announced that it had unanimously rejected the Postal Service’s request for an exigent price increase in its entirety. IWCO Direct joins other members of the Affordable Mail Alliance in congratulating the PRC on this courageous decision. The impact this greater-than-inflation increase would have had on the mailing community, and the Postal Service itself, would have been devastating. We agree strongly with PRC Chairman Ruth Goldway that “the requested exigent rate adjustments are not due to the recent recession, or its impact on mail volume. Rather, they represent an attempt to address long-term structural problems not caused by the recent recession.”
Now the Real Work Begins
Now is the time for the mailing community to remain united and begin the real work of standing with the Postal Service in repairing those long term structural problems inherent in its current business model. First on the agenda must be working with Congress to correct the over-funding of postal pensions and adjusting the prefunding schedule for retiree health benefits. As the PRC notes in its decision, the current liquidity problem facing the Postal Service is not a result of the recent recession-induced volume declines, but “stems principally from an overly optimistic RHBF [Retiree Health Benefit Fund] prefunding schedule.”
We urge Congress to undertake a thorough review of the Postal Service business model in 2011 to ensure that the Postal Service has the appropriate incentives and flexibility to align its operations and costs with current mail volumes and to maintain its competiveness in the marketplace.
We urge all members of the mailing community to join the conversation and fight for reforms that will ensure a viable Postal Service well into the 21st Century. One of the easiest ways is to join the Affordable Mail Alliance.
Postage Rates – What Happens Next?
Postmaster General John E. Potter said in response to the PRC decision that the Postal Service is still considering “what options we have and what may be the best course of action.” While the Postal Service could appeal the PRC decision in the federal courts or file a new request for an exigent price increase (addressing the flaws the PRC found in the original request), the most likely course of action would be for the Postal Service to file a standard request for a price increase within its inflation-based cap. The most likely scenario would be for the Postal Service to request such an increase early in 2011, and for that increase to go into effect sometime in May. Based on current inflation measurements and rate increase authority the Postal Service has “banked” from previous years, such an increase could be in the range of 2.5 to 3.5%.
Be sure to check in often as we will continue to keep you informed as the Postal Service plots its course into the future.
Marketing Services Manager