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PRC Approves USPS Exigent Price Increase Request – But it’s only temporary!!

by Janet Lockhart-Jones, Ed.D., MDC | December 27, 2013 | No Comments

December 24th, 2013

postalrate

The question has been answered.  The Postal Regulatory Commission (PRC or The Commission) has approved the Postal Service’s request for an exigent price increase on market dominate products.  The approved pricing is being referred to as a surcharge and is only temporary.  Nevertheless, this surcharge will take effect  January 26, 2014.  This means that the price of a First-Class Mail stamp is increasing to $0.49 cents.  In total, the exigent price increase will raise market dominate products (First Class Mail, Standard Mail, Periodicals, Package Services and Special Services) 4.3% on average across the board.  In addition to the CPI price increase of 1.696% that was approved back in November, Market Dominate products will experience a total average increase of 6.0%.

Now the good news!  The PRC only authorized the exigent surcharge for a period less than two years.  This is a huge win for the mailing industry; the exigent price increase is not a permanent one.  According to the PRC, allowing the rates to remain in effect indefinitely would result in over recovery of the financial impact of the Great Recession on the Postal Service. The rates proposed by the Postal Service will enable it to recover the lost contribution in less than two years. According to PRC Chairman Goldway, “The Postal Service will be reimbursed for exigent losses that can be reasonably quantified. We have determined that amount to be $2.8 billion to cover the 25.3 billion pieces of volume lost between 2008 and 2011. The funds will come from a rate surcharge that will last just long enough to recover the loss,” she added.

With its decision, The Commission directs the Postal Service to report quarterly on the revenues generated by the new rates, and to develop a plan to phase out these rates once they have produced the revenues justified by this request.  The full PRC Press Release can be found here: http://www.prc.gov/prc-docs/home/whatsnew/Exigent%20Rate%20Increase%202%2024%2013%20%282%29_3428.pdf

 

For more on the new USPS Rates, please go to:

http://www.pb.com/Postal-Information/Postal-Rate-Basics/index.shtml

http://blogs.pb.com/usps-news/wp-admin/post.php?post=979&action=edit

 

 

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