USPS Responds to NAA's Concerns and Walks Back Steep Rate Increase

May 12, 2015

USPS Responds to NAA's Concerns and Walks Back Steep Rate Increase

On May 7, 2015, the Postal Regulatory Commission (PRC) approved the U.S. Postal Service's proposed rate increases for Standard Mail and Periodicals. The new rates take effect on May 31. (The PRC had previously approved new First Class rates, which also take effect on May 31).

The PRC's approval of the rates comes after it denied previous USPS proposals that were filed on January 15 and March 12, respectively. The regulatory agency sent those proposal back to the Postal Service because discounts for commercial and non-profit mail were not "equal" as required by the Postal Accountability and Enhancement Act of 2005, and the rates contained numerous other errors.

When the USPS responded on March 12 to the first remand of its January 15 rate proposals, newspapers were surprised that the new proposal would have significantly increased the rates for Total Market Coverage products that are mailed at High Density Plus rates. Specifically, USPS proposed a 5.75 percent increase in the per-piece charge for flats packages weighing over 3.3 ounces. Depending upon the carrier route, newspapers' TMC packages typically weigh above 3.3 ounces. In addition, there has been a movement within the industry in recent years to increase the number of advertisers (thus, increasing the weight) in TMCs to increase margins for non-subscriber programs.

In response to this dramatic and surprising increase on heavier weight TMCs, NAA contacted Postal Service officials to express concerns and remind them that, in 2014, USPS lowered rates for High Density Plus mail by 11 percent in an effort to encourage newspapers to keep TMCs in the nation's postal system and not shift this mail to private delivery. To its credit, the Postal Service recognized that the 5.75 percent per-piece increase would have had the effect of reversing the "stay-in-the-mail" incentive USPS had implemented in the previous year. On April 16, USPS submitted revised rates to the Postal Regulatory Commission that replaced the 5.75 percent per piece increase with a below rate-of-inflation 1.2 percent increase.

The PRC has directed the Postal Service to eliminate the surcharge when the agency has collected $2.8 billion in revenue that was lost due to the Great Recession. The Postal Service has filed an appeal of this decision to "sunset" the surcharge. NAA joined other mailer organizations to oppose the Postal Service's appeal which currently sits before the DC Circuit Court of Appeals.

More: https://www.prc.gov/press-releases/prc-approves-usps-price-adjustments-certain-market-dominant-products/3487

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