PRC Estimates Value of USO and Monopolies

Every year in its annual report, the Postal Regulatory Commission provides its estimate of the value of the Postal Service’s monopolies over the delivery of some hard-copy mail and access to the mailbox.  At the same time, the PRC estimates the cost to the USPS for its Universal Service Obligation.  Both figures are for the prior full fiscal year.  On February 21, the commission released its latest estimates as part of its Annual Report to the President and Congress FY 2023.


For FY 2022, the estimated cost of the USO was $6.003 billion, composed of three components: providing postal services to areas of the nation the USPS would not otherwise serve ($853 million); providing free or reduced rates for postal services as required by statute ($1.797 billion); and providing other public services or activities the Postal Service would not otherwise provide but for the requirements of law ($3.353 billion). The first component includes maintaining small post offices ($700 million); the Alaska air subsidy ($133 million); and free PO boxes at post offices not offering delivery ($20 million).  The second component includes preferred rates ($1.185 billion) and Periodicals losses ($612 million), while the third component consists of six-day delivery ($2.677 billion); uniform First-Class Mail rates ($74 million); uniform rates for Media and Library Mail ($50 million); and operating the Postal Inspection Service ($551 million).

The monopolies

Conversely, the commission estimated the USPS monopoly over the carriage and delivery of certain types of hard-copy correspondence to be $4.19 billion, over $1 billion more than the previous year.  Meanwhile, the PRC valued the Postal Service’s exclusive access to the mailbox as worth $200 million. The USO and the monopolies are unique attributes of the USPS, linked to its nature as a fundamental federal service (despite receiving virtually no regular government funding).  Ironically, absent both the USO and the monopolies, USPS finances apparently would be over $1.8 billion better off.

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