PRC Approves July Rate Increase on Market Dominant Products

To no-one’s surprise, the Postal Regulatory Commission approved the Postal Service’s April 9 request to raise prices on its market-dominant classes of mail.

In its May 30 decision, the PRC stated

The Commission concludes that the planned price adjustments are consistent with the regulations of 39 CFR part 3030 and applicable Commission directives and orders.  The planned price adjustments are also consistent with the pricing requirements appearing in 39 USC § 3626 and do not implicate the pricing requirements appearing in 39 USC §§ 3627 and 3629.  The Commission also concludes that the planned classification changes, with the revisions described in the body of this Order, are consistent with applicable law.  The Commission’s regulations state plainly that ‘f the planned rate adjustments are found consistent with applicable law, they may take effect.’ 39 CFR § 3030.126(c). …”

Responding to the sentiments expressed by legislators and ratepayers, the PRC made an effort to persuade the Postal Service that what may be legal may not be prudent:

Although the price adjustments proposed in this proceeding are consistent with applicable law and the Commission has no legal basis to reject the proposed changes, the Commission is concerned, given the current state of affairs, that the Postal Service’s proposal does not reflect reasoned consideration of the potential widespread effects of its proposal, is not prudent, and is not consistent with the best interests of all stakeholders. Specifically, the Commission remains concerned about the substantial declines in Market Dominant volumes, overall service performance for Market Dominant products, and the Postal Service’s overall financial situation, issues that have all remained significant, if not worsened, since the current Market Dominant ratemaking system went into effect.  The Commission has opened Docket No. RM2024-4 to consider whether the current ratemaking system is achieving the objectives of 39 USC § 3622(b), taking into account the factors of 39 USC § 3622(c). … While the review in Docket No. RM2024-4 is ongoing, the Commission reminds the Postal Service that it expects it ‘to use its business judgment in utilizing the tools provided in the system of ratemaking to craft pricing schemes and specific prices’ and encourages the Governors of the Postal Service to consider these issues and the issues raised by stakeholders when exercising their business judgment to determine the frequency and magnitude of future Market Dominant price adjustments.  See Order No. 5763 at 270.

The Commission strongly encourages the Governors to consider exercising their business judgment, consistent with statutory and regulatory requirements, not to increase rates by the full amount permitted by law.  Participants in the docket presented a number of reasons why rate increases below the legal limit may be appropriate for business and public policy reasons.  The Commission recommends that, in exercising their discretion, the Governors heed the concerns of stakeholders, particularly in light of the facts that: rate increases have occurred more frequently than occurred previously and than may have been expected by the mail market when the ratemaking system was modified in Docket No. RM2017-3; some of the effects from the most recent rate increases in January 2024 have yet to occur, let alone be understood; and service performance and efficiency have declined by historic levels, adding to the stress on the mail market. This combination of stressors may be unprecedented in the history of the Postal Service.  In addition, as of March 2024, the Postal Service had liquidity of $16.150 billion, including cash, cash equivalents, short-term investments, and available borrowing authority.”

In conclusion, the Postal Service’s proposed prices, as well as the discounts and incentives and the 2025 promotions, were approved as filed and will take effect on July 14. The upshot for those who were hoping for a different outcome is that the commission, likely on the advice of its lawyers, had insufficient reason to reject the filing; if they had, the USPS likely would have sued in federal court to reverse the decision.  Essentially, the law only allows rejection of a ate filing for specific reasons, and those don’t include the imprudent policies of the Postmaster General and his doormat Board of Governors.  Back in 1970, and again in 2006, Congress didn’t foresee a future Louis DeJoy hell-bent on a quixotic and self-defeating search for financial self-sufficiency through volume-destroying price increases.

Download the Mailers Hub Services BrochureLearn more about the solutions we have for you.

If you're on this page, it's likely because you have challenges to find solutions for or a question to answer. Fortunately, you've come to the right place. Click below to download our 2023 Services brochure to learn just how much we have to offer. Leave your name and email if you'd like us to stay in touch. 

The brochure is a PDF that will open in a new browser window. Download, read, share, and let us know if you have questions.

Related posts