In an order issued August 21, the Postal Regulatory Commission denied a July 16 Postal Service motion to “use a modified calculation of the available density rate authority.” The agency’s purpose was to “transition to a January rate change cycle in 2027 in a financially responsible manner.”
As the commission noted, “The practical effect of the Postal Service’s Motion is to accelerate its use of FY 2026 density rate authority by more than 4 months by allowing it to calculate that authority using unaudited FY 2026, Quarter 3 volume and forecasted FY 2026, Quarter 4 volume, projected FY 2026 delivery points, and the FY 2025 institutional cost ratio in place of the completed FY 2026 data otherwise required by the rules.”
The request
In its motion, the Postal Service stated that, “subject to the approval of the Governors,” it would move to January (from July) as the basis for its annual price increases on market-dominant products. To do so, the USPS “argues that it must seek a partial waiver of the Commission’s density rate authority rules because it will not have a full year of data necessary to submit ‘its usual calculation’ for the amount of density rate authority.”
The Postal Service added that, in order to file for a January 2027 increase, it would need to “receive approval from the Governors no later than September 2026.”
The PRC
In its analysis, the PRC stated
“… the vast majority of commenters argue that the Motion should be denied because, among other things, the proposed methodology: (1) relies on unverified, estimated data; (2) contains insufficient protections against overestimation and a true-up mechanism that is unenforceable; (3) undermines rate stability and predictability; (4) should be evaluated through notice and comment rulemaking rather than as a request for waiver; and (5) fails to meet the standard for granting a waiver.
“… the Commission concludes that the Motion fails to satisfy the standard for granting a waiver by failing to both show good cause and to establish that the waiver is consistent with the public interest and will not unduly prejudice the interests of other participants. …
“At a high level, the Commission shares the Public Representative’s concern that the proposal of a new, revised methodology for calculating estimated FY 2026 density rate authority would be more properly reviewed in a rulemaking proceeding than as part of a motion for waiver. … That concern is particularly important when the proposed revised methodology departs sharply from the Commission’s traditional reliance on verified, actual data. …
“The Postal Service asserts that the Motion for partial waiver is the most appropriate procedural option under the circumstances. The Commission disagrees that a Motion for partial waiver is procedurally appropriate. A notice and comment rulemaking would subject the proposed methodology for estimating FY 2026 density rate authority to necessary scrutiny, allowing time for the Commission and other participants to seek additional information about the proposed methodology to better weigh its merits. By contrast, the purpose of a motion for waiver is to provide an exemption from compliance with an existing rule, rather than substantially revising one. …
“The Commission agrees with the responses that the delay in accessing density rate authority caused by switching to a January price adjustment schedule was previously raised in Docket No. RM2024-4 long before the filing of the instant Motion. … The need to now rely on the inadequate vehicle of a Motion for partial waiver to seek review of its proposed methodology in time for a January 2027 price adjustment is thus primarily a consequence of the Postal Service not promptly filing a petition to initiate a rulemaking proceeding.
“Finally, the Commission agrees with the responses that note that the timing issue where density rate authority is determined subsequent to a January price adjustment would persist in future years, potentially leading the Postal Service to seek successive waivers. … A rulemaking proceeding considering permanent changes to the density rate authority rules would avoid any prospect of annual waivers and the resulting administrative burden and uncertainty for mailers. …”
Whether this will force the USPS to suboptimize a January price change it will still pursue, or totally forego its plan, remains to be seen. Either way, the PRC’s order likely will fuel the Postal Service’s claim that, by not acceding to the motion and its supporting logic, the commission is obstructing its effort to stabilize its finances. Ratepayers might disagree; the USPS should not be further enabled to cut corners to grab more money.