The following comes from David LeDuc, SIIA's senior director, public policy:
In December the Postal Regulatory Commission (PRC) proposed new rules for setting postal rates that, if implemented as drafted, will result in drastic rate increases for Connectiv members. The rate review and proposal resulted from the 2006 Postal Accountability and Enhancement Act (PAEA), which provided the PRC the authority to review and change the rate system after 10 years. The PRC’s key conclusion is that the current rate cap system has not maintained the financial health of the Postal Service as intended by the legislation. The PRC’s proposal therefore provides the Postal Service with the ability to increase rates substantially, particularly for periodicals and other classes of mail that do not cover their costs.
Overall, the proposal is likely to provide for rate increases on periodicals of approximately 5-7% each year for at least the next five years, beginning in 2019 (these are cumulative percentage increase). If this proposal goes forward, periodicals could experience rate increase in excess of 50% over the next five years. In summary, the proposed rule retains the CPI-based price cap, where prices will rise each year in accordance with the consumer price index, but it adds substantial cumulative rate making authority on top of that. In addition to the CPR, which averages over 1% per year, the Postal Service can add an additional 2% each year for all classes of mail (this authority is provided for five years after the rule takes effect). On top of the 2% increase for all classes of mail, the Postal Service can raise rates an additional 2% each year for periodicals (and other products that are “underwater”) until these products cover their attributable costs. Further, the Postal Service is provided with an additional 1% of rate raising authority if they meet targets for efficiency and on-time delivery.
The PRC is providing an opportunity for comments before announcing a final decision, due by March 1, 2018. In preparation for our comments opposing this proposal, SIIA needs to hear from members about the impact of significant rate increases on periodicals mailers. Specifically, we would benefit from your input in the following areas:
- Will these rate increases lead to a decrease in the number of titles, or perhaps number of copies, print orders of the periodicals you currently offer, and if so, to what extent?
- If rates cause periodicals to decline, this decline will hurt the USPS revenue in related first-class and standard mail. For each periodical, or for all of your periodicals, what is the amount of first class mail that is associated with them (e.g. renewal notices, acknowledgments, invoices and solicitations)?
- Are there any opportunities you have to increase efficiency in your periodicals mailing that can help to save costs?
- Any other feedback that would be valuable for the PRC to consider, in light of these proposed rate increses?
Please provide feedback, or reach out with questions or to discuss, to SIIA Senior Policy Director, David LeDuc, by Jan. 26, 2018.