In comments to the Postal Regulatory Commission on March 1, SIIA urged a rethink of proposed new rate authority for the Postal Service that could result in increases for first class mail and periodicals in the neighborhoods of 30 and 40 percent, respectively.
The Commission has largely been a sound regulator of the Postal Service over the last several decades, diligently prodding the USPS to comply with efficiency requirements and service standards, while ensuring they stay within the clear lines established by the Postal Accountability and Enhancement Act (PAEA). That is why it was quite shocking to us when, after conducting a review of the rate system required by that legislation in 2017, the Commission determined that the current price cap system is not meeting the needs of the Postal Service, and therefore proposed additional rate authority that will usher in these drastic rate increases at the beginning of 2018 if the Commission sticks to its guns.
Our comments make the following fundamental points that the Commission has somehow overlooked, to the peril of mailers and the Postal Service:
· Periodicals simply can’t sustain significantly higher rates due to decreasing ad revenue and other market pressures;
· Periodicals and other mail volume are intrinsically linked, so raising Periodicals rates will actually decrease USPS revenue;
· The proposed radical rate increases are in conflict with the Commission’s legislative mandate; and
· The proposal creates a disincentive for critical legislative reform to address structural costs crushing the Postal Service.
In addition to highlighting these concerns, SIIA underscored the flawed nature of trying to balance the Postal Service’s books with rate increase, rather than statutory changes that Congress needs to make to address the uncontrollable costs. We also applaud the Commission for considering changes that would provide more revenue opportunity through the expanding USPS Parcels business, to offset the declining volume of First Class, Standard, and Periodicals mail.
Finally, we suggest that if the Commission deems additional revenue to be absolutely necessary, they could look to provide another “exigent” or emergency rate increase on a temporary basis, like we saw in 2016. While we certainly don’t think this is necessary, the key is for the Commission to “do no harm” while encouraging necessary legislative reform.
SIIA comments are available here. Stay tuned as the Commission mulls this input and releases an updated, and hopefully more economically sound proposal for the path forward.