December 24, 2013, 04:36 pm
Postal regulator backs 3-cent stamp hike
By Bernie Becker
The U.S. Postal Service’s regulator said Tuesday that it would approve a temporary hike in the price of stamps, giving the cash-strapped agency close to $3 billion in relief.
The Postal Regulatory Commission’s (PRC) decision amounted to a compromise, as it also rejected the USPS’s request to permanently increase prices quicker than the rate of inflation. That decision paves the way for the price of stamps to increase from 46 cents to 49 cents next year.
In a split decision, the regulators said that it would allow the USPS a rate hike for less than two years, a time span it said would be enough for the agency to recover the roughly $2.8 billion lost from the fiscal crisis.
The PRC had previously denied a Postal Service request for a quicker rate increase in 2010 but now estimates that the USPS carried about 25 billion fewer pieces of mail because of the fiscal downturn.
The regulator also said it saw no reason to keep the rate increase in place long term. The PRC argued that the Postal Service was putting too much blame for losses on the economic crash and not enough to changes caused by online communication.
“Allowing the rates to remain in effect indefinitely would result in over recovery of the financial impact of the Great Recession on the Postal Service,” the PRC said in its decision.
A broad range of businesses that are heavy users of mail, like banks, oppose the rate increase, saying it would be counterproductive by making them less reliant on the banks.
“The Postal Service must face the facts and right-size its operations, not drive even more volume away by raising prices so drastically on its remaining customers,” Jim Cregan of the Association of Magazine Media said in a statement after the USPS proposed the rate increase.
Postmaster General Patrick Donahoe has said that his agency latched on to the proposed price increases as a last resort, blaming lawmakers who have been unable to strike a broad postal reform deal over the last three years.
The USPS lost $5 billion in fiscal 2013, significantly less than its $15.9 billion it bled the year before. Postal officials have said that the proposed rate increase — the first time the price of a stamp would rise more quickly than the inflation rate in four decades — would raise an extra $2 billion of revenue a year.
The last major postal bill, enacted in 2006, says that the Postal Service could seek a more rapid rate of increase only if it faces extraordinary circumstances that it could not have foreseen or recovered from quickly.
The PRC has already ruled that the economic downturn was an extraordinary circumstance. But some lawmakers and outside groups have ruled that the Internet and other technological changes were a bigger factor in the USPS’s bottom line, and the agency didn’t deserve the rate increase.
Lawmakers in both parties and chambers are still hoping to press ahead with postal reform legislation in 2014. But a bipartisan proposal remains stalled in the Senate Homeland Security Committee. House GOP leaders have yet to show much interest in a bill from Oversight Committee Chairman Darrell Issa (R-Calif.).