In an order issued on November 9th, the Postal Regulatory Commission(PRC) approved the Postal Service’s proposed prices for market-dominant products. In its 63-page decision, the PRC found that the proposed rates do not violate the price cap and that the workshare discounts meet statutory requirements; proposed classification changes also were approved.
Earlier the commission also approved USPS price changes for competitive products.
As a result, the price changes announced last month by the USPS will be implemented as planned on January 21, 2018. Below is a price comparison chart for First Class Rates. For a downloadable PDF of the January First Class Rates, click here.
The USPS said it will propose higher postal rates (for market dominant products) based on the August 2018 Consumer Price Index (CPI). The proposed filing will be submitted sometime in October and the rate hike will take effect on January 21, 2018.
The actual proposed changes are unknown at this time, and we are uncertain how much the USPS will draw on “Banked Pricing Authority” (see below right for more information).
However, based on statistics released by the Bureau of Labor, the Consumer Price Index Figures for August (including those used to construct the USPS pricing authority), reflect the calculated “cap” at 1.987%. Therefore, our advice to mailers is to estimate around a 2% increase for your 2018 postal budget. Of course specific prices can change plus or minus.
What is the USPS Banked Pricing Authority
An amount not used in a previous filing or developed through discounts tied to incentives & promotions. This can be added to what is available under the CPI cap to increase the net percentage applicable to each class of mail.
Today the USPS filed it’s rate case with the PRC (Postal Regulatory Commission), for a rate hike to take effect January 21, 2018.
As expected, the overall postal rate increase falls just short of 2%, excluding Nonprofit (NP), Marketing rates.
As noted within our newsletter, the Bureau, the USPS is trying to change the way nonprofit rates are calculated. Click here to read more.
If the PRC accepts the request (which is uncertain as a legal challenge will most likely follow), nonprofit prices could increase anywhere from 3.3% – 6.9% over and above other increases. As the rate case stands now, Marketing Mail Nonprofit Auto Letters are proposed to increase by 2.9%. All news isn’t bad in the NP realm, USPS marketing Mail 5-Digit Auto Flats entered at Origin are proposed to drop by 6.97%.
First Class stamps are slated to rise to 50¢ and international first class letters, cards, and flats won’t increase at all.
The PRC has up to 45-days to respond and suggest changes. We’ll keep you posted as the rate case moves through its channels.
For over 10-years, the USPS Mail Evaluation Readability Lookup INstrument, also known as MERLIN, has been used by acceptance clerks to test and verify mailings. When first rolled out, it created quite a stir within industry surrounding measuring mail quality at the point of mail acceptance.
Full-Service mailers have moved to Seamless Acceptance and enjoy the benefit of standardized acceptance and verification processes thereby eliminating the need to have mailings tested on MERLIN.
MERLIN is also used to ensure that addresses were updated within 95-days of the mailing date with customer filed COA (Change of Address) orders. The USPS announced that on January 21, 2018, the method for ensuring compliance with Move Update requirements will change from the MERLIN Method to a new Census Method. The new method checks compliance on all mail pieces (unlike MERLIN that verified samplings), and reduces the current 30% threshold to .5%.
This marks the end of the MERLIN era, and the start of greater efficiency in measuring postal compliant mail.
The PRC (Postal Regulatory Commission) has been petitioned for approval to amend its method of calculating Standard and Nonprofit (NP) prices.
Since 2000, the 60% rule applies to NP rates. That means that the average NP revenue per piece should be 60% of the estimated average revenue per piece rate, class-wide. The USPS wants to revert to using a methodology that was used prior to the passage of postal reform legislation where regular and ECR (enhanced carrier route) rates are considered subclasses of mail. The Alliance of Nonprofit Mailers alerted members that by reverting to the prior methodology, prices could increase 3.3% to 6.9% over and above other increases that are proposed for implementation in January of 2018.
The PRC Public Representative recognized the potential “rate shock” facing nonprofit mailers, and urged the USPS to apply any corrective price adjustments (over the annual CPI cap increase) over more than two price-adjustment cycles.
There isn’t a time constraint applicable for the PRC to issue a decision on the matter, and the comment period on the USPS proposal ended on September 18th. Knowing the possibility of a legal challenge, the PRC may be more deliberate in issuing its ruling than usual. We’ll keep you posted as this issue unfolds.