Tag Archives: PRC

Estimate 2% for Jan Rate Increase

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 budgetOf 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.

 

 

The Nonprofit Postal Rate Controversy

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.

*from The Bureau-October 2017 issue

 

Postal Rate Decreases Coming in April

BEB POSTAL RATES DECREASING APRIIL 2016The USPS & PRC (Postal Regulatory Commission) have started preparation for the end of the exigent surcharge that’s been in place since January 2014.  The surcharge removal is projected to end in early April, but that date is only a forecast at this point, as it’s based solely on when the full amount authorized to be derived from the surcharge ($4.63 billion) will be collected.

For obvious reasons, the PRC is interested in ensuring that the correct date is set for the end of the surcharge and, accordingly, had directed the Postal Service to provide biweekly updates on the amount collected beginning in the postal quarter when the end of the surcharge was anticipated. Also, the agency must give 45 days’ notice of the end of the surcharge.

In its February 14 report, the USPS explained that it had collected an estimated $4.347 billion, including $827.1 million so far in FY 2016.   For the 750 days that the surcharge had been in effect through February 14, the USPS averaged about $5.796 million per day in additional revenue. At that rate the total should take just over 799 days to collect, or until about April 3, 2016.   As the PRC has noted, the USPS is entitled to collect only the amount the commission authorized, and there’s no process for refunding any excess collected from ratepayers, so the need to be as precise as possible in setting the end date is clear.  In the meantime, the surcharge revenue continues to accumulate, mailers look forward to lower rates in April, and the Postal Service worries how it will replace the 4.3% of revenue.

See below for rate changes and comparisons:

2016-04 NP STANDARD LETTER AND FLAT COMPARISON

2016-04 STANDARD LETTER AND FLAT COMPARISON

2016-04 FIRST CLASS AND PC RATE COMPARISON

If you have questions or need additional information, please don’t hesitate to contact us!

 

USPS Files Market Dominant Price Change

Blog with BEB 2015-01-15 USPS Postal Rate Increase RequestToday the U.S. Postal Service filed a request with the PRC (Postal Regulatory Commission) for a rate adjustment (1.966%) based on the CPI (Consumer Price Index). The request for increase applies to only “market-dominant products”, which includes Standard Mail, the primary postage used by marketers.
The USPS has requested that the increase take effect on April 26 and estimates that it will generate an additional $900 million on an annualized basis. The USPS estimates that an additional $400 million will be contributed to the fiscal year 2015, if the PRC agrees to meet the proposed implementation date.
The case also includes a separate pricing structure for Standard Mail run through the FSS (Flats Sequencing System). The request removes FSS pricing for carrier route, high density, or high density plus categories. Instead, a five-digit carrier route pallet rate will be created. An estimated 2.465% rate increase is predicted for Standard Flats.
Forever stamps will remain unchanged (49 cents), International letters will increase to $1.20 (a 5 cent increase), and postcard rates increase to 35 cents (a 1 cent rate hike).
We will keep you abreast of the outcome of this filing as it becomes available.

Postal Rate Hike Approved

FOREVER STAMPThe price of a Forever stamp and other mail will rise by 3 cents on January 26, 2014.  This represents the largest rate hike in 11 years.  The increase will be in effect for two years, giving the USPS a temporary shot of extra revenue.  “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,” wrote the commission.

The PRC (Postal Rate Commission) approved the exigent increase by a 2 to 1 vote, resulting in a 6% overall jump in postal rates.  This is the first extra revenue for the USPS since the 2006 law limited rate increases to the rate of inflation.

In addition to First-Class mail, the higher rates will apply to magazines, newspapers, advertising mail and bills – which together account for most of the 158 billion pieces of mail delivered every year.

 

Exigent Case Basics

A review of the Exigent Rate Case from our partner, Thomas Glassman of Wilen Direct.

2012-Tom Glassman

Mr. Tom Glassman of Wilen Direct

In general, the Postal Rate Commission granted the USPS request for additional revenue as a result of recession related losses.  Even though the mailing industry argued that the losses were from diversion to other marketing methods.  As a result, the rates contained in its exigent price filing would be allowed to take effect on January 26th.  However, the PRC did not agree that the rate increase should be permanent and so directed that the rates should be implemented as a “surcharge”.  The USPS was further directed to submit a plan for the eventual removal of that surcharge.  I believe that you will see them in place for a long time.