April 10, 2023

Alliance of Nonprofit Mailers Members and Sponsors:

The Postal Service Governors approved the use of virtually the full rate authority which the USPS just filed at the PRC. This includes a 66-cent single-piece First-Class letter (stamp) rate.

The filing is here: https://www.prc.gov/docs/124/124885/R2023-2%20USPS%20Notice%20M-D%20Price%20Chg.pdf

The press release is here: https://about.usps.com/newsroom/national-releases/2023/0410-usps-files-notice-with-prc-for-new-mailing-services-pricing.htm

The filing begins as follows. They appear to be continuing the decimation of flats.

The Governors of the United States Postal Service have determined to adjust
rates for Market Dominant products. The adjusted rates will take effect at 12:01 a.m.
on July 9, 2023. The Postal Service hereby submits the new rates, which have been
developed from the most recent agreed-upon analytic principles, for regulatory
review and demonstrates their compliance with applicable law.

The Postal Service has available approximately 5.4 percentage points of
pricing authority for compensatory classes and approximately 8.1 percentage points
of pricing authority for the Periodicals class, which was non-compensatory due to its
attributable cost exceeding revenue for the class. The available pricing authority for
Periodicals includes approximately 0.7 percentage points of banked cap space
carried over from prior years. The Governors have determined to use virtually all of
this authority. The Postal Service’s Delivering for America plan sets forth a balanced
array of initiatives to achieve financial sustainability and service excellence, and
price cases are an integral component of that plan.

Finally, the Postal Service is aware that on April 6, 2023, the Commission
issued its report on flats, as required by the Postal Service Reform Act, Pub. L.
117-108 § 6, 136 Stat. 1148 (Apr. 6, 2022). Section 206(b) requires the Postal
Service to develop and implement a plan to remedy inefficiencies identified in the
report within six months, and section 206(c) requires the Postal Service to consider
the report’s findings when changing Market-Dominant prices.
The Postal Service is familiar with the report’s recommendations, which as
the Commission notes in the report build upon the Commission’s prior analyses of flats.

While the Postal Service has only just begun reviewing the report in depth, let
alone begun developing the required remedial plan, this rate adjustment is fully
consistent with the Commission’s recommendation that the Postal Service address
flats cost coverage issues by “[c]ontinuing the combination of increasing revenue
and reducing costs until unit revenue exceeds attributable costs for reach non-
compensatory flats product.” As discussed below, and consistent with recent prior
rate adjustments, these rates utilize the Postal Service’s available pricing authority to
increase revenue from flats products in a manner consistent with the Commission’s
rules and the recent report.

We will be sending our members the rate change tables applicable to nonprofit mailers, and further analysis.

Best, Steve