March 13, 2015

Last Friday, March 6, the Postal Regulatory Commission (PRC) remanded some of the 2015 Postal Service rate increase proposal back to the USPS with a deadline yesterday, March 12, in order to keep the April 26 implementation date. In its revised rate case for Standard Mail, Periodicals, and Package Services filed yesterday, the Postal Service seems to have resolved some, but not all, of the issues raised by the Alliance. Of course, this will be subject to the review and approval of the PRC.

The Postal Service did not resolve what we believe is a very bad business decision to jeopardize publications with little or no advertising and light weight. Needless to say, nonprofit mailer members of the Alliance are very unhappy and flummoxed about why the Postal Service has treated some of its most longstanding and loyal customers in a way that demonstrates that USPS management wants them out of the mail. What could possibly be the rational business decision behind price increases 2, 3, 4, 5, 6, or 7 times the rate of inflation at a time when USPS says it wants to stay relevant?

Here is a brief summary of how USPS responded to concerns raised by their nonprofit customers represented by the Alliance:

1) The Alliance pointed out several work-sharing discounts proposed for nonprofits that were lower than the discounts given to commercial mailers. The Postal Service says it has equalized all of these discounts. The Alliance will ensure that they did.
2) The Alliance argued that the legally-required 60% ratio of nonprofit Standard mail revenue per piece to commercial was exceeded by too much at 60.4%. The Postal Service says it lowered the ratio to 60.15%. Again, the Alliance will check the compliance.
3) The Alliance suggested lowering the 5.1% proposed price increase for nonprofit Standard Mail DSCF (Destination Sectional Center Facility) 5-Digit Automation Letter rate. The Postal Service did so by lowering the price from 10.4 cents to 10.2 cents, and the increase from 5.1% to 3.0%.
4) The Alliance brought to Postal Service management attention, outside of the PRC proceeding, the fact that USPS had proposed very large price increases for some nonprofit Periodicals that have little or no advertising and are light weight. This did not violate the rules about the price cap that is measured at the Periodicals class level, but did represent an important business decision by the USPS that is likely to force several publications out of the mail. The Postal Service was ordered by the PRC remand to increase average pricing for Periodicals to bring the class up to its CPI cap of 1.966%. In its response, the Postal Service did not correct the problem for low advertising light weight publications. It did, however, on remand, increase only advertising pound rates which at the very least spared the already-affected publications from further price increases.

(c) 2015 Alliance of Nonprofit Mailers