Following review from the Postal Regulatory Commission, the U.S. Postal Service’s price hike that is set to take effect next month will move forward. Though the price increase was legally sound, the commission expressed concerns over the agency’s rapid cost increases.
“Although the price adjustments proposed in this proceeding are consistent with applicable law and the commission has no legal basis to reject the proposed changes, the commission is concerned, given the current state of affairs, that the Postal Service’s proposal does not reflect reasoned consideration of the potential widespread effects of its proposal, is not prudent, and is not consistent with the best interests of all stakeholders,” the commission wrote in Order No. 7155, which was published on May 30.
The commission went on to urge USPS to use “business judgment” and not continue to increase rates to the maximum permitted by law due to historic declines in performance and efficiency, pending effects from the January 2024 rate increases and increases occurring at a more frequent rate than in the past.
This chart shows the percentage increases and total unused price authority by mail class. | Credit: Order No. 7155 by Postal Regulatory Commission
The Alliance of Nonprofit Mailers submitted comments to the commission on May 6, encouraging the overturning of the price increase. The USPS has made twice-a-year increases the new normal. Despite 1.6% inflation, the July rate hikes account for 7.8% for first-class mail and marketing mail, and close to 10% for periodicals, according to the alliance, which cited the compounded price increases between January 2021 and July 2024 ranges from 29% to 83% depending on the product.
“With this sixth notice of market-dominant price changes in three years, the Postal Service continues, Titanic-esque, to sail inexorably toward the iceberg — clinging to its belief that the Delivering for America plan is the panacea to its ills notwithstanding all evidence to the contrary,” The Alliance of Nonprofit Mailers said in its commentary.
The table shows postal rate trends over the past three years. | Credit: Order No. 7036 by Alliance of Nonprofit Mailers
The alliance also pushed the commission to not rubber stamp each price increase, but instead utilize its oversight and enforcement function by ensuring the rates meet the requirements of federal law.
“The commission can stop this madness,” the alliance said in its comments. “It was empowered by Congress to promulgate rules, regulations, and procedures, and to ‘take any other action they deem necessary and proper to carry out their functions and obligations to the Government of the United States and the people.’”
However, the commission noted it does not have this statutory or regulatory authority.
“Nothing in title 39 of the United States Code or the regulations permits the Commission to suspend the Postal Service’s ability to use the rate authority granted to it pursuant to 39 C.F.R. part 3030, and as a result, the commission is obligated to enforce the regulations as currently in effect,” the commission said in its order.
In fact, the commission went on to say many of the concerns from the alliance and other industry organizations are outside the scope of the commission’s proceeding, deferring to another docket, which includes Order No. 7032, to assess the ratemaking system and potential regulation modifications.
The commission will consider all relevant comments but has specifically asked commenters to consider:
- Is the ratemaking system achieving the statutory objectives, while taking into account the statutory factors? Why or why not?
- If the ratemaking system is not achieving the statutory objectives, while taking into account the statutory factors, should modifications be made or an alternative system be adopted to achieve the statutory objectives?
- Why or why not?
- If so, what modifications to the ratemaking system should be made or what alternative system should be adopted?
Thus far, a group of Congress members from the Committee on Oversight and Accountability, led by U.S. Rep. Jamie Raskin, submitted comments. In addition to citing statistics, such as the 6.5 billion net loss in fiscal year 2023, Raskin, the committee’s ranking member, and his fellow committee members expressed concerns over the frequent price hikes.
“It is imperative that the Postal Service meet its service delivery standards, curb excessive mail volume declines, and prevent the Postal Service from entering unrecoverable financial peril, or else put at risk the livelihood of the millions of Americans who rely on the Postal Service for their medication, social security checks, mail-in ballots, and veterans’ benefits. We request that you consider these issues seriously as you review the system for regulating rates and classes for market-dominant products.”
The deadline to comment on this matter is July 9.