January 21, 2015

The Postal Service decided to take a safer, bird-in-the-hand decision to file its latest Consumer Price Index (CPI) increase right before the close of business on Thursday, January 15. The timing is interesting because the next morning at 8:30 am another monthly CPI number was released by the Bureau of Labor Statistics that would have raised USPS pricing authority to 2.027% from the 1.966% it filed. But as we reported in our December 10 Alliance Report, word had slipped out that Postal Service staff had begun preparing a potential rate case for April 26 implementation. They used the CPI cap that ran through the December 17 release of the November CPI in their January 15 filing.

There are several possible reasons for the USPS filing the case now rather than later:

• The work had been done on the rate case for April 26 implementation of CPI-based rates through the December 17 release. Waiting would have caused substantial re-work.
• With Megan Brennan preparing to take office on February 1 as Postmaster General the filing frees her to focus on more strategic issues.
• The U.S. Court of Appeals for the D.C. Circuit has taken longer than most, including Postal management, expected for its decision on the exigent rate case appeal.
• Postal management likely agrees with us that there is a good chance the court will remand the exigent case back to the PRC which could extend the time until the surcharge is removed. This would push off the date and make delaying the CPI increase to coincide with the rescission impractical.
• As we have reported, declines of 0.3% and 0.4% in the latest two CPI reports threaten to reduce the USPS price cap, but not until around perhaps March or April. But perhaps they decided why take the chance?

Still, with an implementation near the end of April we could have two rate changes (a 1.966% increase and a 4.3% decrease) within four or five months of each other.

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