Long-Time PRC Staffer Nominated as Commissioner

March 5, 2019

On March 1, President Trump announced his intention to nominate Ann C. Fisher to be a Commissioner of the Postal Regulatory Commission.  The official White House announcement:

Today, President Donald J. Trump announced his intent to nominate the following individual to a key position in his Administration:

Ann C. Fisher of the District of Columbia, to be a Commissioner of the Postal Regulatory Commission. 

Ann C. Fisher currently serves as Public Affairs and Government Relations Director of the Postal Regulatory Commission. Fisher spent 12 years on Capitol Hill in roles including Deputy Staff Director of the Senate Homeland Security and Governmental Affairs Committee. In this role she served as principal Senate Republican staff architect of the Postal Accountability and Enhancement Act of 2006 which modernized postal laws. She also served as a Government Relations Manager at the U.S. Postal Service and as an Economist on the Senate Small Business Committee. Fisher earned an M.A. from the University of South Dakota and a B.S. from Minnesota State University, Mankato. She resides in Washington D.C., with her husband David N. Fisher and their two daughters.

Ann Fisher spoke recently at a Lexington Institute session on the Postal System Task Force.

If confirmed by the U.S. Senate, which is very likely, Ms. Fisher would take to place of fellow Republican Commissioner Tony Hammond whose term officially ended on October 14, 2018.  Commissioner Hammond is now serving in his “holdover year” until he is replaced or the year ends.

The departure of Commissioner Hammond is especially concerning for mailers, as he dissented from the December 1, 2017 PRC proposal to add surcharges on top of the CPI price cap, which would result in 28 to 40 percent rate increases over five years.  The PRC has taken no formal action since that proposal was met with near-universal condemnation.  It is now likely to wait until Ms. Fisher takes her seat.

Commissioner Hammond’s Dissenting Views:

DISSENTING VIEWS OF COMMISSIONER TONY HAMMOND

I respectfully disagree with the Commission’s decision to propose the changes contained in this Order because, rather than balancing all the objectives of 39 U.S.C. 3622, the proposed changes elevate the financial stability objective above the others.

As I explained in my concurring statement to Order No. 4257, the existing ratemaking system has not provided the Postal Service with revenues adequate to maintain financial stability. However, I have also concluded that a significant portion of the Postal Service’s financial instability results from an overly aggressive retiree health benefits prefunding schedule—which warrants a legislative solution—and from the Postal Service’s decision in 2007 not to pursue the final cost-of-service rate increase authorized by the PAEA. Therefore, I would propose a one-time price increase that raises the Postal Service’s finances to the level needed to ensure stability absent those two factors, while leaving the price cap intact for future rate adjustments.

In contrast, the changes proposed in this Order essentially constitute a return to the PRA’s cost-of-service rates, but without any of the protections of the PRA framework.

The PRA afforded the Postal Service the ability to recover all its costs through price increases, but accordingly made it forgo pricing flexibility and subjected it to significant regulatory scrutiny. The PAEA freed up the Postal Service’s flexibility to set prices as it sees fit. But, it also simultaneously imposed the constraint of an overall price cap to protect customers.

The changes proposed in this Order would grant the Postal Service the benefits of both systems and require of it the sacrifices of neither.

I am especially troubled by what effect these changes may have if the Postal Service’s finances deteriorate in unforeseen ways. This Order is committed to price Docket No. RM2017-3 Dissenting Views of Commissioner Tony Hammond Page 2 of 2 increases that deliver revenues equaling the sum of all the Postal Service’s costs, whatever they may be, with additional revenues to cover long-term capital expenditures. This is a laudable goal. But, if the Postal Service’s costs (particularly its structural costs) increase unexpectedly, the logic of this Order would require ever-increasing prices, even if that would drive away mail volume at a rate that could put the Postal Service out of business.

A second concern I have is the questionable regulatory complexity that this Order seeks to overlay on what has been, until now, a straightforward and pragmatic ratemaking system. For example, tying 0.75 percent of pricing authority to Commission-approved efficiency and 0.25 percent of pricing authority to Commission-approved service performance creates unnecessary regulatory hurdles.

Of course, we must go through a formal process seeking public input in order to replace the current system and this proposal is no more than a starting point. All the Commissioners agree that some change is needed to the ratemaking system. But, we disagree on the exact changes that would be most prudent. I look forward to comments on how to craft a balanced change, one that provides the Postal Service with a fair level of additional revenue while continuing to ensure that all of the objectives of 39 U.S.C. 3622 are met. In this regard, I note that the exigent surcharges that were in effect from 2014 to 2016 appeared not to result in any significant volume loss. Therefore, they may serve as a useful starting point for analyses.

I am hopeful that, with the input of all stakeholders, the Commission can arrive at a balanced resolution to this review process.

Tony Hammond