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Alliance expresses support for maintaining a “Rate Cap” on postage

The News Media Alliance on March 17 filed comments with the Postal Regulatory Commission (PRC) to retain the inflation-capped pricing structure which has been a part of the postal pricing regime since 2006.

The PRC is conducting a review of the rate setting system established by Congress in the Postal Accountability and Enhancement Act. The Alliance argued that the current price cap structure has forced USPS to reduce costs rather than simply passing those costs to mailers as was the case in the previous pricing regime. This rate cap has provided mailers with rate predictability and stability compared to the previous system.

As expected, USPS filed comments with the PRC asking it to remove the inflation-capped price structure saying that it has “failed to assure adequate revenues to maintain Postal Service’s financial stability.” While USPS has an operational surplus, with a net increase in cash of more than $1.4 billion, the agency has defaulted on $33.9 billion in statutorily mandated retiree health benefit payments over the last 5 years.

Mailers are concerned that the PRC might attempt to repair the USPS balance sheet by allowing for an increase of rates outside of a rate cap, which could lead to an increase in rates of 6-7 percent a year over the next 3 years.

The PRC is expected to reach a decision this fall on whether the current price cap structure is meeting the objectives established by law. If they do not believe it is, the agency will put out a call for public comment on an alternative rate structure.

Source: News Media Alliance policyXchange