Will the USPS ask for a second postage increase?

The U.S. Postal Service is expected to say next month how much standard mail rates are increasing.

The U.S. Postal Service is expected to say next month how much standard mail rates are increasing but there’s growing doubt among some observers that the hike—or hikes—won’t be as small as expected.

They fear that the USPS could file an “exigent” rate case that would drive the rates up even more.

Under the 2006 postal reform law, the USPS can only raise rates every year based on increases in the Consumer Price Index, now pegged at 3.8%. Those increases would take effect sometime in May, according to the USPS.

But the postal service, which lost more than $2.8 bn last year and has been steadily losing mail volume for many years, is also saddled with a $5.8 billion-a-year obligation to pay the pensions and health benefits of former postal workers and may have to file for a separate additional “exigent rate case” to meet that obligation.

“There still is some lingering concern that the postal service may file for an exigent rate case and bust the rate cap,” said Tony Conway, executive director of the Alliance of Nonprofit Mailers. “And that is probably most contingent on the postal service getting some relief from their [pension] liabilities.”
At the same time, Conway expects the regular increase to be lower than predicted.

“It’s interesting because up until the last two or three months of the year, inflation was soaring up so it looked as if it was going to be up over 5%,” he said. “And then, the last few months with the economy tanking, inflation has fallen back down so it’s a little bit less than people expected most of the year.”

Earlier this month, Reps. Danny Davis (D-IL) and John McHugh (R-NY) introduced a bill that would place postal pension relief in the economic stimulus legislation now under consideration in Congress, said Bob McLean, executive director of the Mailers Council.

Mc Lean expects the USPS to announce its rate hikes at its Board of Governors meeting Feb. 9.