US Post Office starts rate increase process

The post office is beginning the process of seeking a rate increase even as it awaits congressional action that would make the step unnecessary.

The internal process of preparing for a new rate case has started, postal vice president Azeezaly Jaffer confirmed Thursday.

Last fall, a financial review discovered that the Postal Service had paid too much into a retirement program for workers who joined the agency before 1983.

Correcting that error could permit the post office to cut its payments into the system by $2.9 billion in 2003 and $2.6 billion in 2004. Postmaster General John E. Potter said that money could allow the next rate increase to be delayed until 2006.

One hitch is that reducing the payments requires action by Congress and that has yet to happen.

Without it, the post office will need to raise the price of a stamp in 2004 and, thanks to the long and complex process involved, would have to file a case with the Postal Rate Commission this year, probably by April.

Lobbyists from a variety of businesses that send large volumes of mail have reportedly been visiting lawmakers seeking help in getting the retirement payment cutback added to legislation now under consideration.

The payments in question are to the Civil Service Retirement System. Workers who joined the post office in 1983 and since are enrolled in a different retirement system.

After fears that losses could run into many billions of dollars because of the lagging economy and the anthrax attacks, the post office finished last year with a loss of $1.35 billion after making sharp spending cuts and reducing staff. In addition a rate increase last summer brought in extra money.

A strong holiday mail season this year boosted the post office to a larger-than-expected $1 billion profit in the first quarter of this year, though that is typically balanced by losses in the slower summer months.

Because it takes so long to raise rates the agency must begin the work far in advance, anticipating a point in the future when it will go into the red. Overall, the post office, which does not receive a tax subsidy for operations, is required to break even over time.

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