US Postal Regulatory Commission recommends temporary rate relief

The Postal Regulatory Commission May 25 offered interim rate relief for Standard Regular flats and catalog mailers in response to the U.S. Postal Service Governors’ request to reconsider the recommended rates in March.

The PRC’s decision grants a temporary rate reduction of 3 cents for all Standard Mail regular flats and 2 cents for Standard Regular nonprofit flats. The temporary transitional rate relief for Standard Regular flats mailers would end Sept. 29.

“We believe this option responds to the concerns expressed by the Governors and all of the many participants who submitted comments,” PRC Chairman Dan G. Blair said in a statement. “It leaves Standard letter rates untouched, protects the Postal Service’s financial standing, allows USPS projected revenues to meet expected costs and does not reduce the contingency fund.”

The agency said the Governors’ acceptance of this recommendation would require minimal administrative or transaction costs since the savings can be measured at the end of the transition period or at the time of mailing.

Also, additional computer hardware or software will not be needed to accommodate this temporary change. The PRC recommends mailers simply multiply the number of flats mailed by either 3 cents or 2 cents, depending on mail type.

“We believe our recommendation appropriately acknowledges the recent passage of the Postal Accountability and Enhancement Act that underscores the potential benefits of providing the Postal Service with additional pricing flexibility,” Mr. Blair said.

Meanwhile, the Direct Marketing Association disagreed with the recommendation and issued a statement of disappointment in the PRC.

“Over the past several months, postal officials have heard a loud-and-clear message from the mailing community that these outrageous rate increases will force catalog and nonprofit mailers to make significant cuts in mailing volumes,” DMA president/CEO John A. Greco Jr. said in the statement. “Giving mailers a ‘summer break’ doesn’t change that fact.”

The decision to temporarily reduce rates now lies in the hands of the USPS Board of Governors. The DMA is asking the USPS Governors to approve the rate reduction without the deadline, leaving it in effect until the next postal rate change, which is likely in 2008.

“We are encouraged that the PRC at least seemed to recognize our fundamental premise that flat rates can be reduced without imposing higher costs on other classes of mail,” Jerry Cerasale, DMA’s senior vice president for government affairs, said in a statement. “We have every confidence that [Friday’s] proposed relief can be made permanent without causing financial harm to the Postal Service.”

He noted that the 3-cent decrease leaves flat rates substantially higher that what the USPS originally requested in May last year.

“Offering this temporary relief is merely a Band-Aid that will dolittle to address the ultimate problem and stop plummeting mail volumes,” Mr. Cerasale said.

The DMA is asking its members and other mailers to support its request and send their own letters to the USPS Governors to keep the rate reductions that the PRC has recommended in effect beyond September 29.

“We have tremendous strength in numbers,” Mr. Greco said. “If we work together, we can present a powerful, unified message that lets the Postal Governors know that permanent rate relief for flat-shaped mail is the only real solution for the mailing community. Temporary relief is not what we asked for – and it’s not the relief mailers desperately need.”