USPS denied more time to decide on exigent postal rate rise

US regulators have rejected the US Postal Service’s request for a temporary stay on its application to raise postal rates by more than its inflation-based price cap. USPS must now decide by November 7 whether to pursue its long-running attempt to impose an “exigent” rate rise to compensate for the damage to its finances from the recent recession.

The Postal Regulatory Commission ruled yesterday that it would not be “appropriate” to allow USPS to wait for pending Congressional legislation before deciding whether to continue the request process for a 5.6% increase in its prices.

The process has already been through the courts for clarification, after the Commission rejected the request last year.

USPS asked last month for a stay until December 15 to decide whether to continue seeking the above-inflation price increase.

But the Commission decided yesterday that allowing a delay would “prolong uncertainty and contravene the statutory objective of ‘creat[ing] predictability and stability in rates'”.

“Uncertain”

In the ruling, the regulators warned that it was still “highly speculative” that Congress would agree to a rescue package for the struggling Postal Service this fall.

There was “no guarantee”, said the Commission, that a national deficit reduction plan expected from the Congressional “Super Committee” later this month would include powers for USPS to raise prices above its current price cap. And, it added that there was also no guarantee that any other Congressional legislation would be passed by the end of this year.

“In many cases, motions to stay based on pending legislation have been denied, because the legislative process is uncertain,” ruled the Commission. “The Commission is persuaded by this reasoning and finds that it applies to the pending postal legislation.”

USPS did itself no favours by admitting in its filings that it might not even decide by December 15 whether to pursue the exigent rate rise, and if allowed a stay might have subsequently asked for a further delay when the deadline came around.

“Disappointed”

USPS spokesman Dave Partenheimer said today the Postal Service was reviewing the Commission’s decision, but could not yet say whether the organization was likely to pursue its exigent case.

“We are disappointed that the PRC did not grant our stay request,” he told Post&Parcel, adding: “we’ll make a decision once we have reviewed their decision and come back with a response by the November 7 deadline.”

If it decides to go forward with the case, the Postal Service will have to show how the 2008-2009 recession caused “extraordinary or exceptional circumstances” within USPS finances, in order to meet the terms of US postal law for an above-inflation rate rise.

The Postal Service is expected to record a loss of $10bn for the 12 months up to the end of September when it releases its latest annual results on November 15, following on from a $8.5bn loss last year. It believes the recession was a major factor in those losses, along with e-substitution and mandated pension and benefit payments.

However, following the summer’s court order it has to show the recession was an impact that was beyond normal circumstances in the postal market, then claim only the amount in extra postage that covers the affect of the recession.