“Forced” USPS price reductions come into effect on Sunday
The US Postal Service (USPS) has issued a statement claiming it will lose about $2bn in annual revenue as a result of the “forced” price reduction that will come into effect on Sunday (10 April). As previously reported, the price reduction has been mandated by the PRC.
The PRC granted an exigent surcharge beginning in January 2014 on mailing products and services, in order to help the USPS compensate for the volume and revenue losses resulting from” the Great Recession” – but this exigent surcharge has now been removed.
In a statement issued by USPS yesterday (7 April), Megan J. Brennan, US Postmaster General and USPS CEO, commented: “Given our precarious financial condition and ongoing business needs, the price reduction required by the PRC exacerbates our losses.
“This unfortunate decision heightens the importance of the review of our ratemaking system which our regulator is required to conduct later this year.”
The USPS statement also pointed out the PRC is required to review the market-dominant regulatory system to determine whether it is achieving the statutory objectives mandated by Congress.
The PRC is empowered to modify the system or create a new system as necessary to achieve the objectives. The obligation to conduct the review arises 10 years after enactment of the Postal Accountability and Enhancement Act, which occurs in December of this year.
“To provide clear guidance to all interested parties concerning the review process, we filed a petition today with our regulator to clarify the scope of the review and which provisions of the current regulatory structure are subject to potential modification or replacement,” said Brennan. “By addressing preliminary issues now, the PRC can ensure an expeditious and efficient review.”
Brennan said that the USPS will “continue to seek legislative reforms to put the Postal Service back on a sustainable financial path”, adding that “pricing is an important component”. The USPS is putting forward a number of proposals – which include reinstating the exigent surcharge and making it permanent.
While the USPS may object to the surcharge removal, its statement did include a useful table summarising the First-Class Mail price reductions:
| Current | Mandated Reduction | |
| • Letters (1 oz.) | 49 cents | 47 cents |
| • Letters additional ounces | 22 cents | 21 cents |
| • Letters to all international destinations | $1.20 | $1.15 |
| • Postcards | 35 cents | 34 cents |
