In a unanimous decision, the Postal Regulatory Commission (PRC) has denied the US Postal Service’s request for an exigent rate increase that would have increased postage rates by an average of 5.6% beginning in January. The reason given by the PRC for its decision is that the US Postal Service failed to prove how its current financial troubles are a result of the economic recession and a decline in mail volume. Instead, the primary cause of the USPS’ liquidity crisis, as revealed by documentation the USPS provided during a 90-day review of the rate increase request, is related to the funds that the USPS is required to set aside for future retiree health benefit premiums. In other words, its recent cash problems, which include a year-to-date net loss of $7.7 billion, would have occurred whether or not the recession took place. “The commission finds that the Postal Service has show the recent recession to be an exigent circumstance but it has failed both to quantify the impact of the recession on its finances and to show how its rate request relates to the resulting loss of mail volume,” said PRC chairman Ruth Y. Goldway, in a statement. In early July, the USPS officially requested an exigent rate increase, which is an increase in excess of a predetermined price cap necessitated by exceptional circumstances. The US Postal Service asked the PRC to find that the decline in mail volume it experienced as a result of recession was the extraordinary or exceptional circumstance driving the need for an exigent rate increase. However, the law requires that the US Postal Service demonstrate that any exigent rate adjustments are due to the identified exceptional circumstances, which the PRC is saying it failed to do. For example, during the review process it was shown that the US Postal Service has significantly cut costs in response to falling mail volumes caused by the recession and the ongoing electronic diversion of mail, a process that is continuing.