Postal Service Approves Majority of PRC Pricing Recommendations
Tuesday, March 20, 2007
WASHINGTON, D.C. — The Governors of the U.S. Postal Service (USPS) today approved an increase in the price of a First-Class stamp to 41 cents, authorized the issuance of the Forever Stamp, approved shape-based pricing, and set May 14 as the date for implementation of these changes. (See chart below.) However, they delayed implementation of new prices for periodicals and requested reconsideration for some mail classes. USPS proposed new rates on May 3, 2006, and the Postal Regulatory Commission (PRC) issued its recommendation on Feb. 26, 2007. The Governors spent considerable time deliberating the PRC's recommendations — meeting six times and rewriting several drafts of their decision over the past 22 days — before voting earlier today. (See complete decision of the Governors at usps.com/ratecase.) "We praise the PRC for its early and thoughtful recommended decision," said Board of Governors Chairman James C. Miller III, "and appreciate the comprehensive analysis the Postal Service staff provided in its rate proposal." Forever Stamp The Governors approved the Forever Stamp, which will sell at the new 41-cent First-Class Mail one-ounce letter rate. The value on these stamps will always be the one-ounce letter rate and can be used for any future one-ounce letter mailing without extra postage. "The Forever Stamp is a consumer innovation that delivers convenience and value and will help ease the transition for mailing letters when prices change," said Chairman Miller. Shape-based Pricing The new prices also reflect differences in the costs of handling letters, large envelopes (flats), and packages. Mailers are encouraged to consider options available to reduce postage costs. For example, if the contents of a First-Class large envelope are folded and placed in a letter-sized envelope, mailers can reduce postage by as much as 39 cents per piece. Request for Reconsideration The Governors, however, requested reconsideration of the PRC's rate recommendations for Standard Mail flats (catalogs), the Non-machinable Surcharge for First-Class Mail letters, and the Priority Mail Flat-Rate Box. * Standard Mail Flats - The Governors are concerned that price increases recommended by the PRC may impose an unnecessary degree of "rate shock" on the catalog industry, particularly small businesses. The recommended increase for some catalog mailers is as much as 40 percent, which is more than double what the Postal Service had proposed. * Non-machinable Surcharge - The PRC decision on First Class Mail two-ounce and three-ounce letters does not differentiate between machinable and non-machinable. The Governors believe this warrants further analysis to ensure there are incentives for mailers to provide letters that can be processed at lower cost on efficient sorting equipment. * Priority Mail Flat-Rate Box - The PRC recommended a rate of $9.15 for the Priority Mail Flat-Rate Box, which is $1.05 above the current rate and 35 cents higher than the Postal Service proposal of $8.80. The Governors believe a rate below $9 would be more appropriate for this popular consumer and business product and would be cost-justified. Delayed Implementation The Board of Governors also delayed until July 15, 2007, implementation of the new prices for Periodicals (magazines and newspapers) to allow time for the publishing industry to update computer software and adjust to the complexity of the PRC-recommended rate structure for periodicals. USPS had proposed a single container charge for periodicals to encourage efficiency, but the PRC recommended 55 different prices based on container type, entry point, and level of sortation.