A day before the USPS releases its most recent quarter’s financial results, it got some bad news. The Postal Regulatory Commission (PRC) is rejecting its proposed First Class Mail rates for 2020. It appears to be an unusual occurrence, though we’ll reserve judgement until the experts weigh in.
The Alliance of Nonprofit Mailers was quick to tweet a link with the following comment: “@PostalRegulator nixes @USPS 2020 First-Class prices as over CPI. PRC “also expects…amended rate adjustment filing will demonstrate how the revised planned First-Class Mail prices are consistent with the relevant objectives and factors.”
CPI refers to the Consumer Price Index. First Class Mail is a “dominant” mail service (as opposed to “competitive”), and the USPS is restricted from raising dominant rates above the rate of inflation based on the CPI.
When the USPS filed its 2020 rates last month, it said Mailing Services would go up an average of 1.9%. But the PRC said the USPS incorrectly calculated the percentage change in rates for First-Class Mail, stating it made “impermissible adjustments to the billing determinants related to Inbound Letter Post.”
The PRC calculated the proposed percentage change in rates to be 2.109%, which “exceeds the total price adjustment authority of 1.933 percent.”
Since the PRC can only approve or disapprove of rates, not set them, it remanded the case back to the USPS.
The PRC advised the USPS to submit its amended proposal “expeditiously” given it wants to implement the price changes on January 26, 2020.
The filing is on the PRC.gov website (PDF format).
Update 11/14/19: More information from today’s Linn’s Stamp News.