A Postage Rate Decrease?

A Postage Rate Decrease?


Could it be true?  A postal decrease?

First, lets go back a couple of years when the postal service was hit hard by recession.  Overall mail use decreased-especially First Class that was once considered the saviour.  This left USPS in the red.  This allowed for the creation of the Postal Accountability and Enhancement Act (PAEA) of 2006 which was a clause that closely tied postal rates to the Consumer Price Index (CPI). This gave mailers a predictable schedule and process for price changes. USPS argued that they needed more revenue to overcome the difficulty caused by the recession, and in 2013 the PRC approved a temporary 4.3 percent postage increase. This increase or “exigency” expired at the end July.  USPS argued again that they needed more money and in came the DC Court of Appeals.  They ruled that the initial calculations were not correct.  After much review, the PRC determine that USPS could collect an additional $1.91 billion in exigent contribution.

What Does This Mean To You?

This means that mailers will see the first ever rate decrease in 2016. But until then, mailers will be stuck paying the exigent surcharge of 4.3% for an additional 8 months. Prices will remain the same through the fall mailing season. USPS will be required to “roll off” the surcharge once they reach the $1.91 billion amount.

When and How Much Will I Save?

USPS needs to notify the PRC and the industry at least 45 days in advance for the price decrease.  To further complicate things, that comes at the time that they can apply the yearly rate changes due to CPI.  Right now the CPI is less than one percent, but newer numbers will be released in December and will determine if they can raise prices to compensate.  

If it were to happen today, we would see a decrease between 2.5-4%.  However that amount could vary widely from mailing to mailing.

Is it final?

The discussion on exigency goes back to 2010. There were many filings, comments filed from the industry, court cases and lots and lots of math. USPS had originally requested that the exigent price be permanent.  USPS aruged that they should be able to collect an additional $11 billion dollars. However the appeals court ruled that the “count once” rule should not apply.  USPS could escalate this again, but it is very unlikely.

You can read the full decision of the PRC below.


View the document here in PDF