12/1/17 PRC completes its review of the postage rate-setting system
The Postal Regulatory Commission (PRC) today posted its findings of the so-called 10-year review of the postage rate-making system established by the Postal Accountability and Enhancement Act of 2006 (PAEA). That law indexed the prices of so-called “market dominant” products (e.g., letter mail, periodicals and catalogs) to the Consumer Price Index (CPI), often referred to as the CPI price cap. The law also called on the PRC to launch a review of the system after 10 years to determine whether the new system was working to fulfill the nine objectives identified by the law, including financial sustainability and service quality and predictability.
NALC filed comments in the review case, which was launched Dec. 20, 2016, arguing that the current system was failing to meet the key objectives of the PAEA. We also urged the commission to approve a one-time—or “true-up”—increase to restore the Postal Service’s financial stability. In addition, we called on the PRC to propose a new system without a price cap.
On our first argument, the PRC agreed with NALC, as well as USPS and the other postal unions, that the current system is not working. Given that virtually all of the other interested parties urged the commission to conclude otherwise, this is a victory.
However, on our second argument, the PRC did not call for a “true-up” increase or a new system without a price cap. Instead, it proposed a new price cap allowing the Postal Service to raise rates by up to two percentage points above the CPI each year (CPI+2) with the possibility of raising rates by an additional one percentage point (CPI+3) if efficiency and service-quality targets are met. This proposed system is set to last for five years before a new review. It will be the subject of a rule-making proceeding that will involve a 120-day comment period for interested parties.
“We will vigorously participate in this new rate-making proceeding,” NALC President Fredric Rolando said, “and we remain committed to achieving a sensible system of rate-setting that will be good for the public and the Postal Service.”
NALC is now reviewing the PRC’s 293-page report on its findings from the 10-year review, as well as the 190-page order of proposed rulemaking, and we will report more fully on both in the January Postal Record.