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Archive for Friday, October 1, 2010

USPS denied mail rate increase

October 1, 2010

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— The panel that regulates the U.S. Postal Service denied a proposal to increase postage rates Thursday, blaming the agency’s business model for its recent financial hardships.

In a news conference, the Postal Regulatory Commission said the Postal Service had failed to justify the requested 5.6 percent increase.

In July, the Postal Service proposed increasing the price of first-class postage from 44 cents to 46 cents in an attempt to compensate for decreasing revenue and declining mail volume. This was the first time the commission considered a rate increase higher than the rate of inflation, Chairman Ruth Goldway said.

In August, the Postal Service reported a $3.5 billion net loss for the fiscal third quarter — $1.1 billion more than the same quarter last year.

The commission’s decision was unanimous among its five members, Goldway said at the press conference. She said the commission acknowledged the decline in mail volume during the recession, but said she believed the rate increase was an attempt by the Postal Service to deal with the agency’s long-term structural problems.

“The commission finds that the Postal Service has shown the recent recession to be exigent circumstances but has failed to both quantify the impact of the recession on its finances and to show how its rate request relates to the resulting loss of mail volume,” Goldway said in a statement.

Goldway said the Postal Service’s most pressing financial problem is the agency’s yearly $5.5 billion payments to a prefunded future retiree fund, which is required by law.

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