PRC Announces Proposed Rulemaking For USPS Rate System Changes

The Postal Regulatory Commission (PRC) announced on December 1, 2017, proposed changes to the current system for regulating rates and classes of USPS Market Dominant products.

Last fall, the PRC announced an audit of the postage ratemaking conditions established in December 2016 when the Postal Accountability and Enhancement Act (PAEA) was signed into law. Chairman Robert Taub hosted a media conference today to discuss the PRC’s findings after the conclusion of its nearly year-long review.

In conclusion, the PRC determined that the objectives of the 2006 law are not being met, which brings a new set of proposed rules to approach postage rates going forward.

Here are the highlights of the PRC’s new suggestions:

• A supplemental 2% rate authority (over the cap) for 5 years and an additional 1% as “performance-based” rate authority if the USPS achieves its performance goals 
• For products the USPS says are “underwater” as they are non-compensatory, the PRC proposes price increases that are 2% higher than other elements of the class (Marketing Mail Flats and Periodicals could realize this additional increase.) 
• For workshare, the Commission proposes pass-through bands (75% – 125% for Periodicals, 85% – 115% for all other products) with a 3-year phase-in to bring all existing discounts into 100% compliance

There was no exact implementation date shared. To offer the industry an opportunity to consider and comment on these proposed changes, the PRC is planning on a 90-day comment period and an additional 30 days for reply comments.

We’ll be posting more on this topic as it develops, however to read the full details at this time you can view the PRC Docket here.