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NJ Daily

Big Mailers Bracing for Steep Rate-Hike Request From Postal Service

The Postal Service may soon deliver a hefty rate increase.(AP Photo/Pat Wellenbach)

photo of Billy House
August 27, 2013

A coalition of magazine, newspaper, printing, and direct-marketing groups warns that the U.S. Postal Service may decide next week to request that postal rates be raised significantly—perhaps by as much as 10 percent—under the claim of "exigent" circumstances.

The Board of Governors for the Postal Service, which is bleeding money, continues to explore "the possibility of filing for price adjustment later this year," spokesman Dave Partenheimer said Tuesday.

But he said no final decision has been made.

 

However, the board is scheduled to meet in a private teleconference Sept. 5 with the topic of "pricing" included on its agenda. Fearing the board plans to vote to request an across-the-board rate increase that far exceeds inflation, the Affordable Mail Alliance of more than 50 commercial organizations that represent newspapers, magazines, and direct mailers has launched a preemptive lobbying effort.

"The Affordable Mail Alliance understands that the Board of Governors will be considering a potential exigency rate increase on your conference call on Sept. 5," declared letters by the group to the board's chairman, Mickey Barnett, and other board members.

Notwithstanding the Postal Service's ongoing financial predicament, warns those letters, a significant rate increase could be self-defeating to recovering postal financial stability, causing "severely adverse and likely irrevocable consequences for mail volume and revenue."

Postal rate increases are capped at inflation, as measured by the Consumer Price Index. That would mean an allowable increase of about 2 percent for late January 2014 implementation.

But a 2006 law also allows the Postal Service to seek a higher rate increase beyond the CPI in instances of "exigent" circumstances. In crafting that language, Sen. Susan Collins, R-Maine, has said she envisioned extreme circumstances, like terrorist attacks or natural disasters.

Such requests are to be made to the Postal Regulatory Commission, which has 90 days to act on them. In 2010, the Postal Service submitted such a request for an exigent rate increase of 5.6 percent—far more than the CPI cap—that would have brought in more than $3 billion more annually.

But the mailers fought that increase in court, and it was derailed.

The Postal Service continues to hemorrhage money—as much as $19 billion since early 2012. And there are expectations that efforts to use "exigent" circumstances as a basis for a significant rate increase are being rekindled.

The higher costs would hit everyone, including individuals who put a stamp on a piece of mail. However, the AMA's letters spell out that the mailing industry and its suppliers are responsible for $1.3 trillion in sales annually, and nearly 8 million private-sector jobs.

"This is not a solution," said Mary Berner, president and CEO of the Association of Magazine Media, in an interview.

Rather, she said it will instead produce a "lose-lose situation" for Postal Service consumers and the service itself. Some magazines, she said, could end up abandoning mail use altogether and concentrate even more on digital efforts, or even go out of business. A 10 percent increase would add about $300 billion in costs to the industry, she said.

Berner said her group is among those supportive of efforts in Congress to come up with "real reforms" rather than what she says are such short-term efforts to address the Postal Service's worsening financial situation. However, she said that attention and effort will be diverted from those current legislative efforts by the renewed legal challenges sure to be mounted if the Postal Service pursues another "exigent' increase.

In the House, the Oversight and Government Reform Committee already has passed along party lines its new version of a postal-reform bill sponsored by Chairman Darrell Issa, R-Calif. A bill also has been introduced by Sens. Tom Carper, D-Del., and Tom Coburn, R-Okla., the chairman and ranking member, respectively, of the Senate Homeland Security and Governmental Affairs Committee.

This article appears in the August 28, 2013 edition of NJ Daily.

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