PRC Confirmation – On April 6th the Postal Regulatory Commission issued an order confirming the Postal Services additional rate authority stemming from the new regulations in Final Order No. 5763 which revised the ratemaking system for Market Dominant products.
The PRC concurred with the USPS calculations of;
Density factor – 4.5%
Retirement factor – 1.062%
Non Compensatory Surcharge– 2%
Currently the CPI available is 0.68%. The below shows the total available to each class, including the new factors, the CPI, and any banked unused rates.
While the maximum available rate authority to Marketing Mail is currently 6.252%, the USPS has been mandated that “whenever the Postal Service files a notice of rate adjustment applicable to any class of mail, it will be required to propose to increase the rate for any non-compensatory product within that class by a minimum of 2 percentage points above the percentage increase for the class.”
It is likely then that Letters and HD flats will see a below max increase to accommodate the extra 2% needed for Marketing Mail Flats and Carrier Route Flats.
Timing – On Friday March 26th, the USPS submitted a filing with the PRC seeking a waiver under 39 CFR to make them exempt from the requirement to keep the passthrough for the workshare discount avoided costs to at least 85 percent on First Class 5-Digit Automation Letter mail. This waiver should not be granted by the PRC as the USPS did not meet the requirements of reporting, but two important nuggets to gleam from the filing are that the USPS identifies a date for an announcement of a second rate increase in 2021 (on or about May 28th, 2021), and that it would be above CPI, meaning it would be using part, or all of the additional rate authority the PRC granted to the USPS. A May 28th announcement would make a second increase possible to go in effect any time after August 27th, 2021.
“Pursuant to 39 C.F.R. § 3030.286, the United States Postal Service requests that the Postal Regulatory Commission waive the applicability of 39 C.F.R. § 3030.284 to the First-Class Mail Letters 5-Digit Automation workshare discount in the upcoming market-dominant price change, which the Postal Service expects to file on or about May 28, 2021.”
“Granting a waiver for this year would permit the Postal Service to implement the higher workshare discount requirement for 5-Digit presort First-Class Mail a year later, while focusing this upcoming year on monitoring the effect on overall mail volumes of the first above-inflation price increase since the exigent increase”
If the USPS files for a rate increase on May 28th, then we can expect an increase to go in affect as early as the end of August 2021.
PRC Final Rule No. 5763
Request for waiver under 39 CFR