PRC Approves Proposed First-Class Rates – with Details to Follow

The following article is an excerpt from the Dec. 9 edition of Mailers Hub News

In an order issued on December 6, the Postal Regulatory Commission approved the First-Class Mail rates proposed on October 9 by the Postal Service, as those were later corrected on October 10 and amended on November 20.

The decision follows the Postal Service’s submission of amended prices and supporting documents after the commission had remanded the filing back to the USPS on November 13. The PRC had found discrepancies in the data initially presented about Inbound E-format Letter Post that, when corrected, pushed the rate increase to 2.109% for the class, beyond the Postal Service’s 1.933% rate authority under the CPI cap (plus previously “banked” authority.)

The Postal Service submitted revised data and other documents on November 20. The major change presented in that filing was a reduction in the price for 5-digit automation presort letters from $0.391 to $0.389. That adjustment offset any variations in the workpaper calculations for Inbound E-format Letter Post and yielded a net increase for the class that stayed within the agency’s available rate authority.

Approval in two parts

In its November 20 response to the remand, the Postal Service also had presented three alternative scenarios for dealing with Inbound E-format Letter Post – which the USPS had earlier asked to be transferred to competitive products. In the order approving the amended prices, the PRC stated:

“... All of the planned prices for First-Class Mail are the same under all three scenarios. ... Each scenario differs based on what, if any, billing determinant adjustments are made for Inbound Letter Post. ... Therefore, each scenario would result in a different amount of unused price adjustment authority that would be available for use in future First-Class Mail price adjustments. “... The Commission concludes that the amended planned price adjustments do not violate the price cap limitations [and,] because no planned First-Class Mail workshare discounts exceed their avoided costs, all proposed workshare discounts comply with [statutory requirements]. ...”

In an innovative approach to issuing the major elements of a decision and the complex justifications supporting it, the PRC divided its decision in two.

“The Commission acknowledges that the Postal Service seeks issuance of a final order by December 12, 2019. ... However, as previously observed, to sufficiently address the issues identified in Carlson v. Postal Reg. Comm’n, the Commission’s determination will take additional time. ...

“Therefore, the Commission reserves final disposition of issues not addressed in this Order, including consistency with the statutory objectives and factors, billing determinant adjustments, the amount of unused price adjustment authority for First-Class Mail, the Postal Service’s request to accelerate the transfer, and comments.”

An innovative approach

Essentially, the PRC didn’t make the USPS or its customers and suppliers wait to learn about the approved rates until after it had finished producing its legal explanation of how that approval comported with statute, as that was recently interpreted by the US Court of Appeals. (The commission’s attention to a detailed explanation of process and legal compliance derives from the appellate court’s review of last year’s PRC decision about the 55-cent stamp. In its review, the court alleged that the PRC hadn’t fully demonstrated it had considered every element of the rate-setting statute.)

Though often criticized for being bureaucratic, the PRC deserves kudos in this instance for finding a way to issue a decision in two installments: first, the time-sensitive information for which the USPS and mailing community have been waiting, then the legal and statistical details of how the commission’s decision is in line with statutory requirements.

Part two of the PRC’s decision will be contained in an order to be issued at an unspecified later date. Meanwhile, the now approved rates for First-Class Mail, and for all other market-dominant and competitive products, will take effect on January 26, 2020, as planned.

Excerpted from the Dec 9, 2019 issue of Mailers Hub News. 

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