New Postal Service Rules Delivered Ahead of Schedule

By Stephen Barr
Tuesday, October 30, 2007

The Postal Regulatory Commission yesterday took an important step in reshaping the U.S. Postal Service, eight months ahead of the deadline set by Congress.

The commission released a regulation that will give the Postal Service more leeway in setting prices and in using contracts to customize rates for big mailers, while maintaining universal mail service to homes and businesses.

The changes are supposed to bolster business operations at the Postal Service, which has seen an erosion in first-class mail as Americans increasingly turn to the Internet and e-mail to communicate, buy products and pay bills.

Retailers, advertisers, banks and other businesses that rely on the mail had pushed for a new process for setting postage rates, in part because the old system was slow and costly. It usually took 10 months to evaluate postal costs and set new stamp prices; during the process, some large companies hired lawyers and economists to analyze and challenge rate requests.

Under the new system, rate adjustments should become more predictable for companies and the public.

The 173-page regulation issued yesterday will permit the Postal Service to adjust rates annually for first-class letters, magazines, advertising and certain other types of mail. But the rate increases cannot exceed the increase in the consumer price index for the previous 12 months.

Other types of mail, such as Priority Mail and Express Mail, will be treated as "competitive products" and not subject to the price cap. The Postal Service will be allowed to offer discounts based on volume and to negotiate special terms for this category.

Dan G. Blair, chairman of the five-member Postal Regulatory Commission, said he was "extremely proud" that the panel had completed the regulation months ahead of the deadline set by Congress. Lawmakers passed a law last year mandating the changes to postal operations, the most significant since the 1970 law that reorganized the post office.

As part of the transition to the new system, Congress gave the Postal Service the option to raise postage rates, if necessary, by filing by Dec. 19 for one last rate increase under the old 1970 law.

The regulation issued yesterday includes a rule for the transition. In the event that the Postal Service decides to file for a rate increase under the old law, the Postal Service cannot pursue a rate increase under the new system at the same time. In other words, the Postal Service must choose between the old or new rules if it wants to raise rates next year.

In a statement yesterday, Blair said that "having a new ratemaking system in place sooner, rather than later, allows us to focus on the tasks ahead and hopefully avoid an old cost-of-service rate case."

How the Postal Service plans to handle the transition may be discussed today at a House subcommittee hearing, where James C. Miller III, chairman of the postal board of governors; John E. Potter, the postmaster general; and Blair are scheduled to testify on postal rates.

The most recent rate increase came in May, when the price of a first-class stamp rose to 41 cents.

The final regulation has been in the works since August, when the commission issued a proposed regulation. That proposal provided retailers, advertisers and others with "pretty good guidance on what the new system will look like," said Dennis Shea, head of federal government relations for Pitney Bowes, a company that specializes in mail technology.

"I think the mailing industry is going to understand the new rules very quickly," he said.

Federal Benefits Forums

Rep. Chris Van Hollen (D-Md.) will host two forums on health-insurance plans and other benefits that will be provided to federal employees and retirees in 2008.

The first forum will be held from 9 a.m. to 11 a.m. on Nov. 28 at the Holiday Park Senior Center, 3950 Ferrara Dr., Wheaton. The second is scheduled for 7 p.m. to 9 p.m. on Nov. 29 at the Johns Hopkins University Montgomery County campus, 9601 Medical Center Dr., Building III, Rockville.

The forums are co-sponsored by the Maryland Federation of Chapters of the National Active and Retired Federal Employees Association.

For more information or directions, call 301-424-3501.

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