Legislation being considered by Congress could force postal rates higher than might otherwise be necessary, Postmaster General John E. Potter said yesterday.
Potter urged major customers of the U.S. Postal Service to join the agency in helping it communicate its needs.
"Your voice needs to be heard," Potter told a regional meeting of the Postal Customer Council in Boxborough, Mass. His speech was broadcast to other members of the group in 140 cities across the country.
"Last year we collectively convinced Congress" that changes needed to be made in postal operations, he said, and many of the needed improvements are included in bills now in House and Senate committees.
But those bills, which change the law that governs the Postal Service, also contain potentially costly problems, Potter warned.
For example, he said, the measures would require the agency to pay retirees' health benefits in advance. That could cost $3.9 billion in 2006.
Potter has promised that postal rates will not increase until 2006. But if the agency has to prepay those benefits, he said, the cost will add just over 2 cents to whatever increase would have been necessary in the current 37-cent first-class rate.
In addition, the bills do not address pricing flexibility in various products, an omission that could result in extra costs shifted to package rates, potentially forcing shippers to competitors.
The loss of the $2.5 billion annual contribution that packages make to postal overhead would have to be made up elsewhere, "most likely on higher rates on other classes of mail," Potter said.
On the positive side, Potter said, the bills do eliminate the requirement for the Postal Service to maintain a $3 billion escrow account holding retirement overpayments, and relieve the agency of the responsibility of funding pension benefits for the time its workers may have spent in the military.