Thursday, June 11, 2015

Notes on the USPS exigent postage rate decision

Chronology of the USPS exigent (meaning extraordinary) postage rate case due to the 2006-2008 "great recession"...

July 2010, USPS files for a +5.6% postage increase
Sept 2010 Postal Regulatory Commission's (PRC) denial
Oct 2010 USPS files Federal Court Appeal
May 2011 Court remands to PRC to establish quantifiable loss criteria
Sept 2011 PRC directs USPS to support their rate claim (i.e. amount due to recession instead of diversion of mail to electronic communication, for example).

2 year lapse (A response back to the PRC is held in the Postmaster General's back pocket awaiting reform legislation that never happens).

Sept 2013, USPS files for $4.3% increase (Why +4.3%?  Just feels right).
Dec 2013 PRC grants 4.3% increase for only about 2 yrs., then reverses (est. ending Sept 2015).
Apr 2014 USPS files Federal Court Appeal asking for +4.3% baked-in (forever rate)
June 2015 Appeals Court remands to PRC; upholds rate limit but revises "count once" effect of mail revenue loss to bump out another $1.2 B (the value according to the USPS).

We now await determination from the PRC if the 4.3% exigent rate will continue past Sept 2015 until the additional $1.2 B is collected.

Final take:  The USPS focused too much on "we need money" pressure to push through an exigent increase in hopes of striking it big, without properly defining (or in their opinion limiting) how much they were actually due.   This strategy never really worked; although it did eventually bring $4.4 B in revenue over about 3 years, 8 to 10 years after the exigent loss.  The good news is that while struggling financially during this process, the USPS accelerated their network contraction and personnel attrition to match infrastructure to demand.  That process continues.

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