Senator Susan Collins, the principal author of the 2006 Postal Accountability and Enhancement Act (PAEA) has told mailers that the US Postal Service is not entitled to an emergency rate increase under the terms of that law. In a letter to the Coalition for a 21st Century Postal Service, a mailing industry lobbying group, Collins said:

I agree…that the exigent rate case filing is not justified under the terms of the 2006 Postal Accountability and Enhancement Act (PAEA). Rather than help restore postal solvency, an exigent rate increase will worsen the decline in mail volume and revenues. I have expressed repeatedly my strong concerns to the Postal Service that reducing service and increasing prices are not the means to raise mail volume and restore fiscal balance. In fact, these steps are likely to erode further the Postal Service’s customer base. Raising the rates for catalogs by more than five percent will cause some businesses to reduce their mailings and to direct more of their customers to websites for information about their products. This is exactly the wrong direction, and the Postal Service should be looking at initiatives that will increase volume, not drive it away.

I recognize that pricing increases have a considerable impact on your businesses. This is why I included mechanisms in the PAEA to help provide predictability and stability to pricing. Specifically, the PAEA provided the Postal Service pricing flexibility while requiring, for market-dominant products, that the Postal Service live within an inflation-based rate cap. These protections were designed to promote increased demand from the mailing community and to support long-term planning.

…

As the author of the PAEA, I can unequivocally state that the law does not provide for an exigent rate case based merely on poor economic circumstances or on increased utilization of electronic or other alternatives to traditional mail. Neither of these circumstances are exceptional nor extraordinary as required by the law. As then-Postal Rate Commission Chairman George Omas stated in a hearing before the Committee on Governmental Affairs in 2004, "…exigent increases are limited to extraordinary circumstances, and are not appropriate simply because revenues are misestimated or cost reduction programs are not as successful as planned. These types of events are normal in business, and postal management must be expected to adjust to normal business fluctuations." The PAEA adopted this standard.

via PostCom: Postal News and Information from Around the World.

This entry was posted on Monday, July 26th, 2010 at 10:36 am and is filed under postal, rate increase. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.