Postage increases planned

Published 2:26 pm Tuesday, July 6, 2010

The United States Postal Service announced Tuesday it had requested a price increase on many items, including the cost of a first class stamp, which would move from 44 cents to 46 cents.

The request, made this week, now goes before the Postal Regulatory Commission, which has 90 days to either accept or reject any proposal.

In a press release, the Postal Service said the increases were needed to help close a projected $7 billion projected shortfall in fiscal year 2011. The rate increases, according to the postal service, would be combined with additional spending cuts.

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“This proposal is moderate and reasonable and carefully evaluated for its effect on our customers,” said Maura Robinson, Postal Service Vice President. “Increasing prices will help overcome some of the financial challenges faced by the Postal Service.”

The proposed price changes, which would affect everything from first-class letters to postcards, are expected to generate $2.3 billion for the final three quarters of fiscal year 2011 (January to September and an estimated $3 billion for the full 12 months of fiscal year 2012.

In addition to the change in first-class postage, other changes could include: an increase in first-class mail postcard prices from 28 cents to 30 cents; an 8-percent increase for periodicals; a 5.1-percent increase for catalogs and a 23-percent increase in the rate for standard mail parcels.

The service has continued to battle losses in business tied to the public’s transition to electronic services such as email and online bill paying, which has removed mail from the service.

The effects of digital changes and a sluggish economy have also forced the Postal Service to make this request for a rate increase. This change, in particular, represents a departure for the Postal Service.

“This is the first time the Postal Service is requesting price increases above the rate of inflation, an action that is allowed under the 2006 Postal law as long as the Postal Service can demonstrate ‘exceptional or extraordinary circumstance,’” the service said in a release.

“An ongoing recession that has rocked the Postal Service business customer base, continued movement toward electronic alternatives and unprecedented volume loss have created a situation where the price cap of .6 percent, based on the Consumer Price Index, is insufficient to cover the extraordinary losses.”

In March, Postmaster General John E. Potter said the service would pursue a number of changes to help offset the expected losses in addition to rate increases.

Those items included such things as the elimination of Saturday delivery and restructuring payment of retiree health benefits.

The Postage Regulatory Commission now has 90 days to review the request and rule. It is expected the changes would go into effect Jan. 2.

Also announced Tuesday was the plan to begin sales of a new Forever Stamp, beginning in October.

The Holiday Evergreen Forever Stamps would be sold at the current rate of 44 cents and would hold their value “forever.”