Commission Begins Proceeding to Establish New Postal Rate Setting System

The Postal Accountability and Enforcement Act requires the new Postal Regulatory Commission to adopt numerous regulations over the next 18 months that would be the basis for a modern rate setting system for “market-dominant” mail services, including First-Class, Periodicals, and Standard Mail. The commission will consider a number of objectives in designing a rate system, including the current rate system, pricing flexibility, incentives to reduce costs, rate predictability and stability, and a “just and reasonable rate” schedule. Under the new system, USPS will have the flexibility to change rates for market-dominant products, subject to a Consumer Price Index rate cap applied at the class level. The likely result is more frequent, but smaller rate increases.

On Jan. 30, the Postal Regulatory Commission published an Advance Notice of Proposed Rulemaking inviting public comment on how it should implement the rate system in accordance with the new law. NAA will file comments by April 6, 2006, that address a number of key issues in the proceeding, such as: the complaint process for mailers to use to challenge rate changes that are unjust and unreasonable, the development of costing methodologies for USPS reports to ensure that attributable and institutional costs are allocated equitably and the development of service standards to discourage service degradation under a price cap regime.

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