Postal Commission Denies USPS Exigent Rate Increase Request

Chairman Ruth Y. Goldway explained the comminsions' decision in the following statement:

This is the first request for an exigent rate increase the Postal Regulatory Commission has considered. From the moment the Service announced its intention to file on March 2nd, 2010, my fellow Commissioners and I have been aware that this process is unprecedented and whatever decision we make will be controversial.

From the outset, we devoted ourselves to a careful study of the law. The Commission and our staff have worked to determine the law’s intent, to clearly understand its provisions and to define our responsibilities in order to apply it fairly. Notwithstanding the complexity and difficulty of the issues before us, the Commissioners’ deliberations have been collegial. The decision we have come to is a consensus and is unanimous. We concluded we must deny the request.

The Price Cap is the centerpiece of the law; it had strong bipartisan support when enacted. The Cap was seen as essential for promoting efficiency and creating an environment of rate stability that would encourage mailers to stay in the mail and use it more, while providing the Postal Service with incentives to reduce its costs.

The Exigent rate provision is a carefully crafted exception to the Price Cap. Congress made the terms for the exception very narrow. To be valid, an exigent rate adjustment must be shown to be:

1. Due to either extraordinary or exceptional circumstances;

2. Reasonable, equitable, and necessary under best practices of honest, efficient, and economical management; and,

3. Necessary to maintain and continue the development of postal services of the kind and quality adapted to the needs of the United States.

All of these three provisions must be met.

The Commission responded to the Postal Service’s July 6th request by initiating an expedited review process to last no more than ninety days. The Commission heard the Postal Service testimony and evidence that identified exigent circumstances and requested rate relief. A wide variety of parties submitted extensive arguments that were very helpful to the development of the record. In addition, the Commission received and reviewed more than 500 public comments.