Mailers and USPS Appeal PRC Decision in Exigency Case
February 14, 2014
Late on Christmas Eve, the Postal Regulatory Commission (PRC) announced its partial approval of the United States Postal Service’s (USPS) request for an “exigent” (a rate increase in excess of the law’s CPI price cap) rate increase. The Commission approved a temporary increase in rates on “market dominant” products, including Periodicals, by 4.3 percent. The increase (on top of the 1.6 percent annual CPI increase), went into effect on January 26. According to the PRC decision, the exigent increase – which the PRC designated a “surcharge” – will remain in effect until the USPS has collected $2.8 billion worth of additional revenue, an amount equal to the PRC’s determination of USPS losses attributable to the recession.
Though the Commission’s decision to approve the request was disappointing, both the total amount awarded and duration of the surcharge are significantly less than what USPS was seeking. USPS had asked for $60 billion and claimed that they could have asked for $150 billion. Similarly, the USPS wanted the “exigent” surcharge to be built into the rate base forever, a request the Commission did not grant. As a result, USPS has appealed the PRC’s decision at the U.S. Court of Appeals for the DC Circuit, seeking to make the exigent increase permanent, and “win” the $60 billion in new rate revenue that the PRC rejected.
MPA, in conjunction with a broad coalition of mailers, has also decided to appeal the decision. We are asking the court to sustain the argument that we made to the PRC that only a relatively small portion of USPS revenue declines in recent years are attributable to the recession. We also are asking the court to rebuff the USPS attempt to make the exigent increase permanent (the $60 billion dollar issue). We believe that an assertive mailer appeal heightens the chances that the Court of Appeals will remand the case back to the PRC for reconsideration. The appeal does not roll back the rate increase currently in effect; if the increase is overturned, there is no provision in law for refunds. However, we are requesting expedited review of the case, which should reduce the timeline for a court decision from a year to about six months.