A while back, we sent you an eTip telling you about the rate proposal that was submitted by the United States Postal Service® (USPS®) to the Postal Regulatory Commission (PRC). At that time, the planned implementation date for the proposed price changes was slated for April 26, 2015. Well, a lot has happened since that eTip, which has left mailers scratching their heads wondering what the heck is going on.
Price Proposals Approved and Remanded
When the PRC receives a rate case from the USPS, they have a number of options regarding their response. They can approve the proposal, in which case the proposed price changes become official and are implemented on the designated date. The PRC can also make their own proposed price changes, or make changes to the USPS proposed rates and return the case back to the USPS. The last alternative is for the PRC to return the rate case (also known as a “remand”) to the USPS for further review. In this current rate case, the PRC has made an unprecedented move by approving SOME of the proposed price changes and remanding the rest. In fact, the PRC has remanded most of the proposed price changes not just once, but twice! So, what does all this mean for mailers?
When Will the Prices Change?
That is the million dollar question! Let’s begin with a quick review of what’s happened up to this point.
On January 15, 2015 the USPS submitted two rate change proposals for consideration: one for Market Dominant/Mailing Services products and another for Competitive/Shipping Services products. “Market Dominant” products are those services over which the Postal Service has a legal monopoly, including First-Class Mail®, Standard Mail®, Periodicals, Package Services, and Special Services. “Competitive” products include Shipping Services such as Priority Mail, Priority Mail Express, Parcel Select, and First-Class Package Service.
The PRC originally approved the First-Class changes, but remanded the rest of the market-dominant filing. The USPS then made changes and re-filed only to have the PRC remand them again. As time was ticking down on the 30-day window prior to April 26, 2015, the USPS announced last week that they would hold off implementing any new rates until ALL of the market-dominant changes are approved by the PRC. Whew! Breathing room. BUT – don’t get complacent. Though it is too early to know a new date right now, it is still conceivable that a May 31, 2015 date could be met. Stay tuned here for additional details as they become available!
A Price Roll-back?
Say what??? You read that correctly – there is a possibility that in addition to the price changes happening this Spring, there could be an actual price reduction sometime this Fall. You may recall in the postal rate case that took effect in January 2014, there was an element of that case that was termed an “exigency” increase. Under the postal reform act, the USPS is permitted to increase postal prices by no more than the amount of the Consumer Price Index (CPI). The only exception to this is in exigent situations where the USPS costs or revenues, due to circumstances beyond their control, would require increases higher than the CPI. In the 2014 price increase, there was both the CPI component of the increase plus the exigent portion of the increase. The USPS claimed in that case that the downturn in the US economy was an exigent situation that caused their volumes and revenues to drop. Although the PRC approved the rate case, the legality of the exigency claim was questioned by many in the mailing industry and there is a case currently underway in federal court to come to a decision about the legality of the exigent portion of the increase.
If the court rules in favor of the USPS, pretty much nothing will change as far as mailers are concerned. However, if the court rules against the USPS, that means that the exigency portion of that rate change would need to be removed, which would essentially mean a roll-back on postal prices. A ruling is expected to be reached later this year, in time for this potential price roll-back to be implemented sometime in September.
Managing Price Changes
Mailers should be in close contact with their postal software providers to keep abreast of any updates on all of these possible pricing changes so that your software can be properly updated on a timely basis. The uncertainty of all of these changes makes it very challenging for software to be coded with the price changes and postage statement form changes in time for the implementation dates. Add to that the Mail.dat specification version change to 15-1, and it becomes even more complicated. Mailers need to be prepared to deal with last-minute software updates, as well as multiple mandatory software updates within a short period of time. Of course, all this uncertainty also wreaks havoc with postage budgets!
Window Book has many utilities available to assist mailers with these postal price changes. All postage calculations in all of our software applications are based on mailing date, which means users can be assured that their mailings will be calculated with the correct postal prices in place at the time the mailing is processed.
Window Book’s newest smart postal solution, PostalWeb™, completes the PostalOne! automation circle by providing easy downloading of finalized PostalOne! postage statements directly to your servers, and includes options for email notifications and even emailing of these finalized postage statements! (Coming soon: automatically download your confirmation pages!)