PRC Ruling Exposes Unhealthy Relationship
Between USPS and Influential Mailers

Burrus Update #04-08, March 25, 2008

Pursuant to the Postal Accountability and Enhancement Act (PAEA), the Postal Regulatory Commission (PRC) has reviewed USPS price adjustments [PDF] scheduled to take effect May 12, 2008, and has recorded serious questions regarding the Postal Service’s methods of collecting data – data that is used as a basis for determining workshare discounts.

Consistent with the APWU’s analysis, the commission ruled that the 1.4 cents discount applied to certain Standard Mail letters exceeds the postal costs avoided and amounts to a whopping 557.8 percent of postal savings. The PRC ordered an adjustment based on actual USPS savings.

The commission examined 14 discounts that exceed 100 percent of costs avoided. While the PRC only required an adjustment in the discount for Standard Mail letters where the discount is 557.8 percent, the commission issued a strong warning that in future rate cases “the Postal Service must satisfy the rules and provide a more complete justification for excessive rate discounts.”

The commission rejected the USPS assertion that a smaller discount would not encourage mailers to pre-barcode their mail. “If the Postal Service can provide a service at a lower cost than a mailer, it should be the entity providing that service,” the commission wrote.

The commission afforded the Postal Service a reprieve for this case, but warned that, “The claim of ‘no reliable cost avoidance data’ is not a long-term justification.”

The commission ruling reaffirms the APWU’s position that workshare discounts that exceed the postal costs avoided are not consistent with the standard of universal rates for all mailers, large and small. The 2008 PRC ruling is Exhibit #1 in exposing the unhealthy relationship between postal management and influential large mailers.

The Postal Regulatory Commission has issued a strong warning that it will not permit the continuation of arbitrary “sweetheart” deals for large mailers.

William Burrus
President

[Click here to read more about the PRC's ruling on the USPS rate increase proposal.]

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