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Postal Regulatory Rate System Review Underway

APWU Weighs In, Calling for an End to CPI Price Cap

Web News Article #: 
31-2017

03/25/2017 - The American Postal Workers Union (APWU) submitted comments before the March 20 deadline to the Postal Regulatory Commission (PRC) for their ongoing “10 Year Rate System Review,” required by Congress in the 2006 Postal Accountability and Enhancement Act (PAEA). The Commission is reviewing the effects of the current rate system, capped by the Consumer Price Index (CPI), to see how it impacts the Postal Service's ability to meet the objectives stated in the PAEA. The PRC requested comments from stakeholders, including the public, about the Postal Service’s rate setting system. 

This rate setting system blocks the ability for the USPS to raise revenue. The union’s recommendations included eliminating the CPI cap on “market dominant products,” including products such as First Class Mail. This would allow the Postal Service to have the flexibility needed to meet their financial challenges.

Due to the lack of revenue from the rate cap, as well as the retiree health pre-funding requirement not factored into the pricing system, the USPS cut costs. The cuts included consolidations of mail processing facilities, service standard degradation and cutting hours, thus denying good quality postal services to thousands of communities across the country.

The APWU outlined in their comments how the “Price Cap is the barrier to achieving a public postal system that satisfies the Universal Services Obligation and meets all the objectives set out by Congress.”

The financial pressures of this CPI cap places the Postal Service at risk. It holds back the necessary infrastructure changes, needed capital investments and the ability for the USPS to fix safety and health issues – such as replacing an outdated fleet of vehicles. It also strangles the USPS' ability to restore and protect good postal services.

“Under any reasonable view of the Postal Service’s financial condition, it is evident that laboring under the Price Cap for the past decade has put the Postal Service in a difficult financial situation,” the APWU added in the comments submitted to the Commission. “It is evident that the Price Cap prevents the Postal Service from achieving its statutory Objectives and mission. Particularly in meeting Objectives to maintain quality service and achieve adequate revenue for financial sustainability.”

The APWU’s comments were prepared by a committee of officers, union members, attorneys and economic specialists. They pulled studies and utilized the research available on the last 10 years of USPS’ failings in meeting the necessary objectives as required by law.

The PRC will review the comments submitted and complete the project as required by Congress and the PAEA. Their proposal is expected by the fall of 2017.

The APWU will continue to be engaged with their sister postal unions throughout this process to ensure the protection of the public Postal Service. Many organizations, including the four postal unions, postal management, a number of signatories of A Grand Alliance to Save Our Public Postal Service and other stakeholders submitted comments exposing the crippling effects of the price cap.    

Thank you to participating APWU members

APWU wants to thank the local presidents and members who also submitted comments to the PRC. Their experience shows that there is widespread reductions in the quality of postal services, affecting communities across this country. 

Locals who participated: Omaha Area Local (NE), Joplin Area Loca (MO)l, New York Metro Area Local, Wilmington Area Local (NC), Montgomery County Area Local (MD), Des Moines Area Local (IA), Fox Valley Area Local (IL), Wichita Area Local (KS), Mississippi Coast Area Local, New Hampshire State, Central NY Area Local, Prescott Local (AZ), Greater Northland Area Local (Duluth, MN)

Also a special thank you to Byron Preminger (Des Moines Area Local Legislative Officer) and David Yao (Seattle Area Local Vice President) for submitting their own comments to the Commission.