Postage hike takes effect this Sunday

With a one-cent postal increase on First Class mail effective Sunday, Jan. 7, people can expect to take an extra penny to the post office this year. The decision comes from the Governors of the U.S. Postal Service who accepted the recommendation of the Postal Rate Commission to rase the price of a First Class letter to 34 cents. The U.S. Postal Service has post offices in every community in the country and remarkably processes and delivers over 40 percent of the total world mail volume, visiting every household and business in the country on a daily basis. Last year, the Postal Service delivered over 200 billion pieces of mail. Even more remarkable, the Postal Service has not received any tax money for operating expenses since 1982. The entire cost of operating the system is paid for by the customers who use its services. Like all businesses, the Postal Service must periodically raise the prices it charges for its services to cover increases in the cost of doing business and to sustain high quality universal service. The process for raising prices is outlined under the Postal Reorganization Act of 1970, and follows several stages. The first step is for the Postal Service to file a rate request with the Postal Rate Commission (PRC), an independent body. The Postal Service proposes rates for the PRC to consider based upon its own thorough analysis of costs and projected mail volumes. The Commission then invites any interested party to comment and participate in a series of hearings. During these hearings, Postal Service customers, competitors, mailing groups and members of the public have the opportunity to provide evidence and arguments to the PRC reflecting their respective concerns. Following lengthy review and rigorous scrutiny lasting up to 10 months, the PRC recommends a decision to the Postal Service’s Governors. The Governors then have three options to consider: they may approve the PRC recommendations; reject them; or allow them under protest. The Postal Reorganization Act grants the presidentially-appointed Governors of the Unites States Postal Service several options to exercise in response to a recommended decision from the PRC decision. One of these options is to allow the recommended rates and fees to take effect under protest and return the recommended decision to the Commission for reconsideration (and a further recommended decision). The Governors have elected this option in this case, primarily because of the concerns about the Commission’s treatment of the Postal Service’s revenue requirement, as well as certain rate design and costing issues. According to the United States Postal Service’s website, www. usps.com, this is not an unusual step for the Governors to take. A similar approach was taken in the 1980 and 1990 rate cases and on a more limited basis in the 1994 and 1997 rate cases. Brady Post Master Garland Freeze said the recent increase didn’t strike the same amount of question as did the previous postal hike in 1997. “This increase was heavily advertised,” he explained. “It’s quite natural that when prices go up, people want to know why. “I think people here in Brady have accepted the one-cent increase very well, but if any customer has further questions, we encourage them to contact the local post office or if they have access to a computer they can log on to our website. “The money that we have for overhead and additional costs comes solely from the sale of stamps. We just hold our own like any other business for profit, and we simply try to break even each year,” Freeze explained. Each class of mail is expected to cover its share of the costs, a requirement that causes the percentage rate adjustments to vary in different classes of mail. Since the Postal Service receives no tax dollars for operations and relies solely on the sale of postal products and services to cover operating costs, price adjustments are necessary to respond to changes in the cost of doing business. Overall, rates are rising 4.6 percent; however, each additional ounce will decrease from 22 cents to 21 cents. The cost of mailing a postcard will remain at 20 cents.

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