Rate Case Filing Delayed Until Early Next Year; 6% Hike Expected for Direct Mail

Circulation Management, Nov, 1999

The U.S. Postal Service, which was expected to file the next rate case with the USPS Board of Governors as early as November, will now put off the filing until at least January. The rate case, previously scheduled to be filed sometime between November and April 2000, will now be filed sometime between January and April 2000.

Postmaster William J. Henderson told a Senate subcommittee that the USPS delayed the case because of an anticipated $200 million revenue surplus in fiscal year 1999, resulting from this year's $700-million cost-reduction program.

Neal Denton, executive director of the Alliance of Nonprofit Mailers, predicts that the USPS will file the case in January, with a target implementation date of January 2001.

Denton believes that the USPS will ask for $2 billion in revenue, a 35-cent stamp, and rate increases averaging 4- to 6-percent for most mail classes. MPA senior VP, legislation and regulatory policy Rita Cohen believes that the USPS will ask for $4 billion in revenue. However, both agree that, based on the Postal Service's record of assigning higher costs to periodicals in recent rate cases, the periodicals class will probably be hit with an average increase of 10 percent or more.

DMA senior VP, government affairs Jerry Cerasale says that the direct mail or letter subcategory of Standard A mail will probably see an average increase of about 6 percent, although the flats subclass, which includes catalogs, is likely to see a 10 percent hike. Recently released USPS data indicates that processing costs for Standard A as a whole increased by 9.5 percent in fiscal year 1998. Postal experts say that much of that increase is probably attributable to flats, since USPS efforts to automate flats handling have been problematic.