Postal Service requests 8.7 percent rate increase

The U.S. Postal Service on Monday filed a new rate case with the Postal Rate Commission seeking an overall 8.7 percent hike in postage. The commission, an independent agency charged with overseeing postal rates, has 10 months to review the case. Postal Service officials asked for an expedited review in order to give the Postal Service's Board of Governors and the mailing industry time to prepare for increased rates. The rate commission has completed only two reviews-one in the 1970s and one in 1994-in less than 10 months. Industry sources are doubtful the five-member panel, which is already down one commissioner and preparing for another commissioner's term to end in November, can move the case quickly. "We do think there are some opportunities to streamline the process," said Dan Foucheax, chief counsel for rates and classification at the Postal Service. "They can shorten the discovery period on the Postal Service. They can hold hearings at night … if we don't have to update the base year data, that would save some time." The board of governors approved the filing at its Sept. 10 meeting. At that time, the agency was predicting $1.35 billion in losses on $68 billion in revenue for 2002. Those projections were based on 1 percent growth in mail volume, a 3.2 percent rise in expenses, a 3.7 percent rise in revenue and a slight upturn in the economy. It is unclear how the Sept. 11 terrorist attacks will affect both the economy and the agency's revenue projections. To help cover unforeseen events, the agency built a $2.4 billion contingency fund request into the rate case. The agency can also update its filing as new economic projections become available. Major mailers, ranging from publishers to e-commerce companies, have mounted an ambitious lobbying effort over the past several months to fight the new rate case. They argue that the agency should first try to cut costs and become more efficient. "Our financial situation is not good and it is time to correct that as we go forward," said Anita Bizzotto, the Postal Service's chief marketing officer. "We need to have enough money to continue to operate the Postal Service."