Postal Service asked to hold off on rate increase

House Government Reform Chairman Tom Davis, R-Va., is asking the U.S. Postal Service to hold off on its next rate increase until issues surrounding postal overhaul legislation are smoothed out.

In a letter this month to Postal Service Board of Governors' Chairman James Miller, Davis wrote that "It would be prudent to delay filing for the next rate increase" until overhaul legislation awaiting conference "is closer to resolution." A similar letter was also sent from the chairman of the Mailing Industry CEO Council, a nonprofit group that focuses on mailing issues.

Ben Cooper, who represents direct mailers at Williams & Jensen, said he was glad Davis sent the letter, dated April 10, but added the Postal Service "is under no obligation to listen to the Congress on this."

Unlike the 5.4 percent increase that occurred this year, Cooper noted the impending rate case will address classification issues, discounts and how costs are attributed to rates. While mailers "want the rate case but they don't want the rates," Cooper said there is an "obligation on the Postal Service to respond to cost issues."

The upcoming rate case might be the last before the overhaul legislation is enacted.

Because the Senate version of the bill includes a provision limiting the amount by which the Postal Service can increase its rates, some mass mailers closely watching the legislation fear the agency could "take its chances" this time around.

Cooper predicted that without a cap, the Postal Service "will ask for anything they can get," which could amount to an increase "in the high single digits."

Tim May, an attorney for Patton Boggs who works on postal issues, said the next wave of increases will create a "benchmark" for pricing "from where [the Postal Service] will start" once legislation is enacted.

Responding to Davis' letter, in which the Virginia Republican warned a rate case might "needlessly expend the resources" of the agency, Miller said the agency faces "a debt increase of at least $1 billion" that will cause a deficit in next year's Postal Service budget even "if postal legislation is passed."

In a written response to Davis Monday, Miller did not indicate whether the impending rate case will be postponed.

Postal Service spokesman Gerry McKiernan said he expects the next rate case will be announced by "early May," which might coincide with the agency's next Board of Governors meeting, scheduled for May 2 and 3.