The U.S. Postal Service could soon raise prices in a way that more closely follows increases in its costs, as the mailing agency’s regulator has completed a years-long process to finally overhaul the existing rate-setting system it has deemed inadequate.
The Postal Regulatory Commission will not give USPS full authority to set its own prices—as agency management previously requested—in its final order issued on Monday. The rule concludes a process kicked off several years ago as required by a 2006 law that created the current cap structure limiting postal rate hikes. It was the first review since that law and the current pricing regulations went into effect.
The new system will tie price caps to what the regulatory commission identified as USPS’ two biggest cost drivers: fewer pieces of mail going to more addresses and mandatory payments the agency must make toward benefits for future retirees. PRC suggested a new formula that factors in the higher costs of declining “mail density,” as well as a second formula based on the costs of mandated payments for retirees. The retiree calculation would be phased in over five years and all revenue it generated would have to go toward amortized payments into retiree funds.