USPS announces rate increase, pulls discount
February 16, 2015
By Tonda F. Rush
CEO | NNA
WASHINGTON—Higher postage rates for 2015 driven by two separate developments surprised publishers in January as the U.S. Postal Service announced its annual inflationary price increase and quietly rescinded a discount available in 2014 to publishers entering mail at transportation hubs.
The inflation or “price cap” based increase at an average of 1.9 percent is scheduled to go into effect April 26. (See Max Heath’s Postal Tips column on Page 16 for details.)
Although USPS annually increases postage up to the inflation cap allowed under the Postal Accountability and Enhancement Act, this year’s increase was unusual. First, it did not go into effect in January as in previous years. Second, it was filed despite uncertainty stemming from litigation before the U.S. Court of Appeals for the District of Columbia Circuit, where both mailers groups and the Postal Service have sued the Postal Regulatory Commission for the 2014 postage increase.
As USPS filed its 2015 increase with the PRC in January, publishers were reporting dramatically higher rates already in effect for mail entered at some hubs installed where former mail sorting plants had been. In the former plants, the mail had earned a Sectional Center Facility discount. the National Newspaper Association’s postal experts had expected the discount to be continued at the hubs in 2015 but learned USPS had stopped recognizing a discount in January. The product of a Hub Work Group under MTAC auspices includes the SCF entry discount, but the final report has been delayed.
NNA President John Edgecombe Jr., publisher of The Nebraska Signal in Geneva, NE, said the NNA postal team was working to restore the discount.
NNA is also a party to the DC Circuit lawsuit on the 2014 rates, which added an additional 4.3 percent to its usual inflation-based increase. USPS at the time said it needed the extra money because of losses driven by the Great Recession. The PRC allowed the increase but said USPS could not build the 4.3 percent into its annual rate base after the summer of 2015, when the Postal Service is expected to fully recoup the recession losses. Mailers sued the PRC because the increase was permitted at all; USPS sued because it is not allowed to keep the increase in its base forever.
“January just added to the bad news for newspapers using the mail, particularly in rural areas,” Edgecombe said. “The closing of mail processing plants has dramatically slowed service. Then we learned the hub discount was being taken away. The final punch came from a proposed increase that assumes USPS will win the lawsuit. We are redoubling our efforts to improve service and achieve fair rates.”
NNA Postal Committee Chair Max Heath said NNA had already filed an internal appeal at USPS for the hub discount.
“NNA was the first champion of these hubs,” he said. “Our goal was to keep newspapers headed to area post offices within an old SCF territory and stop them from traveling needlessly to a faraway plant only to come back again in their same bundles and containers. Those distant plants do not sort this mail. So we campaigned for USPS to let us transfer these newspapers through a hub directly to a local post office, where possible. We are preserving our service. We are also saving USPS both transportation and mail processing dollars. We expected, and had been assured by USPS, that the appropriate discount would apply.
“Instead, what we have learned is that the old discount was set for a sunset in January, and the new one has not come into play yet to take its place. We think that was an oversight error by USPS, but it is already a costly one. NNA members should know we are in hot pursuit of a correction.”
The PRC will review the 1.9 percent annual increase. Unless it finds the increase is disallowed under the law, it is required to let the increase go into effect. But a decision by the appeals court could still require USPS to accept a lower increase in April.
The restoration of the hub discount may require an amended filing with PRC. Newspaper budgets cannot incorporate the April postage increases as the final word for 2015 until pending developments are known and USPS has finally settled on its prices for the year.