On June 9, the Postal Regulatory Commission issued a set of orders following the conclusion of its second review of the ratemaking process that it had initiated on April 5, 2024.
As veteran commercial mail producers know, the current ratemaking system for market dominant products was established by the 2006 Postal Accountability and Enhancement Act. That law specified nine “objectives” that the system was to achieve, taking into account fourteen “factors.” The law further required the PRC to review the system ten years later to determine if it was operating as planned. The commission started that review on December 20, 2016. In a December 1, 2017, order, the PRC reported its findings, concluding that:
“In short, the Commission found that the ratemaking system was not achieving the statutory objectives, taking into account the statutory factors. It found that the Postal Service’s operating environment changed dramatically after the PAEA’s enactment due to the Great Recession and technological trends, the Postal Service’s costs increased significantly due to the PAEA’s requirement that the Postal Service prefund future retiree health benefits (RHBs), and the Postal Service was unable to raise rates sufficiently given the CPI-U price cap. ... As a result, the Postal Service failed to achieve medium-and long-term financial stability and was unable to achieve retained earnings (Objective 5). In addition, the Initial Ratemaking System failed to maximize pricing and operational efficiency (Objective 1), failed to maintain reasonable rates (Objective 8), and failed to maintain high quality service standards. (Objective 3)”