Nonprofit Postal Rate Recommendations Ignored

Monday, March 19, 2007 — The Governors of the US Postal Service (USPS) this afternoon approved most of the Postal Regulatory Commission’s (PRC) postal rate recommendations, which were announced on February 26. Most of the new rates will take effect on May 14, 2007.

The Governors listened to DMA’s members and requested reconsideration of the PRC’s rate recommendations for Standard Mail flats (catalogs). The Governors also ask the PRC to reconsider recommended rates for the Non-Machinable Surcharge for First-Class Mail letters, and the Priority Mail Flat-Rate Box.

On Tuesday, March 20 from 1:00 p.m. to 2:00 p.m. (EDT), DMA will host a virtual seminar on the postal rate news. The one-hour virtual briefing is FREE for DMA members and costs $199 for non-members. [See information below.]

DMA’S COMMENTS ON THE GOVERNORS’ ACTIONS

DMA today thanked the Governors of the US Postal Service for responding to mailers’ concerns and for requesting reconsideration of the postage rate increases recommended by the Postal Regulatory Commission (PRC) for flat-shaped mail.

At the same time, DMA expressed its disappointment that the Board of Governors did not allow additional time for many nonprofit mailers to revise and test new mailing campaigns.

The Governors announced this afternoon their acceptance of most of the recommendations put forth by the PRC on February 26. But after hearing from many within the mailing community, the Governors asked the PRC to reconsider its recommendations for Standard Mail flats. The PRC’s proposed rates were more than double what the USPS had originally requested in May 2006, and would be devastating to many of America’s catalog mailers.

“In regard to Standard flat rates, the Postal Governors made the right decision today,” said DMA President & CEO John A. Greco, Jr. “In the face of overwhelming evidence, they chose not to move forward with a decision that was certain to be detrimental to many postal customers and to the very future of postal operations.”

“At the same time,” Greco said, “we are disappointed that the Board of Governors has ignored the pleas of nonprofit organizations for more time to adjust to significantly higher rates.”

Hundreds of DMA members and others in the mailing community have written to the Governors and the PRC over the past two weeks to explain the severe negative effect the recommended rates would have for their organizations.

“We sent a clear message to postal officials that the surprisingly high increases in flat mail rates were unacceptable to the mailing community,” said Greco. “The Governors and the PRC were left in no doubt that catalog and nonprofit mailers would be forced to make significant cuts in mailing volumes, which could ignite a long-term downward spiral in postal revenues.”

Senny Boone, executive director of DMA’s Nonprofit Federation (DMANF), highlighted the nonprofit community’s displeasure regarding today’s decision. “We are extremely disappointed that the Board of Governors did not delay the implementation of increased rates for nonprofit mail that falls into the new ‘not flat-machineable’ class.”

“In their decision, the Governors frequently expressed concern for those mailers who would have difficulty converting their mailings to more cost-effective shapes,” said Boone. “Nonprofits desperately need that additional time to develop and test alternative methods for successful fundraising, so we continue to ask that the Board reconsider its decision and give nonprofits more time to adjust.”

For all classes of mail for which increases were approved today, the new rates will go into effect on May 14, 2007. For periodicals, the effective date will be July 15.

The rates that the PRC has been asked to reconsider will go into effect “under protest” on May 14, pending a final decision by the Governors on the further recommendations of the PRC.

“As it reconsiders its recommendations, we hope that the PRC will act quickly, listen to the voice of postal customers, and embrace the tenets of the postal reform legislation that will govern future rate increases,” added Jerry Cerasale, DMA’s senior vice president of government affairs.

DMA continues to believe that the proposed flat rates can be mitigated without affecting the approved rates for other classes of mail, which are consistent with the original USPS request.

As the PRC announces its schedule and procedure for revising its recommendations, DMA will continue to provide updated information and calls to action for our members.

REQUEST FOR RECONSIDERATION

As noted above, the Governors listened to DMA’s members and requested reconsideration of the PRC’s rate recommendations for Standard Mail flats (catalogs). The Governors also ask the PRC to reconsider recommended rates for the Non-Machinable Surcharge for First-Class Mail letters, and the Priority Mail Flat-Rate Box.

Standard Mail Flats — The Governors said they are concerned that price increases recommended by the PRC may impose an unnecessary degree of “rate shock” on the catalog industry, particularly small businesses. The recommended increase for some catalog mailers is as much as 40 percent, which is more than double what the USPS had proposed in its May 2006 rate case filing.

Non-Machinable Surcharge — The Governors said the PRC decision on First Class Mail two-ounce and three-ounce letters does not differentiate between machinable and non-machinable. The Governors said this warrants further PRC analysis to ensure that there are incentives for mailers to provide letters that can be processed at lower cost on efficient sorting equipment.

Priority Mail Flat-Rate Box — The PRC recommended a rate of $9.15 for the Priority Mail Flat-Rate Box, which is $1.05 above the current rate and 35 cents higher than the USPS proposal of $8.80. The Governors said they felt a rate below $9.00 would be more appropriate for this popular consumer and business product and would be cost-justified.

OTHER ACTIONS OF THE BOARD

In addition, the Postal Governors took the following actions:

First-Class Stamp — Approved the price of a First-Class stamp to be 41 cents.

Forever Stamp — Approved the Forever Stamp, which will sell at the new 41-cent First-Class Mail one-ounce letter rate. The value on these stamps will always be the one-ounce letter rate and can be used for any future one-ounce letter mailing without extra postage.

Shape-Based Rates — Approved shape-based pricing that reflects differences in the costs of handling letters, large envelopes (flats), and packages. Mailers are encouraged to consider options available to reduce postage costs.

MAY 14 IMPLEMENTATION FOR MOST RATES

The Governors approved an implementation date of May 14, 2007, for most postal rates EXCEPT for Periodicals.

The new rates for Periodicals will take effect on July 15, 2007, to allow the mailing industry and the USPS sufficient time to make the necessary changes to their systems, given the complexity of the PRC’s rate structure.

As noted previously, the rates that PRC has been asked to reconsider will go into effect “under protest” on May 14, pending a final decision by the Governors on the further recommendations of the PRC.

DMA TO HOST VIRTUAL BRIEFING MARCH 20

DMA will host a virtual seminar tomorrow afternoon (Tuesday, March 20) from 1:00 p.m. to 2:00 p.m. (EDT) to brief mailers on the bottom-line and operational impact of today’s postal rate news. This one-hour briefing will be hosted by DMA Senior Vice President for Government Affairs Jerry Cerasale and postal economist Larry Buc.

To register for this virtual briefing, which is FREE for DMA members and $199 for non-members, please visit http://www.the-dma.org/seminars/postalrate or call DMA’s Member Relations Center at 212.790.1500.

ADDITIONAL POSTAL RESOURCES

For additional information, including rate charts for First-Class Mail and Standard Mail, visit the postal section of DMA’s Web site at www.the-dma.org/postal.

To access the US Postal Service’s rate case page (which includes the Postal Governors’ decision), visit http://www.usps.com/ratecase.

To access the PRC’s Web site, visit www.prc.gov.