Price Reduction Will Cost Postal Service $2 Billion Per Year and Magnifies the Importance of PRC Rate System Review; Postal Service Files Petition to Clarify Scope of the Review.
WASHINGTON, April 07, 2016 — The Postal Service will lose approximately $2 billion in annual revenue resulting from a price reduction mandated by the Postal Regulatory Commission (PRC) — which will go into effect on Sunday, April 10.
The PRC granted an exigent surcharge beginning in January 2014 on mailing products and services totaling $4.6 billion to recover for the massive volume and revenue losses resulting from the Great Recession. However, this amount only partially offsets Postal Service revenue losses — which the Postal Service estimates exceeded $7 billion in 2009 alone.
“Given our precarious financial condition and ongoing business needs, the price reduction required by the PRC exacerbates our losses,” said Megan J. Brennan, Postmaster General and CEO. “This unfortunate decision heightens the importance of the review of our ratemaking system which our regulator is required to conduct later this year.”
The PRC is required to review the market-dominant regulatory system to determine whether it is achieving the statutory objectives mandated by Congress. The Commission is empowered to modify the system or create a new system as necessary to achieve the objectives. The obligation to conduct the review arises 10 years after enactment of the Postal Accountability and Enhancement Act, which occurs in December of this year.
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