PRC Approves USPS Market Dominant and Competitive Product Price Changes

In separate orders issued November 13, the Postal Regulatory Commission approved without changes the Postal Service’s proposed prices for both market dominant and competitive products. Also approved as filed were the promotions the USPS proposed as part of its market dominant filing. As a result, both sets of rates will be implemented as planned at 12:01am ET on January 27, 2019.

Market dominant  products

In its order, the PRC stated:

“…The Commission has reviewed the pricing proposals for compliance with the requirements of title 39, the Commission’s regulations appearing in 39 CFR part 3010, and other applicable legal requirements. The Commission concludes that the planned price adjustments do not violate the price cap under 39 USC 3622(d) and are consistent with, or justified by an exception to, the workshare discount limitations appearing in 39 USC 3622(e). The planned price adjustments are consistent with the pricing requirements appearing in 39 USC 3626 and do not implicate the pricing requirements appearing in 39 USC 3627 and 3629. The Commission also concludes that the planned classification changes, with the revisions set forth in the body of this Order, are consistent with applicable law and regulations. …”

Based on the provisions governing the CPI-based cap on market dominant rates, adoption of the 2019 prices will still leave a small amount of rate authority “banked” for future use. According to the PRC:

 

Competitive products

In its order, the PRC stated:

“Proposed price adjustments for competitive products are reviewed pursuant to 39 USC 3633(a) and Commission regulations under 39 CFR part 3015. In brief, these statutory and regulatory provisions require each competitive product to cover its attributable costs (39 USC 3633(a)(2)), prohibit the subsidization of competitive products by market dominant products (39 USC 3633(a)(1)), and require that competitive products collectively make an appropriate contribution to the recovery of the Postal Service’s total institutional costs (39 USC 3633(a)(3)). “The Commission finds that the new price proposed for each product is projected to generate sufficient revenue to cover each product’s attributable cost. This finding supports a conclusion that the new prices will satisfy section 3633(a)(2). In addition, in accordance with section 3633(a)(3), competitive products as a whole are projected to contribute 25.0 percent to institutional costs in FY 2019, exceeding the required 5.5 percent. Together, these findings support the conclusion that competitive products will not be subsidized by market dominant products, as required by 39 USC. § 3633(a)(1). The Commission, therefore, concludes that the new competitive prices and proposed MCS language incorporating the new prices comply with 39 USC 3633(a).”

Among the structural changes for competitive products are the introduction of zoned rates for First-Class Package Service and dimensional pricing for large but light-weight parcels over one cubic foot that are entered at Priority Mail Express, Priority Mail, Parcel Select, or USPS Retail Ground rates.

Postcom and The Parcel Shippers Association had cited the scope of programming changes that would be needed to shippers’ systems to implement those structural changes, and asked that the USPS defer their implementation. (PSA sought a nine-month delay.)

In response, the governors of the USPS granted a five-month delay – to June 23. All other elements of the Postal Service’s competitive price filing will be implemented as planned on January 27.


 

Excerpted from the Nov. 26, 2018 edition of the Mailers Hub NewsFor the updated 2019 rate charts, please log into your Mailers Hub account. 

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