Price of Stamps to Drop Sunday; Price Reduction will Cost Postal Service $2 Billion per Year

usps post offc lakewoodThe 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.

“To provide clear guidance to all interested parties concerning the review process, we filed a petition today with our regulator to clarify the scope of the review and which provisions of the current regulatory structure are subject to potential modification or replacement,” said Brennan. “By addressing preliminary issues now, the PRC can ensure an expeditious and efficient review.”

To offset long-term declines in the use of First-Class Mail in particular, the Postal Service continues to aggressively improve efficiency and has reduced our annual cost base by $15 billion since 2008. Nevertheless, and despite strong multi-year growth in package deliveries, the Postal Service continues to record unsustainable financial losses due to changing market conditions and legislative and regulatory mandates which prevent the Postal Service from fully adjusting to the new market realities.

“To properly compete for customers and continue to meet America’s evolving mailing and shipping needs, the Postal Service needs the financial capability to invest in the future,” said Brennan. “We continue to seek legislative reforms to put the Postal Service back on a sustainable financial path, and pricing is an important component.”

Among other proposals, the Postal Service continues to seek congressional action to reinstate and make the exigent surcharge permanent.

The surcharge removal means these First-Class Mail prices will be reduced to the following beginning April 10:

Current Mandated Reduction
• Letters (1 oz.) 49 cents 47 cents
• Letters additional ounces 22 cents 21 cents
• Letters to all international destinations $1.20 $1.15
• Postcards 35 cents 34 cents

Commercial prices will also decrease. A complete listing of the new prices, effective April 10, is available at www.usps.com.

[TLS]

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6 COMMENTS

  1. so does the postal service owe us money for all the stamps we bought in the past year? I stocked up on forever stamps to save money and now it seems I would have saved by not buying those “forever” stamps

  2. Too little too late
    The USPS. Has been mismanaged for years
    Most of the income goes to union workers
    Overtime benefits and retirement
    By the time it reaches the point of profit there isn’t any money left
    They messed up with the mosdos big time
    Instead of working with them to get out ” weeklies out ” in a cost effective and timely manner
    Imagine if your mailing goes out in Lakewood , they’d ship it to Trenton and then deliver in lkwd unless u paid very high fees , so the oilem took the initiative and deliver on their own way cheaper
    Can wait till chasuna invites do that
    Right now it’s a fortune to mail out a chasuna

  3. People are complaining that a stamp is too expensive? Sending a letter across the country for $0.47 is very very cheap.Having that letter delivered to your door for that price is insanely cheap. The post office should do away with door to door delivery. Have people pick up their mail at several locations around town. Do you know hoe much it costs to run a fleet of mail trucks? Gas, maintenance, and people driving those trucks?

  4. this is in reply to comment #1….

    So let me get this straight…
    You speculated on the cost of postage going up and purchased “forever” stamps. Your speculation has turned out wrong and you want your money back? Who thinks like that? You were never promised anything other than a stamp that would pay for postage on a single letter no matter what the stamp price was. You still have that. You have lost nothing but yet feel you deserve compensation.

Comments are closed.