Capitol Hill Fact Sheet

Contact: Robert E. McLean
703-418-0390
bmclean@mailers.org
www.mailers.org

Postal Facts: How the US Postal Service
Sets Postage Rates

When Congress created the USPS in 1971 it removed price-setting from Congress' jurisdiction, and divided it between two Presidentially-appointed bodies: the Postal Service Board of Governors and the Postal Rate Commission (PRC).

There are nine Governors who are appointed by the President and confirmed by the Senate for nine-year terms. They select a Postmaster General and a Deputy Postmaster General who become Board members.

There are five Postal Rate Commissioners who are appointed by the President and confirmed by the Senate for six-year terms. The President also designates the PRC Chairman.

In 2006 Congress approved another postal reform bill that dramatically changed the rate setting process. Now, instead of a nine-month litigious process, the USPS may increase rates for most products in a simplified process that will save mailers millions of dollars.

Following are some of the notable provisions int he 2006 legislation relating to postage rate increases:

  • There are different rules for market-dominant and competitive products. The PRC may assign services to either the competitive or marketdominant category.
  • The bill required the PRC to create new rules for market-dominant products that will tie annual postage rate hikes to increases in the Consumer Price Index (CPI).
  • It allows the USPS Board of Governors to set competitive product rates according to regulations drafted by the PRC.
  • The USPS may seek a waiver of the CPI limit from the PRC in extraordinary or exceptional circumstances in order to maintain quality services.
  • It allows the USPS to save and use later any unused rate-hiking authority for up to five years.

The PRC must publish annual reports on the USPS’ compliance with the 2006 reform bill. The USPS must file financial reports similar to those required of private sector companies by the SEC.

In 2016 the PRC must review the price indexing system and make any necessary changes.

 

 

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