Stand-Up Talk:

Modified Postage Rates Effective July 1, 2001

For Immediate Discussion With Employees

On Monday, May 7, the Governors of the Postal Service approved a modification of the postage rate schedule put into effect, under protest, on January 7 of this year.

The Governors’ vote, which was unanimous, came only after the independent Postal Rate Commission issued an initial “recommended decision” and two later “further recommended decisions” that did not meet the revenue requirement identified by the Governors.

The new rates increase an average 1.6 percent and will become effective July 1, 2001.

Here are a few highlights of the changes:

 The modified rates will not affect the basic, one-ounce First-Class letter rate of 34 cents.

 However, for each additional ounce, First-Class postage will increase two cents, to 23 cents.

 The First-Class postcard rate will increase one cent, to 21 cents.

 The Priority Mail flat rate and rates for items weighing up to one pound or two pounds will not change, however, rates for heavier Priority Mail pieces will increase, as will rates for Express Mail, Package Services, Standard Mail and Periodicals.

 The Certified mail fee will increase by 20 cents, to $2.10, and the money order fee will increase to 90 cents.

Why rates are being modified now?

 Simply stated, the rates are being modified because the PRC did not recommend rates in its Recommend Decision sufficient to enable the Postal Service to breakeven.

 There have been significant increases in the cost of doing business - costs such as fuel, transportation, utilities, salaries, and health benefits. The Postal Service receives no tax subsidies to operate. Without increases, we face significant losses, and that could adversely impact the nation’s mail service.

What is the Postal Service doing to cut costs?

 The Postal Service has taken a number of steps, including: cutting capital commitments by one billion dollars this year, freezing hiring for administrative positions, and cutting programs and activity budgets.

 In addition, cost reductions totaling approximately $2.5 billion have been planned for the future.

Where can more information be found?

 Rate modification information can be found in Postal Bulletin 22051 (05-31-01) and on our Web site at www.usps.com.

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