|
|
The Postal Service needs the authority to adjust its pricing to better reflect market dynamics and offset future volume and revenue declines. Current law does not provide the necessary flexibility. Instead, prices by class remain tied to inflation as measured by the Consumer Price Index (CPI), and not to the key drivers of postal inflation, such as increases in labor costs. In July, the Postal Service filed for an exigent price increase with the PRC. This was the first time the Postal Service requested a price increase above the rate of inflation, an action allowed under the Postal Act if exceptional or extraordinary circumstances have made such an increase necessary. The proposed price change, which would have been effective in January 2011, would have improved the Postal Service’s bottom line by about $2.3 billion in 2011.
However, the PRC denied the exigent price increase request on September 30. In response, on October 22 the Postal Service appealed the ruling to the United States Court of Appeals for the District of Columbia Circuit. The appeal seeks a review of the PRC’s interpretation of the law that governs how prices can be set under extraordinary and exceptional circumstances. The Postal Service’s position is that the PRC misread the statute and applied an incorrect standard in evaluating the request.
|
|
