Stamps set to climb 3 more cents

Postal Service says idle Congress makes higher prices a must

WASHINGTON - The U.S. Postal Service’s regulator Tuesday approved price increases amounting to 6 percent on most mail, a step the service’s board called a “last resort” forced by Congress’ failure to pass cost-cutting legislation.

A first-class stamp will cost 49 cents, up from 46 cents, starting Jan. 26. Similar changes will apply to magazines, bills and advertising mail. The increases of 4.3 percent approved Tuesday are on top of 1.7 percent, an amount equal to inflation, approved last month.

Forever stamps, good for first-class postage whatever the future rate, can be purchased at the lower price until the new rate is effective Jan. 26.

The Postal Regulatory Commission, in a 2-1 vote, rejected a Postal Service request to make the higher rates permanent, saying they will probably need to end in less than two years. The increase is designed to boost revenue by $1.8 billion a year to make up for losses during the economic downturn in 2008 and 2009, according to the order Tuesday.

“The Postal Service is disappointed in the Postal Regulatory Commission’s split decision to limit the duration of a modest exigent rate increase,” Roy Betts, a Postal Service spokesman, said in an email.

The Postal Service, which is supposed to fund its operations through postage sales, can’t increase prices by more than the inflation rate without regulator blessing.

The commission disagreed with the Postal Service’s argument that it had lost $6.6 billion in revenue from the recession. Some of the decline has been related to the growth of Internet-based communications as a substitute for mail, which the service isn’t allowed to make up through price increases, it found.

The Postal Service’s revenue from the increase beyond inflation will be limited to $2.8 billion, according to the commission.

“The commission’s decision closely follows the law we are charged by the president and Congress to uphold,” Chairman Ruth Goldway said in an emailed statement.

The Time publishing unit of Time Warner Inc. and a trade group representing financial institutions including Bank of America Corp. were among large mailers opposing the increase request.

The New York-based Association of Magazine Media trade group, in an e-mail, called the decision counterproductive and harmful to the postal service’s long-term prospects.

“It will drive more customers away from using the Postal Service and will have ripple effects through our economy - hurting consumers, forcing layoffs,and impacting businesses,” Mary Berner, president of the group, said in the email. “It doesn’t delay the inevitable but will hasten it.”

The group is considering a court challenge, Berner said.

The regulators ordered the agency to develop a plan to phase out the higher rates once the lost revenue is recouped.

It’s unclear where that would take rates for first class postage in 2016. The regular, inflation-adjusted price would have been 47 cents next year. If inflation rates average 2 percent over the next two years, regulators could deem 49 cents an acceptable price going forward.

The Postal Service has only twice lowered the price of a stamp: in the mid-19th century from 3 cents to 2 cents, and again after the end of World War I. In neither case was the higher price the result of a temporary authorization.

The new price of a postcard stamp, raised by a penny to 34 cents in November, also is effective next month.

The last price increase for stamps was in January, when the cost of sending a letter rose by a penny to 46 cents. A postcard also increased by one cent to 33 cents.

The Postal Service, which lost $5 billion in the 2013 fiscal year ended Sept. 30, is trying to close its budget gap with cost cuts and revenue increases. The agency lost $15.9 billion in 2012.

Postal management has few options to make large scale cost cuts without changes Congress must allow, the board said in September. Such measures in the House and Senate are stalled.

Postal unions last week said they oppose a legislative compromise proposed by Sen. Tom Carper, a Delaware Democrat, that would allow the service to end Saturday mail delivery if volume continues to decrease.

The service’s board in September asked the regulatory commission for permission to raise prices by more than the inflation rate, repeating a 2010 request the regulator rejected.

The post office has struggled for years with declining mail volume as a result of growing Internet use and a 2006 congressional requirement that it make annual $5.6 billion payments to cover expected health-care costs for future retirees. It has defaulted on three of those payments.

For consumers who have cut back on their use of mail for correspondence, the newest rate increase may have little impact on their pocketbooks.

“I don’t know a whole lot of people who truly, with the exception of packages, really use snail mail anymore,” said Kristin Johnson, a Green Bay, Wis., resident who was shopping in downtown Anchorage, Alaska, while visiting relatives and friends. “It’s just so rare that I actually mail anything at this point.” Information for this article was contributed by Angela Greiling Keane and Alan Levin of Bloomberg News and by Bradley Klapper and Mark Thiessen of The Associated Press.

Front Section, Pages 1 on 12/25/2013

Upcoming Events