Postal Service OKs increase to 34 cents

By RANDOLPH E. SCHMID

Associated Press

WASHINGTON – It’s official: It will cost a penny more to mail a letter starting Jan. 7.

The increase to 34 cents was accepted by the Postal Service’s board of governors today. It will be accompanied by changes in many other rates, including international mail.

But the wide-ranging set of rates approved last month by the independent Postal Rate Commission fell well short of what the post office wanted, prompting the agency to adopt the new rates under protest.

“We will implement the recommended decision, but are returning it to the commission for further consideration,” said Board Chairman Einar V. Dyhrkopp.

“We cannot accept a situation that threatens the ability of this organization to provide the levels of service that the American people expect and deserve,” he said.

Postmaster General William Henderson said the cuts made by the rate commission reduced the post office’s planned contingency fund by $1 billion.

Rate commission general counsel Stephen Sharfman said the commissioners were waiting to receive and read the post office’s response.

The post office is currently in arbitration with three of its largest labor unions. It expects to need the added income to pay higher salaries and to meet other rising costs, including fuel and equipment.

Also at today’s meeting, Richard J. Strasser Jr., the post office’s chief financial officer, reported that the agency finished fiscal 2000 with a $199 million loss.

While the independent rate commission agreed with the post office’s requested 34-cent first-class rate, it reduced the agency’s proposed increases in other areas.

For example, under the rates recommended by the commission, a letter will cost 34 cents for the first ounce, but the second ounce will cost 21 cents, a penny less than the current price. There were cuts in other rate requests also.

Dyhrkopp said the resulting price will not provide sufficient revenue for the agency.

The post office had been in the black for several years, but the request for a rate increase had been made in January in anticipation of a small loss in 2000 and a larger one in 2001.

Changing postage prices is a complex process, beginning when the postal service sends a request to the rate commission. The commission then holds hearings and has 10 months to reply with a series of its own recommendations.

The post office can then accept that set of rates, accept them under protest and ask for reconsideration or reject them. The postal governors can overrule the rate commission and impose their own rates, but only if they vote unanimously to do so.

While the post office contends that it needs higher rates to cover its costs, price increases are never popular with customers.

The Direct Marketing Association promptly complained about the rising rates, calling on the post office to delay implementation at the least.

Jerry Cerasale, DMA senior vice president for government affairs, contended that the “decision by the governors to ask for an even larger increase will hurt American businesses and consumers as well as drive businesses away from the Postal Service in droves.”

He also appealed to the board of governors to rescind the Jan. 7 implementation date, contending that it will take at least 60 days to implement the change after businesses obtain new mail processing computer software.

Overall mail prices are rising by 4.6 percent, the post office said. The increases vary by type of mail. By law, each class of mail is required to cover its own costs.

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