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Pricing update

PRC issues ruling on 2014 price increase

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The Postal Regulatory Commission (PRC) has agreed to a USPS request to extend the “exigent” surcharge that has been in effect since January 2014.

The decision allows the Postal Service to keep prices for its market-dominant products at current levels until it collects an additional $1.4 billion in revenue, raising the total amount USPS can recover through the exigent surcharge to $4.6 billion in revenue.

The ruling, which the PRC announced this week, is expected to allow the Postal Service to keep existing prices in place into 2016. If there are no further appeals, the surcharge will be removed at that time, and prices would be expected to fall accordingly.

“We appreciate that the Postal Regulatory Commission provided some additional pricing relief to the Postal Service,” USPS said in a statement. “However, the recent decision does not fully restore the Postal Service for the significant mail volume and revenue losses associated with the great recession.”

The statement also noted that the PRC’s decision “clearly demonstrates that there are significant pricing constraints in the postal law that undermines the long-term financial health of the Postal Service, and reinforces the need for legislative reform of the Postal Service business model.”

USPS said it will work with the PRC, mailers and other stakeholders to “fully address the pricing needs of the Postal Service when it reviews the current rate system for market-dominant products in 2017.”

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