Postal regulator backs 3-cent stamp hike

The U.S. Postal Service’s regulator said Tuesday that it would approve a temporary hike in the price of stamps, giving the cash-strapped agency close to $3 billion in relief.

The Postal Regulatory Commission’s (PRC) decision amounted to a compromise, as it also rejected USPS’s request to permanently increase prices quicker than the rate of inflation. That decision paves the way for the price of stamps to increase from 46 cents to 49 cents in January.

In a split decision, the regulators said that it would allow USPS the rate hike for less than two years, a time span it said would be enough for the agency to recover the roughly $2.8 billion lost from the fiscal crisis.

The Postal Service, which said it sought the rate increase as a last resort, said it was "disappointed" that the regulator didn't give them a permanent increase. 

"We are reviewing the decision in an attempt to determine the basis for the Commission's decision," the agency said in a statement.

The PRC had previously denied a Postal Service request for a quicker rate increase in 2010, but now estimates that USPS carried about 25 billion fewer pieces of mail because of the fiscal downturn.

But at the same time, the regulator said that it saw no reason to keep the rate increase in place long-term. The PRC argued that the Postal Service was putting too much of the blame for its losses on the economic crash, and not giving enough to the changes caused by online communication.

“Allowing the rates to remain in effect indefinitely would result in over recovery of the financial impact of the Great Recession on the Postal Service,” the PRC said in its decision.

A broad range of businesses that are heavy users of the mail – like banks – oppose the rate increase, saying it would be counterproductive by making them less reliant on the Postal Service.

Mary Berner of the Association of Magazine Media said it was little comfort that the rate hike is temporary, and that her group would consider challenging the decision in court. 

"It does nothing to fix USPS’s systemic problems," Berner said in a statement. "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. It doesn’t delay the inevitable but will hasten it."

Postmaster General Patrick Donahoe has blamed lawmakers who have been unable to strike a broad postal reform deal over the last three years for forcing the agency into seeking the rate increase.

USPS lost $5 billion in fiscal 2013, significantly less than its $15.9 billion it bled the year before. Postal officials have said that the proposed rate increase – the first time the price of a stamp would rise more quickly than the inflation rate in four decades – would raise an extra $2 billion of revenue a year.

The last major postal bill, enacted in 2006, says that the Postal Service can seek a more rapid rate increase only if it faces extraordinary circumstances that it could not have foreseen or recovered from quickly.

The PRC has already ruled that the economic downturn was an extraordinary circumstance. But some lawmakers and outside groups have insisted that the Internet and other technological changes were a bigger factor in USPS’s bottom line, and that the agency didn’t deserve the rate increase.

Lawmakers in both parties and both chambers are still hoping to press ahead with postal reform legislation in 2014. But a bipartisan proposal remains stalled in the Senate Homeland Security Committee, and House GOP leaders have yet to show much interest in a bill from Oversight Chairman Darrell Issa (R-Calif.).

Sen. Tom Carper (D-Del.), the chairman of the Homeland Security panel, said that Tuesday's decision was necessary because lawmakers had fallen short, and vowed work toward a legislative solution next year.

"A one-time rate increase isn't enough to solve its systemic problems. Only that can come from a comprehensive bill approved by Congress and the administration," Carper said in a statement.

This post has been updated.