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Postal News
FOR IMMEDIATE RELEASE
April 9, 2002
Release No. 02-022
GOVERNORS APPROVE CHANGE IN POSTAGE RATES
New rates go into effect June 30

WASHINGTON, D.C. -- The Governors of the Postal Service voted yesterday to accept the Postal Rate Commission's recommendation for a three-cent increase in the price of a First-Class stamp to 37 cents, as part of an overall rate increase of 7.7 percent. The new rates will take effect on June 30, 2002. New non-denominated U.S. Flag and Antique Toys stamps, plus a three-cent "make-up rate" Star stamp will be available in mid-June.

Consumers will see other changes in postage and services. While postage for the first ounce of a First-Class letter rises to 37 cents, the cost of the second ounce remains the same at 23 cents. Customers who mail First-Class Mail parcels will now be able to buy Delivery Confirmation or Signature Confirmation. Post cards will cost 23 cents.

Priority Mail will have a new one-pound flat rate at $3.85. Postage for heavier pieces will vary by zone. An 8-ounce flat rate Express Mail letter will be $13.65. Post office box fee changes will vary depending on the location of the office, with increases at some offices and decreases at others. Certified Mail will cost $2.30 and will include Internet access to Delivery Confirmation. The charge for a return receipt will be $1.75. COD fees will not change.

"This rate change came through an unprecedented settlement between the Postal Service and the mailing industry which allowed the Postal Rate Commission (PRC) to expedite the case and the new rates to be implemented earlier than they normally would have," said Robert F. Rider, Chairman of the Postal Service's Board of Governors. "The settlement agreement with the industry was in recognition of the urgent financial needs of the Postal Service in light of the terrorist attacks and the downturn in the economy." Chairman Rider took special note of the leadership of PRC Chairman George Omas in bringing about the negotiated agreement.

The Postal Service's mail volume has declined five percent this fiscal year and, despite management's aggressive cost-cutting, the cost of maintaining an expanding universal delivery network continues to exceed postal revenues.

Rider noted that postal management has reduced costs by $2.5 billion in the past two years and cut 30,000 jobs. Productivity gains, record service performance and high levels of customer satisfaction have been maintained-despite the addition of 1.7 million new addresses to the national delivery network each year.

"The Governors recognize that continual rate increases are not the long-term answer to maintaining a national postal system," added Rider. "Under the 30-year-old laws that govern us, we simply don't have the basic tools necessary to operate in a modern, business-like manner. That's why we support the reforms outlined in the Transformation Plan that was submitted to Congress last week."

The ratemaking process requires the Board to request a recommended decision from the independent Postal Rate Commission, which then holds public hearings on the proposal. During these hearings, any interested parties, including Postal Service competitors, have the opportunity to present arguments and information from their perspectives. Following the review process, the PRC makes a Recommended Decision to the Governors, who then ultimately take action on the rate recommendation.

Complete rate information is available on the Postal Service website, www.usps.com/ratecase.

Since 1775, the U.S. Postal Service has connected friends, families, neighbors and businesses by mail. It is an independent federal agency that makes deliveries to 137 million addresses every day and is the only service provider to deliver to every address in the nation. The Postal Service receives no taxpayer dollars for routine operations, but derives its operating revenues solely from the sale of postage, products and services. With annual revenues of more than $65 billion, it is the world's leading provider of postal services, offering some of the most affordable postage rates in the world. The U.S. Postal Service delivers more than 43 percent of the world's mail volume - some 207 billion letters, advertisements, periodicals and packages a year - and serves 7 million customers each day at its 38,000 retail locations nationwide.
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Selected Rate Changes
 currentnew
First-Class Letter (1 oz.)34¢37¢
Postcard21¢23¢
Priority Mail (1 lb.)$3.50$3.85
Express Mail (1/2 lb., next day/2nd day)$12.45$13.65
Fee and Service Changes
 currentnew
Certified Mail$2.10$2.30
Delivery Confirmation for Priority Mail40¢45¢
Insurance  
    up to $50.00$1.10$1.30
    $50.01 to $100.00$2.00$2.20
    $100.01 to $5,000.00$2.00+$2.20+
Return Receipt$1.50$1.75
Post Office Box
(group 6/size 1 semi-annual fee)		$10.00$12.00
Express Mail Insurance fee changes:
Insurance for the first $100 is free. From $100.01 to $5,000, there is a charge of $1.00 per $100 or fraction thereof.
Money Order maximum increased:
Maximum increased from $700 to $1,000. Fee continues at 90¢ for Money Orders up to $500, but increases to $1.25 for Money Orders over $500.
Rates and Fees Unchanged
COD fees remain the same.
No rate increase for First-Class Mail single piece additional ounce. It remains 23¢.

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BACKGROUNDER
SETTING POSTAGE RATES

It is the Postal Service's mandate under law to break even over time. Since the Postal Service receives no tax dollars for operations and relies solely on the sale of postal products and services to cover operating costs, price adjustments are necessary to respond to changes in the cost of doing business. By law, each class of mail must cover its costs, plus a portion of the institutional, or overhead, costs of the Postal Service.

The process for changing rates and fees is outlined under the Postal Reorganization Act of 1970, and follows several stages. The first step is for the Postal Service to file a rate request with the Postal Rate Commission (PRC), an independent body, explaining why a rate change is necessary and proposing new rates and fees. It takes six months of preparation to file a rate case, including more than a hundred thousand pages of supporting documents.

The Commission then invites any interested party to comment and participate in open hearings. During these hearings, Postal Service customers, competitors, mailing groups, and members of the public have the opportunity to provide evidence and arguments to the PRC reflecting their respective concerns and proposals.

Following lengthy review lasting up to ten months, the PRC issues a Recommended Decision on rates and fees to the Postal Service's Governors. If the Governors concur with the PRC's Recommended Decision, they vote to implement the rates.

This rate case was different from previous ones. At the suggestion of PRC Chairman George Omas, the parties in the case and the Postal Service came to an unprecedented settlement agreement as a means to avoid the usual litigation before the Commission and enable an earlier implementation of the rates. All parties in the case recognized that the Postal Service was facing financial hardship due to the terrorist attacks and the downturn in the economy. The settlement allows an earlier implementation and provides the Postal Service with additional revenue to bolster its financial position.

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