PRC Report Finds Excessive Postage Discounts

Confirming charges the APWU has made for more than a decade, the Postal Regulatory Commission (PRC) concluded on March 29 that the Postal Service grants excessive postage discounts to large mailers. The USPS suffered a loss of $3.8 billion in Fiscal Year 2009.

The PRC’s Annual Compliance Determination (ACD) identified 30 types of worksharing discounts that exceed USPS savings when work is performed by large mailers. According to a March 29 press release, the Postal Service demonstrated that “special circumstances” justify the discounts in only 17 instances.

Noting that federal law says that workshare discounts may not exceed “avoided costs,” the PRC concluded that “the appropriate action is for the Postal Service to align the discounts with the avoided costs” when it files its next request for a general rate increase.

The APWU is exploring options to help expedite the process of bringing postage discounts into conformity with the law.

Echoing APWU Concerns Echoing APWU Concerns

The PRC findings echo concerns that the APWU has raised regarding the discounts offered to large mailers. “We are pleased the PRC has verified our claims: Postage discounts to large mailers are excessive,” said APWU President William Burrus. “They rob the Postal Service of needed revenue, and undermine the mission of the USPS to provide universal service at uniform rates.”

The PRC report also confirms another important APWU contention, that the general “policies and objectives” of the Postal Accountability and Enhancement Act do not modify the clear statutory requirements of the law governing workshare discounts. The report notes that the APWU argued “that the language of section 3622(e) is ‘clear and mandatory,’ requiring the Commission to ensure that discounts do not exceed avoided costs unless one of the exceptions within the section is met.”

In addition to postal deficits for FY 2009 created by worksharing, the report also attributed losses to mail volume declines caused by the recession and the requirement that the USPS pay more than $5 billion annually to pre-fund retiree health benefits.

“The USPS business model is based on the premise that discounts for large mailers increases volume,” Burrus said, noting that the most recent findings by the PRC further show that despite disproportionate increases in discounts, mail volume has not increased.

“Furthermore,” Burrus said, “Congress and the American public should be made aware that excessive discounts for large mailers shift costs to individuals and small business mailers.”