Another Postal Rate Hike Coming?

UNITED STATES POSTAL SERVICE logo, over money texture, partial graphic
The Postal Service said Wednesday it wants to raise the price of a first-class stamp by 3 cents — to 42 cents — and proposed a "forever" stamp that people could use as hedge against future rate increases.

The changes would take effect in the spring of 2007 if approved by the independent Postal Rate Commission. The PRC has the right to reject or modify the USPS request, and has.

"A forever stamp would help ease the transition to any future price adjustments," said James C. Miller III, chairman of the USPS board of governors.

Postmaster General John E. Potter said the agency would not be making a rate change if it were not necessary.

"The Postal Service is not immune to the cost pressures affecting every household and business in America," he said.

For example, each penny increase in the price of a gallon of gasoline costs the post office $8 million, and payroll, health expenses and other costs also have been rising.

Unlike private delivery companies, the post office cannot simply add a fuel surcharge to its rates.

In addition to the increase in first-class prices, the package of rate changes includes boosts in other categories — and even some rate cuts.

For example, while the first ounce of a letter would rise 3 cents to 42 cents, additional ounces would cost 20 cents instead of the current 24 cents. That means a saving on heavier items such as wedding invitations. The cost to mail a 2-ounce letter would drop from 63 cents to 62 cents.

Other changes would include Express Mail, flat rate up from $14.40 to $16.25; 2-ounce bar-coded bank statement, down from 54.5 cents to 48.6 cents; bulk-mailed weekly newsmagazine, up from 17.9 cents to 20 cents; presorted catalog, up from 32.1 cents to 33.6 cents; post card, up from 24 cents to 27 cents.

The forever stamp would help soften the blow of a rate increase by allowing customers to stock up. As originally proposed it would sell for the first class rate and, once purchased, the special stamp would remain valid for whatever the first-class rate is when it is used, regardless of future increases.

Once the post office proposes a rate change, including the new stamp, the matter goes to the Postal Rate Commission, which holds hearings and has 10 months to consider the matter before responding.

The earliest a change would take effect would be May 2007.

The cost of a first-class stamp went from 37 cents to 39 cents in January. Before that, the price had been unchanged since 2002.

The proposed increase would boost the price of mailing a letter to 42 cents.

The increase in January was required so the post office could place some $3 billion in a military pension escrow account, a step required in law.