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Postal Commission To Rule on Rates

WASHINGTON (AP) — Americans are about to find out whether they will be paying more to mail a letter next year. A penny increase was in prospect.

After months of studying reports and listening to arguments, the independent Postal Rate Commission planned to announce its decision Monday on the Postal Service's request for higher rates.

The post office wants changes in most classes of mail, including a one-cent boost to 34 cents in the cost of sending a first-class letter.

The last rate increase took place on Jan. 10, 1999, with first-class stamps also rising a penny.

Once approved, the post office's Board of Governors would decide when to implement the new rates. It has been considering Jan. 7, after the holiday mail rush.

Because it takes so long to print the billions of stamps needed when new rates take effect, the Postal Service already has interim stamps in the works.

In the past, those changeover stamps carried letter designations, A through H, but that practice has been discontinued.

The next first-class non-denominated stamp is likely to go on sale before the end of the year to allow people to stock up for the change. It will carry a picture of the Statue of Liberty.

Linn's Stamp News, the weekly magazine for stamp collectors, reports that other non-denominated stamps in preparation include four issues showing flowers, a postcard-rate stamp featuring a bust of George Washington, a Priority Rate stamp showing the Capitol dome and an Express Mail stamp with an image of the Washington Monument.

The proposed increases average about 6 percent over all classes of mail.

In addition to letters and post cards, the Postal Service sought significant rate increases for such things as magazines and catalogs. Magazine publishers called the requested rate jump ``devastating'' to their business.

The post office is required by law to base its rates on the cost of handling each type of mail; when rate cases go before the rate commission, hours are spent debating whether costs have been properly allocated.

Postmaster General William Henderson has noted that the planned 1-cent boost in first class mail rates is below the rate of inflation.

The post office had a $363 million profit in its 1999 fiscal year but was expecting to lose money in fiscal 2000, which ended Sept. 30. Final figures are scheduled to be announced in December.

Unlike its commercial competitors, when the Postal Service wants to raise prices it must seek permission from the rate commission and provide detailed supporting documents. The commission then holds hearings and issues its decision; the process takes 10 months.

The Postal Service is a semi-independent federal agency. It does not receive tax money for operations and is expected to make enough money to break even over time. The agency still carries a $3.5 billion accumulated deficit, built up over many years of operating in the red.

In recent years, the Postal Service had sought to delay rate increases as long as possible; the result was that when they did occur, they were 3 or 4 cents. Henderson said large business mailers have indicated they prefer smaller increases at more frequent intervals rather than the larger boosts.

Monday's ruling affects only domestic mail rates. The Postal Service can increase international rates on its own decision, and usually does so shortly after domestic rates are increased. Some observers are expecting substantial increases in the international charges.


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