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Postal Rates To Go Up a Penny

Updated:
WASHINGTON (AP) — The cost of mailing a letter will be going up a penny, probably in January.

The independent Postal Rate Commission acted Monday on a request by the Postal Service for a rate increase to offset rising costs.

Under the commission's action, the price of a first-class stamp will rise to 34 cents. But the 22-cent cost of a second ounce of first-class mail will stay the same, as will the 20-cent postcard. The Postal Service had asked that the second-ounce rate be raised by 2 cents and the postcard by 1 cent.

The post office Board of Governors will decide when the higher rates will go into effect. Jan. 7 is said to be the likely date.

The Postal Rate Commission approved the increase after months of hearings and deliberations. The higher rate for a first-class stamp will bring in about $1 billion a year.

The commission also raised the cost of mailing one pound of Priority Mail from $3.20 to $3.50.

The last rate increase, which tacked a penny onto the cost of a first-class stamp, was Jan. 10, 1999.

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 post office's proposed increases averaged about 6 percent over all classes of mail.

In addition to letters and postcards, 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.

Newspaper postage will increase from 26.6 cents for a 10-ounce mailing to 28.7 cents.

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 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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On the Net:

Postal Rate Commission: http://www.prc.gov

Postal Service: http://www.usps.com

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