Postal regulators move to let price of stamps rise higher

WASHINGTON — Seeking to bolster the ailing U.S. Postal Service, federal regulators moved Friday to allow bigger hikes in stamp prices beyond the rate of inflation, a move that could eventually add millions more dollars to companies’ shipping rates from prescription drugs to magazine subscriptions.

The Postal Regulatory Commission announced the decision as part of a much-anticipated, 10-year review of the Postal Service’s stamp rates. It concluded that the post office’s mounting red ink from declining mail volume and costs from its pension and health care obligations hamper the ability to provide reliable mail and package service in the digital age.

The commission’s plan would give the Postal Service freedom to raise the price of its first-class stamp, now at 49 cents, by an additional 2 percent above the rate of inflation to help avoid bankruptcy and make needed multi-billion dollar investments, such as upgraded information technology and delivery trucks.

The post office could also tack on another 1 percent to the stamp price if it met certain standards for “operational efficiency” and quality service.

In all, that could translate to an increase of up to a few cents each year, depending on rates of inflation, compared with roughly 1 cent per year previously. The new pricing system would be in place for at least the next five years.

Businesses immediately voiced objections, calling the regulatory plan “disappointing.”

“The more-than-doubling over five years at current inflation rates proposed by the commission would be harmful to postal customers and the Postal Service,” said Art Sackler, manager of the Coalition for a 21st Century Postal Service, a broad trade group that includes mailers such as Amazon and the National Retail Federation. He said higher stamp rates could drive more price-sensitive consumers to online communications, decreasing postal revenue further.

“Once mail leaves, it rarely comes back,” he said.

Groups including eBay, Netflix and Greeting Card Association had urged the commission to defer on major changes to the Postal System’s pricing system, arguing in part that Congress had intended to keep a rate cap in placed based on a law passed in 2006. Only lawmakers can provide financial relief from the onerous requirements placed on the Postal Service to pre-fund retiree health benefits, which have been the biggest factor behind its financial losses over the last decade, the groups said.

The Postal Service, which had sought almost complete freedom to raise postal rates, said it was still reviewing the proposal to see if it was sufficient. “We continue to believe that any price cap is unnecessary in the rapidly evolving postal marketplace, for which all of our customers have alternatives to using the mail,” said Postmaster General Megan Brennan.