Dan G. Blair

Chairman of the Postal Regulatory Commission

Summer is here. For the first time ever, so is a “Summer Sale” in the mail. On June 4, the Commission approved a Postal Service proposal to implement a Standard Mail Volume Incentive Pricing program from July 1 through September 30. Eligible mailers who increase their standard mail volume above what would be expected based on their past mailing behavior can earn rebates of 30 percent on the extra volume. And the Postal Service can earn some sorely needed extra cash while adding volume to take advantage of excess capacity in the system. Hopefully, the overwhelming enthusiasm expressed by mailers during the Commission’s review of the Summer Sale will translate into new sales and revenue for the Postal Service and economic returns for the mailers.

The Summer Sale is a good example of how rate cases have become routine under the Postal Accountability and Enhancement (PAEA). In just 34 days, the Commission solicited public input, reviewed the Postal Service’s proposal and issued its decision – just as it has done four times before in reviewing Postal Service proposals to adjust prices for both market-dominant and competitive products in 2008 and 2009.

While the Commission looks forward to reviewing the results and lessons to be learned from the Summer Sale, it is also preparing for the possibility of the Postal Service seeking an advisory opinion on a proposal to reduce service nationwide by eliminating one day of delivery per week. Commission staff are refining cost and benefit estimates developed during our year-long study of the Postal Service’s universal service obligation and will be ready to serve as an effective national forum on this proposal should it go forward.

In the near term, the Postal Service continues to be in jeopardy of running out of cash. It is seeking financial relief from retiree health benefit payments that total roughly $7.4 billion this year, including a scheduled $5.4 billion payment mandated by the PAEA, and an estimated $2 billion for current retiree health benefit premiums. Given its limited choices for fiscal relief, an adjustment to the health benefit payment schedule would appear to be the most pragmatic approach to address the looming financial deficit.

As Congress weighs the Postal Service’s requests for financial relief and flexibility to reduce service, it is clear that now, more than ever, there is a need for the increased transparency and accountability provided through the PAEA. This is a message that I also shared with Japanese leaders at a June 9 symposium on postal reform in Tokyo. Japan is eager to learn from our experience in the United States as it implements its own version of postal reform. Indeed, there is a keen interest among the international regulatory community to share ideas and best practices, as the Commission found when it hosted its first International Regulatory Dialogue in March.

Effective oversight is a universal principle of postal reform, a fundamental value that is always in season. Postal stakeholders around the world require thorough, accurate and timely performance data as they make tough policy choices and essential business decisions. The Postal Regulatory Commission is committed to ensuring that outcome here at home.

Sincerely,

Dan G. Blair
Chairman