For the first time in nearly a century, the price of mailing a letter in the US fell today but the US Postal Service lamented that the decision imposed on it would lead to a whopping USD two billion fall in its annual revenue.
USPS said the decline in the cost of a postage stamp, from 49 cents to 47 cents, will cost it two billion this year, and make it more difficult for it to compete and provide the service its customers demand.
The USPS was ordered to cut the price by its regulator, the Postal Regulatory Commission (PRC).
"Given our precarious financial condition and ongoing business needs, the price reduction required by the PRC exacerbates our losses," said Megan J Brennan, Postmaster General and CEO.
"This unfortunate decision heightens the importance of the review of our ratemaking system which our regulator is required to conduct later this year," he said in a statement.
So the USPS is asking for a change in its rate-setting process that could allow it to enact steeper rate hikes in the future.
The PRC is required to review the market-dominant regulatory system to determine whether it is achieving the statutory objectives mandated by Congress.
The obligation to conduct the review arises 10 years after enactment of the Postal Accountability and Enhancement Act, which occurs in December of this year.
"To provide clear guidance to all interested parties concerning the review process, we filed a petition today with our regulator to clarify the scope of the review and which provisions of the current regulatory structure are subject to potential modification or replacement," said Brennan on Thursday.
"By addressing preliminary issues now, the PRC can ensure an expeditious and efficient review."
To offset long-term declines in the use of First-Class Mail in particular, the Postal Service continues to aggressively improve efficiency and has reduced our annual cost base by USD 15 billion since 2008.
Nevertheless, and despite strong multi-year growth in package deliveries, the Postal Service continues to record unsustainable financial losses due to changing market conditions and legislative and regulatory mandates which prevent the Postal Service from fully adjusting to the new market realities.
The last time that there was a decrease in the price of postage was in July 1919, when stamp prices dropped from 3 cents to 2 cents. This is only the third price decrease on record going back to the Civil War, CNN reported.
The Postal Service is not funded by tax dollars, so it has to cover the cost of its operations through revenue sources such as postage. It has also reached its borrowing limit, the report said.
