Postal regulator proposes 2-cent letter rate hike

updated 12:52 p.m. ET Feb. 27, 2007

WASHINGTON - Say goodbye to those pesky 1- and 2-cent stamps that used to clutter up desks and purses every time the price of mailing a letter went up.

A new “forever” stamp — good for mailing a letter no matter how much rates go up — was recommended Monday by the independent Postal Regulatory Commission. The panel also called for a 2-cent increase in first-class rates to 41 cents, a penny less than the post office had sought.

In addition, the changes would sharply scale back the price of heavier letters.

“Adoption of this proposal is good for the Postal Service, postal customers and our postal system,” commission chairman Dan G. Blair said at a briefing.

A forever stamp would not carry a denomination, but would sell for whatever the first-class rate was at the time.

For example, if the 41-cent rate takes effect, forever stamps would sell for 41 cents. If rates later climbed to 45 cents or more, the price of the forever stamp would also go up at the counter or machine, but those purchased before the change would still be valid to mail a letter.

So there would be no need to buy small-denomination stamps to add to envelopes.

Currently, first-class mail costs 39 cents for the first ounce and 24 cents for each additional ounce.

While the first ounce would rise to 41 cents under the proposal, it would cost just 17 cents for each additional ounce.

That means the price of sending a two-ounce letter would actually decrease from 63 cents to 58 cents.

The proposal also recommended a 2-cent boost, to 26 cents, in the cost of mailing a post card, also a penny less than the Postal Service had sought.

Blair said the rate proposals were scaled back because the higher rates the post office proposed would have raised more income than necessary for the service to break even in 2008.

The proposal also suggested changes in a variety of other rates including a 17-cent surcharge on “odd-shaped” mail that cannot be processed using letter-sorting machines.

The matter now goes back to the board of governors of the post office which can accept the recommendations or ask for reconsideration. If accepted, the new rates could take effect as soon as May.

The Postal Service applied for higher rates last May. Since then the commission has received 139 pieces of testimony from 99 witnesses and held 34 days of hearing on the request in developing its recommendations.

Under legislation approved by Congress last year the commission will develop a new, less cumbersome system of raising rates for use in the future, and also has more authority to regulate postal activity.

Postage rates last went up in January 2006.

Postmaster General John E. Potter has pointed out that “the Postal Service is not immune to the cost pressures affecting every household and business in America.”

For example, each penny increase in the price of a gallon of gasoline costs the post office $8 million, and the post office cannot simply add a fuel surcharge to its rates.

Proposed rate changes include:

• Priority Mail, 1 pound, $4.60, up from $4.05.
• Express Mail, 8 ounces, $16.25, up from $14.40.
• Parcel post, 5 pounds, $5.67, up from $4.36.
• Certified Mail, $2.65, up from $2.40.
• Money orders up to $500, $1.05, up from 95 cents.
• Bank statement, 3 ounces, 58.4 cents, down from 73.9 cents.
• Department store bill, presorted, 37.3 cents, up from 37.1 cents.
• Weekly newsmagazine, 5.8 ounces, presorted, 20.6 cents, up from 18.5 cents.
• Household magazine, 13.8 ounces, presorted, 33.6 cents, up from 28.9 cents.
• National newspaper, 10 ounces, presorted, 36.4 cents, up from 31.4 cents.
• Small nonprofit magazine, 4 ounces, presorted, 32.4 cents, up from 28.3 cents.
• Advertising, 2 ounces, presorted, 23.3 cents, up from 21.4 cents.
• Advertising, 9 ounces, last envelope, presorted, 62.9 cents, up from 57.0 cents.
• Nonprofit mail, 1 ounce, 16.4 cents, down from 17.0 cents.
• Church bulletin, 12.7 cents, down from 18.9 cents.
• Library mail, 2 pounds, presorted, $1.88, up from $1.78.

MORE FROM U.S. BUSINESS

U.S. business Section Front

Jackson’s luxe lifestyle aided by Wall Street   Chicago family will get Cubs, source says Economists point to rising debt as next crisis Marshals seize Madoff’s $7 million penthouse Hot dogs replace steaks this Fourth of July McDonald’s passes, Taco Bell scores with NBA Trustee: $231 million so far for Madoff victims Stanford exec makes plea deal, attorney says Businesses targeted in immigration crackdown Census: Big cities now growing quicker U.S. business Section Front   Add U.S. business headlines to your news reader: