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THE NATION

Postal Service Says No More Rate Hikes Until '04

April 05, 2002|From Reuters

WASHINGTON — With mail rates set to rise in June, the cash-strapped U.S. Postal Service is pledging no further rate increases until 2004 under a restructuring plan expected to be unveiled today.

An executive summary of the U.S. Postal Service Transformation Plan obtained by Reuters shows the post office envisions $5 billion in cost cuts over the next four years and wants Congress to allow post office closings as needed.

The postal service also said it would continue to press for legislative reform that would allow for quick postal price adjustments to reflect seasonal volumes and demand.

The Postal Service said it would also favor moving to a more commercial model that stops short of private ownership but includes more streamlined operations, including automation of mail forwarding.

Postmaster General John Potter was scheduled to unveil the full plan, to be presented to Congress, at the National Press Club today.

In the summary of the plan, the agency said it faces uncertainty, in part because of electronic mail and bill payments.

A recent congressional report warned that the agency's financial outlook is "increasingly dire" because of declining mail volumes and rising costs.

The agency's basic business model is not sustainable, according to the General Accounting Office report.

The post office lost $1.7 billion in fiscal 2001, which ended Sept. 30, as mail volume declined for the first time in a decade after an economic slump and the Sept. 11 terrorist attacks.

Post offices were further hit by the discovery of anthrax-laced letters sent through the mail.

The Postal Service, which delivers more than 40% of the world's mail, has said it wants to raise the price of a first-class stamp to 37 cents from 34 cents. The increase must be approved by the independent Postal Rate Commission.

In 1999, the postal service increased the price of a first-class stamp for the first time in four years, to 33 cents. A year later, it raised the price to 34 cents.

The post office is mandated to cover operating costs but not necessarily turn a profit. It has not received any tax dollars for operating expenses since 1982.

The government agency presented several business models for its future but said it favors a "commercialization" option that would stop short of private ownership.

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