Postal Service Board Urges Increase, Drop in 1st-Class Mail Cost

The Postal Service Board of Governors voted Tuesday to raise the price of a first-class stamp to 33 cents but the 1-cent increase is unlikely to take effect before May 1998.

At the same time, the board approved an unprecedented proposal to reduce the first-class rate to 30 cents for prepaid reply envelopes that can be handled easily by automated machinery.

Postal officials said the lower prepaid rate is designed in part to prevent customers from abandoning traditional mail service and using the Internet to pay their bills on-line.

The penny increase for regular first-class mail represents the lowest increase ever sought by the Postal Service. Even so, it would increase annual revenue by an estimated $2.5 billion.

The Postal Service has enjoyed record profits during the last two years but officials said it faces declining revenues and rising costs in the near future.

“Today, a penny doesn’t go very far,” said Tirso Del Junco, chairman of the governing board. “But a penny per stamp is all we need. It’s just enough for the Postal Service to maintain universal mail service, offset projected losses, help us take record service performance to new heights for the nation and keep rates steady to the year 2000.”

The reduced rate for prepaid envelopes was prompted by growing concern that another increase in the first-class rate could further alienate Americans who are increasingly using the Internet to pay their bills.

“That’s a very real situation for the Postal Service,” said Roy Betts, national spokesman for the agency. “Customers have more options. [The reduction] is a significant step toward maintaining value in the mail. There’s a bright future for hard-copy communication in spite of the alternatives.”

Under the plan, companies would include prepaid reply envelopes with the bills they send to their customers. They could either foot the postage bill themselves or add it to customers’ billing statements.

Despite the dual rate structure, Betts said, the Postal Service would only create one new stamp: the 33-cent variety. Since the 30-cent rate only applies to prepaid envelopes, no new stamps would have to be issued.

Opposition to the plan already is growing among high-volume mailers. Mallory Duncan, vice president of National Retail Federation, which represents department stores, said that the Postal Service should maintain the current 32-cent rate for a longer period of time.

The proposal now goes to the independent Postal Rate Commission, which has 10 months to conduct hearings before issuing a recommendation to the Postal Service. The Postal Service may accept the recommendation, ask for reconsideration, or overrule it, if its governors vote unanimously.