Price of First-Class Postage Stamp to Increase by 1 Cent

Despite three years of billion-dollar mail profits, the independent Postal Rate Commission reluctantly agreed Monday to a post office request to raise the price of stamps by a penny.

The increase could take place later this summer, although the commission urged that it be held off at least until January.

“The commission is reluctantly granting the Postal Service request to raise the price of the first-class stamp from the present 32 cents to 33 cents,” said Ed Gleiman, chairman of the commission.

The commission chided the Postal Service for not delaying its request to provide more up-to-date information on costs and expenses.

But, in the end, the commission agreed to much of what the Postal Service had asked for.

It approved the 1-cent increase in first-class letters and a series of increases for other types of mail.

The commission rejected a request to raise the price of sending postcards by a penny, keeping them at 20 cents.

In addition, the commission recommended cutting the price of heavier letters. Currently, each extra ounce costs 23 cents, and the commission called for reducing that to 22 cents.

That means that although a one-ounce letter would go up to 33 cents, a letter weighing two ounces would cost the same to mail as it does now--55 cents--and letters heavier than that would cost less than they used to.

On other rates, the commission recommended a 12.3% increase for parcel post, somewhat more than the 9.2% asked by the post office. For periodicals, the post office wanted a 3.9% boost, but the commission recommended 4.6%.

Advertising mail rates asked by the post office were reduced by about one-third by the commission. The commission also sharply cut the proposed increase in book rates.

“These changes will provide added funds to enable the Postal Service to proceed with its plans to spend $5.6 billion on equipment and service-enhancement programs in the 1998 fiscal year,” the commission said in announcing its decision.

The 32-cent price to mail a first-class letter took effect Jan. 1, 1995, after a year in which the mail agency lost nearly $1 billion.

In the three fiscal years since then, the Postal Service has reported profits of $1.8 billion, $1.6 billion and $1.3 billion, which have helped reduce--but not eliminate--debts accumulated over decades of red ink.

“We want to avoid the mistakes made in the 1980s when we waited too long before raising rates,” a top postal manager said last week. “Then our million-dollar profits turned to billion-dollar losses.”

Nonprofit organizations complained to the commission that their rates, which are lower than other businesses, will increase too much under the changes.

Under the law, rates for each class of mail must cover the cost of handling that type of mail plus a portion of the overall costs of running the Postal Service. Each rate case produces complex debates over how those costs are allocated.