WASHINGTON – The Postal Service’s bid to raise the cost of mailing a letter by 2 cents was rejected Thursday, denying the agency immediate relief from a worsening financial crisis.

The Postal Service lost $3.8 billion last year and is headed toward a $7 billion loss this year as people do more business on the Internet and the recession erodes the volume of marketing mail.

In July, the post office asked for a special rate increase for letters, postcards, periodicals, parcels and other services to cut its losses. The agency also suggested cutting delivery service to five days a week and closing or consolidating offices — issues that were not addressed in the decision by the independent Postal Regulatory Commission.

The rate increase needed the commission’s approval because it was higher than the rate of inflation. The unanimous denial of the increase was a signal to the post office to deal with what its chairman says is an even bigger financial problem — a $5.5-billion-a-year obligation to set money aside for future retiree health benefits.

Chairwoman Ruth Goldway said the Postal Service’s request failed to fully justify the rate increase. She said the requested rate adjustment was not due to the recent recession, as indicated by Postal Service officials, but rather was an attempt to address long-term structural problems.

U.S. Sen. Susan Collins, R-Maine, said she was pleased by the regulatory commission’s decision. “American consumers and businesses that rely on the Postal Service won a major victory today,” said Collins, the ranking member of the Senate Homeland Security and Governmental Affairs Committee.

 


Only subscribers are eligible to post comments. Please subscribe or login first for digital access. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.