KEY HIGHLIGHTS

• USPS petitions to overhaul Market Dominant rate-setting.
• Board of Governors would gain expanded pricing authority over a five-year period.
• Signaled price path through 2027, including the possibility of a July 2026 increase.
• Alternative “rate reset” proposal if the cap is retained.

Overview

On December 22, 2025, the United States Postal Service (USPS) filed a significant petition with the Postal Regulatory Commission (PRC) seeking to restructure the rate-setting system for “Market Dominant” products (such as First-Class and Marketing Mail).

The following is an executive summary of that request and the next steps expected:

Reform of the Ratemaking System

The USPS is requesting to replace the current inflation-based “price cap” system with a more flexible regulatory monitoring approach.

• Increased Authority: Under this new model, the USPS Board of Governors would have the power to set rate parameters over a five-year period and would not be tied to the current price cap of CPI and additional rate factors.
• Forward Guidance: To provide predictability for mailers, the USPS commits to providing advance notice on filing dates, implementation dates, and a total price “ceiling” for the five-year review period:
  • This would not prohibit a July 2026 price increase.
  • The first forward guidance would call for a January 17th, 2027 price increase of an average 7.4%, ranging from 6% for Marketing Mail to 12% for Periodicals. First-Class mail would see an 8% increase.

If the PRC keeps the price cap, USPS has provided an alternate proposal.

• Alternative “Reset”: The USPS requests a “rate reset” of at least 22% in additional pricing authority to bridge the gap between revenue and operating costs. The 22% would be banked for use over a five-year period.

What’s Next?

Based on standard regulatory procedures and the “phased” approach the PRC has already established, the following steps are expected:

→ The PRC will likely issue a notice in the Federal register notice acknowledging the USPS petition and establishing a formal docket for consideration that would include a comment and reply comment period. GrayHair will keep you apprised of any developments.

For more information on these topics or other postal issues, contact GrayHair Software at engage@grayhairsoftware.com.

 

Download the entire Briefing below: