Except for when it has something to say about stamp prices, you don’t seem to hear much about the Postal Regulatory Commission (PRC). But in reality it is an active organization and just came out with its annual report covering the 2023 fiscal year, which is the year right after the 2022, Postal Service Reform Act. For a review, The Federal Drive with Tom Temin spoke with PRC Chairman Michael Kubayanda and with Commissioner Ashley Poling.

Interview Transcript: 

Tom Temin Let’s start with a little civics, maybe at the beginning, because Postal service and postal delivery is something of a complicated apparatus. The Postal Regulatory Commission that you are on is not the postal board of governors, and it’s not the U.S. Postal Service. So tell us what you do and the scope of PRC activities.

Michael Kubayanda Sure, Tom. The PRC is a small federal agency. We have about 90 employees, and our mission is to provide transparency and accountability of the U.S. Postal Service. The relationship is similar to, say, utility regulation. So think of an electricity provider or an energy provider and how the local public utility commission oversees that provider. That’s a little bit of the model for the creation of the Postal Service and the Postal Regulatory Commission through a 1970 law known as the Postal Reorganization Act. The PRC was created as the Postal Rate Commission in that 1970 law, and then renamed the Postal Regulatory Commission in the 2006 Postal Reform Law that gave the commission some expanded powers as well. The main thing that the Commission does is approve Postal Service requests for price changes, and we determine whether those price changes are consistent with the law and our regulations. And I can go into that a little bit more if you like.

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Tom Temin Yeah, the details probably get into deep statute in the case history and so forth. Ms. Poling, how do you stay clear of the Postal Board of Governors?

Ashley Poling Tom, we were just chatting a little bit before about just the misconceptions, I think, out there regarding like the different roles of the Postal Regulatory Commission and the board. You were even asking me, I think about the position and if it’s full time, and we are, there are five of us here at the commission. We’re not allowed to have more than three folks from one political party. Currently we have two Democrats, one independent and two Republicans, actually. But yeah, it’s a full time job. And I will tell you this, the Postal Service sure keeps us busy. We did have a new rate system that went into effect in 2021. And since then the Postal Service has been filing rate increases twice a year. We’ve been staying on our toes. I think also with the pandemic, I always hesitate saying this, because obviously COVID was so terrible in so many ways for so many people in our country. But I do think it gave a real appreciation for postal workers and how much they contribute every day to our daily lives. But I think that time really revealed that. And so I think with all that going on, I think things like the Postal Service Reform Act kind of helped give momentum, I think, for that getting past many people actually understanding just how vital this agency is and how incredible these workers are. And I think with that, it’s kept us busy in the way of, you’ve probably heard of these nature of service cases as well. The Postal Service did lengthen service standards a few years ago. We participate through the advisory opinion process, which is when there’s a nationwide or substantially nationwide change in service. So just a few highlights. But I think that’s really how they’re keeping us busy.

Tom Temin And the idea of rates. And you do a lot more than just simply look at rates and have final say over those. But that’s a difficult question because the Postal Service does lose money, and there’s been a lot of effort to try to close that gap. You could say, well, let’s make first class $1,000 and then we’d be in the clover. Of course, nobody would mail anything. So I imagine it’s a pretty complicated, more than it seems to say, whether 61, 62, $0.63 there is a, what do they call it in economics, elasticity of demand connected to pricing.

Michael Kubayanda That is absolutely a major issue. And that is one of the major issues that were tasked with taking a look at. So Congress created an approach for the Postal Service pricing. There’s two broad categories of Postal Service products, what we call market dominant. Those are products where the Postal service is either the sole provider or dominates the market, the primary provider, as compared to product areas where the postal service has a lot of competitors. You can think of  parcel products as an example of that. In the competitive space, we have, relatively light regulation. And what the commission does is look at primarily whether the Postal Service is covering its costs and think of ideas that they’re not unfairly underpricing those products. And the idea there is that the market provides some kind of protection for consumers to a certain extent. On the market dominant side, this is where the Postal service is either so provider, it has a legal monopoly or it dominates the space, there are stricter regulations. And Congress created an approach in which we have to balance several objectives and factors that govern whether postal prices are legal or not. So it’s a balancing act. And then the what the Commission does is issue regulations to implement those objectives and factors and help guide the implementation of those rates. So you are correct, there’s a lot of competing issues. Elasticities, price elasticity of demand is one of those complicated issues.

Tom Temin We’re speaking with Michael Kubayanda, he’s chairman of the Postal Regulatory Commission, and with Commissioner Ashley Poling. And you are out with a new strategic plan and also a new review of 2023 for the Commission itself. What are the top issues? What are you trying to accomplish in the year ahead in the master plan that goes out to 2028, I believe.

Michael Kubayanda Yes, we do have a relatively new strategic plan through 2028. Like most agencies, we develop overall strategies to help guide our work. Over a five year period, we believe that a new strategy is important because, as Commissioner Poling pointed out, COVID really revealed, how critical the mailing system is to the nation. The Postal Service played a critical role in distributing, COVID test kits, and no one else has a network that reaches every American in the fashion that the Postal Service does. So that really highlighted the criticality of the postal system, the importance of postal workers who do an amazing job on a day to day basis. But as, you also noted, the industry is undergoing some really difficult changes. We’ve seen a large decline in mail volume. In 2006, mail volume peaked at 213 billion pieces of mail. It is now below 120 billion pieces of mail annually. So you can see, really large changes. We’ve also discussed already a change in pricing strategy from the Postal Service, in terms of raising prices twice a year. So that’s been a change. And all these issues have led to some stakeholder concerns and more demands on the commission, which Commissioner Poling has also referred to. So we wanted to develop a new strategy, sort of address all these issues and make sure that we’re on top of the changes that are going on in the industry and address the concerns policymakers and stakeholders have.

Ashley Poling And I think, Tom, engagement is a really big part of that strategic plan. And I’m really excited about all the ways we’re doing that. I already mentioned COVID, but of course, another impact that had was in us not being able to meet with folks from the industry quite as much in person, obviously. And so it was really exciting, I thought for us last year, because it’s the most meetings I can recall since being a commissioner here, which I came onto the commission in 2019, the most meetings I think we’ve ever had with stakeholders was in 2023. And it was so important for us to hear from them about the Postal Service and how pricing strategies were affecting them, how service issues were affecting them. And I think that really shapes how we are able to respond to things. And just to kind of tag on to a few things, obviously our annual report is really covering kind of all the things we did in FY 2023. But I think it’s also important to talk about sort of how that kind of sets us up for this year as well in 2024. So sort of with that being such a busy year, it’s also important to note you might have seen we opened to public inquiry docket on the delivering for America plan. We did that in April of 2023. That really allows us to kind of explore the scope of what’s going on there and to be able to ask the Postal Service questions.

Ashley Poling There’s obviously been a lot of concern, I think, when it comes particularly to service issues. So that is sort of unique, I know we’ve talked a lot about rates, which is a huge part of what we do, but we really do also play an incredible role when it comes to service transparency and accountability. And that’s sort of one of the ways we’re doing that. Not to leave out rates again, but to say one other thing we are doing, we heard a lot from stakeholders, as I mentioned, in these meetings, in various venues throughout the year. We also have a very extensive comment process, and that’s how people can file in our docket system. But I think hearing a lot about what was going on with their concerns were, and we were due to do a five year sort of review of the market dominant rate making system in light of sort of developments and also really hearing from stakeholders. We’ve since moved that up. And we’ll be opening that up earlier. So I think engagement is just critical, I think for for the work that we do, it plays out in all kinds of ways, whether we’re going to a conference or speaking at an event or whatever it might be. But it’s incredibly important for us to know what’s going on in the community and for them to feel connected to us.

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Tom Temin And how our relations with the executive branch of the Postal Service itself. Do you meet in person regularly? Is it like a food fight or is it pretty cordial?

Ashley Poling I think that’s an excellent question. We do and there is I guess the elephant in the room is, you see a lot of times these articles and talking about this, maybe we’re at odds with each other or whatever else. I think it’s really important to remember that regulated entities don’t often love their regulator. And I think that’s fine. I actually think it’s quite healthy. I also think it’s really important right now, particularly with so much going on with this plan and so many changes happening. We’re hearing about it every day from members of Congress, from customers all over this country who are reaching out to their members. It is just so critical for us to really be paying attention to what’s going on. And the best way we can really do that, Tom, is by all working together and collaborating. So I do hope to see more of that in the future, because I really think that this is a system that we all care about so much. And as we were talking earlier, we worry a little bit right about the lost art of of letter writing even. But even more important, this is such a foundational institution to our country, and I think we all need to be doing what we can to make sure that it survives. So we do. But to also technically answer your question, we do meet with the Postmaster General and quarterly basis, and obviously are in constant touch through our commenting process. As I mentioned already, the Postal Service is frequently commenting on our docket system.

Michael Kubayanda I’d say, that was very good overview from Commissioner Poling. We do meet with the head of the Postal Service periodically in his team, and I think it’s a respectful relationship. As Commissioner Poling pointed out, there should be some friction, actually, between an operator and a regulator. Congress created the commission to provide oversight. And so some, disagreement is natural. That should be cordial and respectful. And I think that process of having raising points, having counterpoints and then, moving towards resolution is critical. And I’m a strong believer in that in working in a bipartisan fashion, within the commission, and then also working in a cordial fashion with the Postal Service as well, to come up with reasonable solutions for the American people, for, postal ratepayers.

Tom Temin And the Postal Service has done a lot recently for the work force. There have been some raises that have gone through, you know, part of the federal pay package. There’s also a update to the health plans available to the postal workers. But there’s also the capital question, and there seems to be a lot of friction over Mr. DeJoy, the Postmaster General’s ideas for streamlining the capital infrastructure for the Postal Service. How do you deal with that? And what do you think we can expect in the next few years with respect to right sizing or correctly calibrating the capital infrastructure to the mail volume and style of mail that they’re actually delivering?

Michael Kubayanda As Commissioner Poling, mentioned, that the commission had opened up, we call a public inquiry docket. This is a docket that is designed to delve into important issues. There’s no direct regulatory outcome, but it can lead to other proceedings where we have more direct regulatory outcomes. Commissioner Poling has been very dedicated to the issue of service performance over the years, to say the least. And I think she can dive into some of the details of what we’re looking at in the public inquiry of the delivering for America plan.

Ashley Poling Thank you so much, Mr. Chairman. That’s very kind of you. I think the service issue is really the one on the front burner for everyone right now. If we’re hearing about it from every part of the country. And I just think it’s really incredibly important for us to be doing as much as we can within the authorities we have. Admittedly, I think, sometimes people think we have more enforcement in authority than we do. But I also think it’s really incredible, the accountability and transparency role we do have. And I think this public inquiry docket is an excellent example of how we’re using that. The authorities that we do have to really examine this issue. This is probably one of the most extensive changes to how mail and packages are processed that we’ve seen in years. So it’s incredibly important, I think, that we understand what’s going on and really understand the impact of those changes. So separately from the docket itself, I actually had the opportunity to go down and visit some of these new processing centers in Atlanta and Athens, Georgia, with Vice Chairman Day, who joined us in September of this past year. It was really helpful, I think, to kind of see what’s going on, and it’ll be really even more important, I think, to see what are the cost savings that are going to result from these. How will they continue to affect service? We don’t have those answers yet, Tom. So I think it’s just really important to keep examining this and understanding what’s going on. There have just been, I think, a dramatic number of things that really do affect people. And I think it’s important to just imagine. I think the Postal Service, going a little bit off script for a minute here with the question. But it is like the one agency, I feel like that everybody knows. And they know their postal carrier and it matters to them. And there’s that just amazing connection, I think, between a letter carrier and their customers. And so people really notice when the cadence of the mail isn’t the same. And they’re not getting things when they’re supposed to be or when something else is going wrong. So I just think this is an important time really, for not only us to be doing what we can within our role, but also Congress. And obviously, I’ve seen so many letters recently from members of Congress. I think they really are paying attention to this, which is fantastic and is very needed. But we do have an election coming up this fall. I think it’s really important to work through these service issues as quickly as we can.

Tom Temin What are your major plans for the year ahead, and what do you hope it looks like in another year from now? And, you know, let alone five years from now?

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Michael Kubayanda I think we touched a little bit on the Delivering for America plan. That is the kind of major headline grabbing issue at this time from, as Commissioner Poling mentioned, that is one of the largest changes, I think probably in the history of the postal network. And so the commission only has 90 employees. And so one of the things we’re doing is trying to boost our capacity. We’re going to remain small, but we’re trying to expand our capacity to do these types of analyzes in order to, be on top of the changes, understand their impact on the American people, understand the impact on service, on efficiency, on cost containment, all those types of issues. And in order to do that, we’ve created a small data analytics group that can examine these issues that has a little bit of expertise from the way the network operates. Commissioner Poling mentioned the Vice Chairman, Thomas Day, who happens to have a great background in these operational issues. And as Commissioner Poling mentioned, she and vice chairman visited one of these new processing plants that opened up under the Delivering for America plan. There have been some issues in the rollout of that plan. So that’s something that we’re watching very closely. You see, issues popping up in Atlanta currently. We’ve also seen issues in other parts of the country, in Virginia, in Wichita, Kansas. So those are all things that we’ll be monitoring over this coming year.

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