PRC Limits USPS Market Dominant Rate Increases to Once Per Year, Tightens Workshare Discounts
The Postal Regulatory Commission has moved to rein in USPS’s aggressive pricing strategy, approving new rules that limit Market Dominant rate increases to once per fiscal year and tighten controls on workshare discounts.
These changes, adopted in Order No. 9426, aim to restore predictability for mailers after years of semiannual hikes while forcing USPS to align discounts more closely with the costs it actually avoids when large mailers perform sorting and transportation work.
Since 2021, USPS has treated its expanded pricing authority under the Modified Ratemaking System as a green light for twice-a-year increases in Market Dominant products like First-Class Mail, Marketing Mail, and Media Mail. Nearly all available authority was exhausted each time, leaving shippers scrambling to keep up with constant changes.
The PRC has finally stepped in to give shippers some relief with this new rule ordering that USPS may not file more than one above‑de‑minimis rate increase of general applicability per fiscal year for Market Dominant products, from March 1, 2026 through September 30, 2030.
According to the rule, USPS still has some wiggle room to make tiny “de minimis” increases (less than 0.001% at the class level), and in truly “extraordinary or exceptional circumstances” it can still seek an exigent increase under separate statutory authority, but that is a high bar to meet.
Crucially, this rule does not reduce the total rate authority USPS can use. It simply stops USPS from carving that authority into multiple major hits in the same fiscal year - so shippers should be prepared that the single annual rate hike could be larger than one of the two semiannual increases would have been, with the tradeoff being more planning time and stability.
USPS tried to argue that restricting the frequency of increases would meaningfully harm revenue and financial stability.
But PRC did the math and found that under a high‑inflation scenario, the upper bound of incremental revenue from a second rate hike within a single year was roughly 700 million dollars, and more conservative assumptions put it around 230 million dollars.
That's chump change compared to the ~$9B loss USPS racked up for fiscal year 2025 and the PRC didn't pull any punches, saying the incremental revenue from the second rate hike "would at most cover 1-3 days of the Postal Service’s costs, a gap which could be reasonably addressed by even limited cost control measures" while calling on USPS leadership to pursue cost controls, operational efficiency, and service improvements rather than treating captive Market Dominant users as an ATM.
In a move that was likely driven by the assumption this rule would pass, USPS petitioned the PRC last month to adjust the system for regulating market dominant rates by lifting remaining price caps and further relaxing rate-setting constraints tied to retiree pension and health benefit obligations.
Liz Morton
The PRC has not yet ruled on that petition.
USPS had also previously announced that there would be no Market Dominant price increases in January 2026, again likely foreseeing that the PRC was going to move to limit them to once a year and wanting to wait until later in the year to use that one-time power.
Importantly, these changes do not apply to Competitive Products like Ground Advantage, Priority, and Priority Express - those rates will still be allowed to be adjusted more than once per year with the next one going into effect January 18th.
Liz Morton
The second major piece of Order 9426 tightens workshare discount rules so USPS can’t keep pricing them “farther away” from the costs it avoids.
Worksharing is the “you do the work, you pay less” side of USPS pricing:
- Mailers (or their vendors) presort mail, apply automation‑ready barcodes, and/or truck mail deeper into the USPS network.
- USPS gives a workshare discount that is supposed to roughly equal the avoided cost - what USPS would have spent doing that work itself.
In theory, this arrangement lowers USPS costs, rewards efficient private‑sector processing and transport, and keeps overall system costs and prices down.
In practice, PRC has long wrestled with USPS repeatedly setting discounts too high (over‑rewarding workshare and bleeding revenue) or too low (discouraging private work and forcing USPS to do more expensive in‑house processing), and then leaning on a regulatory gap to keep those discounts misaligned.
Order 9426 closes that regulatory gap by:
- Restricting USPS from setting workshare discounts farther away from avoided costs than existing rules already allow.
- Clarifying that workshare discounts should stay as close as possible to those avoided costs to support Objective 1 (maximizing incentives to reduce costs and increase efficiency).
- Tightening the waiver process: USPS can request waivers in limited circumstances, but PRC states clearly that waivers are disfavored and the new rule will be strictly enforced.
This change will mostly affect presort bureaus, comminglers, consolidators while the impact for typical online sellers using intermediaries will be more indirect.
Order 9426 won’t magically fix USPS’s balance sheet, but by capping Market Dominant increases at once per fiscal year and tightening workshare discounts so they actually track real cost savings, the PRC is at least putting some guardrails around how far and how fast USPS can push captive mailers.
For online sellers who use Market Dominant services, that means fewer surprise hits, a clearer rate‑planning calendar, and a better chance that the savings created by presort and consolidation actually show up in the prices they pay - even as USPS continues to press for broader pricing power in the years ahead.
