Utility Automation & Engineering T&D - 5 ways utilities can mitigate costs associated with the USPS rate hike

On February 26 of this year, the Postal Regulatory Commission recommended an overall rate increase of 7.6 percent after numerous administrative meetings involving a variety of interested parties, including major business mailers, consumer representatives and employee organizations. The final decision was to raise the price of an individual stamp by two cents instead of the requested three cents and to offer a new "forever" stamp at 41 cents, good for mailing a letter no matter how much the United State Post Office (USPS) rates rise in the future -- and they will.

While the single piece rate went up 5.1 percent, the discount rate adjustment for business mailers was not as favorable, increasing as much as 10.4 percent. The commission also proposed limiting discounts large mailers get for presorting mail. For companies mailing high volumes of bills, the financial impact will be significant and hence it is critical to use every avenue possible to offset these costs. Here are some things your company can do to mitigate the effects of the rate hike:

* Follow USPS pre-sort rules: Properly preparing and pre-sorting mail will earn utilities significant USPS discounts. Be sure to leverage these discounts aggressively by making sure mail is segmented to reach the critical volumes per zip code needed to qualify for the highest discount rates. To qualify for these rates, however, you must print a delivery point barcode on each mail piece and commingle the mail for concentrated volume to geographical areas.

* Verify addresses: Nearly one-fourth of all mail that goes through the USPS contains some simple errors like misspelled street names and improper abbreviations, which can result in significant increases in postage costs. If a mail piece cannot be delivered (e.g., undeliverable-as-addressed or UAA), the cost to correct the piece can be up to 70 cents. A number of tools in the marketplace are designed to identify undeliverable addresses and link old addresses to new move addresses, including Coding Accuracy Support System (CASS) software to validate, correct and standardize addresses. If CASS does not recognize a mail piece, it will not qualify for presort discounts and will instead be mailed at full rate (41 cents instead of the approximate automated discount rate of 33 cents).

* And then double-check those addresses: To date, CASS-certification is all that's been required for mailers to qualify for maximum automation rate postal discounts. But beginning with what the USPS calls "Cycle L" on August 1, 2007, mailing lists also must be run through delivery point verification (DPV) processing to continue to qualify for the deepest discounts. DPV takes the CASS certification to the next level by identifying whether or not a CASS-certified ZIP+4 address is a confirmed delivery point.

For example, a Zip+4 Code might cover an area with addresses from 100 Main Street to 300 Main Street. Typically, addresses would run 100 Main Street, 102 Main Street, 104 Main Street, and so on. However, if 104 Main Street is an empty lot, this is not a valid delivery point and DPV would mark it "N" for "invalid" and a First-Class rate applies. DPV confirms all primary number addresses, so addresses missing a secondary number -- like a suite or apartment number -- remain acceptable, along with addresses that have a secondary number that hasn't yet been confirmed by the USPS.

* Keep your mailings letter-size: Automation is key for postal savings. While the USPS charges a "non-machinable surcharge" of 13 cents for letters and packages designed in such a way they are difficult to process, under the new proposal that charge will be eliminated. Sounds like good news, right? Not really. The new proposal indicates that "odd-shaped" mail -- weighing more than 3.5 ounces, measuring more than 4.25 inches high or 6 inches long, or poly-bagged, etc. -- will be considered flat mail and subject to an even larger surcharge.

What's more, the cost for flat mail versus folded is increasing with flat mail costing up to 32 percent more per piece than a folded piece. Converting flat mail to folded will save you money if your mailings are under the 3.5 ounce requirement.

* Explore electronic options: Electronic bill presentment is another way to sidestep the pending postal rate increases. Though recent reports by the USPS show that more than 70 percent of people still prefer to receive their statements through the mail, converting just 10 to 20 percent of existing customers to electronic bill receipt corresponds to a significant cost savings and is worth the effort.

Over the last few years, the cost of postage has been rising gradually and this trend shows no sign of slowing. While no one likes to see a rate increase at any time, the silver lining may be an increased focus on print/mail production within your company and better efficiencies within the USPS. By keeping current with changing regulations and available technology you can take advantage of savings that go straight to the bottom line.

Harry Stephens is president and CEO of DATAMATX, a provider of printed and electronic billing solutions. Stephens is actively involved in several postal trade associations. He serves on the executive board of the Greater Atlanta Postal Customer Council, Major Mailers Association, PCC Advisory Committee, National Postal Policy Council, and The Imaging Network Group. For more information about DATAMATX, visit www.datamatx.com. Harry can be reached at hstephens@datamatx.com.

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