The cost of mailing a letter to go up by one penny

WASHINGTON - For the second time in as many years, Americans are being asked to spend a penny more to mail a letter.

First-class stamps will cost 34 cents and other postal service rates will increase, but 20-cent postcards will remain unchanged. The price hikes are likely to take effect in early January.

After months of hearings and deliberations, the independent Postal Rate Commission approved the new rates yesterday to offset rising costs. But it rejected some of the Postal Service's proposed higher rates - such as a penny more to send postcards and one cent more for a letter's second ounce.

The commission also for the first time set a one-pound Priority Mail rate of $3.50. Until now, people sending anything up to two pounds have paid the $3.20 two-pound rate. It also raised the two-pound rate to $3.95.

Beyond the penny increase, each additional ounce of first-class postage, up to 11 ounces, will be shaved from 22 cents to 21 cents.

The Postal Service had hoped for a 6 percent increase overall in postage rates for all classes of mail to generate $2.8 billion more in revenue per year, with $1 billion of that coming from the one-cent increase for first-class stamps. But the five-member commission granted only a 4.6 percent overall increase, providing $2.5 billion.

The biggest disagreement was over the Postal Service's $1.7 billion request for its contingency fund, which the commission cut by $700 million, deeming the request "unreasonably large," said commission spokesman Stephen Sharfman. But the commission voted to increase the Postal Service's budget by $400 million in other areas, giving the agency a net $300 million less than it sought.

By law, the Postal Service's budget must break even each year, and the commission decided that could be done with a smaller increase.

It is now up to the post office Board of Governors to decide when the higher rates will go into effect. That decision likely will occur at its scheduled meeting the first week of December.

Postal Service spokeswoman Sue Brennan declined to comment on the Postal Service's reaction to the commission's decisions.

The last rate increase, adding a penny to the cost of a first-class stamp, was Jan. 10, 1999.