In August, the Postal Service reported a $3.5 billion net loss for the fiscal third quarter, $1.1 billion more than the same quarter of 2009.
The decision of the five-member commission was unanimous, Goldway said. She said the commission acknowledged the decline in mail volume during the recession, but she said she thought the rate increase was an attempt by the Postal Service to deal with the agency's long-term structural problems.
The agency, she said in a statement, "has failed to both quantify the impact of the recession on its finances and to show how its rate request relates to the resulting loss of mail volume."
Goldway said the Postal Service's most pressing financial problem was its yearly $5.5 billion payments to a prefunded future-retiree fund, as required by law.
In a statement, Postmaster General John Potter said he was disappointed by the decision but was encouraged that the commission acknowledged the financial strain the $5.5 billion payments placed on the agency.
Congress denied the agency a deferral for its latest payment, Potter said. While it was able to make the payment, it still runs the risk of defaulting on other financial obligations without legislative action.
"The financial risk remains," Potter said. "We will carefully manage every dollar we spend in the upcoming fiscal year."
Postage rates have increased twice since new regulations were enacted in 2006. The regulations require that rate increases remain below current inflation rates, commission spokesman Norman Sherstrom said.
Before 2006, rate increases were determined by a "break even" standard that required the rate to cover the Postal Service's costs.
