ANCHORAGE - The new U.S. Postal Service rates that go into effect Monday have people living in Alaska's remotest villages worried about more than just paying 2 cents more for a stamp.
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The Postal Service also is bumping up rates for Alaska's one-of-a-kind discount mail program, which ensures that groceries and other basic supplies arrive regularly in 139 villages that cannot be reached by any road.
For these communities, where prices already are high, the roughly 13 percent hike will affect the cost of all sorts of items from milk to fresh fruit, retailers say.
Even before the postal hike, a regular-size box of cereal could cost more than $8 in some villages and milk cost more than $7 a gallon.
"The villages are already having a hard time. A lot of people live on food stamps and I don't think they get very far," said 85-year-old Josephine Roberts, who lives in the Athabascan Indian village of Tanana.
The community of 260 people lies 130 air miles west of Fairbanks, Alaska's second-largest city. Large shipments can reach it only by plane or the barges that navigate the nearby Yukon River after the summer thaw.
"I don't know why they don't just build a road down here already because air freight and postage is going up," Roberts said.
Hike goes into effect today
How much are rates going up? A first-class stamp is going up from 39 cents to 41 cents; overall, rates are going up 7.6 percent. One bonus: The new "forever" stamp will be good for first-class postage in the future even after rates go up, so you'll no longer have to hunt around for extra 2- or 3-cent stamps.
Along with price increases, the Postal Service is introducing "shape-based pricing." Prices no longer will be determined solely by weight, because the Postal Service wants to encourage consumers and businesses to use envelopes and package sizes that are easier for automated processing.
Didn't rates just go up last year? Yes. They went up in January 2006 by 5.4 percent overall, with a first-class stamp going from 37 cents to 39 cents.
Does the Postal Service make money? Since its creation in 1971, the Postal Service has been required by law to break even, making just enough to cover its costs. In reality, revenue and expenses never work out evenly in a given year.
In 2006, the Postal Service had a profit of $900 million on revenue of $72.7 billion, its fourth straight profitable year.
Source: Los Angeles Times
The Postal Service program pays Alaska's air carriers to deliver the mail and gives shippers a break, charging third- and fourth-class postal rates for what is essentially first-class service. Packages sent through the program are known as "bypass mail" because they circumvent the post office and go directly to air carriers for delivery.
Shipments must total 1,000 pounds or more to qualify for the reduced postage and the individual parcels that make up a shipment weigh 35 and 70 pounds each. Only businesses based in Anchorage or Fairbanks qualify to pay bypass rates.
As of Monday, the cost to mail one 50-pound package through bypass will rise to $12.39 from $10.95, according to Sen. Ted Stevens, R-Alaska.
"When the program started the purpose was to keep the costs of living down in the remotest parts of the state," said David Harding, spokesman for North Slope borough mayor Edward Itta. "When rates go up it calls into question the original intent."
The bypass mail service was started in the 1970s under legislation written by Stevens to help buoy the economies of far-flung villages, most of them Alaska Native, that still practice traditional food-gathering such as hunting, fishing and berry harvesting.
The service costs the Postal Service close to $70 million each year, said Steve Deaton, a USPS network operations specialist in Anchorage.
"It's a program that the Postal Service supports in recognition of the unique circumstances of Alaska residents," Deaton said. "We are committed to keeping it going in the state of Alaska."
The increase is the second-largest in the history of the program, according to Rex Wilhelm, president and chief operating officer of the Alaska Commercial Co., the largest rural retailer in the state. Eighteen of its 29 stores are located in communities that qualify for bypass mail. The largest hike, about 20 percent, was in 2001, he said.
"The price increases in the stores will largely depend on the weight of the item," Wilhelm said. "Very heavy items will see a more noticeable increase when freight goes up."