Canada Gazette, Part I, Volume 158, Number 36: Regulations Amending Certain Regulations Made Under the Canada Post Corporation Act
September 7, 2024
Statutory authority
Canada Post Corporation Act
Sponsoring agency
Canada Post Corporation
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues
The Canada Post Corporation Act (Act) requires Canada Post to provide quality postal services to all Canadians —rural and urban, individuals and businesses — in a secure and financially self-sustaining manner. Rates of postage must be fair, reasonable and, together with other revenues, sufficient to pay for Canada Post’s costs of operation. Under the Act, Canada Post has an exclusive privilege on the collection, transmission and delivery of letters within Canada to meet its service obligations. This universal service obligation (USO) is set out in the Canadian Postal Service Charter.
For more than a century, letter mail was the main source of revenue for the postal service. However, since 2006, letter mail volumes have declined by 60%. At the same time, Canada’s population has been increasing, which means Canada Post is required to serve a growing number of addresses each year. The decreasing revenues paired with the increasing delivery costs are putting significant financial pressure on Canada Post.
This issue is not unique to Canada Post. Postal services in advanced economies around the world are experiencing these same challenges as part of the rapid growth of ecommerce and digital transformation for consumers and businesses. The Universal Postal Union estimates revenue from letter-post services globally will decline to about 29% of postal service revenue by 2025, from more than 50% in 2005.
Canada Post is a Crown corporation with a long-standing responsibility to stand on its own financially. It is a user-pay system, which means when Canadians change their mailing and shipping needs, the postal system must respond; otherwise, revenue suffers. Canada Post’s domestic and international rates for letters are reviewed on a regular basis. While the Corporation has kept letter mail rate increases to a minimum for much of the past decade, it is now seeking to realign stamp prices to address the cost pressures from this eroding line of business.
Background
Under the Act, Canada Post, with the approval of the Governor in Council, has the authority to make regulations prescribing rates of postage. Domestic and international rates for letters are an important source of revenue for the Corporation and are reviewed on a regular basis. The last rate increases to take effect were on May 6, 2024.
Canada Post’s exclusive privilege is rapidly losing its value on account of digital technologies. In 2006, domestic Lettermail™ volumes hit an historic high when Canada Post delivered almost 5.5 billion letters to Canadians. Since then, domestic Lettermail volumes for the Transaction Mail line of business have declined by 60% (down to 2.2 billion letters in 2023) and associated revenue has fallen by nearly 30%.
In 2006, Canadian households received an average of seven letters per week; today, it’s two per week. At the same time, population growth means Canada Post is required to serve a growing number of addresses each year, with more than 200 000 new addresses added annually. In 2023, Canada Post delivered to 17.4 million addresses — up from 14.3 million addresses in 2006. As Canada Post’s mail revenue drops, the cost of delivering mail keeps going up. Every year, there are fewer letters to deliver to more addresses.
Despite these pressures, stamp prices in Canada remain among the lowest internationally.
Canada Post has reported six consecutive years of significant losses (2018 through 2023), accumulating more than $3 billion in losses. Large operating losses have eroded Canada Post’s net liquidity position as cash reserves have been used to sustain the universal service obligation, as well as to fund capital expenditures to maintain and upgrade the network. With financial pressures mounting, Canada Post must consider and implement options within its regulatory framework to mitigate these pressures.
Objective
The objective of the proposed amendments to the Letter Mail Regulations, the International Letter-post Items Regulations and the Special Services and Fees Regulations is to help Canada Post offset the rising costs of maintaining a postal service for all Canadians, while ensuring rates are fair and reasonable.
Description
The proposed amendments would include increases to the rates in the Letter Mail Regulations, the International Letter-post Items Regulations and the Special Services and Fees Regulations.
More specifically, the amendments to the Letter Mail Regulations would increase the rate for a letter weighing up to 30 grams from the current price of $1.15 to the new price of $1.44, representing an increase of 25.2% for customers purchasing a single stamp at the retail counter. The new price of a stamp for a letter of 30 grams or less would increase from the current price of $0.99 to the new price of $1.24, representing an increase of 25.3% when purchased in a booklet, coil or pane.
The International Letter-post Items Regulations prescribe the rates Canada Post charges for U.S. and international outbound letters. The U.S. basic letter rate (up to 30 grams) is proposed to increase from the current price of $1.40 to the new price of $1.75. The international basic letter rate (up to 30 grams) is proposed to increase from the current price of $2.92 to the new price of $3.65.
The Special Services and Fees Regulations prescribe the rate for Registered Mail in Canada. The proposed amendment would increase the rate from the current price of $10.50 to the new price of $13.15.
In total, the proposed rates will represent a weighted average increase of 25.2%.
| Domestic Lettermail | Weight | Current rate | January 13, 2025 rate |
|---|---|---|---|
| 1. Single stamp | Up to 30 g | $1.15 | $1.44 |
| In booklets, coils or panes | Up to 30 g | $0.99 | $1.24 |
| 2. Standard Lettermail | Over 30 g up to 50 g | $1.40 | $1.75 |
| 3. Other Lettermail |
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|
|
| Letter-post to the United States | Weight | Current rate | January 13, 2025 rate |
|---|---|---|---|
| 1. Standard mail |
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|
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| 2. Other | Up to 100 g | $3.43 | $4.29 |
| 3. Letter-post |
|
|
|
| International letter-post | Weight | Current rate | January 13, 2025 rate |
|---|---|---|---|
| 1. Standard mail |
|
|
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| 2. Other | Up to 100 g | $6.88 | $8.60 |
| 3. Letter-post |
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Regulatory development
Consultation
The Act requires a consultation period through publication of each regulatory proposal in the Canada Gazette. All representations must be sent to the Minister of Public Services and Procurement Canada within 30 days after the prepublication of the proposed Regulations. The representations will be taken into consideration in the preparation of the final regulatory proposal.
Modern treaty obligations and Indigenous engagement and consultation
Canada Post examined the scope and subject matter of the proposed rate increases for domestic and international letter mail in relation to modern treaties and determined that the regulatory amendments do not have any potential to cause modern treaty implications.
Instrument choice
Canada Post operates within a legal and policy framework established by the Government of Canada. As such, the options to address Canada Post’s financial challenges must be done within this framework. Canada Post continuously explores opportunities to find efficiencies in its operations and generate revenue while ensuring its rates remain fair and reasonable; however, given the current financial situation, Canada Post requires a broader approach.
Consequently, the proposed regulatory amendments are one of a collection of mechanisms that are being explored to help offset the cost of operations.
Regulatory analysis
Benefits and costs
The proposed rate increase would have a net present benefit of $25.54 million over a 10-year period of analysis between 2025 and 2034. The additional price paid for postage would represent a present value total cost of $516.2 million for Canadians purchasing postage and an equal benefit to Canada Post in terms of increased revenue. The revenue collected by Canada Post would help offset rising costs associated with providing postal services to all Canadians. The increased rate change would also bring the price of postage closer to the delivery cost, resulting in the removal of a welfare loss to Canadians. The total present value of the welfare loss is $25.54 million.
Detailed information is included in a cost-benefit analysis report, which is available upon request to the contact below.
To determine the impact of the rate change, the difference between rates is multiplied by predicted letter volumes. Canada Post uses historical data and a third-party model called the Price Elasticity Econometric Model to predict erosion rates for different regulated products. This model provides projections for letter mail based on recent historical Canada Post volumes and proposed rate changes. Although the price elasticity impact on letter mail volumes is small compared to the price change, the volume of mail is lower in the regulatory scenario compared to the baseline scenario.
In January 2025, the price of a single stamp for domestic Lettermail™ weighing 30 g or less would increase to $1.44 (up from $1.15), representing an increase of 25.2%, while the price for a stamp purchased in a booklet, coil or pane would increase to $1.24 (up from $0.99), representing an increase of 25.3%. The fee for domestic Registered Mail would also increase from the current price of $10.50 to $13.15 in January 2025. All other regulated prices would increase by approximately 25.2%.
The impact of these rate increases across all products for the average Canadian household is estimated at $2.26 per year, based on an average annual expenditure on postage of $11.25. These regulated rate increases would generate an estimated $78.4 million of additional gross revenue for Canada Post in 2025.
Cost-benefit statement
As stated above, the benefit of this rate adjustment is increased revenue for Canada Post, while the cost is increased prices paid by Canadians for postage.
- Number of years: 10 (2025 to 2034)
- Base year for costing: 2025
- Present value base year: 2025
- Discount rate: 7%
| Impacted stakeholder | Description of impacts | Base year (2025) | Mid year (2029) |
Final year (2034) | Total (present value) |
Annualized value |
|---|---|---|---|---|---|---|
| Canada Post | Increased revenue | $78.40 | $74.80 | $62.60 | $516.20 | $73.50 |
| Canadians | Welfare gain | $1.19 | $3.71 | $6.78 | $25.54 | $3.64 |
| All stakeholders | Total benefits | $79.59 | $78.51 | $69.38 | $541.74 | $77.14 |
| Impacted stakeholder | Description of cost | Base year | Other relevant years | Final year | Total (present value) |
Annualized value |
|---|---|---|---|---|---|---|
| Canadians | Higher price for product | $78.40 | $74.80 | $62.60 | $516.20 | $73.50 |
| All stakeholders | Total costs | $78.40 | $74.80 | $62.60 | $516.20 | $73.50 |
| Impact | Base year | Other relevant years |
Final year | Total (present value) |
Annualized value |
|---|---|---|---|---|---|
| Total benefits | $79.59 | $78.51 | $69.38 | $541.74 | $77.14 |
| Total costs | $78.40 | $74.80 | $62.60 | $516.20 | $73.50 |
| Net impact | $1.19 | $3.71 | $6.78 | $25.54 | $3.64 |
| Type of impact | Stakeholder | Description |
|---|---|---|
| Positive impacts | Canada Post | Contribute toward the provision of postal services to all Canadians; enable ongoing innovation and the long-term financial sustainability of Canada Post. |
| Negative impacts | Canadians | Annual average impact of $2.26 for consumers and $42.17 for small businesses. |
Distributional impacts analysis
The impact per Canadian household is an incremental impact based on the projected letter mail volumes. The household data is taken from Canada Post’s Precision Targeter™ tool which identifies the total number of residential households; the household counts used by this tool are based on mailable addresses. Detailed calculations are included in a cost-benefit analysis report, which is available upon request to the contact below.
The distributional analysis below demonstrates the distribution of impact by product as well as by region and demographics. To estimate the impact, Canada Post leveraged retail sales data by Forward Sortation Area (FSA), which is a specific area in a major geographic region or province. Using the FSA information, Canada Post was able to determine the location of the post office where sales were made and distribute the impact by urban, rural and Indigenous communities.footnote 1
Note that the data used to estimate the distributional analysis by region and demographics was only available for domestic Lettermail™.
Distribution by region
Of a total of 1 669 FSAs, 183 were identified to be rural regions with an average spend of $12.09 per household per year, which is 44% higher than urban areas.footnote 2
| Region | FSA count | Number of households (in millions) |
Retail transaction revenue (in millions) |
Current $/household |
Estimated increase at 25.2% |
|---|---|---|---|---|---|
| Rural | 183 | 2.2 | $26.7 | $12.09 | $3.04 |
| Urban | 1,486 | 11.5 | $96.6 | $8.39 | $2.11 |
| Total | 1,669 | 13.7 | $123.3 | $8.99 | $2.26 |
Indigenous population
Indigenous penetration is calculated as Indigenous population divided by total population in an FSA. Of the total of 1 669 FSAs, 229 have an Indigenous penetration of higher than 10%, a blended penetration of 21%, and an average spend on retail stamps of $11.15 per household per year, which is 28% higher than FSAs with lower than 10% Indigenous penetration.
| Penetration | FSA count | Number of households (in millions) |
Indigenous population (in millions) |
Retail transaction revenue (in millions) | Indigenous penetration | Current $/household |
Estimated increase at 25.2% |
|---|---|---|---|---|---|---|---|
| ≥ 10% | 229 | 1.7 | 1.0 | $18.7 | 21% | $11.15 | $2.81 |
| < 10% | 1,440 | 12.0 | 0.9 | $104.6 | 3% | $8.69 | $2.19 |
| Total | 1,669 | 13.7 | 1.9 | $123.3 | 5% | $8.99 | $2.26 |
By demographic
Senior penetration is calculated as senior population divided by total population in an FSA. Of the total 1 669 FSAs, 774 have a senior penetration of higher than 20%, a blended penetration of 25%, and an average spend on retail stamps of $10.55 per household per year, which is 53% higher than FSAs with lower than 20% senior penetration.footnote 2
| Penetration | FSA count | Number of households (in millions) |
Senior
population (in millions) |
Retail transaction revenue (in millions) | Senior penetration | Current $/household | Estimated increase at 25.2% |
|---|---|---|---|---|---|---|---|
| ≥ 20% | 774 | 5.8 | 3.8 | $60.9 | 25% | $10.55 | $2.66 |
| < 20% | 892 | 7.9 | 3.6 | $62.4 | 15% | $7.85 | $1.98 |
| Total | 1,666 | 13.7 | 7.4 | $123.3 | 19% | $8.99 | $2.26 |
Additional considerations for the distributional impact by region and demographic
While more Canadians are accessing services online, Indigenous communities and those living in rural and remote areas may still be more reliant on Canada Post’s regulated postal products than those living in urban centres, as rural and remote areas have a lower percentage of households with Internet access at home.footnote 3 Similarly, seniors (individuals aged 65 and over) — whose Internet intensity use is lowerfootnote 4 — may have more reliance on these regulated products. Consequently, this could be contributing to the slightly greater impact we’re seeing on these groups.
Sensitivity analysis
A number of assumptions have been made to estimate the costs and benefits of the proposed rate increases. To address the effect of uncertainty and variability on these assumptions, a sensitivity analysis is conducted, where variables are assigned different values, and outcomes are re-evaluated. A sensitivity analysis was performed on the following variables: erosion rate and discount rate.
Erosion rate
To account for uncertainty in the erosion on the letter mail volumes, three erosion scenarios are estimated. The central scenario represents the most probable case, with an erosion rate of 10.3%, based on historical data. The low scenario represents a case where the erosion rate drops to 9.3%, and a high scenario represents a case erosion increases to 11.3%. The results of this sensitivity analysis are presented in Table 11.
| Erosion rate | Monetized benefits (in million $) |
Monetized costs (in million $) |
Net benefits (in million $) |
|---|---|---|---|
| 9.3% (low) | 80.0 | 79.3 | 0.7 |
| 10.3% (current) | 79.6 | 78.4 | 1.2 |
| 11.3% (high) | 79.1 | 77.5 | 1.6 |
Discount rate
The central analysis used a 7% discount rate as recommended by the Treasury Board of Canada Secretariat. For the purposes of the sensitivity analysis, Table 12 presents the results should a 3% discount rate have been used. The base year (2025) results, which are undiscounted, have also been added to the table for comparison purposes.
| Discount rate | 2025 Total benefits (annualized value [in million $]) | 2025 Total costs (annualized value [in million $]) | 2025 Net impact (annualized value [in million $]) |
|---|---|---|---|
| 3% | 77.3 | 76.1 | 1.2 |
| 7% | 74.4 | 73.2 | 1.1 |
| Base year (undiscounted) | 79.6 | 78.4 | 1.2 |
Small business lens
The regulated rate increases are expected to have a modest impact on small businesses who purchase these products to support their business activities. In accordance with privacy laws, Canada Post does not track the letter mail volumes used by small businesses. As such, the Corporation relies on the total number of small business data provided by Statistics Canada to estimate this impact. The total increase in mailing costs for small businesses that use stamps to pay postage is estimated at $42.17 per year, based on an average annual expenditure of $209.59. This is an average amount and could affect some businesses more than others.
Small business lens summary
- Number of small businesses impacted: 1.2 million
- Number of years: 10 (2025–2034)
- Base year for costing: 2025
- Present value base year: 2025
- Discount rate: 7%
| Totals | Annualized value | Present value |
|---|---|---|
| Total cost (all impacted small businesses) | $50,604,000 | $355,421,320 |
| Cost per impacted small business | $42.17 | $296.18 |
One-for-one rule
The amendments would not result in additional administrative burden costs for businesses, and the one-for-one rule therefore does not apply.
Regulatory cooperation and alignment
The proposed amendments are not related to a work plan or commitment under a formal regulatory cooperation forum. If the proposed rates come into effect, Canada Post’s domestic Lettermail™ rates would still be lower than the comparable rates of many of its global peers, including those of Australia, the United Kingdom, Germany, France and Italy.
Effects on the environment
In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, a preliminary scan concluded that a strategic environmental assessment is not required.
Gender-based analysis plus
The regulatory proposal includes modest increases to Canada Post’s regulated rates. When gender-based analysis plus (GBA+) considerations are taken into account, analysis of buying patterns suggests that there may be a slightly greater impact on those living in rural, remote and Indigenous communities, as well as on seniors (individuals aged 65 and over).
While more Canadians are accessing services online, Indigenous communities and those living in rural and remote areas — which have a lower percentage of households with Internet access at home — may be more reliant on Canada Post’s regulated postal products than those living in urban centres. Seniors — whose intensity of Internet use is lower — may also be more reliant on these regulated products. Canada Post anticipates that the rate increase could have a greater impact on these groups; however, on an individual or per-household basis, these impacts are expected to be minimal.
Implementation, compliance and enforcement, and service standards
Implementation
The proposed rates would take effect on January 13, 2025, and would be available for purchase at all Canada Post locations and online that day. Current definitive stamps, except Permanent™ stamps, would be recalled from post offices and taken off the online store. Those who still have stamps at the old rate would be able to purchase “top up” single stamps, which are available in our post offices as well as online and would remain available until inventories are depleted.
Items posted before January 13, 2025, that remain within the carriage of Canada Post after this date are deemed paid and would be processed accordingly. Letters posted on or after January 13, 2025, at the previous rates, are deemed short-paid and subject to our normal short-paid procedures (e.g. return to sender).
Regulations are enforced by Canada Post under the Act. No change in the cost of enforcement is expected as a result of these amendments.
Service standards
The Canadian Postal Service Charter includes service standards for domestic Lettermail delivery, which outline that Canada Post will deliver letter mail within a community within two business days; within a province within three business days; and between provinces within four business days. Canada Post reports on its performance against these service standards each year in its annual report.
Contact
Lisa Hoskins
Director
Regulatory Affairs
Canada Post Corporation
2701 Riverside Drive, Suite N1150D
Ottawa, Ontario
K1A 0B1
PROPOSED REGULATORY TEXT
Notice is given, under subsection 20(1) of the Canada Post Corporation Act footnote a, that the Canada Post Corporation proposes to make the annexed Regulations Amending Certain Regulations Made Under the Canada Post Corporation Act under subsection 19(1)footnote b of that Act.
Interested persons may make representations concerning the proposed Regulations within 30 days after the date of publication of this notice. They are strongly encouraged to use the online commenting feature that is available on the Canada Gazette website but if they use email, mail or any other means, the representations should cite the Canada Gazette, Part I, and the date of publication of this notice, and be sent to the Lisa Hoskins, Director, Corporate Compliance and Regulatory Affairs, Canada Post Corporation, 2701 Riverside Drive, Suite N1150D, Ottawa, Ontario K1A 0B1 (email: regulatory.affairs@canadapost.ca).
Canada Post Corporation
Regulations Amending Certain Regulations Made Under the Canada Post Corporation Act
Special Services and Fees Regulations
| Item | Column II Rate |
|---|---|
| 1(1)(a) | $13.15 |
International Letter-post Items Regulations
| Item | Column II Rate per item ($) |
|---|---|
| 1 (a)(i) |
|
| (ii) |
|
| (b)(i) |
|
| (ii) |
|
Letter Mail Regulations
| Item | Column 2 Rate |
|---|---|
| 1(1)(a) | $1.44 |
| (b) | $1.24 |
| Item | Column 2 Rate |
|---|---|
| 1(2) | $1.75 |
| Item | Column 2 Rate |
|---|---|
| 2(1) | $2.61 |
| (2) | $4.29 |
| (3) | $5.98 |
| (4) | $6.85 |
| (5) | $7.36 |
Coming into Force
5 These Regulations come into force on January 13, 2025.
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