Regulations Amending Certain Regulations Made Under the Canada Post Corporation Act: SOR/2024-262
Canada Gazette, Part II, Volume 158, Number 26
Registration
SOR/2024-262 December 9, 2024
CANADA POST CORPORATION ACT
Regulations Amending Certain Regulations Made Under the Canada Post Corporation Act
P.C. 2024-1278 November 29, 2024
Whereas, under subsection 20(1) of the Canada Post Corporation Act footnote a, a copy of the proposed Regulations Amending Certain Regulations Made Under the Canada Post Corporation Act, in the annexed form, was published in the Canada Gazette, Part I, on September 7, 2024 and a reasonable opportunity was afforded to interested persons to make representations to the Minister of Public Works and Government Services with respect to the proposed Regulations;
Therefore, Her Excellency the Governor General in Council, on the recommendation of the Minister of Public Works and Government Services, under subsection 19(1)footnote b of the Canada Post Corporation Act footnote a, approves the annexed Regulations Amending Certain Regulations Made Under the Canada Post Corporation Act made on October 23, 2024 by the Canada Post Corporation.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Issues
The Canada Post Corporation Act (the 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 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 amendments 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 will 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 will 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) will increase from the current price of $1.40 to the new price of $1.75. The international basic letter rate (up to 30 grams) will 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 amendment will increase the rate from the current price of $10.50 to the new price of $13.15.
In total, the 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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| 2. Other | Up to 100 g | $3.43 | $4.29 |
| 3. Letter-post |
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| 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 Regulations. The representations were taken into consideration in the preparation of the final regulatory proposal.
Prepublication in the Canada Gazette, Part I
The amended postal rates were published in the Canada Gazette, Part I, on September 7, 2024, followed by a public consultation period of 30 days. A total of 37 representations from 21 commentors were received during the consultation period. This included six formal representations from businesses, associations or organizations, as well as several informal representations from business owners or organizations.
The representations received by private citizens were generally unfavourable to the proposal. Several noted concerns about the impact the regulatory amendments will have on certain segments of the population, specifically seniors and incarcerated individuals who may rely more on letters to communicate. Concerns included the fact that incarcerated individuals’ income is low and even a small increase in postage rates could significantly impact them, as they are responsible for covering their own mailing costs. With regards to seniors, the representations noted that the increases may impact this group disproportionately given their lower usage of digital means to communicate. A few representations noted concern over the size of the increase. Several representations noted the impact on small businesses or municipalities, stating that such an increase would have a negative financial impact on these organizations. A few representations recommended changes to Canada Post’s operations or structure.
The formal and informal representations received from businesses, associations, or organizations were also generally unfavourable to the proposal. A few representations highlighted that the increase would accelerate letter mail volume erosion. Canada Post took volume erosion into account when developing the regulations. Current modelling, informed by an experienced third-party expert in postal demand, indicates a short-term acceleration in erosion, followed by a return to the current long-term trend. Several representations noted the impact the amendments would have on small businesses and organizations, including concern that the small business impact is understated. The latter concern was raised given that the impact is estimated using available data from all small businesses in Canada, and not just those that are frequent users of the mail. Privacy laws prevent Canada Post from tracking the level of detail that would allow further analysis of this. A few noted the impact specifically on the mailing industry, highlighting the potential risk for job losses as a result. Several representations encouraged reconsideration of the rate increase, while others encouraged differentiated rates for commercial mailers that use postage meters. It should be noted that Canada Post has a pricing strategy in place that extends additional discounts to commercial mailers. A few also recommended Government of Canada policy changes related to Canada Post, while others advocated for structural changes to the Corporation. While such suggestions are outside the scope of the regulatory proposal, they were shared with Canada Post’s senior executive team, including the President and CEO.
Finally, other comments received during the consultation period were not directly related to the regulatory amendments, including the impact on products not affected by the amendments (i.e. parcels) and the quality of service provided by Canada Post.
Following the news release of the proposed rate increases on September 6, 2024, Canada Post actively monitored reactions. Media coverage included print and online media stories, and newscast coverage on several national TV networks and radio stations. The coverage was fact-based, and leveraged a news release issued by Canada Post. There were at least 450 mentions on social media. Reaction from the public was generally neutral.
Canada Post recognizes that the rate increases may have a differential cost impact on certain segments of the population, businesses and organizations including — but not limited to — small businesses and those in the mailing industry. However, the Corporation’s financial challenges require action to ensure Canada Post can continue to meet its USO set out in the Canadian Postal Service Charter. Importantly, these actions must fall within the regulatory and policy framework established by the Government of Canada. Canada Post continues to explore opportunities to find efficiencies and generate additional revenue. However, its current regulatory framework does not provide much flexibility. Given the above factors, Canada Post concluded that these regulatory amendments are a key aspect of the broader set of mechanisms being explored to help address the rising cost of providing a postal service to all Canadians and help address the Corporation’s financial challenges.
Modern treaty obligations and Indigenous engagement and consultation
Canada Post examined the scope and subject matter of the 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 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 rate increase will 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 will 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 will help offset rising costs associated with providing postal services to all Canadians. The increased rate change will 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 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 will 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 will increase to $1.24 (up from $0.99), representing an increase of 25.3%. The fee for domestic Registered Mail will also increase from the current price of $10.50 to $13.15 in January 2025. All other regulated prices will 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 will 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 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 will not result in additional administrative burden costs for businesses, and the one-for-one rule therefore does not apply.
Regulatory cooperation and alignment
The amendments are not related to a work plan or commitment under a formal regulatory cooperation forum. Once the rates come into effect, Canada Post’s domestic Lettermail™ rates will 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 rates will take effect on January 13, 2025, and will be available for purchase at all Canada Post locations and online that day. Current definitive stamps, except Permanent™ stamps, will be recalled from post offices and taken off the online store. Those who still have stamps at the old rate will be able to purchase “top up” single stamps, which are available in our post offices as well as online and will 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 will 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