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The U.S. Postal Service is denying reports that it might be considering a withdrawal of the current rate case.

"I don't know what happened behind closed doors but as far as I know the rate case is going forward," said USPS spokesman Jerry McKiernan.

Sources said that because of the substantial improvement in USPS finances, postal management had asked the Board of Governors for permission to pull the 2005 postal rate case, but several members of the BOG balked at it, apparently concerned over how it may affect possible postal reform legislation now pending in the House and Senate.

McKiernan conceded that when the USPS filed the rate case, it had originally estimated its fiscal year 2005 net income to be $1.64 billion. "But now we're projecting net income to be $1.68 billion," he said. Fiscal Year 2005 ends Sept. 30.

"I don't have any first-hand knowledge of any plans to withdraw the case but I do know the USPS is doing better financially than they had expected and we're using that for discussions about a settlement of the rate case," said Jerry Cerasale, senior vice president of the Direct Marketing Association.

He said the DMA was looking to possibly use this information as a bargaining chip to seek a delays in implementation of he rate case – to July of 2006 from January -- the current date when the new rates are expected to take effect.