Utilities Commission Surprises Legislature on UberX Insurance

May 5, 2014

Colorado Public Utilities Commission Director Doug Dean failed to inform state legislators that two taxi companies had requested a waiver from the state’s new minimum insurance rates when he testified in early April, even as he was testifying about a bill applying insurance requirements to networked carriers such as UberX and Lyft.

Dean was testifying before the House Transportation and Energy Committee on SB14-125 to create a regulatory framework for insurance to allow Transportation Network Companies, or TNCs, to operate in the state. TNCs like UberX and Lyft are extremely popular with both riders and their contract drivers. They provide flexibility in pricing, added availability during peak hours, a chance for private citizens to earn extra money, and make use of a great deal of idle transportation inventory.

However, the PUC had ruled that they were operating in violation of carrier regulations, and the drivers were at risk of finding that their auto insurance policies didn’t cover commercial activity. This bill was substantially an attempt to cover that gap in the law.

Yesterday afternoon, Andy Vuong of the Denver Post’s Technobytes blog reported that Colorado’s Public Utilities Commission, which oversees the state’s taxi and limo services, had lowered the minimum insurance requirements just days after the state legislature had passed a bill creating a $1 million minimum for TNCs:

…the PUC granted an emergency request from taxi companies to lower their minimum insurance-coverage requirement from $1.5 million to $500,000.

“The decision raises questions because PUC Director Doug Dean was adamant early on in the legislative process that Colorado mandate that Lyft and UberX carry $1.5 million in liability coverage – the same amount placed on taxi companies. The final version of Senate Bill 125 sets the requirement on so-called transportation network companies, or TNCs, at $1 million.

Vuong went on to report that:

On April 17, Union Taxi and Freedom Cabs filed for waivers, said PUC spokesman Terry Bote. The companies argued that they faced financial hardships from the new requirement, with Freedom dealing with a 29 percent increase in costs.

After the taxi companies expressed concerns about their ability to keep paying the higher premiums without raising fares or driver lease rates, Dean changed his stance on insurance requirements on Lyft and UberX, Bote said.

“Once this started becoming an issue … he wasn’t advocating for $1.5 million anymore,” Bote said. “He actually told the legislators ‘You may want to leave the insurance out of the statute and just have language in there for the PUC to set it,’ which they did. But then it got stripped out.”

However, PUC records belie that timeline, and show that Freedom Cabs filed its waiver request on March 27, and Union filed a similar request on March 31. On April 2 – the same day as Mr. Dean’s evening testimony to the House committee – the PUC granted motions to shorten the requests’ notice period to ten days.

In a statement to Watchdog Wire, Mr. Bote admitted an error in speaking with Mr. Vuong, and that Union and Freedom had filed earlier. April 17 was the date when two larger cab companies had asked to file as intervenors, opposing Union’s and Freedom’s requests for waivers, claiming that the lower cost would put them at an unfair competitive disadvantage.

Mr. Bote stated that Mr. Dean had spoken to the bill’s sponsors in private about the pending proceedings, and requested that the bill be amended to read that TNCs carry the same insurance as other carriers. However, on April 2, when Mr. Dean was reading his own testimony, the subject didn’t come up at all. While Mr. Dean couldn’t have commented on the substance of the waiver requests, for fear of prejudicing the proceedings, he certainly could have noted their existence.

It is correct that the House Transportation Committee removed the $1 million requirement and delegated the minimum insurance requirement to the PUC, but that didn’t happen until April 9. The $1 million minimum was later re-inserted into the bill on the House floor.

However, at the time at which Director Dean was testifying before the House committee on April 2, it was still a part of the bill, and he failed to mention the relevant proceedings then pending before his commission.

In addition, in conversations with Watchdog Wire, neither Sen. Cheri Jahn (D – Jefferson County) nor Rep. Dan Pabon (D – Denver) recalled Dean having mentioned the pending proceedings to them.

Sen. Ted Harvey (R – Douglas County), discussed the matter at length on Thursday on Grassroots Radio Colorado, and asserted that Dean knew all along he was planning to lower the insurance minimums. This revelation doesn’t prove that he knew the outcome, but it is true that he knew he had these proceedings on the docket, and didn’t tell legislators about them.

It would certainly explain the surprise and displeasure that legislators on both sides of the aisle are expressing at having been blindsided by the PUC’s Wednesday decision.

More than that, with the $1 million requirement having been taken out of the bill, the House might have been less likely to re-insert it had it known for certain that the PUC was seriously considering this action.

Instead, it was left to operate without that information, leading to a bill that, instead of helping TNCs, runs the risk of placing them at a serious competitive disadvantage.

Joshua Sharf is co-editor of Watchdog Wire – Colorado, where this article first appeared May 2. Sharf can be contacted at Colorado@WatchdogWire.com

Comments made by visitors are not representative of The Colorado Observer staff.

One Response to Utilities Commission Surprises Legislature on UberX Insurance

  1. Samuel
    May 5, 2014 at 9:42 am

    Don’t be fooled. Ride-sharing is not about “safety” or “creating competition” It’s about all that CASH that your local municipality was taking IN from issuance / transfer of transportation business permits and their subsequent regulation. They want that. They could care less about anything else. City revenue LOST is literally ride-sharing law-breakers PROFIT. How, you ask? Simple, ride-sharing private corporations aggressively refuse regulation and refuse paying for business permits claiming a “new” business model (well, because “GPS”). Where city made MILLIONS – city will now get PENNIES. There is nothing else but a THEFT from municipal coffers. Ride-sharing private corporations will flood local markets – and minimum wage drivers will wait for hours for 1 single smartphone dispatch. Who benefits from all this madness? Ride-sharing California-based oligarchy. That’s who. If THEY truly wanted a FAIR competition – they would pay SAME EXACT expenses that all your local transportation businesses are paying daily. That would be FAIR. But that would mean a FAIR competition. And ride-sharing corporations would lose that in A DAY – so they perpetuate a myth of them being special and different…. “well, because GPS”. Ride-sharing is a FRAUD on a mass-scale. Shame to all local politicians who sell out their local economies and their local businesses for the sake of 2-3 California ride-sharing oligarchies
    If we call for FTC to take a look at this whole matter – then let’s begin with closed-door cartel-like meeting that ride-sharing multi-BILLION dollar private California corporations had just a few months ago to “shape up” their common strategies..That would be a good place to start investigating this ride-sharing fraud. And here are relevant links to read:
    1. http://pando.com/2014/02/25/ridesharing-companies-meet-to-discuss-public-liability-insurance-wont-share-details-with-the-public/
    2. http://www.bizjournals.com/sanjose/news/2014/01/24/uber-admits-to-dirty-tricks-in-nyc.html
    3. http://www.nbcchicago.com/investigations/Ride-Service-May-Pose-Risk-to-Passengers-256639641.html

    4. http://www.hg.org/article.asp?id=32579

    5. http://www.cleveland.com/opinion/index.ssf/2014/05/our_taxi_company_plays_by_rule.html


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