HUDSON | Gig economy disrupts ground transportation | Columns


Miller Hudson

Most Colorado residents have a vague idea of ​​what constitutes a regulated utility. The Public Utilities Commission (PUC) is recognized, at best, as playing a role in setting the energy cost for gas and electricity tariffs. Over the past 40 years, public policies have promoted deregulation. In the markets for telecommunications services, air fares and trucking fees, competition has generally benefited consumers. Nonetheless, PUC remains less obviously linked to rail safety, bus services, private water providers and taxi fares, as well as pipelines and transmission systems.

This oversight mostly occurs off the scene unless there is a system failure like the Texas power outages during last winter’s arctic explosion. This transmission collapse has precipitated a nasty string of finger-pointing among politicians, regulators, power plants and network operators at Lone Star. As is usually the case, it turned out that there was a lot of blame going on for everyone. Climate change deniers have even piled up to blame renewable energy sources like wind and solar. Electricity prices skyrocketed, overwhelming homeowners who still received electricity with monthly bills in the thousands of dollars. Texas, which has largely deregulated its electricity grid, is still working out its tax mess.

The definition of a public service evolved in response to the predatory practices of rail shippers in the 19th century. For most agricultural products, railways were the only transporter available to farmers to transport crops and livestock to national markets. The railways used their monopoly power to wrest every last penny from ranchers and farmers. Populist lawmakers have allowed railroad commissions to crack down on these abuses. These commissions were empowered to balance the demands of the railroads for a reasonable profit with the demand of the producers for a fair shake. Once the use of electricity and telephones increased, utility commissions assumed a similar role in setting fair pricing for these “natural monopolies”.

Colorado PUC plays a bigger role than just estimating expenses and income. Electrical service must also be reliable, scalable, and ready to meet expected demand. The capital investment required to serve new customers should be included in the base rates. Recently, issues such as climate change have prompted Colorado to shift its electricity suppliers away from fossil fuels to renewable sources. This joint planning with utilities on behalf of consumers has worked quite well. Discussions on the installation of charging stations for electric vehicles are currently underway. While cell service, broadband, and cable streaming have replaced dial tone, the changes haven’t always been so smooth.

The above is intended to serve as a backdrop to the recent reported Uber and Lyft fare hikes in Colorado. Taxi companies have been under fire from competitors for nearly forty years. For decades, taxi drivers have been protected by PUC regulations, while new entrants to the market have been required to demonstrate a public need for additional services. Licensed taxi companies reflexively resisted the candidates. Nonetheless, the size of the taxi pool gradually expanded, as existing companies increased their fleets. A fringe of “gypsy limousine” services coexisted in a gray area where they could pick up and drop off customers who had “scheduled” their trips. The legislature gave in to pressure from concert fanatics and largely deregulated the entire industry.

Historically, regulators have required drivers of licensed taxi companies to be treated as employees, receiving the benefits normally provided by an employer. The taxis themselves were owned or hired by the taxi companies. Then the gig economy came with Uber and Lyft. The drivers became independent contractors and the capital investment in the vehicles was assumed by the owners / drivers. All of the proposed concert operators were an internet calling platform. Coupled with GPS directions, a driver no longer needed to know where he was actually going.

Uber and Lyft pocketed the lion’s share of fares, while avoiding the costs of hiring employees or purchasing vehicles – a neat trick. Of course, these information age entrepreneurs could dramatically cut taxi fares. At first, the economy seemed like a bargain for consumers. The trips were cheaper. The waits were shorter and the giggers seemed to have solved a problem effectively. Contract drivers were promised unlimited flexibility and opportunities, but found themselves living in their cars, barely earning minimum wage.

And then came COVID-19. Demand for rides has collapsed. The risk of carrying strangers skyrocketed and drivers quickly found themselves InstaCarting, Grub Hubbing and delivering packages for even less than they used to. With the ranks of the taxi companies decimated, there was suddenly a shortage of drivers. The result is downtown DIA fares of $ 120. Or consider the revelers at RINO who wanted to return to Centennial at 2:00 a.m. last week and were cut for $ 117.

Lawmakers and tourism leaders should consider restructuring taxi services. When journeys to and from DIA cost more than plane tickets, something has gone deeply wrong. It’s not as if concert algorithms are putting their new profits in the pockets of drivers.

Miller Hudson is a public affairs consultant and former Colorado lawmaker.


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