Thursday, September 19, 2013

CPUC Chooses Venture Capital Over Public Safety

To hardly anyone's surprise, the CPUC chose to validate the operations of Lyft, Sidecar and Uberx. That this would be their decision has been obvious from the moment the CPUC lifted their cease and desist orders against Lyft and Uber – before the hearing on legalizing ridesharing even started.

The members of the commission gave a lot of lip service to public safety and a little bit to helping the cab business but the decisions they've made will inevitably lead to shafting both taxicab drivers and the public.

More later – I need to take a woman I met in my taxi to lunch. Then, I need to drive my hybrid taxi tonight so I can make some money while it's still possible.

Analysis later. But first a preview.

I told one of President Peevey's assistants that personal insurance companies won't write policies for people who drive for Lyft et al.

She said, "We know that – the insurance companies will have to adapt."

And, indeed they will.  Insurance companies don't loose money. They'll pass the bill on to the public and raise the personal insurance auto rates for everybody in California.

Enjoy your lunch.

I think this links to latest version of the proposed decision.


I wrote this piece in about 10 minutes and naturally left much out.

1. In the original version, I said that the CPUC had "legalized" the operations of Lyft, Sidecar and Uberx. This was incorrect. Only the California State Legislature can change these laws. It would have been more correct to say that the CPUC proposed legalizing ...

They will have a fight on their hands.

I'd like to thank Barry Korengold of the SFCDA for pointing this out. I'd also like the thank him for pointing out my  many typos and grammatical error over the last years. I'm a horrible proofreader.

2. I was unable to find the name of Peevey's assistant on the CPUC website but, while I didn't misquote her, I did leave her next sentence out.

She said, "We know that – the insurance companies will have to adapt."

I said, "Yes – the insurance companies will raise their rates."

She said, "No – we're already talking about a commercial lite policy with Geico."

There is much to said about that but here I simply have a question,

Why is the CPUC spending tax payers money bending over backwards to help these companies out? They keep claiming that they don't want to interfere in the TNC's business. Having been handed over $400 million in venture capital, they can probably afford to look into this for themselves.

The Phantom


  1. The insurance companies adapted long before Lyft was invented. It called a contract of insurance that would spell out clearly that cars for hire are not insured.
    So lets pretend a Lyft runs a red light, hits a car that careens into a pedestrian , killing him.
    So lets say everybody involved is injured but there is no is
    insurance. If the injured don't have Kaiser or the like the tax payers will pay for every last bit including maybe welfare for the dead mans wife and kids..
    The tax payers and others may get a judgement against the Lyft driver but he or she is probably "Judgement Proof"
    Maybe Lyft's one million policy will kick in but Lyft ain't gonna be insuring the drivers for very long

  2. September 20, 2013 at 3:52 AM
    I am a Lyft Driver, and although I am concerned about the insurance situation, I continue to drive. I do take certain actions to minimize risks and maximize safety. After I receive a request through the app I always call the user. The Lyft GPS is not always spot-on, and I need their exact location. The reason being......I drive WITHOUT the pink mustache on my grill. Five seconds before I pull up to their location I place it on my dash board, so they can identify me. As soon as they see me, I fold it up and stick it underneath the seat. No hassle from the cabbies, police, airport officials, or (future) insurance claims...
    Only 25% of users are initially puzzled by the "dash stache", but before long I will have bribed them with my cool bottled water and chocolates, while they rest on leather in my luxury SUV listening to Sirius radio.
    I also make it a point to get them into the front passenger's seat, even if I have to repeat my invitation. Now the "front seat" experience is a Lyft marketing tool to make it more "social", but I see it as extra camouflage. Even if its a couple I ask one of them to come sit upfront with me. If they look at each other with separation anxiety, I tell them the truth: Insurance wise it is better for all of us; if they sat in the back, it would look as if I was their driver, but with "a friend" next to me (and no fugly pink mustache on my grill) we look like a group of friends in a unmarked private vehicle. In the meantime I have been waiting on the final vote on the ride sharing apps by the CPUC which was today. They talk about 1 mln "commercial" liability insurance that covers driver AND vehicle, and Lyft must provide every driver with a copy of that commercial insurance card to keep in their car. Looks like Lyft may have to buy some real insurance this time around.....

    1. Read this carefully, gentle reader, it may be he most amazing comment that I've ever had. Or, as they say, AWESOME.

      The Phantom

  3. The sf taxi industry would not have this fight on their hand if they invested in
    their business. Instead money got sucked out in the medallion system. While I appreciate your blog you miss the common sense approach to solve the problem.
    Lower the gate fees. Keep that money in the system. Problem solved. Simple math.

    1. We are experiencing deregulation of the industry. That has been tried in 18 Cities and had to be reversed because it leads to chaos. Lyft etc drivers are taking some enormous chances with heir future. Court Judgements are good for ten years and at that point can be renewed.
      Forget credit and hello garnishments on your income

    2. Speaking of garnishments, uber and limo companies that use the uber app do hold back tips. I just interviewed with a limo company the primarily uses the uber app and they do not pass along tips. They told me something about them being special so they did not have to pass it along. They will lose eventually in court. Both Uber and the limo companies will be liable for the back pay. These limo company owners will have a hard time sleeping at night with this hanging over them.
      Also I thought the uber app was suppose to give a destination to comply with PUC pre arranged laws for the waybills. But it appears they have been breaking this law for a long time.

  4. This situation is not that simple.

    For one thing, these jerks are trying to go into markets like NYC, Chicago and D.C. that already have a ton of cabs and don't have the problems with servicing the neighborhoods that we've had in San Francisco.

    For another, the medallion system has nothing to do with the problem. Richie Weiner, John Lazar and the like are pulling far more money out of the system than the medallion holders. If the medallions didn't exist, the Weiners and Lazars would simply be eating more of the pie.

    The technology needed to compete is relatively cheap. Lazar and Yellow killed Open Taxi Access and continue to obstruct any attempt to create a universal app. There's plenty of money in the system. Flywheel isn't expensive. The only reason that every taxi in S.F. doesn't have either that app or a universal app of some kind, are the gentlemen mentioned above.

    The medallions have actually been a way to spread the wealth a little bit. Blaming medallion holders for the problem is like blaming baseball players for the high salaries paid to them by their teams. It's the teams that are doing the bidding not the players.

    Personally i think the gate system has to go. A split of the meter would make the companies much more flexible..

    The phantom

  5. Since the time of Blackberry pearl is popular and smart phones are not in the market, we tested a dispatch software ourselves. I tried to get itthrough the cab companies but no one was interested. The cab companies are just focus on protecting their business to extort the drivers will make them obsolete. The taxi companies need to comeup with a way to stay in business. If they don't, the medallions worth nothing. I asked at TAC how the city is going to guarantee to protect the people who bought medallions and there was no clear explanations. That simply explain the irresponsibility of the officials to protect the property of city and their interest is for a temporary relief of budget shortfall. The taxi drivers are being used as cash cow by the city and extorted by the cab companies.
    If the cabs are operated without the cab companies, the cost of operation will be 30-50% lower for the drivers and better service for the riders if over see by taxi and limo commission that involve the consumers instead of politician appointed ignorants.

    1. One of the the major issues I see with this David K, no medallions no over sight imagine , how many independent cabs would be on the streets unlimited in number in a race to the bottom, this is even the problem with Uberx, Uber, Lyft side car etc, more and more people will try to get into their business and copy their business model there is only so much road and so many customers so it is a race to the bottom. Unjust people like these Venture capitalists usually like to legalize what they have stolen in the end though so they can hold on to their gains..on the bright side of the over all picture David beat Goliath in the Bible, and having overwhelming money is not always a guaranteed winner as demonstrated many times in history , from things like the US defeat in Vietnam to the Civil rights movements of the United States in the 1950's and 1960's.

  6. Abandon your taxi career, buy a car, and join one of these TNCs. You wont have to worry about leasing your vehicle and making a minimum just to break even.

    1. I think you are right. Over time TNC's will charge the driver less money as there will be more and more competition. It looks like the same situation that happened years ago in the stock market. Commissions dropped
      by 95%. The players of tomorrow will be different than the ones today.
      Maybe taxi magic or flywheel will beat out Bezos and google.

    2. Han you drives tai you are covered by Workers Comp insurance. What is going to happen to you if you cause an accident and get hurt real bad?
      Welfare ain't pretty

  7. Lets crunch some numbers for TNC owner operators if the regulations passed by the CPUC are eventually enforced. These costs would presumably be paid by the owners of the cars who are running them under a pink mustache, UberX or sidecar. If commercial insurance costs are the same as Taxi's for the million dollar policy, that would be around $1,200 a month or $40.00 a day. Then there is the wear and tear on their cars which the IRS presumes is worth 55 cents per mile. If they drive the equivalent of a 10 hour taxi shift, they may put 100 miles a day on their car. This would equal $55.00 in wear and tear to their vehicle.

    Add it all up, and they are paying the equivalent of a $95.00 gate fee.

    Now, since none of their income includes cash which could presumably be hidden from the IRS, how does it make sense for these people to choose driving their own vehicles rather than becoming an A-card holding taxi driver. I suppose they would have total freedom to choose when they want to work. But every day they aren't working, they are still incurring that $40.00 per day insurance cost.

    Please. If there is anybody who wants to add their thoughts on this, I would like to hear it.

    1. The highest insurance for a taxi is now $10,300 per year. I believe Limo insurance is about $4500.
      But what about comp. insurance? I imagine $4500 will make some turn tail.

    2. yes that is $95 per 24 hour period versus $95 per 10 hour period from the taxi company.
      That makes it less than half the cost. Also their commercial insurance could be a lot less than
      $40 per day as the TNC could slice this expense around among drivers.

  8. The mission statement from the CPUC web site reads:

    The CPUC serves the public interest by protecting consumers and ensuring the provision of safe, reliable utility service and infrastructure at reasonable rates, with a commitment to environmental enhancement and a healthy California economy.

    I'm a little confused about the environmental enhancement portion of this statement. I assumed it had to do with our natural environment. A commitment to reduce green house gasses protect consumers from the harm they create. Apparently it means something entirely different to President Peevey and the CPUC. To them, it means a commitment to the enhancement of the business environment for newly designated TNC's. Protecting their rights to operate SUV's and Pick-up trucks bearing pink mustaches without regard to gas mileage or emissions standards on the streets of San Francisco. While San Francisco taxi fleets are mandated to operate Hybrids, and soon electric vehicles.

    I'm glad the CPUC's meaning of environmental enhancement has been clarified. Of course John Zimmer from Lyft and Travis Kalanik from Uber could have explained this to us a year ago if you had just asked.

    Good work President Peevey. And many thanks to Mayor Lee. The natural environment understands that it must stand aside and suffer in order for fine politicians to get important campaign contributions for reelection.

    1. I agree Mayor Lee should lose re election on this alone. Thanks for the dirty air Mr Lee

  9. This is from a Lyft Blog and gives some further insight to the actual cost of operating a Lyft car.

    For you LAist readers who are “actors” who are looking for a “side job,” the Reddit user, whose handle is hyypaa, said that the hourly pay is a minimum of $15 an hour, with compensation rising as high as $25 an hour during peak times - which sounds pretty good for just driving people around, except that Lyft doesn’t reimburse drivers for gas and car maintenance. (Another Reddit user pointed out that, at the standard federal mileage rate of 56.5 cents a mile, driving 20-30 miles in an hour costs $10 to $15, which would seem to take a big chunk out of a driver’s pay.)

  10. a few comments from the cheap seats.

    1. ed, you are absolutely right and dead on the spot about the fact that the medallion system is not the culprit in this case. most of these guys spend their entire life waiting for the medallion. mind you "their entire life" to reap some benefits, such as the ability to work any shift and get some monthly revenue from the company pool. small revenue compared to the guys upstairs.

    2. in yellow cab there are some fat cats. literally. richard (richie) wiener is one of them. he makes over $200K a year. how do i know that ? because the untouchable tech guy (george) makes $200K a year and is never on site. has a technicians working for him and blames all his limitations on the users of what he develops. tech george has a high opinion of himself. if you get my drift. especially drivers. so chances are richie makes more than this guy. there are 2 other managers and of course the gm jim gillespie who is probably cutting the cake at over $300k. one does not think that the top brass makes less than technology george who is apparently well connected with the founder of yellow nate. jim gillespie is just weak. he had a chance to make changes when the rogue apps showed him the business flaws and he didn't do a thing about it. the yellow cab medallion owners are outsmarted by the city slickers upstairs managers. they come from a different generation. they do not feel the pain as the regular drivers do, because they get a share of the revenue. therein lies one of the problems. the medallion owners do not care if the drivers lose 20/30% of market because they get their piece of the cake. as long as there are drivers, the medallion owners are ok. once, the drivers are gone...or join a TNC. then, their cut of the cake will be gone. the same for the fat cats upstairs.

    i dont know much about the rest of the cab companies. but yellow, the biggest cab company really, really fell asleep and that has to fall in the laps of their fat cats management, beginning with the GM.

    2. 1M insurance liability for a limo or in this case a TNC is $300-$400 approximately. it is not $10K a year. so blogger ask your bro limo driver about it.

    3. the "cash" business is done because of electronic waybill. it does not matter that is cash or check or credit card. the irs will get that electronic waybill showing all a cab driver makes...except the tips.
    the BIG difference between a cab driver and a limo/TNC driver is that they get to deduct their car, gas, parking, tires, oil, cleaning supplies, car washing, registration, et al. while cab drivers have no tax deductions at all. but, the irs will know how much they earn that year, because the taxi companies will comply with requests from them.

    3. lets take yellow cab. a driver pays 107.50 for a car + 5 for the car dispatcher (it is downright corruption) + 1 gas man + 2 for the cashier, for a grand total of $115.50. so if you work 6 days a week lets say $2772 a month to yellow for a privilege to work. driver pays for the daily gas, so it is separate.


    how much does a car cost a month ? how much insurance ? new cars or semi used have some warranty. maybe 50K miles. so a mechanic is not needed immediately. use a local mechanic ? maintenance is the straw man argument. you can see them on california st up and down. they dont look pretty or "clean" but passengers dont care. they just want to get to their destination.

    ed, the industry has been deregulated. it is a sad day in the cab industry no matter how you cut it. they will get insurance for sure. they (cpuc) will make it happen.

    1. The de regulation of cab industry is not a done deal. If it is in the General welfare of San Francisco the city can control streets for a myriad of reasons.For example the control of Market street between around 9th and around 5th street are not open to normal cars. So If the city deems for reasons of needing a regulated cab industry.(Uber is not regulated can raise and lower fees at will),or trying to lower congestion on city streets, or limit pollution. It can do so.

    2. The TNC situation is parasitic and dishonest in many ways. but to keep the communication clear one of the biggest players getting ripped of by the TNC's are the insurance companies who are not receiving enough payments to warrant the kind of risks being insured.
      To put it bluntly the insurance companies are being ripped off by the TNC's.

  11. Today, at the Folsom street fair, I witnessed one Lyft and Side Car after another pull into the bus zone at 8th and Harrison to pick up passengers. In one case, the driver targeted a couple of attractive women, soliciting them for a ride. The women said they were waiting for a taxi. I approached the driver and told him to vacate the bus zone immediately. He told me to F@*%k off. I pulled out my iphone and took some picks. He got extremely abusive at this point. I noticed to police officers at the intersection on foot. I told the driver to come on over to where the cops were and he sped off.

    So, this is what we have to look forward to more and more. Thank you Mayor Lee for unleashing unregulated transportation on our streets. These women actually thanked me and said the guy creeped them out. They also felt it was wrong that these Lyft cars kept cluttering up the bus stop to pick up passengers.

    I'd post pics of the driver and car if it were possible on this forum.

    1. Hi,

      You can send any pics of Lyft or any other recognizable TNC to:

      The Phantom

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