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BLAKE: The PUC's taxi tango

Peter Blake

Published August 14, 2008 at 12:05 a.m.

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Yes, there will be many extra cabs on the street to handle the crowds here for the Democratic National Convention. No, they won't be supplied by the fledgling Union Taxi Cooperative, which had hoped to get started this month.

Here's why: The Colorado Public Utilities Commission is going to take its own sweet time opening up the Denver-area taxi market to more competition. Never mind the recent legislative mandate.

Last session, Gov. Bill Ritter signed HB 1227 which, among other things, lowered the barriers for would-be cab companies in the metro area. Instead of applicants having to demonstrate in advance there's a "need" for their business, the current oligopoly would have to prove that more competition would be "detrimental to the public interest."

Cheered by this shift in the burden of proof, Union Taxi (whose members belong to the Communications Workers of America) immediately applied for a temporary permit that would have enabled them to start running 262 cabs before the convention. (They're seeking permanent authority as well, but that takes much longer to secure.)

The PUC turned them down July 2, ruling that the co-op had failed to prove there is an "urgent and immediate" need for new cab service. It maintained the new law applies only to permanent, not temporary, authority. Gotcha!

But here's the irony: When the PUC was ruling against Union Taxi, it was simultaneously authorizing the three incumbents - Yellow Cab, Freedom Cab and Metro Taxi - to put 315 additional cabs on the street during the convention. They're already authorized to run 942. The expanded authority begins Friday and runs through Sept. 4.

The PUC, according to a spokesman, took up the issue of authorizing additional temporary permits on its own initiative.

That's how it works at the PUC: Permits for the oligopoly, not for upstarts.

Union decided not to appeal the denial of the temporary permit, since the courts couldn't have reached a decision before the convention.

But even Union's permanent authority isn't going to come easy. The existing cab companies have made it clear that they will object, arguing that "excessive entry of new service could result in serious public harm." Their theory is that too much competition drives prices down so low that only one survives and raises rates astronomically. In fact, this never happens in any market.

The incumbents are also likely to protest that the new companies don't meet proper financial standards.

The Institute for Justice, which is helping Union as it helped Freedom get its license a decade ago, argues in a friend-of-the-court brief that since the commission's standards for financial and operational fitness are subjective, they shouldn't become "just another avenue under which existing companies can protect their turf."

Yellow and Freedom do not lack chutzpah. Having been given temporary authority for extra cabs during the convention, they each are also seeking an additional 150 permanent permits for themselves.

"Yellow and Freedom kind of contradict themselves a little bit," said Mark Walker, an attorney for Union Taxi. "They want additional cabs but don't want a new entry."

Union Taxi isn't the only new company seeking PUC authority in the metro area. Iron Taxi wants to serve Broomfield and Boulder, and Castle Rock Taxi would like authority in Douglas County. They're not likely to be welcomed by the Big Three any more than Union is, even though they seek to operate only on the fringes of the metro area.

A PUC meeting will be held next Tuesday not to rule on specific applications but just to decide what the issues are: What does the new legislation mean, exactly? Is the PUC entitled to continue putting a cap on permits in the Denver area?

The incumbents argue the new law hasn't changed the entry rules very much. If they convince the PUC of this, the legislature better get back to work and make the taxi market truly open to more competition.

Peter Blake is a former Rocky Mountain News political columnist. He can be reached at pblake0705@comcast.net.

Comments

  • August 14, 2008

    8:35 p.m.

    Suggest removal

    555 writes:

    PUC has failed to act on HB-07-1114 to regulate the lease rates that is charge to the drivers by the cab companies.
    PUC has also failed to act on the legislators intent on HB-07-1114.
    they are now trying very hard to ignore the legislators intent on HB-08-1227.in my opinion the PUC does not care the legislators intent on Taxi issues or gov.Ritters signatory when it comes to the changes that the state has so far made.the incumbents always get away with everything, they do have the money to control and confuse the public and officails.

  • August 14, 2008

    8:40 p.m.

    Suggest removal

    555 writes:

    PUC has failed to act on HB-07-1114 to regulate the lease rates that is charge to the drivers by the cab companies.
    PUC has also failed to act on the legislators intent on HB-07-1114.
    they are now trying very hard to ignore the legislators intent on HB-08-1227.in my opinion the PUC does not care the legislators intent on Taxi issues or gov.Ritters signatory when it comes to the changes that the state has so far made.the incumbents always get away with everything, they do have the money to control and confuse the public and officails.Taxi drivers feel that they are bleeding very hard paying cab companies 70% of the money they earn
    every day.

  • August 16, 2008

    4:28 p.m.

    Suggest removal

    echolowe writes:

    The PUC and the taxi co's know each other in the Biblical tense. This should be no suprise to anyone.