UBER IGNORED APPEAL TO CURB STORM $URGE
Lyft did suspend `Prime Time' pricing after Baker letter
Uber ignored an explicit request to disable surge pricing when Gov. Charlie Baker declared a state of emergency during a March nor’easter, according to a copy of a letter sent by the state and obtained by the Herald.
“Transportation Network Companies and Drivers shall not raise base fares, nor implement surge pricing,” said the letter, sent to ridehailing companies hours after the state of emergency was declared on March 3.
A month later, the state Department of Public Utilities sent a letter to Uber announcing an investigation into the company’s use of surge pricing during a nor’easter that wiped out power to hundreds of thousands in Massachusetts and killed at least eight across the Northeast.
Uber has said state law does not specifically prohibit surge pricing during states of emergency, only increases to the “base rate.”
Despite the company’s belief their actions were legal, Uber said yesterday it responded to the DPU’s request for information, including fares, number of drivers and number of riders before, during and after the state of emergency. Uber declined to say whether their response included an explanation of their position.
When Baker declared a state of emergency, Lyft turned off its version of surge pricing, Prime Time, the company said.
“We suspended Prime Time when the governor declared the state of emergency; we interpreted the law to prohibit price surging during states of emergency,” said Campbell Matthews, a Lyft spokesman. “The DPU later confirmed in an email that Prime Time should be suspended.”
Meanwhile, state Rep. Aaron Michlewitz, who wrote the original ride-for-hire app bill, said amending the law to explicitly ban surge pricing during states of emergency could be a possibility, but would wait and see how the DPU process plays out.
“If there’s a need to fix it, then we’d certainly look at that,” Michlewitz said. “The intent of the law is very clear. I don’t think there should be any misconceptions related to that.”
Uber said yesterday it put in place its national emergency policy, which caps how much fares can surge, during the March storm.
Since Uber burst onto the scene less than a decade ago, surge pricing has been a controversial feature.
“Surge pricing in general comes from the basic economic idea to adjust price so supply meets demand,” said Scott Kominers, a professor at Harvard Business School. “From a basic market standpoint, it’s Economics 101.”
Surge pricing is meant to incentivize drivers, who make more money during surge periods, to get in their cars and increase supply to match rider demand.