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Winter Storm Juno Will Be The First Test Of Uber Price Caps In New York

The Office of the Attorney General will be monitoring Uber prices to ensure the company is adhering to the agreed-upon price caps.

Posted on January 26, 2015, at 12:55 p.m. ET

AP Photo/Julio Cortez, File

For the first time since the Office of the New York Attorney General and Uber came to an agreement in July 2014, the caps set on Uber's pricing model during states of emergency will be tested. During the state of emergency in New York City due to Winter Storm Juno, BuzzFeed News has learned this agreement means Uber's prices will not exceed 2.8 times its normal rate.

"Uber is committed to getting riders safely and reliably to where they need to be, and we urge everyone to use extra caution when out on the roadways today. Per our national policy, during states of emergencies, dynamic pricing will be capped and all Uber proceeds will be donated to the American Red Cross to support relief efforts," Uber told BuzzFeed News in a written statement.

Whether rain, sleet, or snow — bad weather usually means it's harder to hail a yellow cab, which means a higher demand for Uber or Lyft, which means (you guessed it): surge pricing.

According to Uber, the higher the price, the more incentive drivers have to get on the road and help the company meet the spike in demand. The worse the weather, the higher the incentive needs to be. But the company has faced an onslaught of criticism for applying surge pricing — many accused the company of price gouging — during "states of emergency" such as Hurricane Sandy, for example.

The agreement that Attorney General Eric Schneiderman and Uber came to states that the company cannot charge more than its "normal range of prices" during what the OAG refers to as "abnormal disruptions of the market." To determine the price cap, according to the agreement, Uber has to identify the three highest surge prices (a multiple of the base fare) on three different days in the 60 days before the state of emergency. The next highest price — the fourth highest multiplier — will be the price cap.

"Provided there is an abnormal disruption in the market during the expected storm, the Attorney General's Office will be monitoring all providers of essential services, including transportation, for price gouging," OAG deputy press secretary Liz DeBold told BuzzFeed News. "In addition, the office will be working with Uber to ensure last year's price cap agreement is in full effect."

In order to ensure the company adheres to the agreement, the agreement also states that Uber must provide all documentation and information to the OAG upon request.

We will update as the story develops.