June 18,2010 Via Hand Delivery Mr. Jeff Derouen Executive Director
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LEGAL AID SOCIETY PURSUING ..JUSTICE RESTORING HOPE EILEEN L ORDOVER I5021 6 14-3I 25 EORDOVERC~LASLOUORG June 18,2010 Via Hand Delivery Mr. Jeff Derouen Executive Director Kentucky Public Service Commission 21 1 Sower Boulevard Frankfort, Kentucky 4060 1 Re: Case No. 2010-00146 An Investigation of Natural Gas Retail Competition Programs Dear Mr. Derouen: Enclosed for filing in the above-captioned matter please find an original plus ten (1 0) copies of Testimony of Marloii Cuininings on Behalf of Association of Community Ministries. Please confirm your receipt of this filing by placing the stamp of your office with the date received on the enclosed additional copy, and returning it to me in the enclosed self addressed stamped envelope. Thank you for your assistance in this matter. Please contact me if you need further information. Very truly yours, Eileen Ordover Attorney for ACM Cc: Parties of record 4 I6 W MUHAMMAD ALI BLVD I SUITE 300 I LOUISVILLE, KY 40202 I 15021 584- I 254 I 18001 292- I862 FAX 15021 584-80 14 I WWW LASLOCJ ORG COMMONWEALTH OF KENTUCKY REFORF, THE PUBLIC SERVICE COMMISSION In the Matter of: E AN INVESTIGATION OF NATURAL ) CASENO. GAS RETAIL COMPETITION PROGRAMS ) 2010-00146 PUBLIC SERVICE c0 M M Is s ION TESTIMONY OF MARLON CUMMINGS ASSOCIATION OF COMMUNITY MINISTJXIES ON BEHALF OF ASSOCIATION OF COMMUNITY MINISTMES Filed: June 18,2010 Q. Please state your name, title and address. A. My name is Marlon Curnniiiigs and I am Treasurer of the Board of Directors of the Association of Coininuiiity Ministries (“ACM”). I have been appointed by the Board to represent ACM in all low-income utility issues. Q. Please describe ACM. A. ACM is a Kentucky 501(c)(3) nonprofit corporation and its membership is comprised of 15 independent community iniiiistries that provide services to the L,ouisville 8 Metro area. The common mission for all 15 members is to provide an emergency 9 assistance network in partnership with the Louisville Metro Governinent, local 10 congregations, and other businesses and organizations. Each Ministry serves a specific I1 geographical area to ensure that all of Louisville Metro is covered under the umbrella of 12 the ACM. Among the social services provided by ACM inembers are utility assistance 13 programs. 14 Q. Describe ACM’s activities regarding utility issues. 1s A. Our rneinber agencies provide financial assistance with utility bills to low-income 16 persons year round. Our agencies help clients negotiate payment plans with the utility 17 companies when they fall behind, and help them avoid utility disconnections. The 18 agencies obtain funding from donations and local governments grants. These agencies 19 also distribute Community Winterhelp funds from January through April each year. 20 ACM utility assistance providers routinely refer customers to the federal Low Income 21 Home Energy Assistance Prograin (“LIHEAP”) when it is in operation. ACM is one of 22 the joint applicants for the current Louisville Gas & Electric Company Home Energy 23 Assistance Program. 1 1 Q. Describe your employment and educational background. 2 A. Currently and for the past 12 years I have been Executive Director of 3 Jeffersontown Area Ministries, which is one of the member agencies of ACM and which 4 provides emergency utility and rental assistance and a variety of other social services to 5 residents in the Jeffersontown area. I have been on the Board of Directors of ACM since 6 1994. I served tlie Jeffersontown Christian Churcli (Disciples of Christ), from 1985 until 7 1996, as the Family and Youth Minister. I have a Bachelor of Arts in Business froin 8 Bellarmine TJniversity and received my Minister’s license from the Kentucky Region of 9 the Christian Churcli (Disciples of Christ) in conjunction with the Lexington Theological 10 Seminary. 11 Q. Have you previousIy testified before the Commission? 12 A. Yes, I filed testimony in the pending LG&E base rate case, Case No. 2009-00549, 13 Application Of Louisville Gas And Electric Company For An Adjustment Of Electric And 14 Gas Rase Rates on behalf of ACM, and in the immediately prior LG&E base rate case, 15 No. 2008-00252, Application Of Louisville Gas And Electric Coinpany For An 16 Adjwtment Of Its Electric And Gas Base Rates 011 behalf of ACM and POWER. I have 17 also filed testimony in Case No. 2006-00045, Consideration Of The Reqziiremerzts Of The 18 Federal Energy Policy Act Of 2005 Regarding Time-Rased Metering, Demand Response 19 And Interconnection Service on behalf of Metro Human Needs Alliance and in Case No. 20 2007-00477, An Investigation Of The Energy And Regulalory Issues In Section 50 Of 21 Kentucky s 2007 Energy Act on behalf of ACM. 2 1 Q. What is the Purpose of your testimony? 2 A. I offer this testimony to voice ACM's coiiceriis regarding the potential impact of 3 natural gas retail competition on low iiicoine consumers, and the issues ACM believes the 4 legislature and the Commission must address in considering whether retail competition is 5 to be allowed in Kentucky and, if so, under what conditions. 6 Q. How has ACM identified these concerns? 7 A. Since being notified of this Investigation, we have sought out informatioii about 8 the experience of low income customers in states that have adopted natural gas retail 9 competition programs, and how those programs have attempted to address their needs. 10 Towards that end, I have reviewed inforiiiation from the LIHEAP Clearinghouse,' 11 newspaper coverage, and other sources available to the general public regarding 12 implemeiitatiori of natural gas restructuring, deregulation and retail competition in 13 particular states. 14 Q. Please identify the major areas of concern that have emerged from your 1.5 research. 16 A. Our concerns fall into three broad areas. First, we are conceriied that retail 17 competition will result in higher gas bills for our clients arid other low inconie customers. 18 Second, we are concerned because Kentucky currently lacks the kind of low-income 19 energy assistaiice programs mandated by other states in connection with natural gas 20 restructuring and deregulation. Third, given the vulnerable populatioii we serve, ACM is 21 extremely concerned about the potential for consuiner confusion and consuiner fraud. The LIHEAP Clearinghouse is a resource maintained by the U.S. Department of Health and Human ServiceslAdininistration for Children and Families, which administers the federally-funded Low Income Home Energy Assistance Program. 3 1 Q. Please elaborate on ACM’s concerns about higher gas bills. 2 A. According to media reports I’ve reviewed from Georgia, Illinois and Ohio, many 3 residential consuiners saw substantial iiicreases in their natural gas bills when retail 4 competition was implemented. Copies of such articles are attached to this testimony as 5 ‘‘Exhibit A.” The possibility of such increases in KY is particularly alarming to ACM, as 6 our clients are already struggling to inale ends meet. Even without rate increases, the 7 level of need for assistance with utility bills is increasing beyond tlie ability of ACM 8 members to meet it. In fiscal year 2009-10, requests for services from ACM member 9 agencies increased by 30%. And even while increasing their total utility assistance 10 payments to LG&E by 20%, ACM agencies were still forced to turn away needy 11 customers due to lack of sufficient funding. 12 Q. Please elaborate on ACM’s concern that Kentucky currently lacks the low- 13 income energy assistance programs mandated by other states in connection with 14 natural gas restructuring and deregulation. 15 A. Based upon my review of inforniation in the LIHEAP Clearinghouse, which can be 16 accessed at www.lilieap.ncat.org, it appears that states restructuring or deregulating 17 natural gas service to residential customers have also, through legislation and/or IS regulation, put into place mandatory low income energy assistance programs to 19 anieliorate the potential harsh impact on low-income customers. By way of example, a 20 sampling of LJHEAP reports (for tlie states of Georgia, Ohio, Pennsylvania, Montana, 21 mode Island and Massachusetts) summarizing low income energy assistance programs 22 mandated in coiviection with natural gas restructuring and deregulation and operated 23 through public benefit funds, universal service funds, and system benefit funds is 4 I attached to this testimoiiy as Exhibit “B.” According to these reports, restructuring and 2 deregulating states have mandated through legislation or regulation such measures as 3 percentage of income payment plans; gas rate assistance programs; special rates and/or 4 discounts for low-income customers; arrearage management and forgiveness plans; and, 5 in Georgia’s implementation of retail competition, designation of a regulated provider to 6 serve low-income natural gas customers and/or those with poor credit. Kentucky law 7 does not contain protections of comparable and sufficient magnitude. There are a variety 8 of models of assistance available, and before retail competition proceeds, there needs to 9 be evaluation undertaken to decide which, if any, can adequately protect Kentucky’s low- 10 income consumers. 11 Q. Please elaborate on ACM’s concern about the potential for consumer 12 confusion and consumer fraud. 13 A. I have paid particular attention to the experience of Georgia, which instituted 14 natura1 gas retail competition in 1997. News reports I reviewed concerning 1.5 implementation in Georgia, copies of which are among those attached to this testimony in 16 Exhibit Cy describe marketer fraud targeted at low income and elderly consumers, 17 ACM’s constituency. One article reported that marketers were going door-to-door in low 18 income residential areas to solicit business from customers without fully explaining gas 19 rates, contract terms and procedures.