HOUSE JOURNAL - South Carolina Legislature Online

South Carolina General Assembly
112th Session, 1997-1998
Journal of the House of Representatives

TUESDAY, APRIL 7, 1998

Tuesday, April 7, 1998
(Statewide Session)

~~Indicates Matter Stricken~~
Indicates New Matter

The House assembled at 12:00 Noon.

Deliberations were opened with prayer by the Chaplain of the House of Representatives, the Rev. Dr. Alton C. Clark as follows:

God of greatness and glory, in these days of earth's awakening, thrilling and throbbing with the loveliness of springtime, we thank You for every beauty from which our enraptured selves drink as we behold in wonder the petaled cups held high by bushes aflame with evidences of Your presence. In the changing pageant of nature with forms and colors that thrill our senses, may we see all this beauty as but Your handwriting. Make us to know that in the loveliness of springtime that You are always present - that the world is Your creation and that You are the Caretaker of it and of all that is in it.

For it all, we give You our praise and thanksgiving. Amen.

Pursuant to Rule 6.3, the House of Representatives was led in the Pledge of Allegiance to the Flag of the United States of America by the SPEAKER.

After corrections to the Journal of the proceedings of Friday, the SPEAKER ordered it confirmed.

MOTION ADOPTED

Rep. BAUER moved that when the House adjourns, it adjourn in memory of Ronald Earle Howard of Lexington, which was agreed to.

REPORT RECEIVED
COMMITTEE TO REVIEW CANDIDATES FOR THE
SOUTH CAROLINA PUBLIC SERVICE COMMISSION

TO: The Clerk of the Senate

The Clerk of the House
FROM: Committee to Review Candidates for the

South Carolina Public Service Commission
DATE: April 6, 1998

In compliance with the provisions of Sections 58-3-26 and 2-19-30(D), Code of Laws of South Carolina, 1976, it is respectfully requested that the following information be printed in the Journals of the Senate and the House.

Donald H. Holland, Chairman

Pursuant to Act No. 181 of 1993, the Committee to Review Candidates for the South Carolina Public Service Commission (hereinafter "Committee") was organized to consider the qualifications of candidates for the six resident and one at-large commissioners of the South Carolina Public Service Commission (hereinafter "Commission"). The Committee is composed of ten members, six of whom are members of the General Assembly, and four of whom are members of the public. While its statutory mission does not include selecting or nominating the most qualified persons for service on the Commission, the Committee has determined that it does bear responsibility to supply the General Assembly with findings regarding each candidate's capabilities, giving special attention to any issue or concern which might limit a commissioner's effectiveness. In making its findings, the Committee is charged with "find[ing] the best qualified people giving due consideration to their ability and integrity."[1]

[1] See S. C. Code of Laws § 58-3-26 (1993).

LEGAL QUALIFICATIONS

The determination of legal qualifications is limited to a determination of the candidate's residence in the appropriate Public Service Commission district as established by Section 58-3-20, the candidate's eligibility for election as determined by Section 58-3-24, and the candidate's compliance with Constitutional provisions limiting election to those persons eligible to be electors of this state.

GENERAL QUALIFICATIONS

To fulfill its mandate that it determine fitness beyond mere legal qualifications, the Committee conducted an intensive review of each candidate's (1) experience, (2) temperament, (3) sensitivity to legal and ethical constraints on public service, and (4) knowledge of Commission operations.

An explanation of these four benchmarks which the Committee used to judge the qualifications of candidates is as follows:

Experience

By statutory mandate, this Committee is charged with considering the knowledge and experience of potential commissioners "in such varied fields as business, government, accounting, law, engineering, statistics, consumer affairs, and finance." The Committee looked for persons who have excelled in these fields and those persons' capability to transfer this success and knowledge to the operations of the Commission. The transcript contained in this report contains each applicant's background and employment history.

Temperament

The Commission is neither a court, an executive agency, nor a legislative body, but a blend of all three. The Committee sought to determine if a candidate's sense of the role or roles he is to fill on the Commission is such that his work will be productive, proactive, and protective of the interests of all South Carolinians.

Compliance With and Sensitivity to
Legal and Ethical Constraints/Integrity

Each candidate carries a wealth of life experiences as well as business and personal relationships when seeking election to the Commission. The Committee realizes that there is little possibility of electing candidates with no pre-existing conflicts of interest. To do so would, in effect, be asking candidates to have totally disassociated themselves from the "real world" and would be a direct repudiation of this Committee's statutory mandate to find candidates with experience in business, law, and other fields. However, the Committee finds it to be an important standard that a candidate recognizes when he may have a conflict of interest between his existing responsibilities and/or business interests and his future duties as a commissioner. The Committee strongly feels that a candidate should not only readily recognize these conflicts of interest, but should pro-actively and willingly offer to divest or divorce himself from such conflicts of interest. The Committee believes that the reluctance of a candidate to readily recognize or willingly divest or divorce himself of such interests during the intense public scrutiny of these screening hearings is a likely indicator of that candidate's future unwillingness to avoid conflicts of interest when called upon to do so in a less public forum--Public Service Commission deliberations.

The Committee also strongly feels that candidates for the Commission who serve or have served as public officials, public members, or public employees must have demonstrated high ethical standards through compliance with all laws governing ethical behavior, most notably those provisions of Title 8. In order to withstand public scrutiny and to gain public confidence, these candidates for the Commission must have conducted and comported themselves with the highest regard for ethics in their actions as public officials, members, or employees.

In this regard, and pursuant to Section 58-3-26, the Committee has made findings as to integrity.

The Committee's findings are designated as follows:

OUTSTANDING

ABOVE AVERAGE

AVERAGE

BELOW AVERAGE

Substantive Knowledge of Commission Operations

The Committee acknowledges its statutory duty to recognize those candidates who are the most qualified in this regard. However, it would be patently unfair to require nonincumbents to have accumulated a wealth of knowledge about Commission operations specifically, or regulated utilities generally. Unlike incumbent commissioners, challengers have not had the benefit of a compensated opportunity to educate themselves in hearings or through conversations with Commission staff. The Committee expects that incumbents and others with substantial experience before the Commission should be able to discuss these matters with a greater fluency than those persons who have to date committed themselves to other employment. However, every candidate, whether incumbent or nonincumbent, must be required to demonstrate some basic understanding of the role of the Commission and its operations. The Committee wishes to emphasize that the substantive knowledge findings contained in this report are merely a measure of a candidate's knowledge at the time of his candidacy and are by no means indicative of a candidate's ability to subsequently master Commission operations and the multitude of issues relating thereto.

For the first time since this Committee's inception, the Committee adopted a written format to assist in judging the qualifications of each candidate in substantive knowledge. In previous screenings, where substantive knowledge was examined solely in an oral format, candidates whose screenings occurred toward the conclusion of the hearings were at a decided advantage. Because the Committee's hearings are open to the public, the content of questions relating to substantive knowledge could be readily discerned from the screening of an earlier-scheduled candidate. The sequestration of candidates did little to remedy the unfairness.

For this round of screening, a written format was utilized to preserve the integrity of the process, and to survey a candidate's general and specific knowledge of the work in which the Commission engages. Candidates were instructed to choose three discussion questions among the six provided. Back-to-back examination times were structured such that no candidate had the personal advantage of access to the questions prior to other candidates; nor did any candidate have the opportunity to divulge the nature of the questions to another candidate. Each candidate was given the choice of writing his or her answers or using a computer.

The Committee feels that the written format coupled with structured examination times placed all candidates on a level playing field. However, the Committee is cognizant that not all people excel in a written format. Therefore, in order that no candidate would be prejudiced in this regard, a candidate who scored poorly on the written survey was asked a substantive question (which had also appeared on the written examination) orally during screening hearings to determine if the written format perhaps did not fully capture the candidate's knowledge and ability. The Committee wishes to commend the industry of those candidates who took the time, trouble, and effort to seek information to correct their deficiencies.

Oral answers given during the screening process were evaluated and, in addition to the written answers, were used in the final compilation of the Committee's findings relating to substantive knowledge/ability. The written answers of all candidates are published in the transcript of the Committee's hearings. The Committee strongly urges members of the General Assembly to review these written answers to gauge for themselves candidates' qualifications. For those candidates who were subsequently questioned orally as to substantive knowledge, those answers are also contained in the transcript.

The Committee's findings are designated as follows:

OUTSTANDING

ABOVE AVERAGE

AVERAGE

BELOW AVERAGE

In this area of substantive knowledge, the Committee would particularly commend to the General Assembly's attention candidates Scott, Carruth, and Atkins.

Miscellaneous

Candidates should also be generally aware of the time commitment necessary for productive service as a commissioner. Each candidate provided adequate assurance to this Committee of his or her commitment to meet the demands of the office.

Screening of Candidates

A transcript of the Committee's extensive oral examination of the twenty-seven candidates on January 7 and 8, 1998, and March 23, 1998, as well as the written examination given on December 19, 1997, and required of all candidates, are appended to this report as required by law.

In consideration of these findings of fact, the Committee finds all twenty-seven candidates to be legally qualified for service as Public Service commissioners. The Committee makes the following findings of fitness and ability for individual candidates for the Commission:

FIRST DISTRICT

MONTYE M. DuBOSE

Finding as to Substantive Knowledge/Ability: AVERAGE
Finding as to Integrity: OUTSTANDING

For the past seven years, Ms. DuBose has been the owner and president of a pay telephone company. She also previously worked with the Social Security Administration. The Committee finds that Ms. DuBose has an even temperament and a good understanding of the legal and ethical constraints on public service.

CLARA H. HEINSOHN

Finding as to Substantive Knowledge/Ability: BELOW AVERAGE
Finding as to Integrity: OUTSTANDING

Ms. Heinsohn has worked as an elementary school teacher for almost thirty years. She has also served as a member of the Commission on Women and a member of the PASS Commission. While Ms. Heinsohn's knowledge of Commission operations is limited, she has a commendable desire to serve. The Committee finds that Ms. Heinsohn has an even temperament and a good understanding of the legal and ethical constraints on public service.

WILLIAM SAUNDERS

Finding as to Substantive Knowledge/Ability: AVERAGE
Finding as to Integrity: OUTSTANDING

Mr. Saunders has served on the Commission for the First District for the past four years. Mr. Saunders also has ownership interests with respect to two radio stations. The Committee finds that he has an even temperament and a good understanding of the legal and ethical constraints on public service. The Committee was concerned, however, with Mr. Saunders' substantial financial liabilities connected with his ownership of one radio station, including one debt to JEDA. Mr. Saunders assured the Committee that he is negotiating with his creditors, and that a sale of the station would readily extinguish his debts.

WILLIAM A. WHATLEY

Finding as to Substantive Knowledge/Ability: BELOW AVERAGE
Finding as to Integrity: OUTSTANDING

Mr. Whatley recently closed his own real estate brokerage company, and has also served as a county councilman. Mr. Whatley has an educational background in business administration. While Mr. Whatley's knowledge of Commission operations is limited, he has a commendable desire to serve. The Committee finds that Mr. Whatley has an even temperament and a good understanding of the legal and ethical constraints on public service.

SECOND DISTRICT:

MICHAEL L. BELL

Finding as to Substantive Knowledge/Ability: BELOW AVERAGE
Finding as to Integrity: OUTSTANDING

Mr. Bell is the owner of a consulting business which provides development permitting and project management assistance to developers, engineers, and architects, and has also served as a town planner. Mr. Bell currently serves on a water and sewer authority. While Mr. Bell's knowledge of Commission operations is limited, he has a commendable desire to serve. The Committee also finds that Mr. Bell has an even temperament and a good understanding of the legal and ethical constraints on public service.

C. DUKES SCOTT

Finding as to Substantive Knowledge/Ability: OUTSTANDING
Finding as to Integrity: OUTSTANDING

The Committee finds Mr. Scott to be an outstanding candidate for the Commission. Having served as Public Service Commissioner for the past four years, Mr. Scott previously served as Deputy Executive Director for the Commission. The Committee also finds that he has an even temperament and a good understanding of the legal and ethical constraints on public service.

THIRD DISTRICT:

W. PATRICK FLACK

Finding as to Substantive Knowledge/Ability: AVERAGE
Finding as to Integrity: OUTSTANDING

Mr. Flack currently serves as a member of the Consumer Affairs Commission and a member of a county economic development board. Mr. Flack is a part-time manpower and political consultant. The Committee finds that Mr. Flack has an even temperament and a good understanding of the legal and ethical constraints on public service.

GEORGE J. HUNTER, JR.

Finding as to Substantive Knowledge/Ability: BELOW AVERAGE
Finding as to Integrity: OUTSTANDING

Mr. Hunter is a salesman at a realty company, and has a masters' degree in accountancy. Mr. Hunter serves on a county water and sewer board and also has served as a county finance director. While Mr. Hunter's knowledge of Commission operations is limited, he has a commendable desire to serve. The Committee finds that he has an even temperament and a good understanding of the legal and ethical constraints on public service.

RANDY MITCHELL

Finding as to Substantive Knowledge/Ability: AVERAGE
Finding as to Integrity: OUTSTANDING

Mr. Mitchell currently serves as a probate judge and also owns a poultry farming business. He has also served as a county councilman. The Committee finds that Mr. Mitchell has an even temperament and a good understanding of the legal and ethical constraints on public service.

LEWIS E. PINSON

Finding as to Substantive Knowledge/Ability: AVERAGE
Finding as to Integrity: OUTSTANDING

Mr. Pinson currently serves as a county veterans affairs officer and also is a partner in a rental company. He has also served as a county councilman. The Committee finds that Mr. Pinson has an even temperament and a good understanding of the legal and ethical constraints on public service.

FOURTH DISTRICT:

PHILIP T. BRADLEY

Finding as to Substantive Knowledge/Ability: ABOVE AVERAGE
Finding as to Integrity: OUTSTANDING

Mr. Bradley has served as a Public Service Commissioner for the past four years, and is an unopposed candidate for the Fourth District seat. The Committee finds that he has an even temperament and a good understanding of the legal and ethical constraints on public service.

FIFTH DISTRICT:

WARREN D. ARTHUR, IV

Finding as to Substantive Knowledge/Ability: ABOVE AVERAGE
Finding as to Integrity: *See comments below

Mr. Arthur has served as a Public Service Commissioner for the Fifth District for the past eight years. The Committee finds that he has an even temperament.

*The Committee is concerned, however, that the frequency and related expenses of Mr. Arthur's out-of-state travel during the last few years far exceed that of any other Public Service Commissioner. The Committee specifically examined Mr. Arthur's travel for which the expenses were reimbursed by third parties. The points of concern to the Committee are: (1) whether the travel was directly related or even indirectly related to Mr. Arthur's duties as Commissioner; (2) whether Mr. Arthur's travel contributed to his absence from more than one-third of the Commission's hearings; and (3) whether Mr. Arthur adhered to the ethics laws, including the question of the lawfulness of the acceptance of meals exceeding $25/day from an individual who is paid a monthly retainer by entities (in this case lobbyists' principals) who are regulated by the Commission. The Committee extensively reviewed statutes (e.g., Sections 2-17-90, 2-17-100, 8-13-700, 8-13-705, 8-13-715) governing receipt of items from lobbyists' principals and third persons who are not lobbyists' principals. In the course of its screening, the Committee requested and received informal opinions from the director of the Ethics Commission. Those opinions are attached as an addendum to this report for the General Assembly's review. If any member of the General Assembly has any questions regarding the opinions, the Committee recommends that the State Ethics Commission be contacted.

H. CLAY CARRUTH, JR.

Finding as to Substantive Knowledge/Ability: OUTSTANDING
Finding as to Integrity: OUTSTANDING

The Committee finds Mr. Carruth to be an outstanding candidate for the Commission. Mr. Carruth currently serves as Director of Research and Attorney to the Senate Medical Affairs Committee. His familiarity with Commission functions and operation in part stems from his prior employment as an attorney with the Commission. The Committee also finds that he has an even temperament and a good understanding of the legal and ethical constraints on public service.

RICHARD A. HALL

Finding as to Substantive Knowledge/Ability: AVERAGE
Finding as to Integrity: OUTSTANDING

Mr. Hall is presently the owner of his own residential real estate business, and has previous employment experience with an electric utility. He is also a director for a natural gas authority. The Committee finds that Mr. Hall has an even temperament and a good understanding of the legal and ethical constraints on public service.

KATHY H. BIGHAM

Finding as to Substantive Knowledge/Ability: AVERAGE
Finding as to Integrity: OUTSTANDING

Ms. Bigham is president and co-owner of a restaurant business. The Committee finds that she has an even temperament and a good understanding of the legal and ethical constraints on public service.

T. EDWARD KYZER

Finding as to Substantive Knowledge/Ability: BELOW AVERAGE
Finding as to Integrity: OUTSTANDING

Mr. Kyzer, a vice-president of a company engaged in food service distribution, currently serves as a city mayor and is member of a natural gas authority. While Mr. Kyzer's knowledge of Commission operations is limited, he has a commendable desire to serve. The Committee also finds that Mr. Kyzer has an even temperament and a good understanding of the legal and ethical constraints on public service.

SIXTH DISTRICT:

JAMES BEARD, JR.

Finding as to Substantive Knowledge/Ability: BELOW AVERAGE
Finding as to Integrity: OUTSTANDING

Mr. Beard is presently employed as an administrator of his family's residential care facility, and has served on the Human Affairs Commission and as a town councilman. While Mr. Beard's knowledge of Commission operations is limited, he has a commendable desire to serve. The Committee also finds that he has an even temperament and a good understanding of the legal and ethical constraints on public service.

TRISHA C. CAULDER

Finding as to Substantive Knowledge/Ability: AVERAGE
Finding as to Integrity: OUTSTANDING

Ms. Caulder has an employment background in education. She currently is employed as a director of Adult/Community Education for Florence District One, and also serves on an economic development council. The Committee also finds that Ms. Caulder has an even temperament and a good understanding of the legal and ethical constraints on public service.

MIGNON L. CLYBURN

Finding as to Substantive Knowledge/Ability: AVERAGE
Finding as to Integrity: OUTSTANDING

Ms. Clyburn is currently the editor, president, and publisher of a weekly newspaper, with an educational background in banking, finance, and economics. The Committee finds that she has an even temperament and a good understanding of the legal and ethical constraints on public service.

HARRIET GARDIN FIELDS

Finding as to Substantive Knowledge/Ability: AVERAGE
Finding as to Integrity: OUTSTANDING

Ms. Fields has experience in education, counseling, and consulting. She is presently the president of her own consulting firm and has served as a county councilwoman. The Committee finds that Ms. Fields has an even temperament and a good understanding of the legal and ethical constraints on public service.

CLAYTON B. INGRAM

Finding as to Substantive Knowledge/Ability: ABOVE AVERAGE
Finding as to Integrity: OUTSTANDING

The Committee wishes to commend Mr. Ingram for his obvious study in the area of public utilities and regulation. Mr. Ingram is currently employed with the state in insurance services and has an advanced degree in public administration. The Committee also finds that he has an even temperament and a good understanding of the legal and ethical constraints on public service.

PATRICK J. NOBLE

Finding as to Substantive Knowledge/Ability: AVERAGE
Finding as to Integrity: OUTSTANDING

Ms. Noble has a varied background in areas such as city planning, criminal justice, marketing, governmental highway safety programs, and real estate. She currently owns a management and planning consulting firm which provides public affairs services throughout the southeast, engages in some lobbying, and is a commissioner for a city housing authority. She also holds a masters' degree in city planning. The Committee finds that Ms. Noble has an even temperament and a good understanding of the legal and ethical constraints on public service.

AT-LARGE:

JAMES BLAKE ATKINS

Finding as to Substantive Knowledge/Ability: OUTSTANDING
Finding as to Integrity: OUTSTANDING

The Committee finds Mr. Atkins to be an outstanding candidate for the Commission. Mr. Atkins is presently employed as a research faculty member with the University of South Carolina, conducting environmental research. Currently completing his Ph.D. in marine sciences and oceanography, Mr. Atkins has experience in environmental and water resources engineering with governmental agencies over the past twenty years. The Committee finds that he has an even temperament and a good understanding of the legal and ethical constraints on public service.

BRENDA M. BEDENBAUGH

Finding as to Substantive Knowledge/Ability: AVERAGE
Finding as to Integrity: OUTSTANDING

Ms. Bedenbaugh has experience in both education and real estate. She is employed part-time at a technical college as a counselor and is also a broker with a realty company. The Committee finds that she has an even temperament and a good understanding of the legal and ethical constraints on public service.

MONTYE M. DuBOSE

Finding as to Substantive Knowledge/Ability: AVERAGE
Finding as to Integrity: OUTSTANDING

C. ROBERT MOSELEY

Finding as to Substantive Knowledge/Ability: AVERAGE
Finding as to Integrity: OUTSTANDING

Mr. Moseley has business experience in both the banking and insurance industries. He is currently the owner of an insurance agency. Mr. Moseley is also a member of the Advisory Council for the Department of Consumer Affairs. The Committee finds that he has an even temperament and a good understanding of the legal and ethical constraints on public service.

FRANK B. STONE

Finding as to Substantive Knowledge/Ability: AVERAGE
Finding as to Integrity: OUTSTANDING

Mr. Stone has business experience dating from the 1950's, the most recent being ownership of his own company for approximately twenty years and from which he is now retired. He also serves on the board of a savings and loan. The Committee finds that he has an even temperament and a good understanding of the legal and ethical constraints on public service.

C. JO ANNE WESSINGER

Finding as to Substantive Knowledge/Ability: ABOVE AVERAGE
Finding as to Integrity: OUTSTANDING

Ms. Wessinger has employment experience in governmental service, the most recent being Counsel and Director of Research of the House of Representatives Labor, Commerce & Industry Committee, and an educational background in finance and business economics. Through her legislative employment, she has become familiar with the issue of electric deregulation. The Committee finds that she has an even temperament and a good understanding of the legal and ethical constraints on public service.

Respectfully submitted,

SENATE MEMBERS:
/s/The Honorable Donald H. Holland, Chairman
/s/The Honorable C. Tyrone Courtney
/s/The Honorable Darrell Jackson

SENATE PUBLIC MEMBERS:
Mr. J. Stephen Bilton
/s/Mr. Richard H. Darby

HOUSE MEMBERS:
/s/The Honorable Timothy C. Wilkes, Vice-Chairman
/s/The Honorable Kenneth Kennedy
/s/The Honorable Richard M. Quinn, Jr.

HOUSE PUBLIC MEMBERS:
/s/The Honorable Dave C. Waldrop
Mr. Henry Swink

TRANSCRIPT OF PROCEEDINGS
Wednesday, January 7, 1998
10:00 a.m.
105 Gressette Building
Columbia, South Carolina

COMMITTEE MEMBERS IN ATTENDANCE:
DONALD H. HOLLAND, Chairman
C. TYRONE COURTNEY
RICHARD H. DARBY, SR.
KENNETH KENNEDY
RICHARD M. QUINN, JR.
DAVE C. WALDROP
TIMOTHY C. WILKES
ALSO PRESENT:
SUSAN S. MUSSER, Attorney to the Committee

DEBRA D. HAMMOND, Administrative Assistant

CHAIRMAN HOLLAND: I will call the meeting to order. Does everyone have their listening devises on? If there's anyone out there that needs to come in, we'd appreciate your coming in now.

Gentlemen of the Committee, I'm going to read a statement that I have had prepared. There are certain things that I need to say that I might forget to say. This is a joint committee composed of ten members, three House members, three Senators and four public members in charge of screening candidates for the South Carolina Public Service Commission.

The Committee screens those candidates who apply for consideration by the General Assembly and for election for seven positions for the PSC. Our basic duties are set forth by statute. For the pertinent statutes, members should turn to Tab 2. Not only are we to inquire as to the legal qualifications of the candidates, we are also required to determine their fitness to serve based upon their experience, knowledge of utility regulation, and personal character.

This hearing will be conducted by the acting chief counsel for the Judiciary Committee, who is Ms. Musser here to my right. And members of the Committee will also ask questions they have of the candidates.

I understand from Ms. Musser there are certain questions that must be discussed in executive session before we start with the meeting. There are certain things that we're going to have to address in executive session. I would entertain a motion that we go into executive session.

MR. WILKES: So move, Mr. Chairman.

CHAIRMAN HOLLAND: We have a motion that we go into executive session. Any objection? There being no objection, I now declare this Committee in executive session. And we will get you back here as quickly as we can. (Executive session follows.)

(Public session continues.)

CHAIRMAN HOLLAND: I will call the meeting back into regular session. The first candidate is on her way in to be screened by this Committee. The first candidate is Montye M. DuBose. Would you come in please.

MS. MUSSER: Ms. DuBose, do you have your driver's license and voter registration card?

CHAIRMAN HOLLAND: Can you hear us, Ms. DuBose?

MS. DUBOSE: Sure.

MS. MUSSER: Mr. Chairman, I have the driver's license of Ms. Montye DuBose listing her address at 1233 Gilmore Road, Charleston, South Carolina 29407, and a voter registration card listing the same address. Ms. DuBose, if you would, raise your right hand.

MS. DUBOSE: Shall I stand?

MS. MUSSER: That would be fine.

MONTYE M. DuBOSE, being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you please state your full name for the record.

A. Montye MacKenzie DuBose.

MS. MUSSER: Mr. Chairman, in reviewing the SLED report for criminal convictions and civil judgments as well as Ms. DuBose's credit record, there were no negative entries.

Q. Ms. DuBose, have you had an opportunity to review the personal data questionnaire summary that was given to you today?

A. Yes.

Q. Are there any changes you would like to make, any clarifications or modifications to that summary?

A. Not any.

Q. Would you have any objection to that summary being made part of the record?

A. Not any.

Q. Okay. Thank you. I note that you are running for the First District seat and the at large seat at will. Briefly tell this Committee what is the reason or are the reasons that you wish to serve on the Public Service Commission.

A. Well, in the past six years, I have been the president of a utility. I have had lots of reasons to be exposed to the interactions of the Public Service Commission, their jurisdiction, and a number of their laws that they have to follow. With this experience and with my background working with federal law when I worked with the Social Security Administration, I feel that I would be a very good commissioner. I would make very good decisions on behalf of the consumers of South Carolina as well as the utilities which the Public Service Commission regulates to ensure that they would have an adequate return on their investments for serving the customers of South Carolina.

Q. You mentioned that you have been regulated by the PSC. I assume that's your business, 2M Corporation?

A. 2M Communications, Incorporated. That's a pay phone company.

Q. So you received a certificate from the PSC?

A. Correct.

Q. How long have you been president of that company?

A. Since its inception, February of '91.

Q. Are you the owner as well? Do you
have any partners in that business?

A. I'm an the owner also.

Q. Are you the sole owner? Are there any other shareholders or investors?

A. No.

Q. If you were to be elected to the PSC, what would be your plans as far as your involvement with 2M Communications?

A. I would have to divest myself of any interest to them because if I were to say that I would just -- I'm searching for that word, recuse. I couldn't rightfully serve as a commissioner if I were to say that I would recuse myself of voting on anything that would affect the pay phone industry economically. That would make me an inadequate person, so I would have to divest myself of all the interest in 2M in order to be a good, sound commissioner.

Q. Yes, ma'am. I noted that you are also the owner of a boutique on Market Street in Charleston.

A. Uh-huh.

Q. Can you tell us what type of business that is.

A. That's a little trendy fashion, ladies' accessories, and then nautical figurines like, you know, sea life, that type of thing.

Q. Do you have any partners in that business, or are you the sole owner?

A. At this time I'm the sole owner. But I should be ashamed of myself. My husband does all the work.

Q. Well, you've got that one figured out.

A. If it works, go with it.

Q. So he runs the business for you on a day-to-day basis?

A. Yes.

Q. Your personal data questionnaire also lists that you are the president of the Southern Investment Corporation. Could you tell this Committee about that corporation, your involvement in it.

A. I'm the president of that corporation. My brother is primarily -- is primarily -- he, shall we say, he does all the day-to-day functions. The function of that company is he will buy properties, for instance, foreclosures, renovate them if necessary, abandoned properties, bring them up to code or standards, then he will either sell or rent these properties.

And initially when I was -- you know, when it was first -- the inception of that, I think, was about three or four years ago. Anyway, you need finances to stay in this kind of business because you can have a lot of your liquid assets out all at one time. So I more or less, you know, use my assets to support a property. For instance, you may need my signature to purchase that piece of property, to acquire a loan, and that's the most that I do with any, quote, decision making.

Q. Is this property residential or commercial or a mix, that you and your brother deal with?

A. It can be most anything. It can be commercial, but generally not. To my knowledge, anything commercial he's ever purchased that was out of the state wasn't a good idea, and he, you know, immediately got rid of it. But here in South Carolina --

Q. To your knowledge, this business doesn't buy or sell property to or from any regulated utility?

A. That's correct. Never. Never. Because that's a question that I looked into, and he has never purchased any part of a utility.

Q. Your husband runs the boutique on Market Street, you said. Was he employed prior to helping you with that business?

A. In the City of Charleston he retired as an employee of the City of Charleston.

Q. What did he do for the City of Charleston?

A. His capacity was he worked with a youth program like, as you and I know it, the JPTA. When that was up and running, he was the supervisor of that program for the City of Charleston.

Q. Ms. DuBose, other than 2M Communication, do you own any utility stock?

A. No.

Q. And does your husband own any utility stock or does any of member of your household?

A. No, no.

Q. Does your brother with whom you are in business for the property venture you have?

A. Own any stock?

Q. Any utility stock.

A. Oh, no. He's horrified of the stock market.

Q. As a housekeeping matter, I noted on your economic interest statement, I believe it's item 15, that you listed some properties, I believe, Spruce Boulevard, Jessamine Road. There's been some confusion as to just what that form was requesting. Is there any probable conflict or potential for conflict, or were you just listing all your real estate?

A. Those are just rental properties. And I thought I understood the question. I thought I answered it adequately, and then they asked for follow-up information, give the locations on mortgages that were on these properties and the name of the mortgage company. So that's when I came back in and gave the address and the mortgage holder and the amount. And that was the only significance.

Q. Ms. DuBose, are you currently a member of or have you ever been a member of at any time an organization, charitable or otherwise, which is politically active on the question of deregulation?

A. No. You mean -- I say no. You mean like, for instance, that's their purpose, their primary purpose, to make sure deregulation comes to pass.

Q. Well, even it would be just an ancillary --

A. The only thing that mixed me up is I belong to the South Carolina Pay Phone Association. That's the only --

Q. Have you been contacted by any such organization that would advocate deregulation?

A. No, huh-uh. No, because deregulation is healthy.

Q. Have you directly or indirectly through your business or as an individual or family member been approached or promised employment with a regulated utility?

A. No. I have a sister who is retired now from Bell, but that's okay, isn't it?

Q. I'm sorry, she's retired from?

A. Southern Bell.

Q. Would that cause you any problem? If Southern Bell came before the Commission and you were a member, would you have any conflict or a problem in being fair as a member of the Commission as far as that utility is concerned? As far as consumers of the state are concerned, would you be able to be fair and impartial in spite of the fact that your sister has retired from Southern Bell?

A. You see, I would have no problem because anyone who knows me throughout my entire life, I've always maintained a reputation that, she may be hostile at times, but she's the fairest person you will ever run into. And I would always uphold that part of my reputation.

Q. Thank you, Ms. DuBose.

MS. MUSSER: Mr. Chairman, I have no further questions at this time.

CHAIRMAN HOLLAND: Any questions by any member of the Committee of Ms. DuBose?

MR. WILKES: Yes, Mr. Chairman.

CHAIRMAN HOLLAND: Representative Wilkes.

EXAMINATION BY MR. WILKES:

Q. Ms. DuBose, have you taken any public position on deregulation at any point in time on the issue either for or against?

A. Not really, no.

Q. Thank you.

CHAIRMAN HOLLAND: One second please.

MS. MUSSER: By letter, and I believe Mr. Couick sent this out before he left, candidates were given the opportunity to submit a statement. In the alternative, and as I understand it, your practice four years ago was to allow the candidate to make a statement as to his or her qualifications. So at this time if Ms. DuBose would --

CHAIRMAN HOLLAND: She did that at opening statement. I think she's met that requirement. Thank you so much, Ms. DuBose.

MS. DUBOSE: Thank you.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. Montye M. DuBose

Home Address: Business Address:

1233 Gilmore Road 1233 Gilmore Road

Charleston, SC 29407 Charleston, SC 29407

2. She was born on September 20, 1938, in Bamberg County, South Carolina.

4. She married Victor Ronald DuBose on October 27, 1984.

6. She graduated from Ehrhardt High School in 1956; attended St. Petersburg Junior College in 1976; and attended the College of Charleston in 1997.

8. She was an unsuccessful candidate for House Seat #119 in 1996.

9. She has worked with:

Bessinger's Incorporated, waitress and bookkeeper, 1960-1969;

Social Security Administration, claim representative, 1970-1979;

Boutique, owner, since 1986; and

2M Communications, president, since 1991.

10. She is the President of Southern Investment Corporation.

13. She has had a tax lien filed against 2M Communications, Inc. by the South Carolina Revenue Department.

14. She has been sued civilly by her former husband.

26. She is a member of the following professional organizations:

South Carolina Payphone Association.

27. She has served on the following civic, charitable, etc. organizations:
Advent Lutheran Church;

Associate member of the Huguenot Church;

Republican Party, state, county and local levels; and

Market Area Merchants Association.

29. Five letters of reference:

1) Lawton Grimball

Bank of South Carolina

P.O. Box 538

Charleston, South Carolina 29402
2) June Waring

705-A St. Andrews Blvd.

Charleston, South Carolina 29407

3) David Chard

2050 Spaulding Drive

North Charleston, South Carolina 29406

4) Gail Walden

P.O. Box 21972

Charleston, South Carolina 29413-1972

5) Dixie Long

1269 Battalion Drive

Charleston, South Carolina 29412

30. She is seeking the position of Public Service Commissioner for the At-Large District.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

True

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

False

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True

4. The South Carolina Public Service Commission, in setting a rate of return on common equity, may select a rate of return not based, in whole or part, on the return on investments of other enterprises having corresponding risks.

False

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True

7. On average, South Carolina residential customers consume less electricity than the national average.

True

8. The Federal Telecommunications Act of 1996 exempts small, rural exchange (telephone) carriers from the general requirement that incumbent local exchanges open up their local markets to competition.

False

9. The South Carolina Public Service Commission was granted sole authority by the Federal Telecommunications Act of 1996 to grant BellSouth the right to enter into the inter-lata and/or long distance toll telephone business.

False

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

11. While the South Carolina Public Service Commission does not set the rates and charges for electrical service provided by the state's electric cooperatives, it does have the authority and responsibility of assigning the territory the cooperatives serve.

True

12. As to those electric utilities whose rates and services are regulated by the South Carolina Public Service Commission, the Commission allows such utilities to recoup fluctuations in fuel expense through automatic fuel adjustment clauses.

False

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

True

14. A candidate for the South Carolina Public Service Commission may directly seek the pledge of a member of the General Assembly upon his filing of his personal data questionnaire with the Screening Committee.

False

15. A South Carolina Public Service Commissioner's ownership of stock of a utility regulated by the South Carolina Public Service Commission does not generally constitute a conflict of interest under the South Carolina Code of Laws.

False

16. The South Carolina Public Service Commission, in determining valuation of rate base, should not allow an electric utility to include costs of operation of affiliate subsidiaries if such operations are not used or useful in the generation or transmission of electricity.

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False

19. The appearance of the South Carolina Consumer Advocate before the South Carolina Public Service Commission in an electrical utility rate hearing does not preclude the Public Service Commission from granting any member of the public the right to appear in the hearing.

True

20. In the event a long distance carrier and a local exchange carrier cannot agree upon the terms of an inter-connection agreement so as to enable the long distance carrier to provide local telephone service, the South Carolina Public Service Commission is charged with arbitrating such an agreement.

True

DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?

The regulated industries are: a portion of transportation, water, wastewater, gas pipelines, electric and gas utilities, water utilities and telecommunication utilities. There are as far as transportation is concerned they primarily in transportation cover household goods. Because the rest of that stuff was moved out in the early 1990's - out from the PSC jurisdiction. On up to the federal level. Now the reason why they have this authority is to insure quality and service and decent rates to the citizens of South Carolina and their protection and when I say protection, I mean protection for getting the proper service at the proper time.

Did it.. .

Oh gosh, well, I said it without trying. Do I need to break down on like the water....I don't need to give a little dissertation on each one?

And to be sure it is electric and gas, gas lines, transportation, water and wastewater, and, you know, if you wanted to get technical, there are some rules still on the books where railway is concerned - that was taken from - and even trolley cars.... but the reason for this is to protect the citizens of South Carolina and their best interest in getting good utility services.

2. What federal agencies regulate the same industries as the South Carolina Public Service Commission?

The FCC regulates the telecommunications industry and cable was (solely? slowly?) turned over to them in about 1994 - or maybe earlier sometime in the 90's - telecommunications; transportation was, Federal Transportation took over interstate transportation, or shall we say the trucking industry. Those are the only ones that I can think of. Gas ... this is state to state. The Department of Energy. I forgot about it. The Department of Energy, the FCC, and the Department of Transportation.

3. Discuss the concept of "universal service" with regard to telecommunications utilities.

Okay, under deregulation of the telecommunications act by the FCC, it came down as a blanket deregulation but the . . and it had in there a type of universal service, but I believe that the universal service you are discussing there is the one of SC, is that correct?

That's what it sounds like ... we are talking two different ones here. So it would be prudent for me to tell both of them because both are supposed to take effect January 1 and there is a federal, and this is not a law, this is somewhat of a, I am going to say, a mandate by Congress because it was not voted on. That a certain portion of everyone's light, I mean, telephone bill will be charged a fee. And this goes back to Mr. Gore I believe it was that made a statement a couple of years ago that we were going to have a computer in every school and a library in every home in the nation. And this I believe this $2.40 per month will come out of your telephone bill and it will go to the federal coffers for this particular project. And it's deemed to harvest about two and a quarter billion dollars a year and again we're operating under not a quote law. That 's only just a, like I say for lack of a better term, just -- an executive order, that's the word I have been trying to find. An executive order. Now on the universal here in the state, I believe that was voted into law in 1996 and it has a lot of merit to it in a way. I don't know the actual law on it but my concept as I understand it was it has two separate funds. One fund is to I'm going to say, use the term, subsidize the current or incumbent local exchange carriers. The other fund will be for shall we say the rural areas that no one really wants to go in there and give competition and it was actually set up to insure a good standard or a good, well, good quality of service at a reasonable price. And yet the company could expect a reasonable rate of return. To insure that this fund was set up and, I believe it is set up for five years or these, both of these funds. Now, I'm going to say, the incumbent local carrier fund would work something like this. For instance, say GTE handles Walterboro, they are the incumbent local exchange carrier in Walterboro and say BellSouth says well I want to go in there. If GTE is charging you a flat rate of $20 a month and Bell says I can give you the same service they are giving you for $16 a month, then GTE if they lost that customer would be entitled to that $4 difference that they could have charged; they were charging $20, but because of the competition they lost a customer but they lost $4 also, so, therefore, it has, the competition has hurt them financially so they will be compensated for five years under part of this universal service bill. And that was just an example I was using; that's not correct figures and in no way to be misconstrued as "a true statement of the names and the amounts of money."

Now for instance say on the other portion, it's much longer and more comprehensive but I am trying to break it down in laymen's terms. That no one wants - when you get competition in anything it doesn't matter what you always got a group of people that naturally are going to go to the most heavily populated or, and do what is known as cherry picking-- pick out the finest, pick out the best cities, since we are talking telephones, we'll say Greenville and Columbia and Charleston, Spartanburg - the large cities. They will go in there first. No body wants to mess with the small companies, so, but still they have their problems too, so they are not going to be bothered with as much of this competition so when they are having to lay their lines out in rural areas, it's costing more because they are not closely or densely populated so it is costing more to lay their cable and lines for their telephones, so, therefore, this fund will partially subsidize them for their investment and help keep down the cost to the person who is receiving, the beneficiary of the service, shall we say, because it's much cheaper to run the line to my house in Charleston than it is to my sister's home out in the country somewhere. So, therefore, they are being subsidized by this universal fund here in South Carolina. And I believe this fund is to run out in five years or be revisited in five years, so it is up to the Public Service Commission to make a decision on how much money will be deemed appropriate to have this, I'm going to call it a slush fund, where, whereby the local exchange carriers, the incumbents will have access to and, well that covers the rural areas also, the metropolitan service areas and the rural service areas. And this fund will be--the guidelines are laid down by the General Assembly but the Public Service Commission, after hearing all the testimony from whomever chooses to testify as to what the costs are going to be from their point of view whatever they or carrier deems is their cost involved, then it will be up to the Public Service Commission to review all these facts and findings and come up with what they believe to be a sustainable charge for this fund and this charge will be passed on to each citizen who has a telephone in South Carolina.

That one is the hardest one it seems like.

The second one.

On that one, I was troubled, because the Department of Transportation regulates so much of the transportation but yet I would have been remiss had I not said that our Public Service Commission does participate to a small degree in that function so, either solely or in part and, you know, they are: the Department of Transportation, Energy and Federal Communications. I am satisfied with that.

* * *

CHAIRMAN HOLLAND: Good morning, Ms. Heinsohn.

MS. HEINSOHN: Good morning.

MS. MUSSER: Mr. Chairman, I have a driver's license and voter registration card for Clara Heinsohn. Her address is listed at 1740 Vassar Drive in Charleston, 29407.

If you could stand please and raise your right hand.

CLARA H. HEINSOHN, being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you please state your full name for the record.

A. Clara Holland Heinsohn.

MS. MUSSER: Mr. Chairman, in reviewing the SLED report for criminal convictions and civil judgments as well as Ms. Heinsohn's credit report, there were no negative entries on either.

Q. Ms. Heinsohn, today you were given a personal data questionnaire summary. Have you had an opportunity to look at that?

A. Yes, I have.

Q. Are there any corrections or changes you would like to make to that summary?

A. No, there are none.

Q. Would you have an objection then to that summary being made part of the permanent record in these proceedings?

A. Not at all.

Q. Ms. Heinsohn, you have extensive experience since 1970, I believe, as a teacher at some five or six different schools in the Charleston and Columbia areas?

A. Uh-huh.

Q. I see you are currently a teacher at Hursey Elementary School in North Charleston; is that correct?

A. That's correct.

Q. Please tell this Committee why you would like to leave the educational field to which you have been very committed to become a commissioner for the Public Service Commission?

A. Well, I don't think I will ever completely leave the educational field. I am doing a mentoring program. I think education is a vital part of our state. I just see that -- my offer to serve on the Public Service Commission I just see as an opportunity to do something different in my life. I am embarking on a new area of my life, and I have given some consideration to doing something different. But education will always be very important to me, and I will always have an extensive interest in this. But I feel as an educator that I have served the state, and if elected to this position, it will give me another opportunity to serve the state.

Q. You mentioned a mentoring program. What kind of time commitment is that mentoring program?

A. Well, what I've been doing is I'm working at my church. I'm a member of Grace Episcopal Church in Charleston. We're going to establish -- I'm in the process of helping establish a mentoring program, which I hope to get more volunteers involved in that. And also I have two former students that I mentor to. It's not necessarily a weekly commitment. It's just when I have the time for it.

Q. Ms. Heinsohn, your PDQ, excuse me, that's my shorthand way of saying personal data questionnaire, indicates that you are a member of the Commission on Women.

A. Correct.

Q. And you were originally appointed by Governor Campbell?

A. That's right.

Q. And then reappointed by Governor Beasley?

A. Right.

Q. When does your term expire on that?

A. I was recently appointed, so it would be probably 2001, I believe.

Q. You are also a member of Governor Beasley's PASS Commission of Performance and Standards for Schools Committee; is that correct?

A. That's correct.

Q. And you also serve as member of the Charleston Development Alliance?

A. That's correct.

Q. Ms. Heinsohn, do you own any utility stocks?

A. Yes, I do.

Q. Can you tell the Committee what those are?

A. SCANA.

Q. What would be your plans as far as that stock is concerned if you were to be elected to the Public Service Commission?

A. Obviously I would have to dispose of it.
That would be a conflict of interest.

Q. Do you have any other stocks besides the SCANA stock, any other utility stocks?

A. No, no utility stocks, not unless my broker bought some today, but I have told him not to buy any.

Q. Does anyone else living in your household own any utility stocks?

A. No.

Q. Your daughter is a student at the College of Charleston?

A. That's correct.

Q. Is she employed?

A. No, she's a full-time student. She works part-time at the Outback Steakhouse, but that's just a part-time job.

Q. Ms. Heinsohn, if you would, tell us briefly in your own words what the term generational mix means to you and what it means as far as the Public Service Commission is concerned.

A. I'm not sure what it means to the Public Service Commission. I was a little puzzled by that question when it was asked to me. Generational mix to me is obviously when you have a group of people from various generations. You have your youth, your middle-aged and you have an older age.

And as far as the Public Service Commission, I think it would be very important that anyone who serves on this Commission would keep in mind always the needs of all aspects of our society, particularly the older members of our society, someone who is encountering some financial difficulties.

Q. Have you had a financial relationship with or have you had discussion of a future financial relationship with a lobbyist or lobbyist's principal?

A. No, I have not.

Q. Are you currently a member of or have you been a member of an organization, whether that's charitable or otherwise, which is politically active on the issue of deregulation?

A. No, I have not.

Q. Have you been contacted by any such organization?

A. No, I have not.

MS. MUSSER: Mr. Chairman, I don't have any other questions.

CHAIRMAN HOLLAND: Any questions of any members of the Committee?

MR. KENNEDY: Yes, sir, Mr. Chairman.

EXAMINATION BY MR. KENNEDY:

Q. I don't know if I missed it, but would you please tell me why you are running for commissioner to the Public Service Commission and what background that you have that would give you an idea what the Public Service Commission does. Again, maybe I missed it somewhere.

A. Yes, I would be glad to answer that question. I see the Public Service Commission as a commission that serves the people of this state. I know my predecessors on this Commission have affected -- the predecessors have done an able job of doing that. I see it as a means of serving the state. I have been very involved over the last 20 years, as you can see on my resume, been very involved in educational issues, in women's issues and in local issues. And I would just like the opportunity to serve the state in that manner.

And I think I bring an understanding. I've dealt with people over the last 20 years. As a teacher, I bring hopefully a skill that I can understand people's problems. I certainly have a lot of dialogue with that in my profession. I'm a problem solver. You do that on a daily basis when you are in the classroom. I have the ability. I'm a goal setter. And I think all of those aspects of my personality and those aspects of my work, hopefully if elected, I could use that in this position.

Q. Explain to me this commission that you are on on women's issues.

A. South Carolina Commission on Women, yes, sir.

Q. Tell me what they do.

A. The commission was begun in 1970 by Governor John West, and the purpose of the commission was to report to the Governor's office the status of women in the states. And I must tell you, I received a lot of criticism for being on this commission, particularly from men, because they see it as a leftist organization. Sometimes they are threatened by it.

What it is is -- that's not the case at all. It's concerned about helping women in this state. And we have been very fortunate that the Governors in this state have been attuned to women's needs. And we have quarterly meetings, and we have worked on legislation to benefit women. Because ultimately, sir, in our state there are more women than men in our population, and there is a growing number of women today who are head of households and responsible for children.

Q. Thank you, ma'am.

CHAIRMAN HOLLAND: Any further questions?

MR. WILKES: Yes, sir.

CHAIRMAN HOLLAND: Representative Wilkes.

EXAMINATION BY MR. WILKES:

Q. Ms. Heinsohn, have you ever taken a public position on the issue of electric deregulation?

A. No, I have not.

CHAIRMAN HOLLAND: Any further questions? Thank you so much, Ms. Heinsohn.

MS. HEINSOHN: Thank you very much.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. Clara H. Heinsohn

Home Address: Business Address:

1740 Vassar Drive Hursey Elementary School

Charleston, SC 29407 4542 Simms Street

North Charleston, SC 29405

2. She was born on November 21, 1948, in Augusta, Georgia.

4. She is a widow.

She has one child:

Anne Louise Heinsohn, age 20 (College of Charleston student).

6. She graduated from St. Andrews High School in 1966; received a B.S. in Education from Winthrop College in 1970 and a Masters in Education from the College of Charleston in 1974.

9. She has worked with:

Louie B. Conder Elementary School, Columbia, SC, 1970-1972;

Alice Birney Elementary School, Charleston, SC, 1972-1975;

Pepperhill Elementary School, Charleston, SC, 1975-1977;

Addlestone Hebrew Academy, Charleston, SC, 1983-1993; and

Hursey Elementary School, North Charleston, SC, since 1993.

19. She has worked for the school systems stated in number 9.

26. She is a member of the following professional organizations:

Palmetto Teacher Association.

27. She has served on the following civic, charitable, etc. organizations:
Grace Episcopal Church;

South Carolina Commission on Women;

Performance and Standards for Schools Committee;

Charleston Regional Development Alliance;

South Carolina Republican Party;

Republican Party;

YWCA;

South Carolina Historical Society;

Friends of Drayton Hall;

Friend of the Library;

Charleston Jewish Council;

Charleston Museum; and

National Trust for Historic Preservation.

29. Five letters of reference:

1) Bill Barnett

William Barnet and Son, Inc.

P.O. Box 131

Arcadia, South Carolina 29320
2) Anita Zucker

16 Buckington Drive

Charleston, South Carolina 29407

3) Jamie Choppin

J.C. Bradford and Company

330 Commerce Street

Nashville, Tennessee 37201-1809

4) Nancy Hawk

1 Meeting Street

Charleston, South Carolina 29401

5) H. B. Limehouse

8 Cumberland Street

Charleston, South Carolina 29401

30. She is seeking the position of Public Service Commissioner for the First District.

31. She owns stock in the following corporations: Bristol Myers Squibb Co., General Electric, Hewlett Packard Co., Lucent Technologies, Inc., Merek and Co., and SCANA.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

True
2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

False

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True

False

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

False

7. On average, South Carolina residential customers consume less electricity than the national average.

True

False

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

False

True

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

False

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

True

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False

True

DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?

The South Carolina Public Service Commission regulates the public owned electrical, communication, and cable T.V. industries. It is vital that the Commission protects and oversees the economic interests of its state's citizens as well as provide a friendly environment for the state's businesses. It is imperative that both sides are represented fairly, and equally.

4. What is the "rate base" and how is it used in public utility regulation?

I believe the rate base is what the PSC determines the utility companies can charge. This is based on cost of electricity and gas included is cost of production, and transmission to its customers. Then the utility company is allowed to include a profit which added to the previous equation constitutes the rate the consumer pays. Close attention must be paid to not include those expenses not pertaining to the costs of production or transmission. These rates should be evaluated periodically to examine their fairness.

6. To what does the term "generational mix" refer? Please describe the importance of a utility's choice of generational mix from both the economic and environmental perspectives.

I assume "generational mix" refers to the diverse population in our state. It transcends generations from young adult consumers to older or senior citizen consumers. The utilities need to be mindful of both of these groups. There often exists a disparity between their economic capacities. The utility companies want to provide an excellent product at an equitable rate so to encompass all age group in S.C. As far as environmental prospectives are concerned the utility companies must take in consideration the preserving of our older generations rich heritage of land and water and provide for progress in the future such as constructing the Virgil Sumner Nuclear Power Plant. It's important to maintain a balance between the old and young of our population and preservation and progressive utilization of our environment. The utility companies must provide the best possible service to all aspects of our society at an affordable rate. Lastly, but certainly not least, our beautiful state must be protected but this protection must not prohibit progress. These two aspects must be given careful consideration by our utility companies.

* * *

CHAIRMAN HOLLAND: The next candidate?

MS. MUSSER: Mr. Saunders is on his way.

MS. MUSSER: Good morning, Mr. Saunders.

CHAIRMAN HOLLAND: Mr. Saunders, have a seat. Good to see you. Ms. Musser is going to ask you some questions.

MS. MUSSER: Ms. Tucker is going to get your driver's license and voter registration card. Thank you.

Mr. Chairman, I have the driver's license of Mr. William Saunders. He resides at 6191 Chisolm Road, Post Office Box 36, in John's Island, South Carolina 29455. And his voter registration card reflects the same address. Mr. Saunders, would you raise your right hand please.

WILLIAM SAUNDERS, being first duly sworn by Ms. Musser, testified as follows:

MS. MUSSER: Mr. Chairman, in reviewing the SLED report for criminal convictions, there were no negative entries.

EXAMINATION BY MS. MUSSER:

Q. Mr. Saunders, counsel for the Committee has several questions relating to the SLED report for civil judgments only, non-criminal matters. And it would be my request that in order to protect your privacy at this point, that the Committee go into executive session.

CHAIRMAN HOLLAND: The Chair will entertain a motion.

MR. KENNEDY: Motion for executive session.

CHAIRMAN HOLLAND: Any objection? We'll now go to executive session. It won't be long.

(Executive session follows.)

(Public session continues.)

CHAIRMAN HOLLAND: We are now back in regular session. Ms. Musser, proceed.

MS. MUSSER: Yes, sir. BY MS. MUSSER:

Q. Mr. Saunders, we are now back in open session. Were you given a copy of your personal data questionnaire summary?

A. Yes, ma'am.

Q. Have you had an opportunity to review that summary?

A. Yes, ma'am.

Q. Would you like any additions or deletions or other changes made to that, or are you satisfied with it the way it is?

A. I'm satisfied with it.

Q. Do you have any objection to that being made a part of the record of these proceedings?

A. No, ma'am.

Q. Mr. Saunders, you were elected to the PSC in 1994; is that correct?

A. Yes, ma'am.

Q. What is the reason or reasons that you wish to continue to serve on the Commission? What would you like to accomplish by your service during the next four years?

A. Well, I think that as we go through all of the changes that's going to be happening in the State of South Carolina, I just would really like to be a part of those changes. And I think that I have the background and the ability to really help South Carolina in these changes. And I'm not talking about just certain groups in South Carolina, but the whole State of South Carolina.

Q. Your personal data questionnaire indicates that you're the president of WPAL, which is your AM station?

A. Yes.

Q. And also you are president of Gresham Communications, which is an FM station?

A. Yes, ma'am.

Q. Do you have any partners in your business with WPAL or with Gresham Communications?

A. No, ma'am.

Q. Do you have shareholders in either one of those radio stations?

A. I have some shareholders in the AM station.

Q. Are those shareholders actively involved in the utility business or have any connections or association with any regulated utilities?

A. No, ma'am.

Q. Do you receive any advertising dollars for either station from regulated utilities?

A. We get some advertisement dollars from some of the regulated entities sometimes.

Q. Could you tell us about those, if you can recall, which ones?

A. Well, we get some from SCE&G, and sometimes we get some from Bell Telephone.

Q. What would you say as far as the amount of that advertising is concerned, just the general run-of-the-mill amount, or could you tell us more about that?

A. Well, it's not the general run-of-the-mill amount. We don't think that we get near to the run-of-the-mill amount. We get very little of it. The only reason this year we got some of it is because of the competition that came in from the -- Electric Lite came in and spent a lot of money, so we started getting money from both sides. And most of those advertisements that are placed normally are placed outside the State of South Carolina. They are normally placed out in Atlanta or other places by ad agencies and not something that would be done from the company itself.

Q. Would that pose any conflict for you or does it as a commissioner when those entities come before you?

A. No, ma'am, it does not.

Q. Do you own any utility stock?

A. No, ma'am.

Q. Does your spouse or any member of your household own any?

A. No, ma'am.

Q. Mr. Saunders, could you tell this Committee in your own words what stranded costs are and describe the potential for stranded costs in the electric utility industry which might result from the deregulation of retail service?

A. Well, stranded cost to me would be the investment that some of our utilities made back maybe in the seventies or early eighties when money was very expensive and it built plants or nuclear plants and now there is still a good bit of money on them. And if we went to a deregulated system at this particular point, they would end up with what we envision as stranded costs.

Q. Mr. Saunders, have you ever taken a public position on the issue of electric deregulation?

A. No, ma'am.

Q. Are you currently a member of or have you ever been a member of an organization, whether it's charitable or otherwise, which is politically active on the question of deregulation?

A. No, ma'am.

Q. Have you been contacted by any such organization?

A. (Shaking head negatively.)

MS. MUSSER: Mr. Chairman, I don't have any further questions of this candidate at this time.

CHAIRMAN HOLLAND: Any questions of any member of the Committee? Thank you very much, Mr. Saunders.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. William Saunders

Home Address: Business Address:

6191 Chisolm Rd. 111 Doctor's Circle

John's Island, SC 29455 Columbia, SC 29203

2. He was born on February 14, 1935.

4. He married Henrietta J. Saunders in 1968.

He has ten children:
William Saunders, Jr. (Pilot USAF);
Sharon Saunders (Teacher);
Loretta Saunders (Teacher);
Kathleen Saunders (Teacher);
Byon Saunders (Insurance);
Gary Saunders (Warehouse Manager);
Alphea Saunders (Day Care Director);
Myra Saunders (Beauty Salon Manager);
Clinton Saunders (Port Authority Security); and
Tamara Saunders (Medical Secretary).

5. He served in the US Army from 1951 until he was honorably discharged as a staff sergeant in 1954.

6. He graduated from:
Laing High School, 1956;
Southern Business College, Business Management, 1974; and

Southern Illinois Univ., Vocational Education, 1977-1978.
7. He has been a member of the Public Service Commission since 1994.

9. He has worked with:
Weil's Mattress Factory, 1956-1974;

COBRA Sickle Cell Disease, Health Education, 1971-1994; and

WPAL Inc., Radio Station, 1971-1994.

10. He's the president of WPAL, Inc. and Gresham Communications.

14. He has been sued three times in connection with financial difficulties encountered by his radio station and loans taken out during his acquisition of the business. His attorney states that the property has been put up for sale, and any proceeds from such sale would fully liquidate the remaining debt.

22. He has spent $48 on stamps and $62 on stationery.

26. He is a member of the following professional organizations:
SC Broadcasters Assoc., Pres. 1988;

Nat'l Assoc. Of Broadcasters;

Nat'l Assoc. Of Regulatory Utility Comm.;

Nat'l Water Comm.;

Trident Urban League, Board, Founding Member;

Wesley Methodist Church;

College of Chas., Business School, Bd. of Governors;

Rotary International Breakfast Club;

YMCA, Pres. 1991;

Charleston Southern Univ., Bd. of Visitors;
17th inductee to the Broadcasters Hall of Fame; and

Attended the Administrative Low-Fair Hearing at Univ. of Nevada.

27. He is a member of the following civic organizations:
Charleston Southern University, Board of Visitors, 1990 to present;
YMCA, 1989-1995;
Rotary International Breakfast Club, 1991-1992;
College of Charleston, Board of Governors,;
Wesley Methodist Church; and
Trident Urban League, Board & founding member.

29. Five letters of reference:

1) Tom Baker

Baker Motor Co.

1511-1513 Savannah Highway

Charleston, SC 29407

(803) 852-4000

2) Hugh Lane

P.O. Box 538

Charleston, SC 29402

(803) 724-1500

3) Mary Thornley

P.O. Box 118067

Charleston, SC 29402

(803) 572-6241

4) Maxine Martin

P.O. Box 20249

Charleston, SC 29402

(803) 965-4037

5) David Soutter

P.O. Box 700

Charleston, SC 29402

(803) 937-4401

30. He is seeking the position of Public Service Commissioner for the First District.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

False

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

True
3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True

False - I'm saying false, but there are exceptions.

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True

7. On average, South Carolina residential customers consume less electricity than the national average.

False

True

False

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

False - It did at one time.

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

False

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False - I use the term "waste water" and sewerage as the same.

True

DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?

Electricity, telephone, transportation (household goods), water and sewage, gas. The General Assembly believes it is in the public good, that it will help promote economic growth, and that it is fair. So the laws dealing with regulation in South Carolina from 1878 - 1922 to now just improve what we have.

2. What federal agencies regulate the same industries as the South Carolina Public Service Commission?

FCC

FERC

5. Describe the potential for "stranded costs" in the electric utility industry which might result from the deregulation of retail service.

The potential for stranded costs in the electric utility industry is great because of deregulation of retail service. The electric utilities that made big investments when money was high and also equipment was high will have some "stranded cost."

* * *

CHAIRMAN HOLLAND: Next candidate?

MS. MUSSER: Mr. Whatley.

CHAIRMAN HOLLAND: Thank you very much, Mr. Whatley.

MS. MUSSER: Good morning, Mr. Whatley.

Mr. Chairman, I have Mr. Whatley's driver's license that indicates an address at 102 Dove Lane in Summerville, 29843 and a voter registration card which lists 113 Rice Circle in Ladson.

MR. WHATLEY: Look on the other side of my license if you would.

MS. MUSSER: Address change. Thank you. 113 Rice Circle. Would you raise your right hand please, sir.

WILLIAM A. WHATLEY, being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you please state your full name for the record.

A. William Alfred Whatley.

MS. MUSSER: Mr. Chairman, as our usual practice for all candidates, staff has reviewed the SLED report for criminal convictions and civil judgments and also Mr. Whatley's credit report. As far as criminal convictions, the SLED report was negative. It would be my request at this time to go into executive session to discuss the SLED report as far as civil judgments and the credit report to protect Mr. Whatley's privacy.

CHAIRMAN HOLLAND: The Chair will entertain a motion to do so?

MR. WALDROP: So move.

CHAIRMAN HOLLAND: Any objection to going into executive session? There being none, we are now in executive session.

(Executive session follows.)

(Public session continues.)

CHAIRMAN HOLLAND: We are now back in regular session. Ms. Musser.

EXAMINATION BY MS. MUSSER:

Q. Mr. Whatley, were you given a copy of your personal data questionnaire summary today?

A. Yes, I was.

Q. Have you had an opportunity to review that?

A. Yes, I have.

Q. Would you like to make any changes, or is it okay as it is?

A. Well, since I made application as a candidate, I have closed down my business at Fairway Corporation as of the end of this year -- 1997, excuse me. I am not now a member of Oakbrook Rotary, No. 27. I have been in the past. But other than that, everything is fine.

Q. So with those changes, you would have no objection to this summary being made part of the permanent record?

A. No, I wouldn't.

Q. We will make those changes accordingly. Thank you. Your personal data questionnaire indicates that you served 20 years in the Army including a stint in Vietnam; is that correct?

A. Two stints in Vietnam.

Q. And subsequent to that you sold real estate in the Charleston area working for various companies?

A. Right.

Q. And since 1984 you formed your own real estate brokerage company, that's Fairway?

A. That's Fairway Corporation, the one that was just dissolved.

Q. Did you have any partners in that business, or was it you alone?

A. No, my wife.

Q. Your wife?

A. Yes.

Q. I note that you also served on the Dorchester County Council from '91 to '94. Is that correct?

A. That's correct.

Q. And you are the brother of Representative Mickie Whatley in the House of Representatives?

A. That's correct, younger brother.

Q. And you are currently the vice chairman of the Dorchester Republican Party?

A. That's correct.

Q. Mr. Whatley, tell the Committee briefly why you want to serve on the Public Service Commission.

A. Well, I think it's an important function, and I have been reading quite a bit about all the regulation, the deregulation effort that's going on now with the electric industry. There are a multitude of communication things going on that I think are going to be very important to work out, and I think I can contribute. I believe I have the background. I believe I have the business background to -- as a business person, I would like to see anybody get a fair rate of return on their investment, but also as a consumer, I want to make sure the consumer is not gouged also. And I think I could contribute to that overall effort. I think I have the background, the capability and mentality to the do a good job there.

Q. Mr. Whatley, do you own any utility stock?

A. Not unless they are in one of those mutual funds. I'm not sure. I have two little, small mutual funds.

Q. Are they general mutual funds or are they oriented towards --

A. Just general mutual funds.

Q. Does your spouse or any member of your household own any utility stock?

A. No.

Q. Have you taken a public position on the issue of electric deregulation?

A. No, I haven't taken a public position. I haven't been in the public to take a public position.

Q. Are you currently a member of or have you ever been a member of any organization, charitable or otherwise, which is politically active on the question of deregulation?

A. There was an outfit called Committee for Deregulation, Committee for Competitive Practice or something like that, and I was asked to serve on that. Fulmer, Ron Fulmer asked me to put my name on it, and I did. Very little activity. I don't know what ever happened to it. It just went away.

Q. So you are not currently a member of that?

A. No. Ron Fulmer even went somewhere else.

Q. Well, what was the nature of your involvement when you were a member?

A. I think it was just education of the public toward competitive electricity.

Q. Did you have any personal involvement? I mean did you have any duties with regard to this organization?

A. No. I went to, I think, a press conference up here in Columbia one time.

Q. To your understanding, it was an education --

A. That was my understanding, just education of the public.

Q. Have you had a financial relationship or have you had discussion of a future financial relationship with a lobbyist or lobbyist's principal?

A. No, I have not.

Q. Mr. Whatley, if you could, please describe for this Committee the potential for stranded costs in the electric utility industry which might result from the deregulation of retail service?

A. I believe stranded costs, my understanding of it at this point, I am a laymen in this thing, but I believe stranded costs are those costs that the competition or competitive person coming in -- for instance, in electric if it was deregulated and another company came in and used the lines that were put up by SCE&G, for instance, that it would pay them -- they would pay SCE&G for the use of their property that they had maintained and put in place all these years. That's my understanding of stranded costs. It would be the same thing in telephone application.

Q. How about generational mix, can you tell us what that means?

A. Generational mix, I'm not sure I understand that. Is that the one where you have the urban area subsidizing the rural areas?

Q. Well, I will let you answer that.

A. There was a question like that on that exam, and that's the way I interpreted that question as being, to make it affordable for the rural areas, you would have to have some kind of subsidy from some other group, normally the urban areas.

MS. MUSSER: Mr. Chairman, I believe that's all my questions.

CHAIRMAN HOLLAND: Any questions from the members of the Committee?

MR. WILKES: Mr. Chairman.

CHAIRMAN HOLLAND: Representative Wilkes.

EXAMINATION BY MR. WILKES:

Q. Mr. Whatley, I would like to, if we could, talk a little further about the Committee for Competitive Electricity. My understanding of that organization is that it was a group formed for lobbying and really took a position on the forefront on the deregulation issue, and Mr. Fulmer was hired in that capacity.

A. I was assured by Mr. Fulmer that it was not a lobbying group. I asked that question specifically.

Q. But it did take a public position on deregulation --

A. Yes, sir. They were for competition in a general sense. That is my understanding. I never did really get into it because I don't -- you know, it just didn't -- nothing ever jelled on it, I guess.

CHAIRMAN HOLLAND: You sort of divorced yourself from it early in the game?

MR. WHATLEY: Yes, sir, really, and then Ron, I think I read somewhere in the paper where he took a job somewhere else. And that was, as far as I was concerned, the end of it.

BY MR. WILKES:

Q. So you never were really actively involved in it yourself or financially involved?

A. No, not at all.

MR. WILKES: Thank you.

CHAIRMAN HOLLAND: Any questions of any other members of the Committee?

MR. KENNEDY: Mr. Chairman.

CHAIRMAN HOLLAND: Representative Kennedy.

MR. KENNEDY: I don't know whether I'm clear whether he knew prior to taking this position that this Committee was dealing with deregulation. I don't know if I'm picking --

EXAMINATION BY MR. KENNEDY:

Q. Please explain to me, what are you saying? Did you know when you were asked to serve on this Committee what this Committee was all about?

A. Well, no. I just -- the thing I heard when they explained what it was all about was that they were looking into competitive electricity. And I am pretty open to listening to different viewpoints, and I like competition in the business place. I think that's valid for business personally. Now, as far as lobbying anybody, I was definitely told that that was not the case in this situation, strictly an educational effort.

CHAIRMAN HOLLAND: Representative Quinn? Are you through?

MR. KENNEDY: Yes, sir, I think I am.

EXAMINATION BY MR. QUINN:

Q. Mr. Whatley, it sounds like you had a friend that roped you into doing something you didn't understand exactly what was going on.

A. That's exactly what happened.

Q. I know him well too, and I could see him doing something like that.

A. Well, I guess he just wanted my name on it for Dorchester County, and something happened. I don't know what happened.

EXAMINATION BY MR. WILKES:

Q. Mr. Whatley, I'm listening to your answers. Would it be fair to say that you allowed yourself to become a member of this Committee because you did favor the deregulation of electricity at the point in time you were approached about it?

A. At the point in time it sounded like it was worthy of being looked into, the competition.

Q. In other words, you signed on because you agreed with the position that Ron Fulmer presented to you regarding the deregulation issue?

A. Yes, sir. Basically we were going to try to educate the people and educate ourselves.

Q. As an advocate?

A. It would have eventually led to that, I suppose, if I had stayed in it.

CHAIRMAN HOLLAND: Any further questions? Thank you so much, Mr. Whatley.

MR. WHATLEY: Thank you, ladies and gentlemen.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. William A. Whatley

Home Address: Business Address:

113 Rice Circle 107 S. Main St.

Ladson, SC 29456 Summerville, SC 29483

2. He was born on December 11, 1936, in Charleston, South Carolina.

4. He married Marian Jane Ouzts Whatley on March 3, 1956.
He has two children:
Will Whatley, age (?) (LTC, U.S. Army); and;
Patty Flood, age (?) (Homemaker).

5. He served on:
US Army National Guard, 1950-1961;
Army, 1961-1981, honorably discharged as a Major.

6. He graduated from Chicora High School, 1954; and Georgia College, BA in Business Administration, 1971. He attended the Citadel in 1982 for graduate work but left because of business requirements.

7. He was a member of the Dorchester County Council.

9. He has worked with:
Atlantic Coastline Railroad, 1955-1961;
US Army, 1961-1981;
Real Estate Agent, 1981-1984;
Fairway Corp., Inc., 1984 to present; and
Dorchester County Councilman, 1991-1994.

10. He was the president of Fairway Corp., Inc. (closed 1997).

13. He has been sued by the Veterans Administration with regard to a mortgage foreclosure. His army retirement benefits were garnished, and he was made to pay $350 in interest.
19. He served on the Dorchester County Council.

26. He is a member of the national, state and Charleston Board of Realtors.

27. He is a member of the following civic organizations:
Summerville Baptist Church;
Washington Light Infantry;
Dorchester County Republican Party; and
100 Club of Charleston.

29. Five letters of reference:

1) Ronald Strawn, Vice President

Bank of South Carolina

P.O. Box 538

Charleston, SC 29402

(803) 832-7100

2) Wesley H. Birt

500 N. Main St.

Summerville, SC 29483

(803) 832-0020

3) Joseph Bivens

112 Brandywine Dr.

Summerville, SC 29485

(803) 821-0817

4) Stan Jackiewicz, Jr., Esquire

1370 Remount Rd., Suite C

N. Charleston, SC 29406

(803) 554-0686

5) Dr. Joe Wren, Pastor

Summerville Baptist Church

417 Central Ave.

Summerville, SC 29483

(803) 873-2440

30. He is seeking the position of Public Service Commissioner for the First District.

31. He owns shares in two mutual funds.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

True

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

True

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True

False

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

True

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True

7. On average, South Carolina residential customers consume less electricity than the national average.

False

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

False

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

True

False

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False

True

False

DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?

The SC Public Service Commission regulates Intrastate investor owned utilities and Transportation, specifically, Gas, Electric, Transportation, including Railroads, Waste Management Companies, Hazardous Waste hauling and storage, Water and Sewer Companies and Common Carriers that transport people or other goods and materials. These industries are regulated primarily to protect the consumer from unwise actions of some of these high cost, high value businesses. The South Carolina Public Service Commission ensures the consumer of a fair cost for these services and also ensures the industries of a fair and equitable return on their investments.

3. Discuss the concept of "universal service" with regard to telecommunications utilities.
The concept of Universal Service generally is considered in discussions about provide reasonable service to rural and sparsely populated areas. Essentially, it calls for a subsidy from people who live and have similar service in more heavily populated areas.

5. Describe the potential for "stranded costs" in the electric utility industry which might result from the deregulation of retail service.

"Stranded Costs" occur when the predominant server of a particular territory is required to allow other companies providing the same service to use their facilities, such as electric lines, to those 'new' companies so they can provide service to their customers at a reasonable rate. Typically they are those expenses, material and equipment that the predominant server (or those who were the original providers of electric service in a monopoly situation), have installed and maintained over a number of years. The companies that provide this material, equipment and maintenance feel that the 'new' companies using their facilities should pay a fair rate for them. "Stranded Costs" terminology has recently been used during the introduction of a bill, and its consideration by the South Carolina General Assembly, which would require the deregulation of the electric utility industry.

* * *

MS. MUSSER: Mr. Chairman, the next candidate is the first candidate for the Second District. Mr. Bell is on his way.

Good morning, Mr. Bell. I guess I better say good afternoon.

Mr. Chairman, I have Mr. Bell's driver's license and voter registration card, and it lists his address as Post Office Box 22002 and also 22 Windtree. I see the voter registration card has 19 Willow Run in Bluffton as your address. Could you tell us which one of these is your address?

MR. BELL: Okay. Sure.

CHAIRMAN HOLLAND: Can you hear us all right?

MR. BELL: Yes, I can. Thank you. What you have there is my old address on my driver's license, which I have yet to change. And my street address has been changed because of the enhanced 911 system that Beaufort County now put in place. And that went through, and they renumbered by subdivision. So I have 19 Willow Run as a street address.

MS. MUSSER: Thank you.

MR. BELL: And I have a post office box which was a former post office box doesn't exist anymore.

MS. MUSSER: Could you raise your right hand please.

MICHAEL L. BELL, being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you state your full name for the record.

A. My name is Michael Lee Bell.

MS. MUSSER: Mr. Chairman, in reviewing the SLED report and the credit report, counsel has a few questions to ask Mr. Bell in executive session to protect his privacy.

CHAIRMAN HOLLAND: The Chair will entertain a motion to go into executive session.

MR. WALDROP: So move.

CHAIRMAN HOLLAND: We will go into executive session.

(Executive session follows.)

(Public session continues.)

CHAIRMAN HOLLAND: Proceed, Ms. Musser. We are now in regular session.

MS. MUSSER: Thank you, Mr. Chairman.

EXAMINATION BY MS. MUSSER:

Q. Mr. Bell, you were given a copy of a personal data questionnaire summary this morning or sometime earlier today?

A. Yes.

Q. Have you had a chance to review that?

A. Yes, I have, and there are a couple of corrections if I may.

Q. Yes, sir.

A. Under item 4, my wife's name is Gail Bell. That's not on there.

Q. I believe that was left off your PDQ as well, so with your permission we will change that too?

A. Please. I do apologize. One additional note I would like to add, and that is as of the December meeting with the Beaufort-Jasper County Water and Sewer Authority, I have been elected chairman of that board. It's noted I am secretary-treasurer and vice chairman, but I am now chairman of that board.

Q. Are there any others?

A. No, ma'am. Well, yes, yes. I apologize again. On item 29, letters of reference, under item 5, you have a Greg Walker, Island Club. That should really read Scott Graber. I believe you should have received that letter of reference. Mr. Walker was out of town and unable to provide that letter in a timely manner, so I substituted Scott Graber.

Q. We are checking the file. We have it, and we will make that change.

A. Very good.

Q. With those changes, do you have any objection to that summary being made apart of the record?

A. No.

Q. Mr. Bell, tell us what has made you want to run for the Public Service Commission. Tell us what you want to accomplish as a commissioner, why you want to run, why you want to be one?

A. That's a fair question. I have to answer it, because I believe that I have wisdom, knowledge, and strength. I have wisdom that I have gathered through my various capacities and the various positions as denoted on my data questionnaire summary. That wisdom will serve me well in such capacity.

I have knowledge. My experience in city planning in the data analytical side of city planning and number crunching has given me that analytical mind, that analytical view of things.

And I have strength. I have the strength to implement solutions, solutions that are needed. But those solutions must be fair, must be equitable, and they must also be workable. I don't believe you create a tool and find a problem to apply it to. You find a problem, and you then create a tool to solve that problem.

I think right now the Public Service Commission is confronted with a lot of interesting problems, but I would like to call them opportunities. And you are far more familiar with them than I will ever become sitting on this side of the table. But I would say that whatever I do will be based on these principles, that it's fair to all involved, that it's equitable, spread across everyone, and that it's workable.

Some of those things in particular involve electric deregulation, involve monitoring of water and sewer. And those are some significant things that impact all of us. But we have to make sure that when changes happen, there are no costs that are left on the table for people who cannot afford those costs to pick them up. So we have to make sure those things happen.

And I as an individual am very experienced in doing those things. I have a background, and I have to bring this out, because I am from that era. Sonny Bono, he was not respected because of his experiences, but I think experiences change your value system. And I have those experiences, and I have a very good value system. That value system can serve me well. That's why I think I bring a special talent to this side of the table in hopes of becoming one of the persons sitting on that side of the table.

Q. Thank you, Mr. Bell. You mentioned your work as city planner. Could you brief the Committee on your employment history and bring us up to date on what you're doing at the present time.

A. Sure, I will be glad to. My experience, and that's one of the other things that I don't see on my data questionnaire, but it's been so long ago I'm not sure it's totally significant now. I cut my teeth in planning with an area planning development agency in Georgia, and that agency is very, very similar to the COGs that we have here in South Carolina, in other words, the Council of Government. And I worked with three different counties and four municipalities in handling all of the planning activities in that city. That's where I cut my teeth, practical experience.

After that, I became assistant director of a housing agency in putting together a very innovative program which I am very, very sad to say doesn't exist anymore. But we were able to combine the SETA program, and you might know it now by a different name, but it's the old SETA working program where you took people out of low income situations and provided them with jobs. I think they call it now -- well, I'm not sure what it's called now.

Anyway, that program existed. And what we did is we combined that work training program with housing rehabilitation, so we provided job training to renovate houses. We had rehab houses for low to moderate income individuals.

After that, I went to work for St. Mary's Human Development Center, which was an alternative high school for pregnant adolescents. My job there was crunching numbers, justifying the programs in existence, making sure that we had an impact. That program was a federally funded program throughout the office of adolescent pregnancy, and we had an entitlement grant, which was a three-year program. And as I said, my job was making sure that we did what we told them we were going to do.

Subsequent to that, I was hired with the Town of Hilton Head shortly after it was incorporated. I began working in '84. They were incorporated in '83. I was brought aboard as a long-range planner, one of two. And our task was to put together the town's first comprehensive plan, write the ordinances and policies that would implement that plan. And I must say that we were successful. We have been successful.

I spent 11 years there, and right now Hilton Head is probably one of the most renowned resort communities in this country when you start talking about planning. We have put together a tremendous amount of impact ordinances, and those ordinances themselves have sought to balance the impact of development with its cost. And we have tried to balance those things, impact and infrastructure.

With that, I will say that that has pretty much taken care of my background as far as employment. I left the Town of Hilton Head voluntarily, mind you, to start a consulting business, develop the consulting business, which I have done and have had fun doing it. It hasn't been as lucrative as I had hoped it would have been, but it has been a very, very interesting experience.

Q. That business is BCS, Incorporated?

A. That business is BCS, Incorporated. And the goal of that business is to provide development consulting assistance, in other words, running permits for residential and commercial projects, residential other than single family, individual single family subdivisions, residential kind of thing.

Q. Do you have any partners in that business?

A. No, I do not.

Q. Are you the sole employee?

A. I am the sole employee and owner.

Q. Do you have any plans as far as that business is concerned if you were to be elected as commissioner for the Public Service Commission?

A. Fortunately in the consulting business, both fortunately and unfortunately, consulting business work comes sometimes when you don't want it, and it comes sometimes when you want it. I personally in the consulting business can pick and choose the projects I work on. And that has always been something that I have taken pride in because I like to work with individuals whom I feel are reputable, whom I feel I can create an impact for.

And I have to be very, very careful when I'm growing a business that I don't associate with the wrong kind of individuals and get the wrong kind of reputation. You have to be very, very careful about that in my opinion. And that's the appearance kind of thing. So fortunately I think that in the consulting business, I can maneuver those things around my work schedule should I be --

Q. So you would continue the business?

A. I could continue it or put it on mothballs, whichever needs to be.

Q. Your PDQ also states as well as your economic interest statement you are a member of Beaufort-Jasper County Water and Sewer Authority?

A. Yes.

Q. And you were just elected as chairman?

A. Yes, I was.

Q. And when does your term expire?

A. This term expires June 30; however, the Town of Bluffton, of whom I'm their representative has saw fit to reappoint me. And of course recognizing that that would be a dual employment kind of thing, and it would be a conflict, I would be more than willing to resign from there should I be selected. But I think that that is also a testament to the effective members of my position as a member of that board because they chose to reappoint me unanimously, I might add.

Q. Mr. Bell, do you own any utility stock?

A. No, I do not.

Q. Does your spouse or any member of your household own any utility stock?

A. No.

Q. In your statement to the Committee, you mentioned deregulation among some other things. Have you taken a public position on the issue of electric deregulation?

A. No, I haven't. I believe that we are in what I would term in my planner-ese, I would say we are in the information-gathering stage. And I haven't heard what works best, so that's where I'm at. I'm open.

Q. Are you currently a member of or have you been member of any organization, charitable or otherwise, which is politically active on the question of deregulation?

A. No.

Q. Have you been contacted or approached by any such organization?

A. Not as a direct thing. I have received a mailing. I would imagine everyone in South Carolina received a mailing sometime back, but no.

Q. Would you envision that as just a bulk mailing that was not targeting you personally?

A. Right.

Q. Have you had a financial relationship or have you had discussion of a future financial relationship with a lobbyist or lobbyist's principal?

A. No.

Q. Mr. Bell, in your own words tell the Committee, if you would, what universal service is with regard to telecommunications.

A. I'm sorry, would you please repeat the question.

Q. The question is, could you tell us about the term universal service with regard to telecommunications?

A. Universal services? In my limited knowledge, I would say that universal services would include and involve a company or utility that would actually be able to provide all types of services, that in other words would involve a variety of services as opposed to just one single service.

MS. MUSSER: Mr. Chairman, I don't have any further questions at this time.

CHAIRMAN HOLLAND: Any questions of any members of the Committee?

SENATOR COURTNEY: Mr. Chairman.

CHAIRMAN HOLLAND: Senator Courtney.

EXAMINATION BY SENATOR COURTNEY:

Q. Mr. Bell, in your consulting business, have you represented anyone who does appear before the Public Service Commission?

A. To my knowledge, no. Most of the folks that I have worked with have been individuals putting a commercial development on the ground, and in a couple of cases residential development. So I have not really gone into their background. In other words, we have worked specifically on that project. They signed an agreement with me for that project to do those services. I have not done a background check on them, so I can't really answer that. If they have, I have no knowledge of it now.

SENATOR COURTNEY: That's all. Thank you, Mr. Chairman.

CHAIRMAN HOLLAND: Any further questions? Thank you so much.

MR. BELL: Thank you.

MS. MUSSER: Thank you, Mr. Bell.

MR. BELL: That was painless. Thank you very much.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. Michael L. Bell

Home Address: Business Address:

19 Willow Run 19 Willow Run

Bluffton, SC 29910 Bluffton, SC 29910

2. He was born August 18, 1957, in Baxley, Georgia.

4. Married to Gail Bell.

He has two children:
Justin W. Bell, age 13; and
Bryson L. Bell, age 3.

6. He graduated from Appling County High School, 1975 and Albany State College, B.A. in Sociology, 1979. He attended Webster University, but left prior to graduation.

7. He has held public office with:
Beaufort-Jasper County Water and Sewer Authority, 7/92-6/98 (Elected Chairman 12/97); and Secretary/Treasurer from 1/93-12/95, Vice Chairman from 12/95-12/97.

9. Mr. Bell reported his occupational history as follows:
Genesis Housing & Community Development Corp., Assistant Director and Office Manager, Metter, GA, 1981-1982;
St. Mary Human Development Center, Data Analyst, Ridgeland, SC, 1982-1984;

Town of Hilton Head Island, Long Range Planner, Hilton Head, SC, 1984-1995;
Town of Hilton Head Island, Senior Planner, Hilton Head, SC, 1995-1996; and
BCS, Inc., Owner and President of Development Consulting Firm,

Bluffton, SC, 1996-present.

10. He is currently owner and president of BCS, Inc.

13. He has had a federal tax lien imposed by the IRS which was satisfied in 1995.

19. He has worked with the following government agencies:
Town of Hilton Head Island, Long Range Planner, Hilton Head, SC, 1984-1995; and
Town of Hilton Head Island, Senior Planner, Hilton Head, SC, 1995-1996.

22. He has spent $11.00 on express mail and $1.50 on phone calls.

27. Mr. Bell is a member of the following civic, charitable, religious, educational, social and fraternal organizations:
Central Oak Grove Baptist Church, Deacon;

Leadership Hilton Head, Board of Directors;

Strategic Planning Committee, Beaufort County Schools;

Beaufort County School District, McCraken Middle School

Technical Design Committee;

Alpha Phi Alpha Fraternity, Xi Gamma Lambda Chapter, President;

Habitat for Humanity, Board of Directors; and

Michael C. Riley Elementary School Improvement Council, President.

29. Five letters of reference:

1) Ben Racusin

The Seabrook

Hilton Head Island, SC 29928

(803) 842-6335

2) Carol Maroska

First Union Bank

4 Pope Ave.

Hilton Head Island, SC 29938

(803) 842-7331

3) John Curry

P.O. Box 7197

Hilton Head Island, SC 29938

(803) 785-2650

4) Jim Carlen, III

P.O. Box 7154

Hilton Head Island, SC 29938

(803) 785-3870

5) Scott Graber

The Island Club

Hilton Head Island, SC 29928

(803) 785-7976

30. He is seeking the position of Public Service Commissioner for the Second District.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

True - It also regulates other utilities that sale or otherwise provide electricity within the state.

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

True

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True

False

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True

7. On average, South Carolina residential customers consume less electricity than the national average.

False

True

False

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

True

False

True - The ownership of such stock must be disclosed and the Commissioner should refrain from participating in all matters related to the utility should the utility appear before the Commission.

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False

True

DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?

The industries regulated by the PSC are: Gas and Railroads; Utilities; and Transportation. These industries are regulated for expressed purpose of protecting the health, safety and welfare of the general public (consumers) by setting rates, performing inspections, issuing licenses/certifications, auditing, receiving complaints, and enforcement.

2. What federal agencies regulate the same industries as the South Carolina Public Service Commission?

The federal agencies which also maintain regulatory jurisdiction over PSC regulated industries are: Federal Communications Commission (FCC) in telecommunications; Department of Energy in power generating plants; and the Federal Highway Commission in transportation on federal highways. These federal agencies play an important role in interstate regulation.

3. Discuss the concept of "universal service" with regard to telecommunications utilities.

The term universal service is used in reference to telecommunications utilities to denote a utility which provides both local and long distance service to its customers.

6. To what does the term "generational mix" refer? Please describe the importance of a utility's choice of generational mix from both the economic and environmental perspectives.

The term generational mix refers to power generation. The mix referenced involves permitting a utility to generate electricity from more than one source which may include hydrogeneration, coal, or the like. The economic benefits are derived to both the utility and the customer. The utility has the flexibility to switch from one source to reduce costs. The consumer is spared price fluctuation or rate increases. The permitting of multisource generation reduces the negative environmental impact to a single source by spreading the impact across several sources.

* * *

MS. MUSSER: Mr. Scott is the next candidate from the Second District.

MS. MUSSER: Mr. Chairman, I have Mr. Scott's driver's license. It indicates an address of 6413 Pinefield Road in Columbia. His voter registration card indicates the same address.

Mr. Scott, if you will, raise your right hand.

CHARLES D. SCOTT, being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you please state your full name for the record.

A. Charles Dukes Scott.

MS. MUSSER: Mr. Chairman, in reviewing the SLED report for criminal convictions and civil judgments and Mr. Scott's credit report, there are no negative entries as to either for Mr. Scott.

Q. Mr. Scott, you were given a copy of a personal data questionnaire summary today, were you not?

A. Yes, ma'am.

Q. Have you had an opportunity to review that summary?

A. Yes, ma'am.

Q. Are there any changes or corrections you would like to make at this time?

A. No, ma'am.

Q. Would you have any objection to that summary being entered into the record and used as a part of the proceedings?

A. No, objection whatsoever.

Q. Mr. Scott, I took no part in your screening last time, but I did review the transcript from 1994. And during your screening interview at that time, I believe you stated that one thing you hoped to accomplish as a commissioner that you couldn't accomplish as a staff member, which you were at that time at the commission, was to become active in the National Association in order to have influence on policy-making decisions in Washington.

Have you had this opportunity, and if so, what do you feel like you have been able to accomplish as a commissioner that you couldn't as a staff member?

A. Yes, ma'am, I have had that opportunity. I was fortunate to be appointed to the Communications Committee of the National Association of Regulatory Utility Commission which as a staff member you couldn't be -- you could be on the staff subcommittee, but not on the committee itself.

Just reading the newspapers, it's understandable and complicated the changes we are experiencing in the communications area. And by serving on this communications committee and in South Carolina having the opportunity to have a representative on this communications committee, I feel that through my participation that we have been able to -- a voice has been heard on the national association basis, and that national association is active in Washington.

Certainly some of our needs are different than some of the other states. And that is the committee that, I guess other people may disagree, but that's the committee that's probably the most difficult to get on, is the communications committee. That's the committee people wanted on. It is where in my opinion the hardest work and the most work is done. Other committees are important too.

That has been very rewarding to me, and I think it's been helpful to the State of South Carolina, and I hope helpful to the nation as my influence on that committee has grown, and particularly being a member on a sub-policy group on consumer issues, which I am very much interested in consumer issues.

I have also had an opportunity to serve on an advisory board for the National Exchange Association, which is a telecommunications area, to assist in insuring that those persons who are hearing impaired and who want to communicate with others and those who want to communicate with hearing impaired who are not hearing impaired can communicate without the hearing person having a TDY device.

And I think that that has been very rewarding for me and also something I have been able to do, and I hope I have been a valued member of that committee as well, and have been able to express opinions a little bit freer as commissioner than you do as a staff member. Because as a staff member, you're always trying to reflect the opinion of at least four commissioners.

Q. Thank you. Do you own any stock in a publicly regulated utility?

A. No, ma'am.

Q. Does your spouse or any member of your household own any utility stock?

A. No, ma'am.

Q. Have you taken a public position on the issue of electric deregulation?

A. No, ma'am, I haven't taken a public position since the legislation was filed in the General Assembly. I certainly have been available for questions and have gotten a lot of questions about electric deregulation.

But once the bill passed in the General Assembly -- not passed, bit filed in the General Assembly, I have taken the view that probably wouldn't be helpful for me to be going out taking a position one way or the other unless asked by a body of the General Assembly. And I have been from time to time asked some technical questions or issues that way.

Once legislation gets filed in the General Assembly, and the members of the General Assembly who we respond to considering the issue, you know, I have to take the position that I shouldn't be advocating one position or the other until asked by the, you know, the General Assembly.

Q. I will ask you, as I'm asking all candidates, are you currently a member or have you been a member of any organization, charitable or otherwise, which is politically active on the question of deregulation?

A. No, ma'am.

Q. Have you been contacted by any such organization?

A. By any organization that's for electric deregulation?

Q. Yes, sir, personally contacted, not in a bulk mailing sense where you might have received something in the mail as other people did, but have you been personally contacted?

A. Yes, ma'am.

Q. In what way?

A. I'm assuming I'm answering the question correctly. For example, we had a public proceeding on how to implement electric restructuring should the General Assembly pass it, so certainly I have been confronted there. We didn't consider that a contested case. And certainly before that, you know, I have had different sides come and talk to me and have served on -- prior to legislation being passed, I have served on panels as far away as Salt Lake City, Utah that the American Bar Association sponsored, and I was asked to be on that panel. So I'm sure people talked to me about that. Yes, ma'am, I'm sure I have been --

Q. As far as state organizations, you mentioned these out-of-state things like in Utah, but how about state organizations?

A. I don't know about organizations, but people who were working for different groups, you know, whether it be utility people or people who are representing Electric Lite or who are representing groups who are favorable to electric restructuring. I'm sure I have been talked to I'm sure by every group there is, I mean that I know of, you know, that are working for -- you know, that the group is working for -- there's a group out there working for it separate from Electric Lite. But then there's Electric Lite people as well. And then there's utilities. I'm sure one of the offices discussed it.

Q. Have you had discussion of a future financial relationship with a lobbyist or lobbyist's principal?

A. No, ma'am.

MS. MUSSER: No further questions.

CHAIRMAN HOLLAND: Any questions of any members of the Committee? Representative Kennedy.

EXAMINATION BY MR. KENNEDY:

Q. Mr. Scott, where are you with the report that the Speaker has asked for, at what point?

A. We are working -- we are working on that report. The Chairman has appointed a committee, which I have the pleasure of being on, to draft that report. And I am getting my draft together, I would say as we speak, but I put it aside to prepare for this of course, and certainly will be responsive by the January 31st deadline.

The Commission as a whole has not had a copy of any documents that I know of that is being prepared in that report. That will be probably I would say in the next couple of weeks that we would then be discussing the report that other people have done or any idea that other commissioners had. So we are in the process of preparing it now.

Q. I have heard you mention this company Electric Lite, but I'm assuming from what I've heard from you, even though these people have contacted you in one form or another, you have not taken a position on deregulation?

A. No.

Q. You are just listening to what they are saying?

A. Right. No, sir, I haven't taken a position on what they are saying. Most of it, you know, was before the -- probably before the legislation was filed where there was an interest nationwide, and certainly since the legislation has been filed, people come and present their views, certainly. But I have not taken a position on it. And on the issue of electric restructuring, I'm deferring that to the General Assembly.

Q. I remember when we screened you before, I was impressed with your knowledge and background being involved with the PSC.

A. Thank you, sir.

Q. But let me ask you this question: How do you see the relationship as far as the existing incumbent PSC members? Do you find them to be knowledgeable of their job or -- I don't know if that's the right way to ask you that question. Do you all get along well together? Do you work well together? Do you find them to be conscientious workers?

A. Yes, all of those things. I think the commissioners do get along together. We don't vote together every time, and I think that's healthy. If all seven of us agreed on everything, they wouldn't need but one of us. I think it's healthy that we do disagree, but I find all of them conscientious, all of them very honest and work at what they're doing and sincerely trying to do the best job for the people of South Carolina. No doubt in my mind that all seven of them fit in all of those categories.

CHAIRMAN HOLLAND: Representative Wilkes.

EXAMINATION BY MR. WILKES:

Q. Mr. Scott, following up on Mr. Kennedy's question, given all of the publicity and contacts and everything surrounding the deregulation issue, how important do you think it is that the members of the Public Service Commission remain objective on this issue?

A. I think it's absolutely imperative that we do. We take the policy, it is our job to take the responsibility and policies as set forth by the General Assembly and implement those policies. And it seems that what we have to do is defer to the General Assembly for the broad policy in the threshold question of whether electric deregulation is in the public interest, and that I believe belongs to the members of the General Assembly who are elected by the people of this state. And I think it would probably be inappropriate for me as a commissioner to go out saying one thing or the other because I've got to be in a position to implement whatever policy this General Assembly passes, whether it be yes or no.

Q. And again, following along that same line of questioning, I have heard many times on the issue of deregulation that it is not if but when. And I would ask you, I guess, how important is it to add the question how is it going to be done?

A. Well, I think --

Q. And I don't mean technically or specifically, but just in the conceptual framework, what role will the Commission play in how it is done?

A. Well, I think the Commission role will just be hopefully, if the General Assembly sees fit to keep us, we will be very involved. The Commission will have to, I think, be the ones who determine the amount of stranded costs, which is going to be a big issue, the amount of stranded costs. And within the guidelines they provide for by the General Assembly to provide for the recovery of those stranded costs in the amount that the General Assembly says should be recovered and is recovered.

Certainly the unbundling of the generation from the transmission will have to be done by the Public Service Commission. And the new suppliers, it will be imperative, if we are going to have them, the new suppliers coming be found to be fit, willing and able to provide the service that they are going to provide, similar to telephone.

And probably more important is electricity than telephone, because in the electric area, it's not going to be as easy if your electric generator is not supplying you electricity just to dial around. If you got to resell it if it goes out of business, you can always get your call completed if you dial around. But electricity, it's going to be more imperative.

I think it's going to be an extensive licensing process now, not a process to try to -- if this General Assembly decides that we need to have competition and you want competition, there can't be a licensing process to hinder that policy of the General Assembly, but it certainly needs to be one that we ensure the people who are coming in here to provide a service, and we've got some 325 providers of telephone service. So if similar things happen, then of course you've got quite a job to make sure these people are able to provide a service, to provide a default service. I mean what happens if that company doesn't provide electricity. I think that's going to be a role. Consumer education is going to be tremendous role. Regulating the distribution rates will be the job of the Public Service Commission.

Q. So we can conclude then that if in fact the Public Service Commission is going to play a major role in how it is done if it is done, then doesn't that say, going back to the first question, it is absolutely imperative that the Commission be objective throughout this whole process for the reasons you just stated?

A. Yes, sir.

Q. Thank you.

A. I think we need to be objective.

CHAIRMAN HOLLAND: Any further questions?

SENATOR COURTNEY: Mr. Chairman.

CHAIRMAN HOLLAND: Mr. Courtney.

EXAMINATION BY SENATOR COURTNEY:

Q. How much authority would the Public Service Commission actually have in deciding the liability of those companies outside the state, how is what you are doing, how is that going to impact you as a commissioner or the Commission itself in making sure that those companies are financially stable and so forth?

A. I think it would be similar to the telephone in the sense that we would still -- even with the federal law, I mean with the federal government, we would still have the ability to license only those companies which are proven fit, willing, and able to provide a service similar to the way we do telephone. We have companies in the telephone market. We still got jurisdiction over them because they are intrastate telephone services in South Carolina.

Q. It's part of your ability to permit them. You have a right to see their financial statements?

A. Yes, sir, and we require that of the telephone utility. We would require them to submit financial information to us, and we have that financial information available as we make our decision as to whether this particular company is fit, willing, and able to provide the service. Financial information--it would be absolutely imperative that we have financial information.

CHAIRMAN HOLLAND: Any further questions? Thank you, Mr. Scott. Thanks for coming by.

MR. SCOTT: Thank you. I appreciate it.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. Charles Dukes Scott

Home Address: Business Address:

6413 Pinefield Road P.O. Drawer 11649

Columbia, SC 29206 Columbia, SC 29211

2. He was born on August 21, 1949, in Orangeburg, South Carolina.

4. He was married but divorced June 1978. He then married Judith S. Scott on September 10, 1978.

5. He served in the United States Army Reserve from 1971 until 1979 when he was honorably discharged.

6. He graduated from Orangeburg High School in 1967; received a B.S. from Clemson University in 1971; and received a J.D. from the University of South Carolina in 1974.

7. He has served on the Public Service Commission since 1994.

9. He has worked with:

Leventis and Scott, Attorney, 1974-1981;

Public Service Commission, Staff Attorney, 1981-1985;

Willoughby and Scott, Attorney, 1985-1986; and

Public Service Commission, Staff, 1986-1994.

14. He has been sued in his official capacity with the Public Service Commission.

19. He has served as a Staff Attorney to the Public Service Commission from 1981-1985; in Staff Positions with the Public Service Commission from 1986-1994; and with Budget & Control Board as an advisor to the State Energy Office, 1992-1994.

22. He has spent $109.02 on postage and letterhead in seeking office.

26. He is a member of the following professional organizations:

South Carolina Bar Association; and

National Association of Regulatory Utility Commissioners.

27. He has served on the following civic, charitable, etc. organizations:

Forest Lake Presbyterian Church.

29. Five letters of reference:

1) Stanford E. Lacy, Esquire

1330 Lady Street, Suite 601

P.O. Box 12487

Columbia, South Carolina 29211

2) James C. Leventis, Esquire

1441 Main Street, 10th Floor

P.O. Box 100200

Columbia, SC 29202-3200

3) Frances Robinson

800 Huger Street

P.O. Box 726

Columbia, SC 29202

4) James I. St. John

Forest Lake Presbyterian Church

6500 North Trenholm Road

Columbia, SC 29206

5) Edgar W. Dickson, Esquire

370 St. Paul N.E.

P.O. Box 1084

Orangeburg, SC 29116-1084

30. He is seeking the position of Public Service Commissioner for the Second District.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

False - The FERC regulates the wholesale sale of electricity.

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

True

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True

False - The Hope and Bluefield decisions require this.

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True

7. On average, South Carolina residential customers consume less electricity than the national average.

False

True - It is more appropriate to state that the Act provided an avenue for the states to grant certain exemptions to small rural carriers.

False

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True - Until recently, some of the small telephone companies did not provide equal access in all their exchanges. I believe all now do, but there may be a small exchange which does not. In that case a customer could still choose a long distance toll carrier from certificated toll providers, but may not be able to presubscribe to that carrier on a 1+ basis.

True

False

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

False

False - Section 8-13-730

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False

True

DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?

The industries regulated by the Public Service Commission are the investor owned electrical utilities; investor (or privately) owned natural gas, water, wastewater (sewage), and street railway service providers; telecommunication utilities; radio common carriers, (except as to rates for radio common carriers which were preempted by the FCC); rail and railroad service providers (although most regulation of the railroads has been preempted by the federal government); transporters (common and contract carriers) of hazardous waste, household goods, and passengers, the safety regulation of investor owned gas, municipality gas, gas authorities, propane pipelines, and propane where 10 or more customers are served by a common source; the safety of railroads; the assignment of territory to the investor owned electrical utilities and the electric cooperatives, and under Section 58-27-1220 and 1230 to some extensions by municipalities pursuant to the Territory Assignment Act. Also, the statute provides (or did provide) for regulation of the sale of heat other than by means of electricity.

The industries are regulated so that the Commission could serve as a substitute for competition. Industries such as the electricity providers, natural gas, water, wastewater, and in the beginning of the industry, telephone, providers were considered to be more efficient if the services were provided as a monopoly. The provision of those services as a monopoly would avoid wasteful, unnecessary, and costly duplication of facilities such as lines, poles, pipes and other equipment necessary to provide those services. Therefore, it was found by the state policy makers that the services should be basically provided by lawful monopolies. In order to protect the public from monopoly abuses, the state created the Public Service Commission to prevent the abuses of monopoly and to act as a substitute for competition to ensure that these services are provided to consumers at reasonable rates and that the service is provided in a safe, reliable and adequate manner. In telecommunications, competition is not yet sufficient to provide competitive outcomes and therefore is still regulated.

As to the common and contract carriers of hazardous waste, household goods and passengers, these services are so essential and of such importance that the state has set a policy to ensure good, safe, adequate and dependable service to consumers all over the state, especially in rural areas.

As a practical matter, the regulation of railroads is limited to safety of operations. The need for such regulation is due to the tremendous amount of damage and injuries which unsafe operation of the railroads or the track can cause.

4. What is the "rate base" and how is it used in public utility regulation?

Rate base is the investment that the utility has made in property and facilities used and useful in providing the particular regulated service. It includes gross plant in service (original cost) less accumulated depreciation plus materials and supplies, a working capital allowance, construction work in progress, plant held for future use less operating reserves, customer deposits and contributions in aid of construction and accumulated deferred income taxes.

It is important in regulation because it is the rate base that the utility is entitled to earn a reasonable rate of return on. In setting rates, the Commission examines the revenues and expenses of the utility for an historical 12 month test period and determines the amount of investment that the utility should have an opportunity to earn a reasonable rate of return on, (the rate base), and what that return should be. When that percentage return is applied to the rate base, there should be sufficient return to pay the utility's cost of long term debt, cost of preferred stock and cost of common equity, that is, cost of capital.

6. To what does the term "generational mix" refer? Please describe the importance of a utility's choice of generational mix from both the economic and environmental perspectives.

Generation mix describes the various fuels used by the electrical utility to generate the electricity, that is the percentage of coal, oil, gas, hydro, nuclear used to generate the electricity.

From the economic standpoint, the generation mix is important due to the impact that the cost of fuel has on the cost of the electricity. The fuel cost is part of the energy cost contained in the price per kwh. The utility should strive to utilize a generation mix that is economical. Due to the capital cost of the nuclear generating plants and the relatively lower cost of the fuel as compared to fossil, the utility, from an economic standpoint, should attempt to get optimum operating efficiency from the nuclear units. However, due to the high capital costs, the utility certainly would not want to use all nuclear plants. The generation mix is important then because the fuels vary in cost per (illegible) and the lower cost fuel plants should be used first, thus reducing the cost of fuel and the cost of electricity.

Environmentally, the generation mix is important due to the impact that burning fuel has on the atmosphere. Coal fuels generate SO2 emissions which adversely impact the environment. Our utilities have been environmentally friendly in that they have generally used low sulfur coal. Also, the Clean Air Act requires reductions in SO2 emissions (which also will be economically costly).

Nuclear fuel does not generate the emission problem that coal does, but creates a disposal problem for the spent nuclear fuel. Although our rate payers have been paying 1 mill per kwh to the federal government to provide a permanent storage facility for this spent nuclear fuel, we do not have such a facility. The site being tested is Yucca Mountain. The spent nuclear fuel is now being stored on site. The environmental impact of nuclear generation is how do we dispose of the spent nuclear fuel in an environmentally safe manner. Of course, the more nuclear fuel used, the greater the problem.

Natural gas is relatively clean burning. Hydro, once you have the dam, is reusable source and therefore environmentally friendly. However, cleaning up rivers can cause great environmental impacts.

"Green" sources of electricity such as wind and solar, need to be further developed. These are renewable sources of energy and environmentally friendly. However, it is not practical to expect a large portion of the generation mix to come from these sources at this time. Some potential competitors in the generation market will offer "green" electricity as an inducement to get customers.

* * *

CHAIRMAN HOLLAND: We will adjourn now and come back at 2:00.

A F T E R N O O N S E S S I O N

CHAIRMAN HOLLAND: Call the Committee to order. Our first candidate?

MS. MUSSER: Mr. Flack.

MR. FLACK: Yes, sir.

MS. MUSSER: Mr. Flack, if you could please hand Ms. Tucker your driver's license and your voter registration card, we would appreciate it. Thank you, sir.

MS. MUSSER: Mr. Chairman, I have Mr. Flack's license. It states an address of 2041 Bolt Drive in Anderson, 29621, and his voter registration card reflects the same address.

Mr. Flack, if you would, raise your right hand please.

W. PATRICK FLACK, being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you please state your full name for the record.

A. William Patrick Flack.

MS. MUSSER: Mr. Chairman, in reviewing the SLED report for criminal convictions and civil judgments as well as Mr. Flack's credit report, there were no negative entries.

Q. Mr. Flack, were you given a copy of your personal data questionnaire summary this morning or before lunch?

A. Yes.

Q. Did you have a chance to review that?

A. Yes, I did.

Q. Would you like to make any changes at this time?

A. That's all right.

Q. It's okay as it is?

A. Yes, it is.

Q. Would you have any objection to that summary being made a part of the record for these proceedings?

A. No.

Q. Thank you, sir. Mr. Flack, would you please tell this Committee what is the reason or reasons you wish to serve on the Public Service Commission.

A. Yes. I thank you for this opportunity to give you some insight in the reason I think I would like to serve. I think I would be an asset to South Carolina due to my experience. I have had as a citizen of South Carolina and participant of South Carolina, I have served on the Department of Social Services as commissioner. I am president on the Consumer Affairs Commission. I worked as a union organizer some 30 years ago, which I know the state quite well.

This is my home. It's always been my home. I worked as a member of the democratic party and am president and a member of the republican party. I went to two national conventions. My experience in the manpower field which I worked in gives me quite an insight on what is needed for the best interest of South Carolina.

I feel that being on this board, I can be in a neutral position. Sometimes the statue of justice are in equal balance. Maybe sometimes it has to tilt one way or the other to be a fair judge. I know the PSC was set up to protect the consumers of South Carolina years ago. On the other hand, you must realize that we must have economic growth so we all can grow socially, educationally, and culturally.

And I feel that common sense and good judgment in making decisions that affect the people in the incoming industry and the existing industry would be quite crucial. I feel right now South Carolina is on the cutting edge of growth and development. We have been left behind so long, ever since the Civil War.

And I think in USA news today, it's been 18 months ago, I-85 and 95 coming through South Carolina is an asset of growth in the United States. That's where the growth is going to be, from Richmond into Atlanta. And both segments of I-85 and 95 is ideal.

We have an excellent rail system, ideal airport, good facilities, and a good highway system. I think it's ideal in South Carolina. We have adequate land. We have natural resources. We have ideal climatic conditions. We will reduce it to new industry. And we have a good quality of life, and we look forward to a better quality of life. With this growth and development, South Carolina can take its place in the world. We are in a world economy, and we're going to have to compete.

And I think we should have somebody on the PSC to make a good judgment on decisions to keep industry running and which run on the back of the consumer. And I feel that with this expertise and experience I have had over the years, I would be an adequate candidate.

Q. You mentioned your service on the Consumer Affairs Commission. When does that term expire?

A. 2002, but I've signed a waiver on that.

Q. So what would be your plan for your continued service on that commission would be if you were to be elected on the Public Service Commission?

A. I've already signed a waiver on that.

Q. Are you currently employed?

A. I'm retired. I'm a part-time consultant. I say I'm retired. My wife says I'm not retired because I stay involved.

Q. Tell us about that consulting business.

A. Well, I'm a manpower and political consultant. Through my previous employment and political connections, I have served on occasions, a number of campaigns who ask my opinion on how to approach the needs and desire of people of South Carolina. And I've worked in Texas and Michigan, Georgia, three or four other states some time ago. There hasn't been any recently. Then my manpower training, I had training in Harvard in manpower management, and I ran a manpower program for 20 years.

Another thing about South Carolina, we don't have any natural resources such as oil or gas or things of that sort, but we do have an ideal work force, equalifiable work force, a work force that can adjust to conditions we tolerate.

Up in our part of the state where I live, we are changing drastically from a predominant textile agricultural environment to high tech. And not only that, if you saw that film, video, that was put out by South Carolina Employment Commission, 27 Flags over South Carolina, it showed you how diversified South Carolina has become. And not only will this agency affect people in our area, it will affect farmers in the low income part of the country where it's predominantly agricultural. We have to be concerned about what affect everybody so South Carolina will have an upward growth of, not one section, but all sections of South Carolina.

Q. What would be your plans as to your consulting business if you were to be --

A. That is waived.

Q. So you are telling us that you would no longer work in that business?

A. I'm retired really. I need to be occupied. I'm the type of person I just can't sit still and do nothing because I think I would wither away. I go by the library three times a week and read periodicals of everything that is happening, try to keep myself involved because an idle mind is the devil's workshop and so is his body, and I try to be involved. On a local level I'm on the Anderson County Economic Development Board, which we are trying to lure new industry in and improve existing industry. Various things of that sort is what I'm trying to do to keep myself active and productive in living.

Q. Yes, sir. Mr. Flack, do you own any utility stock?

A. No, I do not.

Q. Does your spouse or any member of your household?

A. No, there's nothing but the two of us, and we don't own anything but our home.

Q. As a housekeeping matter on your economic interest statement, you listed, under creditors, Capital Bank and Sak's. There's been some confusion as to what's required there, and I just want to clarify things for the record.

A. Okay.

Q. The instructions say, do not include amounts owed on credit cards or retail installment contracts, so you were just including those as creditors, but you didn't mean that those were --

A. No.

Q. -- or would pose a potential conflict?

A. When I read that, I wanted to be sure that you had adequate information. I was advised to put it down.

Q. We appreciate that. Mr. Flack, have you at any point taken a public position on the issue of electric deregulation?

A. I haven't taken any public opinion, but I have my own private opinion what I think about deregulation. I feel that the General Assembly, along with recommendation from the Public Service Commission, we must devise a plan that provides the framework that the reconstruction of electric industry will give us continuous quality of service we need.

What I'm talking about, I don't want to see any fly-by-night companies come in and promise people things and can't deliver. For example, "A" industry comes in and says I can supply this, and I'm seeing trucks or vehicles or lines that can offer repair in case there is a storm like we had in Anderson a couple weeks ago and all the utilities went out. But in time, the company supplied the needs.

I know there has been a monopoly more or less for the electric industry in most states and most counties. For example, I know that years ago, that utilities went in and wanted a priority on certain counties and they signed agreements wherein they furnished transportation or whatever if we be their only supplier. I think we should open it up to be a fair marketplace, let the market decide what is fair for us.

And I feel that I have the confidence of the research and technical information, that the PSC staff, along with some common sense, that we can make adequate decisions and recommendations to the General Assembly because they are the ones that are going to have to make the decision.

And I think -- I notice I have been keeping up with the California deregulations and how it is operating, and I feel, this is my personal opinion, that somehow or another, that we're going to have to find some kind of uniform partnership with the federal government or other states so one state won't take advantage of the other in deregulations.

For example, I know, only speaking for what I know, Seneca, South Carolina, Georgia Power or what you call Southern Company is coming in now and taking over Seneca, South Carolina away from Duke Power. And I think BMW is getting their electric supplied from Mississippi, the State of Mississippi.

CHAIRMAN HOLLAND: Mr. Flack, I conclude from what you're saying that you're open on the question of deregulation.

MR. FLACK: Yes, I'm open.

CHAIRMAN HOLLAND: That's basically all we wanted to know, if you were open on it. Is that all right?

MR. KENNEDY: Yes, sir.

CHAIRMAN HOLLAND: And if you expressed any public opinions about it.

MR. FLACK: All right.

CHAIRMAN HOLLAND: Any questions by any member of the Committee of Mr. Flack?

MS. MUSSER: I do have one.

CHAIRMAN HOLLAND: Wait a minute. Any member of the Committee have any questions? Now, you go right ahead, Ms. Musser.

MS. MUSSER: Thank you, Senator.

EXAMINATION BY MS. MUSSER:

Q. Mr. Flack, what does the term rate base mean to you and how is that term used in public utility regulation?

A. I'm not a technician on rate base, but I feel that that's the measurement that you must have to know what you will pay and how much it costs to produce and whether it's an amount of profit. That's what I believe.

MS. MUSSER: Thank you, sir.

CHAIRMAN HOLLAND: Any other questions? Thank you so much, Mr. Flack. We appreciate your coming.

MR. FLACK: Thank you, sir. Appreciate it.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. W. Patrick Flack

Home Address: Business Address:

2041 Bolt Drive 2041 Bolt Drive

Anderson, SC 29621 Anderson, SC 29621

2. He was born on March 19, 1927, in Anderson, South Carolina.
4. He married Thomasenia Mattison Flack on August 13, 1951.

5. He served in the United States Army in 1945, and he was honorably discharged.

6. He attended Tuskeegee University from 1943-1946.

7. He served on the South Carolina Board of the Department of Social Services, Third Congressional District; his term expired in 1975. He served on the Anderson County Elections Commission. He is currently on the South Carolina Consumer Affairs Commission; his term expires September 2002.

9. He has worked as:

Union Representative for ILGWU-AFL-CIO;

Director of RTP of South Carolina; and

Consultant of Manpower and Political for the William Ross Agency.

27. He has served on the following civic, charitable, etc. organizations:

NAACP;
Elks;

Anderson County Republican Party; and

Salem Presbyterian Church.

29. Five letters of reference:

1) Crayton Weir

534 Salem Street

Anderson, SC 29621

2) Rev. David Terry

604 Hampton Street

Anderson, SC 29624

3) Rev. J. O. Rich

324 West Reed St.

Anderson, SC 29624

4) Richard Parks

4011 Dobbins Bridge Rd.

Anderson, SC 29624

5) Rev. Joe Murray

1010 Hillhouse Rd.

Anderson, SC 29624
30. He is seeking the position of Public Service Commissioner for the Third District.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

True

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

True

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True

False

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

False

7. On average, South Carolina residential customers consume less electricity than the national average.

False

True

False

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

False

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

False

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False

True

False

DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?

Telephone, telegraph, motor carrier of household goods, utility, gas, disposal waste, water suppliers. It is why the state formed the Public Service Commission.

2. What federal agencies regulate the same industries as the South Carolina Public Service Commission?

FCC, Environmental Agency, Atomic Energy Commission, Department of Energy.

4. What is the "rate base" and how is it used in public utility regulation?

How much service is used in a given time. This is how one can set the cost.

5. Describe the potential for "stranded costs" in the electric utility industry which might result from the deregulation of retail service.

Unused electric power. One can not store electric power. Therefore one have a surplus that not used.

6. To what does the term "generational mix" refer? Please describe the importance of a utility's choice of generational mix from both the economic and environmental perspectives.

Use of water or hydro or fuel generated power.

* * *

MS. MUSSER: The next candidate, Mr. Chairman, is Mr. George J. Hunter for the Third District.

MS. MUSSER: Mr. Chairman, I have Mr. Hunter's license. It reflects an address of 3 Long Road in Williamston, South Carolina 29697, and his voter registration card reflects the same address.

Mr. Hunter, if you would, raise your right hand please.

GEORGE J. HUNTER, JR., being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you state your full name for the record please.

A. George J. "Jackie" Hunter.

MS. MUSSER: Mr. Chairman, in reviewing the SLED report for criminal convictions and civil judgments as well as Mr. Hunter's credit report, the staff found that there were no negative entries as to either.

Q. Mr. Hunter, were you given a copy of your personal data questionnaire summary earlier today?

A. Yes.

Q. Have you had a chance to review it?

A. Yes, I have. The only thing I noticed, I am a licensed realtor at this point, and I did not probably have that on there.

Q. We are making that change. Are there any other ones you would like to make?

A. Not that I'm aware of.

Q. With that change made, would you have any objection to this summary being made a part of the permanent record?

A. No, I wouldn't.

Q. Mr. Hunter, please tell this Committee why you would like to serve on the Public Service Commission.

A. I'm interested in the process and what the
Public Service Commission does in the State of South Carolina and have always been, and I feel like in my background in terms of looking at utilities and all the areas that are part of the Public Service Commissions, areas that they look at, that I would be well qualified. I have governmental experience in utilities with the county. We had sewer, water. I have had private business experience in the area of railroad shipments and those sort of things when I was in business.

Q. Do you currently serve on the Hammond Water and Sewer Company board of directors?

A. That's correct.

Q. What type of entity is that?

A. It was created by a legislative act. Years ago it was one of the farmers' own administration -- and I happen to have a water meter, so in order to get on the water board, you go to the annual meeting, and the owners of -- the people who own water meters own the system, and we get water direct from Duke Power.

Q. What would be your plans?

A. I would have to resign because there could be some conflicts as a result, or would be.

Q. You are currently employed where?

A. Gerald Realty.

Q. Is that your business?

A. No, I'm a salesman at this point.

Q. Do you lease or rent to or from any regulated utilities?

A. No.

Q. Just residential property primarily?

A. Residential and agricultural.

Q. You have a Master's in accounting, I see.

A. Correct.

Q. If you would, just go back in time and briefly state what other positions in employment you have prior to your being employed as a salesman for that real estate company.

A. I was finance director in Anderson County for ten years until May of '97, during which time we -- as you are aware, in South Carolina our counties went basically from rural to urban. We went through the process of having a lot of different checkbooks and all of those in the finance area to consolidate the system to where we were able to get unqualified audits for the last ten years, receive a certificate of excellence in financial reporting as a result. But anyway that's part of the financial director job. And prior to that I was in the agri business for a period of 13 years, farm supply across the board from buying grain to selling products.

Q. Your economic interest statement mentions compensation from Clemson, is that yours or your wife's?

A. My wife is Clemson extension agent and has been for 27 years.

Q. Mr. Hunter, Do you own any utility stock?

A. No, I do not.

Q. Does your spouse or anyone who resides in your household own any utility stock?

A. No, we do not.

Q. You have some children in high school and I believe one in college. Do any of them have employment?

A. They work in a restaurant.

Q. Mr. Hunter, would you explain to this Committee in your words the concept of universal service with regard to telecommunications utility, universal service.

A. I'm not sure I understand the term. I have not studied what universal service is. If it has to do with deregulation, which I assume it does, I could answer something. But universal service I'm not real familiar with.

Q. Mr. Hunter, have you taken a public position on the issue of electric deregulation?

A. No, I have not.

Q. Are you currently a member of or have you ever belonged at any time to an organization, whether that be charitable or otherwise, which is politically active on the question of deregulation?

A. No, I have not advised at all on deregulation.

Q. I'm sorry?

A. I would be in the middle of the road on deregulation all the way. I don't have an opinion one way or the other.

Q. Have you ever been directly or indirectly contacted by any such organization?

A. No, I have not.

Q. Have you had a financial relationship or have you had discussion of a future financial relationship with a lobbyist or a lobbyist's principal?

A. No, I have not.

MS. MUSSER: Mr. Chairman, I have no other questions.

CHAIRMAN HOLLAND: Any questions of any members of this Committee for this gentleman? Thank you so much.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. George J. Hunter, Jr.

Home Address: Business Address:

341 Long Rd. 4005 Clemson Blvd.

Williamston, SC 29697 Anderson, SC 29621

2. He was born on February 9, 1946, in Newnan, Georgia.

4. He was married to Janis Gerrard Hunter on April 17, 1971.

He has two children:
Traci E. Hunter, age 21 (Clemson student); and
Jonathan G. Hunter, age 17 (high school student).

5. He served in the Army from 1968-1970. He was honorably discharged with a rank of E-5.

6. He graduated from:
East Coweta High School, 1964;
West Georgia College, transferred in 1966;
University of Georgia, BA Accounting, 1968; and
Clemson University, Masters of Professional Accountancy.

9. Mr. Hunter reported his occupational history as follows:
Mr. Hunter is a licensed realtor.

Anderson County Government, Finance Department Director,

2/88- 5/97;

Road Maintenance Department Supervisor, 7/87 - 2/88; Elections Commission Director, 10/85 - 6/87;
Farm & Garden Center, 5/72 - 8/85;
U.S. Defense Contracts Administration, 7/71 - 4/72; and
U.S. Defense Supply Agency, 8/68 - 7/71.

10. He is on the Board of Directors of the Hammond Water & Sewer Authority.

19. He has worked as the Finance Director of Anderson County, 1985- 1997.

26. He is a member of SC Government Finance Officer's Association and the SC Association of Finance Directors & Data Processing Professionals.

27. He is a member of the Anderson Lions Club and the Central Presbyterian Church.
.
29. Five letters of reference:

1) David Watson

1609 Penson Farm Rd.

Belton, SC 29627

(864) 338-5790

2) E.J. Wright

1333 Wright School Rd.

Belton, SC 29627

(864) 296-2340

3) Laniel Chapman

117 W. Benson St.

Anderson, SC 29624

(864) 225-1411

4) G. Hugh Durham

1808 N. Main St.

Anderson, SC 29621

(864) 225-3788

5) Lujack Orr

907 N. Main St.

Anderson, SC 29621

30. He is seeking the position of Public Service Commissioner for the Third District.

Candidate's Written Answers

TRUE/FALSE:
1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

True - the Commission reviews all accounting records also that take revenue into account for proposed retail rate changes. While the Commission might not (illegible) wholesale rates it indirectly affects the utility.

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

True - the Commission reviews the distribution companies. Rates would be set by the elected city officials and approved by vote of officials.

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True

False - to be fair and equal the Commission must base the rates on the market place over time and not arbitrarily set a rate not comparable to other similar industries.

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False - not covered.

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True - the Commission sets standards for the industry - the municipality would follow those standards with DHEC approvals.

7. On average, South Carolina residential customers consume less electricity than the national average.

True

False - the Act covers all telephone carriers.

False - BellSouth covers most of the southeast - the Commission is not the party to grant this approval.

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

True - the areas are pretty much defined in most cases but since the Commission would decide cases involving the territories, it could define or assign a territory.
12. As to those electric utilities whose rates and services are regulated by the South Carolina Public Service Commission, the Commission allows such utilities to recoup fluctuations in fuel expense through automatic fuel adjustment clauses.

True

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

True - Several large dams provide a large part of the power generated in S.C.

False

False - if not it should.

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False - This segment of the trucking industry is still under the PSC.
18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False - water and sewer companies are both regulated.

True - All meetings are public - except under certain conditions.

True - the PSC would act on this or similar problems involving regulated companies in S.C.

DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?

Electric, water and sewer, telecommunications, gas, trucking, railroads, buses, cabs (for hire transportation), these industries are regulated due to their monopolistic nature. Due to geographical boundaries or companies that are truly a monopoly.

3. Discuss the concept of "universal service" with regard to telecommunications utilities.

Universal service refers to the telecommunications utility providing service in all areas of that industry. Example - provide local and long distance service - cell phones - pagers - etc. - the ability to provide all services available in the industry by one carrier.
4. What is the "rate base" and how is it used in public utility regulation?

Rate base - refers to all those historical cost associated with the production of the utilities product that determined the rate now or in the past that reflect the rate that must be used in order to arrive at an equitable rate. Other cost might be added to the base as a result of other cost associated with the production of the end product in (illegible).

The rate base is a starting point at arriving at the minimum charge for a good or service.

* * *

MS. MUSSER: Mr. Chairman, the next candidate is Judge Randy Mitchell.

Hello, Judge Mitchell. Please have a seat. Mr. Chairman, I have Mr. Mitchell's driver's license which reflects an address of Route 1, Box 148A in Saluda, and his voter registration card reflects the same address.

Judge Mitchell, would you please raise your right hand.

RANDY MITCHELL, being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you please state your full name for the record.

A. My full name is Randy Mitchell, no middle initial.

MS. MUSSER: Mr. Chairman, in reviewing the SLED report for criminal convictions and civil judgments, and Judge Mitchell's credit report, the credit report had no entries, and there were no criminal convictions. There were a number of suits filed against Judge Mitchell, but only in his capacity as a member of the Saluda County Council.

Q. Is that correct?

A. That is correct.

Q. Also I think there was one case where you purchased some property at a tax sale and the original owner came in to redeem the property?

A. Redeem the property.

Q. And then finally there was an appeal from an order in your capacity as a probate judge on an elective share issue?

A. Only had one in nine years.

Q. In any of these actions, there was never any allegations of fraudulent behavior on your part or anybody you supervise?

A. No.

Q. Judge Mitchell, earlier today you were given a copy of a personal data questionnaire summary, were you not?

A. Yes, ma'am.

Q. Have you had an opportunity to review that?

A. I have.

Q. Would you like to make any changes to that or are you satisfied --

A. Two little minor changes. My address now is Route 511, 48-A, the route changed since we sent that information. And I would like one thing added if you wouldn't mind. We are required each year to
attend conferences to obtain more study in probate law, and I have over 150 hours of probate law study added to my resume there. You said where I attended probate associations, but we are required by law to get 15 hours a year.

Q. We will be happy to make that change.

A. It would be 150 hours there.

Q. With that change, would you be satisfied with the summary?

A. I would.

Q. Would you have any problem with the summary, as amended, being made part of the permanent record?

A. No, I would like for it to be made please.

Q. Do you recall the pre-screening interview you and I had sometime back in mid-December?

A. Right.

Q. And I believe there was some question at the time you wanted to amend your PDQs to include your educational degrees.

A. Right. You asked me, and I included them. And one other minor change there as far as Lander University, I do have the hours for a minor in English. However, a direct minor was not awarded, so they always said I could use that, you know, if you wanted to contact the university, but I would like to clarify that little part.

Q. We just want the record to be complete.

A. Right.

Q. And you are currently probate judge for Saluda County; is that correct?

A. That's correct.

Q. How long have you had this position?

A. Since 1988. I believe it was October of that year.

Q. Judge Mitchell, why do you want to trade the hat you wear as a probate judge for the hat of a public service commissioner?

A. Well, I feel like my years of service to the county as was stated there, I served seven years on county council. I also served four years as vice-chairman of county council, and it has been stated almost served nine years as probate judge. And in doing that, being the probate judge of Saluda County, you have to listen to a lot of different hearings. And over the years, I have had probably hundreds of hearings for conservatorships, guardianships, and intervening with hearings as far as state and we appointed conservators for minor children. And in saying that, I feel like my judicial experience along with, I also have a business of my own that I operate my own farm, poultry farm, and I also have investment property and rental property, so I feel that my judicial experience combined with the private sector of my experience, that together gives me a good background to offer a service for the Public Service Commission.

Q. You mentioned that you own a dairy farm.

A. I did, no longer in operation, the dairy farm, but it's now a poultry farm.

Q. So you own the poultry farm, but not the dairy farm?

A. Right.

Q. What sort of time commitment do you have where this business is concerned? How do you balance --

A. My probate work comes first. I have people that help manage my farm and also work with me on my rental property. So I can devote whatever time is necessary to the job.

Q. So you wouldn't anticipate any time problems with juggling the PSC responsibilities, which are essentially a full-time job, with your poultry farm?

A. Right. It would be top priority, no problem.

Q. And your rental business, is that primarily residential, commercial, or mixed?

A. Residential, and I own small investment properties.

Q. The investments properties --

A. It's just land that I bought to resell.

Q. Have you ever sold, leased, or rented to any regulated utilities?

A. None whatsoever, no.

Q. Tell us about Employee Solutions. You listed that on your personal data questionnaire.

A. What that is, that's some stock that is actually employees that own stock in medical -- medical stock. It's not directly related at all to the Public Service Commission, any utility stock. The best I know, it's medical. To be honest with you, I haven't had the stock but about five weeks now, and that's -- it just looked like it was going up, so that's the reason I purchased it.

Q. Is that a placement service business?

A. Right, it's more like a placement -- right, an investment program by medical workers, so I understand.

Q. Judge Mitchell, do you own any utility stock?

A. I own none.

Q. Does your spouse or any member of your household?

A. None.

Q. Have you taken a public position on the issue of electric deregulation at any time?

A. Should I take one now?

Q. Excuse me. Have you, up to this point, as we are speaking about it?

A. I think deregulation, as I'm sure you've heard discussed here, is a very complex situation. My main ideas on deregulation is that certainly I want the residential household to protect and also along with that if it doesn't hurt industry and it doesn't hurt commercial development, I certainly have an open mind. I wouldn't say I would rule it out.

And as I'm sure all of you know, the PSC at this time is going to present a plan to the legislature, and I think we need to wait until all the facts are in to see exactly what plan they present and what position the legislature takes on it. But I think a person in today's society must have an open mind about any new change.

Q. Thank you. Are you currently a member of or have you ever been a member of any organization, whether that be charitable or otherwise, which is politically active on the issue of deregulation?

A. None.

Q. Have you ever been contacted by any such organization?

A. None.

Q. Have you had a financial relationship with or have you had discussion of a future financial relationship with a lobbyist or a lobbyist's principal?

A. None.

Q. And just as a final housekeeping matter, I notice on your statement of economic interests, on item 15, you list some lots.

A. I believe -- excuse me. I believe you wanted a schedule on those, and I think I've sent -- you haven't gotten that yet?

Q. Yes, sir. You took care of that on your financial statement. There's a confidential financial statement which is required as part of these proceedings. But I just wanted to clarify, on your Economic Interests Statement, you don't anticipate any conflict of interest with these things that are listed.

A. Right.

Q. You were just listing your real estate?

A. Right, just what I own.

Q. And on number 17, you list Production Credit and Saluda Company Bank loans. Were those loans made in the ordinary course of business with interest rates which would be available to the general public?

A. Absolutely.

Q. This question was designed to request the listing of a different kind of loan than you have listed here, but we appreciate your being forthright with those.

A. Right.

MS. MUSSER: Mr. Chairman, I don't believe I have any more questions at this time.

CHAIRMAN HOLLAND: Any questions of any member of the Committee?

EXAMINATION BY SENATOR COURTNEY:

Q. Judge, in your election efforts, I assume you take donations, like all of us do. I just wanted to ask if you received any campaign donations from any industry as regulated by the PSC or any individual that you know has any association like that?

A. No, sir, to my knowledge I haven't.

CHAIRMAN HOLLAND: Randy, I'm curious about something. Is there a Town of Hollywood down there?

MR. MITCHELL: You know we had a Hollywood, South Carolina. Yes, it actually was a high school at one time. And there was a high school there in Saluda County. It was out in a rural area, and now it's just a junior high..

CHAIRMAN HOLLAND: Thank you so much.

MR. MITCHELL: Thank you, sir.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. Randy Mitchell

Home Address: Business Address:

Route 511, Box 48-A

Saluda, SC 29138

2. He was born on September 16, 1950, in Newberry, South Carolina.

4. He married Wanda J. Mitchell on December 29, 1977.

He has four children:

Amy Mitchell, age 16;

Jason Mitchell, age 13;

Lauren Mitchell, age 11; and

Jeremy Mitchell, age 7.

6. He graduated from Hollywood High School in 1968; received an A.A. in general studies from Spartanburg Methodist College in 1970; received a B.S. in Physical Education, with an English minor from Lander University in 1972. He has also attended the South Carolina Probate Judge's Association and Court Administration. He has 150 hours continuing education for probate judges.

7. He served on the Saluda County Council, 1981-1987; appointed Probate Judge, 1987- 1988; and elected Probate Judge 1988-present.

9. He has worked with:

Dairy Farm, owner and manager, twenty years;

Poultry Farm, owner and manager, eight years; and

Rental Property, owner and manager, six years.

10. He currently owns and manages a poultry farm and a rental business.

19. He has served as the Saluda County Probate Judge since 1988 and previously served on the Saluda County Council from 1981-1988.

22. He has spent $104.01 on postage and pencils in seeking office.

27. He has served on the following civic, charitable, etc. organizations:

Hollywood Ruritan Club;

South Carolina Guernsey Cattle Club; and

Hickory Grove Advent Christian Men's Fellowship.

29. Five letters of reference:

1) Robert Addy

Senior Vice President Saluda Co. Bank

200 North Main Street

Saluda, South Carolina 29138

2) Judge D. Bruce Horne

Chief Magistrate of Saluda Co.

Courthouse Annex

120 South Main Street

Saluda, SC 29138

3) Pastor Edward Adams

Hickory Grove A.C. Church

Route 5, Box 422

Saluda, SC 29138

4) Dudley Rushton

Sheriff of Saluda Co.

205 E. Church Street

Saluda, SC 29138

5) Kathy Ouzts Rushton, Esquire

106 West Butler Avenue

Saluda, SC 29138

30. He is seeking the position of Public Service Commissioner for the Third District.

31. He owns stock in Employee Solutions.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

False - The S. C. Public Service Commission only regulates the investor owned utilities retail sale of electricity. There are four major: SCE&G, Duke Power, CP&L and Lockhart which deals with Genco in the transfer of the Williams Plant. The Federal Energy Regulatory Commission regulates the wholesale rate.

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

True - They regulate only the pipeline safety of the 10 municipalities selling natural gas in South Carolina.

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True - This is found in Section 1-23-310 of the 1979 Code of Laws of South Carolina. It also gives aid to the formal and informal procedures that appear before the Commission. (additional notes made on legal pad were inadvertently destroyed)

False

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False - These can be established by counties passing ordinances and/or other franchises.

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True - There are 10 of these, municipally operated gas companies in the state.

7. On average, South Carolina residential customers consume less electricity than the national average.
False - S. C. consumes more because of the long, hot summers in South Carolina makes more air-conditioners run.

False - This makes more competition within the market however the universal concept is still recognized.

True

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

True - They do this for the 21 electric co-ops serving South Carolina.

True

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

False - In the generation mix, 32% fossil, 64% nuclear, 4% hydro.

False - A candidate may not seek the pledge of a member of the General Assembly until a person has been declared a qualified candidate by the Screening panel and 48 hours before a joint session of the General Assembly.

False - No member of the PSC may own stock in a company he regulates, nor member of family, nor business related partner.

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

True - The 28 employees were shifted to the Department of Public Safety in fiscal years 1993 and 1994.

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False - State statute clearly gives this authority to the municipalities.
19. The appearance of the South Carolina Consumer Advocate before the South Carolina Public Service Commission in an electrical utility rate hearing does not preclude the Public Service Commission from granting any member of the public the right to appear in the hearing.

True - Anyone can appear before the Commission on a rate request if they are in compliance with the Administrative Policy Act and they abide by the rules of the Commission.

False - Federal Communications Commission has authority in this situation.

DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?

The industries that are regulated by the PSC are first of all 576 total. Railroad, electric investor owned; territorial disputes with the 21 co-op municipalities; Santee Cooper distribution and transmission co-op; natural gas pipeline safety; propane pipeline safety when 10 or more obtain service from one source; household movers and hazardous waste movers; regulation by excepting fines from magistrates when decals are purchased and money is then deposited into the State Department of Revenue to help fund Commission. The telephone industry is also deregulated. Under the Telecommunications Act of 1996, however many changes have been made as to what the Commission does, such as pay telephones they are now deregulated. These industries are regulated because there must be consumer protection. Boundary lines are constantly a problem. The industries must make a profit however because they must be able to meet peak demands so that the consumers will have electricity in the future. The PSC does have some jurisdiction of the intrastate and interstate carriers. Over 300 interstate and 17 - 18 intrastate.
(additional notes made on legal pad were inadvertently destroyed)

2. What federal agencies regulate the same industries as the South Carolina Public Service Commission?

The Federal Energy Regulatory Commission regulates the wholesale price of electricity in South Carolina. The Federal Communications Commission regulates many of the telecommunications industries decisions since the 1996 passage of the Telecommunications Act.

PURPA which was signed into law by President Carter in 1979 has influenced many of the PSC decisions in recent years. It established many guidelines for companies in SC such as conservation and environmental issues.

Nuclear Regulatory Commission regulated the 7 nuclear plants in SC; one by CP& L; 5 by Duke Power and 1 by SCE&G at Peak. The National Weatherization Act that was passed does help consumers have a reasonable bill each month as the account can be averaged in order to keep a bill from soaring in the extreme heat or extreme cold.

GENCO regulates the wholesale power from the Williams plant that was transferred from the Lockhart company.
(additional notes made on legal pad were inadvertently destroyed)

6. To what does the term "generational mix" refer? Please describe the importance of a utility's choice of generational mix from both the economic and environmental perspectives.

Generation mix refers to the amount of coal, oil, hydro, natural gas and nuclear that goes to supply the electricity for plants to operate. This is 32% fossil, 64% nuclear, and 4% hydro. The Commission must abide by the two bills that have been passed by the General Assembly. House bill 3414 and Senate bill 346 are similar in nature however they reform the industries in SC. H3414 says that by January of 1999, electric Generation is in effect and the customer will have six months from that date to choose. Senate bill 346 says that by the year 2000 in December you may have a choice.
The PSC does have the right to continuously check to see if the mix is at a fair and marketable price. During six month intervals this takes place as far as the economic issue. Generally speaking, in the earlier years of the nuclear industry, nuclear power was the cheapest we have. There are seven nuclear plants in SC and currently none in construction however, they would be regulated by the Nuclear Regulatory Commission. Nuclear power can become more expensive today because of environmental issues.

Coal and oil can have their problems in the perspective mix because they, as we found out in the early 1980's, are not for certain with the oil embargo that we experienced. Oil prices soared and consequently the PSC was flooded with continuing requests for rate increases.

Coal can aid in keeping prices down because we seem to have an abundant supply however, too much coal can cause environmental issues.

* * *

MS. MUSSER: The last candidate for the Third District is Mr. Pinson, who is on his way.

Mr. Chairman, I have Mr. Pinson's driver's license. It reflects an address of 306 Plantation Drive in Greenwood, and the voter registration card lists the same address.

LEWIS E. PINSON, being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you state your full name for the record please.

A. Lewis Eugene Pinson.

MS. MUSSER: In reviewing the SLED report and the credit record, Mr. Chairman, there were no negative entries as to either for Mr. Pinson.

Q. Mr. Pinson, were you given earlier today a copy of a personal data questionnaire summary?

A. Yes, I was.

Q. Have you had a chance to look over that?

A. Yes. I think the basic information is correct. There are a few adjustments that probably ought to be noted.

Q. If you want to make those at this time, we have someone who will take those down and change it for you.

A. Okay. In item No. 5, I'm presently still serving in South Carolina Army National Guard as Lieutenant Colonel. I think it says until 1997.

Q. Anything further?

A. I'm past president of the South Carolina Association of County Veterans Affairs Officers. I think it lists president.

Q. Yes, sir. Okay. We've got that.

A. I think that's it.

Q. With those changes, would you have any objection to making that summary a part of the permanent record of these proceedings?

A. None whatsoever.

Q. Thank you, sir. Your personal data questionnaire indicates that you had various public service positions. Could you give us dates and positions starting with your current service as a veterans affairs officer in Greenwood and perhaps work back in time?

A. Oh, mercy. Well, actually pure public service I guess as noted in item No. 7, I served as a member of Greenwood County Council from 1976 to 1982. I served on School District 50 board of trustees from 1986 to 1992. Hold on a second. That's 1986 until 1994, I believe, I did not pick up on that, a total of ten years. I was appointed County Veterans Affairs officer, County of Greenwood, in 1983, still serve presently. I have held numerous other public service and church- related activities. I was appointed to the Council of Governments while I was on County Council. I have served on Gleans Human Resources Commission for possibly four years, which is a human resource on fueling, housing program in Greenwood County. And I think that's basically it as far as pure public service is concerned.

CHAIRMAN HOLLAND: Mr. Pinson, do you know a veterans service officer by the name of Billy Bell?

MR. PINSON: Yes, sir, but is this a matter of public record? I know him real well. The problem is he knows me real well.
BY MS. MUSSER:

Q. Mr. Pinson, what would be your plans as far as your service as County Veterans Affairs officer?

A. Resign.

Q. Tell us why you want to serve on the Public Service Commission if you would.

A. As you can see, I have spent the bulk of my life in public service serving at local government levels, serving at district board of trustees level, held various occupations in those endeavors, and served as County Veterans Affairs officer, and I think this would be another level of pure public service. And I have always had admiration for my community, my state, and my nation, and I think it would just be an honor to hold a position of Public Service Commissioner.

Q. How are you currently employed or in business? Do you have some type of business?

A. Yes, I'm in a limited partnership called Bulldog Investors. And that might be something we want to note here too. I didn't mention this before, but you may want to do it now. In item No. 10, that's a limited partnership, and I have a more detailed explanation of what that partnership is. Basically it's rental property, and it's with another member of the Greenwood family, another fellow from Greenwood, and we own some apartments. And we financed it, and they are managed by outside rental management agencies. I own five units, apartment units, myself outright other than in the partnership and my home. And other than that, that's all the property that I have other than cars.

Q. All the property in this partnership is residential?

A. Yes.

Q. So you don't rent or lease to any investor of utilities?

A. No.

Q. Do any of your partners have any ties or association with investor-owned utilities?

A. No.

Q. How long have you had Bulldog Investors?

A. Since 1987. Hopefully we are going to get some of these things paid for soon.

Q. As a housekeeping matter, on your economic interest statement --

A. I've got something more itemized than that.

Q. Were you just listing business interests, your property interests that you have there? Would you ever perceive there to be any kind of ground for conflict or potential conflict there?

A. Absolutely not.

Q. So you were just listing that because it says real or personal property interest?

A. Right.

Q. Your personal data questionnaire indicates that your children are either high school age or college age; is that correct?

A. That's correct.

Q. Are any of them employed?

A. No.

Q. Mr. Pinson, do you own any utility stock?

A. No.

Q. Does your spouse or any member of your household own any utility stock?

A. No.

Q. Have you taken a public position on the issue of electric deregulation at any time?

A. No.

Q. Are you currently a member or have you been a member of any organization, whether it be charitable or otherwise, that is politically active on the question of deregulation?

A. No.

Q. Have you at any time been contacted or approached by any such organization?

A. No.

Q. Have you had a financial relationship with or have you had discussion of a future financial relationship with a lobbyist or a lobbyist's principal?

A. No.

MS. MUSSER: I have no further questions, Mr. Chairman.

CHAIRMAN HOLLAND: Any questions of any members of the Committee of this gentleman? Representative Kennedy.

EXAMINATION BY MR. KENNEDY:

Q. Mr. Pinson, can you tell me, what does a Public Service Commissioner do? What is his job?

A. Well, the seven members that oversee the regulated bodies of utilities, transportation, and rail within the State of South Carolina; they are the regulatory body for the State of South Carolina.

CHAIRMAN HOLLAND: Any other questions? Thank you so much.

MR. PINSON: I appreciate you all's service and taking your time out to screen these candidates. Thank you, sir.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. Lewis E. Pinson

Home Address: Business Address:

306 Plantation Dr. Box 115, Park Plaza

Greenwood, SC 29649 Greenwood, SC 29646

2. He was born on November 2, 1949, in Greenwood, South Carolina.

4. He married Carol V. Metger Pinson on August 3, 1974.
He has three children:
Brian Pinson, age 18 (Citadel student);
Emily Pinson, age 17 (high school student); and
Neal Pinson, age 16 (high school student).

5. He served in the Signal Corps, 1972-1973. He is currently serving in the SC Army National Guard as a Lt. Colonel.

6. He graduated from the Citadel in 1972 with a B.A. in History. He attended Clemson University but had to stop because it was too time consuming.

7. He has held public office as:
Greenwood County Council, 1976-1982;
Greenwood School District # 50, 1986-1994; and
Veterans Officer, County of Greenwood, 1983 to present.

8. He lost the election for the Mayor of Greenwood in 1982.

10. He is a member of a limited partnership and the Bulldog investors club.

26. He is a member of the following professional organizations:
American Legion, Commander of Post # 20; and
SC Association County Veterans Affairs Officer, past president.

27. He is a member of the following civic organizations:
Masonic Member;
South Main St. Baptist Church;
Voiture 435 40&8;
Association of Citadel Men;
Greenwood Citadel Club;
American Legion;
Travelers Protective Association; and
National Guard Association.

29. Five letters of reference:

1) Cindy Polatty

346 Tranquil Rd.

Greenwood, SC 29649

(864) 223-6226

2) Faye Ridge

Route 3, Box 779P

Waterloo, SC 29384

(864) 998-3655

3) Tom Jordan

304 Gentry Rd.

Greenwood, SC 29646

(864) 229-5211

4) John McCravy

803 Johns Creek Rd.

Hodges, SC 29653

(864) 229-1625

5) Bill Cook

First Union

Greenwood, SC 29646

30. He is seeking the position of Public Service Commissioner for the Third District.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

True

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

True

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True

7. On average, South Carolina residential customers consume less electricity than the national average.

True

False

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

False

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

True

False

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False

True

DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?
The South Carolina PSC has jurisdiction over the regulated areas of telecommunications, gas (natural), electricity, trucking, and water and wastewater.

When Wade Hampton appointed the first Railroad Commission in the 1880's, the general feeling was that the railroad industry needed regulating to provide safety and orderly procedure.

In the complex world of providing services, you would not want to have telephone poles going everywhere or power lines being burned out.

The PSC is in place to oversee rates and territories, and approve a systematic orderly flow so South Carolinians may have the best rates, service, and safety for our citizens.

3. Discuss the concept of "universal service" with regard to telecommunications utilities.

The universal fund as I understand is mandated to be in place by January 1, 1999 (I believe). This fund will help offset the cost of the local telephone service presently being provided. (Local service, business, access charges, long distance, additional services (call waiting, etc.)).

Local services in order to remain low have historically had to be subsidized by other charges so that everyone who wants a phone can have one. The difference between what is being charged and the actual cost with a deregulated market eventually has got to be made up in order that the service will still be provided.

In South Carolina your telecommunications companies will contribute to this universal fund I believe to be about $44,000,000 initially so that the companies providing local service can recoup cost - most charges for other services are coming down and even forecasted that local service may rise a little but minimal.

The whole concept is to protect the individual in rural McCormick as well as the city of Columbia from skyrocketing cost for phone service. It cost more to provide service in outlying areas than more populated areas, under the universal fund all local services hopefully will be protected.

5. Describe the potential for "stranded costs" in the electric utility industry which might result from the deregulation of retail service.

"Stranded cost" is one of the complex issues involved with deregulation of the electricity in our state. In a regulated market 30 and 40 year forecast or borrowing to build plants was done. You end up with all this investment then deregulation hits who will eat the cost?

Stranded on an island and no one around to help save you (by yourself).

* * *

MS. MUSSER: Mr. Chairman, the next candidate is Mr. Bradley for the Fourth District, the only candidate for that district.

Good afternoon, Mr. Bradley.

MR. BRADLEY: Good afternoon.

MS. MUSSER: Mr. Chairman, I have Mr. Bradley's driver's license. It lists an address of 29 Jamestown Drive in Greenville. His voter registration card lists the same address. Mr. Bradley, would you raise your right hand please.

PHILIP T. BRADLEY, being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you please state your full name for the record.

A. It's Philip Ted Bradley.

MS. MUSSER: In reviewing the SLED report for criminal convictions, civil judgments, and the credit report, there are no criminal convictions or civil judgments. The credit report is clear, Mr. Chairman.

Q. Mr. Bradley, were you given a copy of your personal data questionnaire summary earlier today?

A. Yes, I was.

Q. Have you had an opportunity to review that?

A. Yes, ma'am, I did.

Q. Any corrections?

A. No, ma'am, it appears to be correct.

Q. Would you have any objection to that summary being made part of our permanent record?

A. No, ma'am.

Q. Mr. Bradley, you currently serve as a Public Service Commissioner. Would you please tell us why you would like to serve another term. What would you like to accomplish that you perhaps haven't to date?

A. What I would like to see us continue to do with the deregulation that was ordered into the telecommunications industry is to see it fully implemented as it should be in South Carolina. The universal service fund fully funded, that would protect the low income and rural customers of this state and also to be involved with the pending deregulation of the electric industry or reregulation of the electric industry that's coming forward. And I would like to be involved in that. I think that my experience and knowledge concerning those issues would be valuable to the people of the State of South Carolina.

Q. You mentioned deregulation as an issue that you are interested in. Have you taken a public position on that issue?

A. No, ma'am, I have not taken a position on it.

Q. Are you currently a member of or have you been a member of any organization, whether that be charitable or otherwise, which is politically active on the question of deregulation?

A. No, ma'am.

Q. Have you at any time been contacted or approached by any such organization?

A. No, ma'am, I have not.

Q. Your personal data questionnaire indicates that you are the owner of Philip T. Bradley Realtors; is that correct?

A. That is correct, yes, ma'am.

Q. You also indicated on that PDQ that you would continue to devote a hundred percent of your time to the PSC if reelected; is that correct?

A. That's correct, ma'am.

Q. So you're maintaining your real estate brokerage to keep your license active?

A. Yes, ma'am, to keep my license active and meet the requirements of the state law pertaining to education requirements, and et cetera.

Q. Have you yourself sold or leased any real estate during the last four years?

A. No, ma'am, I have not sold any. I purchased one piece of property, which is the house that I live in.

Q. Do you have people working for you in that business or is it just --

A. I have one person who is licensed under me, and he has made no sales, and we don't do any business. We don't -- we are not actively promoting real estate or selling real estate.

Q. Does he have any connections or association with any investor- owned utilities?

A. No, ma'am.

Q. Mr. Bradley, do you own any utility stock?

A. No, ma'am.

Q. Does any member of your household own any utility stock?

A. No, ma'am.

Q. One final question. Have you had a financial relationship with or have you had discussion about a future financial relationship with a lobbyist or lobbyist's principal?

A. No, ma'am.

MS. MUSSER: Mr. Chairman, I have no further questions.

CHAIRMAN HOLLAND: Any questions by any member of the Committee? Mr. Kennedy.

EXAMINATION BY MR. KENNEDY:

Q. Mr. Bradley, how are you doing?

A. Just fine, Representative Kennedy. How are you, sir?

Q. Mr. Bradley, tell me, you're serving on the Public Service Commission, what are maybe two of the most important things that you did over the past four years that you are most proud of?

A. Mr. Kennedy, we restructured inwardly the Commission, the departments that we have. We put in a research department, created a research department, not by hiring any additional people, but by moving some personnel around, and that has been a very valuable resource to us and also to the legislature in particular two pieces of legislation with the telecommunications deregulation and the pending restructuring of the electric industry. I'm very proud of that accomplishment.

I think the forward-looking approach that the Commission has in the future, it I guess, kind of ties into the same kind of thing, because when we made the decision to restructure, also with that decision made, it was a forward-looking decision to try to put our Commission in the perspective that as we move from rate of return regulation into a different type of regulation, we needed to have our Commission in a different frame of mind, a different mode, to be able to be meet the consumer needs, whether it's residential, whether it's industrial.

So I guess I feel like that I have been effective in trying to change the focus of the Commission and help us be prepared to move into the future with deregulation and reregulation.

MR. KENNEDY: Thank you, sir.

MR. WILKES: Mr. Chairman.

CHAIRMAN HOLLAND: Representative Wilkes.

EXAMINATION BY MR. WILKES:

Q. Mr. Bradley, how are you?

A. Fine, Representative Wilkes. And how are you, sir?

Q. Fine. Thank you. Two questions, one, do you consider yourself to be objective when it comes to the issue of electric deregulation, and secondly if so, how important is that objectivity going to be as the Commission approaches this very complex issue?

A. Senator -- Representative Wilkes, I was about to promote you. I think that I am totally objective because there's not any state, or there's not any particular area of the country that has passed deregulation that at this point has done what the proponents of them said. At the same time I think that it is possible for deregulation to be put in place. That will be a savings to the consumer. It will create a truly competitive environment. And I think that if you are not objective to all the proposed plans and proposed ideas that come, not only from our legislature, but from other parts of the country, I don't think that you can do the job, quite honestly.

Q. Thank you.

A. And the second part of your question was --

Q. Second part of my question was how important is the objectivity of all of the members of the Commission going to be as we move into the issue of deregulation? And of course the Commission is going to have a very important role in how it's done. And there will be external pressure from a lot of directions coming, not only to the Commission, but to the General Assembly. And I think we all have to maintain objectivity. But particularly as a Commissioner, as the architect of the deregulation, if it is done here and how it is done here, how important is it for you to obtain that objectivity?

A. Representative Wilkes, I think if myself or any of the members of the Commission don't remain objective, it will be unfair to the consumers of South Carolina and to the regulatory climate. One of the best assets of the State of South Carolina is a good regulatory climate.

And if you look at the industry that's moving into this state, every single person talks about, we have a good regulatory environment. We've got to maintain that. And it can be maintained with deregulation, but it's got to be objective. We've got to be objective about it as the legislature has to be objective.

I can only speak for myself as one commissioner, provided I'm reelected to the Commission, we will carry out -- I will carry out the
mandates of the General Assembly as it pertains to deregulation.

CHAIRMAN HOLLAND: Any further questions? Representative Kennedy.

MR. KENNEDY: He's an incumbent, and I have to have ask him another question.

EXAMINATION BY MR. KENNEDY:

Q. Mr. Bradley.

A. Yes, Representative.

Q. Where are you with the request that the speaker made with your recommendation from the Public Service Commission with this deregulation issue? What I mean, where are you, at what stage are you presenting this to us? Are you on time? Are you running behind? How is it going?

A. Representative Kennedy, the fairest and best answer I can give you is that our Commission is on schedule to deliver our report to the Speaker on January 31 when he requested it.

Q. The other question I would like to ask, have you had any contacts or people who have been contacting you as an incumbent on this deregulation issue? Have you received any telephone calls or any pressure or any type of correspondence from individuals about this deregulation issue as a Public Service Commissioner?

A. No, sir, I have not. And, Representative Kennedy, I think one of the reasons that I have not, and I can't speak for the other commissioners, you are probably aware that back in August we opened a hearing in which we allowed anybody, public, any person, any corporation, anybody who wanted to present a plan to our Commission to do so. And also, we held public hearings and allowed anybody who had comments concerning that plan one way or the other to appear before us. And those hearings I think ran about four days, three and a half or four days. And we had 30 plans presented. We had 22 persons to testify.

And so because of the way I think the Commission has handled it so far, we -- or I have not had any requests, because we asked people to put it in writing, and we let them know, now is your time and don't come to me on February 1st of 1998 and say, well, I didn't have an opportunity to present my proposal. Well, my response is, yes, you did, you were notified of it back in August, and if you didn't show up, we're sorry, but we're moving forward with what's been presented to us.

So because of that, I think that we have not seen the questions and people saying I want this in, and I want that out, you know.

Q. Thank you, Mr. Bradley.

A. Yes, sir.

CHAIRMAN HOLLAND: Any further questions any member of the committees?

EXAMINATION BY MR. DARBY:

Q. Since you are seeking reelection, how many miles do you travel a year that's job-related?

A. I live in Greenville, and I come down to Columbia on Mondays and go back to Greenville on Fridays. And I would say job-related, 22, 25 thousand miles a year because we do have some hearings and things around the state in different locations, Hilton Head, Florence, Myrtle Beach, Anderson, different places, so we travel to those too, and I generally drive my car.

CHAIRMAN HOLLAND: Thank you, Mr. Bradley.

MR. BRADLEY: Thank you, Senator, and thank you, Committee.

MR. KENNEDY: Thank you, sir.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. Philip T. Bradley

Home Address: Business Address:

29 Jamestown Drive 902 North Pleasantburg Drive

Greenville, SC 29615 Greenville, SC 29607

2. He was born on September 15, 1938, in Albermarle, North Carolina.

4. He was married, but divorced on June 5, 1981.

He has one child:
Leigh B. Waltz, age 25 (Certified Public Accountant).

5. He served in the South Carolina National Guard/U.S. Army Reserve from 1960 until his honorable discharge in 1966.

6. He graduated from Woodruff High School in 1956; attended Gardener-Webb in 1956 and transferred to Clemson; attended Clemson but left due to academic reasons in 1959; received a certificate of graduation from the University of Florida Forest Ranger School in 1962; received a B.A. from Furman University in 1969; and received an Administrative Law Regulatory Agencies Course Certificate from the National Judicial College in 1996.

7. He served in the South Carolina House of Representatives from 1979-1988, serving on the Education Committee from 1979-1984 and the Labor, Commerce and Industry Committee from 1985-1988.

9. He has worked with:

Philip T. Bradley, Inc., Realtors, Owner and Manager, 1985-current;

Austin Moving & Storage, Vice President of Marketing, 1983-1985;

Philip T. Bradley, Inc., Owner and Manager, 1973-1983; and
Cothran-Sims-Barker, Inc., Marketing and Real Estate Sales, 1969-1973.

10. He is the owner of Philip T. Bradley, Inc., Realtors.

11. He was indicted on October 20, 1986 by a Richland County Grand Jury for the misdemeanor of obstruction of justice. The charges were dismissed on November 17, 1986 by James C. Anders, Fifth Circuit Solicitor.

13. He has had a Federal Tax Lien placed against him for 1989, 1990, and 1992, but the lien has been paid and released. He has also had a State Tax Lien placed against him for four returns, which have been paid and released.

14. He has been sued in his official capacity with the Public Service Commission, but not individually.

22. He has expended $116.56 in seeking the office of the Public Service Commission.

26. He is a member of the South Carolina Association of Realtors and the Greenville Association of Realtors.

27. He has served on the following civic, charitable, etc. organizations:

First Presbyterian Church;
YMCA, Youth in Government, President; and
Security Federal Savings and Loan, Advisory Board of Directors.

29. Five letters of reference:

1) Mr. R. Denis Hennett, President & CEO

Greer State Bank

P.O. Box 1029

Greer, SC 29652-1029

2) Ms. Patt A. Smith, Broker-In-Charge

Caine Coldwell Banker

2502 Wade Hampton Blvd.

Greenville, SC 29615

3) Dick James

The Dick James Law Firm

611 North Main Street

Greenville, SC 29601

4) Mrs. Gail Crawford, President

Crawford Properties, Inc.

3304 White Horse Rd.

Greenville, SC 29611

5) Mr. Paul S. Goldsmith, President & CEO

451 Haywood Rd.

P.O. Box 1827

Greenville, SC 29602

30. He is seeking the position of Public Service Commissioner for the Fourth District.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

False

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.
True

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True

7. On average, South Carolina residential customers consume less electricity than the national average.

False

True

False

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

False

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

False

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False

True

True
DISCUSSION:

3. Discuss the concept of "universal service" with regard to telecommunications utilities.

The universal service concept is designed to insure that all residential customers have telecommunications service at affordable, reliable rates. The main reason this is called into question is because rural customers and service to them are high cost customers. The density and types of customers per square mile is the "cost and revenue" effect that local exchange companies examine. With rural communities/customers the cost of service is higher due to sparsely developed areas, distance between customers and lack of business/industrial customers to enhance revenue. All cost are spread across a smaller customer rate base while the cost of the investment and service is higher or a per customer basis than highly populated urban areas. The Universal Service Fund is to be developed so that small rural local telephone companies and local telephone companies serving rural areas can draw money from the fund to subsidize cost of serving high cost areas and at the same time be able to provide affordable rates and reliable service. The S.C. Public Service Commission currently has an open docket on this issue. The funds will come from an incremental amount of money charged to all customers through services they use. The fund will be administered by the PSC who will be charged with the responsibility of verifying costs incurred for invoices submitted, collecting the monies charged, distribution of money, and accounting for all monies collected.

5. Describe the potential for "stranded costs" in the electric utility industry which might result from the deregulation of retail service.

Stranded Costs - the potential for stranded costs are real. Stranded costs come about because of the Territorial Assignment Act and the obligation to serve. When the state was developing, utilities were granted monopoly areas and in return had to build facilities to serve all customers and their demands. They built expensive generating facilities in anticipation of getting all service in those areas. Now with competition and with the possible loss of customers, they have facilities they cannot use and have no way to recover those costs. The Federal Energy Regulatory Commission has ruled there are stranded costs and they are recoverable. It is up to the S.C. General Assembly to decide how much these stranded costs are and how they are to be recovered.

6. To what does the term "generational mix" refer? Please describe the importance of a utility's choice of generational mix from both the economic and environmental perspectives.

Generational mix is the amount of mix of energy generated by use of different types of fuel. In S.C. there are 3 basic types used: fossil (34%), nuclear (64%), hydro (4%).

The economic mix is important to control costs and provide utility at the lowest cost possible. Different fuels have different costs at different times of the year and hence the companies watch this to control their costs and cost of utility to consumer. The PSC monitors fuel use to ensure that the utility is using the most economic fuels and that is passed to customer.

The environmental mix is important due to the Clean Air and Clean Water Act administered by the EPA. The utility is monitored closely for output and when they exceed certain standards they are fined which effects the economic side.

* * *

MS. MUSSER: Mr. Chairman, the first candidate for the Fifth District is Mr. Arthur. He's on his way now.

Hi, Mr. Arthur.

MR. ARTHUR: Hi.

MS. MUSSER: Mr. Chairman, I have a driver's license for Mr. Arthur listing his address at 516 Woodland Drive, and a voter registration card listing -- in Hartsville, excuse me, and an address on his voter registration card of 413 Goodson Road in Hartsville.

Which one of these is --

MR. ARTHUR: 413.

MS. MUSSER: 413 Goodson Road. Thank you, sir.

EXAMINATION BY MS. MUSSER:

Q. Would you please state your full name.

A. Warren Dupree Arthur, IV.

Q. Mr. Arthur, as a preliminary matter, just to make some corrections to your personal data questionnaire, item 2 states your birthday I believe as 1997, and we want to make sure the date is accurate for the record. I think you were probably thinking that day's date when you typed that in or somebody did that for you.

CHAIRMAN HOLLAND: You're not even living.

A. The personal data questionnaire, mine says 48.

Q. On your summary, it does.

A. Yes.

Q. I was referring to the actual personal data questionnaire that you submitted with your application package.

A. Oh, I'm sorry.

Q. It shows 1997, and we just want to hear from you what that year should be?

A. Right. It's 1948. I wish it was.

Q. Mr. Arthur, I failed to swear you in, so let me do that, if you'll raise your right hand.

WARREN D. ARTHUR, IV, being first duly sworn by Ms. Musser, testified as follows: BY MS. MUSSER:

Q. Would the information I asked you prior to your being sworn be the same information that you would give after your being sworn?

A. Yes.

Q. Thank you. Also, Mr. Arthur, one final matter as to your personal data questionnaire, not the summary that you have, but the questionnaire itself. No. 19 lists you as having served in the Governor's office in the criminal justice program, and the dates there say June '87 to September '80. I assume maybe --

A. September 1990.

Q. We just want that to be accurate. Thank you, sir. You have your personal data questionnaire summary in front of you I see. Have you had a chance to review that?

A. Yes, I have.

Q. Are there any changes you would like to make to that?

A. Well, in item 4, it says I remarried Barbara Ricardo Arthur. I wish I had the opportunity to remarry her, but I just married her on August 9.

Q. Yes, sir. We will make that correction.

A. Item 26, I don't know whether this is pertinent or not, but it did list that I was on the Executive Committee of the Nuclear Waste Strategy Coalition. I was president of Southeastern Association of Regulatory Commissioners, and I'm currently vice chairman of the Nuclear Waste Subcommittee of the National Commissioners.

Q. We will make those changes.

A. And I was president of the National Conference of Insurance Legislators.

Q. Are there any other changes?

A. I'm still giving blood. I guess that's kind of -- I think I was a former member of the 56 Day Club.

Q. So you are still a member of the Red Cross?

A. Yes. And then there are two spelling errors on the letters of reference. It's Gerald Malloy.

Q. Yes, sir. That name has no R in it, does it? That R should not be there.

A. Right.

Q. And I see the Gardner.

A. Right, and the T on the Gardner.

Q. We will make those changes.

A. And other than that, I think it's exact.

Q. With those changes, would you have any objection to that summary being made part of the permanent record of these proceedings?

A. That would be fine.

Q. Thank you. With all that out of the way, you have served on the PSC for some seven years I believe?

A. Yes.

Q. Why would you like to serve another term if you could tell this Committee please? What do you hope to accomplish that you haven't to date yet accomplished?

A. Well, during my service, I have always felt a special burden for the residential rate payors, and I also -- I feel a special burden and know it's my responsibility to be absolutely fair with everybody that we regulate. But over the years, even stemming back to my legislative service and even prior to that, it seems that the people with economic power have always been able to have lawyers and lobbyists represent them. And the constituencies that I represented when I was in the legislature, and now the Public Service Commission, the residential rate payors that don't have a lot of economic power, I feel a special burden to make sure that those people get a fair shake.

And I believe that my record -- and this is not something that's a secret. I feel my record indicates that there have been many times when I have voted on commission, sometimes five to two or six to one, where I have voted to end rate proceedings where I felt like the rate was too high, and I felt like it's necessary in any adversarial proceeding to have people on both sides of an issue. And I felt like I tried to vote what I thought was fair and make sure that the rates not only were fair for the larger industrial people, but also for the residential customers. And I think my record indicates that.

There's one other issue that I have been actively involved in that has not been resolved yet. That's an issue of high-level nuclear waste. I chose to, after I found out what was going on in South Carolina, every rate payor pays -- the average rate payor in South Carolina for electricity pays a dollar a month into what's called a nuclear waste fund. And that will be approximately $25 million this year. And the Congress is in effect stealing, going to steal $20 million of that money from South Carolina rate payors this year because of a number of circumstances.

And there's right now no law in place that would allow that issue to be resolved. And I have been working very hard on that for a number of years. And we had a law passed by the Senate and the House in Congress this year which I believe will resolve the problem.

And there's another aspect of this in regards to the Savannah River plant. The Savannah River plant, if nothing is done, will become the nation's high-level nuclear waste depository. And if it's not, then the only other solution would be to leave it on site, which would mean we would have five sites in South Carolina as opposed to all the areas where it's located now.

So with that, that's the only thing that I would like to say as far as a statement. Thank you.

Q. Thank you, Mr. Arthur. Do you own any utility stock?

A. No, I don't, not to my knowledge. I discussed with you when I came in there, I bought into a fund through Charles Schwab. I have $6,000 invested in this fund that's called The Dogs of the Dow, and I do not know what's in that fund.

CHAIRMAN HOLLAND: Called what?

MR. ARTHUR: It's called The Dogs of the Dow, Jones. It's --

CHAIRMAN HOLLAND: I didn't know where Dow comes from.

A. The reason I mention that is that they could have a utility stock in there, but I don't know about it if they do.

Q. It's not a utility-oriented mutual fund?

A. No, it's an income-oriented --

Q. Does your spouse or any member of your household own any utility stock other than what you've just described?

A. No.

Q. Do any of your children have employment that does or could produce any real or potential conflict of interest? I see you have some high school-aged children and college-aged children. Do they have any employment that could present a conflict?

A. Not that I know of.

Q. Mr. Arthur, have you taken a public position on the issue of deregulation, electric deregulation either for or against?

A. I don't think I've taken a formal public position on that. It would be my judgment that I have not taken a formal public position on it.

Q. To the best of your recollection, you have not?

A. I'm sure I haven't issued any kind of formal statement. We certainly are looking at some issues right now that would, I feel, would be inappropriate for me to take any kind of formal position. I have lots of ideas about it, and I have expressed concerns that I have at times with different people. But expressing concerns about how it will affect South Carolina and taking a formal position in my opinion are two different things.

Q. Are you currently a member of or have you ever been a member of any organization, whether that be charitable or otherwise, that's politically active on the issue of deregulation?

A. No.

Q. Have you ever been contacted or approached by any such organization?

A. Not to my knowledge.

Q. Have you had a financial relationship with or have you had discussion of a future financial relationship with a lobbyist or a lobbyist's principal?

A. No.

MS. MUSSER: Mr. Chairman, I don't have any further questions.

MR. WILKES: Thank you, Susan. Does any member of the Committee have any questions for Mr. Arthur? Mr. Courtney.

EXAMINATION BY SENATOR COURTNEY:

Q. Who is Mr. Henry Yonce, who employs him?

A. He was a chairman of South Carolina Public Service Commission, and as I understand it, he is coordinating some entertainment functions for the industry that we regulate.

Q. Who pays his salary?

A. I think he is -- I don't think he's paid a salary by any of the companies. I think he's an independent consultant, has a consulting business.

Q. Thank you.

MR. WILKES: Any other questions from any Committee members for Mr. Arthur? Yes, sir, Representative Kennedy.

EXAMINATION BY MR. KENNEDY:

Q. Let me ask you some questions. I'm looking at your ethics report here, and I see where these trips that you made, were they made in 1997, these gifts, or is that over a period of time?

A. I assume that those that you're looking at were made in 1997.

Q. 1997. Edison Electric Institute and Nuclear Energy, Edison Electric Institute, who are they?

A. That is an organization that is an industry organization that does research and provides information to the electricity industry, and they conduct meetings from time to time. I think it's an industry supported organization that basically does research and provides information to the industry.

Q. Nuclear Electric Insurance Limited, who are they?

A. That is an insurance company. That's an offshore insurance company that insures the nuclear plants in America and some I think in Canada. And they meet once a year, and there are three -- when it was formed, right after the Three Mile Island accident, they came to the National Organization of Commissioners and asked for their approval and said that they would like for that group to have three members to be observers on their board.

Q. And what I'm looking at, these other entries on here are places that you visited last year?

A. Yes.

Q. One more question. Give me two items that you are most proud of that you did this past year on the Public Service Commission.

A. Voting against things that I felt were unfair. One that comes to mind immediately is when we last year, actually it was right before Christmas last year, when there was a meeting and we in effect went up on the small telephone companies' rates for some of them fairly sharply. And I voted against it, and I think it was Commissioner Mitchell that voted against it, because we felt like the public wasn't given notice about this proceeding, proper notice, and that it was -- it ended up being a rate increase. That's one that comes to mind.

The other significant thing, and a lot of my travel has had to do with that, the nuclear waste legislation that was passed. I testified before Congress this past year. One of my trips last year -- well, I made a number of trips to Washington to lobby, and the legislation was passed to Congress this year. And that's something that I personally have been working on for four years.

The Commission voted four or five years ago now for me to represent the Commission on this issue, on the Nuclear Waste Strategy Coalition. And then two years ago I was asked to serve on the executive committee of that body. And in effect that was created because the National Organization of Commissioners cannot function as lobbyists.

But the Nuclear Waste Strategy Coalition basically lobbies Congressmen to pass this legislation which I think is absolutely vital to South Carolina. And it just outrages me that our rate payors are going to pay in and lose $20 million. They are not going to get anything for it this year, and it makes me angry. I think it's one of the biggest single consumer rip-offs that's going on in South Carolina, and for the most part, the public doesn't even know that they are paying into this fund.

MR. KENNEDY: Thank you, Mr. Chairman.

MR. WILKES: Congratulations on your recent marriage. And, Ms. Arthur, it's nice to have you here today.

EXAMINATION BY MR. WILKES:

Q. Warren, I would like to ask you a couple questions that I have asked about everybody who has come in here today. Do you feel that you can approach the issue of deregulation with some level of objectivity?

A. Yes, sir, I do.

Q. How important is that to being unbiased in the approach to the deregulation issue with the significant role obviously the Commission is going to play? I mean, do you think it is vital that you maintain that kind of unbiased and objective opinion as we move forward?

A. Yes. You know, I view this as primarily a legislative function. I have a deep concern about how this is going to affect the people in South Carolina. You know, but I think we have to -- one of the things that I've realized early on is that we have to be open-minded enough that we don't want to go too fast or too slow in this, that either one could potentially harm people in South Carolina. So I think we have to be objective, and I feel I can.

Q. Thank you.

MR. WILKES: Are there any other questions? Representative Quinn.

EXAMINATION BY MR. QUINN:

Q. Any of these trips that you went on, were any members of the PSC there with you? Because I'm just kind of perusing through here, and I can't seem to find a single entry similar to yours. I was just wondering why you would have -- I don't have it counted, but it's a pretty fair number of trips basically paid for by associations, and I was curious why I didn't see any other members listed there.

A. Those particular ones, I doubt if there was any other member there.

Q. Did you speak at all these events? Were you a speaker at all times?

A. I was a speaker at some of them. Some of them were board meetings, and some were committee meetings. You know, I'm -- you know, I'm the vice-chairman of the Nuclear Waste Subcommittee, and DOE, Department of Energy, had provided funding to our committee. And sometimes our committee is able to pay for some of the travel to and from basically Washington or out to Las Vegas, and I don't know if there's one of those on there, to look at the repository site.

Q. I see something to Las Vegas.

A. Right.

Q. Is Edison Power and Light, is that a subsidiary or funded by -- I'm sorry. Is Edison Electric Institute funded by Edison Power and Light by any chance?

A. By what power and light?

Q. Edison Power and Light.

A. In part, it's an industry organization. It's funded by all the industry there. And they are basically, as I understand, created and maintained by the industry to do research and to represent the industry best on their desires and what they feel is best for that industry.

MR. QUINN: That's all the questions I have. Thank you.

MR. WILKES: Thank you. Are there any other questions for Mr. Arthur? If not, then thank you, Mr. Arthur, for your time and your answers to our questions.

MR. ARTHUR: Thank you.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. Warren D. Arthur, IV

Home Address: Business Address:

413 Goodson Rd. P.O. Box 11649

Hartsville, SC 29550 Columbia, SC 29211

2. He was born on July 7, 1948, in Hartsville, South Carolina.
4. He was married to Jamie F. Arthur. They were divorced in 1989.

He married Barbara Ricardo Arthur on August 9, 1997.

He has five children:
Daphne D. Arthur, age 28 (Chef);
Allison F. Arthur, age 25 (Public Relations);
Jacqueline D. Arthur, age 20 (College Student);
Catherine F. Arthur, age 17 (High School Student); and
Warren D. Arthur, V, age 16 (High School Student).

He has one step-daughter:
Aida I. Medel, age 14 (High School Student).

5. He served in the South Carolina National Guard, as an E-2, and was honorably discharged in 1970.

6. He graduated from Hartsville High School in 1966; received an Associate of Science from Wingate Jr. College in 1968; and a B.S. in Business from Campbell College in 1970.

7. He held public office on:
Hartsville City Council, 1973-1976;
House of Representatives, 1976-1986; and
S.C. Public Service Commission, 1991-1997.

8. He lost the election for the House of Representatives in 1986.

9. He was an oil jobber from 1970-1981 and was an insurance agent from 1982-1985.
He owned an interest in a restaurant business and a company which produced hair care products.

11. He was charged with DUI in 1985.
He received a $150 speeding ticket in 1992.

14. Several suits involving Warren D. Arthur Oil Co. and Pee Dee Food Systems, Inc. were settled.

19. He worked with the Governor's Office of Criminal Justice Programs on D.A.R.E. with Burke Fitspatrick from June 1987 to September 1990.

22. He has spent $188.82 on printing.

26. He is a member of the following professional organizations:
S.E. Assoc. of Regulatory Utility Commissioners; president
National Assoc. of Regulatory Utility Commissioners,
Nuclear Waste Sub-committee; vice chairman
Electricity Committee;
National Conference of Insurance Legislators; president
Leadership of SC Alumni Association; and
Nuclear Waste Strategy Coalition, Exec. Committee.

27. He is a member of the following civic organizations:
Alcoholics for Christ, Inc., President;
Former Chaplain of the Gideons;
Lakeview Baptist Church, deacon;
American Red Cross;
Southern Baptist Theological Seminary, Bd. of Dir., 1995 to present;
SC Baptist Convention, Exec. Bd. 1993 to present; and
Providence Home for Homeless Men, Bd. of Dir., 1992 to present.

29. Five letters of reference:

1) Mr. John S. Nichols, Jr.

VP Hartsville Nationsbank

100 E. Carolina Ave.,

Hartsville, SC 29550

(803) 383-1900

2) Dr. Donald C. Purvis

202 Lakeview Blvd.

Hartsville, SC 29550

(803) 332-8427

3) Dr. Luke Baxley

500 W. Carolina Ave.

Hartsville, SC 29550

(803) 383-4994

4) Mr. Gerald Malloy

311 W. Home Ave.

Hartsville, SC 29550

(803) 332-1531

5) Dr. Lee Gardner, Jr.

724 S. 4th St.

Hartsville, SC 29550

(803) 383-4562

30. He is seeking the position of Public Service Commissioner for the Fifth District.

31. He owns 942 shares of Sonoco and 209 shares in PNC Bank.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

False - FERC regulates wholesale rates; PSC regulates retail rates.

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

True - PSC only regulates safety of these munies systems.

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True - Electricity rate hearing are: 30-day notice of intent to file. PSC has 6 months from date of filing to make a decision or it goes into effect. PSC can extend five days.

False - It must at least consider other similar risks.

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False - PSC has more complaints about this than anything - I sure think we should regulate cable TV.

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True

7. On average, South Carolina residential customers consume less electricity than the national average.

False - We are no. 3 in the country in consumption because of high humidity and temperatures and because many heat with electricity which they don't in most other areas of our nation.

True

False - That issue is before the FCC right now.

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

False - PSC has hearings once a year to determine the fuel adjustment-- if any.

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

False - About 65% nuclear; about 30 % fossil, about 5% hydro or other.

False - Not until the Committee report is issued.

False

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

True - But, household goods movers wanted regulations and the South Carolina General Assembly passed legislation for PSC to currently regulate household goods/movers.

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False - same over both

True

DISCUSSION:

3. Discuss the concept of "universal service" with regard to telecommunications utilities.

The concept of "universal service" is the idea that every citizen in the state (or county) should have access to personal or (residential) telephone service at a reasonable cost (a cost that is affordable to them).
In our society today, a telephone is considered a necessity and access to 911 emergency service is almost considered a right. Currently (Jan. 1) BellSouth low income customers can receive a $10.50 per month ($7.00 Federal, $3.50 state (BellSouth)) subsidy on their local telephone service. The PSC will hold hearings this spring to establish a universal service fund which will enable all other telephone companies in SC to offer the same $10.50 in 1999.

5. Describe the potential for "stranded costs" in the electric utility industry which might result from the deregulation of retail service.

In years past, the South Carolina Public Service Commission has required the electric utilities to maintain reserves of electricity of up to 20% more than they would need on their projected peaks demand day. In order to do this they had to invest more in generation assets than they would have if they were not required to maintain these reserve margins of electricity.

An electric company sure does not want to have extra unneeded plant investment in a competitive environment. This extra investment is considered "stranded cost" that was caused by previous regulations.

In our state Duke Power has almost no stranded cost. SCE&G has a modest amount of stranded cost. CP&L has relatively high stranded cost. Piedmont Municipal Power Association has a severe problem with stranded cost resulting in their over investment in Nuclear generation assets.

6. To what does the term "generational mix" refer? Please describe the importance of a utility's choice of generational mix from both the economic and environmental perspectives.

"Generation mix" refers to the different types of electric generation a company has that makes up its total generation. In SC, it is about 65% nuclear, 30% fossil (or coal) and 5% hydro.

Nuclear units cost South Carolina's utilities a lot to build originally but today they are the cheapest and cleanest to operate. There is only a small amount of hydro and gas generation in South Carolina but both are very clean. Hydro is very expensive to build but cheap to operate. Gas very (the most) inexpensive to build but more expensive (fuel) than coal to operate. Coal is probably the least desirable form of generation when all three factors are considered (cost of construction, cost of fuel, and environmental pollution).

South Carolina is blessed to have seven nuclear units in our state which are safe and efficient and produce up to 70% of our electricity in a given year.

I think we need to encourage the safe and efficient use of these nuclear units because the cost of electricity would surely go up and potentially be less clean because of the cost of replacing this generation with new expensive generation assets (possibly hydro) or by putting too much trust in the idea that there will always be an abundant supply of cheap natural gas.

I think our state has a good generation mix now. This is supported by the fact that our electricity costs are about 20% below the national average.

* * *

MS. MUSSER: Mr. Chairman, the next candidate is Mr. Clay Carruth for the Fifth District. I believe he's on his way down.

Hi, Mr. Carruth, come on in and have a seat. Mr. Chairman, I have a copy of Mr. Carruth's driver's license which lists an address of 1603 Lyttleton Street in Camden, and his voter registration card lists the same address.

Mr. Carruth, would you raise your right hand please.

H. CLAY CARRUTH, JR., being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you state your full name for the record.

A. Yes, ma'am. My name is Herbert Clay Carruth, Jr.

MS. MUSSER: Mr. Chairman, In reviewing the SLED report for criminal convictions and civil judgments, as well as Mr. Carruth's credit report, there were no negative entries.

MR. WILKES: Thank you.

Q. Mr. Carruth, were you given a copy of your personal data questionnaire summary sometime today?

A. Yes, ma'am, I was.

Q. Have you had an opportunity to review that?

A. Yes, ma'am, I have.

Q. Would there be any corrections, changes you would like to make at this time?

A. Yes, ma'am.

Q. Please tell us what those are.

A. Item No. 4. Cotton, my youngest child, became seven, that's Carl West Carruth, became seven the 23rd of December.

Q. We will make that correction.

A. And it's up to date.

Q. With that one change, would you have any objection to the summary being made part of our record?

A. No, ma'am.

Q. Mr. Carruth, your personal data questionnaire indicates that you are currently the director of research of the Senate Medical Affairs Committee; is that correct?

A. Yes, ma'am.

Q. How long have you been in that position?

A. Since the middle of December 1990.

Q. And prior to that employment, you were employed at the Public Service Commission; is that correct?

A. Yes, ma'am, I was.

Q. And how long were you there?

A. From 1985 through most of 1990.

Q. And please tell us what your duties were at the Commission.

A. Well, I was staff counsel out there. I was the lawyer for the Commission's transportation division, and I handled a good many cases in the utilities department as well.

At that time the Commission was set up in kind of a halfsies version, you know, of the transportation and utilities division. The transportation division had a lot more to do then before recent changes in the law on the regulatory jurisdiction of the Commission.

And so I did almost everything for the transportation division. And I did a little bit of electrical work, a little bit of electric cases, a good many telephone cases, resellers particularly. I did water and sewer cases, did a gas case or two, general rate cases, things like that. Appeared before the Commission, Commission hearings, appeared in magistrate's court for the transportation division around the state. I think I was the only one there to go before juries and appeared in the Circuit Court and Supreme Court and the Court of Appeals.

Q. So would it would be fair to say that you have had experience with most, if not all of the jurisdictional issues in front of the Commission?

A. Yes, ma'am.

Q. You left the executive branch and came to the legislative branch. Would you tell us why you would like to go back to the Commission but this time as a commissioner rather than an employee?

A. Well, when I was out there, I got to know the gist of what the Commission regulates and how it regulates the regulated entities, the standards that were applicable, the legal standards, and how the court treated these matters on review. I became acquainted with the individuals who represent the different interests who come under the jurisdiction of the Commission and became familiar with the Commission staff, got along well with them. I acquired pretty good knowledge, I think, of what the Commission does and an interest in it.

I think since I have been here, I have broadened my knowledge of how the public trust is discharged and the importance of collegiality in doing that particularly, and I think that just adds to what I learned there and enables me to make a substantial contribution if this panel will see fit and if the General Assembly will allow me that opportunity. I think it would satisfy me very much, and I think I could do something that would be significant in the general public interest.

Q. Mr. Carruth, your wife teaches public speaking; is that correct?

A. Yes, ma'am.

Q. Are her clients individuals, or does she have any corporate accounts, or is it a mix? Can you tell us about that?

A. She is an employee and does not have clients as such. Reed Buckley, who is William F. Buckley's little brother, has a school of public speaking over in Camden. She is the seminar director. She in my opinion does not have clients but performs as an employee for Mr. Reed Buckley.

Q. So she has no ownership interest in that business?

A. In point of fact as a precise and picayune matter, I think Reed gave them a certain number of shares several years ago, not many, and the fractional interest is slight. And should that present any problem at all, she could divest herself of it in a heartbeat, and it would not be to our detriment financially.

Q. Mr. Carruth, do you own any utility stock?

A. Speaking of vast holdings, I think I have four shares of one, six shares of another that came into the account over the years on account of stock splits and stock dividends and things like that. And as those of you who are familiar with stock holdings are probably aware, most of the people who deal in that do it in blocks of a hundred or something similar. And to get rid of something like that can be problematical. I would be very willing to divest myself of it just as soon as practicable.

Q. So if you were to be elected, you would divest yourself of that stock?

A. Absolutely, with great glee.

Q. Does your spouse or any member of your household own any utility stocks other than that which you just described to us?

A. No, not my household. My mother-in-law probably does.

Q. Does she reside with you?

A. She does not reside with me, and I don't know what she's got.

Q. Mr. Carruth, have you taken a public position on the issue of electric deregulation for or against?

A. I have not taken a public position, and I don't -- I have not thought that it was appropriate to do so. However, to the extent of my familiarity with the pertinent concerns, I have formulated at least a preliminary conception of what's proper or have some perspective on the matter, but I don't have an official position.

Q. Are you currently a member of or have you ever at any time been a member of any organization, whether that be charitable or otherwise, which was politically active on the question of deregulation?

A. I'm really apolitical. I'm really not a member of any political organization.

Q. Have you ever been approached or contacted by any such organization which advocates the deregulation of power, personally approached?

A. No, I have not.

Q. Have you had a financial relationship or have you had discussion of a future financial relationship with a lobbyist or a lobbyist's principal?

A. No, I have not.

MS. MUSSER: Mr. Chairman, I have no further questions.

MR. WILKES: Any questions for Mr. Carruth from any members of the Committee?

MR. KENNEDY: A couple minor questions.

MR. WILKES: Mr. Kennedy.

EXAMINATION BY MR. KENNEDY:

Q. Mr. Carruth, I'm a carpenter, and I would like you to tell me, how did you get in carpentry in 1981 and '82 in the midst of your career?

A. I was a helper. Representative Kennedy, I just graduated from law school. The economy was in a slump. I was between graduation and job as a lawyer, and I got hired as a carpenter's helper for the minimum wage plus ten cents an hour because I had a law degree. And that's what I did. And I enjoyed it. It was honest work. Nobody had to rock me to sleep at night.

Q. Thank you. That's why you went into other work?

A. I decided I didn't want to do it indefinitely, yes, sir.

CHAIRMAN HOLLAND: One thing about Mr. Carruth I don't think he tells us. He was involved in the Vietnam conflict for many years, and he doesn't mention that on this document.

MR. CARRUTH: Well, I wasn't there many years, with all due respect, Mr. Chairman, wasn't there many years, but I did my one over there. It seemed like many.

MR. WILKES: Any other questions of Mr. Carruth?

EXAMINATION BY MR. WILKES:

Q. Mr. Carruth, you had made the statement a few minutes ago on the issue of deregulation that you had formed sort of, I guess, your own personal conceptual framework. As a member of the Commission, would you be able to maintain your objectivity on this issue as we move in that direction or as the Commission moves in that direction?

A. Representative Wilkes, I would be consistent with the framework which I haven't divulged yet that I have already formulated as a preliminary matter. One of the things, conceptual aspect of the framework, if you will, is that this thing is a moving target. It's a matter of complexity and performance, that precipitous action should be avoided.

That pretty much means, I think, you do what's indicated as it's indicated. And I think as an individual, now that's my perception, and I think that's the perception I would bring with me if you all see fit to elect me.

MR. WILKES: Very good answer. Thank you. Any other questions for Mr. Carruth? Mr. Carruth, thank you for coming and spending some time with us. We appreciate it.

MR. CARRUTH: Thank you for the briefness of that time.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. H. Clay Carruth, Jr.

Home Address: Business Address:

1603 Lyttleton Street P.O. Box 142

Camden, SC 29020 Columbia, SC 29202

2. He was born on August 15, 1948, in Athens, Georgia.

4. He married Anne West Carruth on December 16, 1978.

He has three children:
Herbert Clay Carruth, III, age 12;

George West Carruth, age 9; and

Carl West Carruth, age 7.

5. He served in the United States Army from February 28, 1969 until February 22, 1971, when he was honorably discharged.

6. He received a B.A. in Philosophy from the University of South Carolina (USC) in 1973. He was a Ph.D. candidate at USC in Comparative Literature from 1973-1976; he resigned to attend the University of Tennessee School of Law from 1977-1979. He received his J.D. from the USC School of Law in 1980.

8. He was a candidate for an Administrative Law Judgeship in 1994, but withdrew prior to the elections.

9. He has worked with:

Office of the South Carolina Attorney General, staff attorney, 1982-1984;

Office of the South Carolina Attorney General, assistant Attorney General (child support division), 1984-1985;

South Carolina Public Service Commission, staff counsel, 1985-1990; and
South Carolina Senate Medical Affairs Committee, director of research and attorney, since 1990.

19. He has worked for the State Government in the capacities listed above in number 9.

26. He is a member of the South Carolina Bar Association.

27. He has served on the following civic, charitable, etc. organizations:

Southern Legislative Conference Energy and Environment Committee;
Buckley School of Public Speaking Forensic Society;

Federalist Society;

Wilson Hall Athletic Association;
Camden Country Club; and

Springdale Hall Club.

29. Five letters of reference:

1) Robert T. Bockman, Esquire

McNair Law Firm, P.A.

P.O. Box 11390

Columbia, SC 29211

2) Sarena D. Burch, Esquire

1426 Main Street, MC130

Columbia, SC 29201

3) Nancy V. Coombs, Esquire

P.O. Box 5757

Columbia, SC 29250-5757

4) Susan A. Lake, Esquire

Nexsen, Pruet, Jacobs, & Pollard

P.O. Drawer 2426

Columbia, SC 29202

5) Kenneth L. Lannigan

Vice President, Merrill Lynch

P.O. Box 11269

Columbia, SC 29211

30. He is seeking the position of Public Service Commissioner for the Fifth District.

31. He owns six shares of SBC Communications stock and four shares of SCANA stock.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

False

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

True

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True

False - Hope and Bluefield decisions, as well as previous PSC orders state the standard as being that of affording an opportunity to earn a commensurate rate with enterprises of a corresponding risk.

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True

7. On average, South Carolina residential customers consume less electricity than the national average.

False

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

True - the word "automatic" is a bit problematic. The procedure is regular, periodic, and the clause is standard.

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

False

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False

True

DISCUSSION:

4. What is the "rate base" and how is it used in public utility regulation?

"Rate base" is a rather broad concept referring to the utility's investment in its "used and useful" generating plant and operations capacity, upon which it should be allowed an opportunity to earn for its owners a "fair and reasonable" return. Such standard items as plant in service (less reserve for depreciation), construction work in progress, plant held for future use, working capital allowance, operational and maintenance reserves are allowed. Excluded are contributions in aid of construction, availability fees, deferred taxes, and other matters not contributed by shareholder investment and "used and useful" to generation of electricity (e.g.) sold to the public.

Methodology: a 12-month "test year," usually the previous year for which data is available, is determined, and certain accounting and pro forma adjustments to it are made for "known and measurable" changes in expenses and revenue. Revenue requirements are determined for the utility's operations in order to produce an approved rate of return on rate base. Rate of return on rate base, and cost of capital items are the gist of a major utility's general rate case.

A standard "chart of accounts" is used for regulatory accounting purposes. Additions to, or subtractions from, rate base are made according to a particular matter's recognition in terms of these accounts.

Revenue requirements are figured based on the adjusted test year data, and additional matters such as customer growth are considered if known and measurable. Such standard accounting concepts are applied as are reflected in whether to capitalize or expense items for regular business accounting purposes, but regulatory accounting is peculiar.

The rate of return on rate base is figured based on an allocation of revenues to rate base. It will yield a return in terms of a percentage figure. This involves projections, based on the revenue and rate base items carried over from the test year but with allowance for known and measurable changes and the adjustments previously discussed.

As to whether you use historic test year data, or immediately prior 12-month test year for which complete data are available, there is a recent S.C. Supreme Court case, Heater Utilities of Seabrook, which says that the standard in a H2O and sewer case was the historic test year rather than the one calendar year immediately past. Operating ratio is another rate-making methodology used by PSC. There is no specific legal requirement as to rate-making methodology PSC must employ.

5. Describe the potential for "stranded costs" in the electric utility industry which might result from the deregulation of retail service.

Stranded costs are those embedded costs which public utilities (electric retail) have incurred over time to fulfill the regulatory compact obligation of providing service to every customer in their service areas who requests such service. To insure adequacy, reliability, growth, and response to emergency situations, regulatory commissions have required electric utilities to establish certain plant generating capacities. In addition to operating and reserve capacities, there are environmental requirements imposed by regulatory agencies. All of these costs, generally, have been permitted to be recovered over time by the utilities in their approved rates on an amortized basis (usually). This obligation to serve was predicated upon guaranteed monopoly service areas.
To the extent that the utilities' investment in all this capacity exceeds the fair market value of that generating capacity in a deregulated, competitive market for electric generation, you have stranded costs. The issues then become how you quantify, and allow recovery for, costs associated with, e.g. nuclear decommissioning and waste disposal costs (spent fuel, etc.). Also, excess capacity for generators which are more expensive to operate than other types of generators becomes a "white elephant."

The general problem with recognition and treatment of stranded costs is that there is much speculation about them and little experience according to which the value of generating capacity in a re-regulated, competitive market might be determined. The old way of recognition of costs incurred under the regulatory compact by rate of return on rate base methodology would be gone, and there might arise daunting legal and practical issues.

6. To what does the term "generational mix" refer? Please describe the importance of a utility's choice of generational mix from both the economic and environmental perspectives.

"Generational mix" refers to the different types of fuel used by utilities to generate electric power. Some examples are: fossil/steam (coal), nuclear/steam, hydro (water), oil, gas turbine/internal combustion.

The choice of generational mix is important for environmental and economic reasons (and, to an extent, environmental reasons have economic translation).

Coal is a relatively cheap and reliable fuel, but the combustion of it produces carbon and sulphur dioxide, which causes "acid rain" and contributes nitrogen and CO2 to the "greenhouse effect" which is supposed to cause global warming. On the other hand, nuclear is cheaper in respect of fuel, but the plant capacity is more expensive to establish, and the spent fuel must be safely disposed of and the plant decommissioned. The cost of lowest sulphur coal and installation of "scrubbers" can make coal cleaner burning, but at some additional expense. Nuclear plants are more expensive to build, but are "clean-burning" generation. Still, there are great waste disposal costs as to spent fuel and decommissioned parts of generating plant. An issue has arisen lately as to renewed licensure for nuclear reactors - over what period of time should the process take? For how long should they be licensed? What will it cost? Better to relicense or decommission from economic and environmental perspective?

The establishment of new generating capacity, e.g. gas turbine/internal combustion, may seem desirable currently, but there may be problems down the road regarding adequate capacity. Renewables, like photovoltaic and wind, are expensive and not continually reliable. Also, what do you do with leftover, obsolete generation capacity and how do you treat costs?

MS. MUSSER: Mr. Chairman, our last candidate for today is Mr. Hall, candidate for the Fifth District.

Mr. Chairman, I have Mr. Hall's driver's license. It states an address of 2520 Wooten Road in Chester. His voter registration card lists the same address. Mr. Hall, if you would, raise your right hand please.

RICHARD A. HALL, being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you please state your full name for the record.

A. Richard A. Hall.

MS. MUSSER: Mr. Chairman, in reviewing the SLED report for criminal convictions, civil judgments and Mr. Hall's credit report, there are no criminal convictions. There are no unsatisfied judgments. The only other item listed was simply a situation, I believe -- Mr. Hall, I don't want to put words in your mouth. You purchased some property at a tax sale. The previous owner came back and redeemed the property?

A. Correct.

Q. And that was the extent of that?

A. Yes.

MS. MUSSER: There are no other entries other than that which I just described, Mr. Chairman.

Q. Mr. Hall you were given a copy of a personal data questionnaire summary, I believe.

A. Yes.

Q. Have you had an opportunity to review that summary?

A. I have.

Q. Would you like to make any changes at this time?

A. Item 10, that should read is a director. I'm not the only director.

Q. Okay. We've got that.

A. And then item 31, I think my wife owns more shares than that states.

Q. Could you give us a guesstimation of that?

A. It's probably 3500 shares.

Q. We will put approximately that if that suits you. With those changes, would you have any objection to the amended summary being made part of the permanent record?

A. No, ma'am.

Q. Would you please briefly tell the Committee why you would like to serve on the Public Service Commission?

A. It's a change of direction. It's a way to serve the state. And I'm familiar with the utility business, been involved with it for a good while. I understand it, like it. Just a change of direction to what I'm doing right now.

Q. Your PDQ said that you had worked with some utilities in the past, I believe Duke Power?

A. Yes, ma'am.

Q. Do you have any ownership of that stock or any other utility stock?

A. My wife owns some shares of the Chester Telephone Company.

Q. And what would be your plans or her plans --

A. We would have to dispose of them if I'm elected.

Q. You also gave me a document listing some stocks that are held by an association. I believe it's called Les Douze Association, D-O-U-Z-E, and if I remember my French correctly, that means 12?

A. Yes.

Q. 12 of you belong to that?

A. Yes.

Q. And there is some AT&T stock held by that association?

A. Yes.

Q. What would be your plans as far as your continued association with that investment association?

A. Well, if I have to drop out, I'll drop out I suppose.

Q. Knowing that your former associates still hold that interest, would you have any sense of conflict serving on the Commission having had partners that were involved with that stock?

A. I don't quite understand.

Q. Let me rephrase the question. Since you would have been associated with the members of your association, your Douze associates who held the AT&T stock, who continued to hold the stock once you became a Public Service Commissioner --

A. I would probably have to drop out of the club because I am 1 of 12, and it's an investment club, so I would have drop out probably if I had to.

Q. Once you did drop out of that club, would you have any conflict knowing that these former associates of yours still held that stock?

A. No, I wouldn't have a problem with that.

Q. You could be fair and impartial even though you had --

A. If I dropped out of the investment club, I would no longer have an interest in the investment club. Am I answering your question properly?

Q. Yes, sir. That's fine. Your PDQ indicates that you are a director of Chester County Natural Gas Authority. What would be your plan to continue --

A. Withdraw from that board.

Q. You also indicate that you're the owner of the Richard Hall Real Estate Company. Do you sell or lease properties or both?

A. Not to any utility, no, ma'am.

Q. What type of property is it?

A. Residential rental property.

Q. If you were to be elected to the Public Service Commission, would you continue to own or operate this business?

A. I wouldn't operate the real estate sales part of it. I would continue it on my own personal rental property.

Q. You have three children, I believe?

A. That's correct.

Q. And you have a son who's an attorney; is that correct?

A. That's correct.

Q. And what type of law does he practice?

A. He does criminal law and insurance law, insurance claims.

Q. And the college student is employed as a photographer; is that right?

A. That's correct. She's in photography school.

Q. Mr. Hall, could you please tell us what generational mix refers to.

A. Generational mix?

Q. Yes, sir.

A. I think it refers to a company's choice of fuels to be used with -- like a power company uses coal and nuclear, water, hydro.

Q. Mr. Hall, have you ever taken a public position on the issue of electric deregulation?

A. Not to my knowledge, no, ma'am.

Q. Are you currently a member of or have you ever been a member of any organization, whether it's charitable or otherwise, which is politically active on the issue of electric deregulation?

A. No, ma'am.

Q. Have you ever been approached or contacted by any such organization?

A. No, ma'am.

Q. Have you had a financial relationship with or have you had discussion on a future financial relationship with a lobbyist or a lobbyist's principal?

A. No.

MS. MUSSER: Mr. Chairman, I have no further questions.

CHAIRMAN HOLLAND: Any questions by any members of the Committee? Representative Wilkes.

EXAMINATION BY MR. WILKES:

Q. Mr. Hall, how are you?

A. Fine, sir.

Q. Do you feel that if elected as a member of the Public Service Commission that you could remain objective and impartial as it relates to the deregulation issue?

A. I think so. I believe I could.

CHAIRMAN HOLLAND: Any other questions? Thank you so much, Mr. Hall.

MR. HALL: That's it?

MR. WILKES: Yes, sir. Thank you.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. Richard A. Hall

Home Address: Business Address:

2520 Wooten Road 136 Main Street

Chester, SC 29706 Chester, SC 29706

2. He was born on July 16, 1943, in Chester, South Carolina.

4. He married Lois Brice Hall on August 22, 1964.

He has three children:

Richard A. Hall, Jr., age 31 (environmental logger-timber frame builder); Thomas Brice Hall, age 30 (attorney); and Edith Pressly Hall, age 25 (student).

6. He graduated from Chester High School in 1961; attended Spartanburg Junior College in 1964; and received a B.S. in Marketing from the University of South Carolina in 1967.

8. He ran for the Fifth District Seat on the Public Service Commission in 1993, but withdrew prior to the election.

9. He has worked with:

Duke Power, sales representative, 1967-1972; and

Richard Hall Real Estate Co., since 1972.

10. He is a Director of the Chester Natural Gas Authority and the owner of Richard Hall Real Estate Co.

14. He was sued in 1986 by a woman who wanted to have his purchase of her foreclosed land voided.

19. He served as a Page in the South Carolina Senate from 1965-1966.

26. He is a member of the following professional organizations:

Chester County Board of Realtors;

South Carolina Association of Realtors; and

Chester County Home Builders Association.

27. He has served on the following civic, charitable, etc. organizations:

Chester Rotary Club;

Chester County Chamber of Commerce;

Chester ARP Church;

Chester Assembly Club;

Les Douze Investment Club; and

Chester Down Town Development Association.

29. Five letters of reference:

1) Wallace Boyd

Founders Credit Union

72-By-Pass

Chester, SC 29706

2) Don B. Murray

Murray Lumber Company

221 Gadsen Street

Chester, SC 29706

3) Rev. Dwight Pearson

ARP Church

122 York Street

Chester, SC 29706

4) William Keel, Esquire

126 Main Street

Chester, SC 29706

5) Mrs. Geraldine Clawson

162 Cemetery Street

Chester, SC 29706

30. He is seeking the position of Public Service Commissioner for the Fifth District.

31. His wife owns approximately 3500 shares of Chester Telephone Company stock.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

True

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

True - only investor owned

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

True

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True

7. On average, South Carolina residential customers consume less electricity than the national average.

True

False

True

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

True

False

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False

True

DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?

Industries regulated by PSC are as follows:
(a) Investor owned electric utility companies

Rival electric co-operatives as to territorial assignments

(b) Radio common carriers

(d) Trucking companies hauling hazardous waste, household goods, and people (buses)

(e) Railroads

(f) Investor owned water and waste water companies

Why are these industries regulated? These industries are monopolies and need a voice to speak for their consumers as to rates, etc., i.e., a customer of Duke Power Company, at present, has no other choice for electricity, thus a monopoly exists. This customer needs a voice, with authority, to speak for its interests.

4. What is the "rate base" and how is it used in public utility regulation?

"Rate base" is the cost of producing the product of the industry involved that will allow the investor in that industry to make a reasonable return. Investor owned companies need to have this cost to attract many to their particular industry to maintain the quality of their product.

The PSC, in determining rate increases desired by these companies, need this data and supporting data to make informed decisions on these matters.

6. To what does the term "generational mix" refer? Please describe the importance of a utility's choice of generational mix from both the economic and environmental perspectives.

"Generational mix" refers to utility companies having more than one product to offer, i.e., Duke Power Company buying a natural gas pipeline to become more diversified as deregulation becomes more prevalent. This mix allows them to reach more markets and become a "utility company of choice" in the wholesale and retail sale of their products. Financially strong companies will be able to better serve their customers and insure the quality of their environment and ours.

* * *

MS. MUSSER: That concludes the candidates for today, Mr. Chairman.

CHAIRMAN HOLLAND: Let me ask members of the Committee if anybody has any problems with the time we started. We are still good for 10:00? So we will be back at 10:00 in the morning. Thank all you gentlemen for coming. This meeting is now adjourned.

(The meeting was adjourned at 3:50 p.m.)

* * *
Thursday, January 8, 1998
10:00 a.m.

DEBRA D. HAMMOND, Administrative Assistant

REPRESENTATIVE WALDROP: I make a motion to go into executive session.

REPRESENTATIVE WILKES: Seconded.
(Executive session.)
10:24 A.M.

SENATOR HOLLAND: Gentlemen, we are now
back in regular session.
(Off-the-record discussion.)

SENATOR HOLLAND: Ms. Musser, who's the first candidate?

MS. MUSSER: The first candidate, Mr. Chairman, is Ms. Bigham for the Fifth District.

SENATOR HOLLAND: Someone usher her in and get her a cup of water.

MS. MUSSER: Good morning, Ms. Bigham.

SENATOR HOLLAND: Morning, Ms. Bigham. Have a seat.

MS. BIGHAM: Hey, how are you?

MS. MUSSER: Mr. Chairman, I have the driver's license of Ms. Bigham which reflects an address of 1528 Blanchard Bend in Rock Hill, South Carolina, 29732, and a voter registration card reflecting the same address.
If you would, raise your right hand, please.

KATHY H. BIGHAM, being first duly sworn by Ms. Musser, testified as follows:

EXAMINATIONBY MS. MUSSER:

Q. Would you please state your full name for the record.

A. Kathy Hudson Bigham.

MS. MUSSER: Mr. Chairman, in reviewing Ms. Bigham's SLED report and credit report, there are no negative entries on Ms. Bigham's credit report, and there are no negative entries on Ms. Bigham's SLED report as well.

BY MS. MUSSER:

Q. Have you had an opportunity, Ms. Bigham, to review your Personal Data Questionnaire Summary; were you given a copy this morning?

A. Yes, I was.

Q. Are there any corrections or other changes you would like to make?

A. No. I think it's fine.

Q. Would you have any objection to that summary being made part of the record of these proceedings?

A. No, I would not.

Q. Ms. Bigham, tell us, please, if you would, why you would like to serve on the Public Service Commission.

A. I feel that it would be an opportunity for me to provide a service to the citizens of South Carolina. Our entire family has always been very involved in our community and tried to give back to it. The state of South Carolina has been good to our family. I have lived here all my life
and in the Fifth District all my life. Larry and I have raised our family here. Our oldest daughter, Amy, graduated from the Honors College at the University of South Carolina; and our youngest daughter, Kelly, is a sophomore at Winthrop University. And our state prepared them through the public schools for this opportunity, and I feel like this would just be an extension of giving something back to our state. I think that my business background would be an asset to me and that -- and to the Commission, and that I would try to serve with fairness.

Q. Thank you.

Your Personal Data Questionnaire indicates that you are currently the president and co-owner of B&G Food Services; is that correct?

A. Yes. That's a restaurant that we've owned in Rock Hill since 1983, and it's -- it does
business by the name of Thursdays II, just like the day of the week.

Q. What is your involvement in that business; do you run it on a day-to-day basis or what?

A. Yes, I do; but fortunately because I run the business with my husband, Larry, it has afforded us the opportunity to do other things from time to time.

In 1995, I was serving as one of three South Carolinians on the Carolina's Billy Graham Crusade Executive Committee, and that took me to Charlotte three, sometimes four times a week, four days a week, and then I traveled at night across the areas and spoke for the crusade. So there have been several times during our ownership of Thursdays that we've both been away from our business.

We have a very strong management team; two of our managers have been with us for the entire 16 years that we have owned the business, and one has been with us for nine years.

Q. So you have some flexibility where that's concerned?

A. Yes, I do.

Q. What would be your plans to continue in your current role in the business if you were to be elected as a commissioner, the same, or would you --

A. Instead of a hands-on manager, more of an advisory manager.

Q. Okay. You mentioned your two children. I believe one who's already graduated from college who has a pharmaceutical career; is that correct?

A. Right.

Q. And the other is a college student; is that right?

A. That's correct.

Q. What, if any, employment does the college student engage in?

A. She does work twice a week for us at our family restaurant.

(Representatives Kennedy and Quinn enter the room.)

BY MS. MUSSER:

Q. Any other employment besides that?

A. No.

Q. Ms. Bigham, do you own any utility stock?

A. We have 15 shares of South Carolina Electric & Gas stock that was given to us, to our daughter, Amy, when she was born from a family friend. We have just turned that over through the years. I'm not sure how many that would be now. But if elected to the Commission, we would sell the stock immediately.

Q. Okay. Is Amy the child who lives at home?

A. No. She lives in Wilmington, North Carolina.

Q. Other than that SCE&G stock, do you have any other utility stock or --

A. No, we don't.

Q. -- does your spouse?

A. No, and no family member.

Q. Your husband, I see, is currently a member of the Public Service Authority, that is, Santee Cooper. Is that correct?

A. Yes, it is. And although the Public Service Commission has no jurisdiction at this time over the Public Service Authority, if that were to change in the future or if there would ever even be the appearance of a conflict of interest, Larry would resign from the Public Service Authority so I could serve as a commissioner.

Q. Okay. Ms. Bigham, have you ever taken a public position on the issue of electric deregulation?

A. No, I have not.

Q. Are you currently a member of or have you ever at any time been a member of any organization, whether that's charitable or otherwise, that's politically active on the question of deregulation?

A. No, I have not.

Q. Have you ever been contacted or approached by any such organization?

A. No.

Q. Have you had a financial relationship with or have you had discussion of a future financial relationship with a lobbyist or a lobbyist's principal?

A. No.

MS. MUSSER: I have no further questions, Mr. Chairman.

SENATOR HOLLAND: Any questions by any members of the Committee?

Thank you, Ms. Bigham.

REPRESENTATIVE KENNEDY: Well, yes, sir.

SENATOR HOLLAND: I'm sorry, Representative Kennedy.

EXAMINATION BY REPRESENTATIVE KENNEDY:

Q. Ms. Bigham, in your own words, would you please tell me what do you think the Public Service Commission does. What are their functions?

A. I feel that they are a regulatory board over our investor-owned utilities, intrastate, gas, sewage. They have jurisdiction over the telephone industry, motor carriers, radios and that they serve to -- in -- from what I understand, they do a lot to govern rates and regulations over these agencies.

Q. Susan asked you, and I will ask you again, what will you bring to the Public Service Commission? You are running. What are you going to bring with you when you come?

A. Well, I can only pledge to you that I think I'm qualified from having served in the civic organizations through the years. I've been a member of our Rock Hill area chamber board of commerce. I serve on several boards in our area, and I understand how important it is that when you serve on a board, or in this instance a commission, that you remain open minded and that you try to be fair. I would certainly serve in a very professional way, would take responsibilities very serious and would serve with honor.

I think my business background -- again, I'm used to working with people; and I think if you ask anybody that's ever worked for me, they will tell you that I'm fair. And I am used to having to make tough decisions, and I think that you would certainly be called on to use those skills as a commissioner.

Q. If you were making a decision and you were weighing the citizens of the state of South Carolina against big industry, tell me, where would your heart be?

A. Well, I think my heart would be with the consumer, with our citizens that I am on this Commission to represent.

I would try to think with every decision that I make not just how it would affect me and my family, but I have an 82-year-old mother that's on a fixed income, and I would think how it would affect her, how it would affect my small business, but also the economic growth of our area, and I would try to consider all the entities and make a very fair decision. But I think first and foremost as a commissioner I would be there to represent the citizens and the consumer.

REPRESENTATIVE KENNEDY: Thank you, ma'am.

SENATOR HOLLAND: Any further questions?

Thank you, Ms. Bigham. Glad to see you again.

MS. BIGHAM: Thank you. Appreciate the opportunity to be here today.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. Kathy Hudson Bigham

Home Address: Business Address:

1528 Blanchard Bend 147 Herlong Avenue

Rock Hill, SC 29732 Rock Hill, SC 29732
2. She was born on December 7, 1950, in Columbia, South Carolina.

4. She married Larry L. Bigham on June 25, 1972.

She has two children:
Amy L. Bigham, age 23 (Pharmaceutical Specialist-Astra Mereck Inc); and
Kelly J. Bigham, age 19 (Winthrop University Student).

6. She graduated from Chester High School in 1969, and received a B.A. in Sociology from Winthrop College in 1973.

9. She was an educator at Chester Junior High School in 1974. She has been the President of B&G Food Services, Inc. since 1984.

10. She is the President and Co-owner of B&G Food Services.

27. She has served on the following civic organizations:
Rock Hill Area Chamber of Commerce Board of Directors;
Clinton Junior College Board of Advisors;

Winthrop University Eagle Club Board of Directors;
Wachovia Bank Advisory Board of Directors;
Christians to Feed the Hungry Board of Directors;
Northwestern High School Academic Booster Club Member;

Carolinas Billy Graham Crusade Executive Committee;

York County Co-chair for Outreach Carolina;

Chairperson of 1997 NAACP Freedom Fund Dinner;

Tarantella Dance Club; and

Junior Welfare League.

29. Five letters of reference:

1) Dr. Robert D. Shrum, Senior Pastor

Oakland Baptist Church

1067 Oakland Avenue

Rock Hill, South Carolina 29732
2) Dennis J. Stuber

Vice President/City Executive

First Citizens Bank

P.O. Box 11396

Rock Hill, South Carolina 29731-1396

3) Mark DeMarcus

Vice President

Wachovia Bank

P.O. Box 2918

Rock Hill, South Carolina 29732-4918

4) Carlton P. Heustess

762 Myrtle Drive

Rock Hill, South Carolina 29730

5) Shan F. McDonald

1828 Charter Drive

Rock Hill, South Carolina 29732

30. She is seeking the position of Public Service Commissioner for the Fifth District.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

False - The S.C. Public Service Commission regulates the retail sale of electricity by the investor-owned utilities in the state.

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

True

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True - A function of the administration is to maintain the docket and notify the public of hearings.

True

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True

7. On average, South Carolina residential customers consume less electricity than the national average.

True

False - The S. C. Public Service Commission recently voted 7-0 that BellSouth had met the 14 point checklist to enter the long distance market. The FCC will take action.

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

False

False - Section 8-13-930 states that a candidate for the S. C. Public Service Authority cannot seek the pledge of a member of the General Assembly until after the Screening Committee issues its report.

False - I was asked in my informal interview if stock (SC Electric & Gas) given to my daughter at birth (15 shares) would be sold if I was elected.

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False - Under the motor vehicle regulation, household goods is under the S. C. Public Service Commission.

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False

True

True
DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?

There are six industries regulated by the South Carolina Public Service Commission - the investor-owned electrical utilities, the intrastate investor-owned utilities, telephone, radio, motor vehicle and railway and railroads. These industries are regulated to insure fairness and quality of rates, charges, services, facilities, practices and activities of these industries.

3. Discuss the concept of "universal service" with regard to telecommunications utilities.

The term "universal service" when used with regard to the telecommunications utilities is to provide telephone services to rural, high-cost areas and to low income areas at a reasonable cost. The Universal Trust Fund is to assure that the expense for the high cost areas is distributed so that the cost is shared. Some services provided to the consumer by our telephone companies actually operate below cost to the provider while some services such as call waiting, caller I.D., voice mail, etc., have a high profit margin to off set the rural, low income below cost areas. The "universal service" would assure continued service to all customers at a fair price.

5. Describe the potential for "stranded costs" in the electric utility industry which might result from the deregulation of retail service.

The electric utility industry has incurred cost as it has built facilities to provide electrical services to its customers. These costs were scheduled to be recouped over a long period of time at a low rate to the consumer. If retail service was deregulated and the consumer chose another utility provider, some utilities with a higher debt service and a loss of customer volume would be faced with cost they incurred to service an area they are no longer serving. The loss of a major electrical customer before the cost to serve has been recouped could leave providers in the electrical utility industry with these stranded cost.

* * *

MS. MUSSER: Mr. Chairman, the next candidate is a Mr. Kyzer, also running for the Fifth District seat.

SENATOR HOLLAND: Usher him in and give him a glass of water.

MS. MUSSER: Mr. Chairman, I have Mr. Kyzer's driver's license. It indicates an address of 2210 Evans Circle in Newberry, 29018.

Mr. Kyzer, if you would, raise your right hand, please.

T. EDWARD KYZER, being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you please state your full name for the record.

A. My full name is Thomas Edward Kyzer. I go by T. Edward Kyzer.

MS. MUSSER: Mr. Chairman, in reviewing Mr. Kyzer's SLED report and credit report, staff reports that they were both negative, there are no negative entries as to either.

BY MS. MUSSER:

Q. Mr. Kyzer, were you given a copy of a Personal Data Questionnaire Summary this morning?

A. Yes. I have it in front of me.

Q. Have you had an opportunity to review it?

A. Yes, I have.

Q. Would you like at this time to make any changes or corrections to that summary?

A. No. The only thing that could be added in some of my duties, I worked for the Junior Achievement program.

Q. Junior Achievement, okay.

A. That's all.

Q. All right. With that change, would you have any objection to the summary being made part of the permanent record of these proceedings?

A. No.

Q. Thank you, sir.

Mr. Kyzer, you are currently the Mayor of Newberry, I believe.

A. That's correct.

Q. Since 1990 --

A. That's correct.

Q. -- is that right?

A. Yes.

Q. Tell us why you want to leave municipal service and become a Public Service commissioner, if you would.

A. Well, being involved in an electrical city and utility city, I think with the new regulations coming upon us, that we probably need all the experienced people we can to follow up on deregulations and also see that the public itself is the main concern, that whatever regulations are passed are in the public interests.

Q. Okay. You are also the senior vice president of human resources for Thomas and Howard; is that correct?

A. That's correct.

Q. Tell us what kind of business that is, please.

A. It's a food service distribution, distributing food to restaurants and fast food chains.

Q. And how long have you been with Thomas and Howard?

A. Approximately 30 years.

Q. Thirty years.

I would assume that's a full-time position.

A. It is.

Q. What would be your plans as to continued employment with Thomas and Howard should you be elected to the PSC?

A. I would resign.

Q. Your Personal Data Questionnaire also indicates that you serve as the chairman of the Clinton/Newberry Natural Gas Authority; is that correct?

A. I do at the present time, yes.

Q. And your plans as to continued membership on that authority?

A. I would have to resign.

Q. Mr. Kyzer, do you own any utility stock?

A. No, I do not.

Q. Does your spouse or any member of our household own any utilities' stock?

A. No, they do not.

Q. Mr. Kyzer, if you would, in your own words, please, describe the potential for stranded costs in the electric utility industry which might result from the deregulation of retail service.

A. Well, stranded costs, in my opinion, on deregulation would be affecting electrical cities. Stranded costs would be the costs they would lose on the transmission lines.

Q. Mr. Kyzer, have you ever at any time taken a public position on the issue of electric deregulation?

A. No, I have not.

Q. Are you currently a member of, or have you at any time been a member of an organization, whether that be charitable or otherwise, which is politically active on the question of deregulation?

A. No, I have not.

Q. Have you ever been contacted or approached by any such organization advocating the deregulation?

A. No, I have not.

Q. Have you had a financial relationship with or have you had discussions of a future financial relationship with a lobbyist or a lobbyist's principal?

A. No, I have not.

MS. MUSSER: Mr. Chairman, I have no further questions.

SENATOR HOLLAND: Any questions from the members of the Committee?

REPRESENTATIVE KENNEDY: Yes, sir.

I would like Mr. Kyzer to tell me in his own words what does he think the Public Service Commission does as a whole. What is the function of the Public Service Commission?

MR. KYZER: It regulates the services as to communications, gas lines, electrical lines and any type of utility communication of that nature. It regulates the tariffs. It regulates the type services that would be generated by these services.

EXAMINATION BY REPRESENTATIVE KENNEDY:

Q. And, Mr. Kyzer, what do you bring to the Public Service Commission?

A. Well, I would bring my experience with the Clinton/Newberry Natural Gas Authority by watching over that industry since 1990, as chairman since 1994, about what the problems -- would arise.

When you have electrical -- when you have utility cities, it's a revenue generator for these cities. Of course, on deregulation, what would happen is that, of course, if they're privatized, that some of the funding that would come from revenue generators of the utility cities would have to be taken into consideration by the Public Service Commission as to what's fair for all so that the taxpayers of the cities, their tax would not skyrocket.

And I think I bring experience on knowing the tax base of the city. I bring the experience of people like the PMPA that we deal with through our city and people like the Gas Authority that we deal with on gas transmissions through the lines.

But I think basically utility experience I have by being with a utility city.

REPRESENTATIVE KENNEDY: Thank you, sir.

REPRESENTATIVE WILKES: Mr. Chairman.

SENATOR HOLLAND: Representative Wilkes.

EXAMINATION BY REPRESENTATIVE WILKES:

Q. Good morning, Mr. Kyzer. How are you?

A. Good morning, sir.

Q. All right. You mentioned the word fairness a few minutes ago. I live in Winnsboro, and Winnsboro also is an electric city, and in Fairfield County we have a nuclear power plant in Jenkinsville as you probably know.

A. Yes.

Q. As we proceed into deregulation, if it does occur, how important do you think fairness and objectivity will be for a Public Service commissioner as one of the architects of probably how deregulation will be carried forward?

A. Well, in fairness, you've got to take into consideration the public that you represent and the entire district. In other words, the taxpayer himself. When you take a -- well, like you said, like Winnsboro or Newberry, you take the tax base, maybe you are running at 80, 85 mils. All of a sudden deregulation, you lose a lot of your utility base, and that would drive your tax to almost triple if you didn't have the utility base to supplement your tax base.

Q. So it is going to be a very complex issue to deal with.

A. It definitely, will, yes. I think there's room for all, but it needs to be watched over very carefully.

REPRESENTATIVE WILKES: Thank you.

SENATOR HOLLAND: Are you through?

REPRESENTATIVE WILKES: Yes, sir.

SENATOR HOLLAND: Any further questions?

EXAMINATION BY SENATOR HOLLAND:

Q. Mr. Kyzer, I live in a city which is also an electric city.

A. Yes, sir.

Q. Have you ever given any thought to whether or not the PSC should regulate electric cities or if they should be under the PSC?

A. I think the deregulation coming up here would be an opportunity to look at that, yes.

Q. What?

A. I think the deregulation coming in, that there would be an opportunity to take a look at that by the PSC.

REPRESENTATIVE KENNEDY: Mr. Chairman, I would just like to follow up with one more question.

REEXAMINATION BY REPRESENTATIVE KENNEDY:

Q. Mr. Kyzer, I'm from rural South Carolina, and I'm really concerned about deregulation and the effect that it may have upon the rural South Carolinians.

A. Yes, sir, I agree.

Q. As a member of the Public Service Commission, where do you see -- how would you look at this deregulation when it comes to affecting the rural areas in the state? Just basically, where is your mind with that?

A. Okay. I, too, am in a rural area; and, of course, we have special purpose districts in our area, rural electricity; and I think the rural electricity has done a fantastic job of getting us to the point where we are; and they must be considered to continue that point. I think deregulation of the rural areas, they could be hurt just as well as the cities can with -- by driving prices in a different direction than what they may have been.

I guess you can take a look at telecommunications deregulation. We thought we would get a cheaper deal by deregulating. It's not such a cheaper deal. It hasn't been watched like it should. A telephone call that should be a dime, some people pay 48 cents thinking they are paying a dime per minute.

So, yes, we have a big chore ahead of us, a very big chore.

Q. If deregulation happens in South Carolina, do you see the Public Service Commission duties growing, becoming more than really what it is now, like do you think the -- I guess my question is: Do you think that the Public Service Commission then, because of deregulation of electricity, would be a watch dog agency over this?

A. Yes, sir. I think they would definitely have to be. The same as the Governor watches over the state, someone is going to have to watch over the interests of the people who are purchasing these powers.

Q. Thank you, sir.

A. I think our citizens need all the help they can get. I think they are taxed enough as it is without having to pay extra costs to private enterprises.

SENATOR HOLLAND: Any further questions?

Thank you so much, Mr. Kyzer.

MR. KYZER: Thank you, ladies and gentlemen.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. T. Edward Kyzer

Home Address: Business Address:

2210 Evans Circle Thomas and Howard Company

Newberry, SC 29108 P.O. Box 38

Newberry, SC 29108

2. He was born on August 28, 1939, in Newberry, South Carolina.

4. He married Joan Maxey Kyzer on June 3, 1959.

He has one child:

Clarke E. Kyzer, age 35 (general manager, Carolina Foods, Inc.)

5. He served in the United States Navy from 1959 until his honorable discharge in 1961.

6. He graduated from Newberry High School in 1959.

7. He has served as Mayor of Newberry since 1990.

9. He has worked with:

Thomas and Howard Co., Senior Vice President, Human Resources, since 1965.

10. He is the Senior Vice President of Thomas and Howard Company.

19. He has served as Mayor of Newberry, South Carolina since 1990.

27. He has served on the following civic, charitable, etc. organizations:

Clinton, Newberry Natural Gas Authority;

Central Midlands Planning Commission;

Piedmont Technical College Board of Visitors;

Newberry County Governmental Association;

Newberry County Museum Association;

Newberry County Personnel Association;

Newberry Rotary Club;

Newberry YMCA/Charter Member;

O'Neal St. Methodist Church;

Scout Master, Troop 1;

Junior Achievement Program;

Loyal Order of the Moose; and

Woodman of the World.

29. Five letters of reference:

1) Larry Longshore

President and CEO

Newberry Electric Cooperative, Inc.

P.O. Box 477

Newberry, SC 29108

2) W. Frank Partridge, Jr.

Attorney & Counselor at Law

P.O. Box 446

Newberry, SC 29108

3) W. A. Harvey

City of Newberry

1330 College Street

Newberry, SC 29108

4) Mrs. Ann Threatt

Wachovia Bank

1119 Boyce Street

Newberry, SC 29108

5) Mr. Tommy Cook

NationsBank

1310 Wilson Road

Newberry, SC 29108

30. He is seeking the position of Public Service Commissioner for the Fifth District.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

True

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

False

True

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

True

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True

7. On average, South Carolina residential customers consume less electricity than the national average.

False

True

False

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

True

False

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

True

DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?

Trucking industry: to regulate tariff - territory and fee structure charged on S.C. roads.

Telecommunications: to regulate fees - transmission lines, territory, and rates.

Natural gas: to regulate rates - territory, safety and regulations.

Electricity: to regulate rates, transmission lines, territory.

3. Discuss the concept of "universal service" with regard to telecommunications utilities.

The concept of universal services in regard to telecommunications utilities are in place to offer a free market and privatization of telecommunications in South Carolina. This is to make the market more competitive and offer a savings to the end users. Also it will open a new market in equipment sales as well as independent markets for new suppliers to come on line with new competitive rates. All of above create new jobs and new investments to the South Carolina economy. Regulations should be controlled and free enterprise should grow stronger.

4. What is the "rate base" and how is it used in public utility regulation?

5. Describe the potential for "stranded costs" in the electric utility industry which might result from the deregulation of retail service.

Stranded costs in the electric utility industry could result in higher cost to the retailer due to deregulation. By deregulation of electric utilities may result in a "back lash" of placing a new burden on electric cities and cooperatives. The cities and cooperatives take profits from the sale of electricity to supplement taxes or the growth in the cooperatives area by giving to industrial development and growth. In an electric city taxes may rise by more than two thirds to replace income that could be lost to deregulation by allowing others to sale utilities in its assigned market. The public service commission must keep the services and economic development that could be lost in mind when setting controls on deregulation of these markets. Taxes provide services!

* * *

MS. MUSSER: Mr. Chairman, Mr. Beard is the next candidate, the first candidate for the Sixth District seat. He's on his way down.

(Off-the-record discussion.)

MS. MUSSER: Good morning, Mr. Beard.

MR. BEARD: Good morning.

MS. MUSSER: Mr. Chairman, I have Mr. Beard's driver's license. It indicates an address of 504 North Warren Street in Timmonsville, and his voter registration card indicates the same address.

Mr. Beard, if you would, raise your right hand, please.

JAMES BEARD, JR., being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you state your full name for the record, please.

A. James Beard, Jr.

MS. MUSSER: Mr. Chairman, in reviewing the SLED report for criminal convictions and civil judgments as well as Mr. Beard's credit report, there are no negative entries against Mr. Beard where his credit is concerned.

The SLED check -- the SLED check turned up a suit against Mr. Beard in his capacity as mayor of Timmonsville in the mid-'80s, I believe. I think it was a Freedom of Information suit which was filed when an emergency meeting was called, and the whole matter was ultimately dismissed.

Q. Is that a fair description of that matter, Mr. Beard?

A. That's correct.

Q. Have you had an opportunity to review your Personal Data Questionnaire Summary; were you given a copy of that earlier this morning?

A. Yes, I have.

Q. Were there any corrections or other clarifications you would like to make at this time?

A. Several.

Q. Okay. Please tell us what those are, and we will make a note of it.

A. Looking at the name James L. Beard, Jr., I don't have a middle initial.

Q. Yes, sir.

A. Where it says he has one child, a student. He is not an -- he's an electrician's helper.

Q. All right.

A. Number 14, he has been sued for failure to pay child support in 1992. That reads incorrectly. I was not sued for failure. This was to start.

Q. It was -- I beg your pardon?

A. This was for not failure but to start paying.

Q. Okay. Got that.

A. Under Number 29(3), you have Reggie, R-e-g-g-i-e. That should Reginald E. Greene.

Q. Mr. Beard, if we could ask one question for clarification.

Under Item 4, you have one child, James L. Beard, III; is that accurate? Is that correct?

A. That's correct.

Q. Okay. All right. Are there any other changes that you would like to make?

A. I think that's it.

Q. With those changes, would you have any objection to that summary being made part of our permanent record?

A. I would not.

Q. Okay. Mr. Beard, I note that you have served as a member of the Human Affairs Board; is that correct --

A. That's correct.

Q. -- for the Human Affairs Commission?

A. That's correct.

Q. And the Timmonsville Town Council?

A. That's correct.

Q. And as we mentioned earlier, the mayor of Timmonsville. Is that also correct?

A. That's correct.

Q. If you would, please tell us a little bit about your employment history and what you are doing now.

A. Well, shortly after graduating from Benedict College in 1972, I was employed at Timmonsville High School as a study hall instructor and assistant basketball and football coach for one year.

After that, I was employed with the Pee Dee Economic Development Corporation. And I'm going by memory here; I don't have a resume, so to speak, with me. I worked with the Pee Dee Economic Development Corporation which was located in the Pee Dee area. My primary duties was to survey the needs of economically disadvantaged people in the Pee Dee area; and from that, what we did was develop programs that they would benefit from, such as catfish farming and ------ cooperatives and the like.

After that, I was employed with the South Carolina Resources Development Corporation with headquarters in Spartanburg, South Carolina. In the Pee Dee area I was the regional coordinator. I was responsible for dealing with the employment of migrant and seasonal farm workers.

At that particular time, we were in the process of developing what is called a resource mobilization where we dealt with all of the agencies in the area. And after having talked with a family, what we would do, we would be able to refer them for the services that were available in that particular area. We worked closely with local health departments, Employment Security, Department of Social Services, local sheriff departments and the like.

That job went on into the Department of Labor with the same duties, and I was called a Social Worker II, which was a supervisor of that particular area.

After that, I became the administrator of Beard's Residential Care where we provide services to individuals who cannot assist themselves. And my family has been involved in that line of work since 1982, and I'm presently there now.

Q. Mr. Beard, one more matter for clarification and along the same lines of what you have mentioned about your child listed in Item 4. We just want to make sure the Item 14 for the child support, was that for James L. Beard, III, or was it a different --

A. It was a different child. My wife and I have one child.

Q. Okay. Would you like to list any other children here, or is this an accurate reflection of--

A. The child that's mentioned for support is not a child of my wife's.

Q. Okay. It's a child of yours?

A. Right.

Q. That's fine. Thank you, sir.

Your business at Beard's Residential Care facility -- is that your business?

A. It's a family business. My mother owns the business. I am one of the administrators.

Q. So you have been doing that for how long?

A. Since 1982.

Q. What would you do as far as your role in that business while you carried out your duties as a commissioner for the Public Service Commission if you were to be elected? Would you continue to be or serve as an administrator for Beard's facility?

A. If there was a conflict of interest, there would be no problem with me stepping down from that.

Q. Well, not even speaking as a conflict of interest, what about just a time commitment?

A. Well, first of all, I think I would have to know what the time commitment would be for the Public Service Commission.

Q. Historically, it's been thought of as essentially a full-time position.

A. Then that being the case, then I could resign my position with Beard's Residential Care.

Q. Mr. Beard, tell us, please, why you would like to serve on the Public Service Commission. What do you think you could bring to the Commission?

A. Well, I think having served both in public office, elective office, and appointed office I think that I have gained experience in knowing about -- basically about what happens when you are dealing with people, what's expected as far as government is concerned. I know that there's a lot of discretion to be involved. Basically my experience, I think, qualifies me for that, this position.

Q. Mr. Beard, do you own any utility stock?

A. No, I do not.

Q. Does your spouse or any member of your household own any utility stocks?

A. No.

Q. Mr. Beard, if you would, in your own words, please, discuss the concept of universal service with regard to telecommunications utilities. Just tell the Committee what that means to you.

A. Believe it or not, it's very ironic. I just picked up a copy of the -- that from the Public Service Commission this morning, and I have not had a chance to basically go through the document itself, but I do have a copy of it right here.

Q. That's fine.

A. I'm sorry, I don't.

Q. No problem.

Mr. Beard, have you ever taken a public position on the issue of electric deregulation?

A. No, ma'am.

Q. Are you a member of currently, or have you in the past been a member of any organization, whether that be charitable or otherwise, which is politically active on the question of deregulation?

A. Not to my knowledge.

Q. Have you ever been contacted or approached by any such organization that I described?

A. Not that I can remember.

Q. Have you ever had a financial relationship with or have you ever had discussion of a future financial relationship with a lobbyist or a lobbyist's principal?

A. No, I have not.

MS. MUSSER: Mr. Chairman, that's all I have.

SENATOR : Any questions of this gentleman by any member of the Committee?

REPRESENTATIVE KENNEDY: Yes. Yes, sir.

SENATOR : Representative Kennedy.

EXAMINATION BY REPRESENTATIVE KENNEDY:

Q. Mr. Beard, in your own words, tell me what is the responsibility of the Public Service Commission.

A. The Public Service Commission is responsible for the regulations of rates and services of the privately-owned utility -- utilities, utilities including water, electric, gas, wastewater, all telephone utilities, for hire motor -- motor carriers of household goods and waste disposal for decompensation, the safety of railways and railroads, the assignment of territory boundaries between the electric suppliers, the enforcement/administration of natural gas acquisitions.

Q. Mr. Beard, tell me, why are you running for the Public Service Commission and what will you bring to the Public Service Commission?

A. I'm running for the Public Service Commission because I want to be -- I want to continue to serve the people of the state of South Carolina, and I bring the experiences that I have gained over the past 25, 30 years in working with social organizations, public entities and the like.

Q. Mr. Beard, I'm concerned, and a lot of us are, about this deregulation; and I want to ask you this question.

I'm a rural state Representative that represents rural South Carolina, and I would like to ask you: If deregulation should come about in this state, what is your thoughts about representing the Sixth District and looking at the interests of the rural South Carolinians in this issue?

A. First of all, I think that my experience working with the public allows me to know the economic conditions of the individuals in the Pee Dee area, in the rural Pee Dee area.

I also believe that public utilities have the right to make a profit on their returns.

My qualifications coming to the Public Service Commission would allow me to see just who -- how are these rates being increased; can, in fact -- are they justifiable rates. This is what I want to say. Are the rates justified?

And my concern also as a representative in a rural area would be that we have individuals who are on fixed incomes. Do we -- that we continue to have a basic rate for individuals across the board for basic services.

REPRESENTATIVE KENNEDY: Thank you, Mr. Beard.

SENATOR : Any other questions?

Thank you, Mr. Beard.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. James Beard, Jr.

Home Address: Business Address:

504 N. Warren St. 201 Brockington St.

Timmonsville, SC 29161 Timmonsville, SC 29161

2. He was born on August 20, 1949, in Timmonsville, South Carolina.

4. He married Victoria McDaniel Beard on September 21, 1974.
He has one child: James L. Beard, III, age 23 (electrician's helper).

6. He graduated from Johnson High School in 1967 and received a B.A. in English from Benedict College in 1972.

7. Mr. Beard has held public office for:
Appointed S.C. Human Affairs Board 1976-1978;
Elected Timmonsville Town Council 1979-1984; and
Elected Mayor of Timmonsville 1985-1987.

9. He has worked with:
Beard's Residential Care Facility, currently Administrator;
South Carolina Migrant and Seasonal Farm Workers Organization, 1981-1983; and
Migrant Division of the South Carolina Department of Labor, 1977-1981.

14. He was sued to begin paying child support in 1992.

27. He is a trustee for Bethlehem Baptist Church and the Regional Intake Chairman for Omega Psi Phi Fraternity.

29. Five letters of reference:

1) Rounder Saverance

Pee Dee State Bank

115 Main St.

Timmonsville, SC 29161

(803) 346-3181

2) Mayor Henry B. Peoples

108 E. Garner St.

Timmonsville, SC 29161

(803) 346-2345

3) Reginald E. Greene

2918 McDaniel Rd.

Effingham, SC 29541

(803) 669-4855

4) Mark Buyck, Jr.

248 W. Evans St.

Florence, SC 29501

(803) 662-3258

5) Theodore Greene, Jr.

25 Queen Elizabeth Way

Quinby, SC 29506

(803) 669-4983

30. He is seeking the position of Public Service Commissioner for the Sixth District.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

False

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

True

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

False - the South Carolina Public Service Commission's procedures are subject to the statutes imposed by Title 58 of the S.C. Code of Laws (1976).

True

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True

7. On average, South Carolina residential customers consume less electricity than the national average.

False

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True - If the long distance toll carrier provide services in their area.

False

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

False

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False

True

DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?

The S.C. Public Service Commission regulates privately owned electric, gas, water, and wastewater, all telephone utilities, common motor carriers, railroads and railways.

2. What federal agencies regulate the same industries as the South Carolina Public Service Commission?

The Federal Communication Commission; Inter State Commerce Commission.

3. Discuss the concept of "universal service" with regard to telecommunications utilities.

Universal service would be the basic service offered to all telecommunications consumers and would be the entry level or first tier of service generally offered by other telecommunications utility companies.

* * *

MS. MUSSER: Mr. Chairman, the next candidate is Ms. Trisha Caulder.

Good morning, Ms. Caulder. Mr. Chairman, I have Ms. Caulder's driver's license and voter registration card. The driver's license lists an address of 3413 Forest Lake Drive in Florence, 29501; and her voter registration card lists the same address.

Ms. Caulder, if you would, raise your right hand, please.

TRISHA C. CAULDER, being first duly sworn at 11:05 a.m., testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you please state your full name for the record.

A. Trisha Cummings Caulder.

MS. MUSSER: Mr. Chairman, in reviewing the SLED report and the credit report for Ms. Caulder, there were no negative entries as to either.

BY MS. MUSSER:

Q. Ms. Caulder, were you given earlier this morning a copy of your Personal Data Questionnaire Summary?

A. Yes, I was.

Q. Are there any corrections or other changes, clarifications you would like to make to that document?

A. No. It's correct as stands.

Q. Okay. Would you have any objection then to that summary being made part of our permanent record?

A. No objection.

Q. Ms. Caulder, starting with your current employment, briefly tell the Committee where you work and what you do in that role.

A. I'm the director of adult/community education for Florence School District 1.

Q. And how long have you been in that position?

A. I have been there for eight years now.

Q. Tell us a bit about your other employment, your past employment prior to that position.

A. My past employment, I was director of adult/community education for Florence School Districts 2 through 4 and 5.

Q. What would be your plans as to your continued employment with School District 1?

A. From what I see with the Public Service Commission and the studying that I've done and the questions that I've asked, it seems to be a pretty full-time kind of job --

Q. Yes, ma'am.

A. -- if you do it in the way that it needs to be done. So my intention would be to resign my position.

Q. Your Personal Data Questionnaire lists several organizations to which you belong.

Could you tell us, please, what the National Alliance of Business is. Are you still a member of that?

A. Yes, I am.

Q. And what is your role as far as that?

A. I am simply a member. It's businesses all over the United States that get together. They discuss educational issues, other things that relate to the business world.

Q. Okay. The Southern Economic Development Council?

A. Yes.

Q. Is that a similar organization?

A. The Southern Economic Development Council, of course, sponsors economic development in the southern region.

Q. In the southern region?

A. Right.

Q. And you are currently a member of that?

A. Yes, I am.

Q. Tell us, Ms. Caulder, if you would, please, what is the reason or reasons you would like to serve on the Public Service Commission. What do you hope to bring to the Commission?

A. All of my life I've taken a lot of pride in serving the public. In the job that I do, I work with a lot of undereducated adults in the state. Along with my job, several years ago, as a matter of fact about eight years ago, I got involved in economic development; and I've been very active in that in the Pee Dee area for the last eight years.

I've served as the chairman of the Economic Development Authority for Florence County. And in doing that, I have learned a lot about the businesses, their needs, the utilities. I have worked very closely with the telephone companies, the power companies, the co-ops, some of the others in trying to put together some of our business dealings down there.

I feel that I have a good feel for the general public and a feel for what the business arena is looking for, also. I think I could bring a good mesh of that to the Committee.

Q. Thank you.

Ms. Caulder, do you own any utility stock?

A. No.

Q. Does your spouse or any member of your household own any utility stock?

A. No.

Q. You have three daughters, I believe.

A. Three daughters.

Q. One is a pharmacist; is that correct?

A. One's a pharmacist.

Q. An elementary school teacher?

A. (Nodding head.)

Q. Does the college student have employment?

A. Does she have employment? No.

Q. So she's a full-time college student.

A. She's a full-time college student.

Q. Ms. Caulder, have you ever at any time taken a public position on the issue of electric deregulation?

A. No, I have not.

Q. Are you currently a member or have you ever been a member of any organization which is politically active on the issue of electric deregulation?

A. No.

Q. Have you ever been approached or contacted by any such organization?

A. No. The only thing that I have done is to sit in on different discussions that have been going on like with the Rotary Club and different groups like that.

Q. As to deregulation or --

A. Well, there were discussions on deregulation.

Q. Did you participate in those discussions?

A. No, only as a listener.

Q. Have you had a financial relationship with or have you had discussion of a future financial relationship with a lobbyist or lobbyist's principal?

A. No.

MS. MUSSER: Mr. Chairman, that's all the questions I have at this time.

SENATOR : Mrs. Caulder, are you the wife of Colonel Caulder or the occupational widow of Colonel Caulder?

MS. CAULDER: Yes, sir, I am. You are not going to hold that against me, are you?

SENATOR : No. I think he's kind of lucky.

MS. CAULDER: I appreciate that. Thank you.

SENATOR : Any questions by any members of this Committee?

Representative Wilkes.

EXAMINATION BY REPRESENTATIVE WILKES:

Q. Good morning, Mrs. Caulder.

A. Good morning.

Q. How are you? It's nice to see you. I notice that you were very much involved with economic development in Florence County, and I wanted to congratulate you on the Honda location in Timmonsville and ask you, in looking at economic development as an issue, as being very closely involved with electric deregulation and electric costs, how important do you see the role of the Public Service Commission to be in the coming years as it pertains to the deregulation issue because one of the -- I think one of the issues that has been brought up upon a lot of occasions is what impact will deregulation have on the electric utility industry given the fact that they -- that industry often is a party to economic development incentives and so forth.

So my question is: Do you perceive that role of the commissioner as an important role particularly as it pertains to economic development for the state of South Carolina?

A. I certainly do because what happens with deregulation in the state of South Carolina is going to directly impact the economic development of the state. I don't think there's any question about that. We are talking about a lot of different changes. It's -- it's going to be critical.

In my studies and my listening to the different debates and the different things on deregulation, I'm very concerned about it. Looking at the part that I played in economic development and knowing that a big part of any economic development project is the utility companies, that's going to be extremely important.

My thing is, and as I've listened -- and I came to one of the hearings that they had here recently, one of the House committees. And I listened to all the different groups representing the different power companies, representing the new company that's trying to get its foothold in South Carolina, Electric Lite. I listened to all that. And as a result, I sort of determined that I don't think anybody really has the answers. I think that we are very wise to take a look at what's happening around us and what's going on in the other states and maybe take a sort of wait-and-see kind of attitude here.

Q. How important do you think impartiality and objectivity will be in this issue as it moves on through?

A. It's critical; it's extremely important.

Q. And you feel like you could be impartial and objective in your approach to the issue?

A. I would like to think that I could because in working with the education arena and in working with the economic development side, being the big business and the other groups, I have been able to see the importance of both sides. And I think a part of -- and I certainly don't know what the whole impact is going to be but only a part of what the impact could possibly be on the small people, the ones that don't have a lot, the ones that we really have to look out for; but I also know that we have to look at the interests of the larger companies, too, because they are the ones that provide a lot of the jobs and a lot of the opportunities that we have in our state.

So there's got to be a happy medium in there somewhere, and this Commission is going to be extremely important in trying to find that.

REPRESENTATIVE WILKES: Thank you.

SENATOR : Any further questions by anybody?

Representative Kennedy.

EXAMINATION BY REPRESENTATIVE KENNEDY:

Q. How are you, Mrs. Caulder?

A. I'm fine, thank you. A little nervous but fine.

Q. You know, I've always wondered who was the shaker and baker behind the development going on in Florence, Hoffman-La Roche and Honda. And rather than running for this position, why don't you come and be the development board director for Williamsburg County?

A. I will keep that in mind, and I will remember that you asked that.

Q. You are doing a fantastic job.

A. Thank you.

Q. Let me ask you this. We are in the Sixth District, and that's the area that I am from, and I am concerned about the upcoming deregulation that's thwarting around. And you are from Florence, and I am from Williamsburg County. Florence, urban, and Williamsburg County, rural. And I am concerned that we make sure that we give our urban and rural areas proper representation on the issue that is before us.

As a member of the Public Service Commission, what are you going to bring to make sure that this happens?

A. The job that I had prior to the one that I have with Florence School District 1 now, I set up programs for all of the other school districts in Florence County, which meant Johnsonville, Lake City, Timmonsville, Pamplico, all of those areas. I worked a great deal over in the Williamsburg area and some of the rural areas of the county.

I know those people very well there. I have a great feeling and a great caring for those people in that area. As the chair of economic development in Florence, I tried to work very closely with the rural areas of the county; and I don't think that there's anyone in the whole area that was more pleased to see where Honda finally located than in the town of Timmonsville which was having a lot of the same kinds of tribulations and trials as Williamsburg County is having. So I can assure you that I have dealt with rural areas, I have worked urban, I feel very comfortable in both.

Q. Thank you very much. Appreciate it. I will keep that in mind.

A. Thank you.

REPRESENTATIVE WILKES: Any other --

MS. CAULDER: I would expect you to.

REPRESENTATIVE WILKES: Any other Committee members have a question for Ms. Caulder?

Thank you, Ms. Caulder.

MS. CAULDER: Thank you. Thank you for the opportunity.

REPRESENTATIVE WILKES: Yes, ma'am.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. Trisha C. Caulder

Home Address: Business Address:

3413 Forest Lake Drive 301 South Dargan Street

Florence, SC 29501 Florence, SC 29506

2. She was born on October 27, 1944, in Conway, South Carolina.

4. She married James Caulder on June 24, 1966.

She has three children:
Melissa Y. Caulder, age 26 (Pharmacist);

Sherry L. Caulder Elder, age 22 (Elementary School Teacher); and
Julie A. Caulder, age 20 (College Student).

6. She graduated from Conway High School in 1962; attended Coastal Carolina University and transferred to the University of South Carolina (USC) in 1964; received a B.A. in Education from USC in 1966; and received a Masters in Adult/Continuing Education from USC in 1984.

9. She worked as a High School Teacher for Georgetown Public Schools from 1966-1967; a High School and Adult Education Teacher for Florence School District One from 1967-1984; the Director of Adult/Community Education for Florence School Districts 2, 3, 4, & 5 from 1984-1991; and the Director of Adult/Community Education for Florence School District One since 1991.

19. She has been employed by the various School Districts as stated in Number 9.

26. She is a member of the following professional organizations:

South Carolina Association of School Administrators;

South Carolina Association of Adult Education Directors;

South Carolina Association of Community Education;

South Carolina Association of Adult Continuing Education;

National Community Education Association;

American Association of Training and Development;

Carolina Society for Training and Development;

National Alliance of Business; and

Southern Economic Development Council.

27. She has served on the following civic, charitable, etc. organizations:
Florence County Economic Development Authority;

Pee Dee Economic Development Partnership;

Florence County Progress;

Greater Florence Chamber of Commerce;
Florence Rotary Club;

Pee Dee Transitional Shelter;
Mayor's Committee for Human Relations;
National Dropout Prevention Center;
Circle Park Women's Treatment Center;

Florence Committee for Excellence In Education;

Make-A-Wish Foundation;

Florence County Work Support Council;

Florence County Coalition For Drug/Alcohol Abuse;

South Carolina Chamber of Commerce;

Highland Park Methodist Church;

American Heart Association; and

United Way of Florence.

29. Five letters of reference:

1) Mayor Frank E. Willis

City-County Complex AA

180 N. Irby Street

Florence, South Carolina 29501-3456

2) Dr. Stephen A. Imbeau

Medical Park East

901 East Cheves Street

Florence, South Carolina 29501

3) Mr. Tim A. Garrett

Vice President Administration

Honda of America Mfg., Inc.

24000 Honda Parkway

Marysville, Ohio 43040-3215

4) Mr. Bruce Barrigan, Administrator

McLeod Regional Medical Center

555 East Cheves Street

Florence, South Carolina 29501-0551

5) Mr. Rounder Saverance

Vice President

Pee Dee State Bank

P.O. Box 458

Timmonsville, South Carolina 29161

30. She is seeking the position of Public Service Commissioner for the Sixth District.

31. She owns stock in NationsBank and Sonoco Products.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

False

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

True

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True

False

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True

7. On average, South Carolina residential customers consume less electricity than the national average.

False

True

False

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

False

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

False

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False

True

DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?

The industries regulated by the SC Public Service Commission are: electric utilities; natural gas; telephone; railroads and railways; carriers of people, household goods, and hazardous waste; common radio carriers; and water and wastewater (sewage).

These industries are regulated because they directly affect the daily lives of all the people in South Carolina and are critical to their general well-being and their quality of life. It is critical that the costs, rates, safety, and the overall quality of these services be both affordable and assessable to everyone no matter their location or financial status.

3. Discuss the concept of "universal service" with regard to telecommunications utilities.

The term "universal service" as it relates to the telecommunications utilities refers to the assurance that everyone, no matter his/her financial status, should be able to have a telephone in the home.

The telephone companies must provide a reduced rate to allow for persons who are AFDC recipients, Medicaid, etc., and whose income is not sufficient to pay the full rate. The company then recoups the cost or a portion of the cost of this service from other areas.

There is a provision in the Telecommunication Act of 1996 which will establish a federal fund to help reimburse phone companies for a portion of this service. The Public Service Commission has also enacted provisions and regulations to assist the phone companies with this service.

5. Describe the potential for "stranded costs" in the electric utility industry which might result from the deregulation of retail service.

There has been a great deal of discussion and concern relating to the potential of "stranded costs" in the electric utility industry which might result from the deregulation of the industry.

The electric companies have already spent or invested a great deal of money in new plants, modern equipment, and expansions to insure that everyone has adequate electricity to meet both present and future needs. Under the present system, provisions have been made which would allow them to recoup these costs. Without special provisions and regulations being provided in the state's deregulation plan, which is slated to go into effect by January 1, 1999, the major companies like Duke Power, Carolina Power & Light and South Carolina Electric & Gas stand to lose millions of dollars in the deregulation process.

How to deal with this issue will be a major concern to all since everyone's electric rates will be affected by that decision.

* * *

MS. MUSSER: Mr. Chairman, the next candidate is Ms. Clyburn.

Good morning, Ms. Clyburn.

MS. CLYBURN: Good morning.

MS. MUSSER: Mr. Chairman, I have Ms. Clyburn's driver's license and voter registration card. Her driver's license lists an address of 16 Darlington Avenue in Charleston, 29403. And her voter registration card reflects the same address.

Ms. Clyburn, if you would, raise your right hand, please.

MIGNON L. CLYBURN, being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you please state your full name for the record.

A. Mignon Latisha Clyburn.

MS. MUSSER: Mr. Chairman, when staff reviewed the SLED report and the credit report for Ms. Clyburn, there were no negative entries as to either.

BY MS. MUSSER:

Q. Ms. Clyburn, please briefly tell this Committee why you would like to be a Public Service commissioner.

A. My reason is twofold.

First of all, I am really interested in the dynamics of the Public Service Commission. Things are changing so rapidly and it is the most significant entity, I think, right now in the wake of all of those changes. I really don't think a lot of people realize just how important and significant this agency is. I do. And for that reason, I would like to serve.

Also, my public interests, my public service interests -- this agency to me is a nice mix, that the Public Service interests in terms of really being a vehicle for change and a voice for persons in this state -- all of those reasons I feel -- they just interest me, and I really feel that I would be of service, and I am really interested in serving for those reasons.

Q. Ms. Clyburn, you are owner and operator of the Coastal Times newspaper; is that correct?

A. That's correct.

Q. Is that a bi-weekly or weekly --

A. It is a weekly newspaper in Charleston.

Q. And how long have you been owner and operator?

A. Thirteen years.

Q. What would be your plans as to your continued involvement with the newspaper?

A. There would be no continued involvement. I would not have anything to do with the day-to-day operations of the paper if elected to the Commission.

Q. You would maintain an ownership interest?

A. I would not.

Q. You would not?

A. I would not.

Q. Ms. Clyburn, earlier today you were given a copy of your Personal Data Questionnaire Summary, were you not?

A. Yes. Yes, I was.

Q. Have you had a chance to review that?

A. I saw no mistakes in it. Yeah.

Q. Good.

Would you have any objection then to that being made a part of our permanent record?

A. No.

Q. Ms. Clyburn, do you own any utility stock?

A. I own two shares of SCANA.

Q. What would be your plans as to that stock if you were to be elected as a member of the Commission?

A. I would divest.

Q. Does anyone else residing in your household have any stock in utilities?

A. No.

Q. Okay. Just a few more questions, Ms. Clyburn.

Have you at any time ever taken a public position on the issue of electric deregulation?

A. I have not.

Q. Do you belong to any organization or have you in the past belonged to any organization which is politically active on the issue of electric deregulation?

A. I have not and do not.

Q. Have you ever been contacted or approached by any such organization?

A. I have not -- well, let me say that Electric Lite and as well as some other utilities, because of the nature of my business, they do advertise in my newspaper at this point. So I am not sure if -- when you say contact --

Q. Through your --

A. Not to the individuals but through their agencies, advertising agencies, so that's the only type of contact I've had.

Q. Was it a business contact --

A. Correct.

Q. -- for advertising?

A. Right.

Q. Have you had a financial relationship at any time or have you had discussion of a future financial relationship with a lobbyist or a lobbyist's principal?

A. I have not.

MS. MUSSER: Mr. Chairman, I have no further questions.

REPRESENTATIVE WILKES: Do any of the Committee members have any questions for Ms. Clyburn?

REPRESENTATIVE KENNEDY: Yes, Mr. Chairman.

REPRESENTATIVE WILKES: Mr. Kennedy.

REPRESENTATIVE KENNEDY: I would like for Ms. Clyburn to --

Please, in your own words, tell me what do you think the responsibility of the Public Service Commission is. Please, just in your own words.

MS. CLYBURN: The duties and responsibilities of the Public Service Commission are multi. First, they supervise and regulate publicly investor-owned electrical utilities, gas, water and sewer utilities, all of the telephone companies that operate in the state, street and railway companies, for hire motor carriers and telegraph companies in the state of South Carolina.

EXAMINATION BY REPRESENTATIVE KENNEDY:

Q. Ms. Clyburn, you are running for the commissioner from the Sixth District in which I live. And I've asked all that has come before us, tell me -- one of our major emphases this year is going to be on deregulation; and tell me, as far as you are concerned, weighing the rural areas of the state of South Carolina from whence I come and the urban areas, how would you handle yourself in dealing with this issue as far as a commissioner on the Public Service?

A. It's going to be extremely complex if we go -- reading what is potentially coming up in 1999. So in terms of weighing the interests of the more urban area where you have more persons so you are going to have costs more spread out as opposed to rural areas where the costs per person or the cost of serving that person is much higher, we are really going to have to look closely at an equalization of sorts, not placing an unfair burden on persons who live in rural areas such as yourself.

So it's going to be a difficult balance; and we, as a collective, the seven members of the body, if I'm so elected, are really going to have to look at that and be as fair and equitable as possible because, again, in some of the rural areas we are dealing with some economic issues, too, in terms of some of the rural areas have a tendency to be not as affluent, of course, as some of the urban areas. So you really don't want to put an unfair burden on those areas, so those things are really going to have to be weighed heavily.

REPRESENTATIVE KENNEDY: Thank you, ma'am.

REPRESENTATIVE WILKES: Any other questions for Ms. Clyburn from our Committee?

If not, Ms. Clyburn, thank you so much for your time.

MS. CLYBURN: Thank you. I appreciate it.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. Mignon L. Clyburn

Home Address: Business Address:

16 Darlington Avenue 2106 Mt. Pleasant Street

Charleston, SC 29403 Charleston, SC 29403

2. She was born on March 22, 1962, in Charleston, South Carolina.

4. She is single.

6. She graduated from W.J. Keenan High School in 1980; and received a B.S. in Banking Finance and Economics from the University of South Carolina in 1984.

9. She has worked as the newspaper editor, general manager and publisher for the Coastal Times since 1984.

10. She is the owner and operator of the Coastal Times newspaper.

26. She is a member of the following professional organizations:

South Carolina Association of Black Journalist;

Black Women Entrepreneurs; and

Southeastern Publishers Association.

27. She has served on the following civic, charitable, etc. organizations:
Trident Urban League;

Trident United Way;

Charleston county Democratic Women;

Friends of Reid House of Christian Service;

The College Fund/UNCF;
United Way Allocations Board;

Charleston Area Arts Council; and

Adjustment Site and Design City of Charleston.

29. Five letters of reference:

1) Majorie Amos Frazier

361 Ashley Avenue

Charleston, South Carolina 29403

2) Sam Lyons

704 Bradburn Drive

Mt. Pleasant, South Carolina 29464

3) H. Ronald Stanley

P.O. Box 7722

Columbia, South Carolina 29202

4) The Honorable Alex Sanders

President, College of Charleston

66 George Street

Charleston, South Carolina 29424

5) Ms. Ann K. Baker

Vice President

NationsBank

200 Meeting Street

Charleston, South Carolina 29401

30. She is seeking the position of Public Service Commissioner for the Sixth District.

31. She owns two shares of stock in SCANA and has interest in the Oppenheimer Fund.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

True

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

True - It also has safety authority over gas pipelines.

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True

False - One of the factors they can take into consideration is what the rates of returns are in other "similar" enterprises so that the utility can compete in the marketplace for capital.

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True

7. On average, South Carolina residential customers consume less electricity than the national average.

False - It is surmised that because our climate is so hot/humid most of the year, persons in this state consume at much higher proportions than in other states.

True

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

False

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

False

False - They must wait until after the screening process.

False

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False - The safety component was shifted to the Department of Public Safety, but the commission still issues certificates of necessities as well as decals, etc.

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False

True

DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?

Investor-owned electric, water and sewer, gas companies, railroads and railways, public and private telephone and telegraph companies, for hire motor carriers, radio common carriers. These functions are best supplied by monopolies or oligopolies, so there is a need for (a/some) regulatory body (ies) to protect the public from unfair rate and service practices as well as to guarantee utility investors a fair rate of return.

2. What federal agencies regulate the same industries as the South Carolina Public Service Commission?

The Nuclear Regulatory Commission, the Federal Energy Regulatory Commission, The Federal Communications Commission, The National Transportation and Safety Commission.

5. Describe the potential for "stranded costs" in the electric utility industry which might result from the deregulation of retail service.

The concept deals with what would be fair and equitable compensation for companies who have been doing business in an unregulated climate, which are now forced to do business or share "a piece of the pie" so to speak, with other enter enterprises who have not had any capital investment or stake in the utility. Companies who may/are (be/being) forced to compete feel that they should recoup their costs (equipment, plant, etc.) because of the (potential) change in nature of the utility climate. If other enterprises are able to buy energy (retail wheeling) from sources outside of the area, or if they can buy from an existing entity in bulk, the domestic utility supplier is concerned about how this change would affect their company's overall economic standing as well as its projections about utility usage.

* * *

MS. MUSSER: Mr. Chairman, the next candidate for the Sixth District is Harriet Gardin Fields.

Good morning, Ms. Fields.

MS. FIELDS: Good morning.

MS. MUSSER: Mr. Chairman, I have Ms. Fields' driver's license, and it indicates an address of 412 Juniper Street in Columbia. The ZIP code is 29203. Her voter registration card lists the same address.

Ms. Fields, if you would, raise your right hand, please.

HARRIET GARDIN FIELDS, being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you please state your full name for the record.

A. My full name for the record is Harriet Rochel Gardin Fields.

MS. MUSSER: Mr. Chairman, in reviewing the SLED report and credit report for Ms. Fields, we found no negative entries.

Q. Ms. Fields, did you receive a copy of your Personal Data Questionnaire Summary?

A. Yes, I did.

Q. Okay. Have you had an opportunity to look that over?

A. Yes, I have.

Q. Are there any corrections or other changes you would like to make?

A. Yes, I do. I don't know if I typed this incorrectly when I put it in. Calhoun County Public Schools, I worked there from 1979 to 1982, not 1983.

Q. Yes, ma'am. We have that.

A. And in relationship to the South Carolina Employment Security Commission, that was a tripartite agreement between Richland School District 1, South Carolina Department of Education, South Carolina Employment Security Commission. I do not object to it being listed as South Carolina Employment Security Commission, but I felt that you needed to know what the facts were.

Q. Yes, ma'am. Thank you.

A. I was physically housed in a South Carolina Employment Security Commission facility, but I worked for and negotiated with the three entities.

Q. We will make that change. Are there any further corrections?

A. I saw no further corrections.

Q. With those changes that you made today, would you have any objection to that summary as amended being a part of the permanent record?

A. I have no objections to it being a part of the permanent record.

The only thing that I really request that you really change is that the Calhoun County Public Schools give an ending date of 1982. I just wanted to disclose to the Committee that that was a tripartite agreement so that they would not consider that I was trying to be unethical or not disclosing the facts.

Q. Yes, ma'am. Thank you.

Ms. Fields, I see that you've served on the Richland County Council for some eight years; is that correct?

A. Nine years.

Q. And I believe four or five of that was as chairman.

A. Five.

Q. I note for the record that you were sued a couple of times in your capacity as a council member only --

A. Many times.

Q. -- along with your fellow councilmen; is that correct?

A. That is correct.

Q. In those cases, were there ever any allegations of fraudulent behavior on your part or on the part of anyone that you directly supervised?

A. Not to my knowledge or recollection.

Q. Just suits that came along with the territory as a councilperson, I assume.

A. Yes. And a list has been submitted as was given to me. It was given to the county attorney via the clerk of court, Barbara Scott.

Q. Yes, ma'am.

A. And that's what I have relied on to share with you as a Committee.

Q. Thank you.

Ms. Fields, if you would, please tell us why you would like to be a Public Service commissioner and also what you hope to bring to the Commission.

A. The thing that I think that I could bring to the Commission is the fact that I have spent at least nine years participating in public hearings, five of which I was responsible for being sure that they were held in both a legal and appropriate manner.

I have spent time all of my career working in public service, even though I spent three years as a missionary working for the United Methodist Church. I think that I have some feel for what South Carolina is like, what its problems are, what we need to do to have growth.

It is my opinion that the functions that the Public Service Commission provides relates to how well South Carolina grows or how well it sustains and how well the citizens, both as citizens and as corporate citizens, are able to survive and live, work and play in our state.

Q. Thank you.

Your Personal Data Questionnaire indicates that you are currently the president and consultant of H.G. Fields & Associates --

A. That is correct.

Q. Would you tell us, please, a bit about that business.

A. That business does mainly one of two things. I am a professional counselor by training and profession. Also, I have spent a number of years working with communities and working with agencies and people in terms of trying to get communities -- and whether it be the school districts or government, county governments, or governments in trying to solve problems and deal with problems. I've spent -- that company spends time working with people with employee/employer relations and other kinds of things that people feel that we have a service for.

Q. If you were to be elected to the Public Service Commission, would you continue your ownership of that business?

A. Yes, I would.

Q. Do you think that your consultation contracts could ever present a potential conflict, whether actual or real --

A. I do not because I do not do any contracting with any utility group, water, sewer, telephone, electric line, gas, interstate or intrastate transmission. I have not done any with any touring group, any taxi or anything that I have noted that the PSC regulates.

I have from time to time contracted to have like done tours for people, but that's usually been for -- in conjunction with something else, but very few. I would not perceive that we would be doing that if I were a PSC commissioner.

Q. What's your weekly time commitment where your business is concerned?

A. It varies based on the contracts that I handle.
Q. Could you give us a range? Is it a few hours?

A. It could range from a few hours to 60 hours, depending upon the contract.

Q. All right. Ms. Fields, do you own any utility stock?

A. I do not.

Q. Does your spouse or any member of your household own any utility stock?

A. They do not, not to my knowledge.

Q. I see you have one child, a son; is that correct?

A. That is correct.

Q. Please tell us, what type of business is he in?

A. He has ACF Management.

Q. ACF Management?

A. Management. He's a representative for Herb Jones. He has a territory for Herb Jones, which is a class ring and cap and gown, high school/college memorabilia kind of business. He does do officiating in the MEA -- the South Carolina High School League, the MEAC. And there is one other conference in South Carolina or in the region. I don't know what it is. And he does officiate for private schools for basketball.

Q. You mentioned ACF. Is that part of the class ring business, or is that a different one?

A. No, the class ring is a part of it. Everything he does is a part of that --

Q. Okay.

A. -- to my understanding.

Q. All right. Ms. Fields, just a few more questions.

Have you ever taken a public position on the issue of electric deregulation?

A. I don't think so.

Q. Are you currently a member of or have you ever at any time been a member of any organization, whether that be a charitable organization or otherwise, which is politically active on the issue of deregulation?

A. Not to my recollection.

Q. Have you ever been contacted or approached by any such organization?

A. Not to my recollection.

I need to qualify that statement and say that I have attended some workshops that dealt with deregulation, both in state and out of state.

Q. Were you an active participant in those workshops?

A. No.

Q. You were more of a spectator or --

A. Yes. If you will note, I'm sure that all of you are aware and I'm sure all of you have been invited, whether or not you participated -- for example, SCE&G invited all the elected officials in the areas that they served throughout the state for the various dinner meetings in which they talked about electricity, electric deregulation.

I have attended at least a work -- at least one workshop that I can recollect that dealt with gas deregulation in Detroit, Michigan, as a part of another conference that dealt with economic development as related to county officials.

Q. Thank you.

Have you ever had a financial relationship with or have you had discussion of a future financial relationship with a lobbyist or a lobbyist's principal?

A. Please restate the question.

Q. I will be happy to.

Have you had a financial relationship with or have you had discussion of a future financial relationship with a lobbyist or a lobbyist's principal?

A. As it relates to utilities or things that the Public Service Commission regulates or as it relates to anything?

Q. You may answer both ways for the --

A. As it relates to things that the Public Service Commission regulates, no.

As it relates to in general, I have served as chair of the Public Policy Committee of the South Carolina Counselors' Association. We are a lobbyist's principal. We do have -- we have a retained lobbyist. Until this year, I have been the person in the association who the lobbyist directly reported to, when we dealt with it.

I currently am the public policy chair of the American -- of the Association for Multicultural Counseling and Development, which is a Division of the American Counseling Association; and we do not retain a lobbyist.

Q. Thank you.

One final question, Ms. Fields. If you would, in your own words, describe the potential for stranded costs in the electric utility industry which might result from the deregulation of retail service.

A. My understanding of stranded costs in electric utility deregulation is that those are the costs that are not taken into consideration in terms of rates, in terms of providing electric utilities to a -- to residents, to business, to utilities.

They are the things that deal with -- involve -- they also involve the generation of the power, having the power reach whomever the consumer is. It also deals with the fact that in some areas of South Carolina in particular, you have rural places where power must be provided that may not necessarily be cost effective.

And it is my understanding that stranded costs brings about concern for many utilities who have, in the past, had territories and have been able to deal with the -- with being able to take something else that's profitable and something else that's not profitable and being able to make it at least be a wash.

MS. MUSSER: Okay. Thank you.

Mr. Chairman, I have no further questions.

REPRESENTATIVE WILKES: Would any of the Committee members like to ask Ms. Fields a question?

SENATOR COURTNEY: Mr. Chairman, purely on a personal note.

Ms. Fields, I graduated from Gaffney High School. Do you know Mr. Gardin there?

MS. FIELDS: I am his only daughter, and I did not know you graduated from Gaffney High. I thought I knew all the legislators who either worked or graduated from there.

SENATOR COURTNEY: Thank you, Ms. Fields.

EXAMINATION BY REPRESENTATIVE WILKES:

Q. Ms. Fields, on the issue of electric deregulation, if elected to the Public Service Commission, could you approach that issue with impartiality and objectivity?

A. I feel that I could because I feel that there is a lot of information that I do not possess, do not have, perhaps, the access that deals with deregulation of electricity; and as such, obviously, if I had been to a workshop that dealt with deregulation of gas, I am concerned about that; and I feel that I do not have all of the information.

REPRESENTATIVE WILKES: Thank you.

Any further questions?

REPRESENTATIVE KENNEDY: Yes, Mr. Chairman.

EXAMINATION BY REPRESENTATIVE KENNEDY:

Q. How are you doing, Ms. Fields?

A. I'm fine.

Q. Happy New Year.

A. Happy New Year to you.

Q. Ms. Fields, I'm going to ask you also, would you please tell me, in your own words, what do you think the Public Service Commission does?

A. In my words, I feel that the Public Service Commission is a regulatory commission that regulates, and it started out as the Railroad Commission back in, I think, 1870 or thereabouts. I'm not good on dates. That it regulates railroad. It regulates moving companies. It regulates the transportation of nuclear and hazardous waste within South Carolina. It regulates electric rates, and it -- although within the smaller areas in terms of the territory or maybe rural areas, that it regulates the territories. But I understand from having read the report that the cooperatives, I guess that's the correct term, electric cooperatives, had an opportunity to determine their territory and worked together and the PSC approved it.

That it does some regulations on the rates of telephone and telegraph services, that it regulates private water and sewer -- does electric, water, sewer, telephone, moving, intrastate transportation, tour buses.

That's my understanding of what it does.

Q. Ms. Fields, I guess I'm interested in all of the commissioners, you know, as a state representative, but more so in District 6 because that's where I reside. And you are from an urban community, and I'm from a rural community, and it's all part of the state of South Carolina, but we have one of the most important issues that's going to face us this coming year, and it's going to have to do with deregulation. And because I represent and am from a rural area, I am concerned about the people that we put on the Public Service Commission, that they are going to look at this issue with an open eye and deal with it in that way.

How can you, as a commissioner, deal with your responsibilities and protect the people from the rural areas of the state of South Carolina and make sure they get a fair shake?

A. Well, the Honorable Representative, I differ with you that I am from an urban area as opposed to rural area. I was born in Pasco, Washington, the State of Washington. Pasco is probably smaller than Eastover, South Carolina, if you are familiar with Eastover. Or -- I can't say, but it is a very small place.

I first came to South Carolina, and I lived in Spartanburg County in a place called Packard, South Carolina, and I was very fortunate that at that time to have a well and plenty of water. I lived for -- I lived there for eight years, and I probably lived there for probably three or four of those years carting water by car from someone else's well because my well went dry. I never had sewer in that particular instance.

I lived in Cherokee County for four years, although my father worked there for many years; and Cherokee County, I did live in town there; and I did live -- I did have water and sewer once again. When I first moved to South Carolina, in Packard, South Carolina, I did not electricity. I did not have electricity for a number of years.

I had a telephone, believe it or not, before I had electricity because we had a problem with one of the lines. The person who owned a very small strip of land between where the line would have come between what was right-of-way and what was our land would not provide an easement for the line to cross. So the Methodist Church whose land adjoined our land allowed us to run, finally, the line down their land to come to our land to provide it.

So I have not always been fortunate to have had water, sewer, and electricity. I am -- I think that I am -- while I reside in Columbia, I have resided in Columbia soon to be 32 years, I have not always worked in Columbia. I have worked a majority all over the Sixth Congressional District. I have particularly dealt with a lot of your specific district; and there are others who sit on this screening panel, that I have dealt with their district.

I have been followed in districts by I shall not say whom but not the -- I was -- not by the police. I have been followed in some people's district by the police, too. That's been fine because you are always safe, in my opinion, if you have the law enforcement following you. They are not going to do much to you, and nobody else is going to do much to you. I have traveled South Carolina in the wee hours of the morning during the sun up, during the sun down, in between. I have not really had problems, but I think I have a feel for the situation that deals with all of the Sixth Congressional District and all of South Carolina. I have worked in all of South Carolina.

While I am running for a position with the Sixth Congressional District, I think I have a feel for the majority of South Carolina. I have a feel for the upstate of what ice storms and snow storms do. I have a feel for what tornadoes and hurricanes and rain storms do to utilities in the Sixth Congressional District. I have not owned a generator in the Sixth Congressional District, but there have been people who have owned property in the Sixth Congressional District who have had to have generators so that when the electricity didn't work, because they had to get water from pumps, because -- so that -- because they didn't have pumps to pump their sewage into the septic tank, that they had to have a generator and electricity to survive. And I did visit parts of the Sixth Congressional District that was very affected by Hurricane Hugo.

Q. Ms. Fields, let me ask you just one last question.

How do you see the Public Service Commission as far as its relationship as an organization looking at the consumer interests and the business interests in the state?

A. It is my opinion from -- I don't have an expert knowledge of the Public Service Commission, but it is my opinion from observing what the Public Service Commission has done as a consumer from afar, that it is the job of the Public Service Commission to be sure that it protects both the consumers and the corporate community.

We cannot have -- the Commission cannot lead overtly for the corporate community, or the business community if we want to refer to them that way, or the consumer community. In order for us to have a positive quality of life in South Carolina, we have to balance both communities. We have to be able to provide, see that there is the provision of service for the needs of the consumer, whether it be the corporate community or the consumer community. We have to be able to go -- to be able to see that those services that are provided are provided in a way that the users or the consumers of those services can afford them.

To give you an example, until I became a Richland County council member -- and I said, I had felt that I had been all over South Carolina and that I had dealt with South Carolinians. I understood the problems of the need for sewer, the problems with septic tanks leaking, not functioning, but I did not understand in the great state of South Carolina that we had major problems with the provision of water to individuals.

I did not understand that there were places that you could drill a well and reach water but the water was not safe because of the soil consistency, because of things leaking into it. I did not understand that when you have corporations coming in that you need to be sure -- more/less plants, I guess you should say. You need to be sure that they do not discharge chemicals into their holding ponds; that even when it is distilled and charged, that it may leak into the water.

I understood about it leaking into the rivers, into the ocean; but I did not understand the problems with it leaking into wells till I experienced the problems in Northeast Richland County in terms of people having wells, having water but the amount of cancer that we found in that area, that we needed to go out and find money to be able to have them to run the pipes for water to hook up. I did not understand the problems with it.

I lived in Richland County -- as I said, it will be almost 32 years. It will be 32 years if I continue to live in 1998, and I have lived in other parts of South Carolina, and I have known about some water problems, but I did not understand the extent of the water problems.

I did not understand the extent of the water problems in the Sixth Congressional District, the problems that you have as you go toward the sea that deal with Jasper County, Beaufort County, Walterboro -- well, I guess that's Colleton County -- the problems that they have because having lived for the first part of my South Carolinian residency in the upper part of the state. And I don't think we've had as many problems securing water because just of the topography, the water, the aquifers, those kind of things.

I understood the problems of the aquifers in Beaufort County a long timse ago and probably as a very young woman, but I didn't understand the problems, the other problems.

REPRESENTATIVE KENNEDY: Thank you, ma'am.

Thank you, Mr. Chairman.

REPRESENTATIVE WILKES: Do any other members of the Screening Committee have any questions for Ms. Fields?

If not, thank you.

SENATOR : Have a nice day, Ms. Fields.

MS. FIELDS: Thank you very much and have a good day.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. Harriet G. Fields

Home Address: Business Address:

412 Juniper St. 412 Juniper St.

Columbia, SC 29203 Columbia, SC 29203

2. She was born on February 25, 1944, in Pasco, Washington.

4. She married Avery C. Fields, Sr. in 1967.

She has one child:
Avery C. Fields, Jr., age 30 (self-employed).

6. She graduated from:
Granard High School, 1962;
SC State University, BSE, 1966;
USC, M.Ed., 1974; and
Local Government Institute, County Council Level I & II.

7. She has held public office as a member of the Richland County Council, 1989-1997.

8. She has lost elections for:
SC Health & Human Services Commission, 1984;
House of Representatives, District 73, 1986; and
Richland County Council, 1997.

9. He has worked with:
Richland School District 1, 1966-1967;
Midlands Technical College, 1968-1970;
SC Department of Corrections, 1971-1973;
SC Employment Security Commission, 1973-1976 (Richland School District 1, S.C. Department of Education, and S.C. Employment Security Commission);
Bethlehem Community Center, 1976-1979;
Calhoun County Public Schools, 1979-1982;
Allen University, 1982-1983; and
Brothers and Sisters, 1984-1987.

10. She is the president of HG Fields & Associates.

14. She has been sued several times in her official capacity as a member of the Richland County Council.

19. She has worked with the following government agencies:
Midlands Technical College, 1968-1970;
Richland School District 1, 1971;
SC Department of Corrections, 1971-1973;
SC Employment Security Commission, 1973-1976; and
Calhoun County Public Schools, 1979-1983.

26. She is a member of the following professional organizations:
American Business Women's Association;
SC Counseling Association;
American Counseling Association;
Multi-cultural Counseling Association;
National Association of Counties;
Employment Steering Committee;
Youth Subcommittee;
National Association of Black County Officials;
National Democratic County Officials Executive Committee; and
Minority Coalition of the SC Association of Counties.

27. She is a member of the following civic organizations:
Francis Burns United Methodist Church;
Capital Senior Center, Board of Directors;
River Alliance;
Central Midlands Council of Governments;
N. Columbia Civic Club;
House District 73 Development Council;
Central Carolina Economic Development Alliance; and
Hold Out The Lifeline.

29. Five letters of reference:

1) David Swinton

Benedict College

Harden St.

Columbia, SC 29203

(803) 253-5201

2) Don Drake

236 Stoneridge Dr.

Columbia, SC 29210

(803) 376-5390

3) Steve Morris

P.O. Box 192

Columbia, SC 29202

(803) 254-2300

4) Tom Felder

P.O. Box 448

Columbia, SC 29222

(803) 255-7434

5) Rev. Mack McClam

Francis Burnes United Methodist Church

5616 Farrow Rd.

Cola, SC 29203

(803) 754-1760

30. She is seeking the position of Public Service Commissioner for the Sixth District.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

True - S. C. PSC also in the regulation determines that there is electricity available to the communities. It is my understanding that the companies developed the maps or territories that were approved by the PSC.

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

True - The PSC does assure that the municipalities are operating in a safe manner. Most of the gas in S. C. come through pipelines that come from Texas and La. so some oversight is needed and exerted.

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

False - The commission subject to the Administrative Procedures Act's requirements of uniform notice of proceedings.

False

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True

7. On average, South Carolina residential customers consume less electricity than the national average.

False

True

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.
True

False

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False

True

DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?

Industries regulated by the South Carolina Public Service Commission are private water and sewage systems. Electric and gas systems. Intrastate transportation. Class A and C. These industries are regulated by the PSC so that the industries can get a reasonable return on the dollar and those who consume the service can also receive the services at a fair price. If the industries were not regulated by the PSC then in instances where there was not sufficient profit, the consumers could be left without the opportunity to receive the service. Also the larger, stronger industries who would take all of the profitable areas and leave the areas that were difficult to serve undeserved or unserved.

2. What federal agencies regulate the same industries as the South Carolina Public Service Commission?

FCC, Commerce Dept., Environment Protection Agency.

5. Describe the potential for "stranded costs" in the electric utility industry which might result from the deregulation of retail service.

The potential for "stranded cost" in the electric utility industry which might result from the deregulation of retail service is that at present one can take into consideration all of the factors involved in providing the service. Also if I chose company A as my provider from the perspective of a residential customer and company A is not the company who owns the lines then the company who owns the lines may be the company with the "stranded cost" due to the fact that they may charge a fee for my receipt of the service but for some reason the fee does not cover the delivery of service. The other consideration is that with deregulation outside companies can come in and get the most profitable customers at a negotiated rate thereby causing the companies that have served the industrial customers and the unprofitable residential customers to lose their ability to deal with "stranded cost." Many who looked at deregulation as being the answer to lower cost utilities have looked at stranded cost and all of the factors involved.

* * *

MS. MUSSER: Mr. Ingram, good morning.

Mr. Chairman, I have Mr. Ingram's driver's license. It lists the address of 1215 Harvey Street in Columbia with a ZIP code of 29201, and his voter registration card lists the same address. Mr. Ingram, if you would, raise your right hand, please. (Witness sworn.)

MS. MUSSER: Mr. Chairman, in reviewing the SLED report and the credit report for Mr. Ingram, there were no negative entries, both are clear.

CLAYTON INGRAM, being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Mr. Ingram, you're no stranger to this process.

A. It's good to be back.

Q. I see you have run for the PSC a couple of times before, once in 1990, I believe, for the Second District and then again in 1994 for the at large seat; is that correct?

A. That's correct.

Q. It would appear that being a commissioner is something that holds a great deal of appeal for you.

Could you please tell us why that is the case; why would you like to be a commissioner?

A. Well, I became interested in utility regulation roughly 12 years ago, having followed it just as a citizen, some of the proceedings of the Commission; and, of course, having lived in Columbia during the -- part of the 1979 rate case when -- sort of the expose event for the Commission, when new intervenors were allowed. Rates, of course, in the '70s for the first time began to be a regular item for the Commission; and as a consumer and a young person at that time, at least, I began to get interested in just what the workings of the Commission were.

I can't really even tell you the real reason that first touched me off to that, but I became interested in it and started following the procedure, and about 12 years ago I started following very closely. Roughly ten years ago I decided that I was going to run for the Public Service Commission and be a part of what was going on with utility regulation and in 1990.

Came in during the time when there were some matters of cross-subsidization. That's since been resolved, I believe, that were of interest to me. Some land deals that were going on with utilities that were of interest to me and really piqued my interest.

I came on; at that time, of course, was defeated. Four years later, continued to study, continued to watch the proceedings. Came back and ran again. Again knowing that I probably did not have a chance to stand against an incumbent and a very knowledgeable and long-time incumbent at that time who I have a great deal of respect for and was not really running to unseat him as much as to just keep before the Legislature and the public and introduce some issues that I thought were important.

And, finally, biding my time until I found an open seat that I was able to run for, and so hopefully the third time will be a charm.

Q. I see that since last time you were screened you have obtained your master's in public administration.

A. Right. That's one thing that I sort of went back for that -- to fill in some gaps that I noticed during the first couple of times, to give me some more of a background in administrative procedure, more of a background in administrative law, more of a background in public finance and more of a background in statistics that I really had not gotten in my undergraduate degree or in some of my business and personal life. So I obtained that and graduated last year.

Q. Congratulations.

A. I used that really as a vehicle and, in fact, a lot of my research and writings dealt with public utility and Public Service Commission issues. I was able to sort of blend the two together and gain a great deal more information and insight doing that.

Q. I note, also, since the last time you were screened you have taken employment with the Budget and Control Board --

A. Right.

Q. -- Office of Insurance Services; is that correct?

A. That's correct.

Q. Please tell us what the nature is of your work there.

A. With Insurance Services, we administer and oversee the insurance benefits for state employees and related public entities: school districts, municipalities, counties that opt to join the state system.

My particular role there is as designer and writer for publications explaining really the benefits, how to obtain the benefits, how to best utilize the benefits.

Q. How long have you been in that position?

A. I'm going into four years now.

Q. Back up a little bit and tell us what you were doing prior to that position. Refresh our memories on your employment history.

A. Prior to that, for a few years before that I was working in organ donation and transplant-related issues for nonprofit entities, Lifebridge Foundation, that were interested in working on a couple of legislative issues that were, in fact, passed during the last session, I believe, with the Gift of Life Trust Fund.

Before that I was with the South Carolina Organ Procurement Agency actually doing the organ -- the state's organ procurement agency in this area.

Prior to that, I was in retail sales and wholesale sales, also.

Q. I see that you were with the university for a while.

Was that during your --

A. Right.

Q. -- master's studies?

A. Right. That was for a brief time I was working over there with research and development of -- sort of a municipal -- what would you call that? A database that municipalities could use for performance-based budgeting and performance-based government type initiatives.

Q. Mr. Ingram, your economic interests statement reflects your salary for the Budget and Control Board, but it also shows that you received a stipend from Richland School District 1.

Could you tell us what that stipend was for?

A. That was on my wife's income. She's a member of Richland 1 School Board.

Q. You also list in your Personal Data Questionnaire the Ingram Siblings Partnership.

Could you tell us about that?

A. Right. With my two sisters and one brother, I hold an interest in some commercial real estate in Cheraw, South Carolina.

Q. Do you sell or lease those properties?

A. We lease them. None of them are currently leased to any regulated interests.

Q. Mr. Ingram, do you own any utility stock?

A. No, I do not.

Q. Does your spouse or any member of your household own any utility stock?

A. No, they do not.

Q. I note simply for the record that you were sued once; is that correct?

A. Right. That's -- that was a long time ago. I put that on there just as a matter of full disclosure, and I had listed it the last few times I was here.

Q. Well, we appreciate your candor and not to replow old ground for the third time, because I think the prior transcript indicated this Committee looked into the matter extensively, but you were helping someone move, I understand.

A. That's correct.

Q. And you paid for that chair?

A. Right, extensively.

Q. Mr. Ingram, did you receive a copy of your Personal Data Questionnaire Summary?

A. Yes, I did.

Q. Have you had a chance to review that?

A. Yes, I have.

Q. Would you like to make any changes or clarifications to that document?

A. I think it's accurate as it is.

Q. Would you have any objection then to that summary being made part of the record of these proceedings?

A. No, I would not.

Q. Just a final few questions.

Mr. Ingram, have you ever taken a public position on the issue of electric deregulation?

A. No, I have not.

I have studied it extensively, and I have not taken a stand on it and have not in any way really made up my mind which side I would come down on. It's still under study, and the information I have has equal arguments from people of renown and esteem on both sides.

Thank goodness, I probably as a commissioner would not be called upon to make a judgment on that but to expeditiously enact whatever the Legislature decides, and that's what I would do as a commissioner.

Q. Are you currently a member of or have you at any time been a member of an organization, whether that be charitable or otherwise, which is politically active on the question of deregulation?

A. No.

Q. Have you ever been approached or contacted by any such organization?

A. I think everyone in South Carolina has at some time or another, been solicited; but other than just with the mail campaigns that have gone out from the utilities and those wishing to enter the utility market, no, I have not.

Q. Have you had a financial relationship with or have you had discussion of a future financial relationship with a lobbyist or lobbyist's principal?

A. No I have not.

MS. MUSSER: Mr. Chairman, I have no further questions.

REPRESENTATIVE WILKES: Any of the Committee members have any questions for Mr. Ingram?

EXAMINATION BY REPRESENTATIVE KENNEDY:

Q. Mr. Ingram, I know that you are aware of the Public Service Commission, what it's about, because this is your second time before us.

A. Third.

Q. My question to you is that you are running for commissioner from the Sixth District --

A. Right.

Q. -- and that's where I'm from. And my question to you is, I'm -- I represent South Carolina in the Legislature, but I live in a rural area, Williamsburg County. Deregulation is going to be a major issue that the General Assembly may be dealing with this year, and I'm concerned that we have somebody in that position that is going to -- you live in an urban area, but you are going to be representing a huge district, rural and urban.

Would you tell me how you would balance some of your decisions and how would you handle yourself as a commissioner looking out for the interests of the rural people in South Carolina?

A. And you are referring to the deregulation issue?

Q. Yes, just briefly.

A. Well, under deregulation, rural areas do stand the potential to be underserved if it's not done properly. What we have -- the advantage we have, I guess, in South Carolina at this time, and what I have been studying and I'm sure that the Legislature and the Public Service Commission also have, is the way that the other states are going about it.

Specifically I could reference California and Massachusetts in a mandate to serve, building that into the law and into the regulations, making certain that there is a drop back or a default provider built into that; whereas, if one provider for a certain area no longer is able to or willing to provide service, the previous provider would have to, by default, provide that service.

I also think that deregulation has the potential to open up areas of service the same way that the electric cooperatives did to rural areas by people who may be willing to get into a rural market if the situation was right; whereas, some of the larger providers may not have found it profitable.

It's all in the way that you structure the law initially, which would be your duty. My duty as commissioner would be to make sure that the regulations, the rules and the atmosphere, I guess, for that would be amenable.

REPRESENTATIVE KENNEDY: Okay. No further questions, Mr. Chairman.

REPRESENTATIVE WILKES: Any further questions for Mr. Ingram by any members of the Committee?

REPRESENTATIVE WILKES: If not, Mr. Ingram, thank you.

MR. INGRAM: Thank you.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. Clayton Baker Ingram

Home Address: Business Address:

1215 Harvey Street 1201 Main Street Suite 300

Columbia, SC 29201 Columbia, SC 29201

2. He was born on June 29, 1961, in Cheraw, South Carolina.

4. He married Valerie Elaine Rose Ingram on September 22, 1985.

He has one child:

Dillon Townsend Ingram, age 7.

6. He graduated from Cheraw High School in 1979; received a B.A. in Journalism-Advertising/Public Relations from the University of South Carolina in 1983; and received a Master of Public Administration from the University of South Carolina in 1997.

8. He ran unsuccessfully for the Public Service Commission, District Two, in 1990 and At-Large District, in 1994.

9. He has worked with:

South Carolina Budget and Control Board, Assistant Director of Public Information, since 1994;

University of South Carolina, Institute of Public Affairs Research and Development, 1997;

Lifebridge Foundation, Director, 1993-1996;

South Carolina Organ Procurement Agency, public relations, 1993;

Heritage Wine and Spirits, sales, 1989-1993;

Columbia Distributing Corporation, sales, 1987-1988; and

John Barleycorn, Inc., Managing Partner/Retail, 1984-1986.

10. He owns a quarter interest in Ingram Siblings Partnership.

14. He has been sued by Elizabeth Simmons for the unintentional loss of a rocking chair in 1983.

19. He has served in governmental positions as stated above in number 9.

26. He is a member of the following professional organizations:

American Society of Public Administrators organizations; and

South Carolina Organization of Government Information Officers.

27. He has served on the following civic, charitable, etc. organizations:

Earlewood Community Citizens Organization;

House District 74 citizens advisory panel;

City of Columbia Mini-Grants Commission;

City of Columbia Community Development Block Grants

Committee;

City of Columbia Community Housing Initiative;

South Carolina Liver Association;

Project Life;
Midlands Organ Transplant Support Group;

Leadership Columbia; and

Ridgeview Presbyterian Church.

29. Five letters of reference:

1) Mr. F.M.C. Fralix, President

South Carolina State Credit Union

800 Huger Street

Columbia, SC 29201

2) Honorable Robert Coble, Mayor

City of Columbia

1737 Main Street

Columbia, SC 29201

3) Mr. Robert Lyles, President

Stevens and Wilkinson Architects

1401 Main Street

Columbia, SC 29201

4) Dr. Charlie Tyer

University of South Carolina,

Institute of Public Affairs

Columbia, SC 29208

5) Dr. Lawrence McClure

2903 River Drive

Columbia, SC 29201

30. He is seeking the position of Public Service Commissioner for the Sixth District.

Candidate's Written Answers

TRUE/FALSE:

1. The South Carolina Public Service Commission regulates the wholesale sale of electricity by investor-owned utilities operating in this state.

False

2. The South Carolina Public Service Commission does not regulate the rates and charges of municipalities selling natural gas in South Carolina.

True

3. The South Carolina Public Service Commission's procedures are subject to the Administrative Procedures Act's requirements of uniform notice of proceedings and judicial review of agency hearings.

True

True - I supposed this question was referring to cross-subsidization of enterprises within a utility holding company. If it refers to comparative risks of enterprises similarly situated, the answer would have been the opposite.

5. The South Carolina Public Service Commission has regulatory authority over all cable television systems operating in South Carolina except for those owned and operated by municipalities.

False

6. The South Carolina Public Service Commission has authority to regulate the safety of municipally operated natural gas pipe lines.

True

7. On average, South Carolina residential customers consume less electricity than the national average.

False

True - However, PSC must rule as to what is and is not a small, rural provider, as in its recent case disallowing GTE this status.

False - The PSC ruled that BellSouth could be allowed to reenter the inter-LATA market. Final review, however, rest with the FCC.

10. All telecommunications consumers in South Carolina are allowed to select their long distance toll carrier.

True

True - Typically in the case of PGA (purchased gas adjustments) that allow for a degree of rate adjustment, due the fluctuating price of gas, without requiring a full rate case.

13. Hydro-generated electricity provides well over one-half of the total electricity produced in South Carolina.

False

True

17. With the federal deregulation of the trucking industry, the South Carolina Public Service Commission was divested of its jurisdiction over intrastate, household goods movers.

False

18. The South Carolina Public Service Commission has economic regulation authority over certain suppliers of water but has no similar jurisdiction over waste water companies.

False

True

False

DISCUSSION:

1. What are the industries regulated by the South Carolina Public Service Commission? Why are these industries regulated?

The South Carolina Public Service Commission is charged with regulating private, investor owned utilities including: electricity, gas, telephone and telegraph, water and sewer and intra state transportation and for-hire common carriers (trucking) as well as its original charge of regulation of railroads.

They regulate the bulks of these industries because that is what had traditionally been considered "natural monopolies." In the case of electric and gas transmission as well as the transmission of telecommunications signals over wire, it is not feasible for any and all willing providers to string lines, run pipes and lay track. The concept of public regulation was to assure the public a fair level of service provision and equitable rate structure while allowing these businesses to operate as monopolies. Regulation also serves as a limiting and policing device by issuing certificates of "public convenience and necessity." This limits competition but assures the public that the regulated service providers have demonstrated some ability to provide the service on a reliable, on-going basis.

A final consideration in regulation was to assure an oversight agency to provide for inspection and safety and uniformity of service provision.
3. Discuss the concept of "universal service" with regard to telecommunications utilities.

The Universal Service Fund (USF) is currently one of the hottest and most widely debated aspects of public utility and telecommunications regulation compliance. The Telecommunications Act of 1996, further deregulating telecommunications, provided for the concept of Universal Service. Briefly, Universal Service seeks to assure that all Americans have access to telecommunications service at some level. It acts as a kind of subsidy through which (primarily) low-income customers, schools, libraries and rural health care providers may apply for and be granted Universal Service Funds to establish or expand telecommunications access. In order to pay for this the FCC has sought to establish the broadest base of funding that it can. This should allow the fund to be funded to its cap each year while providing the least burden to each payor. Businesses will pay a little more for telecommunications fees, as will second residential lines, but the base will be so broad as to make the additional assessment as benign as possible for all who pay in.

The PSC will decide the terms of this fund for South Carolina and administer it. It currently administers (with certified telecommunications providers) a variation of Universal Service in the LifeLine and LinkUp programs.

5. Describe the potential for "stranded costs" in the electric utility industry which might result from the deregulation of retail service.

The concept of a deregulated electric industry, once thought to be impossible or impractical is now viewed as being inevitable in the near future. It has certainly been the fuel for a great deal of debate in the public and the General Assembly over the last few years. The debate is divided into two basic camps, the utilities who provide power and service in a monopolistic environment currently and "industry," large industry in particular, who desire to purchase the vast amounts of power that they consume on the open market in a deregulated environment. Both sides have sought to win the general public consumer to their particular stance and both site studies to show, on the one hand, that deregulation and competition will result in lower cost to the consumer or, on the other hand, that the uncertainty generated by the sudden erosion of a stable base of customers will drive the cost of energy up and radically destabilize the market. Both sides make excellent arguments. One of the arguments against this is the idea of "stranded costs."

Stranded costs are those costs that are recovered slowly over the life of a facility or at least over a long term amortization. CP&L provides a good example. In order to provide electricity for their customers, businesses like CP&L must construct generating facilities, which they own. Almost inevitable this results in a large expenditure of up-front capital that will be recovered gradually over time. CP&L built one of the last nuclear power generating facilities (in North Carolina) in order to provide power to its subscribers. The costs of this proved to be enormous and the rates they were allowed to charge, though some of the highest in the state, were and are still inadequate to allow them a rapid recovery of these costs. In the event of deregulation, CP&L's rates would no longer prove attractive to most of their rates payers, either business or residential. Those rate payers and the income they generate might look elsewhere to purchase their power and the cost of building this facility and others like it would be "stranded," virtually unrecoverable. While I have used CP&L as an example, all currently regulated utility providers have similar situations which leave them with stranded costs. The trick is, who pays for this? The answer is, the rate payer, from whom all income flows to cover these costs. The PSC must determine how the company can seek to recover these stranded costs from their rates and thus how rapidly or slowly the costs can be recovered. All of this has huge implication for the rate payer, the stability of the company and the power environment at large and is (arguably) one of the single biggest factor in determining how to move forward with deregulation in South Carolina.

The PSC is currently developing a plan for deregulation in SC, tentatively due to the legislature in January of 1998. It will be interesting to see how this issue is addressed.

* * *

MS. MUSSER: Mr. Chairman, the last candidate for the Sixth District is Ms. Patrick Noble.

Good morning, Ms. Noble.

Mr. Chairman, I have Ms. Noble's driver's license which lists an address of 14 New Circle in Columbia, 29203; and her voter registration card reflects the same address.

Ms. Noble, would you raise your right hand, please.

PATRICK J. NOBLE, being first duly sworn by Ms. Musser, testified as follows:

EXAMINATION BY MS. MUSSER:

Q. Would you state your full name for the record, please.

A. It's Patrick Jackson Noble.

MS. MUSSER: Mr. Chairman, in reviewing the SLED report