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

Friday, April 3, 1998
(Local Session)

Indicates Matter Stricken
Indicates New Matter

The Senate assembled at 11:00 A.M., the hour to which it stood adjourned, and was called to order by the ACTING PRESIDENT, Senator PATTERSON.

REPORT RECEIVED

On motion of Senator HOLLAND, the following Report of the Joint Legislative Committee to Screen Candidates for the Public Service Commission was ordered printed in the Journal:

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
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.

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

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.

False

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.

False

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.

False

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.

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

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 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

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 - 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

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.

True

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 - It did at one time.

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

False

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

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?

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

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.

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

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.

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

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.

False

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.

True

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.

True

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.

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.

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 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

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 - 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

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.

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

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 - 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.

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.

False

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 - Section 8-13-730

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 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

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.

False

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

False

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.

True

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.

False

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.

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

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 - 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

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 - the Act covers all telephone carriers.

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 - 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

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 - 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.

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 - if not it should.

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 - 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.

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 - All meetings are public - except under certain conditions.

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 - 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)

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 - 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.

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 - This makes more competition within the market however the universal concept is still recognized.

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.

True

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 - They do this for the 21 electric co-ops serving South Carolina.

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.

False - In the generation mix, 32% fossil, 64% nuclear, 4% hydro.

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 - 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.

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 - No member of the PSC may own stock in a company he regulates, nor member of family, nor business related partner.

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.

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.

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.

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

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.

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

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 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

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.

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

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.

True

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.

False

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:

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.

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 - 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.

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.

True

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 - 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

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 - 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.

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 - Not until the Committee report is issued.

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.

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

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:

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

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 - 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

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.

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

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:

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

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.

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

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.
True

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.

True

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?

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
(c)   Telephone companies
(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.

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

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.

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.

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

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.

True

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 - 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

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.

True

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

False

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 - 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.

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 - 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.

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 - 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

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?

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.

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

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.

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

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.

True

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.

True

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.

True

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?

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).

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.

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

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 - If the long distance toll carrier provide services in their area.

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.

False

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.
False

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.

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

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 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

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.

False

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.

True

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.

False

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 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

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 - 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.

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.

True

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.

True

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.

False

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 - They must wait until after the screening process.

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 - 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

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?

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.

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.

False

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.

True

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.

True

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.

True

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?

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

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.

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

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.

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.

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 - 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

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.

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

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.

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 and the credit report for Ms. Noble, there were no negative entries as to either.
BY MS. MUSSER:
Q.   Ms. Noble, were you given earlier today a copy of your Personal Data Questionnaire Summary?
A.   Yes.
Q.   Have you had an opportunity to review that summary?
A.   Yes, I did.
Q.   Would you like to make any changes or corrections at this time?
A.   I only wanted to add, I guess, under the civic charitable organizations just a couple more of the organizations, ones I really kind of forgot when I was completing the form.
Q.   Yes, ma'am. Tell us at this time, and we will make those changes.
A.   Okay. I have also been on the board of the directors of the United Way of the Midlands, board of directors of the Columbia Urban League, board of the directors of the Big Brothers and Big Sisters. I serve currently as a lay delegate to the annual conference for the Francis Burns United Methodist Church, for my church. And I'm, also, I guess, a regional officer and on the national board of the Jack and Jill of America Foundation, which is a foundation which funds children's programs for children of child abuse.
Q.   We are making those changes. Do you have any additional changes that you would like to make?
A.   No. I think that's it.
Q.   Then with those changes, would you have any objection to the summary as amended today being made a part of the permanent record?
A.   None whatsoever.
Q.   Your Personal Data Questionnaire indicates that you are president and CEO of Noble and Associates; is that correct?
A.   Uh-huh. It's P.J. Noble and Associates, Inc.
Q.   Could you please tell the Committee, if you would, about this business?
A.   Yes. Essentially what I do is management and planning consulting. I work primarily with both the public sector and the private sector. A major part of the business, in addition to management and planning, is also I do legislative lobbying, primarily for one client, which has tended to be since 1993 Chem-Nuclear, Incorporated.
Essentially in terms of my management and planning end of the business, I do quite a bit of training and conflict resolution, motivational training, communication skills, that kind of thing.
And with respect to the management and planning end of it, I work with municipalities like, for example, I currently work with the City of Columbia on the new CCI redevelopment project, that kind of thing.   I primarily do problem solving with cities and with private corporations and organizational analysis. That's essentially the gist of what I do.
Q.   Do you have any investor-owned utilities as clients?
A.   None.
Q.   Ms. Noble, do you recall a prescreening interview that you and I had, I think it was in mid-December; and at that time, I believe you mentioned that at one time at least for -- it was on one occasion that you had done some work for Southern Bell, I believe?
A.   Right. Yeah.
Q.   BellSouth it's now called.
A.   Right. It was BellSouth. I had worked for BellSouth as a marketing manager back in 1979 -- or 1978 to 1979; but in my consulting business, BellSouth does an annual African-American calendar event where they essentially recognize African-Americans in terms of their South Carolina contributions. And a couple of years ago, I believe it was in '95, I coordinated that effort for them; and it was a one-time kind of initiative and did that on a contract basis.
Q.   What would your plans be, Ms. Noble, as far as your business is concerned if you were elected to the PSC?
A.   I would hope to be able to continue some of my management and planning consulting.
With respect to the lobbying, I have every intention of resigning any lobbying efforts whatsoever.
Q.   With your past association with clients such as BellSouth, could you be a fair and impartial member of the PSC when those folks come before the Commission?
A.   I certainly think so. As part of my business, I have always worked, I guess traditionally through the 25 years of my experience, with both the public and the private sector; and it's always been very important to be able to delineate the responsibilities and accountability. And, yes, I do certainly think that I could be objective as it relates to that.
I don't have any ongoing, continuing connections with BellSouth and -- nor do I have any promise of any kind as it relates to continued work.
And so from that standpoint, I would, of course, seek not to do any of that kind of work with any of the utilities given election.
Q.   Thank you.
You are currently a commissioner for the Public Housing Authority?
A.   For the Columbia Housing Authority, right.
Q.   And when does your term expire?
A.   It expires 2000, the year 2000. I am on the second term. I was originally appointed by the City Council of Columbia to that position, and I'm on the second -- I'm pretty sure it expires -- it's either 2000 or 2001. I think it's 2000.
Q.   Mrs. Noble, tell us, please, what is the reason or reasons you would like to be a Public Service commissioner. What do you hope to bring to the Commission?
A.   Well, you know, I was thinking about that from the standpoint that all of my professional career, I think, has prepared me in a way from the standpoint that for about 14 or 15 years I worked for both the City of Indianapolis, the State of Massachusetts and the State of South Carolina from a public standpoint in terms of administering public funds and administering public policy, that kind of thing.
In addition to that, over the last 10 or 12 years, I guess, I have worked in the private sector, both managing my own business and working with private corporations and that kind of thing. I really think that that combination of experience uniquely prepares me to be able to look at the delicate balance of both the consumer and also the industry with respect to the utilities and that kind of thing.
From that standpoint, I have an interest, I think, in a continuing environment. I think we are all going to be faced with a continuing environment of deregulation, less regulation, that kind of thing; and I think it's key to have people at the Public Service Commission to continue the efforts of that delicate balance in representing South Carolina interests, even though there may be all -- or the public of South Carolina interests, even though there may be all kinds of things going on in the industry and the whole issue of making sure that everybody has access to utility services and making sure at the same time that our industries continue so that they are able to survive and continue to provide that service.
Q.   Ms. Noble, do you own any utility stock?
A.   No, I don't.
Q.   Does your spouse or any member of your household own any utility stocks?
A.   No, they don't.
Q.   Okay. I see you have four children; is that correct?
A.   Yes, four children.
Q.   Could you tell us where they are employed?
A.   Yes. My oldest daughter is 21, and she is a senior at Hampton University in Virginia. She works on campus there in the technology center, the computer center, and doesn't have any other employment.
My second oldest daughter is 19. She is a sophomore at Carolina. She does have a part-time job at CRW, Incorporated. I believe it's like a collection agency, and she works there part-time in order to kind of supplement her income, but she's a full-time student in nursing at Carolina.
My third oldest child is 16, and she is a full-time student at Keenan High School in Richland District 1. And my youngest is a son, and he is 11, and he, of course, is in the sixth grade at W.G. Sanders Middle School.
Q.   Thank you. Ms. Noble, have you at any time taken a public position on the issue of electric deregulation?
A.   I have not.
Q.   Are you currently a member of or have you ever been a member of an organization, whether that organization be charitable or otherwise, which is politically active on the question of deregulation?
A.   I have not.
Q.   Have you been approached or contacted by any such organization?
A.   I have not.
Q.   You mentioned your work as a lobbyist to us earlier.
Have you had any discussion or have you had any discussions of a future financial relationship with any lobbyist or lobbyist's principal other than what you have described to us today?
A.   No, I have not. I have discussed the fact that I have filed an application for the Public Service Commission with my current contract employer, which is Chem-Nuclear.
Q. Mr. Chairman, I don't have any further questions.
REPRESENTATIVE WILKES: Ms. Noble, will you be registered to lobby in the 1998 legislative year with Chem-Nuclear?
MS. NOBLE: I will.
REPRESENTATIVE WILKES: Does any other Committee member have a question?
Senator Jackson.
EXAMINATION BY SENATOR JACKSON:
Q.   Ms. Noble, I did hear you say that if you are successful with this position that you will continue your business, but you would do that on a part-time basis knowing that this is a full-time position with the Public Service Commission?
A.   Absolutely. It was my understanding that my full-time commitment, if elected to the Public Service Commission, would be, of course, with that Commission; and I would approach the consulting business primarily as a part-time initiative in those areas where there would be no conflict.
Q.   And then secondly, to follow up with what Representative Wilkes said, if you see or this Committee feels that it may be a potential conflict for you to be a registered lobbyist at the same time vying for this position this year, would you be willing to take a leave as a lobbyist for this session, at least until this process has been seen to?
A.   Yes. If the Committee feels that it is a conflict, I'm prepared to do that.
REPRESENTATIVE WILKES: Any other questions from any Committee members for Ms. Noble?
SENATOR : Ms. Noble, New Circle, I didn't know you lived on my street.
MS. NOBLE: I didn't, either. It is out in Summer Hill. It's out about two miles beyond Interstate 20 and North Main Street. That intersection out beyond that area, in north Richland.
REPRESENTATIVE WILKES: If there are no further questions, thank you, Ms. Noble.
MS. NOBLE: Thank you.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1.   Patrick J. Noble
Home Address:           Business Address:
14 New Holland Circle     P.O. Box 11733
Columbia, SC 29203       Columbia, SC 29211
2.   She was born on November 10, 1949.

4.   She married Jerome Noble on August 18, 1973.
She has four children:
Jakiya Noble, age 21 (student);
Aisha Noble, age 19 (student);
Shiante Noble, age 16 (student); and
Rashan Noble, age 11 (student).

6.   She graduated from C. A. Johnson High School in 1967; received a B.A. in Sociology from Hampton University in 1971; received a Masters in City Planning from the Massachusetts Institute of Technology in 1973; attended summer school at Harvard University in 1969 and 1970.

7.   She has served as the Commissioner for the Columbia Housing Authority since 1993 and   her term expires in 2000.

9.   She has worked with:
Indianapolis Department of Metropolitan Development, planner, 1973-1974;
Massachusetts Governor's Committee on Criminal Justice, planner, 1974-1977;
Self-employed, Management Consultant, 1977-1978;
Southern Bell, Manager/Service Consultant, 1978-1979;
Office of the South Carolina Governor, Director of Highway Safety, 1979-1986;
Gary Realty, Inc., real estate broker, since 1987; and
P.J. Noble and Associates, Inc., President and CEO, 1987-1997.

10.   She is the President/CEO of P.J. Noble and Associates, Inc.

17.   She has served as a lobbyist for Chem Nuclear Systems since 1993.

19.   She has served in the Governor's Office of Highway Safety, 1979-1986, and in the City of Columbia as a Professional Service Consultant, 1996-present.

26.   She is a member of the following professional organizations:
Greater Columbia Board of Realtors;
South Carolina Board of Realtors; and
National Association of Governors Highway Safety Representatives.

27.   She has served on the following civic, charitable, etc. organizations:
Jack and Jill, Columbia Chapter;
Hampton University Alumni Association;
Summerhill Homeowner's Association;
Greenview Elementary School Parent/Teacher Organization;
W.J. Sanders Middle School Parent/Teacher Organization;
Lay Delegate to the Annual Conference for the S.C. United Methodist Church (Francis Burns United Methodist Church);
Historic Columbia Foundation (former board member);
United Way of the Midlands (former board member);
Columbia Urban League (former board member); and
Big Brothers and Big Sisters (former board member).

29.   Five letters of reference:
1)   Vince Ford
Vice President

Community Relations
Richland Memorial Hospital
221 Summerhill Dr.
Columbia, SC 29203
2)   James Bennett
Senior Vice President
First Citizens Bank
1230 Main Street
Columbia, SC 29201
3)   Heyward Bannister
President/CEO
BANCO, Inc.
P.O. Box 3247
Columbia, SC 29230
4)   Carol Singletary

1208 Bush River Rd., L-8
Columbia, SC 29210
5)   Carol D. Waldo, Director
Administration & Building Services,
Richland Memorial Hospital
P.O. Box 8858
Columbia, SC 29202

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.

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

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 - I would think that an analysis of return on similar enterprises with similar risks would always be an integral part of the analysis in setting the rate of return on common equity. Certainly as one factor to consider.

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 - We pay less per kwh but, I don't believe we necessarily consume less electricity. Regionally, we would consume less than colder or warmer climates, perhaps.

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.

True - Yes, but the decision can be appealed to the FCC.

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.

False

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

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 - There is no one S. C. Consumer advocate that represents every consumer perspective and even if there were, the PSC still has the right to hear from anyone who wants to be heard.

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.

False

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 include the following:
a) Intrastate investor owned electric utilities (includes rates, procedures, accounting, purchasing)
b)Investor owned intrastate gas, water, wastewater and sewage companies
c) Telephone companies operating within the state (includes rates)
d) Radio common carriers (practices and service)
e) For hire motor carriers relative to household goods, hazardous waste for disposal and passengers with respect to licensing, schedules, rates, etc.
f) Railroad and railway companies with respect to safety and practices

The industries are regulated in order to ensure that the public receives adequate service in the above areas at reasonable rates. There is a delicate balance between the ensurance of continued long term service from the various utilities to the public and the responsibility to ensure that the industry receives a fair rate of return on their investment.

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

The FERC (Federal Energy Regulatory Commission) and the FCC (Federal Communications Commission) are the two major federal agencies that also regulate the same utilities as the Public Service Commission. The FERC regulates electric and gas utilities. The FCC regulates radio common carriers and the telecommunications industries.

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 utilization of different fuel types by the utility companies. For example, fossil fuels, hydro generated, nuclear generated fuels.

It is important from an economic standpoint that the utilities establish strategies that incorporate a mix of the fuel types so as to not unnecessarily burden the consumer with the cost of a completely new nuclear fuel generating system particularly over a short period of time.

From an environmental standpoint, the generational mix allows us to gradually ease into a more technologically advanced nuclear base while maintaining the other forms of fuel generation. This is helpful in terms of hazardous waste disposal if it is done over a gradual period of time which helps the environment in the long run.

* * *

MS. MUSSER: Mr. Chairman, the first at large candidate is Mr. Atkins.
Your driver's license lists an address of 2 New Grant Court, Columbia, South Carolina, with a ZIP code of 29209; and your voter registration card lists the same address. Would you raise your right hand, please, sir.
JAMES BLAKE ATKINS, being first duly sworn by Ms. Musser, testified as follows:
EXAMINATION BY MS. MUSSER:
Q.   Mr. Atkins, would you please state your full name for the record.
A.   My full name is James Blake Atkins.
MS. MUSSER: Mr. Chairman, in reviewing the SLED report and the credit report for Mr. Atkins, there were no negative entries as to either.
BY MS. MUSSER:
Q.   Mr. Atkins, were you earlier today given a copy of your Personal Data Questionnaire Summary?
A.   I was.
Q.   Have you had a chance to look that over?
A.   I did, and there is one very small correction that needs to be made.
Q.   Please tell us what that is.
A.   It's Entry Number 26. He is a member of the American Water Resources Association, President in '94. That should read the South Carolina section.
Q.   I heard South Carolina. I didn't hear the rest of that.
A.   South Carolina section.
Q.   Oh, section.
A.   I wasn't president of the entire American Water Resources Association, just the South Carolina section.
Q.   Are there any further changes you would like to make at this time?
A.   No.
Q.   With that one change, would you have any objection then to the amended summary being made a part of this record of these proceedings?
A.   That would be fine.
Q.   Thank you. Tell the Committee, if you would, please, briefly about your employment history, what you are doing now and what you have been doing.
A.   Whew. I have worked at a lot of different places, mostly state agencies here in South Carolina and North Carolina and with -- in the academic environment.
I'm currently a research faculty member at the University of South Carolina in the Earth Sciences and Resources Institute. I have been there since September of '96. We do environmental type research and work.
Prior to that time, I worked at the Department of Health and Environmental Control for a couple of years in two different bureaus, their Water Supply Bureau dealing with drinking water issues and then their Water Pollution Control Bureau that dealt with wastewater issues.
I was transferred there as part of the state agency reorganization in 1994. For nine years prior to that, I worked as the chief of the Surface Water Hydrology Section for the South Carolina Water Resources Commission. Very fun job, good opportunity to do a lot of very interesting and good things for the state.
Prior to that time, I had worked for one year with the North Carolina Department of Natural Resources and Community Development and ran an agricultural cost share program which was newly implemented there worth about $2.1 million a year. I was one of three section managers in that division, and those divisions there would be equivalent to our DHEC, our Water Resources, Land Resources, to give you an idea of the level.
Prior to that time, I served as an extension specialist, had a dual appointment, both in extension and research, at NC State University in the Ag. Engineering Department and ran their statewide program for agricultural programs dealing with water quality and the infamous swine waste management issues that they are still dealing with up there.
And by the way, that cost share program at Natural Resources that I ran was meant to deal with that. And, thank goodness, they had that; otherwise, it would have been much worse.
But I worked at the Ag. Engineering Department and did extension work. I went around and taught a lot of classes, out with lay people and then also worked on two or three different research projects.
Prior to that time, I was a graduate student for two years at the Environmental Engineering Department, Systems Engineering Department at Clemson and worked under contract to the USDA, the EPA, and Duke Power Company and was involved in part of the original licensing, environmental assessment for the Bad Creek Project.
Prior to that time, I worked for about two to three years as a hydrologist for the U.S. Geological Survey as part of the Interior Department here in Columbia. They are responsible for collection of water resources data on the stream flow, flooding, rainfall, environmental monitoring and worked on a number of projects dealing with the Cooper River Rediversion Project; the Barnwell site; Chem-Nuclear, which was one of the original mass balance studies that was done over there.
And then prior to that, I inspected restaurants with the Department of Health and Environmental Control; so I can tell you all the good and bad Chinese restaurants. And that is it. I have worked at a lot of different agencies over the past 20 years.
Q.   What would be your plans regarding your current employment if you were to be elected to the Commission?
A.   I will have to resign my position. It's a very demanding position. Being a research professor, I do environmental monitoring. For example, if I had not had this meeting here today, I would have been out in the rain at 3:00 last night with my graduate students doing assessments. So it's much too demanding. So I would have to resign that position.
I would hope ultimately, though, it would be within the ethics rules to remain an adjunct faculty member because I think it's important to keep that relationship with some of the things that are going on over there in terms of what I believe is going to happen in the Public Service Commission during its next term.
Q.   You are currently working on your Ph.D.?
A.   I am. I would not probably recommend this to anybody, but I have been doing it part-time over the last six years and finally am to the point of finishing up and hope to finish in May. I have done everything, all the requirements except final defense and have a draft dissertation. I've done all that and plan on finishing it in May.
Q.   In what field is the --
A.   It's in marine sciences and oceanography. That was what my undergraduate degree at Carolina was in. I knew the faculty there, and they allowed me in.
Nowadays it's very difficult to be admitted into a candidacy under a part-time basis. I explored the School of Engineering, but they required you to be a full-time student, and I couldn't do that because of requirements to pay the mortgage and I have a 14-year-old son and do those kinds of things.
Q.   Mr. Atkins, briefly tell the Committee why you want to serve on the Public Service Commission, one, and, two, what you hope to bring to the Commission if you were to be elected.
A.   I'm interested in serving on the Public Service Commission because of the issues that the Commission deals with. I think that the issues of deregulation in the utility industry that are going to be forthcoming, one way or another, eventually they will happen, we will have to respond to those. I'm interested in being a part of that.
I think based on my experiences and qualifications, especially my practical experiences in water resources and working with the utility industry, I think I bring some things that are kind of unique probably among all the rest of the candidates and the standing commissioners.
I want to be involved in that process. I think that in the conversations that have been ensuing so far, not only here but in many of the other states, I don't think the right questions are being asked in terms of the interplay between deregulation and environment, in particular. You can't make energy without water, and I think there are going to be some serious conflicts as we move into the next millennium in terms of what -- what the allocations or what the priorities of you should be for our water resources.
Most people don't realize that on average the utility, the thermal electric generation in our state, uses about 4.5 billion gallons of water a day. It comprises 80 percent of all of our water use in the state. As a matter of fact, the evaporative losses just from the nuclear and coal-fired plants, especially the nuclear plants, are equal to about half the amount of all the municipal water that's used in the state every year.
So there's significant implications in terms of ultimately what happens with deregulation, water use. Obviously, there are conflicts for that water, especially during drought times. We are very blessed, we have a lot of water especially out there today. We're at the flood stage on the Congaree at St. Matthews. But when we go into these droughts every 20 to 30 years, we are really, really to the point of being constrained.
So I hope to bring some of that expertise there, to the Commission. And that's one of the -- one of the big reasons that I'm running.
I've always been involved in the government, always from the staff level, though; and I think I understand the intricacies and some of the difficulties and the tradeoffs that go on between staff and commission. And I know having worked for a number of commissions both here and in North Carolina, sometimes there were great communications and great understandings between the staff and the commission and other times there were not. And I think I would bring a good understanding of those processes to the Public Service Commission in terms of me being a commissioner.
Q.   Thank you.
Mr. Atkins, do you own any utility stock?
A.   I do not.
Q.   Does your spouse or any member of your household own any utility stocks?
A.   We do not.
Q.   How is your spouse occupied?
A.   My wife is an attorney. She's a sole practitioner here in Columbia and does work for the State and also under contract to a number of different people, including BellSouth.
Q.   Okay. What is the nature of her services with BellSouth?
A.   Again, she's a contract attorney, one of many. She does not appear before the Public Service Commission. She -- her specialty -- my wife is Holly Saleeby Atkins. Her specialty is Workers' Compensation. So she represents BellSouth, along with other clients like the State Accident Fund, Second Injury Fund, in some of the disputes that result from Workers' Comp.
Q.   She receives income from BellSouth?
A.   She does. She has been a staff contract attorney with them ever since she opened her business almost five years ago.
Q.   Would you have any idea of her caseload with them? Is it a small part of her income or a --
A.   It varies. I would say it probably comprises on average about 10 to 15 percent of her annual income. I don't -- she -- she doesn't tell me all of what she makes.
Q.   Does she have any other investor-owned utilities as clients besides BellSouth?
A.   She does not.
Q.   Okay. What would her plans be as far as continued representation of BellSouth on that basis which you described if you were to be elected as a commissioner?
A.   Well, if I was fortunate enough to be elected to the Public Service Commission, I think we would have to look at that to make sure that there was not anything that would be unethical there. Obviously, if there's the potential -- I know that serving as a commissioner I wouldn't want to bring any type of economic gain to her because of what I would do, and I would certainly never do that anyway.
I think I'm very ethical. I think it goes all the way back from being an Eagle Scout along with -- Wes Hayes and I, we were in Boy Scouts together, so I certainly would never do anything to bring any type of economic gain to her. But I think, obviously, I would have to, on some cases, recuse myself or she would have to be in a position to give up that business if the caseload from BellSouth was such that it was a substantial part of the Commission business.
Q.   Okay. You mentioned deregulation a moment ago and its environmental impact, environmental impact associated with that.
Have you ever taken a public position on the issue of electric deregulation?
A.   I have not. I have avoided the issue.
Q.   Are you currently a member of or have you 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 been contacted or approached by any such organization?
A.   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 a lobbyist's principal?
A.   No.
MS. MUSSER: Mr. Chairman, I have no further questions.
SENATOR HOLLAND: Any questions by any members of the Committee?
Representative Wilkes.
EXAMINATION BY REPRESENTATIVE WILKES:
Q.   Mr. Atkins, again, back on the question of your wife's representation of BellSouth, my initial feeling is that at least in appearances, if not in actuality, there would be a conflict of interest there.
Would that create a problem for you or her if, in fact, it would be indicated that she would have to sever that relationship with BellSouth?
A.   She would not be happy about it because she's worked very, very hard for that business; but I think given the weighing of that part of her business with, I think, the potential that being on the Commission would bring, I think that the choice there would be that she would give up that business.
Q.   You haven't discussed it with her?
A.   I have discussed it with her, and I think her response has been, Well, if you get elected to the Commission, then I will send my letter to them.
REPRESENTATIVE WILKES: Thank you.
Do any other members of the Committee have any questions for Mr. Atkins?
Thank you very much, Mr. Atkins.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1.   James B. Atkins
Home Address:         Business Address:
2 New Grant Ct.         Earth Sciences & Resources Institute
Columbia, SC 29209   USC, 901 Sumter St., Rm. 401
Columbia, SC 29208

2.   He was born on July 5, 1954, in Rock Hill, South Carolina.

4.   He married Holly Saleeby Atkins on October 7, 1989.
He has one child: James C. Atkins, age 14 (student).

6.   He received a B.S. in Marine Science from the University of South Carolina in 1976; a M.S. in Environmental Systems Engineering, from Clemson University in 1981; and is a candidate for a Ph.D. in Marine Science in May of 1998 from the University of South Carolina.

9.   He has worked with:
Earth Sciences & Resource Institute, USC, 9/96 to present;
SCDHEC, Bureau of Drinking Water Protection, 7/95-8/96;
SCDHEC, Bureau of Water Pollution Control, 7/94-7/96;
SC Water Resources Commission, 4/85-6/94;
NC Dept. Of Natural Resources & Community Development, Div. of Soil & Water Conservation, 4/84-3/85;
Biological & Agricultural Engineering Dept., NC State Univ., 7/81-4/84;
Environmental Sys. Engineering Dept., Clemson Univ., 9/79-6/81;
USGS, SC Dist., 10/77-9/79; and
SCDHEC, Central Midland Health Dist., 3/77-9/77.

26.   He is a member of the American Water Resources Association, President (S.C. Section) in 1994.

27.   He is a member of the following civic organizations:
Shandon United Methodist Church; and
Dreher High School PTO.

29.   Five letters of reference:
1)   Dr. John M. Schafer
USC, Byrnes Ctr., Rm. 401,
Columbia, SC 29208
(803) 777-4421
2)   Mr. Brian J. McCrodden
401 Oberlin Rd., Suite 120
Raleigh, NC 27605
(919) 856-1288
3)   Mr. Doug Calvert
2600 Bull St.
Columbia, SC 29201
(803) 737-4184
4)   Dr. Benjamin Dysart
224 Broadland St., NW
Atlanta, GA 30342
(404) 842-0112
5)   Mr. Melvin Miller
1401 Main St.
Columbia, SC 29226
(803) 765-3000

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

31.   He owns 210 shares of Sonoco.

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 Commission regulates and supervises the rates, charges, services, facilities, practices and accounting of these utilities - wholesale and retail.

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 gas utilities.

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 - Rates are to be based on comparison of similar utilities and their 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 - Municipalities and counties are granted exclusive tariffs regarding cable TV.

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

True - Under the Gas Safety Act.

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.

True

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 - As of this time, BellSouth has not been granted this right.

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

True - This can also be accomplished through access codes for each call (which are specific to each long distance carrier).

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 - There are specific provisions in the Code for fuel costs based on the cost of fuel, purchased fuel costs and SO2 allowances. These are adjusted monthly over a 12 month running period. They are to be based on least cost operation and fuel purchases.

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

False - About 2% of total production. Most of the peak production is from hydro.

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 - Pledges can only be sought and given after the determination of qualification by the Committee.

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 - Jurisdiction over investor-owned water, sewer and combined water/sewer utilities.

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 industries regulated by the SC Public Service Commission include the following:

Investor-owned electric utilities; This excludes all publicly-owned utilities in SC such as municipalities, electric cooperatives and the SC Public Service Authority (Santee-Cooper). However, electric cooperatives and municipalities are regulated regarding service outside of their jurisdictional boundaries.

Investor-owned gas, water and wastewater utilities; Interstate gas pipelines are not regulated by the Commission, nor are publicly-owned gas companies. However, all gas utilities are regulated under the Gas Safety Act regarding safety pursuant to federal law. Most water and sewer utilities are public and regulated by SCDHEC. SCDHEC also regulates the private and water sewer companies pursuant to both federal and state water pollution and drinking water acts. Rates, charges, services (adequacy), facilities, practices and accounting are all jurisdictional for water and sewer.

All telephone companies; rates, charges, services, facilities, practices and accounting are regulated and supervised by the Commission.

All for hire common carriers; The rates, charges and facilities, as well as schedules, are regulated and supervised concerning passenger service, household goods and hazardous waste.

All common radio carriers, except those excluding under FCC orders.

All railroad and railway companies; Rates, construction and expansion of facilities, crossing safety, schedules, and specific operational guidance concerning passengers and livestock are regulated and supervised.

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

Universal service is defined as providing basic service to all residential and other customers within a service area, and ultimately throughout SC. Basic service includes touch tone capability, inter-connections to other local exchange carriers (LEC), emergency number access, exchange of phone numbers, and a phone listing (book) provided once annually. Under telecommunication deregulation, protection of incumbent LECs has been dramatically changed. Through the granting of a Certificate of Public Convenience and Necessity, the Commission can allow new providers to serve areas previously held by the incumbent LEC. This competition can lead to rate reductions, since the incumbent must meet the new proposed rates.

Since in may cases there has existed a carrier of last resort, which has been an incumbent LEC, the Commission has established a universal service fund (USF) to help promote the establishment of universal service statewide. The USF can administered by the Commission or a third party, and seeks to "equalize" rates/costs for carriers of last resort so that competition and deregulation can be successful. A carrier of last resort can be "reimbursed" from the USF based on the difference between their costs for service and the maximum allowable charge approved. Through competition (where two carriers exist) and limited regulation by the Commission, the market can help to extend and provide universal service at a reasonable rate to all of SC's consumers.
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 source of generation for an electric utility in meeting off-peak and on-peak load demands. Off-peak demands occur on average about 17 hours per day and are met through the utilization of baseload generation. In SC, baseload generation is comprised predominately of nuclear and then steam thermal-generation via coal. In some limited cases, generation can be achieved through co-generation facilities. Baseload plants remain on-line the vast majority of time, except for planned outages or in emergency situations. These plants must be run efficiently for the utility to minimize its cost of production. These require good maintenance schedules and reliable forecasts of future (one day out to six months) climatic, demand and source (supply) terms. However, most energy scheduling and production is based on one-week periods.

On-peak electric power is the most valuable to the utility and the most costly to the consumer. On-peak demands vary both daily, seasonally and inter-annually. In SC, peak loads are generally the largest in summer (cooling demand) and also during the summer of dry years when energy utilization for pumping water and cooling are extreme. These demands generally include about 7 hours during an average day. On-peak demands require that the utility generate power to the grid almost instantaneously. The loads are met predominately by hydropower generation, with some demand met at local demand centers via gas turbines.

Utilities through Integrated Resource Plans submitted to the Commission are required to analyze their generational mix to minimize costs to the consumer. Baseload requirements are met through the construction of new nuclear and thermal plants. These must be approved by the Commission under the Siting and Environmental Protection Act. Because of the cost and waste management implications, nuclear construction is non-existent in the US. However, thermal plants also have environmental liabilities such as SO2 and particulate emissions, changes to communities and ecosystems due to construction, and nuisance concerns. Further, nuclear and thermal plants require and consume large amounts of water to meet cooling demands. Power is the largest water user in SC and on average 3% of the water withdrawn is evaporated and consumed. This can have serious implications to both off stream and in stream water uses within the river basin. In addition, utilities often reduce release from reservoirs during droughts and high demand periods to increase thermal efficiency. The larger and deeper the hypolimnion (cold deep layer), the better the cooling and generation efficiency. Thus water levels are maintained in these lakes, reducing downstream releases. Refer to the next paragraph.

Hydroelectric generation is renewable since no water is consumed. However, rules for hydro operation via both FERC licenses for investor-owned utilities and US COE reservoirs, control the availability of water in a river basin. Releases from reservoirs generally augment flows in rivers. However, during drought, release are reduced to meet upstream (in reservoir uses) often in conflict with other downstream hydros, municipal and industrial water users and environmental concerns (water quality, waste assimilation and fisheries.) Hydroelectric reservoirs are not jurisdictional under the Siting Act however. The last reservoir for peak power to be constructed in SC was the Bad Creek Project by Duke. Power or multipurpose reservoirs are difficult to build due to the potential negative environmental impacts and the costs involved.

* * *

MS. MUSSER: Good afternoon, Ms. Bedenbaugh.
MS. BEDENBAUGH: Good afternoon.
SENATOR HOLLAND: Ms. Bedenbaugh, Ms. Musser is going to ask you some questions as counsel for the Committee.
MS. MUSSER: Mr. Chairman, I have Ms. Bedenbaugh's driver's license. It indicates an address of Route 4, Box 195 in Leesville; and her voter registration card lists the same address.
If you would, raise your right hand, please.
BRENDA BEDENBAUGH, 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 name is Brenda Maxey Bedenbaugh.
MS. MUSSER: Mr. Chairman, in reviewing the SLED report and the credit report for Ms. Bedenbaugh, there were no negative entries in either.
BY MS. MUSSER:
Q.   Ms. Bedenbaugh, were you earlier today given a copy of your Personal Data Questionnaire Summary?
A.   Yes, I was.
Q.   Have you had an opportunity to look that over?
A.   I have, and there are a few corrections.
Q.   Could we make those at this time, please?
A.   Uh-huh. My daughter is no longer with Newberry County Memorial Hospital. She is now the owner of a gift shop called Michelle's at 1202 Main Street, Newberry.
Q.   Yes, ma'am. Do you have any other ones?
A.   And under work, I saw that you left out two of my employers.
Q.   Okay.
A.   One was Bonham Academy.
Q.   Pardon me. Could you say that again?
A.   One of them was Bonham, B-o-n-h-a-m, Academy; and one was W. Wyman King Academy.
Q.   We are getting those down.
A.   And under Number 19, I still am a counselor in a federally-funded program which is entitled Educational Talent Search. I work with low-income first generation students that have a
potential to go to college but might not if they don't get some extra counseling and guidance.
Q.   Do you have any other changes for the summary?
A.   Everything else I think is fine.
Q.   With those changes, would you have any objection to the summary as amended being made part of the permanent record?
A.   None at all.
Q.   Also, Ms. Bedenbaugh, as a preliminary matter, I think there was some inadvertent deletion on the Personal Data Questionnaire of some dates of employment.
Could you briefly tell us how you have been employed and the dates of those employment? I think you listed your employments, but the dates were missing.
A.   I had faxed that to you earlier in the week, but I guess you didn't get it.
Q.   We need to enter it into the record.
A.   Okay. If you will, just give me a second here.
Q.   Ms. Bedenbaugh, I have a copy of what you faxed me. Do you need that?
A.   I thought I had one but --
Q.   Someone's going to hand that to you.
A.   Okay. That will be great.
Q.   You can just review that aloud, and also as you -- perhaps, as far as the most several recent entries, tell us what you did in those positions and the dates that you held those positions.
A.   Okay. I will be glad to. I currently am employed at Piedmont Technical College on a part-time basis. As I said, in a federally-funded program that's entitled Educational Talent Search. I work with low-income first generation students. I work with students in three different counties: Newberry County, Saluda County and Edgefield County.
Q.   And when did you start that business?
A.   I began that in 1998, and I am still employed there.
And I am also a broker with Hometown Realty, and I have been there since 1987. When I began there, it was called John Dowling Realty; but it is now called Hometown Realty. It's the same firm, just a different name.
And there I do a wide range of things. I list property. I sell property, both residential and commercial. I do broker's price opinions. I do advertising. I do some public relations. I work as a liaison between clients and financial institutions to help them get their loan process in progress to purchase a home.
Q.   May I interrupt you one minute?
A.   Sure.
Q.   Do you sell or have you ever sold or leased property to any investor-owned utilities?
A.   No, I have not.
Q.   Continue. I'm sorry for interrupting.
A.   Okay. Also, in this position I do -- handle some rental properties for people and also aid people in finding a rental. And I work very closely with the Chamber of Commerce and the Development Board, often give tours of Newberry and the surrounding area to prospective people coming into the area.
Q.   With the position as commissioner for the Public Service Commission being largely considered a full-time position, what would be your plans as far as your real estate job and your part-time job at Piedmont Tech?
A.   I would put my real estate license on hold with the Real Estate Commission, and I would resign the other commission.
Q.   I see that you are also actively involved in the Republican Party on the local level and the state level; is that correct?
A.   That's correct.
Q.   In what capacity are you involved with the party? Do you hold any --
A.   Yes, I do. I have just completed a term as chairman of the Saluda County Republican Party, and I am currently serving as the executive committeeman from Saluda on the State Executive Committee.
Q.   Tell us, Ms. Bedenbaugh, why you wish to serve on the Public Service Commission, number one, and, number two, what would you like to bring to the Commission with your involvement.
A.   Okay. Well, it's something that I have been interested in for probably ten or 15 years, and the time just seemed right with Mr. Mitchell's retiring.
I feel that I have had a wide range of experiences having been an educator, a counselor and a businesswoman. I feel that I have a lot of experience that I could contribute to the position. I feel that I have gained a lot of wisdom over the years, and I think that the Commission needs a woman, and I feel like I would be an excellent female member of the Commission. I have worked with people from all walks of life; and I feel that I understand people very well, their needs; and I feel that being educated, I can see issues that come before the Commission from both the professional side as well as from the people-in-general side. I feel that I would serve everyone well.
Q.   Ms. Bedenbaugh, 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.   No.
Q.   Just a few final questions.
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 at any time been a member of an organization, whether that be a charitable organization or any other kind of organization, which is politically active on the issue of deregulation?
A.   Not that I'm aware of.
Q.   Have you ever been contacted or approached by any such organization?
A.   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 a lobbyist's principal?
A.   No.
MS. MUSSER: Mr. Chairman, I have no further questions.
SENATOR HOLLAND: Any questions by any member of the Committee of this lady?
REPRESENTATIVE KENNEDY: Just one, Mr. Chairman.
SENATOR HOLLAND: Representative Kennedy.
EXAMINATION BY REPRESENTATIVE KENNEDY:
Q.   Ms. Bedenbaugh, that's right?
A.   Yes.
Q.   Would you please, ma'am, give me in your own words what do you think the electric -- Public Service Commission responsibilities are briefly.
A.   What are they responsible for?
Q.   Yes, ma'am. What do they do?
A.   The Public Service Commission does a number of things. We deal with electric companies, four electric companies: South Carolina Electric & Gas, Lockhart and the other two. You hold hearings on anything that pertains to them that is necessary. You deal with some water and sewer problems or matters. You deal with railroad safety. You deal with the safety of gas pipelines.
So you deal with things that serve the public. The Public Service Commission deals with those entities that provide services; and, also, you deal with communication, with the telephones and so forth.
Q.   As a Public Service commissioner, how would you see yourself as far as your responsibilities to the consumer and to business interests in the state of South Carolina? How would you see yourself as far as what are -- what would be your responsibilities as far as the Commission is concerned looking at the issues that affects the consumer and the business community?
A.   Well, I think I -- as a commissioner, I would have to look at both sides of the issue and make a decision that would be fair to both business and consumer.
REPRESENTATIVE KENNEDY: Thank you, Mr. Chairman.
SENATOR HOLLAND: Any further questions?
Thank you so much, ma'am. Appreciate you coming.
MS. BEDENBAUGH: May I ask one question?
SENATOR HOLLAND: Yes, ma'am.
MS. BEDENBAUGH: When are we free to seek pledges?
SENATOR HOLLAND: You will be notified by the Committee.
MS. BEDENBAUGH: Thank you. Appreciate your time. Have a nice afternoon.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1.   Brenda M. Bedenbaugh
Home Address:         Business Address:
Rt. 4, Box 195         P.O. Box 553.
Leesville, SC 29070     Newberry, SC 29108

2.   She was born on January 23, 1940, in Oconee County, South Carolina.

4.   She married George C. Bedenbaugh on June 21, 1964.
She has two children:
Bryan M. Bedenbaugh, age 29 (Newberry County Assessor's Office); and
Andrea M. Bedenbaugh, age 26 (owner, gift shop--Michelle's).

6.   She graduated from Wallhalla High School in 1958; received a B.A. in History/Government from Lander College in 1962; received her Guidance Certification from Winthrop University in 1965; received her Salesman Certification and Broker Certification from the Southern Institute of Real Estate.

8.   She was an unsuccessful candidate for Clerk of Court in Saluda County in 1996.

9.   She has worked with:
Langley-Bath-Clearwater High, History & Government Teacher, 1962-64;
Jefferson High School, History, Government & English Teacher, 1964-65;
Whitmire High School, Guidance Counselor, History Teacher, 1965-68;
Newberry County Adult Education Program, Counselor, 1966-68;
Newberry/Lexington County Substitute Teacher;
Bonham Academy, 1978-79;
W. Wyman King Academy, 1982-88;
Hometown Realty, Broker, 1987-present; and
Piedmont Technical College, part-time Counselor, 1998-present.

19.   She serves as a part-time counselor in federally funded programs at Piedmont Technical College (Educational Talent Search).

26.   She is a member of both the South Carolina and National Association of Realtors.

27.   She has served on the following civic organizations:
Newberry County Chamber of Commerce/ Development Bd.;
Newberry First Baptist Church, Sunday School teacher;
AARP;
Saluda County Republican Party, Chairman, 1995-97;
Exec. Committeeman, 1997-99;
SC Museum membership; and
Smithsonian Association.

29.   Five letters of reference:
1)   Patty Hix
124 Abby Ct.
Greenwood, SC 29649
2)   Carol Richard
113 Sheldon Ave.
Greenwood, SC 29649
3)   Glenn Whitesides
1818 Main St.
Newberry, SC 29108
4)   Robbiette Hazel
BB&T
1724 Wilson Rd.
Newberry, SC 29108
5)   Marjeane Hughes
2201 Main St.
Newberry, SC 29108

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.

False - retail

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

True - only the safety of 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

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.

False - South Carolina residents consume more than the national average.

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.

True

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 - They (electric utilities) did have this right to recoup fluctuations in fuel expense, but I believe this was changed.

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

False - The largest percentage is produced by coal.

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 - only after all candidates have been interviewed by the committee.

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.

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

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:

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

"Universal service" - universal service is the concept that all citizens have the right to telecommunication (telephone) service at a reasonable charge. Rates should not be such that any group of society or area of the country would be without service.

As a result of universal service some individuals qualify for assistance in having their telephone equipment installed.

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

"Rate base" is the method used by the commission to establish the rate for electricity. A number of things would be involved in determining the "rate base."

The cost of the facility would be considered. It would be depreciated as time goes by, but you might also have a need for expansion and updating to meet future needs.

The interest rate of capital needed to operate would be considered as would the costs of supplies, manpower, and materials needed in the production of the electricity.

The utility would probably receive some tax rebates which would be subtracted from their costs. Also, the monies which are received from installation of service to consumers would be considered.

Basically, I guess you would say that the rate base is determined by cost to produce. Rate base is the amount determined to be needed for a kilowatt hour of electricity produced and sold.

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." This is the term used to refer to the various methods by which electric utility companies can generate electricity.

They use nuclear energy, coal, and hydro-generation to produce electricity. Our state has facilities that use each.

Currently, South Carolina has seven nuclear generating stations that are being used. Some environmentalist are opposed to nuclear power plants. They feel that they are not safe and expose the citizens to too much radiation. However, this is probably the most cost efficient method of producing electricity.

Coal is used to produce much of South Carolina's electricity. This, too, is a concern of environmentalist. They do not want the air polluted with coal smoke.

I feel that it is good that utilities have a mix of generating possibilities. When fuel supplies are short, the cost of generating electricity rises. If there were not a mix of possibilities for generating electricity, then people would often have to pay exorbitant rates for electricity. From an economic standpoint "generational mix" allows us to have electricity at the most economical rates available.

* * *

MS. MUSSER: The next candidate, Mr. Chairman, is Mr. Moseley, C. Robert Moseley.
Mr. Chairman, I have a copy of Mr. Moseley's driver's license. It lists his address as 137 Jefferson Place in Columbia, 29212; and his voter registration card reflects the same address.
Mr. Moseley, if you would raise your right hand, please, I will swear you in.
C. ROBERT MOSELEY, 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 Robert Moseley.
MS. MUSSER: Mr. Chairman, in reviewing the SLED report and the credit report for Mr. Moseley, there are no negative entries as to either.
BY MS. MUSSER:
Q.   Mr. Moseley, you were earlier today given a copy of your Personal Data Questionnaire.
Have you had a chance to look that over?
A.   Yes, ma'am.
Q.   Would there be any changes or corrections you would like to make at this time?
A.   On the second page, I think it's incidental, but it's Irmo Planning Commission, I'm a former member.
Q.   A former member of the Irmo Planning Commission?
A.   Yeah. And then the Columbia area -- the Central Midlands, I am a former member of that, too.
Q.   Okay. We have got those. Are there any additional corrections you would like to make at this time?
A.   No, ma'am.
Q.   With those changes, with the summary as amended, would you have any objection to that being made a part of the permanent record of these proceedings?
A.   No, ma'am.
Q.   Tell the Committee, if you would, briefly, why you would like to serve on the Public Service Commission. First, tell us that and then what you hope to bring to the Commission with your involvement.
A.   I ran for the Second District seat approximately three years ago, and I have kept up with deregulation since then. I have attended 90 percent of the Public Service meetings on Tuesday, attended most of the deregulation meetings and also the subcommittee meetings on the LCI Committee for the last ten months. I just kind of got interested since last time around.
Q.   Your Personal Data Questionnaire indicates that you currently serve on the Council of Advisors for the Department of Consumer Affairs; is that correct?
A.   Yes, ma'am.
Q.   Who appointed you to that?
A.   The Governor.
Q.   Governor Beasley?
A.   Carroll Campbell.
Q.   When does your term expire for that?
A.   We don't know because it's just continuing because it hasn't been reapproved yet, so there is about six of us in limbo.
Q.   So you are in holdover --
A.   Yes, ma'am.
Q.   -- status at the present time?
What would be your plans as far as your continued service on the council should you be elected to the Public Service Commission?
A.   I would resign from that, ma'am.
Q.   Tell this Committee, if you would, about your current employment, where you are currently employed.
A.   I am the owner of Irmo Insurance Agency, which is an independent agency in Irmo. It's mainly property and casualty insurance. My son works for me in the business. I have been operating since 1979. Prior to that, I was in banking for 19 years.
Q.   You also own the Lexington Insurance Agency?
A.   Yes, ma'am. It's a dormant S corporation right now. It's not in operation.
Q.   What types of insurance do you sell with the Irmo agency?
A.   Personal lines, which is cars, homeowners, autos, boats, and we do small commercial business, too.
Q.   Do you plan to continue to work with the Irmo Insurance Agency if you are to be elected --
A.   My son plans on taking over the business.
Q.   Okay. Would you maintain ownership of the business?
A.   No, ma'am.
Q.   On your economic interest statement I believe you disclosed the fact that you sold insurance to a few registered lobbyists; is that correct?
A.   Yes, ma'am. I am licensed in the whole state of South Carolina, so I have been writing business, you know, since 1979. I have to make an income.
Q.   I see that Greg Morton of BellSouth is among those.
A.   Correct.
Q.   And you're telling us that you are not going to be selling insurance any more, that your son is going to be taking over this business.
A.   Yes, ma'am.
Q.   Assuming that you do cease writing insurance, would you, as a commissioner, feel that you could be unbiased when BellSouth came before you for a rate case, for example?
A.   Yes, ma'am.
Q.   You mentioned that you have been in banking. I believe you've worked in various capacities including Southern Bank, the Hampton County Bank and before that with the Board of Financial Institutions as a bank examiner; is that correct?
A.   Yes, ma'am.
Q.   And before that, you were with South Carolina National Bank as a customer service representative?
A.   Yes, ma'am.
Q.   You've been banking since 1960?
A.   Yes, ma'am.
Q.   Mr. Moseley, do you own any utility stock?
A.   No, ma'am.
Q.   Does your spouse or any member of your household own any utility stock?
A.   No, ma'am.
Q.   Other than that which you disclosed on your economic interest statement as far as selling insurance to those various individuals, do you have any other business interests or connections with regulated utilities?
A.   No, ma'am.
Q.   Just a final few questions.
A moment ago you mentioned your interest in deregulation.
Have you at any point taken a public position on the issue of electric deregulation?
A.   No, ma'am.
Q.   Are you currently a member of or have you been a member of an organization, whether that's a charitable organization or any kind of organization, which is politically active on the question of deregulation?
A.   No, ma'am.
Q.   Have you ever been approached or contacted by any such organization?
A.   No, ma'am.
Q.   Other than that which you disclosed to us as far as your business relationships with those lobbyists as far as writing those personal lines of insurance, 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, ma'am.
MS. MUSSER: Mr. Chairman, I have no further questions.
SENATOR HOLLAND: Any questions by any member of the Committee of this gentleman?
SENATOR HOLLAND: Thank you so much, Mr. Moseley.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1.   Charles Robert Moseley
Home Address:         Business Address:
137 Jefferson Place     P.O. Box 1047
Columbia, SC 29212     Irmo, SC 29063

2.   He was born on October 30, 1940, in Augusta, Georgia.

4.   He married Lisa Van Austin Moseley on October 24, 1992.
He has two children:
Robert Scott Moseley, age 29 (insurance agent); and
Ann Alexander Moseley, age 3.

5.   He served in the SC Air National Guard. He was honorably discharged in 1967 as an Airman 2d Class.

6.   He graduated from Eau Claire High School in 1959; Columbia College in 1962; SC Bankers School in 1971; and Louisiana State University School of Banking in 1973.

7.   He has held public office as:
Town of Irmo, Business Manager, 3/79-10/79; and
SC Department of Consumer Affairs, Council of Advisors, 1990 to present.

8.   He lost the election for PSC Seat - 2 in 1994.

9.   Mr. Moseley reported his occupational history as follows:
Irmo Insurance Agency, 1979 to present;
Bank of Commerce/Southern Bank & Trust, 1969-1979;
SC Board of Financial Institutions, 1964-1969; and
SC National Bank, 1960-1964.

10.   He is the President and CEO of Irmo Insurance Agency and holds 95% of the stock of Lexington Insurance Agency, Inc.

22.   He has spent $62 on postage.

26.   He is a member of the following professional organizations:
Independent Insurance Agents of SC;
Independent Insurance Agents of Greater Columbia; and
Home Builders Association of Greater Columbia.

27.   He is a member of the following civic organizations:
Riverland Hills Baptist Church;
Department of Consumer Credit, Council of Advisors;
First Citizens Bank, Irmo Advisory Board;
Irmo Ruritan Club, Program Chairman;
Lake Murray/Irmo Rotary Club, Membership Chairman;
Woodmen of the World Lodge # 2;
Ballentine Fire Commission, Founding Chairmen;
Irmo Planning Commission; Former Member
Central Midlands Regional Planning Council; Former Member
Columbia Area Mental Health Center, former member; and
Ballentine Civic Association.

29.   Five letters of reference:
1)   Mary Judd
P.O. Box 68
Irmo, SC 29063
(803) 781-2103
2)   James Holcombe
P.O. Box 29
Columbia, SC 29202
(803) 781-0177
3)   John Gibbons
P.O. Box 343
Irmo, SC 29063
(803) 781-2223
4)   Charlene Meetze
P.O. Box 1577
Irmo, SC 29063
(803) 781-7894
5)   Dan Randall
P.O. Box 2207
Irmo, SC 29063
(803) 781-1540

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

31.   He owns stock in:   BB&T - 194 shares;
First Citizens Bank of SC - 59 shares;
Intel, Inc. - 229 shares;
CNA Financial - 39 shares; and
Pfizer Inc. - 216 shares

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 - Municipalities are the wholesale saler 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

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.

True - I believe BellSouth rate is set this way.

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.

True

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 - only if they meet the points set by the FCC.

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.

True

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

False - nuclear energy.

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.

True

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?

Local phone, long distance, investor owned utility (cooperative territories only), Lockhard Plant, private water and sewage, household good movers, railroad, railway safety, natural gas safety, limo service. These industries are used by the citizens of S.C. and if they weren't regulated they could charge whatever they wanted, and for the safety of the citizens.

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

Federal Communications Commission (FCC), Nuclear Regulatory Commission (NRC), Public Utility Regulatory Act.

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

Universal service: to provide affordable phone service to all the residents of S.C. for individuals and small businesses.

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

Stranded cost: cost which the utility companies have had to maintain because the government made them do this. Equipment, nuclear plants, grit, and other facilities during regulation, which they will not be able to depreciate after deregulation.

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: hydro, which is water steam, coal to make steam are the economic way to produce electric, and nuclear energy to generate steam also. Hydro and nuclear are the cleanest on the environment, however coal put off smoke in the air, and nuclear is probable has the greater importance on the environment do to the nuclear hazard if the plant had a explosion and let off radiation in the air and the storage of the fuel rods in the ground.

* * *

MS. MUSSER: Mr. Chairman, our next candidate is here, Mr. Stone, for the at-large seat.
Mr. Chairman, I have Mr. Stone's driver's license, and it lists his address as 134 Pinewood Drive in Woodruff, South Carolina, with a ZIP code of 29388. His voter registration card likewise lists the same address.
Mr. Stone, if you would raise your right hand, please.
FRANK B. STONE, 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.   Frank Bobo Stone.
Q.   Okay.
A.   B-o-b-o.
MS. MUSSER: Mr. Chairman, in reviewing the SLED report and the credit report, there were no negative entries on either.
BY MS. MUSSER:
Q.   Mr. Stone, were you earlier today given a copy of your Personal Data Questionnaire Summary?
A.   Yes, I have it here.
Q.   Are there any corrections or changes you would like to make at this time?
A.   Just --
Q.   You have an opportunity --
A.   Just some minor ones. On the work as far as what's there, the date is wrong. It should be 1957 to '61 on the first one.
Then an update on Number 22 there: To date I have spent $116.80 on postage and still $11 on supplies.
I did not -- I did not go into small work areas like working while I was in college and stuff like that. I stuck to the bigger picture. I mean, if you wanted those, I could fill in the blanks on that; but just, you know, if I worked at a part-time job, I didn't put that down.
Q.   With those changes that you've made, would you have any objection to the summary as amended being made part of the permanent record?
A.   It would be correct then.
Q.   Mr. Stone, four years ago, I believe, when you appeared before this Committee you were on the verge of retiring.
A.   Yes.
Q.   And you have since retired?
A.   Yes. I sold my business at the end of '94.
Q.   Tell us about that business, if you would, please.
A.   Initially I started manufacturing laparotomy sponges for hospital use. They are specialized units that are used in the operating room that can moisten you down while you are being operated on. They use saline solution or sterile water and put those in.
I had manufactured some of my own machinery, and I sold two pieces of my machinery to a place in Taiwan. And after going to Taiwan and spending 15 days in Taiwan, I decided that I had better get out of the sewing business because I could not compete with the people there that worked seven days a week and got one Sunday a month off.
So when I came back, the business complexion changed. I shifted into an auto electric rebuild program, that up until the end of '94 I ran Power Built Starter and Alternator in Spartanburg. And there we remanufactured starters, alternators, generators, rewind armatures, that type of operation.
Q.   Since you've sold your business, if you were to be elected, you would have no other employment except for your position as --
A.   I piddle and diddle I tell people.
Q.   What are you involved in?
A.   I hand wind -- I still hand wind some small armatures, specialty armatures; and I still wish I had some armatures for bigger customers. Nothing that takes up a great deal of time.
Q.   Do you serve on the board of Woodruff Federal Savings and Loan?
A.   That's correct.
Q.   And how long have you been on that board?
A.   I went on there in 1989. It would not -- it would not interfere with the service on the Commission.
Q.   Your wife works for the State at DHEC, I believe.
A.   She works for the Health Department. She works in the Children's Rehabilitative Services for the Department of Health.
Q.   And your children, neither one of those works for any regulated utility; is that correct?
A.   That's correct.
Q.   Would you tell us, Mr. Stone, why you wish to serve on the Public Service Commission and what you hope to bring to the Commission as a commissioner.
A.   Well, I thought about that because I knew that you would ask me that, and I'm not unlike the mountain climber, there's some similiarities, that the mountain is there to be climbed.
I see the Public Service Commission as a challenge with the deregulations that are coming into being and the things that are transpiring with the Commission; and I feel that I could bring a way of problem solving, a way of thinking that would be the way that I have always approached problems and solved problems in the past and have been very successful toward reaching good decisions.
With me, a good decision is one that you look on five years down the road and on down the road and you say that you made a good decision, not something that is a quick fix or spur of the moment; and my interest in the Public Service Commission is to see that things are done right the first time.
Q.   Mr. Stone, do you own any utility stock?
A.   No.
Q.   Does your spouse own any?
A.   No.
Q.   Does any member of your household own any --
A.   No.
Q.   A final few questions.
Mr. Stone, have you ever at any point taken a public position on the issue of electric deregulation?
A.   No.
Q.   Okay. Are you currently a member of or have you ever been a member of any organization which is politically active on the question of deregulation?
A.   No.
Q.   Have you ever been approached or contacted by any such organization?
A.   In my bid for the Public Service Commission I have been invited by a lobbyist to talk with him, but I would not go talk with him.
Q.   Could you repeat that, please, for the benefit of the Committee.   A.   I said, In my bid for the Public Service Commission I was invited by a lobbyist to come talk with him, but I will not go talk with him about deregulation.
MS. MUSSER: One moment, Mr. Chairman.
MR. STONE: I would prefer to remain neutral on that.
(Off-the-record discussion.)
BY MS. MUSSER:
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. STONE: One note. The closest that I have to any utility or any relationship with anyone working or anything that's regulated by the Public Service Commission is that occasionally the Woodruff Federal Group will make loans to them. Every loan comes before -- every employee loan comes before the full board, and I would see that people work for, say, Duke Power or for some other regulated utility.
BY MS. MUSSER:
Q.   Would that cause you any problem or conflict if you were a member --
A.   I've searched through, and I think I could abstain from any votes being taken on those issues.
Q.   As a member of --
A.   As a member of that board.
SENATOR HOLLAND: Any questions by the members of the Committee?
REPRESENTATIVE WILKES: Yes, sir.
SENATOR HOLLAND: Representative Wilkes.
EXAMINATION BY REPRESENTATIVE WILKES:
Q.   Mr. Stone, without getting into any specifics, in your communication with this lobbyist, what was the nature -- how were you approached? I'm just interested in --
A.   I just told him --
Q.   No. What did he say to you?
A.   He said come by and talk with him.
Q.   Regarding?
A.   Regarding deregulation.
Q.   And that contact was made because he was aware that you were a candidate?
A.   I inferred that that is the truth, yes.
REPRESENTATIVE WILKES: Thank you.
SENATOR HOLLAND: Any further questions?
Thank you, sir.
SENATOR COURTNEY: Mr. Chairman, I would like a little more information in the context of the relationship there with the lobbyist and when that contact occurred.
MR. STONE: Yes, sir.
As a group, the Community Financial Institution of South Carolina, the thrift organization which just recently merged with the South Carolina Bankers Association, had our annual convention in Boston back in -- the last date was October the 3rd, so it was the latter part of September and October, and Steve Smith was in attendance there. And I told Steve at that time that I would be running for the at large seat on the Public Service Commission, and Steve told me to come by and talk with him.
EXAMINATION BY SENATOR COURTNEY:
Q.   Was there any indication that that contact had been offered to other candidates?
A.   I don't know.
SENATOR COURTNEY: Okay.
Thank you, Mr. Chairman.
SENATOR HOLLAND: Any further questions?
Thank you, sir. Thank you.
MR. STONE: Excuse me. One thing in reading over the transcript from the last time, you always asked the candidates if there were any suggestions or recommendations that I might make to this Committee for improvement of selection of the service candidates.
MS. MUSSER: Mr. Couick did ask that last time; you are absolutely right.
SENATOR HOLLAND: You are free to respond to that again.
MR. STONE: I have three suggestions.
One you can take -- I don't understand the loophole that allows a candidate to run for a district seat as well as the at large seat, and that's all I'll say about that.
The other thing that -- the other suggestion I have is to advise the candidates of their qualification within a shorter period of time rather than waiting for the transcript to be -- to come out, which will come out three to four weeks from now.
And then the last thing that I have to suggest to you is that in the transcript that you make of these proceedings that you omit such pertinent and personal information that would benefit someone if they wanted to assume someone's identity. This -- I have got the transcript from '94. It has my name, my address, my social security number, my voter registration number and my driver's license number, and it would be very easy -- very, very easy for someone to pick up on this and take it. And I hope that -- I'm not aware that this is electronically transcribed; but if it goes into like the Internet, that you not make that a part of the record.
SENATOR HOLLAND: Yes. Ms. Musser will respond to you.
MS. MUSSER: As to the first concern that you have about the legality of a person to run for two seats, I was not involved in screening last time, but this Committee made a determination that there was no legal prohibition against a person running for a numbered seat, one of the Congressional seats, and then an at large seat, that there was no legal prohibition against that.
The second thing you mentioned is the time of the transcript as far as your receiving it, and I agree that that's -- you know, you would like that time frame to be shorter, and I can understand that. We have to get that transcript from the court reporter; and we are subject to, you know, how long it takes her to get that done or how long it takes that service to get it done. So we are at their mercy, and they do a very good job, but that just takes some turnaround time that we don't have any control over.
Third, you also and rightly mentioned your concern with the social security numbers and the driver's license numbers being listed in the report. Historically they have been. We are not doing that anymore for the very reasons that you described, because of the potential for a computer hacker to get control of your banking accounts and such other problems. That is a very valid concern.
MR. STONE: Good. Thank you. I do appreciate that.
SENATOR HOLLAND: Thank you.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1.   Frank B. Stone
Home Address:         Business Address:
134 Pinewood Dr.       P.O. Box 605
Woodruff, SC 29388   Woodruff, SC 29388

2.   He was born on November 29, 1938, in Woodruff, South Carolina.

4.   He married Shirley Ann King on June 11, 1966.
He has two children:
Wayne Stone, age 27 (Westvaco); and
Brandon, age 19 (Clemson student).

6.   He graduated from:
Fairforest High School, 1956;
Wofford College, 1964; and
MUSC, failed out in 1966.

7.   He was a member of the board at Spartanburg Regional Medical Center, 1989-1997.

8.   He lost the election for PSC Seat # 4 in 1994.

9.   He has worked with:
Union Special Machine Co., Chicago, Ill., sales and service, 1957-1961;
Ace Sweater, Union, SC, production manager, 1967-1969;
American & Efird Thread Mills, Mt. Holly, NC, tech support & sales, 1969-1977;
Sunbrand Corp., Atlanta, GA, sales and service, 1977-1978; and
Shirann Ind. & Power Built Starter & Alternator, Spartanburg, SC, owner and operator, 1978-1995.

10.   He is a member of the Board of Woodruff Federal Savings & Loan.

21.   He received a mailing list from Glenn Reese.

22.   He has spent $116.80 on mail and $11.00 on office supplies.

27.   He is a member of the following civic organizations:
Masonic Member;
Emma Gray Memorial United Methodist Church;
Committee member of Troop 21, Boy Scouts of America;
Order of the Arrow, Skyuka Lodge 270;
Odyssey of the Mind Coach;
Habitat for Humanity, Building and Finance Committee, labor; and
Tri-Scouts, Inc., Director.

29.   Five letters of reference:
1)   G. Curtis Walker
Workman Memorial Hospital
Woodruff, SC 29388
(864) 476-8127
2)   D. W. Waddell, President
Woodruff Federal Savings & Loan
247 N. Main St.
Woodruff, SC 29388
(864) 476-8144
3)   Charles R. Morris, Jr.
Woodruff State Bank
131 S. Main St.
Woodruff, SC 29388
(864) 476-8136
4)   Roy Smith, Esquire
415 Montgomery Bldg., Suite 415
Spartanburg, SC 29303
(864) 582-6727
5)   Ray Eubanks, Probate Judge
Spartanburg County Courthouse
Spartanburg, SC 29303
(864) 596-2556

30.   He 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 - The PSC would also and probably more importantly regulate the retail sale.

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

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.

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.

False

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.

True

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.

True

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

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.

True - I believe this became a function of DOT.

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 - PSC has regulatory power over investor owned waste-water and water providers.

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 - Normally the Consumer Advocate would speak for the consumer, however, there may be times when individuals would be granted time before the Commission.

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 - Since this is a mandate, the PSC would arbitrate this situation. Failing this, it possibly might be the PSC's position to project a solution that would be implemented.

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 intrastate railroads, natural gas utilities, electric utilities, telephone utilities, investor owned waste water plants and investor owned water providers. Ground carriers transporting persons or goods for hire also fall under the PSC. In providing the aforementioned services the companies being regulated are given a franchise to serve within a given area. It is the function of the PSC to insure that these services are provided at a reasonable cost with a reasonable return for the company providing these services. The PSC has to examine all perspective while performing this task. In keeping the consumer price low and reasonable the PSC on the other hand has to insure that the provider realizes a profit. Not simply just a profit but one that will fund depreciation and new advancements in technology in order to grow the company and expand for the future.

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

The question of stranded costs is looming large in the debate of electric deregulation. Very simply stranded cost are entailed when the Book Value of an asset under regulation doesn't come up to the Market Value of the same asset under deregulation. The difference between these is termed Stranded Cost. An electric utility under regulation enjoyed a franchise. Within this franchise strategic plans were made and within this franchise the pay-back for new technology--new generating facilities were insured. With deregulation this is no longer true. An electric producer having spent mega-dollars to bring a new generating facility now may find that through wholesale purchasing of power that his new facility may become a liability. Restructuring the electric industry after deregulation will have to deal with stranded costs.

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 a utilities ability to produce electricity with many power sources. The ability to use hydro power, coal fired steam, petroleum fired steam, natural gas and nuclear power within one system would demonstrate generational mix. The importance of generational mix is of economic value. Obviously, the production costs vary with hydro generation being very cost effective (hydro also offers a kind of unique reserve in that water can be backed up for future use). Environmentally hydro is the best option, but unfortunately not enough hydro power exists. The burning of high sulfur coal while maybe producing an economic advantage would in the long run be seriously detrimental to the environment. The same would most likely be true with petroleum products although the economics would not be as great, the pollution would still be abundant. Nuclear has a potential for low cost energy but a high price to be paid in the case of an accident and also with spent fuel rod disposal. The fact that no new nuclear plants have been constructed in the past twenty years indicates that even though generation costs are low, the overwhelming construction costs combined with disposal costs make nuclear energy production something of a dinosaur.

* * *

MS. MUSSER: Mr. Chairman, the last candidate is Ms. Jo Anne Wessinger.
MS. MUSSER: Mr. Chairman, I have Ms. Wessinger's driver's license in front of me, and it lists an address of 1125 Gladden Street, Columbia, South Carolina with a ZIP code of 29205; and her voter registration card reflects the same address.
Ms. Wessinger, if you would, raise your right hand, please.
C. JO ANNE WESSINGER, 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.   Cecilia Jo Anne Wessinger.
MS. MUSSER: Mr. Chairman, in reviewing the SLED report for criminal convictions and civil judgments, as well as Ms. Wessinger's credit reports, staff found that there were no negative entries as to each.
BY MS. MUSSER:
Q.   Ms. Wessinger, were you earlier today given a copy of your Personal Data Questionnaire Summary?
A.   Yes, I was.
Q.   Have you had a chance to review that?
A.   Yes, I have.
Q.   Are there any changes or additions you would like to make at this time?
A.   A couple of technical changes.
Q.   Okay. Please tell us those, and we will make notes as you do.
A.   Okay. The first one, in Item Number 1, the business address, I do not have a business address.
Q.   Okay.
A.   And at the time of application, that was up through December 5th.
Q.   Okay.
A.   The second one is Item Number 9 where it explains my work history. It says, South Carolina House of Representatives Labor, Commerce and Industry Committee, Staff Counsel. I was staff counsel from 1995 to 1997. In 1991 through 1994, I was staff attorney or research assistant in the second slot.
Q.   Okay.
A.   Also in Item 22 --
Q.   One moment, please.
Okay.
A.   -- as to expenditures, I forwarded a copy of my last expenditures to the Committee. I don't know if you got it or not.
Q.   Yes. We just need for the record for you to --
A.   Okay. And those reflect -- and I don't have it in front of me but approximately, I think, about $300 more, so it's about 350, $400.
And, also, Item Number 9 -- I left this out -- with the Office of the Governor it lists me as assistant legal counsel. At the same time I was also deputy division director and assistant legal counsel.
Q.   Are there any further changes you would like to make?
A.   No, ma'am.
Q.   With those changes, with that summary amended as you have described, would you have any objection to it being made a part of the permanent record of these proceedings?
A.   No.
Q.   Ms. Wessinger, tell us why you want to serve on the Public Service Commission, one, and, two, what do you hope to bring to the Commission?
A.   Well, one, as I said in my application, this is something that I have always wanted to do and hoped for even throughout my educational career when I was in law school.
My parents and my family have always been in a public service type of field, whether it's a fire fighter, police officer or either a farmer or a nurse; and they instilled within me the need that you have to give something back to your state and your community.
And I feel that with the work experience that I have had, plus my personal background and educational background, that I would be able to add something of value to help the Public Service Commission, especially as it is coming forth with some tremendous issues that are going to have to be decided or as -- well, the Legislature has to decide those issues; however, the Public Service Commission is going to have to be the ones to implement those dictates of the General Assembly.
Q.   Your Personal Data Questionnaire indicates, and you just mentioned, that you just recently resigned your position as counsel to the House of Representatives.
A.   Yes, I did.
Q.   And you were there from '95 to '97?
A.   Yeah, January 1st -- excuse me, January 2nd, 1995, till December 5th, 1997.
Q.   Okay. Can you tell us a bit about your previous employment and what you did in those positions?
A.   With the House LCI Committee?
Q.   Before that.
A.   Well, before that, I was assistant legal counsel and deputy division director for the Office of Governor Carroll Campbell, deputy division director for the Ombudsman and Citizens Services Division.
Part of that, as assistant legal counsel, I worked over in what we called the legal shop at the Governor's Office whereby basically any legal problems that were -- that arose in connection with the Governor, you participated on those, whether that meant that -- questions of law for him to decide on executive matters, proposals, legislative proposals, veto messages, analyzing the law and help with things of that nature; also, assisting when needed for any of the divisions that the Governor had, if they needed some legal counsel on that.
Several divisions, after restructuring, that came underneath the purview of the Office of the Governor did not have counsel on staff and often availed themselves of the legal services that were available within the executive branch.
Then as deputy division director I managed the staff, worked directly under the ombudsman director who was and still is Jeff Bryson; managed the budget of the division. I was the financial liaison for that, so I handled fiscal matters plus all the personnel matters that came up as being the supervisor over several other supervisors who managed the rest of the staff in that instance.
And then you -- and those duties over there in the Division of Citizen Services and Ombudsman Services varied greatly from any kind of constituent problem, or any miscellaneous problem that did not properly fit into any other realm of the Governor's divisions were all funneled through there.
Q.   Your economic interest statement, I believe, states that you are a member of Governor Beasley's committee on health care reform.
A.   Yes.
Q.   Is this a statutorily created group, or is it an ad hoc committee?
A.   No, it is an ad hoc committee created by executive order.
Q.   How many members are on this committee?
A.   I believe there's approximately nine or ten members. They have not met since it was reauthorized.
Q.   What would your plans be to continue serving on that committee should you be elected to the PSC?
A.   Well, we have never officially met, so I don't perceive even possibly serving on it.
Q.   Your economic interest statement also lists various lunches and dinners that you attended, I assume associated with your previous duties at the House LCI.
A.   Yes.
Q.   Some of those include lunches and dinners hosted by AT&T, BellSouth, SCANA, the Committee for Competitive Electricity and others.
A.   Yes.
Q.   Having accepted those meals, do you think that you could be impartial and fair and unbiased as a commissioner when these folks come before you at the PSC?
A.   Yes.
Q.   Your Personal Data Questionnaire indicates that you own no stock; is that correct?
A.   That's correct.
Q.   And I see that you hold some joint banking accounts with your parents; is that also correct?
A.   That's correct.
Q.   Your parents do not, to your knowledge, own any utility stock?
A.   No, they do not.
Q.   Does anyone else in your household, including you, own any utility stock?
A.   No.
Q.   Ms. Wessinger, just a final few questions. In your duties at the House LCI, you obviously worked on the issue of deregulation or at least are familiar with it. Have you ever taken a public position on that issue?
A.   No, I have not. That would have been inappropriate and, according to House rules, would have been grounds for summary dismissal.
Q.   Are you currently a member of or have you been a member of any organization which is politically active on the question of deregulation?
A.   No, I'm not.
Q.   Have you been approached or contacted by any such organization or any individual associated with 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 lobbyist's principal?
A.   Well, it depends on -- ever since I have been staff counsel, since 1995, I have always been approached by potential career opportunities; but I have not pursued any of those.
Q.   All right. Would any of those have been with lobbyists for investor-owned utilities?
A.   No.
MS. MUSSER: I don't have any further questions.
SENATOR HOLLAND: Any questions by any members of the Committee?
REPRESENTATIVE WILKES: Yes.
SENATOR HOLLAND: Representative Wilkes.
EXAMINATION BY REPRESENTATIVE WILKES:
Q.   Good afternoon, Ms. Wessinger. How are you?
A.   Good afternoon.
Q.   One question.
Have you been contacted or approached by any lobbyists that are connected with the electric or any other utility since you announced your candidacy as a Public Service commissioner?
A.   In order for a potential job opportunity?
Q.   No.
A.   No, sir.
Q.   Just for discussion or lobbying efforts or persuasion or whatever it is that lobbyists do.
A.   Well, whenever I filed my application and made my announcement on November 3rd, I still was concluding my duties as staff counsel of House LCI, and we did -- there was one or two -- one subcommittee meeting I do believe that transpired at that point in time and only through my duties as staff counsel but not --
Q.   But never one on one?
A.   No, sir. No, sir.
REPRESENTATIVE WILKES: Okay. Thank you.
SENATOR HOLLAND: You have a question, Senator Jackson?
EXAMINATION BY SENATOR JACKSON:
Q.   How are you, Ms. Wessinger?
A.   Fine. How are you?
Q.   Did you consult with any lobbyists or lobbyist's principals in making up your mind to run for this position to just maybe get an opinion or to just seek information concerning the industry?
A.   No, sir, I did not.
Q.   Did any of them offer any encouragement to you to seek this position, any lobbyist or lobbyist's principal that's associated with a utility or deregulation or future utility companies here in South Carolina?
A.   No, sir, other than whenever it became public on November 3rd that I was leaving, other than when people would just drop by the office and say, I wish you well, that type of thing.
Q.   That was after you decided to run?
A.   Well, after I filed my application, yes, sir. That's it, but it was just general wish-you-well type comments but nothing other than that.
Q.   But no one with the industry ever, again, encouraged you to run?
A.   No, sir, they did not.
SENATOR JACKSON: Okay.
SENATOR HOLLAND: Any other questions?
REPRESENTATIVE KENNEDY: Mr. Chairman, maybe one.
SENATOR HOLLAND: Yes.
EXAMINATION BY REPRESENTATIVE KENNEDY:
Q.   How are you, Ms. Wessinger?
A.   Fine. How are you doing?
Q.   Good. Let me ask you this question: With all of the issues that are going on with us with this deregulation issue --
A.   Yes, sir.
Q.   -- and your running for the Public Service Commission, tell me, what are you going to bring to the Commission when you come?
A.   Well, I believe I'm going to bring with me not only analytical skills that I have developed, plus I believe a balanced nature because I have learned and been trained over the past few years whereby you've got to balance the needs of both groups; and the Public Service Commission is charged with the responsibility of looking out for the consumer by providing the lowest cost service out there; but, yet, they've got to also maintain a viable industry to make sure that the utility needs are being met and they can be met so that the consumer is going to have those.
So you bring a balanced approach from that and then you are able to see and look and analyze the situation, see the motivations behind the persons that are going to come and appear before the Public Service Commission where the decisions have to be made on certain issues, whether that be a rate case or a signing case or a distribution project case or whatever that's going to come up or even a new entry into a market or a territory -- or reassignment of territory or something. You are going to have to be able to understand and focus and be able to find and dig and discover the motivations behind each one of them and see all the ramifications around it.
And plus, from analyzing legislation and the problems associated with it and from the legal background that you have always -- whenever you have a legal case, you always go in and you look at your opponent, you look at your case, you look at your opponent to try to figure out what all arguments could be out there and see both sides and see what's going on so you can make the best argument and the best decision.
Q.   We seem to have a big turnover in the Public Service Commission this year, and I'm concerned that we make sure we get the right people to serve.
A.   Yes, sir.
Q.   My question -- another question I would have for you is: As far as the Public Service Commission itself, how do you see the Public Service Commission and its dealings with the issues -- with balancing the issues with business and the public itself? How do you see yourself fitting in and working with them and working with the Commission to look out for the best interests of both?
A.   Well, I have had to deal with that on numerous occasions whereby I've been allowed the privilege of mediating groups where you've got consumer-oriented groups versus the business groups. They are trying to resolve situations and help come to a consensus on that.
Also, I think the Commission has to look -- when it balances that, it's got to realize that it's just not one commissioner or you don't have seven individuals. You've got one commission that has to work as a team and get along, be able to interact with each other and to share their viewpoints because each commissioner is going to bring with him or her their own personal background and experience that's going to be able to make them see things that maybe another commissioner can't.
And there would be, as part of being a good commissioner, I do believe, with the Commission -- part of the process when you do have hearings on matters and you get asked questions is that you yourself bring out some of the points that you feel needs to be addressed and help that, and that's part of your role as a commissioner so everybody else can see it, too.
And I believe that from that background and from having worked on constituent problems and dealing with the public, not only in the House but also with the Governor's Office, especially Citizen Services, you deal one on one with the consumer out there if he has got a problem and you have to be able to help them resolve it. Sometimes it's not always in a positive manner that you would like, but you do the best that you can. You conform with the guidelines that are in law, and you try to make the best decision and help them.
SENATOR HOLLAND: Any other questions?
Representative Wilkes.
EXAMINATION BY REPRESENTATIVE WILKES:
Q.   While we are on the subject of balance and fairness, in your intense involvement with the LCI Committee, and there was some discussion, not formally, on deregulation and the issue of deregulation, have you any predetermined positions on deregulation, and do you think that you can approach that subject with impartiality and objectivity if and when the time comes?
A.   I do not have any set predeterminations of whether to say I'm for it or against it. I do not. I have to say I'm pretty much neutral. I'm very much open to discussions, and I can see the persons that come before or have come before in public meetings and who have stated their positions on why they think this is a good way to do this or why they think it's not over here or what approach should be taken.
I can understand both sides and what it's going to take on that end of it; and from that, there's going to have to be a decision of how -- what's the best approach. I do believe there is a good approach out there and one can be met and it will be found, because I do believe, according to what's happening on the federal level the past few years -- when they first started this in 1992, when they opened the competition on the wholesale market and then how it culminated with the opening of -- what happened with the telecommunications whereby they opened those markets to competition that were previously closed with separating services for your local service and your long distance services -- I believe that ultimately it's going to come. So it's a matter of not that it's going to happen, it's just a matter of how it's going to happen.
Q.   And that is my point; you know, that we have heard over and over that it is, when, not if.
A.   Uh-huh.
Q.   Or rather it is going to happen at some point in time. I think that that doesn't change the question of how is it going to happen, and it obviously will be -- you will play a role as a commissioner in how it happens. And if -- you say you are pretty much neutral; and from what you are saying, I assume you are saying that you are neutral, that you really don't have any predetermined opinions.
A.   No, I do not have any predeterminations like it should happen tomorrow and how it should happen or whether it should happen ten years from now. And -- because there are so many other issues involved within that whole of deciding what to do and when to do it, but the how part of it. And if you are going to -- because South Carolina is very unique in the fact that we, unlike any other state, have a public power question. You have the investor-owned utilities, which the Public Service Commission, that's something they regulate on night and day, except for the territorial assignments and some of the other things. Then you have got the electric cooperatives, and then you have got the electric cities or municipalities.
So you have got so many different categories of players in there and how they fit into it, and South Carolina is very unique in that realm, and that's going to be one of the pivotal things. And I do believe it is going to happen, it's just -- and there is a best way to do it, and it will be found, and it will come out because the Legislature is working hard, I know, to gather information to make a good decision.
And that's one of -- and that's going to be the hard part, is to be able to -- because everybody wants to make the best decision. And so hopefully that will -- I mean, I think it's going to happen. It's going to happen, but I don't know when at this point in time.
Q.   Thank you.
So you will take that knowledge with you in an impartial way?
A.   Yes, sir.
REPRESENTATIVE WILKES: Thank you.
SENATOR HOLLAND: Any other questions?
Thank you so much, Ms. Wessinger.
MS. WESSINGER: Oh, thank you.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1.   Cecilia Jo Anne Wessinger, Esquire
Home Address:         Business Address:
1125 Gladden Street     None
Columbia, SC 29205

2.   She was born on August 9, 1965, in Columbia, South Carolina.

4.   She is single.

6.   She graduated from Columbia High School in 1983; received a B.S. in Business Administration from the University of South Carolina 1987; and received a J.D. from the University of South Carolina School of Law in 1990.

9.   She has worked with:
South Carolina House of Representatives Labor, Commerce and Industry Committee, Staff Counsel, 1995-1997, Research Assistant 1991-1994;
Talbot's, Sales Associate, 1997-present; and
Office of the Governor, Assistant Legal Counsel and Deputy Division Director, 1994-1995.

19.   She has worked in the governmental positions as stated above in number 9.

22.   She has spent approximately $350.00 on copies and faxes in seeking the position.

26.   She is a member of the following professional organizations:
South Carolina Bar Association;
Young Lawyers Division;
South Carolina Women Lawyers Association;
American Bar Association;
Richland County Bar Association; and
Executive Women's Golf Association, Columbia Chapter.

27.   She has served on the following civic, charitable, etc. organizations:
Mt. Horeb Lutheran Church;
Zonta International, Zonta Club of Columbia;
University of South Carolina Semester Program Internship     Candidate Review Board Member, 1996, 1997;
Governor Beasley's Committee on Health Care Reform;
Delta Sigma Pi Business Fraternity; and
Tau Beta Sigma Social and Service Sorority.

29.   Five letters of reference:
1)   Mr. Mark R. Elam, Esquire
American Council of Life Insurance

General Counsel & Senior Vice President, Federal and State Affairs
1001 Pennsylvania Avenue, N.W.
Washington, D.C. 20004-2599
2)   Mr. Wm. Jefferson Bryson, Jr.
Constituent Services Director
Office of the Governor
Division of Ombudsman and Citizen Services
1205 Pendleton Street
Edgar A. Brown Building - Room 308
Columbia, South Carolina 29201
3)   Mr. John T. Moore, Esquire
Nelson, Mullins, Riley & Scarborough, LLP
Keenan Building, Third Floor
1330 Lady Street
P.O. Box 11070
Columbia, South Carolina 29211
4)   Mr. M. John Bowen, Jr., Esquire
McNair Law Firm, P.A.
NationsBank Tower
1301 Gervais Street
P.O. Box 11390
Columbia, South Carolina 29211
5)   Ms. Sandra Pague
Customer Representative
Wachovia Bank, N.A.
P.O. Box 750
Columbia, SC 29202

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.

False - Wholesale power sales (also known as wholesale wheeling) are regulated by regulations and guidelines established by FERC. This FERC order allowed competition on the wholesale market. For example, from the generation supplier to another supplier/distributor (SCE&G, DUKE, City of Seneca, etc.) but not to an end-user (like Dupont, Nucor, residential consumer, etc.). However, no end-user or retail sale can be made. All retail sales of electricity are regulated by the PSC. The State Public Service Commission does not have the authority to establish rates or prices in this area. Generally, electric utilities sale their excess power (if any) on the wholesale market, and/or purchase additional power needed to meet the demands of their customers on this market.

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 not have the authority to regulate the charge or rates of an municipally owned gas utility. The Commission has the power to regulate the rates, charges and services of investor-owned (privately-owned) gas utilities. However, the Commission has the duty and responsibility to ensure the safety of the public and carry out the responsibilities of the gas safety act with any gas utility whether privately owned, municipally owned, or publicly-owned. It must ensure the safety of the pipeline, may test equipment, etc.

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 has established by regulation its procedures and guidelines for its hearings and proceedings. Commission orders may be appealed to the appropriate court of jurisdiction. Furthermore, PSC matters are specifically exempt from the requirements of the APA.

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.
True - As part of the rate making authority, the Commission is to ensure the lowest cost to the consumer, the reasonableness of the utilities actions, and provide the utility with the opportunity for a reasonable rate of return. The Commission staff analyzes the rate filing and filters through the materials; thus, suggesting a reasonable rate of return which is usually based on that of 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 - Cable TV systems are regulated by the municipality or county in which such entity wishes to serve through are procedure established by the General Assembly via franchises.

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

True - Although the Commission does not have the authority to regulate the rates/charges/service of municipally owned gas utilities, the Commission is specifically charged with the responsibility as the State of South Carolina's regulator under the gas safety act to ensure the public's safety and protection.

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

True - South Carolina's residential consumers consume less electricity than the industrial customers of all investor-owned utilities in the State. Furthermore, South Carolina's average cent per kilowatt charge to the residential class of customers is less than the national average.

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.

True

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 - The Commission was granted the authority, via the federal act along with the legislative enactments by the S.C. General Assembly, to establish a procedure whereby local telephone service providers (like BellSouth) could be authorized to enter the long-distance market and compete against other long-distance carriers such as AT&T, Sprint, MCI, etc. However, state approval must be authorized by federal regulators and the Commission will participate in such federal proceedings. Also, these changes establish a procedure whereby the local distance service carriers can enter and compete in the provision of local telephone services. The 1996 federal enactments were the second wave telecommunications restructuring following the first wave which disbanded "bell system" in the 1980's (prohibiting long-distance carriers from entering and competing in the local service market and visa versa). Because of the numerous related issues and considerations, the granting of BellSouth's entry as a long-distance service provider must be approved by the federal regulators also.

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 - Pursuant to the directive of the General Assembly ensuring the safety, reliability, resource conservation, among other items, the Commission was given the authority and responsibility of assigning service territories to electric providers. Although the territorial assignment act was established in 1969 and most areas of South Carolina have already been assigned, the Commission still hears and decides these issues to this day.

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 - However, these adjustments are carefully reviewed for appropriateness and reasonableness by the Commission and its staff.

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

False - Nuclear generated electricity provides well over one-half of such total. Fossil-fuel plants, hydro-generation facilities, and other resources provide the remainder.

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 - It is statutorily prohibited for any PSC candidate to directly solicit the pledge of a member of the General Assembly until the report has been issued by the candidate review committee. Furthermore, no member of the General Assembly can give his/her pledge until all candidates have been screened and the report issued.

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 - Regardless of statutory prohibition, ownership of utility stock by a Commissioner is ethically inappropriate and casts a veil of impropriety. The Commission regulates privately-owned utilities. Ownership of such stock is a conflict of interest -- the success or profitability of such stock would be directly related to the actions taken as Commissioner.

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 - One of the Commission duties is to prevent cross-subsidization. The regulated functions of the utility cannot subsidize its unregulated activities; thus, the costs of unregulated functions cannot be borne as part of the regulated service of electricity.

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 Commission is charged by the General Assembly to regulate and supervise the following:

(1)   all investor-owned (privately owned) electric utilities operating in the State; compliance with the territorial assignment act; and compliance with the rural electricity act;

(2)   all privately owned water utilities, water sewerage system utility, street railway, gas utilities, and producers of heat by means other than electricity. However, the jurisdiction of gas safety even extends to municipally owned gas providers and publicly owned gas providers (i.e., City of Columbia, a public service authority, etc.);

(3)   the services and procedures of all radio common carriers (not rates or charges which are federally regulated);

(4)   all privately owned telephone and telegraph companies in the state;

(5)   all intra-state motor vehicle carriers for-hire carrying passengers, household goods, or hazardous waste for disposal. The Commission must license (certificate of public convenience and necessity) all motor vehicle carriers whether intra-state or inter-state providers who are domestically based in South Carolina; and

(6)   the railroads in the state as authorized or permitted by the federal Interstate Commerce Commission (ICC). Primarily these responsibilities pertain to the enforcement of railway safety and the state's general railroad laws which do not interfere with the federal jurisdiction.

These entities are regulated for the protection of the public, to ensure the safety and reliability of these services, and to provide all citizens with the opportunity to purchase such services without fear of discrimination. Furthermore, these entities are regulation to ensure the reasonable use of the state's resources and that materials used to provide these commodities or services are the least cost available. The General Assembly created the Commission and charged it with these entities to regulate in the overall best interest of the citizens of South Carolina.

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

The Federal Energy Regulatory Commission (FERC); Federal Communications Commission (FCC); Interstate Commerce Commission (ICC); Nuclear Regulatory Commission (NRC); and the Federal Aviation Administration (FAA).

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

The concept of "stranded costs" refers to that portion of investment made by the electric utility in compliance with regulatory dictates to provide electricity which the utility is unable to recoup or recover. If the generation portion of the electricity market is de-regulated as encouraged by a 1992 FERC Order, electric utilities who have built generation projects (which have been Commission approved) as a required condition of operation in the State to fulfill the needs of South Carolinians may not have some investment expense recovered due to a change from a regulated market to a competitive market -- i.e., a change in customer base where the previously estimated need has changed with the fluctuations of a market where the retail customer can choose another provider than the incumbent utility. These facilities were built with the anticipation of recovering the cost over time; however, with the advent of "de-regulation," these utilities are concerned whether their investment will be recovered, whether they will be able to compete in a newly created "free-market" system because of these costs, and whether they will continue to be viable entity. AS the issue of de-regulation is discussed, "stranded costs" will have to be addressed. Other states which have either established pilot programs or de-regulated have formulated some means of cost recovery for these stranded costs. Presumably, when and if the General Assembly decides to de-regulate the generation component of electricity, the PSC will most likely be engaged in the function of determining the amount of stranded cost, the means to recoupment, etc; provided, however, the General Assembly grants this authority.

* * *

Monday, March 23, 1998
2:10 p.m.

COMMITTEE MEMBERS IN ATTENDANCE:
DONALD H. HOLLAND, Chairman
C. TYRONE COURTNEY
J. STEPHEN BILTON
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. It's now 2:10. I would recommend this to the committee. I think that we should go into executive session to discuss the matters with our attorney. The Chair will entertain a motion to that.
REPRESENTATIVE WILKES: Mr. Chairman, I so move we go into executive session.
CHAIRMAN HOLLAND: Any objection to going into executive session? There being none, we will go into executive session.
(Public session continues. Reexamination of Mr. Arthur.)
CHAIRMAN HOLLAND: Mr. Arthur, staff has certain questions they want to ask you. Ms. Musser, go ahead.
MS. MUSSER: Mr. Arthur, would you raise your right hand, please.
WARREN ARTHUR, being first duly sworn, testified as follows:
EXAMINATION BY MS. MUSSER:

Q.   Mr. Arthur, Ms. Hammond just handed you a document that outlines certain trips that you also disclosed on your economic interest statement. That document is entitled Trips for Commissioner Warren Arthur. Like I said, you disclosed these on your economic interest statement, and we appreciate your candor in doing so.
However, there are just a few questions we would like to ask you. And if I could walk you down through each trip and you could answer the questions of the subcommittee, or the committee rather, we would certainly appreciate it.
The first trip listed is January 2nd through 3rd in Chicago for a Nuclear Waste Subcommittee planned meeting. Could you tell us, please, were you a speaker or a panelist, or at least tell us what was the level of your participation at that meeting?
A.   I'm a subcommittee member.
Q.   Could you speak up a little bit?
A.   I'm a member of the Nuclear Waste -- as a matter of fact, I'm vice-chairman of the subcommittee that handled that meeting.
Q.   So you would say you were an active participant during the entire trip?
A.   Yes. I've been a very active participant in all the nuclear waste meetings.
Q.   So you conducted meetings there or --

A.   Yes. It was in -- Chicago is a convenient place to meet. And we met at a hotel at the airport.
Q.   Okay.
A.   The chairman of the committee at that time was from Illinois.
Q.   Mr. Arthur, per your travel records, which you were kind enough to give this committee, is it accurate that the date of request for approval was January 11th, which was about a week after you returned; is that correct?
A.   Let me look at -- I assume --
Q.   Mr. Arthur, we're giving you a copy of what you submitted to us so you can follow through that. That might be helpful.
A.   Yes, that was submitted late. And I want to submit to you all a legal opinion that was done by our staff in regards to travel where you're not a speaker. It's our opinion that you don't have to have prior approval.
Q.   Okay.
A.   We believe the statute applies. And we contacted the Ethics Commission, and that's a written legal opinion by our staff. And the fact that I submitted that to the Governor's office was a matter of public disclosure and not for prior approval.
Q.   Mr. Arthur, I have not read the opinion written by your staff counsel. I would call your attention to 8-13-715, which I believe is cited in that memo, which states that if expenses are incurred out of state, the public official or employee incurring the expenses must receive prior written approval. And in your instance it would be from the Governor. And that's why we asked you that question. I have not read this memo, but I certainly will do so.
A.   That is our position. My position is that that was not a requirement under the law.
Q.   May I ask then why did you seek pre-approval on all these other ones?
A.   Well, I tried to submit them, you know, in a timely manner ahead of time. And I believe the intent of the law was for public disclosure of all the activities we were doing where we were being reimbursed by other people so that people would be able to see what all we were doing and who was paying for it.
And I've tried to do that as best I can. I don't have a full-time secretary. And there have been times, to be honest with you, where, you know, I've not -- you know, maybe not done things in a timely manner and --
Q.   Let's move on to the next trip of January 18th through the 20th in Washington. And you stated on your travel form it was for an Electric Committee meeting. Were you a speaker and/or panelist for that meeting?
A.   No.
Q.   What was the level of your participation at that meeting for those three days? Were you an attendee, at large attendee?
A.   I'm a member of the Electricity Committee of the National Association of Commissioners.
Q.   So you participated as a committee member?
A.   Right.
Q.   And another Washington trip January 22nd through 23rd, DOE NARUC Nuclear Waste Subcommittee. I assume that was like the Chicago trip, a subcommittee of which you were vice-chairman?
A.   Yes. At that time I was not vice-chairman, but I was a committee member.
Q.   What is a committee member's level of participation?
A.   Well, there are only about nine people on the committee.
I've always been a very active participant because South Carolina has very much at stake in this issue. Very aggressive participant.
Q.   Moving on down, February '95 in Orlando at a NARUC gas conference. Were you a speaker and/or panelist at that?
A.   No, I wasn't.
Q.   Could you tell us the level of your participation at that gas conference?
A.   I was just attending that conference.
Q.   So you would just call yourself an at large attendee?
A.   Yes.
Q.   February 15th through the 18th of '95, Las Vegas, speaker on a panel. Were you a speaker on --
A.   Yes, I was.
Q.   February 22nd through 24th of '95. Again you were a speaker on that panel. You made a speech while you were in Washington for that trip?
A.   Yes, I was.
Q.   April 19th through 21st of '95 in Rhode Island. You stated -- or the travel document simply states "seminar." Could you tell us about that, please?
A.   I'm pretty sure it was a deregulation electricity seminar. I'm not absolutely certain on that. I could find out.
Q.   And were you a speaker or a panelist at that seminar?
A.   No, I was not. I was just attending that conference.
Q.   April 24, 1995, speaker, Congressional staffers regarding nuclear waste disposal legislation. Could you tell us about that? Was it something you didn't feel like --
A.   I made a number of trips to Washington to talk with Congressional staff and members of Congress on the waste issue to try to -- that was a critical time. In all of '95 was a very critical time in regards to the nuclear waste issue, trying to get legislation passed which ended up dying right at the end of the year.
Q.   So this was a conversation you felt like would be perhaps better made in person rather than by telephone?
A.   Absolutely. I mean, this issue is the kind of issue that if you're not there, people, they don't -- they are not going to do anything.
Q.   Is there any particular reason, and I'm just asking about this trip specifically right now, why this was paid for by a third person rather than by the State or by the Commission?
A.   Which one?
Q.   The one where you went to speak to the Congressional staffers regarding nuclear waste disposal legislation that might affect South Carolina.
A.   In 1995 our committee, the NARUC Nuclear Waste Subcommittee -- and we still get a small amount of funding from DOE out of the nuclear waste fund. And that was paid for out of the committee's budget.
Q.   So you were speaking as a committee member on behalf of the subcommittee; is that correct?
A.   Yes. I tried every -- at every opportunity to try to not burden the State with my travel to Washington and other places.
Q.   Moving on down to May 2nd through 5th, Las Vegas, International Forum. Looks like the sponsor was the College of Engineering at the University of Nevada. Were you a speaker and/or panelist at that for that travel?
A.   I'm a member of the Advisory Committee of the International Nuclear Waste Forum. And that, of course, was paid for out of the same committee DOE funding out of NARUC, the subcommittee funding.
And I think I might have been a speaker at that one. I know I spoke several times out there. I'm not sure whether I spoke at that one or if it was the next one, but I was appointed to the Advisory Committee, and I have documentation of that.
Q.   So you have documentation that you were a speaker?
A.   Of my appointment to the committee. I'm not positive I have it with me, but I could get it.
Q.   May 15, '95, to Washington. Was that similar to the April 24th trip where you went to speak in person to the --
A.   Yes.
Q.   And for the same purpose?
A.   Yes.
Q.   May 23rd through the 26th in D.C., nuclear waste seminar. Were you a panelist or a speaker or an attendee?
A.   Well, I was certainly an attendee. And that was our subcommittee that was holding the seminar.
Q.   Did you participate in the seminar as far as giving a presentation?
A.   I was not a speaker, no. I may have been on a panel or something, but I don't recall at this time, but I was certainly a participant.
Q.   June 20th through 21st of '95 in D.C. you attended a Congressional hearing regarding DOE. Could you tell us what the nature of that was?
A.   Department of Energy hearing -- you know, I don't -- back in '95 I really -- I would have to look that up. I really don't remember the exact nature of that hearing. I'm quite certain it had to do with nuclear waste.
That was -- again '95 was a very critical time. We were trying to make sure that DOE proceeded with development on the Yucca Mountain so that Savannah River would not have to take all the nation's nuclear waste.
Q.   Okay. The trip to Bermuda in '95, annual Advisory Board meeting, that's the board you spoke of earlier that you said you were an advisory member?
A.   Yes.

Q.   Is that the national forum?
A.   No. This is Nuclear Electric Insurance Limited. That NEI actually was listed in error, and it's supposed to be --
Q.   NEIL?
A.   Yeah.
Q.   Okay.

A.   And that was an error that I overlooked. We missed that. But that's a nuclear insurance company that insures all the nuclear companies in America that was started after Three-Mile Island, and it's got $4 billion in net assets of rate payers' money. And it needs to have oversight because this is rate payers' money.   And, you know, I was appointed to be on the Advisory Board because I have an insurance background and also, as some of you remember, I was president of the National Conference of Insurance Legislators, and I'm also an expert on high level nuclear waste politics.
Q.   Could you tell us what your level of participation was during those several days in Bermuda?
A.   As an Advisory Board member.
Q.   Did you all meet daily?
A.   Yes.
Q.   July 2nd through 9th of '95 in the United Kingdom and France --
A.   Yes.
Q.   -- by BNFL and COGEMA. And you listed the purpose was to learn about foreign nuclear waste management programs. Were you a speaker or panelist at this conference?
A.   No, I wasn't. I was invited by the -- BNFL is British Nuclear Fuels. It's a British government owned company that manages their reprocessing and nuclear waste transportation. And COGEMA is a similar company in France that manages the French reprocessing and all their nuclear activities. And I was invited by those two government-owned companies to come to those countries.
As a matter of fact, Congressman Graham, the day I was leaving England -- he was there to take the same tour that I was, on the day I left, of British facilities. And I was -- quite frankly, I was honored that they would ask me to come over and be willing to pay for the trip. And I learned a lot and it was a very hard working trip. There were no days of activity other than work.
Q.   July 7th through 9th of '95 in D.C., annual meeting, sponsor National Energy Institute. Was that something that you participated in or spoke at?
A.   No. I was -- our committee paid for that. I feel like that if, you know, essentially -- I mean, I know maybe I could use a different word, but I've been lobbying to get federal legislation passed so the federal government will stop stealing money from our rate payers.
The federal government is stealing $20 million from our rate payers. The average rate payer in South Carolina is paying a dollar a month into the nuclear waste fund, and the government is stealing 80 cents of that.
And I've been lobbying to get this legislation passed through Congress. And it's passed both houses now, but it had a technical problem in the House and the bill didn't originate in the Ways and Means Committee so it's going back through -- well, it had -- anyway, they are still working on it in Congress, but I feel that -- the Nuclear Energy Institute is funded by the nuclear electric companies in our country. And all the leaders of the nuclear industry are there.
And I felt like it's important if I'm going to be an active participant in the national debate, then I need to find out what's going on and what these people are thinking. And for that reason our committee, you know, funded that trip for me to go up there and attend that meeting.
Q.   The next one was August 23, '95. That's the subcommittee which you are now vice-chairman?
A.   Yes.
Q.   And that was similar to the other meeting, for instance, in Chicago?
A.   Yes.
Q.   That was just a meeting of your subcommittee. September 13th through 15th of '95 in Knoxville, Electric Committee retreat. Could you tell us about that?
A.   That was a deregulation retreat where our Electricity Committee -- I'm a member of the Electricity Committee. And the Nuclear Waste Subcommittee is a subcommittee of the Electricity Committee. And that was the full Electricity Committee deregulation conference, which I knew deregulation was coming and I felt obligated that we need to find out what's going on.
Q.   October 4, '95, Nuclear Waste Committee meeting is similar to the Nuclear Waste Subcommittee, just a larger --
A.   It was the same.
Q.   So the subcommittee, of course, is a smaller component of this larger committee. And so you participated at this committee meeting?
A.   Yes. And in almost all of those meetings we met with members of Congress and staff people.
Q.   But it was a structured committee meeting?
A.   Yes.
Q.   November 1st of '95 in D.C. you met with members of Congress. Is this, would you say, similar to the other --
A.   Yes.
Q.   -- conversations with staffers and Congressmen?
A.   Yes.
Q.   Turning to the second page, December 2nd through 8th in San Francisco. Edison Electric is the sponsor, Edison Electric Institute. Would you tell us about that, please?
A.   That was a conference that Edison Electric put on to -- it was about the fundamental -- fundamentals of deregulation and how it would work from the standpoint of how it operates, the operations standpoint of how you would control and manage the load and how it would be set up in the event that you -- you know, when you set up these centers to manage all the different companies when competition does come.
And it was a seminar or actually a school. I got a certificate from that that was paid for by a grant from the Department of Energy.
Q.   So you were a student and not a teacher at that?
A.   Yes. And we met, you know, five days all day.
Q.   I see that Edison Electric is an association of shareholder electric companies. Would that be an accurate description?
A.   Yes.
Q.   Are there any electric companies which come before the Commission or which are within the Commission's jurisdiction which would be a member of that association?
A.   Well, I think possibly all three of the ones that we regulate were members at that time.
I don't know that they all three are members at this time.
Q.   January 18th through 20th of '96 in Tampa, attend NARUC EPA workshop. Was that as a student or attendee or did you speak or were you a panelist at that?
A.   No. I was just attending that conference.
Q.   All right. The next trip, March 10th through 11th, you list yourself as a speaker. The the sponsor of that was Edison Electric Institute?
A.   Yes.
Q.   Do you recall the nature of your speech or what was the conference?
A.   Well, it was a group of engineers and I was keynote speaker. I didn't realize it at the time. I was scared to death when I found that out. It was about deregulation.
Q.   March 26th through 27th in Louisiana. Speaker?
A.   Yes. That was a nuclear conference and I was a speaker.
Q.   April 25th through 26th in Chicago where you were a speaker?
A.   Yes, I was. I was on a panel with four other commissioners talking about deregulation.
Q.   April 28th through May 2nd you were a board member and panelist at a convention in Las Vegas for NARUC?
A.   Yes.
Q.   Did you participate as a board member and panelist during the entire trip while you were there?
A.   Yes. That was another international high level waste conference, and I was a speaker. Actually I have a newspaper article where they covered my speech in the Las Vegas newspaper.
Q.   May 15th through 16th in D.C., NARUC nuclear waste meeting. Was that of your committee or subcommittee?
A.   Yes. Subcommittee.
Q.   Subcommittee. Were you vice-chairman at this time in '96?
A.   I think so. Well, no -- well, maybe not. I was appointed sometime in the early '97 time frame, I think.
I'd like for you all to know I turned down the chairmanship of that committee. I was offered the chairmanship and turned it down because of what's going on now because I know that my travel was probably going to be an issue.
Q.   Moving to June 12th through 15th of '96, Bermuda, annual Advisory Board meeting, board member. So you participated as a board member in that trip?
A.   Yes.
Q.   Were you a speaker or panelist or was it like just strictly a board meeting?
A.   Just Advisory Board member.
Q.   October 20th through 23rd of '96 in Santa Fe, restructure of electric industry. Were you a speaker or panelist at that conference?
A.   No, I wasn't.

Q.   And what was the level of your participation in Santa Fe?
A.   Well, the Electricity Committee is -- most of these deregulation meetings the Electricity Committee was actively involved in putting them on. So I was just a member of the Electricity Committee attending that meeting.
Q.   January 23rd through 24th, Fort Myers, Florida, conference on nuclear energy and competitive electricity markets. Was that part of your participation as a committee member or subcommittee member or --
A.   Yes.
Q.   Did you speak at that or were you --
A.   I moderated a panel. I was not a speaker.
Q.   May 28th through 30th in D.C., attended the Nuclear Energy Assembly at the invitation of NEI. Would you tell us about that?
A.   Well, that was the same meeting that I went to previously of nuclear industry executives. Except this time they paid for it instead of the NARUC Committee paying for it.
Q.   Did you have any speaking responsibility or --
A.   No. They just wanted me in attendance. And, of course, I'll repeat, every time I go to Washington we went over to the Congress and talked with members of the Congress.
Q.   June 15th through 19th in Bermuda, Advisory Board member attending annual meeting. You attended board meetings while in Bermuda?
A.   Yes.
Q.   Did you have any other responsibilities other than to attend those board meetings?
A.   That was my only responsibility.
Q.   July 15, '97, in D.C., Department of Energy meeting with commissioners and electric industry executives. So you went to Congress and spoke?
A.   Well, actually that was a big DOE arranged meeting where all the key players in the industry and in the government actually were at a big table. It was a very big nuclear waste meeting and I was one of -- I wasn't a speaker, but I was there, you know, as a committee member.
Q.   October 19th through 21th of '97 in Las Vegas, vice-chairman of subcommittee, composed tour of completed proposed nuclear waste storage area tunnel at Yucca Mountain. Could you tell us about that? You took the participants or the attendees on a tour?
A.   Well, yeah. All my trips -- almost all my trips to Las Vegas -- by the way, I want you all to know I don't drink alcohol or gamble. So when I go to Las Vegas there's not much to do except work.
But the nuclear waste repository of Yucca Mountain is 100 miles north of Las Vegas. And basically what we do -- I was only there 24 hours on this trip. And I got there at night and the next morning at 6:00 we left and went up -- drove 100 miles to Yucca Mountain and had a tour of the facility.
So we take other people around the country to try to influence public opinion about what's going to happen to the nuclear waste in our country. And I've been there enough where I basically could give a tour, you know, because I'm -- if it doesn't go there, it's going to be sent to Savannah River and we're going to have the biggest nuclear waste repository in the world at Savannah River. And I don't think that's the best thing for our country, and it's certainly not the best thing for our state.
Q.   December 6th through 8th in D.C., restructure of the electric industry. Could you tell us what that was about? Was it a meeting?
A.   Yes, that was a restructuring conference.
Q.   It was a conference?
A.   Yes.
Q.   And you were an attendee or participant?
A.   Attendee.
Q.   Okay. And finally January 9th of this year in D.C. to plan federal nuclear waste legislative strategy for 1998. Was that with Congressional staffers or was that something different?
A.   That was probably one of the best meetings I've ever been to. We talked with DOE officials, the head of the nuclear waste area in DOE. We talked with all the key staffers from the House and the Senate that day.
Q.   When you say we, are you talking about your subcommittee?
A.   The subcommittee.
Q.   How many members are on that subcommittee?
A.   About nine, I think. Actually there were only -- there were about four or five of us. We invited some other non-subcommittee members, but our subcommittee put it on.
Q.   Did you take any other trips besides these that you disclosed on your economic interest statement which by law would have to be reported?
A.   Well, there was another trip in -- well, no, I don't think so, not by law. I went -- I've been to Washington twice more this year, but that was not paid for by another -- it was paid for by the State of South Carolina.
Q.   Did you ever take any other trips to Florida, for instance, make any other speeches to any other groups in Florida?
A.   Not that I know of. I mean, I've been to -- I was elected by the -- well, the South Carolina Public Service Commission joined -- voted to join the Nuclear Waste Strategy Coalition.
And I have represented the State of South Carolina or the Public Service Commission on the Nuclear Waste Strategy Coalition, and I made a number of trips in that role, which is different from the NARUC Nuclear Waste Subcommittee.
Back in '95 in particular the NARUC Committee could not effectively lobby because of the fact of being a national organization when you had opposing states in the organization. So we formed the Nuclear Waste Strategy Coalition in early '94 and South Carolina voted to join the Nuclear Waste Strategy Coalition. I have some folders that tell about that.
And I have -- but the State for the most part, I mean almost entirely, paid for that travel. And I'm on the Executive Committee of that organization.
Q.   And the State paid for that travel?
A.   Yes.
Q.   It was not paid for by a third person?
A.   Right. As far as I know, these are all that were paid for by a third party.
Q.   Again, I have not read this memo that you have provided to the Committee members, but I do note that it's dated March 18 of '98. So you asked for this opinion rather recently, I assume?
A.   Yes. Well, obviously, you know, when I got a call from you all about this, you know, and before that I've been trying to look at all this in anticipation of trying to be able to answer you all's questions as best I can.
Q.   Before you received this opinion what was your understanding of the law as far as receiving pre-approval versus post-approval or receiving no approval at all?
A.   Well, my understanding of the law was that it was for the purposes of public disclosure.
MS. MUSSER: Mr. Chairman, I don't have any further questions at this time.
CHAIRMAN HOLLAND: Any members of the Committee have some questions? Mr. Quinn?
EXAMINATION BY REPRESENTATIVE QUINN:
Q.   Mr. Arthur, apparently there were some times in your relationship with Mr. Yonce that you -- refresh my memory. He bought you supper a couple times?
A.   Yeah.
Q.   And I'm just trying to find exactly what the type of that relationship was. What was it? Does the Committee staff have a copy of what exactly --
A.   Can I answer -- I think I can resolve that satisfactorily.
Q.   Go ahead. All right.
A.   When that question was asked of me in my hearing I did not have the document that you all were looking at in front of me, and I was asked about whether or not anybody else went with me on that.
I'd like for you to know all those with Mr. Yonce were where he actually invited each of the commissioners and it was approved in advance by the Commission at a public meeting. His invitation was accepted.
And in those -- I thought when I was asked that question it was talking about the trips where I had gone on a trip, and I didn't think you were talking about the dinners. At those dinners -- there were other commissioners in attendance at all those dinners.
Q.   Do I understand you to say that Mr. Yonce went on some trips with you?
A.   No. No. He goes to the NARUC meetings and --
Q.   Okay. So he sometimes will travel at the same --
A.   -- he sponsors dinners for the companies. He's not a registered lobbyist, but he does follow the procedures. And, of course, mine, I determined, was over $25 and I needed to report it. My food was. But there were other commissioners in attendance at all those meetings.
Q.   So it's your understanding that if it's -- your only requirement is if it's over $25, you've got to report it?
A.   Well, as long as it's done properly. As far as I know, it was done properly. He issued an invitation and it was approved to all the commissioners. And I'm -- there were at least three or four other commissioners were in attendance at those meetings.
Q.   What does Mr. Yonce -- what is his role?
A.   He's a former chairman of the Commission. And --
Q.   What is his job now? Let me put it that way.
A.   I don't know.

Q.   You don't know?
A.   I think he's semi-retired.
Q.   So these dinners he purchased were just out of camaraderie with the Commission members?
A.   No. They were paid for, I'm certain, by the companies. Usually it's paid for by maybe two or three companies. And he just arranges for these dinners.
Q.   I see. What companies would these be, do you know?
A.   Southern Bell and CP&L and SCANA.
Q.   And let's just --
A.   And I'm not certain. I don't know exactly who he -- I mean, I don't want to speak for him, but --
Q.   I understand. Okay. I was looking at the list of folks that you went to visit or that paid for your travel on different occasions. I noticed the Department of Energy was in there a good bit.
A.   Yes.
Q.   So when you're reimbursed you receive a direct check from the federal government for the travel?
A.   Yes.
Q.   And that's in all instances, I guess. If you listed DOE here, you got a check from the federal government?
A.   Right.
Q.   NARUC is also listed a good bit.
A.   Well, actually those checks were from NARUC.
Q.   Okay. So the Department of Energy would give a grant or something to NARUC and --
A.   Right.
Q.   Explain to me in a little more detail what NARUC is.
A.   The National Association of Regulatory Utility Commissioners.   Q.   So any state that has an organization similar to yours would maybe join this group?
A.   As far as I know, all 50 states are members.
Q.   Okay. Is the funding for this group purely from dues from State dollars and grants from the federal government or do you know if, for example, private utilities helped fund this?
A.   No.
Q.   So as far as you know, it's just primarily a dues organization that South Carolina Public Service Commission happens to be a member of?
A.   Right. And as far as I know, there's not any direct funding by the utilities that we regulate. I'm sure there's maybe some indirect funding through different things, but we try to maintain a distance between us.
Q.   And the other organization you had a couple of times was NEIL?
A.   Nuclear Energy Institute.
Q.   And that -- tell me one more time in a little more detail what that organization is about.
A.   That is basically the nuclear -- there are a number of electric companies don't have any nuclear power. And that would be the nuclear companies that are formed together in kind of a sub-organization just -- and they do all the lobbying for all nuclear waste issues or nuclear issues, period.
Q.   So these are companies that had nuclear energy in their services and they joined this organization?
A.   Right. As far as I know, all three of the South Carolina companies are members.
Q.   Who appointed you to be on the Advisory Board for NEIL?
A.   The president of the National Association.
Q.   So the president of the NEIL appoints these folks?
A.   No. The president of National Association of Regulatory Utility Commissioners.
Q.   So NARUC is given authority and power to make board appointments on NEIL?
A.   Right.
Q.   And their funds are from predominantly private companies, I guess?
A.   Well, they have $4 billion in assets.
Q.   I remember hearing you say that. Where do those assets come from?
A.   Well, that came from the companies purchasing insurance. They were basically assessed money until they get up to the level of where they are now.
And I want -- you know, probably -- I'm quite sure that the rate payers are going to save hundreds of millions of dollars because the insurance when you -- unless we have a nuclear disaster, the insurance rates are going to go way down. So it's going to save a tremendous amount of money to South Carolina rate payers.
Q.   So the funds that were used to fund your trips from NEIL probably came from premiums from the companies who were --
A.   Yes. Or generated from investments. They have $4 billion in investments.
Q.   The BNFL and COGEMA, I'm not going to try to pronounce all --
A.   COGEMA.
Q.   COGEMA. Those are government owned entities --
A.   Government owned.
Q.   -- over in Europe? Do they have any contracts with the American government or with American private companies?
A.   I'm sure they probably do, but as far as I know, there's nothing in South Carolina. They were not trying to influence anything having to do with South Carolina. They wanted me to see what they were doing and how it might possibly in the future fit in to national policy in the United States.
Q.   So the French government basically was wanting to just explore -- you to explore their facilities to give you an idea as to how maybe things should be done here?
A.   Well, they wanted us to see how reprocessing was perceived over there and how it was done. And they wanted to -- you know, for us to see what was going on so that maybe we could have a little bit less fear of it, that sort of thing, and might want to consider that as an option to send some fuel over there in the future.
Q.   I see. So they were wanting to educate you on their facilities so that the possibility one day perhaps that South Carolina or other states in America may send fuel to be -- I guess, what's the word? What's the technical term for that?
A.   Reprocessed.
Q.   Reprocessed. NEI, that's a different group than NEIL, right?
A.   Right. NEIL is a nuclear insurance company. And NEI is Nuclear Energy Institute, and that's the lobbying organization for the nuclear company.
Q.   So NEI is a lobbying entity?
A.   Right. Essentially it's, you know, an association, but they primarily lobby for all nuclear issues.
Q.   And so that was another group that you said that you think South Carolina companies are
involved with that group?
A.   Oh, I know they are.
Q.   Okay. I notice that NEI was listed as a sponsor for the July 7th to 9th meeting. What does that mean? Why would -- so they sponsored an event that NARUC paid for you to travel to? It's the July 7, 1995. Under purpose it says annual meeting as sponsored by the National Energy Institute.
A.   At that point our committee had some funds that we could use. And that was an important activity, so they funded me to go to that meeting.
Q.   So who is they? NARUC?

A.   The Nuclear Waste Subcommittee.
Q.   So NARUC paid for you to go to that meeting?
A.   Right.
Q.   And I'm sorry. I don't want to dominate the Committee's time. I've just got one or two more questions. EEI, Edison Electrical Institute, you said they sponsored that trip and a grant was used to pay for that. That was December 2nd to the 8th? December 2nd to the 8th of 1995 you went to San Francisco?
A.   Okay. That was a DOE grant. They put on the school and DOE was providing scholarships, grants for commissioners to go.
Q.   And so that grant, was that paid for by -- in other words, the federal government gave you a grant or was that a grant that --
A.   They gave me a grant.

Q.   -- EEI had that they gave you funds from?
A.   No. It was a grant from DOE to me.
Q.   So the federal government wrote you that check?
A.   Right.
Q.   And I notice that you went to a couple -- are you also on the Advisory Board for NEI?
A.   No.
Q.   Now, maybe this is a typo, I know you listed one typo before, May 28th to May 30th of 1997, that said NEI. And it also says NEI when you went to Bermuda June 12th to the 15th.
A.   Okay. The 12th to the 15th was a typo.
Q.   Okay. So that's the typo that --

A.   That should be NEIL meeting.
Q.   Okay. What about the 28th to 30th?
A.   The May 28th they -- actually our committee funding from DOE got cut and we did not have funds. So NEI invited me to come and offered to pay for my travel.
Q.   Okay. Is it also a typo on the first page, June 25th to 29th, where it says NEI? You said that was a typo also?
A.   Yes.
Q.   So there were two typographical errors listing your travel here?
A.   Yeah. Actually the one on May 28th, that was corrected on my statement of economic interest.
Q.   Corrected? What do you mean?
A.   Well, I caught it and corrected it when I submitted my statement of economic interest last year.
Q.   Define corrected. Define corrected.
A.   Well, I mean I caught the typo.
Q.   Okay. So wait. I'm losing you here. So is the June 12th to the 15th a typo and the May 28th to May 30th a typo? Are there three typographical errors now?
A.   No. Wait a minute. Oh, wait a minute. The June 12th through 15th, '96, when I submitted my statement of economic interest to the Ethics Commission I caught -- when we were reviewing it I caught that and we corrected it on my statement of economic interest.
Q.   So the May --
A.   On the form it did still have this listed.
Q.   Right. So the May 28th to May 30th trip --
A.   No. The May 28th to May 30th is not --
Q.   That's not a typo. That's NEI, and you attended the Nuclear Energy Assembly?
A.   Yes.
REPRESENTATIVE QUINN: Okay. That's all the questions I have. Thank you.
CHAIRMAN HOLLAND: Any other member of the Committee? Representative Wilkes?
REPRESENTATIVE WILKES: Thank you, Mr. Chairman.
EXAMINATION BY REPRESENTATIVE WILKES:
Q.   Good afternoon, Mr. Arthur. Let me first refer you to your memo that you handed out to us that relates to Code Section 8-13-715. If you'll read down in the second paragraph in italics it says, and this is a central question I think that we need to clear up, "The expenses must be reasonable and must be incurred for a speaking engagement for a third party travel reimbursement." How do you -- what do you interpret that to mean?
A.   That means that if it was a speaking engagement, that's a key question, was it a speaking engagement.
Q.   Okay.
A.   The form actually --
Q.   Do you interpret this code section to mean that if it is not a speaking engagement, then it is improper for you to be reimbursed by a third party?
A.   No. Our investigation in talking with the Ethics Commission indicated that that was not improper.
Q.   Where is that ethics report?
A.   I've discussed this with our staff and we investigated it pretty thoroughly, but I'm not a lawyer.
Q.   Let me ask you this then. Has that question come up before? If you were going to attend a conference for which a third party is going to reimburse you for your expenses and you are not a speaker, then is it proper for you to be reimbursed by a third party just for your attendance at a conference? Because I'm interpreting this code section to mean that it is not.
A.   Well, our staff attorneys interpret it to mean that it is.
Q.   But that specific question was asked before?
A.   Oh, yeah. Oh, yeah. We looked at that very closely. I mean, obviously that would be a serious problem. I mean, I just couldn't go.
Q.   But you don't have an opinion on that?
A.   Well, it's my opinion --
Q.   No. No. I'm sorry. You don't have an Ethics opinion on that, an Ethics Commission opinion?
A.   She talked with the Ethics Commission about that directly, yes. And I have some other additional information that I'll be glad -- some additional research that I can --
Q.   Is it on point on this issue of speaking engagement versus non-speaking engagement? Because that appears to be part of the problem here is that is it, in fact, proper to be reimbursed for travel when you are either not speaking or not a panel member, but just going to, say, a convention or conference and a third party picked up the tab?
A.   That is based on our investigation and talking with the investigators at the Ethics Commission that that is currently going on in our state and not a problem, not perceived by them as a problem.
And we have a number of -- there are a number of -- I have some research here that I would be glad to furnish to the staff which our staff did and did extensive -- talked extensively with the Ethics Commission in this regard.
Q.   Well, it just -- it seems to me that -- and I'm just working off of common sense because I'm not a lawyer either. If you have to get approval for a conference where you are a speaker to be reimbursed, then would it not be even more compelling to get approval if you're not a speaker to be reimbursed?
A.   Right. I can understand how you feel. I was a little puzzled about it too.
Q.   It is puzzling. And this is not accusatory on my part. I'm just trying to clear this issue up because --
A.   Evidently when the law was passed -- and I don't know. I've always felt like the law was intended to create public disclosure, which is the way I interpret it and is what I've tried to do and lay everything out before you all.
But our staff -- I mean, it appears that when the law was written in regard to the speaker there was somebody that was focusing on speaking for some reason. I don't know why. You know, in the past they used to be able to take honorariums and stuff for speaking, which is illegal now, and that may have been part of the reason they were looking just at speakers for prior approval.
I really don't know what the thought was when that was -- but the Ethics Commission and our staff thoroughly looked at it, and they believe that it does not require prior approval unless you're a speaker. And that's our position.
Q.   And so your position then would be that being reimbursed by a third party, even when you're not a speaker, is perfectly proper?
A.   That's our -- I actually --
Q.   Obviously that's the position you're taking because most of these --
A.   My feeling was that if it was for a good purpose, you know, and somebody else was willing to pay for it, it would benefit me in my job and the State would not have to pay for it, then it would be a good thing.
Q.   Let's go back to Mr. Yonce again, if we may. Did I understand you to say that it's a possibility that Mr. Yonce may have provided you with a meal and then he would then be reimbursed by a third party company such as CP&L?
A.   I don't think that's a possibility. That's a fact.

Q.   In other words, the money went from CP&L possibly to Mr. Yonce to you for dinner?
A.   Yes. Well, to the restaurant.
Q.   Is that any different in your mind than CP&L buying you dinner?
A.   No.
Q.   And that's proper?
A.   Under the ethics law -- our staff believes that he complied with all the ethics law. And we have -- we've certainly tried to comply with the ethics laws. We even had a place on our agenda where we accept invitations.
Q.   And that cost would have been under $25?
A.   Well, the reason mine was reported and the other commissioners weren't was because mine was over 25 and theirs weren't.
Q.   Were any of these reimbursing entities for profit organizations that you're aware of? Like some of them like the Edison Electric Institute, is that a for profit or not for profit?
A.   No, it's not --
Q.   It's not for profit?
A.   It's not for profit, no.
Q.   How about the BNFL and COGEMA?
A.   Those are government owned companies. As far as I know, they are not for profit.
Q.   And which one is the insurance company?
A.   NEIL.
Q.   NEIL?

A.   Nuclear Electric Insurance Limited. And they are like a mutual insurance company, which is basically not for profit. Any profits go back to the owners or the participants in the company.
Q.   So you don't see in any instance here that there would be either the appearance of or an actual conflict of interest in your receiving reimbursement from any of these people?
A.   I don't, Representative Wilkes. I wouldn't have gone on these trips if I felt like they weren't. I don't -- I certainly intended to comply with all laws and to not only do that, but to do what's right.
Q.   Okay. And finally, do you think that the traveling -- your travel in any way interfered with your attendance at hearings or meetings of the Public Service Commission?
A.   Well, obviously if you -- you know, I had to miss some meetings, yeah. And we've looked at that. I mean, somebody requested that information and we have -- you know, I want you to know we have a lot of routine hearings. They are called weak telephone resales where somebody comes
in and gets a routine approval on something. And we might have five or six of those in a day.
And, you know, I missed, I think, 11 Commission meetings and 10 in '95 and out of -- we generally have one every week, and I missed 11 in '96 and six in '97. But I have missed a fair amount of resales. If I was gone like -- for example, I could have missed 15 in one week or in two days I could miss -- we sometimes have as many as five or six in one day. And if I was gone that day, then I would miss five or six hearings.
But I did not miss any votes on anything of a controversial nature where -- you know, if I was gone on a controversial subject, I would read the transcripts and participate in the vote.
Q.   So you would say that the public was better served by your having been at some of these conferences than possibly at a non-controversial hearing?
A.   Yes. And I want you to know, this issue of nuclear waste is very very serious to South Carolina. Our rate payers are being ripped off to the tune of $20 million this year. And I've only spent a few thousand dollars on travel.
Now, I really have a burden about that. And when I think about Savannah River becoming the nation's nuclear waste dump -- which is going to happen unless something is done. If nothing is done, it's going to happen. It's happening now. The fuel from Europe is coming there now. And if it moves anywhere in America, that's where it's going to go. And we've got to pass this law. I think it's for a good purpose, and I've worked very hard on it.
REPRESENTATIVE WILKES: That's all I have.
CHAIRMAN HOLLAND: Any other member? Mr. Quinn?
REEXAMINATION BY REPRESENTATIVE QUINN:
Q.   If you could just indulge me for one more minute, Mr. Arthur. I've got your memo from the staff at the Public Service Commission. Where in this memo does it say it's legal to take money for a trip when you're not speaking or not part of the program? I mean, if you all know where it is, point it out to me. Okay. See, let me tell you what I disagree with here in terms of this memo. And I'm taking what they're saying as being your position that the second to last paragraph or the next to the last paragraph on Page 2 of the memo says that the statute that we're dealing with, 8-13-715, only requires prior written approval for reimbursement of out-of-state expenses incurred for a speaking engagement.
So you're maintaining that as long as it's a speaking engagement, you don't have to report it or get approval?
A.   No. If it's a speaking engagement, you have to get prior approval.
Q.   Okay. What if it's not a speaking engagement?
A.   Then you don't have to get prior approval.
Q.   Okay. So let me ask you a question here.
A.   Can I continue?
Q.   Yes, sir. Go right ahead.
A.   If it's not a speaking engagement, our interpretation of the law is that the only requirement is that you must report it on your ethics form at the end of the year.
Q.   I see. When did you first discuss this with your legal counsel? When did they give you this opinion?
A.   Well, the 18th.
Q.   So you all never had discussion of this prior to the 18th?
A.   Oh, yeah, we've had discussion.
Q.   When was the first time you had discussion about it?
A.   Years ago.
Q.   Years ago?
A.   Yeah. But we never had researched this issue.
Q.   So when did you first discuss when it would be legal and proper to take reimbursement for travel with your legal staff?
A.   The first trip I took.
Q.   So you asked them -- I don't know when the first trip you took, but you asked them January 2, 1995, whether it would be appropriate for you to take expense money?
A.   Yeah. We -- yeah.
Q.   Was that ever done in writing or was that just verbally?
A.   Verbal.
Q.   Was that an informal conversation between you and legal counsel?
A.   Yes.
Q.   Or was it a formal discussion point at a meeting of the Public Service Commission?
A.   No. It was informal. Our staff counsel -- actually, you know, Dukes Scott actually advised us on travel until he got elected to the Commission.
Q.   I guess Dukes is an attorney, isn't he?
A.   Yeah.
Q.   And one last --
A.   And I served for three years before, you know, this time period too.
Q.   So you all had informal discussions prior to this memo being written?
A.   Oh, yeah.
Q.   Okay. One last question. Just hypothetically let's say a group of lobbyists come to you, lobbyists being folks that are registered lobbyists. Let's say if Mr. Yonce was a registered lobbyist and he wanted to buy you supper. Your feeling is it's legal as long as you put it down on disclosure?
A.   No. He has to comply with all the rules of the state.
Q.   Do you think it's legal for you to accept that?
A.   No, not unless he invites all the commissioners and it was formally approved.
Q.   And that strikes to the question that I have when I look at the disclosure and I look at Mr. Yonce's -- everything I see here was out of state?
A.   Right.
Q.   Everything was?
A.   Right.
Q.   NARUC winter meetings in Washington for commissioner and daughter; $50?
A.   Right.
Q.   So all the other commissioners were invited and attended that?
A.   The ones that were there.
Q.   The ones that were there. They were all invited though?
A.   Yes.
Q.   Let's see. I'm looking for the next one here. NEIL in conjunction with CRUC meeting in Pt. Clear, Alabama, for commissioner. They were all there or all invited?
A.   Yeah, all invited. And the ones that attended the conference were there, as far as I know.
Q.   NARUC meeting in Los Angeles, California, for commissioner. They were all there for that too?
A.   They were all invited, and the ones that attended were there. Sometimes they might do some other activity or something.
Q.   And I see one here for San Francisco, California, $110, the same. They were all invited?
A.   (Nodded.) We've tried very hard to comply with all --

Q.   Well, I'm sure. I'm sure you have. I think there are some -- I understand. I'm sure you have.
So all of these meetings where Mr. Yonce paid for these meals, every single instance that he's ever paid for a meal for you was done in conjunction with a situation where the entire Public Service Commission was invited?
A.   Yes. We're not big friends, and I voted against him most of the time when I was on the Commission.
REPRESENTATIVE QUINN: Thank you, Mr. Chairman. I appreciate it. Thank you, Mr. Arthur.
EXAMINATION BY REPRESENTATIVE KENNEDY:
Q.   Warren, I'm trying to clear some things up in my mind about this whole issue with travel, not just with your travel, but other travel. And one of the things in looking at that I noticed in looking at this travel, your travel outdistanced all the other members of the Public Service Commission. And I sat and listened to you explain the different organizations that you are a member of.
I'd like for you to just tell me what specialty do you have that puts you in a position above the rest of the Public Service Commission members to attend all of these different functions across the world?
A.   Well, I'm an expert on high level nuclear waste politics.
Q.   Do you have a degree?
A.   No, I don't. But that's why they asked me to come and speak and are willing to pay for it and that's -- about 80 to 85 percent of my travel has all been nuclear waste regarded in regards to that.
And, you know, my position has always been that if it would help me in my efforts to resolve this issue for our consumers and that nuclear high level waste issue, because that it would benefit the state of South Carolina. And if somebody else was willing to pay for it -- I can't -- I can't tell you why people don't ask other commissioners to come speak.
Q.   Well, let me ask you what makes you an expert?
A.   Because of the fact that I've been so involved in the issue.
Q.   Okay. Let me ask you this then. When you go out to these meetings and you come back into the state of South Carolina, do you hold a meeting then with all of the Public Service Commissioners and furnish them with all of the knowledge and information that you get from these meetings?
A.   Not a formal meeting. Informally they know what I'm doing and what I'm trying to accomplish and they form --
Q.   Do you make a report? Do you type up a report and give to them about what you -- the information you gathered at these affairs so that they will be enlightened like you are on your trips?
A.   No, not formally.
Q.   So really these trips that you've taken is for you?
A.   No, sir, not for me. For the people of the state of South Carolina.
Q.   Well, show me a report from any of these trips that you took that you came back to the state of South Carolina and you furnished information to your colleagues about what you learned on these trips?
A.   Well, I can't show you a report where I've done that that I recall, but I can show you letters from other people around the country about the work that I've been doing.
Q.   Warren, I'm not interested in -- if you were traveling and you're spending all of your time to go to these meetings all over the world and you come back to South Carolina and don't share the knowledge that you have gained, the information that you have, with your colleagues on the Public Service Commission, I don't understand.
A.   Well, I do. I guess that's just kind of the nature of the way the Public Service Commission operates. They are really not too terribly interested in this issue. They've kind of deferred to me on the issue of nuclear waste.
Q.   Well, okay. I mean, what you were saying is they told you, "You handle nuclear waste. And whatever decisions you make, whatever information you gather, that's all right. You handle it"?
A.   Well, they know the nature of the work that I've been doing in trying to get this legislation passed in Congress and to influence national policy to try to protect Savannah River and to get this consumer rip-off corrected for our rate payers.
Q.   Let me ask you this, Warren. Other than the travel that I see here that you were paid by third party, did you also get travel paid to you by State of South Carolina?
A.   Yes.
Q.   Do you have a figure off the top of your head how much is that?
A.   It was approximately $23,000, I think, during this time period.
Q.   So if you take the two -- if you take the travel that you got from the State of South Carolina and the travel that you got here and add it together, you've got about $55,000 worth of travel?
A.   I think it's 53. And that document has been circulated among the General Assembly.
Q.   And in all of that travel there's nowhere where you came back to South Carolina and made a report on your travels?
A.   I've never been in the habit, and maybe I ought to think about doing that, of making formal reports in regards to, you know, the trips.
REPRESENTATIVE KENNEDY: Thank you, Mr. Arthur.
EXAMINATION BY SENATOR JACKSON:
Q.   I have one question just to follow up with what Representative Kennedy asked. You stated that the reason you are invited is because they consider you to be an expert. And his follow-up was do you have any formal education or training in that area, and your answer was no.
My question is could it be possible that one reason you are considered an expert is because of the number of trips you take to the seminars?
A.   Yes. Senator, that's exactly why. I mean, it's just like any lobbyist that comes to lobby you all. If you don't see them on a regular basis, if you don't think that they are knowledgeable, they are not going to have any credibility with any of you all. And it's no different on the federal level.
Q.   So you became an expert because of the trips, yet they invited you because you were an expert?
A.   Right. And when I use the word "expert," you know, that's kind of a vague term. I don't mean to be building myself up, but I do think that the reason they invite me is because I have expertise that they want to have at where I've been asked to speak.

Q.   And these expertise were achieved or gathered how?
A.   By attending these meetings and being -- and going to Congress and talking with the people and finding out what's going on.
Q.   Prior to gaining the expertise why did they invite you?
A.   Prior to gaining the expertise they didn't invite me.
Q.   So prior to gaining the expertise the trips weren't paid for by them?
A.   Well, oh, okay. Well, now early on in '95 our subcommittee had funding for trips. And, you know, there's two different things. I think he asked me about the times when somebody paid for a trip to come speak and why would they do that. And that's because they wanted me to tell what I did know and my opinion on the national debate.
Q.   Not as much the trips to come speak, but what about the trips just to be in attendance, why were they necessary?
A.   There again I think -- I was just talking to a Duke Power Company lobbyist out here standing out here and he came to this meeting. Well, obviously this meeting doesn't have any direct effect on what he's doing for Duke Power, but he's here because this affects the industry.
And attending meetings is of varying degrees of direct effect on an issue, but oftentimes the same players are there and you get to talk with them and you get to find out what's going on at a particular meeting.
SENATOR JACKSON: Thank you.
REEXAMINATION BY REPRESENTATIVE WILKES:
Q.   Mr. Arthur, the hour is late and I'm tired and I know the chairman is tired because he told me so and I think you are probably getting tired too. And I just want to summarize things that have bothered me and get it somewhat clarified, I guess.
On the first issue as to whether or not it's proper to be reimbursed when you are not a speaker by a third party, that's still up in the air. There are varying and conflicting opinions on that, and so be it.
And on the other issue of this -- the reimbursements, and you had said that Mr. Yonce and Sprint had reimbursed you and had bought meals for you and that Mr. Yonce was probably reimbursed by the company, but your opinion is as long as the other folks were invited, that's okay?
A.   Well, can I clarify that?
Q.   Yes, sir.
A.   I don't think I said Sprint. I don't know whether Sprint has been involved in anything. Southern Bell, I believe, and the three power companies, I believe, may have been involved.
Q.   Would have provided meals for you, but also for other members of the Commission?
A.   Right. And if I said that, I didn't mean to say that. What I mean to say --
Q.   Well, Sprint is on the list. It has Sprint $40, Henry Yonce $70, Henry Yonce $50 --   A.   Okay. That was in Pt. Clear, Alabama?
Q.   Yes.
A.   Yes. Sprint did -- that was a meeting that they hosted down there.
Q.   And they bought you a meal?
A.   Right.
Q.   And your contention is that since everybody was invited, that that falls within --
A.   Well, as I understand -- we tried to follow the rules as closely as we could. As I understand the rules, if a lobbyist principal invites you, they have to invite all the people, like the whole committee or the whole commission, it has to be formally approved. And at that point it becomes legal.
And if it's under $25, you don't have to report it. There's a cumulative amount that you have to report. But if it's over $25, you have to report each instance. That's our understanding of the law.
Q.   In other words, this meal in conjunction in Pt. Clear, Alabama, was $70, that was one entertainment evening, I guess?
A.   Yeah. Well, that was not just for me.
Q.   That was for --
A.   It was for me and -- my former brother-in-law was actually living down there, and he went out with us.
Q.   But you are aware that there is a $25 per day limit?
A.   On the reporting as I understand it. That's what our belief has always been. As long as it was under 25 that you didn't have to report it, but you had to report it if it was over.
Q.   The law is pretty specific there. It's something that we as legislators deal with the same provision in the same Code Section 217-90B it says, "No lobbyist principal or person acting on behalf of a lobbyist principal may provide to a public official or public employee food, meals, or beverages exceeding $25 in a day and $200 in a calendar year."
A.   The only thing I can tell you is our counsel, legal counsel, has -- and this has been what we've thought all along. And I'm not a lawyer and I haven't -- I didn't ask them for any -- that's what I've always been told by our staff.
Obviously I wasn't trying to hide it or anything. I put it there because it was -- and I certainly wouldn't -- I mean, I wouldn't have done it if I didn't think it was the right thing. And certainly we believe that what we did was right. And if we are wrong, then our staff has sure been giving us wrong advice for seven years.
Q.   So according to your staff then there is really no limit on what can be spent by a lobbyist principal on a public employee or commissioner as long as you report it?

A.   Well, the $200 limit, I think, you know, applies.
Q.   $25 a day or $200 in a calendar year?
A.   Right. The $200 limit --
Q.   So the $110 in San Francisco would be proper, as far as you and your staff are concerned?
A.   Yeah, that was our opinion. If I didn't -- if we didn't think it was proper, I certainly wouldn't have done it. I mean, believe me, I didn't, you know -- and I did that -- Representative Wilkes, I promise you we got legal advice on the Ethics Act, and we believe -- and I still believe that we were following it.
I don't know -- I'm not a lawyer and I'm not an expert on the Ethics Act, but I believe that's in compliance. I don't believe that we've been wrong for seven years.
Q.   It is $25 and $200 a year is the way that code section reads. It's not "or," it's "and." Do you think that other commissioners on the Public Service Commission would have been given the same advice that you were given and would have taken meals and other entertainment expenses in excess of $25? I mean, I guess the legal staff of the Commission has given you all the same advice?
A.   Yes.
REPRESENTATIVE WILKES: That's all, Mr. Chairman.
CHAIRMAN HOLLAND: Anybody else? Senator Courtney?
EXAMINATION BY SENATOR COURTNEY:

Q.   Mr. Arthur, this committee I know wants to get these reports out and let you have the things you can get -- and let life go on and all that. And as I understand our obligation as a committee is, No. 1, to find out whether or not you legally are qualified to serve on the Public Service Commission and, No. 2, to gather any facts that we can about you that we might feel are relevant to the members of the General Assembly and report back to them, and then they can decide whether that's something that could influence their vote with you or against you or whatever. And I'm sure the staff has already looked into this, but I assume that you are a qualified elector and you do vote in elections and so forth?
A.   Yes.
Q.   You have no felony convictions or anything like that in the records. When you first become a member of the Public Service Commission do they have any kind of classes or anything like that to train you in any way?
A.   Yes, they do. They have a NARUC school. They call it basic training basically. It's a two-week school they have during the summer.
Q.   And is that what they give you basically to get you ready to serve as a commissioner?
A.   It's not mandatory.
Q.   I understand. But that's all there is that's provided?
A.   Yeah. Yes, Senator.

Q.   And as I look over the candidates here that are wanting to become a member of the Public Service Commission I see schoolteachers, I see radio personalities, I see real estate people and all that.
So somehow or another you try to make yourself qualified for all the complex issues that come before you as a member of the Public Service Commission?
A.   Yes, sir.
Q.   And apparently you have felt to make yourself as qualified as possible that you needed to attend as many seminars and get as involved as you could with different organizations during your tenure on the Public Service Commission. Is that what you're telling us?
A.   Yes.
Q.   And I can understand that. I mean, some members of the General Assembly might look at all these trips and they may say, "Well, there's a red flag there." They may question there may be some undue influence somewhere.
Other members of the General Assembly when they look may say, "That's a hard working man and someone really interested in trying to improve his experience and his education and so forth." So, I mean, that's something that each individual member of the General Assembly, I think, has to decide for himself or herself.
But have you attended these conferences and these seminars with that motive in mind, to make yourself a better member of the Public Service Commission?
A.   Yes, sir, I have.
Q.   Has it been your intention to make yourself a so-called expert in the area of nuclear waste, nuclear energy?
A.   That wasn't specifically my intention, but my intention was -- I made a commitment when I found out what was happening and how severely it affected South Carolina, I was willing to make a commitment.
At that time I was not married and I was willing to make a commitment of my time and energy to work on that issue because I care very deeply for the rate payers. And this is -- there's no other issue in South Carolina going on right now where the rate payers are going to be ripped off for $20 million this year.
Q.   When you become a member of the Public Service Commission, as you say, you have a voluntary school that you can go to for two weeks to kind of get you ready, but other than that, outside of being whatever your past life experiences are, schoolteacher or real estate developer or radio personality, whatever, I mean, when these Duke Powers and SCANAs and all these come before you and they throw all these complex issues, I assume that like so many of us on the General Assembly you're depending on staff people if you aren't really qualified yourself, aren't you?
A.   I would certainly depend on staff early on.
Q.   But you're telling us that these seminars and so forth that you've gone to is to try to make yourself less dependent on staff and more upon your own knowledge and so forth?
A.   Yes, Senator.
Q.   The trips that we have in front of us, and I think -- personally I think this is something that each member of the General Assembly has to consider on their own about some questions we had before. How do we find out about all these trips?
A.   Well, they are all a matter of public record.
Q.   Why are they a matter of public record?
A.   Well, I mean, all these were submitted to -- on my ethics form.
Q.   Who submitted them on the ethics form?
A.   We did.
Q.   You did?
A.   And all my others are paid for -- these and the ones that are paid for through the Comptroller General's office are all submitted to him.
Q.   So the point is every trip that we know about here as a committee or as a subcommittee, you reported it to the Committee?
A.   Yes.
Q.   Otherwise we wouldn't know about them, I wouldn't guess?
A.   Right.
Q.   So have you reported every trip, as many as there are on here, have you reported every trip that you've taken that is required by law for you to report?
A.   Yes.
Q.   And there's some question about whether or not your reimbursement should have been approved prior to the trip as opposed to afterwards.
But whether it was before or whether it was after on about four or five of them here, did you get approval for every reimbursement that you received for every trip that you took that you reported on your ethics form?
A.   Yes. Each one of these there was a form submitted to the Governor's office. And this is all. Now, there was -- I want to be completely honest with you. There was one trip where I did
speak where I received reimbursement and I reimbursed the company because I was late getting it in. I sent the money back to them. I did not -- I accepted it and then sent it back to them when I realized that I was not in compliance with the prior approval.
Q.   You understand, of course, it's our obligation to report the trips, it's our obligation to report to the General Assembly our opinion of whether or not you should have gotten pre-approval or prior approval and forth. You understand all that. But you did, in fact, get approval one way or the other is what you're telling us?
A.   Yes.
Q.   And you have reported every trip that you've taken?
A.   Yes.
Q.   And you do feel that the trips that you took were to improve yourself and educate yourself as a member of the Public Service Commission?
A.   Yes.
Q.   And I'm not going to be carrying water for you or anybody else in these elections, but I assume that's something you're going to be arguing as you go about shaking hands and trying to get commitments and forth.
Is there any other relationship that you have with any lobbyist or anything like that that you received any payment from that you have not reported?
A.   No, sir. I was vice-chairman of the Ethics Committee when I was in the House of Representatives and always have been sensitive to those kind of things.
COURT REPORTER: Excuse me. I'm going to need to change paper.
All right. Thank you.
SENATOR COURTNEY: Mr. Chairman, nothing further.
CHAIRMAN HOLLAND: Any other questions from any members of the Committee?
REEXAMINATION BY REPRESENTATIVE WILKES:

Q.   One more question, Mr. Arthur. You stated that it was your opinion that your staff attorneys had said that as long as you had less than $25 a day you didn't have to report it, more than $25 a day you did, and that all the other commissioners were working under that same rule. And as I look at their -- I'm just going to read from their statement of economic interest for -- one has no gifts. One says attended several receptions and meetings, but received no gifts worth $25 or more in a day or more than the aggregate of $200 or more in a calendar year.
I'm reading from another incumbent commissioner's report, "Attended several sessions or meetings, but received no gifts worth $25 or more in a day or in the aggregate of $200 or more in a calendar year."
You know, obviously they just had a different interpretation, I guess, of what the staff attorneys had said to you and to them.
A.   Well, I think their position is that they did not spend $25.
Q.   No. They said they did not receive any gifts worth $25 or more in a day or in the aggregate of 200 or more in a calendar year. You're saying that if they had received it, they would have reported it?
A.   If it had been over $25, they would have reported it. That is our interpretation. And that's all the other commissioners' interpretation. We have discussed this at meetings with --
Q.   But if that were the case, they wouldn't have written anything. They would have just left that part blank.
A.   Well, I think they were trying to disclose that they did go to some of these meetings and that their food was just less than $25.
CHAIRMAN HOLLAND: Any more questions? Thank you, Mr. Arthur.
MR. ARTHUR: Thank you, Mr. Chairman.

* * *
ADDENDUM

COMMISSIONERS         COMMISSIONERS
FREDERICK A. HOEFER, ii, 6TH DISTRICT     RAYMOND B. SMITH, 4TH DISTRICT
CHAIRMAN         RICHARD V. DAVIS, MEMBER AT LARGE
R. MARSHALL TALLEY, 5TH DISTRICT       FRANK B. WASHINGTON, MEMBER AT LARGE
VICE CHAIRMAN         R. KENT PORTH, MEMBER AT LARGE
CYNTHIA GRAHAM HOWE, 1ST DISTRICT
EDWARD E. DURYEA, 2ND DISTRICT

State of South Carolina(803) 253-4192
Gary R. BakerState Ethics CommissionFAX (803) 253-7539

Executive Director   5000 thurmond Mall, Suite 250

P.O. Box 11926

Columbia, S.C. 29211

March 27, 1998
The Honorable Donald H. Holland, Chairman
Committee to Review Candidates for the
South Carolina Public Service Commission
Post Office Box 142
Columbia, SC 29202

Re: Confidential Informal Advisory Opinion

Dear Senator Holland:

Thank you for your recent letter in which you asked for a confidential informal advisory opinion. An informal opinion is the opinion of Commission staff based on the Commission's prior published opinions; however, an informal opinion is not binding on the Commission. S. C. Code Section 8-13-320 (Supp. 1996). This opinion is prospective in nature and based on the facts you submitted. Any material deviation from the submitted facts or failure to disclose relevant information will void this opinion. S.C. Code Regs. 52-301 (1997).
You have requested advice concerning three questions:
(1) May a member of the Public Service Commission lawfully receive a single meal in excess of $25.00 per day when the meal is provided for by a person who is employed as a consultant--and receives a monthly retainer for his services as that consultant-- by a regulated utility which is a lobbyist's principal? Please note that the consultant does not receive reimbursement for the money expended for the meal, but that he is paid a monthly fee as the utility's consultant.
In a recent informal advisory opinion, the State Ethics Commission was asked whether the Ethics Reform Act prohibits the Public Service Commission (PSC) staff from accepting an offer from a Kentucky coal contractor to fly the staff members to Kentucky in the company plane for a tour of its coal fields. The informal opinion advised that, although the coal contractor who has made this offer neither lobbies in South Carolina nor seeks a business relationship with the PSC, Section 2-17-90(A) provides that no lobbyist's principal may facilitate the provision of lodging, transportation, entertainment, food, meals or beverages to a public official or public employee. In that matter, a representative from SCE&G (a registered lobbyist's principal) was instrumental in coordinating this invitation, therefore, it was our informal opinion that the PSC staff should not accept the coal contractor's offer in order to avoid the appearance of impropriety.
There is an exception for providing lodging, transportation, entertainment, food, meals, beverages, or an invitation to a function paid for by a lobbyist's principal if the entire board or commission is invited Section 2-17-90(A)(2). Further, there is an exception if the lodging, transportation, entertainment, food, meals, beverages, or an invitation to a function is reasonably and directly related to economic development efforts. This exception requires prior written approval from the Governor Section 2-17-90(A)(6).
Pursuant to Section 2-17-90(A)(6)(a), a lobbyist's principal may invite a public official to a function that is reasonably and directly related to state or local economic development efforts, provided the official receives prior written approval from the Governor. Accordingly, so long as the Commissioner receives the required written approval, it is my informal opinion that his acceptance of the invitation does not violate the Ethics Reform Act. Nevertheless, pursuant to Section 2-17-90(C), the Commissioner must report the value of anything he receives on the appropriate Statement of Economic Interests Form, however, the twenty-five dollar limitation does not apply.
In the absence of such pre-clearance as an economic development issue, I also call your attention to Section 2-17-90(B) which provides:
No lobbyist's principal or person acting on behalf of a lobbyist's principal may provide to a public official or a public employee pursuant to subsections (A)(1), (A)(2), (A)(3), (A)(4), or (A)(5) the value of lodging, transportation, entertainment, food, meals, or beverages exceeding twenty-five dollars in a day and two hundred dollars in a calendar year per public official or public employee.
I also call your attention to Section 8-13-705 which provides in part as follows:
(A)   A person may not, directly or indirectly, give, offer, or promise anything of value to a public official, public member, or public employee with the intent to:
(1)   influence the discharge of a public official's, public member's, or public employee's official responsibilities;
(2)   influence a public official, public member, or public employee to commit, aid in committing, collude in, or allow fraud on a governmental entity; or
(3)   induce a public official, public member, or public employee to perform or fail to perform an act in violation of the public official's, public members's, or public employee's official responsibilities.
(B)   A public official, public member, or public employee may not, directly or indirectly, knowingly ask, demand, exact, solicit, seek, accept, assign, receive, or agree to receive anything of value for himself or for another person in return for being:
(1)   influenced in the discharge of his official responsibilities;
(2)   influenced to commit, aid in committing, collude in, allow fraud, or make an opportunity for the commission of fraud on a governmental entity; or
(3)   induced to perform or fail to perform an act in violation of his official responsibilities.
The Commission's formal opinions have consistently held that the determination of whether the above cited statute bars giving or receiving something of value must be judged on a case by case basis with a primary factor involving the donor's intent. Another factor in the equation is whether there are pending matters before the agency/employee involving the donor and recipient. The Commission's precedent is clear that when there are pending contractual or other matters before a governmental entity, it will not approve the giving and receiving of anything of value to the employees of the governmental body.
I would advise against the provision of any meal of any value by the consultant (1) if there are matters pending before the PSC concerning the public utility represented by the consultant, or (2) if the meal involved any issue(s) or discussion(s) concerning the public utility's interests or activities. My advice would be different if there was prior written approval from the Governor involving economic development.
(2) May a member of the Public Service Commission lawfully accept reimbursement for out-of-state travel expenses incurred for a conference from an association (the Edison Electric Institute) which has as one of its members a South Carolina regulated utility company? Please note that the value of the trip was $3,000.00.
In response to this question, a determination would be based on several factors: (1) whether the Edison Electric Institute utilized the Commissioner as a speaker and reimbursed reasonable and necessary expenses, (2) whether the travel was related to the Commissioner's position responsibilities, and (3) whether the invitation was generated on behalf of the regulated public utility.
Section 2-17-100 and Section 8-13-715 provide nearly identical language concerning speaking engagements. Section 2-17-100 provides:
A public official or a public employee acting in an official capacity may not receive anything of value from a lobbyist's principal for speaking before a public or private group. A public official or public employee is not prohibited by this section from accepting a meal provided in conjunction with a speaking engagement where all participants are entitled to the same meal and the meal is incidental to the speaking engagement. Notwithstanding the limitations of Section 2-17-90, a public official or public employee may receive payment or reimbursement for actual expenses incurred for a speaking engagement. The expenses must be reasonable and must be incurred in a reasonable time and manner in which to accomplish the purpose of the engagement. The payment or reimbursement must be disclosed by the lobbyist's principal as required by Section 2-17-35 and by any public official or public employee who is required to file a statement of economic interests under Section 8-13-1110. A public official or public employee required to file a statement of economic interests under Section 8-13-1110 must report on his statement of economic interests the organization which paid for or reimbursed actual expenses, the amount of such payment or reimbursement, and the purpose, date, and location of the speaking engagement. A public official or public employee who is not required to file a statement of economic interests but who is paid or reimbursed actual expenses for a speaking engagement must report this same information in writing to the chief administrative official or employee of the agency with which the public official or public employee is associated.
If the expenses are incurred out of state, the public official or public employee incurring the expenses must receive prior written approval for the payment or reimbursement from:
(1)   the Governor, in the case of a public official of a state agency who is not listed in an item below;
(2)   any statewide constitutional officer, in the case of himself;
(3)   the President Pro Tempore of the Senate, in the case of a member of the Senate;
(4)   the Speaker of the House, in the case of a member of the House of Representatives; or
(5)   the chief executive of a department of the State or any state board, commission, agency, or authority, including committees of any such body, by whatever name known, in all other cases.
Section 8-13-715 provides:
A public official, public member, or public employee acting in an official capacity may not receive anything of value for speaking before a public or private group. A public official, public member, or public employee is not prohibited by this section from accepting a meal provided in conjunction with a speaking engagement where all participants are entitled to the same meal and the meal is incidental to the speaking engagement. Notwithstanding the limitations of Section 2-17-90, a public official, public member, or public employee may receive payment or reimbursement for actual expenses incurred for a speaking engagement. The expense must be reasonable and must be incurred in a reasonable time and manner in which to accomplish the purpose of the engagement. A public official, public member, or public employee required to file a statement of economic interests under Section 8-13-1110 must report on his statement of economic interests the organization which paid for or reimbursed actual expenses, the amount of such payment or reimbursement, and the purpose, date, and location of the speaking engagement. A public official, public member, or public employee who is not required to file a statement of economic interests but who is paid or reimbursed actual expenses for a speaking engagement must report this same information in writing to the chief administrative official or employee of the agency with which the public official, public member, or public employee is associated.
If the expenses are incurred out of state, the public official, public member, or public employee incurring the expenses must receive prior written approval for the payment or reimbursement from:
(1)   the Governor, in the case of a public official of a state agency who is not listed in an item in this section;
(2)   a statewide constitutional officer, in the case of himself;
(3)   the President Pro Tempore of the Senate, in the case of a member of the Senate;
(4)   the Speaker of the House, in the case of a member of the House of Representatives; or
(5)   the chief executive of the governmental entity in all other cases.
The Commissioner could accept reasonable and necessary expenses associated with a speech in his/her official capacity. If there was no speaking engagement involved, my advice would be based on whether the group had any matter or action pending before the PSC in which case I would advise against such acceptance based upon the above-quoted Section 8-13-705. My advice would also depend upon whether the invitation was issued on behalf of the regulated public utility.
(3) May a member of the Public Service Commission lawfully accept reimbursement for out-of-state travel expenses incurred for a conference from the Nuclear Energy Institute in the amount of $600.00?
My advice would be consistent with that given above in response to question 2.
Please contact us again if we can provide further assistance on this matter.

Sincerely,
/s/Gary R. Baker
Executive Director

COMMISSIONERS             COMMISSIONERS
FREDERICK A. HOEFER, ii, 6TH DISTRICT     RAYMOND B. SMITH, 4TH DISTRICT
CHAIRMAN           RICHARD V. DAVIS, MEMBER AT LARGE
R. MARSHALL TALLEY, 5TH DISTRICT       FRANK B. WASHINGTON, MEMBER AT LARGE
VICE CHAIRMAN         R. KENT PORTH, MEMBER AT LARGE
CYNTHIA GRAHAM HOWE, 1ST DISTRICT
EDWARD E. DURYEA, 2ND DISTRICT

State of South Carolina(803) 253-4192
Gary R. BakerState Ethics CommissionFAX (803) 253-7539

Executive Director   5000 thurmond Mall, Suite 250

P.O. Box 11926

Columbia, S.C. 29211

Dear Senator Holland:
In response to your letter of March 31, 1998, please note the following regarding your questions:
(1)   Your first question concerned the provision of a meal which exceeded $25 paid for by a consultant to a regulated public utility. The twenty-five dollar limit applies absent the economic development exclusion. The provision of the meal must also be consistent with the group invitation rules of Section 2-17-90(A).
(2)   and (3) My references in my letter of March 27, 1998 referred to reimbursements for speaking engagements. Both Sections 2-17-100 and 8-13-715 provide for reimbursements from organizations. Section 2-17-100 provides for reimbursement by a lobbyist principal while Section 8-13-715 provides for reimbursement only from a public or private group. No distinction is made in that code section about a lobbyist's principal.
In your letter of March 31, 1998, you refer to a lobbyist's principal-affiliated group. That terminology is not used in the statute. I assume from your letter that you are referring to a group which has as a member, one or more lobbyist's principals but which itself is not a lobbyist's principal. In Advisory Letter 92-02, the Secretary of State advised Senator Robert W. Hayes "Generally, the new ethics law allows non-lobbyists and non-lobbyist's principals to give anything they desire to legislators." Also, in Advisory Letter 92-23, the Secretary of State advised that Title 2 of the Ethics Reform Act does not have a prohibition against a state employee receiving a trip from a trade association which is not a lobbyist's principal.
The Secretary of State advised in Advisory Letter 92-69 that an employee of MUSC could not accept a free trip to a national convention of a trade association of which the employee is a member if the association is a lobbyist's principal.
The Secretary of State advised in Advisory Letter 91-37 that members of a trade association of a lobbyist's principal do not become lobbyist's principals by virtue of their membership in the trade association. That letter advised that " . . . the stature of lobbyist's principal stops with the legal entity which hires the lobbyists. For example, only the Chamber of Commerce itself is a lobbyist's principal, not each business which joins the Chamber."
In advisory Opinion SEC A092-025, the State Ethics Commission advised that a member of the State Ethics Commission who was also a member of the Association of Realtors, a lobbyist's principal, would not be prohibited from receiving an expense account as an officer of that organization or from receiving a meal or other benefits provided to members of the Association.
In Advisory Opinion SEC A092-090, the State Ethics Commission advised that Highway Commissioners and key staff members were not prohibited from attending a function as guests of an area Chamber of Commerce unless such invitation is given to influence their official actions.
Similarly, in Advisory Opinion SEC A092-120, the State Ethics Commission advised that members/staff of the Commission on Higher Education may accept complimentary conference registration from a national conference of accrediting agencies since it is a gift to the agency.
In Advisory Opinion SEC A092-225, the State Ethics Commission advised that the provision of tuition, a stipend, and travel to attend a training program to teachers would not violate the statute unless given to influence the recipients.
Section 8-13-700(A) prohibits a public officeholder from utilizing his official position to obtain an economic interest for himself. In a number of advisory opinions [SEC A092-002, SEC A092-021, SEC A092-041, SEC A092-098, etc.], the State Ethics Commission has advised that private business may support agency activities through the provision of goods and services.
To summarize, the Ethics Reform Act contains absolute prohibitions against accepting anything of value [as defined in the Section 8-13-100(1)(a)] from a lobbyist. The exception on accepting anything from a lobbyist's principal is based on the group invitation rule and the $25/day, $200/year limitation. Gifts are not prohibited from other donors unless given to influence official actions [Section 8-13-705]. Advisory opinions from the State Ethics Commission have consistently advised against gifts from vendors seeking business with the agency if the recipient is in a position to take action on contracts, people who are seeking action by the recipient's office, or persons who are regulated by the recipient.
Based on my understanding of the scenarios presented, the travel was paid to attend a conference by an organization of which a regulated business is a member. Based on the above-quoted opinions, the State Ethics Commission considers such travel payments to be gifts to the agency rather than to the individual if the purpose of the conference is business related and not for personal benefit or not include expenses of a personal nature (i.e., extended trips to vacation spots, personal entertainment, etc.).
The State Ethics Commission would also consider the organization not to be a lobbyist principal strictly because a member of the organization is a lobbyist's principal.
The State Ethics Commission and I could review this matter if further information could be provided such as:
(1)   the makeup of the two organizations which paid the travel
(2)   whether these two organizations had business before the PSC
(3)   whether the PSC or the candidate hold memberships or otherwise have affiliations with either organization
(4)   whether the Commissioner was speaking, representing the agency, or under what circumstances he was attending the conference
Please let me know if further information is needed. I would be glad to meet with you to discuss this information further.

Sincerely,
/s/Gary R. Baker
Executive Director

ADJOURNMENT

At 11:15 A.M., on motion of Senator LANDER, the Senate adjourned to meet next Tuesday, April 7, 1998, at 12:00 Noon.

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