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COMMITTEE REPORT
May 16, 2002
S. 290
S. Printed 5/16/02--H. [SEC 5/20/02 12:19 PM]
Read the first time May 1, 2002.
To whom was referred a Bill (S. 290) to amend Act 789 of 1952, as amended, relating to the Clinton-Newberry Natural Gas Authority, so as to allow the authority to enter into firm gas sales, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass with amendment:
Amend the bill, as and if amended, by striking the bill in its entirety and inserting therein:
/ SECTION 1. Chapter 9 of Title 58 of the 1976 Code is amended by adding:
Section 58-9-2600. This article regulates the provision of telecommunications service by an agency or entity of the State or a political subdivision of this State, excluding the State Budget and Control Board for services provided as of this act's effective date, to the extent that state constitutional or statutory provisions of law authorize this activity.
Except for the Public Service Commission in regard to its duties and responsibilities under this article, nothing in this article shall be construed to recognize, broaden, or enlarge the authority or legal capacity of any agency or entity of the State or a political subdivision of this State to engage in such activity.
Section 58-9-2610. As used in this article:
(1) 'Government-owned telecommunications service provider' means a state or local political subdivision or person or entity providing telecommunications service to the public for hire over a facility, operation, or system that is directly or indirectly owned by, operated by, or a financial benefit obtained by or derived from, an agency or entity of the State or any local government. 'Government owned telecommunications service provider' does not include the State Budget and Control Board for services provided as of this act's effective date.
The term 'Government-owned telecommunications service provider' does not include any state or local governmental entity or agency that obtains or derives financial benefit solely from leasing or renting, to any person or entity, property that is not, in and of itself, a facility used to provide telecommunications service.
(2) 'Telecommunications service' for the purpose of this section is defined in Section 58-9-2200(1).
(3) 'Person' as defined in Section 58-9-10(4) includes a 'government-owned telecommunications service provider'.
Section 58-9-2620. (A) Notwithstanding any other provision of law, a government-owned telecommunications service provider shall:
(1) be subject to the same local, state, and federal regulatory, statutory, and other legal requirements that nongovernment-owned telecommunications service providers are subject to, including regulation by the Public Service Commission;
(2) not be the recipient of any financial benefits of any type that nongovernment-owned telecommunications service providers are not recipients of including, but not limited to, tax exemptions, governmental subsidies of any type, or tax exempt financing;
(3) not be permitted to subsidize the cost of providing telecommunications service with funds from any other nontelecommunications service, operation, or other revenue source. If a determination is made that a direct or indirect subsidy has occurred, the government-owned telecommunications service provider immediately shall increase prices for telecommunications service in a manner that ensures that the subsidy shall not continue, and any amounts used directly or indirectly to subsidize the past operations shall be reimbursed to the general treasury of the appropriate state or local government;
(4) impute, in calculating the cost incurred and in the rates to be charged for the provision of telecommunications services, the following:
(a) cost of capital component, including depreciation expense, that is the equivalent to the cost of capital available to nongovernment-owned telecommunications service providers in the same state or locality, and
(b) an amount equal to all taxes, licenses, fees, and other assessments applicable to a nongovernment-owned telecommunications provider including, but not limited to, federal, state, and local taxes, rights-of-way franchise consent, or administrative fees, and pole attachment fees.
(5) keep separate books and separately account for the revenues, expenses, property, and source of investment dollars associated with the provision of telecommunications service; and
(6) be required to prepare and publish an independent annual audit in accordance with generally accepted accounting principles that reflects the full cost of providing the service, including all direct and indirect costs. The indirect costs shall include, but are not limited to, amounts for rights-of-way franchise, consent, or administrative fees, regulatory fees, occupation taxes, pole attachment fees, and ad valorem taxes. The annual accounting must reflect any direct or indirect subsidies received by the government-owned telecommunications provider. Records demonstrating compliance with the provisions of this section shall be filed with the Public Service Commission and be made available for public inspection and copying. The compliance shall be overseen by the Public Service Commission pursuant to and not inconsistent with its power and jurisdiction set forth by law including Section 58-3-140;
(7) The term 'public' means the public generally or any limited portion of the public, including a person or corporation. The term 'public' excludes governmental agencies or entities when they receive telecommunications service from the Budget and Control Board pursuant to its statutory authority or other legal requirements.
Section 58-9-2630. (A) A government-owned telecommunications service provider shall pay or collect taxes each year in a manner equivalent to taxes paid by nongovernment-owned telecommunications service providers through payment of the following:
(1) all state taxes, including corporate income taxes, under Section 12-6-530 and utility license taxes under Section 12-20-100;
(2) all local taxes, including local business license taxes, under Section 58-9-2230, together with any franchise fees and other local taxes and fees, including impact, user, service, or permit fees, pole rental fees, and rights-of-way, franchise, consent, or administrative fees; and
(3) all property taxes on otherwise exempt real and personal property that are directly used in the provision of telecommunication services.
(B) A government-owned telecommunications service provider shall be required to compute, collect, and remit taxes in the same manner as a nongovernment-owned telecommunications service provider and shall be entitled to the same deductions.
(C) A government-owned telecommunications service provider shall remit to the Department of Revenue any local tax or fee that it imposes and would otherwise be entitled to retain, and the Department of Revenue shall deposit these monies into the general fund and have the same rights and responsibilities as the local government entity to collect, audit, or contest the amount of the taxes paid.
(D) The taxpayer confidentiality provisions contained in Title 12 shall not apply to government-owned telecommunications service providers.
Section 58-9-2650. The Department of Insurance must determine the South Carolina average market rate for private sector liability insurance for telecommunications operations. In order to have government-owned and nongovernment-owned telecommunications service providers in the same competitive position, to the extent possible, the rate paid for liability insurance for government-owned telecommunications operations must be equal to or greater than the average market rate for private sector liability insurance in South Carolina as determined by the Department of Insurance. To the extent that any government-owned telecommunications service provider pays less than the average market rate for this insurance established by the Department of Insurance, the difference shall be remitted by the government-owned telecommunications service provider to the State Treasurer for deposit in the state general fund.
SECTION 2. Section 58-5-30 of the 1976 Code is amended to read:
"Section 58-5-30. Nothing Except as provided in Article 23, Chapter 9 of Title 58, nothing contained in Articles 1, 3, and 5 of this chapter shall give the commission any power to regulate or interfere with public utilities owned or operated by or on behalf of any municipality or regional transportation authority (as defined in Chapter 25 of this title) or their agencies."
SECTION 3. If any section, subsection, paragraph, subparagraph, sentence, clause, phrase, or word of this act is for any reason held to be unconstitutional or invalid, the holding shall not affect the constitutionality or validity of the remaining portions of this act, the General Assembly hereby declaring that it would have passed this act, and each and every section, subsection, paragraph, subparagraph, sentence, clause, phrase, and word thereof, irrespective of the fact that any one or more other sections, subsections, paragraphs, subparagraphs, sentences, clauses, phrases, or words hereof may be declared to be unconstitutional, invalid, or otherwise ineffective.
SECTION 4. This act takes effect upon approval by the Governor. /
Renumber sections to conform.
Amend totals and title to conform.
HARRY F. CATO for Committee.
TO AMEND ACT 789 OF 1952, AS AMENDED, RELATING TO THE CLINTON-NEWBERRY NATURAL GAS AUTHORITY, SO AS TO ALLOW THE AUTHORITY TO ENTER INTO FIRM GAS SALES, MAKE CONSISTENT CHANGES IN PROVISIONS TO ALLOW FIRM GAS SALES, AND CHANGE THE MANNER OF THE DISPOSITION OF NET REVENUES, SO THAT THEY ARE DIVIDED EQUALLY BETWEEN THE CITIES OF CLINTON AND NEWBERRY.
Be it enacted by the General Assembly of the State of South Carolina:
SECTION 1. Section 3 of Act 789 of 1952 is amended to read:
"Section 3. Such The authority shall consist of a board of seven members as follows: (1), the Mayor of Clinton, ex officio, shall serve as a member o f the authority and shall hold office for a terms corresponding to his term as Mayor of Clinton; (2), the Mayor of Newberry, ex-officio, shall serve as a member of the authority and shall hold office for a term corresponding to his term as Mayor of Newberry; (3), the Municipal Council of each of Clinton and Newberry shall elect two members of their respective councils who shall serve. ex officio, as members of the authority and shall hold office for terms corresponding to their respective terms as such councilmen. Immediately following the effective date of this act, the respective Municipal Councils of Clinton and Newberry shall adopt resolutions designating the members of the council chosen for membership on the authority; certified copies of such resolutions shall be filed with the official records of the authority; Similar action shall be taken upon the expiration of the term of any of the members who are designated by the respective Municipal Councils of Clinton and Newberry. In making the foregoing ex officio designations, the General Assembly finds that the successful operation of the natural gas system has a distinct relation to the welfare of Clinton and Newberry. It has, therefore, determined that those responsible for the operation of such municipalities should likewise participate in the operation of the authority. The six members so designated shall, at their first meeting, elect a seventh member, who shall reside in the service area of the authority. Such seventh member, upon his qualification, shall hold office for a term expiring four years from the date of his appointment or when his successor shall have been selected and shall have qualified, whichever shall last occur. At the expiration of the term of the seventh member, a successor shall be elected for a further term of four years. At each expiration of the term of the seventh member, his successor shall be appointed in the same manner for a term of four years who must be appointed by the legislative delegations representing Laurens and Newberry Counties for terms of four years. In order to stagger terms, four members shall be appointed for terms of four years and three members must be appointed for terms of two years. At the expiration of the two-year terms, successors must be appointed for terms of four years. All members must reside in Newberry and Laurens Counties. In the event of a vacancy in the office of the seventh a member, a successor shall be elected for the remainder of the unexpired term. The members shall serve without salary, but shall be compensated for any actual expenses incurred by them on any official business of the authority. As soon as the seventh member shall be all members are elected, all members of the authority shall convene and shall elect one of their number as chairman and another as secretary, each of whom shall hold office for terms corresponding to their terms as members of the authority. The secretary of the authority shall from time to time file in the offices of the clerks of court for Laurens and Newberry Counties appropriate certificates, showing the personnel of the authority and the duration of the terms of the respective members."
SECTION 2. Section 4(10) of Act 789 of 1952 is amended to read:
"(10) To enter into contracts of long duration for the sale of firm and interruptible gas only, but all of such contracts shall contain a provision permitting the authority to increase the price charged its customers for gas if the authority, in turn, shall be required to pay more for its gas than it did on the occasion that such contract was entered into, and no contract of any sort shall be entered into which shall not in all respects be subordinate to any covenant or undertaking which the authority may make in the proceedings taken in connection with the issuance of any bond or other obligation of the authority. And, no contract of any sort shall be made respecting the sale of firm gas, which shall be sold in accordance with such schedule of rates as shall from time to time be in effect."
SECTION 3. Section 5 of Act 789 of 1952 is amended to read:
"Section 5. All net revenues derived from the system whose disposition the authority shall not have covenanted to otherwise dispose of shall be disposed of as follows:
(a). That sum which reflects the proportion of revenue derived from the sale of firm gas shall be divided between Clinton and Newberry on the basis of firm gas sold within their respective municipal service areas. For the purposes of this section, the Clinton municipal service area is defined as all of the service area of the authority lying in Laurens County, and the Newberry municipal service area is defined as all of the service area of the authority lying in Newberry County. Firm gas sales shall mean gas sold on a non-interruptible basis. Fifty percent to the City of Clinton, irrespective of where the interruptible or firm gas is sold in the service areas of the authority; and
(b). That sum which reflects the proportion of the revenue derived from the sale of interruptible gas shall be divided equally between Clinton and Newberry, irrespective of where such interruptible gas shall be sold. Interruptible gas shall mean gas not sold on a firm basis, but gas sold on an interruptible basis. Fifty percent to the City of Newberry, irrespective of where the interruptible or firm gas is sold in the service areas of the authority.
(c). That portion of the net revenues to which Newberry shall be entitled, hereinafter specified, shall be used by the authority in the manner hereinafter provided to reimburse the authority for the actual cost of constructing that portion of the transmission line which lies between the northwestern municipal limits of Newberry and the line dividing the Counties of Newberry and Laurens. Such cost shall be determined on a per foot basis, in the ratio that the distance between the northwestern municipal limits of Newberry and the line dividing the Counties of Laurens and Newberry bears to the distance between the northwestern municipal limits of Newberry and the point where the said transmission line connects with the transmission line of the Transcontinental Gas Pipe Line Company at or near Fountain Inn. That sum which represents the annual principal and interest requirements on such portion of the construction bond issue as reflects the cost of the portion of the construction bond issue as reflects the cost of the portion of the transmission line between the northwestern municipal limits of Newberry and the line dividing the Counties of Laurens and Newberry shall be deducted from the net revenues due to Newberry for so long a period of time as may be necessary to effect the retirement of such portion of the said construction bond issue. Such payments shall be applied to the effect the earliest possible retirement of the said construction bond issue. The provisions of this paragraph shall may not be construed to limit the power of the authority to pledge and apply the gross revenues derived from the system in such the manner as the authority shall determine to the payment of the principal and interest on any bonds, notes, or other obligations which the authority may issue, it being intended that the application of revenues herein provided in this section for shall be is in addition thereto to that application."
SECTION 4. Act 789 of 1952 is amended by adding:
"Section 4A. (A) The authority shall make a monthly full statement to each member of the legislative delegations representing Laurens and Newberry Counties.
(B) The Public Service Commission shall have conducted an annual audit. A copy of the audit must be forwarded to each member of the legislative delegations representing Laurens and Newberry Counties."
SECTION 5. Notwithstanding any other provision of law, the Clinton Newberry Natural Gas Authority shall retain one and one-half percent of annual revenues which must be used directly on the operation of the authority with the remainder of unencumbered revenues returned to its customers on a pro rata basis.
SECTION 6. The terms of members serving on the effective date of this act are terminated on that date. All members shall serve until their successors are appointed and qualify.
SECTION 7. This act takes effect upon approval by the Governor.
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