1994 Permanent House Journal Printed Pages 2430-2439 - South Carolina Legislature Online

Journal of the House of Representatives
of the Second Session of the 110th General Assembly
of the State of South Carolina
being the Regular Session Beginning Tuesday, January 11, 1994

Page Finder Index

Printed Page 2420, Feb. 24 | Printed Page 2440, Feb. 24

Printed Page 2430 . . . . . Thursday, February 24, 1994

A. No, I have no -- none except that I help my wife grow roses whenever I have the free time, but I do read a lot and I keep up -- I try to keep up to date with what's going on.
Q. So if we have a bad case of mites or something like that, that would be the only thing that would keep you from coming to Columbia?
A. That's right.
Q. You have heard or have -- we have asked other persons applying or being candidates a little bit about the activities of the Public Service Commission in trying to determine your level of familiarity with their operations. As a -- before I ask that question, is it fair for me to summarize your past experience with utilities or with companies that you worked with to being one of design and engineering?
A. Yes, mostly.
Q. And you have not been involved on the side that would work with the accounting aspects, with the management of the rate base, those types of activities?
A. Well, with GTE, I did go into the rate base and how costs are formed, how costs are sort of dreamed up, how to finance would take place, what charges would be equitable in applying the rates.

In other words, if you're going to charge a customer for a service, it's got to be based on something. And the -- that something is the cost of producing that service and I did go into that very extensively with GTE.
Q. Was that a regulated utility at the time?
A. GTE, yes.
Q. And who regulated? What -- was it a state regulator and what state were you located in?
A. That was in -- in Iowa and it was the State Regulatory Commission. But we had more problems with AT&T and the cost sharing than we did with --
Q. You mentioned earlier the role of the PSC should certainly be geared toward public service or service of the consuming public. There are a number of areas where there is tension between a fair rate of return to the industry and the needs of the public for reasonable inexpensive service.

There is also a tension between the environmental clean up movement to some degree and the ability of a company to make a profit. Generally how do you approach those decisions? How would you balance the needs of the public versus a utility to make a profit and the desires of folks to ensure there is a clean environment and the need to make power available in an inexpensive -- at an inexpensive price?
A. That's a rather extensive question and --

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Q. What is your thought process? How do you analyze those things and --
A. Well, the cost of production, first of all, what it -- what it costs to produce the power, get the equipment on-line, how much does it cost to maintain the service and to distribute it to the public. I think this is the cost basis on which you can manage the operation and profits of the company's operation.
Q. If I could stop you at that point, in determining that cost base, that fee base or rate base, have you ever seen an occasion where a utility or a company has one side of its operations that are regulated, its profit and perhaps other ventures under its corporate shell that are unregulated, how would you ensure that you did not allow those folks to put the cost of the nonregulated portion of the corporation in the rate base for the regulated part or would that be appropriate to do that?
A. Yeah, I think it would be because you have the unregulated portions of the service would be cost control while the others would allow a profit margin that's greater than the usual 8 or 10 or 12 percent than the regulated industry would have.
Q. What role should the staff of the Public Service Commission play generally, vis-a-vis, your role as a commissioner?
A. Well, most importantly, of course, is to gather the appropriate information. The -- and to -- for that information to be absolutely correct. It is very difficult especially in telecommunications where a manufacturing of -- manufacturer of the latest technology is determined.

After you have determined what the technology is and cost it out, you should be able to be in a fairly good position to argue the merits of what the rate should be. But basically it should be based on the costs of providing that service.

There is also, I might add, at the present time the Information Superhighway and like everybody else, I've been scratching my head on that one. How would it work? But if a supplier who now has a service to a consumer, you can't duplicate it in a public -- in other words, you can't bring in two water systems to your home as a competing entity. You can't have two different distributors of information on two different lines to a household although that is being done at the present time.

If you get strictly on one service like telephones, if you get two competing companies providing in that -- in the consumer's premises that makes it difficult to reduce the rates of the service.

In other words, the building, the equipment, the lines and everything costs money, if another competing company has to do the same thing, then naturally one side or the other has to lose. And if -- it's difficult. It's one

Printed Page 2432 . . . . . Thursday, February 24, 1994

of the big problems that solve themselves and you can't sit down and try to figure out.
Q. Thank you. One last question, is there anything that would -- you plan to fully serve out your term if elected to the Public Service Commission?
A. Yes.
Q. Mr. Chairman.
THE CHAIRMAN: Any question from any member of the committee? Representative Huff.
EXAMINATION BY REPRESENTATIVE HUFF:
Q. I don't even presume to try to pronounce your name.
A. Oh, give it a try.
Q. Can I call you Eugene?
A. Yes, but give it a try. It's not that difficult.
Q. Novgorodoff?
A. Terrific. You're doing well.
Q. I may have been mistaken, did I hear you say that there should be an opportunity for the unregulated portion of particular industry, should it exist, to pass those costs into the regulated portion?
A. Oh, no. No. I didn't mean that at all.
Q. Well, I wanted to make that --
A. The regulated portion should be regulated.
The unregulated portion should -- I mean
unless the laws require it to be put under
regulation, I don't think we should regulate
without having the appropriate laws to put in the
restriction.

You've got to abide by whatever is the law.
Q. Right. That was my only question. I wasn't quite clear.
THE CHAIRMAN: Any other members? Senator Courtney.
EXAMINATION BY SENATOR COURTNEY:
Q. Mr. Novgorodoff, I want to follow up with the questions Mr. Couick asked you.

You have a background sheet here and as I was looking at it, it shows your experience and so forth through 1949 and then it skips from '49 to '59. I noticed you married in '49. I don't know if it that had anything to do with it.

But could you tell us what you were doing from 1949 until 1959?
A. Oh, I was in -- I left China in 1950 and traveled -- in my nervousness, I may have left out that I went to Thailand for a little while and went to Japan. I lived in Japan for a couple of years, then migrated

Printed Page 2433 . . . . . Thursday, February 24, 1994

to Brazil where I worked for the Brazilian telephone company principally. And that's where I tried to introduce the title of telecommunications engineer into the -- into the vocabulary and --
Q. So did you live in Brazil until '59?
A. That is correct.
Q. How long have you lived in the Charleston area?
A. Seven years. I came to Charleston in 19 -- in December 1987 and my wife and later on our children came to visit and they fell in love with the area. We were happy to make the move.
Q. That was your first time being in South Carolina also?
A. That is correct.
Q. You show that you worked, I believe, until 1981 and did a small job in 1990 including installation of a local telephone there?
A. That is correct.
Q. But other than that, have you been retired since 1981?
A. Yes. I haven't been able to find suitable work, but I've been kept busy.
Q. Mr. Novgorodoff, you ran for City Council in North Charleston, I believe?
A. That is correct.
Q. Do you have any opinion about the regulations of the municipal -- of utilities that are owned by municipalities and their ability to compete with private utilities?
A. Well, I haven't really thought very much about those, but they should be covered by whatever regulations that the law imposes on them, yes. I'm still debating whether they should be unregulated. But you do provide a facility and probably it's just as well to have them regulated. You can argue both ways on the question.
Q. Thank you, sir.
THE CHAIRMAN: Sir, I would ask you one question. How many languages do you speak?
A. Well, to start off with in Shanghai, I spoke Chinese in the streets about two different dialects.
THE CHAIRMAN: I know that.
A. Russian at home and English and French in school. And I speak Portuguese.
THE CHAIRMAN: Five languages?
A. And Russian. Yeah, five languages.
THE CHAIRMAN: You could understand that crowd if you ever get up there.
A. Well, you know, mother is -- mother is --

Printed Page 2434 . . . . . Thursday, February 24, 1994

THE CHAIRMAN: Sir?
A. Mother is -- I mean, necessity is the mother of invention. And also when it's necessary for you to accomplish something, you certainly get off your seat and try to do something.

I remember very distinctly when I came to Brazil, everybody on the ship was studying their little travel books on Portuguese. What I did was try to get to speak to a few people out in the streets. I knew a little French and that helped out a great deal and within the first week, I got to not only speak, but write Brazilian quite -- quite well.
THE CHAIRMAN: Do you speak any Japanese?
A. I beg your pardon?
THE CHAIRMAN: Do you speak any Japanese?
A. No, I didn't -- I never -- I had a prejudice against the Japanese, I'm afraid, because during World War I when I was a Shanghai, they occupied the city and I've seen some very, very cruel things that they did to the people.

And for many, many years I was so very aggravated with the Japanese, but, you know, time passes and people keep on living and -- and you have to forget, to put these things behind you, but the only reason -- my youngest son speaks fluent Japanese, but I was a little aggravated with them and I just didn't care to learn the language.
THE CHAIRMAN: You tried --
A. I wish I did. I wish I hadn't taken that attitude.
THE CHAIRMAN: Thank you so much.
REPRESENTATIVE HUFF: Mr. Chairman, I would submit he would certainly be able to understand lawyers then that come before the PSC.
A. Yes.
REPRESENTATIVE HUFF: They speak a different language, sir.
A. Yes. It's -- it's going to be a very challenging job. I think the future of the telecommunications as well as the distribution of power is going be a very, very difficult problem with the state to solve. There are -- I -- reading the newspapers, I see that in spite of that fact that utility power companies have boundaries, they still come around and steal the other guy's industrial consumers. And, I mean, is that allowed?
RE-EXAMINATION BY REPRESENTATIVE HUFF:
Q. Mr. Novgorodoff --
A. Novgorodoff.
Q. I think your background is very interesting. I wouldn't mind having dinner with you one evening, but I've got two -- I've got an aunt and an uncle who are in Moscow now as missionaries and our daughter is going over there in the --

Printed Page 2435 . . . . . Thursday, February 24, 1994

A. That's terrific.
Q. -- spring, but in light of what you just said, it is somewhat of a difficult issue sitting as a commissioner to deal with those exceptions particularly when you have certain loads that allow the regulated industries then to compete with each other notwithstanding that fact that they have been territorially assigned to certain areas and then layered upon that are certain corridor rights as well. And I was just curious what your thought process might be to dispose of the differences that might arise as a result of that.
A. Well, I think that the thought process has to develop as we grow into these things, you know, in the time to come. You have to develop and see what is the best for the people, really. What serves the people and act accordingly. It will be a process of development.
THE CHAIRMAN: Thank you so much, Mr. Novgorodoff.
A. You're quite welcome, sir.
THE CHAIRMAN: Thank you.
A. And I was very happy to be here.
THE CHAIRMAN: We're going to try to make one more candidate before lunch.
MR. COUICK: And while you're standing if I could administer the oath to you. Please raise your right hand.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. Eugene Novgorodoff

Home Address: Business Address:

9120 DeLancey Circle 9120 DeLancey Circle

North Charleston, SC 29406 North Charleston, SC 29406

2. He was born in Harbin, Manchuria on January 6, 1919.

Social Security Number: ***-**-****.

3. South Carolina Driver's License Number: *********.

South Carolina Voter Registration Number:4 608 707.

4. He was married to Ellen (ne' Chan) Novgorodoff on July 14, 1949. He has two children: Bernard David Novgorodoff, age 45 (Manager of Marketing Research, MILES in Ellchart, IN) and Samuel J. Novgorodoff, age 38 (Technical Managing Editor SONY, Columbia Records in New York).

Printed Page 2436 . . . . . Thursday, February 24, 1994

5. Military Service: He volunteered for service in 1958 but was restricted due to immigrant status and age. He served 4 years with the Shanghai Volunteer Corps (Signals) under the command of the Shanghai Municipal Council (1937- 1941). This was a uniformed, armed, military corps organized to protect the city.

6. He attended the Public School for Boys in Shanghai, China from 1924 to 1936 and St. John's University in Shai, China in 1937. He did not complete his degree due to the war situation and family difficulties. He received 3 years of technical and management training with the Shanghai Telephone Company from 1941 to 1944, and has attended various telecommunications and business management seminars and courses, including:the Advanced Telephone Traffic Engineering Conference at Michigan State University (1969); the Internal Management Training Development Program at New York Central System; the Department of the Navy Ship Managers 3-M Course (1975); Western Union's Principles of Supervisory Management Program (1970); and the Dale Carnegie Course in Effective Speaking and Human Relations (1967).

8. In 1991, he was a candidate for the North Charleston City Council, District 8 seat.

9. Through his work for the Shanghai Power Co., a New York based corporation, he attended seminars and took a short course dealing with the costs and management of electric power production using fossil fuel (i.e. coal) for steam-driven generators.
In 1939, he worked for the Public Works Department of the Shanghai Municipal Council in the areas of field engineering; potable water filtering and distribution systems; road construction; and the budgeting and cost control of materials and labor in the construction of the city's first modern sewerage disposal plant.
From 1941 to 1945, he worked for the Shanghai Telephone Company, an ITT subsidiary. This was a 3-year apprenticeship dealing with the engineering, manufacture, installation, and operation of complete telephone switching systems, including wire transmission facilities. He also worked with capital costs, revenues, the formulation of rates, and tariffs of all service categories.
From 1945 to 1949, he worked at the U.S. Naval Port facilities in Shanghai, China. This work involved the installation and maintenance of teleprinter and radio systems; spectrum assignments;

Printed Page 2437 . . . . . Thursday, February 24, 1994

and coded data transmissions for the U.S. Naval HQ operations in Shanghai.
From 1959 to 1963, he worked for General Telephone & Electronics, Inc. in Grinnell, Iowa, in the areas of traffic engineering and toll separations for a 3-state area. From 1963 to 1967, he worked for the New York Central Railroad, where he developed and implemented the first nationwide "computerized" data switching center for train information exchange between stations. This technology replaced teleprinters.
From 1967 to 1969, he worked for ITT World Communications, Inc. in New York, where he planned, installed, calculated, and forecast quantities of transmission facilities between the United States and other countries. He also determined the costs of materials, tariffs, and usage fees for the operation of data and voice links via radio and sea cables. This work involved the evaluation of the first satellite systems.
From 1971 to 1973, he worked for MITRE Corp. in Bedford, MA. This work involved the specification and development of the first digitized switching and transmission systems and fiber optic networks (short and long haul). He also developed new concepts and applications for voice, facsimile, and inter- active TV.
From 1979 to 1981, he worked for Bechtel, Inc., on the construction of a Jubail (industrial) city in KSA. This involved the first applications of "digitized" and "computerized" telephone exchanges (e.g. CIT Alcutels B-10 and LME's, AXE-10, and MOTOROLA's cellular telephone networks). His work included specification, bidding, and performance evaluations.

19. In 1990, he worked for the U.S. Agency for International Development, where he supervised AT&T International's installation of a local telephone exchange at Egerton University in Njoro, Kenya. He was also employed by TransAmerica Energy Associates in Atlanta, Georgia.

27. Civic, charitable, etc. organizations:He is a member of the Massachusetts Shanghai Lodge (masonic).

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30. Five letters of reference:

(a) Mr. John H. "Duck" Neal

9106 Lafayette Court

Charleston, SC 29406

(803) 764-2930

(b) Mr. Henry M. Proveaux

8830 Salamander Road

North Charleston, SC 29406

(803) 553-5690

1043 Loyalist Lane

Mt. Pleasant, SC 29464

(803) 884-2610

(d) Mr. Roger M. Young

2179 Ashley Phosphate Road

North Charleston, SC 29406

(803) 572-5566

(e) John E. Bourne

4930 Rivers Avenue

North Charleston, SC 29419

(803) 747-7570

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

FURMAN M. REYNOLDS, III, having been duly sworn, testified as follows:
MR. REYNOLDS - EXAMINATION BY MR. REYNOLDS:
Q. If would you share with Ms. Hammond, your driver's license or your voter registration certificate. When ya'll send these wallet, the State paper thinks ya'll are sending money up here.

Mr. Reynolds, your address is listed on your voter registration certificate as 113 Ashley Hill Drive in the city of Goose Creek, South Carolina, 29445. Does that continue to be your address?
A. It does.
Q. Thank you. Would you please state for the record your full name, Mr. Reynolds?
A. Furman Manley Reynolds, III.
Q. Thank you. You received a copy of your Personal Data Questionnaire Summary when you came in this morning and you had an

Printed Page 2439 . . . . . Thursday, February 24, 1994

opportunity, I believe, to review it. Were there any corrections that you wish made to that before we enter it into the public part of this record?
A. No. It's correct.
Q. Thank you. Would you briefly for the committee's benefit state what prompted your interest in serving on the Public Service Commission?
A. I've been in public service since the early seventies. I know a great deal about it and I thought I could be of service to the state.
Q. You have served in a number of capacities working with municipal utilities over the years. In fact, at the current time, you are employed I believe it is by the town of Mount Pleasant. Is there a commissioner? Is that it or --
A. No, sir. I'm a Director of Public Service for the town of Mount Pleasant. That's an appointed employee.
Q. What utilities do they offer in the town of Mount Pleasant?
A. The utilities are offered under the -- Mount Pleasant is the water and sewer, it's separate. It comes under the laws of the CPL (phonetic).
Q. And those are not subject to regulation by the Public Service Commission; is that correct?
A. No, sir.
Q. So you've not had occasion to either practice or appear as a witness or whatever before the Public Service Commission of this state?
A. No, sir. That is correct.
Q. Do you own any utility stock, Mr. Reynolds?
A. No, sir.
Q. Does your wife own any utility stock?
A. None.
Q. You list your children, but you did not list on your PDQ their employers. They were of such age, I was not sure whether they were employed by anyone or not. Your son Furman, the IV and it might have been your daughter, I believe, Cheri Galloway, age 21. Are they
employed?
A. My son is in the Army and the daughter is a student.
Q. Okay. What would you consider to be the one or two hot problems or topics or concerns that are confronting the Public Service Commission today, Mr. Reynolds?
A. Maintain an equitable rate system and within that system make sure it's fair to both parties, i.e., consumer and the provider.
Q. And what would be another topic perhaps that would be of concern to you or you think should be of concern to the PSC?

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