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

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| Printed Page 2640, Feb. 24 | Printed Page 2660, Feb. 24 |
Printed Page 2650 . . . . . Thursday, February 24, 1994
A. Within the commission, the staff would give us the data that we needed to make our decision. They would research any rate increase case that came and any territorial right case. They are the, I guess, professionals that would tell us what we needed to know from both sides and we'd listen, of course, to both of those sides.
Q. That's all my questions, Mr. Chairman.
THE CHAIRMAN: Any questions from any members of the committee? You may be excused, Mr. Hall.
A. Thank you. I appreciate your time.

PERSONAL DATA QUESTIONNAIRE SUMMARY

1. Mr. Richard A. Hall

Home Address: Business Address:

Route 4 Box 618 136 Main Street

Chester, SC 29706 Chester, SC 29706

2. He was born in Chester, SC on July 16, 1943.

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

3. S.C. Driver's License Number: *********;

S.C. Voter's Registration Number: 1204540.

4. He married Lois Moffatt Brice on August 22, 1964. He has three children: Richard A. Hall, Jr., age 27, mental health counselor; Tom B. Hall, age 26, law student; and Edith P. Hall, age 22, college student.

6. He graduated from Chester High School in 1961, and received a B.S. in Business Administration from the University of South Carolina in 1967.

9. He worked for Duke Power in the marketing department from 1967 to 1972, and from 1972 to present as owner and operator of Richard Hall Real Estate in Chester.

10. He is presently the owner of Richard Hall Real Estate and a director of the Chester County Natural Gas Authority.

26. Professional organizations: Chester Co. Board of Realtors (various offices); Chester Co. Home Builders Assoc. (director); Chester Co.

Printed Page 2651 . . . . . Thursday, February 24, 1994
Hospital (former director); Chester Co. Natural Gas Authority (director).

27. Civic, charitable, etc. organizations:Chester A.R.P. Church; Chester Co. Chamber of Commerce; Chester Downtown Development Assoc.; Chester Rotary Club; Investment Club; Chester Men's Golf Assoc.

29. Five letters of reference:

(a) Dwight L. Pearson, Pastor

Chester Associate Reformed Presbyterian Church

109 Wylie Street

P.O. Box 174

Chester, South Carolina 29706

(803) 385-2228

(b) W. Wallace Boyd, Manager

Founders Federal Credit Union

P.O. Box 1079

72 By-Pass

Chester, South Carolina 29706

(803) 377-1175

(c) T. Randolph Ligon

First Union National Bank

P.O. Box 10

Wylie Street

Chester, South Carolina 29706

(803) 385-2181

(d) J.B. McDowell

P.O. Box 473

Lancaster Street

Chester, South Carolina 29706

(803) 385-5490

(e) R. Carlisle Roddey, County Supervisor

P.O. Drawer 580

Chester, South Carolina 29706

(803) 385-5133

30. Fifth District.

MR. COUICK: Thank you. Mr. Arthur, while you're standing if you'll raise your right hand. I'll go ahead and swear you in.

Printed Page 2652 . . . . . Thursday, February 24, 1994
WARREN D. ARTHUR, IV, having been duly sworn, testified as follows:
MR. ARTHUR - EXAMINATION BY MR. COUICK:
Q. Mr. Arthur, I'm reviewing your license now. It indicates that you reside at 516 Woodland Drive, Hartsville, South Carolina, 29550. Your voter registration card indicates the same address. Am I correct in that is in Darlington County?
A. Yes.
Q. And you continue to reside there now?
A. Yes.
Q. Have you had an opportunity to review your Personal Data Questionnaire?
A. Yes.
Q. Is it correct or are there any corrections that you'd like made?
A. Well, there is one addition. Under professional organizations --
Q. Please just go ahead and indicate that.
A. -- I'm a member of the alumni for the National Judicial College.
Q. We'll include that. Mr. Arthur, please tell the committee why you'd like to continue to serve on the Public Service Commission.
A. Well, I'm -- let me just say, I'm thankful for the opportunity I've had to serve for the last three years and it's been a very challenging and very satisfying time in my life and I feel that I've been able to make a contribution, significant contribution, and I feel good about that. And I really feel that I would do the State a service by continuing.
Q. You have served on the commission now probably, is it, three, four years?
A. Three years.
Q. Three years. What would you point to as probably your most positive accomplishment while at the commission?
A. Well, I think when you have a situation where everybody has been there for at least ten years, when I came on board, just bringing of fresh new ideas and -- to the commission, being able to take a kind of a -- at least early on, an outsider's view of the commission and to try to bring balance where I thought there wasn't balance. I have aggressively tried to do that.
Q. You mention balance, what was the type of imbalance that you found when you arrived at the commission, Mr. Arthur?
A. Well, I think typically, you know, when people are doing something for a long period of time, they get comfortable and sometimes it's hard to see where there might be an imbalance. I don't think it was anything intentional. It's just that --
Printed Page 2653 . . . . . Thursday, February 24, 1994
Q. Sure. But what was the imbalance if there was an imbalance whether intentional or not?
A. Well, there were some rate hearings or something like that where I felt that I needed to make certain and aggressively try to see to it that the consumers' interests were represented, or fairly, in order to bring a balance in our decision.
Q. Did you feel like that you were successful?
A. Yes, sir. In a number of cases, I was successful.
Q. Is there an imbalance at the commission now?
A. Well, you know, in each case, you know, you have to -- there is always a difference of opinion. And for -- not always, but most of the time and I've been generally pleased with what's going on on the commission. I think we've been coming out with solid decisions even some that have been overturned by the court that I think have been good decisions.
Q. Is there an imbalance at the commission now, though?
A. I don't think so. I think it's -- I'm comfortable with what's going on at the commission right now.
Q. Do you think the commission operates as a team now or are you a lone ranger when you're out there?
A. Oh, I think we operate -- I don't know whether you want to it operate as a team. There -- we are all friends and all, but without independent opinions about different things, we wouldn't -- I don't think we would get -- the consumers and everybody in South Carolina would get the kind of representation that they need.
Q. What do you think are the one or two big issues coming your way at the commission if you're to be reelected?
A. Well, certainly, the deregulation of the telephone industry. It's just unbelievable the new technology that's coming along, the ability and it's been termed as the Information Superhighway. It has a loose term for trying to incorporate competition and all the technology that's coming down the road into the telephone system as we now know it.

The other thing, one thing I've been working on and I think the future of electricity, one part of it, the nuclear part of it is going to be dependent on the resolving the commercial nuclear waste problem. And I have been directly involved in that. And there will not be any nuclear power plants even planned until that problem is resolved. And I think we need to reserve -- America needs to reserve the nuclear option for the future.
Q. Mr. Arthur, you mentioned earlier the telecommunications aspect and that is something that's gotten lots of scrutiny in the media lately. From a South Carolina Public Service Commissioner's perspective, how much

Printed Page 2654 . . . . . Thursday, February 24, 1994
of that problem are you legally authorized or responsible for handling and what do you see is the public policy issues that you're going to have to confront in the area of the telecommunications revolution?

I understand that the authority and responsibility are somewhat split between the federal and the state level. What are you responsible for doing? What do you hope to accomplish in that area of responsibility and how does that effect public policy?
A. Well, we still have a lot of authority in regulation of the telephone industry. The federal government could at some time in our future usurp that and take some of it for themselves. But I see the main public policy aspect in regards to the commission, and this is something that I feel is important in others areas, too, is to protect the residential customer. To make sure that through this, that these people aren't taken advantage of, that they don't have to finance the changes that are going to happen, that they are protected because in our local companies who are trying to provide service for those people because, you know, in a large -- to a large extent and this industry is being driven by profit which is most
-- you know, I have no problem with that.

But given that, then our job is to protect those people who are even in the future going to have limited opportunities to buy maybe one or two because it probably won't be but more than two lines running into the house. And I don't know whether that's always going to legitimate competition or not.
Q. Mr. Arthur, I believe you were on the commission when you considered the Southern Bell request to include fiberoptic within their rate base; is that correct? This is back in '91, '92?
A. Well, yeah, if it was during that time, then I was on the commission.
Q. Do you -- I'm not asking you to specifically identify your part in the deliberations, but it was the decision of the commission at that time to allow Southern Bell to include fiberoptic in its rate base even though there was testimony given that copper coaxial cable in place at that time clearly delivered enough technological capability to the average household residential user to supply all the service he was looking for that and that the fiberoptic actually may be intended for some other use whether it be cable television or whatever?
A. Right.
Q. The Supreme -- the South Carolina Supreme Court subsequently upheld your decision, but that seems to go against the grain a little bit of what you just said in terms of protecting the residential customer. Does that lady in Hartsville who only uses her phone to call the beauty parlor and her sister really need fiberoptic and should she have to pay to put that

Printed Page 2655 . . . . . Thursday, February 24, 1994
new technology in the ground when copper coaxial already runs in front of her house?
A. Well, I think that we're going to have to go to the fiberoptic in order to stay current and putting it in a house is one part of it. Now, certainly, that's going to be a gradual thing in regards to companies in South Carolina getting it to their house. There are other ways.
Q. I guess my question is -- and I don't mean to cut you off Mr. Arthur. You're correct, I think, technologically, we have to have fiberoptic, but who should pay for it? Who should pay for the installation of fiberoptic?
A. Well, first of all, let me say this, the commission is committed to a concept of universal service and that by definition and by knowing what the commission's positions have been in the past, if we're committed to providing -- we're not letting the people that you just described having to pay for this transition.
Q. Well --
A. And our companies that operate in South Carolina know that we are not going to let those people bear the burden of this transition. And that in our view is our most important job.
Q. Well, if that's the case, why was the fiberoptic included in the rate base in Southern Bell?
A. Why was it? Well, when we make a decision, we not only look at rate base, but we look at the rates. And sometimes we will allow things into the rate base as long as it doesn't effect the rate. We have the ability to control and set the rates and the rate base. Just because the rate base changes, that doesn't mean the rate goes up.
Q. In fact, there was testimony here last week that Southern Bell had bragged, I believe, some four or five years ago that it would never have to seek another rate increase before the South Carolina Public Service Commission because this technology was allowing it to keep rates down while all the while increasing technology. Is there anything wrong with reducing rates?
A. No. And as a matter of fact, we're going to have a hearing in March that -- and we are probably going to be reducing Southern Bell's rates.
Q. My question is, though, if the residential consumer is subsidizing the industrial and commercial user whether it be the law firm in Hartsville or some large college operation or whatever because the residential customer's paying for part of that fiberoptic installation, why don't you start and do what they call zero based budgeting in the General Assembly? Why don't you do zero base rate base? Why don't you build up from zero and determine what ought to be put on the consumer rather than on the industry?
Printed Page 2656 . . . . . Thursday, February 24, 1994
A. Well, that's an interesting idea. I would like to say this, though, as long as I'm on the commission the residential customer won't be subsidizing the commercial and the large users of the telephone. I would -- you know, my vote -- that -- I don't think that's happening now because we haven't gotten far enough in the installation of the -- in other words, they -- Southern Bell, by comparison to a lot of other states in South Carolina is -- in general South Carolina is behind in the installation of fiberoptics. So these issues, even though, we may have approved that, they haven't come to us for approval of changes in the rates and -- because of it.
Q. Mr. Arthur, if I could ask you about a couple of other topics that seem to be on some folks minds. One is the environment at what -- in that balance between the consumer and industry, the consumer wanting cheap rates and industry wanting -- excuse me, not -- the regulated industry wanted a fair rate of return, there is often a third issue and that's the environment. Is the PSC specifically empowered with any authority to look after the environment?
A. Well, we had a Siting Act which you -- the Utility Siting Act. We went through an extensive review of the new plant going to be put down in Cope by the SC -- South Carolina Electric and Gas. And we heard from environmentalists. We looked at the -- and had to give them a certificate to decide whether or not we felt that that was the most environmentally or had to give it basically our approval, so we certainly had to look --
Q. So that's a responsibility ya'll have independent of DHEC or anybody?
A. Right.
Q. That's one that's placed --
A. DHEC, of course, participated in that proceeding and we heard from them. They had to sign off on it before we did.
Q. The testimony that ya'll received from these experts on the environment whether you checked with state agencies or whatever, do interveners have a chance to cross examine these folks?
A. Yes, sir. We try to keep our hearings as open as possible.
Q. There has been some criticism of the Public Service Commission that you actually took testimony by telephone in the Citing case on the Cope plant; is that true? That you took testimony from a wildlife officer about the impact on threatened and endangered species by telephone that didn't allow for cross examination by interveners?
A. You mean during the proceeding?
Q. During the Siting proceeding.
Printed Page 2657 . . . . . Thursday, February 24, 1994
A. I don't recall any testimony by telephone now.
Q. Whether it be by fiberoptic line or not, I mean.
A. Well, I don't recall that now. That's something I've never heard about and I don't --
Q. Would that be appropriate?
A. If -- you know, if both parties agree to -- if all the parties agreed to it, it would be appropriate in my opinion.
Q. Right.
A. But short of that, no, we would continue the hearing or we would allow for that person to come in if he couldn't be there at that time. Frequently, though, we have situations where -- and, you know, as a lawyer, you know, we try to give courtesy if somebody has a legitimate problem and -- but we -- we're involved in something like that now where we're -- we constantly are trying to allow for people to hold cases open, so that people can come in and give actual testimony and have to give other parties an opportunity to cross examine them.
Q. Just a couple of short questions, Mr. Arthur. The Consumer Advocate, what kind of role do you individually play, vis-a-vis, Mr. Hamm or his assistants before the commission? Is it cooperative or is it -- or what type role do you view yourself in as to their job there?
A. Well, they are essentially just like any other intervener. They are there to --
Q. Do they carry any extra status because they are denominated being the Consumer Advocate?
A. Any extra status?
Q. Status.
A. No, sir.
Q. A couple of terms I'd like to ask you about, one is generational mix, is that a term familiar to you?
A. Yes, sir.
Q. What is that?
A. That's a mix between nuclear, fossil fuel and hydro and other things.
Q. How about wheeling?
A. Wheeling is something that I'm on the Electric Committee
-- Electricity Committee of the national association and wheeling is something that Congress dealt with last year and we thought they might allow for retail wheeling which would be, you know, where some of the industrial customers could buy directly from companies out of state which would have a great potential impact on the system as we know it now, the grid system. But that didn't happen.
Printed Page 2658 . . . . . Thursday, February 24, 1994
But they did allow wholesale wheeling where we have a responsibility to approve those transactions and to control our grid in South Carolina to protect our people.
Q. What are the dangers of wholesale wheeling or are there any if it's not properly regulated?
A. Well, the danger is when -- if somebody buys fuel from somebody -- or electricity from somebody in Texas and that person in Texas suddenly finds himself bankrupt or in some other situation then they can't deliver the electricity, then the -- our local company is going to have to take up the slack because, you know, it either will put a bunch of people out of work or put a bunch of people without heat or cooling.
Q. Mr. Chairman, we've reviewed Mr. Arthur's credit and SLED reports, both were negative in that there were no negative entries.

And one final question, Mr. Arthur, what recommendations would you have for improving this screening process that you're going through right now? What can make it better or more effective?
A. Well, I think that judging from the way all the candidates that I know approached it, I think that ya'll are doing a good job. I have no suggestions at this time.
Q. Thank you, Mr. Chairman. That's all my questions.
THE CHAIRMAN: Any questions from any member of the committee? Doctor Hatton.
EXAMINATION BY DOCTOR HATTON:
Q. Mr. Chairman, I would like to ask him a question. Mr. Arthur, how many times have you just in general -- just a general sense of how many times you have voted against the staff's recommendation, the staff's analysis?
A. Probably -- against the staff or against --
Q. Yes. When the staff comes in with an analysis or set of information or whether or not they bring you a recommendation, how many times have you disagreed with what they bring to you?
A. It would be somewhere between ten and possibly as high as 30 percent.
Q. Quite a few? A few? I don't quite know what --
A. Quite a few.
Q. -- that means.
A. Quite a few. I don't rubber stamp anything.
Q. You're not feeling sort of out of the stream over there? Are you feeling that that is what the other commissioners are doing and that you are sort of a fitting in with where they are or that you are making a distinctive stand?

Printed Page 2659 . . . . . Thursday, February 24, 1994
A. I don't view myself as fitting in with anybody, but I don't view myself as a radical person either, but I -- we have -- let me say this, we have an excellent staff and for the most part, they are right on target and they present us information where we can make an intelligent decision. And also for the most part, they don't -- a lot of times they don't make recommendations. They present information for us to make a decision.
Q. Right. Thank you, Mr. Commissioner.
SENATOR COURTNEY: Mr. Chairman?
THE CHAIRMAN: Senator Courtney.
EXAMINATION BY SENATOR COURTNEY:
Q. Mr. Arthur, you've been very open with your records here as far as divulging your salary and expenses and trips and that kind of the thing. And you're the only one that I've seen who has actually done that and I want to just ask you, and I'm not saying that you did anything wrong at all. I just ask you, the trips that you've made and so forth, the expenses that you have incurred from those trips, the trips to DC and New Orleans and Orlando and a few other places, are those fairly typical of members of the commission?
A. No, sir. Not of a South Carolina commissioner, but they are typical of members of other commissions. Mr. Yonce -- Commissioner Yonce does a good bit of traveling because he's been actively involved in the national association and he was the president.

I'm the president of Southeastern Association of Utility Commissioners and because of that, I get asked to speak and because of my active involvement in the -- primarily, my travel is around my involvement in trying to find a solution for the commercial nuclear waste disposal issue and that -- because of that, it requires me to travel a good bit.
Q. So most of these trips were because of your position as president of the Southeastern --
A. Yes, sir. Well, some of them were and the others were -- had to do with the -- my role as the -- on the nuclear subcommittee of the Electricity Committee which deals with nuclear waste.
Q. Is that a part of our government or is that Southeastern you're talking about?
A. Well, it's part of the national committee. When I came on the commission, I -- you know, I tried to do -- get involved, so I could become the best commissioner that I could and I felt one way to do that and was again involved with the national organization. And I have, I believe, benefitted and I think South Carolina has benefitted from my involvement in the -- in those organizations.

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