1 1 2 3 PUBLIC SERVICE COMMISSION 4 5 PUBLIC HEARINGS 6 7 8 9 Tuesday, February 12, 2013 10 11 12 9:00 a.m. 13 14 15 16 17 1105 Pendleton Street Gressette Building, Room 207 Columbia, South Carolina 18 19 REPORTED BY: KATY MCCORMICK Stenographic Court Reporter 20 21 22 23 24 25 ----------------------------------------------------------COMPUSCRIPTS, INC. A Full-Service Court Reporting Agency Post Office Box 7172 Columbia, South Carolina 29202 803-988-0086 1-888-988-0086 www.compuscripts.com 2/12/2013 2 1 MEMBERS IN ATTENDANCE: 2 3 4 REPRESENTATIVE MIKE FORRESTER 5 REPRESENTATIVE WILLIAM E. SANDIFER 6 SENATOR C. BRAD HUTTO, CHAIRMAN 7 HOUSE STAFF ANDY FIFFICK, ESQUIRE 8 SENATE STAFF HEATHER ANDERSON, ESQUIRE 9 REPRESENTATIVE ERIC EBERSOLE 10 REPRESENTATIVE JOHN STEVEN SIMMONS 11 12 13 14 15 16 17 18 19 20 21 22 23 24 (INDEX REAR OF TRANSCRIPT) 25 www.compuscriptsinc.com 2/12/2013 3 1 Thereupon the following proceedings were held at 9:44 a.m.) 2 3 SENATOR HUTTO: Good morning, 4 everybody. 5 hearing on candidates for the Public Service 6 Commission District 7 public screening. 7 following the same format we did yesterday. 8 We'll have the staff asking preliminary questions 9 and member questions then we'll go into a brief Let's get started. This is a public We're 10 executive session and then we'll come back in. 11 (O'Neal Hamilton enters hearing room at 9:45 a.m.) 12 SENATOR HUTTO: 13 MR. HAMILTON: 14 SENATOR HUTTO: Good morning. Good morning. We're going to get you 15 sworn in and then we'll start with some staff 16 questions and then some questions from members. 17 MR. HAMILTON: All right, sir. 18 (O'Neal Hamilton, was duly sworn, after which testimony 19 began at 9:45 a.m.) 20 MR. FIFFICK: Good morning, Mr. 21 Hamilton. 22 educational background and experience and some 23 other relevant information just so we have that 24 on the record. 25 I'm going to briefly summarize your MR. HAMILTON: Okay. www.compuscriptsinc.com 2/12/2013 4 MR. FIFFICK: 1 Mr. Hamilton obtained an 2 associates degree from North Greenville Junior 3 College in 1953. 4 numerous continuing education courses during the 5 past five years. 6 programs administered by the South Carolina 7 Public Service Commission, neighborhood annual 8 summer and winter meetings as well as conferences 9 focusing on emerging issues facing the State's 10 Mr. Hamilton has attended Some of these include in-house Public Service Commissioners. 11 From 1953 to 1957 Mr. Hamilton was the 12 agency manager for the Life Insurance Company of 13 Georgia. 14 15 16 From 1957 to 2003 he served as the agency manger of Farm Bureau Insurance. Mr. Hamilton was elected to the 17 Bennetsville City Council from 1978 to 1980 where 18 he was chairman of the utility committee for 19 oversight of city electric, gas, water and waste 20 water departments. 21 In 1990 he was elected to the South 22 Carolina Highway Commission and served there 23 until 1992. 24 25 Form 1992 to 2004 Mr. Hamilton was elected to the Marlboro County council. www.compuscriptsinc.com 2/12/2013 5 Mr. Hamilton was elected to the Public 1 2 Service Commission in 2004 and he has served 3 continuously until the present. Mr. Hamilton, other than changes that 4 5 you have already submitted do you have any other 6 changes that you would like to make to your 7 Personal Data Questionnaire that you submitted 8 with your application? MR. HAMILTON: 9 MR. FIFFICK: 10 No, sir. Thank you. I would 11 request that Mr. Hamilton's Personal Data 12 Questionnaire be entered into the record with any 13 confidential information being redacted. (EXH. 1, O'Neal Hamilton's Personal 14 15 Data Questionnaire, marked for identification.) MR. FIFFICK: 16 As part of our background 17 investigation of the candidate we obtained a 18 credit check, driver's license check and SLED 19 check. 20 that the credit check, driver's license check and 21 SLED check revealed no negative results for Mr. 22 Hamilton which should be brought to the attention 23 of the subcommittee. 24 25 And for the record I would like to state Before we begin questioning would you like to give a brief opening statement? www.compuscriptsinc.com 2/12/2013 6 MR. HAMILTON: 1 Yes, I would. First off 2 I would certainly be remiss if I didn't thank 3 each of you for your service and the part that 4 you play with the Public Service Commission. 5 have been a great support for us and I think you 6 should take pride in the fact that you have set 7 forth and built a model commission for the entire 8 nation. 9 how we do business and we do too, and the credit You I know many of you get requests about 10 certainly goes to the committee and I thank you 11 for that. 12 statement, I would like to review if I could a 13 few of the things if it hadn't been already done 14 by some other commissioners the things that are 15 facing the commission at this time, the things 16 that we are working on if that would be in order, 17 Mr. Chairman. If I have time for a short opening 18 SENATOR HUTTO: 19 MR. HAMILTON: That's fine. I think the first thing 20 that I need to discuss with you is that trying to 21 build things to get from this committee to the 22 next step, and I think my experience and work 23 with the Base Load Review Act and VC Summer 2 and 24 3 are very important things and could be an 25 experienced commissioner over the next few years www.compuscriptsinc.com 2/12/2013 7 1 in this endeavor are going to be very important 2 because the greatest expense of the nuclear 3 facilities are coming up in the next two or three 4 years. 5 know under the Base Load Review Act, SC&G 6 followed the combined application which gave them 7 the signing and the construction. 8 unanimously decided that this would be used and 9 useful and in the public interest, so where we We have had public hearings as all of you The commission 10 are now is we followed the prudencey of the cost 11 of the costs that occur that are allowed under 12 the construction. 13 basis. And this is done on an annual The ORS has kept us well informed 14 15 because they have hands on and they follow what 16 happens daily on the construction at the nuclear 17 plants. 18 go to NERU (ph) and our commissioners sit around 19 the table I think we're better informed on 20 nuclear construction than any other commissioners 21 in the nation. 22 SCANA's reports that they give us. 23 point this out, the need for the experience is 24 when we first started the nuclear project we had 25 a few people that had environmental concerns and We receive quarterly reports. When we And this is because of ORS and www.compuscriptsinc.com The reason I 2/12/2013 8 1 these were mostly with the waste. 2 is a problem that exists that we hope will soon 3 be solved. 4 anti-nuke and this was not a big thing. 5 reached a settlement with most all the parties as 6 we went forward with the construction. 7 And this still We had some folks that were just And we At our last prudencey test we started 8 hearing voices from public systems of abandonment 9 which the project is moving forward, it's needed 10 and useful and has been proven. 11 next few years when the costs are the highest 12 we're going to have more concerns from members of 13 the public about nuclear construction because of 14 the costs, and I think you need experienced 15 commissioners that have embraced the Base Load 16 Review Act. 17 So I think the We also, as you are aware, have the 18 joint dispatch that's been agreed upon between 19 Progress and Duke. 20 We have got over $125 million that are part of 21 the settlement that ORS worked with Duke that our 22 ratepayers should receive. 23 understand what they are and can help protect and 24 see that ratepayers get justly what they should 25 get over the next period of time. We have a one year look back. If I'm there I www.compuscriptsinc.com 2/12/2013 9 Cyber security is a big issue. 1 It's 2 something that we discuss daily in our weekly 3 briefings with the commission. 4 that has to be done. 5 in Baltimore these young and bright people that 6 have all the ability with the cyber security tell 7 us that any unit that we have can be hacked. 8 this is discouraging and so this is an important 9 thing that your commission is going to be working 10 11 This is something At a neighborhood meeting And on. We already have been informed that both 12 Duke and Progress will have a rate increase 13 within this year or early next year. 14 something else that's important for the company 15 and ratepayers' experience. 16 have an aging infrastructure that is being 17 changed daily. 18 moving fast from coal to gas. 19 that in the base rate that we have to be 20 concerned and note that we handle the right way. 21 All the experts that I know and follow say that 22 nuclear should be a part of the mix and must be a 23 part of the mix. 24 we are incurring now are going to be a great 25 benefit for the next 50 years to ensure that This is As you all know we The former generation has been These are things And I believe the expenses that www.compuscriptsinc.com 2/12/2013 10 1 South Carolina has reliable and clean energy and 2 nuclear is going to be a part of that. Mr. Chairman, I appreciate the time you 3 4 have given me. MR. FIFFICK: 5 Thank you, sir. Could 6 you please state your name and home address for 7 the record. MR. HAMILTON: 8 9 10 706 Lake Shore Drive, Bennetsville, South Carolina 29512. MR. FIFFICK: 11 12 Are you a registered voter? 13 MR. HAMILTON: 14 MR. FIFFICK: 15 Gordon O'Neal Hamilton, Yes, sir. In which congressional district are you registered to vote? 16 MR. HAMILTON: 17 MR. FIFFICK: Seventh. Could you describe an 18 ordinary work day for you both at the commission 19 offices and otherwise. 20 MR. HAMILTON: I haven't changed my 21 work schedule since I became a commissioner. I 22 purchased a condo in Columbia so I could be here. 23 I normally come in on Monday. 24 to meet with staff members on problems and things 25 that are of importance to both of us. It gives me time www.compuscriptsinc.com Normally 2/12/2013 11 1 on Tuesday we have briefing sessions and some 2 meetings in the afternoons. 3 we normally have transportation meetings. 4 Wednesday afternoon we have the commission 5 meeting. 6 hearings and workshops. 7 free and I return home to do work from there and 8 answer telephone calls, etcetera. 9 On Wednesday morning On And normally on Thursday we have MR. FIFFICK: And normally Friday is Thank you, sir. Please 10 describe your experience and any expertise you 11 have in any of the following areas and include 12 the time you've been engaged in these issues. 13 Energy issues, telecommunications issues, 14 consumer protection and advocacy issues, water 15 and waste water issues, finance, economics and 16 statistics, accounting, engineering or law. 17 MR. HAMILTON: If we start with law I 18 have none of that. I am not an attorney, but we 19 do have some excellent attorneys on our staff 20 that give us legal advice that we need. 21 other subject matters that you talked about I 22 have been involved with those for a number of 23 years through the fact that on the municipal 24 association I was the chairman of the water and 25 waste water committee, public utilities which www.compuscriptsinc.com On the 2/12/2013 12 1 also include the electric. 2 electric city. Bennetsville is an I took accounting in school and in the 3 4 insurance business, in running a business, an 5 agency you certainly have to watch the money and 6 see that it's got to the right place. 7 have the expertise, some expertise in this that 8 matter. 9 would not get in one's way. I'm certainly not an accountant and I I'll be happy to answer any other 10 11 I think I questions that you might have about this. MR. FIFFICK: 12 Mr. Hamilton, how do you 13 generally prepare for a hearing and how long does 14 it take to prepare for a typical electric, 15 telecommunications, natural gas, water or sewer 16 case? MR. HAMILTON: 17 Well, at any docket 18 that's open for a rate case of these lines we 19 have six months from start to finish to issue an 20 order. 21 scale in the nation. 22 know, is given and then you have rebuttal 23 testimony and re-rebuttal. 24 made available to the commissions we have time to 25 study the testimony prior to the case to be ready And this I think is the fastest time But testimony, as you well As this testimony is www.compuscriptsinc.com 2/12/2013 13 1 on the day that the case starts. We then -- a 2 typical viewing depends on what hearing it might 3 be, but it could last a week or two weeks and 4 then the commission has to make a decision, and 5 that's done in a way that we don't violate any 6 laws or anything else, that we work together and 7 then we meet with -- if it's not a majority three 8 commissioners can get together and discuss the 9 issues. And we keep splitting around and we end 10 up with a consensus that we feel is in the best 11 evidence for the company and the ratepayer. MR. FIFFICK: 12 Thank you, sir. What 13 type of contact do you have with commission 14 staff? MR. HAMILTON: 15 It's an excellent 16 contract. 17 commission and they call on me and I call on them 18 when I have a question. 19 the quality of the staff that we have and the 20 leadership that we have under our chief clerk, 21 Joshua Boyd. 22 We have an open-door policy within our I can't say enough about And it's like a family. MR. FIFFICK: Thank you, sir. If you 23 were approached by someone wanting to discuss a 24 matter that is or may become an issue before the 25 commission in a proceeding, how would you handle www.compuscriptsinc.com 2/12/2013 14 1 2 that situation? MR. HAMILTON: I would refuse to do it. 3 If that conversation continued one or two people 4 would be in trouble. 5 that happen to me. 6 And thank God I haven't had MR. FIFFICK: Thank you. Are you 7 familiar with the 2006 advisory opinion issued by 8 the review committee dealing with attendance of 9 legislative receptions? 10 MR. HAMILTON: 11 MR. FIFFICK: Yes, I am. And are you familiar with 12 the first decision at its meeting of January 15 13 of this year in which they clarified the 2006 14 advisory opinion. 15 MR. HAMILTON: 16 MR. FIFFICK: Yes, sir. Have you attended any 17 legislative receptions since receiving the 18 advisory opinion? 19 MR. HAMILTON: 20 MR. FIFFICK: 21 22 No, sir. What's the appropriate demeanor for a commission? MR. HAMILTON: Well, I think a 23 commissioner should -- I think perception is 24 important and I think that we should act in a 25 manner that would bring credit to the commission www.compuscriptsinc.com 2/12/2013 15 1 at any time. I am not sure exactly where you 2 want me to go with this but my feeling is that we 3 should be unbiased and we should reflect credit 4 on the commission and on this committee. MR. FIFFICK: 5 And do you feel that's 6 just while you're on the bench or is that an 7 all-the-time 24/7 thing? MR. HAMILTON: 8 9 This is the way you walk. MR. FIFFICK: 10 11 No, sir. Is there ever a role for sternness or anger on the part of a commissioner? MR. HAMILTON: 12 Well, I think if you 13 have witnesses that would totally get out of 14 order I think sternness. 15 there's no place for it. MR. FIFFICK: 16 But I think anger, And Mr. Hamilton, has the 17 job as commissioner been as you expected it would 18 be? 19 MR. HAMILTON: It's been a learning 20 experience since the first day and it will be one 21 today when I get back to the briefing at 11:00. 22 MR. FIFFICK: And how would you rate 23 your performance since being elected 24 commissioner? 25 MR. HAMILTON: I have tried to act in a www.compuscriptsinc.com 2/12/2013 16 1 way that would bring credit to the committee and 2 I have tried to be up on each issue, and I think 3 I've been able to accomplish this. 4 you look at the reports that you would see staff. 5 And from the people that have appeared before the 6 committee will bear this out. MR. FIFFICK: 7 Thank you. I believe if You touched 8 on this previously. Please explain the general 9 rule regarding ex-parte communications. MR. HAMILTON: 10 If you are involved in 11 an ex-parte communication there's certain rules 12 and guidelines that have to be followed at once. 13 You would have to report the matter at once, once 14 this has happened. 15 post it so all parties would be aware and what 16 was discussed and regardless of how the matter 17 was received, telephone communications or 18 electronic e-mail or whatever, it has to be 19 disclosed. 20 The parties have 10 days after they receive it to 21 find whether or not action should be taken. 22 could mean that you would be disqualified from 23 the hearing. 24 resolved it will go to an ALJ that will bring 25 resolvement to the matter. You would have to put it -- All parties have to be aware of it. It If it's resolved -- if it cannot be www.compuscriptsinc.com 2/12/2013 17 MR. FIFFICK: 1 Thank you. You touched 2 on this before but please describe the 3 statutorily stated purpose and operation of the 4 Base Load Review Act of 2007 to include a 5 discussion of contingent and capital costs. MR. HAMILTON: 6 The Base Load Review Act 7 was a blessing that was passed and many of you in 8 here had a great deal to do with that and we 9 appreciate that, but gave us a roadmap to 10 continue the large generation of primary nuclear 11 -- or if clean coal is renewed it will be a part 12 of it. 13 two parts that you can have a sign-in act or you 14 can have a combined act. 15 sign-in act, SCANA took the combined act and they 16 are moving forward with it. 17 Review Act capital costs that can't be recovered 18 it would be prudent with the signed preparation, 19 licensing fees and preparation costs, costs of 20 construction, these are the ones that come to 21 mind. But under the Base Load Review Act it's MR. FIFFICK: 22 Duke has elected a Under the Base Load And would you care to 23 comment further on the difference or the 24 relationship between contingent and capital 25 costs? www.compuscriptsinc.com 2/12/2013 18 MR. HAMILTON: 1 Contingent costs has 2 been a matter that has been I think resolved by 3 the General Assembly is that those contingent 4 costs are set aside and handled at a later date. 5 The capital costs are the ones that we deal with. 6 They put a contingency in the budget but until 7 it's spent it's not a part of the project. MR. FIFFICK: 8 9 housekeeping questions for you now. Have your sought or received the pledge 10 11 I have got some of any legislator prior to this date? 12 MR. HAMILTON: 13 MR. FIFFICK: No, sir. Have you sought or have 14 you been offered a conditional pledge of support 15 of any legislator pending the outcome of your 16 screening? 17 MR. HAMILTON: 18 MS. BENSON: No, sir. Have you been asked by any 19 third parties to contact members of the General 20 Assembly on your behalf before the final and 21 formal screening report has been released? 22 MR. HAMILTON: 23 MR. FIFFICK: No, sir. Are you aware of any 24 friends or colleagues contacting members of the 25 General Assembly on your behalf? www.compuscriptsinc.com 2/12/2013 19 1 MR. HAMILTON: 2 MR. FIFFICK: No, sir. Are you familiar with the 3 48-hour rule that prohibits a candidate from 4 seeking pledges for 48 hours after the report has 5 been submitted to the General Assembly? 6 MR. HAMILTON: 7 MR. FIFFICK: 8 MR. HAMILTON: Yes, sir. MR. FIFFICK: 10 Thank you, sir. Mr. Chairman, I have no further questions. SENATOR HUTTO: 12 13 And finally do you plan to serve your full term if reelected? 9 11 I am. questions? Any members have any Representative Sandifer. REPRESENTATIVE SANDIFER: 14 15 Mr. Chairman. 16 again. Thank you, Commissioner, good to see you 17 MR. HAMILTON: Good to see you. 18 REPRESENTATIVE SANDIFER: Let me go 19 back to some of your PDQ information as well as 20 some of the things that you've answered. 21 you were on the bench for city council you 22 indicated that you were the chairman of the 23 electric, gas, water and waste water. 24 were in that position from whom were you securing 25 electrical service? www.compuscriptsinc.com When When you 2/12/2013 20 MR. HAMILTON: 1 2 At that time Progress Energy. 3 REPRESENTATIVE SANDIFER: 4 contractual agreement that goes out for bid? MR. HAMILTON: 5 Yes, sir. Is it a These are 6 long-term contracts but they go out for bid. 7 REPRESENTATIVE SANDIFER: When you say 8 long-term give me an idea of what we're talking 9 about. 10 MR. HAMILTON: 11 REPRESENTATIVE SANDIFER: 12 13 Ten years. Some of them are five or 10. One of the things that you indicated 14 with regard to the VC Summer plant is that you're 15 now starting to hear voices from the public about 16 abandonment. 17 they're saying and give us some rationale if you 18 can for it. 19 Talk to us a moment about what MR. HAMILTON: Well, in a series of 20 public hearings we had at the last prudencey 21 hearing we had public hearings. 22 talking -- these were mostly industrial people 23 that said that the Shell gas revolution has made 24 in their opinion we should be using that and not 25 building nuclear, that you can build a combined www.compuscriptsinc.com And people were 2/12/2013 21 1 gas plant much cheaper. And it was just a call 2 for at that time for relief. 3 contending some that it would be -- the rates 4 would be too high for them to continue. 5 think the company in the hearing answered the 6 questions very well and the fact that there are 7 many things other than one cost involved in 8 industrial development and in retention of 9 industry. They were REPRESENTATIVE SANDIFER: 10 But I In that vein 11 in the Base Load Review Act is abandonment 12 covered in there in any way? MR. HAMILTON: 13 No, sir, it was not 14 addressed. Once when this commission made a 15 unanimous vote to approve the Base Load Review 16 Act the train left the station. REPRESENTATIVE SANDIFER: 17 And in the 18 Base Load Review Act you said a few minutes ago 19 that it was for the higher production facilities. 20 And if I am not mistaken you said both nuclear 21 and coal? 22 MR. HAMILTON: 23 REPRESENTATIVE SANDIFER: 24 25 Yes, sir. Did you know that it does not cover coal? MR. HAMILTON: I was under the feeling www.compuscriptsinc.com 2/12/2013 22 1 that -- and I might have been wrong but I thought 2 it was for large coal too. REPRESENTATIVE SANDIFER: 3 4 It's just nuclear. 5 MR. HAMILTON: I apologize. 6 REPRESENTATIVE SANDIFER: 7 security, something that we're all concerned 8 about, every one of us. 9 will about what you're doing -- and I don't want Cyber Give us some idea if you 10 you to give away trade secrets or anything like 11 that, I just want to know whether you're staffing 12 up and giving staff sufficient authority to 13 really take care of cyber security. MR. HAMILTON: 14 We're doing everything 15 possible within the commission to follow our 16 personal cyber security and to encourage the 17 companies that we regulate to continue to work on 18 cyber security. 19 safety to the facility itself to the water plant, 20 and it encompasses everything that we regulate. This is a big issue from line REPRESENTATIVE SANDIFER: 21 Do you have 22 experts on staff dealing with nothing but cyber 23 security? 24 25 MR. HAMILTON: We have one attorney that works on this constantly and we don't have a www.compuscriptsinc.com 2/12/2013 23 1 staff advisor for cyber security. 2 thing that is worked on by all of us. 3 an IT man that is very proficient that works with 4 this. 5 REPRESENTATIVE SANDIFER: It's a general We do have Let me go 6 back to your earlier discussion about your work 7 week, and I congratulate you on having a condo 8 hear in Columbia. 9 time ago but I didn't. 10 11 12 13 14 I wish I had done that a long MR. HAMILTON: It was a good investment. REPRESENTATIVE SANDIFER: If I had had the money I probably would have. When you are here in your condo in 15 Columbia are you charging daily travel from 16 Bennetsville? 17 MR. HAMILTON: No, sir. 18 REPRESENTATIVE SANDIFER: So you get 19 just the mileage from your home to Columbia one 20 time or whatever? 21 MR. HAMILTON: Yes, sir. Under the 22 commissions set up that we have now, Mr. 23 Chairman, we don't receive any per diem or 24 mileage other than away from Columbia. 25 REPRESENTATIVE SANDIFER: www.compuscriptsinc.com Okay. When 2/12/2013 24 1 you were describing your Fridays at home one of 2 the things that you said was that you answer 3 calls. What types of calls are we talking about? MR. HAMILTON: 4 Well, in the commission 5 we are always under -- I guess you could say 6 we're on duty 24 hours a day because we have the 7 state phone and the I-Pad that we constantly 8 contact. 9 commission that they need you to be a part of, If anything comes up with the 10 they need your attention on, we know immediately 11 and we keep in contact. 12 REPRESENTATIVE SANDIFER: 13 business calls that would emanate within the 14 commission network? MR. HAMILTON: 15 16 Yes, sir. But it's I have no other employment. 17 REPRESENTATIVE SANDIFER: 18 consensus on cases will you describe how you 19 arrive at that consensus. MR. HAMILTON: 20 Okay. On Okay, again, each 21 commissioner speaks for himself or herself. And 22 we attempt to have unity in our rulings, and we 23 have basically in most instances been able to do 24 that. 25 would not violate any foyer. We normally meet in small groups that And we discuss the www.compuscriptsinc.com 2/12/2013 25 1 matter. We all have our own opinion. We study 2 the pros and the cons of it and we attempt to 3 come up with a resolution that is best for all 4 parties concerned. 5 REPRESENTATIVE SANDIFER: 6 are you really attempting to get a unanimous 7 opinion or a majority opinion? MR. HAMILTON: 8 9 a majority. In doing that Well, we attempt to get We know four votes on the commission 10 walk. 11 one attorney telling me one thing and one showing 12 me something different. 13 coal out and we put it back in, so I correct 14 myself. 15 And I was on the Base Load. I have got At one point we did take REPRESENTATIVE SANDIFER: Talk to me 16 just a second about the Base Load Review Act and 17 what can be charged during the time of 18 construction. 19 MR. HAMILTON: In the time of the 20 construction, of course the construction costs, 21 the environmental costs, the licensing fees. 22 REPRESENTATIVE SANDIFER: So you're 23 saying that you can recover the cost of the 24 bricks and mortar? 25 MR. HAMILTON: Yes. www.compuscriptsinc.com 2/12/2013 26 REPRESENTATIVE SANDIFER: 1 And that part 2 I do know that you have got wrong because you can 3 only recover the cost of the capital, not the 4 capital costs. MR. HAMILTON: 5 6 Okay, I am saying it backwards. REPRESENTATIVE SANDIFER: 7 The cost of 8 the capital in the normal parlance would be 9 categorized as interest on the money. MR. HAMILTON: 10 11 Right. I understand that. REPRESENTATIVE SANDIFER: 12 And do you 13 know how the amount of that is calculated so that 14 you're sure that what you're getting is an 15 accurate figure? MR. HAMILTON: 16 17 depend on ORS. REPRESENTATIVE SANDIFER: 18 19 Well, I know that we How do they get it? MR. HAMILTON: 20 ORS is contingent, is a 21 part of the plan as it goes forward and they have 22 audits. REPRESENTATIVE SANDIFER: 23 24 25 audits? MR. HAMILTON: The ORS. www.compuscriptsinc.com Who does the 2/12/2013 27 REPRESENTATIVE SANDIFER: 1 2 Is there an auditor assigned to that specific plan? 3 MR. HAMILTON: 4 REPRESENTATIVE SANDIFER: 5 MR. HAMILTON: 10 REPRESENTATIVE SANDIFER: MR. HAMILTON: 17 Right. It's part of the act. REPRESENTATIVE SANDIFER: Thank you very much, Mr. Commissioner. SENATOR HUTTO: 15 16 The company provides the auditor through the ORS. 13 14 It's part Thank you, that's what I was searching for. 11 12 The company. of the costs. 8 9 Who pays for that? 6 7 I am sure there is. Representative Forrester? REPRESENTATIVE FORRESTER: Mr. 18 Hamilton, could you explain the process of the 19 Rate Stabilization Act that was approved a few 20 years ago for the natural gas industry. 21 MR. HAMILTON: Yes, sir. The Rate 22 Stabilization Act was another positive act that 23 happened that was put in force to help stabilize, 24 and have not the great change in rates that we 25 saw in the past. And in this the cost of the www.compuscriptsinc.com 2/12/2013 28 1 company's doing business is included, the 2 infrastructure and the rate of return. REPRESENTATIVE FORRESTER: 3 4 preempt a rate case? MR. HAMILTON: 5 6 Yes, sir, it's an annual review. REPRESENTATIVE FORRESTER: 7 8 So does that And how is the rate of return adjusted? MR. HAMILTON: 9 The rate of return is 10 something that is decided on an annual basis by 11 the parties, by the ORS audit and the company's 12 presentation to the commission as to what the 13 rate of return should be. REPRESENTATIVE FORRESTER: 14 15 16 Does it have a swing? MR. HAMILTON: I believe it's five 17 points one way or the other. I don't remember 18 but I wouldn't hold myself to it. 19 REPRESENTATIVE FORRESTER: 20 see are the major challenges facing us in the 21 future from your standpoint as a commissioner? 22 MR. HAMILTON: What do you Well, I think we have 23 discussed the things earlier as I see it. 24 think probably the major thing is cyber security 25 that we have got to get it right. www.compuscriptsinc.com I There's no way 2/12/2013 29 1 that you don't get that right. And I think the 2 aging infrastructure that we see now that we're 3 seeing coal plants close because of the 4 environmental issues. 5 gas coming, and as you well know from your past 6 experience we're going to soon be at capacity and 7 pipelines are going to have to be built to be 8 able to make use of these. 9 things that I see that we have got to meet head We're seeing the natural So these are the 10 on and be prepared for. We're charged with 11 seeing that we have adequate and reliable utility 12 service. REPRESENTATIVE FORRESTER: 13 You've 14 recognized that cyber is an issue. 15 to check in that cause to make sure we're 16 protected? MR. HAMILTON: 17 Who is going I would think the Public 18 Service Commission is going to have to take a 19 re-vote. 20 have will have to see that it's something that is 21 done throughout the state. I think the legislature as you already 22 REPRESENTATIVE FORRESTER: 23 MR. HAMILTON: 24 25 Thank you. Any agency without the support of the legislature is kind of lost. SENATOR HUTTO: Is there a future for www.compuscriptsinc.com 2/12/2013 30 1 2 green energy in South Carolina? MR. HAMILTON: I think we see green 3 energy in a number of ways and I think it's being 4 done to a great extent on individual efforts 5 instead of a unified effort. 6 commissioner that we have is positive about green 7 energy but we don't have the ability to just set 8 our sights in one thing when the costs sometimes 9 are prohibited to be able to go that way. I think every In our 10 hearings we've seen plants that have gone heavy 11 with solar and some of these have said that the 12 payback was going to be something like seven 13 years, which is good if it's working. 14 that have put a renewable standard a lot of them 15 are backing away from it because of being able to 16 meet the fact. 17 biggest renewable that we see and we don't have 18 it in South Carolina, it's not here for us. 19 We've got nuclear. 20 from my position as advisor now to the gas 21 committee, the international petroleum council to 22 meet on two occasions with Secretary Chu. 23 both occasions I discussed with him the 24 opportunity for solar to be given credit for 25 omission, and he agreed with me. States Hydro-electric is probably the I have had an opportunity www.compuscriptsinc.com And on But he also 2/12/2013 31 1 pointed out that you know who I work for. 2 reckon that the one at the top makes the call. SENATOR HUTTO: 3 So I You mentioned solar 4 being pursued on an individual basis and you also 5 raised the cost. 6 solar for an individual or for a company? 7 that put that person in the position of becoming 8 a utility if they do that? What about somebody financing MR. HAMILTON: 9 Does The interpretation that 10 we have Senator is that it does and in my opinion 11 if we're shown a new interpretation of the law or 12 a new change in the law we'll certainly follow 13 that lead. REPRESENTATIVE FORRESTER: 14 15 pass something you all will carry it out? MR. HAMILTON: 16 17 So if we do. Yes, sir, that's what we That's what you send us there for. 18 REPRESENTATIVE FORRESTER: 19 you, switch subjects to the Universal Service 20 Fund. Has it outlived its usefulness? MR. HAMILTON: 21 Let me ask No, sir. We still have 22 rural telephone companies that say this is 23 extremely important. 24 last resort that still need the service that's 25 there. We still have people of I think the state Universal Service Fund www.compuscriptsinc.com 2/12/2013 32 1 along with the national Universal Service Fund 2 has played a great role. 3 tinkering with it and I hope it doesn't hurt 4 South Carolina. And I notice some REPRESENTATIVE FORRESTER: 5 As it 6 relates to those that pay into the Universal 7 Service Fund we have got a dwindling number of 8 people that have landlines and a lot of people 9 are substituting their cell phone for their 10 landlines. 11 Universal Service Fund? 12 MR. HAMILTON: 13 14 Should those folks pay for the I think it would be the proper thing. REPRESENTATIVE FORRESTER: Describe the 15 discussions of the commission after they've heard 16 testimony, that they get together in small groups 17 so as not to violate foyer and then maybe regroup 18 in other small groups. 19 actually just a better procedure than meeting in 20 an open session where the public can see all 21 seven of you and converse and come to a decision, 22 because it sounds to me like you almost have 23 invented a way to get around foyer? 24 25 MR. HAMILTON: Do you see that as No, sir. We would be happy to meet in a group and with the public. www.compuscriptsinc.com We 2/12/2013 33 1 don't hide in transparency at all, but under the 2 structure that we live we haven't seen that as an 3 available way to do it. 4 REPRESENTATIVE FORRESTER: Anything 5 else? 6 to leave and we'll ask you to stay for just a 7 minute. 8 9 10 11 12 13 All right. We're going to ask the public (The Public Service Commission went into executive session from 10:25 to 10:30 a.m.) SENATOR HUTTO: The veil is lifted. (Carolyn Schretzmann-Jebaily enters the hearing room.) SENATOR HUTTO: Good morning. We're going to have you sworn and then get started. 14 MS. SCHRETZMANN-JEBAILY: Yes, sir. 15 (Carolyn Schretzmann-Jebaily, was duly 16 17 sworn, after which testimony began at 10:31 a.m.) MS. ANDERSON: Good morning, Ms. 18 Schretzmann-Jebaily. 19 brief review of your educational and experience 20 background. I'm going to start with a 21 MS. SCHRETZMANN-JEBAILY: 22 MS. ANDERSON: Yes, ma'am. Ms. Schretzmann-Jebaily 23 attended the University of South Carolina and 24 then transferred to MUSC where she received a 25 bachelor of science degree in nursing. www.compuscriptsinc.com She 2/12/2013 34 1 received a bachelor of arts degree in ceramics 2 from Francis Marian University and she's also 3 taken graduate courses in art at Cocoa College 4 and she has taken a number of continuing 5 education courses during the past five years. 6 Since 2009 she's worked as a volunteer 7 research assistant on the MAF minimum allowable 8 flow project at Clemson University. 9 From 2008 to 2009 she worked with the 10 conservation voters of South Carolina as the 11 director of climate change sustainability. 12 13 14 From 2003 to 2008 she worked with the organized responsible economic development. She is involved in the Pee Dee land 15 trust, South Carolina ETV, responsible economic 16 development, wildlife action, Sierra Club, 17 National Home and Gardening Club and the National 18 Sustainable Agricultural Coalition. 19 Ms. Schretzmann-Jebaily, do you have 20 any changes you would like to make to your 21 Personal Data Questionnaire you submitted with 22 your application? 23 24 25 MS. SCHRETZMANN-JEBAILY: In terms of like employment or things that I have done? MS ANDERSON: In general, yes, ma'am. www.compuscriptsinc.com 2/12/2013 35 MS. SCHRETZMANN-JEBAILY: 1 Well, 2 currently for example I am working with the City 3 of Florence and we are re-writing the unified 4 development ordinance for all of Florence County. 5 It has to do with storm water and zoning and land 6 use. 7 MS. ANDERSON: 8 MS. SCHRETZMANN-JEBAILY: 9 10 When did you begin that? about a three-year project. MS. ANDERSON: It's been It's volunteer. Now at this time I would 11 request that Ms. Schretzmann-Jebaily's Personal 12 Data Questionnaire be entered into the record 13 with any confidential information being redacted. 14 (EXH. 2, Ms. Schretzmann-Jebaily's 15 Personal Data Questionnaire marked for 16 identification.) 17 MS. ANDERSON: As part of our 18 background investigation we obtained a credit 19 check, driver's license check and SLED check and 20 we have some questions of a personal nature and 21 will request that they would be taken up in 22 executive session at the appropriate time. 23 24 25 Before we begin questioning do you have a brief opening statement you'd like to make? MS. SCHRETZMANN-JEBAILY: www.compuscriptsinc.com In relation 2/12/2013 36 1 to? MS. ANDERSON: 2 3 This screening, this position? MS. SCHRETZMANN-JEBAILY: 4 Only why I 5 applied, I guess. In terms of what I have to 6 offer I have a varied background I think in a 7 variety of different areas including world public 8 health, community policy making, storm water, a 9 variety of different community issues that I 10 think give me a very different perspective and 11 broader perspective and allow me to bring a lot 12 to the table in terms of what I think I can offer 13 to the Public Service Commission. 14 MS. ANDERSON: 15 Can you please state your full name and home address for the record. MS. SCHRETZMANN-JEBAILY: 16 Carolyn 17 Schretzmann-Jebaily, 1290 Renfield Road, 18 Darlington, South Carolina, 29532. MS. ANDERSON: 19 20 Are you a registered voter? 21 MS. SCHRETZMANN-JEBAILY: 22 MS. ANDERSON: 23 Yes, I am. And which congressional district are you registered in. 24 MS. SCHRETZMANN-JEBAILY: 25 MS. ANDERSON: Seven. Aside from some of the www.compuscriptsinc.com 2/12/2013 37 1 issues that you just touched upon are there other 2 reasons why you're interested in serving on the 3 Public Service Commission? 4 MS. SCHRETZMANN-JEBAILY: Only that I 5 see for example energy as probably the most 6 important and certainly the most important 7 resource and commodity on the planet and so 8 therefor I think of it as we have to be greatly 9 responsible and accountable to the way we think 10 about it and the way we use it, so -- and then 11 what I said earlier, so I think I have a lot to 12 bring to the table in terms of perspective. 13 14 MS. ANDERSON: Have you attended any hearings at the commission? 15 MS. SCHRETZMANN-JEBAILY: 16 MS. ANDERSON: 17 commission's decisions? Recently, no. Have you read any of the 18 MS. SCHRETZMANN-JEBAILY: 19 MS. ANDERSON: I have. How would you expect to 20 get up to speed on issues confronting the 21 commission? 22 MS. SCHRETZMANN-JEBAILY: 23 amount of reading and studying. 24 diligence in terms of learning. 25 MS. ANDERSON: Enormous Lots of Please describe your www.compuscriptsinc.com 2/12/2013 38 1 experience or expertise in any of the following 2 areas and include the time you've been engaged in 3 the issues. 4 protection and advocacy, water and waste water, 5 finance, economics and statistics, accounting, 6 engineering or law. Energy, telecommunications, consumer MS. SCHRETZMANN-JEBAILY: 7 With energy I 8 worked approximately two years with conservation 9 voters. That was primarily an educational 10 position where I was educating the public on 11 current energy policies, especially federal and 12 state policies and how federal regulations were 13 about to impact us. 14 have worked approximately five or six years on 15 that starting with a local problem with storm 16 water in Florence County. 17 land use. 18 we advocated for in the community as part of a 19 responsible economic development non-profit that 20 I ran, so I would say that lasted about eight 21 years. 22 allowable flow work with Clemson, which is 23 currently still ongoing. 24 for three years. 25 as far as I am an assistant to that project. With water and storm water I And also as well as Those are two integrated things that As well as the work I have done with the I've been doing that That's also a volunteer project www.compuscriptsinc.com 2/12/2013 39 1 Also you mentioned? MS. ANDERSON: 2 Telecommunications, 3 consumer protection and advocacy, water and waste 4 water, finance, economics and statistics, 5 accounting, engineering or law. MS. SCHRETZMANN-JEBAILY: 6 Consumer 7 protection I worked with some of the community 8 projects as well as the work I did before I got 9 into community advocacy, I wrote grants for world 10 health clinics in South Carolina all over the Pee 11 Dee. 12 MS. ANDERSON: Are you familiar with 13 the 2006 advisory opinion issued by the review 14 committee dealing with attendance at legislative 15 receptions? 16 MS. SCHRETZMANN-JEBAILY: 17 MS. ANDERSON: Yes. Have you attended any 18 legislative receptions since receiving the 19 advisory opinion? 20 MS. SCHRETZMANN-JEBAILY: 21 MS. ANDERSON: No. Are you familiar with 22 the PURC's decision at its meeting on January 15 23 of this year which clarified the 2006 decision? 24 25 MS. SCHRETZMANN-JEBAILY: attended the meeting. www.compuscriptsinc.com Yes, ma'am, I 2/12/2013 40 1 MS. ANDERSON: Have you attended any 2 legislative receptions or any legislative caucus 3 meetings other than delegation meetings on or 4 after January 15? 5 MS. SCHRETZMANN-JEBAILY: 6 MS. ANDERSON: No, ma'am. Assume you were serving 7 on the commission and you were approached by 8 someone wanting to discuss a matter that is or 9 may become an issue in a proceeding. 10 11 How would you handle the situation? MS. SCHRETZMANN-JEBAILY: I think that 12 falls under ex parte communication and you are 13 not allowed to discuss anything that is or may 14 become an issue without all and any of the 15 parties involved being given due notice and 16 opportunity to participate in the hearing about 17 it, so you would not be allowed to discuss it. 18 MS. ANDERSON: Are you aware that 19 commissioners are subject to the judicial code of 20 conduct as well as state ethics laws? 21 MS. SCHRETZMANN-JEBAILY: 22 MS. ANDERSON: Yes, ma'am. Are you affiliated with 23 any political parties, boards or commissions that 24 would need to be reevaluated if you are nominated 25 and elected? www.compuscriptsinc.com 2/12/2013 41 MS. SCHRETZMANN-JEBAILY: 1 2 3 Not that I know of. MS. ANDERSON: Do you belong to any 4 organizations that discriminate based on race, 5 religion or gender? 6 MS. SCHRETZMANN-JEBAILY: 7 MS. ANDERSON: 8 9 10 11 12 13 No, ma'am. What is the appropriate demeanor for a commissioner? MS. SCHRETZMANN-JEBAILY: Are we talking about the code of laws 501? MS. ANDERSON: Just how you would be -- how you present yourself, your overall demeanor. MS. SCHRETZMANN-JEBAILY: I know for 14 example you have to avoid any improprietous (sic) 15 behavior including the appearance of impropriety. 16 You certainly have to act with diligence and 17 impartiality throughout all of your behaviors. 18 You have to avoid conflict in your outside 19 activities, conflicts of interest in your outside 20 activities as well as avoid what I would call 21 inappropriate political activities. 22 basically to always have integrity and honesty 23 with the way you deal with all of the public. 24 25 MS. ANDERSON: And you have Would that apply just when you're on the bench? www.compuscriptsinc.com 2/12/2013 42 1 MS. SCHRETZMANN-JEBAILY: 2 would be outside of the bench too. 3 4 5 MS. ANDERSON: I think it Is there ever a role for sternness or anger as a commissioner? MS. SCHRETZMANN-JEBAILY: Sternness, do 6 you mean firmness? I would think not anger 7 because that -- I think anger shuts people down 8 and shuts people off but I think you could be 9 firm about certainly your opinion or the way -- 10 if you have to weigh the evidence and you have a 11 firm belief of exactly what the decision might be 12 and you have weighed all the evidence, then I 13 think you can be firm in your opinion. 14 is a different part of that equation, I think. 15 16 17 MS. ANDERSON: But anger What is the purpose of the Base Load Review Act? MS. SCHRETZMANN-JEBAILY: It basically 18 was two-fold. 19 protect the ratepayer in that he had some 20 confidence in the investment and infrastructure 21 for a new base load and it was also to give the 22 utility to provide the utility a way to recover 23 the capital costs during and throughout 24 construction of the base load plant. 25 It was to protect a consumer, MS. ANDERSON: And what are capital and www.compuscriptsinc.com 2/12/2013 43 1 2 contingent costs? MS. SCHRETZMANN-JEBAILY: Capital costs 3 would be everything from development, site 4 design, construction. 5 things throughout the project, the utility work 6 incurred as far as expenses including things like 7 environmental impacts and those kind of things. 8 But contingency costs would be things like 9 unforeseen overruns and cost delays, things that 10 11 12 13 I would think even the would not be recoverable. MS. ANDERSON: What's the purpose of utility regulation? MS. SCHRETZMANN-JEBAILY: The purpose 14 of utility regulation would be to protect -- I 15 would think there would be several things. 16 balance out the whole idea of protecting the 17 fair, firm and equitable regulation of utilities 18 so that it's fair and impartial. 19 this thinking in mind -- and I know this part of 20 it -- there's an adjudicative and investigative 21 part from both sides, one is ORS and one is the 22 Public Service Commission. 23 with the help of ORS it's also to protect and to 24 balance out the financial integrity of the 25 utility companies themselves as well as the You But also with But I would think www.compuscriptsinc.com 2/12/2013 44 1 economic development of the State of South 2 Carolina. MS. ANDERSON: 3 I have a few 4 housekeeping questions for you. Did you make any 5 contributions to members of the General Assembly 6 within six months of filing your application? 7 MS. SCHRETZMANN-JEBAILY: 8 MS. ANDERSON: 9 10 I have not. Have you made any contributions to members of the General Assembly since filing your application? 11 MS. SCHRETZMANN-JEBAILY: 12 MS. ANDERSON: I have not. Have you sought or 13 received the pledge of any legislator prior to 14 this date? 15 MS. SCHRETZMANN-JEBAILY: 16 MS. ANDERSON: I have not. Have you sought or been 17 offered a conditional pledge of support by any 18 legislator pending the outcome of your screening? 19 MS. SCHRETZMANN-JEBAILY: 20 MS. ANDERSON: I have not. Have you asked any third 21 parties to contact members of the General 22 Assembly on your behalf before the final and 23 formal screening report has been released? 24 MS. SCHRETZMANN-JEBAILY: 25 MS. ANDERSON: I have not. Are you aware of any www.compuscriptsinc.com 2/12/2013 45 1 friends or colleagues contacting members of the 2 General Assembly on your behalf? MS. SCHRETZMANN-JEBAILY: 3 4 Not that I know of. MS. ANDERSON: 5 Are you familiar with 6 the 48-hour rule which prohibits candidates from 7 seeking pledges for 48 hours after the report has 8 been submitted to the General Assembly? MS. SCHRETZMANN-JEBAILY: 9 MS. ANDERSON: 10 11 And would you plan on serving a full term if elected? 12 MS. SCHRETZMANN-JEBAILY: 13 MS. ANDERSON: 14 17 Oh, yes. Thank you, I have no further questions, Mr. Chair. SENATOR HUTTO: 15 16 Yes, ma'am. Anyone have any questions? REPRESENTATIVE SANDIFER: Let me go 18 back to the Base Load Review Act for a moment. 19 In your opinion does it allow for the utility 20 building a plant to recover the costs of bricks 21 and mortar throughout the duration of the 22 construction project? 23 MS. SCHRETZMANN-JEBAILY: From what I 24 understand it allows for the recovery of all of 25 the equity costs and a percentage return on that www.compuscriptsinc.com 2/12/2013 46 1 equity as well as an average -- they are actually 2 able to recover the cost of the unspent equity. 3 REPRESENTATIVE SANDIFER: Okay. Do the 4 terms cost of capital and capital cost have a 5 different meaning to you? 6 MS. SCHRETZMANN-JEBAILY: Yes. 7 REPRESENTATIVE SANDIFER: Tell me what 8 9 they are, please. MS. SCHRETZMANN-JEBAILY: Capital costs 10 would be all of those things that I mentioned 11 earlier, site design, planning, all of the 12 various evaluations that would need to be done 13 before the plant is built. 14 it to the grid, setting it up. 15 related to getting there. 16 from what I understand. 17 18 19 Construction, adding Everything That's capital costs REPRESENTATIVE SANDIFER: What is cost of capital? MS. SCHRETZMANN-JEBAILY: Cost of 20 capital is -- which a company is able to recover 21 -- is the investment they have made, whether it 22 be spent or unspent, the upfront investment that 23 the company has made in the project. 24 REPRESENTATIVE SANDIFER: 25 SENATOR HUTTO: Thank you. Okay, no others? www.compuscriptsinc.com All 2/12/2013 47 1 right, thank you very much. 2 3 I believe we have one more. (Dale Surrett enters the hearing room at 11:02 a.m. 4 SENATOR HUTTO: Good morning, come on 5 in. We're going to ask that you be sworn in, 6 then we'll have some staff questions and then we 7 will follow it up with questions from the 8 committee. 9 MR. SURRETT: 10 Yes, sir. REPRESENTATIVE SANDIFER: I simply want 11 to state for the record that I know Mr. Surrett. 12 He served for a very short period of time in 13 Oconee County. 14 acquaintance but I do want it to show on the 15 record. 16 17 That relationship was a passing (Dale Surrett, was duly sworn, after which testimony began at 11:02 a.m.) 18 MR. FIFFICK: Good morning, Mr. 20 MR. SURRETT: Good morning. 21 MR. FIFFICK: I am going to briefly 19 Surrett. 22 summarize your education and experience and some 23 other relevant information just for the purpose 24 of getting it on the record. 25 Mr. Surrett obtained a bachelors of www.compuscriptsinc.com 2/12/2013 48 1 arts degree in political science and an 2 associates of science degree in criminal justice 3 from the University of South Carolina Aiken in 4 1985. 5 Carolina Criminal Justice Academy and he also 6 earned his masters in public administration from 7 the University of South Carolina in 1993. Mr. Surrett is a graduate of the South 8 From 1985 to 1986 Mr. Surrett was 9 employed by the City of Aiken Department of 10 Safety and was a public safety officer charged 11 with routine law enforcement and uniform patrol 12 duties. From 1986 to 1988 he served as a 13 14 security inspector with Wackenhut Services, Inc., 15 responsible for protecting the nuclear facility 16 at the Savannah River Site. 17 required the Department of Energy Security 18 clearance. 19 This position From 1988 to 1990 Mr. Surrett was a 20 deputy sheriff assigned as a field training 21 officer who evaluated and trained deputies with 22 the Richland County Sheriff's Office. 23 continued his employment as a criminal 24 investigator from 1990 to 1993. 25 He From 1993 to 1999 Mr. Surrett was an www.compuscriptsinc.com 2/12/2013 49 1 emergency preparedness coordinator with the 2 County of Greenville. From 1999 to 2004 Mr. Surrett served as 3 4 the county administrator for McCormick County. 5 From 2004 to 2007 he was employed by 6 the town of Moncks Corner as the county 7 administrator. From 2007 to 2009 Mr. Surrett was 8 9 10 employed by Oconee County as a county administrator. From 2011 to present Mr. Surrett has 11 12 served as a county administrator for Darlington 13 County. 14 Mr. Surrett, other than changes you 15 have already submitted do you have any changes 16 that you would like to make to your Personal Data 17 Questionnaire? 18 MR. SURRETT: No, sir. 19 MR. FIFFICK: I would request that Mr. 20 Surrett's Personal Data Questionnaire be entered 21 into the record with any confidential information 22 being redacted. 23 24 25 (EXH. 3, Dale Surrett's Personal Data Questionnaire was marked for identification.) MR. FIFFICK: As part of our background www.compuscriptsinc.com 2/12/2013 50 1 investigation of the candidate we obtained a 2 credit check, driver's license and SLED check. 3 Staff has questions of a confidential nature or 4 personal nature and we would request they be 5 taken up in executive session at the appropriate 6 time. Before we begin questioning do you have 7 8 a brief opening statement you'd like to make? MR. SURRETT: 9 Thank you. I would like 10 to thank the committee for the consideration of 11 my candidacy. 12 questions today. 13 serving in this role as an extension of my 14 continued public service which is demonstrated 15 with my service to South Carolina, and again I 16 look forward to your questions. I see the possibility of my MR. FIFFICK: 17 18 I look forward to answering your Could you please state your full name and address for the record. MR. SURRETT: 19 My full name is Dale 20 Kelly Surrett. I reside at 323 Thoroughbred 21 Trail in Hartsville, South Carolina. MR. FIFFICK: Are you a registered 24 MR. SURRETT: I am. 25 MR. FIFFICK: In which congressional 22 23 voter? www.compuscriptsinc.com 2/12/2013 51 1 district are you registered? 2 MR. SURRETT: Seven. 3 MR. FIFFICK: Mr. Surrett, why are you 4 interested in serving on the Public Service 5 Commission? 6 MR. SURRETT: I see the role of the 7 Public Service Commission as important to ensure 8 that the ratepayers in South Carolina are 9 afforded the best utility service as possible and 10 to make sure that all of the service issues are 11 addressed properly for those pursuant to the 12 regulations and laws set up by the legislature. 13 I also see this as an important role for economic 14 development in South Carolina to ensure that we 15 have available and affordable utilities so that 16 we are competitive as we continue to grow as a 17 state and maintain our businesses that are here. 18 And lastly with my background in emergency 19 management I can assure you that when events 20 occur in a community the availability of reliable 21 utilities and having those restored in a timely 22 fashion is most important to ensure that 23 communities are able to overcome disasters and 24 other events that occur. 25 MR. FIFFICK: Thank you, sir. www.compuscriptsinc.com Have you 2/12/2013 52 1 attended any hearings of the commission? MR. SURRETT: 2 3 hearings of the commission's. MR. FIFFICK: 4 5 I have not attended any Have you read any commission decisions? MR. SURRETT: 6 I have read decisions and 7 I have kept up with several issues with the 8 commission over the years. MR. FIFFICK: 9 And how would you expect 10 to get up to speed on the issues confronting the 11 commission? MR. SURRETT: 12 Well, I would read all 13 submitted briefs for the issues that come before 14 the commission. 15 staff briefings from the staff that's available 16 to the Public Service Commission. I would also ask for specific MR. FIFFICK: 17 Could you please now 18 describe your experience or expertise of any of 19 the following areas and include the time in which 20 you were engaged in those issues. 21 telecommunication issues, consumer protection and 22 advocacy issues, water and waste water issues, 23 finance, economics and statistics, engineering or 24 law. 25 MR. SURRETT: Energy issues, First I'd like to make www.compuscriptsinc.com 2/12/2013 53 1 the committee aware of the fact that I hold a 2 commercial driver's license and also I hold an 3 FCC radio technician's license. 4 are applicable to the telecommunications area. 5 I've also been involved in numerous 6 telecommunications 911 projects and other 7 economic development projects involving 8 telecommunications. 9 Both of those In my position in McCormick County I 10 was responsible for managing the system, the 11 water and sewer system in which we have 3800 12 water customers, 400 miles of service line, 1000 13 sewer customers, 200 miles of sewer line. 14 some of you will not believe this but we have 40 15 lift stations. 16 McCormick we serviced Hickory Knob, John de la 17 Howe facilities and also the Savannah Lakes 18 community, so I'm quite familiar with operating 19 water and sewer systems. 20 And So if you're familiar with In my positions as municipal and county 21 managers I've managed annual budgets in the 22 amount of $5 million to $45 million. 23 positions I was responsible for implementing and 24 recommending local and state laws related to the 25 administration of the local government. www.compuscriptsinc.com In those I was 2/12/2013 54 1 also currently and in the past required to ensure 2 that the records of the county and municipal 3 governments are kept in a fashion that meet the 4 government accounting standards. 5 MR. FIFFICK: Thank you, sir. Are you 6 familiar with the 2006 advisory opinion issued by 7 the review committee dealing with attendance at 8 legislative receptions? 9 MR. SURRETT: I am. 10 MR. FIFFICK: And are you familiar with 11 the PURC's decision at its meeting on January 15 12 of this year which clarified the 2006 advisory 13 opinion? 14 MR. SURRETT: I am. 15 MR. FIFFICK: Have you attended any 16 legislative receptions since receiving the 17 advisory opinion? 18 MR. SURRETT: I have not. 19 MR. FIFFICK: Assume you were serving 20 on the commission and you were approached by 21 someone wanting to discuss a matter that is or 22 may become an issue before the commission in a 23 proceeding. 24 25 How would you handle that situation? MR. SURRETT: I would politely stop the conversation and advise them that in order for me www.compuscriptsinc.com 2/12/2013 55 1 to be able to hear the matter in an impartial 2 fashion that I had to not receive their 3 information and direct them to an appropriate 4 source within the PSC or our offices where they 5 could relay that information and get further 6 information. MR. FIFFICK: 7 Are you aware that 8 commissioners are subject to the judicial code of 9 conduct as well as state ethics laws? 10 MR. SURRETT: I am. 11 MR. FIFFICK: Are you affiliated with 12 any political parties, boards or commissions that 13 would need to be reevaluated if you're nominated 14 and elected? 15 MR. SURRETT: I am not. 16 MR. FIFFICK: Do you belong to any 17 organizations that discriminate on race, religion 18 or gender? 19 MR. SURRETT: No. 20 MR. FIFFICK: Mr. Surrett, what is the 21 22 appropriate demeanor for a commissioner? MR. SURRETT: The appropriate demeanor 23 is to ensure that there's fairness to all 24 parties, there's respect and decorum for the 25 commission meetings. www.compuscriptsinc.com 2/12/2013 56 1 2 MR. FIFFICK: Does that apply just while you're on the bench or is that a 24/7? 3 MR. SURRETT: That occurs at all times. 4 MR. FIFFICK: Is there ever a role for 5 sternness or anger on the part of a commissioner? 6 MR. SURRETT: No, sir. 7 MR. FIFFICK: Could you please describe 8 the statutorily stated purpose and operation of 9 the Base Load Review Act of 2007 to include the 10 11 discussion of contingent and capital costs. MR. SURRETT: The Base Load law sited 12 as I understand it essentially determines how to 13 reimburse the utilities so that they can maintain 14 the base load capacity needed to meet and 15 preserve margins. 16 MR. FIFFICK: Would you like to include 17 any discussion of the difference or the relation 18 between contingent and capital costs? 19 MR. SURRETT: Well, the capital costs 20 serve or are related to the debt service for 21 their infrastructure. 22 reserve funds necessary to account for natural 23 disasters, other interruptions to business and 24 also any other regulatory issues that may come up 25 without foresight so that they have the ability The contingency costs are www.compuscriptsinc.com 2/12/2013 57 1 to respond to change and still maintain the 2 integrity of their system. 3 MR. FIFFICK: You touched on this 4 earlier but could you please explain more 5 specifically the general rule regarding ex-parte 6 communication. 7 MR. SURRETT: Well, the general rule is 8 that in matters that would be heard before the 9 commission is that all parties have the ability 10 to hear all information and that no commissioner 11 or party involved with it has communications 12 outside of the hearings. 13 14 15 16 MR. FIFFICK: Thank you, sir. I have got some housekeeping questions now for you. Have you sought or received a pledge of any legislator prior to this date? 17 MR. SURRETT: I have not. 18 MR. FIFFICK: Have you sought or been 19 offered a conditional pledge of support by any 20 legislator pending the outcome of your screening? 21 MR. SURRETT: I have not. 22 MR. FIFFICK: Have you asked any third 23 parties to contact members of the General 24 Assembly on your behalf before the final and 25 formal screening report has been released? www.compuscriptsinc.com 2/12/2013 58 1 MR. SURRETT: I have not. 2 MR. FIFFICK: Are you aware of any 3 friends or colleagues contacting members of the 4 general Assembly on your behalf? 5 MR. SURRETT: I am not. 6 MR. FIFFICK: Are you familiar with the 7 48 hour rule which prohibits a candidate from 8 seeking pledges for 48 hours after the report has 9 been submitted to the General Assembly? 10 MR. SURRETT: I am. 11 MR. FIFFICK: And finally do you plan 12 to serve a full term if elected? 13 MR. SURRETT: I do. 14 MR. FIFFICK: Mr. Chairman, I have no 15 further questions. SENATOR HUTTO: 16 17 members? REPRESENTATIVE SANDIFER: 18 19 Mr. Chairman. 20 again. 23 Thank you, Mr. Surrett, good to see you MR. SURRETT: 21 22 Any questions by any Good to see you, Mr. Sandifer. REPRESENTATIVE SANDIFER: Let's go back 24 to your earlier statement. One of the things 25 that you said that your reason for wanting to www.compuscriptsinc.com 2/12/2013 59 1 serve was really an extension of your previous 2 public service. 3 And what I'm looking for is the differentiation 4 in the type of service you would be able to 5 perform on the commission versus what you have 6 done in the past. Will you elaborate a little bit? MR. SURRETT: 7 Yes. In my role as a 8 municipal and county administer I have worked 9 very hard to ensure that services are provided to 10 a community in the most efficient manner as 11 possible, and in that same fashion to do 12 everything that we can do ensure that existing 13 businesses are provided the support that they 14 need and that they can only receive in many cases 15 from local government. 16 of you understand our growth comes from our 17 existing businesses, 80 percent of our investment 18 and jobs, new jobs come from those existing 19 businesses, and obviously when new businesses 20 come in they are going to ask those businesses 21 how the environment is before they make an 22 investment. 23 Commission I see the predictability and stability 24 for residents that are looking to move to the 25 state. In that fashion as many In the role of the Public Service For the residents that have been here all www.compuscriptsinc.com 2/12/2013 60 1 their lives, we are getting ready to enter into a 2 period of time in which we are going to have four 3 times the number of those who are senior citizens 4 then we've had in the past because of the baby 5 boomer generation. 6 we have a stable rate base for those folks so as 7 they move into retirement they don't have a lot 8 of surprises, because many of those folks have 9 worked all their lives but don't have a lot of So it's very important that 10 resources to be able to live. 11 competing with businesses where many times the 12 utility rates become the deciding factor as to 13 whether or not we're going to get an investment 14 or not. 15 bring all my past experience in and help focus 16 and craft that. 17 And then we are So I see this as a role of being able to I also would like to say that in my 18 role as a county administrator in Moncks Corner 19 that I was able to establish a lot of 20 relationships with the Santee Cooper organization 21 and the cooperatives and I feel like that I can 22 bring that understanding on how the 23 investor-owned utilities and the state-owned and 24 cooperative utilities can all work together to 25 make this the best situation. www.compuscriptsinc.com 2/12/2013 61 REPRESENTATIVE SANDIFER: 1 I appreciate 2 what you're saying and the fact that you do 3 understand the difference between the regulated 4 and non-regulated types of utilities that we have 5 in the state. 6 not sure that you are recognizing the role that a 7 commissioner plays and that is adjudicatory only; 8 you would not be going out and advocating for a 9 position, and I want to be sure that you 10 However, I am concerned that I'm understand that. MR. SURRETT: 11 Yes, sir. What I would 12 bring to the role is the fact that I would look 13 at the law, I would look at the regulation, I 14 would look at the facts provided and assure that 15 the decisions that were handed down or at least 16 my vote was based on that and that only. 17 However, outside of matters that would be pending 18 to the commission I would certainly always be 19 available if the members of the legislature were 20 interested as to how I felt like we can all work 21 together to make the environment as best as 22 possible. 23 REPRESENTATIVE SANDIFER: And in that 24 regard would you consider a discussion with me as 25 a legislator to be an ex-parte communication? www.compuscriptsinc.com 2/12/2013 62 MR. SURRETT: 1 Not unless it was -- if 2 there was a particular matter pending before the 3 PSC I wouldn't see it as ex-parte. 4 policy and direction as to how -REPRESENTATIVE SANDIFER: 5 If it's just What if it is 6 an issue that may be as in a future date 7 considered, at some future date considered at the 8 commission? MR. SURRETT: 9 Then I would not enter 10 into that discussion. I would only enter those 11 discussions in which I felt like it was general 12 structure and not anything that could be seen as 13 me bringing any preconceived notions to a 14 hearing. 15 REPRESENTATIVE SANDIFER: 16 the things you said earlier on was emergency 17 services and your expertise and experience, and I 18 applaud that, but one of the things that you said 19 that peeked my attention was the fact that you 20 would see that utilities were restored to a 21 community in a timely manner. 22 that? 23 MR. SURRETT: And one of How would you do Well, part of that is to 24 ensure that they have the resources day in and 25 day out in order to be able to respond to those www.compuscriptsinc.com 2/12/2013 63 1 emergencies and they have to have adequate 2 reserves, their infrastructure has to be kept up 3 to date, and they have to have the ability to 4 recover those costs. 5 REPRESENTATIVE SANDIFER: Is that 6 applicable, that restoration, is that applicable 7 state wide? 8 MR. SURRETT: 9 REPRESENTATIVE SANDIFER: 10 applicable in the co-op territory, the Santee 11 territory, all those munies? 12 MR. SURRETT: Yes. So it's Yes, sir, and when those 13 events occur those resources are shared across 14 all boundaries -- 15 REPRESENTATIVE SANDIFER: What I'm 16 trying to get at, Mr. Surrett, is your role as a 17 commissioner in assuring those things are done. 18 And I think you're assuring us there are some 19 things that you would not be able to do. 20 MR. SURRETT: Well, again as the 21 commission we would be focused on investor-owned 22 utilities but certainly encouraging that 23 cooperation and ensuring that wide review on all 24 parties, whether they be municipalities that 25 provide power or the co-ops that that is www.compuscriptsinc.com 2/12/2013 64 1 2 understood. REPRESENTATIVE SANDIFER: When you talk 3 about the ex-parte communications you said that 4 you would refer that individual to the 5 appropriate person. 6 person be and/or agency? 7 8 9 Who might that appropriate MR. SURRETT: In most cases it would be the office of regulatory staff. REPRESENTATIVE SANDIFER: Okay. The 10 base Load Review Act, the term prudently incurred 11 and the meaning in that? 12 MR. SURRETT: As I read the act the act 13 is to balance the need for utilities to provide 14 that base load, provide that infrastructure and 15 yet when they take risks, all the risk is not all 16 put on the ratepayer. 17 by the investors as well as the ratepayers. 18 The risk is shared equally REPRESENTATIVE SANDIFER: During the 19 time of construction of a nuclear facility what 20 charges might be added to the rate that the 21 customer pays? 22 MR. SURRETT: The cost of the 23 development of the nuclear facilities as in the 24 situation that's currently going on with the two 25 units at VS Summer. www.compuscriptsinc.com 2/12/2013 65 REPRESENTATIVE SANDIFER: 1 So those 2 ratepayers would be paying for bricks and mortar 3 as they go in and all the infrastructure and all 4 of that? 5 MR. SURRETT: As it's currently set up 6 as I understand it they share that cost from the 7 very beginning. 8 and I was observing the discussion that was going 9 on is that is so that the cost of this And again, as I understand it, 10 infrastructure is spread across the generations 11 of folks that will use an asset. 12 Hartsville and we have a HB Robinson plant there 13 and that plant's operated for 40 years, it's been 14 re-licensed for another 20 years. 15 very unfair to cause a group of ratepayers for a 16 10 year period of time to bear that entire cost. 17 So it's spreading that cost and sharing it so 18 that it is borne on those as they pay the rates. I live in It would be 19 REPRESENTATIVE SANDIFER: 20 want to go back and reread the Base Load Act 21 because it only allows for the recovery of the 22 cost of capital. 23 costs and cost of capital. 24 25 You might Huge difference between capital One last question. primarily about utilities. You've talked Are there other www.compuscriptsinc.com 2/12/2013 66 1 things that the commission is responsible for? MR. SURRETT: 2 Yes, sir, the interstate 3 motor carriers, natural gas, wire-line 4 telecommunications and also some other 5 transportation such as the limousine stretcher 6 services. 7 REPRESENTATIVE SANDIFER: 8 MR. SURRETT: 9 REPRESENTATIVE SANDIFER: 10 Yes. Pipeline safety? 11 MR. SURRETT: 12 REPRESENTATIVE SANDIFER: 13 Taxi cabs? Yes, railroads. Thank you very much. SENATOR HUTTO: 14 Are you familiar with 15 the Rate Stabilization Act, the natural gas 16 industry? MR. SURRETT: 17 I am familiar with the 18 actions of the commission in terms of being able 19 to adjust the rates according to the cost of 20 natural gas, yes. SENATOR HUTTO: 21 That sounds like the 22 cost of natural gas, but this particular one has 23 to do with extending out a rate case. MR. SURRETT: 24 25 I am sorry, I didn't hear that. www.compuscriptsinc.com 2/12/2013 67 SENATOR HUTTO: 1 2 to do with you don't have to do a rate case. MR. SURRETT: 3 4 This particular one has I am not familiar with those details. SENATOR HUTTO: 5 What do you see as are 6 the major challenges facing us in the utilities 7 industry in the future? MR. SURRETT: 8 9 Power utilities or in all utilities? 10 SENATOR HUTTO: 11 MR. SURRETT: All utilities. Aging infrastructure, the 12 quick turnaround now with technology of -- a lot 13 of the technology in the past you would invest in 14 and you would get a long return on. 15 this there is shorter time frames that equipment 16 becomes obsolete. 17 computer controls and software-driven. 18 in terms of the companies themselves they are all 19 struggling with the fact that they have an aging 20 baby boomer utility base and they are currently 21 trying to find the talent to come in to replace 22 those folks and have continuing staff and 23 expertise there. 24 change. 25 Now a lot of A lot of it has to do with Certainly So it's kind of a generational In terms of the customers themselves www.compuscriptsinc.com 2/12/2013 68 1 there is likely to be probably another million 2 people that will move into South Carolina in the 3 next 20 to 30 years if you believe what some of 4 the demographers have there. 5 have that infrastructure in place to meet that 6 service demand is going to be challenging on the 7 power end, not only in generation but also in 8 transmission and in some cases how services are 9 delivered in terms of the wire-line telephone And so trying to 10 business with so many of the folks moving over to 11 wireless yet still trying to maintain a wired 12 infrastructure because a lot of people don't 13 realize that a wireless phone has to eventually 14 get to a wired telephone in order to actually 15 make a phone call. 16 issues that I see in the next few years. 17 18 19 So those are some of the SENATOR HUTTO: Can you tell us what the Universal Service Fund is? MR. SURRETT: Yes, sir, it's a fund. 20 There's a fee on everyone who has 21 telecommunication service and that fund is used 22 to help provide basic telephone service to folks 23 that may not have the ability to pay for 24 telephone service. 25 SENATOR HUTTO: And do you believe that www.compuscriptsinc.com 2/12/2013 69 1 the Universal Service Fund is still needed? MR. SURRETT: 2 I do. I've served in 3 some communities that have some folks with 4 influence but there are still very many poor 5 folks in this state and they need that ability to 6 communicate. 7 able to call for assistance, and in some cases 8 they need it to be able to try to find 9 employment. 10 So yes, I believe it's very important. SENATOR HUTTO: 11 12 In some cases they need it to be Do you see a future for green energy in South Carolina? MR. SURRETT: 13 I do. Currently in 14 Hartsville I have been working very closely with 15 Sunoco, they're investing $70 million in a bio 16 mass boiler system that will replace two almost 17 50 year-old coal firing boilers. 18 going to be used on the material that we all see 19 on the side of the road where there's been 20 cutting of timber, and after that's done the 21 waste is pushed up in piles. 22 practice has been to push it up in piles and let 23 it dry out, and then on a good rainy day you 24 light it off and you scatter it and then 25 re-plant. And that's And the traditional And they're actually going to go in www.compuscriptsinc.com 2/12/2013 70 1 and re-claim that and chip it and burn it. 2 see a win-win there where we are reducing 3 emissions and capturing that energy there. So I There is certainly as time goes on the 4 5 solar panels are becoming more affordable. 6 There's some opportunities there. 7 renewables are restricted by battery technology 8 so that's something for us all to be watching. 9 And certainly looking at any means to be able to 10 A lot of the capture what could be harmful situations. I have served on the boards that were 11 12 over on landfills and instead of flaring methane 13 to the atmosphere having opportunities to burn 14 that. 15 Because I think very much like our homes we have 16 some big uses in our homes with air conditioning, 17 the hot water, those big users in the homes. 18 you have those little uses out there too. 19 four cell phones in my home and an iPad and all 20 these computers and everything is hooked up to 21 something, and so the power bill is a mix of 22 these big uses but a lot of these are little 23 ones. 24 opportunity to collect that from other places. 25 Anything we can do to help cut down on that big So all of those opportunities out there. But I have And I see the older generation the www.compuscriptsinc.com 2/12/2013 71 1 demand and find ways to take advantage of that I 2 think is certainly great. 3 And in the case like Sunoco not only 4 will they be able to create electricity from that 5 but they'll also be able to create steam that 6 they'll use in the mill itself, so it's a good 7 situation. 8 9 10 11 12 13 14 SENATOR HUTTO: We are going to ask you to stay and ask everyone else to leave for a moment. (The Public Service Commission went into executive session from 11:18 to 11:34 a.m.) SENATOR HUTTO: The veil is lifted and we are adjourned. 15 16 17 (Thereupon the proceedings were concluded at 11:42 a.m.) 18 19 20 21 22 23 24 25 www.compuscriptsinc.com 2/12/2013 72 1 I N D E X 2 3 4 Page 5 6 CANDIDATE TESTIMONY 7 8 1 O'Neal Hamilton 3 9 2 Carolyn Schretzmann-Jebaily 33 10 3 Dale Surrett 47 11 12 13 E X H I B I T S 14 15 PSC page 16 17 1 O'Neal Hamilton's PDQ 5 18 2 Carolyn Jebaily's PDQ 35 19 3 Dale Surrett's PDQ 49 20 21 22 23 24 25 www.compuscriptsinc.com 2/12/2013 73 1 CERTIFICATE OF REPORTER 2 3 4 5 6 7 8 9 10 11 12 13 I, Mary K. McCormick, Court Reporter and Notary Public for the State of South Carolina, do hereby certify: That the foregoing proceeding was taken before me at the date and time and location as stated on page 1 of this transcript; that the witnesses were duly sworn to testify to the truth, the whole truth and nothing but the truth; that the testimony of the witnesses made at the time of the examination were recorded stenographically by me and were thereafter transcribed; that the foregoing proceeding as typed is a true, accurate and complete record of the proceedings to the best of my ability. I further certify that I am not of counsel or kin to any of the parties to this cause pending or interested in the events thereof. Witness my hand, I have hereunto affixed my official seal this 25th day of February, 2013, at Aiken County, South Carolina. 14 15 16 17 ___________________________________ Mary K. McCormick (Katy McCormick) Notary Public State of South Carolina at Large My Commission Expires: June 30, 2015 18 19 20 21 22 23 24 25 www.compuscriptsinc.com