COMMITTEE REPORT
March 11, 2020
H. 5335
S. Printed 3/11/20--H. [SEC 3/19/20 1:10 PM]
Read the first time March 3, 2020.
To whom was referred a Bill (H. 5335) to authorize the sale of the assets of the South Carolina Public Service Authority and the assumption or defeasment of its liabilities or the management of the operations of the Public Service Authority, etc., respectfully
That they have duly and carefully considered the same and recommend that the same do pass with amendment:
Amend the bill, as and if amended, by striking all after the enacting words and inserting:
SECTION 1. The General Assembly authorizes the sale of the assets of the South Carolina Public Service Authority and the assumption or defeasment of its liabilities in the manner provided by this act.
SECTION 2. A special committee is hereby created to be composed of six members, three from each House, to be selected by each body in the same manner members of conference committees are selected by that body. The duties and responsibilities of the special committee are to further negotiate the terms and conditions of the preferred sale proposal of Santee Cooper as recommended by the Department of Administration pursuant to Act 95 of 2019. The special committee shall adopt and set its own rules of procedure. The special committee at the conclusion of its deliberations shall recommend a proposal to sell the South Carolina Public Service Authority as modified by its further negotiations regarding the recommended preferred sale proposal. This recommendation and report may be accepted and approved by each House in the same manner conference committee reports are accepted and approved. Upon approval of the special committee report by the General Assembly, the report also must be transmitted to the Governor for his approval in the same manner enactments are presented to him under Article IV of the Constitution of this State. The Department of Administration shall execute on behalf of the State of South Carolina the documents necessary to effectuate the sale proposal approved in the manner provided in this section.
SECTION 3. In the event the provisions of this act and the provisions of Act 95 of 2019 conflict, the provisions of this act shall control.
SECTION 4. Various provisions of Title 58 of the 1976 Code are amended or added as follows:
A. Section 58-31-20 of the 1976 Code is amended to read:
"Section 58-31-20. (A) The Public Service Authority consists of a board of twelve directors who reside in South Carolina and who have the qualifications stated in this section, as determined by the State Regulation of Public Utilities Review Committee pursuant to Section 58-3-530(14), before being appointed by the Governor with the advice and consent of the Senate General Assembly as follows: one from each congressional district of the State; and one from each of the counties of Horry, Berkeley, and Georgetown who reside in authority territory and are customers of the authority.; and two from the State at large, one of whom must be chairman. Two of the directors must have substantial work experience within the operations of electric cooperatives or substantial experience on an electric cooperative board, including one of the two who must have substantial experience within the operations or board of a transmission or generation cooperative. A director shall not serve as an employee or board member of an electric cooperative during his term as a director Two of the directors from the congressional districts must have substantial work experience within the operations of electric cooperatives or substantial experience on an electric cooperative board, including one of the two who must have substantial experience within the operations or board of a transmission or generation cooperative. The board also shall have one director recommended to the Governor by the South Carolina Manufacturers Alliance to represent industrial customers of the authority, and one director recommended to the Governor by the governing authority of the authority's largest wholesale customer; provided, however, these two directors may not be an employee, counsel, or board member of a customer served by the authority.
A director shall not serve as an employee or board member of an electric cooperative during his term as a director. Each director shall serve for a term of seven five years, and shall not serve more than two consecutive terms except as provided in this section. At the expiration of the term of each director and of each succeeding director, the Governor, with the advice and consent of the Senate, must appoint a successor, who shall hold office for a term of seven years or until his successor has been appointed and qualified. In the event of a director vacancy due to death, resignation, or otherwise, the Governor must appoint the director's successor, with the advice and consent of the Senate General Assembly, and the successor-director shall hold office for the remainder of the unexpired term. A director may not receive a salary for services as director until the authority is in funds, but each director must be paid his actual expense in the performance of his duties, the actual expense to be advanced from the contingent fund of the Governor until the time the Public Service Authority is in funds, at which time the contingent fund must be reimbursed. After the Public Service Authority is in funds, the compensation and expenses of each member of the board must be paid from these funds, and the compensation and expenses must be fixed by the advisory board established in this section. A director may not receive a salary for services as a director. However, the authority, by vote at a regularly scheduled meeting, may choose to grant the director compensation based upon the availability of funds in excess of the pervious year's operational costs. This compensation must be reasonably based upon the financial performance of the authority in the pervious fiscal year. Directors may receive reimbursement from the authority for actual expenses associated with their service as directors. Members of the board of directors may be removed for cause, pursuant to Section 1-3-240(C) or a violation of Section 58-31-55, by the Governor of the State, the advisory board, or a majority thereof. A member of the General Assembly of the State of South Carolina is not eligible for appointment as Director of the Public Service Authority during the term of his office. No more than two members from the same county may serve as directors at any time. A director may not have made a campaign contribution to the Governor who appoints them in the election cycle immediately preceding their appointment.
(B) Candidates for appointment to the board must be screened by the State Regulation of Public Utilities Review Committee and, prior to confirmation by the Senate General Assembly, must be found qualified by meeting the minimum requirements contained in subsection (C). The review committee must submit a written report to the Clerk Clerks of the Senate and House setting forth its findings as to the qualifications of each candidate. A candidate must not serve on the board, even in an interim capacity, until he is screened and found qualified by the State Regulation of Public Utilities Review Committee.
(C)(1) Each member must possess abilities and experience that are generally found among directors of energy utilities serving this State and that allow him to make valuable contributions to the conduct of the authority's business. These abilities include substantial business skills and experience, but are not limited to:
(1)(a) general knowledge of the history, purpose, and operations of the Public Service Authority and the responsibilities of being a director of the authority;
(2)(b) the ability to interpret legal and financial documents and information so as to further the activities and affairs of the Public Service Authority;
(3)(c) with the assistance of counsel, the ability to understand and apply federal and state laws, rules, and regulations including, but not limited to, Chapter 4 of Title 30 as they relate to the activities and affairs of the Public Service Authority; and
(4)(d) with the assistance of counsel, the ability to understand and apply judicial decisions as they relate to the activities and affairs of the Public Service Authority.
(2) Each member also must have:
(a) a baccalaureate or more advanced degree from:
(i) a recognized institution of higher learning requiring face-to-face contact between its students and instructors prior to completion of the academic program;
(ii) an institution of higher learning that has been accredited by a regional or national accrediting body; or
(iii) an institution of higher learning chartered before 1962; and
(b) a background of substantial duration and an expertise in at least one of the following:
(i) energy issues;
(ii) telecommunications issues;
(iii) consumer protection and advocacy issues;
(iv) water and wastewater issues;
(v) finance, economics, and statistics;
(vi) accounting;
(vii) engineering; or
(viii) law.
(D) For the assistance of the board of directors of the Public Service Authority, there is hereby established an advisory board to be known as the advisory board of the South Carolina Public Service Authority, to be composed of the Governor of the State, the Attorney General, the State Treasurer, the Comptroller General, and the Secretary of State, as ex officio members, who must serve without compensation other than necessary traveling expenses. The advisory board must perform any duties imposed on it pursuant to this chapter, and must consult and advise with the board of directors on any and all matters which by the board of directors may be referred to the advisory board. The board of directors must make annual reports to the advisory board, which reports must be submitted to the General Assembly by the Governor, in which full information as to all of the acts of said board of directors shall be given, together with financial statement and full information as to the work of the authority. On July first of each year, the advisory board must designate a certified public accountant or accountants, resident in the State, for the purpose of making a complete audit of the affairs of the authority, which must be filed with the annual report of the board of directors. The Public Service Authority must submit the audit to the General Assembly.
(E) The following shall be nonvoting ex officio members of the board of directors entitled to attend all meetings of the authority board, including any executive sessions:
(1) The Chair of the Board of Central Electric Cooperative;
(2) The Secretary of Commerce or his designee;
(3) A designee of the Chairs of the House and Senate Labor, Commerce and Industry Committees.
(F) The members of the board annually shall elect a chairman and those officers it deems necessary to serve for terms of one year each in these capacities.
(G) The terms of all current members of the board serving on the effective date of this subsection shall expire at which time their successors must be selected in the manner provided for by this section. However, current board members shall continue to serve until their successors are appointed and qualify, and the two members appointed by the Governor upon recommendation of the Manufacturer's Alliance and upon the recommendation of the authority's largest wholesale customer shall be deemed to be the successors to the two current state at-large members."
B. Article 1, Chapter 31, Title 58 of the 1976 Code is amended by adding:
"Section 58-31-25. After the effective date of this section, major utility facilities, as defined in Section 58-33-20(2), of the Public Service Authority as proposed by the authority must be submitted to the Public Service Commission for approval and determined in the manner provided by Articles 1, 3, 5, and 7 of Chapter 33, Title 58. In addition to complying with the requirements of Articles 1, 3, 5, and 7 of Chapter 33, Title 58, the decision of the commission to approve a request by the authority to construct a major utility facility also must comply with Sections 58-31-295, 58-31-296, and 58-37-40."
C. Section 58-31-30(A)(11) and (12) of the 1976 Code is amended to read:
"(11) to make bylaws for the management and regulation of its affairs, including the establishment of subcommittees of the board of directors to include Finance and Audit, Public Information, Water Services and Resource Management, Generation and Power Supply Planning, and Executive and Governance, each of these making regular reports to the full board of directors at each regular meeting of the full board;
(12) to appoint officers, agents, employees, and servants, to prescribe their duties, and to fix their compensation to select a chief executive officer for the authority who shall cause the authority to employ all necessary employees and to approve the employment and compensation of any senior management officials selected as the chief executive officer;"
D. Section 58-31-55 of the 1976 Code is amended to read:
"Section 58-31-55. (A) Every Director shall owe a fiduciary duty of care to the State of South Carolina during his service as a director.
(B) A director shall discharge his duties as a director, including his duties as a member of a committee:
(1) in good faith;
(2) with the care an ordinarily prudent person in a like position would exercise under similar circumstances; and
(3) in a manner he reasonably believes to be in the best interests of the Public Service Authority. As used in this chapter, 'best interests' means a balancing of the following:
(a) preservation of the financial integrity of the Public Service Authority and its ongoing operation of generating, transmitting, and distributing electricity to wholesale and retail customers on a reliable, adequate, efficient, and safe basis, at just and reasonable rates, regardless of the class of customer;
(b) economic development and job attraction and retention within the Public Service Authority's present service area or areas within the State authorized to be served by an electric cooperative or municipally owned electric utility that is a direct or indirect wholesale customer of the authority; and
(c) subject to the limitations of Section 58-31-30(B) and item (3)(a) of this section, exercise of the powers of the authority set forth in Section 58-31-30 in accordance with good business practices and the requirements of applicable licenses, laws, and regulations.
(B)(C) In discharging his duties, a director is entitled to rely on information, opinions, reports, or statements, including financial statements and other financial data, if prepared or presented by:
(1) one or more officers or employees of the Public Service Authority whom the director reasonably believes to be reliable and competent in the matters presented;
(2) legal counsel, public accountants, or other persons as to matters the director reasonably believes are within the person's professional or expert competence; or
(3) a committee of the board of directors of which he is not a member if the director reasonably believes the committee merits confidence.
(C)(D) A director is not acting in good faith if he has knowledge concerning the matter in question that makes reliance otherwise permitted by subsection (B) unwarranted.
(D)(E) A director is not liable for any action taken as a director, or any failure to take any action, if he performed the duties of his office in compliance with this section, except for a violation of the fiduciary duty contained in subsection (A).
(E)(F) An action against a director for failure to perform the duties imposed by this section must be commenced within three years after the cause of action has occurred, or within two years after the time when the cause of action is discovered or should reasonably have been discovered, whichever occurs sooner. This limitations period does not apply to breaches of duty which have been concealed fraudulently."
E. Article 1, Chapter 31, Title 58 of the 1976 Code is amended by adding:
"Section 58-31-230. (A) The Public Service Authority of South Carolina shall explore joint cost-saving opportunities through joint agreements with a privately owned electrical utility for the purpose of advancing system economy and reliability and generating cost savings to its customers. In order to advance system economy and reliability and generate cost savings, the Public Service Authority of South Carolina, subject to approval of the Public Service Commission, shall have all the powers which may be necessary or convenient for the exercise of such action, and shall discharge its duties by evaluating the joint management of the following services with a privately owned electrical utility:
(1) non-nuclear electric generation matters by providing for:
(a) the provision of generation outage, security, engineering, training, benchmarking, environmental emissions data capture, and decommissioning support services; and
(b) the provision of planning, engineering, and construction operati