South Carolina General Assembly
116th Session, 2005-2006

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A137, R82, S573

STATUS INFORMATION

General Bill
Sponsors: Senators McConnell, Verdin, Rankin, Courson, Elliott and Ford
Document Path: l:\council\bills\ms\7347dw05.doc
Companion/Similar bill(s): 3732

Introduced in the Senate on March 3, 2005
Introduced in the House on April 20, 2005
Last Amended on May 12, 2005
Passed by the General Assembly on May 17, 2005
Governor's Action: May 24, 2005, Vetoed
Legislative veto action(s): Veto overridden

Summary: Public Service Authority

HISTORY OF LEGISLATIVE ACTIONS

     Date      Body   Action Description with journal page number
-------------------------------------------------------------------------------
    3/3/2005  Senate  Introduced and read first time SJ-8
    3/3/2005  Senate  Referred to Committee on Judiciary SJ-8
   3/22/2005          Scrivener's error corrected
   4/13/2005  Senate  Recalled from Committee on Judiciary SJ-2
   4/14/2005  Senate  Special order, set for 04/14/05
   4/18/2005  Senate  Amended SJ-46
   4/18/2005  Senate  Read second time SJ-46
   4/19/2005  Senate  Read third time and sent to House SJ-42
   4/19/2005          Scrivener's error corrected SJ-42
   4/19/2005          Scrivener's error corrected
   4/20/2005  House   Introduced and read first time HJ-12
   4/20/2005  House   Referred to Committee on Labor, Commerce and Industry 
                        HJ-13
   5/11/2005  House   Committee report: Favorable with amendment Labor, 
                        Commerce and Industry HJ-2
   5/12/2005  House   Amended HJ-11
   5/12/2005  House   Read second time HJ-16
   5/17/2005  House   Read third time and returned to Senate with amendments 
                        HJ-16
   5/17/2005  Senate  Concurred in House amendment and enrolled SJ-28
   5/18/2005          Ratified R 82
   5/24/2005          Vetoed by Governor
   5/25/2005  Senate  Veto overridden by originating body Yeas-43  Nays-1
   5/25/2005  House   Veto overridden Yeas-104  Nays-5 HJ-321
   6/13/2005          Copies available
   6/13/2005          Effective date See Act for Effective Date
   6/16/2005          Act No. 137

View the latest legislative information at the LPITS web site

VERSIONS OF THIS BILL

3/3/2005
3/22/2005
4/13/2005
4/18/2005
4/19/2005
4/19/2005-A
5/11/2005
5/12/2005


(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)

(A137, R82, S573)

AN ACT TO AMEND SECTION 1-3-240, AS AMENDED, CODE OF LAWS OF SOUTH CAROLINA, 1976, RELATING TO OFFICERS WHO MAY BE REMOVED BY THE GOVERNOR FOR CAUSE, SO AS TO DELETE THE COMMISSION OF THE DEPARTMENT OF REVENUE, TO ADD THE DIRECTORS OF THE SOUTH CAROLINA PUBLIC SERVICE AUTHORITY AND TO ESTABLISH CONDITIONS UNDER WHICH DIRECTORS MAY BE REMOVED; TO AMEND SECTION 15-78-60, RELATING TO GOVERNMENTAL IMMUNITY, SO AS TO PROVIDE THAT THE PUBLIC SERVICE AUTHORITY IS NOT LIABLE FOR CERTAIN LOSSES RESULTING FROM CONDUCT OF A DIRECTOR OF THE AUTHORITY; TO AMEND SECTION 15-78-70, RELATING TO THE LIABILITY OF A GOVERNMENTAL EMPLOYEE, SO AS TO PROVIDE THAT A DIRECTOR OF THE PUBLIC SERVICE AUTHORITY IS NOT IMMUNE FROM LIABILITY FOR CERTAIN CONDUCT AND TO PROVIDE THAT THE INSURANCE RESERVE FUND IS PROHIBITED FROM PROVIDING INSURANCE COVERAGE FOR THAT INDIVIDUAL LIABILITY; TO AMEND SECTION 58-3-530, RELATING TO THE DUTIES AND FUNCTIONS OF THE STATE REGULATIONS OF PUBLIC UTILITIES REVIEW COMMITTEE, SO AS TO ADD THE DUTY TO SCREEN CANDIDATES FOR THE BOARD OF DIRECTORS OF THE PUBLIC SERVICE AUTHORITY; TO AMEND SECTION 58-31-20, RELATING TO THE BOARD OF DIRECTORS OF THE PUBLIC SERVICE AUTHORITY, SO AS TO SET FORTH QUALIFICATIONS AND REQUIREMENTS FOR DIRECTORS AND TO PROVIDE FOR THE SCREENING OF DIRECTORS; TO AMEND SECTION 58-31-30, AS AMENDED, RELATING TO THE POWERS OF THE PUBLIC SERVICE AUTHORITY, SO AS TO PROHIBIT THE AUTHORITY FROM DISPOSING OF CERTAIN PROPERTY WITHOUT PRIOR APPROVAL OF THE GENERAL ASSEMBLY OR FROM INQUIRING INTO THE FEASIBILITY OF DISPOSING OF ITS PROPERTY; BY ADDING SECTION 58-31-55 SO AS TO PROVIDE STANDARDS OF CONDUCT FOR DIRECTORS OF THE PUBLIC SERVICE AUTHORITY; BY ADDING SECTION 58-31-56 SO AS TO DEFINE CONFLICT OF INTEREST TRANSACTION; BY ADDING SECTION 58-31-57 SO AS TO PERMIT CUSTOMERS OF THE PUBLIC SERVICE AUTHORITY TO SUE DIRECTORS OF THE AUTHORITY FOR BREACH OF DUTY AND TO PROVIDE DAMAGES; TO AMEND SECTION 58-31-110, RELATING TO THE TRANSFER OF NET EARNINGS OF THE PUBLIC SERVICE AUTHORITY, SO AS TO PROVIDE THAT ONLY THE NET EARNINGS NOT NECESSARY FOR THE OPERATION OF AND IN THE BEST INTEREST OF THE PUBLIC SERVICE AUTHORITY SHALL BE PAID TO THE STATE TREASURER AND USED TO REDUCE THE TAX BURDENS ON THE PEOPLE OF THE STATE AND PROVIDE THAT NOTHING IN THIS SECTION PROHIBITS THE AUTHORITY FROM PAYING CERTAIN AMOUNTS TO THE STATE; AND TO AMEND SECTION 58-31-320, RELATING TO THE PROVISION OF ELECTRIC SERVICE BY THE AUTHORITY TO CERTAIN CUSTOMERS, SO AS TO AUTHORIZE THE AUTHORITY TO EXCHANGE OR INTERCHANGE SERVICE WITH, PURCHASE ELECTRIC ENERGY FROM, OR SELL ELECTRIC ENERGY TO ANY JOINT AGENCY ORGANIZED AND OPERATING PURSUANT TO THE PROVISIONS OF CHAPTER 23 OF TITLE 6.

Be it enacted by the General Assembly of the State of South Carolina:

Removal of persons of certain boards, commissions, etc.

SECTION    1.    Section 1-3-240(C) of the 1976 Code, as last amended by Act 175 of 2004, is further amended to read:

"(C)(1)        Persons appointed to the following offices of the State may be removed by the Governor for malfeasance, misfeasance, incompetency, absenteeism, conflicts of interest, misconduct, persistent neglect of duty in office, or incapacity:

(a)    Workers' Compensation Commission;

(b)    Reserved;

(c)    Ethics Commission;

(d)    Election Commission;

(e)    Professional and Occupational Licensing Boards;

(f)    Juvenile Parole Board;

(g)    Probation, Parole and Pardon Board;

(h)    Director of the Department of Public Safety;

(i)        Board of the Department of Health and Environmental Control, excepting the chairman;

(j)        Chief of State Law Enforcement Division;

(k)    South Carolina Lottery Commission;

(l)        Executive Director of the Office of Regulatory Staff; and

(m)    Directors of the South Carolina Public Service Authority appointed pursuant to Section 58-31-20. A director of the South Carolina Public Service Authority also may be removed for his breach of any duty arising under Sections 58-31-55 or 58-31-56. The Governor must not request a director of the South Carolina Public Service Authority to resign unless cause for removal, as established by this subsection, exists. Removal of a director of the South Carolina Public Service Authority, except as is provided by this section or by Section 58-31-20(A), must be considered to be an irreparable injury for which no adequate remedy at law exists.

(2)    Upon the expiration of an officeholder's term, the individual may continue to serve until a successor is appointed and qualifies."

Liability for conduct of director

SECTION    2.    Section 15-78-60 of the 1976 Code is amended by adding the following numbered item to read:

"(38)    conduct of a director appointed pursuant to Section 58-31-20 giving rise to a lawsuit under Section 58-31-57."

Immunity of director

SECTION    3.    Section 15-78-70 of the 1976 Code is amended by adding the following lettered subsection at the end to read:

"(e)    Nothing in this chapter may be construed to give a director appointed pursuant to Section 58-31-20 immunity from suit and liability as set forth in Section 58-31-57. The State Budget and Control Board, Insurance Reserve Fund, is prohibited from providing insurance coverage for this individual liability; however, nothing shall prevent the Public Service Authority or its directors from obtaining insurance coverage from any other source."

Duty to screen candidates

SECTION    4.    Section 58-3-530 of the 1976 Code, as added by Act 175 of 2004, is amended by adding the following numbered subsection at the end to read:

"(14)    to review candidates for appointment to the South Carolina Public Service Authority Board of Directors as submitted by the Governor to determine whether the candidates meet the qualifications set forth in Section 58-31-20."

Board of authority

SECTION    5.    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 eleven directors who reside in South Carolina and who shall 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 as follows: one from each congressional district of the State; 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 shall be chairman. Two of the directors shall have substantial work experience within the operations of electric cooperatives or substantial experience on an electric cooperative board, but must not serve as an employee or board member of an electric cooperative during their term as director. Each director shall serve for a term of seven years, except as provided in this section. At the expiration of the term of each director and of each succeeding director, the Governor must appoint with the advice and consent of the Senate 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, and the successor-director shall hold office for the unexpired term. No director shall 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 hereunder, the actual expense to be advanced from the contingent fund of the Governor until such time as the Public Service Authority is in funds, at which time the contingent fund shall be reimbursed. After the Public Service Authority is in funds, the compensation and expenses of each member of the board shall be paid from such funds, and the compensation and expenses must be fixed by the advisory board hereinafter established. Members of the board of directors may be removed for cause, as established in Section 1-3-240(C), by the Governor of the State, the advisory board, or a majority thereof. No member of the General Assembly of the State of South Carolina shall be 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 shall serve as directors at any time.

(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, must be found qualified by meeting the minimum requirements contained in subsection (C). The review committee must submit a written report to the Clerk of the Senate 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)    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)    general knowledge of the history, purpose, and operations of the Public Service Authority and the responsibilities of being a director of the authority;

(2)    the ability to interpret legal and financial documents and information so as to further the activities and affairs of the Public Service Authority;

(3)    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)    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.

(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."

Powers of board

SECTION    6.    Section 58-31-30 of the 1976 Code, as last amended by Act 283 of 1996, is further amended to read:

"Section 58-31-30.    (A)    The Public Service Authority has power to develop the Cooper River, the Santee River, and the Congaree River in this State, as instrumentalities of intrastate, interstate, and foreign commerce and navigation; to produce, distribute, and sell electric power; to acquire, treat, distribute, and sell water at wholesale; to reclaim and drain swampy and flooded lands; and to reforest the watersheds of rivers in this State; and also has all powers which may be necessary or convenient for the exercise of these powers including, without limiting the generality of the foregoing, the following powers:

(1)    to have perpetual succession as a corporation;

(2)    to sue and be sued;

(3)    to adopt, use, and alter a corporate seal;

(4)    to acquire, purchase, hold, use, lease, mortgage, sell, transfer, and dispose of any property, real, personal, or mixed, or any interest therein;

(5)    to divert water from the Tail Race Canal by means of canals, flumes, or otherwise and to build, construct, maintain, and operate canals, dams, locks, aqueducts, reservoirs, draw-spans, ditches, drains, and roads, and to lay and construct any tunnels, penstocks, culverts, flumes, conduits, mains, and other pipes necessary or useful in connection therewith;

(6)    to divert waters from the Santee River by means of a canal or canals, flume or flumes, or otherwise, and to construct and maintain a dam of any height or size for the purpose of impounding said waters and to discharge the same into the Cooper River, or otherwise;

(7)    to build, acquire, construct, and maintain power houses and any and all structures, ways and means, necessary, useful or customarily used and employed in the manufacture, generation, and distribution of water power, steam electric power, hydroelectric power, and any and all other kinds of power, including power transmission lines, poles, telephone lines, substations, transformers, and generally all things used or useful in the manufacture, distribution, purchase, and sale of power generated by water, steam, or otherwise;

(8)    to manufacture, produce, generate, transmit, distribute, and sell water power, steam electric power, hydroelectric power, or mechanical power within and without the State of South Carolina;

(9)    to reclaim and drain swampy and flooded lands;

(10)    to reforest the watersheds of the Cooper, Santee, and Congaree Rivers and to prevent soil erosion and floods;

(11)    to make bylaws for the management and regulation of its affairs;

(12)    to appoint officers, agents, employees, and servants, to prescribe their duties, and to fix their compensation;

(13)    to fix, alter, charge, and collect tolls and other charges for the use of their facilities of, or for the services rendered by, or for any commodities furnished by, the Public Service Authority at rates to be determined by it, these rates to be at least sufficient to provide for payment of all expenses of the Public Service Authority, the conservation, maintenance, and operation of its facilities and properties, the payment of principal and interest on its notes, bonds, and other evidences of indebtedness or obligation, and to fulfill the terms and provisions of any agreements made with the purchasers or holders of any such notes, bonds, or other evidences of indebtedness or obligation;

(14)    as necessary to borrow money, make and issue negotiable notes, bonds, and other evidences of indebtedness including refunding and advanced refunding notes, bonds, and other evidences of indebtedness, of the Public Service Authority; to secure the payment of these obligations or any part of them by mortgage, lien, pledge, or deed of trust, on all or any of its property, contracts, franchises, or revenues including the proceeds of the refunding and advanced refunding notes, bonds, and other evidences of indebtedness and the investments in which these proceeds are invested and the earning on and income from them; to invest its monies including without limitation, its revenues and the proceeds of these notes, bonds, or other evidences of indebtedness, in obligations of, or obligations the principal of and interest on which are guaranteed by or are fully secured by contracts with, the United States of America, in obligations of any agency, instrumentality, or corporation which has been or may be created by or pursuant to an act of Congress of the United States as an agency, instrumentality, or corporation of them, in direct and general obligations of the State of South Carolina, and in certificates of deposit issued by any bank, trust company, or national banking association. The authority, when investing in certificates of deposit, shall invest in certificates of deposit issued by institutions authorized to do business in South Carolina if the institutions offer terms which, in the opinion of the authority, are equal to or better than those offered by other institutions; to make such agreements with the purchasers or holders of the notes, bonds, or other evidences of indebtedness, or with others in connection with any of these notes, bonds, or other evidences of indebtedness, whether issued or to be issued, as the Public Service Authority shall deem advisable; and in general to provide for the security for said notes, bonds, or other evidences of indebtedness and the rights of the holders of them; provided, that in the exercise of the powers in this section granted to issue advanced refunding notes, bonds, or other evidences of indebtedness, the Public Service Authority may, but is not required to, avail itself of or comply with any of the provisions of the Advanced Refunding Act, Sections 11-21-10 to 11-21-80;

(15)    to endorse or otherwise guarantee the obligations of a corporation all of the voting stock of which the Public Service Authority may own or acquire;

(16)    without limitation of the foregoing, to borrow money from the United States Government or any corporation or agency created, designed, or established by the United States;

(17)    to make contracts of every name and nature and to sue and be sued thereon; to enter into agreements providing for binding arbitration between the parties thereto; and to execute all instruments necessary or convenient for the carrying on of its business;

(18)    to have power of eminent domain;

(19)    to mortgage, pledge, hypothecate, or otherwise encumber all or any of the property, real, personal, or mixed, or facilities, or revenues of the Public Service Authority as security for notes, bonds, evidences of indebtedness, or other obligations of the Public Service Authority;

(20)    to do all acts and things necessary or convenient to carry out the powers granted to it by this chapter or any other law;

(21)    to investigate, study, and consider all undeveloped power sites and navigation projects in the State and to acquire or develop the same as need may arise in the same manner as herein provided. Provided, always, nevertheless, that said investigations, studies, and considerations of said South Carolina Public Service Authority herein created shall be limited to the Congaree River and its tributaries below the confluence of the Broad and Saluda Rivers and the Wateree tributary of the Santee River at and near a point at or near Camden, South Carolina. Provided, however, that the Public Service Authority shall have no power at any time or in any manner to pledge the credit and the taxing power of the State or any of its political subdivisions, nor shall any of its obligations or securities be deemed to be obligations of the State or of any of its political subdivisions; nor shall the State be legally, equitably, or morally liable for the payment of principal of and interest on such obligations or securities. The State of South Carolina does hereby pledge to and agree with any person, firm, or corporation, the government of the United States and any corporation or agency created, designated, or established by the United States, subscribing to or acquiring the notes, bonds, evidences of indebtedness, or other obligations to be issued by the Public Service Authority for the construction of any project, that the State will not alter or limit the rights hereby vested in the Public Service Authority until the said notes, bonds, evidences of indebtedness, or other obligations, together with the interest thereon, are fully met and discharged; provided, that nothing herein contained shall preclude such limitation or alteration if and when and after adequate provisions shall be made by law for the protection of those subscribing to or acquiring such notes, bonds, evidences of indebtedness, or other obligations of the Public Service Authority. The State of South Carolina or any political subdivision shall in no way be responsible for any debts or obligations contracted by or for the authority, and the board of directors of the authority, the advisory board, and the officers shall make no debt whatsoever for the payment of which the State or any political subdivision shall in any way be bound. It is intended that the project to be developed hereunder and any and all projects undertaken by the provisions of this chapter shall be financed as self-liquidating projects and that the credit and taxing powers of the State, or its political subdivisions, shall never be pledged to pay said debts and obligations;

(22)    to acquire or purchase, if requested to do so, or to construct, operate, and maintain all structures and facilities necessary, useful, or customarily used and employed in the treatment and distribution of water for industrial, commercial, domestic, or agricultural purposes within the counties of Berkeley, Calhoun, Charleston, Clarendon, Colleton, Dorchester, Orangeburg, and Sumter. The provisions of this section do not apply to the acquisition or purchase of existing electric systems;

(23)    to acquire, treat, transmit, distribute, and sell water at wholesale within the counties of Berkeley, Calhoun, Charleston, Clarendon, Colleton, Dorchester, Orangeburg, and Sumter if requested in writing to do so by the governing body of any incorporated municipality, by the governing body of any special purpose district providing water service in the unincorporated areas of each county, or by the governing body of each county for those unincorporated areas not so provided water service by a special purpose district. The authority may not transfer water from one river basin to another except for those located in the counties specified in this item. However, the authority shall prepare and maintain its books and records for its water supply operations separate and apart from its books and records for the generation, transmission, and distribution of electric power. The costs of water supply operations, including the loss of the generation of hydroelectric power, may not affect rates and charges for electric service. Water must be offered for sale by the authority on a nondiscriminatory basis without regard to whether electricity is also purchased from the authority.

Without limiting the generality of the foregoing, the Public Service Authority shall have power and is authorized as necessary to issue its negotiable bonds and to secure the payment of the same by mortgage, lien, pledge, or deed of trust on or of all or any of its property, contracts, franchises, or revenues. These bonds must be authorized by resolution of the board of directors and bear the date or dates, be in the forms, and contain the provisions as the board of directors may determine. Any resolution or resolutions authorizing any notes, bonds, or other evidences of indebtedness may contain provisions, which must be a part of the contract with the holders of them, as to (a) the rates of tolls and other charges for use of the facilities of, or for the services rendered by, or for the commodities furnished by the Public Service Authority, (b) the setting aside of reserves or sinking funds and the regulation and disposition of them, (c) reserving the right to redeem the notes, bonds, or other evidences of indebtedness at such prices, not exceeding one hundred five percent of the principal amount of them and accrued interest, as may be provided, (d) limitations on the issuance of additional bonds, (e) the terms and provisions of any mortgage or deed of trust securing the bonds or under which the same may be issued, and (f) any other or additional agreements with the holders of the notes, bonds, or other evidences of indebtedness.

The Public Service Authority may enter into any mortgages, deeds of trust, or other agreements with any bank or trust company or other person or persons in the United States having power to enter into the same, including the United States Government or any agency or creature thereof, as security for the notes, bonds, or other evidences of indebtedness and may transfer, convey, mortgage, or pledge all or any of the property, contracts, franchises, or revenues of the Public Service Authority thereunder. Such mortgage, deed of trust, or other agreement may contain provisions as may be customary in the instruments or as the Public Service Authority may authorize including, but without limitation, provisions as to (a) the construction, operation, maintenance, and repair of the properties or facilities of the Public Service Authority, (b) the application of funds and the safeguarding of funds on hand or on deposit, (c) the rights and remedies of the trustee and the holders of the bonds, (d) possession of the mortgaged properties, and (e) the terms and provisions of the bonds, and also may provide for a franchise for operation of the property and business of the Public Service Authority, or any part thereof, to any person, firm, or corporation, including the United States Government, or any agency thereof, acquiring the mortgaged property or any part thereof upon foreclosure for a period of not to exceed twenty years from the date of the acquisition.

(B)    The powers conferred by subsection (A) upon the board of directors may not be construed to give the board of directors the power to sell, lease, or dispose of, except by way of mortgage or deed of trust, all of the property, real, personal, or mixed, of the authority, but the board of directors may sell, lease, or dispose of any surplus property which it may acquire and which the board of directors deems not to be necessary for the purpose of the development. Without prior approval from the General Assembly by act, the authority must not sell, transfer, lease, dispose of, or convey any property, real, personal, or mixed, of the authority used in the generation, transmission, or distribution of electricity, beyond that property considered to be surplus. However, the authority may lease property owned by the authority, including property within the authority's Federal Energy Regulatory Commission Project boundaries, provided the lease does not substantially or materially impair its ability to meet electricity generation, transmission, and distribution needs of its ongoing operation including an adequate reserve capacity and such growth in needs as reasonably may be forecasted. Further, the lease must be in the best interests of the authority as defined in Section 58-31-55(A)(3).

Without prior approval from the General Assembly by act, the authority must not inquire into the feasibility of the sale, transfer, lease, disposal, or conveyance of property, real, personal, or mixed, of the authority that is used in the generation, transmission, or distribution of electricity unless the sale, transfer, lease, disposition, or conveyance would not materially impair the authority's ability to meet generation, transmission, and distribution needs of its ongoing operation including an adequate reserve capacity and such growth in needs as reasonably may be forecasted."

Discharge of duties, conflict of interest, customers may bring suit

SECTION    7.    Article 1, Chapter 31, Title 58 of the 1976 Code is amended by adding:

"Section 58-31-55.    (A)    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)    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)    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)    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.

(E)    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.

Section 58-31-56.    (A)    A conflict of interest transaction is a transaction with the Public Service Authority in which a director of the Public Service Authority has a direct or indirect interest. A conflict of interest transaction is not voidable by the Public Service Authority solely because of the director's interest in the transaction if any one of the following is true:

(1)    the material facts of the transaction and the director's interest were disclosed or known to the board of directors or a committee of the board of directors, and the board of directors or a committee authorized, approved, or ratified the transaction; or

(2)    the transaction was fair to the Public Service Authority and its customers.

If item (1) has been accomplished, the burden of proving unfairness of any transaction covered by this section is on the party claiming unfairness. If item (1) has not been accomplished, the party seeking to uphold the transaction has the burden of proving fairness.

(B)    For purposes of this section, a director of the Public Service Authority has an indirect interest in a transaction if:

(1)    another entity in which he has a material financial interest or in which he is a general partner is a party to the transaction; or

(2)    another entity of which he is a director, officer, or trustee is a party to the transaction and the transaction is or should be considered by the board of directors of the Public Service Authority.

(C)    For purposes of subsection (A)(1), a conflict of interest transaction is authorized, approved, or ratified if it receives the affirmative vote of a majority of the directors on the board of directors (or on the committee) who have no direct or indirect interest in the transaction, but a transaction may not be authorized, approved, or ratified under this section by a single director. If a majority of the directors who have no direct or indirect interest in the transaction vote to authorize, approve, or ratify the transaction, a quorum is present for the purpose of taking action under this section. The presence of, or a vote cast by, a director with a direct or indirect interest in the transaction does not affect the validity of any action taken under subsection (A)(1) if the transaction is otherwise authorized, approved, or ratified as provided in that subsection.

Section 58-31-57.    Wholesale and retail customers of the Public Service Authority and electric cooperatives that are indirect customers of the Public Service Authority may bring suit against Public Service Authority directors asserting a breach of any duty arising under Sections 58-31-55 and 58-31-56. If it is proved that a director violated the provisions of Section 58-31-55 or Section 58-31-56, he is subject to liability under the same theories of liability as for a breach of duty by a corporate director pursuant to Title 33 and South Carolina common law. Liability under this section shall be limited to disgorgement of any ill-gotten gain and damages of not more than fifty thousand dollars per occurrence and reasonable attorney's fees and costs. If the customer prevails, the court may also grant appropriate equitable relief and may award reasonable attorney's fees and costs. Any remedy granted or damages awarded pursuant to this section do not relieve a director from criminal liability or preclude criminal prosecution."

Transfer of earnings

SECTION    8.    Section 58-31-110 of the 1976 Code is amended to read:

"Section 58-31-110.    The South Carolina Public Service Authority is a corporation, completely owned by and to be operated for the benefit of the people of this State. Any and all net earnings of the Public Service Authority not necessary for the prudent conduct and operation of its business in the best interests of the Public Service Authority as defined by Section 58-31-55(A)(3) or to pay the principal of and interest on its bonds, notes, or other evidences of indebtedness or other obligations, or to fulfill the terms and provisions of any agreements made with the purchasers or holders thereof or others must be paid over semiannually to the State Treasurer for the general funds of the State and must be used to reduce the tax burdens on the people of this State. Nothing in this section shall prohibit the authority from paying to the State each year up to one percent of its projected operating revenues, as such revenues would be determined on an accrual basis, from the combined electric and water systems."

Provision of service by authority

SECTION    9.    Section 58-31-320 of the 1976 Code is amended to read:

"Section 58-31-320.    After July 9, 1973, the Public Service Authority shall have the right to provide electric service only to, and it shall have the right to serve:

(1)    Central Electric Power Cooperative, Inc., including:

(a)    all electric cooperatives that are members of Central Electric Power Cooperative, Inc., on July 9, 1973;

(b)    any electric cooperative which after July 9, 1973, becomes a member of Central Electric Power Cooperative, Inc.;

(c)    any electric cooperative which after July 9, 1973, ceases to be a member of Central Electric Power Cooperative, Inc.; and

(d)    in the event Central Electric Power Cooperative, Inc., ceases to exist as a corporate entity, any electric cooperative which was a member of Central Electric Power Cooperative, Inc., at the time of its dissolution;

(2)    all premises, customers, and electric cooperatives served by it on July 9, 1973;

(3)    its present service area as defined in Section 58-31-330;

(4)    those areas owned, leased, or controlled by the Public Service Authority adjacent to the lakes and waterways of Federal Power Commission Project No. 199.

If, after July 9, 1973, any customers, premises, or electric cooperatives located outside the present service area of the Public Service Authority as defined in Section 58-31-330 and being served by the Public Service Authority, including any subsequent expansions or additions by such customers, premises, or cooperatives, ceases or discontinues accepting electrical service from the Public Service Authority, the Public Service Authority may subsequently sell and furnish electrical service to new customers, premises, or electric cooperatives from its major transmission lines in an amount not exceeding the amount of power the sale of which was lost by reason of such discontinuation of service.

Nothing contained herein shall be construed to restrict the right of the Public Service Authority to furnish electric service to its own premises; to exchange or interchange electric service with, purchase electric energy from, or sell electric energy to any other electrical utility or any joint agency organized and operating pursuant to Chapter 23 of Title 6; to construct additional facilities, within or without its present service area, as defined in Section 58-31-330; to construct additional delivery points to or for any of the premises or customers it is authorized to serve as provided for in this section; or to fulfill the growth needs of any customer legally served by it."

Responsibilities and duties of directors

SECTION    10.    Responsibilities and duties of the directors of the Public Service Authority created by the provisions of this act are in addition to responsibilities and duties created by other provisions of law.

Time effective

SECTION    11.    This act becomes effective upon approval by the Governor. The provisions in SECTIONS 4 and 5 are effective for directors confirmed on or after this act's effective date. Notwithstanding any other provision of this act, the Senate Judiciary Committee shall act instead of the State Regulation of Public Utilities Review Committee, mutatis mutandis, for any appointment made on or before July 1, 2005.

Ratified the 18th day of May, 2005.

Vetoed by the Governor -- 5/24/05.

Veto overridden by Senate -- 5/25/05.

Veto overridden by House -- 5/25/05.

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This web page was last updated on Friday, December 4, 2009 at 3:30 P.M.