Facilities from the Heath Springssprings )) Light &6 Power Company to I.Ynchesiynches )) River Electric Cooperative, Inc.Inc

BEFOREBEFORE

THETHE PUBLICPUBLIC SERVICESERVICE COMMISSIONCOMMISSION OFOF

SOUTHSOUTH CAROLINACAROLINA

DOCKETDOCKET NO.NO. 86-600-E86-600-E -—ORDERORDER NO.NO. 86-130286-1302

DecemberDecember 23,23, 19861986

ININ RE:RE: PetitionPetition ofof LynchesLynches RiverRiver ElectricElectric )) Cooperative,Cooperative, Inc.Inc. andand HeathHeath SpringsSprings )) LightLight. &6 PowerPower CompanyCompany forfor authorityauthority )) toto permitpermi. t LynchesLynches RiverRiver ElectricElectric )) Cooperative,Cooperative, Inc.Inc. toto purchasepurcha. se thethe )) electricelectric distributiondistribution facilities,facilities, )) ORDERORDER APPROVINGAPPROVING andand assetsassets ofof thethe HeathHeath SpringsSprings Light)Light. ) SALESALE OFOF SYSTEMSYSTEM andand PowerPower Company; and forfor thethe HeathHeath )) ANDAND REASSIGNMENTREASSIGNMENT SpringsSpr.ings LightLight. andand PowerPower CompanyCompany toto )) OFOF SERVICESERVICE AREAAREA sellsell such.uch assets,assets, and for thethe re-asre-as )) signmentsignment. ofof, the area served byby thesethese )) facilities from the Heath SpringsSprings )) Light &6 Power Company to I.ynchesIynches )) River Electric Cooperative, Inc.Inc. ))

This matter comes before the Public Service CommissionCommi. ssion of

South Carolina (the Commission) by way of a Petition jointly

filed by Lynches River FlectricElectric Cooperative, Inc. (Lynches River)

and HeathHeath Spr,Springsngs Light.Light and PowerPower Company (Heath Springs)

(collectively(collectively referred tot.o asas "Pet."Petitioners").itioners") for authority to

permit.permit LynchesLynches RiverRiver ElectricElectric Cooperative, Inc.Inc. to purchase the

electricelectric distribution faci.facilitieslit. ies andand assets of the HeathHeath SpringsSprings

Li.Lightght. andand PowerPower CompanyCompany andand forfor HeathHeath SpringsSprings LightLight andand PowerPower

CompanyCompany toto sellsell suchsuch assets,assets, andand forfor thethe re-assignmentre-assignment ofof thethe

areaarea .servederved byby thesethese facilitiesfacilities fromfrom HeathHeath SpringsSprings LightLight andand

PowerPower CompanyCompany toto LynchesLynches RiverRiver E'ectricElectric Cooperative,Cooperative, Inc.Inc. TheThe

Petit.Petitionion waswas filedfiled pursuantpursuant toto S.S.C.C. CodeCode Ann.Ann. SectionsSections

58-27-650(A)58-27-650(A) (1976),(1976), asas amendedamended andand 58-27-1.58-27-1300300 (1976)(1976). . DOCKETNO. 86-600-E -— ORDERNO. 86-1302 December 23, 1986 PagePae 2

Upon receipt of thethe Petition, thethe Commission'sCommi. ssion's Executive DirectorDirector:instructedinstructed thethe Petitioners to publish a Notice of Filing

and Hearing once a week for two consecutive weeks in.in a publication of general coverage in the affected area. The Petitioners were also required to file, in writing, a publisher'spubl. isher's affidavit. The NoticeNoti. ce provided the public hearing to be commence Wednesday, December 17, 1986 at 2:30 p.m.p. m. inin the Offices of the Commission, IIi111 Doctor's Circle, Columbia, South Carolina. The

Notice was also published in the State Register.

Subsequently, the CommissionCommiss. ion rescheduled the hearing on the

Petition to commence Monday,IIonday, December 22, 1986.1986 at 2:30 p.m.p. m. in

the Offices of the Commission. A copy of the Notice rescheduling

the hearing was sent to each customer of Heath Springs.Spri. ngs. Petitions to Intervene were filed by the following parties:

Duke Power Company (Duke Power), C. David Small of Sma!l'sSmall's FoodFood.

Center.Center, , and Stanley T. Marshall,Narshall, General Manager of Triangle Machine Co.

Thereafter, the hearing was duly held on December 22, ]9861986

at 2:30 p.m.,p. m. , the Honorable Cecil A. Bowers_Bowers, presiding. Robert J. Sheheen, Esquire, representedrepresented. Heath Springs; E. Crosby Lewis, Esquire, represented Lynches River; Wm. Larry Porter, Esquire,Fsquire,

represented Duke Power; Mr.Yir. Smalls appeared propra se; Mr.Nr. Marshall

appeared pro se; and MarshaNarsha A. Ward, Staff Counsel, represented

the Commission Staff.Sta f. DOCKETDOCKET NO.NO. 86-600-E86-600-E -—ORDERORDER NO.NO. 86-130286-1302 DecemberDecember 23,23, !9861986 Page3~~acaa 3

TheThe PetitionersPeti. tioners presentedpresented thethe testimonytestimony ofof WilliamWilliam H.H.

Bridges,Bridges, PresidentPresident. andand majoritymajority shareholdershareholder ofof HeathHeath SpringsSprings andand

LynnLynn M.N. Lanier,Lanier, GeneralGeneral ManagerNanager ofof LynchesLynches RiverRiver toto supportsupport. thethe purchasepurchase ofof thethe HeathHeath SpringsSprings electricelectric system..ystem andand reassignmentreassignment. ofof thethe HeathHeath SpringsSprings serviceservice areaarea toto LynchesLynches River.River. .

Mr.Nr. BridgesBridge. testifiedtest. .ified thatthat. HeathHeath SpringsSprings LightLight. andand PowerPower

Company isis anan electricalelectrical utilityutility doingdoing businessbusiness inin LancasterLancaster

County, SouthSouth CarolinaCarolina withwith itsit.s principalprincipal. placeplace ofof businessbusiness

located in thethe TownTown of Heath Springs.Springs. TheThe utilityutility servesserves approximately 970970 customers, all o:fof whom are locatedlocated inin or nearnear

the Town of Heath Springs. Approximately 14%14% of the customers

are commercial users.

Mr.Nr. . Bridges stated that the complexity of providing service by a small utility has increased during the past years. His company's capitalization would not allow for rapid expansion nor had thethe utility appl.appliedied forfor a general rate increase in more than

20 years. Nr.Mr. Bridges furtherfurther statedstated that.that the transfer ofof thethe

assets andand reassignmentreassignment ofof the territory served.served by HeathHeath Springs toto LynchesLynches RiverRiver willwill provideprovide good,good, efficient,efficient, andand effect"veeffective electrica1electrical utilityutility serviceservice toto thosethose customerscustomers at.at anan efficientefficient andand

reasonablereasonable raterate andand givegive thethe HeathHeath SpringsSprings customerscustomer's accessaccess toto aa

larger.larger repairrepair andand serviceservice organization.organization. TheThe transfertransfer andand sale,sale,

accordingaccording toto Nr.Mr.. Bridges,Bridges, isis inin thethe best.best interestinterest ofof thethe servi.servicece

areaarea andand thethe HeathHeath SpringsSprings customers.customers. DOCKETDOCKET NO.NO. 86-600-E86-600-E -—ORDERORDER NO.NO. 86-130286-1302 DecemberDecember 23,23, 19861986 PagePage 44

Locally,Locally, Mr.Nr. BridgesBridges testifiedtestified thatthat thethe TownTown ofof HeathHeath

SpringsSprings TownTown CouncilCouncil hashas beenbeen amenableamenable toto thethe transfertransfer andand thethe executionexecution ofof thethe municipalmunicipal franchisefranchise agreementagreement andand thethe supplysupply serviceservice contractcontract withwith thethe Town.Town. Also,Also, thethe twotwo fullfull timetime employeesemployees ofof thethe utilityutility havehave beenbeen informedinformed ofof thethe proposedproposed transfertransfer andand salesale andand thethe utilityutility hashas mademade arrangementsarrangements forfor otherother employment. TheThe customerscustomers securitysecurity deposits onon filefi. .le withwith HeathHeath

Springs will be transferredtransferred toto Lynches RiverRiver andand willwill bebe refundedrefunded or applied againstagainst. thethe customer's utilityutility billbill atat. thethe appropriate time.time.

Lastly, Mr.Nr. Bridges testified that thethe proposed transfer will take place December 30, 1986 and willwi. ll include. operating equipment, physical plant.plant, , inventory of electrical supplies and accounts receivable of Heath Springs LightLight. and PowerPower. Company.

Nr.Mr. Lanier.Lanier testified concerning Lynches River's operations,

its service area, the purchase agreement between Lynches River and Heath Springs,Springs, events leading up to thethe agreement, Lynches

River'sRiver's abil.abilityity toto adequatelyadequately serve the HeathHeath Springs service area,area, andand thethe benefits toto bebe derivedderived fromfrom thethe purchase.purchase.

AsAs statedstated byby Nr.Mr. I.Lanier,anier, L~~nchesLynches RiverRiver isis aa member ownedowned electricelectric cooperativecooperative organizedorganized underunder thethe lawslaws ofof the StateState ofof

SouthSouth CarolinaCarolina engagedengaged in.in thethe businessbusiness ofof di.distributing.tributing andand

sellingselling electricelectric currentcurrent forfor lighti.lighting,ng, heatingheating andand powerpower toto thethe residentialresidential andand commercialcommercial public.public. ItsIts serviceservice areasareas areare withinwithin thethe countiescounties ofof Chesterfield,Chesterfield, Lancaster,Lancaster, andand Kershaw.Kershaw. LynchesLynches DOCKETNO. 86-600-E -— ORDERNO. 86-1302 December 23, 1986 Page 5

River also serves within thethe corporate limitslimits of several municipalities.municipaliti. es. The serviceserv'ce area was outlined in Hearing Exhibit No. I.1. Lynches River has over 10,10,000000 members and services 12,80012, 800 meters within its three-county area. In describing the agreementagreement. between Heath Springs and Lynches River, Mr.Nr. Lanier testified that Lynches RiverPiver has agreed to purchase all of thethe operating and electric distributiondistributi. on assets owned by Heath Springs_Springs, including any interest Heath Springs

Light and Power Company may have to operate within the corporate limitslimit. . ofof. the Town of Heath Springs and in providing municipal service to the Town of Heath Springs. A contingent.contingent conditioncondit, ion to the purchase of the system isi. s the reassignmentreassignment. of Heath Springs'

serviceserwice area to Lynches River. A copy of thethe agreement was placed into evidence as Hearing Exhibit No. 2. An inventory of the operating assets proposed to be transferred by Heath Springs to Lynches River was placed into evidence as Hearing Exhibit No. 3. The customers of Heath Springs will pay the electric rates of

Lynches RiverRi~er if the purchase and reassignment isi.s approved.

In supportsupport. of the purchase and reassignment, Mr.Nr. Lanier

testified to Lynches River's ability toto provide reasonable,

adequate, and dependable service to the customerscu .tomers of Heath

SpringsSpr.ings Light and Power Company. Mr.Nr. Lanier stated thatthat. Lynches RiverPive is one of the fifteen members of the Central Electric Power

Cooperative, Inc. (Central Electric) with which Lynches River hasha, DOCKETNO. 86-600-E -— ORDERNO. 86-1302 DecemberDecember. 23, 1986 Page 6

a long.long term all requirements power supply contract for wholesale power. Central Electric has a long term wholesale power supply and transmission contractcontract. with the South Carolina Public Service

Authority (SCPSA). The SCPSA has a generating capability of

2,6962, 696 megawattsmegawat. ts and has a generating margin over peak of approximately 46%. Central Electric is the largest customer of the SCPSA.

Lynches River has an office near the Town of Heath Springs in Pageland, South Carolina°Carolina. A payment.payment station will be maintained in Heath Springs which customers may use to pay theirthei. r electric bills or apply for service with Lynches River, among other things. Additionally, Lynches River provides a 24-hour toll-freetoll-.free telephone number for service and billing problems.

Mr.Nr. Lanier was of the opinion thatthat. the connection of the

Heath Springs LightLight. and Power Company's system to the Lynches

River system could be accomplished w_thinwithin one day due to the proximity of thethe facilities...acil.ities. For instance, no additional transmission or generating facilitiesfacil. ities willwil.l be required to provide for the Lynches River service to thethe Heath Springs customers. Pre- sently, Duke Power serves Heath Springs under a wholesale power contract which expires on or before July 11, 1987. In the event

Duke Power prefers to cancel the contractcont. act. prior to that date, Mr.Nr.

Lanier stated thatthat. Lynches River,River. , under its contract with Central

Electric, is able to provide adequate wholesale power to meetmeet. the present and future demands of the Heath Springs' system. DOCKETNO. 86-600-E -— ORDERNO. 86-1302 December 23, 1986 P_9__e7~Pa e 7

As of December 20, 1986, the Town of Heath Springs and

Lynches River have reached an agreement to permit Lynches River'River

to provide electric service to the Town of Heath Springs. This

is i.nin the form of an indeterminateIndeterminate Permit attached as Schedule H

to Hearing Exhibit No. 3.

According to Mr. Lanier, the Commission should approve the

reassignmentreassignment. ofof. thethe Heath Springs territory to Lynches River

because LynchesLyncbes River serves mostmost. of the territory surrounding

Heath Springs service area and hasbas negotiated an indeterminate

permitpermit. and a municipalmunicipal. power supply contract with the Town of

Heath Springs, making Lynches River thethe mostmost: logical power

supplier'supplier to serveserve, inin this territory.

No testimony was presented in oppositionoppos:ition to thetbe proposal butbut.

several letters of protest and a Petition in opposition were

filedfi.led with the Commission.

BasedPased upon the foregoing considerationsconsiderat. .ions and after full

review and evaluation of the testimony and exhibits presentedpre .ented in

the proceeding, the Commission has made the following findings

and reached thethe following conclusions:

I.1. ThatThat. Heath Springs Light and Power Company is an

electric utilityut, ility providing service within South Carolina and is

subject to thethe jurisdiction of this Commission pursuantpursuant. to S.C.S.C.

Code Ann. Section 58-27-10, et seq__~ece. (1976).

2. That Lynches River Electric Cooperative, Inc.inc. is a

member owned electric cooperative subject to the Commission's DOCKET NO. 86-600-E -— ORDER NO. 86-1302 December 23, 1986 ~PaPage e 8 jurisdiction, inter alia, pursuant toto S.C.S.C. Code Ann. Section

58-27-610 through 680 (1976), as amended.

3. ThatThat. Heath Springs Light and Power Company and Lynches

River Electric Cooperative, Inc. have petitioned the Commission for authority for Lynches River to purchase the electric distribution facilities and assets of Heath Springs and for.or reassignment of the territory served by the Heath Springs' facilities to Lynches River. 4. That S.C.S.C. Code Ann. Sections 58-27-650 (A) (1976), as amended, and 58-27-1300(1976) grants the CommissionCommiss. ion jurisdiction over the assetasset. purchase and reassignmentreassignment. of territoryterritory and gives the CommissionCommiss. ion thethe authority to rule on such matters.

5. ThatThat. a hearing was held after notice was duly given.

6. ThatThat. the evidence presented at the hearing indicates thatthat. Heath Springs Light and Power Company desiresdesi. res to sell its assets and reassign its service area to Lynches RiverRi.ver Electric

Cooperative, Inc.Tnc.

7. ThatThat. pursuant to Order No. 16,03516,035 in Docket No. 16,1!0,16,110, dated April 18, 1972, the Commission assignedass.igned certain territory

in Lancaster County, South Carolina toto Heath Springs LightLight. and

Power Company. The areas within Lancaster County served by Heath

Springs are shown on the Lancaster County Territorial Assignment

Map,Nap, as approved by the Commission. DOCKET NO. 86-600-E -— ORDER NO. 86-1302 December 23, 1986 Page 9

8. ThatThat. the PetitionersPeti. t.ioners herein have agreed to the reassignmentreass, ignment. of the Heath Springs LightI ight and Power Company's service area toto Lynches River Electric Cooperative, Inc.

9. ThatThat. LynchesI.ynches River Electric Cooperative, Inc.7'nc. has the capabilities and the facilitiesfacilit. .ies to provide good, efficient, and effective electrical utilityuti, l.ity service to the customers of Heath

Springs Light and Power Company and is flit,fit, willing, and able to do so.so

10. That the Heath Springs LightI ight. and Power Company's customers will benefit from thethe sale by having access to a larger service and repair organization.

ii.11. ThatThat. the parties have entered into evidence a map of the territory to be reassigned, the AssetAsset. Purchase AgreementAgreement. with supporting schedules, and an inventory.inventory listoli.st. See, Hearing

Exhibits 1-3.

12. That the sale of tilethe Heath Springs Light and Power

Company's electric distribution facilities and assets to Lynches

River Electric Cooperative, Inc. should be approved.

13.1. 3. ThatThat. Heath Springs LightLiqht and PowerPower. Company's service area, granted pursuant to Order No. 16,035,16,035, supra,supra, should be reassigned to Lynches River ElectricElectri. c Cooperative, Inc.

IT IS THEREFORE ORDERED:

1.i. That the relief sought in the joint Petition of Heath

SpringsSprinqs Light and Power Company and Lynches River Electric

Cooperative, Inc. be, and hereby is, granted and approved. DOCKETNO. 86-600-E -— ORDERNO. 86-1302 December 23, 1986 Page I010

2. That Lynches River Electric Cooperative file a revised

territorial map within thirty (30)(.30) days of the date of this Order to reflect the Commission's determinations herein. 3. That Petitioner'sPetitioners filefi.le written notice with the

Commission within thirty (30)(30) days from the date of closing thatthat.

the sale and purchase isi.s complete. 4. ThatThat. this Order shall remain in full force and effect until further OrderOrder. of the Commission.

BY ORDER OF THE COMMISSION: ) ...... Chairman

ATTESTATTEST":

DirectOr _itM_n_ Execut.iveExecutive Direct. r

(SEAL )