SECURITIES AND EXCHANGE COMMISSION
                      WASHINGTON, DC  20549

                                        
                         
                            FORM 10-K
  
(Mark One)

 x    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

      For the fiscal year ended   December 31, 19931995          

                               OR

      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
      SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

      For the transition period from            to               


                   Commission File Number 1-3375

             SOUTH CAROLINA ELECTRIC & GAS COMPANY         
    (Exact name of registrant as specified in its charter)

SOUTH CAROLINA                               57-0248695           
(State or other jurisdiction of             (IRS employer 
  incorporation or organization)             identification no.)

1426 MAIN STREET,  COLUMBIA, SOUTH CAROLINA       29201         
(Address of principal executive offices)         (Zip code)

Registrant's telephone number, including area code (803) 748-3000


Securities registered pursuant to Section 12(b) of the Act:


Title of each class    Name of each exchange on which registered  
  

5% Cumulative Preferred Stock 
   par value $50 per share           New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act:
         
                                                                  
                        Title of Class

     The Class is comprised of the following series of Cumulative
Preferred Stock, par value $50 per share or $100 per share,
having a periodic sinking fund:

9.40% Cumulative Preferred         Stock         8.72% Cumulative Preferred 
      Stock par value $50 per            shareStock par value $50
      share                              per share

8.12% Cumulative Preferred Stock         7.70% Cumulative Preferred 
      Stock par value $100               per shareStock par value $100
      per share                          per share 

     Indicate by check mark whether the registrant: (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. 
Yes   x   .  No      .


1





     Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [x][ ] 

     State the aggregate market value of the voting stock held by
nonaffiliates of the registrant.  The aggregate market value
shall be computed by reference to the price at which the stock
was sold, or the average bid and asked prices of such stock, as
of a specified date within 60 days prior to the date of filing.
(See definition of affiliate in Rule 405.)

                              Note.  If a determination as to whether a
           particular person or entity is an affiliate cannot be
           made without involving unreasonable effort and expense,
           the aggregate market value of the common stock held by
           non-affiliates may be calculated on the basis of
           assumptions reasonable under the circumstances,
           provided that the assumptions are set forth in this
           form.

     The aggregate market value of the voting stock held by nonaffiliatesnon-
affiliates of the registrant as of February 28, 199429, 1996 was zero.

 APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
      PROCEEDINGS DURING THE PRECEDING FIVE YEARS:


     Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.

Yes        No      

        (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

    Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of the latest
practicable date.

     As of February 28, 199429, 1996 there were issued and outstanding
40,296,147 shares of the registrant's common stock, $4.50 par
value, all of which were held, beneficially and of record, by
SCANA Corporation.

                                        DOCUMENTS INCORPORATED BY
REFERENCE.

    List hereunder the following documents if incorporated by
reference and the Part of the Form 10-K (e.g., Part I, Part II,
etc.) into which the document is incorporated:  (1) any annual
report to security-holders; (2) any proxy or information
statement; and (3) any prospectus filed pursuant to Rule 424(b)
or (c) under the Securities Act of 1933.  The listed documents
should be clearly described for identification purposes (e.g.,
annual report to security-holders for fiscal year ended December
24, 1980).

                                                                
NONE



2





                              TABLE OF CONTENTS
                                    
                                                                      Page

DEFINITIONS .......................................................     4

PART I

     Item 1.  Business ............................................     5

     Item 2.  Properties ..........................................    1819

     Item 3.  Legal Proceedings ...................................    2021

     Item 4.  Submission of Matters to a Vote of
               Security Holders ...................................    2021

PART II

     Item 5.  Market for Registrant's Common Stock
               and Related Security Holder Matters ................    2021

     Item 6.  Selected Financial Data .............................    2122

     Item 7.  Management's Discussion and Analysis of 
               Financial Condition and Results of Operations.......    22Operations ......    23

     Item 8.  Financial Statements and Supplementary Data .........    2830

     Item 9.  Changes in and Disagreements with Accountants on 
               Accounting and Financial Disclosure ................    6055

PART III

     Item 10. Directors and Executive Officers of the 
               Registrant .........................................    6055

     Item 11. Executive Compensation ..............................    6660

     Item 12. Security Ownership of Certain Beneficial
               Owners and Management ..............................    7364

     Item 13. Certain Relationships and Related Transactions ......    7365

PART IV

     Item 14. Exhibits, Financial Statement Schedules,
               and Reports on Form 8-K ............................    7465

SIGNATURES ........................................................    7566





3





                                 DEFINITIONS

The following abbreviations used in the text have the meaning set 
forth below unless the context requires otherwise:

       ABBREVIATION                           TERM

AFC......................... Allowance for Funds Used During Construction
Affiliate................... Wholly-owned subsidiary of SCANA Corporation
BTU......................... British Thermal Unit
Circuit Court............... South Carolina Circuit Court
Clean Air Act............... Clean Air Act Amendments of 1990
Company..................... South Carolina Electric & Gas Company
Consumer Advocate........... Consumer Advocate of South Carolina
Dekatherm................... 1One million BTUs
DHEC........................ South Carolina Department of Health and
                             Environmental Control
DOE......................... United States Department of Energy
EPA......................... United States Environmental Protection Agency
FERC........................ United States Federal Energy Regulatory
                              Commission
Fuel Company................ South Carolina Fuel Company, Inc., an
                              affiliate
GENCO....................... South Carolina Generating Company, Inc., an
                              affiliate
KVA......................... Kilovolt-ampere
KW.......................... Kilowatt
KWH......................... Kilowatt-hour
LNG......................... Liquefied Natural Gas
MCF......................... Thousand Cubic Feet
MW.......................... Megawatt
NEPA........................ National Energy Policy Act of 1992
NRC......................... United States Nuclear Regulatory Commission
Pipeline Corporation........ South Carolina Pipeline Corporation, an 
                              affiliate
PRP......................... Potentially Responsible Party
PSA......................... The South Carolina Public Service Authority
PSC......................... The Public Service Commission of South 
                              Carolina
PUHCA....................... Public Utility Holding Company Act of 1935,
                             as amended
SCANA....................... SCANA Corporation and its subsidiaries
Southern Natural............ Southern Natural Gas Company
Summer Station.............. V. C. Summer Nuclear Station
Supreme Court............... South Carolina Supreme Court
Transco..................... Transcontinental Gas Pipe LinePipeline Corporation
USEC........................ United States Enrichment Corporation
Westinghouse................ Westinghouse Electric Corporation
Williams Station............ A. M. Williams coal-fired, electric
                              generating station owned by GENCO



4





                              PART I

ITEM 1.  BUSINESS

                            THE COMPANY

OrganizationORGANIZATION

     The Company, a wholly owned subsidiary of SCANA, is a South
Carolina corporation organized in 1924 and has its principal
executive office at 1426 Main Street, Columbia, South Carolina
29201, telephone number (803) 748-3000.  The Company had 4,1663,721
full-time, permanent employees as of December 31, 19931995 as
compared to 4,1684,009 full-time, permanent employees as of December
31, 1992.1994.

     SCANA, a South Carolina corporation, was organized in 1984
and is a public utility holding company within the meaning of
PUHCA but is presently exempt from registration under such Act. 
SCANA holds all of the issued and outstanding common stock of the
Company.  (See Note 1A of Notes to Consolidated Financial
Statements.)

Industry Segments and Service AreaINDUSTRY SEGMENTS 

     The Company is a regulated public utility engaged in the
generation, transmission, distribution and sale of electricity
and in the purchase and sale, primarily at retail, of natural gas
in South Carolina.  The Company also renders urban bus service in
the metropolitan areas of Columbia and Charleston, South
Carolina.  The Company's business is subject to seasonal
in that, generally,fluctuations.  Generally, sales of electricity are higher during
the summer and winter months because of air-conditioning and
heating requirements, and sales of natural gas are greater in the
winter months due to its use for heating requirements.

     The Company's electric service area extends into 24 counties
covering more than 15,000 square miles in the central, southern
and southwestern portions of South Carolina.  The service area
for natural gas encompasses all or part of 2930 of the 46 counties
in South Carolina and covers more than 19,00020,000 square miles.  Total estimatedThe
total population of the counties representing the Company's
combined service area is approximately 2.3 million. 

     The predominant industries in the territories served by the
Company include:  synthetic fibers; chemicals and allied
products; fiberglass and fiberglass products; paper and wood
products; metal fabrication; stone, clay and sand mining and
processing; and various textile-related products.

     Information with respect to industry segments for the years
ended December 31, 1993, 19921995, 1994 and 19911993 is contained in Note 11 of
Notes to Consolidated Financial Statements and all such
information is incorporated herein by reference.

COMPETITION

     The electric utility industry has begun a major transition
that could lead to expanded market competition and less
regulatory protection.  Future deregulation of electric wholesale
and retail markets will create opportunities to compete for new
and existing customers and markets.  As a result, profit margins
and asset values of some utilities could be adversely affected. 
The pace of deregulation, the future market price of electricity,
and the regulatory actions which may be taken by the PSC in
response to the changing environment cannot be predicted. 
However, the Company is aggressively pursuing actions to position
itself strategically for the transformed environment.  To enhance
its flexibility and responsiveness to change, the Company
operates Strategic Business Units.  Maintaining a competitive
cost structure is of paramount importance in the utility's
strategic plan.  The Company has undertaken a variety of
initiatives, including reductions in operation and maintenance
costs  and  in  staffing levels.  In January 1996 the PSC
approved (as discussed under "Capital Requirements and Financing


5







Program") the accelerated recovery of the Company's electric
regulatory assets and the shift of depreciation reserves from
transmission and distribution assets to nuclear production
assets.  The Company believes that these actions as well as
numerous others that have been and will be taken demonstrate its
ability and commitment to succeed in the new operating
environment to come.

     Regulated public utilities are allowed to record as assets
some costs that would be expensed by other enterprises.  If
deregulation or other changes in the regulatory environment
occur, the Company may no longer be qualified to apply this
accounting treatment and may be required to eliminate such
regulatory assets from its balance sheet.  Such an event could
have a material adverse effect on the Company's results of
operations in the period the write-off is recorded.  The Company
reported on its balance sheet at December 31, 1995 approximately
$116 million and $4 million of regulatory assets and 
liabilities, respectively, excluding amounts related to net
accumulated deferred income tax assets of approximately $33
million.  


CAPITAL REQUIREMENTS AND FINANCING PROGRAM

Capital Requirements

     The cash requirements of the Company arise primarily from
its operational needs and its construction program.  The ability
of the Company to replace existing plant investments, as well as
to expand to meet future demand for electricity and gas, will
depend upon its ability to attract the necessary capital on
reasonable terms.

     The Company recovers the costs of providing services through
rates charged to customers.  Rates for regulated services are
generally based on historical costs.  As customer growth and
inflation occur and the Company expands its construction program
it is necessary to seek increases in rates.  On July 10, 1995,
the Company filed an application with the PSC for  an increase in
retail electric rates.  On January 9, 1996 the PSC issued an
order granting the Company an increase of 7.34% which will
produce additional revenues of approximately $67.5 million
annually.  The increase will be implemented in two phases.  The
first phase, an increase in revenues of approximately $59.5
million annually based on a test year, or 6.47%, commenced on
January 15, 1996.  The second  phase  will  be  implemented  in 
January 1997 and will produce additional revenues of
approximately $8.0 million annually, or .87% more than current
rates.  The PSC authorized a return on common equity of 12.0%. 
The PSC also approved establishment of a Storm Damage Reserve
Account capped at $50 million to be collected through rates over
a ten-year period.  Additionally, the PSC approved accelerated
recovery of substantially all (excluding accumulated deferred
income taxes) of the Company's electric regulatory assets and the
transition obligation for postretirement benefits other than
pensions, changing the amortization periods to allow recovery by
the end of the year 2000.  The Company's request to shift
approximately $257 million of depreciation reserves from
transmission and distribution assets to nuclear production assets
was also approved.  The Company's future financial position and
results of operations will  be affected by its ability to obtain
adequate and timely rate and other regulatory relief. (See
"Regulation.")

     During 19941996 the Company is expected to meet its capital
requirements principally through internally generated funds
(approximately 32%
excluding77%, after payment of dividends), the issuance and
sale of debt securities and additional equity contributions from
SCANA.  Short-term liquidity is expected to be provided by
issuance of commercial paper.  The timing and amount of such
sales and the type of securities to be sold will depend upon
market conditions and other factors.


The Company recovers the costs of providing services through
rates charged to customers.  Rates for regulated services are
based on historical costs.  As inflation occurs and the Company
expands its construction program it is necessary to seek
increases in rates, and on June 7, 1993 the PSC issued an order
granting the Company a 7.4% annual increase, based on a test
year, in retail electric rates to be implemented in two phases of
$42.0 million annually effective June 1993 and $18.5 million
annually effective June 1994.  The Company's future financial
position and results of operations will  be affected by its
ability to obtain adequate and timely rate relief. (See
"Regulation.")6





     The Company's estimates of its cash requirements for
construction and nuclear fuel expenditures, which are subject to
continuing review and adjustment, for 19941996 and the four-year
period 1995-19981997-2000 as now scheduled, are as follows:

Type of Facilities                              1994         1995-19981997-2000        1996
                                                (Thousands of Dollars)
Electric Plant:
  Generation. . . . . . . . . . . . . . . .     $245,039$268,987       $ 539,18049,036  
  Transmission. . . . . . . . . . . . . . .       21,230             94,17792,502         17,976  
  Distribution. . . . . . . . . . . . . . .      58,178            295,523319,092         64,227  
  Other . . . . . . . . . . . . . . . . . .       12,815             42,97534,152         13,835  
Nuclear Fuel. . . . . . . . . . . . . . . .       28,064             84,77086,413         21,147  
Gas . . . . . . . . . . . . . . . . . . . .       15,814             62,276
Transit . . . . . . . . . . . . . . . . . .        422                74994,147         16,918  
Common. . . . . . . . . . . . . . . . . . .       30,650             54,715
Nonutility34,089         34,633  
Other . . . . . . . . . . . . . . . . 139                545. . .        1,511            553
          Total . . . . . . . . . . . . . .     $412,351         $1,174,910$930,893       $218,325        

     The above estimates exclude AFC.

Construction
     
     The Company's cost estimates for its construction program
for the periods 19941996 and 1995-19981997-2000, shown in the above table,
include costs of the projects described below.

     The  Company  entered into a  contract  with Duke/Fluor 
Daniel in 1991 to design, engineer and build a 385 MW coal-fired
electric generating plant near Cope, South Carolina in Orangeburg
County.Carolina. 
Construction of the plant started in November 1992.  Commercial
operation began in November 1992 with
commercial operation expected in late 1995 or earlyJanuary 1996.  The estimated pricecost  of  the  Cope  plant,
excluding financing  costs
and  AFC, but including an allowance for escalation, is $450$410.9 million.  In  addition, the 
transmission  lines for interconnection with the Company's system
are expected to cost $26$22.5 million.  The steam generators at Summer Station will be replaced
during the 1994 regularly scheduled refueling outage.  In January
1994 the Company, acting on behalf of itself and the PSA (as co-
ownersApproximately $9.8 million of the 885 Megawatt Summer Station), reached a settlement
with Westinghouse Electric Corporation (Westinghouse) resolving a
dispute involving steam generators provided by Westinghouseamounts
included in the above table for 1996 relate to Summer Station which are defective in design, workmanship and
materials.  Termsthe completion of
the settlement are confidential by agreement
of the parties and order of the court.  The Company had filed an
action in May 1990 against Westinghouse in the U. S. District
Court for South Carolina; an order dismissing this suit was
issued on January 12, 1994.

6



Cope plant.

     During 19931995 the Company expended approximately $20$15.9 million
as part of a program to extend the operating lives of certain
non-nuclear generating facilities.  Additional improvements under
the program to be made during 19941996 are estimated to cost
approximately $17$19.9 million.

Additional Capital Requirements

     In addition to the Company's capital requirements for 1996
described in "Capital Requirements" above, approximately $21.2
million will be required for refunding and retiring outstanding
securities and obligations.  For the years 1997-2000, the Company
has an aggregate of $292.8 million of long-term debt maturing
(including approximately $69.2 million for sinking fund
requirements, of which $68.7 million may be satisfied by deposit
and cancellation of bonds issued upon the basis of property
additions or bond retirement credits) and $9.8 million of
purchase or sinking fund requirements for preferred stock.

     Actual 1996 expenditures may vary from the estimates set
forth above due to factors such as inflation, economic
conditions, regulation, legislation, rates of load growth,
environmental protection standards and the cost and availability
of capital.


7




Financing Program

     The Company's First and Refunding Mortgage Bond Indenture,
dated April 1, 1945 (Old Mortgage), contains provisions
prohibiting the issuance of additional bonds thereunder (Class A
Bonds) unless net earnings (as therein defined) for 12twelve
consecutive months out of the 15fifteen months prior to the month
of issuance isare at least twice the annual interest requirements
on all Class A Bonds to be outstanding (Bond Ratio).  For the
year ended December 31, 19931995 the Bond Ratio was 3.70.3.97.  The
issuance of additional Class A Bonds also is restricted also to an
additional principal amount equal to (i) 60% of unfunded net
property additions (which unfunded net property additions totaled
approximately $219.9$162.3 million at December 31, 1993)1995), Class A Bonds issued on the
basis of(ii)
retirements of Class A Bonds (which retirement credits totaled
$10.9$64.8 million at December 31, 1993)1995), (iii) and Class A Bonds
issued on the basis of cash on deposit
with the Trustee.  

    The Company has placed a new bond indenture (New Mortgage)
dated April 1, 1993 oncovering substantially all of its electric
properties under which its future mortgage-backed debt (New
Bonds) will be issued.  New Bonds are expected to be issued under the New
Mortgage on the basis of a like principal amount of Class A Bonds
issued   under the Old Mortgage which  have been  deposited  with 
the  Trustee  of  the  New  Mortgage (of which $157$185 million were
available for such purpose as ofat December 31, 1993)1995), until such time
as all presently outstanding Class A Bonds are retired. 
Thereafter, New Bonds will be issuable on the basis of property
additions in a principal amount equal to 70% of the original cost
of electric and common plant properties (compared to 60% of value
for Class A Bonds under the Old Mortgage), cash deposited with
the Trustee, and retirement of New Bonds.  New Bonds will be
issuable under the New Mortgage only if adjusted net earnings (as
therein defined) for 12twelve consecutive months out of the
18eighteen months immediately preceding the month of issuance are
at least twice the annual interest requirements on all
outstanding bonds (including Class A Bonds) and New Bonds to be
outstanding (New Bond Ratio).  For the year ended December 31,
19931995 the New Bond Ratio was 5.0.5.31.

     The following additional financing transaction has occurred
since December 31, 1994:

     On April 29, 199312, 1995 the Securities and Exchange Commission
declared effective a registration statement for the issuance of
up to $700Company issued $100 million of New Bonds.  The following series,
aggregating $600 million, have been issued under such
registration statement:

         On June 9, 1993, $100 million,First
     Mortgage Bonds, 7 5/8% Seriesseries due JuneApril 1, 20232025 to repay
     short-term borrowings in a like
         amount. 

         On July 1, 1993, $100 million, 6% Series due 
         June 15, 2000, and $150 million, 7 1/8% Series due 
         June 15, 2013, and on July 20, 1993, $150 million, 
         7 1/2% Series due June 15, 2023, to redeem, on 
         July 20, 1993, $382,035,000 of First and Refunding
         Mortgage Bonds maturing between 1999 and 2017 and
         bearing interest at rates between 8% and 9 7/8% per
         annum. 

         On December 20, 1993. $100 million, 6 1/4% Series due
         December 15, 2003 to repay short-term borrowings in a
         like amount.

         On June 1, 1993 the Company redeemed the following
         amounts of First and Refunding Mortgage Bonds:  
         $35 million, 10 1/8% Series due 2009 and $13 million, 
         9 7/8% Series due 2009.borrowings.  

     Without the consent of at least a majority of the total
voting power of the Company's preferred stock, the Company may
not issue or assume any unsecured indebtedness if, after such
issue or assumption, the total principal amount of all such
unsecured indebtedness would exceed 10% of the aggregate
principal amount of all of the Company's secured indebtedness and
capital and surplus; provided, however, that no such consent
shall be required to enter into agreements for payment of
principal, interest and premium for securities issued for
pollution control purposes.

     Pursuant to Section 204 of the Federal Power Act, the
Company must obtain the FERC authority to issue short-term indebted-
ness.debt. 
The FERC has authorized the Company to issue up to $200 million
of unsecured promissory notes or commercial paper with maturity
dates of 12twelve months or less, but not later than December 31,
1995.  



7



1997.  

     The Company has $127.0had $165 million authorized and unused lines of
credit at December 31, 1993.

     SCE&G's1995.  In addition, Fuel Company  has  a 
credit  agreement  for a maximum of $125 million with the full
amount available at December 31, 1995.  The credit agreement
supports the issuance of short-term commercial paper for the
financing of nuclear and fossil fuels and sulfur dioxide emission
allowances.  Fuel Company commercial paper outstanding at
December 31, 1995 was $76.8 million.

     The Company's Restated Articles of Incorporation prohibit
issuance of additional shares of preferred stock without consent
of the preferred stockholders unless net earnings (as defined
therein) for the 12twelve consecutive months immediately preceding
the month of issuance isare at least one and one-half times the
aggregate of all interest charges  and  preferred  stock 
dividend  requirements  (Preferred  Stock  Ratio).  For  the year
ended December 31, 19931995 the Preferred Stock Ratio was 2.52.2.58.  

8





     The ratioratios of earnings to fixed charges (SEC Method) waswere
3.41, 3.46, 3.57, 2.73 3.32, 3.33 and 3.043.32 for the years ended December 31,
1995, 1994, 1993, 1992 and 1991, 1990 and 1989, respectively.

     Additional Capital Requirements

     In additionThe Company expects that it has or can obtain adequate
sources of financing to the Company's capitalmeet its projected cash requirements for
1994
described above, approximately $5.0 million will be requiredthe next twelve months and for refunding and retiring outstanding securities and obligations. 
For the years 1995-1998, the Company has an aggregate of $149.4
million of long-term debt maturing (including approximately $43.9
million for sinking fund requirements, of which $43.5 million may
be satisfied by deposit and cancellation of bonds issued upon the
basis of property additions or bond retirement credits) and $9.9
million of purchase or sinking fund requirements for preferred
stock.

     Actual 1994 expenditures may vary from the estimates set
forth above due to factors such as inflation, economic
conditions, regulation, legislation, rates of load growth,
environmental protection standards and the cost and availability
of capital.foreseeable future.

Fuel Financing Agreements

     The Company has assigned to Fuel Company all of its rights
and interests in its various contracts relating to the
acquisition and ownership of nuclear and fossil fuel.fuels.  To
finance nuclear and fossil fuel inventories,fuels and sulfur dioxide emission
allowances, Fuel Company issues, from time to time, its promissory notes with maturities of less than
270 days ("Commercial Paper").  The issuance of Commercial Papercommercial
paper which is supported, up to $125 million, by an irrevocable
revolving credit agreement which expires July 31, 1996 and is guaranteed by the Company.1998. 
Accordingly, the amounts outstanding have been included in long-
term debt.  TheThis commercial paper and amounts outstanding under
the revolving credit agreement, provides for a maximum amount of
$75 million that may be outstanding atif any, time.are guaranteed by the
Company. 

     At December 31, 1993 Commercial Paper1995 commercial paper outstanding for
nuclear and fossil fuel inventories was
approximately $36.8$76.8 million at a weighted  average  interest 
rate of 3.47%5.76%.  Such
fuel inventories and fuel-related assets and liabilities are
included in the Company's financial statements.  (See Notes 11N and 4 of Notes to Consolidated
Financial Statements.)

ELECTRIC OPERATIONS

Electric Sales

     In 19931995 residential sales of electricity accounted for 43%
of electric sales revenues; commercial sales 29%30%; industrial
sales 21%20%; sales for resale 4%; and all other 3%.  KWH sales by
classification for the years ended December 31, 19931995 and 19921994 are
presented below:

                                                                             
                                             Sales        
                                              KWH                         %  
Classification                       1993              19921995               1994           Change
                                           (thousands)

Residential                        5,650,759         5,155,886         9.505,726,815          5,311,139          7.83
Commercial                         4,844,422         4,538,862         6.735,078,185          4,848,620          4.73
Industrial                         4,887,250         4,684,072         4.345,210,368          5,161,717          0.94
Sale for resale                    1,005,968           946,357         6.301,063,064          1,024,376          3.78
Other                                500,937           476,064         5.22506,806            494,030          2.59
  Total Territorial               16,889,336        15,801,241         6.8917,585,238         16,839,882          4.43
            
Interchange                          198,059            77,046       157.07195,591            171,046         14.35
  Total                           17,087,395        15,878,287         7.61

8



17,780,829         17,010,928          4.53

     The Company furnishes electricity for resale to three
municipalities, threefour investor-owned utilities, two electric
cooperatives and one public power authority.  Such sales for
resale accounted for 4% of total electric sales revenues in 1993.

     An addition1995.

     During 1995 the Company recorded a net increase of 6,9737,943
electric customers, to 468,901increasing its total customers contributed to an484,381.


9





     The electric sales volume increased for the year ended
December 31, 1995 compared to the prior year as a result of
increased residential and commercial sales due to favorable
weather and customer growth.  The all-time peak demand record of 3,557
on July 29, 1993.  The previous years' record of 3,3803,683
MW was set July 13, 1992.on August 14, 1995. 

     On August 8, 1995 the Company signed an agreement with the
DOE to lease the Savannah River Site's (SRS) power and steam
generation and transmission facilities.  The agreement calls for
SRS to purchase all its electrical and a majority of its steam
requirements from the Company.  The Company will lease (with an
option to renew) the power plant for ten years and the electrical
transmission lines for 40 years, with an option to refurbish the
facilities or build a new system.

Electric Interconnections

     The Company purchases all of the electric generation of
Williams Station, owned by GENCO, under a Unit Power Sales
Agreement which has been approved by the FERC.  Williams Station
has a generating capacity of 560 MW.

     The Company's transmission system is part of the
interconnected grid extending over a large part of the southern
and eastern portionportions of the nation.  The Company, Virginia Power
Company, Duke Power Company, Carolina Power & Light Company,
Yadkin, Incorporated and PSA are members of the Virginia-
Carolinas Reliability Group, one of the several geographic
divisions within the Southeastern Electric Reliability Council
whichCouncil. 
This council provides for coordinated planning for reliability
among bulk power systems in the Southeast.  The Company is also
interconnected with Georgia Power Company, Savannah Electric &
Power Company, Oglethorpe Power Corporation and Southeastern
Power Administration's Clark Hill Project.

Fuel Costs

     The following table sets forth the average cost of nuclear
fuel and coal and the weighted average cost of all fuels
(including oil and natural gas) used by the Company and GENCO for
the years 1991-1993.

                                 1991            19921993-1995.

                                 1995            1994            1993
Nuclear:
  Per million BTU               $  .57.48          $  .52.51          $  .47
Coal:
 Company:
  Per ton                       $41.61          $40.00$40.01          $39.92          $39.95
  Per million BTU                 1.63            1.561.57            1.57            1.55 
 GENCO:
  Per ton                       $42.12          $41.82$42.21          $41.85          $41.64 
  Per million BTU                 1.641.63            1.63            1.62 
Weighted Average Cost
  of All Fuels:
  Per million BTU               $ 1.381.26          $ 1.271.39          $ 1.331.31 

     The fuel costs shown above exclude the effects of a PSC
approvedPSC-approved
offsetting of fuel costs through the application of credits carried on the
Company's books as a result of a 1980 settlement of certain litigation.  



10







Fuel Supply

     The following table shows the sources and approximate
percentages of total KWH generation (including Williams Station)
by each category of fuel for the years 1991-19931993-1995 and the
estimates for 19941996 and 1995.1997.

                                 Percent of Total KWH Generated       
                           Estimated                     Actual            
                         Estimated  
                               1991      19921997     1996         1995      1994     1993    

1994     1995

Coal                       68%73%      71%          65%       76%      72%  
77%      69%
Nuclear                    21        29       2224       24           27        17       2623 
Hydro                       3        3            5         5        5        56        5 
Natural Gas & Oil           6         1        1-        2            3         1        - 
                          100%     100%         100%      100%     100%

     Coal is currently used at all fourfive of the Company's major fossil fuel-firedfuel-
fired plants and GENCO's Williams Station.  Unit train deliveries
are used at all of these plants.  On December 31, 19931995 the
Company had approximately a 73-day supply of coal in inventory
and GENCO had approximately a 56-day49-day supply.


9





     The supply of coal is obtained through contracts and
purchases on the spot market.  Spot market purchases are expected
to continue for coal requirements in excess of those provided by
the Company's existing contracts.  Contracts for  the  purchase 
of  coal  represent the following percentages91.5% of  estimated  requirements  for  19941996
(approximately 5.3 million tons, including requirements of
Williams Station).

     The supply of contract coal is purchased from seven
suppliers located in eastern Kentucky and southwest Virginia. 
Contract commitments, which expire at various times from 1997-
2003, approximate 4.85 million tons annually.  Sulfur
restrictions on the dates
indicated (giving effectcontract coal range from .75% to the Company's potential to exercise
renewal options):

                              Range of % of       Final
No. of Tons     % of 1994     Sulfur Content     Expiration  Renegotiation
 Per Year      Requirement     per Contract       Date (1)     Date (1)

  966,664          18.2        up  to 1.55       02/28/2001    02/28/1995
  360,000           6.8        1.00 - 1.80       12/31/2002    12/31/1996
  134,000           2.5        1.10 - 2.00       03/31/1996    03/31/1994
  120,000           2.3        1.10 - 1.60       04/30/1996    04/30/1994
  972,000          18.3        up  to 1.50       12/31/2002    12/31/1996
  192,832           3.6        0.80 - 1.50       06/30/2000    06/30/1994
2,745,496          51.7

(1)  Contract extensions beyond the stated renegotiation date to
     the final expiration date are subject to mutual agreement on
     price, terms, quantity and quality.

     All of the above contracts, except the contracts expiring in
March 1994 and April 1994 which have firm prices, are subject to
periodic price adjustments based on changes in indices published
by the U. S. Department of Labor.

     Coal purchased in December 1993 had an average sulfur
content of 1.17%, which permitted the Company to comply with
existing environmental regulations.2%.

     The Company believes that its operations are in substantial
compliance with all existing regulations relating to the
discharge of sulfur dioxide.  The Company has not been advised by
officials of DHEC that any more stringent sulfur content
requirements for existing plants are contemplated.contemplated at the State
level.  However, the Company will be required to meet the more
stringent Federal emissions standards established by the Clean
Air Act (see "Environmental Control Matters").

     The Company currently has adequate supplies of uranium under contract
to manufacture nuclear fuel for Summer Station through 1996.2005.  The
following table summarizes all contract commitments for the
stages of nuclear fuel assemblies:

    Commitment            Contractor        Regions(1)      Term

Uranium                  NUEXCO Trading
                          Corporation         11            1994
Uranium                  Energy Resources
                          of Australia       9-13         1990-19961990-1997
Uranium                  Everest Minerals    9-13         1990-1996
Conversion               Sequoyah Fuel Corp. 8-12         1989-1995       
Enrichment               DOE                 (2)          Through 2022USEC                12-18        1995-2005
Fabrication              Westinghouse        1-21         1982-2009
Reprocessing             None                       

(1)  A region represents approximately one-third to one-half of
     the nuclear core in the reactor at any one time.  Region no.
     1011 was loaded in 19931994 and regionRegion no. 1112 will be loaded in
     1994.
(2)    The contract with the DOE is a "requirements" type
       contract whereby the DOE supplies total enrichment
       requirements for the unit through the year 2022, as
       specified by its then current schedule.1996.



11





     The Company has on-site spent nuclear fuel storage
capability until at least 20082009 and expects to be able to expand
its storage capacity over the life of Summer Station to accommodate the spent fuel output for the
life of the plant through rod consolidation, dry cask storage or
other technology as it becomes available.  In addition, there is
sufficient on-site storage capacity over the life of Summer
Station to permit storage of the entire reactor core in the event
that complete unloading should become desirable or necessary for
any reason.  (See "Nuclear Fuel Disposal" under "Environmental
Control Matters" for information regarding the contract with the DOE for
disposal of spent fuel.)

10


Decommissioning

     Decommissioning of Summer Station is presently projected to
commence in the year 2022 when the operating license expires. 
Based on a 1991 study, the expenditures (on a before-tax basis)
related to the Company's share of decommissioning activities are
estimated, in 2022 dollars assuming a 4.5% annual rate of
inflation, to be $545.3 million including partial reclamation
costs.  The Company is providing for its share of estimated
decommissioning costs of Summer Station over the life of Summer
Station.  The Company's method of funding decommissioning costs
is referred to as COMReP (Cost of Money Reduction Plan).  Under
this plan, funds collected through rates ($3.2 million in each of
1995 and 1994) are used to purchase insurance policies on the
lives of certain Company personnel.  Through the purchase of
insurance contracts, the Company is able to take advantage of
income tax benefits and accrue earnings on the fund on a tax-
deferred basis at a rate higher than can be achieved using more
traditional funding approaches.  Amounts for decommissioning
collected through electric rates, insurance proceeds, and
interest on proceeds less expenses are transferred by the Company
to an external trust fund in compliance with the financial
assurance requirements of the NRC.  Management intends for the
fund, including earnings thereon, to provide for all eventual
decommissioning expenditures on an after-tax basis.  The trust's
sources of decommissioning funds under the COMReP program include
investment components of life insurance policy proceeds, return
on investment and the cash transfers from the Company described
above.   The Company records its liability for decommissioning
costs in deferred credits.

                    GAS OPERATIONS

Gas Sales

     In 19931995 residential sales accounted for 36%47% of gas sales
revenues; commercial sales 26%32%; industrial sales   17% and
transportation gas     21%. 
Dekatherm sales by classification for the years ended December
31, 19931995 and 19921994 are presented below:

                                                                            
                                        SALES
                                      DEKATHERMSSales
                                      Dekatherms                    %      
CLASSIFICATION                  1993              1992            CHANGEClassification                    1995             1994           Change    

Residential                    12,009,444        11,286,08812,333,769       11,531,558          7.0 
Commercial                     10,436,987        9,813,454          6.4 
Commercial                     8,842,728         9,029,256        (2.1)
Industrial                     5,881,309         5,334,117        10.313,467,687       10,938,713         23.1
Transportation gas              6,993,817         5,906,697        18.43,603,314        5,469,728        (34.1)
    Total                      33,727,298        31,556,158         6.939,841,757       37,753,453          5.5 


     During 19931995 the Company added 2,696recorded a net increase of 4,909 gas
customers, increasing its total customers to 221,278.243,342.  

     The Company purchases all of its natural gas from Pipeline
Corporation.

     The demand for gas is affected by conservation, the weather,
the price relationship between gas and alternativealternate fuels and other
factors.



12





     The deregulation of natural gas prices at the wellhead which
took place on January 1, 1985 and
the changes in the prices of natural gas that have occurred under
Federal regulation have resulted in the development of a spot
market for natural gas in the producing areas of the country. 
Pipeline Corporation has been successful in purchasing lower cost
natural gas in the spot market and arranging for its
transportation to South Carolina.

     On April 8, 1992, the FERC promulgated itsNovember 1, 1993 Transco and Southern Natural (Pipeline
Corporation's interstate suppliers) began operations under Order
No. 636, which is intended to deregulatederegulated the markets for interstate sales of
natural gas by requiring that pipelines provide transportation
services that are equal in quality for all gas supplies whether
the customer purchases gas from the pipeline or another supplier. 
The impact of this order on the Company will be primarily through
changes affecting its supplier, Pipeline Corporation, which,
while operating wholly within the state of South Carolina, is
served by two interstate pipelines.Corporation.  

     To reduce dependence on imported oil, NEPA imposes purchase
requirements for the purchase of alternate fuel vehicles for federal,on
Federal, state, municipal and private fleets which increase over a period of
years.fleets.  The Company
expects these requirements for alternate fuel
vehicles to develop business opportunities for
the sale of compressed natural gas as fuel for vehicles, but it
cannot predict the extentmagnitude of this new market.

Gas Cost and Supply

     Pipeline Corporation purchases natural gas under contracts
with producers brokers and interstate pipelines.marketers on a short-term basis at current
price indices and on a long-term basis for reliability assurance
at index prices plus a gas inventory charge.  The gas is brought
to South Carolina through contractstransportation agreements with both
Southern Natural and Transco.Transco, which expire at various times from
1996 to 2003.  The volume of gas which Pipeline Corporation is
entitled to transport throughunder these contracts on a firm basis is
shown below:

                                                 Maximum Daily
          Supplier                       Contract Demand Capacity (MCF)

          Southern Natural Firm Transportation       160,000184,974             
          Transco Firm Transportation                 29,90029,300
            Total                                    189,900       




11


214,274       
                                           
     Under a contract with Pipeline Corporation, the Company's
maximum daily contract demand is 184,000 MCF.224,270 dekatherms.  The
contract allows the Company to receive amounts in excess of this
demand based on availability.

     The average cost per MCF of natural gas purchased from
Pipeline Corporation was approximately $3.81$3.77 in 19931995 compared to
$3.65$4.29 in 1992.1994.

     To meet the requirements of the Company and its other high
priority natural gas customers during periods of maximum demand,
Pipeline Corporation supplements its supplies of natural gas from
two LNG plants.  The LNG storage tanksplants are capable of storing the liquefiedlique-
fied equivalent of 1,900,000 MCF of natural gas, of which
approximately 1,450,0001,695,489 MCF were in storage at December 31, 1993.1995. 
On peak days the LNG plants can regasify up to 150,000 MCF per
day.  Additionally, Pipeline Corporation had contracted for
6,398,0356,450,727 MCF of natural gas storage space on December 31, 1993,
of which 4,880,4844,307,796 MCF
were in storage at such date.  Propane 
air  peak  shaving facilities  located  in  the Company's 
service  area can supply an additional 137,400 MCF per day.on December 31, 1995.  

     The Company believes that Pipeline Corporation's current
supplies under contract and
available for spot market purchase of natural gas are adequate to meet existing
customer demands for service and to accommodate growth.



13






Curtailment Plans

     The FERC has established allocation priorities applicable to
firm and interruptible capacities on interstate pipeline
companies to their customers which require Southern Natural and
Transco to allocate capacity to Pipeline Corporation. The FERC
allocation priorities are not applicable to deliveries by the
Company to its customers, which are governed by a separate
curtailment plan approved by the PSC.

REGULATION

General

     The Company is subject to the jurisdiction of the PSC as to
retail electric, gas and transit rates, service, accounting,
issuance of securities (other than short-term promissory notes)
and other matters.  The Company is subject to regulatory
jurisdictionregulation under
the Federal Power Act, administered by the FERC and the DOE, in
the transmission of electric energy in interstate commerce and in
the sale of electric energy at wholesale for resale, as well as
with respect to licensed hydroelectric projects and certain other
matters, including accounting and the issuance of short-term
promissory notes.  

     National Energy Policy Act of 1992

     Congress has passed NEPA, the principal thrust of which is
to create a more competitive wholesale power supply market by
creating "exempt wholesale generators" (EWGs) designated by the
FERC, which are independent power producers (IPPs) whose owners
will not become holding companies under PUHCA.  Upon application
of a wholesaler of electric energy, the FERC may order an
electric utility that owns transmission facilities used for
wholesale sales of electric energy to provide transmission
service (including any enlargement of transmission capacity
needed to provide the service) to the applicant.  Charges for
transmission service must be "just and reasonable" and a utility
is entitled to recover "all legitimate, verifiable economic
costs" incurred in connection with any transmission service so
ordered.  The FERC may not order such service where it (1) would
"unreasonably impair the continued reliability of electric
wheeling" judged by reference to "consistently applied regional
or national reliability standards, guidelines or criteria;" (2)
would result in "retail wheeling;" or (3) would conflict with
state laws governing retail marketing areas of electric
utilities.  Electric utilities, including exempt and non-exempt
holding companies, may own and operate EWGs subject to advance
approval by state utility commissions, which are given access to
books and records of the EWG and its affiliates to the extent
that such  a  commission  requires  access  to  perform its
regulatory  duties.  It allows  both registered  and exempt 





12






utility holding companies to acquire interests in foreign utility
companies engaged in the generation, transmission or distribution
of electricity or the retail distribution of gas, where a state
commission has certified that it has the ability to protect the
utility's retail ratepayers against adverse investments in
foreign utilities by affiliates of public utilities that such
commissions regulate.  State Commissions must consider rate
making changes and other regulatory reform to ensure that
electric utilities' investments in energy efficiency and demand
side management programs are at least as profitable as investing
in new generating capacity.  FERC has issued a Notice of Proposed
Rule Making to develop regulations under NEPA concerning EWGs and
electric transmission service. 

     NEPA also has provisions concerning nuclear power, alternate
fuel vehicles, minimum efficiency standards, integrated resource
planning, demand side management incentives, a variety of energy
research projects relating to environmental measures, electric
and magnetic fields, hydroelectric projects, and global warming. 
It authorizes one step licensing for nuclear power plants  and
requires EPA to issue standards for the Yucca Mountain repository
site for nuclear waste (see "Nuclear Fuel Disposal" under
"Environmental Control Matters").  To reduce dependence on
imported oil, NEPA imposes purchase requirements for alternate
fuel vehicles for federal, state, municipal and private fleets
which increase over a period of years (see "Gas Operations").

     In the opinion of the Company, it will be able to meet
successfully the challenges of an altered business climate for
electric and gas utilities and natural gas businesses.  Neither
the application of NEPA or FERC Order No. 636 nor the development
of an EWG industry, new markets and obligations for transmission
services for wholesale sales of electricity, nor deregulated
interstate natural gas markets is expected to have awithout any material
adverse impact on theits results of its operations, its financial position
or its business prospects.

Federal Energy Regulatory Commission

     PursuantThe Company is subject to Section 204 ofregulation under the Federal Power
Act, administered by the Company must obtain FERC authorityand the DOE, in the transmission of
electric energy in interstate commerce and in the sale of
electric energy at wholesale for resale, as well as with respect
to issuelicensed hydroelectric projects and certain other matters
including accounting and the issuance of short-term indebtedness.  The FERC has authorized the Company to issue up to
$200 million of unsecured promissory
notes or commercial paper
with maturity dates of 12 months or less but not later than
December 31, 1995.notes.  (See "Capital Requirements and Financing Program.")

     The Company holds licenses under the Federal Water Power Act
or the Federal Power Act with respect to all its hydroelectric
projects.  The expiration dates of the licenses covering the
projects are as follows:  

       Project                 Capability (KW)      License Expiration Date

       Neal Shoals                  (5,000 KW capability) and5,000                     1993
       Stevens Creek                (9,000 KW capability) 1993;9,000                     2025
       Columbia                    (10,000 KW
capability) 2000;10,000                     2000
       Saluda                     Project (206,000 KW capability) 2007;
and206,000                     2007
       Parr Shoals                 (14,000 KW capability) and14,000                     2020
       Fairfield Pumped Storage   Project (512,000 KW capability) 2020.512,000                     2020

     Pursuant to the provisions of the Federal Power Act, as
amended, by the Electric
Consumers Protection Act of 1986, applications for new licenses for Neal Shoals and
Stevens Creek were filed with the FERC on December 30, 1991.  No
competing applications were filed.  The FERC issued a new 30-year
license for the Stevens Creek project on November 22, 1995.  The
Neal Shoals license application was accepted for
filing byis in the FERC on September 30, 1992 and the Stevens Creek
application was accepted September 15, 1993.final stage of review. 
The FERC has issued Noticesa Notice of Authorization for Continued
Project Operation for both
projects until FERC has acted on SCE&G's applications for new
licenses.  FERC has announced its intentions to perform a
Multiple-project Environmental Assessment for Neal Shoals anduntil the FERC acts on the
Company's application for a Multiple-project Environmental Impact Statement for Stevens
Creek.new license.  

     At the termination of a license under the Federal Power Act,
the United States Governmentgovernment may take over the project covered
thereby, or the FERC may extend the license or issue a license to
another applicant.  If the United States takes over a project or
the FERC issues a license to another applicant, the original
licensee shallis entitled to be paid its net investment in the
project, (notnot to exceed fair value)value, plus severance damages.


14





     The Company has filed an application with the FERC
requesting authorization to sell bulk power at market based
rates.  The application also included proposed open access
transmission tariffs. (See "National Energy Policy Act of 1992
and FERC Order 636.")

Nuclear Regulatory Commission

     The Company is subject to regulation by the NRC with respect
to the ownership and operation of Summer Station.  The NRC's
jurisdiction encompasses broad supervisory and regulatory powers
over the construction and operation of nuclear reactors,
including matters of health and safety, antitrust considerations
and environmental impact.  The NRC conducts semiannual reviews
that identify plants that have demonstrated an excellent level of
safety performance.  Summer Station was recognized in both 1993
reviews as one of the top nuclear plants in the country.

     In addition, the Federal Emergency
Management Agency is responsible for the review, in conjunction
with the NRC, of certain aspects of emergency planning relating
to the operation of nuclear plants.  

     13





                            RATE MATTERS

     The following table presents a summary of significant rate activity for 
the years 1990-1993 based on test years:


                              REQUESTED                              GRANTED         
     
                 Date of
General Rate  Application/     Amount    % Increase   Date of    Amount   % of Increase
Applications     Hearing     (Millions)   Requested    Order   (Millions)    Granted  
   

PSC
 Electric
  Retail        01/03/89      $ 27.2        3.7%      07/03/89    $18.2*      67%*
  Retail        12/07/92      $ 72.0**     11.4%      06/For the fourth time in the last five evaluations, Summer
Station received a category one rating from the Institute of
Nuclear Power Operations (INPO).  The category one rating is the
highest given by INPO for a nuclear plant's overall operations.

National Energy Policy Act of 1992 and FERC Order 636

     The Company's regulated business operations are likely to be
impacted by the NEPA and FERC Order No. 636.  NEPA is designed to
create a more competitive wholesale power supply market by
creating "exempt wholesale generators" and by potentially
requiring utilities owning transmission facilities to provide
transmission access to wholesalers.  Order No. 636 is intended to
deregulate the markets for interstate sales of natural gas by
requiring that pipelines provide transportation services that are
equal in quality for all gas suppliers whether the customer
purchases gas from the pipeline or another supplier.  In the
opinion of the Company, it will be able to meet successfully the
challenges of these altered business climates and does not
anticipate there to be any material adverse impact on the results
of its operations, its financial position or its business
prospects.

RATE MATTERS

     The following table presents a summary of significant rate
activity for the years 1991-1995 based on test years:

                           REQUESTED                     GRANTED           
                       
                Date of                 %                           % of  
General Rate  Application/  Amount   Increase  Date of   Amount   Increase
Applications   Hearing    (Millions) Requested  Order  (Millions)  Granted 
   

PSC
 Electric
  Retail       07/10/95    $ 76.7      8.4%   1/09/96    $67.5      88%  
  Retail       12/07/92    $ 72.0*    11.4%    6/07/93    $60.5      84%


 Transit
  Fares        03/12/92    $  1.7     42.0%    9/14/92    $ 1.0      59%

*Reflects a rate reduction of $3.7 million on January 4, 1993 (see discussion below) and excludes impact* As modified to reflect lowering of rate reduction of $7.7 million onreturn the Company was seeking. 15 On July 10, 1995, the Company filed an application with the PSC for an increase in retail electric rates. On January 3, 1990 which corresponds to $7.7 million reduction in cost-of-service resulting from NRC approval of extension of Summer Station's operating life to 40 years. ** As modified On June 7, 19939, 1996 the PSC issued an order ongranting the Company's pending electric rate proceeding allowingCompany an authorized return on common equityincrease of 11.5%, resulting7.34% which will produce additional revenues of approximately $67.5 million annually. The increase will be implemented in a 7.4% annualtwo phases. The first phase, an increase in retail electric rates, or a projected $60.5revenues of approximately $59.5 million annually based on a test year. These rates are toyear, or 6.47%, commenced on January 15, 1996. The second phase will be implemented in two phasesJanuary 1997 and will produce additional revenues of approximately $8.0 million annually, or .87% more than current rates. The PSC authorized a return on common equity of 12.0%. The PSC also approved establishment of a Storm Damage Reserve Account capped at $50 million to be collected through rates over a two-year period: phase one, effective June 1993, producing $42.0 million annually,ten-year period. Additionally, the PSC approved accelerated recovery of substantially all (excluding accumulated deferred income taxes) of the Company's electric regulatory assets and phase two, effective June 1994, producing $18.5 million annually, based on a test year.the remaining transition obligation for postretirement benefits other than pensions, changing the amortization periods to allow recovery by the end of the year 2000. The Company's request to shift approximately $257 million of depreciation reserves from transmission and distribution assets to nuclear production assets was also approved. On October 27, 1994 the PSC issued an order approving the Company's request to recover through a billing surcharge to its gas customers the costs of environmental cleanup at the sites of former manufactured gas plants. The billing surcharge, which was effective with the first billing cycle in November 1994 and is subject to annual review, provides for the recovery of approximately $16.2 million representing substantially all actual and projected site assessment and cleanup costs for the Company's gas operations that had previously been deferred. In October 1995, as modified, had proposed a return on equityresult of 12.05% and had projectedthe ongoing annual increasesreview, the PSC approved the continued use of $53.0 million and $19.0 million for phases one and two, respectively.the billing surcharge. The balance remaining to be recovered amounts to approximately $14.5 million. On September 14, 1992 the PSC issued an order granting the Company a $.25 increase in transit fares from $.50 to $.75 in both Columbia and Charleston, South Carolina; however, the PSC also required $.40 fares for low incomelow-income customers and denied the Company's request to reduce the number of routes and frequency of service. The new rates were placed into effect on October 5, 1992. The Company has appealed the PSC's order to the Circuit Court. During oral arguments in February 1994On May 23, 1995 the Circuit Court retained jurisdiction and remandedordered the decisioncase back to the PSC for reconsideration of several issues including the limited purpose of answering questions concerninglow-income rider program, routing changes, and the applicable regulatory principles used by the PSC in determining these transit rates. Since November 1, 1991 the Company's gas rate schedules for its residential, small commercial and small industrial customers have included a weather normalization adjustment (WNA). The WNA minimizes fluctuations in gas revenues due to abnormal weather conditions and has been approved through November 1994 subject to an annual review by the PSC. The PSC order was based on a return on common equity of 12.25%. The WNA became effective the first billing cycle in December 1991. In May 1989 the PSC approved a volumetric and direct billing method for Pipeline Corporation to recover take-or-pay costs incurred from its interstate pipeline suppliers pursuant to FERC-approved final and non-appealable settlements. In December 1992 the Supreme Court approved Pipeline Corporation's full recovery of the take-or-pay charges imposed by its suppliers and treatment of these charges as a cost of gas. However, the Supreme Court declared the PSC-approved "purchase deficiency" methodology for recovery of these costs to be unlawful retroactive ratemaking and remanded the docket to the PSC to reconsider its recovery methodology. The Company believes that the elimination of the purchase deficiency method of recovery will affect the timing for recovery of take-or-pay charges and shift the allocations among Pipeline Corporation's customers (including the Company) but that all such charges should be ultimately recovered.$.75 fare. The Supreme Court declined to review an appeal of the Circuit Court decision establishes a principle of law that will provide a basisand dismissed the case. The PSC filed, along with other intervenors, another Petition for full recovery byReconsideration, which the Company, as well as Pipeline Corporation, of these costs. 14 On July 3, 1989 the PSC granted the Company approximately $21.9 million of a requested $27.2 million annual increaseCircuit Court denied. Procedural matters in retail electric revenues based upon an allowed return on common equity of 13.25%. The Consumer Advocate appealed the decisionthis case are yet to the Supreme Court which, on August 31, 1992, found that the evidencebe resolved in the record of that case did not support a return on common equity higher than 13.0% and remanded to the PSC a portion of its July 1989 order for a determination of the proper return on common equity consistent with the Supreme Court's opinion. On January 19, 1993 the PSC issued an order allowing a return on common equity of 13.0%, approving a refund based on the difference in rates created by the difference between the 13.0% and the 13.25% return on common equity and making other non-material adjustments to the calculation of cost-of-service. The total refund before interest and income taxes, was approximately $14.6 million and was charged against 1992 "Electric Revenues." The refund plus interest was made during 1993. On November 28, 1989 the PSC granted the Company an increase in firm retail natural gas rates, effective November 30, 1989, designed to increase annual revenues by $10.1 million, or 89.5% out of the requested increase of approximately $11.3 million. In its order the PSC authorized a 12.75% return on common equity. The Consumer Advocate appealed to the Supreme Court which on August 31, 1992 remanded the order to the PSC for redetermination of the proper amount of litigation expenses to include in the test period. In January 1993 the PSC reduced the amount of litigation expense and ordered a refund totaling approximately $163,000 which was charged against 1992 "Gas Revenues." The refund was made during 1993.court. Fuel Cost Recovery Procedures The PSC has established a fuel cost recovery procedure which determines the fuel component in the Company's retail electric base rates semiannually based on projected fuel costs for the ensuing six-month period, adjusted for any overcollection or undercollection from the preceding six-month period. The Company has the right to request a formal proceeding at any time should circumstances dictate such a review. In the April 19931995 semiannual review of the fuel cost component of electric rates, the PSC voted to reducedecreased the rate from 13.514.16 mills per KWH to 13.013.48 mills per KWH, a monthly decrease of $.50$.68 for an average customer using 1,000 KWH a month. This reduction coincided with the retail electric rate case effective June 1993. For the October 19931995 review the PSC voted to continuecontinued the rate of 13.013.48 mills per KWH. The Company's gas rate schedules and contracts include mechanisms which allow it to recover from its customers changes in the actual cost of gas. The Company's firm gas rates allow for the recovery of a fixed cost of gas, based on projections, as established by the PSC in annual gas cost and gas purchase practice hearings. Any differences between actual and projected gas costs are deferred and included when projecting gas costs during the next annual gas cost recovery hearing. In the October 19931995 review the PSC authorized an increase indecreased the base cost of gas from 41.96351.058 cents per therm to 47.10043.081 cents per therm which resulted in a monthly increasedecrease of $5.14$7.98 (including applicable taxes) based on an average of 100 therms per month on a residential bill during the heating season. In July 1990 the PSC initiated proceedings for a generic hearing on the Industrial Sales Program Rider (ISPR) for the Company and Pipeline Corporation. The PSC issued an order dated December 20, 1991 approving a Stipulation and Agreement signed in December 1991 by all parties involved which retained the ISPR with modifications to Pipeline Corporation's gas cost mechanisms. 1516 ENVIRONMENTAL CONTROL MATTERS General Federal and state authorities have imposed environmental control requirements relating primarily to air emissions, wastewater discharges and solid, toxic and hazardous waste management. The Company is attempting to ensure that its operations meet applicable environmental regulations and standards. It is difficult to forecast the ultimate effect of environmental quality regulations upon the existing and proposed operations. Moreover, developmentsDevelopments in these and other areas may require that equipment and facilities be modified, supplemented or replaced. The ultimate effect of these regulations and standards upon existing and proposed operations cannot be forecast. Capital Expenditures In the years 19911993 through 1993,1995, capital expenditures for environmental control amounted to approximately $73.6$90.0 million. In addition, approximately $7.4$10.4 million, $5.7$8.8 million and $4.8$7.4 million of environmental control expenditures were made during 1993, 19921995, 1994 and 1991,1993, respectively, which were included in "Other operation" and "Maintenance" expenses. It is not possible to estimate all future costs for environmental purposes but forecasts for minimum capitalized expenditures are $40.3$10.1 million for 19941996 and $252.1$138.8 million for the four-year period 19951997 through 1998.2000. These expenditures are included in the Company's construction program. Air Quality Control The Federal Clean Air Act requires electric utilities to reduce substantially emissions of 1970 (the "1970 Act") requires that electric generating plants comply with primary and secondary ambient air quality standards with respect to certain air pollutants including particulates, sulfur oxidesdioxide and nitrogen oxides and imposes economic penalties for noncompliance. This Act was amended withoxide by the passage of the Clean Air Act Amendments of 1990. Currently, the Company uses a variety of methods to comply with the State Implementation Plan (developed pursuant to the 1970 Act), including the use of low sulfur fuel, fuel switching, reduction of load during periods when compliance cannot be met at full power, maintenance and improvement of existing electrostatic precipitators and the installation of new baghouses.year 2000. These requirements are being phased in over two periods. The Company and GENCO have been able to purchase sufficient fuel meeting current sulfur standards for all of their plants. With respect to sulfur dioxide emissions, none of the Company's electric generating plants is included among the Phase I plants listed in the Clean Air Act Amendments of 1990 withfirst phase had a compliance date of January 1, 1995. Both companies will, however, be affected by Phase II requirements which have a compliance date of1995 and the second, January 1, 2000. The companies undertook a study in 1992 to determine the most cost effective mix of control optionsCompany's facilities did not require modifications to meet the requirements of the Clean Air Act. Such a control strategyPhase I. The Company will most likely result in requiringmeet the Company to utilize a combinationPhase II requirements through the burning of the following alternatives to meet its compliance requirements: (1) burnnatural gas and/or lower sulfur coal (2) burn natural gas, (3) retrofit at least one coal-fired electricin its generating unit with a scrubber to remove sulfur dioxideunits and (4)the purchase and use of sulfur dioxide emission allowances to the extent necessary. In addition, the Company will install on most of its coal-fired units lowallowances. Low nitrogen oxide burners are being installed to reduce nitrogen oxide emissions.emissions to the levels required by Phase II. Air toxicity regulations for the electric generating industry are likely to be promulgated around the year 2000. The Company filed compliance plans related to Phase II requirements with DHEC by December 31, 1995. The Company currently estimates that excluding GENCO, air emissions control equipment will require capital expenditures of $190$113 million over the 1994-19981996-2000 period to retrofit existing facilities, and anwith increased operation and maintenance cost of $22approximately $1 million per year. Total capital expenditures required toTo meet compliance requirements through the year 2003 are anticipated to be2005, the Company anticipates total capital expenditures of approximately $211$150 million. 16 Water Quality Control The Federal Clean Water Act, as amended, provides for the imposition of effluent limitations that require various levels of treatment for each wastewater discharge. Under this Act, compliance with applicable limitations is achieved under a national permit program. Discharge permits have been issued for all and renewed for nearly all of the Company's and GENCO's generating units. CommensurateConcurrent with renewal of these permits the permitting agency has been implementation ofimplemented a more rigorous control program on behalf of the permitting agency.program. The facilities haveCompany has been developing compliance plans to meet the additional parameters of control and compliance has involved updating wastewater treatment technologies.this program. Amendments to the Clean Water Act proposed recently in Congress include several provisions which, if passed, could prove costly to the Company. These include limitations to mixing zones and the implementation of technology- basedtechnology-based standards. 17 Superfund Act and Environmental Assessment Program As described in Note 1L of Notes to Consolidated Financial Statements, theThe Company has an environmental assessment program to identify and assess current and former operations sites that could require environmental cleanup. As site assessments are initiated, an estimate isestimates are made of the amount of expenditures,cost, if any, necessary to investigate and clean up each site. These estimates are refined as additional information becomes available; therefore, actual expenditures could differ significantly differ from the original estimates. Amounts estimated and accrued to date ($19.6 million) for site assessments and cleanup relate primarily to regulated operations; such amounts have beenare deferred and are being amortized and recovered through rates over a ten-year period.period for electric operations and an eight-year period for gas operations. Deferred amounts totaled $18.0 million and $20.2 million at December 31, 1995 and 1994, respectively. Estimates to date include, among other things,items, the costs estimated to be associated with the matters discussed in the following paragraphs. The Company and SCANA each own twoowns four decommissioned manufactured gas plant sites which contain residues of by-product chemicals. The Company and SCANA have eachhas maintained an active review of their respectivethe sites to monitor the nature and extent of the residual contamination. In September 1992 the EPA notified the Company, the City of Charleston and the Charleston Housing Authority of their potential liability for the investigation and cleanup of the Calhoun Park Area Site in Charleston, South Carolina. This site originally encompassed approximately 18eighteen acres and included properties which were the locations for industrial operations, including a wood preserving (creosote) plant and one of the Company's decommissioned manufactured gas plants. The original scope of this investigation has been expanded to approximately 30 acres, including adjacent properties owned by the National Park Service and the City of Charleston, and private properties. The site has not been placed on the National Priority List, but may be added before cleanup is initiated. The potentially responsible parties (PRP)PRPs have agreed with the EPA to participate in an innovative approach to site investigation and cleanup called "Superfund Accelerated Cleanup Model," allowing the pre-cleanup site investigations process to be compressed significantly. The PRPs have negotiated an administrative order by consent for the conduct of a Remedial Investigation/Feasibility Study (RI/FS) and a corresponding Scope of Work. Actual fieldField work began in November 1, 1993 after final approval and authorization was granted by EPA.1993. The Company is also working with the City of Charleston to investigate potential contamination from the manufactured gas plant atwhich may have migrated to the city's aquarium site. During 1993In 1994 the City of Charleston notified the Company settledthat it considers the Company to be responsible for a $43.5 million increase in costs of the aquarium project attributable to delays resulting from contamination of the Calhoun Park Area Site. The Company believes that it has meritorious defenses against this claim and does not expect its obligations at the Yellow Water Road Superfund Site near Jacksonville, Florida, the Spencer Transformer and Equipment Site in West Virginia and Elliott's Auto Parts in Benton, Arkansas. No further expenses are anticipated for these sites.resolution to have a material impact on its financial position or results of operations. The Company has been listed as a PRP and has recorded liabilities, which are not considered material, for the Macon- DockeryMacon-Dockery waste disposal site near Rockingham, North Carolina,Carolina. The Company has participated in de minimis buy-outs for the Aqua-Tech Environmental Inc. site in Greer, South Carolina and a landfill owned by Lexington County in South Carolina. 17The Company expects to have no further involvement with these two sites. The Arkansas Department of Pollution Control and Ecology has identified the Company as a PRP for clean-up of PCBs at an abandoned transformer rebuilding plant in Little Rock, Arkansas. No formal notice from the Department has been received. The Company believes that its identification as a PRP was in error, and that the resolution of this issue will not have a material effect on the Company's results of operations or financial position. 18 Solid Waste Control The South Carolina Solid Waste Policy and Management Act of 1991 requires promulgation ofdirected the DHEC to promulgate regulations addressing specified subjects, one of which affectsfor the managementdisposal of industrial solid waste. ThisDHEC has promulgated a proposal regulation, will establish minimum criteria for industrial landfills as mandated under the Act. The proposed regulation,which if adopted as a final regulation in its present form, couldwould significantly impactincrease the Company's engineering, designcosts of construction and operation of existing and future ash management facilities. Potential cost impacts could be substantial. Nuclear Fuel Disposal The Nuclear Waste Policy Act of 1982 (the "1982 Act") requires that the Federal GovernmentUnited States government make available by 1998 a permanent repository for high-level radioactive waste and spent nuclear fuel and imposes a fee of 1.0 mill per KWH of net nuclear generation after April 7, 1983. Payments, which began in 1983, are subject to change and will extend through the operating life of Summer Station. The Company entered into a contract with the DOE on June 29, 1983, providing for permanent disposal of its spent nuclear fuel by the DOE. The DOE presently estimates that the permanent storage facility will not be available until 2010. The Company has on-site spent fuel storage capability until at least 20082009 and expects to be able to expand its storage capacity over the life of Summer Station to accommodate the spent nuclear fuel output for the life of the plant through rod consolidation, dry cask storage or other technology as it becomes available. The 1982 Act also imposes on utilities the primary responsibility for storage of their spent nuclear fuel until the repository is available. (See "Fuel Supply" under "Electric Operations" for a discussion of spent fuel storage facilities at Summer Station.) OTHER MATTERS With regard to the Company's insurance coverage for Summer Station, reference is made to Note 10B of Notes to Consolidated Financial Statements, which is incorporated herein by reference.Statements. ITEM 2. PROPERTIES Reference is made to Schedule V - Property Plant and Equipment, pages 54 through 59, for information concerning investments in utility plant and nonutility property. The Company's bond indentures, securing the First and Refunding Mortgage Bonds and First Mortgage Bonds issued thereunder, constitute direct mortgage liens on substantially all of its property. 1819 ELECTRIC The following table gives information with respect to the Company's electric generating facilities. Net Generating Present Year Capability Facility Fuel Capability Location In-Service (KW)(1) Steam Urquhart Coal/Gas Beech Island, SC 1953 250,000 McMeekin Coal/Gas Irmo, SC 1958 252,000 Canadys Coal/Gas Canadys, SC 1962 430,000 Wateree Coal Eastover, SC 1970 700,000 Summer (2) Nuclear Parr, SC 1984 590,000594,000 D-Area (3) Coal DOE Savannah River Site, SC 1995 17,000 Cope (4) Coal Cope, SC 1996 385,000 Gas Turbines Burton Gas/Oil Burton, SC 1961 28,500 Faber Place Gas Charleston, SC 1961 9,500 Hardeeville Oil Hardeeville, SC 1968 14,000 Canadys Gas/Oil Canadys, SC 1968 14,000 Urquhart Gas/Oil Beech Island, SC 1969 26,00038,000 Coit Gas/Oil Columbia, SC 1969 30,000 Parr (3)(5) Gas/Oil Parr, SC 1970 60,000 Williams (4)(6) Gas/Oil Goose Creek, SC 1972 49,000 Hagood Gas/Oil Charleston, SC 1991 95,000 Hydro Neal Shoals Carlisle, SC 1905 5,000 Parr Shoals Parr, SC 1914 14,000 Stevens Creek Martinez, GA 1914 9,000 Columbia Columbia, SC 1927 10,000 Saluda Irmo, SC 1930 206,000 Pumped Storage Fairfield Parr, SC 1978 512,000 Total (5) 3,304,000(7) 3,722,000 (1) Summer rating. (2) Represents the Company's two-thirds portion of the Summer Station. (3) This plant is operated under lease from the DOE and is dispatched to DOE's Savannah River Site steam needs. "Net Capacity Rating" for this plant is expected average hourly output. The lease, which may be extended, expires on October 1, 2005. (4) Plant began commercial operation in January 1996. (5) Two of the four Parr gas turbines are leased and have a net capability of 34,000 KW. This lease expires on June 29, 1996. (4)The Company has agreed to purchase the leased turbines on the lease expiration date. (6) The two gas turbines at Williams are leased and have a net capability of 49,000 KW. This lease expires on June 29, 1997. (5)(7) Excludes Williams Station. 20 The Company owns 424429 substations having an aggregate transformer capacity of 18,624,78019,577,868 KVA. The transmission system consists of 3,0333,090 miles of lines and the distribution system consists of 15,18615,596 pole miles of overhead lines and 3,0063,191 trench miles of underground lines. GAS Natural Gas The Company's gas system consists of approximately 6,1796,833 miles of three-inch equivalent distribution pipelines and approximately 10,08511,265 miles of distribution mains and related service facilities. The gas system acquired by SCANA is operated by the Company and consists of approximately 450 miles of three-inch equivalent distribution pipelines and approximately 778 miles of distribution mains and related service facilities. Effective January 1, 1994 the assets and liabilities of such gas system were transferred from SCANA to the Company. 19 Propane The Company has propane air peak shaving facilities which can supplement the supply of natural gas by gasifying propane to yield the equivalent of 102,000 MCF per day of natural gas. These facilities can store the equivalent of 430,405 MCF of natural gas. TRANSIT The Company owns 9398 motor coaches which operate on a route system of 285286 miles. ITEM 3. LEGAL PROCEEDINGS For information regarding legal proceedings, see ITEM 1., "BUSINESS" - RATE MATTERS" and "BUSINESS - ENVIRONMENTAL MATTERS - Superfund Act and Environmental Assessment Program" and Note 10 of Notes to Consolidated Financial Statements appearing in ITEMItem 8., "FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA." ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not Applicable PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS All of the Company's common stock is owned by SCANA and therefore there is no market for such stock. During 19931995 and 19921994 the Company paid $108.6$116.7 million and $96.6$115.1 million, respectively, in cash dividends to SCANA. The Restated Articles of Incorporation of the Company and the Indenture underlying its First and Refunding Mortgage Bonds contain provisions that may limit the payment of cash dividends on common stock. In addition, with respect to hydroelectric projects, the Federal Power Act may require the appropriation of a portion of the earnings therefrom. At December 31, 19931995 approximately $10.6$14.5 million of retained earnings were restricted as to payment of cash dividends on common stock. 2021 ITEM 6. SELECTED FINANCIAL DATA For the Years Ended December 31, 1995 1994 1993 1992 1991 1990 1989 STATEMENT OF INCOME DATAStatement of Income Data (Thousands of Dollars except statistics) Operating Revenues: ElectricRevenues $1,211,087 $1,181,274 $1,118,433 $ 940,547 $ 829,938 $ 867,685 $ 851,676 $ 842,059 Gas 174,035 160,820 150,788 147,794 153,206 Transit 3,851 3,623 3,869 4,033 4,102 Total994,381 $1,022,342 Operating Revenues 1,118,433 994,381 1,022,342 1,003,503 999,367 Operating Expenses: Fuel used in electric generation and purchased power 275,298 242,122 262,756 254,489 271,936 Gas purchased for resale 107,722 95,854 93,179 94,358 107,148 Other operation and maintenance 268,233 260,098 248,601 243,735 233,068 Depreciation and amortization 101,220 97,064 91,618 87,021 92,495 Taxes 146,641 116,976 129,482 125,954 109,641 Total Operating Expenses 899,114 812,114 825,636 805,557 814,288 Operating Income 255,854 230,418 219,319 182,267 196,706 197,946 185,079 Other Income: Allowance for equity funds used during construction 7,496 4,577 2,966 1,308 1,931 Other (911) (1,571) 317 (2,267) 1,399 Total Other Income 9,553 7,271 6,585 3,006 3,283 (959) 3,330Net Income Before Interest Charges 225,904 185,273 199,989 196,987 188,409 Interest Charges (Credits): Interest 85,222 86,994 81,340 79,481 78,670 Allowance for borrowed funds used during construction (5,286) (3,884) (4,187) (3,333) (3,934) Total Interest Charges, Net 79,936 83,110 77,153 76,148 74,736 Net Income169,185 152,043 145,968 102,163 122,836 120,839 113,673 Dividends on Preferred Stock 6,217 6,474 6,706 6,911 7,263 Earnings Available for Common Stock $163,498 146,088 139,751 $ 95,689 $ 116,130 $ 113,928 $ 106,410 BALANCE SHEET DATABalance Sheet Data Utility Plant, Net $3,157,657 $2,998,132 $2,687,193 $2,503,201 $2,380,761 $2,270,182 $2,185,505 Total Assets $3,189,939 $2,890,953 $2,748,580 $2,625,407 $2,529,6593,802,433 3,587,091 3,189,939 2,890,953 2,748,580 Capitalization: Common equity $1,051,334 $1,315,072 1,133,432 1,051,334 963,741 $ 840,505 $ 821,373 $ 774,909 Preferred stock: Notstock (Not subject to purchase or sinking fundsfunds) 26,027 26,027 26,027 26,027 26,027 SubjectPreferred stock, Net (Subject to purchase or sinking funds, Netfunds) 46,243 49,528 52,840 56,154 59,469 62,704 66,099 Long-term debt, (excludes current portion)Net 1,279,379 1,231,191 1,097,043 945,964 993,674 779,524 802,328 Total Capitalization $2,666,721 $2,440,178 $2,227,244 $1,991,886 $1,919,675 $1,689,628 $1,669,363 OTHER STATISTICSOther Statistics Electric: Customers (Year-End) 484,381 476,438 468,901 461,928 453,687 446,544 435,033 Territorial Sales (Million KWH) 17,585 16,840 16,889 15,801 15,702 15,394 14,896 Residential: Average annual use per customer (KWH) 13,859 13,048 14,077 13,037 13,246 13,330 12,891 Average annual rate per KWH $.0747 $.0743 $.0707 $.0695 $.0700 $.0707 $.0699 Gas: Customers (Year-End) 243,342 238,433 221,278 218,582 214,485 210,326 205,471 Sales (Thousand Therms) 362,384 322,837 267,335 256,495 247,483 252,373 268,915 Residential: Average annual use per customer (therms)(Therms) 570 538 606 577 522 497 575 Average annual rate per therm $.82 $.84 $.76 $.74 $.77 $.77 $.69 Transit: Number of Coaches 93 95 102 109 113 Revenue Passengers Carried (Thousands) 4,568 5,837 6,395 6,788 6,430
2122 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS COMPETITION The electric utility industry has begun a major transition that could lead to expanded market competition and less regulatory protection. Future deregulation of electric wholesale and retail markets will create opportunities to compete for new and existing customers and markets. As a result, profit margins and asset values of some utilities could be adversely affected. The pace of deregulation, future prices of electricity, and the regulatory actions which may be taken by the PSC in response to the changing environment cannot be predicted. However, the Company is aggressively pursuing actions to position itself strategically for the transformed environment. To enhance its flexibility and responsiveness to change, the Company operates Strategic Business Units. Maintaining a competitive cost structure is of paramount importance in the utility's strategic plan. The Company has undertaken a variety of initiatives, including reductions in operation and maintenance costs and in staffing levels. In January 1996 the PSC approved (as discussed under "Liquidity and Capital Resources") the accelerated recovery of the Company's electric regulatory assets and the shift of depreciation reserves from transmission and distribution assets to nuclear production assets. The Company believes that these actions as well as numerous others that have been and will be taken demonstrate its ability and commitment to succeed in the new operating environment to come. Regulated public utilities are allowed to record as assets some costs that would be expensed by other enterprises. If deregulation or other changes in the regulatory environment occur, the Company may no longer be eligible to apply this accounting treatment and may be required to eliminate such regulatory assets from its balance sheet. Such an event could have a material adverse effect on the Company's results of operations in the period the write-off is recorded. The Company reported approximately $116 million and $4 million of regulatory assets and liabilities, respectively, excluding amounts related to net accumulated deferred income tax assets of approximately $33 million, on its balance sheet at December 31, 1995. LIQUIDITY AND CAPITAL RESOURCES The cash requirements of the Company arise primarily from its operational needs and its construction program. The ability of the Company to replace existing plant investment, as well as to expand to meet future demands for electricity and gas, will depend upon its ability to attract the necessary financial capital on reasonable terms. The Company recovers the costs of providing services through rates charged to customers. Rates for regulated services are generally based on historical costs. As customer growth and inflation occur and the Company expands its construction program, it is necessary to seek increases in rates. As a result, the Company's future financial position and results of operations will be affected by its ability to obtain adequate and timely rate and other regulatory relief. Due to continuing customer growth, the Company entered into a contract with Duke/Fluor Daniel in 1991 to design, engineer and build a 385 MW coal-fired electric generating plant near Cope, South Carolina in Orangeburg County.Carolina. Construction of the plant started in November 1992. Commercial operation began in November 1992 with commercial operation expected in late 1995 or earlyJanuary 1996. The estimated pricecost of the Cope plant, excluding financing costs and AFC, but including an allowance for escalation, is $450$410.9 million. In addition, the transmission lines for interconnection with the Company's system are expected to cost $26$22.5 million. Until the completion of the new plant,On July 10, 1995 the Company is contractingfiled an application with the PSC for additional capacity as necessary to ensure that the energy demands of its customers can be met. As discussedan increase in Note 2A of Notes to Consolidated Financial Statements on June 7, 1993retail electric rates. On January 9, 1996 the PSC issued an order granting the Company a 7.4% annualan increase in retail electric rates toof 7.34% which will produce additional revenues of approximately $67.5 million annually. The increase will be implemented in two phasesphases. The first phase, an increase in revenues of $42.0approximately $59.5 annually based on a test year, or 6.47%, commenced on January 15, 1996. The second phase will be implemented in January 1997 and will produce additional revenues of approximately $8.0 million annually, effective June 1993or .87% more than current rates. The PSC authorized a return on common equity of 12.0%. The PSC also approved establishment of a Storm Damage Reserve Account capped at $50 million to be collected through rates over a ten-year period. Additionally, the PSC approved accelerated recovery of substantially all of the Company's electric regulatory assets (excluding accumulated deferred income taxes) and $18.5the remaining transition obligation for postretirement benefits other than pensions, changing the amortization periods to allow recovery by the end of the year 2000. The Company's request to shift approximately $257 million annually effective June 1994.of depreciation reserves from transmission and distribution assets to nuclear production assets was also approved. 23 The estimated primary cash requirements for 1994,1996, excluding requirements for fuel liabilities and short-term borrowings, (including notes payable to affiliated companies), and the actual primary cash requirements for 19931995 are as follows: 1994 19931996 1995 (Thousands of Dollars) Property additions and construction expenditures, excludingnet of allowance for funds used during construction (AFC) $384,287 $280,910$197,179 $250,870 Nuclear fuel expenditures 28,064 7,17721,147 21,045 Maturing obligations, redemptions and sinking and purchase fund requirements 5,024 3,70021,197 15,812 Total $417,375 $291,787$239,523 $287,727 Approximately 20.0%45% of total cash requirements (excluding(after payment of dividends) was provided from internal sources in 19931995 as compared to 49.2%22% in 1992.1994. The Company's First and Refunding Mortgage Bond Indenture, dated April 1, 1945 (Old Mortgage), contains provisions prohibiting the issuance of additional bonds thereunder (Class A Bonds) unless net earnings (as therein defined) for 12twelve consecutive months out of the 15fifteen months prior to the month of issuance isare at least twice the annual interest requirements on all Class A Bonds to be outstanding (Bond Ratio). For the year ended December 31, 19931995 the Bond Ratio was 3.70.3.97. The issuance of additional Class A Bonds also is restricted also to an additional principal amount equal to (i) 60% of unfunded net property additions (which unfunded net property additions totaled approximately $219.9$162.3 million at December 31, 1993)1995), Class A Bonds issued on the basis of(ii) retirements of Class A Bonds (which retirement credits totaled $10.9$64.8 million at December 31, 1993)1995), (iii) and Class A Bonds issued on the basis of cash on deposit with the Trustee. 22 The Company has placed a new bond indenture (New Mortgage) dated April 1, 1993 oncovering substantially all of its electric properties under which its future mortgage-backed debt (New Bonds) will be issued. New Bonds are expected to be issued under the New Mortgage on the basis of a like principal amount of Class A Bonds issued under the Old Mortgage which have been deposited with the Trustee of the New Mortgage (of which $157$185 million were available for such purpose as of December 31, 1993)1995), until such time as all presently outstanding Class A Bonds are retired. Thereafter, New Bonds will be issuable on the basis of property additions in a principal amount equal to 70% of the original cost of electric and common plant properties (compared to 60% of value for Class A Bonds under the Old Mortgage), cash deposited with the Trustee, and retirement of New Bonds. New Bonds will be issuable under the New Mortgage only if adjusted net earnings (as therein defined) for 12twelve consecutive months out of the 18eighteen months immediately preceding the month of issuance are at least twice the annual interest requirements on all outstanding bonds (including Class A Bonds) and New Bonds to be outstanding (New Bond Ratio). For the year ended December 31, 19931995 the New Bond Ratio was 5.0.5.31. The following financing transaction has occurred since December 31, 1994: On April 29, 199312, 1995 the Securities and Exchange Commission declared effective a registration statement for the issuance of up to $700Company issued $100 million of New Bonds. The following series, aggregating $600 million, have been issued under such registration statement: On June 9, 1993, $100 million,First Mortgage Bonds, 7 5/8% Seriesseries due JuneApril 1, 20232025 to repay short-term borrowings in a like amount. On July 1, 1993, $100 million, 6% Series due June 15, 2000, and $150 million, 7 1/8% Series due June 15, 2013, and on July 20, 1993, $150 million, 7 1/2% Series due June 15, 2023, to redeem, on July 20, 1993, $382,035,000 of First and Refunding Mortgage Bonds maturing between 1999 and 2017 and bearing interest at rates between 8% and 9 7/8% per annum. On December 20, 1993, $100 million, 6 1/4% Series due December 15, 2003 to repay short-term borrowings in a like amount. On June 1, 1993 the Company redeemed the following amounts of First and Refunding Mortgage Bonds: $35 million, 10 1/8% Series due 2009 and $13 million, 9 7/8% Series due 2009.borrowings. Without the consent of at least a majority of the total voting power of the Company's preferred stock, the Company may not issue or assume any unsecured indebtedness if, after such issue or assumption, the total principal amount of all such unsecured indebtedness would exceed 10% of the aggregate principal amount of all of the Company's secured indebtedness and capital and surplus; provided, however, that no such consent shall be required to enter into agreements for payment of principal, interest and premium for securities issued for pollution control purposes. Pursuant to Section 204 of the Federal Power Act, the Company must obtain the FERC authority to issue short-term indebtedness. The FERC ha authorized the Company to issue up to $200 million of unsecured promissory notes or commercial paper with maturity dates of 12twelve months or less, but not later than December 31, 1995.1997. The Company has $127.0had $165 million authorized and unused lines of credit at December 31, 1993.1995. In addition, the Company has a credit agreement for a maximum of $75$125 million to finance nuclear and fossil fuel inventories, with $38.2 millionthe full amount available at December 31, 1993.1995. The credit agreement supports the issuance of short-term commercial paper for the financing of nuclear and fossil fuels and sulfur dioxide emission allowances. Fuel Company commercial paper outstanding at December 31, 1995 was $76.8 million. 24 The Company's Restated Articles of Incorporation prohibit issuance of additional shares of preferred stock without consent of the preferred stockholders unless net earnings (as defined therein) for the 12twelve consecutive months immediately preceding the month of issuance isare at least one and one-half times the aggregate of all interest charges and preferred stock dividend requirements (Preferred Stock Ratio). For the year ended December 31, 19931995 the Preferred Stock Ratio was 2.52.2.58. The Company anticipates that its 19941996 cash requirements of $417.4$378.9 million will be met primarily through internally generated funds (approximately 32% excluding77%, after payment of dividends), the sales of additional equity securities, additional equity contributions from SCANA and the incurrence of additional short-term and long-termlong- term indebtedness. The timing and amount of such financing will depend upon market conditions and other factors. Actual 19941996 expenditures may vary from the estimates set forth above due to factors such as inflation and economic conditions, regulation and legislation, rates of load growth, environmental protection standards and the cost and availability of capital. The Company expects that it has or can obtain adequate sources of financing to meet its projected cash requirements. 23 requirements for the next twelve months and for the foreseeable future. Environmental Matters The Clean Air Act requires electric utilities to reduce substantially emissions of sulfur dioxide and nitrogen oxide by the year 2000. These requirements are being phased in over two periods. The first phase hashad a compliance date of January 1, 1995 and the second, January 1, 2000. The Company meets allCompany's facilities did not require modifications to meet the requirements of Phase I and therefore will not have to implement changes until compliance with Phase II requirements is necessary.I. The Company then will most likely meet its compliancethe Phase II requirements through the burning of natural gas and/or lower sulfur coal the addition of scrubbers to coal-firedin its generating units and the purchase and use of sulfur dioxide emission allowances. Low nitrogen oxide burners will beare being installed to reduce nitrogen oxide emissions. Theemissions to the levels required by Phase II. Air toxicity regulations for the electric generating industry are likely to be promulgated around the year 2000. By December 31, 1995 the Company is continuinghad filed compliance plans related to refine a detailed compliance plan that must be filedPhase II requirements with the EPA by January 1, 1996.DHEC. The Company currently estimates that excluding GENCO, air emissions control equipment will require capital expenditures of $190$113 million over the 1994-19981996-2000 period to retrofit existing facilities, and anwith increased operation and maintenance cost of $22approximately $1 million per year. Total capital expenditures required toTo meet compliance requirements through the year 2003 are anticipated2005, the Company anticipates total capital expenditures of approximately $150 million. The Federal Clean Water Act, as amended, provides for the imposition of effluent limitations that require various levels of treatment for each wastewater discharge. Under this Act, compliance with applicable limitations is achieved under a national permit program. Discharge permits have been issued for all and renewed for nearly all of SCE&G's and GENCO's generating units. Concurrent with renewal of these permits, the permitting agency has implemented more rigorous control programs. The Company has been developing compliance plans for this program. Amendments to be approximately $211 million.the Clean Water Act proposed in Congress include several provisions which, if passed, could prove costly to the Company. These include limitations to mixing zones and the implementation of technology-based standards. The South Carolina Solid Waste Policy and Management Act of 1991 requires promulgation ofdirected DHEC to promulgate regulations addressing specified subjects, one of which affectsfor the managementdisposal of industrial solid waste. ThisDHEC has promulgated a proposed regulation will establish minimum criteria for industrial landfills as mandated under the Act. The proposed regulation,which, if adopted as a final regulation in its present form, couldwould significantly impactincrease the Company's engineering, designand GENCO's costs of construction and operation of existing and future ash management facilities. Potential cost impacts could be substantial. As described in Note 1L of Notes to Consolidated Financial Statements, the25 The Company has an environmental assessment program to identify and assess current and former operations sites that could require environmental cleanup. As site assessments are initiated, an estimate isestimates are made of the amount of expenditures,cost, if any, necessary to investigate and clean up each site. These estimates are refined as additional information becomes available; therefore, actual expenditures could differ significantly differ from the original estimates. Amounts estimated and accrued to date ($19.6 million) for site assessments and cleanup ofrelate primarily to regulated operations have beenoperations; such amounts are deferred and are being amortized and recovered through rates over a tenten-year period for electric operations and an eight- year period.period for gas operations. Deferred amounts totaled $18.0 million and $20.2 million at December 31, 1995 and 1994, respectively. Estimates to date include, among other things,items, the costs estimated to be associated with the matters discussed in the following paragraphs. The Company and SCANA each own twoowns four decommissioned manufactured gas plant sites which contain residues of by-product chemicals. The Company and SCANA have each maintainedmaintains an active review of their respectivethe sites to monitor the nature and extent of the residual contamination. In September 1992 the EPA notified the Company, the City of Charleston and the Charleston Housing Authority of their potential liability for the investigation and cleanup of the Calhoun Park Area Site in Charleston, South Carolina. This site originally encompassed approximately 18eighteen acres and included properties which were the locations for industrial operations, including a wood preserving (creosote) plant and one of the Company's decommissioned manufactured gas plants. The original scope of this investigation has been expanded to approximately 30 acres, including adjacent properties owned by the National Park Service and the City of Charleston, and private properties. The site has not been placed on the National Priority List, but may be added before cleanup is initiated. The potentially responsible parties (PRP)PRPs have agreed with the EPA to participate in an innovative approach to site investigation and cleanup called "Superfund Accelerated Cleanup Model," allowing the pre- cleanuppre-cleanup site investigationsinvestigation process to be compressed significantly. The PRPs have negotiated an administrative order by consent for the conduct of a Remedial Investigation/Feasibility Study (RI/FS) and a corresponding Scope of Work. Actual fieldField work began in November 1, 1993 after final approval and authorization was granted by EPA.1993. The Company is also working with the City of Charleston to investigate potential contamination from the manufactured gas plant atwhich may have migrated to the city'sCity's aquarium site. During 1993In 1994 the City of Charleston notified the Company settled its obligations atthat it considers the Yellow Water Road Superfund Site near Jacksonville, Florida,Company to be responsible for a $43.5 million increase in costs of the Spencer Transformer and Equipment Site in West Virginia and Elliott's Auto Parts in Benton, Arkansas. No further expenses are anticipated for these sites.aquarium project attributable to delays resulting from contamination of the Calhoun Park Area Site. The Company believes it has been listed asmeritorious defenses against this claim and does not expect its resolution to have a PRP and has recorded liabilities, which are not considered material for the Macon- Dockery waste disposal site near Rockingham, North Carolina, the Aqua-Tech Environmental, Inc. site in Greer, South Carolina and a landfill owned by Lexington County in South Carolina. 24 Litigation In January 1994 the Company, actingimpact on behalfits financial position or results of itself and the PSA (as co-owners of Summer Station), reached a settlement with Westinghouse Electric Corporation (Westinghouse) resolving a dispute involving steam generators provided by Westinghouse to Summer Station which are defective in design, workmanship and materials. Terms of the settlement are confidential by agreement of the parties and order of the court.operations. Regulatory Matters The Company had filed an actionfor electric rate relief in May 1990 against Westinghouse in1995 to encompass primarily the U. S. District Court for South Carolina; an order dismissing this suit was issued on January 12, 1994. Regulatory Matters On June 7, 1993remaining costs of completing the Cope Generating Station. As discussed under "Liquidity and Capital Resources," the PSC issued an order on theJanuary 9, 1996 increasing electric retail rates. The Company's pending electric rate proceeding allowing an authorized return on common equity of 11.5%, resulting in a 7.4% annual increase in retail electric rates, or a projected $60.5 million annually on a test year basis. These rates are to be implemented in two phases over a two-year period: phase one, effective June 1993, producing $42.0 million annually, and phase two, effective June 1994, producing $18.5 million annually, on a test year basis. The Company'sregulated business operations are likely to be impacted by the NEPA and FERC Order No. 636. NEPA is designed to create a more competitive wholesale power supply market by creating "exempt wholesale generators" and allowing for the potential requirement that a utilityby potentially requiring utilities owning transmission facilities to provide transmission access to wholesalers. Order No. 636 is intended to deregulate the markets for interstate sales of natural gas by requiring that pipelines provide transportation services that are equal in quality for all gas suppliers whether the customer purchases gas from the pipeline or another supplier. In the opinion of the Company, it will be able to meet successfully the challenges of these altered business climates. Other In November 1992climates and does not anticipate there to be any material adverse impact on the results of its operations, its financial position or its business prospects. 26 Statements of Financial Accounting Standards To Be Adopted The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 112 "Employers' Accounting121, "Accounting for Postemployment Benefits.the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The provisions of the Statement, which is effectivewill be implemented by the Company for calendarthe fiscal year 1994, establishes certain conditions forbeginning January 1, 1996, require the recognition of costs of benefits to former employees after employment but before retirement. The Statement requires recognition ofa loss in the obligation to provide postemployment benefits if such obligation is attributable to services previously rendered,income statement and related disclosures whenever events or changes in circumstances indicate that the obligation relates to rights which vest, payment of the benefits is probable and thecarrying amount of such benefits cana long-lived asset may not be reasonably estimated.recoverable. The Company does not anticipatebelieve that applicationadoption of thisthe provisions of the Statement will have a significantmaterial impact on its results of operations or financial position. The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock- Based Compensation," which will be implemented by the Company on January 1, 1996. The Company does not believe that adoption of the provisions of the Statement will have a material impact on its results of operations or financial position. RESULTS OF OPERATIONS OverviewNet Income Net income and the percent increase (decrease) from the previous year for the years 1993, 19921995, 1994 and 19911993 were as follows: 1995 1994 1993 1992 1991 Net income $169,185 $152,043 $145,968 $102,163 $122,836 Percent increase (decrease) in net income 11.27% 4.16% 42.9% (16.8%) 1.7% 19931995 Net income increased for 1993the year primarily due to increases in electric and gas margins and lower operating and maintenance expenses which more than offset increases in fixed costs. 1994 Net income increased for the year primarily due to an increase in the electric margin which more than offset increases in other operating expenses. 1992 Net income for 1992 decreased from 1991 primarily due to the recording of an $11.1 million (after interest and income taxes) reserve against earnings related to the August 31, 1992 retail electric rate ruling from the South Carolina Supreme Court (see Note 2E of Notes to Consolidated Financial Statements) and as a result of increased non-fuel operating expenses and interest charges. The Company's financial statements include AFC.an allowance for funds used during construction (AFC). AFC is a utility accounting practice whereby a portion of the cost of both equity and borrowed funds used to finance construction (which is shown on the balance sheet as construction work in progress) is capitalized. Both anAn equity portion of AFC is included in nonoperating income and a debt portion of AFC areis included in nonoperating incomeinterest charges (credits) as noncash items, both which have the effect of increasing reported net income. AFC represented approximately 5.6%7.9 % of income before income taxes in 1993, 5.5%1995, 6.3% in 19921994 and 3.7%5.6% in 1991. 251993. 27 Electric Operations Electric sales margins for 1993, 19921995, 1994 and 19911993 were as follows: 1995 1994 1993 1992 1991 (Millions of Dollars) Electric revenues $1,006.6 $974.3 $940.2 $844.5 $867.7 Provision(Provision) for rate refunds .3 (14.6) - 1.2 0.3 Net Electric operating revenues 1,006.6 975.5 940.5 829.9 867.7 Less: Fuel used in electric generation 177.6 176.6 164.2 161.7 160.6 Purchased power 98.2 112.9 111.1 80.4 102.1 Margin $ 730.8 $686.0 $665.2 $587.8 $605.0 19931995 The increase in electric sales margin from 1992 to 1993 isincreased over the prior year primarily as a result of increased residential and commercial KWH sales due tothe combined impact of warmer weather and customer growth, an increase in retail electric rates beginning in June 1993, and a $14.6 million reserve recorded in 1992 as discussed below. 1992 The 1992 electric sales margin decreased from 1991 primarily due to the recording of a $14.6 million reserve, before interest and income taxes, related to the August 31, 1992 ruling from the Supreme Court (see Note 2E of Notes to Consolidated Financial Statements) and a $1.9 million billing-related litigation settlement included in 1991 electric operating revenues. Increases (decreases) in megawatt hour (MWH) sales volume by classes are presented in the following table: Increase (Decrease) From Prior Year Volume (MWH) Classification 1993 1992 Residential 494,874 2,380 Commercial 305,560 37,749 Industrial 203,178 49,248 Sale for Resale (excluding interchange) 59,611 12,945 Other 24,873 (3,116) Total territorial 1,088,096 99,206 Interchange 121,013 16,558 Total 1,209,109 115,764 Warmerthird quarter of 1995, colder weather and an increase in the numberfourth quarter of 1995 and the base rate increase received by the Company in mid-1994. These factors more than offset the negative impact of milder weather experienced during the first half of 1995. An increase of 7,943 electric customers to 484,381 total customers contributed to an all-time peak demand record of 3,5573,683 MW (including Williams Station) on July 29, 1993. The previous year's record of 3,380 MW was set on July 13, 1992.August 14, 1995. 1994 The electric sales margin increased over the prior year primarily as a result of an increase in retail electric rates phased in over a two-year period beginning in June 1993 and an increase in industrial sales which more than offset the negative impact of a six percent decrease in residential sales of electricity due to milder weather in 1994. Increases (decreases) from the prior year in megawatt hour (MWH) sales volume by classes were as follows: Classification 1995 1994 Residential 415,676 (339,620) Commercial 229,565 4,198 Industrial 48,651 274,467 Sale for Resale (excluding interchange) 38,688 18,408 Other 12,776 (6,907) Total territorial 745,356 (49,454) Interchange 24,545 (27,013) Total 769,901 (76,467) Gas Operations Gas sales margins for 1993, 19921995, 1994 and 19911993 were as follows: 1995 1994 1993 1992 1991 (Millions of Dollars) Gas operating revenues $200.6 $201.7 $174.0 $160.8 $150.8 Less: Gas purchased for resale 125.0 127.8 107.7 95.8 93.2 Margin $ 75.6 $ 73.9 $ 66.3 $ 65.0 $ 57.6 19931995 The 1993 gas sales margin increased from 1992over the prior year primarily as a result of increases in higher margin residential and regular commercialinterruptible gas sales. 19921994 The 1992 gas sales margin increased from 1991over the prior year primarily due to recoveriesas a result of $4.2 million allowed under a weather normalization adjustment, increases in residential usage due to unseasonably cool weather during May 1992, and increased transportation volumes. 26interruptible gas sales. 28 Increases (decreases) from the prior year in dekatherm (DT) sales volume by classes, are presented in the following table: Increase (Decrease) From Prior Year Volume (DT)including transportation gas, were as follows: Classification 1993 19921995 1994 Residential 723,356 1,303,673802,211 (477,886) Commercial (186,529) 22,188623,533 970,726 Industrial 547,193 (424,657)2,528,974 5,057,404 Transportation gas (1,866,414) (1,524,089) Total 1,084,020 901,2042,088,304 4,026,155 Other Operating Expenses and Taxes Increases (decreases) in other operating expenses, including taxes, are presented in the following table: Increase (Decrease) From Prior Yearwere as follows: Classification 1993 19921995 1994 (Millions of Dollars) Other operation and maintenance $(7.8) $ 8.1 $11.53.9 Depreciation and amortization 4.2 5.410.6 5.7 Income taxes 29.9 (17.2)12.9 2.8 Other taxes (.2) 4.75.1 5.0 Total $42.0 $ 4.4 1993$20.8 $17.4 1995 Other operation and maintenance expenses increased for 1993decreased primarily due to the implementationas a result of Financial Accounting Standards Board Statement No. 106 (See Note 1J of Notes to Consolidated Financial Statements) pursuant to the June 1993 PSClower pension costs and lower costs at electric rate order and the amortization of environmental expenses. The depreciation and amortization increase reflects additions to plant in service. The increase in income taxes corresponds to the increase in the corporate tax rate from 34% to 35% retroactive to January 1, 1993. 1992 Other operation and maintenance expenses increased for 1992 primarily due to increases in administrative and general expense, increase in nuclear regulatory fees, and nuclear and transmission system maintenance.generating stations. The increase in depreciation and amortization expense reflectsprimarily is attributable to additions to plant in service.plant-in-service and the expensing of software costs. The decreaseincrease in income tax expense is primarily relatedcorresponds to the tax impact of the rate refund (see Note 2E of Notes to Consolidated Financial Statements) and to other decreasesincrease in operating income. The increase in other taxes isreflects higher property taxes resulting from higher millages and assessments partially offset by lower payroll taxes resulting from early retirements of employees. 1994 Other operation and maintenance expenses increased primarily due to higher property taxes caused byan increase in the costs of postretirement benefits other than pensions. These costs are accrued in accordance with Financial Accounting Standards Board Statement No. 106. (See Note 1K of Notes to Consolidated Financial Statements.) The increase in depreciation and amortization expenses is attributable to property additions and increased millage rates. In addition to the above, other taxes increased due to increases in state license fees.depreciation rates. The increase in other taxes reflects an increase in property taxes of approximately $5 million. Interest Expense 1993Increases (decreases) in interest expense were as follows: Classification 1995 1994 (Millions of Dollars) Interest on long-term debt, net $11.0 $8.0 Other interest expense 4.1 (.6) Total $15.1 $7.4 1995 The increase in interest expense, excluding the debt component of AFC, decreased approximately $1.8 millionis due primarily due to the redemptionissuance of Firstadditional debt including commercial paper during the latter part of 1994 and Refunding Mortgage Bonds andearly 1995. 1994 The increase in interest expense, excluding the debt component of AFC, is primarily attributable to the issuance of $100 million of First Mortgage Bonds at lower interest ratesin July and the 1992 interest on the provision for rate refund which were partially offset by interest on an adjustment for the 1987-1988 income tax audit. 1992 Interest expense increased approximately $5.7$30 million of Pollution Control Facilities Revenue Bonds in 1992 comparedNovember, both to 1991 duefinance utility construction, and to the issuancesissuance of the $145 million and $155 million of First and Refunding Mortgage Bonds on July 24, 1991 and Augustlong-term debt during 1993. 29 1991, respectively, which more than offset the decreases in interest expense resulting from the repayment of debt and lower interest rates on remaining debt and interest of $3.1 million accrued on the provision for rate refund (see Note 2E of Notes to Consolidated Financial Statements). 27 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Page Independent Auditor'sAuditors' Report....................................... 2931 Consolidated Financial Statements: Consolidated Balance Sheets as of December 31, 19931995 and 1992... 301994... 32 Consolidated Statements of Income and Retained Earnings for the years ended December 31, 1993, 19921995, 1994 and 1991............. 321993............. 34 Consolidated Statements of Cash Flows for the years ended December 31, 1993, 19921995, 1994 and 1991............................. 331993............................. 35 Consolidated Statements of Capitalization as of December 31, 19931995 and 1992................................... 341994................................... 36 Notes to Consolidated Financial Statements..................... 36 Supplemental Financial Statement Schedules: Schedule V - Property, Plant and Equipment for the years ended December 31, 1993, 1992 and 1991................. 54 Schedule VI - Accumulated Depreciation and Amortization of Property, Plant and Equipment for the years ended December 31, 1993, 1992 and 1991....................... 5738 Supplemental financial statement schedules other than those listed above are omitted because of the absence of conditions under which they are required or because the required information is included in the consolidated financial statements or in the notes thereto. 2830 INDEPENDENT AUDITOR'S REPORT South Carolina Electric & Gas Company: We have audited the accompanying Consolidated Balance Sheets and Statements of Capitalization of South Carolina Electric & Gas Company (Company) as of December 31, 19931995 and 19921994 and the related Consolidated Statements of Income and Retained Earnings and of Cash Flows for each of the three years in the period ended December 31, 1993. Our audits also included the financial statement schedules listed in the index on page 28.1995. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements and financial statement schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 19931995 and 19921994 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 19931995 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. s/Deloitte & Touche LLP DELOITTE & TOUCHE LLP Columbia, South Carolina February 7, 1994 291996 31
SOUTH CAROLINA ELECTRIC & GAS COMPANY CONSOLIDATED BALANCE SHEETS December 31, 1993 19921995 1994 (Thousands of Dollars) ASSETS Utility Plant (Notes 1, 3 and 4): Electric $3,067,881 $2,954,064$3,277,530 $3,165,391 Gas 272,506 263,675320,847 307,929 Transit 3,769 3,2873,768 3,785 Common 72,804 65,12491,616 77,327 Total 3,416,960 3,286,1503,693,761 3,554,432 Less accumulated depreciation and amortization 1,097,531 1,039,9391,196,279 1,171,758 Total 2,319,429 2,246,2112,497,482 2,382,674 Construction work in progress 338,677 217,074613,683 571,867 Nuclear fuel, net of accumulated amortization 29,087 39,91646,492 43,591 Utility Plant, Net 2,687,193 2,503,2013,157,657 2,998,132 Nonutility Property and Investments, net of accumulated depreciation (Note 8) 12,709 12,60411,603 11,931 Current Assets: Cash and temporary cash investments (Note 8) 193 24,3026,798 346 Receivables - customer and other 119,296 91,279154,816 127,679 Receivables - affiliated companies (Note 1) 244 3417,132 18,121 Inventories (at(At average cost): Fuel (Notes 1, 3 and 4) 31,192 32,69735,812 31,310 Materials and supplies 43,372 43,26843,583 43,228 Prepayments 10,089 12,189 Accumulated Deferred Income Taxes 9,015 - Total Current Assets 213,401 204,076 Deferred Debits: Unamortized debt expense 11,060 8,35410,158 14,389 Accumulated deferred income taxes (Notes 1 and 7) - 36,75719,420 17,931 Total Current Assets 277,719 253,004 Deferred Debits: Emission allowances 28,514 19,409 Unamortized debt expense 11,445 11,690 Unamortized deferred return on plant investment (Notes 1 and 2) 14,860 19,1066,369 10,614 Nuclear plant decommissioning fund (Note 1) 25,103 20,84136,070 30,383 Other (Note 1) 225,613 86,014273,056 251,928 Total Deferred Debits 276,636 171,072355,454 324,024 Total $3,189,939 $2,890,953 See Notes to Consolidated Financial Statements. 30$3,802,433 $3,587,091 32 SOUTH CAROLINA ELECTRIC & GAS COMPANY CONSOLIDATED BALANCE SHEETS December 31, 1993 19921995 1994 (Thousands of Dollars) CAPITALIZATION AND LIABILITIES Stockholders' InvestmentInvestment: Common equity (Note 5): Common equity $1,051,334 $ 963,741 $1,315,072 $1,133,432 Preferred stock (Not subject to purchase or sinking funds) 26,027 26,027 Total Stockholders' Investment 1,077,361 989,7681,341,099 1,159,459 Preferred Stock, Net (Subject to purchase or sinking funds)(Notes 6 and 8) 52,840 56,15446,243 49,528 Long-Term Debt, Net (Notes 3, 4 and 8) 1,097,043 944,416 Advances from Affiliated Companies, Net (Note 3) - 1,5481,279,379 1,231,191 Total Capitalization 2,227,244 1,991,8862,666,721 2,440,178 Current Liabilities: Short-term borrowings (Notes 8 and 9) 1,011 3380,500 100,000 Notes payable - affiliated companies - 19,409 Current portion of long-term debt (Note 3) 13,719 12,75436,033 33,042 Current portion of preferred stock (Note 6) 2,504 2,4852,439 2,418 Accounts payable 68,182 49,74971,731 61,466 Accounts payable - affiliated companies (Note(Notes 1 and 3) 28,630 32,222 Estimated rate refunds and related interest (Note 2) 2,509 17,81126,212 33,357 Customer deposits 12,207 12,91812,518 12,668 Taxes accrued 39,965 51,12764,008 46,646 Interest accrued 17,764 26,43321,626 21,534 Dividends declared 29,982 28,35333,126 28,489 Other 10,042 6,18512,507 15,525 Total Current Liabilities 226,515 240,070360,700 374,554 Deferred Credits: Accumulated deferred income taxes (Notes 1 and 7) 480,808 451,046488,310 503,723 Accumulated deferred investment tax credits (Notes 1 and 7) 84,447 87,69278,316 81,546 Accumulated reserve for nuclear plant decommissioning (Note 1) 25,103 20,84136,070 30,383 Other (Note 1) 145,822 99,418172,316 156,707 Total Deferred Credits 736,180 658,997775,012 772,359 Commitments and Contingencies (Note 10) - - Total $3,189,939 $2,890,953$3,802,433 $3,587,091 See Notes to Consolidated Financial Statements. 3133 SOUTH CAROLINA ELECTRIC & GAS COMPANY CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS For the Years Ended December 31, 1995 1994 1993 1992 1991 (Thousands of Dollars) Operating Revenues (Notes 1 and 2): Electric $1,006,566 $ 975,526 $ 940,547 $ 829,938 $ 867,685 Gas 200,632 201,746 174,035 160,820 150,788 Transit 3,889 4,002 3,851 3,623 3,869 Total Operating Revenues 1,211,087 1,181,274 1,118,433 994,381 1,022,342 Operating Expenses: Fuel used in electric generation 177,579 176,581 164,187 161,691 160,640 Purchased power (including affiliated purchases)(Note 1) 98,231 112,900 111,111 80,431 102,116 Gas purchased from affiliate for resale (Note 1) 125,032 127,846 107,722 95,854 93,179 Other operation 211,318 214,344 207,126 199,819 190,824 Maintenance 53,071 57,801 61,107 60,279 57,777 Depreciation and amortization (Note 1) 117,584 106,952 101,220 97,064 91,618 Income taxes (Notes 1 and 7) 96,956 84,066 81,280 51,382 68,543 Other taxes (Note 12) 75,462 70,366 65,361 65,594 60,939 Total Operating Expenses 955,233 950,856 899,114 812,114 825,636 Operating Income 255,854 230,418 219,319 182,267 196,706 Other Income (Note 1): Allowance for equity funds used during construction 9,499 7,989 7,496 4,577 2,966 Other income (loss), net of income taxes 54 (718) (911) (1,571) 317 Total Other Income (Loss)9,553 7,271 6,585 3,006 3,283 Income Before Interest Charges 265,407 237,689 225,904 185,273 199,989 Interest Charges (Credits): Interest on long-term debt, net 98,361 87,361 79,410 80,217 74,250 Other interest expense (Note(Notes 1 and 3) 9,324 5,189 5,812 6,777 7,090 Allowance for borrowed funds used during construction (Note 1) (11,463) (6,904) (5,286) (3,884) (4,187) Total Interest Charges, Net 96,222 85,646 79,936 83,110 77,153 Net Income 169,185 152,043 145,968 102,163 122,836 Preferred Stock Cash Dividends (At stated rates) (5,687) (5,955) (6,217) (6,474) (6,706) Earnings Available for Common Stock 163,498 146,088 139,751 95,689 116,130 Retained Earnings at Beginning of Year 324,101 291,713 262,262 265,864 246,734 Common Stock Cash Dividends Declared (Note 5) (121,363) (113,700) (110,300) (99,291) (97,000) Retained Earnings at End of Year $ 291,713366,236 $ 262,262324,101 $ 265,864291,713 See Notes to Consolidated Financial Statements. 3234 SOUTH CAROLINA ELECTRIC & GAS COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 1995 1994 1993 1992 1991 (Thousands of Dollars) Cash Flows From Operating Activities: Net income $169,185 $152,043 $145,968 $102,163 $122,836 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation and amortization 117,839 107,103 101,370 97,212 91,805 Amortization of nuclear fuel 20,017 13,487 18,156 23,190 18,384 Deferred income taxes, net (17,632) 13,133 56,982 (15,959) 29,680 Deferred investment tax credits, net (3,230) (2,901) (3,245) (3,245) (3,244) Net regulatory asset -arising from adoption of SFAS No. 109 13,560 (1,985) (40,398) - - Allowance for funds used during construction (20,962) (14,893) (12,782) (8,461) (7,153) Unamortized loss on reacquired debt (3,325) (129) (17,094) (112) 139 Early retirements (24,823) (7,086) (11,840) - - Nuclear refueling accrual 6,957 (4,881) (6,086) 11,862 (6,192) Over (under) collections, fuel adjustment clause 18,986 (17,965) (13,728) 7,901 (1,236)Emission allowances (9,105) (19,409) - Changes in certain current assets and liabilities: (Increase) decrease in receivables (16,148) (26,260) (27,920) 4,319 (4,210) (Increase) decrease in inventories (4,857) 26 1,401 1,069 8,647 Increase (decrease) in accounts payable 3,120 (430) 16,757 2,526 (28,561) Increase (decrease) in estimated rate refunds and related interest - (2,509) (15,302) 17,811 - Increase (decrease) in taxes accrued 17,362 6,681 (11,162) 36 7,150 Increase (decrease) in interest accrued 92 3,770 (8,669) 83 9,893 Other, net 886 (2,457) 6,071(14,623) 14,106 8,002 Net Cash Provided From Operating Activities 173,294 237,938 244,009252,413 211,901 180,410 Cash Flows From Investing Activities: Utility property additions and construction expenditures, (300,620) (243,329) (215,303)net of AFC (271,804) (406,054) (287,838) Nonutility property and investments (111) (287) (248) (205) (447) Principal noncash item: Allowance for funds used during construction 12,782 8,461 7,153Transfer of assets from SCANA - 6,285 - Net Cash Used For Investing Activities (271,915) (400,056) (288,086) (235,073) (208,597) Cash Flows From Financing Activities: Proceeds: Issuance of notes payable - affiliated company - 19,409 - Issuance of mortgage bonds 600,00099,583 99,207 592,884 Issuance of pollution control bonds - 300,00030,000 - Equity contributions from parent 139,505 43,426 58,142 126,838Other long-term debt 2,543 11,200 2,562 Repayments: Notes payable - Other Long-term debt 2,562affiliated company (19,409) - - Repayments: Mortgage bonds (64,779) - (430,000) (35,890) (8,000) Other Long-termlong-term debt (12,548) (1,662) (405) (120) (75,285) Preferred stock (3,264) (3,398) (3,295) (3,199) (2,622) Dividend Payments: Common stock (116,663) (115,100) (108,641) (96,550) (73,000) Preferred stock (5,750) (6,048) (6,247) (6,558) (6,718) Short-term borrowings, net (19,500) 98,989 978 (20) (130,417) Fuel and emission allowance financings, net 26,236 13,844 (18,948) (6,628) (4,292) Advances - affiliated companies, net - (1,559) (3,463) (2,899) (3,430) Net Cash Provided From (Used For) Financing Activities 90,683 (25,026) (3,764)25,954 188,308 83,567 Net Increase (Decrease) in Cash and Temporary Cash Investments 6,452 153 (24,109) (22,161) 31,648 Cash and Temporary Cash Investments, January 1 346 193 24,302 46,463 14,815 Cash and Temporary Cash Investments, December 31 $ 1936,798 $ 24,302346 $ 46,463193 Supplemental Cash Flows Information: Cash paid for - Interest (includes capitalized interest of $11,463, $6,904 and $5,286) $105,537 $ 87,255 $ 92,367 $ 86,093 $ 70,201 - Income taxes 95,827 77,295 79,612 72,584 38,313 Noncash Financing Activities: Capital lease obligations recorded - - 2,864 Department of Energy Decontaminationdecontamination and Decommissioning Fund 4,965decommissioning fund obligation - - See Notes to Consolidated Financial Statements.
334,965 See Notes to Consolidated Financial Statements. 35 SOUTH CAROLINA ELECTRIC & GAS COMPANY CONSOLIDATED STATEMENTS OF CAPITALIZATION December 31, 1993 19921995 1994 Common Equity (Note 5): (Thousands of Dollars) Common Stock, $4.50 par value, authorized 50,000,000 shares; issued and outstanding, 40,296,147 shares $ 181,333 $181,333 Premium on common stock 395,072 395,072 Other paid-in capital 188,713 130,624377,822 238,369 Capital stock expense (debit) (5,497) (5,550)(5,391) (5,443) Retained earnings 291,713 262,262366,236 324,101 Total Common Equity 1,051,3341,315,072 49% 1,133,432 47% 963,741 48% Cumulative Preferred Stock (Not subject to purchase or sinking funds)(Note 5): $100 Par Value - Authorized 200,000 shares $50 Par Value - Authorized 125,209 shares Shares Outstanding Redemption Price Eventual Series 1993 19921995 1994 Current Through Minimum $100 Par 8.40% 197,668 197,668 102.80 11-30-96 101.00 19,767 19,767 $50 Par 5.00% 125,209 125,209 52.50 - 52.50 6,260 6,260 Total Preferred Stock (Not subject to purchase or sinking funds) 26,027 1% 26,027 1% Cumulative Preferred Stock (Subject to purchase or sinking funds)(Notes 6 and 8): $100 Par Value - Authorized 1,550,000 shares Shares Outstanding Redemption Price Eventual Series 1993 19921995 1994 Current Through Minimum 7.70% 92,992 96,00086,965 89,984 101.00 - 101.00 9,299 9,6008,696 8,998 8.12% 131,899 136,265123,045 126,835 102.03 - 102.03 13,190 13,62612,305 12,684 Total 224,891 232,265210,010 216,819 $50 Par Value - Authorized - 1,639,8861,614,405 shares Shares Outstanding Redemption Price Eventual Series 1993 19921995 1994 Current Through Minimum 4.50% 20,800 22,40017,519 19,088 51.00 - 51.00 1,040 1,120876 954 4.60% 3,834 5,334834 2,334 50.50 - 50.50 192 26742 117 4.60%(A) 30,052 32,05226,052 28,052 51.00 - 51.00 1,503 1,6021,303 1,403 4.60%(B) 81,600 85,00074,800 78,200 50.50 - 50.50 4,080 4,2503,740 3,910 5.125% 74,000 75,00072,000 73,000 51.00 - 51.00 3,700 3,7503,600 3,650 6.00% 89,600 92,80083,200 86,400 50.50 - 50.50 4,480 4,6404,160 4,320 8.72% 160,000 192,00095,985 127,956 51.00 12-31-98 50.00 8,000 9,6004,799 6,398 9.40% 197,191 203,678183,219 190,245 51.175 - 51.175 9,860 10,1849,161 9,512 Total 657,077 708,264553,609 605,275 $25 Par Value - Authorized 2,000,000 shares; None outstanding in 19931995 and 19921994 Total PrPreferred Stock (Subject to purchase or sinking funds) 48,682 51,946 Less: Current portion, including sinking fund requirements 2,504 2,4852,439 2,418 Total Preferred Stock, Net (Subject to purchase or sinking funds) 52,840 3% 56,154 3% See Notes to Consolidated Financial Statements. 3446,243 2% 49,528 2% 36 SOUTH CAROLINA ELECTRIC & GAS COMPANY CONSOLIDATED STATEMENTS OF CAPITALIZATION December 31, 1993 19921995 1994 (Thousands of Dollars) Long-Term Debt (Notes 3, 4 and 8): First Mortgage Bonds: Year of Series Maturity 6% 2000 100,000 -100,000 6 1/4% 2003 100,000 -100,000 7.70% 2004 100,000 100,000 7 1/8% 2013 150,000 -150,000 7 1/2% 2023 150,000 -150,000 7 5/8% 2023 100,000 100,000 7 5/8% 2025 100,000 - First and Refunding Mortgage Bonds: Year of Series Maturity 4 7/8% 1995 16,000- 16,000 5.45% 1996 15,000 15,000 6% 1997 15,000 15,000 6 1/2% 1998 20,000 20,000 8% 1999 - 35,000 9 1/8% 1999 - 15,000 8% 2001 - 35,000 7 1/4% 2002 30,000 30,000 9% 2006 130,771 145,000 145,000 9 1/8% 2006 - 50,000 8.40% 2006 - 50,000 8 3/8% 2007 - 30,000 8.90% 2008 - 30,000 10 1/8% 2009 - 35,000 9 7/8% 2009 - 50,000 8 3/4% 2017 - 100,000 8 7/8% 2021 155,000120,450 155,000 Pollution Control Facilities Revenue Bonds: 5.95% Series, due 2003 6,760 6,8556,560 6,660 Fairfield County Series 1984, due 2014 (6.50%) 56,820 56,820 Richland County Series 1985, due 2014 (6.50%) 5,210 5,210 Fairfield County Series 1986, due 2014 (6.50%) 1,090 1,090 Colleton and Dorchester Counties Series 1987, due 2014 (6.60%) 4,365 4,365 Capitalized Lease Obligations,Orangeburg County Series 1994 due 1991-1997 (various rates between 5 3/4% and 10%) 2,897 4,875 Installment Note Payable, due 1996 2,277 -2024 (daily adjusted rate) 30,000 30,000 Department of Energy Decontamination and Decommissioning Obligation 4,634 - Nuclear and Fossil Fuel Liability 36,750 55,6983,560 3,922 Commercial Paper 76,830 61,794 Other 3,993 3,294 Total 1,116,803 960,913Long-Term Debt 1,319,649 1,269,155 Less: Current maturities, including sinking fund requirements 13,719 12,75436,033 33,042 Unamortized discount 6,041 3,7434,237 4,922 Total Long-Term Debt, Net 1,097,043 49% 944,4161,279,379 48% Advances from Affiliated Companies 1,559 5,023 Less: Current Portion of Advances - Affiliated Companies 1,559 3,475 Advances from Affiliated Companies, Net - - 1,548 -1,231,191 50% Total Capitalization $2,227,244$2,666,721 100% $1,991,886$2,440,178 100% See Notes to Consolidated Financial Statements. 37
35 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: A. Organization and Principles of Consolidation The Company, a public utility, is a South Carolina corporation organized in 1924 and a wholly owned subsidiary of SCANA Corporation (SCANA), a South Carolina holding company. The Company, through wholly owned subsidiaries is predominately engaged in the generation and sale of electricity to wholesale and retail customers in South Carolina and in the purchase, sale and transportation of natural gas to retail customers in South Carolina. The accompanying Consolidated Financial Statements include the accounts of the Company and South Carolina Fuel Company, Inc. (Fuel Company) (see. (See Note 1M).1N.) Intercompany balances and transactions between the Company and Fuel Company have been eliminated in consolidation. Affiliated Transactions The Company has entered into agreements with certain affiliates to purchase gas for resale to its distribution customers and to purchase electric energy. The Company purchases all of its natural gas requirements from South Carolina Pipeline Corporation (Pipeline Corporation) and at December 31, 19931995 and 19921994 the Company had approximately $15.1$17.5 million and $15.2$16.3 million, respectively, payable to Pipeline Corporation for such gas purchases. The Company purchases all of the electric generation of Williams Station, which is owned by South Carolina Generating Company, Inc. (GENCO),GENCO, under a unit power sales agreement. At December 31, 19931995 and 19921994 the Company had approximately $7.5$8.2 million and $4.5$8.8 million, respectively, payable to GENCO for unit power purchases. Such unit power purchases, which are included in "Purchased power," amounted to approximately $83.5 million, $92.8 million and $98.1 million $73.1 millionin 1995, 1994 and $92.3 million in 1993, 1992 and 1991, respectively. Total interest income, (basedbased on market interest rates)rates, associated with the Company's advances to affiliated companies was approximately $129,000, $231,000$174,000, $5,000 and $141,000$143,000 in 1995, 1994 and 1993, 1992 and 1991.respectively. Included in "Other interest expense" for 1993, 19921995, 1994 and 19911993 is approximately $29,000, $16,000$114,000, $279,000 and $830,000,$29,000, respectively, relating to advances from affiliated companies. Intercompany interest is calculated at market rates. B. Basis of Accounting The Company prepares its financial statements in accordance with the provisions of Statement of Financial Accounting Standards No. 71 (SFAS 71), "Accounting for the Effects of Certain Types of Regulations." The accounting standard allows cost-based rate-regulated utilities, such as the Company, to recognize in their financial statements revenues and expenses in different time periods than do enterprises that are not rate- regulated. As a result the Company has recorded, as of December 31, 1995, approximately $116 million and $4 million of regulatory assets and liabilities, respectively, excluding net accumulated deferred income tax assets of approximately $33 million. As discussed in Note 2A, the PSC has approved accelerated recovery of substantially all of the Company's electric regulatory assets (approximately $84.8 million). In the future, as a result of deregulation or other changes in the regulatory environment, the Company may no longer meet the criteria for continued application of SFAS 71 and would be required to write off its regulatory assets and liabilities. Such an event could have a material adverse effect on the Company's results of operations in the period the write-off is recorded. C. System of Accounts The accounting records of the Company are maintained in accordance with the Uniform System of Accounts prescribed by the Federal Energy Regulatory Commission (FERC)FERC and as adopted by The Public Service Commission of South Carolina (PSC). C.the PSC. 38 D. Utility Plant Utility plant is stated substantially at original cost. The costs of additions, renewals and betterments to utility plant, including direct labor, material and indirect charges for engineering, supervision and an allowance for funds used during construction, are added to utility plant accounts. The original cost of utility property retired or otherwise disposed of is removed from utility plant accounts and generally charged, along with the cost of removal, less salvage, to accumulated depreciation. The costs of repairs, replacements and renewals of items of property determined to be less than a unit of property are charged to maintenance expense. The Company, operator of the V. C. Summer Nuclear Station (Summer Station), and The South Carolina Public Service Authority (PSA)PSA are joint owners of the 885 MW Summer Station in the proportions of two-thirds and one-third, respectively. The parties share the operating costs and energy output of the plant in these proportions. Each party, however, provides its own financing. Plant in servicePlant-in-service related to the Company's portion of Summer Station was approximately $920.2$925.1 million and $916.0$923.1 million as of December 31, 19931995 and 1992,1994, respectively. Accumulated depreciation associated with the Company's share of Summer Station was approximately $285.3$261.0 million and $262.2$297.9 million as of December 31, 19931995 and 1992,1994, respectively. (See Note 2A.) The Company's share of the direct expenses associated with operating Summer Station is included in "Other operation" and "Maintenance" expenses. 36 D.E. Allowance for Funds Used During Construction Allowance for funds used during construction (AFC),AFC, a noncash item, reflects the period cost of capital devoted to plant under construction. This accounting practice results in the inclusion of, as a component of construction cost, of the costs of debt and equity capital dedicated to construction investment. AFC is included in rate base investment and depreciated as a component of plant cost in establishing rates for utility services. The Company has calculated AFC using composite rates of 9.4%8.6%, 8.5% and 9.4% for 1995, 1994 and 9.8% for 1993, 1992 and 1991, respectively. These rates do not exceed the maximum allowable rate as calculated under FERC Order No. 561. Interest on nuclear fuel in process and sulfur dioxide emission allowances is capitalized at the actual interest amount. E.F. Deferred Return on Plant Investment Commencing July 1, 1987, as approved by a PSC order on that date, the Company ceased the deferral of carrying costs associated with 400 MW of electric generating capacity previously removed from rate base and began amortizing the accumulated deferred carrying costs on a straight-line basis over a ten-year period. Amortization of deferred carrying costs, included in "Depreciation and amortization," was approximately $4.2 million for each of 1993, 19921995, 1994 and 1991. F.1993. G. Revenue Recognition Customers' meters are read and bills are rendered on a monthly cycle basis. Base revenue is recorded during the accounting period in which the meters are read. Fuel costs for electric generation are collected through the fuel cost component in retail electric rates. The fuel cost component contained in electric rates is established by the PSC during semiannual fuel cost hearings. Any difference between actual fuel costcosts and that contained in the fuel cost component is deferred and included when determining the fuel cost component during the next semiannual fuel cost hearing. At December 31, 1993 and 1992 theThe Company had overcollected through the electric fuel clausecost component approximately $9.2$3.8 million at December 31, 1995 and $17.7undercollected approximately $3.5 million respectively,at December 31, 1994 which are included in "Deferred Credits - Other.Other" and "Deferral Debits - Other," respectively. Customers subject to the gas cost adjustment clause are billed based on a fixed cost of gas determined by the PSC during annual gas cost recovery hearings. Any difference between actual gas cost and that contained in the rates is deferred and included when establishing gas costs during the next annual gas cost recovery hearing. At December 31, 19931995 and 19921994 the Company had undercollected through the gas cost recovery procedure approximately $11.0$4.6 million and $5.7$16.3 million, respectively, which are included in "Deferred Debits - Other." G.39 The Company's gas rate schedules for residential, small commercial and small industrial customers include a weather normalization adjustment, which minimizes fluctuations in gas revenues due to abnormal weather conditions. H. Depreciation and Amortization Provisions for depreciation are recorded using the straight- line method for financial reporting purposes and are based on the estimated service lives of the various classes of property. The composite weighted average depreciation rates were 2.97%3.02%, 3.00%3.01%, and 2.97% for 1993, 19921995, 1994 and 1991,1993, respectively. Nuclear fuel amortization, which is included in "Fuel used in electric generation" and is recovered through the fuel cost component of the Company's rates, is recorded using the units-of- production method. Provisions for amortization of nuclear fuel include amounts necessary to satisfy obligations to the United States Department of EnergyDOE under a contract for disposal of spent nuclear fuel. 37 H.I. Nuclear Decommissioning Decommissioning of Summer Station is presently projected to commence in the year 2022 when the operating license expires. TheBased on a 1991 study, the expenditures (on a before-tax basis) related to the Company's share of decommissioning activities are currently estimated, (inin 2022 dollars assuming ana 4.5% annual 4.5% rate of inflation)inflation, to be approximately $545.3 million including partial reclamation costs. The Company is providing for its share of estimated decommissioning costs of Summer Station over the life of Summer Station. The CompanyCompany's method of funding decommissioning cost is referred to as COMReP (Cost of Money Reduction Plan). Under this plan, funds collected through rates $2.5 million and $1.6($3.2 million in 1993each of 1995 and 1992, respectively. The amounts1994) are used to purchase insurance policies on the lives of certain Company personnel. Through the purchase of insurance contracts, the Company is able to take advantage of income tax benefits and accrue earnings on the fund on a tax- deferred basis at a rate higher than can be achieved using more traditional funding approaches. Amounts for decommissioning collected through electric rates, insurance proceeds, and interest on proceeds less expenses are deposited intransferred by the Company to an external trust fund in compliance with the financial assurance requirements of the NRC.Nuclear Regulatory Commission. Management intends for the fund, including earnings thereon, to provide for all eventual decommissioning expenditures on an after-tax basis. The trust's sources of decommissioning funds under the COMReP program include investment components of life insurance policy proceeds, return on investment and the cash transfers from the Company described above. The Company records its liability for decommissioning costs in deferred credits. The staff of the Securities and Exchange Commission has questioned certain of the current accounting practices of the electric utility industry regarding the recognition, measurement and classification of decommissioning costs for the financial statements of electric utilities with nuclear generating facilities. In addition, pursuantresponse to these questions, the Financial Accounting Standards Board has agreed to review the accounting for removal costs, including decommissioning. If the current electric utility industry accounting practices for such decommissioning are changed: (1) annual provisions for decommissioning could increase, and (2) trust fund income from the external decommissioning trusts could be reported as investment income rather than as a reduction of decommissioning expense. Pursuant to the National Energy Policy ActNEPA passed by Congress in 1992, the Company has recorded a liability for its estimated share of amounts required by the U. S. Department of EnergyDOE for its decommissioning fund. SCE&G will recover the costs associated with thisThe liability, totaling $4.6approximately $3.6 million at December 31, 1993,1995, has been included in "Long-Term Debt, Net." The Company will recover the cost associated with this liability through the fuel cost component of its rates; accordingly, these amounts havethis amount has been deferred and areis included in "Deferred Debits-Other" and "Long-Term Debt, Net.Debits - Other." I.J. Income Taxes The Company is included in the consolidated Federal and State income tax returnsreturn filed by SCANA. Income taxes are allocated to the Company based on its contribution to the consolidated taxable income. The Company adoptedtotal. As required by Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes," effective January 1, 1993. Prior years' financial statements have not been restated. Deferred tax assets and liabilities were adjusted from the amounts recorded at December 31, 1992 under prior standards to the amounts required at January 1, 1993 under Statement No. 109 at currently enacted income tax rates. The adjustments were charged or credited to regulatory assets or liabilities if the Company expects to recover the resulting additional income tax expense from, or pass through the resulting reductions in income tax expense to, customers of the Company; otherwise they were charged or credited to income tax expense. The cumulative effect of adopting Statement No. 109 on retained earnings as of January 1, 1993, as well as the effect of adoption on net income for the year ended December 31, 1993, was not material. The combined effect of adopting Statement No. 109 and adjusting deferred tax assets and liabilities for the change in 1993 of the corporate Federal income tax rate from 34% to 35% resulted in balances of $97.0 million in regulatory assets (included in "Deferred Debits- Other") and $56.6 million in regulatory liabilities (included in "Deferred Credits-Other"). In accordance with Statement No. 109, deferred tax assets and liabilities are recorded for the tax effecteffects of temporary differences between the book basis and tax basis of assets and liabilities at currently enacted tax rates. Deferred tax assets and liabilities are adjusted for changes in such rates through charges or credits to regulatory assets or liabilities if they are expected to be recovered from, or passed through to, customers; otherwise, they are charged or credited to income tax expense. Prior to the adoption of Statement No. 109 on January 1, 1993, the Company recorded a deferred income tax provision on all material timing differences between the inclusion of items in pretax financial income and taxable income each year, except for those which were expected to be passed through to, or collected from, customers. Accumulated deferred income taxes were generally not adjusted for changes in enacted tax rates. J.40 K. Pension Expense The Company participates in SCANA's noncontributory defined benefit pension plan, which covers all permanent Company employees. Benefits are based on years of accredited service and the employee's average annual base earnings received during the last three years of employment. SCANA's policy has been to fund pension costs accrued to the extent permitted by the applicable Federal income tax regulations as determined by an independent actuary. 38 Net periodic pension cost as determined by an independent actuary, for the years ended December 31, 1993, 19921995, 1994 and 19911993 included the following components: 1993 1992 1991 (Thousands of Dollars) Service cost-benefits1995 1994 1993 (Thousands of Dollars) Service cost--benefits earned during the period $ 5,187 $ 8,684 $ 7,629 $ 7,174 $ 6,367 Interest cost on projected benefit obligation 20,413 19,628 18,334 Adjustments: Return on plan assets (50,389) (28,607) (51,440) Net amortization and deferral 25,936 8,096 36,263 Amounts contributed by the Company's affiliates (175) (154) (1,177) Net periodic pension cost of the Company $ 3,414 $ 6,137 $ 8,347 The following table sets forth the funded status of the plan, as determined by an independent actuary, at December 31, 1993 and 1992: 1993 1992 (Thousands of Dollars) Actuarial present value of benefit obligations: Vested benefit obligation $204,794 $177,930 Nonvested benefit obligation 14,085 17,110 Accumulated benefit obligation $218,879 $195,040 Projected benefit obligation $295,718 $258,440 Plan assets at fair value (invested primarily in equity and debt securities) 351,648 304,114 Plan assets greater than projected benefit obligation 55,930 45,674 Unrecognized net transition liability 10,713 11,555 Unrecognized prior service costs 9,294 10,563 Unrecognized net gain (64,607) (63,633) Pension asset recognized in SCANA's Consolidated Balance Sheets $ 11,330 $ 4,159 The accumulated benefit obligation is based on the plan's benefit formulas without considering expected future salary increases. The following table sets forth the assumptions used in the amounts shown above for the years 1993, 1992 and 1991. 1992 and 1993 1991 Annual discount rate used to determine benefit obligations 7.25% 8.0% Expected long-term rate of return on plan assets 7.25% 8.0% Discount rate used in determining pension cost 8.0% 8.0% Assumed annual rate of future salary increases for projected benefit obligation 19,473 21,711 20,413 Adjustments: Return on plan assets (103,874) 2,365 (50,389) Net amortization and deferral 74,769 (29,760) 25,936 Amounts contributed by the Company's affiliates (203) (130) (175) Net periodic pension (income) expense $ (4,648) $ 2,870 $ 3,414 The determination of net periodic pension cost is based upon the following assumptions: 1995 1994 1993 Annual discount rate 8.0% 7.25% 8.0% Expected long-term rate of return on plan assets 8.0% 8.0% 8.0% Annual rate of salary increases 2.5% 4.75% 5.5%
The following table sets forth the funded status of the plan at December 31, 1995 and 1994: 1995 1994 (Thousands of Dollars) Actuarial present value of benefit obligations: Vested benefit obligation $228,434 $205,364 Nonvested benefit obligation 15,540 13,966 Accumulated benefit obligation $243,974 $219,330 Plan assets at fair value (invested primarily in equity and debt securities) $447,760 $347,702 Projected benefit obligation 284,145 246,318 Plan assets greater than projected benefit obligation 163,615 101,384 Unrecognized net transition liability 9,022 11,307 Unrecognized prior service costs 9,660 9,374 Unrecognized net gain (146,943) (102,284) Pension asset recognized in Consolidated Balance Sheets $ 35,354 $ 19,781 The accumulated benefit obligation is based on the plan's benefit formulas without considering expected future salary increases. The following table sets forth the assumptions used in determining the amounts shown above for the years 1995 and 1994. 1995 1994 Annual discount rate used to determine benefit obligations 7.5% 8.0% Assumed annual rate of future salary increases for projected benefit obligation 3.0% 2.5% 41 The change in the annual discount rate used to determine benefit obligations from 8.0% to 7.25%7.5% and the change in the expected salary increase rate from 2.5% to 3.0% as of December 31, 19931995 increased the projected benefit obligation and reduceddecreased the unrecognized net gain by approximately $4.1$28.6 million. In addition to pension benefits, the Company provides certain health care and life insurance benefits to active and retired employees. On January 1, 1993 the Company adopted Statement No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions." This Statement requires that the costThe costs of postretirement benefits other than pensions beare accrued during the years the employees render the service necessary to be eligible for the applicable benefits. ThePrior to 1993, the Company previously expensed these benefits, which are primarily health care, as claims were incurred. The accumulated obligation for these benefits at January 1, 1993 was approximately $68 million (transition liability) and the annualized increase in expenses (net of payments to current retirees), including the amortization of the transition liability over approximately 20 years as provided for by the Statement, is approximately $4.7 million. In its June 1993 electric rate order, (see Note 2A) the PSC approved the inclusion in rates of the portion of increased expenses related to electric operations. Such expenses had been deferred through May 31, 1993 pursuant to a December 10, 1992 accounting directive allowing deferral pending consideration of recovery in future rate proceedings. For the year ended December 31, 1993 theThe Company expensed approximately $4.3$8.5 million and $8.6 million, net of payments to current retirees. 39 retirees, for the years ended December 31, 1995 and 1994, respectively. The PSC has authorized accelerated amortization of the Company's remaining transition obligation for postretirement benefits other than pensions related to electric operations. (See Note 2A.) Net periodic postretirement benefit cost as determined by an independent actuary for the yearyears ended December 31, 1995, 1994 and 1993, included the following components (thousandscomponents: 1995 1994 1993 (Thousands of dollars): Service cost-benefits earned during the period $ 1,908 Interest cost on accumulated postretirement benefit obligation 5,502 Adjustments: Return on plan assets - Amortization of unrecognized transition obligation 3,344 Other net amortization and deferral - Amounts contributed by the Company's affiliates (525) Net periodic postretirement benefit cost $ 10,229 The following table sets forth the unfunded status of the plan, as determined by an independent actuary, at December 31, 1993 (thousands of dollars): Accumulated postretirement benefit obligations for: Retirees $ 40,865 Other fully eligible participants 25,767 Other active participants 6,841 Accumulated postretirement benefit obligation 73,473 Plan assets at fair value - Plan assets less accumulated postretirement benefit obligation (73,473) Unrecognized net transition liability 64,925 Unrecognized prior service costs - Unrecognized net (gain) loss 4,248 Postretirement benefit liability recognized in Consolidated Balance Sheet $ (4,300) The accumulated postretirement benefit obligation is based upon the plan's benefit provisions and the following assumptions: Assumed health care cost trend rate used to measure expected 1994 costs 12.25% Ultimate health care cost trend rate (to be achieved in 2004) 5.25% Discount rate used in determining post- retirement benefit costs 7.25% Assumed annual rate of salary increases 4.75%
Dollars) Service cost--benefits earned during the period $ 2,076 $ 2,417 $ 1,908 Interest cost on accumulated postretirement benefit obligation 7,253 6,644 5,502 Adjustments: Return on plan assets - - - Amortization of unrecognized transition obligation 3,344 3,344 3,344 Other net amortization and deferral 661 860 - Amounts contributed by the Company's affiliates (610) (575) (525) Net periodic postretirement benefit cost $12,724 $12,690 $10,229 The determination of net periodic postretirement benefit cost is based upon the following assumptions: 1995 1994 1993 Annual discount rate 8.0% 7.25% 8.0% Health care cost trend rate 11.0% 11.25% 13.0% Ultimate health care cost trend rate (to be achieved in 2004) 6.0% 5.25% 6.0% 42 The following table sets forth the funded status of the plan at December 31, 1995 and 1994: 1995 1994 (Thousands of Dollars) Accumulated postretirement benefit obligations for: Retirees $ 64,989 $ 59,174 Other fully eligible participants 6,685 4,995 Other active participants 27,076 24,889 Accumulated postretirement benefit obligation 98,750 89,058 Plan assets at fair value - - Plan assets less accumulated postretirement benefit obligation (98,750) (89,058) Unrecognized net transition liability 58,237 61,581 Unrecognized prior service costs 5,320 3,453 Unrecognized net loss 13,840 11,156 Postretirement benefit liability recognized in Consolidated Balance Sheets $(21,353) $(12,868) The accumulated postretirement benefit obligation is based upon the plan's benefit provisions and the following assumptions: 1995 1994 Assumed health care cost trend rate used to measure expected costs 10.5% 12.0% Ultimate health care cost trend rate (to be achieved in 2004) 5.5% 6.0% Annual discount rate 7.5% 8.0% Annual rate of salary increases 3.0% 2.5% The effect of a one-percentage-pointone percentage-point increase in the assumed health care cost trend rate for each future year on the aggregate of the service and interest cost components of net periodic postretirement benefit cost for the year ended December 31, 19931995 and the accumulated postretirement benefit obligation as of December 31, 19931995 would be to increase such amounts by $60,000$203,000 and $1.7$3.4 million, respectively. K.L. Debt Premium, Discount and Expense, Unamortized Loss on Reacquired Debt Long-term debt premium, discount and expense are being amortized as components of "Interest on long-term debt, net" over the terms of the respective debt issues. Gains or losses on reacquired debt that is refinanced are deferred and amortized over the term of the replacement debt. 40 L.M. Environmental The Company has an environmental assessment program to identify and assess current and former operations sites that could require environmental cleanup. As site assessments are initiated, an estimate is made of the amount of expenditures, if any, necessary to investigate and clean up each site. These estimates are refined as additional information becomes available; therefore, actual expenditures could differ significantly differ from the original estimates. Amounts estimated and accrued to date for site assessments and cleanup relate primarily to regulated operations; such amounts have beenare deferred and are being amortized and recovered through rates over a ten-year period.period for electric operations and an eight-year period for gas operations. Such deferred amounts totaled $19.6$18.0 million and $18.3$20.2 million at December 31, 19931995 and 1992,1994, respectively, and are included in "Deferred Debits-Other.Debits - Other." M.43 N. Fuel InventoryInventories Nuclear fuel and fossil fuel inventories and sulfur dioxide emission allowances are purchased and financed by Fuel Company under a contract which requires the Company to reimburse Fuel Company for all costs and expenses relating to the ownership and financing of fuel inventories.inventories and sulfur dioxide emission allowances. Accordingly, such fuel inventories and emission allowances and fuel-related assets and liabilities are included in the Company's consolidated financial statements (seestatements. (See Note 4). N. Postemployment Benefits In November 1992 the Financial Accounting Standards Board issued Statement No. 112 "Employers' Accounting for Postemployment Benefits." The Statement, which is effective for calendar year 1994, establishes certain conditions for the recognition of costs of benefits to former employees after employment but before retirement. The Statement requires recognition of the obligation to provide postemployment benefits if such obligation is attributable to services previously rendered, the obligation relates to rights which vest, payment of the benefits is probable, and the amount of such benefits can be reasonably estimated. The Company does not anticipate that application of this Statement will have a significant impact on results of operations or financial position.4.) O. Temporary Cash Investments The Company considers temporary cash investments having original maturities of three months or less to be cash equivalents. Temporary cash investments are generally in the form of commercial paper, certificates of deposit and repurchase agreements. P. Recently Issued Accounting Standards The Financial Accounting Standards Board has issued Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of." The provisions of the Statement, which will be implemented by the Company for the fiscal year beginning January 1, 1996, require the recognition of a loss in the income statement and related disclosures whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recoverable. The Company does not believe that adoption of the provisions of the Statement will have a material impact on its results of operations or financial position. The Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock- Based Compensation," which will be implemented by the Company on January 1, 1996. The Company does not believe that adoption of the provisions of the Statement will have a material impact on its results of operations or financial position. Q. Reclassifications Certain amounts from prior periods have been reclassified to conform with the 19931995 presentation. R. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. 44 2. RATE MATTERS: A. On June 7, 1993July 10, 1995, the Company filed an application with the PSC for an increase in retail electric rates. On January 9, 1996 the PSC issued an order ongranting the Company's pending electric rate proceeding allowingCompany an authorized return on common equityincrease of 11.5%, resulting7.34% which will produce additional revenues of approximately $67.5 million annually. The increase will be implemented in a 7.4% annualtwo phases. The first phase, an increase in retail electric rates, or a projected $60.5revenues of approximately $59.5 million annually based on a test year. These rates are toyear, or 6.47%, commenced on January 15, 1996. The second phase will be implemented in two phasesJanuary 1997 and will produce additional revenues of approximately $8.0 million annually, or .87% more than current rates. The PSC authorized a return on common equity of 12.0%. The PSC also approved establishment of a Storm Damage Reserve Account capped at $50 million and collected through rates over a two-year period: phase one, effective June 1993, producing $42.0ten-year period. Additionally, the PSC approved accelerated recovery of substantially all (excluding accumulated deferred income taxes) of the Company's electric regulatory assets and the transition obligation for postretirement benefits other than pensions, changing the amortization periods to allow recovery by the end of the year 2000. The Company's request to shift approximately $257 million annually,of depreciation reserves from transmission and phase two, effective June 1994, producing $18.5 million annually, based on a test year.distribution assets to nuclear production assets was also approved. B. On October 27, 1994 the PSC issued an order approving the Company's request to recover through a billing surcharge to its gas customers the costs of environmental cleanup at the sites of former manufactured gas plants. The billing surcharge, which was effective with the first billing cycle in November 1994 and is subject to annual review, provides for the recovery of approximately $16.2 million representing substantially all site assessment and cleanup costs for the Company's gas operations that had previously been deferred. In October 1995, as a result of the ongoing annual review, the PSC approved the continued use of the billing surcharge. The balance remaining to be recovered amounts to approximately $14.5 million. C. In September 14, 1992 the PSC issued an order granting the Company a $.25 increase in transit fares from $.50 to $.75 in both Columbia and Charleston, South Carolina; however, the PSC also required $.40 fares for low incomelow-income customers and denied the Company's request to reduce the number of routes and frequency of service. The new rates were placed into effect onin October 5, 1992. The Company has appealed the PSC's order to the Circuit Court. During oral arguments in February 1994Court, which on May 23, 1995, ordered the Circuit Court retained jurisdiction and remanded the decisioncase back to the PSC for reconsideration of several issues including the limited purposelow-income rider program, routing changes, and the $.75 fare. The Supreme Court declined to review an appeal of answering questions concerning the applicable regulatory principles usedCircuit Court decision and dismissed the case. Another Petition for Reconsideration was filed by the PSC in determining these transit rates. C. Since November 1, 1991 the Company's gas rate schedules for its residential, small commercial and small industrial customers have included a weather normalization adjustment. The WNA minimizes fluctuations in gas revenues due to abnormal weather conditions and has been approved through November 1994 subject to an annual reviewother intervenors, which was denied by the PSC. The PSC order was based on a return on common equity of 12.25%. The PSC also approved the WNA for SCANA's directly owned natural gas distribution system which is operated by the Company. The WNA became effective the first billing cycleCircuit Court. Procedural matters in December 1991. 41 D. In May 1989 the PSC approved a volumetric and direct billing method for Pipeline Corporation to recover take-or-pay costs incurred from its interstate pipeline suppliers pursuant to FERC-approved final and non-appealable settlements. In December 1992 the Supreme Court approved Pipeline Corporation's full recovery of the take-or-pay charges imposed by its suppliers and treatment of these charges as a cost of gas. However, the Supreme Court declared the PSC-approved "purchase deficiency" methodology for recovery of these coststhis case are yet to be unlawful retroactive ratemaking and remanded the docket to the PSC to reconsider its recovery methodology. The Company believes that the elimination of the purchase deficiency method of recovery will affect the timing for recovery of take-or-pay charges and shift the allocations among Pipeline Corporation's customers (including the Company) but that all such charges should be ultimately recovered. The Supreme Court decision establishes a principle of law that will provide a basis for full recovery by the Company, as well as Pipeline Corporation, of these costs. E. On July 3, 1989 the PSC granted the Company approximately $21.9 million of a requested $27.2 million annual increase in retail electric revenues based upon an allowed return on common equity of 13.25%. The Consumer Advocate appealed the decision to the Supreme Court which, on August 31, 1992, found that the evidenceresolved in the record of that case did not support a return on common equity higher than 13.0% and remanded to the PSC a portion of its July 1989 order for a determination of the proper return on common equity consistent with the Supreme Court's opinion. On January 19, 1993 the PSC issued an order allowing a return on common equity of 13.0%, approving a refund based on the difference in rates created by the difference between the 13.0% and the 13.25% return on common equity and making other non- material adjustments to the calculation of cost-of-service. The total refund, before interest and income taxes, was approximately $14.6 million, and was charged against 1992 "Electric Revenues." The refund plus interest was made during 1993. F. On November 28, 1989 the PSC granted the Company an increase in firm retail natural gas rates, effective November 30, 1989, designed to increase annual revenues by $10.1 million, or 89.5% out of the requested increase of approximately $11.3 million. In its order the PSC authorized a 12.75% return on common equity. The Consumer Advocate appealed to the Supreme Court which on August 31, 1992 remanded the order to the PSC for redetermination of the proper amount of litigation expenses to include in the test period. In January 1993 the PSC reduced the amount of litigation expense and ordered a refund totaling approximately $163,000 which was charged against 1992 "Gas Revenues." The refund was made during 1993.court. 3. LONG-TERM DEBT: The annual amounts of long-term debt maturities, including amounts due under nuclear and fossil fuel agreements (see Note 4), and sinking fund requirements for the years 19941996 through 19982000 are summarized as follows: Year Amount Year Amount (Thousands of Dollars) 1994 $13,7191996 $ 36,033 1999 $ 17,663 1997 $26,345 1995 28,94333,252 2000 117,668 1998 31,325 1996 64,146114,483 Approximately $10.9$17.3 million of the current portion of long- termlong-term debt for 1993payable in 1996 may be satisfied by either deposit and cancellation of bonds issued upon the basis of property additions or bond retirement credits, or by deposit of cash with the Trustee. During 1993 certain issues45 The Company has three-year revolving lines of credit totaling $100 million, in addition to other lines of credit, that provide liquidity for issuance of commercial paper. The three- year lines of credit provide back-up liquidity when commercial paper outstanding is in excess of $100 million. The long-term nature of the Company's First and Refunding Mortgage Bonds were redeemed and replaced with First Mortgage Bonds. 42 Pipeline Corporation's two principal gas suppliers have incurred liabilitieslines of credit allow commercial paper in excess of $100 million to gas producers under take-or-pay provisionsbe classified as long-term debt. The Company had outstanding commercial paper of gas supply contracts. The FERC has accepted filings allowing these pipeline suppliers to recover portions of such take-or-pay liabilities from their customers, including Pipeline Corporation, through volumetric surcharges in gas rates and through direct billings. The Company's liability to Pipeline Corporation for its proportionate share of take-or-pay costs was approximately $1.6$111.2 million at December 31, 19931994, of which is included in Accounts Payable - Affiliated Companies. The Company is paying this amount plus interest (9.4%)$11.2 million was reclassified to Pipeline Corporation over a five- year period which began June 1989. The Company recovers these costs from its customers through the purchased gas adjustment (PGA) provisions in its rates. The Company's take-or-pay liability to Pipeline Corporation will likely be increased due to the Supreme Court decision dated December 14, 1992 (see Note 2D). The Company anticipates that any such increase will be recovered through the PGA.long-term debt. Certain outstanding long-term debt of an affiliated company (approximately $35.9 million at both December 31, 19931995 and 1992 respectively)1994) is guaranteed by the Company. Substantially all utility plant and fuel inventories are pledged as collateral in connection with long-term debt. 4. FUEL FINANCINGS: Nuclear and fossil fuel inventories and sulfur dioxide emission allowances are financed through the issuance by Fuel Company of short-term commercial paper. These short-term borrowings are supported by an irrevocable revolving credit agreement which expires July 31, 1996.1998. Accordingly, the amounts outstanding have been included in long-term debt. The credit agreement provides for a maximum amount of $75$125 million that may be outstanding at any time. Commercial paper outstanding totaled $36.8$76.8 million and $55.7$50.6 million at December 31, 19931995 and 19921994 at weighted average interest rates of 3.47%5.76% and 3.81%6.06%, respectively. 43 5. STOCKHOLDERS' INVESTMENT (Including Preferred Stock Not Subject to Purchase or Sinking Funds):COMMON EQUITY: The changes in "Stockholders' Investment" (Including Preferred Stock Not Subject to Purchase or Sinking Funds) during 1993, 19921995, 1994 and 19911993 are summarized as follows: Common Preferred Thousands Shares Shares of Dollars Balance December 31, 1990 40,296,147 322,877 $847,400 Changes in Retained Earnings: Net Income 122,836 Cash Dividends Declared: Preferred Stock (at stated rates) (6,706) Common Stock (97,000) Other 2 Balance December 31, 1991 40,296,147 322,877 866,532 Changes in Retained Earnings: Net Income 102,163 Cash Dividends Declared: Preferred Stock (at stated rates) (6,474) Common Stock (99,291) Equity Contributions from Parent 126,838 Balance December 31, 1992 40,296,147 322,877 989,768$989,768 Changes in Retained Earnings: Net Income 145,968 Cash Dividends Declared: Preferred Stock (at stated rates) (6,217) Common Stock (110,300) Equity Contributions from Parent 58,142 Balance December 31, 1993 40,296,147 322,877 $1,077,3611,077,361 Changes in Retained Earnings: Net Income 152,043 Cash Dividends Declared: Preferred Stock (at stated rates) (5,955) Common Stock (113,700) Equity Contributions from Parent 49,710 Balance December 31, 1994 40,296,147 322,877 1,159,459 Changes in Retained Earnings: Net Income 169,185 Cash Dividends Declared: Preferred Stock (at stated rates) (5,687) Common Stock (121,363) Equity Contributions from Parent including transfer of assets 139,505 Balance December 31, 1995 40,296,147 322,877 $1,341,099 46 The Restated Articles of Incorporation of the Company and the Indenture underlying its First and Refunding Mortgage Bonds contain provisions that mayunder certain circumstances could limit the payment of cash dividends on common stock. In addition, with respect to hydroelectric projects, the Federal Power Act may requirerequires the appropriation of a portion of the earnings therefrom. At December 31, 19931995 approximately $10.6$14.5 million of retained earnings were restricted by this requirement as to payment of cash dividends on common stock. 6. PREFERRED STOCK (Subject to Purchase or Sinking Funds): The call premium of the respective series of preferred stock in no case exceeds the amount of the annual dividend. Retirements under sinking fund requirements are at par values. At any time when dividends have not been paid in full or declared and set apart for payment on all series of preferred stock, the Company may not redeem any shares of preferred stock (unless all shares of preferred stock then outstanding are redeemed) or purchase or otherwise acquire for value any shares of preferred stock except in accordance with an offer made to all holders of preferred stock. The Company may not redeem any shares of preferred stock (unless all shares of preferred stock then outstanding are redeemed) or purchase or otherwise acquire for value any shares of preferred stock (except out of monies set aside as purchase funds or sinking funds for one or more series of preferred stock) at any time when it is in default under the provisions of the purchase fund or sinking fund for any series of preferred stock. 44 The aggregate annual amounts of purchase fund or sinking fund requirements for preferred stock for the years 19941996 through 19982000 are summarized as follows: Year Amount Year Amount (Thousands of Dollars) 1994 $2,5041996 $2,439 1999 $2,440 1997 $2,440 1995 2,5152,440 2000 2,440 1998 2,440 1996 2,482 The changes in "Total Preferred Stock (Subject to Purchase or Sinking Funds)" during 1993, 19921995, 1994 and 19911993 are summarized as follows: Number Thousands of Shares of Dollars Balance December 31, 1990 1,050,201 $ 64,460 Shares Redeemed: $100 par value (628) (63) $50 par value (51,169) (2,559) Balance December 31, 1991 998,404 61,838 Shares Redeemed: $100 par value (6,098) (610) $50 par value (51,777) (2,589) Balance December 31, 1992 940,529 $ 58,639 Shares Redeemed: $100 par value (7,374) (737) $50 par value (51,187) (2,558) Balance December 31, 1993 881,968 55,344 Shares Redeemed: $100 par value (8,072) (807) $50 par value (51,802) (2,591) Balance December 31, 1994 822,094 51,946 Shares Redeemed: $100 par value (6,809) (681) $50 par value (51,666) (2,583) Balance December 31, 1995 763,619 $ 55,34448,682 7. INCOME TAXES: Total income tax expense for 1993, 19921995, 1994 and 19911993 is as follows: 1995 1994 1993 1992 1991 (Thousands of Dollars) Current taxes: Federal $ 94,137 $66,597 $60,577 $62,147 $36,594 State 14,265 9,505 6,822 7,852 4,833 Total current taxes 108,402 76,102 67,399 69,999 41,427 Deferred taxes, net: Federal (7,319) 7,727 12,197 (16,274) 25,212 State (603) 2,118 4,387 (322) 4,469 Total deferred taxes (7,922) 9,845 16,584 (16,596) 29,681 Investment tax credits: Amortization of amounts deferred (credit) (3,245) (3,245)(3,230) (3,231) (3,245) Total income tax expense $ 97,250 $82,716 $80,738 $50,158 $67,863 4547 TotalThe difference in actual income taxes differand the income taxes calculated from amounts computed by applyingthe application of the statutory Federal income tax rate of 35%(35% for 19931995, 1994 and 34% for 1992 and 19911993) to pretax income is reconciled as follows: 1993 1992 1991 (Thousands of Dollars) Net income $145,968 $102,163 $122,836 Total income tax expense: Charged to operating expenses 81,280 51,382 68,543 Charged (credited) to other income (542) (1,224) (680) Total pretax income $226,706 $152,321 $190,699 Income taxes on above at statutory Federal income tax rate $ 79,347 $ 51,789 $ 64,838 Increases (decreases) attributable to: Allowance for funds used during construction (excluding nuclear fuel) (2,624) (1,556) (1,009) Deferred return on plant investment, net of amortization 1,486 1,444 1,444 Depreciation differences 2,531 2,356 1,666 Amortization of investment tax credits (3,245) (3,245)1995 1994 1993 (Thousands of Dollars) Net income $169,185 $152,043 $145,968 Total income tax expense: Charged to operating expenses 96,956 84,066 81,280 Charged (credited) to other income 294 (1,350) (542) Total pretax income $266,435 $234,759 $226,706 Income taxes on above at statutory Federal income tax rate $ 93,252 $ 82,166 $ 79,347 Increases (decreases) attributable to: Allowance for equity funds used during construction (3,325) (2,796) (2,624) Amortization of deferred return on plant investment 1,486 1,486 1,486 Depreciation differences 3,268 2,994 2,531 Amortization of investment tax credits (3,230) (3,231) (3,245) State income taxes (less Federal income tax effect) 8,880 7,555 7,286 4,970 6,140 Deferred income tax flowback at higher than statutory rates (3,310) (3,647) (3,641) (4,914) (2,768) Other differences, net 229 (1,811) (402) (686) 797 Total income tax expense $ 97,250 $ 82,716 $ 80,738 $ 50,158 $ 67,863
The Omnibus Budget Reconciliation Act was signed into law on August 10, 1993, increasing the corporate tax rate from 34% to 35% effective January 1, 1993. This impact of this change on the Company's financial position and results of operation was not material. The tax effects of significant temporary differences comprising the Company's net deferred tax liability of $471.8$468.9 million at December 31, 19931995 and $485.8 million at December 31, 1994 determined in accordance with Statement No. 109 (see Note 1I)1J) are as follows (thousandsfollows: 1995 1994 (Thousands of dollars): 1993Dollars) Deferred tax assets: Unamortized investment tax credits $ 52,31048,512 $ 50,513 Cycle billing 15,08419,143 17,521 Nuclear operations expenses 4,9083,755 206 Deferred compensation programs 5,2655,562 5,450 Other postretirement benefits 1,631 Injuries and damages 7246,371 3,187 Other 3,8082,929 3,627 Total deferred tax assets 83,73086,272 80,504 Deferred tax liabilities: Accelerated depreciationProperty plant and amortization 526,540equipment 520,294 533,394 Pension expense 14,191 9,022 Reacquired debt 7,574 Property taxes 6,068 Pension expense 6,266 Nuclear system maintenance 2,965 Early retirement programs 1,961 Nuclear decontamination fund 1,4176,680 7,146 Research and experimentation 6,196 2,276 Other 2,7327,801 14,458 Total deferred tax liabilities 555,523555,162 566,296 Net deferred tax liability $471,793 46 "Total deferred taxes" charged (credited) to income tax expense result from timing differences in recognition of the following items: 1992 1991 (Thousands of Dollars) Charged (credited) to expense: Accelerated depreciation and amortization $ (5) $22,053 Deferred fuel accounting (2,947) 461 Property taxes 493 1,608 Cycle billing (1,381) 3,608 Nuclear refueling accrual (4,430) 2,052 Electric rate refund (6,571) - Injuries and damages (1,377) - Other, net (378) (101) Total deferred taxes $(16,596) $29,681$468,890 $485,792 The Internal Revenue Service has examined and closed consolidated Federal income tax returns of SCANA Corporation through 1989 and is currently examining SCANA's 1990, 1991 and 19911992 Federal income tax returns. No adjustmentsAdjustments are currently proposed by the examining agent. SCANA does not anticipate that any adjustments which might result from this examination will have a significant impact on the earnings or financial position of the Company. 48 8. FINANCIAL INSTRUMENTSINSTRUMENTS: The carrying amounts and estimated fair values of the Company's financial instruments at December 31, 19931995 and 19921994 are as follows: 1993 19921995 1994 Estimated Estimated Carrying Fair Carrying Fair Amount Value Amount Value (Thousands of Dollars) Assets: Cash and temporary cash investments $ 1936,798 $ 1936,798 $ 24,302346 $ 24,302346 Investments 62 62 62 6261 61 61 61 Liabilities: Short-term borrowings 1,011 1,011 33 33 Total81 81 100,000 100,000 Notes payable - affiliated companies - - 19,409 19,409 Long-term debt (including advances from affiliated companies) 1,112,321 1,194,522 962,193 1,006,636 Total1,315,412 1,412,213 1,264,233 1,195,023 Preferred stock (subject to purchase or sinking funds) 55,344 51,618 58,639 53,77148,682 46,603 51,946 49,348
The information presented herein is based on pertinent information available to the Company as of December 31, 19931995 and 1992.1994. Although the Company is not aware of any factors that would significantly affect the estimated fair value amounts, such financial instruments have not been comprehensively revalued since December 31, 1993,1995, and the current estimated fair value may differ significantly from the estimated fair value at that date. The following methods and assumptions were used to estimate the fair value of the above classes of financial instruments: Cash and temporary cash investments, including commercial paper, repurchase agreements, treasury bills and notes are valued at their carrying amount. Fair values of investments and long-term debt are based on quoted market prices forof the instruments or similar instruments, or for those instruments for which there are no quoted market prices available, fair values are based on net present value calculations. Settlement of long term debt may not be possible or may not be a prudent management decision. Short-term borrowings are valued at their carrying amount. 47 The fair value of preferred stock (subject to purchase or sinking funds) is estimated on the basis of market prices. Potential taxes and other expenses that would be incurred in an actual sale or settlement have not been taken into consideration. 49 9. SHORT-TERM BORROWINGS: The Company pays fees to banks as compensation for its committed lines of credit. Commercial paper borrowings are for 270 days or less. Details of lines of credit and short-term borrowings, excluding amounts classified as long-term (Notes 3 and 4), at December 31, 1993, 19921995, 1994 and 19911993 and for the years then ended are as follows: 1995 1994 1993 1992 1991 (Millions of dollars) Authorized lines of credit at year end $127.0 $119.9 $121.7year-end $165.0 $165.0 $212.0 Unused lines of credit at year-end $127.0 $119.9 $121.7 Short-term borrowings (including commercial paper) during the year: Maximum outstanding $126.0 $ 95.3 $130.4 Average outstanding $ 56.0 $ 40.9 $ 64.5 Weighted daily average interest rates: Bank loans 3.24% 3.49% 7.69% Commercial paper 3.13% 3.69% 6.31%$165.0 $165.0 $212.0 Short-term borrowings outstanding at year-end: Commercial paper $ 1.080.5 $100.0 $ - $ -1.0 Weighted average interest rate 3.50% - - Bank loans $ - $ - $ - Weighted average interest rate - - -5.83% 6.04% 3.35% 10. COMMITMENTS AND CONTINGENCIES: A. Construction The Company entered into a contract with Duke/Fluor Daniel in 1991 to design, engineer and build a 385 MW coal-fired electric generating plant near Cope, South Carolina in Orangeburg County.Carolina. Construction of the plant started in November 1992. Commercial operation began in November 1992 and commercial operation is expected in late 1995 or earlyJanuary 1996. The estimated pricecost of the Cope plant, excluding financing costs and AFC, but including an allowance for escalation, is $450$410.9 million. In addition, the transmission lines for interconnection with the Company's system are expected to cost $26$22.5 million. 48 Under the Duke/Fluor Daniel contract the Company must make specified monthly minimum payments. These minimum payments do not include amounts for inflation on a portion of the contract which is subject to escalation (approximately 34% of the total contract amount). The aggregate amount of such required minimum payments remaining at December 31, 19931995 is as follows (in thousands): 1994 $168,152 1995 59,766 1996 5,603 Total $233,521$4.2 million due in 1996. Through December 31, 19931995 the Company had paid $142.0$378.7 million under the contract. B. Nuclear Insurance The Price-Anderson Indemnification Act, which deals with the Company's public liability for a nuclear incident, currently establishes the liability limit for third-party claims associated with any nuclear incident at $9.4$8.9 billion. Each reactor licensee is currently liable for up to $79.3 million per reactor owned for each nuclear incident occurring at any reactor in the United States, provided that not more than $10 million of the liability per reactor would be assessed per year. The Company's maximum assessment, based on its two-thirds ownership of Summer Station, would not exceed approxi- matelybe approximately $52.9 million per incident, but not more than $6.7 million per year. The Company currently maintains policies (for itself and on behalf of the PSA) with Nuclear Electric Insurance Limited (NEIL) and American Nuclear Insurers (ANI) providing combined property and decontamination insurance coverage of $1.4$1.9 billion for any losses in excess of $500 million pursuant to existing primary coverages (with ANI) onat Summer Station. The Company pays annual premiums and, in addition, could be assessed a retroactive premium not to exceed 7 1/2 times its annual premium in the event of property damage loss to any nuclear generating facilities covered by NEIL.under the NEIL program. Based on the current annual premium, this retroactive premium would not exceed approximately $8.1$8.2 million. To the extent that insurable claims for property damage, decontamination, repair and replacement and other costs and expenses arising from a nuclear incident at Summer Station exceed the policy limits of insurance, or to the extent such insurance becomes unavailable in the future, and to the extent that the Company's rates would not recover the cost of any purchased replacement power, the Company will retain the risk of loss as a self-insurer. The Company has no reason to anticipate a serious nuclear incident at Summer Station. If such an incident were to occur, it could have a materiallymaterial adverse impact on the Company's financial position.position and results of operations. 50 C. Litigation In January 1994 the Company, acting on behalf of itself and the PSA (as co-owners of Summer Station), reached a settlement with Westinghouse Electric Corporation (Westinghouse) resolving a dispute involving steam generators provided by Westinghouse to Summer Station which are defective in design, workmanship and materials. Terms of the settlement are confidential by agreement of the parties and order of the court. The Company had filed an action in May 1990 against Westinghouse in the U. S. District Court for South Carolina; an order dismissing this suit was issued on January 12, 1994. D. Environmental As described in Note 1L,1M of Notes to Consolidated Financial Statements, the Company has an environmental assessment program to identify and assess current and former operations sites that could require environmental cleanup. As site assessments are initiated, an estimate isestimates are made of the amount of expenditures,cost, if any, necessary to investigate and clean up each site. These estimates are refined as additional information becomes available; therefore, actual expenditures could differ significantly differ from the original estimates. Amounts estimated and accrued to date for site assessments and cleanup relate primarily to regulated operations; such amounts have beenare deferred and are being amortized and recovered through rates over a ten-year period. 49period for electric operations and an eight-year period for gas operations. Such deferred amounts totaled $18.0 million and $20.2 million at December 31, 1995 and 1994, respectively. Estimates to date include, among other items, the costs estimated to be associated with the matters discussed in the following paragraphs. The Company owns four decommissioned manufactured gas plant sites which contain residues of by-product chemicals. The Company maintains an active review of the sites to monitor the nature and extent of the residual contamination. In September 1992 the EPA notified the Company, the City of Charleston and the Charleston Housing Authority of their potential liability for the investigation and cleanup of the Calhoun Park Area Site in Charleston, South Carolina. This site originally encompassed approximately eighteen acres and included properties which were the locations for industrial operations, including a wood preserving (creosote) plant and one of the Company's decommissioned manufactured gas plants. The original scope of this investigation has been expanded to approximately 30 acres, including adjacent properties owned by the National Park Service and the City of Charleston, and private properties. The site has not been placed on the National Priority List, but may be added before cleanup is initiated. The PRPs have agreed with the EPA to participate in an innovative approach to site investigation and cleanup called "Superfund Accelerated Cleanup Model," allowing the pre-cleanup site investigation process to be compressed significantly. The PRPs have negotiated an administrative order by consent for the conduct of a Remedial Investigation/Feasibility Study (RI/FS) and a corresponding Scope of Work. Field work began in November 1993. The Company is also working with the City of Charleston to investigate potential contamination from the manufactured gas plant which may have migrated to the city's aquarium site. In 1994 the City of Charleston notified the Company that it considers the Company to be responsible for a $43.5 million increase in costs of the aquarium project attributable to delays resulting from contamination of the Calhoun Park Area Site. The Company believes it has meritorious defenses against this claim and does not expect its resolution to have a material impact on its financial position or results of operations. D. Claims and Litigation The Company is engaged in various claims and litigation incidental to its business operations which management anticipates will be resolved without loss to the Company. No estimate of the range of loss from these matters can currently be determined. 51 11. SEGMENT OF BUSINESS INFORMATION: Segment information at December 31, 1993, 19921995, 1994 and 19911993 and for the years then ended is as follows: 1995 Electric Gas Transit Total (Thousands of Dollars) Operating revenues $1,006,566 $ 200,632 $ 3,889 $1,211,087 Operating expenses, excluding depreciation and amortization 657,452 169,768 10,429 837,649 Depreciation and amortization 103,961 12,616 1,007 117,584 Total operating expenses 761,413 182,384 11,436 955,233 Operating income (loss) $ 245,153 $ 18,248 $ (7,547) 255,854 Add - Other income, net 9,553 Less - Interest charges 96,222 Net income $ 169,185 Capital expenditures: Identifiable $ 245,016 $ 19,670 $ 265 $ 264,951 Utilized for overall Company operations 27,816 Total $ 292,767 Identifiable assets at December 31, 1995: Utility plant, net $2,850,647 $ 209,847 $ 1,878 $3,062,372 Inventories 76,697 2,155 561 79,413 Total $2,927,344 $ 212,002 $ 2,439 3,141,785 Other assets 660,648 Total assets $3,802,433 1994 Electric Gas Transit Total (Thousands of Dollars) Operating revenues $975,526 $201,746 $ 4,002 $1,181,274 Operating expenses, excluding depreciation and amortization 659,610 173,717 10,577 843,904 Depreciation and amortization 95,666 11,060 226 106,952 Total operating expenses 755,276 184,777 10,803 950,856 Operating income (loss) $ 220,250 $ 16,969 $ (6,801) 230,418 Add - Other income, net 7,271 Less - Interest charges 85,646 Net income $ 152,043 Capital expenditures: Identifiable $ 359,510 $ 40,923 $ 347 $ 400,780 Utilized for overall Company operations 20,167 Total $ 420,947 Identifiable assets at December 31, 1994: Utility plant, net $2,717,147 $201,018 $ 1,791 $2,919,956 Inventories 85,113 2,605 495 88,213 Total $2,802,260 $203,623 $ 2,286 3,008,169 Other assets 578,922 Total assets $3,587,091 52 1993 Electric Gas Transit Total (Thousands of Dollars) Operating revenues $940,547$ 940,547 $174,035 $ 3,851 $1,118,433 Operating expenses, excluding depreciation and amortization 639,808 148,349 9,737 797,894 Depreciation and amortization 91,142 9,903 175 101,220 Total operating expenses 730,950 158,252 9,912 899,114 Operating income (loss) $209,597$ 209,597 $ 15,783 $(6,061) 219,319 Add - Other income, net 6,585 Less - Interest charges 79,936 Net income $ 145,968 Capital expenditures: Identifiable $ 274,408 $ 11,674 $ 604 $ 286,686 Utilized for overall Company operations 13,934 Total $ 300,620 Identifiable assets at December 31, 1993: Utility plant, net $2,445,466 $178,464 $1,673 $2,625,603 Inventories 66,181 2,526 463 69,170 Total $2,511,647 $180,990 $2,136 2,694,773 Assets utilized for overall Company operationsOther assets 495,166 Total assets $3,189,939 5053 1992 Electric Gas Transit Total (Thousands of Dollars) Operating revenues $ 829,938 $160,820 $ 3,623 $ 994,381 Operating expenses, excluding depreciation and amortization 572,234 133,611 9,205 715,050 Depreciation and amortization 87,367 9,534 163 97,064 Total operating expenses 659,601 143,145 9,368 812,114 Operating income (loss) $ 170,337 $ 17,675 $(5,745) 182,267 Add - Other income, net 3,006 Less - Interest charges 83,110 Net income $ 102,163 Capital expenditures: Identifiable $ 223,697 $ 10,409 $ 346 $ 234,452 Utilized for overall Company operations 8,877 Total $ 243,329 Identifiable assets at December 31, 1992: Utility plant, net $2,271,895 $177,309 $ 1,240 $2,450,444 Inventories 68,435 2,967 481 71,883 Total $2,340,330 $180,276 $ 1,721 2,522,327 Assets utilized for overall Company operations 368,626 Total assets $2,890,953 51 1991 Electric Gas Transit Total (Thousands of Dollars) Operating revenues $ 867,685 $ 150,788 $ 3,869 $1,022,342 Operating expenses, excluding depreciation and amortization 596,466 128,529 9,023 734,018 Depreciation and amortization 82,503 8,969 146 91,618 Total operating expenses 678,969 137,498 9,169 825,636 Operating income (loss) $ 188,716 $ 13,290 $ (5,300) 196,706 Add - Other income, net 3,283 Less - Interest charges 77,153 Net income $ 122,836 Capital expenditures: Identifiable $ 191,218 $ 16,029 $ 89 $ 207,336 Utilized for overall Company operations 7,967 Total $ 215,303 Identifiable assets at December 31, 1991: Utility plant, net $2,154,221 $ 176,570 $ 1,073 $2,331,864 Inventories 69,316 2,553 476 72,345 Total $2,223,537 $ 179,123 $ 1,549 2,404,209 Assets utilized for overall Company operations 344,371 Total assets $2,748,580 52 12. SUPPLEMENTARY INCOME STATEMENT INFORMATION: Maintenance expense (including repairs) and provision for depreciation and amortization of utility plant are shown separately in the accompanying consolidated statements of income, except for amounts charged to clearing and other accounts, which amounts are not significant. Advertising expenses are not material and there were no royalties. Taxes other than income taxes are as follows (amounts for nonutility operations are not significant): December 31, 1993 1992 1991 (Thousands of Dollars) State electric generation tax $ 4,056 $ 4,299 $ 3,638 General property taxes 47,624 47,320 44,567 Special state utility license 1,814 1,965 1,595 Federal social security taxes 8,534 8,113 7,463 State gross receipts tax 2,871 3,427 2,734 Other taxes 462 470 942 Total charged to operating expenses $65,361 $65,594 $60,939 13. QUARTERLY FINANCIAL DATA (UNAUDITED): 19931995 (Thousands of Dollars) First Second Third Fourth Quarter Quarter Quarter Quarter Annual Total operating revenues $279,241 $244,485 $329,673 $265,034 $1,118,433$308,759 $275,139 $339,937 $287,252 $1,211,087 Operating income 55,274 38,934 79,363 45,748 219,31967,189 53,153 87,023 48,489 255,854 Net Income 36,820 21,327 61,032 26,789 145,968 199245,249 30,870 65,040 28,026 169,185 1994 (Thousands of Dollars) First Second Third Fourth Quarter Quarter Quarter Quarter Annual Total operating revenues $263,576 $222,097 $270,937 $237,771 $994,381$313,321 $263,033 $327,066 $277,854 $1,181,274 Operating income 49,805 33,452 58,149 40,861 182,26763,520 43,316 79,133 44,449 230,418 Net Income 30,055 13,528 36,747 21,833 102,16345,340 24,348 57,619 24,736 152,043 54 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE NONE PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT DIRECTORS The directors listed below were elected April 27, 1995 to hold office until the next annual meeting of the Company's stockholders on April 25, 1996. Name and Year First Became Director Age Principal Occupation; Directorships Bill L. Amick 52 For more than five years, Chairman of the (1990) Board and Chief Executive Officer of Amick Farms, Inc., Batesburg, SC (vertically integrated broiler operation). For more than five years, Chairman and Chief Executive Officer of Amick Processing, Inc. and Amick Broilers, Inc. Director, SCANA Corporation, Columbia, SC. William B. Bookhart, Jr. 54 For more than five years, a partner in (1979) Bookhart Farms, Elloree, SC (general farming). Director, SCANA Corporation, Columbia, SC. William T. Cassels, Jr. 66 For more than five years, Chairman of the (1990) Board, Southeastern Freight Lines, Inc., Columbia, SC (trucking business). Director, SCANA Corporation, Columbia, SC; South Carolina National Corporation, Columbia, SC; Wachovia Bank of South Carolina, N.A., Columbia, SC. Hugh M. Chapman 63 Since January 1, 1992, Chairman of (1988) NationsBank South, Atlanta, GA (a division of NationsBank Corporation, bank holding company). From September 1, 1990 to December 31, 1991, Vice Chairman and Director, C&S/Sovran Corporation, Atlanta, GA. Prior to September 1, 1990, President and Director, Citizens & Southern Corporation, Atlanta, GA and Chairman of the Board, Citizens & Southern South Carolina Corporation, Columbia, SC. Director, SCANA Corporation, Columbia, SC. 55 Name and Year First Became Director Age Principal Occupation; Directorships James B. Edwards, D.M.D. 68 For more than five years, President and (1986) Professor of Maxillofacial Surgery, Medical University of South Carolina, Charleston, SC. U.S. Secretary of Energy from January 1981 to November 1982. Governor of South Carolina, 1975-1979. Director, Phillips Petroleum Co., Bartlesville, OK; WMX Technologies, Inc., Oak Brook, IL; General Engineering Laboratories, Inc., Charleston SC; GS Industries, Inc., Charlotte, NC; IMO Industries, Inc., Lawrenceville, NJ; National Data Corporation, Atlanta, GA; SCANA Corporation, Columbia, SC. Elaine T. Freeman 60 For more than five years, Executive Director (1992) of ETV Endowment of South Carolina, Inc. (non-profit organization), Spartanburg, SC. Director National Bank of South Carolina, Columbia, SC; SCANA Corporation, Columbia, SC. Lawrence M. Gressette, Jr. 64 For more than five years, Chairman of the (1987) Board and Chief Executive Officer of SCANA Corporation and Chairman of the Board and Chief Executive Officer of all SCANA subsidiaries, including the Company. For more than five years prior to December 13, 1995, President of SCANA Corporation. Director, Wachovia Corporation, Winston- Salem, NC; InterCel, Inc., West Point, GA; The Liberty Corporation, Greenville, SC; SCANA Corporation, Columbia, SC. Benjamin A. Hagood 68 Since January 1, 1993, Chairman of the (1974) Board William M. Bird and Company, Inc., Inc., Charleston, SC (wholesale distributor of floor covering material). For more than two years prior to January 1, 1993, President and Director, William M. Bird and Company, Inc., Charleston, SC. Director, SCANA Corporation, Columbia, SC. 56 Name and Year First Became Director Age Principal Occupation; Directorships W. Hayne Hipp 56 For more than five years, President and (1983) Chief Executive Officer, The Liberty Corporation, Greenville, SC (insurance and broadcasting holding company). Director, The Liberty Corporation, Greenville, SC; Wachovia Corporation, Winston-Salem, NC; SCANA Corporation, Columbia, SC. Bruce D. Kenyon 53 For more than five years, President and (1991) Chief Operating Officer of the Company. Director, SCANA Corporation, Columbia, SC. F. Creighton McMaster 66 For more than five years, President and (1974) Manager, Winnsboro Petroleum Company, Winnsboro, SC (wholesale distributor of petroleum products). Director, First Union National Bank of South Carolina, Greenville, SC; SCANA Corporation, Columbia, SC. Henry Ponder, Ph.D. 67 For more than five years, President, Fisk (1983) University, Nashville, TN. Director, Suntrust Banks, Inc., Nashville, TN; SCANA Corporation, Columbia, SC. John B. Rhodes 65 For more than five years, Chairman and (1967) Chief Executive Officer, Rhodes Oil Company, Inc., Walterboro, SC (distributor of petroleum products). Director, SCANA Corporation, Columbia, SC. William B. Timmerman 49 Since December 13, 1995, President of SCANA (1991) Corporation. From May 1, 1994 to December 13, 1995, Executive Vice President of SCANA Corporation. Since August 25, 1993, Assistant Secretary of SCANA Corporation and all of its subsidiaries, including the Company. From August 28, 1991 to February 20, 1996, Chief Financial Officer of the Company. For more than five years prior to May 1, 1994, Senior Vice President of SCANA SCANA Corporation. For more than five years prior to February 20, 1996, Controller of SCANA Corporation. Director, SCANA Corporation, Columbia, SC; InterCel, Inc., West Point, GA. 57 Name and Year First Became Director Age Principal Occupation; Directorships E. Craig Wall, Jr. 58 For more than five years, President and (1982) Director, Canal Industries, Conway, SC (forest products industry). Director, Sonoco Products Company, Hartsville, SC; Ruddick Corporation, Charlotte, NC; Nationsbank Corp., Charlotte, NC; Blue Cross/Blue Shield of South Carolina, Columbia, SC; SCANA Corporation, Columbia, SC. 58 SCHEDULE V SOUTH CAROLINA ELECTRIC & GAS COMPANY Property, Plant and Equipment Year Ended December 31, 1993 Col. A Col. B Col. C Col. D Col. E Col. F Balance at Balance beginning Other Changes at close Classification of period Additions Retirements add (deduct) of period (*) Electric Utility Plant: Intangible Plant $ 2,526,525 $ 387,277 $ $ 2,913,802 Production Plant - Steam 419,861,153 48,342,749 $23,766,610 (58,121) 444,379,171 Production Plant - Nuclear 901,572,157 6,351,974 2,080,492 905,843,639 Production Plant - Hydraulic 252,749,355 1,300,683 57,399 (16,026) 253,976,613 Other Production 63,281,062 866,307 1,500 (899,820) 63,246,049 Transmission 307,889,993 14,609,788 218,883 (642,210) 321,638,688 Distribution 909,829,946 71,365,534 6,417,737 622,432 975,400,175 General 95,416,815 7,591,100 4,188,810 726,828 99,545,933 Construction Work in Progress 203,255,081 116,265,554 319,520,635 Plant Acquisition Adjustment 936,891 936,891 Total Electric Plant 3,157,318,978 267,080,966 36,731,431 (266,917) 3,387,401,596 Gas Utility Plant: Intangible Plant 2,002 2,002 Production Plant 12,404,326 124,400 364,632 12,164,094 Distribution 233,452,324 9,334,575 244,443 242,542,456 General 17,816,286 752,470 714,102 (55,270) 17,799,384 Construction Work in Progress 2,154,465 1,462,713 3,617,178 Total Gas Plant 265,829,403 11,674,158 1,325,179 (55,270) 276,123,112 Transit Utility Plant: Plant in Service 3,286,740 820,846 338,083 3,769,503 Construction Work In Progress 346,440 (217,070) 129,370 Total Transit Plant 3,633,180 603,776 338,083 3,898,873 Common Utility Plant: Plant in Service 65,124,200 9,842,345 512,645 (1,650,001) 72,803,899 Construction Work in Progress 11,318,260 4,091,970 15,410,230 Total Common Plant 76,442,460 13,934,315 512,645 (1,650,001) 88,214,129 Nuclear Fuel, Net 39,916,340 7,325,982 (18,155,649) 29,086,673 Total Utility Plant 3,543,140,361 300,619,197 38,907,338 (20,127,837) 3,784,724,383 Nonutility Property 13,360,800 249,267 16,729 6,403 13,599,741 Total Property, Plant and Equipment $3,556,501,161 $300,868,464 $38,924,067 $(20,121,434) $3,798,324,124 (*) Includes accounting reclassification of property and equipment between various utility plant and nonutility plant classifications. 54 SCHEDULE V SOUTH CAROLINA ELECTRIC & GAS COMPANY Property, Plant and Equipment Year Ended December 31, 1992 Col. A Col. B Col. C Col. D Col. E Col. F Balance at Balance beginning Other Changes at close Classification of period Additions Retirements add (deduct) of period (*) Electric Utility Plant: Intangible Plant $ 1,745,368 $ 668,802 $ 112,355 $ 2,526,525 Production Plant - Steam 386,509,775 39,281,836 $ 6,311,184 380,726 419,861,153 Production Plant - Nuclear 902,210,500 10,513,580 11,089,182 (62,741) 901,572,157 Production Plant - Hydraulic 252,263,540 729,289 11,087 (232,387) 252,749,355 Other Production 60,580,141 3,495,438 72,541 (721,976) 63,281,062 Transmission 284,885,248 23,378,760 345,830 (28,185) 307,889,993 Distribution 836,231,555 80,261,671 6,726,789 63,509 909,829,946 General 86,645,581 12,212,253 2,218,502 (1,222,517) 95,416,815 Construction Work in Progress 171,497,768 31,757,313 203,255,081 Plant Acquisition Adjustment 936,891 936,891 Total Electric Plant 2,983,506,367 202,298,942 26,775,115 (1,711,216) 3,157,318,978 Gas Utility Plant: Intangible Plant 2,002 2,002 Production Plant 11,729,301 677,519 (2,494) 12,404,326 Distribution 222,086,762 12,319,371 953,809 233,452,324 General 17,254,519 832,364 455,798 185,201 17,816,286 Construction Work in Progress 5,574,900 (3,420,435) 2,154,465 Total Gas Plant 256,647,484 10,408,819 1,409,607 182,707 265,829,403 Transit Utility Plant: Plant in Service 3,626,110 25,203 364,573 3,286,740 Construction Work In Progress 25,422 321,018 346,440 Total Transit Plant 3,651,532 346,221 364,573 3,633,180 Common Utility Plant: Plant in Service 59,209,415 6,427,058 564,596 52,323 65,124,200 Construction Work in Progress 8,868,396 2,449,864 11,318,260 Total Common Plant 68,077,811 8,876,922 564,596 52,323 76,442,460 Nuclear Fuel, Net 41,708,502 21,398,027 (23,190,189) 39,916,340 Total Utility Plant 3,353,591,696 243,328,931 29,113,891 (24,666,375) 3,543,140,361 Nonutility Property 13,337,632 222,651 18,235 (181,248) 13,360,800 Total Property, Plant and Equipment $3,366,929,328 $243,551,582 $29,132,126 $(24,847,623) $3,556,501,161 (*) Includes accounting reclassification of property and equipment between various utility plant and nonutility plant classifications. 55 SCHEDULE V SOUTH CAROLINA ELECTRIC & GAS COMPANY Property, Plant and Equipment Year Ended December 31, 1991 Col. A Col. B Col. C Col. D Col. E Col. F Balance at Balance beginning Other Changes at close Classification of period Additions Retirements add (deduct) of period (*) Electric Utility Plant: Intangible Plant $ 1,498,215 $ 247,153 $ 1,745,368 Production Plant - Steam 375,757,013 11,221,353 $ 2,107,137 $ 1,638,546 386,509,775 Production Plant - Nuclear 892,803,058 11,400,155 1,990,340 (2,373) 902,210,500 Production Plant - Hydraulic 246,061,917 6,234,421 18,421 (14,377) 252,263,540 Other Production 24,719,968 36,664,254 151,891 (652,190) 60,580,141 Transmission 268,810,887 17,218,465 756,709 (387,395) 284,885,248 Distribution 767,262,239 75,701,545 6,388,466 (343,763) 836,231,555 General 78,793,633 10,608,299 2,751,716 (4,635) 86,645,581 Construction Work in Progress 166,273,512 5,224,256 171,497,768 Plant Acquisition Adjustment 936,891 936,891 Total Electric Plant 2,822,917,333 174,519,901 14,164,680 233,813 2,983,506,367 Gas Utility Plant: Intangible Plant 2,002 2,002 Production Plant 12,165,685 132,278 568,662 11,729,301 Distribution 207,249,333 15,419,520 582,091 222,086,762 General 16,549,092 2,010,529 1,308,383 3,281 17,254,519 Construction Work in Progress 7,108,395 (1,533,495) 5,574,900 Total Gas Plant 243,074,507 16,028,832 2,459,136 3,281 256,647,484 Transit Utility Plant: Plant in Service 3,834,731 109,676 318,297 3,626,110 Construction Work In Progress 45,951 (20,529) 25,422 Total Transit Plant 3,880,682 89,147 318,297 3,651,532 Common Utility Plant: Plant in Service 53,402,648 7,485,224 463,637 (1,214,820) 59,209,415 Construction Work in Progress 5,522,233 3,346,163 8,868,396 Total Common Plant 58,924,881 10,831,387 463,637 (1,214,820) 68,077,811 Nuclear Fuel, Net 43,394,098 16,697,735 (18,383,331) 41,708,502 Total Utility Plant 3,172,191,501 218,167,002 17,405,750 (19,361,057) 3,353,591,696 Nonutility Property 15,002,658 632,077 496,481 (1,800,622) 13,337,632 Total Property, Plant and Equipment $3,187,194,159 $218,799,079 $17,902,231 $(21,161,679) $3,366,929,328 (*) Includes accounting reclassification of property and equipment between various utility plant and nonutility plant classifications. 56 SCHEDULE VI SOUTH CAROLINA ELECTRIC & GAS COMPANY Accumulated Depreciation and Amortization of Property, Plant and Equipment Year Ended December 31, 1993 Col. A Col. B Col. C Col. D Col. E Col. F Balance at Balance beginning Other Changes at close Classification of period Additions Retirements add (deduct) of period (*) Electric Utility Plant: Intangible Plant $ 510,230 $ 215,400 $ 725,630 Production Plant - Steam 183,320,992 11,748,848 $26,118,661 168,951,179 Production Plant - Nuclear 258,546,891 27,136,078 4,336,461 281,346,508 Production Plant - Hydraulic 56,833,113 3,708,900 387,290 60,154,723 Other Production 20,965,067 1,992,545 48,970 22,908,642 Transmission 94,236,791 7,748,900 610,744 101,374,947 Distribution 274,166,096 29,477,600 7,264,838 296,378,858 General 35,824,269 6,112,419 3,690,790 38,245,898 Electric Plant Acquisition Adj. 936,891 936,891 Total Electric Plant 925,340,340 88,140,690 42,457,754 971,023,276 Gas Utility Plant: Production Plant 4,051,584 344,400 118,173 4,277,811 Distribution 78,240,161 8,798,400 353,335 86,685,226 General 6,229,475 939,849 473,341 6,695,983 Total Gas Plant 88,521,220 10,082,649 944,849 97,659,020 Transit Utility Plant 2,393,120 167,000 333,808 2,226,312 Common Utility Plant: Common Plant 21,919,678 2,711,444 395,972 24,235,150 Intangible Plant 1,764,900 622,600 2,387,500 Total Common Plant 23,684,578 3,334,044 395,972 26,622,650 Total Utility Plant 1,039,939,258 101,724,383 44,132,383 1,097,531,258 Nonutility Property 818,636 150,000 16,729 951,907 Total Property, Plant and Equipment $1,040,757,894 $101,874,383 $ 44,149,112 $1,098,483,165 (*) After deduction of net salvage. 57 SCHEDULE VI SOUTH CAROLINA ELECTRIC & GAS COMPANY Accumulated Depreciation and Amortization of Property, Plant and Equipment Year Ended December 31, 1992 Col. A Col. B Col. C Col. D Col. E Col. F Balance at Balance beginning Other Changes at close Classification of period Additions Retirements add (deduct) of period (*) Electric Utility Plant: Intangible Plant $ 483,330 $ 26,900 $ 510,230 Production Plant - Steam 181,467,097 9,327,525 $ 7,473,630 183,320,992 Production Plant - Nuclear 244,349,995 26,159,978 11,963,082 258,546,891 Production Plant - Hydraulic 53,551,159 3,474,075 192,121 56,833,113 Other Production 18,442,317 2,636,400 113,650 20,965,067 Transmission 87,812,534 7,068,000 643,743 94,236,791 Distribution 251,465,003 28,531,200 5,830,107 274,166,096 General 32,484,258 5,140,301 1,800,290 35,824,269 Electric Plant Acquisition Adj. 936,891 936,891 Total Electric Plant 870,992,584 82,364,379 28,016,623 925,340,340 Gas Utility Plant: Production Plant 3,722,784 328,800 4,051,584 Distribution 70,865,818 8,373,600 999,257 78,240,161 General 5,489,388 976,408 236,321 6,229,475 Total Gas Plant 80,077,990 9,678,808 1,235,578 88,521,220 Transit Utility Plant 2,579,278 146,500 332,658 2,393,120 Common Utility Plant: Common Plant 18,020,122 4,033,463 133,907 21,919,678 Intangible Plant 1,160,900 604,000 1,764,900 Total Common Plant 19,181,022 4,637,463 133,907 23,684,578 Total Utility Plant 972,830,874 96,827,150 29,718,766 1,039,939,258 Nonutility Property 366,216 148,100 (304,320) 818,636 Total Property, Plant and Equipment $973,197,090 $ 96,975,250 $ 29,414,446 $1,040,757,894 (*) After deduction of net salvage. 58 SCHEDULE VI SOUTH CAROLINA ELECTRIC & GAS COMPANY Accumulated Depreciation and Amortization of Property, Plant and Equipment Year Ended December 31, 1991 Col. A Col. B Col. C Col. D Col. E Col. F Balance at Balance beginning Other Changes at close Classification of period Additions Retirements add (deduct) of period (*) Electric Utility Plant: Intangible Plant $ 282,630 $ 200,700 $ 483,330 Production Plant - Steam 176,597,113 8,986,800 $ 4,116,816 181,467,097 Production Plant - Nuclear 220,460,998 25,905,578 2,016,581 244,349,995 Production Plant - Hydraulic 50,787,917 3,478,800 715,558 53,551,159 Other Production 17,204,322 1,591,396 353,401 18,442,317 Transmission 82,003,719 6,616,800 807,985 87,812,534 Distribution 232,605,806 26,114,400 7,255,203 251,465,003 General 29,725,228 5,114,200 2,355,170 32,484,258 Electric Plant Acquisition Adj. 936,891 936,891 Total Electric Plant 810,604,624 78,008,674 17,620,714 870,992,584 Gas Utility Plant: Production Plant 3,949,910 334,800 561,926 3,722,784 Distribution 63,862,085 7,863,600 859,867 70,865,818 General 5,547,775 981,700 1,040,087 5,489,388 Total Gas Plant 73,359,770 9,180,100 2,461,880 80,077,990 Transit Utility Plant 2,674,599 130,100 225,421 2,579,278 Common Utility Plant: Common Plant 14,793,032 3,723,000 495,910 18,020,122 Intangible Plant 577,700 583,200 1,160,900 Total Common Plant 15,370,732 4,306,200 495,910 19,181,022 Total Utility Plant 902,009,725 91,625,074 20,803,925 972,830,874 Nonutility Property 635,832 187,000 456,616 366,216 Total Property, Plant and Equipment $902,645,557 $ 91,812,074 $ 21,260,541 $973,197,090 (*) After deduction of net salvage.EXECUTIVE OFFICERS OF THE COMPANY The Company's officers are elected at the annual organizational meeting of the Board of Directors and hold office until the next such organizational meeting, unless the Board of Directors shall otherwise determine, or unless a resignation is submitted. Positions Held During Name Age Past Five Years Dates L.M. Gressette, Jr. (1) 64 Chairman of the Board and Chief Executive Officer *-present President - SCANA *-1995 B.D. Kenyon (1) 53 President and Chief Operating Officer 1990-present W.B. Timmerman (1) 49 President - SCANA 1995-present President of MPX, an affiliate 1996-present Executive Vice President, 1994-1995 SCANA Assistant Secretary 1993-1996 Chief Financial Officer *-1996 Controller, SCANA *-1996 Senior Vice President, *-1994 SCANA G.J. Bullwinkel, Jr. 47 Senior Vice President- Retail Electric 1995-present Senior Vice President- Fossil & Hydro Production 1993-1994 Senior Vice President- Production 1991-1992 W.A. Darby 50 Senior Vice President - Gas, SCANA Gas Group 1996-present Vice President-Gas Operations *-present President and Treasurer of ServiceCare 1996-present General Manager of ServiceCare, Inc., an affiliate 1994-present J. L. Skolds 45 Senior Vice President - 1994-present Generation Vice President - Nuclear Operations 1990-1994 K. B. Marsh (1) 40 Vice President - Finance, Chief Financial Officer and Controller - SCANA 1996-present Vice President - Finance, Treasurer and Secretary 1992-1996 Vice President - Finance and Treasurer 1991-1992 Vice President - Corporate Planning 1991 Vice President and Controller *-1991 B.T. Zeigler (1) 40 Vice President - SCANA 1996-present General Counsel of SCE&G 1995-present Associate General Counsel - SCE&G Legal Department 1992-1995 Partner - Lewis, Babcock & Hawkins Law Firm *-1992 *Indicates position held at least since March 1, 1991 (1) Also an executive officer of SCANA 59 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE NONE PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT DIRECTORS The directors listed below were elected April 29, 1993 to hold office until the next annual meeting of the Company's stockholder on April 28, 1994. Name and Year First Became Director Age Principal Occupation; Directorships Bill L. Amick 50 Since September 30, 1988, Chairman of the (1990) Board and Chief Executive Officer of Amick Farms, Inc., Batesburg, SC (vertically integrated broiler operation). Since January 12, 1988, Chairman and Chief Executive Officer of Amick Processing, Inc. and Amick Broilers, Inc. Director, SCANA Corporation, Columbia, SC. William B. Bookhart, Jr. 52 For more than five years, a partner in (1979) Bookhart Farms, Elloree, SC (general farming). Director, SCANA Corporation, Columbia, SC. William T. Cassels, Jr. 64 For more than five years, Chairman of the (1990) Board, Southeastern Freight Lines, Inc., Columbia, SC (trucking business). Director, SCANA Corporation, Columbia, SC; South Carolina National Corporation, Columbia, SC; The Seibels Bruce Group, Inc., Columbia, SC. Hugh M. Chapman 61 Since January 1, 1992, Chairman of (1988) NationsBank South, Atlanta, GA (a division of NationsBank Corporation, bank holding company). From September 1, 1990 to December 31, 1991, Vice Chairman and Director, C&S/Sovran Corporation, Atlanta, GA. Prior to September 1, 1990, President and Director, Citizens & Southern Corporation, Atlanta, GA and Chairman of the Board, Citizens & Southern South Carolina Corporation, Columbia, SC. Director, SCANA Corporation, Columbia, SC. 60 Name and Year First Became Director Age Principal Occupation; Directorships James B. Edwards, D.M.D. 66 President and Professor of Maxillofacial (1986) Surgery, Medical University of South Carolina. U.S. Secretary of Energy from January 1981 to November 1982. Governor of South Carolina, 1975-1979. Director, Phillips Petroleum Co., Bartlesville, OK; Brendle's, Inc., Elkin, NC; Chemical Waste Management, Inc., Chicago, IL; Imo Industries, Inc., Lawrenceville, NJ; South Carolina National Corporation, Columbia, SC; South Carolina National Bank, Columbia, SC; National Data Corporation, Atlanta, GA; Encyclopedia Britannica, Chicago, IL; Communications Satellite Corporation; SCANA Corporation, Columbia, SC. Elaine T. Freeman 58 For more than five years, Executive Director (1992) of ETV Endowment of South Carolina, Inc. (non-profit organization). Director, SCANA Corporation, Columbia, SC. Lawrence M. Gressette, Jr. 62 Since February 1, 1990, Chairman of the (1987) Board, Chief Executive Officer and President of SCANA Corporation and Chairman of the Board and Chief Executive Officer of all SCANA subsidiaries, including the Company. From September 1, 1985 to January 31, 1990, President of SCANA Corporation. From January 1, 1988 to February 21, 1989, President and Treasurer of SCANA Corporation. From May 1, 1987 to January 31, 1990, Vice Chairman of the Company. Director, Wachovia Corporation, Winston- Salem, NC; SCANA Corporation, Columbia, SC. Benjamin A. Hagood 66 Since January 1, 1993, Chairman of the Board, (1974) William M. Bird and Company, Inc., Charleston, SC (wholesale distributor of floor covering material). Prior to January 1, 1993, President and Director, William M. Bird and Company, Inc., Charleston, SC. 61 Name and Year First Became Director Age Principal Occupation; Directorships Benjamin A. Hagood Director, SCANA Corporation, Columbia, SC. (continued) W. Hayne Hipp 54 For more than five years, President and (1983) Chief Executive Officer, The Liberty Corporation, Greenville, SC (insurance and broadcasting holding company). Director, The Liberty Corporation, Greenville, SC; Wachovia Corporation, Winston-Salem, NC; SCANA Corporation, Columbia, SC. Bruce D. Kenyon 51 Since November 12, 1990, President and Chief (1991) Operating Officer of the Company. From April 4, 1988 to November 9, 1990, Senior Vice President-Division Operations, Pennsylvania Power and Light Company, Allentown, PA. Director, SCANA Corporation, Columbia, SC. F. Creighton McMaster 64 For more than five years, President and (1974) Manager, Winnsboro Petroleum Company, Winnsboro, SC (wholesale distributor of petroleum products). Director, First Union National Bank of South Carolina, Greenville, SC; SCANA Corporation, Columbia, SC. Henry Ponder, Ph.D. 65 For more than five years, President, Fisk (1983) University, Nashville, TN. Director, Third National Bank, Nashville, TN; SCANA Corporation, Columbia, SC. John B. Rhodes 63 For more than five years, Chairman and (1967) Chief Executive Officer, Rhodes Oil Company, Inc., Walterboro, SC (distributor of petroleum products). Director, SCANA Corporation, Columbia, SC. William B. Timmerman 47 For more than five years, Senior Vice (1991) President, Chief Financial Officer and Controller of SCANA Corporation. Since August 28, 1991 Chief Financial Officer of the Company. Director, SCANA Corporation, Columbia, SC. 62 Name and Year First Became Director Age Principal Occupation; Directorships E. Craig Wall, Jr. 56 For more than five years, President and (1982) Director, Canal Industries, Conway, SC (forest products industry). Director, Sonoco Products Company, Hartsville, SC; Ruddick Corporation, Charlotte, NC; Blue Cross/Blue Shield of South Carolina, Columbia, SC; SCANA Corporation, Columbia, SC. John A. Warren 69 Since February 1, 1990, Chairman of the (1982) Board Emeritus of SCANA Corporation. Since April 6, 1989, Chairman of the Board of Palmetto Seed Capital Corporation, Columbia, SC (venture capital corporation). From April 23, 1986 to January 31, 1990, Chairman of the Board and Chief Executive Officer of SCANA Corporation and subsidiaries. Director, The Liberty Corporation, Greenville, SC; SCANA Corporation, Columbia, SC. 63 EXECUTIVE OFFICERS OF THE COMPANY The executive officers are elected at the annual organizational meeting of the Board of Directors and hold office until the next such organizational meeting, unless the Board of Directors shall otherwise determine, or unless a resignation is submitted. Positions Held During Name Age Past Five Years Dates L.M. Gressette, Jr. (1) 62 Chairman of the Board and Chief Executive Officer 1990-present Vice Chairman of the Board *-1990 B.D. Kenyon (1) 51 President and Chief Operating Officer 1990-present Senior Vice President - Division Operations, Pennsylvania Power and Light Company 1988-1990 W.B. Timmerman (1) 47 Chief Financial Officer 1991-present Senior Vice President, Chief Financial Officer and Controller, SCANA 1988-present G.J. Bullwinkel, Jr. 45 Senior Vice President- Fossil & Hydro Production 1993-present Senior Vice President- Production 1991-1992 Vice President-Customer Relations, Southern Division *-1991 R.W. Stedman 52 Senior Vice President- Administrative Support Group 1993-present Senior Vice President- Administration 1988-1992 *Indicates position held at least since March 1, 1989 (1) Also an executive officer of SCANA 64 Positions Held During Name Age Past Five Years Dates J.H. Young, Jr. 57 Senior Vice President- Customer Relations 1988-present W.A. Darby 48 Vice President-Gas Operations *-present P.T. Smith 46 Vice President and General Counsel - Rates and Regulatory Affairs 1992-present Vice President - Regulatory Affairs 1991-1992 Vice President - Rates, Purchasing & Regulatory Affairs *-1991 J.E. Addison 33 Vice President and Controller 1992-present Controller 1991 Partner - Hughes, Boan & Addison, CPA's 1990-1991 Manager - Deloitte & Touche *-1990 *Indicates position held at least since March 1, 1989 There is no family relationship between any of the persons named in response to Item 10. 65
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT All of the Company's common stock is held by its parent, SCANA Corporation, and none of the directors and executive officers of the Company own any of the other classes of equity securities of the Company. The required forms indicate that no equity securities of the Company are owned by the directors and executive officers. Based solely on a review of the copies of such forms and amendments furnished to the Company and written representations from the executive officers and directors, the Company believes that during 1995 all Section 16(a) filing requirements applicable to its executive officers, directors and greater than 10% beneficial owners were complied with except that one report covering initial ownership of the Company's preferred stock was filed late by Kevin B. Marsh and Belton T. Zeigler. ITEM 11. EXECUTIVE COMPENSATION The following table contains information with respect to compensation paid or accrued during the years 1995, 1994 and 1993 to the Chief Executive Officer of the Company and to each of the other four most highly compensated executive officers of the Company during 1995 who were serving as executive officers of the Company at the end of 1995. ITEM 11. EXECUTIVE COMPENSATION The following table contains information with respect to compensation paid or accrued by SCANA Corporation and its subsidiaries, including the Company, during the years 1993, 1992 and 1991 to the Chief Executive Officer of the Company and to each of the other four most highly compensated executive officers of the Company during 1993 who were serving as executive officers of the Company at the end of 1993. SUMMARY COMPENSATION TABLE Name and principal positionPrincipal Year Annual Compensation Long-Term All other4Position Compensation compensa- tion ($)(1) (2) Salary Bonus Other Payouts Salary Bonus1 Other annual2 ($) ($) compensa- LTIP3Annual Compen- sation ($) (3) (4) LTIP All Other Payouts Compensa- ($) tion ($) payouts ($) (a) (b) (c) (d) (e) (h) (i) L. M. Gressette, Jr. 1993 383,5575 186,615 57,375 266,007 23,0131995 449,246(5) 197,500 65,779 390,156 26,955 Chairman of the Board, 1992 368,4261994 416,609 0 60,488 82,151 22,104 President, Chief Executive 1991 339,904 144,000 61,000 Officer and Director - SCANA Corporation and the Company and Chairman of the2,255 173,375 24,996 Board and Chief 1993 383,557 186,615 61,699 266,007 23,013 Executive Officer - all SCANA subsidiaries, including the Company B. D. Kenyon 1995 318,542 104,353 7,107 172,240 19,113 President and Chief 1994 313,581 96,768 2,649 81,619 18,815 Operating Officer 1993 297,760 90,09099,090 4,201 125,792 17,866 President and Chief Operating 1992 291,355 0 3,265 46,250 17,481 Officer 1991 262,925 81,450 0 Director - SCANA Corporation and the Company W. B. Timmerman 1995 254,214 101,588 987 150,353 15,127 Chief Financial 1994 235,099 19,725 1,323 70,751 14,106 Officer and 1993 220,752 95,738 2,828 109,768 13,245 Assistant Secretary G. J. Bullwinkel 1995 189,097 70,904 487 90,402 11,346 Senior Vice President and 1992 215,8171994 170,828 42,573 762 38,249 9,826 - - Retail Electric 1993 148,705 51,975 1,477 58,489 0 2,303 15,906 12,949 Chief Financial Officer - 1991 187,615 70,950 33,000 SCANA Corporation Chief Financial Officer Director - SCANA Corporation and the Company J. H. Young 1993 167,566 51,975 1,542 70,508 10,054L. Skolds 1995 176,156 74,151 54 76,128 10,569 Senior Vice President 1992 165,1021994 156,731 42,573 2,146 38,249 9,404 - - Generation 1993 146,438 43,605 4,065 58,489 0 1,084 23,556 9,906 Customer Relations 1991 144,861 45,450 17,000 R. W. Stedman 1993 170,361 51,975 1,107 70,508 10,222 Senior Vice President - 1992 167,259 0 985 23,556 10,036 Administrative Support Group 1991 146,155 45,450 17,000 1______________ (1) Payments under the annual Performance Incentive Plan described hereafter. 2(2) Other annual compensation consists of (i) for Mr. Gressette, perquisites including compensation related to whole life insurance premiums for those1995 in the amount of $54,642, (ii) for Mr. Kenyon, a lump sum payment in lieu of a base salary increase in 1995 and (iii) for all named individuals whose perquisites exceeded the lesser of 10% of their salary and bonus or $50,000 and (ii)officers, payments to cover taxes on benefits. The perquisites for Mr. Gressette includes compensation related to the Whole Life Option described hereafter in the amount of $50,018 for both 1993 and 1992. 3(3) Payments under the long termlong-term Performance Share PlantPlan described hereafter. 4(4) All other compensation includesconsists solely of Company contributions to the SCANA Stock Purchase Savings Plan ("Savings Plan") and the Supplementary Voluntary Deferral Plan described hereafterdefined contribution plans based on the funding formula forapplicable to all employees of the Company. 5(5) Reflects actual salary paid in 1993.1995. Base salary of $395,000$460,000, became effective in May of 1993; the 1992 salary of $360,000 was in effect from January to April of 1993.1995.
66 DESCRIPTION OF PLANS Incentive Compensation To bring total compensation of officers to market levels, the Company has two incentive plans: Annual Performance Incentive Plan SCANA has annual Performance Incentive Plans for officers of SCANA and its subsidiaries. The plans promote SCANA's pay-for-performance philosophy, as well as its goal of having a meaningful amount of executive pay "at-risk." Through these plans, financial incentives are provided in the form of annual cash bonuses that are paid only when corporate, business unit and individual goals are achieved. Short-term incentive awards are targeted below the median of the market. Executives eligible for these plans are assigned threshold, target and maximum bonus levels as a percentage of salary level. Bonuses earned are based on the level of the preestablished goals achieved. Award payouts may increase to a maximum of 1.5 times target, if Company performance exceeds the goals established. Even if this were to occur, payouts would still be below the market median. Award payouts may decrease, generally to a minimum of one-half the target-level awards, if the Company's performance is below targeted goals. Awards earned based on the achievement of preestablished goals may nonetheless be decreased to zero (as was done in 1992), if the Management Development and Corporate Performance Committee (Performance Committee) in its discretion determines that actual results do not warrant the levels of payouts otherwise earned. The various plans in which officers of SCANA and its subsidiaries participate focus generally on short-term goals affecting profitability, efficiency, quality of service, customer satisfaction and progress toward SCANA's strategic objectives for the Company and its other subsidiaries. New performance categories for officers in the various plans are established annually. Specific performance measures, and their weights, also vary from year to year. For 1993, the specific measures in each plan, and their weights, for the officers included in the Summary Compensation Table on page 66 are described below. The relationship of performance to payouts for the officers in each plan also is discussed. For officers of SCANA, 80% of the total award is based on corporate Earnings Per Share ("EPS") goals. The remaining 20% is tied to the achievement of individual performance goals, and is awarded on a discretionary basis. Specific EPS goals are established that correspond to threshold, target and maximum payouts for the EPS portion of awards. For 1993, SCANA's EPS results were sufficient to result in maximum payouts for that portion of the awards. Individual performance for corporate officers also was determined to be sufficient to result in maximum -level payouts for that portion of the awards. Awards for officers of the Company are based on three performance categories: corporate EPS, numerous corporate and Strategic Business Unit (SBU) financial and productivity goals, and additional SBU strategic initiatives (i.e., activities that focus on improvements in existing operating procedures, quality of service and product, human resources matters, etc.). One-third of the total award is based on results in each performance category. Threshold, target and maximum performance levels are established for each category; payouts will vary based on the actual level of performance achieved. For 1993, the overall Company performance in all three categories was such that payouts exceeded target-level awards, but were less than the maximum awards possible. Although results for the first two performance categories were above target performance levels, results in the strategic initiative category were below that level.60 Long-Term Performance Share Plan SCANA has aThe long-term Performance Share Plan for officers of SCANA and its subsidiaries. The long-term Performance Share Plansubsidiaries measures SCANA's Total Shareholder Return ("TSR") relative to a group of peer companies (PSP Peer Group) over a three-year period. The PSP"PSP Peer GroupGroup" includes 9794 electric and gas utilities, none of which have annual revenues of less than $100 million. Total Shareholder ReturnTSR is stock price increase over the three-year period, plus cash dividends paid during the period, divided by stock price as of the beginning of the period. Comparing SCANA's TSR to the TSR of a large group of other utilities reflects SCANA's recognition that investors could have invested their funds in other utility companies. Comparing SCANA's TSR against the TSR of the PSP Peer Groupcompanies and measures how well SCANA did when compared to others operating in similar interest, tax, economic and regulatory environments. Executives eligible to participate in the Performance Share Plan are assigned target award opportunities annually based primarily on their salary level. In determining award sizes, levels of responsibilities and competitive practices also are considered. Target awards are established at levels slightly below the median of the market andAwards under this plan represent a significant portion of executives "at-risk" compensation. But, toTo provide additional incentive for executives, and to ensure that executives are only rewarded when shareholders gain, actual payouts may exceed the median of the market when performance is outstanding.above the 50th percentile of the peer group. For lesser performance, awards will be at or below the market median. Payouts occur when SCANA's TSR is in the top two-thirds of the PSP Peer Group, and vary based on SCANA's ranking against the peer group. Executives earn threshold payouts of 0.4 times target at the 33rd percentile of three-year performance. Target payouts will be made at the 50th percentile of three-year performance. Maximum payouts will be made at 1.5 times target when SCANA's TSR is at or above the 75th percentile of the peer group. Payments will be made on a sliding scale for performance between threshold and target and target and maximum. No payouts will be earned if performance is in the bottom one-third of the peer group. Awards are denominated in shares of SCANA Common Stock and may be paid in either stock or cash or a combination of the two.stock and cash. For the three-year period from 19911993 through 1993,1995, SCANA's TSR was at the 79th98th percentile of the PSP Peer Group. This resulted in payouts in February 19941996 at the maximum level possible. The150% of target shares awarded paid in a combination of the annual Incentive Planstock and the Performance Share Plan provides an opportunity to bring a participant's compensation to market levels. The progressive payout formulas in both plans dictate that above-market pay can be earned only for better-than-average corporate financial performance, and that poor performance will result in below- market pay. 68 cash. The following table shows the target awards made in 19931995 for potential payment in 19961998 under the long-term Performance Share Plan, and estimated future payouts under that plan at threshold, target and maximum levels.levels for the named executive officers. Mr. Gressette's award for the 1995-1997 performance period is prorated to reflect his retirement in February 1997. LONG-TERM INCENTIVE PLANS - AWARDS IN LAST FISCAL YEAR TARGET AWARDS FOR 1995 TO BE PAID IN 1998 LONG-TERM INCENTIVE PLAN TARGET AWARDS FOR 1993 TO BE PAID IN 1996Number of Performance Estimated Future Payouts Under Shares, or Other Non-Stock Price- BasedPrice-Based Plans Number of PerformanceUnits or Shares, UnitsPeriod Until Other PeriodMaturation Name Rights (#) or Payout Threshold Target Maximum Name or Other Rights Until Maturation ($) or (#) ($ or #) ($ or #) (#)($ or Payout (a) (b) (c) (d) (e) (f)#) L. M. Gressette, Jr. 4,100 1993 - 1995 1,640 4,100 6,1506,023 1995-1997 2,409 6,023 9,035 B. D. Kenyon 1,810 1993 - 1995 724 1,810 2,7153,700 1995-1997 1,480 3,700 5,550 W. B. Timmerman 1,580 1993 - 1995 632 1,580 2,3703,220 1995-1997 1,288 3,220 4,830 G. J. H. Young 950 1993 - 1995 380 950 1,425 R. W. Stedman 950 1993 - 1995 380 950 1,425Bullwinkel 1,940 1995-1997 776 1,940 2,910 J. L. Skolds 1,940 1995-1997 776 1,940 2,910
Defined Contribution Plans Under the Savings Plan, most of the Company's employees may contribute up to 15% of their eligible earnings. The Company matches each employee's contribution on a dollar-for-dollar basis up to a maximum of 6% of the participant's eligible earnings as limited by the Internal Revenue Code (IRC). Both Company and employee contributions are invested in SCANA's Common Stock. In addition to the Savings Plan, SCANA has a Supplementary Voluntary Deferral Plan (the "Supplementary Plan") for certain highly compensated employees of the Company and other SCANA subsidiaries. The Supplementary Plan is designed to provide employees whose participation in the Savings Plan is limited by the IRC with the ability to contribute and receive matching contributions in the same percentage as employees generally. However, unlike the Savings Plan where actual shares of SCANA Common Stock are acquired, under the Supplementary Plan the deferred amounts and matches are only accounted for as though shares of common stock had been purchased. Defined Benefit Plans61 DEFINED BENEFIT PLANS In addition to the qualified Retirement Plan for all employees, the Company has Supplemental Executive Retirement Plans ("SERP") for certain eligible employees, including officers. A SERP is an unfunded plan which provides for benefit payments in addition to those payable under a qualified retirement plan. It maintains uniform application of the Retirement Plan benefit formula and would provide, among other benefits, payment of Retirement Plan formula pension benefits, if any, which exceed those payable under the IRCInternal Revenue Code ("IRC") maximum benefit limitations. The following table illustrates the estimated maximum annual benefits payable upon retirement at normal retirement date under the Retirement Plan and the SERPs. Pension Plan Table Final Service Years Average Pay 15 20 25 30 35 $150,000 42,311 56,415 70,519 84,623 87,476 200,000 57,311 76,415 95,519 114,623 118,726 250,000 72,311 96,415 120,519 144,623 149,976 300,000 87,311 116,415 145,519 174,623 181,226 350,000 102,311 136,415 170,519 204,623 212,476 400,000 117,311 156,415 195,519 234,623 243,726 450,000 132,311 176,415 220,519 264,623 274,976 500,000 147,311 196,415 245,519 294,623 306,226 550,000 162,311 216,415 270,519 324,623 337,476 600,000 177,311 236,415 295,519 354,623 368,726 The compensation shown in the column labeled "Salary" of the Summary Compensation Table for the individuals named therein is covered by the Retirement Plan and/or a SERP. As of December 31, 1995, Messrs. Gressette, Kenyon, Timmerman, Bullwinkel and Skolds had credited service under the Retirement Plan (or its equivalent under the SERP) of 33, 22, 17, 25 and 10 years, respectively. Benefits are computed based on a straight-life annuity with an unreduced 60% surviving spouse benefit. The amounts in this table assume continuation of the primary Social Security benefits in effect at January 1, 19941996 and are not subject to any deduction for Social Security or other offset amounts. 69 Pension Plan Table Final Service Years Average Pay 15 20 25 30 35 $125,000 35,130 46,840 58,550 70,260 72,595 150,000 42,630 56,840 71,050 85,260 88,220 175,000 50,130 66,840 83,550 100,260 103,845 200,000 57,630 76,840 96,050 115,260 119,470 225,000 65,130 86,840 108,550 130,260 135,095 250,000 72,630 96,840 121,050 145,260 150,720 300,000 87,630 116,840 146,050 175,260 181,970 350,000 102,630 136,840 171,050 205,260 213,220 400,000 117,630 156,840 196,050 235,260 244,470 450,000 132,630 176,840 221,050 265,260 275,720 500,000 147,630 196,840 246,050 295,260 306,970 The compensation shown in Column (c) of the Summary Compensation Table for the individuals named therein is covered by the Retirement Plan and/or a SERP. Messrs. Gressette, Kenyon, Timmerman, Young and Stedman now have credited service under the Retirement Plan (or its equivalent under the SERP) of 31, 20, 15, 31 and 21 years, respectively. The Company also has a Key Employee Retention Program (the "Key Employee Retention Program") covering officers and certain other executive employees that provides supplemental retirement and/or death benefits for participants. Under the program, the Company will payeach participant may elect to each participantreceive either a monthly retirement benefit for 180 months upon retirement at or after age 65 a monthly retirement benefit equal to 25% of the average monthly salary of the participant over his final 36 months of employment prior to age 65, or an optional death benefit payable to a participant's designated beneficiary monthly for 180 months, in an amount equal to 35% of the average monthly salary of the participant over his final 36 months of employment prior to age 65. In the event of the participant's death prior to age 65, the Company will pay to the participant's designated beneficiary for 180 months, a monthly benefit equal to 50% of such participant's base monthly salary in effect at death. All of the executive officers named in the Summary Compensation Table above are participating in the Key Employee Retention Program.program. Estimated annual retirement benefits payable at age 65 based on projected eligible compensation (assuming increases of 4% per year) to the five executive officers named in the Summary Compensation Table are as follows: Mr. Gressette - $106,863;$113,790; Mr. Kenyon - $126,347;$122,658; Mr. Timmerman - $105,411;$129,942; Mr. YoungBullwinkel - $56,013;$90,887; and Mr. StedmanSkolds - $66,729. Life Insurance Plans The Company offers its officers and certain other highly- compensated employees an option to choose whole life insurance (the "Whole Life Option") in lieu of the term life insurance provided employees generally. Under this plan, the employee becomes the owner of a policy with a death benefit of between $200,000 and $550,000 depending upon the salary grade of the employee. 70$93,234. 62 Termination, Severance and Change of Control ArrangementsTERMINATION, SEVERANCE AND CHANGE OF CONTROL ARRANGEMENTS The Company has a Key Executive Severance Benefit Plan (the "Severance Plan") intended to assure the objective judgment of, and to retain the loyalties of, key executives when the Company is faced with a potential change in control or a change in control by providing a continuation of salary and benefits after a participant's employment is terminated by the Company during a potential change in control, after a change in control without just cause, disability, retirement or death or by the participant for good reason after a change in control. All of the executive officers named in the Summary Compensation Table except Mr. Gressette have been designated as participants in the Severance Plan. When a potential change in control occurs, a participant is obligatedobli- gated to remain with the Company for six months unless his employment is terminated for disability or normal retirement or until a change in control occurs. Upon a change in control resulting in an officer's termination, the Severance Plan provides for guaranteed severance payments equal to three times the annual compensation of the officer plus payments under certain of the Company's incentive and retirement plans. The officer also would receive an additional amount (a "gross-up""gross- up" payment) for any IRC Section 4999 excess tax or any such other similar tax applicable to the severance payments. In addition, for 36 months after termination, the officer would receive coverage for medical benefits and life insurance so as to provide the same level of benefits previously enjoyed under group plans or individual policy contracts or otherwise as determined by the Executive Committee of the Board of Directors. Such benefits however would be reduced to the extent that the participant receives similar benefits during the period from another employer. In addition to the Severance Plan, in the event of a merger, consolidation or acquisition in which SCANA is not the surviving corporation, target awards under the Performance Share Plan will become immediately payable based on SCANA's shareholder return performance as of the end of the most recently completed calendar year for each performance period as to which the grant of target shares has occurred at least six months previously. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION There areDuring 1995, no executive officer-director interlocks where an executiveofficer, employee or former officer of the Company serves on the compensation committee of another company that has an executive officer serving on the Company's Board of Directors. Messrs. Hipp, McMaster, Rhodes and Warren are all membersor its affiliates served as a member of the Long-Term Compensation Committee which administersor the Performance Share Plan. Messrs. Hipp and Rhodes also are membersCommittee, except Mr. Gressette who served as a member of the Performance Committee. Although Mr. Gressette was an ex-officio, nonvoting member of the Performance Committee which generally handles all otherduring 1995, he did not participate in any of its deliberations concerning executive compensation matters. Mr. Warren was the Chief Executive Officer ofofficer compensation. Since January 1, 1995, the Company from April 23, 1986 until January 31, 1990. Information with respect tohas engaged in business transactions with entities with which Messrs. Hipp,Mr. Chapman (Chairman of both the Performance Committee and the Long-Term Compensation Committee) and Mr. McMaster Rhodes and Warren are connected are described below. Mr. Gressette, Chairman of the Board and Chief Executive Officer of the Company, is an ex-officio (i.e. nonvoting)(a member of the Performance Committee.Long-Term Compensation Committee) are executive officers. Mr. Chapman is Chairman of NationsBank South, a division of NationsBank Corporation. Since January 1, 1995, the Company has engaged in various transactions in which affiliates of NationsBank Corporation acted as lender or provider of lines of credit or credit support to the Company and its affiliates. The Performance Committee receives his input on compensation matters concerning executive compensation of other officers but the committee deliberates and makes its decisions without his participation. Mr. Rhodes is the Chairman and Chief Executive Officer of Rhodes Oil Company, Inc. Purchases from Rhodes Oil Company, Inc. totaling $62,500 for fuel oil and gasoline were madeamount paid during 19931995 by the Company.Company and its affiliates to NationsBank Corporation affiliates on account of such transactions was $3,339,270. It is anticipated that transactions such purchasesas described above will continue in the future. Mr. McMaster is the President and Manager of Winnsboro Petroleum Company. Purchases from Winnsboro Petroleum Company totaling $77,549$71,413 for fuel oil and gasoline were made during 19931995 by the Company.Company and its affiliates. It is anticipated that such purchases will continue in the future. 71 During 1995, there existed one executive officer-director interlock where an executive officer of SCANA Corporation served as a director of another company that had an executive officer serving on one of the SCANA Board of Directors' committees which deals with compensation matters. Mr. Gressette, Chairman of the Board and Chief Executive Officer of the Company, served as a director of The Liberty Corporation and Mr. Hipp, is the President and Chief Executive Officer of The Liberty Corporation. Mr. Hipp and John A. Warren are Directors of The Liberty Corporation. During 1993 certainCorporation, served as a member of the insurance policies purchased by the Company on the livesCompany's Long-Term Compensation Committee. 63 Compensation of employeesDirectors Fees. During 1995, directors who were written by Liberty Life Insurance Company, a subsidiary of the Liberty Corporation, and it is expected that this relationship will continue in the future. The total amount paid during 1993 by the Company to Liberty Life Insurance Company was $538,905. COMPENSATION OF DIRECTORS Fees All of the Directorsnot employees of the Company are also Directors of SCANA. During 1993, directors who are not employees of SCANA or its subsidiaries were each paid $14,500$16,000 annually for services rendered, plus $1,500$1,800 for each Board meeting attended and $700$850 for attendance at a committee meeting which is not held on the same day as a regular meeting of the Board. The fee for attendance at a telephone conference meeting is $150.$200. The fee for attendance at a conference is $500.$850. In addition, Directorsdirectors are paid, as part of their compensation, travel, lodging and incidental expenses related to attendance at meetings and conferences. Directors who are employees of SCANAthe Company or its subsidiariesaffiliates receive no compensation for serving as directors or attending meetings. Deferral Plan The CompanyPlan. SCANA has a plan pursuant to which directors may defer all or a portion of their fees for services rendered and meeting attendance. Interest is earned on the deferred amounts at a rate set by the Performance Committee. During 19931995 and currently, the rate is set at the announced prime rate of TheWachovia Bank of South Carolina National Bank. During 1993,Carolina. Mr. Cassels and Mr. Rhodes were the only directordirectors participating in the plan wasduring 1995. Mr. Rhodes. InterestCassels became a participant in January 1994 and Mr. Rhodes in July 1987, and interest credited to Mr. Rhodes'their deferral accountaccounts during 19931995 was $8,526.$3,591.94 and $19,557.86, respectively. Endowment PlanPlan. Each director participates in the Directors' Endowment Plan, which provides for the Company tothat SCANA make a tax deductible, charitable contribution totaling $500,000 to institutions of higher education nominated by the director. A portion is contributed upon retirement of the director and the remainder upon the director's death. The plan is funded in part through insurance on the lives of the directors. Designated in-state institutions of higher education must be approved by the Chief Executive Officer of SCANA andSCANA; any out-of-stateout-of- state designation must be approved by the Performance Committee. The designated institutions are reviewed on an annual basis by the Chief Executive Officer to assure compliance with the intent of the program. The plan is intended to reinforce SCANA's commitment to quality higher education and is intended to enhance SCANA's ability to attract and retain qualified board members. 72 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT All shares of the Company's Common Stock are held, beneficially and of record, by SCANA Corporation. The table set forth below indicates as of March 10, 1994, the shares of SCANA's Common Stock beneficially owned as of March 8, 1996 by each continuing director and nominee, each of the executive officers named in the Summary Compensation Table on page 66,59, and the directors and executive officers of the Company as a group. SECURITY OWNERSHIP OF MANAGEMENT Name of Beneficial Amount and Nature Name of Beneficial Amount and Nature Owner of Ownership (1)1 Owner of Ownership (1)1 B. L. Amick 1,2432,486 W. H.Hayne Hipp 1,4002,800 W. B. Bookhart, Jr. 6,88415,761 B. D. Kenyon 4,78218,883 G. J. Bullwinkel 17,255 F. C. McMaster 5,630 W. T. Cassels, Jr. 1,000 F. C. McMaster 10,2882,000 Henry Ponder 12,381 H. M. Chapman 3,127 Henry Ponder 4,8066,000 J. B. Rhodes 7,780 J. B. Edwards 2,2174,665 J. B. Rhodes 3,434L. Skolds 6,414 E. T. Freeman 1,5004,220 W. B. Timmerman 12,88936,459 L. M. Gressette, Jr. 14,64947,493 E. C. Wall, Jr. 7,00014,000 B. A. Hagood 1,140 John A. Warren 50,823 J. H. Young 5,108 R. W. Stedman 6,4742,370 All directors and executive officers as a group (18(21 persons) TOTAL 138,764247,243 TOTAL PERCENT OF CLASS 0.3% (1)0.2% The information set forth above as to the security ownership has been furnished to the Company by such persons. _____________________ 1 Includes shares owned by close relatives, the beneficial ownership of which is disclaimed by the director or nominee, as follows: Mr. Amick - 240;480; Mr. Bookhart - 1,913; Mr. Chapman - 127;4,498; Mr. Gressette - 530;1,060; Mr. Hagood - 159;334; Mr. McMaster - 6,365; Mr. Warren - 7,160.2,000. Includes shares purchased through December 31, 1993,1995, but not thereafter, by the Trustee under the Savings Plan. The information set forth above as to the security ownership has been furnished to the Company by such persons.64 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS For information regarding certain relationships and related transactions, see Item 11.,11, "Compensation Committee Interlocks and Insider Participation." 73 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K Financial Statements and Schedules See Index to Consolidated Financial Statements and Supplementary Data on page 28.30. Exhibits Filed Exhibits required to be filed with this Annual Report on Form 10-K are listed in the Exhibit Index following the signature page. Certain of such exhibits which have heretofore been filed with the Securities and Exchange Commission and which are designated by reference to their exhibit number in prior filings are hereby incorporated herein by reference and made a part hereof. As permitted under Item 601(b)(4)(iii), instruments defining the rights of holders of long-term debt of less than 10 percent of the total consolidated assets of the Company and its subsidiaries, have been omitted and the Company agrees to furnish a copy of such instruments to the Commission upon request. Reports on Form 8-K The Company filed a report on Form 8-K on January 13, 1994 in response to Item 5, "Other Events" regarding the settlement with Westinghouse Electric Corporation of a lawsuit relating to the steam generators provided to the Company's Summer Station. 74None 65 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (REGISTRANT) SOUTH CAROLINA ELECTRIC & GAS COMPANY BY (SIGNATURE) s/Bruce D. Kenyon (NAME AND TITLE) Bruce D. Kenyon, President and Chief Operating Officer DATE February 15, 199420, 1996 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. (i) Principal executive officer: BY (SIGNATURE) s/L. M. Gressette, Jr. (NAME AND TITLE) L. M. Gressette, Jr., Chairman of the Board, and Chief Executive Officer and Director DATE February 15, 199420, 1996 (ii) Principal financial officer: BY (SIGNATURE) s/W.K. B. TimmermanMarsh (NAME AND TITLE) W.K. B. Timmerman,Marsh, Chief Financial Officer DATE February 15, 199420, 1996 (iii) Principal accounting officer: BY (SIGNATURE) s/J. E. Addison (NAME AND TITLE) J. E. Addison, Vice President and Controller DATE February 15, 199420, 1996 BY (SIGNATURE) s/B. L. Amick (NAME AND TITLE) B. L. Amick, Director DATE February 15, 199420, 1996 BY (SIGNATURE) s/W. B. Bookhart, Jr. (NAME AND TITLE) W. B. Bookhart, Jr., Director DATE February 15, 199420, 1996 BY (SIGNATURE) s/W. T. Cassels, Jr. (NAME AND TITLE) W. T. Cassels, Jr., Director DATE February 15, 199420, 1996 BY (SIGNATURE) s/H. M. Chapman (NAME AND TITLE) H. M. Chapman, Director DATE February 15, 199420, 1996 BY (SIGNATURE) s/J. B. Edwards (NAME AND TITLE) J. B. Edwards, Director DATE February 15, 1994 7520, 1996 66 BY (SIGNATURE) s/E. T. Freeman (NAME AND TITLE) E. T. Freeman, Director DATE February 15, 199420, 1996 BY (SIGNATURE) s/B. A. Hagood (NAME AND TITLE) B. A. Hagood, Director DATE February 15, 199420, 1996 BY (SIGNATURE) s/W. Hayne Hipp (NAME AND TITLE) W. Hayne Hipp, Director DATE February 15, 199420, 1996 BY (SIGNATURE) s/F. C. McMaster (NAME AND TITLE) F. C. McMaster, Director DATE February 15, 199420, 1996 BY (SIGNATURE) s/Henry Ponder (NAME AND TITLE) Henry Ponder, Director DATE February 15, 199420, 1996 BY (SIGNATURE) s/W. B. Timmerman (NAME AND TITLE) W. B. Timmerman, Director DATE February 20, 1996 BY (SIGNATURE) s/J. B. Rhodes (NAME AND TITLE) J. B. Rhodes, Director DATE February 15, 199420, 1996 BY (SIGNATURE) s/E. C. Wall, Jr. (NAME AND TITLE) E. C. Wall, Jr., Director DATE February 20, 1996 67 SOUTH CAROLINA ELECTRIC & GAS COMPANY Sequentially EXHIBIT INDEX Numbered Number Pages 2. Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession Not Applicable 3. Articles of Incorporation and By-Laws A. Restated Articles of Incorporation of the Company as adopted on December 15, 1993 (Exhibit 3-A to Form 10-Q for the quarter ended June 30, 1994, BY (SIGNATURE) s/JohnFile No. 1-3375).................... # B. Articles of Amendment, dated June 7, 1994, filed June 9, 1994 (Exhibit 3-B to Form 10-Q for the quarter ended June 30, 1994, File No. 1-3375).... # C. Articles of Amendment, dated November 9, 1994 (Exhibit 3-C to Form 10-K for the year ended December 31, 1994, File No. 1-3375)...................... # D. Articles of Amendment, dated December 9, 1994 (Exhibit 3-D to Form 10-K for the year ended December 31, 1994, File No. 1-3375)...................... # E. Articles of Correction, dated January 17, 1995 (Exhibit 3-E to Form 10-K for the year ended December 31, 1994, File No. 1-3375)...................... # F. Articles of Amendment, dated January 13, 1995 and filed January 17, 1995 (Exhibit 3-F to Form 10-K for the year ended December 31, 1994, File No. 1-3375)......................................... # G. Articles of Amendment dated March 31, 1995 (Exhibit 3-G to Form 10-Q for the quarter ended March 31, 1995, File No. 1-3375)................... # H. Articles of Correction - Amendment to Statement filed March 31, 1995, dated December 13, 1995 (Filed herewith)......................................... 71 I. Articles of Amendment dated December 13, 1995 (Filed herewith)......................................... 72 J. Copy of By-Laws of the Company as revised and amended thru December 15, 1993 (Exhibit 3-AZ to Form 10-K for the year ended December 31, 1993, File No. 1-3375)......................................... # 4. Instruments Defining the Rights of Security Holders, Including Indentures A. Warren (NAME AND TITLE) JohnIndenture dated as of January 1, 1945, from the South Carolina Power Company (the "Power Company") to Central Hanover Bank and Trust Company, as Trustee, as supplemented by three Supplemental Indentures dated respectively as of May 1, 1946, May 1, 1947 and July 1, 1949 (Exhibit 2-B to Registration No. 2-26459)................................ # B. Fourth Supplemental Indenture dated as of April 1, 1950, to Indenture referred to in Exhibit 4A, pursuant to which the Company assumed said Indenture (Exhibit 2-C to Registration No. 2-26459)...... # C. Fifth through Fifty-second Supplemental Indentures to Indenture referred to in Exhibit 4A dated as of the dates indicated below and filed as exhibits to the Registration Statements and 1934 Act reports whose file numbers are set forth below.............................................. # December 1, 1950 Exhibit 2-D to Registration No. 2-26459 July 1, 1951 Exhibit 2-E to Registration No. 2-26459 June 1, 1953 Exhibit 2-F to Registration No. 2-26459 June 1, 1955 Exhibit 2-G to Registration No. 2-26459 November 1, 1957 Exhibit 2-H to Registration No. 2-26459 September 1, 1958 Exhibit 2-I to Registration No. 2-26459 September 1, 1960 Exhibit 2-J to Registration No. 2-26459 # Incorporated herein by reference as indicated. 68 SOUTH CAROLINA ELECTRIC & GAS COMPANY Exhibit Index (Continued) Sequentially Numbered Number Pages 4. (continued) June 1, 1961 Exhibit 2-K to Registration No. 2-26459 December 1, 1965 Exhibit 2-L to Registration No. 2-26459 June 1, 1966 Exhibit 2-M to Registration No. 2-26459 June 1, 1967 Exhibit 2-N to Registration No. 2-29693 September 1, 1968 Exhibit 4-O to Registration No. 2-31569 June 1, 1969 Exhibit 4-C to Registration No. 33-38580 December 1, 1969 Exhibit 4-Q to Registration No. 2-35388 June 1, 1970 Exhibit 4-R to Registration No. 2-37363 March 1, 1971 Exhibit 2-B-17 to Registration No. 2-40324 January 1, 1972 Exhibit 4-C to Registration No. 33-38580 July 1, 1974 Exhibit 2-A-19 to Registration No. 2-51291 May 1, 1975 Exhibit 4-C to Registration No. 33-38580 July 1, 1975 Exhibit 2-B-21 to Registration No. 2-53908 February 1, 1976 Exhibit 2-B-22 to Registration No. 2-55304 December 1, 1976 Exhibit 2-B-23 to Registration No. 2-57936 March 1, 1977 Exhibit 2-B-24 to Registration No. 2-58662 May 1, 1977 Exhibit 4-C to Registration No. 33-38580 February 1, 1978 Exhibit 4-C to Registration No. 33-38580 June 1, 1978 Exhibit 2-A-3 to Registration No. 2-61653 April 1, 1979 Exhibit 4-C to Registration No. 33-38580 June 1, 1979 Exhibit 4-C to Registration No. 33-38580 April 1, 1980 Exhibit 4-C to Registration No. 33-38580 June 1, 1980 Exhibit 4-C to Registration No. 33-38580 December 1, 1980 Exhibit 4-C to Registration No. 33-38580 April 1, 1981 Exhibit 4-D to Registration No. 33-49421 June 1, 1981 Exhibit 4-D to Registration No. 2-73321 March 1, 1982 Exhibit 4-D to Registration No. 33-49421 April 15, 1982 Exhibit 4-D to Registration No. 33-49421 May 1, 1982 Exhibit 4-D to Registration No. 33-49421 December 1, 1984 Exhibit 4-D to Registration No. 33-49421 December 1, 1985 Exhibit 4-D to Registration No. 33-49421 June 1, 1986 Exhibit 4-D to Registration No. 33-49421 February 1, 1987 Exhibit 4-D to Registration No. 33-49421 September 1, 1987 Exhibit 4-D to Registration No. 33-49421 January 1, 1989 Exhibit 4-D to Registration No. 33-49421 January 1, 1991 Exhibit 4-D to Registration No. 33-49421 February 1, 1991 Exhibit 4-D to Registration No. 33-49421 July 15, 1991 Exhibit 4-D to Registration No. 33-49421 August 15, 1991 Exhibit 4-D to Registration No. 33-49421 April 1, 1993 Exhibit 4-E to Registration No. 33-49421 July 1, 1993 Exhibit 4-D to Registration No. 33-57955 D. Indenture dated as of April 1, 1993 from South Carolina Electric & Gas Company to NationsBank of Georgia, National Association (Filed as Exhibit 4-F to Registration Statement No. 33-49421)......................................... # E. First Supplemental Indenture to Indenture referred to in 4-D dated as of June 1, 1993 (Filed as Exhibit 4-G to Registration Statement No. 33-49421)......................... # F. Second Supplemental Indenture to Indenture referred to in 4-D dated as of June 15, 1993 (Filed as Exhibit 4-G to Registration Statement No. 33-57955)......................... # 9. Voting Trust Agreement Not Applicable 10. Material Contracts A. Warren, Director DATE February 15, 1994 76Copy of Supplemental Executive Retirement Plan (Exhibit 10-A to Form 10-K for the year ended December 31, 1980)............................................ # 11. Statement Re Computation of Per Share Earnings Not Applicable # Incorporated herein by reference as indicated. 69 SOUTH CAROLINA ELECTRIC & GAS COMPANY Exhibit Index (Continued) Sequentially Numbered Number Pages 12. Statement re Computation of Ratios (Filed herewith)........ 74 13. Annual Report to Security Holders, Form 10-Q or Quarterly Report to Security Holders Not Applicable 16. Letter Re Change in Certifying Accountant Not Applicable 18. Letter Re Change in Accounting Principles Not Applicable 21. Subsidiaries of the Registrant Not Applicable 22. Published Report Regarding Matters Submitted to Vote of Security Holders Not Applicable 23. Consents of Experts and Counsel Consent of Deloitte & Touche LLP.......................... 78 24. Power of Attorney Not Applicable 27. Financial Data Schedule Filed herewith 28. Information from Reports furnished to State Insurance Regulatory Authorities Not Applicable 99. Additional Exhibits Not Applicable # Incorporated herein by reference as indicated. 70