ML20050B201

Annual Financial Rept 1981

ML20050B201
Person / Time
Site:	Summer
Issue date:	03/25/1982
From:	SOUTH CAROLINA ELECTRIC & GAS CO.
To:
Shared Package
ML20050B196	List: ML20050B195 ML20050B201 ML20050B205
References
NUDOCS 8204050092
Download: ML20050B201 (43)

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Tcble of Contents FinancialandOperatingHighlights 1

Consolidated FinancialStatements 20-30 Report toShareholders 2,3 CorporateStockInformation 31 Management's Discussion and Analysis SelectedFinancialData 32.33 of Financial Condition and Supplementary Financial Statements ResultsofOperations 4-17 Adjusted forChangingPrices 34,35 Map of Service Area 18 BoardofDirectors 36 Management Report 19 Officers and Supplemental Investor and Opinion of Independent Certified Corporatelnformation insideBack Cover PublicAccountants 19 i

Financialand Opercting Highlights sOumCAROUNAEICDUCa CASCOMPANY

% Increase 1980 1979 (a)

(Decrease)

(Millions of Dollars except statistics and per share amounts) l Oper: ting Revenues Electric S 470.8 5 401.3 17.3 l

Cas 157.6 138.4 13.9 Transportation (coach) 2.3 2.1 9.5 Total Operating Revenues S 630.7 5 541.8 16.4 Operztion and Maintenance Expenses (Excluding Taxes and Depreciation)

Fuel used in electric generation S 205.0 S 185.6 10.5 Power purchased, net (credit) 12.9 (5.8)

Gas purchased for resale 121.6 110.7 9.8 Other operation 58.0 49.1 18.1 Maintenance 30.2 24.7 22.3 Total S 427.7 S 364.3 17.4 Earnings Available for Common Stock Amount S

50.8 5

43.4 17.1 Per common share (Based on weighted average number of shares outstanding)

S 2.02 7

1.81 9.8 Dividends Declared on common S

44.0 39.7 10.8 Per common share 1.74 S

1.68 3.6 Common Stockholders' Equity Amount S 486.2 S 449.4 8.2 Per common share (Book Value-year-end)

$ 18.51 5 18.57

(.3)

Common Stock Outstanding Average-theusands 25,148 23,540 6.8 Year-end-thousands 26,261 24,195 8.5 Plant and Construction Costs Total utility plant (includes nuclear fuel)

S 1,952.3

$ 1,801.3 8.2 Construction expenditures (includes nuclear fuel)

$ 153.6

$ 147.5 4.1 Allowance for equity and borrowed funds used during construction S

33.7 5

29.5 14.2 Electric Statistics Customers-year-end 344,588 336,700 2.3 Total sales (million kwh) 11,809 11,252 5.0 Territorial peak-load (megawatts) 2,489 2,299 8.3 Per residential customer:

Average use (kwh) 12,580 11,627 8.2 Average rate (per kwh)

S.0499

$.0164 7.5 Grs Statistics Customers-year-end 166,470 164,277 1.3 Total sales (million therms) 507 545 (7.0)

Per residential customer:

Average use (therms) 682 684

(.3)

Average rate (per therm)

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.34 29.4 (a) Restated-See Note 2.

1

Fellow Shareholders l

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a testing. t omphant e with regulatory pro-tedures and o'her matters betore the v

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c ommern ement et commert tal operation.

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. i llow es er the lompany has icarned that the NRL may not be able to issue

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, f the inense in a timely tashion Such y-e s

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C ompans management. The l ompany

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n pursuing s igorously every appropriate

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l'ubbi Servne Authority are iomt owners et the 000 000 kilowatt Summer Vir gil ( Su:nmet and Arthur M. Mhams 5tation on the,nasis of two-thirds by the compant and one-third by the Authority and w dl partn ipate on a hke basis in tbe t osts et ionstrudion iosts or w t h (.u ana l leur n & (;as t ompan s

opt ut ons dur:ng 580 t onunard to be operanon and the energy output.

a d i e r st l attet ted b' irtiath n rt t i'rd-

\\ lost of the technnal and operahonal l

bn aL ;ng at rest utes and tur bu!ent meditn atmns mandated f or nutlear ap:ta, nutr kets p(>wer plants as a result or the attident

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l'r M I T d s.1% tht rt sU!t ot r ht' pass at } hree blde [sland have already been m ch a heer tta l osts tor e:n o n incorporated mto the Sumrner stanon.

i a nt t.it < and na' u rai gas t 6 r resa!i Io ti ntorm to ret ent NRL guidelines.

aes tu : cast ' le a e has e reorganved and t onsohd ited a ept canng n s t :

I at m audhit, m o won s etL our operanon ean r-ponsibinnes u t !t

's) ajy ! sim.lte!L b undt r Ibt' PL's!Ilt m _'nl'Ivnepresnenfdn mm,_n_

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.m-m _a t::e, n;.n ' or hight r r ates tist he' We have alsin begun preparatains to i :es on and na" a! gas I armne pt r

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sk su ic80 wert the vn mity or the nm irar station and a

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I for the Company to receive a cash settle-investigations an integral part of long-meeting the energy needs of its ment, some uranium and equipment and l range planning for elettric production.

customers with good service and services, induding f uel fabricatiot,

During the past year, the Company reasonable rates while providing a at a discount.

has developed long-range goals and fair rate of return to its investors.

In December 1980, the South Carolina objectives that indude improving the We look forward to meeting the State Supreme Court reversed a ruling financial position of the Company and challenges and opportunities of the of the South Carolina Public Service concentrating managerial efforts on coming year with confidence in the Commission (PSC) that had required the controlling expenses and increasing talent and dedication of our employees Company to refund to its retail electric efficiency.

and the support of our investors.

customers more than 57 million. The Additionally, we will continue to PSC had ordered the refund as part of a upgrade our capability to meet the rate order issued in December 1977. The service needs of our customers, improve For the Board of Directors.

Supreme Court, in finding in favor of the utilization and development of man-the Company, held that the refund power within the Company and develop.

Would amount to retroactive ratemaking, and implement strategic planning in a practice prohibited by state law.

such areas as conservation, co-I

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The PSC issued an order in June 1080 generation, load management and Arthur M. Williams approving an increase in retail electric alternate energy sources.

l Chairmam of the Board rates designed to produce approximately We were saddened by the death in j

533.5 million annually in test year

June of S. Jane Dent, assistant secretary revenues. This increase was about 86%

i and by the loss of Spencer R. McMaster, 3$-

' C,bwe direc tor emeritus, who died in of the Company's initial request whic h i

had been f ded in June 1079 and collected l December.

l Virgil C. Summer under the state's bonding statute since South Carolina Electric & Cas President and July 1979.

Company remains committed to i Chief Executive Officer The Company has completed (hanges in policies and procedures required to l

comply with certain sections of the l,

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Public Utility Regulatory Policies Act.

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These changes, for the most part, relate

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customer information requirements.

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The Company is one of the finabsts j,y l

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in brisk (ompetition tor a Department l.'

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f of Energy (DOE) grant to operate an y

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proic(t, it approved and f unded would

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be wnstrut ted with DOE f unds on a

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hydroelet tric stations as well as ways to y.

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MUSIC OF THE WATERS Management's Discussion and Analysis of Financial Condition and Results of Operations

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Two of the Company's largest continuing investments available to prospective g

expenditures are for fuel and gas pur-purchasers. These in turn are affected by a- [k, W g chased for resale, which are operating the Company's ability to achieve certain g

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• A' A i expenses, and for financing costs long-term financial goals, such as an gb,! d' (interest and dividendst adequate rate of return on stockholders' y

Cdumbia Canal-opening day Fuel and gas prices are set basically by equity, a properly balanced capital November 21,1891 market conditions beyond t he Company's structure, sulficient coverage of fixed control. Ifowever, the Company strives charges, reasonable levels of internally Hydroelectric power generation, to improve its efficiency in converting generated funds, and consistent dividend in recent years, I;as begun to re-coal and oilinto electricity. According growth (see Charts 1 through 5).

clairn a conspicuous position in to the most recent report released by the The attainment of these goals is the field of energy production, industry publication Electric Light and primarily dependent upon the Company The resninption of its popu.

Powr, the Company's fossil-fueled receiving adequate and timely rate relief, larity is a result of econornic generating system was the fourth most and is also dependent upon the Com-elficient of the 100 systems surveyed pany achieving a high degree of factors, new technologies and 0"0"M I9

• P ' i"" ' ''"'Y' environtncntal considerations.

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Y At South Carolina Electric & Gas chise as a pubhc utility to ensure that Cornpany, tin.s resurnptton is evs-it has the capability to adequate;y serve Tile COMPANY'S FINANCIAL denced by the cornpletion two the ongoing demands of its customers.

CONDITION AT YEAR-END 1980 years ago of our linrfield Purnved in recent years, this has resulted in a Storage Hydro Plant, the largest large construoion program in order to Liquidity hydro station in our systern, as build the generating and other f acilities A fundamental test of a company's well as by renewed interest in needed to maintain reliable service.

financial condition is its degree of hydro sites once considered Construction costs, including the costs liquidity. Liquidity refers to the ability econornically irnpractical.

of financing construction, ultimately of an enterprise to generate adequate Hydro power holds a historic impact operating expenses and rate-amounts of cash, whether from internal

[ dace in the corporate picture of payers because a utility is entitled to or external sources, to meet the enter-electric 2.ad natur 1 gas r tes which pro-prise's needs for cash.

SCE6G. Colarnbia Canal Hydro vide a reasonable rate of return on the The Company's principal source of gggg gg gfg mvestment in the project, mcluding internally generated cash is the flow of having entered conirnercial opera-f nancing costs.

payments from its customers for the fron in 1894. linproved and The construction program has been electricity and natural gas sold. During updated, it continues to provide financed primarily with the proceeds 1980, the average collection period for dependable electric power with a from the sale of securities and, to a custemer accounts receivable was one current capacity of sorne 10,000 lesser extent, through internally month or less. The colleoion period has kilowatts.

generated funds. As a result, financing improved over the past three years, but Aside froin its special place in costs (interest and dividends) have has recently showed signs of slowing.

the Company's history, Colutnbia steadily increased.

The Company has two principal Canal holds a unique place in the Interest and dividend costs, in short-term external sources of liquidity-industrialdevelopinent of the general. are also set by prevailing borrowings from commercial banks and market conditions beyond the control of the sale of short-term unsecured 1.O.U.'s state of South Carolina and in the Company. flowever, within the called " commercial paper". The the teatile industry in particular, limitations of general financial con-Company uses these sources of cash to having provided the energy to ditions, the interest and dividend costs balance the inflows and outflows of cash power the world' first electn,cally-of capital raised through the issuance of in the course of normal operations, and s

operated featile inill.

both debt and equity securities is to pay for the construction of new Columbia Canal Hydroelectric directly affected by the Company's credit facilities pending permanent financing plant was the result of the vision worthiness and the relative attractiveness (see Note 8 of the Notes to Consolidated and detennination of carly et its secunties compared to other Financial Statements).

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g.

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3 x- ~.. s 3A. x 1

y.

%g.

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s g i -Q '

j#

m

. p, f ' 4.g g tion, investors utilize a ratio of earnings A

c. 4 CHART 1 to fixed charges prescribed by the Secur-

. J[ d..-Q '; % g

• f ;. y 9.yJ Return on Year-End ities and Exchange Commission (SEC) as Q.

Common Equityrenccur; a basis for comparing companies within i.

fjr

~ ' -

' 4' the same industry. These ratios are

~

+N'1 n o%

viewed as margin of safety indicators i'"

4' '

3 for holders of fixed income securities.

su%

At December 31,1980, the Company's j

.r~T first mortgage bond indenture limited

] g,

%,1

,J: $. ~

10.4 %

,., N y A em d WhM M6 wM 85%

$.2,,(p e- $.y fy,

could have been issued, except for Ch 4,' J ~ '")

certain refunding issues, to $129 million,

, %,- C -

$. (..,-

assuming an interest rate of 14 %% on t

." :,., f g the additional bonds. At that date, the 4

{

-f Q Qn 1 '.' r Company could not have issued any i

additional shares of preferred stock, Columb. Canal Hydro and since the specified level of coverage ia downtown Colurnbia of fixed charges and dividends could not he met.

businesstnen who recognized the The Restated Articles of Incorporation J

0 i

u financial potential of large-scale 8

0 limit the number of outstanding common te.tfile enterprises, shares to 30 million. At year-end,26.3 The canal, which provides miUion shares wcre outstanding. During the water supply for the plant, The Company has two limitations the Company's 1981 Annual Meeting, borders the Broad River for three affecting its ability to raise cash from schedukd for April 22, the Company s

""ICSI"8#"[##

"C s frotn these sources. Its Restated Articles of stockholders will vote on amending the downtown Colutnin.a,tbcstate,s inco,po,,, ion iimi,,se,o,,3, moon, o, 3,,i<ics,o,,isc,se nom 3c, or ou,3,,.

capital city. Originally dug by both short-and long-term unsecured iied shares to 40 million.

hand in the early 1800's to pro-debt incurred, other than for the financ-Vide water transportation around ing of poHution control f acilities, to 1980 Construction and shoals in the riUcr, the canal approximaiciy ten per cent of its ioiai rinancing Program c.tperienced only litnited success capitalization. At year-end 1980,541 The cash requirements for the Company's untilitnproved in the waning million in unsecured acbt was outstand-1980 construction activities were 5120 years of lbc 19tb Century.

ing. Under this limitation, an additional million, the largest part being spent on The canal was enlarged and

$103 million of unsecured debt couki the V.C. Summer Nuclear Station.

have been incurred at that time.

Exclusive of sinking fund requirements, new gates and locks installed and Als, the Federal Power Act limits an additional $56 million was needed to the accornplishment was heralded the Company's debt, whether secured refund maturing securities, raising the l

P"'

or unsecured, having a maturity of less Company's total 1980 capital require-than one year. The Federal Energy ments to $176 million.

Regulatory Commission has authorized To obtain these funds, the Company the Company to issue up to 512.3 million issued $50 million of 12.15% first of short-term debt consisting of promis-mortgage bonds in May, and one million sory notes and commercial paper with shares of common stock for 515.2 a final maturity date of not later than million and 200,000 shares of 11.08%

K December 31,1982.

preferred stock for $19.8 million in i# <[.3

1. imitations in the Company's first August. The Company's stockholders

?....

4

. p... :

mortgage bond indenture and its purchased 651,000 shares of common MJ =..

5. ~

q Restated Articles of Incorporation, stock through the Dividend Reinvest-

Af. ; " t

'h respectively, restrict the issuance of ment Plan, which generated 59 million

~. / '.g.:' f,L first mortgage bonds and preferred (see Chart 6). The sale of 415,000 F G1 stock, which are major sources of funds shares of common stock to the Com-a.....

y

.~ N -~

' ' 7.

for financing the Company's construc-pany's employees through employee

'l j tion program. The limitation on first plans produced an additional 56 million.

'*rg'..

mortgage bonds utilizes a ratio of The balance of the 1980 cash require-yg ~ N[f.. %. i h.'

.3.c.

W.

(_. a earnings to fixed charges and, that on ments was satisfied by short-term

. Q..t preferred stock, a ratio of earnings to borrowings and the issuance of commer-

' Y U N d ' ) [)* d '$

lixed charges plus preferred dividends.

cial paper by the Company and its fuel cY

- ~'~T V

In addition, although not a legal restric-subsidiary (see Note 4 of the Notes to O

Consolidated Financial Statements),

The Company's 1980 financing A

.. g

~

lMws,4(l 3 -

and by internally-generated funds.

program and operating results left its g 2

'~

As a result of conditions in the finan-capital structure slightly stronger at

'cu t.c.

_ ~;

cial markets and the fact that the year-end. The permanent capital repre-3

+

Company's rate of return on stock-sented by common stock equity made zMi g

s holders' equity was inadequate to up 33.7% of the Company's capital

. ~?,'

6. w.

support a market price equal to the structure at year-end 1980, as compared

>E

.

• 1. x e.

' h f-- g g ;

~

book value of the Company's common to 33.5% at year-end 1979, and 33.1% at r

- y stock, the net proceeds per share of new year-end 1978. One of the Company's y y.T,

. --. 7

.IE J

~

common stock sold were consistently long-term financial goals is to increase L [ T' ' F ' I I

below book value during 1980 (as had common stock equity to 40-42% (see been true in 1979). In 1980, this caused Chart 2).

N - 1.

1 J * ', ' 'd.. 7 the Company to sell 437,000 more shares Pre-tax earnings were higher in 1980 7 <C 36.

17

~

than would have been necessary had the than in the two previous years. However,

,4,3 y*( t

. ;7' net proceeds per share been equal to higher borrowing levels and record high 3

y7 # %Qg p j % [; M Q.. Q L]

the average book value during the year.

interest rates contributed to a decline in

' f $ %..

C.- Q-j Revenue requirements in 1981 to pay the fixed charges coverage ratio to 4

pg A *[k.; ~,( k,,

dividends on these additional 437,000 2.21 x at year-end, down from 2.24 x

..l.7 common shares, while maintaining the in 1979 and 2.67x in 1978 (calculated by expe(ted to be slightly over $2 million.

long-term financial goals is to raise the M s C.. ~

Q nj, recent ratio of dividends to earnings, are the SEC method). Gne of the Company's 1

e ' v,

.g

level of earnings to between three and

% O : 1 W JJJ 4-Capital Structure and four times the Company's fixed charges Coverage of fixed Charges (see Chart 3).

by much fanfare during cere-A company's long-term liquidity is monics held November 21,18571.

af fccted by the proportions of perma-FUTURE FINANCIAL CONDITION The occasion did not go un-nent and borrowed capital it has used The Company expects that its future recorded by fournalists. Under the to provide the facilities necessary to financial condition will be primarily headline, " Music of the Waters,"a serve its customers, and by its ability to affected by the adequacy and timing of reporter announced the event in refinance its financial obligations as they rate relief, the amounts and timing of the eloquent and wordy news-mature. This ability, in turn, is affected the Company's capital requirements, paperstyle of the day.

both by its capital structure and by the and by capital market conditions.

degree to which earnings cover fixed

,,Now the muggy waters of the charges (principally interest), and fixed Regulatory Procedures Broad River which, for so charges plus preferred dividends.

The Company's cash flow is directly many years have run idly by, affccted by t% rates it is allowed to wasting their latent energies in charge. The Company's retail rates are splashing over jagged rocks approved by The Publh Service Com.

and lapping the sister shores of mission of South Carolina (PSC)(see

[ air Columbia and old SaXe-CHART 2 Long-Term Capitalecmo

" Regulation and Rates" on page 17), and Gotha (now West Columbia its wholesale rates by the Federal Energy and Cayce) have been diverted see tongerm oemnct cunent ponion)

+ - Pretened Eque Regulatory Commission, m o the mest channel m the Three regulatory procedures also United lates, where, like the a Common Eau affect the Company's liquidity. First, waters of Lodore, they go I

fuel component of its retail electric rates.

the PSC presently allows the Company swirling and twirling and to forecast fuel costs when setting the whirling and hurling and hiss-ing and foaming and farring Electric fuel expenses, primarily the cost and sparring and twanging and of coal, represent the Company's largest whangmg--ready to play the ongoing monthly expenditure. Current foremost part m this new era i

PSC practices also allow the Company of Columbia's industrial to pass along any increase, and require progress.

m a

m a

m g

g Q

W it to pass along any decrease, in the cost bo modh @ h el of gas through a purchased gas adjust-ment clause.

was completed, it was acquired Secondly, a South Carolina state law by the Columbia Water Power enables utilities to place new retail rates Company, a predecessor of South l

1976 1977 1978 1979 1980 into effect, subject to refund with Carolina Electdc 6 Gas Com-l interest, thirty days af ter the iiling of a pany. Columbia Water Power 7

Company was headed by Aretas new rate application. This statute allows internally-generated funds.

Blood, a wealthy inanu[acturer the Company to adjust its revenues to The Company's current construction and financier from Mancirester, match higher costs on a more timely schedule calls for completion of con-New Hampshire. It was under basis. This ability to react quickly has struction of the Summer Station and its Blood's direction that the bemne em more important during readiness for fuel loading in late summer recent sustained periods of double-digit of 1081. However, the Company cannot Columbr. Canal's true value a

inflation.

load fuel prior to the issuance of an was reahzed.

Thirdly, the Company's cash flow is operating license by the Nuclear Regula-Blood proposed to take advan-also affected by the manner in which tory Commission (NRC). After fuel tage of the energy potential of regulatory bodies treat construction loading, approximately six months are the swift canal waters through work in progress for rate-making pur-expected to be required for start-up construction of a textile inill on poses. The Company's cash flow would testing, power ascension testing, com-its banks and organized Colutnbia be improved if the Company were per-pliance with regulatory procedures and Mills, Inc. to construct and mitted to earn the same rate of return other matters before commencement of operate flic inill. A large under-on all construction work in progress as commercial operation. If the NRC were allowed on P ant in service.

to issue an operating license permitting l

taking at best, the plan was the loading of fuel by December 1981, fraught with problems.

Construction and Financing Program as the Company presently contemplates, pirst, t;le mann acturing gujf'j-The Company's estimated cash require-commercial operation could commence ings should have been located ments for its 1981 construction program by June 1982.

between the canal and the river to totcl 5153 million. These funds will be In a recent report by the NRC Chair-provide meCbanical power [ rom used primarily for the V.C. Summer man to a U.S. House of Representatives water whccls, but bcCause space.

Nucicar Station (the Summer Station).

subcommittee, it was reported that, as a was not adcGuate, tbis was im.

In addition, approximately $44 million result of the NRC staff's re-examination praCllCal. The chosen site was in maturing obligations. exclusive of of the assumptions used in developing some 600 feet from the canal, sinking fund requirements. will need the target schedules for contested cases, to refunded.

the target dates in the NRC's schedule placing the building near the rail-This $197 million in total cash require-for issuance of the operating license that road and away from the danger high water. But it also put the

"' '"""#".cgon and maturing permits the loading of fuel for Summer of.ll too far away from the canal obligations is antiapated to Station were revised and lead '

.to a mi yie provit;ed, subject to capital market projected license completion date in June

! [or mecham. cal connectr.ons.

conditions and other factors. through 1982". In such an event, commercial About tlns time, Sidney B.

the sale of first mortgage bonds and operation of the Summer Station could Paine, a salesman with the newly equity securities, through obligations be delayed until late 1082. The Com-issued by the Company's fuel subsidiary.

pany finds this potential delay unaccept-i'

from short-term borrowings and from able and detrimental to its shareholders and its customers, and it is pursuing

'w x

{.? ]' 7 E,

every appropriate avenue to expedite

'f-1>,

?

...J CHART 3 the licensing process.

VSrc.

M-Eamings Coverage of If commercial operation were to com-

[Dy.

j g

$50. - ZE;..

Fixed Chargep mente by June 1982, which would be in g

accordance with the Company's current

,;..- J r, 1 N i*" i merone wcour rots;

.... -. ; y.d D '. T

(

construction schedule, the estimated kij[D 2.7x total cost (mcluding Allowance for

1. r e

2.sm funds Used During Construction) of g,..,

. f**'

2.2 2.2m the Summer Station would be approxi-

- *E -% ; _ ? w.g./. '

• q-mately $1.03 billion or $1,147 per g

.t 3

'j

[hkE s-/

kilowatt. Since the Summer Station is l 7 '.

-~; V [. y

.d owned jointly by the Company (two-

.. % wh t-O,4, j t..

thirds) and by the South Carolina Public 2-

• D 1. ( '

}

Service Authority (one-thirdt the Com-Q'.

.J,..;*NidLW{W pany's share of the total cost would be j

.c G.[j k

-.,,... ) i; M. % [ - {

the delay in the issuance of an operating approximately So 2 million. However, if o

l

.. ~,,7 l

license indicated in the NRC report were f.ps 1l4

'j w.-

,, VK 1 i

J in fact to occur, the resulting delay in

^ j(jj $4 "

)

the commencement of commercial opera-i..

1976 1977 1978 1979 1980 tion of the Summer Station would result

',.. '...;.,'. ?

.+t..>

,h in the total cost of the Summer Station y.

.< a i.-

S

emu, y

.,w y,,n.

... ~

v.,

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u., >. ;;

..).W_. g..-.,..

.(

SOurCOS Of Cash a

+ '

f n.,

f Requirements for 4.

' #J ' -O 3 D...

4th,, ap '.

Construction i ~

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a

1980 OPERATING RESULTS

~

' ~ " ' '

i CHART S I" "dd "" '" ' I'"" '""'d I

Earnings and Dividends above, a major item which has affected

_,ll per mmon Share the Company's results of operations in p

.V.

?.

Vi recent years is Allowance for Funds

-f Used During Construction (AFC). AFC is a utility accounting practice whereby j,

j g

a portion of the cost of capital funds

{A,

-g used to finance constru; tion is capital-4 l

I 1"

ized instead of being expensed in the J1 m

)

l period incurred. AFC is a non-cash item

}

]

of non-operating income and does not i

i

]

contribute to the current cash flow of the Company.

y The amount of AFC capitalized fluc-fonned General Electric Com-l l

tuates in direct proportion to the level of construction work in progress. Due to pany, visited the site and sug-l l

the high leve! of construction activity in gested that if the inill machinery j

j J

l recent years (principally related to the were driven by electric rnotors 19 6 1977 1978 1979 1980 Summer Station), a substantial portion with power generated by flic M3 Erning per Snam of tf ? Company's reported not income in canal, all the difficultics would he

- omoenos oeciareo per share recent years has resulted from AFC.

eh,rm,nated. No such m, stallation In 1980,1979 and 1978, respectively, had ever been made, but the AFC made up 66c,68"o and 59"o of o

theory scemed sound and con-earnings per common share.

080 megawatt Williams Station into a struction hcgan on the world' AFC will decline significantly when s

first cotton inill totally dependent plant fired by coal or by a fuel mixture.

the Summer Station is placed in com-I'reliminary c nversion costs, which are on clectricity.

,g

'"f;'j'u'," E", "cj ch ge, as well s higher levels of depreciation Paine hid on the motors to tg if rubbers

"* P'" ^"d '"P Y ' *"' "ill "It operate the smil-seventeen 65 are not required, or 5200 million if P

in a substantial reduction m net income horsepower alternating current scrubbers are required Pending regula-

"d**'"

tuotors to be rnounted upside tory approval, the Company is con-tricity provide sufh..cient additmnal down in the ceiling of the tnill, sidering the possibility of obtaining the mcome to t

e fadon.

a requirement demanded by the funus through a project financing. Due fact that all available floor to the numerous uncertainties regarding s

this projat, the estimated conversion space teas taken by the mill' inachinery. General Electric costs have not been included in the accepted the orders even though 1981-1 85 construction requirements CH ART 6 outlined above.

New Equity Capital the largest induction motors built Raised Through Dividend to that day had a capacity of only Capital Market Conditions Reinvestment Plan 10 horsepower.

The year 1980 witnessed the most E

Mear while, construction by turbulent financial market wnditions in Cohanbia Water Power Com-

, recent memory. Fearful of the inflation pany of the hydroelectric plant outlook, sorre investors were, and con-74 to operate the mill neared com-tinue to be, unwilling to purchase bonds pletion on the banks of the carrying the thirty-year maturity which Columbia Canal.

has been customary in our industry; and s.s investors of ten demanded other terms The poteer plant, an unimpos-mamtria ve than nonnal. Through-ing red brick structure resting on out the year, prevaihng mterest rates granite piers, contam.ed two 500 were unusually high.

u kilotcatt thrcc-plutse generators, The Company's program to build co'meCted directly to ftco pmrs bcihties to meet the growing energy ts of boriZontal teater iUbecls. The needs of its service area is dependent electricity icould travel by in-upon the wntinued existence et a s! dated tcire, more than an inch market for the Company's debt 1976 1977 1978 1979 1'980 in diameter, across a smallfoot-and equity securities.

10

CHART 7 b7jdge oygy thc (anaf and up the SCE&G's 1980 Revenue Dollar<cenrs naooun or neveuv

hill to the mill. The motors were Wherelt Carne From Where ttWent Connected to the machinery either Coach.4e directly or through an intricate i

system of belts and pulleys.

All was completed on April 25, 1894 and when the switch was Ase thrown by Aretas Blooddhe first electrically operated textile mill was in operation powered by, y

necmeme

a according to newspaper accounts, M*

"...an electric generator working as easily as a Swiss watch."

Columbia Mills and tbe Colum-A w* ~ c~",_

2 ;*1,',%, n.,,,

bia Water Power Company pros-oese on nesenvar m<

m e

Us SS E I'

,a.m enn,,

pered and a second andjarger'.

W*

M EU.C.?l L.,

generating station was ionstructed )

wa' MM 3 C 2%"*,M'"*'

about 200 yards south of the original plant. This new plant, which entered commercial opera-tion on December 31,1896, had Earnings Per Share Up 10%

costs and higher retail rates, since total three 750 kilowatt generators. '

Earnings per common share (EPS)

KWH sales dropped 3.2%. The decline This is the building used today by increased from $1.84 in 1979 to 52.02 in sales that year was primarily the South Carolina Electric & Gas in 1980(see Chart 5). As explained in result of the expiration of a contract to Company, where updated and im-Note 2 of the Notes to Consolidated sell wholesale electricity to a neighborin8 proved, Columbia Canal Hydro Iinancial Statements, EPS in 1979 has utility.

generates 10,000 kilo 0atts of been restated from $1.90.

The 5.0% increase in total KWH sales eiectricity with its seven turbine in 1979, EPS had fallen 19%, primarily during 1980 was primarily the result of generators.

i as the result of a decrease in total KWH the favorable effects of weather on Weeds and kudzu' vines today sales; and fell 5.8% in 1978, due largely residential and commercial sales, which cover the foundation of the to an increase in the number of common were up 11% and 4.8%, respectively.

shares outstanding. The 1980 increase The average number of residential elec-onginal power house, and the was due to higher electric and natural tric customers increased 2.4% to footbridge that carried the elec-gas rates, and to increased sales of 298,000. Average annual residential (ncity to the Columbia Mill has electricity and natural gas. Rapidly consumption rose 8.2% to 12,580 KWH, been dismantled but interest in escahting costs and the effects of a a Company record (see Chart 8).

general business slowdown were nega-Reflecting the slow pace of the tive factors. The weighted average economy, KWH sales of electricity to number of wmmon shares outstanding industrial customers increased only in 1080 increased by 6.8%.

1.7%. Late in 1980, two additional i:

fixed. rate contracts to sell electricity Operating Revenues Up 16%

to neighboring utilities expired. These j

contracts acwunted for 1.8% of 1980 g-m-mm i

W D

Electric Revenues total KWH sales of electricity. Retail 8

M['I

' f' # "

Ficctric revenues in 1980 increased $70 KWH sales, which exclude sales to other

-t r-million to $471 million, primarily due to utilities, were up 5.5% in 1980 (see N bw8b ywa smm the pass-through of higher fuel costs, Chart 9).

74 a

% y*

y,_S. %g -

h which inflate revenues without raising earnings. The balance of the increase Natural Gas Revenues Q "..,p - l

= ' "'

p reflected the elfects of higher retail rates Revenues from natural gas sales were (see Note 2 of the Notes to Consolidated

$158 million in 1980. The $19 million

<.s 4 4.. s-

1. h p.: j.

Financial Statements) and a 5.0% rise in increase over 1979 revenues resulted 7q

.,aj;JJ total KWH sales of electricity, from the pass-through of significantly

@:i f g;/il 3'.$ h "

C7 By comparison.1970 electric revenues higher natural gas purchase costs and entirely to the recovery of higher fuel in therms, declined 7.0% during the year

'E

~..q^,. gQQ ',

grew only 4.0%. The increase was due from higher retail rates. Total unit sales, 5

Nr 11

\\'

I

{

the Canal retnains. Named in 1 (see chm M. Natural gas revenuu in 1979 to the National Historic

" } 19M Wrml 36% over 1978, due to CHART 8 b

Register, the Columbia Canal 8.8s higt er tierm sales Average Annual an.d t higher purchase costs.

Residential Electricity

[

area is currently under study [or ' ]

possible developtnent of nature

,y The lower level of natural gas sa!cs in Usage nourrsovas,

"'~ "' ' " d~'d d'1i i'~ ' O

' ~

trails, bicycle paths, a publi:

) " d " ~ Od """ '"'" ""'i '"'""""'

f park and hornes.

an) m tiv conversion from natural gas

~-

h 4

At the end of the 19th century,.

l clectric power was being genCrutCd *J m wmpena fueb, by some industrial wsomers. Unit sales to residential m

in snrall stratn powered stations '

customers increased only modestly in j

om L

as well as bydroc[cClflC p[ ants.

1980 and have been relatively I

With strectlights emd electric

' ( unchanged since 1977. Due in large part trolleys in larger cities leading

] ' to the gradual deregulation of prices L

the way, dernands for electric a charged by the Company's supplier, the i

powergrew and the small, and in l average residential rate charged by the i

g int.ny cases family owned, utili-

' Company during 1980 increased 2%.

An additional 27% increase was ties merged into larger companie,.

Such was the ca<e with thKolmd'I

""""""'ed by the Company's supplier a

in anuary 1981. The Company con-I bin Water Power Compunk*. which, 1976 1977 1978 1979 1980 tinuts to serve appyoximately 154,000 g

after the turn of the century, was.

residential natural gas cusNmers.

S"

?-

acquired by the Columbia Electric

= U S""

f Street Railway, Light & Power I

N8 opuaung Expenses Up 16%

Company.

As more CuMomers desired fuel Expense The Impact of Inflation I

more electric energy, the cor-The average cost of coal per Supplementary financial information b

parate ancestors of SCE6G B ru's inucased 9.0% to '

30.

showing the estimated elfects of inflation constructed or purchased addi-

'Ihe average cost of resia

. ontain-is shown on pages 34-35. The methods tionalgenerating capacity.

ing the same heat c onten.. one million required to develop this information are BTUi rose 3M in N80 to $3.15. These wmplex and may not result in present-M Hydroelectric generatiotty o[ ten higher unit wsts caused overall fuel ing a true picture of how inflation has E

the least capensive and most t

evnws for electric ger.eration to affected the Company; however, the I obvious method, grew swiftly

" " ' '

• Y

.'"P'"~""

~U'"Y

^

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as the arca's best sites for powcr f uel exposes in 1979 were virtually adjusted data may be meaningful when production were developed, um hanged, af ter increasing 19%

interpreted in terms of trends and com-Stevens Creek Hydro, located in 1978.

parisons among the periods.

e i on the Savannah River north of in 1980. wal was used to generate-Stmkholders' equity has been seriously Augusta, Georgia, was con-7% el the el.tricity producsd by the eroded by the impact of inflation. Rate structed in 1914 and, following

' Company, up from 72% in 1979 and regulation based upon the use of historical improvements through the years,

'. 65% in 1978. Residual oil was the source wsts in the calculation of depntiation y

now heu a generating capability of 10% vf the ciectricity generated in expense is the principal reason. The use of about 9,000 kilowatts.

IWO. Thisfivure is down from 17% in of historical wsts does not nsult in rates x

1979, and 27% in 1978. During 1981, the to current customers that rewver the

%/.

g 3 hi 9 Company exp<tts to derive 84% of its wst. in terms of pur(hasing power, of

' r (q sY

.v electrir generation from wal,8% f rom the facilities used to provide the services I

,,,. h;. 4 resihal od, and the remainder from (ustomers rec eive. Consequently, with j.. ( !([ =

' [4 4 V j [M v f hydrocintyic, distillate oil and natural the general exception of f uel expenses

[.

.C

(

6

=

gas fueled f acilities, and natural gas costs, the Company is

. 2.- Y /

unable to price its products to of fset on

,7

~

Interest Expene a timely basis the impact of inflation.

d. Ig[ l.;,

.-+

..; - ;L During 1980,1979 and 1978, interest Because the Company can only recover

";~

...t.

'I

~ ~

charges belore the oedit for allowance in its rates depreciation based upon E

b mr Borrowed Funds Used During Con-historical msts, approximately $181 9

i struction were $76 million,564 million million in 1080 and $172 million in 1979 s

4 and $55 million, wspc< tively. The of erosion to stod holders' equity g,hT '

increases between these periods were occurred. This was partially offset by

~

due to higher levels of borrowings a:

a purchasing power gain of about $124 I

"~

5 higher rates of interest.

milhon in N80 and $120 million in N79 l

b _Stevens Creek Hydro Plant

_ __ _ _ _.m

.li 7

.y n f.x ;

} [ ' y [ p. :..n ',5 g [

[.;

l by virtue of the fact that the bords and

"~

preferred stock used to finance the CHART 10 Company can be paid back in ~ cheaper-Annual Growth in Total dollars. Therefore, the holders of the Natural Gas Therm Company's common stock may be con.

Sales (etactur; sidered to have experienced a net a;.a.

,g erosion in common stock equity of 557 "9..'

million in 1980 and 552 million in 1979.

7'

(

g,

j[

If this net crosion of common stock

~

m equity had been deducted from reported i

-C-. -

4 earnings available for common stock-l p

i

~

A.g holders in those years, losses from

('

operations of approximately 56 million

~

N.,

y in 1980 and 59 million in 1970 would a*4 have'been recorded. However, for in-iI

~

come tax purposes, depreciation must be i

L s

based upon original costs. Consequently, L1 taxable earnings were recorded in both years, resulting in total income tax

.W.,

Neal Shoals Hydro Plant accruals, including deferred income 1976 1977 1978 1979 1980 taxes, of 530 million in 1980 and 525 Neal Shoals Hydro, on the million in 1970. Additionally, dividends Bro.2d River in Union County, on common stock of $44 million in 1980 was constructed in 1905 and like and 540 million in 1970 were dedared.

rnany srnall hydro plants, was the attainment of the Company's financial Remedial Actions goals. The latter is largely dependent product of a farm.ly owned bust-In0ation is a nationalproblem. Its upon rate relief and only partially within ness. Purchased by SCE6G in solution lies primarily with the Federal the Company's control.

1963 and updated, Neal Shoals government bemg willing to live within The adequacy of rates is not within has a capability of 5,000 its means, and with the climination of the Company's control. Rates must be kilowatts.

undue and unnecessary burdens on indi-approved by regulatory bodies. How-Saluda Hydro, located adjacent viducts and businesses.

ever. in presentations by the Company to McMeckin Steam Station on In the meanwhile, inflation's damaging before these bodies. it has urged and will Lake Murray about 12 rniles west j

effects on the Company cm be remedied continue tc urge that rate-making prac-of Columbia, is probably the best i

by a combination of adequate rates for tices be adopted which will produce known hydroelectn'c plant in the

(

ele (tricity and natural gas, and the rates that specifically recover cost systern. Seen everyday by the mcreases resulting from changing prices.

i thousands of visitors wbo enjoy Investor perception of realistic rate-makmg procedures could result m a b rurd' owl %'h' ties d My nn owth Retail lower cost of capital, which would Murray, Saluda Hydro has a benefit ratepayers.

capability of 206,000 kilowatts.

Parr Hydro, situated about 30 Sales <ptactur>

rniles northwest of Columbia on Company Profile the Sroad giver, wa, constructed i

cener,,;ng c,p,enty in 15r12-14 andincluded a solid At year-end 1980, the Company owned concrete darn 35[cet high and

~;

electric generating capacity totaling 2,000 eCl long and a resCrvoir of 3.359 megawatts. Approximately one.

approximately 1,850 acres. The u.

i;

~

half is in four steam ekctric plants which generating station held five turbo-utilize coah 22% in two steam electric generator units having a capability plants fueled by residual oih and the of12,400 kilowatts. An additional remaining 8% in internal combustion unit was added later bringing the turbine and combined cycle generators.

capability today to 14,000

'4 Fossil Fuel Supply kil0WafIS-L Most of the coal bumed by the In 1978, the dam at Parr Hydro O

~

Company is purchased under long-term was fitted with crest gates to

^

I i

1976 19U 1978 19E9 1'980 contract and originates from mines increase the reservoir area to hxated in Kentucky and Virginia. The some 4,400 acres in order to pro-13

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Company endeavors to maintain enough grown at an average annual rate of 4.8%

Carolina midlands, coal in inventory Ior 90 days' use. At during the five years ended in 1979 bee At night, as the temperature year-end an 83-day supply was on hand.

Chart 11). The increase in grow th of the decreases and the electric demand W for Williams Station is purchased Company's peak during 1980 was due drops, power provided by under a contract expiring in 1992, largely to a sustained period of hot SCE6G' conventionalfossilfuel s

subject to renegotiation of price in 1982 weather.

and 1987. The contract to supply oil to The Company bases its plans for the plants or economicalpurchases Phnt Hagoed expires in 1982.

construction of new generating facilities

[ rom other utilitres is used to on the expected grownh of the peak.

reverse the turbm.es. Operating as Nuclev Fuel Supply load. Over the next five years, we pumps, the turbines move the In April 1980, a final agreement was expect peak-load to grow at an annual waterfrorn thelower reservoiron reat hed with Westinghouse Electric Cor-rate of 3.1%.

the Broad River up the penstocks poration to settle the uranium lawsuit and back to Monticello Reservoir that had been pending since October 1975 Electric Load Factor whereits energypotentialis agairs hee Note 9 of the Notes to Consolidated Load factor is a term which describes the available to meet peak demands.

~

id I( t 18 pt rati o its.

trich cust mers actually use and what rnercialoperation of the nearby The Company has a contract with enn us if they used electricity VC. Summer Nuclear Station, Westinghouse for a supply of uranium continu usly at the rate of maximum this pumping process will be concentrate and for its conversion and demand (peak-load). During 1980, the accomplished by the advan-fabrication. The contract covers the territ rialI ad factor was 56.9%, down initial core and enough reloads for tageous use ofless expensive I"

a period of approximately ten years of nuCIcargenerated eICCtriCity, hat 1980 summer

"['"

longevity, efficiency and sim-the V.C. Summer Nuclear Station's

,d operations. The Company will have to than had territorial sales of electricity.

plicity of operations am obvious enter mto contracts ta cover the advantages of producing power diffenncc between its total uranium requiremcnts and those covered by its Load Management and through hydroelectric generation.

Energy Conservation But the advantages don't stop prnent contract.

The Company is investigating the costs there. The " music of the waters",

Electric peak-Load and btnefits of controlling the use of inentioned in early newspaper Ti e territorial peak-load demand placed residential water heaters, central air accounts, can provide environ-upon the Company's generating capacity conditioners and electric space heaters rnentaland recreational benefits during 1980 was 2,489 megawatts on as a means of managing the load placed that enhance the quality oflife for August 6. TFis was an increase of 8.3%

upon the Company's generating system.

residents in the Company' service s

over the 1979 peak. Peak-load had This study, which should be completed arm soon, follows a load control experiment completed last year in a residential Lake Murray, formed in 1927 subdivision, with the construction of the CH ART 11 Saluda Dam and Saluda Hydro A program of home " energy audits",

Electnc Peak Load as mandated under provisions of the Station, is a major recreational (Excluding Interchange National Energy Conservation Pc,licy area in the midlands of the state.

and Emergency Loads)

Act of 1978, has bwn initiated. The It offers opportunities for fishing, wtaanrrs) us' audits are conducted by Company boating, swimming and sailing 22'*

l' personnel at a cominal cost to the with its 50,000 acres of clear, (j

1 customer. They include an evaluation of clean water.

j s a

~ ]

existing heating and cooling systems and Lake Murray has become a q

cover a wide variety of weatherization Inuch sought afts r residentialarea

,-l and renewable resource measures, with thousands of permanent 4

,3 j

y including adequate levels of insulation, homes and vacation cottages 1

[

storm windows and doors. If requested dotting its 521 miles of shoreline.

y, by ? 2e customer, the Company will als provide information about sources of To date, SCE&G has Nrovided s a

'a o

t N

\\

financing and installation.

eight public p2rks around Lake i

?;

i py Murny's perimeter with facilities I

l)

NaturalGas Supply that range from covered picnic The Company purchases natural gas shelters to protected swimming h[6 19[7

[9[8 [9[9 19b from Southern Natural Gas Company areas and boat-launching ramps, under a contract terminating in 1989 The Company has also pro-15

_._- - -.~

vided public access to launching with a contract demand of 165 million particularly f uel and mair.tenance, rarnps at the sinaller hydro cubic feet (165,000 N1CF) per day. Not-increased at a faster rate. This contrib-ins!allations, including Stevens withstanding the wntract, daily r.atural uted to a net loss, af ter taxes and Crcck und Neal Shoais.

gas aHmations to the Company art depreciation, of 52.3 million. The Com-

"'0' P'"Y * ~

' ' ' ' ~ "

With the completion of Tuir-Energy Regulatory Comrm. Y

ssion approved transit operations and has not covend its fic/d Pumped Storcge Plant m.

curtailment plan. Due to availability of costs in this department since the mid-lo40's.

1978, a welcomed array of supply in 1980, Southern was able to The Company continues to hold dis-recreational opportunitics became supply to the Company its contract cussions with governmental officials in available to residents of Fairfield demand when requested to do so by the metropolitan Charleston regarding the Comity.

Company. The availability of natural possible transfer of the Company's The recreational opportunitics gas from Southern has not been Charleston transit operations to a public provided by the Company are noticeably affected by the interruption body. Such a transfer might also involve part of the license requirements of dehveries of liquefied natural gas the payment by the Company of a sub-issued by the li>deral Energy from Algeria to Southern.

stantial amount of funds. The Company Regulatory Commission, and are Curtailment plans approved by regula-is unable to predict whea, or if, an j a result of cooperation among tory bodies have an established system agnement will be reached. Any such l SCE6G, state, county and of,viorities that makes provision of agreement would have to be approved by service to the residential and small the Companys Board of Dinctors, the community groups as well as commercial customers the highest PSC, and the local governments in-federal agencres, priority, and the provision of gas used volved. The creation of a public transit The majority of the land and by large indust rial boiler installations authority, if necessary, would require water associated with the plant the lowest priority.

the passage of enabling legislation by the

... - -PP ~ ~"1 Natural Gas Supplemental Facilities State Legislature.

h

I To meet the requirements of its firm Employees

[L natural gas customers, the Company The number of Company employees at e

l s.

z supplements its supplies from a liquefied year-end 1980 increased by 5"o to 3,380.

1 n-a ~

iM natural gas (LNG) plant and from pro-Preliminary staffing of the V.C. Summer

[

~'

pane plants.

Nuclear Station was the largest single During off-peak periods, the LNG factor contributing to the increase.

l plant can liquefy up to 6,000 NICF per Approximately 36"o of the Company's day. In order to provide reliable supplies employees are engaged in construction-l to its high priority users, the Company related activities. Some 1,200 employws can store one million N1CF of gas as are represented by thne unions with LNG. When necessary to meet peak which new thne-year contracts have demand, the plant can regasify up to recently been signed.

60,000 N1CF per day. Propane storage Stockholders facihties can supplement the supply During 1980, the number of record of natural gas by approximately 58,000 holders of common stock increased by N1G per day.

almost 2.000 to nearly 60,000. They live At the beginning of the cunent n all fif ty states (see Chart 12) and in winter, the LNG equivalent of 540,000 several foreign countries. The Company N1CF and the propane equivalent of s not aware of the existence of a bene-496.000 NICF of natural gas were in 6 iM owner of the Company's common and the upper and lower reser-stock that owns more than 5"o of the voirs have been placed by the Transportation Departrr.ent outstanding shares.

Company under the jurisdiction The Company owns and operates a fleet In an effort to improve communica-of the South Carolina Game of 102 buses to provide transit services tions with its stockholder family, the Management program. This pro-in metropohtan Columbia and Charleston, Company and the Association of SCE&G j

gram includes a comprehensive two of the state's thne largest cities.

Investors recently hosted a tour of the During 1980 Company buses carried V.C. Summer Nuclear Station for plan of development and regula-

"' ~ "" P'"'"#'~

P"

^~ "" '

tion in the outdoorsman' interest s

the quality of its transit services in The Association, which.is mdependent of and 15 adnn.. tered by the State Columbia, the Company atently replaced the Company, was formed in 1o78 ms Wildlife and Manne Resources six buses and is refurbishing the remain-to advance the interests of SCE&G Department.

ing buses.

investors and to develop an atmosphere Picnic facilifics, a lighted Even though operating revenues during which can promote the formation of l haschallfield and two tennis 1980 increal by 9% operating expenses, additional capital.

L___.____._

lo

J CHART 12 Geographic Distribution of Common Stockholders

"*=ums I

j

?.

3%

I k

31 %

9%

L 11 %

I 43 %

top states soum crowa 21*.

New M 12*.

O c'9 c%.

S SCE&G public park, Lake Murray Q

M i

~

courts are located on the banks of the Monticello Reservoirin a

' The Envirm t wnt seeks an increase of approximately park constructed by the Company In the years 1978 through 1980, the 16.9'i, in electric retail rates and GNddOHaffdf0lbfCitiZCHS0[

Company's expenditures for environ-would have produced additional reve.

Fairfield County. Fishing and l

mental (ontrol facilities charged to plant nues of approximately $73.5 million swirnining activities can he l

1 auounts amounted to approximately annually based on the Company's enjoyed at a public park located i

$15 million. Additionally, the Company operations for the test year ended on a nearby 300 acre lake.

has incurnd significant costs for envir-September 30,1980. The Company The story of hydroelectric onmental purposes which were expensed.

intends to place this increase in effect generation at South Carolina Over the next five years, environ-in April 1981, subject to refund with Electric & Gas Cornpany is a i

mental protection expenditures charged interest to the extent not finally allowed.

historic one that spans inuny to plant accounts are estin.ated to be There can be no assurance that all or h addhion to envirom

$1N million, of which 53 million is any part of the requested mcrease will espected to be spent in 1981. For its be granted.

1. nentaHy c can e ec c energy, rt has afforded our custorners rec-contnbutions toward conservatioa and Nat.mnal Energy Legislation reational opportunities and has l the enhancement of environmenta!

quality in the state, the Company was The National Energy Act of 1978 allows contributed to our diversifiedgen-seletted to receive the South Carolina the price of natural gas at the producer cration inix. Its efficiency, reliability Wildlife Federation's Industrial Conser-level to rise until deregulation takes and longevity will continue to vationist of the Year Award for 1080.

place, which is presently scheduled to rnake it an irnportant part of the occur in 1985. The PSC allows the REGULATION AND RATES Company to pass along the higher cost energy future of ourstate and our of purchased gas to its customers.

The Public Service Commission of Accordingly, as the cost of natural gas South Carolina to its customers has risen above the cost y

D g

The PSC has jurisdiction over retail of coal, the Company has experienced g-electric and gas rates and coach fares, the loss of some industrial gas customers.

8 whah in total amounted to 95% of the The Act requires state regulatory Company's 1080 revenues. The PSC also agencies to consider different 'ypes of has jurisdiction over the construction of rate structures to encourage energy new generating facilities, the determina-conservation. The South Carolira

/

tion of the boundaries of the Company's Public Service Commission held service area, accounting practices, and hearings in 1980 to amply with a r

the issuance of securities other than portion of the Act and is likely to hold b

short-term indebtedness.

further hearings in the near future. As In Frbruary 1081, the Company filed a result of the 1080 hearings, the

/

with the PSC an application for a rate Company instituted new procedures g g'

• r increase for substantially all of its ekc-regarding the termination of service tric retail customers. This application to customers.

+

17

SCE&G Servic2 Area N.C. "U """

g CilARIUTTE

( REkNVit LE \\

uxe =

0

' S.C/

ATLAVIA CilARLESTON O9OO

( 01l31HIA O

O O

I I K.l i ll l i)

G

,/,. ~

O D

AI AI N gg i

I)I N\\1 ARK 4 Steam Generation j

C llydro Generation 9 Nuclear Generation e4 (under construction)

OOa e Ir.ternal Combustion Generation

,,, g gy O

LNG Storage Facility e

Natural Gas Service Only HiAU)ORI O

Tile COMPANY Our service area encompasses 25 counties and metropolitan Charleston, a major South Atlantic port, in the central, southern and southwestern sections of South In addition to the power plants indicated on the map, the Carolina, covering over 12,000 square miles with a population Company's system is interconnected by a network of high of approximately 1.4 million. Within this area, the Company voltage transmission lines with electric utility systems provides retail electric service to over 344 thousand customers throughout South Caroliria arid tlie Soutlicast. Also, the in 115 incorporated towns and surrounding areas, and supplies Company has three wholly-owned subsidiaries: South retail natural gas service to more than 166 thousand customers Carolina I.NG Company, Inc., organized to own and operate in 54 incorporated towns and surrounding areas. Electricity is LNG storage facilities: South Carolina Ibel Company, Inc.,

also provided at whoksale for resale to six cooperatives and organized to acquire, own and provide for the Company's three municipalities and natural gas is sold at wholesale for nuclear and fossil fuel requirements: and Energy Subsidiary, resale to two municipalities. In addition, the Company provides Inc., engaged in real estate development associated with urban bus service in metropolitan Columbia, the state capital.

presently held properties.

i l

l l

-w

.p...mem-j 18 i

Management Report The N1anagement of South Carolina Electric & Gas Company is responsible for the preparation and integrity of the financial data included in the auompanying Consolidated Financial Statements. These statements have been prepared in conformity with generally aucpted accounting principles as applicable for a regulated utility. In situations that prevent exact accounting measure-ments, management has used informed judgments and estimates in establishing accounting and reporting practices for such items.

Financial information presented elsewhere in this Annual Report is consistent with these financial statements.

The Company maintains and relies upon a system of internal accounting controls which is designed to provide reasonable assurance that all transactions are properly recorded in the books and records and that assets are protected from unauthorized use.

The degree of internal accounting control is based upon the determination of the optimum balance between the cost incurred and the bendits to be derived. The system of internal accounting controls is supported by written policies and guidelines and is comple-ment (d by a staff of internal auditors who conduct comprehensive internal audits and by the selection, training and development of professional finandal managers.

The lloard of Dirntors, through the Audit Committee, whkh is compose 1 of non-employee directors, provides oversight for the prenaration of these financial statements. The Audit Committee meets periodically with internal and independent auditors and representatives of management to review their activities and responsibilities. The internal and independent auditors have full and free auess to the Committee to discuss internal accounting control, auditing and financial reporting matters.

The Company engages Deloitte Haskins & Sells as independent auditors to express an opinion as to the fair presentation of managemenrs Consolidated Financial Statements and their opinion appears on this page. Their examination is conducted in accor-dance with generally auerted auditing standards and is based upon their performing proceduru which include maintaining an understanding of the Cempany's systems and procedures and such tests and other auditing procedures which they believe to be ne essary.

/

T.N1. Groetiinger Vice President and Group Executive Auounting and Computer Services Opinion of Independent Certified Public Accountants South Carolina Electric & Gas Company:

We have examined the Consolidated f3 alar.ce Sheets of South Carolina Electric & Gas Company and consolidated subsidiaries C Companies") as of December 31,1980 and 1979 and the related Consolidated Statements of Income, Retained Earnings and Changes in Financial Position for each of the three years in the period ended December 31,1980. Our examinations were made in auordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered nuessary in the circumstances.

In our report on the 1979 Consolidated Financial Statements dated February 8,1980, our opinion was qualified as being subint to the offuts. if any, of final determination of a request for electric rate increases filed with the 3outh Carolina Public Service Commission. As explained in Note 2, that matter has now been resolved and the 1979 ConsoJdated Financial Statements have been restated. Accordmgly, our present opinion on the 1979 Consolidated Financial Statements, as expressed herein, is different f rom that expressed in our previous report.

In our opinion, such Consolidated Financial Statements pasent fairly the financial position of the Companies at December 31, 1080 and 1970 and the results of their operations and the changes in their financial position for each of the three years in the period endal Dcumber 31,1980, in conformity with generally accepted accounting principles applied on a consistent basis.

del.OITTE HASKINS & SEl.LS Columbia, South Carolina February o.1081 19

l Consolidited Balanc2 Sheets December 31,1980 and 1979 ASSETS 1980 19N Utility Plant (including construction work in progress:

(Thousands of Dollars) 1980-$633,392: 1979-$533,694) (Notes 1, 3 and 4):

Electric S1,742,223 51,601,356 Gas 143,712 137,661 Transponation (coach) 4,435 3,742 Common 16,778 15,247 Nuclear fuel 45,161 43,283 Total 1,952,309 1,801,289 Less accumulated depreciation and amortization 363,012 330,333 Utility Plant, net 1,589,297 1,473,956 Other Property and Investments:

Nonutility property (substantially at cost) 10,444 9,577 investment in, notes receivable and advances to subsidiary (Note 1) 12,506 12,429 Other investments and special funds (at cost) 91 86 Total Other Property and Investments 23,011 22,092 Current Assets:

Cash (Note 8) 8,402 6,679 Temporary cash investments and special deposits 73 282 Receivables 58,278 60,398 Materials and surplies (at average cost):

Fuel (Note 3) 75, % 7 59,727 Other 7,788 7,188 Prepayments 9 982 4,103 Total Current Assets 160,. 10 138,377 l

l Deferred Debits:

Unamortized debt expense 4,898 4,697 limds on deposit (Note 9) 16,355 Other 8,291 11,273 Total Deferred Debits 29,544 15,970 i

Total S1,802,392

$1,650,395 l

See notes to consolidated financial statements.

20

50tJrH CAROUNA ELECTRIC & GAS COMPANY Stockholders' investment (Excluding Preferred (Thousandsof Dollars)

Stock Subject to Purchase or Sinking Funds)(Note 5):

Preferred stock (Not subject to purchase or sinking funds)

S 26,262 5

26,262 i

Common stock (Authorized 30,000,000 shares:

Outstanding 1980-26,261,257 shares:

1979--24,194,863 shares) 118,176 108,877 Premium on common stock 233,495 212,577 Other paid-in capital 4,309 4,159 Capital stock expense (debit)

(6,063)

(5,725)

Retained earnings:

Unappropriated (a) 135,830 129,098 Appropriated 411 411 Total Stockholders

• Investment (Excluding Preferred Stock Subject to Purchase or Sinking Funds) 512,420 475,659 Preferred Stock (Subject to Purchase or Sinking Funds) (Note 6) 144,649 126,364 Long-Term Debt (Notes 3 and 4):

Principal amounts 731,925 673,953 Less unamortized discount and premium, net 918 995 Long-Term Debt, net 731,007 672,958 Total Capitalization 1,388,076 1,274,981 Current Liabilities:

Short-term borrowings (Note 8):

Banks 8,201 1,308 Other 33,079 34,847 Accounts payal h (a) 44,857 40,525 Customer deposits 5,648 5,4 02 Taxes accrued (a) 16,539 17,834 Interest accrued 14,640 14,582 Dividends declared 15,019

'13,234 Current portion of long-term debt (Note 3) 53,866 65,490 Tax collections payable (a) 1,236 1,344 Other 1,000 1,461 Total Current Liabilities 194,085 196,027 Deferred Credits:

Accumulated deferred investment tax credits (Note 1) 75,264 64,358 Accumulated deferred income taxes (Note 1) 123,125 110,550 Funds held in escrow (Note 9) 16,355 Other (Note 1) 5,487 4,479 Total Deferred Credits 220,231 179,387 Commitments and Contingencies (Notes 2 and 9)

Total S1,802,392 51,650,395

= =. = = = = =. = _ - _ - - = = = = = = = = = = = = = = = = = = = = = = = - _ = =

(a) 1979 Restated-See Note 2.

See notes to consolidated financial statements.

21

l Consolidited Statements of Income For the Years Ended December 31,1980,1979 and 1978 1960 1979(a) 1978 (Thousands of Dollars except Operating Revenues (Note 1):

per share amounis)

Electric S470,765 5401,281 5382,370 Gas 157,643 138,386 101,801 Transportation (coach) 2,338 2,146 1,927 Total Operating Revenues 630,746 541,813 486,101 Operating Expenses:

Fuel used in electric generation 204,948 185,624 184,017 Power purchased, net (credit) 12,860 (5,806)

(5,424)

Gas purchased for resale 121,642 110,702 73,455 Other operation 58,044 49,080 39,568 Maintenance 30,226 24,689 21,208 Depreciation and amortization (Note 1) 36,822 3'5,444 32,643 Taxes (Notes 1 and 7):

Other than income 31,219 27,335 23,418 State income 4,383 2,863 4,186 Federal income 17,548 12,998 10,151 Provision for deferred income 24,218 16,790 14,742 Deferred taxes (credit)

(17,200)

(7,833)

(7,378)

Investment tax credit adjustmer.ts:

Amount deferred 14,354 10,930 21,527 Amortization of amounts deferred (credit)

(1,166)

(1,075)

(793)

Iota [ Operating Expenses 537,898 461,741 411,350 Operating Income 92,848 80,072 74,751 Other Income (Notes 1 and 7):

Allowance for equity funds used during construction 6,003 16,608 18,340 Income tax-credit 12,683 9,686 10,212 Other income, net, less income tax effects 212 662 723 Total Other Income 18,898 26,956 29,275 Income Before Interest Charges 111,746 107,028 101,026 Interest Charges:

Interest on long-term debt 69,518 58,777 51,457 Amortization of debt premium, discount and expense, net 605 596 5 71 Other interest expense 5,649 4,890 2,499 Allowance for borrowed funds used during construction (credit)(Note 1)

(27,726)

(12,916)

(10,848)

Total Interest Charges 48,046 51,347 43,679 Net income 63,700 55,681 60,347 Dividends on Preferred Stock 12,949 12,315 10,600 Earnings Available for Common Stock 5 50,751 5 43,366 5 49,747 Weighted Average Number of Common Shares Outstanding (Thousands) 25,148 23,540 22,029 Earnings Per Share of Common Stock (Weighted Average) 52.02 S1.84

$2.26 (a) Restated-See Note 2.

See notes to censolidated financial statements.

22

Consolid:ted St:tements of Changesin Financi:1 Position sOtrmCAROUNALLECHUC& GASCOMI%NY For the Years Ended December 31,1980,1979 and 1978 1960 1979 (a) 1978 (Thousan<ls of Dobrs)

Working Capital Provided:

Net income S 63,700 5 55,681 5 60,347 Charges (credits) to income not providing or requiring working capital:

Depreciation and amortization 36,822 35,444 32,643 Amortization of debt premium, discount and expense, riet 605 596 571 Deferred income taxes, net 7,018 8,957 7,364 Investment tax credit, net 13,188 9,855 20,734 Allowance for funds used during construction (AFC)

(33,729)

(29,524)

(29,188)

Total from Operations 87,604 81,009 92,471 Sale of securities:

Mortgage bonds, net of discounts and commissions 49,563 83,856 69,497 Preferred stock 20,000 15,000 20,000 Common stock 30,217 28,460 36,913 issuance of secured notes-banks (net) 30,000 Increase in:

Nuclear fuel liability, net 1,647 5,466 27,728 Fossil fuel liability, net 21,350 Decreaw in other non-current funds, net 8,143 2,734 284 Total Working Capital Provided 248,524 216,525 246,893 Working Capital Applied:

Utility plant additions (excludmg AFC but including nuclear fuel) 119,869 117,997 147,658 Cash dividends declared:

Preferred stock 12,949 315 10,600 Common stock 44,019

.v,687 35,908 Reduction of long-term debt 44,948 58,964 41,577 Retirement of preferred stock 1,715 16,655 1,775 Increase in other property and investments 949 1 F.5 2,288 Total Working Capital Applied 224,449 245,803 239,806 Increase (Decrease) in Working Capital S 24,075

$(29,278)

S 7,087 Increase (Decrease) in Working Capital by Component:

Cash S 1,723 S 2,661 5 2,027 Temporary cash investments and special deposits (209) 266 (87)

Receivables (2,120) 13,508 2,4 01 Materials and supplies 16,860 (836) 10,797 Short-term borrowings (5,125)

(25,825) 30,440 Current portion of long-term debt 11,624 (17,487)

(38,734)

Accounts payable and accruals (4,557)

(3,103)

(225)

Prepayments 5,879 1,538 465 Increase (Decrease) in Working Capital S 24,075 S(29,278)

S 7,087 (a) Restated-See Note 2.

See notes to consolidated financial statements.

23

Consolidated Stat:ments cf Retained Earnings For the Years Ended December 31,1980,1979 and 1978 1980 1979 (a) 1978 (a)

(Thousands of Dollars)

Unappropriated:

Balance at beginning of year

$129,098

$125,419

$111,580 Add-Net income 63,700 55,681 60,347 Total 192,798 181,100 171,927 Deduct-Cash dividends declared:

Preferred stock 12,949 12,315 10,600 Common stock (at an annual per share rate of $1.74, $1.68 and $1.62 for 1980, 1979 and 1978, respectively) 44,019 39,687 35,908 Total Deductions 56,968 52,002 46,508 Unappropriated retained earnings at end of year (Note 5) 135,830 129,098 125,419 Appropriated:

Balance at beginning of year 411 392 Transfer from amortization reserve 359 Current provision 19 33 Appropriated retained earnings at end of year 411 411 392

~

Total Retained Earnings at End of Year

$136,241

$129,509

$125,811

= = = - - -

(a) Restated-See Note 2.

See notes to consolidated financial statements.

Notes to Consolidated Financial Statements during construction, are added to utility plant accounts.

1.

SUMMARY

OF SIGNIFICANT The original cost of utility property retired or otherwise ACCOUNTING POLICIES:

disposed of is removed from utility plant accounts and i

along with the cost of removal, less salvage, is charged j

A. System of Accounts to accumulated depreciation. The cost of repairs, replace-l The accounting records of the Company are mainta.med ments and renewals of items of property determined to be l

m accordance with the uniform system of accounts pre-less than a unit of property is charged to maintenance i

scnbed by the Federal Energy Regulatory Commission esPense' (FERC) and The Public Service Commission of South Carolina (PSC).

D. Allowance for Funds Used During Construction Allowance for funds used during construction (AFC), a B. Principles of Consolidation non-cash item, reflects the period cost (interest charges on The accounts of two of the Company's wholly-owned borrowed funds and a reasonable rate of return on equity l

j subsidiaries, South Carolina LNG Company, Inc. and.

This accounting practice results in the inclusion, as a funds) of capital devoted to plant under construction.

l South Carolina Fuel Company, Inc., are consolidated in the accompanying Consolidated Financial Statements and component of construction cost (construction work in the investment in Energy Subsidiary, Inc., a third wholly-progress), of amounts of AFC which will ultimately be owned subsidiary, is reported using the equity method included in rate base in establishing rates for utility f 3CC ""t *8-charges. The Company has calculated AFC using a 6.5%

I C. Utility Plant rate (except for nuclear fuel which is capitalized at the Utility plant is stated at original cost. The cost of actual interest amount), which is less than the maximum t

i additions, renewals and betterments to utility plant, allowable rate as calculated under FERC Order No. 561.

l including direct labor, material and indirect charges for Effective January 1,1980, FERC recommended and the l

engineering, supervision, and an allowance for funds used Company began allocating AFC first to the debt portion 24 l

as calculated under the Order, with any remainder monthly cycle basis. Base rate revenue is recorded during allocated to the equity portion. Such change had no the accounting period when the meters are read. Revenue effect on the total AFC capitalized.

attributable to gas costs (to the extent collectible through E. Depreciation adjustment clauses) is recorded in the month during which The Company provides for depreciation for financial the gas is used rather than when the revenue is billed.

reporting purposes on a straight-line basis over the esti_

The Company collects projected fuel costs m base mated usefullives of utility plant. Annual rates averaged rates as established by the PSC during semi-annual 3.02% for 1980 and 1979 and 3.17% for 1978.

he rings. Any resultant over or under collections will be included during the next PSC hearirg te consider E Income Taxes any change in the fuel component of base rates. At Deferred income taxes, arising from the use of accelerated amortization and depreciation rather than straight-line tax December 31,1980,the Company had over-collected depreciation, are charged to income currently with corres-approximately 51.2 million which is included in

" Deferred Credits-Other,,.

ponding credits to accumulated deferred income taxes and are credited to income in appropriate amounts when sub-I. Debt Premium, Discount and Expense sequent income tax liabilities are greater as a result of Long-term debt premium, discount and expense are being this practice.

amortized over the terms of the respective debt issues.

Income taxes are allocated to " Operating Expenses" and "Other income".The income tax-credit under "Other Income" results from tax deductions related to interest

2. RATE MATTERS:

expense arising principally from investments in construc-On June 30,1980, the PSC granted an electric retail rate Inv t nt tax c its on eligible property are being increase am unting to approximately $33.5 million

""" U ' '^pproximately 86% of the amount requested Y

amortized over the lives of the respective assets. The in an pplic ti n filed by the Company on June 1,1979 Company has approximately 56.7 million of unused 1980 investment tax credits available for carryover to nd pl ced into effect July 1,1979 subject to refund. The.

future years.

rder also required refunds to the Company s electn,c The Company's ihleral inceme tax returns have ret il customers of approximately $5.4 million (S2.6 million been examined through 1975 and have been closed relatmg to 1979 revenues) plus mterest. The Company through 1974.

m de refunds to its customers during September 1980.

Intervenors in the rate proceedings filed petitions for G. Pension Plan rehearing, which were denied by the PSC on July 21,1980.

The Company has a pension plan covering all employees.

The intervenors have appealed such denial to the South Total pension contributions, including amortization of Carolina Circuit Court. The Circuit Court has scheduled unfunded prior service cost, were approximately 55.8 oral arguments for mid-April 1981. The electric revenues million, S4.5 million and $4.1 million for 1980,1979 and collected subject to refund which were not required to be 1978, respectively. Unfunded prior service costs were refunded by the PSC order but which could be subject to approximately $4.5 million and $600 thousand based on refund, in whole or in part, as the result of an appeal the latest actuarial valuations, effective January 1,1980 were $35.0 million and $15.4 million at December 31, and 1979, respectively. The Company's policy is to fund 1980 and 1979, respectively. However, the Company pension costs accrued. These costs include the amortiza-believes that the possibility of a further refund which tion of prior service cost over a 20-year period from the would be in a material amount is remote.

date such costs were incurred. The prior service cost, due On December 13,1977 the PSC issued an order to a 1980 amendment of the plan relating to increased requiring the Company to refund to its electric retail benefits, will be funded by the end of 1999.

customers approximately 57.0 million derived from net The actuarial present value of accumulated plan interchange sales of electricity to other utilities. The benefits was approximately 554.2 and $44.8 mill:en for Company appealed such order to the Court of Common vested benefits and approximately $6.3 and $4.6 million Pleas. Pending the outcome of such appeal, the Company for nonvested benefits based on the latest actuarial had eliminated the refund amount from 1977 revenues valuations, effective January 1,1980 and 1979, respec-and had recorded such amount as a liability.On December tively. An interest rate of 7% was used in determining 4,1980 the South Carolina Supreme Court issued an the net assets available for benefits. The plan net assets op nion which reversed the PSC order requiring the available for benefits were approximately $42.2 and $35.3 Company to refund the approximately $7.0 million.

million based on the latest actuarial valuations at January As a result of the foregoing matters and related PSC 1,1980 ana 1979, respectively.

cccounting orders, previously reponed operating results H. Revenue Recognition and unappropriated retained earnings have been restated Customers' meters are read and bills are rendered on a

[ increased (decreased)] as follows:

25

Notes to Consolidtted Financial Stct:mer.ts (conum<ca; 1979 1978 1977 During 1980, the Company renegotiated its bank notes (Mdlions of couars cuert extending due dates until March 10,1982 for $15 million and un Apd 1, N b W m%on. hm on k Toiat elettnc ornatmg revenues 5(2.6 57.0 operating inco..snet of income tax etfeto (1.3) 3.5 bank notes is pegged to applicable prime rates. The bank Net income (1.3) 3.7 notes were secured by the issuance of $45 million of First

(

)

and Refunding Mortgage Bonds,14%% Series. Interest mln"x$r

[o7m" "

ae (weighted aseraxe)

(.06)

.18 on such bonds is applied to the payment of interest on Retained earnings (unappropriateth 2.4 3.7 3.7 the bank notes as long as the notes are not in default,

3. LONG-TERM DEBT:

with any excess interest being returned to the Company.

The bonds will be retired in principal amounts D"""I'" 32' corresponding with and equal to payments on the bank I'*U I#

notes' (Thousandsof Dollars) nrst and Refundmx Mortgaxe thinds.

Substantially all utility plant and fossil fuel inventories as Series. due 1980 5-5 22.2m are pledged as collateral in connection with the various I43 % $N.^d07o87 4$0 0m 4gg issues of long-term debt. Approximately $7.6 million of 3+ 4 % Sents. due lost 3,750 3.tu0 the current portion of long-term debt for 1981 may be 7%

Series. due lo82 50,000 50.000 satisfied by deposit and cancellation of bonds issued upon brI:d"'I 2k$

2[g the basis of property additions or bond retirement credits.

3.i /2% Snies, due lo83 3,350 3.500 The annual amounts of long-term maturities, including 5-1/2% Series. due 1987 7,061 7,300 sinking fund requirements, for the calendar years 1981 4e 8% Snics due to88 10,0m 10.0m through 1985 are summarized as follows:

lal/2% Series, due IWO 12,000 12.600 5%

Snb. due 1900 10,000 10.000 Year Amount Year Amount 5%

Series duc 1901 8,000 8,000

@wsands M DMars) 4-7,8% Serrs, due 1995 16,000 16,000 5.45 % Series due 1900 15,000 15.000 1 81 553.8e6 1984 535.708 o%

Senes, duc 19o7 15,000 15.000 1982 75.072 1985 13.690 0-1/2% Series, due IW8 20,000 20.000 1983 43.440 8%

Series. due 19o9 35,000 35.000 o-i. 8% Snies. due io99 15,000 15.000 4.

FUEL FINANCINGS:

8%

Series. due 2001 35, LOO 35.000 7-1, 4 % Senes. due 2002 30,000 30.000 The Company has assigned to South Carolina Fuel 0- 1, 8 % Series, due 2000 50,000 50,W Company, Inc. all of its rights and interests in its various 8.40%

Senes. duc 200t>

50,000 50.000 contracts relating to the acquisition and ownership of 8-3,8% Senes. due 2007 30,000 30.000 8 00%

Serin. due 2008 30,000 30.0u0 nuclear fuel and fossil fuel. The subsidiary finances these tai 8% Snics, duc 2000 35,0m 35.*

investments through the issuance of short-term commer-2 i$ $ N 0"* IOYO cial paper supported by irrevocable bank lines of credit renution Controi racihties which expire in 1982 for fossil fuel and 1984 for nuclear Revenue lionds:

fuel. Due to the irrevocable lines of credit supporting the

$f$pphNon$e*r$te un Em'itIty commercial paper borrowings, the amounts outstanding lo87 5,155 5.155 5 o5%

Series. due 20a3 7,500 7.500 have been included in long-term debt. The agreements nnt Mortgage ik4nds-4% Senes. due lost W

provide for maximum amounts ($50 million related to 5

on red 5 ge Gold Bonds.

nuclear fuel and $30 million related to fossil fuel) that 1,054 1.0t>3 liank Notes (lo80-wured; loN-uncundl 45,000 45.000 may be outstanding at any time.

Erst Mortgage Bonds-South Carolina LNG At December 31,1980 the amount outstanding for N"N.duetwo nuclear fuel was approximately $45.3 million at an average 8,740 9.430 South Carohna Fuel Comp.my. Inc. (See Note 4) interest rate of 19.61% and the amount outstanding for Nutlear fuel liabihty 45,332 43 +85 lossil fuel was approximately $21.4 million at an average CaNaN"fh ibigations-vehick.s Nf8N interest rate of 19.51%

2.3oi Total 785,791 73o.443 i ess current portion of long; term ik+t 53,8e6 65.400

- $?=Yk{

-=-===

2o

i

5. STOCKHOLDERS' INVESTMENT (EXCLL' DING

6. PREFERRED STOCK PREFERRED STOCK-Subject to Purchase or Sinking (Subject to Purchase or Sinking funds):

Funds):

Redemption Prke 1980 1979 f"'

-Amount Outstanding (Thousands of Dollar 0 Dunnk31, Eventual Preferred Simk:

Cumulative $100 par value:

(Thousandsof Dollars) 8.40% Strin fAuthorized and Cumulative $100 par va!ue:

Outstandmg 200.000 shares) 5 20,000 5 20.000 Authorized 1.550.000 shares:

Cumulative 550 par value:

7 70' S"i" 0"'"'ndmg 5% S-ries (Authorized and 19*-132.M shans

1. M35.000 shares) 5105.75 5101.00 5 13,200 5 13.500 Outstandmg 125.234 sham) 6,262 6.262 8.12% Sen.es (Outstandma,

_ _ _ _ 7"I _ _ _.__ _ _ ___ _ _ _._.__.5 26,262_ _ 5 2p,2_62_

1980-189.200 sham:

m-N.600 sham)

M 102 m 18,920 R360 1980 1979 Common Sem L:

(Thousandsof Dollars) 143% Serin Outgandmg 54.50 par value: Authoriicd 30,000.000 shares:

200.M sham) 110.75 1@m 20,0m 20,m0 1108% Serin (Outstandmg 200.000 shares)

If* *:

100.00 20,000 2el,257 sham,

- 1979 --24.194.863 shares

$118,176 5108.8n Cumulative 550 par value:

_ _ =

m===.r============~

Authmized, increases in " Premium on common stock" for 1980 1980-1.80t986 shares:

(approximately $20.9 million),1979 (approximately $20.6 j'Q8y

"!d%

million) and 1978 (approximately $27.5 million) represent 1980-41.600 shares:

the premium on issuance of additional shares of stock as m-43.2m sham >

si m 51.00 2,080 2,160 fo11ows:

(60% Series (Outstanding, 1980-23.334 sW 1979-24,834 sham) 50.50 50.50 1,167 1,242 Common stak-public sale 1,000,000 1,000.000 1.500.000 4 60% Series A (Outending, St ;k Punhase-Savings Program 1980-56.052 shares; for Ernployees 248,524 191.335 149.308 1979-58.052 shares) 51.00 51.00 2,802 2.902 Dividend Reinvestment and 4.60% Series B (Outstandmg.

Stml Purchase Plan 651,046 459.518 311.807 1980-125.800 shares:

Ernployee Sem k Ownership ILn 166,824 104.139 120,148 ig79-129.200 shares) 50.50 50.50 6,290 6,460 Total Sham issued 2,006,394 1,754.902 2.081,259 5.125% Series (Outstandmg.

1980-87,000 shares:

The increase (decrease) in "Other paid-in capital" is 1979-88.000, ham) sim 51.00 4,350 4,4m summarized as follows:

6% Senn outaanding 1080-131,200 shares:

1979-134,400 shares) 51.00 50.50 6,560 6,720 (Thousandsof Doltars) 8% Series (Outstandmg Gain on reacquiution of preferrn!

300.000 shares) 56.00 50.00 15,000 15,000 sta k 5177 5 45 5 16 8.72% Series (Outstandmg Retirement of preferred stak 400.000 sham) 54.36 50.00 20,000 20.000 tbrough pun hase f unds or unking funds (27)

(85) 9.40% Series (Outstand ng, 1980-285.600 shares:

Total Increase (Decrease) 5150 5(40) 5 16 1979-292.400 shares) 52.35 51.175 14,280 14.620 Cumulative 525 par value:

Increases in " Capital stock expense" are summarized as Authorized 2,0m.mo shares:

follows:

Outstanding-None 1980 1979 1978 Total 5144.649 5126.364

" " ' ' " ' ' ""'")

bynso n connation min issuan<,

The call premium of the respective series of preferred of stmk:

stock in no case exceeds the amount of the annual Common 5 71 SiO2 52 s dividend. Retirements under sinking fund requirements Pn*rred 294 In 249 are at Ear values.

Retirement of prefernd stak through purthase funds or At any time when dividends have rot been paid in full unsing enas (27)

<85>

(28) or declared and set apart for payment on all series of pre-Net Incn ase 5338 5194 5501 ferred stock, the Company may not redeem any shares of The Restated Articles of Incorporation of the Company preferred stock unless all shares of preferred stock then and the indentures underlying certain bond issues contain outstanding are redeemed, or purchase or otherwise provisions that li. it the payment of cash dividends acquire for value any shares of preferred stock except in on common stock. Approximately $116.8 million of re_

accordance with an offer made to all holders of preferred tained earnings were not restricted as to payment of cash stock. The Company may not redeem any shares of pre-dividends on common stock at December 31,1980.

ferred stock (unless all shares of preferred stock then out-standing are redeemed) or purchase or otherwise acquire for value any shares of preferred stock except out of 27

Notes to Consolidited Financial Setzments (continua >

moneys set aside as purchase funds or sinking funds for

7. INCOME TAX EXPENSE:

one or more series of preferred stock, at any time when it The Company's income taxes differ from amounts 1

is in default under the provisions of the purchase fund or computed by applying the Federal income statutory rates sinking fund for any series of preferred stock.

of 46% for 1980 and 1979 and 48% for 1978 to pre-tax The aggregate annual amounts of purchase fund or income as follows:

sinking fund requirements for preferred stock for the 1980 29n(a) m8 calendar years 1981 through 1985 are summarized as (Thouundsof Dollars)

[ol]ows:

Net income

$63,700 555.681 500.347 Add (deduct) components of income tax expense:

Year Amount Year Amount locome tax expense charr,ed to (Thousandsof Dollars) operating expenses (income 1981 53,015 1984 53.015 taxes and credits and invest-1982 3,015 1985 3,815 ment tax credits, net) 42,137 34,673 42.435 1983 3.015 Income tax credited to other income (12,683)

(9,686) (10.212)

The increase (decrease) in " Preferred Stock (Subject to lacom d *"'" Pens'ch'r8'dto thu inconie. nel 102 335 420 Purchase or Sinking Funds)" outstanding is sumr,arized as Total income tax expense 29,556 25,322 32,643 g

1980 593,256 581,003 592,990 Total pre-tax income Number Thousands Income taxes on above at statutory of Shares of Dollars Federal income tax rates

$42,898 537,261 544.635 Increases (decreases) attributable to:

gg All wance for funds used during 5100 par value 200,000 5 20,000 c nstruction (excluding nuclear fuel)

(12,712) (10,972) (12.466) 5 50 par value Depreciati n differences 1,333 1,342 943 Redamed.

Am rtizati n finvestment tax credits (1,167)

(1.078)

(794) 5100 par value (7,400)

(740)

State inc me taxes (less Federal income 5 50 par value (19,500)

(975) tax effect) 2,174 1.610 2,253

_ z==I_k'k=== = = r-

_ _.=---

I8,285 _ _ _

Taxes, s ns a ther items Other differences, net (795)

(1,233)

(437)

I#

Income tax expense 529,556 525,322 532,643 Number Thousands of Shares of Dollars income tax expense is composed of:

!ssual:

Provision for currently payable taxes:

5100 par value Federal 5 4,520 5 2,064 5 (206) 5 50 par value 300,000 5 15,000 State 2,575 1,361 2,809 E'Y' '

5 00 p value (156,800)

(15.680)

-Deferred taxes (neth 5 50 par value (19,500)

(975)

Federal 8,497 10,761 8.385

'_== =r==u==.

State 777 1.284 922

=_:-

l Total deferred taxes (net) 9,274 12,015 9,307 1978 investment tax crechts (net) 13,187 9,852 20,733 Number Thousands Total income tax expense 529,556 525,322 532,643 of Shares of Dollars (a) Restated-See nom 2.

Issued.

51m par value Provision for net deferred taxes results from timing lj v.lue 400,000 ss0 differences in recognition of the following items:

55 gg 1980 1979 1978 5100 par value (8.000)

(800) 5 50 par value (19,500)

(975)

(Thousands of Dollars)

Excess of the net of accelerated depreciation 372.500 5 18,225

_. _ Total _ _ _ _. - -

and amortization deductions over straight-line depreciation otherwise deductible for income tax purposes 5 8,518 5 8.835 5 8,183 Interest on nuclear fuel 3,000 2,792 1,645 Other, net (2,244) 418 (523)

Total provision for net deferred income taxes 5 9,274_ 512.015 5 9.307 l

28

8. SiiORT-TERM BORROWINGS:

directing that proceeds from the settlement should not The Company maintains compensating balances of up to be treated as income by the Company, but should be 10~o for certain of its bank lines and pays fees in lieu of accounted for as a reduction in the cost of uranium.

balances in connection with its other lines of credit. The During 1980, the Company received $20 million from lines supported by compensating balances may be reduced Westinghouse which can be applied to the costs of nuclear or withdrawn at the banks' option, with all compensating fuel as purchased. The balance in trust at December 31, balances available for use as general operating funds.

1980 was approximately $16.4 million. The income tax Bank loans are for 270 days or less. Details of lines of consequences of the settlement (including the cash pay-credit and short-term borrowings at December 31,1980, ment) have not been determined and could be different 1979 and 1978 and for the years then ended are as follows:

from the rate-making treatment indicated in the PSC order.

ne< ember 31.

In August 1977, the Company was named as a codefendant 1980 199_ M 8-in an action filed by certain North Carolina electric coopera-N5 N4 tive utilities alleging that the Company and Carolina Unn oh redit at end of year 589.o Born %nc against <nat hne at end of year s 6.o Power & Light Company have maintained an unlawful Avnage bank bafaru e. dunng the year s 3.1 s 3.0 55.2 monopoly in power exchange services, firm bulk power, n n[eNtNr7duYN"ife" ear:

nd fir retail power in areas of North and South Carolina Maumum outstandmg 574.5 565.o 573.4 and seeking an order requiring the Company to negotiate average outstanding s41.6 532.7 s22.3 with the plaintiffs and to pay $50,400,000 damages trebled led daily average interest rates:

against both defendants. The general counsel of the Com-communal paper 13.49 % n.cos 7.57 %

pany is of the opinion that the Company has meritorious Notes rayaNe at end of year:

defenses to the action and will be able to successfully Bank huns s 8.2 s 1.3 s 2.o defend it.

Inte rni rate 18.22 %

12.48 %

10,11 %

Commenial paper s32.2 s34.5 s 7.7 C.Ecases Interest rate 18.98 % 13.80 %

10.60 %

Minimum lease commitments as of December 31,1980 under all noncancellable non-capitalized leases are not

9. COMMITMENTS AND CONTINGENCIES:

material. The present value of minimum lease commit-A. Construction ments at December 31,1980 with respect to non-capitalized in addition to routine commitments for operating financing leases is less than five per cent of the total capital-materials and supplies, the Company at December 31, ization of the Company.

1980 had commitments for major construction (including

10. SEGMENT OF BUSINESS INFORMATION:

nuclear fuel) of approximately 5419.6 million (includes one-third interest of South Carolina Public Service Segment information at December 31,1980,1979 and 1978 Authority) for construction of the 900 megawatt V.C.

and for the years then ended is as follows:

Summer Nuclear Station (Summer Station).

1980 T

The Company and the South Carolina Public Service po,,"fo, Authority (a public corporation of the State of South nearic ca.

(coach >

Totai Carolir.a) are joint owners of the Summer Station on the (Thousand.of Dollar.)

o nating rnenue.

s 47o,765 s157,643 s 2,338 s 63o,746 basis of two-thirds by the Company and one-third by the r

Authority and have agreed to participate, on a like basis, o natingarenses, r""di"" d'P"'"

352,598 144,o47 4,431 501,o76 in the costs of construction, costs of operation and in the Depreciahon 31,417 5,241 164 36,822 energy output thereof. The Company's share (approxi-mately $563.1 million ana $464.3 million at December 31, op,,,,;,,,,,,,,-

384,o15 149,28s 4,595 537,sas Total operating expense.

= = - - -

- s s,355 --s<2,25W 72.sd s 86,750 1980 and 1079, respectively) of (osts of construction of the nuclear station is included in construction work in t. -i$ " $'h '"ge.

S

^ ~

progress. Each owner is responsible for financing its own x,e income s

63,700-share of the nuclear station. (Reference is made to " Man-agement's Discussion and Analysis of Financial Condition cagalngndaurn:

_ s l43,37b S 6.836

$ 699 $ l50,9tl and Results of Operations" beginning with the third

d' ' ""* " "P'""

P"'

paragraph under" Construction and Financing Program").

7[i g3}'d'

11. Litigation taenuriawe amt. at On April 9,1980, a final settlement was reached with Daembu st,19so:

Westinghouse Electric Corporation to settie the uranium W'"Y P"' "et si,476,730 s 96,185 s1,642 si,574,557 Matuial. nd.upplie.

76,556 5,655 its 82,322 supply lawsuit that had been pending since October 1975.

The agreement provides for cash, some uranium and n,n3,286 m, L n,7_53 1,m,sn T ta

^*t.utmed f r mali company operation.

245,313 equipment and services (including fuel fabrication) at T '"et, si,8 2,3+2 a discount. On May 8,1980, the PSC issued an order 29

Notes to Consolid:ted Financial Strtements summo 1979(a)

11. QUARTERLY FINANCIAL DATA (UNAUDITED):

Trans-porto;on The following data have not been audited, but in the outric cas fu,ach)

Total opinion of the Company, include all adjustments (con-(Thousands (4 Dollars) sisting only of normal recurring accruals) necessary for Operating revenun 5 401.281 5138.386 5 2,146 5 541.813 a fai? presentation of such amounts.

Operating expensa.

excluding deprniatson 204.650 127,739 3,878 426.297 1980 Deprniation 30.205 5.004 145 35.444 First Second Third Fourth

__ uartertai Quarter _ Quarter _ Quarter Total Q _

Tif a! ogyat mg opegws_ _, __,324.885 132.833 4.023 461.741 O.perating mcome 5

7_6.3% 5 5_.5. 53 5.(_1_.877) 80.072 Total operating revenues (000) 5162,550 5141,140 5177,921 5149,135 5630,746 Add - Other intome, net 26.956 Operating less-Interea.t charges 51.347 income (000) 24,241 20,152 29,762 18,693 92,848 Net int ome

=_g_55.681 Net irwome (000) 17,447 11,345 22,716 12,192 63,700

=_ = __,

Earnings available I**'""

Capital e=per dit ures se ck(000) 14.383 8,300 19.471 8,597 50,751 hientifiable 5 140.017 5 5.340 5 % 5 145.483 Earnings per share Utilized for overall Company or rations 2.038 of common stock Total 5 147.521 (weighted average)

.59

.34

.77

.33 2.02

-.=

==: = - _ - = = - _ = =. =

idenediable assets at 1979 Det emb. r 31, in

~

Utility plant, net 51,365.917 5 94.437 5 1.101 51.461.455 First Setond Third Fourth Mderia,1 andyupplies _ _ _59.959

_ _83 65.659 1

5.o17 Quarter Quarter QuartertaiQuarterr i Total a

_, 1,425 876 51 fog _ _{1 184 1,527.114 Total operating 5

To(4{

Asse is utilimi for overall Company operations 125.281 revenues (000) 5132.086 5115.478 5151.6c5 5142.584 5541.813 g

Total awts

= 51_;653395 e(000) 20.190 15.426 25.827 18.620 80,072 (a) Restated -Sir No:e 2.

Net income (000) 14.369 8.879 19.868 12.5o5 55.681 Earnings available for common 1978 stock (000) 11.280 5.805 16.788 9,493 43.366 Trans-Earnings per share portation of common stock Llatric Gas (coach)

Total (weighted average)

.50

.25

.70

.39 1.84 (Thousands of Dollars)

I'> N "'U"" P"*"O N Operatmg revenues 5 382.no 5101.808 51.927 5 48o.101 1980 1m Operating expenws.

eulud ng depretiation 285.002 8o.811 3.244 378.707 First Third Fourth Quarter Quarter Quarter Depicciation 27.457 5.016 170 32.643~

Total operating T'tal eperatmg expen$

313$15) 94.827 3.414 411.350 revenues (000) 51,775 5 1.184 51.405 Operat ng mrome 5 _69.261 5 6.977 __5(l.487) 74.751 Operating income (000) 875 5%

699 Add-Other intome, net 29.275 Net income (000) 944 60) 737 lesw-Interest charges 43.679 Earnings available for common Net inwme 5 60.343 stock (000) 944 609 737 Earnings per share of common i

l stock (weighted average)

.04

.03

.03 Capital opendtures:

hientihable

_ 5 172,784 _ 5__ 3.171_ _ _5 _ 1_2 5 175. % 7 ggg g ggg gg Utilimi for overall Company operations 87?

(UNAUDITED):

Toral

~ ~ ~ ~5 176.846~~ In compliance with Financial Accounting Standards Board Statement No. 33, " Financial Reporting and Id. nt a abic ass. is,

Dnemtwr 3i.1978:

Changing Prices",the Company has prepared certain Et$i ik'aIJ s pphn supplementary financial statement data in constant and 6

b current dollars (as defined). See pages 34 and 35 for l

Total 5i.318.051 5 o9.602 5 u92 1.4 m 845 l

..- ~ = - =

==- -

constant and current dollar supplementary financial i

Assets utilued for overall Company operations 103.862 statement data.

I Total av.ets 51.522.707

-. _ =

-.. = = _ -. - _ =. -

l l

l i

30 i

l

1 Corporcts Stock Informati:n I

Common Stock fa) 1980 1979 4

tot 2nd 3rd 4th 14 2nd 3rd 4th l

Qtr.

Qtr.

Qtr.

Qts.

Otr.

Qtr.

Otr.

Qtr.

Price Range: (b) i liigh 15-1/4 17 17 15-1/4 18 17-1/8 17-3/8 17 low 12 12-3/8 14 1:1/8 16-3/4 15 15-1/4 14-3/8 Dmdends Paid Per Share 5.42 5.435 5.435 5.435 5.405 5.42 5.42 5.42 l

December 31, i

1980 1979 j

Number of common shares outstandmg 26,261,257 24.194.863 i

Numberof co.nmon 1

stockholdersof record 59,834 57,746 4

(a) The prinapal market for SCE&G common stock (SCG) is the New York Stock Exchange.

(b) As reported on the New York Stock Exchange Composite Listinx.

Preferred Stock Series 7.70 %

8.12 %

8.40%

11.08 %

4.50%

5%

8.72 %

9.40%

Wluation Prke-

~ Year End 1980 556.00 559.054 561. @

5e9.25 516.363 518.75 535.50 534.181 i

i I

I l

J f,

6 4

4 1

i 31

..... ~.

Selected Fin:nci 1 D:t2 i

1980 1979(a) 1978_1977(a) 1976 1975 1970 Statement of Income Data (Thousands of Dollars Euept Statistics and Per Share Amount 4 Operating Revenues:

Electric 5470,765 5401,281 5382,370 5344,961 5275,892 5263,773 5101,188 Gas 157,643 138,386 101,801 78,405 71,948 55,379 27,994 Transportation (coach) 2,338 2,146 1,927 2,023 1,99o 1,979 1.908 Total Operating Revenues 630,746 541,813 486,101 425,392 349,836 32 a,131 131,090 Operating Expenses:

Fuel usalin electric generation 204,948 185,624 184,017 155,132 116,892 109,649 31,232 Gas purchased for resale 121,642 110,702 73,455 51,321 44,789 31,061 14,070 Other operation and maintenance 101,130 67,963 55,352 50,144 52,473 49,444 25,628 I

Depreciation 36,822 35,M4 32,643 30,339 27,825 26,703 13,666 Taxes 73,356 62,008 e5,853 66,684 48,724 45,536 17,993 Total Operating Expenses 537,898 461,741 411,350 353,620 290,703 262,393 102,589

_ Operating Income 92,848 80,072 74,751 71,772 59,133 58,738 28,501 Other income:

Allowance for funds used during construction:

j Borrowed and equity 18,317 9,668 6,281 Equity 6,003 16,608 18,340 16,610 4

l Other 12,895 10,348 10,935 8,956 6,205 3,693 1,994 Total Other Income 18,898 26,956 29,275 25,566 24,522 13,361 8,275 income Before Interes' Charges 111,746 107,028 101.026 97,338 83,655 72,099 36,776, i

Interest Charges:

Interest 75,772 64,263 54,527 46,881 39,839 33,677 16,039 Allowan(e for borrowed funds uwd during corntruction (credit)

(27,726)

(12,916)

(10,848)

(7,878)

Total Interest Charges 48,046 51,347 43,679 39,003 39,839 33.677 16,039 Net Income 63,700 55,681 60.347 58,335 43,816 38,422 20,737

_ Dividends on Preferred Stock 12,949 12.315 10,600 10,653 9,169 7,060 2,060

- _a_rn_ings_A_vai.lable for C_ommon Stock 5 50,751 5 43,366 5 49,747 5 47,682 5 34,647 5 31,362

_5 18,677 E

3 Weighted Average Number of Common Shares Outstanding (Thousande 25,148 23,540 22,029 19,833 17,547 15,023 9,358 Earnings Per Share of Common Stock (Weighted Average) 52.02 51.84 52.26 52.40 51.97 52.09 52.00 Dividends Declared Per Share of Common Stock 51.74 51.68 51.62 51.56 51.52 51.48 51.26 Operating Income-Before Income Taxes (%):

Ekstric 95 97 94 94 88 88 82 Cas 8

6 9

8 15 14 19 -

Coach (3)

(3)

(3)

(2)

(3)

(2)

(1)

(a) Restated-See Note 2 of Notes to Consolidated Financial Statements.

32

J s

i SOUTil CAROLINA E1.LCTRIC & G AS COMPANY 1980 1979(a) 1978(a) 1977(a) 1076 1975 1970 i$ lame Sheet Data (Thousands of Dollars Euept Statistics and Per Share Amounts)

Total Utility Plant (includn nudear fuel) 51,952,309 SL801,289 51,661,880

= = = = = = = = - = =. - - = - - - - -. -. - _ - - - - - -

- - - - -51.489,111 51,300,780 51,101,086 SMO,MI Total Awis

$1,802,392 51,650,395 51,522,707 51,361,222 51,171,630 51,005,626 5556,746 Capitalie.ation:

Common equity 5 486,158 5 449,397 5 417,471 5 366,813 5 305.072 5 2 M,331 5145,335 Pieferns) simk:

Not subbst to purchaw or sinking funds 26,262 26,262 26,262 26,262 26,262 6,262 6,262 1

Subbst to purchase or sinking funds 144,649 126,3M 128,019 109,794 111,507 113,224 46,439 long-term debt (exdudes current portion) 731,007 672,958 641,457 585,307 528,650 451,695 248,527 Total Caritalitation

$1,388,076 $1,274,981 51,213,200 51,088,176 5 971,493 5 835,512 5:46,563 Cornmon Sharn Outstandmg-Year-End (Thouunds) 26,261 24,195 22.440 20,359 17,8M 15,905 9,558 i

Ikiok Value lit Share of Common Stak br-Err.1 518.51 518.57 518.60 518 02 517.11 516.62 515.21 G1rr Statistics Du tric:

{

Customers-Wr-End 344,588 336,700 328,797 320,476 312,617 30s,366 258,780 Saks (Thousands Kh11) 11,809,445 11,251,667 11,620,938 11,155,075 10,318,150 9,563,369 7,780,201 l

Rnidential:

I Annual KWil p1 customer 12,580 11,627 12,269 12,146 11,320 10,970 10,157 I

Annual rate pt K%11 5.0:99 5.0164 5.0137 5.0812 5.0361 5.0369 5.0190 Gemtating Capability-Net KW Year End (000) 3,359 3.359 3,3M 2,852 2,852 2,851 1,876 Peak Demand-Net KW (000):

System 2,999 2,965 2,4o9 2,459 2,3 01 2,422 1,716 Territorial 2,497 2,299 2,2 71 2,216 1,994 1,931 1,455 Cas:

Custonwrs-Wr-End 166,470 1M,27/

162,412 161,850 161,473 159,241 129,755 Sales (Thousamis Therms) 506,528 545,387 501,273 468,78o 400,830 467,902 379,453 Iksidential:

Annual therms per mstomer 682 6N 751 734 767 631 8M Annual rate pt therm 5.44 5.34 5.31 5.26 5.23 5.23 5.13 Trartsportation (coach):

Numberof Coaches 102 86 Revenue Paswngers Carrial(000) 10,357 9,548 8,658 8.9 71 8,915 8,937 9,377 I

I l

2 1

1 (a) Restatal-See Note 2 of Notes to Consolidated Financial Statements.

33

l l

Supplement:ry Financial St:tements Adjusted for Ch;nging Prices (Unaudited) tlc tra&tional form of prrparmg Imancial statements m auordarue with t on is purportcJ to induate how much mtlation attests a partaular company xenc< ally attepted auountirig prira sples, proviiln a reasonaWe, tiuantitiaNe in compartion with the general rate of intiation. The data prewnted were team for awnsmg hnarusal results. Hut, dae to the fait that these results are develepid in accordance with the partial restatement provisions of Financial remrted m terms of dollars of varying purt haung power, these statements are Accounting Standards [ bard Statement No. 33, and are not intendn! to adiust not deugnal to f urnish data nuessary to evaluate the impact of inflation.

actual reported earnmgs. nor do they provide a bam for inwme tax reportmg The foibwmg constant dollar and a urrent cost supplementary Imancial or rate-making.

statement data are prewnted in an attempt to prov;Je certain inforrnation See the auompanying Notes to Supplementary Fmancial Stater..ents reganimg the estimated etlett of inflanon on the Company's operatnins. The for additional information.

m. hemataal ddlererxc between the results of the two methods of prewnta-Summary Statement of Income Adjusted for Changing Prices for the Year Ended December 31,1980 liistorical Cost Constant Dollar Current Cost As in Average in Average Rrported 1980 Dollars 1980 Dollars (Thousandsof Dollars)

Operatmg revenun 5630.74o 5 630.74o 5 630.74o

h. A pt f*ses' lutI uwd m eintrk generation 204.948 204.948 204.048 Gas purc hased ior rnale 121.e42 121,642 121.642 Deprniat on and arnortiration (a) 30.822 78,289 87,499 Other operat on and maintenarne 132.349 132,349 132.349 In<omeea es 42.137 42,137 42.137 Internt < harges 43.046 48,046 48.016 Other irwome, net (a)

(18.808)

(18.883)

(18.879)

Total esp nws, not 567.046 608.526 e17.742 Net inc ome 5 63.700 5 22.220(b)

$ 13.004

. = = =

x.: = =

=====

= ====-

Inflanon adiustments.

Reduction of plant to lower rnoverabie value 5(138.0838 5(117.948)

Unreabird gam resultmg from dareaw in punhasing power of net monetary habihties 123,512 l

123,512 Inc reaw in current cost of property plant and equipment (c >

5343.479 Ltin t of inoiaw m general pr ae level (31.0o3]

Inuraw m xeneral prire level over spnif k prn es (12,484)

Inflanon adjustments, net

-.5 (15.471) 5 (

-, - -.. _ 6. 920)- _ _ - - _

l Ne+ mwme less intlanon adjustnwnts 5 o,744 5 6,084 (as As perm 2tted m imanual Au ountmg Standards ibard Statement No. 33, items in the summary statement of income, other than deprniation cipenw.

were not ad usted.

t Ibi includmg the reduction to net rnoverable c ost, net income (bss) on a wnstant dollar basis would have been 5f 116,7631 for 1980.

(t i At themtvr 31.1980. the currect cost of net ut hty plant was 53.2CN,736 w hile net historical cost or net uwt recoverable through deprecianon was 51.w.2W.

NOTES TO SUPPLEMENTARY FINANCIAL STATEMENTS

1. Plant and equipment The data adtusted for genera! inflat on were

2. accumulated depredation The related accumulated depreciation for both l

determine i by wnvertmg historical wsts of unhty plant anJ <ertam non-the constant dollar and curient cost methods was developed by applying the t.nhty prop rty into dollars of the same general purchasirg power using the same percentage relationship that c=isted between gross plant and accumu-Consumer Price Indn ior All Urban Consumers tCPI-Ut This method shows lated depreciat on by fun (tional groups on a historical :ost basis at December the etfett of general inflanon on the Company (constant do!!arst 31,1980 and 1970, to the respntive bahnt es of the restated d<preciable plant.

The current wst data rettnt the cost of currently replacing custmg plant

3. Depraiation espenw Depreciation empen* for both the consrant dollar aswts Thew c mes were determmni through use of the llandy Whitman Indes and current cost methods was determined by applying the same rates and of Pubbc Ut hty Construction Costs and other valuanon methods tailern!

methodology used in computing historically booked depreciation to the sptutically to the type aswt temg restated fren so. replaument of some restated deprenable plant.

custing plant and eqwpment will take p!xe over a period of time and may not rnult in replacement w hah would duphtate nistmg f anhties.

31

Fiva Y:ar Comparison of Selected Supplementary Financial Data Adjusted for Effects of Changing Prices (Average 1980 Dollars)

Years Ended December 31.

1980 l

1979(c) l 1978 l

1977(c) l 1976 (Thousands Enept Per Share Amounts and Consumer Price Indes)

Net income (culudmg net inflation ad ustments, other than i

depretlat son As Reponed

$ 63,700

$ 55.681 Constant Dollars 22,220 25.923 Currrnt Cost 13,004 13.636 Income per common share (after dividend requirements on preferret! stock and culuding net inflation adjustrrents other than depreciatenh As Reported 2.02 5

1.84 Constant Dollars

.37

.51 Current Cost

.002

(.01)

Genertl information Operatmg revenues:

As Reported

$630,746

$541.813

$486,101 5425.392

$349.836 Constant Dollars 630,746 614.958 613.946 578,533 506,563 Unrealued gain resulting from decreaw in purchasing power of net monetary habihties 123,512 136,757 Net aswts at year-end at net recoverable cost (a) 489,361 506.902 Irw reaw in general price

!cvel over specific prices (12.484)

(81,341)

Cash dividends dalared per common share:

As Reponed 1.74 1.68 1.62 1.56 1.52 Constant Dollars 1.74 1.91 2.05 2.12 2.20 Market prite per common share at yearm!.

As Reported 14.25 14.75 17.00 18.50 19.38 Corwtant Dollars 13.61 15.84 20.67 24.53 27.44 Average Consumer Price Indes (CPI-U)(b) 246.8 217.4 195.4 181.5 170.5 (a) Euludmg preferred stock (subject to purchaw or sinking funds).

(b) 1%7 = 100 (c) Restated ~ See Note 2 of the Notes to Censolidated Financial Statements.

NOTES TO SUPPLEMENTARY HNANCIAL STATEME.NTS (continued)

4. Reductions of plant to lower recoverable value The rate regulatory process standing, this sesults in a net monetary gain. This gain does not represent an limits the Company to the recovery of the historical costs of plant and equip.

exchange of cash at present or in the future, but represents the effect of the ment. Therefore, the value of the plant and equipment determined under the changing value of the dollar.

(onstant dollar and current cmt methods must be reduced Io the lower

6. Increaw in general price level over specific prices This results from the rc< overable amount, which is historical cost.

value of the particular plant and equipment held by the Company increasing

5. Unreallied sain resultina from dureaw in purchasing power of r et at a lesser rate than the rate of general inflation as measured by the CPI-U.

monetIry liabitties The Company, by hokhng monetary assets such as cash

7. Other Fuelinventories, the cost of fuel used in ekstric generation and gas and n<eivaNes, lows purchaung power during periods of inflation becauw purchawd for resale have not been restated from their historical cost in thew items will purt haw less at a f uture date. Alternatively, by inc urring nominal dollars. Regulation a!Iows the recovery of fuel and purchawd gas monetary liabihties. pnmarily long term debt, the Company benefits because costs through the operation of ad ustment claue or adjustments in basic i

the payment in the f uture will be made with dollars having less purci.asing ra:e schedules to ac tual costs, power 11nauw the Company has sigruficant amounts of long-term debt out.

35

Board of Directors DIRECTORS W.II. Taylor Avram Kronsbera J.K. Addy President, Edward), Inc.

Chairman of the Board and President President, Addy Dodge. Inc.

Charleston, South Carolina Twin City Motor Company, Inc.

l eiington, South Carohna J.II. Lumpkin Batesburg. South Carohna W B. Boolihart, Jr.

Chairman of the Board Emeritus, Arthur M. Williams Partner, W B. Bouirhart Farms President Emeritus and Chairman of the Board litorre. South Carohna Chairman of the Emutive Committee (1) of the Corrpany W.R. Bruce South Carohna National Corporation Columbia. South Carolina President and Chief Emutive Of ficer Columbia. South Carohna Oscar S. Wooten The Seibels Bruce Group, Inc.

EC. McMaster Emutive Vice President.bnance Colabia. South Carohna President and Manager of the Company K.W. Frenc h Winnsboro Petroleum Company Columbia. South Carolina Retired Plant Manager Winnsboro, South Carolina E.I duPont de Nemours & Co.

E.W. Pike, Jr.

DIRECTORS EMERITI Savannah River Plant President

~~

Ad en, South Carohna Colonial Development Company hart, Sr.

J.B. Guess til Beaufort, South Carolin' W J. Keenan, Jr.

Gwner. Ednto Farms J.B. Rhodes Edward Kronsberg Denmark. South Carolina President, Rt. odes Oil Company, Inc.

S.R. McMaster(2)

B. A. llagood Walterboro, South Carolina ER. McMeekin President. Wm. M. Bird and Co., Inc.

1.E. Si hachte, Jr.

A.C. Mustard Charinton, South Carohna President, Schachte Agency, Inc.

W J. Ready JJ. limil, Jr.

Real Estate and Insurante John C.B. Smith Chairman of the Board and President Charleston, South Carohna a Elfative February 1,1981 Pre Stress Concrete Company. Inc.

Virgil C. Summer (2) Ducased December 23,1980 Charinton, South Carohna President and Chief Executive Offuer of the Company Columbia. South Carohna Board Committees To facilitate the managing of SCE&G, the Board of Directors has six committees.

EXICUTIVE COMMIM EE Arthur M. Williams. Chairman In the intervals between meetings of the Board of Directors, the EC. McMaster Emutive Committee has all powers of the Board in the managc-J E. Schachte, Jr.

ment of the business and affairs of the Company and advises Virrl C. Summer and aids the of ficers of the Company in all matters cornerning Oscar S. Wooten its interests, and the management of its business.

AUDIT COMMITIEE I Fl.1.umpkin, Chairman The Audit Committee. composed entirely of outside directors, J.K. Addy meets with the Internal Auditor and independent auditors to K.W. Frenc h discw.s their respective reports. They also discuss the scope of Avram Kronsberg the audit to be performed by the independent accountants and E.W. Pike. Jr.

report their findmgs and recommendations from such meetings to the Board of Directors.

CORPORATE PLANNING COMMITTEE 1.B. Rhodes. Chairman The Corporate Planning Committee assists corporate manage-K.W. French ment in the ongoing development of strategic plans for the J E flassell, Jr.

Company's long-term development.

Virgil C. Summer Arthur M. Williams INVESTMENT COMMITTLE Virgil C. Summer, Chairman The Investment Commit'ee determines the investment and llenry 11. Gaddis, fundmg pohcies of the Trust between the Company and douth

[

Trecurer of the Company Carolina National Bank as Trustee under the Retirement Plan.

i J B. Guess !!!

W.fl. Taylor Arthur M. Williams Oscar S. Wooten r fN510N COMMITTEE B.A. Itatcxxi Chairman The Pension Committee gives direction to the operation of the W.B. Bookhart, Jr.

Company's Retirement Plan and other welfare benefit plans, W R. Bruce including plans covered by the Employee Retirement Income E.W. Pike, Jr.

Security Act of 1974.

Virgil C. Summer Arthur M. Wilhams SALYRY COKE 11TTEE J.fl. Lumpkin, Chairman The Salary Committee meets to review the salaries and compen-I E Ilaswil, Jr.

sation of the officers of the Company, to receive information, i E. Schachte, Jr.

reports and suggestions with respect to remuneration paid or Virgil C. Summer proposed to be paid and to make recommendations to the Arthur M. Wilhams Directors for their consideration.

36

1 Officers Arthur M. Williams Georze li. fiu her VICE PHLSIDINIS A%1STANI Oll!CI RS Chairman of the ikurd ley.at Allairs W Iliam N. A(kerman J. Gary I!!ac k 11 Virgil C. Summer Ihomas M. Groetsinger Energy Management, Awistant Treasurer Prewlent and Anounting and Computer Servi < es Gas iransrnswu>n and Supply Samuel fl. Ilarrington, Jr.

C hwf i m utive Of fu er Mak olm C. Johnu,n D. lllis llay, Jr.

Ar+, tant Controller I3I CUTIVE VK I l'HISIDINTS Iwd hnt aml Hydm I nulu< tion, Custoner (hwratu>n' T. Roland ude Trrnstmwnin and System Operatk.ns Nortbern thvision Aw,stant Treasurrr CJ hW AMeration T homa-C. Nic hols, Jr.

John W. Iluxxins Idward C. Roberts 3*"""'

• • "istant Sexretary and Garyson C. Meetse Operation, Curtis L Hye

'g,Y "8

C. rwral Counsel Customer (h+rahons flerman B. Speiwexxer, Jr.

g*

fl. Marion Smith, Jr.

Customer 0;=vatu. ins Pubbc Aff airs Southern Ihvmon Vite !*Hf51Df14iS ANI)

James W. Nddinx OTill R OfIK IRS GROUP DI.CITIIVIS--

Corg=. rate Planrung arul liarold M. firyant

-~

ihary G. Iluyldon, Jr, Manage ment Servk es S.5 retary Rate Hexulanon. Purdusmx ilugh W. MLlon llenry 11. Gaddis d* I '"' ""' E Adminntrative Servie es Treasurer Ima fid) II. Crews, fr.

Ivy.meering Seevues aml g

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( onstruc tion g

g Supplemental Investor Information Annual Meeting and form 10-K Solidtation of Prosie*

A copy of the Company's 1980 Form 1GK The annu d rnetting of md holders will be regx>rt as f !cd with the secarities and held at the Corporate of fites Wednewfay, En hange Commission is available to Aprd 22,1981. Provies will be requested sted holders upon request.

for suc h meeting and willle sent to stmk' Stathtical Supplement hohicrs on or about March 12, 1981.

Miipy of the Statistical Supplement to This report is issued wiely for the pur-this report is avadable upon request.

pow of providing inf ormation. It is not Please (all or address your request for any intendn1 f or uw in connettion with any sale or purc haw of, or any of fer or f 6 abe reports, or information ron-sola iration of of fers to buy or sell. any (erning financial and operating data, to g.ra Horton, Jr., Emutive Assistant-su urat ms-Financ c, Telephone (803) 748-3649.

Corporate Information

_. - ~.. _ _ _ _.. _ _ _ _ _ _ _ _.. _

MAILING ADDRESS Cumulative Preferred Simk:

TRUSTEE AND PAYING AGINT P.O. Ihm 7t>4 The Chaw Manhattan llank, N. A.

Hrst and Refunding Mortgage !!onds:

Columbia South Carnhna 29218 New York, New York Manufacturers Hanover Trust Company CORPORATE llEADQUARTI RS T he South Carohna National liank New York, New York 32o Main Street Colutnbia, South Caruhna DIVIDEND REINVESTMINT AGENT Columbia, South Carolina RIGISTRARS South Carohna Ekstric & Gas Company (803)748-3000 Common Stmk:

Sted holder Relations INDIPENDINT AUDilORS Manufacturers llanover Trust Company The Company's (ommon sim k and 5%

Deloitte liaskins & Selh New York, New York (umulative preferred stmk are listed on Colurnbia, South Carohna The Citiiens and Southern National llank the New York Semk Enhange (NYSE).

TRANSil.R AGINIS of South Carolina Company Stmk Symbol-SCC.

Common Simk:

Columbia, South Carolina Manuf ac turers llanover Trust Company Cumulative Preferred Stmk:

New York, New York T he Chaw Manhattan llank, N. A.

Tbc South Carolina National llank New York, New York Columbia. South Carolina T he Citizens and Southern National llank South Carolina lh tric & Gas Company of South Carolina Stakholder Relations (Ruord Keeping Columbia, South Carolina and Dividern! Paying only)

South Carolina Electric & Gas Company P.O. Box ~M Columbia, South Carolina 29218 l

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i \\' \\ s Ns ~? s Table of Contents egy s Financial and Operating Highlights 1 s 3 Report to Shareholders i

2. 3 ~

Managing for the Future 4-8 Map of Service Area 9 1981 in Review 10 13 Management's Discussion and Analysis of Financial Condition and Resuhs of Operations 14-20 Management Report 21 l Consolidated Financial Statements 22-33 Report ofIndependent Certified l Public Accountants 33 Selected Financial Data 34,35 Supplementary Financial Statements Adjusted for Changing Prices 36,37 Corporate Stock Information 38 Directors and Officers 39 t Supplemer.tnlInvestor I 40 Information and Corporate Informatiqn g _. x _ _ _ ~ t s I 3 hl;M , -3 'A s, i, 3 6 f 'g g ,I J [?. J3 s M i i t l ABOLIT U (E COVER Customers, investm and employees are reprewnted on the cover ad the 19M South Carolina Electru A Can Company Annual Repsut as an illustration ( <d the continuing comnutment your Company will ha>e in each group durma the decade ad the it(ya and brynnd. l I \\. g 'e s I

Financial and Operating Highlights % Increase 1981 1980 (Decrease) tMilhons of Dollars except statistics and per share amounts) Operating Revenues S 759.7 $ 630.7 20.5 Operation and Maintenance Expenses (Excluding Taxes, Depreciation and Amortization) $ 507.3 $ 427.7 18.6 Earnings Available for Common Stock $ 68.6 $ 50.8 35.0 Earnings Per Share of Common Stock (Based on Weighted Average Number of Shares Outstanding) $ 2.44 $ 2.02 20.8 Dividends Declared Per Share of Common Stock 1.82 1.74 4.6 ~ Common Stockholders' Equity 5 552.9 $ 486.2 13.7 Book Value Per Share of Common Stock (Year-End) $ 18.62 $ 18.51 .6 Common Stock Outstanding Average (Thousands) 28,139 25,148 11.9 Year-End (Thousands) 29,690 26,261 13.1 Total Utility Plant (Including Nuclear Fuel) $2,131.7 $1,952.3 9.2 Construction Expenditures (Including Nuclear Fuel) $ 184.1 $ 153.6 19.9 Electric Customers (Year-End) 350.506 344,588 1.7 Total Electric Sales (Million KWH) 11,763 11,509 (.4) Gis Customers (Year End) 169,294 166,470 1.7 Total Gas Sales (Million Therms) 493 507 (2.8) Earnings per Common Share Dividends Declared per Common Share Return on Year-End Common Equity i (dollari) (dollarif (percenti 2.00 3.00 14.0 13 12 4 2.50 2 40 2.50 2 2r 10 4 2 02 2.00 2.00 10 4 96 1 e4 1 82 1 56 t 1.50 1.50 8.0 1 00 1.00 6 I .50 .50 4.0 1977 1978 1979 1980 1981 1977 1978 1979 19NO 1981 1977 1978 1979 1940 1981 l

Fellow Shareholders ] i i TDENTIFY!NG objectives and developing strategies to meet them have been .Limportant activities of your Company during the past year. l ^ f ' As is discussed more fully in the" Managing for the Future"section of this S '% report, the first priority of our corporate planning activity has been to improve the financial position of the Company. We are pleased to report to you that we (I ~ ~~ aic making progress toward meeting this objective. ( Earnings per share of common stock in 1981 were $2.41 as compared to $2.02 l in 1980. This improvement is primarily a result of electric revenue collected l under bond since April 1,1981 following the filing of a petition with the South Carolina Public Service Commissionipsc)to increase retail electric rates. Thesc 7. additional revenues and the concurrent improvement in financial position as h reflected by the carnings demonstrate that the request was necessary. Revenue collected under bond, while a decision by the psc is pending, is subject to refund plus interest should any part of the request be denied. In this l case and others, the Company has urged and will continue to urge that more 7 g g realistic rate-making practices be adopted to allow the recovery of expenses resulting from the increased costs of providing service. Hearings in the current rate case have been concluded and a decision by the psc is expected by March 31,1982. Two significant events in the positioning of the Company for the future occurred during January 1982. The first was the completion on January 200f Arthur M. W&ams hearings by the Atomic Safety and Licensing Board on the licensing of Summer Nuclear Station. These hearings were devoted in large part to the continued p l g seismic activity induced in the vicinity of the station as a result of the filling in 1978 of the adjacent Monticello Reservoir. As of February 15,1982, no further hearings had been scheduled. Monticello Reservoir is a 6,8(X) acre man-made lake that forms the upper reservoir for the Fairfield i umped Storage plant as g well as providing cooling water for the nuclear station. As is discussed within this Annual Report, there are other matters which are likely to affect the schedule for licensing and commercial operation of Summer Station. ~ /( v While the ultimate cost of the nuclear station has been adversely affected by inflation and delays asmciated with lessons learned fromThree Mile Island, i the Company strongly believes that the fuel economics that will be realized r from the operation of the plant in the future will make the station an important addition to the South Carolina Electric & Cas system. r 1 he second significant event occurred during the January Ibard meeting i ~ when the Directors approved the signing of a letter ofintent to merge Carolina Energies, Inc. into a wholly-owned subsidiary of SCERG. Carolina Energies, Inc. ~ is a holding company owning over 1(X X) miles of natural gas pipeline as well as L propane transmission and storage facilities. It is engaged primarily in the l transmission and sale of natural gas and propane in the northern and eastern sections of South Carolina. Carolina Energies, Inc. reported gross revenues of l $103. l million and net earnings of $6.6 million for the year ended March 31,1981. v noi c. summe, The letter of intent provides that a definitive merger agreement must be entered into by March 1,1982.1 he merger would be subject to approval by regulatory authorities and the shareholders of Carolina Energies, Inc. In the proposed merger, the shareholders of Carolina Energies, Inc. will have the right to receive $28.(X)per sharc of common stock in cash or in common ? I

stock of South Carolina Electric & Cas Company, as they elect, subject to certain y conditions. SCE&G will not be required to pay in cash more than 49%of the 1

p. Nj total consideration to be paid in the merger.

y"r Carolina Energies, Inc. has a very efficient and outstanding management 4 team. We believe that its high quality earnings will improve the cash flow of the Company and the merging of the two gas systems will enhance the abilities of the two to serve almost the entire state of South Carolina. Negotiations have been cornpleted and construction of the Palmetto Center Complex h>cated on Main Street in Columbia has begun. SCE&G will lx the i major tenant of the high rise office building.This should improve the efficiency of our operations by consolidating the corporate office functions of the Company in one centrally kicated building. The Palmetto Center Complex, scheduled for . N ~- completion in December 1983, will include the office building, a maior hotel, NN A NdM convention / meeting room facilities and a multi-story parking garage. ,4 The Company's Dividend Reinvestment and Stock Purchase Plan contin-d 1 ued to receive increased shareholder participation during the past year. At year- ~ end approximately 21% of the Company's common stockholders were enrolled in the plan, up from 19% at December 31,1980. Since the inception of the plan ,_,,,, y, p,,,,a,,,, c c. ,,,, op,,,n,,,,, o s. in 1974, more than $41 million in new equity capital has been raised, including w...ica. i. nan. : ana ci rnu. ^anunniran..n..n.a an r a record $11 million in 1981. ardusene numiel ed the Painiveto Center Ornples unarr ,,,,,,,,,,,,, c,,i o,,s,. s,,c 3 c,ono,,,,, n, 3 c., At their January 1982 meeting, the lloard of Directors authorized the public o npany wdl rnem nu owpneate hea4uanns us the offering of two million shares of SCENG common stock. This stock is expected *1",","",7",',""""""'""""'"'""""'"'*d"'*d"" to be offered on or about March 16,1982. The Iloard of Directors also declared a quarterly dividend of $.48 per share of common stock payable on April 1 to s'ockholders of record on February 18. This represents a 2M cents increase over the previous quarterly rate, making 1982 the 29th of the past 30 years in which a higher dividend has been declared. The year of 1981 has been one of notable accomplishments and significant events for South Carolina Electric & Gas Company. We are ccmfident that our employees will continue to strive for excel'.cnce in performance of their jobs and that our corporate strategies will carry the Company into the future with strength and cemviction. Sincerely, Y' 4(h ARTiiUR M. WILLIAMS VIRGIL C. SUMMER Chairman of the ihmi President and Chic ( Executive Officer 3

Managing for the Future vg N structuring South Carolina Electric & Gas Company ,S for the decade of the 80's and beyond, your Company has <3) ~ realigned certain areas of middle management responsibility 4 Q and placed increased emphasis on the development of ~ strategic corporate planning. / ,j. gf Organizational changes that have been completed during . -Q the past year should improve our internal efficiency and take greater advantage of tbc talents and skills of our employees. g These changes will make clearer the responsibilities for g/9 meeting goals and employing strategies as they are developed. F The identification and implementation of corporate strategies for the future are intended to contribute to bettering our u. ...,,.ma oi, e.,,.,.,,.,,h... o, financial condition while helping us to be receptive to the E,"*l,'.,*.'."L"".' *2,*','"'o'iM"O i2,,'C"',i; interests of stockholders, the needs of customers and the se - rw.n .<stheo oa.,4.ioa oi,in." concerns of emplayces. gr.ae levels.c,m. ou, nervne.re. emh gr In the early days of this century, utility companies-gas, electric and transportation-relied on an operational c. planning process that addressed such concerns as how much gas or electricity was needed, where was the best place to ~ build a generating plant or what trolley routes would attract ~. the most ciders. In those days, and indeed until recently, 3 'q\\' this type of system planning was sufficient and brought D 9< growth to companies, comfort and safety to customers and ,. jp ye, %.y strength to our nation f' As we look to the future, South Carolina Electric & Gas i Company is fortunate to be able to build on a foundation of f%,k more than 135 years of bringing its plans from concept to I f $f action. Your Company has had many noteworthy accomplish- -1 .p + MJ(g{-)} (i ments since the 1846 incorporation of its earliest ancestor, the Charleston Gas Light Company. In 1894 the Columbia 7(JQyNf7i Water Power Company completed a powerhouse on the Columbia Canal to provide energy for the world's first LT,i'".' 'C'.5"n10..%2.","1"',',ff'i electrically-operated textile mill. a',"L'"u2 $',"'inG"IO U"."o"y."E'.','""; In 1930 another corporate ancestor, the Lexington Water .n Power Company, Completed Saluda Dam, then the largest as in.ded into the emtor. earthen dam for power production in the world. In 1959 McMeckin Steam Electric Generating Stanon was completed. It remains one of the more efficient such a

l plants in the nation. In 1961 SCE&G installed the nation's first package gas turbine electric peaking plants and in 1963 \\ g work was completed on the Southeast's first nuclear-powered 1 ,,9 generating station, an experimental venture by a group of investor-owned companies including South Carolina Electric b g & Gas Company. % Q Today, we are vigorously pursuing commercial operation of our V.C. Summer Nuclear Station. Summer Station will l produce 9(X),(XX) kilowatts of electricity. It was built in conjunction with the South Carolina Public Service Authority, f;. which was responsible for one-third of the construction cost g and will receive one-third of the output.SCERG funded the ~ remaining two-thirds and will operate the station and receive two-thirds of the output. Coming on line in the post-Three 4 Mile Island period, Summer Station incorporates the latest %, ss,,,,,,,s. s.ss s,,,m.s,....,,,,,s, vt. e technological advances in efficiency and safety. 2,7";'ff, !'Zl,", ;"l0" "lll"f, 'f;",',",' "' Also, we are pleased to be part of an exciting new ~ development aimed at revitalizing the downtown business 1,, R district of Columbia, our capital city and corporate {7 headquarters. L Plans were unveiled late last year for the Palmetto Y :[- Center Complex, which will include a 21-story office tower, W. a 13-story hotel, a multi-story parking garage and a three-l \\ j story atrium with meeting rooms and convention facilities. p The development will be located on Main Street and will i m encompass nearly a square block. South Carolina Electne & Gas Company will be the major tenant of the office [ building, bringing the majority of our Columbia employees f together in a single building. We are proud of the Company's past achievements as well as projects currently underway. However, upheavals m s the political and business environment during the past few years have altered the manner in which business planning I,."' Co""",ldo'*E*."J"M'"l,"". 7 "ril" '"S*C must be approaehed. To successful 1y compcte today, utilities '"" 2""f',"C 1"T"',"t"'"<'"s'""E"s'"O .o. must increase their application of strategic planning to identify the long-range objectives of the organization and the policies and strategies that will accomplish these objectives. 4

1 l 4 The management of your Company understands that these new and creative planning methods are necessary to provide adequate returns to our investors, meet the energy requirements of our customers, deal with high interest rates, identify and address the social responsibilities of the future, \\ obtain timely and reasonable rate increases, and keep our i customers, our employees and our shareholders informed of our progress. To help us meet these challenges, a corporate mission statement has been developed and adopted that sets forth the overall purpose and philosophy of the Company. The mission of South Carolina Electric & Gas Company is to meet the energy needs and energy-related requirements i of the people and businesses within our service area. To f accomplish this, the Company must earn an adequate return on the capital invested in its facilities by charging a fair price for its services, while maintaining a high degree of r.m.. w waa.. me n.oa,ni.na mun.m un., a n $n""i',,E'."",',"*,',""nEn"U*"' '"E"d"in".n" efficiency in its operations. ",'"d"N"n'n"'"",*$"'" ".",N", *'"" '""" '"""' The mission implies adequate compcnsation to investors for use of their money, an involvement in future energy ? ] technology, a leadership role in the economic and industrial ? d development of our service area and a willingness to accept l l our share of social responsibility. While carrying out this [ mission, the Company recognizes its responsibility to meet ." the reasonable and appropriate needs of its employees, its f customers and its shareholders. With this mission in mind, we are developing strategic l plans that will satisfy the direction and intent of the mission. First, we will improve the Company's financial strength. j Only with a strong financial base and competent manage-ment can South Carolina Electric & Gas Company continue to provide the service and energy production that have marked its past development. Goals associated with improving the financial position w o. .n.m.,+ nim. n. m....mn.yu m..na include achieving a stronger bond rating, improving a lew c.ely with th. u=r d vehitin hke ihn one. T he c.,mn.n, h..... h n-hme. u.a m,h. m. mien.n<. the fixed charge coverage ratios and internally generating a i larger portion of cash requirements for construction. We will continue to improve the efficiency of operations and w 6

4 l administration through cost awareness and expense reduction programs. We will seek out and i 'vestigate business opportunities and diversification that will support the Company's rate of return requirements and that are consistent with our mission. Secondly, we are upgrading our ability to meet the service needs of our customers and are improving our public image. [ g The perception that our customers have about how well i o we are doing our job can play an important role in improving g a their understanding of the increasing costs of energy today. To meet this objective, we have improved screening N" and training of employees who have direct contact with our .-A customers. We also have trained a volunteer group of ~ Mp.g employees who constitute the foundation of a new and I'Y expanded speakers bureau. Through their speeches, they ^ r,t:,",rgl,1,,C,",*,0,7,',",C,%,',,a ",d ,s carry our story to the communities we serve. We have

'"r,s

.re=";rf "ri a ," ', nt n i ""*"d"'""""""""'- improved the Company's emergency response efforts with training and a new computer-controlled system for tracking trouble reports during storms and other emergencies. A F '~~^W i 7 committee of linemen, technicians, supervisors and h a engineers continues to seek ways to improve equipment y M-utilization and reduce recovery time in emergencies. ? 4 y Our Customer Assistance Department has been very successful in identifying those customers who, due to age, health or financial problems, need assistance in paying their energy bills. This department has established contact with federal, state, local and private assistance agencies to quickly put these customers in touch with the proper organization. A humanitarian outgrowth of this department has been the establishment, by our employees, of a voluntary Good Neighbor Fund to accept donations of money, food or clothing from fellow employees and to distribute these to needy citizens identified by our 3,,,,,,,,,,,,,,,,,,,s.c,.,,,,.,c,,.,s_,,,,<, Customer Assistance representatives. All expenditures are ["1"a"""'Jf"0""l'"7l"l' ';,""s ','id,$,,07 l approved beforehand by the Steering Committee of this fund.

• • • "?;,Ji l

Our third objective calls for improving the utilization I and development of our employees through productivity measurement, achievements recogmtion, cross-traimng and 1 7

1 l, [?"~ exp.mded training and education programs. b The Manpower Development Department has already implemented a program for forecasting and budgeting manpower requirements as well as a system that allows supervisors to recommend employees for educational and training programs. We have developed a management succession plan that more clearly identifies leadership qualities in employees who will direct the future operations of the Company. Our Corporate planning Department, in developing i objectives and identifying goals and strategies, has made l extensive use of computer systems that facilitate the study l ' of alternative solutions to a problem at greater speed. The d computer system and new mathematical techniques can 2"$',,"*"J""It"'","l'""'"'Ul"Ty'""*"",f/;' produce comprehensive finaneia1 models, demand proicetions j h "O"" '"i.7.*o""e"".N",'"",' "i ml.liin,'"."'"d" ", ", " and other forecasts that consider important external factors pirate planmng. Thn n the system's data contr<d unter g i These forecasts and projections, coupled with human ~ - 7 judgment and discretion, form the basis of the goals and ~ .L objectives that will guide our Company into the next century. j _ M,, ~^s ~ Some interesting possibilities are being discussed in ~ ~ our Company as long-range goals and strategies are ^ i [ '4 developed. They include the electric automobile, cable 4 l 'aw communication systems and solar technology. [m The energy future holds many exciting opportunities l [ for South Carolina Electric & Gas Company. It also will 4 !I present difficult, but not unmanageable, problems. We y2 have the facilities to meet the energy and energy-related y* requirements of our customers. We have the experience and talent of dedicated employees and we expect to maintain S"fa,C"""';",d7"l.""'U",'"l,'"*""'d; the confidence of our investors. Our plans and strategies ' '"',T.sT!,Ulf,"Z"m"l'"LZ""U"",' A will help us make the critica1 decisions that will ensure Iu has naved mdluma of dollan and dramancally reduced the ume m,o,ed io,ene. ado, moon. or the.v,,em. that South Carolina Electric & Gas Company will be a contributor to an exciting future. l I 8

h m N a O q r3 k., j J U E g

( 1981 in Revisw The review of 1981 reflects our continuing commitment to our customers and shareholders to provide the best possible service, while improving the efficiency of our operations. ~ Commitment to Our Customers He Company is vitally interested in energy conservation as a means of reducing energy costs of our customers and reducing the need for future additional generating espacity. During 1981, the Company initiated a program of home energy audits designed to reduce the energy requirements of our raidential customers in accordance with the National Energy Conservation Policy Act of 1978. The audits are conducted for a nominal cost to the customer by specially-trained Company personnel. The audit involves a comprehensive, computer-assisted, on-site survey of the various uses of energy in the home, and then recommends ways to reduce energy usage through improved insulation, more energy-efficient appliances and other energy conservation measures. Notices were mailed to all of the Company's residential customers announcing the availability of this service. By year-end, over 1,700 customers had requested an on-site audit and the Company had received requests from nearly 3,400 customers for a do-it-yourself audit package. The Company expects to conduct approximately 3,000 home energy audits annually through 1984. During the year, the Company completed a study which investigated the costs and benefits of controlling the use of residential water heaters, air conditioners and electric heating systems as a means of managing the load placed on the Comoany's electric generating facilitics, and thereby reducing the need to build additional generating facilities. The study, which was - filed with the Pscin June 1981, indicated that the Company should not implement a residential load control program at this time. However, the - Company will continue to monitor load management techniques that could reduce the need for future generating facilities in a cost effective manner. To further energy conservation, and to shift demand from peak to off-peak periods, two new rates were proposed as part of the Company's February 1981 retail rate application before the Psc.lf approved by the PsC,an Energy Conservation Rate will be offered to customers whose homes meet certain. insulation requirements, and will provide a discount of approximately 6.5% on their electric bills. A " time-of-day" rate was also proposed to price electricity higher during periods of peak demand and less during off-peak periods. A seasonal rate was placed in effect under bond which prices regular residential electric rates according to the time of year; concurrently, the Company discontinued the winter discount for electric heating customers. %e Company also proposed that large industrial electric customers which allow interruption of their service during peak periods would be eligible for a reduced rate when compared to their normal rate. The Psc held hearings during 1981 pursuant to the Public Utility Regula-tory Policies Act concerning co-generation. One of the requirements was that state commissions determine rates that utility companies should be required to pay for electricity generated by nonutility entities and furnished to the utilities. At this time, the Company has no co-generators on its system, but is discussing the possibility of purchasing power from several potential co-generators which will be locating in the Company's senice area. i '10

Industrial Development During 1981, South Carolina experienced its best industrial development year in history by announcing more than $2.4 billion in capital investment in new plants and expansions.This eclipsed the old record of $1.5 billion, set in 1979. Some $1.4 billion,or 59%,of these new investments will occur in the Company's semice area and will create an estimated 5,600 jobs for service area citizens. The economy of the Company's service area has evolved since the early 1960's from one largelydependent on agriculture to one better balanced between industry, commerce and agriculture. During the decade 1971-1980, more than $9 billion in investment in new f ndustrial facilitics was announced in South Carolina, with a pproximately 36% occurring in the Company's service area.The Company has worked aggressively to bring new industry to South Carolina. Protection of the Environment During 1981, the Company incurred some $.5 million of capital expenditures on pnllution control facilities to minimize the impact of the Company's operations on the environment in South Carolina. Over the last ten years, the Company has invested approximately $3 million in air pollution control devices and $9 million for waste water treatment equipment. The Company exp: cts to spend approximately $134 million on pollution control facilities over the next five years, including $.3 million in 1982. Employees The Company had 3,607 employees at year-end 1981, a 6.7% increase over 1980. Preliminary staffing of the Summer Station accounted for most of the increase, with the remainder coming from normal growth. Approximately 77% of the Company's employees were involved in operating and maintenance-related activities, including customer service. Approximately 1,200 employees were represented by three unions at December 31,1981. Wage negotiations with each union were successfully completed during 1981in accordance with terms of the three-year contracts signed in 1980. The other employees were given a general wage increase during the year in line with established practice. Stockholders At year-end 1981, there were approximately 59,mo holders of record of the Company's common stock. Several thousand additional shareholders owned shares held by banks, brokers, investment trusts or nominees. The Company's stockholders reside in all fifty states and in several foreign countries (see " Corporate Stock Information", page 38). South Carolina continues to rank first with 23%of the shareholders. The Company is not aware of anycne who owned beneficially more than 5%of the Company's outstanding common shares at December 31,1981. In 1978, a group of the Company's stockholders formed the Association of SCEAG Investors. Acting independently of the Company, the Association works to advance the interests of SCERG investors. Four representatives of the Association appeared before the PSC during the Company's 1981 retail electric rate case proceedings. Their testimony stated that investors have been hurt in recent years by the fact that the electric and gas rates al'. owed by the PSC have not been adequate to pay all the Company's costs, including the cost of using the investor's money. 11

Chart i Electric Peak Demand Electric Peak-load (Excluding The territorial peak demand represents the maximum requirement for Interchange and Emergency Loads) electricity by the Company's erstomers (excluding other utilities) for any one-1 hour period during the year. The 781 peak occurred on July 14 when customer demand reached a record of 2,557 r. gawatts, a 2.7% increase over the 1980 peak (see Chart 1). The territorial peamad has grown at an average annual rate cf 5.1%over the five year period ended in 1981. The growth of the 1981 3" peak was due to an increase in the number of electric customers on the Company's system and a weather-induced usage of electricity for air 2nr conditioning. 2 2n-2 2n-2.a 2m On January 11,1982, a new winter territorial peak was established at 2,335 megawatts. For the past five years, the winter peak has been growing ~ at an average annual rate of 5%. Since the Companyhas tradition lly been a im summer peaking utility, a continuation of this winter growth will allow the Company to utilize its generating equipment more efficiently. The increase in customer conservation awareness during the past several um years has had a noticeable effect on territorial sales of electricity except duririg periods of extreme weather conditions, when customers apparently are willing to sacrifice conservation for comfort and increase their consumption patterns for short periods of time. This results in a higher rate of growth in om peak demand compared to growth in total electricity sales. The Company bases its plans for the construction of new electric generating facilities on the expected growth in the territorial peak demand. Our current projections indicate that the peak-load will grow at an average ion iem ice iom t"l annual rate of 3.6% through 1986. Chart 2 Sourcesof Electric Generation Electric Generating Capacity " ~ "" To meet the energy demands ofits electric customers, the Company had a M[.]Q]Qhpk_pi system peak generating capacity of 3,359 megawatts at year-end 1981. This E' generating capability was unchanged from year-end 1980. Approximately ur n 49% of the Company's electric generating capacity is in four steam plants f , !d ; a which burn coal; 20% in t wo steam plants fueled by residual (No. 6) oil; 23% a h4 in six hydroelectric plants; and the remaining 8% in seventeen internal combustion turbines and combined cycle generators which burn either distillate (No. 2) oil or natural gas. The Company's peak generating capacity to will mercase by 600 megawatts when the Summer Station begins commercial T-~ operation. In 1981, coal was used to generate about 83%of the electricity produced by the Company, residual oil 7%, hydroelectric power 7% and distillate oil and natural gas 3% (see Chart 2). Electric generation in 1980 was 79% coal,10% residual oil,9% hydroelectric power and 2% distillate oil and natural gas. 20 Fossil Fuel Supply The majority of the coal used by the Company is purchased under long-term contracts with suppliers in Kentucky and Virginia. The Company normally ic7 iam iv9 ino swi M co.i M mam maintains a 90-day supply of coal in inventory and at year-end 1981 had C3 ReMdual No.610ii ECE a L a a approximately an 85-day supply on hand. e oil The Company has approximately 88% of its 1982 coal requirements under l long-terni contracts with plans to purchase the remaining requirements on the spot market. 12

The Company has a contract for the residual oil burned at Williams Station. At year-end, there was approximately a 90-day supply in storage. Nuclear Fuel Supply The Company has on hand sufficient quantities of nuclear fuel for the initial start-up of the summer Station. Under terms of a 1980 settlement agreement with Westinghouse Electric Corporation (see Note 90f the Notes to Consolidited Financial Statements), the Cornpany has a contract with Westinghouse for a supply of uranium concentrate and for its conversion and fabrication. Westinghouse is supplying approximately 77% of the uranium for operating requirements through 1989. The Company will have to supplement its nuclear fuel purchases to cover the difference between its total uranium requirements and those covered by its present contract. Natural Gas Supply The Company purchases natural gas from Southern Natural Gas Company under a contract terminating in 1989 with a contract demand of 165 million cubic feet (165,(XX)MCF) per day. Notwithstanding the contract, daily natural gas alk) cations to the Company are made by Southern under a FERC approved curtailment plan. Due to availability of gas supplies in 1981, Southern was able to supply to the Company its contract demand when requested to do so by the Company The availability of natural gas from Southern was not noticeably affected by the interruption of deliveries of liquefied natural gas from Algeria to Southern. To meet the requirements of its firm natural gas customers, the Company supplements its supplies from a liquefied natural gas (LNG) plant and from propane storage facilities. During off-peak periods, the LNG plant can liquefy and store up to 6,000 MCF per day. In order to provide reliable supplies to its high priority users, the Company can store up to one million MCFof natural gas as LNC. When necessary to meet peak demand, the plant can regasify up to 60,000 MCF per day. Propane storage facilities can supplement the supply of natural gas by approximately 55,(XX)MCF per day. At the beginning of the 1981-82 winter heating season, the Company had the LNGequivalent of 972,(XX)MCFand the propane equivalent of 498,000 MCFof natural gas in storage. Curtailment plans approved by regulatory bodies have an established system of priorities that makes provision of servica to residential and small commercial customers the highest priority, and the provision of gas used by large industrial boiler installations the lowest priority. i 13

Management's Discussion and Analysis of Financial Condition and Results of Operations Chart 3 Over the last three years, the Company's results of operations and its financial Sourcesof Cash Requirernents condition have been subjected to pressures common to the electric and gas util-if,, "/fi",C'i ity industry. The Company has had to contend with continued high inflation, rising cost of fuels, increased financing costs and uncertainties connected with energy conservation and governmental regulation. These factors adversely affect the Company's ability to achieve certain long-term financial goals, such as an adequate rate of return on stockholders' equity, a properly balanced capital i48 m M2 structure, sufficient coverage of fixed charges, reasonable levels of internally generated funds, and consistent dividend growth. The attainment of these goals is primarily dependent upon the Company's '2o _ no receiving adequate and timely rate relief, and maintaining a high degree of 89 - operating efficiency. Liquidity m Cash requirements for the Company's last three years' construction activities were $381 million, of which $208 million was spent on the V.C. Summer Nuclear Station (Sununer Station). An additional $183 million was needed to refund ao 'e7 z [*] maturing obligations and meet cash sinking fund requirements, raising the M Company's total three year capital requirements to $564 million. During the

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{@j past three years, internally generated funds have provided approximately 19% n w yd $ h of these capital requirements. To supplement the internal generation of funds, J K' M (1 the Company raised $450 million in additional funds during the three year period through the sale of securities in the following proportions: 68% long-1977 1978 1979 19MO 1981 (Crm dCbt,8% prCferrCd stock, and 24% Common stoCh. The Company utili:Cd W"=I 5=a short-term borrowings to meet its interim cash requirements. Internal cash generation during the 1979-81 period was adversely affected Chart 4 by the fact that a large portion of reported earnings was non-cash allowance for New Equity Capital Raised funds used during construction. Internal cash generation in 1981 was up 60% Through Dividend Reinvestment over 1980, due primarily to rate relief placed in effect subject to refund, as com-And Stock Purchase Plan pared to a 1980 increase of 5.6%over 1979. manom or aoii"' &c dMn Ms mmMM : ds m whsd m na uch wh requirements. At December 31,1981, the Company had unused lines of credit u.o ,3 j of $134 million, including a $60 million Eurodollar revolving line of credit of i which $40 million was established during the year. Establishing the Eurodollar iu 1 credit should facilitate future entry into the European long-term capital markets and provide the Company the flexibility to obtain additional funds at more favorable rates. The commencement of commercial operation of the Summer Station is s.o 73 expected to have a favorable impact on the Company's liquidity due, among other things, to a reduction in income taxes associated with increased ..o o depreciation; expected lower fuel costs; and decreased construction expenditures (see " Future Construction and Financing Program" on Page 16 for a discussion i of the current status of thelicensing proceedings). l The Company's Restated Articles of Incorporation restrict the amount of 4.o [ unsecured debt incurred, other than for the financing of pollution control facil- _t ities, to approximately ten per cent of its total capitalization. At year-end 1981, k; $23 million in unsecured debt was outstanding. Under this limitation, an addi-7, h tional $122 million of unsecured debt could have been incurred at that time. -y Under the Federal power Act the amount of the Company's debt, whether L secured or unsecured, having a maturity of less than one year is subject to ) 19'7 1978 1979 1980 1981 N

1 regulation by the Federal Energy Regulatory Commission. Under the current Chart 5 authorization, the Company can issue up to $150 million of short-term debt I"ng-Term Capital consisting of promissory notes and commercial paper with final maturity dates no later than December 31,1983. h% f f 1981 Omstruction and Financing Pmgram Esi [ f d' h< The Company's 1981 cash construction expenditures were $143 million, up 19% = [M6] E b from the SIX) million reported in 1980, while 1980 was 2% above the $118 mil-lion during 1979 (see Chart 3). In addition to these construction expenditures, r ? y p $77RQ 7 $ 19 million was required to refund maturing obligations and meet cash w sinking fund requirements, bringing the Company's total 1981 cash capital bq gd 4' 6 e i requirements to $19; million. -~ The Company began its 1981 external financing program in April by selling to two institutional investors $15 million of 14-3/8% first mortgage bonds which will mature in 1986. In June,the Company sold to the public two million shares of common stock for proce'eds of $29.5 million, and an additional $70 million of 20 16% thirty-year first mortgage bonds. New issues of common stock through the Company's Dividend Reinvestrnent and Stock Purchase Plan aggregated 8 m thousand shares and proceeds of $11 million (see Chart 4). An additional $8 million was raised by the sale of 583 thousand common shares through ma m' i'm nsi employee stock plans. The balance of the 1981 cash requirements from external 7 sources was satisfied primarily by the issuance of commercial paper. m e,,,,,,,a ryo,,, M common fquity Capital Structure and O)verage of Fixed Charges The Company's ability to sell additional securities for construction or refund-Chart 6 ing purposes is affected both by its capital structure and by the degree to which Earnings Owerage of Fixed Cha;ges ""~"*'"*d earnings cover fixed charges (principally interest), and fixed charges plus pre-ferred dividends. The Company's capital structure (see Chart 5) and fixed charge coverages (see Chart 6) improved by year-end 1981. The maior factor contributing to the improvement in the proportion of common equity in the Company's capital structure was the public sale of two million common shares. m One of the Company's long-term financial goals is to increase common stock m. equity to 40-42%of total capitalization. Limitations in the Company's first mortga>;c bond indenture and its 2.m Restated Articles of Incorporation, respectively, restrict the issuance of first mortgage bonds and preferred stock. The issuance of first mortgage bonds is limited by a required ratio of carnings to fixed charges and that of preferred 2 io stock by a ratio of carnings to fixed charges plus preferred dividends. In addition, although not a legal restriction, investors utilize a ratio of ,,i. carnings to fixed charges prescribed by the Securities and Exchange Commission m 6ECl as a basis for comparing companies within the same industry. These ratios are viewed as margin of safety indicators for holders of fixed income securities. 13y year-end 1981, these ratios had recovered somewhat from the depressed levels y', of 1980 and 1979. The ratio for bonds at December 31 was 2.37 in 1981,2.21 in 1980, and 2.24 in 1979. One of the Company's long-range goals is to raise the level of earnings to between three and four times its fixed charges. In June 1981, one of the three agencies that rate the Company's first mort-nn ms m9 na nu gage bonds lowered its rating from "A" to " A ". In reporting the lowered credit rating, the rating agency cited the continuing large ccmstruction demaads imposed by the summer Station, the Company's inability to carn an adequate 15

Chrrt 7 return and low coverage ratios. The reduction in rating is expected to increase SCE&G's 1981 Revenue Dollar the cost of obtaining funds. Neither of the other two rating agencies lowered (cents per doilar of revenue) its ratings of the Company's bonds. Where It Came From Regulation and Rates As a utility operating in the State of South Carolina, the Company is subject to Coach 3e the jurisdiction of The Public Service Commission of South Carolina (Psc) as to retail electric and gas rates and coach fares. Among other things, the Pschas jurisdiction over the construction of new generating facilities, the determination 'M of the bound. ries of the Company's service area, accounting practices, and the ,M,$ issuance of securities other than short-term indebtedness.In addition,the Com-i pany is subject to the jurisdiction of the Federal Energy Regulatory Commission q (FERClin the transmission of electric energy in interstate commerce and in the W'" sale of electric energy for resale. The FERc also has jurisdiction with respect to ~ VFW ' ' SO E licensed hydroelectric projects and certain other matters, including accounting s N" and the issuance of short-term indebtedness. F-The timeliness with which new and pending rate requests are granted has a significant bearing on the Company's liquidity. The Company's rate-making philosophy is to request rate relief only when it is clear that such relief is nec-

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$* [ essary to maintain the Company's financial integrity and to enable it to provide e inausina ri ac i2 ic customers with safe and reliable service, g^'c y] On February 27,1981, the Company filed with the Psc for restructured and increased retail electric rates reflecting a 17% return on conunon equity. In April local n 9c 24 ee 1981, as ordered by the Psc, the test year was updated to December 31,1980. This update resulted in a request for S74.2 million in additional annual reve-nues, or a 15.9% return on common equity. The new rates were placed in effect Where It Went April 1,1981, subiect to refund with interest on any portion not finally allowed. Hearings, which beganon July 27,1981, have been concluded and the Company is awaiting a decision from the Psc. 3' 10.9G - On May 1,1981, the Company filed a $4.2 million annual wholesale rate 3., dd% public power body and three municipal customers. The rates were placed in increase request with the FERC applicable to five electric cooperatives, one .68 G EA* 1[ effect July 2,1981, subject to refund with interest on any portion not finally V allowed. In January 1982, a negotiated settlement was agreed to between the Company and the wholesale customers and has been filed with the FERC for ~ approval. Under the terms of the settlement agreement, the Company would increase its rates to the wholesale customers by approximately 16.5% and receive approximately $3.8 million annually in increased revenues based upcm a 15.9% return on conunon equity. r"Ne'rNh in addition, the Company has adjustment clauses for electric fuel and ^ nion nd d B Gu rurch.o cd for Resale natural gas which allow the pass-through of increased or decreased fuel costs. c te The adjustments apply to virtually all sales. D Pa froll iluluing Conunximn1 E Other Operaung Ixpenses F Depreuanon and Arnorn: anon Future Construction and Financing Pmgram G nt nse and Other The Company expects cash construction expenditures for 1982 to be SIM n omaads for invesmn. ana million, of which $89 million will be used for the completion of Summer attained tarnino Station. In addition, approximately $71 million will be needed to refund and retire maturing obligations and meet cash sinking fund requirements, bring-ing the Company's total 1982 cash capital requirements to $235 million. Of prime importance to the Company's future financial condition is completing and placingin commercialoperation the Summer StatP. Hearings before an Atomic Safety and Licensing Poa rd i ASLB) on the Compars appli-16 i

cation for an operating license for the Summer Station were conducted in June, July and September 1981 and January 1982. As of February 15,1982, no further hearings had been scheduled. %e ASLB had appointed four independent con- ' sultants to review seismic matters, and two of the consultants of their own volition recommended that a soil-structure interaction analysis be performed to verify the adequacy of scismic design. In addition, the Nuclear Regulatory Commission (NRC) has requested that the Company make a presentation to its staff in February 1982 on the adequacy of its quality assurance and design control program. Other companies approaching the licensing of their nuclear plants have also been requested to make similar presentations. Whether design verification studies might be required and, if required, their scope and impact on the licensing process cannot be predicted at this time. Before an operating license may be issued by the NRC, the findings of the ASLB must have been received, and the NRC staff must have been satisfied with the Company's quality assurance and design control programs. The Company also received a letter from the NRC in late January 1982 relating to tube failures and degradation in foreign nuclear plants with Westinghouse steam generators of the same model as the Company's. There is no licensed nuclear plant in the United States having this nxxlel steam generator and the Summer Station is in the most advanced stage of licensing proceedings of any domestic plant with this nvxlel steam generator. The NRC stated that it considered the potential for such damage to be of safety signifi-cance and requested the Company to provide the NRC with its plans to address the pmblem. The Company is consulting with Westinghouse to develop a solution to this recently discovered problem. nc Company has not completed its assessment of the effect of this development on the NRC's granting of an operating license or the Company's current schedule for commercial operation. However, it is likely to result in delay in the granting of the license, fuel loading and the commencement of conunercial operations or in the imposition of condi-tions to such license. %e Company's current schedule calls for construction and operational readiness to load fuel in the spring of 1982. I kiwever, fuel loading cannot occur until an operating license is issued by the NRC. After fuel loading, at least six months would be required for start-up testing, power ascension testing, com-pliance with regulatory procalures and other matters before commencement of j . commercial operation. If the NRC were to issue an operating license permitting the h>ading of fuel in the second quarter of 1982 and testing and compliance prcredures were satisfactorily completed within six months, commercial oper-l ation could commence in the fourth quarter of 1982. There can be no assurance, however, that the timing and conditions of an operating license and satisfac-H tor ~)mpletion of these tests and procedures will permit the Company to n-atain such a schedule. 'If commercial open ation were to commence in November 1982, the estima-l ted total cost of the Sununer Station would be approximately $1.194 billion, or $1,327 per kilowatt. Since Summer Station is owned jointly by the Company 1 l (two-thirds) and the South Carolina Public Service Authority ione-third), the - Company's share of the total cost would be approximately S796 million. How-ever, any delay in the commencement of commercial operation of the Summer Station would result in its total cost increasing by approximately $113 million , pu month, of which the Company's share would be $7.6 million. ucsc costs

and estimates include allowance for funds used during construction but exclude 17

Chart 8 the cost of nuclear cores and do not reflect any effect of such delay on the bi'd$ OMW3 "A d @N"- hour., Assuming commercial operation of the Summer Station as presently n _n s. E.I "" n 2 4 scheduled, the Company's projecteo cash requirements for the three-year peri (xl 3 tto [ rm pi F 1982-84 are $641 million, of which 'A33 million is for construction, $42 million ,'q Id d for nuclear fuel and $166 million for refunding of maturing obligations and e '0* cash sinking fund requirements. It is anticipated that the major part of 1983 and 1984 cash requirements will be satisfied by internally generated funds an6 ft.nds generated from the sale of equity securitics through the Company's Dividend Reinvestment and Stock purchase plan and employee stock plans. The 1982-84 construction program includes $17 million for the first costs of u additional generating capacity, which, based on present load forecasts, will not be needed until the late 1980's. The Company continues to study the feasibility of converting the oil-fired 580 megawatt Williams Station into a 4.0 coal-fired plant. Impact of Inflation Although the inflationary rate in 1981 has declined from the levels of recent zo years, the purchasing power of the dollar continues to be eroded significantly The inflationary trend continues to distort the conventional measures of finan-cial performance. The methods used to calculate the effect of changing prices a:e complex and depict the approximate results ofinflation rather than a precise measurement. The Company believes that price level adjusted data are most i9n 19's i 9'9 1980 i9ai Residcntual C Sales for Penale meaningful when interpreted in terms of trends and relationships among the ' I 'h*' d' f,",""",',,' periods. Supplementary financial information shmving the estimated results of inflation on the Company's operation is shown on pages 36-37 Chart 9 Stockholders' equity has been seriously diminished by inflationary pres-Number of Residential Customers sures. Rate regulation based upon the use of historical costs in the calculation 8dMl,End of cepreciation expense is the principal reason. The use of historical costs does not result in rates to current customers that recover the cost, in terms of pu:- 30 chasing power, of the facilities used to provide the services customers receive. Consequently, with the general exception of fuel expenses and natural gas costs x7 2" (due to recovery clauses), the Company is unable to price its products to offset 3m m on a timely basis the impact of inflation. I-- A combination of adequate rates for electricity and natural gas and the attainment of the Company's financial goals will help minimize the impact of inflation on the Company's operations. Since rates must be approved by regulatory lxxiics, the adequacy of rates is not within the Conipany's control. The Company continues to feel that the rate-making process must consider 2m the impact of inflation and intends to actively pursue rates that recover cost increases resulting from changing prices. Investor perception of realistic 'y rate-making procedures should result in a lower cost of capital, whi h would c [ j { benefit ratepayers. ( N i 1981 Operating Results An accounting practice in the utility industry which has had a maior effect on ? e the Company's results of operations in recent years is the Allowance for Funds J I Used During Construction (AFC). AFCis an accounting practice through which S A a portion of the cost of capital funds used to finance construction is capitalized. S b ) L This means that these capital costs are added to the cost of the construction f proicct (which is shown on the balance sheet as construction work in progress) 19'7 19'8 1979 1980 1981 C NaturalGas E Electric

8

l added to non-operating income, it does not contribute to the current cash flow Chart 10 received by the Company. Average Annual Use per The amount of AFC capitalized fluctuates in direct proportion to the level d',",,tial Electric Custorner of construction work in progress and varies over a period of time with the cost of money. Due to the high level of construction activity in recent years (princi- '258 pally related to the Summer Station), a substantial portion of the Company's i t.e2 7__ ,2 m reported earnings was attributed to AFC. For the years 1981,1980 and 1979, AFC constituted approximately 60%,66% and 68%, respectively, of carnings avail-able for common stock. Arc will decline sigt ficantly after the Summer Station is placed in com-mercial operation. This decline in AFC, as well as higher levels of depreciation expense and property taxes created by the addition of Summer Station to the Company's plant-in-service, will result in a reduction in net income unless and until sales of electricity and natural gas and/or rate relief provide additional ann revenues to offset these factors. Earnings per Share Up 21% 6Mn ~ Earnings per share of common stock in 1981 were $2.44, as compared to $2.02 in 1980. The improvement was primarily due to higher retail electric rates which were placed in effect, subject to refund, on April 1,1981. Net income 4no increased 30% to $83 million and earnings available for conunon stock rose by 35% to $69 million. In 1980, carnings per share had risen 10%, primarily as a result of higher electric and natural gas rates and increased KWilsales of elec-zyn tricity Earnings per share had fallen 19%during 1979, due to lower KWH sales and inadequate electric and natural gas rates. The weighted average number of common shares outstanding during 1981 rose 12% to 28 million. This increase in shares resulted from the public sale of ivi im in, i9ao i9n 2 million shares in June 1981 and the sale of 1.4 million shares during the year through the Dividend Reinvestment and Stock Purchase plan and employee stock plans. Electric Operating Income Up 33% During 1981, electric operating income increased $28 million over 1980 due t Chart 11 a $98 million increase in operating revenues. The 21% increase in operating Weighted Average Cost of Fuel Burned i revenues was a result of $59 million collected under new retail and wholesale m-u, m ui ~ rates, subject to refund, and the pass-through of higher fuel costs. Since there 4m is no income derived from the recovery of fuel costs, this pass-through inflated l revenues without affecting earnings. 3,, 13y comparison, electric operating income increased 14% dusing 1980 due to a 17% increase in operating revenues. Although KWII sales to ultimate consumers increased 1.3% in 1981, total 2 2e KWil sales declined.4% due to the expiration, in late 1980, of two contracts with neighboring utilities (see Chart 8). m i es M Despite a 1.8% increase in the number of residential electric customers ,y during 1981 (see Chart 9), average annual residential consumption declined 2 L" r i i as by 3.2% from 12,580 KwtIin 1980 to 12,183 KWiiin 1981 (see Chart 10). ] Electric operating expenses (excluding taxes and depreciation in 1981 igg 1 5 increased $41 million or 15% over 1980. This chiefly reflects a $29 million !- [! i increase in fuel expenses for electric generation and a 53 million net increase in electricity purchased from other utilities during 1981. Due to the availability h '3 of less costly off-peak power from neighboring utilities, and to the modest drop im iws iw, ive ivai in total electricity sales,1% fewer KWII were generated at the Company's electric C.] co.S t:s n.*m e+ 19 ~

Chsrt 12 - generating facilities than in 1980. However, the weighted average cost of coal N tur 1 Cas, Sales burned in 1981 was $1.79 per million BTU, or 13% higher than in 1980 (see Chart 11). The weighted average cost of No. 6 oil burned during 1981 rose 15% to 'O : $3.63 per million BTU (see Chart 11). In an effort to keep fuel expenses as low as possible, the Company burned 29% fewer barrels of No. 6 oil in 1981 than in a' _ ar as 3e ; 1980. Higher unit costs of all fuels caused overall fuel costs to increase by 14% 5" y! d h h(, I'f Yi in 1981. By comparison, fuel expenses rose 10% in 1980. Other electnc operating bNf and maintenance expenses increased by 13% in 1981. Such increases were (d b l $ [G fjQ p generally attributable to the escalating costs of labor, materials and services. a h r b]b i ~ / $j Natural Gas Operating Income Down 45% 6, p tg p p The growth of natural gas operating expenses in 1981 outpaced operating reve-am Q bp h pf nues. Consequently, operating income declined by $4 million. This decrease is d ei h[ %~ $ Primarily the result of inflationary pressuru on wages and material costs and the increased operation of the Company's liquefied natural gas (LNG) and pro-vw pane facilities. These facilities supplement the supplies of natural gas received from the Company's supplier, Southern Natural Gas Company. im = Operating income generated by the Company's natural gas operatians had increased 50% in 1980 from 1979, due primarily to an increase in retail natural gas rates. Total natural gas operating revenues were $188 million in 1981, an increase of $31 million over 1980. The bulk of the increase resulted from the pass-1977 19'8 1979 1980 1981 through of higher natural gas purchase costs which, as with electric fuel costs, E Residential Industrial commmut O s.ie. ror neote inflate operating revenues without affecting earnings. Total u nit sales,in therms, declined 2.8% during 1981, after falling 7%in 19S0 (see Chart 12). Natural gas revenues in 1980 had increased 14% over those of 1979, due to the pass-through f higher natural gas purchase costs and higher rates. er ge Annual Use per Residential Natural Gas Customer The lower unit sales of natural gas m 1981 was principally due to decreaset purchases by our industrial customers. Some industrial customers have switched

• =*,,

to competing fuels as a result of increasing costs of natural gas. p* p?]h

• ees 7so p; f

( The volume of natural gas (in therms) purchased by residential customers @N V' Kl T' decreased slightly in 1981 after showing almost no growth in 1980. Average p-L H:7_ tfW-7 annual residential usage of natural gas decreased 2.5% in 1981, after showing a l )f .3% decline during 1980 (see Chart 13). The number of residential natural gas p p Q ~ C E' customers increased 1.7% in 1981 (see Chart 9). The average revenue per therm hMj sold to residential customers increased 11% during 1981, after growing 29% the wo 14 N i Previous year. l x l 8 [. N i 1_ h l %-U-h-g Transportation (Coach) Operating loss Up 26% 3,, k b 4 p p Coach operating expenses increased at a faster rate than did operating revenues l 8 k c' w during 1981 due to inflationary pressures on wages and material costs. Total l ~ef };- - @P-f coach operating expenses grew 15% in 1981 after increasing 14% during 1980. Q However, coach operating revenues rose only 4% during 1981 after increasing 1 9 c g; f, -1 by 9%in 1980. As a result, a net after-tax loss of $2.8 million was recorded in {y M aM_4;a; c 1981, up from $2.3 million in 1980. m pc zy g a-p q r s ~ i G 6< !M Interest Expense Up 21% 1h NN Interest expense, before the credit for Allowance for Borrowed Funds Used / During Construction, increased $16 million, or 21% in 1981, after growing 18% 19'7 1973 [979 3930 398[ rates of interest. 20

i l Financial Section Contents Page Consolidated Balance Sheets 22,23 Consolidated Statements of Income 24 Consolidated Statements of Changes in Financial position 25 4 Consolidated Statements of Retained Earnings 26 I i Notes to Consolidated Financial Statements 26-33 Report of Independent Certified I public Accountants 33 g Sc'ected Financial Data 34,35 i ff Supplementary Financial Statements Adjusted for Changing prices 36,37 e 3 s 9 4 .8 i .y I .i I Management Report i The Management of South Carolina Electric & Gas The Iknrd of Directors, through an Audit Committee i Company is responsible for the preparation and integrity composed of non-employee directors, provides oversight of the financial data inclu/ J in the accompanying Con-for the preparation of these financial statements. The solidated Financial Statements. These statements have Audit Committee meets periodically with internal and been prepared in conformity with generally accepted independent auditors and representatives of management accounting principles as applicable for a regulated utility. to review their activities and responsibilities. The internal In situations that prevent exact accounting measurements, and independent auditors have full and free access to the management has used informed judgments and estimates Committee to discuss internal accounting control, audit-in establishing accounting and reporting practices for ing and financial reporting matters. such items. Financial information presented elsewhere in The Company engages De oitte Haskins & Sells as l this Annual Report is consistent with these financial independent auditors to report as to the fair presentation i statements. of management's Consolidated Financial Statements and The Company maintains and relies upon a system of their report appears on page 33 in this Annual Report. internal accounting controls which is designed to provide Their examination is conducted in accordance with gen-reasonable assurance that all transactions are properly crally accepted auditing standards and is based upcm recorded in the books and records and that assets are pro-their performing procedures which include maintaining tected from unauthorized use. The degree of internal an understanding of the Company's systems and pro-accounting control is based upcm the determination of cedures and such tests and other auditing procedures the optimum balance between the cost incurred and the as they believe to be necessary. benefits to be derived. The system of internal accounting I ccmtrols is supported by written policies and guidelines j I and is complemented by a staff of internal auditors who conduct comprehensive internal audits and by the selec-T. M. Groctzinger tion, training and development of professional financial Vice President and Group Executive managers. Accounting and Computer Services 21

Consolidated Balance Sheets Decer oer31,1981and 1980 ASSETS 1981 1980 Utility Plant (including construction work in progress; (Thousands or nJlars! 1981-$764,480; 1980-5633,392) (Notes I,3 aad 4): Electric $1,900,046 $1,742,223 Cas 151,866 143,712 Transportation (coach) 4,579 4,435 Common 17,519 16,778 Nuclear fuel 57,679 45,161 Total 2,I?1,689 1,952,309 Less accumulated depreciation and amortization 399,505 3M,012 Utility Plant, net 1,732,184 ~ 1,589,297 Other Property and Investments: Nonutility property (substantially at cost) 10,548 10,414 investment in, notes receivable and advances to subsidiary (Note 1) 10,259 12,506 Other investments and special funds (at cost or less) 97 91 Total Other Property and investments 20,904 23,011 Current Assets: Cash (Note 8) 3,215 8,102 Temporary cash investments and special deposits 20 73 Receivables 70,242 58,278 Materials and supplies (at average costh l Fuel (Note 3) 83,694 75,987 l Other 7,786 7,788 l ~ Total Current Assets 171,256 160,510 Prepayments 6,299 9,982 l l Deferred Debits: Unamortized debt expense 4,649 4,898 Funds on deposit (Note 9) 15,610 16,355 Other 14,169 8,291 Total Deferred Debits 34,428 29,544 Total $1,958,772 $ 1,802,392 l bee notes to tonsohdated imaneial s tatements 22

SOUT11 CAROLINA ELECTRIC et GAS COMPANY LIABILITIES 1981 1980 Stockholders' Investment (Excluding Preferred Stock Subject to iThous.m ls of Dollars) Purchase or Sinking Funds) (Note 5): Preferred stock $ 26,262 $ 26,262 Common stock (Authorized 40,000,000 shares) Outstanding 1981 -29,690,064 shares 1980 - 26,261,257 shares 133,605 118,176 Premium on common stock 267,049 233,495 Other paid-in capital 4,687 4,309 Capital stock expense (debit) (6,175) (6,063) Retained earnings 153,759 136,241 Total Stockholders' Investment 579,187 512,420 Preferred Stock (Subject to Purchase or Sinking Funds) (Note 6) 141,217 144,649 long-Term Debt (Notes 3 and 4): Principal amounts 766,415 731,925 Less unamortized discount and premium, net 1,444 918 Long-Term Debt, net ~ 764,971 731,007 Total Capitalization 1,485,375 1,388,076 ' Current Liabilities: Short-term borrowings (Note 8): Banks 609 8,201 Other 22,639 33,079 Accounts payable 57,108 44,857 Customer deposits 6,592 5,648 Taxes accrued 16,743 16,539 Interest accrued 15,914 14,640 Dividends declared 17,039 15,019 Current portion of long-term debt (Note 3) 75,733 53,866 Tax collections payable 1,188 1,236 Other 1,201 1,000 Total Current Liabilities 214,766 194,085 Ikferred Credits: Accumulated deferred investment tax credits (Note 1) 92,644 75,264 Accumulated deferred income taxes (Note 1) 140,971 123,125 Funds held in escrow (Note 9) 15,610 16,355 Other 9,406 5,487 Total Deferred Credits 258,631 220,231 ConinII'~m~ents and Contingencies (5AUTnIl 9) ~~ ~ t Total $1,958,772 $1,802,392 %v notes to sotwell lat:sl(Ithincl.11 statenscnts 23

ConsolidatedSt:tementsofIncome For the Years Ended December 31,1981,1980a nd 1979 1981 1980 1979 (Ihousands of Odhus except per sbarc amounts) Oper: ting itevenues (Notes I and 2h Electric $569,091 $470,765 $401,281 Gas 188,167 157,613 138,386 Transportation (coach) 2,429 2,338 2,146 Total Operating Itcvenues 759,687 630,746 511,813 Operrting Expenses: Fuel used in electric generation 234,243 204,918 185,621 Power purchased, net (credit) 16,271 12,860 (5,806) Gas purchased for resale 154,502 121,612 110,702 Other operation 68,353 58,011 49,080 Maintenance 33,895 30,226 24,689 Depreciation and amortization (Note 1) 39,691 36,822 35,411 Taxes (Notes I and 7): Other than income 34,672 31,219 27,335 State income 5,361 1,383 2,863 Federal income 23,153 17,518 12,998 Provision for deferred income 29,590 24,218 16,790 Deferred taxes (credit) (16,083) (17,2(X)) (7,833J Investment tax credit adjustments Amount deferred 20,503 14,351 10,930 Amortization of amounts deferred (credit) (1,372) (1,166) (1,075) Total Operating Expenses 642,779 537,898 461.741 Operating Income 116,'X)8 92,818 h0.072 Other Income (Notes l and 7): Allowance for equity funds used during construction 4,530 6,(m 16,608 Income tax-credit 16,792 12,683 9,686 l Other income (loss), net of income taxes (227) 212 662 1 Totai Other income 21,095 18,898 26,956 income liefore Interest Charges 138,003 1 1 1,7.l(> 1(17,028 Interest Charges: i Interest on long-term debt 84,232 69,518 58,777 Amortization of debt premium, discount and expense, net 573 605 596 Other interest expense 7,220 5,619 1,890 Alhnvance for borrowed funds used during construction (credit) (Note 1) (36,889) (27,726) (12,916) 55,136 18,016 51,317 l Total Interest Charges \\ Net income 82,867 rd,7(X) 55,681 Dividends on Preferred Stock 14,245 12,919 12,315 Earnings Available for Common Stock 5 68,622 5 50,751 $ 13, W3 'Weigl tI[ANr~akENurbibr ofdmmon ShardOutstanding (Thousands} ~ 58,139 25,l l8 ~ '2Mto ~ i Earnings Per Share of Common Stock (Weighted Average) $2.44 $2.02 $ 1.81 l l See notes to conu dadawd luuwdal sta tement w

Consolidated Statements of ""'c^^"^"""""^S""" Changes in Financial Position Ihr the Years Ended December 31,1931,1980and 1979 1981 1980 1979 (Thousands of DaHars) hking Capital Provided: Net income $ 82,867 $ 63,700 $ 55,681 Charges Icredits) to income not providing or requiring working capital: Depreciation and amortization 39,691 36,822 35,444 Amortization of debt premitun, discount and expense, net 573 605 596 Deferred income taxes, net 13,507 7,018 8,957 Investment tax credit, net 19,131 13,188 9,855 Allowance for funds used during construction ( AFC) (41,419) (33,729) (29,524) Total from Operations 114,350 87,6(M 81,009 Sale of securities: Mortgage bonds, net of discounts and commissions 84,388 49,563 83,856 Preferred stock 20,0XX) 15,(XX) Common stock 48,983 30,217 28,460 Issuance of secured notes-banks, net 30,(XX) Increase in: Nuclear fuel liability, net 12,026 1,647 5,466 Fossil fuel liability, net 3,722 21,350 Decrease in: Other property and investments 2,137 Other non-current funds, net 3,175 8,143 2,734 Total Working Capital Provided 268,781 248,524 216,525 Working Capital Applied: Utility plant additions (excluding AFC but including nuclear fuel) 142,682 119,869 117,997 Cash dividends declared: Preferred stock 14,245 12,949 12,315 Common stock 51,104 44,019 39,687 Reduction oflong-term debt 67,253 44,948 58,964 Retirementof preferredstock 3,432 1,715 16,655 Increase in other property and investments 949 185 ( Total Working Capital Applied 278,716 224,449 245,803 I Inc~rerse (Decrease) in Working Capital $ (9,935) $ 24,075 $(29,278) Increase (Decrease) inWorking Capital by Component: Cash $ (5,187) $ 1,723 $ 2,661 Temporary cash investments and special deposits (53) (209) 266 Receivab!cs 11,964 (2,120) 13,508 Materials and supplies 7,705 16 860 (836) Short-term borrowings 18,032 (5,125) (25,825) Current portion of long-term debt (21,867) 11,624 (17,487) Accounts payable and accruals (16,846) (4,557) (3,103) Prepayments (3,683) 5,879 1,538 increce (Decrease) in Working Capital $ (9,935) $ 24,075 $(29,278) ke notes to consohdated finanaal staternents. 25 _a

Consolidated Statements of Retained Earnings For Ihe Years Ended December 31,1981,19%)and 1979 l981 !980 1979 (Thousands ot Dollars! Hahnce at lieginning of Year $136,241 $129,509 $125,830 Add -Net Income 82,867 63,7(X) 55,681 Total 219,108 193,209 181,511 Deduct -Cash dividends declared: Preferred stock (at stated rates) 14,245 12,949 12,315 Common stock (at an annual per share rate of $1.82, $1.74 and s1.68 for 1981,1980 and 1979, respectively) 51,104 44,019 39,687 Total Deductions 65,349 56,968 52,002 Balance at End of Year (Note 5) $153,759 $136,241 $129,509 See nores ta conwhdated (mancial statements Notes to Consolidated Financial Statements

1.

SUMMARY

OF SIGNIFICANT salvage, to accumulated depreciation. The cost of repairs, ACCOUN FING POLICIES: replacements and renewals of items of property determined to be less than a unit of property is charged A. System of Accounts to maintenance expense. The accounting records of the Company are maintained in accordance with the uniform system of accounts pre. D. Allowance for Funds Used During Construction scribed by the Federal Energy Regulatory Ccmmission Allowance for funds c',ed during construction (AFC), nFERC) and The Public Service Commission of South a non-cash item, reflects the period cost of capital devoted Carolina (PsC). to plant under construction. This accounting practice results in the inclusion, as a component of construction H. Principlesof Consolidation cost (construction work in prcgress), of amounts of AFC The accountsof tvroof theCompany's wholly-owned w hich will ultimately be included in rate base in estab-subsidiaries, South Carolina LNG Company, Inc. and lishing rates for utility charges.The Company has South Carolina Fuel Company, Inc., are consolidated in r calculated AFC using a 6.5% rate (except for nuclear the accompan;ing Consolidated Financial Statements fuel which is capitalized at the actual interest amount), and the investment in its real estate subsidiary, Energy which is less than the maximum allowable rate as cal-Subsidiary, Inc., a third wholly-owned subsidiary, is culated under FERCOrder No. 561. Effective January 1, reported using the equity method of accounting. 1980, the FERC recommended and the Company began ( C. Utility Plant allocating AFC first to the debt portion as calculated Utility plant is stated at original cost.The cost of under the Order, with any remainder allocated to the additions, renewals and betterments to utility plant, equity portion. Such change does not affect total AFC l including direct labor, material and indirect charges for capitalized. engineering, supervision, and an allowance for funds used during constr uction, are added to utility plant E. Depreciation accounts. The original cost of utility property retired or The Company pmvides for depreciation for financial otherwise disposed of is removed from utility plant reporting porposes on a straight-line basis over the l accounts and charged, with the cost of remova!, less estimated usefullives of utility plant. Annual rates averaged 3.12% for 198 (subject to Psc approval) and 3.02% for 1980 and 1979. l l 26

E IncomeTaxes H. Revenue Recognition Dcferred income taxes, arising from the use of accelerated Customers' meters are read and bills are rendered on a amortization and depreciation rather than straight-line monthly cycle basis. Base rate revenue is recorded during tax depreciation for pre-1981 cligible propcrties, are the accour. ting peri (xl when the meters are read. Revenue charged to income currently with corresponding credits attributable to gas costs (to the extent collectible through m accumulated deferred income taxes and are credited to adjustment clauses) is recorded in the month during income in appropriate amounts when subsequent income which the gas is used rather than when the revenue tax liabilities are grea :r as a result of this practice. is billed. Effective with property additions placed in service in The Company collects proiccted electric fuel costs in 1981, the Company has provided deferred taxes on differ-base rates as established by the psc during semi-annual ences arising from the use of Accelerated Cost Recovery hearings. Any resultant over or under collections will be System (as provided by the Economic Recovery Tax Act included during the next psc hearing to consider any of 1981). change in the fuel component of base rates. At December income taxes are alkrated to " Operating Expenses" 31,1981, the Company had under-collected fuel costs of and "Other income". The income tax-credit under "Other approximately $6.7 million which are included in income" results from tax deductions related to interest " Deferred Debits-Other". expense arising principally from investments in con-

1. Debt premium, Discount and Expense struction work in progress.

long-term debt premium, discount and expense are investment tax credits on eligible property are being being amortized over the terms of the respective debt amorti:cd over the usefullives of the respective assets. The Company has approximately $1.5 million of unused 1981 investment tax credits available for carryover to

2. RATE MATTERS:

future years. The Company's Federal income tax returns have been On February 27,1981, the Company filed an application with the psc for restructured and increased retail electric examined by the IRS through 1975 and have been closed through 1974. Returns through 1978 are currently under rates. such increase would generate approximately $74.2 examination; however, no final report has been received. million annually in additional revenues (16.8%) based on the test year ended December 31,1980. He new rates were G. pensm.n plan placed in cf feet on April 1,1081 subject to refund with inter-The Company has a pension plan covering all employees. est on any portion not approved by the psc. The amount of Total pension contributmns, meluding amortization of revenues subject to refund was approximately $56.6 unfunded prior service cost over a twenty-year period million at December 31,1981. Hearings have been con-ending in the year 2000, were approximately $6.7 milh.on, cluded, and the Company is awaiting a decision. There $5.8 million and $1.5 million for 1981,1980 and 1979, can be no assurance that all or any part of the requested respectively. The Company's policy is to fund pension increase will be granted, cop accrued. On May 1,1981, the Company filed an application for Fhe actuarial present value of accumulated plan increased rates with the rERC for approximately an 18.2% benefits, assuming a 7% rate of return, was approximately increase ($4.2 million annually) in wholesale electric $62.0 million for vested benefits and approximately $7.1 revenues. Such rates were placed in effect on July 2,1981 million for nonvested benefits based on the latest actuarial subject to refund with interest on any portion not approved valuation cffective January 1,1081. The plan net assets by the FERC. In January 1982, a negotiated settlement was available for benefits were approximately $52.0 milhon agreed to between the Company and the wholesale custo-based on the latest actuarial valuatmn at lanuary 1,1981. mers and has been filed with the FERC for approval. %e terms of the settlement agreement,if approved by the RRc, would result m a 16.5% increase and generate approxi-mately $3.8 million annually in additional revenues based on a projected test year ended December 31,1981. The amount of revenues subject to refund was approxi-mately $2.2 million at December 31,1981. %ere can be no assurance that the terms of the settlement agreement will be approved. 27

Notcs to Consolidated Financial Statements gonunned) 1

3. I ONC-TERM DEllT:

Substantially all uti'ity plant and fossil fuel inventories l ~~ ~ r is,, u, are pledged as collateral in connection with the various _ _tial _ _ _ _ i yso _ issues of long-term debt. Approximately SS.0 million ihuwnds of D, nan' of the current portion of long-term debt for 1982 may be r in. ana actunding mig. ge ,nd' satisfied by deposit and cancellation of bonds issued upon v n,,. stuurny the basis of property additions or hmd retirement credits. The annual amounts of long-term maturities, includ- < n% iwi s - 5 im m um iwi m" ing sinking fund requirements and amounts due t.nder 7% ios2 so#U so,II O nucl - fuel and fossil fuel agreements (see Note 4), i.im% im 2.s,.o 2.620 w t.cs iwi 2sno 2sn n for the calendar years 1982 through 1986 are summarized u m. tws 3.27s ua as fojjows. 1i. L v% 1os6 1sMil 41/2% le 6.Mso 7.( b l i/m% twx loDU liunut - - - - ' - -Year Am ount Year Amount g g, 10 1/2 % 1+o l l.4m 12n vi ,y g, g p, g s% 1+o 1o90 lon o . g,g gy 7, ,,4 s% imi suo son g, g, i'm% imi 16p H 16,1411 s is% l*% ispn 1;n o Is II) Is1II) zo:(no 2n;n o

4. FUEL FINANCINGS:

(&, l *1' w 2s ia v s. i*" 3sni') niin The Company has assigned to South Carolina Fuel N. $i Yssi] ijj",' Company, Inc. all of its rights and interests in its various contracts relating to the acquisition and ownership of . i. n. sie 3ono uno ows .m. sono son u nuclear fuel and fossil fuel. That subsidiary finances $s. "jll j ',",l these investments through the issuance of short-term commercial paper supported by irrevocable bank !ines of x w. 2n x win unn in i m 2n n asun nuo credit, as amended, which expire in 1983 for ftr,sil fuel Yi x[ [ and 1985 for nuclear fuel. Due to the irrevocable lines of 2 credit supporting the commercial paper borrowings, the 16 % 20 i 7onn lullunon conuol l auhues amounts outstanding have been included in long-term $1YsIrNanna mierest at 'o 's%of debt.The agreements, as amended, provide for maximum arrhcable onme raie unut nutuniv in iw s.tss us, amounts ($65 million related to nuclear fuel and $30 s m senes. duc 2nii 7.sn > million related to fossil fucll that may be outstanding

% Conwihdated sbngage Cold Ibndv duc 1*N at any time.

inon callabict 1.cs4 1.os t At December 31,1981, the amount outstanding for P.ank Nmes-secuted 4sno nan rint migage Ibnds-south Carohna I.NG nuclear fuel was approximately $57.4 million at a Company. Inc.. WClghted average interest rate of 12.46% and the amount ln 1/2% 9 tics, due 1*o 8,oM) 8.71o south Carnhna ruel company. Inc s,cc Note s' outstanding for fossil fuel was approximately $25.1 e i ta il i 1 ? I capttahred lease obhganons -ychalet . _ _ _ 4p4_ _ ty9 Total 842.14M '6 N i try rrent pomon of long ter_m debt, .. 7 5,733 _ __ _ %sm -== W - - -

== --==== : =% # ' N -

S The Company's bank notes ($15 million due March 10,1982 and $30 million due April 1,1983) are secured by $45 million of First and Refunding Mortgage Bonds. Iil 2% Series. Interest on the bank notes is pegged to applicable prime rates. Interest on the bonds is applied to the payment of interest on the bank notes as long as the notes are not in default, with any excess interest being returned to the Company. The bonds will be retired in principal amounts corresponding with and equal to payments on the bank notes. b

5. S'IOCKilOLDERS' INVESTMENT (EXCLUDING

6. PREFERREDSTOCK PREFERRED STOCK-Subject to Purchase or Sinking (Subject to Purchase or Sinking Funds):

Funds): i9so Redempunn Pnce Amount (Thousands of fbilars) per share Outstandmg Preferred stoc k. December Eventual Cumulaisve $1mpar value N m senn (Authonzed and 31,1981 Mnimum 1981 1980 Outstandmg 3tusoshares) $ 20JMI) s 20,(s ul (77nusarxis of DillarsJ Cums.!at sve %0 par value. Cumulative $1m par value; Y% 5cnn ( Authorized and Authorized,1,5N),t X U shares: __ Outstandmg 12s 118 shares) 6,262 6,262 7,7(r% 5 cries (Outstandmg. .. _ __ _To.t a.l.. _._ _ _ _ _ _. _ $. 26_,2t.2_ _ __$. _ 26.,262 1981 -126.080 shares; 19N1-132 tIIIshares) 8105.75 $101.m $ 12,60s $ 13,2tt) 8.12% Series (Outstanding, I"I I*' 19al -188.Mllshares; (T1.7: sands of Dallars) 19HO-lb9,2tu shares) IM.Or> 102.m 18,480 18,9A) Conmion stock. 10-3/4% series (Outstandmg, $ afdip,ir value; A :timri cd 10.n muni) shares: 1981 -187,tu u)shaies; Outstandmg, 19MO-2tIUlo shares) 110.7$ 1(suu 18,700 20,n1) 19M l - 29,6'OJvst sharn 11.0R% Senes (Outstanding lus)_2A,yAi,2,7 shares $1Meir, $11M,176 2t tV10 shares) 111.08 laul) 20,0lN) 20 tun ~ ~ - ~ ~ ' Cumulative $V) par value; Authori:cd. Increases in " Premium on common stock" for 1981 [8pI,79g',h[r*c$[ h (approximately $316 million),1980 (approximately 4.sys series (Outstandmg, $20.9 million) and 1979 (approximately $20.6 million) 198I -40,0 0 shares; 19Ho-41/d o shares) 51.00 51.m 2,000 2,080 represent the premium on issuance of additional shares tun senes (Outstandma, of stock as follows: 1981 -21.us shares; 19N1-2a,M1 shares) 50.50 MLSO 1,092 1,167 I"I IWI I *N l.tdr%Senes A(Outstandmg, Comnon t.ta k - public iale 2,000,mo 1.(It).It u) 1,(In ut u) 19st -54,052 shares; St x k Punhase-%avings Program for 19M)-%OS2 shares) 51.00 S t.m 2,702 2,802 r mployen 312.htf) ll4.s2 8 191 Ms 4.Nr4 Scries P (Outstandmg, lh vid d Reinvestnrnt and sta k 1 1

• t s

g, SOM W M,2. e ta

ing, E mployrc S_ty.=10v:limhip Plan 270.249 166.H2 4 108.119

_ __yta_l sharn hsued _ _ _ _ _ _ ____. - -- - -_ _ _ _3,428,80L _ 2.af,;191 1/f t,u92 1980-87,a t) shares) 51.00 St.m 4,300 4,350 <>% senn (Outstandmg. 1981 -12M,0 Il shares; The increase (decrease) in "Other paid in capital" is i9so _ i3i,21tishares) 50.50 50.50 6,400 6,5N) summarized as follows: 8% 5enes iOutstandmg ingi

iny, gg79

.u tUto shares) 56.00 50.m 15,000 is,nu 8.72% Series (Outstandmg MIUIllshares) 54.36 50.(u) 20Jro 20,0i11 Cain on reJujuisitinn of prefCrTed stolk $4 l II $ 4g 9.*r% Senes $Outstandmg, Reinement of preferred stock thmugl. 1981 -276,Lk U slures; 1j) 19W285/d U slures) 52.35 51.175 13,815 14,2A1 _ purcha< f undwrymkuyg fundy (42L _ _12_'L R '_I)""'NMC'b %--- -_.Il 30 Cumulatave $15 par value; Authon:cd 2,Ol1Un11 shares: Outstandmg -None IDCreases in " Cap. ital stock expcitse" are summf rized h al $141,.17 $44,W as follows: crimusan!sIo'Ionfiarj* The call premium of the respective series of preferred r xpenws in connect scri w tth muance of stock in no case exceeds the a mount of the annual dividend. tommon and preferred sta k $154 $ %5 $279 RetirCments under sinking fund requiremCnts are at par Retarenrnt of preferred sta k thnuxh values

• _ pu.rchase fund.wr smkmg_ fund.s (42L_

127) (Rs) At any time when dividends have not been paid in full , 2 m 3,y, or declared and set apart for payment on all series of pre-ferred stock, the Company may not redeem any shares of The Restated Articles of Incorpar.ition ob.he Company preferred stock (unless all shares of preferred stock then and the indenttnes underlying certain bond issues outstanding are redeemed) or purchase or otherwise acquire contain provisions that limit the payment of cash dividends on common stock. Approximately$ll8.1 million of retained earnings were not restricted as to payment of cash dividends on common stock at December 31,1981. 29

Not:s to Consolidated Financial Stctem:nts conunuca a for valuc any shares of preferred stock except in accordance

7. INCOME TAX EXPENSE:

with an offer made to all holders of preferred stock. The The Company's income taxes differ from amounts com-Company may not redeem any shares of preferred stock puted by applying the Federal income statutory rate of (unless all shares of preferred stock then outstanding are 46% to pre-tax income as follows: redeemcd) or purchase or otherwise acquire for value any 1981 19x0 1979 shares of preferred stock except out of moneys set asidu.is (Thousands of Dollars! purchase funds or sinking funds for one or more series of S 82.867 561,7m $ %,681 Net income ^dd ded"cti comPonc"'$"f mc"me preferred stock, at any time when it is in default under the i tax ex pense: provisions of the purchase fund or sinkm.g fund for any income ta x expense chaiged to series of preferred stock, operaung expenses Imcome . The aggregate annual amounts of purchase fund or "c' 'ad c'cd:, '"d in ve ment tax credits net) 61,152 12,137 18.673 sinking fund requirements for preferred stoci for the cal-incomee,xcreasteatoothe, t endar years 1982 through 1986 are summarized as follows: income (16,792) (iz,6xa) (9.6x6) Income ta x expense charged tr. other mcome, net 902 102 315 Year Amount Year A mou nt (Thousands of Dollars! Total income ta x expense 45,262 29,5;6 2;.122 1912 53,015 1985 53,815 Total pre-ta x income 5128,129 591,2;6 5x i,m1 1983 3,015 1986 4, t 15 Income ~ta xes on almve at statutory g9gg 3,g g 5 Federal income tax rate $ 58,939 512.898 537,26i The increase (decrease) in " preferred Stock (subject to incr.ases (decreases) attributable io; purchase or Sinking Funds)" outstanding is summarized ^$'*'n"g'*I'st,'""$ "'*d ,n as follows: (excluding nuclear fuell (15,024) (12,712) (10,972) Depreciation dif ferences 1,858 1,3 13 1,3 42 Amortization of in vestment Nu mber Thousand* tax credits (1,374) (1,167) (1.117 8) of shares of Dollar

• state income taxes i ess rederal l

Issutd: income ta x cf fect) 3,486 2,174 1,610 $100 par value 5 - Taxes, pensions a nd other items 50 par value capitali:cd on books (2,403) (2,175) (1,60 4 Rideemed: Other differences, net (220) (79s) ( 1,2,0) 8100 par value (23,32p) (2,332) Income ta x cxpense $ 45,262 529,556 52s,322 50 par value (22,000) (1,100)

= - -===- ===re = - - -== =-;=

_a======_= = _ I "' "' * *

• P'"
• h C"* P"'#

_ _.-_ Tota t. _ _ __. _5,3_ _20.) _ _5_(3.,432) provision for currently payable taxes: (4 Federal 5 5.522 5 4.520 5 2,064 1980 State 2.915 2.575 1,361 Number T housand$ Total currently payable taxes 8,437 7,09; 3,425 of_S h_.a._r e s

o. f_D_o_lla. _r.s-Deferred ta xes ineth Federal 15,324 8,497 10,761

$ 100 par value 2m,000 $ 20,tu xi $0 par value State 2,373 777 1,2R 4 $ 1 par value (7 ItM)) (740) 50 par value (19,500) (975) Investment tas credits tnet) 19,128 13,187 9.852 Total 173,lix) $ 18,23 -.._ _ _Iotal_ incom_ _e_ta x e x pe_n_se. - 5 43_,2n_2-5_ _29, %6. _. - - - _2 2 52;,3 - 1979 provision for Det dC[ erred taxes reSUltS from timing Nu mber Thousand' differences in recognition of the following items: of shares of Dollars g9gg g93g g979 issued' ~ ~ (Thousands of Dollars? $100 par value 5 - Excess of the net of accelerated 50 par value 3m tuu s 15,t u t) depreciation and amortization Redeemed. deductions over straight-line $ 100 par value ' 156,x00) (15,660) depreciation otherwise 50 par value i19,5001 (97s) deductible for income tax purposes SmN 5 8,W 5W _ _ Total , __ __ _ _ __123 700_2__ _ --- $ ( 1,65 %) Interest on nuclear fue, 4,312 3.I n o 2,792 Deferred fuel revenue 3,580 81; (1,801) Other n_et_ (260) 1 1,0 ;91 2.219 u Total provision for net ____51_7,697_. __._.5 9 2 74_ _ ____512,t!!i__. __ _ ____. deferred _ inco_me ta xes _,..

l

8. SIIORTTERM llORROWINGS:

" Management's Discussion and Analysis of Financial The Cnmpany maintains compensating balances of up to Condition and Results of Operations" beginning with 10% for certain of its bank lines and pays fees in lieu of the second paragraph under " Future Construction and balanc s in connection with its other lines of cedit. The Financing rogram"). p lines supported by compensating balances may be reduced or withdrawn at the banks' option, with all compensat-II. Westinghouse Fuel Settlement ing balances available for use as general operating funds. On April 9,1980, a final settlement was reached with llank loans are for 270 days or less. Details of lines of Westinghouse Electric Corporation to settle the uranium-credit and short-tcrm borrowings at December 31,1931, supply lawsuit that had been pending since October 1975. 1980 and 1979 and for the years then ended are es follows: The agreement provides for cash, some uranium and December u, equipment and services (including fuel fabrication) at a ig An ~ ~ W discount. The pSC issued orders directing that the total inollan,., M,ilmn o cash proceeds and credits received as discounts from the tantsof unht a.end of war 5134.2 Swa 58 ts settlement should not be treeted as income by the Com-n.rrowmgs agamst orda une ^' pany, but should accrue to the benefit of its customers end of year S 6.o and be accounted for as a reduction in the cost of uranium. Au rage b maal.mcn dunng the year s 4A $ 11 539 shon term humwmgs oncludme The balance, held on deposit in an escrow fund, at Decem- '"*""'aal papwi dunng the war: ber 31' 1981 was approximately $15.6 million. The income Ma umum out standmg 5 740 57ts $65.9 ay<,,ge m niana,ng s 32.7 San su7 tax consequences of the settlement (including the cash Muhttd daily a verage mecrest rares payment) hase not been determined and could be nna tal pa p r 11 3,,n pay,w. nun,,namg a, the psc order. Earnings of the fund have been reported end of year-currently for income tax purposes. ILmk loans s .6 5 k.2 $ L3 Waghted averagt mtcrest rate 12.13 % 18 22%

12. Ws o nnnmat raper s 22.s 532.2 Sus C. Litigation Wuhted average mternt rate 13m% !s w s ws in August 1977, the Company was named as a codefendant in an action filed by certain North Carolina electric cooperative utilities alleging that the Company and

9. COMMITMENTS AND CONTINGENCIES:

Carolina power & Light Company have maintained an A. Construction unlawful monopoly in power exchange services, firm In addition to routine commitments for operating bulk p<nver and firm retail power in areas of North and materials and supplies, the Company at December 31, South Carolina and seeking an order requiring the lost had commitments for maior construction (including Company to negotiate with the plaintiffs and to pay nuclear fuel) of approximately 5115.9 million (includes $;0,100,000 damages trebled against both defendants, one-third interest of South Carolina public Service Thegeneralcounselof theCompanyisof theopinion Authority) for construction of the WO megawatt V.C. that the Company has meritorious defenses to the action Summer Nuclear Station (Summer Station). and will be able to successfully defend it. The Company and the south Carolina public Service Authority (a public corporation of the State of South D. Leases Carolina) are joint owners of the Summer Station on the Minimum lease commitments as of December 31,1981 basis of two-third, by the Company and one-third by the under all noncancellable non. capitalized leases are not Authority and have agreed to participate, on a like basis, material. The present value of minimum lease commit-in the costs of construction, costs of operation and in the ments at December 31,1981 with respect to non-capitalized energy output thereof. The Company's share (approx-financing leases is less than five per cent of the total imately $677.5 million and $563.1 million at December capitalization of the Company. 31,1981 and 1980, respectively) of costs of construction of the Summer Station is included in construction work in progress. Each owner is responsible for financing its own share of the Summer Station. (Reference is made to 31

Notes to Consolidated Financial Statements (confmucal

10. SEGMENT OF llUSINESS INFOIUWATION:

1979 Segment information at December 31,1981,1980 and 1979 Trans-and for th2 years then ended is as follows: P"S" ice" Tmai ticctric cas 1081 (Thouwnds of Ddlars) p((,a Operating revenues 5 401.281 5138,3x6 5 2.146 5 541,811 n Electric Cas (coach) Total Otscr ating e xpenws, (T housands of Dollars) e xcluding depreciation Operating revenues 5 569,091 5188,167 5 2,429 5 759,6g 7 and amorti:ation 29 8,6x0 127,739 3,878 426.297 Depreciation and xcl d ng d pr ciation N and amortization 420.041 177,984 5,0r>3 603,088 Total operating expenses 321.xx 5 l i2.x 11 4.023 461.741 a rti2 t n 33,889 5,593 209 39,691 "] [ [ ' fy Total opereting espenses 453,930 183,577 5,272 642,779 Oper ating income lloss) _ _f 'l_15,161 5 4,590 sj2,843) 116,908 Net income 5 5 51 Add -Other income, net 21.095 ~ ~ ' ~ - ' - ~ ~ ' ~ - -'~~ ~ --- less-Interest chargen 55,136 Capital ex penditures: 82,867 _Idenuftable, _ _ _ l404W $ __5.;340 5 ]6 $ 145.483 Net income - - - ~ utih:ed for overail Companv orerations 2,nw Capital e x penditures: Identifiable 5 173,8 3 5 8,840 5 145 5 182,818 3"'I 147.52_I_ 5 . = - _ _ _ - - =, - -.= -- -- = Utihzed for overall Company operations ~ 1,283 Identifiable awets at Total 5 184] December 31,1979: Utility rlant, net 51, bs,s l7 5 91,437 4 1,101 51,461,4;5

. - - -.

=-- --.. m n_. _ - - _- = Materials and supphes 54,959 5.617 83 65,659 IAntifiable assets at December 31,1981: Total $1,32! 8 6 5100.0;l 5 1,184 1,527,114 7 Utility plant, net 51,616.249 5 99,327 5 1,598 51,717,174 - ----Awets utih:ed for overall Company operations 123,281 Materials and supplies 83.955 6,032 147 90,134 __5_],. 1,807,308 3"alawe_ts _ _ ____ _- __ ___ _ _ _ -_ J (Qp TotaI 5 {,7{2p4 45

_p,350 5

Assets utilized for overall Company operations _ 15h464 Total swets _ 51,958,772 ~_. _ - _ 1980

11. QUARTERLY FINANCIAL DATA (UNAUDITED):

pJ/,7,P"n The following data have not been audited, but in the E lectric cas icoas Toul opinion of the Company, include all adjustments Operatmg revenues 5 170.765 5 611 2, 5 630,746 for a fair presentation of such amounts. Oper ating e x penses, excluding depreciation and amortization 3;2,598 144.04' 4,431 501,076 1981 Depreciation and First Second Third Fourth amortization 31,817 5,241 164 36.822 Q uarter Quarter Quarter Quarter Total Total operating expenws 1s t,015 149.2x8 1.545 537,8 % Total operating revenues (000) 5176,961 5177,439 5222,775 5182,512 5759,687 Operating income ilowl 5 86.7;0 5 8,3;5 Si2.257) 42,848 Operating Add -Other mcome, net 18.xos income (000) 25,069 28,447 40,532 22,860 116,008 trw-interest charges ts.tu6 Net income (000) 16,367 18,990 33,154 14,356 82,867 Net income 5 63,700 Earnings available for common i Ca pital e x penditu res. stock t0001 12,784 15,422 29,589 10,827 68,622 ..._..e. _n_t i.fi_a b..le_ _ _ _... _ _5_ _ l_i t y 6_ _ _5_ _6,x36.. _.. ~ ' ' - -- 1;0.911 Earnings per share l Id 5 699 5 of Common stock Utih:ed for overall Company operations (weighted average) .48 .57 1.01 .36 2.44 2.M7 Total 5 1;3.598 Identihable awets at December 11,19m l Utihty plant, net $ 1, a'6.710 5 on. I n 5 1.642 51 574,557 Materials and suglics ' 6. 5 ;6 5 6;; 111 x2,322 lotal 51.;,1.236 51015 10 $ 1.7; t 1.6;6.3'9 Awets utiltzed for,verall Company operations _ 14i.511 Totalawets 51,802.392 .qu

1980 holders of Carolina Energies will be entitled to receive $28 First seu,nd Third T our th for each share of Carolina Energies common stock in cash ouaner ouaner ouaner ouaner rual orcommon stockof the Company as they may elect, subject 9,$'Se$h 5in2.sso 5i n.i 30 to the limitation that no more than 49%of the total consid. u s 17 7.92 i s i49. ias 5 0 0.'46 operanna cration is to be paid in cash. The letter of intent provides sei C*n'e$x"u nNb N$! f2 Il 2 yy f r a definitive merger agreement to be entered into by 5 r arnino available March 1,1982. The merger would be subject to certam for mmmon conditions including approvals of regulatory authorities simk vXun i t.D1

8. M o 19.4?i 8.s97 so 'il gg ggggim d Omhm bgh De Umudm

$"b"$r5,'nI'*k would be accounted for by the Company as a purchase. me@ed average) w ai n m 2 02 Carolina Energies, according to its published reports. is a holding company with six subsidiaries engaged primarily in the transmisMon and salc of natural gas

12. ACCOUNTING IOlt ClIANGING PillCES and propane in the northern and castern sections of (UNAUDFFED):

South Carolina. Carolina Energies reported revenues of in compliance with Financial Accounting Standards apprcximately $h)i4 million and net income of approx-lloard Statement No. 33, " Financial Itciurting and imately $6.6 million for the fiscal year ended March 31, Changing prices",the Company has prepared certain 1981 and unaudited revenues of approximately $th5 supplementary financial statement data in constant and million and net mcome of approximately $6.S million cunent dollars tas defined). See pages 36 and 37 for for the twelve months ended December 31,1981. Carolina constant and current dollar supplementary financial Energies regurted unaudited total assets of approximately statement data. $69.2 million at December 31,1981 and shareholders' equityof approximately $29.2 million. II. During January 1982, the Company entered into an

13. SUllSEQUENT EVENTS:

agreement to lease a building currently being constructed A. In January 1982, the Company and Carolina Energies, in downtown Columbia for use as its corporate head-Inc. signed a letter of intent pursuant to which Carolina quarters. The Company has also entered into a financing Energies will merge into a wholly-owned subsidiary of agreement with the owner that would require the Gim-the Onnpany for an aggregate consideration of approxi-pany to purchase the building, at cost, not to exceed mately $69.3 million. Under tlie proposed terms, share- $50 million, if certain amditions are not met. Report of Independent Certified Public Accountants Suuth Carolina Electric & Gas Gunpany: ub have examined the Consolidated Balance Sheets of South Carolina Electric & Gas Company and conmlidated sub-sidianes ("Gunpanies") as of December 31,1981 and 1980 and the related Consolidated Statements of Income, Itetained Earnings and Changes in Financial position for each of the three years in the period ended December 31,1981. Our enaminations were made in accordance with generally accepted auditing standards and, accordingly, included such tests of the accounting records and such other auditing procedures s we considered necessary in the circumstances. As explained in the first paragraph of N, te 2 to the Censolidated financial Statements,1981 electric revenues include amounts which are subject to refund pending the outcome of a rate hearing before the South Carolina public l Service Gunmission. In our opinion, subject to the effects, if any, on the 1981 C olidated Financial Statements of final determination of the matter referred to in the preceding paragraph, such Consondated Financial Statements present fairly the finan-l cial pnsition of the Companies at December 31,1981 and 1980 and tF results of their operations and the changes in their financial position for each of the three years in the period endet December 31,1981, in conformity with generally accepted accounting principles applied on a consistent basis. /g A_w . (L DELOlI~IE li r. SKINS A SELLS Columbia. Sonth Carohna Tebt nary 8.1982 l 33 l

Selected Financial Data 1981 1950 1979 1978 1977 1976 1971 Statement of Income Data (Thousands of Dollars Except Statistics and Per Share Amounts) Operating Revenues: Electric $569,091 $470.765 $401,281 $382,370 $344,961 $275,892 $115,660 Cas 188,167 157,613 138,386 101.861 78,405 71,948 33,051 Transportation (coach) 2,4 29 2,338 2,146 1,927 2,023 1,996 1,945 Total Operating Revenues 759,687 630,74() 541,813 486,101_ 425,392 349,836 150,656 Operating Expenses: Fuel used in electric generation 234,243 20s,948 185,624 184,047 155,132 26,892 37,760 Gas purchased for resale 154,502 121,612 110,702 73,455 51,321 44,789 17,176 2 55,352 N),114 52,473 27,378 Other operation and maintenance 118,519 101,130 67,9(x Depreciation and amortization 39,691 36,822 35,414 32,613 30,339 27,825 15,347 Taxes 95,824 73,3 % 62,0)S 65,853 (4,684 48,721 19,482 Total Operating E_penses 642,779 il7,898 461,741 411,350 353,620 200,703 117,(+13 x yrating !ncome 116,908 92.848 80,072 74,751 71,772 59,133 33,013 Other Income: Allowance for funds ad during construction: llorrowed and equity 18,317 5,763 Equity 4,530 6,0 13 16,N)8 18,.M0 16,610 Other 16,565 12.895 10,318 10,935 8,956 6,205 1,673 Total Other income 21,095 18,898 26,956 2s 275 25,566 21,522 7,436 Income llefore Interest Charges 138,003 111,746 107.028 101:126 97,338 83,655 40,419 Interest Charges: Interest 92,u25 75,772 64,2(d 51,527 46,881 39,839 18,973 Allowance for lunowed funds u ed duimg construction (credit) (36,889) (27,72(i) (12,916) (10,818) (7,878) 'Iotal Interest Charges 55,136 48,016 51.317 43.679 39,(111 39,839 18,973 Net Income 82,867 (d,7a) 55,681 60,117 58,335 43,816 21,47() Dividends on Preferred Stock 14,245 12,949 12,315 10,N x) 10,653 9,169 4,142 $ 68,622 $ N),751 $ 43,366 5 49,747 $ 47,682 $ 34,(+17 $ 17,311 _ ______ ___ Earnings Available for Common Stock _ _ _ _ _ _ Weighted Average Number of Common Shares Outstai.. ling (Thousmds) 28,139 25,148 23,540 22,029 19,831 17,547 10,087 Lirmngs Per Share of 0)mmon Stock (Weir,hted Average) $2.44 $2.02 $1.81 $2.26 $2.10 $1.97 $1.72 Dividends Dettated l'er Share of Comnun Susk $1.82 $1.74 $ 1.68 $1.62 $ 1.% $1.52 !!.32 Percent of Operating Income (Inss) 11efore income Taxes: Electric 101 95 97 '14 91 88 81 Gas 2 8 6 9 8 15 18 Transluttation (coach) (3) (1) (3) (3) (2) (3) (2) 34

MXmi CAROLINA ELEGRIC L% CAS COMPAN 1981 19ts0 1979 1978 1977 1976 1971 Italance Sheet Data ( l housands of I A>llars Except Statistics and Per Share Amounts) Tbtal Utihty Plant (includes nuclear fuel) $2,131,689 $1,952,3(N $ 1.N11,289 $1,661,880 $1,489,111 $1,300,780 $721,M2 Total Assets $ 1,958,772 $ 1.802,392 $1,650.395 $1,522,707 $1,361,222 $1,171430 $M S,729 Capitah:ation: Conunon equity $ 552,925 $ 486,158 $ 449,397 5 417,471 $ 366,813 $ 305,072 $168,489 Pr:ferred stock: Not subice' to purchase or siaking funds 26,262 26,262 26,262 26,262 26,262 26,262 6,262 Suhicct to purchase or l sinking funds 141,217 1 14,M9 126,364 128,019 1(N,794 111,509 67,961 tong-term deb: 1 (excludes current portion) 764,971 731,(117 672,958 681,457 585,307 528,650 281,170 l Ihtal Capitalization $1,485,375 $ 1,388,076 $ 1,274,981 $1,213,2tN $ 1,088,176 $ 971,493 $523,885 l l Conunon Shares Outstanding (Year-End) (Gousands) 2 9,65'O 26,261 24,195 22,410 20,359 17,834 10,560 lb >k Value Per Share of Conunon Stock (Year-Iaid) $18.62 $18.51 $18.57 $18.60 $18.02 $17.11 $15 M Other Statistics Llectric: Customers (Year-End) 350,596 341,588 M 6,7(1) 328,797 320,476 312,617 268,567 Sales (Million KWIi) I1,763 11,8(N 11,252 11,621 11,155 10,318 8,113 ltesidential: Average annual use per customer (KWII) 12,183 12,580 11,627 12,269 12,146 11,320 10,323 Average annual rate per KWil 5.0589 $.n190 $.n161 $.(1137 5.(1112 $.n361 5.0 2112 Generatmg Capability -Net KW (Year-End) (Thousa nds) 3,359 3,359 3,359 3,361 2,852 2,852 2,3% Territorial Peak Demand-Net KW (Thousands 1 2,557 2,489 2,299 2,271 2,216 1,994 1,489 Gas: Customers (Year-End) 169,274 166,470 1(>t,277 162,412 161,850 161,473 140,033 Sales (Thousand Therms) 493,305 506,528 545,387 501,273 4(e,786 490,830 412,481 Resident ah Average annual use per customer (therms) 665 682 684 751 734 767 8(11 Average annual rate per therm $.49 $.44 S.34 S.31 $.26 5.23 5.15 Transportation (coach): Number of Coaches Int 102 96 96 85 Revenue Passengers Carried (Thousands) 10 820 10.357 9518 8,658 8.971 8,915 9,103 35

Supplementary Financial Statements Adjustel for Changing Prices (Unaudited) Financial statements prepared in accordance with generally accepted the general rate of inflation on the Company The currer. cost amounts accounting principles h -e traditionally provided a quantifiable basis reflect changes in specific prices of the Company's property. plant and l for a*sessing financial results Because these reports reflect dollars of equipment.The data presented were developed in accordance with the varpng purchasing smwes, the traditional financial gatements are not partial restatement provisions of financial Ascot.nting Standard Board dess ied to furnish data necessary to evaluate inflatmn's impact.The Statement No. 33, ar.d are not intended to adiust actual reported earn-fo. ing constant dollar and current cost supplementary financial ings nor do they provide a Sas%r income tax reporting or rate-making. statement data are presented in an attempt to provide certain informa-See th, accomparuzing Notes to Supi cmentary Tinancial Statements l tion regarding the estimated eff.c of inflation on the Company's opera-for additional information. tions. The constant dollar presentation indicates the estimated effect of Summary Statement of Income Adjusted for Changing Prices Evr the %ar Enricsi Themist 31 1+1 j tiistorical Cost j Constant Dollar Current Cost l As in Average in Average Reported { s ol Dollars i 10x1 Dollars v (Thouwnds of Ikitars? Operatmg Revenues 57 59.M7 5759.6k7 I 5 7;9,687 Expenses l Tuel used in elect ric generation 111,241 111,243 114,241 l l;4.;02 154,502 l 154,502 ! Gas purchased for resale i Depreciation and amortirationnal { N,691 91,236 100,652 Other operation and maintenance 151,191 153. l G 1 153,191 income ta xes 61,152 { 61,1;2 61,152 ; 5;.1 % 55.1 % ! Interest tharges

i.1 %

Oiher mmme. net at (21.09;) (21,07 3 (21,0r>81 1 i J Totalcipenses net 676.x 20 726. H 1 737. e : Net income 5 82.867 l 5 11.30!ib) 5 21.x79 1 1=== - ._==,-p t inflation admstments. i Reduction of plant to lower recoverable value 5i n 0151 l Silx6 M U1 I t Unrealized gain resultmg from detrease in i i' 9 ;,9 19 ' 95.9 N purchasmg power of net monetary liabilities 5105,5M Inucase m cumnt ust of property. plant and equipment ici + E f fcct of mtrease in general price level p9m.6;61 Increase m specific pr tes over general prne lesel 106.912 Inflation adiustments. net 5 7.9 M $ 15,971

1 =- ==== _ = = tm Net mtonic lew inflation adiustments 5N.2N 5

3',W) i ga > As ivrmstred m hrunaal Acwuntmg Standards I%srd Starement No. M stems sn the summary statement of mwme. other than deprecurson extvnse. were not adiusted ib'incluJmg the reductmn to net recoverable cmt. net sncome i o<s'on a constant Jollar basis would have been 5 56.7111 for 1981 l ic) At December 11 NMI. the current cost of net utshty plant was $Ab9% 247 whnle net historscal cost or net cost recoverable through deprecsatson was $1.73.' !M 4 Jo

SOUril CAROLINA ELECTTtlC & CAS COMPANY Five Year Comparison of Selected Supplementary Financial Data Adjusted for Effects of Changing Prices ( Average 1981 Dollars) Years Ended December 31, 1981 i 1980 1979 i 1978 1 1977 Net income. - - _ - _ - - IThousands hcepr Per Share Amounts and Consumer Prue Inden 9 j tencludar.g net inflation adiustments, other than deprectationh As Reported 5 82,867 5 61,7(x) 5 55,681 Conwant thllars 31,304 24,531 28,619 Current Cmt 21.879 14,M6 15.058 I y y_ - - - income per share of common stock i i (after dividend requirementson preferred stock r i j excluding net inflation adiustments other than uepreciation). As Reported 5 2.44 5 2.02 5 1.84 Constant Dollus .61 .31 .56 t Current Cost .27 22 __0011 l 4__.. ._~p Ge neral information l Operating revenues: } As Reported l 5759,687 5630,746 5581,813 54 %,101 5425,392 Consta nt ILllars 759,687 696.388 67M,914 677,796 638,700 Unreahred gam resuhing from decrease in purchasing I power of net monetary habihties I 95,949 116,357 150,980 N.. sts at year end at net recoverable cost ia) 560,652 510,255 559.620 106,912 (13,782) (89.kool Increre n specific prices over general price level Cash dividends declared per share of com.non stock, i As Reported 1.82 ,1 1.68 l 1.62 1.56 Constant Doilars 1.82 L92 2.11 [ 2.26 2.34 Market prue per share of common stock at year-end. As Reported 15.00 14 25 14.75 17.00 18.50 17.49 l 22.8 27.08 I Con st a nt i.bi_l.a r_s _ .. _ _. __ - _ __ _ 4 --_4-14.52 15 03 -_-_ q- - p Average.Co.nsum. er. price Inde.x. iC. pl-U) tb) j 272.4 246.8 1 217.4 195.4 1 1 M 1.5 _ f Escludmg pre l erred stock t'ubsect to purchasear smking fundst n N 19M = w Notes to Supplementary Financial Statements

1. plant and equipment The data adiusted for generalinflation were

4. Reductions of plant to lower recoverable value The rate regulatory determmed by converting historical costs of utility plant and certan, procew limits the Company to the recovery of the historical costs of plant nonuolity ptopertv into dollars of the same geneM pmhmng p~m and c<luipment Therefore, the value of the phnt and equipment deter usmg the Consumer price Index for All U Dan Consumers (Cpl.U) his mmed under the constant dollar and current cost methods must be method shows the effec of general inflatson on the Company iconstant reduced to the lower recoverable amount, which is historical cost.

dollars)

5. Unrealized gain resulting from decrease in purchasing power of net The current cost data reflect the cost of currently replacing existing monetary liabilities The Company, by holdmg monetary assets such as plant assets These costs were determined through use of the llandy cash and receivables, loses purchasing power during periods of infla-Whitman Index of public Utility Construction Costs and other valua-tion because these items will purchase less at a future date. Alterna-tmn methods tailored specifically to the type asset bemg restated Even tively, by incurring monetary habihties, primarily long-term debt, the so. replacement of some extsting plant and equipment will take place Company benefits because the payment in the future will be made with over a period of time and may not result m replacement which would dollars having lew purchasing power Because the Company has signifi-dupbcate existmg facihties.

cant amounts of long-term debt outstandmg, this results in a nu none-

2. Accumulated depreciation 'The related accumulated depreciation tary gam. This gain does not represent an exchange of cash at present or for calculating current cost of net property. plant and equipmrat was in the future,but represents the effect of the changmg value of the dollar.

deseloped by applymg the same percentage relatmnship thn existed

6. Increase in specific prices over gene..l price level his results from between gross plant and accumulated depreciation by furstional groups the value of the parucular plant and equipment held by the Company on a historical cost ham at Decen.ber 31.1981 and 1980.to the respecuve increasing at a greater rate than the rate of general inflation as measured balances of the restated Jerreciable plant.

by the Cpl.U.

3. Depreciation expense Depreciation expense for both the constant

7. Other ruelinventories,the cost of fuelused in electric generation and dollar and current cost methods was determined by applying the same gas purchased for resale have not been restated from their historical cost rates and methmlology used in computmg historically booked deprecia-in nommaldollars Regulation allows the recovery of fuel and purchased tion to the restaird deprecuble plant.

gas costs through the operation of adiustment clauses or adiustments in basic rate schedules to actual costs. 37

Corporate Stock Information Common Stock (a) 1981 1980 4th 3rd 2nd 1st 4th 3rd 2nd 1st i Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. Qtr. i' rice Range: (b) High 16 15-1/8 15-3/8 14-5/8 15-1/4 17 17 15-1/4 inw 13-3/4 13-3/4 12 1/2 13-1/8 12-1/8 14 12-3/8 12 Dividends Per Share: Declared $.455 5.455 $.455 $.455 $.435 5.435 $.435 $.435 Paid 5.455 5.455 5.455 $.435 $.435 5.435 5.435 $.42 December 31, 198i 1980 Number of conunon shares outstanding 29,690,064 26,261,257 Number of common stockholders of record 59,494 59,8M 'a) The principal market for SCE&G common stock (SCG) is the New York Stock Exchange. (b) As reported on the New York Stock Exchang-Composite Listing. Preferred Stock Series 7.70 % 8.12 % 8.40 % 11.08 % 4.50 % 5% 8.72% 9.40 % Wluation Price-Year-End 1981 $49.677 $52.387 $54.193 $73.50 $14.516 $17.50 $29.00 $30.322 Geographic Distribution of Common Stockholders At Year-End 1981(nottoscale) A 9 Top States: South Carolina 23 % New York 11 % Florida 9% California 6%

• N u

Directors cnd Officers DIRECTORS l.K. Addy B.A.Itagood E.W. Pike, f r. Arthur M. Williams

• President, Addy Dodge,Inc.

President, Wm. M. Bird and Co., Inc. President Chairman of the Ibard Le sington, South Ca mlina Charleston. South Carolina Colonial Development Company of the Company Beaufort, South Carolina Columbia, South Carohna W.B. Book ha rt, lt. I.F. lf asuell. f r. Partner. W B. Bookhart Farms Chairman of the Board and President I.B. Rhodes Oscar S. Wooten* Ellorce, South Carohna Pre-Stress Concrete Compa ny. Inc. President, Rhodes Oil Compa ny, Inc. Executive Vice President - Finance Cha rleston, Sout h Carolma Walterboro, South Carohna of the Company W.R. B ruce Columbia. South Carolina President and Chief Executive Officer Avram Kronoberg I.E. Schachte, lr.* The Seibels 15tuce Group, Inc. President, EdwardN, Inc. President. Schachte Agency, Inc+ DIRECTORS EMERITI Columbia, South Carohna Charleston, South Carohna Real Easte and Insurance Charleston South Carolina D.I1. Banks K.W. F re nc h I.H. Lumpkin W.B. Bookha rt Retired Plant Manager of Counsel to the firm of Ibyd, Virgil C. Summer

• W.I. Keenan, f r.

Lt. du Pont de Nemours & Co Knowlton, Tate & Finlay Columbia, President and Chief Executive Edward Kronsberg Savannah River Plant South Carolina and Chairman of the Officer of the Company F R. McMeckin Aiken, Sout h Carolina Executive Committee of the 15aard of Columbia, South Carohn' A.C. M ust ard South Carolina National Corporation, W.I. Readv I.B. Guess,111 Columbia, South Carolina W.II. Ta ylor John C.B. Smit h ~ Owner, Edisto Farms Chairman of the Ibard and President Denmar k, South Carohna F.C. McMaste r* Twin City Motor Company, Inc. President and Manager Batesburg, South Carolina

• Member of the Winnsboro Petroleum Company Executive Commitice Winnsboro, South Carolina Of fICERS Arthur M. Williams George H. Fischer VICE PRESIDENTS ASSISTANT OFFICERS Chairnunof the Pnard Legal Affairs William N. Ackerman J. Gary Black.n Virgil C. Summer Thomas M. Croetzinger Energy Management, Assista nt Treasurer President and Acc untmg and Computer Services Gas Transmission and Supply Chicf LsecutiveOfficer S' * "'I " * "' "i"K'""' I

Malcolm C. Johnson D. Ellis Hay, Jr. Anista nt Controller Fossil and liydro Production, Customer Operations EXECUTIVE VICE PRESIDENT S Transmission and System Operations Northern Division Silas W. Ilotmes Assistant Secretary C. losepa Fritz 'T homas C. Nichols, Jr. John W. Ituggins Admir.1 tration Nuclea r Operation' Preperty Management anel T. Roland Eide Facihties Planning Assistant Treasurer Grryson C. Meette Curtin L. Rye Operation, Customer Operations flerman B. Speissegger, Jr. Edward C. Roberts Customer Operations Assistant Secretary and Oscar S. Wooten B. Marion Smith, f r. Southern Division General Counsel Finance Public Affairs lames W. Wedding VICE PRESIDENTS AND Corporate Planning and GROUP EXECUTIVES Management Services liarold M. Bryant Secret ary firsty C. Boylston, fr. Ilugh W. Weldon ."Treamrer '"'Y"* Rate Regulation. PurchasmR Adminiurative Services and Security Fsca (Edl it. Crews, f r. Robert W. Stedman Engineering and Construction Controller 39 )

$UPPLEMENTALINVESTOR INFORMATION Annual Meeting an 1 Form 10 K Dividend Reinvestment and Stock Purchase Plan Solicit:tionof Proxies A cnpy of the Company's 1981 Ihr information contact: %e annual meeting of stockhold-Turm 1&K report as filed with the South Carolina Electric & Cas Company ers will be held at Seawell's Res-Securities and Exchange Conunis-Ibst Office Box 7M taurant at the fairgrounds,12m sion is avrilable to stockholders Columbia, South Carolina 29218 RosewisalDrive Columbia, South up >n request. Attention: Stockholder Relations Department (I-56) Carolina on kJnesday, April 28, 1982. Proxies will be requested for Statistical Supplement such nreting and will be sent to Acopyof theStatisticalSupple-stakholdersin Abrch 1982. ment to this report is available up>n request. %is report is issued solely for Please call or address your the purp>se of providing informa-request for anyof the above reports, tion. It is ru imended for use in or information concerning finan-connection with any sale or pur' c alandoperatingdata,toitJohn chase of, or any offer or sohcita-Winn, III, Manager-Investor Rela-tion of offers to buy or sell, any tions, Telephone (803) 748-3240. securstics. CORPORATE INFORMATION Mailing Address Registrars Trustee and Paying Agent P. O Box 7M Common Stock: First and Refunding Mortgage Bonds: Columbia, Luth Carolina 2921s Manufacturers IIanover Trust Company Manufacturers tianover Trust Company New York, New York New York, New York Corporate ficadquarters 328 Main Street The Citi: ens and Sou'hern Dividend Reinvestment Agent Columbia, South Carolina National Bank of South Carolina South c.arolina Electric & Cas Company pn3) 748 3mo Columbia, South Carolina Ste elder Relations Cumuls ive Preferred Stock: The Company's common stock Independent Certified Public Accountants Deloitte !!askins & Scils The Chase Manhattan Bank, NA and 5% cumulative preferred stock Columbia, South Carolina New York, New York are listed on the New York Stock Exchange (NYSE), Company Stock The Citizens and Southern Symbol - SCG. Tr:nsfer Agents National Bank of South Carolina Common Stock: Columbia, South Carolina Sbnufacturers Ilanover Trust Company New Wrk, New Lik The South Carolina National Bank Columbia, South Carolina South Caruhna Electric & Gas C'mpany stakholder Relations (Record Keeping and Dividend P.ying onlyl Cumulative rreferred $tock: The Chase AbnhattanIhnk, NA New York, New York The South Carolina National ibnk Columbia. South Carolina do

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