ML20082C624

1994 Annual Rept Scana Corp

ML20082C624
Person / Time
Site:	Summer
Issue date:	12/31/1994
From:	Gressette L SCANA CORP.
To:
Shared Package
ML20082C612	List: ML20082C624 ML20082C652 RC-94-0079, Forwards Summary of Present Levels of Property Insurance & Cash Flow Statement for Plant,In Compliance W/ 10CFR50.54(w)(3) & 10CFR140.21(e). 1994 Annual Rept Scana Corp & Santee Cooper Annual Rept 1994 Also Encl
References
NUDOCS 9504070096
Download: ML20082C624 (37)

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1 FINANCIAL S. OPERATING HIGHLIGHTS

% Increase 1994 1993-(Decrease) s (Millions of dollars except statistics and per share amounts)

COMMON STOCK OATA Earnings Per Weighted Average Share of Common Stock 5

3.19 3.72 (14.2)

Dividends Declared Per Share of Common Stock 2.82 2.74 2.9 Book Value Per Share of Common Stock (Year-End)

$ 29.37 28.59 2.7 Market Price Per Share of Common Stock (Year-End)

$ 42.125 49.75 (15.3) i Common Stockholders' Equity (Year-End)

$ 1,410.4

$ 1,333.0 5.8 Common Stock Outstanding:

Weighted Average (Thousands) 47,381 45,203 4.8 Year-End (Thousands) 48,018 46,619 3.0 TOTAL COMPANY Total Operating Revenues 5 1,322.1

$ 1,264.2 4.6 Total Operating Expenses

$ 1,062.5

$ 1,018.9 4.3 Net income

$ 151.2 168.0 (10.0)

Property Additions and Construction Expenditures

$ 561.1 526.0 6.7 Utility Plant, Net

$ 3,293.7

$ 3,004.1 9.6 j

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' ELECTRIC OPERATIONS Electric Operating Revenues

$ 975.4 5

940.1 3.8 Electric Operatit g Income

$ 232.2 222.0 4.6 Territorial Sales (Million KWil) 16,838 16,880 (0.3)

Customers (Year-End) 476,412 468,874 1.6 Generating Capability - Net MW (Year-End) 3,876 3,864 0.3 Territorial Peak Demand - Net MW 3,444 3,557 (3.2) l GAS UTILITY OPERATIONS Gas Operating Revenues 5 342.7 320.2 7.0 Gas Operating income 34.1 29.4 16.0 i

Sales (Thousand Therms) 778,105 717,417 8.5 Customers (Year-End) 238,613 234,736 1.7 l

UTILITY CUSTOMER PROFILE l

l ELECTRIC NATURAL GAS During 1994 we added kilowatt-hours (KWil), a During 1994 we added sales of natural gas totakd

! 7,538 net new customers, 0.3% decrease from 1993.

3,877 net new customers, 778 million therms in 1994, raising the total ekvtric Sales to ultimate consumers bringing the consolidated an 8.5% increase over 1993.

l customer base by 1.6%

represented 93% of KWil natural gas customer base to Approximately 80% of to 476,412 at year-end. Terri-sales in 1994 while saks to 238,613 at year-end, a 1.7%

consolidated therm saks torial saks of ekttricity in whoksale customers increase over 1993. Residen-in 1994 were to ultimate 1994 totakd 16.8 billion accounted for 79.

tial customers comprise 90%

consumers while saks to of theconsolidated naturalgas whoksale customers customer base. Consolidated accounted for 205.

1

I CHAIRMAN'S LETTER f"

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Fellow Shareholders:

subsidiaries experienced Resources has been altered 1-good financial to reflect the current h

I am pleased to provide performancein 1994, conditions in the natural U

you with this year's in 1993 SCANA gas industry. As a result of Annual Report of SCANA Petroleum Resources the federal deregulation

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Corporation. While earned $.25 per common of thenaturalgasindustry, is the Company made share, based on natural other structural changes E

significant progress in gas prices which averaged in the national regulatory many areas which will

$2.00 per dekatherm. As scheme and the emergence lead to enhanced com-you can see from the of an active futures

'p petitiveness, continued chart below, natural gas trading market, natural growth and improved prices declined about 30%

gas is a commodity subject

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financial performance, between March and to widely varying, cyclical our financial results December of 1994. Given pricelevels. Accordingly, for 1994 did not meet that the cost of our our near-term operating our expectations.

reserves is fixed at the strategy is based on the Earnings for 1994 were timeof theirdevelopment assumption that natural

$3.19 per common share, and that the costs of gas prices will fluctuate SCE&G ENJOYED down $.53 from the record production are very stable, around the levels

$3.72 earned in 1993.

the decline in gas prices currently seen in the The primary reason for caused SCANA Petroleum futures market, and that the d&line oauned Rsounts to lose $.14 prices will be volatile.

MANY SIGNIFICANT.

at SCANA Petroleum per share. In addition,it During January 1995 0

Resources Inc.,our incurred a write-down we substantially reduced OPERATIONAL.

subsidia j which explon s of $20 million, or $.26 per the possibility of write-for and produces oil and share. in the third quarter downs to the carrying natural gas. South Carolina relate _

i reevaluation valuesof the210 billion Electric & Gas Company, of rese cubic feet of natural gas SUCCESSES DURING South Carolina Pipeline The operating strategy reserves on our balance Corporation and our other for SCANA Petroleum sheet. These write-downs THE PAST-YEAR.

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-NORMAL

-NORMAL NOTE: A " degree-day" measures the extent to which the average daily temperature is h krw theating) or ahme icooling1 an assumed lose of 65T.

would have been required shareholder value has but 10% belowlast year.

because of the low gas been pmserved while,at Obviously, this caused prices. We sold forward the same time, we have sales to residential electric approximately60% of the positioned this subsidiary customers to be down 6%.

existing production for the to return to profitability.

Offsetting this, industrial next seven years at prices We are continuing to sales of electricity were which will average $1.88 expand our pmsencein up 5.6% as a msult of per dekatherm. We still are this segment of the energy the improved economy.

in position to have a future industry to which we Customer growth was profit or a loss fmm that remain committed.

1.6%,in line with histor-portion of the reserves At South Carolina ical rates and current which has not been sold.

Electric & Gas Company, expectations. In summary, Ourlonger term operat-our most significant earningsimprovement due ing strategy focuses on subsidiary, operating to our continued growth continuing to add new profits increased despite was offset substantially by reserves at costs that will more temperate weather milder weather.

be profitable for SCANA during the summer and in addition,SCE&G at current pricelevels and winter seasons. As you can enjoyed many significant very pmfitableif prices see fmm the charts above, operational successes climb appreciably.

1994's winter weather as during the past year. While i

I am pleased we have measumd by " heating these are discussed in taken this timely and deci-degree-days" was 20%

greater detail on pages 6-7, I

sive action to minimize the below normal and 20%

1 must comment on our negativeimpact of sig-below the prior year.

twolargest projects.The nificant natural gas price Summer weather as construction of the new dedines. In dealing dinxtly measured by " cooling Cope Ekctric Generating with price volatility, degree-days" was normal, Station is well ahead of l

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m7 7 scheduleand wellurder In the past,I have zational structure,

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budget. We expect it reported to you about the decentralize our decision-Q I to begin commercial ongoing efforts at SCE&G making and employ

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E operation early in 1996.

to examineits cost new technologies which Ourlargest single structure and the actions improve service and investment is the V.C.

taken to enhance our mduce costs.

b Summer Nuclear Station.

competitive position. Even In looking to the futum,

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in 1994 it continued to though our retail electric it is quite appamnt that g(

the Nuclear Regulatory in the Southeast, partic-competition to enter the

~S receive mcognition from rates am among thelowest thepmcessof allowing b

j Commissionasoneof the ularly forindustrialloads, electric utility segment of f

top performing plants in I believe our futum success the energyindustry will o

OUR FUTURE:.

the nation. In a mfueling depends on continuously continue.The extent to p~

outage during the fourth improving the cost which competition willbe quarter,its steam effectiveness of our allowed,and the forms

' SUCCESS,

generators, which had operations.Thelevel of which it will take,are not g~

caused major maintenance operation and maintenance yet clearly defined. What E

activities over theirlifetime, expenses in the past year is clear, however,is that

' DEPENDS ON; wem mplaced.The plant was essentially unchanged we must be pmpamd by has returned to service and from 1993,and our plans having thelowest possible L

cost ekttrical energy to our for reductionsin the cost of nation with the most able msumed providinglow-for 1995 and 1996 call cost structure in combi-

- CONTINU0USLYg customers. Many more providing service, despite and agile management in

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positive things were incmased numb.rs of order to succeed. As a h

iIMPROVING acc mplishedin thepast customers and sales.

team, we am committed p

year, keeping SCE&G These mductions will msult to achieving these goals.

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among the top rank of fmm continuous efforts to I would like to make

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udh6es in the nadon.

stmanvUne oumganh the foHowing obsuvadons 4THE CDST -

[, EFFECTIVENESS 1 l1ATIVE TOTAL F TUI J PEF h AAf,f Of SCANA'S CD h 8

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M 10F OUR-j s,s0 e

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' OPERATIONS.

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NOTD Assumes $100 inmted on lanuary 1.1990, with dividends n inmted.

- SCANA

-PEER GROUP

-S&P 500

-S&P UTluTIES 4

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l in closing.Our principal subsidiaries in the different business now and in the marketsof thisindustry future willbe our electric during that time minforce F'

operations. If you mea-thoselessons.The chart sum our performance by at left shows the relative jM traditional standards, we performance of SCANA's X

1 are clearly superior to common stock during l

industry averages in all the past five years as important facets of our compared with a peer electric operations. His-gmup of 95 utilities, the torical standards willbe Standard & Poor's Index much less relevant as this of 500 common stocks,as

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industry is transformed well as the Standard &

and becomes mom market-Poor's Index of Utility driven.The challenges for Stocks.Certainly, we are on j

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the electric segment of our the right track in incmasing 7

y business willbe dictated by shareholder value.

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the pace and direction of Our financial position regulatory reform. Our continues to be strong ability to influence this and our earnings from j

pmcess likely will be continuing operations are a

limited.Our ability to sound. Notwithstanding f

mspond and capitalize the disappointing 1994 y

by change will belimited Company continues to f]

on opportunities provided operating results, the only by the speed of our grow. At its meeting held

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decision-making, as well February 14,1995, the hwrence M. Grcssctic, Jr.

as our adaptability and Board of Directors raised our desire to succeed.

the indicated annual the outstanding common We are beginning the cash dividend on the stock of the Company and second decade of SCA.NA Company's common stock therefore have a vested Corporation as a holding to $2.88 per share, an personalinterest in seeing company. We are a year increase of $.06 per share, continued growth in away fmm the 150th or 2.1%, compared to shareholder value.The anniversaryof the the previous rate.

quality of their hard work founding of the original SCANA has grown has brought this Company entity which grew into and changed in response to the forefront of the SCANA. The past 10 years to varying technologies, energy industry.The at SCANA have taught us differing economic quality of their hant work how to grow and profit conditions and various will keep us there.

in unregulated industries-regulatory schemes during how to be successfulin the past century and one less structured and mom half. The time available Respectfully submitted, cyclicalindustries.

to make these adaptations g

{ Lawrence M.Gressette,Jr.

Obviously, changes which is greatly foreshortened we have encountered in today's world, and in the past five years in the will be especially so in Chairman of the Board, natural gas segment of toniorrow's world.

President and the energy industry and Employees at SCANA Chief EwcutiveOfficer the performance of our colkrtively own 11.5% of February 14,1995 5

C4 HIGHLIGHTS p

RESTRUCTURING We also took sters to SERVICECAREGOES

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k FOR A COMPETITIVE "88"Sh*1 cut *S'S We BEYOND THE METER Y

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ENVIRONMENT

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we tmk a major sterin targets to reduce SCE&G s r-i The regulatory barriers providing senices beyond I

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• the traditional electric and that once Protected utility decrease m 1995 s operation p[5 markets are being replaced by and maintenance expense 8#" "

powerful competitive forces.

budget from 1994 and a 20%

South Carolina Ehrtric &

1. I reduction in administrative Gas Company is accelerating costs by the end of 1995.

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s its transition from a conven~

a variety of products and

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To that end, a major

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g tional utility into a customer-reorganization of SCE&G

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oriented energy company.T took place in 1994.This remain successful, SCE&G I'*'

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reorganization will ServiceCan> offers a mmpre-must offer competitive allow us to accomplish p

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SCE&G IS :

P'"d "' #"d ""'"i" ""d seveal objecuve.

m r apphance mamtenance p

deliver them in ways Oneis to create a business

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that exceed customers' and repair work.The package i

development function for mcludes senice calls, parts expectations.

p in p t nu 1busins ACCELERATING-Durin8 1994 we took and labor and applies to gas opportunities. During 1994 actions that built on our as we;; as e;ectric app;iances.

we launched several Mini aggressive efforts in im-Business Units (MBUs) within I

"""."' P"""'Y

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! TS TRANSITION-Pmvi"8 c"s'omer satis'^ia-SCt&G's larger Strategic Customer senice operations Business Units (SBUs).These in Columbia and Charleston "E

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7 MBUs serve as a framework to were merged to improve pmvide additional services awe oman+by genaam "8 "I " #* *#

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efficiency. we impiemenica

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a 24-hour service program, costs from the core businesses

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4 extended office hours on most I*P "" #"

and creating additional profit.

. CONVENTIONAL holidars and standardized Two exampies are rower customer service functions

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• " " #8 Delivery Services, which the opportunities to offer and procedures. We als pmvides maintenance and UTILITYINTO A-dmlopd a pmgranno assht technical services on the ekctric customers beyond electrical equipment of i

1 the meter with restoration industrial customers, and f

! CUSTOMER-ORIENTE01 N"eNa#NaEoNt7

'/"Uj;"li$om d1N4 h

n a

lishing higher customer forestry operations.

I service standards,imple-i

. ENERGY COMPANY.-

'"e"""s ^" ^ "'""^ 'ed "*"

reading and smart meter pilot program and fine-tuning a comprehensive customer i

service plan.

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m A Preferred Member Senace h

6

STEAM GENERATOR Summer Station's record REPLACEMENT of outstanding rerformance COMPLETED mntinued in 1994. For the IN RECORD TIME sixth consecutive time, the "C'"#

"E"'#

One of SCE&G's biggest si n named Summer Station accomplishments during 1994 s short list of top perform-was the replacement of the mg plants.The NRC has V.C. Summer Nuclear evaluated the nation's nuclear Station's three steam gener-g g

ators. This project, undertaken identify those companies and as part of the plant's eighth g

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refueling outage,is thelargest a level of safety performance modificatmn ever performed that merits formal NRC at the 88> megawatt plant recognition.Only seven and was completed in 38 of M 09 M W e days, a new US. record and in the U.S. received this only one day off the world r@ h14 record for a steam generator latest assessment.

A state-of-the-art coalfirea plant in Orangeburg County will begin replacement.

producing electricity for SCE&G customers in 1996. The

'""*"""'""F""""P'""'""'"""'""'"h""'"#V' The successful completion COPE CONSTRUCTION of this project has long-term CONTINUES AHEAD complete. Major milestones budget. Construction is financial as well as operational benefits. The new steam gen-0F SCHEDULE reached during 1994 included expected to be complete in late erators will result in shorter, Progress also continued completion of the plant's 1995 with commercial less costly refueling outages, during 1994 on construction of administrative building and operation beginning in early and greater ekrtricity cutput SCE&G's new 385-megawatt ekctrical substation.Two 1996.This plant represents will result from less requind generating plant in central years after the initial ground-the first base-kiad generating maintenance.The next South Carolina near the town breaking, this project is addition to SCE&G's system refueling outageis scheduled of Cope. At year-end the plant approximately four months since Summer Station was for Spring 1996.

was approximately 68%

ahead of schedule and under brought on-line 10 years ago.

Steam generators arrive prior to the fall outage at Summer Station. The plant set a new U.S. record for steam generator eplacement. completing the task m 38 days.

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DIR2CTORS l

SCANA CORPORATION-

))V l

liill L. Amick !>5 W. Hayns Hipp 1A5 I"

Chairman of the Board and

^ President and C0hMITEES & THE BOARD

- DIRECTORS EMEFilTI i

- Chief Executive Officer Chief Executive Officer J OF DIRECTORSi Williain R. Bruce $r '

1 Membe' of Executive

- Kenneth W. French f

Amick Farms, Inc.

The Liberty Corporation r

Batesburg, South Carolina Greenville, South Carolina f Committee "

J.B. Guess, Ill "

4 s

p em fAu JacMasd, Jr.

William B. Bookhart, Jr. 2A3 Bruce D. Kenyon numt g >

. Francis M. Hipp,

Partner President and Bookhart Farms Chief Operating Officer 3 Member of Management;. ' John H. Lumpkin, Sr.-

Elloree, South Carolina South Carolina Electric Development and

AllanC. Mustard

& Gas Company Corporate Performance c ' : Edwin W. Pike, Jr. '

' William T. Cassels, Jr. 235 Columbia, South Carolina

.. Committee r.VirgilC. Summer? '

I * **

T

' Chairman of the Board

' 4 Member of Nuclear.

Southeastern Freight F.Creighton McMaster 1A3 Oversight Committee.

Lines, Inc.

President and Manager 5 Member of Long-Tdrm -

Columbia, South Carolina Winnsboro Petroleum Compensation Committee s Hugh M. Chapman IAs nsb ro, South Carolina

~

e mm ttee.

Chairman NationsBank South Henry Ponder, Ph.D. 2As Atlanta, Georgia President Fisk University James B. Edwards, D.M.D. IA3. Nashville, Tennessee President Medical University John B. Rhodes 2A3 of South Carolina Chairman and Charkston, South Carolina Chief Executive Officer Rhodes Oil Company,Inc.

ElaineT. Freeman 2A3 Walterboro, South Carolina

. Executive Director ETV Endowment William B. Timmerman of South Carolina,Inc.

Executive Vice President, Spartanburg, South Carolina Chief FinancialOfficer, Controller and Lowrence M.Gressette,Jr. 6 Assistant Secretary l

Chairman of the ik>ard, SCANA Corporation President and Columbia, South Carolina Chief ExecutiveOfficer SCANA Corporation E. Craig Wall, Jr.1 A5 l

Columbia, South Carolina President Canal Industries, Inc.

l l

Benjamin A.Hagood 2A5 Conway, South Carolina Chairman of the Board William M. Bird and Company,Inc.

Chark ston, South Carolina l.

f e

8

OFFICERS

. SCANA DFFICERS OFFICERS OF Martin K. Phalen SUBURBAN PROPANE Lawrence M. Gressette, Jr.

PRINCIPAL SUBSIDIARIES Vice President GROUP,INC.

liuman Resources William B.Timmerman Chairman of the Board, SOUTH CAROUNA ELECTRIC President President and

& GAS COMPANY Chief Executive Officer (1)

Bruce D. Kenyon icfP dn Dabney L Sharp President and William B.Timmerman Nuclear Operations Executive Vice President Chief Operating Officer Executive Vice President, and General Manager Chief Financial Officer, hiitchell S. Tibshrany George 1. Bullwinkel, Jr.

Vice President James M. Clark, Jr.

Controller and Senior Vice President Power Delivery Vice President Assistant Secretary (2)

Retail Electric SOUTH CAROLINA PIPELINE MPX SYSTEMS,INC.

Asbury 11.Gibbes John L Skolds CORPORATION Lawrence M. Cressette, Jr.

Senior Vice President, Senior Vice President Max Earwood President General Counsel Generation President and Treasurer and Assistant Secretary Michael D. Blackwell James }{. Young, Jr.

IL Thomas Arthur,II Ewcutive Vice President Cathy B. Novinger Senior Vice President Vice President and and General Manager Senior Vice President Business Development General Counsel Administration, William B. Timmerman Governmental and Kristin L Aebersold Public Affairs George Fasano, Jr.

Senior Vice President Vice President Vice President and Controller Marketing and SERVICECARE,INC.

Kevin B. Marsh Economic Development W. Keller Kissam Bruce D. Kenyon Vice President - Finance, Vice President President and Treasurer Treasurer and Secretary O)

Jimmy E. Addison Vice President and B. J. MacInnis Warren A. Darby Controller Vice President Senior Vice President (1) Also Chairman and Chief Executive and General Manager Warren A. Darby SCANA PETROLEUM Officer of all subsidiaries Vice President RESOURCES,INC.

Richard E. Batton (2) Also Chief Financial Gas Operations Max Earwood Vice President Officer and Assistant President Secretaryof all Johnny Kinloch PRIMESOUTH,INC.

subsidiaries Vice President Richard L Easterwood James M. Woods, III

0) Also Secretary of Transit and Fleet Vice President President all subsidiaries Maintenance and Community Affairs SCANA HYOROCARBONS, INC.

Jeff C. Chapman Max Earwood Senior Vice President, Charles B. McFadden President and Treasurer General Manager and Vice President Assistant Secretary Customer Service Charles A. Rampey,Jr.

Executive Vice President S. C. McM eekin, Jr.

and General Manager Vice President Customer Relations James N. Cantwell Vice President William E. Moore,Jr.

Vice President B.J. MacInnis Fossil and liydro Operations Vice President 9

FINANCIAL REVIEW r

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L COMPANY REPORT ON RNANCIAL STATEMENTS INDEPENDENT AUDITORS' REPORT SCANA Corporation written policies and guide-SCANA CORPORATION:

disclosures in the financial (Company)is responsible lines and are complemented We have audited the statements. An audit also for the preparation and by the selection, training and Consolidated Balance Sheets includes assessing the integrity of the financial development of professional and Consolidated Statements accounting principles used dita inc?uded in the accom-financial managers and by a of Capitalization of SCANA and significant estimates panying Consolidated ~

staff of internal auditors who Corporation and subsidiaries made by management, Financial Statements.These conduct internal audits.

(Company) as of December as well as evaluating the statements have been The Board of Directors 31,1994 and 1993 and the overall financial statement prepared in conformity provides oversight for the related Consolidated presentation. We believe with generally accepted preparation of the financial Statements of Income and that our audits provide a recounting principles, as statements through its Retained Earnings and of reasonable basis for j

applicable. In situations that Audit Committee, which Cash Flows for each of the our opinion.

prevent exact accounting is composed entirely of three years in the period In our opinion, such measurements, informed nonemployee directors.

ended December 31,1994.

financial statements present judgments and estimates The Audit Committee These financial statements fairly,in all material respects, have been used. Financial meets periodically with are the responsibility of the the financial position of the information presented management and internal Company's management.

Company at December 31, elsewherein this Annual auditors to review their Our responsibility is to 1994 and 1993, and the Report is cc.nsistent with activities and responsibilities. express an opinion on these results of its operations these financial statements.

The Audit Committee also financial statements based and its cash flows for each The Company maintains meets periodically with the on our audits.

of the three yeam in the and relies upon internal Company's independent We conducted our audits period ended December 31, accounting controls intended auditors, Deloitte & Touche in accordance with generally 1994 in conformity with to provide reasonable LLP. The internal and accepted auditing standards.

generally accepted assurance that transactions independent auditors have Those standards require that accounting principles.

l are properly recorded in the free access to the Audit we plan and perform the books and records and that Committee to discuss audit to obtain reasonable

)

assets are protected against internal accounting controls, assurance about whether the loss or unauthorized use.

auditing and financial financial statements are free OAbMdM The degree of internal reporting matters.

of material misstatement.

i accounting controlis based An audit includes examining DELOITTE & TOUCHE LLP upon the determination on a test basis, evidence Columbia, South Carolina of the appropriate balance supporting the amounts and February 6,1995

)

between the cost incurred g)p in maintaining internal con-trols and the 1 enefits to be derived. Internal accounting W.B. Timmerman controls are supported by Executive Vice President, Controller and Chief Financial Officer i

February 6,1995 i

11 J

p' 9

HCONSOLIDATED BALANCE SHEETS J

Dccember 31, 1994:

~1993

. ASSETS.

meusands efikifars)-

. Utility Plant (Notes 1,3 and 4h

$3,424,951

$3,328,915

~ Electric Cas :

467,576 451,493 Transit 3,785

.3,769 -

Common 77,327 72,804 Total 3,973,639 3,856,981-r Less accumulated depreciation and amortization 1,333,360 1,259,689

{

Total -

2,640,279 2,597,292..

[

Construction work in progress -

582,628 349,530

~!

Nuclear fuel, net of accumulated amortization.

43,591 29,087

' Acquisition adjustment-gas, net of accumulated amortization 27,169 28,166.

I Utility Plant, Net 3,293,667 3,004,075

.i Nrnutility Property and Investments (Net of accumulated dIpreciation and depletion)(Note 1) -

395,929 393,728 i

Current Assets:

Cash and temporary cash investments (Note 8) -

10,934 20,766 i

Receivables -

183,180 174,121 j

Inventories (at average cost):

Fuel (Notes 3 and 4) 60,273 62,977 j

Materials and supplies 47,463 46,890 Prepayments.

19,853 21,826 Accumulated deferred income taxes 18,629' 8,607 l

Total Current Assets.-

340,332 335,187 l

Deferred Debits:

Emission allowances.

19,409 i

Unamortized debt expense.

13,488-13,076 l

Unamortized deferred return on plant investment (Note 1) 10,614 14,860 Nuclear plant decommissioning fund (Note 1) 30,383 25,103

-l Other (Notes 1 and 10).

289,306

'254,497

-1

- Total Deferred Debits 363,200 -

307,536 t

Total-

$4,393,128

$4,040,526 i

i

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(

1 12'

([y w

A t

I December 3'1;-

1994-1993

' CAPITALIZATION AND LIABILrrIES -

hsands of Dollars)

' Stockholders' Investment (Note 5):

Common equity -

- $1,410,438 '

$1,333,045 i

4 7 ?

Preferred stock (Not subject to purchase or sinking funds) 26,027 26,027' Total Stockholders' Investment 1,436,465 1,359,072

[

Pref:rred Stock, Net (Subject to purchase or sinking -

.52,840' i

i

' fund 2)(Notes 6 and 8) -

49,528

-14ng-Term Debt, Net (Notes 3,4 and 8) 1,537,624 1,424,399 j

Total Capitalization -

3,023,617 2,836,311 j

'?

- Curr:nt Liabilities-6 Short-term borrowings (Notes 8 and 9) 183,027 43,019 i

Current portion of long-term debt (Note 3) -

38,055-34,322-Current portion of preferred stock (Note 6) -

2,418 2,504 Accounts payable -

117,959 129,495 i

Estimated rate refunds and related interest (Note 2).

2,509 j

Customer deposits -

13,768 13,498 l

Taxes accrued :

46,670 50,063 i

Interest accrued 25,226 21,784 l

' Dividends declared 35,530 33.637-

- Other :

17,220 12,649 Total Current Liabilities.

479,873 343,480

.l t

'- Deferred Credits:

Accumulated deferred income taxes (Notes 1 and 7) -

589,026 568,172 l

Accumulated deferred investment tax credits (Notes 1 and 7) 91,349 94,981

' Accumulated reserve for nuclear plant decommissioning (Note 1) 30,383 25,103

. Other (Note 1) 178,880 172,479 j

Total Deferred Credits 889,638 860,735 Commitments and Contingencies (Note 10) -

l Total

$4,393,128

$4,040,526.

' x I

i I

kr Wtn to Gmmldated hnancial Statemntts.

13 o

r

-sr -o-

s (CONSOL.lDATED STATEMENTS OF: 5NCOME AND RETAINE = EARNINGS.

g

! For the Years Ended December 31, -

1994 1993 1992 mawuls of Dollars

~.

except per shurtamounts)

' Operating Revenues (Notes 1 and 2h Electric -

$ 975,388

$ 940,121

$ 829,477 '

Cas.

342,672 320,195 305,275 Tr:nsit 4,002 3,851 3,623 Total Operating Revenues 1,322,062 1,264,167 1,138,375 Operating Expenses:

Fuel used in electric generation 235,136 229,736 206,151 Purchased power -

20,104 13,057 7,323 Cas purchased for resale 220,923 208,695 191,577 Other operation (Note 1) 229,996 223,239 215,800 Maintenance (Note 1) -

63,725 67,652 65,442 Depreciation and amortization (Note 1) 119,177 112,844 108,315 Income taxes (Notes 1 and 7) ;

94,510 90,007 60,947 Other taxes :

78,938 73,626 73,040 Total Operating Expenses 1,062,509 1,018,856 928,595 Operating Income 259,553.

245,3il 209,780 Othtr Income (Note lh Other income (loss), net of incor. > taxes (2,178) 21,147 6,388 Allowance for equity funds used during construction -

8,176 8,929 5,495 Total Other income 5,998 30,076 11,883 -

Income Before Interest Charges end Preferred Stock Dividends -

265,551 275,387 221,663 Intirest Charges (Credits):

Interest on long-term debt, net 108,804 98,695 93,052 Other interest expense -

6,749 8,672 8,819 Allowance for borrowed funds und during construction (Note 1)..

(7,156)

(6,178)

(4,271)

Total Interest Charges, Net.

108,397 101,189 97,600 -

1

}

Income Before Preferred Stock Cash Dividends of Subsidiary.

157,154 174,198 124,063 Preferred Stock Cash Dividends of Subsidiary (At stated rates) -

(5,955)

(6,217)

(6,473)

Net Income 151,199 167,981 117,590

- Retilned Earnings at Beginning of Year 506,380 462,893 457,393

. Common Stock Cash Dividends Declared (Note 5)

(133,911)

(124,494)

(112,090)

Retained Earnings at End of Year -

5 523,668

$ 506,380

$ 462,893

. Net income

$ 151,199

$ 167,981

$ 117,590 Weighted Average Number of Common Shares Outstanding (Thousands) 47,381 45,203 41,475 Ecrnings Per Weighted Average Share of Common Stock.

$3.19

$3.72

$2.84 See Motes to Gmsolutatal huancul Statements.

14-

+

! CON. SOLIDATED STATEMENTS OF g : CASH FLOWS -

j 1

For de Years Ended Decembsr 31, 1994 1993 -

1992

?

Cash Flows From Operating Activities:

mousandsof Donal.

- Net income -

$ 151,199

$ 167,981

$ 117,590 s Adju:tments to reconcile net income to net cash provided from operating activities:

Depreciation, depletion and amortization 210,905 158,024 126,695 Amortization of nuclear fuel :

13,487 18,156 23,190 l

' Deferred income taxes, net 9,%7 65,205 (10,783)-

1 Deferred investment tax credits, net.

(3,632)

(3,658)

(3,667)

' Net regulatory asset - accumulated deferred income taxes (1,951)

(31,531)

.l Dividends declared on preferred stock of subsidiary 5,955 6,217-6,473 -

Allowance for funds used during construction.

(15,332)

(15,107)

(9,766)

Unamortized loss on reacquired debt (60)

(17,063)

(81)

}

Nuclear refueling accrual (4,881)

(6,086) 11,862'

'i Equity in (earnings) k>sses of investees -

(230)

(319) 652 Over (under) collections, fuel adjustment clause (16,966)

(14,308) 7,482 i

Emission allowances (19,409)

' Changes in certain current assets and liabilities:

l (Increase) decrease in receivables (9,059)

(35,244)

(8,918) 1 (Increase) decrease in inventories -

2,131 (10,995)

(234)

Increase (decrease) in accounts payable (11,536) 28,109 7,282 i

Increase (decrease) in estimated rate refunds and related interest.

(2,509)

(15,302) 17,811 Increase (decrease) in taxes accrued (3,393)

(14,941) 1,691-increase (decrease) in interest accrued 3,442 (7,511) 663 i

Other, net (11,423) 3,955 12,354 j

Net Cash Provided From Operating Activities 296,705 275,582 300,2 %

l Cah Flows From Investing Activities

j Utitity property additions and construction expenditures.

(404,600)

- (322,381)

(277,636) t (Increase) decrease in nonutility property and lnvestments:

Acquisition of oil and gas producing properties -

(47,189)

(122,621)'

(74,766)

Nonutility property (109,336)

(81,044)

(35,462)

. Investments -

(19,006)

(4,066)

(2,591)

Sale of real estate assets.

79,439 principal noncash item:

Allowance for funds used during construction 15,332 15,107 9,766 Net Cash Used For Investing Activities,

(485,360)

(515,005)

(380,689)

Cah flows From Financing Activities:

Pmceeds:

Issuance of mortgage txmds _

100,000 600,000 Issuance of common stock........

63,317 129,066 126,809 Issuance of notes and kians -

60,000 148,059 154,254 Issuance of pollution ccmtrol bonds.

30,000 Other long-term debt 3,005 Repayments:

Mortgage bonds.

(430,000)

(35,890)

Notes -

(75,545)

(72 040)

(95,272)

Other long-term debt (11,430)

(1,195)

(255)

Preferred stock -

(3,398)

(3,295)

(3,199)

Dividend payments:

Common stock (131,925)

(122,129)

(109,383)

Preferred stock.

(6,048)

(6,247)

(6,558)

Short-term borrowings, net 140,008 1,863 20,390 Fuel financings, net 13,844 (18,948)

(6,628)

Net Cash Provided By Financing Activities -

178,823 228,139 44,268

- Net Decrease in Cash and Temporary Cash Investments (9,832)

(11,284)

(36,125)

- Cnh end Temporary Cash Investments, January 1 -

20,766 32,050 68,175 C=h end Temporary Cash Investments, December 31

$ 10,934

$ 20,766

$ 32,050 Supplemental Cash Flows Information:

Cash paid for - Interest

$ 110,347

$ 113,010

$ 100,340

- Income taxes 90,012 93,337 81,819

' Nonccsh Financing Activities:

Department of Energy decontamination and decommissioning obligation :

4,965 Ses Notes to Conwlulated nmed Statmes.

15 d

m P

!CONZOLIDATED BTATEMENTS OF i

. CAPITALIZATION Dectimber 31, 1994' 1993

Common Equity (Note 5h

- mwusads of Dollars)

Common stock, without par value, authorized 75,000,000 shares; issued J cnd outstanding,1994 - 48,017,510 shares and 1993 - 46,619,457 shares

$ 886,770 5 826,665 Retained earnings 523,668

. 506,380 l

Total Common Equity 1,410,438 46 % 1,333,045 47%-

South' Carolina Electric & Gas Company:

[

Cumulative Preferred Stock (Not subject to purchase or sinking funds)(Note Sh

$100 Par Value-Authorized 200,000 shares -

$50 Par Value - Authorized 125,209 shares Shares Outstanding _

Redemption Price Eventual Series 1994 1993 Current Through Minimum I

$100 Par 8.40 %

197,668 197,668 102.80.

11-30-96 101.00 19,767 19,767

$50 Par 5.00%

125,209 125,209 52.50 52.50 6,260 6,260 T:tal Preferred Stock (Not subject to purchase or sinking funds) 26,027 1%

26,027 1%

i

- South Carolina Electric & Gas Company:

Cumulative Preferred Stock (Subject to purchase or sinking funds)(Notes 6 and Sh

$100 Par Value - Authorized 1,550,000 shares t

Shares Outstanding, Redemption Price Eventual Series 1994 1993 Current Through Minimum -

7.70 %

89,984 92,992 101.00 101.00 8,998 9,299 8.12%

126,835 131,899 102.03 102.03 12,684 13,190 216,819, 224,891

$50 Par Value Authorized 1,627,074 shares Shares Outstanding,

_,_ Redemption Price Eventual Serigs_

_1994,,

1993_ Current

_Th. rough Minimum 4.50 %

19,0S8 20,800 51.00 51.00 954 1,040 4.60 %

2,334 3,834 50.50 50.50 117 192

)

4.60%(A) 28,052 30,052 51.00 51.00 1,403 1,503 1

4.60%(B) 78,200 81,600 50.50 50.50 3,910 4,080 1

5.125 %

73,000 74,000 51.00 51.00 3,650 3,700

-{

6.00 %

86,400 89,600 50.50 50.50 4,320 4,480 8.72 %

127,956 160,000 51.00 12-31-98 50.00 6,398 8,000 i

I 9.40%

190,245 197,191 51.175 51.175 9,512 9,860 605,275 657,077

. =

==

$25 Par Value - Authorized 2,000,000 shares; none outstanding in 1994 and 1993

'Ibtal Preferred Stock (Subject to purchase or sinking funds) 51,946 5'5,344 J

. less: Current portion, including sinking fund requirements 2,418 2,504 Tot <.1 Preferred Stock, Net (Subject to purchase or sinking funds) 49,528 2%

52,840 2%

)

I 16

T 5

g P

- December 31, 1994 1993

- Long-Term Debt (Notes 3,4 and Sh (Nusands of Dallars)

- SCANA Corporation:

Bank Notes, due 1996 (6.44%, reset quarterly)

. 60,000 60,000 Medium-term Notes:

Series Yearof Maturity 5.76 %

1998 20,000 20,000 7.17 %

1999 42,400 42,400 6.60 %

1999 30,000 30,000 6.15 %

2000 20,000 20,000 6.51 %

2003 20,000 20,000

. South Carolina Electric & Gas Company:

First Mortgage Bonds:

Series Year of Maturity 6%

2000 100,000 100,000 61/4%

2003 100,000 100,000 7.70 %

2004 100,000

. 71/8%

2013 150,000 150,000 71/2%

2023 150,000 150,000 75/8%

2023 100,000 100,000 First and Refunding Mortgage Bonds:

Series Year of Maturity 47/8%

1995 16,000 16,000 5.45%

1996 15,000 15,000 1

6%

1997 15,000 15,000 61/2%

1998 20,000 20,000 71/4%

2002 30,000 30,000 9%

2006 145,000 145,000 87/8%

2021 155,000 155,000 1

Pollution Control Facilities Revenue Bonds:

5.95% Series, due 2003 6,660 6,760

)

Fairfield County Series 1984, due 2014 (6.50%)

56,820 56,820 Richland County Series 1985, due 2014 (6.50%)

5,210 5,210 1

Fairfield County Series 1986, due 2014 (6.50%)

1,090 1,090 Colleton and Dorchester Counties Series 1987, due 2014 (6.60%)

4,365 4,365 Orangeburg County Series 1994, due 2024 (floating daily rate) 30,000

. Capitalized Lease Obligations, due 1991-1997 (various rates between 5 3/4% and 10%)

1,642 2,897 lttstallment Note Payable, due 1996 1,452 2,277 j

Department of Energy Decontamination and Decommissioning Obligation 3,922 4,634 South Carolina Generating Company, Inc.:

)

Berkeley County Pollution Control Facilities Revenue Bonds, due 2014 (6.50%)

35,850 35,850 Note,7.78%, due 2011 67,400 71,100 South Carolina Fuel Company, Inc.:

j Nuclear and Fossil Fuel Liability 50,594 36,750 j

South Carolina Pipeline Corporation:

' Notes,6.72%, due 2013 23,750 25,000 Note,9.27%, due 1991-1994 8,000 SCANA Development Corporation:

Notes, due 1994-2004 (various rates between 8.5% and 12.0%)

1,770 Bank Loans, due 1994-1998 (various rates between 6% and 6.25%)

3,246 13,839

- Total Long-Term Debt 1,580,601 1,464,762

-]

Less - Current maturities, including sinking fund requirements 38,055 34,322 l

- Unamortized discount 4,922 6,041 Totsl Long-Term Debt, Net 1,537,624 51 % 1,424,399 50 %

Tot:.1 Capitalization 53,023,617 100% $2,836,311 100% _

See nom to G4wlulatd Tmaval Statemenu.

'17

]

m p.

F INOTES TO'-

CONSOLIDATED I:lNANCIAL STATEMENTS

1.

SUMMARY

OF SIGNIFICANT ACCOUNTING POUCIES:

was aPPmximately $297.9 million and $285.3 million as of

" A. Organization and Principles of Consolidation December 31,1994 and 1993, respectively. SCE&G's share of the L SCANA Corporation (Company), a South Carolina direct expenses associated with operatmg Summer Station is -

' corporation,is a public utility holding company within the meluded in the Company's "Other operation and f me ning of the Public Utility Holding Company.Act of 1935 but

' Maintenance expenses.

is exempt from registration under such Act.

D. Allowance for Funds Used During Construction -

The accompanying Consolidated Financial Statements reflect Allowance for funds used during construction (AFC), a

- the consolidation of the accounts of the Company and its wholly noncash item, reflects the period cost of capital devoted to plant -

owned subsidiaries:

under construction. This accounting practice results in the Regulated utilities inclusion, as a component of construction cost, of the costs of

' South Carolina Electric & Gas Company (SCE&G) debt and equity capital dedicated to construction investment.

South Carolina Fuel Company,Inc.

AFC is included in rate base investment and depreciated as a South Carolina Generating Company, Inc. (GENCO) component of plant cost in establishing rates for utility services.

. South Carolina Pipeline Corporation (Pipeline Corporation)

The Company's regulated subsidiaries calculated AFC using Nonregulated businesses composite rates of 8.5%,9.3% and 9.6% for 1994,1993 and 1992, SCANA Petrok>um Resources,Inc. (Petroleum Resources) respectively. These rates do not exceed the maximum allowable SCANA flydrocarbons,Inc.

rate as calculated under FERC Order No. 561. Interest on nuclear Suburban l'ropane Group, Inc.

fuel in process and sulfur dioxide emission allowances is MPX Systems, Inc. (MPX) capitalized at the actual interest amount. -

".i E. Deferred Return on Plant Investment -

r ' Inc SCANA Devek[pment Corporation Commencing July 1,1987, as approved by a PSC order on that SCANA Capital Resources, Inc.

date, SCE&G ceased the deferral of carrymg costs associated with investments in joint ventures in real estate and 400 MW of electne generating capacity previously removed from telecommunications are reported using the equity method of rate base and began amortizing the accumulated deferred accounting. Significant intercompany balances and transactions carrying cc,sts on a straight-line basis over a ten-year period, have been eliminated in consolidation.

Amortizatmn of deferred carrymg costs, mcluded in In January 1994 the Company signed an agreement to sell "Deprecialmn and amortization," was approximately $4.2 million for each of 1994,1993 and 1992.

substantially all of the real estate assets of SCANA Development Corporation to Liberty Properties Gmup, Inc. (Liberty) of F. Revenue Recognition Greemille, South Carolina for $91.5 million. On March 4,1994 the Customers' meters are read and bills are rendered on a Company and Liberty amended the agreement to exclude certain monthly cycle basis. Base revenue is rworded during the pr@ cts then under construction, and the sales price was reduced to accounting period in which the meters are read.

$49.6 million. The transaction was closed on May 27,1994. Certain Fuel costs for electric generation are collected through the fuel -

other assets of SCANA Development Corporation are being sold to cost component in retail electric rates. The fuel cost component other parties. These transactions did not have a material impact on contained in electric rates is established by the PSC during the Company's financial position or results of operations.

semiannual fuel cost hearings. Any difference between actual fuel-

. B. System of Accounts e st and that contained in the fuel cost component is deferred and '

- The accounting records of the Company's regulated mcluded when determmmg the fuel cost component during the

. subsidiaries are maintained in accordance with the Uniform next semiannual fuel cost heanng. SCE&G had undercollected -

System of Accounts prescribect by the Federal Energy Regulatory through the electric fuel cost component approximately $3.5 Commission (FERC) and as adopted by the Public Service mdlion at December 31,1994 and overcollected approximately $9.2 Commission of South Carolina (15C).

milli n at December 31,1993 which are mcluded in " Deferred Debits-Other" and " Deferred Credits-Other," respectively. -

C. Utility Plant Customers subject to the gas cost adjustment clause are billed Utility plant is stated substantially at original cost. The costs based on a fixed cost of gas determined by the PSC during -

of additions, renewals and betterments to utility plant, including annual gas cost recovery hearings. Any difference between direct labor, material and indirect charges for engineering, actual gas cost and that c4mtained in the rates is deferred and supervision and an allowance for funds used during included when establishing gas costs during the next annual gas

. ccmstruction, are added to utility plant accounts. The original cost recovery hearing. At December 31,1994 and 1993 the cost of utility property retired or otherwise disposed of is Company had undercollected through the gas cost recovery removed fmm utility plant accounts and generally charged, procedure approximately $16.3 million and $12.0 million, along with the cost of removal,less salvage, to accumulated respectively, which are included in " Deferred Debits-Other."

depreciation. The costs of repairs, replacements and renewals of

. items of property determined to be less than a unit of property G. Depreciation, Depletion and Amortization are charged to maintenance expense.

Provisions for depreciation are recorded usmg the straight-line SCE&G, operator of the V. C. Summer Nuclear Station method for financial reporting purposes and are based on the L'

' (Summer Station), and the South Carolina Public Service estimated service lives of the vanous classes of property. The Authority (PSA) are joint owners of Summer Station in the composite weightcd average depreciation rates were as follows:

- proportions of two-thirds and one-third, respectively. The parties share the operating costs and energy output of the plant in these 1994 1993 1992 proportions. Each party, however, pmvides its own financing.

SCE&G 3.01 %

2.97 %

3.00 %

. Plant in service related to SCE&G's portion of Summer Station GENCO 2.70 %

2.64 %

2.63 %

was appmximately $923.1 million and $920.2 million as of Pipeline Corporation 2.79 %

2.62 %

2.62 %

December 31,1994 and 1993, respectively. Accumulated Aggregateof Above 2.98 %

2.92 %

2.96 %

depsyciation associated with SCE&G's share of Summer Station

~

18-

Nuclear fuel amortization, which is included in " Fuel used in The Company adopted Stateraent of Financial Accounting electric generation" and is recovered through the fuel cost Standards W.109, " Accounting for income Taxes," effective

?co nent of SCE&G's rates,is recorded using the units-of-January 1,1993. Prior years' financial statements have not been uction method. Provisions for amortization of nuclear fuel restated. Deferred tax assets and liabilities were adjusted from nclude amounts necessary to satisfy obligations to the United the amounts recorded at December 31,1992 under prior

Stctes Department of Energy under a contract for disposal of standards to the amounts required at January 1,1993 under spent nuclear fuel.

Statement No.109 at currently enacted income tax rates. The Theecquisition adjustment relating to the purchase of certain adjustments were charged or credited to regulatory assets or gas properties in 1982 is being amortized over a 40-year period liabilities if the Company expected to recover the resulting using the straight-line method.

additional income tax expense from, or pass through the Depreciation, depletion and amortization (DD&A) of the resulting reductions in income tax expense to, customers of the capitalized costs of oil and gas producing properties is provided Company's regulated subsidiaries; otherwise, they were charged for on the units-of-production basis. Units-of-produc'. ion rates or credited to income tax expense. The cumulative effect of are based on estimated proved reserves.

adopting Statement No.109 on retained earnings as of January 1, 1993, as well as the effect of adoption on net income for the year

' H.Nuc! ar Decommissioning ended December 31,1993, was not matenal. At December 31, Decommissioning of Summer Station is presently projected to 1993 the combmed effect of adoptmg Statement No.109 and comraence in the year 2022 when the operating license expires.

adjusting deferred tax assets and liabilities for the change in 1993 The expenditures (on a before-tax basis) related to SCE&G's f the corporate Federal income tax rate from 34% to 35%

+

share of decommissioning activities are currently estimated,in resulted in balances of $100.8 milhon m regulatory assets 2022 dollars assuming a 4.5% annual rate of inflation, to be (included in Deferred Dcbits-Other') and $69.3 milhon m,

. $545.3 million, including partial reclamation costs. SCE&G is regulatory liabilities (included in Deferred Credits-Other',) for providing for its share of estimated decommissioning costs of the Company's regulated subsid, anes.

i Summer Station over the life of Summer Station. SCE&G's in acc rdance with Statement No.109, deferred tax assets and method of funding decommissioning costs is referred to as liabilities are recorded for the tax effect of temporary differences COMReP(Cost of Money Reduction Plan). Under this plan, Mween the book basis and tax basis of assets and liabilities at funds collected through rates ($3.2 million and $2.5 million in en cted tax rates. Deferred tax assets and liabilities are 1994 and 1993, respectively) are used to purchase insurance currenkfor changes in such rates through charges or cn adjust policies on the lives of key Company personnel. Through the regulatory assets or liabilities if they are expected to be recovered purchase of insurance contracts, SCE&G is able to take advantage imm, r passed through to, c'istomers of the Com any's of income tax benefits and accrue carnings on the fund on a tax regulated subsidianes; otherwise, they are charge ( or credited to deferred basis at a rate higher than can be achieved using more I"* ** '* * ** P'"S*'

~ traditional funding approaches. Amounts for decommissioning Prior to the adoption of Statement No.109 on January 1,1993, collected through electric rates, insurance proceeds and interest the Company recorded a deferred income tax provtsion on all on proceeds h ss expenses are transferred by the Company to an matenal timmg differences between the inclusion of items m, external trust fund in compliance with the financial assurance pretax financial income and taxable income each year, except for requirements of the Nuclear Regulatory Commission.

those which were expected to be passed through to, or collected Management intends for the fund, including earnings thereon, to fr m, customers of the Company's regulated subsidianes.

provide for all eventual decommissioning expenditures on an Accunnilated deferred mcome taxes were generally not adjusted after-tax basis. Thus, the trust's sources of decommissioning f r changes m enacted tax rates.

funds under the COMReP program include investment components of life insurance policy proceeds, return on J. Pension Expense investments, and the cash transfers from SCE&G described The Company has a noncontributory defined benefit pension above. SCE&G records its liability for decommissioning costs in plan covering substantially all permanent employees. Benefits deferred credits.

are based on years of accredited service and the employee's The staff of the Securities and Exchange Commission has average annual base earnings received during the last three years questioned certain of the current accounting practices of the of employment. The Company's policy has been to fund pension electric utility industry regarding the recognition, measurement costs accrued to the extent permitted by the applicable Federal and classification of decommissioning costs for the financial income tax regulations as determined by an independent actuary.

statements of electric utilities with nuclear generating facilities.

Net periodic pension cost for the years ended December 31, In response to these questions, the Financial Accounting 1994,1993 and 1992 included the following components:

i Standards Board has agreed to review the accounting for removal costs, including decommissioning. If the current electric utility 1994 1993 1992 industry accounting practices for such decommissioning are (Thousands of Doli,ns) i changed: (1) annual provisions for decommissioning could Service cost-benefits earned increase, and (2) trust fund income from the external during the period

$ 8,684 5 7,629 $ 7,174 decommissioning trusts could be reported as mvestment m.come Interest cost on projected rather than as a reduction of decommissionmg expense.

benefit obligation 21,711 20,413 19,628 in addition, pursuant to the National Energy Pohey Act passed Adjustments: Return on plan assets 2,365 (50,389) (28,607) 1 by Congress m 1992, SCE&G has recorded a liability for its Net amortization and deferral (29,760) 25,936 8,096 estimated share of amounts required by the U.S. Department of Energy for its decommissioning fund. SCE&G will recover the

_ Net periodic pension cost

$ 3,000 $ 3,589 $ 6,291 costs associated with this liability, totaling $4.3 million at December 31,1994, through the fuel cost component of its rates; The determination of net periodic pension cost is based upon accordingly, these amounts have been deferred and are included the following assumptions:

in Deferred DebitsOther" and "I.ong-Term Debt, Net."

1994 1993 1992

.'l. Income Taxes Annual discount rate 7.25 %

8.0%

8.0%

The Company and its subsidiaries file consolidated Federal and State income tax returns. Income taxes are allocated to all Expected long-term rate of subsidiaries based on their contributions to consolidated taxable return on plan assets 8.0%

8.0%

8.0%

income.

Annual rate of salary increases 4.75%

5.5%

5.5%

19 i

J

n

y M

~

b~

.~.

' The determination of net periodic postretirement benefit cost is..

I iThe following toble sets forth the funded status of the plan at

~

M t December 31,1994 and 1993:

s based upon the following assumptions:

1

~

1994

'1993 1994:

'1993 (Nusands of Dollars)

Annual discount rate -

7.25% -

8.0% :

[Actubial present value of benefit obligations:

Health care cost trend rate :

11.25 %

13 0%

Voted benefit obligation

$ 205,364 $204,794 ~ Ultimate health care cost trend rate.

7 L Nonvested benefit obligation

• 13,966 - 14,085 -

(to be achieved in 2004).

5.25 %

6.0%

Accumulated benefit obligation

$ 219,330 $218,879

=

i t

The following table sets forth the funded status of the plan, as.-

Projected benefit obligation

$ 246,318 $295,718 determined by an independent actuary, at December 31,1994 and

Plan assets at fair value 1993:

J (invested primarily in equity

. and debt securities) 347,702 -351,648 1994 1993 Phn assets greater than (Nusands of Dollars) ;.

projected benefit obligation 101,384 - 55,930

. Accumulated postretirement l

'. Unrecognized net transition liability

' 11,307 10,713 benefit obligations for:

. Unrecognized prior service costs 9,374 9,294 Retirees

$ 59,174 5 40,8651.;

? ~ Unrecognized net gain (102,284) (64,607)

Other fully eligible parti.ipants 4,995 6,841 l[

Other active participants 24,889 : 25,767 -

t

- pension asset recognized in Consolidated Balance Sheets

$ 19,781 5 11,330 Accumulated postretirement benefit obligation

. 89,058 73,473 1The accumulated benefit obligation is based on the plan's Plan assets at fair value'

! benefit formulas without considering expected future salary.

Plan assets less accumulated postretirement j

. Increases. The following table sets forth the assumptions used in benefit obligation (89,058) (73,473) the amounts shown above for the years 1994,1993 and 1992.

Unrecognized net transition liability 61,581 64,925 Unrecognized prior service costs 3,453 1994 1993 1992 Unrecognized net loss 11,156 4,284 Annual discount rate used to Postretirement benefit liability recognized -

. determine benefit obligations 8.0%

7.25 %

8.0%

in Consolidated Balance Sheets '

$(12,868) 5 (4,264)

. Assumed annual rate of futu e salary increases for projected The accumulated postretirement obligation is based upon the benefit obligation 2.5%

4.75 %

5.5%

plan's benefit provisions and the following assumptions:

The change in the annual discount rate used to determine 1994 1993 l

benefit obligations from 7.25% to 8.0% and the change in the.

Assumed health care cost trend rate used te-expected salary increase rate from 4.75% to 2.5% as of December measure expected costs

.12.0% ;

11.25 %

31,1994 decreased the projected benefit obligation and increased Ultimate health care cost trend rate f'

. the unrecognized net gain by approximately $67.7 million.

(to be achieved in 2004) 6.0%

5.25 %

In addition to pension benefits, the Company provides certain Annual discount rate 8.0%.

7.25%.

health care and life insurance benefits to active and retired -

Annual rate of salary increases 2.5% '

4.75 %

employees. The costs of postretirement benefits other than ll pensions are accrued during the years the employees render the The effect of a one-percentage-point increase in the assumed l

service necessary to be eligible for the applicable benefits. Pnor health care cost trend rate for each future year on the aggregate.)

'l l-to 1993 the Company expensed these benefits, which are of the service and interest cost components of net periodic l

- pnmanly health care, as claims were incurred. in its June 1993 '

postretirement benefit cost for the year ended December 31,1994

("

electric rate order the PSC approved the mclusm, n in rates of the -

and the accumulated postretirement benefit obligation as of -

portion of increased expenses related to electric operations. The December 31,1994 would be to increase such amounts by Company expensed approximately $8.6 rmlhon and $4.3 million,

$210,000 and $3.3 million, respectively.

net of payments to current retirees, for the years ended December 31,1994 and 1993, respectively.

K. Debt Premium, Discount and Expense, Unamortized Loss on -

' Net periodic postretirement benefit cost for the years ended Reacquired Debt December 31,1994 and 1993 included the following components:

Long-term debt premium, discount and expense are bemg j

amortized as components of " Interest on long-term debt, net" I

1994 1993 over the terms of the respective debt issues. Gains or losses on

)

reacquired debt that is refinanced are deferred and amortized l!

T (Wusands of Dollars)

Service cost-benefits earned during ver the term of the replacement debt.

the period

$ 2,417 $ 1,908 L. Environmental

.l Interest cost on accumulated postretirement The Company has an environmental assessment program to i

benefit obligation 6,644 5,502 identifv and assess current and former operations sites that could

, Adjustments:

require environmental cleanupi As site assessments are initiated, l

' Return on plan assets an estimate is made of the amount of expendituras,if any, 8

Amortization of unrecognized necessary to investigate and clean up each site. These estimates l

transition obligation 3,344 3,344

- Other net amortization and deferral 860 are refined as additionalinformation becomes available; 4

}

therefore, actual expenditures could differ significantly from the j

4

=" " periodic postretirement benefit cost

$13,265 $10,754 original estimates. Amounts estimated and accrued to date for -

I Net site assessments and cleanup relate primarily to regulated operations; such amounts have been deferred and are being amortized and recovered through rates over a ten-year period for j

20-1

i 7 ekctric operations and an eight-year period for gas operations.

E. In May 1989 the PSC approved a volumetric and direct s Such deferred amounts totaled $20.2 million and $19.6 million at billing method for Pipeline Corporation to recover take-or-pay.

December 31,1994 and 1993, respectively, and are included in costs incurred from its interstate pipeline suppliers pursuant to Deferred Debits-Other."

FERC-approved final and non-appealable settlements. In December 1992 the Supreme Court approved Pipeline Corporation's full recovery of the take-or-pay charges imposed d gas properties are accounted for using the successful-by its supphers and treatment of these charges as a cost of gas.

efforts method. The costs of acquiring nonproducing acreage, Iiowever, the Supreme Court declared the PSC-approved

- drilling successful exploration wells, and all development costs

, purchase deficiency' methodology for recove of these costs to are capitalized. The Company's net investment in oil and gas be unlawful retroactive ratemaking and reman ed the docket to

properties is subject to a quarterly ceiling limitation calculation the PSC to reconsider its recovery methodology. On April 30, that is based on the future net revenues from forecasted 1994 the PSC issued an order mvolvmg Pipeline Corporation's production of proved oil and gas reserves valued at current or a my f tabor-pay cost meurred pursuant to FERC-contract prices. Carrying values of proved reserves in excess of the ceiling limitation are expensed currently. The Company's appmyed settlements with its upstream mterstate p line suppher. This order provided a mechanism for Pipe me investments in nonproducing properties are evaluated Corporation to recover its take-or-pay cost volumetrically over a periodically, and if conditions warrant, an impairment reserve is peri d of approximately 30 months. SCE&G receives a credit for

' brovided. Costs of that bargely on historical experience, areortion of undeveloped acreage likely to payments made pnor to the April 30 rder which is netted unproductive, based against the current volumetnc surcharge. That net cost is 1

amortized over the period of exploration. Annual lease rentals and exploration costs, including geological and geophysical costs

((ered by SCE&G through its purchased gas adjustment and exploratory dry-hole costs, are expensed as incurred.

F. On August 8,1990 the PSC issued an order, effective N. Gas Futures Contracts November 1,1990, approving changes in Pipeline Corporation's The Company sells gas futures and forward contracts, gas rate design for sak s for resale service and upholding the purchases options and enters into over-the-counter agreements to "value-of-senice" method of regulation for its direct industrial hedge price risks for the majority of Petroleum Resources' service. Direct industrial customers seeking " cost-of-service" production. Gains and losses on the above are recognized based rates initiated two separate appeals to the Circuit Court, concurrently with the revenue from the associated gas sales.

which reversed and remanded to the PSC its August 8,1990 order.

Pipeline Corporation appealed that decision to the Supreme Court O. Temporary Cash Investments which on January 10,1994, reversed the two Circuit Court The Company considers temporary cash investments having decisions and remstated the PSC Order. The Supreme Court held original maturities of three months or less to be cash equivalents.

that the industrial customer group's appeal was premature and Temporary cash investments are generally in the form of failed to exhaust admmistrative remedies. Additionally, the commercial aPr, certificates of deposit and repurchase Supreme Court interpreted the rate-makmg statutes of South P

agements.

Carolina to give discretion to the PSC in selecting the P. Rrclassifications methodology to be used in setting rates for natural gas sente.

Certain amounts from prior periods have been reclassified to G. On July 3,1989 the PSC granted SCE&G approximately $21.9 conform with the 1994 presentation.

million of a requested $27.2 million annual increase in retail electric revenues based upon an allowed return on common

2. RATE MATTERS:

equity of 13.25%. The Consumer Advocate appealed the decision A. On October 27,1994 the PSC issued an order approving

'".the Supreme Court which, on August 31,1992, found that the SCE&G's request to recover through a billing surcharge to its gas ev dence m the record of that case did not support a return on cm n eqmty higher than 13.0% and remanded to the PSC a customers the costs of environmental cleanup at the sites of former manufactured gas plants. The billing surcharge, which p rti n of its July 1989 order for a determmation of the proper was effective with the first billing cycle in November 1994, n4 urn n c mm n equity consistent with the Supreme Court s provides for the recovery of approximately $16.2 mi!! ion opi

n. On January 19,1993 the PSC issued an order allowing a representing substantially all site assessment and cleanup costs return on common equity of 13.0%, approving a refund based on for SCE&G's gas operations that had previously been deferred, the difference m rates created by the difference between the 13.0%

B. On June 7,1993 the PSC issued an order on SCE&G's and the 13.25% return on common equity and making other non-pendin material adjustments to the calculation of cost-of-service. The j

on com'g electric rate proceeding allowing an authorized return mon equity o(11.5% resulting in a 7.4% annualincrease total refund, before interest and income taxes, was approxtmately in retail electric rates, or a projected $60.5 million annually based

$14.6 milhon and was charged against 1992 Electric Revenues.

on a test year. These rates were implemented in two phases over The refund plus interest was made during 1993, a two-year period: phase one, effective June 1993, producing

$42.0 million annually, and phase two, effective June 1994,

3. LONG-TERM DEBT:

producing $18.5 million annually, based on a test year.

The annual amounts of long-term debt maturities, including C. On September 14,1992 the PSC issued an order granting the amounts due under the nuclear and fossil fuel agreements SCE&G a 5.25 increase in transit fares from 5.50 to $.75 in both (see Note 4), and sinking fund requirements for the years 1995 Columbia and Charleston, South Carolina; however, the PSC also through 1999 are summarized as follows:

required 5.40 fares for low income customers and denied SCE&G's request to reduce the number of routes and frequency Yea; Amount Year Amount of v.ervice. The new rates were placed into effect on October 5, (Thousands of Dollars) 1992. SCE&G has appeakd the PSC's order to the Circuit Court.

1995 5 38,055 1998

$60,174 D. Effective with the first billing cycle in December 1991, 1996 147,248 1999 92,584 SCE&G's gas rate schedules for its residential, small commercial 1997

'18,306 and small industrial customers have included a weather normalization adjustment OVNA). The WNA minimizes gg g

g gf,

fluctuations in gas revenues due to abnormal weather conditions and was sub}ect to an annual review by the PSC. The PSC order term debt for 1995 may be satisfied by either deposit and was based on a return on common equity of 12.251 On August cancellation of bonds issued upon the basis of property additions

.6,1994, the PSC ordered that the W NA be made permanent.

or bond retirement credits, or by deposit of cash with the Trustee.

21

r in January 1995 the Company arranged for an unsecured bank The aggregate annual amounts of purchase fund or sinking loan of $60 million, due January 12,1996 at an initial interest rate fund requirements for preferred stock for the years 1995 through of 6.44%, subject to reset quarterly at LIBOR plus ten basis 1999 are summarized as follows:

points. Proceeds from the loan were used to mpay bank loans tot: ling $60 million due January 13,1995; accordingly, such loans Year Amount Year Amount cre included in long-term debt at Dnember 31,1994.

ggggg Substantially all utility plant and fuel inventories are pledged 1995

$2,418 1998

$2,440 as collateral in connection with long-term debt.

1996 2,482 1999 2,440 2'

• 4, FUEL FINMCINGS:

Nuclear and foril fuel inventories are financed through the The changes it " Total Preferred Stock (Subject ta purchase or issuance of short-term commercial paper. These short-term sinking funds)" during 1994,1993 and 1992 are summarized as borrowings are supported by an irrevocable revolving credit follows:

agreement which expires July 31,1996. Accordingly, the amounts outstanding have been included in long-term debt. The credit Number Thousands agreement provides for a maximum amount of $75 milhon that of Shares of Dollars

~

Balance December 31,1991 998,404

$61,838 omm r al p p r uts a ing totaled $50.6 million and $36.8 Shares Redeemed:

million at December 31,1994 and 1993 at weighted average 09 interest rates of 6.06% and 3.47%, respectively.

par [a u[

5. STOCKHOLDERS' INVESTMENT [lNCl.UDING PREFERRED Balance December 31,1992 940,529 58,639 Shares Redeemed.

STOCK NOT SUBJECT TD PURCHASE OR SINKING FUNDS}:

$100 par value (7,374)

(737)

The changes in

• Common Stock," without par value, during

$50 par value (51,187)

(2,558) 1994,1993 and 1992 are summarized as follows:

Balance December 31,1993 881,968 55,344 Shares Redeemed:

Number Thousands

$100 par value (8,072)

(807) of Shares of Dollars

$50 par value (51,802)

(2,591)

Balance December 31,1991 40,784,327

$571,597 Balance December 31,1994 822,094

$51,946 issuance of common stock 3,126,304 12'i,406 Balance December 31,1992 43,910,631 699,003 Issuance of common stock 2,708,826 127,662

7. INCOME TAXES:

Bil:nce December 31,1993 46,619,457 826,665 Total income tax expense for 1994,1993 and 1992 is as follows:

Issuance of common stock 1,398,053 60,105 Biltnce December 31,1994 48,017,510

$886,770 1994 1993 1992 The Restated Articles of Incorporation of the Company do not Current taxes:

limit the dividends that may be payable on its common stock.

Federal

$62,033 $59,590 $ 67,240 However, the Restated Articles ofIncorporation of SCE&G and State 13,178 6,409 8,146 the Indenture underlying its First and Refunding Mortgage Total current taxes 75,211 65 M9 75,386 Ikmds contain provisions that may limit the payment of cash dividends on its common stock. In addition, with respect to Deferred taxes, net:

hydrodectric projects, the Federal Power Act may require the Federal 10,242 23,219 (11,888) appropriation of a portion of the earnings therefrom. At State (86) 6,003 413 December 31,1994 approximately $13.2 million of retained Total deferred taxes 10,156 29,222 (11,475) earnings were restricted as to payment of cash dividends on Investment tax credits:

i common stock.

Amortization of amounts i

Cash dividends on common stock were declared at an annual deferred (credit)

(3,631)

(3,659)

(3,659) rate per share of $2.82, $2.74 and $2.68 for 1994,1993 and 1992, Total income tax expense

$81,736 $91,562 5 60,252 i

respectively.

The difference in actual income taxes and the income taxes

6. PREFERRED STOCK ISUBJECT TO PURCHASE OR calculated from the application of the statutory Federal income SINKING FUNDSI:

tax rate (35% for 1994 and 1993 and 34% for 1992) to prelax The call premium of the respective series of preferred stock in income is reconcikd as follows:

no case exceeds the amount of the annual dividend. Retirements under sinking ftmd requirements are at par values.

At any time when ciividends have not been paid in full or declared and set apart for payment on all series of preferred stock, SCE&G may not redeem any shares of preferred stock (unless all shares of preferred stock then outstanding are mdeemed) or purchase or otherwise acquire for value any shares of preferred stock except in accordance with an offer made to all holders of preferred stock. SCE&G may not redeem any shares of preferred stock (unless all shares of preferred stock then outstanding are redeemed) or purchase or otherwise acquire for value any shares of preferred stock (except out of monies set aside as purchase funds or sinking funds for one or more series of preferred stock) at any time when it is in default under the provisions of the purchase fund or sinking fund for any series of preferred stock.

22

{

1994 1993 1992 1992 mousands of Doffars)

Charged (credited) to expense:

Net income

~ $151,199 $167,981 $117,590 Property, plant and equipment (including Tot 11 income tax expense:

DD&A and basis differences)

$ 7,435 Chuged to operating expenses 94,510 90,007 60,947 Deferred fuel revenue (2,958)

Chtrged (credited) to other Property taxes 562 income (12,774) 1,555 (695)

Cycle billing (1,321)

Preferred stock dividends 5,955 6,217 6,473 Take-or-pay contracts (1,11 8)

Total pretax income

$238,890 $265,760 $184,315 Nuclear refueling accrual (4,430)

Electric rate refund (6,571) income taxes on above at statutory injuries and damages (1,377)

Federalincome tax rate

$83,612 $93,016 $62,667 Other, net (1,697)

Increases (decreases) attributable to:

Total deferred taxes

$(11,475)

Allowance for funds used during construction The Internal Revenue Service has examined and closed l

(excluding nuclear fuel)

(2,862)

(3,125)

(1,868) consolidated Federalincome tax returns of the Company through Deferred return on plant 1989 and is currently examining the 1990,1991 and 1992 Federal investment, net of amortization 1,486 1,486 1,444 income tax returns. No adjustments are currently proposed by Depreciation differences 2,860 '

2,794 2,129 the examining agent. The Company does not anticipate that any Amortization ofinvestment tax adjustments which might result from this examination will have credits (3,631)

(3,659)

(3,659) a significant impact on the earnings or financial position of the State income taxes (less Federal

Company, income tax effect) 8,510 8,068 5,649 Deferred income tax flowback at

8. RNANCIAL INSTRUMENTS:

i higher than statutory rates (4,327)

(4,4 11)

(5,565)

The carrying amounts and estimated fair values of the Alternate fuel productmn tax credit (1,274)

(1,373)

(275)

Company's financial instruments at December 31,1994 and 1993 Other differences, net (2,638)

(1,234)

(270) are as follows-Totalincome tax expense

$81,736 $91,562 $60,252 l

1994 1993 The Omnibus Budget Reconciliation Act was signed into law Estimated Estimated on August 10,1993, increasing the corporate tax rate from 34% t Ca rying Fair Carrying Fair 35% effective January 1,1993. The impact of this change on the Amount Value Amount Value Company's financial position and results of operations was not matcnal.

(nmusands of Dollars)

The tax effects of significant tem irary differences comprising Cash and temporary cash mvestments

$ 10,934 $ 10,934 $ 20,766 $ 20,766 the Company's net deferred tax lia lity of $570.4 million at investments 24,858 27,099 5,312 15,235 December 31,1994 and $559.6 million at December 31,1993, determincd in accordance with Statement No.109 (see Note 11),

Short-term borrowings 183,027 183,027 43,019 43,019 are as follows:

Totallong-term debt 1,575,679 1,490,852 1,458,721 1,551,873 j

Total preferred stock (subject to puichase 1994 1993 or sinking funds) 51,946 49,348 55,344 51,618 (Dwusands of Dollars)

Deferred tax assets:

The information presented herein is based on pertinent Unamortired mvestment tax credits 5 56,588 $ 58,839 nformation available to the Company as of December 31,1994 Cycle billing 17,521 15,084 and 1993. Although the Company is not aware of any factors that Nuclear operations expenses 206 4,908 would significantly affect the estimated fair value amounts, such Deferred compensatmn 5,513 5,315 f nancial instruments have not been comprehensively revalued Other post retirement benefits 3,187 1,631 s nee December 31,1994 and the current estimated fair value may Other 8,392 11,102 differ significantly from the estimated fair value at that date.

Total deferred tax assets 91,407 96,879 The following methods and assumptions were used to estimate Deferred tax habilities:

the fair value of the above classes of financialinstruments:

Property, plant and equipment (including Cash and temporary cash investments, including commercial DD&A and basis differences) 625,636 619,859 paper, repurchase agreements, treasury bills and notes are valued Pension expense 9,022 6,266 at their carrying amount.

Deferred fuel revenue 7,803 931 Fair values of investments and long-term debt are based on Reacquired debt 7,146 7,574 quoted market prices for similar instruments, or for those Other 12,197 21,814 instruments for which there are no quoted market prices Total deferred tax liabilities 661,804 656,444 available, fair values are based on net present value calculations.

Net deferred tax liability

$570,397 $559,565 Investments which are not considered to be financial instruments (goodwill) have been excluded from the carrying amount and

=--

"#* " "" " N ""

• 1. 7

" Total deferred taxes" charged (credited) to income tax possible or may not be a prudent management decision."

expense result from timing differences in recognition of the Short-term borrowings are valued at their carrying amount.

following items (thousands of dollars):

Ik fair value of preferred stock (subject to purchase or sinking 3

funds)is estimated on the basis of market prices.

Potential taxes and other expenses that would be incurred in an actual sale or settlement have not been taken into consideration.

23 J

V l

l

9. SHORT-TERM BORROWINGS:

insurance becomes unavailable in the future, and to the extent I

i The Company pays fees to banks as compensation for its lines of that SCE&G's rates would not recover the cost of any purchased credit. Commercial paper borrowings are for 270 days or less.

replacement power, SCE&G will retain the risk of loss as a self-Details of lines of credit and short-term bormwings at December insurer. SCE&G has no reason to anticipate a serious nuclear incident at Summer Station. If such an incident were to occur,it 31,1994,1993 and 1992 and for the years then ended are as follows:

could have a materially adverse impact on the Company's financial position.

1994 1993 1992 tMillions of Dollars; C. Environmental Authorized lines of credit at year-end $479.1 $335.0 $288.9 As described in Note 1L, the Company has an environmental q

Unused lines of credit at year-end

$455.1 $308.0 $262.8 assessment program to identify and assess curwnt and former j

Short-term bormwings operations sites that could require environmental cleanup. As site j

outstanding at year-end:

assessments am initiated, an estimate is made of the amount of Bank loans 5 71.1 5 42.0 $ 41.1 expenditures,if any, necessary to investigate and clean up each site.

f.

Weighted average interest rate 6,50 % 3.71 % 4.49 %

These estimates are refined as additional information becomes l'

Commercial paper

$111.2 $ 1.0 available; therefore actual expenditures could differ significantly i

Weighted average interest rate 6.04 % 3.35 %

from the original estimates. Amounts estimated and accrued to date for site assessments and cleanup mlate primarily to regulated pnadonsmch amounts hm bwn defamd and am bdng

10. COMMITMENTS AND CONTINGENCIES, amortized and recovemd through rates over a ten-year period for i

A. Construction electric operations and an eight-year period for gas operations.

SCE&G entered into a contract with Duke / Fluor Daniel in in September 1992 the Environmental Protection Agency (EPA)

I l

1991 to design, engineer and build a 385 MW coal-fired electric notified SCE&G, the City of Charleston and the Charleston generating plant near Cope, South Carolina in Orangeburg Housing Authority of their potentialliability for the investigation County. Construction of the plant began in November 1992 and and cleanup of the Calhoun Park Area Site m Charleston, South is enpected to be complete in late 1995 with commercial Carolina. This site originally encompassed approximately 18 acres operation beginning in early 1996. The estimated cost of the and included pmperties which were the locations for industrial Cope plant, excluding financing costs and AFC but including an operations, including a wood preserving (creosote) plant and one allowance for escalation, is $450 mi!! ion. In addition, the of SCE&G's decommissioned manufactured gas plants. The transmission lines for interconnection with the Company's original scope of this investigation has been expanded to system are expected to cost $26 million.

appmximately 30 acres including adjacent pmperties owned by Under the Duke / Fluor Daniel contract SCE&G must make the National Park Service and the City of Charleston, and private specified monthly minimum payments. These minimum properties. The site has not been placed on the National Priority payments do not include amounts for inflation on a portion of List, but may be added before cleanup is initiated. The potentially the contract which is subject to escalation (approximately 34% of responsible parties (PRP) have agreed with the EPA to participate the total contract amount). Tlw aggregate amount of such in an innovative approach to site investigation and cleanup called required minimum payments remaining at December 31,1994 is "Superfund Accelerated Cleanup Model," allowing the pre-as follows (thousands of dollars):

cleanup site investigations process to be compressed significantly.

The PRPs have negotiated an administrative order by consent for 1995 5 59,766 the conduct of a RemedialInvestigation/ Feasibility Study (Rl/FS) 1996 5,603 and a corresponding Scope of Work. Actual field work began Total

$ 65,369 November 1,1993 after final appmval and authorization was granted by EPA. SCE&G is also working with the City of Through December 31,1994 SCE&G had paid $310 million Charleston to investigate potential contamination from the 4

under the contract.

manufactured gas plant which may have migrated to the city's aquarium site. In 1994 the City of Charleston notified SCE&G that i

B. Nuclear Insurance it considers SCE&G to be responsible for a $43.5 million increase j

The Price-Anderson Indemnification Act, which deals with n costs of the aquarium project attributable to delays msulting public liability for a nuclear incident, currently establishes the from contamination of the Calhoun Park area site. SCE&G liability limit for third-party claims associated with any nuclear believes it has meritorious defenses against this claim and does incident at $8.9 billion. Each reactor licensee is currently liable for not expect its resolution to have a material impact on its financial up to $79.3 million per reactor owned for each nuclear incident pos tion or results of operations.

occurring at any reactor in the United States, provided that not more than $10 million of the liability per reactor would be D. Emission Allowances assessed per year. SCE&G's maximum assessment, based on its The Company has entered into an agreement with a broker of two-thirds ownership of Summer Station, would be approximately sulfur dioxide emission allowances to purchase $6.8 million of

$52.9 *nillion per incident, but not more than $6.7 million per year.

allowances at a fixed price during 1995.

SCE&G currently maintains policies (for itself and on behalf of E. Personal Communication Services licenses the PSA) with Nuclear Electric Insurance Limited (NEIL) and MPX is pursuing Personal Communication Services licenses for American Nuclear Insurers (AND pmviding combined property wireless communications in the Southeast through a joint and decontamination insurance coverage of $1.4 billion for any venture. A $40 million construction loan obtained by the joint loases in excess of $500 million pursuant to existing primary venture has been guaranteed by SCANA Corporation.

coverages (with AND on Summer Station. SCE&G pays annual premiums and, in addition, could be assessed a retroactive F. Oil and Gas Forward Contracts premium not to exceed 7 % times its annual premium in the in an effort to limit exposure to changing natural gas prices event of property damage loss to any nuclear generating facilities and to avoid a write-down resulting from the application of the covered by NE1L Based on the current annual premium, this ceiling test (see Note IM) at December 31,1994, in January 1995 retroactive premium would not exceed $8.2 million.

the Company entered into a series of forward contracts relating To the extent that insurable claims for property damage, to natural gas production. These forward contracts have the decontamination, repair and replacement and other costs and effect of stabilizing the price that the Compemy will receive on expenses arising fmm a nuclear incident at Summer Station appmximately sixty percent of its forecasted natural gas exceed the policy limits of insurance, or to the extent such production for the years 1995-2001. The forward contracts are at an average price of $1.88 per dekatherm.

24

1 r

11, SEGMENT OF BUSINESS INFORMATION:

1992-Segment information at December 31,1994,1993 and 1992 and Electric Gas Transit Total for the years then ended is as follows:

(musands of Dollars)

Operating revenues S 829,477 $305275

$ 3,623 $1.138,375 Operating expenses, Electric Gas Transit Total excluding depreciation i

(Nusands of Dollars) and amortization 554,897 256,178 9205 820,280 Operating revenues 5 975,388 $342,672

$ 4,002 $1,322,062 Depredation and Opetting expenses, amortization 93,978 14,174 163 108315 cxcluding depreciation Total operating expenses 648,875 270,352 9,368 928,595 i

and imortization 640,528 292,227 10,577 943,332 Depreciation and Operating income 00ss) $ 180,602 5 34,923

$(5,745) 209,780 amirtization 102,647 16,304 226 119,177

^

"C Total operating expenses 743,175 308,531 10,803 1,062,509 g

Operating income Goss) $ 232,213 5 34,141

$(6,801) 259,553

- Preferred stock dividends 6,473 Add - Other income, net 5,998 Less -Interest charges 108,397

- Preferred stock dividends 5,955 Capital expenditures:

1,dentifiable

$ 234,918 $ 33,495

$ 346_ $ 268,759 Net income

$ 151,199 Crpital expenditures:

Utilized for overall Company operations 8,87*

Identifiable

$ 364,007 $ 20,079

$ 347 $ 384,433 Total

$ 277,636 Utilized for overall Company operations 20,167 Identifiable assets at l

December 31,1992:

Total

$ 404'600 Utility plant, net

$2,456,691 $299,591

$1,240 $2,757,522

= = = = -

Inventories 82,717 8,155 481 91,353 Identifiable assets at Dmmber 31,1994:

Total

$2,539,408 $307,746

$ 1,721 2,848,875 I

Utility plant, net

$2,897,954 $315,746

$ 1,791 $3,215,491 Inventories 98,669 17,026 495 116,190 Other assets 708,846 Total

$2,996,623 $332,772 5 2,286 3,331,681 Total assets

$3,557,721 l

Other assets 1,061,447 Totai asset.

$4,393,128

12. QUARTERLY RNANCIAL DATA IUNAUDITEDL 1993 1994 Electric Gas Transit Total first Second Third fourth (Timusands of Dollars)

Quarter Quarter Quarter _ Quarter Annual Operating revenues

$ 940,121 $320,195

$ 3A51 $1264,167 Total operating Operating expenses, revenues (000) $347,309 $2%,046 $361,329 $317,378 $1,322,062 excluding depreciation Operating and amortization 620,291 275,984 9,737 906,012 income (000) 69,398 50,048 86,708 53,399 259,553 Depreciation and Net income (000) 50,124 29,167 49,690 22,218 151,199 amortization 97,849 14,820 175 112,844 Earnings per Total operating expenses 718.140 290,804 9,912 1,018,856 weighted average 8'

Operatingjncome 00ss) $ 221,981 $ 29,391

$(631) 245,311

,ck as repo ed 1.07

.62 1.04

.46 3,19 Add - Other income, net 30,076 1493 Less - Interest charges 101,189

- Preferred stock dividends 6,217 First Second Third Fourth Net income

$ 167,981 Quarter Quarter Quarter Quarter Annual Total operating Capital expenditures:

revenues (000) $321,840 $280,382 $359,453 $302,492 $1,264,167 Identifiable

$ 279,082 $ 28,761

$ 604 $ 308,447 Operating income (000) 63,714 45,370 84,638 51,589 245,311 Net income (000) 43,110 26,909 64,427 31,535 167,981

- Utillied for overall Company operations 13,934 "8

Total

$ 322,381 ight erage share of commcm Identifiable assets at stock as reported 1.02

.61 1.41

.68 3.72 December 31,1993:

Utility plant, net

$2,628,374 $312.437

$ 1,673 $2,942,484 inventories 77,805 22,019 461 100287 Total

$2,706,179 $334.456

$ 2,136 3,042,771 Other assets 997,755 Total assets

$4,040,526 u

25 J

! MANAGEMENT'S DISCUSSIDN AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS COMPETITION the actual primary cash requirements for 1994 are as follows:.

The electric utility industry has legun a major transition that could lead to expanded market competition and less regulatory 1995 1994 protection. The transition began with the enactment of the Public gmy,g pjg Utility Regulatory Policies Act of 1978 which facilitated toe entry Property additions and construction of competitors into the electric generation business. Subsequently, expenditures, excluding allowance for the National Energy Policy Act (NEPA) was enacted in 19% tq funds used durin8 construction (AFC)

$348,530

$471,175 promote competition among utility and nonutility generators m the whoh sale electric generation market. Recent initiatives in Acquisilm.n of oil and gas producing

. some states to lessen regulation and promote competition, properties 47,189 particularly with regard to retail transmission access, also have Nuclear fuel expenditures 23,084 27,429 i

accelerated the utility industry's transition.

Maturing obligations, redemptions and future deregulation of electric wholesale and retail markets will sinking and purchase fund requirements 25,630 30,373 i

create opportunities to compete for new and existmg customers Total

--$397,244

$576,166 and markets. As a result, profit margins and asset values of some

==

A roximately 31% of total cash n irements (excluding I

utilities could be adnlrsely affected.

divihnds) was{r.ovided from intern The pace of deregu ation, the future market price of electn..ty, ci sources in 1994 as and the regulatory actions which may be taken by the Pubhc co d 28 n 199 Service Commissfon of South Carolina (PSC) in response to the changmg envmmment cannot be predicted. Howes er, t e issuance from time to time of unsecured medium-term debt Compa,ny is aggressively ursumg actions to position itself W

ds fm k ub hwh my h-strate ically for the trans ormed environment. To enhance its used to hmd a[iitional business activities in nonutility flexib ity and r onsiveness to ch ge, the Company s lectric subsidianes, to reduce short-term debt incurred in connection and gas uti ity, E&G, reorganir, ts operations aroun th thbposes. In December 1994 a therewith or for general cor rate Strategic Busmess Units. Maintammg a competitive cost structure registration statement filed curities and Exchan roviding for the issuance ofe is of paramount importance in the utility's strategic lan. SCE&G Cmis hnMivekium-term notes. At December 31,up to has undertaken a vanety of initiatives, meludmg n ctions in an additional 5250 million me operation and maintenance costs and in staffing levels. SCE&G 1994 the Com any had available for issuance $317.6 million.

believes that these actions as well as numerous others that have been and will be taken demonstrate its ability and commitment to C,CE&G's Fi st and Refunding Mortgage Bond Indenture dated i

the i

April 1,1945 (Old Mortgage), contains hrovisions brohibitinfess succeed in the new operating environment to come.

issuance of additional bonds thereunde (Class A l nds) un F

net earnings (as therein defined) for 12 consecutive months out of i

UQUIDITY AND CAPITAL RESOURCES the 15 months prior to the month of issuance am at least twice the j

- The cash requirements of the Comoany arise primarily from annual interest requirements on all Class A ikmds to be SCF&G's operational needs, the Company's construction program outstanding (Bond Ratio). For the year ended December 31,1994 and the need to fund the activities or mvestments of the the liond Ratio was 3.52. The issuance of additional Class A Bonds Company's nonregulated subsidiaries. The ability of the is restricted also to an additional principal amount equal to 6(Yk of Company's regulated subsidiaries to replace existing plant unfunded net property additions (which unfunded net property

'l investment, as well as to expand to meet future demand for additions totaled approximately $499.8 million at December 31, electricity and gas, will depend uptm their ability to attract the 1994), Class A Bonds issued on the basis of retirements of Class A necessary financial capital on reasonable terms. 'The Company's Bonds (no earned retirement credits remained at December 31, regulated subsidiaries nrover the costs of providing sen ices 1994), and Class A Lionds issued on the basis of cash on deposit through rater charged to customers. Rates for regulated services with the Trustee, are generally based on historical costs. As customer growth and SCE&G has placed a new bond indenture (New Mortgage) dated inflation occur and the regulated subsidiaries expand their April 1,1993 on substantially all of its electric properties under i

cunstruction programs, it is necessary to seek mcreases in rates. As which its future mortgage-backed debt (New Btmds) will be issued.

a result the Company's future financial position and results of New Bonds are expected to be issued under the New Mortgage on operations will be affected by the regulated subsidiaries' ability to the basis of a like principal amount of Class A tkmds issued under obtain adequate and timely rate relief.

the Old Mortgage which have been deposited with the Trustee of Due to ctmtinuing customer growth, SCE&G entered into a the New Mortgage (of which 557 million were available for such ctmtract with Duke / Fluor Damel in 1991 to design, engineer and purpose as of December 31,1994), until such time as all presently build a 385 MW coal-fired electric generating plant near Colw, outstanding Class A Londs are retimd. Thereafter, New Ikmds will South Carolina in Orangeburg County. Construction of the plant be issuaNe on the basis of property additions in a principal amount began in November 1942 and is expected to be complete in late equal to 70% of the original cost of electric and commoa plant 1995 with commercial operation begmning in early 1996. The properties (compared to 60% of value for Class A Ikmds under the estimated cost of the Cope plant, excluding financing costs and Old Mortgage), cash deposited with the Trustee, and retirement of allowance for futids used during construction (AIC) but including New Bonds. New Ikmus will be issuable under the New Mortgage an allowance for escalation, is $450 million. In addition, the only if adjustai net earnings (as therein defined) for 12 consecutive transmission lines for interconnection with the Company's system months out of the 18 months immediately preceding the month of are expected to cost $26 million. Until the completion of the'new issuance are at least twice the annual interest requirements on all plant, SCE&G is contracting for additional capacity as necessary to outstanding bonds (including Class A Bonds) and New Bonds to be r

ensure that the energy demands of its customers can be met, outstanding (New lkmd Ratio). For the year ended December 31, l'

As discussed in Note 211 of Notes to Consolidated Financial 1994 the New Ikmd Ratio was 4.85.

Statements, on June 7,1993 the PSC issued an order granting The following additional financing transactions have occurred SCE&G a 7.4% annual increase in retail ehrtric rates which was since December 31,1993:

implemented in two phases over a two year period: phase one,

• On January 14,1994 the Company closed unsecured bank hians l

effective June 1993, producing 542.0 million annualiy, and phase totaling 560 million due January 13,~ 1995, and useci the proceeds two, effective lune 1994, producing $18.5 million annually, based to pay off a loan in a like total amount. In January 1995 the on a test year.

Company refinanced the loans with a 560 million unsecured bank i

The estimated primary cash requirements for 1993, excluding kian due' January 12,1996 at an initialinterest rate of 6.44%,

requirements for fuel liabilities and short-term borrowings, and sutvet to reset quarterly at LIBOR plus ten basis points.

26

e On July 21,1994 SCE&G issued $100 million of First Mortgage standards and the cost and availability of capital.

Bonds,7.70% series due July 15,2004 to repay short-term The Company expects that it has or can obtain adequate sources borrowings in a hke amount.

of financing to meet its projected cash requirements.

• On November 3,1994 SCE&G issued $30 million of Pollution Control Facilities Revenue 11onds due November 1,2024. The Environmental Matters

- proceeds from the sale of the bonds are being used to defray the The Clean Air,Act requires electric utilities to reduce

. cost of constructinbenerating Station under construction incertain facilities for the disposal of solid waste substantially emissions of sulfur dioxide and nitrogen oxide by the at SCE&G's Cope yeay 22 These requirements are being phased m over two,

t Orangeburg County, South Carolina.

penods. The first phase has a comphance date of January 1,1993

, Without the ccmsent of at least a majority of the total voting and the second, January 1,2000. The Company meets all therefore will not have to implement requirements of Phase 1 and,th Phase II requirements is power of SCE&G's preferred stock, SCE&C may not issue or changes until comphance wi assume any unsecured indebtedness if, after such issue or assumption, the total principal amount of all such unsecured The C, ompany then will most li,kely meet its comphance r

utrements through the burnmg of natural gas and/or lower rt indebtedness would exceed 10% of the aggregate principal amount of all of SCE&G's secured indebtedness and capital and su fur coal, the addition of scrubbers to coal-fired generatmg units, curplus; provided, however, that no such consent shall be required and the purchase of sulfur dioxide emission allowances. At to enter into agreements for payment of principal, interest and December 31,1994, the Company had purchased $19.4 million in emission allowances and had commitments to purchase $6.8 premium for securities issued for pollution control pur ses.

Pursuant to Section 204 of the tederal Power Act, ' &G and million in emission allowances m 1995. I.ow mtrogen oxide CENCO must obtain FERC authority to issue short-term burners will be mstalled to, reduce mtrogen oxide emissions.

indebtedness. The FERC has authorized SCE&G to issue up to The Company is contmumg t,o refine a compliance plan that

$200 million of unsecured promissory notes or commercial paper must be filed with the U.S. Environmental Protection Agency with maturity dates of 12 months or less but not later than (EPA) byjanuary 1,1996. The Company currently estimates that December 31,1997. GENCO has not sought such authorization.

air enussions control equipment will require capital expenditures The Company has $479.1 million authorized lines of credit and of $158 million over the 1995-1999 period to retrofit existmg has unused hnes of credit of $455.1 million at December 31,1994.

facilities and an mcreased operation and maintenance cost of In addition, the Company has a credit agreement for a maximum apprpximately $1 million per year. To meet complianc,e, of $75 million to finance nuclear and fossil fuel inventories, with requirements through the year 2004, the Company anticipates total

$24.4 million available at December 31,1994.

ca ital ex. >nditures of $287 million.

SCE&G's Restated Articles of Incorporation prohibit issuance of

'e.Ft eral Clean Water Act, as amended, provides for the additional shares of preferred stock without consent of the imposition of effluent limitations that require vanous levels of treatment for each wastewater discharge. Un compliance with applicable limitations is actu, der this Act, preferred stockholders unless net earnings (as defined therein) for eved under a the 12 consecutive months immediately preceding the month of issuance are at least one and one-half times the aggregate of all national permit program. Discharge permits have been issued for all and renewed for nearly all of SCE&G's and GENCO's interest charges and p) referred stock dividend requirements 8e".atmg umts. Concurrent with renewal of these permits, the (Preferred Stock Ratio, For the year ended December 31,1994 the Preferred Stock Ratio was 2.29.

pernuttmg a ency has implemented more rigorous control On December 16,1994 the Com p grams.

dpmpany has been developmg compliance plans 2,000,000 additional shares of the bany registered with the SEC ompany's common stock to be to meet the add,itional parameters of control, and compliance has issued and sold under the Stock Purchase-Bavings Plan (SISP).

inv Ived updatmg wastewater treatment technologies.,

During 1994 the Company issued 595,438 shares of the Amendments to the Clean Water Act proposed recently m Com any's common stock under the Dividend Reinvestment Plan Congress include several provisions w hich could prove costly to (DRI ). In addition, the Companv issued 781,354 shares of its SCEkG. These include limitations to mixing zones and the im lementation of technolo -based standards.

common stock pursuant to its Sf5P. The Company has authorized and reserved for issuance, and registered under ef'fective he South Carolina Solid 'aste Policy and Management Act of registration statements,1,470,386 and 2,091,066 shares of common 1991 N9uireS Promulgation of regulations addressmg specified stock pursuant to the DRP and the SPSP, respectively.

subjects, one of which affects the management of industrial solid in January 1994 the Company signed an agreement to sell waste. This regulation will establish mmimum criteria for substantially all of the real estate assets of SCANA Development industrial landfills as mandated under the Act. The proposed Corporation to Liberty Properties Group, Inc. of Greenville, South regulati,on,if adopted as a final re ulation in its resent form, l

Carolina for 591.5 million. On March 4,1994 the Company and C"2.id sigmficantly impact SCE& 's and GENC 's engineering, Liberty amended the agreement to exclude certain projects then design and operation of existing and future ash management under construction, and the sales price was reduced to 549.6 f cihties. Potential cost impacts could be substantial.

million. The transaction was closed on May 27,1994. Certain As described in Note IL of Notes to Consolidated Financial other assets of SCANA Development Corporation are being sold Statements, the Company has an em-ironmental assessment to other parties. These transactions did not have a material impact program to identify and assess current and former operations sites on the Company's financial position or results of operations.

that could require environmental cleanup. As site assessments are MPX Systems, Inc., a wholly owned subsidiary of SCAN A, initiated, an estimate is made of the amount of expenditures,if through a joint venture with ITC Transmission Systems, a Georgia.

any, necessary to investigate and clean up each site. These based telecommunications holding company, is constructing a estimates are refined as additional information becomes available; fiber optic network through Texas, Louisian'a, Mississippi, therefore, actual expenditures could differ significantly from the, Alabama and Georgia. The network, which will consist of more origmal estimates. Amounts estimated and accrued to date for site i

than 900 miles of fiber optic lines,is expected to be completed by assessments and cleanup relate primarily to regulated operations; June 1995 at a cost of 558 million. In addition, MPX is pursuing such amounts have been deferred and are bemg amortized and Personal Communication Services licenses for wireless recovered through rates over a ten-vear period for electne operations and an eight-vear period for gas operations. Such communications in the Southeast through a joint venture. A S40 deferred amounts totaled $20.2 million and $19.6 million at million construction loan obtained by the joint venture has been guaranteed by SCANA Corporation.

December 31,1994 and 1993, respectively. Estimates to date i

i The Company anticipates that its 1995 cash requirements of include, among other things, the costs associated with the matters

$397.2 million will be met through internally generated funds discussed in the followmg paragraphs.

3 (approximately 42% excluding dividends), the sales of additional The company's prmcipal subsidiary, SCE&G, owns five equity securities and the incurrence of additional short-term and decommissioned manufactured gas pjant sites which contam, term indebtedness. The timing and amount of such financing wsidues of by-product chemicals. SCE&G has maintamed an lonI~ depend upon market conditions and other factors. Actual wil active review of the sites to monitor the nature and extent of the ed 1 1995 expenditures may vary from the estimate set forth above due th'e EPA notified SCE&G, the City o.f to factors such as mflaton and economic conditions, regulation P

1 and legislation, rates of load growth, emironmental protection Charleston and the Charleston Housing Authority of their 27

potential liability for the investigation and cleanup of the Calhoun These forward contracts have the effect of stabilizing the price that lirk Area Site in Charleston, South Camlina. This site originally the Company will receive on approximately sixty percent of its encompassed approximately 18 acres and included properties forecasted natural gas productwn for the years 1995-2001. The which were the locations for industrial operations, including a forward contracts are at an average price of $1.88 per dekatherm.

wcod preserving (creosote) plant and one of SCE&G's if market prices exceed the forward contracts' prices at the time of decommissioned manufactured gas plants. The original scope of delivery, the Company will forego additional revenues to the this investigation has been expanded to approximately 30 acres extent of the price diffcrential for the quantities subject to such including adjacent properties owned by the National Park Service forward contracts. However, the Company believes these forward and the City of Charleston, and private properties. The site has contracts are appropriate in light of current market conditions and not been placed on the National Priority List, but may be added that the forward contracts reduce the Company's exposure to price before cleanup is initiated. The potentially responsible parties risk. The Company remains exposed to pnce nsk for any (PRP) have agreed with the EPA to participate in an innovative production that is not subject to such forward contracts.

appmach to site investigation and cleanup called "Superfund Accelerated Cleanup Afodel," allowing the pre-cleanup site RESUl3S OF OPERATIONS investigations process to be compressed sigmficantiv. The PRPs have negotiated an administrative order by consent'for the Earnings and Dividends conduct of a Remedial Investigation / Feasibility Study (RI/FS) and Earnings per share of common stock, the percent increase a corresponding Scope of Work. Actual field work began (decrease) from the previous year and the rate of return earned on November 1,1993 after final approval and authorization was common equity for the years 1992 through 1994 were as follows:

granted by EPA. SCE&G is also working with the City of Charleston to investigate potential contamination from the 1994 1993 1992 aquarium site. In 1994 the City of' Charleston notified SCE&y's Earnings per weighted average share

$3.19 53.72 52.84

[

manufactured gas plant which may have migrated to the cit G that Percent increase (decrease)in it considers SCE&G to be responsible for a $43.5 million increase carnings per share (14.2% ) 31.0 % (15.7%)

m costs of the aquanum project attributable to delays resulting Return earned on common equity from contammation of the Calhoun Park Area Site., SCE&G 3( rear-end) 10.7%

12.6%

10.1 %

beheves it has meritonous defenses against this claim and does not expect its resolution to have a material impact on its financial position or results of operation.

• 1994 Earnings per share and return on common equity SCE&G has been listed as a PRP and has recorded liabilities, decreased in 1994 primarily due to operations at Petroleum which are not considered material, for the Macon-Dockery waste Resources, the Company's oil and natural gas exploration and disposal site near Rockingham, North Carolina, the Aqua-Tech production subsidiary. Petroleum Resources reported a net loss of Environmental Inc. Site in Greer, South Carolina and a landfill

$19.2 million for 1994, including an after-tax charge of $12.4 owned by Lexington County in South Carolina.

million recorded during the third quarter of 1994 to reflect an The Arkansas Department of Pollution Control And Ecology adjustment to accumulated depreciation, depletion and (ADPCE) has identified SCE&G as a potentially responsible party amortization and a writedown of the carrying value of certain of for clean-up of PCBs at an abandoned transformer rebuilding '

Petroleum Resources' gas properties based on a recently plant in Little Rock, Arkansas. No formal notice from ADN_E has completed reserve stu y been received concerning this issue. SCE&G does not believe that

• 1993 Earnings per share and return on common equity the resolution of this issue will have a material effect on SCE&G's increased in 1993 primarily due to a higher electric sales margin results of operations or financial position.

and additional nonoperating income.

The Company's financial statements include AFC. AFC is a Regulatory Matters utility accounting practice whereby a portion of the cost of both On June 7,1993 the PSC issued an order on SCE&G's pendin8 equity and borrowed funds used to finance construction (which is electric rate proceeding allowing an authorized return on common show'n on the balance sheet as construction work in progress)is equity of 11.5%, resulting in a 7.4% annual increase in retail capitalized. An equity portion of AFC is included in nonoperating electric rates, or a projected $60.5 million annually on a test year income and a debt portion of AFC is included in interest charges basis. These rates were implemented in two phases over a two-(credits) as noncash items, both of which have the effect of year period: phase one, effective June 1993, producing $42.0 increasing reported net income. AFC represented approximately million annually, and phase two, effective June 1994, producing 6.4% of income before income taxes in 1994,5.7% in 1993 and 5.3%

518.5 million annually, on a test year basis.

n 1992.

SCE&G anticipates filing for electric rate relief in 1995. The in 1994 the Company's Board of Directors raised the quarterly fihng is anticipated to encompass primarily the remaining costs of cash dividend on common stock to 70.5 cents per share from 68'.5 completing the construction of the Cope Generating Station.

cents r share. The increase, effective with the dividend payable The Company's regulated business operations are likely to be on A il 1,1094, raised the indicated annual dividend rate to $2.8' impacted by the NEl A and FERC Order No. 636. NEPA is per s are from $2.74. The Company has increased the dividend J

designed to create a more competitive wholesale power supply rate on its common stock in 41 of the last 42 years.

market by creating " exempt wholesale generators" and by potentially requinng utilities owning transmission facilities to Electric Operations provide transmission access to wholesalers. Order No. 636 is

• 1994 The increase in the electric sales margin from 1993 to 1994 j

mtended to deregulate the markets for interstate sales of natural is primarily the result of an increast in retail ciectric rates phased gas by requiring that pipelines provide transportation services that in over a two-year period beginning June 1993 and an increase in are equal m quality for all gas suppliers whether the customer industrial sales, which more than offset the negative impact of a purchases gas from the pipeline or another supplier. In the six percent decrease in residential sales of electricity due to milde-opinion of the Company, it will be able to meet successfully the weather in 1994.

i challenges of these altered business climates.

• 1993 The increase in electric sales margin from 1992 to 1993 is j

primarily a result of increased residential and commersi IGVH Other sales due to weather and customer growth, an increase in retail The Company's net investment m oil and gas properties is electe c rates beginning in June 1993 and the recording in 1992 of a subject to a quarterly ceiling limitation calculation that is based on

$14.6 million reserve against earninge related to the August 31, the future net revenues from forecasted production of roved oil 1992 retail electric rate ruling fram the South Carolina Supreme and gas reserves valued at current or contract prices. arrying Court (see Note 2G of Notes to Consolidated Financial values of proved n serves in excess of the ceiling limitation are Statements).

expensed currently.

An increase of 7,538 electric customers to 476,412 total In an effort to limit exposure to changing natural gas prices and customers contributed to a 1994 peak demand of 3,444 MW en I

to avoid a write-down resulting from the application of the ceiling January 19. The all-time record of 3,557 MW was set on July 29, test at December 31,1994, in January 1995 the Company entered 1993.

into a series of forward contacts relating to natural gas production.

28 I

Gas Oper:ti:ns pas properties based on a recently completed reserve study. In

• 1994 The 1994 gas sales margin increased from 1993 primarily 1993 Petroleum Resources reported net income of $11.1 million.

as a result of lower gas costs, which allowed Pipeline Corporation The Company's net investment in oil and gas properties is to compete successfully with attemative fuel suppliers in subject to a quarterly ceiling limitation calculation that is based on industrial markets. Higher oil prices and a stronger economy had the future net revenues from forecasted production of proved oil

- a positive impact on industrial gas sales which increased for both and gas reserves valued at current or contract prices. Carrying SLE&G and Pipeline Corporation.

values of proved reserws in excess of the ceiling limitation are

• 1993 In 1993 the gas sales margin decreased from 1992 as a expensed currently.

result of higher gas prices which reduced Pipeline Corporation's In an effort to limit exposure to changing natural gas prices and sales due to the competitiveness of alternative fuels. This to avoid a write-down resulting from the application of the ceiling reduction was partially offset by incwases in higher margin test at December 31,1994, in January 1995 the Company entered residential and commercial sales and increased transportation into a series of forward contracts relating to natural gas volumes.

production. These forward contracts have the effect of stabilizing the price that the Company will receive on a,pproximately sixty Other Operating Expenses percent of its forecasted natural gas production for the years 1995-

• 1994 Other operation and maintenance expenses increased for 2001. The forward contracts are at an average price of $1.88 per 1994 primarily due to an increase in the cost of postretirement dekatherm. If market prices exceed the forward contracts' prices benefits other than pensions which are accrued m accordance with at the time of delivery, the Company will forego additional Financial Accounting Standards Ikiard Statement No.106 (see revenues to the extent of the price differential for the quantities Note 1J of Notes to Consolidated Financial Statements). The subject to such forward contracts. However, the Com any 1

increase in depreciation and amortization expenses is attributable believes these forward contracts are appmpriate in li t of current to property additions and to increases in depreciation rates. The market conditions and that the forward contracts ce the increase m other taxes reflects an increase in SCE&G's property Company's exposure to price risk. The Company remains taxes of approximately $5 million.

exposed to price risk for any production that is riot subject to such

• 1993 Other operation and maintenance expenses increased for forward contracts.

1993 primarily due to the implementation of Financial Accounting Standards Board Statement No.106 (see Note 1J of. Notes to Interest Expense Consolidated Financial Statements) pursuant to the June 1993 PSC

• 1994 The increase in interest expense (excluding the debt ekctric rate order and the amortization of environmental component of AFC)is primarily attributable to the issuance of expenses. The depreciation and amortization increase reflects

$100 million of First Mortgage bonds in July and $30 million of additions to plant in service. The increase in income taxes Pollution Control Facilities Revenue Bonds in November, both to corresponds to the increase in income and reflects the increase in during 1993.y construction, and the issuance of long-term de finance utilit the ccorporate tax rate from 34% to 35% retroactive to January 1, 1993'

• 1993 Interest on long-term debt increased approximately $5.6 million in 1993 compared to 1992 due to the issuance of $72.4

)

Other Income million medium-term notes during the latter part of 1492 and $60 Other income, net of income taxes, decreased approximately million medium-term notes in July 1993 to finance acquisitions of

$23.3 million in 1994 primarily due to operations at Petroleum natural gas reserves and the issuance of $200 million of SCE&G's Resources. Petroleum Resources reported a net loss of $19.2 First Mortgage Bonds to finance utility construction. The resulting million for 1994, including an after-tax charge of $12.4 million increases more than offset the interest' savings resulting from the recorded dunng the third quarter of 1994 to reflect an adjustment redemption and refinancing of $382 million of First and Refunding to accumulated depreciation, depletion and amortization and a Mortgage Bonds with the proceeds from the issuance of $400 writedown of the carrying value of certain Petroleum Resources million of First Mortgage Bonds by SCE&G at lower interest rates.

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29

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'l CELECTED FINANCIAL DATA

)

Ior the Years Ended December 31, 1994-

'1993:

1992 1991 1990 1984' Statement of Income Data -

mwusands of dollars except statistics and per sharr amounts) l l

+.

Operating Revenues:

i Electric

$ 975,388

- $ 940,121

$ 829,477

$ 867,215

.$ 851,146

$ 755,502

-Gas:

342,672 320,195 305,275

-276,742 -

292,380 378,491-

' Transit.

4,002

- 3,851 3,623 3,869-4,033 _

3,178 l

-Total Operating Revenues 1,322,062 1,264,167 1,138,375 1,147,826

- 1,147,559 -

1,137,171 j

Operating Expenses:.

i

- Fuel used in electric generation -

. 255,240 242,793 213,474 234,683 223,972 235,246-and purchased power l

Gas purchased for resale.

220,923 208,695 191,577 171,869 191,939 289,212 f

Other operation and maintenance 293,721 290,891-1 281,242 270,213 265,887

184,727 Depreciation and amortir.ation.

119,177 112,844 108,315 102,669 97,801 74,914 Taxes 173,448 163,633 133,987 146,032 142,003

' 153,776 Tota 10perating Expenses 1,062,509 1,018,856 928,595 925,466 921,602 937,875 i

Operating Income 259,553 245,311 209,780 222,360 225,957 199,2 %

1 Other Income -

5,998 30,076 11,883 -

11,655 54,874.-

17,647 income Before Interest Charges and Preferred Stock Dividends 265,551 275,387 221,663 234,015 280,831 216,943'

.l Interest Charges, Net 108,397 101,189 97,600 91,458 92,317 78,248 Preferred Stock Cash Dividends of Subsidiary 5,955 6,217 6,473 6,706 6,911 16,877

~

_ Net income

$ 151,199

$ 167,981

$ 117,590

$ 135,851

$ 181,603

$ 121,818

's Percent of Operating Income (Loss) j Btfore income Taxes Electric 88 %

90 %

85 %

89 %

89%.

87%.

Gas-14 %

13%

18%

14%

14% -

15%

i Transit ~

(2%)

(3%)

(3%)

(3%)

(3%)

' (2%)

[

Common Stock Data Weighted Average Number of Common

' Shares Outstanding (Thousands) 47,381 45,203

- 41,475 40,361 40,882 39,900.

i Eamings Per Weighted Average Share

-i of Common Stock

$3.19.

53.72

$2.84

$3.37

$4.44

$3.05 Dividends Declared Per Share of I

Common Stock

$2.82

$2.74

$2.68

$2.62

$2.52

$2.05 l

Common Shares Outstanding (Year-End) (Thousands) 48,018 46,619

. 43,911 40,784

- 40,882

. 40,2%

.l Ikmk Value Per Share of Common Stock i

(Year-End) -

$29.37

$28.59

$26.46

$25.23

$24.56

$19.31 l

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For the Years Ended December 31, 1994 1993 1992 1991 1990 1984 ECEnc3 Sheet Data mwusands of dollars except statistics and per share amounts)

,U_t_ility Plant, Net

$3,293,667

$3,004,075

$2,810,279

$2,664,651

$2,549,763

$2,205,297 m[tal Assets __.

$4,393,128

$4.040,526

$3,557,721

$3,305,862

$3,144,936

$2,506,996 Tc Common Equity

$1,410,438

$1,333,045

$1,161,896

$1,028,990

$1,003,877

$ 778,251 Preferred Stock (Not subject to purchase or sinking fund requirements) 26,027 26,027 26,027 26,027 26,027 26,262 Preferred Stock, Net (Subject to purchase or sinking fund requirements) 49,528 52,840 56,154 59,469 62,704 152,974 Long-Term Debt, Net 1,537,624 1,424,399 1,204,754 1,122,396 938,933 900,878 Total Capitalization _

$3,023,617

$2,836,311

$2,448,831

$2,236,882

$2,031,541

$1,858,365 Other Statistics Electric:

Customers (Year-End) 476,412 468,874 461,900 453,660 446,516 378,963 Territorial sales (Million KWH) 16,838 16,880 15,794 15,695 15,385 12,590 Residential:

Average annual use per customer (KWH) 13,048 14,077 13,037 13,246 13,330 12,061 Average annual rate per KWH

$.0743

$.0707

$.0695

$.0700

$.0707

$.0757 Generating Capability - Net MW (Year-End) 3,876 3,864 3,912 3,912 3,891 3,959 Territorial Peak Demand - Net MW 3,444 3,557 3,380 3,300 3,222 2,596 Gas:

Customers (Year-End) 238,613 234,736 231,153 225,819 220,817 189,544 Sales (Timusand Therms) 778,105 717,417 761,721 694,801 711,821 737,059 Residential:

Average annual use per customer (therms) 543 605 577 521 497 618 Average annual rate per therm 5.84

$.76

$.74

$.77

$.77

$.69

+

g 31 J

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~ --

4 LCOMMON' STOCK INFORMATION 1994 1993 I

4th 3rd 2nd 1st.

4th -

3ni 2nd.-

1~st i

Qtr.

Qtr.

Qtr.

Qtr.

Qtr.

. Otr.

Qtr.

Qtr.

~tj

Price Range: (a).

High -

44 5/8 46 46 1/2 50 1/8 52 1/4 51 7/8 48 3/8.

46 1/2 Iow 41 42 3/4 42 1/8 44 3/4 -

47 7/8

47 5/8 45 40 1/8

. Dividends Per Share:

I 1994 Amount Date Declared _

Date Pa_id -

First Quarter

$.705 February 15,1994

. Aprill,1994 Second Quarter

.705 April 28,1994 -

July 1,1994 j

Third Quarter

.705 August 24,1994 October 1,1994 Fourth Quarter

.705 October 18,1994

. January 1,1995

.{

~

1993 Amount Date Declared Date Paid First Quarter

$.685 February 16,1993 April 1,1993 Seccmd Quarter

'.685 April 29,1993 July 1,1993

-l Third Quarter

.685 August 25,1993 October 1,1993 i

Fourth Quarter

.685 October 19,1993 January 1,1994

.D. e. c. emb. er_31,

~ Number of common shares outstanding 48,017,510

. 46,619,457

- Number of common stockholders of record

- 39,516 41,564 The principal market for SCANA common stock is the New York Stock Exchange. The ticker symbol used is SCG. The corporate name SCANA is used in newspaper stock listings.

- (a) As reported on the New York Stock Exchange Composite Listing.

, SECURITIES RATINGS (As of December 31,1994) l

~ SCANA CORPORATION SOUTH CAROLINA ELECTRIC & GAS COMPANY Rating First Mortgage First and Refunding Preferred Commercial i'

Agency Medium-Term Notes Bonds Mortgage Ikmds Stock Paper Duff & Phelps NR A+

A+

A NR

{

. Moody's A3 Al Al al P-1 Standard & Poor's A.

A A

A-

- A-1

'l NR - Not Rated l

}

I l

32 1

e

INVESTOR INFORMATION ANNUAL MEETING STOCKHOLDER INQUIRIES STOCK RECORDKEEPING SCE&G First Mortgage Bonds:

SCANA Corporation's Stockholders with ques- -

AND TRANSFER NationsBank of Georgia, N.A.

1995 Annual Meeting of tions about stock transfer SCANA Corporation Stczkholders will be held in requirements, replacement of maintains stockholder records, A ^ " ^

Columbia, SC on Thursday, lost or stolen stock certificates, issues dividend checks and Telephone:(800) 848-8198 A}ril 27. The meeting will dhidend payments (including acts as Transfer Agent and

, begin at 10:00 a.m. in the replacement oflost or stolen Registrar for the Company's AUDITORS Ballroom of the Embassy dividend checks), direct common stock and SCE&G's Deloitte & Touche LLP Suites Hotel,200 Stoneridge deposit of dividends, address preferred stock. Stockholders Certified Public Accountants Drive. A formal notice of the changes, elimination of dupli-may send certificates directly 1426 Main Street, Suite 820 meeting and a proxy state.

cate mailings or other stock to the Company's Shareholder Columbia, SC 29201 ment has been maikd along ownership matters may write Services Department (Mail INVESTOR with this report to all stock.

the Shareholder Services Code 054) for transfer.Them COMMUNICATl0NS holders of record as of March Department (Mail Code 054) is no charge for this service.

Interim reports providing 10,1995. Stockholders who at the Company's mailing The Company recommends S"""""

^ " * ' "

• are unable to attend the address, or call toll-free that certificates be mailed by Annual Meeting should 1-800-763-5891. Calls not registered or certified mail.

and Company news am mailed

" *I"8

• return their proxy card received during normal busi-Signatures required for trans-d se f the first, second and promptly by mail.

ness hours (8:00 a.m. to 5 00 fer must be guaranteed by ua e C py o MAILING ADDRESS p.m., Monday through Friday) an official of a financialinstitu.

wiH be recorded and handled g

SCANA Corporation tion that is an approved mem-on Form 10-K tas filed with Columbia, SC 29218 the next business day.

ber of a Medallion Signature CORPORATE DMDEND Guarantee Program.

the Securities and Exchange C e lsio M h HEADQUARTERS REINVESTMENT PLAN BONDHOLDER INDUIRIES Statisticai Supplement to 1426 Main Street Tlw Plan provides stock-Questions concerning the 1994 Annual Report are holders and other investm replacement of interest checks, available without charge.

Columbia, SC 29201 with a convenient and econom-tax mformation, transfers and Inquiries conceming activities Telephone: (803) 748-3000 ical method of purchasing other bond account informa-of SCANA Corporation and its STOCK EXCHANGE shares of SCANA's common tion should be directed to the subsidiaries and requests for LISTINGS stock without brokerage com-appropriate Bond Trustee and Company publications should The common stock of missions or service charges.

Paying Agent listed below. A Lv addnssed to the Investor SCANA Corporation is listed Participants in the Plan may listing of issues under each Relations Department (Mail and traded on the New York purchase shams through auto-dassification of SCE&G bonds Code 054) at the Company's Stock Exchange and has matic reinvestment of cash is shown under the heading mailing address.

unlisted trading privileges dhidends and/or by making

" Consolidated Statements of INVESTOR CONTACT on the Boston, Cincinnati, optional cash payments of up Capitalization" in the Financial Wum Midwest, Pacific and Phila-to $36,000 during a calendar Review section of this report.

g delphia exchanges. The year. Persons not presently SCE&G first and Refunding and Shareholder Services trading symln is SCG.

owning shares of the Corn-Mortgage Bonds:

Telephone: (803) 748-3240 Newspaper listings of daily pany's common stock may join Chemical Bank Facsimile: (803) 343-2344 stock transactions use the the Plan by making an initial Cope TM %w INVESTORS' name SCANA. The 5% series cash mvestment of at least $250 cumulative preferred stock but not more than $36;D00. A 3 j"Strwt ASSOCIATION of South Carolina Ek ctric Pnwpectus describing the Plan For informati n almut this orga-Y NY M

& Gas Company (SCE&G),

and enrollment information are nization's activities, write to:

Tdephone: (800) 648-8380 SCANA's principal sub-available upon request.

Association of SCANA sidiary,is also listed and l

Corporation Investors i EXPECTED 1995 COMMON STOCK DMDEND DATES {

c/o Mr.PaulQuattiebaumdr.

traded on the NYSE. The trading symbolis SAC Pr;

[,

- j g-]4g-Sd]

22 Broughton Road the newspaper listmg is i%.

na.

gyg[wy % wnt pa.

Charleston, SC 29407 SCrE pf, SCE&G's other j

,g g

yyg gg 4y m,,,,, s,,gn aa,,,,,,y.,

3 series of preferred stock are

"*"'*"""2

[I"[""$ h$f[ Y,',h y"

tun -

lun u NI I not actively traded and mar-gh sq ll (x,j sq ket prices are not published.

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Santee Cooper 2000 l

1 l

%' 'ir putting our eneigy to workforyou.

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'A SANTEE COOPER ANNUAL REPORT 1994 9504070100 950331 PDR ADOCK 05000395

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SANTEE COOPER ANNUAL REPORT 1994 i

(

• 1-9504070100 950331 PDR ADOCK 05000395 J.

PDR j

J

CONTEN7s 4 Corporate Statistics 5 Comparative Highlights 6 Mission Statement 7 Executive Report 11 Energy Sales 12 Santee Cooper 2000 32 In Memory of Ray Fiddie 33 Financial Statements 35 Report ofIndependent Auditors 51 Audit Committee Chairman's Letter 52 Board of Directors 54 Advisory Board and Management Schedule of Bonds Outstanding S6 Schedule of Refunded Bonds Outstanding 59 COVER Expanded Service:in 1994, Santee Cooper made the transition from an electrre utility to an electric and water utility. This occurred in October with the stad-up of the Santee Cooper Flegional Water System providin0 treated water delivered by four systems to more than 75.000 Lowcountry users, Tames Cooper is today with water where we were more than 50 years ago with electr6ty," commented Prescent and Chef Executrve officer T Graham Edwards at the dedication ceremonies for the $34.5 million tystem.

_;., a As pad of Santee Cooper's corporate commitment to protecting and improving os environment this annuc. report was printed with soy-based inks on paper that meets United States Environmental Protection Agency gudelines for recycled pape" We urge you to recycle th!$ paper w'1en you have finished with it.

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WE'RE PUTTING

~

ou'r: energy TO WORK

.oryou The National Energy Iblicy Act of 1992 opened the door for deregulation of the electric utility industry.

l That means commercial, industrial, and wholesale j

'l customers will, in the not too distant future, probably I

beabletochoosewhateverpowerprovidertheydesire.

just as they can now choose their long-distance tele-phone service provider. As a result, by the year 2000, electric utilities will be competing for survival.

5 Responding to this new competitive environment, Santee Cooper and utilities thro *ughout the country [

are focusing on two major challenges: 1) pmviding the lowest possible price of power to customers; and 2) improving customer service., 5 To meet these chal-lenges and develop a road map for its future, Santee Coopr completed develo[ ment in 1994 ofits first formal strategic plan, known as Santec Cooper 2000.

The intent of that plan is to better position this

' organization for the 21st century. S *We'ir Putting Our Energy To Work For ibu' is the theme'of this annual report. It is the new c$rporate identity tag that has evohui as a product of Santee Cooper 2000 and expresses Santec Cooper's commitment ofsem;ce to its customers and the citizins of South Carolina.'

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- CORPORATE STATISTICS 1994 1993 1992 1991 1990 Calendar Year Total Ubbty Plant-Net including Nuclear Fuel (at year end) 6n thousands of dollars) 2,313,068 2,190,396 2.015,526 1,852,471 1.786.059 Bonded indebtedness (at year end)(in thousands of dollars) 2,648,965 2.677,810 2.569.010 2.237,729 1,937,721 Operatmg Revenues (m thousands of dollars) 63,373 60.251 56.958 56.884 54.356 Residentaf 65,330 60 802 57.994 58.064 56.156 Commercial Pubhc Street Lighting & Other 2,354 2.032 2.077 2.010 1,904 166,640 168.339 173.278 184.707 182.662 ladustrial 296,636 292,606 251,418 256.071 252,988 Wholesale 5,703 3.327 1,173 Sales to Other Utihties*

99 Interdepartmental Sales of Electricity 5,095 5.453 5.153 4.842 5 914 Miscellaneous Total Electnc Revenues 605,230 592 810 548.051 562,578 553.980 Intardepartmental Sales of Electricity and Water (102)

Total-Net of interdepartmental Sales 605,128 592.810 548.051 562.578 553,980 528 Water System 605,656 592.810 548.051 562.578 553.980 Tota! Operatmg Revenues Operatmg & Maintenance Expenses Charged to Operations (in thousands of dollars) 377,825 366.439 333,191 344.320 341,743 Payments m Lieu of Taxes Charged to Operations (m thousands of deltars)"

2.235 3.643 3.643 3.364 3.426 Payments to the State Charged to Remvested Earnings (in thousanas of dollars) 6,157 5,997 5.816 5.640 5.629 Net Operatmg Revenues Available for Debt Service (in thousands of dollars) 245,497 243.627 235,324 245,706 233,179 Reinvested Earnmgs (in thousands of dollars) 35,375 37,583 29.717 40 968 40.001 Kilowatthout Sales (in thousands)

Resident!al 1,018,355 1,024.861 981,163 935.650 900.626 Commercial 1,188,248 1,152,137 1,113.505 1,062,371 1,027,319 Public Street Lighhng & Other 46,190 38,481 40.642 36.304 34.939 Industrial 5,168,556 5,155259 5,502.276 5 474.394 5.533,130 7,159,329 7,059,116 6.395.055 6.088.552 6.052,241 Wholesale Sales to Other Utihties*

141,729 171,231 65.586 Interdepartmental Sales of Dectricity to the Water System 2,111 14,724,518 14.601.085 14.098.227 13.597,271 13.548.255 Total Number of Customers (at year end)

Residentral 83,487 80.913 78.671 76.824 74.922 15,886 15.362 15250 15.158 14,950 Commercial 409 395 294 294 298 Pubhc Street Lighting & Other 31 31 32 32 34 fndustnaf 5

5 5

5 6

Wholesale 99,818 96 D

%2 92,313 90210 Total Residential Statistics (average) Kilowatthout 12,139 12,754 1/.449 12,151 12.071 Consumption / Customer 6.22 5 88 5 81 6 08 6.04 Cents /Kilowatthour Generahng Capahihty (at year end) (megawatts) 2,780 2.780 2.780 2.780 2.780 Pcwer Requirements and Suop!y (kilowatthours in milhons)

Generation.

527 508 556 598 548 Hydro 12,533 11.974 10.843 11.233 11.006 Steam to 4

1 3

Combushon Tabine 1,476 2 030 2,499 1,776 2,031 Nuclear 14,546 14,516 13 898 13.608 13.588 Total 862 649 778 681 615 Purchases, Net interchanges. Ett

• 15,408 15,355 14.676 14289 14203 Totar Temtonal Peak Demand (megawatts) 2,931 2,655 2.620 2.571 2,508

• Nguming m 1994 and restated tw 1993 and 1992. saes to other utikbes is rNmn as operatmo reenue and mCluded in maattnour saies rarier than ne

" kQmmny in Aptil W4 tranCN3e fees 3!9 00 longtH ShCWD as levenues 300..xpenSt$ AmHurits 3CCrued lor payment ID the l'UnicipahbeS SirT.e 4/1

^

COMPARATIVE HIGHLIGHTS Calendar Year 1994 1993

% Change Financial (Thousands of Dollars)

Total Revenues & income

$ 623,977

$ 612,153 1.9 Total Emenses & Interest Char;;es 609,b64 598.165 19 Other 20,962 23.595 (11 2)

Reinvested Eamings S 35,375 5 37.583 (5 9)

Debt Service Coverage 1.41 times 1.46 times (3 4)

Debt / Equity Ratio 79/21 80/20 Statistical Retail Customers Served 99,782 96.670 3.2 Average Annual Residential Consumption (KWH) 12,139 12.754 (4 8)

Average Residential Cost (cents per KWH) 6.22 5 88 5.8 Energy Sales (MWH) 14,724,518 14 601.085 09 Terntonal Peak Demand (MW) 2,931 2.655 10 4 AVERAGE SOURCES RESIDENTIAL OF INCOME COST in mawus i twpr kdawardwur E Sales to Electrk Co-opa 5 227,920 44.54 %

I,3 E Industrial Sales 166,640 26.71 %

1993 NationalAwrage 3.28

. ?P;

'zgi E Commercial Sales 65,330 10.47%

irnia Con /w 18S hy B ReiklentialSales 63.373 10.16 %

5-r -;

E Other Sales for Resale 24 416 3.91 %

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. Other income 18.321 2.94 %

Q E Oiher Ejectrk Revenue 5,095

.82%

1994 Nailemal Aurage 8.40 m

__m.

E Puhik Street I.ighting 2,354

.3'%

E Wa.er Sales 528

.08%

knare Gwyn 6.22 AVERAGE D15TRIBUTION RESiDENTI AL OF INCOME CONSUMPTION I" ""~

in kdomwedwun 1993 Liinna/ Awrage 9.73 5 5 Iucl and Punimed Power

$ 227,203 36.41%

E Operation and Maintenana 131,831 21.13 %

knta Cmyer 12.754 4

E Intercit

!$0,622 24.14 %

J E A&litions to Plant. Invemories, Etc. 73,167 11.73 %

l

[;I b-:

Retirement of Debi 34.342 5.50 %

• P'"*"5'

' 5' 19n miwna!Aursee 9.8s1

• mp 0235F3EF30522gg dL E Sums in lieu of Tases 655

.35%

itntre Gwper 12.1.59

.. ~....

5

=

"The mission ofSantee Cooper is to be the state's leading resourcefbr improving the quality of lifh for thepeople ofSouth Carolina."

To fulfill this misstog, Santee Cooper is comnutted to:

- being the lowest cost producer and distributor of reliable energy, water, and other essential services

- providing excellent customer service

- maintaining a quality work force through efTective employee involvement and training

- operating according to the highest ethical standards

- protecting our environment

- being a leader in economic development i

4 i

i

]

EXECUTIVE REPORT ltisachallengingand exciting time to be in the electric utility business. A deregulated electric utility envi-ronment is coming to the United States, the result of the Energy Policy Act passed in 4

1992 by the U.S. Congress.

j Dcregulation is without question a ma-1

]

jor factor affecting Santee Cooper's future.

1 i

While its ramificaricas will take many years t

1 to be realized, we must be prepared to oper-1 are effectively in a competitive environment l

where customers may choose electric service much like telephone customers select a long-4 1

l distance carrier. Issues of retail wheeling and open-transmission access are cornerstones of i

deregulation and these issues will take time to sort out.

s Banking, airlines, telecommunications, and broadcasting are already deregulated industries. While the prudence ofderegula-i tion will likely be subject to debate now and T Graham Edwards John S. Raincy I

in the future, we unquestionably stand at 1

l the threshold of it in the electric utility l

l business.

I 1

j A positive beginning is that all our cor-

)

I i

porate goals were met in 1994.This signifi-l cantly contributed to an mcreasmgly com-l petithe posture. And it is the individual j

employee working as pan of a cohesive, j

1 (frective team that has always been a hall-l.

j mark of our operations.This corporate way I

j of life will be even more critical in the future.

i 1

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In 1994, Santec Cooper successfully Where there is demand, there is growth, concluded several major projects that will and there is explosive growth along South solidify our position as we approach de-Carolina's Grand Strand and Waccamaw Neck.

regulation.The new 540 megawatt unit ar Country music venues, golf courses, outlet the Cross Generating Station was first malls, residential housing, and retail business PEAK DEMAND added to the grid in September during test

/=m,mwm openings represent nothing short of a regional start -up. It's particularly gratifying to bring economic juggernaut. San tee Cooper will con-1990 2,50s tinue to provide power to propel this impres-a unit on-liue under budget and on

_gg schedule.

sive growth.

1991 2,571 The Cross I unit's budget was origi-

"c: cts The Santee Cooper Regional Water System nally $509 million. But it has been built was dedicated in October and the long-stand-j yg, gg for $418 million. This is a testament to

~

ing dream of utilizing v'ater from the Santee conscious efforts to hold down costs and 1993 2,655 Cooper Lakes became a reality. This $34.5 m

take advantage of attractive interest rates million (excluding net interest cost) project, 1994 2.931 and a favorable construction environment.

m, completed under budget and on time, is proof Santee Cooper and its customers need this positive that governmental entities in the low-power, and while other utilities struggle to country can and should work together. Before meet peak demand, we are well-positioned.

In mawm the year was out, a k> cal movement was under L pay for this unit, Santec Cooper way to provide water from Lake Marion to

1. 1. 2'995 implemented a rate increase on April 1, users in portions of Calhoun, Clarendon, the first since 1985. Two more adjust.

Dorchester, and orangeburg counties.

1991 2,995 ments will become effective on April 1, Moody's, a major Wall Street bond-rating 1995, and April 1,1996.The system aver-1992 2.995 6nn, gave S.mtee Cooper high marks, citing o~.... n, n.-.,

age increases total 9.8 percent over the

" strong management' and " stable financial per-three-year period.

1993 2,995 formance. Moody's assessment is atypical of We offered an expanded menu of in-how many chctric utilities are viewed in the 1994 2,995 dustrial rates, and intnxiuced real-time financial community due to the unknowns

s.. w... s..,, -

pricing. li should be remembered that even posed by deregtdation. It is indeed gratifying with all the adjustments, projections indi-that confidence in us is s 'id.

cate Santec Cooper will remain the lowest-By not offering minibonds this year, Santee cost pnxiucer and distributor of any maior Cooper was able to assist the state treasurer's generating utihty in South Carolina.

omce in the starc's first-ever sale of minibonds.

ll

b Santee Cooper personnel provided technical

' Santee Qmper. In 1994, nine new compa-and practical advice throughout the process, nies were announced in eight different

'Approximately $24.5 million ofthe state'slunds counties. These announcements repre.

wen: sold.

. sented a total capital im estment of 5160.7 l

With the Charb on Naval Base and million and are expected to generate l,835 RATES E

ca r a-u w -r<deno new jobs. In addition,18 significant ex-Charleston Naval S -

..d closing in mid-w antirm ba,odon ihr NanomdAmage 1996, we made efforts to retain sening these pansions at cooperative-served industries

)

.t facilities as we've done since 1942, and under Residential in 13 counties totalled $121 million in 1

National 8.40 '

- contract since 1954.

nummmmmmmmmum new capital investment and will rewh in With the election of Gov. David Beasley, S,,ntu Carr 622 the creation of 484 new jobs.

the state's emphasis on economic development The Charleston Regional Develop-is projected to continue as it did under Gov.

ment Alliance was formed in the fall, re-Commercial Carroll A. Campbell Jr. Santee Cooper re.

placing the Trident Economic Develop-National 7.71 sponded to Gov. Campbelfs request to act as an nummmmmmanus ment Authority. Fostering greater input agent of the state in a complicated land swap Sanin Cupr 5.50 fmm all segments of Berkeley, Charleston, m

that expanded a weapons range near Shaw Air and Dorchester counties is the group's Force Base in Sumter County in exchange for a overriding goal.

j I"d"$i^I portion of the former Myrtle Beach Air Force The selection ofSantee Qwper's presi-

)

National 4.85 Base which closed in 1993. This should put summmmma dent and chief executive officer as chair-I Shaw AFB in a more advantageous position Santa Ceu.122 man of the alliance reflects strong confi-prior to the next round of base closings. The dence in Santee Omper's leadership for swap, which invohrd the S.C. Forestry Com-economic development in the lowcountry.

mission, allowed AVX Corp., a major capacitor Santee Omper continued at the fore-manufacturer and Harry County's largest em-front of emironmental protection by de-ph>yer, to expand on the tract ofiand which was fending the Santee Cooper Lakes. The part ofthe former Myrtle Beach Air Force Base.

owners of a hazardous waste landfill near Cooperation is the key to so many issues, Lake Marion in Sumter County were re-and Santee Omper will continue to work as quired to place the first payment in a trust part of the Palmetto Fronomic Development fund for cleanup of the site. nc require-

-l Corp. (PEDC). Based in Columbia, PEDC is ment has been challenged by the company governed by representatives of Central Electric every step of the way and litigation is i

Ibwer Omperathr's 15 member co-ops and ongoing.

i-The Give Oil For Energy Recovery or

2. T/u State's leading Resomre-To be GOFER

• program passed the one million recognized by state and local governments gallons mark in statewide collections. By and the citizens ofSouth Carolina as a valued year's end, every county had at least one provider ofessential services.

GOFER site where do-it-yourselfoil chang-

3. EvpandedSm ices-To provide essen-FUEL ers can conveniently and safely dispose of tial services based on our key capabilities that GENERATING cost used oil. Santce Cooper converts the oil into will enhance the quality oflife for the people Gnn jer kulutusilnwur electric power, and GOFER represents one of South Carolina.

of the state's more visible aspects of public od 4.13

4. Work Force Management - To im-gzmn service and environmental protection.

prove company-wide performance through lleing named to the National Environ-enhanced employee involvement and par-

~~

mental Development Association's (NEDA) ticipative work force management.

1994 iIonor Roll was a significant environ.

As we move forward to mid-decade, San-mental achievement. The NEDA recogni-

[*'*d' tee Cooper challenges its employees to fmd d#

1"d"M" U"" I tion is only given to companies promoting ways to improve operations, and to be cre-the development of environmental policies ative and innovative. We are positioning San-that contribute to both a clean environment tee Cooper to be cost-competitive as we are and a strong economy. Santee Ccx>per joined challenged by market-based rates near the ranks of Disney Development Co.,

century's end.

Amoco Corp., Easunan Kodak Co., and Philips Electronics North America Corp.,

and others for this special honor.

The foundation for preparing for our future and thar of the customers we serve was John S. Rainey Chairman. BoardofDirecton laid wn. h implementanon of a new stratepc plan, " Santee Cooper 2000." Its four long-term objectives best describe the course set fors.antee C.ooper as we approach the 21st T. Graham Edwards century:

1%ident and ChiefEwcutin Oficer

1. Lou-Gnt Energy - To remain the state's lowest-cost producer and distributor of reliable electric services.

[

ENERGY SALES At the end of1994, Santec Cooper percent over the previous year. The average cost of was serving 99,782 residential, commercial, and power to industrial customers was 3.22 cents per other retail customers located in Berkeley, Harry, and kilowarthour,1.5 percent less than in 1993 and Georgetown counties. This was an increase of 3,112 33.6 percent lower than the national average.

or 3.2 percent over 1993. Of this increase. 2,574 were Sales to Central Electric Power Cooperative residential and 538 were commercial & others.

Inc. for its 15 member co-ops increased 1.3 percent Sales to these retail customers were 2,253 to 6,903 gigawarthours. Central is Santec Cooper's gigawarthours, up 1.7 percent over the previous year.

largest single customer. The electric cooperatives The average annual consumption of electricity distribute power to more than 360,000 customers by Santee Cooper residential customers declined to in 35 counties.

12,139 kilowatthours,4.8 percent less than 1993.

Sales to the municipalities of Bamberg and a.

i}

1 Industrial's were 5,169 gigawarthours, up 0.3 Georgetown decreased 0.2 percent.

jjj l ll1i 31

0) }

}!

3:

)

3 TOTAL TOTAL i

ENERGY SALES PEAK DEMAND k

in gigauwm in nwgauum hl q

I994*

14.725 1994*

2.931 1995 14.603 1995 2,956 1996 15,589 1996 2.985 1997 15,893 1997 3.06]

1998 16,212 1998 3,129

-~

I999 I 6,4 93 1999 3,196 2(KK) 14.680 2(KK) 2,938 2tK)1 14.346 2001 3,009 2002 14.644 2002 3.079 wwsmwnememeq=gsstangsgg 2(K13 14313 2003 3.150 2004 15.441 20M J.249 ww.-

- -.. = - -

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2(K15 15.746 2005 3,32]

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L i m e a u x.= u a w a m e A u m s w a w a l c u w a x. a w m i a Remaining tI1e state s lowestcost roducer and distributor of reliable eiectric services

[

Although our desire to remain the STARTUP OF CROSS UNIT 1 On Jan.15,1990, the Y:l sum, state's " lowest cost producer and Santee Cooper Board of Directors authorized construction of distributor" may appear to be simplistici the second coal-fired unit at the Cross Generating Station in it will require a true commitment from Berkeley County.

employees at every level. The f act is that i our years and nine months later, the turbine generator the cost of generating electricity con.

spun to life and Cniss Unit I was synchronized to Santee tinues to grow...and to keep our rates low we will be working in all areas to produce cost-cutting measures. It is through the ind..

build-out plan, Unit 1 is unique when measured against the ividual efforts of Santee Cooper employees that we work effectively as a construction diniatc of today's electric utiliry industrv.

team, and it will be through their individual The MO-megawatt Unit I is one of the few large-scale, efforts that we remain the " lowest cost baseload generating unirs btuk in thc U.S. in the last decade.

producer and distributor."

Niany utilities are building combustion-turbine units as a

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increase in 1996.

Cross I will go into commercial operation on May 1, The demand for electric power has climbed 46 percent 1995, providing power wellinto the next century.

since 1985, which led to the decision to build the second unit at the Cross Station in Berkeley Coumy. Paying for construc-RATES ADJUSTED FOR THE FIFtST TIME StNCE tion of the new $418 million unit was the primary reason for 1985 No utility likes to raise rates. But there comes a time the adjustment.

when it simply cannot be delayed. On Jan. 24, the board it is signficant that even with all the projected increases, gave final approval to a three-step rate increase effective Santee Cooper wiil remain the h> west-cost producer and April 1.1994,1995, and 1996. Rates were last raised in distributor of electric power of any large-scale generating 1985.

utility in South Carolina.

The decision followed a three-month period ofreview and comment on the proposed rates by Santee Cooper's customers.

SUBSTATION LINKS SANTEE COOPER WITH Rates for all customer classes increased an average of 4.3 ouKE POWER CO. Santee Cooper is the beneficiary.

percent in April. This will be followed by an overall average but so are customers of utilities in North Carolina, and even J

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people as far away as Ohio. A 230-kilovolt switching station and Branson, Mo. don't have a thing on the strandi twang. By in Granwmd County now hks Santee Gmper and Duke mid-year, more than $1 billion wonh of construction was Power G>., one of the nation's largest inve stor-owned underway or about to begin, including dozens of new hotels, utilities based in Charlotte, N.C.

restaurants, and stores.

The switching station is testimony to the importance of The announcement generating the most anention w as the our nationi unified electric grid whe re the buying end elling

$450 mil!icn !sle nfAnerica theme park on 1,052 aan on the ofpower goes on every hour ofevery day all across the country.

former Mynle Beach Air Force Base. Up to 5,000 year-round Before the Greenwood County station was energized, Santee employees are expected to keep the park running. The project OK)pCr and DukC peWr Were limited kn tbeir purCbases of ks eXpcCled to be larger than Walt Disney Torld's Magic electric gmwer from one another. That usually meant going Kingdom. This is what's planned:

through another utiliry and paying a dtlivery fee or wheeling A 50,000 sq. fr. Centennial Exposition,

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modeled after an 1890's World's Fair The new tie with Duke Power cuts out this " middle man."

Rock 'n' Roll Fair Square, featuring an invencd

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it's prnjected that Santee Cooper will save thousands ofdollars roller coaster in wheeling charges.

Exploier's Isle, a lakefront park with rides and

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The engineering and construction was done in 17 months, eateries catering to children an impressively short period oftime considering ihe amount of s

New England Waterfront, with a log-flume

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engineering work required. Nearly a dozen Santee Gmper ride, and a U.S. House of Representatives units were involved. It's just another exampic ofc>tablishing a Theater where historical events will be solid future for the next millennium.

re-created River City, U.S.A., with a jan club. Delta

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THE GRAND STAND'S ECONOMIC SUCCESS Mansion restaurant, wedding chapel, musi-STORY CONTINUES Fourteen mi! lion people visit the cally themed Imar ride, and computer ani-nonhern coast of South Carolina every year. Tagged the mated rolois

" Grand Strand' in the 1950s by a clever public relations The Final Frontier, which includes an indoor

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practitionet, the seashore from Georgetown io Little River, roller coaster and IMAX theater anchored by Mynle Beach, is a textlook enterpri:,e zone of Thunder Canyon, a river-rapids ride featur-

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magnanimous pro;mrtions.

ing a runaway gold-mine train Witors spend 51.7 billion, as full buses and cars flock to the nation's newest country music venues. Nashville, Tenn.

Then there's the announced $250 million Broadway At

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})rOVilltf Of essentialservices During the last 50 years, Santee SANTEE COOPER HAS A NEW CORPORATE r

Cooper has worked as a sort of COMMITMENT l hrough the decades, $antec Cooper has

" silent partner" to the people of South used ses cral uiipraic ocmenn ui idenoty the rwein dthe Carolina; our services have influenced organvanon. I.hc latest statement... \\\\..c rc Putting Our 1.ncigt and improved the quality of life for

~l o \\\\'ork I or hu." is a uinunionent that reticus the "Santec residents throughout the state, yet we

( 'u ipt t 2000" st ratcp to boldly embras e t he dcregulaicd elca r it have taken minirnal ce edit f or our ef f orts.

unhn marketplasc.

Times change, however, and develop.

NEDAAWARD I or ns em iron mental out reat h etfort s. 5antec ments within the industry are now

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Through a wide rattge of media, Santce

""i""'"'"""""""*"r 1 oard ( h.unnan John A Cooper will now attempt to increase It""'T TC'en ed the reuipmoon at

.u m.::ds thnner in awareness among South Carolinians Odonyton.1)(:. Nmtet Coopci is now part d the N1.l M about the many services we provide, llor.or Roll for os pnnen u.nunument to promoung pn.per 99

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JT Land Agent Brenda Chapman and Forestry and Undeveloped Lands Supervisor Jos6 Stephens anonitor raro a: Icas: 10 on.un/.uions growth of young pine tree plantations tot iht u t tfor ts tou.ml sound as part of Santee Cooper's reforesta-

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tion program. In 1994, Santee Cooper Nun ru n ot htri,uunows u nluq uo. oid asu,,i.u n ins u crc planted 93,000 seedlings on 134 acres

.d so sch t tal fio mJauon on tia, i,no r od N.um e ( oop< r

. n of Santee Cooper's undeveloped lands, iona J tir nn suJi n I kno I >o t lopnn nt ( o.l nnnan kodak (o.1hIdh s ( o and \\rn,,i o l orp

,os.nJJupi>tth. t m n enntnt. I hi l >n pr.un s sj,, a n,in d I,s EDW ARDS ELECTED CH AIRM AN OF CH ARLESTON auti ( n.pt r u n !nJ-R EGION A L DE V E LOPME NT A LLI ANCE in l h u ndit r.

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in the tri-county area and the three county governments, the sible corporate citizen. It represents another example of real-tM latter based on each county's share of the tri<ounty population.

wodd change-a paradigm shift in business etdture not seen

.j Edwards says immediate items on the agenda include nam-until receJdy ing an executive direcmr, formulating a budget, and handling In the four years under his chairmanship, Rainey has estab-the many administrative and organintional i< sues of forming a 145cd a (2nique summit ofenvironmental and business leaders:

new organization.

the South Carolina Environmental Sym;msium. In September, No one believes it will be easy. Intrasectional acrimony has the third such gathering assembled again on Kiawah Island, a Ecen viewed as inhibiting a much-needed cohesive and unified showpiece that blends progressive development with acute sen-effort to move the tri<uunty area foward. Iraders acknowkdge sitivity to its natural setting.

the time has come to enfranchise all segments of the low-Environmental and business leaders from the state, region, country. not simply the strict confmes ofmetropolitan Charles-national, and international scene share concerns. ideas, and ton. As the Charleston daily newspaper stated after Edwards' solutions to the compelling ecological challenges facing the planet.

election, " Edwards is responsible for Santee Cooper's strong The 5.C. Environmentallaw Project's publication,"Moun-name in the business community" tains & Marshes," recognized the chairman's efforts to hold the owners of the hazardous waste landfill on the shones of Lake CHAlRMAN NAMED 1994 CONSERVATIONIST OF Marion financially accountable for the facility.The landfill issue THE YEAR lloard Chairman John S. Rainey was named the received considerable attention from Santec Cooper during the 1994 Conservationist ofthe Year by the S.C. Wildlife Federation.

year to maintain the chairmars stance:"Thelakes must be held This prestigious honor recognizes the Anderson native's influence inviolate, and they must be defended."

in advocating a balance between a sound economy and environmental stewardship.

The chairman set the tone for how Santee Cooper views the m-m-

,.[qsbMWM" ^yi i-p environmental responsibility in April 1990, only three months

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anniversary of Earth Day, that he intro-

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11 only takes a brief glance through S ANTEE COOPER REGION AL WATER SYSTEM Water, it i

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4 ihe legislation that created Santee one of hfe's basic necessities, has traditionally been in abun-Cooper to find that quality of life dance in the South Carolina inwcountn. h once was so improvement has been part of our job simplc. Ibill a well, you get water-and plenty ofit. Things l

l since day one. At first, the mission was have thanged sinte escry town, large and small alike, couki easily defined..as the greatest imptove-pump what seemed hke endicss gallons of water out of the ment imaginable was the electrification gn,und.

of the statc's rural areas. Today, however,

,\\s the populaion in the iri-county aca musluoomed in we believe it is our mission both as a the pros and Ms dic water tahic began dn>pping. Many company and as individuals to eonfinue t tom had problenn widi dium or "hud wmer." Industrics, improve the quality of the lives of our w hile prosiding iohs and ctonomic henctits. literally dried up state's residents - and we will do s nmv aricsian wclls and deplcred the frec.tlowing water. This, wide range of ways.

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' ' > g' f V_pq The result is the Santee C,ooper Reg.ional Water System, eteneghest Seeth OsseGee. The (

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.Mj n> huy the 24-million gallons per day capacity of the regional g,

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system. While talked about since the m.d-1980s, serious K.g he seasseeseper genereIIes cd i

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discussions and needed legidation bore fruit in 1987 when the i

O S.C. General Assembly passed a law to allow Santee Coogr to 3f;

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q becomeawaterwholesalerin Berkeley, Charleston,Clarendon, p

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Plans for the system were an nounced in 1991, and construc-Beautiful. The GOFER program is the most visible public tion on the 23 rniles of pipelines legan in early 1993. Major service program ofTered by Santee Cooper to those who do not achievements in 1994 induded completion of the one million receive Santee Cooper power or water. It's another way diar gallon elevated storage tank near Carnes Crossroads. On Aug.

dramatically illustrates the true statewide public senice ren-11, the first water was drawn from l2ke Moultne and treated at dered by Santee Cooper.

the water treatment plant, located near Moncks Corner.

One million gallons is a lot of oil that might otherwise On Sept. 20, the system began ddivering water to have been illegally introduced into the state's streams,landfdis, Summerville. Moncks Corner followed on Sept. 21, with ditches, soil, or water. The GOFER truck has become a Berkdey County coming on-line on Sept. 22 and Goose Creek familiar sight on our highways and byways, picking up oil and on Sept. 26. Commercial operation began on Oct.1. Gov, transporting it to the Jefferies and Wmyah stations where it is Carroll A. CampbellJr. dedicated the system on Oct. 20.

converted into electric power. Consider that one million gallons of used oil has enough energy to:

COFER* PROGRAM NETS MILLIONTH G ALLON Power 1,310 homes for one ycar Do-it-yourself oil changers and backyard mechanics Power 478.000 homes for one day

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ihroughout South Carolina have helped keep the state's emironment cleaner by depmiting more than one million MYRTLE BEACH AIR FORCE BASE LAND SWAP gallons ofmed niotor oil since 1990 thmugh the Give Oil For Many people don't know Santee Cooper is a major player in Energy Recovery or GOFER program.

military base redevelopment. Its success has been achieved in The one millionth gallon was picked up fmm Greenville facilitating the rederdopment of the former Myrtle Beach Air County on Dec.13. Chief Operating OfTicer Robert V.

Force Base property in Horry County.

Tanner presented a plaque to Greenville County of!icials Santee Cooper became involved in the task at the request during ceremonies at the Enorce landfill attended by kical ofGov. Carroll A. Campbell Jr. who sought someone to act as officials and representarives from ihe S.C. Dept. of Health and an agent of the state throughout a complicated land-swap l

Environmental Control.

process that began in September 1992.

The GOFER program began in July 1990, an idea born by T he land swap between the state and the U.S. Air Force employees in the Environmental Services unit. As 1994 ended, was completed May 26 during signing ceremonics at Santee 302 GOFER sites were in place.There is at least one colk ction Cooper's corporate headquarters. The exchange of 12,500 site in each county in South Carolina.

acres of S.C. Forestry Commission land in Sumter County, GOFER won three environmental awards in 1994, and currently used as a bombing range near Shaw Air Force Base, the total is now nine. In December, GOFER picked up a was rnade for more than 1,550 acres at the closed Myrtle Beach prestigious award in Houston, Texas from Keep America Air Force Base.

as

Gov. Camplxil said the action ".. puts South Carolina at B.A.S.S.' 27-year poundage record was broken the first the forefront of the base redevelopment movement nation-day.The iournament was won by O.T. Fears of Sallisaw, Okla.

wide, and it puts the Grand Strand in a position to capture jobs Ilis total catch was 77 lbs.,4 ozs., a three-day B.A.S.S. record.

and opportunities.

Fears won 514,000 cash and a fully rigged Ranger bass boat "The land swap not only grants us control ofour develop-valued at 521,000. Anglers from 34 states, Japan, and Mexico ment destiny at Myrtle Beach, it also significantly enhances participated.

Shaw Air Force Base for the next round of base closures by The landing is named after Clarendon County Sen. John solving major encroachment problems. I want to thank my C. land 111. He termed the landing "as an example ofgovern-staff, the entire team at Santee Cooper, our Washington ment working together." In addition to Santee Cmper, enti-delegation, and the Air Force for leading us toward this great ties involved in the project included the S.C. Dept. of Natural achievement," said Campbell.

Resources, the S.C. Dept. of Parks, Recreation and Tourism, the U.S. Fish and Wildlife Service, the Clarendon County JOHN C. LAND fil DOATING AND SPORTS FISHING legislative Dekgation, and the States Organization ofBoating FACILITY On May 6, ur. der picture-perfect skies, theJohn Administrators.

C. Land 111 S;mrts Fishing Facility on 12ke Marion was Recreation. considered a byproduct of the original Santee dedicated during a very special even t. The dedication coincided Cooper Hydroelectric and Navigation Project, has grown to with the fmal weigh.in of the 1994 Bassmasters invitational an industry providing an annual economic benefit to the five-FishingTournament sanctioned by the Bass Anglers Sportsman county region of nearly $200 million and providing approxi-Society or itA.S.S.

mately 3,000 tourism-related jobs. In the July 1994 issue of A crowd of 2.000 onlookers was on hand for the dedica.

B.A.S.S. Times the headline trumpeted,

• Santee Cooper Stakes tion and B A.S.S. finale, sponsored by the Clarendon County its Claim as the Nation's Best All-Around Bass Fishery."

Chamber of Commerce. Clarendon is one of five counties surrounding l.akes Marion and Mouhrie, commonly n ferred LEASEHOLDERS SURVEYED ON BUYING THEIR to as the Santee Cooper 1.akes. While the governor thanked LAKE LOTS Santee Cooper conducted a survey of Santee Cooper for the donation ofthe land, the supreme praise approximately 2,600 residential leascholders in J uly to determine came from B.A.S.S. official and veteran angler Ray Scott. He if they would be interested in purchasing their subdivision lots told the gathering that the 26-acre *megalanding." as it's often kicated on lakes Marion and Moultrie. The survey elicited a called, "is one of the finest in this country, ifnot the finest." He response rate of nearly 85 percent. Of those who responded:

also characterited the tournament as one ofthe most successful Approximately 32 percent stated they wouki be inter-B.A.S.S. has ever conducted.

ested in purchasing the property now

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.- Cooper who make us a great company.

appro.it hing. Nantec Cooper is poisul to t han a new tourse as it is their dedication, de pe n da bilit y, and allclearis unlitiegrepuc oi rncer bndanianal danp s in the creativity that have, for over 50 years, w ay busincss is tonduacJ..I.how w.rio adapt will sunive and enabled this company to operate as a eten flourish in a deregul.urd clet uit utihty cin nonmc nt.

cohesive team. It is al*,o they who know

'I hose w ho don't in.iy be the latest ruinple of'" buggy-where we need improvement; as a result, we have charged our ernployees at alllevels lord s Alodtl I resolutioni/cd the sen tabrk of na.nporta-to th.mk not just about how to do a good j.ob, but how to do a betfer job. By recciving their

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specific aspects of our operations, we wdl lo N1an h, a hardhound book. "%antec ('noper 2000 continue to improve as a whole.

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,e psegmus Nute eespon d e geefs,y these changes will afTect Santee Cooper, electric co-ops, or y

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way to tomorrow. This strategic plan represents the work of improve Streamline and/or enhance processes to make them dozens ofemployees who were charged by President and CEO

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T. Graham filwards with the daunting task of articulating the more efficient and competitive Develop new services vision of Santee Cooper's second century.

Promote demand-side management programs such One of the most dramatic changes will be the ability, through retail w hechng, for customers to choose their power as Good Cents and H2O Advantage Find ways to control and reducc operating and main-company much like they now can choose a long-distance telephone carrier.

tenance costs, and capital equipment and construc-Other utilities will be able to use Santec Cooper's transmis-tion expene Offer ideas for the design, construction, operation, sion lines. This is called open transmission access. Regulators will allow independent power producers, who are not tradi-and maintenance of systems and facilities to make se

them more reliable and cost-beneficial project or activity that is mutually decided upon. PEP has an look for creative ways to complement and protect impressive cumulative employee participation rate of 95 per-a natural resources cent.His exceeded the corporate goal of 85 [xrcent.

Share knowledge, skills, and ideas with fellow em.

During the year,1,715 employees participated on 334 ployees and the community teams. When it comes to selecting projects, PEP teams contin-Gimmunicating the strategic plan was accomplished in ued to place more emphasis on activities relating to corporate meetings with managers and supervisors, distribution of bn>-

goals. It's paying off. The estimated net annual savings from l

chures to empkipes, videotaped presentations, and articles in PEP was S730,367.

the employee newsletter.

Examples of1994 PEP projects include the Rates h1arket-ingTeam which devclojul a marketing plan for Santee Cooper's PROGR AM FOR EMPLOYEE PARTICIPATION Employees electric rates. The objective was to help Santec G>oper's em-have a way to constructively share ideas in a level of partici-playces and customers become aware of and understand pative management at Santee Cooper. It's called the Pmgram Santee Gioper's electric rates. In association with " Santee for Employee Participation or PEP, Gioper 2000," a Strategic Action Team was formed to review PEP empowers the individual employee ihmugh collec-corporate public education programs.

tive decision making processes. A PEP group focuses on a PEP has been a fixture at Santee Gioper since 1983.

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IN MEMORY OF RAY FIDDLE In a sad day when a loved one, 7~

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co-wurker, a friend, is lost. It is 3-7 not easy when you worked with n

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one who is young and has a wife and family. It is not easy, but life presents us challenges, and we

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This is the harsh reality Santee Cmper faced in the spring of 1994 folkswing the accidental death of Moncks Corner Line Technician Ray Fiddie. who died March

29. Fiddie came in contact with a 12-kikwolt line while dismantling a transformer at a Nonh Charleston, S.C. substation.

Fiddie was a 12-year employee of Santee Cooper. He is survived by his wife Roberta "1ynn" and an 8-year-old daughter Jennifer.

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South Carolina Public Service Authority Calendar }' ear 1

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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Advisory Board and Board of Directors of the i

South Carolina Public Service Authority:

We have audited the accompanying balance sheets of the South Carolina Public Service Authority (a component unit of the State of South Carolina-Note 1) as of December 31, 1994 and 1993 and the related statements of accumulated earnings reinvested in the business, reinvested earnings, and cash flows for each of the three years in the period ending December 31,1994. These financial statements are the responsibility of the Authority's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the South Carolina Public Service Authority as of December 31,1994 and 1993, and the results ofits operations and its cash flows fcv each of the three years in the period ending December 31,1994 in conformity with generally accepted accounting principles.

As explained in Note 4 of the notes to financial statements effective January 1,1994, the South Carolina Public Service Authority changed its method of accounting for certain investments in debt and equity securities.

l l

LL Charlotte, North Carolina February 17,1995 35

CALENCE CHEETS South Carolina Public Service Authority December 31,1994 and 1993 ASSETS 1994 1993 (Thousands)

Utility Plant - At Cost:

Plant in service 5 2,625 A! 1

$ 2,540,433 Less accumulated depreciation 883,058 814,425 Plant in service 1.742,393 1,726,008 Construction in Progress 549,317 450,306 Nuclear fuel - at amortized cost 21,358 14,082 Utility plant - net 2,313,068 2,190,396 Other Physical Pmperty (Net ofAccumulated Depneciation) l 720 1,748 Cash andInvestments Held by Trustee (Designated) 291,878 440,427 Current Assets:

Cash and investments held by trustee (undesignated) 51,778 50,794 Bond funds - current portion 106A 15 90,031 Accounts receivable - net of allowance for doubtful accounts of $887,000 and $2,907,000 in 1994 and 1993, respectively 54.581 57,339 Accrued interest receivable 2,922 3,203 Inventories, at average cost:

Fuel (coal and oil) 43,844 26,501 Materials and supplies 33,018 32,716 Prepaid expenses 1,011 1,312 Total current assets 293,569 262,296 Deferred Debits and Other Assets:

Unamortized debt expense 25,026 25,838 Unamortized loss on refunded debt 290,963 305,131 Costs to be recovered from future revenue 386,037 365,075 Other 27,343 31,754 Total deferred debits and other assets 729,369 727,798 Tiital 5 3,629.604

$ 3,622,665 The accompanying notes are an integral part of these fmancial statements.

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LIABILITIES AND CAPITALIZATION 1991 1993 (Thousands)

Long-Term Debt:

Electric Revenue Bonds - Priority Obligations 5

39,380 42,100 Electric System Expansion Revenue Bonds 1,058,050 1,079,455 Capitalized lease obligations 46,131 49,448 Revenue Bonds 1,343,740 1,370,910 Total long-term debt (ner of current portion) 2,487,301 2.541,913 Less:

Reacquired debt 11,285 10,550 Unamorrired debt discount and premium - net 53,825 55,268 long-term debt - net 2,422,191 2,476,095 Currrne Liabilities:

Current portion oflong-term debt 54,612 33,704 Accrued intercst on long-term debt 72,625 68,362 Commercial paper notes 118,700 108,250 Mini-Bonds and Revenue Bonds (Series M) 156,500 154,865 Accounts payable 33,526 29,179 Ocber 11,940 18,794 Total current liabilities 447,903 413,154 Deferrrd Cordits and Other Non-Curtrnt Liabilities:

Construction fund liabilities 27,638 32.233 Nuclear decommissioning costs 28,165 27,756 Unamortired gain on reacquired debt 324 470 Other 20,152 16,835 Total deferred credits and other non-current liabilities 76,579 77,294 Commitments and Contingencies Capital Contributions - U.S. Gor >ernment Grants 34,438 34,438 Accumulated Earnings Reintestedin the Business 6-i8,493 621,684 Total 5 3.629,604

$ 3,622,665

STATEMENTS OF ACCUMULATED EARNINGS REINVESTED IN THE BUSINESS South Carolina Public Service Authority Years Ended December 31,1994,1993, and 1992 1994 1993 1992 (Thousands)

Accumulated earnings reinvested in the business - beginning of year S 621.684

$ 590,098

$ 566,197 Reinvested earnings for the year 35,375 37,583 29,717 Total 657,059 627,681 595.914 Distribution to the State of South Carolina 6,157 5,997 5,816 Total 650,902 621,684 590,098 Net unrealized loss on investment securities available-for-sale (2,409)

Accumulated earnings reinvested in the business - end of year S 648,493 5 621,684

$ 590,098 The accompanying notes are an integral part of these financial statements.

l E

STATETINTD CF EEINVESTEJ EA2M?NES South Carolina Public Service Authority Years Ended December 31,1994,1993, and 1992 199-i 1993 1992 (Thousands)

Operating Revenues:

Sale of electricity 5 600.036 5 587,357 5 542,898 Sale of water 528 Other operating revenues 5,092 5,453 5,153 Total operating revenues 605.656 592,810 548,051 Operating Expenses:

Electric operation expense:

Production 233,308 237,685 217,223 Purchased and interchanged power 28.271 16,190 11,598 Transmission 3.692 4,068 3,197 Distribution 3,789 3,594 3,810 Customer accounts 2A77 3,571 3,919 Sales 1,610 1,618 1,295 Administrative and general 49,496 48,087 39,784 Electric maintenance expense 54,824 51,626 52,365 Water operation expense 338 Water maintenance expense 20 Total operation and maintenance expense 377,825 366.439 333,191 Depreciation and amortization 80,222 78,329 75,025 Sums in lieu of taxes 2,235 3,643 3,643 Total operating expenses 460,282 448,411 411,859 Operating Income 145,374 144,399 136,192 Other income:

Interest income 18,271 17,403 21,980 Other - net 50 1,850 642 Total other income 18,321 19,343 22,622 Interest Charges:

Interest on long-term debt 117,970 122,557 129,894 Other 31,312 27,197 23,356 Total interest charges 149,282 149.754 153,250 Costs to be recovered from future revenue 20.962 23,595 24.153 Reintested Earnings 5

35.35 5 37,583

$ 29,717 The accompanying notes are an integral part of these financial statements.

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GTaTCSNTS CF CASH FLCOS ~

1 South Crruina Public Service Authority l Han EnhiDecember31,1991,1993, and 1992 1994 1993 1992 l-(Thousands) j Cash Flows From Operating Activities:

Operating income

$ 145,374

$ 144,399 $ 136,192 Adjustments to reconcile operatingincome to net cash provided by operating activities:

~ Depreciation and amortization 86,660 86,913

' 85,602 Other Income 50-1,850 33 Changes in assets and liabilities:

Accounts receivable, net 2,758 (7,051)

(4,692)

Inventories (17,245)

'17,489 -

(11,437)

Prepaid erpenses 301 (326)

-70 Other deferred debits 3,473 (2,659) -

. (4,380)

' Accounts payable 4,347 1,050 (1,253)

Other current liabilities (7,590)

(6,612) 6,174 Other non<urrent liabilities (569) 16,090 33,244 Net cash provided by operating activities 217.559 -

251.143 239,553 Cash Flows From Investing Activities:

~

Net decrease (increase) in investments 163,356

-106,127 (215,041) -

Interest on investments 20,228 29,379 39,769

. Net cash provided by (used in) investing activities 183,584 135,506:

(175,272)

Cash Flows From Noncapit J Related Financing Activities:

Distribution to the Statt of South Carolina (6,157)

(5,997)

- (5,815)

Cash Flows From Capital &-latei Financing Activities:

Proceeds from sale of bonds 977,955 544,388

- (Additions) retirements of reacquired debt (544)

(5,205) 310 Net commercial paper proceeds (repayments) 10,450 (13,500)

(2,250) =

Repayment and refunding of bonds (31,162)

(964,183)

(227,858)

Interest paid on borrowings (156,503)

(183,548). (167,613)

Construction and betterments of utility plant (182,160)

(240,513)

(235,279)'

. Debt issuance costs (739)

(15,021)

(7,699)

Other (3.225).

(3,148)

(3,052)

. Net cash used in capital-elated financing activities (363,883)

(447,163)

(99,053)

Net Increase (Decrease) in Cash and Cash Equivalents 31,103 (66,511)

(40,587)

Cash and Cash Equivalents at the Beginning of the Year 121,985 188,496 229,083 Cash and Cash Equivalents at the End of the Year 5 153,088 5 121,985 $ 188,496

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]994 1993 1992 (Thousands)

Reconciliation of Cash and Cash Equivalents:

Cash and investments held by trustee (designated)

$ 291,878

$ 440,427

$ 607,112 Cash and investments held by trustec (undesignated) 51,778 50,794 46,536 Bond funds - current portion 106,415 90,031 99,205 Less investments, not considered cash and cash equivalents 296,983 459,267 564,357-Cash and cash equivalents at the end of the year 5 153,088

$ 121,985

$ 188,496 The accompanying notes are an integral part of these financial statements.

4f

N';TES TO FINANCIAL STATEMENT 3 Noir 1 Summary of Significant Accounting Policies:

construction of a regional water system. The Authority executed a contract with the lake Mouhric Water Agency, a joint municipal A - Reporting Enra.y-The South Carolina Public Serv.ue Authon.ty water system conusung ofthe folhiwing members: L,.iryofSummerville (the Authon.ty), a component unit of the State of South C.arolina, was Comm..ission of Public Works, Town of Moncks Corner Comm..imon created in 1934 by the State 1.egislature. T.he Board of Directors is of Public Works, L,ity of(,nx>se Creek and the C,ounty of Berkeley.

appointed by the Governor of South L,amt.ma. The purimse of the 1.he 12ke Mouline Water Agency w. l purchase all of the capacity of d

Authority is to provide elecinc power and wholesale water to the the water system and sell such capacity to the four members. The i

people of South Carolina. Capa.alprojects are funded by bonds u. sued i

water system commenced... l operan.on on October 1,1994.The mma by the Authon.ry and. internally generated frnds. The Board of construction costs incurred as of December 31, 1994 totalled Directors sets rates charged to customers to pay debt service and approximately $35,561,000.

operating expenses and to provide funds required under bond covenants, g,,,3 Costs to be Recovered from future Revenue:

B - 5)nem oplaounts -The accounting records of the Authority are in accordance with generally accepted accounting principles applicable The Authority's electric rates are established based upon debt to governmental entities (Note 12) and are maintained substantially service and operating fund requirements. Straight-line depreciation is in accordance with the Uniform System ofAccounts prescribed by the not considered in the cost of service calculation used to design rates.

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Federal Energy Regulatory Commission (FERC) and the National The differences between debt principal maturities (adjusted for the Association of Regulatory Utility Commissioners (NARUC) as

• IIc'ts of premiums, discounts and amortizations of deferred gains appliable.

and losses) and straight-line depreciation are recognized as costs to be C - Uribry Mani-Utility plant is nsorded at cost, which includes recovered from future revenue.The recovery of outstanding amoums materiak, labor, overhead, and interest cap tahzed during construction.

associated with costs to be recovered from future revenue will coincide Capitalized interest was $27,149,000 in 1994,521.523,000 in 1993, with the retirement of thc outstanding long-term debt ofthe Authoriry.

and 514.020,000 in 1992.The costs ofrepairs and minor replacements Note 4 Cash and Investments Ileid by Trustee (Designated):

are charged to appropriate operation and maintenance expense accounts. The costs of renewals and betterments are capitalized. The Unexpended funds from the sale of bonds, debt service funds, original cost of utility plant retired and the cost of removal less salvage other special funds, and cash and investments are held and maintained are charged to accmnulated depreciation.

by trustees and their use designated in accordance with applicable D - Depwi.nion - Depreciation is computed on a straight-line basis provisions of various trust indentures, bond resolutions, lease over the estimated usef d lives of the various classes of the plant.

agreements, and thc Enabling Act included in the South Carolina law.

Annual depreciation provisions, expressed as a percentage of average Such funds consist principally ofinvestments in government securities.

depreciable utility plant in service, were approximatcly 3.3% for each EfTective January 1,1994, the Financial Accounting Standards Board of the threeyean in the period ended Detember 31,1994. Amonization Statement No. I 15 was adopted.This statement requires investments of capitahied leases is also included in depreciation expem to be classified into one of three categories: trading, held-to-maturity E Rewnue hgnnion andFue/ Cosn-Substantially all wh, _ sale and or available-for sale.The Authority's investments are all classified as industrial revenun are billed and recorded at the end ofeach month.

either held-armaturity or available-for sale. As required by this Revenues for electricity delivered to retail customers which have not statement, investrnents classified as held-to-matunty are carried at been billed are accrued. Fuel costs are reflected in operating expenses amonized cost. Securities categorized as available-for-sale are carried as fuel is consumed.

at market value with the net unreahzed gain or loss offset against F - Bond Asuame Cosn - Unamortiicd debt discount, premium and accumulated earnings reinvested in the business.

expense are amonized to income over the terms of the related debt As of December 31,1994, the Authority had held-u> maturity issues. Unamortized gains or losses on refunded debt are generally investments carrint at amonind cost of $84,665,000 and available-deferred and amortized to income over the terms of the refunding for-sale investmen ts carried at fair market valuc of $316,706,000.The debt issues.

gross unrealized holding losses totalled $521,000 on the held-to-G - Cad andCoh fquindenti-For purposes of the statements ofcash maturity securities. The gross unrealized holding gains totalled flows, the Authority considers highly liquid investments with original

$183,000 and gross unrealized holdinglosses totalled $7.669,000 on maturities ofless than three months and cash on deposit with financial the available-for-sale securities, included in the Authority's available-instinuions as cash and cash equivalents.

for4 ale investments carried at fair market value are nuclear l i - Staie Diuribution -The distribution to the State ofSouth Carolina decommissioning funds of $26,040,000 with related unrealized is determined utilizing a formula requireJ under the 1949 Indenture holdmg losses of $5,076,000. These unrealized holding losses are which a based nsentially on operating cash tiows and mandatory reflected in the decommissioning liability and not as a separate reserve requirements. Such calculation vario substantially from component of accumulated earningi rcinvested in the bmincas.

reinvested earnings for the year principally due to costs to be recovered All the Authority's investments with the exception of decommis-from future revenue and working capital requirements.

sioning funds are limited to a maturity of ten years or less. For the year 1 - Raia@ations-Certain prior year amounts have been reclassified ended December 31,1994 ahe Authority had proceeds of $ 12,153,000 to conform to the current year piesentation.

from sales of available-for-sale securities and realized $31,000 ofgains and 518,000 oflosses in connection with these sales.These gains and Note 2 Regional Water System:

lossa were computed as the difference between the pmceeds and in 1992, the Authontis Board of Directors authorized the 1,pecifically idennfied arnonized cost per security.

E

Cash - Cash is categorized as folknys: Category 1 includes bank the cost of the repurchasc agreement. Securities underlying repurdiase balances entirely covered by federal depository insurance. Category 2 agreements are delivered by broker / dealers to the Authoriry's trust indudes bank balances that are uncollateralized or collateralized with agents. At December 31,1994, the Authority's repurchase agreements securities pledged to the Authority by pledging financial institutions totalled $92,754,000.

but not held in the Authority's name.

The Authoriry's investments are categorized to give an indication Inmtmena - Trust indentures and resolutions authorize the Authority of the level of risk assumed by the Authority at year-end. Category to invest in obligations of the U.S. Treasury, agencies, instrumentalities, 1 includes investments that are insured or registered or for which the and certificates of deposit. The Authority's investments consist of securities are held by trust agents in the Authority's name. Category U.S. Government securities, certificates of deposit, and repurchase 2 includes uninsured certificates of deposit which are collateralized agreements. The Authority requires that securities underlying with securities pledged to the Authority by pledging fmancial repurchase agreements have a market value of at least 102 percent of institutions but not held in the Authority's name.

1994 Investments Cash Total Category Category Category Category Carrying Market 1

2 1

2 Value Value (Thousands)

Cash and Investments licid by Trustee (Designated)

General Improvement Funds.

$ 53.238

$ 1.300

$ 33 80

$ 54,651

$ 54,651 Debt Service Reserve Funds.

128,179 0

0 1,030 129,209 129,209 Other Special Funds.

76,782 0

0 425 77,207 77,207 Funded !nterest.

30,811 0

0 0

30,811 30.295 Total Cash and Investments i f eld by Trustee (Designated).

$ 289,010

$1,300

$ 33

$ 1,535

$ 291,878

$ 291,362 Cash and Investments

!!cid by Trustec (Undesignated)

Revenue Fund..

$ 53.155 0

$ 0 (5.875)

$ 47,280

$ 47,280 Special Reserve Fund.

4,307 0

100 91 4,498 4,498 Total Cash and Investments licld by Trustee (Undesignated).

5 57,462 0

$ 100

$ (5,784)

$ 51,778

$ 51,778 1

Bond Fund,- Current Portion Interest.

$ 24,421 0

$ 0

$ 36.011

$ 60,432

$ 60,432 Bond Principal..

28,797 0

0 617 29,414 29,409 Funded Interest.

497 0

0 15,634 16,131 16,131 lxase.

438 0

0 0

438 438 Total ibnd I unds - Current Portion.

$ 54,153 0

0

$ 52,262

$ 105.415

$ 106,410

I

.Il 1993 i

Investments Cash Total Category Category Category Category Carrying Market 1

2 1

2 Value Value (Thousands)

Cash and Investments lleld by Trustee (Designated)

General Improvement Funds -

$ 57,568

$ 1,650

$ 55

$ 205 5 59,478 5 59,292 Debt Service Reserve Funds..

162,729 0

0 55 162,784 172,038 Other Special Funds ;

157,066 0

0 28 157,094 157,151 Funded Interest -

61,067 0

0 4

61,071 61,908 Total Cash and Investments Held by Trustee (Designated).

$ 438,430

$ 1,650

$ $5

$ 292

$ 440,427 $ 450,389 Cash and Investments Held by Trustee (Undesignated)

Revenue Fund..

$ 44,764 0

$ 0

$ (2,098)

$ 42,666 5 42,643 Spaial Reserve Fund.

7,616 0

100 412 8,128 8,143

-Toral Cai and Investments Held by Trustec (Undesignated).

$ 52,380 0

$ 100

$ (1,686)

$ 50,794

$ 50,786 Bond Funds - Curreni Portion Interest.

$ 24.120 0

$ 0

$ 36,686 5 60,806 5 60,806 Bond Principal.

16,245 0

0 0

16,245 16,247 Funded Interest.

12,542 0

0 0

12,542 12,542 lease..

438 0

0 0

438 438 Total ibnd Funds - Current Portion.

$ 53,345 5

0 0

$ 36,686

$ 90,031 5 90,033 E

Mec5 long-Term Debt Outstanding:

The Authority's long-term debt at December 31,1994 and 1993 consisted of the following:

December 31, 1994 1993 (Thousands)

Electric Revenue Bonds - Priority Obligations: (matu+e through 2006)

Interest rate 4.10%..

5 42,100

$ 44,705 Electric System Expansion Revenue Bonds: (mature through 2022)

Interest rates vary from 5.30% - 8.60%

1,079,455 1,099,525 Capitalized leue obligations: (mature through 2015)

Interest rates vary from 2.00% - 5.00%

49,448 52,672 Revenue Bonds: (mature through 2032)

Interest rates vary from 3.40% - 7.00%

1,370,910 1.378,715 Totallong-Term Debt..

2,541,913 2.575.617 Current Portion -long-Term Debt.

54,612 33,704 Total long-Term Debt - Net,

$ 2,487.301

$ 2,541,913

- hiaturities oflong-t'erm debt through 1999 are as follows:

Priority Expansion Capitalized Revenue Obligations Bonds leases Bonds Total Year Er. ding December 31, (Thousands) 1995.

$ 2,720

$ 21,405

$ 3,318

$ 27,170

$ 54.613 1996.

2,845 23,165 3,418 10,670 40,098 1997-2,975 19,160 3,527 18,380 44,042 1998.

3,105 19,980 3,609 15,800 42,494 1999.

3,245 14,960 3,328 23,270 44,803 Tota! --

$ 14,890

$ 98,670

$ 17,200

$ 95,290

$ 226.050 The fair value of the Authoriry's debt is estin.ated based on the in 1993, the Authority issued $385,125,000 in 1993 Refunding quoted market prices for the same or similar issues or on the current Series A&B Bonds and $631,360,000 in 1993 Refunding Series C rates ofTered to the Authority for debt with the same remaining Bonds. These refundings reduced ti.e Authoriry's total debt senice maturities. Based on the borrowing rates currently available to the over the life ofits bonds by approximately $66,501.000, resulting in Authority for tax-exempt bonds and other debt with similar terms and an economic gain over the life of the bonds of approximately average maturities, the fair value ofdebt is approumately $2.5 billion

$30,249,000.

and $2.85 billion at December 31,1994 and 1993, respectively.

The Authority refunds and defeases debt primarily as a means of reducing debt service, thereby postpcming or reducing future rate adjustments.

es

I Refunded amounts outstanding, original loss on refunding, and the unamortized loss at December 31,1994 are as follow:

Refunding have Refundal Bond Refunded Amount Original Unamonized Ourmadmg Ims Inse (Thousands) 1985 Refunding 5150,000 of the 1982 Series B 5

5 30,570 5 1,163 Cash Defcasance 5 20,000 of the 1982 Series A 2,763 2,026 1986 A&B Refunding 5 42,725 of the 1980 Series A 5 42,000 of the 1981 Series A 5 61,000 of the 1981 Series B 5 4,420 of the 1981 Series C

$ 7,820 of the 1982 Series A 5 9,010 of the 1982 Series B 43,736 2,939 1986 C&D Refunding

$280,275 of the 1982 Refunding Series 97,109 81.689 3

1987 A Refunding

$160,510 of the 1985 Refunding Series 160,510 48,038 36,824 1988 A Refunding 5 18,220 of the 1980 Series A 5 18,315 of the 1981 Series A 5 9,110 of the 1982 Refunding Series 5 5,000 of the 1985 Refunding Series 5120,890 of the 1985 A Refunding Series 125,890 28,644 17,950 1991 A,B&C Refunding &

5 4,855 of the 1980 Series A Improvement Series 5 8,075 of the 1981 Series A 5 13,500 of the 1985 Series 5 32,500 of the 1985 A Refunding Series 32,500 4,856 1,430 1992 A Refunding 5 3,370 of the 1985 Refunding Series

~~ '~ ~~

$ 5,405 of the 1985 A Refunding Series

$ 100,010 of the 1986 Refunding Series A 5 22,555 of the 19fs8 Refunding Series A 5 15,370 of the 1991 Refunding Series B 5 12,085 of the 1991 Series D 158,795 42,188 37,615 e

1993 A&B Refunding 5 86,180 of the 1974 Series 5 93,360 of the 1979 Series A 5 4,980 of the 1985 A Refunding Series 5 14,935 of the 1986 Refunding Series A 5 23.675 of the 1986 Refunding Series B 5135,705 of the 1991 Refunding &

Impiovement Series B and C 179.295 38,870 38,870 1993 C Refunding

$167,660 of the 1977 Refunding Series 5

900 of the 1985 Refunding Series 5 2,390 of the 1985 A Refund;ng Series 5 6,365 of the 1986 Refunding Series A 5 14,905 of the 1988 Refunding Series A 5100,110 of the 1991 Refunding &

Improvement Series B and C 5279,905 of ahe 1991 Series D 404,575 72,311 70,457 Total 5],061,565 5 409,085 5 290,963 The Authority's bond indentures prtwide for certain restrictions.

Authority's electric system and all necessary repairs, replacements, the most significant of which are:

and renewals thereof.

1.The Authority covenants to establish rates sufficient to pay all 2.The Authority is restricted from issuing additional parity bonds debt service, required lease payments, capital imprtwement fund unless certain conditions are met.

requirements and all costs of operation and maintenance of the As of December 31,1994, the Authonry is in compliance with all debt covenants.

a

Note 6 Commrecial Paper and Mini-Bonds:

used to support the Authority's issuance ofcommercial paper. There hmowings under the agreement during 1994 or 1993, were n ne Board of Directors has authorized the issuance ofcommercial paper not to exceed $250,000,000. The paper is issued for valid in 1988 and 1989 the Authority is::ued bonds (Mini-Bonds) in corporne purposes with a term not to exceed 270 days. For the years im 11 denominations which are due on demand by the registered wner under a Mini-Bond Resolution. In 1990 the Revenue Bond ended December 31,1994,1993, and 1992, the information related to commercial paper was as follows:

Resolution was adopted and all senior debt induding the existing 1983 and 1989 Mini-Bonds were frozen exapt for Refunding purposes. Under the Revenue Bond Resolution, small denomination 1994 1993 1992 bonds due on demand (Series M Bonds) were issued.The pledge of revenues securing Revenue Bonds is junior and subordinate to the Mective interest raie pledge ofrevenues securing the Priority Obligations, Electric System (at December 31) 3.99 %

2.52 %

2.69 %

Exparsion Revenue Bonds. and the 1988 and 1989 Mini-Bonds and capital lease obligations, but is superior to the lien and pledge of Average annual amount revenues securing the Commercial Paper, payments to the outstanding 5108,572,')00 $117,700,000 $115,410,000 Contingency Fund, Capital Improvement Fund, Special Reserve Average annual matunty 62 days 52 days 62 days Fund and she payments to the State.

iIter i At December 31,1994, the Authority had additional Revolving Credit Agreements with NationsBank totalling $40,000,000.These te 2.90%

2.40 %

2.96 %

agreements are used to provide liquidity for the put feature on all At December 31,1994 the Authority had a Revolving Credit "E. Mini-Bonds. There were no borrowings under these agreements m 1994 or 1993.

l Agreement with NatiomBank for $250,000,000. This agreement is Commercial Paper and Mini Bonds outnanding at December 31, are as fo!!aws:

1994 1993 4

~

(Thousands)

Commercial Paper 5 118,700

$ 108,250 Mini Bonds:

1988 Series, bearing interest at 7.75% and due 2003..

16,647

$ 16,622 1989 Series, bearing interest at 7.00% and due 2004..

I8,95 18,615 Total Mini-Bonds 5 35.522 5 35,237 Revenue Bonds (Series M):

1990 Series bearing interest at 7.30% and duc 2005, and 2006.

5 22,602

$ 22,185 1991 Series bearing interest at 6.875% and due 2007, and 2008..

28.405 28,030 1992 Series bearing interest at 6.25% and due 2007,2008, and 2009 40.231 39,816 1993 Series bearing interest at 5.35% and due 2010,2011, and 2012.

29,740 29,597 Total Revenue Bonds (Series M).

5 120,9'8 5 115,628 Total Mini-Bonds and %enue Bonds (Series M) 5 156.sna

$ 154,865 Total Commercial Paper, Mini-Bands, and Revenue Bonds (Series M) -

t 2'5,200

$ 263.115 Nore 7 Summer Nudear Srarion:

Nuclear Station, and the Authon.ty is obligated to pay its ownerslu.p The Authority and South Carohna Electric and Gas (SCE&G) are share of all costs relating thereto.The Authority receives 331/3% of parties to a joint ownership agreement providing that the Authoriry the net electricity generated. At December 31,1994 and 1993, the and SCE&G shall own the Summer Nudear Station with undivided plant accounts included approximately 5440,604,000 and interests of 331/3% and 66 2/3% respectively. SCE&G is solely

$438,514,000, respectively, representing the Authority's investment, responsible for the design, construction, budgeting, management, including capitalized interest, in the Summer Nudear Station. For operation, maintenance, and decommissioning of the Summer each of the three years ended December 31,1994,1993 and 1992, 47 tw-.n---.-.

1.

the Authority's operation and maintenance expenses induded associated with replacement energy during the Summer Nuclear

$36,391000,538,772,000 and 541,431,000, respectively, for the Station refueling outages. Defened credits applied to fuel costs Summer Nudcar Station.

during 1994 totaled 5185,000.

Nudear fuel costs are being amortized based on energy expended The Energy Mcy Act of 1992 gave the Department of Energy which indudes a component for estimated disposal costs of spent (DOE) the authority to assess utilities for the decommissioning ofits nuclear fuel. This amortization is induded in fuel expense and is facilities used for the enrichment ofuranium induded in nudear fuel reccwcred through the Authority's rates.

costs. In order to decommission these facilities the DOE estimates SCE&G has an on-site spent fuel storage capability until at least that it would need to charge utilities a total of 5150,000,000, indexed 2008 and expects to be able to expand its storage capacity to for inflation, annually for ftfteen (15) years based on enrichment accommodate the spent fuel output for the life of the plant through services used by utilities in past periods. Based on an estimarc from rod consolidation, dry cask storage or other technology as it becomes SCE&G covering the fifteen years, the Authority 's remaining one-available. In addition, there is sufficient on. site storage capacity over third share of the liability at December 31,1994 totals $1,961,000, the life of Summer Nuclear Station to permit storage of the entire Such amount has been deferred and will be recovered through rates reactor core in the event that u>mplete unkiading should become as paid. These costs are induded on the balance sheet in Deferred desirable or necessary for any reason.

Credits and Other Noncurrent Liabilities.

The Nudear Regulatory Commission (NRC) has published final The maximum liability for public claims arising from any nuclear regulations on decommissioning of nuclear facilities that require a incident has been established at 59.4 billion by the Price-Anderson licensee ofa nuclear reactor to provide minimum financial assurance Indemnification Act. This 59.4 billion would be covered by nudcar ofits ability to decommission its nudcar facilities. In compliance liability insurance of about $200 million per site, with potential with the applicable NRC regulations, the Authority established an retrospective assessments of up to $79.275 million per licensee for external trust fund and began making deposits into this fund in each nudcar incident occurring at any reactor in the United States

,9 September 1990 In addition to pnwiding for the minimum (payable at a rate not to exceed $10 million per incident, per year).

requirements imposed by the NRC, the Authority makes deposits Based on its one-third interest in Summer Nudcar Station, the into an internal ftmd in the amount necessary to fund the difference Authority would be responsible for the maximum assessment of between a site-specific decommissioning study completed in 1991 526.425 million, not to exceed appmximatdy S3.3 million perincident, and the NRC's imposed minimum requirement. Santee Cooper's per year. This amount is subject to further increases to reflect the effect one-third share of the estimated decommissioning costs of the of (i) inflation, (ii) the licensing for operation of additional nudear Summer Nudear Siation equals appmximately $76.266,000 in reactors and (iii) any increase in the amount of commercial liability 1990 dollars. The Authority accrues for its share of the estimated imurance required to be maintained by the NRC.

decommissioning costs over the remaining life of the facility. nese Additionally, SCE&G and the Au thority maintain with American costs are being recovered through the Authority's rates.

Nuclear Insurers (ANI) and Nuclear Electric Insurance Limited Based on current decommissioning cost estimates developed by (NEIL) 5500 million primary and 51.4 billion excess property and SCE&G, these funds, which totalled approximately $26,076,000 decontamination insurance to cover the costs of deanup of the (adjusted to market) at December 31, 1994, along with future facility in the event ofan accident. In addition to the premiums paid j

deposits into both the external and internaldecommissioning accounts on the excess policy, SCE&G and the Authority could also be and investment earnings, are estimated to provide sufficient funds for assessed a retroactive premium, not to exceed 7.5 times the annual the Authority's one-third share of the totd decommissioning costs.

premium, in the event ofproperty damage to any nudear generating Due to stress corrosion cracking, the steam generators at the facility covered by NEIL Based on the current annual premium and Summer Nuclear Station had to be replaced. SCE&G had filed suit the Authority's one-third interest, the Authority's maximum retmactive against the manufacturer of the generators seeking damage for the p-mium would be $4.1 million.

replacement of the generators.

The Authority is self-insured for any retroactive premium in January 1994, SCE&G and the Authority reached a settlement asses,ments, daims in excess ofstated co trage, or cost increases due agreement with the manufacturer of the steam generators resoiving to the purchase of replacement power.

the dispute involving the steam generators. Tenns of the senlement will remain confidential and there will be no n,aterial adverse impact A,m # Leases:

on the Authon.ry. An order dismissing this suit was entered by the judge on January 12,1994. The generators were replaced in 1994.

The Authority has capital lease contracts with Central Electric The supplier under ihe original uranium supply contract breached Pbwer Cooperative, Inc. (Central), ccwering a steam electric generating the contract in 1975 due to uranium market conditions. SCE&G plant, transmission facilities, and various other facilities. He lease initiated action seeking specific performance of the comract pr wisions, terms range from one to twenty-one years. Quarterly lease payments and a fmal settlement was reached and approved by all p2rties in April are based on a sum equal to the interest on and principal of Central's 1980. By terms of the settlemem, the Authority has received indebtedness to the Rural Electrification Administration for funds approximately 510.243,000 in cash as partial setdement of the borrowed ro construci the above-mentioned facilities.The Authority lawsuit. Additionally, the agreement pnwides fordelivery ofuranium, has options to purchase the leased properties at any time during the long-term deliveries ofequipment and services (induding conversion period of the lease agreements for sums equal to Central's indebtedness and fuel fabrication) at a discount.The cash and discouras recei ed remaining outstanding on the properties at the time the options are (and related interest earned) which approximated 517,429.000, were exercised or to return the properties at the termination of the lease.

recorded as deferred credits. During prior refueling outages deferred The Authority plans to exercise each and every option to acquire credits and rdated interest were used to offset additional fuel costs ownership ofsuch facilities prior to expiration of the leases.

4e

Furure minimum lease payments on Central leases, at December Nr/uur Commitmena-ne Authority has contracted for long-term 31,1994 were; coal purchases under contracts with outstanding minimum obliptions at December 31,1994 as follows:

Years ending December 31:

Amount frhousands)

Years ending December 31:

Amount (Thousands) 1995..

$ 5.233 1996-5,229 1995.

$ 104,476 1997 5J29 1996 104,476 1998.

5,198 1997 104,476 1999.

4,802 1998.

85,074 Thereafter.

41,602 1999-85,074 Thereafter -

282,552 Total minimum lease payments 67,293 l

Irss amounts representing interest.

17,845 Total.-

$ 766,128 Balance at December 31,1994 -

$ 49,448 The Authority's outstanding minimum obliptions under existing Property under capitalized leases and related accumulated Purchased power contracts as of December 31,1994, were amortization included in utility plant at December 31,1994 totalled approximately $117.1 million. The terms of the contracts range

$99,628,000 and $59,002,000, respectively, and at December 31, from I to 41 years.

1993 totalled $100,207,000 and $56,672,000, respectively.

HeAuthorityhascommitmentsofapproximately$140.3 million Operating lease payments during the years ended December 31, for its one-third share under the joint ownership agreement with 1994,1993, and 1992, totalled $1,116,000, $753,000, and SCE&G for the purchase, conversion, enrichment and fabrication of

$1,02),000, respedively.

uranium.

Clean Air Act-The Authority endeavors to ensure that its facilities Norr 9 Contract with Central Electric Power Cooperative, Inc.t comply with applicable environmental regulations and standards.

Congress has promulgated comprehensive amendments to the Ibwer supply and transmission services are provided to Central in Clean Air Act, including the addition of a new federal pmgram accordance with a power system coordination and integration relating to acid precipitation. The Authority has evaluated the agreement. In addition, the Authority will be the sole supplier of potential impact of this legislation, including new limits on the Centrafs energy needs excluding energy Central receives from the allowable rates of emission of sulfur dioxide and nitmgen oxide.

Southeastern Ibwer Administration and SCE&G.

While the legislation contains a number ofnew restrictions, the most significant new requirements, relating to acid precipitation, would Note 10 Commitments and Contingencies:

n t begin to impact the Authority until the year 2000.

Under the Clean Air Act, among other things, specific reductions Buder- %e Authoriry's capital budget provides for expenditures of in sulfur dioxide and nitmgen oxide emissions from fossil-fueled appmximately $ 139,454,000 during the year ending December 31, generating units will be required in two phases. In general Phase I 1995, and $168,085.000 during the two years thereafter. Rese compliance must be implemented by January 1,1995 and Phase Il projects will be fmanced by internally generated funds and additional compliance by January 1,2000. Specific regulations, rules and bormwings.

procedures for implementing the Clean Air Act are currendy being future Genemrion -The Authority's Board of Directors approved the pmmulpted by the EPA. ne Authority currently projects it can construction ofa second 540-mepwart coal-fueled electric generating meet Clean Air Act compliance with its exisung units but may need unit at the Cmss Plant.

envimmnentally dispatch the order of operation. The Authority The estimated cost ofconstruction is expected to total approximately has installed continuous emissions monitoring equipment at a cost of

$460.7 million which includes $417.9 million for the generating 55.3 million and estimates that it will spend 58.1 million for low nitmus xide burner technology by the year 2000.

unit, $25.9 million for related trasmission facilities,59.9 million for coal cars and $7.0 million for the initial coal stockpile. On September 12.1994 at 12:03 a.m., Cross Unit I was synchronized to the Santee Eng Ailh Aa op992 - The Energy IWicy Act of 1992 (Ency Cooper transmission grid and pmduced its first test generation.

Act) pmm tes energy c&iency, ahernative fuel use, and increased Commercial operation is expected to commence in May 1995.

'"*P#'I'i " f Ifi' "'iII'i'8 ""d *iII b8 5i nifi' ant impact on S

the utility industry. Under the Energy Act, independent Power Producers (IPPs) are allowed access to a utility's transmission lines to sell their electricity to other utilities, thus enhancing their incentive to build generation plants for the utility's large industrial and commercial customers. At this time, the Authority is not able to determine what impact open transmission access will have on the financial results of the Authority.

49

1, Irinyah Turbine Fire - On December 30,1994, an explosion and on an actuarially determined basis. As of December 31,1994, there subsequent fire severely damaged the Winyah Unit I turbinegenerator were 37 active participants and 23 retirees. He accrued liability at causing apnroximately $25 million in damage to the 270-megawatt December 31,1994,1993 and 1992, was approximately $3,572,000, unit. He turbirgenerator will be repaired and is expected to be out

$3,255,000, and $2,956,000, respectively.

of service for 12 mouths. Insurance carried by the Authority should insulate ratepayers from any impact of paying for repairs, with the Nore 12 Other Post-Retirement Benefits:

exception ofthe $405,000 deductible. Because the new 540-megawatt unit at Cross is ahead of schedule, the Authority does not anticipate The Authority provides cenain health, dental and hfe insurance dEiculty in meeting customer load.

bene 6cs for retired employees. Substantially all of the Authority's employees may become eligible for these benefits if they retire at any age with 30 years ofservice or at age 60 with at least 20 years of service.

Nore 11 Retirement Plan:

Currently, approximately 270 retirees meet these requirements. The f the health, dental and life insurance bene 6ts are recognized as cmt Substantially all Authority full-time employees must participate in one of the components of the South Carolina Retirement System expense as the premiums are paid. For the years ended December 31, (System), a cost-sharing, multiple-employer public employee 1994,1993 and 1992, these costs totalled $558,000, $515,000 and retirement system. The payroll for employees covered by the System

$371,000, mpeaively.

for each of the years ended December 31,1994, I993 and 1992, was Duringtheir first ten years ofservice, full-time pennanent employees

$69,705,000, $65.727,000 and $61,558,000, respectively.

can e m up t 15 days vacation leave per year. After ten years of Vested employees who retire at age 65 or with 30 years ofsenice at senice, employees earn an additional day vacation leave for each year any age are entitled to a retirement benefit, payable monthly forlife.

f senia man until they reach the maximum of 25 days per year.

The annual benefit amount is equal to 1.82 percent of their average Employees earn annually a half day per month plus three additional Gnal compensation times years of service. Benc6ts fully vest on days at year end for sick leave.

reaching 6ve years ofservice. Reduced retirement benefits are payable Empk>yees may carry forward up to 45 days of vacation leave and as early as age 55. The Syuem also provides death and disability 180 days of sick leave from one calendar year to the next. Upon benc6ts. Benents are established by state statute.

terminati n, the Authority pays employees for accumulated vacation Employees are required by state stature to contribute 6 percent of leave at the pay rate then in effect. In addition, the Authority pays salary. The Authority is required by the same stature to contribute empbyees u'pon retirement 20 penent of their accumulated sick leave 7.55 percent of total paymll. The contribution requirement for each at the pay rate then in effect. nese costs are carried as a deferred debit of he years ended December 31,1994, I993 and 1992. was and a liability on the balance sheet and will be recovered through rates

$5,370,000, $5,063,000, and $4,742,000 from the Authority and as they are paid.

$4,183,000, $3,944,000, and $3,689,000 from empk yces.

An actuarial valuation is performed for the System annually.

N,re 13 Credit Risk and Major Customers:

According to the South Carolina Retirement System's June 30,1994 linancial statements, the pension benefit obligation for retired and Concenuations of credit risk with respect to the receivables are active members was approximately $13.8 billion.The amortized cost limited due to the large number of customers in the Authority's ofassets of the System was appmximately $ 10.4 billion.The unfunded cusmmer base and their dispersion across different industries. He pension obligation was approximately $3.4 billion. The pension Authority maintains an allowance for uncollectible accounts based benent obligation is a standardized measure of the present value of up n the expected collectibility of all accounts receivable.

pension benefits, adjusted for the effects ofprojected salary increases, Sales tw maj r cusmmers f r the years ended December 31, estimated to be payable in the future as a result ofemployee senice to date. The measure, which is an actuarial present value of credited projected benefits, is intended to help users assess the System funding status on a going-concern basis, assess progress made m accumulating sufTicient assets to pay benef ts when due, and make comparisons (Thousands) among pubh.c employee retirement systems. The System does not make separate measurements of assets and benefits payable for Central Electric Power individual employers. The Authority's contribution represented Cooperative, Inc.

5 278.000

$ 277,000 $ 236,000 approximately one and a half percent of the total contribution to the Alumax of South System.

Carolina, Inc.

5 71,000

$ 72,000 $ 82,000 Ten-year historical trend information showing the System's progress in accumulating sufficient assets to pay benefits when due is presented in the System's June 30,1994 Comprehensive Annual Financial Report.

The Authority also prmides deferred compensation benefits to certain emph>yns who are chgible to retire with ten years of service and have reached the age of 50. The cost of these benefits is accrued

._l I

AUDIT COMMITTEE CHAIRMAN'S f ETTER The Finance-Audit Committee of the lloard of Directors is composal of five independent directors: Iron S. Goodall, chairman; li.L. Hendricks: D. Gene Rickenbaker; J. Mac Wahers; and Johnnie (Joe) Young. The Committee meets monthly with members of management and Internal Audit 40 review and discuss their activities and responsibilities.

The Finance-Audit Committee oversees Santee Cooper's fmancial reporting and internal auditing pmcesses on behalfof the floard of Directors. Monthly briefings on the fmancial statements and periodic reports from management and the internal auditors pertaining to operations and representations were received. In fulfilling its responsibilities, the Commit-tee also reviewed the overall scope and specific plans for the respective audits by the internal auditors and the independent public accountant.The Committee discussed the Company's financial statements and the adaguacy ofits system of internal controls.

The Committee met with the independent public accountant and with the General Auditor, without management present, to discuss the results of the examination, the evaluation of Santec Cooper's internal controls, and the overall quality of Santec Cooper's fmancial reponing.

W f

Iron S. Goodall, Chairman Finance-Audit Committee

COARD OF DIRECTORS 9

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m John S. Rainey Chairman p.

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Robert D. Bennett leon S. Goodall First \\' ice Chairman Secondl' ice Chairman Represents the Electric Cooperathes Represents 2nd CongressionalDistrict D

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_.. 'i Juanita W. Brown Ralph H. Hlh kepresents ist Congirisiona! District Represents Horry County I

t086 C&O 1987 A 1988 M 1984 A 1985 M 1990 M 1991 A.84C 1991 M REFUNDING REFUNDING MINI BOND REFUNDfMG MIM-BOND MINI-COND REFUNDING &

MINI 80ND 1991 D SER)ES' 8ERIES SERIES SERIE8

$ERIES SERIES IMPROVEMENT SERIES SERILS SERIES Int.Rais Amt.

Int Rate Amt int. Rate Amt.

Int. Rate Amt.

tnt Rate Amt.

Int. Rate Amt.

Int. Rate Amt int. Rate Amt.

l620 1.095 5 90 1.080 7.00 1.840 6.00 18 480 6 40 1.160 5 90 1.140 7.00 3.895 6.60 1,235 6.00 1.205 7.00 4.155 5.30 4,730 6.70 1.320 6.10 1.280 7.10 6.635 6% 2.935 5.50 4 980 6.80 1,400 6% 1.350 720 7.110 6.30 3.120 5 65 5.255 6 90 1.505 6 40 1.435 7.30 7.650 6.40 4205 5.80 5.550 7.00 1.605 6% 2.875 7 40 8220 7.05 1.715 6% 4280 7.40 13.520 6.70 6240

. 10 3.510 6 60 4.575 7% 16.547 7.50 330 7.10 4.920 6 % 20 390 7.50 365 7.00 18.975 (1) 7.10 5.265 6% 16.795 7.60 5,385 7.30 15 409 720 5,625 6% 2.350 7%

320' 7.30 7,193 (1) 7.00 3.760 6 40 6.590 7.20 6.000 6% 2.525 7%

340*

6'4 20.759 7.00 6.415' 6% 2.715' 7%

365*

6% 7.646 (1) 7.00 6.850' 6% 2.925' 7%

395*

7.00 7.310' 6%

3.140*

7%

420*

1.00 6.025' 6% 3.380*

7%

460*

6.50 7,010' 7.00 6.430' 6% 3,625' 7%

490*

6 50 7.470*

7.30 6.870*

6 90 3.880*

7%

S25' 6.50 7.955' 7.30 7.915*

6 90 4.150' 7%

7,315' 6.50 8.470*

7.30 8 145' 6 90 4 465*

7%

8.210' 7.30 20.430*

6 90 4,785*

7%

275*

7.30 21 875*

6 90 5.160*

7%

300*

7.30 23 425' 6 90 5.575*

7%

325' 7.30 25 080*

6 90 6.030" 1 % 19.610' 7.30 27.005*

6 90 6.520' 7 % 25.995*

7.30 56.985*

6 00 7.040' 7 % 23 945' 5 % 62.325' 7.00 61.025'

=

6.00 12.120' 6 00 12.850*

6.00 13.620' 6 00 14=435*

6.00 15.300*

- _ ~ _.

329 440 185 695 16.547 148.395 18.975 (1) 22,602 (1) 107.065 28.405 (1) 58.010 i

6.190 6.965 465 2.720 377 363 12.160 1.8 0

0 0

0 37..#60 0

0 251.185 0

291.990 i

1.881 1.897 1.533 335 630 192.660 17.012 188.575 17.471 21.068 370.410 27.158 350.000 at

1992 A 1992 M 1993 A&B 1983 C 1993 M REFUNDING MINI SOND 1992 8 AEFUNDING REFUNDING MINI 8DND TUTAL TOTAL TOTAL SERl[8 SERIES (2)

SERIES SERl[$

SERIES (2)

SERIES (2)

PRINCIPAL REVENUE DEST In* Rate Amt.

Int Rate Amt W. Rate Amt.

Int Rate Amt.

Int. Rate Ant int. Rsta Amt.

MATURRIES (5)

INTEREST (5)

$ERVICE (5) 4 70 1,165 3 40 7.525 51295 128.680 179.975 4.90 1,220 3.60 9.450 36.680 137,110 173,790 5.10 1,280 3.80 12.370 40,515 144.985 185,500 5.30 2.405 d.00 5.480 38.885 148,115 187.000 5% 7,940 420 6.955 41,475 145,511 186.986 5.60 2,385 520 335 4 80 16.995 4.30 4.055 52.890 143.234 19G.124 5.70 22,505 5.30 360 5.00 6.990 4 40 455 52.240 140.652 192.892 5 80 7.400 5 50 380 5.00 9.810 4% 3.625 56.695 137259 193.954 6.00 5,940 5 60 405 520 6 280 4% 12.030 59.852 133.927 193.779 5 70 435 520 10.115 4 % 12,590 78.565(1) 135.720 214 285 (1) 620 6.290 5.80 460 5 30 7,080 4% 6.440 74.454 126.103 200.557 6.20 6180 5 90 490 5 40 10,400(3) 4 % 13,310 68.663 (1) 130,164 198.827(1) 6.20 7,100 6% 10.016 5 90 525 5 50 8.410 4 % 11.755 80.125 117,386 197,511 6 20 7,540 6 % 10.077 6 00 555 5.50 10,920 5.00 18230 77,968 (1) 123.434 201,402(1) 6% 8,005*

6 % 20.138(1) 6 00 $95 5.50 9,765 5.00 1 A70 64.483 (1) 122.122 186.605 (1) 6% 8.515' 6.00 630 5.50 11.480 5.10 19.210(4) 5.35 10.845(1) 76.775 (1) 108.441 185.216 (1) 6% 10.835' 6 00 670 5.50 11.240 5.10 16.740' 5 35 10.893(1) 90.343 (1) 104,364 194.707 (1) 6 % 11.520' 6.00 71 5 5 60 12,100(3) 5 00 19.040' 5 35 8.003 93.853 95.588 189.441 6 % 12265' 6.00 765 5 60 29.300 (3) 5 00 16,645' 104.175 90.190 194.365 6%

1.935*

6.00 810 5.50 38255' 5 00 9255' 91.995 84.343 176.338 6%

2.055' 6 10 865*

5 50 18.905" 5 00 15.825*

91.485 78.646 170.131 6% 2,275*

6.10 920' 5.50 19 880*

5.00 23265*

105.620 72.993 178.613 6% 2,400*

6 10 980-5.50 20.920' 5 00 19,045*

118.450 66.839 185.289 6% 2.570' 6.10 1.045' 5 50 22.000" 5.00 14 055' 119,595 59,908 179.503 6% 0.570*

610 1.115' 5 50 43270*

5 % 18.555' 123.230 52,550 175,780 6%

7.695*

6 10 1.185' 5 50 42.015' 5 % 23.880*

134295 44.614 178.909 6%

6,870' 6.10 1260' 5 50 18.995*

5 % 27.120*

142215 35,965 178180 6 10 1,345*

5 00 29 460' 154.155 26.443 180.598 610 1.430*

5 00 28,595*

30.025 16.664 46.689 610 1.525' 5.00 28.165' 29.690 15.158 44.848 6.10 1.625' 5.00 29.575*

31200 13.622 44.822 6 10 1.730' 5 % 31.055' 32,785 11,987 44.772 6.10 1.845*

5 % 26.585*

40.550 10.405 50,955 SW 21.890' 34.740 8.323 43.063 5 % 23.010' 36.630 6.401 43.031 SW 24.185' 38.620 4.375 42.995 5% 25A?5*

40.725 2.237 42,962 5% 13.030*

13.030 334 13.364 166,360 40.231 (1) 25.000 385,125 629.350 29.741 (1) 2.648.966 (1) 3.024.792 5.673.758 (1) 2.185 274 0

0 2.010 153 149.703 0

0 0

0 0

0 1 242,670 1.326 384 7.021 168.545 39.179 25 000 385.125 631.360 29 510 4.034.318

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SCHEDULE OF REFUNDED DONDS OUTSTANDING As ofDarml>cr 31,1994 (In Thouun&)

CALL DATE JULY 1.1995 JANUARY 1,1996 JULY 1.1998 JULY 1,2001 JULY 1. 2002

- - ~ ' ^

serif 8 1985 RIF 1985-A REF 1988 A REF 1986 A 8 B RfF 1991-B&C REF 1991-D 8

Rate Amount Rate Amount Rate Amount Rate Amount Rate Amount Rate Amount DATI JULT 1 1995 1996 1997 8 80 900 8 60 2.390 4

1998 9 00 1.060 8 70 4.980 1999 9 05 1,160 8 75 5.405 7.80 6.365 2000 9.10 1.150 7.80 13200 2001 7 90 835 6.60 15.370 5.90 5.870 2002 7.90 900 6.00 6.215 2003 9 00 32,500*

8.00 4.695 2004 8 00 5.070 2005 9%

5.000*

8 00 5.475 2006 8.00 5.910

- ~ - - - -

2007 8.10 6.390 7.00 4.025 2008 8.10 6.905 2009 7.00 8.915*

2010 2011 2012 7.00 25.610*

2013 r

2014 2015 2016 2017 2018 2019 8.00 65.565*

2020 7 00 23.675*

2021 9 20 120.890*

7%

37.460*

7.10 135.705*

2022 9% 160.510' 2024 6.50 130.275*

2025 2026 6%

61.560*

2027 2028 2029 2030 2031 6% 149.630' Totals I

per

$169380

$166.165

$37.460

$144 985

$251.185

$291.990 Senes Totals per Cah

$335 945

$37 460

$144 985

$251.185

$291.990 1

• Term Bands

,__e

SCHEDULE OF DONDE OUTSTANDING As of Deamber 31,1994 (In Thouunds')

1985 1985 A 1986 A&B MATURITY 1967 1973 1974 1977 1973 1970 A REFUNDING REFUNDING REFUNDING DAff SERIFS SIRifS SERIES SERIES SE RES SERES SERES' SERIES SERIES JUtV1 int Rate Amt Int Rate Amt.

W Rate Amt Int Rate Amt int Rate Amt.

Int. Rate Amt.

Int Rate Amt.

Int. Rare Amt Int. Rats Amt.

.1995 410 2.720' 5%

1.795*

6 40 2.035 5 30 785 5.30 1.515 6 05 1.490 8 40 765 8 20 2.425 7.40 6.580 1996 4 10 2.845' 5%

1.900' 6 40 2.155 5 40 830 5 35 1.585 8 60 825 8 40 2.030 7 % 7.645 1997 4.10 2.975*

5%

2.010*

5 45 890 5 40 1.670 7.60 7,905 1998 4 10 3.105*

5%

2.125' 5%

935 5 40 1.760 7.70 5.925 1999 4.10 3.245' 5% 2245' 5% 1,005 5.70 1.850' 2000 410 3395*

5%

2,375" 5 55 1.065 5.70 1.940*

2001 4 10 3.545' 5%

2.510*

5 60 1.130 5 70 2.045*

2002 4 10 3.705-5%

2.655' 5.60 1220 5.70 2.145' 2003 4.10 3 870' 5%

2.810*

5% 1295*

5 70 2.260*

2004 4.10 4 045*

5%

2.970' 5% 1.380*

5 70 2.380*

2005 410 4230' 5%

3.140*

5%

1.460*

5.70 2.500*

2006 410 4420' 5%

3.325' 5% 1.570*

5 70 2.630*

2007 5W 3.515' 5% 1.795*

5.70 7.385*

2008 5% 3 715' 5%

1.945*

5 70 7.845' 2009 5%

3.930' 5% 2.080-5%

8.330*

2010 5%

4.155' 5% 2.225' 5%

8.845*

2011 5% 11.520' 5% 2.180*

5% 9 390*

2012 5% 12.180*

5% 2.300*

5%

9.530' 2013 5% 12.880' 5% 2,500*

5% 10.590' 2014 5% 2.640' 5% 11.250*

2015 5 % 21.065' 5% 11 950*

2016 5 % 21235' 5% 12.555*

2017 5 % 34.580" 5% 13.190' 2018 5% 50.600*

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

?032 Add.

Total 0utstandmg As of 12/31.94 42.100 81.755 4.190 108.110 186.190 1 490 1.590 4.455 28.145 Bonds Redeemed As of 12.7194 9.500 16245 18,630 6.890 13,810 13.585 4.845 7225 22.825 Bonds Refunded As 012?194 0

0 86.180 0

0 94.925 169.780 166.165 144.985 1

Less Accreted Value As of 12f3194 Net Ongmalissue Amt

$1.600 100 000 109 000 115.000 200.000 110.000 176.215 177.845 195,955 TOOTNOTES.

• 1eim Bonds (3) These are floating auction ta -exempt (" FLOATS") and (4) $10210,000 are senal bonds and $9.000.000 are term bonds.

n E

ns a-a (1 I lade a. etion on Capital Appredation bonds

((["r (5) included m year that payment is made. (Exclusive of Funded and o e these matunng 6 3G2006 and 5 60% per annum on those (2) Matunties are on Janury 1 mstead of Jufy 1.

with a fmal matrity of 6?S?013 (For Details on Calls See Schedule et Refunded Bonds Outstandmg *)

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• 8 a

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• 1P J. Mac Walters B.L. Ilendricks Reprnents 4th CongressionalDistrict Represents 3rd Congressional District

. f

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jl John D. Trout D. Gene Rickenbaker Represents Berkeley County Represents 5th Congessional District e-CHANGES IN THE DOARD

,s.

. T$( x ?

W. Melvin Brown represented 3U '. -

the first congressional district on Santee Cooper's Board of

."V Directors from July 1993 until

'~

his death in June 1994. His wife, Juanita W. Brown, was appointed to fill his un-

~

expired term. Her confirmation 7;1 by the state Senate is expected v.i in early 1995.

llenry B. llickenbaker J. Joseph Young Reprnents 6th Congessioull>istrict Represents Georgetou n County

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w.

ADVISORY BOARD MANAGEMENT Carroll A. Campbell Jr.*

T. Graham Edwards Robert E Petracca Gowrnor

&ident and Vice Mident James M. Miles Secireary ofstate Robert V. Tanner Byron C. RodgersJr.

ChiefOpeating ofar Vice Mident T. Trav. Medlock, n

Eriginuririgarid Atorney General Bill McCallJr.

c,,,,,,,,;,, 3 7,,,,,,,,,

Executive 17ahident Y' E' M""I*

1+oduction Jcrry L Stafford Comptroller General y;, y;3,,

Grady L Patterson Jr.*

fly3 Corporate Communications

,;g,,

Stau hasu'"

Enginaringand Operations William R. Sutton Vice kident John Iilliencken Jr.

I-pg,,,,jyg,,,j g g,,pf, Erecuriw VicePresident CHANGES IN ME General Counsel LE " Butch" Volf ADVISORY BOARD g 7,, fgjg,,,

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• In South Carolina's dent November general Adrninistration andFinana 111ine G. Peterson election, David M.

Controller Alfwd Calafiore*

Beadey was elected Senior Vice Nident li. Roderick Murchison governor; Charles M.

PlanningandBulk Pouer Afarkets Trecurer Condon was elected anorney generah and Maxie C. Chaplin W. Glen Brown jj,,,,

Richard Eckstrom was fy,g,,,;,, op,,,;,,,

elected state treasurer.

All were swom-in on Zack W. Dusenbury 7y jj,,,,

CHANGES IN l'"* U ' ' 995*

MANAGEMENT Harry-Georgetown Dirrision Ronald 11. liolmes

• In February 1995, 17ce Nident Alfred Calafiore joined Human Resources the executive manage-ment stafTas senior vice president of Planning and Bulk Ibwer Markets.

1 64

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ForAdditionalInformation

Contact:

Jerry L StafTord, Vice President Corporate Communications Santee Cooper One Riverwmxl Drive Moncki Corner, S.C. 29461-2901 (803) 761-4051-Editor Bah Oliver / Santee Cooper -

Photographer Jim Huf/Santer Cooper Writm Beth Oliwr and nillardStrong / Santee Cooper Designer LeeHebner/AdwrtisingSmiceAgency

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Santee i

Cooper One Riverwood Drive Moncks Corner South Carolina 29461-2901 l