ML20137Y420

1996 Annual Rept for Scana

ML20137Y420
Person / Time
Site:	Summer
Issue date:	12/31/1996
From:	Edwards J, Hagood B, Timmerman W SCANA CORP.
To:
Shared Package
ML20137Y404	List: ML20137Y420 ML20137Y434 RC-97-0081, Forwards 1996 Annual Rept for Scana & 1996 Annual Rept for Santee Cooper
References
NUDOCS 9704230086
Download: ML20137Y420 (40)

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i SCANA Corporation, headquartereIin Columbia, SC, is a $4.8 billion energy-based aetlef.0 Slaff10 derS 2

g holding contpany with 13 wholt owned subsidiaries engaged in regulate electric S

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regulated utility subsidiaries own an electric generating plant near Charleston and provide financing for SCE&G's coal and nuclear fuel inventories.,SCANA's nonregulated operations 0,1cefS include' oil and natural gas exploration and production: electric and natural gas market-ing: propane storage: purchase, delivery and B0afdOfecl0fS M

sale of propane: fiber optics-based tele-communications and investments in personal communications services: power plant man-DV0Sl0FIDL0flDadOD z.0 agement and support services: and other beyond-the-meter services, including service contracts on home appliances.

SCANKs mission as a broad-based energy supplier is to provide a full range of energy /

products and related services at competitive pr; ices in a customer-oriented marketplace.

Through its diversified businesses, the Company seeks to build shareholder value by investing in nonregulated businesses that

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SCANA Corporation, headquartered in Columbia, SC, is a $4.8 billion enfergy-based afflef 0Slafe10..derS 2

g holding company with 13 wholly owned subsidiaries engaged in regulated electric nonr'egulated businesse. South Carolina -

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principal subsidiary, is a regulated public h((f[j-(

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Q utility serving approximately 494,000 electyic customers in a 15,000 square-mile territory hdjh[QQp in central and southern South Carolina.

g Through the combined operations of SCE&G and South Carolina PipelinerCorporation, SCANA's gas transmission s6bsidiary, natural

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gas services ye provided throughout the state on a direct or supplemental basis. Other regulated utility subsidiaries own an electric hydg{fd

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generating plant near Charleston and provide "

inventories. SCANA's[nonregulated operations '

financing for SCE&G coal and nuclear fuel j(([j include oil and natural gas exploration and production: electric and natural gas market-ing; propane storage; purchase, delivery and 80ardOfett0rS sale of propane: fiber optics-b sed tele-4 conimunications and investments in personal communications services: power plant man-RSl0f 5'0flBadOD 20 agement, and support services; and other

.beyond-the-meter seryices, including service contracts on home appliances.

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%b4-had 4,285 employees at December 31,1996.

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% Increase 1996 1995 (Decrease}_

(Millions of dollars g

except statistics and per share amounts)_

C:mmon Stock Data Earnings Per Weighted Average Share of Common Stock 2.05 1.70 20.6 Dividends Declared Per Share of Common Stock 1.47 1.44 2.1 Book Value Per Share of Common Stock (Year-End)

$ 15.85

$ 15.00 5.7 Market Price Per Share of Common Stock (Year-End)

$ 26.75

$ 28.625 (6.6)

Coramon Stockholders' Equity (Year-End)

$ 1,683.4

$ 1,554.7 8.3 Common Stock Outstanding:

Weighted Average (Thousands) 105,123 99,044 6.1 Year-End_{ Thousands)_

106,175 103,624 2.5 T;tal Company Total Operating Revenues 5 1,512.8

$ 1,353.0 11.8 Total Operating Expenses 5 1,198.9

$ 1,065.5 12.5 Net Income

$ 215.3

$ 168.3 27.9 Property Additions and Construction Expenditures

$ 293.4

$ 324.1 (9.5)

Utility Plant, Net _

$ 3,529.0

$ 3,469.0 1.7 El:ctric Operations Electric Operating Revenues

$ 1,106.5

$ 1,006.4 9.9 Electric Operating Income

$ 284.8

$ 257.1 10.8 Territorial Sales (Million KWH) 18,010 17,583 2.4 Customers (Year-End) 493,320 484,354 1.9 Generating Capability - Net MW (Year-End) 4,316 4,282 0.8 Territorial Peak Demand - Net MW 3,698 3,683 0.4 G:s Utility Operations Gas Operating Revenues

$ 403.2

$ 342.7 17.7 Gas Operating Income 35.6 38.0 (6.3)

Sales (Thousand Therms) 896,294 882,511 1.6 Customers (Year-End) 248,681 243,523 2.1

' Year-End Market Price and Book Value Efd.argg,giveTotalHelurn*

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~ a Directors at our Annual Meeting in April. Dr. James B.

Edwards, Benjamin A. Hagood and Dr. Henry Ponder have a combined 48 years of service to our Company.

g Their wisdom and counsel have been very important to the development of SCANA, and they will be missed.

SCAN #s earnings for 1996 grew to $2.05 per share, from $1.70 per share in 1995, which included a 16 cents per share, non-cash charge related to an accounting 4

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change at our natural gas exploration and production,

business. Net of such charge, the increase of 19 cents per share from ongoing operations in 1996 reflects a signifi-3 cant improvement in earnings from our nonregulated

natural gas exploration, production and marketing activities, as well as growth in our core electric and natural gas utility businesses.

i' Consistent with this growth, at its meeting held j

February 18,1997, the Board of Directois raised the 8

indicated annual dividend rate on the Company's common stock from $1.47 to $1.51 per share, a 2.7 percent increase.

The Company has increased its annual dividend for 22 consecutive years and in 44 of the past 45 years.

Electric 0peralins For SCAN #s electric operations,1996 was another year of solid performance. Territorial kilowatt-hour sales winiam a nmmerman of electricity were up 2.4 percent for the year, driven by

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customer growth and continued strength in our service area economy. One key operating goalis to meet our h hg g3 g

3g, customers' needs for eh:tricity by generating power as 1 V lUffjU ul U

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safely and efficiently as possible. Our continued emphasis

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on operational excellence has resulted in our electric iI am pleased to provide you SCANA Corporation's lates being among the lowest in the nation, and the J996 Annual Report, which outlines the operating Company's fossil-firerl generating system continues to results and many significant accomplishments of the rank among the most efficient. The V.C. Summer Nuclear i

past yeari As we begin our 151st year, our long-standing Station operated at 87 percent of capacity in 1996, well 1 commitment to outstanding customer service, cost-above the industry average, despite a refueling and main-geffective operations and the economic development of tenance outage in the spring. It is regarded as one of our communities serves as the foundation on which we the country's safest and lowest-cost nuclear facilities, are' addressing the challenges of the future.

In June SCANA and Westvaco Corporation, one of.

' Before reviewing our performance in 1996, I must our largest industrial customers, agreed to jointly build s

acknowledge the strong leadership provided by and operate a $170 million cogeneration facility at j qLawrence M. Gressette, Jr. during his tenure as SCAN #s Westvaco's paper millin North Charleston. As part of

• L f / Chairman and Chief Executive Officer. His knowledge this venture, Westvaco also entered into a 20-year L ' W :and insight were called upon to guide our Company power supply contract for all of the mill's electricity i through a period of significant change and growth. The requirements. In another joint venture, SCANA and A.P.

current leadership team at SCANA learned many impor-Green Industries, Inc. announced plans in February to

.5 tant lessons from him that will serve us into the 21st build and operate a $25 million industriallime produc-i

. century. Although he is retiring, SCANA will continue tion facility near Charleston that will help meet the L

to benefit from Lawrence's insight in his capacity as growing demand for time in the Southeast. These activities ll Chairman of the Executive Committee of the Board.

are indicative of our partnership approach to attracting J Also, I would like to recognize three longtime new business to our service area and providing energy

'difectors who will be retiring from SCAN #s Board of alternatives to our industrial customers.

I

Directors at our Annual Meeting in April. Dr. James B.

a Edwards, Benjamin A. Hagood and Dr. Henry Ponder v.

have a combined 48 years of service to our Company.

Their wisdom and counsel have been very important to the development of SCANA, and they will be missed.

SCANA's earnings for 1996 grew to $2.05 per share,

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from $1.70 per share in 1995, which included a 16 cents 4

per share, non-cash charge related to an accounting change at our natural gas exploration and production,

business. Net of such charge, the increase of 19 cents per share from ongoing operations in 1996 reflects a signifi-cant improvement in earnings from our nonregulated f

t natural gas exploration, production and marketing activities, as well as growth in our core electric and natural gas utility businesses.

~

Consistent with this growth, at its meetJa held February 18,1997, the Board of Director, raded the l

indicated annual dividend rate on the Company's common stock from $1.47 to $1.51 per share, a 2.7 percent increase.

The Company has increased its annual dividend for 22 consecutive years and in 44 of the past 45 years.

ElectricOpeations for SCANA's electric operations,1996 was another year of solid performance. Territorial kilowatt-hour sales William B. Timmaman of electricity were up 2.4 percent for the year, driven by customer growth and continued strength in our service area economy. One key operating goalis to meet our h

gy 3'73 g 3'

customers' needs for electricity by generating power as a

1 10 U U-ll IU safely and efficiently as possibte. Our continued emphasis on operational excellence has resulted in our electric I am pleased to provide you SCANA Corporation's rates being among the lowest in the nation, and the

1996 Annual Report, which outlines the operating Company's fcssil-fired generating system continues to results and many significant accomplishments of the rank among the most efficient. The V.C. Summer Nuclear past year. As we begin our 151st year, our long-standing Station operated at 87 percent of capacity in 1996, well commitment to outstanding customer service, cost-above the industry average, despite a refueling and main-

- effective operations and the economic development of tenance outage in the spring. It is regarded as one of our communities serves as the foundation on which we the country's safest and lowest-cost nuclear facilities.

are addressing the challenges of the future.

In June SCANA and Westvaco Corporation, one of..

. Before reviewing our performance in 1996, I must our largest industrial customers, agreed to jointly build acknowledge the strong leadership provided by and operate a $170 million cogeneration facility at Lawrence M. Gressette, Jr. during his tenure as SCANA's Westvaco's paper millin North Charleston. As part of -

Chairman and Chief Executive Officer. His knowledge this venture, Westvaco also entered into a 20-year and insight were called upon to guide our Company power supply contract for all of the mill's electricity through a period of significant change and growth. The requirements. In another joint venture, SCANA and A.P.

l current leadership team at SCANA learned many impor-Green Industries, Inc. announced plans in February to tant lessons from him that will serve us into the 21st build and operate a $25 million industriallime produc-century. Although he is retiring, SCANA will continue tion facility near Charleston that will help meet the to benefit from Lawrence's insight in his capacity as growing demand for time in the Southeast. These activities Chairman of the' Executive Committee of the Board.

are indicative of our partnership approach to attracting Also, I would like to recognize three longtime new business to our service area and providing energy directors who will be retiring from SCANA's Board of alternatives to our industrial customers.

I During 1996 the Company and the City of Charleston date has exceeded expectations. Additional markets will signed new 30-year electric and gas franchise agreements be opened dudng 1997, including the Atlanta MTA, which that resulted in the transfer of SCE&G's transit system includes Georgia and parts of South Carolina. Through the to the City in October. The comprehensive accord also purchase of additional PCS licenses in January 1997 covedng included payments to the City to support development 13 smaller Basic Trading Areas, InterCet has expanded its of transit services and to settle certain environmental PCS footprint to more than 245,000 contiguous square miles claims. These agreements represent a very scrward-looking in portions of 12 states serving a population of 23 million, public/ private partnership that will promete economic the largest PCS market in the Southeast. We are venf optimistic

, development and support future growth in Charleston.

about the future growth opportunities of this business.

bhl0DS These were some of the more significant milestones achieved by SCANA during the past year. While I am In early 1996 we realigned all of our natural gas extremely pleased with these accomplishments, we and propane operations into a Gas Group, resulting in must now look to the future. The pace of the electric an enhanced focus on marketing, growth opportunities industry's restructuring is accelerating with legislation and profitability.

pending at both the national and state levels. Pages 6 In October South Carolina Pipeline Corporation, our and 7 of this report discuss our position on this vital intrastate natural gas transmission company, completed matter. The final shape of restructuring is not known.

a $37 million,151-mile pipeline expansion in the Pee Our success in the past has been driven by the cost-Dee region of South Carolina. This is discussed further effective operation of our assets. It is clear that our n page 12.

growth opportunities in the coming years lay in our SCANA Petroleum Resources, one of our largest non-ability to sell our services and products in a much broader regulated subsidiaries, contributed 12 cents per share t geographic arena. Given our low-cost structure, our SCANA's 1996 earnings compared to a loss of 17 cents financial strength anu our past successes in managing per share in 1995. SPR's improvement resulted primarily unregulated businesses, we are ready to tackle this frcm natural gas prices which, on average, were 55 per-change in our business, whatever shape the final regu-cent higher in 1996 than m 1995. During the past year latory scheme takes.

SPR focused on two joint ventures for oil and natural t

SCANA's employees collectively own 11 percent of gas exploration and development that resulted in the the outstanding shares of common stock. In the past successful completion of currently producing properties, year, the Company's leadership worked hard to involve More specific discussion of the drilling program, which is all employee / owners in the understanding of where we continuing in 1997, can be found on page 10.

are going and why. As always, they are responding in a SCANA Energy Marketing had an excellent year in very positive way. These efforts have created higher 1996, selling a record 106 billion cubic feet of natural morale throughout the organization, a real sense of gas, up 52 percent from 1995. That increase came from ownership and a willingness to tackle the challenges to brokered sales to customers m 23 states outside of come. Our success is and will continue to be the sum South Carolina. To keep pace with changes in energy total of our employees' efforts.

markets, this subsidiary also began buying and seliing In 1997 and beyond, SCANA will face daunting but electricity as a power marketer in late 1996, exciting opportunities to build on our tradition of reliable

.Iflf(0mmuDi(dd0flS service, customer satisfaction and competitive prices in As we have previously reported, SCANA Communications, all our businesses. We have a dedicated team of employees Inc. is a 17 percent owner of Intercel, Inc., an established who possess the skills and leadership to successfully rellular telephone company that is developing a new respond to these challenges, enable us to exceed customer generation of digital wireless communications known as expectations and provide a competitive return on our Personal Communications Services (PCS), primarily in shareholders' investment.

the southeastern United States. During 1996 we invested Respectfully submitted, an additional $75 million in InterCel's convertible pre-

[lF ferred stock in connection with Intercel's purchase of a PCS license for the Atlanta Major Trading Area (MTA).

W.B. Timmerman SCANA's total investment in InterCel is now approximately Chairman of the Board, President and

$142 million. The buildout of InterCel's PCS service area Chief Executive Officer is proceeding on schedule, and customer reception to March 1,1997 3

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l N3 r l l 4 d

k.h SCANA Chairman and Chief Executive QJ %y y.

y Officer Lawrence M. Gressette, Jrls long -

and distinguished career reached yet 7

p/

J G another milestone with his retirement L ' V;j Q.

effective February 28,1997.

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As Executive Vice President of South j

Carolina Electric & Gas Company, Mr.

Gressette guided SCANA through its for-M S.

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1 mative years in the early 1980s. He was p

9) l development that led to the formation of 3

responsible for the research, planning and j p

{ M SCANA as a holding company in January h

4 1985. He was elected President of SCANA k

on September 1,1985, and served in e

jg that position until December 13, 1995.

194 Mr. Gressette also served as Chairman j, f and Chief Executive Officer since February 1,1990.

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It was under Mr. Gressette's leadership p

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that SCANA began its diversification 4

strategy, positioning the Corporation to expand into nonregulated businesses to ensure future growth opportunities. SCANA's business interests grew from traditional electric and gas activities to include oil

.. i and natural gas exploration and develop-

'h ment, energy product marketing, fiber bq q

optics and other telecommunications

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technologies.

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3 Mr. Gressette's contributions to the hd corporate world are not restricted to M

SCANA. He serves on the Board of

-. f J Directors of Wachovia Corporation, the AgM Liberty Corporation and InterCel, Inc. He.

fhM has also been at the center of community

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involvement. A Life Trustee of Clemson (Q@Q[

University, Mr. Gressette's contributions -

3l have benefited the Educational Television Gi$

Endowment of South Carolina, the

$h

$[$hh[h Governor's School for the Arts, the United Way, the Children's Trust fund and others f~NlM While his direct involvement in the O

too numerous to mention.

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Corporation's day-to-day activities will be missed, SCANA will benefit from Mr.

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Gressette's insight and experience as he continues to serve as Chairman of the Board's Executive Committee.

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Dr. James B. Edwards, President of the Medical University of South Carolina tyj and Professor of Maxillofacial Surgery, is -

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leaving SCANA's Board of Directors after 11.

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years of service. Appointed to the Board in 1986, Dr. Edwards served as Chairman 4

d

~ f the Nuclear Oversight Committee and o

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as a member of the Executive and the j

Long-Term Compensation Committees.

/*g Governor of South Carolina from 1975 until 1979, Dr. Edwards also served as the U.S. Secretary of Energy from January 1981 until November 1982. Dr. Edwards is n

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f a member of numerous professional and

' J-civic organizations and holds 10 honorary degrees.

l Three Directors with a combined 48 years of service will turn 70 years old bhllMkh00d before the 1998 annual meeting and

! are therefore leaving SCANA's Board in Mr. Hagood is leaving SCANA's Board l

April 1997. Their contributions have f Directors after 23 years of service. He served as a member of the Audit Committee, been many.

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the Nuclear Oversight Committee and the Long-Term Compensation Committee.

,/f Mr. Hagood is Chairman of the Board of William M. Byrd and Company, Inc.

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IkilIV I'0ll@f.I'Ill Dr. Ponder is leaving SCANA's Board of l

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Directors after 14 years. He served as a member of the Audit Committee, the 3

l Management Development and Corporate Performance Committee, and the Long-Term I

7 Compensation Committee.

l Dr. Ponder is President of the National j

's Association for Equal Opportunity in i

Higher Education in Washington, D.C.

s

1 DJAhtimeeing SCANA Corporation has been preparing for a retail wheeling heightens at both the federal and state deregulated electric marketplace for some time and will levels. Retail wheeling is the sale or movement of elec, be ready when competition arrives on the retail level.

tricity by a utility or energy marketer over transmission We have low rates, reliable service and sufficient supply.

and distribution lines owned by other utilities to an end-But we have concerns about protecting the interests of user. We believe there are many unanswered questions,

our shareholders and our customers as the debate over that must be addressed before our concerns are alleviated in regard to this highly complex issue. The question we ask is d

this: Is the time right for retail wheeling in the state of South Carolina?

The National Energy Policy Act of 1992 provided for wholesale competition, but left decisions at the retaillevel for determination

/

by the individual states.

Subsequently, there have been attempts in Congress to change the law and require all states to

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adopt retail wheeling by the year 2000. SCANA opposes any atte.mpt to mandate deregulation of the

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retail segment of the electric

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' 2,c Such proposals fail to protect the

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interests of our shareholders and u.t _..

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all classes of customers. We believe

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decisions regarding retail wheeling belong at the state level, where

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the interests of investors and customers can be better determined.

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Whythe(IllleiSn01 fight [0iIfldil L'

wheelinginS0uthfarolina

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SCANA offers some of the

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lowest electric rates in the natich

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through its electric business -

about 20 percent below the

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national average. This has been

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a key factor in attracting record 1

investments in new and expanded

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business into the state of South Carolina over 0 (.[ ( d.g

[yg the past several years. This economic development boom has meant increased growth opportunities in cents per kilowatt-hour. sold for SCANA in its electric business and helped

. Indirstrial improve the quality of life within the state.

.77 n2 The push for deregulation and retail wheeling is greatest in a few states with excessively high

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electric prices. That is where the problems exist.

.*1 2.m g;28 We believe the reasonable approach for South J

u, ggr u,2 Carolina is to allow those high-cost states to 3,,

experiment with retail wheeling first. Even then,

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deregulation will not begin in the states that u,

have passed legislation until 1998 or 1999 at the earliest. Let those states test the process and go,,,

develop real field data and experience. South 4,33,5,33 k

g 3.36.,.29 Carolina can learn what works and what doesn't, thereby avoiding costly mistakes that could hurt the state's economic development advantage as well as SCANA's shareholders and smaller customers.

@mmefudl While some special interest groups would

,va, like to see immediate action taken with regard

/ us s.n to retail wheeling, SCANA believes in a reasoned m u0 and fair approach. Moving forward without

't u6 si e.es Ei!E sufficient cause, or the knowledge gained from I

us EIY7 experiments being conducted in other states i

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with already high electric rates, could hurt our Oc 7.0i shareholders' investment and those customers u7 most vulnerable - the residential and small i

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• Latst information avanable from The Edison Electric Institute

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l South Carolina Electric & Gas Company's electric cogeneration plant could lead to future expansion at the generating system continues to turn in operating results mill. We are pursuing other partnerships of this nature.

that make it one of the most efficient and low cost in that are mutually beneficial to SCANA and our customers."

the nation. In a report released last fall by Electric Light Westvaco's expansion is not the only project

& Power magazine, two of SCE&G's fossil-fired electric generating plants placed within the survey's top 25. One, announced in 1996 that will have a positive future McMeekin Station, ranked ninth nationally and was rated impact on SCE&G. Carolina Eastman, Kimberly Clark, Michelin, the U.S. Naval Weapons Station and the the most efficient generating plant within the state of University of South Carolina were among those South Carolina. On a combined basis, the fossil plants announcing expansion plans that will add nearly 180 recorded a 1996 availability factor of 83.5 percent.

megawatts of electric load to SCE&G's system within the Electric Light & Power's survey also ranked the V.C.

next several years.

Summer Nuclear Station 12th nationally among efficient and low-cost nuclear facilities for total production costs.

To further strengthen relationships with our larger Operational excellence is the key to Summer Station's users, a new strategic business unit was formed in outstanding record. The plant completed a successful October to bring a greater focus on SCE&G's large indus-refueling and maintenance outage in 1996 in a record trial and wholesale customers. The business unit is made 391/2 days that was well under budget. In addition to replacing approximately one-third of the reactor's fuel JO &

assemblies and conducting routine maintenance, new 1

rotors were installed on the plant's low-pressure turbine.

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This upgrade, combined with the replacement of the

.y plant's three steam generators during the 1995 refueling outage, has increased the generating output of Summer Station from 900 to 954 megawatts.

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3, Summer Station received high marks from the Nuclear Regulatory Commission as well. In the NRC's latest Systematic Assessment of Licensee Performance report, Summer Station received Category 1 " superior" ratings in three of four functional areas and a Category 2 " good" rating in the fourth. Summer Station remams j

an industry leader because of this commitment to opera-tional excellence.

With the next horizon in the new competitive arena focusing on the industrial sector, SCE&G is taking steps y

now to ensure we are successful when competition becomes a reality. In June 1996 we entered into a joint J

venture with Westvaco Corporation to build, own and

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operate a $170 million cogeneration plant at its facility in North Charleston. The facility will provide industrial process steam for Westvaco's paper mill and generate up

+

to 99 megawatts of additional electricity for SCE&G's

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d

E Electric Service Area E Fossil E Hydroelectric 5 Internal Combustion M Nuclear up of every function critical to meeting these customers' M

total energy requirements of price, reliability and respociveness in one complete package. Also, m (hlNl@ h )

Septemb r, SCANA acquired Instel, Inc., a Greenville, SC-based co 9pany that specializes in maintenance and M

testing of 'aw voltage electrical equipment. Instel will 1

remain an urregulated business while it continues to 20 5

provide total.lectrical system maintenance for industrial customers.

18 In April 1996 the Federal Energy Regulatory 17, Commission issued two orders designed to accelerate 15 16.8 competition within the electric utility business at the 1

wholesale level by providing for transmission access.

FERC Orders 888 and 889 basically unbundled existing utilities by separating generation from the marketing to

,and sale of electricity on the wholesale level. All utilities must now share their generating capabilities with all power marketers. In effect, utilities must have a separate 5

a marketing group within their organization to buy and sell the power they generate and compete with other power marketers. Also, utilities were required to file tariffs for use of their transmission lines and to wheel power from

680R)

WetoeumResources nc.

r Drl Ing?rogram SCANA's integrated gas group provides energy services from the wellhead to the burner tip with businesses involved in the exploration and development of new reserves, production, transportation, marketing, local distribution and propane storage and delivery.

SCANA Petroleum Resources, the Company's oil and gas exploration and production subsidiary, had an excellent year. Earnings increased from a loss of $16.7 million in 1995 to income of more than $12.5 million in 1996. The turn-around came as a result of the Company's ongoing effort to reduce costs and a 55 percent increase in the 1

average price of natural gas sold during the year. SPR 0"If 'i M'*k also added new production through its joint venture and in-house drilling programs, successfully executmg its (Obra30iDlVfDluff strategy of reserve growth through exploration and a

development drilling.

E fiDa30101VfDlufe SPR completed a divestiture program in 1996, selling approximately $65 million in nonstrategic and marginal oil-and gas-producing properties. The largest divestiture ready-to-drill oil prospects in Texas, Arkansas and New involved the sale of Oklahoma properties to ONE0K Mexico. SPR participated in 11 Cobra exploration wells Resources Company for approximately $47 million. The in 1996. Six of these were completed successfully and divestitures improved SPR's cost structure, price mar-each one is producing between 70 and 300 barrels of oil gins and operational control of remaining assets. SPR's a day. SPR plans to participate in approximately 20 inventory of producing properties is located in Alabama, exploratory wells,10 or more development wells and an Arkansas, Louisiana, Mississippi, New Mexico and Texas additional 3-D seismic program with Cobra in 1997. SPR's and offshore in the Gulf of Mexico.

interest in the Cobra program is approximately 30 percent.

SPR's strategy of growing reserves through the drill In addition to moving forward with the Fina and bit is focused primarily on two separate joint venture Cobra projects in 1997, SPR will pursue additionaljoint programs with Fina Oil & Chemical Company and Cobra ventures and continued exploitation of its current prop-Oil and Gas Corporation. SPR's interest in the Fina pro-erties. Although gas production will be lower during gram is approximately 50 percent and covers more than 1997 due to the 1996 divestitures, oil volumes will be 400,000 acres in southern 1.ouisiana. Utilizing more higher. In addition, both oil and natural gas prices were than 150 square miles of state-of-the-art 3 D seismic strong entering 1997. SPR remains committed to being data to locate the highest potential prospects, SPR par-a low-cost, high-margin producer offering profitable ticipated in drilling two successful exploration wells investment opportunities for years to come.

SCANA Energy Marketing buys and sells natural gas, with Fina during 1996. At year end, one was producing other light hydrocarbons and electricity with operations, roximatel 5 million cubic feet of r da, and in 23 states. The Com markets uced a

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s exploratory oil and natural gas drilling programs.

The completion of a 151-mile pipeline extension project made additional volumes of gas

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nergy Marketing continued its growth in 4

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atural gas sales reaching a record high of ubic feet. SPR sales accounted for about 29

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tal volume. Sales outside South Carolina C

r 98 percent of the total voluine.

k ergy Marketing also received its certification eral Energy Regulatory Commission as a ter in May. For the year, sales of power than 26,000 megawatt hours with all sales

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h Carolina.

nsportation throughput for South Carolina poration in 1996 was slightly behind 1995 use of higher gas prices. However, additional Suburban Propane's growth strategy included the opening of two tatural gas became available throughout the new retail stores during 1996.

October when SCPC completed the third tajor pipeline expansion project. The new Opted for natural gas as the fuel of choice. Even with ension greatly enhances SCPC's ability to historically high natural gas commodity prices, industrial vice reliability to existing customers while throughput levels kept pace at more than 21 billion meet increasing demand for natural gas cubic feet. Several system expansions are in progress siness and residentie.1 growth. A fourth and that will carry natural gas to new areas of the state and n the planning stage will add a 9,000-Provide growth opportunities, ompression station that will maximize the Two new retail operations and increased emphasis apacity of the pipeline expansion.

on industrial propane standby systems were the focus ustomer growth and increased throughput of Suburban Propane Group's growth activities for cessful year for SCE&G's natural gas local 1996. New retail stores were opened in York, SC and operations in 1996. Net customer growth Statesville, NC in early September, bringing the total I

ercent as many new residential developments number of retail stores to 19. New customer additions at both stores, along with growth in Suburban's existing retail market, helped the Company achieve a 3.1 percent increase in customers to 35,000 and a 26 percent growth ANAEnergyMarkeHag,IE.

in annuat votume to 34 mittion galtons. Additionat new (snuon cuwe reet. scr) store openings are planned for 1997. Suburban also expanded its industrial propane standby plant installa-irol tions in 1996. Approximately $1 million in new plants 2W I

were installed for seven industrial customers in South

• l and lead to increased sales of propane to industrial Carolina. This program should continue to grow in 1997 customers.

so _

40 1

ServiceCare, Inc., which provides energy-related products and services beyond the meter, signed its first license agreement with LG&E Energy in Louisville, KY 20 duri 1996. The a

'ance rotection am is bein

services (PCS), local and long distance telephone services, T1 ne conferendng seMces and MseMce netwoM e

for cable television.

ma____m,_.-o With this conversion, ITC, through subsidiaries, will manage the operations of the existing fiber optics network SCANA Communications, Inc. owns and operates a while overseeing the development of PCS technology in 300-mile fiber optics network within South Carolina. In f ur Major Trading Areas (MTAs) and 13 Basic Trading dJanuary 1997 SCANA Communications reached agreement Areas (BTAs).

in principle to convert its fiber optics lines in North In addition to its common stock investment in Carolina, Georgia, Alabama, Louisiana, Mississippi and InterCel, a subsidiary of ITC, in April 1996 SCANA

' Texas for convertible preferred stock in ITC Holding Communications invested $75 million in convertible pre-Company, Inc. Assuming the successful closing of the ferred stock of Intercel toward the purchase of an Atlanta transaction, SCANA Communications, on a fully converted MTA b, cense from GTE Mobilnet, Inc. SCANA Communications basis, will own 15 percent of ITC, a privately owned venture wns, on a fully converted basis, 25 percent of Intercel.

with six businesses providing personal communications InterCet already owned PCS licenses for the Memphis, 1

TN/ Jackson, MS MTA: the Birmingham, AL MTA: and the

. 0 ([f h[(@3 Jacksonville, FL MTA.

peg In January 1997 InterCel also acquired 13 mggggypE}(,

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dy BTAlicenses covering approximately 66,000 k

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square miles in parts of Tennessee, Kentucky

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and the BTAs gives Intercel a PCS footprint l m-.c4.

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Through its wholly owned subsidiary, Powertel, y...

a Intercel markets PCS within a 245,000-con-x m

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tiguous-square-mile area in portions of 12 pg %.

eston states with a population of more than 23 million.

4 k-Powertel began bringing markets on line

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in October 1996 and at year-end were oper-Jg sting in major markets in Alabama, Florida, gg ona Beach Mi:sissippi and Tennessee with approximately 5- *

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- Mon 14,000 subscribers. Georgia and South Carolina markets are scheduled to open in late 1997.

Gainesville o

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Digital PCS handsets are available at more than 200 l

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w locations at Powertel retail stores, authorized agents E JACKSONVILLE MTA and other major retail outlets.

TENNESSEE, KENTUCKY, INDIANA BTAs

====== Fiber Optics Network Initial PCS Bulldout Completed by Year-End 1997 r

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Company Report On Financia. Statements adependenthaditors'Heport Conso.idated!inancia Statements 1

Notes"oConsoidated!inancia Statements Management'sDiscussion&Anaysis0?inancia Condition

&Resuts0! Operations i

Seetted financia Data & Common Stou a ormation ReturnonCommonEquity (Year-End) 12%

8%

4%

y,.j.

1994 1995 1996 N, A

SCANA Corporation (Company) is responsible for the preparation and integrity of the financial data included in the accompanying Consolidated Financial Statements. These statements have been prepared in conformity with generally accepted accounting principles, as applicable. In situations that prevent exact accounting measurements, informed judg-

ments and estimates have been used. Financialinformation presented elsewhere in this Annual Report is consistent with these financial statements.

The Company maintains and relies upon internal accounting controls intended to provide reasonable assurance that

• transactions are properly recorded in the books and records and that assets are protected against loss or unauthorized use. The degree of internal accounting control is based upon the determination of the appropriate balance between the cost incurred in maintaining internal controls and the benefits to be derived. Internal accounting controls are supported by written policies and guidelines and are complemented by the selection, training and development of professional fmancial managers and by a staff of internal auditors who conduct internal audits.

The Board of Directors provides oversight for the preparation of the financial statements through its Audit Committee, which is composed entirely of nonemployee directors. The Audit Committee meets periodically with management and internal auditors to review their activities and responsibilities. The Audit Committee also meets periodically with the Company's independent auditors, Deloitte & Touche LLP. The internal and independent auditors have free access to the Audit Committee to discuss internal accounting controls, auditing and financial reporting matters.

k Kevin B. Marsh Vice President-Finance, i

Chief Financial Officer and Controller February 7,1997 H[S!D(BluLOT33101 SCANACORPORATION:

We have audited the accompanying Consolidated Balance Sheets and Consolidated Statements of Capitalization of SCANA Corporation and subsidiaries (Company) as of December 31,1996 and 1995 and the related Consolidated Statements of Income and Retained Earnings and of Cash Flows for each of the three years in the period ended December 31,1996.

These financial statements are the responsibility of the Company'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

• minagement, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31,1996 and 1995, and the results of its operations and its cash flows for each of the three years in the period ended December 31,1996 in conformity with generally accepted accounting principles.

W oewA AY DELOITTE & TOUCHE LLP Columbia, South Carolina February 7,1997 15

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h December 31, 1996-

-1995 l

' ABS 818 (Thousands of Dollars)

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)

' Utility Plant (Notes 1,3 and 4):

Electric...................................'.............................................................................:$4,135,567

$3,539,068.

Gas......................................................................................................................

540,196 484,752 1

i Transit...............................................................................................................

3,923 3,768 l1 Common...............................................................................................................

81,858 91,616 Total.................................................................................................................

4,761,544 ~

. 4,119,204 l

' 1.ess accumulated depreciation and amortization..................................................... 1,517,847

- 1,367,541 j

Total.................................................................................................................

3,243,697-2,751,663 Co nstructio n work in prog ress................................................................................

219,150 644,661

]

Nuclear fuel, net of accumulated amortization..........................................................

41,006

- 46,492 1

Acquisition adjustment-gas, net of accumulated amortization....................................

25,175 26,172 t

U tility Pla nt, Ne t............................................................................................... 3,529,028 3.468,988 Nonutility Property and Investments (Net of accumulated depreciation and depletion) (Note 1)....................................................................

345,248 314,207 Current Assets:

' Cash and temporary cash investments (Note 8)........................................................

17,349

.'16,082' Receivables........................................'...................................................................

-239,286 211,173 Inventories (At average cost):

- Fu el (No t es 3 an d 4)............................................................................................

67,428

.61,499

Materials and su pplies........................................................................................

49,449, 47,674 Pr; payments........................................................................................................

-13,276 15,870 :

-i g

De fe rre d inco me taxe s............................................................................................

20,776:

20,186 To tal Curre nt As se ts............................................................................................

407,564 -

372,484 t

, Deferred Debitu Emis sio n allowance s...............................................................................................

'30,457-28,514 :

Environmental.......................................................................................................

41,375

18,016

' Nuclear plant decommissioning fund (Note 1)..........................................................

42,194 36,070 l

Pension asset, net (Note 1 ).....................................................................................

57,931 35,354

'i Othe r (No te s 1 an d 10)...........................................................................................

305,549 260,793 i

E Total Deferre d Debits........................................................................................

477,506 378,747 -

Total............................................................................................................$4,759,346'

$4,534,426 m

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' December 31, 1996 1995 CAPITALIZATION AND LIABILITIES A"$b @W Stockholders' Investment:

Common equity (Note 5).......................................................................................$1,683,448

$1,554,680 '

Preferred stock (Not subject to purchase or sinking funds)........................................

26,027 26,027

' Total Stockholders' Investment............................................................................ 1,709,475 1,580,707 Preferred Stock, Net (Subject to purchase or sinking funds) (Notes 6 and 8).......................................................................................

43,014

'46,243

. Long-Term Debt, Net (Notes 3, 4 and 8).............................................................. 1,581,608 1,588,879 Total Capitalization....................................................................................... 3,334,097 3,215,829

. Current Liabilities:

Short-term borrowings (Notes 8 and 9)....................................................................

144,599 112,524

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

51,220 40,983.

' Current portion of preferred stock (Note 6).............................................................

2,432 2,439

' Ac co unts p a yable.................................................................................................

157,475 138,778 Custo me r de po sits................................................................................................

16,122 13,643 Taxesaccrued........................................................................................................

70,610

' 66,914 Int e re st accru e d...................................................................................................

25,609 25,884 Divid e nd s de clare d................................................................................................

40,773 39,056 Other................................................................................................................

7,200 8,071 Total Current Liabilities.................................................................................

516,040 448,292 Deferred Credits:

. Defel red income taxes (Notes 1 and 7).....................................................................

577,5'J9 '

_542,022 Difened investment tax credits (Notes 1 and 7).......................................................

-84,100 87,719' Reserve icr nuclear plant decommissioning (Note 1)...............................................

42,194'

'36,070 Other(Note 1).....................................................................................................

205,406 204,494 Total Deferred Credits...................................................................................

909,209

.870,305 Commitments and Contingencies (Note 10)............................................................

Total.......................................................................................................14,759,346-

$4,534,426 -

See Notes to Consolidated Financial Statements.

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For theYears Ended December 31 1996 1995 1994 (Thousands of Dollars except per share amounts)

Operating Revenues (Notes 1 and 2):

Ele ctri c................................................

Gas.................................................................................................

$ 1,106,524

$ 1,006,420

$ 975,388

Transit.........................................................................................'

403,199 342,662 342,672 3,108 3,889 4,002 -

Total Operating Revenues........................................................

1,512,831 1,352,971 1,322,062 f

Operating Expenses:

. Fuel ased in electric generation...........................................................

250,516 227,405 235,136 Purchased power...................................................................

11,449 14,704

-20,104-p G as purchased for resale.......................................................................

276,843 212,427 220,923 Other operation (Note 1)....................................................................

238,901 228,682-229,996 Maintenance (No te 1).........................................................................

68,362 58,432 63,725 Depreciation and amortization (Note 1)...............................................

147,557 129,888 119,177 Income taxes (Notes 1 and 7)..............................................................

118,023

.109,949 -

94,510 O the r t a x e s......................................................................

87,297 83,970 78,938 -

L Tots Operating Expenses...................................................Z.......

1,198,948 1,065,457 1,062,509 Operating Income.......................................................................... 313,883 287,514 259,553 Other Income (Note 1):

Oth r income (loss), net of income taxes............................................

21,964 (1,915)

(37,925)

Allowance for equity funds used during construction..............................

.7,028 9,975 8,176 Total Other Income.....................................................................

28,992 8,060 (29,749L Income Before Interest Charges cad Preferred Stock Divid ends.......................................................

342,875 295,574 229,804 Int: rest Charges (Credits):

Interest on long-term debt, net............................................................

114,954 116,368

- 108,804' O the r interest expense........................................................................

13,283

. 17,102 6,749 Allowance for borrowed funds used during construction (Note 1)..............

(6,081)

(11,922)_

(7,156)

To tal Interest Charges, Net...........................................................

122,156 121,548 108,397 L-l Income Before Preferred Stock Cash Dividends of Subsidiary..............

220,719 174,026 121.407 Preferred Stock Cash Dividends of Subsidiary _(At stated rates)............

(5,433)_

(5,687)

(5,955) i.

NetIncome..........................................................................................

215,286-168,339 115,452

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' Retained Earnings at Beginning of Year...............................................

497,991 472,371 490,830 Other..................................................................................................

(386)

L Common Stock Cash Dividends Declared (Note 5)...............................

(154,725)'

(142,719)

(133,911L Retained Earnings at End of Year..................................................... $ 558,166

$ 497,991

$ 472,371 i

lNetIncome.........................................................................................

$ 215,286

$ 168,339

$ 115,452 W;ighted Average Number of Common Shares Ou tstanding (Th ousan ds)..................................................................

105,123 99,044 94,762

_E_arn_ings P._er Weighted Average Share of Common Stock.......................

$2.05

$1.70

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December 31, 1996 1995 Long-Term Debt (Notes 3,4 and 8):

(Thousands of Dollars)

SCANA Corporation:

Bank Notes, due 1998 (Various rates between 5.99% and 6.03%, reset annually)

Medium Term Notes:

60,000 60,000 Year of Series 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:

Year of Series Maturity 6%

2000 100,000 100,000 61/4%

2003 100,000 100,000 7.70%

2004 100,000 100,000 71/8%

2013 150,000 150,000 71/2%

2023 150,000 150,000 75/8%

2023 100,000 100,000 75/8%

2025 100,000 100,000 First and Refunding Mortgage Bonds:

Year of Series Maturity 5.45%

1996 15,000 6%

1997 15,000 15,000 61/2%

1998 20,000 20,000 71/4%

2002 30,000 30,000 9%

2006 130,771 130,771 87/8%

2021 113,450 120,450 Pollution Control Facilities Revenue Bonds:

5.95% Series, due 2003 6,450 6,560 Fairfield County Series 1984, due 2014 (6.50%)

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

5,210 5,210 Fairfield County Series 1986, due 2014 (6.50%)

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

4,365 4,365 Orangeburg County Series 1994, due 2024 (Daily adjusted rate) 30,000 30,000 Department of Energy Decontamination and Decommissioning Obligation 3,187 3,560 Charleston Franchise Agreement due 1997-2002 21,429 Charleston Environmental Agreement due 1997-1999 19,500 South Carolina Generating Company, Inc.:

B;rkeley County Pollution Control Facilities Revenue Bonds, due 2014 (6.50%)

35,850 35,850 Note,7.78%, due 2011 60,000 63,700 South Carolina Fuel Company, Inc.:

Commercial Paper 66,141 76,830 S:uth Carolina Pipeline Corporation:

Notes,6.72%, due 2013 21,250 22,500 Other 3,840 3,993 Tot:1 Long-Term Debt 1,636,753 1,634,099 Less - Current maturities, including sinking fund requirements 51,220 40,983

- Unamortized discount 3,925 4,237 Total Long-Term Debt, Net 1,581,608 47%

1,588,879 50%

Jogyappahadon +

$3,334,097 ~ 100%' $3,215,829 ~ 100%

m See' Notes to Consoudated Financial Statements.

21

l 10 38u0 AlS0 h1lalEld SElR31LS n

1 T

J

1.

SUMMARY

OF SIGNIFICANT and liabitities of approximately $107 mittion and $57 mit.

ACCOUNTING POLICIES:

' A. ' Organization and Principles of Consolidation tion, respectively. The electric regulatory assets of approxi.

mately $119 million (excluding deferred income tax assets)

SCANA Corporation (Company), a South Carolina corpo-are being recovered through rates and, as discussed in Note ration, is a public utility holding company within the mean-2A, the Public Service Commission of South Carolina (PSC) ing of the Public Utility Holding Company Act of 1935 but is has approved accelerated recovery of approximately $64 mil-exempt from registration under such Act.- The Company, hon of these assets. In the future, as a result of deregula-through wholly owned subsidiaries, is engaged predominate, t,on or other changes m the regulatory environment, the

?

ly in the generation and sale of electricity to wholesale and Company may no longer meet the criteria for continued retail customers in South Carolina and in the purchase, sale application of SFAS 71 and would be required to write off its and transportation of natural gas to wholesale and retail regulatory assets and liabilities. Such an event could have a customers in South Carolina. The Company is also engaged material adverse effect on the Company's results of opera-in other energy-related businesses, such as owning and twns in the period the write-off is recorded, but it is not operating interests in oil and gas properties and natural gas expected that cash flows or financial position would be

= marketing. The Company also provides, in the South and materially affected.

. Southeast, fiber optic communications and invests in com-C. System of Accounts pani:.s developing personal communications services for The accounting records of the Company's regulated sub-wireliss communications, sidiaries are maintained in accordance with the Uniform The accompanying Consolidated Financial Statements System of Accounts prescribed by the Federal Energy reflect the accounts of the Company and its wholly owned Regulatory Commission (FERC) and as adopted by the PSC.

subsidiaries:

Regulated utilitie3 D. Utility Plant I

South Carolina Electric & Gas Company (SCE&G)

Utility plant is stated substantially at original cost. The j

South Carolina fuel Company, Inc. (Fuel Company) costs of additions, renewals and betterments to utility plant, 4

South Carolina Generating Company, Inc. (GENCO) including direct labor, material and indirect charges for engineering, supervision and an allowance for funds used South Carolina Pipeline Corporation (Pipeline during construction, are added to utility plant accounts.

Corporation)

Nonregulated businesses The original cost of utility property retired or otherwise dis-posed of is removed from utility plant accounts and general-

- SCANA Petroleum Resources, Inc. (Petroleum Resources)

- ly charged, along with the cost of removal, less salvage, to SCANA Energy Marketing, Inc.

Suburban Propane Group, Inc.

accumulated depreciation. The costs of repairs, replacements SCANA Propane Services, Inc.

and renewals of items of property determined to be less than SCANA Communications, Inc. (SCI)-

a unit of property are charged to maintenance expense.

Primesouth, Inc.

SCE&G, operator of the V. C. Summer Nuclear Station (Summer Station), and the South Carolina Public Service ServiceCare, Inc.

Authority (PSA) are joint owners of Summer Station in the SCANA Resources, Inc.

SCANA Development Corporation (in liquidation) proportions of two-thirds and one-third, respectively. The Certain investments are reported using the cost or equity parties share the operating costs and energy output of the method of accounting as appropriate. Significant intercom-plant in these proportions. Each party, however, provides its pany balances and transactions have been eliminated in own financing. Plant-in-service related to SCE&G's portion of Summer Station was approximately $937.2 million and consolidation in compliance with Statement of Financial

$925.1 million as of December 31,1996 and 1995, respec-Accounting Standards No. 71 (SFAS 71), " Accounting for the tively. Accumulated depreciation associated with SCE&G's Effects of Certain Types of Regulation" which provides that share of Summer Station was approximately $313.2 million profit on intercompany sales to regulated affiliates are not and $261.0 million as of December 31,1996 and 1995, re-eliminated if the sales price is reasonable and the future spectively. SCE&G's share of the direct expenses associated recovery of the sales price through the rate-making process with operating Summer Station is included in "Other opera-is probable, tion" and " Maintenance" expenses.

B. Basis of Accounting E. Allowance for Funds Used During Construction The Company accounts for its regulated utility opera-AFC, a noncash item, reflects the period cost of capital tions, assets and liabilities in accordance with the provisions devoted to plant under construction. This accounting prac-of SFAS 71. The accounting standard requires cost-based tice results in the inclusion of, as a component of construc-rate-regulated utilities, such as the Company, to recognize tion cost, the costs of debt and equity capital dedicated to in their financial statements revenues and expenses in dif-construction investment. AFC is included in rate base in-ferent time periods than do enterprises that are not rate-vestment and depreciated as a component of plant cost in rIgulated. As a result the Company has recorded, as of establishing rates for utility services. The Company's regu-December 31,1996, approximately $287 million and $59 lated subsidiaries calculated AFC using composite rates of wmillion of regulatory assets and liabilities,trespectively,7mm' /These rates do ~not' ex 9;1%r8.6% and -8.5%1for 1996/1995 and 19947respectively.rv

. d includini amounts recorded for' deferred Kncome tax assets?

- aximum allowable rate as;

% p c, a

l

+m l

,a-t E

A v

i Q; W -

\\ fu;

/

calculated under FERC Order No. 561 Interest on nuclear annual rate of inflation, to be $545.3 million including par-fuelin process and sulfn: dioxide emission allowances is tial reclamation costs. SCE&G is providing for its share of capitalized at the actualinterest amount.

estimated decommissioning costs of Summer Station over F. Revenue Recognition the life of Summer Station. SCE&G's method of funding Customers' meters are read and bills are rendered on a decommissioning costs is referred to as COMReP (Cost of monthly cycle basis. Base revenue is recorded during the Money Reduction Plan). Under this plan, funds collected f-accounting period in which the meters are read.

through iates ($3.2 million in each of 1996 and 1995) are l

Fuel costs for electric generation are colh.cted through used to py premiums on insurance policies on the lives of the fuel cost component in retail electric rates. - The fuel certain Company personnel. SCE&G is the beneficiary of l

cost component contained in electric rates is established by these p)licies. Through these insurance contracts, SCE&G is the PSC during semiannual fuel cost hearings. Any differ.

able to take advantage of income tax benefits and accrue ence between actual fuel costs and that contained in the earnings on the fund on a t:x deferred basis at a rate high-fuel cost component is deferred and included when deter.

er than can be achieved using more traditional funding mining the fuel cost couponent during the next semiannual approaches. Amounts for decommissioning collected fuel cost hearing. SCE&G had overcollected through the through electric rates, insurance proceeds, and interest on i

electric fuel cost component approximately $1.9 million and proceeds less expenses are transferred by SCE&G to an exter-l

$3.8 mililon at December 31,1996 and December 31,1995, nal trust fiad in compliance with the financial assurance l-

- respectively, which are included in " Deferred Credit s.

requirements of the Nuclear Regulatory Commission.

l nya.-

Management intends for the fund, including earnings there.

l

. Customers subject to the gas cost adjustiant clause are on, to provide for all eventual decommissioning expendi-

- billed based on a fixed cost of gas determined 17 *ba PSC tures on an after-tax basis. The trust's sources of decom-during annual gas cost recovery hearings. Any diff erer.ce missioning funds under the COMReP program include invest-

- between actual gas costs and that contained in rates if ment components of life insurance policy proceeds, return deferred and included when establishing gas costs dur.ng on investment and the cash transfers from SCE&G described the next annual gas cost recovery hearing. At Decemoer 31, above. SCE&G records its liability for decommissioning costs 1996 and 1995 the Company had undercollected throagh the in deferred credits.

' gas cos recovery proce ure approx mate yl $10.9 million and Pursuant to the National Energy Policy Act passed by t

d i

54.6 million, respectively, which are included in " Deferred Congress in 1992 and the requirements of the DOE, SCE&G Debits - Other."

has recorded a liability for its estimated share of the DOE's SCE&G's gas rate schedules for residentia!, small commer.

decontammtion and decommissioning obligation. The lia-cial and smallindastrial customers include a wather nor.

bility, approximately $3.2 million at December 31,1996, has

' malization adjmcment, which minimizes fluctuations in gas been included in "Long-Term Debt, Net," SCE&G is recover-revenues due to abnormal weather conditions.

ing the cost associated with this liability through the fuel c st component of its rates; accordingly, this amount has G. Diprkiation and Amortization been deferred and is included in " Deferred Debits - Other.,

Provisions for depreciation are recorded using the straight-line method for financial repo: ting purposes and are I. Income Taxes based on the estimated service lives of +he various classes of The Company and its subsidiaries file a consolidated L

property. The composite weighted average depreciation Federalincome tax return. Income taxes are allocated to rates were as follovcs:

individual companies cased on their contributions to the consolidated total.

99 Deferred tax assets and liabilities are recorded for the tax SCE&G~

~ ~ ~ ~

3.13 %

~3.02%

3.01%

effects of temporary differences between the book basis and GENCO 2.68 %

2.67%

2.70%

tax basis of assets and liabilities at currently enacted tax

' Pipeline Corporation 2.56%

2.78%

2.79 %

rates. Deferred tax assets and liabilities are adjusted for Aggregate'of Above 3h8%

2.98%

2.98%

changes in such rates through charges or credits to regula-

~

tory assets or liabilities if they are expected to be recovered Nuclear fuel amortization, which is included in " Fuel used from, or passed through to, customers of the Company's reg-in electric generation" and is recovered through the fuel ulated subsidiaries; otherwise, they are charged or credited

~

cost component of SCE&G's rates, is recorded using the to income tax expense.

units-of production method. Provisions for amortization of J. Pension Expense nuclear fuelinclude amounts necessary to satisfy obligatians The Company has a noncontributory defined benefit pen-i -

to the Department of Energy (D0E) under a contract for sis-sion plan, which covers all permanent employees. Benefits posal of spent nuclear fuel.

are based on years of accredited service and the employee's The acquisition adjustment relating to the purchase of average annual base earnings received during the last three certain gas properties in 19f 2 is i.*ing amortized over a 40-years of employment. The Company's policy has been to year period using the straignt-line me' hod.

fund the plan to the extent permitted by the applicable H. Nuclear Decommissioning Federalincome tax regulations as determined by an inde-Decommissioning of Summer Station h prasently sched.

pendent actuary.

uled to commence when the operating license expires in the year 20{2. Based on a 1991 study, the expenditures (on a z

Lbefore-tax basis) ~related tk CF3G's share of decommission,h'", m S

V Ling activities'are estimated [in'2022 dollars assuming a.45%

a<

C y

's U

u~m }&-

r

+

s u.

w g[

py hh3

[

,L 4

y' O~

ng

- Net periodic pension cost for ths years endid December employees render the service necessary to be eUgible for the -

31,- 1996,1995 and 1994 included the following components:

applicable benefits. Prior to 1993 the Company expensed these benefits, which are primarily health care, as claims

^

.E 1996 1995

'1994 were incurred. In its June 1993 electric rate order the PSC (Thousands of Dollars) approved the inclusion in rates of the portion of increased qvice cost-benefits expenses related to electric operations. The Company

.irned during the period $ 6,511 $

5,187 $ 8,684 expensed approximately $9.8 million, $8.5 million and $8.6 interest cost on projected million, net of payments to current retirees, for the years j

benefit obligation 21,985 19,473 21,711 ended December 31,1996,1995 and 1994, respectively.

l Adjustments:

Additionally, in 1996 the Company expensed approximately.

Return on plan assets (78,614) (103,874) 2,365

$6.2 million to accelerate the amortization of the remaining Net amortization transition obligation for postretirement benefits other than i

74,769~ ~~(29,760) pensions, as authorized by the PSC. (See Note 2A.)

and deferral

~Nefpe:iodiGension

--40,150

^--

Net periodic postretirement benefit cost for the years

_ (i.ncome) e,xpense

_ _' $ (9,968) $ j4,445) $_3,000 ended December 31,1996,1995 and 1994, included the fol-i lowing components:

The determination of net periodic pension cost is based 1996 1995 1994 upon the following assumptions:

(Thousands of Dollars)

AEMal'diiEEEtlafe

~7.5%~~8.0%~7.25%

during the period

$ 2,631 $ 2,076 $ 2,417 j

Expected long-term rate of Interest cost on accumulated -

i return on plan assets 8.0%

8.0%

8.0%

postretirement benefit obligation 7,841 7,253 6,644 l

. Annual rate of Adjustments:

I salary increases _

3A%__, 2.5%_ _4.75%

Return on plan assets Amortization of unrecognized The following table sets forth the funded status of the transition obligation 9,513 ' 3,344 3,344

' plan at December 31,1996 and 1995:

Other net amortization 3

and deferral

_. _ I.9 9 6

~ ~

1,150 661 860

)

t

_ _ __ 1995 _

~ Net periodic poifretirement

' Actuirial present value of benefit obligations:

The determination of net periodic postretirement benefit Vested benefit obligation

$ 243,872 $ 228,434 cost is based upon the following assumptions:

. Nonvested benefit obligation

_ 23,732 _ _.15,540_

3

_._ Accmnulated,bengt, o,,bligaj_n $, 26,7,60{,$ 233,974' E al discount rate

~'

.5

/.

25 /i o

~

Plan assets at fair value Health care cost trend rate 9.5%

11.0 % 11.25%-

(invested pnmanly in equity Ultimate health care cost trend and debt securities)

$ 523,530 $ 447,760

---(to be achieved in 2004)-

5.5%

6.0%

5.25%-

rate - - - -

Proj;cted benefit obligation _

_306,881__ 284,145_

e ga seu M de funded stahs of de L

rj e be ht obl gation 216,649 163,615 plan at December 31,1996 and 1995:

Unrecognized net transition liability 8,178 9,022 Unrecognized prior service costs 8,223 9,660

-~~

1996 1995 ~

' Unrecognized ne.t_ gain

. _ (175,119)_(146,943) fhsaNs of Dolla'8)

Pension asset recograzed in

, _Consolida_t_ed, Balance Sheets _$_,57,931j _3_5,354_

Accu ulate postretirement Retirees '

The accumulated benefit obligation is based on the plan's

$ 74,181

$ 64,989 ben; fit formulas without considering expected future salary Other fully eligible participants 6,674 6,685 increases. The following table sets forth the assumptions per active partigpants__ _29,215_27A76,,

used in determining the amounts shown above for the years Accumukied postretirement 1996 and 1995.

JgeKoggagn ___]110 lyJ 98g5A g

1 Plan assets at fair value i-l I

i Miuhl discount rate used'ti

~ ' ~

Accumulated postretirement

~

1996 1995 benefit obligation 110,130 98,750 determine benefit obligations 7.5%

7.5%

Plan asseis lesithinicumiliated~ ~

~ ~ ~ - ~ ~

~

Assumed annual rate of future salary postretirement benefit obligation (110,130)

(98,750) increases _for projected benefit obligation _

_ 3.0%._ 3.0%

Unrecognized net transition liability 48,724 58,237 Unrecognized prior service costs 6,224 5,320 In addition to pension benefits, the Company provides Unrecognized net loss 17,838 13,840 pgcertain health care and life insurance benefits to active and c ^ : Postretirement benefit liability ? ~ ~

' ^~'

4m ggretired employees.(The costs of postretirement benefits 4:

.r'ecognized in' Consolidated 1 g

?other than pensions are accrued during the years thelg ~

rm.

m(-J $ i 37,344) c l $(21,'353')L

. ; Balance Sheets ;

yw w

mm g 77

,,g M

wg

^;

M *,

~

4,,

q 4

4

,7%

x s

.g

The accumulat:d postretirement benefit obligation is The valuation estimates of interests in oil and natu al gas based upon the plan's benefit provisions and the following properties are significantly influenced by oil and nat ral gas market prices and the results of recurring reserve stuuies of such properties. Net income of the Company may be materi-assumptions:

Assumed Isaltlisare cosihend-9l ally adversely affected by a decline in oil and natural gas

~

prices or reserve estimates.

rate used to measure expected costs 9.5 % 10.59.

N. Temporary Cash Investments Ultimate health care cost trend The Company considers temporary cash investments hav-rate (to be achieved in 2004) 5.5% 5.5%

ing original maturities of three months or less to be cash 7.5% 7.5%

' Annual discount rate equivalents. Temporary cash investments are generally in Annual rate of salary i. ncreases-

~

~ 3.0%

3.0%

the form of commercial paper, certificates of deposit and The effect of a one percentage-point increase in the repurchase agreements.

assumed health care cost trend rate for each future year on

0. Reclassifications the aggregate of the service and interest cost components of Certain amounts from prior periods have been reclassified n:t periodic postretirement benefit cost for the year ended to conform with the 1996 presentation.

D;cember 31,1996 and the accumulated postretirement P. Use of Estimates benefit obligation as of December 31,1996 would be to in.

The preparation of financial statements in conformity

" ease such amounts by $191,000 and $3.2 million, respec.

with generauy accepted accounting principles requires man-

gty, agement to make estimates and assumptions that affect the K. Debt Premium, Discount and Expense, Unamortized reported amounts of assets and liabilities and disclosure of centingent assets and liabilities at the date of the financial acbt renuum, discount and expense are being statements and the reported amount of revenues and amortized as components of " Interest on long-term debt, expenses during the reporting period. Actual results could net" over the terms of the respective debt issues. Gains or differ from those estimates.

losses on reacquired debt that is refinanced are deferred and amortized over the term of the replacement debt.

2. RATE MATTERS:

A. On January 9,1996 the PSC issued an order granting 1.. Environmental SCE8G an increase in retail electric rates of 7.34%, which The Company has an environmental assessment program to identify and assess current and former operations sites will produce additional revenues of approximately $67.5 mil-tion annually. The increase has been implemented in two that could require environmental cleanup. As site assess-phases. The first phase, an increase in revenues of approxi-ments are initiated an estimate is made of the amount of mately $59.5 million annually based on a test year, or i

expenditures, if any, necessary to investigate and clean up 6.47%, commenced in January 1996. The second phase was each site. These estimates are refined as additionalinfor-implemented in January 1997 and will produce additional mation becomes available; therefore, actual expenditures revenues of approximately $8.0 minion annuauy, or.87%

could differ significantly from the original estimates.

more than current rates. The PSC authorized a return on Amounts estimated and accrued to date for site assessments common equity of 12.0% The PSC also approved establish-and cleanup and environmental claims settlements relate ment of a Storm Damage Reserve Accout capped at $50 primarily to regulated operations; such amounts are deferred minion to be collected through rates over a ten-year period.

and are being smortized and recovered through rates over a Additionally, the PSC approved accelerated recovery of a sig-five-year period for electric operations and an eight-year nificant portion of SCE&G's electric regulatory assets period for gas operations. Such deferred amounts totaled (excluding deferred income tax assets) and the remaining

$41.4 million and $18.0 million at December 31,1996 and

- 1995, respectively. The deferralincludes the costs estimated transition obligation for postretirement benefits other than to be associated with the matters discussed in Note 100.

pensions, changing the amortization periods to allow recov-ery by the end of the year 2000. SCE&G's request to shift, M.0il and Gas f r ratemaking purposes, approximately $257 million of The Company fonows the full cost method of accounting depreciation reserves from transmission and distribution for its oil and gas operations and, accordingly, capitalizes all assets to nuclear production assets was also approved. The costs it incurs in the acquisition, exploration and develop.

PSC's ruling does not apply to wholesale electric revenues ment of interests in oil and gas properties. The Company under the FERC's jurisdiction, which constitute approximate-amortizes capitalized costs on the units-of production ly five percent of the Company's electric revenues. The FERC method, based on total estimated proved recoverable has rejected the transfer of depreciation reserves for rates r: serves. The Company accounts for normal dispositions of subject to its jurisdiction.

interests in oil and gas properties as adjustments to capital.

B. In 1994 the PSC issued an order approving the ized costs and does not recognize any gain or loss.

Company's request to recover through a billing surcharge to In addition, the capitalized costs are subject to a " ceiling its gas customers the costs of environmental cleanup at the t0st," which limits such costs to the aggregate of the esti.

sites of former manufactured gas plants. The billing sur-mated present value of future net cash flows from proved oil charge is subject to annual review and provides for the and gas reserves, plus the lower of cost or fair market value recovery of substantiauy an actual and projected site assess-of unproved properties. Non-cash write-downs resulting ment and cleanup costs and environmental claims settle-from the application of the ceiling test were $0 million,$24.2 minion and $94.1 million in the m,ents for the_ Company's gas operat ons t atbeen d i

h had prev lously_

i December 31,l1996,1995 and 1994,Lrespectively.

e y

-(

e' ' Y,? :

I p

h.

~

^

j i7

+

-_m_m_

1 annual review, the PSC approved the continued use of the billmg surcharge. The balanca remaining to be recovered Approximately $17.3 million of the portion of long-term amounts to approximately $38.0 million.

debt payable in 1997 may be satisfied by either deposit and C. In September 1992 the PSC issued an order granting canceHation of bonds issued upon the basis of property the Company a $.25 increase in transit fares from $.50 to additions or bond retirement credits, or by deposit of cash with the Trustee.

$.75 in both Columbia and Charleston, South Carolina; how-ev:r, the PSC also required $.40 fares for low income cus-On January 10,1997 the Company made unsecured tomers and denied the Company's request to reduce the bank loans totaling $60 minion, due January 9,1998 at number of routes and frequency of service. The new rates initial rates between 5.995% and 6.031% at a fixed 12-month 1.IBOR plus a spread of 10 to 121/2 basis points.

w:re placed into effect in October 1992. The Company Proceeds from the loans were used to repay unsecured bank -

I appealed the PSC's order to the Circuit Court, which in May loans totaling $60 minion due January 10,1997 which were 1995 ordered the case back to the PSC for reconsideration of l

i several issues including the low income rider program, rout-classified as long-term debt at December 31,1996.

ing changes, and the $.75 fare. The Supreme Court' declined On August 7,1996 the City of Charleston executed 30-to review an appeal of the Circuit Court decision and dis-year electric and gas franchise agreements with SCE&G. In missed the case. The PSC and other intervenors filed anoth-consideration for the electric franchise agreement, SCE&G er Petition for Reconsideration, which the Supreme Court will pay the City $25 million over seven years (1996-2002) denied. The PSC and other intervenors filed another appeal and has donated to the City the existing transit assets in to the Circuit Court which the Circuit Court denied in an Charleston. The $25 million is included in electric plant-in-service. In settlement of environmental claims the City may Ord:r dated May 9,1996. In this Order, the Circuit Court have had against SCE&G involving the Calhoun Park area, upheld its previous Orders and remanded them back to the where SCE&G and its predecessor companies operated a man-PSC. During August, the PSC heard oral arguments on the Orders on remand for the Circuit Court. On September 30, ufactured gas plant until the 1960's, SCE&G will pay the City

$26 million over a four-year period (1996-1999). Such 1996, the PSC issued an order affirming its previous orders, amount is deferred (see Note 1L). Accordingly, the unpaid and denied the Company's request for reconsideration. The balances of these amounts are included in "Long-Term Debt."

Company has appealed these two PSC orders back to the SCE&G has three-year revolving lines of credit totaling Circuit Court where they are awaiting action.

$100 million, in addition to other lines of credit, that pro-D. On August 8,1990, the PSC issued an order effective vide liquidity for issuance of commercial paper. The three-November 1,1990, approving changes in Pipeline Corpora-year lines of credit provide back-up liquidity when commer-tion's gas rate design for sales for resale service and uphold-cial paper outstanding is in excess of $100 million. The ing the "value-of-service" method of regulation for its direct long-term nature of the lines of credit allow commercial industrial service. Direct industrial customers seeking " cost-paper in excess of $100 million to be classified as long-term of-s!rvice" based rates initiated two separate appeals to the debt. SCE&G had outstanding commercial paper of $90 mil-Circuit Court, which reversed and remanded to the PSC its lion at December 31,1996.

August 8,1990 order. Pipeline Corporation appealed that Substantially all utility plant and fuelinventories are decision to the Supreme Court which on January 10,1994 pledged as collateralin connection with long-term debt.

reversed the two Circuit Court decisions and reinstated the PSC Order. The Supreme Court held that the industrial cus.

4. FUEL FINANCINGS:

tomer group's appeal was premature and failed to exhaust Nuclear and fossil fuel inventories and sulfur dioxide administrative remedies. Additionally, the Supreme Court emission allowances are financed through the issuance by interpreted the rate-making statutes of South Carolina to fuel Company of short term commercial paper. These give discretion to the PSC in selecting the methodology to short-term borrowings are supported by an irrevocable b; used in setting rates for natural gas service. The PSC revolving credit agreement which expires July 31,1998.

then held another hearing and issued its Order dated Accordingly, the amounts outstanding have been included in December 12,1995 maintaining the present level of the long-term debt. The credit agreement provides for a maxi-caps. This Order was appealed to the Circuit Court by mum amount of $125 milh,on that may be outstandmg at Pipeline Corporation and the industrial customer group with any time.

several other parties intervening. The Circuit Court judge Commercial paper outstanding totaled $66.1 million and has written a letter to the parties indicating that he will

$76.8 milhon at December 31,1996 and 1995 at weighted rule to require the PSC to set an overall rate of return.

average interest rates of 5.62% and 5.76%, respectively.

Howev;r, no order has been issued. The impact, if any, on.

the Company's results of operations, cash flows and fmancial

5. COMMON EQUITY:

position is not presently determinable.

The changes in " Common Stock," without par value, during 1996,1995 and 1994 are summarized as follows:

3. LONG-TERM DEBT:

~ Number ~

Thousaruis~

The annual amounts of long term debt maturities, including the amounts due under the nuclear and fossil fuel

. _ of Shares _ of_ Dollars.

Balance December 31,1993' 93,238,914 $ 826,665 agre:ments (see Note 4), and sinking fund requirements for the years 1997 through 2001 are summarized as follows:

Issuance of common stock _._ _2,796,106_60,105 Balance December 31,1994 96,035,020 886,770 t

Year ___.

_. Amount. _ _ _ -

Issuance of common stock. _. 103,623,863 1,0 7,588,843 _ _ 169,919 (Thousarids of Dollars)

Balance December 31,1995

}{ss a

-y)55g$273's1,125[593 m ns y.

41n

.gg 7,m3 0~

~$146 2 3

06 75

, 2{

19991.

105 895 :

o

The Restated Articles of Incorporation of the Company do

7. INCOME TAXESI nit limit the dividends that may be payable on its common Totalincome tax expense for 1996,1995 and 1994 is as stock. However, the Restated Articles of Incorporation of follows:

SCE&G and the Indenture underlying its First and Refunding Mortgage Bonds contain provisions that, under certain cir-

~ ~ ~ 1996 1995 i994~

cumstances, could limit the payment of cash dividends on (Thousands of Dollars) its common stock. In addition, with respect to hydroelec-Current taxes:

tric projects, the Federal Power Act requires the appropria-Federal

$ 98,286 $101,656 $62,033

." tion of a portion of certain earnings therefrom. At

~ State 14,051 16,193 13,178 December 31,1996 approximately $17.6 million of retained Total current taxes 112,337'~~117,849~ ~' "

75,211~~

earnings were restricted by this requirement as to payment Deferred taxes /neti ~~ ~~

of cash dividends on SCE&G's common stock.

Federal 8,635 (13,878)

(9,006)

Cash dividends on common stock were declared at an State 1,706 (1,224)

(86) rnnual rate per share of $1.47, $1.44 and $1.41 for 1996,

_ Tota (deferred taxes _ _1_0,3_4_1_,. _(15,102)](9,092) 1995 and 1994, respectively.

Investment tax credits:

Amortization of amounts 5, PREFERRED STOCK

. deferred _ (credit)_

. (3,619) _(3,630)_ (3,631)

(Subject to Purchase or Sinking Funds):

Jotalincome ta.x expense _ $119,059 $ 99,11W62,480 The call premium of the respective series of preferred stock in no case exceeds the amount of the annual divi-The difference in totalincome tax expense and the dend. Retirements under sinking fund requirements are at amount calculated from the application of the statutory par values.

Federal income tax rate (35% for 1996,1995 and 1994) to The aggregate annual amounts of purchase fund or sink-pretax income is reconciled as follows:

ing fund requirements for preferred stock for the years 1997 1996 _ 1995_ _ 199_4 _

through 2001 are summarized as follows:

(Thousands of Dollars)

Year isoisi Net income

$215,286 $168,339 $115,452

_ Yea.r_ _

Amount 1997

$2,432 2000

$2,440 Charged to operating 1998 2,440 2001 2,440 expenses 118,023 109,949 94,510 1999 _ _ _. _ 2,440 Charged (credited) to other income 1,036 (10,832) (32,022)

Thi changes in " Total Preferred Stock (Subject to pur-Preferred stock dividends 5,433 5,687 5,955 chase or sinking funds)" during 1996,1995 and 1994 are

~ Totalir~e~ tax incoine

$339,778'$273,iW$183,895~

^

summarized as follows:

[ncome taxes on aboTe at statutory Federal Number Thousands inc me tax rate

$118,922 $ 95,600 $ 64,363 of Shares of Dollars Increases (decreases)

Balance December 31,1993 881,968

$ 55,344 attributable to:

Shares Redeemed:

State income taxes (less

$100 par value (8,072)

(807)

Federalincome tax effect) 10,242 9,730 8,510 150 par value (51,802)

(2491) 0 Ba, ce i r 31,1594 822,094 51,946 rever al at h gh than statutory rates (4,073) (3,941) (4,327)

$100 par value (6,809)

(681)

~~

en e ts 3

Bala e De e e

1,19'95 763 619 48[682 Totalincome

$100 par value (7,198)

(720)

(2,516)

.ta_x expense, _. _ _$119,059_$ 99,117 $_62,488

_ (50,319)_$45,446, 550_ par value_._

, BalancqDecembe(3_i i916 706,102 n

comprising the Company's net deferred tax liability of

$556.7 million at December 31,1996 and $521.8 million at December 31,1995 are as follows:

y.,

y

-, yn,

t~w -

-1 h__~

~

1 9

Lw m" ;,

Ig.[ '

'h, g

+A

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1996 1995 The following methods and assumptions were used to

~

~~7 Thousands bf Donas) estimate the fair value of the above classes of financial i

Deferred tax assets:

instruments:

Unamortized investment tax credits $ 52,113 $ 54,342 Cash and temporary cash investments, including commer-Cycle billing 19,799 19,143 cial paper, repurchase agreements, treasury bills and notes Nuclear operations expenses 4,722 3,755 are valued at their carrying amount.

Oil and gas properties 8,267 9,738 Fair values of investments and long-term debt are based Deferred compensation

.6,749 -

5,647 on quoted market prices of the instruments or similar Other postretirement benefits 10,764 6,371 instruments, or for those instruments for which there are no ',

~~Other

~

12,883 7,599 quoted market prices available, fair values are based on net Total defeired'tdisse~ti

"~115,297' ~106,595 IEeferred tax liabilities.

~ '~~

present value calculations. Investments which are not con-1 sidered to be financial instruments (goodwill) have been Property, plant and equipment 610.957 592,160 excluded from the carrying amount and estimated fair value.

Pension expense 21,790 14,191 Settlement of long-term debt may not be possible or may Research and experimentation 12,528 6,196 not be a prudent management decision.

Reacquired debt 8,334 6,680 Short-term borrowings are valued at their carrying amount.

Deferred fuel ~

3,701 541 The fair value of preferred stock (subject to purchase or

-Other 14,721 ~628A3'O Potential taxes and other expenses that would be 8,662 sinking funds) is estimated on the basis of market prices.

Tolal deferred tax liabilities 672,031~

Nil defeired_td~~ liability ~~=~ ~ ^ ' ~ $556,734 $521,'835 incurred in an actual sale or settlement have not been taken into consideration.

=

The Internal Revenue Service has examir.ed and closed SCI was a principal partner in Powertel PCS Partners L.P.

consolidated Federalincome tax returns of the Company (Powertel), which owned licenses to develop a personal com-through 1989, has examined and proposed adjustments to munications services (PCS) system in major markets in the th Company's Federal returns for 1990 through 1992 and is Southeast. As a result of the February 7,1996 merger of currently examining the Company's Federal returns for 1993 Powertel with InterCel, Inc., an established provider of cel-through 1995. The Company does not anticipate that any adjustments which might result from these examinations lutar telephone services, SCI received approximately 4.5 mil-lion shares of Intercel common stock at a distribution price will have a significant impact on the results of operations, per share of $16.50. Such shares are restricted securities cash flows or financial position of the Company.

until early 1998. Based on the value of Intercel common 8, FINANCIAL INSTRUMENTS:

stock on the distribution date, SCI recorded in "Other I

The carrying amounts and estimated fair values of Income a one-time after-tax gain on its investment of the Company's financialinstruments at December 31,1996 approximately $5.7 million. In April 1996, SCI purchased and 1995 are as follows:

100,000 shares of InterCel non-voting convertible preferred 1996 1995

~

stock for $75 million. Such stock is convertible in April J

2000 at a conversion price of $16.50, or approximately 4.5 EsthiiaTed Estimated million common shares. InterCel common stock closed at 12 i,

Carrying Fair Carrying Fair 1/4 per share on December 31,1996, resulting in a pretax i

Amount Value Amount Value unrealized holding loss of approximately $31.1 million. The -

(Thousands of Dollars) common stock ranged from a low of 113/4 to a high of 26 Assets:

1/4 during 1996 and, through February 12, ranged from a Cash and low of 121/16 to a high of 17 during 1997.

temporary

9. SHORT-TERM BORROWINGS:

".pany pays fees to banks as compensation for its n stments $ 17,349 $ 17,349 $ 16,082 $ 16'082 mnu C

mme a papu krrMngs are Invest.ments 179,809 167,657 90,380 105>280 Litbilities:

for 270 days or less. Details of hnes of credit and short-Short-tenn term borrowings, excluding amounts classified as long-term (Notes 3 and 4), at December 31,1996,1995 and 1994 and borrowings 144,599 144,599 112,524 112,524 for the years then ended are as follows:

, ong-term l

2.

l debt-.

1,632,828 1,673,085 1,629,862 1,737,686

~~-

~

1996 1995 1994 Preferred stock (Mons of DoUars) l Authorizd lines of credit at yeared

$525.1

$477.1

$379.1 ure ase r nj sinking funds) 45,446 44,342 48,682 46,603

$470.4

$470.0

$355.1 t

The information presented herein is based on pertinent Short-term borrowings information available to the Company as of December 31, outstanding at year-end:

1996 ard 1995. Although the Company is not aware of any Bank loans

$ 54.6

$ 32.0

$ 71.8 factors that would significantly affect the estimated fair Weighted average

,m. value amounts, such financialinstruments have not been g. w.u 4 interest ratem1 m 5.81%

6.21%

6.38%

7 Leomprehensively sevalued since December 31/1996l and thei LCommercial paper -

i $(90.0 K $; 80.51 l$100.0

' '

• p"

. current esthmated fair value may differ significantly from i

, 4 Weighted average; f

d Winterest ratei 1..

/ 5.53% /.- 5.83% $6.04R ?

@gthe estimated fair value at that atem '

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10, COMMITMENTS AND CONTINGENCIES Scope of this investigation has been expanded to approxi-mately 30 acres, including adjacent properties owned by the A. Construction SCANA and Westvaco Corporation have formed a limited National Park Service, the City of Charleston and private liability company, Cogen South LLC, to build and operate a properties. The site has not been placed on the National

$170 million cocer% tie n fac2ity at Westvaco's Kraft Priority List, but may be added before cleanup is initiated.

Division Pu er h L Grth Charleston, South Carolina.

The potentially responsible parties (PRP) have agreed with SCANA & '#stvaco each own a 50% interest in the LLC. The the EPA to participate in an innovative approach to site

. fac lity Al cido industrial process steam for the investigation and cleanup called "Superfund Accelerated i

• Westy.co papw r 9 and shaft horsepower to enable SCE&G Cleanup Model," allowing the pre-cleanup site investigation to g' n: rate up to 99 megawatts of electricity. Construction process to be compressed significantly. The PRPs have nego-tiated an administrative order by consent for the conduct of financing is being provided to Cogen South LLC by banks. A

' $15 million capital contribution to the LLC by each partner a RemedialInvestigation/ Feasibility Study and a corre-is expected prior to operation of the facility. In addition to Sponding Scope of Work. Field work began in November 1993 and a draft RemedialInvestigation Report was submit-the cogeneration LLC, Westvaco has entered into a 20-year ted to the EPA in February 1995. SCE&G resolved second contract with SCE&G for allits electricity requiiements at the North Charleston mill at SCE&G's standard industrial and third round comments and submitted a Final Draft rate. Construction of the plant began in September 1996 RemedialInvestigation in October 1996. Although SCE&G is and it is expected to be operational in the fall of 1998.

continuing to investigate cost-effective cleanup methodolo-gies, further work is pending EPA approval of the Final Draft B, Nuclear Insurance RemedialInvestigation Report.

The Price Anderson Indemnification Act, which deals with In October 1996 the City of Charleston and SCE&G settled public liability for a nuclear meident, currently establishes all environmental claims the City may have had against the liability limit for third-party claims associated with any SCE&G involving the Calhoun Park area for a payment of $26 nuclear incident at $8.9 billion. Each reactor h,censee is million over four years (1996-1999) by SCE&G to the City.

currintly liable for up to $79.3 mil"an per reactor owned for SCE&G is recovering the amount of the settlement, which each nuclear incident occumng at any reactor in the United does not encompass site assessment and cleanup costs, States, provided that not more than $10 million of the lia-through rates in the same manner as other amounts accrued bility per reactor would be assessed per year. SCE&G s maxi-for site assessments and cleanup (see Note IL). As part of mum assessment, based on its two-thirds ownership of the environmental settlement, SCE&G has agreed to con-Summer Station, would be approximately $52.9 million per struct an 1,100 space parking garage on the Calhoun Park incident, but not more than $6.7 million per year.

site and to transfer the facility to the City in exchange for a SCE&G currently maintains policies (for itself and on 20-year municipal bond backed by revenues from the park-behalf of the PSA) with Nuclear Electric Insurance Limited ing garage and a mortgage on the parking garage. The total (NEIL) and American Nuclear Insurers (ANI) providing com-amount of the bond is not to exceed $16.9 million, the bmid property and decontamination insurance coverage of maximum expected project cost.

$1.9 billion for any losses at Summer Station. SCE&G pays SCE&G owns three other decommissioned manufactured annual premiums and, in addition, could be assessed a gas plant sites which contain residues of by-product chemi-retroactive premium not to exceed five times its annual pre-cats. SCE&G maintains an active review of the sites to moni-mium in the event of property damage loss to any nuclear tor the nature and extent of the residual contamination.

generatmg facilities covered under the NEIL program. Based SCE&G is pursuing recovery of environmentalliabilities on the current annual premium, this retroactive premium from appropriate pollution insurance carriers, would not exceed $5.7 million.

To tha extent that insurable claims for property damage, D. Franchise Agreement See Note 3 for a discussion of an electric franchise agree-decontamination, repair and replacement and other costs and expenses arising from a nuclear incident at Summer ment between SCE&G and the City of Charleston.

Station exceed the policy limits of insurance, or to the E. Oil and Gas forward Contracts extent such insurance becomes unavailable in the future, In an effort to limit exposure to changing natural gas

. and to the extent that SCE&G's rates would not recover the prices, in January 1995 the Company entered into a series of cost af any purchased replacement power, SCE&G will retain forward contracts for approximately sixty percent of its fore-the risk of loss as a self-insurer. SCE&G has no reason to casted natural gas production for the years 1996-2001. In anticipate a serious nuclear incident at Summer Station. If 1996, portions of the forward contracts for the year 1997 such an incident were to occur, it could have a material and all of the forward contracts for the years 1998-2001 adverse impact on the Company's results of operations, cash were removed. The closing of the contracts did not result in flows and financial position.

a material gain or loss to the Company.

C Environmental F. SCI Matters In September 1992 the Environmental Protection Agency A percentage of the projected annual revenues for the (EPA) notified SCE&G, the City of Charleston and the years 1996-2003 of certain fiber optic route of a joint ven-Charleston Housing Authority of their potentialliability for ture between SCI and a subsidiary of ITC Holdn.1 Company, the investigation and cleanup of the Calhoun Park Area Site Inc. has been guaranteed by SCI. The amount of such guar-in Charleston, South Carolina. This site originally encom-antee over the remaining portion of the eight-yea r period, p:ss:d approximately eighteen acres and included properties net of $33.5 million for revenue contracts obtained by the which were;the locations for industrial operations, including

_ joint venture,is approximately $7J mulion. _

4 5 SCI, as a' result of an internal audit [ informed the Federal La wood preserving (creosote) plant and one of SCE&G's

! decommissioned manufactured gas plants. The original '

' Communications Commission (FCC) that it violated certain ?

c 29' w && aw a&

i licensing requirements in establishing and opTrating an 800 Mhz radio system in South Carolina for public safety and 1995 utility use. As a result, SCI has returned to the FCC several.

Electric Gas Tnnsit Total (thousands of mnars) lic;nses obtained in violation of FCC rules and the FCC is Dti[p'""*};-- ' #8

)

conducting an investigation of the system. The Company excluding depreciation i

does not believe that the resolution of this issue will have a and amortization 640,528 292,227 10,577 943,332 rnaterialimpact on its results of operations, cash flows or D'P"Ci^" " *"d financial osition-

-1 2,647 16,304 226 119,177 P

Total operating expenses 743,175 308,531 10,803 1,062,509 G. Claims and Litigation operatinghcostossL, $ _232,213 _$ 34,m $ 16p8g 259,553 J

' The Company is engaged in various claims and litigation Add - Other income, net (29,749) incidental to its business operations which management l'55 - Int'"St ch*'9es, net 108,397 anticipates will be resolved without materialloss to the 3,, ioc%,'" ""*d5 7;d'$ '

J Company. No estimate of the range of loss from these mat-f,gg,@p===~~==

"=-

1 t rs can currently be determined.

Identifiable

$ 364,007

_'. m. $ 384,433

... -. _ _.. _ __ _ _ _$ 20,0 79

$ 347 11e SEGMENT OF BUSINESS INFORMATION:

Yol'Nn'y"o$ns 20,m Segment information at December 31,1996,1995 and T L _,,__ _

~ ~

666~

$ 404 1994 and for the years then ended is as follows:

Identifiable assets at December 31, 1994:

1996 Utility plant, net

$2,897,954 $315,746 $ 1,791 $3,215,491 Inventories 79,260_,17,026_49L 96,781, Electric Gas Transit Total

$ 2, Total (Thousands ofDollars).

~n=.m._.=._

$2,977,214 _$332,772

.n n = _286 3,312,272

==n Operating revenues

$1,106,52_4 $403,19_9_ $ 3,108_ $1,512,831 Other assets

_ 1,004,240, Operating expenses, Total assets

$4,316,512 excluding depreciation

'~~ ~ ~ ~ ~ ~ ~ ^ ^ ~ ~ ~ ~ ^ ' ~ ~

'~

~

and amortization 692,127 349,918 9,346 1,051,391

12. QUARTERLY FINANCIAL DATA a nortis$"on'"'

29,588 _ 17,706 _ 263 _ _147,557_

(UNAUDITED):

Total.. operating expenses __821,715_ 367,624_ ; 9,609 _1,198,948 operating incomejloss) _$_284,809, $,35,575J(6J01) 313,883 Second Third Fourth 1996 Add Other income, net 28,992 Tirst Less. Interest charges, net 122,156 Quarter Quarter Quarter Quarter Annnal Preferred stock dividends

_.5,433 Total operating Net income

$ 215,286 revenues i

Capital'expdiitAeF~~~" ~~~

(000)

$394,662 $350,386 $402,284 $365,199 $1,512,831

~"

Identifiable -

m

--m gg--~.198,671 $ 48,338.m$m.43 $ 247,452 Operating 4

~'

income (000) 85,386 66,447 97,726 64,324 313,883 Company operations 23,981 Net Total

$ 271,433 income (0o0) 68,813 38,300 69,963 38,210 215,286 IdentifiMe assets at Earnings per Decmber 31,1996:

weighted average Utility plant, met

$3,047,648 $370,772 $ 1,875 $3,420,295 share of common

__1 ventories _ ____ _ 83,931, 26,057 _ 423 _ 110,411_

stock as reported

.66

.37

.66

.36 2.05 Total

$3,131,579 $396,829

$2

~ ~.298~ 3,530,706

. Missets

- ' ' ^ '

1,228,640 1995~

T,ot.al assets

$4,759,346 First Second Third fourth m= u

.,. = - s m m.= = ~ ~- "

Quarter Quarter Quarter Quarter Annual 1995 Total operating E'ectric_ Gas _ Transit __ Total _

revenues (000)

$344,760 $311,136 $373,476 $323,599 $1,352,971 (Thousands ofDollars)

Operating Operating revenues 51,006,420 $342,662 $ 3,889

$1,352,971 income (000) 75,046 61,012 95,438 56,018 287,514 operating expenses, Net xxcluding depreciation income (000) 51,265 15,586 68,029 33,459 168,339 and amortization 638,480 286,660 10,429 935,569 Earnings per Depreciation and weighted average amortization -

_ 110,865 _ 18,016 _ 1,007 _ _ 129,888, share of common Tota _l operating expenses.

749,345 _ 304,676_ _ 11,436 _ 1,065,457 stock as reported

.53

,16

.69

.32 1.70 Operadng JacomeJogsL _ _$_257,07t._ $ 37,986J17J3Q 287,514

^

Add Other income, net 8,060 Less - Interest chayes, net 121,548

- Preferred stock dividends

_ 5.687_

Net income

$ 168,339 Capital expenditures:

Identifiab

~ - -...le

$ 253,577 $ 38,718 $

265.a $ 292,560 m.=. n=

.a-

--=m Utilized for overall C:mpany operations

_ 27,816_

l T tal

$ _ 3,20,376 Identifiable assets at

. DecImber 31, 1995:

r Utility plant, net

$3,033,887 $337,939 $ 1,878 $3,373,704 PMginufatornesyTNCrMM 87,143C15,714& 561y103d18y

• s, w ye *wrvy*g " w r w s<em m y amwn F

c inthAg

$3,1Jg3L1336R$Jdgp47w21 -

y+

+7 9th ametsc -

3% - -

u 05 u 04 Wf Thtal assets ~,,

~,.,..

a.

.' $4,534.426 :-

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. COMPETITION _

such regulatory assets from its balance sheet. Although the The electric utility industry has begun a major transition potential effects of deregulation cannot be determined at that could lead to expanded market competition and less present, discontinuation of the accounting treatment could-regulation.- Deregulation of electric wholesale and retail have a material adverse effect on the Company's results of markets is creating oppcrtunities to compete for new and operations in the period the write-off is recorded. It is existing customers and markets. As a result, profit margins expected that cash flows and the financial position of the and asset values of some utilities could be adversely affect.

Company would not be materially affected by the discontin-ed. Legislative initiatives at the Federal and state levels are nation of the accounting treatment. The Company reported being considered and, if enacted, could mandate market approximately $287 million and $59 million of regulatory d: regulation. The pace of deregulation, future prices of assets and liabilities, respectively, including amounts record-electricity, and the regulatory actions which may be taken ed for deferred income tax assets and liabilities of approxi-by the PSC and the FERC in response to the changing envi.

mately $107 million and $57 million, respectively, on its ronm:nt cannot be predicted. However, recent FERC actions balance sheet at December 31,1996.

willlikely accelerate competition among electric utilities by LIQUIDITY AND CAPITAL RESOURCES providing for wholesale transmission access. In April 1996 The cash requirements of the Company arise primarily the FERC issued Order 888, which addresses open access to fr m SCE&Gs operational needs, the Company's construction transmission lines and stranded cost recovery. Order 888 requires utilities under FEP.C jurisdiction that own. control pr gram and the need to fund the activities or investments f the Company's nonregulated subsidiaries. The ability of or op; rate transmission lines to file nondiscriminatory open the Companys regulated subsidianes to replace existing access tariffs that offer to others the same transmission ser-vice they provide thernselves. The FERC has also permitted plant investment, as well as to expand to meet futur, demand for electricity and gas, will depend upon their amu-utilities to seek recoviry of wholesale stranded costs from d: parting customers by direct assignment. Approximately ty to attract the necessary financial capital on reasonable terms. The Company's regulated subsidiaries recover the five percent of tha Company's electric revenues is under FERC jurisdiction.

costs of providing services through rates charged to cus-tomers. Rates for regulated services are generally based on The Company is aggressively pursuing actions to position histoncal costs. As customer growth and inflation occur itself strategically for the transformed environment. To enhance its flexibility and responsiveness to change, the and the regulated subsidianes continue their ongoing con-Company's electric and gas utility, SCE&G, operates Strategic struction programs, it is necessary to seek increases in rates.

As a result, the Company's future financial position and Busin:ss Units. Maintaining a competitive cost structure is results of operations will be affected by the regulated sub-of paramount importance in the utility's strategic plan, SCE&G has undertaken a variety of initiatives, including sidiaries ability to obtain adequate and timely rate and reductions in operation and maintenance costs and in ther regulatory relief.

staffing levels. In January 1996 the PSC approved (as dis-The Company and Westvaco Corporation have formed a cussed under " Liquidity and Capital Resources") the acceler-limited liability company, Cogen South LLC, to build and ated recovery of SCE&G's electric regulatory assets and the perate a $170 milhon cogeneration facility at Westvaco,s shift, for ratemaking purposes, of depreciation reserves from Kraft,Dm,,ston Paper Mill in North Charleston, South transmission and distribution assets to nuclear production Car hna. The Company & Westvaco each own a 50% interest in the LLC. The facility will provide industrial process steam assets. The FERC has rejected the depreciation reserve

. transfer for rates subject to its jurisdiction. In May 1996 for the Westvaco paper mill and shaft horsepower to enable the FERC approved SCE&G's application establishing open SCE&G to generate up to 99 megawatts of electricity.

access transmission tariffs and requesting authorization to Construction financing is being provided to Cogen South LLC sell bulk power to wholesale customers at market-based by banks. A $15 million capital contribution to the LLC by.

rates.. Significant investments are being made in customer each partner is expected prior to operation of the facility.

In addition to the cogeneration LLC, Westvaco has entered and management information systems. Marketing of ser-

- vic:.s to commercial and industrial customers has been into a 20-year contract with SCE&G for allits electricity increased significantly. The Company believes that these requirements at the North Charleston null at SCE&G s s, tan-actions as well as numerous others that have been and will dard industrial rate. Construction of the plant began in be taken demonstrate its ability and commitment to succeed September 1996 and it is expected to be operationalin the fall of 1998.

in the new operating environment to come, Regulated public utilities are allowed to record as assets On August 7,1996 the City of Charleston executed 30-some costs that would be expensed by other enterprises. If year electne and gas franchise agreements with SCE&G. In deregulation or other changes in the regulatory environ-consideration for the electric franchise agreement, SCE&G

,mentroccur, the Company may no longer be eligible to applymWill pay the City $2,5 milhon over se,ven, years (1996-2002) donated 16 thiFCi the fransifassets in.

'J

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~ On January 9,1996 th? PSC issued an ord:r granting SCE&G an increase in retail ct:ctric rates of 7.34%, which 1997 1996_.

will produce additional revenues of approximately $67.5 mil-(Thousands of Dollars) lion annually. The increase has been implemented in two Property additions and phases. The first phase, an increase in revenues of approxi.

construction expenditures, net mately $59.5 million annuG based on a test year, or of allowance for funds used 6.47%, commenced in January 1996. The second phase was during construction

$311,821

$280,749 implemented in January 1997 and will produce additional Nuclear fuel expenditures 30,706 12,724 rev:nues of approximately $8.0 million annually, or.87%

Maturing obligations, redemptions more than current rates. The PSC authorized a return on and sinking and purchase common equity of 12.0%. The PSC also approved establish.

fund requirements _ _ _ _ _ _. $379,812

$327,19_0 -

37,285 33,717 m:nt of a Storm Damage Reserve Account capped at $50

. Tota (

million and collected through rates over a ten-year period.

Additionally, the PSC approved accelerated recovery of a sig.

Approximately 51% of total cash requirements (after pay-nificant portion of SCE&G's electric regulatory assets ment of dividends) was provided from internal sources in (excluding deferred income tax assets) and the remaining 1996 as compared to 56% in 1995.

transition obligation for postretirement benefits other than The Company has in effect a medium-term note program pensions, changing the amortization periods to allow recov.

for the issuance from time to time of unsecured medium-ery by the end of the year 2000. SCE&G's request to shift, term debt securities. The proceeds from the sales of these for ratemaking purposes, approximately $257 million of securities may be used to fund additional business activities depreciation reserves from transmission and distribution in nonutility subsidiaries, to reduce short-term debt assets to nuclear production assets was also approved. The incurred in connection therewith or for general corporate -

PSC's ruling does not apply to wholesale electric revenues purposes. At December 31,1996 the Company had $317.6 under the FERC's jurisdiction, which constitute approximate.

million available for issuance.

ly five percent of the Company's electric revenues. The FERC SCE&G's First and Refunding Mortgage Bond Indenture, has rejected the transfer of depreciation reserves for rates dated April 1,1945 (Old Mortgage), contains provisions pro-subj:ct to'its jurisdiction, hibit'ng the issuance of additional bonds thereunder (Class On August 8,1990 the PSC issued an order effective A Bonds) unless net earnings (as therein defined) for twelve November 1,1990, approving changes in Pipeline consecutive months out of the fifteen months prior to the Corporation's gas rate design for sales for resale service and month of issuance are at least twice the annualinterest upholding the "value-of-ser/ ice" method of regulation for requirements on all Class A Bonds to be outstanding (Bond its direct industrial service. Direct industrial customers Ratio). For the year ended December 31,1996 the Bond seeking " cost-of-service" based rates initiated two separate Ratio was 4.37. The issuance of additional Class A Bonds appeals to the Circuit Court, which reversed and remanded also is restricted to an additional principal amount equal to to the PSC its August 8,1990 order. Pipeline Corporation (i) 60% of unfunded net property additions (which unfund-l app:aled that decision to the Supreme Court which on ed net property additions totaled approximately $379 mil-1 January 00,1994 reversed the two Circuit Court decisions lion at December 31,1996), (ii) retirements of Class A Bonds and reinstated the PSC Order. The Supreme Court held that (which retirement credits totaled $69.6 million at December the industrial customer group's appeal was premature and 31,1996), and (iii) cash on deposit with the Trustee.

failed to exhaust administrative remedies. Additionally, the SCE&G has a bond indenture dated April 1,1993 (New l

Supr:rra Court interpreted the rate-making statutes of Mortgage) covering substantially all of its electric properties South Carolina to give discretion to the PSC in selecting the under which its future mortgage-backed debt (New Bonds) methodology to be used in setting rates for natural gas ser.

will be issued. New Bonds are issued under the New vice. The PSC then held another hearing and issued its Mortgage on the basis of a like principal amount of Class A Order dated December 12,1995 maintaining the present Bonds issued under the Old Mortgage which have been level of the caps. This Order was appealed to the Circuit deposited with the Trustee of the New Mortgage (of which Court by Pipeline Corporation and the industrial customer

$185 million were available for such purpose as of December group with several other parties intervening. The Circuit 31,1996), until such time as all presently outstanding Class Court judge has written a letter to the parties indicating A Bonds are retired. Thereafter, New Londs will be issuable that he will rule to require the PSC to set an overall rate of on the basis of property additions in a principal amount l

return. However, no older has been issued. The impact, if equal to 70% of the original cost of electric and common l

any, on the Company's results of operations, cash flows and plant properties (compared to 60% of value for Class A

. financial position is not presently determinable.

Bonds under the Old Mortgage), cash deposited with the The estimated primary cash requirements for 1997, Trustec, and retirement of New Bonds. New Bonds will be

' excluding requirements for faelliabilities and short-term issuable under the New Mortgage only if adjusted net earn-borrowings, and the actual primary cash requirements for ings (as therein defined) for twelve consecutive months out 1996 are as follows:

of the eighteen months immediately preceding the month of issuance are at least twice the annualinterest requirements on all outstanding bonds (including Class A Bonds) and New Bonds to be outstanding (New Bond Ratio). For the year ended December 31,1996 the New Bond Ratio was 5.90.

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The following additional financing transactions have The Company anticipates that its 1997 cash requheents occurr:d sinca December 31,1995:

of $323.6 million will be met through internally gen:ratsd o On January 12,1996 SCANA closed on unsecured bank funds (approximately 64%, after payment of dividends), the loans totaling $60 million due January 10,1997, and used sales of additional equity securities and the incurrence of th proceeds to pay off a loan in a like total amount. On additional short-term and long-term indebtedness. The tim-January 10,1997 SCANA refinanced the loans with unse-ing and amount of such financing will depend upon market cured bank loans totaling $60 million due January 9,1998 conditions and other factors. Actual 1997 expenditures may at initial interest rates between 5.995% and 6.031%, at a vary from the estimates set forth above due to factors such l fixed 12-month LIBOR plus a spread of 10 to 121/2 basis as inflation and economic conditions, regulation and legisla-points.

tion, rates of load growth, environmental protection stan-o On February 12,1997 SCANA closed on the sale of $25 dards and the cost and availability of capital.

million of Medium-Term Notes having an annualinterest The Company expects that it has or can obtain adequate rate of 6.9% and maturing February 15,2007 These funds sources of financing to meet its projected cash requirements were used to reduce short-term borrowings at SCANA, which for the next twelve months and for the foreseeable future, borrowings had been incurred in support of nonregulated Environmental Matters subsidiaries construction activities.

The Clean Air Act requires electric utilities to reduce sub-Without the consent of at least a majority of the total stantially emissions of sulfur dioxide and nitrogen oxide by voting power of SCE&G s preferred stock, SCE8,G may not the year 2000. These requirements are being phased in over issue or assume any unsecured indebtedness if, after such two periods. The first phase had a compliance date of issue or assumption, the total pnncipal amount of all such January 1,1995 and the second, January 1,2000. The unsecured indebtedness would exceed 10% of the aggregate Company's facilities did not require modifications to meet pnncipal amount of all of SCE&Gs secured indebtedness and the requirements of Phase I. The Company will most likely capital and surplus; provided, however, that no such consent meet the Phase 11 requirements through the burning of nat-shall be required to enter into agreements fer payment of ural gas and/or lower sulfur coalin its generating units and principal, interest and premium for securities issued for pot-the purchase and use of sulfur dioxide emission allowances, lution control purposes.

Low nitrogen oxide burners are being installed to reduce Pursuant to Section 204 of the Federal Power Act, SCE&G nitrogen oxide emissions to the levels required by Phase II.

and GENCO must obtain FERC authority to issue short-term Air toxicity regulations for the electric generating industry mdebtedness. The FERC has authonzed SCE&G to issue up are likely to be promulgated around the year 2000.

to $200 million of unsecured promissory notes or commer-During 1995 the Company filed compliance plans reted cial paper with maturity dates of twelve months or less, but to Phase 11 requirements with DHEC. The Company currentti not later than December 31,1999. GENCO has not sought estimates that air emissions control equipment will require capital expenditures of $114 million over the 1997-2001 SC G ha $145 million authorized and un'ised lines of penod to retrofit existing facilities, with mereased operation cndit at December 31,1996. In addition, Ft Company and maintenance costs of approximately $1 million per year.

has a credit agreement for a maximum of $125 million with To meet comphance requirements through the year 2006, the full amount available at December 31,1996. The credit the Company anticipates total capital expenditures of agre: ment supports the issuance of short-term commercial app papir for the financing of nuclear and fossil fuels and sulfur The Federa lean er hct, as amended, provides for the dioxide emission allowances. Fuel Company commercial.

hddhWhh@MeM paper cutstanding at December 31,1996 was $66.1 million.

of treatment for each wastewater discharge. Under this Act, SCE&G's Restated Articles of Incorporation prohibit compliance with applicable limitations is achieved under a issuance of additional shares of preferred stock without con-national permit program. Discharge permits have been sent of the preferred stockholders unless net earnings (as issued for all and renewed for nearly all of SCE&G's and defined therein) for the twelve consecutive months immedi-GENCO's generating units. Concurrent with renewal of these ately preceding the month of issuance are at least one and permits, the permitting agency has implemented more rigor-

[

on:-half times the aggregate of allinterest charges and us control programs. The Company has been developm.g ptferred stock dividend requirements (Prefened Stock c mpliance plans for this program. Amendments to the Ratio). For the year ended December 31,1996 the Preferred Clean Water Act proposed in Congress mclude several provi-Stock Ratio was 2.80.

sions which, if passed, could prove costly to SCE&G. These During 1996 SCANA issued 1,118,366 shares of the include limitations to mixmg zones and the implementation

• Company's common stock under its Investor Plus Plan. In of tech 10 based stan ar s addition, SCANA issued 1,393,761 shares of its common stock pursuant to its Stock Purchase Savings Plan (SPSP).

Act of 1991 directed D11EC to promulgate regulations for the At December 31,1996 SCANA has authonzed and reserved disposal of industrial solid waste. DHEC has promulgated a for issuance, and registered under effective registration proposed regulation, which, if adopted as a final regulation statements, 387,742 and 1,157,378 shares of common stock in its present form, would significantly increase SCE&G's and pursuant to the Investor Plus Plan and the SPSP, respective-GENCO's costs of construction and operation of existing and ly. On January 14,1997 an additional 2.500,000 shares of future ash management facilities.

SCANA common stock were registered for sale under the The Company has an environmental assessment program Investor Plus Plan. Effective February 1,1997 the Investor Phis Plan converted from an onginalissue plan to a market-that couldiequire enviionmeMal cleanu to identify and assess current and former o Aisite assss7 4

purchase plan,s ments are' initiated, estimates are made of the cost, if any, J

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to investigate and clean up each site. These estimates ars Regulat ry Mitt;rs r; fined as additional information becomes aYailable; there-SCE&G filed for electric rate relief in 1995 to encompass fore, actual expenditures could differ significantly from orig-primarily the remaining costs of completing the Cope inal estimates. Amounts estimated and accrued to date for Generating. Station. As discussed under "I.iquidity and site assessments and cleanup and environmental claims set-Capital Resources," the PSC issued an order on January 9, it:ments relate primarily to regulated operations; such 1996 increasing electric retail rates.

amounts are deferred and are being amortized and recovered The Company's regulated business operations were through rates over a five-year period for electric operations impacted by the NEPA and FERC Orders No. 636 and 888.

and an eight year period for gas operations. Deferred NEPA was designed to create a more competitive wholesale amounts totaled $41.4 minion and $18.0 million at power supply market by creating " exempt wholesale genera-December 31,1996 and 1995, respectively. The deferral tors" and by potentially requiring utilities owning transmis-includes the costs estimated to be associated with the mat-sion facilities to provide transmission access to wholesalers. -

ters discussed below..

See " Competition" for a discussion of FERC Order 888. Order o In September 1992 the EPA notified SCE&G, the City of No. 636 was intended to deregulate the markets for inter-Charleston and the Charleston Housing Authority of their state sales of natural gas by requiring that pipelines provide potentialliability for the investigation and cleanup of the transportation services that are equalin quality for all gas Calhoun Park Area site in Charleston, South Carolina. This suppliers whether the customer purchases gas from the site originally encompassed approximately eighteen acres pipeline or another supplier. In the opinion of the and included properties which were the locations for indus-Company, it continues to be able to meet successfully the trial operations, including a wood preserving (creosote) challenges of these altered business climates and does not

~ lant and one of SCE&G's decommissioned manufactured gas anticipate there to be any material adverse impact on the p

plants. The original scope of this investigation has been results of operations, cash flows, financial position or busi-expanded to approximately 30 acres, including adjacent ness prospects.

properties owned by the National Park Service and the City Oth{, through a joint venture with a subsidiary of Charleston, and private properties. The site has not been S

plac;d on the National Pn,onty I.ist, but may be added before cleanup is mitiated. The PRPs have agreed with the llolding Company, Inc., a Georgia-based telecommunications EPA to participate in an innovative approach to site investi-holding company, owns and operates a 900 mile fiber optic gatnn and cleanup called Superfund Accelerated Cleanup network through Alabama, Georgia, Louisiana, Mississippi Model, allowing the pre-cleanup site investigation process and Texas. SCI holds an approximate 17% interest in the to be compressed sigmficantly. The PRPs have negotiated common stock of Intercel, a publicly traded telecommunica-

- an admimstrative order by consent for the conduct of a tions company which owns PCS licenses for the Birmingham, RemedialInvestigation/ Feasibility Study and a correspond-Alabama; Jacksonville, Florida; and Memphis, Tennessee /

mg Scope of Work. Field work began m November 1993 and Jackson, Mississippi Major Trading Areas (MTAs). In June a draft RemedialInvestigation Report was submitted to the 1996 InterCel purchased a PCS license for the Atlanta MTA, EPA in february 1995. SCE&G resolved second and third financing the purchase principally through a private place-round comments and submitted a final Draft Remedial ment of convertible preferred stock, of which SCI purchased Investigation Report in October 1996. Although SCE&G is

$75 million. The non-voting preferred stock is convertible continuing to investigate cost effective cleanup methodolo-to InterCel common stock in April 2000. Intercel was the gles, further work is pending EPA approval of the Final Draft winning bidder for additional PCS lic.enses to provide service to thirteen Basic Trading Areas in Kentucky, Tennessee and n ctober 1 6 th ity of Charleston and SCE&G settled Indiana. InterCet will now market PCS in portions of twelve all environmental claims the City may have had against state: to a population of 23 million.

SCE&G involving the Calhoun Park area for a payment of $26 A percentage of the projected annual revenues for the million over four years by SCE&G to the City. SCE&G is years 1997-2003 of certain fiber optic routes of a joint ven-recovering the amount of the settlement, which does not ture between SCI and a subsidiary of ITC Holding Company, encompass site assessment and cleanup costs, through rates Inc. has been guaranteed by SCI, The amount of such guar-m the same manner as other amounts accrued for site antee over the remaining portion of the eight-year period, assessments and cleanup. As part of the environmental set-net of $33.5 million for revenue contracts obtained by the tiement, SCE&G has agreed to construct an 1,100 space joint ventures, is approximately $7.3 million. In January parking garage on the Calhoun Park site and to transfer the 1997 SCI reached an agreement in principle with ITC Holding facility to the City m exchange for a 20-year municipal bond Company, Inc. (ITC) to seu to ITC, in exchange for convert-backed by revenues from the parking garage and a mortaage ible preferred stock of ITC, SCI's interest in such joint ven-on the parkmg garage. The total amount of the bond is not ture. Upon closing of the transaction and expected refi-to exceed $16.9 million, the maximum expected proj,ect nancing of debt associated with the joint venture, SCI is to cost.

be released from its revenue guarantee.

o SCE&G owns three other decommissioned manufactured SCI, as a result of an internal audit, informed the FCC gas plant sites which contam residues of by-product chemi-that it violated certain licensing requirements in establish-cils. SCE&G mamtains an active review of the sites to moni-ing and operating an 800 Mhz radio system in South tor the nature and extent of the residual contamination.

Carolina for public safety and utility use. As a result, SCI has returned to the FCC severallicenses obtained in viola-SCE&G is pursuing recovery of environmentalliabilities tion of FCC rules and the FCC is conducting an investigation from appropriate-pollution msurance carners""

M tE Thi Company [does not believe that theTe~so-r ]

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lution of this issue will have a materialimpact on results of 1995 Eamings per share and return on common equity operations, cash flows or financial position.

increased primarily as a result of improved results of opera-The Company's net investment in oil and gas properties is tions at Petroleum Resources, which recorded net losses of subjict to a quarterly ceiling test calculation that limits

$16.7 million in 1995 and $54.9 million in 1994. Higher capitalized costs to the aggregate of the estimated present electric and gas margins and lower operation and mainte-value of future net cash flows from proved oil and gas nance costs, which more than offset the negative impact of riserves plus the lower of cost or fair market value of higher fixed costs, also contributed to the favorable earn-unproved properties. Carrying values of proved reserves in ings performance in 1995.

excess of the ceiling limitation are expensed currently.

The Company's financial statements include AFC. AFC is a.

~

In an effort to limit exposure to changing natural gas utility accounting practice whereby a portion of the cost of pricts, in January 1995 the Company entered into a series of both equity and borrowed funds used to finance construc-forward contracts for approximately sixty percent of its fore-tion (which is shown on the balance sheet as construction

- casted natural gas production for the years 1996-2001. In work in progress)is capitalized. An equity portien of AFC is 1996 portions of the forward contracts for the year 1997 and.

included in nonoperating income and a debt portion of AFC all of the forward contracts for the years 1998-2001 were is included in interest charges (credits) as noncash items, removed. The closing of the contracts did not result in a both of which have the effect of increasing reported net material gain or loss to the Company.

income. AFC represented approximately 3.9% ofincome Petroleum Resources and Fina Oil and Chemical Company before income taxes in 1996, 8.0% in 1995 and 8.3% in (Fina) are parties to a joint exploration and development 1994. In 1996 SCANA's Board of Directors raised the quatter-

. agreement providing for the exclusive oil and gas develop-ly cash dividend on common stock to 36 3/4 cents per share ment rights on approximately 400,000 acres in southern from 36 cents per share. The increase, effective with the

- Louisiana.- Petroleum Resources and Fina are continuing an dividend payable on April 1,1996, raised the indicated '

extensive 3-D seismic acquisition program on the property.

annual dividend rate to $1.47 per share from $1.44 per Fina is the operator of the multi-million dollar seismic pro-share. SCANA has increased the dividend rate on its com-gram, which is financed and owned on a 50-50 basis mon stock in 43 of the last 44 years.

bitween the companies. Petroleum Resources' participation Electric Operations in the seisnu,e and drilhng activity is financed largely with Electric sales margins for 1996,1995 and 1994 were as mternal cash flows from the existing Petroleum Resources fgtt operations.

On April 22,1996 Petroleum Resources closed a $46.7 N6 1965 _ _ 199 T million sale of substantially all of its oil and gas properties N #"#ONO #l r

in the state of Oklahoma to ONE0K Resources Company, a Electric operatm.g subsidiary of ONE0K,Inc.

rewnues

$1,106.5 $1,006.0 $975.4 In August 1996, Petroleum Resources and Cobra Oil and Less: Fuel used m, electn,c Gas Corporation (COBRA) entered into an agreement provid-generation 250.5 227.4 235.1 ing for the joint exploration and development of fifteen field areas in Alabama, Arkansas, Louisiana, New Mexico and

- Purchased power 11.4 14.7 20.1 Texas. Petroleum Resources' average interest in the program yargm,, _

5 84g.6 $ 76g3 $7203

= =.

=

is approximately 30%. Under the agreement, Petroleum 1996 The electn.e sales margin increased primarily as a Resources has acquired interests in 83,000 acres of processed

. result of the rate increase received by SCE&G m, January 3-D seismic data covering 900 square miles.

1996. Economic growth factors also contributed to the RESULTS OF OPERATIONS increase.

Earnings and Dividends 1995 The electric sabs nargin increased primarily as a Earnings per share of common stock, the percent increase result of the combint d impact of warmer weather in the (decrease) from the previous year and the rate of retum third quarter of 1995, colder weather in the fourth quarter earned on common equity for the years 1994 through 1996 of 1995 and the base rate increase received by the Company were as follows:

in mid-1994. These factors more than offset the negative impact of milder weather experienced during the first half 1996 1995 1994 of 1995.

+

Earnings per Increases (decreases) from the prior year in megawatt weighted average share

$2.05

$1.70

$1.22 hour2.546296e-4 days <br />0.00611 hours <br />3.637566e-5 weeks <br />8.371e-6 months <br /> (MWH) sales volume by classes were as follows:

Percent increase (decrease)

_.~

1996 1995 in earnings per share 20.6%

39.3% (33.3%)

Classification Return eamed on Residential 212,888 415,676

_ common equity (year.-end)_ 12.8% _10.8%_

8.5%

Commercial 144,536 229,472

?

- Industrial 110,147 48,651 1996 Earnings per share and retum on common equity Sale for Resale (excluding interchange)

(39,853) 38,688 (1,013) 12,776 increased primarily as a result of higher electric sales mar-Other

~~426,705 '745,263 gins at SCE&G and improved earnings at Petroleum Resources

^Tofal ferrit6 rial ~

- '~~ ' ~

_ Additionally, SCI reported a nonrecurring after-tax gain of s

, _ Total..

_ _. _699,425 _ 24,545 i

which more than offset increases in operating expenses.

Int _erchange_ _

~_

,1,126,130, 769,808-,

O $5.7 million asla result of the business combination of a

> 2 Powertel PCS Partners and InterCelin February 1996.

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'Interchang'e sales volume for 1996 increased ts a result of 1996 Other operation and maintenance expenses increased additional capacity resulting from the startup of the Cope primarily es a result of higher production costs attributable

. plant in early 1996, to the Cope plant which became operationalin January, 1996. The increase in depreciation and amortization i

Gas sale margins for 1996,1995 and 1994 were as fol-expenses reflects the addition of the Cope plant and other I "8' additions to plant-in-service. The increase in income tax expcnse corresponds to the increase in operating income.

The increase in other taxes reflects higher property taxes

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resulting from property additions and higher millages and

,,,,,,,,gg,~

Gas operating revenues

$403.2.

$342.7

$342.7 Less: Gas purchased 1995 Other operation and maintenance expenses decreased for resale 276.8 _ _ 212.4 _ 220.9 primarily as a result of lower pension costs and lower costs

_{ Margin

$126.4

$130.3

$121.8 at electric generating stations. De increase in depreciation and amortization expenses is primarily attributable to addi.

1996 The gas sales margin decreased pn. manly as a result of tions to plant-in-service and the write-off of certain soft-

higher gas costs and curtailments imposed on interruptible ware costs. The increase in income tax expense corresponds industrial customers dunng abnormally cold weather. Also to the increas ; in operating income. The increase in other

' contributing to the dechne in the gas sales margin from taxes reflects higher property taxes resulting from higher 19951996 were lower gas pnces in 1995 which allowed millages and assessments partially offset by lower payroll Pipeline Corporation to compete more successfully in that taxes resulting from early retirements of employees.

year with alternate fuel suppliers in industrial markets.

Other Income 1995 The gas sales margin increased primarily as a result of 1996 Other income, net of taxes, increased approximately lower gas costs which allowed Pipeline Corporation to com-

$23.9 million in 1996 primarily due to the improved earn-j pete successfully with alternate fuel suppliers in industrial ings performance of Petroleum Resources attributable to a markets. A shifting of transportation customers to the noncash reserve adjustment recorded in the second quarter j

industrial class and an increase in interruptible gas sales of 1995 and to higher gas prices and lower production costs.

also contributed to the improved margin.

The gain reported by SCI, discussed under " Earnings and j

Increases { decreases) from the prior year in dekatherm Dividends" is also included in other income reported for (DT) sales volume by classes, including transportation gas, 1996.

j were as follows:

1995 Other income, net of taxes, increased $36.0 million in 1995 primarily due to the improved earnings performance of Ciss'ifiia~ tion ~

1996-1995^

Petroleum Resources as discussed under " Earnings and Residential 1,774,289 802,211 Dividends."

)

Commercial 585,669 Industrial (1,564,759). 632,959 Interest Expense 7,960,434 Increases (decreases) in interest expense, excluding the Sale for resale :

583,040

-744,663 debt component of AFC, were as.follows:

Transportation gas (1,219,903)_(8,089A43)

__ Total _ _. _ _ __ 158,33 6_

_2f51,224 Classification 1996 isis ~

Othir Operating Expenses and Taxes (Millions of Dollars)

Increases (decreases) in other operatm.g expenses, includ-Interest on long-term debt, net

$(1.4)

$ 7.6

. mg taxes, were as follows:

Other interest exp~ense TM

~

$h.8)2C$K0'

'3 10.4 ClMHfistion i996- ~i995~

1996 The decease in interest expense is due primarily to (Millions of Dollars /

reductions in outstanding debt throughout most of the year.

Other operation and maintcnance

$ 20.1

$(6.6) 1995 The increase in interest expense is due primarily to D!preciation and amortization 17.7 10.7 the issuance of additional debt, including commercial paper, -

' Income taxes 8.1 15.4 during the latter part of 1994 and early 1995 Other taxes 3.3 5.0 Total

$49.2

$24.5

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For the Years Ended December 31,-

1996 1995 1994 1993 1992 (Thousands of dollars except statistics and per share amounts) -

L Stat: ment of Income Data -

!

• Total _ Operating Revenues

$1,512,831 $1,352,971 $1,322,062 $1,264,167 $1,138,375 C Operating Income 313,883 287,514 259,5';3 245,311 209,780

. Other Income 28,992

8,060 (29,749) 27,335 11,960

. N;t Income'-

215,286 168,339 115,452 165,240 117,667 i ' Balance Sheet Data l

Utility Plant, Net

' $3,529,028 $3,468,988 - $3,293,667_ $3,004,075 _ $2,810,279 Total Assets 4,759,346 4,534,426 4,316,512 4,026,701. 3,543,057 Capitalization:

i Common Equity 1,683,448 1,554,680 1,359,141

.1,317,495 1,149,087 l

Preferred Stucx (Not subject to purchase 26,027 26,027 26,027 l

Lor sinking fund) '

26,027 26,027 L Prereired Stock, Net (Subject to purchase or

[

-sinking fund)

-43,014 46,243 49,528 _

52,840 56,154 Long-Term Debt, Net -

1,581,608 1,588,879 1,548,824 - 1,424,399 1,204,754 >

l Total Capitalization

$3,334,097 $3,215,829 $2,983,520 $2,820,761 $2,436,022 Common Stock Data -

l

. Weighted Average Number of Common Shares 0utstanding (Thousands) 105,123 99,044 94,762 90,407 82,950 -

Earnings Per Weighted Average Share of Common Stock

$2.05

$1.70

$1.22

' $1.83

$1.42 Dividends Declared Per Share of Common Stock

$1.47

$1.44

$1.41

$1.37

$1.34 l

l Common Shares Outstanding (Year-End) (Thousands) 106,175 103,624 96,035 93,239 87,821 L

B:ok Value Per Share of Common Stock (Year-End)

. $15.86

$15.00

$14.15

$14.13

$13.08 -

I Number of Common Shareholders of Record 36,178 38,231 39,516 l 41,564 '

42,937-Oth;r Statistics i

. El:ctric:

l Customers (Year-End) 493,320 484,354 476,412 468,874 461,900..

E T:rritorial Sales (Million KWH).

18,010 17,583 ~

16,838

'16,880 15,794' Residential:

Average annual use per customer (KWH) 14,149 13,859 13,048.

14,077' 13,037 l

Average annual rate per KWH

$.0785

$.0747 5.0743

$.0707

$.0695 L

Generating Capability - Net MW (Year End) 4,316 4,282 3,876

'3,864 3,912 l

. Territorial Peak Demand - Net MW 3,698 3,683

~ 3,444

.3,557-

' 3,380 i

Gas:

Customers (Year-End) 248,681 243,523 238,614 234,736 231,153'

- Sales (Thousand Therms) 896,294 882,511

'781,109 717,417 761,721 Residential:

' Average annual use per customer (Therms) 639 570 543 605 577:

Average annual rate per therm

$.74

$.82

$.84

$.76

$.74 somm01110a com101 3

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Price Range: (a)

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-28 28 1/4 - 28 1/4-285/8 28 5/8 24 1/4 23 3/8 22 1/2 Low 25 3/8

'25 1/2 25 1/4 25 1/2 24 1/8 21 1/8 20 3/4 20 1/2 (a) As reported on the New York Stock Exchange Composite Listing.

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' Marketing Max Earwood Paul V. Fant Vice Chairman Vice President-Charles A. Rampey, Jr.

Support Services President Orp0fa00ll Pred x.Hann.

Jim x. Cantweit Vice President-Vice President William B. Timmerman Customer Service Chairman of the Board, President and Robert G. Edwards Chief Executive Officer (1)

W. Keller Kissam Vice President Vice President-Cathy B. Novinger Senior Vice President-Gas Operations - SCANA Gas Group SCANAPr0pdfleServices,iiic.

Administration, Neville 0. Lorick Governmental and Public Affairs Vice President-Fossil and Hydro Operations 7"" E; Thaas W H 1

Vice Pasident and GerWral Counsel, Charles B. McFadden Vice President-Yu.Dd E.*C$'cMee2, Jr.

SCANAC0mmunicali0ns, lac.

m y Group Executive-SCAL (A Gas Group Vice President-William B. Timmerman

/Eevin BJ Massh d

Customer Relations President (Vice Pasident-Finam*,

,1 Chief Flnancial OfBeer and Controller (2)

Martin K. Phalen V ce President-I uDavid N.Vanaest, j Electric Operational Support Warren A. Darby nVice President-l Corporate Compliance Gary J. Taylor President

Vice Pmsident (3)( d Betten T. Zeigler 3 Vice President-Judith H. Battle j

Nuclear Vice President-Finance and Controller J I,yan M.' WHHans M

Mitchell S. Tibshrany Richard E. Batton

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Vice President-

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Industrial Strategic Business Unit w7r MJ Steve Burns 4w)easurer>(5)E S0ulh {dr0 lina Pipeline (Orp0rdli0n Vice President

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' p~ 7 (2) Also Chief finandelOfEcer of all subsidiaries Of5cer of allsubsidiaiies Max Earwood Primes 0ulh.Inc.

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Vice Chairman

,i(3) Also Genem! Counsbl of SCE&G Jeff C. Chapman s

7(4) Also Secretary of all' subsidiaries Asbury H. Gibbes President and Treasurer President

(5) and SCANA G

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Vice President and Controller Leslie Withycombe SCANAPetr0leum Res0urces, lac.

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Pr;liiapalSilbsidlafles Max E,rwood SCANARes0urces,lric.

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<M Via Chairman John L. Skolds Jim N. Cantwell President iJohn I.2Shelds R $a President j

! %g Psesident and Chief Operating Officer Charles C. Morgan 3

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Dabney L. Sharp

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.k vCANA's Senior Staff, seatedfrom left: Berry Gibbes, M

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f Cathy Novinger, Kevin Marsh: standing from left:

Jack Skolds. Tom Arthur, Bill Timmerman.

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BoardDiretors i

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! Bill L. Amick

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l Chairman of the Board and Chief Executive Officer g4' p

[r j Amick Farms,Inc. Batesburg, SC g,

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1 William B. Bookhart, Jr.

Partner j

l l Bookhart Farms Elloree, SC j (a general farming business) i William T. Cassels, Jr.

l Chairman of the Board BillL. Amick William B. Bookha, Jr.

k[ W8esn T. Casssis I Southeastern Freight Lines, Inc. Columbia, SC c

4 l (a trucking business) f Hugh M. Chapman s'

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NationsBank South Atlanta, GA ise Elaine T. Freeman b

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ETV Endowment of South Carolina, Inc.

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(a non-profit organization)

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Lawrence M. Gressette, Jr.

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l Chairman of the Board Emeritus Hugh M. Chapman Elaine T. Freeman LLmenmece M. Grassetet A2 l SCANA Corporation Columbia, SC f

J W. Hayne Hipp I

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4 President and Chief Executive Officer The Liberty Corporation Greenville, SC

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(an insurance and broadcasting holding company)

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f F. Creighton McMaster f

President and Manager I

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F Winnsboro Petroleum Company Winnsboro, SC (a wholesale distributor of petroleum products) l John B. Rhodes 1

l Chairman and Chief Executive Officer l Rhodes oil Company, Inc. Walterboro, SC W. Hayne Hipp F. Creighton McMaster L John B. Jthodes (a distributor of petroleum products)

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William B. Timmerman (NOT PICTURED)

IN MEMORIAM I

' Chairman of the Board, President and E. Craig Wall, Jr. of Conway, a SCANA director since i

Chief Execu*.ive Officer 1982, died March 5,1997 at the age of 59. Chairman

$CANA Corporation Columbia, SC and Chief Executive Officer of CanalIndustries, a forest products company, Mr. Wall served on the SCANA Board of Directors' Executive and the Management Development and Corporate Performance Committees. He also served on the board of directors of Sonoco Products, NationsBank, Ruddick Corporation and Blue Cross and Blue Shield of South Carolina. SCANA Corporation will sorely miss his n

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counsel and leadership on the Board. We extend our i -

i sincere sympathy to his wife, Judith; children; and

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other family and friends.

k E. Craig Wall, Jr.

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!J OlRECTORS EMERITl: William R. Bruce.Sr..Kennett W. Franch, Jack E Hassell,Jr., John 9 H. Lumpkin. Sr.. Allan C. Mustard. Edwin W. Pike.Jr., %rgil C. Summer, John A. Warren i 3 -

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Questions concerning replacement of interest checks, tax J

information, transfers and other bond account information should -

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be directed to the appropriate Bond Trustee and Paying Agent:

l The 1997 Annual Meeting of SCANA Corporation's shareholders SCE&G First and Refunding Mortgage Bonds

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. will be held at 10:00 a.m. on Thursday, April 24, in the Ballroom Chase Manhattan 1

of the Adams Mark Hotel,1200 Hampton Street in Columbia, SC.

Corporate Trust Department - 15th Floor i

A notice of the meeting, proxy s+.atement and proxy will be 450 West 33rd Street j

. mailed to shareholders in March /

New York, NY 10001-2697 i

(800) 648-8380 (0Ip0fale%fS SCE&G First Mortgage Bonds SCANA Corporation Bank of New York 1426 Main Street '

100 Asheford Center North Columbia, SC 29201-2845 '

Suite 520 (803) 748-3000-Atlanta, GA 30338 1

90t@lldB00USliDOS

. ~ SCANA Corporation's common stock is listed on the New Audh0rs 1

' York Stock Exchange. The trading symbolis SCG. The newspaper Deloitte & Touche I.I.P listing is SCANA.

Certified Public Accountants The 5% Series cumulative preferred stock of South Carolina 1426 Main Street Electric & Gas Company (SCE&G) is also listed on the New York Columbia, SC 29201 Stock Exchange. The trading symbol is SAC Pr. The newspaper

listing is SCrE pf. SCE&G's other series of preferred stock are not ddili0 Dalin [0fmal10D listed and market prices are not published.

Publications: The Company provides a quarterly report to share.

. SCANA10VRSl0f MUS NdIl holders highlighting financial and operating results in the first, second and third quarters. A copy of SCANNs 1996 Annual H

The Plan provides investors a convenient and economical Report on Form 10-K (as filed with the Securities and -

1 means of acquiring, holding and transferring shares of SCANKs Exchange Commission) is available without charge. Requests common stock. Participants may purchase additional common for these and other financial publications should be directed to l

shar:s through automatic reinvestment of all or a portion of the Investor Relations Department.

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lL their cash dividends on SCANNs common stock and SCE&G's pre.

Internet: Information about the Company, including financial f;rred stock and/or by making optional cash payments of up to reports, press releases and descriptions of customer products and i

$100,000 per year. The Plan also features a direct purchase pro-services, is available on SCANNs home page on the World Wide

/ vision through which investors can acquire their first shares of Web at http://www.scana.com.

l

. SCANA common stock directly from the Company. A variety of other Investor 1.ine: In addition to information on a variety of share-i

' services, including direct deposit of dividends and safekeeping of holder account services, the latest information on dividends, share certificates, are also available. A Plan prospectus and financial results and other significant Company developments is enrollment card are available upon request, available by calling SCAN #s 24-hour, toll-free Investor 1.ine at Slidifil0ldfilB(luifkS Ivefta ela ons

Contact:

. Quistions concerning the SCANA Investor Plus Plan, stock H. John Winn, III l

transfer requirements, replacement of lost or stolen stock certifi-

-Manager - Investor Relations and Shareholder Services (054) cates or dividend checks, address changes, direct deposit of divi-(803) 748-3240

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dends, elimination of duplicate mailings, or other account services (803) 343-2344 (fax) should be directed to the Company's Shareholder Services Investors' Association:

epartmef For information about this organization's activities, please write to:

Association of SCANA Corporation Investors-Corporation c/o Paul Quattlebaum, Jr.

Attention: Shareholder Services (054) i;..

Columbia, South Carolina 29218-0001 22 hougMon Road Gadeston, E 2940M29

^ By caWng:

lES@EU"CA*nE)"t '""*)

hpe(led 199Hommon Stod Dividend Dates l

..(803) 343-2389 (fax).

First Second Third Fourth 3[d9$lffkQfD{dDdNfgiS(faf Quutu Quutu Quartu Quutu

.SCANA Corporation maintains shareholder records, issues Declaration February 18 April 24 August 20 October 21 dividend checks and acts as Transfer Agent and Registrar for the Company's common stock and SCE&G's preferred stock. Shareholders Ex-Dividend March 6 June 6 September 8 December 8 may r,end stock certificates directly to the Company's Shareholder Record March 10 June 10 September 10 December 10

' Services Department for transfer. There is no charge for this ser-Payment April 1 July 1 October 1 January 1,1998 vice. The Company recommends that certificates be mailed by Note: Dividend declaration, record and payment dates are subject to the discretion registered or certified mail Signatures required for transfer must of the Board of Duectors. Dates shown are based on the assumption that past patterns

. be guaranteed by an official of a financialinstitution that is an will prevail. Dividends on SCE&G's preferred stock issues are paid quarterly on the approved member of a Medallion Signature Guarantee Program.

same dates as the common stock dividends.

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SCANACorporation; Columbia,SouthCarolina 29218

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