ML20137Y434

1996 Annual Rept for Santee Cooper

ML20137Y434
Person / Time
Site:	Summer
Issue date:	12/31/1996
From:	Edwards T, Rainey J SOUTH CAROLINA PUBLIC SERVICE AUTHORITY (SANTEE COOPE
To:
Shared Package
ML20137Y404	List: ML20137Y420 ML20137Y434 RC-97-0081, Forwards 1996 Annual Rept for Scana & 1996 Annual Rept for Santee Cooper
References
NUDOCS 9704230088
Download: ML20137Y434 (45)

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?!P588 8 M88L S A N T E E C O O P E R,,,

I PDR ANNUAL REPORT

F

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i Cover: The first sontee cooper electricity was generated at the Pinopolis Power Plant on February 17,1942, and delivered to o defense contractor in North Charleston, S.C. which was producing a metal used in armor plating for ships

. and tanks. Jefferies Hydro, os **;e plant is now known, is located near Moncks Corner and has a generating copobility of 128 megawatts.

e 4

Contents t

9

' Corporate Statistics a

Q.

Comparative H_ighlights V

g.

Executive Report i'

Q

. Energy Sales v

^n TneIearin Review.

s %9 4"y : - Financlot Statements-as

?l Qg Finance Audit Committee Chairman's Letter vo QQ Board of Directors

. wv i

4 QQ Advisory Board & Management

- www

~

.QQ Sched'ule of Refunded Bonds Outstanding -

vv 4/'t Schedule f B nds Outstanding.

V 7

As part of Santae Cooper's corporate commitment to protectmg and improving our k -environment, this annuai report was printed with soy-based inks on paper that meets United States Environmental Protecten Agency guidelines for recycled

. paper. We urge you to recycle this paper when you have fmished with it.

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4 ASantee i

\\j!V' gfCooper Construction on the utility project began on Apnl18.1939.

with the f rst electricity generated on February 17,1942 from

'g the Pinopolis Power Plant a five unit hydroelectric facility near Moncks Corner Santee Cooper generates the power distnbuted by 15 of the state s 20 electnc cooperotwes to

.g more than 370.000 customers located in 38 counties, supplies

't T

power to over 30 large industries. the municipalities of f-

"y h,

Bomberg and Georgetown and the Charleston Air Force Bcse in Charleston Santee Cooper also serves atmost 108 000 retail customers in Berkeley Georgetown and Horry counties In addition to its original hydroelectric station. the utility hcs

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four larcfs scale, cool-fired generating stations in South Carolinz Jeffenes Station in Moncks Corner: Cross Station in Cross Winych Station in Georgetown. and Grornger Station in Conwog Sontee Cooper otso has combustion turbine-peaking units at Myrtle Beach and on Hilton Head Island and a smcit hydroelectric unit at the Santee Dom.

The utility has a one third ownership in the V C Summer Nuclear Station near Jenkinsville.

In October 1994. the Sontee Cooper Regional water p

, System begon commercial operation. This s. goo'ed a new era in Sontee Cooper's service to South Carolino. The c,tizens of Moncks Corner. Goose Creek, and Summer iUe and

. customers of the Berkeleg County Water 6 Son <tation Authonty (over 75.000 water users) are the beneficiones of this stable supply of one of Ufe's most precious comenod t4es Sontee Cooper is governed by a statewice boord of l

directors oppointed by the governor and approved by the state Senate. There is a board member representing each congressional district and each of the three counties where Santee Cooper senes retail customers d rectty one board member with previous electnc cooperoth e expenence: and a choirman oppointed at large.

Y j

Corporate Statistics ere

.m -

n_- v: mar== mwammun,awnemman Total Electric Revenue (en thousands of dollars) 696,026 640,361 605,230 592,810 548.051 Interdepartmental Sales of Electncity and Water (258)

(253)

(102)

Total Electric Revenue-Net of interdepartmental Sales On thousands of dollars) 695,758 ~

640.108 605,128 592.810 548,051 Water Systern 3.838 3,730 528 Total Operating Revenues (in thousands of dollars) 699,606 643,838 605,656 592,810 548,051 Operating & Maintenance Egenses Charged to' Operations On thousands of dollars) 400,556 380,291 377.825

'366,439 333,191 Sums in Lieu of Taxes Charged to Operations On thousands of dollars?"

1,928 1,929 2,235 3,643 3,643 Payments to the State Charged to Reinvested Earnings On thousands of dollars)

' 6,682 6,4'd '

6,157 5,997 5,816 Net Operating Revenues Available for Debt Service On thousands of dollars) 322,673 204,364 245,497 243,627 235,324 Reinvested Earnings (in thousands of dollars) 65,946 50,665 35,375

' 37,583 29,717 Energy Sales On gigawatthouts) 17,549 16,022 14,724 14,601 14,098

~"

- Number of Customers (at year end)

Retail 107,986

- 103,857 99,782.

96,670 94,215

.. Military and large industrial 33

.31 31 31 32 Wholesale

• 5

'5 5

5 5

Total 108.024 103,893 99,818 96,706 94,252 Generating Capability (av year end)(in megawatts)'

3,360 3,340

' 2,780 '

' 2,780 2,780 -

Power Requirements and Supply On gigawatthours)

Generation:

Hydro F23 595 527 508 556 Steam 14.501 12,782 12,533 11,974 10,843 Combustwn Turbine 3

6 10 4

Nuclear 2,375 2.515 1,476 2,030 2,499

. Total {in gigawatthours) 17,402

15,898 14.546 14,516 13,898 Purchases, Net interchanges, ete? On gigawatthours) 935 970 862 849 778 Total *(in gigawatthours) 18,3D 16,868 15,408 15.365 14,676 Terntonial Peak Demand (in megawatts) 3,441 3,102 2,931 2,655 2,620 (1) Begmnmg en Aptd 1994. francNse fees are no langer shown as revenues and expenses Amounts acuned for payment to the mumcipahties totaled $2.2R000 for 1M6 and $2.121000 for 1995 (2) Does r.at intaude non hrm rain to ott+r utihties (3) Begmnmg in 1994 and restated for 1W3 and 1991 sales to other utikt:es is shown as operatmg revenue and mcluded m kdowatthour sa!es rather than named agamst pwchased power A

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Corporate Statistics 2)

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Comparative Highlights

)

. e Financial (in thousands of dollars) 7:,

[TotalRevenues & In'comef, S 732,788~

[ $ 664I16 '

10

{

q Total Expenses & interest Charges 668,856 638,805 5

1

[0thir

,_ 2.0M i

' 24,854I; (92)

[

Reinvested Earnings S 65,946 5 50,665 30

>[

[6ebt Service Coverage};

J1.80 tiNm

[1.5' times.

4 L.,

Debt / Equity Ratio 76/24 '

77/23 2 '- p)

Sentistic$i~

~

~

>i t

i 4>

Retail Customers Served 107,906 103,857 4

[$ erg Saley(ingigawatthours)

[N,549[

l;,16.022

Id ; j

?

g.g y 1, Territorial Peak Demand (in megawatts) 3.441 3,102 11

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Sources of Revenue e Wholesale 48%

9 Military and Large industrial 24 %

9 Retail 21 %

O Other Income 5%

9 Other Electric Revenue 1%

0 Water Sales 1%

Distribution of Revenue Sp, 9 Operating Expenses (except depreciation)*

55%

l O Debt Service 31 */

l I

9 Additions to Plant, inventories, etc.

13%

G Taxes

• 1%

• Does not include payments made from Special Reserve Fund 3

Comparative Highlights

.a

v& Executive Report The electric utility mdustry, long known for its

~

stability, is making the transition into the competitive electric utility market. This change appears

~

inevitable, and Santec Cooper is faced with many

, s l

unprecedented challenges.

Many ask "Why deregulation?". The stated goal is s

I to provide cheaper electric power for the consumer

- E

~

'N ~

who can be a large industrial customer in the 1

g-Lowcountry, or a beachfront home owner in the

-)

Grand Strand area. The standard principle is that if a t

customer has a choice, the business offering the best g

i product, service, and price will be the most i

s i

successful. In theory, the consumers should be the

, 6.:s

.g

]

winners in a deregulated, restructured electric John S. Rolney industry. Ilowever, depending on how deregulation is implemented, this may not be true for all Meanwhile, Santee Cooper is positioning itself to j

consumer groups.

ultimately be the customer's power supplier of 1

with the challenges of entering the competitive choice, while encouraging all customers to make marketplace, Santee Cooper is positioned not merely electricity their energy of citoice.

1 j

to survive, but to be successful.

Santee Cooper is doing many things to prepare for On Jan.11,1996, on a voluntary basis, Santee success in the competitive utility market, things such as:

I

]

Cooper became the first public power utility to file

• Pmading excellent customer service an open-access transmission tariff. FERC's May 29, Santee Cooper is striving to ensure that its j

1996, declaratory order approving the tariff placed customer service and reliability do not suffer as a l

Santee Cooper in a more competitive position.

result of deregulation. In the 1996 Customer In the spring of 1996, the Federal Energy i

l Regulatory Commission (F ERC) issued orders 888 4

f and 889, mandating open-access transmission tariffs, jer*

electronic information systems, and adherence to the standards of conduct. Santec Cooper committed to adhere to Orders 888 and 889 in its open-access filing.

.3 t.

Order 889 stipulated that electric utilities must

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ensure that potential customers of open-access 47 7 "

O(f.

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transmission service receive access to information on

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• =

a nondiscriminatory basis. The rules provide standards t

c..

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s of conduct and require Santec Cooper to operate an

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3 -l,

Open Access, Same-Time Information System (OASIS) 1 that gives users ofits transmission system access to the L..

4 m

(.7 m

r. y g{

s,mle information simultaneously.

Open-access transmission has opened the doors g

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to competition in the electric utility industry.

b

.g _

g T. Graham Edwards 5

Executive Repcrt

Satisfaction Survey, our customers gave Santee Cooper Also, customers and the general public are kept excellent ratings. Most notable was the unprecedented up-to< late about the changes through bill stuffers, 100 percent satisfaction score to the question newspaper articles, and newcomer information packets.

"Considering everything, how satisfied are you with Other activities and programs are in place to help Santee Cooper?" The 1996 distribution, transmission, Santec Cooper prepare for the competitive utility and generation reliability factors were 99.997 percent, market. People are concerned about other issues 99.996 percent, and 93.88 percent, respectively. This which may affcct their choice of a power provider.

was a result of strategic planning, sound management One such issue is the environment. And Santee practices, and conscientious employees working to Cooper is doing its part to protect our provide the best electric service possible. For two environment. Some examples:

consecutive years,1995 and 1996, Praxair Inc.

• In 1996, nearly 628,000 gallons of

' presented Santec Cooper with the " Partnering used motor oil were collected Through Quality Leadership Supplier Excellence through Santee Cooper's Award." Praxair oflicials stated that Santec Cooper is Give Oil for Energy well positioned to compete in a deregulated electric Recovery

+

utility world when customers may choose their electric provider. Santec Cooper is the only utility to

/

• f:

i have won this award twice. This isjust one of many cxamples of Santee Cooper's demonstrated excellence in providing competitive and reliable service to all its S

customers.

• Warking to reduce costs In Santee Cooper's 1996 Corporate Goals Program, one of the targets was to reduce the Operations &

Maintenance (O&M) budget by $4 million.

Through the efTorts of Santec Cooper employees, O&M costs were reduced by almost $15 million, exclusive of fuel and purchased power and increased off-system power sales. These efforts continue to give Santee Cooper the ability to provide some of the lowest rates in the Southeast.

• Expamhng customergroieth Retail customer growth continues at Santec Cooper. The total retail customer base at the end of the year was approximately 108,000. In April 1995, Santec Cooper honored its 100,000th customer. That's an 8 percent increase in just 20 months.

• Educating employces, customers, and the generalpublic The changes in the electric utility industry are sometimes baflling. lb help keep people informed, Santec Cooper publishes "The Electric Marketplace " a monthly four-page newsletter that highlights the changes in the industry.

,5

1 (GOFER *) program. That pushed the total in late 1996, the Nucor minimill in Cainhoy, amount of used oil collected since the program's which produces hot-rolled and cold-rolled sheet steel, inception in 1991 over the two million-gallon went online. This industry made the announcement mark. GOFER is a used motor oil collection in March 1995 to bring their business to the South program that is distinctive because it was South Carolina Lowcountry. With that $500 million Catolina's first program developed to both announcement came 500 jobs. As a result of the protect the environment and conserve Nucor move, to date, three major spinoffindustries vauluable energy resources through an with 115 new jobs have already announced plans to organized statewide effort.

move to the area.

• Santec Cooper is trying to define uses for all of Another project in which Santec Cooper was its ash byproducts. In 1992 and 1993, about 9 instrumentalis the Mt. llolly Commerce Park in percent of Santee Cooper's fly ash was being Berkeley County. Santec Cooper, along with Alumax marketed. In 1996, that tigure jumped to 70 and Berkeley County, worked together creating a percent. Santee Cooper continues to seek ways 1,000-acre state-of-the-art industrial park that has the to improve and use these byproducts in potential of bringing $1 billion in industrial environment;dly responsible methods to reduce investment to the Lowcountry.

the need for new storage ponds and landfills.

The llorry County area experienced remarkable

• And, for the first time since Santee Cooper economic development gains in 1996. In October, began releasing Chinese grass carp in the Santee Loris Industries, a yarn-spinning firm, announced a Cooper Lakes tbr noxious weed control, over

$7 million investment and will be the first industry to 10,000 fish raised in Santee Cooper's ponds were locate in the Loris Commerce Center in Ilorry County.

released into the lake system.

Its plans are to construct a 70,000 sq. It facility on a two-Customers are also concerned about what acre tract at the 178-acre patk. And AlliedSignal utilities do for their community. This is provided announced in November plans to consolidate all U.S.

in the fbrm of economic development or outreach amorphous metals manufacturing operations at its through civic and community organizations.

facility in the Atlantic Center near Conway, S.C.

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Territorial Peak Demand Capacity (in megawatts) f n meGewotts, includes purchased power)

In 1946, the ntunber of new jobs announc ed tot niar ket. S.unce Cooper wntinues to rec en e i<worable tew uidurrw..no i apensions in S nuce Cooper's

< omments f rom independent bond-ratine agen( ies dien t :, rub terntorv tota! led more than 1.ono.

about the over.dl perlo:ma a e of Sature Cooper and I or Santee Cooper, o iing for the wnununity does the preparations for moving into the wmpetitive not stop with emnomic 6'velopment. Not only does arena. In the past tw o year s, Stand.ud & Poor's, Santec Cooper wntnhute to < ivic and < onununity Moody's investor 5ervh c and I in h Investors Service groups, but so do its employees. In lWh, our strongly identihed Santec Cooper as a well-managed employees logged thousands of hotus, both on a"d and opei ned electne and water utility whi< h is well ott the (lot k, in support of nonprotii organizations tositioned to serve the people of the state.

These volunterrs provide services to people f rom all Reah/ing all of these issues play an imponant walks of hte and to environmental groups who are role in the wnsumer's dn ision of who will pnwide workine, to pmtect the carth and provide a liveable then electric setvice. Santec Cooper is working hard habitat for wildhfe.

to be their utility of < hoh c.

Itised on kilowatthour sales, Santec Cooper is the l'out th largest public ly owned elecnic utility in the i

~

Umted States. Smc e its beginning, no South Catolina t-,_a _ _.

a e

e John S. R.unev lor the wnsutu tion, opetations, or maintenance of 1

Clunnnan. Iloimi of l>ucetors the Santec Coopet system. The state of South

(..nolina has never been financially obligated to s mtee Cooper, according to the teim* it its enabling legislation. Ilowever, Santee Cooper pays sums in

'I. Grahinn 1.dwards lieu ot taws to the state cach year. In 1%6, that fiuure nesulent on,I cluet neentut ollk rr was 5h 7 nullion.

Salltec C(Kip ('r, tht' state 4 3wned ele ( tr it litility, is lhisitioning itself tiir the delegtllated c}ct tric litility g

1 Executive Report

L% Energy Sales i

i Direct Retail Service Wholesale f

j At the end of1996, Santee Cooper was serving Sales to the Central Electric Power Syso.n for it, j

107,986 residential, commercial, and other retail 15 member co-ops increased 6 percent. Ceraral is customers located in 13erkeley, Georgetown, and Santec Cooper's largest single customer The electric l

1 forry counties. This was an increase of 4 pm ;nt cooperatives distribute power to more tLar 370,000 over 1995.

customers in 38 counties.

t Sales to these retail customers were 2,619 Sales to the municipalities of Bamberg and gigawatthours, up 8 percent over the previous year.

Georgetown and to other utilities increased 91 Hilltory and 1,orge industrict percent over the previous year.

l Military and large industrial sales were up 5 percent over the previous year.

i 1

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l 19.353.

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3.667 i

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" Generation which supplies oxygen. argon and nitrogen to Nucor; Santec Cooper continues to operate etlicient and and fluntco Steel Corp, another "spinof1" industry cost-ettet live generation that benefits wholesale and supplying Nucor.

retail customers. Santec Cooper is among an elite group Additional construc tion projects completed of low-cost generators. ranking among the nation's top included the Charity 230-115 kV Substation and the 20 utihties in 1946 in Elecnw Ligin & ltnecr magazine's Andrews-Insteel 115 kV Transmission Line.

annual survey.

Distribution Generation system av.u.labihty for coal-t.ued um.ts

,The growth of retail electric customers continues at m, emd...

exceeded the 90 peu ent goal with m-77

m. A ]C 4 ~

7 an unpressive pace. Less than two years ago, Santec 4-1 M.

an attual availability of 93.83 Cooper passed the 100,000th retail customer mark m.

.P-

)D>

hr pen,ent. The system net heat rate bi

)

n a

providing servit e in Herkeley, G.eorgetown and Horry MN t A' ~ >

1 was below the goal of 10,000 Btus -

E%

Vk

'r counties. At year's end, the numbel of customers i kWh. Cross Station won the 1946 I'

I 7N ~

annual prodm. tion Goals and lleat recewmg bills f rom Santee C,ooper totaled 107.986.

Santec Cooper averaged adding almost 350 new customers Rate competions.

per month. In the last quarter of 19%. retail kWh sales Inbine retront padiges were ntreased as high as 9 pen:ent hom the same quarter m pun-hased for Winyah Station Units 194,.m some meas of the G, rand Strand.

2 and 3 for installation in 1997 and it was a busy hunicane season along the Grand 1993. These upgrades will result in an approximate 14.5

~

Strand. Distribution crews restored service to 3., o w

megawatt capacity incicase and a 60 htus kWh o - M 1

B h

' dgn improvemeru per unit' W d WW m m We power back for 36.785 Transmission customers in September following flurricane I ran. In Santec Cooper power flows through 4,112 mdes <d both instances. 95 percent ot'S mtce Cooper's customers transmission lines in 36 of South Carohna's 46 counties.

were back online within 24 hours2.777778e-4 days <br />0.00667 hours <br />3.968254e-5 weeks <br />9.132e-6 months <br /> This network, covering three-fourths of the state, is the l

cnticallink for delivering power to all customer classes.

Customer Service i

Deregulation will bnng e

,w providing power to a gtowing state is an ongoing n

mercased customer service f)J Q,

( hallence Major transmission construction projects

"(4 demands a

completed included service to a second prauir fhcihty

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a' e,

.[.he t e tot e, w y,

j. -

in Georgetown County; Nucor Steel Corp at their w '

t.(

Cainhoy minimill in Ber keley County; MG Industries, L-

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N6..4 Santec Cooper must continue to identify and Qualifying customers receive low-interest loans on implement ways to improva customer service.

esisting hottles by installing or improving stKh items as A new remittance processing and retail of fice high-clliciency heat pumps, insulation water heaters, and cashiering system was given the go-ahead to meet storm windows.

gmwth. One way to gauge effec tive servic e in retail Newer and simphtied Good Cents standards were put offices was the implementation of the Mystery in place to make it mole attractive for customers to quality Shopper program. Employees are " shopped" to for energv-saving benefits. The amount a pinpoint. strengths and weaknesses in dealing with customer can horrow through the Good in-person and telephone customer servic e requests.

Cents Loan Progr<nn inacased f rom The Customer Cate Guarantee program was

$6,500 to 510,000. A totd of 1,985 1

introduced to provide residential and conunercial new customers participated in customers with more than just a promise The conservation and load program assures that meters are read accurately managernent pmgrams such as and installed by the date requested, lighting repairs Good Cents and I10 Alvantage.

y 2

.uc made within three working days, and Outreach custorners receive the highest level of timely, with more than a halt-century of courteous service.

service to the state, < onununity outreach ~

In 1996, something historic occurred with a has been a cornerstone of fulfilling Santee

~

- 4%

lollg--Standiflg partrier. SJntec Cooper tealned up Cooper's legisldtive inandate that the utility exists for the with iterkeley Electric Coopeiative to open the benetit of all the people of the state, for the improvement BEC ' Santee Cooper Custorner ser vic e of their heahh and welfare and material Center at Santec Cooper's IcLlil of fice ill l

prosperity."

St. Stephen. The partnership is the

.C 3:

In January, the 24 mile stretch of the beginning of ways to combine resources 3

Lake Mouhric Passage of the Pahnetto

'l

'Irail opened to the InLing and hiking and expertise to hetter serve customers.

_e m

Santee Cooper's Marketing unit public. This was the first leg of the 300-strengthened serYi( es to customers by mile-long Palmetto ' hail, a increasing the loan h,tlatu e til the Inollntains-to-the-sea (lail thill is Good Cents progrant by $1 million, a projected to he unnpleted by 2000.

j Most of the passage is oli Santec nlove that will benefit customers who Illect c!!Pigy4 onservitig staldards.

, j Cooper property, semicin. ling its Way p.. w.?

On a monthly basis. some 1.000 h*ers and b*ers use the Lake Moultrie passage of the eatmetto Trait-Year in Review

ij j/j$

i w

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around Lake Moultric's eastern shore. At du n ation ft. multi-use facility is na ned after Walter T. 'ox, a ceremonics with the keynote address by NatureScene" lifelong educator, preside [nt emeritus at Clemson host Rudy Mancke, board chairman John S. Raincy University, and former member of the Santec Cooper called the trail Board of Directors. Located on Lake Marion in

" community Clarendon County, " Camp Bob Cooper," as it's y _ ;_

development in its commonly known, serves all the state's citizens.

g e

T

'I

?*

finest form."

i, 5

The camp is located on Santec Cooper property, 4

~ j Santee Cooper and for more than a half-century, has been leased to l

~

.- py personnel built Clemson University. The former work camp housed I( -

1>=

cinnpsites and hand-Works Progress Administration laborers when the s

~

w

e,n m

t y p jg operated water pumps Santec Cooper Ilydroelectric and Navigation Project f k,li 2

along the trail.

was built between 1939 to 1942. It is now a facility for POWER LINE HA!ARDS Santee Cooper all South Carolinians, not just 4-ilers, to enjoy year-A*ARENE55 DEMON 5fRAfl0N UNff employees used the round. f..or the past six years Santec Cooper has sontee cooper employees along with Ronoid Mcdonald and Louie the Lightning Bug get Power llazard ready to start a demonstration of the PHAD unit.

sponsored the center's Outdoor Adventure Camp for g.g.g g

,ou@m ayd 9 m lE N aMidon to poon bM Demonstration (PilAD) unit to make 24 presentations trips to the Jef feries f lydtu Station, Pinopolis Lock, and Old throughout the year on the importance of safety Santee Canal State Park, personnel from Environmental around power lines The PHAD unit is a mobile Services and Envitonmental Resources give presentations demonstration platform used to teach as well as on water quality, aquaculture, and insects.

entertain children of all ages. Over 4,000 people saw In November. Santec Cooper sponsored Insulation the PilAD unit in action in 1996.

Station, a program that educates math and science in May, Santec Cooper announced it would be the teachets in Santee Cooper's service territory about the first electric utility in the state to panicipate in the basics of energy efficiency.

McGruif truck sah ty pmgram. A McGruff truck is a Santec Cooper, along with florry Electric utility vehicle, such as a line truck with a specially Cooperanve, promoted fire safety in the home through trained crew who can call proper authorities for

" Project Safe llome." Area municipal and county fire assistance when children signal they are in need.

departments delivered some 8.000 smoke detectum to Presentations were given in schools throughout 4 ciderly and needy families.

Santee Cooper's service area.

In November, President and CEO T. Graham in September, the Santec Cooper / Walter T. Cox f' Edwards was honored by the State Board of Education Building was dedicated Education for his role in creating the Academic at the Robert M. Cooper State 411

- Booster Club at Berkeley Iligh School. State Leadership Center This 4,500 sq.

. Superintendent of Education, Barbara 3

pw yeain neview 3

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Nicisen presented Edwards with a plaque honoring River plant also received recognition from the2 him "for significant contributions to South Carolina's publication. Nucor Steel and Amoco are served by public schools."

Santcc Cooper. President and CEO T. Graham Edwards The annual Environmental Essay Contest drew serves as the Alliance's voluntary chairman. Since its nearly 4,000 yarticipants f rom seventh-graders across founding in early 1995, the Alliance has attracted more South Carolina. The theme was " Endangered than $1.2 billion in new investment,40 Wildlife." A statewide winner along new compmy rek) cations and /or with two winners f rom each of gt 4.4 expansions, and nearly 5,000 newjobs.

the state's six congressional g -4/

'p#

m in June, Smith Enterprises districts were selected.

announced plans to make gift

[ s '8 "/ ~!.

.j p

baskets for large retail stores. The Economic Development E

operation, located in a 48,000 sq.

1996 was a remarkable year jkh5?

ft. facility in St. Stephen, creates

^

for economic

~~-

100 new jobs, including several development in Santec Cooper's direct management positions.

service territory and the 38 South Carolina counties Santec Cooper, aluminum served by electric cooperatives distributing power maker Alumax of S.C., and Berkeley County generated by Santec Cooper, announced plans in July to develop a state-of-the art A full-time economic development office was industrial park, the first ofits type in the Lowcountry.

opened in Conway to augment efforts from Santee The htt. lioily Commerce Park is located on Cooper's corporate headquarters in hioncks Corner.

approximately 1,000

. g gs 7.,

redevelopment of the N1yrtle Beach Air Force Base, property on U.S.

T [~'

Santec Cooper has played a major role in the aues of Alumax

' f, continued development of the Atlantic Center fi>r Highway 52 between Business and Industry, the new Loris Commerce Goose Creek and s

Center, and the hit. Ilolly Conunerte P.uk nmv under hioncks Corner.

development in llet keley County.

Berkeley County Site Sclection magazine named the Charleston Supervisor James Regional Development Alliance as one of the Rozier called the nation's top 10 cconomic development groups fi)r indus trial park "the achievements in 1995. The Alliance was cited for most important santee Cooper President and CEO helping to attract Nucor to the Lowoountry with its economic.

Graham Edwards and Charteston Regional g,v,i,

,,n,,ti,,nc,

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$500 million steel mill providing 500 jobs. Amoco dCVCI"lunent een Cote display two of the many awards the alliance has received for its economic Corporation's $300 ruillion expansion at its Cooper announnmm em aevelopment work in the s C. t.owcountry.

Yea.-in Review

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for Berkeley Countybecause Ntonservatifely

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. ent totaled $32.9 million N

yw represents $1 billion in eventual industrial

• New jobs totaled 1,fi7(i development."

• New electric load totaled 17,850 kilowatts The Mt. IIolly announcement drew national Environmental attention. Unsmc.s.s Fhahnc.s magazine announced in Santec Cooper has one of the strongest November that Santee Cooper won a first-place award environmental commitments of any utility in the in tbc Utilities-Public/ Private Partnerships" category nation. In 1990, the board of directors passed a for its mle in developing the park.

resolution during the 20th anniversary of Earth Day Glendinning Marine Products, an florry that states, " Protection and improvement of our County-based manufacturer of products for

~

cnvironment are equal in importance to providing yachts, broke ground in August for its af fordable electric energv." Santec Cooper continues new 31,000 sq. f t. facility in the i

with that comnutment by supporting many Atlantic Center for Business and

'~

[ environmental programs.

Industry. The h.rm is relocating from j

&nnee Cooper and the Center for a smaller plant in rural llorry County-Alternative Energy 'nansportation at York The Palinetto Economic Development Corp

' %chnial College hnmed a parmership in

(

January to f urther the development of electric (PEDC) also had bd vehicles.

another outstanding In February, the used oil c

year. Formed in 1933, romdinator at the American Columbiahased PEDC is a N

Petroleum Institute in Washington, joint economic development cf tort

'*V D.C. ter med Santee Cooper's Give Oil of Santec Coopel and Central Electric ful M@' Recovery 6;OFER) program Power System. Cent!'al purchases power for its 15

• a national mairl." The award-winning, six.-

member co-ops flom Santee Cooper yeaFold prog!'am y.

PEDC's progicSS represents new and expanded pmvides a business in the service area of the 15 electric

[?

Q,b convement way for I

l.

cooperatives served by Central Electtic Power d+ibyomwlf oil

'U Systein. Central is SantOO Cooper's largest single changers to lecycle W

/

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v custoinet in 199fi, Central's service territory haw the used motor oil The A gS h

5 following economic. development tesults:

oil collection 3 -

M)*. h1

s..g Santee Coope rs Entomologist Larry Notes Speaks Mth oreo schoolchildren at the annual Bockyard Naturescope.

ee

.e.g.

Year in Review

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/ pmgram passed the two mil {igga lans' mark m7 7 g Qa;Q: h.e ongo ng c.h e e of. ort:

7

. Imgpulsance? ' g.q;f {,7 gn m + w

.F-q September. Santee Cooper safely converts the oil into aquatic weeds in the Santee Cooper Lakes continues.

electric power. Collections in 199fi totaled nearly Over 7(i,000 sterile Chiacsc grass carp were stocked fs28,000 gallons, u p 15 into the lakes during the year. Ior the first time, over l

per( ent honi 1995.

10,000 of these " natural" weed caters were raised in Also in February, hmtec Cooper's own ponds at Cross Station.

v

.) -

Saruce Cooper n on Approximately 10,000 mosquito-cating tish were Pioject f labitat's liest introduced in suitable habitat throughout the five-Ibn Community Relations county area surrounding the Santec Cooper Lakes.

Program for 1995. As a Santee Cooper continues to find uses for what's Project liabitat member, lef t over af ter the electricity is made. Over 342,650 hintec Cooper manages tons of coal-comhustion hyproducts, or ll.V.lsh, were transmission rights of way diverted from disposal and recyded. Of the fly ash

' TS with an eye toward generated in 1994 70 percent was inarketed, l

piR d.

increasitig their use by compared to 45 percent in 1995.

Santee Cooper was awarded the 3.Udhh Th< awad um eest Community netations Program C.orporate for 1995 by Project Hobitat. Santee presented by the National hioving into the deregulated electric utilitv Cooper joined Project Habitat white Right of Way Monogement was

,ild 'llnkey I. deration.

environmem requires changes in the day-to-day e

under the leadership of Dave Quajj pgjimited, and Evans. He is now the supervisor of operations at the state-owned electric utility.

Santee Cooper's Environmentot lluckmastets The award in 199(i, the Automated Interchange hlatching Services unit.

g g

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Cyanamid Co., which has developed a new generation Comrol. Tliis antomated mat keting system, of heihicides that do not hann wikihfe.

developed through the cooperative ellorts of The U.S. Dept. of Energy (DOE) in June n utilities. was designed to automatically

• iccogni/cd Santec Cooper for inacasing its 1941 tind the lowest cost interchange cornmitment in the DOE's voluntary Climate opport u nities.

Challenge program. Santec Cooper has pledged to e

4 %,%

4 reduce carbon dioude emissions b.y 3..a nulh.on

. _g% e # n.n -x 9

d. @W tons f rom 1991 through 2000 by generating station

^'

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upgrades, planting hees, recycling fly ash, and

p. 3 promoting demand-side management programs M

y J,Q sucil as bo(Kl Cellts. 'IIVt:lVe ()lher pldlliC jh)Wer

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utilities parti (ipate in the Climate Challerige.

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Conformance to FERC Orders 888 and 889, f hMQ N{f # Y h $[ ' - ((;,(

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g which is paving the way for open-access

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g transmission by Santee Cooper and other utilities.

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,i9 included the establishment of a Transmission t

f Wk k

h ' " [ f Services unit. This unit will provide transmission i

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services and operate the new Open Access Same-g

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/JK provides the information needed and allows the use m

p J

Q of transmission lines to transfer power in a f7 nondiscnminatory manner among all parties in the c --

a s

4p market.

M L

on March 22. Moody's Credit Perspectives stated nx w

santec Coop r's lowost power, strong management,

. and resoung planagement position it as a winning

.so vs compstf. ;

1. w c.n,; r in a deregulated 61e g)?gIts cqmp tivs prfnidvan; 7. ctric po to t-

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-_-a tage refleds the u de of Ar b

M Mtbhd5didatioh $M n&uo((my"[#'Id h o pum. w m

4 dire' o ! Winne 1%.54 5t%

7 fi N.% 4 -

' rn sa % ntee:

2perbiantnt

~on'costW A WN i r i k :.2:

f.

n, p Q educyon ~. y.ru ;in 1996.Somesexynp.lesqg

.w g

r* Thmugh'many cost-saving measures Santec Q;.\\',

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. Cooper empioyees re._ yduced O&M expe.ndit,u{r;es-i

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.w by almost $15'million, exchisiv.e'orfuel and $ r. ~

o Lpurchased power and increased off system,

power sales.

e 'nvo bond refundings saved appmximately $150.

million ovef the life of the bonds refunded; ;

_a A longderni'icase for new aluminum raildars is > <

estinkated to save approximately $30 million in,

coal freight costs ovdr'th. e nen seven year,s.i (

,1

. e s

Santec Cooper strives for a cu,hure of operational / '

r.,

g." excellence which can be achieved thmugh effective p1

) I employee performance. As the electric utility moves i

a.

t [into A demgulated envuonment, an educated work 9orce'is needed to ensure a smooth transition: Here are

}

a few things that occurredin3D95 that'will h'el}j khep >

employees motivated:

• A financial counseling program waddevekiphd And[:

instituted which included se minan, cNidticted by'sj certified financial planner since the filthncialEYd q

planning programs began in 1995,194 employees >

8 have taken advantage ofleaming options for s

effective financial management and retiremerit i

I _ _ planning..

4 t

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• Dn er$ity edu$ation classes. whic h to( us on

{

j r..n teamwork and a (ompetitive business advantage, were held at seven locations.4

's

,, 'Ihe overall incident rate, based on n;cordable -

linjuries'were the lowest in santee Cooper's history..

Also, los't-time injuries pbduced an incident rate that was the lowest reb 6dIiiikince 58k l

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c Report ofindependent-Public Accountants,tr 7b the Advisory Board and Board of Directors of the South Carolina Public Service Authority:

We have audited the accompanying balance sheets of the South Cerolina Public Service Authority (a component unit of the state of South Carolina-Note 1) as of December 31,1996 and 1995 and the related statements of accumulated earnings reinvested in the business, reinvested earnings, and cash flows for each of the three years in the period ended December 31, 1996. These financial statements are the responsibility of the Authority's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the South Carolina Public Service Authority as of December 31,1996 and 1995 and the results ofits 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.

de Charlotte, North Carolina February 14,1997 h

Financials

--M-Bolonce Sh@@ts South Carolina Public Service Authority Decernber 31,1996 and 1995 ASSC'IS 1996 1995 (Thouumds)

Utility Plant - At Costa Plant in service

$ 3,249,424

$ 3,201,769 Less accumulated depreciation 1,026,205 958,044 lbtal Plant in service - net 2,223,219 2,243,725 Construction in progress 6tl,241 71,666 Nuclear fuel - at amortized cost 19,606 16,934 Tbtal Utility plant - net 2,311,066 2,332,325 Other Physical Propesty (Net of Accurnulated Depreciation) 1,763 1,721 Cash and Investunents IIcid by Thestce (Designated) 21 6,5111 272,856 Curtrnt Assets:

Cash and investments held by trustee 146,038 106,830 Bond funds - current portion 117,607 96,364 Accounts receivable - net of allowance for doubtful accounts of $859,000 and $712,000 in 1996 and 1995, respectively 68,328 64,322 Accrued interest ieceivable 2,63fl 2,756 Inventories, at average cost:

Fuel (coal and oil) 42,387 43,088 Materials and supplies 31,537 32,722 Prepaid expenses

!!3 1,096 "Ibtal current assets 40fl,618 347,178 Deferred Debits and Other Assets:

Unamortized debt expense 24,fl30 26,239 Costs to be recovered from future revenue 432,Ilfl5 422,215 Deferred coal contract buy-out costs 44,500 50,200 Other 24,440 31,572

'Ibtal deferred debits and other assets 526,655 530,226 7btal

$ 3,464,6fl3

$ 3,484,306 The accompanying notes w financial statements are an integral part of these balance sheets.

EH Financials

.. ~.-..-.

l l

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LIAHILITIES AND cal'ITALIZATION 1996 1995 (ihousands)

Long-7tnn Dcht:

Electric Revenue Bonds - Priority Obligations 33,560 36,535 Electric System Expansion Revenue Bonds 363,075 721,050 Capitalized Lease Obligations 39,186 42,712 Revenue Bonds 1,957,125 1,648,050 Tbtal long-term debt (net of current portion) 2,392,946 2,448,347 Less:

Unamortized loss on refunded debt 284,929 282,679 Reacquired debt 4,470 7,695 Unamortized debt discount and premium - net 57,611 55,343 Long-term debt - net 2,045,936 2,102,630 Current Liabilitics:

Current portion oflong-term debt 62,947 41,878 Accrued interest on long-term debt 65,934 67,163 Commercial paper notes 204,773 237,320 Mini-Bonds and Revenue Bonds (Series M) 159,221 157,691 Accounts payable 28,649 31,111 Other 36,297 37,557

'lbtal current liabilities 557,821 572,720 i

Deferred Crtdits and Other Noncurrent Liabilittest Construction fund liabilitics 2,097 8,533 Nuclear decommissioning costs 42,509 40,079 Ur. amortized gain on reacquired debt 83 167 Other 25,241 24,792

'fbtal deferred credhs and other noucurrent liabilities 69,930 73,571 Comunittnents and Contingencies Capital Contributions - U.S. Goncrrunent Grants 34,4311 34,438 Accumulated Durnings Reintested in the Ilusiness 756,558 700,947 7btal

$ 3,4fi4,683

$ 3,484,306 Financials

4Nv-Statements of-Accumulated-Earnings Reinvested-in-the--Business South Carolina Public Service Authority Years Ended December 31,1996,1995, and 1994 1996 1995 1994 (Thousands)

Accumulated earnings reinvested in the business - beginning of year

$ 700,947 $ 648,493 $ 621,684 i<einvested earnings for the year 65,946 50,665 35,375 lbtal 766,893 699,158 657,059 Distribution to the state of South Carolina 6,682 6,436 6,157 7btal 760,211 692,722 650,902 Change in net unrealized gain (loss) on investment securities available-for-sale (3,653) 8,225 (2,409).

Accumulated earnings reinvested in the business - end of year S 756,558 $ 700,947 $ 648,493 The accompanying notes to financial statements are an integral part of these statements.

[

Statements of Reinvested Earnings-1 South Carolina Public Service Authority Years Ended December 31,1996,1995, and 1994 1996 1995 1994 (Thousands)

Operating llevenues:

Sale of electricity

$ 690,294 $ 634,678 $ 600,036 Sale of water 3,838 3,730 528 Other operating revenues 5,474 5,430 5,092 "Ibtal operating revenues 699,606 643,838 605,656 Opemting Expenses:

Electric operation expense:

Production 257,457 226,446 233,308 Purchased and interchanged power 13,327 30,593 28,271 Transmission 3,809 4,442 3,692 Distribution 3,776 3,299 3,789 Customer accou nts 3,t106 3,282 2,477 Sales 1,560 1,465 1,610 Administrative and general 61,259 56,504 49,496 Electric maintenance expense 54,182 53,029 54,824 Water operation expense 1,088 1,063 338 Water maintenance expense 292 168 20 1htal operation and maintenance expense 400,556 380,291 377,825 Depreciation and amortization 101,359 91,468 80,222 Sums in lieu of taxes 1,928 1,929 2,235 Tbtal operating expenses 503,843 473,688 460,282 Opemting income 195,763 170,150 145,374 Other income:

Interest income 23,537 20,682 18,271 Other - net 9,625 96 50 Tbtal other income 33,162 20,778 18,321 Interest Charycs:

Interest on long-term debt 127,908 125,370 117,970 Other 37,105 39,747 31,312 lbtal interest charges 165,013 165,117 149,282 Costs to be itecovered irum future Itevenue 2,034 24,854 20,962

$ 65,946 $

50,665 $ 35,375 Itcinvested Earnings The accompanying notes to financial statement > are an integral part of these statements.

Financials

-weStat@m@nts of Cash Flow South Carolina Public service Authority Years Ervled Decernber 31,1996,1995, and 1994 1996 1995 1994 (Fhousaruls)

Cash Flows Fmm Operating Activities:

Operating income

$ 195,763 $ 170,150 $ 145,374 Adjustments to reconcile operating income to net cash provided by operating activities:

Depreciation and amortization 110,660 101,267 86,660 Other income 43 96 50 Changes in assets and liabilities:

Accounts receivable, net (4,006)

(9,741) 2,758 inventories 3,669 1,851 (17,24c)

Prepaid expenses 1,013 (85) 3 01 Other deferred debits 5,460 (5,649) 3,473 Defened coal contract buy-out costs 5,700 (50,200)

Accounts payable (2,462)

(2,415) 4,347 Other current liabilities (1,340) 24,924 (7,590)

Other noncurrent liabilities 477 (8,858) 4,507 Net cash provided by operating activities 314,977 221,340 222,635 Cash Flows Fmm Investing Activities:

Net decrease in investments (4,823) 50,619 154,799 Interest on investments 24,886 24,444 23,709

?

Ne.t cash provided by investing activities 20,063 75,063 178,508 Cash Flows Fmm Noncapital-Related Financing Activities:

Distribution to the state of South Carolina (6,682)

(6,436)

(6,157)

Cash Flows Fmm Capital and Related Financing Activities:

Proceeds from sale of bonds 350,966 317,791 Retirements (additions) of reacquired debt 3,254 3,644 (544)

Net commercial paper (repayments) proceeds (32,547) 118,620 10,450 Repayment and refunding of bonds (382,490)

(366,389)

(31,162)

Interest paid on borrowings (155,396)

(166,697)

(156,503)

Construction and betterments of utility plant (79,860)

(114,558)

(182,160)

Debt issuance costs (22,013)

(16,870)

(739)

Other (3,418)

(3,318)

(3,225)

Net cash used in capital and related financing activities (321,504)

(227,777)

(363,883)

Net increase in Cash and Cash Equivalents 6,854 62,190 31,103 Cash and Cash Equivalents at the Beginning of the Year 215,278 153,088 121,985 Cash and Cash Equivalents at the End of the Year

$ 222,132 $ 215,278 $ 153,088 E

Financials

e i

t 1996 1995 1994 j

(l'housands)

Reconciliation of Cash and Cash Squivalents:

Cash and investments held by trustee (designated)

$ 216,581 $ 272,856 $ 291,878 Cash and investments held by trustee 146,038 106,830 51,778 Bond funds - current portion 117,607 96,364 106,415 Less investments, not considered cash and cash equivalents 258,094 260,772 296,983 Cash and Cash Equivalents at the End of the Year

$ 222,132 $ 215,278 $ 153,088 1

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'The accompanying notes to financial statements are an integral part of these statements.

Financials

y Notes-to Financial Statements

- s N(yrr.1 - St%1 MARY OF SIGNInCANT A(xx)t'NTING PotJcirs:

I ikferred Coal Contract th4y4hst Costs - During 1995, the Authonty A Reporting Entity The South Carolina Public Service Authority (the exercised a buy-out option on an existing coa! contract in order to take Authonty) a component unit of the state of South Carohna, was created advantage of lower coal costs. The wst of the buyout, which was in 1914 by the state legislature. The Ibard of Directors is appointed by approximately $53.00c,000, is recorded in deferred debits and included the Governor of South Carohna. The purpose of the Authority is to as a component of fuel costs over the remaining life of the former i

provide ele <tric p>wer and wholesale water to the people of South contract. The balance in this acwunt at December 31,1996 was Carohna Capital projects are funded by commenial paper notes in

$44,500M)0.

addition to bonds and inernally generated tunds. The Board of Direc-J - Reclasifications - Certain prior year amounts have been reclassi-tors sets rates charged to customers to pay debt service and operating fied to ccmfunn to the current year presentation.

)

expenses and to provide funds required under bond covenants.

K - New Accounting Standards - The FASB has issued Statement No.

B - Systan of Aaounts - The accounting rewnis of the Authority arc 121 (SFAS 121), ' Accounting for the Impairment of long-Lwed Assets nuintained in accordance with generally aurpted acmunung pnnciples and long-Lived Assets to Be Dispeed Of.' This statement requires that (GAAP) applicable to governmental entities and are maintained substan-long-lived assets be reviewei for impainnent whenever events or tully in acwrdance with the Uniform System of Aununts prescriled by the changes in circumstances indicate that the car.ying amount of an asset Federal Energy Regulatory Commission (FERC) and the Nation,d Associa-may not be rewverable This state ment also imposes stncter criteria for tion of Regulatory Utihty Commissioners (NARUC) as apphrable. The regulatory assets by requiring that such assets be probable of future Authority also comphes with accounting pohcies and pruturs prescribed rewvery at each balance sheet date. The Company adopted this stan-by its 11oard of Directors. The preparation at financi.d statements in dard January 1,19%, with no material effect on the financial state-conforrruty w1th GAAP requires the use of management's estimates and ments llowever, the Authority will reassess the effect of SFAS 121 in at.tual nwults truy ddler from these estinutes.

the future as compeutive factors influence wholesale and retail pricing C - Utility I'lant - Utihty plant is recorded at cost, which includes in the industry.

materials, labor, overhead, and interest upitahzed during wnstruc-tion. No interest was upitahzed in 19%, interest capitahzed in 1995 N(n12 - RrLIOML WATER SYSTDt:

totaled $5,973.0m The costs of maintenante, repairs and minor re.

In 1992, the Authority's leard of Directors authorized the construe-placements are tharged to appropriate operation and maintenance tion of a regional water system. The Authonty executed a 35 year

~

expense acenunts. The costs of renewals and betterments are capital.

wntract with the Lake Moultrie Water Agency, a joint municip d water ized The original cost ot utihty plant retired and the cost of removal, system consisung of the following membert City of Summerville less salvage, are charged to accumulated depreciation.

Commission of Pubhc Works, Town of Moncks Corner Commission of D - Depreciation Depreciation is computed on a straight-hne basis Public Works, City of Goose Creek, and the County of Berkeley. The over the estimated uscful hves of the vanous classes of the plant.

Lake Moultrie Water Agency pun hases all of the capacity of the water Annual degreciation provisions, expressed as a percentage of average system and sells such capacity to the four members. The water system depreciable utility plant in serviu; were approximately 3.3% for the commenced initial operation on October 1,1994.

period ended December 31,1996,3.4% for the period ended December N(YTE 3 - Com m BE RtIOVERED FROM ftT1 RE Rh ENtB 31,1995, and 3 3% for the period ended December 31,1994. Amortiza-tion of capitahzed leases is also included in depreciation expense.

The Authority's electnc rates are established based upon debt E Rnenue Recognition and thel Costs - Substantially all wholesale service and operating fund requirements. Straight line depreciation is and industrial revenues are hilled and rewrded at th'e end of each nm wnsidned in the cost of service calculation used to design rates month. Revenues for electricity delivered to retail customers which The differences between debt principal matunties (adjusted for the have not been hilled are accrued fuel costs are reflected in operating chts of premiums, dzswunts, and amortization of deferred gains and expenses as fuel is wnsumed losses) and straight-line depreciation are recognized as wsts to be f - Ikmd hsunner Costs - l'namort zed debt discount, premium and recovered from future revenue. The recovery of outstandmg aniounts awociated w th wsts to be remvered from future revenue will coincide expense are amortized to income over the terms of the related debt issues Prior to December 31, 1994, unamortized gams or losces on with the retirement of the outstandinglong-term debt of the Authority.

refunded debt were generally deferred and amortized to inwme over the terms of the refunding debt issue. Due to implementation of NmI 4 - CASH AND lWESTMEYl511ED HY TRtNrtI (DESHMTED):

Governmental Actountmg Standards Board Statement No. 23 f GASB Unexpended funds from the sale of bonds, debt service funds, other 23), ' Accounting and Fmancial Reporting for Refundmgs of Debt Rc_

sircial funds, and cash and investments are held and mamtained by ported by proprietary Activitics" in 19% gams or losses are amortized trustees, and their use is designated in accordante with apphuhle to income over the shorter of the remainmg Irfe of the refunded debt or pmvisions of vanous trust indentures, bond resolutions lease agree.

the hfe of the new debt. In addition, per G ASB 23, the unamortized loss ments, and the Enabling Act induded in the South Carolina law. Sutn on refunded debt is bemg shown as a reduct on in long-term debt-net.

funds wnsist principally of investments in government securines.

This change m accounting pohcy did not hase a material impact on the Effective January 1,1994, the financial Atwunting Standards Board Authority's financial position or results of operations.

Statement No.115, "Acwunting for Certain Investments in Debt and G - Cash and Cash Equimlents - for purposes of the stateme nts of cash Equity Securities,' was adopted. This statement requires investments to be classified into one of three categones: tradmg. held-to-matunty, or flows, the Authonty considers highly hquid investments with onginal avadable-for sale The Authonty's in estments are all dassitied as maturities of less than three mombs and cash on deposit with rinancial insututions as cash and cash equivalents either held-to-matunty or avadable-for*de. As requ: red by this state-ment, investments classified as held-to-maturity are carried at amor-II - Starr Distribution - The distribution to the state of South Carohna is determined consistent with reqmrements under the 1949 Indenture.

tized cost Securines categorized as available-for-sale are carr ed at maket value, with the net umealized gain or loss otiset against The amount vanes substantially f rom reinvested earnines for the year accumulated earnings reinvered in the business.

principally due to e osts to be recovered from future revenue and working capital requirements.

ED Financials

i As of December 31,1996 and 1995, the Authority had held-to.

imd $6.000 in losses in connection with these sales. Proceeds from maturity investments carned at amonized cost and available-for-sale available-for-sale securities totaled $22,464,000 for the year ended investments carried at fair market value as follows:

December 31, 1995. During 1995, no losses were realized on these 1996 19 %

available-for-sale securities and gains on these sales totaled $287,000.

pygmyg These gains and losses were computed as the dderence between the licid To-Maturity proceeds and specifically identified amortized cost per security.

i Amortized wst

$ 117,607

$101,583 Cash - Cash is categorized as follows: Category 1 includes bank

]

anCc8 ent mme e fa poskog bsurana Categog 2 j

Gross unreahzed holding includes bank balances that are uncollateralized or collateralized with i

gains /(losses) 0 25 securities pledged to the Authority by pledging financialinsututions but

" ^ "

I" "#*#'

Available-For Sale

~ " * " "# #

Fair market value

$ 367,662

$ 373,033

^" "" * " " * "

• • "'#E"""**

Gross unrealized holding U

^"

gains 2,224 6,936 j

P Gross unrealized holding chase agreements. The Authority requires that securities underlying Imes 2,799 U

i repurchase agreements have a market value of at least 102 percent of

""E""**

"E"W'

. Included in the Authority's available.for-sale investments carried at agreements are delivered by broker / dealers to the Authority,8 trust fair market value are nuclear decommissioning funds of $40,912,000 with related unrealized holdmg losses at $2,739,000 and $38,132,000 agents. At December 31,1996, the Authority's repurchase agreements 1

totaled $196 245 000.

~

with related unrealized holdmg gains of $1,109.000 as of December 31, The Authority's investments are categorized to give an indication of 1996 and 1995, respectively. These unrealized holding gains or losses are reflected in the decommissioning liability and not as a separate the level of risk assumed by the Authority at year-end Category 1 ncludes investments that are insured or registered or for which the component of accumulated earnings reinvested m the busmess.

All the Authonty's investments with the exception of dewmmis.

securities are held by trust agents in the Authority's name. Category 2 includes uninsured certificates of deposit w hich are collaterahzed with sioning funds are limited to a matunty of ten years or less for the year securities pledged to the Authority b) pledging financialinstitutionsbut ended December 31,1996, the Authority had proceeds of $24 096,000

~

not held in the Authonty's namc.

from sales of available-for-sale secunties and reahzed $36d 000 m gains 1996 Investments Cash Total Category Category Category Category Carrying Market i

2 1

2 Value Value (Thottsands)

Cash and Investments Held by Trustec (Designated)

General Improvement Funds..

23,722 5 950 13 27

$ 24,712

$ 24,712 Debt Service Reserve Funds..

125,423 0

19 0

125,442 125,442 Other Special Funds.

66.426 0

1 0

66,427 66,427 Funded Interest..

0 0

0 0

0 0

j Total Cash and investments lleld by Trustee (Designated).

215.571

$ 950 33 27

$ 216.581

$ 216,581 1

Cash and Investments lleld by Trustee Revenue Fund.

57,058 0

0

$ (5.675)

$ 51,383

$ 51,383 Revenue fund - Water System.

532 0

0 0

532 532 Special Reserve Fund.

93,625 0

100 372 94,097 94,097 Special Resen'e fund - Water..

26 0

0 0

26 26 Total Cash and investments Ileld by Trustee.

151,241 0

100

$ (5,303)

$ 146.038

$ 146,038

)

Bond Funds - Current Portion interest.

69,746 0

0 0

$ 69,746

$ 69.,746 Ik nd Principal-47,425 0

0 0

47,425 47.425 Funded Interest.,

0 0

0 0

0 0

Lease 436 0

0 0

436 4 ui 1

Total Bond Funds - Current Portion..$

117,607 0

0 0

$ 117 607

$ 117.607 i

l Financials

\\

=

i i

1995 Investments Cash Total Category Category Category Category Carrying Market 1

2 1

2 Value Value I

(Fhousands)

Cash and Investments Held by Trustee (Designated)

General improvement Funds,.

46,734

$ 1,350 53 687

$ 48,824

$ 48,824 Debt Service Reserve Funds..

143,334 0

24 2,042 145,400 145,400 Other Special Funds..

68,176 0

7 65 68.248 68,248 Fundsd Interest.,

10.384 0

0 0

10.384 10,409 Total Cash and investments Held by Trustec (Designated)..

268,628

$ 1,350 84 2,794

$ 272,856

$ 272,881 Cash and Investments Held by Trustee Revenue Fund.,

55,408 0

0 $ (7,237)

$ 48,171

$ 48,171 Revenue Fund - Water System.

541 0

0 0

541 541 Special Reserve Fund.

57,581 0

100 406 58,087 58,087 Special Reserve Fund - Water..

31 0

0 0

31 31 Total Cash and Investments Held by Trustee.

113,561 0

100 $ (6,831)

$ 106.830

$ 106,830 Bond Funds - Currc nt Portion Interest..

60,746 0

0 $

0

$ 60,746

$ 60,746 Bond Principal..

19,801 0

0 5,045 24,846 24,846 Funded Interest..

10,258 0

0 78 10,336 10,336 Lease.

436 0

0 0

436 436 Total Bond Funds - Current Portion.

91,241 0

0 $

5,123

$ 96.364

$ 96,364

\\

1 1

Financials

i l

Nmt 5 - IDNG-TERM DLar OLT!WANDING:

The Authonty's long-term debt at December 31,1996 and 1995 consisted of the following:

1 1996 1995 (Thouwnds)

Electric Revenue Honds - Priority Obligations: (mature through 2006)

Interest rate 4.10%,

',6,535 39,380 Electric System Expansion Revenue Ikmds: (mature through 2018)

Interest rates vary from 5.40% 7.60%.

378,080 744,215 Capitahzed I, case Obligations: (mature through 2015)

Interest rates vary from 2.00% - 5.00%,

42,712 46,130 Revenue Ikmds:(mature through 2032)

Interest rates vary from 3.80% - 7.00%.

1,998,566 1,660,500 Totallong-Term Debt..

2,455,893 2,490,225 Current Portion Long-Term Debt..

62,947 41,878 Total long-Term Debt -(Net of current portion).

. $ 2,392,946

$ 2,448,347 Maturities oflong-term debt through 2001 are as follows:

Priority Expansion Capitalized Revenue Obligations ihmds Leases Bonds Total Year Ending December 31, (Thousands) 1997.

2,975

$ 15,005 3,527 41,440 62.947 1998..

3,105 4,820 3,609 49,135 60,669 1999..

3,245 5,100 3,328 61,755 73,418 2000.,

3,395 5,380 2,761 62.415 73,951 2001.

3,545 5,685 2,554 43,120 54,904 Total.

16,265

$ 35,990

$ 15,779

$ 257,865

$ 325.899 The fair value of the Authonty's debt is estimated ba. sed on quoted The Authonty refunds and defcases debt pnmarily as a means of market prices for the same or similar issues or on the current rates reducing debt service, thereby postponing or reducing future rate offered to the Authority for debt with the same remaining maturities.

adjustments.

llased on the borrowing rates currently available to the Authority for in 1996, the Authority issued $267,045,000 in 1996 Refunding tax-exempt bonds and other debt with similar terms and average Series A Bonds and $83,470,000 in 1996 Refundmg Series B Bonds.

maturities, and in accordance with FASB Statement 107, " Disclosure These refundings reduced the Authority's total debt service over the About Fair Value of Financial Instruments,' the fair value of debt is life of its bonds by approximately $150,258.000, resulting in an approximately $2.78 billion and $2.87 bilhon at December 31,1996 economic gain over the hfe of the bonds of approximately $27,097,000.

and 1995, respectively.

24 Financials

.__s.

.m._.-__m, 1

Refunded amounts outstanding, original loss on refunding, and the unamortized loss at December 31,1996 are as follow:

Refunding Issue Refunded Honds Refunded Original Unamortized Amount Ima loss Outstanding (Thou. sands)

Cash Defeasance 20,000 of the 1982 Series A 2,763 1,879 1986 A&B Refunding 42,725 of the 1980 Series A 42,000 of the 1981 Series A 61,000 of the 1981 Series B 4,420 of the 1981 Series C 7,820 of the 1982 Series A 9,010 of the 1982 Series B 43,736 57 i

1986 C&D Refunding -

$ 280,275 of the 1982 Refunding Series 97,109 21 i

1987 A Refunding

$ 160,510 of the 1985 Refunding Series 48,038 104 1991 A,B,&C Refunding & $

4,855 of the 1980 Series A Improvement Series 8,075 of the 1981 Series A 13,500 of the 1985 Series i

32,500 of the 1985 A Refunding Series 4,856 508 1992 A Refunding 3,370 of the 1985 Refunding Series 5,405 of the 1985 A Refunding Series

$ 100,010 of the 1986 Refunding Series A

$ 22,555 of the 1988 Refunding Series A 15,370 of the 1991 Refunding Series B 12,085 of the 1991 Series D 27,455 42,188 33,003 1993 A&B Refunding 86,180 of the 1974 Series 93,360 of the 1979 Series A 4,980 of the 1985 A Refunding Series 14,935 of the 1986 Refunding Series A 23,675 of the 1986 Refunding Series B

$ 135,705 of the 1991-Refunding &

1mprovement Series B and C 135,705 38,870 38,870 1993 C Refunding

$ 167,660 of the 1977 Refur. ding Series 900 of the 1985 Refunding Series 2,390 of the 1985 A Refunding Series 6,365 of the 1986 Refunding Series A

$.14,905 of the 1988 Refundmg Series A

$ 100,110 of the 1991 Refunding &

Improvement Series B and C

$ 279,905 of the 1991 Series D 380,015 72,311 66,747 1995 A Refundmg

$ 138,505 of the 1988 Refunding Series A 20,024 16,756 1995 B Refunding

$ 175,330 of the 1987 Reftmding Series A 40,758 34,306 1996A Refunding

$ 257,795 of the 1986 Refunding Series C 92,596

-88,680 i

i 19968 Retunding 5

5,925 of the 1986 Refundmg Senes A 5,830 of the 1986 Refunding Series C

$ 62,325 of the 1986 Refunding Series D j

6,940 of the 1987 RefundingSeries A 4,155 of the 1988 ReftmdingSeries A 4,831 3,998 Total 543,175

$ 508,080

$ 284,929 Financials

The Authority's bond indentures provide for certain restrictions, At December 31, 1996 the Authority had a Revolving Credit the most significant of which are:

Agreement with NationsBank for $250,000,000. This agreement is

1. The Authority covenants to establish rates suilicient to pay all used to support the Authority's issuance of commercial paper. There debt service, required lease payments, capital improvement fund were no borrowings under the agreement during 1996 or 1995.

equirements, and all u>sts of operation and maintenance of the in 1988 and 1989, the Authority issued bonds (Mini-Bonds) in Authority's electric system and all necessary repairs, replacements, small denominations which are due on demand by the registered and renewals thereof.

owner under a Mini-Bond Resolution. In 1990, the Revenue Bond

2. The Authority is restricted from issuing additional parity Resolution was adopted and all senior debt including the existing 1988 bonds unless certain conditions are met.

and 1989 Mini-Bonds were frozen except for refunding purposes.

As of December 31,1996, the Authority is in compliance with all Unde ~ the Revenue Bond Resolution, small denomination bonds due debt covenants.

on demand (Series M Bonds) were issued. The pledge of revenues o

securing Revenue Bonds is junior and subordinate to the pledge of

)

NtyrE 6 - C(M1ERCIAL PAPER AND MINI BONDS:

revenues securing the Priority Obligations, Electric System Expan-

{

The Board of Directors has authorized the issuance of commer-8 on Revenue Bonds, and the 1988 and 1989 Mini. Bonds and capital cial paper not to exceed $250,000,000. The paper is issued for valid lease obligations, but is superior to the lien and pledge of revenues corporate purposes with a term not to exceed 270 days. For the years securing the Commercial Paper, payments to the Contingency Fund, ended December 31.1996,1995, and 1994, the information related to Capital Improvement Fund, Special Reserve Fund, and the payments commercial paper was as follows:

to the state.

1996 1995 1994 At December 31,1996, the Authority had additional Revolving Ettective interest rate Credit Agreements with NationsBank totaling $40,000,000. These (at December 31) 3.59%

3.71 %

3.99 %

agreements are used to provide liquidity for the put feature on all outstanding Mini-Bonds. There were no borrowings under these j

Average annual amount greements in 1996 or 1995.

outstanding ($000)

$225,627

$175,170 $108,572 Average maturity 65 days 77 days 62 days Average annual effective interest rate 3.53%

3.88 %

2.90 %

Commercial Paper and Mini-Bonds outstanding at December 31, are as follow:

1996 1995 (Thouumds)

Commercial Paper.

204,773 237,320 Mini-Bonds:

1988 Series bearing interest at 7.75% and due 2003.

16,362 16,453 1989 Series, bearing interest at 7.00% and due 2004.

19,636 19,308 Total Mini-Bonds..

35,998 35,761 Revenue Bonds (Series Mj:

1990 Series beanng interest at 7.30% and due 2005 and 2006..

23,463 22,997 1991 Series bearing interest at 6.875% and due 2007 and 2008.

29,095 28,693 1992 Series bearing interest at 6.25% and due 2007,2008, and 2009..

40,878 40,535 1993 Series beanng interest at 5.35% and dae 2010, 2011, and 2012..

29,787 29,705 Total Revenue Bonds (Series M).

123,223 121,930 Total Mini-Bonds and Revenue Bonds (Series M).

159,221 157.691 Total Commercial Paper, Mini-Bonds, and Revenue Bonds (Series M)..

363,994 395.011 31 Financials

i NurE 7 - SUMutR NUCLEAR STATION:

transmission facilities, and various other facilities. The k ase terms range

%e Authonty and South Caroluu Electric and Gas (SCE&G) are from 1 to 20 years. Quarterly lease payments are based on a sum equal to j

parties to ajotnt ownership agreement providing that the Authority and the interest on and principal of Central's indebtedness to the Rural Utilities SCE&G shall own the Summer Nudear Station with unchvided interests of Service (formerly Rural Electrification Administration) for funds bor-33%% and 66%%, respectively. SCE&G is solely responsible for the rowed to constmct the above-mentioned facihties. The Authonty has design, construction, budgeting, management, operation, rnaintenance, options to purchase the leased properties at any time during the period of l

and decommissioning of the Summer Nudear Station, and the Authonty the lease agreements for sums equal to Centrats indebtedness remaining is obligated to pay its ownership share of all costs relating thereto. The outstanding on the properties at the time the options are exercised or to l

Authonty receives 33 %% of the net electricity generated. At December return the properties at the termination of the lease.The Authority plans 31,1996 and 1995, the plant accounts induded approximately $480,000,000 to exercise each and every option to acxtuire ownership of such facihties l

and $478,000,000, respectively, representing the Authority's investment, prior to expiration of the leases.

l indudmg capitalized interest, i the Summer Nudear Station. For each of Future minimum lease payments on Central leases at December 31, the three years ended December 31,1996,1995, and 1994, the Authority's 1996 were:

. l operation and maintenance expenses induded $42,433,000, $45,282,000' Year ending December 31:

Amount

,md $41,545,000, respectively, for the Surnmer Nudear Station, g4 Nudear fuel costs are being amortized based on energy expended, 1

1997.

5,229 which includes a component for estimated disposal costs ofspent nudear 1998.

5,198 fuel. This amortization is induded in fuel expense and is remvered 1999.

4,802 through the Authority's rates.

2000.

4,129 SCE&G has an on site spent fuel storage capability untd at least 2008 2001.

3,821 and expects to be able to expand its storage capacity to acmmmodate the Thcreafter..

33,652 spent fuel output for the life of the plant through rod consohdation, dry cask storage, or other technokgy as it becomes available. In addition, there Total minimum lease payments..

56,831 is sutlicient on site storage capacity over the hfe of Summer Nudcar less amounts representing interest.

14.119 Station to pennit storage of the entire reactor core in die event that Balance at December 31,1996..

42,712 cumplete unloadmg should become desirable or necessary for any reason.

The Nudear Regulatory Commission (NRC) has pubbshed final Property under capital leases and related accumulated amorti-regulationson decomnussioningof nudear facilities that require alicensee zation induded in utility p! ant at December 31,1996 totaled $98,178,000 of a nudear reactor to provide minimum financial assurance ofits ability and 63,650,000 respectively, and at December 31, 1995 totaled to decommission its nudear facilities. In comphance with the applicable

$99,123,000 and $61,387,000, respectively.

NRC regulations, the Authority established an external trust fund and Operating lease payments, including the operating lease pay-began making deposits into this fund in September 199C. In addition to ments for leased coal cars which are reflected in fuel inventory, i

providing for the minimum requirements imposed by the NRC, the totaled $3,672,000, $2,214,000, and $2,295,000 during the years ended Authority makes c;eposits into an internal fund in the amount necessary December 31,1996,199F, and 1994, respectively.

to fund the difkrence octween a site-specific decommissiomng study completed in 1991 and the NRC's imposed minimum requirement. The NorE 9 - CON 1RACT W Tit CE,vrRAL EtrcrRIC POWER Authority's one-thini share of the estimated decommissioning costs of the COm'ERATIVE, INC.:

Summer Nudear Station equals appmrimately $76,266,000 in 1990 dol-Power supply and transmission services are provided to Central lars. The Authority acaues for its share of the estimated decommissioning n accordance with a power system coordination and integration costs over the remaining life of the facility. These costs are being agreement. In addition, the Authority will be the sole supplier of recovered through the Authority's rates.

Central's energy needs excluding energy Central receives from the Based on current decommissioning cost estimates developed by Southeastern Power Administration and SCE&G.

SCE&G, these funds, which totaled approximately $40,913,000 (adjusted to market) at December 31,1996, along with future tksposits into both the NarE 10 - COMMrrMENU AND CONTINGENCIES:

extemal and internal decommissioning acenunts and investment earn-Budget - The Authority's capital budget provides for expendi-ings, are estimated to provide sullicient funds for the Authonty's one-third tures of approximately $105,122,000 during the year ending Decem-share of the total decommissioning msts.

ber 31,1997 and $149,065,000 during the two years thereafter. These The Energy Policy Act ofl992 gave the Department of Energy (DOE) expenditures will be financed by internally generated funds and the authority to assess utihties for the decommissioning of its facilities additional borrowings.

used for the enrichment of uranium induded in nudcar fuel costs. In Purchase Commitments - The Authority has contracted for order to demmmission these facilities, the DOE estimates that it would long-term coal purchases under contracts with estimated outstanding need to charge utibties a total of $150,000,000, indexed for inflation, minimum obhgations at December 31,1996 as follows:

annually for 15 yearsbased on enrichment services used by utilities in past Year endmg December 31:

Amount periods. Based on an estimate from SCE&G covering the 15 years, the pg Authority's remaining one-thin! share of the liability at December 31,1996 39g7 *

'3 g3,g39 l

totals $1,597,000. Such amount has been deferred and will be recovered 66,886 through rates as paid. These msts are included on the balance sheet in

ggg; gggg 66,440 Deferred Credits and Other Noncurmnt Liabilities.

2000.

67,793 NurE 8 - LEASE 5:

%emafter.

82,856 I

%e Authority has capitallease contracts with Central Electric lbwer Total.

420.M Cooperative, Inc. (Central), covering a steam electric generating plant, 32 Financials

%e Authority's outstandmg minimum obligations under an existing forjol>related illnesses or injuries (State Accident Fund);

purchased power contract as of December 31,1996 were approximately

3) Claims of covered employees for health benefits (office of

$100,000,000 The term of the contract is 39 years.

Insurance Services); and The Authonty has a commitment for the purchase of uranium which

4) Claims of covered employees for long-term disability and group expires in 2006 This commitment totals approximatdy $6.9 million for life insurance benefits (Retirement Systems).

the Authoritys one-third share under thejoint ownership agreement with Employees elect health coverage thmugh either a health mainte-SCE&G. Enrichment and fabrication contracts are contingent upon the nance organization or through the State's self-insured plan. All other operating hfe of the nudear unit. These commitments total approxi-coverages hsted above are through the applicable State self-insured plan mately $98 million over the next ten years.

except that adchtional long-term disabihty premiums are renutted to Risk Management - he Authority is exposed to various risks of kms commercial carriers.

related to torts; theft of, damage to, and destruction ofassets and errors and Nudcar Insurance - The maximum liab0ity for public daims arising omissions The Authority purchases conunercialinsurance to cover these from any nudear incident has been estabhshed at $8 9 billion by the Price-

- risksittled daims resulting from these nsks have not exceeded commer-Anderson Indemrufication Act. This $8.9 billion would be covered by cial insurance coverage in any of the past three years. Policies are subject nuclear liability insurance of about $200 million per site, with potential to deductibles ranging imm $1,000 to approximately $800,000 Also a $1 retnspective assessments of up to $79.3 million per hcensee for each o

milhon general liability self-insured layer exists between the Authoritys nudcar incident occurring at any reactor in the United States (payable at primary and excess lubility policies.

a rate not to exceed $10 million per incident, per year). Based on its one-The Authonty is self-insured for auto and dental, and environmental third interest in Summer Nudear Station, the Authority would be respon-incidents that (k) not anse out of an insured event The Authonty sible for the maximum assessment of $26 4 million, not to exceed purchases commercial insurance to cover automotive exposure in excess approximately $3.3 million per incident, per year. This amount is subject of $2.0 milhon per incident. Risk exposure for the dental plan is limited by to further increases to reflect the effect of(i) inflation, (ii) the licensing for plan pmvisions There have not been any third-party daims for emiron-operation of additional nudear reactors, and (iii) any increase in the mental damages for 1996 or 1995. The Authonty currently reports all ofits amount of commercial liability insurance required to be maintained by risk management activities in its general fund. Claims expenchtures and the NRC.

liabilities are reported when it is pmbable that a loss has occurred and the Additionally, SCE&G and the Authonty maintain with American amount of the loss can be reasonably estimated.

Nudear Insurers (ANI) and Nudear Electric insurance Limited (NEIL)

At December 31,1996, the amount of the self-insured liabilities was

$500 million primary and $1.5 billion excess property and decontamina-

$1.6 milhcm. The liability is the Authority's best estimate based on tion insurance to cover the costs of deanup of the facility in the event of available information. Changes in the reported liabDity in each of the past an accident. In addition to the premiums paid on the excess p>licy, SCE&G two years are as follows:

and the Authority could also be assessed a retroactive premium, not to 1996 1995 exceed five times the annual premium, in the event of property damage Thommds to any nudear generating facility covered by NEIL Based on the current Unpaid daims and daim annual premium and the Authority's one-third interest, the Authority's adjustments expenses at rnaximum retroactive premium would be $2.9 million.

bginning of year 1,634

$ 2,437 The Authanty is self-insured for any retroactive premium assess.

ments, daims in excess of stated coverage, or cost increases due to the Incured daims and purchase of replacement power.

daim adjustment expmses:

Clean Air Act 'Ihe Authonty endeavors to ensure that its facihties Provision for insured events comply with apphcable envimnmental regulations and standards.

of the current year 789 763 Congress has promulgated comprehensive amendments to the Clean Incrmm prrmses) m Air Act, induding the addition of a new federal program relating to acid pronsion forpnor years'emnts 195 (686) precipitation. The Authonty has evaluated the potential impact of this Payments for current legislation, induding new limits on the allowable rates of emission of aral pnor years 969 880 sulfur dioxide and nitrogen oxides. While the legislation contains a Total unpaid daims and daim number of new restrictions, the mom significant new requirements, relating to acid precipitation, would not begin to impact the Authority until expenses at end of year 1,649

$ 1,634 the year 2000 Effective January 1,1997, the Auttority will adopt the provisions of The Clean Air Act Amendments require, among other things, specific Statement of Position (SOP) 941 ' Environmental Remediation Liabili-reductions in sulfur dioxide and nitrogen oxide emissions from fossil-ties? This statement provides authontative guidance for rewgnition, fired generating units. These reductions will be required in two phases.

measurement, display, and disdosure of environmental remediation Phase I compliance was implemented January 1,1995, while Phase II

- habthries in fmancial statements. SOP 961 is not expected to have a comphance is to begin on January 1,2000 The Authority projects that it material impact on the Authoritys financial position or results of opera-may be necessary to purchase sulfur dioxide emission credits and upgrade tions upm adoption.

the sulfur removal capabilities of existing umts to meet Phase 11 sulfur The Authority pays insurance premiums to certain other state agen-dioxide emission hmitations. Although most Clean Air Act Amendment cies to cover nsks that may occur in normal operations. The insurers regulations have been finalized, some important regulations have yet to be promise to pay to, or on behalfof, the insured for covered economic k>sses promulgated by the EPA. Therefore, complete comphance costs camnot sustamed during the policy period in accord with insurance p>licy and yet be determined. The Authonty has installed continuous emissions benetit pmgram hmits. Several State 'imds arrumulate assets, and the monitonng equipment at a cost of $5.6 million and estimates that it will state itself assumes all risks for the fiillowing:

spend $10.7 million for low nitrogen oxide burner technokigy by the year

1) Clanns of employees for unemployment compmsation benefits 20no (Employment Secunty Commission);

Energy Policy Act of 1992 -The Energy Policy Act of1992(Energy Act)

2) Claims of covered employees for workers' compensation benefits pmmotes energy etliciency, ahemative fuel use, transmission access, and Financials

increased competition for electnc uthues and will have a significant

$5.588.000, and $5370,000 from the Authority and $4 450,000, impact on the utility industry. At this time, the Authority is not able to

$4,352.000, and $4,183,000, respectively from employees. The determine what impact the Energy Act will have on the financial Authority made 100% of the required contributions for each of the results of the Authonty.

years ended December 31,1996,1995, and 1994.

Open Accens Transmission Tariff - On January 11,1996, the In acwrdance with GASB Statement No. 27,' Accounting for Pen.

Authority submitted to the FERC open access transmission tanffs in-sions by State and Local Governmental Employers", the pension tended to comply with the FERC's comparability standards and reflect liability (assets) for the System was determined to be zero both prior the proforma tariffs. In addition, the Authonty asked the FERC to to the January 1,1996 t ansition date and at the transition date.

declare that the tariffs satisfy the open access tariffs reciprocity require-The system issues a stand alone financial report that includes all ment for transmittmg utihties that are exempt fmm the FERC's review, required supplementary information. The report may be obtained by On May 29,1996, the FERC issued a declaratory order finding that writmg to: South Carchna Retirement System, Fontaine 13usiness 1

the Authonty's open access transmission tariffs meet the comparahil-Center,202 Arbor Lake Drive, Columbia, S.C. 29223.

ity standards (subject to a compliance filing) and that the Authonty's The Authority also provides compensation benefits to certain. l transmission rates are nondiscnmmatory.The FERC also adopted the employees designated by management and the board of directors l

Authonty's suggested procedure whereby non-jurisdictional utihties under the Supplemental Executive Retirement Plan (SERP). The cost could ensure that an open access transmission tarif f complies with the of these benefits is accrued on an actuarially determined hasis. The FERC's reciprocity requirement.

accrued habihty at December 31,1996 and 1995 was $4,245,000 and On July 9,1996, the Authonty filed a revised tariff in compliance

$1,822,000, respectively.

with Order 888 which meets FERC's reciprocity requirements. The revised tariff substantially conformed with the revised proforma tariff N(rrE 12 - OrrtIER POSTRETIRDIENT IlENEffrM contained in Order 883, and unbundled the charges for ancillary The Authority provides (ertain health, dental, and hfe insurance services. As of this time, the FERC has not acted on the Authority's benefits for retired employees. Substantially all of the Authority's comphance fihng or ancillary sen ces rate and charges.

employees may become eligible for these benefits if they retire at any In addition to compliance with Order 888 the Authority has and will age with 30 years of service or at age 60 with at least 20 years of service.

comply wnh Order 889. The Authonty is participating in the VACAR Currendy, approximately 304 retirees meet these requirements. The OASIS, and on January 3,1997, the Authority implemented and filed cost of the heahh, dental, and life insurance benefits are recognized as with FERC procedures for implementation of the standards of conduct.

expense as the premiums are paid for the years ended December 31, Safe Drinking Water Act The Safe Drinking Water Act(SDWA) was 1996,1995, and 1994, these costs totaled $668,000, $627,000, and reauthorized during 1996, but EPA still has to consider details of how

$558,000, respectively.

to enact changes in the form of regulations. Until state and federal Dunng their first ten years of service, full-time permanent em-regulatory agencies issue revised regulations and procedures, current playees can earn up to 15 days vacation leave per year. After ten years regulations remain in etTect. The Authority will stay abreast of of service, employees earn an additional day of vacation leave for each proposed regulatory changes as they are developed.

year of service over ten until they reach the maximum of 25 days per Clean Water Act-The 105th Congress is due to consider reauthori.

year. Employees carn annually a half day per month plus three zation of Clean Water Act (CWA). The complex act could generate additional days at year end for sick leave.

regulatory changes that could impact the power generation sector Employees may carry fonvard up to 45 days of vacation leave and significantly. The Authority will be momtonng for CWA regulatory 180 days of sick leave from one calendar year to the next. Upm issues impacting electrical utihties during 1997.

termination, the Authonty pays employees for accumulated vacation leave at the pay rate then in effect. In addition, the Authority pays NOTE 11 - RETIREMENT PLAN:

employees upon retirement 20 percent of their accumulated sick Subst;mtially all Authority full-time employees must participate in leave at the pay rate then in effect prior to 1995, these costs were one of the compments of the South Carohna Retirement System carried in a deferred debit and liability account and are being amor-(System), a cost sharing, multiple-employer public employee retire-tized over a five-year penod. Effective January 1,1995, the Authority ment system, which was established by Section 9-120 of the South began recognizing these costs as expenses in the period incurred. This Carolina Code of Laws. The payroll for employees covered by the change in aucunting policy did not have a matenal impact on the System for each of the years ended December 31,1996,1995, and 1994 Authonty's financial position or resuhs of operation.

was $74,016,000, $72,520,000, and $69,705,000, respectively.

Vested employees who retire at at;c 65 or with 30 years of service Nort 13 - CREDIT RISK AND M AJOR CL'STOMERS:

at any age are entitled to a retirement benefit, payable monthly for Concentrations of credit risk with respect to the Authonty's receiv-hfe. The annual benefit amount is equal to 1.82 percent of their ables are limited due to the large number of customers in the Authonty's average final compensation times years of service. llenefits fully vest customer base and their dispersion across different industries The on teachmg five years of ser ice Reduced retirement benefits are Authority maintains an allowance for uncollectible accounts based,

payable as early as age 55 The System also provides death and upm the expected collectibihty of all accounts receivable.

disabihty benetits. Benefits are established by state statute.

S; des to two major customers for the years ended December 31, Article X, Section 16 of the South Carolina Constitution requires 1996,1995, and 1994 were as follows that all State-operated retirement plans be f u nded on a sound actuarial 1996 1945 1944 basis. Title 9 of the South Carolina Code of Laws (as amended)

(ThmmN Central Elettric Power prescribes requirements relating to membership, benefits, and em.

ployee/ employer contributians.

Cmperative, Inc.

$ 314,000

$ 294.000 5 278,000 Alumax or Empk>yces are required by state statute to contribute 6 percent of South Carolina. Inc. $ 87,000

$ 73.000

$ 71,000 salary. The Authority is required by the same statute to contribute 7.55 percent of total payroll. The contribution require ment for each of No other customer accounted for more than 10 percent of the the years ended December 31,1996,1995, and 1994 was $5,715,000, Authority's s. des for the years ended December 1996,1995, and 1994 Financials

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f Finance Audit Committee-Chairman %etter,w J

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i The Finance Audit Committee of the Board of Directors is composed of l

1 five Independent directors: Leon S. Goodall, chairman: Larry L.

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Bigham; Frances B. Gilbert: J. Mac Walters; and Johnnie (Joe) Young.

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The Committee meets monthly with members of management and Internal Audit to review and discuss their activities and responsibilities, t

The Finance-Audit Committee ove" sees Santee Cooper's financlol l

reporting and internalauditing processes on behalf of the Board of Directors. Monthly briefings on the financlot statements and periodic reports from monogement and the Internal ouditors pertolning to operations and representations were received. In fulfilling its responsibilities, the Committee otso reviewed the overall scope and i

specific plans for the respective audits by the internal auditors and the independent pubuc accountants. The Committee discussed the Company's financlot statements and the adequacy of its system of

+

internal controls.

The Committee met with the independent public accountants and with the General Auditor, without management present to discuss the l

results of the examination, the evoluotion of Santee Cooper's Internal controls, and the overall quality of Santee Cooper's financlot reporting.

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.$0h Leon S. Goodall, Chairman Finance Audit Committee I

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35 Finance-Audit Committee Chairman's Letter

Board of Directors l

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John S. Rolney Robert D. Bennett Leon S. Goodoll Chairman First Vice Chairman Second Vice Chairman Represents the Electric Cooperatives Represents 2nd Congressionot District A

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Larry L. Righam Juontto W. Brown Frances B. Gilbert Represents 5th Congressional District Represents 1st Congressional District Represents Horry County 1

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Board of Directors

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Henry B. Rickenbaker John D. Trout Claude V. Marcht anks Represents 6th Congressional District Repre sents Berkeley County Represents 3rd Congressional District

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3. Mac Walters J. Joseph Young Represents 4th Congressional District Represents Georgetown County Board of Directors

Advisory Board Doyld M. Beasley Governor James M. Miles Secretary of State Oorles M. Condon Attortcy General

~ 1 Earle E. Morris Comptroller Richard A. Eckstrom State Treasurer Management I

T. Graham Edwards Ronald H. Holmes President and Vice President Chief Executive Officer Human Resource Management Emily S. Brown Byron C. Rodgers Jr.

Executive Vice President Vice President Administration and Finance Engineering and Construction Services Alfred Coloflore Jerry L. Stafford Executive Vice President Vice President Planning and Bulk Power Markets Corporate Communicotlons Bill McColl Jr.

William R. Sutton Executive Vice President Vice President Operations Planning and Power Supply John H.Tlencken Jr.

L.F. " Butch" Volf Jr.

Executive Vice President Vice President and General Counsel Transmission Lonnie N. Corter John S. West Vice President Vice President Corporate Forecasting Property and Legal Services a

Hoxie C. Chaplin Elaine G. Peterson Vice President Controller Generation H. Roderick Murchison Zack W. Dusenbury Treasurer Vice President Distribution Wm. Glen Brown Jr.

Corporate Secretary 3dvisory Board / Management

Sc h ed u b -offt efu n d o d-Bo n d s-O u tsta nd in g,Av As of December 31,1996 lin Thousands)

CALL DATE JULY 1.2001 JULV I 2001 JULV I. 2002 SERIES IMI.8&C REF 1M1-0 1M14 ORMihAL MATURffY DATE JULY 1 Rate N Amount ($)

Rate l%) Amount (3)

Asie N Amound ($1 1997 1998 1999 2000 2001 6.60 15,370 5.90 5.870 2002 6.00 6,215 2003 2004 2005 2006 2007 7.00 4,025 2008 2009 7.00 8.915*

2010 2011 2012 7.00 25,610*

2013 2014 2015 2016 2017 2018 2019 2020 2021 7 10 135,705*

2022 2023 2024 6%

130.275*

2025 2026 6%

61.560*

2027 2028 2029 2030 2031 6%

149,630*

f 2032 Totals per 251,185 291.990 Series Totals per Call 257,055 286.120 Date

• Term Bonds Schedule of Refunded Bonds Outstanding

WrSchedule-oFBonds-Outstanding As of Decernber 31, 7993 IIn ThousandalI1)

PRIORITV BORfD EXPANSION BONDS LIEN LEVEL 08LIGAT10ftS 1985 A48 1986 C&D 1987 A 1988 M 1988 M MAT 0lTV 1967 1973 1977 1978 REFUNDING REFUNDING f;EFUNDING MINI-BONO MIN 1-80ND i

DATE SERIES SERIES SIRif8 SERIES SERIES SERIES SERIES SERIES SERIES 1

JUty 1 k Rm Am letAma Amt let Rm Amr int Rme Amt Int Rm Amt let Rm Amt k Re Amt k Rme Amt Int Rm Ana t

i 1997 4 10 2.975*

5% 2,010' 5 45 890 5.40 1,670 7.80 7,995 6 60 1.235 6.00 1,205 1$88 4 10 3,105*

5% 2,125' 5%

S35 5.40 1,750 1999 4 10 3,245*

5% 2,245*

5% 1,005 5.70 1,850" 2000 4 10 3,395*

5% 2,375*

5 55 1,065 5.70 1,940' j

l 2001 4 10 3.545' 5% 2,510*

5.60 1,130 5 70 2,045*

2002 4.10 3,705*

5% 2,655' 5 60 1,220 5.70 2,145' 3

2003 4 10 3,870*

5% 2,810*

5%

1,295*

5.70 2.260*

7 % 16,362 j

),

2004 4 10 4.045' 5% 2.970*

5%

1,380*

5.70 2,380*

7.00 19,636(2) 2005 4 10 4.230*

5% 3,140' 5%

1.460*

5.70 2,500*

l 1

2006 4 10 4.420' 5% 3,325' 5%

1,570' 5.70 2,630*

f 2007 5% 3.515' 5%

1,795*

5.70 7,385*

2008 5% 3,715' 5%

1,945' 5 70 7,845*

2009 5% 3,930*

5% 2,000*

5%

8,330*

2010 5% 4,155*

5% 2,225*

5%

8,845*

2011 5 % 11.520' 5%

2, t 80*

5%

9,390*

2012 5 % 12,180*

5% 2,300*

5%

9,980*

2013 5 % 12,880*

5% 2,500*

5% 10.590*

i 2014 5%

2,640*

5% 11,250*

i 2015 5 % 21,065*

5% 11,950' 4

2016 5 % 21,235' 5% 12.555' l

i i

2017 5 % 34,580*

5% 13,190*

1 4

2018 5% 50,600*

i 2019 1

2020 i

1 2021 2022

]

023 1

2024 2025 4

f 2026 2027 2028 2029 d

4 2031 2032 Add.

Total 0utstandmg As of 12/31/96 36,535 78,060 106,495 183,090 7,995 1,235 1,205 16,362 19,636 (2)

Bonds Redeemed As of 12/31/96 15,065 21,940 8,505 16,910 37,050 8,445 9,185 650 5p Bonds Rofunded As of 12S1/96 0

0 0

0 150,910 325,950 182.270 0

1. l Less:

Accreted Value 3

As of 12/31/96 2,751 Net Onginallssue Amt.

51,600 100,000 115,000 200,000 195.955 335.630 192,660 17.012 17,471 FOOTNOTES:

• Term Bonds (1) Rounding may cause small variances.

(4) These are floating suction tax exempt (~FLO ATs") and (5) $10,210.000 are serial bonds and $9,000,000 are term bonds.

residuahnterest tax. exempt (" RITES") bonds which (6) included in year that payment is made (2) Includes accretion on Capital Appreciation Bonds have a semiannual bond equivalent yield of 5 40% per through 12/31/96.

annum on those hiaturing 6/3W2006 and 5 60% per (7) includes accretion on Capital Appreciation Bonds from 1/1/97 through maturl (3) Maturities are on January l instead of July I' annum on thosv eth a final maturity of 6/28/2013.

(For Details on Calls "See Schedule of Refunded Bonds Outstandmg.")

Schedule of Bonds Outstanding

w ' %e tsue M 1991 A.S&C 1981 M 1 set A 1982 M 1983 A&8 1953 C MINISONO REFUNDING &

MINI SOND 1981 O REFUNDING MINI-BOND 1952 O REFUNDING REFUN08MO

$EllE$

IMPROMMEN18ERIES SERKS SER#ES SERIES SERIES (3)

SERIES SERIES SERIESI3)

Int Rate Amt.

Int Rate Amt.

Int Rate Amt k Rate Amt kILene Amt Int Rate Amt M Reie Ana M Rees Amt Int Rete Amt I

5.30 4,730 5.10 1,280 3.80 12,370 6 % 2,935 5 % 4,980 5.30 2,405 4.00 5,480 6.30 3.120 5.65 5.255 5% 7,940 4.20 6,955 6.40 4,205 5.80 5.550 5.60 2,385 5.20 335 4.80 16,995 4.30 4,055 5.70 22,505 5.30 360 5.00 6,990 4.40 455 6.70 6.240 5.80 7,400 5%

380 5.00 9,810 4%

3,625 6.00 8,940 5.60 405 5.20 6,280 4 % 12,030 5.70 435 5.20 10,115 4 % 12,590 17.30 15.239 6.20 6,290 5.80 460 5.30 7,080 4%

6,440 1.30 8.224 (2) 7.00 3,760 6.40 6,590 6.20 6,680 5.90 490 5.40 10,400 (4) 4 '/- 13.310 6 % 20,518 6.20 7,100 6 % 9,883 5.90 525 5% ?410 4 '/s 11,755 6 % 8,577 (2) 6.20 7,540 6 % 9,943 6.00 555 5 % 10,920 5.00 18.230 6 % 8,005*

6 % 21,051 (2) 6.00 595 5%

9,765 5.00 1,470 6% 8.515' 6.00 630 5 % 11,480 5.10 19,210 (5) 1 6 % 7,010' 6 % 10,835*

6.00 670 5 % 11,240 5.10 16,740' 6 % 7,470*

6 % 11.520' 6.00 715 5.60 12,100 (4) 5.00 19,040' 6 % 7,955' 6 % 12,265*

6.00 765 5.60 29.300 (4) 5.00 16,645' 6 % 8,470*

6 % 1,935*

6.00 810 5 % 38,255*

5.00 9,255' 6% 2,055*

6.10 865*

5 % 18,905*

5.00 15.825*

6 % 2,275*

6.10 920*

5 % 19,880*

5.00 23,265*

6 % 2,400*

6.10 980*

5 % 20,920' 5.00 19,045' 6 % 2,570*

6.10 1,045*

5 % 22,000*

5.00 14.055' 6 % 9.570*

6.10 1,115' 5 % 43,270*

5 % 18.555*

6%

7,695*

6.10 1,185*

5 % 42.015' 5 % 23.880*

6 % 6.870*

6.10 1,260*

5 % 18,995*

5 % 27,120*

6.10 1,345' 5.00 29.460*

6.10 1.430*

5.00 28.595*

6.10 1,525*

5.00 28,165*

6.10 1,625*

5.00 29,575*

6.10 1,730' 5 % 31,055*

6.00 12,120' 6.10 1,845' 5 % 26.585*

6.00 12,850*

5 % 21.890*

6.00 13,620*

5 % 23.010*

6.00 14,435' 5 % 24,185*

6.00 15,300*

5 % 25,425*

5 % 13,030*

23,463 (2) 88,585 29,095 (2) 58.010 163,975 40.878 (2) 25,000 385,125 612,375 583 30,640 650 0

4,570 882 0

0 18,985

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0 251,185 9

291.990 0

0 0

0 0

2.978 2,587 2,581 21,068 370,410 27,158 350.000 168,545 39,179 25,000 385,125 631.360 y-I w

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1983 2 1985 A 1905 8 1996 A 19I6 B kNNISDND REFUNDING REFUND 8NG REFUNDING REFUNDING TOTAL TOTAL TOTAL SERIES Q)

SERIES Ql SERIES Ql SERIES Ql SERIES Q)

PRINCIPAL REVENUE DEBT Int Rate Aan int Rate Amt Int Rate Amt het. Rate AmL bet Rete Amt MATURmES (5)

INTERE57 (6)

SERVICE (5)

I 5.40 2,060 4.85 1,655 6.00 7,230 4.00 12,115 59,420 140.884 200,304 5.40 5.490 5.00 1,735 6.00 8.450 4.00 17,660 57,060 138,006 195,066 5 '/a 9,105 5.10 1,820 6.00 10.155 5.00 17,405 70.100 134.661 204,761 6 '/. 9,625 5.20 1,915 6.00 2,565 5.00 14,785 71,!90 131,241 202,431 6 '/. 6,005 5.30 2,015 6 '/.

4,790 52,350 128,226 180,576 6 '/. 5,700 5.35 4,260 6 '/.

5,9R 53,090 124,872 177,962 6 '/. 7,890 5.40 3,410 6 '/.

1,645 64,197 122,071 186,268 6 '/i 10,160 6 '/.

3,565 67,276 (2) 122.638 (7) 189,914 6 '/e 10,765 6 '/.

4,645 62.249 114,832 177,081 6 '/a 10,350 6 '/.

5,665 77,414 (2) 118,629 (7) 196,043 70,886 107,116 178,002 6 '/s 815*

5.70 3,255 6 '/s 3,730 77,070 (2) 112,266 (7) 189,336 5 '/.

1,035' 56.261 (2) 111.058 (7) 167,319

.35 10.936 (2) 6 '/s 860*

5.80 3,485 5 '/4 15,170*

85,511 (2) 98,698 (7) 184,209

.35 10,984 (2) 6 '/.

915*

5.80 3.705 5 '/.

6,165*

91,354 (2) 94,502 (7) 185,856

.35 7,867 6 '/e 970*

5 '/.

3,940 5 '/.

5.615*

93,697 86.230 179,927 6 '/s 1,025*

5 '/s 4,180 5 '/.

5,925*

104.030 80,941 184,971 6 '/.

4.460*

5 '/s 4.430 5 '/.

6.530*

88,035 75.125 163,160 6 '/.

8,275*

5 '/s 4,705 5 '/.

7,00$

• 90,650 69,806 160.456 I

6 '/. 10.400*

6 '/.

4.670*

5 '/s 5,000*

5 '/.

13,075*

102,875 64,425 167,300 6 '/.

680*

5 '/a 5,320*

5 '/.

19.650*

116,765 58,703 175,468 6 '/.

720*

5 '/s 5,685*

5 '/. 20,735*

117,410 52,221 169,631 5 '/s 6.085*

5 '/.

21,875*

110,870 45,066 155,936 6 '/. 23,100*

5 '/.

6,515' 5 5/.

23,155*

127,545 38,209 165,754 1

6 '/. 24,915*

5 '/s 6,970*

5 '/. 38,535*

124,665 30,358 155,023 6 '/. 11,505*

5 '/s 34,165*

5 '/. 24,185*

5 '/> 11,435*

112,095 22,903 134,998 5 '/s 30,270*

5 '/e 10,070*

70,365 17,830 88,195 29,690 15,158 44,848 31,200 13.622 44.822 32,785 11,987 44,772 40,556 10,405 50,955 34.760 8,323 43,063 36.630 6,401 43,031 38,620 4.375 42,995 40,725 2,237 42,962 13,030 334 13,364 29.787 (2) 139,185 175,795 267,045 83,470 2,572,401 (2) 2.514,359 (7).. gyg%

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997 11,894 g Aygl}gble Ost Aperture Card 29,510 139,685 177,075 267,045 83,470 3,939,958 8-l 1

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' For AdditionalInformation,-;

Contact:

.5-i L. Jerry L. Stafford

. Vice President, Corporate Communications

= Santee Cooper;-

J 1)

- > One Riverwood Drive

. v.

Moncks' Corner, S.C. 29461-290'1..

i (803)761 4051; P

y f Editori Beth Fondren/Sant'ee Cooper iPhotographer: Jim Huff / Santee Cooper.

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Mriters: Beth Fondren and Willard Strong / Santee Cooper

Designers; D' ale.Lanford and Eric Vincent / Advertising Service Agency g

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k' Santee Cooper.

22 mv* sor nw

' One Riverwood Drive Moncks Corner South Carouna 29461-2901 www.santeecooper.com

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