ML20199E299

Scana Corp,1985 Annual Rept

ML20199E299
Person / Time
Site:	Summer
Issue date:	12/31/1985
From:	Summer V, Warren J SOUTH CAROLINA ELECTRIC & GAS CO.
To:
Shared Package
ML20199E290	List: ML20199E287 ML20199E292 ML20199E299
References
NUDOCS 8603260030
Download: ML20199E299 (48)

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CONTENTS IL n = w_-2 m

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TINANCIAL AND Ol' ERA TING HIGHLIGHTS 3

REl' ORT TO SHAREHOLDERS 4

1' 1983 IN REVIE1V Financial Results 6

Electric Operations 9

Gas Operations 15

~~ ;

os i Transit Operations 17 Other Corporate Activities 17 N1PX Systems, Inc.

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' TINANCIALS r

I Management Report 21 j

Opinion of Independent Certified Public Accountants 21 i

Consolidated Financial Statements 22

'~x Common Stock Information 35 Management's Discussion and Analysis of I %.. -

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Financial Condition and Results of Operation 36

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Selected Financial Data 38 "y

Supplementary Financial Statements Adjusted For j

Changing Prices (Unaudited) 40 n,

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DIRECTORS 42 l

OITICERS 42 INVESTOR INFORAIATION 44 l

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CJ AHOU T THE COAU'ANY NOHCL OL ANNUAL A1LETING l

$CAN \\ CorporatHin {$CANA)is a lhe 19s6 Annual Nitrting of Stin kholders of %l ANA Corporation will be held in hielding iompany fairmed ori l)ett mbt r 31.

('olumbia. south ('arohna on Ednesday, Apnl 23 Ihe met ting will tonsene at 10 00 a nt 14%4 bs south C.trailina I let trit & (.a s at $t awell's at the I.urgreiunds l200 Rosewinni l) rise. l'rowles %ill be niailed to t ommon (ompans 1%(. I &<,L SC AN A b.is ten diret t !

tis kholders in N1 art h. Stot k holders w ho are unable to attend the Annual Nlecting shoofd i

.ind two indiret t w holly-ow nett subsids-i return tht ir proxies promptly by mail int s that are engaged in utihts and n.m-l 1

utility operath an,. 5(. AN A's o I

ihart tari be ti>und ten the insiIr anie.itional batktiistr

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of this report i

2

FINANCIAL AND OPERATING HIGHLIGHTS 7e increase 1985 1984 (Decrease)

(htillions of Dollars except statistics and per share amounts)

Financial Total Operating Revenues 5 1,110.3

$ 1,128.4 (1.6)

Total Operating Expenses

$ 912.7

$ 929.1 (1.8)

Earnings Available for Common Stock

$ 113.6

$ 121.8 (6.7)

Earnings Per Share of Common Stock 2.82 5

3.05 (7.5)

Dividends Declared Per Share of Common Stock 2.16 2.05 5.4 Book Value Per Share of Common Stock (Year-End)

$ 20.01

$ 19.31 3.6 hlarket Price Per Share of Common Stock (Year-End)

$ 27.875

$ 23.625 18.0 Common Stockholders' Equity (Year-End)

$ 806.2

$ 778 3 3.6 Common Stock Outstanding:

Average (Thousands) 40,296 39,900 1.0 Year-End (Thousands) 40,296 40,2 %

Construction Expenditures 5 128.5

$ 283.5 (54.7)

Gross Utility Plant

$ 2,859.1 5 2,7M.8 3.4 Electric Operations Electric Operating Revenues

$ 787.8

$ 74o.7 5.5 Sales (Nhilion KW1i) 13,041 12,590 3.6 Customers (Year-End) 393,810 378,960 3.9 Generating Capability - Net A1W (Year-End) 3,959 3,959 Territorial Peak Demand - Net A1W 2,703 2,5%

4.1 Gas Operations Gas Operating Revenues

$ 318.9

$ 378.5 (15.7)

Sales (Thousand T herms) 647,215

'37,059 (12.2)

Customers (Year-End) 191,002 189,M4

.8 Transit Operations Transit Operating Revenues 3.7 3.2 15.6 Revenue Passengers Carned (Thousands) 9,032 9,658 (6.5)

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EARNINGS PER COSU10N SHARE DIVIDENDS DECIARED PER RE7 URN ON YEAR-END COMMON '

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I FELLOW SHAREHOLDERS:

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j This past year has been an exciting transition for our Company. We

completed the corporate restructuring designed to transform a traditional

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l electric and gas utility into a diversified holding company, still primarily in the energy business but with new and expanding interests. In j

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- 7 addition, South Carolina Electric & Gas Company DCE&G), our major subsidiary, was named 1985 Electric Utility of the Year by Electric Light 6 1

i Power, a utility industry publication. In making the selection the maga-1 zine focused on several major achievenients including the successful I

{ formation of SCANA Corpt ration, completion of Summer Nuclear Station 1

i and its inclusion in the rate base, the formation of a generating company l

and the organization of a telecommunications subsidiary. The maga /ine I

i was also impressed with what it termed our " broad range of customer j

l assistance and development progams.

and exemplary corporate citi-

]

j /enship" This award, perhaps more than any other we ha\\e received, is a tribute to the hard work and dedication of our employees. We are j

justifiably proud of this recognition for their tireless etforts.

i Earnings per share for 1985 were $2.82 compared to 53.05 for 1984. As i

Virgil C. Summer

- 1 previously reported, net income for 1984 included a nonrecurring gain of l

20 cents per share, resulting f rom a revised retail electric rate order issued in March 19s4. Net earnings from operations were down slightly in 1985 L.. _ we._. m_

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4 j

compared to 19S4, as a result of reduced operating income from gas j

, operations and extra maintenance activities performed on the Summer I

Nuclear Station while it was out of service for refueling. ~Ihese conditions

were offset largely by improvement in the profitability of the electric I

operations. Operating results for the past year are more fully descnbed in subsequent sections of this report. We believe an improved economy in I

our sertice area together with productivity ef forts undertaken in the past two years will improve our financial results for 1986.

l At its January 1986 meeting, the Company's Board of Directors declared a dividend of 56 cents per share of (ommon stock, an increase of l

two cents over the previous quarterly rate. I'his action raises the Compa-l ny's indicated annual dividend rate from $2.16 to $2.24 per share. The j

, Company has increased the dividend rate on its common stock in 33 of i

the last 34 vears.

l

'Ihe outlook for SCE&G is very positive. Sales of electncity are expected l to grow 3.I'J annually for the next ti\\e years. Current forecasts indicate l that we will not have to build additional base load generating facilities until the next century. Our sigmticantly reduced construction activities i

)

will enal'e us to meet our fmancial requirements with internally gener-l ated funds for several years. Ihe Summer Nuclear Station continues its j

record of outstanding performance. The unit was taken of t line during the fourth quarter of 1985 for its second refueling. It has bet n back on-line j

. at tull power sinte January 2,1986, with the nest refueling espected in the j

spring of 1987. In February 19s6 we will redeem $14.11 nullion of 12.150 bonds at 100',, and in Apnl 1986 we will redeem the entire 560 million of 1

the 15.5', Guaranteed Notes of South Carolina Elet tric & Gas Finance j

i N.V., at 101'; of par vahie. Ihese redemptions will substantially lower our i

i cost of debt capital. Except for the semiannual review by the Public Service i

i Commission to consider adjustments to reflect the changes in the cost of fuel, our eletinc rates remained unchanged throughout 1983. We have no plans for an electric rate increase during 1986.

Our natural gas businesses proside approximately 10'] of the income of the Company. During 1983 they operated at a reduced level of profitabil-l ity in a period of significant restructuring in the industry. ihe Natural l

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Gas Policy Act of 1978 substantially deregulated the wellhead price of a l

portion of natural gas supplies on January 1,1983. Subsequently, energy l

.k prices in general, and oil prices in particular, began a period of signifi-cant decline. Since residual fuel oil is the main competitive fuel for our l

existing industrial gas loads, severe competitive price pressure resulted t

l and continues. The final major change occurred in October 1985 when i

1 the Federal Energy Regulatory Commission issued its Order No. 436. This Order, which applies to interstate pipeline companies, will fundamentally alter the natural gas industry by leading to further deregulation in the i

l industry and changed relationships with our gas suppliers and our l

customers.

I Our wholly-owned subsidiary, South Carolina Pipeline Corporation, i

is not an interstate pipeline company, but will be affected by the impact of j

i the ruling on our suppliers, Southern Natural Gas Company and Trans-continental Gas Pipeline Corporation. If they become common carriers, as we believe they will, an opportunity will exist for us to broaden our j

ability to purchase gas, thus improving our competitive position.

l i

Transition has moved us into non-traditional areas. Perhaps the best jj Jan A., Warren j

example of diversification fostered by our holding company structure is j

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N1PX Systems.Inc.(N1PX). During 1955 it completed construction of the longest overhead fiber optic line m the utility industry, on time and l

under projected costs. This system, more fully described later in this j

report, transmit, voice, video and data communications between Colum-l bia and Charleston. In addition to our own system, MPX is associated l

i with local, regional and national data transmission networks to market l

l 1

the excess capacity of o line and expand our potential profits from this j

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business. Another subsidiary, South Carolina Real Estate Development i

j Company, Inc., began development of a 550 million executive office park j

i in the Charleston area. Additional projects are underway.

l l

Through our strategic planning process we are addressing new l

i opportunities as well as the major issues that impact on the financial well-l l

being of the Company. Our strategic plan charts SCANA's course for the

[

future w hilt seeking to optimize your ins estment. Our objectives include j

continued improsement in the Company's financial condition. Looking l

to the future, our focus will be to raise our level of customer service while l

l improving our competitive position by controlling operating expenses, I

continuing productivity improsements, avoiding gas and electric rate l

6 increases, and by aggressively marketing our products and services. We i

also will continue to seek appropriate opportunities to diversify.

We are pleased with the prospect of economic growth as existing businesses expand and new industries move into our service area. We believe that 1986 and beyond will bring SCANA Corporation new and

{

profitable iaterests, as well as opportunities for enhancing our service in j

traditional utihty areas. With the support of our shareholders and the i

dedication of our employees, your management will continue to strive for excellence.

Q Q.u folin A. Warren Virgil C. Stunmer Vice Citairman and Citatrman of tire Board Citief I:xecutive GWicer hMary 5, Is i

um

+m muos x s m,,,, v

~

~

\\ FINANCIAL RESULTS 1985 REWVUE DOLLAR EARNINGS AND DIVIDENDS Consolidated net income for SCANA Corporation and its subsidiaries (collectively "the Com-pany") totaled $113.6 million in 1985, down from $121.8 million in Where N Came From -

1984. Earnings per share of common stock in 1985 were $2.82 tompared to $3.05 in 1984.

~Y The primary difference between 1985 and 1984 earnings was a

"~

nonrecurring gain which increased 1984 net income by approxi-mately $7.9 million (net of income taxes), or 20 cents per share. As

,. me -

previously reported, that gain resulted from a revised retail electric

O]

rate order issued in March 1984 by The Public Service Commission of South Carolina (PSC). That order resolved an appeal by South o

Carolina Electric & Gas Company (SCE&G), SCANA's principal f

subsidiary, of a 1983 rate order. Excluding the effect of that 1984 j

gain, earnings per share in 1985 were three cents below those for i

1984.

(jf The 1985 earnings provided a return on year-end common equity of 14.1% compared to 15.7% at year-end 1984. Fixed charges, primarily interest expense, were covered by earnings 3.71 times in o,c,,,e ao neseereas.

. 2sas 54 1985 compared to 3.74 times in 1984 (see Chart 2).

c-.,ciai

.s is te. 4.78 On December 31,1985 the Company's capital structure con-

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sisted of 44% long-term debt,10% preferred stock and 46% com-ya mon equity (see Chart 3). The Company's goal is to strengthen its omr.

.. 2 3e 2e.

rout..

7t oc 2s_7s capital structure further by achieving a 50% common equity compo-

== "--

nent by 1990.

The Company believes that its strong financial position, to-

• h"*"*""

gether with lower prevailing interest rates, had a favorable impact on the market price of SCANA's common stock in 1985. The stock

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.h g g closed the year at a price of $27-7/8, up from $23-5/8 at year-end

" ['

1984. The book value per share of common stock was $20.01 at year-i end 1985, up from $19.31 at year-end 1984. This resulted in a

,l

/ ;7.J market-to-book ratio at year-end 1985 of 139%.

'i A detailed review of the Company's financial condition for

.,j:n 1985 is included in " Management's Discussion and Analysis of

• E

, lf p "

Financial Condition and Results of Operation" beginning on pe

'd page 36.

p '

At its January 1986 meeting, SCANA's Board of Directors raised Lg 09 the quarterly cash dividend on common stock to 56 cents per share S l,,W 4,

j4 ?y from 54 cents per share. The dividend is payable April 1,1986 to Q n[7 ( U y,? g b r (w !

stockholders of record March 10,1986. This action raised the current hl4slosassenessdaissey egg M M *,", g g indicated annual dividend rate to $2.24 per share, up from $2.16.

p The Company has increased the dividend rate on its common stock

.gcpanssMMOQ in 33 of the last 34 years.

go P8P'83 MO:ffM 161TE ACTIVITY No requests for general rate increases were filed pgmessis Mf "

V9 in the retail or wholesale electric or natural gas jurisdictions of the g

Company's subsidiaries during 1985. Except for changes in the fuel F

component, SCE&G's electric rates are the same as those placed in A

effect on March 5,1984.

On December 26,1984 South Carolina Generating Company b,.

i g

4 (GENCO), a SCANA subsidiary, filed with the Federal Energy f;

Regulatory Commission (FERC) a cost of service formula rate for the

[%a

.mA sale of power and energy to SCE&G. Under a contract with GENCO, 6

I

i I

wn.

m~ m m w m m ga m mw azm a a.x=1= m naxm 1

I N C Nr" " "

l SCE&G purchases all of the electric power generated by the A. N1. Williams Station, which is owned by GENCO. A partial EARNINGS COVERAGE Of FIXED settlement has been reached and the remaininh* issues are expected CllARGES-SEC METilOD nmes coed betare mcom ia=>

to be resolved m. the first quarter of 1986.

l On January 17,1985 the PSC issued an order approving changes related to the realignment of the Company's natural gas operations in connection with the corporate restructuring which

/ "9]

I took effect on December 31,1984. The result was an approximate 3

)

$1.7 million annual rate reduction that was allocated among most T

f a

I of SCE&G's residential natural gas customers. The PSC also ap-f.

4 l

proved the Company's request to make the Temporary Cas Cost 3.2, Rider a permanent part of the gas tariff. The Rider has enabled the

/

g 2.

I Company's subsidiaries, under certain conditions, to compete j

more effectively with lower-priced alternatives to natural gas in Tc industrial markets.

No general rate increases are expected to be filed during 1986

.l in the retail or wholesale electric or natural gas areas. The Company m

j may request a fare increase to help reduce losse.s in its transit 5

,&i V l

operations. Otherwise, the focus of SCANA's regulatory activities

~

during 1986 will be on the federal level. The Company and its l,.

I subsidiaries will continue to be active participants in the major F>;

y policy and regulatory changes currently under consideration by h.,y h

i u

l the FERC Those proposed changes concern increasing competi-j tion resulting from deregulation of the natural gas industry and p

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the possibility of increased competition through changes in the

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i regulation of certain segments of the electric industry.

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For more information on these and other rate matters, see

" * * " " " " ^~

Note 2 on page 29 and "N!anagement's Discussion and Analysis of Financial Condition and Results of O eration" beh'inninb' on CAPITAL STRllCTllRE P

co.a.on. ce mn page 36.

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umanremnauw mm"mm=m CONSTRUCTION AND FINANCING PROGRAM The Company's CASH REQUIREMENTS FOR construction expenditures and related financing requirements CONSTRUCTIOy decreased considerably in 1985. Total cash expenditures for con-("* " * **

struction amounted to $125.0 million in 1985 (see Chart 4). This is a 54% decrease from 1984, which saw completion of the construction related to converting Williams Station from oil to coal-fired opera-see tion. Electric facilities, including nuclear fuel purchases, required

'4 expenditures of $94.4 million, while $23.8 million was spent on gas

. [$

facilities. Expenditures to build and upgrade other facilities ac-

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counted for the remaining $6.8 million. Construction expendi-tures plus cash requirements for maturing securities and sinking funds of approximately $58.4 million brought the Company's total

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capital requirements for 1985 to $183.4 million.

Substantially all of th'e Company's 1985 cash requirements for

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construction were provided from internal sources, compared to I

approximately 79% in 1984. The Company has not issued new I

f; shares of common stock through a public offering since 1982, and does not anticipate domg so in the foreseeable future. The Com-i a.

1 pany projects that most of its cash requirements during 1986 will be o

provided by internally generated funds. Short-term needs will be ff d

satisfied through the' sale of commercial paper.

PE d

The following capital transactions occurred during 1985:

M M8f@f7 p@p]

w

. ;tesagem se s

• On March 1, SCE&G redeemed, at par, the entire $66.25 b.

milhon pn,ncipal amount outstandmg of its 16% Series First W k sphy M N and Refunding Mortgage Bonds dueJune 1,2011. SCE&G's m y w? Q J r %p Board of Directors also authorized the early redemption on L

February 20,1986, at par, of $14.11 million of the 12.15% Series First and Refunding Mortgage Bonds due June 1,2010. The principal amount outstanding of this series on December 31, 1985 was $50 million. These redemptions will reduce the Com-pany's annual interest charges.

• SCE&G raised $5.5 million in December through the sale of tax-exempt pollution control facilities revenue bonds issued by Richland County, SC. The initial interest rate on these secured bonds, which mature in 2014, was 6.175%. The interest rate will be adjusted annually. Proceeds from this sale will be used to finance construction of additional pollution control facili-ties at SCE&G's Wateree Station in Richland County.

In January 1986 the Company's Board of Directors authorized the redemption, on A aril 15,1986, of $60 million of 15.5% Guaranteed Notes due 1989. T 1ese notes are an obligation of South Carolina Electric & Gas Finance N.V., a SCANA subsidiary. The prepayment of these high-interest obligations will result in additional interest savings for the Company.

8 I

_ _ n nn-,

-x.m m wnn-w w - n a w n m m ELECTRIC OPERATIONS tcomman=mmm TOTA L ELECTRIC S.1LES SALES AND CUSTOMERS Sales of electricity from the Company's

>=m oe xwwi system during 1985 totaled 13.0 billion kilowatt-hours (KWIi), a 3.69 increase over 1984 (see Chart 5). Sales to residential and "a

is o 12 commercial customers were up 2.9',1 and 7.l'1 respectively, while sales to industrial customers rose 1.2%. Wholesale and other en-zo ergy sales increased 5.2'T. Customer growth and continued expan_

sion in the retail trade and service sectors of the state's economy contributed to the improvement in residential and commercial' sales. The increase in industrial sales was due in part to a 1.5%

increase in sales to the textile industry. Sales to this industry have cg-

1. 6

• been sluggish in recent years due to rising competition from foreign textile imports.

" [gge,)

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The start-up in late 1985 of a nuclear reactor at the Department of Energy's Savannah River Plant is expected to place an additional "k

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load on the Company's electric generating system of 40 megawatts (N1W), or approximately 315 million KWil annually.

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For the second consecutive year, the Company experienced a se's m record annual increase in electric customers. At year-end 1985, it d **

4 had 393,810 electric customers, an increase of 3S% over 1984 (see Chart 6). Nearly all of that growth occurred in the residential and

?

g-m. u commercial classes. Current projections indicate that electric

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TOTAL NUMBER OF ELECTRIC

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CUSTOMERS 4

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. I M.f 396 s.

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t-A kdhededse ihr wiring see nar seser neenfugt sneter. Themr assers 1 4

L are went in i 6dANnst, sadeteries &and sesafirs and otkr spurislizaf instions including tend sumw. INIRng infernantion enn be obtainal fnnn Ik norter V

1981 : 1983 1983 UNI'YN"' *!!*'l"*'l"8fMptatjpinif JM,layfiony pumu,_A ;_,L,,,Q L

- 1ees 1988 -

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1 ti mm aj 9

i t

c=m==nmzu==x=====u.=2mns xn==an=mm=w=xce.:muremvz:n rowarer==ramxc=e=rma customer growth will average 2.29 annually through 1990. During SOURCES OFELECTRIC the same period, total sales of electricity are projected to increase GENERATION 3.1% annually.

The Company experienced an increase in off-system power im sales during 1985. These sales were made under contracts with Savannah Electric and Power Company and Southern Company Services, Inc. (for delivery to Florida Power & Light Company and Jacksonville Electric Auth'ority). Subject to the energy needs of its q}%

own customers and the availability of its generating units, the Company intends to seek additional off-system sales in the future.

O GENERATION AND CAPACITY The Company's electric generat-mt y

ing system produced 14.8 billion KWH of electricity during 1985, a

]i 107c increase over 1984. Of the total power generated,70% was produced by coal-fired plants,24% by nuclear power and 69 by Y

hydroelectric stations (see Chart 7).

~

" * ' 4 ',,

' During 1985 the Company's network of five coal-fired generat-ing plants consumed a total of 4.0 million tons of coal, a 6.5'7c hl increase over 1984. The weighted average cost of coal burned during the year was $1.95 per million BTU compared to $2.03 per am million BTU in 1984.

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Approximately 87.4?c of the Company's projected 1986 coal requirements are under long-term contract. The Company has in wiset yees w,ise

'" '" N storage, or under contract, sufficient qu mtities of nuclear fuel and g m n$ser

- M_Weesewese ]1 related services to operate the V. C. Summer Nuclear Station m

through 1989.

L_ _,

,_c w.m al The Company's peak generating capability as of December 31, 1985 was 3,959 MW, unchanged from year-end 1984. It consisted of 57% coal-fired capacity,19% hydroelectric capacity,159 nuclear

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i The Energy in b Centers oWrr infornantier pregnenen so nil chiMrrn ni.:fety f

' day, int!? ihe Ls)ghtning Bug, SE&G's nnpety sperkelist,

. Ata recent nn p

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. ; ' that pouvrlines anf ruaird equiprnent can Wdengerous tou w-.,_ uas~3 aroun{

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- - - m 2.e:= m a r.r m e r e. m m u m m e. m. : m m w ar e - a. w r m power,2% in an oil-fired unit, and 79

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• p ~~T""'-~ ~"~~T-~"~~~"~=% W C F in sixteen internal combustion peak-4Y i*

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ing turbines and one combined cycle

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facility which burn either No. 2 fuel oil N-

=p or nat' ural gas.

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NilCLEAR OPERATIONS The V. C.

R,

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Summer Nuclear Station achieved above geg g

average performance during 1985. The 4*JQ

- 'J e

N 900 MW unit is owned jointly by the

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Company (two-thirds) and the South

kgo, Carolina Public Service Authority (one-('

third). During 1985 Summer Station

'4h

'e achieved a capacity factor of 68% despite

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a ten-week outage in the fall for mainte-nance, modifications and the plant's k

second refueling. The capacity factor is W:

the ratio of the amount of electricity ac-g tually produced by a unit in relation to the amount it is designed to produce if f

y operated without interruption year-j. fg round. The average annual capacity fac-1 Eat mers ner 6y the siaca(she tf.6sa.Jorat Samuner_.

i i

tor for domestic nuclear plants is about K N=le Sidilon. The I returned to wreur on wder 17,1985 e

soq'

, pleaving completam its nenned refuelhqq end other nenintenmeer activities. L t Sumneer Station soill operated nose on an 18-neonth y n.p,cf g,,,,t.

f.,f,,,,,wg,,,,,g,3,,,,,f,gj[ch, ns a result of i During the plant,s refueling,68 of its g

,,,f in,

,nrichd 157 fuel assemblies were replaced. The Lumnmmhe

.____u_J fuel for the plant's third fuel cycle was designed to allow the plant to operate on an 18-month fuel cycle, or 50% longer than the previous fuel cycle. Consequently, the next scheduled refueling outage will not occur until the spring of 1987.

This should improve the plant's already above average operating performance record and result in additional fuel cost savings.

While the. plant was out of service, numerous maintenance l

and testing procedures were performed along with some plant modifications. A process called "rotopeening" was performed on about half of the approximately 14,000 tubes in the plant's three steam generators This process is designed to extend the life of the tubes, whicn transfer heat from the reactor to a separate steam system that produces electricity. Summer Station is the first nuclear plant in the United States to undergo this procedure. It is also the l

first operating nuclear plant in the world to implement this proce-l dure using robotics.

l The Institute of Nuclear Power Operations (INPO) awarded l

accreditation to two additional training programs at Summer Sta-tion in 1985. The training programs accredited were for the Ilealth Physics Specialist and Chemistry Specialist. This brings to six the l

number of accredited programs at Summer Station, with four additional programs scheduled far accreditation in 1986. INPO is an industry group that evaluates plant operations and establishes programs to help nuclear plants achieve excellence in operations.

In 1985 Company personnel detected two variances from prescribed technical specifications for the plant, promptly corrected them, and reported them to the Nuclear Regulatory Commission (NRC). In January 1986 the NRC imposed a civil penalty of $50,000 11

1 m-wxrmnrs= m==rm,==:r.cmmmrca-ce,r m-me

~2m sowns m a u a = =3 for violation of the two technical specifications. The violations were l

ELECTRIC TERRITORIAL PEAK classified a Level Ill, which is the lowest level for which a civil DEMtXD penalty assessed. The NRC stated that neither condition posed any da'nger to the health and safety of the public or to the plant.

Although the Company believed the violations should have been 2.m am classified as Level II, for which no fine would be imposed, it has 7

paid the fine. This was the only fine imposed by the NRC during a 2.ss(

the plant's construction and operation.

+j GENEIMTING EITICIENCY The Company had the nation's elev-

"a, ass enth most efficient investor-owned thermal electric generating y

system in 1984 according to the most recent annual survey con-w q

ducted by Electric Light & Power magazine. The survey compared b

operating performance data for the country's 100 largest utilities.

Each company was ranked according to its generating system heat m

h rate, a standard measure of the efficiency achieved in converting fl one form of energy (such as coal, oil or uranium) into another form q

of energy - electricity. The Company has consistently ranked 2.000 y

among the nation's leaders in generating efficiency.

4 The EL&P survey also cited the Company's network of fossil-ji.eoo fired generating units as the seventh most efficient in the country during 1984. This category excluded the operations of nuclear 4

y F1-i plants, gas turbines and diesel engines.

l p & esi.

,4 PEAK DEAfAND Territorial peak demand is the maximum require-u--t seen, tese iese-.iess.

[

]

ment fo. electricity placed on the Company's electric generating LL.a

.a

- m.J system t v its customers (excluding off-system sales) during any one-hour period. The annual growth in m_n

-~~

peak demand is an important indicator of the need for future electric generating

^

capacity.

On January 21,1985 the Company's customers set a new all-time peak demand of 2,703 N1W during a period of record cold weather (see Chart 8). The new peak ex-ceeded the previous all-time peak of 2,700 N1W set in August 1983. The Company had not recorded an all-time peak demand dur-ing the winter since 1955. The Company hit its 1985 summer peak of 2,694 N1W on g

July 10. That peak was 3.8'A higher than the 1984 summer peak.

On January 28,1986 extremely cold

/"9 weather again resulted in an all-time peak w-id _ j customer demand. The new record peak of Liwnsm in sht

's DwwHistem mig raner

'l 2,818 N1W we 4.3'A higher than the pre-Jianes insemedof

'Auf sikAson dertrk arrryiq sp to j vious all-time peak.

23,000 volts. Thr is more east-efinent and mentw tmilgo through an educa,jt Current projections mdicate that the

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i time-EarstasfAy,all.

b3"*[88.g y ggigghtp,gg n_

j Company's territorial ped demand will grow at an average annual rate of 1.9'7<

through 1990. The Company anticipates t

12

mmw = n --mmmnnmumm,,

l that no additional base-load generating capacity will be needed until 7"~~"^

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after the year 2000.

//.

j

' don't think&r CONSERVATION AND LOAD MANAGEMENT Programs that pro.

p 6_ si mote energ~y conservation and load management are a key ele-

'.A88d8"8

1. dIA N i ment in the Company's long-range strategy for meeting tile en-ergy needs of its cust'omers. These programs are geared toward Sminnes Me k think a

i L W @M " 8'I888 8A8 M reducing the rate of growth in electric peak demand while increas-7 3

! ""A 88

• # N8) i ing off-peak energy usage, thereby avoiding or delaying the need I

A" to build costly neN generating fac'ilities.

Since its inception in 1981, the Company's Residential Con.

Dcost-e$sent.fhis is servation Services program has provided energy conservation as-M 88 k 8"I M O8A8888 sistance and advice to residential customers through home energy ga fift. r

. E dinterough.

l audits. When this program officially ended on March 31,1985 mo're dCf. 's new p;

than 6,500 customers had requested home energy audits while an

, panss amf asisk the (

ex-:

additional 15,000 customers had requested do-it-vourself audit kits.

l =hibiisst er Energy hyp The Company will continue to offer energ'y advic'e and assistance p eerside # asgpe,ngis.

t ustom rs rough its Energy Info Centers located in Columbia

{NI" The Company offers two residential conservation rates that are k II88 M88?

l designed to promote energy use management and conservation.

w%

The Residential Energy Conservation rate provides a discount to e

g customers whose homes meet stnngent construction and insula-Heh Ah('

tion requirements. The number of customers qualifying for this c,,,,g,gw,m -

rate has doubled each year since it was

_s introduced in June 1982. A Residential m_ lama Time-of-Use rate is available to customers h

M Tsd h*

in the Columbia and Charleston metropol-itan areas. This rate offers savings to cus-B[lNC BljillTOM[El-Mf*

4 tomers who switch their use of electricity (ggggjggggggy l

a 5:.

peak periods.

IlESIDENTIAL I

(

from periods of maximum demand to off-i r

ENPIRONMENTAL CONCERNS Acid ENERGY

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rain continues to be one of the nation's CONSERVATION

=

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most complex and intensely debated gg x,

environmental issues. Because emissions resulting from the combustion of coal ASK THE BUILDER

(

~ h SPECIFICATIONS in electric generating plants are said g

5, g

m to contribute to the formation of acid L

2 rain, this issue is of major concern to the 6

Company.

Although Congress did not enact any acid rain control legislation in 1985, a law requiring emission reductions could be passed within the next several years. Some g.

ass,7 l, wig c,

previousiv proposed legislation would require installation of ex-

, wese6msserHesismer A

pensive equipment without assurance that the desired environ-1 7 1 Y w,"'-

mental benefits would be achieved. The Company will continue to

,,,,,,,gw,.y,,,pm I

monitor all legislation deahn.; with this issue.

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Excluding expenditures which may ultimately be required by passage of some form of acid rain legislation, the Company projects j,'

that it will spend more than $25 million over the next five years to minimize the environmental impact of its operations.

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GAS OPERATIONS CONSOLIDATED GAS SALES SALES AND CUSTOMERS Total consolidated sales of natural gas

%. d e=m in 1985 were 647.2 million therms, a 12.2% decrease from the strong sales recorded in 1984 (see Chart 9). Residential and commercial sales declined 14.8% and 7.39 respectively, while sales to industrial and resale customers were down 13.1% and ll.57c respectively. By comparison, total sales in 1984 had risen 9.87c over the previous I

year in response to improved economic conditions in the Compa-l ny's service area.

I Several factors contributed to the overall decline in 1985's sales, l

including generally warmer weather during the winter months, q wc customer conservation efforts, decreased demand for natural gas 7, -

in various segments of the manufacturing industry and incremen-tal pricing restrictions under the Natural Gas Policy Act of 1978 m

(NGPA). Intense competition from competitively priced alternative fuels, particularly No. 6 fuel oil, also contributed to the sales Ewm decline. The result was a decrease in the average annual use of f*

' a 1

natural gas by residential, commercial and industrial customers

(

q compared to 1984. The Company will seek a waiver of the restric-J tions under the NGPA in early 1986.

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At year-end 1985, the Co'mpany was serving 191,002 natural f

]

m gas customers, up from 189,544 customers at year-end 1984. An-

' "' 7%

other 85,000 residential, commercial and indu'strial customers re-NYM %"80 "t 1*N iamma ceived natural gas indirectly during the year from sales by the g g ;g l

Company to its resale customers.

"" - - -"" - '3 The average annual rate per therm declined for residential, commercial and industrial natural gas customers during 1985, primarily as a r<sult of a decrease in the cost of gas purchased from suppliers.

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On January 21,1985

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SCE&G established an all-time 4

one-dav record for natural gas o^

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1 sold to'its customers. Nearly 3

9 f,.,,

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259,000 MCF was delivered'on j

S*.:E&G's distribution system,

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an 18'A increase over the pre-

/.r vious all-time peak day. The re-(

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t cord gas usage was the result of f

4 extremely cold weather on this W.

,S

$I ~

date thro'ughout the natural gas

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service area. Pipeline also expe-oQ 7 *

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rienced an all-time record for

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l natural gas delivered on its

-$~

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l transmission system during the t "-

p.

l same 24-hour period.

p.f Over the five-year period

- i 1986-1990, the Company's natu-y%y

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ral gas customer base is pro-p,g

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jected to grow at an average an-i

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nual rate of about 17<. During f*

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the same period, the Company's g

g total consolidated sales of natu-I 'smientief ges seterr. SCE6C' sales momen W4rSpunam(s a ral as are ProI'ected to increase N

re scredesusemssuar at an average annual rate of

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! on-fejd training 6rfere they adWrurj--. : sessus.

j GAS SUPPLY The Company

~

- " ~ ~ " -

j purchases natural gas under gas (LNG) plant is capable of storing the liquefied equivalent of up long-term contracts with South-to one million MCE The LNG storage tanks are filled by liquefying j

ern Natural Gas Company natural gas from incoming pipeline supplies during off-peak pe-i (Southern) and Transconti-riods. The plant can regasify up to 60,000 MCF per day to meet peak

^

nental Gas Pipeline Corpora-demand. Propane storage facilities can supply an additional 65,000 tion (Transco). The volume of MCF per day.

gas which the Company is ent.i-The totil volume of natural gas purchased by the Company in tied to receive under these con-1985 for resale was approximatelv 64 million MCF compared to' tracts is shown in the following approximately 71 million MCF in' 1984. The decreased purchases table:

were the result of lower customer demand. The average cost per i

Ntaximum Daily MCF of natural gas purchased for resale was approximately $3.50 Supplier Contract Demand (NICF) in 1985 compared with ap aroximately $4.05 in 1984. This decline i

Southern 210,900 was due to stabilized pipe ine prices as a consequence of l

Transco 29,300 increased competition in the marketplace and the Company's l

TOTAL 210,200 ability to make substantial spot market purchases at prices below j

firm contract rates. These lower gas costs were passed along to The interconnections with customers.

these suppliers provide the The availability of spot market gas to the Company recently has i

Company with reliability of diminished due to the refusal of the Company's suppliers to accept supply and purchasing flexibil-provisions of FERC Order No. 436 requiring nondiscriminatory i

ity. The Company also has var-transportation for shippers of natural gas. The Company believes

)

ious storage and peak shaving that its suppliers will be able to resolve the problems that would i

facilities to help meet peak de-result from operation under FERC Order 436, and that enhanced j

mand during the winter competition in natural gas markets ultimately should increase 1

months. Its liquefied natural marketing opportunities for the Company.

i b

==.

SYSTEAfIAIPROVEAfENTS During 1985 a number of measures charter bus service statewide.

were undertaken to improve overall efficiency and reliability on The Company will continue its-l both the natural gas distribution and transmission systems.

efforts during 1986 to increase On the Company's distribution system, operations in Colum-revenues, decrease expenses bia and Georgetown were enhanced by relocating into modern and improve customer service, j

operation centers that will better serve the needs of customers in As a result of a joint effort j

those areas. A project to replace over 600 miles of deteriorating among the Company, the City mains and service connections in Columbia at a total cost of of Columbia and the Central approximately $30 million reached the halfway point during the Afidlands Regional Planning i

year. This project should be completed in 1988. A second distribu-Council, a $3.9 million operat-l tion feeder to the Charleston area was also completed during 1985.

ing assistance grant was ap-q The new line will improve service reliability to this heavily popu-proved in 1985 by the Urban i

lated area.

Afass Transportation Adminis-improvements were also made during 1985 on the Company's tration (UhfTA). Receipt of j

transmission system, including the consolidation of two compres-these funds is expected in 1986.

i sor stations at Aiken. Implementation of a new computer system The Uh1TA grant is designed to to handle gas dispatching for the entire transmission system compensate the Company for a began in 1985 When fully operational, this computer system will portion of its transit operating i

coordinate the efficient allocation of available gas supplies, includ-losses incurred in Columbia ing supplemental sources, and the curtailment of gas to interrupti-from 1981 to 1983. A similar ble customers during periods of heaviest demand.

UhlTA grant of $1.9 million was NON-UTIllIY OPERATIONS In addition to its natural gas opera-received by the Company in 1985 for its transit operations m I

tions, the Company is also involved in a number of gas-related Charleston.

businesses througli three wholly-owned subsidiaries. Carotane, Inc. sells and distributes propane to residential, commercial and OTHER CORPORATE small industrial customers in areas where natural gas service is not ACTIVITIES 1

available. At year-end 1985, Carotane was serving approximately 4,300 customers compared to 4,500 customers at year-end 1984.

EITICIENCY PROGRA AfS Carolina LPG Corporation and Carolina Propane Storage Cor-RECOGNIZED in addition to poration participate in joint ventures with subsidiaries of Transco.

winning the prestigious Electric 3

j These joint ventures operate a 62-mile propane pipeline and an 80-Light & Power 1985 Utility of the million gallon underground propane storage facility. The storage Year Award, the Company facility leases space in the underground cavern to industrial com-achieved impressive results with panies, utilities and others for the storage of propane. The propane its ongoing productivity pro-pipelire connects the Dixie Pipeline System, which traverses cen-grams during the year. In rec-3 l

tral South Carolina, to a terminal facility near the underground ognition of these results, the aropane storage facility. The demand for propane storage services Company received the 1985 i

ias been depressed in recent years due to ample supplies of Governor's Award for Excel-l natural gas during peak dema'nd periods, lerce la Productivity improve-ment from the South Carolina I

TRANSIT OPERATIONS Productivity Council. Only four i

The Company provides public bus service in the metropolitan other companies in the state re-areas of Columbia and Charleston under franchise agreements ceived similar recognition.

with each city. The Company operates a combined fleet of 122 coaches on a tot.d r >ute system covering 295 miles. During 1985 the bus fleet traveled a pproximately 3.5 million miles and carried ap-proximately 9.0 million revenue passengers.

The Company has not realized a profit f rom its transit opera-tions since 1948. Efforts continued during 1985 to reverse this trend. Routes were revised to provide for more economical opera-tion as well as better customer service. Under a charter certificate issued in October 1985 by the PSC, the Company expanded its 17

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. 9 EAIPLOYEES At year-end

- - - " ~ ~ ~ ~ ~ ~ ~

gg.

p 1985, the Company had 3,901 puiSCE6G is cer.

full-time employees, an in-A crease of 3.8% over 1984. New geinlyg,grcyg..

memledprgettag the Fire._

hires are being held to a mini-f;: Ismad Project started; y were jmum with replacements filled si hwa, primarily through transfers

} the getssemd;junkly a t : very su Wr'or,

withm the Company.

3 i had curr 10D#rst tier applica.-

During the year the Com-jl ' quests.; A lot ofsenior citizens d_ )

thus med multiper repast re.

pany successfully negotiated wage issues under continuing l,l_.ik merSt. Masems

~ rely on this Igood as their sole ]

labor contracts with each of

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j soNrce of hestmg. Ihope this :.1 three unions that represent ap-t nr1,3 coops jsse nese

[ opperfNnitycWn Arr2 pended." d pro \\imately 1,200 employees, t drier-in wedssajercussonnercon-a L temence. Crestgesreersmeleasted.p e

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Phyuis PeHaria CUSTO3fER ASSISTANCE jind tMhaness ofer j

Ezeratist Derectors PROGRAAfS During the past

- Aiken Arus Councd on Aging i year, the Company placed an in.

CUSTOAfER SERVICE 1

crea' sed emphasis IACILITIES IAIPROVED Du r-V lp 4Eaj on community as.

ing 1985 a new commercial of-4 I

sistance programs.

fice was opened m the town of 1-In addition to on.

Williston and a new customer going programs application area was opened in like the Summer Columbia's downtown com-Foundation, Good mercial office. New operations

_ ~~

7 Neighbor Fund centers m St. Matthews and and the annual Georgetown replaced obsolete weatherization facilities. In Charleston, a cus-project, several tomer service center was built new programs in Village Square Shopping were started.

Center and ground was bro-c

. l Project Sil ARE is designed ken on a new fleet mainte-I l Aden? Norm" f

to give fuel assistance to those nance center to replace an ag-

h. Jert, SCEwedsWeinds sininer a" 7 yvho are unable to keep warm ing facility. A new complex in,

@"cfg 4

3 city tnn aser,is p,mdesper so in the wmtertime. Customers Columb,a will house gas distri-i

[

Mnem and sansr citarns.

can choose to pay one addi-bution operations, electric sub-f'

'* N tional dollar eacli month on station operations and a trans-t Cssnety snd their energy bill. Those funds former repair facility.

t Casmr# on Ag%sf er are turned over to community M"

action agencies which allocat'e the funds.

')

The Missing Children's j

Program attempts to help locate

)

missing children. The Com-y pany places photo placards in its business offices and buses.

r'

.l Allleads are referred to the i

South Carolina Law Enforce-ment Division.

To increase awareness of

[-

the availability of its community

[

assistance programs, the Com-

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'l pany began a statewide adver-k m._

as_.mj tising campaign during 1985.

18

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--m_,m mm NEW ENERGYINTO CENTER OPENED A daz-

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zling array of displays delighted those who vis-ited the Company's new Energy info Center in Charleston at the grand opening in November 1985. A cooperative effort by the Company, the Trident ilomebuilders Association and appli-I ance manufacturers and dealers, the Charleston center is designed to give energy advice and assistance to customers in that part of the Com-pany's service area. Columbia's Energy Info Center has had more than 200,000 visitors since A -

manggggHi,igir7Ndetsamamas%

1 1

it opened in June 1984. Both centers will period-3$ g#88'puessesanidness, Ares 4sess ass ames E

8"f8'8h8"'**8f8888888":

l ically be updated with new displays and current information.

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INDllSTRIAL DEVELOPMENT Announced capital investment f or n

new and expanded industrial facilities in South Carolina totaled 4

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$1.4 billion in 1983. Approximately $1.0 billion, or 71% of this growth is targeted for the Company's electric and natural gas service areas. This new investment is expected to create more than 6,900 new job opportunities in the manufacturing sector of the service area's economy. Since 1982 some $5.3 billion, or 76G of the state's announced inv'stment in new industrial facilities was

• 2b'":t e

y M"

-l designated for areas served by the Company.

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NEW CENTRAL lAHORATORY DEDICATED The Company's yM 888 8"

• A Central Laboratorv moved into new quarters in March 1985. The 7,800 square-foot facility was designed and built by Company I N a[retsf raur;Imessai sir -

employees. It houses state-of-the-art testing equipment used by ten

[ *Ashiry Jtiserin ommsese. saw ss-

[ by,,$g"88 Y

chemists and analysts. Water, fuel and oils used in the production f

of electncity are analyzed at the Central Laboratory, which is the

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1 main analytical facility for the Company's fossil and hydro plants.

Myans st a g(550 min, don.

g The new lab was dedicated in August 1985 in memory of Grayson C. Meetze, SCE&G's former executive vice president of operations who died in 1984.

M4NAGEMENTCHANGES On August 31,1985 Virgil C. Summer retired as chief executive officer of SCANA Corporation and its subsidiaries. Ile will continue to serve as chairman of SCANA's Board of Directors and will also serve as a consultant to the Company.

Summer began his career at SCE&G in 1937 as a maintenance man at Parr Steam Plant. lie was superintendent at several of the Company's generating plants and, by 1977, had worked his way up to the position of president and chief operating officer. Ile became chief executive officer in 1979 and was elected chairman of the board in 1982.

In conjunction with Mr. Summer's retirement, SCANA's Board of Directors elected John A. Warren vice chairman of the board and chief executive officer. lie was also named chief executive officer of all SCANA subsidiaries, including SCE&G. Lawrence M. Gressette, Jr. was elected president of SCANA Corporation and Thomas C.

Nichols, Jr. was elected president and chief operating officer of SCE&G. In addition, E. II. Crews, Jr. was elected executive vice president of SCE&G.

19

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mnm-.mzmm MPX SYSTEMS,1NC.

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During 1985,h1PX Systems, Inc. completed construction of a

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129-mile fiber optics communications line between Columbia and W ' ]

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.. i ~l" i J.;;.1 Charleston. Part of the line is used for the Company's internal L. 4.%. f Z i, ^ /' f,,g$ e

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communications needs. The remaining capacity will be leased to long-distance communications carriers through PalmettoNet, a y - ( ' ~-f.,,t.7 r

Ja.i-V P

communications carrier serving South Carolina.

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c?ehW:S.h Fiber optics is a relatively new technology that uses thin, hair-bcF#;.. sR like glass fibers and light impulses created by a laser. By turning on p2 y? i St R

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and off millions of times each second, the laser sends light beams M;5 d TR: @.

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through the fibers. The laser's " flashing" creates a digital code, i

which is then translated into sound or pictures at the receiving

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end of the line. There are six pairs of glass fibers in the fiber optics

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line between Columbia and Charleston. Each fiber pair is capable

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of transmitting 6,000 voice conversations simultaneously. Because e dj ggp of its speed, expandable capacity and clarity of sound and picture, K.d. l.

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fiber optics is considered to be superior to conventional copper 9-l 73 3. Mip s i

wire and microwave technology for communications transmission.

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i wide system. N1PX Systems, Inc. acts as exclusive marketing agent ffW.: "

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for PalmettoNet. h1PX also serves as a marketing agent in South 1,6 e 4.q.;2; 1U

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Carolina for SouthernNet, whose fiber optic trunkline will provide t

service from Washington, D.C. to Atlanta. The integration into M.$

_w SouthernNet gives N1PX the opportunity to serve customers by an

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even more extensive communications system, the National Tele-c uswx epetsaaremains 4

communications Network (NTN). NTN is a joint venture that afs atm i

b provides interconnection relationships with other carriers that will i '""*d A

emusdes andananary.

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provide nationwide fiber optic-based telecommunications serv ce ap i

coast to coast.

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"On behalf of all the employees of South Carolina i

Electric & Gas, I'm honored to accept this award today. I know that it took the dedicated effort of each and every one of us to earn the right to be called the l

1985 Electric Utility of the Year."

Virgil C. Summer Chairman of the Board i

November 26,1985 1

Electric Light & Power, a nationally known industry publication, named South-Carolina Electric & Gas Company as its 1985 Electric Utility of the Year. In selecting SCE&G for this singular honor, the magazine praised the Company for its efforts on behalf of shareholders, customers and employees.

Specifically, SCE&G was selected company over the past two years The for a combination of unusually strong company has received high marks on performances. The utility completed its its commission-mandated management l

~

audit for the efficiency of its operations V.C; Summer nuclear plant and was able to get it into the rate base in 1984. and has been recognized for its pro-it formed a holding company, SCANA ductivity improvements.

i Corporation, to provide an umbrella or-An additional strong factorin the -

ganization to facilitate growth through company's selection was its broad diversification. It formed a subsidiary to range of customer assistance and de-J take ownership of its Williams Station, velopment programs, including weath-enabling it to convert the plant to burn erization of needy customers' homes, coal, qualify for FERC regulation and business / industry training of disadvan-l Save customers interest costs amount-taged minorities, distribution to needy.

ing to $6 million. It has completed a 129 customers of wood cut from rights-of-mile fiber optic system, the longest in way for heating and cooking, counsel-i the industry by a substantial margin,

.ing to explain assistance alternatives to with " private carrier" status to allow needy customers and both direct and '

[

excess capacity to be sold to outside indirect financial support for worthwhile customers. Itis heavily involved in social, health and educational community service activities and has programs.

improved customer perceptions of the Reprinted with permission of Electric Light & Pouvr r

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EI ANSK fNdC RIMCSu d

La_ammm.mummea.-

m MANAGEMENT REPORT -

OPINION OFINDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Management of SCANA Corporation (the Company)is responsible for the preparation SCANA Corporation:

and integrity of the financial data included in We have examined the Consolidated Balance the accompanying Consolidated Financial State-Sheets and Consolidated Statements of Capitali-ments. These statements have been prepared in zation of SCANA Corporation and consolidated conformity with generally accepted accounting subsidiaries (the Companies) as of December 31, principles as applicable. In situations that pre-1985 and 1984 and the related Consolidated State-vent exact accounting measurements, manage-ments of Income and Retained Earnings and of ment has used informed judgments and Sources of Funds for Gross Property Additions estimates. Financial information presented else-for each of the three years in the period ended where in this Annual Report is consistent with December 31,1985. Our examinations were made these financial statements.

in accordance with generally accepted auditing The Company maintains and relies upon a standards and, accordingly,' included such tests system of internal accounting controls which is.

of the accounting records and such other auditing designed to provide reasonable assurance that all procedures as we considered necessary in the transactions are properly recorded in the books circumstances.

and records and that assets are protected from In our opinion, such Consolidated Financial unauthorized use. The degree of internal ac-Statements present fairly the consolidated finan-counting controlis based upon the determina-cial position of the Companies at December 31, tion of the optimum balance between the cost 1985 and 1984 and the results of their operations incurred and the benefits to be derived. The and the changes in their financial position for system of internal accounting controls is sup-each of the three years in the period ended De-ported by written policies and guidelines and is cember 31,1985, in conformity with generally complemented by the selection, training and accepted accounting principles applied on a development of professional fmancial managers consistent basis.

and by a staff of internal auditors who conduct comprehensive internal audits.

The Board of Directors, through an Audit u A *M /,j/ > = [

Committee composed of nonemployee directors, provides oversight for the preparation of these DELOITTE IIASKINS & SELLS financial statements. The Audit Committee meets Columbia, South Carolina periodically with internal and independent audi.

February 5,1986 tors and representatives of management to re-view their activities and responsibilities. The in-ternal and independent auditors have full and free access to the Audit Committee to discuss internal accounting control, auditing and financial reporting matters.

The independent certified public accounting firm of Deloitte liaskins & Sells is engaged to examine and report as to the fair presentation of management's Consolidated Financial Statements in accordance with generally accepted auditing standards.

b v'

~

W. B. Timmerman R. W. Stedman Vice President &

Vice President &

Treasurer Controller 21

1 hu.a m-u

-i ei iu EE' il---ir=Nmm is CONSOLIDATED BALANCE SHEETS December 31, 1985 1984 ASSETS (Thousands of Dollars)

Utility Plant (Notes 1,2,3 and 4):

Electric

$ 2,417,565

$ 2,355,914 Cas 251,686 237,737 Transit 4,877 5,056 Common 18,178 16,273 Total 2,692,306 2,614,980 Less accumulated depreciation and amortization 644,975 566,814 Total 2,047,331 2,048,166 Construction work in progress 65,402 32,949 Nuclear fuel, net of accumulated amortization 65,266 79,739 Acquisition adjustment-gas, net of accumulated amortization 36,143 37,141 Utility Plant, Net 2,214,142

' 2,197,995 Other Property and investments:

Nonutility property (substantially at cost) 19,169 15,465 investments (Note 1) 17,989 14,089 Total Other Property and Investments 37,158 29,554 Current Assets:

Cash, temporary eash investments and special deposits (Note 8) 48,683 53,148 Receivables 105,949 103,032 inventories (at average cost):

Fuel (Note 3) 48,156 39,442 Materials and supplies 13,197 10,630

? repayments 13,222 10,173 Total Current Assets 229,207 216,425 Deferred Debits:

Unamortized debt expense 6,513 5,975 Accumulated deferred income taxes (Notes 1 and 7) 1,615 2,054 Deferred return on plant investment (Notes I and 2) 23,945 11,064 Decommissioning fund (Note 1) 3,182 690 Other 27,937 35,437 Total Deferred Debits 63,192 55,720 Total

$ 2,543,699

$ 2,499,694 See Notes to Consolidated Financial Statements.

22

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.wmsme--mm----m-wmeermmmarw-se ua a 2a December 31, 1985 1984 CAPITALIZATION (See Consolidated Statements of Capitalization)

(Thousands of Dollars)

Stockholders' Investment:

Common Equity

$ 806,155 5 778,251 Preferred Stock (Not Subject td Purchase or Sinking Funds) 26,262 26,262 Total Stockholders' Investment 832,417 804,513 Preferred Stock (Subject to Purchase or Sinking Funds) 152,514 156,789 Ieng-Term Debt, Net 785,021 893,950 Total Capitalization 1,769,952 1,855,252 LIABILITIES Current Liabilities:

Short-term borrowings (Note 8) 2,388 473 Current portion of long-term debt, net (Note 3) 90,348 29,055 Accounts payable 86,089 60,599 Customer deposits 11,441 10,283 Taxes accrued 26,813 29,389 Interest accrued 21,183 19,622' Dividends declared 25,989 24,832 Other 5,053 4,013 Total Current Liabilities 269,304 178,266 Deferred Credits:

Accumulated deferred investment tax credits (Note 1) 129,359 128,538 Accumulated deferred income taxes (Notes 1 and 7) 343,998 301,170 Accumulated reserve for decommissioning (Note 1) 3,182 690 Other 27,904 35,778 Total Deferred Credits 504,443 466,176 Ccmmitments and Contingencies (Note 9)

Total

$ 2,543,699

$ 2,499,694 See Notes to Consolidated Financial Statements.

23

m mxws:n:enmu%- Aumuunn:h,-esmrean=was-mw:==sammaarmar CONSOLIDATED STATEMENTS OFINCOME AND RETAINED EARNINGS For the Years Ended December 31, 1985 1984 1983 i

(Thousands of Dollars except per share amounts)

Operating Revenues (Notes 1 and 2):

Electric

$ 787,796

$ 746,745

$ 634,127 Gas 318,856 378,491 337,282 Transit 3,689 3,178 3,242 Total Operating Revenues 1,110,341 1,128,414 974,651 Operating Expenses:

Fuel used in electric generation 229,249 223,768 260,381 Power purchased, net (8,821) 2,721 10,143 Gas purchased for resale 246,760 289,212 277,091 Other operation 143,016 132,108 88,939 Maintenance 60,836 52,619 36,292 Depreciation and amortization (Note 1) 86,899 74,914 45,000 Income taxes (Notes 1 and 7) 105,783 108,768 70,395 Other taxes 49,021 45,008 36,537 Total Operating Expenses 912,743 929,118 824,778 Operating Income 197,598 199,296 149,873-Other Income (Note 1):

Allowance for equity funds used during construction 1,086 2,885 10,244 Deferred return on plant investment (Note 2) 12,881 11,064 Other income, net of income taxes 1,754 3,698 1,327 Total Other Income 15,721 17,647 11,571 Income Before Interest Charges and Preferred Stock Dividends 213,319 216,943 161,444 Interest Charges (Credits):

Interest on long-term debt, net 83,817 85,679 88,025 Other interest expense 1,789 3,865 7,478 Allowance for borrowed funds used during construction (Note 1)

(2,388)

(11,296)

(37,997)

Total Interest Charges, Net 83,218 78,248 57,506 Preferred Stock Cash Dividends of Subsidiary (At stated rates) 16,541 16,877 17,186 Net Income 113,560 121,818 86,752 Retained Earnings at Beginning of Year 202,988 162,981 151,975 Common Stock Cash Dividends Declared (Note 5)

(85,999)

(81,811)

(75,746)

Retained Earnings at Erid of Year 5 230,549

$ ' 202,988

$ 162,981 Earnings Available for Common Stock

$ 113,560

$ 121,818

$ 86,752 Weighted Average Number of Common Shares Outstanding (Thousands) 40,296

-39,900 37,844 Earnings Per Share of Common Stock

$ 2.82

$ 3.05

$ 2.29 See Notes to Consolidated Financial Statements.

24

e i

CONSOLIDATED STATEMENTS OF SOURCES OF FUNDS FOR GROSS PROPERTYADDITIONS For the Years Ended December 31, 1985 1984 1983 SOURCES OF FUNDS (Thousands of Dollars)

. Internally Generated:

Net income

$ 113,560

$ 121,818

$ 86,752 Charges (credits) to income not requiring (providing) funds:

Depreciation and amortization 86,899 74,914 45,000 Amortization of nuclear fuel 22,612 19,029 Deferred income taxes, net 42,497 92,801 30,919 Deferred investment tax credit, net ~

821 9,231 9,515 Allowance for funds used during construction (3,474)

(14,181)'

(48,241)

Deferred return on plant investment (12,881)

(11,064)

. Generation expense during construction 69,868 Other, net 1,444 2,853 3,873 ~

Funds provided from operations 251,478 295,401 197,686 Deduct cash dividends declared on common stock 85,999 81,811 75,746 Internally Generated Funds, Net 165,479 213,590 121,940 External Financing:

Common stock issued 27,954 39,512 Bank notes sold 81,500 Pollution control bonds sold 5,500 92,850 Increase in fuel financings 874 18,041 Reduction oflong-term debt (54,096)

(112,961)

(29,158)

Retirement of preferred stock (4,275)

(3,815)

(3,015)

Increase (decrease) in short-term borrowings 1,915 315 (21,808)

Funds from External Financing -

(50,082) 103,884 (14,469)

Other Sources (Uses):

~(Increase) decrease in working capital, excluding short-term borrowings and current portion of long-term debt 15,048 17,793 (21,144)

Other changes in noncurrent balance sheet items, net (5,412)

(65,929) 47,172 Other Sources (Uses) 9,636 (48,136) 26,028 Funds for Property Additions 125,033 269,338 133,499 Allowance for Funds Used During Construction 3,474 14,181 48,241 Gross Property Additions

$ 128,507

$ 283,519 5 181,740 See Notes to Consolidated Financial Statements.

25

nam., nmy m e w,,.- - w

.,.w.

~ -,.uwwww

- mm m m-_

.,~. m m.m CONSOLIDATED STATEMENTS OF CAPITALIZATION December 31, 1985 1984 f

Common Equity (Note 5):

mmusands of Dollars)

Common stock, no par value, authorized 75,000,000 shares; issued and outstanding,1985 and 19M - 40,296,147 shares

$575,606

$575,263 Retained earnings 230,549 202,988 Total Common Equity 806,155 46 % 778,251 42%

South Carolina Electric & Gas Company:

Preferred Stock (Not Subject to Purchase or Sinking Funds)(Cumulative):

Shares Outstanding Redemption Price Eventual Series 1985 1984 Current Through Minimum 5100 Par 8.40 %

200,000 200,000 106.50 11-30-86 101.00 20,000 20,000 550 Par 5%

125,234 125,234 52.50 52.50 6,262 6,262 Total Preferred Stock (Not Subject to Purchase or Sinking Funds) 26,262 1%

26,262 1%

South Carolina Electric & Cas Company:

Preferred Stock (Subject to Purchase or Sinking Funds)(Cumulative)(Note 6);

$100 Par Value - Authorized 1,550,000 shares Shares Outstanding Redemption Price Eventual Series 1985 1984 Current Through Minimum 7.70 %

116,900 120,000 103.85 6-30-87 101.00 11,690 12,000 8.12%

167,150 171,600 104.06 6-30-86 102.03 16,715 17,160 10.Y4%

135,000 148,000 IN.84 10-01-86 100.00 13,500 14,800 11.08 %

200,000 200,000 108.00 9-30-90 100.00 20,000 20,000 13.88 %

250,000 250.000 1!3.88 6-30-87 100.00 25,000 25,000 869,050 889,600

$50 Par Value - Authorized 1985-1,741,486 shares; 1984 - 1,754,186 shares Shares Outstanding Redemption Price Eventual Series 1985 1984 Current Through Minimum 4.50%

33,600 35,200 51.00 51.00 1,680 1,760 4.60%

15,834 17,334 50.50 50.50 792 867 4.60% (A) 46,052' 48,052 51.00 51.00 2,302 2,402 4. 6 0 % ( 15) 108,800 112,200 50.50 50.50 5,440 5,610 5.125 %

82,000 83,000 51.00 51.00 4,100 4,150 6%

115,200 118,400 50.50.

50.50 5,760 5,920 8%

300,000 300,000 51.50 1-30-86 50.00 15,000 15,0m) 8.72 %

365,400 3M,000 53.00 12-31-88 50.00 18,270 19,200 9.40 %

245,292 258,400 51.175

.51.175 12,265 12,920 1,312,178 1,356,586 Total Preferred Stock (Subject to Purchase or Sinking Funds) 152,514 9%

156,789 9%

- 26

.I

a

{

d December 31, 1985 1984 Long-Term Debt (Notes 3 and 4):

(Thousands of Douars)

South Carolina Electric & Gas Company:

First and Refunding Alortgage Bonds:

Year of

' Series Maturity 3-1/2%

1985 3,125 14-3/8 %

1986 15,000 15,000 15-5'8 %

1987 8,334 25,000!

5-1/2%

1987 6,176 6,400 4-7/8%

1988 10,000 10,000 10-1/2 %

1990 9,000 -

9,600 5%

1990 10,000 10,000 5%

1991 8,000 8,000 4-7/8%

1995 16,000 16,000 5.45%

1996 15,000 15,000 6%

1997 15,000 15,000 6-1/2%

1998 20,000 20,000 8%

1999 35,000 35,000 9-1/8%

1999 15,000 15,000 8%

2001 35,000 35,000 7-1/4%

2002 30,000 30,000 9-1/8%

2006 50,000 50,000 8.40 %

2006 50,000 50,000 8-3/8%

2007 30,000 30,000 8.90 %

2008 30,000 30,000 10-1/8 %

20W 35,000 35,000 9-7/8%

2009 50,000 50,000 12.15 %

2010 50,000 50,000 16%

2011 66,250 Pollution Control Facilities Revenue Bonds:

4-1/2% Series, bearing interest at 70-75% of applicable prime rate, due 1987 2,062 3,093 5.95% Series, due 2003 7,380 7,440 Fairfield County, due 2014 57,000 57,000

- Richland County, due 2014 5,500 Consolidated Mortgage Gold Bonds 5% Series, due 1999 (non-callable) 977 1,000 Nuclear Fuel Disposal Liability, d ue 1985 (no interest) 694 Capitalized lease obligations - vehicles (at various rates and maturities) 3,5M Lease Obligation,5-3/4%, due 1997 255 270 South Carolina Generating Company, Inc.:

Berkeley County Pollution Control Facilities Revenue Bonds, due 2014 35,850 35,850 Bank Note, due 1988 (variable rate - 8.56% at December 31,1985) 81,500 81,500 South Carolina LNG Company, Inc.:

10-1/2% Series First Mortgage Bonds, due 1990 5,290 5,980 South Carolina Fuel Company, Inc.:

Nuclear fuelliability 65,096 74,226 Fossil fuelliability 24,791 23,917 Sooth Carolina Electric & Gas Finance, N.V.:

15-1/2% Guaranteed Notes; due 1989 60,000 60,000 South Carolina Pipeline Corporation:

6% Series A First Mortgage Bonds, due 1988 1,963 1,963 Carolina Propane Storage Corporation:

Term Loan,9%, due 1985 4,144 South Carolina Rea1 Estate Development Company, Inc.:

Notes, due 1986-1991 (at various rates) 99 -

149 Total 890,273 990,135 Less - Long-term debt maturities, including sinking fund requirements 30,348 29,055 Bonds called for early redemption 74,110 66,250 Unamortind discount 794

-880 Total Long-Term Debt 785,021 44 %

893,950 48 %

- Total Capitalization

$1,769,952 100 %

$1,855,252 100 %

See Notes to Consolidated Financial Statements.

27

w-_mammmmmmwamamwammmmu NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUAIA1ARY OF SIGNITICANT ACCOUNTING POLICIES:

SCE&G, operator of the 900 megawatt Summer Station,

- A. Reorgani:ation and Principles of Consolidation and the South Carolina Public Service Authority (a public corporation oi the State oi South Carolina) are joint owners, SCANA Corporation (the Company), a South Carolina in the proportions of two-thirds and one-third, respectively, corporation, was organized in 1984 by South Carolina Electric of Summer Station. The parties share the costs of operating

& Gas Company (SCE&G) and acquired all of the issued and the plant and in energy output in these proportions. The outstanding common stock of SCE&G under a Plan of total cost of the construction of Summer Station was approxi-Exchange effective December 31,19M. Pursuant to the Plan mately $1.3 billion, or about $1,461 per kilowatt, of which of Exchange, the corporate framework through which the SCE&G's share was approximately $877 million. Accumulated operations of SCE&G and its af tiliated companies were con-depreciation associated with SCE&G's share of Summer Sta-ducted was restructured, with the Company becoming the tion was approximately $62.2 million and $28.0 million as of sole holder of the common stock of SCE&G and the holders of December 31,1985 and 1984, respectively. SCE&G's share of the common stock of SCE&G automatically becoming the the direct expenses associated with operating the Summer holders of all the outstanding shares of common stock of the Station is included in "Other Operation" and "Mainte-Company on a share-for-share basis. The corporate restructur-nance" expenses.

ing involved the transfer of assets and businesses among.

D. Allowancefor Funds Used During Construction vanous corporate entities which are direct or mdimet subsidi-aries of SCANA. The Preferred Stock of SCE&G continues to Allowance for funds used dunng construction (AFC), a be held by nonaffiliated parties, nuncash item, reflects the period cost of capital devoted to The Company is a public utility holding (ompany within plant under construction. This accounting practice results in the meaning of the Public Utility liolding Company Act of the inclusion, as a component of construction cost (con-1935, but is exempt from registration under such Act.

struction work in progress), of amounts of AFC which will The accounts of the Company and its wholly-owned ultimately be included in rate base in establishing rates for subsidiaries, SCE&G, South Carolina Generating Company, utility charges. The Company's subsidiaries calculated AFC Inc. (GENCO). South Carolina Fuel Company, Inc., South using rates of 9.5%,6.5% and 6.5% for 1985,19M and 1983, Carolina Electric & Gas Finan' e, N.V., South Carolina Pipe-respectively, except for GENCO which used a rate of 5.7% for c

line Corporation, Carohna LPG Corporation, Carolina Pro-1985. These rates do not exceed the maximum allowable rate i

pane Storage Corporation, Carotane, Inc., South Carolina as calculated under FERC Order No. 561. Interest on nuclear Real Estate Development Company, Inc., MPX Systems, Inc.;

fuel is (apitalized at the actual interest amount.

and Carolma Exploration Corporation and South Carolina LNG Company, Inc. w hich are wholly-owned subsidiaries of E Dcferred Return on Plant Incestment South Carohna Pipeline Corporation, are consolidated in the Carrying costs (including equity return) associated with accompanying Consolidated Financial Statements invest-approximately $114.8 million (5108.0 million at December 31, ments in joint ventures are reported using the equity 1985) of production investment, net of accumulated deprecia-method of accounting. Significant intercompany transac-tion, relating to 400 MW of electric generating capacity tions have been eliminated in consolidation.

removed from rate base are being deferred at SCE&G's ap-B. System of Accounts proved overall rate of return of i1.74% for recovery over some future period pursuant to a March 2,1984 PSC rate order (see The accounting records of the Company's regulated sub-Note 2A).

sidiaries are maintained in accordance with the uniform On December 19,1985, the Financial Accounting Stand-system of accounts presenbed by the Federal Energy Regula-ards Board (FASB) issued an exposure draft which would tory Commission (FERC) and as adopted by The Public Ser-amend FASB Statement No. 71 to include, among other vice Commission of South Carolina (PSC).

revisions, certain criteria for recognizing deferrals of current gg pg operating costs, including carrying costs, associated with i

mvestments m utility plant m service.

Utility plant is stated substantially at original cost. The The recovery of SCE&G's deferred return on plant in-costs of additions, renewals and betterments to utility plant, vestment as set forth m the PSC's March 2,1984 rate order including direct labor, material and indirect charges for engi-(see Note 2A) does not presently meet the criteria proposed neering, supervision, and an allowance for funds used by the FASB. Therefore, if the FASB's exposure draft is adopted during construction, are added to utility plant accounts. The in its current form, and absent any modification of the original cost of utility property retired or otherwise disposed March 2,1984 rate order, the Company could be required for of is remosed from utility plant accounts and charged, with accounting purposes to restate its financial statements in the cost of removal, less salvage, to accumulated depreciation.

order to eliminate the deferred return on plant investment.

The costs of repairs, replacements and renewals of items of The effect of such restatement would be to reduce reported property determined to be less than a unit of property are earnings per share for 1985 and 1984 by 32c and 28e, respec-charged to maintenance expense. In accordance with FERC -

tively. It is uncertain if FASB Statement No. 71 will be Electric Plant Instructions, the fair value of test power gener-amended and what, if any, criteria will be established for ated in 1983 by the V. C. Summer Nuclear Station (Summer recognizing deferrals of utility plant operating costs, includ-Station) and delivered to the Company's electric system for ing carrying costs.

distribution and sale was credited to construction work in progress.

28

am-am-me m;:am m.u.ur.m m.s.rs m uz w +=-"-w e m-E Depreciation and Amorti:ation crease in the unfunded prior service cost obligation. The Provisions for d reciation are recorded using the increase in pension expense for 1984 resulted primarily from straight-line method 7or financial reporting purposes and are changes in plan assumptions. In 1984, the Company began based on the estimated service lives of the various classes of amortizmg unfunded prior service cost over a ten-year pe-property. The composite weighted-average depreciation rates riod. Prior to 1984, this cost was amortized over a twenty-year were 3.35%,3.41% and 3.15% for 1985,1984 and 1983, period. The effect of this change is not significant.

respectively.

The actuarial present value of accumulated plan benefits Provisions for amortization of nuclear fuel include and plan net assets as of the most recent benefit informa-tion date are as follows:

amounts necessary to satisfy obligations to the United States Department of Energy under a contract for disposal of spent January 1, nuclear fuel. Nuclear fuel amortization, which is included in 3,33 3934

" Fuel used in electric generation" and is recovered through SCE&G's cost of fuel, is recorded using the unit-of-produc.

mons of Mars) tion method. Prior to commercial operation of the Summer Actuarial present value of Station, amortization of nuclear fuel was charged to construc-accumulated plan benetits:

Vested

$ 68.5

$122.9 tion work in progress.

Nonvested 6.6 5.0 The acquisition adjustment relating to the purchase of certain gas properties in 1982 is being amortized over a forty.

Retirees (Prior to June 1983) 50.2 year period using the straight-line method.

Total

$125.3

$127.9 G. Nuclear Decommissioning Net assets available for benefits

$107.9

$ 94.1 Decommissioning of the Summer Station is projected to commence in the year 2014, and the expenditures (on a The assumed rate of return used in determining the before-tax basis) related to decommissioning activities are actuarial present value of accumulated plan benefits was 7%

currently estimated to be approximately $211 million (in 2014 for 1985 and 19M; except for dedicated assets (Retirees prior to dollars). SCE&G is providing for estimated decommissioning June 1983) which are valued at 11%.

costs over the life of the Summer Station and has established a

/. Rennue Ruogm.h.on reserve for this purpose. SCE&G is presently funding the Customers' meters are read and bills are rendered on a reserve with amounts collected through electric rates (appros.

mately 5827 thousand annually, net of taxes), and intends monthly cycle basis. Base revenue is recorded during the for the fund, including earnings, to provide for all eventual accounting period when the meters are read. Revenue attrib-decommissioning expenditures on an after-tax basis. Earn.

utable to gas costs (to the extent collectible through adjustment ings within the fund are generally on a tax-deferred basis, clauses) is accrued and recorded in the month during which and are reinvested in the fund.

the gas is used and metered rather than when the revenue is billed.

II. Income Taxes Projected fuel costs are collected through the fuel compo-The Company and its subsidiaries file consolidated Fed-nent in retail electric base rates, as established by the PSC eral and State income tax returns. Income taxes are allocated during semiannual fuel cost hearings. Any differences be-to all subsidiaries based on their contributions to consoli-tween actual and projected fuel costs are deferred and in-dated taxable income.

cluded when estimating the fuel cost component during the The Company provides deferred income taxes for sub-next semiannual fuel cost hearing. At December 31,1985, stantially all timing differences, principally accelerated depre-SCE&G had accumulated deferred fuel costs of approximately ciation, except for certain basis differences arising prior to

$8.3 million which are included in " Deferred Debits - Other" 1981. Deferred income tax provisions are included in income currently with corresponding credits or charges to accumu-K. Debt Premium, Discount and Erpense lated deferred income taxes. Deferred income taxes are cred.

Long-term debt premium, discount and apense are ited or charged to income in appropriate amounts when being amortized as a component of " Interest expense" over subsequent income tax liabilities are greater or less as a result the terms of the respective debt issues.

of this practice.

L. Reclassifications investment tax credits on eligible property are generally Certam. amounts m.the financial statements of prior deferred and amortized over the usefullives of the respective years have been reclassified to conform with 1985 assets.

classifications.

l. Pension Expense -

2. RATE A1ATITRS:

The Company has a noncontributory defined benefit A. On October 28,1985, the South Carolina Supreme Court plan covering all employees of its subsidiaries. The Compa-upheld a circuit court ruling that allows the State Consumer ny's policy is to fund pension costs accrued. Total pension Advocate to appeal approximately $M million of a March 2, expense, including the amortization of unfunded prior ser" 19M order of the PSC granting SCE&G approximately $132.6 vice cost, for 1985,1984 and 1983 was approximately $8.3 million annually in increased retail electric rates. While the million, 512.9 million and $10.3 million, respectively. The outcome of this matter is uncertain, the Company believes the decrease in 1985 pension expense compared to 19M and 1983 probability of any material change in the rate order is unlikely was largely attributable to the dedication of certain plan and accordingly, has not recorded any provision for refunds.

assets to satisfy future retirement benefit obligations to all employees retired pnor to June 1983, with a resulting de-29

m r mm w ~~ m :r;m m m a r;= m; = m u m n c =;m m m m m m m As part of the March 2,19M order, the PSC removed from 15% per annum, which rate shall be adjusted annually or rate base, at average system cost, the production investment, become fixed until maturity. These Ekmds also provide that the net of accumulated depreciation, (approximately 5114.8 mil-holders may require the Bonds to be purchased at par upon i

tion: 5108.0 million at December 31,1985) associated with 400 each annual adjustment of the interest rate or at the time the MW of electric generating capacity. Ilowever, the order al-interest rate becomes fixed until maturity. If the Bonds are lowed carrying costs, computed on the basis of the appmved tendered by the holders, the Company intends to reoffer the overall rate of return (11.74%), associated with the removed Bonds to the public. Due to the irrevocable letter of credit for investment to be deferred and recovered over some future the Berkeley Bonds and provisions of the Fairfield, Richland period. The order also allowed the recovery, currently through and Berkeley Bond Indentures, which permit the Company to rates, of all operating expenses, including depreciation and purchase the bonds in lieu of redemption and to substitute property taxes, associated with the 400 MW of electric generat-other security arrangements, the Bonds are classified as long-ing capacity (see Note IE).

term debt.

B. By an order dated March 2,1984, the PSC increased the On March 1,1985, SCF&G redeemed at par, prior to return on common equity originally authorized in its July-13, maturity, the entire 566,250,000 principal amount outstand-1983 retail electric rate order from 13.2% to 14.0%. In its ing of its 16% Series First and Refundmg Mortgage Bonds original order, the PSC granted approximately $34.1 million due 2011. Restricted cash totaling $66.25 million was on annually, or 39.6% of the amount requested in an application deposit with the Trustee at December 31,1984, and was filed on July 1,1982. That order, dated July 13,1983, was available for redemption of bonds. In January 1985, SCE&G's appealed by SCE&G to the South Carolina Circuit Court and Board of Directors authorized the early redemption at par of SCE&G continued to bill its customers at the litigated rates.

$14,110,000 principal amount of its 12.15% Series First and The difference in revenues between the litigated rates and Refunding Mortgage Bonds due 2010. The b(mds are to be those approved in the PSC's July 13,1983 order was eliminated redeemed on February 20,1986. Restricted cash totaling $14.11 from electric revenues and, together with interest thereon, million was on deposit with the Trustee at December 31,1985, recorded as a liabili'y.

and was available for redemption of bonds.

In February 19A, the South Carolina Circuit Court re-In January 1986, the Company's Board of Directors au-manded 'he case to the PSC for further consideration and as a thorized the redemption at 101% of the entire $60 million result the PSC issued its March 2,1984 order. Accordingly, principal amount outstanding of the 15-1/2% Guaranteed approximately $15 million (20e per share of which 14c and 4e Notes of South Carolina Electric & Gas Finance, N.V., due per share relate to amounts billed in 1983 and 1982, respec-1989, on April 15,1986. These notes are secured as to payment tively) was recorded as nonrecurnng electric revenues in of principal and interest by 15-1/2% Series First and Refund-March 1984 and approximately 574 million was refunded to ing Mortgage Bonds of SCE&G.

retail electric customers in April 1984.

The bond redemptions and the restricted cash at Decem-C. On December 26,19S4, GENCO filed with the FERC a cost ber 31 for the years indicated were reflected in " Current of sersice formula rate for the sale of power and energy to portion of long-term debt, net," as follows:

SCE&G. Under a contract with GENCO, SCE&G purchases all of the electric power generated by the A. M. Williams Station, 1985 1984 which is owned by GENCO. A partial settlement has been

• =*1 M"5) reached and the remaining issues are expected to be resolved Long-term debt matunties, includmg in the first quarter of 19s6.

sinking fund requirements 5 30,348 $ 29,055 Bonds called for early redemption 74,110 66,250

3. LONG-TERMDEBT:

Total 104 458 95,305 The Fairfield County Pollution Control Revenue Bond' L ess restncted cash deposit 14,110 66,250 (Annual tender -557 million, due September 1,2014) are secured by a like principal amount of SCE&G's First and Current portion of long-term debt, net 5 90,348 $ 29,055 Refunding Mortgage Bonds,15% Series, due 2014. The Bonds bear interest at the rate of 6-li4% per annum through August The annual amounts of long-term debt maturities, in-Richland County Pollution Control Revenue Bonds ciuding the effects of the early redemption of bonds as de-(Annual tender -55.5 million, due September 1, 2014) are

1. N""*" ' *

" "" W secured by a like principal amount of SCE&G's First and Refunding Mortgage Bonds,159 Series A, due 2014. He

'. " ' I*'"

f Bonds bear interest at a rate equal to 65% of a prime rate but not more than 15% per annum through August 31,1986 Year Amount Year Amount (6.175% at Decen ber 31,1985).

The Berkeley County Pollution Control Revenue Ikmds

"# "W"*

(Annual tender -535,850,000, due October 1, 2014) are secured 1986

$ 90,348 1989

$11,188 by an irrevocable letter of credit expiring in 1991. The Bonds 1987 30,307 1990 27,336 l

bear interest at the rate of 6-1/8% per annum through Septem.

1988' 187,295 ber 30,1986.

After the interest rate periods described above, the Ikmds will bear interest at a rate, which will be set between 80% and 120% of an index rate on one-year yield evaluations of comparable tax-exempt obligations, or 65% of one-year yield evaluations of U. S. Treasury Bonds at par, but not to exceed 30

mzmacwmmmmm:=remmvwammarmr==mmm;:mmemmessemw.mta Approximately $9.3 million of the current portion of The Restated Articles of Incorporation of the Company long-term debt for 1986 may be satisfied by either deposit and do not limit the dividends that may be payable on its com-mon stock. flowever, the Restated Articles of Incorporatibn of cancellation of bonds issued upon the basis of property.

additions or bond retirement credits, or by deposit of cash SCE&G and the indentures underlying certain of its bond with the Trustee.

issues contain provisions that limit the payment of cash Substantially all utility plant and fossil fuel inventuries dividends on common stock. Accordmgly, $184.6 million of are pledged as collateral in connection with the various consolidated retained earnings were not restricted as to issues of long-term debt.

payment of cash dividends on common stock at December 31,1985.

4. FUEL FINANCINGS:

Cash dividends on common stock were declared at an Nuclear and fossil fuelinvestments are financed annual rate per share of $2,16, $2.05 and 52.00 for 1985,1984 through the issuance of short-term commercial paper. These and 1983, respectively.

short-term borrowings are supported by irrevocable bank

6. PRETERRED STOCK fSubj. t to Purchase or Sinking Funds):

Lines of credit which expire in 1988. Accordingly, the ec amounts outstanding have been included in long-term debt.

The call premium of the respective series of preferred The bank lines provide for maximum amounts ($75 million stock in no case exceeds the amount of the annual dividend.

related to nuclear fuel and $25 million related to fossil fuel)

Retirements under sinking fund requirements are at par that may be outstanding at any time.

values.

At December 31,1985, the amount outstanding for nu-At any time when dividends have not been paid in full clear fuel was approximately $65.1 million at a weighted or declared and set apart for payment on all series of pre-average interest rate of 8.01% and the amount outstanding ferred stock, SCE&G may not redeem any shares of preferred for fossil fuel was approximately $24.8 million at a weighted stock (unless all shares of preferred stock then outstanding average interest rate of 7.95%.

are redeemed) or purchase or otherwise acquire for value any shares of preferred stock except in accordance with an offer

5. COMMONSTOCK:

made to all holders of preferred stock. SCE&G may not The changes in " Common stock", without par value, redeem any shares of preferred stock (unless all shares of during 1985,1984 and 1983 are summarized as follows:

preferred stock then outstanding are redeemed) or purchase or otherwise acquire for value any shares of preferred stock Number Thousands except out of moneys set aside as purchase funds or sinking of Shares of Dollars funds for one or more series of preferred stock, at any time Balance January 1,1983 36,526,499

$507,160 when it is in default under the provisions of the purchase Additional Shares issued:

fund or sinking fund for any series of preferred stock.

Stock Purchase-Savings Program for The aggregate annual amounts of purchase fund or Employees 489,734 9,333 sinking fund requirements for preferred stock for the years Employee Stock Ownership Plan 120,827 2,2M 1986 through 1990 are summarized as follows:

Dividend Reimestment and Stock Purchase Pian 1,590,592 27,922 Year Amount Year Amount Other 25>

"""MN*

Balance D'cember 31,1983 38,727,652 546,927 Additional Shares issued:

19 %

$ 3,285 19M9 516,415 Stock Purchase-Savmgs Program for 1987 7,285 1990 9,415 Empkiyees 211,915 3.829 1988 14,415 Employee Stock Ownership Plan 9,012 170 Dividend Reirwestment and Stock The changes in " Preferred Stock (Subject to Purchase or Purchase Plan 1,M8,709 23,973 Sinking Funds)" during 1985,1984 amd 1983 are summarized Other (1,141) 364 33 gggyg,3 Balance December 31,1984 40,296,147 575,263 Other 343 Number Thousands Belance December 31,1985 40,2 %,147

$575,606 of Shares of Dollars Balance January 1,1983 2,MI,986

$163,619 in May 1984, the Trustee for the Company's employee Shares Redeemed:

stock benefit plans began purchasing previously issued and

$100 par value (20,400)

(2,040) outstanding shares of the Company's common stock in the

• P"""

0 9'*

A open market. Commencing with the January 1,1985 divi.

Balance December 31,1983 2,302,086 160,604 Shares Red emed:

dend payment, an independent agent for the Company's Dividend Reinvestment and Stock Purchase Plan began

$100 par valw (20, m (2,m par value 05, 4 0,4 purchasing shares in the open market. Prior to the above dates for each Plan, all shares purchased pursuant to each Balance December 31,1984 2,246,186 156,789 Sha ed m ed:.

Plan were shares originally issued for that purpose.

50 par value (44,408)

(2,220)

Balance December 31,1985 2,181,228

$152,514 31

?";u=a==1mm w:=m:===w~n=c=ww=z==m=nt:= rmmmc===2

7. INCOME TAXES:

Provision for deferred taxes, net results from timing differences in recognition of the following items:

Total income tax expense for 1985,19M and 1983 is as follows:

1985 1984 19M3 1985 1984 19s3 (Thouwnds of Nkrs)

(TimusanA of IMLrs)

Charged to espenses:

Accelerated depreciation and Current income tases:

amortization

$46,084

$55,227

$ 52,421 Federal

$ 57,680

$ 5,767

$21.825 Litigated revenues 37,684 (29,628)

State 8,687 4.053 6,262 Deferred fuel revenue (801) 249 7,632 Foreign 674 tv00 546 Other, net (2,786)

(339) 494 Total current tases 67,041 10.420 28.683 Total provision for deferred Deferred taws, net:

income tases, net

$42,497 Su2.801

$30.919 Federal 37,239 82,466 28.948 State 5,208 10,335 1,971 The Company's Federalincome tax returns have been Total deferred taws 42,497 92,801 30.919 exammed by the Internal Revenue S,ervice through 1981 and l

Investment tax credits.

have been cIosed through 1980. A final report has been Deferred 6,887 15.404 11,488 received for 1981 and allissues resolved, except for those

^((fr P.ertaining to Investment Tax Credits generated in 1982 car-r (6,065)

(6,173)

(1,973) ned back to 1981.

Other 694 694 4,576 The Internal Revenue Service is currently examining the Total investment tax credits 1,516 9.925 14.091 Company's Federal income tax returns for 1982 through 1984.

Total income tax expense $111,054

$113.146

$73,693 No report relating to the present examination has been received by the Company.

(

Total income taxes differ from amounts computed by At December 31,1985, the cumulative net amount of 1

applying the statutory Federalincome tax rate of 46% to' pre.

income tax timing dif ferences on which deferred taxes have tax iricome as follows':

net been provided totaled approximately $100 million.

8. SHORT-TERM BORROWINGS:

1985 19M 1983 (ThousanA of IM!ars)

The Company maintains compensating balances of up to 59 for certain bank hnes. It pays fees in lieu of balances in Net mcome

$113,560

$121,818

$ 86.752 connection with other lines of credit. The hnes supported by Total income tas espense:

compensating balances may be reduced or withdrawn at the Charged to operatmg banks' options, with all compensating balances available for espenses 105,783 108,768

~0,395 use as general operating fur.ds. Bank loans are for 270 days or Charged to other income 5,271 4,378 3,298 less. Details of lines of credit and short-term borrowings at Preferred stock dividends 16,541 16,877 17.186 Dectmber 31,1985,19M and 1983 and for the years then Total pre-tas income

$241,155

$251,MI

$177.631 ended are as follows:

Income tases on above at statu-tory Federalincome tax rate

$110,931

$115,M7

$ 81,710 fkccmber 31, increases (decreases) 3935 3934 3933 attnbutable to:

Allowance for funds used (Dollars in Afillions) dunng construction (escludmg nuclear fuel)

(707)

(5,104)

(19,140)

Lines of credit at year-end

$87.9

$81.3

$127.2 Deferred return on plant Ibrrowings against credit hne at investment (5,925)

(5.089) year-end

$ 2.25 Depreciation differences 5,325 5,454 1,56M Average bank balances during Amortiration of investment the year

$ 3.1

$ 5.0

$ 4.9 tax credits (6,065)

(6,173)

(1,973)

Short-term borrowings(includmg State income taxes (less commeraal paper) during the year:

Federal income tax effect) 7,503 7 f~0 7,065 Masimum outstandmg

$ 4.5

$29.4

$ 36.3 Amortization of acquisitmrr Average outstanding

$ 1.1

$ 2.5

$ 12.4 adjustment 460 C

805 Weighted daily average interest Other dif ferences. net (468!

11 )

3,63M rates:

Bank loans 8.527 %

Total income tas espense

$111,054

$113.144

$73,693 Commercial paper 11.35 %

8.85%

Short-term borrowmgs outstandmg at year +nd:

I Bank loans 5 2.25 Weighted average interest rate 8.57 %

Other

$.14

.5 5

.2 Weighted average interest rate 9.50 %

11.22 %

9.50%

32

swww;supwwwww==,=:::zrx, crammm.xw:.mn:2nwrrr;z::za

9. COAfAllTAfENTS AND CONTINGENCIES:

To the extent that insurable claims for property damage, decontamination, repair and replacement and other costs A Ud" and expenses arising from a nuclear incident at Summer The Company leases certain equipment, office furniture Station exceed the policy limits of insurance, or to the extent and an office building used for its corporate headquarters such insurance becomes unavailable in the future, and to the under long-term operating leases with lease terms (excluding extent that the Company's rates do not recover the cost of various renewal options) expiring in 1996,1991 and 2009, any purchased replacement power, the Company will retain respectively.

the risk of loss as a self-insurer. The Company has no reason In connection with the office building lease, dated Octo-to anticipate a serious nuclear incident at Summer Station. If ber 19M, the Company may be required to purchase a 10%

such an incident were to occur, it could have a materially Note and Mortgage on the building in the amount of $44 adverse impact on the Company's financial position.

million in 1989. The Company pays, as additional rent, any amount by which a current index rate (8.75% at Dewmber 31,

10. SEGAfENTOf BilSINESSINFORAfATION:

1985) cxceeds the 10% Note and Mortgage rate. Also, the Company is reimbursed any amount by which the 10% Note Segment information at December 31,1985,1984 and 1983 and for the years then ended is as follows:

and Mortgage rate exceeds the current mdex rate.

Total rent expense was approsimately $5.0 million, $2.0 1985 million and 52.2 million for 1985,1984 and 1983, respectively.

Electric Gas Transit Total Future minimum rental payments as of December 31, 1985 are as follows:

@"*8d"d5 "M"N"'5#

Operating revenues 5 787,796 5318,856 5 3,689 51,110,341 Year Amount Year Amount Operating espenses, mmamh ef fM!ars) escluding depreciation 1986 54,783 1989 5 5,360 and amortization 528,773 289,868 7,203 825,844 1987 4,50 two 5,671 Depreciation and 1988 3.588 IWl-2009 122,4 4 amortization 77,658 9,033 208 86,899 B. NuclearInsurance Total operating eupenses 606,431 298,901 7,411 912,743 The Price-Anderson Indemnification Act (the Act) cur.

Operating income (loss) 5 181,365 5 19,955 5(3,722) 197,598 rently hmits the liability for third-party claims related to an Add - Other income, net 15,721 accident at a utility's nuclear generating facility to 5650 mil-Less - Interest charges 83,218 lion per accident. The Act provides that all owners of nuclear

- Preferred stock dividends 16,541 reactors may be assessed up to $5 million per reactor owned Net income 5 113,560 for each nuclear accident occurring at any reactor in the United States with a limit of two assessments per year (a capital expenditures:

retroactive premium). Ihe Company's maximum exposure, Identifiable 5 97,525 5 24,091 5 609 5 122,225 based on its two-thirds ownership of Summer Station, would be approximately $6.7 million per year under this legislation.

U'ilid I ' V"'ll C mPany operations 6,282 The Act is scheduled to expire in August 1987 and Total 5 128,507 Congress is considering several proposals to amend the present Act. The Company is unable to predict what actions identifiable assets at Congress may ultimately take and what effects such actions December 31,1985:

may have on the Company's potentialliability.

Utility plant, net

$1,988,372 $203,060 5 2,159 52,193,591 Invent ries n,356 7,337 298 58,991

' The Company currently maintains policies with Nuclear Electric Insurance Limited (NEIL) and American Nuclear Total 52,039,728 $210,397 5 2,457 2,252,582 Insurers (ANI) providing combined property and decontam-Assets utilized for overall Company operations 291,117 ination insurance coverage of $610 million for any losses m Total assets 52,543,699 excess of $500 million pursuant to existing primary coverages (with ANI) on the Summer Station. The Company pays annual premiums and, in addition, could be assessed a retroactive premium not to exceed 7-1/2 times its annual premium, in the event of property damage loss to any nuclear generating facilities covered by NEIL. Based on the.

current annual premium, this retroactive premium would be approximately R8 million.

33

EZL"%%%"Y2%VKC*DCADYXL%#MML%.%L u %27M M C21 W M M C Pxt*w m m M ' m m 1 1t w 2 4u 1984 1983 Electric Gas Transit Total Electric Cas Transit Total fhusands of Dollars)

(husands of EMlars)

Operating resenues

$ 746,745 $378,491 5 3,178 $1,128,414 Operating revenues 5 634,127 ~ $337,282 5 3,242 $ 974,651 Operating expenses, Operating expenses, ev:luding depnriatxm excluding depreciation and amortization 506,747 341,692 5,765 854,204 and amortization 457,746 316,072 5,9n0 779,778 Depreciation and Depreciation and amortization 67,173 7,544 197 74,914 amortization 37,472 7,M5 183 45,000 '

Total operating expenses 573,920 349,236 5,962 929,118 Total operating expenses 495,218 323,417 6,143 824,778 Operating income (loss) $ 172,825 $ 29,255 $(2,7M) 199,296 Operating income (loss) $ 138,909 $ 13,865 $(2.901) 149,873 Add - Other income, net 17,647 Add - Other income, net 11,571 Less -Interest charges 78,248 Less - Interest charges 57,506

- Preferred stock dividends 16,877

- Preferred stock dividends 17,186 Net income

$ 121,818 Net income

$ 86.752 Capital expenditures:

Capital expenditures:

Identifiable

$ 259,208 $ 20,402 $ San $ 280,114 Identifiable

$ IM,955 $ 14,410 $ 211 $ 179,576 Utilized for overall Company operations 3,405 Utilized for overall Company operations 2,lM Total

$ 283,519 Total 5 181,740 Identifiable assets at identifiable assets at December 31,1984:

December 31,1983:

Utility plant, net

$1.992,206 $188,077 $1,820 $2,182,103 Utility plant, net

$1.819,717 $175,788 $ 1,519 $1,997,024 Inventories 40,227 7,783 281 48,291 Inventories 51,421 7,217 203 58,841 Total

$2,032,433 $195,860 $ 2,101 2,230,394 Total

$1.871,138 $183,005 $1,722 2,055,865 Assets utilized for overall Company operations 269,300 Assets utilized for overall Company operations 302,269 Total assets

$2,499,694 Total assets

$2,358,lM l

34

mmranme:m=:5.em:mrminr.rnemunemTrJ%iNeeccenc=Em=eI:aw,2m'=45hura

11. QUARTERLYTINANCIAL DATA (UNAUDITED):

1984 The following data have not been audited, but in the g","d g,,y,,

y,",,y, 3,,,,,

opinion of the Company, include all adjustments (consisting only of normal recurring accruals) necessary for a fair pres-I"$,]",8 w

s 353 m3 s279,825 sla28A14 entation of such amounts.

op,,,ti,g income (000) 50.638 45,561 en),393 36,704 199,296 1965 Net income (000) 34,512 23,715 46,334 17,257 121.818 First Second Third Fourth Earnings per shan-Quarter Quarter Quarter Quarter Annual of cornmon stock as reported

.Ma)

.59 I.15(b)

.43 3.05 Total operating revenues (000)

$311,440

$251,487 5282,733

$264,681 51,110,341 Operating (a) Includes an increase of 20e per share due to nonrecurnng electrk revenues income t000) 54,767 45,938 60,788 36,105 197,598 (see Note 28), and a decrease of 17e per share due to a loss reserve Net income 1000) 32,064 24,106 39,835 17,555 113,560 contmgency relating to a contested audit issue with the FERC.

Earnings per share (b) includes an increase of 17e per share for the favurat le resolution of the of conunon stock FE! C audit issue discussed atur.

. as reported

.80

.60

.99

.43 2.82

12. ACCOUNTING TOR CIIANGING PRICES (UNAUDITED):

In compliance with Financial Accounting Standards Board Statement No. 33, as amended, Financial Reporting and Changing Prices", the Company has prepared certain supplementary financial statement data (see pages 40 and 41).

cwn=msmmvammerra=me=nummm===tezcwz::mr=~wmemrmm=m COMMON STOCKINFORMATION 1985 1984 4th 3rd 2nd 1st 4th 3rd 2nd 1st Qtr.

Qtr.

Qtr.

Qtr.

Qtr.

Qtr.

Qtr.

Qtr.

Price Range:(a)

High 28 28-1!8 28 23-7/8 23-5/8 22-1/4

~19 19 Low 23-7/8 23-3/8 23-7/8 22-1/8 21-1/4 17-7/8 17-l/2 17-1/4 Dividends Per Share:

1985 Amount Date Declared Date Paid First Quarter 5.54 January 23,1985 April 1,1985 Second Quarter

.54 April 24,1985 July 1,1985 Third Quarter

.54 July 24,1985 October 1,1985 Fourth Quarter

.54 October 23,1985 January 1,19%

19M First Quarter 5.5125 January 25,19M April 1,19M Second Quarter

.5125 May 23,1984 July 1,1984 Third Quarter

.5125 August 22,1984 October 1,1984 -

Fourth Quarter

.5125 November 28,1984 January 1,1985 December 31, 1985 1984 Number of common shares outstanding 40,2 %,147 40,296,147 Number of common stockholders of record 57,439 60,897 The principal market for SCANA common stock is the New York Stock Exchange (stock symbol-SCG).

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

e.~.~

- n m e - g a xn _ _ _

a-,_

~ MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION LIQUIDin*AND CAPITAL RESOURCES Rroessiro Arntosto The primary cash requirements for 1985 were, and as D

^0"; xML T,"

^G"i Yd M estimated for 1986 are as follows:

ne Ret.d 7/11C sm 2 HM n1M m 1986 1985 wicuie oc sis,

32 s2 nu -

s 413

'io 2%

sne na

~'"

~

~

~

Construction expenditures (Excluding '. (Thousands of Dollars) b e

m4

,n 6

s75 m

allowance for funds used during m B.m1 on sent ye.r unea m rate cow, construction-AFC) 5132,791 $118,830 m se m* 2 aer. e con =4 i.eea rm.nmi wienwni. sor.aan==.i mum.i =

Nuclear fuel expenditures 20,219 6,203 mmemmg these rme requests.

Maturing obligations and sinking Due to the high level of construction activity in the and purchase fund requirements M,377 58,371 recent past, primarily at the V. C. Summer Station (Summer Total

% 37,387 5183,404 Station), a substantial portion of the Company's earnings was attributable to AFC. AFC is a utility accounting practice During 1985, approximately 90.2% of 'otal cash whereby a portion of the cost of both equity and borrowed requirements were provided from internal sources as funds used to finance construction (which is shown on the compared to 55.3% in 1984. External funds for 1985 were balance sheet as construction work in progress) is

~

provided from the sale of $5.5 million in tax-exempt annual capitalized. Both the equity and the debt portions of AFC are tender pollution control facilities revenue bonds and short-noncash items of nonoperating income which have the term commercial paper sold on an interim basis.

effect of increasing reported net income by their full The Company anticipates that 1986 cash requirements amounts. For the years 1984 and 1983, AFC contributed will be met pnmanly through internally generated funds.

approximately 12% and 56%, respectively, of Earnings The remainder will probably be provided througF hort-term Available for Common Stock. Because of the reduction in borrowings and the sale of commercial paper. Actual 1986 construction expenditures and the inclusion of Summer construction and nuclear fuel expenditures may vary from Station in rate base in 1984, the portion of eamings the estimates set forth above due to factors such as inflation attributable to AFC was only 3% in 1985.

and economic conditions, regulation and legislation, rates The Company also records carrying costs (including of load growth, environmental protection standards and the equity return) associated with the production investment, cost and availability of capital.

net of accumulated depreciation, relating to 400 MW of "E ' P Y"'*"

RESULTS OF OPERATIONS 1E and 2A of Notes to Consolidated Financial Statements).

Earnings Total carrying costs, a noncash item included under "Other Income" as " Deferred return on plant investment", are Earnings per share of common stock (based on the being deferred for recovery over some future period and weighted average number of shares outstanding), the represent approximately 11% and 9% of Earnings Available percent merease (decrease) from the previous year and the for Common Stock for the years 1985 and 1984, respectively, rate of retum earned on common equity for the years 1983 through 1985 svere as follows:

Operating Revenues 1985 19M 1983 Total electric and gas operating revenues decreased $18.6 million (1.7%)in 1985 and increased $153.8 million (15.8%)

Earnings per share 52.82 $3.05 $2.29 Percent increase (decrease) in 19M when compared to the previous years. The rincipal factors contributing to these variances in revenues rom the in earnings per share (7.5%) 33.2% 10.1 %

Return camed on common preceding year were as follows:

equity (year-end) 14.1 % 15.7 % 12.2 %

1985 19M The decrease in earnings per share for 1985 was primarily Eiectric:

attributable to the recording of a nonrecurring gain of 20e Volume mcreases (1)

-$28.0

$ 27.6 per share in March 19M (see Note 2B of Notes to Rate increases (2) 13.0 70.0 Consolidated Financial Statements), a de crease in allowance Nonrecurring gain (3) -

15.0 for funds used.during construction (see discussion below)

Net increase 5 41.0

$112.6 and decreased sales of natural gas. In addition to the nonrecurring gain recorded in 19M, increases in camings Gas:-

per share during 19M and 1983 resulted from various rate volume increase (decrease)(1) 5(46.2) 5 30.5 increases placed in effect during 1984 and 1983 and Rate increase (decrease)(2)

(13.4) 10.7 improved electric and natural gas sales. The following table Net increase (decrease)

$(59.6) 5 41.2 sets forth certain information with respect to significant rate cases for 1983 through 1985:

(1) Annualincreases (decreasey in units sold multiplied by the weighted average rate levas in effect during the previous year..

1 36

gwwwrwen mn1G=,wts M rsdtM MiM W M 2 MIM W M C MXAR M M CEG = M W E M (2) Annual increases (decreases) in revenues less the amounts The increase in fuct used in ricctric generation expense for shown for volume increases (decreases). The relative effects of 1985 was due primarily to increased generation as a result of rate increases and adjustment clauses vary according to the greater customer demand. The increase was partially offset by timing of general rate increases and the elfective dates of a reduction in the average cost of fuel burned ($1.63 versus (3) R su ted rt a re a lectric rate ordtr issued by the PSC

$1.74 per million BTU in 1985 and 19M, respectively). The in Atarch N84 (see Note 28 of Notes to Consolidated Fin'ancial decrease for 1984 was primarily the result of a lower average Statements).

cost of fuel burned ($1.74 versus $2.08 per million BTU in 1984 and 1983), but was partially offset by increased increases in electric operating revenues were primarily generation as a result of greater customer demand. The the result of various rate increases placed in effect durin8 decrease in the average cost of fuel burned was attributable to 1984 and 1983 and the inclusion of a nonrecurring gain in nuclear fuel used to generate electricity at Summer Station.

1984 (see Note 2B of Notes to Consolidated Financial The decreases in Pour purchased, net expense were largely the Statements). In addition, unit sales of electricity increased by result of increased demand for electricity by other utilities.

approximately 3.6% and 4.4% during 1985 and 1984, The decrease in Gas purchasedfor resale expense for 1985 respectively, as a result of improved economic conditions and reflected the overall decrease in demand for natural gas and increases of approximately 3.9% and 3.4%, respectively, in the decreased cost of gas from suppliers. The increase for 19M the number of customers. On January 21,1985, the Company was primarily due to increased demand for natural gas estatilished a record peak demand for electricity of 2,703 htW, among industrial and sales for resale customers. Other surpassing the previous record of 2,700 A1W set on August 22, operation and maintenance expenses for 1985 increased primarily 1983. On January 28,1986, the Company set an all-time peak because of additional operation and maintenance costs demand of 2,818 N1W.

associated with the commercial operation of Summer Station The decrease in gas operating revenues for 1985 was and increased electric distribution maintenance, primarily primanly due to decreased consumption of natural gas by all rights of way and overhead lines. The increase for 1984 was classes of customers. The decrease in consumption was due primarily to additional costs associated with the primarily attnbutable to milder weather and increased commercial operation of Summer Station. Increases in competition f rom alternative fuels used by certain industrial Depreciation and amorti:ation expense reflect additions to plant customers. Additionally,1985 gas operating revenues in service, includmg Summer Station and the Williams included a 149 decrease in the cost of gas, which is passed Station coal conversion in 1984.

along to customers through a purchased gas adjustment clause. The increase in gas operating revenues for 1984 was interest Charges primanly attnbutable to increased retail gas rates placed in Interest on long term debt decreased $1.9 million in 1985 etfect dunng 1983 and increased unit sales of gas to and $2.3 million in 1984 compared to the respective previous industrial and sales for resale customers. These unit sales years. The decrease in 1985 was primarily the result of the increases, approximately 13M and 15.4%, respectively, were replacement through early redemption of $66,250,000 (16%

mainly the result of economic expansion by large gas Series, due 20ll)(see Note 3 of Notes to Consolidated purchasers and the utilization of specialincentive pricing Financial Statements) and $8,333,000 (15-5/8% Series, due which allows the Company to compete more effectively with 1985-87) principal amount of First and Refunding htortgage kiwer pnced alternatise fuels in industrial markets.

Bonds in N1 arch and Niay,1985, respectively, with $92.9 Operating Expenses million in tax-exempt annual tender pollution control facilities revenue bo' as and a bank loan of $81.5 million in increases (decreases) in operating expenses, excluding December 1984, bearing lower interest rates. The decrease in taxes, are presented in the following table:

19M was primarily due to a reduction in the amount of increase (Decrease) long-term debt outstanding.

From Pnor Year Other interest expense decreased $2.1 million in 1985 and $3.6 in 1984 compared to the respective previous years.

Classhcatmn 1985 1984 These decreases were primarily the result of interest expense associated with litigated revenues that had been collected Ofdlens of Dollars) subject to refund (see Note 2B of Notes to Consolidated

"*" } '

Fuel used in electric generation 5 5.5

$(36.6)

Power purchased, net (11.5)

(7.4)

Inflation Gas purchased for resale (42.5) 12.1 Other operation and maintenance 19.1 59.5 For the estimated effects of inflation on the Company's Depreciatmn and amortizanon 12.0 29.9 operations, see pages 40-41.

Total

$(17.4)

$ 57.5 37

l i

l t cewemtrame-yr :rmmemwmac:r =mmewnnmzrwasr trer.mmmmmerzrimmarr=nntszensverarsmrsmma i

SELECTED FINANCIAL DATA For the Years Ended December 31, 1%5 1984 1983 1982 1981 1980 1975 STATEMENT OF INCOME DATA (Thousands of Dollars except statistics and per shan mounts)

Operating Revenues:

Electric

$ 787,796 $ 746,745

$6M,127

$574,113 $555,716 $470,765

$263,773 Gas 318,856 378,491 337,282 266,389 188,167

.157,M3 55,379 Transit 3,689 3,178 3,242 2,603 2,429 2,338 1,979 Total Operating Revenues 1,110,341 1,128,414 974,'651 M3,105 746,312 630,746 321,131 Operating Expenses:

Fuel used in electric generation 229,249 223,768 260,381 214,617 2M,243 2N,948 109,M9 Gas purchased for resale 246,760 289,212 277,091 220,502 154,502 121,M2 31,061 Other operation and maintenance 195,031 187,448 135,374 147,843 118,519 101,130 49,444 Depreciation and amortization 86,899 74,914 45,000 43,406 39,691 36,822 26,703 Taxes

~ 154,804 153,776 106,932 77,033 89,N9 73,356 45,536 Total Operating Expenses 912,743 929,118 824,778 703,398 636,0N 537,898 262,393 Operating Income 197,598 199,296 149,873 139,707 110,308 92,848 58,738 Total Other Income 15,721 17,M7 11,571 5,230 21,095 18,898 13,361 Income Before Interest Charges and Preferred Stock Dividends 213,319 216,943 161,444 144,937 131,403 111,746 72,099 Total Interest Charges, Net 83,218 78,248 57,506 57,121 55,520 48,N6 33,677-Preferred Stock Cash Dividends of Subsidiary 16,541 16,877 17,186 16,371 14,245 12,949 7,060 Net income

$ 113,560 $ 121,818

$ 86.752

$ 71,445

$ 61,638

$ 50,751

$ 31,362 Weighted Average Number of Common Shares Outstanding (Thousands) 40,296 39,900 37,M4 34,387 28,139 25,148 15,023 Earnings Per Share of Common Stock

$2.82

$3.05

$2.29

$2.08

$2.19

$2.02

$2.09 Dividends Declared Per Share or Common Stock

$2.16

$2.05

$2.00

$1.92

$1.82

$1.74

$1.48 Percent of Operating Income (Loss)

Before Income Taxes:

Electric 92 87 93 98 101 95 88 Gas 10 15 10 5

2 8

14 e Transit (2)

(2)

(3)

(3)

(3)

(3)

(2)

M

MTxrmcms2mwrarwm2.?:3=r=Mrmammmrrmut= mar.mnwi,E=.ct";1u,;3rxxnn1m December 31, 1985 1984 1983 1982 1981

-1980 1975 BALANCE StIEET DATA G1wusands of Dollars except statistics and per share anwunts)

Gross Utility Plant

$2,859,117 $2,761,809 $2,5W,581 $2,411,479 $2.131,689 $1.952,309

$1,101,086 Total Assets

$2,543,699 $2,499,694 $2,358,1M $2.202,755 $1,958,772 $1,802,392

$1,005,626 Total Capitalization

$1,769,952 $1.855,252 $1,685,990 $1,703,860 $1,478,391 $1.388,076

$ 835,512 Common Shares Outstanding (Year-End)(Thousands) 40,2 %

40,296 38,728 36,526 29,690 26,261 15,905 Book Value Per Share of Common Stock (Year-End)

$20.01

$19.31

$18.33

$18.05

$18.39

$18.51

$16.62 OTllER STATISTICS Electric:

Customers (Year-End) 393,810 378,960 366,424 356,709 350,596 M4,588 3N,366 Sales (Million KWli) 13,041 12,590 12,063 11,490 11,763 11,809 9,563 Residential:

Average annual use per customer (KWll) 11,992 12,061 12,009 11,712 12,183 12,580 10,970 Average annual rate per KWii

$.0774

$.0757

$.0642 5.0637 5.0577

$.N99

$.0369 Generating Capability - Net MW (Year-End) 3,959 3,959 3,359 3,359 3,359 3,359 2,851 Territorial Peak Demand - Net MW 2,703 2,5%

2,700 2,463 2,557 2,489 1,931 Gas:

Customers (Year-End) 191,002 189,544 187,638 186,320 169,294 166,470 159,241

. Sales (Thousand Therms) 647,215 737,059 671,429 590,257 493,305 506,528 467,902 Residential:

Average annual use per customer (therms) 524 618 610 570 665 682 632 Average annual rate per therm 5.67 5.69 5.65 5.56

$.49 5.44

$.23 Transit:

Number of Coaches 122 123 112 IN IM 102 Revenue Passengers Carried (Thousands) 9,032 9,658 9,744 10,720 10,820 10,357 8,937

?

39-

_m.m-

--#m

---uwe=-------m SUPPLEMENTARY FINANCIAL STATEMENTS ADJUSTED FOR CHANGING PRICES (UNAUDITED)

Financial statements prepared in accordance with changes in specific prices of the Company's property, plant generally accepted accounting principles have traditionally and equipment. The data presented were developed in provided a quantifiable basis for assessing financial results.

~accordance with the partial restatement provisions of Because these reports reflect dollars of varying purchasing Financial Accounting Standards Board Statement No. 33, as power, the traditional financial statements are not designed amended, and are not intended to adjust actual reported to furnish data necessary to evaluate inflation's impact. The earnings nor do they provide a basis for income tax reporting following current cost and other supplementary financial or rate-making.

statement data are presented in an attempt to provide certain See the accompanying Notes to Supplementary information regarding the estimated effect of inflation on the Financial Statements for additional information.

Company's operations. The current cost amounts reflect FIVE YEAR COMPARISON OF SELECTED SUPPLEMENTARY FINANCIAL DATA ADJUSTED FOR EFFECTS OF CHANGING PRICES (AVERAGE 1985 DOLLARS)

Years Ended December 31, 1985 I

1984 I

1983 l

1982 l

1981 fThousands Except Ikr Share Amounts and Consumer Price Index)

Net income (excluding net inflation adjustments, other than depreciation):

As Reported

$ 113,560

$ 121,814

$ 86,752

$ 71,445 561,638 Current Cost 45,194 35,806 19,503 5,502 763 Income per share of common stock (after dividend requirements on preferred stock and ex-cluding net intla tion adjustments ot her tha n depreciation):

As Reported

$ 2.82

$ 3.05

$ 2.29

$2.08

$ 2.19 Current Cost 1.12

.90

.52

.16

.03 General information Operating revenues:

As Reported

$ 1,110,341

$1,128,414 5 974.651

$ 843,105

$ 746,312 Constant Dollars 1,110,341 1,168,676 1,052,387 939,635 882,497 Unrealized gain resulting from decrease in purchasing power of net monetary liabilities 68,249 52,086 79,698 83,M4 113,458 Net assets at year-end at net recoverable cost (a) 819,196 821,597 781,528 7M,623 662,959 Increase (Decrease) in general price leve! over specific prices 28,0M (10,465) 35,133 93,503 126,121 Cash dividends declared per share of common stock:

As Reported 2.16 2.05 2.00 1.92 1.82 Constant Dollars 2.16 2.12 2.16 2.13 2.14 Market price per share of common stock at year-end:

As Reported 27.875 23.625 17.75 18.00 15.00 f

Constant Dollars 27.875 24.47 18.M 19.83' 17.18 Average Consumer Price Index (CPI-U) (b) 322.2 l 311.1 l 298.4 l 289.1 272.4 (a) Excluding preferred stock (subject to purchase or sinking funds).

(b) 1967 = 100.

40

uwm.um.wm-mm.m.ma.mmmmmuua.mw.mm=m mm SUAihiARY STATEAIENT OF INCOAIE ADJUSTED FOR CHANGING PRICES For the Year Ended December 31,1985 Historical Cost Current Cost As Average Reported 1985 Dollars (Thousands of Dollars 1 Operating Revenues 51,110,M1 5 1,110,341 Expenses:

Fuel used in electric generation 229,249 229,249

' Gas purchased for resale 246,760 246,760 Depreciation and amortization (a) 86,899 155,599 Other operation and maintenance 244,052 244,052 Income taxes 105,783 105,783 Interest charges 83,218 83,218 Other income, net (a)

(15,721)

(16,055)

Total expenses, net 980,240 1,048,606 Preferred Stock Cash Dividends of Subsidiary (at stated rates) 16,M1 16,541 Net income 5 113,560 45,194 Inflation adjustments:

Reduction of plant to lower recoverable value (56,810)

Unrealized gain resulting from decrease in purchasing power of net monetary liabilities 68,249 Increase in current cost of property, plant and equipment (b) 120,608 Effect of increase in general price level 148,672 Increase in general price level over specific prices 28,064 Inflation adjustments, net 39,503 Net income after inflation adjustments 5

84,697 (a) As permitted in Financial Accounting Standards Board Statement No. 33, as amended, items in the summary statement of income, other than depreciation expense, were not adjusted.

(b) At December 31,1985, the current cost of net utility plant was 54,027,535 while net historical cost or net cost recoverable through depreciation was 52,214,142.

NOTES TO SUPPLEAfENTARY FINANCIAL STATEhiENTS i

1 PLANT AND EQUIPMENT The current cost data reflect recoverable amount, which is historical cost.

the cost of currently replacing existing plant assets. These

5. UNREALIZED GAIN RESULTING FROM DECREASE IN costs were determined through use of the Handy Whitman PURCHASING POWER OF NET MONETARY LIABILITIES 3

Index of Public Utility Construction Costs and other The Company, by holding monetary assets such as cash and f

valuation methods tailored specifically to the type asset being receivables, loses purchasing power during periods of restated. Even so, replacement of some existing plant and inflation because these items will purchase less at a future equipment will take place over a period of time and may not date. Alternatively, by incurring monetary liabilities, result in replacement which would duplicate existing primarily long-term debt, the Company benefits because the facilities.

payment in the future will be made with dollars having less l

2. ACCUMULATED DEPRECIATION The related purchasing power. Because the Company has significant I

accumulated depreciation for calculating current cost of net amounts of long-term debt outstanding, this results in a net property, plant and equipment was developed by applying monetary gain. This gain does not represent an exchange of the same percenta;;e relationship that existed between gross cash at present or in the future, but represents the effect of plant and accumulated depreciation by functional groups on the changing value of the dollar.

a historical cost basis at December 31,1985 and 1984, to the

6. INCREASE (DECREASE)IN GENERAL PRICE LEVEL respective balances of the restated depreciable plant.

OVER SPECIFIC PRICES This results from the value of the 3, DEPRECIATION EXPENSE Depreciation expense for the particular plant and equipment held by the Company current cost method was determined by applying the same increasing at a lesser (greater) rate than the rate of general rates and methodology used in computing historically inflation as measured by the CPI-U.

booked depreciation to the restated depreciable plant.

7. OTHER Fuelinventories, the cost of fuel used in electric

4. REDUCTIONS OF PLANT TO LOWER RECOVERABLE generation and gas purchased for resale have not been VALUE The regulatory process limits the Company to the restated from their historical cost in nominal dollars.

vecovery of the historical costs of plant and equipment. _

Regulation allows the recovery of fuel and purchased gas Therefore, the value of the plant and equipment determined costs through the operation of adjustments in basic rate under the current cost method must be reduced to the lower

,chedules or adjustment clauses to actual costs.

-41

em= -

-===n=www=w====wa=======.

=m==m SCANA CORPORATION DIRECTORS

- J.K. Addy "

W.fl. Ilipp

• J.E. Schachte, J r. ' '

President Addy Dodge, Inc.

President and Chief Executive Officer Real Estate and Insurance llroker Lexington South Carolina The Liberty Corporation Charleston, South Carolina Greenville, South Carolina W.B. Bookhart, Jr. "

V.C. Summer""

Partner, W.B. Bookhart Farms Avram Kronsberg" Chairman of the Board Elloree, South Carolina President, liarrison & Co.., Inc.

Columbia, South Carolina Charleston, South Carolina W.R. Bruce" E.C. Wall, Jr. "

Chairman and Chief Ewcutive Officer J.ll. Lumpkin '

• President, Canal Industries The Seibels Bruce Group, Inc.

Of Counsel to the firm of NicNair, Conway, South Carolina Columbia, South Carolina Glenn, Konduros, Corley, Singletary, Porter & Dibtile John A. Warren ' *"

K.W. French 2 '

Columbia, South Carolina Vite Chairman and Retired Plant Afanager Chief Exetutive Of ficer E.1. duPont de Nemours & Co.

F.C. Nichtaster'

• Columbia, South Carolina Savannah River Plant President and Nianager Aiken, South Carolina Winnsboro Petroleum Company A.ht. Williams ' '

Winnsboro, South Carolina Chairman of the Board Emeritus J.B. Guess, III" iouth Carolina Electric & Gas Company c

Owner, Edisto Farms E.%,. Pike, J r. ' '

Columbia, South Carolina President, Colom. t Development Co.

Denmark, South Carohna a

Beaufort, South Carolina B. A.11agood '

President, Wm. N1. Bird and Co., Inc.

Dr. IIenry Ponder" DIRECTORS Eh1ERITI Charleston, South Carolina President, Fisk University D.fl. Banks (died 1/laE6)

Nashville, Tennessee W.B. Bookhart J.F. Ilassell, Jr. '*

EN1. liipp Retired Chairman and J.B. Rhodes "

E R. Nichleekin Chief Ewcutive Officer Chief Ewcutive Officer A.C. htustard Pre-Stress Concrete Company, Inc.

Rhodes Oil Company, Inc.

John C.B. Smith Charleston, South Carolina Walterboro, South Carolina W.f l. Taylor OFFICERS V. C. Summer E. II. Crews, Jr.

R.W. Stedman Chairman of the Board Vice President Vice President & Controller John A. Warren hiax Earwood Betty C. Bissell Vice Chairman and Vice President Secretary Chief Executive Officer Cathy B. Novinger liarriett h1. Gardner L.ht. Gressette, Jr.

Vice President Assistant Secretary President W. B. Timmerman S.W. Ilolmes T.C. Nichols, Jr.

Vice President & Treasurer Assistant Secretary Executive Vice President E.C. Roberts Assistant Secretary

' N1 ember of Executive Committee

Niember of $1anagement Development and Compensation Committee

' Atember of Audit Committee

• Niember of Corporate Responsibility and Nominating Committee

' N1 ember of Long-Range Planning Committec

• hiember of Investment Committee l

42

e==ma=====r=mmm-=x=m=mmummw===m===on=x==rnxm OFFICERS OF PRINCIPAL SllBSIDIARIES SOllTil CAROLINA ELECTRIC & GAS COMPANY VICE CllAIRMtN AND W.B. Timmerman S.C. N1chleekin, Jr.

D.C. AlcNamara CillEE EXECllTIFE OEEICER Finance Customer Operations -

Afarketing John A. Warren (1)

Age 39

[7]

Northern Division Age 38

[8]

Age 60*

[28l=

Age 43

[14]

J II. Young, Jr.

W.E. hfoore PRESIDENTAND Power Supply D. A. Nauman Production Engineering ClllEE OPERA 77NG OfflCER Age 48

[23]

Nuclear Operations Age 53

[26)

T.C. Nichols, Jr. (2)

UlfE PRESIDENTS K.E. Price G.J. Bullwinkel, Jr.

E.C. Roberts Niinority Affairs EXECLITirE Customer Operations _

Legal Counsel and Age 38

[l1]

VICE PRESIDENTS Scuthern Division Assistant Secretary A e 37

[14]

Age 48

[18]

OTHER OFEICERS b

L.ht. Gressette, Jr. (3)

Betty C. Bissell Legil, Finance, Governmental V.R. Coward, Jr.

Patricia T. Smith Secretary and Regulatory Affairs Support Services Governmental and Age 53 ~ [28]

Age 53

[3]

Age 47

[20]

Regulatory Affairs Age 38

[10]

B.T. Ilorton, Jr.

E.II. Crews, J r.

G.C. Croft, Jr.

Treasurer Power Operations Transmission and R.W. Stedman Age 42

[7]

Age 63

[39)

Distribution Engineenng Controller A ' bU l3bb

^E i l I

8 Assistant T'reasurer i

SENIOR VICE PRESIDENTS O.W. Dixon, Jr.

Stas Earwood (4)

J.W. Wedding 15)

Age 47

[22]

Nuclear Power. Construction Gas Distribution Utility Property and Pniduction Engineering Age 53

[28]

and Facilities liarriett A1. Gardner Age 55

[15]

Age 60

[16]

Assistant Secretary R.D. Ilazel Age 51

[29]

Cathy B. Novinger Corporate Communications ASSISTANT Administration and Planning UICE PRESIDEATS T.II.Ilearn Age 36

[15]

Age 49

[29]

W. A. Darby Assistant Treasurer Gas Operations._

Age 59

[27J C.L. Rye J. Kinloch Eastern Division Operations Support Transit and Fleet S W II I"'S Age 40

[17) and Transportation N1aintenance Assistant Secretary and Age 56

[33]

Age 49

[23]

E.F. Frick Group h1anager-Stockholder Auditin Relations B.NI. Smith, J r.

C.B. McFadden Age 60

[27]

Age 53

[25]

Corporatt and Industrial Personnel and Corporate Development Services S.B. Ilarrington, Jr.

Age 54

[27]

Age 40

[16]

Corporate Planning

}

Age 53

[22]

SOllTil CAROLINA PIPELINE CORPORATION hias Earwood T.fl. Ilearn W.B. Timmerman B.T. Ilorton, Jr.

President Vice President Vice President Treasurer W.N. Ackerman R.ht. Kightlinger R.W. Stedman E.C. Roberts Executive Vice President Vice President Controller Assistant Secretary Age 58

[36]

Age 54

[12]

Betty C. Bissell W.A. Darby B.J. StacInnis Secretary Vice President Vice President Age 40

[22]

(1) Also Vice Chairman and Chief Esecutwe Officer of all other subsidiary companies

• (age as of December 31,1985)

(2) Also President of South Carohna Generatmg Company, Inc

• • (years of service as of December 31,1985)

(3) Also Presidat of N1PX Systems, Inc.

(4) Also President of South Carohna Pipehne Corporation, Caruhna Exploration Corporation, South Carohna LNG Company,.nc., Carolina LPG Corporation, Carohna Propane Storage Corporation and Carotane, Inc.

(5) Also Presidt nt of South Caroliru Real Estate Development Company, Inc.

43 l

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INVESTOR INFORMA TION CORPORATE HEADQUARTERS STOCKilOLDER INQUIRIES BOND TRUSTEE AND Palmetto Center Questions concerning dividend PAYING AGENT 1426 hiain Street accounts or related stockholder SCE&G First and Refunding Columbia, SC matters should be directed in writ.

Afortgage Bonds:

Telephone: (803) 748-3000 ing to the Stockholder Relations hianufacturers Hanover Trust Department (054) at the Company's Company AfAILING ADDRESS mailing address.

RO. Box 24935 SCANA Corporation Church Street Station EO. Box 7(>l AUDITORS New York, NY 10249 Columbia, SC 29218 Deloitte Haskins & Sells Certified Public Accountants INVESTOR COAfATUNICATIONS COAfAf0N STOCK LISTING 1426 hiain Street, Suite 820 Interim reports providing updated financial information and Com-The common stock of SCANA Cor.

Columbia, SC 29201 poration is listed and traded on Pany news are sent to stockhold-the New York Stock Exchange. The RECORD KEEPING AND ers with each dividend mailing.

ticker symbol is SCG. The corpo-PAYING AGENTS A copy of SCANA's Annual Report rate name SCANA is used in Common Stock:

on Form 10-K (as filed with the newspaper stock listings.

Stockholder Relations Department Securities and Exchange Commis-The 57c series cumulative preferred (051) sion) and the Statistical Supple-stock of SCE&G is also listed and SCANA Corporation ment to the 1985 Annual Report traded on the New York Stock EO. Box 764 are available to stockholders and Exchange. The ticker symbol is Columbia, SC 29218 others without charge.

SAC Pr; the newspaper listing is Inquiries concerning activities of SCrE pf.

SCE6G Preferred Stock:

SCANA Corporation and requests South Carolina National Bank for publications should be ad-DIVIDENDS Securities Transfer Services dressed to H. John Winn, III, Quarterly dividends on common 101 Greystone Boulevard Afanager-Investor Relations De-Columbia, SC 29226 stock are r ormally payable on the partment (057) at the Company's first day of January, April, July and mailing address.

Octobe'r to stockholders of record TRANSFER AGENTS on the 10th day of the month pre.

Common Stock:

ANALYST'S CONTACT ceding the payment date.

South Carolina National Bank H. John Winn,111 (803) 748-3240 Dividends on'SCE&G's preferred Securities Transfer Services hianager-Investor Relations stock are paid quarterly on the 101 Greystone Boulevard same dates as the common stock Columbia, SC 29226 INVESTORS' ASSOCIA TION dividends.

hianufacturers Hanover Trust For information about this organi-Company zation's activities, write to Associa-DIVIDEND REINVESTAfENT Stock Tran'sfer Department tion of SCANA Investors, c/o hir.

SCANA offers a Dividend Rein-EO. Box 24935 Paul Quattlebaum, Jr.,63 East Bay

(

vestment and Stock Purchase Plan Church Street Station Street, Charleston, SC 29401

\\

to its common stockholders of re-New York, NY 10249 cord. A Prospectus, Authorization Card and return envelope are au-SCL&G Preferred Stock:

This report is issued solely for the pur-tomatically mailed te all new stock-South Carolina National Bank pose of providing information. It is not

~

holders. For further information or Secunties Transfer Services infended for use in connection with any for questions about your reinvest.

101 Greystone Boulevard sale or purchase of, or any solicitation of ment account, w.ite'to the Stock-Columbia, SC 29226 o#crs to buy or sell, any securities.

holder Relations Department (054)

The Chase hianhattan Bank, N. A.

at the Company's maihng address.

Stock Transfer Department PO. Box 469 Washington Bridge Station New York, NY 10033 44

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SCANA Corporation Post Office Box 764 Columbia, South Carolina 29218 l

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