ML20206A773
| ML20206A773 | |
| Person / Time | |
|---|---|
| Site: | Summer  |
| Issue date: | 12/31/1986 |
| From: | Gressette L, Warren J SCANA CORP. |
| To: | |
| Shared Package | |
| ML20206A771 | List: |
| References | |
| NUDOCS 8704080165 | |
| Download: ML20206A773 (50) | |
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Coilteills
; FINANCIAL AND OPERATING HIGHLIGHTS 3 . LETTERTOSTOCKHOLDERS 4 B.ggy __
1986-YEARIN REVIEW SCANACormration South Carolina Electric & Gas Company South Carolina Pipeline Corporation 6 8 i8
- MPX Systcms,Inc. 20 South Carolina RealEstate Development Company,inc. 22 Primesouth,Inc. 24 '
l OtherSubsidiary Operations 24 l
~ '
~
DIRECTORS AND OFFICERS-SCANA CORPORATION 26 OFFICERS OF PRINCIPALSUBSIDIARIES 27 0 ? ,p FINANCIALS
, Management Report 29 r
Opinion ofindependent Certified
' 29 PublicAccountants Consolidated FinancialStatements 30 <
Notes to Consolidated FinancialStatements 3b
+
Common Stockinformation 43 Management's Discussion and Analysis of i Financial Condition and Results of Operation 44 l Sclected FinancialData 40 INVESTORINFORMATION 48 i Notxeof AnnualMeeting l Tk 1987 Annual Matng # Sa kfeldcrs d SCANA Corm-I renon s,Il te hai m Columlu Scuth Carobna on Wednes,Liu
&nt22 Thematmgwihemrneaf 1000a m af Siv4ifsat the Fairpounds.1200 Rescumi Drne Preun will tv mah to i,
stafuu,s m March Sa khurs ufu'are unalk to attend the Annual Matmg shouU mu rn their prents promrt!g 19 m,;d 2
FinancialandOperating Highlights
% increase EARNINGS PER COMMON SHARE 1986 1985 (Decrease) g (Millions of Dollars l l s2p except statisticsand g pershareamounts) -
Financial 3p.3 7 m TotalOperating Revenues $ 1,102.0 $ 1,110.3 (.7)
~ '
=]
sa c s l i TotalOperating Expenses $ 903.3 S 912.7 (1.0) g Eamings AvailableforCommon Stock $ 122.2 S 1136 7.6 - Eamings PerShareof Common Stock $ 3.03 S 2.82 7.4 I I Dividends Declared PerShareof ! Common Stock BookValue PerShareof Common
$ 2.24 S 2.16 3.7 4-stm l l l l stso s2 m s2 so sa m sa so
}
Stock (Year-End) $ 20.77 $ 20.01 3.8 Market Price PerShareof Common Stock (Year-End) $ 36.625 S 27.875 31.4 DMDENDS DECLARED PER COMMON SHARE Commen Stockholders' Equity n (Year-End) $ 836.9 $ 806.2 3.8 5 Common StockOutstanding: l l sts2 Average (Thousands) 40,296 40.296 - E Year-End(Thousands) 40,296 40.296 - sim Construction Expenditures $ 144.2 S 128.5 12.2 g
~~
Gross Utility Plant $ 2.959.5 S 2.859.1 3.5 j - 52is Electric Operations ! ElectricOperating Revenues $ 809.5 S 787.8 2.8 I I s*16 Sales (Million KWH) 13,704 13.041 5.1 $ Customers (Year-End) 406,511 393.810 't 2 l s2 24 l Generating Capability- ,,1 ,,1 l Net MW (Year-End) 3,890 3.959 (l7) TerntorialPeak Demand-Net MW 2,853 2.703 5.5 Gas Operations Gas Operating Revenues $ 289.4 S 318 9 (9.3) Sales (Thousand Therms) 671,881 647.215 38 Custor.,m (Year-End) 192,941 191.002 1.0 TreDnsitOperations Transit Operating Revenues $ 3.1 $ 3.7 (16.2) Revenue Passengers Carried (Thousands) 8,699 9.032 (3 7) l 3
s FellowStockholders: l This past year was filled with many capaaty Since the 1984 order. demand on i successes for SCAN A Corporation and its the Company's electric system has grown subsidianes Financially.eamings percom- to the extent that inclusion of the 400 me-mon share were $3 03. an increase of 74% gawatts will give the Company approxi-
- over 1985 The dividend on common stock mately the same reserve margin it had
)
g was increased 3 6% on January 28.1987. to (after excludmg the deducted capacityl in anindicatedannualrateof $2.32 Thedivi- 1984 The Company has filed an applica-j dend has been increased 34 times in the tion to restore the cost of the 400 mega-j { last 35 years Supporting the excellent 1986 watts to the rate base After considenng ihe
~
D* operating results were significant accom-phshments having very positive long range current cost of capital. this can be accom-phshed without an increase in retail elec-l ' N e'E!PLlu implications The number of electnc customers tnc rates South Carolina Pipehne Corporation , f l . 4
.M K I served by South Carolina Electric 6 Cas Company exceeds 406.500 an increase of had a very successful year while coping with increased competition from oil in in-
- 4 3 2% While this rate of growth may fall dustnal mark ets Decpite oil prices which
, shghtly in the next few years. we believe went as low as $10 per barrel Pipehne was
, L 7 i that continued customer growth will occur able to acquire supphes on the spot mark et
,. , Expansion of existing industries and move- and sell them at pnces which iept most in-ment of new industry to South Carohna dustnal customers using natural gas Pipe-e .
continues to improve our industnal base. hne's demonstrated abihty to operate ef-l
- j. --
resulting in increased opportunities for res- fectively in highly competitive markets will i f idents in our sernce area be a significant asset should natural gas i TheV C SummerNuclearStation markets expenence further deregulation John A. Warren operated at a capaaty factor of 92 4% dur- Our diversihcation efforts continue Chairman ad ing the year the fifth best rate in the nation During December 19m MPX Systems Inc Cha1Emtar ONr The plant continues to receive favorable our hber optic subsidiary. reached prof;ta-evaluations from various regulatory bod!es bihty We currently have 527 5 milhon in- l in March 1937.the plant will begin a vested in this technology of w hich $ 15 mil-planned outage to refuel for another 16- hon is in fiber optic cable installations and month penod of production $12 5 milhon is in the common stcd et
- South Carolina Electnc & Gas Com- SouthemNet inc a regional facihties-
- pany lowered its retail electnc rates ap- based telecommunications company
- proximately 3 L effectise February 1.1987 Based on the over-the-counter mark et que j to pass on to its customers the cost savings tation for SouthernNet common stock the which will result from reduced income tax Company's intestment has a value of $20 i
rates recentlylegislated bythe U S Con- milhon We beheve that the3e insestments gress It has been three years since the last will continue to have prohtable growth in retai! electric rate increase Dunng this pe- the coming years riod e!ectnc rates actually have been re- Our subsidianes South Caro!ma duced tour times to reflect lower costs of Rea! Estate Deselepment Company inc I fuel in addition to the latest 3% reduction and Pnme<cuth. Inc la newly created cen. 4 No electnc rate increases are contemplated struction companyl recently icined fcrces presently to win the bid for deselerment and con-in 1954 the Pubhc Seruce Cemmis- struction of a faahty in Charlesten for the sion removed from retail electnc rate base South Carchna Research Authenty The the cost of 400 megawatts of generating Authont) has centracted with a conser-I I i l i
- l 1
i tium of business groups and research insti- would be elected each year. A complete de-tutions at the leading edge in the field of scnrtion of these proposals will be con-i computerintegrated manufacturing This tained in the proxy statement, which will be j facility. estimated to cost S I 2 million. will separately mailed to stockholders of record i be used by the Authority for testing of man- March 5.1987. ufacturing techniques for electronic and Threedirectorswill retireas of the ! small metal parts for the U S. Nasy When Annual Meeting of Stockholders in April. completed in July 1988, this facility will lohn H. Lumpkin has been a director for 21 bring the latest in manufacturing technol- years. William R Brucefor9yearsandi E. i ogy to South Carolina Schachte. fr for 21 years They served with i Ascan be seen from theexamples distinction during the years of construction i above. the objective for our diversification of the V. C. Summer Nuclear Station, the ! program is to create stockholder value difficult penods of rate increases and more , through the utilization of SCANA's capital recently, the restructuring of the Company and human resources. While we have made into SCANA Their counsel will be missed. promising starts in several areas. it will be Lawrence M Cressette. lr , President of several years before these efforts fully SCANA. and Thomas C. Nichols. Jr., Presi- .
- mature dent of South Carolina Electric & Gas Com-1 A major element of ourcontinuing pany.have been nominated to srveas
- cost containment strategy is the Bonus in- direc' ors t
centive Program implemented in the past Our plans for the next few years are year for all permanent employees it was straightforward we will continue to em-i designed to focus the efforts of all employ- phasize customer satisfaction through rate j ees toward a common goal of controlling stabihty, cost containment, and system re-costs. and included speafic objectives for liability in our regulated businesses We Lawrence M.Gressette lr. l significant reductions in budgeted operat- will operate our nuclear plant at the high- PresiJcnt ing expenses.controlof ovemme and est possible capacity factor but always with l achievement of other quantified operating the highest degree of safety and reliability j goals Remarkable results were achieved. Our diversification efforts will intensify, as . which benefitted customers and stockhold- we build on the promising start we have , i ers as wellas employees This plan has made Finaliy. we will continue our com- )
! been continued for 1987 mitment to be a strong corporate atizen. l Thereare two proposals in SCANA's utilizing our resources to continue the '
1987 proxy statement which are intended progress of South Carolina. and to meet to strengthen the Company's abihty to pro- the human needs of the residents of our tect the stockholders' interest in the event area of a hostiletakeover attempt One proposal l is a " fair pnce" amendment which would prohibitacceptanceof atwo-tiertakeover .i offer unless approved by 8% of the com-mon shares outstanding This is designed gh -, --- to ensure that the Company's stockholders j would all receive the sa me price in the ~% /r, 4 - - T q event of a takeover The second proposal - ) would create a classified Board of Directors who individually would be elected for three Frf w p6 1987 j year terms in effect.one-third of the Board I i l l i 5 l
i i SCANA Corporation 1986-THE YEAR IN REVIEW RETURN ON YEAR-END COMMON EOUlTY Earnings and Dividends Consolidated Diversification The Company extended net income for SCANA Corporation (the the scope of its operations with the crea- ! " Company"I totaled $122 2 million in 1986. tion of SCANA Software Services. Inc. in upfrom$1136millionin 1985 Eamings lune 1986and Pnmesouth,Inc in Ianuary l l 1j es per sharnf common stock in 1986were 1987. Activities of each of the Company's Q _"q- ~ ~ ' ' , y , %' '
$303comparedto$282in 1985 Theim- subsidianes are highhghted later in this re-
-l provement was due to a combination of port SCANA now has i 1 direct and 2 indi-EL ~ _ _ . factors including higher sales of electricity. rect wholly-owned subsidiaries that are en-
"Is% lower total operating expenses and re- gaged in a variety of traditional utikty as mysus duced interest and preferred dividend well as non-utihty businesses
- charges. Two of SCANA's major corporate I l l I '*#t SCANA's 1986 eamings provided a goals are the diversification of risk and the
$ - retum on year-end common equityof development of unregulated lines of busi-i i i i4 n 14 6% compared to i 41% at yeat-end 1985 ness with the potential for higher retums At year-(nd 1986. SCANA's capital struc- than are possible in its regulated utikty l l l l l
-#-6 0% 80% 10 0 % 12 0 % 14 0 % 16 0 % tureConsistedof 43%long-termdebt.8% businesses in evaluating new ventures, the preferred stock and 49% common equity. Company will continue to focus on activi-There were approximately 40 3 million ties that utilize existing management ex-CAPITALSTRUCTURE shares of common stock outstanding at pertise SCANAwill makecapitalcommit-ibilhons of dollarsi year-end 1986 unchanged since year +nd ments only to new enterprises that the 1984.and no offenngs of common stock Company believes have the potential to k
- are planned in the near future make a meaningful contnbution to eam-l l l 517 Dunngtheyear,SCANA's common ingswithin a few yearsof start-up stock traded at pnces ranging from a low of SCANA's present non-utihty subsi-6 42 %
dianes are not expected to have a signifi-
--[sg $27-l 8 to a high of $42-7.8 The stock
~ g closed the year at a price of $36-5 8. up cant impact on the Company's financial ! E I ' T #% . E _ l _ ' 42% j 51 9 from $27-7 8 at year-end 1985 Bookvalue per share of common stock was $20 77 at picture for several years For the immediate future. the electnc and natural gas utihty l l g 7~ g"~,, p ;[ . year-end 1986. up from $20 01 at year-end businesses w ill continue to dominate g, 1985 Themarket-to-bookratioatyear-end SCANA's es erall performance. with capital I I I 1986 was 176% investment. eamings and cash flow pnmar-0V 7 e%E 1
~
149 % In lanuary 1987.SCANA's Board of ily dnven by the requirements and per- ~ i ; i s'O Directors raised the quarterly cash d:vi- formanceof South Carolina Electric & Cas l l [ dend on common stock to 58 cents per Company iSCESG t its principal subsidi-ss $10 $1 s 52 0 share from 56 cents per share The increase. ary In its utihty operations. SCANA s pn-effeClis e with the dividend payable on mary oblective is to provide the highest mum CommonEquty e Long-Term Det)t. Net m Prc?erredStock (excl current portiers) Apnl 1.1987. raised the indicated annual quahty of sersice to customers at the low dr.idend rate to $2 32 per share up from est possible cost At the same time SCANA
$2 24 The Company has increased the divi- will look to other business activities to op-dend rate on its common stock in 34 of the timee the investment of its shareholders last 35 years Fora detailed discussion of 1986 operatmg results and financial conditon.
refer to " Management s Discussion and Analysis of Financial Condition and Re-sults of Operation" beginning on page 44 6
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South Carolina Electric & Gas Company SCANA s pnncipal subsidiary. Recognizing the necessityof being SCESG. generates and sells electricity, a market-dnven organization. SCEGG reor-buys and sells natural gas at retail and op- ganized its marketing department during 4 erates public transit systems in the metro- 1986 to include detailed market research i pohtan Columbia and Charleston areas. and sales training functions Formal sales l SCEGG serves over 406.500 ekttnc cus- teams were also estabhshed in each of the , i tomers in the central and southem por- district offices to help satisfy customer
- tionsof thestate,anareaof morethan needs and provide support for new con- !
l 2000 square miles with a total population sumer-onented programs hke" Good approaching 2 million SCESG also serves Cents " approximately 102.800 natural gas cus- Good Cents is a nationally syndi-4 tomersacrosstwo-thirdsof thestate At cated program that encourages energy effi-
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year-end 1986. SCE&G had 3.912 full-time ciency in the construction and selection of employees.up 3%over 1985 heatingand coohng equipment in new As a result ofincreased emphasis homes According to market surveys. 86% ' on cost control. SCE&G reduced budgeted of SCEGG s residential customers consider , operating and maintenance expenses in energy efficiency very important in the pur-1986byapproximately31% Alsoin 1986. chase of a new home Good Cents homes (( [,' SCEGG offered an early retirement pro- automatically quahfy for SCEGG's special gram that is expected to result in savings of electric conservation rate and Good Cents an estimated $5 million over the next hve homeowners can save up to 50%in ; T.C. Nichols. lr. years monthly heating and coohng bills over Pr h conventionally built homes if successful. SCEGG's EnergyInfo Centers were , honored with a national conservation conservation programs such as Good l award in November The U S Department Cents can help SCESG postpone the need i of Energy recognized the centers for their for costly new generating plants role in providmg the pubhc with assistance An important advancement m cus- , education and information relatmg to en- tomer relations occurred in November. l ergyconservation Approximately293.000 whert more than Iwo years of market re-peoplevisited the two centes in 1986 search ce!minated in the unveiling cf a new bil! Consumer panels played a big part in Responding to a Changing Environment determming the new format. which gis es The electnc utihty marketplace is undergo-customers detailed information about how ing major changes brought on by emerging their bill is calculated and the date and competition from other suppliers and al- time their meter is read Consumer accept-temative energy sources In addition t ance was excellent providing reliable service at a reasonable pnce. SCEGG recognizes that the key to re. Construction Expenditures SCEGG's f maining competitive in this environment is cash expenditures for construction developmg a better understandmg of w hat amounted to $133 6 milhon in 1%c com-the customer wants and positioning itself pared to $117 3 million in 1985 Expendi-to meet this challenge in innovative ways tures for electnc facilities were $88 3 mil Acu!tural change is taking place in- lion w hile $ 16 7 milhon was expended en ternally Instead of viewing SCESG simply gas fachties An additional $ 15 8 milhon as a traditional electric and gas utihty. em- was spent for nuclear fuel Expenditures to ployees are leaming to market comfort and build and upgrade ether faahties ac-convenience through the sale of electncity counted for the remaining $ 12 8 milhon and natural gas Everyone is bemg asked to SCE6C's construction cash expenditures be a salesperson To enhance industnal re- in 1987 are protected ta tetal $169 I mil-lations. for example. du ring 1986 all hon. including approximately S25 5 milhen SCEGG officers made personal visits on a for nuclear fuel monthly basis to large manufacturmg and service customers This program will be ex-pandedin 1987 Alsoin 1987,allemploy-ees will be asb ed to introduce their fnends and t.eighbors to special services SCESG offers to its customers. such as secunty hghting and equal payment bilkngs i 1 4 j 8
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EARNINGS COVERACE OF FtXED CHARGES- Security Transactions For the second On February 18.1987.SCEGG sold SECMETHOD consecutive year. intemal generation of $100 mil lion principal amount of First and ttimes covered beforeincome taxes) cash and short-term borrowings were suffi. Refunding Mortgage Bonds. 8-3 '4% Series g cient to proside for substantially all of due 2017. Proceeds from this sale were SCEGG's 1986 capital requirements To fur- used to reduce SCE&G's short-term in-l ' ther reduce interest and preferred dividend debtedness The remainder of SCEGG's E
~
charges. SCEGG continued its program of 1987 cash requirements is expected to be 2 a2 retinng high-ccst debt and preferred stock provided by intemally generated funds and g E, , issues prior to maturity. short-term borrowings if market condi-
- I a, The following capitaltransactions tions permit. SCEGG may issue additional l F7' occurred during 1986. long-term debt during the year to retire y
- In Februa y, SCE6G redeemed.at higher cost secunties
; a par.$1411 million of the S50 mil-
) ,
Regulation and Rate Activity SCEGG g lion principal amount outstanding i did not request a general rate increase in ofits 12.15% Series First and Re- . . 4 4d funding Mortgage Bonds duelune its retail or wholesale electnc or natural gas l l l l I i I I I I 2010 lunsdictions during 1986 In accordance
- 25 5 * ** with state regulatory requirements. SCEGG
- Ir$ Apnl South Carohna Electric &
Gas Finance. NV. redeemed the en- filed during 1986 for adiustments in the tire $60 million pnncipal amount fuel cost component of its retail electnc TOTAL ELECTRIC SALES r tes Theseadiustmentsresultedinalow-outstanding ofits 15-I/2% Guaran-Ibillions of KWH) enngof thefuelcomponentin retailelec-teed Notes due 1989 at a priceof l tric rates, the fourth such reduction since g 101% of par value These Notes ! weresecured bythe pledgeof the V C Summer Nuclear Station began { t l i 1 215 SCEGG's First and Refunding Mort- commercial operation in 1984 SCESG s I
@ gage Bonds Thiswholly-owned I st general retail electric rate increase was ~
j i l l l izj ubsidiary cf SCANAwas dissolved EI " "
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- In lune. SCEGG raised $1. r aion Commission of South Carohna (PSC) di-1 i l i I 46 through thesaleof taxexemptan- rected SCESG to reduce its retail electric l
nual tender Pollution Control Reve- rates by approximate!y 3% to reflect a re-nue Bondsissued by Fairfield duction in the corporate federal income ta.
' ' '00 r te that takes effect on July 1.1987 under Ccunty.SouthCarolina Proceeds or this sale were used to finance provisions of the Tax Reform Act of 1986 The PSC's crder requires SCEGG to pass l l l 137 construction of additional pollu-1 I l tion control facihties at theV C. the resulting tax savings on to its retail 2.0 40 60 80 10 0 12.0 14 0 Summer Nuclear Sotion' electnccustomers Thelowerrates.which
- nesmai e in luIy. SCEGG reh.ned two out- became effective in February 1987. will re-m ineustnai
" "' "" " " " u p sult in a reduction in SCEGG's retail elec-('"3tock e s ues) ti tnc revenues of approximately $25 million the entire $13 5 milhon parvaluec( annually However, the combined effects of the 10-3 4% Series at a redemption reduced taxes and lowered rates will not price of 104 84%. and the entire $20 havea significant imoact on net income.
milhon par value of the iI 08%Se- Based on the recent growth in de-nes at a redemption price of 108% m nd on its electric system. SCELG filed an application with the PSC on lanuary 30 Short-term capital needsdunng 1987 requesting among other thmgs. that 1986 were satisfied through the sale of 400 megawatts oMectnc generating ca-commercial paper At year-end 1986, pacity deducted from rate base in a March SCE&G had $78 2 million in commercial 2.1984 PSC rate order be restored to rate paper obhgations outstanding South Car- baseeffectiveluly I.1987 SCE6Gdid not ohna Fuel Company, a w holly-owned sub- request a change in its retait electric rates currently in effect Although the changes. if sidiary of SCANA that finances SCEGG's in, appr ved by the PSC.would result in a sentones of nuclear and fossil fuel had S70 I milhon in commercial paper obliga- I wer camed retum on equity.SCEGG be-tions outstanding at year-end 1986 heves this action to be in the best interes's SCEGG's eamings coverage of fixed f its ratepayers and SCANA's charges 19M was 4 48 times. up from stockho ers idattJ Vmanaal Sta:cments" kr alitwnal mprmatms 10 O
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ELECTRICTERRITORIAL PEAK DEMAND ELECTRIC OPERATIONS Generation and Capacity SCEGG pur-irnegawattsi chases all of the electricity generated at Record Peak Demand SCEGGs his- AM Wilhams Station.a 560 MW unit near 8 toncal peakdemand record was broken Charleston owned by South Carchna Gen- ~ l l zy fourtimesduring 1986 Peakdemandisthe erating Company. Inc. (GENCO). a wholly-maximum requirement for electricity owned subsidiary of SCANA lm 43 m amz 17 _'J placed on the system by customers during The average 1985 fossil heat rate of I l l any one-hour period. Record peaks were 9.918 BTU KWH placed SCEGGs generat-g.-
~
9 established lanuary 27 and again lanuary ing system (includes GENCO's Williams
^zs9q 28 as arctic air rushed into South Carolina Station) in seventh place in the latest rank-
,r. The record fell again July 8 in the midst of ings of the country's 100 largest investor-8 oneof the state'sworst heat waves in owned utihties by Elatric Ugitt & Pourr mag-l l l P03 nearly a century Temperatures chmbed azine SCE6C s continuing record of gener-g above the 100-degree mark for 15 straight ating efficiency is especially noteworthy be-days. and the all-time record demand of cause of the large percentage of relatively l l l 7)g 2.853 MWwas set July 9 small plants on its system The forced out-z000 zaco 24ao zeco 2 800 3. Sales and Customers Systemwide age rate was also significantly better than the nationalaverage. electric ty sales totaled 13.7 billion kilo. Totalgeneration for the system ,n i watt-hou rs ( KWH ) in 1986. an increase of 1986 including GENCO.was 15 3 bilhon TOTAL NUMBER OF ELECTRIC CUSTOMERS 51% over 1985. january's extremely cold Ithousandsacar-ends KWH.an increase of approximately 3 l% temperatures and the summer's extended heat wave contnbuted to this growth Resi, over 1985 Coal-fired plants accounted for g 63% nuclear 31% hydroelectric 5% and oil 7 dential and commercial sales rose 108% and natural gas 1% and 7 %. respectively, while industrial Coal-fired plants in the SCE6C sys-E[ d3 sales were up .7% Wholesale and other en_ tem bumed a totalof 3 7 milhon tons of ergy sales decreased 29% due to the loss of
] )366 a large cooperative customer early in the c !in 1986.a 78%dxrease from 1985. !~---
The weighted average cost of thecoal
-- year
# bumed in 1986 was $184 per million BTU.
For the third yearin a row.SCEGG c mpared to $195 per million BTU in 1985 { p94 expenenced a record increase in the num_ berof newelectriccustomers Atyear-end About 8% of projected coal requirements l l l
! s .u o ear end 985. E s a ngcapaM-ity was 3.890 MW as of lanuary I.1987.
The majonty of growth occurred in the resi- { { { {
#{ "' . dential and commercial classes Based on Coal-fired generation accounted for 56% of that capacity. hydroelectric 20% nuclear the latest protections. SCE6Gs customer growth is expected to average 2% annually I 5A Oil-fired 2% and 7% was in 16 intemal through 1991 Total electnc sales grcwth c mbustion peaking turbines and one combmed-cycle plant which bum either during the same period <hould average about 3 8% annually No. 2 fuel oil or natural gas.
System improvements SCE6G spent g . ._ A approximately $15 milhon in 1986 as part of an on-going hfe-extension program for its generating facihties About $13 5 million h<Nshoats is budgeted in 1987 for additional improve- {( ments Keeping these older plants in ser- [ ' GParrNeurnped storage ' Vice will result in substantial savings by
, q canal postponing the need for costly new gener-
~
IbeekinE saiuda0 Cat ,
' 9 ating facihties Colum Other system improvements fo-tevens creek **g\. .
cused pnmanly on preventive maintenance Ourguhart ' of substation equipment Actions were M ' C ' 4 also taken to ensure quicker response to Canadys' . g power outages and to provide more elfec-g tive technical assistance to field personnel SCE6G ELECTRIC gon OPERATIONS Hagoodl w 5 stearn Generaton m FaberPlacefa r E Hydro Generaton lie - # 8"'t " E InternalCornbustonGeneraton ' E Nuclear Generaton
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SOURCES OF ELECTRIC GENERATION' ,, Nuclear Operations V C. Summer Nu- In August.theInstituteof Nuclear clear Station was ranked among the top Power Operations (INPO) formally recog-S ., five nuclear plants nationwide in a key area nized Summer Station as a branch of the of operating performance in 1986by Nu- National Academyof NuclearTraining l l l l dms Wa* magazine The unit's capacity INPO has fully accredited the operator g
- factor. the amount of electricity a plant ac- training programs at the plant. signifying i i l l I tually produces compared to the maximum they meet the industry safety group's standard of excellence The first 19 gradu-
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it can produce, was 92.4% The average an-nual capacity factor for U S nuclear plants ates of the accred. tad programs received l 9 l g is about 60% their certificates during the ceremonies f '" Oneof thereasonsforSummer Station's high capacity factor in 1986 was a The Federal Emergency Manage-ment Agency also gave final approval in l l l l g longer fuel cycle, which ehminated the 1986 to Summer Station's emergency alert need for a refueling outage dunng the year. and notification system 1% Summer Station was converted from a 12-l l a m l l m l en ion month refueling cycle to an 18-month cycle ErvironmentalConcerns Acid rain continued to be a controversial issue na-in 1985 The next refueling outage is sched- . tionally in 1986 Sixteen bills were intro-IMIIHB Coal M Hydro uled for March 1987 and is expected to last m Near mium Od&NaturalGas duced in Congress. but no legislation was about two months en cted SCESG has always been a propo-
- INCLUDES GENCO The Nuclear Regulatory Commis-nent of a clean environment and contmues sion (N RC) levied two fines of $50.000 each to support objective legislation that would against SCE6G for violations dunng 1986 SCE6G'S SALES OF N ATURALGAS BY confront the acid rain issue on a region-by-of technical speafications at Summer Sta-CUST R CLASS FOR 1986 region basis The purchase of low-sulphur
~' tion in both occurrences. SCE6G discov_ coal enables SCE6G s fossil plants to ered and reported the violations to the W- . NRC Bothof theviolationsarethelowest level for w hich a civil penalty is assessed, ma!ntain relatively low sulphur-dioxide emissions and the NRC determined that the events 35 % surroundmg the fines were insignificant NATURALGAS OPERATIONS from a safety standpoint. However. exten-
~ Sales and Customers Total retail natu-sive corrective actions were taken to pre-31 % ral gas sales were 274 6 milhon therms in vent their recurrence.
1986 an increaseof 3 Okover 1985 Resi-dential and commercial sales were up 5 4% and i 7% respectively, while industrial
~:g sales increased 2 5%
1 h SCEGG serves approximately 192.800 natural gas customers in 72 cities
/
t \ - and towns along its 5.399-mile distnbution system SCESG purchases all of its natural s \ gas from another SCANA subsidiary. South Carchna Pipehne Corporation
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System improvements Work contin-Columbia ued during the year on a $30 million prol-ect to replace more than 600 miles of mains and service connections in the Co-Aiken Orangeburg g lumbia area This replacement project is y expected to becompleted in 1989.
% Another maior prolect was com-
- pleted in the Charleston area dunng 1%6 SCE6C GAS OPERATIONS Charleston A new hve-mile gas main senting lames Is-E NaturaiGas Servce Area W land will improve service to more than V 8000 existing customers and allow SCESG Nffl y to grow along with the island s rapidly ex-panding residential market in Columbia the Luaus Road propane air peak-shaving plant was rebuilt and its capaaty more than doubkd to assure greater amounts of supplemental gas supphes when needed i4
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TRANSITOPERATIONS INDUSTRIALDEVELOPMENT SCEGG buses traveled approxi- SCEGG was again a leaderin in-mately 3.6 million miles and carried more dustrial recruitment as a variety of new in-than 86 million revenue passengers in Co- dustries moved into South Carolina in lumbia and Charleston during 1986. At 1986. Announced capital investment for year end 1986 SCEGGwasoperating i17 new and expanded industrial facilities to-coaches on a combined route system total- taled approximately $ 1 3 bilhon during the ing 295 miles. year. Of that amount, about 80% will occur in December,a new 56.000-square- within SCE6Cs electric and natural gas foot facihty for Transit Operations and service areas. resulting in approximately Fleet Maintenance opened in Charleston. 7,700 new jobs. In luly, a reduced fare program required by in January 1986.MackTrucks.Inc. the Urban Mass Transportation Administra- announced it would relocate an assembly tion (UMTA) for the elderly and handi- plant to Winnsboro. South Carolina. The capped that began in Charleston was ex- Mack facility, a Pirelli fiber optic cable panded to include the Columbia area as plant in Lexington, and the growth and ex-well. pansion of research parks in Columbia and Efforts continued during 1986to Charleston are indicators of a new level of cut losses in transit operations SCE6G up- opportunity for the state's workforce. graded its fleet by buying and refurbishing 19 coaches which replaced older ones. Nu- CUSTOMER / COMMUNITY merous routerevisionswere madefor more economical operation. SCESG also SERVICE PROGRAMS acquired two over-the-road coaches for its Emphasison communityservice charter services Continued expansion in programs was a key strategy again in 1986 this area could lead to increased transit The Customer Assistance Department revenues in years to come. helped nearly 22.000 needy customers se-SCESG received $39 millionin cure $1.63 million in financial aid from the UMTA funds in 1986 as partial reimburse- appropriate local. state and federal agen-ment for operating losses incurred in the cies to he'p pay heatingand cooling Columbia area during 1981-83.With sup- expenses. port from the involved municipalities. More than i4.000 SCESG cus-SCESG will apply for an additional $3 3 tomers contributed $ 148.524 to help el-million in UMTA funds for the Columbia derly persons and low-income families area in early 1987, SCESG accepted a $12 meet emergency heating needs through million UMTA grant for the Charleston theProjectSHAREprogram project area SHARE is a voluntary donation program in SCESG continues toworkvigor- which customers make a one-time contri-ously for the establishment of Regional bution or authonze a pledged amount to Transportation Authorities These publicly beaddedtotheirmonthly bills supported systems could reduce SCEGGs Also,a progrem to provide free fire-role in providing public transportation wood for the needyw as expanded toin-ciude the Charleston area Similar pro-grams werealready in placein the Columbia and AikenLNorth Augusta areas These programs loin SCESG with local govemment and community action organi-zations to provide the free fuel 16
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'i; South Carolina Pipehne Corpora- Total sales of natural gas in 1986 tion (SCPC) is an intrastate natural gas were 66 8 million MCF. a 3 4 L increase over
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~j pipehne with 1.657 miles of line serving re- 1985 Industnal sales decreased by 7.1%
' a safe and industnal customers in all but two while sales to resale customers increased of thestate's46 counties SCPC'slargest 86% in addition. the transportation of nat-
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customerisSCEGG Other resalecus- ural gas for resale customers and end-tomers include municipahties and county users tota!ed approximately 3 5 million gasauthonties aswellasothergas MCF. more than double the 1985 level At utihties year-end 1986. SCPC was serving approxi-SCPC has two subsidiaries South mately 160 natural gas customers Carolina LNG Company. Inc., liquefies and Gas Supply SCPC buys its natural gas stores up to one bilhon cubic feet of natu-under long-term contracts with Southem
, ral gas during periods of low usage Dunng Natural Gas Company ISouthem)and peakdemand penods, up to 60.000 MCF Transcontinental Gas Pipehne Corporation per day can be regasihed to supplement (Transco) Interconnections with these sup-pipeline supphes Carolina Exploration pl ers provide a rehable supply and allow Corporation is involved in toint-venture flexibihtyin purchasmg SCPC'scontract projects in the development and produc- demand is 210.900 MCF per day with tion of oiland gas reserves Southem and 29.300 MCF per day with Sales and Customers Overthe past Transco year. natural gas companies faced intense The total volume of natural gas I w competition for industnal customers from purchased in 1986 for resale was approxi-supphers of other fuels, particularly No 6 mately 665 million MCF compared with Mad fuel oil which was selkng at its lowest pnce about t>t 3 milhon MCFin 1985 The in-Presdat in years Most industrial customers are creased purchases were the re; ult of equipped to use several types of fuel. al- greater customer demand and some non-lowing them to switch to the most eco- traditional sales to regional natural gas au-DEUVERIES OF N ATURAL GAS BY SCPC DURING 198o nomical energy source available SCPC has thonties Thecost per MCFcf naturalgas 1% of total MCFI remained competitive by increasing pur- purchased for resale was approximately chases of less expensive spot-market gas $3 24 in 1986 compared with abeat $3 84 and reducing its proht margin Because of in 1985 This dechne can be attnbuted to changes in federal regulations. large cus- lower pipehne pnces, a consequence of in-l tomers a!so have the option of makmg pur- creased competition in the marketplace E-_ . . .
chases directly from producers at the well- and SCPC s abihty to male substantial head and having the gas transported in spot-market purchases at pnces well belox m these instances. SCPC contracts with the customer to provide transportation firm contract rates These lower gas costs were passed alongto customers ti opera e derthe rov si n f f J-cal Energy Regulatory Commission Order 436. issued in 1985 which would require g s Trzah Propane nondiscnminatory transportation of natu-
'*9 " * * "* ralgas Howeser SCPC has been able te Y RocN Hill -
; purchase and transport spot-mark et gas l c under vanous provisions of the Natural j j Gas Pohcy Act of 1978
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Sptem improvements were taken in 1986 to impros e the os erall Several steps Columbia } ethciency of SCPC s transmission system le Certain backup equipment was added at , Mygea\ ch' i the LNG plant to ensure its safety and reh-Orangeburg ability dunng penods of regasihcatic 9 New fire protection systems were : - .ed
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J at the Columbia othce and at the Transco uou7eo dehvery compressor station for adJed GAS TRANSMISSION SYSTEM Charleston> hatGas safety Other system improvements in-8" cluded rogu!ator upgradings and the instal-
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e lation el electronic monitanng measure-Beat! fort p ment and flow control equipment
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l MPX Systems,Inc. 7 ty: 3Cy. :k
% 4;:~ ber optic project hnking Atlanta to Hart 4.4 -
I .;; d MPX Systems, Inc . SCANA's tele-j M7 -e .j communications subsidiary. is fast becom- County. Georgia. the southem terminus of
-$;C*- 5 ing an industry leader in the relatively new a fiber eptic kne stretching from Washing-Ja 4[1 4 d
*N 1~ 4 field of fiber optics This technology uses ton. D C in February 1987, a 180-mile fiber thin glass fibers about the diameter of a optic link between Atlanta and Birming-
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human hair to transmit laser-generated ham was placed in commercial service.
- $1f ' u i - -s hght impulses that flash milhons of times a representing one of the longest overhead
$My $ second Theresultingdigitalcodeisthen fiber optic protects in North Amenca and a WT " ::' , translated into sound or pictures at the re- maior engineenng accomphshment.
N. W T 'dM : i ceivingendof thetransmission Both knes are part of Southem-2 In 1985 MPXinstalled a 129-mile Net ~s hnk in the National Telecommunica-84b , %) fiber optic kne from Columbia to Charles-tions Network lNTN) MPX has a 10 21 tn-
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' I ton Two new projects in which MPX is in- terest in SouthemNet, an interstate camer NYS volved are joint ventures with Southem that provides telecommunications sernces
~ Company Services in August 19% work from Washington. D C to seven southeast-A j was completed on a 125-mile overhead fi- ern states
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'_ South Carolina Real Estate Devel-opment Company. Inc. ( SCREDl is actively SCRED is currently involved in 15 additional projects - ses en independ-o h: <. - -
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engaged in the acquisition and develop- ently and eight as a icint venture partner ment of strategically located properties Work has been completed on the
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beneficial results for the other SCANA companies ton A neighborhood shopping center. a residential subdivision and a 58-acre com-In December 1986 the S C. Re- mercial site are under development in the search Authonty selected SCRED to de- Columbia area in the planning stages are a
/).g .' , - [~ velop a $12 million facihtyas part of the mixed-use development and resort-style U S Nasys Rapid Acquisition of Manufac- residential area at take Murray near Co-
,. tured Parts l RAMPI program Pnmescuth, lumbia and a residential subdivision near Inc., another SCANA subsidiary. will con- Lexington. South Carolina
_) struct the facility Other joint-venture projects in-e j . The RAMP program willinvolve a clude two residential developments near sy , ', consortium of leading business groups Columbia and an office and industrial park and research laboratones explanng the use nearCharleston Additionalcommercial ; 4 of computers and robotics to manufacture joint ventures are being planned I I ? *b sophisticated replacement parts for the 1 0p# ' U S fleet on a timely basis. eliminating the need for large parts inventones The selec-l i I 77., T,'4a%y y ;< 4 ' u tion of South Carolina as the site for this federally-funded research protect is consid-cred a coup for the state and could place South Carolina in a position of national
, // leadership in this new manufactunng tech-
/ nology This aggressive approach toward j [ i W. Wedding economic development will provide new 1 Praht lobs protect present jobs and make possi-ble the attraction of important new indus-tries to the state i
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I Primesoulft,Inc. Building on SCEGG s more than 30 Intemational Airport being developed by
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years' expenence in construction and SCREDfortheU S NavyandtheSC Re- i heavy equipment maintenance. SCANA's search Authonty The RAMP facihty will e, newest subsidiary. Pnmesouth. Inc began consist of an office building and two high-
, , operationslanuary 1,1987 technology manufacturing and test centers SCEGG phased out its construction Completion of the prolect is scheduled for
- department and transferred its 300 con-q . July 1988
- i. struction employees to Pnmescuth, a full- Pnmesouth will continue to pursue b
semce organization providing design coor- a vanety of commercial and industna! prol-I : , dination. construction and construction ects and limit its construction activities to xj management semces the Southeast Pnmesouth will also seek Ground was broken in February industnal maintenance contracts in areas Y 1987 for Pnmesouth's first maior project. a 140.500-square-foot facility at Charleston of its expemse such as boiler and con-denser repairs duNo
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E H Crews,lr. Pestfatt OtfterSubsidiary Operations SCAN A Software Senices,lnc. Carolina Propane SCANASoftwareSenaces Inc, Storage Corporation w hich began operations lune L iw; is en-Carchna Propane Storage Corp 3ra-gaced in the deselopment and marketing tion owns a 50b loint4enture interest to-nt .emputer-centered information systems gether with Transco Energy Company in an technology pnmanly for utihty-related in- go.milhon gallon underground propane ducinal chents initially. maior systems storagecavem near York. South Carchna txong marketed include a Distnbution The cavem leases storage space to indus-Construction Information System. a Fleet tnes utihties and propane supphers A Maintenance System and a Nuclear Edu- toint venture agreemer.t with another sub-cation and Training System Software. sidiary of Transco will aHow for the expan-hard A are. software maintenance. customi- sion of Ihe cavem's markets throughout zation seruces and a wide range of profes- the Southeast sinnal consulting and programming ser-vicesare alsoavailable Carolina LPG Corporation Carolane,Inf. Carchna LPG Corporation in a inint senture witb Transco operates a 62-Carotane. Inc purchases and dis- mile six inch prepane pipchne that con-tnbutes propine to areas beyond SCF6G s nects the cas em facility w it h Dme pipehne natural gas mains In 19% it sold approxi- Company near Bethune South Carohna mateiy five milhon gallons of propane and This hne transports propane t0 industnal had more than 4 400 residential commer- customers along it s route and to Dixie cial and industnal customers at year-end pipchne Compiny for distnbutien to cus- ' tomers along its system New Federal Ln-ergy Regulatory Commission tantts that went into effett Cotober i 1%h substan-tially reduced per-turrel shipping costs and should spur additional business opportunities i 24
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SCANACorporation DIRECTORS W.H. Hipp" J E.Schachte,lr. 1.K. Addy Presdwt. Addy Dodae. Inc. Presdmt and Om1Exauti,rOMcer PalEstateand Insurance Brda The Dfyrty Cornraten - CharfesLm. South Cardna Leun.Am. Swth Cardna Crernn!!e.&uth Cardna W.B. Bookhart,lr." V.C. Summer" Partna.W B adhart Farms Avram Kronsberg Charman a the Board Ementus Presdmt.Hamsom & G.Inc G' amin Seuth Grdna EILww.Scuth Grolina Charnton. South Cardna E.C. Wall, Jr.'
- W.R. Bruce'*
J.H. Lumpkin*' Pradmt CanallnJustnes Rttired Charman and Onay South Cardna Chu1Exau'nto,1ar of CounseltoThe McNant Frm TheSks BructGroup.Inc Cdumiu South Cardna Cdumfu Swth Cardna John A. Warren"'" F.C. McMaster" Charman and Presawf andManaacr Ch1ExautavOMctr I.B. Edwards DMD" Cdumfu Smth Cardna Wmnsfero Petrdeum Comtung Presamt M.*alUnnersity# South Cardna Winnsfero.Swth Cardna Charleston SouthCardna E.W. Pike, Jr." 1.B. Guess,Ill'* Presdwt.CoLmulDnyforment Co Owner. EJ.sto Farms Beaufort.Smth Cardna Denmark SwthCardna Henry Ponder. Ph.D."* BA Hagood" Prcsdwt Fisk Unnrrsitw Nasm"<. Tennemy PradmtWm M BirdandCo.Inc Cha4 mon ScudICadna Dirators Emeritt i B. Rhodes
- 2 K W Frenih l F. Hassell, Jr." PredwtandChiExa fiwOpccr FM Hrr Rtt:ralCharman and Rhodes odComtuny In AC Musurd Waltaforo SoutaCaroim lohn C B Sm:th Ch1EmuenrOtur Prr.Strns CarrrtCcerung lac WHTaAv Cha49cn Sou'h Cadna AM Willums
' Mertet of E>ec@ve Corrimetee Memter of Mawemer.t Ebektmera and Compensatum (cemittee
'Memtvrof ActComtmttee
- Membe9 d Cef;V rate Pesgresbury arsi'ietnating Comrm"ee
' Mea ter d Lot 4Farge Ptar mrg Committee
- Me'- ret d Ir.evment Ccermttee
' MemP *f of Nalea rOvers #t Comms' tee s
OFFICERS E.H. Crews. f r. I II R.W.Stedman John A. Warren Charman and Vu Presd nt Vu Presamt & Ontrolla Chu1 Exautar00ar Max Earwood Barbara D. Blair(2l LM Gressette,lr. Vu PreiJcnt kretary Prcsamt
~
Cathy B.Novinger Harriett M.Gardner Vu Presdmt Assisunt sr.wu T.C. Nichols. lr. ExtutarVu Predwt W B.Timmerman E C. Roberts Vu Presd nt & Treasurer Asmiant M r.wu lll RettleMleffNtfve 12 !! Rh diiIntM l24Id 26
OfficersofPrincipalSubsidiaries SOUTH CAROUNA ELECTRIC & GAS COMPANY Chairneen and W.B.Timmerman S.C. MCMeekin, Jr. D.C.MCNamara ChiefE&Oker Finance Customa Piktwns- Martermg John A. Warren til J.H. Young. lr. W.E Moore ParrSurrIg DA Nauman Prdwton Engmanng NuclearOtvratens CAMOmh @er Vke Presidents OtherORers T.C. NiChols,lr. (2) EC. Roberts G.I. Bullwinkel.lr. Barbara D.Blair(7) Customer Rthtens- N "Ed"0 Saretaq ExecutiveVke Presidents S h Dnwn ^585'd"' S"'#9 Lht Gressette,Jr.(3) B.T. Holton,lr. Leal. Finance.Gwrnmental V.R. Coward,lr' PatriClaT. Smith Tasurn arlRmubtory Akirs surgergsmo Gxtrnmentaland RmulatoryA$ fairs EH. Crews.fr.(4) G.C. Croft.fr AsudantTimura Parrogrratwns Transm&n and R.W.Stedman Ostrtutbn Enaimung G"l'vil" Ham.e ttM.Gardner , SeniorVke Presidenis ^58#d"' S"'*9 1.W. Wedding (6) O.W. Dixon,lr. Max Earwood (5) Gas Ostr+uten %IdW WW Nudear Pwer.Constructen and Fadites arlPrducten Engmwng R.D. Hazel CunwateCornmunratens Assistant Vke Cathy B.Novinger Admmistraten ard Plannmg Preskients WA Darby C.L Rye J.KinloCh casOnratens Ogeratens Surgert TranutamiFkrt and Transnytaten Mamtenana EF. FriCk Auditina~ BM. Smith.Ir. C.B.MCFadden CornwattandInJustrul Personneland Gvnwate Darkyment Sm1ces SOUTH CAROUNA PIPEUNE CORPORATION Max Earwood RAL Kightlinger W.B.Timmerman B.T. Horton. ir. President we President yge preswnt g,,,,77 WA Darby BJ MaCinnis R.W.Stedman EC. Roberts VKtPres&nt ut Pres &nt Controller Asusunt Sumry Barbara D.Blair(7) Swtay l l 111 Also Chairrnan and Chef EJecu'ne Ofhcer d all other subdary cornpanies lh Also Presdnt d 50uth Cardma Generating Cornrany Iru
- 11. Alv) Pres &nt d MPX Sys. ems Inc South Carohna FuelCompny inc andSCANA5ufteareScrsnes Inc I4: Retired eMective Illi A6 ch ted Pres &nt of Pnmesouth inc effettive I l st7 i l* Aho Pres &nt d South Carchna Pipehne Corpaation Carvima E arkvatm e CorporatKm South Carohna LNG I
Compny inc Carchna LPG Carp > ration Carolma Pforene Storage Corporatnm and Can4ane inc ' 161 Also Proent d South Carchna Peal Estate Devektment Company inc
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Manaaement Report The Management of SCANA Corporation (the Company) is The Board of Directors, through an Audit Committee responsible for the preparation and integrity of the financial data composed of nonemployee directors. provides oversight for the included in the accompanying Consolidated Financial preparation of these financial statements The Audit Committee Statements. These statements have been prepared in conformity meets periodically with ir'temal and independent auditors and with generally accepted accounting principles as applicable in representatives of management to review their activities and situations that prevent exact accounting measurements, responsibihties The intemal and independent auditors have full management has used informed judgments and estimates. and free access to the Audit Coramittee to discuss intemal Financial information presented elsewhere in this Annual Reoort accounting control, auditing and financial reporting matters. is consistent with these financial statements. The independent certified public accounting firm of Deloitte l The Company maintains and relies upon a system of Haskins & Sells is engaged to examine, in accordance with intemal accounting controls which is designed to provide generally accepted auditing standards. and to report as to the fair reasonable assurance that all transactions are properly recorded presentation of Management's Conschdated Financial in the books and records and that assets are protected from Statements and their opinion appears below unauthorized use The degree of intemal accounting control is based upon thedetermination of the optimum balance between the cost incurred in maintaining a system of intemal controls and the benefits to be denved The system of intemal accounting [o o i controls is supported by wntten pohcies and guidehnes and is complemented by the seletion, training and development of
/h l professional finanaal managers and by a staff of intemal W. B.Timmerman R.W.Stedman auditors who conduct comprehensive intemal audits Vice President & Trousurer Vict president & Controller Opinion ofIndependent Certified Public Accountants h6 $ suite 820 1426 Main street Post OffKe Drawer 7128 b bY b Cclumbia. south Carolina 29202 7128 SCANA CORPORATION We have examined the Consohdated Balance Sheets and in our opinion, such Consohdated Financial Statements Consohdated Statements of Capitahzation of SCANA present fairly the consolidated financial position of the i Corporation and consohdated subsidianes FCompanies") as of Companies at December 31.1986 and 1985 and the results of December 31.1986 and 1985 and the related Consolidated their operations and the changes in their financial position for Statements of income and Retained Eamings and of Sources of each of the three years in the period ended December 31.1986. in Funds for Cross Property Additions for each of the three years in conformity with generally accepted accounting pnnaples the period ended December 31.1986 Our examinations were apphed on a consistent basis made in accordance with genera!Iy accepted auditing standards and. accordmgly. Included such tests of theaccounting records and such other auditing procedures as we considered necessary 3x A in the circumstances -
a_i 4 Fdruary 61987 leutrt for Note i 1. as to nd the date rs Fdruary 18.1987) 29
Consolidated Balance Sheets December 31. 1986 1985 ASSE7S (ThousandsofDollars) Utility Plant (Notes I,2.3 and 4): Electric $ 2,475,332 S 2.417,565 Gas 277,292 251.686 Transit 4,188 4.877 Common 23,622 18.178 Total 2,780,434 2.692.306 Less accumulated depreciation and amortization 722,996 644.975 Total 2,057,438 2.047.331 Construction workin progress 92,379 65.402 Nuclearfuel,netof accumulatedamortization 51,535 65.266 Acquisition &diustment-gas. net of accumulated amortization 35,146 36.143 Utility Plant. Net 2,236,498 2.214.142 Other Propertyandinvestments: Nonutility property (substantially at cost) 30,33I '19.169 investments (Note 1) 19,213 17.989 Total Other Property and Investments 49,544 37.158 CurrentAssets. Cash, temporary cash investments and special deoosits ( Note 8) 10,913 48.683 Receivables 107,078 105.949 Inventories (ataveragecost): Fuel (Note 31 54,768 48,156 Materials and supplies I8.433 13.197 Prepayments 15.323 13.222 TotalCurrent Assets 206.515 229.207 Deferred Debits: Unamortized debtexpense 5,474 6.513 Accumulated deferred income taxes (Notes I and 7) I1,208 1.615 Deferred retum on plant investment (Notes I and 2) 36,395 23.945 Decommissioning fund (Note 1) 5,128 3.182 Other 24,570 27.937 Total Deferred Debits 82.775 63.192 Total $ 2,575,332 $ 2.543.699 Sx Notes to Consohdated Finandal Statements 30
December 31. 1986 1985 CAPITAUZATION (See Consolidated Statements of Capitalization) (ThomsandsofDollars) Stockholders' investment: Common Equity $ 836,913 $ 806,155 Preferred Stock (Not Subject to Purchase or Sinking Funds) 26,029 26.262 TotalStockholders' investment 862,942 832.417 Preferred Stock (Subject to Purchase or Sinking Funds) I17,542 152.514 Long-Term Debt Net 745,451 785.021 TotalCapitalization I,725,935 1.769.952 UABluTIES Current uabilities. Short-term borrowings(Note 8) . 80,576 2.388 Current portion of long-term debt. net (Note 3) 21,930 90.348 Accounts payable 82,068 86.089 Customerdeposits 13,417 11.44i Taxesaccrued 45,836 26.813 Interestaccrued 12,147 21.183 Dividendsdeclared 25,966 25.989 Other 3,715 5.053 TotalCurrent Liabilities 285,655 269.304 Deferred Credits: Accumu'ated deferred investment tax credits (Note I) I19,766 129.359 Accumulated deferred income taxes (Note I ) 388,789 343.998 Accumulated reserve for decommissioning (Note I) 5,128 3.182 Other 50,059 27.904 Total Deferred Credits 563,742 504.443 Commitments and Contingencies ( Note 9) - - Total $ 2,575.332 S 2.543.699 I l l S e Notes to Consoldated Finandal Statements. 31
Consolidated Statements of Income and Retained Earnings FortheYears Ended December 31. 1986 1985 1984 (ThousandsofDollars exceptpershareamounts) Operating Revenues (Notes I and 2): Electric $ 809,488 $ 7S7.796 $ 746.745 Gas 289,429 318.856 378.491 Transit 3.119 3.689 3.178 TotalOperating Revenues 1,102,036 1.110.341 1.128.414 Operating r-- . Fuelusedinelectricgeneration - 216,076 229.249 223.768 Powerpurchased. net (2,823) (8.821) 2.721 Gas purchased forresale 215,928 246.760 289.212 Otheroperation 155,588 143.016 132.108' Maintenance 56,864 60.836 52.619 Depreciation and amortization (Note 1) 90,627 86.899 74.914 incometaxes(Notes I and 7) i19,108 105.783 108.768 othertaxes 51,952 49.021 45.008 TotalOperating Expenses 903,320 912.743 929.118 Operatingincome 198,716 197.598 199.296 Otherincome(Note 1); Allowance for equity funds used during construction 1,264 1.086 2.885 Deferred retum on plant investment (Note 2) 12,450 12.881 11.064 Other income lloss). net of income taxes (3.889) 1.754 3.698 TotalOtherincome 9,825 15.721 17b47 income BeforeInterestChargesand Preferred Stock Dividends 208.541 213.319 216.943 interestCharges(Credits): Interestonlong-term debt. net 68,180 83.817 85.679 Otherinterest expense 5,771 1,789 3.865 Allowanceforborrowed funds used duringconstruction(Note 11 (2,017) (2.388) (I1.296) Totallnterest Charges. Net 71,934 83.218 78.248 Preferred Stock Cash DMdends of Subsidiary (At stated rates) 14.443 16.541 16.877 Netincome 122,164 113.560 121.818 ; Retained Earnings at Beginning of Year 230,549 202.988 162.981 Common Stock Cash DMdends Declared (Note 5) (90,263) (87.0401 (81.8liI Other Capital Stock Transactions, Net 22I l.041 - Retained Earnings at End of Year $ ' 262,67I $ 230.549 $ 202.988 Earnings Available forCommon Stock $ 122,164 $ I13.560 $ I21.818 Weighted Average Number of Common Shares Outstanding (Thousands) 40,2 % 40.296 39.900 Earnings PerShareof Common Stock $ 3.03 $ 282 $ 305 See Notes to Consolidated Financial Stattments 32
Consolidated Statements of Sources of Funds for Gross Property Additions FortheYears Ended December 31. 1986 1985 f984 SOURCES OFFUNDS (ThousandsofDollars) InternallyGenerated: Netincome $ 122,164 S 113.560 $ 121.818 Charges (credits) to income not requiring (providing) funds: Depreciation andamortization 90,627 86.899 74.914 Amortizationofnuclearfuel 30,529 22,612 19.029 Deferredincometaxes, net 33,635 42.497 92.801 Deferred investment tax credits, net (9,593) 821 9.231 Allowance for funds used during construction (3,281) (3.474) (14.181) Deferred retum on plantinvestment (12,450) (12.881) (11.064) Other. net 2,020 1.444 2.853 Funds providedfromoperations 253,651 251.478 295.401 Deduct cash dividends declared on common stock 90,263 87.040 81.81I intemallyGenerated Funds. Net 163,388 164.438 213.590 ExternalRnancing: Common stockissued - - 27.954 Banknotesold - - 81.500 Pollution controlbondssold 1,100 5.500 92.850 increase (decrease) in fuel hnancings. net (19,813) (8.256) 18.041 Reduction oflong-term debt (89,459) (44.966) (l12.%1) Retirement of preferredstock (35,205) (4.275) (3.815) Increasein short-term borrowings 78,188 1.915 315 Funds from ExtemalFinancing (65,189) (50.082) 103.884 OtherSources(Uses): Decrease in working capital, excluding short term borrowings and cu rrent portion of long-term debt 29,273 15.048 17.793 Other changes in noncurrent balance sheet items, net 13.424 (4.371) (65.929) Other Sources (Uses) 42,697 10.677 (48.136i Funds for Property Additions 140,8 % 125.033 269.338 Allowance for Funds Used During Construction 3,28I 3.474 14.181 Gross Property Additions $ I44,I77 $ 128.507 $ 283.519 Sw Notes to Consolidated Financial Statements 33
Consolidated Statements of Capitalization December 31, , 1986 1985 Common Equity (Note 5) . IThouwmisofDdhrs) Common stock, no par value, authonzed 75.000.000 shares, issued and outstanding.1986 and 1%5 - 40.296.147 shares $574,242 $575.606 Retainedeamings 262,671 2 W,49 TotalComunon Equity 836,913 49% 806.155 46% South Careans E3ectric & Gas Company- , Cumuisthe Preferred Stock (Not Sut$ect to Purchase or SimVng Fundsk SharesOutstanding Redemption Price Eventual Senes 1986 1985 Current Through Minimum
$100 Par 840% 197,668 200.000 105 22 11 30-87 100 00 19,767 20.000
$50 Par 5 00 % I25,234 125.234 52.50 - 52 50 e.262 6.262 Total Pmierred Stock I Not Suldect to Purchase or Sinking Funds) 26,029 1% 26.262 1%
South Carolina Electric & Cas Company' Cumulathe Preferred Stock ISuldect to Purchase or Sinidng Funds)l Note 6)
$ 100 Par Value- Authorned 1.550.000 shares SharesOutganding Redemption Pnce Eventual Senes 1986 1985 Current Through Minimum 7 70 % 113,894 116.900 10385 6 30$87 10100 II.389 11.690 812% 162,086 167,150 102 03 - 102 03 16,209 16.715 13 88 % 250,000 250.000 113 88 6487 10000 25,000 25.000 10 75% - 135,000 - - - - 13.500 ll 08% - 200.000 - - - - 20 000 525,900 NA050
$50 Par Vafue - Authonzed.1986- 1.728.786 shares.
1985- 1.741.486 shores SharesOutstanding Redemption Price f Eventual Senes 1986 1985 Current 0 'through Minimum 4 5(Tb 32,000 33.600 5100 - 5100 1,600 1.680 4&L I4,334 15,834 50 50 - 50 50 717 792 4 M LIA) 44,052 46.052 5100
- 51.00 2,202 2.302 4 M tlBI 105,400 108.800 5050 - 50 50 5.270 5.440 5 125% 81,000 82.000 5100 - 5100 4.050 4.100 6 00 % I12,000 115.200 50 50 - 50 50 5,600 5.760 8005 300,000 300.000 5100 1 30-87 50 00 15,000 15.000 8 72 % 365,400 365.400 53 00 12-31-88 50 00 18,270 18.270 :
940b 244,692 245 292 51.175 - 51 175 12.235 12.265 l.298.878 1 312.178 Total Preferred Stock ISut4ect to Purchase or Sinking Funds) I17.542 7% 152.514 9L 1 Sa Notes to Consolidated Financial Statements. l 34 ) l
~
Demnfer 31, 1986 1965 Imag-Term Debt (Notes 3,4 and iI): (ThousandsofDo!!ars) South Carohna Electric & Cas Company: Firstand Refunding Mortgage Bonds: Yearof Senes Matunty , 14-18% 1986 - 15.000 t4 15-5 3 % 1987 - 8.334 5-l/2% 1987 6.176 6.176 . 4-7.85 1988 10,000 10.000 10-17L 1990 8.400 9.000 5% 1990 10,000 10.000 5% 1991 ' 8,000 8.000 4-73% 1995 16,000 16.000 5 45% 1996 15,000 15.000 6% 1997 15,000 15.000 617b 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 9-1.3% 2006 50,000 50.000 84GL 2006 50,000 50.000 8-18% 2007 , 30,000 30.000 890% 2008 30,000 30.000 1018% 2009 35,000 35.000 978% 2009 50,000 50.000 12 15 % 2010 35,890 50.000 Follution Control Facihties Revenue Bonds 4 l >2% Senes, beanng interest at 75% of apphcable pnme rate. due 1987 1.031 2.062 995%Senes.due 2003 7,285 7.380 fairfield County Senes 1984 due 2014 (vanable rate-55% through 8'3187) 57.000 57.000 Richland County, due 2014 Ivanable rate- 5 5% through &'ll 87) 5,500 5.500 Fairfield County Senes 1986. due 2014 Ivariable rate-4875% at 11'3136) 1.I00 - Consohdated Mortgage Gold Bonds 5% Senes, due 1999 Inonca!!able) 949 977 leaseObhgation.5-14L due 1997- 240 255 South Carohna Generating Company. inc.: BerkeleyCounty Pollution Control . Fachties Rewnue Bonds. due 2014 banable rate-4 55% throup - '7) 35,850 35.850 Bank Note. due 1988 Ivanable rate-64375% at 11'31.861 78,500 81.500 South Carohna LNG Company.Inc: 10 17L Senes First Mortgage Bonds. due 1990 4,600 5.290 South Carohna FuelCompany inca Wuclearfuelhabihty 52.991 65.096 Fossilfuel!iabihty 17,083 24.791 South Carohna Electnc & Gas F unce. N V.: 15-17L Guaranteed Notes, cue 1980 - 60.000 South Carohna PipehneCorporation 6% Senes A First Mortgage Bonds. due 1988 I,319 1%3 South Carolina Real Estate Development Company. Inc.: kbtes. due 1986- 1991 lat vanous rates) 77 99 Total 767,991 890.273 Less-I.bng-term debt matunties. including sinking fund requirements 21,930 30.348 Bondscalled forearlyredemption - 74.110 Unarnortized discount 6l0 794 Totallong-Term Debt 745,451 43% 785.021 44 % TotalCapaahration $l,725,935 100% $1.769.952 100'n See Notts to Consolidated FinandalStatements. 35 l g
Notes to Consolidated Financial Statements SCELG, operator of the V C Sumrner Nuclear Staton (Summer Sta-I.
SUMMARY
OFSIGNIFICANT tion), and the South Carohna Pubhc Semce Authonty Ia pubhc corpora-ACCOUNTING POUCIES: t on of the State d South Carchna) are joint owners of Summer Station m A. Orgnahation and Principles of Coneotdetion the proportions d two-thirds and one-thini respectively The parties share the ccsts of operating the plant and in energy output in these propor-SCANA Corporaton (the Company). a South Carohna corporaton ' tions The total cost of the construction of Summer Station was approxi-cas organized in 1984 by South Carchna Electric & Gas Company mately $ 1 3 bilhon. or about $ 1.461 per lulowatt. d which SCELG's share (SCELG) and acquired a!! d the issued and outstanding cc mmon stock d wasapproximately$877millon Accumulateddeprecationassociated SCELG under a Plan of Exchange effective December 31.1984. whereby with SCELG's share d Summer Staton was approximately $% i millon the holders d the common stock d SCELG automatically became the and $622 milhon as of December 31.1986 and 1985. respectively holders #aff the outstanding shares of common stock of the Company on SCELG's share of the direct expenses associated with operating Summer a share-for-share basis The Preferred Stock of SCELG continues to be Station is included in the Companys "Other operation ~ and "Mainte-held by nonafhliated pames 'he Company is a pubhc utihty holding com-na w expenses pany within the meamng of the Puble Ut!ity Holding Company Act d 1935.but is exempt from registraton under such Act- D A5owance for Funds Used During Construction The accompanying Consol dated Financial Statements reflect the Allowance for funds used dunng construction iAFCl. a noncash item. consohdatenof theaccountsdtheCompanyanditswholly-owned reflects the pened cost d capital devoted to plant under construct on subsidianes This accounting practice results in the incluson. as a component d con-FebW & struction cost iconstruction work in progresst of the costs of debt and eq-South Carohna Electnc & GasCompany uity capital dedicated to construction investment AFC will ultimately be South Carohna Generating Company. Inc (CENCO) included in rate base investment in estabhshing rates for utihty services South Carohna Pipehne Corporation (Pipeline Corporatonl The Companys regulated subsidianes calculated AFC using the following which whollyowns South Carohna LNG Company. inc and rates. Carohna ExploratonCorporation SouthCarchna FuelCompany.Inc 1986 198s 19M Non-repubW fusinesses Carohna 1.PG Corporation SCEGG 6.3% 95% 65L CENCO 5.3% 5 7b - Carohna Propane Storage Corporation Pipeline Corporation 8.6% 95% 65% Carotane.Inc South Carohna Real Estate Development Company. Inc Thc.e rates do not exceed the rnaximum allowable rate as calculated un-MPXSystems.inc der F ERC Order No 561 Interest on nuclear fuel is capitahzed at the actual SCANA Software Services. Inc interest amount. Pnmesouth inc South Carchna Electnc & Gas Finance. N V (Finance. N V ) E. Deferred Return on Plant investment Dunng 1986. Finance. N V., which had obtained funds outside the Carrying costs (induding equity retum ) associated with approxi-United States for use in finanong the activities of SCESG and Pipehne mately $1148 milhon ($1044 million at December 31.1986) of production Corporation. was dissolved and hquidated (see No'e 3) investment. net of accumulated deprecation. assocated with 400 MW of Investments in joint ventures are reported using the equity method electnc generatmg capacity removed from rate base are being deferred at of accounting Sigmhcantintercompanytransactionshavebeenehm;- SCESG's approved overall rate of retum of I I 74% for recovery over some natedin consohdaten future period pursuant to a March 2.19M PSC rate order (see Note 2B) In December 1985.the Financal Accounting Standards Board (FASB) E S Y"'I ACC8""'5 issued an exposure draft which would amend Statement No 71 ~ Account-Theaccountingrecordsof theCompanysregulatedsubsidianesare ing for the Effects of Certain Types of Regulaton~ to include certain cnte-maintained in accordance with the uniform system of accounts presenbed ria for recognizmg deferrals d current operating costs including carrying by the Federal Energy Regulatory Commission (FERCl and as adopted by costs, associated with investments in operating utthty plant In December !986.the FASB issued Statement No 90. ' Regulated The Pubhc Service Commission d South Carohna IPSC) Enterpnses-Accou .bngforAbandonments and Disa!!owancesof Plant C. % Plant Costs".This Statement, which addresses certain aspects of the FASB's ear. Utihty plant is stated substantiallyat onginal cost The costs of addi- her exposure draft does not spec'ically address accounting recogniton of tions. renewals and betterments to utihty plant. including direct labor. deferralsassociatedwithinvestmentsinoperatingutiktyplant TheFASB matenal and indirect charges for engineenng supervision. and an allow- has indicated that it will continue to consider this aspect of the December ance for funds used dunng construction. are added to utihty plant ac- 1985 exposuredraft counts The one,inal cost of utihty property retired or etherwise disposed The future recovery of SCESG's deferred retum on plant investment of is removed trom utihty plant accounts and generally charged. along as set forth m the PSCs March 2.1984 rate order or as p*oposed in with the cost of removal. less salvage. to accumulated depreciaton The SCESG's Apphcation dated lanuary 30.1987 (see Note 2B) may not meet costs of repairs. replacements and renewals of items d property deter- the cntena proposed in the December 1985 exposure draft if the FASB mined to be less than a unit d property are charged to maintenance were to adopt such cntena in their current form. and absent the necessary expense modihcation of the March 2.1984 rate order, the Company could be re-quired for accounting purposes to restate its hnancial statements m order to ehrnin. ate the deferred retum on plant investment The effect of such restatement would be to reduce reported eamings per share ice 19M 1985 and 1984 by 31c.32c and 28c. respectively It is uncertain if the FASB will issue a fmal statement that spechcally addresses deferral d costs as-soaated with operating utihty plant and what. if any cnteria will be estab-hshed for accounting recognition of such defc rals 36
F. Depredationand Amortisselon The actuanal present value of accumulated plan benehts and plan Provisions for depreciation are recorded using the straight-line net assets as of the most recent benefit information date are as follows. method for financial reportng purposes and are based on the estimated lanuary I. serviceIrvesof thevariousclassesof property Thecompositeweighted- m i933 average deprettation rates were 3 3%,3 35% and 341% for 1966.1965 and 1964. Nudear fuel amortuation, which is included in Tuel used in cleanc Actuarialpresent value of generation" and is recovered through SCELC's cost of fuel, is recorded accalated plan benehts using the unitsdproduction method Provisions foramortuation of nu. Vested $ 80.2 S 68 5 clear fuel indude arnounts necessary to satisfy obligations to the United Nonvested 7.4 66 States Department d Energy under a contract for disposal d spent nu- Retirees (Pnorto fune 1983) 45.5 50 2 clear fuel. Total $133.1 $I25 3 The acquisition achustment relatng to the purchase d certain gas propertes in 1982 is being amortized cuer a forty year pened using the Net assets available for benehts $l34.9 $1079 straight-hne method. The assumed rate of retum used in determining the actuanal present (B.Medaar W value t)f accumulated plan benehts was 7% for 1966 and 1985, except for Decommissioning at Summer Station is protected to commence in dedjcated assets (Retirees prior to fune 19831 which are valued at i 1% the year 2014. and the expenditures (on a t>. fore-tax basis) related to de- In December 1985, the FASB issued Statement No 87.
- Employers' commissioning actmties are currently estimated to be approximately Accounting for Pensions" Statement No 87.which is generally effectrve
$31 I million (in 2014 dollars) SCESG is prcmding for estimated decom- for hscal years beginning after December 15.1986. requires the use of a missioning costs over the hfe of Summer Statico and has established a standardued method of measunng net period;c pension expense. Upon reserve for this purpose SCELG is presently funding the reserve with adoption of this Statement. certain changes wi!! be required in actuanal amounta collected through electric rates (appoximately S 83 million an- assumptions and the manner in which net periodic pension expense is nualb net of taxes). and intends for the fund. induding eamings. to pro- measured. The Company has chosen not to apply the provisions d the vide for all eventual decommissioning expenditures on an after-tax basis Statement prior to its effective date The Company does not beheve that H.incomeTames a#cah@atemt pn NWha sgnh en its results of operations or financial position. The Company and its subsidianes ble consohdated Federal and State income tax retums Income taxes are allocated to all subsidianes I.Itevenue Recognition based on their contnbutions to consohdated taxable income Customers' meters are read and bills are rendered on a montidv . The Company provides deferred income taxes for substantially all cycle basis. Base revenue is recorded dunng the accounting period when tim:ng differences. pnnopa!!y accelerated depreciation, except for certain themetersareread basis differences ansing pnor to 1981. Deferred income tax provisions are Revenue attnbutable to gas costs (to the extent collectible through induded in income currently with corresponding credits or charges to ac- adiustment clauses) is accrued and recorded in the month dunng which cumulateddeferredincometaxes Deferredincometaxesarecreditedor the customers' meters are read rather than when the revenue is billed. charged to income in appropnate amounts when subsequent income tax Protected fuel costs for electnc generation are collected through the habihties are greater or less as a result of this practice. fuel component in retail electnc rates. as established by the PSC dunng Investment tax credits on ehgible property are generally deferred and semiannualfuelcostheanngs Anydifferencesbetweenactualandproi-amortuedovertheusefullivesof therespectiveassets. etted fuel costs are deferred and induded ivhen estimating the fuel cost component dunng the next semiannual fuel cost heanng At December b '" 31.1986. SCESG had collected approximately $ 16 milhon through the lhe Company has a noncontnbutory defined beneht plan covenng electric fuel clause component. which is induded in " Deferred Cred;ts - di employees of its subsidianes The Companys pohcy is to fund pension Other" costs Ctcrued Total pension expense. including tre amortization of un-funded pnor service cost om a ten-year penod. for 1986.1983 and 1984 K. Debt Premium. Discount and Expense cas approximately $ 104 milhon. $83 million and $129 milhon, respec- Long-term debt premium, discount and expense are being amor. Tively The decreases in 1986 and 1985 pension expense compared to 1984 tuedas-r untsof s *1nterestonlong-termdebt, net ~overthetermsof are largely attnbutable to the dedication of certain plan assets to satisfy the respectivedebt issues. future retirement benefit obligations to all employees retired prior to June 1%3.esth a resulting decrease in the unfunded prior service cost LN obhgaton. Certain amounts in the financial statements of prior years have been redassified to conform with 1986 classifications. 37
---. _..x... ~ . cy-
- 2. RATEMATTERS: The Berkeley County Pollutson Control Fachties Revenue Bonds (Annual tender- $35.850.000, due October 1. 20141 are secured by an ir-A. On December 22. lW. SCESG file'dwith the PSC a report which revocable letter dcredit expanng in 1991 The Bonds bear interest at the descnbed the antiopated income tax savings assoaated with the Tax Re- rate of 4 55% per annum through September 30.1%7.
form Act of 1986 based on the results of operations for the year ended Nter the interest rate penods descnbed above the Bonds will bear December 31.1%5 On lanuary 15.1987, the PSC directed SCELG to re- interest at a rate. which will be set between 8% and 120% of an index rate duce its retail electnc rates approximately S25 milhon annually. or 3% On based on one-year yield evaluations of comparable tax-exempt obhga-lanuary 19.1987. SCEE,G filed revised retail electnc rate schedules with the tions, or 65% of one-year yield evaluatons of U. S Treasury Bonds at par. PSC which were subsequently approved by an order dated lanuary 29- but. in any case. not more than 15% per annum The interest rate shall be 1987 The revised rates were placed into effect with the first bdhng cycle in adiusted annually or becorne fixed untd matunty These Bonds also pro-February 1%7. vide that the holders may require the Bonds to be purchased at par upon B. As part of a March 2.1984 order.the PSC removed from rate base ea:h annual adiustment of the interest rate or at the time the interest rate approximately SI 148 milhon. lS104 4 milhon at December 31.1986l of av- becomes fixed until matunty if the Bonds are tendered by the holders the erage production investment. net of accumulated depreciar on. associ- Company intends to reoffer the Bonds to the pubhc. Due to the irrevoca-ated with 400 MW of electnc generating capaaty However, the order al' ble letter of credit for the Berkeley County Bonds and provisionsof the lowed carrymg costs. computed on the basis of the approved overall rate Fairfield County Senes 1984. Richland County. Fairfield County Senes of retum ( l I 74%). associated with the removed investment to be deferred IW and Berkeley County Bond indentures. which permit the Company and recovered over some future penod The order a!so allowed the recov- to purchase the Bonds in heu of redemption and resell them and to sub-ery. currently through rates of all operating expenses, includmg deprecia- stitute other secunty arrangements, the Bonds are classified as long-term tion and property taxes. associated with the 400 MW of elecinc generating debt. capaaty- Onlanuary22.1986.theCompany'sBoardof Directorsauthonzed On January 30.1987. SCE6G filed an Apphcation with the PSC forap- the early redemption d the entire $60 milhon pnnapal amount outstand-proval to restore to its rate base. effective luly I .1987, the 400 MW of elec- ing of the 15-1/2% Guaranteed Notes d Finance. N V due 1989 The Notes tnc generating capaaty previously removed and to also include the asso- were redeemed on Apnl 15.1986 at a pnce of 101% of par value. ciatedaccumulateddeferredcarryingcosts SCE6Calsorequestedthat On February 20.1986. SCELG redeemed at par. pnor to matunty. accumulated deferred carrying costs (S364 million at December 31.1986) S14,110.000 pnncipal amount d its 1215% Senes First and Refund ng be amortized caer a ten-year penod commenang July 1.1987 There has Mortgage Bonds due 2010 Restncted cash totahng SI 4 I I million was on been no ccton by the PSC in response to SCELG's Amhcation ISee Note deposit with the Trustee at December 31.1985. and was available for re-C. As a result of a PSC order dated March 2.1984. SCE6G recorded stricted cash at December 31."1985 was reflected in ' Current por approximately $15 milhon (20c per share.of which 14c and 4c relate t long-term debt. net /as follows. amounts bdled in 1983 and 1982, respectively) as nonrecumng electnc revenuesin March 1984 Thousands D. On October 28.1985, the South Carchna Supreme Court upheld a crcuit court ruhng that allows the State Consumer Advocate to appeal ap- Long-term debt maturities. mcluding proximateF/ SMmillonof theMarch 2.1984orderof thePSCgrantmg sinlung fund requirements S 30.348 SCE6C approximately $ 1326 milhon annually in increased retail electnc Note repayment and bond redempton 74 I10 rates while the outcome of this matter is uncertain. the Company be-heves the probabihty of any significant change in the rate order is unhkely Total 104 458 and accordingly, has not recorded any provison for refunds less restncted cash deposit 14110 E. On December 26.19M GENCO filed with the FERC a cost of ser- Current portion of long-term debt. net S 90 148 vice formula rate for the sale of power and energy to SCE6G Undera con-tract with GENCO. SCELG purchases all of the electnc power generated The annual amounts of long-term debt matunties. including the by the A M WJhams Station, which is owned by GENCO. Dunng October amounts due under nuclear and fossil fuel agreements (see Note 4 ). and 1985, a partial settlement was reached prior to a formal heanng on the sinking fund requirements for the calendar years 1987 through 1991 are remaining issues before an Administrative Law ludce On February 20. summanredasfollows 1986. the Administratrve law ludge issued an initial deasion on the re-Year Amount Year Amount maining issues Bnefs on exceptions to the Administratrve las ludge's decision have been filed with the FERC The Company believes that the iThoedsof DolbN outcome d the proceedmgs will not have any significant effect on the ,9g 3 93g 333y Company's conschdated financial statements 3933 974o3 399 37.533 1989 81 258
- 3. LONG-TERM DEBT 15cc Note 1Ih The Fairfield County Series 1984 (Annual tender-S57 milhon. due Appr sma@2miHo@cenwionhgenn&
fm 87 rnay be sawed by either deposit and camHaW Ws b September I. 2014L Richland County (Annual tender-S5 5 milhon due 5 "5" " September l. 20l 4) and Fairf eld County Senes 1986 (Annual tender-Si l million. due September 1. 2014) Polluton Control Fachties Revenue Substantially all utihty plant and fuel inventories are pledged as col-Bonds are secured by hke pnncipal amounts of SCELG s First and Re-law Hncaedonwhgm& fundmg Mortgage Bonds The Fairfield CountySenes 1984 and Richland County Bonds bear interest at the rate of 5 5% per annum through August 31.1987 The Fairfield County Senes 1986 Bonds bear interest at a rate equal to 65% d a prime rate but not more than 15% per annum through August 31.19'7 (4 875% at Licember 31.19861 38
- 4. FUELFINANCINGS: 6. PREFERREDSTOCK(SufpriloPurcistseorSinkmgFunds):
( Wudear and fossil fuel inventories are financed through the issuance The call premium of the respective senes of prefened stock in no d short-term commercial paper These short-term borrowings are sup-case exceeds the amount of the annual dividend. Retirements under sink-ported by inevocable bank lines of credit which expire in 1989. Accord- ing fund requirements are at par values. ingly. th emounts outstanding have been induded in long-term debt. The At any time when dmdends have not been paid in full or declared bank hnes mvide for maximum amounts ($75 milhon relateJ to nudear and set apart for payment on all series of prefened stock. SCEGG may not fuel and $25 milhon related to fossil fuel) that may be outstanding at any redeem any shares of preferred stock (unless all shares of preferred stock time ' then outstanding are redeemed) or purchase or otherwise acquire for At December 31,19% the amount outstanding for nudear fuel was value any shares of preferred stock except in accordance with an offer approximately $530 milhon at a weighted average interest rate of 688% made to all holders of preferred stock. SCESG may not redeem any shares and the amount outstanding for fossil fuel was approximately $ 17.1 mil- of preferred stock (unless a!! shares of preferred stock then outstanding ton at a weighted average interest rate of 635%. are redeemed) or purchase or otherwise acquire forvalue any shares d peferred stock except out of monies set aside as pu chase funds or sink-
- 5. STOCKHOLDERS' INVESTMENT (IndudingPreferred ing funds for one or more series of preferred stock, at any time when it is in Stock Not Suf#ct to Purrfnise or Sinking Fundsh default under & prcwsims d h purchase fund or smking fed for am senesofpreferredstock The changes in " Common Stock". without par value. dunng 19%
On May 27.19% SCESG's Board of Directors called for the redemp-1985 ard 1984 are summarued as follows-tion of all the issued and outstanding shares of two series of that compa-ny's cumulative preferred stock in July 19% all 135.000 shares outstand-Number Thousands d Sh**5 ing of the 10-3J4% Senes. S 100 par value were redeemed at a pnce of d UdI*'5 Balance lanuary I.1984 10484%, and all 200.000 shares outstanding of the 1 I 08% Senes. 5100 par 38.727.652 $546.927 x Addineal Sharesissued valuewere redeemedata priceof108% se-SawW grambr The aggregate annual amounts of purchase fund or sinking fund re-
$p e, 211.915 3.829 quirements for preferred stock for the years 1987 through 1991 are sum-Ernployee stock Ownership Plan 9.012 170 madasloh Dividend Remvestmentand Stock Purchase Pian 1.348.709 23.973 Year Amount Year Amount C her (1.141l 364 (Thousan.fset Do!!arst Balance December 31.1984 40 296.I47 575.263 C her 343 1987 S 5.298 1990 $ 7.515 1988 12.515 1991 7.515 Balanc3 December 31,1985 40.296,147 575.606 1989 14.515 Other 11.3648 BalancJ December 31.1986 40.296.I47 $574.242 The changes in ~ Preferred Stock (Subject to Purchase or Sinking Funds)~ dunng 19% 1985 and 1984 are summarized as follows in May 1984. the Trustee for the Company's employee stock benefit plans began purchasing previously issued and outstanding shares of the Number Thousands of Shares of Dollars Company's common stock m the open rnarket Commencing with the lanuary 1.1985 dividend payment. an independent agent for the Compa- Balancelanuary 1.1984 2.302.086 $160.604 Shares Redeemed ny's Dmdend Reinvestment and Stock Purchase Plan began purchasing
$100 parvalue shares in the open maAet Pnor to the above dates for cach Plan, all 120 4001 (2.0401 50 par value shares purchased pursuant to each Plan were shares onginally issued for t 35.500: R7751 thatpurpose Balance December 31.1984 2.246.186 156.789 Shares Redeemed The Restated Artides of incorporation of the Company do not limit
$100parvalue (20.550) the dmdends that may be payable on its common stock However, the I2.0551 50 parvalue 144 4081 12 220:
Restated Articles of Incorporation of SCESG and the indentures underly-ing certain of its bond issues contain provisions that hmit the payment of salance December 31.1985 2,8s1,22s 152,514 Shares Redeemed cash dividends on common stock Accordingly. $2318 mi' hon of consoli- sIooparvalue dated retained eammgs were not restricted as to payment of cash drvi- 4343.0701 (34.3071 50 parvalve 113.3006 1665) dends on common stock at December 31,1986-aalance December 31,1986 1.s24.e58 $l17.542 Cash dmdends on common stock were declared at an annual rate per share of S224. S2.16 and $205 for 19d6.1985 and 1984. respectively , Dunng 1986. SCE Z redeemed 2.332 shares cfits 840% cumulative I preferred stock.S100 parvalue. i { l l i
)
39
1
- 7. INCOMETAXES: rotal provision for deferrad taxes. ner results from timing differ- l ences in rec gnition d the following items. j Total irrome tax expense for 1986,1%5 and 1984 is as follows:
i 1986 1985 1984 g g3 (hsands #Dolfss) Chargedto expenses. l Currentincome taxes Accelerated depreciation and Federal $ 82.637 $ 57.680 $ 5.767 l am in 367 $46.084 $55.227 { State 9.845 8 687 4.053 ga N ues - - 37.684 1 Foreign (1771 674 600 Deferred fuei revenue (4.616) (801) 249 Totalcurrent taxes 92.305 67.048 10.420 Other. net (2.116l 12.786) 1359) Deferred taxes. net. Totalprovision fordeferred Federal 28.257 37 289 82.466 incometaxes net $33.635 S42 497 $92.801 State 5.378 5.208 10.335 Totaldeferred taxes 33.635 42.497 92.801 investment taxcredits h h W sF M M m w m W W w n @
,he Intemal Revenue Service through 1981 and base been closed through A. tion of amounts N A ina epor s or 9 ad a0ssWS resoM ex-deferred (credit) (8.107) 16.065) (6.173) @ pa@o ben.daxNsgmMn W82 and other 500 694 694 camed backto 1981.
Totat investment tax credits (9.0931 1.516 9 925 e m xa M @ h n d h Federal income tax retums of SCANA and SCESG for 1982 through 1984. Totalincome tax expense $116.847 Si 11.054 SI13 I46 No report relating to the present examination has been received How-ever.the Company does not anticipate any significant effect on its results Total income taxes differ from amounts computed by applying the of operations or financia' position statutory Federal income tax rate d 46% to pre-tax income as follows. At December 31.19% the cumulative net amount d income tax tim-ing differences on which deferred taxes have not been provided totaled 1986 1985 1984 approximately$l10million
- 8. SHORT-TERM BORROWINGS:
Net income $122.164 Si13.560 5121818 lhe Company pays fees to banks as compensation for its hnes d to g credit. Bank loans are for 270 days or less Detail s of hnes d credit and expenses I19.108 105.783 108 768 short-term horrowings at December 31.1986.1985 and 1984 and for the
- years then ended areasfollows.
Charged to otherincome (2261) 5.27I 4 378 Preferred stock divxiends 14.443 16541 16 877 Total pre-tax income $253.454 $241155 $251.841 Drunifer 31. Income taxes on above at statu'- O tory Federalincome tax rate $116.589 Si10.931 SI15.847 (Dolles in Mdfwns) Increases (decreases l attnbutable to Miowance forfunds used Lines of credit at year-end $1332 S87 9 S81 3 dunng constnaction Borrowmgsagainst creditline at (excludmg nuclearfuel) (I.053) (707) (5.104) year-end $ 2.25 S 2 25 - Deferred return on plant Average bank balances durng investment (5.727) (5.925) (5.0893 theyear $ 3.5 $ 31 5 50 Depreciation d;fferences 5,309 5.325 5.454 Short-term borrowmgs(including Amortization of mvestment commercialpaperlduring the year tax credits { (8.107) 16.065) (6.173) Maximum outstanding $l11.2 S 45 $29 4 j Stateincome taxeslless Average outstanding $ 45.7 $ 11 $ 25 Federalincome tax effect) 8.220 7.503 7.770 Weighted dady averageinterest , Amortizationnf acquisition rates adiustment 460 460 460 Bankloans 7.40% 8527% - Otherdifferences net 1.156 f468) 119) Commercialpaper 6.36 % - 1135% i Totalincome tax expense $116.847 SilI .054 SI13146 Short-term borrowings outstandmg at year-end
'Bankloans $ 2.25 S 2 25 -
Weighted averageinterest rate 6.25% 857% - Commercialpaper $ 78.2 - - Weighted average mterest rate 6.67% - - Other $ .53 S 14 $ .5 Weighted average interest rate 9.50 % 9 50 % 1122% 40
- 9. COMMITMENTS AND CONTINGENCIES: 10. SEGMENTOFBUSINESSINFORMATION:
A, games, . Secmet information at December 31.1986.1%5 and 1%4 and for The Company leases certain equipnent. office fumiture Md an office building itsed for its corporate headquarters under long-tema perating 19se leases with lease terms (exduding various renewal options) expiring in Electric Cas Transit Total . 1996.1991 and 2009.respectively. in connection with the office building lease, dated October 1984. the ,%g Comgny may be required to purchase a 1% Note and Mortgage on the OPeredngrevenues $ s09.488 $2s9.429 $ 3.119 $1.102.036 building in the amount of S44 million in 1989 The Company pays, as adde operadng expenses, tional rent, any amount by which a current index rate (8685% at Decem- 88clud!"8 d'PCl*80" ber 31.1986) exceeds the la Note and Mortgage rate. Also, the Company and asmortizadon 544.067 261.712 6.914 s12.693 is reimbursed any amount by which the 10% Note and Mortgage rate ex- don and ceeds thecurrentindex rate. so.825 9.557 245 90.627 Total rent expense was app oximate 'y $4 4 milhon. $50 million and Totaloperadas expenses 624.892 271.269 7.159 903.320
$10 milhon for 1986.1985 and 1984. resp <trvely. opersensincome tiossi $ Is4.596 $ Is.160 sa4.040s 19s.716 Future minimum rental payments as of Decemoer 31.1986 are as lass -Interest charges 71.934
-Preferred stock dividends I4.443 Netincome $ I22.164 Year Arnount Year Arnount Capitalexpenditures:
O"U NI idendflable $ 110,249 $ 20.981 $ 247 $ 131,477 1987 $4.850 1990 $ 7.124 1988 5.029 199i 5.820 Udlized for overen Company operadons I2.700 ) 1989 6.935 1992-2009 II7.38i TU $ 1 M I77 B. Nuclearlasurance idendflable assetsat Tb Price-Anderson indemnihcation Act che Acti currently limits the December 31,19Fk liabil:ty for third-pa.'ty claims related to an acadent at a utshtys nuclear Udlity plant. net $1.988.769 $214.299 $ I,77s $2.204.s46 generating fachty to $695 millon per accident. The Act provides that all Inven es 62.930 6.se 320 70.095 owr'ers of nuclear reactors may be assessed up to S5 milhon per reactc Total $2.051.699 $221.144 $ 2.09s 2,274.94I owned for each nuclear acodent occumng at any reactor in the United ' States with a hmit of two assessments per year ta retroactive premium) Mudlworove suCompanyoperadons 300.39i Tb Companys maximum exposure, based on its two-thirds ownership of Totalamets $2.575.332 Summer Station, would be approximately 567 million per year under this legislation. The Act is scheduled to expire in August 1987 and Congress is con-sidenng several proposals to amend the present Act.The Company is un-able to predict what actions Congress may ultimately take and what ef-ft:ts such actions may have on the Companys potential hability The Company currently maintains policies with Nuclear Electnc In-surance Limited (NEIL) and Amencart Nudear insurers (ANil providing combined property and decontamination insurance coverage of $695 mil-tion for any losses in excess of $500 milhon pursuant to existing primary coverages (with ANI) on Summer Station The Company pays annual pre-miums and. in addition could be assessed a retroactive premium not to
- exceed 7-l/2 times its annual premium, in the event of property damage loss to any nuclear generating fachties covered by NEIL Based on the current annual premium, this retroactrve premium would be approxi-mately $5 5 million.
To the extent that insurable claims for property damage, decontami-nation. repair and replacement and other costs and expenses ansing from a nuclear incident at Summer Station exceed the pohcy hmits of insur-arte, or to the extent such insurance becomes unavailable in the futt.:e. and to the extent that the Companys rates would not recover the cost of any purchased replacement power. the Company retains the nsk of loss as a self-insurer lhe Company has no reason to antiapate a senous nudear inodent at Summer Station if such an inadent were to occur it could have o materially adverse impact on the Companys hnancial position 41
1985 II. SUBSEQUENTEVENTS: Electnc Cas Transit Total On February 9.1987, the State Consumer Advocate petitioned the (ThousandsofDohrs) PSC to require SCESC to make additional reductions in its retail electric Operating revenues S 787.796 $318.856 S 3.689 St.110.341 rates based on data for the year 1986 to reflect the reduction of tax ex-pense resulting from provisions of the Tax Reform Act of 1986. %e reduc-Operating expenses, tions previously authorized by the PSC in January 1987 were based on the excludingdepreciation andamortization 528.773 289.868 - 7.203 825.844 results of operations for the year er-t .l December 31.1985 (see Note 2A) Depreciation and Be Company intends to file the opdated data as soon as it becomes amortization 77.658 9.033 208 86.899 available The State Consumr. Advocate also requested that the PSC.after Totaloperating expenses 606.431 298.901 7.411 912.743 opportunity for heanng. isne its rule to show cause why the PSC should n torderareductionintf eCompany'sauthorizedrateof retumoneq-Operatingincomellossi S 181.365 S 19.955 $13.7221 197.598 uity, cost of debt. cost of peferred stock and overall authonzed rate of Add -Otherincome.riet 15.721 retum. %e Company onnot presently predKt whether the PSC will issue Less-Interest charges 83.218 its rule to show c-u conceming the rate of retum
-Preferred stockdividends 16.54I On N , uary 18.1987,SCESG issued and sold $100.000.000 pnncipal
$ I13.560 amount of First and Refunding Mortgage Bonds 844% Series due Febru-Netincome ary 1,2017.nese bonds are part of $200.000.000 pnnapal amount of Capital expenditures' SCESCs First and Refunding Mortgage Bonds registered under the Secu-identifiable S 97.525 S 24 091 S 609 S 122.225 nties Act of 1933. pursuant to Rule 415. under a Registration Statement Utilaed for overall Company operations 6.282 whichiseffectiveJuly 1986throughluly 1988 wal S 128307
- 12. QUARTERLY FINANCIAL DATA (Unauditedh identihableassets at ,,,,
December 31.1985. Utility plant. net S203.060 S 2.159 nre W Wrd Fourth
$1.988.372 S2.193.591 0"* " 0"* " 0"*" "" ^**
Inventones 51.356 7.337 298 58.991 Total S2 039.728 S210.397 S 2 457 2.252.582 ses i $30s.445 $247.363 $2s9.857 $263.371 S1.102.036 Assets utilced for overall Company operations 291.117 W 62.920 39.240 19s.716 (000: 56.010 40.546 Netincome q000) 34.343 23.922 41.942 21.957 122.164 Totalassets 52.543.699 Earnings pershare of common stock 1984 as reported .e5 .59 1.04 .55 3.03 Electnc Gas Transit Total 1%usands otDoCars 1985 Operatmg revenues S 746.745 S378.491 S 3.178 S t.128 414 First second Third Founh ouana cuann cuaner ouann Annual Operatingexpenses. excluding depreciation Totaloperating 854 204 revenues t0001 $3:1.440 $251.487 $282.733 $264h81 S t.i t0.34 and amortcation 506.747 341.602 5.765 operaong Depreciation and 45.938 ea788 3eJ05 n7w inc met 000: 54.707 amortuation 67.173 7.544 197 74 914 39A35 17.555 il3.5e0 Net tncome t000: 32.064 24.100 Totaloperating expenses 573.920 349 236 5 962 929.118 Eamings pershare Operatingincomelloss) S 172.825 S 29.255 S(2.7841 199 296 poned A0 eo .99 .43 282 Add -Otherincome. net 17.647 Less-Interest charges 78.248
- Preferred stock dividends 16.877 Net income $ 111.818 Capital exper'ditures identifiable S 259.208 $ 20402 S 504 S 280.114 Utilaed for overall Company operations 3.405 Total S 283.519 Identifiable assets at Dnember 31.1984 Utility plant. net $1.992.206 Sl8o.077 S 1.820 $2.182.103 Inventones 40227 7.783 281 48.291 1 ta! S2 032.433 S195 860 $ i.101 2.230.394 Assets utihzed for overall Company operations 269.300 Totalassets $2 499.694 42
Common Stocklnfonnation 1986 1985 4th 3ni 2nd Ist 4th 3rd 2nd ist Otr. Otr. Otr. Otr. Ott Otr. Otr. Otr. Price Ran8e:(a) High 39-74 42-7/8 36-l'4 33-l/4 28 28-13 28 23-7.3 1.cw 36 34-l/2 31-l/4 27-l/8 23-73 23-33 23-7 3 22-1 3 DMdends PerShare: 1986 Amount Date Decliared Date Paid FirstQuarter $.56 January 22,1986 April I,1986 Second Quarter .56 Apr823,1986 July 1,1986
" third Quarter .56 July 23,1986 October I,1986 Fourth Quarter .56 October 22,1986 January 1,1987 1985 Amount Date Declared Date Paid FirstQuarter S 54 lanuary 23.1985 Apnl I.1985 SecondQuarter 54 Apnl 24.1985 July 1.1985 ThirdQuarter .54 luly 24.1985 October 1.1985 Fourth Quarter .54 October 23.1985 January 1.1986 December 31.
1986 1985 Numberofcommon sharesoutstanding 40,2 % ,147 40.296,147 Nurnberof common stockholders of record 51,738 57.439 The prinapal market for SCANA common stock is the New York Stock Exchange istock symbol-SCG) (a) As reported on the New York Stock Exchange Composite Listing. 43
Management's Discussion and Analysis of Financial Condition and Results of Operation UOUIDITY AND CAPITAL RESOURCES RESULTS OFOPERATIONS The capital needs of the Company arise primanly from the capital Eareasand N requirements of SCE6Cs operations and construction program. Because Eamings per share of common stock hsed on the weighted average rates for regulated services are based on histoncal cost amounts. to the number of shares outstanding). the percent increase (decrease) from the extent inflation occurs and rates are not appropnately adiusted on a previous year and the rate of retum eamed on common equity for the timely basis, the Company's regulated subsidianes will not be allowed an years 1984 through 1986 were as follows-opportunity to recover the costs of prcmding services. Therefore. the 1986 1985 1984 Companys future finanaal position and results of operations could be Eamings pershare $3.03 S2 82 S3 05 impacted by any future inflationary trends The abihty of the Companys regulated subsidianes to replace Percentincrease(decrease) ineamings pershare 7.4% (7.5%) 33 2 % existing plant investment. as well as to expand to meet future demand. will hkely depend upon its abihty to attract the necessary financial capital Retum eamedoncommon on reasonable terms The abihty to attract such capital could. in tum. equity (year-endi 14.6 % 14 1 % 15 7 % depend upon the subsidianes' abihty to obtain adequate and timely rate Eamings per share increased from 1985 pnmanly as a result of higher rehef. electric energy sales related to the 1986 summer heat wave. lower interest Continued growth in the Companys non-utihty operations. along charges and reduced dividend requirements on preferred stock assocated with future economic expansion throughout the utihty service temtory. with the early redemption of two issues of SCE6Gs preferred stock (see could have a positive impact on total Company eamings The pnmary cash requirements for 1986 were. and as estimated for Note 6 of Notes to Consohdated Financial Statements). The decrease in eamings per share for 1985 was pnmanly 1987 are.as follows attnbutable tothe recordingof a nonrecumng gain of 20c per share in 1987 1M6 March 1984 (see Note 2Cof Notes to Consol. dated Financial Statements) (ThousadofDouars) and a decrease in AFC (see discussion below) and decreased sales of Construction expenditures exduding natural gas in 1985 in addition to the nonrecumng gain recorded in 19M allowanceforfundsused dunng the increase in eamings per share dunng 1984 reflects various rate constructon(AFCI S156.790 $125,090 ' increases placed in effect dunng 1984 and 1983 and improved electnc and Nudear fuelexpenditures 25.529 15,806 naturalgas sabs Matunng obhgations, redemptions and AFC is a utikty accounting practice whereby a portion of the cost of sinking and purchase fund reqwrements 18 000 144,477 both equity and borrowed funds used to fmance construction (which is shown on the balance sheet as construction work in progress)is Total $200.319 $285,373 capitahzed Both the equity and the debt pomons of AFC exduding nuclear fuel, are noncash items of nonoperating income which have the Dunng 1986.approximately 57 3% of total cash requirements were effect of mcreasing reported net income by their full amounts AFC provided from intemal sources as compared to 897% in 1985 Extemal excluding nuclear fuel, represented approximately 2% of Eamings funds for 1986 were provided through the issuance of $782 milhon short- Available for Common Stock in 1986 and 1985. decreasing from term comrnercial paper and the sale of S l .1 milhon in tax-exempt annual approximately 95 for 19M The dedine in AFC reflects a reduction in tender pollution control fachties revenue bonds construction expenditures pnmanly relating to the V. C Summer Nuclear The Company antiapates that 1987 cash requirements will be met Station completed and transferred to plant in service in 1984 pnmanly through intemally generated funds, short-term borrowings and The Company also records carrying costs (includmg equity retum ) the sale of commeraal paper Actual 1987 construction and nuclear fuel assoaated with the production investment. net of accumulated expenditures may vary from the estimates set forth above due to factors depreciation. relating to 400 MW of electnc canerating capaaty removed such as inflation and economic conditions. regulation and legislation, from rate base as a result of a March 2.19M rate order of the PSC (sw rates of load growth. ermronmental protection standards and the cost Notes ! E and 2B of Notes to Consolidated Financal Statements) Total andavailabihtyofcapital- canying costs. a noncash item included under "Other income ~ as On February I 8.1987. SCEGG sold $100 million prinapal amount of Deferred retum on plant investment". are being deferred for recovery over First and Refunding Mortgage Bonds. 8441.Senes due February 1. 2017 some future penod and represent approximately IW I 1% and 7b of for net proceeds of $98.078.000 The net proceeds were used to repay a hke Eamings Available for Common Stock for the years 19% 1985 and 1984. amount of short-term indebtedness outstanding at the date of sale Such N short-term indebtedness had been incurred to prepay or pay at matunty ianuary 1987,the Companys Board of Directors raised the long-term debt and to redeem preferred stock dunng 1986 quarterly cash dividend on common stock to 58 cents per share from 56 SCEGG presently has in effect a shelf registration statement under cents per share The increase. effective with the dmdend payable on Apnl which it can issue an additional $100 milhon of First and Refunding 1. i%7. raised the indicated annual dmdend rate to S2 32 per share. up Mortgage Bonds Whether additional secunties will be sold and the from $2 24 The Company has increased the dmdend rate on its common timing and amount of such sales will depend pnmanly upon market stockin34of thelast35 years conditions and other factors in existence at the time For information relating to operations of the Companys subsidianes l see 1986 Year in Review beenning on page 6 l 1 i 44
Operating Revenues Operating Expenses Revenues from the sale of electric energy increased $217 million inceases (decreases) in operating expenses, exduding taxes, are (28%) and $41.0 milhon (5.5%) for 1986 and 1985. pnmarily as a result of presentedin thefollowingtable: increased kilowatt-hour consumption by residential and commeraal customers Theincreasedconsumptionwaslargelyduetotheadditionof 10.584 (31%) and 12.539 (38%) residential customers and 2.092 (44%) I"{'" , ,,
**I and 2287 (50%) commercial customers during the respective peiiods. The Classification 19s6 1985 increases in revenues were partially offset by revenue adjustments relating to changes in the cost of fuel.which is a component in electne (MdiensofDalars) base rates if actual fuel costs are higher or lower than those projeaed. the differences are recorded as increases or deceases, respectively, in Fuelusedin electric generation St 13.2) S $5 operating revenues _ Power purchased. net 6.0 (11.5)
Gas purchased fonesale (3&S) (42 5) On lanuary 21.1985, the Company established a record peak demand for electnaty of 2.703 MW. surpassing the previous record of 2.700 MW set on August 22.1983. Dunng 1986, the Company's peak y'**Q"d, '"'"C' n N $ demand record was broken four times. Record peaks were set on lanuary Total S425.7) St!741 27ard January 28 as a result cfunusually cold temperatures. On luly 8 1986. in the midst of one of the state's worst heat waves in nearly a The decease in Fuel asalin ektrr genera: ion expense for 1986 was century, the record fell again and on luly 9 the all-time peak demand of primarily attnbutable to a reduction in the average cost of fuel bumed 2.853 MWwas set. ($145 versus S t .63 per million BTil in 1986 and 1985. respectively). Increases (decreases) in electnc customers and megawatt-hour pnmarily attnbutable to nuclear fuel The increase for 1%5 was due (MW) sales volume c3 classes of customers are presented in the following primarily to increased generation as a result of greater customer demand table. The increase in Powrrurchasat net for 1986 was largely due to decreased sales of electnaty to other utihties lhe decrease for 1985 results pnmanly increaseIDecrease)From PnorYear from increased sales of electnaty to oli er utilities The decreases in Gas customers volume (MW) purdiasaikr resair expense for 1986 and 1985 reflect reductions in the cost Class 4 cation 1986 1985 1986 1985 of gas purchased from the Companys suppliers The decrease in 1985 was also partially attnbutable to an overall decrease in consumption of Residential 10.584 12.539 434.464 113.424 natural gas. Ot/itr ora:en and niaintenance expenses for 1986 increased Commercial 2.092 2.287 233.748 220.986 primanly because of the settlement of certain claims relating to injunes and damages and moderate inceases in other administrative and general i Resale ( ) other 43 expenses, induding pension expense (see Note I-I of Notes to 45 22.765 23.503 Consohdated Financial Statements) The incease for 1985 was largely due Total 12.701 14.850 663.245 450.993 to additional operation and maintenance costs associated with the commeraal operation of Summer Station. as well as increased electric Revenues from the sale of natural gas deceased $294 milhon (92%) distnbution maintenancecosts increasesin Derrauton andanortcatien expense f r 1986 and 1985 reflect additions to plant m service. including in 1986 and 5596 milhon (158%) in 1985.The deaeases in revenues were pnmanly attnbutable to reductions in the cost of gas purchased from the Summer Station and the Wihems Station coal conversion in 1984 Company's suppliers, which are passed along to customers through a Interest Charges purchased gas adjustment clause, and deceased unit sales to industnal Interest on long-term debt decreased $156 million in 1986 and SI 9 customers These unit sales deceases, approximately 7.7% and 131%. million in 1985 compared to the respectrve previous years The deceases respntively. were mainly the result of increased competition from lower-pnced attemati.e fuels used in certain industrial markets' in 1986 and 1985 result pnmarily from redemption. prior to matunty. of SI 4 I I m lhon (12.15% Senes. due 2010) pnncipalamount of First and increases (deceases) in gas customers and decatherm (DT) sales Refunding Mortgage Bonds in February 1986. 560 million pnnapal volume by classes of customers are presented in the following table: amount of the 15-1/2% Guaranteed Notes of South Carolina Electric & Gas increase (DeceaselFrom PnorYear Finance. N V. in Apnl 1986. S6625 milhon l 16% Senes. due 201 I) and $8.3 Customers volumeiDil milhon (15-54% Senes, due 1987) prinapal amount of First and Refunding Mortgage Bonds in March and May.1985. respectively. Ckss6 cation 1986 1985 19s6 1985 Other in* rest expense inceased 540 million in 1986 and deceased Residential 1.442 1.148 487,447 (I.566.150)
$2 I million in 1985 compared to the respective previous years The Commercial 532 290 207.888 (743.252) increase in 1986 reflects the increase in short-term borrowings during the Industnal (35 9 (2.353.490) 14.614.441) year.The decrease in 1%5 was pnmanly the result of interest expense Sales for Resale - 1I 4.124.761 (2.060.547) recorded in 1984 which was associated with htigated revenues that had Tot'a l I939 1.458 2.466.606 (8.984.390) been collectedsubject torefund 45
Selected FinancialData 1906 1985 1984 1983 1982 1981 1976 FortheYears Ended December 31. STATEMENTOFINCOMEDATA (Thousands # Do&zrs tunt statistrs and pr snare amounts) Operatir2 Revenues: Electnc $ 809,488 S 787,796 $ 746.745 $634.127 5574.113 $555.716 S275.892 289,429 318.856 378.491 337.282 266389 188.167 71.948 Gas 3,119 3.689 3.178 3.242 2.603 2.429 1.996 Transit 1,102.036 1.110341 1.128.414 974,651 843.105 746312 349.836 TotalOperating Revenues OperatingExpenses 223.768 260381 214.617 234.243 116.892 Fuelusedinelectricgeneration 216.076 229.249 215,928 246.760 289.212 277.091 220.502 154.502 44.789 Gaspurchased forresale 187,448 135374 147.840 118.519 52.473 Otheroperation and maintenance 209.629 195.031 90,627 86.899 74.914 45.000 43.406 39.691 27.825 Depreciationandamortcation 89,049 171,060 154.804 153.776 106.932 77.033 48.724 Taxes 903,320 912.743 929.118 824 778 703398 636.004 290.703 TotalOperating Expenses 199.296 I49.873 139.707 110308 59.133 Operatingincome 198.716 197.598 9,825 15.721 17.647 11.571 5.230 21.095 24.522 Tota!Otherincome Income BeforeInterestChargesand 208,541 213319 216.943 161.444 144.937 131.403 83.655 PreferredStock Dividends 83.218 78.248 57.50r: 57.121 55.520 39.839 Totallntered Charges. Net 71.934 PreferredStockCash Drvidendsof 16.541 16.877 17,186 16371 14 245 9.169 Subsidias 14.443
$ 122,164 S 113.560 S 121.818 $ 86.752 $ 71.445 $ 61.638 S 14 647 Netincome Weighted Average Numberof Common Shares Outstanding (Thousands) 40.2 % 40.296 39.900 37.844 34 387 28.I39 I7.547 Eamings PerShareof Common Stock $3.03 52 82 $305 $229 52 08 $219 51 97
$2.24 S2 16 $205 S2 00 $192 51 82 SI 52 Dividends Declared Per Share of Common Stock Percentof Operatmgincome(loss)
BeforeincomeTaxes. 93 92 87 93 98 101 88 Electnc 9 10 15 10 5 2 15 Gas Transit (21 (21 (21 (31 (31 (3) (31 46 d
December 31. 1986 1985 1984 I 83 1982 1981 1976 BAIANCESHEETIMTA (Thousands # Do&us tugt statistics and gr share amou nts) Gross utiltty Plant $2,959,494 $2.859.117 S2.764.809 $2.509.581 $2.411.479 S2.131.689 St.300.780 Total Assets $2,575,332 S2.543.699 S2.499.694 $2.358.134 $2.202.755 $1.958.772 $1.171.630 TotalCapita! cation $1,725,935 St.769.952 $1.8$5.252 $1.685.990 $1.703.860 S!.478.391 S 971.493 CommonSharesOutstanding (Year-End)(Thousands) 40,296 40.296 40.296 38.728 36.52o 29.690 17.834 BookValue Per Shareof Common Stock (Year-End) $20.77 $2001 S19 31 $1833 $1805 S18 39 $17 !! OTHERSTATISTICS Electnc Customers (Year-End) 406,511 393.810 378.960 366.424 356.709 350.5 % 312.617 Sales (Million KWH) 33,704 13.041 12.590 12.063 II490 11.763 10.318 Residential-Averageannualuseper customer (KWH) 12,82I II.992 12.061 12.009 !!.712 12.183 11.320 Averageannualrate per KWH $.0759 S0774 50757 S0642 S0637 50577 S0361 GeneratingCapabdity-Net MW (Year-End) 3,890 3.959 3.959 3.359 3.359 3.359 2.852 Temtonal Peak Demand-Net MW 2,853 2.703 2.5% 2.700 2.463 2.557 f.994 Cas: Customers (Year-End) 192.941 191 002 189.544 187.638 186.320 169.294 161473 Sales (ThousandTherms) 671,881 647.215 737.059 671.429 590.257 493.305 490.830 Residential. Averageannualuseper customeritherms) 548 524 618 610 570 665 767 Averageannua! rate pertherm $.68 $ 67 $ 69 S 65 S 56 S 49 S 23 Transit: NumberofCoaches 117 122 123 112 104 104 % RevenuePassengers Carned(Thousands) 8.699 9.032 9.658 9.744 10.720 10.820 8.915 I 47 }
ImestorInfonnation Corporate Headquarters SCE6CPreferraf Stock: PalmettoCenter South Carolina NationalBank 1426 Main Street SecuritiesTransferServices Columbia.SC 101 Greystone Boulevard Telephone:(803) 748-3000 Columbia.SC 29226 6 MallingAddress TransferAgents SCANACorporation Common Stock: Columbia,SC 29218 South Carolina NationalBank SecuritiesTransferServices h nd h M W G Boulevard The common stock of SCANA Corporation hlu ' is listed and traded on the New York Stock Manufacturers HanoverTrust Company Exchange. The ticker symbol is SCG.The StockTransfer Department - 8th Floor corporate name SCANA is used in newspa-450 West 33rd Street perstocklistings. The 5% series cumulative preferred stock of NewYork.NY 10001 SCESGisalsolistedand traded on the SCESGPreferredStock: New York Stock Exchange. The ticker sym- South Carolina NationalBank bol is SAC Pr; the newspaper listing is SecuritiesTransferServices SCrE pf. 101 Greystone Boulevard Columbia.SC29226 DMdend Payment Dates Quarterly dividends on common stock are The Chase Manhattan Bank. NA normally payable on the first day of Janu- StockTransferDepartment ary, April. July and October to stockholders P.O. Box 469. Washington Bridge Station of record on the loth day of the month pre- NewYork, NY 10033 a ngAgent D vider o sp ferredstockare paid quarterly on the same dates as the
~
Bo d ' common stockdividends. Manufacturer's HanoverTrust Company DMdend Reinvestment Plan Corporate Trust Department- 10th Floor SCANA offers a Dividend Reinvestment 600 Fifth Avenue and StockPurchas e Plantoitscommon NewYork.NewYork 10020 stockholders of rexard. A Proso&tus, Au-InvestorCommunicaticns thorization Form and retum envelope are Interim reports providing updated financial automatically mahd to all new stockhold- nformation and Company news are sent to ers. For further infoimation or for questions stockholders with each dividend mailing A aboutyourreinvestr entaccount.writeto copyof SCANA's Annual Report on Form the investor Relations Department (054) at 10-K (as filed with the Secunties and Ex-the Company's maihngaddress. change Commission) and the Statistical Stockholderinquiries Supplement to the 1986 Annual Report are Questions conceming dividend accounts available to stockholders and others with-or related stockholder matters should be out charge Inquiries conceming activities directed in writing to the Investor Relations of SCANA Corporation and requests for Department (054) at the Company's mail- publications should be addressed to H ingaddress lohn Winn. III. Manager-Investor Services (054) at the Ccmpany's mailing address g Deloitte Haskins& Sells Analyst's Contact Certified PublicAccountants H lohn Winn,!!! 1426 Main Street. Suite 820 Manager-InvestorServices Columbia.SC 29201 Telephone:(803) 748-3240 Recordkeepingand Paying Agents investors' Association Common Stock: For information about this organization's Tlus report is issual solefy & thepu poseof praeg in-
&maten it is not mtemfaf & usein connaten wh any SCANACorporation activities. wnte to Association of SCANA sair orpurchase of orany scharation of c(crs to fmy or Stockhc ' der Records Department (054) Investors.c/oMr PaulQuattlebaum.ir..
Columbla.SC 29218 63 East Bay Street. Charleston, SC 29401. seft any sauntrs 48
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