ML20246Q078

1997 Annual Financial Rept for Sceg

ML20246Q078
Person / Time
Site:	Summer
Issue date:	12/31/1997
From:	SOUTH CAROLINA ELECTRIC & GAS CO.
To:
Shared Package
ML20246Q067	List: ML20246Q069 ML20246Q078 RC-98-0094, Forwards South Carolina Electric & Gas Cos 1997 Annual Financial Rept & South Carolina Public Service Authoritys 1997 Annual Financial Rept
References
NUDOCS 9805040454
Download: ML20246Q078 (45)

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e r The Faces of Santee Cooper As the face of the electric utility industry changes due to increased competition, improvements in technology and the approach of deregulation, the face of Santee Cooper is also changing. We are operating more efficiently, improving customer service and reducing costs. We are committed to serving the daily needs of our customers, the communities we serve, and in maintaining Santee Cooper's value as one of South Carolina's most impor-tant energy and economic resources. Through the dedicated and resourceful efforts of our employees, we are planmng to compete successfully in this changing electric utility environment and preparing to meet the challenges of the new millennium. In this report, we are pleased to share the perspectives of a few employees who represent the more than 1,600 involved in helping shape our future. Through their comments and in their faces, you will see the determination, commitment and energy that shape the character of Santee Cooper. As Santee Cooper faces the future, these faces represent the future of Santee Cooper. 1 Table of Contents Corporate S tatistics.................................................................. 2 Comparative Highlights........................................................ .3 Ex ecutive Report...................................................................... B Energy 5 ales........................................................... 13 Year in Review....................................................................... 14 Glossary o f Terms.................................................................. 2D Financial S ta temen ts.................................................................... El Finance-Audit Committee Chairman's Letter....................... 39 Board o f Directors................................................................. 40 Advisory Board E Management.............................................. 42 Schedule of Refunded Bonds Outstanding.......................... 43 Schedule of Bonds Outstanding. ................................... 44 On the cover from top to bottom: Lonnie Carter, along with Jim Munroe, Joanie Teofilo, and Bill Rust (in the back-ground), work in the boardroom at The Energy Authority in JacksonviPe, Florida. This new, joint venture between Santee Cooper, the Municipal Electric Authority of Georgia, and Jacksc,nville Electric Authority will market and sell excess generating capacity. Karyn Van Deusen and Dee Dee Williams in the Garden City Customer Service Center work to provlde excellent customer service as evidenced by Santee Cooper's 98.4 percent customer satisfaction rating. The Santee Cooper Regional water System provides water to some 75,000 Lowcountry residents. As an employee of the water plant, Jill Kennedy works daily to make sure high quality water is sent down the 26 miles of transmission pipelines. Santee Cooper has approximately 4,100 miles of transmission lines that cross three-quarters of the state of South Carolina. As a line technician, one of Paul Garrett's responsibilities is to ensure the reliability of those super highways for electric power. Forest Technician James Bridge is one of the Santee Cooper employees who helps manage our environmental resources. Santee Cooper's environmental pledge is: Protec-tion and improvement of our environment are equal in importance to providing afford-able electric energy. Jefferies Hydroe!ectric Station first generated electricity on February 17,1942. With employees like Unit Operator James Clark, this facility will continue to generate power for many years to come.

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r <-),' The Faces of Santee Cooper ., As the face of the electric utility industry changes due to increased competition, knprovements in technology and the approach of deregulation, the face of Santee Cooperis also changing. We are operating more efficiently, improving customer service and reducing costs. We are committed to serving the daily needs of our customers, the communities we serve, and in maintaining Santee Coopers value as one of South Carolina's most impor-tant energy and economic resources. Through the dedicated and resourceful efforts of our employees, we are planmng to I compete successfully in this changing electric utility environment and preparing to meet the challenges of the new millennium. In this report, we are pleased to share the perspectives of a few employees who represent the more than 1,600 involved in helping shape our future. Through their comments and in their faces, you will see the determination, commitment and energy - that shape the character of Santee Cooper. As Santee Cooper faces the future, these faces represent the future of Santee Cooper. 1 Table of Contents l Corporate Statistics............... ... 2 Comparative Highlights................. ........... 3 Executive Report.. ................................... B Energy 5 ales.......................... ........................ 13 Year in Review............................... ... 14 Glossary of Terms.... ................ 20 Financial Statements.. .......... El Finance-Audit Committee Chairman's Letter... ..... 39 Board of Directors........................... .................. 40 Advisorg Board IE Management.......... .......... 42 Schedule of Refunded Bonds Outstanding................. 43 Schedule of Bonos Outstanding............ .............. 44 On the cover from top to bottom: Lonnie Carter, along with Jim Munroe, Joanie Teofilo, and Bill Rust (in the back. ground), work in the boardroom at The Energy Authority in Jacksonville, Florida. This new, joint venture between Santee Cooper, the Municipal Electric Authority of Georgia, and Jacksonville Electric Authority will market and sell excess generating capacity. Karyn Van Deusen and Dee Dee Williams in the Garden City Customer Service Center work to provide excellent customer service as evidenced by Santee Cooper's 98.4 percent customer satisfaction rating. The Santee Cooper Regional Water System provides water to some 75,000 Lowcountry residents. As an employee of the water plant, Jill Kennedy works daily to make sure high quality water is sent down the 26 miles of transmission pipelines. Santee Cooper has approximately 4,100 miles of transmission lines that cross three-ciuarters of the state of South Carolina. As a line technician, one of Paul Garrett's responsibilities is to ensure the reliability of those super highways for electric power. Forest Technician James Bridge is one of the Santee Cooper employees who helps manage our environmental resources. Santee Cooper's environmental pledge is: Protec-tion and improvement of our environment are equal in importance to providing afford-able electric energy. Jefferies Hydroelectric Station first generated electricity on February 17,1942. With employees like Unit Operator James Clark, this facility will continue to generate power for many years to come.

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• , 'Salitee Cooper is South Carolina's State-Owned Electric and Water Utility Construction on the utility project I

began on April 18,1919, with the first l l electricity generated on February 17, 1942 from the Pinopolis Power Plant, l (renamed Jefferies Hydroelectric i Station in 1966), a five-unit hydroelec-tric facility near Moncks Corner. Santee q Cooper generates the power distributed by 15 of the state's 20 electric coopera-tives to more than 390,000 customers loccted in 38 counties, supplies power to 331arge industries, which indudes one x ~m . ;.m milit.~ary 15hhlla, tion in Chirieston,' S.C.y J;f[ N. s ;.. Y d[ w Ppalities of Bar'nbSrg a~n.-d Georgetown.' ', < 4. l m nx -. m ,4

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.. a 1 'Jg}e. ntee Coopei'also serse.s the mu..nici is.,, -"q a.- ~.. 0 4 n-' .65antee ' Cooper also serves over 110,000 retail customers in Berkeley, '[! = Georgetown, and Horry counties. ^ h" ^ ' in addit *;n to its original hydroelec- . Q ',[ ^ ' / s

tric station, the utility has f6ut arge-scale, l

, F 4*,*. W , "t s > coal-fired generating statibns1n South , j Carolina: Jefferies Station in Moncks 'j Corner, Cross Station in Cross, Winyah qpff f ,z ^ Station in Georgetown, and Grainger 'O 1Q 5tation in Conway. Santee Cooper also has combustion 4"Q turbine-peaking units at Myrtle Beach, F and on Hilton HeadIsland, and a small g hydroelectric unit at the Santee Dam. 4 The utility has a one-third owner- ~k 3 ship in the V.C. Summer Nucleaf T '7 V Station near Jenkinsville. g"f in October 1994,the Santee Cooper 7 Regional Water System began com- \\, ; mercial operation.This signaled a new \\ Nf era in Santee Cooper service to South y 'h"y Carolina. The citizens of Moncks - ,6 E'". j g. Corner, Goose Creek and Summerville, f 9q.. a( b[ A u and customers of the Berkeley CountyS-37*. r 7 Water & Sanitation Authority are the. Y l f

6 beneficiaries of th,is stable supply of one j

of life's most precious commod; ties. !m .f y Santee ~ ? 4

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r Corporate Statistics ,~,e Idisarukw Yeah - M7 F7Mi 895 M4 m3 W~ W

c:vmer nwy ' esn nwr~mWWW"mT1 y[ n.W " :r w + m 7 7 w m y:

696,026 6 640,361 605,230.. C 592,810 :. p Total Electik Revenue un thouunds of donan)- i 724,211 1 3 pU. j a. g N239) ;

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l(253) [(102)'( y ; ;;ij [ Interdepartmental 5 ale [of Electncityand W5ter j e .. ; ',. O f .w . ; a 727,834{ P ;699,606 i f 643.838 ; / 605,656 } ($92,810 L 4 [ Total operating Revenues On thousere of dollars). e ~ ) + l n. d [{Sumtid Lieu of Taxes Charged' to Operations On thomands of dollarsF ,2,203 y s1,928; p E 1,929.- / 2,235 ; < ? 3,643 ? ], t ,ating Revenues Available ' ..~d. .? O Not ' w 1 322,673 i - 6 284,364 /.J245,497.b i243,527) j f;for Servke Gn thousard of dolters) L. . 317,940 " 4 c-o I t s s E 14,724 Y ~ 14,601 Rd [ EneY Sales On gigawatthounI

18,437j y 4,549 16,022 e' 17 7

m .,c .i,.... s ~~. .;. ~ ;] 1 .L .i. p ..e _-y c' y _:.... - s d, i Total;s g-F c.114,328 W ',. 106,024' i103.893 [ =-99,818, r; 96,706 ' ] 3 ,-a4+ .g gy u 3'I' '.~,' ' l,s I' _ ~ ^ ' '.f -N '. ., ;. _.. s? ' I y M..O .. z. ' e ~. ( Power Requirements and Supply On gigawatthours) c 'f p a s 7 K.., g 6 ~y p ; Generation: 3 g i M, h Hydro J tt.

520e

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595L 25271 1508 - '?

U ' c3 h [f Steam ,t A - grew E ~ .15,401 l 114,501) ?12,782f : 12,533, !11374bl s 'f M h i - V Combustion Turbine J7 - :3. 6 c10 .4 -l y. A: q m y N, A U {. b Nudear? .2,412,

2,375 i.

2,515.G, d476 6 2,030 p,]4 q

1 a n, m; s -u: mab. iv w 4 )' / {,[thdwrs Net interchanges, etc@ On gigawatthours)

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o 4 g3,102.' W"( 2,931 : m 2,655 ' _ L ms, l perritoria' Peak bemand On omgawatts), , 31,3364 3,44_1; 4Loue.m:a ,awAs -.xm alt,,m u u.h., at.ws.m h.e. ush.h (1) Begmning m April 1994,tranchise fees are nolonger shown as reJenues and edpenses Amounts accrued for payment '

a' to the municipal < ties totaled $2,168.000 for 1997, $2.237,000 far 1996, $2.123.000 tot 1995 and $1.488.000 for 1994 4

(2) Does not mclude non firm sales to other utilities. 'q " i 7. f

13) Begmnmg in 1994 and restated fot 1993 sales to other utdtties are shown as operstm0 revenue and mcluded m kdowattg e

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Comparative Highlights l ~ 199En % [.hmu_ge [dieswidr Yea er A997' s 3 p y ?,y;, w m m yy y ~ m a p y w y w y er w -,ne w m g m c_q p ry.v w m

k. PbtARCISI Sn thousensk of deEen) $ _6 : '

' UND is e g- {T.... -e t otalExpenses&InterestOwges ..is .,4: u WI) f glf!__'L'.1 t 2 668,856 S t5.c3 , 701,279 : 1 m _-{ ~ ' s.% y.l :_, g' ; c. ..,',. l j t,, y. 18 g : Reinvested Eaminis 1i;;' .y. .t v 3' :.,,..179) : M. $ i - 13,723 /, s ' $ V 65,946 6 ~ g 9 i [* ' _ ~ -.,.. :_- , ; y _ } .[' y h,,,g ~, ' ~ ~ g .wg[ h] .. ;x..;,... .y ._h;,. fRetadOsth$emd -- _ h': ' J 114,290 : .It07,986E N $6 ] I g .g 's .t. ITerritdiEPeh Demand On megawam)Y I 3,336 5 . E3,441.: 3): N W k u.L s G n u s k :a u i w M aa& G l >a.la, w a l d a M & a u a;a n u m;(d L.2 $% MS kt 4 jd 01/ $ 1 ,e '4 ~ -

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know as soon as. uw know it. " W p ..;.i,... ,e I' Sherry C. Becker Customer Services Representative g Myrtle Beach

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l Executive Report The face of the electric utility industry is sescion, five restructuring bills, addressing changing daily with increased competition deregulation, were introduced. Of the two l ll and the steady approach of deregulation. bills in the S.C. House and three in the S.C. l l ll l Already, more than a dozen states, including Senate, most of the attention was directed to l ll California, Illinois, Massachusetts, Arizona, H.R. 3414, the South Carolina Competitive l l l l l p Montana, Nevada, New Hampshire, Maine, Power Act. ll Oklahoma, Rhode Island and Pennsylvania, The proposed measure was assigned to l ll,l have enacted legislation mandating retail the House Labor, Commerce and Industry ll l l hl ll choice by a certain date. Committee, and the Public Utihty Subcommit-l l lll hlll Santee Cooper has focused its efforts tee was formed to address the bill. Statewide l l ll over the past year on increasing productivity heanngs were held throughout the spring l ll l and operating efficiency, improving customer and summer. The general consensus of public service and reducing costs to successfully compete in this changmg electric utility [ k. 3q 1 environment. ' gqg "B ' gj 1 We have innovatively expanded our l wholesale power marketing efforts, secured long-term contracts with some of our largest customers, paid off debt ahead of schedule, ]' increased the output of our generating j facilities and supported vigorous grovah of our retail and wholesale customer base. At the same time, we have completed ahead of schedule the implementation of our Activity-Based Management Financial i Information System. Coupling this system with the soon to be completed Work Man-agement System, the Electric Distribution r Information System, and the Transmission Electric Facilities Information System will allow us to operate more economically in a Jof"'5 88'""> competitive, market-based economy. i 3 These goals have been accomplished input relating to proposed deregulation through the dedicated efforts of our employ-echoed the familiar expressions, "Go slowly," ees who have worked harder and smarter and "It's not broken, don't fix it." , s and helped move Santee Cooper forward in With the future of electric utilities I j positioning itself as one of South Carolina's uncertain in general, the positive perception more important energy and economic of Santee Cooper by top Wall Street bond resources. rating agencies is encouraging. In October, ) The electric utility business has re-Standard & Poofs upgraded $2.3 billion of mained substantially unchanged in South Santee Coopers long-term revenue bonds Carolina for more than SO years. However, from A+ to AA-with a stable outlook. "The that is changing. In the 1997 legislative rating upgrades for the quarter were a result

l of the gradual widening between the well-more than $32 million over what would have l positioned utilities and their weaker counter-been the life of the bonds. In addition, the parts," stated the October 13 issue of S&P's 1997A Refunding Bonds resulted in savings Credit Week Municipal. of approximately $22 million over what S&P further stated, "I'he upgrade reflects would have been the life of the refunded Santee Coopers donunant rate advantage over bonds. And, an economic defeasance j the long term. Moreover, Santee Cooper is resulted in debt service reductions of ap-l recognized by the industry to have an excellent proximately $35 million. l management team, a crucial component in a Electric utilities, termed the last real competitive environment. Management repeat-business monopoly in the United States, l edly has proven itself as a forward thinker." appear poised for a fundamental change Santee Coopera bond rating as assigned beyond expenmentation and pilot projects. It is tremendously reassuring that Santee "~ 'l Coopers prudent business practices are

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.. g recognized in the face of that change. What South Carolina and Santee Cooper have to offer must be working well for the ~ ~ - benefit of our state and the areas we serve. Economic development in the state of South Carolina continues to flourish. No doubt low I electric rates contribute to this success. I Santee Cooper offers the lowest industrial rates in the state. According to the Charleston [ - (- Regional Development Alliance, South Carolina has the lowest industrial electricity f y;e rates in the Southeast. ff ,Yk In 1997, companies invested $811 2 million m capital in their facilities located in J Santee Coopers direct service territory of fr Berkeley, Georgetown and Horry counties. 'w T. Graham Ed6wds For South Carolina,1997 was the third consecu-s 3g' tive year that the state exceeded the $S by Fitch Investors Service Inc. remains at AA, billion mark in new capital investment. Of while the rating from Moody's Investors that $S billion, $1.7S billion was for invest-Service Inc. stands at Aa2. ment in rural South Carolina, an area where

e Santee Coopers favorable ratings from Santee Cooper provides power through 15 of 4

credit-rating agencies are due in part to the state's 20 electric cooperatives, financing programs which have resulted in Not only have we been working to bring lower interest costs and accelerated debt new industries and jobs to Santee Coopers reduction. Santee Coopers 1988,1989 and servico area, through our long-range plan-1990 Mini-Bonds, totaling about $60 million, ning, we are working to define and deliver were refunded byissuing tax-exempt new services needed by our customers. We commercial paper, with expected savings of ccntinued our Customer Care Guarantee

program to provide residential and commer-pleted in 1997, and similar retrofits are cial custcmers with more than just a promise. planned for Winyah Unit 3 and Cross Unit 1 l f The program assures meters are read in 1998. accurately and installed by the date re-Not only are we challenged by our quested, lighting repairs are made within commitment to our customers, but also by our three working days, and customers receive commitment to our environment. Testimony the highest level of timely, courteous service. to this commitment is contained in our many Maintaining competitive generation and environmental programs you'll read about in delivery of power is becoming increasingly this report. They include Give Oil For Energy critical to the success of all electric utilities. Recovery, or G0FER* program, the reduction Santee Coopers production of low-cost of noxious aquatic weeds in Lakes Marion power is key to its retail rates that remain and Moultrie, and the many environmental and below the national average. That low cost of power was a major factor in the impressive 98.4 percent customer satisfaction rating from residential customers during the most e/[ bWN recent survey, ? -(,- ,.,,,.n And we're not stopping there. Our focus '", n e',", a~nt 9 41,e u t i IN 1 + ' ' e =" t remains on the customer, whether it is a residential, commercial or industrial account. By offering innovative products and services, we will work to gain and retain tomorrow's y customers. Energy sales continue to grow.'Ibtal energy sales were up by almost S percent and i s s revenues were up by about 4 percent in 1997

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in spite of the mild weather. Kilowatt-hour sales g y h, to industrial customers increased by more than e 22 percent which accounted for all of the t ,8 growth in 1997. Growthin Santee Coopers retail cus-W tomer base continues at a rapid pace, a particularly along the flourishing Grand educational programs. Also, at the 6th Annual

j Strand area in Horry and Georgetown Environmental Symposium hosted by Santee s

i. counties. Myrtle Beach was ranked by Cooper, the University of South Carolina p q q American Demographics in 1997 as the announced its S.C. Environmental ExceJlence .. I nation's second-fastest growing metropolitan Program. The university also established the y area in both projected annual population South Carolina Environmental Scholars t growth and employment growth from 1995-Endowment Fund of which a Santee 2005. Cooper Environmental Fellowship is a part. Santee Cooperis expanding its total As Santee Cooper competes in the generating capacity by retrofitting turbines deregulated wholesale electric utility and generators. Winyah Unit 2 was com-environment, we realize the economic

advantage of developing alliances with basis. But the faces you see at Santee Cooper other public power utilities to buy and sell are the same, the ones that on a daily basis power from the market to benefit our stnve to provide over one million South customers. After more than a year of Carolinians with competitive, reliable electric preparation, The Energy Authority was

service, formed in May. The partners in the new A major part of whatit will take to alliance are Santee Cooper, the Municipal succeed in what looks to be tomorrow's Electric Authority of Georgia, and the wide-open electric utility industry will be Jacksonville Electric Atithority. Some 3C Santeo Coopers outstanding and focused l

employees staff the 24-hour-per-day, seven-workforce. day-a-week operation in Jacksonville, Fla. As you read the pages of this report, The Santee Cooper Regional Water you'll learn what we have accomplished and how we are planning to take Santee Cooper I into the world of deregulation and the next minerusum. Santee Cooper is committed to being a competitive power provider in a +- Territmial* >. f deregulated market. . eeak oerma#1 j .-~ 4, ~

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fevk m. $% e, g r s b l'. ' ~ jp g John S. Rainey Chairman, Board ofDirectors t )' f' i Q EEulMER M g.- g M g System was uprated so that it could provide T. Graham Edwards

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' g an additional 12 million gallons of pumping y 4, 2. capacity. And in October, a charter applica-j tion was signed to form the Lake Marion Regional Water Agency. It is expected the <T new agency will eventually distribute potable water to customers in six counties and 14 municipalities in the Lake Marion/ Interstate 95 corridor area. The face of the electric utility industry is indeed changing, it's changing on a daily Il

3 e 3 1 f h THE MISSION OF SANTEE EDOP k > ~ is to be the state's leading resource 2 yg forimproving the quality oflife for s. / .j the people of South Carolina. j[ n TI FULFILL THIS MISSION, .m "/ Santee Cooper is committed to; ,x M being the lowest-cost producer and a $ m)gd ff{$ i distributor of reliable energy, water, f; m " g$ and other essential services

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Energy Sales Dirkett Hetall Service Wholesale At the end of 1997, Santee Cooper was Sales to the Central Electric Power serving 114,290 residential, commercial, and System for its IS member co-ops increased other retail customers located in Berkeley, three percent. Centralis Santee Cooper's Georgetown and Horry counties. This was an largest single customer. The electric increase of six percent over 1996. cooperatives distribute power to more than Sales to these retail customers were 390.000 customers in 38 counties. 2,574 gigawatthours, down two percent Santee Cooper also provides electricity from the previous year. to the municipalities of Bamberg and Military and Large hutustrial Georgetown. Sales to these municipalities rose Military and large industrial sales were 3 percent. up 22 percent over the previous year. s _,7';me,,g, r-s ' dt ( V , f 1 o G , hk

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Year in Review Generation electric power to more than 390,000 Competitive generation and delivery retail, commercial and industrial l lq l g of power is becoming increasingly critical customers served by 15 electric coop-l l l to the success of all electric utilities. eratives and two municipalities. l Santee Coopers production of low-cost The Open Access Same-Time l l,l power is key to maintaining average k Information System, or OASIS, became l l lll retail rates below the national average. operational in January. This real-time l ll Taking advantage of opportunities to information-sharing system enables all ll improve efficiency of existing generation I continues to be a primary focus. A turbine retrofit was completed on Winyah l l Station's 270-megawatt Unit 2 which \\ lll Will result in a 14.S megawatt capacity increase and a heat rate improvement of 60 Btu /kWh. A similar retrofit with equal l efficiency gains is scheduled in 1998 for the companion Unit 3. Also at Winyah, the combustion-control systems on Units 2 and 4 received major upgrades. A turbine retrofit was also purchased for Cross Station's 540-megawatt Unit I for 1998 installadon. The estimated capacity increase is 29 megawatts, with I a heat rate improvement of 46 Btu /kWh. Coal-fired units recorded availability that exceeded the 91 percent goal by i r,L ' 2.02 percent. The sycm net heat '. ate of y ~ ~ i( 9,846 Btu /kWh was over 2 percent better 9 than the goal of 10,050 Btu /kWh. Cross h, j)l Station won both the 1997 annual hh[ y Generation Goals Competition and the + Heat Rate Competition, an annual ej a z~ T competition among Santee Coopers A generating stations to reward operating buyers and sellers of electricity to have efficiency. access to all informatim re;1arding the s N available transmission capacity, price 3 Transmission and scheduling requirements on all Through 36 of South Carolina's 46 transmission systems in the U.S. It is counties, Santee Cooper power flows designed to er.sure transmission owners over approximately 4,100 miles of do not have an unfair advantage in using transmission lines. This network encom-their own transmission resources to sell passes three-fourths of South Carolina wholesale power. All;mnsmission users and forms the basis for delivering reliable must access the OASIS via the Internet. H

Distribution Cashier 2000, a new computerized In addition to Berkeley County, customer payment system, provides an Santee Cooper distributes power to even higher level of customer service. portions of Georgetown and Horry Developed by Santee Cooper, this program counties, also known as the Grand has enhanced capabilities such as bar Strand, one of the fastest growing areas graph tracking of kilowatt-hour usage and of the Southeast. Myrtle Beach ranks other pertinent data that Santee Cooper second only to Orlando, Pla. as a tourism can provide to customers for tracking energy usage. The Surge Alert Program, which provides customers protection against those brief, uncontrollable voltage in-creases that may cause damage to appli- - E.' ances or electronic equipment, was i enhanced in 1997. The Surge Alert Program provides an affordable, reliable protection device that can absorb excess power and A., should prevent most externally generated surges. 4 Outreach Employees in Engineering and 3 Construction Services provided assistance m h, m E in constmction of the Callen-Lacey Center for Children in Moncks Corner. This 4,229 r sq. ft. facility will be used to provide accommodations for abused children in Berkeley County. The McGmff tmck safety program completed its first full year of operation. Each Santee Cooper McGruff truck has a specially trained crew who can summon . jf proper authorities for assistance when destination. In January, Santee Cooper children signal they are in need. In 1997, had 107,986 retail customers. By year's there were 22 McGmff presentations given end, that number increased to 114,290. by employee volunteers. Approximately 500 new customers per month were added in 1997. Environmental Protection GOFER Customer Service Santee Cooper oporates the state's '~ Santec Cooper received a 98.4 percent largest used motor oil collection program customer satisfaction rating from residen-that targets do-it-yourself oil changers: tial customers in the most recent survey. Give Oil For Energy Recovery. The seven-

year-old, award-winning G0FERR pro-agreement signed in June between Santee gram set a new record by collecting over Cooper and the Lord Berkeley Conservation one million gallons of oil in a single year. Trust. The area borders on the scenic Cooper l i 'Ibtal collections since the program began River and Tailrace Canal, and is in close f l are about three million gallons. proximity to the Old Santee Canal State l ll Working with the S.C. Dept. of Health Historic Site. l l and Environmental Control, local govern-water Qualhy I h ments and electric cooperatives, over 4S0 Santee Cooper is also working to l l l G0FER collection tanks have been placed l f statewide. Four Santee Cooper trucks pick ~ l up the oil and transport it to a generating I station, where it is safely converted into ll electric power. However, the primary benefit of the G0FER program is to help prevent a potential pollutant from fouling the soil and groundwater. Coal Ash b Another way Santee Cooperis working to improve the environment is through finding new uses and buyers for coal ash. By modifying the environmental gpg Wefpgfg]gpf emissions control equipment at Cross 7 ,s

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jg gd [ Station, gypsum will be produced. Gypsum, M a raw material essentialin the production s of cement, controls the set time in concrete 1.h i 'M ( c and can also be used as a fillerin the h,

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production of sheetrock. hj; " " ~ S" In November, a contract was signed with Holnam Inc., a cement manufacturer e and one of Santee Cooper's industrial customers. The agreement provides the plant with a local supply of gypsum, which q was previously purchased from Newfound-land and Nova Scotia, and cuts by 50 preserve water quahty in the Santee s percent the amount of material currently Cooper Lakes. These lakes, Lakes Marion fl landfilled at Cross Station. and Moultrie, provide a IS6,000-acre 1 M,u m[ s, ', ' wildlife angler's paradise and home for the j s i Wading birds, waterfowl, bald eagles, world's first landlocked striped bass. and alhgators, along with tupelo and cypress Several years ago, the nuisance aquatic trees and other plants and animals, now have weed hydrilla infested approximately a permanently protected SO9-acre home in 4S,000 acres of the lakes, snarling boat the Wadboo Creek area east of Moncks propellers and effectively reducing the Corner. Their new home is the result of an size of South Carolina's largest freshwater m

resource. Because of the placement of Environmental Symposium, primarily sterile grass carp and selective spraying sponsored by Santee Cooper. with federally-approved herbicides, the lakes have seen a dramatic 95 percent Corporate reduction in hydrilla infestation. The Energy Authority (TEA), a whole-Recognition sale power-marketing organization opened in April, Santee Cooper was honored for business on Aug.18 in Jacksonville, Fla. by the Project Habitat utility wildlife TEAis comprised of Santee Cooper, Jacksonville Electric Authority and the Municipal Electric Authority of Georgia. It is the first public power marketing alliance in the country and represents over 8,000 ,3 ,3 D g k megawatts of combined generating assets. 4 I The 24 hours a day operation allows f4 (< members to buy and sell power and to mi, y jli'. more effectively use their generation

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C Forming TEA was a logicalway for Santee Cooper to respond to Federal Energy Regulatory Commission Order 889 wHeh requires utilities to segregate transmission functions from power market-ing functions. TEA's costs will be paid by its members and net revenues will be passed back to the members. The TEA board is comprised of nine directors, three / from each member organization. An Jo 7~ g.y. v,. executive committee of the board has a representative from each of the three utilities. ABM/FIS 'Ib help position Santee Cooper for competing successfully in the restructured enhancement program for its community ele.ctric utility industry, Santee Cooper relations activities. Project Habitat is a designed an Activity-Based Management / [O national consortium of business and Financial Information System (ABM/FIS), % 3 [" 1 2 2% industry that promotes enhancing the Work Management Information System Mf wg wildlife habitat along utility rights-of-way. (WMIS), the Electric Distribution Informa-f+e Other ongoing testimonies to tion System (EDIS) and the Transmission Santee Cooper's environmental stew-Electric Facilities Information System ardship are the annual Environmental (TEFIS). Essay Contest for the state's seventh-FIS is an integrated set of applications to graders and the annual South Carolina support the implementation of actmty-based 17

management which allows for enhanced October when a charter application was accounting, budgeting, project manage-signed in Santee, S.C. to form the Lake ment and tracking of costs. Marion RegionalWater Agency. WMIS is a system used to manage the majority of the direct work in Transmission Santee Cooper continued to be recog-and Distribution Operations. EDIS repre-nized for its accomplishments. Citing sents an upgrade of Santee Coopers . sustained achievement and improved distnbution mapping system, while TEFIS customer service among publicly owned serves to construct a transmission mapping system. These projects will streamhne current work processes and automate manual procedures. Awctreness Santee Cooper has a new address: www.santeecooper.com. In April, Santee ~ Cooperlaunched its website on the Internet's World Wide Web. It can be used to access comprehensive and timely information about Santee Cooper. The website is designed to help increase awareness about Santee Cooper. Another way to help expand aware-E ness was with an advertising campaign that began in September. This series of new television commercials and print !.i media ads emphasized employees as the major resource for accomplishing Santee A Coopers commitment of" Putting Our f M Energy To Work For You."

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t-i:; 3Bh kelei b r The 24 million gallons per day Santee Cooper Regional Water System, located near Lake Moultrie, was uprated to 36 electric utihties," the American Pubhc Power mgd. The three-year-old system has Association awarded Santee Cooper the E. E stimulated interest in the Lake Marion/ Scattergood System Achievement Award in Interstate 95 corridor area for Santee June. This is the highest award given to Cooper to construct and operate another pubhc powerutihties by the national treatment plant between Eutawville and organization that represents pubhc power Santee. A regional partnership of six counties and 14 municipalities, with Santee Economic Development Cooper acting as a wholesale water. President and CEO T. Graham Edwards supplier, came a step closer to reauty in received the S.C. Economic Developers is

y.+ L .,...hv Association's Volunteer of the Year Award in 1988,is based in Columbia. + May. Edwards was the first chairman of the Ruralindustrial growth in South Charleston Regional Develop uent Alliance. Carolina has been dramatic. During the The Alliance was formed in 1995 as a result past year,16 new inductries created 2,6S7 of the closure of the Charleston Navy Base jobs with an investment of $334 million. + and the Charleston Naval Shipyard. Since its Expansion of existing industry actually ,f p formation, the Alliance has attracted wer provides more economic development to a e n 7,000 new, directjobs representing an region. That was definitely the case in 1 h 1997 as the combined announced expan-t sions of AlliedSignal, Amoco Chemicals k n -ww. r r.s-.""" 4 \\ , am gn. p W M}"g, ,4 j Corp., AVX Corp., JW Aluminum Co. and j ag; Tb Nucor Steel Corp. created 650 new jobs - - - y,,, y ) with a combined investment of $260 M; ..,o z N million. P bg, Design was completed on the Mount f, C ; 1,- Holly Commerce Park, a joint industrial " [2 i yo j 79 'hi park project between Santee Cooper, 3 f a ' Berkeley County and industrial customer a 4' 59 jg ' Alumax of South Carolina. Construction will e begin in 1998. ") y i> d The Atlantic Center for Business and " ~ ~ y 4~ Industry near Myrtle Beach added three new industries 'or a total of nine. The Atlantic Center companies employ nearly SSO. And, Loris Industries completed construction on its new plant located in 9-the Loris Commerce Center. N Praxair, the largest inaker of industrial 4 1e ' gases in the Western Hemisphere, awarded .) Santee Cooper its Partnering Through k Mb Quality Leadership Supplier Excellence Y3 Award. Praxair annually evaluates its - 'y % a electricity suppliers. It was the second time {'g investment of over $1.7 billion in Berkeley, Santee Cooper received this honor. 4 Charleston and Dorchester counties. Santee Cocper reached ua agreement f (} - }} The Palmetto Economic Development with Alumax of South Carolina, the y. Corporation (PEDC), representing the IS state's largest single user of electric 4-P N-1g member cooperatives of Central Electric power, that extends the aluminum mr~vmm Power Cooperative and Santee Cooper, manufacturer's contract through 2005. 3; ' f. L^ j' promotes and coordinates economic The plant employs 630. 4 development activitiesin the South A j Carolma counties served by Central's j membei cooperatives. PEDC, formed in $pd7 N. 9h

'ad"5t*' cu5t m" VY 9"'t'i' c"5 tom5 5v'd ""d SO55ary af Terms Santee Cooper's Large Light and Power rate schedule for as-sociated riders).These custorners have a demand greater than Availability The amount of time that a system is available to 1,000 kW. provide service, usually expressed in percentage, for a specific period of time such as a month or year. Investor-owned utility - Refers collectively to those inte-Btu (British Thermal Unit)- The standard unit for measuring grated utilities organized as privately owned, taxpaying entities financed by the sale of stock in the free market quantity of heat energy, such as the heat content of fuel. It is and managed by representatives (directors) regularly the amount of heat energy necessary to raise the temoera. ture of one pound of water one degree Fahrenheit. elected by stockholders. Kilowatt (kW) 1,000 watts. Capacity - The load for w hich a generating unit, generating station, or other electrical apparatus is rated either by the Kilowatt-hot.r (kWh) The basic unit of electric energy equal user or by the raanufact.irer. to one kilowatt (1,000 watts) of power flowing through an electric circuit steadily for one hour. Combustion turbine - A jet-type turbine engine whu.h burns gas or oil and propels a generator to produce electricity. Load - The amount of electric power delivered or required at i Commercial customer All nonresidential retail customers any specified point or points on a system. served under the Gereral Service rate schedules. GeneraHy. Megawatt (MW)- One million watts or 1,000 kilowatts, these customers have a demand less than 1,000 kW per month. Mini-Bonds Bonds issued by Santee Cooper in denomina-Demand The rate as which electric energy is dehvered to or tions of $500 for current interest bearing bonds (CIBS) or $200 by a system, part of a system, or a piece of equipment. It is for capital appreciation bonds (CA85) in a maximum amount expressed in Irilowitts at a given instant or averaged over to any one individual of $5,000. which were sold directly to any designated period of time. The primary source of "de-customers and other residents of South Carolina. mand" is the power-consuming equipment of the customers. Open Access Same Time Information System (OASIS) A com-Deregulation -The elimination of regulation from a previ-puter information system that enables all buyers and sellers ously regulated irdustry or sector. to have equal access to Santee Cooper's transmission system. Distribution Tno process of delivering electric energy from tt is designed to ensure that transmission t,vners do not have an unfair advantage in using their own transmission resources convenient poirts on the transmission or bulk power system to the consume's. Also, a functional dassification relating to to self or wheel power. that portion of utility plant used for the purpose of dehver-Peak demand -The maximum amount of electricity used by a ing electric enngy from convenient points on the transmis-utility customer at any instant during a specific time period. sion system to consumers, or to expenses relating to the op-The peak is used to measure the amount of electric generat-eration and rraintenance of distribution plant. ing capacity that is required to meet that maximum demand. Economic defoasance - For accounting and reporting purposes, Public power - Refers collectively to those utilities owned by debt is considered economically or in-substance defeased if municipalities or the state or federal govemment. Although the debtor irrevocably places cash or other assets with an es-not govemment owned, electric cooperatives are sometimes crow agent in a trust to be used solely for satisfying sched-considered within the scope of public power. uled payments of both interest and principal of the defeased Reinvested eamings - Net revenues available for reinvestment debt, and f he possibility that the debtor will be required to in the business. make futu e payments on that debt is remote. Residential customer -The classification of customers to whom Electric cr operative A group of persons who have orga-electricity is sold for household purposes. nized a ynnt venture for the purpose of supplying electnc energy t 3 a specified area. In South Carolina, there are 20 Restructuring -The changes.in the regulatory and statutory policies goveming electric utilities as well as the changes that electric r.o-ops, of which 15 receive Santee Cooper-gener. are taking place in the marketplace and electric utility indus-ated ocwer. try as a result of these changes in policies. Energy sales The sale of electric energy to wholesale and Retail customer - These customers are the ultimate consumer retail eastomers usually expressed in kilowatt-hours. of electric energy. Includes residential, commercial, small in-FERC Federal Energy Regulatory Commission) An indepen-dustrial and other non-wholesale customers. dent federal agency created within the Department of Revenue bond A bond payable solely from net or gross non-Energ y, FERC is vested with broad regulatory authority over taxable revenues derived from the operation and charges paid wholesale electric, natural gas, and oil production arJ the licenJng of hydroelectric facilities. Among other things, the by users of the system. agericy has regulatory authonty over the safety of Santee Substation - An assemblage of equipment for the purpose Cocper's dams and dikes. of switching and/or changing or regulating the voltage of Fly ash-Gas-borne particles of matter resulting from the com-electricity. bt.r, tion of fuels and other materials. Tax-exempt finarning A form of financing employed by pub-licly owned utilities that allows such utilities to issue bonds Generating unit - A combination of equipment needed to where the interest paid on the bonds is not generally subject pr oduce electricity, such as turbine-generator and its boiler. A to taxation. This policy, established in law, stems from the long-9anerating station usually consists of several units. standing philosophical viewpoint that publicly owned utili-0ypsum Thr.. both a naturally occurring and an artificially ties (electric, water, sewer) provide basic services to the citi-s es produced calcium sulfate (CaSO) compound. It is used for a zens they serve and thus should not be taxed. multitude of purposes induding sheetrock, fertilizer, and ce-Transmission The process of transpodng electric energy in merd production. Artificial gypsurn may be produced by utili_ bulk from a source or sources of suppty to other principal parts ties using forced-oxidation desulfubtion systems, of the system or to other utility systems. Also, a functional Heat rate - A measure of generating station thermal efficiency, classification relating to that portion of utility plant used for generally expressed in Btu per net kilowatt hour. It is com-the purpose of transmitting electric energy in bulk to other puted by dividing the total Btu content of fuel burned for principal parts of the system or to other utility systems, or to electnc generation by the resulting kilowatt-hour generation. expenses relating to the operation and maintenance of trans-The lower the heat rate, the more efficient the production. mission plant. Hydrilla A nonnative aquatic plant. It is the most problem. Watt The basic electrical unit of power or rate of doing work. stic aquatic plant species in the Sanwe Cooper Lakes, as well The rate of energy transfer equivalent to one ampere flow-as in the state. Hydrilla forms large, dense populations which ing due to an electrical pressure of one voit at unity power displace native species and impair water activities such as boat-factor. One watt is equivalent to approximately 1946 hcwse-ing and fishing-power, or one joule per second. Wholesale customer A customer who purchases all or part of their electricity from the electric utility for resale.

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i Report of Independent Public Accountants l To the Advisory Board and Board of Directors of the South Carolina Public Service Authority: We have audited the accompanying balance sheets of the South Carolina Public Service Authority (a component unit of the state of South Carolina-Note 1) as of December 31,1997 and 1996 and the related statements of accumulated earnings reinvested in the business, reinvested earnings, and cash flows for each of the three years in the period ended December 31,1997. These financial statements are the responsibility of the Authority's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform thr cudit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a tust basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the South Carolina Public Service Authority as of December 31,1997 and 1996 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997 in conformity with generally accepted accounting principles. [b Charlotte, North Carolina, February 12,1998.

Calance Sheets South Carolina Public Service Authority December 31,1997 and 1996 ASSETS 1997 1996 (Thousands) Utility Plant - At Cost: Plant in service S 3,300,734 $ 3,249,424 Less accumulated depreciation 1,109,376 1,026,205 Total Plant in service - net 2,191,358 2,223,219 Construction in progress 75,704 68,241 Nuclear fuel - at amortized cost 26,020 19,606 Total Utility plant - net 2,293,082 2,311,066 Dther Physical Property (Net of Accumulated Depreciation) 1,720 1,763 Investment in Associated Company 4,231 0 Cash end Investments Held by Trustee (Designated) 184,587 216,581 Current Assets: Cash and investments held by trustee 120,886 146,038 Bond funds - current pomon 111.592 117,607 Accounts receivable - net of allowance for doubtM accounts of $637,C00 and $859,C00 at December 31,1997 and 1996, mspectuely 69,547 68.328 Accrued interest receivable 1,991 2,638 inventories, at everage cost: Fuel (coal and oil) 53,355 42,387 Materials and supplies 33,444 31,537 Prepaid expenses 1,703 83 Total current essets 392,498 408.618 Deferred Debits and Other Assets: Unamortized debt expense 24,358 24,830 Costs to be recovered from future revenue 392,119 432,885 Deferred coal contract buyout costs 38,500 44,500 Other 24,073 24,440 Total deferred debits and other assets 479,050 526,655 Total S 3,355,148 $ 3,464,683 The accompanying notes to financial statements are an integral part of these balance sheets. O

e LIABluTIES AND CAPITAUZATION 1997 1996 (Thousands) Long-Term Debt: Electric Revenue Bonds - Prionty Obligations S 30,455 33,560 Electric System Expansion Revenue Bonds 258,255 363,075 j Capitalized Lease Obligations 35,578 39,186 Revenue Bonds 1,987,285 1,957,125 i Total long-term debt (net of current portion) 2,311,551 2,392,946 Less: Unamortized loss on refunded debt 285,504 284,929 Reacquired debt 3,400 4,470 Unamortized debt discount and premium - net 48,741 57,611 Longterm debt - net 1,873,908 2,045,936 l Current Uabilities: Current portion of lonprm debt S1,094 62,947 Accrued interest on longterm debt 60,731 65,934 Commercial paper notes 241,850 204,773 MiniBonds and Revenue Bonds (Series M) 100,457 159,221 Accounts payab!e 24,884 28,649 Other 18,823 36,297 l Total current liabilities 505,418 557,821 Deferred Credits and Other Noncurrent Usbilities: Construction fund liabilities 349 2,097 Nuclear decommissioning costs 51,479 42,509 Unamortized gain on reacquired debt 44 83 Other 28,321 25,241 Total deferred credits and other noncurrent liabilities 78,693 69,930 Commitments and Contingencies . Capital Contributions - U.S. Government Grants 34,438 34,438 Accumulated Earnings Reinvested in the Business 762,892 756,558 Total 8 3,355,148 $ 3,464,683 9

Statement of Accumulated Earnings Reinvested in the Business South Carolina Public Service Authonty Years Ended December 31,1997,1996, and 1995 1997 1996 1995 (Thousands) Accumulated earnings reinvested in the business - beginning of year S 756,558 $ 700,947 $ 648.493 Reinvested earnings for the year 13,723 65,946 50,665 Total 770,281 766,893 699.158 Distnbution to the state of South Carolina 7.462 6,682 6,436 Total 762,819 760,211 692.722 Change in net unrealized gain (loss) on investment secunties available-for-sale (127) (3,653) 8,225 Accumulated earnings reinvested in the business - ead of year S 762,692 $ 756,558 $ 700.947 The accompanying notes to financial statements are an integral part of these statements. O

Statement of Reinvested Earnings Suuth Carolina Public Service Authority Years Ended December 31,1997,1996, and 1995 1997 1996 1995 Operating Revenues: (Thousands} Sale of electncity 6 717,467 $ 690,294 $ 634,678 Sale of water 3,852 3.838 3,730 Other operating revenues 6,505 5,474 5,430 Total operating revenues 727,824 699,606 643.838 Operating Expenses: Electnc operation expense: Production 274,112 257,457 226,446 Purchased and interchanged power 17,015 13.327 30,593 Transmission 4,129 3,809 4.442 Distnbution 3,822 3.776 3,299 Customer accounts 3,751 3,806 3.282 Sales 1,707 1,560 1,465 Administrative and general 61,615 61,259 56,504 Electnc maintenance expense 61,937 54,182 53,029 Water operation expense 897 1,088 1,063 Water maintenance expense 224 292 168 Total operation and maintenance expense 429,209 400,556 380.291 Depreciation and amortization 101,795 101,359 91,468 Sums in heu of taxes 2,203 1,928 1,929 Total operating expenses 533,207 503,843 473,688 Operating income 194,617 195,763 170,150 Other income: Interest income 21,641 23,537 20,682 Other - net 6,286 9,625 96 Total other income 27,927 33,162 20,778 Interest Charges: Interest on longerm debt 132,921 127,908 125,370 Other 35,151 37,105 39,747 Total interest charges 168,072 165,013 165,117 Costs to be Recovered from Future Revenue (40,749) 2,034 24,854 Reinvested Earnings 8 13,723 $ 65,946 $ 50,665 The accompanying notes to financial statements are an integral part of these statements. 9

Statement of Cash Flow South Carohna Public Service Authonty Years Ended December 31,1997,1996, and 1995 1997 1996 1995 (Thousands) Cash Flows Femm Operating Activities: Operating income 6 194,617 $ 195,763 3 170.150 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 111,034 110,660 101,267 Impact of transactions involving associated company (3,322) O O Other income 39 43 96 Changes in assets and habihties: Accounts recCvable, net (1,219) (4,006) (9,741) inventories (11,240) 3,669 1,851 Prepaid expenses (1,620) 1,013 (85) Other deferred debits (1,532) 5,460 [5,649) Oeferred coal contract buy-out costs 6,000 5,700 (50,200) Accounts payable (3,785) (2,462) [2,415) Other current liabilities (18,725) (1,340) 24,924 Other noncurrent liabihties 8,992 477 (8,858) Net cash provided by operating activities 279,239 314,977 221,340 Cash Flows From Investing Activities: Net decrease (increase) in investments 79,123 (4,823) 50,619 Interest on investments 22,284 24,886 24,444 Net investment in associated company (3,467) O O Net cash provided by investing activities 97,940 20,063 75,063 Cash Flows From NoncapitaTRelated Financing Activities: Oistnbution to the state of South Carolina (7.462) (6,682) (6.436) Cash Flows From Capital and Related Financing Activities: Proceeds from sale of bonds 215,597 350.966 317,791 Retirements of reacquired debt 1.122 3,254 3,644 Net commercial paper (repayments) proceeds 36,877 (32,547) 118,620 Repayment and refunding of bonds (355,217) (382,490) (366,389) Interest paid on borrowings (154,733) (155,396) (166,697) Construction and betterments of utikty plant (84,203) (79,860) [114,558) Oebt issuance costs (9,586) (22,013) (16,870) Other (3,527) (3,418) (3,318) Net cash used in capital and related financing activities (353,670) (321,504) (227,777) Net increase in Cash and Cash Equivalents 18,047 6,854 62,190 Cash and Cash Equivalents at the Beginning of the Year 222,132 215,278 153,088 Cash and Cash Equivalents at the End of the Year S 238,179 $ 222,132 $ 215,278 0

n' l' e l l 1997 1996 1995 (Thousands) Reconciliation of Cash and Cash Equivalents: Cash and investments held by trustee (designated) 8 184,587 $ 216.581 $ 272,856 i Cash and investments held by trustee 180,868 146,038 106.830 Bond funds - current portion 111.588 117,607 98.364 Less investments, not considered cash and cash equivalents 178,848 258.094 260,772 Cash and Cash Equivalents at the End of the Year 8 838,178 $ 222.132 $ 215.27B Noncash investing activities: Ouring the year ended December 31,1997, the Authonty recognized $2.558.000 in equity losses related to its interest in a wholesale power marketing joint venture, primarily attributable to start up activities. l i I I. .The accompanying riotes to financial statements are an integral part of these statements. O n

Notes to Financial Statements NOTE 1 -

SUMMARY

of SIGNIHCANT ACCOUNTWG POUCIEs: power marketing venture (the " Venture"] formed by the Authonty 4 - Reporting Entity The South Carolina Public Service Authonty and two unrelated publicly owned electnc utilities (collectively the (the Authanty), a component unit of the state of South Carolina, " members") in May 1997. The Authonty has a 33.33 percent was created in 1934 by the state legislature. The Board of ownership interest in the Venture which provides services to the Directors is appointed by the Governor of South Carolina with the members and non-members and allocates transaction savings advise and consent of the Senate. The purpose of the Authonty and operating expenses to the members pursuant to a Settlement is to provide electnc power and wholesale water to the people of Agreement. Dunng fiscal 1997, the Authonty made net capital South Carolina. Capital projects are funded by commercial paper contributions of $3,467,000 to the Venture and recognized notes in addition to bonds and internally generated funds. The $3,322,000 in reductions to power costs partially offset by Board of Directors sets rates charged to customers to pay debt $2,558,000 in equity losses pnmanly attnbutable to the Venture's service and operating expenses and to provide funds required start-up activities. In addition, the Authonty provides certain under bond covenants. guarantees and has pledged certain collateral to support the transactions of the Venture. The Authority's Board of Directors B System of Accounts The accounting records of the Authonty has approved the use of $10 million to support the Venture s are maintained in accordance with generally accepted accounting trad.ing activities. Of the $10 million pledge of support, the principles (GAAP) apphcable to governmental entities and are Authonty has provided a guarantee of $5 million to secure trade maintained substantially in accordance with the Uniform System obligations of the Venture and has pledged $2 million to secure of Acccunts presenbed by the Federal Energy Regulatory a letter of credit agreement, which the Venture has entered into Commission (FERC) and the National Association of Regulatory with a bank as of December 31,1997. Utility Commissioners (NARUC) as applicable. The Authonty also complies with accounting policies and practices presenbed by its K-Reclassi5 cations-Certain pnoryear amounts have been reclassified Board of Directors. The preparation of financial statements in to conform to current year presentation. conformity with GAAP requires management to make estimates L -New Accounting Standards-The C s any adopted Statement and assumptions that affect the reported amounts of assets and of Financial Accounting Standards No.121 (SFAS 121), liabilities and disclosure of contingent assets and liabihties at the " Accounting for the Impairment of Long-Lived Assets and Long-date of the financial statements and the reported amounts of Lived Assets to Be Disposed Of" on January 1,1996, with no revenues and expenses during the reporting penod. Actual material effect on the financial statements. This statement results may differ from those estimate.s. requires that long-lived assets be reviewed for impairment C - Utility Plant - Utility plant is recorded at cost, which includes whenever events or changes in circumstances indicate that the matenals, labor, overhead, and interest capitalized during carrying amount of an asset may not be recoverable. This construction. No interest was capitahzed in 1997 or 1996. The statement also imposes stricter enteria for regulatory assets by costs of maintenance, repairs and minor replacements are requiring that such assets be probable of future recovery at each charged to appropriate operation and maintenance expense balance sheet date. The Authonty will reassess the effect of SFAS accounts. Tho costs of renewals and betterments are capitahzed. No.121 in the future as competitive factors influence wholesale The anginal cost of utility plant retired and the cost of removal, and retail pricing in the industry. less salvage, are charged to accumulated depreciation. NOTE 2 - REGIONAL WATER SYSTEM: D - Depreciation - Depreciation is computed on a straight-line basis over the estimated usefullives of the vanous classes of the in 1992, the Authonty's Bocrd of Directors authorized the plant. Annual depreciation provisions, expressed as a percentage construction of a regional water system. The Authority executed of average depreciable utility plant in service, were approximately a 35-year contract with the Lake Moultrie Water Agency, a joint 3 3% for the periods ended December 31,1997 and 1996, and municipal water system consisting of the following members: City 3.4% for the period ended December 31,1995. Amortization of of Summerville Commission of Public Works, Town of Moncks capitalized leases is also included in depreciation expense. Corner Commission of Pubhc Works, City of Goose Creek, and the E - Revenue Recognition and fuel Costs - Substantially all County of Berkeley. The Lake Moultrie Water Agency purchases wholesale and industnal revenues are billed and recorded at the all of the capacity of the water system and sells such capacity to end of each month. Revenues for electricity delivered to retail the four members. The water system commenced initial operation n October 1,1994. customers which have not been billed are accrued. Fuel costs are reflected in operating expenses as fuel is consumed. NOTE 3 - Cosu To BE RECOVERED FRoM FUTURE REVENUE: F-Bond issuanca Costs - Unamortized debt discount, premium, and expense are amortized to income over the terms of the The Authonty's electric rates are estabhshed based upon debt related debt issues. Gains or losses on refunded debt are service and operating fund requirements. Straight-line depreciation amortized to income over the shorter of the remaining life of the is not considered in the cost of service calculation used to design refunded debt or the hfe of the new debt. The unamortized loss rates. The differereces between debt principal matunties (adjusted on refunded debt is being shown as a reduction in long-term debt-for the effects of premiums, discounts, and amortization of net. deferred gains and losses) and straight-kne depreciation are recognized as costs to be recovered from future revenue. The G-Cash and Cash Equivalents - For purposes of the statements recovery of outstanding amounts associated with costs to be of cash flows, the Authonty considers highly liquid investments recovered from future revenue will coincide with the retirement with onginal maturities of less than three months and cash on of the outstanding long-term debt of the Authority. deposit with financial institutions as cash and cash equivalents. H State Distribution - The distnbution to the state of South NOTE 4 - CASH ANo INVESTMENTS HELD BY TRUSTEE [ DESIGNATED): Carolina is determined consistent with requirements under the Unexpended funds from the sale of bonds, debt service funds, 1949 Indenture. other special funds, and cash and investments are held and 1 - Deferred Coal Contract BurDuc Costs - During 1995, the maintained by trustees, and their use is designated in accordance Authonty exercised a buy-out option on an existing coal contract with applicable provisions of vanous trust indentures, bond in order to take advantage of lower coal costs. The cost of the but resolutions, lease agreements, and the Enabhng Act included in out, which was approximately $53,000,000, is recorded in the South Carolina law Such funds consist pnncipally of investments deferred debits and included as a component of fuel costs over in government secunties. In accordance with SFAS No.115, the remaining hfe of the former contract. The balance in this . Accounting for Certain Investments in Debt and Equity Secunties," account at December 31,1997 was $38,500,000. the Authonty's investments are all classified as either held-to-J - investment in Associated Company Investment in Asso-matunty or available-for-sale. Investments classified as held-to-ciated Company represents an equity investment in a wholesale maturity are carned at amortized cost. Securities categorized as

available*for sale are carried at market value,. With the net less. For the year ended December 31,1997, the Author ty had 'unreehzed gain or loss offset tigainst accumulated earnings proceeds of $35,433,000 from sales of available-for sale - reinvested in the business. secunties and reahzed $658,000 in gains and $34,000 in As of December 31,1997 and 1996, the Authonty had held-losses in connection with these sales. Proceeds from available-to-matunty investments carried at amortized cost and available_ for-sole securities totaled $24.096,000 for the year ended forssale investments carried at fair market value as follows: December 31,1996. During 1996, $6,000 in losses were realized on these available-for-sale secunties and gains on these sales totaled $368,000. These gains and losses were computed 1997 1996 as the difference between the proceeds and specifically identified (Thousands) amortized cost per secunty. Held-Matur ty Cash - Cash is categonzed as follows: Category 1 includes 8 '592 $ E 607 bank balances entirely covered by federal depository insurance. I Category 2 includes bank balances that are uncollateralized or collaterahzed with secunties pledged to the Authonty by pledging Avalabi o ae finan ialinstrtuti ns but not held in the Authonty's name. 3E662 Gross unrealized holding investments -Trust indentures and resolutions authorize the i i gains 12,519 2,224 Aur.honty to invest in obhgations of the U.S. Treasury, agencies, instrumentakties, and certificates of deposit. The Authonty's Gross unreahzed holding investments consist of U.S. government securities, certificates losses 2 2,799 of deposit, and repurchase agreements. The Authority requires that securities underlying repurchase agreements have a market value of at least 102 percent of the cost of the repurchase As of December 31 1997 the Autho"tY's available-for-sale agreement. Secunties underlying repurchase agreements are investments carried a't fair ' market value included nuclear delivered by broker / dealers to the Authontya trust agents. At Oecember 31,1997, the Authonty's repurchase agreements decommissioning funds of $50,066,000 with related unreahzed totaled $225103,000. holding gains of $10,480.000. As of December 31,1996 The Author ty's investments are categorized to give an indication , decommissioning funds totaled $40,912,000 with related - unrealized holding losses of $2,739.000. These unrealized of the level of risk assumed by the Authorty at year-end. Category holding gains or losses are rettected in the decommissioning 1 includes investments that are insured or registered or for which liability and not as a separate component of accumulated earnings the secunties are held by trust agents in the Authonty's name. Category 2 includes uninsured certificates of deposit which are reinvested in the business. All the Authority's investments with the exception of collaterahzed with secunties pledged to the Authorty by pledging decommissioning funds are hmited to a matunty of ten years or financial instructions but not held in the Atthonty's name, l 1997 Irwootments Cash Total Category Category Category Category Cartyng Market 1 2 1 2 venue value (Thousands) Cesh and Investments Hekt by Trustee (Desgnated).. Generalimprmement Funds. .. S 15,598 8 950 S 22 8 183 8 18,733 S 18,733 Oebt Service Reserve Funds. 98,452 0 21 0 98,473 98,473 Other Special Funds.. 71,353 0 8 0 71,381 71,381 Total Cash and investments Held by Trustee [Desgnated),. .S 183,403 8 950 51 S 183 $ 184 587 8 18_4,587 i 1 . Cash and Irwestmento Held by Trustee Revenue Fund. ,S 81,353 S O 172 S (10,827) S 50,898 8 50,898 Revenue Func. -Water System 884 0 0 0 884 884 i l Special Reserw Fund....... 88,401 0 100 740 89,241 89,241 L Special Reserve fund -Water. 83 0 0 0 83 83 Total Cash end investments Held by Trustee. 8 130,481 8 0 S 272 S (9,887) $ 120,888 8 120,888 Ocnd Funds-Current Portaon htarest .8 R 793 0 0 S 0 $ 82,793 S 82,793 Band Pnncipal, 48,3W D 1 0 48,383 48,383 Lease 438 0 0 0 438 438 Total Bond Funds - Current Portion .S 111,591 8 r3 1 S O S 111,592 8 111 592 1 0

1996 investments Cash Tntal Category Category Category Category Carrying Market 1 2 1 2 Value Value (Thousands) Cash and Investments Held by Trustee (Designated) General Improvement Funds. 23,722 950 13 27 $ 24,712 $ 24,712 Oebt Service Reserve Funds,. 125,423 0 19 0 125,442 125,442 i Other Special Funds... 66,426 0 1 0 66,427 66,427 ) l Total Cash and Investments l Held by Trustee (Designated). . $ 215,571 950 33 27 $ 216,581 $ 216,581 ) Cash and investments l Held by Trustee Revenue Fund.. 57,058 0 0 $ (5,675) $ 51.383 $ 51,383 Revenue Fund - Water System. 532 O O O 532 532 Special Reserve Fund. 93,625 0 100 372 94,097 94,097 Special Reserve Fund - Water.. 26 O O O 26 26 Total Cash and Investments Hel'J by Trustee., . $ 151,241 0 100 $ [5,303) $ 146,038 3 146.038 Bond Funds - Current Portion interest 69,746 0 0 0 $ 69.746 $ 69,746 Bond Principal, 47,425 0 0 0 47,425 47,425 Lease 436 0 0 0 436 436 Total Bond Funds - Current Portion. . $ 117,607 0 0 0 $ 117,607 $ 117,607

6 n - Nodt 5 - LonG-Tunu Dest Out;;TAmotmo: The Authonty's longterm debt at December 31,1997 and 1996 consisted of the following: l I 1997 1996 (Thousands) Electric Revenue Bonds Priority Obligations: [ mature through 2006) Interest rate 4,10% 33,580 36,535 Electric System Expansion Revenue Bonds: (mature through 2018) l . Interest rates vary from 5.40% - 5 7/8% 283,075 378,080 l !~ Capitalized Lease Obligations: [ mature through 2015) Interest rates vary from 2.00% - 5.00%. 39,185 ~ 42,712 l - Revenue Bonds: (mature through 2032)

Interest rates vary from 3.80% - 7.00% -

2,038,835 1,998,566 ' Total Long-Term Debt.- 2,378,545 2,455,893 Current Portion Long-Term Debt 81,094 62,947; Total Long-Term Debt [ Net of current portion) S 3,311,551 $ 2,392,946 1 I Maturities of longterm debt through 2002 are as follows:- Prionty Expansion Capitalized Revenue Obligations Bonds Leases Bonds Total .. Year Ending December 31, (Thousands) 1998 ~ $. 3,105 $ 4,820 3,609~ $ 49,560 61,094 ' 1999 3,245 5,100 3,328 63,450 75,123 2000 3,395 5,380 2,761 64,180 - 75,716 2001. 3,545 5.685 2,554 40,165 51,949-2002 3,705 6,020 2,654 - 33,390 45,769 Total ~ $ 16,995 $ 27,005 $ 14,906 $ 250,745 $ 309,651 The fair vane of the Authonty's debt is estimated based on Authority's total debt service over the life of its bonds by quoted market prices for the same or similar issues or on the approximately $22,228,000, resulting in an economic gain over t current rates offered to the Authority for debt with the same the life of the bonds of approximately $11,885,000.

remaining maturities Based on the borrowing rates currently GAS 8 No. 7 allows governmental antities to advance refund avcilable to the Authority for tax-exempt bonds and other debt debt through either legal or in-substance defeasance. On

' with similar terms and average maturities, and in accordance September 5,1997, the Authonty deposited $25,201,000 in with SFAS No.107, "Oisclosure About Fair Value of Financial ,en irrevocable escrow to in-substance defease to maturity ' instruments ' the fair value of debt is approximately $2.78 billion. Revenue Bonds due January 1,2001 through July 1,2006. The at December 31,1997 and 1996. amount deposited in escrow, plus earnings thereon, will be The Authonty refunds and defeases debt primarily as a means sufficient to pay principal at maturity of $29,035,000 in addition of reducing debt service, thereby postponing or reducing future to interest on the bonds for the period from July 1,2000 through . rate adjustments. July 1,2006 of approximately$6,751,000. in-substance defeased in 1997.1 the Authority issued $214.555,000 in 1997 bonds remain callable in accordance with the applicable call - R1 funding' Series A Bonds. These refundings reduced the - provision of the respective issue.

Refuaded amounts outstanding, original loss on refunding, and the unamortized loss at December 31,1997 are as follows: Refunding issue Refunded Bonds Refunded Original Unamortized Amount Loss Loss Outstanding (Thousands) Cash Defeasance $ 20,000 of the 1982 Senes A 2,763 1,805 1991 A,8,&C Refunding & 4,855 of the 1980 Senes A Improvement Series S 8,075 of the 1981 Series A $ 13,500 of the 1985 Series $ 32,500 of the 1985 A Refunding Series 4,856 216 1992 A Refunding 3,370 of the 1985 Refunding Series S 5,405 of the 1985 A Refunding Series $ 100,010 of the 1986 Refunding Series A $ 22,555 of the 1988 Refunding Senes A $ 15.370 of the 1991 Refunding Series B $ 12,085 of the 1991 Series O 27.455 42,188 27,898 1993 A&B Refunding $ 86,180 of the 1974 Series $ 93,360 of the 1979 Series A 4,980 of the 1985 A Refunding Series $ 14,935 of the 1986 Refunding Senes A $ 23,675 of the 1986 Refunding Series B $ 135,705 of the 1991 Refun Jing & Improvement Series B and C 135,705 38,870 38,870 1993 C Refunding $ 167,660 of the 1977 Refunding Series S 900 of the 1985 Refunding Series 2,390 of the 1985 A Refunding Series S 6.365 of the 1986 Refunding Series A $ 14,905 of the 1988 Refunding Series A $ 100,110 of the 1991 Refunding & Improvement Series 8 and C $ 279.905 of the 1991 Series O 380,015 72,311 64,895 1995 A Refunding $ 138,505 of the 1988 Refunding Senes A 20,024 15,726 1995 B Refunding $ 175,330 of the 1987 Refunding Series A 40,758 32,397 1996 A Refunding $ 257,795 of the 1986 Refunding Series C 92,596 78.788 1996 B Refunding 5,925 of the 1986 Refunding Series A 5,830 of the 1986 Refunding Series C $ 62,325 of the 1986 Refunding Series O 6,940 of the 1987 Refunding Senes A 4,155 of the 1988 Refunding Series A 4,831 3,435 Cash Defeasance $ 14,080 of the 1992A Series $ 14,955 of the 1996A Series 29,035 4,779 4,608 1997 A Refunding $ 100.000 of the 1978 Series S 68,325 of the 1991 Senes B $ 37,A95 of the 1991 Series 0 105,820 16.990 16,866 Total $ 678,030 $ 340,966 $ 285,504 0

The Authonty's bond indentures provide for certain restnctions, At Oecember 31,1997 the Authonty had a RevoMng Credit the most significant of which are: ~ Agreement with NationsBank for $250.000,000. This agreement

1. The Authonty covenants to establish rates sufficient to pay is used to support the Authonty's issuance of commercial paper.

all debt service. required lease payments, capital improvement There were no borrowings under the agreement during 1997 or fund requirements, and all costs of operation and maintenance 1996. Effective January 16,1998, the Authonty executed a new of the Authonty's electnc system and all necessary repairs. Revolving Credit Agreement with NationsBank for $500.000.000. replacements, and renewals thereof. In 1988 and 1989, the Authonty issued bonds (MinLBonds)

2. The Authonty is restricted from issuing additional panty in small denominations which are due on demand by the registered bonds unless certain conditions are met.

owner under a MinkBond Resolution. In 1990, the Revenue Bond As of December 31,1997,the Authorityisin compliance with Resolution was adopted and all senior debt including the existing all debt covenants. 1988 and 1989 MinkBonds were frozen except for refunding l purposes. Under the Revenue Bond Resolution, small denomination i NOTE B - COMMERCIAL PAPER AND MINI-BONDS: bonds due on demand (Series M Bonds) were issued. On July The Board of Oirectors has authorized the issuance of 1,1997, the Authonty issued $58.933.000 in tax-exempt commercial paper not to exceed $500,000,000. The paper is commercial paper notes to refund the 1988 and 1989 Mini-i issued for valid corporate purposes with a term not to exceed Bonds and the 1990 Series M Revenue Bonds at an estimated 270 days. For the years ended December 31,1997,1996, and effective interest rate of 3.75%. This refunding is expected to 1995, the information related to commercial paper was as result in,ah flow savings of approximately $32,500.000 over follows: the lift a the refunded bonds and result in an economic gain over the 4 e of the bonds of approximately $12,550,000. 1997 1996 1995 At Oecember 31,1997, the Authority had additional Revolving i Credit Agreements with NationsBank totaling $22,000.000. l Effectue interest rate These agreements are used to provide liquidity for the put feature (at December 31) 3.83% 3.59% 3.71% on al'. outstanding Mini-Bonds. There were no borrowings under Average annual amount outstanding ($000) S 225,004 $ 225.627 $175,170 l Average matunty 63 days 65 days 77 days Average annual effective interest rate 3.65% 3.53% 3.88% l 1 l Commercial Paper and Mini-Bonds outstanding at December 31, are as follow: 1997 1996 (Thousands) 1 Commercial Paper 6 241,850 204,773 Mini-Bonds: 1988 Series, bearing interest at 7.75% and due 2003 S O 16.362 1989 Series, bearing interest at 7.00% and due 2004 0 19.636 Total MinLBonds S O 35,998 Revenue Bonds (Series M): 1990 Series bearing interest at 7.30% and due 2005 and 2006 6 0 23.463 1991 Senes bearing interest at 6.875% and due 2007 and 2008 29,478 29.095 1992 Series beanng interest at 6.25% and due 2007, 2008, and 2009 41,155 40,878 1993 Series bearing interest at 5.35% and due 2010, 2011, and 2012 29,828 29,787 Total Revenue Bonds (Series M) 100,457 123,223 i l-i Total MinkBonds and Revenue Bonds (Series M) S 100,457 159,221 Total Commercial Paper, Mini-Bonds, and Revenue Bonds (Series M) S 342,107 363.994 l l i I 1 l

NOTE 7 - SUMMEn NUCLEAR STATION: (formerly Rural Electnfication Administration) for funds borrowed, Th:3 Authonty and South Carolina Electnc and Gas (SCE&G) to construct the above-mentioned facilities. The Authority has are parties to a joint ownership agreement providing that the options to purchase the leased properties at any time dunng the /,Bonty and SCE&G shall own the Summer Nuclear Station with penod of the lease agreements for sums equal to Central's undivided interests of 33%% and 66 / %, respectively. SCE&G indebtedness remaining outstanding on the properties at the 3 is solely responsible for the design, construction, budgeting, time the options are exercised or to return the properties at the management, operation, maintenance, and decommissioning of termination of the lease. The Authonty plans to exercise each and the Summer Nuclear Station, and the Authonty is obkgated to pay every option to acquire ownership of such facihties prior to its ownership share of all costs relating thereto. The Authonty expiration of the leases. receives 33'/ % of the net electricity generated. At December Future minimum lease payments on Central leases at Oecember 3 31,1997 and 1996, the plant accounts included approximately 31,1997 wem: $505,000,000 and $480.000,000, respectively, representing the Authority's investment, including capitalized interest, in the Year endii.g December 31: Amount Summer Nuclear Station. For each of the three years ended (Thousands) D:cember 31,1997,1996, and 1995, the Authonty's operation and maintenance expenses included $45,712,000, 1998 5,198 $42,433,000, and $45.708,000, respectively, for the Summer 1999 4,802 Nuclear Station. 2000 4,129 Nuclear fuel costs are being amortized based on energy 2001 3,821 expended, which includes a component for estimated disposal 2002. 3,818 costs of spent nuclear fuel. This amortization is included in fuel Themafter, 29,832 expense and is recovered through the Authority's rates. SCE&G has an on-site spent fuel storage capaoility until at Total minimum lease payments, 51,600 least 2009 and exnects to be able to expand its storage capacity Less amounts representing interest. 12.414 to accommodate the spent fuel output for the life of the plant through rod consolidation, dry cask storage, or other technology Balance at December 31.1997. . $ 39.186 as it becomes available. In addition, there is sufficient on-site j storage capacity over the life of Summer Nuclear Station to Property under capital leases and related accumulated 1 permit storage of the entire reactor core in the event that amortization included in utshty plant at December 31,1997 complete unloading should become desirable or necessary for totaled $97,473,000 and $65,830,000, respectively, and at any reason. December 31,1996 totaled $98,178,000 and $63,650,000. The Nuclear Regulatony Commission (NRC) requires a licensee respectively. of a nuclear reactor to provide minimum financial assurance of Operating lease payments, including the opereung lease payments its abihty to decommission its nuclear facihties. In compliance with for leased coal cars which are reflected in fuel oventory, totalnd the applicable NRC regulations, the Authonty estabhshed an $5,811,000, $3.672,000, and $2.214,C00 during the years ended external trust fund and began making deposits into this fund in December 31,1997,1996, and 1995, respectively September 1990. In addition to providing for the minimum requirements imposed by the NRC, the Authonty makes deposits NOTE 9 - CONTP.ACT WITH CENTRAL ELEcTmc POWER into en internal fund in the amount necessary to fund the CoOPERATWE, INC,: difference between a site-specific decommissioning study Power supply and transmission senaces are provided to Central in completed in 1991 and the NRC's imposed minimum requirement. acconiancewth a powersystem coordnabon and integration og um a t. The Authonty's one4.hird share of the estimated decommissioning In addiuon, the Authonty will be the sole supplier of Centrars energy costs of the Summer Nuclear Station equals approximately needs excluding energy Central ruceNes from the Southeaster Power $76,266,000 in 1990 dollars. The Authority accrues for its Adnminuuun and S&&G. share of the estimated decommissioning costs over the remaining hfe of the facihty. These costs are being recovered through the NOTE 10 - COMMITMENTS AND CONTINGENCIES: Authonty's rates. Budget - The Authonty's capital budget provides for expenditures of Based on current decommissioning cost estimates developed app-uiowly $84,415,000 dunng the year ending December 31, by SCESG, these funds, which totaled approximately $50,066,000 1998 and $155,274,000 dunng the two years themafter. These (adjusted to market) at December 31,1997, along with future expenditures will be financed byintemally p uM funds and additional deposits into both the external and internal decommissioning barmwings. accounts and investment earnings, are estimated to provide Purchase Cortwnitments - The Authonty has contracted for longterm sufficient funds for the Authonty's one-third share of the total coal purthases under contracts with estimated outstanding minimum decommissioning costs. obligations at December 31,1997 as follows: The Energy Policy Act of 1992 gave the Department of Energy (DOE) the authonty to assess utilities for the decommissioning of Year ending Decer > 31: Amount its facihties used for the enrichment of uranium included in (Thnusands) nuclear fuel costs. In order to decommission these facilities, the 1998 100,947 DOE estimates that it would need to charge utthties a total of 1999 100,134 $150,000,000, indexed for inflation, annually for 15 years 2000 102,038 based on enrichment services used by utikties in past periods. 2001 90,778 Based on an estimate from SCE&G covenng the 15 years, the 2002 91,111 Authonty's remaining one-third share of the habihty at December 31,1997 totals $1,407.000. Such amount has been deferred Total 485,000 and will be recovered through rates as paid. These casts are included on the accompanying balance sheets in " Deferred Debits The Authonty's outstanding minimum obGgabons under en existing and Other Assets" and " Deferred Credits and Other Noncurrent pumhased powercontractm of December 31,1997 were appi ueatdy l Liabilities." $97,000,000. The term of the contract is 37 years. l The Authonty has commitments for nuclear fuel unnlu u si. and NOTE 8 - LEASES: fabncabon contracts which are contingent upon the operabng life of the The Authonty has capital lease contracts with Central Electric nuclear unit. As of December 31,1997, these Ummbius total Power Cooperative, Inc. (Central), covenng a steam electric approximately $72.3 milkon cwer the next eight to 12 years, generating plant, transmission facihties, and various other facihties. Risk Management - The Authonty is exposed to vanous nsks of loss The remaining lease terms range from 1 to 18 years. Quarterly related to torts; theft of, damage to, and destrucbon of assets; business lease payments are based on a sum equal to the interest on and intermption; and erroni and omissions. The Authonty purchases fs5 principal of Central's indebtedness to the Rural Utikties Service w on a vai insurance to cover these nsks, subsct to coverage limits G

a prd wanous exclusions Settled claims resultang from these nsks have any nuclear incident has been estabhshed at $8.9 blion by the Pnce-not exceeded commertial insurance coverage in any of the past thme Anderson Indemnifcauon Act. The $8.9 bihnn would be cowmd by years. Polcies are sutaect to deducubles rongulg fmm $1,000 to nuclear liebley insurance of about $2G] milhon per s,te, wth potertial appnwmately $850,000 wth the excepuon of named storm fosses retrmpecbve asscements of up to $79.3 milhon per bcensee for each whch carTy deducubles up to $3,000,000. Also a $1 millon gene'ai nucler incdont occumng at any reactor in the Unted States (payable liabkty self*1surcd layer exists between the AuttiontVs pnmary and at a rua not to exceed $10 milhon per incident, per year). Based on es excess habbty polcies. onethrd interest in Summer Nuclear Station, the Auttionty would be The Authonty e self4nsured for auto and dental, and env unmenLd respornble for the maximum assessment of $26.4 mnon, not to incdents that do not anse cut of an insumd event. The Authonty exceed appmximately $3.3 mAon per incdont, per year. D1:s amourt pumhases commemial insurance subect to cr-ege limts and is sut ect to further increases to reflect the effect of (i) inflauan, (ii) the i vanous exclusons, to cover automatave exposum in excess of $2.0 kcensing for operation of additional nuclear reactors, and muon per incident Risk exposure for the dental plan s hmited by plan [iii) any increase in the amount of commercial habkty insurance requimd prtusons. There have not been anythetiparty claims for erumnmental to be rnaintained by the NRC. damages fur 1997 or 1996. The Authonty currently mports all of ts Adiltaanally, S&&G and the Authunty maintain wth Amencan nsk managemert actuties riits general fund. Daims expenditures and Nuclear Insurers (ANI) and Nuclear Electnc Insurance Limited (NEIL) hablitaes are mported when e is pmtubie that a loss has occurmd and $500 milkon pnmary and $1.5 bilicn excess property and l the amount of the loss con be reasonabh estamated. decontaminaban insurance to cover the costs of cleanup of the facilty Additionally, effecuve September 1,1997, the Authonty is self-in the event of an accident. In addtion to the premiums pad on the risured for claims of employees for workers' compensauon benefes. excess polcy, S SG and the Auttionty could also be assessed a Pnor to September 1,1997, woriers' compensabon claims wem mtmacuve premium, not to exceed five bmes the annual premium, r1 cowred by the State Accdent Fund (the Fund). Any work < elated the evert of pmperty damage to any nuclear genemting facilty covered inciderts or illnesses that have an occurmnce or diagnosis date pnor by NEIL Based on the current annual premium and the Authonty'e one-to September 1,1997, are cowred under the Fund. As of December thrd intomst, the Authonty% maximum mtmactive premium would be 31,1997, the amount of the workersb upewuun selt<1sumd liabbty $2.5 rnillon. was $40,000. The Authortys self*isumd foranymtmaam premiurn asw.u nents, Effectue January 1,1947, the Authonty adopted the provisions of claims in excess of stated coverage, or cost increases due to the StatementofPosioon" 1 "Ermmnmental Remediacon LiabbtJes." purchase of replacernent power. This statemert en authontative guidance for recogntion, Dean Air Act - The Authonty endeavors to ensure that its facihues rneasurement, d. sg disclosure of erumnmental remediabon comply wth appicable envimnmental regulatons and standartis-liabhues in finance tt r ;rients. SDP 96-1 did not have a matenal Congress has pmmulgated comprehensive amendments to the impact on the Authec; s financial positaon or results of operabons upon Dean Ar Act, including the addtion of a rew federel pmgram relating adopbon to acid preciptabon. The Authonty has evaluated the potenbalimpact A: December 31,1997, the amount of the self4nsured habihues of this egslation, including new hmits on the allowable rates of eriussion l was $1.3 milhon. The habikty is the Authonty's best estamate based of sulfur dioxde and nitrogen oxxies. Whle the legislauon contains a on available information. Changes in the reported liability in each of number d new restncuans, the most signifcant new requirements, the past two years are as follows: relaung to acd pmcipitabon, wil take effect January 1, 2OJD. The Dean Ar Act Amendments require, among other things, 1997 1996 specific reducuans in sulfur dioxdo and nitrogen oxide emissions imm piousands) f ssMred genemung units. These reducbons mil be requimd in two phases. Phase I compliance was irnplemented January 1,1995, whle Unpaid claims and claim Phase Il comphance is to begin on January 1, 2000. The Authonty adjustments expenses at projects that t wil be necessary to pumhase sulfur dioxde emission beginning of year S 1,649 $ 1,634 credits ard upgrade the sulfur removal capabhues of existing units to rneet Phase B sulfur dioxide emission kmitations. To meet u mhnny incurmd claims and requirements of the Dean Ar Act, the Authonty has instaHed conunuous claim ad!ustment expenses emissions monstonng equipment at a cost of $5.2 milhon. It is also Prwson for insured events necessary that the Authonty upgrede the combusbon systems on some of the current year 769 789 of ts boilers to meet Phase Il nitrogen oxide kmtabons. This cout wil be Increases (decreases) in incurred between 1998 and 2000. The Autharty has budgeted $8.2 prwson for pnar years' events (367) 195 milhon to complets these combusuon upgrados Most Dean Ar Act Amendment regulabons have been finahzed and costs have been Payments for curmnt quantified However,otherregulatoryactionspendingunderTtjeIof the and pnor years 758 969 Dean Ar Act relating to ozone transport and nonettainment have yet to be finahzed. Thus, complete comphance costs cannot be quanufied Total unpad clams and claim at this ume. expenses at end of year S 1,293 $ 1,649 Safe Drinking Water Act -The Safe Onnking Water Act (SDWA) was reauthonzed dunng 1996. The Authonty continues to stay abreast of The Authonty pays insurance premiums to certain other state pmposed regulatory changes as they are developed. Tre most recent agencies to cover nsks that may occur in normal operabons. The pmposed state regulauons posed no signifcant concerns for the insurers pmmise to pay to, or on behalf of, the insurtd for covered Authonty econome losses sustained dunng the pohcy penod in acconf wth De nWatarAct The105thCongresseduetoconsderreauthanzaton insun,nce polcy and beneft pmgram hmits. Several State funds of the Dean Water Act (CWA). The complex act could generate accumulate assets, and the state stself assumes al nsks for the regulatory changes that could impact the power generabon sector folkwng: significantly. Although predctions am that mauthonzation is unlikely

1) Coms of employees for unemployment uu npu wuon dunng ther second sesson, the Authonty will be nmtonng for CWA benefts (Employment Secunty Commisson),

regulatory issues irnpacung electncal utahues dun,ng 1998.

2) Daims of covered employees for health benefts (Offoe Open Access Transmission Tanff-On January 11,1996, the Authonty of insurance Senres), and submitted to the RRC open access transmsson tanffs intended to

3) Caims of commd employees for longterm disabkty and compty wth tfe RRC's comparabhty standartis and reflect the pm-group hfe insurance benefts (Retnment Systems).

forma tanffs. In addicon, the Authonty asked the RRC to declare that Employees elect health coverage thmugh ether a health maintenance the tanffs sausfy the open access tanffs reciprocty requirement for ortjanizauonorthmughtheState'sself4nsuredplan. Allothercmerages transmitting ubkues that am emmpt fmm the RRC's revow. hsted abow are thmugh the apphcable State selfansured plan excer t On May 29,1996, the RRC ssued a declamtory onfer finding that that additional long-term disabity pmrniums are mmitted to commei : ial the Authonty's open access transmission tanffs meet the comparabbty camers standartfs (subject to a comphance fihng) and that the Authonty's hiuclear insurance - The maximum liabihty for public claims ansing fmm transmission rates are nordis-wh2y The ERC also adopted tho

Authonty's suggested procedure whereby norvjunsdictional utillbes Pensions by State and Local Govemmental Employers", th'e pension could ensure that an open access transtrission tanff coreplies wrth liability [ assets) for the System was determined to be zero both pnor the FERC's recipmcity requirement. to the January 1,1996 transition date and at the transition data. On July 9,1996, the Authonty filed a revised tanff in compliance The system issues a stand alone financial report that includes all wth Order 888 which meetc FERC's reciprocity requimments. The required supplementary information. The report may be obtained by revised tanff substant, ally conformed with the revised pro-forma wndng to: South Carolina Retirement System, Fontaine Business tanff contained in Order 888, and unbundled the charges for Center, 202 Arbor Lake Onve, Columbia, S.C. 29223. ancillary services. The Authonty also provides compensation benefits to certain On July 30,1997, the FERC adopted an order approving the employees designated by management and the board of directors Authonty's transmission rates, ancillary charges and nonrate under the Supplemental Executive Retirement Plan (SERP). The cost terms and conditions set forth in the July 9,1996 fihng. of these benefits is accrued on an actuanally deterrruned basis. The FERC Order 889 requires junsdicuonal udlities to provide all accrued liability at December 31,1997 and 1996 was $e 25,000 information regaiding transmission availability and pnce on en Open and $4,245,000, respectively. Access Same-Time information System (OASIS) via the Internet. l The Authonty is participating in the VACAR OAS!S, and on NOTE 12 - OTHER POSTRETIREMENT DENEFITS: l January 3,1997, the Authonty implemented and filed with FERC The Authonty provides certain health, dental, and life insurance l procedures for implementation of the nor>discnminatory standards benefits for retired employees. Substantially all of the Authonty's of conduct. employees may become eligible for these benefits if they retire at any Competition - The electnc industry has become, and is expected to age with 30 years of service or at age 60 with at least 20 years of be, increasingly compeutive due to regulatory changes and market service. Currently, approximately 313 retirees moet these developments. As utilides move fr, a regulated environment requirements. The cost of the health, dental, and life insurance where rates are based on co'. ur service to a deregulated benefits are recognized as expense as the premiums are paid. For environment where rates are based on market forces, there may be the years ended December 31,1997,1996, and 1995, these costs that cannot be recovered by charging the market rate. Some costs totaled $702.000, $668,000, and $627,000, respectraly. deregulation measures proposed to date allow for recovery of some Dunng their first ten years of service, fulltime permanent portion of these costs but ultimate regulatory treatment of such employees can earn up to 15 days vacation leave per year. After ten costs cannot be predicted. years of service, employees eern en additional day of vacadon leave Bills have been introduced in the U S. Congress and the S.C. for each year of service over ten until they reach the maximum of 25 Legislature to provide for retail customer choice. The outcome of days per year. Employees earn annually a half day per month plus these intuouves and the impact on the Authonty cannot be determined three additional days at yearsend for sick leave. at this time-Employee., anyforwardupto45daysof vacationleaveand The Authorty has developed and is implementing a long-term 180 days of sick leave from one calendar year to the next. Upon strategic plan to position the Authonty to compete effectively in the terminauon, the Authonty pays employees for accumulated vacation changing competitive environment. Consistent with the plan, the leave at the pay rate then in effect. In addibon, the Authonty pays Authonty is implementing initiatives to reduce outstanding debt, employees upon retirement 20 percent of their accumulated sick achieve more financial flexibility, reduce operating, maintenance and leave at the pay rate then in effera. Pnor to 1995, those costs were capital costs, increase revenue, retain customers, and strengthen camed in a deferred debt and liabilty account. However, in 1995, employee performance and accountability. the Authonty changed its accounting policy and began amortizing While the Authonty is taking these and other actions to prepare the balance over a five-year period. The remaining unamortized for a deregulated market, the Authorty cannot predict what effects balance at December 31,1997, is $3,587,000. Effecove January increased compettion will have on the operatons and financial 1,1995, the Authonty began recognizing these costs as expenses condition of the Authonty. in the period incurred. This change in accounting policy did not have a matenal impact on the Authonty's financial position or results of NOTE 11 - RETmEMENT PUuW: operation. Substanually all Authonty fulkume employees must participate in one of the components of the South Carolina Retirement System NOTE 13 - CREDrT RISK ANo MAJOR customers: (System), a cost shanng, multiple +mployer public employee Concentrations of credit risk with respect to the Authonty's retirement system, which was established by Section 9-1-20 of the receivables are limited due to the large number of customers in the South Carolina Code of Laws. The payroll for employees covered by Authonty's customer base and their dispersion across different the System for each of the years ended December 31,1997, industnes. The Authonty maintains an allowance for uncollecuble 1996, and 1995 was $77,068,000, $74,016,000, and accounts based upon the expected collecubility of all accounts $72,520,000, respectively. receivable. Vested employees who retre at age 65 or with 30 years of Sales to two major customers for the years ended service at any age are endtled to a retirement benefit, payable December 31,1997,1996, and 1995 were as follows: monthly for life. The annual beneft amount is equal to 1,82 percent of their average final compensation times years of service. Benefts 1997 1996 1995 fully vest on reaching five years of service. Reduced retirement benefits are payable as early as age 55 The System also provides (Thousands) death and disability benefits. Benefts are established by state Central Electnc Power statute. Cooperauve, Inc. S 328,000 $ 314,000 $ 294,000 Article X, Section 16 of the South Carolina Consutucon requires that all Stateoperated retirement plans be funded on a sound Alumax of actuanal basis. Tale 9 of the South Carolina Code of Laws (as South Carolina, Inc. S B 5,000 $ 87,000 $ 73,000 amended) prescnbes requirements relating to membership, benefts. and employee / employer contnbutions. No other customer accounted for more than 10 pertent of the Employees are required by state statute to contnbute 6 percent Authonty's sales for the years ended December 31,1997,1996, of salary. The Authonty is required by the same statute to contnbute and 1995. 7.55 percent of total payroll. The contribution requirement for each of the years ended December 31,1997,1996, and 1995 was $5.935,000, $5,700,000 and $5,574,000 imm the Authonty and $4,624,000, $4,441,000 and $4,343,000. respectively from employees. Tne Authonty made 100% of the required contnbubons for tech of the years ended December 31,1997, 1996, and 1995. l in accordance tyth GASB Statement No. 27, Accounting for 1 O I v

Finance-Audit Committee Chairman's Letter l The Pinance-Audit Committee of the Board of Directors is composed of five independent l directors: Leon S. Goodall, chairman; Larry L. Bigham; Frances B. Gilbert; J. Mac Walters; and Johnnie poe) Young. The Committee meets monthly with members of management and Internal Audit to review and discuss their activities and responsibilities. The Finance-Audit Committee oversees Santee Coopers financial reportmg and internal auditing processes on behalf of the Board of Directors. Monthly briefings on the financial statements and periodic reports from management and the internal auditors pertaining to operations and representations were received. In fulfilling its responsibilities, the Committee also reviewed the overall scope and specific plans for the respective audits by the internal auditors and the independent public accountants. The Committee discussed the Company's financial statements and the adequacy of its system of internal controls. The Committee met with the independent public accountants and with the General Auditor, without management present, to discuss the results of the examination, the evaluation of Santee Coopers internal controls, and the overall quality of Santee Coopers financial reporting. .50% Leon S. Goodall, Chainnan Finance-Audit Committee

Board of Directors ~ ff-V f 1 John S. Rainey Robert D. Bennett Chairman First Vice Chairman Represents the Electric Cooperatwes g _. \\ q' r-Leon S. Goodall Larry L Bigham Second Vice Chairman Represents 6th Congressional District Represents 2nd Congressional District A 9: r f Juanita W. Brown Frances B. Gilbert Represents 1st Congressional District Represents Hony County

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?~4 a. ' Y. ) . 'M i 2 ..,m t g. l ' (Q.) ~_.) a s 3.n 'l '/ ' i N I Il E /t ll l[ e e Claude V. Marchbanks Henry B. Rickenbaker 1 l ] l i Represents 3rd Congressional District Represents 6th CongressionalDistrict j [ Nilh5[ M 3lP H I ej [3 lh ma Ei \\ ilk, h W - r

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f d ik i IF John D. Trout J. Mac Walters F i { E RepresentsBerkeley County Repre:ents 4th CongressionalDistrict ~ s r.*iEAEj ? $'~$}lth, wh_. a$ h { L gi ' -4 - ny ,b &[.h+ff;,fff,f;[y f J. Joseph Young Represents Georgetown County A $$bdNbM I

Advisory Board David M. Beasley Governor James M. Miles Secretary ofState Charles M. Condon Attorney General Earle E. Morris Comptroller l 1 Richard A.Eckstrom ll State Treasurer Management T. Graham Edwards Ronald H. Holmes President and Vice President ChiefExecutive Officer Human Resource Management Emily S. Brown Byron C. Rodgers Jr. Executive Vice President Vice President Administration and Finance Engineering and Construction Services Alfred Calafiore Jerry L Stafford Executive Vice President Vice President Planning and Bulk Power Markets Corporate Communications 9. Bill McCall Jr. William R. Sutton Executive Vice President Vice President Operations Planning and Power Supply John H. Tiencken Jr. LE " Butch" Volf Jr. Executive Vice President Vice President W and General Counsel Transmission i., " Lonnie N. Carter John S. West Vice President Vice President Corporate Forecasting Property and LegalServices y 3 I Maxie C. Chaplin Elaine G. Peterson Vice President Controller Generation H. Roderick Murchison Zack W. Dusenbury Treasurer Vice President Distribution Wm. Glen Brown Jr. Corporate Secretary

Schedule of Refunded Bonds Outstanding e As of December 31,1997 Un Thousands) CALL DATE JULY 1,2000 MY 1,2000 MV 1,2001 MY 1,2001 MV t,2002 $ERIES 1991 AREF(8) 1990A REF IS)(3) 1991 B&C REF 1991 4 1991-0 OlHOffeAL PAATURITY g Rate N Ameent ($) RateN Amount (1) RateN Ameent($l Rate N Amount ($) RateN Amount (3) 1998 1999 2000 2001 4.790 6.60 15,370 5.90 5.870 2002 7,400 4,500 6.00 6.215 2003 2004 2005 2006 6,680 5,665 6.40 6,590 2007 7.00 4,025 2008 2009 7.00 8.915* 2010 2011 5% 7,010* 2012 7.00 25,610* 6% 7,470* 2013 6% 7,955* 2014 6% 8,470* 2015 2016 2017 2018 2019 2020 2021 7.10 135,705* 2022 2023 2024 6% 130,275* 2025 2026 6% 61,560* 2027 6.00 12.120* 2028 6.00 12,850* 2029 6.00 13.620* 2030 6.00 14,435* 2031 6.00 15.300* 6% 149.630* 2032 Totals per $14.080 $14.955 U19.510 $329.485-Series Totals per Call $29,035 .$325,380 $323,615 Date

• Term Bonds (For Footnotes See " Schedule of Bonds Outstanding.")

1 1 a Schedule of Bonds Outstanding As of Decernber 3f,1997 (In Thouesndn> b .m 1991 A.S&C 1991 M 1982 A MAltikffY 1967 1973 1977 1878 REFUNDING S MINl-80ND 1981 D REFUNDING DAff SERIES SERIES SERIES SERfES IMPROVEMENT SERIES SERIES SERIES SERIES JULYl Int Rate AmL IntRate Amt inLRate Amt inL Rate Amt int Rate AmL lut Rate AmL Int Rate AmL int Rate Amt 1998 4 10 3,105* 5% 2,125' 5% S35 5 40 1,760 6% 2,935 5 % 4,980 5.30 2,405 1999 4.10 3,245' 5% 2,245' 5% 1,005 5.70 1,850' 6.30 3,120 5.65 5,255 5% 7.940 2000 4.10 3,395* 5% 2.375* 5 55 1,065 530 1.940* 6.40 4,205 5.80 5,550 5.60 2.385 2U01 4 10 3,545' 5% 2,510* 5 60 1,130 5 70 2,045' 5.7022,505 2002 4,10 3,705* 5% 2.655' 5 60 1,220 5 70 2,145' 6.70 6,240 2003 4 to 3,870* 5% 2,810' 5% 1 215* 'i70 2.260* 6.00 5.940 2004 4.10 4,045' 5% 2,970* 5% 1.380* 5.70 2,380* 2005 4.10 4,230' 5% 3.140' 5% 1,460* 530 2,500* 6.20 6,290 2006 4.10 4,420' 5% 3.325* 5% 1,570* 530 2.630' 7,00 3,760 2007 5% 3.515* 5% 1395* $30 7.385* 6 % 20,388 6.20 7,100 2008 5% 3,715' 5% 1,945' 5 70 7,845' 6% 9,089 (2) 6.20 7,540 2009 5% 3,930* 5% 2,080* 5% 2,655' 6% 8,005* 2010 5% 4,155' 5% 2,225* 5% 2,815* 6% 8,515* 2011 5 % 11,520' 5% 2,180* 5% 2,990* 6 % 10,835* 2012 5 % 12,180* 5% 2,300* 5% 3,180* 6 % 11,520* 2013 5 % 12,880* 5% 2,500* 5% 3,370* 6 % 12.265* 2014 5% 2,640* 5% 3,580* 6% 1,935' l 2015 5 % 21,065* 5% 3,800* 6% 2,055' 2016 5 % 21.235' 5% 3,995* 6% 2,275' 2017 5 % 34,580* 5% 4,195* 6% 2,400* 2018 5% 16,100* 6% 2,570* 2019 6% 9,570* 2020 6% 7,695* 2021 6% 6.870* 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Add. Total 0utstan&ng As of 12/31/97 33,560 75,050 105,605 81.420 20,260 29.476 (2) 15,785 148,615 Bonds Redeemed As of 12!31/97 18,040 23 230 9,395 18,580 30,640 838 4,730 5.850 Bonds Refunded As of 12/31/97 0 0 0 100,000 319.510 0 329,485 14.080 (8) Less: Accreted Value As of 12/31/97 3,156 Net Onginalissue Amt. 51,600 100,000 115,000 200,000 370,410 27,158 350,000 168,545 FOOTNOTES: (3) Maturmes are on January linstead of July 1. (5) $10,210,000 are serial bonds.snd $9,000,000 are term bonds. (6) Included in yeat that payment is made. (Exclussve of Accrued Interest.) exempt (" FLOATS") and (i und g may cause small variances. (4) These are floating auction tax; RITES } bonds which residualinterest tax-exempt ( (7) includes accretion on Capital Appreciation Bonds from 1/1/95 through have a semiannual bond equivalent yield of 5.40% per (2) Includes accretion on Capital Appreciation Bonds maturity. annum on those maturing W342006 and 5 60% per g

g 9A annum on those with a final matunty of 6/28/13.

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e l e l l l 1sar M 1ss3 A&B 1ss3 c Isu M iss5 A 1995 8 1995 A 1995 B MN BOND 1992 B REFUNDING REFUNDING MM BONO REFUNDING REFUNDING REFUNDING REFUNDING SERIES Ql SERIES SERIES SERIES Ql SERIE50) SERIE8 0) SElllES Ql SERIE5 GI SEMIES Ql intRole AmL intRete Amt int Rate AmL tut Rate Amt k Rata AmL M Rate Amt Int Ross Asd. ImL Rate Amt, intRate Amt 4 00 5.480 5 40 5,490 5.00 1,735 6.00 8,450 4.00 17,660 4.20 6,955 5% 9,105 5.10 1,820 6.00 10,155 5.00 17,405 5.20 335 4.80 16.995 4.30 4,055 6% 9.625 5.20 1,9 I5 6.00 2,565 5.00 14,785 5.30 360 5.00 6,990 4.40 455 6% 6,005 5.30 2.015 5% 380 5.00 9,810 4% 3.625 6% 5,700 5.35 4,260 6% 1,450 5 60 405 5 20 6,280 4 % 12.030 6% 7,890 5.40 3,4 t o 6% 1,645 5.70 435 5 20 10.115 4 % 12,500 6% 10,160 6% 3,565 5 80 460 5.30 7,080 4% 6,440 6% 10,765 6% 4,645 5.90 490 5.40 10,400(4) 4 % 13,310 6% 10,350 6 % 9,794 5.00 525 5% 8,410 4 % 11,755 6 % 9.854 6.00 555 5 % 10,920 5 00 18,230 6% 815' 5.70 3255 6% 3.730 6 % 21,507(2) 6.00 595 5% 9,765 5.00 1,470 5% 1,035' 6.00 630 5 % 11,480 5.10 19,210(5) 5.35 10.991 (2) 6% 860* 5.80 3.485 5% 15,170* 6.00 670 5 % 11,240 5.10 16,740* 5 35 11,038 (2) 6% 915* 5.80 3,705 5% 6,165* 6.00 715 5 60 12,100(4) 5.00 19.040* 5.35 7,796 6% 970* 5% 3,940 5% 5,615' 6.00 765 5.60 29,300(4) 5.00 16,645* 6% 1,025' 5% 4,180 5% 5,925' 6.00 810 5 % 38.255* 5.00 9.255' 6% 4.460* 5% 4,430 5% 6,530* 6.10 865* 5 % 18,905* 5.00 15,825* 6% 8,275* 5% 4,705 5% 7,005* 6.10 920* 5 % 19,880* 5 00 23,265* 6% 4,670* 5% 5,000* 5% 13.075* 6.10 980* 5 % 20,920* 5.00 19.045' 6% 680* 5% 5.320' 5% 19.650* 6.10 1,045' 5 % 22,000* 5.00 14,055' 6% 720* 5% 5.685* 5% 20,735' 6.10 1,115' 5 % 43,270* 5 % 18,555' 6 % 10,400* 5% 6.085* 5% 21,875* 6.10 1,185* 5 % 42,015' 5 % 23,880* 6 % 23.100* 5% 6,515* 5% 23.155* 6.10 1,260* 5 % 18.995* 5 % 27,120* 6 % 24,915* 5% 6,970* 5% 38,535' 6.10 1,345* 5.00 29,460* 6 % 11,505* 5% 34,165* 5% 24,185* 5 % 11.435' 6.10 1,430' 5.00 28,595* 5% 30,270* 5 % 10.070* 6.10 t.525' 5 00 28,165* 6.10 i.025' 5 00 29,575* 6.10 1,730' 5 % 31,055* 6.10 1.845' 5 % 26,585* 5 % 21,890* 5 % 23,010' 5 % 24,185* 5 % 25,425' 5 % 13,030' 41,155(2) 25,000 385.125 600,005 29,826 (2) 137,125 174,140 244,860 71,355 1,266 0 0 31.355 1,001 2,560 2.935 7.230 12,115 0 0 0 0 0 0 0 14,955(8) 0 3,242 1,317 39,179 25 000 385.125 631,360 29,510 139.685 177,075 267,045 83.470 3 Cash defeased to muunty, $14,080,000 of the 1992A Refun&ng Bonds due 7/1/02 and 7/1/06 and 314 955.000 of the 1996A Refundmg Bonds due 1/1/01, 1/1/02, and 1/1/06. Bonds are subject to the onginah;all provisions as stated in eoch othcial statement. For Details on Calls See " Schedule of Rufunded Bonds Outstanding *) ~*, m

I ~ 1957 A ) FUNDING TOTAL TOTAL TOTAL 15a13 CU PEINCIPAL REVENUE OtBT 1 Rate Amt MATUNTIES (S) INTER 15Till 5f RVIC116) 0 425 57,485 129,289 186,774 6 1,695 71,795 129,626 201,421 6 1,765 72,955 125247 198202 0 1,835 49,395 121,411 170,806 0 1,925 43,115 118253 161,368 47,835 115,974 163,809 47,640 113,086 160,726 0 2,025 49,035 110,837 159.872 50,255 107,845 158,100 70,667 105,376 176,043 77,492 (2) 109,849 (7) 187,342 51,042 (2) 108,479 (7) 159.521 e 2,505 82,041 (2) 97,048 (7) 179.089 0 9,780 87,778 (2) 92,905 (7) 180,683 0 15,040 94.396 85,065 179,460 0 15,815 104,670 79.891 184,561 0 16,630 88,525 74206 162.731 0 12,980 95.480 69.148 164,628 0 9,095* 103,410 63.693 167,103 0 9,485* 117255 58.010 175265 0 22,410* 105,320 51259 156,579 0 17,755* 128,625 45,126 173,751 PERT 0 380* 127,925 37,816 165,741 0 400* 125,065 29,945 155,010 0 420* 112.515 22,470 134,985 I 0 440' 70,805 17.376 88,181 g 0 465* 30,155 14.681 44.836 k 0 485* 31,685 13,121 44.806 0 510* 33295 11,461 44,756 0 6,595* 35,025 9,701 44,726 0 12,985* 34.875 7,857 42,732 0 13,635* 36,645 6.041 42,686 e 14,315' 38,500 4.124 42.624 e 15.050 40,475 2,100 42,575 s 7,710* 20,740 531 21,271 214.555 2,433,917 (2) 2 288.845 (7) 4,722,762 0 170.485 0 778,030 7,715 214.555 3,374,717 9%o50404-59 -)

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~~ '., Jerry L. Stafford i- ~ Vice President, Corporate Communications .'.. "+ Santee Cooper ~. .. ~ : - 3. - ; One Enrwcod Drive 1 Moncks Corner, S.C. 29461-2901 6-i~ (843) 761-4051 ... : -. a... Ed; tor: Beth Fondren/ Santee Cooper 0 7. '." " ' .u- .j ': j. -(.. Photographer: Jim Huff / Santee Cooper

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