RC-04-0094, 2003 Annual Financial Reports

2003 Annual Financial Reports

ML041550129
Person / Time
Site:	Summer
Issue date:	05/24/2004
From:	Clary R South Carolina Electric & Gas Co
To:	Document Control Desk, Office of Nuclear Reactor Regulation
References
RC-04-0094
Download: ML041550129 (89)

Text

I Ronald B. Clary Manager, Nuclear Licensing 803.345-4757 May 24, 2004 RC-04-0094 A SCANA COMPANY Document Control Desk U. S. Nuclear Regulatory Commission Washington, DC 20555

Subject:

VIRGIL C. SUMMER NUCLEAR STATION DOCKET NO. 50/395 OPERATING LICENSE NO. NPF-12 2003 ANNUAL FINANCIAL REPORTS Pursuant to 10CFR50.71 (b), enclosed are ten (10) copies each of South Carolina Electric & Gas Company's 2003 Annual Financial Report and South Carolina Public Service Authority's 2003 Annual Financial Report.

Please contact Mrs. Donna Railey at (803) 345-4107 for additional copies.

Very truly yours, Ronald B. Clary DWR/RBC/dr Enclosures c: N. 0. Lorick N. S. Cams T. G. Eppink (w/o Enclosures)

R. J. White NRC Regional Administrator K. R. Cotton NRC Resident Inspector K. M. Sutton Glenda Willoughby, INPO RTS (L-99-0360-1)

File (818.02-5, RR 8200)

DMS (RC-04-0094)

SCE&G I Virgil CSummer Nuclear Station

• P.0.Box 88. Jenkinsville, South (arolina 29065 . T(803) 345.5209 . www.scano.om

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SCANA CORPORATION 03 Annual Report

CONTENTS Letter To Shareholders ...... 2 Enduring Values .......... 4 Financial Highlights ....... 18 Financial Review ......... 24 Investor Information ...... 26 Directors and Officers ..... 28

Enduring Values Achieve

• Serve Our Community

• Excel in Customner Service and Safety Respect Diversity and Care for Each Other

• Communicate Openly and Honestly Do What is Right Some call it corporate governance. We call it having values. They're pretty simple, you know. The very things your parents talked about. Being honest. Helping others.

Doing what is right. Treating others like you want to be treated.

At SCANA, our values are at the core of everything we do. We're an energy-based, Fortune 500 company - 5,500 employees strong - and we've been serving local customers with reliable utility services for almost 160 years.

Time and experience have taught us a lot and contributed greatly to the strength of our company. But our values continue to be our guiding force. They are evident in our results.

They are demonstrated in our operations. They are the foundation of our success, today and in the future.

I II 2003 Annual Report

Letter To Shareholders Fellow Shareholders:

Our annual report for the year ended December 31, 2003 is enclosed for your review. This report focuses on our operating results and relates them to the values by which we run the company every day. These values have deep relevance during periods of uncertainty, and they are our guide for the future.

I am pleased that at its meeting held February 19, 2004, the Board of Directors increased the annual cash dividend on common stock 5.8 percent, to $1.46 per common share, effective with the dividend payable April 1, 2004. This marks the 50th time in the last 52 years that SCANA has increased the dividend rate on its common stock. The remainder of earnings is needed for capital investment in system expansion to support customer growth, as well as to maintain or improve our conservative financial condition.

Again this year, I am reconciling for you the differences between our financial results from ongoing operations and net income as defined by generally accepted accounting principles (GAAP). We have always followed GAAP in our accounting processes, as well as in the preparation and presentation of our financial statements. In addition to these reported (GAAP) results, we also provide a non-GAAP financial measure known as GAAP-adjusted net earnings from operations. We believe this measure provides a meaningful representation of the Company's fundamental earnings power and can aid in analysis of period-over-period financial performance. This non-GAAP financial measure is calculated by excluding from reported (GAAP) earnings the impact of gains or impairment charges related to our telecommunications investments, sales of certain other assets and mandated changes in accounting. Please refer to page 3 of this report for a numerical reconciliation that you may review.

A consensus on a national energy policy seems as elusive as ever. Events in the past few years in California, as well as the recent power blackout in the Northeast, create concerns about reliability. Historically high natural gas prices also raise questions regarding supply and cost. In our service areas, we have been fortunate to have thoughtful regulatory oversight and support for all energy providers. As a result, our customers have been largely spared the problems seen elsewhere. How this national debate will be resolved ultimately is not known. At SCANA, we believe our focus on excellent service to customers, operational excellence and reliability while growing with our service areas will be as successful a strategy in the future as it has been in the past.

Economic prospects for the nation and for the areas we serve in the Carolinas and Georgia seem much better today than just one year ago. While we expect to see a 2

Enduring Values Values 1 2

continuation of high natural gas prices and continuing significant increases in health care costs for employees, a rebound in the industrial and commercial economy of our service areas seems likely. During the past year, SCANA operating companies continued to receive national awards for excellence in customer service, call center operations, plant efficiency and safety. We have completed, or are in the very final stages of completion of, several major capital projects, all of which will enhance and strengthen our ability to serve our communities and our customers. Our employees have worked diligently to create these results. They also helped neighboring utilities when natural disasters struck. I hope you will connect with their professionalism and with the magnitude of their achievements as you read this report. As a group, our employees continue to own more than 12 percent of the outstanding common shares of SCANA.

The past 30 months have been difficult for our nation's economy. During this period of uncertainty and challenge, we have focused intently on delivering value to customers. By doing so, we brought value to our company. I refer you to page 18 of this report, where we show you our total shareholder return for the past year, the past three years and the past five years. We will continue to pursue the strategies that created these results.

Respectfully submitted, W. B. Timmerman Chairman, President and CEO February 21, 2004 Years Ended December 31 Earnings Reconciliation 2003 2002 2001 Reported (GAAP) earnings (loss) per share $2.54 $(1.34) $5.15 Less: Gains from sales of investments and assets (.35) (.24) (3.42)

Plus: Investment impairments .31 1.79 .42 Cumulative effect of mandated accounting change - 2.17 -

GAAP-adjusted net earnings from operations per share $2.50 $2.38 $2.15 1 3 1 2003 Annual Report j3 I 2003 Annual Report

SCE&G's UrquhartStation was selected by Platts Power magazine as one of the top 12 power plants in the world, thanks to the success of a repoweringproject that increasedthe plant's electric output and reduced emissions.

Enduring Values 1 4

Achieve At SCANA, we don't just talk about what we want to achieve. We deliver. Long before the current dialogue about the importance of liquefied natural gas (LNG) to the natural gas market, we identified an opportunity to bring in a third source of natural gas supply to our service territories through the Elba Island LNG facility off the coast of Georgia. We immediately began planning, and in 2001 we communicated our intentions to construct an 18.2 mile pipeline to provide transportation for this vital gas supply. Less than three years later, the SCG Pipeline project is in operation, substantially improving the reliability of our natural gas supply for all our customers.

In 2000, SCE&G projected increasing demand for electricity and a correlating reduction in our electric reserve margin. With system planning a top priority at SCE&G, the company converted the 50-year-old, coal-fired Urquhart Generating Station to a natural gas-fueled facility. By doing so, the company accomplished two things: it brought an additional 341 megawatts of local generation on line and significantly improved air quality in the Aiken/North Augusta area in one well-orchestrated plan.

Just as Urquhart was being completed, construction of the 875-megawatt Jasper Generating Station began. This major generating facility ensures that SCE&G's reserve SCANA's newest subsidiary, SCG Pipeline, completed construction of an 18.2 mile naturalgastransmission pipeline in the fall of 2003 to serve the newJasper County electric generating station.

1 5 1 2003 Annual Report

margin stays in the 12 to 18 percent range. By the spring of 2004, it will bring local power to local customers. Equally important to maintaining reliability is V.C. Summer Nuclear Station, which accounts for 21 percent of our generation. This summer, the Nuclear Regulatory Commission will rule on extending the license for this 1,000-megawatt facility until 2042, providing another critical component to SCE&G's plan for serving its customers well into the future.

In the competitive natural gas marketplace in Georgia, SCANA Energy is doing extremely well and has been an important contributor to our continuing financial success.

And as you can see by our information on pages 18 and 19, we also continue to achieve strong results for our financial stakeholders with growing earnings, a solid and growing dividend and a healthy market valuation for our common stock. Our strategic focus has enabled us to consistently achieve our goals, despite uncertain economic times and market volatility.

Understanding what you need to achieve is one part of the equation. Delivering on it is another. At SCANA, our subsidiaries are successful at doing both.

SCE&G's newest electric generatingplant in Jasper County will use naturalgas to produce 875 megawatts of energy and keep the Company's reserve margin in the 12 to 18 percent range.

Enduring Values

Ed Crews (right] has a long history of helping SCE&G reliably serve its electric customers. For more than 50 years, he has played a primary role in the construction of seven electric generating plants, includingJasper.

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Western Carolina University is one of PSNC Energy's newest customers due to a major pipeline expansion into western North Carolina. Bill Williams (left) and Bill Rayner (right) are two of the PSNC Energy team members who worked on the expansion project.

Enduring Values 1 8

Serve Our Community SCANA and its subsidiaries are committed to providing local customers with utility services they can count on. For our 571,000 electric customers, that means focusing on local power for local people - not bringing power in from multiple states away. For our million-plus natural gas customers, it means making prudent purchases of natural gas to ensure price stability during periods of instability, while expanding our choices and sources of supply.

The people and businesses we serve are counting on us each and every day. That's a big responsibility, one we take very seriously. It requires experience and careful planning, from transmission and distribution infrastructure upgrades to building local generation to meet local needs. Whatever it takes, providing safe, reliable energy to local customers is always our top priority.

Constructing and maintainingthe electric and gas systems to provide safe reliable energy is always our top priority.

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Excel In Customer Service And Safety Serving customers well is a key to survival in any marketplace, and we continue to do just that. That's why SCE&G was named No. 1 in the nation in overall customer satisfaction by our largest electric customers in the TQS annual survey for the second time in three years. Excellent customer service is also part of the reason SCANA Energy was awarded the regulated provider responsibility in Georgia's deregulated natural gas marketplace. It's also why J.D. Power recently named the SCE&G natural gas group as No. 1 nationally and the SCE&G electric group tied for No. 2 in customer service in the Southern region.

We could tell you how we deliver in customer service, but this kind of third-party recognition speaks for itself. It is a part of our culture, inherent in our values and a cornerstone of our success.

SCE&G's customer assistance advisors average more than 80 home visits a month to help customers with special needs.

Enduring Values 1 10 I

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SC&,G's call .nerersentatives cene rpe are Only a 11 caltrawaysdto and respond aPstomner requests, answer quCstions to cut about bills

- .usr.1 This SCANA Energy Homework Center in Savannah is one of 24 after-school sites sponsored by SCANA in South Carolina, North Carolinaand Georgia that gives students a safe place to complete assignments and develop good study habits.

Enduring Values l 12 Vaues Endurng 1

Respect Diversity And Care For Each Other A team is not just a group of individuals who work at the same company. A successful team is made up of people with different backgrounds, perspectives, life experiences, talents and education levels who support each other while working in a collaborative manner.

Our diversity at SCANA not only makes us a stronger team, but an overall stronger company. That's why we were proud to receive the prestigious Secretary of Labor's 2003 Opportunity Award, which is given to businesses that establish and institute comprehensive workforce strategies to ensure equal employment opportunities.

Diversity also makes us a strong community partner. Our employees give in a big way

- with their hearts, their time, their talents and their financial support.

Our team is a main supporter of the United Way and the leading agency contributor to the American Heart Association. We are also in our 11th year of funding 24 homework centers, which give local children a safe place to complete assignments and develop good study habits.

Sponsorship of a playroom at the Palmetto Health Children's Hospitalin Columbia is just one of the ways SCANA gives back to the community it serves.

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Communicate Openly And Honestly Cultivating an environment of open and honest communication is critical to the success of an organization. It removes barriers, encourages discussion and solves problems. With respect to workplace practices, open and honest communication facilitates the process of making clear what is acceptable and what is not. At SCANA, we don't just assume that our employees and contractors know our code of conduct; we make sure they do. In fact, receiving annual corporate compliance training is a condition of employment.

In the July 2003 results of the annual TQS benchmark of the nation's 60 largest utility companies, SCE&G ranked first in the survey regarding corporate ethics and community service. The Company ranked No. 1 in having earned the respect of the business community, having employees actively support their communities, refraining from deceptive business practices and having upper management that can be trusted.

Achieving this recognition is the result of the collective effort of our team - and our commitment to communicating openly and honestly.

Senior officers such as Kevin Marsh make a point of spending time with employees in all areas of the organization to ensure good communication.

Enduring Values 1 14 1

Developing respect for others and a high level of accountability is at the heart of SCANA's personal leadership program. A group exercise enhances participants'listening skills and builds trust.

When hurricanesand other natural disastersstrike our neighbors, SCE&G crews are ready and willing to lend a helping hand.

Enduring Values 16

Do What Is Right When the $275 million back-up remediation dam at Lake Murray is completed, it will stand as a monument for doing what is right. We won't be able to generate or sell one additional kilowatt hour of electricity from the Saluda Hydro Generating Station located on site, but what we will have gained is the safekeeping of more than 150,000 people living downstream from Lake Murray, as well as the recreational asset the 50,000-acre lake has become.

At SCANA, our employees are also good neighbors. After Hurricane Isabel pummeled communities in North Carolina and Virginia in 2003, our crews left their loved ones for two weeks in order to provide restoration support in the areas most ravaged by the storm.

That's the kind of company we are. If you look back through annual reports from the last 10 years, you'll see some consistency in theme - PE ratios, profitable growth, market comparisons. But this year, we thought it was important to talk to you about who we are at the beginning and the end of the day. We're a company of 5,500 driven people, working hard to meet your expectations and doing it the right way.

The safety of our neighbors is the reason behind the construction of a backup dam at SCE&G's Lake Murray.

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COMPARATIVE TOTAL RETURN' ANALYSIS 1 Year fEnded December 31, 2003]

40 30 28.3 28.7 29.4 26.3 co 20 s.

p 10 0

-10 15.3 1 I I I C -20

-30

-40 SCANA Dow Jones S&P Dow Jones S&P Industrials 500 Utilities Utilities 3 Years [Ended December 31, 2003]

40 31.9 30 8 20 3.1 2' -10

-20 -11.7

-30

-26.9

-40

-38.5 SCANA Dow Jones S&P Dow Jones S&P Industrials 500 Utilities Utilities 5 Years [Ended December 31, 20031 3.3 I 40 30 25.0

,20 3 410 4.2 U

E -10 -2.8 1

-12.2

-30

-40 SCANA Dow Jones S&P Dow Jones S&P Industrials 500 Utilities Utilities Chmlnge instock price phus dividends.

Financial Highlights L 18 1

[Years Ended December 311

$2.54 GAAP Earnings (Loss) Per Share 2002 2001 2000 1999 S(1.34) $5.15 $2.40 $1.73

$2.50 GAAP-Adjusted Net Earnings From Operations Per Share 2002 2001 2000 1999

$2.38 $2.15 $2.12 $1.39 22.52 Total Electricity Sales

[Billions of Kilowatt Hours]

2002 2001 2000 1999 23.09 22.93 23.35 21.74 2.3 Total Gas Sales

[Billions of Therns]

2002 2001 2000 1999 2.5 2.7 3.3 2.5

$8.45 Total Assets

[Billions of Dollars]

2002 2001 2000 1999

$8.07 $7.82 $7.43 $6.01 I 19 I 2003 Annual Report

I SELECTED FINANCIAL AND OTHER STATISTICAL DATA I I Years Ended December 31

[Millions ofdollars, except per share amounts] 2003 2002 2001 2000 1999 Statement of Income Data Operating Revenues $ 3,416 $ 2,954 $3,451 $3,433 $2,078 Operating Income 551 514 528 554 353 Other Income (Expense) 75 (180) 550 44 90 Income Before Cumulative Effect of Accounting Change 282 88 539 221 179 Net Income (Loss) $ 282 $ (142) $ 539 $ 250 $ 179 Common Stock Data Weighted Average Shares Outstanding [Millions] 110.8 106.0 104.7 104.5 103.6 Net Earnings (Loss) Derived from:

Operations (GAAP-Adjusted) $ 2.50 $ 2.38 $ 2.15 $ 2.12 $ 1.39 Gains .35 .24 3.42 .34 Investment Impairments (.31) (1.79) (.42)

Cumulative Effects of Accounting Changes (2.17) .28 Basic and Diluted Earnings (Loss) Per Share (GAAP) $ 2.54 $ (1.34) $ 5.15 $ 2.40 $ 1.73 Dividends Declared Per Share of Common Stock $ 1.38 $ 1.30 $ 1.20 $ 1.15 $ 1.32 Balance Sheet Data Utility Plant, Net $ 6,417 $ 5,474 $5,263 $4,949 $3,851 Total Assets 8,449 8,074 7,822 7,427 6,011 Capitalization:

Common Equity 2,306 2,177 2,194 2,032 2,099 Preferred Stock 115 165 166 166 167 Long-term Debt, net 3,225 2,834 2,646 2,850 1,563 Total Capizaon $ 5,646 $ 5,176 $5,006 $5,048 $3,829 O0 Stat Electric:

Customers [Year-End] 570,940 560,224 547,388 537,253 523,552 Total Sales [Million KWH] 22,516 23,085 22,928 23,352 21,744 Generating Capability-Net MW [Year-End] 4,880 4,866 4,520 4,544 4,483 Territorial Peak Demand-Net MW 4,474 4,404 4,196 4,211 4,158 Regulated Gas:

Customers [Year-End] 670,770 655,669 645,749 637,018 260,456 Sales, Excluding Transportation [Thousand Therms] 1,205,730 1,354,400 1,183,463 1,389,975 1,013,083 Retail Gas Marketing:

Retail Customers [Year-End] 415,573 374,872 385,581 431,814 430,950 Firm Customer Deliveries [Thousand Therms] 356,256 337,858 359,602 431,115 220,729 Non-regulated Interruptible Gas Deliveries [Thousand Therms] 735,902 852,008 1,119,719 1,506,057 1,226,033 Financial Highlights 1 20 1

I CONDENSED CONSOLIDATED BALANCE SHEETS I I Years Ended December 31

[Millions of dollars] 2003 2002 Assets Utility Plant, net $ 6,417 $ 5,799 Non-utility Property, net 96 95 Investments 178 231 Utility and Non-utility Property and Investments, net 6,691 6,125 Current Assets:

Cash and temporary investments 136 374 Receivables, net 516 489 Inventories 213 237 Prepayments and other 36 40 Total Current Assets 901 1,140 Regulatory Assets and Deferred Debits 857 809 Total Assets $ 8,449 $ 8,074 Capitalization and Liabilities Common Equity $ 2,306 $ 2,177 Preferred Stock [Not subject to purchase or sinking funds] 106 106 Total Shareholders' Investment 2,412 2,283 Preferred Stock, net [Subject to purchase or sinking funds] 9 9 SCE&G-Obligated Mandatorily Redeemable Preferred Securities - 50 Long-term Debt, net 3,225 2,834 Total Capitalization 5,646 5,176 Current Liabilities:

Short-term borrowings 195 209 Current portion of long-term debt 202 413 Accounts payable and accrued liabilities 616 650 Deferred income taxes, net 4 4 Total Current Liabilities 1,017 1,276 Regulatory Liabilities and Deferred Credits 1,786 1,622 Commitments and Contingencies Total Capitalization and Liabilities $ 8,449 $ 8,074 21 1 2003 Annual Report

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS l Years Ended December 31

[Millions of dollars, except per share amounts] 2003 2002 2001 Operating Revenues:

Electric $1,466 $1,380 $1,369 Gas - Regulated 1,086 878 1,015 Gas - Non-regulated 864 696 1,067 Total Operating Revenues 3,416 2,954 3,451 Operating Expenses:

Fuel used in electric generation 334 330 283 Purchased power 64 42 138 Gas purchased for resale 1,532 1,199 1,681 Other operation and maintenance 558 522 482 Depreciation and amortization 238 220 224 Other taxes 139 127 115 Total Operating Expenses 2,865 2,440 2,923 Operating Income 551 514 528 Other Income (Expense):

Other income, including allowance for equity funds used during construction 67 71 55 Gain on sale of assets and investments 61 40 557 Impairment of investments (53) (291) (62)

Total Other Income (Expense) 75 (180) 550 Income Before Interest Charges, Income Taxes, Preferred Stock Dividends and Cumulative Effect of Accounting Change 626 334 1,078 Interest Charges, Net 200 199 223 Income Before Income Taxes, Preferred Stock Dividends and Cumulative Effect of Accounting Change 426 135 855 Income Taxes 135 36 305 Income Before Preferred Stock Dividends and Cumulative Effect of Accounting Change 291 99 550 Preferred Stock Dividends 9 11 11 Income Before Cumulative Effect of Accounting Change 282 88 539 Cumulative Effect of Accounting Change - (230) -

Net Income (Loss) $282 $(142) $539 Basic and Diluted Earnings (Loss) Per Share of Common Stock:

Before Cumulative Effect of Accounting Change $2.54 $.83 $5.15 Cumulative Effect of Accounting Change - (2.17) -

Basic and Diluted Earnings (Loss) Per Share $2.54 $(1.34) $5.15 Weighted Average Shares Outstanding [Millions] 110.8 106.0 104.7 I

Financial Highlights 1 22 1

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS l I Years Ended December 31

[Millions of dollars, except per share amounts] 2003 2002 2001 Operating Activities:

Net income (loss) $ 282 $ (142) $ 539 Adjustments to reconcile net income (loss) to net cash provided from operating activities:

Cumulative effect of accounting change, net of taxes 230 Depreciation and amortization 249 233 236 Amortization of nuclear fuel 21 20 16 Gain on sale of assets and investments (61) (40) (558)

Impairment of investments 53 291 62 Hedging activities 4 42 (65)

Allowance for funds used during construction (AFC) (30) (35) (26)

Over (under) collection, fuel adjustment clauses 23 (15) 20 Changes in certain assets and liabilities 15 (153) 274 Other 4 60 (5)

Net Cash Provided From Operating Activities 560 491 493 Investing Activities:

Utility property additions and construction expenditures, net of AFC (738) (675) (523)

Other investing activities 45 487 (43)

Net Cash Used For Investing Activities (693) (188) (566)

Financing Activities:

Proceeds from common stock issuance 6 149 -

Proceeds from debt issuances 978 908 803 Debt repayments and stock repurchases 1917) (1,082) 1317)

Dividends on preferred and common stock (158) (140) (130)

Short-term borrowings, net 114) 44 (233)

Net Cash Provided From (Used For) Financing Activities (105) (121) 123 Net (Decrease) Increase In Cash and Temporary Investments (238) 182 50 Cash and Temporary Investments, January 1 374 192 142 Cash and Temporary Investments, December 31 $ 136 S 374 $ 192 r23 } 2003 Annual Report

I FINANCIAL REVIEW This Annual Report is a summary. Complete financial statements and an extensive review of SCANA's financial condition and results of operations are provided to shareholders of record as of March 10, 2004 as part of SCANA's proxy statement, and they are also included in the 2003 Form 10-K filed with the Securities and Exchange Commission.

GAAP-adjusted net earnings from operations per share increased by $.12 in 2003, from

$2.38 to $2.50, primarily as a result of improved margins on sales of electricity and natural gas. These improvements were partially offset by increased operations and maintenance expenses, depreciation, property taxes and the dilutive effect of additional shares outstanding. In 2003, the Company also recorded a gain of $.35 per share related to the sale of its investment in ITC Holding. This gain was partially offset by the recording of impairment charges of $(.31) related to the Company's investment in Knology Electric Operations Sales margins increased in 2003 primarily due to an increase in retail electric base rates and customer growth. Sales volume decreased primarily due to milder weather.

Gas Distribution While sales margins improved in 2003, sales volume declined slightly, with the effect of more favorable winter weather being offset by increased competition with alternate fuels for industrial and transportation customers.

Gas Transmission Sales margins in 2003 increased primarily due to the favorable competitive position of natural gas relative to alternate fuels in the first quarter, which was partially offset by the unfavorable competitive position experienced during the rest of the year. Sales volume in 2003 was negatively impacted both by this unfavorable competitive position and by decreased demand for electric generation due to mild summer weather.

2003 Annual Report 1 24 1

I FINANCIAL REVIEW I Retail Gas Marketing Results of operations of Retail Gas Marketing improved due to higher sales margins arising from customer growth and favorable market conditions.

Other Operating Expenses Other operating expenses increased in 2003 primarily as a result of increases in employee benefit costs, including a decline in pension income.

Depreciation expense increased due to the recording of a full year of depreciation of the Urquhart Station repowering project (completed June 2002) and other normal property additions. Other taxes increased due to increased property taxes.

Other Income Other income increased in 2003 primarily as a result of a gain on the sale of the Company's investment in ITC Holding, which was partially offset by the recording of impairments on the Company's investment in Knology. In 2002, the Company recorded impairments on its investments in Deutsche Telekom AG (DTAG) and ITCADeltaCom, which were partially offset by gains on the sale of the Company's radio service network and on the sale of DTAG shares.

Interest Expense Interest expense increased, with the favorable effect of lower interest rates being offset by increased borrowings.

Cash Flows In 2003, cash was provided from operations, from the sale of the ITC Holding investment and from the issuance of debt. Cash was used to pay dividends, to repay debt and to fund construction of utility assets.

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INVESTOR INFORMATION Corporate Headquarters SCANA Corporation, 1426 Main Street, Columbia, SC 29201-2845, Telephone: (803) 217-9000 Internet Access Information about the Company, including stock quotes, financial reports, press releases and information on the Company's products and services, is available on SCANA's home page on the Internet at www.scana.com. Registered shareholders may also access a variety of information about their stock accounts 24-hours a day, seven days a week on the Company's Web site. From the Company's home page, click on Investor Information, then select Shareholder Online.

Annual Meeting SCANA Corporation's 2004 Annual Meeting of Shareholders will be held at 9:00 a.m. Eastern Time on Thursday, April 29, at Emmett Robinson Theater, The Simon Center for the Arts, College of Charleston, 54 St. Philip Street in Charleston, South Carolina.

Common Stock SCANA Corporation's common stock is listed and traded on the New York Stock Exchange (NYSE). The ticker symbol is SCG. Quotes may be obtained in daily newspapers under the listing SCANA. Current and historical stock price information is also available on the Company's Web site at www.scana.com.

Dividends Dividends on SCANA's common stock and SCE&G's cumulative preferred stock are declared quarterly by the Company's board of directors, and are normally payable on the first day of January, April, July and October to shareholders of record on or about the 10th day of the preceding month.

SCANA Investor Plus Plan The Plan provides investors a convenient and economical means of acquiring, holding and transferring shares of SCANA's common stock.

Participants may purchase additional shares of common stock through automatic reinvestment of all or a portion of their cash dividends on SCANA's common stock and SCE&G's cumulative preferred stock and/or by making optional cash payments of up to $100,000 per calendar year. The Plan also features a direct purchase provision through which investors can acquire their first shares of SCANA's common stock directly from the Company. A variety of other services, including direct deposit of dividends and safekeeping of share certificates, are also available. To receive a Plan prospectus and enrollment form, contact Shareholder Services.

Transfer Agent and Registrar SCANA Corporation maintains shareholder records, issues dividend checks and acts as Transfer Agent and Registrar for the Company's common stock and SCE&G's cumulative preferred stock. Shareholders may send stock certificates directly to the Company's Shareholder Services Department for transfer.

There is no charge for this service. The Company recommends that certificates be mailed by registered or certified mail. Signatures required for transfer must be guaranteed by an official of a financial institution that is an approved member of a Medallion Signature Guarantee Program.

2003 Annual Report 26 1

I INVESTOR INFORMATION I Shareholder Services Questions concerning SCANA's Investor Plus Plan, stock transfer requirements, replacement of lost or stolen stock certificates or dividend checks, address changes, direct deposit of dividends, elimination of duplicate mailings, or other account services should be directed to the Shareholder Services Department:

SCANA Corporation Attention: Shareholder Services (054)

Columbia, SC 29218-0001 (800) 763-5891 (24-hour toll-free Investor Line)

(803) 217-7817 (Columbia)

(Note: A Shareholder Services representative is available between 9:00 a.m. and 4:00 p.m.

Eastern Time, Monday through FridayJ E-MAIL: SHAREHOLDER@SCANA.COM FAX: (803) 217-7389 Form 10-K The Company's Annual Report on Form 10-K, quarterly reports on Form 10-Q and other reports filed with the Securities and Exchange Commission are available free of charge on the Company's Web site at www.scana.com as soon as reasonably practical after the reports are filed. Copies of these reports may also be obtained upon receipt of a written request. Requests for these reports should be directed to Shareholder Services as listed above.

Auditors Trustee And Payment Agents Deloitte & Touche LLP Questions concerning replacement of Certified Public Accountants interest checks, tax information, transfers 1426 Main Street, Suite 820 and other account information related to the Columbia, SC 29201-0001 following securities should be directed to the Telephone: (803) 255-7000 appropriate Trustee and Paying Agent:

Investor Relations Contact SCE&G First & Refunding Mortgage Bonds H. John Winn, III JPMorgan Chase Bank Director - Investor Relations & Corporate Trust Dept - 15th Floor Shareholder Services 4 New York Plaza Telephone: (803) 217-9240 New York, NY 10004 Fax: (803) 217-7344 Telephone (800) 648-8380 E-mail: jwinn@scana.com SCE&G First Mortgage Bonds Investors' Association The Bank of New York, NA For information about this organization's 101 Barclay Street, NY 10286 activities, write to: Telephone (800) 254-2826 Assoc. of SCANA Corp. Investors P.O. Box 32115 Charleston, SC 29417-2115 127 1 2003 Annual Report 27 2003 Annual Report

I BOARD OF DIRECTORS I James A. Bennett Lynne M. Miller Executive Vice President CEO First Citizens Bank Environmental Strategies Columbia, SC Consulting LLC Reston, VA Maceo K. Sloan Chairman, President and CEO William C. Burkhardt Sloan FinancialGroup, Inc. CEO Chairman and CEO CapitalBank NCM CapitalMgt. Group, Inc. Raleigh, NC Durham, NC From left:James A. Bennett; Mfaceo K Sloan; Lynne Al. Miller; William C. Burkhardt W. Hayne Hipp G. Smedes York Chairman and CEO President and Treasurer The Liberty Corporation York Properties, Inc.

Greenville, SC Raleigh, NC Harold C. Stowe William B. Bookhart, Jr.

President Partner Canal Holdings, LLC Bookhart Farms Conway, SC Elloree, SC From left: W. Hayne Hipp; Harold C. Stowe; G. Smedes York; William B. Bookhart, Jr.

William B. Timmerman Bill L Amick Chairman, Presidentand CEO Chairman and CEO SCANA Corporation Amick Farms, Inc.

Columbia, SC Batesburg, SC Elaine T. Freeman D. Maybank Hagood Executive Director President and CEO ETV Endowment of SC, Inc. William M. Bird & Co., Inc.

Spartanburg, SC Charleston, SC From left: William B. 7immerman; Elaine T Freeman; Bill L. Amick; D. Maybank Hagood Directors Emeriti: William T Cassels, Jr.; Hugh M. Chapman; James B. Edwards; Lawrence M. Gressette, Jr.; Benjamin A. Hagood; F Creighton McMaster; Henry Ponder;John A. Warren 2003 Annual Report l 28 l 2003 Annual Report 28

EXECUTIVE OFFICERS H. Thomas Arthur Stephen A. Byrne Kevin B. Marsh Legal Nuclear Operations Finance George J. Bullwinkel, Jr. Sharon K. Jenkins Charles B. McFadden Natural Gas Transmission; Marketing and Communications Governmental Affairs Telecommunications Neville 0. Lorick William B. Timmerman Sarena D. Burch Electric and Natural Gas Chief Executive Officer Natural Gas/CoalProcurement Operations and Pipeline Capacity In Memoriam DirectorEmeritusJohn B. Rhodes, Jr. of Walterboro, South Carolinadied December2, 2003. Mr. Rhodes served on SCANA's Board of Directorsfrom 1967 until his retirement from the Board on April 27, 2000.

DirectorEmeritusJohn F Sack Hassell, Jr. of Mount Pleasant, South CarolinadiedJanuary17, 2004.

Mr. Hassell served on SCANA's Board of Directors from 1976 until his retirement from the Board on April 24, 1991.

Statements included in this summary annual report which are not subsidiaries, [41 the impact of competition from other energy statements of historical fact are intended to be, and are hereby suppliers, including competition from alternate fuels in industrial identified as, *forward-looking statements' for purposes of Section interruptible markets, 15] growth opportunities for the Company's 27A of the Securities Act of 1933, as amended, and Section 21E of the regulated and diversified subsidiaries, 161the results of financing Securities Exchange Act of 1934, as amended. Readers are cautioned efforts, 171changes in the Company's accounting policies, 181weather that any such forward-looking statements are not guarantees of conditions, especially in areas served by the Company's subsidiaries, future performance and involve a number of risks and uncertainties, 191performance of and marketability of the Company's investments and that actual results could differ materially from those indicated by in telecommunications companies, 1101 performance of the such forward-looking statements. Important factors that could cause Company's pension plan assets, 1111 inflation, [121 changes in actual results to differ materially from those indicated by such environmental regulations, [131 volatility in commodity natural gas forward-looking statements include, but are not limited to, the markets and [141 the other risks and uncertainties described from following: [11 that the information is of a preliminary nature and may time to time in the Company's periodic reports filed with the SEC.

be subject to further andlor continuing review and adjustment, [2j The Company disclaims any obligation to update any forward-changes in the utility and nonutility regulatory environment, 131 looking statements.

changes in the economy, especially in areas served by the Company's

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