DEF 14A 1 a2182313zdef14a.htm DEF 14A
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

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Check the appropriate box:

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Preliminary Proxy Statement

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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

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Definitive Proxy Statement

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Definitive Additional Materials

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Soliciting Material Pursuant to §240.14a-12

SCANA Corporation

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
         
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Fee paid previously with preliminary materials.

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

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    Your VOTE is Important                

 

 

 

 

 

 
    SCANA Corporation 2008 Proxy Materials  

 

 

 

 

 

 
    SCANA LOGO  

 

 

 

 

 

 
        Chairman's Letter,
Notice of Annual Meeting,
Proxy Statement for Annual Meeting,
Annual Financial Statements,
Management's Discussion and
    Analysis and Related Annual
    Report Information
 

 

 

 

 

 

 


SCANA LOGO

March 7, 2008

Dear Shareholders:

        You are cordially invited to attend the Annual Meeting of Shareholders to be held at 9:00 a.m., Eastern Daylight Time on Thursday, April 24, 2008. The meeting will be held at Leaside, 100 East Exchange Place, Columbia, South Carolina 29209. An admission ticket is enclosed as part of your proxy card. Directions to Leaside are on the back of the ticket.

        Enclosed is SCANA's proxy statement and form of proxy for the 2008 Annual Meeting. The approximate date of mailing for this proxy statement and form of proxy is March 17, 2008. We are including SCANA's annual financial statements, management's discussion and analysis of financial condition and results of operations and related annual report information as an appendix to the proxy statement.

    A Notice of Annual Meeting identifying the two proposals that will be presented at the Annual Meeting is enclosed.

    At the meeting, we will give a brief report on SCANA's 2007 business results.

    If you vote by mail and plan to attend the meeting, please so indicate on your proxy card. If you vote by telephone or through the Internet, please follow the instructions to indicate if you plan to attend the Annual Meeting.

    If you will need special assistance at the meeting, please contact the Office of the Corporate Secretary, Mail Code 134 at SCANA Corporation's principal executive office, 1426 Main Street, Columbia, South Carolina 29201 or call 803-217-7568 no later than Thursday, April 17, 2008.

    Refreshments will be served beginning at 8:00 a.m.

        Your vote is important.    We encourage you to read this proxy statement and vote your shares as soon as possible. Please vote today either electronically by telephone or through the Internet, or by signing, dating and mailing your proxy card in the envelope enclosed. Telephone and Internet voting permits you to vote at your convenience, 24 hours a day, seven days a week. Detailed voting instructions are included on your proxy card.

Sincerely,

SIGNATURE

William B. Timmerman
Chairman of the Board,
President and Chief Executive Officer


Table of Contents


 
  Page
CHAIRMAN'S LETTER TO SHAREHOLDERS    

NOTICE OF ANNUAL MEETING

 

 

PROXY STATEMENT

 

 
 
INFORMATION ABOUT THE SOLICITATION OF PROXIES

 

1
 
VOTING PROCEDURES

 

1
 
PROPOSAL 1 — ELECTION OF DIRECTORS

 

4
 
NOMINEES FOR DIRECTORS

 

5
 
CONTINUING DIRECTORS

 

7
 
BOARD MEETINGS — COMMITTEES OF THE BOARD

 

9
 
GOVERNANCE INFORMATION

 

12
 
RELATED PARTY TRANSACTIONS

 

15
 
SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

16
 
EXECUTIVE COMPENSATION

 

18
   
COMPENSATION COMMITTEE PROCESSES AND PROCEDURES

 

18
   
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

 

18
   
COMPENSATION DISCUSSION AND ANALYSIS

 

18
   
COMPENSATION COMMITTEE REPORT

 

35
   
SUMMARY COMPENSATION TABLE

 

36
   
2007 GRANTS OF PLAN-BASED AWARDS

 

37
   
OUTSTANDING EQUITY AWARDS AT 2007 FISCAL YEAR-END

 

38
   
2007 OPTION EXERCISES AND STOCK VESTED

 

39
   
PENSION BENEFITS

 

40
   
2007 NONQUALIFIED DEFERRED COMPENSATION

 

42
   
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

 

44
 
DIRECTOR COMPENSATION

 

52
   
2007 DIRECTOR COMPENSATION TABLE

 

54
 
AUDIT COMMITTEE REPORT

 

55
 
PROPOSAL 2 — APPROVAL OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

56
 
OTHER INFORMATION

 

57

FINANCIAL APPENDIX

 

 
Index to Annual Financial Statements, Management's Discussion and Analysis and Related Annual Report Information    

NOTICE OF ANNUAL MEETING
SCANA LOGO

   


Meeting Date:

 

Thursday, April 24, 2008

Meeting Time:

 

9:00 a.m., Eastern Daylight Time

Meeting Place:

 

Leaside
100 East Exchange Place
Columbia, South Carolina 29209

Meeting Record Date:

 

March 3, 2008

Meeting Agenda:

 

1)

 

Election of four Class III Directors; one Class I Director; and one Class II Director
    2)   Approval of Appointment of Independent Registered Public Accounting Firm

Shareholder List

        Upon written request by a shareholder, a list of shareholders entitled to vote at the meeting will be available for inspection at SCANA's Corporate Offices, 1426 Main Street, Columbia, South Carolina 29201, during business hours from March 17, 2008 through the date of the meeting.

Admission to the Meeting

        An admission ticket or proof of share ownership as of the record date is required. If you plan to use the admission ticket, please remember to detach it from your proxy card before mailing. If you hold your shares through a stockbroker or other nominee, you must provide proof of ownership by bringing either a copy of the voting instruction card provided by your broker or a brokerage statement showing your share ownership as of March 3, 2008.

By Order of the Board of Directors,

SIGNATURE

Gina Champion
Corporate Secretary


SCANA Corporation
1426 Main Street
Columbia, South Carolina 29201

PROXY STATEMENT




INFORMATION ABOUT THE SOLICITATION OF PROXIES

        We are providing these proxy materials in connection with the solicitation by the Board of Directors of SCANA Corporation ("SCANA," the "Company," "we" or "us"), a South Carolina corporation, of proxies to be voted at our 2008 Annual Meeting of Shareholders, which will be held at 9:00 a.m., Eastern Daylight Time on Thursday, April 24, 2008, and at any adjournment or postponement of the meeting. The meeting will be held at Leaside, 100 East Exchange Place, Columbia, South Carolina 29209. These proxy materials are first being mailed to shareholders of record on or about March 17, 2008.




VOTING PROCEDURES

Your Vote Is Important

        Whether or not you plan to attend the Annual Meeting, please vote your shares as soon as possible.

Who May Vote

        You will only be entitled to vote at the Annual Meeting if our records show that you were a shareholder of record on March 3, 2008, the record date.

Shares Held Directly

        If you hold your shares directly, you may vote by proxy or in person at the meeting. To vote by proxy, you may select one of the following options: telephone, Internet or mail.

Vote By Telephone:

        You may vote your shares by telephone using the toll-free number shown on your proxy card. You must have a touch-tone telephone to use this option. Telephone voting is available 24 hours a day, seven days a week. Clear and simple voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded. If you vote by telephone, please DO NOT return your proxy card.

Vote Through The Internet:

        You may vote through the Internet. The website for Internet voting is shown on your proxy card. Internet voting is available 24 hours a day, seven days a week. When you vote through the Internet, you will be given the opportunity to confirm that your instructions have been properly recorded. If you vote through the Internet, please DO NOT return your proxy card.

Vote By Mail:

        If you choose to vote by mail, please mark the enclosed proxy card, date and sign it, detach your meeting admission ticket and return your proxy card to SCANA in the enclosed postage-paid envelope. If you indicate your voting choices on your proxy card, your shares will be voted according to your instructions. If your proxy card is signed and returned without specifying choices, the shares

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will be voted FOR all director nominees and FOR Proposal 2.

Shares Held In Street Name

        If you hold shares in street name, you may direct your vote by submitting your voting instructions to your broker or nominee. Please refer to the voting instruction card provided by your broker or nominee.

Changing Or Revoking Your Proxy Vote

        You may change or revoke your proxy instructions at any time prior to the vote at the Annual Meeting. If you hold your shares directly in your name, you may accomplish this by granting a new proxy (by telephone, Internet or mail) bearing a later date (which automatically revokes the earlier proxy) or by attending the Annual Meeting and voting in person. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request. If you hold your shares in street name, you may change or revoke your proxy instructions by properly submitting new voting instructions to your broker or nominee.

Voting By Savings Plan Participants

        If you own shares of SCANA common stock as a participant in the SCANA Stock Purchase Savings Plan, you will receive a proxy card that covers only your plan shares. Proxies executed by plan participants will serve as voting instructions to the plan's trustee.

Voting at the Annual Meeting

        The method by which you vote will not limit your right to vote at the Annual Meeting if you decide to attend in person. However, if you wish to vote at the meeting and your shares are held in the name of a bank, broker or other holder of record, you must obtain a proxy executed in your favor from the holder of record prior to the meeting. Directions to the location of the Annual Meeting are on the proxy card included with this mailing.

Vote Required and Method of Counting Votes

        At the close of business on the record date, March 3, 2008, there were 116,656,761 shares of SCANA common stock outstanding and entitled to vote at the Annual Meeting. Each share is entitled to one vote on each proposal.

        The presence, in person or by proxy, of the holders of a majority of the shares entitled to vote at the Annual Meeting is necessary to constitute a quorum. Abstentions, "withheld" votes and broker "non-votes" are counted as present and entitled to vote for purposes of determining a quorum. A broker "non-vote" occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee has not received instructions from the beneficial owner and either (i) does not have discretionary voting power for that particular proposal, or (ii) chooses not to vote the shares.

        If you hold your shares in street name, the broker or nominee is permitted to vote your shares on the election of directors and on the approval of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm, even if the broker or nominee does not receive voting instructions from you.

Proposal 1 — Election of Directors

        The affirmative vote of a plurality of the votes cast is required for the election of directors. "Plurality" means that if there are more nominees than positions to be filled, the individuals who receive the largest number of votes cast for directors will be elected as directors. Votes indicated as "withheld" and broker "non-votes" will not be cast for nominees, but will have no effect on the outcome of the election.

        The Board knows of no reason why any of the nominees for director named herein would at the time of election be unable to serve. In the event, however, that any nominee named

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should, prior to the election, become unable to serve as a director, your proxy will be voted for such other person or persons as the Board may recommend.

Proposal 2 — Approval of Appointment of Independent Registered Public Accounting Firm

        The appointment of Deloitte & Touche LLP will be approved if more shares vote for approval than vote against. Accordingly, abstentions and broker "non-votes" will have no effect on the results.

Other Business

        The Board knows of no other matters to be presented for shareholder action at the meeting. If other matters are properly brought before the meeting, the proxy agents named on the accompanying proxy card intend to vote the shares represented by proxies in accordance with their best judgment.

View Proxy Statements and Annual Report Information Through the Internet

Important Notice Regarding Availability of Proxy Materials for Shareholder Meeting to be Held on April 24, 2008.

        The Proxy Statement, Notice of Annual Meeting and Management's Discussion and Analysis and Related Annual Report Information are available through the Internet at www.scana.com under the caption "Investor Relations — Financial Reports — Proxy Statements."

        SCANA shareholders may view proxy statements and annual report information at this website. If you choose to view proxy materials through the Internet, you may incur costs, such as telephone and Internet access charges, for which you will be responsible.

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PROPOSAL 1 — ELECTION OF DIRECTORS

        We currently have 12 directors. The Board is divided into three classes with the members of each class usually serving a three-year term. The terms of the Class III Directors will expire at the Annual Meeting. The Board has decided to nominate the existing Class III Directors, Mrs. Decker and Messrs. Amick, Hagood and Timmerman for reelection at the Annual Meeting to serve until the Annual Meeting in 2011, or until their successors are elected and have qualified to serve.

        On December 31, 2007, James M. Micali and James W. Roquemore were elected to the Board by the Board to serve until the 2008 Annual Meeting. The Board has nominated Mr. Micali for election by the shareholders as a Class II Director with a term expiring at the 2010 Annual Meeting and Mr. Roquemore for election by the shareholders as a Class I Director with a term expiring at the 2009 Annual Meeting. Mr. Micali and Mr. Roquemore were recommended for election by non-management directors.

        The proxy agents identified on your proxy card intend to vote the shares represented by your proxy FOR the election of the nominees named above unless you withhold authority to vote for any or all of such nominees.

        The Board of Directors recommends a vote FOR all of its director nominees.

Information about Directors and Nominees

        The information set forth on the following pages about the nominees and continuing directors has been furnished to SCANA by such persons. With the exception of Mr. Micali and Mr. Roquemore, each of the directors is also a director of South Carolina Electric & Gas Company, a subsidiary of SCANA. There are no family relationships among any of SCANA's directors, director nominees or executive officers.

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NOMINEES FOR DIRECTORS

Nominees for Class III Directors—Terms to Expire at the Annual Meeting in 2011

    Bill L. Amick (Age 64)
Director since 1990
     

PHOTO

 

Mr. Amick has been the Chairman of The Amick Company, a residential and resort property real estate development company, since his retirement in October 2006 from Amick Farms, Inc., Amick Processing, Inc. and Amick Broilers, Inc., a vertically integrated broiler operation. Prior to his retirement, he served as Chairman of the Board of the Amick entities, all of which are located in Batesburg, South Carolina. He held those positions for more than five years. Mr. Amick is a director of Blue Cross and Blue Shield of South Carolina.

 

 

 

Sharon A. Decker (Age 51)
Director since 2005

 

 

 

PHOTO

 

Mrs. Decker is the founder and has been the principal of The Tapestry Group, a faith-based, non-profit organization, located in Rutherfordton, North Carolina, since September 2004. Mrs. Decker previously served as President of Tanner Holdings, LLC and Doncaster, apparel manufacturers, from August 1999 until September 2004. Mrs. Decker is a director of Coca-Cola Bottling Company Consolidated, Inc. and Family Dollar Stores, Inc., both in Charlotte, North Carolina.

 

 

 

D. Maybank Hagood (Age 46)
Director since 1999

 

 

 

PHOTO

 

Mr. Hagood has been President and Chief Executive Officer of Southern Diversified Distributors, Inc., a provider of logistic and distribution services, located in Charleston, South Carolina, since November 2003. Mr. Hagood also has been President and Chief Executive Officer of William M. Bird and Company, Inc., a subsidiary of Southern Diversified Distributors, Inc., a wholesale distributor of floor covering materials, in Charleston, South Carolina, since 1993.

 

 

 

William B. Timmerman (Age 61)
Director since 1991

 

 

 

PHOTO

 

Mr. Timmerman has been Chairman of the Board and Chief Executive Officer of SCANA since March 1997. He has been President of SCANA since December 1995.

 

5


Nominee For Class II Director—Term to Expire at the 2010 Annual Meeting

    James M. Micali (Age 60)
Director since December 2007
     

PHOTO

 

Mr. Micali has been Chairman and President of Michelin North America, Inc., located in Greenville, South Carolina, since 1996 and has served as a director of Sonoco Products Company, in Hartsville, South Carolina since 2003. Mr. Micali served on the board of Lafarge North America from 2004 to 2006, and on the board of St. Francis Hospital from 1996 to 2005. In 2006, he was Chairman of the South Carolina Manufacturers Alliance, and currently serves as Chairman of the South Carolina Chamber of Commerce.

 

Nominee For Class I Director—Term to Expire at the 2009 Annual Meeting

    James W. Roquemore (Age 53)
Director since December 2007
     

PHOTO

 

Mr. Roquemore is Chief Executive Officer and Chairman of Patten Seed Company, headquartered in Lakeland, Georgia, and General Manager of Super-Sod/Carolina, a company that produces and markets turf grass, sod and seed. He has held these positions for more than five years. Mr. Roquemore is a director of SC Bank and Trust and SCBT Financial Corporation. He serves on the Southeast Region and National boards of the Boy Scouts of America. He is currently the Agribusiness Co-Chairman for "New Carolina" — South Carolina's Council on Competitiveness, and is the past President and current board member of the Palmetto Agribusiness Council.

 

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CONTINUING DIRECTORS

Class I Directors — Terms to Expire at the Annual Meeting in 2009

    James A. Bennett (Age 47)
Director since 1997
     

PHOTO

 

Mr. Bennett has been Executive Vice President and Director of Public Affairs of First Citizens Bank, located in Columbia, South Carolina, since August 2002. Previously, he was President and Chief Executive Officer of South Carolina Community Bank, in Columbia, South Carolina, from May 2000 to July 2002.

 

 

 

Lynne M. Miller (Age 56)
Director since 1997

 

 

 

PHOTO

 

Ms. Miller has been an environmental consultant since her retirement from Quanta Capital Holdings, Inc., a specialty insurer, in August 2006. From August 2005 to August 2006 she was a Senior Business Consultant at Quanta Capital Holdings. From April 2004 through July 2005, she was President of Quanta Technical Services LLC. She was Chief Executive Officer of Environmental Strategies Consulting LLC, a division of Quanta Technical Services LLC, from September 2003 through March 2004. Ms. Miller co-founded Environmental Strategies Corporation, an environmental consulting firm in Reston, Virginia, in 1986, and served as President from 1986 until 1995 and as Chief Executive Officer from 1995 until September 2003 when the firm was acquired by Quanta Capital Holdings, Inc. and its name was changed to Environmental Strategies Consulting LLC. Ms. Miller is a director of Adams National Bank, a subsidiary of Abigail Adams National Bancorp, Inc., in Washington, D.C.

 

 

 

Maceo K. Sloan (Age 58)
Director since 1997

 

 

 

PHOTO

 

Mr. Sloan is Chairman, President and Chief Executive Officer of Sloan Financial Group, Inc., a financial holding company, and Chairman, Chief Executive Officer and Chief Investment Officer of both NCM Capital Management Group, Inc., and NCM Capital Advisers, Inc., investment management companies, in Durham, North Carolina. He has held these positions for more than five years. Mr. Sloan is a trustee of Teachers Insurance Annuity Association-College Retirement Equity Fund (TIAA-CREF) Funds Boards, Chairman of the Board of M&F Bancorp, Inc. and a director of its subsidiary, Mechanics and Farmers Bank, in Durham, North Carolina.

 

7


Class II Directors — Terms to Expire at the Annual Meeting in 2010

    W. Hayne Hipp (Age 68)*
Director since 1983
     

PHOTO

 

Mr. Hipp has been a private investor since The Liberty Corporation's acquisition in January 2006. Prior to its acquisition, Mr. Hipp served as Chairman, Chief Executive Officer and a director of the Liberty Corporation, a broadcasting holding company headquartered in Greenville, South Carolina. Mr. Hipp held these positions for more than five years.

 

 

 

Harold C. Stowe (Age 61)
Director since 1999

 

 

 

PHOTO

 

Mr. Stowe retired as interim Dean of the Wall College of Business at Coastal Carolina University in Conway, South Carolina on July 1, 2007, a position that he held since June 2006. From February 2005 to May 2006, Mr. Stowe was retired. Prior to his retirement, Mr. Stowe had served as President of Canal Holdings, LLC, a forest products industry company, located in Conway, South Carolina, and its predecessor company, since March 1997. Mr. Stowe is a director of Ruddick Corporation, in Charlotte, North Carolina.

 

 

 

G. Smedes York (Age 67)
Director since 2000

 

 

 

PHOTO

 

Mr. York is Chairman and Treasurer of York Properties, Inc., a full-service commercial and residential real estate company, in Raleigh, North Carolina. Mr. York has been associated with York Properties, Inc. since 1970. Mr. York is also Chairman of the Board of York Simpson Underwood, a residential real estate brokerage company, and of McDonald-York, Inc., a general contractor, both in Raleigh, North Carolina.

 

*
Mr. Hipp's term will expire at the Annual Meeting in 2009 when he reaches the mandatory retirement age pursuant to the Company's bylaws.

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BOARD MEETINGS — COMMITTEES OF THE BOARD

        The Board held ten meetings in 2007, consisting of four board meetings, five strategy sessions and one Code of Conduct training session. Each director attended at least 75% of all meetings of the Board and committees of which he or she was a member during 2007 (with the exception of Mr. Amick who attended 70%). Directors are expected, but not required, to attend the annual shareholders meeting absent extenuating circumstances. All of the directors attended the 2007 Annual Meeting.

        The tables below identify the members and briefly summarize the responsibilities of the Board's committees, which include the Executive Committee, the Human Resources Committee, the Nominating Committee, the Governance Committee, the Audit Committee and the Nuclear Oversight Committee. The charters of the Human Resources Committee, the Nominating Committee, the Governance Committee and the Audit Committee can be found on SCANA's website at www.scana.com under the caption, "Company Profile — Corporate Governance," and copies are also available in print upon request to the Corporate Secretary, SCANA Corporation, 1426 Main Street, Mail Code 134, Columbia, South Carolina 29201.


NAME OF COMMITTEE
AND MEMBERS

  PRINCIPAL FUNCTIONS
OF THE COMMITTEE

  NUMBER OF
MEETINGS IN
2007


EXECUTIVE COMMITTEE

W. B. Timmerman, Chairman
B. L. Amick
W. H. Hipp
L. M. Miller
M. K. Sloan
G. S. York
    authorized to exercise the powers of the full Board of Directors when the Board is not in session, with the exception of certain powers specifically reserved to the full Board of Directors by statute, and to advise the Chief Executive Officer on other matters important to the Company.   0

HUMAN RESOURCES     reviews and makes recommendations to the Board with respect to   3
COMMITTEE       compensation plans    
      recommends to the Board persons to serve as senior officers of    
G. S. York, Chairman       SCANA and its subsidiaries    
J. A.  Bennett     recommends to the Board salary and compensation levels, including    
S. A. Decker       fringe benefits, for officers of SCANA and its subsidiaries    
D. M. Hagood     approves goals and objectives with respect to the compensation of    
L. M. Miller       the Chief Executive Officer, evaluates the Chief Executive Officer's    
M. K. Sloan       performance and sets his compensation based on this evaluation    
      reviews succession and continuity planning with the    
        Chief Executive Officer    
      reviews the investment policies of SCANA's Retirement Plan    
      reviews long-term strategic plans and performance in regard to    
        management of human resources, including safety, health, labor/    
        employee relations and equality of treatment    
      reviews SCANA's operating performance relative to its bonus and    
        incentive programs    
      reviews management's compensation discussion and analysis on executive compensation prior to its inclusion in the Company's proxy statement    
      approves the inclusion of a Compensation Committee Report in the Company's proxy statement    
      executes the duties, responsibilities and authority set forth in the Human Resources Committee Charter    
      evaluates annually its own performance and the adequacy of its    
        charter    

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NOMINATING     recommends the slate of director nominees to be presented for   2
COMMITTEE       election at each annual meeting and director nominees to fill    
        vacancies    
W. H. Hipp, Chairman     reviews and evaluates shareholder nominees for director in    
J. A.  Bennett       accordance with the nominating criteria    
L. M. Miller     evaluates the qualifications and performance of incumbent directors    
M. K. Sloan     reviews the independence of directors and makes recommendations    
H. C. Stowe       regarding director independence to the Board    
G. S. York     monitors the new director orientation and the ongoing educational    
        needs of the directors    
      reviews the level of stock ownership of directors to ensure    
        compliance with minimum standards    
      reviews reports and disclosures of insider and affiliated    
        party transactions and makes recommendations to the Board on    
        such transactions    
      reviews director compensation and recommends changes to the    
        Board    
      executes the duties, responsibilities and authority set forth in    
        the Nominating Committee Charter    
      evaluates annually its own performance and the adequacy of    
        its charter    

GOVERNANCE     reviews annually, and revises as necessary, SCANA's Governance   2
COMMITTEE       Principles    
      recommends assignments of directors to serve on Board committees    
B. L. Amick, Chairman     initiates and oversees an annual evaluation of the Board's    
W. H. Hipp       effectiveness and assists and provides guidance to the Board in    
H. C. Stowe       performing the Board's annual self evaluation    
      evaluates periodically the size, composition and organizational    
        and operational structure of the Board and recommends to the    
        Board any changes    
      executes the duties, responsibilities and authority set forth in    
        the Governance Committee Charter    
      evaluates annually its own performance and the adequacy of its    
        charter    

AUDIT COMMITTEE     periodically meets separately with management, internal auditors   7
(Established in accordance       and the independent registered public accounting firm to discuss    
with Section 3(a)(58)(A) of       and evaluate the scope and results of audits and SCANA's    
the Securities Exchange       accounting procedures and controls    
Act of 1934)     reviews major issues regarding accounting principles and financial    
        statement preparation    
H. C. Stowe, Chairman*     reviews SCANA's financial statements before submission to the    
D. M. Hagood       Board for approval and prior to dissemination to shareholders, the    
M. K. Sloan       public or regulatory agencies    
      appoints (subject to ratification by the shareholders) the independent    
        registered public accounting firm    
      sets compensation of independent registered public accounting firm    
      reviews SCANA's corporate compliance and risk management    
        programs    
      executes the duties, responsibilities and authority set forth in the    
        Audit Committee Charter    
      constitutes the Qualified Legal Compliance Committee    
      evaluates annually its own performance and the adequacy of its charter    

   

10



NUCLEAR OVERSIGHT     monitors SCANA's nuclear operations   4
COMMITTEE     meets periodically with SCANA's management to discuss and    
        evaluate nuclear operations, including regulatory matters,    
L. M. Miller, Chairman       operating results, training and other related topics    
J. A.  Bennett     periodically tours the V.C. Summer Nuclear Station and training    
S. A. Decker       facilities    
G. S. York     reviews with the Institute of Nuclear Power Operations, on a    
        periodic basis, its appraisal of SCANA's nuclear operations    
      periodically presents an independent report to the Board on the    
        status of SCANA's nuclear operations    

*
The Board has determined that Mr. Stowe is an "audit committee financial expert" as defined under Item 407(d)(5) of the Securities and Exchange Commission's Regulation S-K. Mr. Stowe is independent as defined by the New York Stock Exchange Listing Standards.

11





GOVERNANCE INFORMATION

Governance Principles

        Our Governance Principles can be found on SCANA's website at www.scana.com under the "Company Profile — Corporate Governance" caption, and are also available in print upon request to the Corporate Secretary, SCANA Corporation, 1426 Main Street, Mail Code 134, Columbia, South Carolina 29201.

Director Independence

        SCANA's Governance Principles require that a majority of SCANA's directors be independent under the New York Stock Exchange Listing Standards and under any Director Qualification Standards recommended by the Nominating Committee. To be considered "independent" pursuant to the SCANA Director Qualification Standards, a director must be determined by resolution of the Board as a whole, following thorough deliberation and consideration of all relevant facts and circumstances, to have no material relationship with SCANA except that of director and to satisfy the independence standards of the New York Stock Exchange. Under the SCANA Director Qualification Standards, a director is required to be unencumbered and unbiased and able to make business judgments in the long-term interests of SCANA and its shareholders as a whole, to deal at arm's length with SCANA, and to disclose all circumstances material to the director that might be perceived as a conflict of interest.

        The SCANA Director Qualification Standards also prohibit Audit Committee members from having any direct or indirect financial relationship with SCANA other than the ownership of SCANA securities and compensation as directors and committee members. The Board has determined that all of its directors and director nominees serving during 2007, except Mr. Timmerman, who is SCANA's Chief Executive Officer, are independent under the New York Stock Exchange Listing Standards and SCANA's Governance Principles. The Board has also determined that each member of the Audit Committee, Human Resources Committee, Governance Committee and Nominating Committee is independent under the New York Stock Exchange Listing Standards and SCANA's Governance Principles.

Executive Sessions of Non-Management Directors

        To promote open discussion among themselves, SCANA's non-management directors meet regularly in executive session without management participation. The Chairs of the Audit, Human Resources, Nuclear Oversight, Nominating, and Governance Committees of the Board each preside as the Chair at meetings of non-management directors at which the principal items to be considered are within the scope of authority of his or her committee. The Board believes this procedure provides for leadership at all meetings of non-management directors without the need to designate a lead director.

Director Nominations Process

        The Nominating Committee recommended to the Board the individuals nominated for director positions at the 2008 Annual Meeting.

        The Nominating Committee will consider for recommendation to the Board as Board of Directors' nominees, candidates recommended by shareholders if the shareholders comply with the following requirements. If a shareholder wishes to recommend a candidate to the Nominating Committee for consideration as a Board of Directors' nominee, such shareholder must submit in writing to the Nominating Committee the recommended candidate's name, a brief resume setting forth the recommended candidate's business and

12



educational background and qualifications for service, and a notarized consent signed by the recommended candidate stating the recommended candidate's willingness to be nominated and to serve. This information must be delivered to the SCANA Nominating Committee, c/o the Corporate Secretary at the Company's address and must be received no later than 120 days prior to the first anniversary of the date of the proxy statement sent to shareholders in connection with the preceding year's annual meeting for a potential candidate to be considered as a potential Board of Directors' nominee. The Nominating Committee may request further information if it determines a potential candidate may be an appropriate nominee. Director candidates recommended by shareholders that comply with these requirements will be considered on the same basis as candidates otherwise chosen by the Nominating Committee.

        Director candidates recommended by shareholders will not be considered for recommendation by the Nominating Committee as potential Board of Directors' nominees if the shareholder recommendations are received later than 120 days prior to the first anniversary of the date of the proxy statement sent to shareholders in connection with the preceding year's annual meeting. If the Nominating Committee chooses not to recommend a shareholder candidate as a Board of Directors' nominee, or if a shareholder chooses to personally nominate a candidate, the shareholder may come to an annual meeting and nominate a director candidate for election at the annual meeting if the shareholder has given notice of his intention to do so in writing to the SCANA Corporate Secretary at least 120 days prior to the first anniversary of the date of the proxy statement sent to shareholders in connection with the preceding year's annual meeting. Such shareholder nominations must also comply with the other requirements in SCANA's bylaws. Any shareholder may request a copy of the relevant bylaw provision by writing to the Office of the Corporate Secretary, SCANA Corporation, 1426 Main Street, Mail Code 134, Columbia, South Carolina 29201. Nominations not made in accordance with these requirements may be disregarded by the presiding officer of the meeting, and upon his instructions, the voting inspectors shall disregard all votes cast for each such nominee.

Director Qualification Criteria

        In identifying and evaluating potential nominees, the Nominating Committee Charter directs the committee to take into account applicable requirements for directors under the Securities Exchange Act of 1934, the listing standards of the New York Stock Exchange and Director Qualification Standards in SCANA's Governance Principles, including SCANA's policy that a majority of its directors be independent.

        The Nominating Committee may take into consideration such other factors and criteria as it deems appropriate in evaluating a candidate, including his or her knowledge, expertise, skills, integrity, judgment, business or other experience and reputation in the business community, the interplay of the candidate's experience with the experience of other Board members, diversity, and the extent to which the candidate would be a desirable addition to the Board and any committees. Additionally, the Director Qualification Standards set forth in SCANA's Governance Principles include the following:

    Directors must possess and have demonstrated the highest personal and professional ethics, integrity and values consistent with those of SCANA;

    Directors must be unencumbered and unbiased and able to make business judgments in the long-term interests of SCANA and its shareholders as a whole;

    Directors are required to deal at arm's length with SCANA and its subsidiaries and to disclose all circumstances

13


      material to the director that might be perceived as a conflict of interest;

    Directors must be committed to the enhancement of the long-term interests of SCANA's shareholders;

    Directors must be willing to challenge the strategic direction of management, exercising mature judgment and business acumen;

    Directors must be willing to devote sufficient time and care to the exercise of their duties and responsibilities;

    Directors must possess significant experience in management positions of successful business organizations;

    Directors who serve as chief executive officers or equivalent positions should not serve on more than two boards of public companies in addition to the SCANA Board. Other directors should not serve on more than four boards of public companies in addition to the SCANA Board;

    The term of office of a director who is not a salaried employee of SCANA will expire at the annual meeting next preceding the date on which such director attains age 70; and

    Directors are required to own a minimum of 100 shares of SCANA common stock. A significant financial commitment to SCANA in the form of ownership of common stock is encouraged and will be evaluated by the Nominating Committee in the course of its work.

Communications with the Board of Directors, including Non-Management Directors

        Shareholders and other interested parties can communicate with the Board, with the non-management directors as a group or with any director by writing to them, c/o Gina Champion, Corporate Secretary, SCANA Corporation, 1426 Main Street, Mail Code 134, Columbia, South Carolina 29201 or by sending an e-mail to independentdirectors@scana.com (for correspondence to the non-management directors), to chairman@scana.com (for correspondence to the CEO/chairman) or to gchampion@scana.com (for correspondence to a particular director). Interested parties also may communicate with the chair of the following committees by sending an e-mail to: auditchair@scana.com, humanresourceschair@scana.com, nominatingchair@scana.com, or governancechair@scana.com. The Corporate Secretary may initially review communications with directors and transmit a summary to the directors, but has discretion to exclude from transmittal any communications that are commercial advertisements or other forms of solicitation or individual service or billing complaints (although all communications are available to the directors at their request). The Corporate Secretary will forward to the directors any communications raising substantial issues.

SCANA's Code of Conduct & Ethics

        All SCANA employees (including the Chief Executive Officer, Chief Financial Officer and Controller) and directors are required to abide by SCANA's Code of Conduct & Ethics (the "Code") to ensure that SCANA's business is conducted in a consistently legal and ethical manner. The Code forms the foundation of a comprehensive process that promotes compliance with corporate policies and procedures, an open relationship among colleagues that contributes to good business conduct, and a belief in the integrity of SCANA's employees. SCANA's policies and procedures cover all areas of business conduct, and require adherence to all laws and regulations applicable to the conduct of SCANA's business.

        The full text of the Code is published on the SCANA website, at www.scana.com, under the "Company Profile — Code of Conduct" caption, and a copy is also available in print

14



upon request to the Corporate Secretary, SCANA Corporation, 1426 Main Street, Mail Code 134, Columbia, South Carolina 29201. SCANA intends to disclose future amendments to, or waivers from, certain provisions of the Code on its website within two business days following the date of such amendment or waiver.




RELATED PARTY TRANSACTIONS

        We require that each senior executive officer, director and director nominee complete an annual questionnaire and report all transactions with SCANA in which such persons (or their immediate family members) had or will have a direct or indirect material interest (except for salaries, directors' fees and dividends on our stock). It is the general intention of the Company to avoid such transactions. The Company's General Counsel reviews responses to the questionnaires and any other information about related party transactions that may be brought to his attention. If any related party transactions are disclosed, they are reviewed by the Nominating Committee, and if appropriate, submitted to the Board for approval. The Company does not, however, have a formal policy or procedure for approval or ratification of such transactions.

        The types of transactions that have been reviewed in the past include the purchase and sale of goods, services or property from companies for which our directors serve as executive officers or directors, the purchase of financial services and access to lines of credit from banks for which our directors serve as executive officers or directors, and the employment of family members of executive officers or directors. There were no such transactions during the year ended December 31, 2007.

15





SHARE OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

SECURITY OWNERSHIP OF MANAGEMENT

        The following table lists shares of our common stock beneficially owned on February 22, 2008, by each director, each nominee, each person named in the Summary Compensation Table on page 36, and all directors and executive officers as a group.

Name of Beneficial Owner

  Amount and Nature of
Beneficial Ownership(1)(2)(3)(4)(5)

  Percent of
Class

W. B.   Timmerman   76,790   *
J. E.   Addison   17,584   *
K. B.   Marsh   25,677   *
G. J.   Bullwinkel, Jr.   44,683   *
S. A.   Byrne   14,919   *
B. L.   Amick   61,852   *
J. A.   Bennett   2,792   *
S. A.   Decker   1,781 (6) *
D. M.   Hagood   1,541   *
W. H.   Hipp   19,584   *
J. M.   Micali   1,000   *
L. M.   Miller   3,814   *
J. W.   Roquemore   1,000   *
M. K.   Sloan   1,994   *
H. C.   Stowe   2,975   *
G. S.   York   14,374   *
All executive officers and directors as a group (21 persons)   372,297 (7) *

*Less than 1%

(1)
Includes shares purchased through February 22, 2008, by the Trustee under SCANA's Stock Purchase Savings Plan.

(2)
Includes Restricted Stock granted on February 14, 2008, subject to a three-year vesting period, in the following amounts: Messrs. Timmerman — 17,006; Addison — 3,224; Marsh — 5,983; Bullwinkel — 3,997; Byrne — 3,826; and other executive officers as a group — 9,911.

(3)
Hypothetical shares acquired under the Director Compensation and Deferral Plan are not included in the above table. These hypothetical shares do not have voting rights. As of February 22, 2008, each of the following directors had acquired under the plan the number of hypothetical shares following his or her name: Messrs. Amick — 18,368; Bennett — 17,217; Hagood — 6,678; Hipp — 12,549; Micali — 1,386; Roquemore — 1,232; Sloan — 21,801; Stowe — 14,750; and York — 21,917; and Ms. Miller — 22,850.

(4)
Hypothetical shares acquired under the Executive Deferred Compensation Plan are not included in the above table. These hypothetical shares do not have voting rights. As of February 22, 2008, each of the following officers had acquired under the plan the number of hypothetical shares following his name: Messrs. Timmerman — 48,020; Addison — 682; Marsh — 5,382; Bullwinkel — 20,983; and Byrne — 9,814.

(5)
Includes shares owned by close relatives and/or shares held in trust for others, as follows: Messrs. Amick — 480; Bullwinkel — 1,930; and other executive officers — 500.

(6)
Mrs. Decker's shares are held in a margin account with a broker and up to 30% of the shares can be pledged as collateral at any time.

(7)
Includes a total of 6,768 shares subject to options that are currently exercisable or that will become exercisable within 60 days.

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FIVE PERCENT BENEFICIAL OWNERSHIP OF SCANA COMMON STOCK

        The following table provides information about persons known by us to be the beneficial owners of more than five percent of our common stock as of December 31, 2007. This information was obtained from Schedules 13G filed with the Securities and Exchange Commission and we have not independently verified it.

Name and Address of Beneficial Owner

  Amount and Nature
of Beneficial
Ownership

  Percent of
Class

SCANA Corporation Stock Purchase Savings Plan
Merrill Lynch Bank & Trust Company, as Trustee
400 Colony Square, Suite 2200
1201 Peachtree Street, N.E.
Atlanta, GA 30361
  11,111,720 (1) 9.50

Barclays Entities
45 Fremont Street
San Francisco, CA 94105

 

6,584,504

(2)

5.64
(1)
The SPSP has shared power to vote and dispose of all of these shares.

(2)
Based on a Schedule 13G filing by several Barclays entities who disclaimed the existence of a group but aggregated their shares for filing purposes. Those Barclays entities are Barclays Global Investors, NA, Barclays Global Fund Advisors, Barclays Global Investors, Ltd, and Barclays Global Investors Japan Limited.

17





EXECUTIVE COMPENSATION

Compensation Committee Processes and Procedures

        Our Human Resources Committee, which is comprised entirely of independent directors, administers our senior executive compensation program. Compensation decisions for all senior executive officers are approved by the Human Resources Committee and recommended by the Committee to the full Board for final approval. The Committee considers recommendations from our Chairman and Chief Executive Officer in setting compensation for senior executive officers.

        In addition to attendance by members of the Human Resources Committee, the Committee's meetings are also regularly attended by our Chairman and Chief Executive Officer and our Senior Vice President of Human Resources. However, at each meeting the Committee also meets in executive session. The Chairman of the Committee reports the Committee's recommendations on executive compensation to the Board of Directors. Our Human Resources and Tax Departments support the Human Resources Committee in its duties, and the Committee may delegate authority to these departments to fulfill administrative duties relating to our compensation programs.

        The Committee has the authority under its charter to retain, approve fees for, and terminate advisors, consultants and others as it deems appropriate to assist in the fulfillment of its responsibilities. The Committee has, however, historically chosen to use relevant information provided to us by management's consultant, Hewitt Associates. The Committee uses this information to assist it in carrying out its responsibilities for overseeing matters relating to compensation plans and compensation of our senior executive officers. Using information provided by a national compensation consultant helps to assure the Committee that our policies for compensation and benefits are competitive and aligned with utility and general industry practices.

Compensation Committee Interlocks and Insider Participation

        During 2007, decisions on various elements of executive compensation were made by the Human Resources Committee. No officer, employee, former officer or any related person of SCANA or any of its subsidiaries served as a member of the Human Resources Committee.

        The directors who served on the Human Resources Committee during 2007 were:

Mr. G. Smedes York, Chairman
Mr. James A. Bennett
Mr. William C. Burkhardt
Mrs. Sharon A. Decker
Mr. D. Maybank Hagood
Ms. Lynne M. Miller
Mr. Maceo K. Sloan

Compensation Discussion and Analysis

Objectives and Philosophy of Executive Compensation

        Our senior executive compensation program is designed to support our overall objective of increasing shareholder value by:

    Hiring and retaining premier executive talent;

    Having a pay-for-performance philosophy that links total rewards to achievement of corporate, business unit and individual goals, and places a substantial portion of pay for senior executives "at-risk;"

    Aligning the interests of executives with the long-term interests of shareholders through long-term equity-based incentive compensation; and

    Relating the elements of the compensation program to focus on the

18


      proper balance of financial, customer service, operational and strategic goals.

        We have designed our compensation program to reward senior executive officers for their individual and collective performance, and for our collective performance in achieving target goals for earnings per share and total shareholder return and other annual business objectives. We believe our program performs a vital role in keeping executives focused on improving our performance and enhancing shareholder value while rewarding successful individual executive performance in a way that helps to assure retention.

        The following discussion provides an overview of our compensation program for all of our senior executive officers (a group of ten people who are at the level of senior vice president and above), as well as a specific discussion of compensation for our Chief Executive Officer, our Chief Financial Officer and the other executive officers named in the Summary Compensation Table that follows this "Compensation Discussion and Analysis." In this discussion, we refer to the executives named in the Summary Compensation Table as "Named Executive Officers."

Principal Components of Executive Compensation

        During 2007, senior executive compensation consisted primarily of three key components: base salary, short-term cash incentive compensation (under the Short-Term Annual Incentive Plan) and long-term equity-based incentive compensation (under the shareholder-approved Long-Term Equity Compensation Plan). We also provide various additional benefits to senior executive officers, including health, life and disability insurance plans, retirement plans, termination, severance and change in control arrangements, and perquisites. The Human Resources Committee makes its decisions about how to allocate senior executive officer compensation among base salary, short-term cash incentive compensation and long-term equity-based incentive compensation on the basis of information provided by our compensation consultant, and our goals of remaining competitive with the compensation practices of a group of surveyed companies and of linking compensation to our corporate performance and individual senior executive officer performance.

        A more detailed discussion of each of these components of senior executive officer compensation, the reasons for awarding such types of compensation, the considerations in setting the amounts of each component of compensation, the amounts actually awarded for the periods indicated, and various other related matters are set forth in the sections below.

Factors Considered in Setting Senior Executive Officer Compensation

Use of Market Surveys and Peer Group Data

        We believe it is important to consider comparative market information about compensation paid to executive officers of other companies in order to remain competitive in the executive workforce marketplace. We want to be able to attract and retain highly skilled and talented senior executive officers who have the ability to carry out our short- and long-term goals. To do so, we must be able to compensate them at levels that are competitive with compensation offered by other companies in our business or geographic marketplace that seek similarly skilled and talented executives. Accordingly, we consider market survey results in establishing target compensation levels for all components of compensation. The market survey information is provided to us every other year by our compensation consultant. In years in which our consultant does not provide us with market survey information, our process is to apply an aging factor to the prior year's information with assistance from our consultant, based on its experience in the marketplace. Compensation decisions for 2007 were based

19



on a compensation survey performed in 2005. A new compensation study was performed by our compensation consultant in 2007, and that survey information was used to set 2008 compensation. Prior to the consultant's initiating the biennial market study, we assist our consultant in matching our positions with positions in its database by examining specific responsibilities of our positions. If we are unable to find an exact match for one of our positions in the consultant's database, we select the most similar position and we may request the market survey information be adjusted upward or downward to match our position as closely as possible. We also may request an adjustment upward or downward to the survey data of a particular position if we believe the data does not appropriately match the level of a position in our organization.

        Our goal is to set base salary and short- and long-term incentive compensation for our senior executive officers at the median (50th percentile) of compensation paid for similar positions by the companies included in the market surveys. We set our target at the median because we believe this target will meet the requirements of most of the persons we seek to hire and retain in our geographic area, and because we believe it is fair both to us and to the executives. Variations to this objective may, however, occur as dictated by the experience level of the individual, internal equity and market factors. We do not set a target level for broad-based benefits for our senior executive officers, but our market survey information indicates that they currently are approximately at the median.

        The companies included in the market surveys are a group of utilities and general industry companies of various sizes in terms of revenue. Approximately half of the companies included in the most recent market surveys had substantially the same levels of annual revenues as we had, while the remainder had revenues not greater than four times our revenues. Market survey results for each position are adjusted using regression analysis to account for these differences in company revenues. To a large extent, the companies included in the survey results were those that had agreed to participate in market surveys included in our compensation consultant's database.

        The companies included in the market survey we used in connection with setting base salaries and short-term incentive compensation for 2007, and the states in which they are headquartered are listed below:

    Utility Industry: AGL Resources, Inc. (GA); Ameren Corporation (MO); Aquila, Inc. (MO); Black Hills Corporation (SD); CenterPoint Energy (TX); Cinergy Corp. (OH); Cleco Corporation (LA); CMS Energy Corporation (MI); Dominion Resources, Inc. (VA); DTE Energy Company (MI); Duke Energy Corporation (NC); Edison International (CA); El Paso Electric Company (TX); FPL Group, Inc. (FL); Great Plains Energy (MO); Nicor Inc. (IL); NiSource Inc. (IN); Pepco Holdings, Inc. (DC); PNM Resources, Inc. (NM); PPL Corporation (PA); Progress Energy, Inc. (NC); Public Service Enterprise Group (NJ); Sempra Energy (CA); Southern Company (GA); WGL Holdings, Inc. (DC).

    General Industry: Alliant Techsystems Inc. (MN); ALLTEL Corporation (AR); Armstrong World Industries (PA); Ball Corporation (CO); Becton Dickinson and Co. (NJ); BorgWarner Inc. (MI); Brunswick Corporation (IL); C.R. Bard, Inc. (NJ); The Clorox Company (CA); Cooper Cameron Corp. (TX); Cooper Industries (TX); Ecolab Inc. (MN); FMC Corporation (PA); Hasbro, Inc. (RI); MeadWestvaco Corporation (VA); Medtronic, Inc. (MN); Packaging Corp. of America (IL); Praxair, Inc. (CT); The Sherwin-Williams Co. (OH); Sonoco Products Company (SC); Springs Industries, Inc. (SC); Steelcase Inc. (MI); Wm. Wrigley Jr. Company (IL).

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        We believe the utilities included in our market surveys are an appropriate group to use for compensation comparisons because they align well with our sales and revenues, the nature of our business and workforce, and the talent and skills required for safe and successful operations. We believe the additional non-utility companies included in our market surveys are appropriate to include in our comparisons because they align well with our sales and revenues, and are the types of companies that might be expected to seek executives with the same general skills and talents as the executives we are trying to attract and retain in our geographic area. The companies we use for comparisons may change from time to time based on the factors discussed above.

        To make comparisons with the market survey results, we generally divide all of our senior executive officers into utility and non-utility executive groups — that is, executive officers whose responsibilities are primarily related to utility businesses and require a high degree of technical or industry-specific knowledge (such as electrical engineering, nuclear engineering or gas pipeline transmission), and those whose responsibilities are more general and do not require such specialized knowledge (such as business and other corporate support functions). We then attempt to match to the greatest degree possible our positions with similar positions in the survey results. For positions that do not fall specifically into the utility or non-utility group, we may blend the survey results to achieve what we believe is an appropriate comparison.

        We also use performance data covering a larger peer group of utilities in determining long-term equity incentive compensation under our shareholder-approved long-term equity compensation plan, as discussed below under "Long-Term Equity Compensation Plan."

Personal Qualifications

        In addition to considering market survey comparisons, we consider each senior executive officer's knowledge, skills, scope of authority and responsibilities, job performance and tenure with us as a senior executive officer.

        Mr. Timmerman has been our President and Chief Executive Officer for 11 years, and has been employed with us in various capacities, including Chief Financial Officer and Chief Operating Officer, for 29 years. Mr. Timmerman started his career as a certified public accountant. As our Chief Executive Officer, Mr. Timmerman has responsibility for strategic planning, development of our senior executive officers and oversight of all our operations.

        Mr. Addison was appointed our Senior Vice President and Chief Financial Officer in April 2006, prior to which time he had served as our Vice President — Finance since 2001. As Chief Financial Officer, he is responsible for all of our financial operations, including accounting, risk management, treasury, regulatory affairs, investor relations, shareholder services, taxation and financial planning, as well as our information technology functions. Mr. Addison is a certified public accountant, and has been with us for 16 years.

        Mr. Marsh is Senior Vice President of SCANA and was appointed President and Chief Operating Officer of South Carolina Electric & Gas Company, our largest subsidiary, in April 2006, prior to which time he had served as our Senior Vice President and Chief Financial Officer since 1998. As President of SCE&G, he is responsible for all of its gas and electric operations, as well as for all of our facilities and properties management. Mr. Marsh previously practiced as a certified public accountant, and has been with us for 23 years.

        Mr. Bullwinkel has been with us for 36 years. He is Senior Vice President of SCANA, as well as President and Chief Operating Officer of our subsidiary, SCANA

21


Energy Marketing, Inc., which is a provider of natural gas, and President of our subsidiaries, SCANA Communications, Inc. and ServiceCare, Inc. He is also responsible for senior executive oversight of our subsidiary, Public Service Company of North Carolina, Incorporated, d/b/a PSNC Energy, which is a regulated provider of natural gas in North Carolina. In these positions, he is responsible for overall operations of each of these subsidiaries.

        Mr. Byrne is Senior Vice President-Generation, Nuclear and Fossil Hydro. In these positions, he is responsible for overseeing all of our activities related to nuclear power, including nuclear plant operations, emergency planning, licensing and nuclear support services. He has been with us for 12 years, and has over 21 years experience in the nuclear industry.

Other Factors Considered

        In addition to the foregoing information, we consider the fairness of the compensation paid to each senior executive officer in relation to what we pay our other senior executive officers. Our Human Resources Committee also considers recommendations from our Chairman and Chief Executive Officer in setting compensation for senior executive officers.

        We review our compensation program and levels of compensation paid to all of our senior executive officers, including the Named Executive Officers, annually and make adjustments based on the foregoing factors as well as other subjective factors.

        In 2007, our Human Resources Committee reviewed summaries of compensation components ("tally sheets") for all of our senior executive officers, including the Named Executive Officers. These tally sheets reflected changes in compensation from the prior year and affixed dollar amounts to each component of compensation. The Committee did not make any adjustments to executive compensation in 2007 based on its review of the tally sheets. The Committee intends to continue to use such tally sheets in the future to review each component of the total compensation package, including base salaries, short- and long-term incentives, severance plans, insurance, retirement and other benefits, as a factor in determining the total compensation package for each senior executive officer.

Timing of Senior Executive Officer Compensation Decisions

        Annual salary reviews and adjustments and short- and long-term incentive compensation awards are routinely made in February of each year at the first regularly scheduled Human Resources Committee and Board meetings. Determinations also are made at those meetings as to whether to pay out awards under the most recently completed three-year cycle of long-term equity-based incentive compensation. Compensation determinations also may be made by the Committee at its other quarterly meetings in the case of newly hired executives or promotions of existing employees that could not be deferred until the February meeting. We routinely make our annual and quarterly earnings releases in conjunction with the quarterly meetings of our Board.

Base Salaries

        Senior executive officer base salaries are divided into grade levels based on market data for similar positions and experience. The Human Resources Committee believes it is appropriate to set base salaries at a reasonable level that will provide executives with a predictable income base on which to structure their personal budgets. Accordingly, base salaries are targeted at the median (50th percentile) of the market survey data. The Human Resources Committee reviews base salaries annually and makes adjustments, if appropriate, on the basis of an assessment of individual performance, relative levels of accountability, prior experience, breadth and

22



depth of knowledge, changes in market compensation practices as reflected in market survey data, and relative compensation levels within our company.

        All Named Executive Officers received base salary increases in 2007. The Human Resources Committee determined that the increases to base salaries were necessary and appropriate in light of market survey data and the fact that, with the exception of two Named Executive Officers who received increases in base salary in connection with promotions, the Named Executive Officers did not receive increases in 2006. In making the decisions with respect to the increases in base salaries for each of the Named Executive Officers, the Committee took into consideration recommendations of our Chief Executive Officer.

Short-Term and Long-Term Incentive Compensation

        Our senior executive officer compensation program provides for both short-term incentive compensation in the form of annual cash incentive compensation, and long-term equity-based incentive compensation payable at the end of periods which have historically lasted three years. Both our short-term incentive and long-term equity compensation plans promote our pay-for-performance philosophy, as well as our goal of having a meaningful amount of pay "at-risk," and we believe both plans provide us a competitive advantage in recruiting and retaining top quality talent.

        We believe the short-term incentive compensation plan provides our senior executive officers with an annual stimulus to achieve short-term individual and business unit or departmental goals and short-term corporate earnings goals that ultimately help us achieve our long-term corporate goals. We believe the long-term equity-based incentive compensation counterbalances the emphasis of short-term incentive compensation on short-term results by focusing our senior executive officers on achievement of our long-term corporate goals; provides additional incentives for them to remain our employees by ensuring that they have a continuing stake in the long-term success of the Company; and helps to align the interests of senior executive officers with those of shareholders.

Short-Term Annual Incentive Plan

        Our Short-Term Annual Incentive Plan provides financial incentives for performance in the form of opportunities for annual incentive cash payments. Participants in the Short-Term Annual Incentive Plan include not only our senior executive officers, but also approximately 190 additional employees, including other officers, senior management, division heads and other professionals whose positions or levels of responsibility make their participation in the plan appropriate. Our Chief Executive Officer recommends, and the Human Resources Committee approves, the performance measures, operational goals and other terms and conditions of incentive awards for senior executives, including the Named Executive Officers.

        The Committee reviews and approves target short-term incentive levels at its first regularly scheduled meeting each year based on percentages assigned to each executive salary grade. Actual short-term incentive awards are based both on the Company's achieving pre-determined financial and business objectives, and on each senior executive officer's level of performance in achieving his or her individual financial and strategic objectives. In assessing accomplishment of objectives, the Committee considers the difficulty of achieving each objective, unforeseen obstacles or favorable circumstances that might have altered the level of difficulty in achieving the objective, overall importance of the objective to our long-term and short-term goals, and importance of achieving the objective to enhancing shareholder value. Changes in annual target short-term incentive levels can be made if there

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are changes in the senior executive officer's salary grade level that warrant a target change.

        The plan allows for an increase or decrease in short-term incentive award payout of up to 20% of the target award based on an individual's performance in meeting individual financial and strategic objectives. The plan also allows for an increase or decrease in award payout of up to 50% of the target award based on the extent to which we achieve our pre-determined financial objectives. However, cumulative adjustments to target award payouts for all participants may not increase or decrease overall award levels by more than 50%. Individual awards may nonetheless be decreased or eliminated if the Human Resources Committee determines that actual results warrant a lower payout.

        For Mr. Timmerman, the Short-Term Annual Incentive Plan placed equal emphasis on the following financial and business objectives for 2007:

    Our achieving earnings per share targets set to reflect our published earnings per share guidance; and

    Performance of our senior executive officers.

        For each of our other Named Executive Officers, the Short-Term Annual Incentive Plan placed equal emphasis on the following financial and business objectives for 2007:

    Our achieving earnings per share targets set to reflect our published earnings per share guidance; and

    Our achieving annual business objectives relating to our four critical success factors: cost effective operations, profitable growth, excellence in customer service, and developing our people.

        The estimated possible payouts that could have been earned under the 2007 awards if performance objectives were met at threshold, target and maximum levels are set forth in the 2007 Grants of Plan-Based Awards Table.


        The extent to which each Named Executive Officer's individual strategic objectives depended upon our achieving one or more of our critical success factors was weighted according to the extent to which the executive was responsible for results of the objectives. The weightings assigned to the business objectives for each Named Executive Officer for 2007 are shown in the table below:

2007 Weightings Assigned to Each Business Performance Objective
for Named Executive Officers

Objective

  Mr. Timmerman
  Mr. Addison
  Mr. Marsh
  Mr. Byrne
  Mr. Bullwinkel
 
Financial Results   50 % 50 % 50 % 50 % 50 %
Senior Staff Performance   50 %                
Cost Effective Operations       20 % 5 % 12.5 % 30 %
Profitable Growth       10 % 25 % 25 %    
Customer Service       20 % 15 %     20 %
Developing our People           5 % 12.5 %    

        We did not achieve our earnings per share targets for 2007 and, accordingly, we did not make any payouts on the earnings per share component of the Short-Term Annual Incentive Plan. However, we achieved our business objectives and our senior executive officers achieved their individual strategic objectives. Accordingly, we made payouts to our senior

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executive officers, including our Named Executive Officers, with respect to the business and individual strategic objectives portions of the plan. As further discussed below under the caption " — Discretionary Bonus Award," we also made a 20% discretionary bonus award to each of our senior executive officers, including our Named Executive Officers, as permitted by the plan. The 2007 Short-Term Incentive Plan payouts based on our achieving our business objectives and our Named Executive Officers' achieving their individual objectives are reflected in the Summary Compensation Table on page 36 under the column "Non-Equity Incentive Plan Compensation," and the discretionary bonuses under the plan are reflected in the Summary Compensation Table under the column "Bonus."

Individual Strategic Objectives on which 2007 Short-Term Annual Incentive Awards were Based

        Our four critical success factors — cost effective operations, profitable growth, excellence in customer service, and developing our people — included the following components, which were included in business unit objectives: continuing to implement workforce planning initiatives; effectively addressing new regulatory and legislative issues; focusing on safety and employee wellness; advancing an environmental strategy that meets requirements and anticipates future needs; ensuring the security of our people, assets and operations; maintaining focus on cost control and business efficiency; meeting future growth requirements; and focusing on excellence in customer service.

        The individual strategic objectives the Human Resources Committee considered with respect to one or more of our critical success factors in determining short-term incentive awards for the Named Executive Officers were as follows:

        Mr. Timmerman's award was based on his contributions and his leadership of other senior executives in achieving our overall corporate strategic plan objectives.

        Mr. Addison's award was based on his successful efforts toward maintaining financial reporting compliance processes and procedures that meet the requirements of the Sarbanes-Oxley Act; leadership-level participation in regulatory decisions and strategy for 2007; monitoring financial markets and ensuring our financings are cost effective and appropriate for all enterprises and capital projects; redesigning internal financial planning; and increasing our visibility in the financial community.

        Mr. Marsh's award was based on his progress toward implementing our succession and leadership development plans; leadership-level participation in regulatory decisions and strategy; oversight of our implementation of North American Electric Reliability Council and Electric Reliability Organization reliability standards; evaluating and developing long-term growth strategies; and completion of project milestones on new meter-reading technology.

        Mr. Bullwinkel's award was based on his efforts in connection with the continued successful implementation by one of our subsidiaries of automated meter-reading in designated service areas; development and implementation of technology enhancements at our communications subsidiary; actions to help assure optimum financial returns of our unregulated gas subsidiary; and improvement of customer service at one of our subsidiaries by implementing a new software system.

        Mr. Byrne's award was based on his evaluation and decisions related to our 2009 peaking power needs; completion of equipment modifications at one of our generating stations; oversight and resolution of safety issues; and implementation of a communication plan on new generation options.

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Discretionary Bonus Award

        The 20% discretionary bonus award was recommended to our Human Resources Committee by our Chief Executive Officer, and both the Human Resources Committee and the Board approved the discretionary payout. The bases for the discretionary portion of the award are as follows:

    Two primary factors that held down financial performance significantly (mild weather and reduced synthetic fuel royalties) were not within the control of our employees;

    Notwithstanding the two primary factors listed above, our management team excelled at implementing strategies, including cost control and non-core asset disposition, such that we missed our earnings target by only one cent per share ($2.74 versus $2.75); and

    Our management team has continued to make substantial progress this year in addressing long-term strategic issues, such as planning for future expansion of generation capacity and pending environmental challenges.

        We believe this discretionary payment to our short-term bonus plan participants is well justified and necessary to reward and retain our critical human resources.

Long-Term Equity Compensation Plan

        The potential value of long-term equity-based incentive compensation opportunities comprises a significant portion of the total compensation package for senior executive officers and key employees. The Human Resources Committee believes this approach to total compensation provides the appropriate long-range focus for senior executive officers and other key employees who are charged with responsibility for managing the Company and achieving success for our shareholders because it links the amount of their compensation to our business and financial performance.

        A portion of each senior executive officer's potential compensation consists of awards under the Long-Term Equity Compensation Plan. The types of long-term equity-based compensation the Human Resources Committee may award under the plan include incentive and nonqualified stock options, stock appreciation rights (either alone or in tandem with a related stock option), restricted stock, performance units and performance shares. In recent years, our only long-term equity-based awards have been in the form of performance shares and performance units. These long-term equity-based awards are granted subject to satisfaction of specific performance goals. For the 2007-2009 performance period, awards under the Long-Term Equity Compensation Plan consisted solely of performance shares. We have not awarded stock options since 2002 and have no plans to do so in the foreseeable future.

        We believe awards of performance units and performance shares align the interests of our executives with those of shareholders because the value of such awards is tied to our achieving financial and business goals that would be expected to affect the value of our common stock.

Performance Share Awards

        We have been granting performance share awards based on comparative total shareholder return and earnings per share components for several years. Performance share awards based on these components place a portion of executive compensation at risk because executives are compensated pursuant to the awards only when the objectives for Total Shareholder Return ("TSR") and earnings growth are met. Additionally, comparing our TSR to the TSR of a group of other companies reflects our recognition that investors could have invested their funds in other entities, and

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measures how well we performed over time when compared to others in the group.

        Performance share awards are denominated in shares of our common stock. The number of performance shares into which awards are denominated is calculated by multiplying the Named Executive Officer's base salary by a target percentage based on positions cited in the market survey data and dividing the product by a valuation factor applied to our opening stock price on the date of grant. The target percentage is derived from market survey data of the peer companies listed above under "Factors Considered in Setting Senior Executive Officer Compensation — Use of Market Surveys and Peer Group Data." The valuation factor is provided to us by our compensation consultant and is intended as a means to establish a grant date salary equivalent value that takes into consideration such factors as dividend treatment, potential for maximum performance, and the treatment of awards upon termination. Performance share awards may be paid in stock or cash or a combination of stock and cash at our discretion, but are most frequently paid in cash. In recent years, all payouts have been in cash and we currently anticipate that we will continue to make such payouts in cash. Payouts are based on the closing market price of our stock on the last date of the three-year performance period.

Components of 2005-2007 and 2006-2008 Performance Share Awards

        For the 2005-2007 and 2006-2008 performance cycles, components of performance share awards to senior executive officers under the Long-Term Equity Compensation Plan were as follows: (1) our TSR relative to the TSR of a group of peer companies over the three-year periods and (2) a three-year average growth in earnings component based on our earnings per share under generally accepted accounting principles, with adjustments to be made to account for the cumulative effects of any mandated changes in accounting principles and the effects of sales of certain investments or impairment charges related to certain investments (we refer to this component as growth in "EPS from ongoing operations"). TSR over the performance period is equal to the change in our common stock price, plus cash dividends paid on our common stock during the period, divided by the common stock price as of the beginning of the period.

Performance Criteria for the 2005-2007 Performance Share Awards Granted in 2005 and Award Payouts in 2008

        Payouts for performance share awards granted in 2005 for the 2005-2007 performance period were based on our achieving: (1) TSR in the top two-thirds of the Long-Term Equity Compensation Plan peer group over the three-year period, and (2) three-year average growth in EPS from ongoing operations of at least 2%. Sixty percent of target performance shares were based on the TSR component and 40% were based on the EPS growth component. The allocation of 60% of awards to three-year TSR and 40% to growth in EPS from ongoing operations was made to weight the external performance measure slightly higher than the internal performance measure.

        With respect to the TSR component, executives would earn threshold payouts (equal to 50% of target award) if we ranked at the 33rd percentile in relation to the peer group's three-year TSR performance. Target payouts (equal to 100% of target award) would be earned if we ranked at the 50th percentile in relation to the peer group's three-year TSR performance. Maximum payouts (equal to 150% of target award) would be earned if we ranked at or above the 75th percentile in relation to the peer group's three-year TSR performance. Payouts were scaled between 50% and 150% based on the actual percentile achieved. No payouts would be earned if TSR performance was less than the 33rd percentile and no

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payouts would exceed 150% of the target award.

        For the three-year performance period 2005-2007, our TSR was below the 33rd percentile of the peer group's TSR, which resulted in no payouts on the TSR component of the awards.

        With respect to the EPS component of the 2005-2007 awards, executives would earn threshold payouts (equal to 50% of target award) at 2% average growth, target payouts (equal to 100% of target award) at 4% average growth and maximum payouts (equal to 150% of target award) at or above 6% average growth. Payouts were scaled between 50% and 150% based on the actual growth in EPS from ongoing operations achieved. No payouts would occur if average growth in EPS from ongoing operations over the period was less than 2% and no payouts would exceed 150% of target award. These threshold, target and maximum payout levels were consistent with the earnings growth guidance provided publicly by management at the time of the grants.

        For the three-year performance period 2005-2007, our average growth in EPS from ongoing operations was 2.3%, resulting in a payout of 57.5% of the EPS component of the awards. This payout, which occurred in February, 2008, is reflected in the 2007 Option Exercises and Stock Vested Table on page 39.

2007-2009 Performance Share Awards

        In 2007, we granted performance share awards to each of the Named Executive Officers. Information about the components of the awards and the performance criteria for the 2007 three-year period is set forth below. Information about the number of performance shares that could be earned at threshold, target and maximum performance levels for the 2007 three-year period is provided in the 2007 Grants of Plan-Based Awards Table on page 37.

        As further discussed below, the design of performance share awards under the Long-Term Equity Compensation Plan for the 2007-2009 period was modified from the design of the 2005-2007 and 2006-2008 performance share awards. We implemented these changes for the 2007-2009 period because we believed that they would increase the effectiveness of the plan in encouraging executive retention by minimizing the impact of extraordinarily strong or poor single-year performance on award payouts while generally requiring that the executives continue employment with us for the entire three-year period to receive a payout.

Components of, and Performance Criteria for, the 2007-2009 Performance Share Awards and Earned Awards for the 2007 Performance Period

        Performance share awards granted for the 2007-2009 period were based on (1) our TSR relative to the TSR of a peer group of companies and (2) an average growth in earnings component based on growth in "GAAP-adjusted net earnings per share from operations" as that term is used in the Company's periodic reports and external communications. (For an explanation of GAAP-adjusted net earnings per share from operations, see the discussion of Results of Operations in the Financial Appendix on page F-10.) GAAP-adjusted net earnings per share from operations may reflect different or additional adjustments than are or would have been reflected in the determination of EPS from ongoing operations in prior plan cycles. As in prior periods,TSR over the performance period is equal to the change in our common stock price, plus cash dividends paid on our common stock during the period, divided by the common stock price as of the beginning of the period.

        Performance measurement and award determination for the 2007-2009 period will be made on an annual basis (rather than the above described three-year measurement and determination used for prior awards), with payment of awards being deferred until after the end of the three-year period. Accordingly,

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payouts under the 2007-2009 three-year period will be earned for each year that performance goals are met during the three-year period, but payments will be deferred until the end of the period and will be contingent upon the participant's still being employed by us at the end of the period, subject to certain exceptions in the event of retirement, death or disability. The other performance criteria adopted by the Board on recommendation of the Human Resources Committee for the 2007-2009 period do not differ materially from the 2005-2007 and 2006-2008 Plan performance cycles.

        Sixty percent of the 2007-2009 target performance share awards are based on our TSR for each year of the three-year plan period compared with the peer group of utilities set forth below:

    Allegheny Energy, Inc.; Alliant Energy Corporation; Ameren Corporation; American Electric Power; Aquila, Inc.; Avista Corporation; Centerpoint Energy Inc.; CMS Energy Corporation; Consolidated Edison, Inc.; Constellation Energy Group, Inc.; Dominion Resources, Inc.; DPL, Inc.; DTE Energy Company; Duke Energy Corporation; Edison International; Energy East Corporation; Entergy Corporation; Exelon Corporation; FirstEnergy Corp.; FPL Group, Inc.; Great Plains Energy, Inc.; Hawaiian Electric Industries, Inc.; Integrys Energy Group, Inc.; NiSource Inc.; Northeast Utilities; NorthWestern Corporation; NSTAR; OGE Energy Corp.; Pepco Holdings, Inc.; PG&E Corporation; Pinnacle West Capital Corporation; PNM Resources, Inc.; PPL Corporation; Progress Energy, Inc.; Public Service Enterprise Group, Inc.; Puget Energy, Inc.; Sierra Pacific Resources; Southern Company; TECO Energy, Inc.; UIL Holdings Corporation; UniSource Energy Corporation; Vectren Corporation; Westar Energy, Inc.; Wisconsin Energy Corporation; XCEL Energy, Inc.

        The number of utilities included in the peer group used for TSR comparisons is larger than the number included in the market survey utility peer group we use for purposes of setting base salary and short- and long-term incentive compensation because information about TSR is publicly available for a larger number of utilities. We include only utilities in the TSR peer group because we have assumed that shareholders would measure our performance against performance of other utilities in which they might have invested.

        Payouts based on the TSR component of the 2007-2009 plan are scaled according to our ranking against the peer group. No payout is earned if our performance is less than the 33rd percentile. Executives earn threshold payouts (equal to 50% of target award) for each year of the three-year period in which we rank at the 33rd percentile in relation to the peer group's TSR performance for the one-year period. Target payouts (equal to 100% of target award) are earned for each year of the three-year period in which we rank at the 50th percentile in relation to the peer group's TSR performance for the one-year period. Maximum payouts (equal to 150% of target award) are earned for each year of the three-year period in which our performance ranks at or above the 75th percentile in relation to the peer group's TSR performance for the one-year period. Payouts are scaled between 50% and 150% based on the actual percentile achieved. No payouts may exceed 150% of the target award. Threshold, target and maximum payouts at the 33rd, 50th and 75th percentiles were used because these generally match the levels used by the companies in the market survey data.

        For the first year of the 2007-2009 period, our TSR was at the 59th percentile, which resulted in awards on the TSR component being earned at 118% for the year, payment of which will be deferred until the end of the three-year period as discussed above. See the

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Outstanding Equity Awards at 2007 Fiscal Year-End Table on page 38.

        Forty percent of the 2007-2009 performance share awards are based on meeting our annual projections for growth in GAAP-adjusted net earnings per share from operations. Executives would earn threshold payouts (equal to 50% of target award) for each year in the three-year period in which growth in GAAP-adjusted net earnings per share from operations equals 2%. Executives would earn target payouts (equal to 100% of target award) for each year in which such growth equals 4%, and maximum payouts (equal to 150% of target award) for each year in which such growth equals or exceeds 6%. Payouts are scaled between 50% and 150% based on the actual growth in GAAP-adjusted net earnings per share from operations achieved. No payouts will be earned for any year in which growth in GAAP-adjusted net earnings per share from operations is less than 2%, and no payouts will exceed 150% of target award.

        For the first year of the 2007-2009 period, our growth in GAAP-adjusted net earnings per share from operations was 5.8%, which resulted in awards on the earnings per share component being earned at 145% for the year, payment of which will be deferred until the end of the three-year period as discussed above.

        The allocation of 60% of awards to three-year TSR and 40% to growth in GAAP-adjusted net earnings per share from operations was made to weight the external performance measure slightly higher than the internal performance measure.

        As discussed below under the caption "Long-Term Equity Compensation Plan Awards for the 2008-2010 Period," we have made further modifications to the design of awards under the Long-Term Equity Compensation Plan for 2008 awards.

Retirement and Other Benefit Plans

        We currently sponsor the following retirement benefit plans:

    a tax qualified defined benefit retirement plan (the "Retirement Plan");

    a nonqualified defined benefit Supplemental Executive Retirement Plan (the "SERP") for our senior executive officers;

    a tax qualified defined contribution plan (the "401(k) Plan"); and

    a nonqualified defined contribution Executive Deferred Compensation Plan (the "EDCP") for our senior executive officers.

        All employees who have met eligibility requirements may participate in the Retirement Plan and the 401(k) Plan.

        The SERP and the EDCP plans are designed to provide a benefit to senior executive officers who participate in the Retirement Plan or 401(k) Plan (our tax qualified retirement plans) and whose participation in those tax qualified plans at the same percentage of salary as all other employees is otherwise limited by government regulation. The SERP and EDCP participants are provided with the benefits to which they would have been entitled under the Retirement Plan or 401(k) Plan had their participation not been limited. At present, certain executive officers, including the Named Executive Officers, are participants in the SERP and /or EDCP. The SERP and the EDCP are described under the caption "Potential Payments Upon Termination or Change in Control — Retirement Benefits" on page 49 of this proxy statement. We provide the SERP and EDCP benefits because they allow our senior executive officers the opportunity to defer the same percentage of their compensation as other employees. We also believe, based on market survey data, that these plans are necessary to make our senior executive officer retirement benefits competitive.

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        We also provide other benefits such as medical, dental, life and disability insurance, which are available to all of our employees. In addition, we provide certain of our executive officers with additional long-term disability insurance and term life insurance.

Termination, Severance and Change in Control Arrangements

        We have entered into arrangements with certain of our senior executive officers, including our Named Executive Officers, that provide for payments to them in the event of a change in control of our Company. These arrangements, including the triggering events for payments and possible payment amounts, are described under the caption "Potential Payments Upon Termination or Change in Control." We believe that these arrangements are not uncommon for executives at the level of our Named Executive Officers, including executives of the companies included in our compensation market survey information, and are generally expected by those holding such positions. We believe these arrangements are an important factor in attracting and retaining our senior executive officers by assuring them financial and employment status protections in the event control of our Company changes. We believe such assurances of financial and employment protections help free executives from personal concerns over their futures, and thereby, can help to align their interests more closely with those of shareholders in negotiating transactions that could result in a change in control.

Perquisites

        We provide a number of perquisites to senior executive officers as summarized below.

Company Aircraft

        The Company owns two turboprop aircraft for the use of officers and managers in their travels to various operations throughout our service areas, as well as to meet with regulatory bodies, industry groups and financial groups, principally in Washington, D. C. and New York, New York. Our senior executive officers may use our aircraft for business purposes on a non-exclusive basis. Our aircraft may also be used from time to time to transport directors to and from meetings and committee meetings of the Board of Directors. Spouses or close family members of directors and senior executive officers occasionally accompany a director or senior executive officer on the aircraft when the director or executive officer is flying for our business purposes. On very rare occasions, a senior executive officer may use our aircraft for personal use that is not in connection with a business purpose. We impute income to the executive for certain expenses related to such use.

        For purposes of determining total 2007 compensation, we valued the aggregate incremental cost of the personal use of our aircraft using a method that takes into account the variable expenses associated with operating the aircraft, which variable expenses are only incurred if the planes are flying. The following items are included in our aggregate incremental cost: aircraft fuel and oil expenses per hour of flight; maintenance, parts and external labor (inspections and repairs) per hour of flight; landing/parking/flight planning services expenses; crew travel expenses; and supplies and catering.

Medical Examinations

        We provide each of our senior executive officers the opportunity to have a comprehensive annual medical examination from Duke University, the Medical University of South Carolina or the physician of his or her choice. We believe this examination helps encourage health-conscious senior executive officers, and helps us plan for any health related retirements or resignations.

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Security Systems

        We offer installation and provide monitoring of home security systems for our senior executive officers. Because we operate a nuclear facility and provide essential services to the public, we believe we have a duty to help assure uninterrupted and safe operations by protecting the safety and security of our senior executive officers. We provide such installation and monitoring at multiple homes for some senior executive officers.

Other Perquisites

        We provide a taxable allowance to our senior executive officers for financial counseling services, including tax preparation and estate planning services. We value this benefit based on the actual charges incurred. We also pay the initiation fees and monthly dues for one dining club membership for each senior executive officer for business use. We allow spouses to accompany directors and senior executive officers to our quarterly Board meetings because we believe social gatherings of directors and senior executive officers in connection with these meetings increases collegiality. Some of our meetings are at resort locations where resort amenities may be provided.

Accounting and Tax Treatments of Compensation

Deductibility of Executive Compensation

        Section 162(m) of the Internal Revenue Code establishes a limit on the deductibility of annual compensation in excess of $1,000,000 for certain senior executive officers, including the Named Executive Officers. Certain performance-based compensation approved by shareholders is not subject to the deduction limit. Our Long-Term Equity Compensation Plan is qualified so that most performance-based awards under that plan constitute compensation that is not subject to Section 162(m). Our Short-Term Incentive Plan does not meet 162(m) deductibility requirements. To maintain flexibility in compensating senior executive officers in a manner designed to promote various corporate goals, the Human Resources Committee has not adopted a policy that all compensation must be deductible. Since Mr. Timmerman's salary was above the $1,000,000 threshold, we may not deduct a portion of his compensation. The Human Resources Committee considered these tax and accounting effects in connection with its deliberations on senior executive compensation.

Nonqualified Deferred Compensation

        On January 1, 2005, the Internal Revenue Code was amended to include a new Section 409A, which would impose interest and penalties on our executives' receipt of certain types of deferred compensation payments. Deferred compensation plans are required to be amended to comply with the requirements of Section 409A, if necessary, by the end of 2008 to avoid imposition of such interest and penalties. In the meantime, the plans must operate in good faith compliance with Section 409A, and we believe our deferred compensation plans meet this requirement. We have determined that amendments will be required to the Supplemental Executive Retirement Plan, the Executive Deferred Compensation Plan, the Director Compensation and Deferral Plan, the Key Executive Severance Benefits Plan and the Supplementary Key Executive Severance Benefits Plan to cause these plans to comply with Section 409A. The Human Resources Committee expects to continue to address these amendments in 2008.

Accounting for Stock Based Compensation

        Beginning January 1, 2006, we began accounting for stock based compensation in accordance with the requirements of Statement of Financial Accounting Standards No. 123(R).

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Long-Term Equity Compensation Plan Awards for the 2008-2010 Period

        On February 14, 2008, the Board, on the recommendation of the Human Resources Committee, adopted criteria for awards for the 2008 - 2010 period under the Long-Term Equity Compensation Plan. These criteria are different from those adopted for prior awards for the reasons discussed below.

        As discussed above under "Long-Term Equity Compensation Plan," each of the grants for the 2005-2007 and 2006-2008 performance cycles under the Long-Term Equity Compensation Plan provided for awards of performance shares, 60% of which would be earned based on our level of success in achieving certain TSR targets as compared to the TSR of a peer group of companies over the three-year cycles, and 40% of which would be earned based on our level of success in achieving certain EPS growth targets over the three year cycles. The performance share awards for the 2007-2009 period also provided for the 60/40% allocation between TSR and EPS growth components, but with annual, instead of three-year, measurement periods.

        The performance thresholds were not met with respect to either the TSR or EPS growth components for the 2004-2006 cycle which resulted in no performance shares being earned and no payouts, and the performance threshold was not met with respect to the TSR component for the 2005-2007 cycle, which resulted in no performance shares being earned and no payout on the TSR component for this cycle. Although threshold performance was met with respect to the EPS growth component for the 2005-2007 cycle, performance shares earned and paid out were only 57.5% of the targeted 40% award, resulting in an overall payout of only 23%. The performance threshold may not be met with respect to the TSR component for the 2006-2008 cycle, and is only projected to be met between threshold and target with respect to the EPS component for this cycle.

        We believe the principal reason for the below threshold performance with respect to the TSR component of the awards is that our announced plans to build new generation capacity, including our consideration of a potential new nuclear facility, have depressed the market price of our stock. We believe the construction of new generation capacity is in our long-term best interests, and the long-term best interests of our shareholders and the communities we serve, but it appears to us that the financial markets may have a shorter term focus. Although alignment of our executives' interests with shareholder interests is very important, our executives have consistently focused on our long-term performance. We wish to continue to encourage our executives and our employees to focus on our long-term goals and avoid having their strategic decisions driven by short-term market performance. Accordingly, to reduce the potential negative impact that might result from our plans for increased generation capacity, we have made further adjustments to the design of our awards under the Long Term Equity Compensation Plan.

        Because we believe our plans to build new generation capacity are a primary reason for our failure to meet TSR targets, we asked our compensation consultant to compile a group of twenty-five peer companies and include a group of twelve other utilities that have announced an interest in expanding generation capacity, including consideration of building new nuclear facilities. The survey revealed that 96% of these utilities use performance plans, but 80% of them also grant restricted stock or stock options. Only four of the companies (16%) use only performance plans. The survey also indicated that most of these other companies have wider performance and payout ranges than we do. Our TSR performance range is from the 33rd percentile to the 75th percentile; however, the peer group comparison denoted a performance range from the 28th percentile to the 83rd percentile. Additionally, the survey indicated that some of

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the modified peer group companies have lower minimum payouts and higher maximum payouts than we do. Whereas we pay out 50% of target award at threshold performance (33%), median payout by the peer group is 25% of target, and our maximum payout is 150% of target as compared to maximum median payout by the peer group of 200% of target.

        Taking into consideration the disparities between our plan awards and those of this modified peer group, the Committee approved the following changes to the 2008-2010 awards under the Long Term Equity Compensation Plan as compared to the awards for the two prior cycles:

    Instead of awards being denominated in all performance shares which are based 60% on our level of achieving TSR targets and 40% on our level of achieving EPS growth targets, awards for the 2008-2010 period will be comprised of a combination of performance shares and restricted stock. Performance shares will represent 80% of the awards, consisting of one half to be earned based on our level of achieving TSR targets and the remaining one half to be earned based on our level of achieving EPS growth targets. The remaining 20% of the awards will be in restricted stock. The restricted stock will vest in 36 months and will not be performance based. Although restricted stock does not have the same risk of forfeiture for failure to meet performance thresholds associated with performance shares, it has no upside potential for payout above target level.

    Instead of the TSR threshold for payout on performance share awards being set at the 33rd percentile of the peer group performance and paying out 50% of target, the TSR threshold for payout will be reduced to the 25th percentile of peer group TSR performance and payout will start at 25% of target.

    Instead of the TSR maximum payout on performance share awards being set at 150% if we achieve 75% or more of peer group TSR performance, maximum TSR payout will be increased to 175% of target if we achieve 90% of peer group performance.

    Instead of the EPS growth threshold for payout on performance share awards being set at 2% and paying out at 50% of target, the EPS growth threshold for payout will be reduced to 1% and payout will start at 25%.

    Instead of the EPS growth maximum for payout on performance share awards being set at 6% and paying out at 150% of target, the EPS growth maximum for payout will be increased to 7% with a maximum payout of 175%.

        The performance results for the 2008-2010 period will continue to be measured on an annual basis.

        We believe these changes are consistent with our goals of retaining our executives and encouraging them to focus on our long-term performance goals.

        On the same day, upon recommendation of the Human Resources Committee, the Board approved base salaries for our Named Executive Officers and criteria for performance awards under our Short-Term Annual Incentive Plan for the year 2008. Such base salaries and performance award criteria do not differ materially from year 2007 levels.

        As noted above, in 2008, the Human Resources Committee expects to make amendments to our deferred compensation plans as necessary to address issues raised by Internal Revenue Code Section 409A.

Financial Restatement

        Although we have never experienced such a situation, our Board of Directors' policy is to consider on a case-by-case basis a retroactive

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adjustment to any cash or equity-based incentive compensation paid to our senior executive officers where payment was conditioned on achievement of certain financial results that were subsequently restated or otherwise adjusted in a manner that would reduce the size of a prior award or payment.

Security Ownership Guidelines for Executive Officers

        We do not currently have any equity or other security ownership guidelines or requirements for executive officers (specifying applicable amounts and forms of ownership), or any policies regarding hedging the economic risk of such ownership. However, all of our senior executive officers have a significant amount of their 401(k) plan accounts invested in SCANA stock.

Compensation Committee Report

        The Human Resources Committee has reviewed and discussed with management the "Compensation Discussion and Analysis" included in this proxy statement. Based on that review and discussion, the Human Resources Committee recommended to our Board of Directors that the "Compensation Discussion and Analysis" be included in our Annual Report on Form 10-K for the year ended December 31, 2007 for filing with the Securities and Exchange Commission and in this proxy statement.

    Mr. G. Smedes York (Chairman)
    Mr. James A. Bennett
    Mrs. Sharon A. Decker
    Mr. D. Maybank Hagood
    Ms. Lynne M. Miller
    Mr. Maceo K. Sloan

35


SUMMARY COMPENSATION TABLE

        The following table summarizes information about compensation paid or accrued during 2007 and 2006 to our Chief Executive Officer, our Chief Financial Officer and our three next most highly compensated executive officers during 2007. (As noted in the Compensation Discussion and Analysis, we refer to these persons as our Named Executive Officers.)


Name and Principal Position   Year     Salary
($)
    Bonus
($)(1)
    Stock Awards
($)(2)
  Option
Awards
($)
    Non-Equity
Incentive Plan
Compensation
($)(3)
    Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)(4)
    All
Other
Compensation
($)(5)
    Total
($)

(a)

 

(b)

 

 

(c)

 

 

(d)

 

 

(e)

 

(f)

 

 

(g)

 

 

(h)

 

 

(i)

 

 

(j)


W. B. Timmerman,
President and Chief Executive Officer
  2007
2006
  $
$
1,043,408
1,002,700
  $
$
177,956
170,459
  $
$
1,761,331
301,759
 
  $
$
444,890
426,148
  $
$
330,605
274,724
  $
$
121,481
73,629
  $
$
3,879,671
2,249,419

J. E. Addison,
Senior Vice President Chief Financial Officer
  2007
2006
  $
$
303,846
278,990
  $
$
36,600
27,916
  $
$
252,274
37,505
 
  $
$
91,500
69,789
  $
$
41,300
21,981
  $
$
29,242
30,091
  $
$
754,762
466,272

K. B. Marsh,
Senior Vice President
  2007
2006
  $
$
548,115
516,183
  $
$
71,500
66,916
  $
$
613,229
106,749
 
  $
$
178,750
167,290
  $
$
113,085
59,934
  $
$
53,730
63,816
  $
$
1,578,409
980,888

G. J. Bullwinkel, Jr.,
Senior Vice President
  2007
2006
  $
$
443,462
425,000
  $
$
53,400
51,000
  $
$
397,642
70,347
 
  $
$
133,500
127,500
  $
$
159,343
83,324
  $
$
44,950
49,655
  $
$
1,232,297
806,826

S. A. Byrne,
Senior Vice President
  2007
2006
  $
$
418,492
400,400
  $
$
50,400
48,048
  $
$
375,124
66,274
 
  $
$
126,000
120,120
  $
$
62,519
40,226
  $
$
42,093
45,550
  $
$
1,074,628
720,618

(1)
Discretionary bonus awards as permitted under the 2007 Short-Term Annual Incentive Plan, which are discussed in further detail under "— Compensation Discussion and Analysis — Short-Term Annual Incentive Plan — Discretionary Bonus Award" on page 26.

(2)
The information in this column relates to performance share awards (liability awards) under the Long-Term Equity Compensation Plan. This plan is discussed under "— Compensation Discussion and Analysis — Long-Term Equity Compensation Plan." The figures for 2007 reflect accruals for all three performance plan cycles which were in operation during that year. The amounts in this column are the dollar amounts recognized for financial statement reporting purposes with respect to the fiscal year in accordance with FAS 123R. The assumptions made in valuation of stock awards are set forth in Note 3 to our audited financial statements for the year ended December 31, 2007, which are included in our 2007 Form 10-K and this proxy statement.


The 2006 information in this column also reflects the amounts recognized for financial reporting purposes in accordance with FAS 123R. However, amounts reported in this column for 2006 do not reflect the reversal in 2006 of previously expensed portions of awards to the extent those expenses had been recorded in periods prior to 2006. As such, the figures for 2006 reflect only the accrual of costs in 2006 related to the 2006-2008 plan cycle.

(3)
Payouts under the 2007 Short-Term Annual Incentive Plan, based on our achieving our business objectives and our Named Executive Officers achieving their individual financial and strategic objectives, as discussed in further detail under "— Compensation Discussion and Analysis — Short-Term Annual Incentive Plan" on page 23.

(4)
The aggregate change in the actuarial present value of each Named Executive Officer's accumulated benefits under SCANA's Retirement Plan and Supplemental Executive Retirement Plan from December 31, 2006 to December 31, 2007, determined using interest rate and mortality rate assumptions consistent with those used in our financial statements. These plans are discussed under "— Compensation Discussion and Analysis — Retirement and Other Benefit Plans" on page 30.

(5)
All other compensation paid to each Named Executive Officer, including company contributions to the 401(k) Plan and the Executive Deferred Compensation Plan, tax reimbursements with respect to perquisites or other personal benefits, and life insurance premiums on policies owned by Named Executive Officers. For 2007, the Company contributions to defined contribution plans were as follows: Mr. Timmerman — $100,511; Mr. Addison — $24,560; Mr. Marsh — $48,039; Mr. Bullwinkel — $38,206; and Mr. Byrne — $36,033. For 2007, tax reimbursements with respect to perquisites or other personal benefits were as follows: Mr. Bullwinkel — $369; and Mr. Byrne — $804. Neither life insurance premiums on policies owned by the Named Executive Officers nor perquisites exceeded $10,000 for any Named Executive Officer with the exception of Mr. Timmerman. Mr Timmerman's All Other Compensation includes perquisites of $14,449 consisting of expenses related to the Company provided medical examination and transportation to and from the medical examination on the Company plane, financial planning services, and travel expenses associated with his spouse occasionally accompanying him on business travel.

36


2007 GRANTS OF PLAN-BASED AWARDS

        The following table sets forth information about each grant of an award made to a Named Executive Officer under our compensation plans during 2007.



 
   
  Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards(1)

  Estimated Future Payouts
Under Equity Incentive Plan
Awards(2)

   
   
   
   
 
   
 

   
   
   
   
Name

  Grant
Date

  Threshold
($)

  Target
($)

  Maximum
($)

  Threshold
(#)

  Target
(#)

  Maximum
(#)

  All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)

  All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)

  Exercise
or Base
Price of
Option
Awards
($/Sh)

  Grant
Date
Fair
Value
of
Stock
and
Option
Awards


(a)


 

(b)


 

(c)


 

(d)


 

(e)


 

(f)


 

(g)


 

(h)


 

(i)


 

(j)


 

(k)


 

(l)



W. B. Timmerman   2-15-07
2-15-07
  $ 444,890   $ 889,780   $ 1,334,670   33,773   67,546   101,319                

J. E. Addison   2-15-07
2-15-07
  $ 91,500   $ 183,000   $ 274,500   5,412   10,824   16,236                

K. B. Marsh   2-15-07
2-15-07
  $ 178,750   $ 357,500   $ 536,250   11,978   23,956   35,934                

G. J. Bullwinkel, Jr.   2-15-07
2-15-07
  $ 133,500   $ 267,000   $ 400,500   7,897   15,793   23,690                

S. A. Byrne   2-15-07
2-15-07
  $ 126,000   $ 252,000   $ 378,000   7,453   14,906   22,359                

(1)
The amounts in columns (c), (d) and (e) represent the threshold, target and maximum awards that could have been paid under the 2007 Short-Term Annual Incentive Plan if performance criteria were met. Target awards were based 50% on our achieving earnings per share objectives and 50% on achieving individual performance objectives. We did not meet the earnings per share objectives, but all of the Named Executive Officers met their individual strategic objectives. Accordingly, there was no payout on the earnings per share component of the award. The amounts shown in column (g) of the Summary Compensation Table, therefore, reflect the threshold payout in column (c) above (50% below target in column (d) above). A discussion of the 2007 Short-Term Annual Incentive Plan is included under "— Compensation Discussion and Analysis — Short-Term Annual Incentive Plan" on page 23. See also, "— Compensation Discussion and Analysis — Short-Term Annual Incentive Plan — Discretionary Bonus Award" on page 26 for a discussion of the discretionary bonus paid under this plan.

(2)
Represents total potential future payouts of the 2007-2009 performance share awards under the Long-Term Equity Compensation Plan. Payout of performance share awards at the end of the 2007-2009 plan period will be dictated by our performance against pre-determined measures of TSR and growth in GAAP-adjusted net earnings per share from operations for each year of the three-year period. Awards for the 2007 performance period have been earned at 118% of target for the TSR portion and 145% of target for the EPS portion, but have not vested. A discussion of the components of the performance share awards is included under "— Compensation Discussion and Analysis — Long-Term Equity Compensation Plan — 2007-2009 Performance Share Awards" on page 28.

37


OUTSTANDING EQUITY AWARDS AT 2007 FISCAL YEAR-END

        The following table sets forth certain information regarding unexercised options and equity incentive plan awards for each Named Executive Officer outstanding as of December 31, 2007.


    Option Awards   Stock Awards

 

 


Name   Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
  Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
  Equity
Incentive Plan
Awards: Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
  Option
Exercise
Price
($)
  Option
Expiration
Date
  Number of
Shares or
Units of
Stock
That Have
Not
Vested
(#)(1)
    Market
Value of
Shares or
Units of
Stock
That
Have
Not
Vested
($)(2)
  Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
(#)(3)(4)
    Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That Have
Not
Vested
($)(2)(4)

(a)

 

(b)

 

(c)

 

(d)

 

(e)

 

(f)

 

(g)

 

 

(h)

 

(i)

 

 

(j)

W. B. Timmerman                       29,000   $ 1,222,350   116,608   $ 4,915,027

J. E. Addison                       4,647   $ 195,871   16,922   $ 713,262

K. B. Marsh                       10,285   $ 433,513   41,312   $ 1,741,301

G. J. Bullwinkel, Jr.                       6,780   $ 285,777   27,231   $ 1,147,787

S. A. Byrne                       6,400   $ 269,760   25,681   $ 1,082,454

(1)
These awards, which were earned for 2007 under the 2007-2009 Long-Term Equity Compensation Plan period based on achieving TSR at the 59th percentile and growth in GAAP-adjusted net earnings per share from operations of 5.8%, will vest on December 31, 2009 if the Named Executive Officer is still employed by us at that date, subject to exceptions for retirement, death or disability.

(2)
The market value of these awards is based on the closing market price of our common stock on the New York Stock Exchange on December 31, 2007 of $42.15.

(3)
Assuming the performance criteria are met and the reported payout levels are sustained, the vesting dates of these awards would be as follows: Mr. Timmerman, 49,062 shares would vest on December 31, 2008 and 96,546 shares would vest on December 31, 2009; Mr. Addison, 6,098 shares would vest on December 31, 2008 and 15,471 shares would vest on December 31, 2009; Mr. Marsh, 17,356 shares would vest on December 31, 2008 and 34,241 shares would vest on December 31, 2009; Mr. Bullwinkel, 11,438 shares would vest on December 31, 2008 and 22,573 shares would vest on December 31, 2009; and Mr. Byrne, 10,775 shares would vest on December 31, 2008 and 21,306 shares would vest on December 31, 2009.

(4)
For the 2006-2008 cycle, performance shares tracking against TSR (60% of target shares) were projected to result in no payout. Therefore, the number of shares and payout value shown in columns (i) and (j) are based on the threshold performance measure for the 2006-2008 TSR portion of the shares. Performance shares tracking against growth in EPS from ongoing operations (40% of target shares) for the 2006-2008 performance cycle are projected to result in a payout between threshold and target. Therefore, the number of shares and payout value shown in columns (i) and (j) are based on the target performance measure for the 2006-2008 growth in EPS from ongoing operations portion of the shares. For each of the 2008 and 2009 periods remaining in the 2007-2009 awards, performance shares tracking against TSR (60% of target shares) are projected to result in between target and maximum payout. Therefore, the number of shares and payout value shown in columns (i) and (j) are based on the maximum performance measure for these 2008 and 2009 TSR portions of the shares. Performance shares tracking against growth in GAAP-adjusted net earnings per share (40% of target shares) for the 2008 and 2009 periods remaining in the 2007-2009 awards are also projected to result in between target and maximum payout. Therefore, the number of shares and payout value shown in columns (i) and (j) are based on the maximum performance measure for the growth in these 2008 and 2009 GAAP-adjusted net earnings per share portions of the shares.

38


2007 OPTION EXERCISES AND STOCK VESTED

        The following table sets forth information about exercises of stock options for each Named Executive Officer during 2007.


    Option Awards   Stock Awards

 

 


Name   Number of Shares Acquired on Exercise (#)     Value Realized on Exercise ($)(1)   Number of Shares Acquired on Vesting (#)(2)     Value Realized on Vesting ($)(2)

(a)

 

(b)

 

 

(c)

 

(d)

 

 

(e)


W. B. Timmerman   123,067   $ 1,802,932   16,458   $ 693,705

J. E. Addison             1,333   $ 56,186

K. B. Marsh             5,130   $ 216,230

G. J. Bullwinkel, Jr.   45,279   $ 650,600   2,965   $ 124,975

S. A. Byrne   21,492   $ 353,328   2,793   $ 117,725

(1)
The difference between the exercise prices paid and the closing prices of SCANA common stock on the date of exercise.

(2)
Represents portion of 2005-2007 Performance Share Awards that vested based on our achieving the earnings per share component at slightly above threshold. Dollar amounts in column (e) are calculated by multiplying the number of shares shown in column (d) by the closing price of SCANA common stock on the vesting date, and in addition to the amounts above, each NEO also received dividends on the shares listed above. These awards were paid in cash.

39


PENSION BENEFITS

        The following table sets forth certain information relating to our Retirement Plan and Supplemental Executive Retirement Plan (SERP).


Name   Plan Name   Number of
Years
Credited
Service
(#)(1)
    Present
Value of
Accumulated
Benefit
($)(1)(2)
    Payments
During
Last
Fiscal
Year($)

(a)

 

(b)

 

(c)

 

 

(d)

 

 

(e)


W. B. Timmerman   SCANA Retirement Plan
SCANA Supplemental Executive Retirement Plan
  29
29
  $
$
858,115
2,355,544
  $
$
0
0

J. E. Addison   SCANA Retirement Plan
SCANA Supplemental Executive Retirement Plan
  16
16
  $
$
151,048
87,255
  $
$
0
0

K. B. Marsh   SCANA Retirement Plan
SCANA Supplemental Executive Retirement Plan
  23
23
  $
$
465,241
441,485
  $
$
0
0

G. J. Bullwinkel, Jr.   SCANA Retirement Plan
SCANA Supplemental Executive Retirement Plan
  36
36
  $
$
1,131,269
751,028
  $
$
0
0

S. A. Byrne   SCANA Retirement Plan
SCANA Supplemental Executive Retirement Plan
  12
12
  $
$
132,060
215,304
  $
$
0
0

(1)
Computed as of December 31, 2007, the plan measurement date used for financial statement reporting purposes.

(2)
Present value calculation determined using current account balances for each Named Executive Officer as of the end of 2007, based on assumed retirement at normal retirement age (specified as age 65) and other assumptions as to valuation method, interest rate, discount rate and other material factors as set forth in Note 3 to our audited financial statements for the year ended December 31, 2007, which are included in our Form 10-K for the year ended December 31, 2007 and with this proxy statement.

        The SCANA Retirement Plan and Supplemental Executive Retirement Plan are both cash balance defined benefit plans. Effective January 1, 2008, the plans provide for full vesting after three years of service or after reaching age 65. All Named Executive Officers are fully vested in both plans.

40


Defined Benefit Retirement Plan

        The Retirement Plan is a tax qualified defined benefit retirement plan. The plan uses a mandatory cash balance benefit formula for employees hired on or after January 1, 2000. Effective July 1, 2000, SCANA employees hired prior to January 1, 2000 were given the choice of remaining under the Retirement Plan's final average pay formula or switching to the cash balance formula. All the Named Executive Officers participate under the cash balance formula of the Retirement Plan.

        The cash balance formula is expressed in the form of a hypothetical account balance. Account balances are increased monthly by interest and compensation credits. The interest rate used for accumulating account balances is determined annually and is equal to the average rate for 30-year Treasury Notes for December of the previous calendar year. Compensation credits equal 5% of compensation up to the Social Security wage base and 10% of compensation in excess of the Social Security wage base.

Supplemental Executive Retirement Plan

        In addition to our Retirement Plan for all employees, we provide a Supplemental Executive Retirement Plan for certain eligible employees, including the Named Executive Officers. The Supplemental Executive Retirement Plan is an unfunded plan that provides for benefit payments in addition to benefits payable under the qualified Retirement Plan in order to replace benefits lost in the Retirement Plan because of Internal Revenue Code maximum benefit limitations. The Supplemental Executive Retirement Plan is discussed under the caption "— Potential Payments Upon Termination or Change in Control — Retirement Benefits" on page 49, and under the caption "— Compensation Discussion and Analysis — Retirement and Other Benefit Plans" on page 30.

41


2007 NONQUALIFIED DEFERRED COMPENSATION

        The following table sets forth information with respect to the Executive Deferred Compensation Plan:



Name

  Executive
Contributions
in Last FY
($)(1)

  Registrant
Contributions
in Last FY
($)(1)

  Aggregate
Earnings in
Last FY
($)

  Aggregate
Withdrawals/
Distributions
($)

  Aggregate
Balance at
Last FYE
($)


(a)


 

(b)


 

(c)


 

(d)


 

(e)


 

(f)



W. B. Timmerman   $ 84,799   $ 87,011   $ 188,931   $ 0   $ 3,013,350

J. E. Addison   $ 12,207   $ 11,199   $ 18,352   $ 0   $ 366,860

K. B. Marsh   $ 33,383   $ 34,539   $ 40,858   $ 0   $ 1,214,118

G. J. Bullwinkel, Jr.   $ 23,771   $ 24,706   $ 79,543   $ 0   $ 1,558,258

S. A. Byrne   $ 21,654   $ 22,533   $ 34,057   $ 0   $ 517,412

(1)
The amounts reported in columns (b) and (c) are reflected in columns (c) and (i), respectively, of the Summary Compensation Table.

Executive Deferred Compensation Plan

        We have adopted the SCANA Corporation Executive Deferred Compensation Plan, in which our Named Executive Officers may participate if they choose to do so. The plan is a non-qualified deferred compensation plan. Each participant may elect to defer up to 25% of that part of his or her eligible earnings (as defined in the 401(k) plan) that exceeds the limitation on compensation otherwise required under Internal Revenue Code Section 401(a)(17), without regard to any deferrals or the foregoing of compensation. For 2007, participants could defer eligible earnings in excess of $225,000. In addition, a participant may elect to defer up to 100% of any performance share award for the year under our Long-Term Equity Compensation Plan. We match the amount of compensation deferred by each participant up to 6% of the participant's eligible earnings in excess of the limit amount not including any performance share award.

        We record the amount of each participant's deferred compensation and the amount we match in a special ledger. We also credit a rate of return to each participant's special ledger account based on hypothetical investment alternatives chosen by the participant. The committee that administers the Executive Deferred Compensation Plan designates various hypothetical investment alternatives from which the participants may choose. Using the results of the hypothetical investment alternatives chosen, we credit each participant's special ledger account with the amount it would have earned if the account amount had been invested in that alternative. If the chosen hypothetical investment alternative loses money, the participant's special ledger account is reduced by the corresponding amount. All amounts credited to a participant's special ledger accounts continue to be credited or reduced pursuant to the chosen investment alternatives until such amounts are paid in full to the participant or his beneficiary. No actual investments are made. The investment alternatives are only used to generate a rate of increase (or decrease) in the special ledger accounts and amounts paid to participants are solely our obligation. In connection with this plan, the Board has established a grantor trust (known as the "SCANA Corporation Executive Benefit Plan Trust") for the purpose of accumulating funds to satisfy the obligations we incur under the Plan. At any time prior to a change in control we may transfer assets to the trust to satisfy all or part of our obligations under the Plan. Notwithstanding the establishment of the Trust, the right of participants to receive future payments is an unsecured claim against us. The trust has been

42



partially funded with respect to ongoing deferrals and Company matching funds since October 2001.

        In 2007, the Named Executive Officers' special ledger accounts were credited with earnings (or losses) based on the following investment alternatives and rates of returns:

    INVESCO Stable Value Trust (4.14%); PIMCO Total Return (8.81%); Dodge & Cox Common Stock (0.14%); American Century Inc. & Growth Adv. (-0.54%); INVESCO 500 Index Trust (5.18%); Pioneer Oak Ridge Large Cap Growth (7.61%); T. Rowe Price Mid Cap Value (0.60%); Times Square Mid Cap Growth Fund (10.11%); RS Partners (-3.78%); Vanguard Explorer (5.26%); American Funds Europacific Growth (18.96%); SCANA Corporation Stock (8.36%); Vanguard Target Retirement Income (8.17%); Vanguard Target Retirement 2005 (8.12%); Vanguard Target Retirement 2015 (7.55%); Vanguard Target Retirement 2025 (7.59%); Vanguard Target Retirement 2035 (7.49%); Vanguard Target Retirement 2045 (7.47%).

        The measures for calculating interest or other plan earnings are based on the investments chosen by the manager of each investment vehicle, except the SCANA Corporation Stock, the earnings of which are based on the value of our common stock.

        The hypothetical investment alternatives may be changed at any time on a prospective basis by the participants in accordance with the telephone, electronic, and written procedures and forms adopted by the committee for use by all participants on a consistent basis.

        All amounts deferred under the Executive Deferred Compensation Plan, other than matching deferrals and earnings thereon may be paid at a date certain prior to termination of employment or at termination of employment, death, disability or retirement. Matching deferrals credited to a participant's special ledger account as well as all other deferrals and earnings thereon are required to be paid, or to begin to be paid, as soon as practicable following the participant's death, disability, retirement or other termination of employment. Payments made before termination of employment may only be made in the form of a single sum cash distribution. Payments made after termination of employment but before retirement may only be made in the form of a single sum cash distribution. Payments made after retirement, death or disability are to be paid in the form of a single sum cash distribution, or, at the participant's election, may be paid in annual installments over a period not to exceed fifteen years.

        A participant may request and receive, with the approval of the committee, an acceleration of the payment of some or all of the participant's special ledger account due to severe financial hardship as the result of extraordinary and unforeseeable circumstances arising as a result of events beyond the individual's control. With respect to amounts earned and vested before January 1, 2005, and earnings thereon, a participant may also obtain payment of this special ledger account on an accelerated basis by forfeiting 10% of the amount accelerated or by making the election to accelerate the payment to a date not less than 12 months before the payment otherwise would be made. Additionally, the plan provides for the acceleration of payments following a change in control of our Company. The change in control provisions are discussed under "— Potential Payments Upon Termination or Change in Control — Change in Control Arrangements."

        For amounts earned and vested after January 1, 2005, distribution and withdrawal elections are subject to Internal Revenue Code Section 409A. During 2008, we plan to amend all available distribution and withdrawal options with respect to amounts earned or vested after 2004 to conform to the new requirements for deferred compensation under Section 409A. Although the Internal Revenue Service does not

43



require that changes to conform to Section 409A be made before December 31, 2008, we were required to operate in good faith compliance with Section 409A from January 1, 2005 forward, subject to guidance issued by the Internal Revenue Service.

Potential Payments Upon Termination or Change in Control

Change in Control Arrangements

Triggering Events for Payments under the Key Executive Severance Benefits Plan and the Supplementary Key Executive Severance Benefits Plan

        We have adopted the SCANA Corporation Key Executive Severance Benefits Plan and the SCANA Corporation Supplementary Key Executive Severance Benefits Plan, which provide for payments to our senior executive officers in connection with a change in control of our Company. The Key Executive Severance Benefits Plan (the "Severance Plan") provides for payment of benefits in a lump sum immediately upon a change in control unless the plan has been terminated prior to the change in control. This plan is designed to provide for benefits in the event of a change in control that our Board deems to be hostile. In the event of a change in control that our Board deems to be friendly, we anticipate that the Board would terminate the Severance Plan prior to the change in control. If the Severance Plan is terminated, the Supplementary Key Executive Severance Benefits Plan (the "Supplementary Severance Plan") would provide for payment of benefits if, within 24 months after the change in control, we terminate a senior executive officer's employment without just cause or if the senior executive officer terminates his or her employment for good reason.

        Our change in control plans are intended to advance the interests of our Company by providing highly qualified executives and other key personnel with an assurance of equitable treatment in terms of compensation and economic security and to induce continued employment with the Company in the event of certain changes in control. We believe that an assurance of equitable treatment will enable valued executives and key personnel to maintain productivity and focus during a period of significant uncertainty inherent in change in control situations. We also believe that compensation plans of this type aid the Company in attracting and retaining the highly qualified professionals who are essential to our success. The structure of the plans, and the benefits which might be paid in the event of a change in control, are reviewed as part of the Human Resources Committee's annual review of tally sheets for each senior executive officer. The Human Resources Committee has reviewed the structure of the plans and the overall compensation that might be due pursuant to those plans as part of its discussions of plan amendments required to comply with Section 409A. Although no compensation decisions were made in 2007 as a result of the Committee's review of the benefits payable under these plans, the Committee intends to make amendments to the plans in 2008 to comply with the current December 31, 2008 Section 409A compliance deadline.

        Both plans provide that a "change in control" will be deemed to occur under the following circumstances:

    if any person or entity becomes the beneficial owner, directly or indirectly, of 25% or more of the combined voting power of the outstanding shares of our common stock;

    if, during a consecutive two-year period, a majority of our directors cease to be individuals who either (a) were directors on the Board at the beginning of such period, or (b) became directors after the beginning of such period but whose election by the Board, or nomination for election by our shareholders, was approved by at least two-thirds of the

44


      directors then still in office who either were directors at the beginning of such period, or whose election or nomination for election was previously so approved;

    if our shareholders approve (a) a merger or consolidation of our Company with another corporation (except a merger or consolidation in which our outstanding voting shares prior to such transaction continue to represent at least 80% of the combined voting power of the surviving entity's outstanding voting shares after such transaction), (b) a plan of complete liquidation of our Company, or (c) an agreement to sell or dispose of all or substantially all of our assets; or

    if our shareholders approve a plan of complete liquidation, or sale or disposition of, South Carolina Electric & Gas Company, Carolina Gas Transmission Corporation, or any of our other subsidiaries that the Board designates to be a material subsidiary. (This last provision would constitute a change in control only with respect to participants exclusively assigned to the affected subsidiary.)

        As noted above, benefits under the Supplementary Severance Plan would be triggered if we terminated the Severance Plan prior to a change in control, and, within 24 months after the change in control, we terminated the senior executive officer's employment without just cause or if the senior executive officer terminated his or her employment for good reason. Under the plan, we would be deemed to have "just cause" for terminating the employment of a senior executive officer if he or she:

    willfully and continually failed to perform his or her duties after we made demand for substantial performance;

    willfully engaged in conduct that is materially injurious to us; or

    were convicted of a felony or certain misdemeanors.

        A senior executive officer would be deemed to have "good reason" for terminating his or her employment if:

    he or she were assigned to duties inconsistent with his or her duties, or had a reduction or alteration in the nature or status of his or her responsibilities, from those in effect 90 days prior to the change in control;

    we reduced his or her base salary as in effect 30 days prior to the occurrence of certain preliminary actions preceding the change in control (such as the execution of agreements relating to a change in control, public announcements by us of our intentions, transfers of securities representing at least 81/2% of our stock or the adoption of board resolutions with respect thereto);

    after the change in control, we required him or her to be based more than 25 miles from his or her location as of the effective date of the Supplementary Severance Plan;

    we failed to continue to offer any annual or long-term incentive programs for officers which were in effect on the effective date of the change in control, or other employee benefit plans, policies, practices or arrangements in which he or she participates, unless similar plans of equal value are put in place, or we failed to permit him or her to continue participation on substantially the same basis as existed on the date of the change in control;

    we failed to obtain a satisfactory agreement from any successor to assume and perform the Supplementary Severance Plan; or

    we purported to terminate him or her without using a notice of termination that

45


      satisfies the requirements of the Supplementary Severance Plan.

Potential Benefits Payable

        The benefits we would be required to pay our senior executive officers under the Severance Plan immediately upon a change in control are as follows:

    An amount intended to approximate three times the sum of: (i) his or her annual base salary (before reduction for certain pre-tax deferrals) and (ii) his or her full targeted annual incentive award, in each case as in effect for the year in which the change in control occurs;

    An amount equal to the present value as of the date of the change in control of his or her accrued benefit, if any, under our Supplemental Executive Retirement Plan, determined prior to any offset for amounts payable under the SCANA Retirement Plan, increased by the present value of the additional projected pay credits and periodic interest credits that would otherwise accrue under the plan (based on the plan's actuarial assumptions) assuming that he or she remained employed until reaching age 65, and reduced by his or her cash balance account under the SCANA Retirement Plan; and

    An amount equal to the projected cost for medical, long-term disability and certain life insurance coverage for three years following the change in control as though he or she had continued to be our employee.

        In addition to the benefits above, immediately upon a change in control prior to which we had not terminated the Severance Plan (unless their agreements with us provide otherwise), our senior executive officers would also be entitled to benefits under our other plans in which they participate as follows:

    A benefit distribution of all amounts credited to his or her Executive Deferred Compensation Plan ledger account as of the date of the change in control;

    A benefit distribution under the Long-Term Equity Compensation Plan equal to 100% of the target performance share award for all performance periods not completed as of the date of the change in control, if any;

    A benefit distribution under the Short-Term Annual Incentive Plan equal to 100% of the target award in effect as of the date of the change in control;

    Under the Long-Term Equity Compensation Plan and related agreements, all nonqualified stock options awarded and non-vested target performance shares would become immediately exercisable or vested and remain exercisable throughout their original term or, in the case of performance shares, vested and payable within 30 days of the change in control; and

    Any amounts previously earned, but not yet paid, under the terms of any of our other plans or programs.

        Under the Supplementary Severance Plan, senior executive officers would also be entitled to all of the benefits described above. In addition, interest would be paid on the benefits payable under the Executive Deferred Compensation Plan at a rate equal to the sum of the prime interest rate as published in the Wall Street Journal on the most recent publication date prior to the date of the change in control plus 3%, calculated through the end of the month preceding the month in which the benefits are distributed. Any amounts payable under the Supplementary Severance Plan

46


would be reduced by all amounts, if any, received under the Severance Plan.

        In addition, benefit distributions to senior executive officers under either the Severance Plan or the Supplementary Severance Plan would also include payment of an amount (a "gross-up payment") reimbursing him or her for the amount of anticipated excise tax imposed under Section 4999 of the Internal Revenue Code (or any similar tax) on such benefits and the gross-up payment, and any income and employment tax and excise tax due with respect to the gross-up payment.

Calculation of Benefits Potentially Payable to our Named Executive Officers if a Triggering Event had Occurred as of December 31, 2007

Severance Plan

        If we had been subject to a change in control as of December 31, 2007, and the Severance Plan had not been terminated, our Named Executive Officers would have been immediately entitled to the benefits outlined below.

        Mr. Timmerman would have been entitled to the following: an amount equal to three times his 2007 base salary and target short-term incentive award — $5,809,740; an amount equal to the excess payable under the Supplemental Executive Retirement Plan as calculated under the assumptions described above — $674,972; an amount equal to insurance continuation benefits for three years — $37,239; an amount equal to the value of 100% of his target performance shares under the Long-Term Equity Compensation Plan — $5,801,273; and anticipated excise tax and gross-up payment — $5,499,025. The total value of these change in control benefits would have been $17,822,249. In addition, Mr. Timmerman would have been paid amounts previously earned, but not yet paid, as follows: 2007 target short-term annual incentive award — $889,780; 2007 actual long-term equity award — $774,760; Executive Deferred Compensation Plan account balance — $3,013,350; Supplemental Executive Retirement Plan and Retirement Plan account balances — $3,366,124; vacation accrual — $40,261; as well as his 401(k) Plan account balance.

        Mr. Addison would have been entitled to the following: an amount equal to three times his 2007 base salary and target short-term incentive award — $1,464,000; an amount equal to the excess payable under the Supplemental Executive Retirement Plan as calculated under the assumptions described above — $553,456; an amount equal to insurance continuation benefits for three years — $69,375; an amount equal to the value of 100% of his target performance shares under the Long-Term Equity Compensation Plan — $823,400; and anticipated excise tax and gross-up payment — $1,365,729. The total value of these change in control benefits would have been $4,275,960. In addition, Mr. Addison would have been paid amounts previously earned, but not yet paid, as follows: 2007 target short-term annual incentive award — $183,000; 2007 actual long-term equity award — $62,751; Executive Deferred Compensation Plan account balance — $366,860; Supplemental Executive Retirement Plan and Retirement Plan account balances — $294,298; vacation accrual — $10,264; as well as his 401(k) Plan account balance.

        Mr. Marsh would have been entitled to the following: an amount equal to three times his 2007 base salary and target short-term incentive award — $2,722,500; an amount equal to the excess payable under the Supplemental Executive Retirement Plan as calculated under the assumptions described above — $850,458; an amount equal to insurance continuation benefits for three years — $52,371; an amount equal to the value of 100% of his target performance shares under the Long-Term Equity Compensation Plan — $2,054,813; and anticipated excise tax and gross-up payment — $2,468,698. The total value of these change in control benefits would

47



have been $8,148,840. In addition, Mr. Marsh would have been paid amounts previously earned, but not yet paid, as follows: 2007 target short-term annual incentive award — $357,500; 2007 actual long-term equity award — $241,495; Executive Deferred Compensation Plan account balance — $1,214,118; Supplemental Executive Retirement Plan and Retirement Plan account balances — $1,054,403; vacation accrual — $9,916; as well as his 401(k) Plan account balance.

        Mr. Bullwinkel would have been entitled to the following: an amount equal to three times his 2007 base salary and target short-term incentive award — $2,136,000; an amount equal to the excess payable under the Supplemental Executive Retirement Plan as calculated under the assumptions described above — $336,123; an amount equal to insurance continuation benefits for three years — $52,873; an amount equal to the value of 100% of his target performance shares under the Long-Term Equity Compensation Plan — $1,354,364; and anticipated excise tax and gross-up payment — $1,753,554. The total value of these change in control benefits would have been $5,632,914. In addition, Mr. Bullwinkel would have been paid amounts previously earned, but not yet paid, as follows: 2007 target short-term annual incentive award — $267,000; 2007 actual long-term equity award — $139,577; Executive Deferred Compensation Plan account balance — $1,558,258; Supplemental Executive Retirement Plan and Retirement Plan account balances — $2,014,842; vacation accrual — $24,817; as well as his 401(k) Plan account balance.

        Mr. Byrne would have been entitled to the following: an amount equal to three times his 2007 base salary and target short-term incentive award — $2,016,000; an amount equal to the excess payable under the Supplemental Executive Retirement Plan as calculated under the assumptions described above — $760,940; an amount equal to insurance continuation benefits for three years — $71,740; an amount equal to the value of 100% of his target performance shares under the Long-Term Equity Compensation Plan — $1,277,103; and anticipated excise tax and gross-up payment — $1,855,127. The total value of these change in control benefits would have been $5,980,910. In addition, Mr. Byrne would have been paid amounts previously earned, but not yet paid, as follows: 2007 target short-term annual incentive award — $252,000; 2007 actual long-term equity award — $131,480; Executive Deferred Compensation Plan account balance — $517,412; Supplemental Executive Retirement Plan and Retirement Plan account balances — $424,775; vacation accrual — $10,904; as well as his 401(k) Plan account balance.

        In addition to the foregoing benefits, all option and stock awards set forth in the 2007 Outstanding Equity Awards at Fiscal Year-End Table would have vested for each Named Executive Officer.

Supplementary Severance Plan

        If (i) we had been subject to a change in control in the past 24 months, (ii) the Severance Plan had been terminated prior to the change in control, and (iii) as of December 31, 2007, either we had terminated the employment of any of our Named Executive Officers without just cause or they had terminated their employment for good reason, such terminated Named Executive Officer would have been immediately entitled to all of the benefits outlined above, together with an amount equal to an increase in the amount payable with respect to his Executive Deferred Compensation Plan account, calculated as outlined above. The actual amount of any such additional payment would depend upon the date on which employment of the Named Executive Officer terminated subsequent to the change in control.

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Retirement Benefits

Supplemental Executive Retirement Plan

        The SCANA Corporation Supplemental Executive Retirement Plan (the "SERP") is an unfunded nonqualified deferred compensation plan. The SERP was established for the purpose of providing supplemental retirement income to certain of our employees, including the Named Executive Officers, whose benefits under the Retirement Plan are limited in accordance with the limitations imposed by the Internal Revenue Code on the amount of annual retirement benefits payable to employees from qualified pension plans or on the amount of annual compensation that may be taken into account for all qualified plan purposes, or by certain other design limitations on determining compensation under the Retirement Plan.

        Subject to the terms of the SERP, a participant becomes eligible to receive benefits under the SERP upon termination of his or her employment with us (or at such later date as may be provided in a participant's agreement with us), if the participant has become vested in his or her accrued benefit under the Retirement Plan prior to termination of employment. However, if a participant is involuntarily terminated following or incident to a change in control and prior to becoming fully vested in his or her accrued benefit under the Retirement Plan, the participant will automatically become fully vested in his benefit under the SERP and a benefit will be payable under the SERP. The term "change in control" has the same meaning in the SERP as in the Severance Plan and the Supplementary Severance Plan. See the discussion under "Change in Control Arrangements."

        Unless otherwise provided in a participant agreement, the amount of any benefit payable to a participant under the SERP will be determined as of the date he or she first becomes eligible to receive benefits under the SERP, and will be equal to (i) the cash balance account that otherwise would have been payable under the Retirement Plan as of such determination date, based on compensation and disregarding the limitations imposed by the Internal Revenue Code on the amount of annual retirement benefits payable to employees from qualified pension plans and on the amount of annual compensation that may be taken into account for all qualified plan purposes, minus (ii) the participant's cash balance account determined under the Retirement Plan as of such determination date. For purposes of the SERP, "compensation" is defined as determined under the Retirement Plan, without regard to the limitation under Section 401(a)(17) of the Internal Revenue Code, including any amounts of compensation otherwise deferred under any non-qualified deferred compensation plan (excluding the SERP).

        The benefit payable to a participant under the SERP will be paid, or commence to be paid, as of the first day of the calendar month following the date the participant first becomes eligible to receive a benefit under the SERP. With respect to amounts earned and vested before January 1, 2005, the participant may elect, in accordance with procedures we establish, to receive a distribution of such benefit in either of the following two forms of payment:

    A single sum distribution of the value of the participant's benefit under the SERP determined as of the last day of the month preceding the date he or she first becomes eligible to receive benefits; or

    A lifetime annuity benefit with an additional death benefit payment as follows: A lifetime annuity that is the actuarial equivalent of the participant's single sum amount which provides for a monthly benefit payable for the participant's life, beginning on the first day of the month following the date on which he or she first becomes eligible to receive benefits. In addition to this life

49


      annuity, commencing on the first day of the month following the participant's death, his or her designated beneficiary will receive a benefit of 60% of the amount of the participant's monthly payment continuing for a 15 year period. If, however, the beneficiary dies before the end of the 15 year period, the lump sum value of the remaining monthly payments of the survivor benefit will be paid to the beneficiary's estate. The participant's life annuity will not be reduced to reflect the "cost" of providing the 60% survivor benefit feature. "Actuarial equivalent" is defined by the SERP as equality in value of the benefit provided under the SERP based on actuarial assumptions, methods, factors and tables that would apply under the Retirement Plan under similar circumstances.

        For amounts earned and vested after January 1, 2005, the amounts are subject to Internal Revenue Service Code Section 409A and the choice between lump sum and annuity is not available. The new distribution options have not yet been determined.

        Unless otherwise provided in a participant agreement, if a participant dies before the first day of the calendar month after he or she becomes eligible to receive benefits under the SERP, a single sum distribution equal to the value of the benefit that otherwise would have been payable under the SERP will be paid to the participant's designated beneficiary as soon as administratively practicable following the participant's death. With respect to SERP amounts earned and vested on or after January 1, 2005, the available distribution options will be limited in accordance with Section 409A of the Internal Revenue Code.

Calculation of Benefits Potentially Payable to our Named Executive Officers if a Triggering Event had Occurred as of December 31, 2007

        The lump sum or annuity amounts that would have been payable under the SERP to each of our Named Executive Officers if they had become eligible for benefits as of December 31, 2007 are set forth below.

        Also set forth below are the payments that would have been made to each Named Executive Officer's designated beneficiary if the officer had died December 31, 2007.

        For Mr. Timmerman, the lump sum amount would have been $2,467,298, or the monthly payments would have been $15,411 for the remainder of his lifetime. In the event he had died December 31, 2007 after becoming eligible for benefits, his designated beneficiary would receive monthly payments of $9,246 for up to 15 years. If Mr. Timmerman had died December 31, 2007 before becoming eligible for benefits, his beneficiary would have been entitled to a lump sum payment equal to the amount shown above.

        For Mr. Addison, the lump sum amount would have been $107,758, or the monthly payments would have been $530 for the remainder of his lifetime. In the event he had died December 31, 2007 after becoming eligible for benefits, his designated beneficiary would receive monthly payments of $318 for up to 15 years. If Mr. Addison had died December 31, 2007 before becoming eligible for benefits, his beneficiary would have been entitled to a lump sum payment equal to the amount shown above.

        For Mr. Marsh, the lump sum amount would have been $513,389, or the monthly payments would have been $2,709 for the remainder of his lifetime. In the event he had died December 31, 2007 after becoming eligible for benefits, his designated beneficiary would receive monthly payments of $1,626 for up to 15 years. If Mr. Marsh had died December 31, 2007 before becoming eligible

50



for benefits, his beneficiary would have been entitled to a lump sum payment equal to the amount shown above.

        For Mr. Bullwinkel, the lump sum amount would have been $803,913, or the monthly payments would have been $4,822 for the remainder of his lifetime. In the event he had died December 31, 2007 after becoming eligible for benefits, his designated beneficiary would receive monthly payments of $2,893 for up to 15 years. If Mr. Bullwinkel had died December 31, 2007 before becoming eligible for benefits, his beneficiary would have been entitled to a lump sum payment equal to the amount shown above.

        For Mr. Byrne, the lump sum amount would have been $263,284, or the monthly payments would have been $1,309 for the remainder of his lifetime. In the event he had died December 31, 2007 after becoming eligible for benefits, his designated beneficiary would receive monthly payments of $786 for up to 15 years. If Mr. Byrne had died December 31, 2007 before becoming eligible for benefits, his beneficiary would have been entitled to a lump sum payment equal to the amount shown above.

Executive Deferred Compensation Plan

        The SCANA Corporation Executive Deferred Compensation Plan is described in the narrative following the 2007 Nonqualified Deferred Compensation Table on page 42. As discussed in that section, amounts deferred under the plan are required to be paid, or begin to be paid, as soon as practicable following a participant's death, disability, retirement or other termination of employment. Such payments are made in the form of a single sum cash distribution. However, at the election of the participant, payments payable after the participant's death after reaching retirement age, retirement, or termination of employment as a result of disability, may be made in the form of annual installment payments over a period not to exceed 15 years. The plan defines "retirement age" as the later of reaching age 55 and 20 years of vesting service or attainment of age 65, and defines "retirement" as termination of employment after reaching retirement age. All amounts credited to a participant's special ledger account continue to be hypothetically invested among the investment alternatives until such amounts are paid in full to the participant or his or her beneficiary. The terms of the plan governing distributions and deferrals are subject to further modification to conform to the requirements of Section 409A of the Internal Revenue Code.

        The "Aggregate Balance at Last FYE" column of the 2007 Nonqualified Deferred Compensation Table shows the amounts that would have been payable under the Executive Deferred Compensation Plan to each of our Named Executive Officers if they had died after reaching retirement age, retired, or if their employment had been terminated as a result of disability, as of December 31, 2007, and if they had been paid using the single sum form of payment. If the Named Executive Officers instead chose payment of the deferrals in annual installments, the annual installment payments over the payment periods selected by the Named Executive Officers are estimated as set forth below: Mr. Timmerman — $602,670; Mr. Addison — $73,372; Mr. Marsh — $242,824; Mr. Bullwinkel — $311,652; and Mr. Byrne — $103,482.

Discussion of Plans are Summaries Only

        The discussions of our various compensation plans in this "Executive Compensation" section of the proxy statement are merely summaries of the plans and do not create any rights under any of the plans, and are qualified in their entirety by reference to the plans themselves.

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DIRECTOR COMPENSATION

Board Fees

        Our Board reviews director compensation every year with guidance from the Nominating Committee. In making its recommendations, the Committee is required by our Governance Principles to consider that compensation should fairly pay directors for work required in a company of our size and scope, compensation should align directors' interests with the long-term interests of shareholders, and the compensation structure should be transparent and easy for shareholders to understand. We also consider the risks inherent in board service. Approximately, every other year the Nominating Committee considers relevant public data in making recommendations. The Committee may also consider recommendations from our Chairman and Chief Executive Officer.

        Officers who are also directors do not receive additional compensation for their service as directors. Annual compensation for non-employee directors consists of the following:

    an annual retainer of $45,000 required to be paid in shares of our common stock;

    a fee of $6,500 for attendance at regular quarterly meetings of the Board of Directors;

    a fee of $6,000 for attendance at all-day meetings of the Board of Directors other than regular meetings;

    a fee of $3,000 for attendance at half-day meetings of the Board of Directors other than regular meetings;

    a fee of $3,000 for attendance at a committee meeting held on a day other than a day a regular meeting of the Board of Directors is held;

    a fee of $300 for telephonic meetings of the Board of Directors or a committee that last fewer than 30 minutes;

    a fee of $600 for telephonic meetings of the Board of Directors or a committee that last more than 30 minutes; and

    reimbursement of reasonable expenses incurred in connection with all of the above.

        Unless deferred at the director's election pursuant to the terms of our Director Compensation and Deferral Plan, directors' retainer fees are paid annually in shares of our common stock, and meeting attendance and conference fees are paid at such times as the Board determines in cash or common stock at the director's election.

Director Compensation and Deferral Plan

        Since January 1, 2001, non-employee director compensation and related deferrals have been governed by the SCANA Director Compensation and Deferral Plan. Amounts deferred by directors in previous years under the SCANA Voluntary Deferral Plan continue to be governed by that plan. During 2007, the only director with funds remaining in the Voluntary Deferral Plan was Mr. Bennett.

        Under the Director Compensation and Deferral Plan, a director may make an annual irrevocable election to defer the annual retainer fee, which is required to be paid in our common stock, in a hypothetical investment in our common stock, with distribution from the plan to be ultimately payable in actual shares of our common stock upon termination of the director's service. A director also may elect to defer up to 100% of meeting attendance and conference fees with distribution from the plan to be ultimately payable in either our common stock or cash. Amounts payable in our common stock accrue earnings during the deferral period at our dividend rate, which directors may choose to have paid in cash when accrued or retained to invest in hypothetical shares of our common stock.

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Amounts payable in cash accrue interest until paid. Hypothetical shares do not have voting rights.

        During 2007, Messrs. Amick, Burkhardt, Sloan, York and Ms. Miller elected to defer 100% of their compensation and earnings and Messrs. Bennett, Hagood and Stowe deferred a portion of their earnings under the Director Compensation and Deferral Plan.

        As previously discussed, we plan to amend all available distribution and withdrawal options with respect to amounts earned or vested after 2004 under all of our deferred compensation plans to conform to the requirements for deferred compensation under Section 409A of the Internal Revenue Code.

Endowment Plan

        Upon election to a second term, a director becomes eligible to participate in the SCANA Director Endowment Plan, which provides for us to make tax deductible, charitable contributions totaling $500,000 to institutions of higher education designated by the director. The plan is intended to reinforce our commitment to quality higher education and to enhance our ability to attract and retain qualified board members. A portion is contributed upon retirement of the director and the remainder upon the director's death. As of December 31, 2007, the present value of our obligation under the plan was $3,677,985. The plan is funded through insurance policies on the lives of the directors. The 2007 premium for such insurance was $95,122 which was offset by the receipt of insurance proceeds in the amount of $606,609. Currently the premium estimate for 2008 is approximately $100,000.

        Designated institutions of higher education in South Carolina, North Carolina and Georgia must be approved by SCANA's Chief Executive Officer. Institutions in other states must be approved by the Human Resources Committee. The designated institutions are reviewed on an annual basis by the Chief Executive Officer to assure compliance with the intent of the plan.

Discussions of Plans are Summaries Only

        The discussions of our various plans, including the Director Compensation and Deferral Plans and the Director Endowment Plan, are merely summaries of the plans and do not create any rights under any of the plans, and are qualified in their entirety by reference to the plans themselves.

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2007 DIRECTOR COMPENSATION

        The following table sets forth the compensation we paid to each of our non-employee directors in 2007.


Name     Fees
Earned
or
Paid in
Cash
($)
    Stock
Awards
($)(1)
  Option
Awards
($)
  Non-Equity
Incentive Plan
Compensation
($)
    Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings(2)
($)
  All Other
Compensation
($)
    Total
($)

(a)

 

 

(b)

 

 

(c)

 

(d)

 

(e)

 

 

(f)

 

(g)

 

 

(h)


B. L. Amick   $ 35,500   $ 45,000                     $ 80,500

J. A. Bennett   $ 72,000   $ 45,000           $ 5,326       $ 122,326

W. C. Burkhardt(3)   $ 19,700   $ 45,000                     $ 64,700

S. A. Decker   $ 69,000   $ 45,000                     $ 114,000

D. M. Hagood   $ 69,800   $ 45,000                     $ 114,800

W. H. Hipp   $ 51,000   $ 45,000                     $ 96,000

J. M. Micali(4)   $ 0   $ 0                     $ 0

L. M. Miller   $ 72,000   $ 45,000                     $ 117,000

J. W. Roquemore(4)   $ 0   $ 0                     $ 0

M. K. Sloan   $ 73,800   $ 45,000                     $ 118,800

H. C. Stowe   $ 70,300   $ 45,000                     $ 115,300

G. S. York   $ 72,000   $ 45,000                     $ 117,000

(1)
The annual retainer of $45,000 is required to be paid in our common stock. Shares were purchased on January 18, 2007 at a weighted average purchase price of $40.42 in order to satisfy the retainer fee obligation.

(2)
Mr. Bennett is the only Director who elected to defer director fees into a cash deferral account. Pursuant to the terms of the deferral plan, the earnings are above market as defined by the Securities and Exchange Commission rules. The amounts shown above represent Mr. Bennett's above-market earnings on his deferrals into the cash deferral account ($3,641) as well as his earnings on prior cash deferrals into the prior Voluntary Deferral Plan ($1,685).

(3)
Mr. Burkhardt retired at the Annual Meeting held on April 26, 2007.

(4)
Messrs. Micali and Roquemore were elected to the Board effective as of December 31, 2007.

54





AUDIT COMMITTEE REPORT

        In connection with the December 31, 2007 financial statements, the Audit Committee (i) reviewed and discussed the audited financial statements with management; (ii) discussed with the independent auditors the matters required to be discussed by the Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T; (iii) received the written disclosures and the letter from the independent accountants required by Independence Standards Board Standard No. 1 (Independence Standards Board Standard No. 1, Independence Discussions With Audit Committees) as adopted by the Public Company Accounting Oversight Board in Rule 3600T; and (iv) discussed with the independent accountant the independent accountant's independence. Based upon these reviews and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2007 for filing with the Securities and Exchange Commission.

Mr. Harold C. Stowe (Chairman)
Mr. D. Maybank Hagood
Mr. Maceo K. Sloan

55





PROPOSAL 2 — APPROVAL OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

        Deloitte & Touche LLP served as SCANA's independent registered public accounting firm for the year ended December 31, 2007, and the Audit Committee has appointed Deloitte & Touche LLP to serve as SCANA's independent registered public accounting firm to audit SCANA's 2008 financial statements. Shareholders are being asked to approve this appointment at the Annual Meeting.

        The Board of Directors recommends a vote FOR approval of Deloitte & Touche LLP's 2008 appointment.

        Unless you indicate to the contrary, the proxy agents intend to vote the shares represented by your proxy to approve the appointment of Deloitte & Touche LLP as the independent registered public accounting firm to audit SCANA's 2008 financial statements.

        Representatives of Deloitte & Touche LLP are expected to be present and available at the Annual Meeting to make such statements as they may desire and to respond to appropriate questions from shareholders.

Pre-Approval of Auditing Services and Permitted Non-Audit Services

        SCANA's Audit Committee Charter requires the Audit Committee to pre-approve all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed by the independent registered public accounting firm. Pursuant to a policy adopted by the Audit Committee, its Chairman may pre-approve the rendering of services on behalf of the Audit Committee. Decisions by the Chairman to pre-approve the rendering of services are presented to the Audit Committee at its next scheduled meeting.

Independent Registered Public Accounting Firm's Fees

        The following table sets forth the aggregate fees billed to SCANA and its subsidiaries for the fiscal years ended December 31, 2007 and 2006 by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu and their respective affiliates.

 
  2007
  2006
Audit Fees(1)   $ 2,334,997   $ 2,178,851
Audit Related Fees(2)     108,000     118,195
Tax Fees(3)     46,752     77,820
All Other Fees        
   
 
Total Fees   $ 2,489,749   $ 2,374,866

(1)
Fees for Audit Services billed for 2007 and 2006 consisted of audits of annual financial statements, comfort letters, statutory and regulatory audits, consents and other services related to Securities and Exchange Commission filings, and accounting research.

(2)
Fees primarily for employee benefit plan audits for 2007 and 2006.

(3)
Fees for tax compliance and tax research services.

        In 2007 and 2006, all of the Audit Fees, Audit Related Fees and Tax Fees were approved by the Audit Committee.

56





OTHER INFORMATION

Section 16(a) Beneficial Ownership Reporting Compliance

        The rules of the Securities and Exchange Commission require that we disclose late filings of reports of beneficial ownership and changes in beneficial ownership by our directors, executive officers and greater than 10% beneficial owners. To our knowledge, except as set forth below, based solely on a review of Forms 3, 4 and 5 and amendments to such forms furnished to us and written representations made to us, all filings on behalf of such persons were made on a timely basis in 2007. James A. Bennett, one of our directors, filed one late Form 4 with respect to one transaction.

Shareholder Proposals and Nominations

        In order to be considered for inclusion in our proxy statement and proxy card for the 2009 Annual Meeting, a shareholder proposal must be received at the principal office of SCANA Corporation, c/o Corporate Secretary, 1426 Main Street, Mail Code 134, Columbia, South Carolina 29201, by November 19, 2008. Securities and Exchange Commission rules contain standards for determining whether a shareholder proposal is required to be included in a proxy statement.

        Under our bylaws, any shareholder who intends to present a proposal or nominate an individual to serve as a director at the 2009 Annual Meeting must notify us no later than November 19, 2008 of his intention to present the proposal or make the nomination. The shareholder also must comply with the other requirements in the bylaws. Any shareholder may request a copy of the relevant bylaw provision by writing to the Office of the Corporate Secretary, SCANA Corporation, 1426 Main Street, Mail Code 134, Columbia, South Carolina 29201.

Expenses of Solicitation

        This solicitation of proxies is being made by our Board of Directors. We pay the cost of preparing, assembling and mailing this proxy soliciting material, including certain expenses of brokers and nominees who mail proxy material to their customers or principals. We have retained Georgeson, Inc., 199 Water Street, 26th Floor, New York, New York 10038, to assist in the solicitation of proxies for the Annual Meeting at a fee of $6,000, plus associated costs and expenses.

        In addition to the use of the mail, proxies may be solicited personally, by telephone or by our officers and employees without additional compensation.

Availability of Form 10-K

        We have filed with the Securities and Exchange Commission our Annual Report on Form 10-K for the fiscal year ended December 31, 2007. A copy of the Form 10-K, including the financial statements and financial statement schedules and a list of exhibits, will be provided without charge to each shareholder to whom this proxy statement is delivered upon our receipt of a written request from such shareholder. The exhibits to the Form 10-K also will be provided upon request and payment of copying charges. Requests for the Form 10-K should be directed to:

    Emily (Betty) Elizabeth Best
    Director-Investor Relations
    SCANA Corporation
    1426 Main Street, Mail Code 054
    Columbia, South Carolina 29201

57


Incorporation by Reference

        We file various documents with the Securities and Exchange Commission, some of which incorporate information by reference. This means that information we have previously filed with the Securities and Exchange Commission, should be considered as part of the filing.

        Neither the Compensation Committee Report nor the Audit Committee Report shall be deemed to be filed with the Securities and Exchange Commission or incorporated by reference into any of our filings under the Securities Exchange Act of 1934 or the Securities Act of 1933, unless specifically incorporated by reference therein.

References to our Website Address

        References to our website address throughout this proxy statement and the accompanying materials are for informational purposes only, or to fulfill specific disclosure requirements of the Securities and Exchange Commission's rules or the New York Stock Exchange Listing Standards. These references are not intended to, and do not, incorporate the contents of our website by reference into this proxy statement or the accompanying materials.

Tickets to the Annual Meeting

        An admission ticket to the meeting is detachable from your proxy card. If you plan to attend the Annual Meeting, please so indicate when you vote.

        If your shares are owned jointly and you need an additional ticket, you should contact the Corporate Secretary, SCANA Corporation, 1426 Main Street, Mail Code 134, Columbia, South Carolina 29201, or call 803-217-7568.

        If you forget to bring the admission ticket, you will be admitted to the meeting only if you are listed as a shareholder of record as of the close of business on March 3, 2008 and bring proof of identification. If you hold your shares through a stockbroker or other nominee, you must provide proof of ownership by bringing either a copy of the voting instruction card provided by your broker or a brokerage statement showing your share ownership as of March 3, 2008.

SCANA CORPORATION

SIGNATURE

Gina Champion
Corporate Secretary
March 7, 2008

58





FINANCIAL APPENDIX

Index to Annual Financial Statements, Management's Discussion and Analysis and Related Annual Report Information:    
 
Selected Financial and Other Statistical Data

 

F-1
  SCANA's Business   F-3
  Management's Discussion and Analysis of Financial Condition and Results of Operations   F-5
  Quantitative and Qualitative Disclosures about Market Risk   F-30
  Report of Independent Registered Public Accounting Firm   F-33
  Consolidated Balance Sheets   F-34
  Consolidated Statements of Income   F-36
  Consolidated Statements of Cash Flows   F-37
  Consolidated Statements of Changes in Common Equity and Comprehensive Income   F-38
  Notes to Consolidated Financial Statements   F-39
  Management Report on Internal Control Over Financial Reporting   F-69
  Attestation Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting   F-70
  Market for Common Equity and Related Stockholder Matters   F-72
  Performance Graph   F-73
  Executive Officers   F-76
  Certifications   F-76




SELECTED FINANCIAL AND OTHER STATISTICAL DATA

 
  (Millions of dollars, except statistics and per share amounts)

 
As of or for the Year Ended December 31,
         2007
         2006
         2005
         2004
         2003
 
Statement of Income Data                      
  Operating Revenues   $4,621   $4,563   $4,777   $3,885   $3,416  
  Operating Income   633   603   436   596   551  
  Other Income (Expense)   (160 ) (164 ) (162 ) (219 ) (138 )
  Income Before Cumulative Effect of Accounting Change   320   304   320   257   282  
  Net Income   $320   $310   $320   $257   $282  
Common Stock Data                      
  Weighted Average Number of Common Shares Outstanding (Millions)   116.7   115.8   113.8   111.6   110.8  
  Basic and Diluted Earnings Per Share   $2.74   $2.68   $2.81   $2.30   $2.54  
  Dividends Declared Per Share of Common Stock   $1.76   $1.68   $1.56   $1.46   $1.38  
Balance Sheet Data                      
  Utility Plant, Net   $7,538   $7,007   $6,734   $6,762   $6,417  
  Total Assets   10,165   9,817   9,519   9,006   8,458  
  Capitalization:                      
    Common equity   $2,960   $2,846   $2,677   $2,451   $2,306  
    Preferred Stock (Not subject to purchase or sinking funds)   106   106   106   106   106  
    Preferred Stock, net (Subject to purchase or sinking funds)   7   8   8   9   9  
    Long-term Debt, net   2,879   3,067   2,948   3,186   3,225  
   
 
 
 
 
 
    Total Capitalization   $5,952   $6,027   $5,739   $5,752   $5,646  
   
 
 
 
 
 
Other Statistics                      
  Electric:                      
    Customers (Year-End)   639,258   623,402   609,971   591,435   577,014  
    Total sales (Million KWh)   24,885   24,519   25,305   25,027   22,512  
    Generating capability-Net MW (Year-End)   5,749   5,749   5,808   5,817   4,880  
    Territorial peak demand-Net MW   4,926   4,820   4,820   4,574   4,474  
  Regulated Gas:                      
    Customers (Year-End)   759,336   738,317   716,794   693,172   672,849  
    Sales, excluding transportation (Thousand Therms)   823,976   997,173   1,106,526   1,124,555   1,205,730  
  Retail Gas Marketing:                      
    Retail customers (Year-End)   484,565   482,822   479,382   472,468   415,573  
    Firm customer deliveries (Thousand Therms)   340,743   335,896   379,913   379,712   356,256  
  Nonregulated interruptible customer deliveries (Thousand Therms)   1,548,878   1,239,926   1,010,066   917,875   735,902  

        Significant events affecting historical earnings trends include the following:

        In 2007 Regulated Gas Sales, excluding transportation, reflect the change in business model of Carolina Gas Transmission Corporation (CGTC) from an intrastate supplier of natural gas to a transportation-only, interstate pipeline company in November 2006.

        In 2006 SCANA Corporation (SCANA, and together with its subsidiaries, the Company) reduced a litigation accrual by $4.7 million (after-tax) or $.04 per share as a result of litigation being settled for an amount that was less than had been accrued in 2004 (see below). In addition, SCANA recorded as the cumulative effect of an accounting change a gain of $5.8 million (after-tax) or $.05 per share related to reduced share-based compensation cost upon adoption of Statement of Financial Accounting Standards (SFAS) No. 123(R).

        In 2005 SCANA recognized a gain of $4 million (after-tax) or $.03 per share upon receipt of additional proceeds from the 2003 sale of the Company's investment in ITC Holding Company, Inc. (ITC Holding). These additional proceeds had been held in escrow pending resolution of certain contingencies. All of the Company's significant telecommunications investments have been monetized.

        In 2004 SCANA recognized losses and recorded impairment charges totaling

F-1



$29.8 million (after-tax) or $.27 per share in connection with the valuation and sale of substantially all of the Company's holdings in ITC^Deltacom, Inc. and Knology, Inc. (Knology). Also, SCANA recorded a charge of $11.1 million (after-tax) or $.10 per share related to pending litigation associated with the 1999 sale of the Company's propane assets.

        In 2003 SCANA recognized a gain of $39 million (after-tax) or $.35 per share in connection with the sale of ITC Holding. In addition, SCANA recorded impairment charges of $35 million (after-tax) or $.31 per share on its investment in Knology.

F-2


SCANA'S BUSINESS


Regulated Utilities

        South Carolina Electric & Gas Company (SCE&G) generates, transports and sells electricity to 639,300 customers and purchases, sells and transports natural gas to 302,500 customers (each as of December 31, 2007). SCE&G's business experiences seasonal fluctuations, with generally higher sales of electricity during the summer and winter months because of air conditioning and heating requirements, and generally higher sales of natural gas during the winter months due to heating requirements. SCE&G's electric service territory extends into 24 counties covering nearly 16,000 square miles in the central, southern and southwestern portions of South Carolina. The service area for natural gas encompasses all or part of 35 counties in South Carolina and covers more than 23,000 square miles. More than 3.0 million persons live in the counties where SCE&G conducts its business. Resale customers include municipalities, electric cooperatives, other investor-owned utilities, registered marketers and federal and state electric agencies. Predominant industries served by SCE&G include rubber and plastic, chemicals, health services, paper, retail, metal fabrication, stone, clay and glass, engineering and management services and textile manufacturing.

        South Carolina Generating Company, Inc. (GENCO) owns Williams Station and sells electricity solely to SCE&G.

        South Carolina Fuel Company, Inc. (Fuel Company) acquires, owns and provides financing for SCE&G's nuclear fuel, fossil fuel and emission allowances.

        Public Service Company of North Carolina, Incorporated (PSNC Energy) purchases, sells and transports natural gas to 457,200 residential, commercial and industrial customers (as of December 31, 2007). PSNC Energy serves 28 franchised counties covering 12,000 square miles in North Carolina. The industrial customers of PSNC Energy include manufacturers or processors of ceramics and clay products, glass, automotive products, pharmaceuticals, plastics, metals and a variety of food and tobacco products.

        CGTC operates as an open access, transportation-only interstate pipeline company regulated by the Federal Energy Regulatory Commission (FERC). CGTC operates in southeastern Georgia and in South Carolina and has interconnections with Southern Natural Gas Company (Southern Natural) at Port Wentworth, Georgia and with Southern LNG, Inc. at Elba Island, near Savannah, Georgia. CGTC also has interconnections with Southern Natural in Aiken County, South Carolina, and with Transcontinental Gas Pipeline Corporation (Transco) in Cherokee and Spartanburg counties, South Carolina. CGTC's customers include SCE&G (which uses natural gas for electricity generation and for gas distribution to retail customers), SCANA Energy Marketing, Inc. (SEMI) (which markets natural gas to industrial and sale for resale customers, primarily in the Southeast), other natural gas utilities, municipalities and county gas authorities, and industrial customers primarily engaged in the manufacturing or processing of ceramics, paper, metal, food and textiles.

Nonregulated Businesses

        SEMI markets natural gas primarily in the southeast and provides energy-related risk management services. SCANA Energy, a division of SEMI, markets natural gas to over 475,000 customers (as of December 31, 2007) in Georgia's natural gas market. The Georgia Public Service Commission (GPSC) has selected SCANA Energy to serve as the state's regulated provider until August 31, 2009. Included in the above customer count, SCANA Energy serves over 95,000 low-income or high credit risk customers (as of December 31, 2007)

F-3



under this regulated provider contract. SCANA Energy's total customer base represents over a 30% share of the approximately 1.5 million customers in Georgia's deregulated natural gas market. SCANA Energy remains the second largest natural gas marketer in the state.

        SCANA Communications, Inc. (SCI) owns and operates a 500-mile fiber optic telecommunications network and ethernet network and data center facilities in South Carolina. Through a joint venture, SCI has an interest in an additional 1,742 miles of fiber in South Carolina, North Carolina and Georgia. SCI also provides tower site construction, management and rental services in South Carolina and North Carolina.

        ServiceCare, Inc. provides homeowners with service contracts on their home appliances and heating and air conditioning units.

        SCANA Services, Inc. provides administrative, management and other services to the Company's subsidiaries and business units.

F-4





MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Regarding Forward-Looking Information

        Statements included in this discussion and analysis (or elsewhere herein) which are not statements of historical fact are intended to be, and are hereby identified as, "forward-looking statements" for purposes of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements concerning key earnings drivers, customer growth, environmental regulations and expenditures, leverage ratio, projections for pension fund contributions, financing activities, access to sources of capital, impacts of the adoption of new accounting rules, estimated construction and other expenditures and factors affecting the availability of synthetic fuel tax credits. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "could," "should," "expects," "plans," "anticipates," "believes," "estimates," "projects," "predicts," "potential" or "continue" or the negative of these terms or other similar terminology. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, and that actual results could differ materially from those indicated by such forward-looking statements. Important factors that could cause actual results to differ materially from those indicated by such forward-looking statements include, but are not limited to, the following:

    (1)
    the information is of a preliminary nature and may be subject to further and/or continuing review and adjustment;

    (2)
    regulatory actions, particularly changes in rate regulation and environmental regulations;

    (3)
    current and future litigation;

    (4)
    changes in the economy, especially in areas served by subsidiaries of SCANA;

    (5)
    the impact of competition from other energy suppliers, including competition from alternate fuels in industrial interruptible markets;

    (6)
    growth opportunities for SCANA's regulated and diversified subsidiaries;

    (7)
    the results of financing efforts;

    (8)
    changes in SCANA's or its subsidiaries' accounting rules and accounting policies;

    (9)
    the effects of weather, including drought, especially in areas where the generation and transmission facilities of SCANA and its subsidiaries are located and in areas served by SCANA's subsidiaries;

    (10)
    payment by counterparties as and when due;

    (11)
    the results of efforts to license, site and construct facilities for baseload generation;

    (12)
    the availability of fuels such as coal, natural gas and enriched uranium used to produce electricity; the availability of purchased power and natural gas for distribution; the level and volatility of future market prices for such fuels and purchased power; and the ability to recover the costs for such fuels and purchased power;

    (13)
    performance of SCANA's pension plan assets;

    (14)
    inflation;

    (15)
    compliance with regulations; and

    (16)
    the other risks and uncertainties described from time to time in the periodic reports filed by SCANA or its subsidiaries with the United States Securities and Exchange Commission (SEC), including those risks described in Item 1A, Risk Factors.

        SCANA disclaims any obligation to update any forward-looking statements.

F-5


OVERVIEW

        SCANA, through its wholly-owned regulated subsidiaries, is primarily engaged in the generation, transmission, distribution and sale of electricity in parts of South Carolina and the purchase, transmission and sale of natural gas in portions of North Carolina and South Carolina. Through a wholly owned nonregulated subsidiary, SCANA markets natural gas to retail customers in Georgia and to wholesale customers primarily in the southeast. Other wholly-owned nonregulated subsidiaries provide fiber optic and other telecommunications services and provide service contracts to homeowners on certain home appliances and heating and air conditioning units. Additionally, a service company subsidiary provides administrative, management and other services to the other subsidiaries.

        The following map indicates areas where the Company's significant business segments conduct their activities, as further described in this overview section.

MAP

        The following percentages reflect revenues and net income earned by the Company's regulated and nonregulated businesses and the percentage of total assets held by them.

% of Revenues(a)

  2007

  2006

  2005

Regulated   66%   69%   69%
Nonregulated   34%   31%   31%

% of Net Income(b)


 

 


 

 


 

 

Regulated   92%   89%   92%
Nonregulated   8%   11%   8%

% of Assets


 

 


 

 


 

 

Regulated   92%   93%   94%
Nonregulated   8%   7%   6%
(a)
In 2007, revenues reflects the change in business model in the Gas Transmission segment. See Results of Operations for more information.

(b)
In 2006, net income for nonregulated businesses included a reduction of an accrual related to certain litigation associated with the Company's prior sale of its propane assets upon the settlement of that litigation. See Results of Operations for more information.

F-6


        Key earnings drivers for the Company over the next five years will be additions to rate base at SCE&G, CGTC and PSNC Energy, consisting primarily of capital expenditures for environmental facilities, new generating capacity and system expansion. Other factors that will impact future earnings growth include the regulatory environment, customer growth in each of the regulated utility businesses, consistent earnings in the natural gas marketing business in Georgia and controlling the growth of operation and maintenance expenses.

Electric Operations

        The electric operations segment is comprised of the electric operations of SCE&G, GENCO and Fuel Company, and is primarily engaged in the generation, transmission, distribution and sale of electricity in South Carolina. At December 31, 2007 SCE&G provided electricity to 639,300 customers in an area covering nearly 16,000 square miles. GENCO owns a coal-fired generation station and sells electricity solely to SCE&G. Fuel Company acquires, owns and provides financing for SCE&G's nuclear fuel, fossil fuel and emission allowance requirements.

        Operating results for electric operations are primarily driven by customer demand for electricity, the ability to control costs and rates allowed to be charged to customers. Embedded in the rates charged to customers is an allowed regulatory return on equity. SCE&G's allowed return on equity may not exceed 11.0%, with rates set at 10.7%. Demand for electricity is primarily affected by weather, customer growth and the economy. SCE&G is able to recover the cost of fuel used in electric generation through retail customers' bills, but increases in fuel costs affect electric prices and, therefore, the competitive position of electricity against other energy sources.

        Legislative and regulatory initiatives, including the Energy Policy Act of 2005 (the "Energy Policy Act") also could significantly impact the results of operations and cash flows for the electric operations segment. The Energy Policy Act became law in August 2005, and it provided, among other things, for the establishment of an electric reliability organization (ERO) to propose and enforce mandatory reliability standards for transmission systems and for procedures governing enforcement actions by the ERO and FERC.

        Consistent with reliability provisions of the Energy Policy Act, on July 20, 2006, FERC issued a final rule certifying the North American Electric Reliability Council (NERC) as the ERO. On March 16, 2007, FERC issued a final rule establishing mandatory, enforceable reliability standards for the nation's bulk power system. In the final rule, FERC approved 83 of the 107 mandatory reliability standards submitted by the NERC and compliance with these standards became mandatory on June 18, 2007. FERC has subsequently approved eight critical infrastructure protection standards which are mandatory and enforceable. The Company cannot predict when or if FERC will advance other regulatory initiatives related to the national energy market or what conditions such initiatives would impose on utilities.

        New legislation may also impose stringent requirements on power plants to reduce emissions of sulfur dioxide, nitrogen oxides and mercury. It is also possible that new initiatives will be introduced to reduce carbon dioxide and other greenhouse gas emissions. The Company cannot predict whether such legislation will be enacted, and if it is, the conditions it would impose on utilities.

Gas Distribution

        The gas distribution segment is comprised of the local distribution operations of SCE&G and PSNC Energy, and is primarily engaged in the purchase, transmission and sale of natural gas to retail customers in portions of North Carolina and South Carolina. At December 31, 2007 this segment provided natural gas to 759,700 customers in areas covering 35,000 square miles.

F-7


        Operating results for gas distribution are primarily influenced by customer demand for natural gas, the ability to control costs and allowed rates to be charged to customers. Embedded in the rates charged to customers is an allowed regulatory return on equity.

        Demand for natural gas is primarily affected by weather, customer growth, the economy and, for commercial and industrial customers, the availability and price of alternate fuels. Natural gas competes with electricity, propane and heating oil to serve the heating and, to a lesser extent, other household energy needs of residential and small commercial customers. This competition is generally based on price and convenience. Large commercial and industrial customers often have the ability to switch from natural gas to an alternate fuel, such as propane or fuel oil. Natural gas competes with these alternate fuels based on price. As a result, any significant disparity between supply and demand, either of natural gas or of alternate fuels, and due either to production or delivery disruptions or other factors, will affect price and impact the Company's ability to retain large commercial and industrial customers. Significant supply disruptions occurred in September and October 2005 as a result of hurricane activity in the Gulf of Mexico, resulting in the curtailment during the period of most large commercial and industrial customers with interruptible supply agreements. While supply disruptions were not experienced in 2007 or 2006, the price of natural gas remains volatile and has resulted in short-term competitive pressure. The long-term impact of volatile gas prices and gas supply has not been determined.

Gas Transmission

        CGTC operates an open access, transportation-only interstate pipeline company regulated by FERC. CGTC's operating results are primarily influenced by customer demand for natural gas, the ability to control costs and allowed rates to be charged to customers. Demand for CGTC's services is closely linked to demand for natural gas and is affected by the price of alternate fuels and customer growth. CGTC provides transportation services to SCE&G for its gas distribution customers and for certain electric generation needs and to SEMI for natural gas marketing. CGTC also provides transportation services to other natural gas utilities, municipalities and county gas authorities and to industrial customers.

        Effective November 1, 2006 SCG Pipeline merged into South Carolina Pipeline Corporation (SCPC) and the merged company changed its name to Carolina Gas Transmission Corporation. Prior to the merger, the gas transmission segment was comprised solely of SCPC, which owned and operated an intrastate pipeline engaged in the purchase, transmission and sale of natural gas on a wholesale basis to distribution companies (including SCE&G) and industrial customers throughout most of South Carolina. SCPC's operating results were primarily influenced by customer demand for natural gas, the ability to control costs and allowed rates to be charged to customers.

Retail Gas Marketing

        SCANA Energy, a division of SEMI, comprises the retail gas marketing segment. This segment markets natural gas to over 475,000 customers (as of December 31, 2007) throughout Georgia. SCANA Energy's total customer base represents over a 30% share of the approximately 1.5 million customers in Georgia's deregulated natural gas market. SCANA Energy remains the second largest natural gas marketer in the state. SCANA Energy's competitors include affiliates of other large energy companies with experience in Georgia's energy market, as well as several electric membership cooperatives. SCANA Energy's ability to maintain its market share depends on the prices it charges customers relative to the prices charged by its competitors, its ability to continue to provide high levels of customer service and other factors.

F-8


        As Georgia's regulated provider, SCANA Energy serves low-income customers and customers unable to obtain or maintain natural gas service from other marketers at rates approved by the GPSC, and it receives funding from the Universal Service Fund for some of the bad debt associated with the low-income group. SCANA Energy's service as Georgia's regulated provider of natural gas ends August 31, 2009. SCANA Energy files financial and other information periodically with the GPSC, and such information is available at www.psc.state.ga.us. At December 31, 2007, SCANA Energy's regulated division served over 95,000 customers.

        SCANA Energy and SCANA's other natural gas distribution and marketing segments maintain gas inventory and also utilize forward contracts and financial instruments, including commodity swaps and futures contracts, to manage their exposure to fluctuating commodity natural gas prices. See Note 9 to the consolidated financial statements. As a part of this risk management process, at any given time, a portion of SCANA's projected natural gas needs has been purchased or otherwise placed under contract. Since SCANA Energy operates in a competitive market, it may be unable to sustain its current levels of customers and/or pricing, thereby reducing expected margins and profitability. Further, there can be no assurance that Georgia's gas delivery regulatory framework will remain unchanged as dynamic market conditions evolve.

        In February 2008 the consumer affairs staff (the staff) of the GPSC alleged to the GPSC that SCANA Energy and the state's largest natural gas marketer (the marketers) had overcharged certain of their respective customers. The staff alleges that the marketers failed to inform customers with more expensive rate plans that a lower rate plan was available, charged customers in excess of the published price, and failed to give proper notice of a change in methodology for computing variable rates. SCANA Energy believes it complied with all applicable rules and regulations, that none of its customers were treated unfairly, and that all requests it received from customers to be switched to a lower rate plan were honored. SCANA Energy has responded that these types of pricing plans exist in many deregulated markets, such as telecommunications, and are a natural development in a competitive environment. Therefore, SCANA has declined a GPSC settlement proposal and the GPSC has scheduled a formal investigation into the matter. Separately, without admitting fault, the other marketer has settled the matter with the GPSC. While the Company cannot determine the final outcome, it believes that a resolution of this matter will not have a material adverse impact on its results of operations, cash flows or financial condition.

        On February 26, 2008, a purported class action was filed in U.S. District Court for the Northern District of Georgia, styled Weiskircher, et al. v. SCANA Energy Marketing, Inc., containing similar allegations to those alleged by the staff and seeking damages on behalf of a class of Georgia customers. SCANA Energy is evaluating the lawsuit.

Energy Marketing

        The divisions of SEMI excluding SCANA Energy (Energy Marketing) comprise the energy marketing segment. This segment markets natural gas primarily in the southeast and provides energy-related risk management services to customers.

        The operating results for energy marketing are primarily influenced by customer demand for natural gas and the ability to control costs. Demand for natural gas is primarily affected by the price of alternate fuels and customer growth. In addition, certain pipeline capacity available for Energy Marketing to serve industrial and other customers is tied to the market share held by SCANA Energy in the retail market.

F-9


RESULTS OF OPERATIONS

        The Company's reported earnings are prepared in accordance with GAAP. Management believes that, in addition to reported earnings under GAAP, the Company's GAAP-adjusted net earnings from operations provides a meaningful representation of its fundamental earnings power and can aid in performance of period-over-period financial analysis and comparison with peer group data. In management's opinion, GAAP-adjusted net earnings from operations is a useful indicator of the financial results of the Company's primary businesses. This measure is also a basis for management's provision of earnings guidance and growth projections, and it is used by management in making resource allocation and other budgetary and operational decisions. This non-GAAP performance measure is not intended to replace the GAAP measure of net earnings, but is offered as a supplement to it. A reconciliation of reported (GAAP) earnings per share to GAAP-adjusted net earnings per share from operations is provided in the table below:

 
  2007
  2006
  2005
 
Reported (GAAP) earnings per share   $ 2.74   $ 2.68   $ 2.81  
Deduct:                    
  Cumulative effect of accounting change, net of tax         (.05 )    
  Reduction in charge related to propane litigation         (.04 )    
  Gains from sales of telecommunications investments             (.03 )
   
 
 
 
  GAAP-adjusted net earnings per share from operations   $ 2.74   $ 2.59   $ 2.78  
   
 
 
 
  Cash dividends declared (per share)   $ 1.76   $ 1.68   $ 1.56  
   
 
 
 

Discussion of above adjustments:

        The cumulative effect of an accounting change resulted from the Company's adoption of Statement of Financial Accounting Standards (SFAS) No. 123 (revised 2004), "Share-Based Payment" (SFAS 123(R) ). The reduction in charge related to propane litigation resulted from litigation arising from the prior sale of the Company's propane business being settled for an amount that was less than had been accrued previously. This reduction appears in the income statement as a reduction to other expenses. Realized gains in 2005 were recognized on sales of telecommunications investments.

        Management believes that these adjustments are appropriate in determining the non-GAAP financial performance measure. Management utilizes such measure in exercising budgetary control, managing business operations and determining eligibility for certain incentive compensation payments. The non-GAAP measure, GAAP-adjusted net earnings per share from operations, provides a consistent basis upon which to measure performance by excluding the cumulative effect on per share earnings of the accounting change resulting from the Company's adoption of SFAS 123(R), the effect on per share earnings of transactions involving the Company's telecommunications investments and of litigation related to the sale of a prior business.

Pension Income

        Pension income was recorded on the Company's financial statements as follows:

Millions of dollars
  2007
  2006
  2005
Income Statement Impact:                  
  Reduction in employee benefit costs   $ 2.5   $ 0.7   $ 4.3
  Other income     13.7     12.3     11.9
Balance Sheet Impact:                  
  Reduction in capital expenditures     0.8     0.3     1.3
  Component of amount due to Summer Station co-owner     0.4     0.2     0.6
   
 
 
Total Pension Income   $ 17.4   $ 13.5   $ 18.1
   
 
 

        For the last several years, the market value of the Company's retirement plan (pension) assets has exceeded the total actuarial present value of accumulated plan benefits. Among the reasons income in 2007 was higher than income in 2006 was favorable asset investment experience. Among the reasons 2006's income was lower than 2005's was a reduction of the

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assumed long-term rate of return on plan assets from 9.25% to 9%. See also the discussion of pension accounting in Critical Accounting Policies and Estimates.

Allowance for Funds Used During Construction (AFC)

        AFC is a utility accounting practice whereby a portion of the cost of both equity and borrowed funds used to finance construction (which is shown on the balance sheet as construction work in progress) is capitalized. The Company includes an equity portion of AFC in nonoperating income and a debt portion of AFC in interest charges (credits) as noncash items, both of which have the effect of increasing reported net income. AFC represented approximately 3.3% of income before income taxes in 2007, 2.0% in 2006 and 1.4% in 2005.

Electric Operations

        Electric Operations is comprised of the electric operations of SCE&G, GENCO and Fuel Company. Electric operations sales margins (including transactions with affiliates) were as follows:

Millions of dollars

  2007
  % Change
  2006
  % Change
  2005
Operating revenues   $ 1,954.1   4.1 % $ 1,877.6   (1.6 )% $ 1,908.3
Less:                          
  Fuel used in generation     662.3   7.7 %   615.1   (0.5 )%   618.3
  Purchased power     32.7   18.9 %   27.5   (26.1 )%   37.2
   
     
     
  Margin   $ 1,259.1   2.0 % $ 1,235.0   (1.4 )% $ 1,252.8
   
     
     
 
  2007 vs 2006   Margin increased by $27.3 million due to customer growth and usage and due to other electric revenue of $5.2 million. These increases were offset by lower off-system sales of $10.2 million.


 

2006 vs 2005

 

Margin decreased by $20.8 million due to unfavorable weather, by $16.0 million due to decreased off-system sales and by $6.5 million due to lower industrial sales. These decreases were offset by residential and commercial customer growth of $26.5 million. Purchased power cost decreased due to lower volumes.

        Megawatt hour (MWh) sales volumes related to the electric margin above, by class, were as follows:

Classification
(in thousands)

  2007
  % Change
  2006
  % Change
  2005
Residential   7,814   2.8 % 7,598   (0.5 )% 7,634
Commercial   7,469   3.0 % 7,249   1.9 % 7,117
Industrial   6,267   1.4 % 6,183   (6.0 )% 6,581
Sales for resale (excluding interchange)   2,100   1.2 % 2,076   (5.5 )% 2,197
Other   563   6.8 % 527   0.8 % 523
   
     
     
Total territorial   24,213   2.5 % 23,633   (1.7 )% 24,052
Negotiated Market Sales Tariff (NMST)   672   (24.2 )% 886   (29.3 )% 1,253
   
     
     
Total   24,885   1.5 % 24,519   (3.1 )% 25,305
   
     
     
 
  2007 vs 2006   Territorial sales volumes increased by 343 MWh due to residential and commercial customer growth and by 83 MWh due to higher industrial sales volumes.


 

2006 vs 2005

 

Territorial sales volumes decreased by 307 MWh due to lower industrial sales volumes and by 406 MWh due to unfavorable weather. These decreases were partially offset by an increase of 408 MWh due to residential and commercial customer growth.

Gas Distribution

        Gas Distribution is comprised of the local distribution operations of SCE&G and PSNC Energy. Gas distribution sales margins (including transactions with affiliates) were as follows:

Millions of dollars

  2007
  % Change
  2006
  % Change
  2005
Operating revenues   $ 1,096.4   1.7 % $ 1,078.0   (7.8 )% $ 1,168.6
Less:                          
  Gas purchased for resale     764.6   (2.9 )%   787.1   (12.0 )%   894.6
   
     
     
  Margin   $ 331.8   14.1 % $ 290.9   6.2 % $ 274.0
   
     
     
 
  2007 vs 2006   Margin increased by $13.6 million due to an SCPSC-approved increase in retail gas base rates at SCE&G which became effective with the first billing cycle of November 2006, by

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        $1.0 million due to an SCPSC-approved increase in retail gas base rates which became effective with the first billing cycle of November 2007, and by $6.1 million due to other customer growth at SCE&G. The NCUC-approved rate increase at PSNC Energy, for services rendered on or after November 1, 2006, increased margin by $14.3 million. The increase in margin at PSNC Energy also reflects customer growth in 2007 and significant conservation in 2006 due to high natural gas prices.


 

2006 vs 2005

 

Margin increased by $17.5 million due to increased retail gas base rates which became effective with the first billing cycle in November 2005 and by $4.0 million due to an SCPSC-approved increase in retail gas base rates effective with the first billing cycle in November 2006. These increases were offset by $4.0 million due to customer conservation at SCE&G. The NCUC-approved rate increase at PSNC Energy, for services rendered on or after November 1, 2006, increased margin by $2.4 million, but was offset primarily by customer conservation.

        Dekatherm (DT) sales volumes by class, including transportation gas, were as follows:

Classification
(in thousands)

  2007
  % Change
  2006
  % Change
  2005
Residential   34,544   5.1 % 32,879   (13.2 )% 37,860
Commercial   26,573   3.3 % 25,718   (7.3 )% 27,750
Industrial   21,281   0.3 % 21,209   1.8 % 20,833
Transportation gas   31,154   3.3 % 30,147   8.8 % 27,698
   
     
     
Total   113,552   3.3 % 109,953   (3.7 )% 114,141
   
     
     
 
  2007 vs 2006   Residential, commercial and transportation gas sales volumes increased primarily due to customer growth.


 

2006 vs 2005

 

Residential and commercial sales volumes decreased primarily due to milder weather and conservation. Transportation sales volumes increased primarily due to interruptible customers using gas instead of alternate fuels.

Gas Transmission

        Gas Transmission is comprised of the operations of CGTC and, for periods prior to the November 2006 merger and name change, SCPC and SCG Pipeline. Gas transmission sales margins (including transactions with affiliates) were as follows:

Millions of dollars
  2007
  % Change
  2006
  % Change
  2005
Transportation revenue   $ 49.1   85.3 % $ 26.5   40.2 % $ 18.9
Other operating revenues       *     475.0   (26.5 )%   646.3
Less:                          
  Gas purchased for resale       *     439.2   (27.3 )%   604.2
   
     
     
  Margin   $ 49.1   (21.2 )% $ 62.3   2.1 % $ 61.0
   
     
     

*  Change not meaningful due to change to a transportation-only business model.

  2007 vs 2006   Transportation revenue increased as a result of the change to an open access, transportation-only interstate pipeline company effective November 1, 2006. As a result of this change, CGTC no longer earns commodity gas revenues, nor does it incur gas costs.


 

2006 vs 2005

 

Margin increased by $6.2 million due to increased transportation capacity charges (as a result of the merger discussed previously) and by $1.4 million due to higher interruptible transportation revenues, offset by $1.8 million due to decreased firm sales capacity charges and $4.5 million due to lower industrial margins.

        DT sales volumes by class, including transportation, were as follows:

Classification
(in thousands)

  2007
  % Change
  2006
  % Change
  2005
Commercial     *   23   (57.4 )% 54
Industrial     *   18,875   (17.0 )% 22,748
Transportation   108,626   88.8 % 57,546   27.7 % 45,055
Sales for resale     *   33,327   (23.8 )% 43,763
   
     
     
Total   108,626   (1.0 )% 109,771   (1.7 )% 111,620
   
     
     

*  Change not meaningful due to change in business model.

  2007 vs 2006   Transportation volumes increased as a result of the change to an open access, transportation-only interstate

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        pipeline company effective November 1, 2006.


 

2006 vs 2005

 

Prior to the merger on November 1, 2006, industrial volumes decreased primarily due to higher commodity gas prices relative to alternate fuels.

Retail Gas Marketing

        Retail Gas Marketing is comprised of SCANA Energy which operates in Georgia's natural gas market. Retail Gas Marketing revenues and net income were as follows:

Millions of dollars
  2007
  % Change
  2006
  % Change
  2005
Operating revenues   $ 584.2   (3.9 )% $ 608.1   (8.4 )% $ 664.0
Net income     27.5   (8.6 )%   30.1   24.9 %   24.1
 
  2007 vs 2006   Operating revenues decreased primarily due to lower average retail prices. Net income decreased primarily due to higher expenses, including bad debt expense.


 

2006 vs 2005

 

Operating revenues decreased primarily due to milder weather and customer conservation, resulting in lower customer usage, which was partially offset by higher average retail prices arising from higher commodity gas costs. Net income increased primarily due to decreased bad debt of $9.0 million and lower operating and customer service expenses of $6.2 million, partially offset by a margin decrease of $9.1 million, net of taxes.

        Delivered volumes totaled 34.1 million DT in 2007, 33.6 million DT in 2006 and 37.9 million DT in 2005.

Energy Marketing

        Energy Marketing is comprised of the Company's nonregulated marketing operations, excluding SCANA Energy. Energy Marketing operating revenues and net income (loss) were as follows:

Millions of dollars
  2007
  % Change
  2006
  % Change
  2005
 
Operating revenues   $ 1,167.7   23.1 % $ 948.7   0.3 % $ 945.5  
Net income (loss)     2.8   *     (0.4 ) (33.3 )%   (0.6 )

*  Greater than 100%.

  2007 vs 2006   Operating revenues increased primarily due to customer growth, some of which resulted from sales to customers formerly reported in the Gas Transmission segment now being reported in Energy Marketing. Net income increased due to higher margin on sales of $3.8 million, offset by higher operating expenses of $1.0 million.


 

2006 vs 2005

 

Operating revenues increased due primarily to higher sales volume. Net loss decreased due to lower operating expenses of $1.0 million, offset by lower margin on sales of $0.9 million.

        Delivered volumes totaled 154.9 million DT in 2007, 123.9 million DT in 2006 and 101.0 million DT in 2005. Delivered volumes increased in 2007 compared to 2006 primarily as a result of customer growth, including sales to customers formerly reported in the Gas Transmission segment. Delivered volumes increased in 2006 compared to 2005 primarily as a result of increased service to electric generation facilities and municipalities in Georgia and South Carolina.

Other Operating Expenses

        Other operating expenses arising from the operating segments previously discussed were as follows:

Millions of dollars
  2007
  % Change
  2006
  % Change
  2005
Other operation and maintenance   $ 648.2   4.7 % $ 619.2   (2.0 )% $ 632.0
Depreciation and amortization     323.4   (2.7 )%   332.4   (34.8 )%   509.9
Other taxes     160.2   5.5 %   151.8   4.7 %   145.0
   
     
     
Total   $ 1,131.8   2.6 % $ 1,103.4   (14.3 )% $ 1,286.9
   
     
     
 
  2007 vs 2006   Other operation and maintenance expenses increased by $4.6 million due to higher generation, transmission and distribution expenses, by $19.7 million due to higher incentive compensation and other benefits and by $4.7 million due to higher bad debt expense at Retail Gas Marketing. Depreciation and amortization expense decreased by $19.8 million due to lower accelerated depreciation of the

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        back-up dam at Lake Murray in 2007 compared to 2006 (see Income Taxes — Recognition of Synthetic Fuel Tax Credits), partially offset by $11.4 million due to net property additions. Other taxes increased primarily due to higher property taxes.


 

2006 vs 2005

 

Other operation and maintenance expenses decreased by $13.9 million due to lower bad debts and by $9.5 million due to lower operating and customer service expenses, both at retail gas marketing, and by $22.5 million due to decreased incentive compensation expense. These decreases were partially offset by $14.2 million due to increased generation, transmission and distribution expenses, by $3.6 million due to lower pension income and by $2.0 million due to higher customer service expenses at SCE&G. Depreciation and amortization expense decreased by $185.8 million due to lower accelerated depreciation of the back-up dam at Lake Murray in 2006 (see
Income Taxes — Recognition of Synthetic Fuel Tax Credits), partially offset by $6.7 million due to property additions and higher depreciation rates at SCE&G. Other taxes increased primarily due to higher property taxes.

Other Income (Expense)

        Other income (expense) includes the results of certain incidental (nonutility) activities and the activities of certain nonregulated subsidiaries. Other income (expense) declined in 2007 compared to 2006 primarily due to lower royalties earned in connection with the operation by a former subsidiary of a synthetic fuel plant. Components of other income (expense) were as follows:

Millions of dollars
  2007
  % Change
  2006
  % Change
  2005
 
Other revenues   $ 90.3   (36.2 )% $ 141.6   (42.9 )% $ 248.1  
Other expenses     (48.2 ) (48.2 )%   (93.1 ) (53.5 )%   (200.3 )
Gain on sale of investments             (100.0 )%   7.2  
Gains on sales of assets     9.5   *     3.4   100.0 %   1.7  
   
     
     
 
Total   $ 51.6   (0.6 )% $ 51.9   (8.5 )% $ 56.7  
   
     
     
 

*  Greater than 100%

  2007 vs 2006   Other revenues decreased by $32.0 million due to lower power marketing activities and by $26.6 million due to lower fees received for management and maintenance services for a nonaffiliated synthetic fuel production facility, as discussed at Income Taxes — Recognition of Synthetic Fuel Tax Credits below. These decreases were partially offset by $5.8 million of interest income related to the sale of a bankruptcy claim and by $1.9 million due to lower partnership losses, also as discussed at Income Taxes — Recognition of Synthetic Fuel Tax Credits below.

 

 

 

 

Other expenses decreased $31.2 million due to lower power marketing activities, by $19.4 million due to lower management service expenses incurred, as discussed at
Income Taxes — Recognition of Synthetic Fuel Tax Credits below, and by $8.7 million related to a FERC power marketing settlement in 2006. These decreases were partially offset by $7.6 million related to the settlement of propane litigation in 2006.


 

2006 vs 2005

 

Other revenues decreased $91.5 million due to lower power marketing activities, $10.8 million due to the termination of a contract to operate a steam combustion turbine at the United States Department of Energy (DOE) Savannah River Site and by $4.3 million due to lower carrying costs recognized on the unrecovered balance of the Lake Murray back-up dam project and lower management service fees of $10.0 million, as discussed at
Income Taxes — Recognition of Synthetic Fuel Tax Credits below. These decreases were partially offset by higher interest income of $9.4 million and higher third-party coal sales revenue of $4.8 million.

 

 

 

 

Other expenses decreased by $90.6 million due to lower power marketing activities and $4.4 million due to the termination of the DOE's

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        Savannah River Site contract. These decreases were partially offset by increased charges in 2006 of $8.7 million related to the settlement of the FERC power marketing matter and higher expenses to support third-party coal sales of $3.6 million.

Interest Expense

        Components of interest expense, net of the debt component of AFC, were as follows:

Millions of dollars
  2007
  % Change
  2006
  % Change
  2005
Interest on long-term debt, net   $ 174.5   (8.6 )% $ 190.9   (4.3 )% $ 199.5
Other interest expense     31.8   70.1 %   18.7   48.4 %   12.6
   
     
     
Total   $ 206.3   (1.6 )% $ 209.6   (1.2 )% $ 212.1
   
     
     
 
  2007 vs 2006   Interest on long-term debt in 2007 compared to 2006 decreased primarily due to reduced long-term borrowings and lower interest rates. Other interest expense increased primarily due to higher principal balances and interest rates on short-term debt.


 

2006 vs 2005

 

Interest on long-term debt decreased primarily due to reduced long-term borrowings, partially offset by increased variable rates. Other interest expense increased primarily due to increased short-term borrowings.

Income Taxes

        Income tax expense increased primarily due to the recognition at SCE&G of $17.4 million in synthetic fuel tax credits during 2007 compared to $33.5 million during 2006 and due to changes in operating income.

    Recognition of Synthetic Fuel Tax Credits

        SCE&G holds equity-method investments in two partnerships involved in converting coal to synthetic fuel, the use of which fuel qualifies for federal income tax credits. Under an accounting methodology approved by the SCPSC in a January 2005 order, construction costs related to the Lake Murray back-up dam project are recorded in utility plant in service in a special dam remediation account, outside of rate base, and depreciation is being recognized against the balance in this account on an accelerated basis, subject to the availability of the synthetic fuel tax credits. The synthetic fuel tax credit program expired at the end of 2007.

        The level of depreciation expense and related tax benefit recognized in the income statement is equal to the available synthetic fuel tax credits, less partnership losses and other expenses, net of taxes. As a result, the balance of unrecovered costs in the dam remediation account declines as accelerated depreciation is recorded. Although these entries collectively have no impact on consolidated net income, they can have a significant impact on individual line items within the income statement. In addition, SCE&G records non-cash carrying costs on the unrecovered investment. The accelerated depreciation, synthetic fuel tax credits, partnership losses and the income tax benefit arising from such losses recognized by SCE&G during 2007 and 2006 are as follows:

Millions of dollars
  2007
  2006
  2005
 
Depreciation and amortization expense   $ (8.4 ) $ (28.2 ) $ (214.0 )
Income tax benefits:                    
  From synthetic fuel tax credits     16.7     30.0     179.0  
  From accelerated depreciation     3.2     10.8     81.8  
  From partnership losses     7.0     7.8     28.9  
   
 
 
 
Total income tax benefits     26.9     48.6     289.7  
Losses from Equity Method Investments     (18.5 )   (20.4 )   (75.7 )
   
 
 
 
Impact on Net Income   $   $   $  
   
 
 
 

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        The 2007 amounts are estimates based on preliminary benchmark information and reflect the likelihood that credits available in 2007 will be phased down pursuant to regulations which limit the credits based on the relative commodity price of crude oil. The 2005 amounts reflect the recognition of previously deferred tax credits upon initial implementation of the SCPSC-approved accounting methodology. See discussion below.

        The availability of the synthetic fuel tax credits is dependent on the average annual domestic wellhead price per barrel of crude oil as published by the U.S. Government. Under a phase-out provision included in the program, if the domestic wellhead reference price of oil per barrel for a given year is below an inflation-adjusted benchmark range for that year, all of the synthetic fuel tax credits that have been generated in that year are available for use. If that price is above the benchmark range, none of the tax credits are available. If that price falls within the benchmark range, a calculated portion of the credits is available.

        The benchmark price range for 2006 resulted in a phase-out of 33% for 2006. SCE&G's analysis indicates that the available synthetic fuel tax credits for 2007 also are likely to be impacted by the phase-out calculation. As such, in 2007 the Company recorded synthetic fuel tax credits and applied those credits to allow the recording of accelerated depreciation related to the balance in the dam remediation project account based on an estimate that only 32.7% of credits generated in 2007 will be available (phase-out of 67.3%). The U. S. Government is expected to publish the benchmark price range for 2007 in the second quarter of 2008, after which the Company will finalize its estimate of available credits.

        The Company does not expect available credits to be sufficient to fully recover the construction costs of dam remediation. To the extent that available credits are not sufficient to fully recover the construction costs of the dam remediation, regulatory action to allow recovery of those remaining costs will likely be sought. As of December 31, 2007, remaining unrecovered costs, based on management's recording of accelerated depreciation and related tax benefits, were $68.4 million. The Company expects these costs to be recoverable through rates.

        Finally, SCANA, through a subsidiary, provided management and maintenance services for a nonaffiliated synthetic fuel production facility. Reduced synthetic fuel tax credit availability under the above phase-out provisions also adversely impacted the level of payment SCANA received for these services. These services ceased on December 31, 2007, concurrent with the expiration of the synthetic fuel tax credit program.

LIQUIDITY AND CAPITAL RESOURCES

        Cash requirements for SCANA's regulated subsidiaries arise primarily from their operational needs, funding their construction programs and payment of dividends to SCANA. The ability of the regulated subsidiaries to replace existing plant investment, to expand to meet future demand for electricity and gas and to install equipment necessary to comply with environmental regulations, will depend on their ability to attract the necessary financial capital on reasonable terms. Regulated subsidiaries recover the costs of providing services through rates charged to customers. Rates for regulated services are generally based on historical costs. As customer growth and inflation occur and these subsidiaries continue their ongoing construction programs, rate increases will be sought. The future financial position and results of operations of the regulated subsidiaries will be affected by their ability to obtain adequate and timely rate and other regulatory relief, if requested.

        SCE&G expects to add additional base load electric generation in the 2015 to 2016 timeframe. Based on an evaluation of alternatives, SCE&G and Santee Cooper, a state-owned utility in South Carolina (joint

F-16



owners of Summer Station) have selected the Summer Station site as the preferred site if new nuclear generation is built. Due to the significant lead time required for construction of nuclear generation, the joint owners are preparing an application to the Nuclear Regulatory Commission (NRC) for a combined construction and operating license (COL) that would cover two new nuclear units. The COL application, if submitted, would be reviewed by the NRC for an estimated three years. SCE&G is uncertain if or when a COL would be submitted to the NRC. While SCE&G's current plans are to pursue the development of one or both of these nuclear units, these plans will continue to be influenced by many factors, including NRC licensing attainment, ongoing evaluation of relative construction and operating costs, the cost of competing fuels, regulatory and environmental requirements and financial market conditions.

        In May 2007, the Base Load Review Act (the Act) became law in South Carolina. This law is intended to allow a utility to recover prudently incurred capital and operating costs associated with new nuclear or coal-fired base load electric generating facilities larger than 350 megawatts. Based on an application filed by the utility under the Act, the SCPSC would review and rule on the prudency of the decision to build the plant. If the decision were found to be prudent, that finding would be binding on all future proceedings so long as the plant is constructed in accordance with the schedules, estimates and projections set forth in the approved application. In addition, beginning with the initial proceeding, the utility would be allowed to file revised rates with the SCPSC each year to incorporate any nuclear construction work in progress incurred. Requested rate adjustments would be based on the utility's updated cost of debt and capital structure. The cost of service and rate design would be based on the rates approved in the utility's most recent electric rate order. The utility may choose to file for a project-specific return on common equity or use the return from its most recent rate proceeding if the proceeding is less than five years old.

        SCANA's leverage ratio of debt to capital was approximately 55% at December 31, 2007. SCANA has publicly announced its desire to maintain this leverage ratio at 54% to 55%, but SCANA's ability to do so depends on a number of factors. If SCANA is not able to maintain its leverage ratio, SCANA's debt ratings may be affected, it may be required to pay higher interest rates on its long- and short-term indebtedness, and its access to the capital markets may be limited.

        The Company's current estimates of its capital expenditures for construction and nuclear fuel for 2008-2010, which are subject to continuing review and adjustment, are as follows:

Estimated Capital Expenditures

Millions of dollars
  2008
  2009
  2010
SCE&G:                  
  Electric Plant:                  
    Generation (including GENCO)   $ 481   $ 351   $ 652
    Transmission     47     60     52
    Distribution     171     168     172
    Other     40     41     19
  Nuclear Fuel     6     27     74
  Gas     65     61     67
  Common and other     13     11     7
   
 
 
    Total SCE&G     823     719     1,043
Other Companies Combined     167     161     126
   
 
 
    Total   $ 990   $ 880   $ 1,169
   
 
 

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        The Company's contractual cash obligations as of December 31, 2007 are summarized as follows:

Contractual Cash Obligations

Millions of dollars

  Total
  Less than
1 year

  1-3
years

  4-5
years

  More than
5 years

Long- and short-term debt (including interest and preferred stock redemptions)   $ 6,344   $ 1,201   $ 1,263   $ 663   $ 3,217
Capital leases     2     1     1        
Operating leases     36     16     14     1     5
Purchase obligations     592     338     253     1    
Other commercial commitments     7,247     1,391     2,050     1,070     2,736
   
 
 
 
 
  Total   $ 14,221   $ 2,947   $ 3,581   $ 1,735   $ 5,958
   
 
 
 
 

        Included in other commercial commitments are estimated obligations under forward contracts for natural gas purchases. Forward contracts for natural gas purchases include customary "make-whole" or default provisions, but are not considered to be "take-or-pay" contracts. Certain of these contracts relate to regulated businesses; therefore, the effects of such contracts on fuel costs are reflected in electric or gas rates. Also included in other commercial commitments is a "take-and-pay" contract for natural gas which expires in 2019 and estimated obligations for coal and nuclear fuel purchases. See Note 10 to the consolidated financial statements.

        Included in purchase obligations are customary purchase orders under which the Company has the option to utilize certain vendors without the obligation to do so. The Company may terminate such arrangements without penalty.

        In addition to the contractual cash obligations above, the Company sponsors a noncontributory defined benefit pension plan and an unfunded health care and life insurance benefit plan for retirees. The pension plan is adequately funded, and no further contributions are anticipated until after 2010. Cash payments under the health care and life insurance benefit plan were $11.4 million in 2007, and such annual payments are expected to increase to the $12-$13 million range in the future.

        In addition, the Company is party to certain New York Mercantile Exchange (NYMEX) futures contracts for which any unfavorable market movements are funded in cash. These derivatives are accounted for as cash flow hedges under SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," as amended, and their effects are reflected within other comprehensive income until the anticipated sales transactions occur. See further discussion at Quantitative and Qualitative Disclosures About Market Risk.

        The Company also has a legal obligation associated with the decommissioning and dismantling of Summer Station and other conditional asset retirement obligations that are not listed in the contractual cash obligations table. See Notes 1B and 10G to the consolidated financial statements.

        The Company does not have any recorded or unrecorded obligations under the provisions of Financial Accounting Standards Board Interpretation (FIN) 48, "Accounting for Uncertainty in Income Taxes."

        The Company anticipates that its contractual cash obligations will be met through internally generated funds, issuance of equity and the incurrence of additional short- and long-term indebtedness. The Company expects that it has or can obtain adequate sources of financing to meet its projected cash requirements for the foreseeable future.

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        Cash outlays for 2007 (actual) and 2008 (estimated) for certain expenditures are as follows:

Millions of dollars
  2007
  2008
Property additions and construction expenditures, including nuclear fuel, net of AFC   $ 725   $ 986
Investments     10    
   
 
  Total   $ 735   $ 986
   
 

Financing Limits and Related Matters

        The Company's issuance of various securities, including long-term and short-term debt, is subject to customary approval or authorization by regulatory bodies including state public service commissions and FERC. Descriptions of financing programs currently utilized by the Company follow.

        Pursuant to Section 204 of the Federal Power Act, SCE&G and GENCO must obtain FERC authority to issue short-term debt. The FERC has authorized SCE&G and GENCO to issue up to $700 million and $100 million, respectively, of unsecured promissory notes or commercial paper with maturity dates of one year or less. This authorization expires February 6, 2010.

        At December 31, 2007, SCANA, SCE&G (including Fuel Company) and PSNC Energy had available the following lines of credit and short-term borrowings outstanding:

Millions of dollars
  SCANA
  SCE&G
  PSNC Energy
 
Lines of credit:                    
  Committed long-term (total and available, expire December 2011)   $ 200   $ 650   $ 250  
  Uncommitted(a):                    
    Total   $ 78          
    Used by SCANA     7          
    Available for use     71          
Short-term borrowings outstanding:                    
  Bank loans/commercial paper (270 or fewer days)   $ 7   $ 464   $ 157  
  Weighted average interest rate     5.10 %   5.74 %   5.74 %
(a)
SCANA, SCE&G or a combination may use the line of credit.

        SCANA's Restated Articles of Incorporation do not limit the dividends that may be paid on its common stock. However, SCE&G's Restated Articles of Incorporation and its bond indenture each contain provisions that, under certain circumstances, which the Company considers to be remote, could limit the payment of cash dividends on SCE&G's common stock.

    SCANA Corporation

        SCANA has in effect an indenture which permits the issuance from time to time of unsecured debt securities, including its medium-term note debt securities. The indenture contains no specific limit on the amount of unsecured debt securities which may be issued.

    South Carolina Electric & Gas Company

        SCE&G is subject to a bond indenture dated April 1, 1993 (Mortgage) covering substantially all of its electric properties under which all of its currently outstanding First Mortgage Bonds has been, and all of its future mortgage-backed debt (Bonds) will be, issued. Bonds may be issued under the Mortgage in an

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aggregate principal amount not exceeding the sum of (1) 70% of Unfunded Net Property Additions (as therein defined), (2) the aggregate principal amount of retired Bonds and (3) cash deposited with the trustee. Bonds, other than certain Bonds issued on the basis of retired Bonds, will be issuable under the Mortgage only if Adjusted Net Earnings (as therein defined) for 12 consecutive months out of the 18 months immediately preceding the month of issuance are at least twice (2.0) the annual interest requirements on all outstanding Bonds and Bonds to be outstanding (Bond Ratio). For the year ended December 31, 2007, the Bond Ratio was 7.08.

        SCE&G's Restated Articles of Incorporation (Articles) prohibit issuance of additional shares of preferred stock without the consent of the preferred shareholders unless net earnings (as therein defined) for the 12 consecutive months immediately preceding the month of issuance are at least one and one-half times (1.5) the aggregate of all interest charges and preferred stock dividend requirements on all shares of preferred stock outstanding immediately after the proposed issue (Preferred Stock Ratio). For the year ended December 31, 2007, the Preferred Stock Ratio was 2.08.

        The Articles also require the consent of a majority of the total voting power of SCE&G's preferred stock before SCE&G may issue or assume any unsecured indebtedness if, after such issue or assumption, the total principal amount of all such unsecured indebtedness would exceed ten percent of the aggregate principal amount of all of SCE&G's secured indebtedness and capital and surplus (the Ten Percent Test). No such consent is required to enter into agreements for payment of principal, interest and premium for securities issued for pollution control purposes. At December 31, 2007, the Ten Percent Test would have limited total issuances of unsecured indebtedness to approximately $445.4 million. Unsecured indebtedness at December 31, 2007, totaled $436.3 million, and was comprised primarily of short-term borrowings.

Financing Cash Flows

        During 2007 the Company experienced net cash outflows related to financing activities of $67 million primarily due to the payment of dividends, which were partially funded by net increases in short-term borrowings.

        The Company uses interest rate swap agreements to manage interest rate risk. These swap agreements provide for the Company to pay variable and receive fixed rate interest payments and are designated as fair value hedges of certain debt instruments. The Company may terminate a swap agreement and may replace it with a new swap also designated as a fair value hedge. Payments received upon termination of such swaps are recorded as basis adjustments to long-term debt and are amortized as reductions to interest expense over the term of the underlying debt. At December 31, 2007, the estimated fair value of the Company's swaps totaled a $0.6 million gain related to combined notional amounts of $16.0 million.

        In anticipation of the issuance of debt, the Company may use interest rate lock or similar swap agreements to manage interest rate risk. These arrangements are designated as cash flow hedges. Payments made or received upon termination of such agreements by regulated subsidiaries are recorded in regulatory assets or regulatory liabilities, respectively, and if by the holding company, are recorded in accumulated other comprehensive income. Payments made or received are amortized to interest expense over the term of the underlying debt. As permitted by SFAS 104, "Statement of Cash Flows — Net Reporting of Certain Cash Receipts and Cash Payments and Classification of Cash Flows from Hedging Transactions," payments received or made are classified as financing activities in the consolidated statement of cash flows.

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        In June 2007 SCANA entered into an agreement to issue and sell Floating Rate Senior Notes due June 1, 2034, in an aggregate principal amount of between $90 million and $110 million. In December 2007 SCANA issued $40 million of the Floating Rate Senior Notes. The balance of the notes are to be issued in December 2008 and June 2009. At December 31, 2007 the estimated fair value of the Company's forward starting interest rate swap related to the Floating Rate Senior Notes totaled $7.2 million (loss).

        In the fourth quarter of 2007 SCE&G entered into several 30-year forward-starting swaps with an aggregate notional of $250 million. These swaps were terminated in January 2008 concurrent with the issuance by SCE&G of $250 million of its Bonds. The loss of approximately $14.0 million on the settlement of these swaps will be amortized over the 30-year life of the Bonds.

        For additional information on significant financing activities, see Note 4 to the consolidated financial statements.

        On February 14, 2008, SCANA increased the quarterly cash dividend rate on SCANA common stock to $.46 per share, an increase of 4.5%. The new dividend is payable April 1, 2008 to stockholders of record on March 10, 2008.

ENVIRONMENTAL MATTERS

        The Company's regulated operations are subject to extensive regulation by various federal and state authorities in the areas of air quality, water quality, control of toxic substances and hazardous and solid wastes. Applicable statutes and rules include the Clean Air Act, as amended (CAA), the Clean Air Interstate Rule (CAIR), the Clean Air Mercury Rule (CAMR), the Clean Water Act, the Nuclear Waste Policy Act of 1982 (Nuclear Waste Act) and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), among others. Compliance with these environmental requirements involves significant capital and operating costs, which the Company expects to recover through existing ratemaking provisions.

        For the three years ended December 31, 2007, the Company's capital expenditures for environmental control totaled $261.3 million. These expenditures were in addition to environmental expenditures included in "Other operation and maintenance" expenses, which were $34.4 million during 2007, $28.7 million during 2006, and $25.2 million during 2005. It is not possible to estimate all future costs related to environmental matters, but forecasts for capitalized environmental expenditures for the Company are $280.2 million for 2008 and $306.6 million for the four-year period 2009-2012. These expenditures are included in the Company's Estimated Capital Expenditures table, discussed in Liquidity and Capital Resources, and include the matters discussed below.

        In addition, the Company is monitoring federal legislative proposals that, among other things, may require significant reductions in carbon dioxide and other greenhouse gas emissions widely believed to contribute to global climate change. Such legislation could impose a tax based on the carbon content of primary fossil fuels used by the Company, such as coal and natural gas. Other proposals call for implementation of a cap and trade program as a means of meeting stringent new emissions standards. A national mandatory renewable portfolio standard (RPS) may also be considered. Under an RPS, electric utilities would be required to generate a specific percentage of their power from sources deemed to be "climate-friendly," such as solar, wind, geothermal and agricultural waste, over varying periods of time. The Company cannot predict the outcome of these proposals.

        At the state level, no significant environmental legislation that would affect the Company's operations advanced during 2007. The Company cannot predict whether such legislation will be introduced or enacted in 2008,

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or if new regulations or changes to existing regulations at the state or federal level will be implemented in the coming year.

Air Quality

        The United States Environmental Protection Agency (EPA) issued CAIR as a final rule in 2005 known as CAIR. CAIR requires the District of Columbia and 28 states, including South Carolina, to reduce nitrogen oxide and sulfur dioxide emissions in order to attain mandated state levels. CAIR sets emission limits to be met in two phases beginning in 2009 and 2015, respectively, for nitrogen oxide and beginning in 2010 and 2015, respectively, for sulfur dioxide. Numerous states, environmental organizations, industry groups and individual companies have challenged the rule, seeking a change in the method CAIR uses to allocate sulfur dioxide emission allowances. The Company believes that installation of additional air quality controls will be needed to meet the CAIR requirements. Although compliance plans and costs to comply with the rule have not been determined, it is believed that such costs will be material and will be recoverable through rates.

        The EPA issued a final rule referred to as CAMR in 2005 establishing a mercury emissions cap and trade program for coal-fired power plants that required limits to be met in two phases, in 2010 and 2018. Numerous parties challenged the rule. On February 8, 2008, the United States Circuit Court for the District of Columbia vacated the rule for electric utility steam generating units. The Company cannot predict the effect of this ruling on implementation of CAMR state implementation plans and newly promulgated CAMR regulations by the states.

        The EPA has undertaken an enforcement initiative against the utilities industry, and the United States Department of Justice (DOJ) has brought suit against a number of utilities in federal court alleging violations of the CAA. At least two of these suits have either been tried or have had substantive motions decided — neither favorable to the industry. One of the decisions is not believed to be binding as precedent and the other one, described more fully below, may be.

        On April 2, 2007, in a unanimous ruling, the U.S. Supreme Court vacated a decision by the U.S. Court of Appeals for the Fourth Circuit that effectively halted the EPA enforcement action against Duke Energy Corporation (Duke) for allegedly performing plant modifications without a required permit. Such modifications for life extension and modernization as performed by Duke and other utilities, including SCE&G, were common within the industry. Hence this decision may heighten the potential exposure of utilities to enforcement actions such as those already brought against Duke and others, many of which had not proceeded pending this Supreme Court decision. The ultimate outcome of this matter cannot be predicted.

        Prior to the suits, those utilities had received requests for information under Section 114 of the CAA and were issued Notices of Violation. The basis for these suits is the assertion by the EPA, under a stringent rule known as New Source Review (NSR), that maintenance activities undertaken by the utilities over the past 20 or more years constitute "major modifications" which would have required the installation of costly Best Available Control Technology (BACT). SCE&G and GENCO have received and responded to Section 114 requests for information related to Canadys, Wateree and Williams Stations. The regulations under the CAA provide certain exemptions to the definition of "major modifications," including an exemption for routine repair, replacement or maintenance. On October 27, 2003, EPA published a final revised NSR rule in the Federal Register with an effective date of December 26, 2003. The rule represents an industry-favorable departure from certain positions advanced by the federal government in the NSR enforcement initiative. However, on motion of several Northeastern states, the United States Circuit Court of

F-22



Appeals for the District of Columbia stayed the effect of the final rule. The ultimate application of the final rule to the Company is uncertain. The Company has analyzed each of the activities covered by the EPA's requests and believes each of these activities is covered by the exemption for routine repair, replacement and maintenance under what it believes is a fair reading of both the prior regulation and the contested revised regulation. The regulations also provide an exemption for an increase in emissions resulting from increased hours of operation or production rate and from demand growth.

        The current state of continued DOJ enforcement actions is the subject of industry-wide speculation, but it is possible that the EPA will commence enforcement actions against SCE&G and GENCO, and the EPA has the authority to seek penalties at the rate of up to $32,500 per day for each violation. The EPA also could seek installation of BACT (or equivalent) at the three plants. The Company believes that any enforcement actions relative to the Company's compliance with the CAA would be without merit. The Company has completed installation of selective catalytic reactors at Wateree and Williams for nitrogen oxides control and is proceeding with plans to install sulfur dioxide scrubbers at both of these stations to meet CAIR regulations. These actions would mitigate many of the concerns with NSR. SCE&G and GENCO expect to incur capital expenditures totaling approximately $450 million over the 2007-2010 period to install this new equipment. SCE&G and GENCO expect to have increased operation and maintenance costs of approximately $2.4 million in 2010 and $16 million in 2011 and each year thereafter. To meet compliance requirements for the years 2012-2016, SCE&G and GENCO anticipate additional capital expenditures totaling approximately $480 million.

Water Quality

        The Clean Water Act, as amended, provides for the imposition of effluent limitations that require treatment for wastewater discharges. Under the Clean Water Act, compliance with applicable limitations is achieved under a national permit program. Discharge permits have been issued for all, and renewed for nearly all, of SCE&G's and GENCO's generating units. Concurrent with renewal of these permits, the permitting agency has implemented a more rigorous program of monitoring and controlling discharges, has modified the requirements for cooling water intake structures, and has required strategies for toxicity reduction in wastewater streams. The Company is conducting studies and is developing or implementing compliance plans for these initiatives. Congress is expected to consider further amendments to the Clean Water Act. Such legislation may include limitations to mixing zones and toxicity-based standards. These provisions, if passed, could have a material adverse impact on the financial condition, results of operations and cash flows of the Company, SCE&G and GENCO.

Hazardous and Solid Wastes

        The Nuclear Waste Act required that the United States government accept and permanently dispose of high-level radioactive waste and spent nuclear fuel by January 31, 1998. The Nuclear Waste Act also imposed on utilities the primary responsibility for storage of their spent nuclear fuel until the repository is available. SCE&G entered into a Standard Contract for Disposal of Spent Nuclear Fuel and/or High-Level Radioactive Waste with the DOE in 1983. As of December 31, 2007, the federal government has not accepted any spent fuel from Summer Station or any other utility, and it remains unclear when the repository may become available. SCE&G has on-site spent nuclear fuel storage capability until at least 2018 and expects to be able to expand its storage capacity to accommodate the spent nuclear fuel

F-23



output for the life of Summer Station through dry cask storage or other technology as it becomes available.

        The provisions of CERCLA authorize the EPA to require the clean-up of hazardous waste sites. In addition, the states of South Carolina and North Carolina have similar laws. The Company maintains an environmental assessment program to identify and evaluate current and former operations sites that could require environmental clean-up. In addition, regulators from the EPA and other federal or state agencies periodically notify the Company that it may be required to perform or participate in the investigation and remediation of a hazardous waste site. As site assessments are initiated, estimates are made of the amount of expenditures, if any, deemed necessary to investigate and remediate each site. These estimates are refined as additional information becomes available; therefore, actual expenditures may differ significantly from the original estimates. Amounts estimated and accrued to date for site assessments and clean-up relate solely to regulated operations. Such amounts are recorded in deferred debits and amortized with recovery provided through rates. The Company has assessed the following matters.

Electric Operations

        SCE&G has been named, along with 53 others, by the EPA as a potentially responsible party (PRP) at the Alternate Energy Resources, Inc. (AER) Superfund site located in Augusta, Georgia. The EPA placed the site on the National Priorities List on April 19, 2006. AER conducted hazardous waste storage and treatment operations from 1975 to 2000, when the site was abandoned. While operational, AER processed fuels from waste oils, treated industrial coolants and oil/water emulsions, recycled solvents and blended hazardous waste fuels. During that time, SCE&G occasionally used AER for the processing of waste solvents, oily rags and oily wastewater. The EPA and the State of Georgia have documented that a release or releases have occurred at the site leading to contamination of groundwater, surface water and soils. The EPA and the State of Georgia have conducted a preliminary assessment and site inspection. The site has not been remediated nor has a clean-up cost been estimated. Although a basis for the allocation of clean-up costs among the PRPs is unclear, SCE&G does not believe that its involvement at this site would result in an allocation of costs that would have a material adverse impact on its results of operations, cash flows or financial condition. Any cost allocated to SCE&G arising from the remediation of this site, net of insurance recoveries, if any, is expected to be recoverable through rates.

        SCE&G has been named, along with 29 others, by the EPA as a PRP at the Carolina Transformer Superfund site located in Fayetteville, North Carolina. The Carolina Transformer Company (CTC) conducted an electrical transformer rebuilding and repair operation at the site from approximately 1959 to 1986. During that time, SCE&G occasionally used CTC for the repair of existing transformers, purchase of new transformers and sale of used transformers. In 1984, the EPA initiated a remediation of PCB-contaminated soil and groundwater at the site. The EPA reports that it has spent $36 million to date. In 2008, SCE&G, along with other parties, reached a settlement with the EPA and the U.S. Department of Justice on this matter. The settlement, which is subject to court approval, would result in an allocation of costs, net of insurance recoveries, to SCE&G that is not material, and such costs are expected to be recoverable through rates.

Gas Distribution

        SCE&G is responsible for four decommissioned manufactured gas plant (MGP) sites in South Carolina which contain residues of by-product chemicals. These sites are in various stages of investigation, remediation and monitoring under work plans approved by the

F-24



South Carolina Department of Health and Environmental Control (DHEC). SCE&G anticipates that major remediation activities at these sites will continue until 2012 and will cost an additional $11.9 million. In addition, the National Park Service of the Department of the Interior made an initial demand to SCE&G for payment of $9.1 million for certain costs and damages relating to the MGP site in Charleston, South Carolina. SCE&G expects to recover any cost arising from the remediation of these four sites through rates. At December 31, 2007, deferred amounts, net of amounts previously recovered through rates and insurance settlements, totaled $16.7 million.

        PSNC Energy is responsible for environmental clean-up at five sites in North Carolina on which MGP residuals are present or suspected. PSNC Energy's actual remediation costs for these sites will depend on a number of factors, such as actual site conditions, third-party claims and recoveries from other PRPs. PSNC Energy has recorded a liability and associated regulatory asset of $4.6 million, which reflects its estimated remaining liability at December 31, 2007. PSNC Energy expects to recover through rates any costs, net of insurance recoveries, allocable to PSNC Energy arising from the remediation of these sites through rates.

REGULATORY MATTERS

        Material retail rate proceedings are described in more detail in Note 2 to the consolidated financial statements.

South Carolina Electric & Gas Company

        SCE&G is subject to the jurisdiction of the SCPSC as to retail electric and gas rates, service, accounting, issuance of securities (other than short-term borrowings) and other matters.

        In May 2007, the law was changed to revise the statutory definition of fuel costs which are passed through to customers to include certain variable environmental costs such as ammonia, lime, limestone and catalysts consumed in reducing or treating emissions. The revised definition also includes the cost of emission allowances used for sulfur dioxide, nitrogen oxide, and mercury and particulates.

        The Natural Gas Rate Stabilization Act of 2005 allows natural gas distribution companies to request annual adjustments to rates to reflect changes in revenues and expenses and changes in investment. Such annual adjustments are subject to certain qualifying criteria and review by the SCPSC.

Public Service Company of North Carolina, Incorporated

        PSNC Energy is subject to the jurisdiction of the NCUC as to gas rates, issuance of securities (other than notes with a maturity of two years or less or renewals of notes with a maturity of six years or less), accounting and other matters.

        On February 27, 2008, PSNC Energy filed a letter of intent with the NCUC indicating its intention to file an application for a general increase in its rates and charges on or about March 28, 2008.

        The United States Congress passed the Pipeline Safety Improvement Act of 2002 (the Pipeline Safety Act), directing the United States Department of Transportation (DOT) to establish the Integrity Management Rule for operations of natural gas systems with transmission pipelines located near moderate to high density populations. Of PSNC Energy's approximately 593 miles of transmission pipeline subject to the Pipeline Safety Act, approximately 57 miles are located within these areas. Fifty percent of these miles of pipeline were required to be assessed by December 2007, and the remainder by December 2012. Through December 2007, PSNC Energy has achieved a completion rate of eighty-five percent. Depending on the assessment method used, PSNC Energy will be required to reinspect these same miles of pipeline approximately every seven years. Though cost estimates for this program were

F-25



developed using various assumptions, each of which is subject to imprecision, PSNC Energy currently estimates the total cost through December 2012 to be $6.5 million for the initial assessments, not including any subsequent remediation that may be required. Effective November 1, 2004 the NCUC authorized deferral accounting for certain expenses incurred to comply with DOT's pipeline integrity management requirements. In accordance with an October 2006 NCUC rate order, $1.4 million in costs incurred and deferred through June 30, 2006 are now being recovered through rates over a three-year period. Additionally, the rate order approved continuance of deferred accounting treatment for certain pipeline integrity management expenses until resolution of PSNC Energy's next general rate proceeding.

Carolina Gas Transmission Corporation

        CGTC has approximately 74 miles of transmission line that are covered by the Integrity Management Rule of the Pipeline Safety Act. Though cost estimates for this project were developed using various assumptions, each of which is subject to imprecision, CGTC currently estimates the total cost to be $8.3 million for the initial assessments and any subsequent remediation required through December 2012.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

        Following are descriptions of the Company's accounting policies and estimates which are most critical in terms of reporting financial condition or results of operations.

Utility Regulation

        SCANA's regulated utilities are subject to the provisions of SFAS 71, "Accounting for the Effects of Certain Types of Regulation," which require them to record certain assets and liabilities that defer the recognition of expenses and revenues to future periods as a result of being rate-regulated. In the future, as a result of deregulation or other changes in the regulatory environment, the Company may no longer meet the criteria for continued application of SFAS 71 and could be required to write off its regulatory assets and liabilities. Such an event could have a material adverse effect on the results of operations, liquidity or financial position of the Company's Electric Distribution and Gas Distribution segments in the period the write-off would be recorded. See Note 1 to the consolidated financial statements for a description of the Company's regulatory assets and liabilities, including those associated with the Company's environmental assessment program.

        The Company's generation assets would be exposed to considerable financial risks in a deregulated electric market. If market prices for electric generation do not produce adequate revenue streams and the enabling legislation or regulatory actions do not provide for recovery of the resulting stranded costs, the Company could be required to write down its investment in those assets. The Company cannot predict whether any write-downs will be necessary and, if they are, the extent to which they would adversely affect the Company's results of operations in the period in which they would be recorded. As of December 31, 2007, the Company's net investments in fossil/hydro and nuclear generation assets were approximately $2.3 billion and $517 million, respectively.

Revenue Recognition and Unbilled Revenues

        Revenues related to the sale of energy are recorded when service is rendered or when energy is delivered to customers. Because customers of the Company's utilities and retail gas operations are billed on cycles which vary based on the timing of the actual reading of their electric and gas meters, the Company records estimates for unbilled revenues at the end of each reporting period. Such unbilled revenue amounts reflect estimates of the amount of energy delivered to customers since the date of the last reading of their meters. Such unbilled revenues reflect consideration of

F-26



estimated usage by customer class, the effects of different rate schedules, changes in weather and, where applicable, the impact of weather normalization provisions of rate structures. The accrual of unbilled revenues in this manner properly matches revenues and related costs. Accounts receivable included unbilled revenues of $175.5 million at December 31, 2007 and $177.6 million at December 31, 2006, compared to total revenues for each year 2007 and 2006 of $4.6 billion.

Provisions for Bad Debts and Allowances for Doubtful Accounts

        As of each balance sheet date, the Company evaluates the collectibility of accounts receivable and records allowances for doubtful accounts based on estimates of the level of expected write-offs. These estimates are based on, among other things, comparisons of the relative age of accounts, assigned credit ratings for commercial and industrial accounts, credit scores for residential customers in Georgia when available, and consideration of actual write-off history. The distribution segments of the Company's regulated utilities have established write-off histories and regulated service areas that tend to improve the recoverability of accounts and enable the utilities to reliably estimate their respective provisions for bad debts. The Company's Retail Gas Marketing segment operates in Georgia's deregulated natural gas market in which customers may obtain service from others without necessarily paying outstanding amounts and in which there are certain limitations on the Company's ability to effect timely shut-off of service for nonpayment. As such, estimation of the provision for bad debts for these accounts is subject to greater imprecision.

Nuclear Decommissioning

        Accounting for decommissioning costs for nuclear power plants involves significant estimates related to costs to be incurred many years in the future. Among the factors that could change SCE&G's accounting estimates related to decommissioning costs are changes in technology, changes in regulatory and environmental remediation requirements, and changes in financial assumptions such as discount rates and timing of cash flows. Changes in any of these estimates could significantly impact the Company's financial position and cash flows (although changes in such estimates should be earnings-neutral, because these costs are expected to be collected from ratepayers).

        SCE&G's two-thirds share of estimated site-specific nuclear decommissioning costs for Summer Station, including both the cost of decommissioning plant components that are and are not subject to radioactive contamination, totals $451.0 million, stated in 2006 dollars. Santee Cooper is responsible for decommissioning costs related to its one-third ownership interest in Summer Station. The cost estimate assumes that the site would be maintained over a period of 60 years in such a manner as to allow for subsequent decontamination that would permit release for unrestricted use.

        Under SCE&G's method of funding decommissioning costs, amounts collected through rates are invested in insurance policies on the lives of certain Company personnel. SCE&G transfers to an external trust fund the amounts collected through electric rates, insurance proceeds, and interest on proceeds, less expenses. The trusteed asset balance reflects the net cash surrender value of the insurance policies held by the trust. Management intends for the fund, including earnings thereon, to provide for all eventual decommissioning expenditures on an after-tax basis.

Accounting for Pensions and Other Postretirement Benefits

        The Company follows SFAS 87, "Employers' Accounting for Pensions," as amended by SFAS 158, "Employers' Accounting for Defined

F-27



Benefit Pension and Other Postretirement Plans," in accounting for the cost of its defined benefit pension plan. The Company's plan is adequately funded and as such, net pension income is reflected in the financial statements (see Results of Operations — Pension Income). SFAS 87 requires the use of several assumptions, the selection of which may have a large impact on the resulting benefit recorded. Among the more sensitive assumptions are those surrounding discount rates and expected long-term returns on assets. Net pension income of $17.4 million recorded in 2007 reflects the use of a 5.85% discount rate, derived using a cash flow matching technique, and an assumed 9.0% long-term rate of return on plan assets. The Company believes that these assumptions were, and that the resulting pension income amount was, reasonable. For purposes of comparison, using a discount rate of 5.60% in 2007 would have decreased the Company's pension income by $0.1 million. Had the assumed long-term rate of return on assets been 8.75%, the Company's pension income for 2007 would have been reduced by $2.2 million.

        The following information with respect to pension assets (and returns thereon) should also be noted.

        The Company determines the fair value of a majority of its pension assets utilizing market quotes, with the remaining fair value derived from modeling techniques that incorporate market data.

        In developing the expected long-term rate of return assumptions, the Company evaluates historical performance, targeted allocation amounts and expected payment terms. The plan's historical 10, 15, 20 and 25 year cumulative performance showed actual returns of 7.8%, 10.7%, 11.4% and 12.0%, respectively, all of which have been in excess of related broad indices. The 2007 expected long-term rate of return on assets of 9.0% was based on a target asset allocation of 70% with equity managers and 30% with fixed income managers. Management regularly reviews such allocations and periodically rebalances the portfolio when considered appropriate. For 2008, the expected long-term rate of return on assets will be 9.0%.

        The pension trust is adequately funded, and no contributions have been required since 1997. Management does not anticipate the need to make pension contributions until after 2012.

        Similar to its pension accounting, the Company follows SFAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," as amended by SFAS 158, in accounting for the cost of its postretirement medical and life insurance benefits. This plan is unfunded, so no assumptions related to rate of return on assets impact the net expense recorded; however, the selection of discount rates can significantly impact the actuarial determination of net expense. The Company used a discount rate of 5.85%, derived using a cash flow matching technique, and recorded a net SFAS 106 cost of $17.9 million for 2007. Had the selected discount rate been 5.60%, the expense for 2007 would have been $0.7 million higher. Because the plan provisions include "caps" on company per capita costs, healthcare cost inflation rate assumptions do not materially impact the net expense recorded.

Asset Retirement Obligations

        SFAS 143, "Accounting for Asset Retirement Obligations," together with Financial Accounting Standards Board Interpretation (FIN) 47, "Accounting for Conditional Asset Retirement Obligations," provides guidance for recording and disclosing liabilities related to future legally enforceable obligations to retire assets (ARO). SFAS 143 applies to legal obligations associated with the retirement of long-lived tangible assets that result from their acquisition, construction, development and normal operation. Because such obligations relate primarily to the Company's regulated utility operations, SFAS 143 and FIN 47 have no significant impact on results of operations. As of December 31, 2007, the Company has recorded

F-28



an ARO of $99 million for nuclear plant decommissioning (as discussed above) and an ARO of $209 million for other conditional obligations related to generation, transmission and distribution properties, including gas pipelines. All of the amounts recorded in connection with SFAS 143 and FIN 47 are based upon estimates which are subject to varying degrees of imprecision, particularly since such payments will be made many years in the future. Changes in these estimates will be recorded over time; however, these changes in estimates are not expected to materially impact results of operations so long as the regulatory framework for the Company's utilities remains in place.

OTHER MATTERS

Off-Balance Sheet Transactions

        Although SCANA invests in securities and business ventures, it does not hold investments in unconsolidated special purpose entities such as those described in SFAS 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," or as described in FIN 46(R), "Consolidation of Variable Interest Entities." SCANA does not engage in off-balance sheet financing or similar transactions, although it is party to incidental operating leases in the normal course of business, generally for office space, furniture, equipment and rail cars.

Claims and Litigation

        For a description of claims and litigation, see Note 10 to the consolidated financial statements.

F-29





QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        All financial instruments held by the Company described below are held for purposes other than trading.

Interest Rate Risk

        The tables below provide information about long-term debt issued by the Company and other financial instruments that are sensitive to changes in interest rates. For debt obligations, the tables present principal cash flows and related weighted average interest rates by expected maturity dates. For interest rate swaps, the figures shown reflect notional amounts, weighted average interest rates and related maturities. Fair values for debt and swaps represent quoted market prices.

 
  Expected Maturity Date
 
December 31, 2007 Millions of dollars
  2008
  2009
  2010
  2011
  2012
  Thereafter
  Total
  Fair Value
 
Long-Term Debt Issued:                                  
  Fixed Rate ($)   123.2   108.2   16.4   620.9   267.1   1,793.3   2,929.1   2,983.5  
    Average Fixed Interest Rate (%)   5.96   6.27   6.83   6.78   6.23   5.92   6.15      
  Variable Rate ($)   100.0       1.6   1.6   1.6   35.2   140.0   140.1  
    Average Variable Interest Rate (%)   5.27       6.47   6.47   6.47   6.47   5.61      
Interest Rate Swaps:                                  
  Pay Variable/Receive Fixed ($)   3.2   3.2   3.2   3.2   3.2       16.0   0.6  
    Average Pay Interest Rate (%)   8.02   8.02   8.02   8.02   8.02       8.02      
    Average Receive Interest Rate (%)   8.75   8.75   8.75   8.75   8.75       8.75      
  Pay Fixed/Receive Variable ($)           1.6   1.6   1.6   35.2   40.0   (7.2 )
    Average Pay Interest Rate (%)           6.47   6.47   6.47   6.47   6.47      
    Average Receive Interest Rate (%)           5.78   5.78   5.78   5.78   5.78      
 
 
  Expected Maturity Date
December 31, 2006 Millions of dollars
  2007
  2008
  2009
  2010
  2011
  Thereafter
  Total
  Fair Value
Long-Term Debt:                                
  Fixed Rate ($)   33.2   123.2   108.2   14.8   619.3   2,023.6   2,922.3   3,020.0
    Average Fixed Interest Rate (%)   7.17   5.95   6.27   6.87   6.78   5.95   6.16    
  Variable Rate ($)       100.0                   100.0   100.2
    Average Variable Interest Rate (%)       5.52                   5.52    
Interest Rate Swaps:                                
  Pay Variable/Receive Fixed ($)   28.2   3.2   3.2   3.2   3.2   3.2   44.2   0.1
    Average Pay Interest Rate (%)   8.50   8.55   8.55   8.55   8.55   8.55   8.52    
    Average Receive Interest Rate (%)   7.11   8.75   8.75   8.75   8.75   8.75   7.70    

        While a decrease in interest rates would increase the fair value of debt, it is unlikely that events which would result in a realized loss will occur.

        The above tables exclude long-term debt of $72 million at December 31, 2007 and $80 million at December 31, 2006, which amounts do not have a stated interest rate associated with them.

        In June 2007 SCANA entered into an agreement to issue and sell Floating Rate Senior Notes due June 1, 2034, in an aggregate principal amount of between $90 million and $110 million. In December 2007 SCANA issued $40 million of the Floating Rate Senior Notes. The remainder of the Notes are to be issued in December 2008 and June 2009. At December 31, 2007 the estimated fair value of the Company's forward starting interest rate swap related to the Floating Rate Senior Notes is depicted in the table above.

        In the fourth quarter of 2007 SCE&G entered into several 30-year forward starting

F-30



swap agreements in anticipation of its planned issuance of $250 million in debt. At December 31, 2007 the estimated fair value of SCE&G's forward starting interest rate swaps related to this expected debt issuance totaled $6.3 million (loss). On January 14, 2008 SCE&G issued $250 million of its First Mortgage Bonds having an annual interest rate of 6.05% and maturing on January 15, 2038. SCE&G terminated the forward starting interest rate swaps concurrent with the issuance of the debt. This debt and related swaps are not reflected in the table above.

Commodity Price Risk

        The following tables provide information about the Company's financial instruments that are sensitive to changes in natural gas prices. Weighted average settlement prices are per 10,000 DT. Fair value represents quoted market prices.

Expected Maturity:

 
  Futures Contracts
   
  Options
 
   
  Purchased Call
(Long)

  Purchased Put
(Short)

  Sold Put
(Long)

 
  Long
  Short
   
2008                        
Settlement Price(a)   7.90   7.50   Strike Price(a)   8.54   10.85   6.09
Contract Amount(b)   34.4   2.4   Contract Amount(b)   10.8   3.1   1.5
Fair Value(b)   32.5   2.2   Fair Value(b)   0.4    

2009

 

 

 

 

 

 

 

 

 

 

 

 
Settlement Price(a)   8.76                  
Contract Amount(b)   30.8                  
Fair Value(b)   30.0                  

2010

 

 

 

 

 

 

 

 

 

 

 

 
Settlement Price(a)   8.98                  
Contract Amount(b)   3.5                  
Fair Value(b)   3.1                  
(a)
Weighted average, in dollars
(b)
Millions of dollars

Swaps

  2008
  2009
  2010
Commodity Swaps:            
  Pay fixed/receive variable(b)   168.1   47.1   13.7
  Average pay rate(a)   8.687   8.960   9.717
  Average received rate(a)   7.804   8.729   8.949
  Fair Value(b)   151.0   45.9   12.6
 
Pay variable/receive fixed(b)

 

3.5

 


 

  Average pay rate(a)   8.645    
  Average received rate(a)   7.756    
  Fair Value(b)   3.2    

Basis Swaps:

 

 

 

 

 

 
  Pay variable/receive variable(b)   31.9   6.8   4.2
  Average pay rate(a)   7.853   8.775   8.685
  Average received rate(a)   7.854   8.749   8.689
  Fair Value(b)   31.9   6.8   4.1
(a)
Weighted average, in dollars
(b)
Millions of dollars

F-31


        The Company uses derivative instruments to hedge forward purchases and sales of natural gas, which create market risks of different types. See Note 9 to the consolidated financial statements.

        The NYMEX futures information above includes those financial positions of Energy Marketing, SCE&G and PSNC Energy. SCE&G's tariffs include a purchased gas adjustment (PGA) clause that provides for the recovery of actual gas costs incurred. The SCPSC has ruled that the results of these hedging activities are to be included in the PGA. As such, costs of related derivatives utilized by SCE&G to hedge gas purchasing activities are recoverable through the weighted average cost of gas calculation. The offset to the change in fair value of these derivatives is recorded as a regulatory asset or liability. PSNC Energy utilizes futures, options and swaps to hedge gas purchasing activities. PSNC Energy's tariffs also include a provision for the recovery of actual gas costs incurred. PSNC Energy records premiums, transaction fees, margin requirements and any realized and unrealized gains or losses from its hedging program in deferred accounts as a regulatory asset or liability for the over or under- recovery of gas costs.

F-32


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


SCANA Corporation:

        We have audited the accompanying consolidated balance sheets of SCANA Corporation and subsidiaries (the "Company") as of December 31, 2007 and 2006, and the related consolidated statements of income, changes in common equity and comprehensive income, and of cash flows for each of the three years in the period ended December 31, 2007. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

        In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of SCANA Corporation and subsidiaries at December 31, 2007 and 2006, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

        As discussed in Note 3 to the consolidated financial statements, the Company adopted Statement of Financial Accounting Standards No. 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans," effective December 31, 2006.

        We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company's internal control over financial reporting as of December 31, 2007, based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 29, 2008 expressed an unqualified opinion on the Company's internal control over financial reporting.

SIGNATURE

Columbia, South Carolina
February 29, 2008

F-33


SCANA Corporation
CONSOLIDATED BALANCE SHEETS


 
  December 31,
 
 
  2007
  2006
 
 
  (Millions of dollars)

 
Assets              
Utility Plant In Service   $ 9,807   $ 9,227  
Accumulated Depreciation and Amortization     (2,981 )   (2,815 )
   
 
 
      6,826     6,412  
Construction Work in Progress     400     326  
Nuclear Fuel, Net of Accumulated Amortization     82     39  
Acquisition Adjustments     230     230  
   
 
 
  Utility Plant, Net     7,538     7,007  
   
 
 
Nonutility Property and Investments:              
  Nonutility property, net of accumulated depreciation of $84 and $70     131     132  
  Assets held in trust, net-nuclear decommissioning     62     56  
  Other investments     82     88  
   
 
 
  Nonutility Property and Investments, Net     275     276  
   
 
 
Current Assets:              
  Cash and cash equivalents     134     201  
  Receivables, net of allowance for uncollectible accounts of $10 and $14     641     655  
  Receivables — affiliated companies     29     32  
  Inventories (at average cost):              
    Fuel     286     300  
    Materials and supplies     107     93  
    Emission allowances     33     22  
  Prepayments and other     62     39  
  Deferred income taxes     9     34  
   
 
 
  Total Current Assets     1,301     1,376  
   
 
 
Deferred Debits and Other Assets:              
  Pension asset, net     224     200  
  Emission allowances         27  
  Regulatory assets     712     792  
  Other     115     139  
   
 
 
  Total Deferred Debits and Other Assets     1,051     1,158  
   
 
 
    Total   $ 10,165   $ 9,817  
   
 
 

F-34



 
  December 31,
 
  2007
  2006
 
  (Millions of dollars)

Capitalization and Liabilities            
Shareholders' Investment:            
  Common equity   $ 2,960   $ 2,846
  Preferred stock (Not subject to purchase or sinking funds)     106     106
   
 
  Total Shareholders' Investment     3,066     2,952
Preferred Stock, Net (Subject to purchase or sinking funds)     7     8
Long-Term Debt, Net     2,879     3,067
   
 
  Total Capitalization     5,952     6,027
   
 

Current Liabilities:

 

 

 

 

 

 
  Short-term borrowings     627     487
  Current portion of long-term debt     233     43
  Accounts payable     401     414
  Accounts payable — affiliated companies     27     27
  Customer deposits and customer prepayments     85     85
  Taxes accrued     156     121
  Interest accrued     51     51
  Dividends declared     53     51
  Other     88     126
   
 
  Total Current Liabilities     1,721     1,405
   
 

Deferred Credits and Other Liabilities:

 

 

 

 

 

 
  Deferred income taxes, net     944     947
  Deferred investment tax credits     104     120
  Asset retirement obligations     307     292
  Postretirement benefits     185     194
  Regulatory liabilities     830     714
  Other     122     118
   
 
  Total Deferred Credits and Other Liabilities     2,492     2,385
   
 
Commitments and Contingencies (Note 10)        
   
 
      Total   $ 10,165   $ 9,817
   
 

See Notes to Consolidated Financial Statements.

F-35


SCANA Corporation
CONSOLIDATED STATEMENTS OF INCOME


 
  Years Ended December 31,
 
 
  2007
  2006
  2005
 
 
  (Millions of dollars, except per share amounts)

 
Operating Revenues:                    
  Electric   $ 1,954   $ 1,877   $ 1,909  
  Gas — regulated     1,105     1,257     1,405  
  Gas — nonregulated     1,562     1,429     1,463  
   
 
 
 
  Total Operating Revenues     4,621     4,563     4,777  
   
 
 
 
Operating Expenses:                    
  Fuel used in electric generation     662     615     618  
  Purchased power     33     28     37  
  Gas purchased for resale     2,161     2,213     2,399  
  Other operation and maintenance     648     619     632  
  Depreciation and amortization     324     333     510  
  Other taxes     160     152     145  
   
 
 
 
  Total Operating Expenses     3,988     3,960     4,341  
   
 
 
 
Operating Income     633     603     436  
   
 
 
 
Other Income (Expense):                    
  Other income     90     142     248  
  Other expenses     (48 )   (93 )   (200 )
  Interest charges, net of allowance for borrowed funds used during construction of $13, $8 and $3     (206 )   (209 )   (212 )
  Gain on sale of investments and assets     9     3     9  
  Preferred dividends of subsidiary     (7 )   (7 )   (7 )
  Allowance for equity funds used during construction     2          
   
 
 
 
  Total Other Expense     (160 )   (164 )   (162 )
   
 
 
 
Income Before Income Taxes (Benefit) Losses from Equity Method Investments and Cumulative Effect of Accounting Change     473     439     274  
Income Tax Expense (Benefit)     140     119     (118 )
   
 
 
 
Income Before Losses from Equity Method Investments and Cumulative Effect of Accounting Change     333     320     392  
Losses from Equity Method Investments     (13 )   (16 )   (72 )
Cumulative Effect of Accounting Change, net of taxes         6      
   
 
 
 
Net Income   $ 320   $ 310   $ 320  
   
 
 
 
Basic and Diluted Earnings Per Share of Common Stock:                    
Before Cumulative Effect of Accounting Change   $ 2.74   $ 2.63   $ 2.81  
Cumulative Effect of Accounting Change, net of taxes         .05      
   
 
 
 
Basic and Diluted Earnings Per Share   $ 2.74   $ 2.68   $ 2.81  
   
 
 
 
Weighted Average Common Shares Outstanding (Millions)     116.7     115.8     113.8  

See Notes to Consolidated Financial Statements.

F-36


SCANA Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS


 
  For the Years Ended December 31,
 
 
  2007
  2006
  2005
 
 
  (Millions of dollars)

 
Cash Flows From Operating Activities:                    
Net Income   $ 320   $ 310   $ 320  
Adjustments to reconcile net income to net cash provided from operating activities:                    
  Cumulative effect of accounting change, net of taxes         (6 )    
  Excess losses (earnings), net of distributions from equity method investments     14     23     72  
  Depreciation and amortization     330     347     518  
  Amortization of nuclear fuel     19     17     18  
  Gain on sale of assets and investments     (9 )   (3 )   (9 )
  Hedging activities     7     (15 )   4  
  Allowance for equity funds used during construction     (2 )        
  Carrying cost recovery     (6 )   (7 )   (11 )
  Cash provided (used) by changes in certain assets and liabilities:                    
    Receivables, net     17     218     (174 )
    Inventories     (41 )   (80 )   (188 )
    Prepayments and other     (23 )   (2 )    
    Pension asset     (16 )   (13 )   (17 )
    Other regulatory assets     40     (32 )   (28 )
    Deferred income taxes, net     22     5     25  
    Regulatory liabilities     94     9     (159 )
    Postretirement benefits     7     (3 )   6  
    Accounts payable     (38 )   (77 )   79  
    Taxes accrued     35     9     (20 )
    Interest accrued         (1 )   1  
  Changes in fuel adjustment clauses     (19 )   3     (7 )
  Changes in other assets     13     30     (17 )
  Changes in other liabilities     (34 )   21     54  
   
 
 
 
Net Cash Provided From Operating Activities     730     753     467  
   
 
 
 
Cash Flows From Investing Activities:                    
  Utility property additions and construction expenditures     (712 )   (485 )   (366 )
  Proceeds from sale of assets and investments     10     21     10  
  Nonutility property additions     (13 )   (42 )   (19 )
  Investments     (10 )   (25 )   (18 )
   
 
 
 
Net Cash Used For Investing Activities     (725 )   (531 )   (393 )
   
 
 
 
Cash Flows From Financing Activities:                    
  Proceeds from issuance of common stock     6     79     84  
  Proceeds from issuance of debt     40     132     221  
  Repayments of debt     (34 )   (156 )   (470 )
  Redemption/repurchase of equity securities     (14 )       (1 )
  Dividends     (210 )   (198 )   (181 )
  Short-term borrowings, net     140     60     216  
   
 
 
 
Net Cash Used For Financing Activities     (72 )   (83 )   (131 )
   
 
 
 
Net Increase (Decrease) in Cash and Cash Equivalents     (67 )   139     (57 )
Cash and Cash Equivalents, January 1     201     62     119  
   
 
 
 
Cash and Cash Equivalents, December 31   $ 134   $ 201   $ 62  
   
 
 
 
Supplemental Cash Flow Information:                    
  Cash paid for  — Interest (net of capitalized interest of $13, $8 and $3)   $ 172   $ 212   $ 213  
                             — Income taxes     76     100     58  
Noncash Investing and Financing Activities:                    
  Accrued construction expenditures     82     54     36  

See Notes to Consolidated Financial Statements.

F-37


SCANA Corporation
CONSOLIDATED STATEMENTS OF CHANGES IN COMMON EQUITY AND COMPREHENSIVE INCOME


 
  Common Stock
   
  Other Comprehensive Income (Loss)
   
 
 
  Retained Earnings
   
 
 
  Shares
  Amount
  Total
 
 
  Millions

 

Balance as of December 31, 2004

 

113

 

$

1,248

 

$

1,207

 

$

(4

)

$

2,451

 
   
 
 
 
 
 
Comprehensive Income (Loss):                              
  Net Income               320           320  
  Other Comprehensive Income (Loss)                          
   
 
 
 
 
 
    Total Comprehensive Income               320         320  
Issuance of Common Stock upon Exercise of Options   2     84                 84  
Dividends Declared on Common Stock               (178 )         (178 )
   
 
 
 
 
 
Balance as of December 31, 2005   115     1,332     1,349     (4 )   2,677  
   
 
 
 
 
 
Comprehensive Income (Loss):                              
  Net Income               310           310  
  Other Comprehensive Income (Loss), net of taxes $(8)                     (14 )   (14 )
   
 
 
 
 
 
    Total Comprehensive Income               310     (14 )   296  
Deferred Cost of Employee Benefit Plans, net of taxes $(7)                     (11 )   (11 )
Issuance of Common Stock upon Exercise of Options   2     79                 79  
Dividends Declared on Common Stock               (195 )         (195 )
   
 
 
 
 
 
Balance as of December 31, 2006   117     1,411     1,464     (29 )   2,846  
   
 
 
 
 
 
Comprehensive Income (Loss):                              
  Net Income               320           320  
  Other Comprehensive Income, net of taxes $3                     7     7  
   
 
 
 
 
 
    Total Comprehensive Income               320     7     327  
Issuance of Common Stock Upon Exercise of Options         9     (3 )         6  
Repurchase of Common Stock         (13 )               (13 )
Dividends Declared on Common Stock               (206 )         (206 )
   
 
 
 
 
 
Balance as of December 31, 2007   117   $ 1,407   $ 1,575   $ (22 ) $ 2,960  
   
 
 
 
 
 

        The Company adopted SFAS 158 at December 31, 2006 and recorded in accumulated other comprehensive income certain gains, losses, prior service costs and credits that had not yet been recognized through net periodic benefit cost, net of tax effects.

See Notes to Consolidated Financial Statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Organization and Principles of Consolidation

        SCANA Corporation (SCANA, and together with its consolidated subsidiaries, the Company), a South Carolina corporation, is a holding company. The Company engages predominantly in the generation and sale of electricity to wholesale and retail customers in South Carolina and in the purchase, sale and transportation of natural gas to wholesale and retail customers in South Carolina, North Carolina and Georgia. The Company also conducts other energy-related businesses and provides fiber optic communications in South Carolina.

        The accompanying Consolidated Financial Statements reflect the accounts of SCANA, the following wholly-owned subsidiaries, and one other wholly-owned subsidiary in liquidation.

Regulated businesses
South Carolina Electric & Gas Company (SCE&G)
South Carolina Fuel Company, Inc. (Fuel Company)
South Carolina Generating Company, Inc. (GENCO)
Public Service Company of North Carolina, Incorporated (PSNC Energy)
Carolina Gas Transmission Corporation (CGTC)

Nonregulated businesses
SCANA Energy Marketing, Inc.
SCANA Communications, Inc. (SCI)
ServiceCare, Inc.
SCANA Resources, Inc.
SCANA Services, Inc.
SCANA Corporate Security Services, Inc.
Westex Holdings, LLC

        The Company reports certain investments using the cost or equity method of accounting, as appropriate. Significant intercompany balances and transactions have been eliminated in consolidation, except as permitted by Statement of Financial Accounting Standards (SFAS) 71, "Accounting for the Effects of Certain Types of Regulation," which provides that profits on intercompany sales to regulated affiliates are not eliminated if the sales price is reasonable and the future recovery of the sales price through the rate-making process is probable.

B. Basis of Accounting

        The Company accounts for its regulated utility operations, assets and liabilities in accordance with the provisions of SFAS 71, which requires cost-based, rate-regulated utilities to recognize in their financial statements certain revenues and expenses in different time periods than do enterprises that are not rate-regulated. As a result, the Company has recorded regulatory assets and regulatory liabilities, summarized as follows.

 
  December 31,
Millions of dollars
  2007
  2006
Regulatory Assets:            
Accumulated deferred income taxes   $ 161   $ 174
Under-collections — electric fuel and gas cost adjustment clauses     45     95
Environmental remediation costs     26     29
Asset retirement obligations and related funding     274     264
Franchise agreements     52     55
Deferred regional transmission organization costs     5     8
Deferred employee benefit plan costs     120     142
Other     29     25
   
 
Total Regulatory Assets   $ 712   $ 792
   
 

Regulatory Liabilities:

 

 

 

 

 

 
Accumulated deferred income taxes   $ 35   $ 38
Over-collections — electric fuel and gas cost adjustment clauses     19     8
Other asset removal costs     643     599
Storm damage reserve     49     44
Planned major maintenance     15     6
Monetization of bankruptcy claim     45    
Other     24     19
   
 
Total Regulatory Liabilities   $ 830   $ 714
   
 

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        Accumulated deferred income tax liabilities arising from utility operations that have not been included in customer rates are recorded as a regulatory asset. Accumulated deferred income tax assets arising from deferred investment tax credits are recorded as a regulatory liability.

        Under- and over-collections — electric fuel and gas cost adjustment clauses, net, represent amounts under- or over-collected from customers pursuant to the fuel adjustment clause (electric customers) or gas cost adjustment clause (gas customers) as approved by the Public Service Commission of South Carolina (SCPSC) or North Carolina Utilities Commission (NCUC) during annual hearings. Included in these amounts are regulatory assets or liabilities arising from realized and unrealized gains and losses incurred in the natural gas hedging programs of the Company's regulated operations. In addition, certain reagents used to treat fuel emissions are included. See Notes 1E and 1L.

        Environmental remediation costs represent costs associated with the assessment and clean-up of manufactured gas plant (MGP) sites currently or formerly owned by the Company. Costs incurred at sites owned by SCE&G are being recovered through rates, of which $16.7 million remain to be recovered. SCE&G is authorized to amortize $1.4 million of these costs annually. Costs incurred through June 30, 2006, at sites owned by PSNC Energy are being recovered through rates over a three-year period. In addition, management believes that costs incurred subsequent to June 30, 2006, totaling $2.2 million at December 31, 2007, and the estimated remaining costs of $4.6 million, will be recoverable by PSNC Energy through rates.

        Asset retirement obligations (ARO) and related funding represents the regulatory asset associated with the legal obligation to decommission and dismantle V. C. Summer Nuclear Station (Summer Station) and conditional AROs recorded as required by SFAS 143, "Accounting for Asset Retirement Obligations," and Financial Accounting Standards Board Interpretation (FIN) 47, "Accounting for Conditional Asset Retirement Obligations."

        Franchise agreements represent costs associated with electric and gas franchise agreements with the cities of Charleston and Columbia, South Carolina. Based on an SCPSC order, SCE&G began amortizing these amounts through cost of service rates in February 2003 over approximately 20 years.

        Deferred regional transmission organization costs represent costs incurred by SCE&G in the United States Federal Energy Regulatory Commission (FERC)-mandated formation of GridSouth. The project was suspended in 2002. Effective January 2005, the SCPSC approved the amortization of these amounts through cost of service rates over approximately five years.

        Deferred employee benefit plan costs represent amounts of pension and other postretirement benefit costs which were accrued as liabilities under provisions of SFAS 158, "Employers' Accounting for Defined Benefit Pension and Other Postretirement Plans," but which are expected to be recovered through utility rates (see Note 3).

        Other asset removal costs represent net collections through depreciation rates of estimated costs to be incurred for the removal of assets in the future.

        The storm damage reserve represents an SCPSC-approved collection through SCE&G electric rates, capped at $100 million, which can be applied to offset incremental storm damage costs in excess of $2.5 million in a calendar year and certain transmission and distribution insurance premiums. In 2007, $1.4 million was drawn from the reserve. No significant amounts were drawn in 2006. (See Note 2.)

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        Planned major maintenance related to certain fossil hydro turbine/generation equipment and nuclear refueling outages is accrued in advance of the time the costs are incurred, as approved through specific SCPSC orders. SCE&G is allowed to collect $8.5 million annually over an eight-year period, beginning in January 2005, through electric rates to offset turbine maintenance expenditures. Nuclear refueling charges are accrued during each 18-month refueling outage cycle as a component of cost of service.

        The monetization of bankruptcy claim represents proceeds from the sale of a bankruptcy claim which will be amortized into operating revenue through the year 2024.

        The SCPSC and the NCUC (collectively, state commissions) have reviewed and approved through specific orders most of the items shown as regulatory assets. Other regulatory assets represent costs which have not been approved for recovery by a state commission. In recording these costs as regulatory assets, management believes the costs will be allowable under existing rate-making concepts that are embodied in rate orders received by the Company. However, ultimate recovery is subject to state commission approval. In the future, as a result of deregulation or other changes in the regulatory environment, the Company may no longer meet the criteria for continued application of SFAS 71 and could be required to write off its regulatory assets and liabilities. Such an event could have a material adverse effect on the Company's results of operations, liquidity or financial position in the period the write-off would be recorded.

C. Utility Plant and Major Maintenance

        Utility plant is stated substantially at original cost. The costs of additions, renewals and betterments to utility plant, including direct labor, material and indirect charges for engineering, supervision and an allowance for funds used during construction, are added to utility plant accounts. The original cost of utility property retired or otherwise disposed of is removed from utility plant accounts and generally charged to accumulated depreciation. The costs of repairs, replacements and renewals of items of property determined to be less than a unit of property or that do not increase the asset's life or functionality are charged to maintenance expense.

        SCE&G, operator of Summer Station, and the South Carolina Public Service Authority (Santee Cooper) jointly own Summer Station in the proportions of two-thirds and one-third, respectively. The parties share the operating costs and energy output of the plant in these proportions. Each party, however, provides its own financing. Plant in service related to SCE&G's portion of Summer Station was $1.0 billion as of December 31, 2007 and 2006 (including amounts related to ARO). Accumulated depreciation associated with SCE&G's share of Summer Station was $513.1 million and $496.8 million as of December 31, 2007 and 2006, respectively (including amounts related to ARO). SCE&G's share of the direct expenses associated with operating Summer Station is included in other operation and maintenance expenses and totaled $86.7 million in 2007, $77.5 million in 2006 and $76.3 million in 2005.

        Planned major maintenance related to certain fossil and hydro turbine equipment and nuclear refueling outages is accrued in advance of the time the costs are actually incurred in accordance with approval by the SCPSC for such accounting treatment and rate recovery of expenses accrued thereunder. Other planned major maintenance is expensed when incurred. Beginning in 2005, SCE&G is collecting $8.5 million annually over an eight-year period

F-41



through electric rates to offset turbine maintenance expenditures. For the year ended December 31, 2007, SCE&G incurred $11.6 million for turbine maintenance. The remaining balance is in a regulatory liability account on the balance sheet. Nuclear refueling outages are scheduled 18 months apart, and SCE&G begins accruing for each successive outage upon completion of the preceding outage. SCE&G accrued $1.0 million per month from July 2005 through December 2006 for its portion of the outage in October 2006 and is accruing $1.1 million per month for its portion of the outage scheduled for the spring of 2008. Total costs for the 2006 outage were $25.8 million, of which SCE&G was responsible for $17.2 million. As of December 31, 2007 and 2006, SCE&G had an accrued balance of $12.7 million and $0.2 million, respectively.

D. Allowance for Funds Used During Construction (AFC)

        AFC is a noncash item that reflects the period cost of capital devoted to plant under construction. This accounting practice results in the inclusion of, as a component of construction cost, the costs of debt and equity capital dedicated to construction investment. AFC is included in rate base investment and depreciated as a component of plant cost in establishing rates for utility services. The Company's regulated subsidiaries calculated AFC using average composite rates of 6.2% for 2007, 5.5% for 2006 and 4.9% for 2005. These rates do not exceed the maximum allowable rates as calculated under FERC Order No. 561. SCE&G capitalizes interest on nuclear fuel in process at the actual interest cost incurred.

E. Revenue Recognition

        The Company records revenues during the accounting period in which it provides services to customers and includes estimated amounts for electricity and natural gas delivered, but not yet billed. Unbilled revenues totaled $175.5 million at December 31, 2007 and $177.6 million at December 31, 2006.

        Fuel costs and certain environmental reagent costs for electric generation are collected through the fuel cost component in retail electric rates. This component is established by the SCPSC during annual fuel cost hearings. Any difference between actual fuel costs and amounts contained in the fuel cost component is deferred and included when determining the fuel cost component during the next annual hearing. SCE&G had overcollected through the electric fuel cost component $11.4 million at December 31, 2007 which amounts are included in other regulatory liabilities. SCE&G had undercollected $28.9 million at December 31, 2006 which amounts are included in other regulatory assets.

        Customers subject to the gas cost adjustment clause are billed based on a fixed cost of gas determined by the state commission during annual gas cost recovery hearings. Any difference between actual gas costs and amounts contained in rates is deferred and included when establishing gas costs during the next annual hearing. At December 31, 2007 SCE&G had overcollected $7.5 million which amounts are also included in other regulatory liabilities. At December 31, 2006 SCE&G had undercollected $20.3 million which amounts are also included in other regulatory assets. At December 31, 2007 and 2006, PSNC Energy had undercollected $44.5 million, net, and $38.5 million, net, respectively, which amounts are included in other regulatory assets.

        SCE&G's and PSNC Energy's gas rate schedules for residential, small commercial and small industrial customers include a weather normalization adjustment which minimizes fluctuations in gas revenues due to abnormal weather conditions.

F-42


F. Depreciation and Amortization

        The Company records provisions for depreciation and amortization using the straight-line method based on the estimated service lives of the various classes of property. The composite weighted average depreciation rates for utility plant assets were as follows:

 
  2007
  2006
  2005
 
SCE&G   3.16 % 3.19 % 3.20 %
GENCO   2.66 % 2.66 % 2.66 %
CGTC   2.00 % 2.04 % 2.01 %
PSNC Energy   3.28 % 3.69 % 3.77 %
Aggregate of Above   3.12 % 3.19 % 3.20 %

        SCE&G records nuclear fuel amortization using the units-of-production method. Nuclear fuel amortization is included in "Fuel used in electric generation" and recovered through the fuel cost component of retail electric rates. Provisions for amortization of nuclear fuel include amounts necessary to satisfy obligations to the Department of Energy (DOE) under a contract for disposal of spent nuclear fuel.

        The Company considers amounts categorized by FERC as "acquisition adjustments" to be goodwill as defined in SFAS 142, "Goodwill and Other Intangible Assets," and has ceased amortization of such amounts. These amounts are related to acquisition adjustments of $210 million recorded by PSNC Energy (Gas Distribution segment) and $20 million recorded by CGTC (Gas Transmission segment). In accordance with SFAS 142, the Company performs annual impairment evaluations. Since the initial implementation of SFAS 142 in 2003, these calculations have indicated no need for further write-downs of acquisition adjustments. Should a write-down be required in the future, such a charge would be treated as an operating expense.

G. Nuclear Decommissioning

        SCE&G's two-thirds share of estimated site-specific nuclear decommissioning costs for Summer Station, including the cost of decommissioning plant components both subject to and not subject to radioactive contamination, totals $451.0 million, stated in 2006 dollars. Santee Cooper is responsible for decommissioning costs related to its one-third ownership interest in Summer Station. The cost estimate assumes that the site would be maintained over a period of approximately 60 years in such a manner as to allow for subsequent decontamination that would permit release for unrestricted use.

        Under SCE&G's method of funding decommissioning costs, amounts collected through rates ($3.2 million pre-tax in each of 2007, 2006 and 2005) are invested in insurance policies on the lives of certain Company personnel. SCE&G transfers to an external trust fund the amounts collected through electric rates, insurance proceeds, and interest on proceeds, less expenses. The trusteed asset balance reflects the net cash surrender value of the insurance policies and cash held by the trust. Management intends for the fund, including earnings thereon, to provide for all eventual decommissioning expenditures on an after-tax basis.

H. Income and Other Taxes

        The Company files a consolidated federal income tax return. Under a joint consolidated income tax allocation agreement, each subsidiary's current and deferred tax expense is computed on a stand-alone basis. Deferred tax assets and liabilities are recorded for the tax effects of all significant temporary differences between the book basis and tax basis of assets and liabilities at currently enacted tax rates. Deferred tax assets and liabilities are adjusted for changes in such tax rates through charges

F-43



or credits to regulatory assets or liabilities if they are expected to be recovered from, or passed through to, customers of the Company's regulated subsidiaries; otherwise, they are charged or credited to income tax expense.

        The Company records excise taxes billed and collected as liabilities until they are remitted to the respective taxing authority. Accordingly, no such taxes are included in revenues or expenses in the statements of income.

I. Debt Premium, Discount and Expense, Unamortized Loss on Reacquired Debt

        The Company records long-term debt premiums and discounts in long-term debt and amortizes them as components of interest charges over the terms of the respective debt issues. Other issuance expense and gains or losses on reacquired debt that is refinanced are recorded in other deferred debits or credits and amortized over the term of the replacement debt.

J. Environmental

        The Company maintains an environmental assessment program to identify and evaluate current and former operations sites that could require environmental clean-up. As site assessments are initiated, estimates are made of the amount of expenditures, if any, deemed necessary to investigate and remediate each site. These estimates are refined as additional information becomes available; therefore, actual expenditures could differ significantly from the original estimates. Amounts estimated and accrued to date for site assessments and clean-up relate solely to regulated operations. Such amounts are recorded in deferred debits and amortized, with recovery provided through rates.

K. Cash and Cash Equivalents

        The Company considers temporary cash investments having original maturities of three months or less at time of purchase to be cash equivalents. These cash equivalents are generally in the form of commercial paper, certificates of deposit, repurchase agreements, treasury bills and notes.

L. Commodity Derivatives

        The Company records derivatives contracts at their fair value in accordance with SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," as amended, and adjusts fair value each reporting period. The Company determines fair value of most of the energy-related derivatives contracts using quotations from markets where they are actively traded. For other derivatives contracts, the Company uses published market surveys and, in certain cases, brokers to obtain quotes concerning fair value. Market quotes tend to be more plentiful for those derivatives contracts maturing in two years or less. Substantially all of the Company's derivatives contracts do not extend beyond two years. See Note 9.

M. New Accounting Matters

        SFAS 160, "Noncontrolling Interests in Consolidated Financial Statements," was issued in December 2007. SFAS 160 requires entities to report noncontrolling (minority) interests in subsidiaries as equity. SFAS 160 is effective for fiscal years beginning after December 15, 2008. The Company has not determined what impact, if any, that adoption will have on the Company's results of operations, cash flows or financial position.

        SFAS 141(R), "Business Combinations," was issued in December 2007. SFAS 141(R) requires the acquiring entity in a business combination to recognize the assets acquired and the liabilities assumed at their fair values at

F-44



the acquisition date. SFAS 141(R) also requires the acquirer to disclose all of the information needed to evaluate and understand the nature and financial effect of the business combination. SFAS 141(R) is effective for fiscal years beginning after December 15, 2008. The Company has not determined what impact, if any, that adoption will have on the Company's results of operations, cash flows or financial position.

        SFAS 159, "The Fair Value Option for Financial Assets and Financial Liabilities," was issued in February 2007. SFAS 159 allows entities to measure at fair value many financial instruments and certain other assets and liabilities that are not otherwise required to be measured at fair value. SFAS 159 is effective for fiscal years beginning after November 15, 2007. The Company has not elected to measure at fair value any permitted items that are not otherwise required to be measured at fair value. As a result, initial adoption of SFAS 159 is not expected to have an impact on the Company's results of operations, cash flows or financial position.

        SFAS 157, "Fair Value Measurements," was issued in September 2006. SFAS 157 establishes a framework for measuring fair value to increase the consistency and comparability in fair value measurements. The Company will adopt SFAS 157 in the first quarter of 2008, and has determined that the adoption will not have a material impact on the Company's results of operations, cash flows or financial position. The Company believes it will likely be required to provide additional disclosures as part of future financial statements, beginning with first quarter 2008.

        FIN 48, "Accounting for Uncertainty in Income Taxes," prescribes the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with SFAS 109, "Accounting for Income Taxes." FIN 48 prescribes financial statement recognition threshold and measurement attributes for tax positions taken or expected to be taken in tax returns. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company adopted FIN 48 in the first quarter of 2007. (See Note 8).

        FASB Staff Position (FSP) AUG AIR-1, "Accounting for Planned Major Maintenance Activities," amended APB 28, "Interim Financial Reporting," to prohibit the use of the accrue-in-advance method of accounting for planned major maintenance. As disclosed in Note 1A, the Company has received specific SCPSC orders providing for use of accrue-in-advance accounting for certain planned major maintenance activities. Accordingly, the Company will continue to follow accrue-in-advance accounting as allowed under SFAS 71 for these activities. The Company's adoption of FSP AUG AIR-1 in the first quarter of 2007 had no impact on the Company's results of operations, cash flows or financial position.

N. Earnings Per Share

        In accordance with SFAS 128, "Earnings Per Share," the Company computes basic earnings per share by dividing net income by the weighted average number of common shares outstanding for the period. The Company computes diluted earnings per share using this same formula, after giving effect to securities considered to be dilutive potential common stock. The Company uses the treasury stock method in determining total dilutive potential common stock. The Company has issued no securities that would have an antidilutive effect on earnings per share.

O. Affiliated Transactions

        SCE&G holds equity-method investments in two partnerships involved in converting coal to

F-45



synthetic fuel. SCE&G's receivables from these affiliated companies were $28.8 million and $31.8 million at December 31, 2007 and 2006, respectively. SCE&G's payables to these affiliated companies were $26.9 million and $26.6 million at December 31, 2007 and 2006, respectively. SCE&G purchased synthetic fuel from these affiliated companies of $281.6 million in 2007, $291.1 million in 2006 and $248.1 million in 2005. SCE&G's investment in the two partnerships will be liquidated in 2008 as a result of the expiration of the synthetic fuel tax credit program at the end of 2007.

        SCE&G purchases shaft horsepower from a cogeneration facility. The facility is owned by a limited liability company (LLC) in which SCANA holds an equity method investment. SCE&G's payables to the LLC were $2.1 million and $2.5 million at December 31, 2007 and 2006, respectively. SCE&G purchased shaft horsepower from the LLC of $27.7 million in 2007, $27.0 million in 2006 and $24.0 million in 2005.

        The Company received cash distributions from equity investees of $7.8 million in 2007, $6.7 million in 2006 and $7.1 million in 2005. The Company made cash investments in equity investees of $16.2 million in 2007, $18.4 million in 2006 and $17.7 million in 2005.

        Summarized combined financial information of unconsolidated affiliates as of and for the years ended December 31, 2007, 2006 and 2005, is presented below:

Millions of dollars
  2007
  2006
  2005
 
Current assets   $ 76   $ 78   $ 76  
Non-current assets     306     324     340  
Current Liabilities     80     64     62  
Non-current liabilities     302     338     354  
Revenues     428     467     380  
Gross profit     98     123     62  
Loss before income tax benefit     (58 )   (42 )   (40 )

P. Use of Estimates

        The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

2. RATE AND OTHER REGULATORY MATTERS

SCE&G

    Electric

        In December 2007 the SCPSC granted SCE&G an increase in retail electric revenues of approximately $76.9 million, or 4.4%, based on a test year calculation. The order granted an allowed return on common equity of 11%, with rates set at 10.7%. The new rates became effective January 1, 2008.

        In the December 2007 order, the SCPSC also extended through 2015 its approval of the accelerated capital recovery plan for SCE&G's Cope Generating Station. Under the plan, in the event that SCE&G would otherwise earn in excess of its maximum allowed return on common equity, SCE&G may increase depreciation of its Cope Generating Station up to $36 million annually without additional approval of the SCPSC. Any unused portion of the $36 million in any given year may be carried forward for possible use in the immediately following year. No such additional depreciation was recognized in 2007, 2006 or 2005.

        In October 2007 the SCPSC approved SCE&G's request to increase the storm damage reserve cap from $50 million to $100 million. In addition, the SCPSC approved SCE&G's request to apply certain transmission and

F-46



distribution insurance premiums against the reserve until SCE&G files its next retail electric rate case.

        In May 2007, the law was changed to revise the statutory definition of fuel costs which are passed through to customers to include certain variable environmental costs such as ammonia, lime, limestone and catalysts consumed in reducing or treating emissions. The revised definition also includes the cost of emission allowances used for sulfur dioxide, nitrogen oxide, and mercury and particulates.

        In January 2005 the SCPSC approved SCE&G's application of current and anticipated net synthetic fuel tax credits to offset the cost of constructing the back-up dam at Lake Murray. Under the accounting methodology approved by the SCPSC, construction costs related to the Lake Murray back-up dam project have been recorded in a special dam remediation account outside of rate base, and depreciation has been recognized against the balance in this account on an accelerated basis, subject to the availability of the synthetic fuel tax credits. The Company expects any costs not recovered through application of the credits to be recoverable through rates.

    Gas

        In October 2007 the SCPSC approved an increase in retail natural gas rates of 0.9% under the terms of the Natural Gas Rate Stabilization Act (Stabilization Act). The Stabilization Act is designed to reduce the volatility of costs charged to customers by allowing for more timely recovery of the costs that regulated utilities incur related to natural gas service infrastructure. The rate adjustment was effective with the first billing cycle in November 2007.

        SCE&G's rates are calculated using a methodology approved by the SCPSC in October 2006 which authorized SCE&G to adjust its cost of gas on a monthly, rather than an annual, basis beginning in December 2006. The cost of gas adjustment is based on a twelve-month rolling average.

        Prior to November 2005, the SCPSC allowed SCE&G to recover through a billing surcharge to its gas customers the costs of environmental clean-up at the sites of former MGPs. Effective with the first billing cycle of November 2005, the billing surcharge was eliminated. In its place, SCE&G defers certain MGP environmental costs in regulatory asset accounts and collects and amortizes these costs through base rates.

PSNC Energy

        PSNC Energy's rates are established using a benchmark cost of gas approved by the NCUC, which may be modified periodically to reflect changes in the market price of natural gas. PSNC Energy revises its tariffs with the NCUC as necessary to track these changes and accounts for any over- or under-collections of the delivered cost of gas in its deferred accounts for subsequent rate consideration. The NCUC reviews PSNC Energy's gas purchasing practices annually.

        In October 2007, in connection with PSNC Energy's 2007 Annual Prudence Review, the NCUC determined that PSNC Energy's gas costs, including all hedging transactions, were reasonable and prudently incurred during the 12-months ended March 31, 2007.

        In May 2007 the NCUC approved PSNC Energy's request to eliminate the use of its dual residential customer rate structure and replace it with a single residential rate. In October 2007 the NCUC approved PSNC Energy's request to implement a residential service rate which has a winter/summer differential of 6 cents per therm effective November 1, 2007. The higher winter rate will help recover costs associated with operating the system during high customer

F-47


demand. These changes in the rate structure had no impact on 2007 earnings.

        In October 2006, the NCUC granted PSNC Energy an annual increase in retail natural gas margin revenues of approximately $15.2 million, or 2.6%, which was offset by a $9.2 million decrease in fixed-gas cost revenues, for an overall increase of $6 million, or 1.0%. The new rates are based on an allowed overall rate of return of 8.9%, and became effective for services rendered on or after November 1, 2006. In connection with the rate increase, the NCUC approved PSNC Energy's recovery through rates, over a three-year period, of certain costs for environmental remediation and pipeline integrity management.

        In March 2006, the NCUC authorized PSNC Energy to place present and future pipeline supplier refunds into the appropriate deferred accounts for the over- or under-recovery of gas costs. Prior to this authorization, refunds from PSNC Energy's interstate pipeline transporters had been placed in a state-approved expansion fund to provide financing for expansion into areas that otherwise would not be economically feasible to serve. In December 2006, PSNC Energy received a disbursement of $1.1 million from the state expansion fund upon completion of a project to expand natural gas service to Louisburg, North Carolina.

3. EMPLOYEE BENEFIT PLANS AND EQUITY COMPENSATION PLAN

Pension and Other Postretirement Benefit Plans

        The Company sponsors a noncontributory defined benefit pension plan, covering substantially all permanent employees. The Company's policy has been to fund the plan to the extent permitted by applicable federal income tax regulations, as determined by an independent actuary.

        Effective July 1, 2000 the Company's pension plan, which provided a final average pay formula, was amended to provide a cash balance formula for employees hired before January 1, 2000 who elected that option and for all employees hired on or after January 1, 2000. For employees who elected to remain under the final average pay formula, benefits are based on years of credited service and the employee's average annual base earnings received during the last three years of employment. For employees under the cash balance formula, benefits accumulate as a result of compensation credits and interest credits.

        In addition to pension benefits, the Company provides certain unfunded postretirement health care and life insurance benefits to active and retired employees. Retirees share in a portion of their medical care cost. The Company provides life insurance benefits to retirees at no charge. The costs of postretirement benefits other than pensions are accrued during the years the employees render the services necessary to be eligible for these benefits.

    Funded Status

 
  Pension Benefits
December 31,

  Other Postretirement Benefits
December 31,

 
Millions of Dollars
  2007
  2006
  2007
  2006
 
Fair value of plan assets   $ 929.5   $ 912.5          
Benefit obligations     704.8     713.0   $ 196.8   $ 206.9  
   
 
 
 
 
Funded status     224.7     199.5     (196.8 )   (206.9 )
   
 
 
 
 

        Amounts recognized on the balance sheets consist of:

 
  Pension Benefits
December 31,

  Other Postretirement Benefits

 
Millions of dollars
  2007
  2006
  2007
  2006
 
Noncurrent asset   $ 224.7   $ 199.5          
Current liability           $ (11.9 ) $ (12.9 )
Noncurrent liability             (184.9 )   (194.0 )

F-48



        Deferred amounts recognized in accumulated other comprehensive income (a component of common equity) as of December 31, 2007 and 2006, and amounts recognized in other comprehensive income during the year were as follows:

 
  Pension Benefits
  Other Postretirement Benefits
 
 
  Prior Service Cost
  Actuarial Losses
  Total
  Transition Obligation
  Prior Service Costs
  Actuarial Losses
  Total
 
Balance, December 31, 2006   $ 0.9   $ 6.6   $ 7.5   $ 0.6   $ 0.6   $ 2.4   $ 3.6  
Current year actuarial (gains) losses         0.9     0.9             (0.9 )   (0.9 )
Amortization of actuarial losses                         (0.1 )   (0.1 )
Current year prior service credits     0.1         0.1                  
Amortization of prior year service cost     (0.1 )       (0.1 )       (0.2 )       (0.2 )
   
 
 
 
 
 
 
 
Balance, December 31, 2007   $ 0.9   $ 7.5   $ 8.4   $ 0.6   $ 0.4   $ 1.4   $ 2.4  
   
 
 
 
 
 
 
 

        The estimated transition obligation, prior service costs and actuarial losses for the defined benefit plans that will be amortized from accumulated other comprehensive income into net periodic benefit costs during 2008 are less than $300,000 in aggregate.

    Changes in Benefit Obligations

        The measurement date used to determine pension and other postretirement benefit obligations is December 31. Data related to the changes in the projected benefit obligation for retirement benefits and the accumulated benefit obligation for other postretirement benefits are presented below.

 
  Pension Benefits
  Other Postretirement Benefits
 
Millions of dollars
  2007
  2006
  2007
  2006
 
Benefit obligation, January 1   $ 713.0   $ 711.5   $ 206.9   $ 202.1  
Service cost     15.3     14.0     4.4     4.6  
Interest cost     40.5     39.8     11.7     11.5  
Plan participants' contributions             2.6     2.1  
Plan amendments     7.5     0.6         4.0  
Actuarial gain     (25.1 )   (14.4 )   (14.8 )   (5.5 )
Benefits paid     (46.4 )   (38.5 )   (14.0 )   (11.9 )
   
 
 
 
 
Benefit obligation, December 31   $ 704.8   $ 713.0   $ 196.8   $ 206.9  
   
 
 
 
 

        The accumulated benefit obligation for retirement benefits at the end of 2007 and 2006 was $668.3 million and $666.6 million, respectively. These accumulated retirement benefit obligations differ from the projected retirement benefit obligations above in that they reflect no assumptions about future compensation levels.

        Significant assumptions used to determine the above benefit obligations are as follows:

 
  Pension Benefits
  Other Postretirement Benefits
 
 
  2007
  2006
  2007
  2006
 
Annual discount rate used to determine benefit obligations   6.25 % 5.85 % 6.30 % 5.85 %
Assumed annual rate of future salary increases for projected benefit obligation   4.00 % 4.00 % 4.00 % 4.00 %

        A 9.5% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2007. The rate was assumed to decrease gradually to 5.0% for 2013 and to remain at that level thereafter. The postretirement benefit obligation would increase by $2.4 million if the Company increased by one percentage point the assumed healthcare cost trend rate. The obligation would decrease by $2.1 million if a one percentage point decrease in the assumed trend rate occurred.

F-49


    Changes in Plan Assets

 
  Retirement
Benefits

 
Millions of dollars
  2007
  2006
 
Fair value of plan assets, January 1   $ 912.5   $ 854.3  
Actual return on plan assets     63.4     96.7  
Benefits paid     (46.4 )   (38.5 )
   
 
 
Fair value of plan assets, December 31   $ 929.5   $ 912.5  
   
 
 

        The Company determines the fair value of a majority of its pension assets utilizing market quotes, with the remaining fair value derived from modeling techniques that incorporate market data. At the end of 2007 and 2006, the fair value of plan assets for the pension plan exceeded both the projected benefit obligation and the accumulated benefit obligation discussed previously.

        In connection with the joint ownership of Summer Station, as of December 31, 2007 and 2006, the Company recorded within deferred credits a $4.3 million and $3.6 million obligation, respectively, to Santee Cooper, representing an estimate of the net pension asset attributable to the Company's contributions to the pension plan that were recovered through billings to Santee Cooper for its one-third portion of shared costs. As of December 31, 2007 and 2006, the Company also recorded within deferred debits a $9.5 million and $9.9 million receivable, respectively, from Santee Cooper, representing an estimate of its portion of the unfunded net postretirement benefit obligation.

    Expected Cash Flows

        The total benefits expected to be paid from the pension plan or from the Company's assets for the other postretirement benefits plan, respectively, are as follows:

 
   
  Other
Postretirement
Benefits*

Expected Benefit Payments
Millions of dollars

  Pension Benefits
  Excluding Medicare Subsidy
  Including Medicare Subsidy
2008   $ 49.9   $ 12.5   $ 12.2
2009     51.9     13.1     12.7
2010     53.6     13.6     13.3
2011     61.1     13.9     13.5
2012     63.5     14.0     13.7
2013-2017     322.5     76.5     75.0
*
Net of participant contributions

    Net Periodic Benefit Cost (Income)

        As allowed by SFAS 87, "Employers' Accounting for Pensions," and SFAS 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions," as amended, the Company records net periodic benefit cost (income) utilizing beginning of the year assumptions. Disclosures required for these plans under SFAS 132, "Employer's Disclosures about Pensions and Other Postretirement Benefits," as amended, are set forth in the following tables.

    Components of Net Periodic Benefit Cost (Income)

 
  Pension Benefits
  Other Postretirement Benefits
Millions of dollars

  2007
  2006
  2005
  2007
  2006
  2005
Service cost   $ 15.3   $ 14.0   $ 12.2   $ 4.4   $ 4.6   $ 3.5
Interest cost     40.5     39.8     38.3     11.7     11.5     10.7
Expected return on assets     (79.8 )   (75.2 )   (76.3 )   n/a     n/a     n/a
Prior service cost amortization     6.6     6.8     6.9     1.1     1.1     0.8
Amortization of actuarial loss         0.5         0.9     1.7     1.2
Transition amount amortization         0.6     0.8     (0.2 )   0.8     0.8
   
 
 
 
 
 
Net periodic benefit (income) cost   $ (17.4 ) $ (13.5 ) $ (18.1 ) $ 17.9   $ 19.7   $ 17.0
   
 
 
 
 
 

F-50


    Significant Assumptions Used in Determining Net Periodic Benefit Cost (Income)

 
  Pension Benefits
  Other Postretirement Benefits
 
 
  2007
  2006
  2005
  2007
  2006
  2005
 
Discount rate   5.85 % 5.60 % 5.75 % 5.85 % 5.60 % 5.75 %
Expected return on plan assets   9.00 % 9.00 % 9.25 % n/a   n/a   n/a  
Rate of compensation increase   4.00 % 4.00 % 4.00 % 4.00 % 4.00 % 4.00 %
Health care cost trend rate   n/a   n/a   n/a   9.50 % 9.00 % 9.00 %
Ultimate health care cost trend rate   n/a   n/a   n/a   5.00 % 5.00 % 5.00 %
Year achieved   n/a   n/a   n/a   2014   2012   2011  

        Other postretirement benefit costs are subject to annual per capita limits pursuant to plan design. As a result, the effect of a one-percentage-point increase or decrease in the assumed health care cost trend rate on total service and interest cost is less than $150,000.

    Pension Plan Contributions

        The pension trust is adequately funded. No contributions have been required since 1997, and the Company does not anticipate making contributions to the pension plan until after 2012.

    Pension Plan Asset Allocations

        The Company's pension plan asset allocation at December 31, 2007 and 2006 and the target allocation for 2008 are as follows:

Asset Category
  Target
Allocation

  Percentage of Plan Assets
At December 31,

 
 
  2008
  2007
  2006
 
Equity Securities   65 % 71 % 72 %
Debt Securities   35 % 29 % 28 %

        The assets of the pension plan are invested in accordance with the objectives of (1) fully funding the actuarial accrued liability for the pension plan, (2) maximizing return within reasonable and prudent levels of risk in order to minimize contributions, and (3) maintaining sufficient liquidity to meet benefit payment obligations on a timely basis. The pension plan operates with several risk and control procedures, including ongoing reviews of liabilities, investment objectives, investment managers and performance expectations. Transactions involving certain types of investments are prohibited. Equity securities held by the pension plan during the above periods did not include SCANA common stock.

        In developing the expected long-term rate of return assumptions, management evaluates the pension plan's historical cumulative actual returns over several periods, all of which returns have been in excess of related broad indices. The expected long-term rate of return of 9.0% assumes an asset allocation of 65% with equity managers and 35% with fixed income managers. Management regularly reviews such allocations and periodically rebalances the portfolio when considered appropriate. For 2008, the expected long-term rate of return on assets also will be 9.0%.

Share-Based Compensation

        The SCANA Corporation Long-Term Equity Compensation Plan provides for grants of incentive nonqualified stock options, stock appreciation rights, restricted stock, performance shares and performance units to certain key employees and non-employee directors. The plan currently authorizes the issuance of up to five million shares of the Company's common stock, no more than one million of which may be granted in the form of restricted stock.

        SFAS 123 (revised 2004), "Share-Based Payment" (SFAS 123(R)), requires compensation costs related to share-based payment transactions to be recognized in the financial statements. With limited exceptions, compensation cost is measured based on the grant-date fair value of the instruments issued

F-51



and is recognized over the period that an employee provides service in exchange for the award. The cumulative effect of the adoption of SFAS 123(R) on January 1, 2006 resulted in a $.05 per share (net of taxes) gain in the first quarter of 2006 based on a reduction of prior compensation accruals for performance awards (discussed below) granted in 2004 and 2005.

    Liability Awards

        Through 2006, certain executives were granted a target number of performance shares on an annual basis that vest over a three-year period. Each performance share has a value that is equal to, and changes with, the value of a share of SCANA common stock, and dividend equivalents are accrued on, and reinvested in, the performance shares. Payout of performance share awards is determined by SCANA's performance against pre-determined measures of total shareholder return (TSR) as compared to a peer group of utilities (weighted 60%) and growth in earnings per share (as defined) (weighted 40%) over the three year plan cycle. TSR is calculated by dividing the stock price change over the three-year period, plus cash dividends, by the stock price as of the beginning of the period. Payouts vary according to SCANA's ranking against the peer group and relative earnings per share growth.

        Beginning with the 2007-2009 performance cycle, the Long-Term Equity Compensation Plan provides for performance measurement and award determination on an annual basis (rather than the above described three-year measurement and determination), with payment of awards being deferred until after the end of the three-year performance cycle. Accordingly, payouts under the 2007 three-year cycle will be earned for each year that performance goals are met during the three-year cycle, though payments will be deferred until the end of the cycle and will be contingent upon the participant still being employed by the Company at the end of the cycle, subject to certain exceptions in the event of retirement, death or disability. Additionally, the payment or performance cycle awards will be based on growth in "GAAP-adjusted net earnings per share from operations." GAAP-adjusted net earnings per share from operations may reflect different or additional adjustments than are or would have been reflected in the determination of EPS from ongoing operations in prior plan cycles. Awards are designated as target shares of SCANA common stock and may be paid in stock or cash or a combination of stock and cash at SCANA's discretion.

        Under SFAS 123(R), compensation cost of these liability awards is recognized over the three-year performance period based on the estimated fair value of the award, which is periodically updated based on expected ultimate cash payout, and is reduced by estimated forfeitures. Cash-settled liabilities totaling $6.4 million were paid during 2006. No such payments were made in 2007 or 2005.

        Fair value adjustments for performance awards resulted in an increase to compensation expense recognized in the statements of income, exclusive of the cumulative effect adjustment discussed previously, totaling $6.6 million for the year ended December 31, 2007, a reduction to compensation expense totaling $(6.5) million for the year ended December 31, 2006 and an increase to compensation expense totaling $3.6 million for the year ended December 31, 2005. Fair value adjustments resulted in capitalized compensation costs of $0.7 million during the year ended December 31, 2007, compared to a net credit to capitalized costs of $(0.8) million in 2006 and capitalized compensation costs of $0.4 million in 2005.

F-52


    Equity Awards

        A summary of activity related to nonqualified stock options follows:

 
  Number of Options
  Weighted Average Exercise Price
Outstanding —
December 31, 2004
  730,447   $ 27.49
Exercised   (291,177 )   27.48
   
     
Outstanding —
December 31, 2005
  439,270     27.53
Exercised   (53,330 )   27.52
   
     
Outstanding —
December 31, 2006
  385,940     27.56
Exercised   (258,756 )   27.62
   
     
Outstanding —
December 31, 2007
  127,184     27.45
   
     

        No stock options have been granted since August 2002, and all options were fully vested in August 2005. No options were forfeited during any period presented. The options expire ten years after the grant date. At December 31, 2007, all outstanding options were currently exercisable at prices ranging from $25.50-$29.60, and had a weighted-average remaining contractual life of 3.9 years.

        All options were granted with exercise prices equal to the fair market value of SCANA's common stock on the respective grant dates; therefore, no compensation expense was recognized in connection with such grants. If the Company had recognized compensation expense for the issuance of options based on the fair value method described in SFAS 123(R) for the year ended December 31, 2005, pro forma net income and earnings per share would have been unchanged.

        The exercise of stock options during 2005-2007 was satisfied using a combination of original issue shares and open market purchases of the Company's common stock. The Company realized $7.1 million, $1.5 million and $8.0 million in cash upon the exercise of options in the years ended December 31, 2007, 2006 and 2005, respectively. In addition, tax benefits resulting from the exercise of those stock options totaling $1.5 million, $0.3 million and $1.3 million were credited to additional paid in capital (common equity) in these periods.

        The Company estimates that 100,000 common shares may be repurchased in 2008 upon the exercise of stock options.

4. LONG-TERM DEBT

        Long-term debt by type with related weighted average interest rates and maturities is as follows:

 
   
   
  December 31,
 
 
  Weighted-
Average Interest Rate

  Maturity
Date

 
 
  2007
  2006
 
 
   
   
  Millions of dollars

 
Medium-Term Notes (unsecured)(a)   6.35%   2008-2012   $ 915   $ 940  
Senior Notes (unsecured)(b)   6.47%   2034     40      
First Mortgage Bonds (secured)   6.00%   2009-2036     1,675     1,675  
GENCO Notes (secured)   5.86%   2011-2024     119     123  
Industrial and Pollution Control Bonds   5.24%   2012-2032     156     156  
Senior Debentures(c)   7.43%   2012-2026     116     119  
Fair value of interest rate swaps(d)             17     21  
Other       2008-2027     80     89  
           
 
 
Total debt             3,118     3,123  
Current maturities of long-term debt             (233 )   (43 )
Unamortized Discount             (6 )   (13 )
           
 
 
Total long-term debt, net           $ 2,879   $ 3,067  
           
 
 
(a)
Includes $100.0 million of variable interest debt in 2007 and 2006 and $25.0 million of fixed rate debt hedged by a variable interest rate swap in 2006.

(b)
$40 million of variable rate notes are hedged by a fixed interest rate swap.

(c)
Includes $16.0 million of fixed rate debt hedged by a variable interest rate swap in 2007 compared to $19.2 million of such debt in 2006.

(d)
Represents unamortized payments received to terminate previous swaps designated as fair value hedges. See discussion at Note 9.

F-53


        The annual amounts of long-term debt maturities for the years 2008 through 2012 are summarized as follows:

Year

  Millions of dollars
2008   $ 233
2009     143
2010     23
2011     627
2012     273

        On February 15, 2007 SCANA redeemed at maturity $25 million of its medium-term notes which bore interest at 6.9%.

        On January 14, 2008 SCE&G issued $250 million First Mortgage Bonds having an annual interest rate of 6.05% and maturing on January 15, 2038. The proceeds from the sale of these bonds were used to repay short-term debt primarily incurred as a result of SCE&G's construction program and for general corporate purposes.

        Substantially all of SCE&G's and GENCO's electric utility plant is pledged as collateral in connection with long-term debt. The Company is in compliance with all debt covenants.

5. LINES OF CREDIT AND SHORT-TERM BORROWINGS

        Details of lines of credit at December 31, 2007 and 2006, are as follows:

Millions of dollars
  2007
  2006
Lines of credit            
  Committed:            
    SCANA   $ 200   $ 200
    SCE&G     400     400
    Fuel Company     250     250
    PSNC Energy     250     250
   
 
    Long-term (total and available)   $ 1,100   $ 1,100
   
 
  Uncommitted(a):            
    Total   $ 78   $ 103
    Available for use     71     103
(a)
SCANA, SCE&G or a combination may use the $78 million line of credit.

        Bank loans and commercial paper outstanding (270 or fewer days) at December 31, 2007 and 2006 were as follows:

 
  2007
  2006
 
Millions of dollars
  Amount
  Weighted Average Interest Rate
  Amount
  Weighted Average Interest Rate
 
SCANA   $ 7   5.10 % $    
SCE&G     323   5.75 %   238   5.38 %
Fuel Company     140   5.72 %   124   5.38 %
PSNC Energy     157   5.74 %   125   5.40 %
   
     
     
Total   $ 627   5.73 % $ 487   5.38 %
   
     
     

        The Company pays fees to banks as compensation for maintaining committed lines of credit.

        Nuclear and fossil fuel inventories and emission allowances are financed through the issuance by Fuel Company of short-term commercial paper or bank loans. All such borrowings are supported by five-year revolving credit facilities which expire on December 19, 2011. SCANA also has a five-year revolving credit facility which expires December 19, 2011. SCE&G, Fuel Company and PSNC Energy have commercial paper programs in the amounts of $350 million, $250 million and $250 million, respectively.

6. COMMON EQUITY

        SCANA's Restated Articles of Incorporation do not limit the dividends that may be paid on its common stock. However, SCE&G's Restated Articles of Incorporation and its bond indenture each contain provisions that, under certain circumstances, which the Company considers to be remote, could limit the payment of cash dividends on SCE&G's common stock.

        With respect to hydroelectric projects, the Federal Power Act requires the appropriation of a portion of certain earnings therefrom. At December 31, 2007, approximately $55 million of retained earnings were restricted by this

F-54



requirement as to payment of cash dividends on SCE&G's common stock.

        Cash dividends on common stock were declared during 2007, 2006 and 2005 at an annual rate per share of $1.76, $1.68 and $1.56, respectively.

        The accumulated balances related to each component of other comprehensive income (loss) were as follows:

Millions of dollars
  Cash Flow Hedging Activities
  Minimum Pension Liability Adjustment
  Deferred Costs of Employee Benefit Plans
  Accumulated Other Comprehensive Income (Loss)
 
Balance, December 31, 2004   $ (4 ) $   $   $ (4 )
Other comprehensive income (loss)     1     (1 )        
   
 
 
 
 
Balance, December 31, 2005     (3 )   (1 )       (4 )
Other comprehensive income (loss)     (15 )   1         (14 )
Adoption of SFAS 158             (11 )   (11 )
   
 
 
 
 
Balance, December 31, 2006     (18 )       (11 )   (29 )
Other comprehensive income     7             7  
   
 
 
 
 
Balance, December 31, 2007   $ (11 ) $   $ (11 ) $ (22 )
   
 
 
 
 

        The Company recognized losses of $19.1 million and $27.6 million, net of tax, as a result of qualifying cash flow hedges whose hedged transactions occurred during the years ended December 31, 2007 and 2006, respectively. As described in Notes 1 and 3, the Company adopted SFAS 158 at December 31, 2006 and recorded in accumulated other comprehensive income certain gains, losses, prior service costs and credits that have not yet been recognized through net periodic benefit cost, net of tax effects.

7. PREFERRED STOCK

        The aggregate of the annual amounts, at par values, of purchase or sinking fund requirements for preferred stock for the years 2008 through 2012 is $2.4 million. The call premium of the respective series of preferred stock in no case exceeds the amount of the annual dividend. At December 31, 2007 SCE&G had shares of preferred stock authorized and available for issuance as follows:

Par Value

  Authorized
  Available for Issuance
$100   1,000,000  
$50   583,176   300,000
$25   2,000,000   2,000,000

Preferred Stock (Not subject to purchase or sinking funds)

        For each of the three years ended December 31, 2007, SCE&G had outstanding 1,000,000 shares of 6.52% $100 par and 125,209 shares of 5.00% $50 par Cumulative Preferred Stock (not subject to purchase or sinking funds).

F-55



Preferred Stock (Subject to purchase or sinking funds)

        Changes in "Total Preferred Stock (Subject to purchase or sinking funds)" during 2007, 2006 and 2005 are summarized as follows:

 
  Series
   
   
 
 
  4.50%, 4.60% (A) & 5.125%
  4.60% (B)
& 6.00%

  Total Shares
  Millions of Dollars
 
Redemption Price   $ 51.00   $ 50.50            

Balance at December 31, 2004

 

 

78,518

 

 

105,961

 

184,479

 

$

9.2

 
Shares Redeemed — $50 par value     (1,475 )   (6,600 ) (8,075 )   (0.4 )
   
 
 
 
 
Balance at December 31, 2005     77,043     99,361   176,404     8.8  
Shares Redeemed — $50 par value     (2,608 )   (6,600 ) (9,208 )   (0.5 )
   
 
 
 
 
Balance at December 31, 2006     74,435     92,761   167,196     8.3  
Shares Redeemed — $50 par value     (4,600 )   (4,629 ) (9,229 )   (0.4 )
   
 
 
 
 
Balance at December 31, 2007     69,835     88,132   157,967   $ 7.9  
   
 
 
 
 

8. INCOME TAXES

        Total income tax expense (benefit) attributable to income (before cumulative effect of accounting change) for 2007, 2006 and 2005 is as follows:

Millions of dollars
  2007
  2006
  2005
 
Current taxes:                    
  Federal   $ 101.3   $ 93.9   $ 10.2  
  State     12.7     9.8     11.1  
   
 
 
 
    Total current taxes     114.0     103.7     21.3  
   
 
 
 
Deferred taxes, net:                    
  Federal     23.4     11.7     1.7  
  State     3.5     5.3     (6.9 )
   
 
 
 
    Total deferred taxes     26.9     17.0     (5.2 )
   
 
 
 
Investment tax credits:                    
  Deferred — state     5.0     5.0     5.1  
  Amortization of amounts deferred — state     (2.6 )   (3.3 )   (1.9 )
  Amortization of amounts deferred — federal     (3.0 )   (3.0 )   (3.1 )
   
 
 
 
    Total investment tax credits     (0.6 )   (1.3 )   0.1  
   
 
 
 
Synthetic fuel tax credits — federal             (134.2 )
   
 
 
 
  Total income tax expense (benefit)   $ 140.3   $ 119.4   $ (118.0 )
   
 
 
 

        The difference between actual income tax expense (benefit) and that amount calculated from the application of the statutory 35% federal income tax rate to pre-tax income (before cumulative effect of accounting change) is reconciled as follows:

Millions of dollars
  2007
  2006
  2005
 
Income   $ 320.0   $ 304.0   $ 319.5  
Income tax expense (benefit)     140.3     119.4     (118.0 )
Preferred stock dividends     7.3     7.3     7.3  
   
 
 
 
    Total pre-tax income   $ 467.6   $ 430.7   $ 208.8  
   
 
 
 
Income taxes on above at statutory federal income tax rate   $ 163.7   $ 150.7   $ 73.1  
Increases (decreases) attributed to:                    
  State income taxes (less federal income tax effect)     12.1     10.9     4.8  
  Synthetic fuel tax credits     (17.4 )   (33.5 )   (181.9 )
  Deductible dividends-Stock Purchase Savings Plan     (6.9 )   (6.5 )   (5.9 )
  Amortization of federal investment tax credits     (3.0 )   (3.0 )   (3.1 )
  Non-taxable recovery of Lake Murray back-up dam project carrying costs     (2.0 )   (2.3 )   (3.8 )
  Domestic production activities deduction     (3.9 )   (1.0 )   (1.4 )
  Other differences, net     (2.3 )   4.1     0.2  
   
 
 
 
    Total income tax expense (benefit)   $ 140.3   $ 119.4   $ (118.0 )
   
 
 
 

F-56


        The tax effects of significant temporary differences comprising the Company's net deferred tax liability of $934.8 million at December 31, 2007 and $913.0 million at December 31, 2006 are as follows:

Millions of dollars
  2007
  2006
Deferred tax assets:            
  Nondeductible reserves   $ 103.3   $ 103.8
  Unamortized investment tax credits     51.9     58.9
  Federal alternative minimum tax credit carryforward         22.1
  Deferred compensation     18.9     29.0
  Unbilled revenue     10.3     12.5
  Monetization of bankruptcy claim     17.3    
  Other     33.2     38.6
   
 
    Total deferred tax assets     234.9     264.9
   
 
Deferred tax liabilities:            
  Property, plant and equipment     977.2     966.8
  Pension plan income     79.5     71.1
  Deferred employee benefit plan costs     46.9     56.1
  Deferred fuel costs     2.3     25.9
  Other     63.8     58.0
   
 
    Total deferred tax liabilities     1,169.7     1,177.9
   
 
Net deferred tax liability   $ 934.8   $ 913.0
   
 

        The Company files a consolidated federal income tax return and the Company and its subsidiaries file various applicable state and local income tax returns. The Internal Revenue Service (IRS) has completed examinations of the Company's federal returns through 2004, and the Company's federal returns through 2003 are closed for additional assessment. With a few exceptions, the Company is no longer subject to state and local income tax examinations by tax authorities for years before 2003. The IRS has closed the examination of S. C. Coaltech No. 1, LP, a synthetic fuel partnership in which the Company has an interest, for the 2004 tax year, resulting in that return being accepted as filed. The Company continues to believe that all of its synthetic fuel tax credits have been properly claimed.

        In connection with the initial adoption of FIN 48 effective January 1, 2007, the Company removed $15 million of previously recorded tax benefits from its balance sheet. Because regulatory liabilities had been recorded for these previously recognized tax benefits under the provisions of SFAS 71, these benefits had never been recognized in the Company's earnings or retained earnings. As a result, the initial adoption of FIN 48 had no effect on the Company's equity. The total amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate is $15 million. The Company anticipates that this unrecognized amount could change by the end of 2008, as it relates to litigation of a state issue which could be resolved by December 31, 2008. Any change will be within the range of $0 to $15 million. Because any tax benefits recorded would be amortized into earnings over a number of years under SFAS 71, the impact on any individual year's effective tax rate would be immaterial. No material changes in the status of our tax positions have occurred subsequent to adoption. A reconciliation of the beginning and ending amount of unrecognized tax benefit is as follows:

Millions of dollars
  Unrecognized Tax Benefit
Balance at January 1, 2007   $ 15
Additions based on tax positions related to the current year    
Additions for tax positions of prior years    
Reductions for tax positions of prior years    
Settlements    
   
Balance at December 31, 2007   $ 15
   

        The Company recognizes interest accrued related to unrecognized tax benefits within interest expense and recognizes tax penalties within other expenses. The Company has not accrued any significant amount of interest expense or tax penalties in 2007, 2006 or 2005.

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9. FINANCIAL INSTRUMENTS

        Financial instruments for which the carrying amount does not equal estimated fair value at December 31, 2007 and 2006 were as follows:

 
  2007
  2006
Millions of dollars
  Carrying Amount
  Estimated Fair Value
  Carrying Amount
  Estimated Fair Value
Long-term debt   $ 3,111.7   $ 3,166.1   $ 3,110.0   $ 3,207.9
Preferred stock (subject to purchase or sinking funds)     7.9     7.0     8.3     7.8

        The following methods and assumptions were used to estimate the fair value of financial instruments:

        Fair values of long-term debt are based on quoted market prices of the instruments or similar instruments. For debt instruments for which no quoted market prices are available, fair values are based on net present value calculations. Carrying values reflect the fair values of interest rate swaps based on settlement values obtained from counterparties. Early settlement of long-term debt may not be possible or may not be considered prudent.

        The fair value of preferred stock (subject to purchase or sinking funds) is estimated using market quotes.

        Potential taxes and other expenses that would be incurred in an actual sale or settlement have not been considered.

Investments

        SCANA's pension assets are invested in debt and equity securities that are accounted for as available-for-sale securities at fair value in accordance with SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities." SCANA also holds investments which are considered cost basis investments for which determination of fair value historically has been considered impracticable or which are otherwise non-marketable, such as life insurance policies. Insurance policies are carried at net cash surrender value. The Company also holds investments in several partnerships and joint ventures which are accounted for using the equity method.

Derivatives

        SFAS 133, "Accounting for Derivative Instruments and Hedging Activities" as amended, requires the Company to recognize all derivative instruments as either assets or liabilities in the statement of financial position and to measure those instruments at fair value. SFAS 133 further provides that changes in the fair value of derivative instruments are either recognized in earnings or reported as a component of other comprehensive income (loss), depending upon the intended use of the derivative and the resulting designation. The fair value of derivative instruments is determined by reference to quoted market prices of listed contracts, published quotations or quotations from brokers.

        Policies and procedures and risk limits are established to control the level of market, credit, liquidity and operational and administrative risks assumed by the Company. SCANA's Board of Directors has delegated to a Risk Management Committee the authority to set risk limits, establish policies and procedures for risk management and measurement, and oversee and review the risk management process and infrastructure. The Risk Management Committee, which is comprised of certain officers, including the Company's Risk Management Officer and senior officers, apprises the Board of Directors with regard to the management of risk and brings to the Board's attention any areas of concern. Written policies define the physical and financial transactions that are approved, as well as the authorization requirements and limits for transactions.

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Commodities

        The Company uses derivative instruments to hedge forward purchases and sales of natural gas, which create market risks of different types. Instruments designated as cash flow hedges are used to hedge risks associated with fixed price obligations in a volatile market and risks associated with price differentials at different delivery locations. The basic types of financial instruments utilized are exchange-traded instruments, such as New York Mercantile Exchange (NYMEX) futures contracts or options, and over-the-counter instruments such as options and swaps, which are typically offered by energy and financial institutions.

        The Company's regulated gas operations (SCE&G and PSNC Energy) hedge natural gas purchasing activities using over-the-counter options and swaps and NYMEX futures and options. SCE&G's tariffs include a purchased gas adjustment (PGA) clause that provides for the recovery of actual gas costs incurred. The SCPSC has ruled that the results of these hedging activities are to be included in the PGA. As such, costs of related derivatives utilized to hedge gas purchasing activities are recoverable through the weighted average cost of gas calculation. The offset to the change in fair value of these derivatives is recorded as a regulatory asset or liability. PSNC Energy's tariffs also include a provision for the recovery of actual gas costs incurred. PSNC Energy records premiums, transaction fees, margin requirements and any realized and unrealized gains or losses from its hedging program in deferred accounts as a regulatory asset or liability for the over- or under-recovery of gas costs.

        The Company's nonregulated gas operations recognize gains and losses as a result of qualifying cash flow hedges whose hedged transactions occur during the reporting period and record them in cost of gas. The effects of gains or losses resulting from these hedging activities are either offset by the recording of the related hedged transactions or are included in gas sales pricing decisions made by the business unit. The Company estimates that most of the December 31, 2007 unrealized loss balance of $6.6 million, net of tax, will be reclassified from accumulated other comprehensive income (loss) to earnings within the next twelve months as an increase to gas cost if market prices remain at current levels. As of December 31, 2007, all of the Company's cash flow hedges settle by their terms before the end of December 2010.

        PSNC Energy utilizes asset management and supply service agreements with counterparties for certain of its natural gas storage facilities. At December 31, 2007, such counterparties held 44% of PSNC Energy's natural gas inventory, with a carrying value of $40.1 million, through either capacity release or agency relationships. Under the terms of the asset management agreements, PSNC Energy receives storage asset management fees and, in certain instances, a share of profits. No fees are received under supply service agreements. The agreements expire at various times through March 31, 2009.

Interest Rate Swaps

        The Company uses interest rate swap agreements to manage interest rate risk. These swaps provide for the Company to pay variable and receive fixed rate interest payments and are designated as fair value hedges of certain debt instruments. The Company may terminate a swap and may replace it with a new swap also designated as a fair value hedge. At December 31, 2007 the estimated fair value of the Company's swaps totaled $0.6 million related to combined notional amounts of $16.0 million.

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        Payments received upon termination of a swap designated as a fair value hedge are recorded as basis adjustments to long-term debt and are amortized as reductions to interest expense over the term of the underlying debt. The fair value of the swaps is recorded within other deferred debits or credits on the balance sheet. The resulting entries serve to reflect the hedged long-term debt at its fair value. Periodic receipts or payments related to the swaps are credited or charged to interest expense as incurred.

        In anticipation of the issuance of debt, the Company may use interest rate lock or similar swap agreements to manage interest rate risk. These arrangements are designated as cash flow hedges. Payments made or received upon termination of such agreements by regulated subsidiaries are recorded in regulatory assets or regulatory liabilities, respectively, and if by the holding company, are recorded in accumulated other comprehensive income. Payments made or received are amortized to interest expense over the term of the underlying debt. As permitted by SFAS 104, "Statement of Cash Flows — Net Reporting of Certain Cash Receipts and Cash Payments and Classification of Cash Flows from Hedging Transactions," payments received or made are classified as a financing activity in the consolidated statement of cash flows.

        In June 2007 SCANA entered into an agreement to issue and sell Floating Rate Senior Notes due June 1, 2034, in an aggregate principal amount of between $90 million and $110 million. In December 2007 SCANA issued $40 million of the Floating Rate Senior Notes, and through a swap agreement has obtained a fixed rate of 6.47% on those notes. The remaining notes are to be issued in December 2008 and June 2009. At December 31, 2007 the estimated fair value of the Company's forward starting interest rate swap related to the Floating Rate Senior Notes totaled $7.2 million (loss).

        In the fourth quarter of 2007 SCE&G entered into several 30-year forward-starting swaps with an aggregate notional of $250 million. These swaps were terminated in January 2008 concurrent with the issuance by SCE&G of $250 million of its First Mortgage Bonds. The loss of approximately $14 million on the settlement of these swaps will be amortized over the 30-year life of the bonds.

10. COMMITMENTS AND CONTINGENCIES

A. Nuclear Insurance

        The Price-Anderson Indemnification Act deals with public liability for a nuclear incident and establishes the liability limit for third-party claims associated with any nuclear incident at $10.5 billion. Each reactor licensee is currently liable for up to $100.6 million per reactor owned for each nuclear incident occurring at any reactor in the United States, provided that not more than $15 million of the liability per reactor would be assessed per year. SCE&G's maximum assessment, based on its two-thirds ownership of Summer Station, would be approximately $67.1 million per incident, but not more than $10 million per year.

        SCE&G currently maintains policies (for itself and on behalf of Santee Cooper, the one-third owner of Summer Station) with Nuclear Electric Insurance Limited. The policies, covering the nuclear facility for property damage, excess property damage and outage costs, permit retrospective assessments under certain conditions to cover insurer's losses. Based on the current annual premium, SCE&G's portion of the retrospective premium assessment would not exceed $14.1 million.

        To the extent that insurable claims for property damage, decontamination, repair and replacement and other costs and expenses

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arising from a nuclear incident at Summer Station exceed the policy limits of insurance, or to the extent such insurance becomes unavailable in the future, and to the extent that SCE&G's rates would not recover the cost of any purchased replacement power, SCE&G will retain the risk of loss as a self-insurer. SCE&G has no reason to anticipate a serious nuclear incident at Summer Station. However, if such an incident were to occur, it would have a material adverse impact on the Company's results of operations, cash flows and financial position.

B. Environmental

    SCE&G

        The United States Environmental Protection Agency (EPA) issued a final rule in 2005 known as the Clean Air Interstate Rule (CAIR). CAIR requires the District of Columbia and 28 states, including South Carolina, to reduce nitrogen oxide and sulfur dioxide emissions in order to attain mandated state levels. CAIR sets emission limits to be met in two phases beginning in 2009 and 2015, respectively, for nitrogen oxide and beginning in 2010 and 2015, respectively, for sulfur dioxide. Numerous states, environmental organizations, industry groups and individual companies have challenged the rule, seeking a change in the method CAIR uses to allocate sulfur dioxide emission allowances. The Company believes that installation of additional air quality controls will be needed to meet the CAIR requirements. Although compliance plans and costs to comply with the rule have not been determined, it is believed that such costs will be material and will be recoverable through rates.

        The EPA issued a final rule referred to as the Clean Air Mercury Rule (CAMR) in 2005 establishing a mercury emissions cap and trade program for coal-fired power plants that required limits to be met in two phases, in 2010 and 2018. Numerous parties challenged the rule. On February 8, 2008, the United States Circuit Court for the District of Columbia vacated the rule for electric utility steam generating units. The Company cannot predict the effect of this ruling on implementation of CAMR state implementation plans (SIPS) and newly promulgated CAMR regulations by the states.

        SCE&G has been named, along with 53 others, by the EPA as a potentially responsible party (PRP) at the Alternate Energy Resources, Inc. (AER) Superfund site located in Augusta, Georgia. The EPA placed the site on the National Priorities List on April 19, 2006. AER conducted hazardous waste storage and treatment operations from 1975 to 2000, when the site was abandoned. While operational, AER processed fuels from waste oils, treated industrial coolants and oil/water emulsions, recycled solvents and blended hazardous waste fuels. During that time, SCE&G occasionally used AER for the processing of waste solvents, oily rags and oily wastewater. The EPA and the State of Georgia have documented that a release or releases have occurred at the site leading to contamination of groundwater, surface water and soils. The EPA and the State of Georgia have conducted a preliminary assessment and site inspection. The site has not been remediated nor has a clean-up cost been estimated. Although a basis for the allocation of clean-up costs among the PRPs is unclear, SCE&G does not believe that its involvement at this site would result in an allocation of costs that would have a material adverse impact on its results of operations, cash flows or financial condition. Any cost allocated to SCE&G arising from the remediation of this site, net of insurance recoveries, is expected to be recoverable through rates.

        SCE&G has been named, along with 29 others, by the EPA as a PRP at the Carolina Transformer Superfund site located in Fayetteville, North Carolina. The Carolina

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Transformer Company (CTC) conducted an electrical transformer rebuilding and repair operation at the site from 1959 to 1986. During that time, SCE&G occasionally used CTC for the repair of existing transformers, purchase of new transformers and sale of used transformers. In 1984, the EPA initiated a remediation of PCB-contaminated soil and groundwater at the site. The EPA reports that it has spent $36 million to date. In 2008, SCE&G, along with other parties, reached a settlement with the EPA and the U.S. Department of Justice on this matter. The settlement, which is subject to court approval, would result in an allocation of cost, net of insurance recoveries, to SCE&G that is not material, and such cost is expected to be recoverable through rates.

        SCE&G maintains an environmental assessment program to identify and evaluate its current and former operations sites that could require environmental clean-up. As site assessments are initiated, estimates are made of the amount of expenditures, if any, deemed necessary to investigate and remediate each site. These estimates are refined as additional information becomes available; therefore, actual expenditures could differ significantly from the original estimates. Amounts estimated and accrued to date for site assessments and clean-up relate solely to regulated operations. SCE&G defers site assessment and cleanup costs and recovers them through rates (see Note 1). The deferral includes the estimated costs associated with the following matters.

        SCE&G is responsible for four decommissioned MGP sites in South Carolina which contain residues of by-product chemicals. These sites are in various stages of investigation, remediation and monitoring under work plans approved by the South Carolina Department of Health and Environmental Control. SCE&G anticipates that major remediation activities at these sites will continue until 2012 and will cost an additional $11.9 million. In addition, the National Park Service of the Department of the Interior made an initial demand to SCE&G for payment of $9.1 million for certain costs and damages relating to the MGP site in Charleston, South Carolina. SCE&G expects to recover any cost arising from the remediation of these four sites through rates. At December 31, 2007, deferred amounts, net of amounts previously recovered through rates and insurance settlements, totaled $16.7 million.

    PSNC Energy

        PSNC Energy is responsible for environmental clean-up at five sites in North Carolina on which MGP residuals are present or suspected. PSNC Energy's actual remediation costs for these sites will depend on a number of factors, such as actual site conditions, third-party claims and recoveries from other PRPs. PSNC Energy has recorded a liability and associated regulatory asset of $4.6 million, which reflects its estimated remaining liability at December 31, 2007. PSNC Energy expects to recover through rates any costs, net of insurance recoveries, allocable to PSNC Energy arising from the remediation of these sites through rates.

C. Franchise Agreements

        See Note 1B for a discussion of the electric and gas franchise agreements between the Company and the cities of Columbia and Charleston.

D. Claims and Litigation

        In February 2008 the consumer affairs staff (the staff) of the Georgia Public Service Commission (GPSC) alleged to the GPSC that SCANA Energy Marketing, Inc. (SCANA Energy) and the state's largest natural gas marketer (the marketers) had overcharged certain of their

F-62



respective customers. The staff alleges that the marketers failed to inform customers with more expensive rate plans that a lower rate plan was available, charged customers in excess of the published price, and failed to give proper notice of a change in methodology for computing variable rates. SCANA Energy believes it complied with all applicable rules and regulations, that none of its customers were treated unfairly, and that all requests it received from customers to be switched to a lower rate plan were honored. SCANA Energy has responded that these types of pricing plans exist in many deregulated markets, such as telecommunications, and are a natural development in a competitive environment. Therefore, SCANA has declined a GPSC settlement proposal and the GPSC has scheduled a formal investigation into the matter. Separately, without admitting fault, the other marketer has settled the matter with the GPSC. While the Company cannot determine the final outcome, it believes that a resolution of this matter will not have a material adverse impact on its results of operations, cash flows or financial condition.

        On February 26, 2008, a purported class action was filed in U.S. District Court for the Northern District of Georgia, styled Weiskircher, et al. v. SCANA Energy Marketing, Inc., containing similar allegations to those alleged by the staff and seeking damages on behalf of a class of Georgia customers. SCANA Energy is evaluating the lawsuit.

        In May 2004, SCANA and SCE&G were served with a purported class action lawsuit styled as Douglas E. Gressette, individually and on behalf of other persons similarly situated v. South Carolina Electric & Gas Company and SCANA Corporation. The case was filed in South Carolina's Circuit Court of Common Pleas for the Ninth Judicial Circuit. The plaintiff alleges that SCANA and SCE&G made improper use of certain easements and rights-of-way by allowing fiber optic communication lines and/or wireless communication equipment to transmit communications other than SCANA's and SCE&G's electricity-related internal communications. The plaintiff asserted causes of action for unjust enrichment, trespass, injunction and declaratory judgment. The plaintiff did not assert a specific dollar amount for the claims. SCANA and SCE&G believe their actions are consistent with governing law and the applicable documents granting easements and rights-of-way. The Circuit Court granted SCANA's and SCE&G's motion to dismiss and issued an order dismissing the case in June 2005. The plaintiff appealed to the South Carolina Supreme Court. The Supreme Court overruled the Circuit Court in October 2006 and returned the case to the Circuit Court for further consideration. In June 2007, the Circuit Court issued a ruling that limits the plaintiff's purported class to owners of easements situated in Charleston County, South Carolina. The plaintiff appealed this ruling to the South Carolina Court of Appeals and the Court of Appeals has dismissed the appeal, determining that the Circuit Court ruling is not immediately appealable. Plaintiff's motion for class certification was recently heard and correspondence from the Circuit Court indicates the judge's intention to certify the class. There has been no formal order and the class remains limited to easements in Charleston County. SCANA and SCE&G will continue to mount a vigorous defense and believe that the resolution of these claims will not have a material adverse impact on their results of operations, cash flows or financial condition.

        A complaint was filed in October 2003 against SCE&G by the State of South Carolina alleging that SCE&G violated the Unfair Trade Practices Act by charging municipal franchise fees to some customers residing outside a municipality's limits. The complaint sought

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restitution to all affected customers and penalties of up to $5,000 for each separate violation. The claim against SCE&G was settled by an agreement between the parties, and the settlement was approved in 2004 by South Carolina's Circuit Court of Common Pleas for the Fifth Judicial Circuit. In addition, SCE&G filed a petition with the SCPSC in October 2003 pursuant to S. C. Code Ann. R.103-836. The petition requests that the SCPSC exercise its jurisdiction to investigate the operation of the municipal franchise fee collection requirements applicable to SCE&G's electric and gas service, to approve SCE&G's efforts to correct any past franchise fee billing errors, to adopt improvements in the system which will reduce such errors in the future, and to adopt any regulation that the SCPSC deems just and proper to regulate the franchise fee collection process. A hearing on this petition has not been scheduled. The Company believes that the resolution of these matters will not have a material adverse impact on its results of operations, cash flows or financial condition.

        The Company is also engaged in various other claims and litigation incidental to its business operations which management anticipates will be resolved without a material adverse impact on the Company's results of operations, cash flows or financial condition.

E. Operating Lease Commitments

        The Company is obligated under various operating leases with respect to office space, furniture and equipment. Leases expire at various dates through 2013. Rent expense totaled approximately $19.0 million, $15.0 million and $13.9 million in 2007, 2006 and 2005, respectively. Future minimum rental payments under such leases are as follows:

 
  Millions of dollars
2008   $ 16
2009     11
2010     2
2011     1
2012     1
Thereafter     5
   
Total   $ 36
   

        At December 31, 2007 minimum rentals to be received under noncancelable subleases with remaining lease terms in excess of one year totaled approximately $3.7 million.

F. Purchase Commitments

        The Company is obligated for purchase commitments that expire at various dates through 2034. Amounts expended under forward contracts for natural gas purchases, gas transportation capacity agreements, coal supply contracts, nuclear fuel contracts, construction projects and other commitments totaled $2.3 billion, $2.4 billion and $2.2 billion in 2007, 2006 and 2005, respectively. Future payments under such purchase commitments are as follows:

 
  Millions of dollars
2008   $ 1,729
2009     1,080
2010     640
2011     583
2012     546
Thereafter     3,261
   
Total   $ 7,839
   

        Forward contracts for natural gas purchases include customary "make-whole" or default provisions, but are not considered to be "take-or-pay" contracts.

        In addition, included in purchase commitments are customary purchase orders under which the Company has the option to utilize certain vendors without the obligation to

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do so. The Company may terminate such commitments without penalty.

G. Asset Retirement Obligations

        In accordance with SFAS 143, "Accounting for Asset Retirement Obligations," as interpreted by FIN 47, "Accounting for Conditional Asset Retirement Obligations," the Company recognizes a liability for the fair value of an ARO when incurred if the fair value of the liability can be reasonably estimated. Uncertainty about the timing or method of settlement of a conditional ARO is factored into the measurement of the liability when sufficient information exists, but such uncertainty is not a basis upon which to avoid liability recognition.

        SFAS 143 applies to legal obligations associated with the retirement of long-lived tangible assets that result from their acquisition, construction, development and normal operation and relates primarily to the Company's regulated utility operations. As of December 31, 2007, the Company has recorded an ARO of approximately $99 million for nuclear plant decommissioning (see Note 1G) and an ARO of approximately $208 million for other conditional obligations related to generation, transmission and distribution properties, including gas pipelines. All of the amounts recorded are based upon estimates which are subject to varying degrees of imprecision, particularly since such payments will be made many years in the future.

        A reconciliation of the beginning and ending aggregate carrying amount of asset retirement obligations is as follows:

Millions of dollars
  2007
  2006
 
Beginning balance   $ 292   $ 322  
Liabilities incurred     1     1  
Liabilities settled     (2 )   (2 )
Accretion expense     17     17  
Revisions in estimated cash flows     (1 )   (46 )
   
 
 
Ending Balance   $ 307   $ 292  
   
 
 

        Revisions in estimated cash flows in 2006 primarily related to the expectation of lower cost escalations associated with decommissioning Summer Station than had been assumed in the prior cash flow analysis.

11. SEGMENT OF BUSINESS INFORMATION

        The Company's reportable segments are described below. The accounting policies of the segments are the same as those described in the summary of significant accounting policies. The Company records intersegment sales and transfers of electricity and gas based on rates established by the appropriate regulatory authority. Nonregulated sales and transfers are recorded at current market prices.

        Electric Operations is primarily engaged in the generation, transmission and distribution of electricity, and is regulated by the SCPSC and FERC.

        Gas Distribution, comprised of the local distribution operations of SCE&G and PSNC Energy, is engaged in the purchase and sale, primarily at retail, of natural gas. SCE&G and PSNC Energy are regulated by the SCPSC and the NCUC, respectively.

        Gas Transmission is comprised of CGTC which, effective November 1, 2006, began operating as an open access, transportation-only pipeline company regulated by FERC. CGTC resulted from the merger of SCG Pipeline (previously reported in All Other) into SCPC. Prior to the merger, SCPC purchased, transported and sold natural gas intrastate and SCG Pipeline transported gas interstate. The results for CGTC, SCPC and SCG Pipeline appear in the Gas Transmission reportable segment for all periods presented.

        Retail Gas Marketing markets natural gas in Georgia and is regulated as a marketer by the Georgia Public Service Commission. Energy Marketing markets natural gas to industrial and

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large commercial customers and municipalities, primarily in the Southeast.

        The Company's regulated reportable segments share a similar regulatory environment and, in some cases, overlapping service areas. However, Electric Operations' product differs from the other segments, as does its generation process and method of distribution. The gas segments differ from each other in their regulatory environment, the class of customers each serves and the marketing strategies resulting from those differences. The marketing segments differ from each other in their respective markets and customer type.

Disclosure of Reportable Segments (Millions of dollars)

 
  Electric Operations
  Gas Distribution
  Gas Transmission
  Retail Gas Marketing
  Energy Marketing
  All Other
  Adjustments/ Eliminations
  Consolidated Total
 
2007                                                  
Customer Revenue   $ 1,954   $ 1,096   $ 9   $ 584   $ 978   $ 29   $ (29 ) $ 4,621  
Intersegment Revenue     7     1     40         203     340     (591 )    
Operating Income     464     111     18     n/a     n/a         40     633  
Interest Expense     16     26     6     1             157     206  
Depreciation and Amortization     258     56     7     3         17     (17 )   324  
Income Tax Expense     3     20     8     16     2     5     86     140  
Net Income (Loss)     n/a     n/a     n/a     28     3     (18 )   307     320  
Segment Assets     5,925     1,956     356     188     123     1,112     505     10,165  
Expenditures for Assets     540     154     10         2     9     10     725  
Deferred Tax Assets     4     8     19     6     6     1     (35 )   9  

2006

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Customer Revenue   $ 1,877   $ 1,078   $ 179   $ 608   $ 821   $ 66   $ (66 ) $ 4,563  
Intersegment Revenue     9         322         128     306     (765 )    
Operating Income     456     83     30     n/a     n/a     n/a     34     603  
Interest Expense     15     24     7     2             161     209  
Depreciation and Amortization     268     54     8     3         15     (15 )   333  
Income Tax Expense     3     16     11     19         6     64     119  
Net Income (Loss)     n/a     n/a     n/a     30         (11 )   291     310  
Segment Assets     5,520     1,847     315     208     142     649     1,136     9,817  
Expenditures for Assets     304     174     13         3     35     (2 )   527  
Deferred Tax Assets     n/a     n/a     7     3     12     2     10     34  

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2005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Customer Revenue   $ 1,909   $ 1,168   $ 237   $ 664   $ 799   $ 70   $ (70 ) $ 4,777  
Intersegment Revenue     4     1     427         146     317     (895 )    
Operating Income     299     75     26     n/a     n/a     n/a     36     436  
Interest Expense     13     21     7     2             169     212  
Depreciation and Amortization     450     49     8     3         13     (13 )   510  
Income Tax Expense (Benefit)     4     18     8     14     (1 )   12     (173 )   (118 )
Net Income (Loss)     n/a     n/a     n/a     24     (1 )   (69 )   366     320  
Segment Assets     5,531     1,701     427     284     128     553     895     9,519  
Expenditures for Assets     280     122     5         1     18     (41 )   385  
Deferred Tax Assets     n/a     n/a     6     8     3     2     7     26  

        Revenues and assets from segments below the quantitative thresholds are attributable to other direct and indirect wholly-owned subsidiaries of the Company. These subsidiaries conduct nonregulated operations in energy-related and telecommunications industries. None of these subsidiaries met the quantitative thresholds for determining reportable segments during any period reported.

        Management uses operating income to measure segment profitability for SCE&G and other regulated operations and evaluates utility plant, net, for segments attributable to SCE&G. As a result, SCE&G does not allocate interest charges, income tax expense (benefit) or assets other than utility plant to its segments. For nonregulated operations, management uses net income (loss) as the measure of segment profitability and evaluates total assets for financial position. Interest income is not reported by segment and is not material. In accordance with SFAS 109, the Company's deferred tax assets are netted with deferred tax liabilities for reporting purposes.

        The Consolidated Financial Statements report operating revenues which are comprised of the energy-related reportable segments. Revenues from non-reportable segments are included in Other Income. Therefore the adjustments to total operating revenues remove revenues from non-reportable segments. Adjustments to Net Income consist of SCE&G's unallocated net income.

        Segment Assets include utility plant, net for SCE&G's Electric Operations and Gas Distribution, and all assets for PSNC Energy and the remaining segments. As a result, adjustments to assets include non-utility plant and non-fixed assets for SCE&G.

        Adjustments to Interest Expense, Income Tax Expense (Benefit), Expenditures for Assets and Deferred Tax Assets include primarily the totals from SCANA or SCE&G that are not allocated to the segments. Interest Expense is also adjusted to eliminate charges between affiliates. Adjustments to Depreciation and Amortization consist of non-reportable segment expenses, which are not included in the depreciation and amortization reported on a consolidated basis. Expenditures for Assets are adjusted for AFC. Deferred Tax Assets are adjusted to net them against deferred tax liabilities on a consolidated basis.

F-67


12. QUARTERLY FINANCIAL DATA (UNAUDITED)

2007 Millions of dollars, except per share amounts

  First Quarter
  Second Quarter
  Third Quarter
  Fourth Quarter
  Annual
Total operating revenues   $ 1,363   $ 1,007   $ 1,079   $ 1,172   $ 4,621
Operating income     163     116     189     165     633
Net income     86     55     92     87     320
Basic and diluted earnings per share     .73     .47     .79     .75     2.74

2006 Millions of dollars, except per share amounts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Total operating revenues   $ 1,389   $ 944   $ 1,062   $ 1,168   $ 4,563
Operating income     185     122     156     140     603
Income before cumulative effect of accounting change     92     58     89     65     304
Cumulative effect of accounting change, net of taxes(1)     6                 6
Net income     98     58     89     65     310
Basic and diluted earnings per share     .85     .50     .76     .57     2.68
(1)
The cumulative effect of accounting change is attributable to the adoption of SFAS 123(R) in the first quarter of 2006. See Note 3.

F-68


MANAGEMENT REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING


        The management of SCANA Corporation (SCANA) is responsible for establishing and maintaining adequate internal control over financial reporting. SCANA's internal control system was designed by or under the supervision of SCANA's management, including the Chief Executive Officer (CEO) and Chief Financial Officer (CFO), to provide reasonable assurance to SCANA's management and board of directors regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

        All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, the effectiveness of the internal control over financial reporting may deteriorate in future periods due to either changes in conditions or declining levels of compliance with policies or procedures.

        SCANA's management assessed the effectiveness of SCANA's internal control over financial reporting as of December 31, 2007. In making this assessment, SCANA used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework. Based on this assessment, SCANA's management believes that, as of December 31, 2007, internal control over financial reporting is effective based on those criteria.

        SCANA's independent registered public accounting firm has issued an attestation report on SCANA's internal control over financial reporting. This report follows.

F-69


ATTESTATION REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON INTERNAL CONTROL OVER FINANCIAL REPORTING


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

SCANA Corporation

        We have audited the internal control over financial reporting of SCANA Corporation and subsidiaries (the "Company") as of December 31, 2007, based on the criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

        A company's internal control over financial reporting is a process designed by, or under the supervision of, the company's principal executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

        Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

        In our opinion, SCANA Corporation and subsidiaries maintained, in all material respects, effective internal control over financial reporting as of December 31, 2007, based on the criteria

F-70



established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

        We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2007, of SCANA Corporation and subsidiaries and our report dated February 29, 2008, expressed an unqualified opinion on those financial statements and financial statement schedule.

SIGNATURE

Columbia, South Carolina
February 29, 2008

F-71


MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS


COMMON STOCK INFORMATION

        Price Range (New York Stock Exchange Composite Listing):

 
  2007
  2006
 
  4th Qtr.
  3rd Qtr.
  2nd Qtr.
  1st Qtr.
  4th Qtr.
  3rd Qtr.
  2nd Qtr.
  1st Qtr.
High   $ 43.73   $ 39.75   $ 45.49   $ 43.51   $ 42.43   $ 41.65   $ 40.41   $ 41.42
Low   $ 38.69   $ 32.93   $ 37.91   $ 39.92   $ 39.55   $ 38.35   $ 36.92   $ 39.02

DIVIDENDS PER SHARE

        SCANA declared quarterly dividends on its common stock of $.44 per share in 2007 and $.42 per share in 2006.

        SCANA common stock trades on The New York Stock Exchange, using the ticker symbol SCG. Newspaper stock listings use the name SCANA. At February 20, 2008 there were 116,664,933 shares of SCANA Common Stock outstanding which were held by 32,995 stockholders of record.

        On February 20, 2008 the closing price of SCANA common stock on the New York Stock Exchange was $38.94.

        For a discussion of provisions that could limit the payment of cash dividends, see Financial Limits and Related Matters in Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 6 to the consolidated financial statements.

F-72


PERFORMANCE GRAPH


        The line graphs below compare the cumulative TSR on our common stock over five and seven year periods, assuming reinvestment of dividends, with the S&P Utilities Index, the S&P 500 Index and two groups of peer utility industry issuers. We include the peer group indices in the performance graphs because we measure our TSR against these peer group indices to determine whether certain performance share goals under the Long-Term Equity Compensation Plan have been met. The returns for each issuer in the 2007 Peer Group and 2006 Peer Group are weighted according to the respective issuer's stock market capitalization at the beginning of each period.

        The companies in the 2007 Peer Group index are listed in "Compensation Discussion and Analysis — Long-Term Equity Compensation Plan — Components of and Performance Criteria for the 2007-2009 Performance Share Awards and Earned Awards for the 2007 Performance Period" on page 28. The companies in the 2006 Peer Group index were as follows:

    Allegheny Energy, Inc.; Allete Inc.; Alliant Energy Corporation; Ameren Corporation; Avista Corporation; Cinergy Corp.; Cleco Corporation; CMS Energy Corporation; Consolidated Edison, Inc.; Constellation Energy Group, Inc.; Dominion Resources, Inc.; DPL, Inc.; DTE Energy Company; Duquesne Light Holdings, Inc.; Edison International; Energy East Corporation; Entergy Corporation; FirstEnergy Corp.; FPL Group, Inc.; Great Plains Energy, Inc.; Hawaiian Electric Industries, Inc.; IDACORP, Inc.; NiSource Inc.; Northeast Utilities; NorthWestern Corporation; NSTAR; OGE Energy Corp.; Pepco Holdings, Inc.; Pinnacle West Capital Corporation; PNM Resources, Inc.; PPL Corporation; Progress Energy, Inc.; Public Service Enterprise Group, Inc.; Puget Energy, Inc.; Sierra Pacific Resources; Southern Company; TECO Energy, Inc.; UIL Holdings Corporation; UniSource Energy Corporation; Vectren Corporation; Westar Energy, Inc.; Wisconsin Energy Corporation; WPS Resources Corporation.

        The companies in the 2006 Peer Group index included six additional companies that were not included in the 2007 Peer Group, and did not include four additional companies that were added to the 2007 Peer Group.

        We periodically review and update our peer groups which are provided to us by our compensation consultant, and the peer groups may differ from one period to the next because certain companies may no longer meet the compensation consultant's requirements for inclusion (for example a change in revenues may cause a company no longer to qualify for inclusion). In addition, we may also request that our compensation consultant include or exclude a particular company if we have information that such a change would be appropriate.

        The information set forth in this Performance Graph Section shall not be deemed to be filed with the Securities and Exchange Commission or incorporated by reference into any of our filings under the Securities Exchange Act of 1934 or the Securities Act of 1933, unless specifically incorporated by reference therein.

F-73


SCANA Corporation
Comparison of Five-Year Cumulative Total Return*
SCANA Corporation, Long-Term Equity Compensation Plan Peer Groups,
S&P Utilities and S&P 500

CHART

 
  2002
  2003
  2004
  2005
  2006
  2007
SCANA Corp.   100.00   115.32   137.96   143.27   154.14   167.02
2006 Peer Group   100.00   120.77   140.73   159.87   192.12   226.17
2007 Peer Group   100.00   123.35   147.22   168.42   204.08   238.60
S&P Utilities   100.00   126.00   155.77   181.81   219.92   262.79
S&P 500   100.00   128.63   142.59   149.58   173.15   182.64

*
Assumes $100 invested on December 31, 2002, in SCANA common stock, the 2007 Peer Group and the S&P Indices.

F-74


SCANA Corporation
Comparison of Seven-Year Cumulative Total Return*
SCANA Corporation, Long-Term Equity Compensation Plan Peer Groups,
S&P Utilities and S&P 500

CHART

 
  2000
  2001
  2002
  2003
  2004
  2005
  2006
  2007
SCANA Corp.   100.00   98.37   114.35   131.86   157.75   163.83   176.26   190.98
2006 Peer Group   100.00   94.75   91.05   109.97   128.14   145.56   174.92   205.93
2007 Peer Group   100.00   91.88   77.95   96.15   114.76   131.29   159.08   186.00
S&P Utilities   100.00   69.68   48.81   61.51   76.04   88.75   107.35   128.28
S&P 500   100.00   88.17   68.73   88.41   98.00   102.80   119.00   125.53

*
Assumes $100 invested on December 31, 2000, in SCANA common stock, the 2007 Peer Group and the S&P Indices.

F-75





EXECUTIVE OFFICERS

        The executive officers are elected at the annual meeting of the Board of Directors, held immediately after the annual meeting of shareholders, and hold office until the next such annual meeting, unless (1) a resignation is submitted, (2) the Board of Directors shall otherwise determine or (3) as provided in the By-laws of SCANA. Positions held are for SCANA and all subsidiaries unless otherwise indicated.

Name

  Age
  Positions Held During Past Five Years
  Dates
William B. Timmerman   61   Chairman of the Board, President and Chief Executive Officer   *-present

Jimmy E. Addison

 

47

 

Senior Vice President and Chief Financial Officer
Vice President — Finance

 

2006-present
*-2006

Joseph C. Bouknight

 

55

 

Senior Vice President — Human Resources
Vice President Human Resources — Dan River, Inc. — Danville, VA

 

2004-present
*-2004

George J. Bullwinkel

 

59

 

President and Chief Operating Officer — SEMI
President and Chief Operating Officer — SCI and ServiceCare
President and Chief Operating Officer — SCPC and SCG Pipeline

 

2004-present
*-present
*-2004

Sarena D. Burch

 

50

 

Senior Vice President — Fuel Procurement and Asset Management — SCE&G and PSNC Energy
Senior Vice President — Fuel Procurement and Asset Management — SCPC

 

2003-present
  
*-2006

Stephen A. Byrne

 

48

 

Senior Vice President — Generation, Nuclear and Fossil Hydro — SCE&G
Senior Vice President — Nuclear Operations

 

2004-present
*-2004

Paul V. Fant

 

54

 

President and Chief Operating Officer — CGTC (formerly SCPC and SCG Pipeline)
Senior Vice President Transmission Services — SCE&G
Executive Vice President — SCPC and SCG Pipeline

 

2004-present
2004-2007
*-2004

Kevin B. Marsh

 

52

 

President and Chief Operating Officer — SCE&G
Senior Vice President and Chief Financial Officer

 

2006-present
*-2006

Charles B. McFadden

 

63

 

Senior Vice President — Governmental Affairs and Economic Development — SCANA Services

 

*-present

Francis P. Mood, Jr.

 

70

 

Senior Vice President, General Counsel and Assistant Secretary
Attorney, Haynsworth Sinkler Boyd, P.A. — Columbia, SC

 

2005-present
*-2005
*
Indicates position held at least since March 1, 2003.



CERTIFICATIONS

        Following the 2007 Annual Meeting, SCANA submitted to the New York Stock Exchange (NYSE) the certification of the Chief Executive Officer required by Section 303A.12(a) of the NYSE Listed Company Manual. On February 29, 2008 SCANA filed with the Securities and Exchange Commission its Form 10-K which included, as Exhibits 31.01 and 31.02, the required Principal Executive Officer and Principal Financial Officer Sarbanes Oxley Section 302 Certifications.

F-76


SCANA LOGO

SCANA Corporation
1426 Main Street
Columbia, SC 29201
www.scana.com

GRAPHIC

Printed on Recycled Paper

LOGO


ADMISSION TICKET   GRAPHIC

SCANA CORPORATION
Annual Meeting of Shareholders
April 24, 2008

8:00 A.M.— Refreshments    

9:00 A.M.— Meeting Begins

Leaside

100 East Exchange Place

Columbia, SC 29209

       

GRAPHIC

                              PLEASE MARK VOTE /x/
Voting Instructions for Proposals 1 and 2

To vote for all nominees, mark the "For All" box. To withhold voting for all nominees, mark the
"Withhold" box. To withhold voting for a particular nominee, mark the "For All Except" box and enter
the number(s) corresponding with the exception(s) in the space provided. Your shares will be voted
for the remaining nominees.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL
NOMINEES AS DIRECTORS AND "FOR" PROPOSAL 2.

1.(a)

 

Election of Class I Nominee —
Term Expires 2009

 

01-

 

James W. Roquemore

 

 
   (b)   Election of Class II Nominee —
Term Expires 2010
  02-   James M. Micali    
   (c)   Election of Class III Nominees —
Terms Expire 2011
  03-
04-
05-
06-
  Bill L. Amick
Sharon A. Decker
D. Maybank Hagood
William B. Timmerman
   

2.  Approval of Appointment of Independent Registered Public Accounting Firm


 


                                      
  



                                      

  
GRAPHIC

 

 

 
ACCT #:

To vote, mark an 'X' in the appropriate box.

1.

 

For ALL Nominees / /
Withhold Authority / /
For ALL EXCEPT the following: / /
(
Write number(s) of nominee(s) below)

   
 
 
 
 
2.   For / /    Against / /    Abstain / /

Dated

 

 

, 2008
   
 

Sign here X                                                      
exactly as name(s) appears on this card.
                    X                                                      

SHARES WILL BE VOTED IN ACCORDANCE WITH YOUR
INSTRUCTIONS AS SET FORTH ABOVE.
IF NO INSTRUCTIONS ARE GIVEN, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED "FOR"
THE ELECTION OF ALL NOMINEES AS DIRECTORS AND
"FOR" PROPOSAL 2.
I will attend the Annual Meeting of
Shareholders on April 24, 2008 ........ 
/ /


SCANA CORPORATION
Annual Meeting of Shareholders
April 24, 2008

FORM OF PROXY
SCANA CORPORATION

Proxy Solicited on Behalf of
Board of Directors

The undersigned hereby appoints W.B. Timmerman and J.E. Addison, or either of them, as proxies with full power of substitution, to vote all shares of common stock standing in the undersigned's name on the books of the Company, at the Annual Meeting of Shareholders on April 24, 2008, and at any adjournment thereof, as instructed on the reverse hereof and in their discretion upon all other matters which may properly be presented for consideration at said meeting.

Please vote your proxy today, using one of the three convenient voting methods.

INSTRUCTIONS FOR VOTING YOUR PROXY

SCANA offers shareholders three alternative methods of voting this proxy:

•  By Telephone (using a touch-tone telephone)    •  Through the Internet (using a browser)
•  
By Mail (using the attached proxy card and postage-paid envelope)

Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you had returned your proxy card. We encourage you to use these cost-effective and convenient methods of voting, 24 hours a day, 7 days a week.

TELEPHONE VOTING     Available until 5:00 p.m. Eastern Daylight Time on April 23, 2008

•  This method of voting is available for residents of the U.S. and Canada
•  On a touch-tone telephone, call
TOLL FREE 1-877-412-6959, 24 hours a day, 7 days a week
•  In order to vote via telephone, have the voting form in hand, call the number above and follow the instructions
•  Your vote will be confirmed and cast as you directed

INTERNET VOTING    Available until 5:00 p.m. Eastern Daylight Time on April 23, 2008

•  Visit the Internet voting website at http://proxy.georgeson.com
•  In order to vote online, have the voting form in hand, go to the website listed above and follow the instructions
•  Your vote will be confirmed and cast as you directed
•  You will only incur your usual Internet charges

VOTING BY MAIL

•  Mark, sign and date your proxy card and return it in the enclosed postage-paid envelope
•  If you are voting by telephone or through the Internet,
please do not return your proxy card

GRAPHIC

GRAPHIC

DIRECTIONS TO LEASIDE
FROM CHARLOTTE:
Take I-77 south to Exit 9-A (Garners Ferry Road).
Follow the exit onto Garners Ferry Road under I-77. East Exchange Place is the first right turn off Garners Ferry Road immediately past Jim Hudson Automotive Company.
Follow to Leaside at end of East Exchange Place. The parking lot is located in front of the building.
FROM CHARLESTON:
Take I-26 to I-77 toward Charlotte.
Take Exit 9 and turn right at traffic light onto Garners Ferry Road. East Exchange Place is the first right turn off Garners Ferry Road immediately past Jim Hudson Automotive Company.
Follow to Leaside at end of East Exchange Place. The parking lot is located in front of the building.
FROM GREENVILLE:
Take I-26 to I-77 toward Charlotte.
Take Exit 9 and turn right at traffic light onto Garners Ferry Road. East Exchange Place is the first right turn off Garners Ferry Road immediately past Jim Hudson Automotive Company.
Follow to Leaside at end of East Exchange Place. The parking lot is located in front of the building.
FROM FIVE POINTS (COLUMBIA):
Take US 378/76—east (Devine Street/Garners Ferry Road) past the Veterans Administration Hospital and under I-77 overpass. East Exchange Place is the first right turn off Garners Ferry Road immediately past Jim Hudson Automotive Company.
Follow to Leaside at end of East Exchange Place. The parking lot is located in front of the building.

 

GRAPHIC

ADMISSION TICKET   GRAPHIC

SCANA CORPORATION
Annual Meeting of Shareholders
April 24, 2008

8:00 A.M.— Refreshments    

9:00 A.M.— Meeting Begins

Leaside

100 East Exchange Place

Columbia, SC 29209

       

GRAPHIC

                              PLEASE MARK VOTE /x/
Voting Instructions for Proposals 1 and 2

To vote for all nominees, mark the "For All" box. To withhold voting for all nominees, mark the
"Withhold" box. To withhold voting for a particular nominee, mark the "For All Except" box and enter
the number(s) corresponding with the exception(s) in the space provided. Your shares will be voted
for the remaining nominees.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL
NOMINEES AS DIRECTORS AND "FOR" PROPOSAL 2.

1.(a)

 

Election of Class I Nominee —
Term Expires 2009

 

01-

 

James W. Roquemore

 

 
   (b)   Election of Class II Nominee —
Term Expires 2010
  02-   James M. Micali    
   (c)   Election of Class III Nominees —
Terms Expire 2011
  03-
04-
05-
06-
  Bill L. Amick
Sharon A. Decker
D. Maybank Hagood
William B. Timmerman
   

2.  Approval of Appointment of Independent Registered Public Accounting Firm


 


                                      
  



                                      

  
GRAPHIC

 

 

 
ACCT #:

To vote, mark an 'X' in the appropriate box.

1.

 

For ALL Nominees / /
Withhold Authority / /
For ALL EXCEPT the following: / /
(
Write number(s) of nominee(s) below)

   
 
 
 
 
2.   For / /    Against / /    Abstain / /

Dated

 

 

, 2008
   
 

Sign here X                                                      
exactly as name(s) appears on this card.
                    X                                                      

SHARES WILL BE VOTED IN ACCORDANCE WITH YOUR
INSTRUCTIONS AS SET FORTH ABOVE.
IF NO INSTRUCTIONS ARE GIVEN, THE SHARES
REPRESENTED BY THIS PROXY WILL BE VOTED "FOR"
THE ELECTION OF ALL NOMINEES AS DIRECTORS AND
"FOR" PROPOSAL 2.
I will attend the Annual Meeting of
Shareholders on April 24, 2008 ........ 
/ /


SCANA CORPORATION
Annual Meeting of Shareholders
April 24, 2008

FORM OF PROXY
SCANA CORPORATION

Proxy Solicited on Behalf of
Board of Directors

The undersigned hereby appoints W.B. Timmerman and J.E. Addison, or either of them, as proxies with full power of substitution, to vote all shares of common stock standing in the undersigned's name on the books of the Company, at the Annual Meeting of Shareholders on April 24, 2008, and at any adjournment thereof, as instructed on the reverse hereof and in their discretion upon all other matters which may properly be presented for consideration at said meeting.

Please vote your proxy today, using one of the three convenient voting methods.

INSTRUCTIONS FOR VOTING YOUR PROXY

SCANA offers shareholders three alternative methods of voting this proxy:

•  By Telephone (using a touch-tone telephone)    •  Through the Internet (using a browser)
•  
By Mail (using the attached proxy card and postage-paid envelope)

Your telephone or Internet vote authorizes the named proxies to vote your shares in the same manner as if you had returned your proxy card. We encourage you to use these cost-effective and convenient methods of voting, 24 hours a day, 7 days a week.

TELEPHONE VOTING     Available until 5:00 p.m. Eastern Daylight Time on April 22, 2008

•  This method of voting is available for residents of the U.S. and Canada
•  On a touch-tone telephone, call
TOLL FREE 1-877-412-6959, 24 hours a day, 7 days a week
•  In order to vote via telephone, have the voting form in hand, call the number above and follow the instructions
•  Your vote will be confirmed and cast as you directed

INTERNET VOTING    Available until 5:00 p.m. Eastern Daylight Time on April 22, 2008

•  Visit the Internet voting website at http://proxy.georgeson.com
•  In order to vote online, have the voting form in hand, go to the website listed above and follow the instructions
•  Your vote will be confirmed and cast as you directed
•  You will only incur your usual Internet charges

VOTING BY MAIL

•  Mark, sign and date your proxy card and return it in the enclosed postage-paid envelope
•  If you are voting by telephone or through the Internet,
please do not return your proxy card

GRAPHIC

GRAPHIC

DIRECTIONS TO LEASIDE
FROM CHARLOTTE:
Take I-77 south to Exit 9-A (Garners Ferry Road).
Follow the exit onto Garners Ferry Road under I-77. East Exchange Place is the first right turn off Garners Ferry Road immediately past Jim Hudson Automotive Company.
Follow to Leaside at end of East Exchange Place. The parking lot is located in front of the building.
FROM CHARLESTON:
Take I-26 to I-77 toward Charlotte.
Take Exit 9 and turn right at traffic light onto Garners Ferry Road. East Exchange Place is the first right turn off Garners Ferry Road immediately past Jim Hudson Automotive Company.
Follow to Leaside at end of East Exchange Place. The parking lot is located in front of the building.
FROM GREENVILLE:
Take I-26 to I-77 toward Charlotte.
Take Exit 9 and turn right at traffic light onto Garners Ferry Road. East Exchange Place is the first right turn off Garners Ferry Road immediately past Jim Hudson Automotive Company.
Follow to Leaside at end of East Exchange Place. The parking lot is located in front of the building.
FROM FIVE POINTS (COLUMBIA):
Take US 378/76—east (Devine Street/Garners Ferry Road) past the Veterans Administration Hospital and under I-77 overpass. East Exchange Place is the first right turn off Garners Ferry Road immediately past Jim Hudson Automotive Company.
Follow to Leaside at end of East Exchange Place. The parking lot is located in front of the building.

 

GRAPHIC



QuickLinks

CHAIRMAN'S LETTER TO SHAREHOLDERS
NOTICE OF ANNUAL MEETING
PROXY STATEMENT