UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

Commission	Registrant, State of Incorporation,	I.R.S. Employer
File Number	Address and Telephone Number	Identification No.
1-8809	SCANA Corporation(a South Carolina corporation)	57-0784499
1-3375	South Carolina Electric & Gas Company(a South Carolina corporation)	57-0248695
	100 SCANA Parkway, Cayce, South Carolina 29033
	(803) 217-9000

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. SCANA Corporation Yes x No o  South Carolina Electric & Gas Company Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). SCANA Corporation Yes x No o  South Carolina Electric & Gas Company Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

SCANA Corporation	Large accelerated filer  x	Accelerated filer  o	Non-accelerated filer  o	Smaller reporting company  o	Emerging growth company  o
South Carolina Electric & Gas Company	Large accelerated filer  o	Accelerated filer  o	Non-accelerated filer  x	Smaller reporting company  o	Emerging growth company  o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

SCANA Corporation o     South Carolina Electric & Gas Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

SCANA Corporation Yes o No x  South Carolina Electric & Gas Company Yeso No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

	Description of	Shares Outstanding
Registrant	Common Stock	at October 31, 2017
SCANA Corporation	Without Par Value	142,616,254
South Carolina Electric & Gas Company	Without Par Value	40,296,147 (a)

(a) Held beneficially and of record by SCANA Corporation.

This combined Form 10-Q is separately filed by SCANA Corporation and South Carolina Electric & Gas Company.  Information contained herein relating to any individual registrant is filed by such registrant on its own behalf.  South Carolina Electric & Gas Company makes no representation as to information relating to SCANA Corporation or its subsidiaries (other than South Carolina Electric & Gas Company and its consolidated affiliates).

South Carolina Electric & Gas Company meets the conditions set forth in General Instruction H(1)(a) and (b) of Form 10-Q and therefore is filing this Form with the reduced disclosure format allowed under General Instruction H(2).

			Page
Cautionary Statement Regarding Forward-Looking Information			3
Definitions			4
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements			6
	SCANA Corporation		6
		Condensed Consolidated Balance Sheets	6
		Condensed Consolidated Statements of Income	8
		Condensed Consolidated Statements of Comprehensive Income	9
		Condensed Consolidated Statements of Cash Flows	10
		Condensed Consolidated Statements of Changes in Common Equity	11
	South Carolina Electric & Gas Company		12
		Condensed Consolidated Balance Sheets	12
		Condensed Consolidated Statements of Comprehensive Income	14
		Condensed Consolidated Statements of Cash Flows	15
		Condensed Consolidated Statements of Changes in Equity	16
	Notes to Condensed Consolidated Financial Statements		17
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			44
Item 3. Quantitative and Qualitative Disclosures About Market Risk			54
Item 4. Controls and Procedures			55
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			56
Item 1A. Risk Factors			58
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			69
Item 5. Other Information			69
Item 6. Exhibits			70
Signatures			71
Exhibit Index			72

2

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Statements included in this Quarterly Report on Form 10-Q 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 and estimated capital and other expenditures.  In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “should,” “expects,” “forecasts,” “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) uncertainties relating to the bankruptcy filing by WEC and WECTEC, including the effect of the anticipated rejection of the EPC Contract and the determination to cease construction of the New Units; (2) the ability of SCANA and its subsidiaries (the Company) to recover through rates the costs expended on the New Units, and a reasonable return on those costs, under the abandonment provisions of the BLRA or through a general rate case or other regulatory means; (3) changes in tax laws and realization of tax benefits and credits, and the ability or inability to realize credits and deductions, particularly in light of the abandonment of construction of the New Units; (4) the information is of a preliminary nature and may be subject to further and/or continuing review and adjustment; (5) legislative and regulatory actions, particularly changes related to electric and gas services, rate regulation, regulations governing electric grid reliability and pipeline integrity, environmental regulations including any imposition of fees or taxes on carbon emitting generating facilities, the BLRA, and any actions affecting the abandonment of the New Units; (6) current and future litigation, including particularly litigation or government investigations or actions involving or arising from the construction or abandonment of the New Units; (7) the results of short- and long-term financing efforts, including prospects for obtaining access to capital markets and other sources of liquidity, and the effect of rating agency actions on the Company’s cost of and access to capital and sources of liquidity; (8) the ability of suppliers, both domestic and international, to timely provide the labor, secure processes, components, parts, tools, equipment and other supplies needed which may be highly specialized or in short supply, at agreed upon quality and prices, for our construction program, operations and maintenance; (9) the results of efforts to ensure the physical and cyber security of key assets and processes; (10) changes in the economy, especially in areas served by subsidiaries of SCANA; (11) the impact of competition from other energy suppliers, including competition from alternate fuels in industrial markets; (12) the impact of conservation and demand side management efforts and/or technological advances on customer usage; (13) the loss of electricity sales to distributed generation, such as solar photovoltaic systems or energy storage systems; (14) growth opportunities for SCANA’s regulated and other subsidiaries; (15) the effects of weather, especially in areas where the generation and transmission facilities of SCANA and its subsidiaries are located and in areas served by SCANA’s subsidiaries; (16) changes in SCANA’s or its subsidiaries’ accounting rules and accounting policies; (17) payment and performance by counterparties and customers as contracted and when due; (18) the results of efforts to license, site, construct and finance facilities, and to receive related rate recovery, for electric generation and transmission; (19) the results of efforts to operate the Company's electric and gas systems and assets in accordance with acceptable performance standards, including the impact of additional distributed generation; (20) 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; (21) the availability of skilled, licensed and experienced human resources to properly manage, operate, and grow the Company’s businesses; (22) labor disputes; (23) performance of SCANA’s pension plan assets and the effect(s) of associated discount rates; (24) inflation or deflation; (25) changes in interest rates; (26) compliance with regulations; (27) natural disasters, man-made mishaps and acts of terrorism that directly affect our operations or the regulations governing them; and (28) the other risks and uncertainties described from time to time in the reports filed by SCANA or SCE&G with the SEC.

SCANA and SCE&G disclaim any obligation to update any forward-looking statements.

3

DEFINITIONS

The following abbreviations used in the text have the meanings set forth below unless the context requires otherwise: 

TERM	MEANING
AFC	Allowance for Funds Used During Construction
ANI	American Nuclear Insurers
AOCI	Accumulated Other Comprehensive Income (Loss)
ARO	Asset Retirement Obligation
Abandonment Petition	Petition filed with the SCPSC on August 1, 2017 which included SCE&G's plan of abandonment of the New Units.
Bankruptcy Court	U.S. Bankruptcy Court for the Southern District of New York
BLRA	Base Load Review Act
CAA	Clean Air Act, as amended
CAIR	Clean Air Interstate Rule
CCR	Coal Combustion Residuals
CEO	Chief Executive Officer
CFO	Chief Financial Officer
CFTC	Commodity Futures Trading Commission
Citibank	Citibank, N.A.
CO2	Carbon Dioxide
COL	Combined Construction and Operating License
Company	SCANA, together with its consolidated subsidiaries
Consolidated SCE&G	SCE&G and its consolidated affiliates
Consortium	A consortium consisting of WEC and WECTEC
Court of Appeals	United States Court of Appeals for the District of Columbia
CSAPR	Cross-State Air Pollution Rule
CUT	Customer Usage Tracker (decoupling mechanism)
CWA	Clean Water Act
DCGT	Dominion Carolina Gas Transmission LLC
DER	Distributed Energy Resource
DHEC	South Carolina Department of Health and Environmental Control
District Court	United States District Court for the District of South Carolina
Dodd-Frank	Dodd-Frank Wall Street Reform and Consumer Protection Act
DSM Programs	Electric Demand Side Management Programs
ELG Rule	Federal effluent limitation guidelines for steam electric generating units
EMANI	European Mutual Association for Nuclear Insurance
EPA	United States Environmental Protection Agency
EPC Contract	Engineering, Procurement and Construction Agreement dated May 23, 2008, as amended by the October 2015 Amendment
FASB	Financial Accounting Standards Board
FERC	United States Federal Energy Regulatory Commission
Fluor	Fluor Corporation
Fuel Company	South Carolina Fuel Company, Inc.
GAAP	Accounting principles generally accepted in the United States of America
GENCO	South Carolina Generating Company, Inc.
GHG	Greenhouse Gas
GWh	Gigawatt hour
Interim Assessment Agreement	Interim Assessment Agreement dated March 28, 2017, as amended, among SCE&G, Santee Cooper, WEC and WECTEC
IRC	Internal Revenue Code of 1986, as amended
IRS	Internal Revenue Service
Level 1	A fair value measurement using unadjusted quoted prices in active markets for identical assets or liabilities
Level 2	A fair value measurement using observable inputs other than those for Level 1, including quoted prices for similar (not identical) assets or liabilities or inputs that are derived from observable market data by correlation or other means

4

Level 3	A fair value measurement using unobservable inputs, including situations where there is little, if any, market activity for the asset or liability
LOC	Lines of Credit
MATS	Mercury and Air Toxics Standards
MGP	Manufactured Gas Plant
MMBTU	Million British Thermal Units
MW or MWh	Megawatt or Megawatt-hour
NAAQS	National Ambient Air Quality Standards
NASDAQ	The NASDAQ Stock Market, Inc.
NCUC	North Carolina Utilities Commission
NEIL	Nuclear Electric Insurance Limited
New Units	Nuclear Unit 2 and Unit 3 at Summer Station
NOX	Nitrogen Oxide
NPDES	National Pollutant Discharge Elimination System
NRC	United States Nuclear Regulatory Commission
NSPS	New Source Performance Standards
NYMEX	New York Mercantile Exchange
OCI	Other Comprehensive Income
October 2015 Amendment	Amendment, dated October 27, 2015, to the EPC Contract
ORS	South Carolina Office of Regulatory Staff
PGA	Purchased Gas Adjustment
PHMSA	United States Pipeline Hazardous Materials Safety Administration
Price-Anderson	Price-Anderson Indemnification Act
PSNC Energy	Public Service Company of North Carolina, Incorporated
Registrants	SCANA and SCE&G
Request	Request for Rate Relief filed by the ORS on September 26, 2017
ROE	Return on Equity
RSA	Natural Gas Rate Stabilization Act
RTO/ISO	Regional Transmission Organization/Independent System Operator
Santee Cooper	South Carolina Public Service Authority
SCANA	SCANA Corporation, the parent company
SCANA Energy	SCANA Energy Marketing, Inc.
SCANA Services	SCANA Services, Inc.
SCE&G	South Carolina Electric & Gas Company
SCEUC	South Carolina Energy Users Committee
SCPSC	Public Service Commission of South Carolina
SEC	United States Securities and Exchange Commission
SIP	State Implementation Plan
SLED	South Carolina Law Enforcement Division
SO2	Sulfur Dioxide
Summer Station	V. C. Summer Nuclear Station
Supreme Court	United States Supreme Court
Toshiba	Toshiba Corporation, parent company of WEC
Toshiba Settlement	Settlement Agreement dated as of July 27, 2017, by and among Toshiba, SCE&G and Santee Cooper
Unit 1	Nuclear Unit 1 at Summer Station
Unit 2	Nuclear Unit 2 at Summer Station
Unit 3	Nuclear Unit 3 at Summer Station
VIE	Variable Interest Entity
Vogtle Units	Two nuclear units being constructed by the Consortium for another group of utilities
WEC	Westinghouse Electric Company LLC
WECTEC	WECTEC Global Project Services, Inc. (formerly known as Stone & Webster, Inc.), a wholly-owned subsidiary of WEC
Williams Station	A.M. Williams Generating Station, owned by GENCO
WNA	Weather Normalization Adjustment

5

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SCANA Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited) 

Millions of dollars	September 30, 2017			December 31, 2016
Assets
Utility Plant In Service	$	13,767		$	13,444
Accumulated Depreciation and Amortization	(4,559		)	(4,446		)
Construction Work in Progress	768			4,845
Nuclear Fuel, Net of Accumulated Amortization	249			271
Goodwill, net of writedown of $230	210			210
Utility Plant, Net	10,435			14,324
Nonutility Property and Investments:
Nonutility property, net of accumulated depreciation of $135 and $138	272			276
Assets held in trust, net-nuclear decommissioning	132			123
Other investments	77			76
Nonutility Property and Investments, Net	481			475
Current Assets:
Cash and cash equivalents	1,011			208
Receivables:
Customer, net of allowance for uncollectible accounts of $5 and $6	545			616
Income taxes	6			142
Other	189			127
Inventories (at average cost):
Fuel and gas supply	129			136
Materials and supplies	159			155
Prepayments	111			105
Other current assets	14			17
Total Current Assets	2,164			1,506
Deferred Debits and Other Assets:
Regulatory assets	6,690			2,130
Other	249			272
Total Deferred Debits and Other Assets	6,939			2,402
Total	$	20,019		$	18,707

See Notes to Condensed Consolidated Financial Statements.

6

Millions of dollars	September 30, 2017			December 31, 2016
Capitalization and Liabilities
Common Stock - no par value, 143 million shares outstanding	$	2,389		$	2,390
Retained Earnings	3,447			3,384
Accumulated Other Comprehensive Loss	(49		)	(49		)
Total Common Equity	5,787			5,725
Long-Term Debt, net	6,455			6,473
Total Capitalization	12,242			12,198
Current Liabilities:
Short-term borrowings	1,022			941
Current portion of long-term debt	177			17
Accounts payable	266			404
Customer deposits and customer prepayments	116			168
Taxes accrued	526			201
Interest accrued	97			84
Dividends declared	85			80
Derivative financial instruments	45			35
Other	117			135
Total Current Liabilities	2,451			2,065
Deferred Credits and Other Liabilities:
Deferred income taxes, net	1,767			2,159
Asset retirement obligations	569			558
Pension and other postretirement benefits	373			373
Unrecognized tax benefits	402			219
Regulatory liabilities	2,015			930
Other	200			205
Total Deferred Credits and Other Liabilities	5,326			4,444
Commitments and Contingencies (Note 9)
Total	$	20,019		$	18,707

See Notes to Condensed Consolidated Financial Statements.

7

SCANA Corporation and Subsidiaries

Condensed Consolidated Statements of Income

(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Millions of dollars, except per share amounts	2017			2016			2017			2016
Operating Revenues:
Electric	$	786		$	817		$	2,042		$	2,035
Gas - regulated	123			111			584			538
Gas - nonregulated	167			165			623			598
Total Operating Revenues	1,076			1,093			3,249			3,171
Operating Expenses:
Fuel used in electric generation	167			176			464			443
Purchased power	22			21			54			50
Gas purchased for resale	211			202			808			752
Other operation and maintenance	183			187			543			558
Impairment loss	210			—			210			—
Depreciation and amortization	96			93			285			276
Other taxes	67			66			200			192
Total Operating Expenses	956			745			2,564			2,271
Operating Income	120			348			685			900
Other Income (Expense):
Other income	28			15			61			46
Other expense	(7		)	(7		)	(25		)	(31		)
Interest charges, net of allowance for borrowed funds used during construction of $2, $5, $16 and $14	(95		)	(88		)	(270		)	(255		)
Allowance for equity funds used during construction	—			7			17			22
Total Other Expense	(74		)	(73		)	(217		)	(218		)
Income Before Income Tax Expense	46			275			468			682
Income Tax Expense	12			86			142			211
Net Income	$	34		$	189		$	326		$	471
Earnings Per Share of Common Stock	$	0.24		$	1.32		$	2.28		$	3.29
Weighted Average Common Shares Outstanding (millions)	143			143			143			143
Dividends Declared Per Share of Common Stock	$	0.6125		$	0.5750		$	1.8375		$	1.7250

See Notes to Condensed Consolidated Financial Statements.

8

SCANA Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income

(Unaudited) 

	Three Months Ended September 30,					Nine Months Ended September 30,
Millions of dollars	2017		2016			2017			2016
Net Income	$	34	$	189		$	326		$	471
Other Comprehensive Income (Loss), net of tax:
Unrealized Gains (Losses) on Cash Flow Hedging Activities:
Arising during period, net of tax of $-, $-, $(3) and $(3)	—		(1		)	(5		)	(4		)
Reclassified as increases to interest expense, net of tax of $1, $1, $3 and $3	2		2			6			6
Reclassified as increases (decreases) to gas purchased for resale, net of tax of $-, $ -, $(1) and $3	—		—			(2		)	6
Net unrealized gains (losses) on cash flow hedging activities	2		1			(1		)	8
Deferred cost of employee benefit plans, net of tax of $-, $-, $- and $-	1		—			1			—
Other Comprehensive Income	3		1			—			8
Total Comprehensive Income	$	37	$	190		$	326		$	479

See Notes to Condensed Consolidated Financial Statements.

9

SCANA Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited) 

	Nine Months Ended September 30,
Millions of dollars	2017			2016
Cash Flows From Operating Activities:
Net income	$	326		$	471
Adjustments to reconcile net income to net cash provided from operating activities:
Impairment loss	210			—
Deferred income taxes, net	(395		)	151
Depreciation and amortization	302			289
Amortization of nuclear fuel	31			42
Allowance for equity funds used during construction	(17		)	(22		)
Carrying cost recovery	(27		)	(12		)
Changes in certain assets and liabilities:
Receivables	79			(8		)
Income taxes receivable	136			(306		)
Inventories	(58		)	(21		)
Prepayments	(6		)	(2		)
Regulatory assets	(48		)	(14		)
Regulatory liabilities	(3		)	2
Accounts payable	(22		)	(36		)
Unrecognized tax benefits	183			210
Taxes accrued	325			(84		)
Derivative financial instruments	(3		)	(9		)
Other assets	(37		)	(58		)
Other liabilities	(49		)	86
Net Cash Provided From Operating Activities	927			679
Cash Flows From Investing Activities:
Property additions and construction expenditures	(1,095		)	(1,178		)
Proceeds from monetization of guaranty settlement	1,013			—
Proceeds from investments (including derivative collateral returned)	116			629
Purchase of investments (including derivative collateral posted)	(115		)	(743		)
Payments upon interest rate derivative contract settlements	—			(88		)
Net Cash Used For Investing Activities	(81		)	(1,380		)
Cash Flows From Financing Activities:
Proceeds from issuance of long-term debt	150			592
Repayment of long-term debt	(16		)	(15		)
Dividends	(258		)	(243		)
Short-term borrowings, net	81			247
Net Cash (Used For) Provided From Financing Activities	(43		)	581
Net Increase (Decrease) In Cash and Cash Equivalents	803			(120		)
Cash and Cash Equivalents, January 1	208			176
Cash and Cash Equivalents, September 30	$	1,011		$	56
Supplemental Cash Flow Information:
Cash for–Interest paid (net of capitalized interest of $16 and $14)	$	247		$	235
–Income taxes paid	1			229
–Income taxes received	123			—
Noncash Investing and Financing Activities:
Accrued construction expenditures	44			80
Capital leases	6			12
Guaranty settlement receivable	83			—

 See Combined Notes to Condensed Consolidated Financial Statements.

10

SCANA Corporation and Subsidiaries

Condensed Consolidated Statements of Changes in Common Equity

(Unaudited)

	Common Stock									Accumulated Other Comprehensive Income (Loss)
Millions	Shares	Outstanding Amount		Treasury Amount			Retained Earnings			Gains (Losses) from Cash Flow Hedges			Deferred Employee Benefit Plans			Total AOCI			Total
Balance as of January 1, 2017	143	$	2,402	$	(12	)	$	3,384		$	(36	)	$	(13	)	$	(49	)	$	5,725
Net Income							326												326
Other Comprehensive Income (Loss)
Losses arising during the period										(5		)	—			(5		)	(5		)
Losses/amortization reclassified from AOCI										4			1			5			5
Total Comprehensive Income							326			(1		)	1			—			326
Purchase of Treasury Stock	—	—		(1		)													(1		)
Dividends Declared							(263		)										(263		)
Balance as of September 30, 2017	143	$	2,402	$	(13	)	$	3,447		$	(37	)	$	(12	)	$	(49	)	$	5,787
Balance as of January 1, 2016	143	$	2,402	$	(12	)	$	3,118		$	(53	)	$	(12	)	$	(65	)	$	5,443
Net Income							471												471
Other Comprehensive Income (Loss)
Losses arising during the period										(4		)	—			(4		)	(4		)
Losses/amortization reclassified from AOCI										12			—			12			12
Total Comprehensive Income							471			8			—			8			479
Dividends Declared							(247		)										(247		)
Balance as of September 30, 2016	143	$	2,402	$	(12	)	$	3,342		$	(45	)	$	(12	)	$	(57	)	$	5,675

Dividends declared per share of common stock were $1.8375 and $1.7250 for September 30, 2017 and 2016, respectively.

See Notes to Condensed Consolidated Financial Statements.

11

South Carolina Electric & Gas Company and Affiliates

Condensed Consolidated Balance Sheets

(Unaudited)

Millions of dollars	September 30, 2017			December 31, 2016
Assets
Utility Plant In Service	$	11,783		$	11,510
Accumulated Depreciation and Amortization	(4,078		)	(3,991		)
Construction Work in Progress	554			4,813
Nuclear Fuel, Net of Accumulated Amortization	249			271
Utility Plant, Net ($740 and $756 related to VIEs)	8,508			12,603
Nonutility Property and Investments:
Nonutility property, net of accumulated depreciation	71			69
Assets held in trust, net-nuclear decommissioning	132			123
Other investments	2			3
Nonutility Property and Investments, Net	205			195
Current Assets:
Cash and cash equivalents	1,015			164
Receivables:
Customer, net of allowance for uncollectible accounts of $4 and $3	401			378
Affiliated companies	8			16
Income taxes	—			53
Other	168			94
Inventories (at average cost):
Fuel	78			83
Materials and supplies	148			143
Prepayments	98			88
Other current assets	1			1
Total Current Assets ($57 and $85 related to VIEs)	1,917			1,020
Deferred Debits and Other Assets:
Regulatory assets	6,582			2,030
Other	221			243
Total Deferred Debits and Other Assets ($49 and $52 related to VIEs)	6,803			2,273
Total	$	17,433		$	16,091

See Notes to Condensed Consolidated Financial Statements.

12

Millions of dollars	September 30, 2017			December 31, 2016
Capitalization and Liabilities
Common Stock - no par value, 40.3 million shares outstanding	$	2,860		$	2,860
Retained Earnings	2,518			2,481
Accumulated Other Comprehensive Loss	(3		)	(3		)
Total Common Equity	5,375			5,338
Noncontrolling Interest	137			134
Total Equity	5,512			5,472
Long-Term Debt, net	4,990			5,154
Total Capitalization	10,502			10,626
Current Liabilities:
Short-term borrowings	945			804
Current portion of long-term debt	173			12
Accounts payable	154			247
Affiliated payables	96			122
Customer deposits and customer prepayments	74			126
Taxes accrued	663			195
Interest accrued	71			68
Dividends declared	81			79
Derivative financial instruments	41			28
Other	69			55
Total Current Liabilities	2,367			1,736
Deferred Credits and Other Liabilities:
Deferred income taxes, net	1,505			1,939
Asset retirement obligations	533			522
Pension and other postretirement benefits	231			232
Unrecognized tax benefits	402			236
Regulatory liabilities	1,779			695
Other	99			89
Other affiliate	15			16
Total Deferred Credits and Other Liabilities	4,564			3,729
Commitments and Contingencies (Note 9)
Total	$	17,433		$	16,091

See Notes to Condensed Consolidated Financial Statements.

13

South Carolina Electric & Gas Company and Affiliates

Condensed Consolidated Statements of Comprehensive Income

(Unaudited) 

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
Millions of dollars	2017			2016			2017			2016
Operating Revenues:
Electric	$	786		$	817		$	2,042		$	2,035
Electric - nonconsolidated affiliate	1			1			4			4
Gas	69			64			284			252
Gas - nonconsolidated affiliate	—			—			1			1
Total Operating Revenues	856			882			2,331			2,292
Operating Expenses:
Fuel used in electric generation	132			141			370			368
Fuel used in electric generation - nonconsolidated affiliate	35			35			94			75
Purchased power	22			21			54			50
Gas purchased for resale	39			36			147			117
Gas purchased for resale - nonconsolidated affiliate	—			—			—			9
Other operation and maintenance	109			101			305			298
Other operation and maintenance - nonconsolidated affiliate	45			51			141			156
Impairment loss	210			—			210			—
Depreciation and amortization	78			76			232			225
Other taxes	62			61			183			173
Other taxes - nonconsolidated affiliate	1			1			4			5
Total Operating Expenses	733			523			1,740			1,476
Operating Income	123			359			591			816
Other Income (Expense):
Other income	21			7			36			20
Other expense	(6		)	(4		)	(17		)	(19		)
Interest charges, net of allowance for borrowed funds used during construction of $2, $5, $15 and $13	(76		)	(70		)	(214		)	(201		)
Allowance for equity funds used during construction	(3		)	6			13			19
Total Other Income (Expense)	(64		)	(61		)	(182		)	(181		)
Income Before Income Tax Expense	59			298			409			635
Income Tax Expense	17			94			129			202
Net Income and Total Comprehensive Income	42			204			280			433
Less Net Income and Total Comprehensive Income Attributable to Noncontrolling Interest	(3		)	(3		)	(10		)	(10		)
Earnings and Comprehensive Income Available to Common Shareholder	$	39		$	201		$	270		$	423
Dividends Declared on Common Stock	$	81		$	76		$	240		$	225

See Notes to Condensed Consolidated Financial Statements.

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South Carolina Electric & Gas Company and Affiliates

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
Millions of dollars	2017			2016
Cash Flows From Operating Activities:
Net income	$	280		$	433
Adjustments to reconcile net income to net cash provided from operating activities:
Impairment loss	210			—
Deferred income taxes, net	(434		)	127
Depreciation and amortization	238			229
Amortization of nuclear fuel	31			42
Allowance for equity funds used during construction	(13		)	(19		)
Carrying cost recovery	(27		)	(12		)
Changes in certain assets and liabilities:
Receivables	(27		)	(70		)
Receivables - affiliate	8			9
Income tax receivable	53			(206		)
Inventories	(34		)	(14		)
Prepayments	(10		)	(15		)
Regulatory assets	(40		)	(6		)
Regulatory liabilities	(1		)	(3		)
Accounts payable	31			(13		)
Accounts payable - affiliate	(28		)	(13		)
Taxes accrued	468			(151		)
Unrecognized tax benefit	166			210
Other assets	(29		)	(117		)
Other liabilities	(14		)	64
Net Cash Provided From Operating Activities	828			475
Cash Flows From Investing Activities:
Property additions and construction expenditures	(882		)	(1,024		)
Proceeds from monetization of guaranty settlement	1,013			—
Proceeds from investments (including derivative collateral returned)	96			577
Purchase of investments (including derivative collateral posted)	(98		)	(699		)
Payments upon interest rate derivative contract settlements	—			(88		)
Proceeds from money pool investments	—			9
Net Cash Provided From (Used For) Investing Activities	129			(1,225		)
Cash Flows From Financing Activities:
Proceeds from issuance of debt	—			494
Repayment of long-term debt	(11		)	(10		)
Dividends	(238		)	(224		)
Contributions from parent	—			100
Money pool borrowings, net	2			(5		)
Short-term borrowings, net	141			294
Net Cash Provided From (Used For) Financing Activities	(106		)	649
Net Decrease In Cash and Cash Equivalents	851			(101		)
Cash and Cash Equivalents, January 1	164			130
Cash and Cash Equivalents, September 30	$	1,015		$	29
Supplemental Cash Flow Information:
Cash for–Interest (net of capitalized interest of $15 and $13)	$	195		$	182
– Income taxes paid	3			286
– Income taxes received	143			9
Noncash Investing and Financing Activities:
Accrued construction expenditures	21			71
Capital leases	6			12
Guaranty settlement receivable	83			—

See Notes to Condensed Consolidated Financial Statements.

15

South Carolina Electric & Gas Company and Affiliates

Condensed Consolidated Statements of Changes in Common Equity

(Unaudited)

	Common Stock
Millions	Shares	Amount		Retained Earnings			AOCI			Noncontrolling Interest			Total Equity
Balance at January 1, 2017	40	$	2,860	$	2,481		$	(3	)	$	134		$	5,472
Earnings available to common shareholder				270						10			280
Total Comprehensive Income				270			—			10			280
Cash dividend declared				(233		)				(7		)	(240		)
Balance at September 30, 2017	40	$	2,860	$	2,518		$	(3	)	$	137		$	5,512
Balance at January 1, 2016	40	$	2,760	$	2,265		$	(3	)	$	129		$	5,151
Earnings available to common shareholder				423						10			433
Total Comprehensive Income				423			—			10			433
Capital Contributions from parent		100											100
Cash dividend declared				(219		)				(6		)	(225		)
Balance at September 30, 2016	40	$	2,860	$	2,469		$	(3	)	$	133		$	5,459

See Notes to Condensed Consolidated Financial Statements.

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SCANA Corporation and Subsidiaries

South Carolina Electric & Gas Company and Affiliates

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following unaudited notes to the condensed consolidated financial statements are a combined presentation. Except as otherwise indicated herein, each note applies to the Company and Consolidated SCE&G; however, Consolidated SCE&G makes no representation as to information relating solely to SCANA Corporation or its subsidiaries (other than Consolidated SCE&G).

The following condensed notes should be read in conjunction with the Notes to Consolidated Financial Statements appearing in each company's Annual Report on Form 10-K for the year ended December 31, 2016, which also were a combined presentation. These are interim financial statements and, due to the seasonality of each company's business and matters that may occur during the rest of the year, including the matters described in condensed consolidated Note 9 under Impairment Considerations, the amounts reported in the Condensed Consolidated Statements of Income and Condensed Consolidated Statements of Comprehensive Income are not necessarily indicative of amounts expected for the full year.  In the opinion of management of the respective companies, the information furnished herein reflects all adjustments, all of a normal recurring nature, which are necessary for a fair statement of the results for the interim periods reported. In addition, the preparation of financial statements in conformity with GAAP 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.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation and Variable Interest Entities

     The condensed consolidated financial statements of the Company include, after eliminating intercompany balances and transactions, the accounts of the parent holding company and each of its subsidiaries, including Consolidated SCE&G. Accordingly, discussions regarding the Company's financial results necessarily include the results of Consolidated SCE&G.

SCE&G has determined that it has a controlling financial interest in each of GENCO and Fuel Company (which are considered to be VIEs) and, accordingly, Consolidated SCE&G's condensed consolidated financial statements include the accounts of SCE&G, GENCO and Fuel Company. The equity interests in GENCO and Fuel Company are held solely by SCANA, SCE&G’s parent. As a result, GENCO’s and Fuel Company’s equity and results of operations are reflected as noncontrolling interest in Consolidated SCE&G’s condensed consolidated financial statements.

GENCO owns a coal-fired electric generating station with a 605 MW net generating capacity (summer rating). GENCO’s electricity is sold, pursuant to a FERC-approved tariff, solely to SCE&G under the terms of a power purchase agreement and related operating agreement. The effects of these transactions are eliminated in consolidation. Substantially all of GENCO’s property (carrying value of approximately $491 million) serves as collateral for its long-term borrowings. Fuel Company acquires, owns and provides financing for SCE&G’s nuclear fuel, certain fossil fuels and emission and other environmental allowances. See also condensed consolidated Note 4.

Income Statement Presentation

Revenues and expenses arising from regulated businesses and, in the case of the Company, the retail natural gas marketing business (including those activities of segments described in condensed consolidated Note 10) are presented within Operating Income, and all other activities are presented within Other Income (Expense).

Asset Management and Supply Service Agreement

PSNC Energy, a subsidiary of SCANA, utilizes an asset management and supply service agreement with a counterparty for certain natural gas storage facilities.  Such counterparty held, through an agency relationship, 45% and 40% of PSNC Energy’s natural gas inventory at September 30, 2017 and December 31, 2016, respectively, with a carrying value of $14.1 million and $9.8 million, respectively.  Under the terms of this agreement, PSNC Energy receives storage asset management feesof which 75% are credited to customers. This agreement expires on March 31, 2019.

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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. When applicable, the Company computes diluted earnings per share using this same formula, after giving effect to securities considered to be dilutive potential common stock utilizing the treasury stock method.

New Accounting Matters

In May 2014, the FASB issued accounting guidance for revenue arising from contracts with customers that supersedes most prior revenue recognition guidance, including industry-specific guidance. This new revenue recognition model calls for a five-step analysis in determining when and how revenue is recognized, and will require revenue recognition to depict the transfer of promised goods or services to customers, based on the transfer of control, in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. In addition, the new guidance requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The analysis of contracts with customers to which the guidance might be applicable is continuing, and activities of the FASB's Transition Resource Group for Revenue Recognition are being monitored, particularly as they relate to the treatment of contributions in aid of construction, alternative revenue programs and the collectability of revenue of utilities subject to rate regulation. An evaluation of the enhanced disclosure requirements is also underway, including the preliminary drafting of the disclosures that are required under the new standard, identifying performance obligations, determining the appropriate disaggregation of revenue and assessing the availability of information necessary to comply with the requirements. The Company and Consolidated SCE&G will adopt this guidance using the modified retrospective method and will recognize a cumulative effect adjustment, if any, to retained earnings on January 1, 2018 upon adoption. Comparative periods will not be restated. The Company and Consolidated SCE&G do not anticipate that its adoption will have a material impact on recognition patterns in their respective financial statements, but its adoption is expected to result in additional disclosures and may result in income statement presentation changes, particularly with respect to alternate revenue programs of utility operations.

In July 2015, the FASB issued accounting guidance intended to simplify the measurement of inventory cost by requiring most inventory to be measured at the lower of cost and net realizable value. The Company and Consolidated SCE&G adopted this guidance in the first quarter of 2017, and its adoption did not have any impact on their respective financial statements.

In January 2016, the FASB issued accounting guidance that will change how entities measure certain equity investments and financial liabilities, among other things. The Company and Consolidated SCE&G expect to adopt this guidance when required in the first quarter of 2018 and do not anticipate that its adoption will have a significant impact on their respective financial statements.

In February 2016, the FASB issued accounting guidance related to the recognition, measurement and presentation of leases. The guidance applies a right-of-use model and, for lessees, requires all leases with a duration over 12 months to be recorded on the balance sheet, with the rights of use treated as assets and the payment obligations treated as liabilities. Further,

and without consideration of any regulatory accounting requirements which may apply, depending primarily on the nature of the assets and the relative consumption of them, lease costs will be recognized either through the separate amortization of the right-of-use asset and the recognition of the interest cost related to the payment obligation, or through the recording of a combined straight-line rental expense. For lessors, the guidance calls for the recognition of income either through the derecognition of assets and subsequent recording of interest income on lease amounts receivable, or through the recognition of rental income on a straight-line basis, also depending on the nature of the assets and relative consumption. The guidance is effective for years beginning in 2019, and the Company and Consolidated SCE&G do not anticipate that its adoption will impact their respective financial statements other than increasing amounts reported for assets and liabilities on the balance sheet and changing the place on their respective income statements on which certain expenses are recorded. No impact on net income is expected. The identification and analysis of leasing and related contracts to which the guidance might be applicable has begun. In addition, the Company and Consolidated SCE&G have begun implementation of a third party software tool that will assist with initial adoption and ongoing compliance. Specifically, preliminary system configuration has been completed and data from certain leases are being entered.

In June 2016, the FASB issued accounting guidance requiring the use of a current expected credit loss impairment model for certain financial instruments. The new model is applicable to trade receivables and most debt instruments, among other financial instruments, and in certain instances may result in certain impairment losses being recognized earlier than under current guidance. The Company and Consolidated SCE&G must adopt this guidance beginning in 2020, including interim

18

periods, though the guidance may be adopted in 2019. The Company and Consolidated SCE&G have not determined when this guidance will be adopted or what impact it will have on their respective financial statements.

In August 2016, the FASB issued accounting guidance to reduce diversity in cash flow classification related to certain transactions. The Company and Consolidated SCE&G expect to adopt this guidance when required in the first quarter of 2018 and do not anticipate that its adoption will impact their respective financial statements.

In October 2016, the FASB issued accounting guidance related to the tax effects of intra-entity asset transfers of assets other than inventory. An entity will be required to recognize the income tax consequences of such a transfer in the period it occurs. The Company and Consolidated SCE&G adopted this guidance in the first quarter 2017 and it had no impact on their respective financial statements.

In November 2016, the FASB issued accounting guidance related to the presentation of restricted cash on the statement of cash flows. The guidance is effective for years beginning in 2018, and the Company and Consolidated SCE&G do not anticipate that its adoption will impact their respective financial statements.

In January 2017, the FASB issued accounting guidance to simplify the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test. The guidance is effective for years beginning in 2020, though early adoption after January 1, 2017 is allowed. The Company and Consolidated SCE&G have not determined when this guidance will be adopted but do not anticipate that its adoption will have a material impact on their respective financial statements.

In March 2017, the FASB issued accounting guidance to change the required presentation of net periodic pension and postretirement benefit costs. Under the new guidance, the net periodic pension and postretirement benefit costs are to be separated into their service cost components and other components. The service cost components are to be presented in the same line item (or items) as other compensation costs arising from services rendered by employees during the period. The other components are to be reported in the income statement separately from the service cost component and outside operating income. Only the service cost component is eligible for capitalization in assets. This guidance is required to be applied on a retrospective basis for the presentation of the service cost component and the other components, and on a prospective basis for the capitalization of only the service cost component. The Company and Consolidated SCE&G will adopt the guidance when required in the first quarter of 2018 and, due to regulatory overlay, do not anticipate that its adoption will have a material impact on their respective financial statements. Non-service cost components which otherwise would have been capitalizable in assets under current accounting guidance will instead be deferred within regulatory assets.

In August 2017, the FASB issued accounting guidance to simplify the application of hedge accounting. Among other things, the new guidance will enable more hedging strategies to qualify for hedge accounting, will allow entities more time to perform an initial assessment of hedge effectiveness, and will permit an entity to perform a qualitative assessment of effectiveness for certain hedges instead of a quantitative one. For cash flow hedges that are highly effective, all changes in the fair value of the derivative hedging instrument will be recorded in other comprehensive income and will be reclassified to earnings in the same period that the hedged item impacts earnings. Fair value hedges will continue to be recorded in current earnings, and any ineffectiveness will impact the income statement. In addition, changes in the fair value of a derivative will be recorded in the same income statement line as the earnings effect of the hedged item, and additional disclosures will be required related to the effect of hedging on individual income statement line items. The guidance must be applied to all outstanding instruments using a modified retrospective method, with any cumulative effect adjustment recorded to opening retained earnings as of the beginning of the first period in which the guidance becomes effective. The Company and Consolidated SCE&G expect to adopt this guidance when required in the first quarter of 2019, though early adoption is permitted, and have not determined what impact such adoption will have on their respective financial statements.

2.RATE AND OTHER REGULATORY MATTERS

Rate Matters

Electric - Cost of Fuel

By order dated July 15, 2015, the SCPSC approved SCE&G's participation in a DER program and recovery of related costs as a separate component of SCE&G's overall fuel factor. Under this order, SCE&G will, among other things, implement programs to encourage the development of renewable energy facilities with a total nameplate capacity of at least approximately 84.5 MW by the end of 2020, of which half is to be customer-scale solar capacity and half is to be utility-scale solar capacity.

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By order dated April 27, 2017, the SCPSC approved a settlement agreement among SCE&G, the ORS and the SCEUC, to increase the total fuel cost component of retail electric rates. SCE&G agreed to set its base fuel component to produce a projected under recovery of $61.0 million over a 12-month period beginning with the first billing cycle of May 2017. SCE&G also agreed to recover, over a 12-month period beginning with the first billing cycle of May 2017, projected DER program costs of approximately $16.5 million. Additionally, deferral of carrying costs will be allowed for base fuel component under-collected balances as they occur.

In October 2017, the SCPSC initiated its 2018 annual review of base rates for fuel costs. A public hearing on this matter has been scheduled for April 10, 2018.

Electric - Base Rates

Pursuant to an SCPSC order, SCE&G removes from rate base certain deferred income tax assets arising from capital expenditures related to the New Units and accrues carrying costs on those amounts during periods in which they are not included in rate base.  Such carrying costs are determined at SCE&G’s weighted average long-term borrowing rate and are recorded as a regulatory asset and other income. Carrying costs during the three and nine months ended September 30, 2017 totaled $4.9 million and $13.6 million, respectively. During the three and nine months ended September 30, 2016, carrying costs totaled $3.5 million and $10.0 million, respectively. Under this SCPSC order, when these deferred income tax assets are fully offset by related deferred income tax liabilities, the carrying cost accruals will cease, and the regulatory asset will begin to be amortized. See also condensed consolidated Note 9.

By order dated March 1, 2017, the SCPSC approved SCE&G’s request to decrease its pension costs rider. The change in the pension rider will decrease annual revenue by approximately $11.9 million. The pension rider is designed to allow SCE&G to recover projected pension costs, net of the previously over-collected balance, over a 12-month period, beginning with the first billing cycle in May 2017.

In January 2017, SCE&G requested in its annual DSM Programs filing to recover $37.0 million of costs and net lost revenues associated with DSM programs, along with an incentive to invest in such programs. On April 28, 2017, the SCPSC approved SCE&G's request effective beginning with the first billing cycle in May 2017.

Electric - BLRA

On June 22, 2017, the Friends of the Earth and the Sierra Club filed a complaint against SCE&G with the SCPSC, requesting that the SCPSC initiate a formal proceeding to direct SCE&G to immediately cease and desist from expending any further capital costs related to the construction of the New Units; to determine the prudence of acts and omissions by SCE&G in connection with the construction of the New Units; to review and determine the prudence of abandonment of the New Units and of the available least cost efficiency and renewable energy alternatives; and to remedy, abate and make due reparations for the rates charged to ratepayers related to the construction of the New Units. SCE&G filed its answer to the complaint and a motion to dismiss the complaint on July 19, 2017. On October 4, 2017, the SCPSC ordered proceedings under this complaint to be coordinated with proceedings for the Request filed on September 26, 2017, described below, and allowed discovery to proceed. On October 13, 2017, SCE&G filed with the SCPSC a petition for rehearing and reconsideration of the order as well as a response to the SCPSC's request for briefing concerning coordination of proceedings under this complaint with proceedings for the Request. On November 1, 2017, the SCPSC denied SCE&G's petition for rehearing and reconsideration.

On August 1, 2017, SCE&G filed the Abandonment Petition with the SCPSC which sought recovery of costs expended on the construction of the New Units, including certain costs incurred subsequent to SCE&G's last revised rates update, other costs under the abandonment provisions of the BLRA, and affirmation of SCE&G's decision to abandon construction of the New Units, among other things. Subsequently, SCE&G management met with various stakeholders and members of the South Carolina General Assembly, including legislative leaders, to discuss the abandonment of the new nuclear project and to hear their concerns. In response to those concerns, and to allow adequate time for governmental officials to conduct their reviews, SCE&G voluntarily withdrew the Abandonment Petition on August 15, 2017. See additional discussion at condensed consolidated Note 9.

On September 26, 2017, the South Carolina Office of Attorney General issued an opinion stating, among other things, that "as applied, portions of the BLRA are constitutionally suspect," including the abandonment provisions. Also on September 26, 2017, the ORS filed the Request with the SCPSC asking for an order directing SCE&G to immediately suspend all revised rates collections from customers which had been previously approved by the SCPSC pursuant to the authority of the BLRA. In its request, the ORS relied upon the opinion from the Office of Attorney General to assert that it is not just and reasonable or in

20

the public interest to allow SCE&G to continue collecting revised rates. Further, the ORS noted the existence of an allegation that SCE&G failed to disclose information that should have been disclosed and that would have appeared to provide a basis for challenging prior requests, and asserted that SCE&G should not be allowed to continue to benefit from nondisclosure. The ORS also asked for an order that, if the BLRA is found to be unconstitutional or the General Assembly amends or revokes the BLRA, then SCE&G should make credits to future bills or refunds to customers for prior revised rates collections.

On September 28, 2017, citing numerous legal deficiencies in the Request, SCE&G filed a Motion to Dismiss the request by the ORS and a Request for Briefing Schedule and Hearing on Motion to Dismiss. On September 28, 2017, the SCPSC deferred action on the ORS' request and ordered a hearing officer to establish a briefing schedule and hearing date on SCE&G's motion. The hearing has been scheduled for December 12, 2017, and the parties who have filed to intervene in the matter or have filed a letter in support of the request by the ORS include the Governor, the state's Office of Attorney General and Speaker of the House of Representatives, the Electric Cooperatives of South Carolina, the SCEUC, certain large industrial customers, and several environmental groups. SCE&G intends to vigorously contest the request by the ORS, but cannot give any assurance as to the timing or outcome of this matter.

On October 17, 2017, the ORS filed a motion with the SCPSC to amend the Request, in which the ORS asked the SCPSC to consider the most prudent manner by which SCE&G will enable its customers to realize the value of the monetized Toshiba Settlement payments and other payments made by Toshiba towards satisfaction of its obligations to SCE&G. On October 27, 2017, SCE&G filed its response in opposition to, and its motion to strike, the motion by the ORS to amend the Request.

Gas - SCE&G

By order dated October 4, 2017, the SCPSC approved, as adjusted by the ORS, SCE&G’s quarterly monitoring report for the 12-month period ended March 31, 2017, and an overall increase of approximately $8.6 million, or 2.2%, to its natural gas rates under the terms of the RSA. The rate adjustment was effective for the first billing cycle in November 2017.

SCE&G’s natural gas tariffs include a PGA that provides for the recovery of actual gas costs incurred, including transportation costs. SCE&G’s gas rates are calculated using a methodology which may adjust the cost of gas monthly based on a 12-month rolling average, and its gas purchasing policies and practices are reviewed annually by the SCPSC. SCE&G’s annual PGA hearing for the 12-month period ending July 31, 2017, is scheduled for November 9, 2017.

Gas - PSNC Energy

The NCUC has authorized PSNC Energy to use a tracker mechanism to recover the incurred capital investment and associated costs of complying with federal standards for pipeline integrity and safety requirements that are not in current base rates. PSNC Energy has filed biannual applications to adjust its rates for this purpose, and the NCUC has approved those applications for the incremental annual revenue requirements, as follows:

Application Filed	Rates Effective	Incremental Increase
February 15, 2017	March 1, 2017	$1.9 million
August 16, 2017	September 1, 2017	$0.7 million

Regulatory Assets and Regulatory Liabilities

Rate-regulated utilities recognize in their financial statements certain revenues and expenses in different periods than do other enterprises.  As a result, the Company and Consolidated SCE&G have recorded regulatory assets and regulatory liabilities which are summarized in the following tables. Except for certain unrecovered nuclear project costs and other unrecovered plant, substantially all regulatory assets are either explicitly excluded from rate base or are effectively excluded from rate base due to their being offset by related liabilities.

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	The Company				Consolidated SCE&G
Millions of dollars	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Regulatory Assets:
Unrecovered nuclear project costs	$	4,520	—		$	4,520	—
Accumulated deferred income taxes	315		$	316	307		$	307
AROs and related funding	424		425		401		403
Deferred employee benefit plan costs	321		342		290		309
Deferred losses on interest rate derivatives	632		620		632		620
Other unrecovered plant	108		117		108		117
DSM Programs	58		59		58		59
Carrying costs on deferred tax assets related to nuclear construction	46		32		46		32
Pipeline integrity management costs	47		33		7		6
Environmental remediation costs	30		32		25		26
Deferred storm damage costs	22		20		22		20
Deferred costs related to uncertain tax position	28		15		28		15
Other	139		119		138		116
Total Regulatory Assets	$	6,690	$	2,130	$	6,582	$	2,030

Regulatory Liabilities:
Monetization of guaranty settlement	$	1,095	—		$	1,095	—
Asset removal costs	764		$	755	535		$	529
Deferred gains on interest rate derivatives	135		151		135		151
Other	21		24		14		15
Total Regulatory Liabilities	$	2,015	$	930	$	1,779	$	695

Regulatory assets for unrecovered nuclear project costs have been recorded based on such amounts not being probable of loss, whereas the other regulatory assets have been recorded based on the probability of their recovery. All regulatory assets represent incurred costs that may be deferred under applicable GAAP for regulated operations. The SCPSC, the NCUC or the FERC has reviewed and approved through specific orders certain of the items shown as regulatory assets. Other regulatory assets include, but are not limited to, certain costs which have not been specifically approved for recovery by one of these regulatory agencies, including unrecovered nuclear project costs that are the subject of future regulatory proceedings as further discussed in condensed consolidated Note 9. In recording such costs as regulatory assets, management believes the costs would be allowable under existing rate-making concepts that are embodied in rate orders or current state law. The costs are currently not being recovered, but are expected to be recovered through rates in future periods. In the future, as a result of deregulation, changes in state law, other changes in the regulatory environment or changes in accounting requirements, the Company or Consolidated SCE&G could be required to write off all or a portion of its regulatory assets and liabilities. Such an event could have a material effect on the Company's and Consolidated SCE&G's financial statements in the period the write-off would be recorded.

Unrecovered nuclear project costs represents expenditures by SCE&G that have been reclassified from construction work in progress as a result of the decision to stop construction of the New Units and to pursue recovery of costs under the abandonment provisions of the BLRA or through a general rate case or other regulatory means, net of an estimated impairment loss of $210 million. See additional discussion at condensed consolidated Note 9.

Accumulated deferred income tax liabilities that arise from utility operations that have not been included in customer rates are recorded as a regulatory asset.  A substantial portion of these regulatory assets relate to depreciation and are expected to be recovered over the remaining lives of the related property which may range up to approximately 85 years.  Similarly, accumulated deferred income tax assets arising from deferred investment tax credits are recorded as a regulatory liability.

AROs and related funding represents the regulatory asset associated with the legal obligation to decommission and dismantle Unit 1 and conditional AROs related to generation, transmission and distribution properties, including gas pipelines. These regulatory assets are expected to be recovered over the related property lives and periods of decommissioning which may range up to approximately 110 years.

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Employee benefit plan costs of the regulated utilities have historically been recovered as they have been recorded under GAAP. Deferred employee benefit plan costs represent amounts of pension and other postretirement benefit costs which were accrued as liabilities and treated as regulatory assets pursuant to FERC guidance, and costs deferred pursuant to specific SCPSC regulatory orders. In 2013, SCE&G began recovering through utility rates approximately $63 million of deferred pension costs for electric operations over approximately 30 years and approximately $14 million of deferred pension costs for gas operations over approximately 14 years. The remainder of the deferred benefit costs are expected to be recovered through utility rates, primarily over average service periods of participating employees, or up to approximately 11 years.

Deferred losses or gains on interest rate derivatives represent (i) the effective portions of changes in fair value and payments made or received upon settlement of certain interest rate derivatives designated as cash flow hedges and (ii) the changes in fair value and payments made or received upon settlement of certain other interest rate derivatives not so designated. The amounts recorded with respect to (i) are expected to be amortized to interest expense over the lives of the underlying debt through 2043. The amounts recorded with respect to (ii) are expected to be similarly amortized to interest expense through 2065 except when such amounts are applied otherwise at the direction of the SCPSC.

Other unrecovered plant represents the carrying value of coal-fired generating units, including related materials and supplies inventory, retired from service prior to being fully depreciated. Pursuant to SCPSC approval, SCE&G is amortizing these amounts through cost of service rates over the units' previous estimated remaining useful lives through approximately 2025. Unamortized amounts are included in rate base and are earning a current return.

DSM Programs represent SCE&G's deferred costs associated with electric demand reduction programs, and such deferred costs are currently being recovered over approximately five years through an approved rate rider. 

Carrying costs on deferred tax assets related to new nuclear construction are calculated on accumulated deferred income tax assets associated with the New Units which are not part of electric rate base using the weighted average long-term debt cost of capital. These carrying costs will be amortized over ten years beginning when these deferred tax assets are fully offset by related deferred tax liabilities. See also condensed consolidated Note 9.

Pipeline integrity management costs represent operating and maintenance costs incurred to comply with federal regulatory requirements related to natural gas pipelines. PSNC Energy will recover costs incurred as of June 30, 2016 totaling $20.3 million over a five-year period beginning November 2016. PSNC Energy is continuing to defer pipeline integrity costs, and as of September 30, 2017 costs of $21.6 million have been deferred pending future approval of rate recovery. SCE&G amortizes $1.9 million of such costs annually.

Environmental remediation costs represent costs associated with the assessment and clean-up of sites currently or formerly owned by SCE&G or PSNC Energy, and are expected to be recovered over periods of up to approximately 17 years.

Deferred storm damage costs represent costs incurred in excess of amounts previously collected through SCE&G’s SCPSC-approved storm damage reserve, and for which SCE&G expects to receive future recovery through customer rates.

Deferred costs related to uncertain tax position primarily represent the estimated amounts of domestic production activities deductions foregone as a result of the deduction of certain research and experimentation expenditures for income tax purposes, net of related tax credits, as well as accrued interest expense and other costs arising from this uncertain tax position. SCE&G's current customer rates reflect the availability of domestic production activities deductions. These net deferred costs are expected to be recovered through utility rates following ultimate resolution of the claims. See also condensed consolidated Note 5.

Various other regulatory assets are expected to be recovered through rates over varying periods through 2047.

Monetization of guaranty settlement represents proceeds received under or arising from the monetization of the Toshiba Settlement, net of certain expenses. SCE&G expects the SCPSC to approve the use of these net proceeds for the benefit of customers in a future filing. See additional discussion at condensed consolidated Note 9.

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

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3.COMMON EQUITY

SCANA had 200 million shares of common stock authorized as of September 30, 2017 and December 31, 2016.

Authorized shares of SCE&G common stock were 50 million as of September 30, 2017 and December 31, 2016. Authorized shares of SCE&G preferred stock were 20 million, of which 1,000 shares, no par value, were issued and outstanding as of September 30, 2017 and December 31, 2016. All issued and outstanding shares of SCE&G's common and preferred stock are held by SCANA.

4.     LONG-TERM DEBT AND LIQUIDITY

Long-term Debt

In June 2017, PSNC Energy issued $150 million of 4.18% senior notes due June 30, 2047. Proceeds from this sale were used to repay short-term debt, to finance capital expenditures, and for general corporate purposes.

On November 1, 2016, Consolidated SCE&G paid at maturity $100 million related to a nuclear fuel financing which had an imputed interest rate of 0.78%.

In June 2016, SCE&G issued $425 million of 4.1% first mortgage bonds due June 15, 2046. In addition, in June 2016 SCE&G issued $75 million of 4.5% first mortgage bonds due June 1, 2064, which constituted a reopening of $300 million of 4.5% first mortgage bonds issued in May 2014. Proceeds from these sales were used to repay short-term debt primarily incurred as a result of SCE&G’s construction program, to finance capital expenditures, and for general corporate purposes.

In June 2016, PSNC Energy issued $100 million of 4.13% senior notes due June 22, 2046. Proceeds from this sale were used to repay short-term debt, to finance capital expenditures, and for general corporate purposes.

Substantially all electric utility plant is pledged as collateral in connection with long-term debt.

Liquidity

Credit agreements are used for general corporate purposes, including liquidity support for each company's commercial paper program and working capital needs and, in the case of Fuel Company, to finance or refinance the purchase of nuclear fuel, certain fossil fuels, and emission and other environmental allowances. Committed long-term facilities are revolving lines of credit under credit agreements with a syndicate of banks. Committed LOC, outstanding LOC advances, commercial paper, and LOC-supported letter of credit obligations were as follows: 

September 30, 2017 (Millions of dollars)	Total		SCANA			Consolidated SCE&G			PSNC  Energy
Lines of credit:	+
Five-year, expiring December 2020	$	1,300.0	$	400.0		$	700.0		$	200.0
Fuel Company five-year, expiring December 2020	500.0		—			500.0			—
Three-year, expiring December 2018	200.0		—			200.0			—
Total committed long-term	2,000.0		400.0			1,400.0			200.0
Outstanding commercial paper (270 or fewer days)	1,022.1		33.0			944.8			44.3
Weighted average interest rate			1.78		%	1.49		%	1.49		%
Letters of credit supported by LOC	3.3		3.0			0.3			—
Available	$	974.6	$	364.0		$	454.9		$	155.7

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December 31, 2016 (Millions of dollars)	Total		SCANA			Consolidated SCE&G			PSNC  Energy
Lines of credit:
Five-year, expiring December 2020	$	1,300.0	$	400.0		$	700.0		$	200.0
Fuel Company five-year, expiring December 2020	500.0		—			500.0			—
Three-year, expiring December 2018	200.0		—			200.0			—
Total committed long-term	2,000.0		400.0			1,400.0			200.0
Outstanding commercial paper (270 or fewer days)	940.5		64.4			804.3			71.8
Weighted average interest rate			1.43		%	1.04		%	1.07		%
Letters of credit supported by LOC	3.3		3.0			0.3			—
Available	$	1,056.2	$	332.6		$	595.4		$	128.2

Portions of the proceeds received under or arising from the monetization of the Toshiba Settlement in late September and early October 2017 have been utilized to repay maturing commercial paper balances, which short-term borrowings had been incurred for the construction of the New Units prior to the decision to stop their construction (see condensed consolidated Note 9). Should the SCPSC or a court direct that these proceeds be refunded to customers in the near-term, or direct that such funds be escrowed or otherwise made unavailable to SCE&G, it is anticipated that SCE&G would reissue commercial paper or draw on its credit facilities to fund such requirement. However, were the SCPSC to rule in favor of the ORS in response to the Request that SCE&G suspend collections from customers of amounts previously authorized under the BLRA, or were other actions of the SCPSC or others taken in order to significantly restrict SCE&G’s access to revenues or impose additional adverse refund obligations on SCE&G, the Company’s and Consolidated SCE&G's assessments regarding the recoverability of all or a portion of the remaining balance of unrecovered nuclear project costs (see condensed consolidated Note 2) would be adversely impacted. Further, the recognition of significant additional impairment losses with respect to unrecovered nuclear project costs could increase the Company’s and Consolidated SCE&G’s debt to total capitalization to a level which may limit their ability to borrow under their commercial paper programs or under their credit facilities. Borrowing costs for long-term debt issuances could also be impacted.

Each of the Company and Consolidated SCE&G is obligated with respect to an aggregate of $67.8 million of industrial revenue bonds which are secured by letters of credit issued by TD Bank N.A. These letters of credit expire, subject to renewal, in the fourth quarter of 2019.

    Consolidated SCE&G participates in a utility money pool with SCANA and another regulated subsidiary of SCANA. Money pool borrowings and investments bear interest at short-term market rates. Consolidated SCE&G’s interest income and expense from money pool transactions were not significant for any period presented. Consolidated SCE&G had outstanding money pool borrowings due to an affiliate of $31 million at September 30, 2017, and $29 million at December 31, 2016. On its condensed consolidated balance sheet, Consolidated SCE&G includes such amounts within Affiliated payables.

5. INCOME TAXES

The Company files consolidated federal income tax returns which include Consolidated SCE&G, and the Company and its subsidiaries file various applicable state and local income tax returns.

The IRS has completed examinations of the Company’s federal returns through 2004, and the Company’s federal returns through 2007 are closed for additional assessment. The IRS is currently examining SCANA's open federal returns through 2015 as a result of claims discussed below. With few exceptions, the Company, including Consolidated SCE&G, is no longer subject to state and local income tax examinations by tax authorities for years before 2010.

During 2013 and 2014, SCANA amended certain of its income tax returns to claim additional tax-defined research and experimentation deductions (under IRC Section 174) and credits (under IRC Section 41) and to reflect related impacts on other items such as domestic production activities deductions (under IRC Section 199). SCANA also made similar claims in filing its original 2013 and 2014 returns in 2014 and 2015, respectively. In 2016 and 2017, SCANA claimed significant research and experimentation deductions and credits (offset by reductions in its domestic production activities deductions), related to the design and construction activities of the New Units, in its 2015 and 2016 income tax returns. These claims followed the issuance of final IRS regulations in 2014 regarding such treatment with respect to expenditures related to the design and construction of pilot models.

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The IRS examined the claims in the amended returns, and as the examination progressed without resolution, the Company and Consolidated SCE&G evaluated and recorded adjustments to unrecognized tax benefits; however, none of these changes materially affected the Company's and Consolidated SCE&G's effective tax rate. In October 2016, the examination of the amended tax returns progressed to the IRS Office of Appeals. In addition, the IRS has begun an examination of SCANA's 2013 through 2015 income tax returns.

These income tax deductions and credits are considered to be uncertain tax positions, and under relevant accounting guidance, estimates of the amounts of related tax benefits which may not be sustained upon examination by the taxing authorities are required to be recorded as unrecognized tax benefits in the financial statements. As of September 30, 2017, the Company and Consolidated SCE&G have recorded an unrecognized tax benefit of $457 million ($402 million net of the impact of state deductions on federal returns and net of receivables related to the uncertain tax positions). If recognized, $17 million of the tax benefit would affect the Company’s and Consolidated SCE&G's effective tax rates (see discussion below regarding deferral of benefits related to 2015 forward). These unrecognized tax benefits are not expected to increase significantly within the next 12 months, although other uncertain tax positions may be identified or taken, particularly with respect to the abandonment of the construction of the New Units during 2017. It is reasonably possible that these known unrecognized tax benefits may decrease by $457 million within the next 12 months. No other material changes in the status of the Company’s or Consolidated SCE&G's tax positions have occurred through September 30, 2017.

In connection with the research and experimentation deduction and credit claims reflected on the 2015 and 2016 income tax returns and similar claims made in determining 2017’s taxable income, and under the terms of an order of the SCPSC, the Company and Consolidated SCE&G have recorded regulatory assets for estimated foregone domestic production activities deductions, offset by estimated tax credits, and expect that such (net) deferred costs, along with any interest (see below) and other related deferred costs, will be recoverable through customer rates in future years (see condensed consolidated Note 2). SCE&G's current customer rates reflect the availability of domestic production activities deductions.

Also under the terms of an order of the SCPSC, estimated interest expense accrued with respect to the unrecognized tax benefits related to the research and experimentation deductions in the 2015 and 2016 income tax returns has been deferred as a regulatory asset and is expected to be recoverable through customer rates in future years. See also condensed consolidated Note 2. Otherwise, the Company and Consolidated SCE&G recognize interest accrued related to unrecognized tax benefits within interest expense or interest income and recognize tax penalties within other expenses.  Amounts recorded for such interest income, interest expense or tax penalties have not been material for any period presented.

Effective January 1, 2017, the State of North Carolina reduced its corporate income tax rate from 4% to 3%. During the second quarter of 2017, the State of North Carolina passed legislation that will lower the state corporate income tax rate from 3% to 2.5% effective January 1, 2019.  In connection with these changes in tax rates, related state deferred taxes were remeasured, with the change in their balances being credited to