SCEG OATT Formula Transmission Rate Filing.pdf - SCANA ...

20091231-0037 FERC PDF (Unofficia1) 12/29/2009
Exhibit No. SCE-5(A)
Summary:
SCANA Corp.
Credit Rating:
B88+fStablefNR
Rationale
The ratings on Columbia, S.C.-based SCANA Corp. reflect the consolidated credit profiles of its two primary
operating subsidiaries, South Carolina Electric & Gas Co. (SCE&G) and Public Service Co. of North Carolina Inc.
(PSNC), and also incorporate the contributions of Carolina Gas Transmission Corporation (CGTC) and the
company's Georgia retail gas marketing operations.
SCANA has an excellent business risk profile, characterized by operations in generally supportive regulatory
environments in North Carolina and South Carolina, attractive markets with above-average customer growth, some
operating diversity with a presence in two states, and a favorable operating record for its electricity generation
facilities. SCANA's regulated operations account for about 90% of consolidated cash flows.
SCANA's largest subsidiary, SCE&G serves approximately 650,000 electric (1.7% increase over the 2007 level) and
307,000 gas customers (1.3% increase over the 2007 level) in South Carolina and accounted for 77% of
consolidated net income and 79% of cash from operations in 2008. PSNC serves approximately 468,000 gas
customers (a 2.4% increase over the 2007 level) in North Catclina and accounted for 12 % of net income and cash
flow. In the aggregate, the customer base consists mostly of residential and commercial customers, providing a
measure of stability to revenues and cash flow. Customer growth is satisfactory despite the general slowdown in the
national and local economies.
Business risk for SCANA has increased primarily as a result of SCE&G's plans to build two new nuclear units in
partnership with the South Carolina Public Service Authority (Santee Cooper, AA-/Stable!--). The units are
Westinghouse APIOOOdesigns each with 1,117MWof generation capacity and anticipated commercial operation
dates of 2016 and 2019. The new units, while evolutions of existing plant designs, have not been built before and
have significant first-of-a-kind risk. SCE&G will own 55% of each of the units. SCE&G has received the necessary
regulatory approvals, including a Base Load Review Order that approves the proposed construction budget and
schedules and includes both scheduJing and financial contingencies. To supplement the regulatory framework that
provides for recovery of financing costs during construction, periodic progress reviews, inability of future
commissions to review prior years' capital expenditures for prudency, and ability to recover the abandoned
investment, SCE&G has entered into an engineering procurement and construction contract with Shaw and Stone &
Webster to design and build the rwo units. The cost for SCE&G's portion upon completion is estimated at about
$5.4 billion ($6.3 billion after including transmission costs) and includes forecasted inflation, owner's costs and
various contingencies. The proposed project introduces significant construction and financing risk which places
considerable pressure on the consolidated credit prome of SCANA and necessitates that all remaining aspects of the
business perform satisfactorily in order to provide support and preserve the current ratings.
CGTC operates as a FERC-regulated, transportation~only, natural-gas transmission company, eliminating any
exposure to commodity prices.
Standard & Poor's RatingsDirect I April23,2009 2
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