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

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20091231-0037 FERC PDF (Unofficia1) 12/29/2009 Exhibit No. SCE-5(B) Global Credit Research Credit Opinion 16 JUL 2009 Credit Opinion: South Carolina Electric & Gas Company Columbia, South Carolina, United States Ratings Category Outlook Issuer Rating First Mortgage Bonds Senior Secured Shelf Preferred Stock Moody's Rating Negative Baal A3 (P)A3 Baa3 Commercial Paper P-2 Parent: SCANA Corporation Outlook Issuer Rating Senior Unsecured Negative Baa2 Baa2 South Carolina Fuel Company Inc. Outlook Negative Bkd Commercial Paper P-2 Contacts Analyst James HempsteadlNew York William L. HesslNew York Phone 212.553.4318 212.553.3837 Key Indicators
20091231-0037 FERC PDF (Unofficia1) 12/29/2009 ExhibitNo.SCE-5(8) [1] South Carolina Electric & Gas Company LTM lQ 09 2008 2007 2006 (CFO Pre- WIC + Interest) I Interest Expense 3.3 4.4 4.7 4.7 (CFO Pre-W/C) I Debt 12% 18% 23% 23% (CFO Pre-W/C - Dividends) I Debt 8% 13% 18% 17% (CFO Pre-W/C - Dividends) I Capex 35% 63% 77% 105% Debt I Book Capitalization 49% 49% 43% 44% EBITA Margin % 23% 22% 21% 20% [1]All ratios calculated in accordance with the Global Regulated Electric Utilities Rating Methodology using Moody's standard adjustments Note: For definitions of Moody's most common ratio terms please see the accompanying User's Guide. Opinion Rating Drivers Expected decline in financial metrics over intermediate-term horizon New nuclear construction program significantly increases business and operating risk profile, a concern given the size of the investment relative to the size of the consolidated company Supportive regulatory environment is a significant credit benefit Corporate Profile South Carolina Electric and Gas Company (SCE&G, Baa1 issuer rating I negative outlook) is a vertically integrated electric and gas distribution utility which owns or operates approximately 5.8 GWs of generation capacity including a 67% interest in the approximately 950 MW VC Summer nuclear facility. SCE&G is a wholly owned subsidiary of SCANA Corp (SCANA, Baa2 senior unsecured I negative outlook). SUMMARY RATING RATIONALE SCE&G's Baa1 issuer rating primarily reflects the company's high degree of regulated electric and gas utility operations, the supportive political and regulatory environment in South Carolina and the overall financial and liquidity profile of the company. SCE&G is weakly positioned in the Baa1 rating category, primarily due to our views of an elevated business and operating risk profile. Ratings could be further pressured downward over the next 12 to 18 months given the company's significant amount of projected capital expenditures and infrastructure investment, largely attributable to its new nuclear development plans. The financing plans associated with these capital investment plans and resulting credit metric projections, will increasingly represent a critical ratings driver for the credit over the next several years. DETAILED RATING CONSIDERATIONS New Nuclear Generation Plans Raise Business Risk Profile While Moody's generally views investments into regulated rate base favorably, SCE&G's pursuit of constructing 2,234 MWs of nuclear generation, in cooperation with Santee Cooper (45% ownership), is beginning to significantly increase the overall business and operating risk profile of the company. In our opinion, SCANA has taken very few material steps to strengthen SCE&G's balance sheet on the front end of a very long construction cycle.
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64 FERC ER07-169 Ameren Energy Mark
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