10-K - SCANA Corporation

Table of Contents
Effective February 12, 2010, the PHMSA issued a final rule establishing integrity management requirements for gas
distribution pipeline systems. SCE&G has developed a plan and procedures to ensure that it will be fully compliant with this rule.
SCE&G believes that any additional costs incurred to comply with the rule will be recoverable through rates.
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.
The Pipeline Safety Act directed the 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 617 miles of
transmission pipeline subject to the Pipeline Safety Act, approximately 63 miles are located within these areas. Through
December 2011, PSNC Energy has assessed 99 percent of the pipeline and is required to complete its assessment of the remainder by
December 2012. PSNC Energy will be required to reinspect these same miles of pipeline approximately every seven years. PSNC
Energy currently estimates the total costs through December 2012 to be $7.5 million for the initial assessments, not including any
subsequent remediation that may be required. Costs totaling $2.2 million were recovered through rates over a three-year period
beginning November 1, 2008. The NCUC has authorized continuation of deferral accounting for certain costs incurred to comply with
DOT’s pipeline integrity management requirements until resolution of PSNC Energy’s next general rate proceeding. As a result,
PSNC Energy incurred an additional $3.5 million in costs between November 2008 and December 2011.
Carolina Gas Transmission Corporation
CGT has approximately 72 miles of transmission line that are covered by the Integrity Management Rule of the Pipeline
Safety Act. CGT currently estimates the total cost to be $10.5 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 record certain assets and liabilities that defer the recognition of expenses and revenues to future
periods in accordance with accounting guidance for rate-regulated utilities. In the future, in the event of deregulation or other changes
in the regulatory environment, the Company may no longer meet the criteria of accounting for rate-regulated utilities, and could be
required to write off its regulatory assets and liabilities. Such an event could have a material effect on the results of operations,
liquidity or financial position of the Company’s and SCE&G’s Electric Distribution and Gas Distribution segments in the period the
write-off would be recorded. See Note 2 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 would be necessary and, if they were, the extent to which they would affect the
Company’s results of operations in the period in which they would be recorded. As of December 31, 2011, the Company’s net
investments in fossil/hydro and nuclear generation assets were approximately $3.1 billion and $1.8 billion, 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 for which they have not yet
been billed. Such unbilled revenues reflect consideration of estimated usage by customer class,
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