10-K - SCANA Corporation

Table of Contents
As previously reported, SCE&G has been advised by Santee Cooper that it is reviewing certain aspects of its capital
improvement program and long-term power supply plan, including the level of its participation in the New Units. Santee Cooper has
entered into a letter of intent with Duke that may result in Duke acquiring a portion of Santee Cooper’s ownership interest in the New
Units.
The Consortium has recently performed an impact study, at SCE&G’s request, related to various cost and timing alternatives
arising from the delay in the issuance date of the COL from mid-2011, which was the date assumed when the EPC Contract was
signed in 2008, to the early-2012 issuance date currently anticipated by SCE&G. SCE&G has recently informed the Consortium that
it intends to pursue the alternative that would delay the substantial completion date of the first New Unit and accelerate the substantial
completion date for the second New Unit and has also begun discussions concerning the update of cash flow forecasts and
construction schedules on that basis.
In December 2011, the NRC granted final design certification to Westinghouse for the AP1000 nuclear reactor, which is the
reactor to be used for the New Units. This certification is a necessary step before the NRC can issue a COL for the New Units. In
October 2011, the NRC conducted a mandatory hearing regarding the issuance of a COL for the New Units. This hearing followed
the August 2011 completion of the FSER, in which the NRC staff concluded there were no safety aspects that would preclude issuing
the COL, and the April 2011 completion of the FEIS, in which the NRC and the USACE concluded there were no environmental
impacts that would preclude issuing the COL.
See additional discussion at OTHER MATTERS - Nuclear Generation.
Environmental
Significant federal legislative initiatives related to energy were unsuccessful in 2011, and Consolidated SCE&G expects such
legislative initiatives will be hampered through 2012, due to each chamber of Congress being controlled by different political parties.
The EPA, however, did issue new rules in 2011 related to air quality, including CSAPR and MATS, which require reductions in
power plant emissions of sulfur dioxide, nitrogen oxide and mercury, among other substances. Though implementation of CSAPR
was stayed by the United States Court of Appeals for the District of Columbia pending judicial review, Consolidated SCE&G cannot
predict the outcome that judicial review will have on the rule’s implementation. In 2012, additional significant regulatory initiatives by
the EPA and other federal agencies will likely proceed. These initiatives may require Consolidated SCE&G to build or otherwise
acquire generating capacity from energy sources that exclude fossil fuels, nuclear or hydro facilities (for example, under an RES). It is
also possible that new initiatives will be introduced to reduce carbon dioxide and other greenhouse gas emissions. Consolidated
SCE&G cannot predict whether such initiatives will be enacted, and if they are, the conditions they would impose on utilities.
The EPA has stated its intention to propose, in late 2012, new federal regulations affecting the management and disposal of
CCR, such as ash. Such regulations could result in the treatment of some CCRs as hazardous waste and could impose significant costs
to utilities, such as SCE&G and GENCO. The EPA is also expected to issue regulations during 2012 for cooling water intake
structures to meet BACT at existing power generating stations. While Consolidated SCE&G cannot predict how extensive the
regulations will be, Consolidated SCE&G believes that any additional costs imposed by such regulations would be recoverable
through rates.
Gas Distribution
The Gas Distribution segment, comprised of the local distribution operations of SCE&G, is primarily engaged in the
purchase, transportation and sale of natural gas to retail customers in portions of South Carolina. At December 31, 2011 this segment
provided natural gas to approximately 317,000 customers in areas covering 22,600 square miles.
Operating results for gas distribution are primarily influenced by customer demand for natural gas rates allowed to be
charged to customers and the ability to control growth in costs. 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 SCE&G’s ability to
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