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SCANA Corp. (NYSE:SCG)

Q2 2009 Earnings Call

July 30, 2009; 2:00 pm ET

Executives

Jimmy Addison - Senior Vice President & Chief Financial Officer

Kevin Marsh - President of SCE&G

Betty Best - Director of Financial Planning & Investor Relations

Analysts

Dan Jenkins - State of Wisconsin Investments

Chris Ellinghaus - Shields & Company

Paul Patterson - Glenrock Associates

Travis Miller - Morningstar

Jonathan Reeder - Wells Fargo

Vedula Murti - CDP

Marc De Croisset - Macquarie

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. My name is Heather, and I’ll be your conference facilitator today. At this time, I would like to welcome everyone to the SCANA Corporation conference call. (Operator Instructions)

Now I’d like to turn the call over to Betty Best, Director of Financial Planning and Investor Relations.

Betty Best

Thanks, Heather and good afternoon. I’d like to welcome everyone to our earnings conference call, including those who are joining us on the webcast. Earlier today, we announced financial results for the second of 2009.

In just a minute, Jimmy Addison, Senior Vice President and Chief Financial Officer; and Kevin Marsh, President of SCE&G, will review those results, address key operational issues, then respond to questions. The earnings press release that we will refer to in this conference call is available on our website at SCANA.com.

I would like to remind everyone that certain statements that may be made during today’s call which are not statements of historical fact are considered forward-looking statements, and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those indicated by such forward-looking statements, including the risks and uncertainties discussed in the company’s SEC filings. The company does not recognize an obligation to update any forward-looking statements.

I will now turn the call over to Jimmy.

Jimmy Addison

Thanks, Betty and good afternoon. I would also like to welcome each of you to our call. SCANA reported second quarter earnings of $55 million or $0.45 per share, compared to $57 million or $0.48 per share in the second quarter of 2008. This $0.03 decline was due primarily to share dilution and lower electric margins, which more than offset reduced O&M expenses and customer growth.

We conservatively based our 2009 plan on no growth in customers, and are therefore pleased we are seeing continued customer growth in our electric service territory. However, this growth has been more than offset by reduced customer consumption as a result of the economic slowdown. While we have not yet seen a definitive turnaround, South Carolina’s jobless rate remained relatively unchanged in June from May, and we have recently seen an improvement in housing starts.

For the first sixth months of 2009, we reported earnings of $1.39 per share, compared to $1.42 per share for the same period in 2008. This year-to-date $0.03 per share decrease in earnings is similarly due to dilution and lower consumption. This more than offset favorable weather, which accounted for $0.05 year-to-date and $0.02 for the quarter compared to normal.

Although I don’t have any specific degree day statistics to share with you at this point, I should add that we have seen a mild July, which could bring our year-to-date weather earnings impact back to the more normal range going forward. On a year-to-date basis, we estimate that consumers have reduced consumption by approximately 2.5% or $16 million. While we continue to add approximately 2,200 net new electric customers each quarter, these additions can’t offset the impact of the economy on a customer base of 650,000.

We are unsure how long these changes in consumer behavior patterns will continue, but we’re encouraged with the results of efforts we have taken to offset the financial impact. For example, in April we announced that SCE&G and the City of Orangeburg reached an agreement for SCE&G to continue serving wholesale electric power needs through December 2010.

That contract is for approximately 190 megawatts of capacity and is expected to generate an additional $0.06 of earnings for the additional eight months of 2009, or $0.04 for the second half of the year. Additionally, some of the cost control efforts company has undertaken include lower contractor usage, reduced overtime and no salary increases for salaried employees in 2009 to-date, and limiting our spending to what is needed to maintain reliability, safety and customer service. These efforts have yielded $22 million of savings over 2008 levels.

Now I’d like to review second quarter results for our principal lines of business. As a reminder, the large majority of our operations are regulated. These regulated utility businesses, SCE&G, PSNC and CGT, collectively represent more than 90% of the company’s total assets and annual earnings per share.

South Carolina Electric & Gas Company, our largest subsidiary, reported earnings of $59 million, or $0.49 per share, compared to $61 million or $0.52 per share in the same quarter of last year. The $0.03 decrease is attributable to share dilution and lower electric margins, which more than offset lower O&M expenses and customer growth.

On June 15, SCE&G submitted its quarterly filing to the Public Service Commission as required under the Natural Gas Rate Stabilization Act. In that filing, the company reported that its return on common equity for the 12 month period ended March 31, 2009 was 6.36%, compared to an allowed return of 10.25%.

Since the actual return on equity was more than 50 basis points below the allowed return, SCE&G requested a 2.5% increase in its rates in order to restore return on equity to the 10.25% authorized level. This request would produce an estimated $13.4 million annually, and is driven primarily by increased costs associated with building, operating and maintaining SCE&G’s system infrastructure.

Following a required audit of the company’s filing by the Office of Regulatory Staff, the PSC will review both the company’s request and the ORS audit report and issue its order on our request in October. The rate adjustment would be effective with the first billing cycle in November. At June 30, 2009, SCE&G was serving approximately 307,000 natural gas customers, an increase of 1.3% over the last 12 months.

PSNC Energy, our retail natural gas distribution company in North Carolina, reported seasonal breakeven earnings for the second quarter of 2009, compared to a loss of $1 million or $0.01 per share in the same quarter of 2008. That improvement was due mainly to new rates effective in November of last year and customer growth.

At June 30, 2009, PSNC was serving approximately 461,000 natural gas customers, an increase of 1.6% over the last 12 months. Carolina Gas Transmission, our interstate natural gas transmission subsidiary, reported earnings of $0.02 per share, unchanged from the same quarter last year. CGT continues to deliver very consistent earnings each quarter from its transportation-only business model.

SCANA Energy, our retail natural gas marketing business in Georgia, reported a seasonal loss of $3 million or $0.03 per share in the second quarter of 2009, compared to a seasonal loss of $1 million or $0.01 per share in the second quarter of 2008. This decline is due primarily to share dilution, lower volumes and increased reserves for bad debts. At June 30, 2009, SCANA Energy was serving approximately 447,000 customers in Georgia, maintaining its position as the second largest natural gas market in this state.

SCANA’s corporate and other businesses, which include SCANA Communications, ServiceCare, SCANA Energy Marketing and the holding company, reported a combined loss of $3 million, or $0.03 per share, compared to a loss of $4 million or $0.04 per share in the same quarter last year.

Regarding earnings guidance, we are reaffirming our 2009 guidance of $2.65 to $2.95 per share and continue to target a long term average annual earnings growth rate of 4% to 6%. We believe that was continued uncertainty in the economy and considering the criticality of the third quarter cooling season, it’s premature to adjust our guidance at this time.

Keep in mind, that our guidance assumes normal weather in our electric and natural gas service areas for the remainder of the year and excludes any potential impact from changes in accounting principles and certain gains and losses from investing activities, litigation and sales of assets. Other factors that may impact future earnings are discussed in our SEC filings.

With regards to our liquidity position, at June 30, we had approximately $375 million in cash on hand and another $500 million available to us available under our lines of credit. While it was prudent to maintain a conservative cash position until the soundness of the financial system could be assured, we believe that the financial markets are regaining stability and as a result in July, we began decreasing our cash on hand and commensurate borrowings under our credit facility.

Thus, we current will have approximately $100 million in cash and $700 million available in liquidity. Additionally, we recently closed on a $100 million private placement at PSNC to add to our long term liquidity. This facility has a delayed draw feature, so we have not yet withdrawn the funds, but will ultimately reduce our levels of outstanding commercial paper, providing for more net liquidity in the long run.

We’ve recently concluded our annual review process with all three credit rating agencies. Standard & Poor’s downgraded SCANA and its rated subsidiaries One Notch with the exception of SCE&G’s senior secured debt, which remains at A-minus. The long term outlook was revised from negative to stable.

Fixed Ratings downgraded SCANA and its rated subsidiaries One Notch and revised the long term outlook from negative to stable. Finally, Moody’s downgraded SCANA and SCE&G One Notch affirm the ratings for PSNC and South Carolina Fuel Company and revised its long term outlook for SCANA and its rated subsidiaries from stable to negative.

The common theme of the agencies was lessened the credit metrics due to CapEx and the related debt and the overall increased business risk associated with the nuclear build. Due to the long construction cycle of building a nuclear plant, all three agencies have stated that they are taking a more conservative approach to companies that are planning to build nuclear plants.

Nevertheless, despite these recent actions, we still maintain solid investment grade ratings, and most importantly, a senior secured debt rating of A-minus or higher at SCE&G, where our nuclear debt financings will occur. These downgrades have not had a material impact on SCE&G’s first mortgage bond spreads, so we don’t feel there are significant financial implications from these rating actions.

In summary, we remain very committed to our new nuclear strategy and we will continue to work to achieve our stated financial and operational goals. A complete listing of the credit ratings for SCANA and its rated subsidiaries is available in our earnings press release. Turning now to nuclear regulatory matters, there are three recent state regulatory filings I would like Kevin Marsh, the President of SCE&G, to brief you on.

I’ll now turn the call over to, Kevin.

Kevin Marsh

Thanks, Jimmy, and good afternoon. On May 15, we filed our first quarterly status report with the Office of Regulatory Staff as required under our recent base load review order. This report provides a detailed update of our capital costs incurred and updated milestones for our nuclear project. On July 14, the ORS submitted their review of this filing. A copy of the SCE&G report is available on our website.

On May 29, we submitted our initial annual revised rate adjustment filing with the Commission for the annual recovery of financing costs related to CWIP. The requested rate adjustments are based on the incremental CWIP incurred from the July 20, 2008 filings for June 30, 2009, and are based on the updated capital structure with the ROE set at 11%. We expect new rates under this filing will go into effect on October 30 of this year.

Earlier today, the Office of Regulatory Staff filed their recommendation related to our initial annual revised rate adjustment request. $22.5 million or 1.1% is the requested revenue amount, which is also the recommendation by the Office of Regulatory Staff for new rates. Their report supporting our filing will be posted on the PSC website later today.

Finally, on July 20, we filed an update of construction progress and request for updates and revisions to schedules with the South Carolina PSC. This filing request that the Commission issue an order approving an updated construction and capital cost schedule for the construction of the two nuclear units.

Our initial regulatory approval of the project was based on a generic Westinghouse AP-1000 schedule; and since that time, we have received a refined site-specific construction schedule from Westinghouse-Shaw, shifting the sequencing of milestones within the currently approved project schedule The updated schedule outlines the details of the construction and capital cost schedule beyond what was in our original filing in May of 2008.

With this new filing, we are requesting approval to adopt the updated schedule as the official schedule for the project, replacing the one filed in 2008. This refined schedule does not change our commitment to construct and complete the two units by April 1, of 2016, and January 1, of 2019, nor does it change the previously announced cost of $4.53 billion in 2007, but rather better matches the cost of the years expected to be incurred. This schedule also supports the previously disclosed $400 million shift in CapEx from 2009 to 2011 into future years.

That concludes our prepared remarks, and Jimmy and I will now be glad to respond to any questions you might have.

Question-and-Answer Session

Operator

(Operator Instructions) Your next question comes from Dan Jenkins - State of Wisconsin Investments.

Dan Jenkins - State of Wisconsin Investments

I was wondering, on the updated schedule you just talked about for the nuclear project, will that be filed, like in an 8-K or something? Will we have some access to seeing what that new schedule is?

Jimmy Addison

I believe that Dan, that’s already out on the PSC’s website. If you go to the South Carolina PSC, you can find it there.

Dan Jenkins - State of Wisconsin Investments

I missed the amount you said that the dollar amount of the increase that you are expecting related to the clip filing?

Jimmy Addison

With the revised rate filing?

Dan Jenkins - State of Wisconsin Investments

The clip filing for the nuclear?

Jimmy Addison

It’s about 1.1%, around $23 million.

Dan Jenkins - State of Wisconsin Investments

Then I was curious, on page six of your release, for the electric operations, the wholesale was up 13% in the quarter. What was driving that?

Jimmy Addison

Let me make sure, I’m with you on your question, which, page six?

Dan Jenkins - State of Wisconsin Investments

Page six up there at the top, under the KWH sales. For wholesale, it was up 13.2% for the second quarter, to 541 from 478.

Jimmy Addison

The issue there was is really a comparison issue. Last year in this quarter, our nuclear plant was down for an extended refueling outage. So there was very little capacity to sell. Even though the economy is off this year, we have more capacity available to sell. Contrary to that is we’ve made significantly less on it. The margins are much lower this year, but we had more to sell in volumes, and you’re looking at volumes there.

Dan Jenkins - State of Wisconsin Investments

Then similarly, if you go down then and look at the natural gas operations, you had a 5.7% increase in the industrial sales, which given the economic environment, seems kind of contrary like you would expect, so what?

Jimmy Addison

Yes, I agree with you. I asked that same question myself, when I first saw it. That’s primarily through SCANA Energy Marketing. Our subsidiary that sells to other industrials and to other power generators, and that’s gas sold for electric generation for to other electric generators. That’s because of the low cost of gas compared with coal and others are using more gas, as we are.

Dan Jenkins - State of Wisconsin Investments

Kind of the last thing I was wondering about, you talked a little bit about the rating agencies completing their review, and all of them decided to downgrade you, and Moody’s left with you a negative outlook.

I guess my question is, is there some level that you’re willing to defend as far as a rating if they decide that, given the big nuclear construction program and the access you’re going to need to capital? Is there some point where you’d be willing to issue equity to protect the rating, and kind of what your philosophy is going to be going forward?

Jimmy Addison

Well, that’s been our plan all along. As we’ve stated, our plan is to keep a single A minus rating on the first mortgage bond at SCE&G, where we’re going to be issuing all of the debt. We have a plan already, as we’ve discussed, around equity. This was not a surprise to us. So this is part of our plan is to issue equitably, ratably along the way as the project develops. We’ve not changed what we’ve previously disclosed there. We really want to stay at that A level.

Dan Jenkins - State of Wisconsin Investments

So your current ratings are kind of your target level throughout the process? Would that be fair to say?

Jimmy Addison

Well, that’s fair to say based on the dynamics of the market today now. Who knows, “What the future will hold?” For example, I could take you back to a couple of years ago, and the difference between a single A and a triple B rating was negligible in the cost of the bond.

So it really wasn’t worth anything at that point, but based upon what we see in today’s market, which is really different, that is our judgment now. One thing is for sure, the project this long, the dynamics at a macro level will change, and we’ll have to adjust to those, but at this point, it feels like it’s very much worthwhile keeping the rating.

Operator

Your next question comes from Chris Ellinghaus - Shields & Company.

Chris Ellinghaus - Shields & Company

Can you give us any kind of update on NRC or loan guarantees?

Jimmy Addison

I’ll respond to loan guarantees, and let Kevin maybe speak to NRC. I don’t know what, if there’s anything there on NRC. On loan guarantees, really not a lot has happened since the last time we called. We’ve had a meeting with the DOE back; I think it was actually right before our last quarterly call. We’re getting them everything they need.

We continue to have our credit assessment done by one of the rating agencies, and they need that in order to give us the first look at a term sheet. We’ll have to start evaluating from that point. So nothing has really changed on the loan guarantees at this point. I’ll turn it over to Kevin.

Kevin Marsh

Yes, I’ll review. Our work with the NRC continues. They continue to have resources, reviewing our license application for the COL, which we still expect it to get issued in the mid to latter part of 2011.

We are responding to a lot of information, or requests to them they call RAIs, or requests for additional information. So Westinghouse continues to work with them on the design certification document number 17 as they try to get that revision through, which will be the last revision to this engineering design for the plant as we move forward.

We have daily interaction with them. I was in a review meeting just last week with both Westinghouse and Shaw, and we are pleased with where we are at this point, and pleased with the level of cooperation between our team and theirs, and the level of interaction with the NRC.

I think the best thing I can tell you as the process continues, there’s a tremendous amount of information that’s being shared to make sure we respond to any questions they have. So we can stay on schedule for the issuance of the COL.

Chris Ellinghaus - Shields & Company

Jimmy, I think you said something about higher bad debt expense at SCANA Energy. Is the economy’s impact that great, that it’s offsetting the lower natural gas prices that much?

Jimmy Addison

It is. It really has. It’s turned a little in the second quarter, in Georgia especially. Our read and of course, the vast majority of our business 90 plus percentage in the Carolinas, but Georgia is a much more difficult market.

We’ve seen it turn in the second quarter. The other dynamic, if you’re in the gas business is, you’ve got much more leverage to get the gas bill paid in the first quarter than you do in the second quarter, because it gets warm in the south in the second quarter, they’re not nearly as motivated to pay. When I say they’re higher, they’re a couple million dollars higher than a year ago, so it’s not outrageous, but it certainly been mitigated by the lower gas prices.

Chris Ellinghaus - Shields & Company

Can you add any color to the economy in the Carolinas other than what you said?

Jimmy Addison

To repeat first what I said, just to recap. We’re hopeful that things are near the bottom. The jobless rate really didn’t change. I think it went up 10 basis points or something from May to June. We’ve seen more housing starts so we continue to add customers in every one of our regulated businesses in the Carolinas. So that’s a good thing, but it’s not like that we see anything radically different than the national economy at this point.

Operator

Your next question comes from Paul Patterson - Glenrock Associates.

Paul Patterson - Glenrock Associates

Most of my questions have been answered, but the $400 million that I think you mentioned from 2009 to 2011 that’s now going to be coming in later years. Could you explain a little bit more about that?

Jimmy Addison

Yes. Paul, that’s really due to that schedule shift. Kevin talked earlier about the filing we made with the PSC, and we’ve gone from a very generic schedule when we first filed our proceeding with the Commission last fall, to a site-specific schedule now for the BC summer units two and three.

Once they got that granular, it resulted not the overall dollars changing, but in moving out some of the dollars related to milestones that moved out in future years. So if you aggregate 2009, ‘10 and ‘11, the three years that we’ve disclosed publicly, you’d take $400 million off an aggregate to move them out into years ‘12 forward.

Paul Patterson - Glenrock Associates

What about the site-specific? Is the site-specific review caused, I guess, the $400 million caused that shift? Just a number, or is it easy to calculate?

Kevin Marsh

In our detailed work with Westinghouse, as we’ve tried to finalize the schedule, we wanted to ship, what reasonable amount we could, after that 2011 timeframe, which would get us past the COL approval.

While we fully expect to have the license approval by that time, we didn’t want to make any more investment in equipment than was necessary to keep the project on schedule and on time, and working with Westinghouse as they finalized the final schedule with Shaw, we were successful in doing that. That’s why we went back and revised those milestones with the Commission.

It’s not indicative of a problem or a delay in the project, as I said. The initial schedule that was filed with the Public Service Commission was a very generic schedule. As we tailored that schedule to our project and our site and our circumstances, we were able to refine that. That’s what we’ve taken back to the Commission, and that’s consistent with the shift in the capital dollars.

Operator

Your next question comes from Travis Miller - Morningstar.

Travis Miller - Morningstar

My question on the usage declines in the industrial side. How does that affect revenue? Can you give us an idea of the sensitivities around, to say 1% drop in industrial usage, corresponding to an X percent drop in revenues?

Jimmy Addison

I can’t give you anything in that kind of a matrix. Generally, the contracts are all different. Generally, the commonality between them is that there’s a demand charge associated with these contracts and just because you reduce your consumption or you take out the system, it doesn’t mean that revenue is going to go down.

Generally, these use a look back provision, when they look back over the last year and look at the peak usage by the customer during that period. So it would take, you’d have to get out past a one year sustained economic downturn before it would kind of reset that lower level of peak that would allow if you will, the dollar level of the decrease to equal the KWH decrease.

Kevin Marsh

You would also have customers on the flipside of that. Interruptible customers, when you have a fairly thin margins just based on the structure of that contract. So if they were to leave or reduce some of their take on the system, you don’t see nearly the impact you would from a residential or commercial firm application.

Travis Miller - Morningstar

Generally, what is the percentage of the total charge that corresponds to the demand charge is your rough…?

Kevin Marsh

It really varies based on the type of business. It might be half for a steel plant and very different for a chemical plant. They run very fundamentally different operations. I couldn’t give you a rule of thumb that would apply to all of the industries.

Travis Miller - Morningstar

Related to that, has there been a benefit potentially from the mix shift that you’ve seen over the last two years?

Kevin Marsh

If you’re talking about having low industrial and more residential? If you were growing more on the residential side while you lose industrial load, you could potentially see an impact. That’s not been the case. From where we are in the residential, it’s been relatively stable until the economic impact hit here last year. For every kilowatt hour, we had lost on the industrial side, if we could transfer that to residential and commercial, I think you would see a market increase.

Jimmy Addison

If you look at our base overall, I mean half of our margins come from residential and about another third from the commercial segment. So there is not as exposed to the industrial margins. For example, it was here in the south 20 years ago, when manufacturing was much more prevalent. It’s now much more consumer oriented.

Travis Miller - Morningstar

One quick clarification too, on that 22.5 million revenue request on October 30?

Jimmy Addison

Right.

Travis Miller - Morningstar

That would be effective on that date, right?

Jimmy Addison

That’s correct. The law is, we make the filing May 30, within five months. They have to issue their order with the new rates End of October.

Kevin Marsh

I will go back and add one more statement to that shift between industrial and residential. Overtime, that change would diminish, because as we file updated cost of service studies with the Public Service Commission, they would reallocate the costs that would also be shifted to the residential class overtime, and it would pretty much balance out. You’re going to earn your return on your authorized investment by the Commission, but then you go through a process of allocating the costs by class and the relative revenues that come with them.

Operator

Your next question comes from Jonathan Reeder - Wells Fargo.

Jonathan Reeder - Wells Fargo

I was hoping you guys could update us a little bit what you’re thinking as far as intermediate generation meets. I know before you were saying they were going to be mitigated until the nuclear units came online due to the rolling off of some wholesale contracts. Has your thought process kind of changed there at all? Or the shift in expected demand due to the economy has that replaced any potential need there?

Kevin Marsh

Well, we had arrangements in 2008 to purchase a hundred megawatts firm supply during the summer had we needed that supply. We did need that in 2008.

With the change in accounting for 2009, while we have those same reserve requirements out there. We have not found it necessary to pool on that and based on what we see as we go through this recovery period, we’ll have to watch that from year-to-year. I don’t see anything that would require us to go out and build intermediate generation at this point.

Based on what we know today, I think we’ll have to watch very carefully as the economy recovers at how strong the actual sales come back as we do recover, but even in our plan before we saw the economy go down, we didn’t have any major generation construction plans.

We were going to cover that by dropping the City of Orangeburg wholesale contract, or allowing it to expire, as well as a contract we have with the North Carolina EMCs that expires in 2012. Those will continue to be the pieces that we would look at to manage that load requirement.

Jonathan Reeder - Wells Fargo

Then could you also discuss what, if any base electric rate case plans you have beyond just the nuclear recovery filings? Do you expect to file anything later this year in 2010?

Kevin Marsh

Jimmy has talked earlier in the year about our need to seek recovery for some of the investments we’ve made and environmental abatement investments, primarily scrubbers on two of our large coal-fired plants. We’ve got about $500 million and invested in those pieces of equipment. At some point, we’ll need to go in and seek recovery of that. I would also say, in addition to that, we’re watching carefully what our expense levels do.

As we come to the economy, where we do still have a base level of spending we’ll need to do to meet the growth on the system so we do continue to have growth. If that continues, we’ll likely need to have some rate relief on that front, too. We don’t do anything this year that would result in any increases for 2009. Understanding how the process works, if we were to file today, it’s six months before that increase would go into effect.

So we’ve passed the date that anything would go into effect in 2009. I think Jimmy has discussed earlier, that we’ll look as we get towards the end of the year about the timing of those filings and how they may be structured, but it’s too early to put any numbers on those at this time for a definite timeframe.

Jonathan Reeder - Wells Fargo

The possibility that you have an impact for 2010 is definitely still open?

Kevin Marsh

Yes.

Operator

(Operator Instructions) Your next question comes from Vedula Murti - CDP.

Vedula Murti - CDP

A couple of things one, I if I heard your commentary properly, I think you indicated that third quarter weather-wise is off to a slow start and that it’s premature at this point, given the leverage of summer, to make any adjustments for your earnings outlook. Does that imply at this point, that you’re towards the bottom half of the range in terms of where you’re at this point?

Jimmy Addison

No, it doesn’t imply that at all. It doesn’t imply either direction. We’re still comfortable with the range.

Vedula Murti - CDP

Okay, because you did imply, though, that because August, or because July here is off to a slow start that if current conditions continue to persist, that it wouldn’t necessitate, it couldn’t necessitate a change.

Jimmy Addison

The other thing, though that we discussed both earlier today and last quarter is that we added the Orangeburg contract that was not in our original guidance, and that adds $0.06 per share to 2009 earnings.

Vedula Murti - CDP

Secondarily, can you talk about how the shifting of $400 million from the 2009 to 2011 period to out years is going to affect your financing plans in the next two years going forward, especially since you took care of a large amount of equity here at the beginning of this year?

Jimmy Addison

Yes, as we said earlier, we really don’t have any other equity needs for the balance of this year. We did what we felt we needed to do at the beginning of the year. Now, the only exception to that is we continue to issue each quarter new shares to fulfill our 401(k) and our dividend reinvestment plans.

So that would generate about another $40 million to $45 million in the second half of the year. We don’t have any follow on plans in the balance of this year. We think we’re in good shape there. We’ve got one debt deal to do later in the year. Right now that’s somewhere between $150 million and $200 million, based on the shift that Kevin talked about, we really only have one debt deal to do next year. I think that’s about $150 million or so.

So the next couple of years are not huge capital need years and the big benefit is bringing in this additional cash each year through the Base Load Review Act. That’s the benefit of it for the long term of the customers, is it doesn’t add this compounding AFC and put you in a huge capital raising need. It funds part of that capital itself.

So the increase we’ll get this October will help. The increase we get next October will help. Really on the equity side, nothing has changed from our earlier plan that said that our strategy was to finance about half and half equity and debt, and based upon that, we would estimate equity needs next year, in addition to the stock plans of about $130 million to $150 million and the same for the following year.

Vedula Murti - CDP

So even though we’re pushing off $400 million, that doesn’t push that part of it off into back end, either that remains unchanged?

Jimmy Addison

Yes. We’re going to do is to try to really take this opportunity to stick to that plan and work towards strengthening the balance sheet a little bit back to protecting those long term ratings.

Operator

Your next question comes from Marc De Croisset - Macquarie.

Marc De Croisset - Macquarie

I think Vedula asked the question essentially. I want to just make sure I understand. You are shifting out $400 million of capital expenditures past 2011, past the COL, but your financing plan still reflects $300 million of external equity beyond your drip? Is that correct?

Jimmy Addison

That’s correct.

Operator

Your final question comes from Paul Patterson - Glenrock Associates.

Paul Patterson - Glenrock Associates

What was the actual weather impact versus normal for the first six months?

Jimmy Addison

It was $0.05 in total for the first six months, $0.03 in the first quarter and $0.02 in the second.

Paul Patterson - Glenrock Associates

That’s versus normal?

Jimmy Addison

Versus normal.

Operator

As there are no further questions in the queue at this time, I’d like to turn the call back over to Jimmy Addison for closing remarks.

Jimmy Addison

Thank you for everyone’s attention today to the call. I think we had another good quarter. The second quarter is essentially only 15% of our annual plan, but based upon the shoulder months and the composition of our businesses. So if you take our total earnings, only about 15% fall within that second quarter are expected to.

So we don’t expect it to be a huge quarter, but we’re very pleased with the mitigating effects that we’ve been able to have on the effects of the top line from the economy. We thank you for all your interest. If you have got additional questions, feel free to contact our Investor Relations. Thank you.

Operator

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a great day.

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Source: SCANA Corporation Q2 2009 Earnings Call Transcript
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