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Executives

Byron Hinson – Director, Financial Planning and IR

Jimmy Addison – SVP and CFO

Kevin Marsh – President and COO; President of SCE&G

Steve Byrne – EVP, Generation and Transmission and Chief Operating Officer, SCE&G

Analysts

Ashar Karaun – VISSIM

Erica Piserchia – Wunderlich

Marc de Croisset – FBM Capital Markets

Michael Lapides – Goldman Sachs

Jim von Riesemann – UBS

Greg Wright [ph]

Christopher Ellinghaus – Wellington Shields

Dan Jenkins – State of Wisconsin Investments

Erica Piserchia – Wunderlich Securities

Adola Murdhi [ph] – CDP Capital

Jonathan Reeder – Wells Fargo

SCANA Corporation (SCG) Q1 2011 Earnings Call April 27, 2011 2:00 PM ET

Operator

Good afternoon ladies and gentlemen. Thank you for standing by. At this time I would like to welcome everyone to the SCANA Corporation Conference Call. (Operator Instructions). I would now like to turn the call over to Byron Hinson, Director of Financial Claims and Investor Relations. Please proceed.

Byron Hinson

Thank you. I would like to welcome everyone to our earning’s conference call including those who are joining us on the web cast.

As you know, earlier today we announced the financial results for Q1 2011. Joining us on the call today are Jimmy Addison – SCANA’s Chief Financial Officer, Kevin Marsh – President of SCANA, and Steve Byrne – Chief Operating Officer of SCE&G. We will review those results and then we’ll start answering your questions.

The slides and the earnings release that we’ll refer to in this call are available at www.scana.com. (inaudible) Virginia, I would like to remind you that certain statements that may be made in 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 which are shown on slide two and discussed in the company’s SEC filings. The company does not recognize an obligation to update any forward-looking statements. I’ll now turn the call over to Jimmy.

Jimmy Addison

Thanks Byron. Good afternoon. I would like to welcome each of you to our call also. Let’s start on slide three which reflects SCANA’s 2011 Q1 basic earnings per share of $1 compared to $1.02 per share in 2010. The decline in earnings was primarily attributable to weather in our Georgia market of natural gas rates stabilization act, decrease in South Carolina, higher depreciation and share dilution; all of which offset improved margins from electric based rate increases. We are reaffirming our 2011 earnings guide of $2.95 to $3.10 per share with an internal target of $3.02.

Additionally, with more than 90% of our earnings weather normalized I thought it might be helpful for you to understand our view of our annual earnings plan by quarter. In our annual forecast we see this distribution as approximately 30% in both Q1 and Q4, 25% in Q3 and the remaining 15% in Q2. Hopefully this will be helpful in the quarterly distribution within your models. I caution you to consider the combination of this quarterly distribution and our annual guidance in updating your models if you choose to use it at all.

Now on slide four I’d like to review results for our principal lines of business. SCE&G’s Q1 2011 earnings, denoted in blue, were up $.04 compared to 2010. Improved electric margins from base rate increases under the base load review act and the mid-2010 retail electric rate case offset the lower gas margins from the RSA rate decrease and the higher capital related costs of depreciation, property taxes and interest.

As you may recall, in Q1 of 2010, we deferred for refund $25 million related to incremental margin from unusually cold weather as part of the implementation of our pilot electric weather normalization mechanism. This program applies to residential and commercial electric customers and was fully implemented in August 2010. The 2010 deferral had the effect of weather normalizing Q1, therefore there is no weather variance at the SCE&G.

At March 31, 2011 SCE&G was serving approximately 663,000 electric customers and approximately 315,000 natural gas customers; up .6% and .9% respectively over the same date in 2010.

PS&C Energy’s earnings for Q1 2011, in red, were $.25 per share unchanged from Q1 of 2010. Increases in margin from customer growth of 1.4% were offset by higher interest expense. As with SCE&G, no wonder variance is seen at PS&C due to the customer usage tracker or decoupling mechanism. SCANA Energy in grain reported earnings of $.17 during the quarter compared to $.24 in the prior year. The $.07 per share decrease in earnings is primarily attributable to weather. The colder than normal weather in Q1 2010 contributed $.09 to earnings as compared to about $.02 from colder than normal weather in 2011. Said another way, although Q1 of 2011 was cold, it was not nearly as cold as Q1 of 2010.

SCANA Energy was serving approximately 460,000 customers as of March 31, 2011. SCANA’s corporate and other businesses reported earnings of $.03 per share in Q1 of 2011 compared to $.02 per share in the same quarter last year.

Slide five shows our electric and gas sales statistics. Unit sales of electricity and natural gas to our retail customers in Q1 of 2011 were down over the prior year driven by weather related decreases in our residential and commercial classes. Of course our WNA and CUT mechanisms normalized margin and not unit sales. The industrial sector continued the train of recovery with an increase in both electric and gas sales.

On slide six you can see an update of economic growth announcements during Q1 of 2011. These recent announcements suggest the creation of more than 1800 new jobs with an investment of more than $600 million and are a continuing sign of a longer-term economic recovery in our service territory.

As you can see on slide seven, we expect to complete our debt financings for 2011 next month. As it relates to our cash position the final ROS rules for 2011 bonus depreciation were issued in March. These final rules are consistent with the method we used to originally estimate cash will be generated from bonus depreciation as discussed during our February call. In addition to bonus depreciation we continue to recognize a cash benefit and the method being used to account for capital maintenance, which results in certain maintenance costs being treated as current expenses for income tax purposes. Combined, we expect these strategies to generate over $60 million in cash benefit. Accordingly, we do not expect to draw the remaining funds under our May 2010 equity forward until early 2012, which will mitigate dilution.

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

Kevin Marsh

Thanks Jimmy. I would like to direct your attention first to slide 8. As most of you are aware, the United States environmental protection agency issued a proposed rule on March 16th, 2011 which would provide the first national standards for emissions of mercury, arsenic and other pollutants from coal and oil fired power plants. We will review the proposed rules to better understand any potential impact on our operations. The proposed rule must first be published under federal register, then undergo a 60-day comment period and the EPA will also hold three public meetings. Based upon the comments received, the EPA may make changes to the proposal before it is finalized, as early as November 6th, 2011. SCANA is committed to being a good steward of the environment and to meeting all the requirements set by state and federal regulators regarding power plant emissions. After the final rule is available, we will develop a compliant strategy based on the requirements of the rule, compliant time frames and the estimated cost of various options for compliance.

Since the mid 1990s we have spent nearly a billion dollars installing environmental equipment in our fossil plants including, most recently, an SER at our Coat facility and (inaudible) and William Station plants. That equipment has significantly reduced emissions of sulfur dioxide, nitrous oxide and mercury on our system.

Let me turn now to our new nuclear project activities. On slide nine I’m very pleased to report that our project for two new units remains on budget and on schedule for 2016 and 2019 respectively. As you may recall, on November 15th, 2010, we filed a petition with the South Carolina Public Service Commission seeking approval to update the capital cost schedules for the construction of the company’s new nuclear units. This filing was necessary due to the decision by the South Carolina Supreme Court last year, which found that general contingency costs should not be included in forecast approved under the Base Load Review Act. Instead, as the proposed use contingency fund is identified and itemized in specific cost categories, we must file with the PSC for approval.

The November 2010 filing identified and itemized certain capital costs of approximately $174 million that will be incurred during the construction of the new nuclear unit. These are not additional costs nor is this an additional quest to raise customer rates. We’re simply specifying how we intend to use some of the dollars that were originally included in the contingency fund in our initial BLRA filing now that we have more clarity of the construction outlook. The hearing on this request was held on April 4th and we anticipate receiving permission order in May. After receiving the order, any approved capital costs already incurred will be added to those included in our revised rates filing under BLRA to determine the requested rate adjustment for 2011.

Please turn to slide ten. On February 14, 2011 we filed our quarterly status report with the CFC and the Office Of Regulatory Staff for Q4 of 2010 as required under our Base Load Review order. This report provides a detailed update of capital costs incurred and updated milestones for our new nuclear project and is available on our website. Additionally, we intend to file our quarterly status report for Q1 2011 on Monday, May 16th and our annual request for revised rate under the Base Load Review Act on Friday, May 27th. The remaining dates on this slide represent other regulatory filings we anticipate making later this year. We are pleased with the progress of the projects and the continued regulatory support that we have received.

We believe that nuclear power is a clean non-invading source of energy, which will position South Carolina well in the future, particularly as environmental regulations surrounding greenhouse gases and coal increase.

I will now turn the call over to Steve Byrne who will discuss our COL application and provide and update on the status of our nuclear construction project.

Steve Byrne

Thank you Kevin. Please turn to slide 11. The nuclear regulatory commissions’ licensing proceedings continue to progress towards a successful conclusion. We continue to anticipate receiving our combined operating license or COL in late 2011 or early 2012. The COL during impact study referenced in the most recent BLRA filing was initiated by SCE&G in December of 2010. This detailed study is an evaluation of the alternatives for optimizing the construction schedule to make up the anticipated delay beyond the original construction schedule for the first under the EPC contract which assumed the COL would be issued in mid-2011 rather than our current expectation.

Construction schedules generally can be adjusted by adding shifts of construction workers working weekends, undertaking scopes of work in parallel instead of in series and similar changes in the construction plan. SCE&G is involved in the ongoing oversight of the study and will review the results and any cost associated with compressing the schedule using such techniques. While the situation is dynamic, we anticipate that this study will be completed by the end of Q2. SCE&G continues to believe that the commercial operation date for the first will fall within the schedule approved by the South Carolina Public Service Commission including the allowable schedule contingencies. There should be no adverse impact on the commercial operation date for the second meeting.

In late 2010 the NRC staff completed its technical review of the current AP1000 design for the shield building as well as other design changes proposed by Westinghouse and issued a favorable comprehensive advanced safety evaluation report for the units. The advisory committee on reactive safeguards, an independent panel of advisors in NRC also reviewed and recommended the AP1000 design and related changes and has determined that the current design is fully adequate to protect the public health and safety.

We received our final environmental impact statement last week and we anticipate receiving the final safety evaluation report this summer. We believe the NRC will conduct a mandatory hearing in the fall this year. I’d like to point out that there will be no contested hearing as all interveners challenges to SCE&G COL application have been denied by both the Atomic Safety and Licensing Board and the Nuclear Regulatory Commission. After mandatory hearing is complete, the NRC will make the decision regarding issuance of our COL.

As you see from the aerial photo on slide 12, we continue to proceed with pre-construction activity to the site and continue to receive parts on site in preparation for constructing. After we receive the COL, we will begin so called Nuclear Construction of the unit. I’d like to point out that while we do not foresee a delay on the COL beyond late 2011 or early 2012, we are evaluating contingency plans for that scenario. There’s a great deal of work that can be done on the unit prior to receipt of the COL. For example, the two largest modules, CA01 and CA20 can be constructed simultaneously in the module assembly building and then moved into the excavation site once we receive the COL. In the unlikely event that we might receive the COL in late 2011 or early 2012 as we expect, we feel confident that we will be able to optimize our construction schedule for critical path items to reduce any significant impact to our in-service dates.

Finally I would like to briefly touch on the supply chain. As you may know, our turbine generators and steel plating for the containment vessels are being manufactured in Japan. While these components represent less than 15% of the total project cost, they are long lead-time components. Our suppliers in Japan have assured us that they suffered minimal damage as a result of the natural disaster. The biggest challenge these suppliers continue to face is related to their electric power supply. Japan continues to have rolling blackouts so they are not able to operate at full capacity. However, we do not anticipate significant delays in our construction due to these supply issues.

That concludes our prepared remarks, we’ll now be glad to respond to any questions you might have.

Question-and-Answer Session

Operator

(Operator Instructions.) And our first question comes from the line of Ashar Karaun from VISSIM. Please proceed.

Ashar Karaun – VISSIM

Hey, sorry I joined a little bit late. Did you mention if you weather normalize, what was the customer usage this Q1 versus last year’s Q1?

Kevin Marsh

Well other than our Georgia operations, of course our margins are weather normalized for financial purposes. So there is no difference in the earnings in any of the regulated companies from Q1 of last year to Q1 of this year other than Georgia.

Ashar Karaun – VISSIM

No I understand that but I was trying to see is customer usage flat or is going down? On a trend basis?

Kevin Marsh

It’s neither. It’s actually increasing. So if you look at customer usage on a weather normalized basis, it’s approximately 1.5% higher than it was in the same quarter of the prior year.

Ashar Karaun – VISSIM

Okay thank you.

Operator

And our next question comes from the line of Erica Piserchia representing Wunderlich Securities. Please proceed.

Erica Piserchia – Wunderlich

Hi guys. Just a quick follow up. Ashar circled in on one of the questions I had just with regards to that comment on usage. Any particular trends, you know, is that more on the residential side or is that kind of across the board as far as usage comparisons with last year?

Kevin Marsh

Well I’d say if it’s more attributable to any sector it would be industrials. You can see in the information we disclosed in the back of the press release that industrials were up almost 5% year-over-year. And last year was the first quarter that we saw significant increase from 2009’s first quarter in the industrial sales. So we’re encouraged that we’re continuing to see growth over the growth of 2010 in the industrial category. So I’d say the majority of it is in the industrial category.

Kevin Marsh

Yeah, we’ve seen a lot of job announcements we’ve got more detailed in our slides here today. We’ve had more for you in the past there. But we still have to see many of those announcements translate into more jobs which I think ultimately translates into more residential commercial usage.

Erica Piserchia – Wunderlich

Okay. So it sounds like residential commercial then is relatively flat or would that have been, you know, down?

Kevin Marsh

No, I don’t think it’s down. I’d say, I don’t have the details in front of me Erica but I would say it’s probably more flat. Of course we have more customers but so kind of the same customer year-over-year I’d say it’s relatively flat.

Erica Piserchia – Wunderlich

Okay. And then just two quick questions on the nuclear. First, I guess just a process question; I guess the last I had heard was that the NRC hearing with regard to the COL process was expected for midsummer and I think you expected you’re now expecting it in fall. Any particular reason for that sort of date change or can you give any color on that?

Steve Byrne

Well, this is Steve. The change from summer to fall really is within the NRC’s allowable variance in their process. So it still could happen in late summer. I’m not sure that we ever said midsummer but it still could happen in late summer but more than likely our anticipation is that it will be this fall.

Erica Piserchia – Wunderlich

Okay. And then just a last question and I understand this is maybe one step further but just wondering if you can provide what your understanding is of where things stand with regard to the design certification process between Westinghouse and the NRC.

Steve Byrne

Sure. Westinghouse has undergone a number of revisions to their certified design, you know, they were originally certified back in early 2006. Since that timeframe they’ve had three revisions pending before the nuclear regulatory commission. The rule for that change in the design or the change in the certified design has been out for comment for some period of time and I think the comments are due May the 10th and at the same time what Westinghouse is working on is a conforming revision to their DCDs. That will be submitted in the form of DCD rev 19. Now the exact date for submission of rev 19, I don’t know today. It should be fairly soon but the definition of soon could be sometime in May or possibly stretching into June. I’m really not sure. But there will be a conforming DCD revision 19.

Erica Piserchia – Wunderlich

Okay. Thank you.

Operator

And our next question comes from the line of Marc de Croisset representing FBM Capital Markets. Please proceed.

Marc de Croisset – FBM Capital Markets

Hi. Thank you. Good afternoon. Could you refresh my memory on what happens mechanically to cost recovery in the event there’s a slippage in construction timeframe for the nuclear plants or if there’s a later service date. Are there allowanced for extraordinary events for example such as the failure of a supplier to meet its obligations. Could you provide us a little color on that?

Kevin Marsh

Yeah. This is Kevin. When we filed the base load re-filing back in 2008 and requested approval for that, the commission granted us an 18-month extension to the expected in-service date to account for any slippage in the schedule. That would be a time delay allowance. Anytime we might go over the cost that was approved by the commission in that filing with the capital costs schedules as we refer to those and are described in the quarterly report, if we exceed that cost or we expect to exceed that cost, we would have to go back to the commission to get approval for recovery of the additional cost which would give us the opportunity to put the reasons for that cost increase on the board with them and let them have a chance to ask us questions and evaluate that and make a decision. And under the assumption that those would be prudently incurred costs they would include that in the capital cost schedules on a go-forward basis.

Marc de Croisset – FBM Capital Markets

So timing enough of, it sounds like you have an 18-month buffer with respect to timing of construction. Is that correct?

Kevin Marsh

That’s correct. They allowed us to go out 18 months. We gave them a milestone schedule as part of that process and we can extend those milestones 18 months or accelerate them 24 months under that approved order.

Marc de Croisset – FBM Capital Markets

As a follow-up I’m wondering if I guess on a related question if you had any further thoughts on lessons learned from Fukushima Daiichi.

Steve Byrne

This is Steve. I guess I’ll take that. First let me tell you that I think that it’s probably a little early for us to start talking about the lessons learned. The nuclear regulatory commission has, in process, a lessons learned review that they’ll be reporting out and it’s a 90 day review and they’ll be reporting out at 30, 60 and 90 days. And I think May 12th is the advertised date for that first report out from that 30-day review. Beyond that what the NRC is doing is they’re putting in place a taskforce to do a more in-depth review and that taskforce, I believe it’s been selected, once it starts its work it’s about a six month working time frame. So I think that will probably put us somewhere near the end of this year. And that taskforce will then report out. So the NRC has a couple lessons learned of things in the work.

What we are doing is in the United States after September 11th of 2001, we put in place a number of practices, procedures and equipment to compensate for loss of large areas of the plant. And it really doesn’t make much difference as to what the reason for that loss is whether it’s an aircraft impact, whether it’s a tornado, hurricane, whatever the reason is. We had to have mitigating strategies and then some equipment staged. Not necessarily staged at the plant location but staged so that you can get it to the plant location as soon as the plant location suffers some damage.

So one of the things we’ve done after the Fukushima accident was we verified all the equipment was in place and verify that all of our practices and procedures will work. We did that through a group we belong to called WANO Nuclear Power Operations. That group subsequently is one of the charter members of a world association of nuclear operators. But the Japanese utilities are members of that world association and they will be reporting out on lessons learned through that group, through WANO and we’ll get our information through the info link into WANO. Though there’s a couple of, one national and one worldwide industry of associations that will be formulating those lessons learned. Now based on what we have seen, I want to point out a couple things. One, the type of reactors that they’re using in Japan at that Fukushima site, all six of their reactors were borne water reactors. The reactors that we are building and the reactors we currently operate are pressurized water reactors. So there is a fundamental difference in the way that the reactors operate.

Secondly their issue really was not caused as much by the earthquake as it was by the tsunami. They had a significant wall of water that impacted that facility. Our information, in fact, is that the plants rode through the earthquake pretty well; all the reactors shut down, all the controls rods fully inserted, the reactors went sub-critical, the diesel generator started to carry the emergency loads and it wasn’t until almost an hour later when the tsunami flooded the facility that they lost that onsite power supply and then they were relying just on the battery. Our facility is over 400 feet above sea level and we’re over 100 miles from the ocean. So the tsunami issue for us will not be an issue.

So there are some fundamental differences we’ve looked into. What we do expect to learn are things like communications, batteries, emergency planning, communication to offsite agencies, that didn’t go probably as smoothly as it could have or should have. But one fundamental difference is that I don’t think the rest of the world took the events of September 11th of 2001 as seriously as the United States did, probably for very good reasons. But in the US we put in place beyond our design basis mitigating strategies at that point in time. But most of the rest of the world probably didn’t pay a lot of attention to it.

Marc de Croisset – FBM Capital Markets

That’s terrific. Thank you very much for that explanation.

Operator

And our next question comes from the line of Michael Lapides from Goldman Sachs. Please proceed.

Michael Lapides – Goldman Sachs

Yeah guys, really two questions, one bigger picture. Can you talk about when you’ll get a little more certainty from your suppliers in Japan about whether there are timeline delays caused by some of the rolling blackouts? I mean do they give that to you on a weekly, on a monthly basis, how often do they check in with you to give you an update on where they are in the process.

Kevin Marsh

Yeah sure. They are checking in through our consortia because their contracts in general are with the consortia members. So largely for the Japanese vendors that would be through Westinghouse. They are checking with Westinghouse on a weekly or more frequent basis. And remember that one of the suppliers is actually the parent company for Westinghouse and that’s Toshiba and that’s probably our largest supplier in Japan. And again they have not indicated to us any significant damage. In fact none of the vendors that we’re using whether it’s Toshiba, IJI or some of their sub vendors, has indicated to us that they’ve suffered any amount of real damage from the earthquake or tsunami. We did have some equipment on the ground, plate steel and that kind of thing and we verified that our equipment has not suffered any damage.

Now their rolling blackout situation is getting better. And as much as it is now more predictable then it used to be and a number of vendors have indicated to us that they are now shifting their work schedules such that if power’s not going to be available during the day but it will be available at night , then they’re bringing folks in at night to do the work. So as of right now we’re not anticipating any real delays from the supply chain in Japan.

Michael Lapides – Goldman Sachs

Got it. Thank you. And Jimmy, one question just on the quarter a little bit. If I take the total or EPS contribution that comes from what looks like it’s basically corporate and other, and I back out the cost of holding company debt, you’ve got a nice little contribution from kind of some of the other items. Could you just kind of walk us through what those are?

Jimmy Addison

Yeah. The principal item in there, Michael, would probably be our intrastate pipeline company, CGT. So that’s, on an annual basis, probably contributes $.07 or $.08 something like that in earnings on an annual basis. And then our gas marketing business, maybe $.02 or $.03 on manual basis from it. So those are the most significant.

Michael Lapides – Goldman Sachs

Got it. So CGT and (inaudible) combined roughly $.09 or $.10 total on an annualized level.

Jimmy Addison

That’s right.

Michael Lapides – Goldman Sachs

Okay, thank you. Much appreciated.

Operator

And our next question comes from the line of Jim von Riesemann representing UBS. Please proceed.

Jim von Riesemann – UBS

Good afternoon everyone. Three quick questions; all just nuance type stuff. The first one is on O&M trends. O&M was down in Q1, can you talk about some of the O&M trends especially in light of the comments you made in conjunction with the Q4 earnings call?

Second question is at SCE&G what was the earned ROE for either the trailing 12 or 13 months, I forgot how you report it.

And then the final question is on your funding and cash flow impacts and needs going forward on bonus depreciation, I think you mentioned it, but the cash impacts on both 11 and 12 especially now that the rules are out and what are you thinking about your DRIP program in the next several years?

Kevin Marsh

Okay, yeah, thanks Jim. On the first, on O&M, we do continue to keep tight control around what we call core O&M. That’s the things that are really controllable by the wine businesses. The things that have been, and those are really, we’ve maintained those relatively flat. The one exception to that is that for the first time in three years we did have salary increases during Q1 that was impacted about half of the quarter for mid-February. Very modest amounts of 2% to 2.5%, something like that. So you want to have a full run of that for a quarter until Q2.

The things that are offset that many of our incentive comp plans, the part driven by shareholder return, the costs of the revision in the long-term guidance that we did on the yearend call and because of the hit the stock took with the Japan crisis initially. We were out of the money on those at the end of the quarter. So there’s no incentive cost in there related to the shareholder return for Q1.

And the third thing I’d comment on about O&M really relates to bad debt expense. And we continue to have fairly good success in a very difficult economy with bad debt expense across the companies. Certainly low natural gas prices have helped that. A milder winter compared to a winter ago has kept total bills down, has helped that as well. And I think generally just people’s pulling back and concentrating on more critical items in the household they’ve maybe moved the utility bill up in the priority compared to some things they would have spent on a couple three years ago. So we’re fairly encouraged about that but we’re going to watch that throughout the balance of the year so it’s kind of cautious optimism.

On the ROEs you asked about, on the electric business we continue to be at about 10%, just slightly under .995% but that is on a proforma basis and I would just caution you that, so what we do, as you’re probably familiar, is we annualize expenses. I gave you a moment ago the example of salary increases. So in that 10% return that we filed with the regulators, we’ll take any expenses what we’re aware of and known and measurable at the time and annualize a full year’s run rate. So that usually results in a 20 to 40 basis point reduction off the actual return. So when I give you slightly under 10%, the actual return for the period may have been closer to 20 to 40 basis points higher. We try to proforma the entire everything we know of at that point in time out in accordance with the regulator’s requirements.

And then the last thing I think you asked about cash flow and overall with the change we made in our capitalization policy and then the bonus depreciation on top of that, we estimate in aggregate over $200 million of additional cash over those two plus years, really a part of ‘10, ‘11 and ‘12 that would benefit us. Therefore we don’t see ourselves taking down any of the remaining forward equity until Q1 of 2012 when we had originally projected to take that down in a few trenches during this year. So we think we’re in much better position there from a cash basis and we don’t really see needing any additional equity beyond that in the equity forward until well into 2012.

Jim von Riesemann – UBS

So does that imply that you’re not going to do the DRIP program either for the next couple years or next year or so?

Kevin Marsh

Oh sorry. No, we will continue to run the reinvestment, the shares from the dividend reinvestment as well as the 401k plan and that we’re going to write about $100 million a year.

Jim von Riesemann – UBS

Okay. Super. Thanks for the color. Appreciate it.

Operator

And our next question comes from the line of Greg Wright representing (inaudible). Please proceed.

Greg Wright

Hi guys. I saw that you guys mentioned that you were evaluating contingency plans in case the COL license is delayed and you guys were not expecting any sort of impact on the in-service dates of the units. Just wanted to get a little bit more detail on the 2012 nuclear CAPEX. If there were some sort of slippage in the COL timeline would you guys anticipate any of that CAPEX being delayed?

Kevin Marsh

I think the short answer is we probably would anticipate some of that being delayed. But that would be in the, what I termed, the so-called nuclear construction because there are some things that I need a license in order to start. But there are a significant amount of activities that we currently have ongoing that do not need the license and would continue. Cooling towers for example, we just started on cooling towers. We’d be able to step our way through those. There’s one permit we’re waiting on for the cooling towers but was dependent on us getting the final environmental impact statement. Well we received that final environmental impact statement a little over a week ago so we should be cleared to do that now.

We can start the fabrication of the modules; these are the big modules that eventually will be put in the excavation. We’ve got probably a year plus worth of work on the two biggest ones and we can stage those and start on some of the smaller modules. The plate for the containment vessel bottom bowl, the way you build a containment vessel is it’s almost two inch thick steel and you build a bottom bowl just a layer that looks like a big cereal bowl, then you build some stackable rings and then you build the top portion of the bowl. We received all the plate for the bottom bowl and we’ve got probably a years’ worth of fabrication on site to do that. And then we’ll start receiving plate for the ring sites and that can all continue.

We’ve got the switchyard that we’re constructing. That will go through, probably through about 2012. We’ve got a water treatment facility that eventually will supply all three of our units. That can continue and we’ve got a number of other support, piping, intake, structure, discharge, well water supply, all those kinds of things you can go in.

So we’ve got a reasonably significant amount of work that will continue even if we did not get the COL when we anticipate it, you know, we would be looking at reconfiguring our critical path schedule and looking to see what kinds of things we can do external to the excavation that might be inserted once finished. For example rebar; if we put the reinforcing bar together, the matrix and the lattice together outside of the excavation and then lowered it in later, that would remove that from critical pass. So while we would anticipate that the capital spending would slow down in 2012, we would not certainly anticipate a cessation and it would be a reasonable significant amount that we can continue to do.

Greg Wright

Got it. And of that $832 million you guys have slated for 2012, how much is related to the construction CAPEX that you had mentioned that requires the actual COL?

Kevin Marsh

I don’t know that we’ve ever broken it down into COL required construction CAPEX. So that may be a number we’d have to work on.

Greg Wright

Okay, but you guys would be able to, I guess, backfill some of that potential with these other items that you had just mentioned.

Kevin Marsh

Oh yeah, certainly.

Greg Wright

Got it. All right, thank you.

Operator

And our next question comes from the line of Chris Ellinghaus representing Wellington Shields. Please proceed.

Christopher Ellinghaus – Wellington Shields

Hey everybody, how are you? Steve can you, I think you described pretty well that you don’t expect Japan to be a problem in terms of deliveries but is there any critical path items that you might be able to tell us when that delivery date might be just so we can get a further sense of how much time we have to catch up?

Steve Byrne

Well off the top of my head what we’re looking at is our first critical path large items actually are not coming from Japan. They’re coming from South Korea, so they were Union-impacted. And we actually opted to have most of our large forgings or ultra large forgings not done in Japan. Currently their situation is still but there are only two places in the world where ultra large forgings can be done and that’s either in Japan or in Korea. And we opted to have ours done in Korea. So the forgings and the machining are all being done in Korea before shipment here.

We have plate steel that we are going to need for the first ring. It should be coming from a company called IHI, that’s the in Tokyo area. And again we’ve contacted them and don’t anticipate any delays but we would expect to receive some of that steel in 2012 such that when we’re finished with the lower bowl we can start, actually we’ll start before hand, we’ll start on the first lane. So the little bowl goes in first and then the first ring will go on after that. So we would expect those deliveries in 2012 from IHI in the Tokyo area.

The turbine generator is a (inaudible) item but that wasn’t slated to start I think until sometime in ‘12 so we’re not going to receive that until probably sometime in ‘13 or ‘14.

Christopher Ellinghaus – Wellington Shields

Okay super. Have you got any color for us in terms of DOE, long guarantees and what you’re testing?

Kevin Marsh

I can add the color on that. This is Kevin. We have been participating in the loan guarantee process, going through the due diligence and have gotten to a point where we believe we provided enough information to their team that will allow us to get some sort of information back on what sort of terms and conditions they might be attaching to the loan guarantees.

We know and it’s been reported they’ve got a deal with Southern on the Georgia projects. We’d like to certainly see how those documents are laid out and what the requirements might be in there to make sure it would be something that would fit with us for the long-term period that those loans would run. They present some challenges from a financing perspective because they’re twenty-year amortizing loans, which means in that twenty-year period you’ll be out of the marketplace, refinancing significant parts of the plant. If you do accept the loan guarantees that gives us some concern with interest rates where they are today given that they’re likely to go up. That could expose us to some fairly good-sized risk as opposed to thirty-year bonds that we typically do under our First Mortgage financing.

So we have told DOE that we need some more information before we go any further to evaluate the loans but I would reaffirm that we’ve said since day one we don’t need the loan guarantees to proceed with the project. We’ve been very successful to date in doing the financing we need to bring the debt on board as necessary and that we certainly believe that will continue to be the case. So we’ll continue to work with them as information becomes available. But at this point I would say the ball is in their court to provide us additional information to help us do the evaluation; in the meantime we’ll continue with our First Mortgage-run debt issuances when they are necessary.

Christopher Ellinghaus – Wellington Shields

Okay, great. Jimmy, there was, I appreciate you gave some color in terms of the way you see your quarterly earnings pattern developing. The Q4 surprised, the sort of imputed Q4 on the midpoint of your guidance seems a little surprising to me. Can you maybe provide some color on things that you see in the Q4 that might lead to what seems to be a significant year-over-year increase?

Jimmy Addison

Well, yeah, I mean you’re going to have- We’ve got two or three things going on that could impact it. One, we’ve got a, last year was an abnormal year for the RSA at SCE&G Gas because we had a decrease – the first time we’ve had a decrease since we’ve had that mechanism. I don’t expect that to be the case this year. I expect to see a modest increase this year so you’ve really got that going in opposite directions – that kind of exacerbates the difference. We’ve got a rate proceeding at our interstate pipeline company, CGT that I mentioned earlier in response to a question, and I think those new rates will be in effect by that time so we’ll have some benefit coming in from that as well.

And then you’ve just got year-over-year continued improvement that we’ve seen in the industrial sector as well in addition to R&C additions in all of our businesses. So I think most of those main, top line factors are positives, and we continue to do a pretty good job maintaining expense controls. So I think most of the changes are benefits on a year-over-year basis.

Christopher Ellinghaus – Wellington Shields

Okay, great. And then one final thing – can you just remind us, and I am inferring from what you said that if you don’t take down any of the Forward sale this year at all that you’d take it all down in the Q1 next year? What would that bring you to for your total for 2012 equity including your normal plans?

Jimmy Addison

Well, the balance in the Forward at the time we executed the deal was about $240 million, but because we’ve issued those under the Forward, you know, we’re not paying the dividends each quarter. The underwriters pay those to the holders of the shares. So the net proceeds decrease every time there’s a quarterly dividend and those are paid by the underwriter rather than us. So if we hold those until the end of Q1 in 2012 the $240 million would be more like maybe $210 million or $215 million net proceeds, in addition to the approximately $100 million through the (inaudible) plans.

Christopher Ellinghaus – Wellington Shields

Okay, great. Thanks so much, I appreciate it.

Operator

And our next question comes from the line of Dan Jenkins, representing State of Wisconsin Investments. Please proceed.

Dan Jenkins – State of Wisconsin Investments

Hi, good afternoon.

Kevin Marsh

Good afternoon.

Dan Jenkins – State of Wisconsin Investments

First, I just want to clarify your response to Char on whether normalized sales growth at electric, you said it was 1.5 – is that total sales or total retail sales?

Kevin Marsh

Total, total retail.

Dan Jenkins – State of Wisconsin Investments

Total retail?

Kevin Marsh

Yes.

Dan Jenkins – State of Wisconsin Investments

Okay. And then somewhat related to that I saw the Q1 your wholesale was up 11.1%. Was that just opportunity sales or do you have some new contracts on the wholesale area, or what drove–

Kevin Marsh

Yeah, it’s not a new contract. It’s just energy sales to one significant customer we have, the North Carolina EMC’s, and it’s really, it’s 10%, 11% but last year’s quarter, there’s so little going on in that arena these days with the recession, a small change looks like a significant amount but it’s not a large amount. But it’s not any new contracts.

Dan Jenkins – State of Wisconsin Investments

Okay. And then I was curious if you’d give us a little more color on the $0.16 electric margin variance as to how much of that’s related to the base mode review increases, and if there’s any related just you know, normal sales growth and so forth?

Kevin Marsh

Right, I would say about $0.06 of the $0.16 is related to the base load review. The most significant amount is related to the base rate increase that was effective mid of August last year, so this is the first time that Q1 has had that base rate increase in it. And then there’s some in there for base customer growth but I would say that’s a minimal amount, maybe a half cent, something like that.

Dan Jenkins – State of Wisconsin Investments

Okay. And then I was wondering if you could give me what the CAPEX was for the Q1?

Jimmy Addison

Dan, I don’t have the actual CAPEX at my fingertips here but we’d be glad to provide that prospectively if it’ll be of some assistance to you. I can tell you that we’re not, I don’t think we’re significantly off our plan.

Dan Jenkins – State of Wisconsin Investments

Okay. How about cash flow from operations? Would that be the same answer?

Jimmy Addison

Yeah, I really don’t have that. We’ll file our Q next week and you’ll have that information in the Q next Wednesday I believe.

Dan Jenkins – State of Wisconsin Investments

Okay. And then the last thing I had questions on was on your slide #10 you kind of showed the regulatory update related to the upcoming base load review filing. And last year’s was about double the year before; how should we think about this year’s in comparison to the prior year? Is it about similar size or will it continue to increase?

Kevin Marsh

This is Kevin. I don’t know that it’ll change significantly from last year. We have not determined that final number. It’ll be based on the expenditures that are available at the time that filing is made. If you go back and look at the schedules in the quarter before and the schedules for the base load review filing it gives you an estimate by year of how much we expect to be spending. And we should be pretty close to those numbers and we’ll finalize that when the filing is made.

Dan Jenkins – State of Wisconsin Investments

Okay, thank you.

Operator

And our next question comes from the line of Erica Piserchia, representing Wunderlich Securities. Please proceed.

Erica Piserchia – Wunderlich Securities

Hi, just two quick follow-up questions. First, kind of getting back to what Greg was asking about, you mentioned in your comments that you could absorb a delay in the COL issuance by moving things around in 2012. Can you give us a sense of sort of what point during the year past which you would have to start shifting CAPEX into 2013? You mentioned you can absorb a delay in early 2012 but I would imagine you probably can’t if a COL was delayed materially beyond, I don’t know, the middle of the year. Just trying to get a better sense of sort of where the strain or the sensitivity is to that ability to shift things around a little bit from a timing perspective.

Steve Byrne

Yeah, I think the short answer is it would depend on how long any potential delay would be at the time when we were made aware of it, but we would probably start to reconfigure schedules and CAPEX if it became obvious to us that we were not going to get the license by about the first of the year. But if they came back and said it was going to be a week’s delay obviously that wouldn’t be significant; if they said it was three months’ or six months’ then we would begin to do a reevaluation of what we’re going to do and in what sequence we’re going to do it. And that would then facilitate the capital expenditure changes.

Erica Piserchia – Wunderlich Securities

Okay, so it seems that putting that together with your comment that early 2012 is sort of the (inaudible) on that, we’d be looking at delays maybe beyond the middle of the year or something that would cause some material reorganization of those activities relative to what you could do if it was just a matter of a couple weeks or a month or something like that.

Steve Byrne

Certainly if it was a matter of just a couple weeks it wouldn’t be a huge impact to us. What we’re trying to do is balance the amount of resources that we’ve got on the site along with the equipment and the work we’ve got for them to do. So we want to try to keep as many people actively engaged as we can to avoid taking folks that we have already trained and allowing them to go home, and then run the risk that they may not come back when we’re ready to recall them. So we’re going to balance that, we’re doing that now in fact.

We’re looking at what our resource leads need to be and what they need to look like. So if it’s going to be significantly beyond when we expect it that could have an impact, but we have continued to say – I think we’ve been saying for about two years now – that we expect to see it around late 2011, early 2012, and as of right now we don’t know anything to say that’s anything different.

Erica Piserchia – Wunderlich Securities

Okay, okay. And then my last question is just actually, I forgot to ask this earlier, but just thinking back to your advised earnings growth target of 3% to 5% that you pointed out, is there a way you can kind of give us a better sense of what that implies for the underlying growth in the base, the utility base business kind of excluding the nuclear angle?

Kevin Marsh

Erica, I don’t have an exact number of how you break that down between nuclear and the base business. I mean we are more conservative about the business than we were a few months ago as we outlined on the year-end call, but I’d also say it’s not as simple as just parsing those and saying well, if you’re not doing new nuclear what’s the underlying growth? Because we’ve got to do something. We’ve got to have generation on the system to meet customers’ needs down the road, and let’s take the extreme case and say there’s a long-term delay or even a stoppage to new nuclear development. Well, under the law in South Carolina we’re going to take the accumulated equip costs to date and go to the Commission and get that amortized over some period to start getting the actual return of that investment back to investors

We’re also going to begin some type of new generation solution, most likely I would presume some type of combined cycle gas units. So we have looked at that scenario in the extreme case, contingency plan only, and still think that falls within the long-term earnings guidance that we provided.

Erica Piserchia – Wunderlich Securities

Right, absolutely understood and I definitely understand that there’s a need for sort of additional base load generation in some form or another in the unlikely event… I guess it sounds like the nuclear project was cancelled. I guess my question was more to the existing outlook today. I think one of the things that people kind of struggle to get their arms around is you know, you’ve got this 3% to 5% growth rate and how much of that is driven by new nuclear or something else if new nuclear were not to work out; versus how much is driven by organic growth in the business sort of excluding the larger sort of base rate addition-type projects?

Kevin Marsh

Yeah, and again, I don’t have an exact number to it but certainly the majority of it now is driven by the CAPEX for the new nuclear because of the other CAPEX is basically funded by the cash of the existing business. So there’s the depreciation from the existing business netted with the new CAPEX, there’s not a significant amount of rate base going in there. Until customer growth returns in the southeast to the levels more like there was in the past that’s going to be the case. It’s going to be driven from rate base addition, not from new customers.

Erica Piserchia – Wunderlich Securities

Okay, gotcha. So then just remind me for that 3% to 5%, it’s actually just for your 2011 guidance. What’s the load growth, the sales growth function in that range? I think you talked about it on the Q4 call but I can’t remember it off the top of my head.

Kevin Marsh

Yeah, we’ve got very little growth in there, maybe less than 1% customer growth in that plan which is basically what we’re experiencing to this point.

Erica Piserchia – Wunderlich Securities

Customer growth – that’s kilowatt hour sales or growth in number of customers?

Kevin Marsh

Number of customers. We’ve not presumed that existing customers change their patterns in the near term.

Erica Piserchia – Wunderlich Securities

Okay, of usage, got it, got it.

Kevin Marsh

Yes.

Erica Piserchia – Wunderlich Securities

Okay, thank you.

Kevin Marsh

Sure.

Operator

And our next question comes from the line of Adola Murdhi representing CDP Capital. Please proceed.

Adola Murdhi – CDP Capital

Good afternoon. Let’s see, I think has to do a little bit with one of your other questions about how operations and procedures might change post-Japan. I’m just wondering whether we’ve seen over a period of years, the last 10, 15 years a significant reduction in the outage days in terms of doing a turnaround for refueling and other types of things at the nuclear units and across the industry. And I’m wondering at a minimum whether you feel there’s a possibility that those types of fast turnarounds and those types of things may in the future need to be extended if just nothing else, just as a precaution and just to perhaps have more vigorous, enhanced inspections and other types of things while you have the opportunity, while the plant’s down?

Steve Byrne

This is Steve, I’ll take that one. There is nothing that we’ve seen coming out of Japan so far that would say that their problems or their issues have been caused by a lack of maintenance and/or preventative maintenance or modifications to their facilities. So I would not see any impact on outage duration to the US nuclear industry as a result of Japan, at least from what we have seen so far.

Adola Murdhi – CDP Capital

And no indications from regulatory bodies or anything like that about that type of a short-term response?

Steve Byrne

No. Again, I’m struggling to come up with an example of something that we would do in an outage that would need to be extended. The problem again was the tsunami and the initiating event was an earthquake off the coast, and I don’t know of anything at the plants that they would do in a normal refueling-type shut down and maintenance outage that would necessitate making it longer that would help them deal with what they saw in Japan.

Adola Murdhi – CDP Capital

Alright, thank you very much.

Operator

And our next question comes from the line of Michael Lapides representing Goldman Sachs. Please proceed.

Michael Lapides – Goldman Sachs

Hi guys, easy question – what do you think your timing is for the next round of general rate cases at both SCE&G Electric and Gas as well as the North Carolina Gas utility?

Kevin Marsh

Mike, we haven’t picked any particular dates. That’s something we evaluate on an annual basis depending on what the earned returns are. Certainly at the 10% level I don’t think it’s likely we would seek any additional rate relief. I really think it’s dependent upon how quickly we see customer growth come back to the system in terms of what would drive capital spending that would be at cost or higher than what we’re seeing in annual deprecation rates that would need to be recovered for the process; or if we have extreme environmental expenditures that aren’t in the budget today it might come down later that we have to do, we’d have to get recovery of those to make sure we could get a shareholder return back to those investors.

But if you look back to what we’ve done, we’ve kind of been on a two- to three-year cycle. And that’s not an absolute predictor of the future but certainly we’ll look at that on a year-to-year basis.

Michael Lapides – Goldman Sachs

Got it, okay. Thanks guys.

Kevin Marsh

Sure.

Operator

Our next question comes from the line of Jonathan Reeder representing Wells Fargo. Please proceed.

Jonathan Reeder – Wells Fargo

Hey Kevin, you just mentioned potential environmental spend. Assuming the nuclear project goes forward on time and in line with the EPA’s proposed rules, I mean what sort of environmental compliance spend do you forecast and you know, what’s the timing on that?

Kevin Marsh

I don’t know that we’ve had enough time to evaluate how the particular rules may impact our current plants. We’ve got six plants on our system; we’ve made significant expenditures in those plants over the last decade. As you know, the rate case we had last year was to put two scrubbers and an SCR in for three of our larger plants. We have other plants that are smaller that it might not be economical to add equipment to depending on what final rules and regulations might be. That’s flexibility we have built in in our integrated resource plan that we have provided to the Commission in terms of the possibility of not running or eventually retiring some of those older units when the nuclear plants come online, so we’ll continue to evaluate that.

Based on what we’ve got in the plan that gives us the flexibility to respond to an economy that might stay the same that it is today, or if it increases that’ll give us some flexibility to respond to that also.

Jonathan Reeder – Wells Fargo

But would you expect that if you retire some of the smaller plants the larger ones that you do have scrubbers on or SCR’s, there would be some additional compliance CAPEX in the way of maybe bag houses [ph] or something that we might see in say 2013, ‘14, ‘15 timeframe?

Kevin Marsh

I might let Steve give you some more detail on that in terms of the type of equipment that would be on but the three largest plants virtually have the equipment that we know are available today from the technology perspective. You may want to add some color to that, Steve.

Steve Byrne

All of our larger plants have got the scrubbers, SCR’s, and bag houses [ph], even a couple of our smaller plants have bag houses for particular controls. So again, as Kevin said, it hasn’t even been noted in the Federal Registry yet. They’ve got a comment period and it’ll be November sometime at the earliest before we see any kind of a final rule promulgated; and we’re going to need to see what that looks like prior to making any decisions on plants. But at our larger units we would not anticipate any significant actions with regard to environmental CAPEX for those units to come into compliance with what we understand to be the rules so far.

Jonathan Reeder – Wells Fargo

Okay, thanks, that’s very helpful.

Operator

With no further questions in the queue I would now like to turn the call back over to Jimmy Addison for closing remarks. You may proceed.

Jimmy Addison

Thanks. Just to summarize we’re really pleased with our Q1 results. Our weather normalization mechanisms continue to provide us greater predictability in our earnings patterns for the majority of our businesses. Our nuclear project continues to move forward on schedule and under budget and our service territories continue to experience customer growth. We’re optimistic about our future and look forward to further success in 2011, and we thank all of you for joining us today and thank you for your interest in Scana.

Operator

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect and have a great day.

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