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SCANA Corporation (NYSE:SCG)

Q3 2012 Earnings Conference Call

November 6, 2012 11:00 ET

Executives

Byron Hinson - Director, Financial Planning and Investor Relations

Jimmy Addison - Chief Financial Officer

Steve Byrne - Chief Operating Officer

Analysts

Travis Miller - Morningstar Securities

Dan Jenkins - State of Wisconsin Investment Board

Ashar Khan - Visium

Paul Patterson - Glenrock Associates

David Paz - Bank of America Merrill Lynch

Operator

Good morning, ladies and gentlemen. Thank you for standing by. My name is Denise and I will be your conference facilitator today. At this time, I would like to welcome everyone to the SCANA Corporation conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. (Operator Instructions) As a reminder, this conference call is being recorded on Tuesday, November 6, 2012. Anyone who does not consent to the taping may drop off the line.

At this time, I would like to turn the call over to Byron Hinson, Director of Financial Planning and Investor Relations.

Byron Hinson - Director, Financial Planning and Investor Relations

Thank you. I’d like to welcome everyone to our earnings conference call, including those who are joining us on the webcast. As you know, earlier today we announced financial results for the third quarter of 2012.

Joining us on the call today are Jimmy Addison, SCANA's Chief Financial Officer; and Steve Byrne, Chief Operating Officer of SCE&G.

During the call, Jimmy will provide an overview of our financial results, economic development in our service territory and regulatory activity, including an update on our base rate case for our electric business. Additionally, Steve will provide an update on our new nuclear project, including the recently approved annual rate increase from the Base Load Review Act or BLRA, our current new nuclear hearing as well as the current refueling outage of V.C. Summer Nuclear Station. After those comments, we will respond to your questions. The slides and the earnings release referred to in this call are available at scana.com.

Before I turn the call over to Jimmy, I would like to remind you that certain statements that maybe made during today's call are considered forward-looking statements and are subject to a number of risks and uncertainties as shown on slide two. The company does not recognize an obligation to update any forward-looking statements. Additionally, we will disclose certain non-GAAP measures during this presentation and the required Reg G information can be found in the slides used in conjunction with this call.

I'll now turn the call over to Jimmy.

Jimmy Addison - Chief Financial Officer

Thanks, Byron. I would like to start by saying to all of you in the path of Sandy that you are in our thoughts and prayers. And continuing with our tradition of providing resources through our mutual assistance arrangements coordinated through the Southeastern Electric Exchange, we have already sent both utility, construction, and three crews to the affected areas. And we are prepared to send additional resources as directed as part of this coordinated effort to assist those in need.

I will begin our earnings discussion on slide three. Basics earnings per share were $0.93 for the third quarter of 2012 versus $0.81 in 2011. Electric margins were higher due to customer growth and base rate increases under the Base Load Review Act. These margins were partially offset by the cost of our capital program depreciation, interest expense as well as share dilution. Gas margins were also higher due to customer growth and the rate increase under the Rate Stabilization Act. Operating and maintenance expenses were slightly lower during the third quarter of 2012 than in the same period of 2011. We still forecast operating and maintenance expenses to be slightly higher for the full year compared to 2011. We also expect a modest trend to continue into 2013 as we continue to see increases in the costs to operate our systems safely and reliably.

Please turn to slide four. As you can see, basic earnings per share for the nine months ended September 30, 2012 were $2.41 versus $2.25 in 2011. Increases in electric margin were partially offset by lower gas margins in Georgia due to the mild weather in the first quarter along with higher operating and maintenance expenses and higher expenses related to our capital program, specifically depreciation, property taxes, interest and share dilution.

And now on slide five, I’d like to review results for our principal lines of business. South Carolina Electric & Gas Company’s 2012 third quarter basic earnings per share denoted in blue were $1.1, an increase of $0.09 over the third quarter of 2011. Electric and gas margins were higher due primarily to increases under the Base Load Review Act and the Rate Stabilization Act coupled with customer growth. This increase in margin was offset by higher interest expense, depreciation as well as share dilution. Year-to-date, basic earnings were higher about $0.20 due primarily to higher electric and gas margins.

PSNC Energy shown in red reported a seasonal loss of $0.03 per share for the third quarter of 2012, consistent with 2011. Increases in margin due to customer growth were offset by higher depreciation and interest expense. For the nine month period ended September 30, 2012, basic earnings were $0.21 per share, again consistent with the prior year. SCANA Energy in green reported a seasonal loss of $0.03 per share for the third quarter of 2012, also consistent with 2011. Year-to-date earnings were down approximately $0.09 due to the impact of mild weather in the first quarter.

Our corporate and other businesses reported a loss for the quarter of $0.02 per share compared to a loss of $0.05 per share in 2011. For the nine month period, these businesses reported earnings per share of $0.03 compared to a loss of $0.02 in the same period in the prior year. The results for 2011 reflect a slightly higher quarterly effective income tax rate at the holding company, while 2012 results also reflect revenue growth at our interstate pipeline business due to lower natural gas cost.

Next, I would like to touch on economic trends in our service area as shown on slide six. We continued to be encouraged by the level of economic development in our territories with approximately $1 billion invested in the Carolinas this year. Housing is also encouraging. While we still have not returned to pre-recession levels, we are seeing improvement in each of the areas we serve as you see in the chart at the bottom left. Additionally, SCE&G’s territory, which is heavily concentrated in the Charleston and Columbia metro areas has not been as volatile as the rest of the Southeast. In the bottom right you can find our current – customer growth percentages. We continued to be encouraged by the growth in our customer base. Customer growth has slowed slightly in our electric business during the quarter as it’s typical. We tend to see slower electric customer growth during the third and fourth quarters of the year.

For the 12-month period ended September 30, 2012, total weather normalized electric sales to residential and commercial customers were up approximately 1% and 0.4% respectively. Industrial sales were down approximately 2.6% primarily due to reduced production at one of our largest customers as a result of a fire as we have discussed in prior quarters. This customer was brought back on line earlier this month. Where the customer’s operation is consistent with 2011, we estimate overall industrial sales would have increased approximately 1.4%. In addition the Port of Charleston continues to see increased traffic with customer volume up 12% this quarter over the prior year. As I mentioned before it is estimated that one in every five jobs in South Carolina is related to Port volume.

Please turn now to slide seven, which sets forth our regulated rate base returns in South Carolina regulatory calendar. The data on the slide represents information as of the date of our most recent regulatory filings. The pie chart on the upper left presents the components of our regulated rate base of over $7.5 billion as of June 30. This is composed largely of SCE&G electric with approximately $6.4 billion and total electric investment as denoted in two shades of blue.

As Steve will discuss the Public Service Commission of South Carolina recently approved the fifth consecutive rate increase under the Base Load Review Act. The chart to the right shows our actual and allowed regulatory returns for the period, not much has changed here. Our regulated gas business in North Carolina continues to earn a steady return due to customer growth in their territory and stable margins under the customer utilization tracker. The return on our regulated gas business in South Carolina dropped slightly after the winter season. However, the Public Service Commission of South Carolina recently issued an order or a rate increase of $7.5 million under the Annual Rate Stabilization Act. This increase should bring the earned ROE for that business more closely in line with the allowed return of 10.25%.

As you are aware in June of 2012, we filed an application for rate increase for our retail electric business, which I will discuss to a greater extent on the next slide. That application reflected a return of 7.26%. This reflects the full pro forma return considering all known and measurable adjustments as required when the case is filed. The bottom of the slide includes the timeline depicting our regulatory filing schedule for 2012 outside of the new nuclear project. As you can see in the timeline, we have completed all, but one of our planned regulatory filings. In November, we will undergo the annual review of our gas, fuel cost at SCE&G.

Please turn now to slide eight. On June 29, we filed an application with the Public Service Commission requesting an increase in our retail electric rates. In this application, we requested an allowed ROE of 10.95% and additional revenue of $151.5 million. We filed our testimony on October 2 in the Office of Regulatory Staff and other interveners filed their testimony last Friday. We are constructively engaged with ORS and the other interveners in hopes of reaching a settlement by hearing a schedule for November 27 and we anticipate receiving an order from the commission in late December as new rates are effective January 2013.

Slide nine presents our CapEx forecast. This forecast reflects new nuclear spending as reported in our latest BLRA quarterly report from August, which includes amounts as of the second quarter of 2012. We will update these amounts with our next quarterly filing in mid-November to include changes in AFC, escalation and construction activities. Otherwise, this slide is identical to the CapEx forecast we shared during our second quarter earnings call. Also, as you can see along the bottom of the slide and due to your request, we have included our anticipated incremental nuclear CWIP as of June 30 of each year. This represents the incremental CWIP from July 1 through June 30 for each period on which the BLRA increases are calculated. As you will note, the amounts are nearly the same as the calendar period CWIP that we have previously provided.

Please turn to slide 10 to review our financing plan, which is consistent with our last earnings call. We have successfully completed all of our planned debt financings for 2012 and our estimated financing plan through 2017 remains unchanged. We continued to anticipate drawing the remaining funds from our equity forward during the first quarter of 2013, resulting in the issuance of approximately 6.6 million shares.

As presented on slide 11, we are tightening our guidance for the year to $3.10 to $3.25 in basic earnings per share. We estimate our effective tax rate for 2012 will be approximately 30%. Our long-term outlook remains unchanged as we plan to deliver 3% to 5% earnings growth over the 3- to 5-year period based on 2010 weather normalized base of $2.92 per share. While we have seen positive economic signs in our territory, we remain conservative about customer growth and usage. While weather normalized sales are up over the last 12 months, the monthly change versus the prior year has been inconsistent.

Finally, on slide 12, we are very pleased to report earlier this month we successfully completed the syndication of an expanded and extended credit facility. The additional liquidity is important to our nuclear construction and the tenure spans substantially all of the planned peak construction period of the new units. The committed lines of credit now total $1.8 billion, with $1.6 billion covering the entire five years and an additional $200 million over the three years for added peak construction liquidity. I would like to thank our banks for their enthusiastic support of our liquidity needs and support of our nuclear expansion plants. We are pleased that we have received an excellent response for our nuclear construction from our equity and debt investors as well as our banks.

I will now turn the call over to Steve to provide an update on our nuclear project.

Steve Byrne - Chief Operating Officer

Thanks Jimmy. I would now like to direct your attention to slide 13. We are pleased the construction continues to move forward on our nuclear project. The schedule continues to support commercial operation dates of March of 2017 for Unit 2 and May of 2018 for Unit 3. We have made progress in several years during the past quarter. We completed the installation of the Unit 2 rebar cage assembly, poured 30,000 cubic yards of nuclear concrete and begun fabricating the walls of the turbine building. We also continue to make progress on the switchyard and cooling towers and have begun training operators for the two new nuclear facilities. The heavy lift derrick has been assembled, tested and is currently in use. Large component manufacture continues to progress at sites around the world.

And slide 14 shows two of those components at our facility in South Korea. The reactor vessel has completed testing and is expected to be received on-site early in 2013. The steam generators for Unit 2 are scheduled to be tested around year-end and expected to be delivered early next year.

Please turn now to slide 15 which shows the progress of the nuclear island for Unit 2 throughout the year. Over the past months, we have completed the installation of leveling concrete and the waterproof membrane which is same as between a lower mud-mat and higher strength upper mud-mat. We also completed the installation of our rebar cage on top of the mud-mats. Our next step will be to pour base mat which will be the foundation of the nuclear island. On this six-foot thick nuclear island base mat, we will the CR-10 module as pictured on slide 16. CR-10 module is nearing completion and has been fabricated on-site. As you might recall, the CR-10 has a steel frame support used to hold the lower bowl above the base mat until the foundation concrete is completed. We anticipate setting the lower containment bowl later this year or early next year. So, in summary, the construction is progressing well and on track to achieve the amended completion date.

On slide 17, we review our new nuclear and Base Load Review Act filings as related – and related rate increases. As we mentioned in our second quarter call, we filed our annual request for revised rates under the Base Load Review Act in May. In response of that request in September, the Public Service Commission of South Carolina approved an increase of $52.1 million. The new rates were effective for bills rendered on and after October 30th. This is the fifth rate increase under the BLRA. We continued to be pleased that the mechanism is working as designed.

Our BLRA filings for 2012 are shown in the bottom of the slide. And as you can see on August 14th, we filed our quarterly status report on our new nuclear project with the Commission and the Office of Regulatory Staff for the second quarter of 2012. This report provided a detailed update of capital cost incurred and updated milestones for our new nuclear project, and is available on our website. We intend to file our quarterly status report for the third quarter of 2012 in November.

As you may remember, in May, we filed an application with the Public Service Commission seeking to update our budget and schedule. A new schedule set the substantial completion dates for the units at March of 2017 and May of 2018. The updated costs totaled $283 million and were primarily the result of delays in receipt of our license, and agreement with Shaw and Westinghouse related to challenged costs for the construction of our two new nuclear units, transmission costs and additional owners costs or a non-EPC cost for which we are responsible, such as staffing, information technology and facilities. The hearing for this filing was held on October the 2nd and 3rd. During the hearing, we provided the Commission with an update on the project and presented evidence that our decision to pursue nuclear generation remains prudent. We anticipate receiving an order from the Commission on these items in mid-November.

On slide 18, you’ll see a picture of Unit 1 at V.C. Summer Nuclear Station. On October the 12th, we took Unit 1 offline to begin a scheduled refueling outage. The outage follows an 18-month operating cycle and is the 20th for V.C. Summer since the station began commercial operation in 1984. The outage allows us to replace one-third of V.C. Summer’s 157 uranium fuel assemblies and to perform preventive maintenance work that cannot be performed when the reactor is operating. During this outage, we performed a planned inspection of the reactor vessel head.

This inspection is designed to find minor defects which allowed timely repairs and prevents an actual problem. The reactor vessel head contains a total of 66 penetrations which are mostly used to maneuver control rods in the reactor. As a result of this inspection we identified welds for four of those penetrations that need repair. An extensive robotic inspection of the reactor vessel showed there was no leakage from these areas as a result of the condition of the welds. We notified the Nuclear Regulatory Commission as required and developed a strategy to repair the welds. These repairs have been made successfully at other nuclear facilities. As part of the planning for this inspection V.C. Summer and Westinghouse personnel developed a detailed contingency plan if repairs were needed. We will now execute this plan. Our focus is on completing the repair safely during the outage before returning the reactor to service.

We are pleased to announce that the beginning of this scheduled outage marks the end of the first breaker-to-breaker cycle in the history of V.C. Summer. A breaker-to-breaker run is an industry term recognizing a plant that operates continuously between refueling outages and only occurs when the plant reliability is very high. V.C. Summer was connected to the grid for 501 continuous days, which also set energy production records for the station.

That concludes our prepared remarks. We will now be glad to respond to any questions you might have.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions) And the first question will come from Travis Miller of Morningstar Securities. Please go ahead.

Travis Miller – Morningstar Securities

Good morning. Thanks.

Jimmy Addison

Good morning.

Travis Miller – Morningstar Securities

Wanted some more detail on conversation, you’ve had perhaps with regulators or other outside parties on the rate case, and particularly the ROE elements, what are the sticking points? What are the pros and cons that you’ve heard and obviously with interest rates where they are in some other allowed ROEs we have seen over the couple months that 10.95% appears quite high relative to peers and other financial metrics? Can you just discuss kind of again the pros and construction, what the other people involved in the case are thinking along those lines?

Jimmy Addison

Well, sure to the extent I can of course. What we have filed, we believe is very defensible. When you look at the some of the peers, it’s difficult to get apples-to-apples. Some of our peers have prospective forward-looking test years. We have a historical test year. So, as I have said before by the time we start off with new rates, it’s very difficult to get within 50 basis points of the ROE just because of the historical nature of the test year and the attrition that occurs. Some of the other peers have more mechanisms, if you will, around environmental matters and things like that than we do. So, you really got to be careful when you just compare numbers from across the country, because I think ours are more pure. And I think those are the kinds of factors that the commissions here in the Southeast have taken into consideration when they have granted ROEs in the past. And of course, very few of our peers in fact one is building new nuclear at the same time we do which brings increased risk as well. So, those would be the primary factors that I would suggest differentiate us.

Travis Miller – Morningstar Securities

Well, what are the elements in the rate case aside from the ROE that you are looking at in the settlement, where I suppose again, we are part of the most contentious issues are the ones that the other parties in the potential settlement want some clarity on?

Jimmy Addison

Well, I am going to protect the confidentiality of those discussions as I have to or else it would deteriorate into never reaching a settlement most likely, but all parties are attempting to do that so we are working hard about it. Let me just frame it by saying that the commission has a practice that they like to have any settlements presented to them at least a week before the beginning of the hearing. So, they have got ample time to consider this settlement when they are hearing the testimony from the various parties. So, that essentially means we have got the next two weeks, this week, next week to try to work something out and we are trying. And I am encouraged by the party’s participation and I think everyone is serious about it.

I don’t know that there are any other significant items that would have as large of an impact, particularly on earnings as would ROE. So, that’s certainly a significant item, but there are other items too. For example, we have got some deferred costs related to the scrubber that we installed at the Wateree Station, that was not completely in service at the time of our last increase about 2.5 years ago. So, we agreed to defer that until this time. So, one of the items that will be up for discussion is what amortization period do you collect that deferral over. So, there is differences in opinions over that and that will go into the judgment. That’s just an example.

Travis Miller – Morningstar Securities

Great. Thanks a lot for the detail.

Jimmy Addison

Sure.

Operator

(Operator Instructions) The next question will come from Dan Jenkins of State of Wisconsin Investment Board. Please go ahead.

Dan Jenkins – State of Wisconsin Investment Board

Hi, good morning.

Jimmy Addison

Good morning.

Dan Jenkins – State of Wisconsin Investment Board

Going back to the rate case, I’m think you had said that staff and interveners have filed their testimony already, that’s correct right?

Jimmy Addison

It is, that’s true.

Dan Jenkins – State of Wisconsin Investment Board

So, what did they recommend in terms of an ROE?

Jimmy Addison

Well, there is variety of recommendations. The ORS recommended 10.25% and some of the other parties that made other lower recommendations and of course ours was at 10.95%. So, you’ve got ranging from anywhere in the 9.5 or so percent range to our 10.95%.

Dan Jenkins – State of Wisconsin Investment Board

The lowest was 9.5%?

Jimmy Addison

Yeah, I don’t know precisely what the lowest, but was in that range.

Dan Jenkins – State of Wisconsin Investment Board

Okay, and then you talked about deferral period, so are other any other big issues that particularly the staff brought up other than that and ROE?

Jimmy Addison

I don’t recall any other significant issues those are the most significant.

Dan Jenkins – State of Wisconsin Investment Board

Okay, and then you mentioned that you found some – during the inspection of Summer 1 that there is going be some repairs on the welds, so I was wondering do you have a sense yet for how long the outage is going to be then at that unit?

Steve Byrne

Yeah, Dan, it’s Steve. We anticipate that we’re going to add about somewhere between two and three weeks to outage scope.

Dan Jenkins – State of Wisconsin Investment Board

Okay, and what was the original plan?

Steve Byrne

Original was around 40 days, so we ought to have the unit back on somewhere in the first or second week of December.

Dan Jenkins – State of Wisconsin Investment Board

Okay, and then I was wondering if you could give us just a little more color on what you’re seeing in your service territory from industrial sector, I know you mentioned that you have that customer with the fire comeback on line, but beyond that and given that you’ve had a number of new like the Boeing plant stuff like that what we see…?

Jimmy Addison

We’ve had – 2011 was an extremely strong year. The announcements have been slower this year, but what’s occurring now is some of the announcements what were made in the past of course were starting to materialize now. One of the more significant ones of those is a pharmaceutical manufacturer that’s locating a facility in fact just cross the interstate here from our corporate headquarters and they are looking to add about 700 jobs or so very, very good jobs in the $70,000 to $80,000 range. So, we’re seeing the lot of these kind of coming into fruition now so while the announcements aren’t as much, that’s encouraging. And overall and as I said earlier industrial sales if this one industrial customer were at full level would be up about 1.5% on a weather normal basis.

Dan Jenkins – State of Wisconsin Investment Board

Okay, and then my last questions relates to your financing plan and I was wondering where you stand related to potential loans from the DOE?

Jimmy Addison

Yeah, we’re – the position really hasn’t changed there Dan. We continued to communicate with the DOE, but as we’ve constructed this project from the beginning to be financed with public debt and equity and that has been supported very well to-date, and as I said earlier supported by the banks tremendously in renewing and raising our credit facility. So, this point we don’t envisioning – envision participating in that although if things could change down the road.

Dan Jenkins – State of Wisconsin Investment Board

Okay. Thank you.

Jimmy Addison

You’re welcome.

Operator

And our next question will come from Ashar Khan of Visium. Please go ahead.

Ashar Khan – Visium

Hi, how are doing?

Jimmy Addison

Good.

Ashar Khan – Visium

I just wanted to go over, I guess the guidance where it comes out I guess you have it. As you – Jimmy as we look at next year because you don’t file rate cases on electric side so often. And we will get double whammy, right. We will have the BLRA increase which has happened. And I guess ‘13, ‘14, ‘15 are big high CapEx and rate base years. But then you will also have your rate increase which is coming in I believe effective January 1. So, as we look at it shouldn’t earnings be growing at higher than the – your range that you have forecasted, because the rate case is going to expound the results with the release? Is that a fair assumption as we look at 2013 that the earnings should be higher than the top end of the range that you have mentioned as part of the long-term?

Jimmy Addison

Well, two things. First of all, we are still comfortable with the range, if there becomes a point that we think that range is inaccurate, we’ll certainly update the range for you, but secondly, there is no certainty yet around the rate case. So, normally, we like to provide the following year guidance on this call and we are just not in position to do that this year, because of such a significant variance variable factor that is with the rate case. So, we are going to need to wait until our year end call to do that, but we are still comfortable with the range at this point.

Ashar Khan – Visium

Yeah, Jimmy, you didn’t understand my question. My question is on the range is long-term range it’s not a one-year range, if I am right, the way I look at your range unless you can correct me?

Jimmy Addison

You are correct.

Ashar Khan – Visium

Okay.

Jimmy Addison

You are correct.

Ashar Khan – Visium

Okay. So, that’s the number one assumption, okay. Second, I am saying is because you don’t file rate cases every year that the year that you have a rate case decision coming pending, and it’s a pretty hefty rate case. Shouldn’t you be above that range because of a double whammy effect of the BLRA and the rate case? So, you should technically be higher than the range, and of course, the range will go down some years and everything, but technically you should be higher on that range next year?

Jimmy Addison

I think I do understand your question, but I don’t believe that to be the case. Of course, the rate case, there is a lots of expenses that come along with that case too if you were listening earlier and I was talking about the amortization period. There will be revenue associated with that amortization, but there will be a dollar in expense for every dollar in revenue associated with it too. So, that will create no margins, no earnings at all, that’s simply a dollar for dollar wash in collecting the cash that we have already spent. So, and I know you are aware that. That’s just one example. But I really don’t think that will be the case next year.

Ashar Khan – Visium

Okay, thank you.

Jimmy Addison

You are welcome.

Operator

(Operator Instructions) The next question will be from Paul Patterson of Glenrock Associates. Please go ahead.

Paul Patterson – Glenrock Associates

Hi, how are you doing?

Steve Byrne

Good Paul.

Paul Patterson – Glenrock Associates

I’m just – most of my stuff was asked, but the litigation or excuse me disagreements with contractors or anything, do you guys I am sorry if I understood, it’s been a crazy morning. Is there any issue there that you’d like to talk about or you could describe like you see it obviously with another company that’s building a nuclear plant?

Steve Byrne

Yeah, Paul, this is Steve. I think I can’t speak to that other company.

Paul Patterson – Glenrock Associates

Sure.

Steve Byrne

Building the nuclear plant and what their disagreements may or may not be, but we have had some disagreements with our contractors that we have negotiated and settled. That settlement was made earlier this year and the expenses associated with that settlement were included in the Base Load Review Act update filing that we made and presented to our Public Service Commission in early October. So, we’ve settled those disputes from our perspective without having to go the litigation round.

Paul Patterson – Glenrock Associates

Okay. Nothing new was developed since then, right?

Steve Byrne

We have nothing new that we are aware of.

Paul Patterson – Glenrock Associates

Okay. And could you give us a feeling as to – and I apologize if just I can’t recall right now, what the total amount was that you guys settled on?

Jimmy Addison

Yeah, we – the amount to SCE&G in that settlement with Shaw and Westinghouse was $138 million.

Paul Patterson – Glenrock Associates

Okay. And that…

Jimmy Addison

That’s our 55% piece.

Paul Patterson – Glenrock Associates

That’s what you got. Okay, that’s your 55% piece. And what was the total amount that was in disagreement? Sorry to touch on this spot if you don’t want to come back to me, that’s okay.

Jimmy Addison

Yeah, I am trying to remember what the total was. It was something I believe, just short of $400 million. It was in that range anyway.

Paul Patterson – Glenrock Associates

And that was the total amount or just the amount that was SCE&G’s disputed amount?

Jimmy Addison

I think that $400 millionish was the total amount.

Paul Patterson – Glenrock Associates

Okay. And then with respect to the economy and stuff, it looks like you guys are on a 12-month running basis it’s coming up, it’s improving, anymore sort of outlook or flavor you could give for us on that?

Jimmy Addison

No, it is up across all categories on a 12-month basis residential up about 1%, commercial up about 0.5%. And then industrial, if you pro forma in a full year run-rate for that one customer, I mentioned it would be up almost 1.5% also. So, things continued to go well there. I hear from the commerce folks here in South Carolina that there are lot of things pending, they are just not ready for announcement yet. I also have mentioned earlier, I think port traffic at the Port of Charleston was up significantly in Q3, up over 10% year-over-year and that is a significant factor in South Carolina as it is such a heavy driver in the economy.

Paul Patterson – Glenrock Associates

Okay. And is there any change in usage patterns or anything else that you are detecting there, I mean, obviously the economy is doing better than everything but is it coming in pretty much as you expected or any thought on that?

Jimmy Addison

Yeah. I’d say if anything Paul, it’s slightly on the upside. We have been fairly conservative just because of the erratic nature of it. I would say its still – still not a linear trend, so we have still got to kind of keep our fingers crossed on the thing, but as a whole, I would say things are looking a little better than we had expected earlier in the year.

Paul Patterson – Glenrock Associates

Okay, great. Thanks a lot.

Jimmy Addison

You are welcome.

Operator

The next question will come from David Paz of Bank of America Merrill Lynch. Please go ahead.

David Paz – Bank of America Merrill Lynch

Hello, good morning.

Jimmy Addison

Hello, David.

David Paz – Bank of America Merrill Lynch

Just actually following up on the last question, when you said that residential power, sales were up about 1%, are you referring to a weather adjusted number?

Jimmy Addison

That’s correct.

David Paz – Bank of America Merrill Lynch

So, commercial diesel was 1.5% as well and there is not a lot of weather there?

Jimmy Addison

Yeah. Commercial is about a 0.5% where industrial would be about 1.5% if you included a full year comparable period for that one industrial customer that was down due to the fire.

David Paz – Bank of America Merrill Lynch

Alright, great, thanks. And then picking up on actually Ashar’s question, can I just get a sense, I think you've said this in the past, but remind me how much incremental pre-tax margin would come from your requested rate increase, net of all the costs?

Jimmy Addison

Yeah, based on what was filed about $50 million.

David Paz – Bank of America Merrill Lynch

That’s pre-tax.

Jimmy Addison

After-tax.

David Paz – Bank of America Merrill Lynch

After tax, okay, I want to confirm that. Thanks. And then in looking at the ORS’ recommendation, do you happen to know what are the difference between their recommendation and your request, how much of that is associated with the differing ROEs on a dollar basis?

Jimmy Addison

Well, that’s 74 basis points, that’s about 30, little over $30 million $30, $32 million.

David Paz – Bank of America Merrill Lynch

Got it, great. And actually going back to Q4, ‘11, can you remind me was there any weather benefit or hit that you guys experienced in that quarter?

Jimmy Addison

David, let me back up your last question first to be sure I am clear, because we are talking after-tax and then pre-tax numbers. The last information I gave you about the $30 million or so, that’s pre-tax.

David Paz – Bank of America Merrill Lynch

Pre-tax right?

Jimmy Addison

Yeah. So, the earlier one was after-tax the 50 and that ROE estimate was pre-tax.

David Paz – Bank of America Merrill Lynch

Perfect. Yeah, and…

Jimmy Addison

So, you asked about weather?

David Paz – Bank of America Merrill Lynch

The weather impact in Q4 ’11?

Jimmy Addison

Q4 ‘11 would be Georgia, really…

David Paz – Bank of America Merrill Lynch

Actually normal.

Jimmy Addison

Slightly milder normal, I believe, but I don’t have that at my fingertips, David.

David Paz – Bank of America Merrill Lynch

Alright, no problem. I can follow-up later. And then just the last on O&M, in your script you have talked – you touched on O&M, I think you’ve said that you expected O&M to slightly or modestly increase full year ‘12 versus full year ‘11. I guess, can you confirm that and is that the actual O&M that you see this year, or is that based on the pro forma you included in the rate cases just want to get a sense of?

Jimmy Addison

Right. You see the actual that we are seeing this year, so I think year-to-date it’s in the 1.5% to 2% range up. So, something around that would be what we would expect for the full year, and of course, those that come in as part of the rate case those new expenses would not go into effect until January of ‘13 when the revenue accompanied them.

David Paz – Bank of America Merrill Lynch

Right. And I think you said about that you would see some of that trend go into ‘13 is that should we see roughly same percentage basis or would it….

Jimmy Addison

Yeah, I think something in the 1% to 2% range would be the best ballpark. Of course that can change a lot, just based on this earlier discussion we had about these amortization periods.

David Paz – Bank of America Merrill Lynch

Got it. Okay, great. Thanks so much.

Jimmy Addison

But there will be no margin impact from that once you’ve shorter period, more revenue, longer period and less revenue.

David Paz – Bank of America Merrill Lynch

Right, right, alright. Thanks again.

Jimmy Addison

You’re welcome.

Operator

Ladies and gentlemen, this will conclude our question-and-answer session. I would like to turn the conference back over to Mr. Addison for any closing remarks.

Jimmy Addison - Chief Financial Officer

Well, thank you. And just to summarize, we are pleased with our results for the third quarter. And while customer growth and rate mechanisms continue to drive the margins, we maintain our focus on containing operation and maintenance cost and construction of our new nuclear project continues to move forward. We thank you for joining us today and for your interest in SCANA.

Operator

Ladies and gentlemen, the conference has now concluded. We thank you for attending today’s presentation. You may now disconnect your lines.

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