UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, ~~2017~~2018



Commission File Number	Registrant, State of Incorporation, Address and Telephone Number	I.R.S. Employer Identification No.
1-8809 1-3375	SCANA Corporation (a South Carolina corporation) South Carolina Electric & Gas Company (a South Carolina corporation) 100 SCANA Parkway, Cayce, South Carolina 29033 (803) 217-9000	57-0784499 57-0248695

Securities registered pursuant to Section 12(b) of the Act: SCANA Corporation: Common stock, without par value, registered on The New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act:South Carolina Electric & Gas Company: Series A Nonvoting Preferred Shares



Securities registered pursuant to Section 12(b) of the Act:	Securities registered pursuant to Section 12(g) of the Act:
SCANA Corporation:	South Carolina Electric & Gas Company:
Common stock, without par value	Series A Nonvoting Preferred Shares

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

SCANA Corporation x South Carolina Electric & Gas Company x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

SCANA Corporation o South Carolina Electric & Gas Company o

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months ~~(or for such shorter period that the registrant was required to file such reports)~~, and (2) has been subject to such filing requirements for the past 90 days. ~~SCANA Corporation Yes x No o South Carolina Electric & Gas Company Yes x No o~~

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). SCANA Corporation Yes x No o South Carolina Electric & Gas Company ~~Yes~~ Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months.

SCANA Corporation Yes x No o South Carolina Electric & Gas Company Yes x No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

SCANA Corporation x South Carolina Electric & Gas Company x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.



SCANA Corporation	Large accelerated filer x	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o	Emerging growth company o
South Carolina Electric & Gas Company	Large accelerated filer o	Accelerated filer o	Non-accelerated filer x	Smaller reporting company o	Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ~~SCANA Corporation o South Carolina Electric & Gas Company o~~

SCANA Corporation o South Carolina Electric & Gas Company o

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).

SCANA Corporation Yes o No x South Carolina Electric & Gas Company Yes o No x

Registrant	Description of Common Stock	Shares Outstanding at February 20, 2018
SCANA Corporation	Without Par Value	142,638,371
South Carolina Electric & Gas Company	Without Par Value	40,296,147

Effective January 1, 2019, Dominion Energy, Inc. became the sole holder of SCANA Corporation common stock. The aggregate market value of SCANA Corporation common stock held by non-affiliates was approximately $5.5 billion based on the closing price of SCANA Corporation's common stock as reported on the New York Stock Exchange as of the last day of SCANA Corporation's most recently completed second fiscal quarter. SCANA Corporation is the sole holder of South Carolina Electric & Gas Company common stock. At February 15, 2019, SCANA Corporation had 100 shares of common stock outstanding and South Carolina Electric & Gas Company had 40,296,147 shares of common stock outstanding.

~~Documents~~This ~~incorporated~~combined ~~by reference: Information required by Items 10-13 of Part III of this~~ Form 10-K ~~will~~represents beseparate ~~incorporated~~filings by ~~reference to~~ SCANA Corporation's ~~definitive~~and ~~proxy~~South ~~statement~~Carolina ~~with~~Electric & ~~respect~~Gas toCompany. ~~its~~Information ~~2018~~contained ~~Annual~~herein ~~Meeting~~relating ofto ~~Shareholders,~~an ifindividual ~~such~~registrant ~~definitive proxy statement~~ is filed ~~with~~by ~~the~~that ~~Securities~~registrant ~~and Exchange Commission~~ on orits ~~before~~own ~~April 30, 2018~~behalf. ~~Due~~South toCarolina ~~the~~Electric ~~pending~~& ~~merger~~Gas ~~with~~Company ~~Dominion~~makes ~~Energy,~~no ~~Inc.,~~representation weas ~~may not be required~~ to ~~file~~information arelating ~~definitive proxy statement with regard~~ to ~~such~~SCANA ~~meeting~~Corporation or ~~may~~its ~~file~~subsidiaries it(other ~~after~~than ~~April~~South ~~30,~~Carolina ~~2018,~~Electric in& ~~which~~Gas ~~case~~Company weand ~~will~~its ~~file~~consolidated ~~an amendment to this Form 10-K on or before April 30, 2018 to include the information that would otherwise be incorporated by reference~~affiliates).

~~This combined Form 10-K is separately filed by~~ SCANA ~~Corporation~~CORPORATION ~~and~~AND ~~South~~SOUTH ~~Carolina~~CAROLINA ~~Electric &~~ELECTRIC ~~Gas Company. Information contained herein relating to any individual registrant is filed by such registrant on its own behalf. South Carolina Electric~~ & ~~Gas~~GAS ~~Company~~COMPANY ~~makes~~MEET noTHE ~~representation~~CONDITIONS asSET toFORTH ~~information~~IN ~~relating~~GENERAL toINSTRUCTION ~~SCANA~~I(1)(a) AND ~~Corporation~~(b) OF orFORM ~~its~~10-K ~~subsidiaries~~AND ~~(other~~ARE ~~than~~FILING ~~South~~THIS ~~Carolina~~FORM ~~Electric~~10-K &UNDER ~~Gas~~THE ~~Company~~REDUCED ~~and~~DISCLOSURE ~~its consolidated affiliates)~~FORMAT.

South Carolina Electric & Gas Company meets the conditions set forth in General Instruction I(1) (a) and (b) of Form 10-K and therefore is filing this Form with the reduced disclosure format allowed under General Instruction I(2).

TABLE OF CONTENTS

			Page
Cautionary Statement Regarding Forward-Looking Information			3
Definitions			4
PART I
Item 1.	Business		5
Item 1A.	Risk Factors		196
Item 1B.	Unresolved Staff Comments		2614
Item 2.	Properties		2614
Item 3.	Legal Proceedings		2614
Item 4.	Mine Safety Disclosures		3014
Executive Officers of SCANA Corporation			31
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		3214
Item 6.	Selected Financial Data		3315
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		3415
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		5719
Item 8.	Financial Statements and Supplementary Data		6023
	SCANA Corporation and Subsidiaries		6023
		Report of Independent Registered Public Accounting Firm
		Consolidated Balance Sheets
		Consolidated Statements of Operations
		Consolidated Statements of Comprehensive Income (Loss)
		Consolidated Statements of Cash Flows
		Consolidated Statements of Changes in Common Equity
	South Carolina Electric & Gas Company and Affiliates		7030
		Report of Independent Registered Public Accounting Firm
		Consolidated Balance Sheets
		Consolidated Statements of Comprehensive Income (Loss)
		Consolidated Statements of Cash Flows
		Consolidated Statements of Changes in Common Equity
	Notes to Consolidated Financial Statements		7636
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure		~~124~~88
Item 9A.	Controls and Procedures		~~124~~88
Item 9B.	Other Information		~~126~~90
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		~~126~~90
Item 11.	Executive Compensation		~~127~~90
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		~~127~~90
Item 13.	Certain Relationships and Related Transactions, and Director Independence		~~127~~91
Item 14.	Principal Accounting Fees and Services		~~127~~91
PART IV
Item 15.	Exhibits, Financial Statement Schedules		~~128~~91
Signatures			130
Item 16.	Form 10-K Summary		92
Exhibit Index			~~132~~93
Signatures			95

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Statements included in this Annual Report on Form 10-K which are not statements of historical fact are intended to be, and are hereby identified as, “forward-looking statements” for purposes of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include, but are not limited to, statements concerning the ~~proposed merger with Dominion Energy,~~ recovery of Nuclear Project abandonment costs, ~~key earnings drivers,~~ customer growth, environmental regulations and expenditures, ~~leverage ratio,~~ projections for pension fund contributions, financing activities, access to sources of capital, impacts of the adoption of new accounting rules and estimated capital and other expenditures. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “should,” “expects,” “forecasts,” “plans,” “targets,” “anticipates,” “believes,” “estimates,” “projects,” “predicts,” “potential” or “continue” or the negative of these terms or other similar terminology. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve a number of risks and uncertainties, and that actual results could differ materially from those indicated by such forward-looking statements due to the information being of a preliminary nature and subject to further and/or continuing review and adjustment. Other important factors that could cause such material differences include, but are not limited to, the following:

(1) the ~~occurrence of any event, change or other circumstances that could give rise to the failure by SCANA and its subsidiaries (the Company) to consummate the proposed merger with Dominion Energy; (2) the~~ ability of ~~the~~SCE&G ~~Company~~ to recover through rates the costs expended on ~~Unit~~the 2Nuclear ~~and Unit 3~~Project, and a reasonable return on those costs, under the Merger Approval Order and the abandonment provisions of the BLRA or through other means; (32) uncertainties relating to the bankruptcy filing by WEC and WECTEC; (43) further changes in tax laws and realization of tax benefits and credits, and the ability ~~or inability~~ to realize or maintain tax credits and deductions, particularly in light of the abandonment of ~~Unit~~the 2Nuclear ~~and Unit 3~~Project; (54) legislative and regulatory actions, particularly changes related to electric and gas services, rate regulation, regulations governing electric grid reliability and pipeline integrity, environmental regulations including any imposition of fees or taxes on carbon emitting generating facilities, the BLRA, and any actions ~~affecting~~involving or arising from the abandonment of ~~Unit~~the 2Nuclear ~~and Unit 3~~Project; (65) current and future litigation, including particularly litigation or government investigations or any actions involving or arising from the construction or abandonment of ~~Unit~~the 2Nuclear ~~and~~Project, ~~Unit~~including 3the orpossible ~~arising~~impacts ~~from~~on ~~the~~liquidity ~~proposed~~and ~~merger~~other ~~with~~financial ~~Dominion~~impacts ~~Energy~~therefrom; (76) the results of short- and long-term financing efforts, including prospects for obtaining access to capital markets and other sources of liquidity, and the effect of rating agency actions on the ~~Company’s~~ cost of and access to capital and sources of liquidity of SCANA, SCE&G and Dominion Energy; (87) the ability of suppliers, both domestic and international, to timely provide the labor, secure processes, components, parts, tools, equipment and other supplies needed which may be highly specialized or in short supply, at agreed upon quality and prices, for our construction program, operations and maintenance; (98) the results of efforts to ensure the physical and cyber security of key assets and processes; (109) changes in the economy, especially in areas served by subsidiaries of SCANA; (1110) the impact of competition from other energy suppliers, including competition from alternate fuels in industrial markets; (1211) the impact of conservation and demand side management efforts and/or technological advances on customer usage; (1312) the loss of electricity sales to distributed generation, such as solar photovoltaic systems or energy storage systems; (1413) growth opportunities for ~~SCANA’s~~the ~~regulated and other subsidiaries~~Company; (1514) the effects of weather, especially in areas where the generation and transmission facilities of ~~SCANA~~the ~~and~~Company ~~its subsidiaries~~ are located and in areas served by SCANA’s subsidiaries; (1615) changes in SCANA’s or its subsidiaries’ accounting rules and accounting policies; (1716) payment and performance by counterparties and customers as contracted and when due; (1817) the results of efforts to license, site, construct and finance facilities, and to receive related rate recovery, for generation and transmission; (1918) the results of efforts to operate the Company's electric and gas systems and assets in accordance with acceptable performance standards, including the impact of additional distributed generation; (2019) the availability of fuels such as coal, natural gas and enriched uranium used to produce electricity; the availability of purchased power and natural gas for distribution; the level and volatility of future market prices for such fuels and purchased power; and the ability to recover the costs for such fuels and purchased power; (2120) the availability and retention of skilled, licensed and experienced human resources to properly manage, operate, and grow the Company’s businesses, particularly in light of uncertainties with respect to legislative and regulatory actions surrounding recovery of Nuclear Project costs and integration within the ~~announced~~combined ~~potential~~companies ~~merger~~of Dominion Energy; (2221) labor disputes; (2322) performance of SCANA’s pension plan assets and the effect(s) of associated discount rates; (2423) inflation or deflation; (2524) changes in interest rates; (2625) compliance with regulations; (2726) natural disasters, man-made mishaps and acts of terrorism that directly affect our operations or the regulations governing them; and (2827) the other risks and uncertainties described from time to time in the reports filed by SCANA or SCE&G with the SEC.

SCANA and SCE&G disclaim any obligation to update any forward-looking statements.

DEFINITIONS

Abbreviations used in this Form 10-K have the meanings set forth below unless the context requires otherwise:

TERM		MEANING
ACE		Affordable Clean Energy
Act 258		A law adopted in 2018 by the South Carolina General Assembly that required a temporary reduction in the amount SCE&G could collect from customers under the BLRA.
AFC		Allowance for Funds Used During Construction
ANI		American Nuclear Insurers
AOCI		Accumulated Other Comprehensive Income (Loss)
ARO		Asset Retirement Obligation
ARP		Alternative Revenue Program
BACT		Best Available Control Technology
Bankruptcy Court		U.S. Bankruptcy Court for the Southern District of New York
bcf		billion cubic feet
BLRA		Base Load Review Act
CAA		Clean Air Act, as amended
CAIR		Clean Air Interstate Rule
CC		Combined Cycle
CCR		Coal Combustion Residuals
CEC		Columbia Energy Center
CEO		Chief Executive Officer
CERCLA		Comprehensive Environmental Response, Compensation and Liability Act
CFO		Chief Financial Officer
CFTC		Commodity Futures Trading Commission
CGT		Carolina Gas Transmission Corporation
CIAC		Contributions In Aid of Construction
Citibank		Citibank, N.A.
CO2		Carbon Dioxide
Company		SCANA, together with its consolidated subsidiaries
Concurrent Dockets		Separate dockets that were before the SCPSC related to the Nuclear Project which were handled concurrently. The Concurrent Dockets included the Joint Petition, the Request for Rate Relief filed by the ORS on September 26, 2017, as subsequently amended on October 17, 2017, and a June 2017 complaint filed by the Friends of the Earth and the Sierra Club.
Consolidated SCE&G		SCE&G and its consolidated affiliates
Consortium		A consortium consisting of WEC and WECTEC
Court of Appeals		United States Court of Appeals for the ~~District~~Fourth ~~of Columbia~~Circuit
CPP		Clean Power Plan
CSAPR		Cross-State Air Pollution Rule
CT		Combustion Turbine
CUT		Customer Usage Tracker (decoupling mechanism)
CWA		Clean Water Act
DECG		Dominion Energy Carolina Gas Transmission LLC
DER		Distributed Energy Resource
Derivative Litigation		Claims asserted against former officers and directors of SCANA in derivative shareholder actions and related actions
DHEC		South Carolina Department of Health and Environmental Control
District Court		United States District Court for the District of South Carolina
Dodd-Frank		Dodd-Frank Wall Street Reform and Consumer Protection Act
DOE		United States Department of Energy
DOJ		United States Department of Justice
Dominion Energy		Dominion Energy, Inc., the parent company of SCANA effective January 1, 2019
Dominion Energy		Dominion Energy, Inc.
DOR		South Carolina Department of Revenue
DOT		United States Department of Transportation
DSM Programs		Electric Demand Side Management Programs
ELG Rule		Federal effluent limitation guidelines for steam electric generating units
EMANI		European Mutual Association for Nuclear Insurance
EPA		United States Environmental Protection Agency
EPC Contract		Engineering, Procurement and Construction Agreement dated May 23, 2008, as amended by the October 2015 Amendment
Exchange Act		Securities Exchange Act of 1934, as amended
FASB		Financial Accounting Standards Board
FERC		United States Federal Energy Regulatory Commission
FILOT		Fee in ~~Lieu~~lieu of ~~Taxes~~taxes
Fluor		Fluor Corporation
Fluor Defendants		Fluor Enterprises, Inc. and Fluor Daniel Maintenance Services, Inc.
Fuel Company		South Carolina Fuel Company, Inc.
GAAP		Accounting principles generally accepted in the United States of America
GENCO		South Carolina Generating Company, Inc.
GHG		Greenhouse Gas
GPSC		Georgia Public Service Commission
GWh		Gigawatt hour
Interim Assessment Agreement		Interim Assessment Agreement dated March 28, 2017, as amended, among SCE&G, Santee Cooper, WEC and WECTEC
IAA		Interim Assessment Agreement dated March 28, 2017, as amended, among SCE&G, Santee Cooper, WEC and WECTEC
IRC		Internal Revenue Code of 1986, as amended
IRS		Internal Revenue Service
Joint Petition		Joint application and petition of SCE&G and Dominion Energy for review and approval of a proposed business combination as set forth in the Merger Agreement and for a prudency determination regarding the abandonment of the Nuclear Project and associated merger benefits and cost recovery plans, filed with the SCPSC on January 12, 2018
kWh		Kilowatt-hour
Level 1		A fair value measurement using unadjusted quoted prices in active markets for identical assets or liabilities
Level 2		A fair value measurement using observable inputs other than those for Level 1, including quoted prices for similar (not identical) assets or liabilities or inputs that are derived from observable market data by correlation or other means
Level 3		A fair value measurement using unobservable inputs, including situations where there is little, if any, market activity for the asset or liability
LNG		Liquefied Natural Gas
LOC		Lines of Credit
LTECP		SCANA Long-Term Equity Compensation Plan
MATS		Mercury and Air Toxics Standards
MCF		Thousand Cubic Feet
Merger Agreement		Agreement and Plan of Merger, dated as of January 2, 2018, by and among Dominion Energy, Sedona Corp. and SCANA
Merger Approval Order		The December 21, 2018, order by the SCPSC related to the Concurrent Dockets and setting forth its approval of the SCANA Combination
MGP		Manufactured Gas Plant
Merger Agreement		Agreement and Plan of Merger, dated as of January 2, 2018, by and among Dominion Energy, Sedona Corp. (a wholly-owned subsidiary of Dominion Energy) and SCANA
MMBTU		Million British Thermal Units
MRA		Modified Removal Action
MW or MWh		Megawatt or Megawatt-hour
NASDAQ		The NASDAQ Stock Market, Inc.
NAV		Net Asset Value
NCUC		North Carolina Utilities Commission
NEIL		Nuclear Electric Insurance Limited
NERC		North American Electric Reliability Corporation
NOL		Net Operating Loss
NOX		Nitrogen Oxide
NPDES		National Pollutant Discharge Elimination System
NRC		United States Nuclear Regulatory Commission
NSPS		New Source Performance Standards
NSR		New Source Review
Nuclear Project		Project to construct Unit 2 and Unit 3 under the EPC Contract
Nuclear Waste Act		Nuclear Waste Policy Act of 1982
NYMEX		New York Mercantile Exchange
NYSE		The New York Stock Exchange
OCI		Other Comprehensive Income
October 2015 Amendment		Amendment, dated October 27, 2015, to the EPC Contract
ORS		South Carolina Office of Regulatory Staff
PGA		Purchased Gas Adjustment
PHMSA		United States Pipeline Hazardous Materials Safety Administration
PLR		Private Letter Ruling
PPA		Purchase Power Agreement
Price-Anderson		Price-Anderson Indemnification Act
PSNC Energy		Public Service Company of North Carolina, Incorporated
Registrants		SCANA and SCE&G
RICO		The Racketeer Influenced and Corrupt Organizations Act
Request		Request for Rate Relief filed by the ORS on September 26, 2017, as amended October 17, 2017
ROE		Return on Equity
RSA		Natural Gas Rate Stabilization Act
RTO/ISO		Regional Transmission Organization/Independent System Operator
Santee Cooper		South Carolina Public Service Authority
SCANA		SCANA Corporation, the parent company of SCE&G
SCANA Combination		Dominion Energy's acquisition of SCANA and its subsidiaries effective January 1, 2019 pursuant to the terms of the Merger Agreement
SCANA Energy		SCANA Energy Marketing, Inc.
SCANA Services		SCANA Services, Inc.
SCE&G		South Carolina Electric & Gas Company
SCE&G Ratepayer Case		A consolidated complaint styled Richard Lightsey, LeBrian Cleckley, Phillip Cooper et al. on behalf of themselves and all others similarly situated v. SCE&G, SCANA, and the State of South Carolina filed in the State Court of Common Pleas in Hampton County
SCEUC		South Carolina Energy Users Committee
SCI		SCANA Communications, Inc.
SCPSC		Public Service Commission of South Carolina
SEC		United States Securities and Exchange Commission
SERC		SERC Reliability Corporation
SIP		State Implementation Plan
SLED		South Carolina Law Enforcement Division
SO2		Sulfur Dioxide
Southern Natural		Southern Natural Gas Company
Spirit Communications		SCTG, LLC and its wholly-owned subsidiary SCTG Communications, Inc.
Summer Station		V.C. Summer Nuclear Station
Supreme Court		United States Supreme Court
Tax Act		An Act to Provide for Reconciliation Pursuant to Titles II and V of the Concurrent Resolution on the Budget for Fiscal Year 2018 (previously known as The Tax Cuts and Jobs Act) enacted on December 22, 2017
Toshiba		Toshiba Corporation, parent company of WEC
Toshiba Settlement		Settlement Agreement dated as of July 27, 2017, by and among Toshiba, SCE&G and Santee Cooper
Transco		Transcontinental Gas ~~Pipeline~~Pipe ~~Corporation~~Line Company, LLC
TSR		Total Shareholder Return
Unit 1		Nuclear Unit 1 at Summer Station
Unit 2		Nuclear Unit 2 at Summer Station (abandoned prior to construction completion)
Unit 3		Nuclear Unit 3 at Summer Station (abandoned prior to construction completion)
VACAR		Virginia-Carolinas Reliability Group
USACE		United States Army Corps of Engineers
VIE		Variable Interest Entity
WARN Act		Worker Adjustment and Retraining Notification Act
WEC		Westinghouse Electric Company LLC
WEC Subcontractors		Subcontractors and suppliers to the Consortium
WECTEC		WECTEC Global Project Services, Inc. (formerly known as Stone & Webster, Inc.), a wholly-owned subsidiary of WEC
Williams Station		A.M. Williams Generating Station, owned by GENCO
WNA		Weather Normalization Adjustment

PART I

ITEM 1. BUSINESS

~~INVESTOR~~CORPORATE ~~INFORMATION~~STRUCTURE

~~SCANA’s~~Effective ~~and~~January ~~SCE&G’s annual reports on Form 10-K~~1, ~~quarterly reports on Form 10-Q~~2019, ~~current~~SCANA ~~reports~~became ona ~~Form 8~~wholly-Kowned ~~and~~subsidiary ~~amendments~~of toDominion ~~those~~Energy ~~reports~~under ~~filed with or furnished to~~ the ~~SEC~~terms ~~are available free~~ of ~~charge~~the ~~through~~Merger Agreement. SCANA’'s ~~internet~~shareholders ~~website~~approved atthe ~~www.scana.com~~merger ~~(which~~in isa ~~not~~special ~~intended~~meeting ~~as an active hyperlink; the information~~ on ~~SCANA’s~~July ~~website~~31, is2018, ~~not~~and avarious ~~part~~regulatory ofbodies ~~this~~approved ~~report~~the ortransaction ~~any~~throughout ~~other~~2018. ~~report~~See oradditional ~~document~~discussion ~~that~~in ~~SCANA~~Note or2 ~~SCE&G~~and ~~files~~Note ~~with~~11 ~~or furnishes~~ to the ~~SEC)~~consolidated asfinancial ~~soon~~statements asin ~~reasonably~~Part ~~practicable~~II, ~~after~~Item ~~these~~8. ~~reports~~Financial ~~are~~Statements ~~filed~~and orSupplementary ~~furnished~~Data.

SCANA ~~and SCE&G post information from time to time regarding developments relating to SCE&G’s Nuclear Project and other matters of interest to investors on SCANA’s website. On SCANA’s homepage, there~~ is a ~~yellow~~South ~~box~~Carolina ~~containing~~corporation ~~links~~created toin ~~the~~1984 ~~Nuclear~~as ~~and Other Investor Information sections of the website. The Nuclear section contains~~ a ~~yellow~~holding ~~box with a link to project news and updates~~company. ~~The~~ ~~Other~~SCANA ~~Investor~~does ~~Information~~not ~~section~~directly ofown ~~the~~or ~~website~~operate ~~contains~~any asignificant ~~link~~physical toproperties, ~~recent~~but ~~investor-related~~it ~~information~~holds ~~that~~directly ~~cannot~~all ~~be found at other areas~~ of the ~~website.~~capital ~~Some~~stock of ~~the~~its ~~information that will be posted from time to time~~subsidiaries, including the ~~quarterly~~subsidiaries ~~reports~~described ~~that SCE&G submits to the SCPSC and the ORS in connection with the Nuclear Project, may be deemed to be material information that has not otherwise become public~~below. Investors, media and other interested persons are encouraged to review this information and can sign up, under the Investor Relations Section of the website, for an email alert when there is a new posting in the Nuclear and Other Investor Information yellow box.

CORPORATE STRUCTURE AND SEGMENTS OF BUSINESS

SCANA is a South Carolina corporation created in 1984 as a holding company. SCANA and its subsidiaries had full-time, permanent employees as of February 20, 2018 and 2017 of 5,228 and 5,910, respectively. SCANA does not directly own or operate any significant physical properties, but it holds directly all of the capital stock of its subsidiaries, including the subsidiaries described below.

On January 2, 2018, SCANA entered into the Merger Agreement whereby it would become a wholly-owned subsidiary of Dominion Energy. The merger is subject to a variety of closing conditions including the receipt of approvals from several regulators and from SCANA's shareholders. Refer to Exhibit 2.01 in the Exhibit Index for information on where a copy of the Merger Agreement may be obtained. See also Note 10 to the consolidated financial statements for more discussion.

Regulated Utilities

SCE&G is engaged in the generation, transmission, distribution and sale of electricity to approximately ~~719~~730,000 customers and the purchase, sale and transportation of natural gas to approximately ~~368~~380,000 customers (each as of December 31, ~~2017~~2018). SCE&G’s business experiences seasonal fluctuations, with generally higher sales of electricity during the summer and winter months because of air conditioning and heating requirements, and generally higher sales of natural gas during the winter months due to heating requirements. SCE&G’s ~~electric~~ service territory ~~extends~~includes ~~into~~portions 24of ~~counties covering nearly 16,000 square miles in the~~ central, southern and southwestern ~~portions of~~ South Carolina. ~~The~~(for ~~service~~electric ~~area~~and ~~for~~ natural gas) ~~encompasses~~as ~~all~~well oras ~~part~~portions of 35eastern ~~counties in~~ South Carolina ~~and~~(for ~~covers~~natural ~~approximately~~gas ~~23,000 square miles~~only). ~~More than 3.4 million persons live in the counties where~~ SCE&G’s ~~conducts its business. Resale customers include municipalities,~~ electric ~~cooperatives,~~transmission ~~other~~system ~~investor-owned~~extends ~~utilities,~~over ~~registered~~a ~~marketers~~large ~~and~~part ~~federal~~of ~~and~~the ~~state electric agencies. Predominant industries served by SCE&G include chemicals~~central, ~~educational~~southern ~~services, paper products, food products, lumber~~ and ~~wood~~southwestern ~~products,~~portions ~~health~~of ~~services,~~South ~~textile manufacturing, rubber and miscellaneous plastic products, automotive and tire and fabricated metal products~~Carolina.

GENCO owns Williams Station and sells electricity, ~~pursuant to a FERC-approved tariff,~~ solely to SCE&G under the terms of a unit power sales agreement and related operating agreement and pursuant to a FERC-approved tariff. Fuel Company acquires, owns and provides financing for SCE&G's nuclear fuel, certain fossil fuels and emission allowances.

PSNC Energy purchases, sells and transports natural gas to approximately ~~563~~580,000 residential, commercial and industrial customers (as of December 31, ~~2017~~2018). PSNC Energy serves ~~28 franchised~~portions ~~counties~~of ~~covering approximately 12~~western,~~000~~ ~~square~~central ~~miles~~and ineastern North Carolina~~. The predominant industries served by PSNC Energy include educational services~~, ~~food~~including ~~and~~the ~~beverage~~area ~~products,~~known ~~health~~as ~~services,~~the ~~automotive,~~Research ~~chemicals, motorsports, non-woven textiles and electrical generation and construction~~Triangle.

Nonregulated Businesses

SCANA Energy markets natural gas in the southeast and provides energy-related services. A division of SCANA Energy sells natural gas to approximately ~~425~~420,000 customers (as of December 31, ~~2017~~2018) in Georgia’s deregulated natural gas market. As Georgia’s provider of last resort, SCANA Energy provides service to customers considered to be low-income or that are otherwise unable to obtain natural gas service from other marketers. SCANA Energy provides this service at rates approved by the GPSC and receives funding from Georgia's Universal Service Fund to offset some of the resulting bad debt. SCANA Energy files financial and other information periodically with the GPSC, and such information is available at www.psc.state.ga.us (which is not intended as an active hyperlink; the information on the GPSC website is not part of this or any other report filed by the Company with the SEC).

SCANA Services provides shared administrative and management services to SCANA's other subsidiaries.

For information with respect to major segments of business, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 12 of the consolidated financial statements. All such information is incorporated herein by reference.Employees

~~ELECTRIC~~At ~~OPERATIONS~~December 31, 2018, the Company had approximately 5,200 full-time employees, of which approximately 1,100 were subject to collective bargaining agreements, and Consolidated SCE&G had approximately 2,700 employees, of which approximately 800 were subject to collective bargaining agreements.

~~Electric Sales~~COMPETITION

There is no competition for electric distribution or generation service within SCE&G’'s ~~sales~~service ofterritory ~~electricity~~in bySouth ~~customer~~Carolina ~~classification~~and asno ~~percentages~~such competition is currently permitted. However, competition from third-party owners for development, construction and ownership of ~~electric~~certain ~~revenues~~transmission ~~were~~facilities asin ~~follows:~~SCE&G’s service territory is permitted pursuant to FERC Order

	Sales
Customer Classification	2017		2016
Residential	45	%	46	%
Commercial	33	%	33	%
Industrial	18	%	17	%
Sales for resale	2	%	2	%
Other	2	%	2	%
Total	100	%	100	%

~~Sales~~1000, ~~for~~subject ~~resale include sales~~ to ~~three~~state ~~municipalities~~and inlocal ~~2017~~siting and ~~2016~~permitting approvals. ~~Other~~This ~~includes~~could ~~short-term~~result ~~system~~in ~~sales~~additional ~~which~~competition ~~during 2017 included sales~~ to ~~two~~build ~~investor-owned~~and ~~utilities~~own ortransmission ~~registered~~infrastructure ~~marketers.~~in ~~Short-term~~SCE&G’s ~~system~~service ~~sales~~area ~~during~~in ~~2016~~the ~~included sales to four investor-owned utilities or registered marketers~~future.

~~During~~Competition ~~2017~~in SCE&G's ~~experienced~~and aPSNC ~~net~~Energy's ~~increase~~natural ofgas ~~approximately~~distribution ~~10,000~~operations ~~electric~~is generally based on price and convenience. Large commercial and industrial customers ~~(growth~~often ~~rate~~have ofthe 1ability to switch from natural gas to an alternate fuel, such as propane or fuel oil.~~4%)~~ Natural gas competes with these alternate fuels based on price. As a result, ~~increasing~~any ~~its~~significant ~~total~~disparity ~~electric~~between ~~customers~~supply and demand, either of natural gas or of alternate fuels, and due either to ~~approximately~~production ~~719~~or delivery disruptions or other factors,~~000~~ atwill ~~year~~affect ~~end~~price and the ability to retain large commercial and industrial customers.

~~The~~SCANA ~~following~~Energy ~~projections~~faces ~~assume~~competition ~~normal~~from ~~weather~~affiliates ~~where applicable. For the period 2017 to 2018, SCE&G projects a retail kWh sales increase~~ of ~~approximately~~large ~~0.4%~~energy companies and ~~customer~~electric ~~growth~~membership ~~of 1.5%. For the period 2018-2020~~cooperatives, ~~SCE&G~~among ~~projects~~others. ~~total~~The ~~territorial~~ability ~~kWh sales~~ of ~~electricity~~SCANA toEnergy ~~increase 0.3% annually, total retail sales~~ to ~~decrease~~maintain ~~0.2%~~its ~~annually,~~market ~~total~~share ~~electric~~primarily ~~customer~~depends ~~base~~on tothe ~~increase~~prices ~~1.5%~~it ~~annually~~charges ~~and~~customers ~~territorial~~relative ~~peak load (summer, in MW)~~ to ~~increase~~the ~~1.0%~~prices ~~annually. SCE&G’s~~charged ~~goal~~by isits tocompetitors ~~maintain a planning reserve margin of between 14%~~ and ~~20%;~~its ~~however,~~ability ~~weather and other factors affect territorial peak load and can cause actual generating capacity on any given day~~ to ~~fall~~provide ~~below~~high ~~the~~levels ~~reserve~~of ~~margin~~customer ~~goal~~service.

Electric Interconnections

SCE&G purchases all of the electric generation of GENCO’s Williams Station under a unit power sales agreement which has been approved by FERC. Williams Station has a net generating capacity (summer rating) of 605 MW.

SCE&G’s transmission system extends over a large part of the central, southern and southwestern portions of South Carolina. The system interconnects with Duke Energy Carolinas, LLC, Duke Energy Progress, LLC, Santee Cooper, Georgia Power Company and the Southeastern Power Administration’s Clarks Hill (Thurmond) Project. SCE&G is a member of VACAR, one of several geographic divisions within the SERC. SERC is one of eight regional entities with delegated authority from NERC for the purpose of proposing and enforcing reliability standards approved by FERC. The regional entities and all members of NERC work to safeguard the reliability of the bulk power systems throughout North America.

Fuel Costs and Fuel Supply

The average cost of various fuels and the weighted average cost of all fuels (including oil) were as follows:

	Cost of Fuel Used
	2017		2016		2015
Per MMBTU:
Nuclear	$	0.95	$	0.98	$	0.95
Coal	3.31		3.41		3.81
Natural Gas	3.52		3.02		3.26
All Fuels (weighted average)	2.63		2.41		3.01
Per Ton: Coal	82.45		84.62		95.69
Per MCF: Gas	3.57		3.11		3.35

	% of Total MWh Generated
	Actual						Estimated
	2015		2016		2017		2018		2019		2020
Coal	39	%	37	%	39	%	38	%	29	%	30	%
Nuclear	20	%	25	%	20	%	20	%	23	%	20	%
Hydro	3	%	3	%	2	%	3	%	3	%	3	%
Natural Gas & Oil	36	%	33	%	37	%	35	%	42	%	41	%
Biomass/Solar	2	%	2	%	2	%	4	%	3	%	6	%
Total	100	%	100	%	100	%	100	%	100	%	100	%

For a listing of the Company's generating facilities, see the Electric Properties section within Item 2. Properties.

In 2017, coal was primarily obtained through long-term contracts with suppliers located in eastern Kentucky, Tennessee, Virginia, and West Virginia. These contracts provide for approximately 2.1 million tons annually. Sulfur restrictions on the contract coal range from 1.0% to 1.6%. These contracts expire at various times through 2019. Spot market purchases may occur when needed or when prices are believed to be favorable. The Company relies on unit trains and, in some cases, trucks for coal deliveries.

SCANA and SCE&G believe that electric operations comply with all applicable regulations relating to the discharge of SO2 and NOX. See additional discussion at Environmental Matters in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

SCE&G, for itself and as agent for Santee Cooper, and WEC are parties to a fuel alliance agreement and contracts for fuel fabrication and related services. Under these contracts, SCE&G supplies enriched products to WEC and WEC supplies nuclear fuel assemblies for Unit 1. WEC is SCE&G’s exclusive provider of such fuel assemblies on a cost-plus basis. The fuel assemblies to be delivered under the contracts are expected to supply the nuclear fuel requirements of Unit 1 through 2033.

In addition, SCE&G has contracts covering its nuclear fuel needs for uranium, conversion services and enrichment services. These contracts have varying expiration dates through 2024. SCE&G believes that it will be able to renew contracts as they expire or enter into similar contractual arrangements with other suppliers of nuclear fuel materials and services and that sufficient capacity for nuclear fuel supplies and processing exists to allow for normal operations of its nuclear generating unit.

SCE&G stores spent nuclear fuel in its on-site spent-fuel pool, and has constructed a dry cask storage facility to accommodate the spent fuel output for the life of Unit 1. In addition, Unit 1 has sufficient on-site capacity to permit storage of the entire reactor core in the event that complete unloading should become desirable or necessary. For information about the contract with the DOE regarding disposal of spent fuel, see the Environmental section of Note 10 to the consolidated financial statements.

SCE&G also uses long-term power purchase agreements to ensure that adequate power supply resources are in place to meet load obligations and reserve requirements. As of January 1, 2018, SCE&G had such agreements in place for 325 MW of capacity (expiring at various times through 2020). In addition, SCE&G had the ability to purchase an additional 204 MW of capacity under these agreements. On December 20, 2017, SCE&G entered into an agreement to purchase the Columbia Energy Center, which is the existing 540 MW combined cycle gas generating station to which these capacity contracts relate. Upon the closing of such purchase, these contracts will be moot, and all output of that station will be available for SCE&G's load obligations and reserve requirements. Also, as of December 31, 2017, SCE&G is taking delivery of utility scale solar generated power pursuant to 17 executed power purchase agreements totaling 218 MW-alternating current.

GAS OPERATIONS

Gas Sales-Regulated

Regulated sales of natural gas by customer classification as a percent of total regulated gas revenues sold or transported were as follows:

	SCANA				SCE&G
Customer Classification	2017		2016		2017		2016
Residential	57.1	%	57.9	%	47.0	%	48.3	%
Commercial	26.5	%	26.4	%	27.8	%	28.6	%
Industrial	11.4	%	10.4	%	21.6	%	19.5	%
Transportation Gas	5.0	%	5.3	%	3.6	%	3.6	%
Total	100.0	%	100.0	%	100.0	%	100.0	%

For the period 2018-2020, SCANA projects total consolidated sales of regulated natural gas in MMBTUs to increase 31.7% annually (excluding transportation and assuming normal weather). Annual projected increases over such period in MMBTU sales include residential of 2.5%, commercial of 0.9%, and industrial of 84.8%. Projections of total and industrial sales include amounts for new gas-fired electric generating plants that will be served by PSNC Energy.

For the period 2018-2020, SCE&G projects total consolidated sales of regulated natural gas in MMBTUs to increase 2.2% annually (excluding transportation and assuming normal weather). Annual projected increases over such period in MMBTU sales include residential of 2.4%, commercial of 1.0% and industrial of 2.9%.

For the period 2018-2020, each of SCANA’s and SCE&G’s total regulated natural gas customer base is projected to increase 2.6% annually. During 2017, SCANA recorded a net increase of approximately 24,000 regulated gas customers (growth rate of 2.6%), increasing the number of its regulated gas customers to approximately 931,000. Of this increase, SCE&G recorded a net increase of approximately 10,000 gas customers (growth rate of 2.9%), increasing the number of its total gas customers to approximately 368,000 (as of December 31, 2017).

Demand for gas changes primarily due to weather and the price relationship between gas and alternate fuels.

Gas Cost and Supply

SCE&G purchases natural gas under contracts with producers and marketers on both a short-term and long-term basis at market based prices. The gas is delivered to South Carolina through firm transportation agreements with Southern Natural (expiring in 2019), Transco (expiring at various times through 2084) and DECG (expiring at various times through 2036). The maximum daily volume of gas that SCE&G is entitled to transport under these contracts is 212,194 MMBTU from Southern Natural, 110,458 MMBTU from Transco and 456,427 MMBTU from DECG. Additional natural gas volumes may be delivered to SCE&G’s system as capacity is available through interruptible transportation.

The daily volume of gas that SCANA Energy is entitled to transport under its service agreements (expiring at various times through 2023) on a firm basis is 761,860 MMBTU. Additional natural gas volumes may be delivered as capacity is available through interruptible transportation.

SCE&G purchased natural gas, including fixed transportation, at an average cost of $3.96 per MMBTU during 2017 and $3.46 per MMBTU during 2016.

To meet the requirements of its high priority natural gas customers during periods of maximum demand, SCE&G has 5,502,600 MMBTU of natural gas storage capacity on the systems of Southern Natural and Transco. Approximately 3,433,200 MMBTU of gas were in storage on December 31, 2017. SCE&G supplements its supplies of natural gas with two LNG storage facilities, one of which has liquefaction capability. Approximately 1,624,300 MMBTU (liquefied equivalent) of gas were in storage on December 31, 2017. For a discussion of SCE&G's natural gas storage capacity, see Item 2. Properties.

PSNC Energy purchases natural gas under contracts with producers and marketers on a short-term basis at market based prices and on a long-term basis for reliability assurance at first of the month index prices plus a reservation charge in certain cases. Transco transports natural gas to North Carolina through transportation agreements with varying expiration dates through 2031. On a peak day, PSNC Energy is capable of receiving daily transportation volumes of natural gas under these contracts, utilizing firm contracts of 710,062 MMBTU from Transco.

PSNC Energy purchased natural gas, including fixed transportation, at an average cost of $4.39 per MMBTU during 2017 compared to $3.73 per MMBTU during 2016.

To meet the requirements of its high priority natural gas customers during periods of maximum demand, PSNC Energy supplements its supplies of natural gas with underground natural gas storage services and LNG peaking services. Underground natural gas storage service agreements with Dominion Energy Transmission, Inc., Columbia Gas Transmission, Transco and Enbridge Inc. provide for storage capacity of approximately 13,000,000 MMBTU. Approximately 9,000,000 MMBTU of gas were in storage under these agreements at December 31, 2017. PSNC Energy also maintains LNG storage service agreements with Transco, Cove Point LNG and Pine Needle LNG which provides 1,300,000 MMBTU (liquefied equivalent) of storage space. Approximately 1,200,000 MMBTU (liquefied equivalent) were in storage under these agreements at December 31, 2017. Approximately 800,000 MMBTU (liquefied equivalent) of gas were in storage at PSNC Energy's LNG storage facility at December 31, 2017. For a discussion of PSNC Energy's LNG storage capacity, see Item 2. Properties.

SCANA and SCE&G believe that supplies under long-term contracts and supplies available for spot market purchase are adequate to meet existing customer demands and to accommodate growth.

Gas Marketing-Nonregulated

SCANA Energy markets natural gas and provides energy-related services in the Southeast. In addition, a division of SCANA Energy markets natural gas to greater than 425,000 customers (as of December 31, 2017) in Georgia’s natural gas market. Georgia’s natural gas market includes approximately 1.6 million customers.

Risk Management

For a discussion of risk management policies and procedures, see Note 6 to the consolidated financial statements.

REGULATION

~~Regulatory~~SCE&G's ~~jurisdictions~~electric distribution service, including the rates it may charge to ~~which~~jurisdictional ~~SCANA~~customers, ~~and~~is ~~its~~subject ~~subsidiaries~~to regulation by the SCPSC. SCE&G's electric generation operations are subject ~~are~~to ~~described~~regulation inby the ~~Regulatory~~SCPSC, ~~Matters~~FERC, ~~section~~the ofNRC, ~~Management~~the EPA, the DOE and various other federal, state and local authorities. SCE&G's ~~Discussion~~electric transmission service is primarily regulated by FERC and ~~Analysis~~the ofDOE. ~~Financial~~SCE&G ~~Condition~~and PSNC Energy's gas distribution operations are subject to regulation by the SCPSC and ~~Results~~the NCUC, respectively, as well as PHMSA, DOT, the ORS and the NCUC for enforcement of ~~Operations~~federal and state pipeline safety requirements in their respective service territories. SCANA Energy's activities are subject to regulation by the GPSC as to retail prices for customers served under regulated provider contracts and the FERC.

~~SCE&G~~WHERE ~~has~~YOU ~~obtained~~CAN ~~FERC~~FIND ~~authority~~MORE to issue short-term indebtedness and to assume liabilities as a guarantor (pursuant to Section 204 of the Federal Power Act). SCE&G may issue unsecured promissory notes, commercial paper and direct loans in amounts not to exceed $1.6 billion outstanding with maturity dates of one year or less, and may enter into guaranty agreements in favor of lenders, bankers, and dealers in commercial paper in amounts not to exceed $600 million. GENCO has obtained FERC authority to issue short-term indebtedness not to exceed $200 million outstanding with maturity dates of one year or less. The authority described herein will expire in October 2018. Were adverse developments to occur with respect to uncertainties highlighted elsewhere, the ability of SCE&G or GENCO to secure renewal of this short-term borrowing authority may be adversely impacted.INFORMATION

SCANA and SCE&G ~~holds~~file ~~licenses~~their ~~under~~annual, ~~the~~quarterly ~~Federal~~and ~~Power~~current ~~Act~~reports ~~for~~and ~~each~~other ofinformation ~~its~~with ~~hydroelectric~~the ~~projects~~SEC. ~~The~~Their ~~licenses~~SEC ~~expire~~filings asare ~~follows~~available to the public over the Internet at the SEC’s website at http://www.sec.gov.

9SCANA and SCE&G make their SEC filings available, free of charge, including the annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, through Dominion Energy’s internet website, http://www.dominionenergy.com, as soon as reasonably practicable after filing or furnishing the material to the SEC. Information contained on Dominion Energy’s website is not incorporated by reference in this report.

Project		LicenseExpiration
Saluda (Lake Murray)		*
Fairfield Pumped Storage/Parr Shoals		2020
Stevens Creek		2025
Neal Shoals		2036

* SCE&G operates the Saluda hydroelectric project under an annual license while its long-term re-licensing application is being reviewed by FERC.

At the termination of a license under the Federal Power Act, FERC may extend or issue a new license to the previous licensee, may issue a license to another applicant, or the federal government may take over the related project. If the federal government takes over a project or if FERC issues a license to another applicant, the federal government or the new licensee, as the case may be, must pay the previous licensee an amount equal to its net investment in the project, not to exceed fair value, plus severance damages.

RATE MATTERS

For a discussion of the impact of various rate matters, see the Regulatory Matters section of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Note 2 to the consolidated financial statements.

Fuel Cost Recovery Procedures

The SCPSC’s fuel cost recovery procedure determines the fuel component in SCE&G’s retail electric base rates annually based on projected fuel costs for the ensuing 12-month period, adjusted for any over-collection or under-collection from the preceding 12-month period. The statutory definition of fuel costs includes certain variable environmental costs, such as ammonia, lime, limestone and catalysts consumed in reducing or treating emissions, and the cost of emission allowances used for SO2, NOX, mercury and particulates. In addition, the statutory definition of fuel cost allows electric utilities to recover avoided costs under the Public Utility Regulatory Policy Act of 1978, as well as costs incurred as a result of offering DER and net metering programs to its customers. SCE&G may request a formal proceeding concerning its fuel costs at any time.

Purchased gas cost recovery procedures related to the Company's natural gas operations along with related rate proceedings by the SCPSC and NCUC are described in Note 2 to the consolidated financial statements.

ENVIRONMENTAL MATTERS

Federal and state authorities have imposed environmental regulations and standards relating primarily to air emissions, wastewater discharges and solid, toxic and hazardous waste management. Developments in these areas may require that equipment and facilities be modified, supplemented or replaced. The ultimate effect of any new or pending regulations or standards upon existing operations cannot be predicted. For a discussion of how these regulations and standards may impact SCANA and SCE&G (including capital expenditures necessitated thereby), see the Environmental Matters section of Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations and Note 10 to the consolidated financial statements.

OTHER MATTERS

Insurance coverage for Unit 1 is described in Note 10 to the consolidated financial statements.

For a discussion of the impact of competition, see the Overview section of Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations.

For a discussion of cash requirements for construction and nuclear fuel expenditures, contractual cash obligations, financing limits, financing transactions and other related information, see the Liquidity and Capital Resources section of Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

ITEM 1A. RISK FACTORS

The risk factors that follow relate in each case to the Company, and where indicated the risk factors also relate to Consolidated SCE&G.

~~The~~There ~~completion of the merger is subject to the receipt of consents, approvals and/or findings from governmental entities, which~~ may impose conditions that could have an adverse effect on Dominion Energy or SCANA or could cause either Dominion Energy or SCANA to terminate the merger. The completion of the merger is also subject to there having not been certain substantive changes in certain South Carolina laws that have or would reasonably be ~~expected~~significant tochallenges ~~have an adverse effect on SCANA or its subsidiaries or changes in law that impose any condition that would reasonably be expected~~ to ~~result~~successfully inintegrate ~~specified changes to~~ the ~~Joint~~Company’s ~~Petition. Additionally,~~and ~~any~~Consolidated ~~such~~SCE&G’s ~~changes~~businesses inwith ~~certain South Carolina law could affect the considerations which were relied upon by SCANA and/or~~ Dominion Energy ~~prior to the signing of the Merger Agreement~~.

~~Dominion~~Significant ~~Energy~~management ~~and~~attention ~~SCANA are not required to complete the merger until after the requisite authorizations, approvals, consents~~ and~~/or~~ ~~permits~~resources ~~are~~will ~~received~~be ~~from the FERC, NRC, SCPSC, NCUC and GPSC. Any of the relevant governmental entities may oppose the merger, fail to approve the merger, fail to make~~ required findings in favor of the merger, or impose certain requirements or obligations as conditions for their consent, approval or findings or in connection with their review. Regulatory approvals of the merger or findings with respect to ~~the~~integrate ~~merger may not be obtained on a timely basis or at all, and such approvals or findings may include conditions that could have an adverse effect on~~ the Company’s orand Consolidated SCE&G,’s ~~and/or~~businesses ~~result~~with inDominion ~~the termination of the merger~~Energy. ~~The~~Potential ~~terms~~difficulties ofthat ~~any conditions imposed in order to obtain the requisite regulatory approvals or findings~~ may ~~not~~ be ~~known~~encountered byin the ~~date~~integration ofprocess ~~the~~include ~~special meeting of SCANA shareholders to vote on~~ the ~~merger proposal. No assurance can be given that the necessary approvals or findings will be obtained or that any required conditions will not have an adverse effect on Dominion Energy~~ following: the merger. If SCANA shareholders vote in favor of the merger proposal at the special meeting, Dominion Energy or SCANA may make decisions after the special meeting to waive a condition or approve certain actions required to obtain regulatory approvals or findings without seeking further approval of the SCANA shareholders.

~~Subject~~• to the ~~terms~~complexities ~~and~~associated ~~conditions~~with ~~set~~integrating ~~forth in~~ the ~~Merger Agreement~~Company, ~~the~~including ~~Merger~~its ~~Agreement~~utility ~~requires~~businesses, ~~Dominion~~while ~~Energy~~at ~~to accept conditions from regulators that could adversely impact Dominion Energy after~~ the ~~merger~~same ~~without~~time ~~either~~providing ~~of Dominion Energy or SCANA having the right to refuse to close the merger on the basis of those regulatory conditions~~consistent, ~~except~~high ~~that~~quality Dominion Energy is generally not required, and SCANA is generally not permitted without Dominion Energy’s prior approval, to take any action or accept any condition that results in a burdensome condition.services;

In• ~~addition,~~ the ~~Merger~~complexities ~~Agreement provides that Dominion Energy (but not SCANA) will have the right to refuse to complete the merger if, since the date~~ of ~~the~~integrating ~~Merger~~a ~~Agreement,~~company ~~any~~with ~~governmental~~different ~~entity~~markets ~~shall have enacted any order, or there shall have been any change in law (including the BLRA~~ and the other laws governing South Carolina public utilities), which imposes any material change to the terms, conditions or undertakings set forth in the Joint Petition, or any significant changes to the economic value of the Joint Petition, in each case as determined by Dominion Energy in good faith.customers;

The Merger Agreement further provides that Dominion Energy (but not SCANA) will have the right to refuse to complete the merger if there shall have occurred any substantive change in the BLRA or other laws governing South Carolina public utilities which has or would reasonably be expected to have an adverse effect on SCANA or any of its subsidiaries. There is currently pending before the South Carolina Senate a bill that would make substantive changes to the BLRA. This bill (H.4375) has passed the South Carolina House of Representatives. If this bill becomes law, Dominion Energy would not be obligated to complete the merger if it is determined that the bill has or would reasonably be expected to have an adverse effect on SCANA or any of its subsidiaries.

Certain lawsuits and regulatory actions have been filed against SCANA and SCE&G in connection with the abandonment of the Nuclear Project. If the relief requested in these matters (including a request for declaratory judgment that the BLRA is unconstitutional) is granted, Dominion Energy might not be obligated to complete the merger.

No assurance can be given that these risks will not materialize and either adversely impact Dominion Energy after the completion of the merger or, if such conditions rise to the thresholds discussed above, some of which, as described above, are in the subjective determination of Dominion Energy acting in good faith, or if the required authorizations, approvals, consents and/or permits are not obtained or received, result in the termination of the merger and adversely impact the results of operations, cash flows and financial conditions of the Company and Consolidated SCE&G.

Failure to complete the merger could negatively impact the stock price and the future business and financial results of SCANA.

If the merger is not completed, the ongoing business of the Company and Consolidated SCE&G may be adversely affected and the Company and Consolidated SCE&G could be subject to several risks, including the following:

• the price of SCANA common stock may decline to the extent that the current market price reflects an expectation by the market that the merger will be completed;

• obligations to pay certain costs relating to the merger, such as legal, accounting, financial advisory, filing, printing and mailing fees;

• the disruption of the Company’s and Consolidated SCE&G’s ongoing business or inconsistencies in its services, standards, controls, procedures and policies due to management’s focus on the merger, any of which could adversely affect the ability of the Company and Consolidated SCE&G to maintain relationships with customers, regulators, vendors and employees, or could otherwise adversely affect the business and financial results of the Company or Consolidated SCE&G, without realizing any of the benefits of having the merger completed;

• the potential negative impact on the Company and Consolidated SCE&G ultimately resolving the rate and regulatory issues, including pending investigations and legal challenges, relating to the abandonment of the Nuclear Project in a manner satisfactory to SCANA on account of SCANA working with Dominion Energy to pursue the resolution of these issues as contemplated by the Merger Agreement rather than pursuing its regulatory and legal options for resolving these issues independently of considerations and obligations related to the merger; and

• the loss of other opportunities that could be beneficial to the Company and Consolidated SCE&G that could have been pursued during the pendency of the merger, without realizing any of the benefits of having the merger completed.

In addition to the above risks, SCANA may be required, under certain circumstances, to pay to Dominion Energy a termination fee of $240 million.

If the merger is not completed, no assurance can be given that these risks will not materialize and will not materially affect SCANA's business, financial results and stock price.

The Merger Agreement contains provisions that limit SCANA’s ability to pursue alternatives to the merger, which could discourage a potential competing acquirer of SCANA or could result in any competing proposal being at a lower price than it might otherwise be.

The Merger Agreement contains provisions that, subject to certain exceptions, restrict SCANA’s ability to initiate, solicit, knowingly encourage, facilitate or discuss competing third-party proposals to acquire all or a significant part of SCANA, or provide information to a third party that could reasonably be expected to lead to such a proposal. In addition, Dominion Energy generally has an opportunity to offer to modify the terms of the merger in response to any superior acquisition proposal that may be made before the SCANA board of directors is permitted to withdraw or qualify its recommendation. In some circumstances on termination of the Merger Agreement, SCANA may be required to pay to Dominion Energy a termination fee of $240 million.

These provisions, which the SCANA board regards as customary for transactions of this type, could discourage a potential competing acquirer that might have an interest in acquiring all or a significant part of SCANA from considering or proposing that acquisition, even if it were prepared to pay consideration with a higher per share cash or market value than the merger consideration, or might result in a potential competing acquirer proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable by SCANA in certain circumstances.

The pendency of the merger could adversely affect the business and operations of SCANA.

In connection with the pending merger, some current or prospective customers or vendors of SCANA’s utilities may delay or defer decisions regarding their existing or proposed relationships with those utilities, which could negatively impact the operation, revenues, earnings, cash flows and expenses of the Company and Consolidated SCE&G, regardless of whether the merger is completed. Similarly, current and prospective employees of SCANA and its utilities may experience uncertainty about their future roles following the merger, which may adversely affect the ability of SCANA and its utilities to attract and retain key personnel during the pendency of the merger. In addition, due to operating covenants in the Merger Agreement, during the pendency of the merger, SCANA and its utilities may be unable to pursue strategic transactions, undertake

significant capital projects, undertake certain significant financing or other specified transactions or pursue actions that are not in the ordinary course of business, even if such actions would prove beneficial.

Following the merger, Dominion Energy may be unable to successfully integrate the Company’s and Consolidated SCE&G’s businesses.

Dominion Energy and SCANA currently operate as independent public companies. After the merger, Dominion Energy will be required to devote significant management attention and resources to integrating the Company’s and Consolidated SCE&G’s business. Potential difficulties Dominion Energy may encounter in the integration process include the following:

• the complexities associated with integrating SCANA and its utility businesses, while at the same time continuing to provide consistent, high quality services;

• the complexities of integrating a company with different core services, markets and customers;


•	the inability to attract and retain key employees;

• potential unknown liabilities and unforeseen increased expenses, ~~delays or regulatory conditions~~ associated with the merger;

• difficulties in managing political and regulatory conditions related to ~~SCANA’~~the Company's utility ~~business after the merger~~businesses;

• the ~~cost recovery plan includes a~~ moratorium on filing requests for adjustments in ~~SCANA’~~SCE&G's base electric rates until ~~2021~~2020 ifwith ~~the~~no ~~merger~~change isin ~~approved~~rates byuntil ~~the~~January ~~SCPSC~~1, 2021, which ~~would~~limits ~~limit~~the ~~Dominion Energy’s~~ ability to recover increases in non-fuel related costs of electric operations for SCE&G’s customers; ~~and~~

• ~~performance~~the ~~shortfalls~~stipulation asagreement aapproved ~~result~~by of the ~~diversion~~NCUC, ofwhich ~~Dominion~~provides ~~Energy~~for ~~management’s~~a ~~attention~~rate ~~caused~~moratorium byat ~~completing~~PSNC ~~the~~Energy ~~merger~~until ~~and~~November ~~integrating~~1, ~~SCANA’s~~2021, ~~utility~~with ~~businesses.~~certain exceptions; and

~~For~~• ~~these~~performance ~~reasons,~~shortfalls ~~you~~as ~~should~~a ~~be aware that it is possible that the integration process following the merger could~~ result ~~in the distraction~~ of ~~Dominion Energy’s management,~~ the ~~disruption~~diversion of ~~Dominion Energy~~management’s ~~ongoing~~attention ~~business~~caused orby ~~inconsistencies~~integrating ~~in its services, standards, controls, procedures and policies, any of which could adversely affect~~ the ~~ability~~Company's of Dominion Energy to maintain or establish relationships with current and prospective customers, vendors and employees or could otherwise adversely affect the business and financial results of Dominion Energybusinesses.

Dominion Energy, the Company and Consolidated SCE&G may be adversely affected by negative publicity related to the merger and in connection with other related matters, including the abandonment of the Nuclear Project.6

~~From~~For ~~time~~these ~~to time~~reasons, ~~political~~it ~~and~~is ~~public~~possible ~~sentiment~~that ~~in connection with~~ the ~~merger~~integration ~~and~~process incould ~~connection with other matters, including the abandonment of the Nuclear Project, may~~ result in athe ~~significant~~distraction ~~amount~~ of ~~adverse press coverage and other adverse public statements affecting Dominion Energy and~~ the Company's and Consolidated SCE&G.'s ~~Adverse~~management, ~~press~~the ~~coverage~~disruption ~~and~~of ~~other~~each ~~adverse~~of ~~statements,~~their ~~whether~~ongoing orbusinesses ~~not driven by political~~ or ~~public~~inconsistencies ~~sentiment, may also result~~ in ~~investigations~~their byservices, ~~regulators~~standards, ~~legislators~~controls, procedures and ~~law~~policies, ~~enforcement~~any ~~officials~~of orwhich incould ~~legal~~adversely ~~claims.~~affect ~~Responding to these investigations and lawsuits, regardless of~~ the ~~ultimate~~ability ~~outcome~~ of the ~~proceedings,~~Company asor ~~well~~Consolidated asSCE&G ~~responding~~ to ~~and~~maintain ~~addressing~~or ~~adverse~~establish ~~press~~relationships ~~coverage~~with current and ~~other~~prospective ~~adverse public statements~~customers, ~~can~~vendors ~~divert the time~~ and ~~effort~~employees ofor ~~senior~~could ~~management~~otherwise ~~from~~adversely ~~the~~affect ~~management~~their ofbusinesses ~~Dominion Energy’s, the Company’s~~ and ~~Consolidated~~financial ~~SCE&G’s respective businesses~~results.

~~Addressing~~The ~~any~~Company ~~adverse~~and ~~publicity,~~Consolidated ~~governmental~~SCE&G ~~scrutiny~~are orsubject ~~enforcement~~to orthe ~~other~~reputational ~~legal~~risks ~~proceedings~~that ismay ~~time~~result ~~consuming~~from ~~and~~a ~~expensive~~failure ~~and,~~to ~~regardless~~adhere ofto ~~the~~high ~~factual~~standards ~~basis~~related ~~for~~to ~~the~~compliance ~~assertions~~with ~~being~~laws ~~made~~and regulations, ~~can~~ethical ~~have~~conduct, aoperational ~~negative impact on the reputation of Dominion Energy~~effectiveness, ~~the~~customer ~~Company~~service and ~~Consolidated SCE&G, on~~ the ~~morale~~safety ~~and performance~~ of ~~their~~ employees ~~and on their relationships with their respective regulators~~, customers and ~~commercial~~the ~~counterparties~~public. ItIn ~~may~~addition, ~~also~~the ~~have~~Company aand ~~negative~~Consolidated ~~impact~~SCE&G onhave ~~their~~been ~~ability to take timely advantage of various business~~ and ~~market~~may ~~opportunities.~~continue ~~The~~to ~~direct~~be ~~and~~adversely ~~indirect~~affected ~~effects~~by of negative publicity, ~~and~~related ~~the demands of responding~~ to ~~and addressing it, may have an adverse effect on Dominion Energy’s,~~ the ~~Company’s~~abandonment ~~and Consolidated SCE&G’s respective business, financial condition, results~~ of ~~operations~~the ~~and~~Nuclear ~~prospects~~Project.

~~Pending~~The ~~litigation~~Company ~~against~~and ~~SCANA~~Consolidated ~~and~~SCE&G ~~Dominion~~are ~~Energy~~committed ~~could~~to ~~result~~operational inexcellence, to quality customer service, and, through an ~~injunction~~ethics ~~preventing~~and ~~the~~compliance ~~completion~~program, to maintain high standards of ~~the~~ethical ~~merger~~conduct in our business operations. A failure to meet these commitments, or a perceived failure to meet these commitments, may subject the Company and Consolidated SCE&G not only to fraud, regulatory action, litigation or financial loss, but also to reputational risk that could adversely affect the ~~combined~~Company’s ~~company~~and Consolidated SCE&G’s ~~business~~access to capital, ~~financial~~and ~~condition~~result in further regulatory oversight. In addition, traditional news media and social media can very rapidly convey information, whether factual or ~~results~~not, to large numbers of ~~operations~~people, ~~following~~including customers, investors, regulators, legislators and other stakeholders, and the ~~merger~~failure to effectively manage timely, accurate communication through these channels could adversely impact our reputation.

~~Following~~Political and public sentiment in connection with the ~~announcement~~abandonment of the ~~merger,~~Nuclear ~~three~~Project ~~lawsuits~~has ~~were~~resulted ~~filed~~in ~~asserting~~and ~~claims~~may ~~relating~~continue to result in a significant amount of adverse press coverage and other adverse public statements affecting the ~~merger~~Company and Consolidated SCE&G. ~~First,~~ anAdverse ~~existing~~press ~~derivative~~coverage ~~lawsuit~~and ~~was~~other ~~amended~~adverse tostatements, ~~assert~~whether ~~direct~~or ~~claims~~not ofdriven aby ~~putative~~political ~~class~~or ofpublic ~~SCANA~~sentiment, ~~shareholders~~may inalso ~~the~~result ~~Court~~in ofinvestigations ~~Common~~by ~~Pleas~~regulators, oflegislators ~~the~~and ~~County~~law ofenforcement ~~Richland,~~officials ~~South~~or ~~Carolina~~in ~~against~~legal ~~the~~claims ~~members~~in ofaddition ~~the~~to ~~SCANA~~those ~~board~~which ofhave ~~directors,~~already ~~Dominion~~occurred ~~Energy~~or ~~and~~are ~~Sedona~~currently ~~Corp~~pending., ~~alleging~~Responding ~~breaches~~to ofthese ~~various~~investigations ~~fiduciary~~and ~~duties~~lawsuits, byregardless of the ~~members~~ultimate outcome of the ~~SCANA~~proceedings, ~~board~~as ofwell ~~directors~~as inresponding ~~connection~~to ~~with~~and ~~the~~addressing ~~merger~~adverse press coverage and ~~alleging~~other ~~that~~adverse ~~Dominion~~public ~~Energy~~statements, can divert the time and ~~Sedona~~effort ~~Corp.~~of ~~aided~~senior management from the management of the Company’s and ~~abetted~~Consolidated ~~such~~SCE&G’s ~~alleged~~respective ~~breaches~~businesses.

13Addressing any adverse publicity, governmental scrutiny or enforcement or other legal proceedings is time consuming and expensive and, regardless of the factual basis for the assertions being made, can have a negative impact on the reputation of the Company and Consolidated SCE&G, on the morale and performance of their employees and on their relationships with their respective regulators, customers and commercial counterparties. It may also have a negative impact on their ability to take timely advantage of various business and market opportunities. The direct and indirect effects of negative publicity, and the demands of responding to and addressing it, may have an adverse effect on the Company’s and Consolidated SCE&G’s respective businesses, financial condition, results of operations and prospects.

~~Second,~~The ~~two~~rates ~~putative~~that ~~class actions on behalf of SCANA shareholders have been filed in~~ the ~~Court~~Company ~~of Common Pleas of the Counties of Lexington~~ and ~~Richland,~~Consolidated ~~South~~SCE&G ~~Carolina,~~can ~~respectively,~~charge ~~against~~customers ~~SCANA,~~are ~~the~~subject members of the SCANA board of directors, Dominion Energy and Sedona Corp., alleging breaches of various fiduciary duties by the members of the SCANA board of directors in connection with the merger and alleging that SCANA, Dominion Energy and Sedona Corp. aided and abetted such alleged breaches. Among other remedies, the plaintiffs in each case seek to ~~enjoin~~regulatory ~~the merger and rescind the Merger Agreement~~review. ~~In addition, the second and third lawsuits seek in the alternative, should the merger be completed, an award of unspecified monetary damages.~~

~~While~~Revenue provided by the ~~defendants~~Company’s ~~believe~~and ~~that~~Consolidated ~~dismissal~~SCE&G’s operations is ~~warranted,~~based ~~the~~primarily ~~outcome~~on ofrates ~~any~~approved ~~such~~by ~~litigation~~state isregulatory ~~inherently uncertain~~agencies. The ~~defense~~profitability ~~or settlement~~ of ~~any~~these ~~lawsuit~~businesses oris ~~claim~~dependent ~~that~~on ~~remains~~their ~~unresolved~~ability, atthrough the ~~time~~rates ~~the~~that ~~merger~~they ~~closes~~are ~~may~~permitted ~~adversely~~to ~~affect~~charge, ~~the~~to ~~combined~~recover ~~company’s~~costs ~~business,~~and ~~financial~~earn ~~condition~~a orreasonable ~~results~~rate of ~~operation.~~return on their capital investment.

~~There~~The ~~is uncertainty as to whether the~~ Company’s ~~and~~retail ~~Consolidated~~gas ~~SCE&G~~base ~~will~~rates befor ~~able~~distribution services to ~~recover~~customers ~~costs~~in ~~expended~~North ~~for~~Carolina ~~the~~are ~~Nuclear~~regulated ~~Project,~~on ~~and~~ a ~~reasonable~~cost-of-service ~~return~~basis onsubject ~~those~~to ~~costs,~~North ~~under~~Carolina statutes and the ~~abandonment~~rules ~~provisions~~and procedures of the ~~BLRA~~NCUC. orConsolidated ~~through~~SCE&G’s ~~other~~retail ~~means.~~electric Asbases ofrates ~~December~~for ~~31,~~services ~~2017,~~to ~~the~~customers ~~Company~~in ~~and~~South ~~Consolidated~~Carolina ~~SCE&G~~are ~~have~~regulated ~~recognized~~on a ~~significant~~cost-of-service/rate-of-return ~~estimated~~basis ~~impairment~~subject ~~loss~~to ~~with~~South ~~respect~~Carolina tostatutes ~~such~~and ~~investment~~the rules and ~~related~~procedures ~~costs~~of the SCSPC. InIf retail electric earnings exceed the ~~event~~returns established by the ~~Company~~SCPSC, ~~and~~retail ~~Consolidated~~electric ~~SCE&G~~rates ~~were~~may tobe ~~determine~~subject ~~that~~to ~~all~~review orand anpossible ~~additional~~reduction ~~portion~~by ofthe ~~their~~SCPSC, ~~remaining~~which ~~unrecovered~~may ~~Nuclear~~decrease ~~Project~~Consolidated ~~costs~~SCE&G’s ~~are~~future toearnings. beIf ~~disallowed~~the NCUC and ~~that~~SCPSC ~~significant~~do ~~additional~~not ~~impairment~~allow ~~losses~~recovery ~~must~~through bebase ~~recognized~~rates, ~~further~~on ~~material~~a ~~adverse~~timely ~~impacts~~basis, onof ~~their~~costs ~~results~~incurred ofin ~~operations~~providing service, ~~cash~~the ~~flows~~Company’s and ~~financial~~Consolidated ~~condition~~SCE&G’s ~~would~~future ~~occur~~earnings could be negatively impacted.

~~During the term of the Interim Assessment Agreement~~Additionally, ~~SCE&G~~governmental ~~and Santee Cooper evaluated the various elements of the Nuclear Project~~officials, ~~including~~stakeholders ~~forecasted costs~~ and ~~completion~~advocacy ~~dates,~~groups ~~while~~may ~~construction~~challenge ~~continued,~~these ~~and~~regulatory ~~SCE&G and Santee Cooper continued to make payments for such work~~reviews. ~~Based~~ onSuch ~~this~~challenges ~~evaluation,~~may ~~and~~lengthen inthe ~~light of Santee Cooper's decision to suspend construction~~time, oncomplexity ~~July 31, 2017, the Company determined to stop construction of Unit 2~~ and ~~Unit 3 and to pursue recovery of~~ costs ~~incurred~~associated ~~in connection~~ with such ~~construction~~regulatory ~~under the abandonment provisions of the BLRA or through other means~~reviews. ~~On July 31, 2017, SCE&G gave WEC a five-day notice of termination of the Interim Assessment Agreement, and notified WEC of its determination to stop construction of Unit 2 and Unit 3.~~

OnThe ~~August~~Company 1,and ~~2017,~~ SCE&G ~~senior~~are ~~management~~subject ~~provided an allowable ex parte briefing~~ to ~~the~~numerous ~~SCPSC~~legal ~~regarding~~proceedings ~~the Nuclear Project~~ and ~~this~~ongoing ~~decision,~~governmental ~~and~~investigations ~~SCE&G also filed a petition with the SCPSC which included its plan of abandonment~~ and certain proposed actions which would mitigate related customer rate increases, including a proposal to return to customers the net value of the proceeds received by SCE&G under or arising from the Toshiba Settlementexaminations.

The BLRA provides that, in the event of abandonment prior to plant completion, costs incurred, including AFC, and a return on those costs may be recoverable through rates, if the SCPSC determines that the decision to abandon the Nuclear Project was prudent. Through its August 1, 2017 petition, SCE&G had sought recovery of such costs expended on the construction of the project, including certain costs incurred subsequent to SCE&G's last revised rates update, and a reasonable return on those costs, and certain other costs under the abandonment provisions of the BLRA. Subsequently, SCE&G’s management met with various stakeholders and members of the South Carolina General Assembly, including legislative leaders, to discuss the abandonment of the Nuclear Project and to hear their concerns. In response to those concerns, and to allow for adequate time for governmental officials to conduct their reviews, SCE&G voluntarily withdrew its August 1, 2017 petition from the SCPSC on August 15, 2017.7

InThe ~~August~~Company ~~2017,~~and ~~special~~SCE&G ~~committees~~are ofdefendants ~~the South Carolina General Assembly, both~~ in ~~the~~numerous ~~House~~federal ~~of Representatives~~ and instate ~~the~~legal ~~Senate,~~proceedings ~~began~~and ~~conducting~~governmental ~~public~~investigations ~~hearings~~relating ~~regarding~~to the decision to abandon construction at the Nuclear Project. ~~Members~~Among ofother ~~SCE&G's senior management~~things, ~~along with representatives from Santee Cooper,~~ the ~~ORS~~lawsuits and ~~other~~investigations ~~interested~~allege ~~parties~~misrepresentation, ~~testified~~failure ~~before these committees. Several legislative proposals adverse~~ to ~~the~~properly ~~Company~~manage ~~and Consolidated SCE&G resulted from~~ the ~~work~~Nuclear ~~of these committees and are being considered by the General Assembly in 2018. In January 2018~~Project, ~~these~~unfair ~~committees~~trade ~~reconvened~~practices ~~for~~and ~~the~~violation ~~purpose~~ of ~~considering~~anti-trust ~~the effects of the proposed merger~~laws. OnThe ~~January~~plaintiffs ~~31,~~seek ~~2018, the House of Representatives passed~~ a ~~bill~~judgment ~~(H. 4375)~~ that ~~would~~SCE&G ~~create~~many annot ~~experimental~~charge ~~rate~~its ~~which~~customers would effectively suspend collections from rates previously approved by the SCPSC under the BLRA. This experimental rate would remain in effect during the pendency of administrative proceedings currently before the SCPSC or any appeal therefrom. In addition, the South Carolina Senate passed a joint resolution (S. 954) which, if enacted, would prohibit the SCPSC from holding a hearing on the merits for ~~a docket in which requests were made pursuant to the BLRA (other than an administrative or procedural hearing prior to such hearing on the merits), and would prohibit~~ any ~~final~~past determination on any such requests, before November 1, 2018, and would require the SCPSC to issue a final order for such docket no later than December 21, 2018. Any bill must be approved by both legislative chambers and be signed by, or ~~allowed~~continuing tocosts ~~become~~of ~~law without~~ the ~~signature~~Nuclear ofProject, ~~the~~among ~~Governor~~other ~~before it would be enacted~~remedies. ~~Neither the Company nor Consolidated SCE&G can predict if or when either of these bills could become law, the~~

14Additionally, the Company and SCE&G are defendants in federal and state legal proceedings relating to the SCANA Combination. Among other things, the lawsuits allege improper disclosures and breaches of various fiduciary duties. Remedies sought include rescinding the SCANA Combination.

~~precise~~The ~~impact~~outcome of ~~any~~these ~~change~~legal ~~in the law~~proceedings, orinvestigations ~~what~~and ~~additional~~examinations ~~actions,~~is ifuncertain ~~any,~~and may beadversely ~~proposed~~affect orthe ~~taken,~~Company’s ~~including~~and ~~other~~Consolidated ~~legislative~~SCE&G’s ~~actions~~financial ~~related~~condition toor ~~the~~results ~~BLRA.~~of operation.

~~In September 2017, the Company was served with a subpoena issued by the United States Attorney’s Office for the District of South Carolina seeking documents relating to the Nuclear Project.~~ The ~~subpoena requires the~~ Company ~~to produce a broad range of documents related to the project. Also in September 2017, the state's Office of Attorney General, the Speaker of the House of Representatives,~~ and ~~the~~Consolidated ~~Chair and Vice-Chair of the South Carolina House Utility Ratepayer Protection Committee requested that SLED conduct a criminal investigation into the handling of the Nuclear Project by SCANA and~~ SCE&G. Inhave ~~October~~engaged ~~2017,~~in ~~the~~activities ~~staff of the SEC's Division of Enforcement also issued a subpoena~~ for ~~documents~~which ~~related to an investigation~~ they ~~are~~have ~~conducting~~claimed ~~related~~research toand ~~the~~experimentation ~~Nuclear~~tax ~~Project.~~deductions ~~The~~and ~~Company~~credits and ~~Consolidated~~tax ~~SCE&G~~abandonment ~~intend~~losses, toall ~~fully~~of ~~cooperate~~which ~~with~~are ~~these investigations. No assurance can be given as to~~ the ~~timing~~subject ~~or outcome~~ of ~~these matters~~uncertainty.

OnThe ~~September~~Company ~~26,~~and ~~2017,~~Consolidated the South Carolina Office of Attorney General issued an opinion stating, among other things, that "as applied, portions of the BLRA are constitutionally suspect," including the abandonment provisions. Also on September 26, 2017, the ORS filed the Request with the SCPSC asking for an order directing SCE&G tohave ~~immediately~~claimed ~~suspend~~significant ~~all~~research ~~revised~~and ~~rates~~experimentation ~~collections~~tax ~~from~~deductions ~~customers~~and ~~which~~credits ~~were~~related ~~previously~~to ~~approved by~~ the ~~SCPSC~~design ~~pursuant~~and toconstruction ~~the~~activities ~~authority~~ of ~~the~~Unit ~~BLRA.~~2 Inand ~~the~~Unit ~~Request,~~3. ~~the~~A ~~ORS~~significant ~~relied~~portion ~~upon~~of ~~the~~these ~~opinion~~claims ~~from~~followed the ~~Office~~issuance of ~~Attorney~~final ~~General~~IRS toregulations ~~assert that it is not just and reasonable or~~ in ~~the~~2014 ~~public~~regarding ~~interest~~such totreatment ~~allow~~with ~~SCE&G~~respect to ~~continue~~expenditures ~~collecting~~related ~~revised rates. Further, the ORS noted the existence of an allegation that SCE&G failed~~ to ~~disclose information to~~ the ~~ORS~~design ~~that should have been disclosed~~ and ~~that~~construction ~~would~~of ~~have~~pilot ~~appeared~~models. The toCompany ~~provide a basis for challenging prior requests,~~ and ~~asserted~~Consolidated ~~that~~ SCE&G ~~should~~have ~~not be allowed to continue to benefit from nondisclosure. The ORS~~ also ~~asked~~claimed ~~for~~a ansignificant ~~order~~tax ~~that,~~deduction ifrelated ~~the BLRA is found~~ to ~~be unconstitutional or~~ the ~~General~~decision ~~Assembly amends or revokes the BLRA, then SCE&G should make credits~~ to ~~future~~stop ~~bills~~construction orand ~~refunds~~ to ~~customers~~abandon ~~for prior revised rates collections. SCE&G estimates that revised rates collections currently total approximately $445 million annually, and~~ the ~~amounts~~Nuclear ~~accumulated~~Project asin ~~of December 31,~~ 2017 ~~total approximately $1~~.~~9 billion.~~

OnThese ~~September~~tax ~~27,~~claims ~~2017,~~primarily ~~the~~involve ~~scheduled payments under~~ the ~~Toshiba~~timing ~~Settlement,~~of ~~exclusive~~recognition of ~~the~~tax ~~payment~~deductions ~~due~~rather inthan ~~October~~permanent ~~2017~~tax attributes, ~~were~~and ~~purchased~~their bypermanent ~~Citibank~~attributes ~~for a one-time upfront payment of $1.847 billion~~ (~~approximately $1.016 billion for SCE&G's 55% share~~net), ~~including~~as ~~amounts~~well ~~related to certain liens that SCE&G was contesting but for which SCE&G may ultimately have been liable. The initial payment was then received from Toshiba on October 2, 2017,~~ as ~~scheduled,~~most ~~in the amount~~ of ~~$150 million ($82.5 million for SCE&G's 55% share). A regulatory liability has been recorded on~~ the ~~consolidated~~interest ~~balance~~accruals ~~sheets~~required to ~~reflect the amount related to the Toshiba Settlement that will~~ be ~~utilized~~recorded towith ~~benefit~~respect ~~SCE&G's customers in a manner~~ to ~~be determined by the SCPSC. While this determination is pending~~them, ~~SCE&G has utilized portions of the proceeds to repay maturing commercial paper balances, which short-term borrowings~~ had been ~~incurred~~deferred ~~primarily~~within ~~for~~regulatory ~~the~~assets. ~~construction~~As ofsuch, ~~Unit~~until 2December ~~and Unit 3 prior to the decision to stop their construction. On October 17~~31, 2017, ~~the~~when ~~ORS~~these ~~filed~~deferrals awere ~~motion~~considered ~~with the SCPSC~~ to ~~amend~~be ~~its earlier Request~~impaired, inthese ~~which~~claims ~~the~~had ~~ORS~~not ~~asked~~had, ~~the SCPSC to consider the most prudent manner by which SCE&G will enable its customers to realize the value of the monetized Toshiba Settlement payments~~ and ~~other~~were ~~payments~~not ~~made~~expected ~~by Toshiba towards satisfaction of its obligations~~ to ~~SCE&G.~~have Itin ~~is possible that~~ the ~~outcome of regulatory or legal proceedings could result in requiring SCE&G's share of these proceeds to be placed in escrow pending their final disposition~~future, orsignificant ~~could~~direct ~~require~~effects ~~these~~on ~~proceeds to be refunded to customers in~~ the ~~near-term~~Company’s orand ~~otherwise~~Consolidated ~~make these funds unavailable to~~ SCE&G.’s Ifresults ~~any~~ of ~~these circumstances were to arise, it is anticipated that SCE&G would reissue commercial paper or draw on its credit facilities to fund such requirement~~operations. ~~However~~ Nonetheless, ~~such~~the ~~sources~~claims ~~may~~contributed ~~not be available. Any such requirement would~~ significantly ~~harm~~to the Company'’s and Consolidated SCE&G'’s ~~results of operations,~~ cash flows ~~and~~by ~~financial~~providing ~~condition.~~a Insignificant ~~addition,~~source ~~the~~of ~~purchase~~capital ~~agreement~~and ~~with~~lessening ~~Citibank~~the ~~provides~~level ~~that~~of ~~SCE&G~~debt and ~~Santee~~equity ~~Cooper~~financing ~~(each~~that ~~according~~the toCompany ~~its~~and ~~pro~~Consolidated ~~rata~~SCE&G ~~share)~~were ~~would~~required ~~indemnify~~to ~~Citibank~~raise ~~for~~in ~~its losses arising from misrepresentations or covenant defaults under~~ the ~~purchase~~financial ~~agreement~~markets.

OnThe ~~September~~claims ~~28,~~made ~~2017,~~to ~~SCE&G~~date ~~filed~~are aunder ~~Motion~~examination toand, ~~Dismiss~~even ~~the~~though ~~Request and~~ a ~~Request~~favorable ~~for~~PLR ~~Briefing~~regarding ~~Schedule~~the ~~and~~2017 ~~Hearing~~abandonment onloss ~~Motion~~related to ~~Dismiss.~~the OnNuclear ~~September~~Project ~~28,~~was ~~2017~~obtained, ~~the~~all ~~SCPSC~~such ~~deferred~~claims ~~action~~are onconsidered uncertain. To the ~~Request~~extent ~~and~~that ~~ordered~~any aof ~~hearing~~these ~~officer~~claims toare ~~establish~~not asustained ~~briefing~~as ~~schedule~~ordinary ~~and~~losses ~~hearing date~~ on ~~SCE&G's~~examination ~~motion. Parties who filed to intervene in the matter~~ or ~~who~~through ~~filed~~any asubsequent ~~letter~~appeal, ~~in support of~~ the ~~request~~Company byand ~~the~~Consolidated ~~ORS~~SCE&G ~~include~~will ~~the~~be ~~Governor,~~required ~~the~~to ~~state's~~repay ~~Office~~any ofcash ~~Attorney~~received ~~General~~for ~~and~~tax ~~Speaker~~benefit ofclaims ~~the~~which ~~House~~are ofultimately ~~Representatives~~disallowed, ~~the~~along ~~Electric~~with ~~Cooperatives~~interest ofon ~~South~~those ~~Carolina,~~amounts. Such ~~the~~amounts ~~SCEUC,~~could ~~certain~~be ~~large~~significant ~~industrial customers,~~ and ~~several~~could ~~environmental~~adversely ~~groups.~~affect ~~After~~the ~~conducting~~Company's aand ~~hearing~~Consolidated ~~to consider~~ SCE&G's ~~motion~~liquidity, ~~the~~cash ~~SCPSC~~flows, ~~denied~~results ~~the~~of ~~motion~~operations ~~on December 20, 2017~~ and ~~ordered~~financial ~~that a hearing be scheduled to consider the Request~~condition. In ~~The~~certain ~~hearing~~circumstances, ~~has~~which ~~not~~management ~~yet~~considers ~~been scheduled. SCE&G intends~~ to ~~continue~~be ~~vigorously contesting the Request~~remote, ~~but~~penalties ~~cannot~~for ~~give~~underpayment ~~any assurance as to the timing or outcome~~ of ~~this~~income ~~matter.~~taxes ~~Any adverse action by the SCPSC, such as that sought by the ORS in the Request,~~ could ~~have~~also abe ~~material adverse impact on the Company's and Consolidated SCE&G's results of operations, cash flows and financial condition~~assessed.

InAn ~~the~~inability ~~third quarter of 2017, SCE&G recorded a pre-tax impairment loss of $210 million related~~ to ~~unrecovered~~obtain ~~nuclear~~needed ~~project~~capital ~~costs.~~or Infinancing ~~the~~on ~~fourth~~satisfactory ~~quarter~~terms, ofor ~~2017~~at all, ~~SCE&G~~could ~~recorded~~have an ~~additional~~adverse ~~pre-tax~~effect ~~impairment~~on ~~loss~~our ofoperations ~~$908 million related to such unrecovered costs~~ and ~~other~~ability ~~related costs. See Note 10~~ to ~~the~~generate ~~consolidated~~cash ~~financial statements~~flow. ~~These~~

15The Company and Consolidated SCE&G are dependent on certain financing arrangements with Dominion Energy for any borrowings necessary to meet our working capital and other financial needs. If Dominion Energy’s funding resources were to become unavailable to Dominion Energy, the Company’s and Consolidated SCE&G’s access to funding would also be in jeopardy. In the future, an inability to obtain additional financing from other sources on acceptable terms could negatively affect our financial condition, cash flows, anticipated financial results or impair our ability to generate additional cash flows. The ability to obtain bank financing or to access the capital markets for future debt offerings may be limited by the financial condition of the Company or Consolidated SCE&G at the time of any such financing or offering or other debt agreements in place at the time, adverse market conditions or other contingencies and uncertainties that are beyond our control.

~~impairment losses have had the effect of increasing the Company's and Consolidated~~ SCE&G's ~~debt~~also torelies ~~total~~on ~~capitalization.~~a Ifcredit ~~the~~facility ~~SCPSC~~with ~~were~~banks to ~~rule~~meet inshort-term ~~favor~~funding ofneeds. Banks ~~the~~may ~~ORS~~be inunable ~~response~~or unwilling to ~~the~~extend ~~Request~~credit ~~that~~in ~~SCE&G suspend collections from customers of amounts previously authorized under~~ the ~~BLRA,~~future. orFrom ~~were~~time ~~other actions of the SCPSC or others taken in order~~ to ~~significantly~~time, ~~restrict~~ SCE&G’s ~~access~~may touse ~~revenues~~interest-rate orderivatives ~~impose~~to ~~additional~~fix ~~adverse~~the ~~refund~~rate ~~obligations~~ on ~~SCE&G,~~a ~~the~~portion ~~Company’s~~of ~~and~~its ~~Consolidated~~variable-rate ~~SCE&G's~~debt. ~~assessments~~A ~~regarding~~downgrade ~~the recoverability~~ of ~~all~~credit orratings acould ~~portion~~increase of the ~~remaining~~interest ~~balance~~cost of ~~unrecovered~~debt ~~Nuclear~~and ~~Project~~decrease ~~costs~~future ~~would~~availability beof ~~adversely~~capital ~~impacted.~~from ~~Also,~~banks ~~the~~and ~~recognition~~other ofsources. ~~significant~~While ~~additional~~management ~~impairment~~believes ~~losses~~it ~~with~~is ~~respect~~important to ~~unrecovered~~maintain ~~Nuclear~~investment-grade ~~Project~~credit ~~costs~~ratings ~~could~~to ~~further~~conduct ~~increase the Company~~SCE&G’s ~~and~~businesses, ~~Consolidated~~ SCE&G’s ~~debt to total capitalization to a level which~~ may ~~limit~~not ~~their~~be ~~ability~~able to ~~borrow~~keep ~~under their commercial paper programs or under their credit facilities and also could constitute a default under these credit facilities. Borrowing costs for long~~investment-~~term~~grade ~~debt issuances and access to capital markets could also be negatively impacted~~ratings.

The ability of SCE&G to recover its costs related to the construction and subsequent abandonment of the Nuclear Project, and a reasonable return on them, through rates will be subject to review and approval by the SCPSC. An application under the abandonment provisions of the BLRA, and the regulatory process contemplated thereby, have never been pursued or legally challenged. As a result, and in light of the contentious nature of the ongoing reviews by and related activities of the South Carolina House Utility Ratepayer Protection Committee, the South Carolina Senate's V.C. Summer Nuclear Project Review Committee and others, and given pending legislation, it is uncertain whether SCE&G will be able to successfully recover the costs of the abandoned units, and a reasonable return on them. Under the BLRA, the SCPSC must consider and rule on a petition within six months. Even so, and although expedited action has been requested by SCE&G, it is unclear when the SCPSC will consider the Joint Petition. In any case, anticipated appeals of any ruling by the SCPSC could be protracted. Further, should the regulatory construct in South Carolina change in such a manner that recovery is sought through other legal proceedings or through regulatory proceedings outside the provisions of the BLRA, such as in a general rate case, other uncertainties may arise, such as those highlighted with respect to the Merger Agreement.

Further downgrades in the credit ratings of SCANA or any of SCANA’s subsidiaries, including SCE&G, could negatively affect our ability to access capital and to operate our businesses, thereby adversely affecting results of operations, cash flows and financial condition.

Various rating agencies currently rate SCE&G’s senior secured debt and the senior unsecured debt of PSNC Energy as investment grade. One rating agency currently rates SCANA’s senior unsecured debt as investment grade, and two rating agencies rate SCANA's senior unsecured debt as below investment grade. In addition, rating agencies maintain ratings on the short-term debt of SCANA, SCE&G, Fuel Company (which ratings are based upon the guarantee of SCE&G) and PSNC Energy. Rating agencies consider qualitative and quantitative factors when assessing SCANA and its rated operating companies’ credit ratings, including regulatory environment, capital structure and the ability to meet liquidity requirements.

In the first quarter of 2017, the rating agencies placed SCANA and SCE&G’s credit ratings on negative outlook or watch status due to adverse developments relating to the WEC bankruptcy. In the third quarter of 2017, two agencies lowered their ratings for SCANA and its rated subsidiaries, citing a decline in the regulatory environment as a principal reason for the downgrades, and both agencies maintained their negative outlook or watch status. On January 3, 2018, after SCANA announced a proposed merger with Dominion Energy, each of the three agencies affirmed or reported no change to their respective credit ratings, and one agency revised its rating outlook for SCANA and its rated operating companies from negative to evolving. However, on January 31, 2018, the South Carolina House of Representatives overwhelmingly approved a bill (H. 4375) that, if enacted, would temporarily repeal rates SCE&G collects under the BLRA. As a result, on February 5, 2018, one agency downgraded its ratings for SCANA and SCE&G, and attributed the downgrade to the action taken by the House of Representatives and the politically charged environment that is expected to weigh heavily on any decisions by the SCPSC related to SCE&G's electric rates. All of the ratings for SCANA, SCE&G and PSNC Energy are either under review for possible downgrade or have a negative or evolving outlook.

The Company and Consolidated SCE&G are defendants in numerous legal proceedings and the subject of ongoing governmental investigations, examinations and other inquiries stemming from the decision to abandon the Nuclear Project. The outcome of each of these matters is uncertain, and any resolution adverse to the Company and Consolidated SCE&G could adversely affect results of operations, cash flows and financial condition.

Following the Company’s decision to abandon construction of Unit 2 and Unit 3, putative derivative and class action lawsuits seeking have been filed in multiple state circuit courts and federal district court on behalf of customers, shareholders and SCANA (in the case of the derivative shareholder actions), against SCANA, SCE&G, or both, and in certain cases some of their officers and/or directors. The plaintiffs allege various causes of action, including but not limited to waste, breach of fiduciary duty, negligence, unfair trade practices, unjust enrichment, conspiracy, fraud, constructive fraud, misrepresentation and negligent misrepresentation, promissory estoppel, constructive trust, and money had and received, among other causes of action. Plaintiffs generally seek compensatory, consequential and statutory treble damages and such further relief as the court deems just and proper. In addition, certain plaintiffs seek a declaration that SCE&G may not charge its customers to reimburse itself for past and continuing costs of the Nuclear Project. Certain plaintiffs also seek to freeze or appoint a receiver for certain of SCE&G’s assets, namely all money SCE&G has received under the Toshiba payment guaranty and related settlement agreement for the Nuclear Project.

In addition, purported class action lawsuits have been filed on behalf of investors in federal court against SCANA and certain of its current and former executive officers and directors. The plaintiffs allege, among other things, that defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, and two suits allege violations of the Racketeer Influenced and Corrupt Organizations Act. In one suit, the plaintiff alleges that director defendants violated Section 14(a) of the Exchange Act and SEC Rule 14a-9 by allowing or causing misleading proxy statements to be issued. The plaintiffs in each of these suits seek compensatory and consequential damages and such further relief as the court deems proper.

A complaint has been filed by Fairfield County against SCE&G making allegations of breach of contract, fraud, negligent misrepresentation, breach of fiduciary duty, breach of the implied duty of good faith and fair dealing, and unfair trade practices related to SCE&G’s termination of the FILOT agreement. Plaintiff seeks injunctive relief to prevent SCE&G from terminating the FILOT agreement; actual and consequential damages; treble damages; punitive damages; and attorneys’ fees.

The Company has also been served with subpoenas issued by the United States Attorney’s Office for the District of South Carolina and the staff of the SEC's Division of Enforcement seeking documents relating to the Nuclear Project. In addition, the state's Office of Attorney General, the Speaker of the House of Representatives, and the Chair and Vice-Chair of the South Carolina House Utility Ratepayer Protection Committee have requested that SLED conduct a criminal investigation into the handling of the Nuclear Project by SCANA and SCE&G. The Company and Consolidated SCE&G intend to fully cooperate with any such investigations. Also in connection with the abandonment of the Nuclear Project, various state or local governmental authorities have challenged or may attempt to challenge, reverse or revoke one or more previously-approved tax or economic development incentives, benefits or exemptions, including use tax exemptions, and are attempting to apply such action retroactively.

The Company and Consolidated SCE&G cannot predict the outcome of these matters or other claims, allegations or assessments which may arise, and it is possible that adverse outcomes from some of these matters would not be covered by insurance. A resolution adverse to the Company and Consolidated SCE&G could adversely affect results of operations, cash flows and financial condition.

The Company and Consolidated SCE&G are engaged in activities for which they have claimed, and expect to claim in the future, research and experimentation tax deductions and credits and tax abandonment losses, all of which are the subject of uncertainty and which may be considered controversial by the taxing authorities. The outcome of those uncertainties could adversely impact cash flows, results of operations and financial condition.

The Company and Consolidated SCE&G have claimed significant research and experimentation tax deductions and credits related to the design and construction activities of Unit 2 and Unit 3. A significant portion of these claims followed the issuance of final IRS regulations in 2014 regarding such treatment with respect to expenditures related to the design and construction of pilot models. (See also Note 5 to the consolidated financial statements.) The Company and Consolidated SCE&G also expect to claim a significant tax deduction related to the decision to stop construction and to abandon the Nuclear Project in 2017.

impaired (see Note 10 to the consolidated financial statements), these claims had not had, and were not expected to have in the future, significant direct effects on the Company’s and Consolidated SCE&G’s results of operations. Nonetheless, the claims have contributed significantly to the Company’s and Consolidated SCE&G’s cash flows by providing a significant source of capital and lessening the level of debt and equity financing that the Company and Consolidated SCE&G have needed to raise in the financial markets.

The claims made to date are under examination and are considered controversial by the IRS. Tax deductions which are expected to be claimed in connection with the determination to abandon the construction of Unit 2 and Unit 3 may also be considered controversial; therefore, it is also expected that the IRS will examine future tax returns. To the extent that any of these claims are not sustained as ordinary losses on examination or through any subsequent appeal, the Company and Consolidated SCE&G will be required to repay any cash received for tax benefit claims which are ultimately disallowed, along with interest on those amounts. Such amounts could be significant and could adversely affect the Company's and Consolidated SCE&G's liquidity, cash flows, results of operations and financial condition. In certain circumstances, which management considers to be remote, penalties for underpayment of income taxes could also be assessed. Additionally, in such circumstances, the Company and Consolidated SCE&G may need to access the capital markets to fund those tax and interest payments, which could in turn adversely impact their ability to access capital markets for other purposes.

The Company and Consolidated SCE&G are subject to numerous environmental laws and regulations that require significant capital expenditures, can increase our costs of operations and may impact our business plans or expose us to environmental liabilities.

The Company and Consolidated SCE&G are subject to extensive federal, state and local environmental laws and regulations, including those relating to water quality and air emissions (such as reducing NOX, SO2, mercury and particulate matter). Some form of regulation is expected at the federal and state levels to impose regulatory requirements specifically directed at reducing GHG emissions from fossil fuel-fired electric generating units. On August 3, 2015, the EPA issued a revised standard for new power plants by re-proposing NSPS under the CAA for emissions of CO2 from newly constructed fossil fuel-fired units. No new coal-fired plants could be constructed without partial carbon capture and sequestration capabilities. The Company and Consolidated SCE&G are monitoring the final rule, but do not plan to construct new coal-fired units in the foreseeable future. In addition, on August 3, 2015, the EPA issued its final rule on emission guidelines for states to follow in developing plans to address GHG emissions from existing units. On October 10, 2017, the Administrator of the EPA signed a notice proposing to repeal the rule on the grounds that it exceeds the EPA's statutory authority. The EPA is further considering the scope of any potential replacement rule and plans to formally solicit information on systems of emission reduction that are in accord with the EPA's interpretation of its statutory authority. However, a number of bills have been introduced in Congress that seek to require GHG emissions reductions from fossil fuel-fired electric generation facilities, natural gas facilities and other sectors of the economy, although none has yet been enacted. In April 2012, the EPA issued the finalized MATS for power plants that requires reduced emissions from new and existing coal and oil-fired electric utility steam generating facilities. The EPA's rule for cooling water intake structures to meet the best technology available became effective in October 2014, and the EPA also issued a final rule in December 2014 regarding the handling of coal ash and other combustion by-products produced by power plant operations. Furthermore, the EPA finalized new standards under the CWA governing effluent limitation guidelines for electric generating units in September 2015. The rule setting forth these new standards has been stayed administratively, and the EPA has begun a new rulemaking process that could take until 2020 before revisions to the effluent limitation guidelines for electric generating units is complete. 8

~~Compliance~~The ~~with~~Company ~~these environmental laws~~ and ~~regulations~~Consolidated ~~requires~~SCE&G usare subject to ~~commit~~extensive ~~significant~~federal, ~~resources~~state ~~toward~~and local environmental ~~monitoring,~~laws ~~installation~~and ~~of pollution control equipment~~regulations, ~~emissions~~including ~~fees~~those ~~and~~relating ~~permitting~~to atwater ~~our~~quality ~~facilities.~~and ~~These~~air ~~expenditures~~emissions ~~have~~(such ~~been~~as ~~significant~~reducing inNOX, ~~the~~SO2, ~~past~~mercury and ~~are~~particulate ~~expected~~matter). toSome ~~continue~~form orof ~~even~~regulation ~~increase~~is inexpected at the ~~future.~~federal ~~Changes~~and instate ~~compliance~~levels ~~requirements,~~to ~~additional~~impose ~~regulations~~regulatory ~~and~~requirements ~~related~~specifically ~~costs,~~directed orat ~~more~~reducing ~~restrictive~~GHG ~~interpretations~~emissions byfrom ~~governmental~~fossil ~~authorities~~fuel-fired ofelectric ~~existing~~generating ~~requirements~~units. ~~may~~For ~~impose~~example, ~~additional~~on ~~costs~~August on21, us2018, ~~(such~~the asEPA ~~more~~proposed ~~stringent~~a ~~clean-up~~replacement ofrule ~~contaminated~~to ~~sites~~the orCPP, ~~reduced~~known ~~emission~~as ~~allowances)~~the orACE ~~require~~rule, uswhich towill ~~incur~~establish ~~additional~~guidelines ~~expenditures~~for orstates ~~curtail~~to ~~some~~develop ofplans ~~our~~to ~~cost~~address ~~savings~~GHG ~~activities~~emissions ~~(such~~from asexisting ~~the~~coal-fired ~~recycling~~power ofplants. ~~fly~~However, ~~ash~~a ~~and~~number ~~other~~of ~~coal~~bills ~~combustion~~have ~~products~~been ~~for~~introduced ~~beneficial~~in ~~use).~~Congress ~~Compliance~~that ~~with~~seek ~~any~~to require GHG ~~emission~~emissions ~~reduction~~reductions ~~requirements,~~from ~~including~~fossil ~~any~~fuel-fired ~~mandated~~electric ~~renewable~~generation ~~portfolio standards~~facilities, ~~also~~natural ~~may~~gas ~~impose~~facilities ~~significant~~and ~~costs~~other onsectors ~~us,~~of ~~and~~ the ~~resulting~~economy, ~~price~~although ~~increases~~none tohas ~~our~~yet ~~customers~~been ~~may lower customer consumption~~enacted. ~~Such~~Furthermore, ~~costs~~the ofEPA ~~compliance~~finalized ~~with~~standards ~~environmental~~under ~~regulations~~the ~~could~~CWA ~~negatively~~governing ~~impact~~effluent ~~our~~limitation ~~businesses~~guidelines ~~and~~for ~~our~~electric ~~results~~generating ofunits ~~operations~~in ~~and~~September ~~financial~~2015. ~~position,~~While ~~especially~~the ifrule ~~emissions~~setting orforth ~~discharge~~these ~~limits~~standards ~~are~~has ~~reduced~~been orstayed ~~more~~administratively, ~~onerous~~the ~~permitting~~EPA ~~requirements~~has orbegun ~~additional~~a ~~regulatory~~new ~~requirements~~rulemaking ~~are~~process ~~imposed.~~that ~~Additionally,~~could ~~there~~take ~~can~~until be2020 nobefore ~~assurance~~revisions ~~that~~to athe ~~federal~~effluent ~~tax~~limitation orguidelines ~~fee~~ for ~~carbon~~electric ~~emitting~~ generating ~~facilities~~units ~~will~~is ~~not be imposed~~complete.

~~Renewable~~Compliance with environmental laws and~~/or~~ ~~alternative~~regulations ~~electric~~requires ~~generation~~us ~~portfolio~~to ~~standards~~commit ~~may~~significant beresources ~~enacted~~toward environmental monitoring, installation of pollution control equipment, emissions fees and permitting at our facilities. These expenditures have been significant in the ~~federal~~past and are expected to continue or ~~state~~increase ~~level~~in the future. ~~Such~~Changes ~~renewable~~in ~~energy~~compliance requirements, additional regulations and related costs, or more restrictive interpretations by governmental authorities of existing requirements may ~~not~~impose beadditional ~~readily~~costs ~~available~~on inus (such as more stringent clean-up of contaminated sites or reduced emission allowances) or require us to incur additional expenditures or curtail some of our ~~service~~cost ~~territories~~savings activities (such as the recycling of fly ash and ~~could~~other becoal ~~costly~~combustion toproducts ~~build,~~for ~~finance~~beneficial use). Compliance with any GHG emission reduction requirements, ~~acquire~~including any mandated renewable portfolio standards, ~~integrate~~also may impose significant costs on us, and~~/or~~ ~~operate. Resulting~~the resulting price increases into ~~the~~our ~~price~~customers ofmay ~~electricity~~lower tocustomer ~~recover~~consumption. ~~the~~Such ~~cost~~costs of ~~these~~compliance ~~types~~with ofenvironmental ~~generation,~~regulations could negatively impact our businesses and ~~the~~our ~~costs~~results of operations and financial position, especially if emissions or discharge limits are reduced or more onerous permitting requirements or additional regulatory requirements are imposed. Additionally, there can be no assurance that a federal tax or fee for carbon emitting generating facilities will not be imposed.

18The compliance costs of these environmental laws and regulations are important considerations in the Company's and Consolidated SCE&G's strategic planning and, as a result, significantly affect the decisions to construct, operate, and retire facilities, including generating facilities. In turn, they affect the costs and rates of the Company and Consolidated SCE&G.

~~their~~Commodity ~~integration~~price ~~to the electric system~~changes, ~~could~~delays ~~result~~ in ~~lower~~delivery ~~usage~~ of ~~electricity by our customers. In addition~~commodities, ~~DER~~commodity ~~generation~~availability atand ~~customers’~~other ~~facilities~~factors ~~could~~may ~~result~~affect in the ~~loss~~operating ofcost, ~~sales to those customers. Compliance with potential future portfolio standards could significantly impact our~~ capital expenditures and ~~our~~competitive ~~results~~positions of ~~operations~~the Company’s and ~~financial~~Consolidated ~~condition. Utility scale solar development companies are currently working in South Carolina to develop projects in~~ SCE&G'’s ~~service~~energy ~~territory~~businesses. ~~The integration of those resources at high penetration levels may be challenging.~~

~~The~~Our ~~compliance~~energy ~~costs~~businesses ofare ~~these~~sensitive ~~environmental~~to ~~laws~~changes ~~and~~in ~~regulations~~coal, ~~are~~natural ~~important~~gas, ~~considerations~~uranium inand ~~the~~other ~~Company's~~commodity ~~and~~prices ~~Consolidated~~(as ~~SCE&G's~~well ~~strategic~~as ~~planning~~their ~~and~~transportation costs), asavailability aand ~~result,~~deliverability. ~~significantly~~Any such changes could affect the ~~decisions~~prices tothese ~~construct~~businesses charge, ~~operate~~their operating costs, and ~~retire~~the ~~facilities,~~competitive ~~including~~position ~~generating~~of ~~facilities~~their products and services. In ~~turn~~While Consolidated SCE&G is permitted to recover the prudently incurred cost of purchased power and fuel (including transportation) used in electric generation through retail customers’ bills, ~~they~~such cost increases affect ~~the~~electric ~~costs~~prices and ~~rates~~therefore the competitive position of ~~the~~electricity ~~Company~~against ~~and~~other ~~Consolidated~~energy ~~SCE&G~~sources. In ~~effecting~~addition, ~~compliance~~when ~~with~~natural ~~MATS,~~gas ~~SCE&G~~prices ~~has~~are ~~retired~~low ~~three~~enough relative to coal to result in the dispatch of ~~its~~gas-fired ~~oldest~~electric ~~and~~generation ~~smallest~~ahead of coal-fired ~~units~~electric ~~and~~generation, ~~converted~~higher ~~three~~inventories ~~others~~of ~~such~~coal, ~~that~~with ~~they~~related ~~are~~increased ~~gas-fired~~carrying costs, may result. This may adversely affect our results of operations, cash flows and financial condition.

Commodity price changes, delays in delivery of commodities, commodity availability and other factors may affect the operating cost, capital expenditures and competitive positions of the Company’s and Consolidated SCE&G’s energy businesses, thereby adversely impacting results of operations, cash flows and financial condition.

Our energy businesses are sensitive to changes in coal, natural gas, uranium and other commodity prices (as well as their transportation costs), availability and deliverability. Any such changes could affect the prices these businesses charge, their operating costs, and the competitive position of their products and services. In addition, the abandonment of the Nuclear Project may heighten the Company's and Consolidated SCE&G's future exposure to volatility in prices of non-nuclear commodities such as natural gas. Consolidated SCE&G is permitted to recover the prudently incurred cost of purchased power and fuel (including transportation) used in electric generation through retail customers’ bills, but purchased power and fuel cost increases affect electric prices and therefore the competitive position of electricity against other energy sources. In addition, when natural gas prices are low enough relative to coal to result in the dispatch of gas-fired electric generation ahead of coal-fired electric generation, higher inventories of coal, with related increased carrying costs, may result. This may adversely affect our results of operations, cash flows and financial condition.

In the case of regulated natural gas operations, costs prudently incurred for purchased gas and pipeline capacity may be recovered through retail customers’ bills. However, in both our regulated and deregulated natural gas markets, increases in gas costs affect total retail prices and therefore the competitive position of gas relative to electricity and other forms of energy. Accordingly, customers able to do so may switch to alternate forms of energy and reduce their usage of gas from the Company and Consolidated SCE&G. Customers on a volumetric rate structure unable to switch to alternate fuels or suppliers may reduce their usage of gas from the Company and Consolidated SCE&G. A regulatory mechanism applies to residential and commercial customers at PSNC Energy to mitigate the earnings impact of an increase or decrease in gas usage.

Certain construction-related commodities, such as copper and aluminum used in our transmission and distribution lines and in our electrical equipment, and steel, concrete and rare earth elements, have experienced significant price fluctuations due to changes in worldwide demand. To operate our air emissions control equipment, we use significant quantities of ammonia, limestone and lime. With EPA-mandated industry-wide compliance requirements for air emissions controls, increased demand for these reagents, combined with the increased demand for low sulfur coal, may result in higher costs for coal and reagents used for compliance purposes.

Changing and complex laws and regulations to which the Company and Consolidated SCE&G are subject could adversely affect revenues, increase costs, or curtail activities, thereby adversely impacting results of operations, cash flows and financial condition.9

~~The~~Changing ~~Company~~ and ~~Consolidated~~complex ~~SCE&G~~laws ~~operate under the regulatory authority of the United States government~~ and ~~its~~regulations ~~various~~to ~~regulatory~~which ~~agencies, including~~ the ~~FERC, NRC, SEC, IRS, EPA, the Department of Homeland Security, CFTC and PHMSA. In addition, the~~ Company and Consolidated SCE&G are subject tocould ~~regulation~~adversely byaffect ~~the state governments of South Carolina~~revenues, ~~North~~increase ~~Carolina and Georgia via regulatory agencies~~costs, state environmental agencies, and state employment commissions. Accordingly, the Company and Consolidated SCE&G must comply with extensive federal, state and local laws and regulations. Such governmental oversight and regulation broadly and materially affect the operation of our businesses. In addition to many other aspects of our businesses, these requirements impact the services mandated or ~~offered~~curtail ~~to our customers, and the licensing, siting, construction and operation of facilities~~activities. They affect our management of safety, the reliability of our electric and natural gas systems, the physical and cyber security of key assets, customer conservation through DSM Programs, information security, the issuance of securities and borrowing of money, financial reporting, interactions among affiliates, the pricing of utility services, the payment of dividends and employment programs and practices. Changes to governmental regulations are continual and potentially costly to effect compliance. Non-compliance with these requirements by third parties, such as our contractors, vendors and agents, may subject the Company and Consolidated SCE&G to operational risks and to

19The Company and Consolidated SCE&G operate under the regulatory authority of the United States government and its various regulatory agencies, including the FERC, NRC, SEC, IRS, EPA, the Department of Homeland Security, CFTC and PHMSA. In addition, the Company and Consolidated SCE&G are subject to regulation by the state governments of South Carolina, North Carolina and Georgia via regulatory agencies, state environmental agencies, and state employment commissions. Accordingly, the Company and Consolidated SCE&G must comply with extensive federal, state and local laws and regulations. Such governmental oversight and regulation broadly and materially affect the operation of our businesses. In addition to many other aspects of our businesses, these requirements impact the services mandated or offered to our customers, and the licensing, siting, construction and operation of facilities. They affect our management of safety, the reliability of our electric and natural gas systems, the physical and cyber security of key assets, customer conservation through DSM Programs, information security, the issuance of securities and borrowing of money, financial reporting, interactions among affiliates, the pricing of utility services, the payment of dividends and employment programs and practices. Changes to governmental regulations are continual and potentially costly to effect compliance. Non-compliance with these requirements by third parties, such as our contractors, vendors and agents, may subject the Company and Consolidated SCE&G to operational risks and to liability. We cannot predict the future course of changes in this regulatory environment or the ultimate effect that this changing regulatory environment will have on the Company’s or Consolidated SCE&G’s businesses. Non-compliance with these laws and regulations could result in fines, litigation, loss of licenses or permits, mandated capital expenditures and other adverse business outcomes, as well as reputational damage, which could adversely affect the cash flows, results of operations, and financial condition of the Company and Consolidated SCE&G.

~~liability. We~~Furthermore, ~~cannot~~changes ~~predict~~in ~~the~~or ~~future~~uncertainty ~~course~~in ofmonetary, ~~changes~~fiscal, intax, ~~this~~economic, trade, or regulatory ~~environment~~policies orof the ~~ultimate~~federal ~~effect~~government ~~that~~may ~~this~~adversely ~~changing~~affect ~~regulatory~~the ~~environment~~debt ~~will~~and ~~have~~equity onmarkets and the ~~Company’s~~economic climate for the nation, region or particular industries, such as ours or those of our customers. The Company and Consolidated SCE&G’s ~~businesses. Non-compliance~~also ~~with~~could ~~these~~be ~~laws~~adversely ~~and~~impacted ~~regulations~~by ~~could~~changes ~~result~~ in ~~fines,~~tax ~~litigation~~policy, ~~loss~~or oftaxes ~~licenses~~related orto ~~permits,~~the ~~mandated~~usage ~~capital~~of ~~expenditures~~certain ~~and~~fuel ~~other~~types ~~adverse~~in ~~business~~our ~~outcomes,~~businesses asor ~~well~~our asownership ~~reputational~~and/or ~~damage,~~operation ~~which~~of ~~could~~certain ~~adversely~~types ~~affect~~of ~~the~~generating ~~cash~~facilities. ~~flows~~Future, ~~results~~unknown regulation of hydraulic fracturing activities also could impact the operations, and ~~financial~~finances ~~condition~~ of the Company and Consolidated SCE&G.

~~Furthermore,~~SCE&G’s ~~changes~~electric operations in orSouth ~~uncertainty~~Carolina and the Company’s gas distribution operations in ~~monetary,~~South ~~fiscal,~~Carolina ~~tax,~~and ~~economic,~~North ~~trade,~~Carolina orare ~~regulatory~~regulated ~~policies~~by ofstate ~~the~~utilities ~~Federal~~commissions. ~~government~~Consolidated ~~may~~SCE&G’s ~~adversely~~generating ~~affect~~facilities ~~the~~are ~~debt~~subject ~~and~~to ~~equity~~extensive ~~markets~~regulation and oversight from the ~~economic~~NRC ~~climate~~and ~~for~~SCPSC. ~~the~~SCE&G's ~~nation,~~electric ~~region~~transmission orsystem ~~particular~~is ~~industries,~~subject ~~such~~to asextensive ~~ours~~regulations orand ~~those~~oversight offrom ~~our~~the ~~customers~~SCPSC, NERC and FERC. ~~The~~ ~~Company~~Implementing and ~~Consolidated~~maintaining ~~SCE&G~~compliance ~~also~~with ~~could~~the beNERC's ~~adversely~~mandatory ~~impacted~~reliability standards, enforced by ~~changes~~FERC, for bulk electric systems could result in ~~tax~~higher ~~policy,~~operating orcosts ~~taxes~~and ~~related~~capital expenditures. Non-compliance with these standards could subject SCE&G to ~~the~~substantial ~~usage~~monetary ofpenalties. Our ~~certain~~gas ~~fuel~~marketing ~~types~~operations in ~~our~~Georgia ~~businesses~~are orsubject ~~our~~to ~~ownership~~state ~~and/or~~regulatory ~~operation~~oversight ofand, ~~certain~~for ~~types~~a portion of ~~generating~~its ~~facilities. Future~~operations, ~~unknown~~to rate regulation. ofThere ~~hydraulic~~can ~~fracturing~~be ~~activities~~no ~~also~~assurance ~~could~~that ~~impact~~Georgia’s ~~the~~gas ~~operations~~delivery ~~and~~regulatory ~~finances~~framework ofwill ~~the~~remain ~~Company~~unchanged ~~and~~as ~~Consolidated~~market ~~SCE&G~~conditions evolve.

~~The~~Furthermore, ~~Company~~Dodd-Frank ~~and~~affects ~~Consolidated~~the ~~SCE&G~~use ~~are~~and ~~subject~~reporting toof ~~extensive~~derivative ~~rate~~instruments. ~~regulation~~The ~~which~~regulations ~~could~~under ~~adversely~~this ~~affect~~legislation ~~operations.~~provide ~~Large~~for ~~capital~~substantial ~~projects~~additional ~~(including~~regulation of over-the-counter ~~abandonment~~and ofsecurity-based ~~Unit~~derivative 2instruments, among other things, and ~~Unit~~require 3numerous asrule-makings ~~previously~~by ~~described),~~the ~~results~~CFTC ofand ~~DSM~~the ~~Programs~~SEC to implement, ~~results~~many of ~~DER~~which ~~programs,~~are ~~and/or~~still ~~increases~~pending infinal ~~operating~~action ~~costs~~by ~~may~~those ~~lead~~federal toagencies. The ~~requests~~Company ~~for~~and ~~regulatory~~Consolidated ~~relief~~SCE&G ~~and~~have ~~any~~determined ~~related~~that ~~administrative~~they ormeet ~~legislative~~the ~~action,~~end-user ~~decision,~~exception ~~regulation~~to ormandatory ~~law~~clearing ~~affecting~~of ~~rates,~~swaps ~~such~~under asDodd-Frank. ~~rate~~In ~~increases~~addition, ~~which~~the ~~may~~Company beand ~~denied,~~Consolidated inSCE&G ~~whole~~have ortaken ~~part,~~steps byto ~~rate~~ensure ~~regulators. Rate~~that ~~increases~~they ~~may~~are ~~also~~not ~~result~~the inparty ~~reductions~~required to report these transactions in ~~customer~~real-time ~~usage~~(the of"reporting ~~electricity~~party") orby ~~gas,~~transacting ~~legislative~~solely ~~action~~with swap dealers and ~~lawsuits.~~major ~~Additionally~~swap participants, inwhen ~~2017~~possible, ~~several~~as ~~legislative~~well ~~proposals~~as ~~were~~entering ~~introduced~~into ~~that~~reporting ~~are~~party ~~being~~agreements orwith ~~are~~counterparties ~~expected~~who toalso beare ~~considered~~not byswap ~~the~~dealers ~~South~~or ~~Carolina~~major ~~General~~swap ~~Assembly~~participants, inwhich ~~2018. In~~establishes ~~the~~that ~~event~~those ~~certain~~counterparties ~~provisions~~are ofobligated ~~these~~to ~~legislative~~report ~~proposals~~the ~~were~~transactions toin ~~become~~accordance ~~law~~with asapplicable ~~proposed,~~Dodd-Frank ~~such~~regulations. ~~provisions~~While ~~could~~these ~~adversely~~actions ~~impact~~minimize ~~SCE&G’s~~the ~~rate~~reporting ~~recovery~~obligations ~~with~~of ~~respect~~the toCompany ~~the~~and ~~Nuclear~~Consolidated ~~Project. Furthermore~~SCE&G, ~~there~~they ~~can~~do benot noeliminate ~~assurance~~required ~~that~~recordkeeping ~~other~~for ~~legislation~~any ~~which~~Dodd-Frank ~~might~~regulated ~~modify~~transactions. orDespite ~~repeal~~qualifying for the ~~BLRA~~end-user inexception ato ~~manner~~mandatory ~~which~~clearing ~~would~~and ~~adversely~~ensuring ~~impact~~that ~~SCE&G’s~~neither ~~rate~~the ~~recovery,~~Company ~~including~~nor ~~its~~Consolidated ~~reasonable~~SCE&G ~~return~~is onthe ~~costs,~~reporting ~~with~~party ~~respect~~ to ~~its~~a ~~abandonment~~transaction ofrequired ~~Unit~~to 2be ~~and~~reported ~~Unit~~in 3real-time, ~~will~~we ~~not~~cannot bepredict ~~proposed~~when ~~and~~the ~~passed.~~final ~~Any~~regulations ~~such~~will ~~action~~be ~~could~~issued ~~also~~or ~~result~~what inrequirements athey ~~failure~~will ~~to consummate the merger~~impose.

~~SCE&G’s~~Hostile ~~electric~~cyber ~~operations~~intrusions incould ~~South~~severely ~~Carolina~~impair ~~and~~ the Company’s ~~gas distribution operations in South Carolina~~ and ~~North~~Consolidated ~~Carolina are regulated by state utilities commissions. In addition, the ability of~~ SCE&G’s tooperations, ~~recover~~lead to the ~~cost~~disclosure of ~~the~~confidential ~~Nuclear Project~~information, ~~including~~damage ~~abandonment costs, and a reasonable return on those costs, is subject to rate regulation by~~ the ~~SCPSC.~~reputation ~~Consolidated~~of ~~SCE&G’s generating facilities are subject to extensive regulation and oversight from~~ the ~~NRC~~Company and ~~SCPSC.~~Consolidated SCE&G's ~~electric transmission system is subject to extensive regulations~~ and ~~oversight~~otherwise ~~from~~have ~~the~~an ~~SCPSC,~~adverse ~~NERC~~effect ~~and~~on ~~FERC. Implementing and maintaining compliance with~~ the ~~NERC'~~Company’s ~~mandatory reliability standards, enforced by FERC, for bulk electric systems could result in higher operating costs~~ and ~~capital~~Consolidated ~~expenditures. Non-compliance with these standards could subject~~ SCE&G to substantial monetary penalties. Our gas marketing operations in Georgia are subject to state regulatory oversight and, for a portion of its operations, to rate regulation. There can be no assurance that Georgia’s ~~gas delivery regulatory framework will remain unchanged as market conditions evolve~~business.

~~Furthermore, Dodd-Frank affects the use and reporting of derivative instruments.~~ The regulations under this legislation provide for substantial additional regulation of over-the-counter and security-based derivative instruments, among other things, and require numerous rule-makings by the CFTC and the SEC to implement, many of which are still pending final action by those federal agencies. The Company and Consolidated SCE&G ~~have~~own ~~determined~~assets ~~that~~deemed ~~they~~as ~~meet~~critical ~~the end-user exception to mandatory clearing of swaps under Dodd-Frank. In addition~~infrastructure, the ~~Company~~operation ~~and~~of Consolidated SCE&G have taken steps to ensure that they are not the party required to report these transactions in real-time (the "reporting party") by transacting solely with swap dealers and major swap participants, when possible, as well as entering into reporting party agreements with counterparties who also are not swap dealers or major swap participants, which ~~establishes~~is ~~that~~dependent ~~those~~on ~~counterparties~~information ~~are~~technology ~~obligated to report the transactions in accordance with applicable Dodd-Frank regulations~~systems. ~~While these actions minimize the reporting obligations of the Company~~Further, ~~they do not eliminate required recordkeeping for any Dodd-Frank regulated transactions. Despite qualifying for~~ the ~~end-user~~computer ~~exception~~systems ~~to mandatory clearing and ensuring~~ that ~~neither~~run the Company’s ~~nor~~and Consolidated ~~SCE&G is the reporting party to a transaction required to be reported in real-time, we cannot predict when the final regulations will be issued or what requirements they will impose.~~

Our ability to charge customer rates that will allow us to maintain reasonable rates of return is dependent upon regulatory determinations, and there can be no assurance that we will be able to implement rate adjustments when sought.10

~~The Company and Consolidated~~ SCE&G’s facilities are ~~subject~~not completely isolated from external networks. There appears to ~~the~~be ~~reputational~~an ~~risks~~increasing ~~that~~level ~~may~~of ~~result~~activity, ~~from~~sophistication aand ~~failure~~maturity toof ~~adhere~~threat toactors, ~~high~~in ~~standards~~particular ~~related~~nation state actors, that wish to ~~compliance~~disrupt ~~with~~the ~~laws~~U.S. bulk power system and ~~regulations,~~the ~~ethical~~U.S. ~~conduct,~~gas ~~operational~~transmission ~~effectiveness,~~or ~~customer~~distribution ~~service~~system. ~~and~~Such parties could view the ~~safety~~Company’s ofand ~~employees~~Consolidated SCE&G’s computer systems, ~~customers~~software ~~and~~or ~~the~~networks ~~public~~as attractive targets for cyber attack. ~~These~~For ~~risks~~example, ~~could~~malware ~~adversely~~has ~~affect~~been designed to target software that runs the ~~valuation~~nation’s ofcritical ~~our~~infrastructure ~~common~~such ~~stock~~as power transmission grids and gas pipelines. In addition, the Company’s and Consolidated SCE&G’s ~~access~~businesses require that they and their vendors collect and maintain sensitive customer data, as well as confidential employee and shareholder information, which is subject to ~~capital~~electronic theft or loss.

20A successful cyber attack on the systems that control the Company’s and Consolidated SCE&G’s electric generation, electric or gas transmission or distribution assets could severely disrupt business operations, preventing the Company and Consolidated SCE&G from serving customers or collecting revenues. The breach of certain business systems could affect the Company’s and Consolidated SCE&G’s ability to correctly record, process and report financial information. A major cyber incident could result in significant expenses to investigate and repair security breaches or system damage and could lead to litigation, fines, other remedial action, heightened regulatory scrutiny and damage to the Company’s and Consolidated SCE&G’s reputation. In addition, the misappropriation, corruption or loss of personally identifiable information and other confidential data at the Company or Consolidated SCE&G or one of their vendors could lead to significant breach notification expenses and mitigation expenses such as credit monitoring. While the Company and Consolidated SCE&G maintain property and casualty insurance, along with other contractual provisions, that may cover certain damage caused by potential cyber incidents, all damage and claims arising from such incidents may not be covered or may exceed the amount of any insurance available. For these reasons, a significant cyber incident could materially and adversely affect the Company’s and Consolidated SCE&G’s business, financial condition and results of operations.

The Company and Consolidated SCE&G are committed to comply with all laws and regulations, to assure reliability of provided services, to focus on the safety of employees, customers and the public, to ensure environmental compliance, to maintain the physical and cyber security of their operations and assets, to maintain the privacy of information related to our customers and employees, and to maintain effective communications with the public and key stakeholder groups, particularly during emergencies and times of crisis. Traditional news media and social media can very rapidly convey information, whether factual or not, to large numbers of people, including customers, investors, regulators, legislators and other stakeholders, and the failure to effectively manage timely, accurate communication through these channels could adversely impact our reputation. The Company and Consolidated SCE&G also are committed to operational excellence, to quality customer service, and, through our Code of Conduct and Ethics, to maintain high standards of ethical conduct in our business operations. A failure to meet these commitments, or a perceived failure to meet these commitments, may subject the Company and Consolidated SCE&G not only to fraud, regulatory action, litigation or financial loss, but also to reputational risk that could adversely affect the valuation of SCANA’s stock, adversely affect the Company’s and Consolidated SCE&G’s access to capital, and result in further regulatory oversight. Insurance may not be available or adequate to respond to these events.

A failure of the Company and Consolidated SCE&G to maintain the physical and cyber security of its operations may result in the failure of operations, damage to equipment, or loss of information, and could result in a significant adverse impact to the Company's and Consolidated SCE&G's financial condition, results of operations and cash flows.

The Company and Consolidated SCE&G depend on maintaining the physical and cyber security of their operations and assets. As much of our business is part of the nation's critical infrastructure, the loss or impairment of the assets associated with that portion of our businesses could have serious adverse impacts on the customers and communities that we serve. Virtually all of the Company's and Consolidated SCE&G's operations are dependent in some manner upon our cyber systems, which encompass electric and gas operations, nuclear and fossil fuel generating plants, human resource and customer systems and databases, information system networks, and systems containing confidential corporate information. Cyber systems, such as those of the Company and Consolidated SCE&G, are often targets of malicious cyber attacks. A successful physical or cyber attack could lead to outages, failure of operations of all or portions of our businesses, damage to key components and equipment, and exposure of confidential customer, vendor, shareholder, employee, or corporate information. The Company and Consolidated SCE&G may not be readily able to recover from such events. In addition, the failure to secure our operations from such physical and cyber events may cause us reputational damage. Litigation, penalties and claims from a number of parties, including customers, regulators and shareholders, may ensue. Insurance may not be adequate to mitigate the adverse impacts of these events. As a result, the Company's and Consolidated SCE&G's financial condition, results of operations, and cash flows may be adversely affected.

The Company and Consolidated SCE&G are vulnerable to interest rate increases, which would increase our borrowing costs, and we may not have access to capital at favorable rates, if at all. Additionally, potential disruptions in the capital and credit markets may further adversely affect the availability and cost of short-term funds for liquidity requirements and our ability to meet long-term commitments; each could in turn adversely affect our results of operations, cash flows and financial condition.

The Company and Consolidated SCE&G rely on the capital markets, particularly for publicly offered debt and equity, as well as the banking and commercial paper markets, to meet our financial commitments and short-term liquidity needs if internal funds are not available from operations. Changes in interest rates affect the cost of borrowing. The Company’s and Consolidated SCE&G’s business plans, which include significant investments in energy generation and other internal infrastructure projects, reflect the expectation that we will have access to the capital markets on satisfactory terms to fund commitments. Moreover, the ability to maintain short-term liquidity by utilizing commercial paper programs is dependent upon maintaining satisfactory short-term debt ratings and the existence of a market for our commercial paper generally.

The Company’s and Consolidated SCE&G’s ability to draw on our respective bank revolving credit facilities is dependent on the ability of the banks that are parties to the facilities to meet their funding commitments and on our ability to timely renew such facilities. Those banks may not be able to meet their funding commitments to the Company or Consolidated SCE&G if they experience shortages of capital and liquidity or if they experience excessive volumes of borrowing requests from us and other borrowers within a short period of time. Longer-term disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives or failures of significant financial institutions could adversely affect our access to liquidity needed for our businesses. Any disruption could require the Company and Consolidated SCE&G to take measures to conserve cash until the markets stabilize or until alternative credit arrangements or other funding for our business needs can be arranged. Such measures could include deferring capital expenditures or other discretionary uses of cash. Disruptions in capital and credit markets also could result in higher interest rates on debt securities, limited or no access to the commercial paper market, increased costs associated with commercial paper borrowing or limitations on the

maturities of commercial paper that can be sold (if at all), increased costs under bank credit facilities and reduced availability thereof, and increased costs for certain variable interest rate debt securities of the Company and Consolidated SCE&G.

Disruptions in the capital markets and their actual or perceived effects on particular businesses and the greater economy also adversely affect the value of the investments held within SCANA’s pension trust. A significant long-term decline in the value of these investments may require us to make or increase contributions to the trust to meet future funding requirements. In addition, a significant decline in the market value of the investments may adversely impact the Company’s and Consolidated SCE&G’s results of operations, cash flows and financial condition, including its shareholders’ equity.

Operating results may be adversely affected by natural disasters, man-made mishaps and abnormal weather.

The Company has delivered less gas and, in deregulated markets, received lower prices for natural gas when weather conditions have been milder than normal, and as a consequence earned less income from those operations. Mild weather in the future could adversely impact the revenues and results of operations and harm the financial condition of the Company and Consolidated SCE&G. Hot or cold weather could result in higher bills for customers and result in higher write-offs of receivables and in a greater number of disconnections for non-payment. In addition, for the Company and Consolidated SCE&G, severe weather can be destructive, causing outages and property damage, adversely affecting operating expenses and revenues.

Natural disasters (such as hurricanes or other significant weather events, electromagnetic events, ~~the~~earthquakes, ~~2011~~flooding ~~earthquake and tsunami in Japan~~ or fires) or man-made mishaps (such as natural gas transmission pipeline failure, electric utility companies' ash pond failures, and cyber-security failures experienced by many businesses) could have direct significant impacts on the Company and Consolidated SCE&G and on our key contractors and suppliers or could impact us through changes to federal, state or local policies, laws and regulations, and have a significant impact on our financial condition, operating expenses, and cash flows.

The costs of large capital projects, such as the Company’s and Consolidated SCE&G’s construction and environmental compliance programs, are significant, and these projects are subject to a number of risks and uncertainties that may adversely affect the cost, timing and completion of these projects.

The Company’s and Consolidated SCE&G’s businesses are capital intensive and require significant investments in electric generation and in other internal infrastructure projects, including projects for environmental compliance. Achieving the intended benefits of any large construction project is subject to many uncertainties. For instance, the ability to adhere to established budgets and construction schedules may be affected by many variables, such as the regulatory, legal, training and construction processes associated with securing approvals, permits and licenses and necessary amendments to them within projected ~~timeframes~~time frames, the availability of labor and materials at estimated costs, the availability and cost of financing, and weather. There also may be contractor or supplier performance issues or adverse changes in their creditworthiness and/or financial stability, unforeseen difficulties meeting critical regulatory requirements, contract disputes and litigation, and changes in key contractors or subcontractors. There may be unforeseen engineering problems or unanticipated changes in project design or scope. Our ability to complete construction projects as well as our ability to maintain current operations at reasonable cost could be affected by the availability of key components or commodities, increases in the price of or the unavailability of labor, commodities or other materials, increases in lead times for components, adverse changes in applicable laws and regulations, new or enhanced environmental or regulatory requirements, supply chain failures (whether resulting from the foregoing or other factors), and disruptions in the transportation of components, commodities and fuels. To the extent that, in connection with the construction of a project, delays occur, costs become unrecoverable, or we otherwise become unable to effectively manage and complete the project, our results of operations, cash flows and financial condition, as well as our qualifications for applicable governmental programs, benefits and tax credits may be adversely affected.

A significant portion of Consolidated SCE&G’s generating capacity is derived from nuclear power, the use of which exposes us to regulatory, environmental and business risks. These risks could increase our costs or otherwise constrain our business, thereby adversely impacting our results of operations, cash flows and financial condition. 11

A significant portion of Consolidated SCE&G’s generating capacity is derived from nuclear power, the use of which exposes us to regulatory, environmental and business risks.

SCE&G jointly owns and is the operator of Unit 1. Various risks of nuclear generation to which SCE&G is subject include the following:


•	The potential harmful effects on the environment and human health resulting from a release of radioactive materials in connection with the operation of nuclear facilities and the storage, handling and disposal of radioactive materials;


•	Limitations on the amounts and types of insurance commercially available to cover losses that might arise in connection with our nuclear operations or those of others in the United States;


•	The possibility that new laws and regulations could be enacted that could adversely affect the liability structure that currently exists in the United States;

• Uncertainties, including trade disputes, with respect to procurement of nuclear fuel and suppliers thereof, fabrication of nuclear fuel and related vendors, and the storage of spent nuclear fuel;


•	Uncertainties with respect to contingencies if insurance coverage is inadequate;


•	Uncertainties with respect to possible future increased regulation of nuclear facilities and nuclear generation, and related costs thereof; and

• Uncertainties with respect to the technological ~~and~~aspects ~~financial~~of, ~~aspects~~and adequacy of funding for, decommissioning nuclear plants at the end of their operating lives.

SCE&G maintains a trust to minimize the financial risks associated with the decommissioning of Unit 1; however, it is possible that future decommissioning costs could exceed amounts in the decommissioning trust. If assets in the trust are insufficient to cover the eventual costs of decommissioning, and if SCE&G is unable to recover the shortfall through regulatory means, the Company's and Consolidated SCE&G's results of operations could be negatively impacted.

The NRC has broad authority under federal law to impose licensing and safety-related requirements for the operation of nuclear generation facilities. In the event of non-compliance, the NRC has the authority to impose fines or shut down a unit, or both, depending upon its assessment of the severity of the situation, until compliance is achieved. Revised safety requirements promulgated by the NRC could necessitate capital expenditures at nuclear plants such as ours. In today’s environment, there is a heightened risk of terrorist attack on the nation’s nuclear facilities, which has resulted in increased security costs at our nuclear plant. Although we have no reason to anticipate a serious nuclear incident, a major incident at a nuclear facility anywhere in the world could cause the NRC to limit or prohibit the operation or licensing of any domestic nuclear unit, resulting in costly changes to units in operation and adversely impacting our results of operations, cash flows and financial condition. Furthermore, a major incident at a domestic nuclear facility could result in retrospective premium assessments under our nuclear insurance coverages.

Potential competitive changes may adversely affect our gas and electricity businesses due to the loss of customers, reductions in revenues, or write-down of stranded assets.

The utility industry has been undergoing a structural change for a number of years, resulting in increasing competitive pressures on electric and natural gas utility companies. Competition in wholesale power sales via an RTO/ISO is in effect across much of the country, but the Southeastern utilities have retained the traditional bundled, vertically integrated structure. Should an RTO/ISO-market be implemented in the Southeast, potential risks emerge from reliance on volatile wholesale market prices as well as increased costs associated with new transmission and distribution infrastructure.

Some states have also mandated or encouraged unbundled retail competition. Should this occur in South Carolina or North Carolina, increased competition may create greater risks to the stability of utility earnings generally and may in the future reduce earnings from retail electric and natural gas sales. In a deregulated environment, formerly regulated utility companies that are not responsive to a competitive energy marketplace may suffer erosion in market share, revenues and profits as competitors gain access to their customers. In addition, the Company’s and Consolidated SCE&G’s generation assets would be exposed to considerable financial risk in a deregulated electric market. If market prices for electric generation do not produce adequate revenue streams and the enabling legislation or regulatory actions do not provide for recovery of the resulting stranded costs, a write-down in the value of the related assets could be required.

The Company and Consolidated SCE&G are subject to the risk of loss of sales due to the growth of distributed generation especially in the form of renewable power such as solar photovoltaic systems, which systems have undergone a rapid decline in their costs. As a result of federal and state subsidies, potential regulations allowing third-party retail sales, and advances in distributed generation technology, the growth of such distributed generation could be significant in the future. Such growth will lessen Company and Consolidated SCE&G sales and will slow growth, potentially causing higher rates to customers.

The Company and Consolidated SCE&G are subject to risks associated with changes in business and economic climate which could adversely affect revenues, results of operations, cash flows and financial condition and could limit access to capital.12

~~Sales,~~advances ~~sales growth and customer usage patterns are dependent upon the economic climate~~ in ~~the~~distributed ~~service~~generation ~~territories of the Company and Consolidated SCE&G~~technology, ~~which~~particularly ~~may~~when becombined ~~affected~~with bystorage ~~regional~~solutions, ~~national or even international economic factors. Adverse events, economic or otherwise, may also affect~~ the ~~operations~~growth of suppliers and key customers. Such events may result in the loss of suppliers or customers, in higher costs charged by suppliers, in changes to customer usage patterns and in the failure of customers to make timely payments to us. With respect to the Company, such ~~events~~distributed ~~also~~generation could ~~adversely~~be ~~impact~~significant ~~the~~in ~~results of operations through~~ the ~~recording of a goodwill or other asset impairment~~future. ~~Also,~~Such ingrowth ~~connection~~will ~~with~~lessen the ~~pending merger, some customers or vendors of the~~ Company's and Consolidated SCE&G's ~~may~~sales ~~delay~~and orwill ~~defer~~slow ~~decisions~~growth, ~~which~~potentially ~~could~~causing higher rates to customers.

23Renewable and/or alternative electric generation portfolio standards may be enacted at the federal or state level. Such renewable energy may not be readily available in our service territories and could be costly to build, finance, acquire, integrate, and/or operate. Resulting increases in the price of electricity to recover the cost of these types of generation, and the costs of their integration to the electric system, could result in lower usage of electricity by our customers. In addition, DER generation at customers’ facilities could result in the loss of sales to those customers. Compliance with potential future portfolio standards could significantly impact our capital expenditures and our results of operations and financial condition. Utility scale solar development companies are currently working in South Carolina to develop projects in SCE&G's service territory.

~~negatively~~Problems ~~impact~~with ~~the~~operations ~~revenues,~~could ~~earnings,~~cause ~~cash~~us ~~flows~~to ~~and~~curtail ~~expenses~~or oflimit ~~the Company and Consolidated SCE&G regardless of whether the merger is completed. The success of local and state governments in attracting new industry to~~ our ~~service~~ability ~~territories is important~~ to ~~our~~serve ~~sales~~customers ~~and growth in sales, as are stable levels of taxation (including property, income~~ or ~~other~~cause ~~taxes)~~us ~~which~~to ~~may~~incur besubstantial ~~affected by local, state, or federal budget deficits, adverse economic climates generally, legislative actions (including tax reform), or regulatory actions~~costs. Industrial and commercial customer growth also potentially is affected by the availability of "clean" energy options in our service territory. Budget cutbacks also adversely affect funding levels of federal and state support agencies and non-profit organizations that assist low income customers with bill payments.

In addition, conservation and demand side management efforts and/or technological advances may cause or enable customers to significantly reduce their usage of the Company’s and SCE&G’s products and adversely affect sales, sales growth, and customer usage patterns. For instance, improvements in energy storage technology, if realized, could have dramatic impacts on the viability of and growth in distributed generation.

Factors that generally could affect our ability to access capital include economic conditions and our capital structure. Much of our business is capital intensive, and achievement of our capital plan and long-term growth targets is dependent, at least in part, upon our ability to access capital at rates and on terms that are attractive. If our ability to access capital becomes significantly constrained, our interest costs will likely increase and our financial condition and future results of operations could be adversely impacted.

Problems with operations could cause us to curtail or limit our ability to serve customers or cause us to incur substantial costs, thereby adversely impacting revenues, results of operations, cash flows and financial condition.

Critical processes or systems in the Company’s or Consolidated SCE&G’s operations could become impaired or fail from a variety of causes, such as equipment breakdown, transmission equipment failure, information systems failure or security breach, operator error, natural disasters, and the effects of a pandemic, terrorist attack or cyber attack on our workforce or facilities or on vendors and suppliers necessary to maintain services key to our operations.

In particular, as the operator of power generation facilities, many of which entered service prior to 1985 and may be difficult to maintain, Consolidated SCE&G could incur problems, such as the breakdown or failure of power generation or emission control equipment, transmission equipment, or other equipment or processes which would result in performance below assumed levels of output or efficiency. The integration of a significant amount of distributed generation into our systems may entail additional cycling of our coal-fired generation facilities and may thereby increase the number of unplanned outages at those facilities. In addition, any such breakdown or failure may result in Consolidated SCE&G purchasing emission allowances or replacement power at market rates, if such allowances and replacement power are available at all. These purchases are subject to state regulatory prudency reviews for recovery through rates. If replacement power is not available, such problems could result in interruptions of service (blackout or brownout conditions) in all or part of SCE&G’s territory or elsewhere in the region. Similarly, a natural gas line failure of the Company or Consolidated SCE&G could affect the safety of the public, destroy property, and interrupt our ability to serve customers.

Events such as these could entail substantial repair costs, litigation, fines and penalties, and damage to reputation, each of which could have an adverse effect on the Company’s and Consolidated SCE&G's revenues, results of operations, cash flows, and financial condition. Insurance may not be available or adequate to mitigate the adverse impacts of these events.

~~SCANA’s~~The ~~ability~~use toof ~~pay~~derivative ~~dividends~~instruments ~~and~~could toresult ~~make~~in ~~payments~~financial onlosses ~~SCANA’s~~and ~~debt~~liquidity ~~securities~~constraints. ~~may~~The beCompany ~~limited~~and byConsolidated ~~covenants~~SCE&G indo ~~certain~~not ~~financial~~fully ~~instruments~~hedge ~~and~~against ~~by the~~ financial ~~results~~market ~~and~~risks ~~condition~~or ofprice ~~its~~changes ~~subsidiaries,~~in ~~thereby~~commodities. ~~adversely~~This ~~impacting~~could ~~the~~result ~~valuation~~in ofincreased ~~our~~costs, ~~common~~thereby ~~stock~~resulting ~~and~~in ~~our~~lower ~~access to capital~~margin.

WeThe ~~are~~Company aand ~~holding~~Consolidated ~~company~~SCE&G ~~that~~may ~~conducts~~use ~~substantially~~derivative ~~all of our operations through our subsidiaries. Our assets consist primarily of investments in subsidiaries. Therefore~~instruments, ~~our~~including ~~ability to meet our obligations for payment of interest and principal on outstanding debt and to pay dividends to shareholders and corporate expenses depends on the earnings~~futures, ~~cash flows~~forwards, ~~financial~~options ~~condition~~ and ~~capital requirements of our subsidiaries~~swaps, ~~and~~to ~~the~~manage ~~ability of~~ our ~~subsidiaries,~~financial ~~principally~~market ~~Consolidated~~risks. ~~SCE&G,~~The ~~PSNC~~Company ~~Energy~~also ~~and~~uses ~~SCANA~~such ~~Energy,~~derivative toinstruments ~~pay dividends or~~ to ~~repay~~manage ~~funds~~certain tocommodity us(i.e., ~~Our~~natural ~~ability~~gas) tomarket ~~pay~~risk. We ~~dividends~~could onbe ~~our~~required ~~common~~to ~~stock~~provide ~~may~~cash ~~also~~collateral ~~be limited by existing~~ or ~~future~~recognize ~~covenants~~financial ~~limiting~~losses ~~the right of our subsidiaries to pay dividends~~ on ~~their~~these ~~common~~contracts ~~stock.~~as ~~Further,~~a ~~SCANA~~result ~~has~~of ~~agreed~~volatility toin ~~obtain~~ the ~~consent~~market values of ~~Dominion~~the ~~Energy,~~underlying ~~which~~commodities ~~consent~~and ~~cannot~~financial becontracts ~~unreasonably~~or ~~withheld,~~if ~~prior~~a tocounterparty ~~making~~fails ~~dividend payments~~ to ~~shareholders~~perform ~~greater~~under ~~than~~a $0contract.~~6125~~ ~~per~~We ~~share~~could ~~for~~also ~~any~~be ~~quarter~~required ~~while~~to ~~the~~provide ~~Merger~~additional ~~Agreement~~cash iscollateral ~~pending.~~if ~~Any~~credit ~~significant~~rating ~~reduction~~agency indowngrades ~~our payment~~ of ~~dividends in the future may result in a decline in the value of~~ our ~~common stock. Such a decline in value could limit our ability to raise~~ debt ~~and~~trigger ~~equity~~more ~~capital~~stringent requirements.

The use of derivative instruments could result in financial losses and liquidity constraints. The Company and Consolidated SCE&G do not fully hedge against financial market risks or price changes in commodities. This could result in increased costs, thereby resulting in lower margins and adversely affecting results of operations, cash flows and financial condition.

The Company and Consolidated SCE&G use derivative instruments, including futures, forwards, options and swaps, to manage our financial market risks. The Company also uses such derivative instruments to manage certain commodity (i.e., natural gas) market risk. We could be required to provide cash collateral or recognize financial losses on these contracts as a result of volatility in the market values of the underlying commodities and financial contracts or if a counterparty fails to perform under a contract. We could also be required to provide additional cash collateral if credit rating agency downgrades of our debt trigger more stringent requirements.

The Company strives to manage commodity price exposure by establishing risk limits and utilizing various financial instruments (exchange traded and over-the-counter instruments) to hedge physical obligations and reduce price volatility. We do not hedge the entire exposure of our operations from commodity price volatility. To the extent we do not hedge against commodity price volatility or our hedges are not effective, results of operations, cash flows and financial condition may be adversely impacted.

Failure to retain and attract key personnel could adversely affect the Company’s and Consolidated SCE&G’s operations and financial performance, particularly in light of uncertainties related to and resulting from ~~abandonment~~regulatory, oflegislative ~~the~~and ~~Nuclear~~legal ~~Project~~proceedings and ~~the pending merger~~integration.

A significant portion of our workforce will be eligible for retirement during the next few years. Uncertainties related to regulatory, legislative and legal proceedings, as well as the ~~proposed~~continuing ~~merger~~integration of companies, also weigh significantly on the employment considerations made by current and prospective employees. We must attract, retain and develop executive officers and other professional, technical and craft employees with the skills and experience necessary to successfully manage, operate and grow our businesses. Competition for these employees is high, and in some cases we must compete for these employees on a regional or national basis. We may be unable to attract and retain these personnel. Further, the Company’s or Consolidated SCE&G’s ability to construct or maintain generation or other assets requires the availability of suitable skilled contractor personnel. We may be unable to obtain appropriate contractor personnel at the times and places needed. Labor disputes with employees or contractors covered by collective bargaining agreements also could adversely affect implementation of our strategic plan and our operational and financial performance. Furthermore, increased medical benefit costs of employees and retirees could adversely affect the results of operations of the Company and Consolidated SCE&G. Medical costs in this country have risen significantly over the past number of years and are expected to continue to increase at unpredictable rates. Such increases, unless satisfactorily managed by the Company and Consolidated SCE&G, could adversely affect results of operations.

The Company and Consolidated SCE&G are subject to the risk that strategic decisions made by us either do not result in a return of or on invested capital or might negatively impact our competitive position, which can adversely impact our results of operations, cash flows, financial condition, and access to capital.13

~~From~~employment ~~time~~considerations tomade ~~time,~~by ~~the~~current ~~Company~~ and ~~Consolidated~~prospective ~~SCE&G~~employees, ~~make~~and ~~strategic~~some ~~decisions~~workforce ~~that~~attrition ~~may~~has ~~impact~~occurred. ~~our~~We ~~direction~~must ~~with regard to business opportunities~~attract, ~~the~~retain ~~services~~ and ~~technologies~~develop ~~offered~~executive toofficers ~~customers~~and orother ~~that~~professional, ~~are~~technical ~~used~~and tocraft ~~serve~~employees ~~customers,~~with ~~and~~ the ~~generating~~skills ~~plants~~ and ~~other~~experience ~~infrastructure~~necessary ~~that~~to ~~form~~successfully ~~the~~manage, ~~basis~~operate ofand ~~much~~grow of our ~~business~~businesses. ~~These~~Competition ~~strategic~~for ~~decisions~~these ~~may~~employees ~~not~~is ~~result in a return of or on our invested capital~~high, and ~~the effects of these strategic decisions may have long-term implications that are not likely to be known to us~~ in ~~the~~some ~~short-term. Changing political climates and public attitudes~~cases, ~~including~~we ~~customers'~~must ~~concerns~~compete ~~regarding~~for ~~rate~~these ~~increases,~~employees ~~such~~on ~~as the current environment relating to proposed recovery of costs, and~~ a ~~reasonable~~regional ~~return on those costs, under the abandonment provisions of the BLRA~~ or ~~through~~national ~~other~~basis. ~~means,~~We may ~~adversely~~be ~~affect~~unable ~~the~~to ~~ongoing~~attract ~~acceptability of strategic decisions that have been made (~~and, inretain ~~some~~these ~~cases,~~personnel. ~~previously supported by legislation or approved by regulators)~~Further, to the ~~detriment of the~~ Company’s or Consolidated SCE&G’s ~~(e.g.,~~ability ~~revision~~to construct or ~~repeal~~maintain ofgeneration ~~the~~or ~~BLRA).~~other Inassets ~~addition,~~requires ~~operating covenants in~~ the ~~Merger~~availability ~~Agreement require the consent~~ of ~~Dominion~~suitable ~~Energy~~skilled ~~prior~~contractor ~~to SCANA taking certain actions, which consent cannot be unreasonably withheld, during the pendency of the merger~~personnel. AsWe ~~a result, the Company and Consolidated SCE&G~~ may be unable to ~~pursue~~obtain ~~strategic~~appropriate ~~transactions,~~contractor ~~undertake~~personnel ~~significant~~at ~~capital~~the ~~projects,~~times ~~undertake~~and ~~certain~~places ~~significant~~needed. ~~financing~~Labor ordisputes ~~other~~with ~~specified~~employees ~~transactions~~ or ~~pursue~~contractors ~~actions~~covered ~~that~~by ~~are~~collective ~~not~~bargaining inagreements ~~the~~also ~~ordinary~~could ~~course~~adversely ofaffect ~~business~~implementation ~~even~~of ifour ~~such~~strategic ~~actions~~plan ~~would~~and ~~prove~~our ~~beneficial.~~operational ~~Further, the Company's~~ and ~~Consolidated~~financial ~~SCE&G's management may be focused on completion of the merger~~performance. Furthermore, ~~which~~increased ~~could~~medical ~~lead~~benefit tocosts ~~the disruption~~ of ~~ongoing~~employees ~~business or inconsistencies in service, standards, controls, procedures~~ and ~~policies,~~retirees ~~any of which~~ could adversely affect the ~~ability~~results of operations of the Company and Consolidated SCE&G. Medical tocosts ~~maintain~~in ~~relationships~~this ~~with~~country ~~customers,~~have ~~regulators,~~risen ~~vendors~~significantly ~~and~~over ~~employees,~~the orpast ~~could~~number ~~otherwise~~of ~~adversely~~years ~~affect their business~~ and ~~financial~~such ~~results,~~increases ~~without~~are ~~realizing~~expected ~~any~~to ~~of the benefits of having the merger completed~~continue. ~~Over~~Such ~~time~~increases, ~~these~~unless ~~strategic~~satisfactorily ~~decisions~~managed orby ~~changing attitudes toward such decisions, which could be adverse to~~ the Company’s orand Consolidated SCE&G~~’s interests~~, could adversely affect results of operations.

may have a negative effect on our results of operations, cash flows and financial condition, as well as limit our ability to access capital.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not Applicable.

ITEM 2. PROPERTIES

SCANA owns no significant property other than the capital stock of each of its subsidiaries. It holds directly all of the capital stock of each of its subsidiaries.

SCE&G's bond indenture, which secures its First Mortgage Bonds, constitutes a direct mortgage lien on substantially all of its electric utility property. GENCO's Williams Station is also subject to a first mortgage lien which secures certain outstanding debt of GENCO.

Electric ~~Properties~~Operations

The following table shows the electric generating facilities and their net generating capacity as of December 31, ~~2017~~2018.

		Net Generating Capacity
				Percentage
	In-Service	Summer
		Net Summer		Net Summer
	Date	(MW)
Plant	Location	Capacity (MW)		Capacity
Coal-Fired Steam:
Gas
Wateree - Eastover, SC	1970	684
McMeekin	Irmo, SC	250
Williams - Goose Creek, SC	1973	605
Urquhart Unit 3	Beech Island, SC	95
Cope - Cope, SC	1996	415
Jasper (CC)	Hardeeville, SC	852	*
Kapstone - Charleston, SC	1999	85
Urquhart (CC)	Beech Island, SC	458	*
Gas-Fired Steam:
Columbia Energy Center (CC)	Gaston, SC	504	*
McMeekin - Irmo, SC	1958	250
Hagood Units 4, 5 and 6 (CT)	Charleston, SC	126	*
Urquhart Unit 3 - Beech Island, SC	1953	95
Parr (CT)	Jenkinsville, SC	60	*
Nuclear:
Coit (CT)	Columbia, SC	26	*
Summer Station Unit 1 - Parr, SC (reflects SCE&G's 66.7% ownership share)	1984	647
Urquhart Units 1, 2, 3 and 4 (CT)	Beech Island, SC	87
Internal Combustion Turbines:
Williams (CT)	Goose Creek, SC	40	*
Jasper Combined Cycle - Jasper, SC	2004	852
Hardeeville (CT)	Hardeeville, SC	9
Urquhart Combined Cycle - Beech Island, SC	2002	458
Total Gas		2,507		42	%
Peaking units - various locations in SC	1968-2010	348
Coal
Hydro:
Wateree	Eastover, SC	684
Fairfield Pumped Storage - Parr, SC	1978	576
Williams	Goose Creek, SC	605
Saluda - Irmo, SC	1930	200
Cope	Cope, SC	415	**
Other - various locations in or bordering SC	1905-1914	18
Total Coal		1,704		28	%
Nuclear
Summer Station Unit 1	Jenkinsville, SC	647	***	11	%
Hydro
Fairfield Pumped Storage	Jenkinsville, SC	576
Saluda	Irmo, SC	198
Neal Shoals	Union, SC	2
Parr	Jenkinsville, SC	7
Stevens Creek	Martinez, GA	9
Total Hydro		792		13	%
Total Utility Generation		5,650
Power Purchase Agreements (contracted capacity)		335		6	%
Total Generation		5,985		100	%

~~SCE&G~~Note: ~~owns~~(CT) ~~436~~denotes ~~substations~~combustion ~~having~~turbine ~~an aggregate transformer capacity of 32.1 million Kilovolt ampere. The transmission system consists of 3,469 miles of lines,~~ and ~~the~~(CC) ~~distribution~~denotes ~~system~~combined ~~consists of 18,559 pole miles of overhead lines and 7,622 trench miles of underground lines~~cycle.

~~Natural~~* ~~Gas~~Capable ~~Distribution~~of ~~and~~burning ~~Transmission~~fuel ~~Properties~~oil as a secondary source

~~SCE&G's~~** ~~natural~~Capable ~~gas system includes 447 miles~~ of ~~transmission~~burning pipeline of up to 20 inches in diameter that connect its distribution system with Southern Natural, Transco and DECG. SCE&G’s distribution system consists of 17,671 miles of distribution mains and related service facilities. SCE&G also owns two LNG plants, one located near Charleston, South Carolina, and the other in Salley, South Carolina. The Charleston facility can liquefy up to 6,180 MMBTU per day and store the liquefied equivalent of 1,009,400 MMBTU of natural gas. ~~The~~as ~~Salley~~a ~~facility~~secondary can store the liquefied equivalent of 927,000 MMBTU of natural gas and has no liquefying capabilities. The LNG facilities have the capacity to regasify approximately 61,800 MMBTU per day at Charleston and 92,700 MMBTU per day at Salley.source

~~PSNC~~***Reflects ~~Energy’~~SCE&G's ~~natural gas system consists of 607 miles of transmission pipeline of up to 24 inches in diameter that connect its distribution systems with Transco~~66.7% ~~PSNC~~ownership Energy’s distribution system consists of 22,141 miles of distribution mains and related service facilities. PSNC Energy owns one LNG plant with storage capacity of 1,000,000 MMBTU, the capacity to liquefy up to 4,000 MMBTU per day and the capacity to regasify approximately 100,000 MMBTU per day. share

SCE&G owns 440 substations. The transmission system consists of 3,478 miles of lines. The distribution system consists of 18,606 pole miles of overhead lines and 7,809 trench miles of underground lines, exclusive of service-level lines.

Gas Distribution

SCE&G's natural gas system includes 453 miles of transmission pipeline of up to 20 inches in diameter that connect its distribution system with Southern Natural Gas Company, Transco and Dominion Energy Carolina Gas Transmission, LLC. SCE&G’s distribution system consists of 18,005 miles of distribution mains and related service facilities.

SCE&G also owns two LNG plants, one located near Charleston, South Carolina, and the other in Salley, South Carolina. The Charleston facility can store the liquefied equivalent of 1.0 bcf of natural gas, can regasify approximately 6% of its storage capacity per day and can liquefy less than 1% of its storage capacity per day. The Salley facility can store the liquefied equivalent of 0.9 bcf of natural gas and can regasify approximately 10% of its storage capacity per day. The Salley facility has no liquefying capabilities.

PSNC Energy’s natural gas system consists of 633 miles of transmission pipeline of up to 24 inches in diameter that connect its distribution systems with Transco. PSNC Energy’s distribution system consists of 22,600 miles of distribution mains and related service facilities. PSNC Energy owns one LNG plant that stores the liquefied equivalent of 1.0 bcf of natural gas, can regasify approximately 10% of its storage capacity per day and can liquefy less than 1% of its storage capacity per day.

ITEM 3. LEGAL PROCEEDINGS

~~SCANA~~From time to time, the Company and Consolidated SCE&G: are alleged to be in violation or in default under orders, statutes, rules or regulations relating to the environment, compliance plans imposed upon or agreed to by the Company or Consolidated SCE&G, or permits issued by various local, state and/or federal agencies for the construction or operation of facilities. Administrative proceedings may also be pending on these matters. In addition, in the ordinary course of business, and particularly following the abandonment of the Nuclear Project, the Company and Consolidated SCE&G are involved in various legal proceedings.

~~The~~See ~~following~~Claims ~~describes certain legal proceedings through December 31, 2017. The Company~~ and ~~Consolidated~~Litigation ~~SCE&G~~in ~~intend~~Note 11 to ~~vigorously contest~~ the ~~lawsuits~~consolidated ~~which~~financial ~~have~~statements ~~been~~in ~~filed~~Item ~~against them~~8. ~~For~~Financial ~~developments~~Statements ~~related~~and toSupplementary ~~these or other proceedings subsequent to December 31~~Data, ~~2017,~~which ~~see~~information ~~Note~~is 2incorporated ~~and~~herein ~~Note~~by ~~10 to the consolidated financial statements. No~~ reference to, orfor ~~disclosure~~a discussion of, ~~any~~various ~~proceeding~~legal, ~~item~~environmental orand ~~matter~~other ~~described~~regulatory ~~below~~proceedings ~~shall~~to bewhich ~~construed~~the asCompany anand ~~admission~~Consolidated orSCE&G ~~indication~~are ~~that~~a ~~such~~party ~~proceeding~~to, ~~item~~including orany ~~matter is~~ material ordevelopments that ~~such~~have ~~proceeding,~~occurred ~~items~~in orthe ~~matter~~fourth isquarter ~~required~~of ~~to be referred to or disclosed in this Form 10-K~~2018.

Ratepayer Class Actions

On August 11, 2017, a purported class action was filed against SCE&G by plaintiff LeBrian Cleckley (the “Cleckley Lawsuit”), on behalf of himself and all others similarly situated, in the State Court of Common Pleas in Richland County, South Carolina (the “Richland County Court”). The plaintiff alleges, among other things, that SCE&G was negligent and unjustly enriched and breached alleged fiduciary and contractual duties by failing to properly manage the Nuclear project. The plaintiff seeks to recover, on behalf of the purported class, unspecified damages and attorneys’ fees, specific performance of the alleged implied contract to construct the now abandoned project, and any other relief the court deems proper. At December 31, 2017, SCE&G’s amended motion to dismiss was scheduled to be heard on January 8, 2018. Also at December 31, 2017, the following additional motions were pending: SCE&G’s Motion for Protective Order, filed October 2, 2017; Plaintiff’s Motion to Compel Discovery, filed October 20, 2017; and Plaintiff’s Motion to Appoint a Receiver, filed November 1, 2017. By order dated October 31, 2017, the South Carolina Supreme Court consolidated all pending state court ratepayer class actions and assigned the consolidated cases to a single Circuit Court judge.

On August 14, 2017, a purported class action was filed against SCE&G by plaintiff Richard Lightsey (the "Lightsey Lawsuit"), on behalf of himself and all others similarly situated, in the State Court of Common Pleas in Hampton County (the "Hampton County Court"). The plaintiff makes substantially similar allegations as those alleged in the Cleckley Lawsuit and, in addition, alleges that SCE&G committed unfair trade practices and violated state anti-trust laws. The plaintiff seeks a declaratory judgment that SCE&G may not charge its customers for any past or continuing costs of the Nuclear Project. The plaintiff also seeks compensatory, punitive and statutory treble damages, attorneys’ fees, and any other relief the court deems proper. On August 25, 2017, SCE&G filed a motion to transfer venue to Lexington County, South Carolina. At December 31, 2017, the following motions were pending: Plaintiff’s Motion for Class Certification, filed August 23, 2017; SCE&G’s Motion to Dismiss, etc., filed September 14, 2017; SCE&G’s Motion for Protective Order, filed September 26, 2017; Plaintiff’s Motion to Compel, filed October 12, 2017; and SCE&G’s Motion to Dismiss, etc., Second Amended Complaint, filed October 24, 2017.

On August 28, 2017, a purported class action was filed against SCANA and SCE&G by plaintiff Edwinda Goodman, on behalf of herself and all others similarly situated, in the State Court of Common Pleas in Fairfield County (the “Fairfield County Court”). The plaintiff makes substantially similar allegations as those alleged in the Cleckley Lawsuit and, in addition, alleges that SCE&G committed fraud and misrepresentation in failing to properly manage the Nuclear Project. The plaintiff seeks to have the defendants’ assets frozen and all monies recovered from Toshiba and other sources be placed in a constructive trust for the benefit of ratepayers. The plaintiff also seeks compensatory, punitive and treble damages, attorneys’ fees, and any other relief the court deems proper. At December 31, 2017, the following motions were pending: SCE&G’s Motion to Dismiss and Strike, filed October 2, 2017; SCE&G’s Motion for Protective Order, filed October 2, 2017; and Plaintiff’s Motion to Appoint Receiver and Expedite Hearing, served November 2, 2017.

On September 7, 2017, a purported class action was filed against Santee Cooper, SCE&G, Palmetto Electric Cooperative, Inc. and Central Electric Power Cooperative, Inc. by plaintiff Jessica Cook, on behalf of herself and all others similarly situated, in the Hampton County Court. The plaintiff makes substantially similar allegations as the Cleckley Lawsuit and the Lightsey Lawsuit. The plaintiff seeks a declaratory judgment that defendants may not charge the purported class for reimbursement for past or future costs of the Nuclear Project, as well as other compensatory and statutory treble damages, attorneys’ fees, and any other relief the court deems proper. At December 31, 2017, the following motions were pending: SCE&G’s Motion to Dismiss and to Strike, filed October 11, 2017; SCE&G’s Motion for Protective Order, filed October 11, 2017; Santee Cooper’s Motion to Dismiss Third Amended Complaint, filed October 24, 2017; Plaintiff’s Motion for Default Judgment against Central Electric Power Cooperative, filed November 1, 2017; and Central Electric Power Cooperative, Inc.’s Motion to Dismiss Third Amended Complaint, filed November 16, 2017.

Also on September 7, 2017, a purported class action was filed against Santee Cooper and SCANA by plaintiffs Hope Brown and Thomas Lott, on behalf of themselves and all others similarly situated, in the Richland County Court. The plaintiffs allege, among other things, that SCE&G conspired with Santee Cooper to unlawfully deprive plaintiffs of their property rights guaranteed under the United States and South Carolina Constitutions and were unjustly enriched by the Nuclear Project. The plaintiffs seek disgorgement of all monies spent by defendants on the project, as well as other compensatory and punitive damages, attorneys’ fees, and any other relief the court deems proper. Plaintiffs’ counsel voluntarily dismissed this action without prejudice on November 12, 2017.

On September 25, 2017, a purported class action was filed against SCANA by plaintiff Christine Delmater, on behalf of herself and all others similarly situated, in the District Court. The plaintiff alleges, among other things, that SCE&G violated provisions of the Racketeer Influenced and Corrupt Organizations Act 18 U.S.C. §1961, was negligent, breached alleged contractual duties, and was unjustly enriched by failing to properly manage the Nuclear Project. The plaintiff seeks compensatory and consequential damages, and any other relief the court deems proper. Plaintiff filed its Second Amended Complaint on November 7, 2017, and filed a Motion for Injunctive Relief on November 8, 2017. Following extensions, responsive pleadings to the Second Amended Complaint and the Motion for Injunctive Relief were filed December 21, 2017.

On October 9, 2017, plaintiffs Chris Kolbe and Ruth Ann Keffer filed an amended complaint in a purported class action, on behalf of themselves and all others similarly situated, against Santee Cooper and certain of its directors and officers, in the Berkeley County Court of Common Pleas, naming SCE&G and SCANA as additional defendants. The plaintiffs allege, among other things, that SCE&G and SCANA were grossly negligent, reckless, breached contracts, were unjustly enriched, and violated principles of equity in connection with their management of the Nuclear Project. The plaintiffs seek compensatory damages and attorneys’ fees, and a declaratory judgment as to Santee Cooper’s rates. SCANA and SCE&G filed a Motion to Dismiss and to Strike on November 17, 2017.

Shareholder Derivative and 10b-5 Class Actions

On September 26, 2017, a purported shareholder derivative action was filed against defendants Kevin Marsh, Gregory Aliff, James Bennett, John Cecil, Sharon Decker, Maybank Hagood, Lynne Miller, James Roquemore, Maceo Sloan, Alfredo Trujillo, Jimmy Addison, Stephen Byrne, and nominal defendant SCANA by plaintiff John Crangle, purportedly on behalf of SCANA, in the Richland County Court (the "Crangle Lawsuit"). The plaintiff alleges, among other things, that the defendants breached their fiduciary duties to shareholders by their gross mismanagement of the Nuclear Project, and that the defendants Marsh, Addison, and Byrne were unjustly enriched by bonuses they were paid in connection with the project. The plaintiff seeks compensatory and consequential damages, attorneys’ fees, and any other relief the court deems proper. Defendants filed motions to dismiss the complaint in December 2017.

On September 27, 2017, a purported class action was filed against SCANA, Kevin B. Marsh, Jimmy E. Addison, and Stephen A. Byrne by plaintiff Robert L. Norman, on behalf of himself and all others similarly situated, in the District Court. The plaintiff alleges, among other things, that the defendants violated §10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, and that the individual named defendants are liable under §20(a) of the Exchange Act. The plaintiff seeks compensatory and consequential damages, attorneys’ fees, and any other relief the court deems proper.

On October 5, 2017, a purported class action was filed against SCANA, Kevin B. Marsh, and Jimmy E. Addison by plaintiff Kenneth Evans on behalf of himself and all others similarly situated in the District Court. The plaintiff alleges, among other things, that the defendants violated §10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, and that the individual named defendants violated §20(a) of the Exchange Act. The plaintiff seeks compensatory and consequential damages, attorneys’ fees, and any other relief the court deems proper.

On October 30, 2017, a purported shareholder derivative action was filed against Kevin Marsh, Gregory Aliff, James Bennett, John Cecil, Sharon Decker, Maybank Hagood, Lynn Miller, James Roquemore, Maceo Sloan, Aldredo Trujillo, Jimmy Addison, Stephen Byrne, and SCANA by plaintiff R. Wayne Todd, purportedly on behalf of SCANA in Richland County Court (the “Todd Lawsuit”). The plaintiff makes substantially similar allegations as those alleged in the Crangle Lawsuit, and alleges that the defendants Marsh, Addison, and Byrne were unjustly enriched by bonuses they were paid in connection with the Nuclear Project. The plaintiff seeks compensatory and consequential damages, punitive damages, attorneys’ fees, and any other relief the court deems proper. Defendants filed motions to dismiss the complaint in December 2017.

On November 10, 2017, a purported class action was filed against SCANA, Kevin Marsh, Jimmy Addison, and Steve Byrne by plaintiff Marsha Fox on behalf of herself and all others similarly situated in the District Court. The plaintiff alleges, among other things, that the defendants violated §10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, and that the individual named defendants violated §20(a) of the Exchange Act. The plaintiff seeks compensatory and consequential damages, attorneys’ fees, and any other relief the court deems proper.

On November 17, 2017, a purported class action was filed against SCANA, Kevin B. Marsh, Jimmy E. Addison, and Steve B. Byrne by plaintiff West Palm Beach Firefighters’ Pension Fund on behalf of itself and all others similarly situated in the District Court. The plaintiff alleges, among other things, that the defendants violated §10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder, and that the individual named defendants violated §20(a) of the Exchange Act. The plaintiff seeks compensatory and consequential damages, attorneys’ fees, and any other relief the court deems proper.

On November 21, 2017, a purported shareholder derivative action was filed against Kevin Marsh, Gregory Aliff, James Bennett, John Cecil, Sharon Decker, Maybank Hagood, Lynn Miller, James Roquemore, Maceo Sloan, Aldredo Trujillo, Jimmy Addison, Stephen Byrne, and SCANA by plaintiff Colleen Witmer, purportedly on behalf of SCANA in the District Court. The plaintiff alleges, among other things, that the defendants violated their fiduciary duties to shareholders by disseminating false and misleading information about the Nuclear Project, failing to maintain proper internal controls, failing to properly oversee and manage the company, and that the individual defendants were unjustly enriched in their compensation. The plaintiff seeks compensatory and consequential damages, disgorgement of compensation, punitive damages, attorneys’ fees, and any other relief the court deems proper.

On November 22, 2017, a purported shareholder derivative action was filed against Kevin Marsh, Gregory Aliff, James Bennett, John Cecil, Sharon Decker, Maybank Hagood, Lynn Miller, James Roquemore, Maceo Sloan, Aldredo Trujillo, and SCANA by plaintiff Richard Wickstrom, purportedly on behalf of SCANA in the District Court. The plaintiff alleges, among other things, that the defendants violated their fiduciary duties to shareholders by affirmatively making and allowing material misstatements to be made to shareholders regarding the Nuclear Project. The plaintiff seeks compensatory and consequential damages, disgorgement of Marsh’s compensation, attorneys’ fees, and any other relief the court deems proper.

On December 5, 2017, a purported shareholder derivative action was filed against Kevin B. Marsh, Stephen A. Byrne, Jimmy Addison, Gregory E. Aliff, James A. Bennett, John F.A.V. Cecil, Sharon A. Decker, D. Maybank Hagood, Lynne M. Miller, James W. Roquemore, Maceo K. Sloan, Aldredo Trujillo, James M. Micali, Harold C. Stowe, and nominal defendant SCANA by plaintiff City of Hollywood Employees Retirement Fund in the District Court. The plaintiff alleges, among other things, that the defendants violated their fiduciary duties to shareholders by their gross mismanagement of the Nuclear Project, committed corporate waste, were unjustly enriched, and that the director defendants violated Section 14(a) of the Exchange Act and SEC Rule 14a-9 by allowing or causing misleading proxy statements to be issued in 2016 and 2017. Plaintiff seeks equitable and injunctive relief related to corporate governance functions, as well as compensatory and consequential damages, disgorgement of compensation, attorneys’ fees, and any other relief the court deems proper.

On December 13, 2017, a purported shareholder derivative action was filed against Kevin Marsh, Jimmy Addison, Stephen Byrne, Maybank Hagood, Lynne Miller, James Bennett, Maceo Sloan, Sharon Decker, James Roquemore, Alfredo Trujillo, John F.A.V. Cecil, Gregory Aliff, James Micali, Harold Stowe, and nominal defendant SCANA by plaintiff Firemen's Retirement System of St. Louis, purportedly on behalf of SCANA, in the Richland County Court. The plaintiff makes substantially similar allegations as those alleged in the Crangle and Todd Lawsuits. The plaintiff seeks compensatory and consequential damages, injunctive relief, restitution, attorneys’ fees, and any other relief the court deems proper.

Contractor Lien Litigation

On April 27, 2017, SCE&G filed a declaratory judgment lawsuit in the Fairfield County Court against Structural Preservation Systems, Inc., a subcontractor to WECTEC and several dozen other companies that were WECTEC subcontractors, or who otherwise provided such labor and materials for other companies for the use and benefit of WECTEC (collectively, the “WECTEC Subcontractors”), who claimed that WECTEC had not paid them for work on the Nuclear Project.

The lawsuit was filed for the purpose of asserting SCE&G’s common defenses to such claims by the WECTEC Subcontractors that WECTEC owed them payment for labor or materials they supplied on the project. Since that time, more than 40 individual cases have been filed by WECTEC Subcontractors against SCE&G and Santee Cooper asserting statutory and common law claims against both entities for alleged non-payment by WECTEC. On September 29, 2017, SCE&G obtained a court order consolidating all current and future lawsuits among SCE&G, Santee Cooper, and the WECTEC Subcontractors arising out of allegations of non-payment of the WECTEC Subcontractors by WEC. SCE&G also obtained a court order that designated all such lawsuits as complex and assigning them to one judge. Finally, SCE&G obtained a third court order that stayed any party's otherwise required response to any lawsuit, claim, cross-claim, counterclaim, or third party claim in these lawsuits until the parties could work on case management issues and present a plan for case management to the judge assigned the cases. The lawsuits are in the pleadings stage. The WECTEC Subcontractors have made claims including but not limited to foreclosure of mechanics liens, common law theories including but not limited to negligence and breach of contract, equitable theories including the imposition of a constructive trust on the Toshiba settlement proceeds, damages, and injunctive relief.

FILOT Litigation

On November 29, 2017, Fairfield County filed a Complaint and a Motion for Temporary Injunction against SCE&G making allegations of breach of contract, fraud, negligent misrepresentation, breach of fiduciary duty, breach of the implied duty of good faith and fair dealing, and unfair trade practices related to SCE&G’s termination of the FILOT agreement. Plaintiff sought a temporary and permanent injunction to prevent SCE&G from terminating the FILOT; actual and consequential damages; treble damages; punitive damages; and attorneys’ fees. Plaintiff sought a hearing within ten days on their motion for temporary injunction. The Court heard arguments on December 15, 2017 on the motion for temporary injunction, and asked the parties to submit supplemental briefing and proposed orders by December 20, 2017. Plaintiff voluntarily withdrew the Motion for Temporary Injunction on December 20, 2017. The Court set a hearing for February 8, 2018 on SCE&G’s Motion to Transfer Venue.

Regulatory Proceedings and Investigations

On June 22, 2017, the Friends of the Earth and the Sierra Club filed a complaint against SCE&G with the SCPSC, requesting that the SCPSC initiate a formal proceeding to direct SCE&G to immediately cease and desist from expending any further capital costs related to the construction of Unit 2 and Unit 3; to determine the prudence of acts and omissions by SCE&G in connection with the construction of Unit 2 and Unit 3; to review and determine the prudence of abandonment of the Nuclear Project and of the available least cost efficiency and renewable energy alternatives; and to remedy, abate and make due reparations for the rates charged to ratepayers related to the construction of Unit 2 and Unit 3. SCE&G filed its answer to the complaint on July 19, 2017. SCE&G has filed a motion to dismiss the plaintiff's complaint, which motion was argued at a hearing held on December 13, 2017. On December 20, 2017, the SCPSC, among other things, denied SCE&G's motion to dismiss and ordered that the matter be consolidated with proceedings related to the Request, described below.

On September 26, 2017, the ORS filed the Request with the SCPSC asking for an order directing SCE&G to immediately suspend all revised rates collections from customers which were previously approved by the SCPSC pursuant to the authority of the BLRA. In the Request, the ORS relied upon an opinion of the South Carolina Office of Attorney General issued on the same date, to assert that it is not just and reasonable or in the public interest to allow SCE&G to continue collecting revised rates. Further, the ORS noted the existence of an allegation that SCE&G failed to disclose information to the ORS that should have been disclosed and that would have appeared to provide a basis for challenging prior requests, and asserted that SCE&G should not be allowed to continue to benefit from nondisclosure. The ORS also asked for an order that, if the BLRA is found to be unconstitutional or the South Carolina General Assembly amends or revokes the BLRA, then SCE&G should make credits to future bills or refunds to customers for prior revised rates collections.

On September 28, 2017, SCE&G filed a Motion to Dismiss the Request and a Request for Briefing Schedule and Hearing on Motion to Dismiss. On September 28, 2017, the SCPSC deferred action on the Request and ordered a hearing officer to establish a briefing schedule and hearing date on SCE&G's motion. On October 17, 2017, the ORS filed with the SCPSC a motion to amend its request, in which the ORS asked the SCPSC to consider the most prudent manner by which SCE&G will enable its customers to realize the value of the monetized Toshiba Settlement payments and other payments made by Toshiba towards satisfaction of its obligations to SCE&G. A hearing on the parties' motions was held on December 12, 2017, and included the state's Office of Attorney General and Speaker of the House of Representatives, the Electric Cooperatives of South Carolina, a large industrial customer, and several environmental groups. In addition, on November 20, 2017, the ORS filed a letter with the SCPSC providing ORS's preliminary list for stabilization and protection of the site containing Unit 2 and Unit 3 and suggesting that the SCPSC have SCE&G respond to ORS's November 20, 2017 letter and "explain why there is no violation of S.C. Code Ann. § 58-27-1300." The SCPSC granted ORS's request, and SCE&G filed its response with the SCPSC on December 27, 2017.

By order dated December 20, 2017, the SCPSC denied SCE&G’s Motion to Dismiss the Request and ordered that a hearing be set on the Request. In addition, the SCPSC ordered ORS to perform a thorough inspection and audit, within 30 days, to determine the reasonableness of SCE&G’s retail electric rates and to determine the reasonableness of SCE&G’s statements regarding the potential effect that the removal of approximately $445 million in annual revenues, as requested by the ORS, could have on SCE&G. The SCPSC also granted ORS’s motion to amend the Request and consider the monetization of the Toshiba payout along with any other related factors that may be appropriate in determining a fair and reasonable rate. Lastly, the order consolidated the Friends of the Earth and Sierra Club petition with the Request.

On November 30, 2017, the SCPSC served upon SCE&G a document styled as “South Carolinians Against Monetary Abuse (SCAMA) and Leslie Minerd v. South Carolina Electric & Gas Company” requesting that SCE&G include a line item on customers’ monthly bill identifying the charges incurred as a result of the BLRA. On December 29, 2017, SCE&G filed its Answer and Motion to Dismiss and requested that the testimony deadlines and hearing date be held in abeyance pending a determination on SCE&G’s Motion to Dismiss.

Bankruptcy Court Litigation

On March 29, 2017, WEC and WECTEC and certain of their affiliates filed petitions for protection under Chapter 11 of the U.S. Bankruptcy Code with the Bankruptcy Court. On September 1, 2017, SCE&G, for itself and as agent for Santee Cooper, filed with the Bankruptcy Court Proofs of Claim for unliquidated damages against each of WEC and WECTEC. The Proofs of Claim are based upon the anticipatory repudiation and material breach by the Consortium of the EPC Contract, and assert against WEC any and all claims that are based thereon or that may be related thereto. On September 27, 2017, SCE&G sold substantially all of its interest in the Toshiba Settlement and assigned all of its claims under the WEC bankruptcy process to Citibank. SCE&G has agreed to use commercially reasonable efforts to cooperate with Citibank and provide reasonable support necessary for its enforcement of those claims. Notwithstanding the sale of the claims, SCE&G and Santee Cooper remain responsible for any claims that may be made by WEC and WECTEC against them relating to the EPC Contract.

Employment Class Action

On August 8, 2017, a purported class action was filed against SCANA, SCE&G, and its co-defendants Fluor and Fluor Enterprises, Inc., by plaintiffs Harry Pennington III and Timothy Lorenz, on behalf of themselves and all others similarly situated, in the District Court. The plaintiffs allege, among other things, that the defendants violated the Worker Adjustment and Retraining Notification Act (“WARN Act”) in connection with the decision to stop construction on the Nuclear Project. The plaintiffs allege that the defendants failed to provide adequate advance written notice of their terminations of employment.

ITEM 4. MINE SAFETY DISCLOSURES

Not Applicable.

EXECUTIVE OFFICERS OF SCANA CORPORATION

Executive officers are elected at the annual meeting of the Board of Directors, held immediately after the annual meeting of shareholders, and hold office until the next such annual meeting, unless (1) a resignation is submitted, (2) the Board of Directors shall otherwise determine or (3) as provided in the By-laws of SCANA. Positions held are for SCANA and all wholly-owned subsidiaries unless otherwise indicated.

Name	Age	Positions Held During Past Five Years	Dates
Jimmy E. Addison	57	Chief Executive Officer and President-SCANA President and Chief Operating Officer-SCANA EnergyExecutive Vice President-SCANA and Chief Financial Officer	2018-present 2014-2018 *-2017
Jeffrey B. Archie	60	Senior Vice President and Chief Nuclear Officer-SCE&G Senior Vice President-SCANA	-present-present
Sarena D. Burch	60	Senior Vice President-Risk Management and Corporate Compliance Senior Vice President-Fuel Procurement and Asset Management-SCANA, SCE&G and PSNC Energy	2016-present*-2015
Iris N. Griffin	41	Senior Vice President, Chief Financial Officer and TreasurerVice President - Finance and TreasurerAssociate TreasurerDirector - Audit Services, Privacy and Corporate Compliance OfficerManager - Investor Relations	2018-present2016-20172015-20162013-2015*-2013
D. Russell Harris	53	President-Gas Operations-SCE&GPresident and Chief Operating Officer-PSNC EnergyPresident and Chief Operating Officer-SCANA EnergySenior Vice President-SCANA	2013-present*-present2018-present 2013-present
Kenneth R. Jackson	61	Senior Vice President-Economic Development, Governmental and Regulatory AffairsVice President-Rates and Regulatory Services	2014-present*-2014
W. Keller Kissam	51	President-Generation, Transmission and Distribution and Chief Operating Officer-SCE&GPresident-Retail Operations-SCE&GSenior Vice President-SCANA	2018-present-2017-present
Randal M. Senn	61	Senior Vice President-Administration-SCANAVice President and Chief Information Officer Chief Information Officer	2016-present2016*-2016
Jim Odell Stuckey	49	Senior Vice President, General Counsel and Assistant SecretaryDirector - Legal Department and Deputy General Counsel Director - Legal Department and Associate General Counsel	2017-present 2014-2017 *-2014

*Indicates positions held at least since February 23, 2013.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES

SCANA:

~~Price~~SCANA ~~Range~~became (a wholly-owned subsidiary of Dominion Energy effective January 1, 2019, after which date no established public trading market exists for SCANA common stock. Prior to this date, SCANA common stock traded on the NYSE ~~Composite~~using ~~Listing):~~ the ticker symbol SCG. SCANA intends to pay quarterly cash dividends in 2019 but is neither required to nor restricted from making such payment, except as described in Note 4 to the consolidated financial statements in Item 8. Financial Statements and Supplementary Data.

	2017								2016
	4th Qtr.		3rd Qtr.		2nd Qtr.		1st Qtr.		4th Qtr.		3rd Qtr.		2nd Qtr.		1st Qtr.
High	$	50.22	$	68.35	$	71.28	$	72.75	$	74.94	$	76.41	$	75.67	$	70.35
Low	$	37.10	$	48.32	$	63.90	$	63.63	$	67.31	$	69.04	$	66.02	$	59.46

The following table provides information about purchases by or on behalf of SCANA or any affiliated purchaser (as defined in Rule 10b-18(a)(3) under the Exchange Act) of shares or other units of any class of SCANA's equity securities that are registered pursuant to Section 12 of the Exchange Act:

SCANA common stock trades on the NYSE using the ticker symbol SCG. At February 20, 2018 there were approximately 143 million shares of SCANA common stock outstanding which were held by approximately 23,100 shareholders of record. See Item 12 for a summary of equity securities issuable under SCANA’s compensation plans at December 31, 2017.



Issuer Purchases of Equity Securities
	(a)	(b)		(c)	(d)
Period	Total number of shares (or units) purchased	Average price paid per share (or unit)		Total number of shares (or units) purchased as part of publicly announced plans or programs	Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs
October 1-31, 2018	6,162	$	39.85	6,162
November 1-30, 2018	—	—		—
December 1-31, 2018	—	—		—
Total	6,162			6,162	*

~~SCANA~~*The ~~declared~~above ~~quarterly~~table ~~dividends~~represents onshares ~~its~~acquired ~~common~~for ~~stock~~non-employee ofdirectors ~~$0.6125~~under ~~per~~the ~~share~~Director inCompensation ~~2017~~ and ~~$0.575~~Deferral ~~per share in 2016~~Plan. On ~~February 22~~December 16, ~~2018~~2014, SCANA ~~declared~~announced a ~~quarterly~~program ~~cash~~to ~~dividend~~convert onfrom ~~SCANA~~original ~~common~~issue ~~stock of $0.6125 per share, which quarterly dividend is payable April 1, 2018~~ to ~~shareholders~~open ofmarket ~~record~~purchase ~~on March 12, 2018. For a discussion~~ of ~~provisions~~SCANA ~~that~~common ~~could~~stock ~~limit~~for ~~the~~all ~~payment~~applicable ofcompensation ~~cash~~and ~~dividends,~~dividend ~~see~~reinvestment ~~Financing~~plans. ~~Limits~~This ~~and~~program ~~Related~~took ~~Matters~~effect in the ~~Liquidity~~first ~~and~~quarter ~~Capital Resources section~~ of ~~Item 7~~2015. ~~Management's~~Concurrent ~~Discussion~~with ~~and~~the ~~Analysis~~SCANA ofCombination, ~~Financial~~effective ~~Condition~~January ~~and~~1, ~~Results~~2019, ofthis ~~Operations~~program ~~and Note 3 to the consolidated financial statements~~ceased.

The following table provides information about purchases by or on behalf of SCANA or any affiliated purchaser (as defined in Rule 10b-18(a)(3) under the Securities Exchange Act of 1934, as amended (Exchange Act)) of shares or other units of any class of SCANA's equity securities that are registered pursuant to Section 12 of the Exchange Act:14

Issuer Purchases of Equity Securities
	(a)	(b)		(c)	(d)
Period	Total number of shares (or units) purchased	Average price paidper share (or unit)		Total number of shares (or units) purchased aspart of publicly announcedplans or programs	Maximum number (or approximate dollar value) of shares (or units) that may yet bepurchased under theplans or programs
October 1-31, 2017	7,964	$	49.01	7,964
November 1-30, 2017	—	—		—
December 1-31, 2017	—	—		—
Total	7,964			7,964	*

*The above table represents shares acquired for non-employee directors under the Director Compensation and Deferral Plan. On December 16, 2014, SCANA announced a program to convert from original issue to open market purchase of SCANA common stock for all applicable compensation and dividend reinvestment plans. This program took effect in the first quarter of 2015 and has no stated maximum number of shares that may be purchased and no stated expiration date.

SCE&G:

All of SCE&G’'s common stock is owned by SCANA, and no established public trading market exists for SCE&G common stock. ~~During 2017 and 2016,~~ SCE&G ~~declared~~intends to pay quarterly cash dividends onin ~~its~~2019 ~~common~~but ~~stock~~is neither required to nor restricted from making such payment, except as described in Note 4 to the ~~following~~consolidated ~~amounts:~~financial statements in Item 8. Financial Statements and Supplementary Data.

Declaration Date	Amount			Declaration Date	Amount
February 16, 2017	$	76.9	million	February 18, 2016	$	72.2	million
April 27, 2017	78.1		million	April 28, 2016	73.3		million
August 3, 2017	78.5		million	July 28, 2016	74.0		million
October 26, 2017	80.6		million	October 27, 2016	77.5		million

On February 22, 2018, SCE&G declared a quarterly dividend on its common stock of $71.9 million.

For a discussion of provisions that could limit the payment of cash dividends, see Financing Limits and Related Matters in the Liquidity and Capital Resources section of Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 3 to the consolidated financial statements.

ITEM 6. SELECTED FINANCIAL DATA

As of or for the Year Ended December 31,	2017			2016		2015		2014		2013
	(Millions of dollars, except statistics and per share amounts)
SCANA:
Statement of Operations Data
Operating Revenues	$	4,407		$	4,227	$	4,380	$	4,951	$	4,495
Operating Income	$	87		$	1,153	$	1,308	$	1,007	$	910
Net Income (Loss)	$	(119	)	$	595	$	746	$	538	$	471
Common Stock Data
Weighted Avg Common Shares Outstanding (Millions)	142.6			142.6		142.6		142.6		138.4
Basic Earnings (Loss) Per Share	$	(0.83	)	$	4.16	$	5.22	$	3.79	$	3.40
Diluted Earnings (Loss) Per Share	$	(0.83	)	$	4.16	$	5.22	$	3.79	$	3.39
Dividends Declared Per Share of Common Stock	$	2.45		$	2.30	$	2.18	$	2.10	$	2.03
Balance Sheet Data
Utility Plant, Net	$	10,648		$	14,324	$	13,145	$	12,232	$	11,643
Total Assets	$	18,739		$	18,707	$	17,146	$	16,818	$	15,127
Total Equity	$	5,255		$	5,725	$	5,443	$	4,987	$	4,664
Short-term and Long-term Debt	$	6,983		$	7,431	$	6,529	$	6,581	$	5,788
Other Statistics
Electric:
Customers (Year-End)	718,822			709,418		698,372		687,800		678,273
Total sales (Million kWh)	22,866			23,458		23,102		23,319		22,313
Generating capability-Net MW (Year-End)	5,233			5,233		5,234		5,237		5,237
Territorial peak demand-Net MW	4,701			4,807		4,970		4,853		4,574
Regulated Gas:
Customers, excluding transportation (Year-End)	930,790			906,883		881,295		859,186		837,232
Sales, excluding transportation (Thousand Therms)	857,886			890,113		875,218		973,907		921,533
Transportation customers (Year-End)	616			632		627		656		667
Transportation volumes (Thousand Therms)	700,254			674,999		791,402		1,786,897		1,729,399

Not Applicable.

The comparability of Selected Financial Data is affected by the following:

In 2017, as a result of the decision to stop construction on Unit 2 and Unit 3, approximately $4.7 billion (prior to an estimated impairment loss) was reclassified from construction work in progress within Utility Plant, Net into regulatory assets. In addition, a pre-tax impairment loss of $1.1 billion was recorded. See Note 10 to the consolidated financial statements. Finally, deferred income tax assets and liabilities were remeasured in connection with the enactment of the Tax Act, resulting in an increase in Net Loss of approximately $30 million.

In 2015, a regulated gas operating subsidiary and a non-operating subsidiary were sold, resulting in pre-tax gains totaling approximately $342 million. See Note 1 to the consolidated financial statements.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

~~Pursuant~~SCANA and SCE&G meet the conditions to ~~General~~file ~~Instruction~~under Ithe ofreduced ~~Form~~disclosure ~~10-K~~format, ~~SCE&G~~and istherefore ~~permitted~~have toomitted ~~omit~~ certain information related to ~~itself~~themselves and ~~its~~their consolidated affiliates and subsidiaries called for by Item 7 of Form 10-K. As a result, ~~and~~this ~~instead~~Item ~~provide~~7 provides a management’'s narrative ~~explanation~~analysis of ~~its~~the ~~consolidated~~Company's ~~results of operation~~ and ~~other~~Consolidated ~~information~~SCE&G's ~~described~~results ~~therein.~~of ~~Such~~operations, ~~information~~and isit ~~presented~~should ~~hereunder~~be ~~specifically~~read ~~for~~in ~~Consolidated~~conjunction ~~SCE&G,~~with ~~but~~Item ~~may~~8. beFinancial ~~presented~~Statements ~~alongside~~and ~~information~~Supplementary ~~presented for the Company generally~~Data. Consolidated SCE&G makes no representation as to information relating solely to SCANA ~~Corporation~~ and its subsidiaries (other than Consolidated SCE&G).

OVERVIEW

SCANA, through its wholly-owned regulated subsidiaries, is primarily engaged in the generation, transmission, distribution and sale of electricity in South Carolina and in the purchase, transmission and sale of natural gas in North Carolina and South Carolina. Through a wholly-owned nonregulated subsidiary, SCANA markets natural gas to retail customers in Georgia and to wholesale customers in the southeast. A service company subsidiary of SCANA provides primarily administrative and management services to SCANA and its subsidiaries.

Key Earnings Drivers and Outlook

The outcome of contentious regulatory, legislative and court proceedings stemming from the Company's July 31, 2017 decision to stop construction of Unit 2 and Unit 3 and to seek recovery of its investment in the abandoned Nuclear Project will significantly affect the Company's future earnings. These proceedings could result in the SCPSC ordering SCE&G to cease collecting BLRA-related rates and to immediately refund such amounts previously collected. Such an outcome would likely result in degraded credit ratings with a corresponding higher cost of capital, if such capital were available at all. In 2017, the Company's principal subsidiary, SCE&G, recorded an aggregate pre-tax impairment loss of $1.118 billion related to the abandoned Nuclear Project. These matters are discussed further in Electric Operations below, in Liquidity and Capital Resources herein and in Note 10 to the consolidated financial statements.

On January 2, 2018, SCANA entered into the Merger Agreement with Dominion Energy. Under the terms of that agreement, Dominion Energy would provide the financial support for SCE&G to make a $1.3 billion up-front, one time rate credit to SCE&G's electric customers to be paid within 90 days of the closing of the merger, a $575 million refund along with the benefits of the Tax Act resulting in at least a 5% reduction to SCE&G electric service customers' bills over an eight-year period, and the exclusion from rate recovery of approximately $1.7 billion of costs related to the Nuclear Project. These terms, together with other terms and commitments in the Merger Agreement and the Joint Petition, could resolve many of the outstanding issues related to the Nuclear Project. The Company targets the closing of the merger by the end of 2018. Significant hurdles must be overcome before closing may occur, however, including the receipt of the requisite authorizations, approvals, consents and/or permits from various federal and state regulatory entities and the approval of two-thirds of the shares represented by SCANA's shareholders. Regulatory approvals of the merger may not be obtained on a timely basis or at all, and such approvals may include conditions that could have an adverse effect on the Company and Consolidated SCE&G or result in the abandonment of the merger. No assurance can be provided that the necessary approvals will be obtained or that any required conditions will not have an adverse effect on Consolidated SCE&G following the merger. See additional discussion in Item 1A. Risk Factors and in Note 2 and Note 10 to the consolidated financial statements.

Electric Operations

SCE&G's electric operations primarily generate electricity and provide for its transmission, distribution and sale to approximately 719,000 customers (as of December 31, 2017) in portions of South Carolina in an area covering nearly 17,000 square miles. GENCO owns a coal-fired generating station and sells electricity solely to SCE&G. Fuel Company acquires, owns, provides financing for and sells at cost to SCE&G nuclear fuel, certain fossil fuels and emission and other environmental allowances.

Operating results are primarily driven by customer demand for electricity, rates allowed to be charged to customers and the ability to control costs. Demand for electricity is primarily affected by weather, customer growth and the economy. SCE&G is able to recover the cost of fuel used in electric generation through retail customers’ bills, but increases in fuel costs affect electricity prices and, therefore, the competitive position of electricity compared to other energy sources.

Embedded in the rates charged to customers is an allowed regulatory ROE. SCE&G’s allowed ROE in 2017 was 10.25% for non-BLRA rate base. For BLRA-related rate base existing prior to 2016, SCE&G's ROE was 11.0%, and for such rate base arising in 2016, the ROE was 10.5%. As described in Note 2 to the consolidated financial statements, the SCPSC revised SCE&G's ROE for Nuclear Project costs to 10.25%, which was to be applied prospectively for the purpose of calculating revised rates sought by SCE&G under the BLRA on and after January 1, 2017. No revised rates filing was pursued in 2017. Uncertainties that are expected to adversely impact ROE on BLRA-related rate base are discussed in Abandoned Nuclear Project herein and in Note 10 to the consolidated financial statements.

In 2017, the enactment of federal environmental laws and regulations related to the generation of electricity slowed significantly; however, public sentiment surrounding air quality and water quality remains strong and is expected to continue. Over several years, SCE&G has incurred significant costs and made substantial investments to comply with federal environmental initiatives, including the retirement of certain coal-fired plants and the conversion of others to burn natural gas. In addition, SCE&G has added the renewable energy from several new solar generating facilities at locations throughout its electric service territory. In addition, SCE&G and GENCO have installed pollution control equipment at their remaining coal-fired plants, which have resulted in reduced air emissions. The status of significant environmental laws and regulations and certain initiatives undertaken to ensure compliance with them are described in Environmental Matters herein and in Note 10 to the consolidated financial statements.

Abandoned Nuclear Project

Significant events leading up to the Company's decision to abandon the Nuclear Project include the following:

• On July 1, 2016, SCE&G, on behalf of itself and as agent for Santee Cooper, elected the fixed price option as provided for in the October 2015 Amendment to the EPC Contract, subject to SCPSC approval. The fixed price option was designed to shift the risk of significant cost overruns from SCE&G and Santee Cooper by fixing the total amount to be paid to the Consortium for its entire scope of work on the project, with limited exceptions.

• On November 9, 2016, the SCPSC approved SCE&G's election of the fixed price option.

• On March 29, 2017, WEC and WECTEC filed petitions for protection under Chapter 11 of the U.S. Bankruptcy Code, citing a liquidity crisis arising from project contract losses attributable to the Nuclear Project and similar units being built for an unaffiliated company as a material factor that caused them to seek protection under the bankruptcy laws. As part of their filing, WEC and WECTEC publicly announced their inability to complete Unit 2 and Unit 3 under the fixed price terms of the EPC Contract.

• In connection with the bankruptcy filing, SCE&G, Santee Cooper, WEC and WECTEC entered into an Interim Assessment Agreement under which engineering and construction continued on the project and under which SCE&G and Santee Cooper were provided the right to discuss project status with Fluor and other subcontractors and vendors and to obtain from them relevant project information and documents that had been previously contractually unavailable in order for SCE&G and Santee Cooper to perform comprehensive analyses regarding whether or how to proceed with the project.

• On July 31, 2017, based on the results of its analysis and in light of Santee Cooper's decision to suspend construction on the units, the Company determined to stop the construction of Unit 2 and Unit 3 and to pursue recovery of costs incurred in connection with their construction under the abandonment provisions of the BLRA or through other regulatory means.

The Company's decision to stop construction of Unit 2 and Unit 3 and to pursue recovery of costs incurred in connection with their construction have been the subject of contentious proceedings before the SCPSC and special committees of the South Carolina legislature. The Governor has likewise asserted, among other things, that the BLRA should be replaced and any further collection of money from customers for the Nuclear Project should be prevented. The SCPSC is actively considering a request that could result in the suspension of rates currently being collected by SCE&G under the BLRA (approximately $445 million annually, which includes collections related to transmission assets expected to be placed into service), that could require the return of such amounts previously collected (approximately $1.9 billion as of December 31, 2017), and that will affect when and in what manner proceeds arising from the Toshiba guaranty (approximately $1.1 billion) will be used for the benefit of SCE&G customers.

Proposals to Resolve Outstanding Issues

On November 16, 2017, SCE&G announced for public consideration a proposal to resolve outstanding issues relating to the Nuclear Project. Under the proposal, SCE&G electric customers were to receive a 3.5% electric rate reduction, the addition of an existing 540-MW natural gas fired power plant by SCE&G with the acquisition cost borne by SCANA shareholders, and the addition of approximately 100-MW of large scale solar energy by SCE&G. The proposal also provided for the recovery of the nuclear construction costs (net of the proceeds of the Toshiba Settlement not utilized for liquidation of project liens) over 50 years. While SCE&G’s proposal was not formally submitted for regulatory approval, discussions with key stakeholders over the ensuing weeks indicated that SCE&G's proposal would not be sufficient to resolve the outstanding issues.

On January 2, 2018, SCANA entered into the Merger Agreement with Dominion Energy, and on January 12, 2018, SCE&G and Dominion Energy filed the Joint Petition requesting SCPSC approval of the merger or a finding that either the merger is in the public interest or that there is an absence of harm arising from the merger. In the Joint Petition, among other things, the parties commit to providing an up-front, one time rate credit to SCE&G's electric customers totaling approximately $1.3 billion within 90 days of the merger's closing, at least a 5% reduction in customer bills, shortening the amortization period for recovery of costs related to the Nuclear Project to 20 years, forgoing recovery of approximately $1.7 billion in costs related to the Nuclear Project, and the addition of an existing 540-MW natural gas fired power plant by SCE&G with no initial investment borne by customers. The petition also puts forth other less-favored alternatives for rate recovery in the event the joint proposal were not to be accepted by the SCPSC and the merger were not to be consummated.

The outcome of these matters is uncertain, and any resolution adverse to the Company and Consolidated SCE&G could adversely affect results of operations, cash flows and financial condition. These matters and others are further discussed in Liquidity and Capital Resources and in Note 2 and Note 10 to the consolidated financial statements.

Gas Distribution

The local distribution operations of SCE&G and PSNC Energy purchase, transport and sell natural gas to approximately 931,000 retail customers (as of December 31, 2017) in portions of South Carolina and North Carolina in areas covering approximately 35,000 square miles. Operating results for gas distribution are primarily influenced by customer demand for natural gas, rates allowed to be charged to customers and the ability to control costs. Embedded in the rates charged to customers is an allowed regulatory ROE for SCE&G of 10.25% and for PSNC Energy of 9.7%.

Demand for natural gas is primarily affected by weather, customer growth, the economy and the availability and price of alternate fuels. Natural gas competes with electricity, propane and heating oil to serve the heating and, to a lesser extent, other household energy needs of residential and small commercial customers. This competition is generally based on price and convenience. Large commercial and industrial customers often have the ability to switch from natural gas to an alternate fuel, such as propane or fuel oil. Natural gas competes with these alternate fuels based on price. As a result, any significant disparity between supply and demand, either of natural gas or of alternate fuels, and due either to production or delivery disruptions or other factors, will affect price and will impact the Company’s ability to retain large commercial and industrial customers.

The production of shale gas in the United States continues to keep prices for this commodity at historic lows, and such prices are expected to continue at generally low levels for several years. The supply of natural gas from the Marcellus shale basin has prompted Dominion Energy and other companies unaffiliated with SCANA to propose construction of an approximately 600-mile pipeline that would bring natural gas from West Virginia to Virginia and North Carolina. This pipeline is expected to be completed in late 2019 and, if successful, it may drive economic development along its path, including areas within PSNC Energy's service territory, and may serve to assist in keeping natural gas competitively priced in the region.

Gas Marketing

SCANA Energy markets natural gas in the southeast and provides energy-related services to customers, including retail customers in Georgia. Operating results for energy marketing are influenced by customer demand for natural gas and the ability to control costs. The price of alternate fuels and customer growth significantly affect demand for natural gas. In addition, the availability of certain pipeline capacity to serve industrial and other customers is dependent upon the market share held by SCANA Energy in the Georgia retail market. SCANA Energy sells natural gas to over 425,000 customers (as of December 31, 2017) throughout Georgia. This market is mature, resulting in low margins and significant competition from affiliates of large energy companies and electric membership cooperatives, among others. SCANA Energy’s ability to maintain its market share primarily depends on the prices it charges customers relative to the prices charged by its competitors and its ability to provide

high levels of customer service. In addition, SCANA Energy's operating results are sensitive to the impacts of weather on customer demand.

RESULTS OF OPERATIONS

Earnings (Loss) and dividends were as follows:



	2018			2017
The Company
Loss per share	$	(3.70	)	$	(0.83	)
Cash dividends declared per share	$	0.98		$	2.45

Consolidated SCE&G
Net loss (millions of dollars)	$	(589.3	)	$	(171.9	)

	2017			2016		2015
The Company
Earnings (loss) per share	$	(0.83	)	$	4.16	$	5.22
Cash dividends declared per share	$	2.45		$	2.30	$	2.18
Consolidated SCE&G
Net income (loss) (millions of dollars)	$	(171.9	)	$	525.8	$	479.5

2018 vs 2017

OnThe ~~February 22,~~Company's loss per share and Consolidated SCE&G's net loss reflect impairment losses taken in each period related to the abandoned Nuclear Project. Results in 2018, ~~SCANA~~also ~~declared~~reflect aan ~~quarterly~~electric ~~cash~~rate ~~dividend~~reduction onmade ~~its~~effective ~~common~~as ~~stock~~of the second quarter of $02018 and significant legal and other costs incurred in connection with the Nuclear Project.~~6125~~ ~~per~~For ~~share~~the Company, 2018's results also reflect costs associated with the merger with Dominion Energy. These and other results are discussed below.

2017 vs 2016

The Company's earnings (loss) per share and Consolidated SCE&G's net income (loss) primarily reflects an operating loss from Electric Operations, which includes an impairment loss associated with the abandonment of the Nuclear Project, partially offset by improved operating income from Gas Distribution. In addition, the Company's earnings (loss) per share reflects a loss resulting from enactment of the Tax Act. These and other results are discussed below.

2016 vs 2015

The Company's earnings per share and Consolidated SCE&G's net income reflects higher operating income from Electric Operations and Gas Distribution. The Company's earnings per share also reflects higher net income from Gas Marketing. These and other results are discussed below.

Matters Impacting Future Results

The Company's decision on July 31, 2017 to stop construction of Unit 2 and Unit 3 and to pursue recovery of the cost of the abandoned Nuclear Project has had and could continue to have significant impacts on the Company's and Consolidated SCE&G's future earnings, cash flows and financial position, including those related to the ultimate recovery of regulatory assets and the sustainability of tax positions. The Company continues to believe the decision to abandon the Nuclear Project was prudent and that costs incurred with respect to the project were prudent, have contested specific challenges to this decision, and believe that the issues related to the recovery of the cost of the abandoned Nuclear Project and related to the rates currently being collected under the BLRA for financing costs should be resolved in future proceedings before the SCPSC. However, based on various events following the abandonment, there is significant uncertainty as to SCE&G's ultimate ability to fully recover its costs of Unit 2 and Unit 3 and a return on them from its customers. These events include the contentious nature of ongoing reviews by legislative committees and others, legislative proposals being considered by the General Assembly and promoted by the Governor, and the Request being considered by the SCPSC that could result in the suspension of rates currently being collected under the BLRA, as well as the return of such amounts previously collected.

The Company and Consolidated SCE&G have determined that a disallowance of recovery of part of the cost of the abandoned plant is both probable and reasonably estimable under applicable accounting guidance, and have recorded a pre-tax impairment loss with respect to disallowance of unrecovered nuclear project costs and other related deferred costs totaling approximately $1.118 billion. This amount includes $210 million recorded in the third quarter of 2017 and the remaining $908 million recorded in the fourth quarter of 2017. For additional discussion, see Impairment Considerations in Critical Accounting Policies and Estimates and Note 10 to the consolidated financial statements.

It is reasonably possible that further changes in these estimates will occur in the near term and could be material; however, all such changes cannot be reasonably estimated. The above impairment loss reflects impacts similar to those that would have resulted had the proposed solution announced November 16, 2017 been implemented. If the merger benefits and cost recovery plan outlined in the Joint Petition is implemented (upon closing of the merger as contemplated in the Merger Agreement), an additional impairment loss and other charges totaling as much as approximately $1.7 billion would be expected to be recorded. If instead the Joint Petition is not approved and the Request by the ORS is approved, if the BLRA is found to be unconstitutional or the General Assembly amends or revokes the BLRA, the Company and Consolidated SCE&G may be

required to record an additional impairment loss and other charges totaling as much as approximately $4.8 billion. This additional impairment loss would result from the write-off of the remaining unrecovered Nuclear Project costs of $3.976 billion recorded within regulatory assets and the refund of revised rates collections under the BLRA described above of approximately $1.9 billion, net of approximately $1.062 billion, which amount represents the monetization of guaranty settlement of $1.095 billion recorded within regulatory liabilities less amounts that may be required to settle contractor liens. The Company and Consolidated SCE&G do not currently anticipate that any of the $1.9 billion in revenue previously collected will be subject to refund; however, no assurance can be given as to the outcome of this matter.

In December 2017, the Tax Act was enacted, resulting in the remeasurement of all federal deferred income tax assets and liabilities to reflect a 21% federal statutory corporate tax rate. Due to the regulated nature of the Company’s and Consolidated SCE&G’s operations, the effect of this remeasurement is primarily reflected in excess deferred income tax balances within regulatory liabilities. As described in Note 2 to the consolidated financial statements, SCE&G and PSNC Energy have responded to orders from state regulators seeking information on the effects the Tax Act would have on their respective operations. The Company and Consolidated SCE&G cannot determine the amount or timing of any refunds to customers that may result. Going forward, the Company and Consolidated SCE&G expect that the lower tax expense resulting from the reduced federal statutory tax rate will result in similar reductions to amounts collected from customers through electric and gas rates, and no significant impact on financial results are expected. See also Note 5 to the consolidated financial statements for additional discussion related to deferred tax assets and deferred tax liabilities.

These matters impacting future results are further discussed under Impact of Abandonment of Nuclear Project within LIQUIDITY AND CAPITAL RESOURCES, in Note 2 and Note 10 to the consolidated financial statements and in Part I, Item 1A. Risk Factors.

Electric Operations

Electric Operations for the Company and for Consolidated SCE&G is comprised of the electric operations of SCE&G, GENCO and Fuel Company. Electric Operations operating ~~income~~loss (including transactions with affiliates) was as follows:

	The Company						Consolidated SCE&G			~~Consolidated SCE&G~~
Millions of dollars	~~2017~~2018			~~2016~~2017			~~2015~~2018			2017			~~2016~~		~~2015~~
Operating revenues	$	2,~~664~~326.46		$	2,~~619~~664.4		$	2,~~557~~326.16		$	2,664.4		$	~~2,619.4~~	$	~~2,557.1~~
Fuel used in electric generation	~~593~~671.63			~~576~~593.16			~~660~~671.63			593.6			~~576.1~~		~~660.6~~
Purchased power	8091.19			6380.71			5291.19			80.1			~~63.7~~		~~52.1~~
Other operation and maintenance	~~519~~546.04			~~526~~512.10			~~497~~559.18			~~533~~526.4			~~540.2~~		~~509.6~~
Impairment loss	1,~~118~~376.10			—1,118.1			—1,376.0			1,118.1			—		—
Depreciation and amortization	~~294~~307.74			~~286~~294.57			~~277~~296.34			282.8			~~274.9~~		~~266.9~~
Other taxes	~~220~~227.34			~~210~~220.43			~~194~~225.50			217.8			~~207.9~~		~~192.4~~
Operating Income (Loss)	$	(161.4	)	$	956.6		$	875.5		$	(161.4	)	$	956.6	$	875.5
Operating Loss	$	(893.8	)	$	(154.4	)	$	(893.8	)	$	(154.4	)

Electric operations can be significantly impacted by the effects of weather. SCE&G estimates the effects on its electric business of actual temperatures in its service territory as compared to historical averages to ~~develop~~approximate ~~an estimate of~~ electric revenue and fuel costs attributable to the effects of abnormal weather. Results in ~~2017~~both ~~reflect~~2018 ~~milder than normal weather in the first~~ and ~~fourth~~2017 ~~quarters and warmer than normal weather in the second and third quarters. Results in 2016~~ reflect ~~significantly warmer than normal weather in the second and third quarters and~~ milder than normal weather in the first and fourth quarters. Results in 2015 reflect colder than normal weather in the first quarter, warmer than normal weather in the second and third quarters and milder than normal weather in the fourth quarter.

~~2017 vs 2016~~15

~~Ÿ Operating revenue increased due to revised rates increases under~~ the ~~BLRA~~first ~~of $57.6 million~~quarter, ~~residential~~with ~~and~~2017 ~~commercial~~being ~~growth~~significantly ofmilder ~~$29.4~~than ~~million~~2018, ~~industrial growth~~ and ~~higher~~warmer ~~usage~~than ofnormal ~~$5.5~~weather ~~million,~~in ~~increased revenue recognized under~~ the ~~DER program of $7.3 million and higher fuel cost recovery of $48.1 million. These revenue increases were partially offset by the effects of milder weather of $77.7 million~~second, ~~lower~~third ~~residential~~ and ~~commercial~~fourth average use of $18.9 million and lower collections under the rate rider for pension costs of $4.0 million. The lower pension rider collections had no impact on net income as they were fully offset by the recognitionquarters, ~~within~~with ~~other~~2018 ~~operation~~being ~~and~~warmer ~~maintenance~~than ~~expenses,~~2017 ofin ~~lower~~each ~~pension costs~~period.

Ÿ2018 ~~Fuel~~vs ~~used~~2017 in electric generation and purchased power expenses increased due to higher fuel prices of $48.1 million, amortization of DER program costs of $3.9 million and increased sales volumes associated with residential and

38Ÿ Operating revenues decreased in 2018 by $113.7 million pursuant to an SCPSC order whereby fuel cost recovery was offset with gains realized upon the settlement of certain interest rate derivative contracts, as further described in Other Income (Expense) below. Operating revenue also decreased by $300.4 million due to the enactment and implementation of Act 258, by $69.2 million due to the recognition of estimated amounts to be refunded to customers as a result of the Tax Act and by lower residential and commercial average use of $48.6 million. The downward reserve adjustment related to fuel cost recovery had no effect on net income as it was fully offset by the recognition within other income of gains realized upon the settlement of certain derivative interest rate contracts. These revenue decreases were partially offset by the effects of weather of $100.4 million, residential and commercial growth of $22.4 million and higher fuel cost recovery of $65.6 million.

~~commercial~~Ÿ ~~customer~~Fuel ~~growth~~used in electric generation and purchased power expenses increased due to higher fuel prices of $565.86 million., ~~These~~increased ~~increases~~sales ~~were~~volumes ~~partially~~associated ~~offset~~with ~~due~~residential toand ~~lower~~commercial customer growth of $5.2 million and higher sales volumes associated with the effects of ~~milder~~ weather of $1524.93 million,. These increases were partially offset by lower residential and commercial average use of $412.17 million,. ~~lower~~In ~~industrial~~2018, ~~usage~~purchased ofpower ~~$1.6~~expenses ~~million~~were lower and ~~lower~~expenses for fuel ~~handling~~used ~~expenses~~in electric generation were higher due to SCE&G's purchase of ~~$2.4~~CEC ~~million~~and the termination of a related purchase power agreement.

Ÿ Other operation and maintenance expenses ~~decreased~~increased due to ~~lower~~higher ~~labor~~legal and other costs ofarising ~~$24.0~~from ~~million,~~the ~~primarily~~abandonment ~~due~~of tothe ~~lower~~Nuclear ~~incentive~~Project ~~compensation~~of ~~costs~~approximately $25.6 million and ~~lower~~increases ~~pension~~in non-labor costs associated with the ~~lower~~purchase ~~pension~~of ~~rider~~CEC ~~collections, partially offset by nuclear abandonment-related severance costs~~ of $128.35 million. ~~This~~These ~~decrease~~increases ~~was~~were partially offset by ~~higher~~lower ~~non-~~labor ~~electric generation~~ costs of $29.24 million, ~~and~~primarily due to ~~wind down and other costs associated with~~ the ~~abandonment~~absence of ~~the~~ Nuclear Project ofseverance ~~$10.9~~accruals ~~million~~in 2018.

Ÿ• Impairment loss ~~represents~~in ~~the~~each ~~estimate~~period ofrepresents ~~the~~ probable ~~disallowance~~disallowances of cost recovery associated with the ~~abandonment~~abandoned of the Unit 2 and Unit 3 of $670 million, a write down to estimated fair value of the carrying value of nuclear fuel acquired for use in Unit 2 and Unit 3 of $87 million and an aggregate amount of $361 million to write off costs which had been previously deferred primarily within regulatory assets in connection with the Nuclear Project.


Ÿ	Depreciation and amortization increased primarily due to net plant additions.


Ÿ	Other taxes increased primarily due to higher property taxes associated with net plant additions.

2016 vs 2015

Ÿ Operating revenue increased due to revised rates increases under the BLRA of $60.7 million, residential and commercial growth of $29.0 million, industrial growth and higher usage of $9.7 million, increased revenue recognized under the DER program of $5.8 million, the effects of weather of $28.2 million and higher collections under the rate rider for pension costs of $13.5 million. The higher pension rider collections had no impact on net income as they were fully offset by the recognition, within other operation and maintenance expenses, of higher pension costs. Revenue also increased due to downward adjustments in 2015, pursuant to orders from the SCPSC, to apply $14.5 million as an offset to fuel cost recovery upon the adoption of new (lower) electric depreciation rates and by $5.2 million related to DSM Programs. These adjustments had no effect on net income in 2015 as they were fully offset by the recognition of $14.5 million of lower depreciation expense and by the recognition, within other income, of $5.2 million of gains realized upon the settlement of certain interest rate contracts. These revenue increases were partially offset by lower fuel cost recovery of $84.1 million and lower residential and commercial average use of $19.5 million.

Ÿ Fuel used in electric generation and purchased power expenses decreased due to lower fuel prices of $84.1 million, lower sales volumes associated with residential and commercial average use of $4.2 million and lower fuel handling expenses of $2.3 million. These decreases were partially offset due higher to amortization of DER program costs of $4.6 million, higher industrial usage of $1.9 million, increased sales volumes associated with residential and commercial customer growth of $6.4 million and higher sales volumes associated with the effects of weather of $4.9 million.

Ÿ Other operation and maintenance expenses increased due to higher labor costs of $25.4 million, primarily due to increased pension costs associated with the higher pension rider collections and higher incentive compensation costs. Other operation and maintenance expenses also increased due to higher amortization of DSM program costs of $2.0 million.

Ÿ Depreciation and amortization increased primarily due to net plant additions.

Ÿ Other taxes increased primarily due to higher property taxes associated with net plant additions.

Sales volumes (in GWh) related to the electric operations above, by class, were as follows:

Classification	~~2017~~2018	~~2016~~2017	~~2015~~
Residential	78,~~782~~366	87,~~140~~782	~~7,978~~
Commercial	7,~~372~~446	7,~~506~~372	~~7,386~~
Industrial	6,~~212~~250	6,~~265~~212	~~6,201~~
Other	~~584~~583	~~600~~584	~~595~~
Total retail sales	2122,~~950~~645	2221,~~511~~950	~~22,160~~
Wholesale	~~916~~1,014	~~947~~916	~~942~~
Total Sales	2223,~~866~~659	2322,~~458~~866	~~23,102~~

~~2017~~2018 vs ~~2016~~2017

Retail and wholesale sales volumes ~~decreased~~increased primarily due to the effects of weather~~, partially offset by increases associated with customer growth~~.

~~2016 vs 2015~~16

Retail sales volumes increased primarily due to the effects of weather and customer growth.

Gas Distribution

Gas Distribution is comprised of the local distribution operations of SCE&G, and for the Company, also includes PSNC Energy. Gas Distribution operating income (including transactions with affiliates) was as follows:

The Company

Consolidated SCE&G

~~Consolidated SCE&G~~

Millions of dollars

~~2017~~2018

~~2016~~2017

~~2015~~2018

2017

~~2016~~

~~2015~~

Operating revenues

~~876~~935.01

~~789~~876.80

~~811~~435.71

405.8

~~366.8~~

~~372.7~~

Gas purchased for resale

~~393~~449.03

~~345~~393.90

~~383~~239.70

205.9

~~182.9~~

~~192.5~~

Other operation and maintenance

~~168~~172.96

~~172~~167.79

~~161~~71.42

70.6

~~73.6~~

~~69.8~~

Depreciation and amortization

8493.96

8284.09

7730.5

29.0

~~27.3~~

~~26.8~~

Other taxes

4246.59

4142.5

3731.54

28.5

~~26.8~~

~~24.9~~

Operating Income

~~186~~172.7

~~147~~187.7

~~151~~63.60

71.8

~~56.2~~

~~58.7~~

The effect of abnormal weather conditions on gas distribution ~~margin~~operating income is mitigated by the WNA at SCE&G and the CUT at PSNC Energy as further described in ~~Revenue Recognition in~~ Note 13 of the consolidated financial statements in Item 8. Financial Statements and Supplementary Data. The WNA and CUT do not affect sales volumes.

~~2017~~2018 vs ~~2016~~2017

Ÿ Operating ~~revenue~~revenues increased at SCE&G primarily due to ~~increased~~higher ~~base~~gas ~~rates~~cost ~~under~~recovery ~~the RSA~~ of $623.75 million, customer growth of $119.7 million and higher ~~gas~~average ~~cost~~use ~~recovery~~ of $141.97 million. These increases were partially offset by ~~lower~~a ~~average~~decrease ~~use~~ of $17.65 million due to the deferral of estimated amounts to be refunded to customers as a result of the Tax Act. In addition to these factors, operating ~~revenue~~revenues ~~increased~~for at the Company increased due to weather at PSNC Energy's ~~higher gas cost collections~~ of $2863.96 million, acustomer ~~rate~~growth ~~increase~~ of $1412.93 million, ~~customer~~and ~~growth~~an ofincreased ~~$8.1~~adjustment ~~million~~related ~~and~~to ~~higher~~integrity ~~CUT~~management of $1711.29 million. These increases ~~at PSNC Energy~~ were partially offset by ~~milder~~a ~~weather~~CUT ~~and~~adjustment ~~declining~~of ~~consumption~~$34.3 million, decreased gas cost recoveries of $1814.7 million and $14.8 million due to deferred revenues related to the Tax Act.

Ÿ Gas purchased for resale increased at SCE&G due to increased sales volumes due to weather of $14.5 million, higher gas prices of $159.70 million, ~~and~~higher ~~increased~~average ~~sales~~use ~~volumes~~of ~~associated~~$4.8 ~~with~~million and firm customer growth of $74.17 million. In addition to these factors, gas purchased for resale at the Company reflects increased ~~primarily~~sales volumes due to weather at PSNC Energy's ~~higher gas costs~~ of $2832.91 million and customer growth of $24.26 million. ~~that~~These increases were partially offset by ~~milder~~decreased ~~weather~~gas costs of $14.7 million and ~~declining~~the ~~consumption~~effect of a CUT adjustment of $7.3.9 million.

Ÿ Other operation and maintenance expenses ~~decreased~~increased primarily due to ~~lower labor costs of $4.9 million at SCE&G and $10.9 million at PSNC Energy, due primarily to lower incentive compensation costs. These decreases were partially offset by~~ higher ~~non-~~labor costs ~~of $1~~.~~7 million at SCE&G and $8.6 million at PSNC Energy.~~


Ÿ	Depreciation and amortization increased primarily due to net plant additions.


Ÿ	Other taxes increased primarily due to higher property taxes associated with net plant additions.

2016 vs 2015

Ÿ Operating revenue decreased at SCE&G primarily due to lower gas cost recovery of $17.6 million and lower firm average use of $6.1 million. These decreases were partially offset by increased base rates under the RSA of $2.6 million and firm customer growth of $13.1 million. In addition to these factors, operating revenue decreased at the Company due to PSNC Energy's lower gas cost collections of $45.4 million. These decreases at PSNC Energy were partially offset by a rate increase of $6.5 million, increased customer growth of $10.3 million and higher CUT of $13.8 million.

Ÿ Gas purchased for resale at SCE&G decreased due to lower gas prices of $17.6 million. These decreases at SCE&G were partially offset by increased sales volumes associated with firm customer growth of $6.5 million. In addition to these factors, gas purchased for resale at the Company decreased due to PSNC Energy's decreased gas cost of $45.4 million and an excess state deferred income tax refund of $1.9 million. This decrease at PSNC Energy was partially offset by customer growth of $3.8 million, as well as higher CUT of $15.5 million.

Ÿ Other operation and maintenance expenses increased due to higher labor costs of $2.1 million at SCE&G and $6.7 million at the Company, due primarily to higher incentive compensation costs.

Ÿ Depreciation and amortization increased due to net plant additions, partially offset by the implementation of SCPSC-approved revised (lower) depreciation rates at SCE&G of $1.1 million.

Ÿ Other taxes increased primarily due to net plant additions.

Sales volumes (in MMBTU) related to gas distribution by class, including transportation, were as follows:

The Company

Consolidated SCE&G

~~Consolidated SCE&G~~

Classification (in thousands)

~~2017~~2018

~~2016~~2017

~~2015~~2018

2017

~~2016~~

~~2015~~

Residential

3745,~~251~~477

4037,~~142~~251

3914,~~090~~082

11,285

~~12,420~~

~~12,086~~

Commercial

2831,~~429~~640

2928,~~078~~429

2813,~~064~~344

12,565

~~12,879~~

~~12,580~~

Industrial

2021,~~108~~543

1920,~~364~~108

2019,~~101~~037

18,091

~~17,228~~

~~17,901~~

Transportation gas

5157,~~587~~867

4951,~~769~~587

496,~~297~~401

6,229

~~5,250~~

~~4,781~~

Total

~~137~~156,~~375~~527

~~138~~137,~~353~~375

~~136~~52,~~552~~864

48,170

~~47,777~~

~~47,348~~

~~2017~~2018 vs ~~2016~~2017

Residential, commercial and ~~commercial~~industrial sales volumes ~~decreased~~at ~~due to~~ the ~~effects~~Company ~~of weather~~ and ~~lower~~Consolidated ~~average use. These decreases were partially offset by customer growth. Industrial sales volumes at~~ SCE&G increased due to ~~fewer~~the ~~curtailments~~effects of weather and customer growth. Transportation volumes ~~at SCE&G~~ increased ~~primarily due to firm customers transporting rather than purchasing system supply. Transportation volumes~~ at ~~PSNC~~the ~~Energy~~Company ~~increased~~ primarily due to ~~firm~~a ~~service~~significant customer expansion ~~partly~~and ~~offset~~increased ~~by a decline in~~ natural gas fired electric generation ~~transportation~~within ~~and~~PSNC ~~milder~~Energy's ~~weather~~territory.

~~2016 vs 2015~~17

Residential and commercial firm sales volumes increased primarily due to customer growth. Commercial and industrial interruptible volumes decreased, and firm volumes increased, due to customers switching from interruptible to firm service at SCE&G. Industrial volumes decreased and transportation volumes increased due to customers switching to transportation only service.

Gas Marketing

Gas Marketing is comprised of the Company’s nonregulated marketing operation, SCANA Energy, which operates in the southeast and includes Georgia’s retail natural gas market. Gas Marketing operating revenues and net income were as follows:

Millions of dollars

~~2017~~2018

~~2016~~2017

~~2015~~

Operating revenues

~~1,001~~935.41

~~936~~1,001.74

~~1,146.7~~

Net Income

2643.92

2926.89

~~27.6~~

412018 vs 2017

~~2017~~Operating vsrevenues ~~2016~~decreased primarily due to the impact of adopting revenue recognition guidance (see Note 3 to the consolidated financial statements in Item 8. Financial Statements and Supplementary Data), whereby certain pass through charges are no longer classified as revenues. Net income increased due to the effects of weather.

Operating revenues increased primarily due to higher natural gas prices. Net income decreased primarily due to the impact of the remeasurement of deferred income taxes upon enactment of the Tax Act.

2016 vs 2015

Operating revenues decreased due to the lower market price of natural gas and lower industrial sales volume. Net income increased primarily due to a weather-related increase in demand.

Other Operating Expenses

Other operating expenses were as follows:

The Company

Consolidated SCE&G

~~Consolidated SCE&G~~

Millions of dollars

~~2017~~2018

~~2016~~2017

~~2015~~2018

2017

~~2016~~

~~2015~~

Other operation and maintenance

~~736~~835.73

~~755~~727.67

~~715~~631.30

~~604~~597.0

~~613.8~~

~~579.4~~

Impairment loss

1,~~118~~376.10

—1,118.1

—1,376.0

1,118.1

—

Depreciation and amortization

~~381~~402.67

~~370~~381.96

~~357~~326.58

311.8

~~302.2~~

~~293.7~~

Other taxes

~~264~~276.21

~~253~~264.92

~~234~~256.24

246.4

~~234.7~~

~~217.3~~

Changes in other operating expenses are largely attributable to the electric operations and gas distribution segments and are addressed in ~~their~~those ~~respective~~ discussions ~~of operating income (loss)~~. In addition, ~~overall~~other ~~increases~~operation inand ~~other~~maintenance ~~operating~~expense ~~expenses~~includes incertain ~~2016~~legal ~~were~~and ~~partially~~other ~~offset~~costs byarising from the ~~Company's~~abandonment ~~sale~~ of ~~CGT~~the inNuclear ~~early~~Project ~~2015,~~and ~~which~~the ~~resulted~~merger inwith ~~decreases~~Dominion Energy. Increases in ~~other~~such ~~operation~~costs ~~and~~at ~~maintenance~~the ~~expenses~~Company oftotaled approximately $281.21 million, ~~depreciation~~(including ~~and~~$25.6 ~~amortization~~million ofattributable $0to Consolidated SCE&G).7 ~~million~~The ~~and~~increases ~~other~~attributable ~~taxes~~to ofConsolidated ~~$0.5~~SCE&G ~~million.~~are included in amounts described in electric operations.

Net Periodic Pension Benefit Cost

Other operation and maintenance expense includes net periodic pension benefit cost, which was recorded on the income statements and balance sheets as follows:

	The Company						Consolidated SCE&G			~~Consolidated SCE&G~~
Millions of dollars	~~2017~~2018			~~2016~~2017			~~2015~~2018			2017			~~2016~~			~~2015~~
Income Statement Impact:
Employee benefit costs	$	1510.3		$	1915.23		$	58.34		$	12.3		$	~~16.4~~		$	~~2.8~~
Other expense	0.51			0.95			10.1			0.3			~~0.2~~			~~0.2~~
Balance Sheet Impact:
Increase in capital expenditures	5.2.5			5.32			32.90			4.7			~~4.7~~			~~3.4~~
Component of amount receivable from Summer Station co-owner	20.17			2.1			10.57			2.1			~~2.1~~			~~1.5~~
Increase (decrease) in regulatory assets	(0.8		)	(4.6		)	6.2			(0.8		)	(4.6		)	6.2
Decrease in regulatory assets	(1.9		)	(0.8		)	(1.9		)	(0.8		)
Net periodic benefit cost	$	2211.37		$	22.93		$	189.03		$	18.6		$	~~18.8~~		$	~~14.1~~

Pursuant to regulatory orders, SCE&G recovers current pension expense through a rate rider (for retail electric operations) and through cost of service rates (for gas operations), and amortizes pension costs previously deferred in regulatory assets as further described in Note 2 and Note 89 to the consolidated financial statements. Amounts amortized were $2.0 million for retail electric operations and $1.0 million for gas operations for each period presented. Pursuant to regulatory orders, PSNC Energy recovers current pension expense through cost of service rates.

~~Other Income (Expense), net~~18

Other ~~income~~Income (~~expense~~Expense), net includes the results of certain incidental non-utility activities of regulated subsidiaries, the activities of certain non-regulated subsidiaries, governance activities of the parent company and AFC. AFC is a utility accounting practice whereby a portion of the cost of both equity and borrowed funds used to finance construction (which is shown on the balance sheet as construction work in progress) is capitalized. An equity portion of AFC is included in nonoperating income and a debt portion of AFC is included in interest charges (credits), both of which have the effect of increasing reported net income. Components of other income (expense), net were as follows:

42Other income (expense), net includes the results of certain incidental non-utility activities of regulated subsidiaries, the activities of certain non-regulated subsidiaries, governance activities of SCANA and AFC. AFC is a utility accounting practice whereby a portion of the cost of both equity and borrowed funds used to finance construction (which is shown on the balance sheet as construction work in progress) is capitalized. An equity portion of AFC is included in nonoperating income and a debt portion of AFC is included in interest charges (credits), both of which have the effect of increasing reported net income. Components of other income (expense), net were as follows:

	The Company						Consolidated SCE&G			~~Consolidated SCE&G~~
Millions of dollars	~~2017~~2018			~~2016~~2017			~~2015~~2018			2017			~~2016~~			~~2015~~
Other income	$	78200.47		$	6478.4		$	74146.58		$	44.9		$	~~29.3~~		$	~~31.1~~
Other expense	(46.20		)	(3855.52		)	(6028.12		)	(2431.9		)	~~(24.1~~		)	~~(31.1~~		)
Gain on sale of SCI, net of transaction costs	—			—			106.6			—			—			—
AFC - equity funds	18.7			23.2			10.8			14.8
AFC - equity funds	23.2			29.4			27.0			14.8			26.1			24.8

~~2017~~2018 vs ~~2016~~2017

Other income at the Company and Consolidated SCE&G increased primarily due to the recognition of $113.7 million of gains realized upon the settlement of certain interest rate derivative contracts and $6.9 million of gains from land sales. The gains related to the settlement of interest rate derivative contracts were fully offset by downward adjustments to electric revenues pursuant to a previously received SCPSC order related to fuel cost recovery and, as such, had no effect on net income. These increases were partially offset by $10.9 million due to the absence of accrual of carrying costs on unrecovered ~~nuclear~~Nuclear ~~project~~Project costs in 2018 and by $617.35 million due to ~~SCPSC-approved~~lower carrying cost accrual on certain other deferred items. Other ~~expenses~~expense at the Company ~~increased~~and ~~primarily~~Consolidated ~~due~~SCE&G todecreased ~~higher~~$2.9 ~~legal~~million ~~costs~~and ~~at the parent company~~$1.9 ~~AFC~~million, ~~decreased~~respectively, due to ~~the~~changes ~~abandonment~~in ofnon-service ~~the~~cost ~~Nuclear~~components ~~Project~~of pension and aother ~~lower~~postretirement ~~AFC~~benefit ~~rate~~expense asrecognized awithin ~~result~~other ofexpense. ~~removing~~At ~~Nuclear~~the ~~Project~~Company, ~~related~~the ~~capital~~decreases ~~costs~~also ~~from~~include ~~the~~lower ~~average~~expenses ~~construction~~related ~~work~~to inother ~~progress~~benefit ~~balance~~programs. ~~used~~Equity toAFC ~~determine~~decreased ~~the~~primarily ~~annual~~due ~~AFC~~to ~~rate~~the ~~following~~abandonment of the ~~abandonment~~Nuclear ~~decision~~Project in 2017.

2016 vs 2015

Other income at the Company and Consolidated SCE&G decreased by $3.5 million due to lower gains on the sale of land and due to the recognition in 2015 of $5.2 million of gains realized upon the settlement of certain interest rate contracts previously recorded as regulatory liabilities pursuant to SCPSC orders previously discussed. Such gain recognition was fully offset by downward adjustments to electric operating revenues and had no effect on net income (see electric margin discussion). At the Company, other income also decreased by $3.9 million and other expenses decreased by $2.3 million due to the sale of SCI, and other income and other expenses decreased by $10.5 million for billings to DECG for transition services provided at cost pursuant to the terms of the sale of CGT. Other expenses at the Company and Consolidated SCE&G decreased by $5.2 million due to lower contribution expenses. In 2015, the Company's other income included the gain on the sale of SCI (see Dispositions in Note 1 to the consolidated financial statements). AFC increased due to construction activity.

Interest Expense

Components of interest expense, net of the debt component of AFC, were as follows:

	The Company				Consolidated SCE&G		~~Consolidated SCE&G~~
Millions of dollars	~~2017~~2018		~~2016~~2017		~~2015~~2018		2017		~~2016~~		~~2015~~
Interest on long-term debt, net	$	~~346~~357.7	$	~~330~~346.37	$	~~311~~271.30	$	266.1	$	~~253.8~~	$	~~236.0~~
Other interest expense	1626.73		1216.07		632.57		21.5		~~16.2~~		~~12.1~~
Total	$	~~363~~384.40	$	~~342~~363.34	$	~~317~~303.87	$	287.6	$	~~270.0~~	$	~~248.1~~

Interest ~~expense~~charges increased ~~in each year~~ primarily due to ~~increased~~the ~~borrowings,~~issuance of long-term debt at SCE&G and PSNC Energy in ~~2017~~2018, ~~due~~the accrual of interest related to uncertain tax positions and lower debt AFC ondue ~~borrowed~~to ~~funds~~the abandonment of the Nuclear Project. These increases were partially offset by the repayment of long-term debt at GENCO with short-term borrowings at lower rates.

Income ~~Taxes~~Tax Benefit

At the Company, ~~the income tax benefit for 2017 was primarily due to the impairment loss. Additionally, the impact of remeasuring deferred taxes upon enactment of the Tax Act increased deferred tax expense~~ and ~~resulted~~Consolidated ~~in additional net loss of approximately $30 million. Exclusive of these items~~SCE&G, income tax ~~expense~~benefit increased ~~from 2016 to 2017~~ primarily due to higher ~~income~~losses before taxes~~. Income~~ ~~tax~~as ~~expense~~a ~~decreased~~result ~~from~~of ~~2015~~the toincreased ~~2016~~impairment ~~primarily~~loss ~~due~~recognized toin ~~lower~~2018 ~~income before taxes. In 2015 income tax expense~~ and ~~income before taxes were affected by~~ the ~~sales~~effect of ~~CGT~~the ~~and~~electric ~~SCI.~~rate Atchange ~~Consolidated~~effective ~~SCE&G,~~in ~~income tax expense decreased from 2016 to 2017 primarily due to impacts related to~~ the ~~impairment~~second ~~loss~~quarter. Without these impacts, income tax expense increased from 2016 to 2017 primarily due to higher income before taxes. Income tax expense increased from 2015 to 2016 primarily due to higher income before taxes.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity Considerations

The Company and Consolidated SCE&G have experienced significant adverse events leading up to their decision to stop construction of Unit 2 and Unit 3, as well as significant adverse events since that decision was made. These events include the bankruptcy filing of the Consortium, the anticipated rejection by the Consortium of the EPC Contract with its fixed-price

provisions, and the ongoing contentious proceedings before regulatory and legislative bodies, among others things described in Note 10. In addition, downgrades by credit ratings agencies have occurred since the beginning of 2017, including recent rating actions. The Company and Consolidated SCE&G have significant obligations that must be paid within the next 12 months, including long-term debt maturities and capital lease payments of $727 million for the Company (including $723 million for Consolidated SCE&G), short-term borrowings of $350 million for the Company (including $252 million for Consolidated SCE&G), interest payments of approximately $335 million for the Company (including $259 million for Consolidated SCE&G), and future minimum payments for operating leases of $34 million for the Company (including $26 million for Consolidated SCE&G). Working capital requirements, such as those for fuel supply and similar obligations, also arise due to the lag between when such amounts are paid and when related collection of such costs through customer rates occurs.

Management believes as of the date of issuance of these financial statements that it has access to available sources of cash to pay obligations when due over the next 12 months. These sources include committed lines of credit that expire in December 2018 totaling $200 million for the Company, all of which pertains to Consolidated SCE&G, and committed long-term lines of credit that expire in December 2020 totaling $1.8 billion for the Company (including $1.2 billion for Consolidated SCE&G). In addition, as of the date of issuance of these financial statements, SCE&G continues to collect in customer rates amounts previously approved under the BLRA, as well as amounts provided for in other orders related to non-BLRA electric and gas rates. However, as further described below, SCANA's credit rating has fallen below investment grade, which has constricted its ability and that of Consolidated SCE&G to issue commercial paper.

As described in Note 10, on January 31, 2018, the South Carolina House of Representatives passed a bill (H.4375) that would create an experimental rate which would effectively suspend collections from rates previously approved by the SCPSC under the BLRA. This experimental rate would remain in effect during the pendency of administrative proceedings currently before the SCPSC or any appeal therefrom. In addition, the South Carolina Senate passed a joint resolution (S. 954) which, if enacted, would prohibit the SCPSC from holding a hearing on the merits for a docket in which requests were made pursuant to the BLRA (other than an administrative or procedural hearing prior to such hearing on the merits), and would prohibit any final determination on any such requests, before November 1, 2018, and would require the SCPSC to issue a final order for such docket no later than December 21, 2018. Any bill must be approved by both legislative chambers and be signed by, or allowed to become law without the signature of, the Governor before it would be enacted. Such regulatory, legislative or judicial proceedings outside of the Company’s and Consolidated SCE&G’s control may result in the temporary or permanent suspension of the approximately $445 million annually of rates being collected currently under the BLRA, the return of such amounts previously collected of $1.9 billion, or the requirement that SCE&G's share of payments received from the Toshiba Settlement ($1.095 billion) be placed in escrow or be refunded to customers. Neither the Company nor Consolidated SCE&G can predict if or when either of these bills could become law or what additional actions, if any, may be proposed or taken, including other legislative actions related to the BLRA.

Were the SCPSC to grant the relief sought by ORS in the Request or grant similar relief resulting from legislative action, and as further discussed in Note 10 in the consolidated financial statements, an additional impairment loss or other charges totaling as much as approximately $4.8 billion may be required. Such an impairment loss or other charges would further stress the Company’s and Consolidated SCE&G’s equity to total capitalization ratio and may result in the Company’s and Consolidated SCE&G’s ratio of equity to total capitalization falling below minimum levels prescribed in the Company’s credit agreements. In such an event, the Company’s and Consolidated SCE&G’s ability to borrow under their commercial paper programs and credit facilities and their ability to pay future dividends would likely be limited or may trigger events of default under such agreements.

Known and knowable conditions and events when considered in the aggregate as of the date of issuance of these financial statements do not suggest it is probable that the Company and Consolidated SCE&G will not be able to meet obligations as they come due over the next 12 months. However, possible future actions related to rates or refunds could have a material adverse effect on the Company’s and Consolidated SCE&G’s financial condition, liquidity, results of operations and cash flows such that management’s conclusion with respect to its ability to pay obligations when due could change.

Impact of Abandonment of Nuclear Project

Toshiba provided a parental guaranty for WEC’s payment obligations under the EPC Contract. Following the bankruptcy of WEC, the Toshiba Settlement was executed under which Toshiba was to make periodic settlement payments in the total amount of approximately $2.2 billion ($1.2 billion for SCE&G's 55% share), including certain amounts with respect to contractor liens. In 2017, the first payment under the Toshiba Settlement was received and the remaining amounts due were monetized, resulting in total cash inflows of approximately $2 billion (approximately $1.1 billion for SCE&G's 55% share), including amounts related to the contractor liens. See also Note 10 to the consolidated financial statements. Portions of these

proceeds have been utilized to repay maturing commercial paper balances. Such short-term borrowings had been incurred primarily for the construction of Unit 2 and Unit 3 prior to the decision to stop their construction.

Regulatory proceedings being considered by the SCPSC include the Request filed by the ORS which, if granted, would require SCE&G to (1) immediately suspend all revised rates collections from customers which were previously approved by the SCPSC pursuant to the authority of the BLRA, and (2) make credits to future bills or refunds to customers for prior revised rates collections in the event that the BLRA is found to be unconstitutional or the South Carolina General Assembly amends or revokes it. SCE&G estimates that revised rates collections, including collections related to transmission assets expected to be placed into service, currently total approximately $445 million annually, and such amounts accumulated as of December 31, 2017 total approximately $1.9 billion.

In an amendment to the Request, the ORS has asked the SCPSC to consider the most prudent manner by which SCE&G will enable its customers to realize the value of the monetized Toshiba Settlement payments and other payments made by Toshiba towards satisfaction of its obligations to SCE&G. Parties who filed to intervene in these proceedings or who filed a letter in support of the Request, as amended, include the Governor, the state's Office of Attorney General and Speaker of the House of Representatives, the Electric Cooperatives of South Carolina, the SCEUC, certain large industrial customers, and several environmental groups. On December 20, 2017, the SCPSC denied SCE&G's motion to dismiss the Request and requested that the ORS carry out an inspection, audit and examination of SCE&G's revenue requirements to assist the SCPSC in determining whether SCE&G's present schedule of rates is fair and reasonable and also ordered that a hearing be scheduled to consider the Request. The hearing has not yet been scheduled. See Note 2 for additional developments. SCE&G intends to continue vigorously contesting the Request, but cannot give any assurance as to the timing or outcome of this matter. Any adverse action by the SCPSC, such as that sought by the ORS in the Request, could have a material adverse impact on the Company's and Consolidated SCE&G's results of operations, cash flows and financial condition.

Should the SCPSC or a court direct that proceeds arising from the Toshiba Settlement be refunded to customers in the near-term, or direct that such funds be escrowed or otherwise made unavailable to SCE&G, it is anticipated that SCE&G would reissue commercial paper, draw on its credit facilities or issue long-term debt to fund such requirement if such sources are available. However, were the SCPSC to rule in favor of the ORS in response to the Request that SCE&G suspend collections from customers of amounts previously authorized under the BLRA, or were other actions of the SCPSC or others taken in order to significantly restrict SCE&G’s access to revenues or impose additional adverse refund obligations on SCE&G, the Company’s and Consolidated SCE&G's assessments regarding the recoverability of all or a portion of the remaining balance of unrecovered nuclear project costs (see Note 2 to the consolidated financial statements) would be adversely impacted and additional impairment losses would likely be recorded. Further, the recognition of significant additional impairment losses with respect to unrecovered Nuclear Project costs could increase the Company’s and Consolidated SCE&G’s debt to total capitalization to a level which may limit their ability to borrow under their commercial paper programs or under their credit facilities and also could constitute a default under these credit facilities. Borrowing costs for long-term debt issuances and access to capital markets could also be negatively impacted.

For additional background on the Nuclear Project and further details on the matters described above, see Note 10 to the consolidated financial statements under Abandoned Nuclear Project - Toshiba Settlement and Subsequent Monetization

and Determination to Stop Construction and Related Regulatory, Political and Legal Developments.

In the first quarter of 2017, credit ratings agencies placed SCANA and SCE&G’s credit ratings on negative outlook or watch status due to adverse developments relating to the WEC Bankruptcy. In the third quarter of 2017, two agencies lowered their ratings for SCANA and its rated subsidiaries, citing a decline in the regulatory environment as a principal reason for the downgrades, and both agencies maintained their negative outlook or watch status. On January 3, 2018, after SCANA announced a proposed merger with Dominion Energy, each of the three agencies affirmed or reported no change to their respective credit ratings, and one agency revised its rating outlook for SCANA and its rated operating companies from negative to evolving. However, on January 31, 2018, the South Carolina House of Representatives overwhelmingly approved a bill (H.4375) that, if enacted, would temporarily repeal rates SCE&G collects under the BLRA. As a result, on February 5, 2018, one agency downgraded its ratings for SCANA and SCE&G, and attributed the downgrade to the action taken by the House of Representatives and the politically charged environment that is expected to weigh heavily on any decisions by the SCPSC related to SCE&G's electric rates. With this recent downgrade, the issuer ratings and the senior unsecured debt ratings for SCANA are considered below investment grade by two credit agencies; the issuer ratings for SCE&G are considered to be at the threshold for investment grade by two credit agencies while its senior secured debt ratings remain above investment grade; and the issuer ratings for PSNC Energy are considered to be at the threshold for investment grade by one credit agency while its senior secured debt ratings remain above investment grade. All of the ratings for SCANA, SCE&G and PSNC Energy are either under review for possible downgrade or have a negative or evolving outlook.

Any actions taken by or anticipated to be taken by regulators or legislators that are viewed as adverse, including a change to the BLRA or a requirement that SCE&G make credits to future bills or refunds to customers above such amounts as are included in the Merger Agreement or any requirement that SCE&G make such credits or refunds in the absence of the merger being consummated, or deterioration of the rated companies’ commonly monitored financial credit metrics or any additional adverse developments with respect to the Nuclear Project, could further negatively affect their debt ratings. If these rating agencies were to further lower any of these ratings, borrowing costs on new issuances of long-term debt and commercial paper would increase, which could adversely impact financial results or limit or eliminate refinancing opportunities, and the potential pool of investors and funding sources could decrease. In addition, further ratings downgrades may result in lower collateral thresholds being applied to the Company's and Consolidated SCE&G's commodity derivatives, or the removal of such thresholds altogether. This action would have the effect of requiring the Company to post additional collateral for commodity derivative instruments with unfavorable fair values. Ratings downgrades have also resulted in prepayments and demands from vendors for letters of credit, cash deposits, or other forms of credit support under certain gas supply and other agreements, and further ratings downgrades could result in requirements for additional deposits or the provision of additional credit support in order to conduct business under these agreements. See further discussion under the heading Credit Risk Considerations in Note 6 to the consolidated financial statements.

Significant Tax Deductions and Credits

These tax claims primarily involve the timing of recognition of tax deductions rather than permanent tax attributes, and their permanent attributes (net), as well as most of the interest accruals required to be recorded with respect to them, had been deferred within regulatory assets. As such, until December 31, 2017 when it was determined to treat these deferrals as impaired (see Note 10 to the consolidated financial statements), these claims had not had, and were not expected to have in the future, significant direct effects on the Company’s and Consolidated SCE&G’s results of operations. Nonetheless, the claims have contributed significantly to the Company’s and Consolidated SCE&G’s cash flows by providing a significant source of capital and lessening the level of debt and equity financing that the Company and Consolidated SCE&G have needed to raise in the financial markets.

The claims made to date are under examination, and are considered controversial, by the IRS. Tax deductions which are expected to be claimed in connection with the determination to abandon the construction of Unit 2 and Unit 3 may also be considered controversial; therefore, it is also expected that the IRS will examine future tax returns. To the extent that any of these claims are not sustained as ordinary losses on examination or through any subsequent appeal, the Company and Consolidated SCE&G will be required to repay any cash received for tax benefit claims which are ultimately disallowed, along with interest on those amounts. Such amounts could be significant and could adversely affect the Company's and Consolidated SCE&G's liquidity, cash flows, results of operations and financial condition. In certain circumstances, which management considers to be remote, penalties for underpayment of income taxes could also be assessed. Additionally, in such circumstances, the Company and Consolidated SCE&G may need to access the capital markets to fund those tax and interest payments, which could in turn adversely impact their ability to access financial markets for other purposes.

Other Liquidity Requirements and Restrictions

The terms of the Merger Agreement place limits on the Company and its subsidiaries as to certain investing and financing transactions. While the Merger Agreement permits the Company and its subsidiaries to refinance and issue certain long-term debt, make capital expenditures at certain levels, consummate certain planned investments, and make regular quarterly dividend payments to its shareholders at certain levels, transactions above these levels would require consent from Dominion Energy, which consent cannot be unreasonably withheld. Permitted transactions include, but are not limited to, the planned refinancing of $710 million of long-term debt maturing in 2018 at Consolidated SCE&G and the planned new issuance of $100 million of long-term debt at PSNC Energy, the purchase of an existing 540-MW gas fired power plant, and the payment by SCANA of regular quarterly dividends to its shareholders subject to certain limits. See Capital Expenditures herein for additional restrictions. In addition, SCANA’s Supplementary Key Executive Severance Benefits Plan provides certain payments to qualified senior executive officers in connection with a change in control. In January 2018, approximately $110.7 million was placed irrevocably in a rabbi trust to fund payments pursuant to this and certain other deferred compensation, incentive and

retirement plans, which might arise in connection with a change in control and/or a termination of employment or service if and when such payments become due.

The Company expects to meet contractual cash obligations in 2018 through internally generated funds and additional short- and long-term borrowings. Subject to the outcome of the regulatory, legislative and legal proceedings discussed above, the Company expects that, barring a future impairment of the capital markets or its access to such markets, it has or can obtain adequate sources of financing to meet its projected cash requirements for the foreseeable future, including the cash requirements for refinancing maturing long-term debt. As noted above, adverse developments in regulatory, legislative or legal proceedings could alter these conclusions.

The terms of the Merger Agreement limit the dividends that SCANA can pay on its shares of common stock to an amount not greater than $0.6125 per share for any quarter. In order to preserve liquidity, the Company may revise its dividend policy to reduce or eliminate dividend payments. Such a decision could result in a significant decrease in the price of SCANA's common stock and an increase in the cost of raising equity capital.

Cash requirements for SCANA’s regulated subsidiaries arise primarily from their operational needs, funding their construction programs and payment of dividends to SCANA. The ability of the regulated subsidiaries to replace existing plant investment, to expand to meet future demand for electricity and gas and to install equipment necessary to comply with environmental regulations, will depend on their ability to attract the necessary financial capital on reasonable terms. Regulated subsidiaries recover the costs of providing services through rates charged to customers. Rates for regulated services are generally based on historical costs. As customer growth and inflation occur and these subsidiaries continue their ongoing construction programs, rate increases will be sought. The future financial position and results of operations of regulated subsidiaries will be affected by their ability to obtain adequate and timely rate and other regulatory relief.

Rating agencies consider qualitative and quantitative factors when assessing SCANA and its rated operating companies’ credit ratings, including the legislative and regulatory environment, capital structure and the ability to meet liquidity requirements. As previously noted, adverse developments with respect to recovery of Nuclear Project costs have negatively affected the Company’s and Consolidated SCE&G's debt ratings. Further adverse developments, changes in the legislative and regulatory environment or deterioration of SCANA's or its rated operating companies' commonly monitored financial credit metrics could cause the Company and Consolidated SCE&G to pay higher interest rates on its long- and short-term indebtedness, could limit the Company's and Consolidated SCE&G's access to capital markets and liquidity, and could trigger more stringent collateral requirements on interest rate and commodity hedges and under gas supply agreements and other contracts.

Cash provided from operating activities in 2016 and 2017 reflect significant tax benefits (reductions in income tax payments) arising from the deductions previously described under Significant Tax Deductions and Credits. The Company's decision in 2017 to stop construction of Unit 2 and Unit 3 and to abandon the Nuclear Project is expected to result in a significant tax deduction and an associated NOL for tax purposes. The Company expects to obtain a refund of taxes paid in certain prior years as a result of the carryback of the NOL, and expects to benefit from the carryforward of the NOL in future years. These cash flows are expected to supplant portions of financing which would otherwise be obtained in the capital markets.

Enactment of the Tax Act resulted in the remeasurement of deferred income tax assets and liabilities and the recognition as regulatory liabilities of certain excess deferred income taxes (see Note 2 and Note 5 to the consolidated financial statements). These regulatory liabilities will be amortized to the benefit of customers in accordance with the normalization provisions of the IRC and Code of Federal Regulations, which will serve to mitigate significant negative cash impact. Similarly, since the majority of the Company’s and Consolidated SCE&G's businesses are rate regulated, lower income taxes payable in future years due to the Tax Act should ultimately result in lower collections from customers in rates.

Capital Expenditures

Cash outlays for property additions and construction expenditures, including nuclear fuel, were $1.2 billion in 2017. Estimates of capital expenditures for construction and nuclear fuel for the next three years, which are subject to continuing review and adjustment, are as follows:

Millions of dollars	2018		2019
SCE&G
Generation	$	124	$	145
Transmission & Distribution	229		203
Other	12		23
Gas	98		105
Common	3		11
Total SCE&G	466		487
PSNC Energy	288		275
Other	37		24
Total Normal	791		786
Nuclear Fuel - SCE&G	54		51
Total Estimated Capital Expenditures	$	845	$	837

Under the terms of the Merger Agreement, the Company may increase the amounts of the above estimated capital expenditures in 2018 and 2019 by not more than 10% without obtaining the consent of Dominion Energy.

Contractual cash obligations as of December 31, 2017 are summarized as follows:

Contractual Cash Obligations	Payments due by periods
Millions of dollars	Total		Less than1 year		1 - 3 years		4 - 5 years		More than5 years
Long- and short-term debt, including interest	$	13,352	$	1,406	$	1,721	$	768	$	9,457
Capital leases	28		5		14		3		6
Operating leases	112		34		42		9		27
Purchase obligations	3,159		2,345		812		2		—
Other commercial commitments	2,929		1,057		846		258		768
Total	$	19,580	$	4,847	$	3,435	$	1,040	$	10,258

As of December 31, 2017, the SCPSC has taken no final action with regard to the Request by the ORS or in connection with the effect of the Tax Act on customer rates, including any action with respect to excess deferred income taxes. Therefore, no amounts have been included in the table above for these matters. See Note 2 to the consolidated financial statements.

Purchase obligations include customary purchase orders under which the Company has the option to utilize certain vendors without the obligation to do so. The Company may terminate such arrangements without penalty. Purchase obligations also includes amounts related to the EPC Contract, which the Company anticipates that WEC and WECTEC will reject. The Company does not expect that such amounts will be expended. See Note 10 to the consolidated financial statements.

Other commercial commitments includes estimated obligations under forward contracts for natural gas purchases. Such forward contracts include customary “make-whole” or default provisions, but are not considered to be “take-or-pay” contracts. Certain of these contracts relate to regulated businesses; therefore, the effects of such contracts on fuel costs are reflected in electric or gas rates. Other commercial commitments also includes a “take-and-pay” contract for natural gas which expires in 2019 and estimated obligations for coal and nuclear fuel purchases. The Company has included certain amounts related to nuclear fuel commitments based on its interpretation of its obligations under existing contract terms that are currently disputed by the supplier.

Unrecognized tax benefits of approximately $19 million have been excluded from the table above due to uncertainty as to the timing of any future payments. In addition, the table excludes amounts that may be required to be paid to federal or state taxing authorities related to tax deductions and credits on tax returns for which examinations have not been completed or closed. For additional information, see Note 5 to the consolidated financial statements.

In addition to the contractual cash obligations above, the Company sponsors a noncontributory defined benefit pension plan and an unfunded health care and life insurance benefit plan for retirees. The pension plan is adequately funded under current regulations, and no significant contributions are anticipated for the foreseeable future. Cash payments under the

postretirement health care and life insurance benefit plan were $12.5 million in 2017, and such annual payments are expected to be the same or increase to as much as $16.5 million in the future.

The Company is party to certain NYMEX natural gas futures contracts for which any unfavorable market movements are funded in cash. These derivatives are accounted for as cash flow hedges and their effects are reflected within other comprehensive income until the anticipated sales transactions occur. The Company, including Consolidated SCE&G, is also party to certain interest rate derivative contracts for which unfavorable market movements above certain thresholds are funded in cash collateral. Certain of these interest rate derivative contracts are accounted for as cash flow hedges, and others are not designated for accounting purposes as cash flow hedges but are accounted for pursuant to regulatory orders. See further discussion at Item 7A. Quantitative and Qualitative Disclosures About Market Risk and Note 6 to the consolidated financial statements. As of December 31, 2017, the Company had posted approximately $29 million in cash collateral related to interest rate derivative contracts.

The Company has a legal obligation associated with the decommissioning and dismantling of Unit 1 and other conditional AROs that are not listed in contractual cash obligations above. See Notes 1 and 10 to the consolidated financial statements. SCE&G's method for funding decommissioning costs is described in Note 1 to the consolidated financial statements.

Financing Limits and Related Matters

Issuance of various securities, including long-term and short-term debt, is subject to customary approval or authorization by regulatory bodies including state public service commissions and FERC.

SCE&G has obtained FERC authority to issue short-term indebtedness and to assume liabilities as a guarantor (pursuant to Section 204 of the Federal Power Act). SCE&G may issue unsecured promissory notes, commercial paper and direct loans in amounts not to exceed $1.6 billion outstanding with maturity dates of one year or less, and may enter into guaranty agreements in favor of lenders, banks, and dealers in commercial paper in amounts not to exceed $600 million. GENCO has obtained FERC authority to issue short-term indebtedness not to exceed $200 million outstanding with maturity dates of one year or less. The authority described herein will expire in October 2018. Were adverse developments to occur with respect to uncertainties highlighted elsewhere, the ability of SCE&G or GENCO to secure renewal of this short-term borrowing authority may be adversely impacted.

At December 31, 2017 SCANA, SCE&G (including Fuel Company) and PSNC Energy were parties to five-year credit agreements in the amounts of $400 million, $1.2 billion, of which $500 million relates to Fuel Company, and $200 million, respectively, which expire in December 2020. In addition, at December 31, 2017 SCE&G was party to a three-year credit agreement in the amount of $200 million which expires in December 2018. These credit agreements are used for general corporate purposes, including liquidity support for each company's commercial paper program and working capital needs and, in the case of Fuel Company, to finance or refinance the purchase of nuclear fuel, certain fossil fuels, and emission and other environmental allowances. For a list of banks providing credit support and other information, see Note 4 to the consolidated financial statements.

As of December 31, 2017, the Company had no outstanding borrowings under its credit facilities, had approximately $350 million in commercial paper borrowings outstanding, was obligated under $3.3 million in LOC-supported letters of credit, and held approximately $409 million in cash and temporary investments. The Company regularly monitors the commercial paper and short-term credit markets to optimize the timing for repayment of the outstanding balance on its draws, while maintaining appropriate levels of liquidity. The Company's average short-term borrowings outstanding during 2017 were approximately $870 million. Short-term cash needs were met primarily through the issuance of commercial paper.

At December 31, 2017, the Company’s long-term debt portfolio has a weighted average maturity of approximately 19 years and bears an average cost of 5.75%. Substantially all long-term debt bears fixed interest rates or is swapped to fixed.

The Company’s articles of incorporation do not limit the dividends that may be paid on its common stock. However, the terms of the Merger Agreement limit the dividends that SCANA can pay on its shares of common stock to an amount not greater than $0.6125 per share for any quarter.

SCE&G’s bond indenture (relating to the hereinafter defined Bonds) contains provisions that could limit the payment of cash dividends on its common stock. SCE&G's bond indenture permits the payment of dividends on SCE&G's common stock only either (1) out of its Surplus (which as defined equates to its retained earnings) or (2) in case there is no Surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. In addition, the Federal

Power Act requires the appropriation of a portion of certain earnings from hydroelectric projects. At December 31, 2017, approximately $94.0 million of retained earnings were restricted by this requirement as to payment of cash dividends on SCE&G’s common stock.

PSNC Energy’s note purchase and debenture purchase agreements contain provisions that could limit the payment of cash distributions, including dividends, on PSNC Energy's common stock. These agreements generally limit the sum of distributions to an amount that does not exceed $30 million plus 85% of Consolidated Net Income (as therein defined) accumulated after December 31, 2008 plus the net proceeds of issuances by PSNC Energy of equity or convertible debt securities (as therein defined). As of December 31, 2017, this limitation would permit PSNC Energy to pay cash distributions in excess of $100 million.

SCANA Corporation

SCANA has an indenture which permits the issuance of unsecured debt securities from time to time including its medium-term notes. This indenture contains no specific limit on the amount of unsecured debt securities which may be issued.

South Carolina Electric & Gas Company

SCE&G is subject to a bond indenture dated April 1, 1993 (Mortgage) covering substantially all of its electric properties under which all of its first mortgage bonds (Bonds) have been issued. Bonds may be issued under the Mortgage in an aggregate principal amount not exceeding the sum of (1) 70% of Unfunded Net Property Additions (as therein defined), (2) the aggregate principal amount of retired Bonds and (3) cash deposited with the trustee. At December 31, 2017, SCE&G's Unfunded Net Property Additions (which are based on property certified November 30, 2017) totaled approximately $754 million, and the aggregate principal of retired Bonds totaled approximately $491 million. Bonds, other than certain Bonds issued on the basis of retired Bonds, may be issued under the Mortgage only if Adjusted Net Earnings (as therein defined) for 12 consecutive months out of the 18 months immediately preceding the month of issuance are at least twice (2.0) the annual interest requirements on all outstanding Bonds and Bonds to be issued (Bond Ratio). For the year ended December 31, 2017, the Bond Ratio was 5.24. Adjusted Net Earnings, as therein defined, excludes the impairment loss.

Financing Activities

During 2017, net cash outflows related to financing activities totaled approximately $802 million, primarily associated with short-term borrowings and the payment of dividends. During 2016, net cash inflows related to financing activities totaled approximately $560 million, primarily associated with the proceeds from the issuance of long-term debt and short-term borrowings, partially offset by the payment of dividends.

On November 1, 2016, Consolidated SCE&G paid at maturity $100 million related to a nuclear fuel financing which had an imputed interest rate of 0.78%.

In June 2016, SCE&G issued $425 million of 4.1% first mortgage bonds due June 15, 2046. Also in June 2016, SCE&G issued $75 million of 4.5% first mortgage bonds due June 1, 2064, which constituted a reopening of the $300 million of 4.5% first mortgage bonds issued in May 2014. Proceeds from these sales were used to repay short-term debt primarily incurred as a result of SCE&G’s construction program, to finance capital expenditures, and for general corporate purposes.

In June 2017, PSNC Energy issued $150 million of 4.18% senior notes due June 22, 2047. In June 2016, PSNC Energy issued $100 million of 4.13% senior notes due June 22, 2046. Proceeds from these sales were used to repay short-term debt, to finance capital expenditures, and for general corporate purposes.

Investing Activities

To settle interest rate derivative contracts, the Company paid approximately $39 million in 2017, $113 million in 2016, and $253 million, net, in 2015.

For additional information, see Note 4 to the consolidated financial statements.

Ratios of earnings to fixed charges for each of the five years ended December 31, 2017, were as follows:

December 31,	2017	2016	2015	2014	2013
The Company	0.43	3.38	4.40	3.39	3.22
Consolidated SCE&G	(0.10)	3.66	3.69	3.77	3.48

The earnings deficiency below fixed charges for 2017 is approximately $226 million for the Company and approximately $338 million for Consolidated SCE&G. Ratios for 2017 reflect impairment losses related to the Nuclear Project. See Note 10 to the consolidated financial statements. The Company's ratio for 2015 reflects the impact of gains recorded upon the sale of certain subsidiaries. See Note 1 to the consolidated financial statements.

ENVIRONMENTAL MATTERS

The operations of the Company are subject to extensive regulation by various federal and state authorities in the areas of air quality, water quality, control of toxic substances and hazardous and solid wastes. Applicable statutes and rules include the CAA, CWA, Nuclear Waste Act and CERCLA, among others. In many cases, regulations proposed by such authorities could have a significant impact on financial condition, results of operations and cash flows. In addition, the conditions or requirements that will be imposed by regulatory or legislative proposals often cannot be predicted. To the extent that compliance with environmental regulations or legislation results in capital expenditures or operating costs, recovery of such expenditures and costs are expected through existing ratemaking provisions.

For the three years ended December 31, 2017, capital expenditures for environmental control equipment at fossil fuel generating stations totaled $60.7 million. During this same period, expenditures were made for the construction and retirement of landfills and ash ponds, net of disposal proceeds, of approximately $23.6 million. In addition, expenditures were made to operate and maintain environmental control equipment at fossil plants of $8.2 million in 2017, $9.5 million in 2016 and $8.7 million in 2015, which are included in other operation and maintenance expense, and expenditures were made to handle waste ash, net of disposal proceeds, of $1.2 million in 2017, $2.4 million in 2016 and $1.3 million in 2015, which are included in fuel used in electric generation. In addition, included within other operation and maintenance expense is an annual amortization of $1.4 million in each of 2017, 2016 and 2015 related to SCE&G's recovery of MGP remediation costs as approved by the SCPSC. It is not possible to estimate all future costs related to environmental matters, but forecasts for capitalized environmental expenditures for the Company are $28 million for 2018 and $329 million for the four-year period 2019-2022. These expenditures are included in the Estimated Capital Expenditures table, discussed in Liquidity and Capital Resources, and include known costs related to the matters discussed below.

The EPA is conducting an enforcement initiative against the utilities industry related to the New Source Review provisions and the NSPS of the CAA. In addition, the DOJ, on behalf of the EPA, has taken civil enforcement action against several utilities. The primary basis for these actions is the assertion by the EPA that maintenance activities undertaken by the utilities at their coal-fired power plants constituted “major modifications” which required the installation of costly BACT. Some of the utilities subject to the actions have reached settlement. Though the Company cannot predict what action, if any, the EPA will initiate against it, any costs incurred are expected to be recoverable through rates.

With the pervasive emergence of concern over the issue of global climate change as a significant influence upon the economy, SCANA, SCE&G and GENCO are subject to climate-related financial risks, including those involving regulatory requirements responsive to GHG emissions, as well as those involving other potential physical impacts. Other business and financial risks arising from such climate change could also materialize. The Company cannot predict all of the climate-related regulatory and physical risks nor the related consequences which might impact the Company, and the following discussion should not be considered all-inclusive.

Physical effects associated with climate changes could include changes in weather patterns, such as storm frequency and intensity, and any resultant damage to the Company's electric and gas systems, as well as impacts on employees and customers, the supply chain and many others. Much of the service territory of SCE&G is subject to the damaging effects of Atlantic and Gulf coast hurricanes and also to the damaging impact of winter ice storms. To help mitigate the financial risks arising from these potential occurrences, SCE&G maintains insurance on certain properties. As part of its ongoing operations, SCE&G maintains emergency response and storm preparation plans and teams who receive ongoing training and related simulations, all in order to allow for the protection of assets and the return of systems to normal reliable operation in a timely fashion following any such event.

Environmental commitments and contingencies are further described in Note 10 to the consolidated financial statements.

REGULATORY MATTERS

SCANA and its subsidiaries are subject to the regulatory jurisdiction of the following entities for the matters noted below. In addition, see Environmental Matters above for a discussion of related regulations to which the Company's operations are subject.

Company Regulatory Jurisdiction/Matters SCANA The SEC as to the issuance of certain securities and other matters and the FERC as to certain acquisitions and other matters. SCANA and all subsidiaries The CFTC, under Dodd-Frank, concerning record keeping, reporting, and other related regulations associated with swaps, options, forward contracts, and trade options, to the extent SCANA and any of its subsidiaries engage in any such activities. SCE&G The SEC as to the issuance of certain securities and other matters; the SCPSC as to retail electric and gas rates, service, accounting, issuance of securities (other than short-term borrowings) and other matters; the FERC as to issuance of short-term borrowings, guarantees of short-term indebtedness, certain acquisitions, wholesale electric power and transmission rates and services, the transmission of electric energy in interstate commerce, the wholesale sale of electric energy, the licensing of hydroelectric projects and other matters, including accounting; the DOE under the Federal Power Act as to use of emergency authority and coordination of all applicable federal authorizations and related environmental reviews to site an electric transmission facility; and the NRC with respect to the ownership, construction, operation and decommissioning of its nuclear facilities. NRC jurisdiction encompasses broad supervisory and regulatory powers over the construction and operation of nuclear reactors, including matters of health and safety and environmental impact. In addition, the Federal Emergency Management Agency reviews, in conjunction with the NRC, certain aspects of emergency planning relating to the operation of nuclear plants. GENCO The SCPSC as to the issuance of securities (other than short-term borrowings); the FERC as to issuance of short-term borrowings, the wholesale sale of electric energy, accounting, certain acquisitions and other matters; and the DOE under the Federal Power Act as to use of emergency authority. Fuel Company The SEC as to the issuance of certain securities. PSNC Energy The NCUC as to gas rates, service, issuance of securities (other than notes with a maturity of two years or less or renewals of notes with a maturity of six years or less), accounting and other matters, and the SEC as to the issuance of certain securities. SCE&G and PSNC Energy The PHMSA and the DOT as to federal pipeline safety requirements for gas distribution pipeline systems and natural gas transmission systems, respectively. The ORS and the NCUC as to enforcement of federal and state pipeline safety requirements in South Carolina (SCE&G) and North Carolina (PSNC Energy), respectively. The FERC as to participation in wholesale natural gas markets. SCANA Energy The GPSC through its certification as a natural gas marketer in Georgia and specifically as to retail prices for customers served under its regulated provider contract. The FERC as to participation in wholesale natural gas markets.

Material retail rate proceedings, and significant uncertainties with respect to certain of these proceedings, are described in Note 2 and Note 10 to the consolidated financial statements. In addition, the RSA allows natural gas distribution companies in South Carolina to request annual adjustments to rates to reflect changes in revenues and expenses and changes in investment. Such annual adjustments are subject to certain qualifying criteria and review by the SCPSC.

SCE&G’s electric transmission system and certain facilities related to generation and distribution are subject to NERC, which develops and enforces reliability standards for the bulk power systems throughout North America. NERC is subject to oversight by FERC.

Dodd-Frank provides for substantial additional regulation of over-the-counter and security-based derivative instruments, among other things, and the CFTC and the SEC continue to modify the implementation of Dodd-Frank through rule makings. The Company has determined that it meets the end-user exception in Dodd-Frank, with the lowest level of required regulatory reporting burden imposed by this law. The Company is currently complying with these enacted regulations and intends to comply with regulations enacted in the future.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Following are descriptions of the accounting policies and estimates which are most critical in terms of reporting financial condition or results of operations.

Impairment Considerations

Under the current regulatory construct in South Carolina, pursuant to the BLRA or through other means, the ability of SCE&G to recover costs incurred in connection with Unit 2 and Unit 3, and a reasonable return on them, will be subject to review and approval by the SCPSC. In light of the contentious nature of the reviews by legislative committees and others, the adverse impact that would result if proposed legislation is enacted, and the Request being considered by the SCPSC that could result in the suspension of rates currently being collected under the BLRA, as well as the return of such amounts previously collected, there is significant uncertainty as to SCE&G’s ultimate ability to fully recover its costs of Unit 2 and Unit 3 and a return on them from its customers. SCE&G continues to contest the specific challenges set forth in regulatory, legislative and legal proceedings (see also Note 10 to the consolidated financial statements). However, based on the consideration of those challenges, and particularly in light of SCE&G's proposed solution announced on November 16, 2017 and details in the Joint Petition filed by SCE&G and Dominion Energy with the SCPSC on January 12, 2018, the Company and Consolidated SCE&G have determined that a disallowance of recovery of part of the cost of the abandoned plant is both probable and reasonably estimable under applicable accounting guidance. In addition, the Company and Consolidated SCE&G have determined that recovery of certain other related costs deferred within regulatory assets is less than probable. As a result, as of December 31, 2017, the Company and Consolidated SCE&G have recognized a pre-tax impairment loss totaling $1.118 billion ($690 million net of tax). With the exception of the $210 million loss recorded in the third quarter of 2017 as explained below, this impairment loss was recorded in the fourth quarter of 2017. A discussion of this impairment loss follows:

• A pre-tax impairment loss was recorded with respect to disallowance of unrecovered nuclear project costs of approximately $670 million. This amount includes $210 million recorded in the third quarter of 2017, which represented costs of approximately $1.2 billion that had been expended on the project, exclusive of transmission costs, but which had not yet been determined to be prudent by the SCPSC in connection with revised rates proceedings under the BLRA, offset by the amount of approximately $1 billion, which amount represents the recovery of the Toshiba Settlement proceeds that are in excess of amounts from that settlement that the Company and Consolidated SCE&G estimated may be necessary to satisfy certain project liens. This impairment loss also includes $180 million, which amount arises from SCE&G’s entry into an agreement in the fourth quarter of 2017 to purchase in 2018 an existing 540-MW combined cycle gas generating station along with SCE&G's commitment to regulators and the public that the recovery of the initial capital investment in the facility would not be sought from customers. The remaining $280 million of this impairment loss was recorded after consideration of the regulatory and political developments in the fourth quarter of 2017 and early 2018 described in Note 10 to the consolidated financial statements.

• A pre-tax impairment loss was recorded in the aggregate amount of $361 million to write off costs which had been previously deferred, primarily as regulatory assets, in connection with the Nuclear Project. Such regulatory assets included deferred losses on interest rate swaps for which debt will not be issued due to the abandonment of the Nuclear Project, carrying costs on deferred tax assets arising from the capitalization of interest costs for tax purposes, net deferred costs and tax benefits related to foregone domestic production activities deductions (net of uncertain tax positions and credits) taken with respect to the project, and taxes associated with equity AFC.

• Finally, an $87 million pre-tax impairment loss was recorded in order to reduce to estimated fair value the carrying value of nuclear fuel acquired for use in Unit 2 and Unit 3.

With the exception of the $87 million related to nuclear fuel, the above impairment loss reflects impacts similar to those that may have resulted had the proposed solution announced November 16, 2017 been implemented. That proposal is presented by SCE&G as a less-favored alternative to the merger benefits and cost recovery plan in the January 12, 2018 Joint Petition. It is reasonably possible that a change in the estimated impairment loss could occur in the near term. If the merger benefits and cost recovery plan outlined in the Joint Petition is implemented (upon closing of the merger as contemplated in the Merger Agreement), an additional impairment loss and other charges totaling as much as approximately $1.7 billion would be expected to be recorded. This additional impairment loss would result from the write-off of unrecovered Nuclear Project costs of approximately $856 million recorded within regulatory assets and the recording of additional liabilities for customer refunds totaling approximately $1.875 billion, net of approximately $1.062 billion, which amount represents the monetization of guaranty settlement of $1.095 billion recorded within regulatory liabilities less amounts that may be required to settle

contractor liens. If instead the Joint Petition is not approved and the Request by the ORS is approved, and if the BLRA is found to be unconstitutional or the General Assembly amends or revokes the BLRA, the Company and Consolidated SCE&G may be required to record an additional impairment loss and other charges totaling as much as approximately $4.8 billion. This additional impairment loss would result from the write-off of the remaining unrecovered Nuclear Project costs of $3.976 billion recorded within regulatory assets and the refund of revised rates collections under the BLRA described above of approximately $1.9 billion, net of approximately $1.062 billion, which amount represents the monetization of guaranty settlement of $1.095 billion recorded within regulatory liabilities less amounts that may be required to settle contractor liens.

Accounting for Rate Regulated Operations

Regulated utilities record certain assets and liabilities that defer the recognition of expenses and revenues to future periods in accordance with accounting guidance for rate-regulated utilities. In the future, in the event of deregulation or other changes in the regulatory environment, the criteria of accounting for rate-regulated utilities may no longer be met, and the write off of regulatory assets and liabilities could be required. Such an event could have a material effect on the results of operations, liquidity or financial position of the Electric Operations and Gas Distribution segments in the period the write-off would be recorded. See Note 2 to the consolidated financial statements for a description of the regulatory assets and liabilities.

Generation assets would be exposed to considerable financial risks in a deregulated electric market. If market prices for electric generation do not produce adequate revenue streams and the enabling legislation or regulatory actions do not provide for recovery of the resulting stranded costs, a write down in those assets could be required. It is not possible to predict whether any write-downs would be necessary and, if they were, the extent to which they would affect results of operations in the period in which they would be recorded. As of December 31, 2017, net investments in fossil/hydro and nuclear generation assets (excluding assets associated with the Nuclear Project, which are discussed under Impairment Considerations above) were approximately $2.2 billion and $825 million, respectively.

Revenue Recognition and Unbilled Revenues

Revenues related to the sale of energy are recorded when service is rendered or when energy is delivered to customers. Because customers of the utilities and retail gas operations are billed on cycles which vary based on the timing of the actual reading of their electric and gas meters, estimates are recorded for unbilled revenues at the end of each reporting period. Such unbilled revenue amounts reflect estimates of the amount of energy delivered to customers for which they have not yet been billed. Such unbilled revenues reflect consideration of estimated usage by customer class, the effects of different rate schedules and, where applicable, the impact of weather normalization or other regulatory provisions of rate structures. The accrual of unbilled revenues in this manner properly matches revenues and related costs. The Company's accounts receivable included unbilled revenues of $220.9 million at December 31, 2017 and $178.9 million at December 31, 2016, compared to total revenues of $4.4 billion in 2017 and $4.2 billion in 2016. See Note 1 to the consolidated financial statements for a discussion of the impact expected from the adoption of new revenue recognition guidance in 2018.

Nuclear Decommissioning

Accounting for decommissioning costs for nuclear power plants involves significant estimates related to costs to be incurred many years into the future. Among the factors that could change SCE&G’s accounting estimates related to decommissioning costs are changes in technology, changes in regulatory and environmental remediation requirements, and changes in financial assumptions such as discount rates and the estimated timing of cash flows. Changes in any of these estimates could significantly impact financial position and cash flows (although changes in such estimates should be earnings-neutral, because these costs are expected to be collected from ratepayers).

Based on a decommissioning cost study, SCE&G’s two-thirds share of estimated site-specific nuclear decommissioning costs for Unit 1, including both the cost of decommissioning plant components that are and are not subject to radioactive contamination, totals $786.4 million, stated in 2016 dollars. Santee Cooper is responsible for decommissioning costs related to its one-third ownership interest in Unit 1. The cost estimate assumes that upon closure the site would be maintained for 60 years in such a manner as to allow for subsequent decontamination that would permit release for unrestricted use.

Under SCE&G’s method of funding decommissioning costs, SCE&G transfers to an external trust fund the amounts collected through rates, less expenses. The trust invests the amounts transferred into insurance policies on the lives of certain company personnel. Insurance proceeds are reinvested in insurance policies. The asset balance held in the trust reflects the net cash surrender value of the insurance policies and cash held by the trust. Management intends for the fund, including earnings thereon, to provide for all eventual decommissioning expenditures for Unit 1 on an after-tax basis.

Asset Retirement Obligations

AROs are accrued for legal obligations associated with the retirement of long-lived tangible assets that result from acquisition, construction, development and normal operation in accordance with applicable accounting guidance. These obligations are recognized at present value in the period in which they are incurred, and associated asset retirement costs are capitalized as part of the carrying amount of the related long-lived assets. Because such obligations relate primarily to regulated utility operations, their recognition has no significant impact on results of operations. As of December 31, 2017, the Company has recorded AROs of $208 million for nuclear plant decommissioning (as discussed above) and AROs of $360 million for other conditional obligations primarily related to other generation, transmission and distribution properties, including gas pipelines. All of the amounts are based upon estimates which are subject to varying degrees of precision, particularly since payments in settlement of such obligations may be made many years in the future. Changes in these estimates will be recorded over time; however, these changes in estimates are not expected to materially impact results of operations so long as the regulatory framework for the utilities remains in place.

Accounting for Pensions and Other Postretirement Benefits

The Company recognizes the funded status of its defined benefit pension plan as a liability and changes in funded status as a component of net periodic benefit cost or other comprehensive income, net of tax, or as a regulatory asset as required by accounting guidance. Accounting guidance requires the use of several assumptions that impact pension cost, of which the discount rate and the expected return on assets are the most sensitive. Net pension cost of $22.3 million recorded in 2017 reflects the use of a 4.22% discount rate derived using a cash flow matching technique, and an assumed 7.25% long-term rate of return on plan assets. The Company believes that these assumptions and the resulting pension cost amount were reasonable. For purposes of comparison, a 25 basis point reduction in the discount rate in 2017 would have increased the Company’s pension cost by $1.7 million and increased the pension obligation by $25.2 million. Further, had the assumed long-term rate of return on assets been 7.00%, the Company’s pension cost for 2017 would have increased by $1.9 million.

The following information with respect to pension assets (and returns thereon) should also be noted.

In developing the expected long-term rate of return assumptions, the Company evaluates historical performance, targeted allocation amounts and expected payment terms. As of the beginning of 2017, the plan’s historical 10, 15, 20 and 25 year cumulative performance showed actual returns of 5.1%, 5.4%, 6.9% and 8.2%, respectively. The 2017 expected long-term rate of return of 7.25% was based on a target asset allocation of 58% with equity managers, 33% with fixed income managers and 9% with hedge fund managers. Management regularly reviews such allocations and periodically rebalances the portfolio when considered appropriate. As of the beginning of 2018, the plan’s historical 10, 15, 20 and 25 year cumulative performance showed actual returns of 6.1%, 7.8%, 6.6% and 8.5%, respectively. For 2018, it is anticipated that the long-term expected rate of return will be 7.00%.

Pursuant to regulatory orders, certain previously deferred pension costs are being amortized as described in Note 2 to the consolidated financial statements. Current pension expense for electric operations is being recovered through a pension cost rider, and current pension expense related to SCE&G's and PSNC Energy's gas operations is being recovered through cost of service rates.

Pension benefits are not offered to employees hired or rehired after 2013, and pension benefits for existing participants will no longer accrue for services performed or compensation earned after 2023. As a result, the significance of pension costs and the criticality of the related estimates will continue to diminish. Further, the pension trust is adequately funded under current regulations, and management does not anticipate the need to make significant pension contributions for the foreseeable future based on current market conditions and assumptions.

The Company accounts for the cost of its postretirement medical and life insurance benefit plan in a similar manner to that used for its defined benefit pension plan. This plan is unfunded, so no assumptions related to rate of return on assets impact the net expense recorded; however, the selection of discount rates can significantly impact the actuarial determination of net expense. The Company used a discount rate of 4.30%, derived using a cash flow matching technique, and recorded a net cost for 2017 of $17.0 million. Had the selected discount rate been 4.05% (25 basis points lower than the discount rate referenced above), the expense for 2017 would have been $0.6 million higher and the obligation would have increased by $8.6 million. Because the plan provisions include “caps” on company per capita costs, and because employees hired after 2010 are responsible for the full cost of retiree medical benefits elected by them, health care cost inflation rate assumptions do not materially impact the net expense recorded.

Uncertain Income Tax Positions

During 2013 and 2014, SCANA amended certain of its income tax returns to claim additional tax-defined research and experimentation deductions (under IRC Section 174) and credits (under IRC Section 41) and to reflect related impacts on other items such as domestic production activities deductions (under IRC Section 199). SCANA also made similar claims in filing its original 2013 and 2014 returns in 2014 and 2015, respectively. In 2016 and 2017, SCANA claimed significant research and experimentation deductions and credits (offset by reductions in its domestic production activities deductions), related to the design and construction activities of the Nuclear Project, in its 2015 and 2016 income tax returns. SCANA expects to claim similar deductions and credits on its 2017 tax return when it is filed in 2018. These claims followed the issuance of final IRS regulations in 2014 regarding such treatment with respect to expenditures related to the design and construction of pilot models. See also Note 5 to the consolidated financial statements.

These IRC Section 174 income tax deductions and IRC Section 41 credits were considered to be uncertain tax positions, and under relevant accounting guidance, estimates of the amounts of related tax benefits which may not be sustained upon examination by the taxing authorities were recorded as unrecognized tax benefits in the financial statements. Following the abandonment of the Nuclear Project, SCANA anticipates that an abandonment loss deduction under IRC Section 165 will be claimed on the 2017 tax return. As such, certain of the IRC Section 174 deductions, to the extent they are denied, would instead be deductible in 2017 under IRC Section 165. The abandonment loss deduction is also considered an uncertain tax position; however, under relevant accounting guidance, no such estimated unrecognized tax benefits were recorded as of December 31, 2017. The remaining unrecognized tax benefits include the impact of the IRC Section 174 deductions on domestic production activities deductions, credits, and certain unrecognized state tax benefits.

As of December 31, 2017, the Company and Consolidated SCE&G have recorded an unrecognized tax benefit of $98 million ($19 million net of the impact of state deductions on federal returns, net of NOLs and credit carryforwards, and net of receivables related to the uncertain tax positions). If recognized, $98 million of the tax benefit would affect the Company’s and Consolidated SCE&G's effective tax rates. These unrecognized tax benefits are not expected to increase significantly within the next 12 months. It is also reasonably possible that these unrecognized tax benefits may decrease by $11 million within the next 12 months. No other material changes in the status of the Company’s or Consolidated SCE&G's tax positions have occurred through December 31, 2017.

The estimates of unrecognized tax benefits were computed with consideration as to whether the claims are (or are not) more likely than not to be sustained and with consideration of analyses of cumulative probabilities regarding potential outcomes. Such estimates involve significant management judgment and varying levels of precision. Changes in such estimates are required to be recorded as circumstances change and additional information regarding the claims and potential outcomes becomes available, and these changes could be significant.

Historically, because the unrecognized tax benefit through December 31, 2017 primarily involved the timing of recognition of tax deductions rather than permanent tax attributes, the estimates regarding their recognition did not have a significant impact on the Company's effective tax rate. Further, until December 31, 2017, when such deferrals were considered to be less than probable of recovery (see Note 10), these permanent attributes (net), as well as most of the interest accruals required to be recorded with respect to the unrecognized tax benefits, had been deferred within regulatory assets. As such, the impacts of these significant accounting estimates, and changes therein, had primarily been reflected on the balance sheet rather than in results of operations. In the future, the impact of changes in estimates with respect to these permanent attributes (net) are not expected to be deferred within regulatory assets (see Note 10) and the impact of such changes to the unrecognized tax benefit related to these permanent attributes (net) could be significant.

Upon resolution of the uncertainties, the Company will be required to re-pay any tax benefits claimed which are ultimately disallowed, along with interest on those amounts. In certain circumstances, which the Company considers to be remote, penalties for underpayment of income taxes could also be assessed. Such re-payment amounts could be significant and adversely affect cash flow and financial condition.

OTHER MATTERS

Off-Balance Sheet Arrangements

SCANA holds insignificant investments in securities and business ventures. The Company does not engage in significant off-balance sheet financing or similar transactions, although it is party to various operating leases in the normal course of business for land, office space, furniture, equipment, rail cars, a purchase power agreement, and airplanes.

Claims and Litigation

For a description of claims and litigation, see Note 10 to the consolidated financial statements.

Other

As Georgia’s regulated provider, SCANA Energy provides service to customers considered to be low-income or that are otherwise unable to obtain natural gas service from other marketers. SCANA Energy provides this service at rates approved by the GPSC and receives funding from Georgia's Universal Service Fund to offset some of the resulting bad debt. SCANA Energy files financial and other information periodically with the GPSC, and such information is available at www.psc.state.ga.us (which is not intended as an active hyperlink; the information on the GPSC website is not part of this or any other report filed by the Company with the SEC).

SCANA’s natural gas distribution and gas marketing segments maintain gas inventory and utilize forward contracts and other financial instruments, including commodity swaps and futures contracts, to manage exposure to fluctuating natural gas commodity prices. See Note 6 to the consolidated financial statements. As a part of this risk management process, at any given time, a portion of SCANA’s projected natural gas needs has been purchased or placed under contract.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

All financial instruments described in this section are held for purposes other than trading.

Interest Rate Risk

The tables below provide information about long-term debt issued by the Company and Consolidated SCE&G and other financial instruments that are sensitive to changes in interest rates. For debt obligations, the tables present principal cash flows and related weighted average interest rates by expected maturity dates. For interest rate swaps, the figures shown reflect notional amounts, weighted average interest rates and related maturities. Fair values for debt represent quoted market prices. Interest rate swap agreements are valued using discounted cash flow models with independently sourced data.

The Company
December 31, 2017	Expected Maturity Date
Millions of dollars	2018	2019	2020	2021	2022	Thereafter	Total	Fair Value
Long-Term Debt:
Fixed Rate ($)	722.5	12.0	361.5	490.2	259.3	4,683.9	6,529.4	7,261.8
Average Fixed Interest Rate (%)	6.01	4.31	6.31	4.63	5.26	5.71	5.68	—
Variable Rate ($)	4.4	4.4	4.4	4.4	4.4	120.6	142.6	137.8
Average Variable Interest Rate (%)	2.18	2.18	2.18	2.18	2.18	1.64	1.72	—
Interest Rate Swaps:
Pay Fixed/Receive Variable ($)	554.4	4.4	4.4	4.4	4.4	124.2	696.2	20.4
Average Pay Interest Rate (%)	2.14	6.17	6.17	6.17	6.17	4.51	2.66	—
Average Receive Interest Rate (%)	1.48	2.18	2.18	2.18	2.18	1.91	1.58	—

December 31, 2016	Expected Maturity Date
Millions of dollars	2017	2018	2019	2020	2021	Thereafter	Total	Fair Value
Long-Term Debt:
Fixed Rate ($)	12.5	721.7	11.1	360.2	489.0	4,789.7	6,384.3	7,040.6
Average Fixed Interest Rate (%)	4.21	6.01	4.40	6.33	4.64	5.73	5.70	—
Variable Rate ($)	4.4	4.4	4.4	4.4	4.4	125.0	147.0	142.7
Average Variable Interest Rate (%)	1.63	1.63	1.63	1.63	1.63	1.16	1.23	—
Interest Rate Swaps:
Pay Fixed/Receive Variable ($)	554.4	704.4	4.4	4.4	4.4	128.6	1,400.6	12.3
Average Pay Interest Rate (%)	2.91	2.22	6.17	6.17	6.17	4.57	2.74	—
Average Receive Interest Rate (%)	1.00	1.00	1.63	1.63	1.63	1.08	1.02	—

notional amounts, weighted average interest rates and related maturities. Fair values for debt represent quoted market prices. Interest rate swap agreements are valued using discounted cash flow models with independently sourced data.



The Company
December 31, 2018	Expected Maturity Date
Millions of dollars	2019	2020	2021	2022	2023	Thereafter	Total	Fair Value
Long-Term Debt:
Fixed Rate ($)	54.3	363.8	792.3	261.3	9.8	5,175.2	6,656.7	7,048.3
Average Fixed Interest Rate (%)	3.94	6.30	4.21	5.24	4.69	5.58	5.42	—
Variable Rate ($)	4.4	4.4	4.4	4.4	4.4	116.2	138.2	132.5
Average Variable Interest Rate (%)	3.44	3.44	3.44	3.44	3.44	2.41	1.39	—
Interest Rate Swaps:
Pay Fixed/Receive Variable ($)	4.4	4.4	4.4	4.4	4.4	119.8	146.2	(24.4	)
Average Pay Interest Rate (%)	6.17	6.17	6.17	6.17	6.17	4.45	4.76	—
Average Receive Interest Rate (%)	3.44	3.44	3.44	3.44	3.44	2.41	2.59	—

Consolidated SCE&G
December 31, 2017	Expected Maturity Date
Millions of dollars	2018	2019	2020	2021	2022	Thereafter	Total	Fair Value
Long-Term Debt:
Fixed Rate ($)	722.5	12.0	11361.5	40490.2	9259.3	4,~~333~~683.9	56,~~129~~529.4	57,~~726~~261.8
Average Fixed Interest Rate (%)	6.01	4.31	46.3831	34.5863	45.7426	5.7671	5.7768	—
Variable Rate ($)	—4.4	—4.4	—4.4	—4.4	—4.4	67120.86	67142.86	63137.58
Average Variable Interest Rate (%)	—2.18	—2.18	—2.18	—2.18	—2.18	1.2164	1.2172	—
Interest Rate Swaps:
Pay Fixed/Receive Variable ($)	~~550~~554.04	—4.4	—4.4	—4.4	—4.4	71124.42	~~621~~696.42	3720.4
Average Pay Interest Rate (%)	2.1014	—6.17	—6.17	—6.17	—6.17	34.2951	2.2466	—
Average Receive Interest Rate (%)	1.48	—2.18	—2.18	—2.18	—2.18	1.7191	1.5158	—

December 31, 2016		Expected Maturity Date
Consolidated SCE&G
Millions of dollars		2017		2018		2019		2020		2021		Thereafter		Total		Fair Value
December 31, 2018	Expected Maturity Date
Long-Term Debt:
Millions of dollars	2019		2020		2021		2022		2023		Thereafter		Total		Fair Value
Fixed Rate ($)		12.0		721.7		11.1		10.2		39.0		4,339.7		5,133.7		5,687.3
Long-Term Debt:
Average Fixed Interest Rate (%)		4.27		6.01		4.40		4.54		3.60		5.75		5.76		—
Fixed Rate ($)	13.8		13.3		341.8		10.8		9.5		4,725.3		5,114.5		5,406.8
Variable Rate ($)		—		—		—		—		—		67.8		67.8		64.9
Average Fixed Interest Rate (%)	4.18		4.23		3.52		4.53		5.23		5.64		5.48		—
Average Variable Interest Rate (%)		—		—		—		—		—		0.76		0.76		—
Variable Rate ($)	—		—		—		—		—		67.8		67.8		63.0
Interest Rate Swaps:
Average Variable Interest Rate (%)	—		—		—		—		—		1.67		1.67		—
Pay Fixed/Receive Variable ($)		550.0		700.0		—		—		—		71.4		1,321.4		31.7
Interest Rate Swaps:
Average Pay Interest Rate (%)		2.88		2.19		—		—		—		3.29		2.54		—
Pay Fixed/Receive Variable ($)	—		—		—		—		—		71.4		71.4		(11.2	)
Average Receive Interest Rate (%)		1.00		1.00		—		—		—		0.64		0.98		—
Average Pay Interest Rate (%)	—		—		—		—		—		3.29		3.29		—
Average Receive Interest Rate (%)	—		—		—		—		—		1.67		1.67		—



December 31, 2017	Expected Maturity Date
Millions of dollars	2018	2019	2020	2021	2022	Thereafter	Total	Fair Value
Long-Term Debt:
Fixed Rate ($)	722.5	12.0	11.5	40.2	9.3	4,333.9	5,129.4	5,726.8
Average Fixed Interest Rate (%)	6.01	4.31	4.38	3.58	4.74	5.76	5.77	—
Variable Rate ($)	—	—	—	—	—	67.8	67.8	63.5
Average Variable Interest Rate (%)	—	—	—	—	—	1.21	1.21	—
Interest Rate Swaps:
Pay Fixed/Receive Variable ($)	550.0	—	—	—	—	71.4	621.4	37.4
Average Pay Interest Rate (%)	2.10	—	—	—	—	3.29	2.24	—
Average Receive Interest Rate (%)	1.48	—	—	—	—	1.71	1.51	—

While a decrease in interest rates would increase the fair value of debt, it is unlikely that events which would result in a realized loss will occur.

For further discussion of long-term debt and interest rate derivatives, see the Liquidity and Capital Resources section in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 4 and Note 6 to the consolidated financial statements.20

For further discussion of long-term debt and interest rate derivatives, see Note 5 and Note 7 to the consolidated financial statements in Item 8. Financial Statements and Supplementary Data.

Commodity Price Risk

The following table provides information about the Company’s financial instruments, which are limited to financial positions of Energy Marketing and PSNC Energy, that are sensitive to changes in natural gas prices. Weighted average settlement prices are per 10,000 MMBTU. Fair value represents quoted market prices.

Expected Maturity	~~2018~~2019	~~2019~~2020	~~2020~~2021
Futures - Long
Settlement Price (a)	2.8785	2.9482	—2.81
Contract Amount (b)	5382.12	1312.3	—0.2
Fair Value (b)	4969.8	1312.04	—0.2
Futures - Short
Settlement Price (a)	2.8590	—	—
Contract Amount (b)	531.69	—	—
Fair Value (b)	520.18	—	—
Options - Purchased Call (Long)
Strike Price (a)	32.3558	—3.54	—
Contract Amount (b)	2017.75	—2.3	—
Fair Value (b)	01.76	—0.1	—
Options - Sold Call (Short)
Strike Price (a)	0.39	—	—
Contract Amount (b)	0.4	—	—
Fair Value (b)	0.5	—	—
Swaps - Commodity
Pay fixed/receive variable (b)	156.91	63.78	3.0.9
Average pay rate (a)	32.~~2293~~92	2.~~9298~~85	2.~~8730~~73
Average received rate (a)	2.~~8587~~80	2.~~8613~~69	2.~~8211~~74
Fair Value (b)	145.18	63.5	20.9
Pay variable/receive fixed (b)	26.4	8.2	0.8
Average pay rate (a)	2.80	2.70	2.79
Average received rate (a)	2.90	2.80	2.77
Fair Value (b)	27.3	8.5	0.7
Swaps - Basis
Pay variable/receive variable (b)	15.9	—	—
Average pay rate (a)	3.14	—	—
Average received rate (a)	3.15	—	—
Fair Value (b)	16.0	—	—

Pay variable/receive fixed (b)	29.6	11.5	2.7
Average pay rate (a)	2.8505	2.8710	2.8211
Average received rate (a)	3.0993	2.9410	2.8764
Fair Value (b)	32.2	11.8	2.8
Swaps - Basis
Pay variable/receive variable (b)	7.0	0.3	—
Average pay rate (a)	2.8191	3.0876	—
Average received rate (a)	2.7935	3.0306	—
Fair Value (b)	7.0	0.3	—

(a) Weighted average, in dollars

(b) Millions of dollars

The Company uses derivative instruments to hedge forward purchases and sales of natural gas, which create market risks of different types. See Note 67 to the consolidated financial statements in Item 8. Financial Statements and Supplementary Data.

PSNC Energy utilizes futures, options and swaps to hedge gas purchasing activities. PSNC Energy’s tariffs include a provision for the recovery of actual gas costs incurred. PSNC Energy defers premiums, transaction fees, margin requirements and any realized gains or losses from its hedging program for subsequent recovery from customers.

5922

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and ~~Stockholders~~Stockholder of

SCANA Corporation

Cayce, South Carolina

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of SCANA Corporation and subsidiaries (the "Company") as of December 31, ~~2017~~2018 and ~~2016~~2017, the related consolidated statements of operations, comprehensive income (loss), changes in common equity, and cash flows, for each of the three years in the period ended December 31, ~~2017~~2018, and the related notes and the financial statement schedule listed in the Part IV at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2017~~2018 and ~~2016~~2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2017~~2018, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, ~~2017~~2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 2228, ~~2018~~2019, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

~~Emphasis~~/s/DELOITTE of& ~~Matter~~TOUCHE LLP Charlotte, North Carolina February 28, 2019

As discussed in Note 10 to the financial statements, the abandoned Nuclear Project has led to legal, legislative, and regulatory matters that may result in material impacts to results and the liquidity of the Company.

/s/DELOITTE & TOUCHE LLP Charlotte, North Carolina February 22, 2018

We have served as the Company's auditor since 1945.

6023

SCANA Corporation and Subsidiaries

Consolidated Balance Sheets

December 31, (Millions of dollars)	~~2017~~2018			~~2016~~2017
Assets
Utility Plant In Service	$	14,370		$	13,444
Utility Plant in Service	$	15,171		$	14,370
Accumulated Depreciation and Amortization	(45,~~611~~109		)	(4,~~446~~611		)
Construction Work in Progress	~~471~~527			~~4,845~~471
Nuclear Fuel, Net of Accumulated Amortization	~~208~~211			~~271~~208
Goodwill	210			210
Utility Plant, Net	1011,~~648~~010			1410,~~324~~648
Nonutility Property and Investments:
Nonutility property, net of accumulated depreciation of $133 and $138	270			276
Nonutility property, net of accumulated depreciation of $143 and $133	267			270
Assets held in trust, net-nuclear decommissioning	~~136~~190			~~123~~136
Other investments	6822			7668
Nonutility Property and Investments, Net	~~474~~479			~~475~~474
Current Assets:
Cash and cash equivalents	~~409~~389			~~208~~409
Receivables:
Customer, net of allowance for uncollectible accounts of $6 and $6	665			616
Customer, net of allowance for uncollectible accounts of $7 and $6	632			665
Income taxes	~~198~~—			~~142~~198
Other	~~105~~88			~~127~~105
Inventories:
Fuel	~~143~~153			~~136~~143
Materials and supplies	~~161~~170			~~155~~161
Prepayments	99105			~~105~~99
Other current assets	1712			1771
Derivative financial instruments	54			—
Total Current Assets	1,549			1,851
Total Current Assets	1,851			1,506
Deferred Debits and Other Assets:
Regulatory assets	54,~~580~~380			25,~~130~~580
Other	~~186~~236			~~272~~186
Total Deferred Debits and Other Assets	54,~~766~~616			25,~~402~~766
Total	$	1817,~~739~~654		$	18,~~707~~739

See Notes to Consolidated Financial Statements.

6124

December 31, (Millions of dollars)	~~2017~~2018			~~2016~~2017
Capitalization and Liabilities
Common Stock - no par value, 143 million shares outstanding for all periods presented	$	2,~~390~~389		$	2,390
Retained Earnings	2,~~915~~247			32,~~384~~915
Accumulated Other Comprehensive Loss	(5034		)	(4950		)
Total Common Equity	54,~~255~~602			5,~~725~~255
Long-Term Debt, Net	56,~~906~~695			65,~~473~~906
Total Capitalization	11,~~161~~297			1211,~~198~~161
Current Liabilities:
Short-term borrowings	~~350~~173			~~941~~350
Current portion of long-term debt	~~727~~59			17727
Accounts payable	~~438~~430			~~404~~438
Customer deposits and customer prepayments	~~112~~114			~~168~~112
Taxes accrued	214			201
Revenue subject to refund	77			—
Interest accrued	87			84
Taxes accrued	245			214
Dividends declared	86			80
Interest accrued	89			87
Derivative financial instruments	6			35
Dividends declared	17			86
Other	9372			~~135~~99
Total Current Liabilities	21,~~113~~276			2,~~065~~113
Deferred Credits and Other Liabilities:
Deferred income taxes, net	1,~~261~~112			21,~~159~~261
Asset retirement obligations	~~568~~577			~~558~~568
Pension and postretirement benefits	~~360~~376			~~373~~360
Unrecognized tax benefits	1938			~~219~~19
Regulatory liabilities	32,~~059~~789			~~930~~3,059
Other	~~198~~189			~~205~~198
Total Deferred Credits and Other Liabilities	5,~~465~~081			45,~~444~~465
Commitments and Contingencies (Note 10)	—			—
Commitments and Contingencies (Note 11)
Total	$	1817,~~739~~654		$	18,~~707~~739

See Notes to Consolidated Financial Statements.

6225

SCANA Corporation and Subsidiaries

Consolidated Statements of Operations

Years Ended December 31, (Millions of dollars, except per share amounts)	~~2017~~2018			~~2016~~2017			~~2015~~2016
Operating Revenues:
Electric	$	2,~~659~~322		$	2,~~614~~659		$	2,~~551~~614
Gas-regulated	~~874~~934			~~788~~874			~~811~~788
Gas-nonregulated	~~874~~796			~~825~~874			~~1,018~~825
Total Operating Revenues	4,~~407~~052			4,~~227~~407			4,~~380~~227
Operating Expenses:
Fuel used in electric generation	~~594~~671			~~576~~594			~~660~~576
Purchased power	8092			6480			5264
Gas purchased for resale	1,~~156~~128			1,~~054~~156			1,~~287~~054
Other operation and maintenance	~~737~~835			~~755~~728			~~715~~741
Impairment loss	1,~~118~~376			—1,118			—
Depreciation and amortization	~~382~~403			~~371~~382			~~358~~371
Other taxes	~~264~~276			~~254~~264			~~234~~254
Total Operating Expenses	4,~~331~~781			34,~~074~~322			3,~~306~~060
Gain on sale of CGT, net of transaction costs	—			—			234
Operating Income (Loss)	(729		)	85			1,167
Operating Income	76			1,153			1,308
Other Income (Expense), net	173			47			41
Other Income (Expense), net	56			55			42
Interest charges, net of allowance for borrowed funds used during construction of $12, $18 and $19	(384		)	(363		)	(342		)
Gain on sale of SCI, net of transaction costs	—			—			107
Income (Loss) Before Income Tax Expense (Benefit)	(940		)	(231		)	866
Interest charges, net of allowance for borrowed funds used during construction of $18, $19 and $15	(363		)	(342		)	(318		)
Income Tax Expense (Benefit)	(412		)	(112		)	271
Income (Loss) Before Income Tax Expense	(231		)	866			1,139
Net Income (Loss)	$	(528	)	$	(119	)	$	595
Income Tax Expense (Benefit)	(112		)	271			393
Earnings (Loss) Per Share of Common Stock	$	(3.70	)	$	(0.83	)	$	4.16
Net Income (Loss)	$	(119	)	$	595		$	746
Earnings (Loss) Per Share of Common Stock	$	(0.83	)	$	4.16		$	5.22
Weighted Average Common Shares Outstanding (millions)	143			143			143
Dividends Declared Per Share of Common Stock	$	2.45		$	2.30		$	2.18

See Notes to Consolidated Financial Statements.

6326

SCANA Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

Years Ended December 31, (Millions of dollars)	~~2017~~2018			~~2016~~2017			~~2015~~2016
Net Income (Loss)	$	(~~119~~528	)	$	~~595~~(119	)	$	~~746~~595
Other Comprehensive Income (Loss), net of tax:
Unrealized Losses on Cash Flow Hedging Activities:
Unrealized Gains (Losses) on Cash Flow Hedging Activities:
Unrealized gains (losses) on cash flow hedging activities arising during period, net of tax of $(4), $2 and $(7)	(7		)	4			(12		)
Arising during period, net of tax of $(1), $(4) and $2	(2		)	(7		)	4
Cash flow hedging activities reclassified to interest expense, net of tax of $4, $4 and $4	7			7			7
Reclassified as interest expense, net of tax of $2, $4 and $4	9			7			7
Cash flow hedging activities reclassified to gas purchased for resale, net of tax of $-, $4 and $9	(1		)	6			15
Reclassified as gas purchased for resale, net of tax of $2, $- and $4	7			(1		)	6
Net unrealized gains (losses) on cash flow hedging activities	(114		)	17(1		)	1017
Deferred Costs of Employee Benefit Plans:
Deferred Costs of Employee Benefit Plans (Note 9):
Amortization of deferred employee benefit plan costs reclassified to net income (see Note 8), net of tax of $-, $- and $-	—			(1		)	—
Gains arising during the period, net of tax of $1, $- and $-	2			—			—
Net deferred costs of employee benefit plans	—			(1		)	—
Reclassified to net income, net of tax of $-, $- and $-	—			—			(1		)
Other Comprehensive Income (Loss)	(1		)	16			10
Net deferred gains (costs) of employee benefit plans	2			—			(1		)
Total Comprehensive Income (Loss)	$	(120	)	$	611		$	756
Other Comprehensive Income (Loss)	16			(1		)	16
Total Comprehensive Income (Loss)	$	(512	)	$	(120	)	$	611

See Notes to Consolidated Financial Statements.

6427

SCANA Corporation and Subsidiaries

Consolidated Statements of Cash Flows

For the Years Ended December 31, (Millions of dollars)	~~2017~~2018			~~2016~~2017			~~2015~~2016
Cash Flows From Operating Activities:
Net Income (Loss)	$	(~~119~~528	)	$	~~595~~(119	)	$	~~746~~595
Adjustments to reconcile net income to net cash provided from operating activities:
Gain on sale of subsidiaries	—			—			(355		)
Impairment loss	1,376			1,118			—
Impairment loss	1,118			—			—
Gain on sale of investments	(30		)	—			—
Deferred income taxes, net	(~~911~~151		)	~~242~~(911		)	~~(31~~242		)
Depreciation and amortization	~~406~~434			~~389~~406			~~368~~389
Amortization of nuclear fuel	4447			5744			4657
Allowance for equity funds used during construction	(2319		)	(2923		)	(2729		)
Carrying cost recovery	(346		)	(1734		)	(1217		)
Changes in certain assets and liabilities:
Receivables	~~(56~~37		)	(~~112~~56		)	~~188~~(112		)
Income tax receivable	~~(56~~198		)	(~~142~~56		)	—(142		)
Inventories	(9388		)	(4393		)	(1643		)
Prepayments	(54		)	11(5		)	~~211~~11
Regulatory assets	~~181~~(199		)	~~(114~~181		)	(31114		)
Regulatory liabilities	~~1,051~~(350		)	(21,051		)	(12		)
Accounts payable	2461			4424			~~(78~~44		)
Unrecognized tax benefits	(224		)	175			31
Revenue subject to refund	77			—			—
Taxes accrued	13			(41		)	61
Unrecognized tax benefits	19			(224		)	175
Pension and other postretirement benefits	(20		)	51			(6		)
Taxes accrued	31			13			(41		)
Derivative financial instruments	(3		)	(9		)	(9		)
Pension and other postretirement benefits	16			(20		)	51
Other assets	~~(47~~61		)	(4447		)	(344		)
Other liabilities	(7718		)	81(80		)	~~(23~~72		)
Net Cash Provided From Operating Activities	~~1,169~~964			1,~~092~~169			1,~~059~~092
Cash Flows From Investing Activities:
Property additions and construction expenditures	(~~1,225~~890		)	(1,~~579~~225		)	(1,~~153~~579		)
Proceeds from sale of subsidiaries	—			—			647
Proceeds from monetization of guaranty settlement	—			1,096			—
Proceeds from guaranty settlement	1,096			—			—
Proceeds from investments (including derivative collateral returned)	227			145			860
Proceeds from investments (including derivative collateral returned)	145			860			1,117
Purchase of investments (including derivative collateral posted)	(155		)	(143		)	(788		)
Purchase of investments (including derivative collateral posted)	(143		)	(788		)	(1,018		)
Payments upon interest rate derivative contract settlement	—			(39		)	(113		)
Payments upon interest rate derivative contract settlement	(39		)	(113		)	(263		)
Proceeds from interest rate derivative contract settlement	115			—			—
Proceeds from interest rate derivative contract settlement	—			—			10
Net Cash Used For Investing Activities	(703		)	(166		)	(1,620		)
Net Cash Used For Investing Activities	(166		)	(1,620		)	(660		)
Cash Flows From Financing Activities:
Proceeds from issuance of common stock	—			—			14
Proceeds from issuance of long-term debt	935			150			592
Proceeds from issuance of long-term debt	150			592			491
Repayments of long-term debt	(830		)	(17		)	(117		)
Repayments of long-term debt	(17		)	(117		)	(166		)
Dividends	(209		)	(344		)	(325		)
Dividends	(344		)	(325		)	(309		)
Short-term borrowings, net	(177		)	(591		)	410
Short-term borrowings, net	(591		)	410			(387		)
Net Cash Provided From (Used For) Financing Activities	(281		)	(802		)	560
Deferred financing costs	—			—			(3		)
Net Increase (Decrease) in Cash and Cash Equivalents	(20		)	201			32
Net Cash Provided From (Used For) Financing Activities	(802		)	560			(360		)
Cash and Cash Equivalents, January 1	409			208			176
Net Increase in Cash and Cash Equivalents	201			32			39
Cash and Cash Equivalents, December 31	$	389		$	409		$	208
Cash and Cash Equivalents, January 1	208			176			137
Cash and Cash Equivalents, December 31	$	409		$	208		$	176
Supplemental Cash Flow Information:
Cash for—Interest paid (net of capitalized interest of $18, $19 and $15)	$	346		$	328		$	306
Cash for—Interest paid (net of capitalized interest of $12, $18 and $19)	$	356		$	346		$	328
—Income taxes paid	24			~~229~~2			~~184~~229
—Income taxes received	~~184~~206			~~166~~184			—166
Noncash Investing and Financing Activities:
Accrued construction expenditures (including nuclear fuel)	139			109			244
Accrued construction expenditures	85			139			109
Capital leases	811			158			615
Contributed construction	6			—			—

See Notes to Consolidated Financial Statements.

6528

SCANA Corporation and Subsidiaries

Consolidated Statements of Changes in Common Equity

	Common Stock									Accumulated Other Comprehensive Income (Loss)
Millions	Shares	Outstanding Amount		Treasury Amount			Retained Earnings			Gains (Losses) on Cash Flow Hedges			Deferred Costs of Employee Benefit Plans			Total AOCI			Total
Balance as of January 1, 2015	143	$	2,388	$	(10	)	$	2,684		$	(63	)	$	(12	)	$	(75	)	$	4,987
Balance as of January 1, 2016	143	$	2,402	$	(12	)	$	3,118		$	(53	)	$	(12	)	$	(65	)	$	5,443
Net Income							746												746
Other Comprehensive Income (Loss)
Losses arising during the period										(12		)	—			(12		)	(12		)
Losses/amortization reclassified from AOCI										22			—			22			22
Total Comprehensive Income (Loss)							746			10			—			10			756
Issuance of Common Stock	—	14		(2		)													12
Dividends Declared							(312		)										(312		)
Balance as of December 31, 2015	143	$	2,402	(12		)	3,118			(53		)	(12		)	(65		)	5,443
Net Income							595												595
Other Comprehensive Income (Loss)
Gains (Losses) arising during the period										4			(1		)	3			3
Losses/amortization reclassified from AOCI										13			—			13			13
Total Comprehensive Income							595			17			(1		)	16			611
Total Comprehensive Income (Loss)							595			17			(1		)	16			611
Dividends Declared							(329		)										(329		)
Balance as of December 31, 2016	143	$2,402	~~2,402~~	(12		)	3,384			(36		)	(13		)	(49		)	5,725
Net Loss							(119		)										(119		)
Other Comprehensive Income (Loss)
Losses arising during the period										(7		)	—			(7		)	(7		)
Losses/amortization reclassified from AOCI										6			—			6			6
Total Comprehensive Income (Loss)							(119		)	(1		)	—			(1		)	(120		)
Dividends Declared							(350		)										(350		)
Balance as of December 31, 2017	143	$2,402	~~2,402~~	$(12	~~(12~~	)	$	2,915		$	(37	)	$	(13	)	$	(50	)	$	5,255
Net Loss							(528		)										(528		)
Other Comprehensive Income (Loss)
Gains (losses) arising during the period										(2		)	2			—			—
Losses/amortization reclassified from AOCI										16			—			16			16
Total Comprehensive Income (Loss)							(528		)	14			2			16			(512		)
Purchase of Treasury Stock				(1		)													(1		)
Dividends Declared							(140		)										(140		)
Balance as of December 31, 2018	143	$	2,402	$	(13	)	$	2,247		$	(23	)	$	(11	)	$	(34	)	$	4,602

Dividends declared per share of common stock were $20.4598, $2.3045 and $2.1830 for ~~2017~~2018, ~~2016~~2017 and ~~2015~~2016, respectively.

See Notes to Consolidated Financial Statements.

6629

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholder of

South Carolina Electric & Gas Company

Cayce, South Carolina

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of South Carolina Electric & Gas Company and affiliates (the "Company") as of December 31, ~~2017~~2018 and ~~2016~~2017, the related consolidated statements of comprehensive income (loss), changes in equity, and cash flows, for each of the three years in the period ended December 31, ~~2017~~2018, and the related notes and the financial statement schedule listed in the Part IV at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2017~~2018 and ~~2016~~2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, ~~2017~~2018, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Emphasis of Matter

/s/DELOITTE & TOUCHE LLP

Charlotte, North Carolina

February 2228, ~~2018~~2019

We have served as the Company's auditor since 1945.

7030

South Carolina Electric & Gas Company and Affiliates

Consolidated Balance Sheets

December 31, (Millions of dollars)	~~2017~~2018			~~2016~~2017
Assets
Utility Plant In Service	$	12,161		$	11,510
Utility Plant in Service	$	12,803		$	12,161
Accumulated Depreciation and Amortization	(4,~~124~~581		)	(34,~~991~~124		)
Construction Work in Progress	~~375~~350			~~4,813~~375
Nuclear Fuel, Net of Accumulated Amortization	~~208~~211			~~271~~208
Utility Plant, Net ($711 and $756 related to VIEs)	8,620			12,603
Utility Plant, Net ($711 and $711 related to VIEs)	8,783			8,620
Nonutility Property and Investments:
Nonutility property, net of accumulated depreciation	7172			6971
Assets held in trust, net-nuclear decommissioning	~~136~~190			~~123~~136
Other investments	21			32
Nonutility Property and Investments, Net	~~209~~263			~~195~~209
Current Assets:
Cash and cash equivalents	~~395~~377			~~164~~395
Receivables:
Customer, net of allowance for uncollectible accounts of $4 and $3	390			378
Customer, net of allowance for uncollectible accounts of $4 and $4	344			390
Affiliated companies	32359			1632
Income taxes	~~198~~—			53198
Other	8568			9485
Inventories:
Fuel	9089			8390
Materials and supplies	~~149~~158			~~143~~149
Prepayments	82			8882
Derivative financial instrument	54			—
Other current assets	1			56
Other current assets	2			1
Total Current Assets ($96 and $191 related to VIEs)	1,478			1,477
Total Current Assets ($191 and $85 related to VIEs)	1,477			1,020
Deferred Debits and Other Assets:
Regulatory assets	54,~~476~~256			25,~~030~~476
Other	~~164~~183			~~243~~164
Total Deferred Debits and Other Assets ($50 and $52 related to VIEs)	5,640			2,273
Total Deferred Debits and Other Assets ($34 and $50 related to VIEs)	4,439			5,640
Total	$	1514,~~946~~963		$	1615,~~091~~946

See Notes to Consolidated Financial Statements.

7131

December 31, (Millions of dollars)	~~2017~~2018			~~2016~~2017
Capitalization and Liabilities
Common Stock - no par value, 40.3 million shares outstanding for all periods presented	$	2,860		$	2,860
Retained Earnings	1,~~982~~279			21,~~481~~982
Accumulated Other Comprehensive Loss	(43		)	(34		)
Total Common Equity	4,~~838~~136			54,~~338~~838
Noncontrolling interest	~~142~~179			~~134~~142
Total Equity	4,~~980~~315			54,~~472~~980
Long-Term Debt, net	45,~~441~~132			54,~~154~~441
Total Capitalization	9,~~421~~447			109,~~626~~421
Current Liabilities:
Short-term borrowings	~~252~~73			~~804~~252
Current portion of long-term debt	~~723~~14			12723
Accounts payable	~~251~~267			~~247~~251
Affiliated payables	~~102~~347			~~122~~102
Customer deposits and customer prepayments	7083			~~126~~70
Taxes accrued	208			195
Revenue subject to refund	77			—
Interest accrued	67			68
Taxes accrued	239			208
Dividends declared	82			79
Interest accrued	72			67
Derivative financial instruments	2			28
Dividends declared	10			82
Other	4732			5549
Total Current Liabilities	1,~~804~~214			1,~~736~~804
Deferred Credits and Other Liabilities:
Deferred income taxes, net	~~1,173~~989			1,~~939~~173
Asset retirement obligations	~~529~~542			~~522~~529
Pension and postretirement benefits	~~217~~232			~~232~~217
Unrecognized tax benefits	1938			~~236~~19
Regulatory liabilities	2,~~667~~380			~~695~~2,667
Other	97105			8997
Other - affiliate	1916			1619
Total Deferred Credits and Other Liabilities	4,~~721~~302			34,~~729~~721
Commitments and Contingencies (Note 10)	—			—
Commitments and Contingencies (Note 11)
Total	$	1514,~~946~~963		$	1615,~~091~~946

See Notes to Consolidated Financial Statements.

7232

South Carolina Electric & Gas Company and Affiliates

Consolidated Statements of Comprehensive Income (Loss)

For the Years Ended December 31, (Millions of dollars)	~~2017~~2018			~~2016~~2017			~~2015~~2016
Operating Revenues:
Electric	$	2,~~659~~322		$	2,~~614~~659		$	2,~~551~~614
Electric - nonconsolidated affiliate	5			5			65
Gas	~~405~~434			~~366~~405			~~372~~366
Gas - nonconsolidated affiliate	1			1			1
Total Operating Revenues	32,~~070~~762			23,~~986~~070			2,~~930~~986
Operating Expenses:
Fuel used in electric generation	~~465~~531			~~472~~465			~~559~~472
Fuel used in electric generation - nonconsolidated affiliate	~~129~~140			~~104~~129			~~102~~104
Purchased power	8092			6480			5264
Gas purchased for resale	~~206~~239			~~174~~206			~~162~~174
Gas purchased for resale - nonconsolidated affiliate	—			9—			319
Other operation and maintenance	~~417~~449			~~403~~417			~~380~~403
Other operation and maintenance - nonconsolidated affiliate	~~187~~182			~~211~~180			199
Impairment loss	1,~~118~~376			—1,118			—
Depreciation and amortization	~~312~~327			~~302~~312			~~294~~302
Other taxes	~~241~~251			~~227~~241			~~211~~227
Other taxes - nonconsolidated affiliate	56			75			67
Total Operating Expenses	3,~~160~~593			13,~~973~~153			1,~~996~~961
Operating Income (Loss)	(90831		)	~~1,013~~(83		)	~~934~~1,025
Other Income (Expense), net	35129			3128			2519
Interest charges, net of allowance for borrowed funds used during construction of $15, $18 and $14	(288		)	(270		)	(248		)
Interest charges, net of allowance for borrowed funds used during construction of $9, $15 and $18	(303		)	(288		)	(270		)
Income (Loss) Before Income Tax Expense	(~~343~~1,005		)	~~774~~(343		)	~~711~~774
Income Tax Expense (Benefit)	(~~171~~416		)	~~248~~(171		)	~~231~~248
Net Income (Loss) and Total Comprehensive Income (Loss)	(172		)	526			480
Net Income (Loss)	(589		)	(172		)	526
Less Net Income and Total Comprehensive Income Attributable to Noncontrolling Interest	13			13			14
Other Comprehensive Income
Earnings (Loss) and Comprehensive Income Available (Loss Attributable) to Common Shareholder	$	(185	)	$	513		$	466
Deferred cost of employee benefit plans, net of tax of $-, $- and $-	1			—			—
Dividends Declared on Common Stock	$	323		$	305		$	285
Total Comprehensive Income (Loss)	(588		)	(172		)	526
Less Comprehensive Income Attributable to Noncontrolling Interest	25			13			13
Comprehensive Income Available (Loss Attributable) to Common Shareholder	$	(613	)	$	(185	)	$	513

See Notes to Consolidated Financial Statements.

7333

South Carolina Electric & Gas Company and Affiliates

Consolidated Statements of Cash Flow

For the Years Ended December 31, (Millions of dollars)	~~2017~~2018			~~2016~~2017			~~2015~~2016
Cash Flows From Operating Activities:
Net income (Loss)	$	(~~172~~589	)	$	~~526~~(172	)	$	~~480~~526
Adjustments to reconcile net income to net cash provided from operating activities:
Impairment loss	1,~~118~~376			—1,118			—
Deferred income taxes, net	(~~780~~184		)	~~207~~(780		)	8207
Depreciation and amortization	~~323~~342			~~310~~323			~~294~~310
Amortization of nuclear fuel	4447			5744			4657
Allowance for equity funds used during construction	(1511		)	(2615		)	(2526		)
Carrying cost recovery	(346		)	(1734		)	(1217		)
Changes in certain assets and liabilities:
Receivables	~~(32~~50		)	(4732		)	85(47		)
Receivables - affiliate	12(2		)	(312		)	16(3		)
Income tax receivable	~~(145~~198		)	(53145		)	—(53		)
Inventories	(6054		)	(3560		)	(2435		)
Prepayments	6—			(46		)	70(4		)
Regulatory assets	~~185~~(179		)	~~(94~~185		)	(2994		)
Other regulatory liabilities	~~899~~(360		)	(5899		)	(35		)
Accounts payable	2061			820			118
Accounts payable - affiliate	~~(28~~—		)	13(28		)	~~(17~~13		)
Unrecognized tax benefits	(241		)	192			31
Revenue subject to refund	77			—			—
Taxes accrued	13			(104		)	129
Unrecognized tax benefits	19			(241		)	192
Pension and other postretirement benefits	(21		)	39			(5		)
Taxes accrued	31			13			(104		)
Other assets	(46		)	(99		)	57
Pension and other postretirement benefits	15			(21		)	39
Other liabilities	(43		)	58			(28		)
Other assets	77			(46		)	(99		)
Other liabilities - affiliate	3			(1		)	(6		)
Other liabilities	22			(43		)	58
Net Cash Provided From Operating Activities	1,006			922			1,078
Other liabilities - affiliate	(3		)	3			(1		)
Net Cash Provided From Operating Activities	927			1,006			922
Cash Flows From Investing Activities:
Property additions and construction expenditures	(~~928~~633		)	(~~1,399~~928		)	(1,~~008~~399		)
Proceeds from guaranty settlement	1,096			—			—
Proceeds from monetization of guaranty settlement	—			1,096			—
Proceeds from investments and sales of assets (including derivative collateral returned)	~~118~~40			~~794~~118			~~975~~794
Purchase of investments (including derivative collateral posted)	(~~122~~29		)	(~~740~~122		)	(~~887~~740		)
Payments upon interest rate derivative contract settlement	(39		)	(113		)	(263		)
Purchase of investments - affiliate	(111		)	—			—
Proceeds from interest rate derivative contract settlement	—			—			10
Payments upon interest rate derivative contract settlement	—			(39		)	(113		)
Proceeds from investment in affiliate	—			9			71
Proceeds from interest rate derivative contract settlement	115			—			—
Investment in affiliate	(28		)	—			—
Proceeds from investments - affiliate	111			—			9
Net Cash Used For Investing Activities	97			(1,449		)	(1,102		)
Investment in affiliate	(325		)	(28		)	—
Net Cash Provided From (Used For) Investing Activities	(832		)	97			(1,449		)
Cash Flows From Financing Activities:
Proceeds from issuance of long-term debt	—			494			491
Proceeds from issuance of debt	795			—			494
Repayment of long-term debt	(12825		)	(~~112~~12		)	(11112		)
Dividends	(~~319~~173		)	(~~301~~319		)	(~~285~~301		)
Short-term borrowings, net	(~~552~~179		)	~~384~~(552		)	~~(289~~384		)
Short-term borrowings-nonconsolidated affiliate, net	8			(4		)	(50		)
Money pool borrowings, net	245			8			(4		)
Contribution from parent	324			~~100~~3			~~204~~100
Return of capital to parent	—			—			(4		)
Net Cash Provided From (Used For) Financing Activities	(113		)	(872		)	561
Deferred financing costs	—			—			(2		)
Net Increase (Decrease) in Cash and Cash Equivalents	(18		)	231			34
Net Cash Provided From Financing Activities	(872		)	561			54
Cash and Cash Equivalents, January 1	395			164			130
Net Increase in Cash and Cash Equivalents	231			34			30
Cash and Cash Equivalents, December 31	$	377		$	395		$	164
Cash and Cash Equivalents, January 1	164			130			100
Cash and Cash Equivalents, December 31	$	395		$	164		$	130
Supplemental Cash Flow Information:
Cash for—Interest paid (net of capitalized interest of $15, $18 and $14)	$	269		$	251		$	228
Cash for—Interest paid (net of capitalized interest of $9, $15 and $18)	$	264		$	269		$	251
—Income taxes paid	473			~~289~~47			89289
—Income taxes received	~~145~~216			~~189~~145			84189
Noncash Investing and Financing Activities:
Accrued construction expenditures (including nuclear fuel)	99			95			230
Accrued construction expenditures	69			99			95
Capital leases	8			148			614
Contributed construction	6			—			—

See Notes to Consolidated Financial Statements.

7434

South Carolina Electric & Gas Company and Affiliates

Consolidated Statements of Changes in Equity

	Common Stock						AccumulatedOtherComprehensiveIncome (Loss)			Non-controllingInterest
Millions	Shares	Amount		RetainedEarnings			~~AccumulatedOtherComprehensiveIncome (Loss)~~			~~Non-controllingInterest~~			TotalEquity
Balance at January 1, 2015	40	$	2,560	$	2,077		$	(3	)	$	123		$	4,757
Balance at January 1, 2016	40	$	2,760	$	2,265		$	(3	)	$	129		$	5,151
Earnings available for common shareholder				466						14			480
Earnings (Loss) Available for (Attributable to) Common Shareholder				513						13			526
Deferred cost of employee benefit plans, net of tax $-							—						—
Total Comprehensive Income				466			—			14			480
Capital contributions from parent		200								—			200
Cash dividends declared				(278		)				(8		)	(286		)
Balance at December 31, 2015	40	2,760		2,265			(3		)	129			5,151
Earnings Available for Common Shareholder				513						13			526
Deferred Cost of Employee Benefit Plans, net of tax $-							—						—
Total Comprehensive Income				513			—			13			526
Capital contributions from parent		100								—			100
Cash dividends declared				(297		)				(8		)	(305		)
Balance at December 31, 2016	40	2,860		2,481			(3		)	134			5,472
Earnings (Loss) Available for (Attributable to) Common Shareholder				(185		)				13			(172		)
Deferred Cost of Employee Benefit Plans, net of tax $-							(1		)	1			(1		)
Total Comprehensive Income (Loss)				(185		)	(1		)	13			(173		)
Total Comprehensive Income				(185		)	(1		)	13			(173		)
Capital contributions from parent		—								3			3100
Cash dividends declared				(314		)				(8		)	(322		)
Balance at December 31, 2017	40	$2,860	~~2,860~~	$1,982	~~1,982~~		$(4	(4	)	$142	~~142~~		$4,980	~~4,980~~
Earnings (Loss) Available for (Attributable to) Common Shareholder				(614		)				25			(589		)
Deferred Cost of Employee Benefit Plans, net of tax $-							1						1
Total Comprehensive Income (Loss)				(614		)	1			25			(588		)
Capital contributions from parent		—								24			24
Cash dividends declared				(89		)				(12		)	(101		)
Balance at December 31, 2018	40	$	2,860	$	1,279		$	(3	)	$	179		$	4,315

See Notes to Consolidated Financial Statements.

7535

SCANA Corporation and Subsidiaries

South Carolina Electric & Gas Company and Affiliates

Notes to Consolidated Financial Statements

The following notes to the consolidated financial statements are a combined presentation. Except as otherwise indicated herein, each note applies to the Company and Consolidated SCE&G; however, Consolidated SCE&G makes no representation as to information relating solely to SCANA Corporation or its subsidiaries (other than Consolidated SCE&G).

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Principles of Consolidation

Effective January 1, 2019, SCANA became a wholly-owned subsidiary of Dominion Energy under the terms of the Merger Agreement. See additional discussion in Note 2 and Note 11.

The Company

SCANA, a South Carolina corporation, is a holding company created in 1984. The Company primarily engages ~~predominantly~~ in the generation and sale of electricity to wholesale and retail customers in South Carolina, and the purchase, sale and transportation of natural gas to wholesale and retail customers in South Carolina, North Carolina and Georgia ~~and conducts other energy-related business~~.

The accompanying consolidated financial statements reflect the accounts of SCANA, and the following wholly-owned subsidiaries~~, and subsidiaries that formerly were wholly-owned during the periods presented~~.



Regulated businesses		Nonregulated businesses
South Carolina Electric & Gas Company		SCANA Energy Marketing, Inc.
South Carolina Fuel Company, Inc.		SCANA Services, Inc.
South Carolina Generating Company, Inc.		SCANA Corporate Security Services, Inc.
Public Service Company of North Carolina, Incorporated		SCANA Communications Holdings, Inc.

SCANA reports certain investments using the cost or equity method of accounting, as appropriate. Intercompany balances and transactions have been eliminated in consolidation, with the exception of profits on intercompany sales to regulated affiliates if the sales price is reasonable and the future recovery of the sales price through the rate-making process is probable, as permitted by accounting guidance. Discussions regarding the Company's financial results necessarily include the results of Consolidated SCE&G.

Consolidated SCE&G

SCE&G, a public utility, is a South Carolina corporation organized in 1924 and a wholly-owned subsidiary of SCANA~~, a South Carolina corporation~~. Consolidated SCE&G primarily engages ~~predominantly~~ in the generation and sale of electricity to wholesale and retail customers in South Carolina and in the purchase, sale and transportation of natural gas to retail customers in South Carolina.

SCE&G has determined that it has a controlling financial interest in GENCO and Fuel Company (which are considered to be VIEs) and accordingly, Consolidated SCE&G's consolidated financial statements include the accounts of SCE&G, GENCO and Fuel Company. The equity interests in GENCO and Fuel Company are held solely by SCANA, SCE&G’s parent. As a result, GENCO’s and Fuel Company’s equity and results of operations are reflected as noncontrolling interest in Consolidated SCE&G’s consolidated financial statements.

GENCO owns a coal-fired electric generating station with a 605 MW net generating capacity (summer rating). GENCO’s electricity is sold, pursuant to a FERC-approved tariff, solely to SCE&G under the terms of a power purchase agreement and related operating agreement. The effects of these transactions are eliminated in consolidation. Substantially all of GENCO’s property (carrying value of approximately $~~503~~500 million) serves as collateral for its long-term borrowings. Fuel Company acquires, owns and provides financing for SCE&G’s nuclear fuel, certain fossil fuels and emission and other environmental allowances. See also Note 45.

~~Dispositions~~36

In the first quarter of 2015, SCANA sold CGT and SCI. CGT was an interstate natural gas pipeline regulated by FERC that transported natural gas in South Carolina and southeastern Georgia, and it was sold to Dominion Resources, Inc. SCI provided fiber optic communications and other services and built, managed and leased communications towers in several

southeastern states, and it was sold to Spirit Communications. These sales resulted in recognition of pre-tax gains totaling approximately $342 million. The pre-tax gain from the sale of CGT is included within Operating Income and the pre-tax gain from the sale of SCI is included within Other Income (Expense) on the Company's consolidated statement of operations.

CGT and SCI operated principally in wholesale markets, whereas the Company's primary focus is the delivery of energy-related products and services to retail markets. In addition, neither CGT nor SCI met accounting criteria for disclosure as a reportable segment. The sales of CGT and SCI did not represent a strategic shift that had a major effect on the Company's operations; therefore, these sales did not meet the criteria for classification as discontinued operations.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

No estimate is made for legal costs expected to be incurred in connection with loss contingencies. Such costs are recorded when incurred.

Utility Plant

Utility plant is stated at original cost. The costs of additions, replacements and betterments to utility plant, including direct labor, material and indirect charges for engineering, supervision and AFC, are added to utility plant accounts. The original cost of utility property retired or otherwise disposed of is removed from utility plant accounts and generally charged to accumulated depreciation. The costs of repairs and replacements of items of property determined to be less than a unit of property or that do not increase the asset’s life or functionality are charged to expense.

AFC is a noncash item that reflects the period cost of capital devoted to plant under construction. This accounting practice results in the inclusion of, as a component of construction cost, the costs of debt and equity capital dedicated to construction investment. AFC is included in rate base investment and depreciated as a component of plant cost in establishing rates for utility services. The Company’s regulated subsidiaries calculated AFC using average composite rates of 57.67% for ~~2017~~2018, 5.36% for ~~2016~~2017, and 65.13% for ~~2015~~2016. Consolidated SCE&G calculated AFC using average composite rates of 37.90% for ~~2017~~2018, 43.79% for ~~2016~~2017, and 54.67% for ~~2015~~2016. These rates do not exceed the maximum rates allowed in the various regulatory jurisdictions. SCE&G capitalizes interest on nuclear fuel in process at the actual interest cost incurred.

Provisions for depreciation and amortization are recorded using the straight-line method based on the estimated service lives of the various classes of property, and in most cases, include provisions for future cost of removal. InThe ~~2015,~~2018 SCE&G adopted lower depreciation rates for electric and common plant, as approved by the SCPSC and further described in Note 2. In addition, CGT was sold in the first quarter of 2015 (see Dispositions herein) and excluded from the 2015 calculation of composite weighted average depreciation rates~~. The~~ ~~composite weighted average depreciation rates~~ for utility plant ~~assets~~by function were as follows:

	2017			2016			2015
		The Company			Consolidated SCE&G
SCE&G	2.55	%		2.56	%		2.55	%
Generation		2.61	%		2.61	%
GENCO	2.66	%		2.66	%		2.66	%
Transmission		2.47	%		2.74	%
PSNC Energy	3.03	%		2.90	%		2.94	%
Distribution		2.48	%		2.41	%
Weighted average of above	2.63	%		2.61	%		2.61	%
Storage		2.48	%		2.71	%
Consolidated SCE&G	2.55	%		2.56	%		2.56	%
General and other		5.64	%		3.18	%

SCE&G records nuclear fuel amortization using the units-of-production method. Nuclear fuel amortization is included in Fuel used in electric generation and recovered through the fuel cost component of retail electric rates.

Jointly Owned Utility Plant

SCE&G jointly owns and is the operator of Unit 1. Each joint owner provides its own financing and shares the direct expenses and generation output in proportion to its ownership. SCE&G’s share of the direct expenses is included in the corresponding operating expenses on its income statement. Unit 2 and Unit 3 have been reclassified from construction work in progress to a regulatory asset as a result of the decision to stop their construction. See additional discussion at Note 2.

As of December 31,	2017			2016
	Unit 1			Unit 1			Unit 2 and Unit 3
Percent owned	66.7%			66.7%			55.0%
Plant in service	$	1.5	billion	$	1.3	billion	—
Accumulated depreciation	$	637.6	million	$	634.4	million	—
Construction work in progress	$	110.1	million	$	167.7	million	$	4.2	billion

Included within other receivables on the balance sheet were amounts due to SCE&G from Santee Cooper for its share of direct expenses and construction costs for the units. These amounts totaled $53.8 million at December 31, 2017 and $76.2 million at December 31, 2016.

Major Maintenance

Planned major maintenance costs related to certain fossil fuel turbine equipment and nuclear refueling outages are accrued in periods other than when incurred in accordance with approval by the SCPSC for such accounting treatment and rate recovery of expenses accrued thereunder. The difference between such cumulative major maintenance costs and cumulative collections is classified as a regulatory asset or regulatory liability on the consolidated balance sheet. Other planned major maintenance is expensed when incurred.

SCE&G is authorized to collect $18.4 million annually through electric rates to offset certain turbine maintenance expenditures. For the years ended December 31, ~~2017~~2018, and ~~2016~~2017, SCE&G incurred $2616.13 million and $2326.81 million, respectively, for turbine maintenance.

Nuclear refueling outages are scheduled 18 months apart. As approved by the SCPSC, SCE&G accrues $17.2 million annually for its portion of the nuclear refueling outages scheduled from the spring of 2014 through the spring of 2020. Refueling outage costs incurred for which SCE&G was responsible totaled $128.86 million in ~~2016~~2018 ~~in preparation for the Spring 2017 outage~~ and $23.2 million in 2017.

Goodwill

The Company considers certain amounts categorized by FERC as acquisition adjustments to be goodwill. The Company ~~tests~~has tested goodwill for impairment annually as of January 1, unless indicators, events or circumstances ~~require~~required interim testing to be performed. ~~Accounting~~The ~~guidance~~Company ~~adopted~~performed byits ~~the~~test ~~Company~~on ~~gives~~January it1, ~~the~~2019 ~~option~~and intends to test goodwill annually on April 1, effective April 1, 2019. Under current accounting guidance, the Company may perform a qualitative assessment of impairment ~~("step zero")~~. Based on this ~~qualitative~~ assessment, if the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, the Company is not required to ~~proceed~~make ~~with~~ a ~~two-step~~ quantitative ~~assessment.~~estimate ~~If the quantitative assessment becomes necessary, step one requires estimation~~ of the fair value of the reporting unit and ~~the~~to ~~comparison~~compare of that amount to its carrying value. If ~~this~~the ~~step~~Company ~~indicates~~is anrequired ~~impairment~~to (make a ~~carrying~~quantitative ~~value~~assessment inor ~~excess~~if ofit ~~fair~~chooses ~~value),~~to ~~then~~do ~~step~~so ~~two~~without first performing a qualitative one, ~~measurement~~and ofif the ~~amount~~quantitative ofassessment ~~the~~indicates ~~goodwill~~a ~~impairment~~carrying ~~(if~~value ~~any)~~in excess of fair value, isan ~~required. Should~~impairment acharge ~~write-down~~would be required,. Any such a charge would be treated as an operating expense.

For each period presented, assets with a carrying value of $210 million for PSNC Energy (Gas Distribution segment), net of a writedown of $230 million taken in 2002, were classified as goodwill. The Company ~~utilized~~performed ~~the~~a ~~step~~quantitative ~~zero~~assessment ~~qualitative~~of ~~assessment~~goodwill in its ~~evaluations~~evaluation as of January 1, ~~2018~~2019 and performed a qualitative assessment of goodwill in its evaluation as of January 1, ~~2017~~2018. ~~and~~No ~~was~~impairment ~~not~~of ~~required~~goodwill towas ~~use~~required ~~the~~based ~~two-step~~on ~~quantitative~~these ~~assessment~~evaluations.

Nuclear Decommissioning

Based on a decommissioning cost study, SCE&G’s two-thirds share of estimated site-specific nuclear decommissioning costs for Unit 1, including the cost of decommissioning plant components both subject to and not subject to radioactive contamination, totals $~~786~~625.48 million, stated in ~~2016~~2018 dollars. Santee Cooper is responsible for decommissioning costs related to its one-third ownership interest in Unit 1. The cost estimate assumes that the site will be maintained over a period of approximately 60 years in such a manner as to allow for subsequent decontamination that would permit release for unrestricted use.

Under SCE&G’s method of funding decommissioning costs, SCE&G transfers to an external trust fund the amounts collected through rates ($3.2 million pre-tax in each period presented), less expenses. The trust invests the amounts transferred into insurance policies on the lives of certain company personnel. Insurance proceeds are reinvested in insurance policies. The asset balance held in trust reflects the net cash surrender value of the insurance policies and cash held by the trust. Management intends for the fund, including earnings thereon, to provide for all eventual decommissioning expenditures for Unit 1 on an after-tax basis.

intends for the fund, including earnings thereon, to provide for all eventual decommissioning expenditures for Unit 1 on an after-tax basis.

Cash and Cash Equivalents

Temporary cash investments having original maturities of three months or less at time of purchase are considered to be cash equivalents. These cash equivalents are generally in the form of commercial paper, certificates of deposit, repurchase agreements, treasury bills and money market funds. At December 31, 2018, cash and cash equivalents at the Company and Consolidated SCE&G included approximately $115.3 million held in escrow pending consummation of the merger with Dominion Energy and final approval of a legal settlement in the SCE&G Ratepayer Case. As such, the Company and Consolidated SCE&G did not consider these amounts to be restricted at December 31, 2018. See Claims and Litigation in Note 11 for additional discussion.

Receivables

Customer receivables reflect amounts due from customers arising from the delivery of energy or related services and include both billed and unbilled amounts earned pursuant to revenue recognition practices described ~~below~~in Note 3. Customer receivables are generally due within one month of receipt of invoices which are presented on a monthly cycle basis. Unbilled revenues totaled $~~220~~217.95 million at December 31, ~~2017~~2018 and $~~178~~220.9 million at December 31, ~~2016~~2017 for the Company. Unbilled revenues totaled $~~140~~129.3 million at December 31, ~~2017~~2018 and $~~117~~140.63 million at December 31, ~~2016~~2017 for Consolidated SCE&G.

Other receivables consist primarily of amounts due from Santee Cooper related to the jointly owned nuclear generating facilities at Summer Station.

Inventories

Materials and supplies include the average cost of transmission, distribution, and generating plant materials. Materials are charged to inventory when purchased and then expensed or capitalized to plant, as appropriate, at weighted average cost when used. Fuel inventory includes the average cost of coal, natural gas, fuel oil and emission allowances. Fuel is charged to ~~inventory when purchased and is expensed, at weighted average cost, as used and recovered through fuel cost recovery rates approved by the SCPSC or NCUC, as applicable.~~

PSNC Energy, a subsidiary of SCANA, utilizes an asset management and supply service agreement with a counterparty for certain natural gas storage facilities. Such counterparty held, through an agency relationship, 39% and 40% of PSNC Energy’s natural gas inventory at December 31, 2017 and December 31, 2016, respectively, with a carrying value of $11.5 million and $9.8 million, respectively. Under the terms of this agreement, PSNC Energy receives storage asset management fees of which 75% are credited to customers. This agreement expires on March 31, 2019.38

inventory when purchased and is expensed, at weighted average cost, as used and recovered through fuel cost recovery rates approved by the SCPSC or NCUC, as applicable.

PSNC Energy, a subsidiary of SCANA, utilizes an asset management and supply service agreement with a counterparty for certain natural gas storage facilities. Such counterparty held, through an agency relationship, 46% and 39% of PSNC Energy’s natural gas inventory at December 31, 2018 and December 31, 2017, respectively, with a carrying value of $13.9 million and $11.5 million, respectively. Under the terms of this agreement, PSNC Energy receives storage asset management fees of which 75% are credited to customers. This agreement has been extended and expires October 31, 2020.

Income Taxes

SCANA files consolidated federal income tax returns. Under a joint consolidated income tax allocation agreement, each subsidiary’s current and deferred tax expense is computed on a stand-alone basis. Deferred tax assets and liabilities are recorded for the tax effects of all significant temporary differences between the book basis and tax basis of assets and liabilities at currently enacted tax rates. Deferred tax assets and liabilities are adjusted for changes in such tax rates through charges or credits to regulatory assets or liabilities if such impacts are expected to be recovered from, or passed through to, customers of the Company’s regulated subsidiaries; otherwise, such adjustments are charged or credited to deferred income tax expense. Also, see Note 56 for a discussion of the impact of adjustments recorded ~~upon~~in connection with enactment of the Tax Act.

Consolidated SCE&G is included in the consolidated federal income tax returns of SCANA for all periods presented. Also, under provisions of ~~the~~an income tax allocation agreement, certain tax benefits of the parent holding company are distributed in cash to tax paying affiliates, including Consolidated SCE&G, in the form of capital contributions.

Regulatory Assets and Regulatory Liabilities

The Company’s rate-regulated utilities, including Consolidated SCE&G, record costs that have been or are expected to be allowed in the ratemaking process in periods ~~different~~that differ from ~~the~~those ~~periods~~ in which the costs would be charged to expense, or record revenues in periods ~~different~~that differ from ~~the~~those ~~periods~~ in which the revenues would be recorded, by a nonregulated enterprise. These expenses deferred for future recovery from customers or obligations for refunds to customers are primarily classified on the balance sheet as regulatory assets and regulatory liabilities (see Note 2) and are amortized consistent with the treatment of the related costs or revenues in the ratemaking process. Certain deferred amounts expected to be recovered or repaid within 12 months are classified inon the balance sheet as Receivables - Customer or Customer deposits and customer prepayments, respectively.

Debt Issuance Premiums, Discounts and Other Costs

Premiums, discounts and debt issuance costs are presented within long-term debt and are amortized as components of interest charges over the terms of the respective debt issues. For regulated subsidiaries, gains or losses on reacquired debt that is refinanced are recorded in other deferred ~~debits~~credits or ~~credits~~debits and are amortized over the term of the replacement debt, also as interest charges.

Environmental

An environmental assessment program is maintained to identify and evaluate current and former operations sites that could require environmental clean-up. As site assessments are initiated, estimates are made of the amount of expenditures, if any, deemed necessary to investigate and remediate each site. Environmental remediation liabilities are accrued when the criteria for loss contingencies are met. These estimates are refined as additional information becomes available; therefore, actual expenditures could differ significantly from the original estimates. Probable and estimable costs are accrued related to environmental sites on an undiscounted basis. Amounts estimated and accrued to date for site assessments and clean-up relate solely to regulated operations. Amounts expected to be recovered through rates are recorded in regulatory assets and, if applicable, amortized over approved amortization periods. Other environmental costs are expensed as incurred.

Statement of Operations Presentation

Revenues and expenses arising from regulated businesses and, in the case of the Company, the retail natural gas marketing business (including those activities of segments described in Note 12) are presented within Operating Income (Loss), and all other activities are presented within Other Income (Expense). ~~Consistent~~ ~~with this presentation, the Company presents the 2015 gain on the sale of CGT within Operating Income and the 2015 gain on the sale of SCI within Other Income (Expense).~~

Revenue Recognition

Revenues are recorded during the accounting period in which services are provided to customers and include estimated amounts for electricity and natural gas delivered but not billed.

Fuel costs, emission allowances and certain environmental reagent costs for electric generation are collected through the fuel cost component in retail electric rates. The SCPSC establishes this component during fuel cost proceedings. Any difference between actual fuel costs and amounts contained in the fuel cost component is adjusted through revenue and is deferred and included when determining the fuel cost component during subsequent proceedings.

SCE&G customers subject to a PGA are billed based on a cost of gas factor calculated in accordance with a gas cost recovery procedure approved by the SCPSC and subject to adjustment monthly. Any difference between actual gas costs and amounts contained in rates is adjusted through revenue and is deferred and included when making the next adjustment to the cost of gas factor. PSNC Energy’s PGA mechanism authorized by the NCUC allows the recovery of all prudently incurred gas costs, including the results of its hedging program, from customers. Any difference between actual gas costs and amounts contained in rates is deferred and included when establishing gas costs during subsequent PGA filings or in annual prudence reviews.

~~SCE&G’s~~Taxes ~~gas~~billed ~~rate~~to ~~schedules~~and ~~for~~collected ~~residential,~~from ~~small~~customers ~~commercial~~are ~~and~~recorded ~~small~~as ~~industrial~~liabilities ~~customers~~until ~~include~~they aare ~~WNA~~remitted ~~which~~to ~~minimizes~~the ~~fluctuations~~respective intaxing ~~gas~~authority. Such taxes are not included in revenues ~~due~~or toexpenses ~~abnormal~~in ~~weather~~the ~~conditions.~~statements of operations.

PSNC Energy is authorized by the NCUC to utilize a CUT which allows it to adjust base rates semi-annually for residential and commercial customers based on average per customer consumption, whether impacted by weather or other factors.

Taxes billed to and collected from customers are recorded as liabilities until they are remitted to the respective taxing authority. Such taxes are not included in revenues or expenses in the statements of income.

Earnings (Loss) Per Share

The Company computes basic earnings (loss) per share by dividing net income (loss) by the weighted average number of common shares outstanding for the period. When applicable, the Company computes diluted earnings (loss) per share using this same formula, after giving effect to securities considered to be dilutive potential common stock utilizing the treasury stock method.

this same formula, after giving effect to securities considered to be dilutive potential common stock utilizing the treasury stock method.

New Accounting Matters

Recently Adopted

In the first quarter of ~~2017~~2018, the Company and Consolidated SCE&G adopted the following accounting guidance, as applicable, issued by the FASB. The adoption of this guidance had no impact or no significant impact on their respective financial statements except as indicated.

• ~~Guidance~~Goodwill ~~issued~~impairment ~~in August 2014 requires an entity's management to evaluate whether there are conditions or events~~guidance, ~~considered~~issued in ~~the~~January ~~aggregate~~2017, ~~that~~removed ~~raise~~Step ~~substantial~~2 ~~doubt~~of ~~about~~ the ~~entity's~~goodwill ~~ability~~impairment ~~to continue as a going concern~~test. ~~See related disclosure at Note 10.~~

• Guidance ~~issued~~for revenue arising from contracts with customers uses a five-step analysis in ~~July~~determining ~~2015~~when and how revenue is recognized, and requires ~~most~~that ~~inventory~~revenue recognition depict the transfer of control of promised goods or services to becustomers ~~measured~~in atan amount that reflects the ~~lower~~consideration a company expects to receive in exchange for those goods or services. As permitted, this guidance was adopted using the modified retrospective method whereby amounts and disclosures for prior periods were not restated. Revenue recognition patterns did not change as a result of ~~cost~~adopting this guidance, and ~~net~~no ~~realizable~~cumulative ~~value~~effect adjustment to Retained Earnings was required. For additional required disclosures, see Note 3.

• ~~Guidance~~The ~~issued~~required inpresentation ~~October~~of ~~2016~~net ~~requires~~periodic ~~entities~~pension and postretirement benefit costs has been changed to ~~recognize~~distinguish ~~the~~between service cost components and non-service cost components. Service cost components continue to be included within operating income ~~tax~~and ~~consequences~~are ofpresented anin ~~intra~~the same line item as other compensation costs arising from services rendered by employees. Non-~~entity~~service ~~transfer~~cost components are now excluded from operating income. This guidance has been applied retrospectively for the presentation of anthe ~~asset,~~service ~~other~~cost ~~than~~components ~~inventory~~and other components, ~~when~~and resulted in the ~~transfer~~following ~~occurs~~changes to amounts reported in 2017 and 2016.

In January 2017, the FASB issued accounting guidance to simplify the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test. The guidance is effective for years beginning in 2020, though early adoption after January 1, 2017 is allowed. The Company adopted this guidance on January 1, 2018, and its adoption had no impact on its financial statements.40



Increase (Decrease) Millions of dollars	The Company						Consolidated SCE&G
Year Ended December 31	2017			2016			2017			2016
Other operation and maintenance	$	(9	)	$	(14	)	$	(7	)	$	(12	)
Total Operating Expenses	(9		)	(14		)	(7		)	(12		)
Operating Income	9			14			7			12
Other Income (Expense), Net	(9		)	(14		)	(7		)	(12		)

In addition, this guidance limits eligibility for capitalization of net periodic pension and postretirement benefit costs to only the service cost component, and requires this change to be applied prospectively. Accordingly, no reclassifications were made related to the capitalization of service costs. Effective January 1, 2018, amounts which otherwise would have been capitalized to plant accounts under prior guidance are now being deferred within regulatory assets.


•	Guidance issued in January 2016 changed how entities measure certain equity investments and financial liabilities, among other things.


•	Guidance issued in August 2016 is intended to reduce diversity in cash flow statement classification related to certain transactions, and entities must apply the guidance retrospectively to all periods presented.


•	Guidance issued in November 2016 clarified how restricted cash should be presented on the statement of cash flows, and entities were to apply the guidance retrospectively to all periods presented.

Pending Adoption

In the first quarter of 2018, the Company and Consolidated SCE&G will adopt the following accounting guidance issued by the FASB.

• Guidance issued in May 2014 for revenue arising from contracts with customers supersedes most prior revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides for a five-step analysis in determining when and how revenue is recognized, and requires revenue recognition to depict the transfer of promised goods or services to customers, based on the transfer of control, in an amount that reflects the consideration a company expects to receive in exchange for those goods or services. In addition, this guidance requires disclosure of the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. The analysis of contracts with customers to which the guidance might be applicable has been completed and activities of the FASB's Transition Resource Group for Revenue Recognition, particularly as they relate to the treatment of CIAC, ARP and the collectability of revenue of utilities subject to rate regulation have been considered. Specifically, the Company and Consolidated SCE&G have concluded that their use of CIAC is outside the scope of the new revenue recognition guidance. The Company and Consolidated SCE&G have determined that aspects of SCE&G’s WNA and, for the Company, PSNC Energy's CUT allow for revenue adjustments to be recognized prior to amounts being reflected in customer bills. These revenue adjustments, which give rise to regulatory assets or liabilities, represent ARPs that are outside the scope of the new guidance and will be reported as Other operating revenue separately from revenue from contracts with customers on the statement of operations. An evaluation of the enhanced disclosure requirements is being completed, including determining the appropriate disaggregation of revenue.

The Company and Consolidated SCE&G will adopt this guidance using the modified retrospective method, and comparative periods will not be restated. In connection with this adoption, the Company has determined that its gas marketing subsidiary serves as an agent for gas distribution services in its retail market. Accordingly, certain pass through charges that the Company currently records within Gas-nonregulated revenues, and which are entirely offset within Gas purchased for resale, in the future will be recorded net on the statements of operations. The Company and Consolidated SCE&G do not anticipate that the adoption of this guidance will have any material impacts on their respective financial statements, but its adoption will result in additional disclosures. The adoption of this guidance will not result in a cumulative effect adjustment to beginning retained earnings.

• Guidance issued in January 2016 changes how entities measure certain equity investments and financial liabilities, among other things. Entities will be required to make a cumulative-effect adjustment to beginning retained earnings as of the beginning of the fiscal year in which the guidance is effective, with certain exceptions. The Company and Consolidated SCE&G expect to adopt this guidance when required in the first quarter of 2018 and do not anticipate that its adoption will have a significant impact on their respective financial statements.

• Guidance issued in August 2016 is intended to reduce diversity in cash flow statement classification related to certain transactions, and entities must apply the guidance retrospectively to all periods presented. The adoption of this guidance will have no impact on the financial statements of the Company and Consolidated SCE&G.

• Guidance issued in November 2016 clarifies how restricted cash should be presented on the statement of cash flows, and entities must apply the guidance retrospectively to all periods presented. The adoption of this guidance will have no impact on the financial statements of the Company and Consolidated SCE&G.

• Guidance issued in March 2017 changes the required presentation of net periodic pension and postretirement benefit costs. Under this guidance, such costs will be separated into service cost components and other components. The service cost components will be presented in the same line item (or items) as other compensation costs arising from services rendered by employees during the period. The other components will be reported in the income statement separately from the service cost component and outside operating income. Only the service cost component will be eligible for capitalization in assets. Entities must apply this guidance on a retrospective basis for the presentation of the service cost component and the other components, and on a prospective basis for the capitalization of only the service cost component. As permitted, service cost and other costs disclosed in related footnotes to previously issued financial statements will be used when estimating retrospective changes for such costs in the income statements for prior periods. Due to regulatory overlay, non-service cost components related to regulated operations that are capitalized in assets under current accounting guidance will be deferred within regulatory assets in the future. As a result, the adoption of this guidance will not have a material impact on the financial statements of the Company and Consolidated SCE&G.

The Company and Consolidated SCE&G will adopt the following accounting guidance issued by the FASB when indicated below.

In February 2016, the FASB issued revised accounting guidance ~~related~~for to the recognition, measurement, presentation and ~~presentation~~disclosure of ~~leases~~leasing arrangements. The ~~guidance~~update ~~applies~~requires that a liability and corresponding right-of-use ~~model~~asset ~~and,~~are recorded on the balance sheet for ~~lessees~~all leases, ~~requires~~including ~~all~~those leases ~~with~~currently classified as operating leases, while also refining the definition of a ~~duration~~lease. ~~over~~In 12addition ~~months~~lessees towill be ~~recorded~~required onto ~~the~~disclose ~~balance~~key ~~sheet,~~information ~~with~~about the ~~rights~~amount, timing, and uncertainty of ~~use~~cash ~~treated~~flows asarising ~~assets~~from ~~and~~leasing ~~the~~arrangements. ~~payment~~Lessor ~~obligations~~accounting ~~treated~~remains aslargely ~~liabilities~~unchanged. ~~Further,~~

~~and~~The ~~without~~guidance ~~consideration~~is ofeffective ~~any~~for ~~regulatory~~the ~~accounting~~Company's ~~requirements~~and ~~which~~Consolidated ~~may~~SCE&G's ~~apply,~~interim ~~depending~~and ~~primarily~~annual onreporting ~~the~~periods ~~nature~~beginning ofJanuary ~~the~~1, ~~assets~~2019. ~~and~~This ~~the~~revised ~~relative~~accounting ~~consumption~~guidance ~~of them, lease costs~~ will be ~~recognized~~adopted ~~either~~using ~~through~~a ~~the~~modified-retrospective ~~separate~~approach, ~~amortization~~which ofrequires ~~the~~lessees ~~right-of-use asset~~ and ~~the~~lessors ~~recognition of the interest cost related~~ to ~~the~~recognize ~~payment~~and ~~obligation,~~measure orleases ~~through~~at the ~~recording~~date of ~~a combined straight-line rental expense~~adoption. ~~For~~Under ~~lessors~~this approach, the ~~guidance~~Company ~~calls~~and ~~for~~Consolidated ~~the~~SCE&G ~~recognition~~are ofpermitted ~~income~~to ~~either~~utilize ~~through~~ the ~~derecognition~~transition ofpractical ~~assets~~expedient ~~and~~to ~~subsequent~~maintain ~~recording~~historical ofpresentation ~~interest~~for ~~income~~periods onbefore ~~lease~~January ~~amounts receivable~~1, or2019. ~~through~~The ~~the~~Company ~~recognition~~and ofConsolidated ~~rental~~SCE&G ~~income~~will onapply athe ~~straight-line~~other ~~basis~~practical expedients, ~~also~~which ~~depending~~would onrequire ~~the~~no ~~nature~~reassessment of ~~the~~whether ~~assets~~existing ~~and~~contracts ~~relative~~are ~~consumption.~~or Incontain ~~January 2018~~leases, ~~FASB~~no ~~amended~~reassessment ~~this~~of ~~accounting~~lease ~~guidance~~classification tofor ~~provide~~existing anleases ~~optional~~and ~~transition~~no ~~practical~~reassessment ~~expedient~~of ~~that would allow adopters to not evaluate under the new guidance~~ existing or expired land easements that were not previously accounted for as leases ~~under existing guidance~~. The ~~new guidance is effective for years beginning in 2019, and the~~ Company and Consolidated SCE&G ~~do not~~ anticipate that ~~its~~the adoption ~~will~~of ~~impact~~this ~~their~~guidance ~~respective~~will ~~financial~~result ~~statements~~in ~~other~~approximately ~~than~~$30 ~~increasing~~million ~~amounts~~to ~~reported~~$35 ~~for~~million ~~assets~~ and ~~liabilities~~$15 onmillion ~~the~~to ~~balance~~$20 ~~sheet~~million, ~~and~~respectively, ~~changing~~of ~~the~~offsetting ~~place~~right-of-use onassets ~~their~~and ~~respective~~liabilities ~~statements~~added ofto ~~operations~~their onconsolidated ~~which~~balance ~~certain~~sheets ~~expenses~~for ~~are~~operating ~~recorded.~~leases Noin ~~impact~~effect onat ~~net~~the ~~income~~adoption ~~(loss) is expected~~date. ~~The~~No ~~identification~~material ~~and~~changes ~~analysis~~are ofexpected ~~leasing and related contracts~~ to ~~which~~ the ~~guidance might be applicable has begun. In addition, the~~ Company's and Consolidated SCE&G's ~~have~~results ~~begun implementation~~ of ~~a third party software tool that will assist with initial adoption and ongoing compliance~~operations. ~~Specifically, preliminary system configuration has been completed and data from certain leases are being entered.~~

In ~~June~~August ~~2016~~2017, the FASB issued accounting guidance ~~requiring~~intended to simplify the ~~use~~application of ahedge ~~current~~accounting. Among ~~expected~~other ~~credit~~things, ~~loss~~the ~~impairment~~new ~~model~~guidance will enable more hedging strategies to qualify for ~~certain~~hedge ~~financial~~accounting, ~~instruments. The~~will ~~new~~allow ~~model~~entities ismore ~~applicable~~time to ~~trade~~perform ~~receivables~~an ~~and~~initial ~~most~~assessment ~~debt~~of ~~instruments~~hedge effectiveness, ~~among~~and ~~other~~will ~~financial~~permit ~~instruments,~~an ~~and~~entity into perform a qualitative assessment of effectiveness for certain ~~instances~~hedges ~~may~~instead ~~result~~of a quantitative one. For cash flow hedges that are highly effective, all changes in ~~impairment~~the ~~losses~~fair ~~being~~value ~~recognized~~of ~~earlier~~the ~~than~~derivative ~~under~~hedging ~~current~~instrument ~~guidance.~~will ~~The~~be ~~Company~~recorded in other comprehensive income and ~~Consolidated~~will ~~SCE&G~~be ~~must~~reclassified ~~adopt~~to ~~this~~earnings ~~guidance~~in ~~beginning~~the same period that the hedged item impacts earnings. Fair value hedges will continue to be recorded in ~~2020~~current earnings, ~~including~~and ~~interim~~any ~~periods~~ineffectiveness will impact the income statement. In addition, ~~though~~changes in the ~~guidance~~fair ~~may~~value of a derivative will be ~~adopted~~recorded in ~~2019.~~the ~~The~~same ~~Company~~income ~~and~~statement ~~Consolidated~~line ~~SCE&G~~as ~~have~~the ~~not~~earnings ~~determined~~effect ~~when~~of ~~this~~the ~~guidance~~hedged item, and additional disclosures will be ~~adopted~~required orrelated ~~what~~to ~~impact~~the iteffect ~~will~~of ~~have~~hedging on ~~their~~individual ~~respective~~income ~~financial~~statement ~~statements~~line items. The guidance must be applied to all outstanding instruments using a modified retrospective method, with any cumulative effect adjustment recorded to opening retained earnings as of the beginning of the first period in which the guidance becomes effective. The Company and

In August 2017, the FASB issued accounting guidance to simplify the application of hedge accounting. Among other things, the new guidance will enable more hedging strategies to qualify for hedge accounting, will allow entities more time to perform an initial assessment of hedge effectiveness, and will permit an entity to perform a qualitative assessment of effectiveness for certain hedges instead of a quantitative one. For cash flow hedges that are highly effective, all changes in the fair value of the derivative hedging instrument will be recorded in other comprehensive income and will be reclassified to earnings in the same period that the hedged item impacts earnings. Fair value hedges will continue to be recorded in current earnings, and any ineffectiveness will impact the income statement. In addition, changes in the fair value of a derivative will be 41

82Consolidated SCE&G will adopt this guidance when required in the first quarter of 2019 and do not expect it to have a significant impact on their respective financial statements.

~~recorded~~In inFebruary 2018, the ~~same~~FASB ~~income~~issued ~~statement~~accounting ~~line~~guidance asallowing ~~the~~entities to reclassify from AOCI to retained earnings ~~effect~~any ofamounts ~~the~~for ~~hedged~~stranded ~~item,~~tax ~~and~~effects ~~additional~~resulting ~~disclosures~~from ~~will~~the Tax Act. The guidance must be ~~required~~applied ~~related~~either toin the ~~effect~~period of ~~hedging~~adoption onor ~~individual~~retrospectively ~~income~~to ~~statement~~each ~~line~~period ~~items~~in which the effect of the change was recognized. The Company and Consolidated SCE&G will adopt this guidance ~~must~~when berequired ~~applied~~in tothe ~~all~~first ~~outstanding~~quarter ~~instruments~~of ~~using~~2019 on a ~~modified~~prospective ~~retrospective~~basis. ~~method~~Upon adoption, ~~with~~the ~~any~~Company ~~cumulative~~and ~~effect~~Consolidated ~~adjustment~~SCE&G ~~recorded~~expect to ~~opening~~record cumulative effect adjustments to retained earnings asand ofAOCI ~~the~~in ~~beginning~~their statements of ~~the~~changes ~~first~~in ~~period~~common equity (in ~~which~~ the ~~guidance~~amount ~~becomes~~of ~~effective. The~~$8 million and $1 million at the Company and Consolidated SCE&G, respectively) and do not expect any other significant impact on their financial statements. The amounts to ~~adopt~~be ~~this~~reclassified ~~guidance~~reflect ~~when~~the ~~required~~impact of the reduction in the ~~first~~federal ~~quarter~~income oftax ~~2019,~~rate ~~though~~arising ~~early~~from ~~adoption~~the isTax ~~permitted~~Act, and ~~have~~the ~~not~~related ~~determined~~federal ~~what~~benefit ~~impact~~of ~~such~~state ~~adoption~~income ~~will~~taxes, ~~have~~ on ~~their~~the ~~respective~~components ~~financial~~of ~~statements~~the Company’s and Consolidated SCE&G’s AOCI.

In ~~February~~June ~~2018~~2016, the FASB issued accounting guidance ~~allowing~~requiring ~~entities~~the touse ~~reclassify~~of ~~from~~a ~~AOCI~~current toexpected ~~retained~~credit ~~earnings~~loss ~~any~~impairment ~~amounts~~model for ~~stranded~~certain ~~tax~~financial ~~effects~~instruments. The ~~resulting~~new ~~from~~model ~~the~~is ~~Tax~~applicable ~~Act.~~to ~~The~~trade ~~guidance~~receivables ~~must~~and bemost ~~applied~~debt ~~either~~instruments, inamong ~~the~~other ~~period~~financial ofinstruments, ~~adoption~~and orin ~~retrospectively~~certain toinstances ~~each~~may ~~period~~result in ~~which~~impairment ~~the~~losses ~~effect~~being ofrecognized ~~the~~earlier ~~change~~than ~~was~~under ~~recognized~~current guidance. The Company and Consolidated SCE&G must adopt this guidance beginning in ~~2019~~2020, including interim periods, though the guidance may be adopted ~~earlier~~in 2019. A modified-retrospective approach is required upon adoption, whereby a cumulative-effect adjustment to retained earnings is made as of the beginning of the first reporting period in which the guidance is effective. The Company and Consolidated SCE&G have not determined when this guidance will be adopted or what impact it will have on their respective ~~statements of~~ financial ~~position. No impact is expected on~~ statements ~~of operations or cash flows~~.

In August 2018, the FASB issued accounting guidance to modify the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. The guidance must be applied retrospectively to all periods presented. The Company and Consolidated SCE&G must adopt this guidance beginning in 2020, including interim periods, though the guidance may be adopted earlier. The Company and Consolidated SCE&G have not determined when this guidance will be adopted or what impact it will have on their respective statements of financial position.

2. RATE AND OTHER REGULATORY MATTERS

Rate Matters

Tax Act Regulatory Proceedings

The Tax Act lowered the federal corporate tax rate from 35% to 21% effective January 1, 2018. In response, the SCPSC and NCUC have required SCE&G and PSNC Energy to track and defer impacts related to the Tax Act arising from customer rates in 2018 as subject to refund. In addition, as further discussed under Regulatory Assets and Regulatory Liabilities below, certain accumulated deferred income taxes contained within regulatory liabilities represent excess deferred income taxes arising from the remeasurement of deferred income taxes upon the enactment of the Tax Act. Certain of these amounts are protected under normalization rules and will be amortized over the remaining regulatory life of the property, and certain of these amounts will be amortized to the benefit of customers, as instructed by regulators, which ranges from 5 years to 50 years.

As of December 31, 2018, SCE&G has recorded approximately $73.7 million as Revenue subject to refund and approximately $3.7 million as Regulatory liabilities on the consolidated balance sheet for the Company and Consolidated SCE&G, and PSNC Energy has recorded approximately $15.4 million of such deferrals within Regulatory liabilities on the consolidated balance sheet for the Company. These amounts were collected through customer rates in 2018 and include the accrual of estimated carrying costs. In addition, the Company and Consolidated SCE&G have recorded amounts related to excess deferred income taxes arising from the Tax Act within Regulatory liabilities. For a discussion of related actions taken by the SCPSC and NCUC, see Electric - Other, Gas - SCE&G, and Gas - PSNC Energy below.

Electric - BLRA and Merger Approval Order

In 2016, the SCPSC approved revised rates under the BLRA to incorporate financing cost of SCE&G's incremental construction work in progress incurred for the Nuclear Project. Rate adjustments resulted in approximately $64.4 million in additional revenue on an annual basis and were effective for bills rendered on and after November 27, 2016. Such rate adjustments were based on SCE&G's updated cost of debt and capital structure and on an allowed ROE of 10.5% applied prospectively for purposes of calculating revised rates under the BLRA on and after January 1, 2016. No revised rates filings were pursued after this 2016 approval.

In May 2016, SCE&G petitioned the SCPSC for approval of updated construction and capital cost schedules for Unit 2 and Unit 3 which had been developed in connection with the October 2015 Amendment. On November 9, 2016, the SCPSC approved a settlement agreement among SCE&G, the ORS and certain other parties concerning this petition. The SCPSC also approved SCE&G's election of the fixed price option included in that October 2015 contract amendment. By order dated February 28, 2017, the SCPSC denied Petitions for Rehearing filed by certain parties that were not included in the settlement, and that denial was not appealed.

On July 2 and 3, 2018, the SCPSC issued orders implementing a legislatively-mandated temporary reduction in revenues that could be collected by SCE&G from customers under the BLRA. These orders reduced the portion of SCE&G's retail electric rates associated with the Nuclear Project from approximately 18% of the average residential electric customer's bill to approximately 3.2%, which equates to a reduction in revenues of approximately $31 million per month, retroactive to April 1, 2018. These lower rates remained in effect until February 2019 pursuant to the Merger Approval Order.

On December 21, 2018, the SCPSC issued the Merger Approval Order. The order adopted Dominion Energy's Plan-B Levelized Customer Benefits Plan whereby the average bill for an SCE&G residential electric customer would approximate that which resulted from the legislatively-mandated temporary reduction that had been put into effect by the SCPSC retroactive to April 1, 2018. The Merger Approval Order established an allowed ROE of 9.9% on unrecovered Nuclear Project costs, and resulted in the following findings and conditions:


•	No capital costs related to the Nuclear Project incurred after March 12, 2015 will be recoverable by SCE&G.


•	SCE&G will provide refunds and restitution to customers from prior years' revenues totaling an aggregate $2.039 billion, comprised of $1.032 billion to be credited to customers over 20 years and $1.007 billion credited to customers over approximately 11 years.


•	Except for rate adjustments for fuel and environmental costs, demand side management costs, and other rates routinely adjusted on an annual or biannual basis, SCE&G will freeze retail electric base rates at current levels until January 1, 2021.


•	SCE&G's natural gas customers will receive a refund totaling $2.45 million in 2019, 2020 and 2021 combined.


•	Corporate giving will increase above historical levels by $1 million per year for at least five years.


•	SCE&G will not seek to pass on to ratepayers its initial capital investment in CEC, a 540-MW combined-cycle natural gas-fired generating facility, and will not seek to pass on to ratepayers any acquisition premium costs, transition costs, or transaction cost associated with the merger.

Various parties filed petitions for rehearing or reconsideration of the Merger Approval Order. On February 12, 2019, the SCPSC issued a ruling (1) finding that SCE&G was imprudent in its actions by not disclosing material information to the ORS and the SCPSC, and (2) denying the petitions for rehearing or reconsideration as to other issues raised in the various petitions. The Merger Approval Order and the ruling are subject to appeal by various parties. The Company and Consolidated SCE&G cannot predict the outcome of these matters. See also Note 11.

Electric - Cost of Fuel

SCE&G's retail electric rates include a cost of fuel component approved by the SCPSC which may be adjusted periodically to reflect changes in the price of fuel purchased by SCE&G.

By order dated April 30, 2015, the SCPSC approved a settlement agreement among SCE&G and certain other parties in which SCE&G agreed to decrease the total fuel cost component of retail electric rates. Under this order, SCE&G is to recover an amount equal to its under-collected balance of base fuel and variable environmental costs as of April 30, 2015, over the subsequent 12-month period beginning with the first billing cycle of May 2015.

By order dated July 15, 2015, the SCPSC approved SCE&G's participation in a DER program and recovery of related costs as a separate component of SCE&G's overall fuel factor. Under this order, SCE&G is to implement programs to encourage the development of renewable energy facilities with a total nameplate capacity of at least approximately 84.5 MW by the end of 2020, of which half is to be customer-scale solar capacity and half is to be utility-scale solar capacity. This nameplate capacity goal was achieved in 2017.

By order dated April 29, 2016, the SCPSC approved a settlement agreement among SCE&G, ORS and certain other parties to decrease the total fuel cost component of retail electric rates. SCE&G reduced the total fuel cost component of retail electric rates to reflect lower projected fuel costs and to eliminate over-collected balances of approximately $61 million for base fuel and environmental costs over a 12-month period beginning with the first billing cycle of May 2016. SCE&G also began to recover projected DER program costs of approximately $6.9 million beginning with the first billing cycle of May 2016.

By order dated April 27, 2017, the SCPSC approved a settlement agreement among SCE&G, the ORS and the SCEUC, to increase the total fuel cost component of retail electric rates. SCE&G agreed to set its base fuel component to produce a projected under recovery of $61.0 million over a 12-month period beginning with the first billing cycle of May 2017. SCE&G also agreed to recover, over a 12-month period beginning with the first billing cycle of May 2017, projected DER program costs of approximately $16.5 million. Additionally, deferral of carrying costs ~~will~~would be allowed for base fuel component under-collected balances as they ~~occur~~occurred.

InOn ~~October~~April ~~2017~~25, 2018, the SCPSC ~~initiated~~approved ~~its~~SCE&G’s ~~2018~~proposal ~~annual~~to ~~review~~increase the total fuel cost component of ~~base~~retail electric rates. ~~for~~Specifically, ~~fuel~~the ~~costs. A~~SCPSC ~~public~~approved ~~hearing~~an ~~for~~increase ~~this~~to ~~annual~~certain ~~review~~environmental, isavoided ~~scheduled~~capacity ~~for~~and ~~April~~DER ~~10,~~program ~~2018.~~cost

components and SCE&G’s agreement to maintain its base fuel component to produce a projected under-recovered balance of approximately $1.3 million at the end of the 12-month period beginning with the first billing cycle of May 2018. This projected under-recovered balance includes the effect of offsetting fuel cost recovery with gains realized from the settlement of certain interest rate derivatives in 2018. SCE&G also agreed to recover, over a 12-month period beginning with the first billing cycle of May 2018, projected DER program costs of approximately $29.3 million. Petitions for rehearing and reconsideration were filed by various parties, and on October 30, 2018, the SCPSC issued an order granting one such petition related to SCE&G supplying certain information as in previous years. The other petitions were denied, and certain parties have appealed the decision to deny their petitions to the South Carolina Supreme Court. These appeals primarily relate to avoided cost rates that SCE&G is required to pay to solar energy developers, and these appeals are pending. The Company and Consolidated SCE&G cannot predict the outcome of these matters.

On February 8, 2019, SCE&G filed with the SCPSC a proposal to decrease the total fuel cost component of retail electric rates. In the filing, SCE&G proposed to maintain its base fuel component at the current level to produce a projected under-recovered balance of approximately $35.4 million at the end of the 12-month period beginning with the first billing cycle of May 2019, and requested carrying costs for any base fuel under-collected balances, should they occur. SCE&G also proposed to reduce its variable environmental component and maintain or reduce its DER components. A public hearing on this matter is scheduled to be held in April 2019.

Electric - Base Rates

Pursuant to an SCPSC order, SCE&G ~~has~~ removed from rate base certain deferred income tax assets arising from capital expenditures related to Unit 2 and Unit 3 and accrued carrying costs on those amounts during periods in which they were not included in rate base. Such carrying costs were determined at SCE&G’s weighted average long-term debt borrowing rate and were recorded as a regulatory asset and other income. Carrying costs totaled $18.8 million during 2017 and $14.0 million during ~~2017 and~~ 2016~~, respectively~~. As part of the Nuclear Project impairment loss described in Note 1011, accumulated carrying costs related to ~~the~~these ~~Nuclear~~deferred ~~Project~~income tax assets totaling $51.0 million were written off in 2017.

83Electric - Other

The SCPSC has approved a suite of DSM Programs for development and implementation. SCE&G offers to its retail electric customers several distinct programs designed to assist customers in reducing their demand for electricity and improving their energy efficiency. SCE&G submits annual filings to the SCPSC related to these programs which include actual program costs, net lost revenues (both forecasted and actual), customer incentives, and net program benefits, among other things. As actual DSM Program costs are incurred, they are deferred as regulatory assets and recovered through a rate rider approved by the SCPSC. The rate rider also provides for recovery of net lost revenues and for a shared savings incentive. The SCPSC approved the following rate riders pursuant to the annual DSM Programs filings, which went into effect as indicated below:

Year	Effective	Amount
2018	First billing cycle of May	$33.0 million
2017	First billing cycle of May	$37.0 million
2016	First billing cycle of May	$37.6 million
2015	First billing cycle of May	$32.0 million

ByIn ~~order~~January ~~dated April 29~~2019, ~~2016, the SCPSC approved~~ SCE&G’s ~~request~~submitted toits ~~increase~~annual ~~its~~DSM ~~pension~~Programs ~~costs~~filing ~~rider. The~~to ~~increased~~the ~~pension~~SCPSC. ~~rider~~If ~~was~~approved ~~designed~~the tofiling would allow ~~SCE&G~~recovery toof ~~recover~~approximately ~~projected~~$30.3 ~~pension~~million of costs, ~~including~~and ~~under-collections,~~net ~~over~~lost arevenues ~~12-month~~associated ~~period~~with DSM Programs, ~~beginning~~along with ~~the~~an ~~first~~incentive ~~billing~~to ~~cycle~~invest in ~~May~~such ~~2016~~programs.

BySCE&G ~~order~~utilizes ~~dated~~a ~~March~~pension 1,costs ~~2017,~~rider approved by the SCPSC ~~approved~~which ~~SCE&G’s~~is ~~request~~designed to ~~decrease~~allow ~~its~~recovery of projected pension costs, ~~rider. The~~including ~~change~~under-collected inbalances ~~the~~or ~~pension~~net ~~rider~~of ~~decreased~~over-collected ~~annual~~balances, ~~revenue~~as ~~by approximately $11~~applicable.9 ~~million.~~ The ~~pension~~ rider is ~~designed~~typically toreviewed ~~allow~~for ~~SCE&G~~adjustment toevery ~~recover~~12 ~~projected~~months ~~pension~~with ~~costs,~~any ~~net~~resulting ofincrease ~~the~~or ~~previously~~decrease ~~over-collected~~going ~~balance,~~into ~~over~~effect ~~a 12-month period,~~ beginning with the first billing cycle in May. In 2017, this rider was adjusted to decrease annual revenue by approximately $11.9 million. No adjustment was made in 2018. No adjustment has been proposed in 2019.

InAs ~~December~~part ~~2017,~~of the ~~ORS~~Merger ~~filed~~Approval aOrder, ~~petition with~~ the SCPSC ~~requesting~~approved ~~all~~refunds ~~investor-owned~~of ~~utilities~~approximately ~~under~~$100 ~~the~~million ~~SCPSC’s~~by ~~jurisdiction~~SCE&G tofor ~~report~~ the impact of the ~~Tax Act on their individual company’s operations. The Tax Act contains provisions that~~ lower ~~the~~ federal ~~corporate~~ tax rate resulting from ~~35% to 21% effective January 1, 2018. The petition requested that utilities file an estimate of~~ the Tax Act’s. ~~effects~~The onrefunds ~~their~~include ~~most~~amounts ~~recent~~which ~~test~~had ~~year~~been ~~information~~collected ~~available,~~through ~~including~~customer anrates ~~explanation~~in of2018 ~~those effects,~~ and ~~requested~~January ~~that~~2019 ~~utilities~~and ~~propose~~also ~~procedures~~include ~~for changing rates to reflect~~ the ~~impacts.~~effects ~~Lastly,~~of the ~~petition~~amortization ~~requested~~of ~~that~~certain ~~the~~excess ~~SCPSC~~deferred ~~state~~taxes induring ~~its~~the ~~order~~same ~~that~~period. ~~rates~~At inDecember ~~effect as of January 1~~31, 2018, beamounts ~~subject~~ to ~~refund~~be sorefunded ~~that~~to ~~ratepayers~~electric ~~receive~~customers ~~the~~totaled ~~benefit~~approximately of$91 ~~the~~million, ~~tax~~and ~~law~~were ~~changes~~comprised as of ~~January~~approximately 1,$70 ~~2018.~~million Byincluded ~~order~~within ~~dated~~Revenue ~~January~~subject ~~10,~~to ~~2018,~~refund ~~the~~and ~~SCPSC~~approximately ~~granted~~$21 ~~the~~million ~~ORS~~included ~~petition~~within ~~but~~Regulatory ~~did~~liabilities. ~~not~~These ~~state~~refunds ~~that~~have ~~rates~~been included in ~~effect~~bills asrendered ~~of January 1, 2018 would be subject to refund. SCE&G provided its comments~~ on ~~January~~and ~~24,~~after ~~2018, concerning~~ the ~~timing~~first ~~and~~billing ~~the~~cycle ~~format~~ of ~~the report.~~

In January 2018, SCE&G submitted its annual DSM Programs filing to the SCPSC. If approved the filing would allow recovery of $37.0 million of costs and net lost revenues associated with DSM programs, along with an incentive to invest in such programs. 44

~~Electric~~February -2019. ~~BLRA~~In addition, the SCPSC approved the implementation of a tax rider whereby amounts collected though customer rates effectively would be reduced and ~~Joint~~excess ~~Petition~~deferred income taxes arising from the remeasurement of deferred income taxes upon the enactment of the Tax Act will be amortized to the benefit of customers. This tax rider is expected to reduce base rates to customers by approximately $67 million in each of 2019 and 2020, effective with the first billing cycle of February 2019. Unamortized excess deferred income taxes that remain at the end of 2020 will be considered in future rate proceedings.

Under the BLRA, SCE&G filed revised rates with the SCPSC in 2015 and 2016 to incorporate the financing cost of incremental construction work in progress incurred for the Nuclear Project. Rate adjustments were based on SCE&G's updated cost of debt and capital structure and on an allowed ROE. No revised rates filing was pursued in 2017. The SCPSC approved recovery of the following amounts.

Increase	Effective for bills rendered on and after	Amount	Allowed ROE
2.7%	November 27, 2016	$64.4 million	10.50%	*
2.6%	October 30, 2015	$64.5 million	11.00%

*Applied prospectively for purposes of calculating revised rates under the BLRA on and after January 1, 2016.

In May 2016, SCE&G petitioned the SCPSC for approval of updated construction and capital cost schedules for Unit 2 and Unit 3 which had been developed in connection with the October 2015 Amendment (see Note 10). On November 9, 2016, the SCPSC approved a settlement agreement among SCE&G, the ORS and certain other parties concerning this petition. The SCPSC also approved SCE&G's election of the fixed price option. By order dated February 28, 2017, the SCPSC denied Petitions for Rehearing filed by certain parties that were not included in the settlement, and that denial was not appealed.

The construction schedule approved by the SCPSC in November 2016 provided for contractual guaranteed substantial completion dates of August 31, 2019 and August 31, 2020 for Unit 2 and Unit 3, respectively. The approved capital cost schedule included incremental capital costs that totaled $831 million, raising SCE&G’s total project capital cost as then

approved to an estimated amount of approximately $6.8 billion including owner’s costs and transmission, or $7.7 billion with escalation and AFC. In addition, the SCPSC approved revising SCE&G’s allowed ROE for the Nuclear Project from 10.5% to 10.25%. This revised ROE was to be applied prospectively for the purpose of calculating revised rates sought by SCE&G under the BLRA on and after January 1, 2017. In addition, SCE&G could not file future requests to amend capital cost schedules prior to January 28, 2019, unless its annual revised rate request was denied because SCE&G was out of compliance with its approved capital cost schedule or BLRA construction milestone schedule, subject to certain extensions. See also Abandoned Nuclear Project in Note 10.

Following WEC and WECTEC's bankruptcy filing on March 29, 2017, on June 22, 2017, the Friends of the Earth and the Sierra Club filed a complaint against SCE&G with the SCPSC, requesting that the SCPSC initiate a formal proceeding to direct SCE&G to immediately cease and desist from expending any further capital costs related to the construction of Unit 2 and Unit 3; to determine the prudence of acts and omissions by SCE&G in connection with this construction; to review and determine the prudence of abandonment of Unit 2 and Unit 3 and of the available least cost efficiency and renewable energy alternatives; and to remedy, abate and make due reparations for the rates charged to ratepayers related to the construction of Unit 2 and Unit 3. SCE&G filed its answer to the complaint and a motion to dismiss the complaint on July 19, 2017. On October 4, 2017, the SCPSC ordered proceedings under this complaint to be coordinated with proceedings for the Request filed by the ORS on September 26, 2017, described below, and allowed discovery to proceed. SCE&G's subsequent petition for rehearing and reconsideration was denied by the SCPSC on November 1, 2017. Proceedings related to this complaint have been consolidated with proceedings for the Request and the Joint Petition as described below.

On August 1, 2017, SCE&G filed the Abandonment Petition with the SCPSC which sought recovery of costs expended on the construction of Unit 2 and Unit 3, including certain costs incurred subsequent to SCE&G's last revised rates update, other costs under the abandonment provisions of the BLRA, and affirmation of SCE&G's decision to abandon construction of Unit 2 and Unit 3, among other things. Subsequently, SCE&G management met with various stakeholders and members of the South Carolina General Assembly, including legislative leaders, to discuss the abandonment of the Nuclear Project and to hear their concerns. In response to those concerns, and to allow adequate time for governmental officials to conduct their reviews, SCE&G voluntarily withdrew the Abandonment Petition on August 15, 2017. See additional discussion at Note 10.

On September 26, 2017, the South Carolina Office of Attorney General issued an opinion stating, among other things, that "as applied, portions of the BLRA are constitutionally suspect," including the abandonment provisions. Also on September 26, 2017, the ORS filed the Request with the SCPSC asking for an order directing SCE&G to immediately suspend all revised rates collections from customers which had been previously approved by the SCPSC pursuant to the authority of the BLRA. In the Request, the ORS relied upon the opinion from the Office of Attorney General to assert that it is not just and reasonable or in the public interest to allow SCE&G to continue collecting revised rates. Further, the ORS noted the existence of an allegation that SCE&G failed to disclose information to the ORS that should have been disclosed and that would have appeared to provide a basis for challenging prior requests, and asserted that SCE&G should not be allowed to continue to benefit from nondisclosure. The ORS also asked for an order that, if the BLRA is found to be unconstitutional or the General Assembly amends or revokes the BLRA, then SCE&G should make credits to future bills or refunds to customers for prior revised rates collections.

By order dated December 20, 2017, the SCPSC denied SCE&G’s Motion to Dismiss the Request and ordered that a hearing be set on the Request. In addition, the SCPSC ordered the ORS to perform a thorough inspection and audit, within 30 days, to determine the reasonableness of SCE&G’s retail electric rates and to determine the reasonableness of SCE&G’s statements regarding the potential effect that the removal of approximately $445 million in annual revenues, as requested by the ORS, could have on SCE&G. The SCPSC also granted the ORS’s motion to amend the Request and consider the monetization of the Toshiba payout along with any other related factors that may be appropriate in determining a fair and reasonable rate. SCE&G intends to vigorously contest the Request, but cannot give any assurance as to the timing or outcome of this matter. Proceedings for the Request, the complaint filed by Friends of the Earth and the Sierra Club on June 22, 2017, and the Joint Petition discussed below have been consolidated.

On November 20, 2017, the ORS filed a letter with the SCPSC providing the ORS's preliminary list for stabilization and protection of the site where Unit 2 and Unit 3 are located and suggesting that the SCPSC have SCE&G respond to the ORS's November 20, 2017 letter and "explain why there is no violation of S.C. Code Ann. § 58-27-1300." The SCPSC granted the ORS's request, and SCE&G filed its response with the SCPSC on December 27, 2017.

On January 12, 2018, SCE&G and Dominion Energy filed with the SCPSC the Joint Petition for review and approval of a proposed business combination whereby SCANA would become a wholly-owned subsidiary of Dominion Energy. In the Joint Petition, approval of a customer benefits plan and a cost recovery plan for the Nuclear Project is also sought. Key provisions of this Joint Petition are summarized at Note 10. A hearing on this matter has not yet been scheduled.

On January 19, 2018, the ORS filed a report with the SCPSC in response to the SCPSC's order for a thorough inspection and audit of SCE&G's statements regarding potential adverse effects that could result from the removal of annual BLRA revenues. The ORS report relied on the analysis of bankruptcy counsel to conclude that the suspension of revised rates collections is unlikely to force SCE&G into bankruptcy. Notwithstanding this conclusion, the ORS predicted that there is 35% likelihood of an SCE&G bankruptcy if revised rates are terminated. The report also indicated that a full audit, as ordered by the SCPSC, would require upwards of 90 days to complete. SCE&G filed responses to the ORS report alleging numerous deficiencies in it, including that the report was not verified by an accountant and that it contained incorrect and misleading accounting conclusions, particularly with regard to the timing and magnitude of any impairment loss that would be required by GAAP. On January 31, 2018, the SCPSC ordered the ORS to complete this previously ordered thorough audit, inspection and examination of SCE&G's accounting records by March 30, 2018, encouraged them to employ the assistance of a utility financial professional if needed, and indicated that a request by the ORS for an extension of time would not be considered unreasonable.

Gas - SCE&G

The RSA is designed to reduce the volatility of costs charged to customers by allowing for more timely recovery of the costs that regulated utilities incur related to natural gas infrastructure. The SCPSC has approved the following rate changes pursuant to annual RSA filings effective with the first billing cycle of November in the following years:

Year	Action			Amount
2017	2.2	%	Increase	$8.6 million
2018	4.6	%	Decrease	$19.7 million	*
2016	1.2	%	Increase	$4.1 million
2017	2.2	%	Increase	$8.6 million
2015	No change			—
2016	1.2	%	Increase	$4.1 million

~~SCE&G's~~*Includes ~~natural gas tariffs include a PGA that provides for~~ the ~~recovery~~impact of ~~actual~~the ~~gas~~lower ~~costs~~federal ~~incurred,~~corporate ~~including~~tax ~~transportation~~rate ~~costs.~~resulting ~~SCE&G's~~from ~~gas~~the ~~rates~~Tax ~~are~~Act. ~~calculated~~The ~~using~~SCPSC aalso ~~methodology~~approved ~~which~~revised ~~may~~rate ~~adjust~~schedules ~~the~~for ~~cost~~natural of gas ~~monthly~~service ~~based~~that oninclude a ~~12-month~~rider ~~rolling~~to ~~average,~~refund ~~and~~certain ~~its~~amounts ~~gas~~previously ~~purchasing~~collected ~~policies~~from ~~and~~customers ~~practices are reviewed annually by the SCPSC. The annual reviews conducted~~ for ~~each of the 12-month periods ended July 31, 2017, 2016 and 2015 resulted in the SCPSC issuing an order finding that~~ SCE&G's ~~gas~~income ~~purchasing policies and practices during each of the review periods were reasonable and prudent~~taxes. ~~See Electric - Base Rates for a discussion of the ORS petition related to the Tax Act, which also applies to Gas - SCE&G.~~

SCE&G's natural gas tariffs include a PGA that provides for the recovery of actual gas costs incurred, including transportation costs. SCE&G's gas rates are calculated using a methodology which may adjust the cost of gas monthly based on a 12-month rolling average, and its gas purchasing policies and practices are reviewed annually by the SCPSC.

Gas - PSNC Energy

PSNC Energy's Rider D rate mechanism allows it to recover from customers all prudently incurred gas costs and certain related uncollectible expenses as well as losses on negotiated gas and transportation sales.

PSNC Energy establishes rates using a benchmark cost of gas approved by the NCUC, which may be periodically adjusted to reflect changes in the market price of natural gas. PSNC Energy revises its tariffs as necessary to track these changes and accounts for any over- or under-collection of the delivered cost of gas in ~~its~~ deferred accounts for subsequent rate consideration. The NCUC reviews PSNC Energy’s gas purchasing practices annually. In addition, PSNC Energy utilizes a CUT which allows it to adjust its base rates semi-annually for residential and commercial customers based on average per customer consumption.

On October 28, 2016, the NCUC granted PSNC Energy a net annual increase of approximately $19.1 million, or 4.39%, in rates and charges to customers, and set PSNC Energy's authorized ROE at 9.7%. In addition, the NCUC has authorized PSNC Energy to use a tracker mechanism to recover the incurred capital investment and associated costs of complying with federal standards for pipeline integrity and safety requirements that are not in current base rates. PSNC Energy files biannual applications to adjust its rates for this purpose. The NCUC has approved those applications for the incremental increase to annual revenue requirements, as follows:



Rates Effective	2018	2017
March 1	$14.7 million	$1.9 million
September 1	$1.1 million	$0.7 million

~~complying~~On ~~with~~February ~~federal~~15, ~~standards~~2019, ~~for~~PSNC ~~pipeline~~Energy ~~integrity~~submitted ~~and~~its ~~safety~~biannual ~~requirements~~application ~~that~~to ~~are~~adjust ~~not in current base~~ rates~~. PSNC~~ ~~Energy~~associated ~~has~~with ~~filed~~its ~~biannual~~pipeline ~~applications~~integrity totracker. ~~adjust~~As ~~its~~approved ~~rates~~by ~~for~~the ~~this purpose~~NCUC, ~~and~~ the ~~NCUC~~filing ~~has~~increases ~~approved~~PSNC ~~those~~Energy's ~~applications~~allowed ~~for~~recovery ~~the~~by ~~incremental~~approximately ~~annual~~$1.7 ~~revenue~~million ~~requirements,~~effective asMarch ~~follows:~~1, 2019.

Rates Effective		Incremental Increase
March 1, 2017		$1.9 million
September 1, 2017		$0.7 million

On November 19, 2018, the NCUC issued an order approving the SCANA Combination subject to a stipulation agreement with the following provisions: (1) customer bill credits of $1.25 million in each of January 2019, 2020 and 2021; (2) a rate moratorium until November 1, 2021 other than for rate adjustments pursuant to the CUT, the Integrity Management Tracker and the PGA; and (3) an agreement that direct merger-related expenses will be excluded from PSNC Energy regulated expenses for ratemaking purposes.

InOn December ~~2017~~17, in2018, ~~connection~~the ~~with~~NCUC issued an order approving PSNC Energy's ~~2017~~proposed ~~Annual~~adjustments ~~Prudence~~to ~~Review,~~customer ~~the~~rates ~~NCUC~~to ~~determined~~reflect ~~that~~the ~~PSNC~~reduction ~~Energy's~~in ~~gas~~the ~~costs,~~federal ~~including~~corporate ~~all~~tax ~~hedging~~rate ~~transactions,~~arising ~~were~~from ~~reasonable~~the ~~and~~Tax ~~prudently~~Act. ~~incurred~~These ~~during~~lower ~~the~~rates ~~12 months~~became ~~ended~~effective ~~March 31,~~for ~~2017.~~service

On January 3, 2018, the NCUC sought reports from its jurisdictional utilities as to how they planned to respond to the Tax Act. In its response on February 1, 2018, PSNC Energy proposed certain adjustments to its rates that, if enacted, would serve to reduce amounts that are currently being collected from customers based on pre-Tax Act rates. PSNC Energy cannot determine when the NCUC may take action on this matter.45

rendered on and after January 1, 2019. The impact of the lower tax rate collected in customer rates during 2018 and amounts arising from excess deferred income taxes have been recorded in regulatory liabilities and must be considered in PSNC Energy's next general rate case proceeding or in three years, whichever is sooner (i.e., no later than October 25, 2021). The reduction in the federal corporate tax rate and its impact on PSNC Energy's various rate riders will be addressed in future proceedings related to those riders.

Regulatory Assets and Regulatory Liabilities

Rate-regulated utilities recognize in their financial statements certain revenues and expenses in different periods than do other enterprises. As a result, the Company and Consolidated SCE&G have recorded regulatory assets and regulatory liabilities which are summarized in the following tables. Except for certain unrecovered ~~Nuclear~~nuclear ~~Project~~project costs and other unrecovered plant, substantially all regulatory assets are either explicitly excluded from rate base or are effectively excluded from rate base due to their being offset by related liabilities.

	The Company				Consolidated SCE&G
	December 31,				December 31,
Millions of dollars	~~2017~~2018		~~2016~~2017		~~2017~~2018		~~2016~~2017
Regulatory Assets:
Unrecovered Nuclear Project costs	$	32,~~976~~768	—3,976		$	32,~~976~~768	—3,976
Accumulated deferred income taxes	—		$	316	—		$	307
AROs and related funding	406		434		380		410
AROs and related funding	434		425		410		403
Deferred employee benefit plan costs	302		305		272		273
Deferred employee benefit plan costs	305		342		273		309
Deferred losses on interest rate derivatives	448		456		448		456
Deferred losses on interest rate derivatives	456		620		456		620
Other unrecovered plant	93		105		93		105
Other unrecovered plant	105		117		105		117
DSM Programs	65		59		65		59
DSM Programs	59		59		59		59
Pipeline integrity management costs	73		51		9		8
Carrying costs on deferred tax assets related to the Nuclear Project	—		32		—		32
Environmental remediation costs	27		30		24		25
Pipeline integrity management costs	51		33		8		6
Deferred storm damage costs	35		24		35		24
Environmental remediation costs	30		32		25		26
Deferred transmission operating costs	15		—		15		—
Deferred storm damage costs	24		20		24		20
Other	148		140		147		140
Deferred costs related to uncertain tax position	—		15		—		15
Total Regulatory Assets	$	4,380	$	5,580	$	4,256	$	5,476
Other	140		119		140		116
Total Regulatory Assets	$	5,580	$	2,130	$	5,476	$	2,030

Regulatory Liabilities:

Monetization of guaranty settlement

1,~~095~~098

—1,095

1,~~095~~098

—1,095

Accumulated deferred income taxes

~~1,076~~814

231,076

~~914~~659

14914

Asset removal costs

~~757~~779

~~755~~757

~~527~~541

~~529~~527

Deferred gains on interest rate derivatives

~~131~~77

~~151~~131

~~131~~77

~~151~~131

Other

—21

1—

—5

1—

Total Regulatory Liabilities

32,~~059~~789

~~930~~3,059

2,~~667~~380

~~695~~2,667

~~Regulatory~~The ~~assets~~carrying amount of the regulatory asset for unrecovered Nuclear Project costs ~~have~~has been recorded based on such ~~amounts~~amount not being probable of loss in accordance with the accounting guidance on abandonments, whereas the other regulatory assets have been recorded based on the probability of their recovery. All regulatory assets represent incurred costs that may be deferred under applicable GAAP for regulated operations. The SCPSC, the NCUC or the FERC has reviewed and approved through specific orders certain of the items shown as regulatory assets. In addition, regulatory assets include certain costs which have not been specifically approved for recovery by one of these regulatory agencies, including deferred transmission operating costs that are the subject of regulatory proceedings as further discussed above and in Note 11. In recording such costs as regulatory assets, management believes the costs would be allowable under existing rate-making concepts embodied in rate orders or applicable state law. The costs are currently not being recovered but are expected to be recovered through rates in future periods. In the future, as a result of deregulation, changes in state law, other changes in the regulatory environment or changes in accounting requirements or other adverse legislative or regulatory developments, the Company or Consolidated SCE&G could be required to write off all or a portion of its regulatory assets and liabilities. Such an event could have a material effect on the Company's and Consolidated SCE&G's financial statements in the period the write-off would be recorded.

87Unrecovered Nuclear Project costs represents expenditures by SCE&G that have been reclassified from construction work in progress and, pursuant to the Merger Approval Order and subsequent SCANA Combination, are to be recovered over a

orders certain of the items shown as regulatory assets. Other regulatory assets include, but are not limited to, certain costs which have not been specifically approved for recovery by one of these regulatory agencies, including unrecovered nuclear project costs that are the subject of regulatory proceedings as further discussed in Note 10. In recording such costs as regulatory assets, management believes the costs would be allowable under existing rate-making concepts that are embodied in rate orders or current state law. The costs are currently not being recovered, but are expected to be recovered through rates in future periods. In the future, as a result of deregulation, changes in state law, other changes in the regulatory environment or changes in accounting requirements, the Company or Consolidated SCE&G could be required to write off all or a portion of its regulatory assets and liabilities. Such an event could have a material effect on the Company's and Consolidated SCE&G's financial statements in the period the write-off would be recorded.46

~~Unrecovered~~20-year ~~Nuclear~~period ~~Project~~ending ~~costs~~in ~~represents~~2039. ~~expenditures~~In by2017, ~~SCE&G~~such ~~that~~amounts ~~have~~were ~~been~~recorded ~~reclassified~~pending ~~from construction work in progress as~~ a ~~result~~final ofdetermination ~~the~~by ~~decision to stop construction of Unit 2 and Unit 3 and to pursue recovery of costs under~~ the ~~abandonment~~SCPSC. ~~provisions~~See ofNote ~~the~~11 ~~BLRA~~for ora ~~through~~discussion ~~other regulatory means, net~~ of ~~an estimated~~ impairment ~~loss~~charges ~~and~~related to the ~~transfer~~Nuclear ~~of certain assets described at Note 10~~Project.

~~Accumulated~~AROs ~~deferred~~and ~~income~~related ~~taxes~~funding ~~contained~~represents ~~within~~the regulatory ~~assets~~asset ~~represent~~associated ~~deferred~~with ~~tax~~the ~~liabilities~~legal ~~that~~obligation ~~arise~~to ~~from~~decommission ~~utility~~and ~~operations~~dismantle ~~that~~Unit ~~have~~1 ~~not~~and ~~been~~conditional ~~included~~AROs inrelated ~~customer~~to ~~rates. A~~generation, ~~portion~~transmission ofand ~~these~~distribution properties, including gas pipelines. These regulatory assets ~~related~~are expected to ~~depreciation~~be recovered over the related property lives and ~~are~~periods ~~netted~~of ~~within~~decommissioning ~~regulatory~~which ~~liabilities~~may inrange ~~the~~up ~~current~~to ~~period~~approximately 106 years.

AROs and related funding represents the regulatory asset associated with the legal obligation to decommission and dismantle Unit 1 and conditional AROs related to generation, transmission and distribution properties, including gas pipelines. These regulatory assets are expected to be recovered over the related property lives and periods of decommissioning which may range up to approximately 107 years.

Employee benefit plan costs of the regulated utilities have historically been recovered as they have been recorded under GAAP. Deferred employee benefit plan costs represent amounts of pension and other postretirement benefit costs which were accrued as liabilities and treated as regulatory assets pursuant to FERC guidance, and costs deferred pursuant to specific SCPSC regulatory orders. SCE&G recovers deferred pension costs through utility rates of approximately $2 million annually for electric operations, which will end in 2044, and approximately $1 million annually for gas operations, which will end in 2027. The remainder of the deferred benefit costs are expected to be recovered through utility rates, primarily over average service periods of participating employees up to approximately 11 years.

Deferred losses or gains on interest rate derivatives represent (i) the effective portions of changes in fair value and payments made or received upon settlement of certain interest rate derivatives designated as cash flow hedges and (ii) the changes in fair value and payments made or received upon settlement of certain other interest rate derivatives not so designated. ~~The~~Such deferred amounts ~~recorded with respect to (i)~~ are expected to be amortized to interest expense over the lives of the underlying debt ~~through~~which, ~~2043. The amounts recorded~~ with respect to (iii), ~~are~~is ~~expected~~through to2043, beand ~~similarly~~with ~~amortized~~respect to ~~interest~~(ii), ~~expense~~is through 2065 ~~except when such amounts are applied otherwise at the direction of the SCPSC~~. ~~See also Note 10 for a discussion of certain amounts that were treated as impaired as of December 31, 2017.~~

Other unrecovered plant represents the carrying value of coal-fired generating units, including related materials and supplies inventory, retired from service prior to being fully depreciated. Pursuant to SCPSC approval, SCE&G is amortizing these amounts through cost of service rates over the units' previous estimated remaining useful lives through approximately 2025. Unamortized amounts are included in rate base and are earning a current return.

DSM Programs represent SCE&G's deferred costs associated with electric demand reduction programs, and such deferred costs are ~~currently~~ being recovered over approximately five years through an approved rate rider.

~~Carrying~~Pipeline integrity management costs onrepresent ~~deferred~~operating ~~tax~~costs ~~assets~~expended to comply with federal regulatory requirements related to ~~the~~natural ~~Nuclear~~gas ~~Project~~pipelines. ~~were~~PSNC ~~calculated~~Energy onis ~~accumulated~~recovering ~~deferred~~costs ~~income~~totaling ~~tax~~$4.1 ~~assets~~million ~~associated~~annually ~~with~~through ~~Unit~~2021. 2PSNC ~~and~~Energy ~~Unit~~is 3continuing ~~which~~to ~~were~~defer ~~not~~pipeline ~~part~~integrity costs, and as of ~~electric~~December ~~rate~~31, ~~base~~2018 ~~using~~costs ~~the~~of ~~weighted~~$51.3 ~~average~~million ~~long-term~~have ~~debt~~been ~~cost~~deferred pending future approval of ~~capital~~rate recovery. ~~These~~Effective ~~carrying~~November ~~costs~~2018, ~~were~~SCE&G ~~written~~began ~~off~~amortizing asdeferred apipeline ~~part~~integrity ofcosts ~~the~~at ~~impairment~~an ~~loss~~annual inrate ~~2017~~of $3.2 ~~See~~million. ~~also~~Prior ~~Note~~to 10November 2018, such costs were amortized at an annual rate of $1.9 million annually.

~~Pipeline~~Environmental ~~integrity~~remediation ~~management~~ costs represent ~~operating~~costs ~~and~~associated ~~maintenance~~with ~~costs~~the ~~incurred~~assessment toand ~~comply~~clean-up ~~with~~of ~~federal~~sites ~~regulatory~~currently ~~requirements~~or ~~related~~formerly toowned ~~natural~~by ~~gas~~SCE&G ~~pipelines.~~or PSNC Energy. isSCE&G's ~~recovering~~remediation costs ~~totaling~~are ~~$4.1~~expected ~~million~~to ~~annually~~be ~~through~~recovered ~~2021.~~over ~~PSNC~~periods ~~Energy~~of isup ~~continuing~~ to ~~defer~~approximately ~~pipeline~~16 ~~integrity costs~~years, and asPSNC ofEnergy's ~~December~~remediation ~~31, 2017~~ costs of $263.68 million ~~have~~are ~~been~~being ~~deferred~~recovered ~~pending~~over ~~future~~a ~~approval~~period ofthat ~~rate~~will ~~recovery. SCE&G~~end ~~amortizes~~in $12021.~~9 million of such costs annually.~~

88Deferred storm damage costs represent storm restoration costs for which SCE&G expects to receive future recovery through customer rates.

~~Environmental~~Deferred ~~remediation~~transmission ~~costs~~operating ~~represent~~ costs ~~associated~~include ~~with~~deferred ~~the~~depreciation ~~assessment~~ and ~~clean-up~~property oftaxes ~~sites~~associated ~~currently~~with orcertain ~~formerly~~transmission ~~owned~~assets byfor ~~SCE&G~~which ~~or PSNC Energy.~~ SCE&G's ~~remediation~~expects ~~costs~~recovery ~~are~~from ~~expected~~customers tothrough befuture ~~recovered over periods of up to approximately 17 years, and PSNC Energy's remediation costs total $6~~rates.9 ~~million~~See ~~are~~also ~~being~~Note ~~recovered over a five year period that will end in 2021~~11.

~~Deferred~~Various ~~storm~~other ~~damage~~regulatory ~~costs~~assets ~~represent~~are ~~costs~~expected ~~incurred~~to inbe ~~excess~~recovered ~~of amounts previously collected~~ through ~~SCE&G's~~rates ~~SCPSC-approved~~over ~~storm~~varying ~~damage~~periods ~~reserve, and for which SCE&G expects to receive future recovery~~ through ~~customer rates~~2047.

~~Deferred~~Monetization ~~costs~~of ~~related~~guaranty tosettlement ~~uncertain~~represents ~~tax~~proceeds ~~position~~received ~~primarily~~under ~~represented~~or ~~the~~arising ~~estimated~~from ~~amounts~~the ofmonetization ~~domestic production activities deductions foregone as a result~~ of the ~~deduction~~Toshiba ofSettlement. ~~certain~~In ~~research~~accordance ~~and~~with ~~experimentation~~the ~~expenditures~~Merger ~~for~~Approval ~~income~~Order, ~~tax~~this ~~purposes~~balance, net of ~~related~~amounts ~~tax~~that ~~credits,~~may asbe ~~well~~required asto ~~accrued~~satisfy ~~interest~~liens ~~expense~~described ~~and~~in ~~other~~Note ~~costs~~11, ~~arising~~will ~~from~~be ~~this~~refunded ~~uncertain~~to ~~tax~~electric ~~position. SCE&G's~~customers ~~current~~over ~~customer rates reflect the availability of domestic production activities deductions. These net deferred costs were written off as~~ a ~~part~~period ofending ~~the impairment loss~~ in ~~2017~~2039. ~~See Note 5 and Note 10.~~

~~Various~~Accumulated ~~other~~deferred income taxes contained within regulatory ~~assets~~liabilities represent (i) excess deferred income taxes arising from the remeasurement of deferred income taxes in connection with the enactment of the Tax Act (certain of which are ~~expected~~protected tounder normalization rules and will be ~~recovered~~amortized ~~through~~over ~~rates~~the remaining lives of related property, and certain of which will be amortized to the benefit of customers over prescribed periods ~~through~~as ~~2047.~~instructed by regulators) and (ii) deferred income taxes arising from investment tax credits, offset by (iii) deferred income taxes that arise from utility operations that have not been

~~Monetization of guaranty settlement represents proceeds received under or arising from the monetization of the Toshiba Settlement, net of certain expenses.~~ 47

Accumulated deferred income taxes contained within regulatory liabilities represent (i) excess deferred income taxes arising from the remeasurement of deferred income taxes upon the enactment of the Tax Act (certain of which are protected under normalization regulations and will be amortized over the remaining lives of related property, and certain of which will be amortized to the benefit of customers over a prescribed period as instructed by regulators) and (ii) deferred income taxes arising from investment tax credits, offset by (iii) deferred income taxes that arise from utility operations that have not been included in customer rates (a portion of which relate to depreciation and are expected to be recovered over the remaining lives of the related property which may range up to approximately 85 years). See also Note 56.

Asset removal costs represent estimated net collections through depreciation rates of amounts to be ~~incurred~~expended for the removal of assets in the future.

3. ~~COMMON~~ REVENUE ~~EQUITY~~RECOGNITION

~~Authorized~~Identifying ~~shares~~Revenue ofStreams ~~SCANA common stock were 200 million as of December 31, 2017~~ and ~~2016.~~Related ~~Authorized~~Performance ~~shares~~Obligations of SCE&G common stock were 50 million as of December 31, 2017 and 2016. Authorized shares of SCE&G preferred stock were 20 million, of which 1,000 shares, no par value, were held by SCANA as of December 31, 2017 and 2016.

~~SCANA’s~~Operating articles of incorporation do not limit the dividends that may be paid on its common stock, and the articles of incorporation of each of SCANA's subsidiaries contain no such limitations on their respective common stock. SCANA has agreed to obtain the consent of Dominion Energy, which consent cannot be unreasonably withheld, prior to making dividend payments to shareholders greater than $0.6125 per share for any quarter while the Merger Agreement is pending. Revenues

~~SCE&G’s~~Operating ~~bond~~revenues ~~indenture~~arise ~~under~~primarily ~~which~~from itthe ~~issues~~sale ~~First~~and ~~Mortgage~~transmission ~~Bonds~~of ~~contains~~electricity ~~provisions~~and ~~that~~the ~~could~~sale ~~limit~~and ~~the~~transportation ~~payment~~ of ~~cash~~natural ~~dividends~~gas. onElectric ~~its~~and ~~common~~Gas ~~stock.~~regulated ~~SCE&G's~~revenues ~~bond~~consist ~~indenture~~primarily ~~permits~~of ~~the~~retail ~~payment~~sales ofto ~~dividends~~residential, oncommercial ~~SCE&G's~~and ~~common~~industrial ~~stock~~customers ~~only~~under ~~either~~various ~~(1)~~tariff ~~out~~rates ofapproved ~~its~~by ~~Surplus~~state ~~(which~~regulatory ascommissions. These ~~defined~~tariff inrates generally include charges for the ~~bond~~energy ~~indenture~~consumed ~~equates~~and toa ~~its~~standard ~~retained~~basic ~~earnings)~~facilities or ~~(2)~~demand incharge ~~case~~designed ~~there~~to isrecover nocertain ~~Surplus,~~fixed ~~out~~costs ofincurred ~~its~~to ~~net~~provide ~~profits~~service ~~for~~to the ~~fiscal~~customer. Tariff ~~year~~rates inalso ~~which~~include ~~the~~commission-approved ~~dividend~~regulatory ismechanisms ~~declared~~in ~~and/or~~ the ~~preceding~~form ~~fiscal~~of ~~year.~~adjustments Inor ~~addition~~riders, ~~the~~such ~~Federal~~as ~~Power~~for ~~Act~~weather ~~requires~~normalization, ~~the~~fuel ~~appropriation~~and ofenvironmental acost ~~portion~~recovery, ofenergy ~~certain~~conservation ~~earnings~~programs, ~~from~~interruptible ~~hydroelectric~~service ~~projects.~~and Atreal ~~December 31,~~time ~~2017~~pricing ~~and 2016~~provisions, ~~retained~~among ~~earnings~~others. ofElectric ~~approximately~~revenues ~~$93.9~~also ~~million~~include wholesale sales and ~~$79.0~~transmission ~~million~~service, ~~respectively,~~primarily ~~were~~to ~~restricted~~municipal bycustomers ~~this~~and ~~requirement~~other asservice toproviders, ~~payment~~under ofcontracts ~~cash~~or ~~dividends~~tariffs onapproved ~~SCE&G’s~~by ~~common~~the ~~stock~~FERC.

~~PSNC~~Gas ~~Energy’s~~nonregulated ~~note~~revenues ~~purchase~~arise from natural gas sales at market-based rates. Such sales to residential and ~~debenture~~certain ~~purchase~~commercial ~~agreements~~customers ~~contain~~include ~~provisions~~charges ~~that~~for ~~could~~natural ~~limit~~gas ~~the~~delivered, ~~payment~~at ofeither ~~cash~~variable ~~distributions~~or fixed prices, ~~including~~together ~~dividends~~with any applicable customer service charges, oncharges ~~PSNC~~originating ~~Energy's~~from ~~common~~an ~~stock~~interstate pipeline company, and other incidental charges. ~~These~~The ~~agreements~~Company ~~generally~~has ~~limit~~determined ~~the~~that ~~sum~~its ofgas ~~distributions~~marketing tosubsidiary serves as an ~~amount~~agent ~~that~~for ~~does~~distribution ~~not~~services ~~exceed~~provided ~~$30~~by ~~million~~a ~~plus~~nonaffiliated ~~85%~~company ofin ~~Consolidated~~its ~~Net~~retail ~~Income~~market. ~~(as~~Accordingly, ~~therein~~the ~~defined)~~pass-through ~~accumulated~~charges ~~after~~to ~~December~~customers ~~31,~~related ~~2008~~to ~~plus~~such ~~the~~services ~~net~~are ~~proceeds~~not ofconsidered ~~issuances~~revenues. bySales ~~PSNC~~to ~~Energy~~other ofcommercial ~~equity~~and orto ~~convertible~~industrial ~~debt~~customers ~~securities~~include ~~(as~~commodity ~~therein~~and ~~defined).~~transportation Ascharges offor ~~December~~natural ~~31,~~gas ~~2017~~delivered at contracted rates, ~~this~~together ~~limitation~~with ~~would~~applicable ~~permit~~

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