SCE&G files for increase to rates

South Carolina Electric & Gas Company (SCE&G), principal subsidiary of SCANA Corporation (NYSE:SCG), today filed an application with the Public Service Commission of South Carolina (PSC) requesting a 6.61 percent overall increase in retail electric base rates.

Keller Kissam, SCE&G's president of retail operations, said the company's base rate filing - its first since January 2010 - is primarily driven by increased costs associated with improving reliability and ensuring regulatory compliance.

"Since our last rate filing, we've spent nearly $300 million on upgrades and improvements to our electric transmission and distribution system in order to remain in compliance with federal law and to continue providing safe and reliable service to our customers," said Kissam. "We've also spent millions of dollars putting environmental equipment in service at our Wateree Station power plant to comply with federal air emission standards, and spent another $30 million on other environmental upgrades and projects at our various power plants. Plus, our property taxes have increased by $16 million a year."

Kissam said the expiration of a key, off-system sales contract is another driver in the case.

"When we built our natural-gas-fired Jasper Station power plant, which was put into service in 2004, we were able to create construction cost efficiencies by building it to a capacity that exceeded our system needs at the time and entering into a long-term contract to sell the excess capacity off system," he said. "That contract expires at the end of this year, making available 250 megawatts of generation for our customers. This will assist us in replacing power that will no longer be available to our customers as we carry out plans to retire some of our older coal generation. While retiring that coal generation will help reduce annual expenses by about $6 million, the net impact of replacing the power is about $23 million."

Kissam said customers are benefitting from the company's focus on reliability. SCE&G is among the leading utilities in the southeastern United States for reliability, having achieved a 20 percent reduction over the past five years in the average amount of time its customers are without power.

"Providing our customers with reliable service is the most important thing we do," said Kissam. "Our daily focus is on providing that service safely, cost efficiently, and in compliance with the many rules and regulations that govern our operations."

Kissam said SCE&G recognizes that its customers continue to deal with challenging economic times. To help soften the impact of the requested increase on customers, he said SCE&G is seeking to simultaneously reduce the fuel cost portion of its electric rates. The company normally adjusts its rates up or down each May based on the cost of fuel for its power plants. "Fuel costs have been declining," said Kissam. "As part of today's filing, we're asking to accelerate to customers the benefit of those lower costs. This will effectively lower the amount of the increase."

A public hearing on SCE&G's application is expected to be held in the fall. If the PSC approves the fuel cost decrease and the base rate increase as filed, rates would increase in January 2013 as follows:

* Residential customers: 4.85%

* Small commercial customers: 1.36%

* Medium commercial customers: 2.78%

* Large commercial/industrial customers: 3.69%

The monthly bill of a residential customer using 1,000 kilowatt hours of electricity would increase $6.67.