~~Condensed~~

Dominion Energy South Carolina, Inc.

Consolidated Balance Sheets

(Unaudited)

(millions)	September 30, 2019			December 31, 2018
ASSETS
Utility plant in service	$	13,056		$	12,803
Accumulated depreciation and amortization		(4,799	)		(4,581	)
Construction work in progress		309			350
Nuclear fuel, net of accumulated amortization		185			211
Utility plant, net ($683 and $711 related to VIEs)		8,751			8,783
Nonutility Property and Investments:
Nonutility property, net of accumulated depreciation		71			72
Assets held in trust, net-nuclear decommissioning		210			190
Other investments		—			1
Nonutility property and investments, net		281			263
Current Assets:
Cash and cash equivalents		11			377
Receivables:
Customer, net of allowance for uncollectible accounts of $8 and $4		335			331
Affiliated and related party		30			359
Other		77			68
Inventories (at average cost):
Fuel		110			89
Materials and supplies		164			158
Prepayments		91			82
Regulatory assets		322			224
Other current assets		23			1
Total current assets ($134 and $96 related to VIEs)		1,163			1,689
Deferred Debits and Other Assets:
Regulatory assets		3,970			4,060
Other		155			168
Total deferred debits and other assets ($34 and $34 related to VIEs)		4,125			4,228
Total assets	$	14,320		$	14,963

~~(Unaudited)~~

Millions of dollars September 30,
2017 December 31,
2016
Assets
Utility Plant In Service $ 13,767
$ 13,444
Accumulated Depreciation and Amortization (4,559 ) (4,446 )
Construction Work in Progress 768
4,845
Nuclear Fuel, Net of Accumulated Amortization 249
271
Goodwill, net of writedown of $230 210
210
Utility Plant, Net 10,435
14,324
Nonutility Property and Investments:
     Nonutility property, net of accumulated depreciation of $135 and $138 272
276
Assets held in trust, net-nuclear decommissioning 132
123
Other investments 77
76
Nonutility Property and Investments, Net 481
475
Current Assets:
Cash and cash equivalents 1,011
208
     Receivables:
         Customer, net of allowance for uncollectible accounts of $5 and $6 545
616
    Income taxes 6
142
         Other 189
127
Inventories (at average cost):
Fuel and gas supply 129
136
Materials and supplies 159
155
Prepayments 111
105
     Other current assets 14
17
     Total Current Assets 2,164
1,506
Deferred Debits and Other Assets:
Regulatory assets 6,690
2,130
Other 249
272
Total Deferred Debits and Other Assets 6,939
2,402
Total $ 20,019
$ 18,707

See Notes to ~~Condensed~~ Consolidated Financial Statements.

Dominion Energy South Carolina, Inc.

Consolidated Balance Sheets—(Continued)

(Unaudited)

(millions)	September 30, 2019			December 31, 2018
CAPITALIZATION AND LIABILITIES
Common Stock - no par value, 40.3 million shares outstanding	$	3,685		$	2,860
Retained earnings		214			1,279
Accumulated other comprehensive loss		(3	)		(3	)
Total common equity		3,896			4,136
Noncontrolling interest		173			179
Total equity		4,069			4,315
Affiliated long-term debt		230			—
Long-term debt, net		3,378			5,132
Total long-term debt		3,608			5,132
Total capitalization		7,677			9,447
Current Liabilities:
Short-term borrowings		—			73
Current portion of long-term debt		7			14
Accounts payable		151			267
Affiliated and related party payables		795			347
Customer deposits and customer prepayments		71			73
Revenue subject to refund		3			77
Taxes accrued		206			228
Interest accrued		78			72
Regulatory liabilities		308			126
Reserves for litigation and regulatory proceedings		181			11
Other		66			42
Total current liabilities		1,866			1,330
Deferred Credits and Other Liabilities:
Deferred income taxes, net		605			989
Asset retirement obligations		493			542
Pension and other postretirement benefits		205			232
Regulatory liabilities		3,241			2,264
Other		218			143
Other affiliate		15			16
Total deferred credits and other liabilities		4,777			4,186
Commitments and Contingencies (see Note 11)
Total capitalization and liabilities	$	14,320		$	14,963

~~Table of Contents~~

Millions of dollars September 30,
2017 December 31,
2016
Capitalization and Liabilities

Common Stock - no par value, 143 million shares outstanding $ 2,389
$ 2,390
Retained Earnings 3,447
3,384
Accumulated Other Comprehensive Loss (49 ) (49 )
Total Common Equity 5,787
5,725
Long-Term Debt, net 6,455
6,473
Total Capitalization 12,242
12,198
Current Liabilities:

Short-term borrowings 1,022
941
Current portion of long-term debt 177
17
Accounts payable 266
404
Customer deposits and customer prepayments 116
168
Taxes accrued 526
201
Interest accrued 97
84
Dividends declared 85
80
Derivative financial instruments 45
35
Other 117
135
Total Current Liabilities 2,451
2,065
Deferred Credits and Other Liabilities:

Deferred income taxes, net 1,767
2,159
Asset retirement obligations 569
558
Pension and other postretirement benefits 373
373
Unrecognized tax benefits 402
219
Regulatory liabilities 2,015
930
Other 200
205
Total Deferred Credits and Other Liabilities 5,326
4,444
Commitments and Contingencies (Note 9)

Total $ 20,019
$ 18,707

See Notes to ~~Condensed~~ Consolidated Financial Statements.

~~Table of Contents~~

~~SCANA Corporation and Subsidiaries~~

~~Condensed Consolidated Statements of Income~~

~~(Unaudited)~~

Three Months Ended Nine Months Ended
September 30, September 30,
Millions of dollars, except per share amounts 2017 2016 2017 2016
Operating Revenues:

Electric $ 786
$ 817
$ 2,042
$ 2,035
Gas - regulated 123
111
584
538
Gas - nonregulated 167
165
623
598
Total Operating Revenues 1,076
1,093
3,249
3,171
Operating Expenses:

Fuel used in electric generation 167
176
464
443
Purchased power 22
21
54
50
Gas purchased for resale 211
202
808
752
Other operation and maintenance 183
187
543
558
Impairment loss 210
—
210
—
Depreciation and amortization 96
93
285
276
Other taxes 67
66
200
192
Total Operating Expenses 956
745
2,564
2,271
Operating Income 120
348
685
900
Other Income (Expense):

Other income 28
15
61
46
Other expense (7 ) (7 ) (25 ) (31 )
Interest charges, net of allowance for borrowed funds used during construction of $2, $5, $16 and $14 (95 ) (88 ) (270 ) (255 )
Allowance for equity funds used during construction —
7
17
22
Total Other Expense (74 ) (73 ) (217 ) (218 )
Income Before Income Tax Expense 46
275
468
682
Income Tax Expense 12
86
142
211
Net Income $ 34
$ 189
$ 326
$ 471

Earnings Per Share of Common Stock $ 0.24
$ 1.32
$ 2.28
$ 3.29
Weighted Average Common Shares Outstanding (millions) 143
143
143
143
Dividends Declared Per Share of Common Stock $ 0.6125
$ 0.5750
$ 1.8375
$ 1.7250

~~See Notes to Condensed Consolidated Financial Statements.~~

~~Table of Contents~~

~~SCANA Corporation and Subsidiaries~~

~~Condensed~~

Dominion Energy South Carolina, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
(millions)	2019			2018			2019			2018
Operating Revenues:
Electric⁽¹⁾	$	728		$	670		$	869		$	1,770
Gas		67			69			289			304
Total operating revenues		795			739			1,158			2,074
Operating Expenses:
Fuel used in electric generation⁽¹⁾		167			188			447			503
Purchased power⁽¹⁾		15			10			35			77
Gas purchased for resale⁽¹⁾		37			41			158			161
Other operations and maintenance		90			105			309			320
Other operations and maintenance - affiliated suppliers		54			39			174			135
Impairment of assets and other charges		—			—			371			4
Depreciation and amortization		116			81			333			242
Other taxes⁽¹⁾		55			63			196			192
Total operating expenses		534			527			2,023			1,634
Operating income (loss)		261			212			(865	)		440
Other income (expense), net		(13	)		(1	)		(27	)		124
Interest charges, net of allowance for borrowed funds used during construction of $2, $2, $4 and $7⁽¹⁾		66			79			202			232
Income (loss) before income tax expense (benefit)		182			132			(1,094	)		332
Income tax expense (benefit)		40			29			(63	)		70
Net Income (Loss)		142			103			(1,031	)		262
Other Comprehensive Income:
Deferred cost of employee benefit plans, net of tax of $-, $-, $-, $-		1			1			1			1
Total Comprehensive Income (Loss)		143			104			(1,030	)		263
Comprehensive Income Attributable to Noncontrolling Interest		—			6			14			15
Comprehensive Income (Loss) Available (Attributable) to Common Shareholder	$	143		$	98		$	(1,044	)	$	248

~~(Unaudited)~~

(1)	See Note 14 for amounts attributable to affiliates.

Three Months Ended September 30, Nine Months Ended September 30,
Millions of dollars 2017 2016 2017 2016
Net Income $ 34
$ 189
$ 326
$ 471
Other Comprehensive Income (Loss), net of tax:
Unrealized Gains (Losses) on Cash Flow Hedging Activities:
Arising during period, net of tax of $-, $-, $(3) and $(3) —
(1 ) (5 ) (4 )
Reclassified as increases to interest expense, net of tax of $1, $1, $3 and $3 2
2
6
6
Reclassified as increases (decreases) to gas purchased for resale, net of tax of $-, $ -, $(1) and $3 —
—
(2 ) 6
Net unrealized gains (losses) on cash flow hedging activities 2
1
(1 ) 8
Deferred cost of employee benefit plans, net of tax of $-, $-, $- and $- 1
—
1
—
Other Comprehensive Income 3
1
—
8
Total Comprehensive Income $ 37
$ 190
$ 326
$ 479

See Notes to ~~Condensed~~ Consolidated Financial Statements.

~~Table of Contents~~

~~SCANA Corporation and Subsidiaries~~

~~Condensed~~

Dominion Energy South Carolina, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
(millions)	2019			2018
Operating Activities
Net income (loss)	$	(1,031	)	$	262
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Impairment of assets and other charges		256			4
Provision for refunds to customers		923			—
Gain on sale of assets		(7	)		—
Deferred income taxes, net		(384	)		93
Depreciation and amortization		341			259
Amortization of nuclear fuel		41			41
Other adjustments		(5	)		(11	)
Changes in certain assets and liabilities:
Receivables		(9	)		49
Receivables - affiliated and related party		(7	)		(4	)
Income tax receivable		—			198
Inventories		(66	)		(15	)
Prepayments		(9	)		(13	)
Regulatory assets		(109	)		2
Regulatory liabilities		223			(102	)
Accounts payable		(68	)		(10	)
Accounts payable - affiliated and related party		7			—
Revenue subject to refund		(74	)		61
Taxes accrued		(22	)		(39	)
Other assets		124			(44	)
Other liabilities		40			38
Net cash provided by operating activities		164			769
Investing Activities
Property additions and construction expenditures		(340	)		(538	)
Proceeds from investments and sales of assets		33			35
Purchase of investments		(42	)		(21	)
Purchase of investments - affiliate		—			(113	)
Proceeds from interest rate derivative contract settlement		—			115
Investment in affiliate, net		336			(108	)
Net cash used in investing activities		(13	)		(630	)
Financing Activities
Proceeds from issuance of debt		—			795
Proceeds from issuance of affiliated debt		230			—
Repayment of long-term debt, including redemption premiums		(1,890	)		(824	)
Dividend to parent		(30	)		(164	)
Contribution from parent		825			20
Contribution returned to parent		(20	)		—
Money pool borrowings, net		441			157
Short-term borrowings, net		(73	)		(79	)
Net cash used in financing activities		(517	)		(95	)
Net increase (decrease) in cash, restricted cash and equivalents		(366	)		44
Cash, restricted cash and equivalents at beginning of period⁽¹⁾		377			395
Cash, restricted cash and equivalents at end of period⁽¹⁾	$	11		$	439
Supplemental Cash Flow Information
Noncash investing and financing activities:⁽²⁾
Accrued construction expenditures	$	47		$	25
Leases⁽³⁾		7			7

~~(Unaudited)~~

(1)	At September 30, 2019, September 30, 2018, December 31, 2018 and December 31, 2017 there were 0 restricted cash and equivalent balances.

(2)	See Note 1 for noncash investing and financing activities related to the adoption of a new accounting standard for leasing arrangements.

Nine Months Ended September 30,
Millions of dollars 2017 2016
Cash Flows From Operating Activities:

Net income $ 326
$ 471
Adjustments to reconcile net income to net cash provided from operating activities:

Impairment loss 210
—
Deferred income taxes, net (395 ) 151
Depreciation and amortization 302
289
Amortization of nuclear fuel 31
42
Allowance for equity funds used during construction (17 ) (22 )
Carrying cost recovery (27 ) (12 )
Changes in certain assets and liabilities:
Receivables 79
(8 )
Income taxes receivable 136
(306 )
Inventories (58 ) (21 )
Prepayments (6 ) (2 )
Regulatory assets (48 ) (14 )
Regulatory liabilities (3 ) 2
Accounts payable (22 ) (36 )
Unrecognized tax benefits 183
210
Taxes accrued 325
(84 )
Derivative financial instruments (3 ) (9 )
Other assets (37 ) (58 )
Other liabilities (49 ) 86
Net Cash Provided From Operating Activities 927
679
Cash Flows From Investing Activities:

Property additions and construction expenditures (1,095 ) (1,178 )
Proceeds from monetization of guaranty settlement 1,013
—
Proceeds from investments (including derivative collateral returned) 116
629
Purchase of investments (including derivative collateral posted) (115 ) (743 )
Payments upon interest rate derivative contract settlements —
(88 )
Net Cash Used For Investing Activities (81 ) (1,380 )
Cash Flows From Financing Activities:

Proceeds from issuance of long-term debt 150
592
Repayment of long-term debt (16 ) (15 )
Dividends (258 ) (243 )
Short-term borrowings, net 81
247
Net Cash (Used For) Provided From Financing Activities (43 ) 581
Net Increase (Decrease) In Cash and Cash Equivalents 803
(120 )
Cash and Cash Equivalents, January 1 208
176
Cash and Cash Equivalents, September 30 $ 1,011
$ 56
Supplemental Cash Flow Information:

Cash for–Interest paid (net of capitalized interest of $16 and $14) $ 247
$ 235
–Income taxes paid 1
229
–Income taxes received 123
—
Noncash Investing and Financing Activities:
Accrued construction expenditures 44
80
Capital leases 6
12
Guaranty settlement receivable 83
—

(3) Includes $3 million of financing leases and $4 million of operating leases for the nine months ended September 30, 2019 and $7 million of capital leases for the nine months ended September 30, 2018.

See ~~Combined~~ Notes to ~~Condensed~~ Consolidated Financial ~~Statements.~~

Statements.

~~SCANA Corporation and Subsidiaries~~

~~Condensed~~

Dominion Energy South Carolina, Inc.

Consolidated Statements of Changes in Common Equity

(Unaudited)

Quarter-To-Date

	Common Stock
(millions)	Shares		Amount		Retained Earnings			AOCI			Noncontrolling Interest			Total Equity
June 30, 2018		40	$	2,860	$	2,060		$	(4	)	$	169		$	5,085
Total comprehensive income available to common shareholder						97			1			6			104
Dividend to parent						(11	)					(6	)		(17	)
September 30, 2018		40	$	2,860	$	2,146		$	(3	)	$	169		$	5,172

June 30, 2019		40	$	3,635	$	72		$	(4	)	$	173		$	3,876
Total comprehensive income available to common shareholder						142			1						143
Capital contribution from parent				50											50
September 30, 2019		40	$	3,685	$	214		$	(3	)	$	173		$	4,069

Year-To-Date

~~(Unaudited)~~

	Common Stock
(millions)	Shares		Amount		Retained Earnings			AOCI			Noncontrolling Interest			Total Equity
December 31, 2017		40	$	2,860	$	1,982		$	(4	)	$	142		$	4,980
Total comprehensive income available to common shareholder						247			1			15			263
Capital contribution from parent												20			20
Dividend to parent						(83	)					(8	)		(91	)
September 30, 2018		40	$	2,860	$	2,146		$	(3	)	$	169		$	5,172

December 31, 2018		40	$	2,860	$	1,279		$	(3	)	$	179		$	4,315
Cumulative-effect of change in accounting principle						1			(1	)					—
Total comprehensive income (loss) available (attributable) to common shareholder						(1,045	)		1			14			(1,030	)
Capital contribution from parent				825											825
Capital contribution returned to parent												(20	)		(20	)
Dividend to parent						(20	)								(20	)
Other						(1	)								(1	)
September 30, 2019		40	$	3,685	$	214		$	(3	)	$	173		$	4,069

Common Stock Accumulated Other Comprehensive Income (Loss)
Millions Shares Outstanding Amount Treasury Amount Retained Earnings Gains (Losses) from Cash Flow Hedges Deferred Employee Benefit Plans Total AOCI Total
Balance as of January 1, 2017 143
$ 2,402
$ (12 ) $ 3,384
$ (36 ) $ (13 ) $ (49 ) $ 5,725
Net Income 326
326
Other Comprehensive Income (Loss)
Losses arising during the period (5 ) —
(5 ) (5 )
Losses/amortization reclassified from AOCI 4
1
5
5
Total Comprehensive Income 326
(1 ) 1
—
326
Purchase of Treasury Stock —
—
(1 ) (1 )
Dividends Declared (263 ) (263 )
Balance as of September 30, 2017 143
$ 2,402
$ (13 ) $ 3,447
$ (37 ) $ (12 ) $ (49 ) $ 5,787

Balance as of January 1, 2016 143
$ 2,402
$ (12 ) $ 3,118
$ (53 ) $ (12 ) $ (65 ) $ 5,443
Net Income 471
471
Other Comprehensive Income (Loss)
Losses arising during the period (4 ) —
(4 ) (4 )
Losses/amortization reclassified from AOCI 12
—
12
12
Total Comprehensive Income 471
8
—
8
479
Dividends Declared (247 ) (247 )
Balance as of September 30, 2016 143
$ 2,402
$ (12 ) $ 3,342
$ (45 ) $ (12 ) $ (57 ) $ 5,675

~~Dividends declared per share of common stock were $1.8375 and $1.7250 for September 30, 2017 and 2016, respectively.~~

See Notes to ~~Condensed~~ Consolidated Financial Statements.

~~Table of Contents~~

Dominion Energy South Carolina, ~~Electric & Gas Company and Affiliates~~

~~Condensed Consolidated Balance Sheets~~

~~(Unaudited)~~

Millions of dollars September 30,
2017 December 31,
2016
Assets

Utility Plant In Service $ 11,783
$ 11,510
Accumulated Depreciation and Amortization (4,078 ) (3,991 )
Construction Work in Progress 554
4,813
Nuclear Fuel, Net of Accumulated Amortization 249
271
Utility Plant, Net ($740 and $756 related to VIEs) 8,508
12,603
Nonutility Property and Investments:

Nonutility property, net of accumulated depreciation 71
69
Assets held in trust, net-nuclear decommissioning 132
123
Other investments 2
3
Nonutility Property and Investments, Net 205
195
Current Assets:

     Cash and cash equivalents 1,015
164
     Receivables:
          Customer, net of allowance for uncollectible accounts of $4 and $3 401
378
          Affiliated companies 8
16
          Income taxes —
53
          Other 168
94
     Inventories (at average cost):

     Fuel 78
83
     Materials and supplies 148
143
     Prepayments 98
88
     Other current assets 1
1
     Total Current Assets ($57 and $85 related to VIEs) 1,917
1,020
Deferred Debits and Other Assets:

Regulatory assets 6,582
2,030
Other 221
243
     Total Deferred Debits and Other Assets ($49 and $52 related to VIEs) 6,803
2,273
Total $ 17,433
$ 16,091

~~See~~ Inc.

Notes to ~~Condensed Consolidated Financial Statements.~~

~~Table of Contents~~

Millions of dollars September 30,
2017 December 31,
2016
Capitalization and Liabilities
Common Stock - no par value, 40.3 million shares outstanding $ 2,860
$ 2,860
Retained Earnings 2,518
2,481
Accumulated Other Comprehensive Loss (3 ) (3 )
Total Common Equity 5,375
5,338
Noncontrolling Interest 137
134
Total Equity 5,512
5,472
Long-Term Debt, net 4,990
5,154
Total Capitalization 10,502
10,626
Current Liabilities:
Short-term borrowings 945
804
Current portion of long-term debt 173
12
Accounts payable 154
247
Affiliated payables 96
122
Customer deposits and customer prepayments 74
126
Taxes accrued 663
195
Interest accrued 71
68
Dividends declared 81
79
Derivative financial instruments 41
28
Other 69
55
Total Current Liabilities 2,367
1,736
Deferred Credits and Other Liabilities:
Deferred income taxes, net 1,505
1,939
Asset retirement obligations 533
522
Pension and other postretirement benefits 231
232
Unrecognized tax benefits 402
236
Regulatory liabilities 1,779
695
Other 99
89
Other affiliate 15
16
Total Deferred Credits and Other Liabilities 4,564
3,729
Commitments and Contingencies (Note 9)

Total $ 17,433
$ 16,091

~~See Notes to Condensed Consolidated Financial Statements.~~

~~Table of Contents~~

~~South Carolina Electric & Gas Company and Affiliates~~

~~Condensed Consolidated Statements of Comprehensive Income~~

~~(Unaudited)~~

Three Months Ended Nine Months Ended
September 30, September 30,
Millions of dollars 2017 2016 2017 2016
Operating Revenues:

Electric $ 786
$ 817
$ 2,042
$ 2,035
Electric - nonconsolidated affiliate 1
1
4
4
Gas 69
64
284
252
Gas - nonconsolidated affiliate —
—
1
1
Total Operating Revenues 856
882
2,331
2,292
Operating Expenses:

Fuel used in electric generation 132
141
370
368
Fuel used in electric generation - nonconsolidated affiliate 35
35
94
75
Purchased power 22
21
54
50
Gas purchased for resale 39
36
147
117
Gas purchased for resale - nonconsolidated affiliate —
—
—
9
Other operation and maintenance 109
101
305
298
Other operation and maintenance - nonconsolidated affiliate 45
51
141
156
Impairment loss 210
—
210
—
Depreciation and amortization 78
76
232
225
Other taxes 62
61
183
173
Other taxes - nonconsolidated affiliate 1
1
4
5
Total Operating Expenses 733
523
1,740
1,476
Operating Income 123
359
591
816
Other Income (Expense):

Other income 21
7
36
20
Other expense (6 ) (4 ) (17 ) (19 )
Interest charges, net of allowance for borrowed funds used during construction of $2, $5, $15 and $13 (76 ) (70 ) (214 ) (201 )
Allowance for equity funds used during construction (3 ) 6
13
19
Total Other Income (Expense) (64 ) (61 ) (182 ) (181 )
Income Before Income Tax Expense 59
298
409
635
Income Tax Expense 17
94
129
202
Net Income and Total Comprehensive Income 42
204
280
433
Less Net Income and Total Comprehensive Income Attributable to Noncontrolling Interest (3 ) (3 ) (10 ) (10 )
Earnings and Comprehensive Income Available to Common Shareholder $ 39
$ 201
$ 270
$ 423

Dividends Declared on Common Stock $ 81
$ 76
$ 240
$ 225

~~See Notes to Condensed Consolidated Financial Statements.~~

~~Table of Contents~~

~~South Carolina Electric & Gas Company and Affiliates~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

Nine Months Ended September 30,
Millions of dollars 2017 2016
Cash Flows From Operating Activities:
Net income $ 280
$ 433
Adjustments to reconcile net income to net cash provided from operating activities:
Impairment loss 210
—
Deferred income taxes, net (434 ) 127
Depreciation and amortization 238
229
Amortization of nuclear fuel 31
42
Allowance for equity funds used during construction (13 ) (19 )
Carrying cost recovery (27 ) (12 )
Changes in certain assets and liabilities:
Receivables (27 ) (70 )
Receivables - affiliate 8
9
Income tax receivable 53
(206 )
Inventories (34 ) (14 )
Prepayments (10 ) (15 )
Regulatory assets (40 ) (6 )
Regulatory liabilities (1 ) (3 )
Accounts payable 31
(13 )
Accounts payable - affiliate (28 ) (13 )
Taxes accrued 468
(151 )
Unrecognized tax benefit 166
210
Other assets (29 ) (117 )
Other liabilities (14 ) 64
Net Cash Provided From Operating Activities 828
475
Cash Flows From Investing Activities:
Property additions and construction expenditures (882 ) (1,024 )
Proceeds from monetization of guaranty settlement 1,013
—
Proceeds from investments (including derivative collateral returned) 96
577
Purchase of investments (including derivative collateral posted) (98 ) (699 )
Payments upon interest rate derivative contract settlements —
(88 )
Proceeds from money pool investments —
9
Net Cash Provided From (Used For) Investing Activities 129
(1,225 )
Cash Flows From Financing Activities:
Proceeds from issuance of debt —
494
Repayment of long-term debt (11 ) (10 )
Dividends (238 ) (224 )
Contributions from parent —
100
Money pool borrowings, net 2
(5 )
Short-term borrowings, net 141
294
Net Cash Provided From (Used For) Financing Activities (106 ) 649
Net Decrease In Cash and Cash Equivalents 851
(101 )
Cash and Cash Equivalents, January 1 164
130
Cash and Cash Equivalents, September 30 $ 1,015
$ 29

Supplemental Cash Flow Information:
Cash for–Interest (net of capitalized interest of $15 and $13) $ 195
$ 182
– Income taxes paid 3
286
– Income taxes received 143
9
Noncash Investing and Financing Activities:
Accrued construction expenditures 21
71
Capital leases 6
12
Guaranty settlement receivable 83
—

~~See Notes to Condensed~~ Consolidated Financial Statements.

~~Table of Contents~~

~~South Carolina Electric & Gas Company and Affiliates~~

~~Condensed Consolidated Statements of Changes in Common Equity~~

(Unaudited)

Common Stock
Millions Shares Amount Retained Earnings AOCI Noncontrolling Interest Total Equity
Balance at January 1, 2017 40
$ 2,860
$ 2,481
$ (3 ) $ 134
$ 5,472
Earnings available to common shareholder 270
10
280
Total Comprehensive Income 270
—
10
280
Cash dividend declared (233 ) (7 ) (240 )
Balance at September 30, 2017 40
$ 2,860
$ 2,518
$ (3 ) $ 137
$ 5,512

Balance at January 1, 2016 40
$ 2,760
$ 2,265
$ (3 ) $ 129
$ 5,151
Earnings available to common shareholder 423
10
433
Total Comprehensive Income 423
—
10
433
Capital Contributions from parent 100
100
Cash dividend declared (219 ) (6 ) (225 )
Balance at September 30, 2016 40
$ 2,860
$ 2,469
$ (3 ) $ 133
$ 5,459

~~See Notes to Condensed Consolidated Financial Statements.~~

~~Table of Contents~~

~~SCANA Corporation and Subsidiaries~~

~~South Carolina Electric & Gas Company and Affiliates~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(Unaudited)~~

The following unaudited notes to the condensed 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).

~~The following condensed~~ notes should be read in conjunction with the Notes to Consolidated Financial Statements appearing in ~~each company's~~DESC's Annual Report on Form 10-K for the year ended December 31, ~~2016, which also were~~2018. DESC filed such annual report on a combined ~~presentation.~~ basis with SCANA. Accordingly, the information presented in such notes is presented on a combined basis and therefore some of the information may apply only to SCANA and not DESC. DESC makes no representation as to any such information.

These are interim financial statements and, due to the seasonality of ~~each company's~~DESC's business and matters that may occur during the rest of the year, ~~including the matters described in condensed consolidated Note 9 under~~ ~~Impairment Considerations~~, the amounts reported in the ~~Condensed Consolidated Statements of Income and Condensed~~ Consolidated Statements of Comprehensive Income (Loss) are not necessarily indicative of amounts expected for the full year. In the opinion of management, ~~of the respective companies,~~ the information furnished herein reflects all adjustments ~~all of a normal recurring nature,~~ which are necessary for a fair statement of the results for the interim periods ~~reported.~~reported, and such adjustments are of a normal recurring nature. In addition, 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.


1.	~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~

Certain amounts in DESC's 2018 Consolidated Financial Statements and Notes have been reclassified to conform to the 2019 presentation for comparative purposes; however, such reclassifications did not affect DESC's net income (loss) and other comprehensive income (loss), total assets, liabilities, equity or cash flows.

DESC is a wholly-owned subsidiary of SCANA which, effective January 2019, is a wholly-owned subsidiary of Dominion Energy.

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation and Variable Interest Entities

The condensed consolidated financial statements of the Company include, after eliminating intercompany balances and transactions, the accounts of the parent holding company and each of its subsidiaries, including Consolidated SCE&G. Accordingly, discussions regarding the Company's financial results necessarily include the results of Consolidated SCE&G.

~~SCE&G~~

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

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~~DESC 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 $491~~$501 million) ~~serves~~previously served as collateral for its long-term borrowings. In May 2019, GENCO redeemed its 5.49% senior secured notes and was able to release the first mortgage lien in June 2019 that had previously secured these notes. Fuel Company acquires, owns and provides financing for ~~SCE&G’s~~DESC’s nuclear fuel, certain fossil fuels and emission and other environmental allowances. See also ~~condensed consolidated~~ Note 4.

~~Income Statement Presentation~~

~~Revenues~~5.

Additionally, DESC purchases shared services from DESS, an affiliated VIE that provides accounting, legal, finance and ~~expenses arising~~certain administrative and technical services to all SCANA subsidiaries, including DESC. DESC has determined that it is not the primary beneficiary of DESS as it does not have either the power to direct the activities that most significantly impact its economic performance or an obligation to absorb losses and benefits which could be significant to it. See Note 14 for amounts attributable to affiliates.

Significant Accounting Policies

There have been no significant changes from ~~regulated businesses~~Note 1 to the Consolidated Financial Statements in DESC's Annual Report on Form 10-K for the year ended December 31, 2018, with the exception of the item described below.

Leases

DESC leases certain assets including vehicles, real estate, office equipment and other assets under both operating and finance leases. For operating leases, rent expense is recognized on a straight-line basis over the term of the lease agreement, subject to regulatory framework. Rent expense associated with operating leases, short-term leases and variable leases is primarily recorded in other operations and maintenance expense in the ~~case~~Consolidated Statements of Comprehensive Income (Loss). Rent expense associated with finance leases results in the separate presentation of interest expense on the lease liability and amortization expense of the ~~Company,~~related right-of-use asset in the ~~retail natural gas marketing business (including those activities~~Consolidated Statements of ~~segments described~~Comprehensive Income (Loss). Amortization expense and interest charges associated with finance leases are recorded in ~~condensed consolidated Note 10)~~depreciation and amortization and interest charges, respectively, in the Consolidated Statements of Comprehensive Income (Loss) or deferred within regulatory assets in the Consolidated Balance Sheets.

Certain leases include one or more options to renew, with renewal terms that can extend the lease from one to 70 years. The exercise of renewal options is solely at DESC's discretion and is included in the lease term if the option is reasonably certain to be exercised. A right-of-use asset and corresponding lease liability for leases with original lease terms of one year or less are ~~presented within Operating Income, and all other activities are presented within Other Income (Expense).~~

~~Asset Management and Supply Service Agreement~~

~~PSNC Energy,~~not included in the Consolidated Balance Sheets, unless such leases contain renewal options that DESC is reasonably certain will be exercised.

The determination of the discount rate utilized has a ~~subsidiary~~significant impact on the calculation 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, 45% and 40% of PSNC Energy’s natural gas inventory at September 30, 2017 and December 31, 2016, respectively, with a carryingthe present value of ~~$14.1 million and $9.8 million, respectively. Under~~ the ~~terms of this agreement, PSNC Energy receives storage asset management feesof which 75% are credited to customers. This agreement expires on March 31, 2019.~~

~~Table of Contents~~

~~Earnings Per Share~~

~~The Company computes basic earnings per share by dividing net income by~~lease liability included in the ~~weighted average number of common shares outstanding for~~Consolidated Balance Sheets. For DESC’s leased assets, the ~~period. When applicable,~~discount rate implicit in the ~~Company computes diluted earnings per share using this same formula, after giving effect to securities considered~~lease is generally unable to be ~~dilutive potential common stock utilizing~~determined from a lessee perspective. As such, DESC uses internally-developed incremental borrowing rates as a discount rate in the ~~treasury stock method.~~

~~New~~calculation of the present value of the lease liability. The incremental borrowing rates are determined based on an analysis of DESC's publicly available secured borrowing rates over various lengths of time that most closely correspond to DESC's lease maturities.

Recently Adopted Accounting ~~Matters~~

Standards

In ~~May 2014,~~February 2016, the ~~FASB~~Financial Accounting Standards Board issued revised accounting guidance for ~~revenue arising from contracts with customers~~the recognition, measurement, presentation and disclosure of leasing arrangements. The update requires that ~~supersedes most prior revenue recognition guidance, including industry-specific guidance. This new revenue recognition model calls for~~ a ~~five-step analysis in determining when~~liability and ~~how revenue is recognized, and will require revenue recognition to depict the transfer of promised goods or services to customers, based~~corresponding right-of-use asset are recorded on the ~~transfer~~balance sheet for all leases, including those leases classified as operating leases, while also refining the definition of ~~control, in an amount that reflects the consideration~~ a ~~company expects to receive in exchange for those goods or services.~~lease. In addition, lessees will be required to disclose key information about the ~~new guidance requires disclosure of the nature,~~ amount, timing, and uncertainty of ~~revenue and~~ cash flows arising from ~~contracts with customers.~~ leasing arrangements. Lessor accounting remains largely unchanged.

The ~~analysis of contracts with customers to which the~~ guidance ~~might be applicable is continuing,~~became effective for DESC's interim and activities of the FASB's Transition Resource Group for Revenue Recognition are being monitored, particularly as they relate to the treatment of contributions in aid of construction, alternative revenue programs and the collectability of revenue of utilities subject to rate regulation. An evaluation of the enhanced disclosure requirements is also underway, including the preliminary drafting of the disclosures that are required under the new standard, identifying performance obligations, determining the appropriate disaggregation of revenue and assessing the availability of information necessary to comply with the requirements. The Company and Consolidated SCE&G will adopt this guidance using the modified retrospective method and will recognize a cumulative effect adjustment, if any, to retained earnings onannual reporting periods beginning January 1, 2018 upon adoption. Comparative periods will not be restated. The Company and Consolidated SCE&G do not anticipate that its adoption will have a material impact on recognition patterns in their respective financial statements, but its adoption is expected to result in additional disclosures and may result in income statement presentation changes, particularly with respect to alternate revenue programs of utility operations.

~~In July 2015, the FASB issued~~2019. DESC adopted this revised accounting guidance intended to simplify the measurement of inventory cost by requiring most inventory to be measured at the lower of cost and net realizable value. The Company and Consolidated SCE&G adopted this guidance in the first quarter of 2017, and its adoption did not have any impact on their respective financial statements.

In January 2016, the FASB issued accounting guidance that will change how entities measure certain equity investments and financial liabilities, among other things. 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.

In February 2016, the FASB issued accounting guidance related to the recognition, measurement and presentation of leases. The guidance applies a right-of-use model and, for lessees, requires all leases with a duration over 12 months to be recorded on the balance sheet, with the rights of use treated as assets and the payment obligations treated as liabilities. Further,

and without consideration of any regulatory accounting requirements which may apply, depending primarily on the nature of the assets and the relative consumption of them, lease costs will be recognized either through the separate amortization of the right-of-use asset and the recognition of the interest cost related to the payment obligation, or through the recording of a combined straight-line rental expense. For lessors, the guidance calls for the recognition of income either through the derecognition of assets and subsequent recording of interest income on lease amounts receivable, or through the recognition of rental income on a straight-line basis, also depending on the nature of the assets and relative consumption. The guidance is effective for years beginning in 2019, and the Company and Consolidated SCE&G do not anticipate that its adoption will impact their respective financial statements other than increasing amounts reported for assets and liabilities on the balance sheet and changing the place on their respective income statements on which certain expenses are recorded. No impact on net income is expected. The identification and analysis of leasing and related contracts to which the guidance might be applicable has begun. In addition, the Company and Consolidated SCE&G have begun implementation of a third party software tool that will assist with initial adoption and ongoing compliance. Specifically, preliminary system configuration has been completed and data from certain leases are being entered.

In June 2016, the FASB issued accounting guidance requiring the use of a current expected credit loss impairment model for certain financial instruments. The new model is applicable to trade receivables and most debt instruments, among other financial instruments, and in certain instances may result in certain impairment losses being recognized earlier than under current guidance. The Company and Consolidated SCE&G must adopt this guidance beginning in 2020, including interim

periods, though the guidance may be adopted in 2019. The Company and Consolidated SCE&G have not determined when this guidance will be adopted or what impact it will have on their respective financial statements.

In August 2016, the FASB issued accounting guidance to reduce diversity in cash flow classification related to certain transactions. 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 impact their respective financial statements.

In October 2016, the FASB issued accounting guidance related to the tax effects of intra-entity asset transfers of assets other than inventory. An entity will be required to recognize the income tax consequences of such a transfer in the period it occurs. The Company and Consolidated SCE&G adopted this guidance in the first quarter 2017 and it had no impact on their respective financial statements.

In November 2016, the FASB issued accounting guidance related to the presentation of restricted cash on the statement of cash flows. The guidance is effective for years beginning in 2018, and the Company and Consolidated SCE&G do not anticipate that its adoption will impact their respective financial statements.

In January 2017, the FASB issued accounting guidance to simplify the accounting for goodwill impairment. The guidance removes 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 and Consolidated SCE&G have not determined when this guidance will be adopted but do not anticipate that its adoption will have a material impact on their respective financial statements.

In March 2017, the FASB issued accounting guidance to change the required presentation of net periodic pension and postretirement benefit costs. Under the new guidance, the net periodic pension and postretirement benefit costs are to be separated into their service cost components and other components. The service cost components are to 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 are to be reported in the income statement separately from the service cost component and outside operating income. Only the service cost component is eligible for capitalization in assets. This guidance is required to be applied 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. The Company and Consolidated SCE&G will adopt the guidance when required in the first quarter of 2018 and, due to regulatory overlay, do not anticipate that its adoption will have a material impact on their respective financial statements. Non-service cost components which otherwise would have been capitalizable in assets under current accounting guidance will instead be deferred within regulatory assets.

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 recorded in the same income statement line as the earnings effect of the hedged item, and additional disclosures will be required related to the effect of hedging on individual income statement line items. The guidance must be applied to all outstanding instruments using a modified retrospective ~~method,~~approach, which requires lessees and lessors to recognize and measure leases at the date of adoption. Under this approach, DESC utilized the transition practical expedient to maintain historical presentation for periods before January 1, 2019. DESC also applied the other practical expedients, which required no reassessment of whether existing contracts are or contain leases, no reassessment of lease classification for existing leases and no evaluation of existing or expired land easements that were not previously accounted for as leases. In connection with ~~any cumulative~~the adoption of this revised accounting guidance, DESC recorded $19 million of offsetting right-of-use assets and liabilities for operating leases in effect ~~adjustment recorded to opening retained earnings as of~~at the ~~beginning of the first period in which the guidance becomes effective. The Company and Consolidated SCE&G expect to adopt this guidance when required in the first quarter of 2019, though early~~ adoption ~~is permitted, and have not determined what impact such adoption will have on their respective financial statements.~~

date. See Note 12 for additional information.

2.RATE AND OTHER REGULATORY MATTERS

~~Rate~~

Regulatory Matters

~~Electric - Cost~~ Involving Potential Loss Contingencies

As a result of ~~Fuel~~

~~By order dated July 15, 2015,~~issues generated in the ~~SCPSC approved SCE&G's participation~~ordinary course of business, DESC is involved in various regulatory matters. Certain regulatory matters may ultimately result in a ~~DER program~~loss; however, as such matters are in an initial procedural phase, involve uncertainty as to the outcome of pending reviews or orders, and/or involve significant factual issues that need to be resolved, it is not possible for DESC to estimate a range of possible loss. For regulatory matters that DESC cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the regulatory process such that DESC is able to estimate a range of possible loss. For regulatory matters that DESC is able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. Any estimated range is based on currently available information, involves elements of judgment and ~~recovery~~significant uncertainties and may not represent DESC’s maximum possible loss exposure. The circumstances of ~~related costs~~such regulatory matters will change from time to time and actual results may vary significantly from the current estimate. For current matters not specifically reported below, management does not anticipate that the outcome from such matters would have a material effect on DESC’s financial position, liquidity or results of operations.

FERC

In June 2019, DESC submitted the 2015 Task Order as a ~~separate component~~stand-alone rate schedule, which governs DESC’s provision of ~~SCE&G's overall fuel factor. Under this order, SCE&G will, among other things, implement programs~~retail service to ~~encourage~~ the ~~development~~DOE at the Savannah River Site. The 2015 Task Order also includes provisions that govern the operations and maintenance of ~~renewable energy~~certain transmission facilities, ~~with a total nameplate capacity of at least approximately 84.5 MW by the end of 2020, of~~ which ~~half is~~DESC had determined to be ~~customer-scale solar capacity~~services that are likely subject to FERC’s jurisdiction. DESC requested that FERC accept the 2015 Task Order for filing to become effective in August 2019 and ~~half is to be utility-scale solar capacity.~~

~~By order dated April 27, 2017,~~accept 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 be allowed for base fuel component under-collected balances as they occur.

~~In October 2017, the SCPSC initiated its 2018 annual review of base rates for fuel costs. A public hearing on this matter has been scheduled for April 10, 2018.~~

~~Electric - Base Rates~~

Pursuant to an SCPSC order, SCE&G removes from rate base certain deferred income tax assets arising from capital expenditures related to the New Units and accrues carrying costs on those amounts during periods in which they are notrefund analysis included in ~~rate base. Such carrying costs are determined at SCE&G’s weighted average long-term borrowing rate~~the filing for amounts collected under the 2015 Task Order as well as under two prior task orders commencing in 1995 and ~~are recorded as a regulatory asset and other income. Carrying costs during the three and nine months ended September 30, 2017 totaled $4.9 million and $13.6 million, respectively.~~each covering ten-year periods. During the ~~three and nine months ended September 30, 2016, carrying costs totaled $3.5~~second quarter of 2019, DESC recorded a $6 million ~~and $10.0~~($4 million respectively. Under this SCPSC order, when these deferred income tax assets are fully offset by related deferred income tax liabilities, the carrying cost accruals will cease, and the regulatory asset will begin to be amortized. See also condensed consolidated Note 9.

~~By order dated March 1, 2017, the SCPSC approved SCE&G’s request to decrease its pension costs rider. The change~~after-tax) charge primarily within interest charges in ~~the pension rider will decrease annual revenue by approximately $11.9 million. The pension rider is designed to allow SCE&G to recover projected pension costs, net~~DESC’s Consolidated Statements of ~~the previously over-collected balance, over a 12-month period, beginning with the first billing cycle in May 2017.~~

Comprehensive Income (Loss). In January 2017, SCE&G requested in its annual DSM Programs filing to recover $37.0 million of costs and net lost revenues associated with DSM programs, along with an incentive to invest in such programs. On April 28, 2017, the SCPSC approved SCE&G's request effective beginning with the first billing cycle in May 2017.

~~Electric - BLRA~~

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 the New Units; to determine the prudence of acts and omissions by SCE&G in connection with the construction of the New Units; to review and determine the prudence of abandonment of the New Units 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 the New Units. SCE&G filed its answer to the complaint andAugust 2019, DESC submitted a motion to ~~dismiss~~withdraw the ~~complaint~~2015 Task Order filing and related refund analysis as requested by FERC staff. As a result, DESC recorded a $10 million ($7 million after-tax) benefit, primarily within interest charges in DESC’s Consolidated Statements of Comprehensive Income (Loss) during the third quarter of 2019, to remove previously recorded reserves.

Electric – BLRA

In July 2018, the South Carolina Commission issued orders implementing a legislatively-mandated temporary reduction in revenues that could be collected by DESC from customers under the BLRA. These orders reduced the portion of DESC’s retail electric rates associated with the NND Project from approximately 18% of the average residential electric customer's bill to approximately 3%,

which equates to a reduction in revenues of approximately $31 million per month, retroactive to April 1, 2018. As a result, in the second quarter of 2018 DESC recorded a charge of $109 million ($82 million after-tax) to operating revenues in DESC’s Consolidated Statements of Comprehensive Income (Loss). The temporary rate reduction remained in effect until February 2019 when rates pursuant to the SCANA Merger Approval Order became effective.

Other Regulatory Matters

Other than the following matter, there have been no significant developments regarding the pending regulatory matters disclosed in Note 2 to the Consolidated Financial Statements in DESC's Annual Report on ~~July 19, 2017. On October 4, 2017, the SCPSC ordered proceedings under this complaint to be coordinated with proceedings~~Form 10-K for the ~~Request filed~~year ended December 31, 2018 or Note 2 to the Consolidated Financial Statements in DESC’s Quarterly Report on ~~September 26, 2017, described below,~~Form 10-Q for the quarters ended March 31, 2019 and ~~allowed discovery to proceed. On October 13, 2017, SCE&G~~June 30, 2019.

Gas

In June 2019, DESC filed with the SCPSC a petition for rehearing and reconsideration of the order as well as a response to the SCPSC's request for briefing concerning coordination of proceedings under this complaint with proceedings for the Request. On November 1, 2017, the SCPSC denied SCE&G's petition for rehearing and reconsideration.

On August 1, 2017, SCE&G filed the Abandonment Petition with the SCPSC which sought recovery of costs expended on the construction of the New Units, 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 the New Units, 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 new 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 condensed consolidated Note 9.

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 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.

On September 28, 2017, citing numerous legal deficiencies in the Request, SCE&G filed a Motion to Dismiss the request by the ORS and a Request for Briefing Schedule and Hearing on Motion to Dismiss. On September 28, 2017, the SCPSC deferred action on the ORS' request and ordered a hearing officer to establish a briefing schedule and hearing date on SCE&G's motion. The hearing has been scheduled for December 12, 2017, and the parties who have filed to intervene in the matter or have filed a letter in support of the request by the ORS 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. SCE&G intends to vigorously contest the request by the ORS, but cannot give any assurance as to the timing or outcome of this matter.

On October 17, 2017, the ORS filed a motion with the SCPSC to amend the 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. On October 27, 2017, SCE&G filed its response in opposition to, and its motion to strike, the motion by the ORS to amend the Request.

~~Gas - SCE&G~~

~~By order dated October 4, 2017, the SCPSC approved, as adjusted by the ORS, SCE&G’s quarterly~~ monitoring report for the 12-month period ended March 31, ~~2017, and an~~2019 with a total revenue requirement of $437 million. This represents a $7 million overall increase ~~of approximately $8.6 million, or 2.2%,~~ to its natural gas rates under the terms of the ~~RSA. The~~Natural Gas Rate Stabilization Act effective for the rate ~~adjustment was~~year beginning November 2019. In October 2019, the South Carolina Commission approved a total revenue requirement of $436 million effective ~~for~~with the first billing cycle inof November ~~2017.~~

2019.

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. SCE&G’s annual PGA hearing for the 12-month period ending July 31, 2017, is scheduled for November 9, 2017.

~~Gas - PSNC Energy~~

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 has filed biannual applications to adjust its rates for this purpose, and the NCUC has approved those applications for the incremental annual revenue requirements, as follows:



~~Application Filed~~	~~Rates Effective~~	~~Incremental Increase~~
~~February 15, 2017~~	~~March 1, 2017~~	~~$1.9 million~~
~~August 16, 2017~~	~~September 1, 2017~~	~~$0.7 million~~

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~~DESC has recorded regulatory assets and regulatory liabilities which are summarized in the following ~~tables.~~table. Except for ~~certain unrecovered nuclear project~~NND Project costs and certain other unrecovered plant costs, 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.

	September 30,		December 31,
(millions)	2019		2018
Regulatory assets:
NND Project costs	$	138	$	127
Income taxes recoverable through future rates		52		—
Deferred employee benefit plan costs		13		16
Other unrecovered plant		14		14
DSM programs		16		14
Other		89		53
Regulatory assets - current		322		224
NND Project costs		2,537		2,641
AROs		315		380
Cost of reacquired debt		271		14
Deferred employee benefit plan costs		205		256
Deferred losses on interest rate derivatives		310		442
Other unrecovered plant		70		79
DSM programs		53		51
Environmental remediation costs		21		24
Deferred storm damage costs		43		35
Deferred transmission operating costs		32		15
Other		113		123
Regulatory assets - noncurrent		3,970		4,060
Total regulatory assets	$	4,292	$	4,284
Regulatory liabilities:
Monetization of guaranty settlement	$	67	$	61
Income taxes refundable through future rates		—		52
Reserve for refunds to electric utility customers		215		—
Other		26		13
Regulatory liabilities - current		308		126
Monetization of guaranty settlement		987		1,037
Income taxes refundable through future rates		912		607
Asset removal costs		554		541
Deferred gains on interest rate derivatives		72		75
Reserve for refunds to electric utility customers		707		—
Other		9		4
Regulatory liabilities - noncurrent		3,241		2,264
Total regulatory liabilities	$	3,549	$	2,390

The Company Consolidated SCE&G
Millions of dollars September 30,
2017 December 31,
2016 September 30,
2017 December 31,
2016
Regulatory Assets:

Unrecovered nuclear project costs $ 4,520
—
$ 4,520
—
Accumulated deferred income taxes 315
$ 316
307
$ 307
AROs and related funding 424
425
401
403
Deferred employee benefit plan costs 321
342
290
309
Deferred losses on interest rate derivatives 632
620
632
620
Other unrecovered plant 108
117
108
117
DSM Programs 58
59
58
59
Carrying costs on deferred tax assets related to nuclear construction 46
32
46
32
Pipeline integrity management costs 47
33
7
6
Environmental remediation costs 30
32
25
26
Deferred storm damage costs 22
20
22
20
Deferred costs related to uncertain tax position 28
15
28
15
Other 139
119
138
116
Total Regulatory Assets $ 6,690
$ 2,130
$ 6,582
$ 2,030

Regulatory Liabilities:

Monetization of guaranty settlement $ 1,095
—
$ 1,095
—
Asset removal costs 764
$ 755
535
$ 529
Deferred gains on interest rate derivatives 135
151
135
151
Other 21
24
14
15
Total Regulatory Liabilities $ 2,015

$ 930
$ 1,779
$ 695

Regulatory ~~assets for unrecovered nuclear project costs have been recorded based on such amounts not being probable of loss, 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~~South Carolina Commission or the FERC has reviewed and approved through specific orders certain of the items shown as regulatory assets. ~~Other~~In addition, 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~~deferred transmission operating costs that are the subject of ~~future~~ regulatory proceedings ~~as further~~ discussed in ~~condensed consolidated~~ Note ~~9. In recording~~11. While such costs ~~as regulatory assets,~~are not currently being recovered, management believes ~~the costs~~they would be allowable under existing rate-making concepts ~~that are~~ embodied in rate orders or ~~current~~applicable state ~~law. The~~law and expects to recover these 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~~other adverse legislative or regulatory developments, DESC 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~~DESC's Consolidated ~~SCE&G's financial statements~~Financial Statements in the period the write-off would be recorded.

~~Unrecovered nuclear project~~

NND Project costs ~~represents~~reflects expenditures by SCE&G that have been reclassified from construction work in progress as a result of the decision to stop construction of the New Units and to pursue recovery of costs under the abandonment provisions of the BLRA or through a general rate case or other regulatory means, net of an estimated impairment loss of $210 million. See additional discussion at condensed consolidated Note 9.

Accumulated deferred income tax liabilities that arise from utility operations that have not been included in customer rates are recorded as a regulatory asset. A substantial portion of these regulatory assets 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. Similarly, accumulated deferred income tax assets arising from deferred investment tax credits are recorded as a regulatory liability.

~~AROs and related funding represents the regulatory asset~~ associated with the ~~legal obligation~~NND Project, which pursuant to ~~decommission~~the SCANA Merger Approval Order, will be recovered from electric service customers over a 20-year period ending in 2039. See also Note 11.

AROs represent deferred depreciation and ~~dismantle Unit 1 and conditional AROs~~accretion expense related to legal obligations associated with the future retirement of generation, transmission and distribution ~~properties,~~properties. The AROs primarily relate to DESC’s electric generating facilities, including ~~gas pipelines. These regulatory assets~~Summer, and are expected to be recovered over the related property lives and periods of decommissioning which may range up to approximately ~~110~~106 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~~South Carolina Commission regulatory orders. ~~In 2013, SCE&G began recovering~~DESC expects to recover deferred pension costs through utility rates ~~approximately $63 million of deferred pension costs for electric operations~~ over ~~approximately 30 years and approximately $14 million of deferred pension costs for gas operations over approximately 14 years. The remainder of the~~periods through 2044. DESC expects to recover other deferred benefit costs ~~are expected to be recovered~~ through utility rates, primarily over average service periods of participating employees or 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 amounts recorded with respect to (i) are expected to be amortized to interest expense over the lives of the underlying debt through 2043. The amounts recorded with respect to (ii) are expected to be similarly amortized to interest expense through ~~2065 except when such amounts are applied otherwise at the direction of the SCPSC.~~

2065.

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~~DESC 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~~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 costs on deferred tax assets related to new nuclear construction are calculated on accumulated deferred income tax assets associated with the New Units which are not part of electric rate base using the weighted average long-term debt cost of capital. These carrying costs will be amortized over ten years beginning when these deferred tax assets are fully offset by related deferred tax liabilities. See also condensed consolidated Note 9.

Pipeline integrity management costs represent operating and maintenance costs incurred to comply with federal regulatory requirements related to natural gas pipelines. PSNC Energy will recover costs incurred as of June 30, 2016 totaling $20.3 million over a five-year period beginning November 2016. PSNC Energy is continuing to defer pipeline integrity costs, and as of September 30, 2017 costs of $21.6 million have been deferred pending future approval of rate recovery. SCE&G amortizes $1.9 million of such costs annually.

Environmental remediation costs ~~represent costs~~are associated with the assessment and clean-up of sites currently or formerly owned by ~~SCE&G or PSNC Energy, and~~DESC. Such remediation costs are expected to be recovered over periods of up to ~~approximately 17~~16 years.

See also Note 11.

Deferred storm damage costs represent ~~costs incurred in excess of amounts previously collected through SCE&G’s SCPSC-approved~~ storm ~~damage reserve, and~~restoration costs for which ~~SCE&G~~DESC expects to receive future recovery through customer rates.

Deferred transmission operating costs ~~related to uncertain tax position primarily represent the estimated amounts of domestic production activities deductions foregone as a result~~includes deferred depreciation and property taxes associated with certain transmission assets for which DESC expects recovery from customers through future rates. See also Note 11.

Costs of the ~~deduction~~reacquisition of ~~certain research~~debt are deferred and ~~experimentation expenditures for income tax purposes, net of related tax credits,~~amortized as ~~well as accrued~~ interest expense ~~and other costs arising from this uncertain tax position. SCE&G's current customer rates reflect~~over the ~~availability of domestic production activities deductions. These net deferred costs are expected to be recovered through utility rates following ultimate resolution~~would-be remaining life of the ~~claims. See also condensed consolidated Note 5.~~

reacquired debt. The reacquired debt costs had a weighted-average life of approximately 26 years as of September 30, 2019.

Various other regulatory assets are expected to be recovered through rates over varying periods through 2047.

Monetization of guaranty settlement represents proceeds ~~received under or arising from~~related to the monetization of the Toshiba ~~Settlement,~~Settlement. In accordance with the SCANA Merger Approval Order, this balance, net of amounts that may be required to satisfy certain ~~expenses. SCE&G expects~~liens, will be refunded to electric customers over a 20-year period ending in 2039. See also Note 11.

Income taxes recoverable/refundable through future rates includes (i) excess deferred income taxes arising from the ~~SCPSC~~remeasurement of deferred income taxes in connection with the enactment of the 2017 Tax Reform Act (certain of which are protected under normalization rules and will be amortized over the remaining lives of related property, and certain of which will be amortized to ~~approve the use of these net proceeds for~~ the benefit of customers over prescribed periods 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 ~~a future filing.~~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 85 years). See ~~additional discussion at condensed consolidated~~also Note 9.

Reserve for refunds to electric utility customers reflects amounts previously collected from retail electric customers of DESC for the NND Project to be credited to customers over an estimated 11-year period in connection with the SCANA Merger Approval Order. See also Note 11.

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. REVENUE RECOGNITION

DESC has disaggregated operating revenues by customer class as follows:

	Three Months Ended				Three Months Ended				Nine Months Ended				Nine Months Ended
	September 30, 2019				September 30, 2018				September 30, 2019				September 30, 2018
(millions)	Electric		Gas		Electric		Gas		Electric		Gas		Electric		Gas
Customer class:
Residential	$	354	$	24	$	310	$	25	$	364	$	133	$	805	$	145
Commercial		229		19		231		19		296		80		571		80
Industrial		101		18		95		19		119		63		286		64
Other		37		6		31		6		82		13		99		13
Revenues from contracts with customers		721		67		667		69		861		289		1,761		302
Other revenues		7		—		3		—		8		—		9		1
Total Operating Revenues	$	728	$	67	$	670	$	69	$	869	$	289	$	1,770	$	303

~~Table~~

Contract liabilities represent the obligation to transfer goods or services to a customer for which consideration has already been received from the customer. DESC had contract liability balances of ~~Contents~~

3.~~COMMON~~$5 million and $4 million at September 30, 2019 and December 31, 2018, respectively. During the nine months ended September 30, 2019, DESC recognized revenue of $3 million from the beginning contract liability balances as DESC fulfilled its obligations to provide service to its customers. Contract liabilities are recorded in customer deposits and customer prepayments in the Consolidated Balance Sheets.

4. EQUITY

~~SCANA had 200 million~~

For all periods presented, DESC's authorized shares of common stock, ~~authorized as of September 30, 2017 and December 31, 2016.~~

~~Authorized shares of SCE&G common stock~~no par value, were 50 million, as of ~~September 30, 2017~~which 40.3 million were issued and ~~December 31, 2016. Authorized~~outstanding, and DESC's authorized shares of ~~SCE&G~~ preferred stock, no par value, were 20 million, of which 1,000 shares ~~no par value,~~ were issued and ~~outstanding as of September 30, 2017 and December 31, 2016.~~outstanding. All ~~issued and~~ outstanding shares of ~~SCE&G's~~ common and preferred stock are held by SCANA.

In February 2019, DESC received an equity contribution of $675 million from its parent that was funded by Dominion Energy. DESC used these funds to redeem long-term debt. See Note 5.

In June 2019, DESC received an equity contribution of $100 million from its parent that was funded by Dominion Energy. DESC used these funds to repay intercompany credit agreement borrowings from Dominion Energy.

In September 2019, DESC received an equity contribution of $50 million from its parent that was funded by Dominion Energy. DESC used these funds to redeem long-term debt. See Note 5.

DESC’s bond indenture under which it issues first mortgage bonds contains provisions that could limit the payment of cash dividends on its common stock. DESC's bond indenture permits the payment of dividends on DESC's common stock only either (1) out of its Surplus (as defined in the bond indenture) 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 both September 30, 2019 and December 31, 2018, retained earnings of $115 million were restricted by this requirement as to payment of cash dividends on DESC’s common stock. In addition, pursuant to the SCANA Merger Approval Order, the amount of any DESC dividends paid must be reasonable and consistent with the long-term payout ratio of the electric utility industry and gas distribution industry.

5. LONG-TERM AND SHORT-TERM DEBT AND LIQUIDITY

Long-term Debt

In ~~June 2017, PSNC~~February 2019, DESC launched tender offers for certain of its first mortgage bonds pursuant to which it purchased first mortgage bonds having an aggregate purchase price equal to $1.2 billion. DESC incurred a loss on reacquired debt of $187 million in connection with these tender offers, which is recorded in regulatory assets on the Consolidated Balance Sheets.

In August 2019, DESC launched a tender offer for certain of its first mortgage bonds pursuant to which it purchased first mortgage bonds having an outstanding principal balance equal to $552 million. DESC incurred a net loss on reacquired debt of $83 million in connection with this tender offer, which is recorded in regulatory assets on the Consolidated Balance Sheets.

Long-term Debt - Affiliate

In May 2019, GENCO issued a $230 million 3.05% promissory note due to Dominion Energy ~~issued $150 million of 4.18% senior notes due June 30, 2047.~~that matures in May 2024. The issuance by GENCO was approved by the South Carolina Commission. Proceeds from ~~this sale~~the issuance were used to redeem GENCO’s 5.49%

senior secured notes due in 2024 at the remaining principal outstanding of $33 million plus accrued interest, repay money pool borrowings and to return $20 million of contributed equity capital to SCANA.

Liquidity

In March 2019, DESC became a co-borrower under Dominion Energy's $6 billion joint revolving credit facility. DESC's short-term ~~debt,~~financing is supported through its access to ~~finance~~this joint revolving credit facility, which can be used for working capital, ~~expenditures,~~as support for the combined commercial paper programs of DESC, Dominion Energy and certain other of its subsidiaries (co-borrowers), and for other general corporate purposes.

DESC's share of commercial paper and letters of credit outstanding under its joint credit facility with Dominion Energy, were as follows:

(millions)

Facility Limit

Outstanding

Commercial Paper

Outstanding

Letters of Credit

At September 30, 2019

1,000

—

~~On November 1, 2016, Consolidated SCE&G paid~~

A maximum of $1.0 billion of the facility is available to DESC, less any amounts outstanding to co-borrowers. A sub-limit for DESC is set within the facility limit but can be changed at ~~maturity $100 million related to a nuclear fuel financing which had an imputed interest rate~~the option of ~~0.78%.~~

~~In June 2016, SCE&G issued $425 million~~the co-borrowers multiple times per year. At September 30, 2019, the sub-limit for DESC was $500 million. If DESC has liquidity needs in excess of ~~4.1% first mortgage bonds due June 15, 2046. In addition,~~its sub-limit, the sub-limit may be changed or such needs may be satisfied through short-term borrowings from DESC's parent or from Dominion Energy. This credit facility matures in June 2016 SCE&G issued $75 million of 4.5% first mortgage bonds due June 1, 2064, which constituted a reopening of $300 million of 4.5% first mortgage bonds issued in May 2014. Proceeds from these sales wereMarch 2023 and can be used to ~~repay short-term debt primarily incurred~~support bank borrowings and the issuance of commercial paper, as well as to support up to $1.0 billion (or the sub-limit, whichever is less) of letters of credit.

Also in March 2019, DESC canceled its previous committed long-term facility which was a ~~result~~revolving line of ~~SCE&G’s construction program, to finance capital expenditures, and for general corporate purposes.~~

~~In June 2016, PSNC Energy issued $100 million~~credit under a credit agreement with a syndicate of ~~4.13% senior notes due June 22, 2046. Proceeds from this sale were used to repay short-term debt, to finance capital expenditures, and for general corporate purposes.~~

~~Substantially all electric utility plant is pledged as collateral in connection with long-term debt.~~

~~Liquidity~~

~~Credit agreements are~~banks. This previous credit agreement was used for general corporate purposes, including liquidity support for ~~each company's~~DESC's commercial paper program and working capital needs, and was set to expire in December 2020.

(millions)

Facility Limit⁽¹⁾

Outstanding

Commercial Paper

Outstanding

Letters of Credit

At December 31, 2018

1,200

—

(1)	Included $500 million related to Fuel Company. In February 2019, Fuel Company's commercial paper program and its credit facility were terminated.

The weighted-average interest rate of the ~~case~~outstanding commercial paper supported by this credit facility was 3.82% at December 31, 2018.

In April 2019, DESC renewed its FERC authority to issue short-term indebtedness (pursuant to Section 204 of ~~Fuel Company, to finance or refinance~~ the purchase of nuclear fuel, certain fossil fuels, and emission and other environmental allowances. Committed long-term facilities are revolving lines of credit under credit agreements with a syndicate of banks. Committed LOC, outstanding LOC advances,Federal Power Act). DESC may issue unsecured promissory notes, commercial paper and ~~LOC-supported letter~~direct loans in amounts not to exceed $2.2 billion outstanding with maturity dates of ~~credit obligations were~~one year or less. In addition, in April 2019, GENCO renewed its FERC authority to issue short-term indebtedness not to exceed $200 million outstanding with maturity dates of one year or less. The authorities described herein will expire in April 2020, which reflects a one-year authorization period rather than the two-year period DESC and GENCO had requested. In granting the authorization for a shorter period, FERC cited certain regulatory and legislative proceedings at the state level, as ~~follows:~~

September 30, 2017 (Millions of dollars) Total SCANA Consolidated SCE&G PSNC Energy
Lines of credit: +

Five-year, expiring December 2020 $ 1,300.0
$ 400.0
$ 700.0
$ 200.0
Fuel Company five-year, expiring December 2020 500.0
—
500.0
—
Three-year, expiring December 2018 200.0
—
200.0
—
Total committed long-term 2,000.0
400.0
1,400.0
200.0
Outstanding commercial paper (270 or fewer days) 1,022.1
33.0
944.8
44.3
Weighted average interest rate 1.78 % 1.49 % 1.49 %
Letters of credit supported by LOC 3.3
3.0
0.3
—
Available $ 974.6
$ 364.0
$ 454.9
$ 155.7

December 31, 2016 (Millions of dollars) Total SCANA Consolidated SCE&G PSNC Energy
Lines of credit:
Five-year, expiring December 2020 $ 1,300.0
$ 400.0
$ 700.0
$ 200.0
Fuel Company five-year, expiring December 2020 500.0
—
500.0
—
Three-year, expiring December 2018 200.0
—
200.0
—
Total committed long-term 2,000.0
400.0
1,400.0
200.0
Outstanding commercial paper (270 or fewer days) 940.5
64.4
804.3
71.8
Weighted average interest rate 1.43 % 1.04 % 1.07 %
Letters of credit supported by LOC 3.3
3.0
0.3
—
Available $ 1,056.2
$ 332.6
$ 595.4
$ 128.2

~~Portions of the proceeds received under or~~well as certain legal proceedings, arising from the ~~monetization~~NND Project that could affect DESC's and GENCO's circumstances. Were adverse developments to occur with respect to these uncertainties, the ability of ~~the Toshiba Settlement in late September and early October 2017 have been utilized~~DESC or GENCO to ~~repay maturing commercial paper balances, which~~secure renewal of this short-term borrowings had been incurred for the construction of the New Units prior to the decision to stop their construction (see condensed consolidated Note 9). Should the SCPSC or a court direct that these proceeds 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 or draw on its credit facilities to fund such requirement. 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 condensed consolidated Note 2) wouldborrowing authority may be adversely impacted. 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. Borrowing costs for long-term debt issuances could also be impacted.

~~Each of the Company and Consolidated SCE&G~~

DESC is obligated with respect to an aggregate of ~~$67.8~~$68 million of industrial revenue bonds which are secured by letters of credit issued by TD Bank N.A. These letters of credit expire, subject to renewal, in the fourth quarter of 2019.

DESC received FERC approval to enter into an inter-company credit agreement in April 2019 with Dominion Energy under which DESC may have short-term borrowings outstanding up to $900 million. At September 30, 2019, DESC had borrowings outstanding under this credit agreement totaling $501 million, which are recorded in affiliated and related party payables in DESC’s Consolidated ~~SCE&G participates~~Balance Sheets. For both the three and nine months ended September 30, 2019, DESC recorded interest charges of $1 million.

DESC participated in a utility money pool with SCANA and another regulated subsidiary of ~~SCANA.~~SCANA through April 2019. Fuel Company and GENCO remain in the utility money pool. Money pool borrowings and investments bear interest at short-term market rates. ~~Consolidated SCE&G’s~~For the three and nine months ended September 30, 2019, DESC recorded interest income from money pool transactions of $1 million and $7 million, respectively, and for the same periods DESC recorded interest expense from money pool transactions ~~were not significant~~of $1 million and $7 million, respectively. For the three and nine months ended September 30, 2018, DESC recorded interest income from money pool transactions of $1 million and $2 million, respectively, and for ~~any period presented. Consolidated SCE&G~~the same periods DESC recorded interest expense from money pool transactions of $1 million and $2 million, respectively. DESC had outstanding money pool borrowings due to an affiliate of ~~$31~~$222 million and investments due from an affiliate of $17 million at September 30, ~~2017, and $29 million at~~2019. At December 31, ~~2016.~~2018, DESC had outstanding money pool borrowings due to an affiliate of $282 million and investments due from an affiliate of $353 million. On its ~~condensed consolidated balance sheet,~~ Consolidated ~~SCE&G~~Balance Sheets, DESC includes ~~such amounts~~money pool borrowings within ~~Affiliated payables.~~


5.	~~INCOME TAXES~~

~~The Company files consolidated~~affiliated and related party payables and money pool investments within affiliated and related party receivables.

6. INCOME TAXES

DESC’s effective tax rate for the nine months ended September 30, 2019 is 5.7% compared to 21.1% for the nine months ended September 30, 2018. Variances in the effective tax rate are primarily driven by charges resulting from the SCANA Combination. In connection with the SCANA Merger Approval Order, Dominion Energy committed to forgo, or limit, the recovery of certain income tax-related regulatory assets associated with the NND Project. DESC's effective tax rate reflects income tax expense of $198 million in satisfaction of this commitment.

In the first quarter, DESC’s unrecognized tax benefits increased by $51 million and income tax expense increased by $40 million related to a state income tax position taken in prior years. In the second quarter, DESC’s unrecognized tax benefits increased by $24 million and income tax expense increased by $23 million primarily related to a federal income tax ~~returns which include Consolidated SCE&G,~~position taken in prior years. In the third quarter, DESC’s unrecognized tax benefits decreased by $5 million and ~~the Company and its subsidiaries file various applicable state and local~~ income tax ~~returns.~~

~~The IRS has completed examinations~~expense decreased by $4 million associated with refinements of the Company’s federal returns through 2004, and the Company’s federal returns through 2007 are closed for additional assessment. The IRS is currently examining SCANA's open federal returns through 2015 asestimates on a ~~result of claims discussed below. With few exceptions, the Company, including Consolidated SCE&G, is no longer subject to~~ state ~~and local~~ income tax ~~examinations by tax authorities for years before 2010.~~

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 claimsposition taken 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 New Units, in its 2015 and 2016 income tax returns. 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.

~~Table of Contents~~

The IRS examined the claims in the amended returns, and as the examination progressed without resolution, the Company and Consolidated SCE&G evaluated and recorded adjustments to unrecognized tax benefits; however, none of these changes materially affected the Company's and Consolidated SCE&G's effective tax rate. In October 2016, the examination of the amended tax returns progressed to the IRS Office of Appeals.prior years. In addition, ~~the IRS has begun an examination~~DESC accrued interest and penalties of ~~SCANA's 2013 through 2015 income tax returns.~~

~~These income tax deductions~~$12 million ($9 million after-tax) and credits are 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 are required to be recorded as$7 million ($7 million after-tax), respectively, on unrecognized tax benefits in the ~~financial statements.~~ current quarter.

As of September 30, ~~2017, the Company and Consolidated SCE&G~~2019, there have recorded an unrecognized tax benefit of $457 million ($402 million net of the impact of state deductions on federal returns and net of receivables related to the uncertain tax positions). If recognized, $17 million of the tax benefit would affect the Company’s and Consolidated SCE&G's effective tax rates (see discussion below regarding deferral of benefits related to 2015 forward). These unrecognized tax benefits are not expected to increase significantly within the next 12 months, although other uncertain tax positions may be identified or taken, particularly with respect to the abandonment of the construction of the New Units during 2017. It is reasonably possible that these known unrecognized tax benefits may decrease by $457 million within the next 12 months. Nobeen no other material changes in ~~the status of the Company’s or Consolidated SCE&G's~~DESC’s unrecognized tax ~~positions have occurred through September 30, 2017.~~

In connection with the research and experimentation deduction and credit claims reflected on the 2015 and 2016 income tax returns and similar claims made in determining 2017’s taxable income, and under the terms of an order of the SCPSC, the Company and Consolidated SCE&G have recorded regulatory assets for estimated foregone domestic production activities deductions, offset by estimated tax credits, and expect that such (net) deferred costs, along with any interest (see below) and other related deferred costs, will be recoverable through customer rates in future years (see condensed consolidatedbenefits. See Note ~~2). SCE&G's current customer rates reflect the availability of domestic production activities deductions.~~

~~Also under the terms of an order of the SCPSC, estimated interest expense accrued with respect~~6 to the Consolidated Financial Statements in DESC's Annual Report on Form 10-K for the year ended December 31, 2018 for a discussion of these unrecognized tax benefits ~~related~~and potential changes due to the ~~research~~SCANA Combination.

DESC has significant federal and ~~experimentation deductions~~state net operating loss carryforward-related deferred tax assets where the utilization of these tax benefits may be limited in future periods due to the SCANA Combination. For the period ended September 30, 2019, DESC has concluded a valuation allowance is not required on these deferred tax assets. If DESC concludes a valuation allowance is required in future periods, the impact could be material.

The 2017 Tax Reform Act limits the deductibility of interest expense to 30% of adjusted taxable income for certain businesses, with any disallowed interest carried forward indefinitely. Subject to additional guidance in yet to be finalized regulations, DESC expects its interest expense to be deductible in 2019.

7. DERIVATIVE FINANCIAL INSTRUMENTS

DESC’s accounting policies, objectives, and strategies for using derivative instruments are discussed in Note 7 in the ~~2015~~Consolidated Financial Statements in DESC’s Annual Report on Form 10-K for the year ended December 31, 2018. Derivative assets and 2016 income tax returns has been deferred as a regulatory asset and is expected to be recoverable through customer rates in future years. See also condensed consolidated Note 2. Otherwise, the Company and Consolidated SCE&G recognize interest accrued related to unrecognized tax benefits within interest expense or interest income and recognize tax penalties within other expenses. Amounts recorded for such interest income, interest expense or tax penalties have not been material for any period presented.

Effective January 1, 2017, the State of North Carolina reduced its corporate income tax rate from 4% to 3%. During the second quarter of 2017, the State of North Carolina passed legislation that will lower the state corporate income tax rate from 3% to 2.5% effective January 1, 2019. In connection with these changes in tax rates, related state deferred taxes were remeasured, with the change in their balances being credited to a regulatory liability. These changes in income tax rates did not andliabilities are ~~not expected to have a material impact~~presented gross on the ~~Company’s financial position, results of operations or cash flows.~~


6.	~~DERIVATIVE FINANCIAL INSTRUMENTS~~

~~Derivative instruments are recognized either as assets or liabilities in the statement of financial position~~Consolidated Balance Sheets and are measured at fair value. ~~Changes in the~~See Note 8 for further information about fair value ~~of derivative instruments~~measurements and associated valuation methods for derivatives. Derivative contracts include over-the-counter transactions, which are recognized either in earnings, as a component of other comprehensive income (loss) or, for regulated operations, within regulatory assets or regulatory liabilities, depending upon the intended use of the derivative and the resulting designation.

Policies and procedures, and in some cases risk limits, are established to control the level of market, credit, liquidity and operational and administrative risks. SCANA’s Board of Directors has delegated to a Risk Management Committee the authority to set risk limits, establish policies and procedures for risk management and measurement, and oversee and review the risk management process and infrastructure for SCANA and each of its subsidiaries. The Risk Management Committee, which is comprised of certain officers, including the Risk Management Officer and other senior officers, apprises the Audit Committee of the Board of Directors with regard to the management of risk and brings to their attention significant areas of concern. Written policies define the physical and financial transactionsbilateral contracts that are ~~approved, as well as the authorization requirements and limits for transactions.~~

~~Commodity Derivatives~~

~~The Company uses derivative instruments~~transacted directly with a third party. In general, most over-the-counter transactions are subject to ~~hedge forward purchases and sales of natural gas, which create market risks of different types. Instruments designated as cash flow hedges are used to hedge risks associated with fixed price~~

obligations in a volatile market and risks associated with price differentials at different delivery locations. Instruments designated as fair value hedges are used to mitigate exposure to fluctuating market prices created by fixed prices of stored natural gas. The basic types of financial instruments utilized are exchange-traded instruments, such as NYMEX futures contracts or options, and over-the-counter instruments such as options and swaps, which are typically offered by energy companies and financial institutions. Cash settlements of commodity derivatives are classified as operating activities in the consolidated statements of cash flows.

PSNC Energy hedges natural gas purchasing activities using over-the-counter options and NYMEX futures and options. PSNC Energy’s tariffs include a provision for the recovery of actual gas costs incurred, including any costs of hedging. PSNC Energy records premiums, transaction fees, margin requirements and any realized gains or losses from its hedging program in deferred accounts as a regulatory asset or liability for the under- or over-recovery of gas costs. These derivative financial instruments are not designated as hedges for accounting purposes.

Unrealized gains and losses on qualifying cash flow hedges of nonregulated operations are deferred in AOCI. When the hedged transactions affect earnings, previously recorded gains and losses are reclassified from AOCI to cost of gas. The effects of gains or losses resulting from these hedging activities are either offset by the recording of the related hedged transactions or are included in gas sales pricing decisions made by the business unit.

As an accommodation to certain customers, SCANA Energy, as part of its energy management services, offers fixed price supply contracts which are accounted for as derivatives. These sales contracts are offset by the purchase of supply futures and swaps which are also accounted for as derivatives. Neither the sales contracts nor the related supply futures and swaps are designated as hedges for accounting purposes.

~~Interest Rate Swaps~~

Interest rate swaps may be used to manage interest rate risk and exposure to changes in fair value attributable to changes in interest rates on certain debt issuances. In cases in which swaps designated as cash flow hedges are used to synthetically convert variable rate debt to fixed rate debt, periodic payments to or receipts from swap counterparties related to these derivatives are recorded within interest expense.

Forward starting swap agreements that are designated as cash flow hedges may be used in anticipation of the issuance of debt. Except as described in the following paragraph, the effective portions of changes in fair value and payments made or received upon termination of such agreements for regulated subsidiaries are recorded in regulatory assets or regulatory liabilities. For SCANA and its nonregulated subsidiaries, such amounts are recorded in AOCI. Such amounts are amortized to interest expense over the term of the underlying debt. Ineffective portions of fair value changes are recognized in income.

collateral requirements.

Pursuant to regulatory orders, interest rate derivatives entered into by ~~SCE&G~~DESC after October 2013 ~~are~~have not been designated for accounting purposes as cash flow hedges, and fair value changes and settlement amounts related to them ~~are~~have been recorded as regulatory assets and liabilities. Settlement losses ~~or gains~~ on swaps ~~will be~~generally have been amortized ~~to interest expense~~ over the lives of subsequent debt issuances,

and gains have been amortized to interest expense or ~~may be~~have been applied as otherwise directed by the ~~SCPSC.~~

~~Cash payments made or received upon termination of these financial instruments are classified as investing activities for cash flow statement purposes.~~

~~Quantitative Disclosures Related to Derivatives~~

~~The Company was party to natural gas derivative contracts outstanding~~South Carolina Commission. See Note 15 regarding the settlement gains realized in the ~~following quantities:~~

Commodity and Other Energy Management Contracts (in MMBTU)

Hedge designation Gas Distribution Gas Marketing Total
As of September 30, 2017

Commodity contracts 8,330,000
16,723,000
25,053,000
Energy management contracts (a)
—
46,346,530
46,346,530
Total (a)
8,330,000
63,069,530
71,399,530

As of December 31, 2016

Commodity contracts 4,510,000
11,947,000
16,457,000
Energy management contracts (a)
—
67,447,223
67,447,223
Total (a)
4,510,000
79,394,223
83,904,223

~~(a)~~ ~~Includes~~first quarter of 2018.

The table below presents derivative balances by type of financial instrument, if the gross amounts ~~related to basis swap contracts totaling 4,954,667 MMBTU~~recognized in ~~2017~~the Consolidated Balance Sheets were netted with derivative instruments and ~~730,721 MMBTU in 2016.~~cash collateral received or paid:

	September 30, 2019								December 31, 2018
	Gross Amounts Not Offset in the Consolidated Balance Sheet								Gross Amounts Not Offset in the Consolidated Balance Sheet
(millions)	Gross Liabilities Presented in the Consolidated Balance Sheet		Financial Instruments		Cash Collateral Paid		Net Amounts		Gross Liabilities Presented in the Consolidated Balance Sheet		Financial Instruments		Cash Collateral Paid		Net Amounts
Interest rate contracts:
Over-the-counter	$	23	$	—	$	23	$	—	$	11	$	—	$	11	$	—
Total derivatives	$	23	$	—	$	23	$	—	$	11	$	—	$	11	$	—

~~The aggregate notional amounts of the interest rate swaps were as follows:~~

Interest Rate Swaps
The Company Consolidated SCE&G
Millions of dollars September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016
Designated as hedging instruments $ 111.2
$ 115.6
$ 36.4
$ 36.4
Not designated as hedging instruments 1,285.0
1,285.0
1,285.0
1,285.0

Volumes

The following table ~~shows~~presents the ~~fair value and balance sheet location~~volume of derivative ~~instruments. Although derivatives subject to master netting arrangements~~activity at September 30, 2019. These volumes are ~~netted~~based on open derivative positions and represent the ~~balance sheet,~~combined absolute value of their long and short positions.

		Current				Noncurrent
Interest rate⁽¹⁾		$	—			$	71,400,000

(1)	Maturity is determined based on final settlement period.

Fair Value and Gains and Losses on Derivative Instruments

The following tables present the fair values of derivatives and where they are presented ~~below are shown gross~~in the Consolidated Balance Sheets:

(millions)	Fair Value - Derivatives under Hedge Accounting		Fair Value - Derivatives not under Hedge Accounting		Total Fair Value
At September 30, 2019
Current Liabilities
Interest rate	$	1	$	1	$	2
Total current derivative liabilities⁽¹⁾		1		1		2
Noncurrent Liabilities
Interest rate		13		8		21
Total noncurrent derivative liabilities⁽²⁾		13		8		21
Total derivative liabilities	$	14	$	9	$	23
At December 31, 2018
Current Liabilities
Interest rate	$	1	$	—	$	1
Total current derivative liabilities⁽¹⁾		1		—		1
Noncurrent Liabilities
Interest rate		7		3		10
Total noncurrent derivative liabilities⁽²⁾		7		3		10
Total derivative liabilities	$	8	$	3	$	11

(1)	Current derivative liabilities are presented in other current liabilities in the Consolidated Balance Sheets.

(2)	Noncurrent derivative liabilities are presented in other deferred credits and other liabilities in the Consolidated Balance Sheets.

The following tables present the gains and ~~cash collateral~~losses on derivatives, as well as where the ~~derivatives has not been netted against the fair values shown.~~

associated activity is presented in its Consolidated Balance Sheets and Statements of Comprehensive Income (Loss):

Fair Values of Derivative Instruments
The Company Consolidated SCE&G
Millions of dollars Balance Sheet Location Asset Liability Asset Liability
As of September 30, 2017

Designated as hedging instruments

Interest rate contracts
Derivative financial instruments —
$ 3
—
$ 1
Other deferred credits and other liabilities —
25
—
9
Commodity contracts
Prepayments —
1
—
—
Derivative financial instruments $ 1
1
—
—
Total $ 1
$ 30
—
$ 10

Not designated as hedging instruments

Interest rate contracts
Other deferred debits and other assets $ 56
—
$ 56
—
Derivative financial instruments —
$ 40
—
$ 40
Other deferred credits and other liabilities —
4
—
4
Commodity contracts
Prepayments 1
—
—
—
Energy management contracts
Prepayments 2
1
—
—
Other current assets 2
—
—
—
Other deferred debits and other assets 1
—
—
—
Derivative financial instruments —
2
—
—
Other deferred credits and other liabilities —
1
—
—
Total $ 62
$ 48
$ 56
$ 44

As of December 31, 2016
Designated as hedging instruments
Interest rate contracts
Derivative financial instruments —
$ 4
—
$ 1
Other deferred credits and other liabilities —
24
—
8
Commodity contracts
Prepayments $ 5
—
—
—
Other current assets 1
—
—
—
Total $ 6
$ 28
—
$ 9

Not designated as hedging instruments
Interest rate contracts
Other deferred debits and other assets $ 71
—
$ 71
—
Derivative financial instruments —
$ 27
—
$ 27
Other deferred credits and other liabilities —
3
—
3
Commodity contracts
Other current assets 3
—
—
—
Energy management contracts
Prepayments 6
2
—
—
Other current assets 2
1
—
—
Other deferred debits and other assets 2
—
—
—
Derivative financial instruments —
4
—
—
Other deferred credits and other liabilities —
2
—
—
Total $ 84
$ 39
$ 71
$ 30

~~The effect of derivative instruments on the consolidated statements of income is as follows:~~

Derivatives in Cash Flow Hedging Relationships

(millions)	Gain (loss) Reclassified from Deferred Accounts into Income			Increase (Decrease) in Derivatives Subject to Regulatory Treatment⁽¹⁾
Three Months Ended September 30, 2019
Derivative type and location of gains (losses):
Interest rate⁽²⁾	$	—		$	(1	)
Total	$	—		$	(1	)
Three Months Ended September 30, 2018
Derivative type and location of gains (losses):
Interest rate⁽²⁾	$	—		$	—
Total	$	—		$	—
Nine Months Ended September 30, 2019
Derivative type and location of gains (losses):
Interest rate⁽²⁾	$	—		$	(3	)
Total	$	—		$	(3	)
Nine Months Ended September 30, 2018
Derivative type and location of gains (losses):
Interest rate⁽²⁾	$	(1	)	$	2
Total	$	(1	)	$	2

(1)	Represents net derivative activity deferred into and amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/ liabilities have no associated effect in the Consolidated Statements of Comprehensive Income (Loss).

(2)	Amounts recorded in DESC’s Consolidated Statements of Comprehensive Income (Loss) are classified in interest charges.

Derivatives Not designated as Hedging Instruments

(millions)	Increase (Decrease) in Derivatives Subject to Regulatory Treatment⁽¹⁾						Amount of Gain (Loss) Recognized in Income on Derivatives⁽²⁾
Three Months Ended September 30,	2019			2018		Location	2019			2018
Derivative type and location of gains (losses):
Interest rate contracts:						Interest charges	$	(1	)	$	(1	)
Total interest rate contracts	$	(2	)	$	1		$	(1	)	$	(1	)
Nine Months Ended September 30,
Derivative type and location of gains (losses):
Interest rate contracts:						Interest charges	$	(1	)	$	(2	)
						Other income		—			115
Total interest rate contracts	$	(5	)	$	66		$	(1	)	$	113

(1)	Represents net derivative activity deferred into and amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in the Consolidated Statements of Comprehensive Income (Loss).

The Company and Consolidated SCE&G:
Loss Deferred in Regulatory Accounts Loss Reclassified from Deferred Accounts into Income

Millions of dollars 2017
2016
Location 2017
2016
Three Months Ended September 30,
Interest rate contracts —
$ (1 ) Interest expense —
$ (1 )
Nine Months Ended September 30,
Interest rate contracts $ (1 ) $ (6 ) Interest expense $ (1 ) $ (2 )

The Company:
Gain (Loss) Recognized in OCI, net of tax Gain (Loss) Reclassified from AOCI into Income, net of tax

Millions of dollars 2017
2016
Location 2017
2016
Three Months Ended September 30,
Interest rate contracts —
$ 1
Interest expense $ (2 ) $ (2 )
Commodity contracts —
(2 ) Gas purchased for resale —
—
Total —
$ (1 ) $ (2 ) $ (2 )

Nine Months Ended September 30,
Interest rate contracts $ (1 ) $ (4 ) Interest expense $ (6 ) $ (6 )
Commodity contracts (4 ) —
Gas purchased for resale 2
(6 )
Total $ (5 ) $ (4 ) $ (4 ) $ (12 )

(2)	Includes derivative activity amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in the Consolidated Statements of Comprehensive Income (Loss).

As of September 30, 2017, the Company expects that during the next 12 months reclassifications from AOCI to earnings arising from cash flow hedges will include approximately $0.8 million as an increase to gas cost, assuming natural gas markets remain at their current levels, and approximately $6.6 million as an increase to interest expense. As of September 30, 2017, all of the Company’s commodity cash flow hedges settle by their terms before the end of the fourth quarter of 2019.

As of September 30, 2017, each of the Company and Consolidated SCE&G expects that during the next 12 months reclassifications from regulatory accounts to earnings arising from cash flow hedges designated as hedging instruments will include approximately $1.6 million as an increase to interest expense.

~~Hedge Ineffectiveness~~

~~For the Company and Consolidated SCE&G, ineffectiveness on interest rate hedges designated as cash flow hedges was insignificant during all periods presented.~~

Derivatives Not designated as Hedging Instruments

The Company and Consolidated SCE&G:
Millions of dollars Loss Deferred in Regulatory Accounts Location Loss Reclassified from Deferred Accounts into Income
Three Months Ended September 30, 2017
Interest rate contracts $ (6 ) Interest Expense $ (1 )
Nine Months Ended September 30, 2017
Interest rate contracts $ (30 ) Interest Expense $ (2 )
Three Months Ended September 30, 2016

Interest rate contracts $ (24 ) Other Income $ (1 )
Nine Months Ended September 30, 2016
Interest rate contracts $ (268 ) Other Income $ (1 )

As of September 30, 2017, each of the Company and Consolidated SCE&G expects that during the next 12 months reclassifications from regulatory accounts to earnings arising from derivatives not designated as hedges will include $3.2 million as an increase to interest expense.

Credit Risk Considerations

Certain derivative contracts contain contingent credit ~~contingent~~ features. These features may include (i) material adverse change clauses or payment acceleration clauses that could result in immediate payments or (ii) the ~~requirement for~~ posting of letters of credit or termination of the derivative contract before maturity if specific events occur, such as a credit rating downgrade below investment grade or failure to post collateral. ~~The Company’s~~

Derivative Contracts with Credit Contingent Features

(millions)	September 30, 2019		December 31, 2018
in Net Liability Position
Aggregate fair value of derivatives in net liability position	$	23	$	11
Fair value of collateral already posted		23		11
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered	$	—	$	—

8. FAIR VALUE MEASUREMENTS, INCLUDING DERIVATIVES

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. Fair values are based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and ~~Consolidated SCE&G's~~the risks inherent in valuation techniques and the inputs to valuations. This includes not only the credit ~~ratings have come under pressure during~~standing of counterparties involved and the ~~third quarter~~impact of ~~2017, through~~ credit ~~rating downgrades~~enhancements but also the impact of DESC’s own nonperformance risk on their liabilities. Fair value measurements assume that the transaction occurs in the principal market for the asset or liability (the market with the most volume and ~~continued negative outlooks, following~~activity for the ~~Company’s decision to terminate construction~~asset or liability from the perspective of the ~~New Units and~~reporting entity), or in the ~~credit ratings agencies' assessment~~absence of a ~~deterioration of~~principal market, the ~~regulatory support environment following that decision. The triggering of credit contingent features, through credit downgrades~~most advantageous market for the asset or ~~otherwise, could result~~liability (the market in ~~more stringent collateral requirements.~~

Derivative Contracts with Credit Contingent Features
The Company Consolidated SCE&G
Millions of dollars September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016
in Net Liability Position

Aggregate fair value of derivatives in net liability position $ 67.1
$ 50.3
$ 47.7
$ 30.3
Fair value of collateral already posted 31.0
29.2
10.3
9.2
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered $ 36.1
$ 21.1
$ 37.4
$ 21.1

in Net Asset Position
Aggregate fair value of derivatives in net asset position $ 49.0
$ 62.9
$ 49.0
$ 62.0
Fair value of collateral already posted —
—
—
—
Additional cash collateral or letters of credit in the event credit-risk-related contingent features were triggered $ 49.0
$ 62.9
$ 49.0
$ 62.0

~~In addition, for fixed price supply contracts offered~~which the reporting entity would be able to ~~certain of SCANA Energy's customers, the Company could have called on letters of credit in~~maximize the amount ~~of $1.3 million related to $5.0 million in commodity derivatives that are in a net asset position at September 30, 2017, compared to letters of credit in~~received or minimize the amount ~~of $1.5 million related~~paid). DESC applies fair value measurements to ~~derivatives of $9.0 million at December 31, 2016, if all the contingent features underlying these instruments had been fully triggered.~~

~~Information related to the offsetting of derivative~~interest rate assets and ~~derivative liabilities follows:~~

Derivative Assets The Company Consolidated SCE&G
Millions of dollars Interest Rate Contracts Commodity Contracts Energy Management Contracts Total Interest Rate Contracts
As of September 30, 2017

Gross Amounts of Recognized Assets $ 56
$ 2
$ 5
$ 63
$ 56
Gross Amounts Offset in Statement of Financial Position —
(1 ) (2 ) (3 ) —
Net Amounts Presented in Statement of Financial Position 56
1
3
60
56
Gross Amounts Not Offset - Financial Instruments (7 ) —
—
(7 ) (7 )
Gross Amounts Not Offset - Cash Collateral Received —
—
—
—
—
Net Amount $ 49
$ 1
$ 3
$ 53
$ 49
Balance sheet location
     Prepayments $ 1
—
     Other current assets 2
—
     Other deferred debits and other assets 57
$ 56
Total $ 60
$ 56

As of December 31, 2016
Gross Amounts of Recognized Assets $ 71
$ 9
$ 10
$ 90
$ 71
Gross Amounts Offset in Statement of Financial Position —
—
(4 ) (4 ) —
Net Amounts Presented in Statement of Financial Position 71
9
6
86
71
Gross Amounts Not Offset - Financial Instruments (9 ) —
—
(9 ) (9 )
Gross Amounts Not Offset - Cash Collateral Received —
—
—
—
—
Net Amount $ 62
$ 9
$ 6
$ 77
$ 62
Balance sheet location
     Prepayments $ 9
—
     Other current assets 5
—
     Other deferred debits and other assets 72
$ 71
Total $ 86
$ 71

Derivative Liabilities The Company Consolidated SCE&G
Millions of dollars Interest Rate Contracts Commodity Contracts Energy Management Contracts Total Interest Rate Contracts
As of September 30, 2017

Gross Amounts of Recognized Liabilities $ 72
$ 2
$ 4
$ 78
$ 54
Gross Amounts Offset in Statement of Financial Position —
(1 ) (2 ) (3 ) —
Net Amounts Presented in Statement of Financial Position 72
1
2
75
54
Gross Amounts Not Offset - Financial Instruments (7 ) —
—
(7 ) (7 )
Gross Amounts Not Offset - Cash Collateral Posted (30 ) —
(1 ) (31 ) (10 )
Net Amount $ 35
$ 1
$ 1
$ 37
$ 37
Balance sheet location
     Prepayments $ 1
—
     Derivative financial instruments 45
$ 41
     Other deferred credits and other liabilities 29
13
Total $ 75
$ 54

As of December 31, 2016
Gross Amounts of Recognized Liabilities $ 58
—
$ 9
$ 67
$ 39
Gross Amounts Offset in Statement of Financial Position —
—
(3 ) (3 ) —
Net Amounts Presented in Statement of Financial Position 58
—
6
64
39
Gross Amounts Not Offset - Financial Instruments (9 ) —
—
(9 ) (9 )
Gross Amounts Not Offset - Cash Collateral Posted (29 ) —
—
(29 ) (9 )
Net Amount $ 20
—
$ 6
$ 26
$ 21
Balance sheet location
     Derivative financial instruments $ 35
$ 28
     Other deferred credits and other liabilities 29
11
Total $ 64
$ 39


7.	~~FAIR VALUE MEASUREMENTS, INCLUDING DERIVATIVES~~

The Company values available for sale securities using quoted prices from a national stock exchange, such as the NASDAQ, where the securities are actively traded. For commodity derivative and energy management assets and liabilities, the Company uses unadjusted NYMEX prices to determine fair value, and considers such measures of fair value to be Level 1 for exchange traded instruments and Level 2 for over-the-counter instruments. The Company’s and Consolidated SCE&G'sliabilities. DESC’s interest rate swap agreements are valued using discounted cash flow models with independently sourced data. DESC applies credit adjustments to its derivative fair values in accordance with the requirements described above.

Inputs and Assumptions

Fair value is based on actively-quoted market prices, if available. In the absence of actively-quoted market prices, price information is sought from external sources, including industry publications, and to a lesser extent, broker quotes. When evaluating pricing information, DESC considers the ability to transact at the quoted price. Periodically, inputs to valuation models are reviewed and revised as needed, based on historical information, updated market data, market liquidity and relationships, and changes in third-party sources.

The inputs and assumptions used in measuring fair value for interest rate derivative contracts include the following:

•	Interest rate curves

•	Credit quality of counterparties and DESC

•	Notional value

•	Credit enhancements

•	Time value

Levels

DESC utilizes the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels:

•	Level 1-Quoted prices (unadjusted) in active markets for identical assets and liabilities that they have the ability to access at the measurement date.

•

Level 2-Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived from observable market data by correlation or other means. Instruments categorized in Level 2 include interest rate swaps.

•	Level 3-Unobservable inputs for the asset or liability, including situations where there is little, if any, market activity for the asset or liability.

The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. In these cases, the lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability.

Recurring Fair Value Measurements

Fair value measurements ~~and the~~are separately disclosed by level within the fair value ~~hierarchy~~hierarchy.

All of DESC's interest rate swap agreements were in ~~which the measurements fall, were as follows:~~

As of September 30, 2017 As of December 31, 2016
The Company Consolidated SCE&G The Company Consolidated SCE&G
Millions of dollars Level 1 Level 2 Level 2 Level 1 Level 2 Level 2
Assets:
Available for sale securities $ 19
—
—
$ 14
—
—
Held to maturity securities —
$ 7
—
—
$ 7
—
Interest rate contracts —
56
$ 56
—
71
$ 71
Commodity contracts 1
1
—
8
1
—
Energy management contracts 2
3
—
6
4
—
Liabilities:
Interest rate contracts —
72
54
—
58
39
Commodity contracts 1
1
—
—
—
—
Energy management contracts 1
5
—
2
10
—

~~Table of Contents~~

~~The Company had no Level 3 fair value measurements~~a liability position for ~~either period presented, and there were no transfers of fair value amounts into or out of Levels 1, 2 or 3 during the~~all periods presented. Consolidated SCE&G had no Level 1 or Level 3 fair value measurements for either period presented, and there were no transfers of fair value amounts into or out of Levels 1, 2 or 3 during the periods presented.

~~Financial instruments for which the carrying amount may not equal estimated fair value were as follows:~~

Long-Term Debt September 30, 2017 December 31, 2016
Millions of dollars
Carrying
Amount

Estimated
Fair Value

Carrying
Amount

Estimated
Fair Value
The Company $ 6,632.4
$ 7,462.9
$ 6,489.8
$ 7,183.3
Consolidated SCE&G 5,162.5
5,836.9
5,166.0
5,752.3

~~Fair values of long-term debt instruments~~Such agreements are ~~based on net present value calculations~~valued using discounted cash flow models with independently sourced ~~market~~ data, ~~that incorporate a developed discount rate using similarly rated long-term debt, along with benchmark interest rates. As such, the aggregate fair values presented above~~and are considered to be Level ~~2. Early settlement of long-term debt may not be possible or may not be considered prudent.~~

~~Carrying values of short-term borrowings approximate~~2 fair value measurements. The fair value of these derivatives at September 30, 2019 was $23 million, and at December 31, 2018 was $11 million.

Fair Value of Financial Instruments

Substantially all of DESC’s financial instruments are ~~based on quoted prices from dealers~~recorded at fair value, with the exception of the instruments described below, which are reported at historical cost. Estimated fair values have been determined using available market information and valuation methodologies considered appropriate by management. The carrying amount of financial instruments classified within current assets and current liabilities are representative of fair value because of the short-term nature of these instruments. For financial instruments that are not recorded at fair value, the carrying amounts and estimated fair values are as follows:

September 30, 2019

December 31, 2018

(millions)

Carrying

Amount

Estimated

Fair Value⁽¹⁾

Carrying

Amount

Estimated

Fair Value⁽²⁾

Long-term debt⁽³⁾

3,615

4,601

5,146

5,470

(1)

Fair value is estimated using market prices, where available, and interest rates currently available for issuance of debt with similar terms and remaining maturities. All fair value measurements are classified as Level 2. The carrying amount of debt issuances with short-term maturities and variable rates refinanced at current market rates is a reasonable estimate of their fair value.

(2)

Fair value is estimated based on net present value calculations using independently sourced market data that incorporate a developed discount rate using similarly rated long-term debt, along with benchmark interest rates. All fair value measurements are classified as Level 2. The carrying amount of debt issuances with short-term maturities and variable rates refinanced at current market rates is a reasonable estimate of their fair value.

(3)	Carrying amount includes amounts which represent the unamortized debt issuance costs and discount or premium.

9. UTILITY PLANT AND NONUTILITY PROPERTY

Sale of Warranty Service Contract Assets

In May 2019, DESC entered into an agreement to sell certain warranty service contract assets for total consideration of $7 million. The transaction closed in August 2019, resulting in a $7 million ($5 million after-tax) gain recorded in other income (expense), net in DESC’s Consolidated Statements of Comprehensive Income (Loss). Pursuant to the agreement, upon closing DESC entered into a commission agreement with the buyer under which the buyer will compensate DESC in connection with the right to use DESC’s brand in marketing materials and other services over a ten-year term.

Jointly Owned Utility Plant

DESC jointly owns and is the operator of Summer. Each joint owner provides its own financing and shares the direct expenses and generation output in proportion to its ownership. DESC’s share of the direct expenses in Summer is 66.7%. In May 2019, DESC and Santee Cooper entered into an agreement in which DESC agreed to purchase 11.7% of Santee Cooper’s ownership interest in the ~~commercial paper market. The resulting fair value is considered~~NND Project nuclear fuel, which will be used at Summer, for $8 million to ~~be Level 2.~~


8.	~~EMPLOYEE BENEFIT PLANS~~

true up the ownership percentage from the 55% ownership percentage that was applicable for the NND Project to the 66.7% ownership percentage applicable for Summer.

10. EMPLOYEE BENEFIT PLANS

Components of net periodic benefit cost recorded by ~~the Company and Consolidated SCE&G~~DESC were as follows:

(millions)	Pension Benefits						Other Postretirement Benefits
Three Months Ended September 30,	2019			2018			2019		2018
Service cost	$	4		$	5		$	1	$	1
Interest cost		6			7			2		2
Expected return on assets		(11	)		(12	)		—		—
Amortization of actuarial losses (gains)		2			3			—		(1	)
Settlement loss⁽¹⁾		11			—			—		—
Net periodic benefit cost	$	12		$	3		$	3	$	2
Nine Months Ended September 30,
Service cost	$	11		$	13		$	2	$	3
Interest cost		21			22			6		6
Expected return on assets		(31	)		(36	)		—		—
Amortization of actuarial losses		9			8			—		—
Curtailment⁽¹⁾		6			—			3		—
Settlement loss⁽¹⁾		11			—			—		—
Net periodic benefit cost	$	27		$	7		$	11	$	9

The Company Pension Benefits Other Postretirement Benefits
2017 2016 2017 2016
Three months ended September 30,

Service cost $ 5.7
$ 4.4
$ 1.0
$ 0.8
Interest cost 9.2
9.8
2.8
3.0
Expected return on assets (13.4 ) (13.8 ) —
—
Prior service cost amortization 0.4
1.0
—
0.1
Amortization of actuarial losses 4.4
3.7
—
0.2
Net periodic benefit cost $ 6.3
$ 5.1
$ 3.8
$ 4.1

Nine months ended September 30,

Service cost $ 16.3
$ 15.5
$ 3.4
$ 3.3
Interest cost 28.0
29.5
8.6
9.1
Expected return on assets (41.0 ) (41.9 ) —
—
Prior service cost amortization 1.2
3.0
—
0.2
Amortization of actuarial losses 12.2
11.1
0.8
0.4
Net periodic benefit cost $ 16.7
$ 17.2
$ 12.8
$ 13.0

Consolidated SCE&G Pension Benefits Other Postretirement Benefits
2017 2016 2017 2016
Three months ended September 30,
Service cost $ 4.8
$ 3.6
$ 0.8
$ 0.7
Interest cost 7.8
8.3
2.3
2.5
Expected return on assets (11.4 ) (11.7 ) —
—
Prior service cost amortization 0.3
0.8
—
0.1
Amortization of actuarial losses 3.7
3.2
—
0.1
Net periodic benefit cost $ 5.2
$ 4.2
$ 3.1
$ 3.4

~~Table of Contents~~

Nine months ended September 30,
Service cost $ 13.6
$ 12.7
$ 2.8
$ 2.7
Interest cost 24.0
25.0
7.1
7.5
Expected return on assets (35.0 ) (35.5 ) —
—
Prior service cost amortization 1.0
2.5
—
0.2
Amortization of actuarial losses 10.4
9.4
0.6
0.3
Net periodic benefit cost $ 14.0
$ 14.1
$ 10.5
$ 10.7

(1) Related to a voluntary retirement program.

No significant contribution to the pension trust is expected for the ~~foreseeable future~~remainder of 2019 based on current market conditions and assumptions, nor is a limitation on benefit payments expected to apply. ~~SCE&G~~DESC recovers current pension costs through either a rate rider that may be adjusted annually for retail electric operations or through cost of service rates for gas operations. ~~PSNC~~

Voluntary Retirement Program

In March 2019, Dominion Energy ~~recovers pension costs through cost~~announced a voluntary retirement program to employees, including employees of DESC, that meet certain age and service ~~rates.~~


9.	~~COMMITMENTS AND CONTINGENCIES~~

~~Nuclear Insurance~~

~~Under Price-Anderson, SCE&G (for itself~~requirements. The voluntary retirement program will not compromise safety or DESC’s ability to comply with applicable laws and ~~on behalf~~regulations. In the second quarter of ~~Santee Cooper, a one-third owner~~2019, upon the determinations made concerning the number of ~~Unit 1) maintains agreements of indemnity with the NRC~~employees that ~~together with private insurance, cover third-party liability arising from any nuclear incident occurring at SCE&G's nuclear power plant. Price-Anderson provides funds up~~elected to $13.4 billion for public liability claims that could arise from a single nuclear incident. Each nuclear plant is insured against this liability to a maximum of $450 million by ANI with the remaining coverage provided by a mandatory program of deferred premiums that could be assessed, after a nuclear incident, against all owners of commercial nuclear reactors. Each reactor licensee is liable for up to $127.3 million per reactor owned for each nuclear incident occurring at any reactorparticipate in the ~~United States, provided that not more than $18.9~~program, DESC recorded a charge of $62 million ($47 million after-tax), of ~~the liability per reactor would be assessed per year. SCE&G’s maximum assessment, based on its two-thirds ownership of Unit 1, would be $84.8~~which $50 million ~~per incident, but not more than $12.6~~was included within other operations and maintenance expense, $3 million ~~per year. Both the maximum assessment per reactor~~within other taxes and ~~the maximum yearly assessment are adjusted for inflation at least every five years.~~

SCE&G currently maintains insurance policies (for itself and on behalf of Santee Cooper) with NEIL. The policies provide coverage to Unit 1 for property damage and outage costs up to $2.75 billion resulting from an event of nuclear origin and up to $2.33 billion resulting from an event of a non-nuclear origin, and provide coverage up to $500$9 million for accidental property damage occurring at the New Units. The NEIL policies in aggregate, are subject to a maximum loss of $2.75 billion for any single loss occurrence. The NEIL policies permit retrospective assessments under certain conditions to cover insurer’s losses. Based on the current annual premium, SCE&G’s portion of the retrospective premium assessment would not exceed $45.4 million. SCE&G currently maintains an excess property insurance policy (for itself and on behalf of Santee Cooper) with EMANI. The policy provides coverage to Unit 1 for property damage and outage costs up to $415 million resulting from an event of a non-nuclear origin. The EMANI policy permits retrospective assessments under certain conditions to cover insurer's losses. Based on the current annual premium, SCE&G's portion of the retrospective premium assessment would not exceed $1.9 million.

~~To the extent that insurable claims for property damage, decontamination, repair and replacement and~~within other costs and expenses arising from an incident at Unit 1 exceed the policy limits of insurance, or to the extent such insurance becomes unavailable in the future, and to the extent that SCE&G's rates would not recover the cost of any purchased replacement power, SCE&G will retain the risk of lossincome (expense), net. In addition, as a self-insurer. SCE&G has no reason to anticipate a serious nuclear or other incident. However, if such an incident were to occur, it likely would have a material impact on the Company’s and Consolidated SCE&G's results of operations, cash flows and financial position.

~~New Nuclear Project~~

SCE&G, on behalf of itself and as agent for Santee Cooper, entered into the EPC Contract with the Consortium in 2008 for the design and construction of the New Units. SCE&G's ownership share in the New Units is 55%. As discussed below, various difficulties were encountered in connection with the project. The ability of the Consortium to adhere to established budgets and construction schedules was affected by many variables, including unanticipated difficulties encountered in connection with project engineering and the construction of project components, constrained financial resources of the contractors, regulatory, legal, training and construction processes associated with securing approvals, permits and licenses and necessary amendments to them within projected timeframes, the availability of labor and materials at estimated costs, the

efficiency of project labor and weather. There were also contractor and supplier performance issues, difficulties in timely meeting critical regulatory requirements, contract disputes, and changes in key contractors or subcontractors. These matters, and others more fully discussed below, were the subject of a comprehensive analysis performed by the Company and Santee Cooper (see ~~Contractor Bankruptcy Proceedings and Related Uncertainties~~ below). Based on the results of this analysis, and in light of Santee Cooper's decision to suspend construction on the New Units, on July 31, 2017, the Company determined to stop the construction of the New Units and to pursue recovery of costs incurred in connection with such construction under the abandonment provisions of the BLRA or through a general rate case or other regulatory means.

~~EPC Contract and BLRA Matters~~

The construction of the New Units and SCE&G’s related recovery of financing costs through rates has been subject to review and approval by the SCPSC as provided for in the BLRA. Under the BLRA, the SCPSC approved, among other things, a milestone schedule and a capital costs estimates schedule for the New Units. This approval constituted a final and binding determination that the New Units were used and useful for utility purposes, and that the capital costs associated with the New Units were prudent utility costs and expenses and were properly included in rates, so long as the New Units were constructed or were being constructed within the parameters of the approved milestone schedule, including specified contingencies, and the approved capital costs estimates schedule. Subject to the same conditions, the BLRA provides that SCE&G may apply to the SCPSC annually for an order to recover through revised rates SCE&G’s weighted average cost of capital applied to all or part of the outstanding balance of construction work in progress concerning the New Units. As of September 30, 2017, financing costs on $3.8 billion of SCE&G's construction costs for the New Units, including related transmission assets, have been reflected in rates under the BLRA. SCE&G's costs related to the New Units as of September 30, 2017, excluding transmission assets of approximately $300 million which are expected to be placed in service and after recognizing the estimated impairment loss described in ~~Impairment Considerations~~ ~~below, totaled $4.5 billion. As~~ a result of the ~~decision to stop construction~~voluntary retirement program, DESC recorded pension plan settlement losses of ~~the New Units, this amount has been reclassified from construction work in progress into regulatory assets~~$11 million within other income (expense), net in the third quarter of ~~2017. See further discussion below.~~

~~The SCPSC granted initial approval~~2019. DESC expects to recognize additional pension plan settlement losses in the fourth quarter of 2019. While DESC is currently unable to estimate the ~~construction schedule~~amount of such additional settlement losses, they could be material to its results of operations and ~~related forecasted capital costs in 2009. The NRC issued COLs in March 2012.~~ financial condition.

In ~~November 2012, and again in September 2015 and November 2016 (see discussion below),~~ the ~~SCPSC approved SCE&G's requested updates to the milestone schedule, revised contractual substantial completion dates, and increases in capital~~second quarter of 2019, DESC remeasured its pension and other costs. As further discussed below, approval by the SCPSC of cost recovery under the abandonment provisions of the BLRA or through a general rate case or other regulatory means will be required as a consequence of the Company’s determination on July 31, 2017 to cease construction of the New Units.

~~October 2015 Amendment and WEC's Engagement of Fluor~~

On October 27, 2015, SCE&G, Santee Cooper and the Consortium amended the EPC Contract. The amendment became effective in December 2015, at which time Fluor began serving as a subcontracted construction manager for the Consortium. The October 2015 Amendment provided SCE&G and Santee Cooper an option to fix the total amount to be paid to the Consortium for its entire scope of work on the project (excluding a limited amount of work within the time and materials component of the contract price) after June 30, 2015 at $6.082 billion (SCE&G’s 55% portion being approximately $3.345 billion). This total amount to be paid would be reduced by amounts paid since June 30, 2015. SCE&G, on behalf of itself and as agent for Santee Cooper, executed the fixed price option, subject to SCPSC approval, on July 1, 2016.

Among other things, the October 2015 Amendment revised the contractual guaranteed substantial completion dates of Unit 2 and Unit 3 to August 31, 2019 and 2020, respectively, and provided for development of a revised construction milestone payment schedule. In February 2017, WEC notified the Company and Consolidated SCE&G that the contractual guaranteed substantial completion dates of August 2019 and 2020 for Unit 2 and Unit 3, respectively, which were reflected in the October 2015 Amendment, would not be met. Instead, WEC provided further revised estimated substantial completion dates of April 2020 and December 2020.

~~November 2016 SCPSC Order~~

In May 2016, SCE&G petitioned the SCPSC for approval of the updated construction and capital cost schedules for the New Units which had been developed in connection with the October 2015 Amendment. On November 9, 2016, the SCPSC approved a settlement agreement among SCE&G, ORS and certain other parties concerning this petition. The SCPSC also approved SCE&G's election of the fixed price option.

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, and the approved capital cost

schedule included incremental capital costs totaling $831 million. Under such approved capital cost schedule, SCE&G’s total project capital cost would be 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 new nuclear construction from 10.5% to 10.25%, with this revised ROE being applied prospectively for the purpose of calculating revised rates sought by SCE&G under the BLRA on and after January 1, 2017.

~~On February 28, 2017, the SCPSC issued its order denying Petitions for Rehearing which had been filed by certain parties that were not included in the settlement, and that order was not appealed.~~

~~Contractor Bankruptcy Proceedings and Related Uncertainties~~

On March 29, 2017, WEC and WECTEC, the two members of the Consortium, and certain of their affiliates 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 New Units and the Vogtle Units as a material factor that caused them to seek protection under the bankruptcy laws. As part of such filing, WEC and WECTEC publicly announced their inability to complete the New Units under the 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. As part of the Interim Assessment Agreement, and to avoid an immediate rejection of the EPC Contract upon the filing of the bankruptcy case, WEC and WECTEC required SCE&G and Santee Cooper to make estimated weekly payments to WEC, WECTEC, subcontractors and vendors, irrespective of the fixed price provisions of the EPC Contract, to permit the time to conduct analyses. SCE&G and Santee Cooper agreed to pay specified costs incurred by the Consortium, Fluor, other subcontractors and vendors for work performed or services rendered while the Interim Assessment Agreement remained in effect.

During the period of the Interim Assessment Agreement, as amended and extended, SCE&G and Santee Cooper evaluated the various elements of the new nuclear project, including forecasted costs and completion dates, while construction continued and SCE&G and Santee Cooper continued to make payments for such work.

~~As part of its evaluation, SCE&G considered that,~~postretirement benefit plans as a result of the ~~bankruptcy process (including WEC~~voluntary retirement program. The remeasurement resulted in an increase in the pension benefit obligation of $16 million and ~~WECTEC's public announcements that they could not perform under~~an increase in the ~~terms~~accumulated postretirement benefit obligation of $10 million. In addition, the remeasurement resulted in an increase in the fair value of pension plan assets of $27 million. The impact of the ~~EPC Contract), the EPC Contract would likely be rejected and that the~~remeasurement on net periodic benefit ~~of the fixed-price terms provided by the EPC Contract would be lost. As such, any~~ cost overruns that would have been absorbed by the Consortium would become the responsibility of SCE&G and Santee Cooper. Additionally, these cost increases and other costs identified by SCE&G would not be fully recoverablewas recognized prospectively from the ~~Consortium or~~remeasurement date. The remeasurement is expected to increase the net periodic benefit cost for 2019 by approximately $1 million, excluding the impacts of curtailments. The discount rate used for the remeasurement was 4.07% for the pension plan and 4.08% for the other postretirement benefit plan. All other assumptions used for the remeasurement were consistent with the measurement as of December 31, 2018.

In the third quarter of 2019, DESC remeasured a pension plan as a result of a settlement from ~~Toshiba under its payment guaranty or~~ the voluntary retirement program. The settlement and related Toshiba Settlement Agreement, discussed below, and such costs would likely substantially exceed the amount of the Consortium's payment obligations guaranteed by Toshiba. SCE&G also considered that even the newly revised substantial completion dates identified by WEC of April and December 2020 for Unit 2 and Unit 3, respectively, would not be met, which would resultremeasurement resulted in an increase in the ~~nuclear production tax credits discussed below not being earned under current law.~~

~~On September 1, 2017, SCE&G, for itself~~pension benefit obligation of $25 million 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 and WECTEC any and all claims that are based thereon or that may be related thereto. These claims were sold to Citibank on September 27, 2017 as part of the monetization transaction discussed below. 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.

~~Toshiba Settlement and Subsequent Monetization~~

Payment and performance obligations under the EPC Contract are joint and several obligations of WEC and WECTEC, and in connection with the October 2015 Amendment, Toshiba, WEC’s parent company, reaffirmed its guaranty of WEC’s payment obligations.

~~In April of 2017, following WEC’s and WECTEC’s bankruptcy petitions, Toshiba announced that it had recorded~~ an impairment charge of approximately $6.2 billion relating to its nuclear power systems business, leaving it with negative shareholders’ equity. Toshiba also disclosed that, although these conditions and events raised substantial doubt, it believed that

its responses to such conditions, including the sale of a portion of its computer memory business as then anticipated by Toshiba, would enable it to continue to operate as a going concern. However, there could be no assurance that such sales or other actions would be successful.

As discussed above, Toshiba provided a parental guaranty for WEC’s payment obligations under the EPC Contract. In satisfaction of such guaranty obligations, on July 27, 2017, the Toshiba Settlement was executed under which Toshiba was to begin making periodic settlement payments from October 2017 through September 2022increase in the total amount of approximately $2.2 billion ($1.2 billion for SCE&G’s 55% share). The $2.2 billion is subject to offset for payments by WEC that have the effect of satisfying the liens on the project discussed below.

On September 27, 2017, the scheduled payments under the Toshiba Settlement, exclusive of the payment due in October 2017, were purchased by Citibank for a one-time upfront payment of $1.847 billion (approximately $1.016 billion for SCE&G's 55% share), including amounts related to the contractor liens discussed below. The initial payment was then received from Toshiba on October 2, 2017, as scheduled, in the amount of $150 million ($82.5 million for SCE&G's 55% share). The purchase agreement provides that SCE&G and Santee Cooper (each according to its pro rata share) would indemnify Citibank for its losses arising from misrepresentations or covenant defaults under the purchase agreement. SCE&G and Santee Cooper have also assigned their claims under the WEC bankruptcy process to Citibank, and have agreed to use commercially reasonable efforts to cooperate with Citibank and provide reasonable support necessary for its enforcement of those claims. The proceeds received under or arising from the monetization of the Toshiba Settlement are reflected as a regulatory liability on the accompanying condensed consolidated balance sheets, as the netfair value of the ~~proceeds~~pension plan assets of $35 million for DESC. The impact of the remeasurement on net periodic benefit cost (credit) was recognized prospectively from the remeasurement date. The remeasurement is expected to decrease the net periodic benefit cost

for 2019 by $4 million. The discount rate used for the remeasurement was 3.57%. All other assumptions used for the remeasurement were consistent with the measurement as of December 31, 2018.

11. COMMITMENTS AND CONTINGENCIES

As a result of issues generated in the ordinary course of business, DESC is involved in legal proceedings before various courts and is periodically subject to governmental examinations (including by regulatory authorities), inquiries and investigations. Certain legal proceedings and governmental examinations involve demands for unspecified amounts of damages, are in an initial procedural phase, involve uncertainty as to the outcome of pending appeals or motions, or involve significant factual issues that need to be resolved, such that it is not possible for DESC to estimate a range of possible loss. For such matters that DESC cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the litigation or investigative processes such that DESC is able to estimate a range of possible loss. For legal proceedings and governmental examinations that DESC is able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. Any accrued liability is recorded on a gross basis with a receivable also recorded for any probable insurance recoveries. Estimated ranges of loss are inclusive of legal fees and net of any anticipated insurance recoveries. Any estimated range is based on currently available information and involves elements of judgment and significant uncertainties. Any estimated range of possible loss may not represent DESC’s maximum possible loss exposure. The circumstances of such legal proceedings and governmental examinations will ~~be utilized~~change from time to ~~benefit SCE&G's customers~~time and actual results may vary significantly from the current estimate. For current proceedings not specifically reported below, management does not anticipate that the liabilities, if any, arising from such proceedings would have a material effect on DESC’s financial position, liquidity or results of operations.

Environmental

In July 2019, the EPA published the ACE Rule, which repeals and replaces the Clean Power Plan. The ACE Rule became effective in ~~a manner~~September 2019. The final ACE Rule applies to coal-fired steam electric generating units greater than or equal to 25 MW. The rule includes unit-specific performance standards based on the degree of emission reduction levels achievable from unit efficiency improvements to be determined by the ~~SCPSC. See further discussion in condensed consolidated Note 4.~~

~~A number of subcontractors and vendors~~permitting agency. The ACE Rule requires states to ~~the Consortium have alleged non-payment~~develop plans by ~~the Consortium for amounts owed for work performed on the New Units and have filed liens on property in Fairfield County, South Carolina, where the New Units were~~July 2022 to ~~be located. SCE&G is contesting the filed liens. SCE&G estimates that the aggregate amount of claims for~~implement these performance standards, which subcontractor and vendor liens have been filed was, as of September 30, 2017, approximately $302 million (SCE&G’s 55% portion being approximately $166 million). Payments under the Toshiba Settlement described above are subject to reduction if WEC pays creditors holding these liens directly. Under these circumstances, SCE&G and Santee Cooper, each in its pro rata share, wouldplans must be ~~required to make Citibank whole for the reduction. An estimate of amounts that may be necessary to satisfy project liens has been incorporated into the estimate of impairment loss described below.~~

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

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 New Units was prudent. Based on the evaluation previously discussed, and in light of Santee Cooper's decision to suspend construction, on July 31, 2017, the Company determined to stop the construction of the New Units and to pursue recovery of costs incurred in connection with such construction under the abandonment provisions of the BLRA or through a general rate case or other regulatory means. 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 the New Units.

On August 1, 2017, SCE&G senior management provided an allowable ex parte briefing to the SCPSC regarding the project and this decision, and SCE&G also filed the Abandonment Petition with the SCPSC. Through the Abandonment Petition, SCE&G had sought recovery of such costs expended on the construction of the New Units, including certain costs incurred subsequent to SCE&G's last revised rates update, and certain other costs under the abandonment provisions of the BLRA. The Abandonment Petition included SCE&G's 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 proceeds received by SCE&G under or arising from the monetization of the Toshiba Settlement. 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 new 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 the Abandonment Petition from the SCPSC on August 15, 2017.

In August 2017, special committees of the South Carolina General Assembly, both in the House and in the Senate, began conducting public hearings regarding the decision to abandon the new nuclear project. Members of SCE&G's senior management, along with representatives from Santee Cooper, the ORS and other interested parties, testified before these committees. The reviews being conducted by each of these committees are continuing, and neither the Company nor Consolidated SCE&G can predict when their reviews will be complete or what actions, if any, may be proposed or taken, including legislative actions related to the BLRA.

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 new 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 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 new nuclear project by SCANA and SCE&G. In October 2017, the staff of the SEC's Division of Enforcement also issued a subpoena for documents related to an investigation they are conducting related to the new nuclear project. The Company and Consolidated SCE&G intend to fully cooperate with these investigations. Also in connection with the abandonment of the new nuclear project, various state or local governmental authorities may attempt to challenge, reverse or revoke one or more previously-approved tax or economic development incentives, benefits or exemptions and may attempt to apply such action retroactively. No assurance can be given as to the timing or outcome of these matters.

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 were 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 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. SCE&G estimates that revised rates collections currently total approximately $445 million annually, and the amounts accumulated through September 30, 2017 total approximately $1.8 billion.

On September 28, 2017, citing numerous legal deficiencies in the Request, 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. The hearing has been scheduled for December 12, 2017, and the parties who have filed to intervene in the matter or have filed a letter in support of the requestEPA by the ORS 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. SCE&G intends to vigorously contest the request by the ORS, but cannot give any assurance as to the timing or outcome of this matter.

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. It 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. Such a requirement would significantly harm the Company's and Consolidated SCE&G's results of operations, cash flows and financial condition.

~~See also Claims and Litigation for more discussion of legal matters related to the new nuclear project.~~

~~Impairment Considerations~~

Under the current regulatory construct in South Carolina, pursuant to the BLRA or through a general rate case or other regulatory means, the ability of SCE&G to recover costs incurred in connection with the New Units, and a reasonable return on them, will be subject to review and approval by the SCPSC. In light of the contentious nature of ongoing reviews by legislative committees and others, and given the Request being considered by the SCPSC that could result in the suspension of rates being currently 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 the New Units and a return on them from its customers. The Company and Consolidated SCE&G have contested the specific challenges described above and do not currently anticipate that any of the $1.8 billion in revenue previously collected will be subject to refund. The Company and Consolidated SCE&G believe that the issues related to the recovery of the cost of the New Units and related to the rates currently being collected under the BLRA for financing costs should both be resolved in future proceedings before the SCPSC. However, based on the considerations described above, 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. A pre-tax impairment loss of $210 million has been recorded as of September 30, 2017. This estimate represents costs in the amount

of approximately $1.2 billion that have been expended on the project, exclusive of transmission costs, but which have not yet been determined to be prudent by the SCPSC in a revised rates proceeding under the BLRA, offset by the amount of approximately $1.0 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 estimate may be necessary to satisfy certain project liens. A full recovery of and a full return on the remaining balance of unrecovered nuclear project costs of approximately $4.5 billionJanuary 2024. DESC is currently ~~anticipated to be provided; however, it is reasonably possible that a change in this assessment~~evaluating the ACE Rule for potential impact at its coal fired units and ~~the estimated impairment loss could occur in the near term and the change could be material. The impact of any such change cannot be reasonably estimated.~~

~~Nuclear Production Tax Credits~~

In August 2014, the IRS notified SCE&G that, subject to a national megawatt capacity limitation, the electricity to be produced by each of the New Units would qualify for nuclear production tax credits under Section 45J of the IRC to the extent that such New Unit was operational before January 1, 2021 and other eligibility requirements were met. These nuclear production tax credits (related to SCE&G's 55% share of both New Units) could have totaled as much as approximately $1.4 billion. Due to the Company's determination to abandon the construction of the New Units, no such production tax credits will be earned.

~~Claims and Litigation~~

Following the Company’s decision to stop construction of the New Units, numerous lawsuits seeking class action status have been filed on behalf of customers and shareholders 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 and consequential 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 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, including all money SCE&G has received under the Toshiba payment guaranty and related settlement agreement and money to be collected from customers for the new nuclear project.

In addition, lawsuits seeking class action status have been filed on behalf of investors in District Court against SCANA and certain of its executive officers. The plaintiffs allege, among other things, that defendants violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder (i.e., employment of manipulative and deceptive devices), and one suit alleges violations of the Racketeer Influenced and Corrupt Organizations Act. The plaintiffs in each of these suits seek compensatory and consequential damages and such further relief as the court deems proper.

While the Company and Consolidated SCE&G intend to vigorously contest the lawsuits which have been filed against them, they cannot predict the timing or outcome of these matters or others that may arise, and adverse outcomes from some of these matters would not be covered by insurance. The Company and Consolidated SCE&G cannot provide any estimate or range of potential loss for these matters at this time, and therefore, no accrual for these potential losses has been included in the condensed consolidated financial statements. Such outcomes could have a material adverse effect on the Company's and Consolidated SCE&G's results of operations, cash flows and financial condition.

~~Environmental~~

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. The rule includes state-specific goals for reducing national CO₂ emissions by 32% from 2005 levels by 2030, and establishes a phased-in compliance approach beginning in 2022. The rule gives each state from one to three years to issue its SIP, which will ultimately define the specific compliance methodology that will be applied to existing units in that state. On February 9, 2016, the Supreme Court stayed the rule pending disposition of a petition of review of the rule in the Court of Appeals. As a result of an Executive Order on March 28, 2017, the EPA placed the rule under

review and the Court of Appeals agreed to hold the case in abeyance. 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. The Company and Consolidated SCE&G expectexpects any costs incurred to comply with such rule to be recoverable through rates.

While the impacts of this rule could be material to DESC’s results of operations, financial condition and/or cash flows, the existing regulatory framework in South Carolina provides rate recovery mechanisms that could substantially mitigate any such impacts.

In July 2011, the EPA issued the CSAPR to reduce emissions of SO₂and NO_X from power plants in the eastern half of the ~~United States.~~U.S. The CSAPR replaces the ~~CAIR~~Clean Air Interstate Rule and requires a total of 28 states to reduce annual SO₂ emissions and annual ~~and~~ ozone season NO_X emissions to assist in attaining the ozone and fine particle ~~NAAQS.~~National Ambient Air Quality Standards. The rule establishes an emissions cap for SO₂and NO_X and limits the trading for emission allowances by separating affected states into two groups with no trading between the groups. The State of South Carolina has chosen to remain in the CSAPR program, even though recent court rulings exempted the state. This allows the state to remain compliant with regional haze standards. Air quality control installations that ~~SCE&G and GENCO have~~DESC has already completed have positioned them to comply with the existing allowances set by the CSAPR. Any costs incurred to comply with CSAPR are expected to be recoverable through rates.

In ~~April 2012,~~February 2019, the ~~EPA's~~EPA published a proposed rule to reverse its previous finding that it is appropriate and necessary to regulate toxic emissions from power plants. However, the emissions standards and other requirements of the MATS rule ~~containing new standards for mercury~~would remain in place as the EPA is not proposing to remove coal and ~~other specified air pollutants became effective. The~~oil fired power plants from the list of sources that are regulated under MATS. Although litigation of the MATS rule ~~has been~~and the ~~subject~~outcome of ~~ongoing litigation even while it~~the EPA’s rulemaking are still pending, the regulation remains in ~~effect. Rulings on~~effect and DESC is complying with the applicable requirements of the rule and does not expect any adverse impacts to its operations at this ~~litigation are not expected to have an impact on SCE&G or GENCO~~time due to plant retirements, conversions and enhancements. ~~SCE&G and GENCO are in compliance with the MATS rule and expect to remain in compliance.~~

The CWA provides for the imposition of effluent limitations that require treatment for wastewater discharges. Under the CWA, compliance with applicable limitations is achieved under state-issued NPDES permits such that, as a facility’s NPDES permit is renewed, any new effluent limitations would be incorporated. The ELG Rule ~~had become effective on January 4, 2016,~~was final in September 2015, after which state regulators ~~could~~are required to modify facility NPDES permits to match more restrictive standards, which would require facilities to retrofit with new wastewater treatment technologies. Compliance dates varied by type of wastewater, and some were based on a facility's five-year permit cycle and thus could range from 2018 to 2023. However, the ELG Rule is under reconsideration by the EPA and has been stayed administratively. The EPA has decided to conduct a new rulemaking that could result in revisions to certain flue gas desulfurization wastewater and bottom ash transport water requirements in the ELG Rule. Accordingly, in September 2017 the EPA finalized a rule that ~~resets~~postpones compliance dates under the ELG Rule to a range from November 1, 2020 to December ~~31,~~ 2023. The EPA indicates that the new rulemaking process may take up to three years to complete, such that any revisions to the ELG Rule likely would not be final until the summer of 2020. While ~~the Company and Consolidated SCE&G expect~~DESC expects that wastewater treatment technology retrofits will be required at Williams and Wateree ~~Stations,~~generating stations, any costs incurred to comply with the ELG Rule are expected to be recoverable through rates.

The CWA Section 316(b) Existing Facilities Rule became effective in October 2014. This rule establishes national requirements for the location, design, construction and capacity of cooling water intake structures at existing facilities that reflect the best technology available for minimizing the adverse environmental impacts of impingement and entrainment. ~~SCE&G and GENCO are~~DESC is conducting studies and implementing plans as required by the rule to determine appropriate intake structure modifications at certain facilities to ensure compliance with this rule. Any costs incurred to comply with this rule are expected to be recoverable through rates.

The EPA's final rule for CCR became effective in the fourth quarter of 2015. This rule regulates CCR as a non-hazardous waste under Subtitle D of the Resource Conservation and Recovery Act and imposes certain requirements on ash storage ponds and other CCR management facilities at ~~SCE&G's and GENCO's~~certain of DESC's coal-fired generating facilities. ~~SCE&G and GENCO have~~DESC has already closed or ~~have~~has begun the process of closure of all of ~~their~~its ash storage ponds and ~~have~~has previously recognized AROs for such ash storage ponds under existing requirements. ~~The Company and Consolidated SCE&G do~~DESC does not expect the incremental compliance costs associated with this rule to be significant and expect to recover such costs in future rates.

~~SCE&G~~

DESC is responsible for ~~four~~4 decommissioned MGP sites in South Carolina which contain residues of by-product chemicals. These sites are in various stages of investigation, remediation and monitoring under work plans approved by ~~DHEC~~or under review by SCDHEC and the EPA. ~~SCE&G~~DESC anticipates that major remediation activities at all of these sites will continue at least through ~~2018~~2022 and will cost an additional ~~$9.9 million,~~$10 million. In February 2019, SCDHEC directed DESC to pursue a stakeholder-developed modified removal action plan for one site (Congaree River). DESC is developing an engineering design for this plan, which iswould require permits from the U.S. Army Corps of Engineers and others and further approvals before it could be implemented. If DESC receives the necessary permits and approvals for this plan, remediation cost for the Congaree River site would increase by $8 million. DESC cannot predict if or when such permits or approvals will be received. Major remediation activities are accrued in ~~Other~~other within ~~Deferred Credits~~deferred credits and ~~Other Liabilities~~other liabilities on the ~~condensed consolidated balance sheet. SCE&G~~Consolidated Balance Sheets. DESC expects to recover any cost arising from the remediation of MGP sites through rates. At September 30, ~~2017,~~2019, deferred amounts, net of amounts previously recovered through rates and insurance settlements, totaled ~~$24.7~~$23 million and are included in regulatory assets.

Abandoned NND Project

A description of events and circumstances leading up to DESC's abandonment of the NND Project and subsequent regulatory, legislative, legal and investigative proceedings, as well as related impairments of NND Project and other costs are described in Note 11 in DESC's Annual Report on Form 10-K for the year ended December 31, 2018.

SCANA Merger Approval Order

In accordance with the terms of the South Carolina Commission's SCANA Merger Approval Order, DESC adopted the Plan-B Levelized Customer Benefits Plan, effective February 2019, whereby the average bill for a DESC residential electric customer approximates that which resulted from the legislatively-mandated temporary reduction that had been put into effect by the South Carolina Commission in August 2018. DESC also recorded a significant impairment charge in the fourth quarter of 2018, which charge resulted from its conclusion that NND Project capital costs exceeding the amount established in the SCANA Merger Approval Order were probable of loss, regardless of whether the SCANA Combination was completed. In addition, in the first quarter of 2019, DESC recorded the following charges and liabilities which arose from or are related to provisions in the SCANA Merger Approval Order.

•	A charge of $105 million ($79 million after-tax) related to certain assets that had been constructed in connection with the NND Project for which DESC committed to forgo recovery.

•

A regulatory liability for refunds and restitution of amounts previously collected from retail electric customers of $1.0 billion ($756 million after-tax), recorded as a reduction in operating revenue, which will be credited to customers over an estimated 11 years. In addition, a previously existing regulatory liability of $1.0 billion will be credited to customers over 20 years, which reflects amounts to be refunded to customers related to the monetization of guaranty settlement described in Note 2.

•	A regulatory liability for refunds to natural gas customers totaling $2 million ($2 million after-tax).

•	A tax charge of $198 million related to $264 million of regulatory assets for which DESC committed to forgo recovery.

Further, except for rate adjustments for fuel and environmental costs, DSM costs, and other rates routinely adjusted on an annual or biannual basis, DESC will freeze retail electric base rates at current levels until January 1, 2021.

The South Carolina Commission order also approved the removal of DESC's investment in certain transmission assets that have not been abandoned from BLRA capital costs. As of September 30, 2019, such investment in these assets included $345 million within utility plant, net and $32 million within regulatory assets, which amount represents certain deferred operating costs. The South Carolina Commission approved deferral of these operating costs related to the investment until recovery of the transmission capital costs and associated deferred operating costs is addressed in a future rate proceeding. DESC believes these transmission capital and deferred operating costs are probable of recovery; however, if the South Carolina Commission were to disallow recovery of or a reasonable return on all or a portion of them, an impairment charge equal to the disallowed costs may be required.

Various parties filed petitions for rehearing or reconsideration of the SCANA Merger Approval Order. In January 2019, the South Carolina Commission issued an order (1) granting the request of various parties and finding that DESC was imprudent in its actions by not disclosing material information to the South Carolina Office of Regulatory Staff and the South Carolina Commission with regard to costs incurred subsequent to March 2015 and (2) denying the petitions for rehearing or consideration as to other issues raised in the various petitions. The deadline to appeal the SCANA Merger Approval Order and the order on rehearing expired in April 2019, and no party has sought appeal.

Claims and Litigation

The following describes certain legal proceedings involving DESC relating to events occurring before closing of the SCANA Combination. Dominion Energy intends to vigorously contest the lawsuits, claims and assessments which have been filed or initiated against DESC. No reference to, or disclosure of, any proceeding, item or matter described below shall be construed as an admission or indication that such proceeding, item or matter is material. For certain of these matters, and unless otherwise noted therein, DESC is unable to estimate a reasonable range of possible loss and the related financial statement impacts, but for any such matter there could be a material impact to its results of operations, financial condition and/or cash flows. For the matters for which DESC is able to reasonably estimate a probable loss, the Consolidated Balance Sheets include reserves of $181 million included within reserves for litigation and regulatory proceedings and insurance receivables of $18 million included within other receivables at September 30, 2019. During the nine months ended September 30, 2019, the Consolidated Statements of Comprehensive Income (Loss) includes charges of $266 million ($200 million after-tax), included within impairment of assets and other charges.

Ratepayer Class Actions

In May 2018, a consolidated complaint against DESC, SCANA and the State of South Carolina was filed in the State Court of Common Pleas in Hampton County, South Carolina (the DESC Ratepayer Case). In September 2018, the court certified this case as a class action. The plaintiffs allege, among other things, that DESC was negligent and unjustly enriched, breached alleged fiduciary and contractual duties and committed fraud and misrepresentation in failing to properly manage the NND Project, and that DESC committed unfair trade practices and violated state anti-trust laws. The plaintiffs sought a declaratory judgment that DESC may not charge its customers for any past or continuing costs of the NND Project, sought to have SCANA and DESC’s assets frozen and all monies recovered from Toshiba and other sources be placed in a constructive trust for the benefit of ratepayers and sought specific performance of the alleged implied contract to construct the NND Project.

In December 2018, the State Court of Common Pleas in Hampton County entered an order granting preliminary approval of a class action settlement and a stay of pre-trial proceedings in the DESC Ratepayer Case. The settlement agreement, contingent upon the closing of the SCANA Combination, provided that SCANA and DESC would establish an escrow account and proceeds from the escrow account would be distributed to the class members, after payment of certain taxes, attorneys' fees and other expenses and administrative costs. The escrow account would include (1) up to $2.0 billion, net of a credit of up to $2.0 billion in future electric bill relief, which would inure to the benefit of the escrow account in favor of class members over a period of time established by the South Carolina Commission in its order related to matters before the South Carolina Commission related to the NND Project, (2) a cash payment of $115 million and (3) the transfer of certain DESC-owned real estate or sales proceeds from the sale of such properties, which counsel for the DESC Ratepayer Class estimate to have an aggregate value between $60 million and $85 million. At the closing of the SCANA Combination, SCANA and DESC funded the cash payment portion of the escrow account. The court held a fairness hearing on the settlement in May 2019. In June 2019, the court entered an order granting final approval of the settlement, which order became effective July 2019. In July 2019, DESC transferred $117 million representing the cash payment, plus accrued interest, to the plaintiffs. In addition, property with a net recorded value of $42 million is in the process of being transferred to the plaintiffs in coordination with the court-appointed real estate trustee to satisfy the settlement agreement.

In September 2017, a purported class action was filed by Santee Cooper ratepayers against Santee Cooper, DESC, Palmetto Electric Cooperative, Inc. and Central Electric Power Cooperative, Inc. in the State Court of Common Pleas in Hampton County, South Carolina (the Santee Cooper Ratepayer Case). The allegations are substantially similar to those in the DESC Ratepayer Case. The plaintiffs seek a declaratory judgment that the defendants may not charge the purported class for reimbursement for past or future costs of the NND Project. In March 2018, the plaintiffs filed an amended complaint including as additional named defendants certain then current and former directors of Santee Cooper and SCANA. In June 2018, Santee Cooper filed a Notice of Petition for Original Jurisdiction with the Supreme Court of South Carolina which was denied. In December 2018, Santee Cooper filed its answer to the plaintiffs' fourth amended complaint and filed cross claims against DESC. In October 2019, Santee Cooper voluntarily consented to stay its cross claims against DESC pending the outcome of the trial of the underlying case. This case is pending.

In July 2019, a similar purported class action was filed by certain Santee Cooper ratepayers against DESC, SCANA, Dominion Energy and former directors and officers of SCANA in the State Court of Common Pleas in Orangeburg, South Carolina. In August 2019, DESC, SCANA and Dominion Energy were voluntarily dismissed from the case. The claims are similar to the Santee Cooper Ratepayer Case. This case is pending.

RICO Class Action

In January 2018, a purported class action was filed, and subsequently amended, against SCANA, DESC and certain former executive officers in the U.S. District Court for the District of South Carolina. The plaintiff alleges, among other things, that SCANA, DESC and the individual defendants participated in an unlawful racketeering enterprise in violation of RICO and conspired to violate RICO by fraudulently inflating utility bills to generate unlawful proceeds. The DESC Ratepayer Class Action settlement described previously contemplates dismissal of claims by DESC ratepayers in this case against DESC, SCANA and their officers. In August 2019, the individual defendants filed motions to dismiss. This case is pending.

SCANA Shareholder Litigation

In February 2018, a purported class action was filed against Dominion Energy and certain former directors of SCANA and DESC in the State Court of Common Pleas in Richland County, South Carolina (the Metzler Lawsuit). The plaintiff alleges, among other things, that defendants violated their fiduciary duties to shareholders by executing a merger agreement that would unfairly deprive plaintiffs of the true value of their SCANA stock, and that Dominion Energy aided and abetted these actions. Among other remedies, the plaintiff seeks to enjoin and/or rescind the merger. In February 2018, Dominion Energy removed the case to the U.S. District Court for the District of South Carolina and filed a Motion to Dismiss in March 2018. In August 2018, the case was remanded back to the State Court of Common Pleas in Richland County. Dominion Energy appealed the decision to remand to the U.S. Court of Appeals for the Fourth Circuit, where the appeal was consolidated with another lawsuit regarding the SCANA Merger Agreement to which DESC is not a party. In June 2019, the U.S. Court of Appeals for the Fourth Circuit reversed the order remanding the case to state court. The case is pending in the U.S. District Court for the District of South Carolina.

Employment Class Actions and Indemnification

In August 2017, a case was filed in the U.S. District Court for the District of South Carolina on behalf of persons who were formerly employed at the NND Project. In July 2018, the court certified this case as a class action. In February 2019, certain of these plaintiffs filed an additional case, which case has been dismissed and the plaintiffs have joined the case filed in August 2017. The plaintiffs allege, among other things, that SCANA, DESC, Fluor Corporation and Fluor Enterprises, Inc. violated the Worker Adjustment and Retraining Notification Act in connection with the decision to stop construction at the NND Project. The plaintiffs allege that the defendants failed to provide adequate advance written notice of their terminations of employment and are seeking damages, which could be as much as $100 million for 100% of the NND Project.

In September 2018, a case was filed in the State Court of Common Pleas in Fairfield County, South Carolina by Fluor Enterprises, Inc. and Fluor Daniel Maintenance Services, Inc. against DESC and Santee Cooper. The plaintiffs make claims for indemnification, breach of contract and promissory estoppel arising from, among other things, the defendants' alleged failure and refusal to defend and indemnify the Fluor defendants in the aforementioned case. These cases are pending.

FILOT Litigation and Related Matters

In November 2017, Fairfield County filed a complaint and a motion for temporary injunction against DESC in the State Court of Common Pleas in Fairfield County, South Carolina, making allegations of breach of contract, fraud, negligent misrepresentation, breach of fiduciary duty, breach of implied duty of good faith and fair dealing and unfair trade practices related to DESC’s termination of the FILOT agreement between DESC and Fairfield County related to the NND Project. The plaintiff sought a temporary and permanent injunction to prevent DESC from terminating the FILOT agreement. The plaintiff withdrew the motion for temporary injunction in December 2017. This case is pending.

Governmental Proceedings and Investigations

In June 2018, DESC received a notice of proposed assessment of approximately $410 million, excluding interest, from the SCDOR following its audit of DESC’s sales and use tax returns for the periods September 1, 2008 through December 31, 2017. The proposed assessment, which includes 100% of the NND Project, is based on the SCDOR’s position that DESC’s sales and use tax exemption for the NND Project does not apply because the facility will not become operational. DESC has protested the proposed assessment, which remains pending.

In September and October 2017, SCANA was served with subpoenas issued by the U.S. Attorney’s Office for the District of South Carolina and the Staff of the SEC’s Division of Enforcement seeking documents related to the NND Project. In addition, the South Carolina Law Enforcement Division is conducting a criminal investigation into the handling of the NND Project by SCANA and DESC. These matters are pending. SCANA and DESC are cooperating fully with the investigations, including responding to additional subpoenas and document requests.

Other Litigation

In December 2018, arbitration proceedings commenced between DESC and Cameco Corporation related to a supply agreement signed in May 2008. This agreement provides the terms and conditions under which DESC agreed to purchase uranium hexafluoride from Cameco Corporation over a period from 2010 to 2020. Cameco Corporation alleges that DESC violated this agreement by failing to purchase the stated quantities of uranium hexafluoride for the 2017 and 2018 delivery years. DESC denies that it is in breach of the agreement and believes that it has reduced its purchase quantity within the terms of the agreement. This matter is pending.

In September 2019, a South Carolina state court jury awarded a judgment to the estate of Jose Larios in a wrongful death suit filed in June 2017 against DESC, of which DESC was apportioned $19 million. DESC holds general liability insurance coverage which is expected to provide payment for substantially all DESC’s liability in this matter. In October 2019, DESC filed a motion requesting a reduction in the judgment or, in the alternative, a new trial. In November 2019,DESC’s motion for a new trial was granted, setting aside the entire verdict amount. This matter is pending.

Contractor Bankruptcy Proceedings

Westinghouse’s Reorganization Plan became effective August 1, 2018. Initially, Westinghouse had projected that its Reorganization Plan would pay in full or nearly in full its pre-petition trade creditors, including several of the Westinghouse Subcontractors which have alleged non-payment by the Consortium for amounts owed for work performed on the NND Project and have filed liens on related property in Fairfield County, South Carolina. DESC is contesting approximately $285 million of such filed liens. Most of these asserted liens are “pre-petition” claims that relate to work performed by Westinghouse Subcontractors before the Westinghouse bankruptcy, although some of them are “post-petition” claims arising from work performed after the Westinghouse bankruptcy. It is possible that the Reorganization Plan will not provide for payment in full or nearly in full to its pre-petition trade creditors. The shortfall could be significant. In addition, payments under the Toshiba Settlement are subject to reduction if Westinghouse pays Westinghouse Subcontractors holding pre-petition liens directly. Under these circumstances, DESC and Santee Cooper, each in its pro rata share, would be required to make Citibank, N.A., which purchased the scheduled payments under the Toshiba Settlement, whole for reductions related to valid subcontractor and vendor pre-petition liens up to $60 million ($33 million for DESC's 55% share).

DESC and Santee Cooper are responsible for amounts owed to Westinghouse for valid work performed by Westinghouse Subcontractors on the NND Project after the Westinghouse bankruptcy filing (i.e., post-petition) until termination of the IAA (the IAA Period). In the Westinghouse bankruptcy proceeding, deadlines were established for creditors of Westinghouse to assert the amounts owed to such creditors prior to the Westinghouse bankruptcy filing and during the IAA Period. Many of the Westinghouse Subcontractors have filed such claims. DESC does not believe that the claims asserted related to the IAA Period will exceed the amounts previously funded for the currently asserted IAA-related claims, whether relating to claims already paid or those remaining to be paid. DESC intends to oppose any previously unasserted claim that is asserted against it, whether directly or indirectly by a claim through the IAA.

Further, some Westinghouse Subcontractors who have made claims against Westinghouse in the bankruptcy proceeding also filed against DESC and Santee Cooper in South Carolina state court for damages. The Westinghouse Subcontractor claims in South Carolina state court include common law claims for pre-petition work, IAA Period work, and work after the termination of the IAA. Many of these claimants have also asserted construction liens against the NND Project site. While DESC cannot be assured that it will not have any exposure on account of unpaid Westinghouse Subcontractor claims, which claims DESC is presently disputing, DESC believes it is unlikely that it will be required to make payments on account of such claims.

Nuclear Insurance

Under Price-Anderson, DESC (for itself and on behalf of Santee-Cooper) maintains agreements of indemnity with the U.S. Nuclear Regulatory Commission that, together with private insurance, cover third-party liability arising from any nuclear incident occurring at Summer. Price-Anderson provides funds up to $14.0 billion for public liability claims that could arise from a single nuclear incident. Each nuclear plant is insured against this liability to a maximum of $450 million by American Nuclear Insurers with the remaining coverage provided by a mandatory program of deferred premiums that could be assessed, after a nuclear incident, against all owners of commercial nuclear reactors. Each reactor licensee is liable for up to $138 million per reactor owned for each nuclear incident occurring at any reactor in the U.S., provided that not more than $21 million of the liability per reactor would be assessed per year. DESC’s maximum assessment, based on its two-thirds ownership of Summer, would be $92 million per incident, but not more than $14 million per year. Both the maximum assessment per reactor and the maximum yearly assessment are adjusted for inflation at least every five years.

DESC currently maintains insurance policies (for itself and on behalf of Santee Cooper) with NEIL. The policies provide coverage to Summer for property damage and outage costs up to $2.75 billion resulting from an event of nuclear origin and up to $2.33 billion resulting from an event of a non-nuclear origin. The NEIL policies in aggregate, are subject to a maximum loss of $2.75 billion for any single loss occurrence. The NEIL policies permit retrospective assessments under certain conditions to cover insurer’s losses. Based on the current annual premium, DESC’s portion of the retrospective premium assessment would not exceed $24 million. DESC currently maintains an excess property insurance policy (for itself and on behalf of Santee Cooper) with EMANI. The policy provides coverage to Summer for property damage and outage costs up to $415 million resulting from an event of a non-nuclear origin. The EMANI policy permits retrospective assessments under certain conditions to cover insurer's losses. Based on the current annual premium, DESC's portion of the retrospective premium assessment would not exceed $2 million.

To the extent that insurable claims for property damage, decontamination, repair and replacement and other costs and expenses arising from an incident at Summer exceed the policy limits of insurance, or to the extent such insurance becomes unavailable in the future, and to the extent that DESC's rates would not recover the cost of any purchased replacement power, DESC will retain the risk of loss as a self-insurer. DESC has no reason to anticipate a serious nuclear or other incident. However, if such an incident were to occur, it likely would have a material impact on DESC's results of operations, cash flows and financial position.

12. LEASES

At September 30, 2019, DESC had the following lease assets and liabilities recorded in the Consolidated Balance Sheets:

(millions)	September 30, 2019
Lease assets:
Operating lease assets⁽¹⁾	$	24
Finance lease assets⁽²⁾		27
Total lease assets	$	51
Lease liabilities:
Operating lease - current⁽³⁾	$	3
Operating lease - noncurrent⁽⁴⁾		19
Finance lease - current⁽⁵⁾		7
Finance lease - noncurrent⁽⁶⁾		21
Total lease liabilities	$	50

(1)	Included in other deferred debits and other assets in the Consolidated Balance Sheets.

(2)	Included in utility plant, net, in the Consolidated Balance Sheets, net of $22 million of accumulated amortization at September 30, 2019.

~~Table~~

(3)	Included in other current liabilities in the Consolidated Balance Sheets.

(4)	Included in other deferred credits and other liabilities in the Consolidated Balance Sheets.

(5)	Included in current portion of long-term debt in the Consolidated Balance Sheets.

(6)	Included in long-term debt in the Consolidated Balance Sheets.

For the three and nine months ended September 30, 2019, total lease cost consisted of ~~Contents~~the following:

	Three Months Ended		Nine Months Ended
(millions)	September 30, 2019		September 30, 2019
Finance lease cost:
Amortization	$	2	$	6
Interest		—		—
Operating lease cost		1		2
Short-term lease cost		—		1
Variable lease cost		—		—
Total lease cost	$	3	$	9

For the nine months ended September 30, 2019, cash paid for amounts included in the measurement of lease liabilities consisted of the following amounts, included in the Consolidated Statements of Cash Flows:

	Nine Months Ended
(millions)	September 30, 2019
Operating cash flows from finance leases	$	1
Operating cash flows from operating leases		3
Financing cash flows from finance leases		5

At September 30, 2019, the weighted average remaining lease term and weighted average discount rate for finance and operating leases were as follows:

		September 30, 2019
~~10.~~ Weighted average remaining lease term - finance leases	~~SEGMENT OF BUSINESS INFORMATION~~	5 years
Weighted average remaining lease term - operating leases		18 years
Weighted average discount rate - finance leases			2.96	%
Weighted average discount rate - operating leases			3.95	%

Lease liabilities have the following scheduled maturities:

(millions)	Operating			Finance
2019	$	1		$	2
2020		4			8
2021		3			6
2022		2			5
2023		1			3
After 2023		23			6
Total undiscounted lease payments		34			30
Present value adjustment		(12	)		(2	)
Present value of lease liabilities	$	22		$	28

~~Regulated operations measure profitability using operating income; therefore, net income is not allocated to the~~

13. OPERATING SEGMENTS

Operating segments include Electric Operations and Gas Distribution ~~segments.~~and are organized primarily on the basis of products and services sold.

In connection with the SCANA Combination, effective January 2019, reportable segments were changed to include a Corporate and Other segment and to utilize comprehensive income (loss) as the measure of segment profitability. The ~~Gas Marketing~~Corporate and Other segment includes specific items attributable to DESC's operating segments that are not included in profit measures ~~profitability using~~evaluated by executive management in assessing the segments' performance or in allocating resources. Corresponding amounts in prior periods have been recast to conform to the current presentation.

In the nine months ended September 30, 2019, DESC reported after-tax net ~~income.~~expenses of $1.4 billion for specific items in the Corporate and Other segment, with $1.4 billion attributable to its operating segments.

The net expense for specific items attributable to DESC’s operating segments in 2019 primarily related to the impact of the following items:

•	A $1.0 billion ($756 million after-tax) charge for refunds of amounts previously collected from retail electric customers for the NND Project, attributable to Electric Operations;

•	$266 million ($200 million after-tax) of charges associated with litigation, attributable to Electric Operations;

•	A $198 million tax charge for $264 million of income tax-related regulatory assets for which DESC committed to forgo recovery, attributable to Electric Operations;

•	A $114 million ($86 million after-tax) charge for utility plant primarily for which DESC committed to forgo recovery, attributable to Electric Operations;

•	$90 million ($68 million after-tax) of merger and integration-related costs associated with the SCANA Combination, including a $75 million ($56 million after-tax) charge related to a voluntary retirement program, attributable to:

•

Electric Operations ($61 million after-tax); and

•

Gas Distribution ($7 million after-tax); and

•	$59 million tax charges for changes in unrecognized tax benefits, attributable to Electric Operations.

The Company's Gas Distribution segment is comprised of the local distribution operations of SCE&G and PSNC Energy which meet the criteria for aggregation. All Other includes the parent company, a services company and other nonreportable segments that were insignificant for all periods presented.

(millions)	External Revenue			Comprehensive Income (Loss) Available (Attributable) to Common Shareholder
Three Months Ended September 30, 2019
Electric Operations	$	728		$	169
Gas Distribution		67			(1	)
Corporate and Other		—			(25	)
Adjustments/Eliminations		—			—
Consolidated Total	$	795		$	143

Three Months Ended September 30, 2018
Electric Operations	$	670		$	112
Gas Distribution		69			(7	)
Corporate and Other		—			(1	)
Adjustments/Eliminations		—			(6	)
Consolidated Total	$	739		$	98

Nine Months Ended September 30, 2019
Electric Operations	$	1,875		$	321
Gas Distribution		292			13
Corporate and Other		(1,009	)		(1,364	)
Adjustments/Eliminations		—			(14	)
Consolidated Total	$	1,158		$	(1,044	)

Nine Months Ended September 30, 2018
Electric Operations	$	1,770		$	242
Gas Distribution		304			22
Corporate and Other		—			(1	)
Adjustments/Eliminations		—			(15	)
Consolidated Total	$	2,074		$	248

The Company
Millions of dollars
External
Revenue
Intersegment Revenue
Operating
Income

Net
Income
Three Months Ended September 30, 2017
Electric Operations $ 786
$ 1
$ 126
n/a
Gas Distribution 123
—
(7 ) n/a
Gas Marketing 167
35
n/a
$ 1
All Other —
90
—
(7 )
Adjustments/Eliminations —
(126 ) 1
40
Consolidated Total $ 1,076
$ —
$ 120
$ 34

Nine Months Ended September 30, 2017
Electric Operations $ 2,042
$ 4
$ 549
n/a
Gas Distribution 584
1
109
n/a
Gas Marketing 623
93
n/a
$ 17
All Other —
286
—
(14 )
Adjustments/Eliminations —
(384 ) 27
323
Consolidated Total $ 3,249
$ —
$ 685
$ 326

Three Months Ended September 30, 2016
Electric Operations $ 817
$ 1
$ 364
n/a
Gas Distribution 111
—
(14 ) n/a
Gas Marketing 165
35
n/a
$ (1 )
All Other —
100
—
(7 )
Adjustments/Eliminations —
(136 ) (2 ) 197
Consolidated Total $ 1,093
$ —
$ 348
$ 189

Nine Months Ended September 30, 2016
Electric Operations $ 2,035
$ 4
$ 784
n/a
Gas Distribution 538
1
79
n/a
Gas Marketing 598
83
n/a
$ 23
All Other —
302
—
(14 )
Adjustments/Eliminations —
(390 ) 37
462
Consolidated Total $ 3,171
$ —
$ 900
$ 471

Consolidated SCE&G
Millions of dollars External Revenue Operating Income
Earnings Available to
Common Shareholder
Three Months Ended September 30, 2017
Electric Operations $ 787
$ 125
n/a
Gas Distribution 69
(2 ) n/a
Adjustments/Eliminations —
—
$ 39
Consolidated Total $ 856
$ 123
$ 39

Nine Months Ended September 30, 2017
Electric Operations $ 2,046
$ 549
n/a
Gas Distribution 285
42
n/a
Adjustments/Eliminations —
—
$ 270
Consolidated Total $ 2,331
$ 591
$ 270

Three Months Ended September 30, 2016
Electric Operations $ 818
$ 364
n/a
Gas Distribution 64
(5 ) n/a
Adjustments/Eliminations —
—
$ 201
Consolidated Total $ 882
$ 359
$ 201

Nine Months Ended September 30, 2016
Electric Operations $ 2,039
$ 784
n/a
Gas Distribution 253
32
n/a
Adjustments/Eliminations —
—
$ 423
Consolidated Total $ 2,292
$ 816
$ 423

Segment Assets The Company Consolidated SCE&G
September 30, December 31, September 30, December 31,
Millions of dollars 2017 2016 2017 2016
Electric Operations $ 12,294
$ 11,929
$ 12,294
$ 11,929
Gas Distribution 3,080
2,892
856
825
Gas Marketing 187
230
n/a
n/a
All Other 970
1,124
n/a
n/a
Adjustments/Eliminations 3,488
2,532
4,283
3,337
Consolidated Total $ 20,019
$ 18,707
$ 17,433
$ 16,091

~~11.~~

14. AFFILIATED AND RELATED PARTY TRANSACTIONS

~~The Company and Consolidated SCE&G:~~

~~SCE&G~~

DESC owns 40% of Canadys Refined Coal, LLC, which is involved in the manufacturing and sale of refined coal to reduce ~~emissions. SCE&G~~emissions at certain of DESC's generating facilities. DESC accounts for this investment using the equity method. ~~The net~~Purchases and sales of the ~~total purchases and total sales~~related coal are recorded as other income (expense), net in ~~Other expenses on~~ the ~~consolidated statements~~Consolidated Statements of ~~income (for the Company) and of comprehensive income (for Consolidated SCE&G)~~Comprehensive Income (Loss).

Three Months Ended September 30, Nine Months Ended September 30,
Millions of Dollars 2017 2016 2017 2016
Purchases from Canadys Refined Coal, LLC $ 47.5
$ 41.8
$ 144.9
$ 138.6
Sales to Canadys Refined Coal, LLC 47.2
41.6
144.0
137.8

Millions of Dollars September 30, 2017 December 31, 2016
Receivable from Canadys Refined Coal, LLC $ 7.6
$ 16.0
Payable to Canadys Refined Coal, LLC 7.7
16.1

~~Consolidated SCE&G:~~

~~SCE&G~~

DESC purchases natural gas and related pipeline capacity from SCANA Energy Marketing, Inc. to serve its retail gas customers and to satisfy certain electric generation requirements.

These purchases are included within gas purchased for resale or fuel used in electric generation, as applicable in the Consolidated Statements of Comprehensive Income (Loss).

~~SCANA Services,~~

DESS, on behalf of itself and its parent company, provides the following services to ~~Consolidated SCE&G,~~DESC, which are rendered at direct or allocated cost: information systems, telecommunications, customer support, marketing and sales, human resources, corporate compliance, purchasing, financial, risk management, public affairs, legal, investor relations, gas supply and capacity management, strategic planning, general administrative, and retirement benefits. In addition, ~~SCANA Services~~DESS processes and pays invoices for ~~Consolidated SCE&G~~DESC and is reimbursed. Costs for these services include amounts capitalized. Amounts expensed are primarily recorded in ~~Other operation~~other operations and maintenance - ~~nonconsolidated~~affiliated suppliers and other income (expense), net in the Consolidated Statements of Comprehensive Income (Loss).

	Three Months Ended September 30,				Nine Months Ended September 30,
(millions)	2019		2018		2019		2018
Purchases of coal from affiliate	$	38	$	45	$	100	$	123
Sales of coal to affiliate		37		45		99		122
Purchases of fuel used in electric generation from affiliate		—		35		43		95
Direct and allocated costs from services company affiliate⁽¹⁾		67		73		207		208
Operating Revenues - Electric from sales to affiliate		1		1		3		3
Operating Expenses - Other taxes from affiliate		2		2		5		4

(1)	Includes capitalized expenditures of $13 million and $10 million for the three months ended September 30, 2019 and 2018, and $33 million and $29 million for the nine months ended September 30, 2019 and 2018, respectively.

(millions)	September 30, 2019		December 31, 2018
Receivable from Canadys Refined Coal, LLC	$	13	$	7
Payable to Canadys Refined Coal, LLC		13		7
Payable to SCANA Energy Marketing, Inc.		—		14
Payable to DESS		47		38

In connection with the SCANA Combination, purchases from certain entities owned by Dominion Energy became affiliated transactions. During the three and nine months ended September 30, 2019, DESC purchased electricity generated by three such affiliates, totaling $3 million and $7 million, respectively, which is recorded as purchased power in the Consolidated Statements of Comprehensive Income (Loss). At September 30, 2019, DESC had accounts payable balances to these affiliates totaling less than $1 million. In addition, during the three and nine months ended September 30, 2019, DESC incurred demand and transportation charges from Dominion Energy Carolina Gas Transmission, LLC totaling $16 million and $48 million, respectively, of which $6 million and $15 million, respectively, is recorded as fuel used in electric generation and $10 million and $33 million, respectively, is recorded as gas purchased for resale in the Consolidated Statements of Comprehensive Income (Loss). At September 30, 2019, DESC had an accounts payable balance due to this affiliate ~~and Other expenses on the consolidated statements of comprehensive income.~~

Three Months Ended September 30, Nine Months Ended September 30,
Millions of Dollars 2017 2016 2017 2016
Purchases from SCANA Energy $ 35.3
$ 34.8
$ 93.4
$ 83.1
Direct and Allocated Costs from SCANA Services 78.1
80.4
233.6
236.4

Millions of Dollars September 30, 2017 December 31, 2016
Payable to SCANA Energy $ 10.7
$ 8.8
Payable to SCANA Services 45.3
63.5

~~Consolidated SCE&G's money pool borrowings~~totaling $6 million.

Borrowings from an affiliate are described in ~~condensed consolidated~~ Note ~~4. SCE&G's participation~~5.

15. OTHER INCOME (EXPENSE), NET

Components of other income (expense), net are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
(millions)	2019			2018			2019			2018
Revenues from contracts with customers	$	1		$	1		$	4		$	4
Other income		11			5			17			135
Other expense		(23	)		(10	)		(48	)		(22	)
Allowance for equity funds used during construction		(2	)		3			—			7
Other income (expense), net	$	(13	)	$	(1	)	$	(27	)	$	124

Other income in ~~SCANA's noncontributory defined benefit~~2018 includes gains from the settlement of interest rate derivatives of $115 million (see Note 7). Non-service cost components of pension ~~plan~~ and ~~unfunded~~other postretirement ~~health care and life insurance programs is described~~benefits are included in ~~condensed consolidated Note 8.~~

other expense.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS

OF OPERATIONS

Pursuant to General Instruction H of Form 10-Q, SCE&G is permitted to omit certain information related to itself and its consolidated affiliates called for by Item 2 of Part I of Form 10-Q, and instead provide a

MD&A provides management’s narrative analysis of its consolidated results of ~~operation~~operation. MD&A should be read in conjunction with DESC's Consolidated Financial Statements. DESC meets the conditions to file under the reduced disclosure format, and therefore has omitted certain sections of MD&A.

Forward-Looking Statements

This report contains statements concerning DESC’s expectations, plans, objectives, future financial performance and other ~~information described therein. Such information is~~statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In most cases, the reader can identify these forward-looking statements by such words as “anticipate,” “estimate,” “forecast,” “expect,” “believe,” “should,” “could,” “plan,” “may,” “continue,” “target” or other similar words.

DESC makes forward-looking statements with full knowledge that risks and uncertainties exist that may cause actual results to differ materially from predicted results. Factors that may cause actual results to differ are often presented ~~hereunder specifically for Consolidated SCE&G,~~with the forward-looking statements themselves. Additionally, other factors may cause actual results to differ materially from those indicated in any forward-looking statement. These factors include but may be presented alongside information presented for the Company generally. Consolidated SCE&G makes no representation as to information relating solely to SCANA and its subsidiaries (other than Consolidated SCE&G).are not limited to:

•	the ability of DESC to recover through rates certain costs expended on the NND Project, and a reasonable return on those costs, under the SCANA Merger Approval Order and the abandonment provisions of the BLRA or through other means;

•	uncertainties relating to the bankruptcy filing by Westinghouse and WECTEC;

•	further changes in tax laws and realization of tax benefits and credits, and the ability to realize or maintain tax credits and deductions, particularly in light of the abandonment of the NND Project;

•

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, and any actions involving or arising from the abandonment of the NND Project;

•	current and future litigation, including particularly litigation or government investigations or any actions involving or arising from the construction or abandonment of the NND Project, including the possible impacts on liquidity and other financial impacts therefrom;

•	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 cost of and access to capital and sources of liquidity of DESC and Dominion Energy;

•

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;

•	the results of efforts to ensure the physical and cyber security of key assets and processes;

•	changes in the economy, especially in areas served by DESC;

•	the impact of competition from other energy suppliers, including competition from alternate fuels in industrial markets;

•	the impact of conservation and demand side management efforts and/or technological advances on customer usage;

•	the loss of electricity sales to distributed generation, such as solar photovoltaic systems or energy storage systems;

•	growth opportunities;

•	the effects of weather, especially in areas where the generation and transmission facilities of DESC are located and in areas served by DESC;

•	changes in accounting rules and accounting policies;

•	payment and performance by counterparties and customers as contracted and when due;

•	the results of efforts to license, site, construct and finance facilities, and to receive related rate recovery, for generation and transmission;

•	the results of efforts to operate DESC's electric and gas systems and assets in accordance with acceptable performance standards, including the impact of additional distributed generation;

•

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;

•	the availability and retention of skilled, licensed and experienced human resources to properly manage, operate, and grow DESC's businesses, particularly in light of uncertainties with respect to integration within the combined companies of Dominion Energy;

•	labor disputes;

•	performance of DESC’s pension plan assets and the effect(s) of associated discount rates;

•	inflation or deflation;

•	changes in interest rates;

•	compliance with regulations; and

•	natural disasters, man-made mishaps and acts of terrorism that directly affect our operations or the regulations governing them.

Additionally, other risks that could cause actual results to differ from predicted results are set forth in Part II, Item 1A. Risk Factors in this report.

DESC’s forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. DESC cautions the reader not to place undue reliance on its forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. DESC undertakes no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.

RESULTS OF OPERATIONS

FOR THE THREE ~~MONTHS~~ AND NINE MONTHS ENDED SEPTEMBER 30, ~~2017~~

2019

AS COMPARED TO THE CORRESPONDING PERIODS IN ~~2016~~

~~The following discussion should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and~~ 2018

Results of Operations appearing in SCANA’s and SCE&G’s Annual Report on Form 10-K for the year ended December 31, 2016. The results of operations of the Company include those of the parent holding company and each of its subsidiaries, including Consolidated SCE&G. Accordingly, discussions regarding the Company's results of operations necessarily include those of Consolidated SCE&G.

	Third Quarter						Year-To-Date
(millions)	2019		2018		$ Change		2019			2018		$ Change
Net income (loss)	$	142	$	103	$	39	$	(1,031	)	$	262	$	(1,293	)

~~Earnings~~

~~Earnings were as follows:~~

Third Quarter Year to Date
The Company 2017 2016 2017 2016
Earnings per share $ 0.24
$ 1.32
$ 2.28
$ 3.29

Consolidated SCE&G
Net income (millions of dollars) $ 41.8
$ 204.0
$ 279.7
$ 432.9

~~Third Quarter~~

The Company's earnings per share and Consolidated SCE&G's net income reflect lower operating income from Electric Operations, which includes an impairment loss associated with the abandonment of the New Units, partially offset by improved operating income from Gas Distribution. These and other results are discussed below.

~~Year to Date~~

The Company's earnings per share and Consolidated SCE&G's net income reflect lower operating income from Electric Operations, which includes an impairment loss associated with the abandonment of the New Units, partially offset by higher operating income from Gas Distribution. The Company's earnings per share also reflects lower 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 the New Units and to pursue recovery of the cost of the abandoned plants could 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 their tax positions. The Company and Consolidated SCE&G continue to believe the decision to abandon 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 New Units and related to the rates currently being collected under the BLRA for financing costs should both be resolved in future proceedings before the SCPSC. However, based on the events of the third quarter, including the contentious nature of ongoing reviews by legislative committees and others, and given 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 the New Units and a return on them from its customers.

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. A pre-tax impairment loss of approximately $210 million, the estimated amount which might be anticipated to be disallowed from rate recovery, has been recorded as of September 30, 2017. This estimate represents costs in the amount of $1.2 billion that have been expended on the project, exclusive of transmission costs, but which have not yet been determined to be prudent by the SCPSC in a revised rates proceeding under the BLRA, offset by the amount of approximately $1.0 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 estimate may be necessary to satisfy project liens. It is reasonably possible that a change in this estimate will occur in the near term and could be material; however, such a change cannot be reasonably estimated.

These matters impacting future results are further discussed under Impact of Abandonment of New Nuclear Project within LIQUIDITY AND CAPITAL RESOURCES, in Note 2 and Note 9 to the condensed consolidated financial statements, in OTHER MATTERS and in Part II, Item 1A. Risk Factors.

~~Dividends Declared~~

~~SCANA's Board of Directors declared the following dividends on common stock during 2017:~~



~~Declaration Date~~	~~Payment Date~~	~~Record Date~~	~~Dividend Per Share~~
~~February 16, 2017~~	~~April 1, 2017~~	~~March 10, 2017~~	~~$0.6125~~
~~April 27, 2017~~	~~July 1, 2017~~	~~June 12, 2017~~	~~$0.6125~~
~~August 3, 2017~~	~~October 1, 2017~~	~~September 11, 2017~~	~~$0.6125~~
~~October 26, 2017~~	~~January 1, 2018~~	~~December 12, 2017~~	~~$0.6125~~

~~When a dividend payment date falls on a weekend or holiday, the payment is made the following business day.~~

~~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 (including transactions with affiliates) was as follows:

The Company Consolidated SCE&G
Third Quarter Year to Date Third Quarter Year to Date
Millions of dollars 2017 2016 2017 2016 2017 2016 2017 2016
Operating revenues $ 787.3
$ 818.4
$ 2,045.9
$ 2,038.5
$ 787.3
$ 818.4
$ 2,045.9
$ 2,038.5
Fuel used in electric generation 166.5
176.4
464.1
442.9
166.5
176.4
464.1
442.9
Purchased power 22.3
21.0
54.1
49.6
22.3
21.0
54.1
49.6
Other operation and maintenance 133.1
130.0
382.5
389.9
136.6
133.6
393.2
400.1
Impairment loss 210.0
—
210.0
—
210.0
—
210.0
—
Depreciation and amortization 73.8
71.9
219.9
213.4
70.8
68.8
211.0
204.7
Other taxes 56.4
55.4
166.8
159.0
55.9
54.9
165.0
157.5
Operating Income $ 125.2
$ 363.7
$ 548.5
$ 783.7
$ 125.2
$ 363.7
$ 548.5
$ 783.7

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 an estimate of electric revenue and fuel costs attributable to the effects of abnormal weather. Results in both 2017 and 2016 reflect milder than normal weather in the first quarter and warmer than normal weather in the second and third quarters. The summer of 2016 was exceptionally warmer than normal.

~~Third Quarter~~

Operating revenues decreased due to the effects of weather of $49.7 million, lower residential and commercial average use of $6.6 million and lower collections under the rate rider for pension costs of $3.8 million. The lower pension rider collections had no impact on net income as they were fully offset by the recognition, within other operation and maintenance expenses, of lower pension costs. These decreases were partially offset due to base rate increases under the BLRA of $19.0 million, residential and commercial growth of $8.3 million and higher fuel cost recovery of $1.4 million.

Fuel used in electric generation and purchased power expenses decreased due to lower sales volumes associated with the effects of weather of $10.3 million, residential and commercial average use of $1.3 million and industrial usage of $0.7 million. These decreases were partially offset due to higher sales volumes associated with residential and commercial customer growth of $1.6 million, higher fuel handling expenses of $1.2 million and higher fuel prices of $1.4 million.

Other operation and maintenance expenses increased due to higher non-labor electric generation costs of $2.0 million and the recognition of nuclear abandonment-related severance costs of $12.3 million. These increases were partially offset by lower other labor costs of $12.6 million, primarily due to lower incentive compensation costs and lower pension costs associated with the lower pension rider collections.

~~Impairment loss represents the estimate of the probable disallowance of recovery associated with the abandonment of the New Units.~~

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

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

~~Year to Date~~

Operating revenues increased due to base rate increases under the BLRA of $50.1 million, residential and commercial growth of $23.0 million, industrial growth and usage of $3.6 million, revenue recognized under the DER program of $3.4 million and higher fuel cost recovery of $45.7 million. These revenue increases were partially offset by the effects of weather of $102.1 million and lower residential and commercial average use of $16.4 million.

Fuel used in electric generation and purchased power expenses increased due to higher fuel prices of $45.7 million, higher fuel handling expenses of $1.7 million and increased sales volumes associated with residential and commercial customer growth of $4.4 million. These increases were partially offset due to lower sales volumes associated with the effects of weather of $20.9 million, residential and commercial average use of $3.6 million and lower industrial usage of $2.3 million.

Other operation and maintenance expenses decreased due to lower other labor costs of $16.4 million, primarily due to lower incentive compensation costs. These lower other labor costs were partially offset by higher non-labor electric generation costs of $2.0 million and the recognition of nuclear abandonment-related severance costs of $12.3 million.

~~Impairment loss represents the estimate of the probable disallowance of recovery associated with the abandonment of the New Units.~~

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

~~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:~~

Third Quarter Year to Date
Classification 2017 2016 2017 2016
Residential 2,384

2,648
5,936
6,450
Commercial 2,159

2,259
5,663
5,861
Industrial 1,652

1,676
4,676
4,760
Other 163

171
444
462
Total Retail Sales 6,358

6,754
16,719
17,533
Wholesale 257

276
699
725
Total Sales 6,615

7,030
17,418
18,258

Third Quarter ~~and Year to Date~~

~~Retail and wholesale sales volumes decreased primarily due to the effects of weather.~~

~~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~~2019 vs. 2018

Net income ~~(including transactions with affiliates) was as follows:~~

The Company Consolidated SCE&G
Third Quarter Year to Date Third Quarter Year to Date
Millions of dollars 2017 2016 2017 2016 2017 2016 2017 2016
Operating revenues $ 123.4
$ 111.9
$ 585.7
$ 539.3
$ 68.3
$ 64.0
$ 285.1
$ 253.2
Gas purchased for resale 57.8
51.2
254.1
238.2
38.5
36.5
146.5
126.0
Other operation and maintenance 39.8
42.9
126.2
129.7
16.9
18.4
52.9
54.1
Depreciation and amortization 21.4
20.8
63.3
60.9
7.4
6.8
21.6
20.3
Other taxes 10.5
10.4
32.4
31.3
7.2
7.0
21.6
20.3
Operating Income (Loss) $ (6.1 ) $ (13.4 ) $ 109.7
$ 79.2
$ (1.7 ) $ (4.7 ) $ 42.5
$ 32.5

The effect of abnormal weather conditions on gas distribution operating income is mitigated by the WNA at SCE&G and the CUT at PSNC Energy, as further described in Note 1 of the consolidated financial statements in SCANA's and SCE&G's Form 10-K for December 31, 2016. The WNA and the CUT do not affect sales volumes.

~~Third Quarter~~

~~Operating revenues~~ increased ~~at SCE&G~~38%, primarily due to increased ~~base rates~~earnings recognized under the ~~RSA effective November 2016~~SCANA Merger Approval Order issued by the South Carolina Commission in 2019 compared to earnings recognized under South Carolina legislation enacted in the second quarter of $0.6 million, customer growth of $1.8 million and higher average use of $1.2 million. In addition to these factors, operating revenues at the Company increased due to PSNC Energy's gas cost recovery of $3.0 million, a rate increase effective November 2016 of $1.8 million, higher industrial revenue of2018.

Year-To-Date 2019 vs. 2018

Net income decreased $1.3 ~~million and customer growth of $1.0 million.~~

~~Gas purchased for resale at SCE&G increased~~billion, primarily due to ~~firm customer growth~~charges for refunds of ~~$1.2 million~~amounts previously collected from retail electric customers for the NND Project, certain regulatory assets and ~~higher average use of $1.2 million. In addition~~utility plant for which DESC committed to ~~these factors, gas purchased for resale at the Company increased primarily due to PSNC Energy's higher commodity charges of $3.5 million~~forgo recovery, litigation and ~~higher CUT of $1.6 million, partially offset by~~ a ~~refund of deferred income taxes of $0.7 million.~~

Other operation and maintenance expenses decreased primarily due to lower labor costs of $3.8 million at PSNC Energy and $1.7 million at SCE&G, primarily due to lower incentive compensation costs. These increases were partially offset by higher non-labor costs at PSNC Energy.

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

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

~~Year to Date~~

Operating revenues increased at SCE&G primarily due to increased base rates under the RSA effective November 2016 of $3.5 million, customer growth of $8.1 million and higher gas cost recovery of $16.4 million. In addition to these factors, operating revenues at the Company increased due to PSNC Energy's higher gas cost recovery and CUT of $33.4 million, a rate increase effective November 2016 of $14.7 million and customer growth of $6.9 million. These increases were partially offset by milder weather and lower average use of $33.1 million and an excess deferred income tax refund of $4.2 million at PSNC Energy.

Gas purchased for resale at SCE&G increased primarily due to higher gas prices of $21.2 million and increased sales volumes associated with firm customer growth of $4.7 million. These increases were partially offset by lower sales volumes due to weather of $5.1 million. This overall increase was partially offset at the Company by PSNC Energy's lower fixed gas costs of $6.3 million, milder weather of $16.6 million and an excess deferred income tax refund of $4.2 million partially offset by higher commodity charges of $23.7 million.

~~Other operation and maintenance expenses decreased primarily due to lower labor costs of $7.5 million at PSNC Energy and $3.1 million at SCE&G, primarily due to lower incentive compensation costs.~~voluntary retirement program. These decreases were partially offset by ~~higher non-labor costs~~increased earnings recognized under the SCANA Merger Approval Order issued by the South Carolina Commission in 2019 compared to earnings recognized under South Carolina legislation enacted in the second quarter of ~~$1.9 million at SCE&G and $4.8 million at PSNC Energy.~~2018.

Analysis of Consolidated Operations

	Third Quarter									Year-To-Date
(millions)	2019			2018			$ Change			2019			2018		$ Change
Operating revenues	$	795		$	739		$	56		$	1,158		$	2,074	$	(916	)
Fuel used in electric generation		167			188			(21	)		447			503		(56	)
Purchased power		15			10			5			35			77		(42	)
Gas purchased for resale		37			41			(4	)		158			161		(3	)
Net revenue		576			500			76			518			1,333		(815	)
Other operations and maintenance		144			144			—			483			455		28
Impairment of assets and other charges		—			—			—			371			4		367
Depreciation and amortization		116			81			35			333			242		91
Other taxes		55			63			(8	)		196			192		4
Other income (expense), net		(13	)		(1	)		(12	)		(27	)		124		(151	)
Interest charges		66			79			(13	)		202			232		(30	)
Income tax expense (benefit)		40			29			11			(63	)		70		(133	)

Third Quarter 2019 vs. 2018

Net revenue increased 15%, primarily due to increased revenue recognized under the SCANA Merger Approval Order issued by the South Carolina Commission in 2019 compared to revenue recognized under South Carolina legislation enacted in the second quarter of 2018 to temporarily reduce the amount collected from customers under the BLRA.

Depreciation and amortization increased 43%, primarily reflecting the amortization of NND Project costs.

Other taxes decreased 13%, primarily due to adjustments to estimated annual property tax accruals.

Other income (expense), net ~~plant additions.~~

~~Other taxes~~ decreased $12 million, primarily due to a charge related to a voluntary retirement program ($11 million) and accrued penalties related to unrecognized tax benefits in the current year ($7 million), partially offset by a gain on sale of certain warranty service contracts ($7 million).

Interest charges decreased 16%, primarily due to lower long-term debt principal balances primarily as a result of the debt tender offers completed in 2019 ($18 million) and the reversal of accrued interest related to a refund reserve ($7 million). These decreases were partially offset by interest charges on unrecognized tax benefits in the current year ($13 million).

Income tax expense increased 38%, primarily due to higher ~~property taxes associated with net plant additions.~~

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

The Company Consolidated SCE&G
Third Quarter Year to Date Third Quarter Year to Date
Classification (in thousands) 2017 2016 2017 2016 2017 2016 2017 2016
Residential 2,196
2,073
21,958
27,055
742
696
6,690
8,473
Commercial 4,537
4,363
19,113
20,748
2,381
2,295
8,783
9,361
Industrial 4,644
4,493
14,723
14,380
4,289
4,141
13,289
12,762
Transportation 14,865
15,171
38,313
37,089
1,516
1,252
4,602
3,747
Total 26,242
26,100
94,107
99,272
8,928
8,384
33,364
34,343

pre-tax income.

~~Third Quarter~~

~~Residential and commercial firm sales volumes increased~~

Year-To-Date 2019 vs. 2018

Net revenue decreased 61%, primarily due ~~to customer growth. Industrial sales volumes~~ to:

•	A $1.0 billion charge to electric revenue for refunds of amounts previously collected from retail electric customers for the NND Project;

•	A $12 million decrease in gas revenues due to lower South Carolina Commission approved rates and refunds of amounts previously collected from gas customers; partially offset by

•	A $114 million increase in electric revenue pursuant to a South Carolina Commission order whereby fuel cost recovery was substantially offset with gains realized upon the settlement of certain interest rate derivative contracts in 2018, as further described in other income (expense) below; and

•

Increased revenue recognized under the SCANA Merger Approval Order issued by the South Carolina Commission in 2019 compared to revenue recognized under South Carolina legislation enacted in the second quarter of 2018 to temporarily reduce the amount collected from customers under the BLRA ($97 million).

Other operations and maintenance increased ~~primarily due to customer growth and average use at SCE&G. Transportation volumes at PSNC Energy decreased~~6%, primarily due to a ~~decline~~charge related to a voluntary retirement program ($51 million), partially offset by lower non-labor electric generation expenses ($11 million) and lower legal and merger-related costs ($11 million).

Impairment of assets and other charges increased $367 million, primarily due to $266 million of charges related to litigation and a $105 million charge for utility plant for which DESC committed to forgo recovery.

Depreciation and amortization increased 38%, primarily reflecting the amortization of NND Project costs.

Other income (expense), net decreased $151 million, primarily due to the absence of gains realized upon the settlement of interest rate derivative contracts in ~~natural gas fired~~2018 ($115 million) that were mostly offset by downward adjustments to electric ~~generation,~~revenues pursuant to a previously received South Carolina Commission order related to fuel cost recovery, a charge related to a voluntary retirement program ($20 million), lower equity allowance for funds used during construction ($7 million) and accrued penalties related to unrecognized tax benefits in the current year ($7 million), partially offset by a ~~significant customer expansion, and increased at SCE&G due to higher transport volumes for industrial interruptible customers.~~

~~Year to Date~~

~~Residential and commercial firm sales volumes~~ gain on sale of certain warranty service contracts ($7 million).

Interest charges decreased primarily due to the effects of weather and lower average use, partially offset by customer growth. Industrial sales volumes increased at SCE&G primarily due to customer growth, higher average use and fewer curtailments in 2017 and decreased at PSNC Energy primarily due to the effects of weather. Transportation volumes increased at SCE&G primarily due to higher transport volumes for industrial interruptible customers and firm customers shifting from system supply to transportation only service and increased at PSNC Energy primarily due to a significant customer expansion mostly offset by a decline in natural gas fired electric generation as well as the effects of milder weather.

~~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:

Third Quarter Year to Date
Millions of dollars 2017 2016 2017 2016
Operating revenues $ 202.1
$ 199.8
$ 716.4
$ 681.5
Net income (Loss) 0.7
(1.0 ) 16.9
22.9

~~Third Quarter~~

~~Revenues increased primarily due to higher commodity pricing. Net income increased~~13%, primarily due to lower ~~operating expenses.~~

~~Year to Date~~

~~Revenue increased~~long-term debt principal balances primarily ~~due to higher commodity pricing. Net income decreased primarily due to milder winter weather.~~

~~Other Operating Expenses~~

~~Other operating expenses were as follows:~~

The Company Consolidated SCE&G
Third Quarter Year to Date Third Quarter Year to Date
Millions of dollars 2017 2016 2017 2016 2017 2016 2017 2016
Other operation and maintenance $ 183.1
$ 186.6
$ 543.1
$ 557.9
$ 153.5
$ 152.0
$ 446.1
$ 454.2
Impairment loss 210.0
—
210.0
—
210.0
—
210.0
—
Depreciation and amortization 95.7
93.2
284.7
276.1
78.2
75.6
232.6
225.0
Other taxes 67.2
66.3
200.2
191.8
63.1
62.0
186.6
177.8

~~Changes in other operating expenses are primarily attributable to the electric operations and gas distribution segments and are addressed in their respective operating income discussions.~~

~~Other Income (Expense)~~

Other income (expense) includes the results of certain incidental non-utility activities of regulated subsidiaries, the activities of certain non-regulated subsidiaries 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 condensed consolidated 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) and AFC were as follows:

The Company Consolidated SCE&G
Third Quarter Year to Date Third Quarter Year to Date
Millions of dollars 2017 2016 2017 2016 2017 2016 2017 2016
Other income $ 28.4
$ 15.8
$ 61.0
$ 46.4
$ 20.8
$ 7.3
$ 36.1
$ 19.6
Other expense (7.0 ) (7.1 ) (25.4 ) (31.5 ) (6.2 ) (4.6 ) (17.3 ) (18.8 )
AFC - equity funds (0.6 ) 6.9
17.6
21.6
(3.5 ) 6.4
12.7
18.7

~~Third Quarter~~

Other income at the Company and at Consolidated SCE&G increased $10.9 million due to the accrual of carrying costs on unrecovered nuclear project costs and by $1.9 million due to SCPSC-approved carrying cost recovery on certain other deferred items. AFC decreased, and was negative for the quarter, due to an adjustment to a revised (lower) AFC rate as a result of ~~removing new nuclear related capital costs from~~ the ~~average construction work~~debt tender offers completed in ~~progress balance used to determine~~2019 ($42 million), partially offset by interest charges on unrecognized tax benefits in the ~~annual AFC rate following the abandonment decision.~~

~~Year to Date~~

Other income at the Company and at Consolidated SCE&G increased $10.9 million due to the accrual of carrying costs on unrecovered nuclear project costs and by $4.6 million due to SCPSC-approved carrying cost recovery on certain other deferred items. Other income and other expense at the Company decreased due to lower billings to DCGT for transition services provided at cost following the sale of Carolina Gas Transmission Corporation in 2015. AFC decreased due to an adjustment to a revised (lower) AFC rate as a result of removing new nuclear related capital costs from the average construction work in progress balance used to determine the annual AFC rate following the abandonment decision.

~~Interest Expense~~

~~Interest charges increased primarily due to increased borrowings.~~

~~Income Taxes~~

current year ($9 million).

Income tax expense ~~was lower~~ decreased $133 million, primarily due to lower pre-tax income ~~before income taxes primarily attributable to the impairment loss.~~

~~LIQUIDITY AND CAPITAL RESOURCES~~

~~Impact of Abandonment of New Nuclear Project~~

~~Toshiba provided~~($393 million), partially offset by a parental guaranty for WEC’s payment obligations under the EPC Contract. In satisfaction of such guaranty obligations, on July 27, 2017, the Toshiba Settlement was executed under which Toshiba was to begin making periodic settlement payments from October 2017 through September 2022 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. These payments were to occur even if the project were abandoned. On September 27, 2017, the Toshiba Settlement, exclusive of the payment due in October 2017, was sold to Citibank for $1.847 billion (approximately $1.016 billion for SCE&G's 55% share), including amountstax charge related to ~~the contractor liens. The October payment was then received from Toshiba on October 2, 2017, as scheduled,~~regulatory assets for which DESC committed to forgo recovery ($198 million) and change in ~~the amount of $150 million ($82.5 million for SCE&G's 55% share).~~

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 were 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 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. SCE&G estimates that revised rates collections currently total approximately $445 million annually, and the amounts accumulated as of September 30, 2017 total approximately $1.8 billion.

On September 28, 2017, citing numerous legal deficiencies in the Request, SCE&G filed a Motion to Dismiss the request by the ORS 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. The hearing has been scheduled for December 12, 2017, and the parties who have filed to intervene in the matter or have filed a letter in support of the request by the ORS 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. SCE&G intends to vigorously contest the request by the ORS, but cannot give any assurance as to the timing or outcome of this matter. If the ORS ultimately prevails in the Request, however, the liquidity and capital resources of the Company and Consolidated SCE&G would be materially adversely affected.

Pending the outcome of the Request, which may include consideration of how the proceeds received under or arising from the monetization of the Toshiba Settlement will be utilized for the benefit of customers, portions of those proceeds have been utilized to repay maturing commercial paper balances. These short-term borrowings had been incurred for the construction of the New Units prior to the decision to stop their construction (see condensed consolidated Note 9). Should the SCPSC or a court direct that these proceeds 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 or draw on its credit facilities to fund such requirement. 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 condensed consolidated Note 2) would be adversely impacted. 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. Borrowing costs for long-term debt issuances could also be impacted.

~~For additional background on the new nuclear project and further details on the matters described above, see Note 9 to the condensed consolidated financial statements under New Nuclear Project -~~ ~~Toshiba Settlement and Subsequent Monetization~~

~~and~~ ~~Determination to Stop Construction and Related Regulatory, Political and Legal Developments,~~ ~~and also see OTHER MATTERS.~~

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 new nuclear project. 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. Any actions taken by regulators or legislators that are viewed as adverse, including a requirement that SCE&G make credits to future bills or refunds to customers for prior revised rates collections, or deterioration of the rated companies’ commonly monitored financial credit metrics and additional adverse developments with respect to the new nuclear project could further negatively affect their debt ratings. If these rating agencies were to further lower any of these ratings, particularly any further decreases resulting in below investment grade ratings for long-term debt instruments, borrowing costs on new issuances 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 interest rate and commodity derivatives, or the removal of such thresholds altogether. This action would have the effect of requiring the Company to post additional collateral for derivative instruments with unfavorable fair values. Such further ratings downgrades would also significantly increase the cash required to be on deposit under certain gas supply and other agreements. See further discussion under the heading Credit Risk Considerations in Note 6 to the condensed consolidated financial statements.

~~Significant Tax Deductions and Credits~~

The Company and Consolidated SCE&G have claimed significant research and experimentation tax deductions and credits related to the design and construction activities of the New Units. 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 Note 5 in the condensed consolidated financial statements. (See also Uncertain Income Tax Positions within the Critical Accounting Policies and Estimates section of Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 5 to the consolidated financial statements in the Registrants’ Form 10-K for the year ended December 31, 2016.)

These tax claims primarily involve the timing of recognition of tax deductions rather than permanent tax attributes. The permanent attributes (net), as well as most of the interest accruals required to be recorded with respect to them, have been deferred within regulatory assets. As such, these claims have not had, and are 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. Also, the claims have provided a significant source of capital and have lessened the level of debt and equity financing that the Company and Consolidated SCE&G have needed to raise in the financial markets. Similar benefits may be provided by claims for abandonment losses following the Company's determination to stop construction of the New Units.

The claims made to date are under examination, and may be considered controversial, by the IRS. Tax deductions which may be claimed in connection with the determination to abandon the construction of the New Units 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 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 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

~~Table of Contents~~

~~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 Considerations~~

The Company anticipates that its cash obligations will be met through internally-generated funds and additional short- and long-term borrowings. The Company expects that, barring a future impairment of the capital markets and absent further negative credit ratings actions described above, 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. The Company’s ratio of earnings to fixed charges for the nine and 12 months ended September 30, 2017 was 2.64 and 2.72, respectively. Consolidated SCE&G’s ratio of earnings to fixed charges for the nine and 12 months ended September 30, 2017 was 2.78 and 2.80, respectively.

The Company is obligated with respect to an aggregate of $67.8 million of industrial revenue bonds which are secured by letters of credit issued by TD Bank N.A. The letters of credit expire, subject to renewal, in the fourth quarter of 2019.

At September 30, 2017, the Company had net available liquidity of approximately $2.0 billion, comprised of cash on hand (including proceeds received under or arising from the monetization of the Toshiba Settlement described above) and available amounts under lines of credit. The credit agreements total an aggregate of $2.0 billion, of which $200 million is scheduled to expire in December 2018 and the remainder is scheduled to expire in December 2020. The Company regularly monitors the commercial paper and short-term credit markets to optimize the timing of repayment of outstanding balances on its draws, if any, from the credit facilities. The Company’s long term debt portfolio has a weighted average maturity of approximately 20 years at a weighted average effective interest rate of 5.8%. All of the long-term debt bears interest at fixed rates or is swapped to fixed. To further preserve liquidity, the Company rigorously reviews its projected capital expenditures and operating costs and adjusts them where possible without impacting safety and core customer service.

In October 2016, SCE&G's authority from FERC to issue short-term indebtedness and to assume liabilities as a guarantor (pursuant to Section 204 of the Federal Power Act) was renewed. SCE&G may issue, with maturity dates of one year or less, unsecured promissory notes, commercial paper and direct loans in amounts not to exceed $1.6 billion outstanding and may enter into guaranty agreements in favor of lenders, banks, and dealers in commercial paper in amounts not to exceed $600 million. Likewise, GENCO's authority from FERC to issue indebtedness with maturity dates of one year or less not to exceed $200 million outstanding was renewed in October 2016. The authority described herein will expire in October 2018.

~~Cash provided from operating activities increased primarily due to receipt of income tax refunds in 2017, contrasted with income tax payments in 2016.~~

Cash flows from investing activities in 2017 were primarily related to the proceeds received under or arising from the monetization of the Toshiba Settlement described above offset by capital expenditures. In 2016, similar levels of capital expenditures were made in addition to funding of collateral deposit requirements with respect to interest rate swaps as interest rates changed.

~~Cash flows from financing activities in 2017 and 2016 included normal dividend payments and increases in commercial paper balances, as well as proceeds from the issuance of debt.~~

In June 2016, SCE&G issued $425 million of 4.1% first mortgage bonds due June 15, 2046. In addition, in June 2016 SCE&G issued $75 million of 4.5% first mortgage bonds due June 1, 2064, which constituted a reopening of $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.

~~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 2017, PSNC Energy issued $150 million of 4.18% senior notes due June 30, 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.

~~Capital Expenditures~~

Estimates of capital expenditures for construction and nuclear fuel are subject to continuing review and adjustment. As discussed in Note 2 and Note 9 of the condensed consolidated financial statements, the Company's July 31, 2017 decision to stop construction of the new nuclear project is the subject of ongoing reviews by legislative committees and others. No update to estimated capital expenditures for SCE&G - Electric Operations is available until these ongoing reviews have developed further.

~~Estimated capital expenditures for SCE&G - Gas and for PSNC Energy are as follows:~~

~~Estimated Annual Capital Expenditures~~

Millions of dollars 2017 2018 2019
SCE&G - Gas $ 74
$ 100
$ 106
PSNC Energy 332
244
192
Total $ 406
$ 344
$ 298

~~OTHER MATTERS~~

For information related to environmental matters, nuclear generation, and claims and litigation, see Note 9 of the condensed consolidated financial statements. For information related to the Company's and Consolidated SCE&G's unrecognized tax benefits ~~see Note 5 of the condensed consolidated financial statements.~~

~~Accounting for Plant Abandonments~~

On July 31, 2017, the Company determined to stop construction of the New Units and to pursue recovery of costs incurred in connection with their construction under the abandonment provisions of the BLRA. 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 New Units was prudent. In order to effect that recovery, the utility must initiate a proceeding by filing a petition with the SCPSC. Under the provisions of the BLRA, this petition would be heard by the SCPSC and ruled upon within six months.

SCE&G filed the Abandonment Petition on August 1, 2017, wherein it had sought recovery of costs expended on the project, including certain costs incurred subsequent to SCE&G's last revised rates update and certain other costs. The Abandonment Petition was voluntarily withdrawn by SCE&G on August 15, 2017. For additional information concerning the Company's abandonment decision and discussion of the reasons for the withdrawal of this petition, see Note 9 to the condensed consolidated financial statements under New Nuclear Project - ~~Determination to Stop Construction and Related Regulatory, Political and Legal Developments~~($62 million). SCE&G expects to file a new petition under the abandonment provisions of the BLRA or to pursue recovery of costs through a general rate case or other regulatory means once the reviews being performed by the South Carolina House Utility Ratepayer Protection Committee, the South Carolina Senate's V.C. Summer Nuclear Project Review Committee and others have had sufficient opportunity to conclude and uncertainties involving an ORS request are known. See Note 2 and Note 9 to the condensed consolidated financial statements.

SCE&G intends to seek recovery of all amounts expended to date on the project, which costs had been capitalized within the Construction Work in Progress caption on the condensed consolidated balance sheet. Such capitalized costs totaled approximately $4.7 billion, against which an impairment loss of $210 million was recorded, and the remainder was reclassified as a regulatory asset as of September 30, 2017. The impairment loss is described below.

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 the South Carolina House Utility Ratepayer Protection Committee, the South Carolina Senate's V.C. Summer Nuclear Project Review Committee and others, it is uncertain whether SCE&G will be able to successfully recover such abandoned costs, and a reasonable return on them. Additionally, 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 relief 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.

~~Table of Contents~~

GAAP requires that an entity determine whether recovery of any of the costs of an abandoned plant may be disallowed, and if so, the entity must recognize a loss to the extent the disallowance is probable and the amount is reasonably estimable. The entity must also determine whether any amount being recovered represents a full return on the abandoned plant. To the extent that a full return is not provided for, a loss must be recognized.

The Company and Consolidated SCE&G believe that the issues related to the recovery of the cost of the New Units and rates currently being collected under the BLRA for financing costs should be resolved in a future proceeding before the SCPSC. However, based on the considerations described above, 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. A pre-tax impairment loss of $210 million, the estimated amount which might be anticipated to be disallowed from rate recovery, has been recorded as of September 30, 2017. This estimate represents costs in the amount of approximately $1.2 billion that have been expended on the project, exclusive of transmission costs, but which have not yet been determined to be prudent by the SCPSC in a revised rates proceeding under the BLRA, offset by the amount of approximately $1.0 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 estimate may be necessary to satisfy project liens.

These conclusions will be reevaluated as legislative and other reviews of the project develop, discovery and data request activities occur, or any settlement negotiations progress. If the Company and Consolidated SCE&G determine that an additional loss is probable and such loss or range of loss can be reasonably estimated, an additional impairment charge will be recognized.

~~ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

~~SCANA:~~

Interest Rate Risk - Interest rates on all outstanding long-term debt are fixed either through the issuance of fixed rate debt or through the use of interest rate derivatives. The Company is not aware of any facts or circumstances that would significantly affect exposures on existing indebtedness in the near future.

For further discussion of changes in long-term debt and interest rate derivatives, including changes in the Company's market risk exposures relative to interest rate risk, see the Liquidity and Capital Resources section in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations and Notes 2, 4, 6 and 7 of the condensed consolidated financial statements.

Commodity price risk - The Company uses derivative instruments to hedge forward purchases and sales of natural gas, which create market risks of different types. See Note 6 and 7 of the condensed consolidated financial statements. The following tables provide information about the Company’s financial instruments, which are limited to financial positions of SCANA Energy 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 for these or similar instruments.

~~Table of Contents~~

Expected Maturity 2017 2018 2019 2020
Futures - Long
Settlement Price (a) 3.10
3.15
3.07
—

Contract Amount (b) 21.4
45.9
6.9
—

Fair Value (b) 20.1
45.4
7.1
—

Futures - Short
Settlement Price (a) 3.09
3.16
—
—

Contract Amount (b) 6.7
8.0
—
—

Fair Value (b) 6.0
7.7
—
—

Options - Purchased Call (Long)
Strike Price (a) —
2.54
—
—

Contract Amount (b) —
19.1
—
—

Fair Value (b) —
1.0
—
—

Swaps - Commodity
Pay fixed/receive variable (b) 6.3
20.4
5.3
1.0

Average pay rate (a) 3.3022
3.2285
2.9381
2.8950

Average received rate (a) 3.1043
3.1288
2.9703
2.8219

Fair value (b) 5.9
19.8
5.4
0.9

Pay variable/receive fixed (b) 6.3
25.5
8.0
0.9

Average pay rate (a) 3.0973
3.0822
2.9796
2.8397

Average received rate (a) 3.1848
3.1643
2.9499
2.9499
2.8973

Fair value (b) 6.5
26.1
8.0
0.9

Swaps - Basis

Pay variable/receive variable (b) 7.1
8.0
0.3
—

Average pay rate (a) 3.0073
3.2222
3.2311
—

Average received rate (a) 2.9666
3.1828
3.1441
—

Fair value (b) 7.0
7.9
0.3
—

(a) Weighted average, in dollars
(b) Millions of dollars


~~ITEM 4.~~	~~CONTROLS AND PROCEDURES~~

ITEM 4. CONTROLS AND PROCEDURES

As of September 30, ~~2017~~,2019, management ~~for each of the Registrants~~ has evaluated, with the participation of the CEO and CFO, (a) the effectiveness of the design and operation of disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) and (b) any change in internal control over financial ~~reporting.~~reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Based on this evaluation, the CEO and CFO concluded that, as of September 30, ~~2017~~,2019, these disclosure controls and procedures were effective. There has been no change in internal control over financial reporting during the quarter ended September 30, ~~2017~~2019 that has materially affected or is reasonably likely to materially affect internal control over financial ~~reporting for either of the Registrants.~~

reporting.

~~Table of Contents~~

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~SCANA and SCE&G:~~

~~The following describes certain legal proceedings through September 30, 2017. The Company and Consolidated SCE&G intend~~

From time to vigorously contest the lawsuits which have been filed against them. For developments related to these or other proceedings subsequent to September 30, 2017, if any, see Note 2 and Note 9 to the condensed consolidated financial statements. No reference to, or disclosure of, any proceeding, item or matter described below shall be construed as an admission or indication that such proceeding, item or mattertime, DESC is ~~material or that such proceeding, items or matter is required~~alleged to be ~~referred to~~in violation or ~~disclosed~~ in ~~this Form 10-Q.~~

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 V.C. Summer construction 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.

On August 14, 2017, a purported class action was filed against SCE&G by plaintiff Richard Lightsey, on behalf of himself and all others similarly situated, in the State Court of Common Pleas in Hampton County. 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 pastdefault under orders, statutes, rules or continuing costs of the V.C. Summer construction 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.

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 V.C. Summer construction 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.

On September 7, 2017, a purported class action was filed against Santee Cooper, SCE&G and Palmetto Electric Cooperative, Inc. by plaintiff Jessica Cook, on behalf of herself and all others similarly situated, in the Richland 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 V.C. Summer Nuclear construction project, as well as other compensatory and statutory treble damages, attorneys’ fees, and any other relief the court deems proper.

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 V.C. Summer Nuclear construction 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.

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 United States District Court for the District of South Carolina (the “Federal District Court”). The plaintiff alleges, among other things, that SCE&G violated provisions of the Racketeer Influenced and Corrupt Organizations Act (“RICO”) 18 U.S.C. §1961, was negligent, breached alleged contractual duties, and was unjustly enriched by failing to properly manage the V.C. Summer construction project. The plaintiff seeks compensatory and consequential damages, and any other relief the court deems proper.

Also on September 25, 2017, a purported class action was filed against 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 SCANA by plaintiff John Crangle, on behalf of himself and all others similarly situated, in the

Richland County Court. The plaintiff alleges, among other things, that the defendants breached their fiduciary duties to shareholders by their gross mismanagement of the V.C. Summer construction 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.

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 Federal 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 April 27, 2017, SCE&G filed a declaratory judgment lawsuit in the State Court of Common Pleas in Fairfield County, South Carolina (the “Lawsuit”), against Structural Preservation Systems, Inc., a subcontractor to WEC and several dozen other companies that were WEC subcontractors, or who otherwise provided such labor and materials for other companies for the use and benefit of WEC (collectively, the “WEC Subcontractors”), who claimed that WEC had not paid them for work on the V.C. Summer construction project. The Lawsuit was filed for the purpose of asserting SCE&G’s common defenses to such claims by the WEC Subcontractors that WEC owed them payment for labor or materials they supplied on the project. Since that time, more than 40 individual cases have been filed by WEC Subcontractors against SCE&G and Santee Cooper asserting statutory and common law claims against both entities for alleged non-payment by WEC. On September 29, 2017, SCE&G obtained a court order consolidating all current and future lawsuits among SCE&G, Santee Cooper, and the WEC Subcontractors arising out of allegations of non-payment of the WEC 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 WEC 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.

~~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~~regulations relating to the ~~new nuclear project. The subpoena requires the Company~~environment, compliance plans imposed upon or agreed 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 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 new nuclear project by ~~SCANA and SCE&G.~~

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 toDESC, 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, DESC is involved in various legal proceedings from time to time, whether in the ~~New Units; to determine~~ordinary course of business or particularly following the ~~prudence of acts and omissions by SCE&G in connection with the construction of the New Units; to review and determine the prudence of~~ abandonment of the ~~New Units~~NND Project.

See the following for discussions on various legal, environmental and ~~of the available least cost efficiency and renewable energy alternatives; and~~other regulatory proceedings to ~~remedy, abate and make due reparations for the rates charged to ratepayers related to the construction of the New Units. SCE&G filed its answer to the complaint on July 19, 2017.~~which DESC is a party, which information is incorporated herein by reference:

•	Notes 2 and 11 to the Consolidated Financial Statements in DESC’s Annual Report on Form 10-K for the year ended December 31, 2018.

•	Note 10 to the Consolidated Financial Statements in DESC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2019.

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 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.

•	Note 11 to the Consolidated Financial Statements in DESC’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019.

•	Note 11 to the Consolidated Financial Statements in this report.

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. The hearing has been scheduled for December 12, 2017, and the parties who have filed to intervene in the matter include 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.~~

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.

On August 8, 2017 a purported class action was filed against SCANA, SCE&G, and its co-defendants Fluor and Fluor Enterprises, Inc., by plaintiff Harry Pennington III, on behalf of himself and all others similarly situated, in Federal District Court. The plaintiff alleges, 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 new nuclear project. The plaintiff alleges that the defendants failed to provide adequate advance written notice of his termination of employment.

ITEM 1A. RISK FACTORS

~~The~~

DESC’s business is influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond its control. A number of these risk factors ~~from the Registrants' combined~~have been identified in DESC’s Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2018, which should be taken into consideration when reviewing the information contained in this report. DESC filed such annual report on a combined basis with SCANA. Accordingly, the information presented in such risk factors is presented on a combined basis and ~~combined Quarterly Report on Form 10-Q for~~therefore some of the ~~quarter ended June 30, 2017,~~information may apply only to SCANA and not DESC. DESC makes no representation as to any such information. There have been ~~updated and are restated below in their entirety.~~

~~The risk factors that follow relate in each case~~no material changes with regard to ~~the Company, and where indicated~~ the risk factors ~~also relate to Consolidated SCE&G.~~

~~There is uncertainty as to whether the Company and Consolidated SCE&G will be able to recover costs expended for the New Units, and a reasonable return~~previously disclosed in DESC's Annual Report on those costs, under the abandonment provisions of the BLRA or through a general rate case or other regulatory means. In the event the Company and Consolidated SCE&G were to determine that all or a portion of their remaining unrecovered nuclear project costs are to be disallowed and that significant impairment losses must be recognized, material adverse impacts on their results of operations, cash flows and financial condition would occur.

During the term of the Interim Assessment Agreement, SCE&G and Santee Cooper evaluated the various elements of the new nuclear project, including forecasted costs and completion dates, while construction continued, and SCE&G and Santee Cooper continued to make payments for such work. Based on this evaluation, and in light of Santee Cooper's decision to suspend construction, on July 31, 2017, the Company determined to stop construction of the New Units and to pursue recovery of costs incurred in connection with such construction under the abandonment provisions of the BLRA or through a general rate case or other regulatory means. 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 the New Units.

On August 1, 2017, SCE&G senior management provided an allowable ex parte briefing to the SCPSC regarding the project and this decision, and SCE&G also filed the Abandonment Petition with the SCPSC which included its plan of abandonment and also 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 Settlement.

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 New Units was prudent. Through the Abandonment Petition, SCE&G had sought recovery of such costs expended on the construction of the New Units, 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 new 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 the Abandonment Petition from the SCPSC on August 15, 2017.

In August 2017, special committees of the South Carolina General Assembly, both in the House and in the Senate, began conducting public hearings regarding the decision to abandon the new nuclear project. Members of SCE&G's senior management, along with representatives from Santee Cooper, the ORS and other interested parties, testified before these committees. The reviews being conducted by each of these committees are continuing and neither the Company nor Consolidated SCE&G can predict when their reviews will be complete or what actions, if any, may be proposed or taken, including legislative actions related to the BLRA.

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 new 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 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 new nuclear project by SCANA and SCE&G. In October 2017, the staff of the SEC's Division of Enforcement also issued a subpoena for documents related to an investigation they are conducting related to the new nuclear project. The Company and Consolidated SCE&G intend to fully cooperate with these investigations, and no assurance can be given as to the timing or outcome of these matters.

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 were 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 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. SCE&G estimates that revised rates collections currently total approximately $445 million annually, and the amounts accumulated as of September 30, 2017 total approximately $1.8 billion.

On September 27, 2017, the scheduled payments under the Toshiba Settlement, exclusive of the payment due in October 2017, were purchased by Citibank for a one-time upfront payment of $1.847 billion (approximately $1.016 billion for SCE&G's 55% share), including amounts related to certain liens that SCE&G is contesting but for which SCE&G may ultimately be liable. The initial payment was then received from Toshiba on October 2, 2017, as scheduled, in the amount of $150 million ($82.5 million for SCE&G's 55% share). These proceeds have been reflected as a regulatory liability on the condensed consolidated balance sheets, as they will be utilized to benefit SCE&G's customers in a manner to be determined by the SCPSC. On October 17, 2017, the ORS filed a motion with the SCPSC to amend the 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. It 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. Such a requirement would significantly harm the Company's and Consolidated SCE&G's results of operations, cash flows and financial condition. In addition, the purchase agreement with Citibank provides that SCE&G and Santee Cooper (each according to its pro rata share) would indemnify Citibank for its losses arising from misrepresentations or covenant defaults under the purchase agreement. If Toshiba fails to make scheduled payments to Citibank under the Toshiba Settlement, it is possible that Citibank could allege that such misrepresentations or covenant defaults have occurred.

On September 28, 2017, citing numerous legal deficiencies in the Request, 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. The hearing has been scheduled for December 12, 2017, and the parties who have filed to intervene in the matter or have filed a letter in support of the request by the ORS 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. SCE&G intends to vigorously contest 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.

Portions of the proceeds received under or arising from the monetization of the Toshiba Settlement have been utilized to repay maturing commercial paper balances, which short-term borrowings had been incurred for the construction of the New

Units prior to the decision to stop their construction. Should the SCPSC or a court direct that these proceeds 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 or draw on its credit facilities to fund such requirement. 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 would be adversely impacted. 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. Borrowing costs for long-term debt issuances could also be impacted.

The ability of SCE&G to recover its costs related to the construction and subsequent abandonment of the new 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 the South Carolina House Utility Ratepayer Protection Committee, the South Carolina Senate's V.C. Summer Nuclear Project Review Committee and others, it is uncertain whether SCE&G will be able to successfully recover such abandoned costs, and a reasonable return on them. Under the BLRA, the SCPSC must consider and rule on a petition within six months; however, 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.

A downgrade in the credit rating 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 SCANA’s long-term senior unsecured debt, SCE&G’s long-term senior secured debt and the long-term senior unsecured debt of PSNC Energy as investment grade, except that SCANA's long-term senior unsecured debt is currently rated by one rating agency 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 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. Any actions taken by regulators or legislators that are viewed as adverse, including a requirement that SCE&G make credits to future bills or refunds to customers for prior revised rates collections, or deterioration of our rated companies’ commonly monitored financial credit metrics and additional adverse developments with respect to the new nuclear project could further negatively affect their debt ratings. If these rating agencies were to further lower any of these ratings, particularly any decreases resulting in additional below investment grade ratings for long-term debt instruments, borrowing costs on new issuances 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. Any further lowering of these ratings could also trigger more stringent collateral requirements on interest rate and commodity hedges and under gas supply agreements and other contracts, as well as higher interest costs.

The Company and Consolidated SCE&G are defendants in numerous legal proceedings and the subject of ongoing governmental investigations and informal inquiries stemming from the decision to abandon the New Units. 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 the New Units, numerous lawsuits seeking class action status have been filed on behalf of customers and shareholders in state court 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 certain of

~~SCE&G’s assets, namely all money SCE&G has received under the Toshiba payment guaranty and related settlement agreement, in addition to the freezing of certain assets of SCANA.~~

In addition, lawsuits seeking class action status have been filed on behalf of investors in federal court against SCANA and certain of its executive officers. The plaintiffs allege, among other things, that defendants violated Section 10(b) of the Exchange Act and Rule 10b-5 promulgated thereunder (i.e., employment of manipulative and deceptive devices), and one suit alleges violations of the Racketeer Influenced and Corrupt Organizations Act. The plaintiffs in each of these suits seek compensatory and consequential damages and such further relief as the court deems proper.

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 Company’s new 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 new 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 new nuclear project, various state or local governmental authorities may attempt to challenge, reverse or revoke one or more previously-approved tax or economic development incentives, benefits or exemptions and may attempt 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 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 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 the New Units. 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 Uncertain Income Tax Positions within the Critical Accounting Policies and Estimates section of Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations and Note 5 to the consolidated financial statements in the Registrants’ Form 10-K for the year ended December 31, ~~2016.)~~

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 NO_X~~, SO~~₂, 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 CO₂from 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.

Compliance with these environmental laws and regulations requires us to commit significant resources toward environmental monitoring, installation of pollution control equipment, emissions fees and permitting at our facilities. These expenditures have been significant in the past and are expected to continue or even increase in the future. Changes in compliance requirements, additional regulations and related costs, or more restrictive interpretations by governmental authorities of existing requirements may impose additional costs on us (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 cost savings activities (such as the recycling of fly ash and other coal combustion products for beneficial use). Compliance with any GHG emission reduction requirements, including any mandated renewable portfolio standards, also may impose significant costs on us, and the resulting price increases to our customers may lower customer consumption. Such costs of compliance with environmental regulations could negatively impact our businesses and our 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.

Renewable and/or alternative electric generation portfolio standards may be enacted at the federal or state level. In June 2014 the State of South Carolina enacted legislation known as Act 236 with the stated goal for each investor-owned utility to supply up to 2% of its 5-year average retail peak demand with renewable electric generation resources by the end of 2020. A utility, at its option, may supply an additional 1% during this period. 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, as approved by regulatory commissions, 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. The integration of those resources at high penetration levels may be challenging.

The 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. In effecting compliance with MATS, SCE&G has retired three of its oldest and smallest coal-fired units and converted three others such that they are gas-fired.

~~Commodity price changes, delays in delivery of commodities, commodity availability and~~2018. For other factors that may ~~affect the operating cost, capital expenditures and competitive positions of the Company’s and Consolidated SCE&G’s energy businesses, thereby adversely impacting~~cause actual results ~~of operations, cash flows and financial condition.~~

~~Our energy businesses are sensitive~~ to ~~changes~~differ materially from those indicated 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 New Units 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 fuelsany forward-looking statement 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.

The 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 changesprojection contained 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 resultreport, see Forward-Looking Statements 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.

Part I, Item 2. MD&A.

Furthermore, changes in or uncertainty in monetary, fiscal, tax, economic, trade, or regulatory policies of the Federal government may adversely affect the debt and equity markets and the economic climate for the nation, region or particular industries, such as ours or those of our customers. The Company and Consolidated SCE&G also could be adversely impacted by changes in tax policy, or taxes related to the usage of certain fuel types in our businesses or our ownership and/or operation of certain types of generating facilities. Future, unknown regulation of hydraulic fracturing activities also could impact the operations and finances of the Company and Consolidated SCE&G.

The Company and Consolidated SCE&G are subject to extensive rate regulation which could adversely affect operations. Large capital projects (including the construction or abandonment of the New Units as previously described), results of DSM Programs, results of DER programs, and/or increases in operating costs may lead to requests for regulatory relief, such as rate increases, which may be denied, in whole or part, by rate regulators. Rate increases may also result in reductions in customer usage of electricity or gas, legislative action and lawsuits. Additionally, in 2017, legislation which would amend the current BLRA was proposed in the S.C. House of Representatives. In the event this bill were to become law, as proposed, its provisions would not adversely impact SCE&G’s rate recovery with respect to the New Units. However, there

can be no assurance that other legislation which might modify or repeal the BLRA in a manner which would adversely impact SCE&G’s rate recovery, including its reasonable return on costs, with respect to its abandonment of the New Units will not be proposed and passed.

SCE&G’s electric operations in South Carolina and the Company’s gas distribution operations in South Carolina and North Carolina are regulated by state utilities commissions. In addition, the ability of SCE&G to recover the cost of the New Units, including abandonment costs, and a reasonable return on those costs, is subject to rate regulation by the SCPSC. Consolidated SCE&G’s generating facilities are subject to extensive regulation and oversight from the NRC and SCPSC. SCE&G's electric transmission system is subject to extensive regulations and oversight from the SCPSC, NERC and FERC. Implementing and maintaining compliance with the NERC's mandatory reliability standards, enforced by FERC, for bulk electric systems could result in higher operating costs and capital 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.

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 determined that they meet the end-user exception to mandatory clearing of swaps under Dodd-Frank. In addition, the Company and 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 that those counterparties are obligated to report the transactions in accordance with applicable Dodd-Frank regulations. While these actions minimize the reporting obligations of the Company, they do not eliminate required recordkeeping for any Dodd-Frank regulated transactions. Despite qualifying for the end-user exception to mandatory clearing and ensuring that neither the Company nor 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.

Although we have had constructive relationships with regulators in the past, our ability to obtain rate treatment 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.

The Company and Consolidated SCE&G are subject to the reputational risks that may result from a failure to adhere to high standards related to compliance with laws and regulations, ethical conduct, operational effectiveness, customer service and the safety of employees, customers and the public. These risks could adversely affect the valuation of our common stock and the Company’s and Consolidated SCE&G’s access to capital.

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 its 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 or the 2011 earthquake and tsunami in Japan) 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, 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, 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.

~~In 2016, Unit 1 provided approximately 5.8 million MWh, or 25% of our generation. Hence, SCE&G is subject to various risks of nuclear generation, which 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 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 financial aspects of decommissioning nuclear plants at the end of their operating lives.~~

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 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 delivery 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 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.

Sales, sales growth and customer usage patterns are dependent upon the economic climate in the service territories of the Company and SCE&G, which may be affected by regional, national or even international economic factors. Adverse events, economic or otherwise, may also affect the operations 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 also could adversely impact the results of operations through the recording of a goodwill or other asset impairment. The success of local and state governments in attracting new industry to our service territories is important to our sales and growth in sales, as are stable levels of taxation (including property, income or other taxes) which may be affected by local, state, or federal budget deficits, adverse economic climates generally, legislative actions (including tax reform), or regulatory actions. 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 ability to pay dividends and to make payments on SCANA’s debt securities may be limited by covenants in certain financial instruments and by the financial results and condition of its subsidiaries, thereby adversely impacting the valuation of our common stock and our access to capital.

We are a holding company that conducts substantially all of our operations through our subsidiaries. Our assets consist primarily of investments in subsidiaries. Therefore, our 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, cash flows, financial condition and capital requirements of our subsidiaries, and the ability of our subsidiaries, principally Consolidated SCE&G, PSNC Energy and SCANA Energy, to pay dividends or to repay funds to us. Our ability to pay dividends on our common stock may also be limited by existing or future covenants limiting the right of our subsidiaries to pay dividends on their common stock. Any significant reduction in 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 equity capital.

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.~~

A significant portion of our workforce will be eligible for retirement during the next few years. 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.

From time to time, the Company and Consolidated SCE&G make strategic decisions that may impact our direction with regard to business opportunities, the services and technologies offered to customers or that are used to serve customers, and the generating plants and other infrastructure that form the basis of much of our business. These strategic decisions may not result in a return of or on our invested capital, and the effects of these strategic decisions may have long-term implications that are not likely to be known to us in the short-term. Changing political climates and public attitudes, including customers' concerns regarding rate increases, such as the current environment relating to proposed rate increases or recovery of costs, and a reasonable return on those costs, under the abandonment provisions of the BLRA or through a general rate case or other regulatory means, may adversely affect the ongoing acceptability of strategic decisions that have been made (and, in some cases, previously supported by legislation or approved by regulators), to the detriment of the Company or Consolidated SCE&G (e.g., revision or repeal of the BLRA). Over time, these strategic decisions or changing attitudes toward such decisions, which could be adverse to the Company’s or Consolidated SCE&G’s interests, 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 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

~~SCANA:~~

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:

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
July 1 - 31 5,935
$ 65.16
5,935

August 1 - 31 —
—
—

September 1 - 30 —
—
—

Total 5,935

5,935
*

*The preceding 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.

~~ITEM 5. OTHER INFORMATION~~

~~SCANA and SCE&G:~~

SCANA and SCE&G post information from time to time regarding developments relating to SCE&G’s new nuclear project and other matters of interest to investors on SCANA’s website at www.scana.com (which is not intended to be an active hyperlink; the information on SCANA’s website is not a part of this report or any other report or document that SCANA or SCE&G files with or furnishes to the SEC). On SCANA’s homepage, there is a yellow box containing links to the Nuclear Development and Other Investor Information sections of the website. The Nuclear Development section contains a yellow box

~~Table of Contents~~

with a link to project news and updates. The Other Investor Information section of the website contains a link to recent investor related information that cannot be found at other areas of the website. Some of the information that will be posted from time to time, including the quarterly reports that SCE&G submits to the SCPSC and the ORS in connection with the new nuclear project, may be deemed to be material information that has not otherwise become public. 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 Development and Other Investor Information yellow box.

ITEM 6. EXHIBITS

~~SCANA and SCE&G:~~

Exhibits filed or furnished with this Quarterly Report on Form 10-Q are listed in the following Exhibit Index.

As permitted under Item 601(b) (4) (iii) of Regulation S-K, instruments defining the rights of holders of long-term debt of less than ~~10 percent~~10% of the total consolidated assets of ~~SCANA, for itself and its subsidiaries, and of SCE&G,~~DESC, for itself and its consolidated affiliates, have been omitted and ~~SCANA and SCE&G agree~~DESC agrees to furnish a copy of such instruments to the SEC upon request.

EXHIBIT INDEX

Exhibit No.		Description
3.1		Amended and Restated Articles of Incorporation, effective April 29, 2019 (Exhibit 3.1, Form 8-K filed April 29, 2019, File No. 1-3375).
3.2		Amended and Restated Bylaws, effective April 29, 2019 (Exhibit 3.2, Form 8-K filed April 29, 2019, File No. 1-3375).
31.1		Certification by Chief Executive Officer of Dominion Energy South Carolina, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2		Certification by Chief Financial Officer of Dominion Energy South Carolina, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1		Certification to the Securities and Exchange Commission by Chief Executive Officer and Chief Financial Officer of Dominion Energy South Carolina, Inc. as required by Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
101		The following financial statements from Dominion Energy South Carolina, Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, filed on November 4, 2019, formatted in iXBRL (Inline eXtensible Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Comprehensive Income (Loss), (iii) Consolidated Statements of Cash Flows, (iv) Consolidated Statements of Changes in Common Equity, and (v) the Notes to Consolidated Financial Statements.
104		Cover Page Interactive Data File (formatted in iXBRL (Inline eXtensible Reporting Language) and contained in Exhibit 101).

~~SIGNATURES~~

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, ~~each of~~ the ~~registrants~~registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ~~The signature of each registrant shall be deemed to relate only to matters having reference to such registrant and any subsidiaries thereof.~~

	DOMINION ENERGY SOUTH CAROLINA, INC.
		(Registrant)
~~SCANA CORPORATION~~
~~SOUTH CAROLINA ELECTRIC & GAS COMPANY~~	By:	/s/ Michele L. Cardiff
~~(Registrants)~~ Date: November 4, 2019		Michele L. Cardiff
		Vice President, Controller and Chief Accounting Officer



	~~By:~~	~~/s/James E. Swan, IV~~
~~Date: November 3, 2017~~		~~James E. Swan, IV~~
		~~Vice President and Controller~~
		~~(Principal accounting officer)~~

~~EXHIBIT INDEX~~



	~~Applicable to~~ ~~Form 10-Q of~~
~~Exhibit No.~~	~~SCANA~~	~~SCE&G~~	~~Description~~
~~3.01~~	X		Restated Articles of Incorporation of SCANA, as adopted on April 26, 1989 (Filed as Exhibit 3-A to Registration Statement No. 33-49145 and incorporated by reference herein). Hyperlink is not required pursuant to Rule 105 of Regulation S-T (Instruction 2).
~~3.02~~	X		~~Articles of Amendment dated April 27, 1995 (Filed as Exhibit 4-A to Registration Statement No. 33-62421~~ ~~and incorporated by reference herein)~~
~~3.03~~	X		~~Articles of Amendment effective April 25, 2011 (Filed as Exhibit 4.03 to Registration Statement No. 333-174796~~ ~~and incorporated by reference herein)~~
~~3.04~~		X	~~Restated Articles of Incorporation of SCE&G, as adopted on December 30, 2009 (Filed as Exhibit 1 to Form 8-A (File Number 000-53860)~~ ~~and incorporated by reference herein)~~
~~3.05~~	X		~~By-Laws of SCANA as amended and restated as of December 30, 2016~~ ~~(Filed as Exhibit 3.05 to Form 10-K for the period ended December 31, 2016 (File No. 001-08809)~~ ~~and incorporated by reference herein)~~
~~3.06~~		X	~~By-Laws of SCE&G as revised and amended on February 22, 2001 (Filed as Exhibit 3.05 to Registration Statement No. 333-65460~~ ~~and incorporated by reference herein)~~
~~10.01~~	X	X	~~Settlement Agreement dated as of July 27, 2017 by and among Toshiba Corporation, SCE&G and Santee Cooper (Filed as Exhibit 99.2 to Form 8-K dated July 27, 2017 (File No. 001-08809 (SCANA); File No. 001-03375 (SCE&G))~~ ~~and incorporated by reference herein)~~
10.02*	X		~~Form of Indemnification Agreement~~ ~~(Filed as Exhibit 10.01 to Form 10-Q for the period ended June 30, 2012~~ ~~and incorporated by reference herein)~~
~~10.03~~	X	X	Trade Confirmation dated September 25, 2017, between SCE&G, Santee Cooper and Citibank, N.A., and associated Assignment and Purchase Agreement, dated September 27, 2017, by and among SCE&G, Santee Cooper and Citibank, N. A. ~~(Filed herewith)~~
~~12.01~~	X	X	~~Statement Re Computation of Ratios~~ ~~(Filed herewith)~~
~~31.01~~	X		~~Certification of Principal Executive Officer Required by Rule 13a-14~~ ~~(Filed herewith)~~
~~31.02~~	X		~~Certification of Principal Financial Officer Required by Rule 13a-14~~ ~~(Filed herewith)~~
~~31.03~~		X	~~Certification of Principal Executive Officer Required by Rule 13a-14~~ ~~(Filed herewith)~~
~~31.04~~		X	~~Certification of Principal Financial Officer Required by Rule 13a-14~~ ~~(Filed herewith)~~
~~32.01~~	X		~~Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350~~ ~~(Furnished herewith)~~
~~32.02~~		X	~~Certification of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350~~ ~~(Furnished herewith)~~
101. INS**	X	X	~~XBRL Instance Document~~
101. SCH**	X	X	~~XBRL Taxonomy Extension Schema~~
101. CAL**	X	X	~~XBRL Taxonomy Extension Calculation Linkbase~~
101. DEF**	X	X	~~XBRL Taxonomy Extension Definition Linkbase~~
101. LAB**	X	X	~~XBRL Taxonomy Extension Label Linkbase~~
101. PRE**	X	X	~~XBRL Taxonomy Extension Presentation Linkbase~~

* Management contract or compensatory plan or arrangement.

** Pursuant to Rule 406T of Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

South Carolina	~~Registrant,~~	57-0248695
State or Other Jurisdiction of Incorporation or Organization		I.R.S. Employer Identification No.
~~File Number~~		~~Address and Telephone Number~~	~~Identification No.~~
~~1-8809~~		~~SCANA Corporation(a South Carolina corporation)~~	~~57-0784499~~
~~1-3375~~		~~South Carolina Electric & Gas Company(a South Carolina corporation)~~	~~57-0248695~~
		~~100 SCANA~~ 400 Otarre Parkway, Cayce, South Carolina ~~29033~~	29033
Address of Principal Executive Offices		~~(803) 217-9000~~	Zip Code



~~SCANA Corporation~~	Large accelerated filerx	☐		Accelerated filero	☐	Emerging growth company	☐
Non-accelerated filero	☒		Smaller reporting companyo	~~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



	~~Description of~~	~~Shares Outstanding~~
~~Registrant~~	~~Common Stock~~	~~at October 31, 2017~~
~~SCANA Corporation~~	~~Without Par Value~~	~~142,616,254~~
~~South Carolina Electric & Gas Company~~	~~Without Par Value~~	~~40,296,147 (a)~~

Abbreviation or Acronym		Definition
2015 Task Order		Retail services agreement between DESC and the DOE, which includes a potential FERC jurisdictional charge for operating and maintaining DOE transmission facilities at the Savannah River Site
~~TERM~~ 2017 Tax Reform Act	~~MEANING~~	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
~~AFC~~ ACE Rule	~~Allowance for Funds Used During Construction~~	Affordable Clean Energy Rule
~~ANI~~ AOCI	~~American Nuclear Insurers~~	Accumulated other comprehensive income (loss)
~~AOCI~~ ARO	~~Accumulated Other Comprehensive Income (Loss)~~	Asset retirement obligation
~~ARO~~ BLRA	~~Asset Retirement Obligation~~
~~Abandonment Petition~~	~~Petition filed with the SCPSC on August 1, 2017 which included SCE&G's plan of abandonment of the New Units.~~
~~Bankruptcy Court~~	~~U.S. Bankruptcy Court for the Southern District of New York~~
~~BLRA~~	South Carolina Base Load Review Act
~~CAA~~ CCR	~~Clean Air Act, as amended~~	Coal combustion residual
~~CAIR~~ CEO	~~Clean Air Interstate Rule~~
~~CCR~~	~~Coal Combustion Residuals~~
~~CEO~~	Chief Executive Officer
CFO		Chief Financial Officer
~~CFTC~~ Consortium	~~Commodity Futures Trading Commission~~
~~Citibank~~	~~Citibank, N.A.~~
CO₂	~~Carbon Dioxide~~
~~COL~~	~~Combined Construction and Operating License~~
~~Company~~	~~SCANA, together with its consolidated subsidiaries~~
~~Consolidated SCE&G~~	~~SCE&G and its consolidated affiliates~~
~~Consortium~~	A consortium consisting of ~~WEC~~Westinghouse and WECTEC
~~Court of Appeals~~ CSAPR	~~United States Court of Appeals for the District of Columbia~~
~~CSAPR~~	Cross-State Air Pollution Rule
~~CUT~~ CWA	~~Customer Usage Tracker (decoupling mechanism)~~
~~CWA~~	Clean Water Act
~~DCGT~~ DESC		The legal entity, Dominion Energy South Carolina, Inc. (formerly known as South Carolina Electric & Gas ~~Transmission LLC~~Company), one or more of its consolidated affiliates or operating segments, or the entirety of Dominion Energy South Carolina, Inc. and its consolidated affiliates
~~DER~~ DESS	~~Distributed~~	Dominion Energy ~~Resource~~Southeast Services, Inc. (formerly known as SCANA Services, Inc.)
~~DHEC~~ DOE	~~South Carolina~~	U.S. Department of ~~Health and Environmental Control~~Energy
~~District Court~~ Dominion Energy	~~United States District Court~~	The legal entity, Dominion Energy, Inc., one or more of its consolidated subsidiaries (other than SCANA and DESC) or operating segments, or the entirety of Dominion Energy, Inc. and its consolidated subsidiaries
DSM		Demand-side management
Electric Operations		Electric Operations Group operating segment
ELG Rule		Effluent limitations guidelines for the ~~District of South Carolina~~steam electric power generating category
~~Dodd-Frank~~ EMANI	~~Dodd-Frank Wall Street Reform and Consumer Protection Act~~
~~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~~	U.S. Environmental Protection Agency
~~EPC Contract~~ Exchange Act	~~Engineering, Procurement and Construction Agreement dated May 23, 2008,~~	Securities Exchange Act of 1934, as amended ~~by the October 2015 Amendment~~
~~FASB~~ FERC	~~Financial Accounting Standards Board~~
~~FERC~~	~~United States~~ Federal Energy Regulatory Commission
~~Fluor~~ FILOT	~~Fluor Corporation~~	Fee in lieu of taxes
Fuel Company		South Carolina Fuel Company, Inc.
GAAP	~~Accounting principles~~	U.S. generally accepted ~~in the United States of America~~accounting principles
~~GENCO~~ Gas Distribution		Gas Distribution Group operating segment
GENCO		South Carolina Generating Company, Inc.
~~GHG~~ IAA	~~Greenhouse Gas~~
~~GWh~~	~~Gigawatt hour~~
~~Interim Assessment Agreement~~	Interim Assessment Agreement dated March 28, 2017, as amended, among ~~SCE&G,~~DESC, Santee Cooper, ~~WEC~~Westinghouse and WECTEC
~~IRC~~ MATS	~~Internal Revenue Code of 1986, as amended~~
~~IRS~~	~~Internal Revenue Service~~
~~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~~
~~LOC~~	~~Lines of Credit~~
~~MATS~~	Utility Mercury and Air Toxics ~~Standards~~Standard Rule
~~MGP~~ MD&A	~~Manufactured Gas Plant~~	Management's Discussion and Analysis of Financial Condition and Results of Operations
~~MMBTU~~ MGP	~~Million British Thermal Units~~	Manufactured gas plant
MW ~~or MWh~~		Megawatt ~~or Megawatt-hour~~
~~NAAQS~~ NEIL	~~National Ambient Air Quality Standards~~
~~NASDAQ~~	~~The NASDAQ Stock Market, Inc.~~
~~NCUC~~	~~North Carolina Utilities Commission~~
~~NEIL~~	Nuclear Electric Insurance Limited
~~New Units~~ NO_X	~~Nuclear Unit 2 and Unit 3 at Summer Station~~	Nitrogen oxide
NO_X NPDES	~~Nitrogen Oxide~~
~~NPDES~~	National Pollutant Discharge Elimination System
~~NRC~~ NND Project	~~United States Nuclear Regulatory Commission~~	V. C. Summer Units 2 and 3 nuclear development project under which SCANA and Santee Cooper undertook to construct two Westinghouse AP1000 Advanced Passive Safety nuclear units in Jenkinsville, South Carolina
~~NSPS~~ Price-Anderson	~~New Source Performance Standards~~	Price-Anderson Nuclear Industries Indemnity Act



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



~~Commission~~ ☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

				Page
		Glossary of Terms		3
	~~Page~~
~~Cautionary Statement Regarding Forward-Looking Information~~			3

~~Definitions~~			4

PART I. FINANCIAL INFORMATION
~~Item 1. Financial Statements~~	6
Item 1.	~~SCANA Corporation~~	6Financial Statements		5
		~~Condensed Consolidated Balance Sheets~~	6
		~~Condensed Consolidated Statements of Income~~	8
		~~Condensed Consolidated Statements of Comprehensive Income~~	9
		~~Condensed Consolidated Statements of Cash Flows~~	10
		~~Condensed Consolidated Statements of Changes in Common Equity~~	11
	~~South Carolina Electric & Gas Company~~		12
		~~Condensed Consolidated Balance Sheets~~	12
		~~Condensed Consolidated Statements of Comprehensive Income~~	14
		~~Condensed Consolidated Statements of Cash Flows~~	15
		~~Condensed Consolidated Statements of Changes in Equity~~	16
	~~Notes to Condensed Consolidated Financial Statements~~		17

Item 2.				Management's Discussion and Analysis of Financial Condition and Results of Operations	44	32

~~Item 3. Quantitative and Qualitative Disclosures About Market Risk~~	54

Item 4.				Controls and Procedures	55	35

PART II. OTHER INFORMATION

Item 1.		Legal Proceedings	56	36

Item 1A.		Risk Factors	58	36

Item ~~2. Unregistered Sales of Equity Securities and Use of Proceeds~~ 6.		69Exhibits		37

~~Item 5. Other Information~~			69

~~Item 6. Exhibits~~			70

~~Signatures~~			71

~~Exhibit Index~~			72

Abbreviation or Acronym		Definition
~~NYMEX~~ Reorganization Plan	~~New York Mercantile Exchange~~	Modified Second Amended Joint Chapter 11 Plan of Reorganization, filed by Westinghouse
~~OCI~~ RICO	~~Other Comprehensive Income~~	Racketeer Influenced and Corrupt Organizations Act
~~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~~
~~Price-Anderson~~	~~Price-Anderson Indemnification Act~~
~~PSNC Energy~~	~~Public Service Company of North Carolina, Incorporated~~
~~Registrants~~	~~SCANA and SCE&G~~
~~Request~~	~~Request for Rate Relief filed by the ORS on September 26, 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		The legal entity, SCANA Corporation, one or more of its consolidated subsidiaries (other than DESC) or the ~~parent company~~entirety of SCANA Corporation and its consolidated subsidiaries
SCANA ~~Energy~~Combination		Dominion Energy's acquisition of SCANA ~~Energy Marketing, Inc.~~completed on January 1, 2019 pursuant to the terms of the SCANA Merger Agreement
SCANA ~~Services~~Merger Agreement		Agreement and plan of merger entered on January 2, 2018 between Dominion Energy and SCANA ~~Services, Inc.~~
~~SCE&G~~ SCANA Merger Approval Order		Final order issued by the South Carolina ~~Electric & Gas Company~~Commission on December 21, 2018 setting forth its approval of the SCANA Combination
~~SCEUC~~ SCDHEC		South Carolina ~~Energy Users Committee~~Department of Health and Environmental Control
~~SCPSC~~ SCDOR		South Carolina Department of Revenue
SEC		U.S. Securities and Exchange Commission
SO₂		Sulfur dioxide
South Carolina Commission		Public Service Commission of South Carolina
~~SEC~~ Summer	~~United States Securities and Exchange Commission~~
~~SIP~~	~~State Implementation Plan~~
~~SLED~~	~~South Carolina Law Enforcement Division~~
SO₂	~~Sulfur Dioxide~~
~~Summer Station~~	V. C. Summer ~~Nuclear Station~~nuclear power station
~~Supreme Court~~ Toshiba	~~United States Supreme Court~~
~~Toshiba~~	Toshiba Corporation, parent company of ~~WEC~~Westinghouse
Toshiba Settlement		Settlement Agreement dated as of July 27, 2017, by and among Toshiba, ~~SCE&G~~DESC and Santee Cooper
~~Unit 1~~ VIE	~~Nuclear Unit 1 at Summer Station~~	Variable interest entity
~~Unit 2~~ WECTEC	~~Nuclear Unit 2 at Summer Station~~
~~Unit 3~~	~~Nuclear Unit 3 at Summer Station~~
~~VIE~~	~~Variable Interest Entity~~
~~Vogtle Units~~	~~Two nuclear units being constructed by the Consortium for another group of utilities~~
~~WEC~~	~~Westinghouse Electric Company LLC~~
~~WECTEC~~	WECTEC Global Project Services, Inc. (formerly known as Stone & Webster, Inc.), a wholly-owned subsidiary of ~~WEC~~Westinghouse
~~Williams Station~~ Westinghouse	~~A.M. Williams Generating Station, owned by GENCO~~	Westinghouse Electric Company LLC
~~WNA~~ Westinghouse Subcontractors	~~Weather Normalization Adjustment~~	Subcontractors and suppliers to the Consortium



Millions of dollars	September 30, 2017			December 31, 2016
Assets
Utility Plant In Service	$	13,767		$	13,444
Accumulated Depreciation and Amortization	(4,559		)	(4,446		)
Construction Work in Progress	768			4,845
Nuclear Fuel, Net of Accumulated Amortization	249			271
Goodwill, net of writedown of $230	210			210
Utility Plant, Net	10,435			14,324
Nonutility Property and Investments:
Nonutility property, net of accumulated depreciation of $135 and $138	272			276
Assets held in trust, net-nuclear decommissioning	132			123
Other investments	77			76
Nonutility Property and Investments, Net	481			475
Current Assets:
Cash and cash equivalents	1,011			208
Receivables:
Customer, net of allowance for uncollectible accounts of $5 and $6	545			616
Income taxes	6			142
Other	189			127
Inventories (at average cost):
Fuel and gas supply	129			136
Materials and supplies	159			155
Prepayments	111			105
Other current assets	14			17
Total Current Assets	2,164			1,506
Deferred Debits and Other Assets:
Regulatory assets	6,690			2,130
Other	249			272
Total Deferred Debits and Other Assets	6,939			2,402
Total	$	20,019		$	18,707



	Nine Months Ended September 30,
Millions of dollars	2017			2016
Cash Flows From Operating Activities:
Net income	$	326		$	471
Adjustments to reconcile net income to net cash provided from operating activities:
Impairment loss	210			—
Deferred income taxes, net	(395		)	151
Depreciation and amortization	302			289
Amortization of nuclear fuel	31			42
Allowance for equity funds used during construction	(17		)	(22		)
Carrying cost recovery	(27		)	(12		)
Changes in certain assets and liabilities:
Receivables	79			(8		)
Income taxes receivable	136			(306		)
Inventories	(58		)	(21		)
Prepayments	(6		)	(2		)
Regulatory assets	(48		)	(14		)
Regulatory liabilities	(3		)	2
Accounts payable	(22		)	(36		)
Unrecognized tax benefits	183			210
Taxes accrued	325			(84		)
Derivative financial instruments	(3		)	(9		)
Other assets	(37		)	(58		)
Other liabilities	(49		)	86
Net Cash Provided From Operating Activities	927			679
Cash Flows From Investing Activities:
Property additions and construction expenditures	(1,095		)	(1,178		)
Proceeds from monetization of guaranty settlement	1,013			—
Proceeds from investments (including derivative collateral returned)	116			629
Purchase of investments (including derivative collateral posted)	(115		)	(743		)
Payments upon interest rate derivative contract settlements	—			(88		)
Net Cash Used For Investing Activities	(81		)	(1,380		)
Cash Flows From Financing Activities:
Proceeds from issuance of long-term debt	150			592
Repayment of long-term debt	(16		)	(15		)
Dividends	(258		)	(243		)
Short-term borrowings, net	81			247
Net Cash (Used For) Provided From Financing Activities	(43		)	581
Net Increase (Decrease) In Cash and Cash Equivalents	803			(120		)
Cash and Cash Equivalents, January 1	208			176
Cash and Cash Equivalents, September 30	$	1,011		$	56
Supplemental Cash Flow Information:
Cash for–Interest paid (net of capitalized interest of $16 and $14)	$	247		$	235
–Income taxes paid	1			229
–Income taxes received	123			—
Noncash Investing and Financing Activities:
Accrued construction expenditures	44			80
Capital leases	6			12
Guaranty settlement receivable	83			—



	Common Stock									Accumulated Other Comprehensive Income (Loss)
Millions	Shares	Outstanding Amount		Treasury Amount			Retained Earnings			Gains (Losses) from Cash Flow Hedges			Deferred Employee Benefit Plans			Total AOCI			Total
Balance as of January 1, 2017	143	$	2,402	$	(12	)	$	3,384		$	(36	)	$	(13	)	$	(49	)	$	5,725
Net Income							326												326
Other Comprehensive Income (Loss)
Losses arising during the period										(5		)	—			(5		)	(5		)
Losses/amortization reclassified from AOCI										4			1			5			5
Total Comprehensive Income							326			(1		)	1			—			326
Purchase of Treasury Stock	—	—		(1		)													(1		)
Dividends Declared							(263		)										(263		)
Balance as of September 30, 2017	143	$	2,402	$	(13	)	$	3,447		$	(37	)	$	(12	)	$	(49	)	$	5,787

Balance as of January 1, 2016	143	$	2,402	$	(12	)	$	3,118		$	(53	)	$	(12	)	$	(65	)	$	5,443
Net Income							471												471
Other Comprehensive Income (Loss)
Losses arising during the period										(4		)	—			(4		)	(4		)
Losses/amortization reclassified from AOCI										12			—			12			12
Total Comprehensive Income							471			8			—			8			479
Dividends Declared							(247		)										(247		)
Balance as of September 30, 2016	143	$	2,402	$	(12	)	$	3,342		$	(45	)	$	(12	)	$	(57	)	$	5,675



	The Company				Consolidated SCE&G
Millions of dollars	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Regulatory Assets:
Unrecovered nuclear project costs	$	4,520	—		$	4,520	—
Accumulated deferred income taxes	315		$	316	307		$	307
AROs and related funding	424		425		401		403
Deferred employee benefit plan costs	321		342		290		309
Deferred losses on interest rate derivatives	632		620		632		620
Other unrecovered plant	108		117		108		117
DSM Programs	58		59		58		59
Carrying costs on deferred tax assets related to nuclear construction	46		32		46		32
Pipeline integrity management costs	47		33		7		6
Environmental remediation costs	30		32		25		26
Deferred storm damage costs	22		20		22		20
Deferred costs related to uncertain tax position	28		15		28		15
Other	139		119		138		116
Total Regulatory Assets	$	6,690	$	2,130	$	6,582	$	2,030



Regulatory Liabilities:
Monetization of guaranty settlement	$	1,095	—		$	1,095	—
Asset removal costs	764		$	755	535		$	529
Deferred gains on interest rate derivatives	135		151		135		151
Other	21		24		14		15
Total Regulatory Liabilities	$	2,015	$	930	$	1,779	$	695



December 31, 2016 (Millions of dollars)	Total		SCANA			Consolidated SCE&G			PSNC Energy
Lines of credit:
Five-year, expiring December 2020	$	1,300.0	$	400.0		$	700.0		$	200.0
Fuel Company five-year, expiring December 2020	500.0		—			500.0			—
Three-year, expiring December 2018	200.0		—			200.0			—
Total committed long-term	2,000.0		400.0			1,400.0			200.0
Outstanding commercial paper (270 or fewer days)	940.5		64.4			804.3			71.8
Weighted average interest rate			1.43		%	1.04		%	1.07		%
Letters of credit supported by LOC	3.3		3.0			0.3			—
Available	$	1,056.2	$	332.6		$	595.4		$	128.2



	Commodity and Other Energy Management Contracts (in MMBTU)

Hedge designation	Gas Distribution	Gas Marketing	Total
As of September 30, 2017
Commodity contracts	8,330,000	16,723,000	25,053,000
Energy management contracts (a)	—	46,346,530	46,346,530
Total (a)	8,330,000	63,069,530	71,399,530

As of December 31, 2016
Commodity contracts	4,510,000	11,947,000	16,457,000
Energy management contracts (a)	—	67,447,223	67,447,223
Total (a)	4,510,000	79,394,223	83,904,223



Interest Rate Swaps
	The Company				Consolidated SCE&G
Millions of dollars	September 30, 2017		December 31, 2016		September 30, 2017		December 31, 2016
Designated as hedging instruments	$	111.2	$	115.6	$	36.4	$	36.4
Not designated as hedging instruments	1,285.0		1,285.0		1,285.0		1,285.0



Fair Values of Derivative Instruments
		The Company				Consolidated SCE&G
Millions of dollars	Balance Sheet Location	Asset		Liability		Asset		Liability
As of September 30, 2017
Designated as hedging instruments
Interest rate contracts
	Derivative financial instruments	—		$	3	—		$	1
	Other deferred credits and other liabilities	—		25		—		9
Commodity contracts
	Prepayments	—		1		—		—
	Derivative financial instruments	$	1	1		—		—
Total		$	1	$	30	—		$	10

Not designated as hedging instruments
Interest rate contracts
	Other deferred debits and other assets	$	56	—		$	56	—
	Derivative financial instruments	—		$	40	—		$	40
	Other deferred credits and other liabilities	—		4		—		4
Commodity contracts
	Prepayments	1		—		—		—
Energy management contracts
	Prepayments	2		1		—		—
	Other current assets	2		—		—		—
	Other deferred debits and other assets	1		—		—		—
	Derivative financial instruments	—		2		—		—
	Other deferred credits and other liabilities	—		1		—		—
Total		$	62	$	48	$	56	$	44

As of December 31, 2016
Designated as hedging instruments
Interest rate contracts
	Derivative financial instruments	—		$	4	—		$	1
	Other deferred credits and other liabilities	—		24		—		8
Commodity contracts
	Prepayments	$	5	—		—		—
	Other current assets	1		—		—		—
Total		$	6	$	28	—		$	9

Not designated as hedging instruments
Interest rate contracts
	Other deferred debits and other assets	$	71	—		$	71	—
	Derivative financial instruments	—		$	27	—		$	27
	Other deferred credits and other liabilities	—		3		—		3
Commodity contracts
	Other current assets	3		—		—		—
Energy management contracts
	Prepayments	6		2		—		—
	Other current assets	2		1		—		—
	Other deferred debits and other assets	2		—		—		—
	Derivative financial instruments	—		4		—		—
	Other deferred credits and other liabilities	—		2		—		—
Total		$	84	$	39	$	71	$	30



The Company and Consolidated SCE&G:
	Loss Deferred in Regulatory Accounts							Loss Reclassified from Deferred Accounts into Income
	Loss Deferred in Regulatory Accounts							Loss Reclassified from Deferred Accounts into Income
Millions of dollars	2017			2016			Location	2017			2016
Three Months Ended September 30,
Interest rate contracts	—			$	(1	)	Interest expense	—			$	(1	)
Nine Months Ended September 30,
Interest rate contracts	$	(1	)	$	(6	)	Interest expense	$	(1	)	$	(2	)



The Company:
	Gain (Loss) Recognized in OCI, net of tax							Gain (Loss) Reclassified from AOCI into Income, net of tax
	Gain (Loss) Recognized in OCI, net of tax							Gain (Loss) Reclassified from AOCI into Income, net of tax
Millions of dollars	2017			2016			Location	2017			2016
Three Months Ended September 30,
Interest rate contracts	—			$	1		Interest expense	$	(2	)	$	(2	)
Commodity contracts	—			(2		)	Gas purchased for resale	—			—
Total	—			$	(1	)		$	(2	)	$	(2	)

Nine Months Ended September 30,
Interest rate contracts	$	(1	)	$	(4	)	Interest expense	$	(6	)	$	(6	)
Commodity contracts	(4		)	—			Gas purchased for resale	2			(6		)
Total	$	(5	)	$	(4	)		$	(4	)	$	(12	)



Derivative Assets	The Company												Consolidated SCE&G
Millions of dollars	Interest Rate Contracts			Commodity Contracts			Energy Management Contracts			Total			Interest Rate Contracts
As of September 30, 2017
Gross Amounts of Recognized Assets	$	56		$	2		$	5		$	63		$	56
Gross Amounts Offset in Statement of Financial Position	—			(1		)	(2		)	(3		)	—
Net Amounts Presented in Statement of Financial Position	56			1			3			60			56
Gross Amounts Not Offset - Financial Instruments	(7		)	—			—			(7		)	(7		)
Gross Amounts Not Offset - Cash Collateral Received	—			—			—			—			—
Net Amount	$	49		$	1		$	3		$	53		$	49
Balance sheet location
Prepayments										$	1		—
Other current assets										2			—
Other deferred debits and other assets										57			$	56
Total										$	60		$	56

As of December 31, 2016
Gross Amounts of Recognized Assets	$	71		$	9		$	10		$	90		$	71
Gross Amounts Offset in Statement of Financial Position	—			—			(4		)	(4		)	—
Net Amounts Presented in Statement of Financial Position	71			9			6			86			71
Gross Amounts Not Offset - Financial Instruments	(9		)	—			—			(9		)	(9		)
Gross Amounts Not Offset - Cash Collateral Received	—			—			—			—			—
Net Amount	$	62		$	9		$	6		$	77		$	62
Balance sheet location
Prepayments										$	9		—
Other current assets										5			—
Other deferred debits and other assets										72			$	71
Total										$	86		$	71



Derivative Liabilities	The Company												Consolidated SCE&G
Millions of dollars	Interest Rate Contracts			Commodity Contracts			Energy Management Contracts			Total			Interest Rate Contracts
As of September 30, 2017
Gross Amounts of Recognized Liabilities	$	72		$	2		$	4		$	78		$	54
Gross Amounts Offset in Statement of Financial Position	—			(1		)	(2		)	(3		)	—
Net Amounts Presented in Statement of Financial Position	72			1			2			75			54
Gross Amounts Not Offset - Financial Instruments	(7		)	—			—			(7		)	(7		)
Gross Amounts Not Offset - Cash Collateral Posted	(30		)	—			(1		)	(31		)	(10		)
Net Amount	$	35		$	1		$	1		$	37		$	37
Balance sheet location
Prepayments										$	1		—
Derivative financial instruments										45			$	41
Other deferred credits and other liabilities										29			13
Total										$	75		$	54

As of December 31, 2016
Gross Amounts of Recognized Liabilities	$	58		—			$	9		$	67		$	39
Gross Amounts Offset in Statement of Financial Position	—			—			(3		)	(3		)	—
Net Amounts Presented in Statement of Financial Position	58			—			6			64			39
Gross Amounts Not Offset - Financial Instruments	(9		)	—			—			(9		)	(9		)
Gross Amounts Not Offset - Cash Collateral Posted	(29		)	—			—			(29		)	(9		)
Net Amount	$	20		—			$	6		$	26		$	21
Balance sheet location
Derivative financial instruments										$	35		$	28
Other deferred credits and other liabilities										29			11
Total										$	64		$	39



Nine months ended September 30,
Service cost	$	16.3		$	15.5		$	3.4	$	3.3
Interest cost	28.0			29.5			8.6		9.1
Expected return on assets	(41.0		)	(41.9		)	—		—
Prior service cost amortization	1.2			3.0			—		0.2
Amortization of actuarial losses	12.2			11.1			0.8		0.4
Net periodic benefit cost	$	16.7		$	17.2		$	12.8	$	13.0



Nine months ended September 30,
Service cost	$	13.6		$	12.7		$	2.8	$	2.7
Interest cost	24.0			25.0			7.1		7.5
Expected return on assets	(35.0		)	(35.5		)	—		—
Prior service cost amortization	1.0			2.5			—		0.2
Amortization of actuarial losses	10.4			9.4			0.6		0.3
Net periodic benefit cost	$	14.0		$	14.1		$	10.5	$	10.7



Nine Months Ended September 30, 2017
Electric Operations	$	2,042	$	4		$	549	n/a
Gas Distribution	584		1			109		n/a
Gas Marketing	623		93			n/a		$	17
All Other	—		286			—		(14		)
Adjustments/Eliminations	—		(384		)	27		323
Consolidated Total	$	3,249	$	—		$	685	$	326



Three Months Ended September 30, 2016
Electric Operations	$	817	$	1		$	364		n/a
Gas Distribution	111		—			(14		)	n/a
Gas Marketing	165		35			n/a			$	(1	)
All Other	—		100			—			(7		)
Adjustments/Eliminations	—		(136		)	(2		)	197
Consolidated Total	$	1,093	$	—		$	348		$	189



Nine Months Ended September 30, 2016
Electric Operations	$	2,035	$	4		$	784	n/a
Gas Distribution	538		1			79		n/a
Gas Marketing	598		83			n/a		$	23
All Other	—		302			—		(14		)
Adjustments/Eliminations	—		(390		)	37		462
Consolidated Total	$	3,171	$	—		$	900	$	471



Consolidated SCE&G
Millions of dollars	External Revenue		Operating Income			Earnings Available to Common Shareholder
Three Months Ended September 30, 2017
Electric Operations	$	787	$	125		n/a
Gas Distribution	69		(2		)	n/a
Adjustments/Eliminations	—		—			$	39
Consolidated Total	$	856	$	123		$	39



Nine Months Ended September 30, 2017
Electric Operations	$	2,046	$	549	n/a
Gas Distribution	285		42		n/a
Adjustments/Eliminations	—		—		$	270
Consolidated Total	$	2,331	$	591	$	270



Nine Months Ended September 30, 2016
Electric Operations	$	2,039	$	784	n/a
Gas Distribution	253		32		n/a
Adjustments/Eliminations	—		—		$	423
Consolidated Total	$	2,292	$	816	$	423



Segment Assets	The Company				Consolidated SCE&G
	September 30,		December 31,		September 30,		December 31,
Millions of dollars	2017		2016		2017		2016
Electric Operations	$	12,294	$	11,929	$	12,294	$	11,929
Gas Distribution	3,080		2,892		856		825
Gas Marketing	187		230		n/a		n/a
All Other	970		1,124		n/a		n/a
Adjustments/Eliminations	3,488		2,532		4,283		3,337
Consolidated Total	$	20,019	$	18,707	$	17,433	$	16,091



	Third Quarter				Year to Date
The Company	2017		2016		2017		2016
Earnings per share	$	0.24	$	1.32	$	2.28	$	3.29

Consolidated SCE&G
Net income (millions of dollars)	$	41.8	$	204.0	$	279.7	$	432.9



	Third Quarter		Year to Date
Classification	2017	2016	2017	2016
Residential	2,384	2,648	5,936	6,450
Commercial	2,159	2,259	5,663	5,861
Industrial	1,652	1,676	4,676	4,760
Other	163	171	444	462
Total Retail Sales	6,358	6,754	16,719	17,533
Wholesale	257	276	699	725
Total Sales	6,615	7,030	17,418	18,258



Expected Maturity	2017	2018		2019	2020
Futures - Long
Settlement Price (a)	3.10	3.15		3.07	—
Contract Amount (b)	21.4	45.9		6.9	—
Fair Value (b)	20.1	45.4		7.1	—

Futures - Short
Settlement Price (a)	3.09	3.16		—	—
Contract Amount (b)	6.7	8.0		—	—
Fair Value (b)	6.0	7.7		—	—

Options - Purchased Call (Long)
Strike Price (a)	—	2.54		—	—
Contract Amount (b)	—	19.1		—	—
Fair Value (b)	—	1.0		—	—

Swaps - Commodity
Pay fixed/receive variable (b)	6.3	20.4		5.3	1.0
Average pay rate (a)	3.3022	3.2285		2.9381	2.8950
Average received rate (a)	3.1043	3.1288		2.9703	2.8219
Fair value (b)	5.9	19.8		5.4	0.9

Pay variable/receive fixed (b)	6.3	25.5		8.0	0.9
Average pay rate (a)	3.0973	3.0822		2.9796	2.8397
Average received rate (a)	3.1848	3.1643	2.9499	2.9499	2.8973
Fair value (b)	6.5	26.1		8.0	0.9

Swaps - Basis
Pay variable/receive variable (b)	7.1	8.0		0.3	—
Average pay rate (a)	3.0073	3.2222		3.2311	—
Average received rate (a)	2.9666	3.1828		3.1441	—
Fair value (b)	7.0	7.9		0.3	—

(a) Weighted average, in dollars
(b) Millions of dollars



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
July 1 - 31	5,935	$	65.16	5,935
August 1 - 31	—	—		—
September 1 - 30	—	—		—
Total	5,935			5,935	*