SCANA (SCG)

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Based in Columbia, South Carolina, SCANA Corporations (NYSE: SGC) engages in the generation, distribution, and sale of electric and natural gas utility services in portions of North and South Carolina. Through its main subsidiary, South Carolina Electric and Gas (NYSE: SCE&G), SCANA markets its services throughout the southeast of the United States.^[1] Its other wholly-owned nonregulated subsidiaries perform power plant maintenance and management services, provide fiber optic and other telecommunication services, and give service contracts to homeowners in the southeast for certain home appliances. Another subsidiary even provides administrative services to the other subsidiaries. .^[2] SCANA operates in the southeast of the United States, particularly in North and South Carolina. While it has struggled with profitability and productivity, it currently operates in markets with above-average population growth, and thus its customer base is growing. It enjoys close partnerships with regulators and subsidies such as SCE&G and Public Service Company of North Carolina, Incorporated (PSNC Energy). The company has also greatly profited from recent rises in gas and electric rates.

[edit] Business Financials

The primary sources of SCANA’s revenue are the electric and gas services provided to customers in the southeast. Other sources include telecommunication services, service contracts for homeowners, and power plant management. As seen by the charts below, operating revenue steadily increased from 2002 to 2005, and did not significantly change during 2006.

Aside from a severe 27 percent drop in 2005, operating income has steadily increased since before 2003. Revenues continued to remain high during 2005’s income drop, despite a 4 percent drop in 2006. .^[3] Between 2006 and 2005, territorial sales volumes decreased by 786 MWh because of lower industrial sale volumes and unfavorable weather. These decreases were partially offset by an increase due to residential and commercial customer growth. Between 2005 and 2004, sales volumes increased due to customer growth, partially offset a decrease due to unfavorable weather, resulting in a net 278 MWh increase.^[4]

[edit] Key Trends and Forces

1. Commodity prices

SCANA uses oil and coal for gas, and as a result, it is especially sensitive to changes in coal, gas, oil and other commodity availability. Any changes affect operating costs and their competitive position in the market. Certain subsidaries can recover the cost of fuel used in electric generation through retail customers' bills. However, rises in costs of fuel affect electric prices and negatively affects the position of electricity as opposed to alternative sources of energy. Increases in gas costs may also result in lower usage by customers unable to switch to alternate fuels. ^[5]

2. Governmental laws and regulations

The government sets SCANA's prices. At any given time, it's profitability is dependent on the whims of the government. The company must comply with extensive governmental regulartions on the federal, state and local levels, changes that are ongoing and often unpredictable. The effects shape the positioning and management of facilities, safety, reliability of our transmission system, security of key assets, etc. In addition, compliance with extensive federal, state and local environmental laws and regulations requires the company to commit large amounts of capital toward monitoring, pollution management equipment, and licenses at facilities. Changes in stipulations by governmental authorities may impose additional costs or require the company to curtail activities. ^[6]

3. Abnormal weather

In the past, SCANA has had fewer sales and delivered less gas, and thus earned less income, when weather conditions are worse than usual. In the future, bad weather could diminish the revenues and results of operations and subsequently harm the company’s position in the financial market. In addition, severe weather can be destructive, causing outages and property damage, adversely affecting operating expenses and revenues. ^[7]

4. Interest rates

SCANA is vulnerable to interest rate fluctuations which can raise borrowing expenses, and may not have access to capital at favorable rates, both of which may adversely affect operations. Business plans reflect the expectation that the company be able to access capital markets on sufficient terms for funding purposes. Moreover, the ability to maintain short-term liquidity by using commercial paper programs depends on maintenance of investment grade debt ratings. ^[8]

5. Nuclear Power

A large part of certain subsidaries’ generating capacity is derived from nuclear power, the use of which exposes SCANA to regulatory, environmental and business risks. These risks could increase our costs or otherwise constrain our business, thus negatively affecting operational procedures, cash flows and financial condition. For instance, there exist serveral potential harmful effects on the environment and human health as a result of a release of radioactive materials used to manage nuclear facilities and radioactive materials. ^[9]

[edit] Competitors

SCANA faces competition mainly from local and regional companies. SCANA, unlike most other industries, has to adapt to the impact of competition from other energy suppliers as well as competition from alternate fuels in industrial markets. In general, the company operates on a smaller scale than it's competitors. Also, unlike its national rivals, it operates primarily through subsidiaries. As seen by the chart below, its megawatt hour (MWh) sales volumes are significantly less than those of its challengers, despite the company's proposed growth in the future by analysts. The chart below states megawatt hour (MWh) sales volumes (in thousands) for SCANA and its close competitors.

 SCANA

	Select All  |  Select None Metrics Generation Capacity in Watt Hours Total Owned Generation Capacity in Watts Total Gas Pipeline Miles Electricity Delivered to other retail Customers in Watt Hours HydroElectric/Wind Generation Capacity in Watts Thermal Generation Capacity in Watts Owned Generation Capacity in Watts Long Term Contract Generation Capacity in Watts Total Electicity Sales Total Gas Sales Total Electicity Sales in Watt Hours Total Gas Sales in Watt Hours Purchased Power Expense Electricity Delivered to Residential Customers in Watt Hours Electricity Delivered to Industrial Customers in Watts hours Electricity Delivered to Commercial Customers in Watt Hours Electricity Delivered to Retail Customers in Watt Hours Electricity Delivered to Wholesale Customers in Watt Hours Electricity Delivered to Other Electric Utilities in Watt Hours Total Customers Generation Capacity in Watts Nuclear Generation Capacity in Watts Fossil Fuel Generation Capacity in Watts Net Income Cancel

	Select All  |  Select None Companies Pacific Gas & Electric (PCG) Consolidated Edison (ED) Ameren (AEE) Allete (ALE) Avista (AVA) CH Energy Group (CHG) CMS Energy (CMS) CenterPoint Energy, Inc (Holding Co) (CNP) DPL (DPL) Energy East (EAS) Commerce Energy Group (EGR) Exelon (EXC) Florida Public Utilities Company (FPU) AQUILA (ILA) Alliant Energy (LNT) MGE Energy (MGEE) Mirant (MIR) NiSource, Inc (NI) Northeast Utilities (NU) NorthWestern (NWEC) Public Service Enterprise Group (PEG) PNM Resources, Inc. (Holding Co.) (PNM) SCANA (SCG) Sierra Pacific Resources (SRP) UGI (UGI) UNITIL (UTL) Vectren (VVC) Wisconsin Energy (WEC) Westar Energy (WR) WPS Resources (TEG) Cancel

Choose View:20042005200620072008Most Recent

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+ Select more metrics (24)

Company	Data From	Nuclear Generation Capacity in Watts	Net Income	Generation Capacity in Watts	Fossil Fuel Generation Capacity in Watts
Energy East (EAS)	2006	Add	$260M	555M	448M
Mirant (MIR)	2007	Add	$2B	10.3B	10.3B
NiSource, Inc (NI)	2007	0	$321M	2.91B	2.9B
Northeast Utilities (NU)	2007	Add	$246M	1.17B	995M
SCANA (SCG)	2007	644M	$320M	5.75B	3.89B

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[edit] Notes

1. ↑ SCG 2006 10-K Item 1 Page 6
2. ↑ Yahoo! Finance SCG Section
3. ↑ SCG 2006 10-K Item 8 Page 48-51
4. ↑ SCG 2006 10-K Item 7 Page 27
5. ↑ SCG 2006 10-K Item 1A Page 14
6. ↑ SCG 2006 10-K Item 1A Page 15
7. ↑ SCG 2006 10-K Item 1A Page 16
8. ↑ SCG 2006 10-K Item 1A Page 16
9. ↑ SCG 2006 10-K Item 1A Page 17
10. ↑ SCG 2006 10-K Item 7 Page 27
11. ↑ D 2006 10-K Item 7 Page 27
12. ↑ Wisconsin Energy Corp.- Investor Relations
13. ↑ PGN 2006 10-K Item 1 Page 23
14. ↑ EAS,2006,10-K,Item 6
15. ↑ ^{15.0 15.1} EAS,2006,10-K,Item 2
16. ↑ MIR,2007,10-K,Item-6,PG-36
17. ↑ ^{17.0 17.1} MIR,2007,10-K,Item-2,PG-31
18. ↑ 2007 Form 10-K
19. ↑ Google Finance
20. ↑ Reuters
21. ↑ http://stocks.us.reuters.com/stocks/fullDescription.asp?rpc=66&symbol=NI
22. ↑ NU,2007,Exhibit 13,Pg-86
23. ↑ ^{23.0 23.1} NU,2007,10-K,Item-2,Pg-23
24. ↑ ^{24.0 24.1} SCG,2007,10-K,Item-2
25. ↑ ^{25.0 25.1} SCG,2007,10-K,Item-6