SCANA subsidiary reaches settlement agreement for annual purchased gas adjustment review in South Carolina

Columbia, S.C., Oct. 21, 2005 — South Carolina Electric & Gas Company (SCE&G), principal subsidiary of SCANA Corporation, announced today that it has entered into a settlement agreement with the Office of Regulatory Staff and the South Carolina Energy Users Committee, a consortium of large industrial customers, relating to the annual review of the purchased gas adjustment (PGA) component of the company’s retail natural gas rates. The annual PGA review allows SCE&G to pass through to customers increases or decreases in the cost of natural gas.

SCE&G does not profit from such adjustments.

The Public Service Commission of South Carolina (PSC) held a hearing today on the company’s PGA request and the proposed settlement agreement. A final decision by the PSC is expected by the end of October 2005.

In September 2005, SCE&G filed for an increase in the PGA component of its retail natural gas rates to offset the recent record increases in the price of wholesale natural gas, attributable in part to supply disruptions caused by Hurricanes Katrina and Rita this summer. That request, which included an increase of approximately 55.5 percent in the PGA component of residential rates, reflected recovery of an estimated $14 million in under-collected gas costs during the 12-month period ending October 31, 2005 as well as projected gas costs over the succeeding 12-month period through October 31, 2006.

In an effort to help its customers deal with the unprecedented increases in natural gas prices, SCE&G has agreed, as part of the proposed settlement agreement, to defer collection of these under-collected expenses and to implement additional cost-saving measures as highlighted below:

(1) SCE&G will defer, for one year, recovery of the $14 million in under- collected gas costs incurred in purchasing natural gas for its customers over the past 12 months. That amount would be subject to collection beginning November 1, 2006.

(2) The settlement agreement stipulates that the cost-of-gas factor to be applied to customer bills for the 12-month period beginning Nov. 1, 2005 will be based on projected natural gas costs over a 24-month period rather than the 12-month forecast period typically used in PGA proceedings. This change lowers the cost-of-gas factor and is projected to increase the under- collection of gas costs during the 12-month forecast period by approximately $7 million.

(3) SCE&G will not accrue interest on the under-collected amounts through October 31, 2006. After that date, interest will accrue monthly on the under- collected balance until the projected $21 million in under-collected gas costs is fully recovered.

(4) To help ensure that the under-collection does not exceed that $21 million mark by the end of the 12-month forecast period, the settlement agreement allows SCE&G to adjust its cost-of-gas factor on a monthly basis beginning in December 2005. That change will allow the company to keep pace with further increases in the wholesale cost of natural gas.

In its original filing, SCE&G had asked the PSC to raise the PGA component of residential rates from approximately $.90 per therm to about $1.40 per therm, or about 55.5 percent, effective in November 2005. The settlement agreement, which is subject to review and approval by the PSC, reduces the requested increase in the PGA component of residential rates by approximately 21 percent, or 11 cents per therm.

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