[Federal Register Volume 68, Number 14 (Wednesday, January 22, 2003)]
[Notices]
[Pages 3056-3062]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-1344]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27639]


Filings Under the Public Utility Holding Company Act of 1935, as 
amended (``Act'')

January 15, 2003.
    Notice is hereby given that the following filing(s) has/have been 
made with the Commission under provisions of the Act and rules 
promulgated under the Act. All interested persons are referred to the 
application(s) and/or declaration(s) for complete statements of the 
proposed transaction(s) summarized below. The application(s) and/or 
declaration(s) and any amendment(s) is/are available for public 
inspection through the Commission's Branch of Public Reference.
    Interested persons wishing to comment or request a hearing on the 
application(s) and/or declaration(s) should submit their views in 
writing by February 7, 2003, to the Secretary, Securities and Exchange 
Commission, Washington, DC 20549-0609, and serve a copy on the relevant 
applicant(s) and/or declarant(s) at the address(es) specified below. 
Proof of service (by affidavit or, in the case of an attorney at law, 
by certificate) should be filed with the request. Any request for 
hearing should identify specifically the issues of facts or law that 
are disputed. A person who so requests will be notified of any hearing, 
if ordered, and will receive a copy of any notice or order issued in 
the matter. After February 7, 2003 the application(s) and/or 
declaration(s), as filed or as amended, may be granted and/or permitted 
to become effective.

SCANA Corporation, et al. (70-10087)

    SCANA Corporation (``SCANA''), a registered holding company, 
SCANA's three public-utility subsidiary companies, South Carolina 
Electric & Gas Company (``SCE&G''), Public Service Company of North 
Carolina (``PSNC''), South Carolina Generating Company, Inc. 
(``GENCO''), and SCANA's nonutility subsidiary companies, SCANA 
Services, Inc. (``SCANA Services''), SCANA Energy Marketing, Inc., 
SCANA Resources, Inc., South Carolina Fuel Company, Inc. (``Fuel 
Company''), South Carolina Pipeline Corporation, SCG Pipeline, Inc., 
SCANA Energy Trading, LLC, SCANA Public Service Company, LLC, SCANA 
Communications, Inc. , ServiceCare, Inc., Primesouth, Inc., Palmark, 
Inc., SCANA Development Corporation, SCANA Services, Inc., PSNC Blue 
Ridge Corporation, PSNC Cardial Pipeline Company and Clean Energy 
Enterprises Inc. (collectively, the ``Applicants''), each located at 
1426 Main Street, Columbia, South Carolina 29201 filed an application-
declaration (``Application'') under sections 6(a), 7, 9(a), 10, 12(b), 
and 12(c) of the Act and rules 43, 45, 46, 53, and 54, and under the 
Act.\1\
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    \1\ SCANA directly owns all of the issued and outstanding common 
stock of three public utility companies, PSNC, SCE&G, and GENCO, 
(collectively referred to as the ``Utility Subsidiaries''). All of 
SCANA's direct and indirect subsidiaries, other than the Utility 
Subsidiaries, are referred to as the ``Nonutility Subsidiaries.'' 
The Utility Subsidiaries and Nonutility Subsidiaries are 
collectively referred to as the ``Subsidiaries.''
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    Applicants request authority to engage in a variety of financing 
transactions, credit support arrangements, and other related proposals, 
as more fully discussed below, commencing on the effective date of an 
order issued under this filing and ending April 15, 2006 
(``Authorization Period'').

I. General Terms and Conditions

    Financing by each Applicant will be subject to the following 
limitations (``Financing Parameters''): (i) The effective cost of 
capital on debt and preferred or equity-linked financings will not 
exceed competitive market rates available at the time of issuance for 
securities having the same or reasonably similar terms and conditions 
issued by similar companies of reasonably comparable credit quality, 
provided that in no event will the effective cost of capital on (a) 
long-term debt borrowings exceed 500 basis points over the comparable 
term U.S. Treasury securities and (b) short-term debt borrowings exceed 
500 basis points over the comparable term London Interbank Offered Rate 
(``LIBOR''); (ii) the maturity of indebtedness will not exceed 50 
years, and, preferred stock or preferred or equity-linked securities 
(other than perpetual preferred stock) will be redeemed no later than 
50 years after the issuance thereof, unless converted into common 
stock; and (iii) the underwriting fees, commissions or other similar 
remuneration paid in connection with the non-competitive issue, sale or 
distribution of securities under this Application will not exceed the 
greater of (a) 5% of the principal or total amount of the securities 
being issued or (b) issuance expenses that are generally paid at the 
time of the pricing for sales of the particular issuance, having the 
same or reasonably similar terms and conditions issued by similar 
companies of reasonably comparable credit quality.
    Applicants represent that at all times during the Authorization 
Period, SCANA and each Utility Subsidiary will each maintain common 
equity (as reflected in the most recent 10-K or 10-Q filed with the 
Commission under the Securities and Exchange Act of 1934, as amended, 
(``1934 Act'') adjusted to reflect changes in capitalization since the 
balance sheet date therein) of at least 30% of its consolidated 
capitalization (common equity, preferred stock, long-term and short-
term debt), provided that SCANA will, in any event, be authorized to 
issue common stock (including under the dividend reinvestment or 
employment plans described below), to the extent authorized in this 
filing.
    Applicants further represent that, at the time of any security 
issuance under the authority sought below, the rating of any security 
issued (or the rating of the same class of security) shall be at least 
investment grade by at least one nationally recognized statistical 
rating organization, as that term is used in paragraphs (c)(2)(vi)(E), 
(F) and (H) of Rule 15c3-1 under the 1934 Act. If such issuance is of a 
type of security that is unrated, the issuer shall have a corporate or 
senior unsecured debt rating of at least investment grade. Applicants 
propose that the ratings test will not apply to any issuance of common 
stock or to issuances of indebtedness by GENCO.\2\
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    \2\ According to Applicants, GENCO does not currently have any 
rated securities outstanding and is not expected to have a security 
rating during the Authorization Period. Applicants state that, if 
GENCO receives a security rating during the Authorization Period, 
the previously outlined ratings test will also apply to any issuance 
by GENCO.
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II. Background and Current Proposal

    By order dated February 14, 2000,\3\ the Commission authorized (as 
supplemented and amended in subsequent Commission orders, collectively, 
the ``Financing Orders''),\4\ SCANA, the Utility Subsidiaries and the 
Nonutility Subsidiaries to, among other

[[Page 3057]]

things, engage in: (i) External issuances by SCANA of common stock, 
long-term debt, short-term debt, and other securities for cash; (ii) 
the entering into by SCANA of transactions to manage interest rate risk 
(``hedging transactions''); (iii) issuances of debt securities 
(including commercial paper) and the entering into of hedging 
transactions by the Utility Subsidiaries; (iv) issuances by Nonutility 
Subsidiaries of debt securities which are not exempt under rule 52 of 
the Act; (v) the establishment of a utility money pool (the ``Utility 
Money Pool'') and a nonutility money pool (the ``Nonutility Money 
Pool''); (vi) the issuance of intrasystem guarantees by SCANA and the 
Nonutility Subsidiaries on behalf of Subsidiaries; (vii) the ability of 
wholly-owned Subsidiaries to alter their capital stock in order to 
engage in financing transactions with their parent company and to 
engage in a reverse stock split to reduce franchise taxes, subject, in 
the case of Utility Subsidiaries, to the approval of, if required, the 
applicable state commission; (viii) the ability of PSNC to pay 
dividends out of capital or unearned surplus; (ix) the formation of 
financing entities and the issuance by such entities of securities 
otherwise authorized to be issued and sold under the Financing Orders; 
and (x) the ability of SCANA to keep outstanding advances in favor of 
certain of its Subsidiaries in an amount of approximately $600 million 
following the acquisition of PSNC and, indirectly, of PSNC's 
subsidiaries (``Merger'').\5\
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    \3\ Holding Co. Act Release Nos. 27135 and 27137.
    \4\ The Commission issued supplemental orders increasing various 
financing limitations until February 11, 2003. See Holding Co. Act 
Release No. 27341 (Jan. 31, 2001) and Holding Co. Act Release No. 
27476 (Dec. 19, 2001).
    \5\ See Holding Co. Act Release No. 27133 (February 9, 2000) 
(``Merger Order'').
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    Further, by order dated June 9, 2000 (``Plan Order''), \6\ the 
Commission authorized SCANA to: (i) Grant awards of stock options, 
stock appreciation rights, restricted stock, performance shares and 
performance units under its long-term equity compensation plan, (ii) 
issue under such plan up to five million shares of its common stock 
through June 8, 2003, and (iii) solicit proxies with respect to such 
plan at SCANA's 2000 annual meeting of shareholders. Applicants state 
that the authority sought in the Application will replace and 
substitute for all the authority granted by the Financing Orders with 
respect to financing activities and will also replace and substitute 
for the authority granted by the Plan Order with respect to issuance of 
shares of common stock for benefit plans described in the Application.
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    \6\ See Holding Co. Act Release No. 27183.
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    Specifically, Applicants seek authority for the transactions 
discussed below and request authority to engage in the transactions in 
the Application during the period from the effective date of the order 
in this proceeding through the Authorization Period. Also, Applicants 
state that the proceeds from the sale of securities in external 
financing transactions will be used for general corporate purposes 
including: (i) The financing, in part, of the capital expenditures of 
the SCANA system; (ii) the financing of working capital requirements of 
the SCANA system; (iii) the acquisition, retirement or redemption under 
rule 42 of securities previously issued by SCANA or its Subsidiaries or 
as otherwise authorized by the Commission; (iv) direct or indirect 
investment in companies authorized under the Act or by Commission rule 
(including exempt wholesale generators (``EWGs'') or foreign utility 
companies (``FUCOs'') or in a separate proceeding; and (v) other lawful 
purposes. Applicants represent that no such financing proceeds will be 
used to acquire a new subsidiary unless such financing is consummated 
in accordance with an order of the Commission or an available exemption 
under the Act. The aggregate amount of proceeds of financings and 
guaranties used to fund investments in EWGs and FUCOs will not, when 
added to SCANA's ``aggregate investment'' in these entities at any 
point in time, exceed 50% of SCANA's ``consolidated retained earnings'' 
as defined in rule 53(a)(1).

III. SCANA External Financing

    SCANA requests authority to obtain funds externally through sales 
of common stock, preferred stock, preferred and equity-linked 
securities, long-term debt and short-term debt securities. With respect 
to common stock, SCANA also requests authority to issue common stock to 
third parties in consideration for the acquisition by SCANA or a 
Nonutility Subsidiary of equity or debt securities of a company being 
acquired under an exemption under the Act or under Commission 
authority. In addition, SCANA seeks the flexibility to enter into 
certain hedging transactions to manage interest rate risk.

A. Common Stock

    Applicants propose that the aggregate amount of financing obtained 
by SCANA during the Authorization Period from issuance and sale of 
common stock, no par value (other than for employee benefit plans or 
stock purchase and dividend reinvestment plans), when combined with 
issuances of preferred stock, preferred and equity-linked securities 
and long-term debt, as described in this section, and other than for 
refunding or replacement of securities where capitalization is not 
increased as a result thereof, shall not exceed $2.2 billion for the 
uses outlined in Part II, above.\7\
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    \7\ Applicants state that this request represents a decrease of 
$250 million from the authority granted in the Financing Orders 
reflecting lower anticipated capital requirements for SCANA.
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    SCANA requests authority to sell common stock covered by the 
Application in any one of the following ways: (i) Through underwriters 
or dealers; (ii) through agents; (iii) directly to a limited number of 
purchasers or a single purchaser; or (iv) directly to employees (or to 
trusts established for their benefit), shareholders and others. 
Issuances of common stock under SCANA's employee benefit plans and 
stock purchase and dividend reinvestment plans will not count towards 
this limitation. If underwriters are used in the sale of the 
securities, such securities will be acquired by the underwriters for 
their own account and may be resold from time to time in one or more 
transactions, including negotiated transactions, at a fixed public 
offering price or at varying prices determined at the time of sale. The 
securities may be offered to the public either through underwriting 
syndicates (which may be represented by a managing underwriter or 
underwriters designated by SCANA) or directly by one or more 
underwriters acting alone. The securities may be sold directly by SCANA 
or through agents designated by SCANA from time to time. If dealers are 
utilized in the sale of any of the securities, SCANA will sell such 
securities to the dealers as principals. Any dealer may then resell 
such securities to the public at varying prices to be determined by 
such dealer at the time of resale. If common stock is being sold in an 
underwritten offering, SCANA may grant the underwriters a ``green 
shoe'' option permitting the purchase from SCANA at the same price of 
additional shares then being offered solely for the purpose of covering 
over-allotments.
    Public distributions may be under private negotiation with 
underwriters, dealers or agents as discussed above or effected through 
competitive bidding among underwriters. In addition, sales may be made 
through private placements or other non-public offerings to one or more 
persons. All such common stock sales will be with terms and conditions, 
at rates or prices and under conditions negotiated or based upon, or 
otherwise determined by, competitive capital markets.

[[Page 3058]]

    Under the terms of the Act and orders of the Commission, including 
the Merger Order, SCANA states that it is authorized to acquire 
securities of companies engaged in energy-related consumer services, 
``energy-related businesses'' as described in rule 58, exempt 
telecommunications companies (``ETCs''), as defined in section 34 of 
the Act, EWGs and FUCOs. Historically, similar acquisitions have 
occasionally involved the exchange of parent company stock for 
securities of the company being acquired in order to provide the seller 
with certain tax advantages. These transactions are individually 
negotiated. According to Applicants, the SCANA common stock to be 
exchanged may be purchased on the open market under rule 42, or may be 
original issue. Original issue stock may be registered under the 
Securities Act of 1933, as amended (the ``1933 Act''), but at present 
it is expected that the common stock would not be registered and the 
common stock acquired by the third parties would be subject to resale 
restrictions under rule 144 under the 1933 Act.

B. Preferred Stock and Preferred and Equity-linked Securities

    SCANA requests Commission authority during the Authorization Period 
to issue preferred stock (subject to approval by shareholders of the 
necessary amendment to the Articles of Incorporation) and to issue 
directly or indirectly through one or more Financing Subsidiaries 
preferred securities (including, specifically, trust preferred 
securities) or equity-linked securities (including, specifically, debt 
or preferred securities that are convertible, either mandatory or at 
the option of the holder, into common stock or SCANA indebtedness and 
forward purchase contracts for common stock). The aggregate amount of 
financing obtained by SCANA during the Authorization Period from 
issuance and sale of preferred stock and preferred and equity-linked 
securities, when combined with issuances of common stock (other than 
for employee benefit plans or stock purchase and dividend reinvestment 
plans) and long-term debt, as described below, and other than for 
refunding or replacement of securities where capitalization is not 
increased from that in place at June 30, 2002, shall not exceed $2.2 
billion.
    According to Applicants, preferred stock and preferred equity-
linked securities may be sold directly or indirectly through 
underwriters or dealers in connection with an acquisition similar to 
that described for common stock above.

C. Long-Term Debt

    SCANA requests Commission authority during the Authorization Period 
to issue long-term debt securities in an aggregate principal amount 
outstanding at any time which, when combined with issuances of common 
stock (other than for benefit plans or stock purchase and dividend 
reinvestment plans), preferred stock, and preferred and equity-linked 
securities, as described above, and other than for refunding or 
replacement of securities where capitalization is not increased, shall 
not exceed $2.2 billion.
    Long-term debt securities may be comprised of bonds, notes, medium-
term notes or debentures under one or more indentures (the ``SCANA 
Indenture'') or long-term indebtedness under agreements with banks or 
other institutional lenders. Any long-term debt security would have 
such designation, aggregate principal amount, maturity, interest 
rate(s) or methods of determining the same, terms of payment of 
interest, redemption provisions, sinking fund terms, terms for 
conversion into any other security of SCANA and other terms and 
conditions as SCANA may determine at the time of issuance.
    Applicants state that the maturity dates, interest rates, 
redemption and sinking fund provisions, tender or repurchase and 
conversion features, if any, with respect to the long-term securities 
of a particular series, as well as any associated placement, 
underwriting or selling agent fees, commissions and discounts, if any, 
will be established by negotiation or competitive bidding.
    Borrowings from banks and other financial institutions may be 
unsecured and pari passu with debt securities issued under the SCANA 
Indenture and the short-term credit facilities (as described below). 
Applicants state that specific terms of any borrowings will continue to 
be determined by SCANA at the time of issuance and will comply in all 
regards with the parameters on financing authority in the Application.

D. Short-Term Debt

    SCANA requests authority to have outstanding at any one time during 
the Authorization Period, up to $500 million of short-term debt, which 
may include institutional borrowings, commercial paper or bid notes 
(all as described below) and short-term debt issued under the SCANA 
Indenture or otherwise. This request represents an increase of $50 
million over the authority previously granted in the Financing Orders. 
The authority for short-term debt is in addition to the $2.2 billion 
requested for common stock, preferred stock and preferred and equity-
linked securities and long-term debt as described above.
    SCANA requests authority to sell commercial paper, from time to 
time, in established domestic commercial paper markets. Such commercial 
paper would be sold to dealers at the discount rate or the coupon rate 
per annum prevailing at the date of issuance for commercial paper of 
comparable quality and maturities sold to commercial paper dealers 
generally. Applicants expect that the dealers acquiring commercial 
paper from SCANA will reoffer such paper at a discount to corporate and 
institutional investors. Institutional investors are expected to 
include commercial banks, insurance companies, pension funds, 
investment trusts, foundations, colleges and universities and finance 
companies.
    SCANA further requests authority to, without counting against the 
$500 million limit, maintain back-up lines of credit in connection with 
a commercial paper program in an aggregate amount not to exceed the 
amount of authorized commercial paper.
    Credit lines may be set up for use by SCANA for general corporate 
purposes in addition to credit lines to support commercial paper as 
described in this subsection. SCANA will borrow and repay under such 
lines of credit, from time to time, as it is deemed appropriate or 
necessary.

E. Financing Risk Management Devices

    SCANA requests authority to enter into, perform, purchase and sell 
financial instruments intended to reduce or manage the volatility of 
interest rates, including but not limited to interest rate swaps, caps, 
floors, collars and forward agreements. Hedges may also include 
issuance of structured notes (i.e., a debt instrument in which the 
principal and/or interest payments are indirectly linked to the value 
of an underlying asset or index), or transactions involving the 
purchase or sale, including short sales, of U.S. Treasury or U.S. 
governmental agency (e.g., Federal National Mortgage Association) 
obligations or LIBOR based swap instruments (collectively referred to 
as ``Hedge Instruments''). Applicants contend that the transactions 
would be for fixed periods and stated notional amounts. SCANA would 
employ interest rate derivatives as a means of prudently managing the 
risk associated with any of its outstanding debt issued under this 
authority or an applicable exemption by, in effect, synthetically (i) 
converting variable rate debt to fixed rate debt, (ii) converting fixed 
rate debt

[[Page 3059]]

to variable rate debt and (iii) limiting the impact of changes in 
interest rates resulting from variable rate debt. In no case will the 
notional principal amount of any interest rate swap exceed the greater 
of the face value of the underlying debt instrument or the present 
market value of the underlying debt instrument and related interest 
rate exposure. Transactions will be entered into for a fixed or 
determinable period. Thus, SCANA will not engage in speculative 
transactions unassociated with its existing outstanding debt and 
financing needs and activities. SCANA will only enter into agreements 
with counterparties (``Approved Counterparties'') whose senior debt 
ratings, as published by a national recognized rating agency, are 
greater than or equal to ``BBB,'' or an equivalent rating.
    In addition, SCANA requests authority to enter into interest rate 
hedging transactions with respect to anticipated debt offerings (the 
``Anticipatory Hedges''), subject to certain limitations and 
restrictions. Such Anticipatory Hedges would only be entered into with 
Approved Counterparties, and would be utilized to fix and/or limit the 
interest rate risk associated with any new issuance through (i) a 
forward sale of exchange-traded Hedge Instruments (a ``Forward Sale''), 
(ii) the purchase of put options on Hedge Instruments (a ``Put Options 
Purchase''), (iii) a Put Options Purchase in combination with the sale 
of call options Hedge Instruments (a ``Zero Cost Collar''), (iv) 
transactions involving the purchase or sale, including short sales, of 
Hedge Instruments, or (v) some combination of a Forward Sale, Put 
Options Purchase, Zero Cost Collar and/or other derivative or cash 
transactions, including, but not limited to, structured notes, caps and 
collars, appropriate for the Anticipatory Hedges. Anticipatory Hedges 
may be executed on-exchange (``On-Exchange Trades'') with brokers 
through the opening of futures and/or options positions traded on the 
Chicago Board of Trade (``CBOT''), the opening of over-the-counter 
positions with one or more counterparties (``Off-Exchange Trades''), or 
a combination of On-Exchange Trades and Off-Exchange Trades. SCANA or 
the appropriate Subsidiary will determine the optimal structure of each 
Anticipatory Hedge transaction at the time of execution. SCANA or the 
appropriate Subsidiary may decide to lock in interest rates and/or 
limit its exposure to interest rate increases.
    SCANA states that it will comply with Statement of Financial 
Accounting Standards (``SFAS'') 133 (``Accounting for Derivative 
Instruments and Hedging Activities''), SFAS 138 (``Accounting for 
Certain Derivative Instruments and Certain Hedging Activities'') or 
such other standards relating to accounting for derivative transactions 
as are adopted and implemented by the FASB. Applicants commit that the 
Hedge Instruments and Anticipatory Hedges will qualify for hedge 
accounting treatment under the current FASB standards in effect and as 
determined at the date such Hedge Instruments or Anticipatory Hedges 
are entered into.

IV. Utility Subsidiary Financing

    Applicants state that the financings by the Utility Subsidiaries 
for which authority is requested in the Application are outside the 
rule 52 exemption. Each Utility Subsidiary requests authority to issue 
securities not exempt under rule 52 for refunding or replacement of 
securities where its capitalization is not increased from that in 
place.

A. SCE&G and PSNC Short-Term Debt

    SCE&G requests authority to issue short-term debt, including 
commercial paper and credit lines, in the aggregate amount of $450 
million to be outstanding at any one time during the Authorization 
Period. Authority is requested for PSNC to issue short-term debt, 
including commercial paper and credit lines, in the aggregate amount of 
$300 million to be outstanding at any one time during the Authorization 
Period. These requests represent an increase of $150 million and $100, 
respectively, over the authority granted in the Financing Orders with 
respect to SCE&G and PSNC.
    SCE&G and PSNC request authority to sell commercial paper, from 
time to time, in established domestic commercial paper markets in a 
manner similar to SCANA as discussed above. SCE&G and PSNC may, without 
counting against the limit set forth above, further maintain back up 
lines of credit in an aggregate amount not to exceed the amount of 
authorized commercial paper. Credit lines may be set up for use by 
SCE&G and PSNC for general corporate purposes in addition to credit 
lines to support commercial paper as described in this subsection. 
SCE&G and PSNC will borrow and repay under such lines of credit, from 
time to time, as it is deemed appropriate or necessary. Subject to the 
limitations described above, SCE&G and PSNC may engage in other types 
of short-term financings as it may deem appropriate in light of its 
needs and market conditions at the time of issuance.

B. PSNC Long-Term Debt

    PSNC requests authority to issue up to $300 million in long-term 
debt securities during the Authorization Period. This request 
represents a decrease of $150 million from the authority granted in the 
Financing Orders.

C. GENCO Long-Term Debt

    GENCO requests authority to issue up to $100 million in long-term 
debt securities during the Authorization Period. SCANA expects to make 
additional exempt capital contributions to GENCO under rule 45. In 
addition thereto, authority is requested for GENCO to issue debt 
obligations to effectuate the refunding (including reasonable costs and 
redemption premiums incurred in connection with such refunding) of its 
now or hereafter outstanding debt obligations including pollution 
control loan obligations to achieve lower costs of money, extend 
maturity or for other proper corporate purposes. At June 30, 2002, 
GENCO had $77.4 million of long-term debt obligations outstanding. The 
amounts issued under this authority will not count against the 
financing limit described above provided for in the Application to the 
extent they will exclusively constitute refunding transactions that 
will not increase total capitalization of GENCO.

D. Financing Risk Management Devices

    To the extent not exempt under rule 52, the Utility Subsidiaries 
also request authority to enter into interest rate risk management 
transactions (hedge instruments) and Anticipatory Hedges of the same 
type and under the same conditions as are requested above by SCANA.

V. Guarantees, Intrasystem Advances and Intrasystem Money Pool

A. Guarantees and Intrasystem Advances

    SCANA requests continued authority to enter into guarantees, obtain 
letters of credit, enter into expense agreements or otherwise provide 
credit support with respect to the obligations of its Subsidiaries 
(``Guarantees'') as may be appropriate or necessary to enable such 
Subsidiaries to carry on in the ordinary course of their respective 
businesses, in an aggregate principal amount not to exceed $600 million 
outstanding at any one time (not taking into account obligations exempt 
under rule 45) (``Guarantee Limitation''). Included in this amount are 
guarantees and other credit support mechanisms by SCANA in favor of its 
Subsidiaries which were

[[Page 3060]]

previously issued. This request represents an increase of $295 million 
over the authority granted in the Financing Orders, reflecting 
increased business activity and additional requirements of SCANA's 
counterparties. SCANA may charge each Subsidiary a fee for each 
Guarantee provided on its behalf that is not more than that obtainable 
by the beneficiary of the Guarantee from third parties. Any Guarantees 
outstanding at the end of the Authorization Period will continue until 
expiration or termination in accordance with their terms.
    Applicants also request authority for the Nonutility Subsidiaries 
to enter into guarantees, obtain letters of credit, enter into expense 
agreements and otherwise provide credit support with respect to other 
Nonutility Subsidiaries, in an aggregate principal amount not to exceed 
$250 million outstanding at any one time, in addition to guarantees 
that are exempt under rule 52. The Nonutility Subsidiary providing any 
such credit support may charge its associate company a fee for each 
guarantee provided on its behalf determined in the same manner as 
specified above for SCANA's Guarantees.
    Furthermore, Applicants request authority for the Utility 
Subsidiaries to enter into guarantees, obtain letters of credit, enter 
into expense agreements and otherwise provide credit support with 
respect to their direct and indirect subsidiaries, in an aggregate 
principal amount not to exceed $250 million outstanding at any one time 
in addition to guarantees that are exempt under rule 52. The Utility 
Subsidiary providing any such credit support may charge its associate 
company a fee for each guarantee provided on its behalf determined in 
the same manner as specified above.
    Applicants state that certain Guarantees may be in support of the 
obligations of Subsidiaries which are subject to varying 
quantification. In such cases, SCANA would determine the exposure under 
such Guarantee for purposes of measuring compliance with the Guarantee 
Limitation by appropriate means, including estimation of exposure based 
on loss experience or projected potential payment amounts. If 
appropriate, such estimates will be made in accordance with Generally 
Accepted Accounting Principles (``GAAP''). Such estimation would be 
reevaluated periodically.
    SCANA also requests authority to keep in place advances to its 
Subsidiaries in an aggregate amount outstanding at any one time of up 
to $1.25 million. The interest rate used is the weighted average rate 
on SCANA's long-term and short-term debt. Such outstanding advances by 
SCANA to its Subsidiaries are open advances with no maturities and are 
callable by SCANA at any time.

B. Authorization and Operation of the Money Pools

    SCANA and the Utility Subsidiaries request authority, through the 
Authorization Period, to continue the Utility Money Pool established 
under the authority granted in the Financing Orders, and the Utility 
Subsidiaries, to the extent not exempted by rule 52, also request 
authority to continue to make, from time to time, unsecured short-term 
borrowings from the Utility Money Pool and to contribute surplus funds 
to the Utility Money Pool and to lend and extend credit to (and acquire 
promissory notes from) one another through the Utility Money Pool. In 
addition to the Utility Subsidiaries, SCANA requests that Fuel Company 
be allowed to continue participating in the Utility Money Pool as a 
result of its financing relationship with SCE&G. For purposes of 
discussing the Utility Money Pool, the term Utility Subsidiaries shall 
include Fuel Company.
    In addition, SCANA and the Nonutility Subsidiaries (other than Fuel 
Company),\8\ request authority to continue the Nonutility Money Pool. 
Funds made available by SCANA for loans through the money pools are 
made available first for loans through the Utility Money Pool (to the 
extent being operated) and thereafter for loans through the Nonutility 
Money Pool.
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    \8\ I.e., South Carolina Pipeline Corporation; SCG Pipeline, 
Inc.; SCANA Energy Marketing, Inc.; SCANA Energy Trading, LLC; SCANA 
Public Service Company, LLC; SCANA Communications, Inc.; 
ServiceCare, Inc.; Primesouth, Inc.; Palmark, Inc.; SCANA Resources, 
Inc.; SCANA Development Corporation; SCANA Petroleum Resources, 
Inc.; SCANA Services, Inc.; PSNC Blue Ridge Corporation; PSNC 
Cardinal Pipeline Company; and Clean Energy Enterprises Inc.
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    SCANA requests authority to contribute surplus funds and to lend 
and extend credit to (a) the Utility Subsidiaries through the Utility 
Money Pool and (b) the Nonutility Subsidiaries through the Nonutility 
Money Pool.
    Applicants believe that the cost of the proposed borrowings through 
the two Money Pools will continue to generally be more favorable to the 
borrowing participants than the comparable cost of external short-term 
borrowings, and the yield to the participants contributing available 
funds to the two Money Pools will generally be higher than the typical 
yield on short-term investments.
    According to Applicants, the Utility Money Pool is currently not 
operated. A separate Nonutility Money Pool is in existence amongst 
SCANA and certain Nonutility Subsidiaries. Each of the Nonutility 
Subsidiaries (other than Fuel Company) that is an Applicant requests 
authority to participate in the Nonutility Money Pool. The Nonutility 
Money Pool is operated on the same terms and conditions as set forth 
for the Utility Money Pool, except that SCANA funds made available to 
the Money Pools will be made available to the Utility Money Pool first 
(to the extent it is operated) and thereafter to the Nonutility Money 
Pool. No loans through the Nonutility Money Pool are made to, and no 
borrowings through the Nonutility Money Pool are made by, SCANA. Fuel 
Company does not participate in the Nonutility Money Pool as it is 
anticipated to participate in the Utility Money Pool.
    SCANA and the Utility Subsidiaries may contribute funds from the 
issuance of short-term debt as authorized above to the Utility Money 
Pool. SCANA and the Nonutility Subsidiaries may contribute funds from 
the issuance of short-term debt to the Nonutility Money Pool.
    SCANA Services under the authority of the appropriate officers of 
the participating companies will continue to handle the operation of 
the Utility and Nonutility Money Pools, including record keeping and 
coordination of loans. SCANA Services administers the Utility and 
Nonutility Money Pools on an ``at cost'' basis and maintains separate 
records for each money pool. Surplus funds of the Utility Money Pool 
and the Nonutility Money Pool may be combined in common short-term 
investments, but separate records of such funds are maintained by SCANA 
Services as administrator of the pools, and interest thereon is 
separately allocated, on a daily basis, to each money pool in 
accordance with the proportion that the amount of each money pool's 
surplus funds bears to the total amount of surplus funds available for 
investment from both money pools.
    Proceeds of borrowings from the money pools may be used for the 
purposes set forth in the Financing Parameters. SCE&G, PSNC and GENCO 
may borrow up to $60 million, $30 million, and $50 million, 
respectively, at any one time outstanding from the Utility Money Pool. 
Each of these amounts is twice the amount of the authority granted in 
the Financing Orders. Applicants state that borrowings by Fuel Company 
under the Utility Money Pool are exempt under rule 52 under the Act and 
that borrowings under the Utility Money Pool are in addition to the 
authority for other

[[Page 3061]]

financings for which authority is sought in the Application.

VI. Direct Stock Purchase and Dividend Reinvestment Plan, Incentive 
Compensation Plans and Other Employee Benefit Plans

    SCANA proposes, from time to time during the Authorization Period, 
to issue and/or acquire in open market transactions, or by some other 
method which complies with applicable law and Commission 
interpretations then in effect, up to 10 million shares of SCANA common 
stock under SCANA's direct stock purchase and dividend reinvestment 
plan, certain incentive compensation plans and certain other employee 
benefit plans described in the Application. Under the Financing Orders 
and the Plan Order SCANA had authority to issue 15 million shares with 
respect to employment plans through February 11, 2003.

VII. Payment of Dividends Out of Capital or Unearned Surplus by 
Nonutility Subsidiaries

    Applicants request authority for the Nonutility Subsidiaries to pay 
dividends, from time to time, out of capital and unearned surplus 
(including revaluation reserve), to the extent permitted under 
applicable corporate law. Without further approval of the Commission, 
no Nonutility Subsidiary will declare or pay any dividend out of 
capital or unearned surplus if that Nonutility Subsidiary derives any 
material part of its revenues from sales of goods, services, 
electricity or natural gas to any of the Utility Subsidiaries.

VIII. Development and Administrative Activities

    In connection with future investments in EWGs, FUCOs and in 
subsidiaries permitted under rule 58 (``Rule 58 Subsidiaries''), SCANA 
requests authority to engage directly and through Subsidiaries in 
preliminary development activities (``Development Activities'') and 
administrative and management activities (``Administrative 
Activities'') associated with such investments.\9\ Development 
Activities and Administrative Activities include preliminary activities 
designed to result in a permitted Nonutility investment such as an 
investment in an EWG or FUCO under the authority requested in the 
Application; however, such preliminary activities may not qualify for 
such status until the project is more fully developed.
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    \9\ Intermediate Subsidiaries may also engage in Development 
Activities and Administrative Activities.
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    Development Activities will be limited to due diligence and design 
review; market studies; preliminary engineering; site inspection; 
preparation of bid proposals, including, in connection therewith, 
posting of bid bonds; application for required permits and/or 
regulatory approvals; acquisition of site options and options on other 
necessary rights; negotiation and execution of contractual commitments 
with owners of existing facilities, equipment vendors, construction 
firms, power purchasers, thermal ``hosts,'' fuel suppliers and other 
project contractors; negotiation of financing commitments with lenders 
and other third-party investors; and such other preliminary activities 
as may be required in connection with the purchase, acquisition or 
construction of facilities or the securities of other companies. 
Applicants state that Development Activities will be designed to 
eventually result in a permitted nonutility investment.
    SCANA proposes to expend directly or through Subsidiaries up to 
$200 million in the aggregate outstanding at any time during the 
Authorization Period on all such Development Activities.\10\ To the 
extent a Subsidiary for which such amounts were expended for 
Development Activities becomes an EWG, FUCO, or Rule 58 Subsidiary, the 
amount so expended will cease to be Development Activities and then be 
considered as part of the ``aggregate investment'' in such entity. In 
the case of EWGs, FUCOs and Rule 58 Subsidiaries, such aggregate 
investment will then count against the limitation on such aggregate 
investment under rule 53 or rule 58.
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    \10\ Applicants state that expenditures in EWGs, FUCOs and in 
Rule 58 Subsidiaries which count against the ``aggregate 
investment'' limitation of rule 53 or rule 58, would not count 
against the $200 million limitation.
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IX. Intermediate Subsidiaries

    SCANA proposes to create and acquire directly or indirectly the 
securities of one or more Intermediate Subsidiaries which may be 
corporations, trusts, partnerships, limited liability companies or 
other entities. Intermediate Subsidiaries will be organized exclusively 
for the purpose of acquiring and holding the securities of, or 
financing or facilitating SCANA's investments in, other direct or 
indirect nonutility investments.
    An Intermediate Subsidiary may be organized, among other things: 
(1) In order to facilitate the making of bids or proposals to develop 
or acquire an interest in any EWG, FUCO, ETC, or other nonutility 
company which, upon acquisition, would qualify as a Rule 58 Subsidiary; 
(2) after the award of such a bid proposal, in order to facilitate 
closing on the purchase or financing of such acquired company; (3) at 
any time subsequent to the consummation of an acquisition of an 
interest in any such company in order, among other things, to effect an 
adjustment in the respective ownership interests in such business held 
by the SCANA system and non-affiliated investors; (4) to facilitate the 
sale of ownership interests in one or more acquired Rule 58 Subsidiary, 
EWG or FUCO; (5) to comply with applicable laws of foreign 
jurisdictions limiting or otherwise relating to the ownership of 
domestic companies by foreign nationals; (6) as a part of tax planning 
in order to limit SCANA's exposure to U.S. and foreign taxes; (7) to 
further insulate SCANA and the Utility Subsidiaries from operational or 
other business risks that may be associated with investments in 
Nonutility companies; or (8) for other lawful business purposes.
    Investments in Intermediate Subsidiaries may take the form of any 
combination of the following: (1) Purchases of capital shares, 
partnership interests, member interests in limited liability companies, 
trust certificates or other forms of voting or non-voting equity 
interests; (2) capital contributions; (3) open account advances without 
interest; (4) loans; and (5) guarantees issued, provided or arranged in 
respect of the securities or other obligations of any Intermediate 
Subsidiaries.
    Funds for any direct or indirect investment in any Intermediate 
Subsidiary will be derived from SCANA's available funds. To the extent 
that SCANA provides funds directly or indirectly to an Intermediate 
Subsidiary which are used for the purpose of making an investment in 
any EWG or FUCO or a Rule 58 Subsidiary, the amount of such funds will 
be included in SCANA's ``aggregate investment'' in such entities, as 
calculated (in the case of EWGs, FUCOs and Rule 58 Subsidiaries) in 
accordance with rule 53 or rule 58, as applicable. \11\
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    \11\ If the Intermediate Subsidiary is merely a conduit, the 
aggregate investment will not ``double count'' both the conduit 
investment and the investment in the operating company authorized as 
an EWG, FUCO, Rule 58 subsidiary or other approved investment.
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    Applicants state that the authority requested for Intermediate 
Subsidiaries is intended to allow for the corporate structuring 
alternatives outlined in the Application and will not allow any 
increase in aggregate investment in EWGs, FUCOs, Rule 58 Subsidiaries, 
or

[[Page 3062]]

any other business subject to an investment limitation under the Act.

X. Internal Reorganization of Existing Investments

    SCANA currently engages directly or through Subsidiaries in certain 
nonutility businesses. SCANA seeks authority to engage in internal 
corporate reorganizations to better organize such Subsidiaries and 
investments. No authority is sought to make new investments or to 
change the organization of the Utility Subsidiaries.
    SCANA and Subsidiaries request authority, to the extent needed, to 
sell or to cause any Subsidiary to sell or otherwise transfer (i) such 
businesses, (ii) the securities of current Subsidiaries engaged in some 
or all of these businesses or (iii) investments which do not involve a 
Subsidiary (i.e. less than 10% voting interest) to a different 
Subsidiary, and, to the extent approval is required, the Subsidiaries 
request authority to acquire the assets of such businesses, 
Subsidiaries or other then existing investment interests. 
Alternatively, transfers of such securities or assets may be effected 
by share exchanges, share distributions or dividends followed by 
contribution of such securities or assets to the receiving entity. In 
the future, following its direct or indirect acquisition of the 
securities of new Nonutility Subsidiaries, SCANA may determine to 
transfer such securities or the assets of such Nonutility Subsidiaries 
to other Subsidiaries as described in the preceding sentence. SCANA may 
also liquidate or merge Nonutility Subsidiaries.
    Applicants state that such internal transactions would be 
undertaken in order to eliminate corporate complexities, to combine 
related business segments for staffing and management purposes, to 
eliminate administrative costs, to achieve tax savings, or for other 
ordinary and necessary business purposes.
    Applicants state that the transactions proposed will not involve 
the sale or other disposition of any utility assets of the Utility 
Subsidiaries and will not involve any change in the corporate ownership 
of the Utility Subsidiaries. In so far the approval sought does not 
extend to the acquisitions of any new businesses or activities.

    For the Commission, by the Division of Investment Management, 
under delegated authority.
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-1344 Filed 1-21-03; 8:45 am]
BILLING CODE 8010-01-U