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Fitch Affirms SCANA and Subsidiary Ratings

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NEW YORK--(BUSINESS WIRE)--

Fitch Ratings has affirmed the 'BBB+' Issuer Default Ratings (IDR) and all instrument ratings of SCANA (SCG) and its regulated subsidiaries South Carolina Electric and Gas Company (SCE&G) and Public Service Company of North Carolina (PSNC) as shown below. The Rating Outlook for all entities is Stable. Fitch also has affirmed the 'F2' commercial paper rating of South Carolina Fuel Company.

Fitch affirms the following ratings:

SCANA Corporation

--Long-term IDR at 'BBB+';

--Senior Unsecured debt at 'BBB+';

--Junior Subordinated Notes at 'BBB-';

--Short-term IDR at 'F2'.

SCE&G

--Long-term IDR at 'BBB+';

--First Mortgage bonds at'A';

--Senior Unsecured debt at 'A-';

--Short-term IDR at 'F2';

--Commercial Paper at 'F2'.

PSNC

--Long-term IDR at 'BBB+';

--Senior Unsecured debt at 'A-';

--Short-term IDR at 'F2';

--Commercial paper at 'F2'.

South Carolina Fuel Company

--Commercial paper at 'F2'.

The SCANA ratings are based on the combined credit quality of its two regulated utilities SCE&G and PSNC, which account for approximately 96% of consolidated net income. Also supporting the rating is the Base Load Review Act (BLRA), which softens the impact of SCE&G's large construction program, and SCG's commitment to support the nuclear expenditures with equity infusions. The BLRA permits rates to be adjusted annually to recover capital costs on construction work in progress (CWIP), including an 11% return on equity (ROE), and assures recovery of invested capital in the event the plant is cancelled before completion.

The ratings of SCE&G reflect the supportive regulation in South Carolina and the construction and financial risk of building two nuclear units for service in 2016 and 2019, respectively. The ratings recognize that financial measures will remain weak relative to its peer group of vertically integrated electric utilities through 2016, when the first of the two nuclear units is expected to enter commercial operation. The construction risk is mitigated by the BLRA, which provides for annual CWIP related rate increases, an engineering and procurement contract (EPC) with more than 50% of the nuclear construction costs either fixed or fixed with escalation and the equity commitment of SCG. SCE&G will own 55% of the two units.

Financial measures are expected to improve in 2010 and 2011 largely due a stipulation agreement with the South Carolina Office of Regulatory Staff (ORS) and other intervenors in the company's pending rate case. The stipulation, which is subject to approval by the South Carolina Public Service Commission (PSC), provides a 4.88% rate increase to be phased in over three years. Under the agreement electric base rates will increase 2.5% in July 2010 (approximately $52 million), and an additional 1.2% in both July 2011 and July 2012, after giving effect to customer rate credits. The rate credits include a one-time credit of $25 million in the first year of the new rates and more than $48 million in state tax credits over the following 24-month period. The stipulation also includes a 12-month pilot weather normalization mechanism, which mitigates the impact of abnormal weather on SCE&G's revenues and lowers business risk. The initial $25 million credit is roughly equal to the weather benefit achieved in 2009. The stipulation agreement is based on a 10.7% return on equity (ROE). SCE&G initially requested a $197.6 million (9.52%) rate increase in January 2010 to be phased in over three periods in July 2010, January 2011, and July 2011, based on an 11.6% ROE.

SCE&G has also filed for an additional $56 million (2.73%) increase to its electric rates under the BLRA to recover nuclear-related capital costs. This is SCE&G's third BLRA filing. Under the BLRA process, SCE&G is permitted to file annually to recover the cost of capital on its CWIP balance as of the filing date. Previously, SCE&G has been allowed full recovery in each of its two BLRA filings including a $22.5 million (1.1%) BLRA increase in October 2009 following a May 2009 filing and a $7.8 million (0.4%) increase effective March 2009 in the company's initial BLRA filing.

The PSNC ratings reflect solid credit metrics for this low risk gas distribution company that fully support the existing rating. The company operates with a purchased gas adjustment mechanism that provides full recovery of all prudently incurred gas costs from customers, and a customer utilization tracker (CUT), which allows the company to periodically adjust rates for residential and commercial customers based on average consumption, whether impacted by weather or other factors. The CUT replaced a weather normalization adjustment.

These rating actions reflect the application of Fitch's current criteria which are available at 'www.fitchratings.com' and specifically include the following reports:

--'Corporate Rating Methodology' (Nov. 24, 2009)

--'Credit Rating Guidelines for Regulated utility Companies' (July 31, 2007)

--'U.S. Power and Gas Comparative Operating Risk (COR) Evaluation and Financial Guidelines' (Aug. 22, 2007)

Additional information is available at 'www.fitchratings.com'.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Fitch Ratings, New York
Robert Hornick, 212-908-0523
Glen Grabelsky, 212-908-0577
or
Media Relations:
Cindy Stoller, 212-908-0526
Email: cindy.stoller@fitchratings.com

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