By Chuck Crumbo
Published Feb. 21, 2013
Cayce-based energy provider SCANA Corp., parent of South Carolina Electric & Gas, reported today that earnings for 2012 climbed 8.5% to $420 million. The increase was driven by higher electric margins due to customer growth and rate increases granted under the Base Load Review Act.
Meanwhile, fourth-quarter earnings rose 7.1% to $105 million.
The company, which reported nearly $4.2 billion in revenue for the year, faced a number of challenges in making its earnings goal.
One of them was a warmer than average winter, especially in the Georgia market where the company’s natural gas subsidiary, SCANA Energy, operates, said Jimmy Addison, executive vice president and CFO.
“Our team successfully implemented strategies to address that challenge and deliver our earnings target,” Addison said.
Measures included trimming expenditures spending and selling two groups of well-subscribed wireless telecommunications towers owned by the company’s communications business, the company said. The sales price for the towers was not disclosed in a company news release.
During 2012, SCE&G reported a 2.4% increase in residential power sales and a 1.7% increase in commercial electricity sales. Industrial electric sales fell 1.7% largely due to a fire that halted production at one of the utility’s major customers, Addison said. The company, which was not identified, resumed production in the fourth quarter, Addison added.
SCANA is looking forward to a “successful year as the economy in our service territory continues to show improvement,” Addison said.
During a conference call with analysts, Addison said it’s possible that the company could see fluctuations in energy use as residential customers feel the pinch of higher gasoline prices and the end of the federal payroll tax holiday. Also, electricity sales could drop as more customers install compact fluorescent light bulbs, or CFLs.
Another positive for the company was growth in its service areas as people move to the Southeast in search of jobs and warmer weather. By the end of the year, SCE&G — which accounts for 85% of the company’s revenue — served about 670,000 electric customers and 323,000 natural gas customers, up 0.9% and 1.8%, respectively, over 2011.
The company offered earnings guidance of 3% to 6% over the next three to five years.
Construction of two reactor units SCE&G and its state-operated partner Santee Cooper are building at the V.C. Summer Nuclear Station in Fairfield County remains on target, said COO Steve Byrne.
The units, each capable of generating 1,100 megawatts of power, are scheduled to go into service in March 2017 and May 2018, respectively. SCE&G and Santee Cooper presently operate a 966-megawatt nuclear unit at the facility, which went into operation in January 1984.
As far as future rate hikes, SCE&G’s goal for the next few years is to hold off asking for an increase in the base electric rate, said CEO Kevin Marsh.
In December, SCE&G received permission from state regulators to raise its base rate 4.23%. The increase is expected to generate about $97 million in additional revenue during 2013.
The company, though, will be seeking annual increases of roughly 4-5% a year from 2013 through 2015 as construction costs accelerate for the units at V.C. Summer.
New nuclear capital expenditures for SCE&G will average about $1 billion a year from 2013 through 2015, the company said.
Since April 2009, the Public Service Commission has approved five rate increases totaling 8.4% to cover the cost of borrowing money for the nuclear project.