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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 35-27071]

Filings Under the Public Utility Holding Company Act of 1935, as

amended (``Act'')

August 31, 1999.

Notice is hereby given that the following filing(s) has/have been

made with the Commission pursuant to 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 amendments 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)

[[Page 48879]]

should submit their views in writing by September 27, 1999, to the

Secretary, Securities and Exchange Commission, Washington, D.C. 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 case of an attorney at law, by certificate) should be filed with the

request. Any request for hearing should identify specifically the

issues or facts of 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 September 27, 1999, the

application(s) and/or declaration(s), as filed or as amended, may be

granted and/or permitted to become effective.

SCANA Corporation (70-9521)

SCANA Corporation (``SCANA''), 1426 Main Street, Columbia, South

Carolina 29201, a South Carolina public utility holding company exempt

from registration under section 3(a)(1) of the Act, has filed an

application under sections 5, 9(a)(2), 10, and 11 of the Act.

SCANA proposes to acquire, by means of the transactions described

below, Public Service Company of North Carolina, Incorporated

(``PSNC''), a North Carolina corporation and gas public-utility

company. PSNC would become a wholly owned subsidiary company of SCANA

and the third public utility company, within the meaning of the Act,

owned by SCANA. Following its acquisition of PSNC, SCANA would register

under section 5 of the Act.

SCANA, PSNC, and their respective subsidiaries have also filed in

File No. 70-9533 an application-declaration related to financing

SCANA's proposed registered holding company system and the

establishment of a service company for that system. A notice of that

filing is being issued simultaneously with this notice.

SCANA is engaged primarily in providing electric and gas service to

customers in South Carolina. SCANA's two current public utility company

subsidiaries are South Carolina Electric and Gas Company (``SCE&G'')

and South Carolina Generating Company, Inc. (``GENCO''). SCE&G

generates and sells electricity to wholesale and retail customers, and

purchases, sells, and transports natural gas at retail. SCE&G also

provides public transit service in Columbia, South Carolina. GENCO owns

and operates the Williams Station generating facility and sells

electricity solely to SCE&G. As of December 31, 1998, SCANA provided

electric utility service to 517,447 customers and gas utility service

to 256,842 customers. As of February 26, 1999, 103,572,623 shares of

SCANA common stock, no par value, were issued and outstanding. SCANA's

principal executive office is located in Columbia, South Carolina.

SCANA has thirteen direct, wholly owned, nonutility subsidiary

companies that engage in a wide range of energy and telecommunications-

related services. For the year ended December 31, 1998, SCANA had total

assets of $5.281 billion, net utility assets of $3,787 billion, total

operating revenues of $1,632 billion, and net income of $115 million.

SCANA neither owns nor operates any physical properties. As of December

31, 1998 SCANA employed, in conjunction with its subsidiaries, a total

of 4,697 full-time employees.

PSNC is a public utility company franchised to serve a 31-county

area in North Carolina. It transports, distributes, and sells natural

gas to approximately 340,000 residential, commercial, and industrial

customers in 95 cities in North Carolina. In connection with its

natural gas distribution business, PSNC promotes, sells, and installs

both new and replacement natural gas appliances and equipment. PSNC has

seven partially or wholly owned nonutility subsidiaries that engage

primarily in energy-related activities.

For the fiscal year ended September 30, 1998, 20,274,332 shares of

PSNC common stock, $1 par value, were outstanding, and PSNC had total

assets of $618,753,000, operating revenues of $330,672,000, and net

income of $24,837,000. As of May 11, 1999 it had approximately 1,000

employees. PSNC owns 750 miles of transmission pipelines, 6,727 miles

of distribution mains, and ownership and leasehold interests in various

buildings used in connection with its operations.

Under an Amended and Restated Agreement and Plan of Merger

(``Merger Agreement''), dated as of February 16, 1999 and amended and

restated as of May 10, 1999 by and among PSNC, SCANA, New Sub I, Inc.

(``New Sub I'') \1\ and New Sub II, Inc. (``New Sub II''),\2\ New Sub I

will be merged with and into SCANA, with SCANA as the surviving

corporation (``First Merger''). PSNC will be merged with and into New

Sub II, with New Sub II as the surviving corporation (``Preferred

Second Merger'' and, together with the First Merger, ``Mergers'').\3\

As a result of the Preferred Second Merger, PSNC will become a wholly

owned subsidiary company of SCANA.

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\1\ New Sub I will be incorporated under the laws of South

Carolina prior to the consummation of the First Merger and will be a

wholly owned subsidiary of SCANA. SCANA states that at no time will

New Sub I have any operations other than the activities contemplated

by the Merger Agreement as necessary to merge New Sub I with and

into SCANA.

\2\ New Sub II will be incorporated under the laws of South

Carolina prior to the consummation of the Preferred Second Merger

and will be a wholly owned subsidiary of SCANA. SCANA states that at

no time will New Sub II have any operations other than the

activities contemplated by the Merger Agreement as necessary to

merge PSNC with and into New Sub II.

\3\ The Merger Agreement also provides that, in the event it is

not possible to consummate the Preferred Second Merger, the parties

would, subject to certain conditions, carry out an ``alternative

merger'' transaction in which PSNC would be merged directly into

SCANA's existing public utility subsidiary, SCE&G. The request for

approval made in SCANA's application concerns only the Preferred

Second Merger.

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The terms of the First Merger provide holders of SCANA common stock

with an opportunity to exchange their shares for a specified cash

payment. In the First Merger, each share of SCANA common stock

outstanding immediately prior to that merger's effective time will be

converted into the right to receive either (i) $30 in cash or (ii) one

share of SCANA common stock. This provision is subject to a requirement

that SCANA pay $700 million in total cash as consideration in the

Mergers. If the First Merger occurs, it will be consummated prior to

the consummation of the Preferred Second Merger. The First Merger will

not involve the acquisition of any securities of a public utility

company, and SCANA does not seek any Commission approvals in connection

with the First Merger.

The terms of the Preferred Second Merger provide holders of PSNC

common stock with an opportunity to exchange their shares for a

specified sum of cash, shares of SCANA common stock, or a combination

of each. Immediately prior to the effective time of the Preferred

Second Merger, each share of PSNC common stock then outstanding will be

converted into the right to receive (1) $33.00 in cash, subject to the

limitation that no more than 50% of the aggregate consideration to be

paid to PSNC shareholders be in cash, (2) a number of shares of SCANA

common stock determined according to a formula described below, or (3)

a combination of cash and shares of SCANA common stock. The ratio by

which PSNC shares will be exchanged for SCANA shares will be

established immediately prior to the Preferred Second Merger and will

be based upon the average market price of SCANA common stock over the

preceding 20 trading day period. This ratio is subject to the

limitation that PSNC shareholders will receive no more than 1.45 and no

less than 1.02 shares of SCANA

[[Page 48880]]

common stock for each share of PSNC common stock.

The Preferred Second Merger will be accounted for under the

purchase method of accounting, in accordance with Generally Accepted

Accounting Principles. As a regulated utility, the assets and

liabilities of the acquired company, PSNC, will not be revalued to

estimates of fair value, but will be maintained at their recorded

amounts. If the Mergers are consummated, SCANA's financial statements

will reflect effects of transaction adjustments only from the time

Preferred Second Merger is effective. The First Merger will be treated

as a reorganization with no change in the recorded amount of SCANA's

assets and liabilities. The financial statements of SCANA will become

the financial statements of the surviving corporation in the First

Merger, and the results of the surviving corporation's operations will

include the results of PSNC's operations commencing at the time the

Preferred Second Merger becomes effective.

Following the Preferred Second Merger, PSNC will become a wholly

owned public utility company subsidiary of SCANA. The Merger Agreement

provides that SCANA's principal corporate office will remain in

Columbia, South Carolina and that PSNC's principal corporate office

will remain in Gastonia, North Carolina.

SCANA Corporation (70-9533)

SCANA Corporation (``SCANA''), a South Carolina public utility

holding company exempt from registration under section 3(a)(1) of the

Act, and its subsidiaries South Carolina Electric and Gas Company

(``SCE&G''); South Carolina Generating Company, Inc. (``GENCO''); South

Carolina Fuel Company, Inc.; South Carolina Pipeline Corporation; SCANA

Energy Marketing Inc.; SCANA Propane Gas, Inc.; SCANA Propane Storage,

Inc.; SCANA Communications, Inc.; Servicecare Inc.; Primesouth, Inc.;

SCANA Resources Development Corporation; SCANA Petroleum Resources,

Inc.; and SCANA Service Company (``SCANA Service''), all located at

1426 Main Street, Columbia, South Carolina 29201; Public Service

Company of North Carolina, Incorporated (``PSNC''), a North Carolina

public utility company, and its subsidiaries Sonat Public Service

Company LLC; Clean Energy Enterprises; Cardinal Pipeline Company, LLC;

Pine Needle LNG Company, LLC; PSNC Blue Ridge Corporation; PSNC

Cardinal Pipeline Company; and PSNC Production Corporation, all located

at 400 Cox Road, Gastonia, North Carolina 28054 (collectively

``Applicants''), have filed an application-declaration under sections

6(a), 7, 9(a), 10, 12, and 13(b) of the Act and rules 42, 43, 45, 54,

87, 88, 90, and 91 under the Act.

SCANA has also filed a related application-declaration in File

No.70-9521 seeking approvals required to complete its proposed

acquisition of PSNC (``Merger''). a notice of that filing is being

issued simultaneously with this notice.

The Applicants propose to enter into numerous types of financing

transactions to meet SCANA's capital requirements immediately following

the Merger and to plan future financing. They request authorization to

engage in these financing transactions for five years commencing on the

date of an order issued responding to their application-declaration

(``Authorization Period'').

1. General Terms and Conditions of Financing

Financings by each Applicant would be subject to the following

limitations: (i) the effective cost of money on long-term debt

securities will not exceed 300 basis points over comparable term U.S.

Treasury securities, and the effective cost of money on short-term

securities will not exceed 300 basis points over the comparable term

London Interbank Offered Rate; (ii) maturity of indebtedness will not

exceed 50 years; (iii) the underwriting fees, commissions, or similar

remuneration paid in connection with the issue, sale, or distribution

of a security will not exceed 5% of the principal amount of the

financing; and (iv) at all times during the Authorization Period

SCANA's common equity will be at least 30% of its consolidated

capitalization.

The proceeds from the sale of securities in external financing

transactions would 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 of existing

securities; and (iv) direct or indirect investment in companies whose

activities the Commission authorizes in connection with the Merger, as

well as energy-related and gas-related companies, as defined in rule

58(b), and exempt telecommunications companies, as defined in section

34(a) of the Act.

2. External Financing

SCANA requests authorizations for four types of external financing.

First it seeks authorization to issue common stock, no par value

(subject to adjustment to reflect any stock split), up to an aggregate

amount of 13.6 million shares, including issuances under its benefit

and dividend reinvestment plans. SCANA also proposes to issue common-

stock options.

Second, SCANA requests authorization to issue long-term debt

securities in an amount, when combined with its issuances of common

stock (other than for benefit or dividend reinvestment plans), not to

exceed $1.435 billion. the long-term debt securities would consist of

medium-term notes issued under an indenture.

Third, SCANA requests authorization to have outstanding at any one

time up to $950 million of short-term debt, consisting of bank

borrowings, commercial paper, or bid notes. The short-term debt would

be used to refund pre-Merger short-term debt, to provide for the

reissuance of pre-Merger letters of credit, and to provide financing

for general corporation purposes, working capital requirements, and

capital expenditures for the Applicants other than SCANA until long-

term financing can be obtained.

Fourth, SCANA requests authorization to engage in hedging

transactions intended to manage the volatility of interest rates,

including interest rate swaps, caps, floors, collars, and forward

agreements or any other similar agreements. SCANA would employ interest

rate swaps to manage the risk associated with any of its outstanding

debt authorized by the Commission.

3. Utility Subsidiary Financing

The Applicants request authorization for SCE&G, GENCO, and PSNC

(``Utility Subsidiaries'') to issue up to $300 million in short-term

debt consisting of commercial paper, unsecured bank loans, and

borrowings under a SCANA holding company system money pool. These

issuances of securities would comply with the general terms and

conditions for financing transactions described above. Any short-term

borrowings by the Utility Subsidiaries, when combined with short-term

borrowings by SCANA, would not exceed $1.2 billion at any time during

the Authorization Period. In addition, the Applicants request

authorization for the Utility Subsidiaries to enter into hedging

transactions of the same type under the same conditions as those

applicable to SCANA.

4. Nonutility Subsidiary Financing

The Applicants believe that in most cases rule 52(b) under the Act

would exempt borrowings by any Applicant

[[Page 48881]]

other than SCANA and the Utility Subsidiaries (excluding SCANA, the

``Nonutility Subsidiaries'') from Commission authorization

requirements. However, the Nonutility Subsidiaries request that the

Commission reserve jurisdiction over the issuance to nonassociates of

securities that are not exempt under rule 52(b). The Nonutility

Subsidiaries state that when a proposed issuance of a security is not

exempt under rule 52(b) they will file a post-effective amendment

requesting the necessary authorization.

5. Other Securities

SCANA may find it necessary or desirable to issue and sell other

types of securities during the Authorization Period in addition to

those specifically enumerated in the application-declaration. SCANA

requests that the Commission reserve jurisdiction over the issuance of

additional types of securities.

6. Guarantees

SCANA requests authorization to enter into guarantees, obtain

letters of credit, enter into expense agreements, or otherwise provide

support that its direct or indirect subsidiaries existing at the time

the Merger is consummated or that are subsequently formed (``System

Subsidiaries'') need in the ordinary course of their respective

businesses. The aggregate principal amount of this credit support would

not exceed $305 million. The debt would comply with the general terms

and conditions for financing transactions described above.

7. Money Pool

SCANA and the Utility Subsidiaries request authorization to

establish a utility money pool, and the Nonutility Subsidiaries request

authorization to establish a Nonutility money pool. The Utility

Subsidiaries, to the extent that a transaction is not exempt under rule

52, request authorization to make unsecured short-term borrowings from

the utility money pool, contribute surplus funds to the utility money

pool, and lend and extend credit to (and acquire promissory notes from)

one another through the utility money pool.

The Nonutility Subsidiaries may participate in a Nonutility money

pool. The application-declaration states that rule 52 exempts the

Nonutility money pool activities of the Nonutility Subsidiaries from

the Act's prior-approval requirements. SCANA is requesting

authorization 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.

SCANA Service will administer the utility and Nonutility money

pools on an ``at cost'' basis and will maintain separate records for

each money pool. Surplus funds of the two money pools may be combined

in common short-term investments, but SCANA Service will maintain

separate records of these funds. The Applicants request the Commission

to reserve jurisdiction over participation in a money pool by future

companies formed by SCANA until a post-effective amendment is filed

naming the new participant.

8. Changes in Capital Stock

The Applicants request authority to change the terms of the

authorized capital stock of any wholly owned System Subsidiary by an

amount SCANA or an immediate parent company deems appropriate. the

application-declaration states that a System Subsidiary would be able

to change the par value, or change between par and no-par stock,

without additional Commission approval. Any action of this type by a

Utility Subsidiary would be subject to, and would be taken only upon

receipt of, necessary approvals by the state commission in the state or

states where the Utility Subsidiary is incorporated and doing business.

9. Payment of Dividends

The Applicants request authorization to pay dividends out of the

additional paid-in-capital account of PSNC up to the amount of PSNC's

aggregate retained earnings just prior to the Merger and out of

earnings before the amortization of the goodwill thereafter.

10. Financing Entities

The Applicants seek authorization for any Applicant other than

SCANA to organize new corporations, trusts, partnerships, or other

entities created for the purpose of facilitating financings through

issuance of securities to third parties. The Applicants also request

authority for (1) the issuance of debt instruments by an Applicant

other than SCANA to a financing entity in return for the financing

proceeds, (2) the acquisition by an Applicant other than SCANA of

voting interests or equity securities issued by a financing entity, and

(3) the guarantee by the Applicant of the financing entity's

obligations. Each of the Applicants other than SCANA requests

authorization to enter into expense agreements with its respective

financing entity, under which it would agree to pay all expenses of

that entity. Any amounts issued by financing entity to a third party

would be included in the overall external financing limitation

authorized for the financing entity's immediate parent.

11. Service Company

SCANA Service will be incorporated in South Carolina and will act

as the SCANA holding company system's service company following the

Merger. It will provide a variety of administrative, management, and

support services. The Applicants anticipate that SCANA Service will be

staffed through a transfer of personnel from SCANA, SCE&G, and PSNC.

The Applicants state that SCANA Service's accounting and cost

allocation methods will comply with Commission standards for service

companies in registered holding-company systems, and that its billing

system will follow the Commission's Uniform System of Accounts for

Mutual Service Companies and Subsidiary Service Companies. Except as

permitted by the Act or the Commission, all services that SCANA Service

provides to affiliated companies will be performed on an ``at cost''

basis in accordance with rules 90 and 91.

To ensure adequate oversight and realize economies of scale, some

administrative and service functions for the SCANA holding company

system will be consolidated and provided through SCANA Service. As a

general rule, the individual system companies will perform those

services that can best be done at the company level, with SCANA Service

offering system-wide coordination, strategy, oversight, and other

services when that proves to be more efficient.

12. Other Services

SCE&G, PSNC and other associate companies of SCANA request

authorization to enter into leases of office or other space with

associate companies. The Utility Subsidiaries may also provide services

to each other that are incidental to their utility businesses, such as

maintenance and emergency repairs and the services of personnel with

special expertise. The Utility Subsidiaries will enter into software

license agreements with other companies in the SCANA holding company

system. The Applicants state that all of these agreements and services

will comply with the requirements of rules 87, 90, and 91.

SCANA Fuel Company, Inc. (``SCANA Fuel'') enters into contracts

with SCE&G to provide environmental and fuel-related services. SCANA

Fuel provides these services ``at cost,'' as determined under rules 90

and 91.

[[Page 48882]]

13. Tax Allocation Agreement

The Applicants have requested approval of an agreement to allocate

consolidated taxes among SCANA and the other Applicants (``Tax

Allocation Agreement''). The Applicants require this approval because

the Tax allocation Agreement allows SCANA to retain certain payments

for tax losses it has incurred, rather than allocate them to the other

Applicants without payment, as rule 45(c)(5) would otherwise require.

SCANA will create tax credits through the Merger that are nonrecourse

to the other Applicants. The Applicants state that SCANA should retain

the benefits of those tax credits.

For the Commission by the Division of Investment Management,

under delegated authority.

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 99-23237 Filed 9-7-99; 8:45 am]

BILLING CODE 8010-01-M