DERIVATIVE FINANCIAL INSTRUMENTS

6 Months Ended

Jun. 30, 2013

Derivative [Line Items]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

DERIVATIVE FINANCIAL INSTRUMENTS

The Company recognizes all derivative instruments as either assets or liabilities in the statement of financial position and measures those instruments at fair value.  The Company recognizes changes in the fair value of derivative instruments either in earnings, as a component of other comprehensive income (loss) or, for regulated subsidiaries, within regulatory assets

or regulatory liabilities, depending upon the intended use of the derivative and the resulting designation. 

Policies and procedures and risk limits are established to control the level of market, credit, liquidity and operational and administrative risks assumed by the Company.  SCANA’s Board of Directors has delegated to a Risk Management Committee the authority to set risk limits, establish policies and procedures for risk management and measurement, and oversee and review the risk management process and infrastructure for SCANA and each of its subsidiaries.  The Risk Management Committee, which is comprised of certain officers, including the Company’s Risk Management Officer and senior officers, apprises the Audit Committee of the Board of Directors with regard to the management of risk and brings to the Audit Committee's attention significant areas of concern. Written policies define the physical and financial transactions that are approved, as well as the authorization requirements and limits for transactions.

Commodity Derivatives

The Company uses derivative instruments to hedge forward purchases and sales of natural gas, which create market risks of different types.  Instruments designated as cash flow hedges are used to hedge risks associated with fixed price obligations in a volatile market and risks associated with price differentials at different delivery locations. Instruments designated as fair value hedges are used to mitigate exposure to fluctuating market prices created by fixed prices of stored natural gas.  The basic types of financial instruments utilized are exchange-traded instruments, such as NYMEX futures contracts or options, and over-the-counter instruments such as options and swaps, which are typically offered by energy companies and financial institutions.  Cash settlements of commodity derivatives are classified as operating activities in the condensed consolidated statements of cash flows.

PSNC Energy hedges natural gas purchasing activities using over-the-counter options and NYMEX futures and options.  PSNC Energy’s tariffs also include a provision for the recovery of actual gas costs incurred, including any costs of hedging.  PSNC Energy records premiums, transaction fees, margin requirements and any realized gains or losses from its hedging program in deferred accounts as a regulatory asset or liability for the under- or over-recovery of gas costs.  These derivative financial instruments are not designated as hedges for accounting purposes.

The unrealized gains and losses on qualifying cash flow hedges of nonregulated operations are deferred in OCI.  When the hedged transactions affect earnings, the previously recorded gains and losses are reclassified from AOCI to cost of gas.  The effects of gains or losses resulting from these hedging activities are either offset by the recording of the related hedged transactions or are included in gas sales pricing decisions made by the business unit.

As an accommodation to certain customers, SEMI, as part of its energy management services, offers fixed price supply contracts which are accounted for as derivatives.  These sales contracts are offset by the purchase of supply futures and swaps which are also accounted for as derivatives. Neither the sales contracts nor the related supply futures and swaps are designated as hedges for accounting purposes.

Interest Rate Swaps

The Company may use interest rate swaps to manage interest rate risk and exposure to changes in fair value attributable to changes in interest rates on certain debt issuances.  These swaps may be designated as either fair value hedges or cash flow hedges.

The Company synthetically converts variable rate debt to fixed rate debt using swaps that are designated as cash flow hedges. Periodic payments to or receipts from swap counterparties related to these derivatives are recorded within interest expense.

In anticipation of the issuance of debt, the Company may use treasury rate lock or forward starting swap agreements that are designated as cash flow hedges.  The effective portions of changes in fair value and payments made or received upon termination of such agreements for regulated subsidiaries are recorded in regulatory assets or regulatory liabilities, and for the holding company or nonregulated subsidiaries, are recorded in OCI.  Such amounts are amortized to interest expense over the term of the underlying debt. Ineffective portions are recognized in income.  Cash payments made or received upon termination of these financial instruments are classified as investing activities for cash flow statement purposes.

Quantitative Disclosures Related to Derivatives

The Company was party to natural gas derivative contracts outstanding in the following quantities:

	Commodity and Other Energy Management Contracts (in MMBTU)
Hedge designation	Gas Distribution	Retail Gas Marketing	Energy Marketing	Total
As of June 30, 2013
Cash flow	—	6,924,000	16,162,250	23,086,250
Not designated (a)	6,680,000	200,000	15,206,863	22,086,863
Total (a)	6,680,000	7,124,000	31,369,113	45,173,113
As of December 31, 2012
Cash flow	—	6,490,000	18,937,000	25,427,000
Not designated (b)	5,170,000	—	17,703,275	22,873,275
Total (b)	5,170,000	6,490,000	36,640,275	48,300,275

(a)  Includes an aggregate 1,365,752 MMBTU related to basis swap contracts in Energy Marketing.

(b)  Includes an aggregate 3,500,000 MMBTU related to basis swap contracts in Energy Marketing.

The Company was not party to any interest rate swap designated as a fair value hedge during any period presented. The Company was party to interest rate swaps designated as cash flow hedges with aggregate notional amounts of $663.8 million at June 30, 2013 and $1.1 billion at December 31, 2012.

The fair value of energy-related derivatives and interest rate derivatives was reflected in the condensed consolidated balance sheet as follows:

	Fair Values of Derivative Instruments
	Asset Derivatives			Liability Derivatives
	Balance Sheet	Fair		Balance Sheet	Fair
Millions of dollars	Location	Value		Location	Value
As of June 30, 2013
Derivatives designated as hedging instruments
Interest rate	Prepayments and other	$	72	Other current liabilities	$	6
	Other deferred debits and other assets	34		Other deferred credits and other liabilities	21
Commodity				Prepayments and other	1
				Other current liabilities	3
Total		$	106		$	31
Derivatives not designated as hedging instruments
Commodity	Prepayments and other	$	1
Energy management	Prepayments and other	5		Other current liabilities	$	5
	Other deferred debits and other assets	5		Other deferred credits and other liabilities	5
Total		$	11		$	10

As of December 31, 2012
Derivatives designated as hedging instruments
Interest rate	Prepayments and other	$	42	Other current liabilities	$	70
	Other deferred debits and other assets	31		Other deferred credits and other liabilities	36
Commodity	Prepayments and other	1		Other current liabilities	4
Total		$	74		$	110
Derivatives not designated as hedging instruments
Commodity	Prepayments and other	$	1
Energy management	Prepayments and other	7		Prepayments and other	$	1
	Other deferred debits and other assets	6		Other current liabilities	6
				Other deferred debits and other assets	6
Total		$	14		$	13

 The effect of derivative instruments on the condensed consolidated statements of income is as follows: 

Fair Value Hedges

With regard to the Company's interest rate swaps designated as fair value hedges, any gains or losses related to the swaps or the fixed rate debt are recognized in current earnings and included in interest expense.  The Company had no interest rate swaps designated as fair value hedges for any period presented, and the amortization of deferred gains on previously terminated swaps were not significant during any period presented.

Cash Flow Hedges

Derivatives in Cash Flow Hedging Relationships

	Gain (Loss) Deferred in Regulatory Accounts						Loss Reclassified from Deferred Accounts into Income
	(Effective Portion)						(Effective Portion)
Millions of dollars	2013		2012			Location	2013			2012
Three Months Ended June 30,
Interest rate	$	61	$	(2	)	Interest expense	—			—
Six Months Ended June 30,
Interest rate	$	96	$	28		Interest expense	$	(1	)	$	(1	)

	Gain (Loss) Recognized in OCI, net of tax							Loss Reclassified from AOCI into Income, net of tax
	(Effective Portion)							(Effective Portion)
Millions of dollars	2013			2012			Location	2013			2012
Three Months Ended June 30,
Interest rate	$	3		$	(4	)	Interest expense	$	(1	)	$	(1	)
Commodity	(3		)	1			Gas purchased for resale	—			(3		)
Total	—			$	(3	)		$	(1	)	$	(4	)
Six Months Ended June 30,
Interest rate	$	4		$	(4	)	Interest expense	$	(3	)	$	(3	)
Commodity	(1		)	(3		)	Gas purchased for resale	(2		)	(11		)
Total	$	3		$	(7	)		$	(5	)	$	(14	)

As of June 30, 2013, the Company expects that during the next 12 months reclassifications from accumulated other comprehensive income (loss) to earnings arising from cash flow hedges will include approximately $2.0 million as an increase to gas cost and approximately $7.0 million as an increase to interest expense, assuming natural gas and financial markets remain at their current levels.  As of June 30, 2013, all of the Company’s commodity cash flow hedges settle by their terms before the end of 2015.

Derivatives not designated as Hedging Instruments		Loss Recognized in Income
Millions of dollars	Location	2013	2012
Three Months Ended June 30,
Commodity	Gas purchased for resale	—	—
Six Months Ended June 30,
Commodity	Gas purchased for resale	—	$	(1	)

Hedge Ineffectiveness

Other losses recognized in income representing ineffectiveness on interest rate hedges designated as cash flow hedges were insignificant in each of the three and six months ended June 30, 2013 and 2012, respectively.

Credit Risk Considerations

The Company limits credit risk in its commodity and interest rate derivatives activities by assessing the creditworthiness of potential counterparties before entering into transactions with them and continuing to evaluate their creditworthiness on an ongoing basis. In this regard, the Company uses credit ratings provided by credit rating agencies and current market-based qualitative and quantitative data, as well as financial statements, to assess the financial health of counterparties on an ongoing basis. The Company uses standardized master agreements which may include collateral requirements. These master agreements permit the netting of cash flows associated with a single counterparty. Cash, letters of credit and parental/affiliate guarantees may be obtained as security from counterparties in order to mitigate credit risk. The collateral agreements permit the secured party to demand the posting of cash or letters of credit in the event an exposure exceeds the established threshold. The threshold represents an unsecured credit limit which may be supported by a parental/affiliate guaranty, as determined in accordance with the Company's credit policies and due diligence. In addition, collateral agreements allow for the termination and liquidation of all positions in the event of a failure or inability to post collateral.

Certain of the Company’s derivative instruments contain contingent provisions that may require the Company to provide collateral upon the occurrence of specific events, primarily credit downgrades.  As of June 30, 2013 and December 31, 2012, the Company has posted $36.1 million and $78.3 million, respectively, of collateral related to derivatives with contingent provisions that were in a net liability position.  Collateral related to the positions expected to close in the next 12 months is recorded in Prepayments and other on the consolidated balance sheets. Collateral related to the noncurrent positions is recorded in Other within Deferred Debits and Other Assets on the consolidated balance sheets. If all of the contingent features underlying these instruments had been fully triggered as of June 30, 2013 and December 31, 2012, the Company could have been required to post an additional $3.2 million and $26.2 million, respectively, of collateral with its counterparties.  The aggregate fair value of all derivative instruments with contingent provisions that are in a net liability position as of June 30, 2013 and December 31, 2012 is $39.3 million and $104.5 million, respectively.

In addition, as of June 30, 2013 and December 31, 2012, the Company has collected no cash collateral related to interest rate derivatives with contingent provisions that are in a net asset position. If all the contingent features underlying these instruments were fully triggered as of June 30, 2013 and December 31, 2012, the Company could request $67.7 million and $32.1 million, respectively, of cash collateral from its counterparties. The aggregate fair value of all derivative instruments with contingent provisions that are in a net asset position as of June 30, 2013 and December 31, 2012 is $67.7 million and $32.1 million, respectively. In addition, at June 30, 2013, the Company could have called on letters of credit in the amount of $10 million related to $10 million in commodity derivatives that are in a net asset position, compared to letters of credit of $10 million related to derivatives of $13 million at December 31, 2012, if all the contingent features underlying these instruments had been fully triggered.

Information related to the Company's offsetting of derivative assets follows:

						Gross Amounts Not Offset in the Statement of Financial Position
Millions of dollars	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position	Net Amounts Presented in the Statement of Financial Position		Financial Instruments			Cash Collateral Received	Net Amount
As of June 30, 2013
Interest rate	$	106	—	$	106	$	(5	)	—	$	101
Commodity	1		—	1		—			—	1
Energy management	10		—	10		—			—	10
Total	$	117	—	$	117	$	(5	)	—	$	112
Balance sheet location	Prepayments and other			$	78
	Other deferred debits and other assets			39
	Total			$	117

As of December 31, 2012
Interest rate	$	73	—			$	73	$	(17	)	—	$	56
Commodity	2		—			2		—			—	2
Energy management	13		$	(1	)	12		—			—	12
Total	$	88	$	(1	)	$	87	$	(17	)	—	$	70
Balance sheet location	Prepayments and other					$	50
	Other deferred debits and other assets					37
	Total					$	87

Information related to the Company's offsetting of derivative liabilities follows:

								Gross Amounts Not Offset in the Statement of Financial Position
Millions of dollars	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position			Net Amounts Presented in the Statement of Financial Position		Financial Instruments			Cash Collateral Posted			Net Amount
As of June 30, 2013
Interest rate	$	27	—			$	27	$	(5	)	$	(22	)	—
Commodity	4		—			4		—			—			$	4
Energy management	11		$	(1	)	10		—			(9		)	1
	$	42	$	(1	)	$	41	$	(5	)	$	(31	)	$	5
Balance sheet location	Prepayments and other					$	1
	Other current liabilities					14
	Other deferred credits and other liabilities					26
	Total					$	41

As of December 31, 2012
Interest rate	$	106	—			$	106	$	(17	)	$	(67	)	$	22
Commodity	4		—			4		—			—			4
Energy management	13		$	(1	)	12		—			(11		)	1
	$	123	$	(1	)	$	122	$	(17	)	$	(78	)	$	27
Balance sheet location	Other current liabilities					$	80
	Other deferred credits and other liabilities					42
	Total					$	122

SCEG

Derivative [Line Items]

Derivative Instruments and Hedging Activities Disclosure [Text Block]

DERIVATIVE FINANCIAL INSTRUMENTS

Consolidated SCE&G recognizes all derivative instruments as either assets or liabilities in the statement of financial position and measures those instruments at fair value.  Consolidated SCE&G recognizes changes in the fair value of derivative instruments either in earnings or within regulatory assets or regulatory liabilities, depending upon the intended use of the derivative and the resulting designation. 

Policies and procedures and risk limits are established to control the level of market, credit, liquidity and operational and administrative risks assumed by Consolidated SCE&G.  SCANA’s Board of Directors has delegated to a Risk Management Committee the authority to set risk limits, establish policies and procedures for risk management and measurement, and oversee and review the risk management process and infrastructure for SCANA and each of its subsidiaries, including Consolidated SCE&G.  The Risk Management Committee, which is comprised of certain officers, including the Consolidated SCE&G’s Risk Management Officer and senior officers, apprises the Audit Committee of the Board of Directors with regard to the management of risk and brings to the Audit Committee’s attention significant areas of concern.  Written policies define the physical and financial transactions that are approved, as well as the authorization requirements and limits for transactions.

Interest Rate Swaps

Consolidated SCE&G synthetically converts variable rate debt to fixed rate debt using swaps that are designated as cash flow hedges.  Periodic payments to or receipts from swap counterparties related to these derivatives are recorded within interest expense.

In anticipation of the issuance of debt, Consolidated SCE&G may use treasury rate lock or forward starting swap agreements that are designated as cash flow hedges.  The effective portions of changes in fair value and payments made or received upon termination of such agreements are recorded in regulatory assets or regulatory liabilities.  Such amounts are amortized to interest expense over the term of the underlying debt.  Ineffective portions are recognized in income.  Cash payments made or received upon termination of these financial instruments are classified as investing activities for cash flow statement purposes.

Quantitative Disclosures Related to Derivatives

Consolidated SCE&G was a party to interest rate swaps designated as cash flow hedges with an aggregate notional amount of $571.4 million at June 30, 2013 and $971.4 million at December 31, 2012.

The fair value of interest rate derivatives was reflected in the condensed consolidated balance sheet as follows:

	Fair Values of Derivative Instruments
	Asset Derivatives			Liability Derivatives
	Balance Sheet	Fair		Balance Sheet	Fair
Millions of dollars	Location	Value		Location	Value
As of June 30, 2013
Derivatives designated as hedging instruments
Interest rate	Prepayments and other	$	72	Other current liabilities	$	2
	Other deferred debits and other assets	34		Other deferred credits and other liabilities	3
Total		$	106		$	5
As of December 31, 2012
Derivatives designated as hedging instruments
Interest rate	Prepayments and other	$	42	Other current liabilities	$	66
	Other deferred debits and other assets	31		Other deferred credits and other liabilities	9
Total		$	73		$	75

The effect of derivative instruments on the condensed consolidated statement of income is as follows:

Derivatives in Cash Flow Hedging Relationships	Gain Deferred in Regulatory Accounts						Loss Reclassified from Deferred Accounts into Income
	(Effective Portion)						(Effective Portion)
Millions of dollars	2013		2012			Location	2013			2012
Three Months Ended June 30,
Interest rate	$	61	$	(2	)	Interest expense	—			—
Six Months Ended June 30,
Interest rate	$	96	$	28		Interest expense	$	(1	)	$	(1	)

Derivatives not designated as Hedging Instruments		Loss Recognized in Income
Millions of dollars	Location	2013	2012
Three Months Ended June 30,
Commodity	Gas purchased for resale	—	—
Six Months Ended June 30,
Commodity	Gas purchased for resale	—	$	(1	)

Hedge Ineffectiveness

Other gains (losses) recognized in income representing ineffectiveness on interest rate hedges designated as cash flow hedges were insignificant in each of the three and six months ended June 30, 2013 and 2012, respectively.

Credit Risk Considerations

Consolidated SCE&G limits credit risk in its derivatives activities by assessing the creditworthiness of potential counterparties before entering into transactions with them and continuing to evaluate their creditworthiness on an ongoing basis. In this regard, Consolidated SCE&G uses credit ratings provided by credit rating agencies and current market-based qualitative and quantitative data as well as financial statements, to assess the financial health of counterparties on an ongoing basis. Consolidated SCE&G uses standardized master agreements which may include collateral requirements. These master agreements permit the netting of cash flows associated with a single counterparty. Cash, letters of credit and parental/affiliate guarantees may be obtained as security from counterparties in order to mitigate credit risk. The collateral agreements permit the secured party to demand the posting of cash or letters of credit in the event an exposure exceeds the established threshold. The threshold represents an unsecured credit limit which may be supported by a parental/affiliate guaranty, as determined in accordance with Consolidated SCE&G's credit policies and due diligence. In addition, collateral agreements allow for the termination and liquidation of all positions in the event of a failure or inability to post collateral.

Certain of Consolidated SCE&G’s derivative instruments contain contingent provisions that may require Consolidated SCE&G to provide collateral upon the occurrence of specific events, primarily credit downgrades.  As of June 30, 2013 and December 31, 2012, Consolidated SCE&G has posted $4.1 million and $35.2 million, respectively, of collateral related to derivatives with contingent provisions that were in a net liability position.  Collateral related to the positions expected to close in the next 12 months are recorded in Prepayments and other on the consolidated balance sheets. Collateral related to the noncurrent positions is recorded in Other within Deferred Debits and Other Assets on the consolidated balance sheets. If all of the contingent features underlying these instruments had been fully triggered as of June 30, 2013 and December 31, 2012, Consolidated SCE&G could have been required to post an additional $0.1 million and $22.7 million respectively, of collateral with its counterparties.  The aggregate fair value of all derivative instruments with contingent provisions that are in a net liability position as of June 30, 2013 and December 31, 2012 is $4.2 million and $57.9 million, respectively.

In addition, as of June 30, 2013 and December 31, 2012, Consolidated SCE&G has collected no cash collateral related to interest rate derivatives with contingent provisions that are in a net asset position. If all the contingent features underlying these instruments were fully triggered as of June 30, 2013 and December 31, 2012, Consolidated SCE&G could request $67.7 million and $32.1 million, respectively, of cash collateral from its counterparties. The aggregate fair value of all derivative instruments with contingent provisions that are in a net asset position as of June 30, 2013 and December 31, 2012 is $67.7 million and $32.1 million, respectively.

Information related to Consolidated SCE&G's derivative assets follows:

						Gross Amounts Not Offset in the Statement of Financial Position
Millions of dollars	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Position	Net Amounts Presented in the Statement of Financial Position		Financial Instruments			Cash Collateral Received	Net Amount
As of June 30, 2013
Interest rate	$	106	—	$	106	$	(5	)	—	$	101
Balance Sheet Location	Prepayments and other			$	72
	Other deferred debits and other assets			34
	Total			$	106

As of December 31, 2012
Interest rate	$	73	—	$	73	$	(17	)	—	$	56
Balance Sheet Location	Prepayments and other			$	42
	Other deferred debits and other assets			31
	Total			$	73

Information related to Consolidated SCE&G's derivative liabilities follows:

						Gross Amounts Not Offset in the Statement of Financial Position
Millions of dollars	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Position	Net Amounts Presented in the Statement of Financial Position		Financial Instruments			Cash Collateral Posted		Net Amount
As of June 30, 2013
Interest rate	$	5	—	$	5	$	(5	)	$	—	$	—
Balance Sheet Location	Other current liabilities			$	2
	Other deferred credits and other liabilities			3
	Total			$	5

As of December 31, 2012
Interest rate	$	75	—	$	75	$	(17	)	$	(35	)	$	23
Balance Sheet Location	Other current liabilities			$	66
	Other deferred credits and other liabilities			9
	Total			$	75