COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2017

Statement [Line Items]

Commitments and Contingencies Disclosure [Text Block]

COMMITMENTS AND CONTINGENCIES

Nuclear Insurance

Under Price-Anderson, SCE&G (for itself and on behalf of Santee Cooper, a one-third owner of Unit 1) maintains agreements of indemnity with the NRC that, together with private insurance, cover third-party liability arising from any nuclear incident occurring at SCE&G's nuclear power plant. Price-Anderson provides funds up to $13.4 billion for public liability claims that could arise from a single nuclear incident. Each nuclear plant is insured against this liability to a maximum of $450 million by ANI with the remaining coverage provided by a mandatory program of deferred premiums that could be assessed, after a nuclear incident, against all owners of commercial nuclear reactors. Each reactor licensee is liable for up to $127.3 million per reactor owned for each nuclear incident occurring at any reactor in the United States, provided that not more than $18.9 million of the liability per reactor would be assessed per year. SCE&G’s maximum assessment, based on its two-thirds ownership of Unit 1, would be $84.8 million per incident, but not more than $12.6 million per year. Both the maximum assessment per reactor and the maximum yearly assessment are adjusted for inflation at least every five years.

SCE&G currently maintains insurance policies (for itself and on behalf of Santee Cooper) with NEIL. The policies provide coverage to Unit 1 for property damage and outage costs up to $2.75 billion resulting from an event of nuclear origin and up to $2.33 billion resulting from an event of a non-nuclear origin. In addition, a builder's risk insurance policy has been purchased from NEIL for the construction of the New Units. This policy provides the owners of the New Units up to $500 million of total coverage for accidental property damage occurring during construction. The NEIL policies, in the aggregate, are subject to a maximum loss of $2.75 billion for any single loss occurrence. All of the NEIL policies permit retrospective assessments under certain conditions to cover insurer’s losses. Based on the current annual premium, SCE&G’s portion of the retrospective premium assessment would not exceed $45.8 million. SCE&G currently maintains an excess property insurance policy (for itself and on behalf of Santee Cooper) with EMANI. The policy provides coverage to Unit 1 for property damage and outage costs up to $415 million resulting from an event of a non-nuclear origin. The EMANI policy permits retrospective assessments under certain conditions to cover insurer's losses. Based on the current annual premium, SCE&G's portion of the retrospective premium assessment would not exceed $1.8 million.

To the extent that insurable claims for property damage, decontamination, repair and replacement and other costs and expenses arising from an incident at Unit 1 exceed the policy limits of insurance, or to the extent such insurance becomes unavailable in the future, and to the extent that SCE&G's rates would not recover the cost of any purchased replacement power, SCE&G will retain the risk of loss as a self-insurer. SCE&G has no reason to anticipate a serious nuclear or other incident.  However, if such an incident were to occur, it likely would have a material impact on the Company’s and Consolidated SCE&G's results of operations, cash flows and financial position.

New Nuclear Construction

SCE&G, on behalf of itself and as agent for Santee Cooper, entered into the EPC Contract with the Consortium in 2008 for the design and construction of the New Units. SCE&G's ownership share in the New Units is 55%. As discussed below, various difficulties have been encountered in connection with the project. The ability of the construction team to adhere to established budgets and construction schedules has been affected by many variables, including unanticipated difficulties encountered in connection with project engineering and the construction of project components, constrained financial resources of the contractors, regulatory, legal, training and construction processes associated with securing approvals, permits and licenses and necessary amendments to them within projected timeframes, the availability of labor and materials at estimated costs, the efficiency of project labor and weather. There have also been contractor and supplier performance issues, difficulties in timely meeting critical regulatory requirements, contract disputes, and changes in key contractors or subcontractors. No assurance can be given that these and other construction-related difficulties will not continue to be experienced as construction progresses.

EPC Contract and BLRA Matters

The construction of the New Units and SCE&G’s related recovery of financing costs through rates is subject to review and approval by the SCPSC as provided for in the BLRA. Under the BLRA, the SCPSC has approved, among other things, a milestone schedule and a capital costs estimates schedule for the New Units. This approval constitutes a final and binding determination that the New Units are used and useful for utility purposes, and that the capital costs associated with the New Units are prudent utility costs and expenses and are properly included in rates, so long as the New Units are constructed or are being constructed within the parameters of the approved milestone schedule, including specified contingencies, and the approved capital costs estimates schedule. Subject to the same conditions, the BLRA provides that SCE&G may apply to the SCPSC annually for an order to recover through revised rates SCE&G’s weighted average cost of capital applied to all or part of the outstanding balance of construction work in progress concerning the New Units. Estimated operating costs, including the depreciation of the utility plant costs, are to be recovered through rates beginning when the construction of each New Unit is completed and it is placed into service. As of March 31, 2017, SCE&G’s investment in the New Units, including related transmission, totaled $4.6 billion, for which the financing costs on $3.8 billion have been reflected in rates under the BLRA.

The SCPSC granted initial approval of the construction schedule and related forecasted capital costs in 2009. The NRC issued COLs in March 2012. In November 2012, and again in September 2015 and November 2016 (see discussion below), the SCPSC approved SCE&G's requested updates to the milestone schedule, revised contractual substantial completion dates, and increases in capital and other costs. It is anticipated that further approval by the SCPSC is likely to be required as a consequence of the Consortium’s bankruptcy proceedings, as further described below.

October 2015 Amendment and WEC's Engagement of Fluor

On October 27, 2015, SCE&G, Santee Cooper and the Consortium amended the EPC Contract. The October 2015 Amendment became effective in December 2015, upon the consummation of the acquisition by WEC of the stock of Stone & Webster from CB&I. Following that acquisition, WECTEC continues to be a member of the Consortium as a subsidiary of WEC, and WEC has engaged Fluor as a subcontracted construction manager.

Among other things, the October 2015 Amendment provided SCE&G and Santee Cooper an option to fix the total amount to be paid to the Consortium for its entire scope of work on the project (excluding a limited amount of work within the time and materials component of the contract price) after June 30, 2015 at $6.082 billion (SCE&G’s 55% portion being approximately $3.345 billion). This total amount to be paid would be reduced by amounts paid since June 30, 2015. SCE&G, on behalf of itself and as agent for Santee Cooper, executed the fixed price option, subject to SCPSC approval, on July 1, 2016.

The October 2015 Amendment:

(i) resolved by settlement and release most outstanding disputes between SCE&G and the Consortium,

(ii) revised the contractual guaranteed substantial completion dates of Units 2 and 3 to August 31, 2019 and 2020, respectively,

(iii) revised the delay-related liquidated damages computation requirements, including those related to the eligibility of the New Units to earn IRC Section 45J production tax credits (see also below), resulting in escalating liquidated damages that are capped at an aggregate of $338 million per New Unit (SCE&G’s 55% portion being approximately $186 million per New Unit),

(iv) provided for payment to the Consortium of a completion bonus of $150 million per New Unit (SCE&G’s 55% portion being approximately $83 million per New Unit) for each New Unit placed in service by the deadline to qualify for production tax credits,

(v) provided for development of a revised construction milestone payment schedule,

(vi) provided that SCE&G and Santee Cooper waive and cancel the CB&I parent company guaranty with respect to the project,

(vii) provided for an explicit definition of Change in Law designed to reduce the likelihood of certain future commercial disputes, with the Consortium also acknowledging and agreeing that the project scope includes providing New Units that meet the standards of the NRC approved Design Control Document Revision 19, and

(viii) eliminated the requirement or ability of any party to bring suit regarding disputes before substantial completion of the project.

November 2016 SCPSC Order

In May 2016, SCE&G petitioned the SCPSC for approval of updated construction and capital cost schedules for the New Units which were developed in connection with the October 2015 Amendment. On November 9, 2016, the SCPSC approved a settlement agreement among SCE&G, ORS and certain other parties concerning this petition. The SCPSC also approved SCE&G's election of the fixed price option.

The construction schedule approved by the SCPSC in November 2016 provided for contractual guaranteed substantial completion dates of August 31, 2019 and August 31, 2020 for Units 2 and 3, respectively. The approved capital cost schedule includes incremental capital costs that total $831 million. Under such approved capital cost schedule, SCE&G’s total project capital cost would be approximately $6.8 billion including owner’s costs and transmission, or $7.7 billion with escalation and AFC. In addition, the SCPSC approved revising SCE&G’s allowed ROE for new nuclear construction from 10.5% to 10.25%. This revised ROE will be applied prospectively for the purpose of calculating revised rates sought by SCE&G under the BLRA on and after January 1, 2017. In addition, SCE&G may not file future requests to amend capital cost schedules prior to January 28, 2019, unless its annual revised rate request is denied because SCE&G is out of compliance with its approved capital cost schedule or BLRA construction milestone schedule. In most circumstances, if the projected commercial operation date for Unit 2 is extended, the expiration of the January 28, 2019 moratorium will be extended by an equal amount of time. Finally, following the expiration of the January 28, 2019 moratorium, SCE&G's right to file future budget increase requests with the SCPSC is limited in certain circumstances to the extent those requests are not associated with change orders, DRB orders, transmission costs, certain time and materials costs, and certain owners’ costs.

On February 28, 2017, the SCPSC issued its order denying the Petitions for Rehearing filed by certain parties that were not included in the settlement. The time period to file a Notice of Appeal of the SCPSC’s decision with the South Carolina Supreme Court has expired for three of the four non-settling parties, and none of those parties has filed a Notice of Appeal.  The remaining non-settling party has until May 8, 2017, to file a Notice of Appeal.

DRB Activity

The October 2015 Amendment established a DRB process for resolving certain commercial claims and disputes. The DRB is comprised of three members chosen by the parties and, under the DRB process, amounts in dispute of less than $5 million are to be resolved by the DRB without recourse. Amounts in dispute greater than $5 million are to be resolved by the DRB for the remainder of the construction of the New Units, with a reserved right to further arbitrate or to litigate such issues at the conclusion of construction.

On February 24, 2017, following SCE&G’s nonpayment of certain invoices upon its assertion that WEC had not fulfilled documentation requirements imposed by the DRB, WEC referred a related claim to the DRB. SCE&G then provided the DRB a response and WEC in turn provided its rebuttal; however, following the Consortium’s bankruptcy filing on March 29, 2017, action regarding this DRB referral ceased.

Payment and Performance Obligations, Contractor Bankruptcy Proceedings and Related Uncertainties

Payment and performance obligations under the EPC Contract are joint and several obligations of WEC and WECTEC, and in connection with the October 2015 Amendment, Toshiba, WEC’s parent company, reaffirmed its guaranty of WEC’s payment obligations. Additionally, the EPC Contract provides the owners the right, exercisable upon certain conditions, to obtain payment and performance bonds from WEC equal to 15%of the highest projected three months' billings during the applicable year, and their aggregate nominal coverage will not exceed $100 million (or $55 millionfor SCE&G's 55% share). SCE&G and Santee Cooper are responsible for the cost of the bonds.

In late 2015, Toshiba's credit ratings declined to below investment grade following disclosures regarding its operating and financial performance and near-term liquidity. As a result, pursuant to the above-described terms of the EPC Contract, SCE&G obtained annual standby letters of credit in lieu of payment and performance bonds from WEC totaling $45 million(or approximately $25 millionfor SCE&G's 55% share). These standby letters of credit automatically renew for successive one-year periods until their final expiration date of August 31, 2020, unless the issuer provides a minimum 60-day notice that it will not renew. If the issuer provides notice that it will not renew, SCE&G may draw upon the standby letter of credit prior to its expiration. In the event that WEC were not to meet its payment and performance obligations under the EPC Contract, it is anticipated that this funding would provide a source of liquidity. In addition, the EPC Contract provides that upon the request of SCE&G, and at owners' cost, the Consortium must escrow certain intellectual property and software for the owners' benefit to assist in completion of the New Units. An escrow arrangement has been established, andWEC has reported that substantially all of the required intellectual property and software have been deposited. SCE&G is attempting to verify that this information is present in useable form.

On March 29, 2017, WEC and WECTEC, the two members of the Consortium, and certain of their affiliates filed petitions for protection under Chapter 11 of the U.S. Bankruptcy Code, citing a liquidity crisis arising from project contract losses attributable to the New Units and the Vogtle Units as a material factor that caused them to seek protection under the bankruptcy laws. In connection with the filing, SCE&G, Santee Cooper, WEC and WECTEC entered into the Interim Assessment Agreement which, as amended, expires on June 26, 2017 unless otherwise terminated. Under the terms of the Interim Assessment Agreement and while it remains in effect, all parties have agreed to continue to perform under the EPC Contract and to give SCE&G and Santee Cooper the right to discuss project status with Fluor and other subcontractors and vendors and to obtain relevant project information and documents from them. SCE&G and Santee Cooper are obligated to pay all costs incurred by the Consortium, Fluor, other subcontractors and vendors for work performed or services rendered while the Interim Assessment Agreement remains in effect. SCE&G and Santee Cooper have also agreed not to draw on the letters of credit discussed above so long as the Interim Assessment Agreement is in effect.

In April of 2017, Toshiba, following several announcements and media reports and following WEC’s and WECTEC’s bankruptcy petitions, announced that it had recorded an impairment charge of approximately $6.2 billion relating to its nuclear power systems business, leaving it with negative shareholders’ equity. Toshiba also disclosed that, although these conditions and events raise substantial doubt, it believed that its responses to such conditions, including the sale of a portion of its computer memory business as then anticipated by Toshiba, would enable it to continue to operate as a going concern. Additionally, Toshiba indicated that it intends to significantly alter its risk management oversight of its nuclear business, and in its filings with the Bankruptcy Court, the Consortium stated that it intends to discontinue its role in the construction of nuclear plants. However, there can be no assurance that such sales or other actions will be successful. As such, there can be no assurance that Toshiba will fulfill its payment guaranty obligations under the EPC Contract.

In February 2017, WEC notified the Company and Consolidated SCE&G that the contractual guaranteed substantial completion dates of August 2019 and 2020 for Unit 2 and Unit 3, respectively, which were reflected in the October 2015 Amendment, are not likely to be met. Instead, WEC provided further revised estimated substantial completion dates of April 2020 and December 2020. These later dates remain within the SCPSC-approved 18-month contingency periods provided for under the BLRA, and achievement of such dates would also allow the output of both units to qualify, under current law, for federal production tax credits (see below). However, there can be no assurance that these dates will be achieved in light of WEC’s historical inability to achieve forecasted productivity and work force efficiency levels and in light of the Consortium’s bankruptcy filing.

Pursuant to the Interim Assessment Agreement, SCE&G and Santee Cooper are evaluating the various elements of the project, including forecasted costs and completion dates, while construction continues and SCE&G and Santee Cooper continue to make payments for such work. The initial term of the Interim Assessment Agreement was 30 days and it has been amended to extend its term through June 26, 2017; however, it may also be terminated earlier by SCE&G or Santee Cooper. Any decision to further extend the Interim Assessment Agreement may be impacted by the willingness of the other parties thereto. Termination of the Interim Assessment Agreement prior to such time that SCE&G and Santee Cooper have completed a full evaluation may adversely impact the continuation of construction of the project.

If, as a result of the bankruptcy process, the benefit of the fixed-price terms provided by the EPC Contract is lost, and part or all of the cost overruns expected to be incurred by the Consortium become the responsibility of SCE&G and Santee Cooper, these cost increases may or may not be recoverable from the Consortium or from Toshiba under its payment guaranty, or may materially exceed the amount of the Consortium's payment obligations guaranteed by Toshiba, which in general are limited to 25 percent of the payments made to the Consortium at the time of its breach under the EPC Contract. The ability of SCE&G to recover any increased costs through rates will be subject to review and approval by the SCPSC, and such costs may or may not qualify for recovery under the BLRA. For example, certain parties may challenge such costs as not being subject to recovery under the BLRA as a result of the terms of the settlement agreement approved by the SCPSC on November 9, 2016.

If, as part of the bankruptcy process, the EPC Contract is rejected, then SCE&G and Santee Cooper will need to engage replacement contractors and/or assume responsibilities of the contractor under the EPC Contract in order to complete the New Units. Alternatively, SCE&G and Santee Cooper could also decide to abandon the construction of one or both of the New Units, leaving SCE&G to pursue cost recovery under the abandonment provisions of the BLRA.

The Consortium has agreed not to reject the EPC Contract prior to the date of termination of the Interim Assessment Agreement; however, after the end of the term of the Interim Assessment Agreement, it is likely that the EPC Contract will be rejected. If the EPC Contract is rejected during the bankruptcy process, it is unlikely that SCE&G and Santee Cooper will be able to negotiate replacement contracts on similar terms with members of the Consortium, and there can be no assurance that some or all of the members of the Consortium will have roles in connection with the design, engineering or construction of the New Units. Additionally, there can be no assurance that any such replacement contracts will provide protection against future construction cost increases through a negotiated fixed price or that they will not assign some or all of the risks for escalating costs onto the owners. There also can be no assurance that SCE&G and Santee Cooper will be able to complete the construction of the New Units without significant delay or additional costs, should they decide to move forward with the project. Such delays could result in the loss of qualification for production tax credits referred to above and disclosed below.

A number of subcontractors and vendors to the Consortium, including Fluor, have alleged non-payment by the Consortium for amounts owed for work performed on the New Units.  SCE&G is contesting the filed liens.  SCE&G estimates that the aggregate amount of claims for which subcontractor and vendor liens have been filed is approximately $118 million (SCE&G’s 55% portion being approximately $65 million), of which $50 million (SCE&G’s 55% share being $27.5 million) have been paid.  SCE&G will continue to evaluate the issues relating to these claims during the pendency of the bankruptcy proceeding.

Jointly-owned projects, such as the current construction of the New Units, are also subject to risks such as (1) one or more of the joint owners becoming either unable or unwilling to continue to fund project financial commitments, (2) new joint owners being sought but not being secured at equivalent financial terms, or (3) disagreement among joint owners or changes in the joint ownership make-up which further increase project costs, further delay the completion of the project or result in the termination of all or a portion of the project.

The Consortium’s bankruptcy filing could have a material impact on the construction of the New Units and could have a material impact on SCANA’s and SCE&G’s results of operations, cash flows and financial condition. The ultimate outcome of these matters cannot be determined at this time.

Santee Cooper Matters

SCE&G has agreed to acquire an additional 5% ownership in the New Units from Santee Cooper. Under the terms of this agreement, SCE&G will acquire a 1% ownership interest in the New Units at the commercial operation date of Unit 2, an additional 2% ownership interest no later than the first anniversary of such commercial operation date, and the final 2% no later than the second anniversary of such commercial operation date. SCE&G has agreed to pay an amount equal to Santee Cooper's actual cost, including its cost of financing, of the percentage conveyed as of the date of each conveyance. In addition, the agreement provides that Santee Cooper will not transfer any of its remaining interest in the New Units to third parties until the New Units are complete. This transaction is subject to customary closing conditions, including receipt of necessary regulatory approvals. This transaction will not affect the payment obligations between the parties during construction of the New Units, nor is it anticipated that the payments for the additional ownership interest would be reflected in a revised rates filing under the BLRA. SCE&G’s projected cost for the additional 5% interest being acquired from Santee Cooper was approximately $850 million at December 31, 2016, and is being further evaluated.

Nuclear Production Tax Credits

The IRS has notified SCE&G that, subject to a national megawatt capacity limitation, the electricity to be produced by each of the New Units (advanced nuclear units, as defined) would qualify for nuclear production tax credits under Section 45J of the IRC to the extent that such New Unit is operational before January 1, 2021 and other eligibility requirements are met. These nuclear production tax credits (related to SCE&G's 55% share of both New Units) could total as much as approximately $1.4 billion. Such credits would be earned over the first eight years of each New Unit's operations and would be realized by SCE&G over those years or during allowable carry-forward periods. Based on current tax law and the contractual guaranteed substantial completion dates (and the dates of completion forecasted by WEC in February 2017) provided above, both New Units would be operational and would qualify for the nuclear production tax credits; however, any further delays in the schedule or changes in tax law could adversely impact these conclusions. See also the Payment and Performance Obligations, Contractor Bankruptcy Proceedings and Related Uncertainties discussion above. When and to the extent that production tax credits are realized, their benefits are expected to be provided directly to SCE&G's electric customers.

During March 2017, legislation was introduced in both houses of Congress which would eliminate the requirement that the New Units be operational before January 1, 2021 in order for their electricity production to qualify for the nuclear production tax credits; however, there can be no assurance that such legislation will become law.

Other Project Matters

When the NRC issued the COLs for the New Units, two of the conditions that it imposed were requiring inspection and testing of certain components of the New Units' passive cooling system, and requiring the development of strategies to respond to extreme natural events resulting in the loss of power at the New Units. In addition, the NRC directed the Office of New Reactors to issue to SCE&G an order requiring enhanced, reliable spent fuel pool instrumentation. SCE&G prepared and submitted an overall integration plan for the New Units to the NRC in August 2013. That plan remains under review by the NRC and SCE&G does not anticipate any additional regulatory actions as a result of that review, but it cannot predict future regulatory activities or how such initiatives would impact construction or operation of the New Units.

Environmental

On August 3, 2015, the EPA issued its final rule on emission guidelines for states to follow in developing plans to address GHG emissions from existing units. The rule includes state-specific goals for reducing national CO₂ emissions by 32% from 2005 levels by 2030. The rule also provides for nuclear reactors under construction, such as the New Units, to count towards compliance and establishes a phased-in compliance approach beginning in 2022. The rule gives each state from one to three years to issue its SIP, which will ultimately define the specific compliance methodology that will be applied to existing units in that state. On February 9, 2016, the Supreme Court stayed the rule pending disposition of a petition of review of the rule in the Court of Appeals. As a result of an Executive Order on March 28, 2017, the EPA is reconsidering the rule and the Court of Appeals agreed to hold the case in abeyance for 60 days. The Company and Consolidated SCE&G expect any costs incurred to comply with such rule to be recoverable through rates.

In July 2011, the EPA issued the CSAPR to reduce emissions of SO₂ and NO_X from power plants in the eastern half of the United States. The CSAPR replaces the CAIR and requires a total of 28 states to reduce annual SO₂ emissions and annual and ozone season NO_X emissions to assist in attaining the ozone and fine particle NAAQS. The rule establishes an emissions cap for SO₂ and NO_X and limits the trading for emission allowances by separating affected states into two groups with no trading between the groups. The State of South Carolina has chosen to remain in the CSAPR program, even though recent court rulings exempted the state. This allows the state to remain compliant with regional haze standards. Air quality control installations that SCE&G and GENCO have already completed have positioned them to comply with the existing allowances set by the CSAPR. Any costs incurred to comply with CSAPR are expected to be recoverable through rates.

In April 2012, the EPA's MATS rule containing new standards for mercury and other specified air pollutants became effective. The MATS rule has been the subject of ongoing litigation even while it remains in effect. Rulings on this litigation are not expected to have an impact on SCE&G or GENCO due to plant retirements, conversions, and enhancements. SCE&G and GENCO are in compliance with the MATS rule and expect to remain in compliance.

The CWA provides for the imposition of effluent limitations that require treatment for wastewater discharges. Under the CWA, compliance with applicable limitations is achieved under state-issued NPDES permits. As a facility’s NPDES permit is renewed (every five years), any new effluent limitations would be incorporated. The ELG Rule became effective on January 4, 2016. After this date, state regulators will modify facility NPDES permits to match more restrictive standards, thus requiring facilities to retrofit with new wastewater treatment technologies. Compliance dates will vary by type of wastewater, and some will be based on a facility's five-year permit cycle and thus may range from 2018 to 2023. However, the ELG Rule is under reconsideration by the EPA and will be stayed administratively when published in the Federal Register. The Company and Consolidated SCE&G expect that wastewater treatment technology retrofits will be required at Williams and Wateree Stations. Any costs incurred to comply with the ELG Rule are expected to be recoverable through rates.

The CWA Section 316(b) Existing Facilities Rule became effective in October 2014. This rule establishes national requirements for the location, design, construction and capacity of cooling water intake structures at existing facilities that reflect the best technology available for minimizing the adverse environmental impacts of impingement and entrainment. SCE&G and GENCO are conducting studies and implementing plans as required by the rule to determine appropriate intake structure modifications to ensure compliance with this rule. Any costs incurred to comply with this rule are expected to be recoverable through rates.

The EPA's final rule for CCR became effective in the fourth quarter of 2015. This rule regulates CCR as a non-hazardous waste under Subtitle D of the Resource Conservation and Recovery Act and imposes certain requirements on ash storage ponds and other CCR management facilities at SCE&G's and GENCO's coal-fired generating facilities. SCE&G and GENCO have already closed or have begun the process of closure of all of their ash storage ponds and have previously recognized AROs for such ash storage ponds under existing requirements. The Company and Consolidated SCE&G do not expect the incremental compliance costs associated with this rule to be significant and expect to recover such costs in future rates.

SCE&G is responsible for four decommissioned MGP sites in South Carolina which contain residues of by-product chemicals. These sites are in various stages of investigation, remediation and monitoring under work plans approved by DHEC and the EPA. SCE&G anticipates that major remediation activities at all these sites will continue at least through 2018 and will cost an additional $10.1 million, which is accrued in Other within Deferred Credits and Other Liabilities on the consolidated balance sheet. SCE&G expects to recover any cost arising from the remediation of MGP sites through rates. At March 31, 2017, deferred amounts, net of amounts previously recovered through rates and insurance settlements, totaled $25.3 million and are included in regulatory assets.

SCEG

Statement [Line Items]

Commitments and Contingencies Disclosure [Text Block]

COMMITMENTS AND CONTINGENCIES

Nuclear Insurance

Under Price-Anderson, SCE&G (for itself and on behalf of Santee Cooper, a one-third owner of Unit 1) maintains agreements of indemnity with the NRC that, together with private insurance, cover third-party liability arising from any nuclear incident occurring at SCE&G's nuclear power plant. Price-Anderson provides funds up to $13.4 billion for public liability claims that could arise from a single nuclear incident. Each nuclear plant is insured against this liability to a maximum of $450 million by ANI with the remaining coverage provided by a mandatory program of deferred premiums that could be assessed, after a nuclear incident, against all owners of commercial nuclear reactors. Each reactor licensee is liable for up to $127.3 million per reactor owned for each nuclear incident occurring at any reactor in the United States, provided that not more than $18.9 million of the liability per reactor would be assessed per year. SCE&G’s maximum assessment, based on its two-thirds ownership of Unit 1, would be $84.8 million per incident, but not more than $12.6 million per year. Both the maximum assessment per reactor and the maximum yearly assessment are adjusted for inflation at least every five years.

SCE&G currently maintains insurance policies (for itself and on behalf of Santee Cooper) with NEIL. The policies provide coverage to Unit 1 for property damage and outage costs up to $2.75 billion resulting from an event of nuclear origin and up to $2.33 billion resulting from an event of a non-nuclear origin. In addition, a builder's risk insurance policy has been purchased from NEIL for the construction of the New Units. This policy provides the owners of the New Units up to $500 million of total coverage for accidental property damage occurring during construction. The NEIL policies, in the aggregate, are subject to a maximum loss of $2.75 billion for any single loss occurrence. All of the NEIL policies permit retrospective assessments under certain conditions to cover insurer’s losses. Based on the current annual premium, SCE&G’s portion of the retrospective premium assessment would not exceed $45.8 million. SCE&G currently maintains an excess property insurance policy (for itself and on behalf of Santee Cooper) with EMANI. The policy provides coverage to Unit 1 for property damage and outage costs up to $415 million resulting from an event of a non-nuclear origin. The EMANI policy permits retrospective assessments under certain conditions to cover insurer's losses. Based on the current annual premium, SCE&G's portion of the retrospective premium assessment would not exceed $1.8 million.

To the extent that insurable claims for property damage, decontamination, repair and replacement and other costs and expenses arising from an incident at Unit 1 exceed the policy limits of insurance, or to the extent such insurance becomes unavailable in the future, and to the extent that SCE&G's rates would not recover the cost of any purchased replacement power, SCE&G will retain the risk of loss as a self-insurer. SCE&G has no reason to anticipate a serious nuclear or other incident.  However, if such an incident were to occur, it likely would have a material impact on the Company’s and Consolidated SCE&G's results of operations, cash flows and financial position.

New Nuclear Construction

SCE&G, on behalf of itself and as agent for Santee Cooper, entered into the EPC Contract with the Consortium in 2008 for the design and construction of the New Units. SCE&G's ownership share in the New Units is 55%. As discussed below, various difficulties have been encountered in connection with the project. The ability of the construction team to adhere to established budgets and construction schedules has been affected by many variables, including unanticipated difficulties encountered in connection with project engineering and the construction of project components, constrained financial resources of the contractors, regulatory, legal, training and construction processes associated with securing approvals, permits and licenses and necessary amendments to them within projected timeframes, the availability of labor and materials at estimated costs, the efficiency of project labor and weather. There have also been contractor and supplier performance issues, difficulties in timely meeting critical regulatory requirements, contract disputes, and changes in key contractors or subcontractors. No assurance can be given that these and other construction-related difficulties will not continue to be experienced as construction progresses.

EPC Contract and BLRA Matters

The construction of the New Units and SCE&G’s related recovery of financing costs through rates is subject to review and approval by the SCPSC as provided for in the BLRA. Under the BLRA, the SCPSC has approved, among other things, a milestone schedule and a capital costs estimates schedule for the New Units. This approval constitutes a final and binding determination that the New Units are used and useful for utility purposes, and that the capital costs associated with the New Units are prudent utility costs and expenses and are properly included in rates, so long as the New Units are constructed or are being constructed within the parameters of the approved milestone schedule, including specified contingencies, and the approved capital costs estimates schedule. Subject to the same conditions, the BLRA provides that SCE&G may apply to the SCPSC annually for an order to recover through revised rates SCE&G’s weighted average cost of capital applied to all or part of the outstanding balance of construction work in progress concerning the New Units. Estimated operating costs, including the depreciation of the utility plant costs, are to be recovered through rates beginning when the construction of each New Unit is completed and it is placed into service. As of March 31, 2017, SCE&G’s investment in the New Units, including related transmission, totaled $4.6 billion, for which the financing costs on $3.8 billion have been reflected in rates under the BLRA.

The SCPSC granted initial approval of the construction schedule and related forecasted capital costs in 2009. The NRC issued COLs in March 2012. In November 2012, and again in September 2015 and November 2016 (see discussion below), the SCPSC approved SCE&G's requested updates to the milestone schedule, revised contractual substantial completion dates, and increases in capital and other costs. It is anticipated that further approval by the SCPSC is likely to be required as a consequence of the Consortium’s bankruptcy proceedings, as further described below.

October 2015 Amendment and WEC's Engagement of Fluor

On October 27, 2015, SCE&G, Santee Cooper and the Consortium amended the EPC Contract. The October 2015 Amendment became effective in December 2015, upon the consummation of the acquisition by WEC of the stock of Stone & Webster from CB&I. Following that acquisition, WECTEC continues to be a member of the Consortium as a subsidiary of WEC, and WEC has engaged Fluor as a subcontracted construction manager.

Among other things, the October 2015 Amendment provided SCE&G and Santee Cooper an option to fix the total amount to be paid to the Consortium for its entire scope of work on the project (excluding a limited amount of work within the time and materials component of the contract price) after June 30, 2015 at $6.082 billion (SCE&G’s 55% portion being approximately $3.345 billion). This total amount to be paid would be reduced by amounts paid since June 30, 2015. SCE&G, on behalf of itself and as agent for Santee Cooper, executed the fixed price option, subject to SCPSC approval, on July 1, 2016.

The October 2015 Amendment:

(i) resolved by settlement and release most outstanding disputes between SCE&G and the Consortium,

(ii) revised the contractual guaranteed substantial completion dates of Units 2 and 3 to August 31, 2019 and 2020, respectively,

(iii) revised the delay-related liquidated damages computation requirements, including those related to the eligibility of the New Units to earn IRC Section 45J production tax credits (see also below), resulting in escalating liquidated damages that are capped at an aggregate of $338 million per New Unit (SCE&G’s 55% portion being approximately $186 million per New Unit),

(iv) provided for payment to the Consortium of a completion bonus of $150 million per New Unit (SCE&G’s 55% portion being approximately $83 million per New Unit) for each New Unit placed in service by the deadline to qualify for production tax credits,

(v) provided for development of a revised construction milestone payment schedule,

(vi) provided that SCE&G and Santee Cooper waive and cancel the CB&I parent company guaranty with respect to the project,

(vii) provided for an explicit definition of Change in Law designed to reduce the likelihood of certain future commercial disputes, with the Consortium also acknowledging and agreeing that the project scope includes providing New Units that meet the standards of the NRC approved Design Control Document Revision 19, and

(viii) eliminated the requirement or ability of any party to bring suit regarding disputes before substantial completion of the project.

November 2016 SCPSC Order

In May 2016, SCE&G petitioned the SCPSC for approval of updated construction and capital cost schedules for the New Units which were developed in connection with the October 2015 Amendment. On November 9, 2016, the SCPSC approved a settlement agreement among SCE&G, ORS and certain other parties concerning this petition. The SCPSC also approved SCE&G's election of the fixed price option.

The construction schedule approved by the SCPSC in November 2016 provided for contractual guaranteed substantial completion dates of August 31, 2019 and August 31, 2020 for Units 2 and 3, respectively. The approved capital cost schedule includes incremental capital costs that total $831 million. Under such approved capital cost schedule, SCE&G’s total project capital cost would be approximately $6.8 billion including owner’s costs and transmission, or $7.7 billion with escalation and AFC. In addition, the SCPSC approved revising SCE&G’s allowed ROE for new nuclear construction from 10.5% to 10.25%. This revised ROE will be applied prospectively for the purpose of calculating revised rates sought by SCE&G under the BLRA on and after January 1, 2017. In addition, SCE&G may not file future requests to amend capital cost schedules prior to January 28, 2019, unless its annual revised rate request is denied because SCE&G is out of compliance with its approved capital cost schedule or BLRA construction milestone schedule. In most circumstances, if the projected commercial operation date for Unit 2 is extended, the expiration of the January 28, 2019 moratorium will be extended by an equal amount of time. Finally, following the expiration of the January 28, 2019 moratorium, SCE&G's right to file future budget increase requests with the SCPSC is limited in certain circumstances to the extent those requests are not associated with change orders, DRB orders, transmission costs, certain time and materials costs, and certain owners’ costs.

On February 28, 2017, the SCPSC issued its order denying the Petitions for Rehearing filed by certain parties that were not included in the settlement. The time period to file a Notice of Appeal of the SCPSC’s decision with the South Carolina Supreme Court has expired for three of the four non-settling parties, and none of those parties has filed a Notice of Appeal.  The remaining non-settling party has until May 8, 2017, to file a Notice of Appeal.

DRB Activity

The October 2015 Amendment established a DRB process for resolving certain commercial claims and disputes. The DRB is comprised of three members chosen by the parties and, under the DRB process, amounts in dispute of less than $5 million are to be resolved by the DRB without recourse. Amounts in dispute greater than $5 million are to be resolved by the DRB for the remainder of the construction of the New Units, with a reserved right to further arbitrate or to litigate such issues at the conclusion of construction.

On February 24, 2017, following SCE&G’s nonpayment of certain invoices upon its assertion that WEC had not fulfilled documentation requirements imposed by the DRB, WEC referred a related claim to the DRB. SCE&G then provided the DRB a response and WEC in turn provided its rebuttal; however, following the Consortium’s bankruptcy filing on March 29, 2017, action regarding this DRB referral ceased.

Payment and Performance Obligations, Contractor Bankruptcy Proceedings and Related Uncertainties

Payment and performance obligations under the EPC Contract are joint and several obligations of WEC and WECTEC, and in connection with the October 2015 Amendment, Toshiba, WEC’s parent company, reaffirmed its guaranty of WEC’s payment obligations. Additionally, the EPC Contract provides the owners the right, exercisable upon certain conditions, to obtain payment and performance bonds from WEC equal to 15%of the highest projected three months' billings during the applicable year, and their aggregate nominal coverage will not exceed $100 million (or $55 millionfor SCE&G's 55% share). SCE&G and Santee Cooper are responsible for the cost of the bonds.

In late 2015, Toshiba's credit ratings declined to below investment grade following disclosures regarding its operating and financial performance and near-term liquidity. As a result, pursuant to the above-described terms of the EPC Contract, SCE&G obtained annual standby letters of credit in lieu of payment and performance bonds from WEC totaling $45 million(or approximately $25 millionfor SCE&G's 55% share). These standby letters of credit automatically renew for successive one-year periods until their final expiration date of August 31, 2020, unless the issuer provides a minimum 60-day notice that it will not renew. If the issuer provides notice that it will not renew, SCE&G may draw upon the standby letter of credit prior to its expiration. In the event that WEC were not to meet its payment and performance obligations under the EPC Contract, it is anticipated that this funding would provide a source of liquidity. In addition, the EPC Contract provides that upon the request of SCE&G, and at owners' cost, the Consortium must escrow certain intellectual property and software for the owners' benefit to assist in completion of the New Units. An escrow arrangement has been established, andWEC has reported that substantially all of the required intellectual property and software have been deposited. SCE&G is attempting to verify that this information is present in useable form.

On March 29, 2017, WEC and WECTEC, the two members of the Consortium, and certain of their affiliates filed petitions for protection under Chapter 11 of the U.S. Bankruptcy Code, citing a liquidity crisis arising from project contract losses attributable to the New Units and the Vogtle Units as a material factor that caused them to seek protection under the bankruptcy laws. In connection with the filing, SCE&G, Santee Cooper, WEC and WECTEC entered into the Interim Assessment Agreement which, as amended, expires on June 26, 2017 unless otherwise terminated. Under the terms of the Interim Assessment Agreement and while it remains in effect, all parties have agreed to continue to perform under the EPC Contract and to give SCE&G and Santee Cooper the right to discuss project status with Fluor and other subcontractors and vendors and to obtain relevant project information and documents from them. SCE&G and Santee Cooper are obligated to pay all costs incurred by the Consortium, Fluor, other subcontractors and vendors for work performed or services rendered while the Interim Assessment Agreement remains in effect. SCE&G and Santee Cooper have also agreed not to draw on the letters of credit discussed above so long as the Interim Assessment Agreement is in effect.

In April of 2017, Toshiba, following several announcements and media reports and following WEC’s and WECTEC’s bankruptcy petitions, announced that it had recorded an impairment charge of approximately $6.2 billion relating to its nuclear power systems business, leaving it with negative shareholders’ equity. Toshiba also disclosed that, although these conditions and events raise substantial doubt, it believed that its responses to such conditions, including the sale of a portion of its computer memory business as then anticipated by Toshiba, would enable it to continue to operate as a going concern. Additionally, Toshiba indicated that it intends to significantly alter its risk management oversight of its nuclear business, and in its filings with the Bankruptcy Court, the Consortium stated that it intends to discontinue its role in the construction of nuclear plants. However, there can be no assurance that such sales or other actions will be successful. As such, there can be no assurance that Toshiba will fulfill its payment guaranty obligations under the EPC Contract.

In February 2017, WEC notified the Company and Consolidated SCE&G that the contractual guaranteed substantial completion dates of August 2019 and 2020 for Unit 2 and Unit 3, respectively, which were reflected in the October 2015 Amendment, are not likely to be met. Instead, WEC provided further revised estimated substantial completion dates of April 2020 and December 2020. These later dates remain within the SCPSC-approved 18-month contingency periods provided for under the BLRA, and achievement of such dates would also allow the output of both units to qualify, under current law, for federal production tax credits (see below). However, there can be no assurance that these dates will be achieved in light of WEC’s historical inability to achieve forecasted productivity and work force efficiency levels and in light of the Consortium’s bankruptcy filing.

Pursuant to the Interim Assessment Agreement, SCE&G and Santee Cooper are evaluating the various elements of the project, including forecasted costs and completion dates, while construction continues and SCE&G and Santee Cooper continue to make payments for such work. The initial term of the Interim Assessment Agreement was 30 days and it has been amended to extend its term through June 26, 2017; however, it may also be terminated earlier by SCE&G or Santee Cooper. Any decision to further extend the Interim Assessment Agreement may be impacted by the willingness of the other parties thereto. Termination of the Interim Assessment Agreement prior to such time that SCE&G and Santee Cooper have completed a full evaluation may adversely impact the continuation of construction of the project.

If, as a result of the bankruptcy process, the benefit of the fixed-price terms provided by the EPC Contract is lost, and part or all of the cost overruns expected to be incurred by the Consortium become the responsibility of SCE&G and Santee Cooper, these cost increases may or may not be recoverable from the Consortium or from Toshiba under its payment guaranty, or may materially exceed the amount of the Consortium's payment obligations guaranteed by Toshiba, which in general are limited to 25 percent of the payments made to the Consortium at the time of its breach under the EPC Contract. The ability of SCE&G to recover any increased costs through rates will be subject to review and approval by the SCPSC, and such costs may or may not qualify for recovery under the BLRA. For example, certain parties may challenge such costs as not being subject to recovery under the BLRA as a result of the terms of the settlement agreement approved by the SCPSC on November 9, 2016.

If, as part of the bankruptcy process, the EPC Contract is rejected, then SCE&G and Santee Cooper will need to engage replacement contractors and/or assume responsibilities of the contractor under the EPC Contract in order to complete the New Units. Alternatively, SCE&G and Santee Cooper could also decide to abandon the construction of one or both of the New Units, leaving SCE&G to pursue cost recovery under the abandonment provisions of the BLRA.

The Consortium has agreed not to reject the EPC Contract prior to the date of termination of the Interim Assessment Agreement; however, after the end of the term of the Interim Assessment Agreement, it is likely that the EPC Contract will be rejected. If the EPC Contract is rejected during the bankruptcy process, it is unlikely that SCE&G and Santee Cooper will be able to negotiate replacement contracts on similar terms with members of the Consortium, and there can be no assurance that some or all of the members of the Consortium will have roles in connection with the design, engineering or construction of the New Units. Additionally, there can be no assurance that any such replacement contracts will provide protection against future construction cost increases through a negotiated fixed price or that they will not assign some or all of the risks for escalating costs onto the owners. There also can be no assurance that SCE&G and Santee Cooper will be able to complete the construction of the New Units without significant delay or additional costs, should they decide to move forward with the project. Such delays could result in the loss of qualification for production tax credits referred to above and disclosed below.

A number of subcontractors and vendors to the Consortium, including Fluor, have alleged non-payment by the Consortium for amounts owed for work performed on the New Units.  SCE&G is contesting the filed liens.  SCE&G estimates that the aggregate amount of claims for which subcontractor and vendor liens have been filed is approximately $118 million (SCE&G’s 55% portion being approximately $65 million), of which $50 million (SCE&G’s 55% share being $27.5 million) have been paid.  SCE&G will continue to evaluate the issues relating to these claims during the pendency of the bankruptcy proceeding.

Jointly-owned projects, such as the current construction of the New Units, are also subject to risks such as (1) one or more of the joint owners becoming either unable or unwilling to continue to fund project financial commitments, (2) new joint owners being sought but not being secured at equivalent financial terms, or (3) disagreement among joint owners or changes in the joint ownership make-up which further increase project costs, further delay the completion of the project or result in the termination of all or a portion of the project.

The Consortium’s bankruptcy filing could have a material impact on the construction of the New Units and could have a material impact on SCANA’s and SCE&G’s results of operations, cash flows and financial condition. The ultimate outcome of these matters cannot be determined at this time.

Santee Cooper Matters

SCE&G has agreed to acquire an additional 5% ownership in the New Units from Santee Cooper. Under the terms of this agreement, SCE&G will acquire a 1% ownership interest in the New Units at the commercial operation date of Unit 2, an additional 2% ownership interest no later than the first anniversary of such commercial operation date, and the final 2% no later than the second anniversary of such commercial operation date. SCE&G has agreed to pay an amount equal to Santee Cooper's actual cost, including its cost of financing, of the percentage conveyed as of the date of each conveyance. In addition, the agreement provides that Santee Cooper will not transfer any of its remaining interest in the New Units to third parties until the New Units are complete. This transaction is subject to customary closing conditions, including receipt of necessary regulatory approvals. This transaction will not affect the payment obligations between the parties during construction of the New Units, nor is it anticipated that the payments for the additional ownership interest would be reflected in a revised rates filing under the BLRA. SCE&G’s projected cost for the additional 5% interest being acquired from Santee Cooper was approximately $850 million at December 31, 2016, and is being further evaluated.

Nuclear Production Tax Credits

The IRS has notified SCE&G that, subject to a national megawatt capacity limitation, the electricity to be produced by each of the New Units (advanced nuclear units, as defined) would qualify for nuclear production tax credits under Section 45J of the IRC to the extent that such New Unit is operational before January 1, 2021 and other eligibility requirements are met. These nuclear production tax credits (related to SCE&G's 55% share of both New Units) could total as much as approximately $1.4 billion. Such credits would be earned over the first eight years of each New Unit's operations and would be realized by SCE&G over those years or during allowable carry-forward periods. Based on current tax law and the contractual guaranteed substantial completion dates (and the dates of completion forecasted by WEC in February 2017) provided above, both New Units would be operational and would qualify for the nuclear production tax credits; however, any further delays in the schedule or changes in tax law could adversely impact these conclusions. See also the Payment and Performance Obligations, Contractor Bankruptcy Proceedings and Related Uncertainties discussion above. When and to the extent that production tax credits are realized, their benefits are expected to be provided directly to SCE&G's electric customers.

During March 2017, legislation was introduced in both houses of Congress which would eliminate the requirement that the New Units be operational before January 1, 2021 in order for their electricity production to qualify for the nuclear production tax credits; however, there can be no assurance that such legislation will become law.

Other Project Matters

When the NRC issued the COLs for the New Units, two of the conditions that it imposed were requiring inspection and testing of certain components of the New Units' passive cooling system, and requiring the development of strategies to respond to extreme natural events resulting in the loss of power at the New Units. In addition, the NRC directed the Office of New Reactors to issue to SCE&G an order requiring enhanced, reliable spent fuel pool instrumentation. SCE&G prepared and submitted an overall integration plan for the New Units to the NRC in August 2013. That plan remains under review by the NRC and SCE&G does not anticipate any additional regulatory actions as a result of that review, but it cannot predict future regulatory activities or how such initiatives would impact construction or operation of the New Units.

Environmental

On August 3, 2015, the EPA issued its final rule on emission guidelines for states to follow in developing plans to address GHG emissions from existing units. The rule includes state-specific goals for reducing national CO₂ emissions by 32% from 2005 levels by 2030. The rule also provides for nuclear reactors under construction, such as the New Units, to count towards compliance and establishes a phased-in compliance approach beginning in 2022. The rule gives each state from one to three years to issue its SIP, which will ultimately define the specific compliance methodology that will be applied to existing units in that state. On February 9, 2016, the Supreme Court stayed the rule pending disposition of a petition of review of the rule in the Court of Appeals. As a result of an Executive Order on March 28, 2017, the EPA is reconsidering the rule and the Court of Appeals agreed to hold the case in abeyance for 60 days. The Company and Consolidated SCE&G expect any costs incurred to comply with such rule to be recoverable through rates.

In July 2011, the EPA issued the CSAPR to reduce emissions of SO₂ and NO_X from power plants in the eastern half of the United States. The CSAPR replaces the CAIR and requires a total of 28 states to reduce annual SO₂ emissions and annual and ozone season NO_X emissions to assist in attaining the ozone and fine particle NAAQS. The rule establishes an emissions cap for SO₂ and NO_X and limits the trading for emission allowances by separating affected states into two groups with no trading between the groups. The State of South Carolina has chosen to remain in the CSAPR program, even though recent court rulings exempted the state. This allows the state to remain compliant with regional haze standards. Air quality control installations that SCE&G and GENCO have already completed have positioned them to comply with the existing allowances set by the CSAPR. Any costs incurred to comply with CSAPR are expected to be recoverable through rates.

In April 2012, the EPA's MATS rule containing new standards for mercury and other specified air pollutants became effective. The MATS rule has been the subject of ongoing litigation even while it remains in effect. Rulings on this litigation are not expected to have an impact on SCE&G or GENCO due to plant retirements, conversions, and enhancements. SCE&G and GENCO are in compliance with the MATS rule and expect to remain in compliance.

The CWA provides for the imposition of effluent limitations that require treatment for wastewater discharges. Under the CWA, compliance with applicable limitations is achieved under state-issued NPDES permits. As a facility’s NPDES permit is renewed (every five years), any new effluent limitations would be incorporated. The ELG Rule became effective on January 4, 2016. After this date, state regulators will modify facility NPDES permits to match more restrictive standards, thus requiring facilities to retrofit with new wastewater treatment technologies. Compliance dates will vary by type of wastewater, and some will be based on a facility's five-year permit cycle and thus may range from 2018 to 2023. However, the ELG Rule is under reconsideration by the EPA and will be stayed administratively when published in the Federal Register. The Company and Consolidated SCE&G expect that wastewater treatment technology retrofits will be required at Williams and Wateree Stations. Any costs incurred to comply with the ELG Rule are expected to be recoverable through rates.

The CWA Section 316(b) Existing Facilities Rule became effective in October 2014. This rule establishes national requirements for the location, design, construction and capacity of cooling water intake structures at existing facilities that reflect the best technology available for minimizing the adverse environmental impacts of impingement and entrainment. SCE&G and GENCO are conducting studies and implementing plans as required by the rule to determine appropriate intake structure modifications to ensure compliance with this rule. Any costs incurred to comply with this rule are expected to be recoverable through rates.

The EPA's final rule for CCR became effective in the fourth quarter of 2015. This rule regulates CCR as a non-hazardous waste under Subtitle D of the Resource Conservation and Recovery Act and imposes certain requirements on ash storage ponds and other CCR management facilities at SCE&G's and GENCO's coal-fired generating facilities. SCE&G and GENCO have already closed or have begun the process of closure of all of their ash storage ponds and have previously recognized AROs for such ash storage ponds under existing requirements. The Company and Consolidated SCE&G do not expect the incremental compliance costs associated with this rule to be significant and expect to recover such costs in future rates.

SCE&G is responsible for four decommissioned MGP sites in South Carolina which contain residues of by-product chemicals. These sites are in various stages of investigation, remediation and monitoring under work plans approved by DHEC and the EPA. SCE&G anticipates that major remediation activities at all these sites will continue at least through 2018 and will cost an additional $10.1 million, which is accrued in Other within Deferred Credits and Other Liabilities on the consolidated balance sheet. SCE&G expects to recover any cost arising from the remediation of MGP sites through rates. At March 31, 2017, deferred amounts, net of amounts previously recovered through rates and insurance settlements, totaled $25.3 million and are included in regulatory assets.