The following discussion should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations appearing in SCANA Corporation's (SCANA, and together with its consolidated subsidiaries, the Company) Annual Report on Form 10-K for the year ended December 31, 2007.

Earnings Per Share

Earnings per share was as follows:

Third Quarter Year to Date Millions of dollars 2008 2007 2008 2007

Earnings per share $ .80 $ .79 $ 2.22 $ 1.99

Earnings per share increased primarily due to higher electric margin of $.07. These increases were primarily offset by lower natural gas margin of $.01 and higher operating expenses and other items aggregating $.05 as detailed below.

Earnings per share increased primarily due to higher electric margin of $.35 and higher natural gas margin of $.05. These increases were primarily offset by higher operating expenses and other items aggregating $.17 as detailed below.

Dividends Declared

The Company's Board of Directors has declared the following dividends on common
stock during 2008:

Declaration Date   Dividend Per Share      Record Date           Payment Date
February 14, 2008        $ .46           March 10, 2008             April 1, 2008
April 24, 2008             .46           June 10, 2008              July 1, 2008
July 31, 2008              .46           September 10, 2008    October 1, 2008
October 29, 2008           .46            December 10, 2008    January 1, 2009

Electric Operations

Electric Operations is comprised of the electric operations of South Carolina
Electric & Gas Company (SCE&G), South Carolina Generating Company, Inc. (GENCO)
and South Carolina Fuel Company, Inc. (Fuel Company) Electric operations sales
margin (including transactions with affiliates) was as follows:

                                  Third Quarter                     Year to Date
Millions of dollars         2008   % Change       2007        2008   % Change        2007
Operating revenues       $ 671.4       11.5 %  $ 602.0   $ 1,735.1       14.6 % $ 1,514.7
Less: Fuel used in         267.5       27.9 %    209.2       671.8       29.7 %     517.9
generation
     Purchased power         7.4      (20.4 )%     9.3        28.3        4.0 %      27.2
   Margin                $ 396.5        3.4 %  $ 383.5   $ 1,035.0        6.7 % $   969.6

Margin increased by $23.2 million due to increased retail electric rates that went into effect in January 2008, partially offset by reduced overall customer usage of $8.1 million, by lower off-system sales of $3.1 million and by lower industrial sales of $1.3 million.

Margin increased by $58.1 million due to increased retail electric rates that went into effect in January 2008, by $4.7 million due to customer growth and usage and by $2.5 million due to higher off-system sales, partially offset by $1.8 million due to lower industrial sales.

Gas Distribution

Gas Distribution is comprised of the local distribution operations of SCE&G and
Public Service Company of North Carolina, Incorporated (PSNC Energy).  Gas
distribution sales margin (including transactions with affiliates) was as
follows:

                                         Third Quarter                   Year to Date
Millions of dollars                 2008   % Change      2007      2008   % Change      2007
Operating revenues               $ 177.1       22.9 % $ 144.1   $ 865.3       12.9 % $ 766.6
Less: Gas purchased for resale     129.8       33.1 %    97.5     624.0       16.7 %   534.5
   Margin                        $  47.3        1.5 % $  46.6   $ 241.3        4.0 % $ 232.1

Margin at SCE&G increased by $0.6 million due to the Public Service Commission of South Carolina (SCPSC)-approved increase in retail gas base rates which became effective with the first billing cycle of November 2007. Margin at PSNC Energy increased by $0.1 million due primarily to customer growth.

Margin at SCE&G increased by $3.5 million due to the SCPSC-approved increase in retail gas base rates which became effective with the first billing cycle of November 2007 and by $1.3 million due to customer growth. Margin at PSNC Energy increased by $4.3 million due primarily to customer growth.

Gas Transmission

Gas Transmission is comprised of the operations of Carolina Gas Transmission
Corporation (CGTC). Gas transmission revenues (including transactions with
affiliates) were as follows:

                                   Third Quarter                 Year to Date
Millions of dollars          2008   % Change      2007     2008   % Change     2007
Transportation revenue     $ 11.7        6.4 %  $ 11.0   $ 36.5        5.8 % $ 34.5
Other operating revenues        -          *       0.6        -          *      2.0

*Greater than 100%.

Transportation revenue increased primarily due to customer growth.

Retail Gas Marketing

Retail Gas Marketing is comprised of SCANA Energy, which operates in Georgia's
natural gas market. Retail Gas Marketing revenues and net income (loss) were as
follows:

                             Third Quarter                   Year to Date
Millions of dollars     2008   % Change     2007       2008   % Change      2007
Operating revenues    $ 81.3        3.7 % $ 78.4    $ 448.2        6.4 % $ 421.4

*Greater than 100%

Third Quarter

Operating revenues increased primarily as a result of higher average retail prices, partially offset by lower sales volume. Net income decreased primarily due to lower margin.

Operating revenues increased primarily as a result of higher average retail prices and volumes. Net income increased primarily due to higher margin and lower bad debt expense, partially offset by the Georgia Public Service Commission settlement.

Energy Marketing

Energy Marketing is comprised of the Company's non-regulated marketing
operations, excluding SCANA Energy. Energy Marketing operating revenues and net
income were as follows:


                               Third Quarter                    Year to Date
Millions of dollars      2008   % Change       2007        2008   % Change       2007
Operating revenues    $ 421.4       34.0 %  $ 314.4   $ 1,217.5       33.2 %  $ 914.0
Net income                1.5       (6.3 )%     1.6         1.6      (30.4 )%     2.3

Operating revenues increased primarily due to higher natural gas commodity prices. Net income decreased primarily due to higher bad debt expense.

Operating revenues increased primarily due to higher natural gas commodity prices. Net income decreased due to higher operating expenses.

Other Operating Expenses

Other operating expenses arising from the operating segments previously
discussed were as follows:

                                 Third Quarter                     Year to Date
Millions of dollars        2008   % Change        2007      2008    % Change       2007
Other operation and     $ 160.4         3.0 %  $ 155.8   $ 504.4         3.0 %  $ 489.9
maintenance
Depreciation and           83.0         9.5 %     75.8     241.6        (4.4 )%   252.7
amortization
Other taxes                40.2        (1.0 )%    40.6     127.2         6.0 %    120.0

Other operation and maintenance expenses increased due to higher generating, transmission and distribution expense. Depreciation and amortization expense increased $7.1 million due to higher estimated phase-out of synthetic fuel tax credits in the third quarter of 2007 related to the back-up dam at Lake Murray (resulting in depreciation that had been recognized in earlier periods of 2007 being reversed in the third quarter of 2007; see Income Taxes-Recognition of Synthetic Fuel Tax Credits) and $3.0 million due to property additions, partially offset by $2.1 million due to the expiration in 2007 of a three-year amortization of previously deferred purchased power costs.

Other operation and maintenance expenses increased due to higher generation, transmission and distribution expense. Depreciation and amortization expense decreased $12.1 million due to the expiration of the synthetic fuel tax credit program (see Income Taxes-Recognition of Synthetic Fuel Tax Credits) and $6.4 million due to the expiration in 2007 of a three-year amortization of previously deferred purchased power costs, partially offset by an increase of $8.8 million due to property additions. Other taxes increased due to higher property taxes.

Other Income (Expense)

Other income (expense) includes the results of certain incidental (non-utility) activities and the activities of certain non-regulated subsidiaries. Other income (expense) declined in 2008 compared to 2007 primarily due to lower royalties earned in connection with the operation of a synthetic fuel plant. Interest charges increased primarily due to the additional borrowings described in Note 3 to the condensed consolidated financial statements.

Pension Income

Pension income was recorded on the Company's financial statements as follows:

                                                    Third Quarter    Year to Date
Millions of dollars                                    2008    2007    2008    2007

Income Statement Impact:
Reduction in employee benefit costs                $   0.2   $ 0.4   $  0.4  $  1.9
Other income                                           3.6     3.4     11.0    10.3
Balance Sheet Impact:
Reduction in capital expenditures                      0.1     0.1      0.2    0.6
Component of amount due to Summer Station co-owner     0.1     0.1      0.2     0.3
Total Pension Income                               $   4.0   $ 4.0   $ 11.8  $ 13.1

Unless the credit and equity markets recover significantly during the fourth quarter of 2008, pension income in 2009 is likely to be significantly lower than in 2008 due to the impact of unfavorable returns on plan assets. However, the Company does not expect that a material contribution to the pension trust will be necessary in 2009, nor does the Company expect limitations on benefit payments to apply. See further information at Liquidity and Capital Resources.

Income Taxes

Income tax expense increased primarily due to changes in operating income and the recognition of synthetic fuel tax credits of $1.2 million and $19.7 million for the three and nine months ended September 30, 2007, respectively.

Recognition of Synthetic Fuel Tax Credits

SCE&G holds equity-method investments in two partnerships that were involved in converting coal to synthetic fuel, the use of which fuel qualified for federal income tax credits. Under an accounting methodology approved by the SCPSC in a January 2005 order, construction costs related to the Lake Murray back-up dam project were recorded in utility plant in service in a special dam remediation account, outside of rate base, and depreciation was recognized against the balance in this account on an accelerated basis, subject to the availability of the synthetic fuel tax credits. The synthetic fuel tax credit program expired at the end of 2007.

For 2007, the level of depreciation expense and related tax benefit recognized in the income statement was equal to the available synthetic fuel tax credits, less partnership losses and other expenses, net of taxes. As a result, the balance of unrecovered costs in the dam remediation account declined as accelerated depreciation was recorded. Although these entries collectively had no impact on consolidated net income, they did have a significant impact on individual line items within the income statement, as follows:

                                         Three Months Ended      Nine Months Ended
Millions of dollars                      September 30, 2007     September 30, 2007
Depreciation and amortization          $        3.2                      (15.9)
recapture (expense)                                           $
Income tax benefits:
  From synthetic fuel tax credits               1.2                       18.9
  From accelerated depreciation                (1.2)                      6.1
  From partnership losses                       1.9                       5.5
Total income tax benefits                       1.9                       30.5

Losses from Equity Method                      (5.1)                     (14.6)
Investments

Impact on Net Income                   $          -           $             -

Available credits were not sufficient to fully recover the construction costs of dam remediation; therefore, regulatory action to allow recovery of remaining costs will be sought. In addition, SCE&G records non-cash carrying costs on the unrecovered investment, which amounts were $1.3 million and $1.6 million in the third quarters of 2008 and 2007, respectively, and $4.1 million and $4.0 million for the nine months ended September 30, 2008 and 2007, respectively. As of September 30, 2008, remaining unrecovered costs, including carrying costs, were $68.7 million. The Company expects these costs to be recoverable through rates.

LIQUIDITY AND CAPITAL RESOURCES

Cash requirements for the Company's regulated subsidiaries arise primarily from their operational needs, funding their construction programs and payment of dividends to SCANA. The ability of the regulated subsidiaries to replace existing plant investment, to expand to meet future demand for electricity and gas and to install equipment necessary to comply with environmental regulations will depend on their ability to attract the necessary financial capital on reasonable terms. Regulated subsidiaries recover the costs of providing services through rates charged to customers. Rates for regulated services are generally based on historical costs. As customer growth and inflation occur and these subsidiaries continue their ongoing construction programs, rate increases will be sought. The future financial position and results of operations of the regulated subsidiaries will be affected by their ability to obtain adequate and timely rate and other regulatory relief, if requested.

The issuance of various securities by the Company or its regulated subsidiaries, including short- and long-term debt, is subject to customary approval or authorization by one or more state and federal regulatory bodies, including state public service commissions and the Federal Energy Regulatory Commission (FERC).

In June 2007, SCANA entered into an agreement to issue and sell Floating Rate Senior Notes due June 1, 2034, in an aggregate principal amount of between $90 million and $110 million. Concurrent with the agreement, SCANA entered into an interest rate swap to receive variable and pay fixed. In December 2007 SCANA issued $40 million of the Floating Rate Senior Notes. The remainder of the Notes are to be issued in December 2008 and June 2009.

On January 14, 2008, SCE&G issued $250 million of First Mortgage Bonds bearing an annual interest rate of 6.05% and maturing on January 15, 2038. Proceeds from the sale of these bonds were used to repay short-term debt primarily incurred as a result of SCE&G's construction program and for general corporate purposes. Concurrent with this issuance, SCE&G terminated several 30-year forward-starting swaps having an aggregate notional amount of $250 million. The resulting loss of approximately $14.0 million on the settlement of these swaps will be amortized over the life of the bonds.

On March 12, 2008, SCANA issued $250 million of Medium Term Notes bearing an annual interest rate of 6.25% and maturing on April 1, 2020. Proceeds from the sale of these notes were used to repay short-term debt incurred to pay at maturity on March 1, 2008 $100 million of floating rate Medium Term Notes, to pay at maturity $115 million of Medium Term Notes, due October 23, 2008, to repay other short-term debt and for general corporate purposes. Concurrent with this issuance, SCANA terminated a treasury lock having a notional amount of $250 million. The resulting loss on the treasury lock of approximately $3.1 million will be amortized over the life of the Medium Term Notes.

On May 30, 2008, GENCO issued $80 million in notes bearing an annual interest rate of 6.06% and maturing on June 1, 2018. Proceeds from the sale of the notes were used to repay short-term debt primarily incurred as a result of GENCO's construction program. On October 1, 2008, an additional $80 million of notes was issued by GENCO with the same terms.

On June 24, 2008, SCE&G issued $110 million of First Mortgage Bonds bearing an annual interest rate of 6.05% and maturing on January 15, 2038. Proceeds from the sale of these bonds were used to repay short term debt and for general corporate purposes. Concurrent with this issuance, SCE&G terminated a treasury lock having a notional amount of $110 million. The resulting gain of approximately $0.5 million will be amortized over the life of the bonds.

On October 2, 2008, SCE&G issued $300 million of First Mortgage Bonds bearing an annual interest rate of 6.50% and maturing on November 1, 2018. Proceeds from the sale of these bonds will be used to repay short-term debt and for general corporate purposes.

Amounts outstanding under lines of credit that are classified as long-term borrowings appear in the chart below.

SCE&G and GENCO have obtained FERC authority to issue short-term indebtedness (pursuant to Section 204 of the Federal Power Act). SCE&G may issue up to $700 million of unsecured promissory notes or commercial paper with maturity of one year or less, and GENCO may issue up to $100 million of short-term indebtedness. FERC's approval expires in February 2010.

At September 30, 2008 and December 31, 2007, SCANA, SCE&G (including Fuel Company) and PSNC Energy had available the following lines of credit and other borrowings outstanding:

                                       SCANA                                 SCE&G                           PSNC Energy
                      September 30,        December 31,            September 30,     December 31,    September 30,   December 31,
Millions of dollars       2008                 2007                    2008              2007            2008            2007
Lines of credit:
 Committed
long-term (expire
  December 2011)
  Total             $           200   $                   200    $           650   $          650   $           250    $       250
  Used                           15                         -                258                -               125              -
  Weighted average
interest rate                  3.48 %                       -               3.32 %              -              3.38 %            -
 Uncommitted (a ):
    Total           $            78   $                    78    $             -   $            -   $             -    $         -
    Used                          -                         7                  -                -                 -              -
  Weighted average
interest rate                     -                      5.10 %                -                -                 -              -
Short-term
borrowings
outstanding:
   Bank
loans/commercial
paper (270
   or fewer days)   $             -   $                     7    $            27   $          464   $            53    $       157
  Weighted average
interest rate                     -                      5.10 %             2.95 %           5.74 %            3.00 %         5.74 %

(a) SCANA, SCE&G or a combination may use the line of credit.

The committed long-term facilities are revolving lines of credit under credit agreements with a syndicate of banks. Wachovia Bank, National Association and Bank of America, N. A. each provide 14.3% of the aggregate $1.1 billion credit facilities, Branch Banking and Trust Company, UBS Loan Finance LLC, Morgan Stanley Bank, and Credit Suisse, each provide 10.9%, and The Bank of New York and Mizuho Corporate Bank, Ltd each provide 9.1%. Four other banks provide the remaining 9.6%. These bank credit facilities support the issuance of commercial paper by SCE&G (including Fuel Company) and PSNC Energy. In addition, a portion of the credit facilities supports SCANA's borrowing needs. When the commercial paper markets are dislocated (due to either price or availability constraints), the credit facilities are available to support the borrowing needs of SCE&G (including Fuel Company) and PSNC Energy.

In mid-September 2008, a very severe dislocation of the commercial paper, long-term debt and equity markets occurred as concerns over bank solvency adversely impacted the credit markets.

Since this time, access by SCE&G, Fuel Company and PSNC Energy to the commercial paper markets has been limited. Commercial paper outstanding has been significantly reduced, and the interest rates on commercial paper outstanding have significantly increased. Generally, SCE&G, Fuel Company and PSNC Energy have been able to issue commercial paper for one week terms, much shorter periods than their prior customary one month terms. In response to the credit market disruption, the Federal Reserve has created a Commercial Paper Funding Facility (CPFF) to provide liquidity to the commercial paper market by increasing the availability of funding to certain commercial paper issuers. However, the CPFF, which became active in the market on October 27, 2008, will only provide such funding to issuers of Tier 1 commercial paper (issuers with credit ratings of A1, P1, F1). While SCE&G, Fuel Company and PSNC Energy, as Tier 2 issuers (with credit ratings of A2, P2, F2), do not qualify for the CPFF program, the Company expects that, over time, the enhanced liquidity in the Tier 1 commercial paper market will positively affect the Tier 2 commercial paper market. As a result of the limited access to commercial paper, SCE&G, Fuel Company and PSNC Energy have accessed their credit facilities with banks (described above) and drawn down funds to replace maturing commercial paper. SCANA has also accessed funds through the credit facilities.

Access to the debt capital markets also has been very limited. SCE&G took advantage of a narrow window of market opportunity and issued $300 million of its First Mortgage Bonds at a coupon of 6.50% on October 2, 2008. Since that time, limited opportunities to issue secured long-term debt have arisen for other issuers, and interest rates on those obligations have increased significantly. Currently, opportunities to issue unsecured long-term debt, such as SCANA's Medium Term Notes, appear to be much more limited.

The Company cannot determine how long this dislocation of the credit markets will last. The Company expects that the risks of a global recession may continue to hamper the economy and adversely affect the capital markets.

Even so, the Company anticipates that its contractual cash obligations will be met through internally generated funds, the incurrence of additional short- and long-term indebtedness and sales of equity securities. The Company expects, barring further impairment of the capital markets, that it has or can obtain adequate sources of financing to meet its projected cash requirements for the foreseeable future. The Company's ratios of earnings to fixed charges for the nine and 12 months ended September 30, 2008 were 3.14 and 3.19, respectively.

Nuclear Generation

On May 27, 2008, SCE&G and Santee Cooper, a state owned utility in South Carolina (joint owners of V. C. Summer Nuclear Station), announced that they had entered into a contractual agreement for the design and construction of two 1,117-megawatt nuclear electric generation units at the site of V. C. Summer Nuclear Station. SCE&G and Santee Cooper will be joint owners and share operating costs and generation output of the two additional units, with SCE&G accounting for 55 percent of the cost and output and Santee Cooper the remaining 45 percent. The first unit is expected to be completed and in service in 2016, the second in 2019. SCE&G's share of the estimated cash outlays are as follows:

Future Value
Millions of dollars 2007 2008 2009-2010 2011-2012 After 2012 Total Plant Costs $ 21 $ 183 $ 1,095 $ 1,431 $ 2,681 $ 5,411 Transmission Costs - - - 2 636 638

The above amounts are not reflected in the contractual cash obligations table included under the Liquidity and Capital Resources section of the Company's Annual Report on Form 10-K for the year ended December 31, 2007.

For information on SCE&G's regulatory filings related to nuclear generation, see Note 2 in the condensed consolidated financial statements.

ENVIRONMENTAL AND REGULATORY MATTERS

The United States Environmental Protection Agency (EPA) issued a final rule in 2005 known as the Clean Air Interstate Rule (CAIR). CAIR requires the District of Columbia and 28 states, including South Carolina, to reduce nitrogen oxide and sulfur dioxide emissions in order to attain mandated state levels. CAIR had set emission limits to be met in two phases beginning in 2009 and 2015, respectively, for nitrogen oxide and beginning in 2010 and 2015, respectively, for sulfur dioxide. Numerous states, environmental organizations, industry groups and individual companies challenged the rule, seeking a change in the method CAIR used to allocate sulfur dioxide emission allowances. On July 11, 2008, the United States Court of Appeals for the District of Columbia Circuit vacated the rule in its entirety and remanded it to the EPA for further rulemaking. Prior to the Court of Appeals' decision, SCE&G and GENCO had determined that additional air quality controls would be needed to meet the CAIR requirements, including the installation of selective catalytic reactor (SCR) technology at Cope Station for nitrogen oxide reduction and wet limestone scrubbers at both Wateree and Williams Stations for sulfur dioxide reduction. SCE&G and GENCO have already begun to install this equipment, and expect to incur capital expenditures totaling approximately $560 million through 2010. The Company cannot predict when the EPA will issue a revised rule or what impact the rule will have on SCE&G and GENCO. Any costs incurred to comply with this vacated rule or other rules issued by the EPA in the future are expected to be recoverable through rates.

The EPA issued a final rule referred to as the Clean Air Mercury Rule (CAMR) in 2005 establishing a mercury emissions cap and trade program for coal-fired power plants that required limits to be met in two phases, in 2010 and 2018. Numerous parties challenged the rule. On February 8, 2008, the United States Circuit Court for the District of Columbia vacated the rule for electric utility steam generating units. The Company cannot predict the effect of this ruling on implementation of CAMR state implementation plans (SIP) and newly promulgated . . .