Exhibit 99.01

V. C. Summer Nuclear Station Units 2 & 3

Quarterly Report to the South Carolina Office of Regulatory Staff

Submitted by South Carolina Electric & Gas Company

Pursuant to Public Service Commission Order No. 2009-104A

Quarter Ending December 31, 2009

I.                                         Introduction and Summary

A.                                    Introduction

This quarterly report is submitted by South Carolina Electric & Gas Company (“SCE&G” or “Company”) to the Public Service Commission of South Carolina (the “Commission”) and the South Carolina Office of Regulatory Staff (“ORS”).  It is submitted in satisfaction of the requirements of S.C. Code Ann. § 58-33-277 (Supp. 2009) and the terms of Commission Order No. 2009-104A.  The report provides updated information concerning the status of construction of V. C. Summer Nuclear Station Units 2 & 3 (the “Units”) and updates the capital cost and construction schedules for the Units as approved in Order No. 2009-104A.  Order No. 2009-104A is the base load review order related to the Units that was issued by the Commission on February 27, 2009.  The Commission approved updated capital cost schedules and construction milestone schedules for the Units in Order No. 2010-12.

B.                                    Structure of Report and Appendices

The current reporting period is the quarter ending December 31, 2009.  The report is divided into the following sections:

Section I:                                            Introduction and Summary;

Section II:                                          Progress of Construction of the Units;

Section III:                                      Anticipated Construction Schedules;

Section IV:                                      Schedules of the Capital Costs Incurred Including Updates to the Information Required by S.C. Code Ann. § 58-33-270(B)(6) (the inflation indices);

Section V:                                          Updated Schedule of Anticipated Capital Costs; and

Section VI:                                      Conclusion.

Appendices 1, 2, and 4 to this report contain detailed financial, milestone and other information updating the schedules approved by the Commission in Order No. 

1

2010-12.  For reference purposes, Appendix 3 provides a copy of the approved capital cost schedule for the project without adjustments in the form approved in Order No. 2010-12.

A confidential and a public version of this report and its attachments are being provided.  All cost information presented reflects only SCE&G’s share of the project’s cost.

As indicated below, construction of Units 2 & 3 is proceeding in full compliance with the cost and schedule forecasts approved by the Commission, as updated.

C.                                    Construction Schedule and Milestones

As the report indicates, the Company has met all current milestones approved by the Commission in Order No. 2010-12, as adjusted pursuant to contingencies authorized in Order No. 2009-104A.  There are 146 separate milestones. Of these, 44 have been completed as of December 31, 2009.  Since the last quarterly report, the expected quarterly completion dates of 23 milestones have changed.  Of these, 18 have been accelerated and five (5) have been delayed for between one and five months.

D.                                    Construction Costs and Cost Forecasts

As this report indicates, the Company is on track to complete the Units at the construction cost forecast of $4.5 billion in 2007 dollars, net of Allowance for Funds Used During Construction (“AFUDC”), as approved in Order No. 2009-104A.

In Order No. 2009-104A, the Commission recognized that forecasts of AFUDC expense and escalation would vary over the course of the project and required those forecasts to be updated with each quarterly report.  As Chart A below shows the forecasted construction cost for the project in 2007 dollars is unchanged.  An increase in the AFUDC rate ($53.3 million) which is partially offset by a reduction in escalation rates ($17.3 million) has increased the gross construction cost forecast of the units by $36 million or 0.6% compared to the forecast provided in the quarterly report for the quarter ending September 30, 2009.

2

Chart A: Reconciliation of Capital Cost ($000)

Chart B compares the current forecast of gross construction costs, including escalation and AFUDC, to the forecast presented by the Company in Docket 2009-293-E.  This chart shows that, while the cost of the plant in 2007 dollars remains at the approved $4.5 billion level, the gross construction cost including escalation and AFUDC is $576 million below the revised schedule forecast.  The reduction in the construction cost forecast is due to the changes in forecasted escalation when netted against other changes as discussed more fully below.

Chart B: Reconciliation of Capital Cost ($000)

3

E.                                      Escalation Rates

As provided in Order No. 2009-104A, the most current 12-month inflation indices are used to project costs occurring in the 12 month period after the date of each quarterly report.  Five-year average rates are used to project costs more than 12 months beyond the date of each report.  As a result, with each quarterly filing, the costs for one quarter shift from being forecasted using the five-year indices to being forecasted using the 12-month indices.

As shown on Appendix 4, utility construction costs were at historically high levels during the period 2005-2008, and since then have begun to drop.  Current escalation rates are at historical lows.  However, the current five-year averages are now closer to historical rates than they were in past periods.  Current escalation rates are shown on Chart C, below.

Chart C: Handy-Whitman Escalation Rates

July 2009 Update

4

For supplemental analysis purposes, the Company has recomputed project cash flow, net of AFUDC, using both the one-year escalation rates and ten-year escalation rates.  As shown on Chart D below, the use of the ten-year rates generates results that are much more comparable to the results generated using five-year rates than was the case in past periods.  Use of one-year rates over the long-term generates cost projections that appear unreasonably low.

Chart D: Reconciliation of Capital Cost ($000)

F.                                      Increased AFUDC

The change in AFUDC for the project is currently projected at $17.6 million compared to the forecast contained in Docket 2009-293-E.  Consistent with Order No. 2009-104A, SCE&G computes AFUDC based on the Federal Energy Regulatory Commission (“FERC”) approved methodology as applied to the balance of Construction Work in Progress (“CWIP”) that is outstanding between rate adjustments.  SCE&G’s AFUDC rate is currently 7.10% compared to the rate of 5.87% that applied in Docket 2009-293-E.  Standing alone, this increase in the AFUDC rate would increase the forecasted amount of AFUDC by $55.2 million. However, lower escalation rates have reduced the forecasted project cash flows thereby reducing AFUDC by $37.6 million to produce a $17.6 million net forecasted increase in AFUDC for the project.

5

G.                                    Contingency Usage and Availability

As Table E below indicates, $1.1 million of the total project contingency of $438 million in 2007 dollars was spent during the current period.  No contingency had been used in prior reporting periods.  As discussed in more detail below, this $1.1 million reflects additional costs in 2009 associated with Change Order No. 2 for the project, and the recalculation of owner’s costs.  The $1.1 million in contingency used in 2009 represents approximately 2.9% of the total 2009 contingency pool of $37.9 million and approximately 0.25% of the total contingency pool for the project of $438 million.

Chart E: Contingency Usage in 2007 Dollars ($000)

As shown in more detail on Appendix 2, Chart C, and as discussed below, SCE&G currently forecasts that at the close of 2018 it will have used a cumulative total of $67.5 million of the $438 million contingency fund, in current dollars, to cover the increased escalation costs associated with project schedule changes and changes in base costs for the project.  Of this $67.5 million amount, $64.2 million represents forecasted changes in base costs for the project and the remaining $3.3 million represents forecasted changes related to escalation as a result of shifts in the timing of expenses.  The $64.2 million in contingency funds currently forecasted to be used to cover increases in base costs of the project represent approximately 1.4% of the total unescalated project cost.

H.                                    Compliance with the Commission Approved Cumulative Project Cash Flow Target

Order No. 2009-104A established the Cumulative Project Cash Flow, listed on Exhibit F to the Combined Application, as the target for measuring the compliance of the project with the cost-related terms of that order.  Order No. 2010-12 updated Exhibit F to

6

conform to the Performance Management Baseline Schedule provided by Westinghouse/Shaw on April 1, 2009.  Order No. 2009-104A provided that the applicable Cumulative Project Cash Flow target would be adjusted with each quarterly report to reflect updated escalation data and any use by the Company of the cost-related contingencies that the Commission approved in Order No. 2009-104A.

Appendix 2, Chart A provides the Cumulative Project Cash Flow target updated for current escalation data as of December 31, 2009 and the current cumulative cash flow schedules for the project.  The cash flow data for the last six months of 2009 are based on the most recently available inflation indices which for purposes of this report are indices that are current through June 30, 2009.  When actual indices for the period June 30, 2009-December 31, 2009 become available, the 2009 cash flow data for the categories that are subject to indexed escalation will be revised to reflect the actual escalation rates.

Appendix 2, Chart B compares the approved Cumulative Project Cash Flow target to the current cumulative cash flow schedules for the project, which include actual costs where available and SCE&G’s working forecasts of annual cash flows for future years.  Appendix 2, Chart B, shows that after all adjustments discussed in this report the project ended 2009 on budget, with a minimal surplus of approximately $64,000 due to timing differences in costs.  In addition, the figures presented on Appendix 2, Chart B and Chart C for 2009 have been adjusted to reflect timing differences between the billing methodology under the EPC Contract and the calculation of the escalated cash flow targets under Order 2009-104A.  Under the EPC Contract, for periods where actual escalation rates are not available, Westinghouse/Shaw bills SCE&G based on a rolling 2-year average of the applicable Handy-Whitman rate and provides adjustments in the following year to reflect the actual rate when it is known.  The effect of the adjustment made to Appendix 2, Chart B is to offset this timing difference related to Westinghouse/Shaw’s approach to estimated billings and credits.  The adjustment applies only to amounts billed to the project during the last six months of 2009 in those EPC cost categories that are subject to indexed escalation.  As shown on Appendix 2, Chart B, the total amount of the resulting adjustment for 2009 was $9.7 million.  The 2009 expenditure number also reflects the carry-forward of $6 million of costs that were unspent in 2009 but are expected to be spent in future years.

Appendix 2, Chart B shows that due to the effects of timing, the project cash flow in the period 2010-2018 will vary within a range of $12.8 million above to $12.5 million below target in each year.  As shown on Appendix 2, Chart B, the cumulative use of contingency to cover changes in escalation due to these timing variances is $3.3 million over the life of the project.  In no year does the cumulative use of contingency to cover timing differences exceed $23 million.  The current forecast also shows that the total use of contingency to cover both escalation-related costs increases and changes in base cost estimates will be $67.5 million or 1.5% of the total project commitment.

7

The projected cash flow figures presented here are in current dollars.  The contingency figures are presented in 2007 dollars before escalation.

II.                                     Progress of Construction of the Units

Construction of the project is progressing on schedule to meet the Unit 2 & 3 Substantial Completion dates of April 1, 2016 and January 1, 2019, respectively.  A summary of the status of the project is addressed in Section II.A-Section II.G below.

A.                                    Licensing and Permitting Update

1.                                      The Combined Operating License Application (COLA)

The COLA review process continues.  The current construction schedule is based on the Nuclear Regulatory Commission (NRC) issuing a Combined Operating License (COL) for the Units no later than July 1, 2011.  Westinghouse (WEC) is expected to submit the shield building technical report to the NRC and to complete testing of the new design for that building in the next 45-60 days.  As mentioned in the prior quarterly report, after the test results are accepted by the NRC, Westinghouse intends to file with the NRC a Design Control Document (DCD) revision, DCD Revision 18. DCD Revision18 will incorporate all of the responses to NRC questions and all of the updates to design matters that have been requested as part of the COLA review process and that are not part of prior amendments.  In light of its assessment of the anticipated schedule for review and approval of DCD Revision 18, SCE&G currently believes that the COL for Units 2 & 3 will be issued in late 2011 or early 2012.  This schedule for the issuance of the COL would impact certain aspects of the construction schedule for the Units.  However, SCE&G and Westinghouse/Shaw do not believe that a COL issuance date of late 2011 or early 2012 will adversly impact the scheduled Substantial Completion dates of Unit 2 or of Unit 3.  SCE&G will continue to carefully monitor and proactively manage this aspect of the COL schedule.  As the schedule for the filing and approval of DCD Revision 18 become better known, SCE&G and Westinghouse/Shaw will make any required revisions to the construction schedule to reflect the anticipated issuance date of the COL. SCE&G and Westinghouse/Shaw are evaluating steps that could be taken to accelerate construction if necessary and are confident that any delay in the issuance of the COL will not necessarily delay the Substantial Completion dates of the Units.  The status of the major COLA review areas is as follows:

8

a)                                      Nuclear Safety Review

1)                                     The Staff of the NRC has completed its Phase 1 review to support development of the Safety Evaluation Report (SER) for the Units, which includes the COLA review and issuance of NRC Requests for Additional Information (RAIs) to SCE&G for resolution. During the Phase 2 review, SCE&G will continue to respond to NRC questions that may arise.  The Phase 2 review of the SER is intended to result in the development of the SER with no open items.

The NRC continues the SER review for the WEC DCD Revision 17 and continues dialogue with WEC in an effort to resolve NRC issues.  Currently, the three primary issues are as follows: (1) concerns with the design of the Reactor Shield Building which includes steel cladding technology to address aircraft impact; (2) containment sump issues; and (3) Piping Design Analysis Criteria (DAC).  These issues are currently progressing with the NRC review; however, unresolved items remain with each.  WEC, SCE&G and the industry are working with the NRC to resolve the open items associated with the NRC approval of DCD Revision 17.  On April 3, 2009, the NRC issued a letter on the DCD Revision 17 review and approval schedule.  The current NRC schedule shows a December 2010 final SER with an August 2011 final rule making.  This final rule making is a prerequisite for the COLA approval and does not support the COLA approval date for the Units.  WEC continues to work closely with the NRC to address schedule concerns.  WEC has agreed to a series of measures that should accelerate the review schedule or assist in minimizing the impact of any delay on the project schedule.  In addition, SCE&G is preparing contingency plans that should allow it to accelerate the construction schedule to absorb a delay in the issuance of a COL if there is any.  SCE&G believes that reasonable and feasible means are available to accelerate the schedule if necessary.  SCE&G is closely monitoring the DCD Revision 17 review process because of its potential impact on the schedule for the review and approval of the COLA for the Units.  SCE&G has identified the status of the review and approval of DCD Revision 17 as a focus area for on-going monitoring and attention to ensure that WEC does what is required to obtain the necessary approvals on a timely basis.  A summary of the three primary issues is as follows:

(1)  On October 15, 2009, the NRC issued documentation to Westinghouse stating that the proposed design of the shield building for the AP1000 plant will require additional analysis and testing or actual design modifications to ensure compliance with NRC requirements.  In DCD Revision 17, Westinghouse proposed an improved design for the shield building for which design codes or standards do not exist in the U.S.  It is not unusual for the regulator to require more “proof of concept” where the design is ahead of corresponding codes.  WEC has already begun to address certain portions of NRC’s concerns and has assured SCE&G that

9

it has committed the resources necessary to address the NRC’s concerns both quickly and definitively.

(2)  The NRC has raised concerns related to the functioning of the Sump located at the base of the Containment structure.  The function of the Sump is to collect water that can be recirculated for cooling purposes within the Containment structure.  The NRC’s concerns relate to the ability of the Sump to function effectively when debris in the form of piping insulation is present in the water being recirculated.  WEC has established a path forward to successfully resolve the Containment Sump issues with the NRC.  To facilitate the COLA review, WEC has changed the screen area design and the debris limits in the Containment structure to meet the NRC requirements.  WEC plans to subsequently complete a design analysis establishing an allowable pressure differential across the fuel assemblies which would permit the screen area and debris limits to be restored to the initial design.

(3)  In an effort to resolve the DAC issue, WEC and the NRC have agreed that WEC will perform representative piping analyses by the end of February 2010 and incorporate these piping analyses into DCD Revision 18.  The remainder of the piping analyses will be captured in the DAC.  It is planned that the DAC would essentially be a checklist of the piping packages that need to be completed. The activities, completion dates and piping assumptions have been agreed upon by the NRC for inclusion within DCD Revision 18.

b)                                      Environmental Review (ER)

In July 2009, the NRC completed the Phase I scoping of the Environmental Impact Statement (EIS) for the Units. All ER RAIs and follow-up questions have been answered.  The NRC plans to issue the draft EIS by March 2010 and the Final EIS in February 2011.  This schedule supports the timely issuance of a COL for the Units.

c)                                      Legal Review

As noted previously, several parties sought to intervene to raise issues before the Atomic Safety Licensing Board (ASLB) in its review of SCE&G’s COLA.  Under NRC Rules, these potential intervenors were required to demonstrate standing and to list their specific contentions in opposition to the COLA.  To be admitted, contentions must meet relevance and factual support standards.  On February 18, 2009, the ASLB dismissed all potential intervenors either because their contentions were deemed not to be admissible, or because they lacked standing.  The intervenors’ appealed the ASLB decision to the NRC.

10

On January 7, 2010, the NRC issued a ruling that affirmed the ASLB’s decision except as to two matters:  First, the NRC granted standing to the Friends of the Earth which had been denied.  Second, the NRC required the ASLB to review on a factual basis the intervenors’ contention related to Demand Side Management (DSM) programs.  The intervenors contended that SCE&G had undervalued the contribution that DSM programs could make to reduce the need for power from the Units.  (DSM programs are programs that promote energy efficiency and load management within the Company’s customer groups.)

In rejecting the intervenors’ DSM challenge, the ASLB had relied on a 2005 NRC decision holding that DSM matters were not relevant to the need for power determination in nuclear licensing.  In its January 7, 2010 decision, the NRC ruled that the 2005 decision should not have been relied upon as the sole basis for disallowing the DSM contention because the applicant in the earlier case was the owner/operator of a merchant plant with no means for undertaking any meaningful DSM programs.  As a result, in this proceeding the NRC directed the ASLB to reconsider the intervenors’ DSM contention on the facts.  The NRC did not express any view on the merits of the intervenors’ DSM contentions or on the factual record before the ASLB regarding DSM. The NRC also ruled that if the ASLB decided that the DSM contention should be admitted and litigated, elements of two other related contentions should be reviewed for potential admission, based on the admission of the DSM contention.

The ASLB has not yet taken any action in response to the NRC’s order. SCE&G believes that there is ample factual material in the existing record of the proceeding to support the ASLB’s rejection of the intervenors’ DSM contentions without reference to the 2005 NRC decision.  Nonetheless, the ASLB may ask for additional input from the participants before proceeding further and SCE&G is prepared to supply additional information on this contention.  The additional review of the intervenors’ DSM contention is not anticipated to have any impact on the schedule for issuance of a COL for the Units.

2.                                      Other Permits

a)                                      DHEC Storm Water Permits

South Carolina Department of Health and Environmental Control (SCDHEC) approved the Phase 7A Storm Water Pollution Prevention Permit (SWPPP) for the Offsite Water System.

11

b)                                      Corps of Engineers Wetlands Permit

SCE&G continues to interface with the Army Corps of Engineers (ACOE) on the ACOE 404 (wetlands) permit and plans to submit the draft permit in early 2010. The ACOE has taken the position that they will not issue a wetlands permit, to include a phased permitting approach, prior to the NRC issuance of the Final EIS. To comply with the ACOE position, Westinghouse/Shaw is finalizing a work-around plan that will not disturb the wetlands in the Cooling Tower area until the Final EIS is approved and the required wetlands permit is issued.  This plan will be technically feasible and will allow construction to proceed within the applicable milestone schedule and financial contingencies.

3.                                            Appeals of Order No. 2009-104A

In May 2009, two intervenors appealed the Commission’s Order No. 2009-104A to the South Carolina Supreme Court.  The oral argument in the appeal brought by Friends of the Earth has been set for March 4, 2010.  The final briefs in the appeal brought by the South Carolina Energy Users Committee are on February 25, 2009.

B.                                    Engineering Update

1.                                      Engineering Completion Status

a)                                      The Engineering Completion Status based on the completion percentage for major plant categories is as follows:

1)                                     Standard Plant Design — 81.6% complete

2)                                     Site Specific Design — 45.7% complete

3)                                     Total Design — 74.0% complete

b)                                      To date, the Engineering Completion Status as reported above reflects the work necessary to bring the design outputs to a point where they are sufficient to support procurement, and construction planning.  The project team is beginning to measure the percentage of engineering work related to standard plant design items that have resulted in drawings that are ready for construction.  Ready for construction drawings are being prepared for site specific work.  The completion of the first ready for construction standard plant drawings are at least a year away.  These anticipated dates fully support the construction schedule.

12

2.                                      Standard Plant Design Activities

During the reporting period, the following standard plant design activities were conducted:

a)                                      Squib Valve design efforts continue for defining solutions for supporting the valve weight and absorbing the shock loading upon valve actuation in order to reduce the pipe loading.  Valve testing commenced in January 2010 with an estimated completion in April 2010. There is no known adverse impact on the project schedule for Units 2 and 3 from this activity.

b)                                      During the testing of the Reactor Cooling Pump (RCP) for the China AP1000 projects, the RCP exhibited a problem during coast down from full speed. Several indications were discovered that warranted a root cause analysis which was performed by WEC and the manufacturer, EMD. The corrective action effort and final testing are expected to be completed within the original test schedule. There is no known adverse impact on the project schedule for Units 2 and 3 from this activity.

c)                                      WEC maintains a system to track the design finalization schedule for major engineering categories and to flag items where design finalization is below WEC expectations.  Currently, WEC has identified several below-expectation items or areas related to activities in the categories of Valves; Piping; Mechanical Modules; and Shaw and Toshiba equipment systems.  The areas that have improved since the third quarter are Instrumentation and Controls; and Procedures.  WEC has provided to SCE&G an explanation and recovery plan for each of the below expectation items.  No adverse impacts on the Units’ Substantial Completion dates are anticipated from these items at this time.  However, this is a focus area and will be monitored closely by SCE&G.

3.                                      Site Specific Design Activities

a)                                      Shaw Engineering continues to perform Site Specific Design work to support the site grading, excavation, backfill and dewatering work. Geotechnical evaluations continue, as well as the design work in support of the permit applications.  This work is proceeding in a satisfactory manner.

b)                                      Design continues for Site Specific Systems, to include the Circulating Water System, Potable Water System, Raw Water System, and the Storm Water System.  This work is proceeding in a satisfactory manner.

c)                                      Work continues on finalizing the Heavy Lift Crane selection and the Nuclear Island excavation plan which is dependent on the crane selection. 

13

Issues associated with Engineering, NRC Licensing, Construction and Commercial questions are being addressed.  SCE&G is following this crane selection and backfill plan closely and considers this activity to be a focus area.

C.                                    Procurement/Fabrication Update

1.                                      Start up of the Shaw Modular Solutions (SMS) facility in Lake Charles, LA is on-going and remains on schedule.  Module fabrication planning and module fabrication also remains on schedule. SCE&G Engineering and Construction Managers visited the SMS facility in October 2009.

2.                                      SCE&G Engineering personnel participated in a Witness Point inspection on the Reactor Vessel and Steam Generator in December 2009 at the Doosan facilities in South Korea.

3.                                      SCE&G Quality Assurance and Construction personnel participated in a Witness Point inspection on the Reactor Vessel Flow Skirt in October 2009 at the Precision Custom Components facility in York, PA.

4.                                      SCE&G’s Engineering Manager participated in a supplier kickoff meeting for the Variable Frequency Drive production in December 2009 at the Siemens facility in Pittsburgh, PA.

5.                                      SCE&G Engineering personnel performed an oversight of the Circulating Water Pipe production at the Hanson facility in Palatka, FL.

D.                                    Construction Update

1.                                      Saiia Construction continues to work on the Plant Access Road from the Mayo Creek Bridge north to the area where the Units will be constructed.

2.                                      Earthwork activities continue in the areas being excavated for location of the nuclear islands, turbine buildings and other principal buildings for the Units.  Earth spoils are being removed to the spoils area at approximately 19,300 cubic yards per day. Through the end of the reporting period approximately 1,700,000 cubic yards of earth have been excavated.

3.                                      Dane Construction has completed all the concrete work on the abutment walls and piers for the Mayo Creek Bridge. The bridge girders were successfully placed in early January 2010.

4.                                      Morgan Construction is performing earthwork grading work in the new Switchyard area.

14

5.                                      Spectrum Building Systems has completed the erection of the Construction Administration Building 15 and the Training and Orientation Building 23 modular buildings which are in full use.

E.                                      Training update

1.                                      The initial group of Reactor Operator Training Instructors will receive reactor operations system training in May 2010, with the second group receiving this training in September 2010. The Reactor Operator Training Instructors will receive their reactor operations simulator training in 2011 and 2012.

2.                                      The renovation of the VCS Unit 1 Nuclear Learning Center (NLC) has begun to house the AP1000 reactor operator training simulators. The current training facility at the NLC is being expanded to accommodate the two simulators for Units 2 and 3 that will arrive onsite in 2012.

F.                                      Change Control/Owners Cost Forecast Update

1.                                      Contract Amendment #1 continues to be processed to revise the language in several areas of the EPC Contract.  These revisions represent updates to the EPC Contract, such as contract language clarifications in the sections relating to Changes in the Work, changes made to the Major Equipment Supplier and Contractor exhibits and changes in the milestone payment schedules due to the Performance Management Baseline Schedule received on April 1, 2009.  There are no changes in forecasted costs related to this item.

2.                                      SCE&G continues to update its forecast of Owner’s Costs to reflect increases in the anticipated costs of project oversight and operations staffing, licensing and other items.  These changes involve forecasted costs only.  SCE&G will continue to review and update these cost projections.

3.                                      Change Order No. 2 was signed in the third quarter.  It relates to the limited scope simulator for the training of reactor operators.

4.                                      The change in cash flow forecast related to item 2 and 3 above is forecast to be $64.2 million in 2007 dollars, the largest component of which is the change in Owner’s Cost. The $64.2 million cost change is reflected in the cash flow projections contained in the exhibits to this Quarterly Report.

15

G.                                    Transmission Update

1.                                      SCE&G’s Power Delivery group continues to progress with the transmission line siting process for determining the precise routes for the new VC Summer Unit 1 — Killian 230kV line and the VC Summer Unit 2 — Lake Murray #2 230kV lines.  Both of these new lines are needed to connect Unit #2 to the grid.

2.                                      The VC Summer Unit 1- Killian line is being sited in three phases; VCS-Winnsboro; Winnsboro-Blythewood; and Blythewood-Killian.  A first public workshop was held on October 29, 2009 to gain public input for the Blythewood-Killian section.  A second public workshop is expected in early March to receive public comments on proposed alternate routes for this line.  The first public workshop for the next section; Winnsboro-Blythewood, is expected to be scheduled in March.  The remaining section (VCS-Winnsboro) will occupy existing right of way and no formal workshops are planned.

3.                                      For the VC Summer Unit 2 — Lake Murray #2 230kV line, SCE&G Power Delivery expects this line route will be constructed entirely within existing rights of way.  SCE&G Power Delivery group has completed an initial inventory survey of one of its existing right of way corridors.  Power Delivery is currently evaluating the other corridors in preparation of analyzing and determining a final route for this line.

4.                                      Power Delivery has completed acquisition of additional land in St. George, South Carolina that will allow for installation of the breaker-and-a-half switchyard configuration needed to connect Unit #3 via two new VC Summer — St. George 230kV lines.  SCE&G is investigating the availability of existing rights of way which could minimize the overall siting process for the VC Summer-St. George 230kV lines.

5.                                      Shaw has awarded the new 230kV Switchyard design and construction to Pike Electric.  SCE&G Power Delivery Engineering is working with Shaw and Pike on the physical arrangement of equipment in the switchyard and the relay protection schemes.  A 30% Design Review was done in December 2009 on the 230kV Switchyard with Shaw, Pike and SCE&G.

III.                                 Anticipated Construction Schedules

As of the end of the fourth quarter of 2009, the Company and its contractors remain on schedule to complete all required milestones as adjusted pursuant to the milestone schedule contingencies approved by the Commission in Order No. 2009-104A.  Each of those adjustments is itemized in the Milestone Update section that follows.  Accordingly, the project is in compliance with the construction schedules approved by

16

the Commission in Order No. 2010-12 and with the provisions of S.C. Code Ann. § 58-33-275(A)(1).

A.                                    Construction Schedule Update

The Project Licensing and Permitting, Engineering, Procurement and Construction work remains on schedule to meet the Units 2 & 3 Substantial Completion dates. Rescheduling of the milestones is addressed in Section III.B herein.  The rescheduling of these milestones is within the approved contingencies and has no adverse impact on the Units’ Substantial Completion dates.

B.                                    Milestone Update

Attached as Appendix 1 to this quarterly report is a spreadsheet that lists and updates each of the specific milestones constituting the anticipated construction schedule for the Units pursuant to S.C. Code Ann. § 58-33-270(B)(1) and Order No. 2010-12. As indicated above, during this quarter, 18 milestones have been advanced and 5 have been delayed.  All milestones adjustments are within the scope of the milestone schedule contingency authorized by the Commission in Order No. 2009-104A. The milestone adjustments do not adversely affect the Substantial Completion dates for Units 2 and 3.

IV.                                Schedules of the Capital Costs Incurred Including Updates to the Information Required by S.C. Code Ann. § 58-33-270(B)(6) (the Inflation Indices)

The Capital Cost Update section of this report provides an update of the cumulative capital costs incurred and forecasted to be incurred in completing the project.  These costs are compared to the cumulative capital cost targets approved by the Commission in Order No. 2010-12.  The approved capital cost targets have been adjusted to reflect the currently reported historical escalation rates, and any use by the Company of the cost and timing contingencies that were approved by the Commission in Order No. 2009-104A.  The Inflation Adjustments and Indices section of this report provides updated information on inflation indices and the changes in them.

A.                                    Capital Costs Update

When adjusted for escalation, the year-end 2009 Cumulative Project Cash Flow as approved in Order No. 2010-12 was $512 million.  During calendar year 2009, SCE&G incurred capital costs for the project amounting to $340 million.  The approved capital cost contingency for 2009, including carry-forward of unused contingency from prior years, was $37.9 million.  Of these contingency funds, $1.1 million was spent in 2009.  As discussed above, these funds were used to cover the 2009 costs associated with Change Order No. 2 and the recalculation of owner’s cost.  As provided for in Order No. 2009-104A, unused contingency funds of $36.8 million will be carried forward into 2010.

17

The expenditure of $340 million for the project in 2009 results in a year-end 2009 cumulative project cash flow, exclusive of AFUDC, of $463 million.  As shown on Appendix 2, Chart B, line 30, when adjusted for timing differences related to Westinghouse/Shaw billing practices, the carry forward of unused contingency and the carry forward of $6 million in forecasted capital costs from 2009 that have been shifted to future years, the resulting amount is approximately $64,000 less than the Cumulative Project Cash Flow approved by the Commission for year-end 2009 as adjusted for inflation.  Apart from the $1.1 million in contingency funds used during this period, these changes in 2009 project expense represent timing differences and not changes in underlying costs.  The Company expects that the forecasted capital costs not incurred in 2009 will be incurred in future periods under the current construction schedule, and those costs have been included in the cash flow projections contained in Exhibit 2 for those years.

Chart A of Appendix 2 shows the Cumulative Project Cash Flow target as approved in Order No. 2010-12 and as updated for escalation and other Commission approved adjustments under the heading “Per Order No. 2010-12 Adjusted.”  As shown there, SCE&G has carried forward into 2010 $36.8 million in unused contingency funds from 2009 as permitted by the Commission in Order No. 2009-104A.  SCE&G has not used the capital cost schedule contingencies to make any adjustments to the approved Cumulative Project Cash Flow as set forth in this filing because the project conforms to approved project cost targets without such adjustments.  Nonetheless, SCE&G does not intend to waive or in any way limit its right, as authorized by the Commission, to make appropriate capital cost contingency adjustments associated with past or future changes in cost scheduling.  SCE&G may make capital cost contingency adjustments related to such changes in its scheduling of capital costs in future filings.

Appendix 2, Chart A, shows the cumulative cash flow for the project based on actual expenditures to date and the Company’s current forecast of cost and construction schedule under the heading “Actual Through December 2009, plus Projected.”  A comparison of the two sets of data is presented at Appendix 2, Chart B.  Appendix 2, Chart C, shows that SCE&G anticipates that it will have more than sufficient contingency funds available to absorb the full amount of the forecasted cash flow differences and will retain substantial contingency funds for other uses.  In addition, SCE&G forecasts that it will have budget surpluses sufficient to restore funds to the contingency pool in 2014, 2017 and 2018.  As a result, SCE&G forecasts that it will have $371 million in uncommitted contingency funds at the end of the project.

The information presented in Appendix 2 establishes that the anticipated cumulative project cash flow for the period ending December 31, 2009 is in conformity with the schedule approved by the Commission in Order No. 2010-12 and with the provisions of S.C. Code Ann. § 58-33-275(A)(1).  It also establishes that the Company’s

18

best forecasts of future project costs are fully consistent with the Cumulative Project Cash Flows approved by the Commission in Order No. 2010-12.

For comparison purposes, Appendix 3 sets out the cash flow schedule for the project exactly as it was approved in Order No. 2010-12, without change or updating.  Appendix 3 does not include any adjustments to the cash flow schedule for changes in inflation indices or adjustments in capital cost schedules made by the Company.  The AFUDC forecast presented on Appendix 3 is the AFUDC forecast that was current at the time of Order No. 2010-12 which has not been updated for changes in AFUDC rates or other factors.

B.                                    Inflation Indices Update

Appendix 4 shows the updated inflation indices approved in Order No. 2009-104A.  Included is a history of the annual Handy Whitman All Steam Index, South Atlantic Region; the Handy Whitman All Steam and Nuclear Index, South Atlantic Region; Handy Whitman All Transmission Plant Index, South Atlantic Region; and the Chained GDP Index for the past 10 years.  The changes in these indices and the escalation-related effects of cost rescheduling resulted in a decrease in the projected cost of the Units in future dollars from $6.9 billion as forecast in Order No. 2010-12 to a forecast of $6.3 billion using current inflation data and the current AFUDC rate. The $4.5 billion forecast of the cost of the Units in 2007 dollars, net of AFUDC, remains unchanged.

V.                                    Updated Schedule of Anticipated Capital Costs

The updated schedule of anticipated capital costs for Units 2 & 3 is reflected in Appendix 2, Chart A.

VI.                                Conclusion

As indicated above, the project is proceeding in compliance with the cost and schedule forecasts approved by the Commission in Order No. 2010-12.  The scheduled completion dates for Units 2 & 3 remain April 1, 2016 and January 1, 2019, respectively.  The Units are on track to be completed within the projected cost of $4.5 billion in 2007 dollars net of AFUDC.  The Company maintains an extensive staff of experts that monitors and oversees the work of its contractors and has identified and continues to monitor closely all areas of concerns related to either cost or schedule for the project.  The Company will continue to update the Commission and ORS of progress and concerns as the project proceeds.

19

APPENDIX 1

V. C. Summer Nuclear Station Units 2 & 3

Quarterly Report to the South Carolina Office of Regulatory Staff

Submitted by South Carolina Electric & Gas Company

Pursuant to Public Service Commission Order No. 2009-104A

Quarter Ending December 31, 2009

Appendix 1 lists and updates each of the milestones which the Commission adopted as the Approved Construction Schedule for the Units, pursuant to S.C. Code Ann. § 58-33-270(B)(1) in Order No. 2010-12.  Appendix 1 provides columns with the following information:

1

2

3

4

5

6