
             As filed with the Securities and Exchange Commission on
                                February 9, 2000

                                File No. 70-09521

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                          PRE-EFFECTIVE AMENDMENT NO. 2
                                       TO
                                    FORM U-1
                             APPLICATION-DECLARATION
                                      UNDER

                 THE PUBLIC UTILITY HOLDING COMPANY ACT OF 1935


                                SCANA Corporation
                                1426 Main Street

                         Columbia, South Carolina 29201

                     (Name of company filing this statement
                   and address of principal executive office)

                                SCANA Corporation
                                1426 Main Street

                         Columbia, South Carolina 29201

                 (Name of top registered holding company parent)

                                 Kevin B. Marsh
                                H. Thomas Arthur
                                SCANA Corporation
                                1426 Main Street

                         Columbia, South Carolina 29201
                            Telephone: (803) 217-9000
                            Facsimile: (803) 217-9336

                   (Names and addresses of agents for service)




<PAGE>



                    The Commission is also requested to send
                 copies of any communication in connection with
                                 this matter to:

                                 William S. Lamb
                               Sheri E. Bloomberg
                     LeBoeuf, Lamb, Greene & MacRae, L.L.P.
                               125 W. 55th Street
                            New York, New York 10019
                            Telephone: (212) 424-8000
                            Facsimile: (212) 424-8500





<PAGE>



                                TABLE OF CONTENTS

                                                                            Page

Item 1.  DESCRIPTION OF THE PROPOSED MERGER....................................1
         A.  Introduction......................................................1
             1.  General Request...............................................1
             2.  Overview of the Mergers.......................................2
         B.  Description of the Parties to the Mergers.........................4
             1.  SCANA.........................................................4
                 a. SCANA Public Utility Companies.............................5
                    i.   SCE&G.................................................5
                          I.  SCE&G's Electric Utility Operations..............6
                          II. SCE&G's Gas Utility Operations...................7
                    ii.   GENCO................................................7
                 b. SCANA Non-Utilities........................................7
                    i.    South Carolina Fuel Company, Inc.....................7
                    ii.   South Carolina Pipeline Corporation..................8
                    iii.  SCANA Energy Marketing, Inc..........................9
                    iv.   SCANA Propane Gas, Inc...............................9
                    v.    SCANA Propane Storage, Inc. .........................9
                    vi.   SCANA Communications, Inc...........................10
                    vii.  ServiceCare, Inc....................................10
                    viii. Primesouth, Inc.....................................10
                    ix.   SCANA Resources, Inc................................11
                    x.    Cogen South, LLC....................................11
                    xi.   Palmetto Lime, LLC..................................12
                    xii.  SCANA Development Corporation.......................12
                    xiii. SCANA Petroleum Resources, Inc......................12
             2.  PSNC.........................................................12
                 a. PSNC's Non-Utilities......................................14
                    i.    PSNC Production Corporation.........................14
                          I.  Sonat Public Service............................14
                    ii.   Clean Energy Enterprises, Inc.......................15
                    iii.  PSNC Cardinal Pipeline Company......................15
                          I.  Cardinal Pipeline Company, LLC..................15
                    iv.   PSNC Blue Ridge Corporation.........................16
                          I.  Pine Needle.....................................16
         C.  Description Of The Mergers.......................................17
             1.  Background...................................................17
             2.  Merger Agreement.............................................20
             3.  Financing the Mergers........................................21
         D.  Management and Operations of SCANA and PSNC Following the
             Mergers..........................................................22




<PAGE>




Item 2.  Fees, Commissions and Expenses.......................................22

Item 3.  Applicable Statutory Provisions......................................23
         A.  Legal Analysis...................................................23
             1.  Section 10(b)................................................25
                 a. Section 10(b)(1)..........................................25
                    i.    Interlocking Relations..............................25
                    ii.   Concentration of Control............................26
                 b. Section 10(b)(2)..........................................31
                    i.    Fairness of Consideration...........................31
                    ii.   Reasonableness of Fees..............................33
                 c. Section 10(b)(3)..........................................34
                    i.    Capital Structure...................................34
                    ii.   Protected Interests.................................37
             2.  Section 10(c)................................................40
                 a. Section 10(c)(1)..........................................40
                    i.    Section 8 Analysis..................................40
                    ii.   Section 11 Analysis - Integration...................41
                          I.  Integrated Electric Utility System..............41
                          II. Integrated Gas Utility System...................42
                    iii.  Section 11 Analysis - Retention of Gas Utility
                          System..............................................47
                    iv.   Section 11 Analysis - Retention of Non-Utility
                          Businesses..........................................52
                 b. Section 10(c)(2)..........................................62
             3.  Section 10(f)................................................64

Item 4.  Regulatory Approvals.................................................65
             1.  The NCUC.....................................................65
             2.  HSR..........................................................69

Item 5.  Procedure............................................................69

Item 6.  Exhibits and Financial Statements....................................70
         A.  Exhibits.........................................................70
         B.  Financial Statements.............................................73

Item 7.  Information as to Environmental Effects..............................74




<PAGE>



     SCANA hereby amends and restates its Application-Declaration as follows:

Item 1. DESCRIPTION OF THE PROPOSED MERGER

     A.   Introduction

     This  Application-Declaration  seeks  approvals  relating  to the  proposed
acquisition of Public Service Company of North Carolina,  Incorporated,  a North
Carolina  corporation   ("PSNC"),   by  SCANA  Corporation,   a  South  Carolina
corporation  ("SCANA"),  pursuant  to which  PSNC  will  become  a wholly  owned
subsidiary company of SCANA. Following consummation of the proposed acquisition,
SCANA will register with the  Securities and Exchange  Commission  (the "SEC" or
the  "Commission")  as a holding  company under Section 5 of the Public  Utility
Holding  Company Act of 1935 (the "Act").  SCANA is currently a holding  company
exempt  from all  provisions  of the Act except  Section  9(a)(2) and Section 10
under Section (3)(a)(1) pursuant to Rule 2 of the Act.

     SCANA has filed a  separate  Application-Declaration  relating  to  certain
financing  activities and  intrasystem  services issues arising under the Act in
connection with proposed acquisition (the "Financing Application-Declaration").

          1.   General Request

     Pursuant  to  Sections  9(a)(2) and 10 of the Act,  SCANA  hereby  requests
authorization  and  approval  of  the  Commission  to  acquire  the  issued  and
outstanding  common stock of PSNC, and thereby  acquire PSNC.  SCANA also hereby
requests that the Commission  approve the retention by SCANA of the  businesses,
investments and non-utility activities of SCANA and PSNC.




<PAGE>



          2.   Overview of the Mergers

     Pursuant  to an Amended  and  Restated  Agreement  and Plan of Merger  (the
"Merger  Agreement"),  dated as of February 16, 1999 and amended and restated as
of May 10,  1999 by and among PSNC,  SCANA,  New Sub I, Inc.,  a South  Carolina
corporation  and a wholly owned  subsidiary  company of SCANA ("New Sub I"), and
New Sub II, Inc., a South  Carolina  corporation  and a wholly owned  subsidiary
company of SCANA  ("New Sub II"),  New Sub I will be merged  with and into SCANA
with SCANA as the surviving  corporation (the "First Merger"),  and PSNC will be
merged  with and into  New Sub II with New Sub II as the  surviving  corporation
(the  "Preferred  Second  Merger",  and  together  with the  First  Merger,  the
"Mergers").  As a result of the Preferred Second Merger,  PSNC, a public utility
company for purposes of the Act, will become a wholly owned  subsidiary  company
of SCANA.

     In the Preferred Second Merger, each share of PSNC common stock outstanding
immediately  prior to the effective time of the Preferred  Second Merger will be
converted  into the right to elect either (i) $33.00 in cash or (ii) a number of
shares of SCANA common stock equal to the PSNC exchange ratio.  This election is
subject to the limitation  that no more than 50% of the aggregate  consideration
paid to all PSNC  shareholders may be in cash. The PSNC exchange ratio will vary
depending  upon  the  average  market  price  of SCANA  common  stock  over a 20
trading-day  period, but is subject to the limitation that PSNC shareholders who
elect to receive  SCANA  common stock will receive no more than 1.45 and no less
than 1.02 shares of SCANA common stock for each share of PSNC common stock.

                                       -2-



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     In  the  First  Merger,  each  share  of  SCANA  common  stock  outstanding
immediately  prior to the  effective  time of the First Merger will be converted
into the  right to  receive  either  (i) $30 in cash or (ii) one  share of SCANA
common stock,  subject to the requirement that SCANA pay $700 million in cash in
the aggregate as consideration in the Mergers. The First Merger will not involve
the acquisition of any securities of a public utility company; therefore it does
not require any approval from the Commission under the Act.

     As discussed in more detail in Item 1.C. below, the boards of directors and
managements  of SCANA and PSNC believe that the Mergers will help position their
combined  companies  to become one of the  premier  distribution  companies  for
energy and other  services in the  southeastern  region by increasing  financial
flexibility and providing strategic growth  opportunities that will benefit both
companies  and their  shareholders,  customers  and  employees  in a manner that
neither company could achieve on its own. The SCANA and PSNC boards of directors
have approved the Merger Agreement and related transactions.

     In addition  to the  approvals  by the SCANA and PSNC boards of  directors,
consummation of the First Merger requires  approval by the holders of two-thirds
of the shares of SCANA common stock and  consummation  of the  Preferred  Second
Merger  requires  approval by holders of a majority of the shares of PSNC common
stock.  Also, the  affirmative  vote of a majority of the shares of SCANA common
stock present and voting at a special meeting of SCANA  shareholders is required
to approve the issuance of SCANA common stock in  connection  with the Preferred
Second  Merger,  provided  that a majority  of all  outstanding  shares of SCANA
common stock is voted at the meeting.  At duly called  special  meetings held on
July 1, 1999, the

                                       -3-



<PAGE>



requisite  approvals by SCANA shareholders for the First Merger and the issuance
of SCANA  common  stock in  connection  with the  Preferred  Second  Merger were
obtained,  and the  requisite  approval of PSNC  shareholders  for the Preferred
Second Merger was obtained.

     In  addition  to  said  shareholder  approvals,  certain  state  regulatory
approvals must be obtained from the North  Carolina  Utilities  Commission  (the
"NCUC").  An order  approving the Preferred  Second Merger was obtained from the
NCUC on December 7, 1999 and is attached hereto as Exhibit D-1.2.

     On the Federal  regulatory  level,  the  Preferred  Second Merger must also
receive clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "HSR Act"),  and such clearance was received on September 26, 1999 when the
applicable  waiting period under the HSR Act expired.  In addition,  the Federal
Communications  Commission  (the  "FCC") has  approved  the  transfer of certain
licenses held by PSNC on a temporary basis.

     B.   Description of the Parties to the Mergers

          1.   SCANA

     SCANA was  incorporated on October 10, 1984 and is a holding company within
the meaning of the Act.  SCANA  common  stock has no par value and is listed and
traded on the New York Stock Exchange (the "NYSE") under the symbol "SCG". As of
September 30, 1999, 103,572,623 shares of SCANA common stock were outstanding.

     As of and for the twelve months ended  September 30, 1999,  SCANA had total
assets of $5.809 billion, net utility assets of $3.824 billion,  total operating
revenues of $1.616 billion,  and net income of $159 million.  SCANA neither owns
nor operates any physical

                                       -4-



<PAGE>



properties.  As of September 30, 1999,  SCANA employed,  in conjunction with its
subsidiaries, a total of 4,890 full-time employees.

     SCANA has fourteen  direct,  wholly owned  subsidiary  companies  which are
engaged in  functionally  distinct  operations as described  below.  It also has
investments in four limited liability company joint ventures. SCANA holds all of
the outstanding  voting  securities of two public utility  companies  within the
meaning of the Act,  South Carolina  Electric & Gas Company  ("SCE&G") and South
Carolina Generating Company, Inc. ("GENCO").

               a.   SCANA Public Utility Companies

                    i.   SCE&G

     SCE&G is a regulated  public  utility  company  engaged in the  generation,
transmission,  distribution and sale of electricity and in the purchase and sale
of natural gas in South Carolina.  SCE&G's electric service area extends into 24
counties  covering  more than 15,000  square miles of the central,  southern and
southwestern  portions of South  Carolina.  SCE&G's service area for natural gas
operations  encompasses  all or part of 31 of the 46 counties in South  Carolina
and covers more than 21,000 square miles.  SCE&G's service area for electric and
gas  operations  has a  population  of  approximately  2.3 million  people,  and
predominant  industries in the areas served by SCE&G include:  synthetic fibers;
chemicals;  fiberglass; paper and wood; metal fabrication;  stone, clay and sand
mining and processing; and textiles. In addition to its electric and gas utility
businesses,   SCE&G  also  operates  a  bus  service  providing   transportation
throughout  Columbia,  South  Carolina.  SCE&G has formed a  subsidiary  finance
trust,  SCE&G Trust I, which issued $50 million in trust  securities in a public
offering.

                                       -5-



<PAGE>



     SCE&G owns  eighteen  electric  generation  facilities  with a combined net
generating  capacity  of 3,772  kilowatts.  SCE&G also owns  several  commercial
office buildings, service center buildings and storage facilities. SCE&G owns 61
motor  coaches used in the  operation of the Columbia,  South  Carolina  transit
system.

     SCE&G is subject to the  jurisdiction  of the South Carolina Public Service
Commission  ("SCPSC"),  the Nuclear  Regulatory  Commission  (the "NRC") and the
Federal Energy Regulatory Commission ("FERC") pursuant to the Federal Power Act.

                        I.   SCE&G's Electric Utility Operations

     SCE&G's  electric  transmission  system is part of an  interconnected  grid
extending  over a large part of the southern and eastern  portions of the United
States.  SCE&G,  Virginia  Power Company,  Duke Power Company,  Carolina Power &
Light  Company,  Yadkin,  Incorporated  and Santee  Cooper  (formerly  The South
Carolina  Public  Service  Authority)  are  members  of  the  Virginia-Carolinas
Reliability Group, one of several  geographic  divisions within the Southeastern
Electric  Reliability  Council.  SCE&G is also interconnected with Georgia Power
Company,  Savannah  Electric & Power Company,  Oglethorpe Power  Corporation and
Southeastern Power Administration's Clark Hill Project.

     SCE&G purchases all of the electric  generation of Williams Station,  owned
by GENCO, under a Unit Power Sales Agreement that has been approved by the FERC.
Williams Station has a generating capacity of 580 megawatts.

     For the twelve months ended  September  30, 1999,  SCE&G's  electric  sales
revenues totaled $1.210 billion.  Residential sales of electricity accounted for
42% of SCE&G's

                                       -6-



<PAGE>



electric sales revenues;  commercial  sales for 30%;  industrial  sales for 18%;
sales  for  resale  for 3%;  and all other  sales  for 7%.  SCE&G had a total of
522,243 electric customers as of September 30, 1999.

                        II.  SCE&G's Gas Utility Operations

     SCE&G's gas system consists of  approximately  11,963 miles of distribution
mains and  related  service  facilities.  SCE&G  has  propane  air peak  shaving
facilities that can supplement its supply of natural gas by gasifying propane to
yield the  equivalent of 102 million cubic feet per day.  These  facilities  can
store the equivalent of 430 million cubic feet of natural gas.

     For the twelve months ended September 30, 1999,  SCE&G's gas sales revenues
totaled $228 million. Residential sales accounted for 42% of gas sales revenues;
commercial  sales for 32%; and  industrial  sales for 26%.  SCE&G had a total of
258,496 gas customers as of September 30, 1999.

                    ii.  GENCO

     GENCO owns and operates the Williams Station  generating  facility in Goose
Creek,  South Carolina,  and sells electricity solely to SCE&G. GENCO is subject
to regulation under the Federal Power Act.

               b.   SCANA Non-Utilities

                    i.   South Carolina Fuel Company, Inc.

     South Carolina Fuel Company,  Inc. ("South  Carolina Fuel") acquires,  owns
and provides  financing for SCE&G's nuclear fuel, fossil fuel and sulfur dioxide
emission allowance requirements.

                                       -7-



<PAGE>



                    ii.  South Carolina Pipeline Corporation

     South Carolina Pipeline Corporation ("Pipeline  Corporation") is engaged in
the purchase,  transmission and sale of natural gas on a wholesale basis to both
distribution  companies and industrial customers in 40 counties throughout South
Carolina.  Pipeline Corporation  operates completely within South Carolina,  and
its gas system consists of  approximately  1,919 miles of transmission  pipeline
that  connect  its resale  customers'  distribution  systems  with  transmission
systems   of   Southern   Natural   Gas   Company   ("Southern   Natural")   and
Transcontinental Gas Pipe Line Corporation  ("Transco").  Pipeline  Corporation,
through a wholly owned subsidiary, owns and operates a 62-mile, six-inch propane
pipeline that connects what was formerly SCANA Propane  Storage,  Inc.'s propane
storage facility with Dixie Pipeline  Company's system,  which traverses central
South Carolina. Pipeline Corporation also owns two liquified natural gas ("LNG")
liquification  and  storage  facilities,  one  located  near  Charleston,  South
Carolina and the other in Salley,  South Carolina.  To meet the  requirements of
its high  priority  natural  gas  customers  during  periods of maximum  demand,
Pipeline Corporation supplements its supplies of natural gas using these two LNG
facilities.

     Pipeline  Corporation supplies the natural gas for SCE&G's gas distribution
system.  Other resale customers include  municipality and county gas authorities
and gas utility companies.  The industrial customers of Pipeline Corporation are
primarily engaged in the manufacturing or processing of ceramics,  paper, metal,
food and textiles.

     SCANA also has a subsidiary,  South Atlantic Farms,  that holds real estate
interests,  consisting of environmental  easements,  in South Carolina which are
intended to support

                                       -8-



<PAGE>



pipeline  operations.  SCANA  currently  intends  to  transfer  these  assets to
Pipeline Corporation and dissolve South Atlantic Farms.

                        iii. SCANA Energy Marketing, Inc.

     SCANA Energy Marketing,  Inc.  ("Energy  Marketing")  markets  electricity,
natural gas and other light  hydrocarbons,  primarily in the southeastern United
States.  Energy  Marketing  also markets  natural gas in  Georgia's  deregulated
natural  gas market and  provides  energy-related  risk  management  services to
producers  and  consumers.   In  1996,  the  FERC  approved  Energy  Marketing's
application to become a power  marketer,  allowing  Energy  Marketing to buy and
sell large blocks of electric  capacity in wholesale  markets.  Energy Marketing
holds a 49% membership interest in SCANA Energy Trading,  LLC ("Energy Trading")
which is also engaged in trading energy commodities.

                        iv.  SCANA Propane Gas, Inc.

     SCANA  Propane  Gas,  Inc.  ("SCANA  Propane  Gas")  previously  purchased,
delivered and sold propane within the southeastern  United States. The assets of
SCANA Propane Gas were sold to Suburban Propane L.P. ("Suburban Propane") in the
fourth quarter of 1999.

                        v.   SCANA Propane Storage, Inc.

     SCANA Propane Storage,  Inc. ("SCANA Propane Storage") previously owned and
operated a 60 million gallon  underground  propane  storage  facility near York,
South  Carolina and leased  cavern  storage space to  industries,  utilities and
others. The assets of SCANA Propane Storage were sold to Suburban Propane in the
fourth quarter of 1999.

                                       -9-



<PAGE>



                        vi.  SCANA Communications, Inc.

     SCANA Communications, Inc. ("SCI") owns and operates a 500-mile fiber optic
telecommunications  network and an 800 MHZ radio  service  network  within South
Carolina.  In addition,  SCI provides  tower site  construction,  management and
rental  services in South  Carolina and Georgia.  FRC, LLC, a subsidiary of SCI,
constructs, owns and operates fiber optic lines from Charleston,  South Carolina
to Raleigh, North Carolina.

     SCI also has investments in Powertel,  Inc., ITC Holding Company, Inc., ITC
DeltaCom,  Inc.,  and Knology  Holdings,  Inc.,  which are  companies  providing
telecommunications  services in the southeastern  United States. SCI holds these
investments  through  an  intermediate  holding  company,  SCANA  Communications
Holdings, Inc.

                        vii. ServiceCare, Inc.

     ServiceCare,  Inc.  ("ServiceCare") is engaged in providing  energy-related
products and services beyond the energy meter.  Its primary  businesses  involve
providing  homeowners  with service  contracts on their home appliances and home
security monitoring.

                        viii. Primesouth, Inc.

     Primesouth, Inc. ("Primesouth"), either directly or through its subsidiary,
Palmark, Inc., is engaged in power plant management and maintenance services and
is  currently  considering  acquiring  a 40%  membership  interest  in a limited
liability company that is engaged in synthetic fuel-related operations.


                                      -10-



<PAGE>



                        ix.  SCANA Resources, Inc.

     SCANA Resources,  Inc. ("SCANA  Resources") is a wholly owned subsidiary of
SCANA.  Its function is to provide a structural  vehicle for the  development of
innovative  business  ideas  related  to  the  energy  industry.  The  types  of
businesses in which SCANA  Resources  currently holds an interest  include:  the
development of remote electric and gas meter reading technology; the development
of efficient gas heating and cooling equipment; the offerings via e- commerce of
gas and electricity to commercial customers in selected markets; the offering of
commercial,  energy efficient  lighting  installation;  and the installation and
maintenance of standby, electric generators for fiber optic systems.

     If any of SCANA Resources' lines of business grows into significance,  then
such line of  business  will be  separated  from SCANA  Resources,  Inc.  into a
separate  affiliate.  If a line of  business  does not develop  sufficiently  to
support  itself as a  separate  affiliate  enterprise,  it will be  divested  or
closed.

                        x.   Cogen South, LLC

     SCANA and  Westvaco  Corporation  ("Westvaco")  each own a 50%  interest in
Cogen South, LLC ("Cogen").  Cogen builds and operates boilers and turbines at a
cogeneration   facility  at  Westvaco's  Kraft  Division  Paper  Mill  in  North
Charleston,  South Carolina.  The facility provides industrial process steam for
the  Westvaco  paper  mill and  shaft  horsepower  to enable  SCE&G to  generate
electricity.

                                      -11-



<PAGE>



                        xi.  Palmetto Lime, LLC

     SCANA owns a 49% membership interest in Palmetto Lime, LLC ("Palmetto"),  a
subsidiary engaged in the production and sale of lime.

                        xii. SCANA Development Corporation

     SCANA Development Corporation is presently in liquidation.  This entity was
previously engaged in the sale of real estate.

                        xiii. SCANA Petroleum Resources, Inc.

     SCANA Petroleum Resources, Inc. is in liquidation following the sale of its
oil and gas properties.

          2.   PSNC

     PSNC,  a North  Carolina  corporation  incorporated  in  1938,  is a public
utility company  certificated to serve a 31-county area in North Carolina.  PSNC
transports,   distributes  and  sells  natural  gas  to  approximately   340,000
residential, commercial and industrial customers in 95 cities and communities in
North Carolina. In connection with its natural gas distribution  business,  PSNC
promotes,  sells and installs both new and replacement  cooking,  water heating,
laundry, space heating,  cooling and humidity control natural gas appliances and
equipment. PSNC, through a subsidiary that is not a public utility company, also
provides conversion and maintenance  services for natural gas-fueled vehicles in
selected cities in and beyond its franchised territory.  It also participates in
non-public  utility  company  businesses  and joint  ventures  in areas  such as
natural gas brokering and supply services.

                                      -12-



<PAGE>



     PSNC common  stock has a par value of $1 per share and is listed and traded
on the  NYSE  under  the  symbol  "PGS."  As of and for the  fiscal  year  ended
September 30, 1999, 20,577,967 shares of PSNC common stock were outstanding, and
PSNC had total assets of  $648,571,000,  operating  revenues of $347,377,000 and
net income of $24,451,000.  As of September 10, 1999, PSNC had approximately 900
employees.

     PSNC owns 761 miles of  transmission  pipelines,  which  range from 2 to 24
inches in  diameter,  and 6,857  miles of  distribution  mains that  connect its
distribution systems with the Texas to New York pipeline  transmission system of
Transco. Most of these transmission pipelines and distribution mains are located
on  right-of-ways  held under  easement,  license  or permit.  PSNC also owns 18
commercial office buildings,  a measurement operations building, a building that
houses  training  and  engineering,  11  service  center  buildings,  15 service
buildings,  and an energy control building.  One of the service buildings houses
training  facilities,  and another  service  building  is jointly  occupied by a
natural gas-fueled vehicle conversion facility.  PSNC also leases six commercial
office buildings for company use.

     PSNC is subject to regulation by the NCUC. PSNC's regulated transportation,
distribution  and sale of natural gas take place in its  31-county  certificated
service territory, which includes Raleigh, Durham and the Research Triangle area
of north  central  North  Carolina,  Gastonia,  Concord and  Statesville  in the
central  area of the state,  and  Asheville,  Hendersonville  and Brevard in the
western area. Over 2.5 million people reside in PSNC's  certificated  territory,
and during the past three  fiscal  years,  PSNC has added  approximately  46,300
residential,  3,450 commercial,  and 50 industrial  customers to its natural gas
transmission and distribution systems.

                                      -13-



<PAGE>



These 49,800 new  customers  have  resulted in a compound  annual growth rate of
5.4% for PSNC over the three-year period. PSNC's diversified industrial customer
base includes manufacturers of textiles,  chemicals, ceramics and clay products,
glass,  automotive  products,  minerals,   pharmaceuticals,   plastics,  metals,
electronic equipment, furniture and a variety of food and tobacco products.

               a.   PSNC's Non-Utilities

     PSNC has four direct and three indirect non-utility  subsidiaries,  each of
which is described below.

                    i.   PSNC Production Corporation

     PSNC  Production   Corporation  ("PSNC   Production")  is  a  wholly  owned
subsidiary of PSNC that was formed in 1981 to engage in the exploration for, and
production  of,  natural  gas. In response to new business  opportunities  being
created by the restructuring of the natural gas industry, PSNC Production began,
in 1990, to limit its business to non-regulated gas brokering and sales to large
commercial and industrial  customers that could obtain  transportation from PSNC
and other local distribution  companies ("LDCs").  In 1994, PSNC Production sold
the last of its  interests in  production  properties.  In December  1996,  PSNC
Production  sold a 50  percent  interest  in its  marketing  business  to  Sonat
Marketing  Company  L.P.  ("Sonat  Marketing")  in order to create  Sonat Public
Service Company L.L.C. ("Sonat Public Service").

                        I.   Sonat Public Service

     Sonat Public  Service is a joint  venture  started in December 1996 by PSNC
Production and Sonat Marketing. As its capital contribution to the venture, PSNC
Production

                                      -14-



<PAGE>



transferred  its gas  brokering  activities to Sonat Public  Service,  and Sonat
Public  Service  now  provides  nonregulated  energy  products  and  services to
approximately 500 industrial and commercial accounts in the mid-Atlantic region.
As of December 31, 1999, PSNC Production owns 100% of Sonat Public Service.

                    ii.  Clean Energy Enterprises, Inc.

     Clean Energy Enterprises,  Inc. ("Clean Energy"), a wholly owned subsidiary
of PSNC, converts vehicles to operate on natural gas or other alternative fuels.
Clean Energy also operates fueling stations in Raleigh and Gastonia, and advises
customers on the installation and operation of natural gas fueling stations.

                    iii. PSNC Cardinal Pipeline Company

     PSNC  Cardinal  Pipeline  Company is a  subsidiary  created  solely to hold
PSNC's  equity  interest in  Cardinal  Extension  and now in  Cardinal  Pipeline
Company LLC, as described below.

                        I.   Cardinal Pipeline Company, LLC

     In March 1994, PSNC and a subsidiary of Piedmont Natural Gas Company,  Inc.
("Piedmont")  formed Cardinal  Pipeline  Company,  LLC  ("Cardinal") in order to
construct and operate a 24-inch,  37.5-mile  natural gas pipeline (the "Cardinal
Pipeline").1  The Cardinal  Pipeline  extends from  Wentworth to near Haw River,
North Carolina,  where it  interconnects  with PSNC and Piedmont.  It was placed
into service on December 31, 1994,  and provides 130 million  cubic feet per day
of  additional  firm  capacity  (70  million  cubic feet per day for PSNC and 60
million

--------
     1 Although not a public utility  company for purposes of the Act,  Cardinal
is a  utility  for  purposes  of state  regulation  and is  currently  under the
jurisdiction of the NCUC.

                                      -15-



<PAGE>



cubic  feet per day for  Piedmont).  When  Cardinal  Pipeline  was  placed  into
service, PSNC owned 64.5% of Cardinal.

     In 1995, PSNC, Piedmont, Transco and North Carolina Natural Gas Corporation
("NCNG")  formed  Cardinal  Extension  Company,  LLC  ("Cardinal  Extension") to
purchase and extend the Cardinal Pipeline by 67.5 miles. As of November 1, 1999,
Cardinal was merged into  Cardinal  Extension  with the  surviving  entity being
named Cardinal Pipeline Company, LLC. PSNC, which contributed its 64.5% interest
in Cardinal to the new  project,  now owns  approximately  33% of the  surviving
company through a subsidiary.

                    iv.  PSNC Blue Ridge Corporation

     Blue Ridge  Corporation  ("Blue Ridge") is a subsidiary used solely to hold
PSNC's equity interest in, Pine Needle LNG Company, LLC ("Pine Needle").

                        I.   Pine Needle

     Pine  Needle was formed by Blue Ridge along with  subsidiaries  of Transco,
Piedmont,  NCNG, Amerada Hess, and the Municipal Gas Authority of Georgia to own
and operate an LNG storage facility in North Carolina.  The facility will have a
storage capacity of four billion cubic feet with vaporization  capability of 400
million cubic feet per day. Blue Ridge made its required capital contribution of
$9,058,000  on May 3, 1999 and owns 17% of Pine Needle.  PSNC has  contracted to
use 25% of the facility's gas storage capacity and withdrawal capabilities.

                                      -16-



<PAGE>



     C.   Description Of The Mergers

          1.   Background

     Over the past several years SCANA has carefully  monitored  developments in
the electric and natural gas utility industries, with particular emphasis on the
growth of competition  in the  southeastern  region of the United  States.  As a
result of these efforts,  SCANA decided to pursue a  regionally-based,  customer
service  oriented  growth  strategy  that  involves  both  expanding its service
options for its  customers to include such  services as appliance  repair,  home
security  and  telecommunications,  and  increasing  its  customer  base through
increased  marketing  efforts in areas with open  access  and  through  possible
acquisitions.

     PSNC has also carefully  followed  recent  developments in the electric and
natural gas utility industries that have substantially  increased competition in
such industries,  particularly  the pressures on small and medium-sized  utility
companies to compete as effectively as larger  utility  companies.  As a result,
PSNC  began to  develop  strategic  plans to  respond  to such an  evolving  and
competitive  environment as it affected PSNC, and engaged and authorized  Morgan
Stanley  &  Co.  Incorporated,  its  financial  advisor,  to  explore  strategic
alternatives and possible business  combinations.  PSNC's  management  concluded
that PSNC's  competitive  position and growth  prospects in this new environment
would be significantly enhanced by, among other things,  increasing the scale of
its operations and the size of its customer base.

     After considering  possible business  combinations with several  companies,
the PSNC board of directors, on February 16, 1999, by a unanimous vote, approved
the Merger  Agreement with SCANA and the transactions  contemplated  thereby and
authorized the execution

                                      -17-



<PAGE>



of the Merger Agreement.  On February 16, 1999, the SCANA board of directors, by
the affirmative vote of twelve  directors with one dissent,  approved the Merger
Agreement with PSNC and the transactions contemplated thereby and authorized the
execution  of the Merger  Agreement.  Following  the meetings of their boards of
directors, PSNC and SCANA executed the Merger Agreement on February 16, 1999 and
publicly announced the proposed Mergers on February 17, 1999.

     The board of directors  and  management  of SCANA  believe that the Mergers
will help position SCANA to become one of the premier distribution companies for
energy and other services in the southeastern region by increasing its financial
flexibility  and  providing  strategic  growth  opportunities  that will benefit
SCANA, its shareholders, customers and employees, including:

          o    Expansion Potential and Broader Customer Base. PSNC brings to the
               combined companies  approximately  340,000 additional natural gas
               retail  distribution  customers.  The  acquisition  of PSNC  will
               increase  SCANA's  domestic retail customer base to approximately
               1.3 million customers in the southeastern region,  including fast
               growing areas of North Carolina.  SCANA and its  shareholders and
               employees will be able to  participate  in these growing  markets
               through  PSNC, a company with which  customers in North  Carolina
               are familiar. In addition, following the Preferred Second Merger,
               SCANA's natural gas customer base will be more diverse, expanding
               from its  traditional  majority  industrial  gas customer base by
               adding PSNC's  residential  and small  commercial  customer base,
               which  accounted for  approximately  50% of PSNC's  throughput in
               fiscal 1998.

          o    Increased  Customer  Products and Services.  The combination with
               PSNC will enable the combined  companies to offer their customers
               access to more  comprehensive  products and services  than either
               company alone could offer.  The retail natural gas experience and
               expertise of PSNC will  complement the  electricity,  natural gas
               and telecommunications assets, experience and expertise of SCANA,
               giving the combined companies

                                      -18-



<PAGE>



               improved capabilities in the delivery of a more complete range of
               products and services for all of their customers.

          o    Financial  Strength  and  Benefits.  The Mergers  should  enhance
               SCANA's   ability  to  compete  in  the   utility   market  as  a
               growth-oriented  company.  Following the Mergers, SCANA will have
               increased its revenues to  approximately  $2 billion annually and
               its customer  base to  approximately  1.3  million.  As a result,
               SCANA  should enjoy an increased  cash flow for  reinvestment  or
               growth  in  the   competitive   energy  and   services   delivery
               businesses.   SCANA  should  also  benefit  from  the   long-term
               financial stability of a larger company.

          o    Operating  Efficiencies.  As a  result  of the  Preferred  Second
               Merger, SCANA should benefit from operating efficiencies obtained
               from economies of scale and should be able to make more efficient
               use of advanced information systems.

     The board of directors and management of PSNC believe that the Mergers will
join two companies with  complementary  operations as well as a common vision of
the future of the retail and wholesale energy markets in the southeastern region
of the United  States.  As a result of utility  deregulation  and the increasing
competitive  pressures faced by electric and natural gas utility companies,  the
PSNC board  believes that in order to succeed in such a market,  PSNC must be an
efficient,  low cost  supplier  of energy  and  allied  services  with a diverse
customer base. The Mergers are expected to allow PSNC to achieve these goals and
to provide  substantial  strategic and financial benefits to the shareholders of
PSNC, as well as to its employees  and the  customers  that it serves.  The PSNC
board believes that such benefits include:

          o    Strategic   Position.   The   combination   of   the   companies'
               complementary  expertise  and  infrastructure,  including  PSNC's
               natural gas  distribution  business in North Carolina and SCANA's
               diversified   electric,   natural   gas  and   telecommunications
               businesses throughout the southeastern United States will provide
               the  combined  company with the size and scope to be an effective
               participant in the emerging and increasingly competitive electric
               and natural gas utility markets.

                                      -19-



<PAGE>



          o    Cost  Competitive.  Both  PSNC and  SCANA  are  amongst  the most
               efficient  providers  of their  respective  services  within  the
               states  in which  they  operate.  The  Mergers  will  enable  the
               combined  company to create  efficiencies  through  which the new
               company will be able to provide even more cost-effective services
               to customers.

          o    New Products  and  Services.  The  combined  company will use its
               distribution  channels  to market a portfolio  of  energy-related
               services  throughout the  southeastern  region.  The Mergers will
               create  a  company   with  the  ability  to  develop  and  market
               competitive  new products and services and to provide  integrated
               energy solutions for its customers.

          o    Increased  Financial  Strength  and Customer  Base.  The combined
               company  will be  financially  stronger  and will  have a broader
               customer base than PSNC or SCANA as independent  entities.  Based
               on the 1998 results for PSNC and SCANA, the total annual revenues
               for the combined  company will be  approximately  $2 billion.  In
               addition,  the combined company will serve approximately  517,000
               electric  customers  in  South  Carolina  and more  than  750,000
               natural gas  customers  in South  Carolina,  North  Carolina  and
               Georgia.

          2.   Merger Agreement

     The Merger  Agreement  provides for a two-step merger  transaction.  In the
First  Merger,  New Sub I will be merged  with and into  SCANA  and  SCANA  will
survive.  In the Preferred Second Merger,  PSNC will be merged with and into New
Sub II and New Sub II will survive.  As a result of the Preferred Second Merger,
PSNC will become a wholly owned subsidiary company of SCANA. The Mergers will be
accounted for using the purchase method of accounting.

     In exchange  for each share of PSNC common  stock  outstanding  immediately
prior to the effective time of the Preferred  Second Merger,  PSNC  shareholders
will be given the  option to receive  either (i) $33.00 in cash,  subject to the
limitation  that a maximum of 50% of the aggregate  consideration  to be paid to
PSNC shareholders may be paid in cash, or (ii) a number of

                                      -20-



<PAGE>



shares of SCANA common stock as determined in accordance  with the PSNC exchange
ratio (which may be as low as 1.02 or as high as 1.45,  depending on the average
market price of SCANA common stock over a 20  trading-day  period).  In exchange
for each  share of  SCANA  common  stock  outstanding  immediately  prior to the
effective time of the First Merger,  SCANA shareholders will be given the option
to receive  either (i) $30.00 in cash or (ii) one share of SCANA  common  stock,
subject to the requirement  that SCANA pay $700 million in cash in the aggregate
as  consideration  in the Mergers.  The amount of cash  available for payment to
SCANA  shareholders will be the portion of the $700 million remaining after PSNC
shareholders  make their choice with respect to the form of  consideration  they
receive.

          3.   Financing the Mergers

     Before  completing  the  Mergers,  the  management  of SCANA will  evaluate
various sources and methods of financing to fund the  consideration  required to
finance the Mergers  (the total amount of  approximately  $700  million).  SCANA
currently  anticipates  that the full  amount  will be  financed  at the holding
company level through external sources.  On December 1, 1999, SCANA entered into
a $300 million credit  agreement with First Union National Bank, The Bank of New
York, Bank of America N.A., Suntrust Bank, Atlanta and Wachovia Bank, N.A. It is
expected that this $300 million  commitment will be used by SCANA to finance the
Mergers.  SCANA currently  expects to finance the remaining $400 million in cash
to be paid as  consideration  in the  Mergers  through  a private  placement  of
two-year notes. As a result of this financing,  the consolidated  capitalization
of SCANA after the Mergers will consist of approximately 37.9% common equity and
62.1% debt (long and short-term) and preferred stock.

                                      -21-



<PAGE>



     D.   Management and Operations of SCANA and PSNC Following the Mergers

     Following  consummation of the Preferred Second Merger,  the SCANA board of
directors  will be  expanded to include  Charles E.  Zeigler,  Jr.,  the current
Chairman,  President and Chief  Executive  Officer of PSNC,  and two  additional
persons presently serving as members of the PSNC board of directors.  After PSNC
is merged into New Sub II, Mr.  Zeigler  will be President  and Chief  Operating
Officer of the surviving  corporation  and each other  subsidiary of SCANA whose
primary  operations are located in North Carolina.  Mr. Zeigler will also be one
of the three  members of SCANA's  Office of the Chairman  (the other two members
will be (i) the  Chairman,  President and Chief  Executive  Officer of SCANA and
(ii) the President and Chief Operating Officer of SCE&G).

     Also following  consummation of the Preferred Second Merger,  the corporate
headquarters of the surviving  corporation will be relocated to Columbia,  South
Carolina.

Item 2. Fees, Commissions and Expenses

Commission Registration Fees                                  $   805,200
Accountant's Fees                                                 500,600
Legal Fees and Expenses                                         2,125,500
Shareholder Communication and proxy solicitation expenses       2,144,700
Investment bankers' fees and expenses                           6,100,000
Miscellaneous                                                     276,800
                                                              -----------
         Total                                                $11,952,800

     The total fees,  commissions and expenses  expected to be incurred by SCANA
in connection with the Mergers are estimated to be approximately $11,952,800.

                                      -22-



<PAGE>



Item 3. Applicable Statutory Provisions

     The following sections of the Act and the Commission's rules thereunder are
or may be  directly  or  indirectly  applicable  to  the  proposed  transaction:

Sections of       Transactions to which section or rule is or may be applicable:
the Act

4, 5              Registration  of  SCANA as a  holding  company  following  the
                  consummation of the Preferred Second Merger.

9(a)(2), 10       Acquisition by SCANA of PSNC common stock.

9(a)(1), 11(b)    Retention  by  SCANA   of  the   businesses,  investments  and
                  non-utility activities of SCANA and PSNC.

To the  extent  that  other  sections  of the  Act  or  the  Commission's  rules
thereunder are deemed  applicable to SCANA's  acquisition of PSNC, such sections
and rules should be considered to be set forth in this Item 3.

     A.   Legal Analysis

     Section  9(a)(2)  of the Act makes it  unlawful,  without  approval  of the
Commission  under  Section  10,  "for any person . . . to  acquire,  directly or
indirectly,  any security of any public  utility  company,  if such person is an
affiliate  . . . of such  company  and of any other  public  utility  or holding
company,  or will by virtue of such acquisition become such an affiliate." Under
the definition set forth in Section  2(a)(11)(A) of the Act, an "affiliate" of a
specified company means "any person that directly or indirectly owns,  controls,
or holds with  power to vote,  5 per  centum or more of the  outstanding  voting
securities of such specified company."

     SCANA is currently the beneficial  owner of 100% of the voting stock of two
public utility companies, SCE&G and GENCO. PSNC is also a public utility company
as defined

                                      -23-



<PAGE>



in Section 2(a)(5) of the Act.  Because SCANA will, as a result of the Preferred
Second  Merger,  acquire  more  than  five  percent  of the  outstanding  voting
securities  of a third  public  utility  company,  PSNC,  SCANA must  obtain the
approval of the  Commission  for the  Preferred  Second  Merger  under  Sections
9(a)(2) and 10 of the Act.  The  statutory  standards  to be  considered  by the
Commission in determining  whether to approve the proposed  transaction  are set
forth in Sections 10(b), 10(c) and 10(f) of the Act.

     As set forth more fully below,  the Preferred  Second Merger  complies with
all of the applicable provisions of Section 10 of the Act and should be approved
by the Commission because:

          o    the  Preferred   Second   Merger  will  not  create   detrimental
               interlocking relations or a concentration of control;

          o    the  consideration  to be paid in the Preferred  Second Merger is
               fair and reasonable;

          o    the  Preferred  Second  Merger  will  not  result  in  an  unduly
               complicated capital structure for the SCANA system;

          o    the  Preferred  Second  Merger is in the public  interest and the
               interests of investors and consumers;

          o    the Preferred  Second Merger is consistent with Sections 8 and 11
               of the Act;

          o    the  Preferred  Second Merger tends  towards the  economical  and
               efficient development of an integrated public utility system; and

          o    the Preferred Second Merger will comply with all applicable state
               laws.


                                      -24-



<PAGE>



          1.   Section 10(b)

     Section  10(b)  provides  that if the  requirements  of  Section  10(f) are
satisfied,  the Commission  shall approve an acquisition  under Section  9(a)(2)
unless the Commission finds that:

     (1)  such  acquisition  will tend  towards  interlocking  relations  or the
          concentration of control of public utility companies,  of a kind or to
          an extent  detrimental  to the public  interest  or the  interests  of
          investors or consumers;

     (2)  in case of the  acquisition  of  securities  or  utility  assets,  the
          consideration,    including   all   fees,   commissions,   and   other
          remuneration, to whomsoever paid, to be given, directly or indirectly,
          in connection with such acquisition is not reasonable or does not bear
          a fair relation to the sums invested in or the earning capacity of the
          utility  assets to be acquired or the utility  assets  underlying  the
          securities to be acquired; or

     (3)  such acquisition will unduly  complicate the capital  structure of the
          holding  company system of the applicant or will be detrimental to the
          public  interest or the  interests  of  investors  or consumers or the
          proper functioning of such holding company system.

               a.   Section 10(b)(1)

                    i.   Interlocking Relations

     Under Section 10(b)(1),  the Commission shall approve an acquisition unless
the  Commission  finds that "such  acquisition  will tend  towards  interlocking
relations.  . . ." By its nature, any merger of previously  unrelated  companies
results in new links and relations between the companies.  Northeast  Utilities,
Holding Co. Act Release No. 25221 (Dec. 21, 1990), as modified,  Holding Co. Act
Release No. 25273 (March 15,  1991),  aff'd sub nom. City of Holyoke v. SEC, 972
F.2d  358  (D.C.  Cir.  1992)  ("interlocking  relationships  are  necessary  to
integrate [the two merging entities]").  These links, however, are not the types
of  interlocking  relations  targeted by Section  10(b)(1),  which was primarily
aimed at preventing business combinations unrelated to

                                      -25-



<PAGE>



operating  efficiencies.3  SCANA's  acquisition of PSNC in the Preferred  Second
Merger is  related  to  operating  efficiencies  and does not create the type of
interlocking  relations  targeted  by Section  10(b)(1).  The  Merger  Agreement
provides for the board of directors of SCANA,  after completion of the Preferred
Second  Merger,  to be composed of members drawn from the boards of directors of
both SCANA and PSNC.  Upon  completion of the Preferred  Second Merger,  Charles
Zeigler,  the current  Chairman,  President and Chief Executive Officer of PSNC,
and two other  persons  presently  serving on the PSNC board of  directors  will
become  members  of the  board of  directors  of  SCANA.  This is  necessary  to
integrate  PSNC fully into the SCANA system and will  therefore be in the public
interest and in the  interests of investors and  consumers by  facilitating  the
management of SCANA as an integrated and economically  efficient energy services
company.  Forging such relations is beneficial to the protected  interests under
the Act and is not prohibited by Section 10(b)(1).

                    ii.  Concentration of Control

     Section  10(b)(1) is intended to prevent  utility  acquisitions  that would
result in "huge,  complex and  irrational  systems",  and to avoid "an excess of
concentration and bigness" while preserving  opportunities for the "economies of
scale,  the elimination of duplicate  facilities and activities,  the sharing of
production  capacity and reserves and the generally more  efficient  operations"
afforded by the  coordination  of local  utilities  into an  integrated  system.
American  Electric Power Co., 46 S.E.C.  1299, 1307 (1978).  In applying Section
10(b)(1) to utility

--------
     3 See Section  1(b)(4) of the Act  (finding  that the public  interests  of
consumers  are  adversely  affected  "when the growth and  extension  of holding
companies  bears no  relation  to economy of  management  and  operation  or the
integration and coordination of related operating properties. . . .").

                                      -26-



<PAGE>



acquisitions,  the Commission must determine whether the acquisition will create
"the type of structures and combinations which the Act was specifically directed
[to prohibit]." Vermont Yankee Nuclear Corp., 43 S.E.C. 693, 700 (1968).

     SCANA's  acquisition  of PSNC pursuant to the Preferred  Second Merger will
not result in a "huge  system" and will avoid the "excess of  concentration  and
bigness" at which Section  10(b)(1) is aimed at  preventing.  The Commission has
recognized  that there is, per se, no limit to the size of a  transaction  which
may be approved.  See Centerior Energy Corp.,  Holding Co. Act Release No. 24073
(April 29, 1986)  ("determination of whether to prohibit enlargement of a system
by acquisition is to be made on the basis of all the  circumstances,  not on the
basis of size alone").  SCANA's acquisition of PSNC will create a system that is
comparable  to or smaller  than other  systems  which have been  approved by the
Commission.  On a pro forma basis, giving effect to the proposed  acquisition as
of  December  31,  1998,  SCANA and PSNC  would have  combined  assets of $6.409
billion,  total operating  revenue of $1.932 billion for the twelve months ended
December 31, 1998,  approximately  517,000 electric  utility  customers and more
than 750,000 gas utility  customers.  The Commission  has approved  acquisitions
involving registered holding companies with much larger operating public utility
systems (See Entergy  Corp.,  Holding Co. Act Release No. 25952 (Dec.  17, 1993)
(approving the acquisition of Gulf State Utilities,  with combined assets at the
time of acquisition in excess of $21 billion); The Southern Company, Holding Co.
Act Release No. 24579 (Feb.  12, 1988)  (approving  the  acquisition of Savannah
Electric  and Power  Company to create a system  with  assets of $20 billion and
3.25 million customers);  Ameren Corporation,  Holding Co. Act Release No. 26809
(Dec. 30, 1997)

                                      -27-



<PAGE>



(approving  the  merger  of  Union  Electric  Company  and  CIPSCO  to  create a
registered  system  with  assets  of $8.9  billion  and  operating  revenues  of
approximately  $3.1  billion))  and has not had a problem with mergers  creating
holding  companies  that  are  similar  to the  size  that  SCANA  will  be upon
completion of the Preferred Second Merger (See Conectiv,  Inc.,  Holding Co. Act
Release No 26832 (Feb. 25, 1998) (approving the merger of Delmarva Power & Light
Company and Atlantic  Energy,  Inc. to create holding company system with assets
of $5.75 billion and operating revenues of $2.24 billion); New Century Energies,
Inc.,  Holding Co. Act Release No. 26748 (Aug. 1, 1997) (approving the merger of
Public Service  Company of Colorado and  Southwestern  Public Service Company to
create holding  company system with assets of $7 billion and operating  revenues
of $3 billion)).

     SCANA's  acquisition  of PSNC pursuant to the Preferred  Second Merger will
also not have a negative effect on  competition.  In analyzing the impact of the
Preferred Second Merger on competition,  it is important to recognize that there
is no overlapping  service territory for the public utility system operations of
SCANA and PSNC.  In addition,  there are  numerous,  large  competitors  who are
sophisticated  players in the market and regulatory  environment where SCANA and
PSNC  operate.  The  following  chart  provides a  comparison  of certain  major
regional  utility  companies in the southeastern  region and demonstrates  that,
after the  Preferred  Second Merger is  completed,  although  SCANA will be more
competitive than it is today, it will not be  comparatively  large and would not
have excessive market power in the region.

                                      -28-



<PAGE>




   Utility Companies Comparison Chart (for the fiscal year ended 12/31/1998)
<TABLE>
<CAPTION>

                                 Operating
                                  Revenues             Net Income           Total Assets
                              ($ in millions)       ($ in millions)       ($ in millions)
<S>                          <C>                   <C>                   <C>
Southern Company                  $ 11,403               $   977               $36,192
Duke Energy                       $ 17,610               $ 1,252               $26,806
Dominion Resources 4              $  6,086               $   535               $17,517
Carolina Power & Light 5          $  3,130               $   399               $ 8,347
SCANA (pro forma)                 $  1,932               $   202               $ 6,409
</TABLE>


In comparison to other  regional gas utility  companies,  the combined SCANA and
PSNC gas operations,  on a pro forma basis, will have approximately $710 million
in operating revenues and $735 million in assets. In comparison, Columbia Energy
Group (formerly  Columbia Gas), for the fiscal year ended December 31, 1998, had
$1.929 billion in operating revenues and $6.968 billion in assets; AGL Resources
(formerly Atlanta Gas Light),  for the fiscal year ended September 30, 1998, had
$1.339  billion in operating  revenues and $1.982 billion in assets and Piedmont
Natural  Gas, for the fiscal year ended  October 31,  1998,  had $765 million in
operating revenues and $1.163 billion in assets.  Importantly, as noted above, a
number of large, regional electric utility

--------
     4  Dominion   Resources  has  entered  into  an  agreement  to  merge  with
Consolidated  Natural Gas Company,  a gas utility  holding company with, for the
fiscal year ended 12/31/1998, operating revenue of $2.706 billion, net income of
$238 million and assets of $6.362 billion.

     5 Carolina Power & Light has  subsequently  acquired North Carolina Natural
Gas, a gas utility company operating in North Carolina with, for the fiscal year
ended 9/30/1998,  operating  revenue of $232 million,  net income of $17 million
and assets of $271  million.  Carolina  Power & Light has also  entered  into an
agreement to acquire  Florida  Progress Corp., an electric and gas utility with,
for the fiscal year ended December 31, 1998, $3.6 billion in operating revenues,
$281 million in net income and $6.2 billion in total assets.

                                      -29-



<PAGE>



companies have also entered into agreements to acquire gas utility  companies of
similar or larger size than PSNC. Overall,  SCANA's acquisition of PSNC will not
create a "complex and irrational  system",  but will create a company focused on
competitive prices and high quality reliable customer service.

     Finally,  the  Commission  should note that although the  Preferred  Second
Merger  is not a  jurisdictional  transaction  under  the  Federal  Power Act or
Natural Gas Act and  therefore  does not require the  approval of the FERC,6 its
impact on  competition  and/or the public  interest will be subject to review on
both the federal and state level. On or about August 27, 1999, each of SCANA and
PSNC filed a Pre-merger Notification and Report Form with the Antitrust Division
of the  Department  of Justice  ("DOJ") and the Federal  Trade  Commission  (the
"FTC")  pursuant to the HSR Act,  and on  September  26,  1999,  the  applicable
waiting  period for both SCANA and PSNC under the HSR Act expired.  On the state
regulatory  level,  SCANA's  acquisition  of PSNC has been approved by the NCUC.
Following  consummation  of the  Mergers,  SCE&G will  continue to be subject to
regulation with respect to rates and other corporate  matters by the SCPSC,  and
PSNC will continue to be subject to  regulation  with respect to rates and other
corporate matters by the NCUC, in each case in order to protect the interests of
consumers and the public.

--------
     6 In TUC Holding Company, Holding Co. Act Release No. 26749 (Aug. 1, 1997),
the Commission approved a transaction that similarly did not require approval by
the Federal  Energy  Regulatory  Commission.  In the case of TUC,  however,  the
companies did have overlapping service territory.

                                      -30-



<PAGE>



               b.   Section 10(b)(2)

                    i.   Fairness of Consideration

     Section  10(b)(2)   requires  the  Commission  to  determine   whether  the
consideration  to be  given  by SCANA to the  holders  of PSNC  common  stock in
connection with the Preferred Second Merger is reasonable,  and whether it bears
a fair  relation  to the  investment  in, and earning  capacity  of, the utility
assets  underlying the PSNC common stock being acquired.  Market prices at which
securities are traded have always been strong  indicators as to values. As shown
in the table  below,  the  quarterly  price data,  high and low, for PSNC common
stock provides support that the consideration of approximately $33.00 (depending
on the  operation of the exchange  ratio) for each share of PSNC common stock is
fair.

                                                  PSNC

                              High                 Low              Dividends

1997

First Quarter                $19                 $17 3/8              $0.22
Second Quarter               20                  16 3/4                0.23
Third Quarter                21 7/8              18 3/4                0.23
Fourth Quarter               24 3/8              19 7/16               0.23
1998

First Quarter                22 7/8              19 1/8                0.23
Second Quarter               22 3/16             19 7/8                0.24
Third Quarter                24 1/2              19 1/8                0.24
Fourth Quarter               26 1/16             21 9/16               0.24
1999

First Quarter                29 15/16            22 5/16               0.24
Second Quarter               30                  28 1/16               0.2475
Third Quarter                31 7/16             29 1/16               0.2475
Fourth Quarter               33 1/4             30 13/16              0.2475


                                      -31-



<PAGE>



On February 12, 1999,  the last  business day before the date on which SCANA and
PSNC  entered  into the Merger  Agreement,  the closing  price per share of PSNC
common stock as reported on the NYSE-Composite Transactions was $22 5/8.

     In addition to such  quantitative  evidence  that the  consideration  being
offered to holders of PSNC common stock is fair, the consideration being offered
to holders of PSNC common  stock is also the product of  extensive  and vigorous
arms-length  negotiations  between  SCANA  and  PSNC.  These  negotiations  were
preceded by months of due  diligence,  analysis  and  evaluation  of the assets,
liabilities  and  business  prospects  of the  respective  companies.  See SCANA
Registration     Statement     on    Form    S-4     (Exhibit    C-1    hereto).
Internationally-recognized  investment  bankers for SCANA and PSNC have reviewed
extensive  information  concerning  the companies and analyzed that  information
using a variety of valuation  methodologies.  Morgan Stanley & Co.  Incorporated
provided an opinion to PSNC which states that the  consideration  to be received
by holders of PSNC common stock pursuant to the Merger Agreement was fair from a
financial  point of view to the holders of PSNC common stock.  Morgan  Stanley's
analyses are attached hereto.  See Opinion of Morgan Stanley & Co.  Incorporated
(Exhibit  G-1). In addition,  although not directly  addressing  the issue under
consideration   by  the  Commission,   it  is  worth  noting  that   PaineWebber
Incorporated  provided  an  opinion  to SCANA  that the  financial  terms of the
Mergers,  taken as a whole,  were fair to the  holders  of SCANA  common  stock.
PaineWebber's  analyses are also  attached  hereto.  See Opinion of  PaineWebber
Incorporated (Exhibit G-2).

                                      -32-



<PAGE>



     In light of the analysis of all relevant  factors,  including  the benefits
that may be realized as a result of the Preferred Second Merger,  SCANA believes
that  the  consideration  being  offered  to  holders  of PSNC  common  stock in
connection  with the  Preferred  Second Merger bears a fair relation to the sums
invested in, and the earning capacity of, the utility assets of PSNC.

                    ii.  Reasonableness of Fees

     SCANA believes that the overall fees, commissions and expenses incurred and
to be incurred in connection  with the Mergers are  reasonable and fair in light
of the size and complexity of the Mergers relative to other transactions and the
anticipated benefits of the Mergers to the public, investors and consumers; that
they are consistent with recent  precedent;  and that they meet the standards of
Section 10(b)(2).

     As set forth in Item 2 of this  Application/Declaration,  SCANA  expects to
incur a combined total of  approximately  $11,952,800 in fees,  commissions  and
expenses in connection with the Mergers.  By contrast,  American  Electric Power
Company and Central and South West Corporation have represented that they expect
to incur total transaction fees and regulatory  processing fees of approximately
$53 million,  including financial advisory fees of approximately $31 million, in
connection with their proposed merger.

     The Applicant  believes that the estimated fees and expenses in this matter
bear a fair  relation  to the  value of PSNC and the  strategic  benefits  to be
achieved by the Mergers,  and that the fees and expenses are fair and reasonable
in light of the complexity of the Mergers. See Northeast Utilities,  Holding Co.
Act Release No. 25548 (June 3, 1992), modified on other grounds, Holding Co. Act
Release No. 25550 (June 4, 1992) (noting that fees and expenses must


                                      -33-



<PAGE>



bear a fair relation to the value of the company to be acquired and the benefits
to be achieved in connection with the  acquisition).  Based on the closing price
of SCANA stock on May 12, 1999,  the Preferred  Second Merger would be valued on
an equity basis at  approximately  $679 million and both of the Mergers would be
valued on an equity  basis at  roughly  $3.3  billion.  The  estimated  fees and
expenses  that  SCANA  will  incur  in   connection   with  both  Mergers  total
$11,952,800,   which  represents   approximately  1.76%  of  the  value  of  the
consideration  to be paid by SCANA to the  shareholders  of PSNC and .3 % of the
value  of  the  entire  transaction.   These  percentages  are  consistent  with
percentages  previously  approved by the Commission.  See, e.g.,  Entergy Corp.,
Holding Co. Act Release No. 25952 (Dec. 17, 1993) (fees and expenses represented
approximately 1.7% of the value of the consideration paid to the shareholders of
Gulf States Utilities);  Northeast Utilities,  Holding Co. Act Release No. 25548
(June 3, 1992) (approximately 2% of the value of the assets to be acquired).

               c.   Section 10(b)(3)

     Section  10(b)(3)  requires the  Commission  to determine  whether  SCANA's
proposed acquisition of PSNC pursuant to the Preferred Second Merger will unduly
complicate  SCANA's capital  structure or be detrimental to the public interest,
the interest of investors or consumers or the proper functioning of SCANA.

                    i.   Capital Structure

     The  capital  structure  of SCANA  after  the  Mergers  will not be  unduly
complicated.  In connection with the Mergers, SCANA will issue additional shares
of SCANA common stock to be exchanged for existing  shares of SCANA common stock
and PSNC common stock. As for the

                                      -34-



<PAGE>



$700 million cash consideration  being offered in the Mergers,  SCANA intends to
finance this cash  consideration  at the holding  company level through a credit
agreement  with  sophisticated  commercial  lenders and a private  placement  of
two-year  notes to  qualified  institutional  buyers  within the  meaning of the
Securities  Act of 1933, as amended.7 It is expected that this financing and the
issuance of new shares will not have a material effect on the capital  structure
of SCANA. In this regard,  SCANA's capital  structure will closely resemble that
of most registered holding company systems.

     Set forth below is a summary of the historical  capital structures of SCANA
and PSNC as of  September  30,  1999,  and the pro  forma  consolidated  capital
structure of SCANA,  as of September 30, 1999 (assuming  that the  consideration
paid by SCANA for the shares of PSNC common  stock  consisted of $343 million in
cash consideration and $343 million in stock consideration and, therefore,  $357
million in cash was paid to SCANA shareholders in the First Merger).

--------
     7 See fn. 2, supra.

                                      -35-



<PAGE>





<TABLE>
<CAPTION>
                  SCANA and PSNC Historical Capital Structures
                          (Dollar amounts in millions)
                                                                   % of Total                            % of Total
                                                    SCANA        Capitalization          PSNC        Capitalization
<S>                                                <C>          <C>                    <C>          <C>
Common stock equity                                 $1,922           45.9%               $233            58.7%

Preferred stock equity                                 118            2.8%                n/a             n/a

SCE&G Obligated Mandatorily                             50            1.2%                n/a             n/a
Redeemable Preferred Securities of
SCE&G's Subsidiary Trust I, holding
solely $50 million principal amount
of 7.55% Junior Subordinated
Debentures of SCE&G, due 2027

Debt (long and short-term)                           2,102           50.1%                164            41.3%
                                                    ------          ------               ----           ------
Total                                               $4,192          100.0%               $397           100.0%
</TABLE>

<TABLE>
<CAPTION>
                 SCANA PRO FORMA Consolidated Capital Structure
                    (Dollar amounts in millions) (unaudited)
                                    Combined

                                                    SCANA            Merger                              % of Total
                                                   & PSNC          Adjustment            Total       Capitalization
<S>                                              <C>             <C>                   <C>          <C>
Common stock equity                                 $2,155            $<247>            $1,908           37.9%

Preferred stock equity                                 118                                 118            2.3%

SCE&G Obligated Mandatorily                             50                                  50            1.0%
Redeemable Preferred Securities of
SCE&G's Subsidiary Trust I,
holding solely $50 million principal
amount of 7.55% Junior
Subordinated Debentures of
SCE&G, due 2027

Debt (long and short-term)                           2,266               700             2,966           58.8%
                                                     -----                              ------          ------
Total                                               $4,589                              $5,042          100.0%
</TABLE>



                                      -36-



<PAGE>



     Significantly,  SCANA's  pro  forma  consolidated  common  equity  to total
capitalization  ratio of 37.9% as of  September  30,  1999,  is well  above  the
"traditionally  acceptable  30% level." See Northeast  Utilities,  47 SEC Docket
1270 at 1279,  n. 47 (Dec.  21,  1990).  It should be noted that in most mergers
involving  cash  consideration,  the  acquiring  company will incur some debt or
other   obligation  as  part  of  the  acquisition.   Furthermore,   acquisition
indebtedness  incurred at the registered holding company level has been approved
by the Commission in connection with other transactions (See Dominion Resources,
Inc.,  Holding Co. Act Release No. 27113 (Dec. 15, 1999) (approving  acquisition
involving issuance of $4.5 billion of securities by Dominion Resources,  Inc., a
holding  company  that  will  register  after   completing  its  acquisition  of
Consolidated   Natural  Gas  Company);   See  also  General   Public   Utilities
Corporation,  Holding Co. Act Release No.  26559 (Aug.  23,  1996)  (authorizing
issuance of debentures with terms of up to 40 years with proceeds to be used to,
among other things, "fund the acquisition of interests,  and to make investments
in . . . foreign utility  companies," and "for other [General Public Utilities']
corporate  purposes")) and, as demonstrated  above, the level of indebtedness of
SCANA  following the  Preferred  Second Merger is well within the level that the
Commission has been comfortable with in the past.

                    ii.  Protected Interests

     Section  10(b)(3)  also  requires  that  a  proposed   acquisition  not  be
detrimental to the public  interest,  the interest of the investors or consumers
or the proper  functioning of the resulting holding company system. As set forth
more fully in the discussion of the standards of Section  10(c)(2),  below,  and
elsewhere in this Application-Declaration,  SCANA's proposed acquisition of PSNC
will combine  SCANA's  existing  natural gas operations  with those of PSNC, and
allow

                                      -37-



<PAGE>



SCANA to extend its  service  area into some of the fastest  growing  markets in
North Carolina. As an economically  integrated and efficient energy company, the
combined company will be able to offer improved  capabilities in the delivery of
a more complete range of services and products for all customers.

     As noted by the  Commission in Entergy  Corporation,  et al., 55 SEC Docket
2035 at 2045 (December 17, 1993), "concerns with respect to investors' interests
have been largely  addressed by developments in the federal  securities laws and
the securities markets  themselves." In this regard, SCANA will continue to be a
reporting  company  subject to the  disclosure  requirements  of the  Securities
Exchange Act of 1934 (the "Exchange Act") following  completion of the Preferred
Second Merger,  which will provide investors with readily available  information
concerning SCANA and its subsidiary companies. Furthermore, the Preferred Second
Merger is subject to various other federal and state  regulatory  approvals (See
Item 4 - Regulatory Approvals,  below). Finally, SCANA notes that the incurrence
of acquisition  indebtedness is not detrimental to investor's interests.  As the
Commission has  previously  recognized,  under Section  7(c)(2)(A) of the Act, a
registered  holding  company  can issue other than  "plain  vanilla"  securities
"solely . . . for the  purpose of  effecting a merger,  consolidation,  or other
reorganization." Conectiv, Inc., Holding Company Act Release No. 26832 (Feb. 25,
1998).  Indeed,  the issue for purposes of Section 10(b)(3) is not the existence
of parent-level  debt per se. Rather,  the question is whether it is permissible
for a registered  system to have debt at more than one level. The Commission has
answered this question in the  affirmative.  In the 1992  amendments to Rule 52,
the  Commission  eliminated the  requirement  that a  public-utility  subsidiary
company could issue

                                      -38-



<PAGE>



debt  to  nonassociates  only  if its  parent  holding  company  had  issued  no
securities  other  than  common  stock and  short-term  debt.  The rule  release
explains:

          Condition (6) provides that a  public-utility  subsidiary  company may
          issue and sell securities to nonassociates  only if its parent holding
          company  has  issued  no  securities   other  than  common  stock  and
          short-term  debt. All eight  commenters that considered this condition
          recommended  that  it  be  eliminated.  They  noted  that  it  may  be
          appropriate  for a holding  company  to issue and sell long- term debt
          and that such a transaction is subject to prior  Commission  approval.
          They further observed that other controls, that did not exist when the
          statute was enacted,  provide  assurance that such financings will not
          lead to abuse.  These  include the likely  adverse  reaction of rating
          agencies to excessive  amounts of debt at the parent  holding  company
          level and the disclosure required of companies seeking public capital.
          The Commission agrees with these observations and also noted the power
          of many  state  utility  commissions  to limit the  ability of utility
          subsidiaries  to  service  holding  company  debt by  restricting  the
          payment of dividends to the parent company.  The Commission  concludes
          that this provision should be eliminated.

Exemption  of  Issuance  and  Sale  of  Certain   Securities  by  Public-Utility
Subsidiary Companies of Registered Public-Utility Holding Companies, Holding Co.
Act Release No. 25573 (July 7, 1992).  Moreover,  the  Commission has previously
permitted  combination gas and electric  holding  companies to issue debt at the
holding company as well as the subsidiary level. See Cinergy Corp.,  Holding Co.
Act Release No. 26909 (Aug.  21, 1998)  (authorizing  the issuance of up to $400
million of unsecured debt securities);  Conectiv,  Inc., Holding Co. Act Release
No.  26921  (Sept.  28,  1998)  (authorizing  issuance of up to $250  million of
debentures).  Therefore,  the post- merger SCANA  capital  structure  having two
levels of debt will be similar to the capital  structure of  similarly  situated
registered holding companies.

                                      -39-



<PAGE>



     For these reasons,  SCANA submits that  investors'  interests in SCANA will
continue  to be  protected  and that the  Commission  has no basis for  making a
negative finding under Section 10(b)(3).  SCANA's acquisition of PSNC will be in
the public interest and in the interest of investors and consumers, and will not
be  detrimental  to the proper  functioning  of the  resulting  holding  company
system.

          2.   Section 10(c) a. Section 10(c)(1)

     Section 10(c)(1) prohibits the Commission from approving an acquisition for
which Commission  approval is required under Section 9(a) if such acquisition is
unlawful under the provisions of Section 8 or is detrimental to the carrying out
of the provisions of Section 11.

                    i.   Section 8 Analysis

     Section 8 prohibits a registered  holding company from acquiring  interests
in an electric  utility company and a gas utility company serving  substantially
the same territory in contravention of state law. Following the Preferred Second
Merger,  SCANA's  electric  utility  company,  SCE&G,  will  continue  to  serve
customers  exclusively in South  Carolina,  while the gas utility  operations of
PSNC which SCANA acquires will be located in North  Carolina.  When a registered
holding company's holdings include an electric utility company and a gas utility
company,  each of which serve customers in a different state from the other, the
utilities  do not "[serve]  substantially  the same  territory"  for purposes of
Section 8. Moreover,  no state law prohibits  SCANA from acquiring  PSNC.  Thus,
SCANA's  acquisition of PSNC under the Preferred  Second Merger does not violate
Section 8 of the Act and is therefore not prohibited, in this regard, by Section
10(c)(1).

                                      -40-



<PAGE>



                    ii.  Section 11 Analysis - Integration

     Section  10(c)(1) also requires that an  acquisition  not be detrimental to
carrying  out the  provisions  of Section 11 of the Act.  Section  11(b)(1),  in
pertinent part, directs the Commission:

          to  require  . . . that  each  registered  holding  company,  and each
          subsidiary company,  thereof, take such action as the Commission shall
          find necessary to limit the operations of the  holding-company  system
          of which such company is a part to a single  integrated public utility
          system, and to such other businesses as are reasonably incidental,  or
          economically  necessary  or  appropriate  to the  operations  of  such
          integrated  public utility system.  . . . The Commission may permit as
          reasonably incidental, or economically necessary or appropriate to the
          operations  of one or  more  integrated  public  utility  systems  the
          retention of an interest in any business (other than the business of a
          public  utility  company  as such)  which the  Commission  shall  find
          necessary or appropriate in the public  interest or for the protection
          of  investors  or  consumers  and  not   detrimental   to  the  proper
          functioning of such system or systems.

                        I.   Integrated Electric Utility System

     The existing SCANA electric  utility system is, and following the Preferred
Second  Merger,  will continue to be, an  integrated  electric  utility  system.
Section  2(a)(29)(A) of the Act defines an integrated public utility system with
respect to electric utility companies as:

          a system  consisting of one or more units of generating  plants and/or
          transmission  lines  and/or  distribution  facilities,  whose  utility
          assets,  whether owned by one or more electric utility companies,  are
          physically  interconnected  or  capable of  interconnection  and which
          under normal  circumstances  may be economically  operated as a single
          interconnected  and coordinated system confined in its operations to a
          single  area or  region,  in one or more  states,  not so  large as to
          impair  (considering the state of the art and area or region affected)
          the advantages of localized management,  efficient operation,  and the
          effectiveness of regulation.

                                      -41-



<PAGE>



SCE&G and GENCO operate in a single contiguous service territory in the State of
South Carolina,  and the Preferred Second Merger will not have any impact on the
operation of SCANA's electric utility system.

                        II.  Integrated Gas Utility System

     Section  2(a)(29)(B)  defines an  integrated  public  utility  system  with
respect to gas utility companies as:

          a system  comprised of one or more gas utility  companies which are so
          located and related that  substantial  economies may be effectuated by
          being  operated  as  a  single  coordinated  system  confined  in  its
          operations to a single area or region,  in one or more states,  not so
          large  as to  impair  (considering  the  state  of the art and area or
          region  affected) the  advantages of localized  management,  efficient
          operation,  and the  effectiveness  of  regulation;  provided that gas
          utility companies  deriving natural gas from a common source of supply
          may be deemed to be included in a single area or region.

SCE&G's gas utility  operations are located in a single contiguous area in South
Carolina and are currently integrated.

     PSNC's gas utility  operations  are also currently  integrated.  PSNC's gas
utility  operations  are  located  in  three  areas  within  the  State of North
Carolina:  the Raleigh,  Durham and Research  Triangle area in the north central
portion of the state;  Gastonia,  Concord and Statesville in the central portion
of the state;  and  Asheville,  Hendersonville  and Brevard in the Western area.
PSNC currently  transports,  distributes  and sells natural gas to  residential,
commercial and industrial  customers in these three  non-contiguous  areas. PSNC
serves all three areas using,  in the  aggregate,  all of its gas supplies under
its gas purchase contracts with various marketers and suppliers.

                                      -42-



<PAGE>



     While  these gas  supplies  are  transported  from the  basins  by  various
interstate pipelines, only one pipeline,  Transco, has physical connections with
PSNC. The other  interstate  pipelines have direct or indirect  connections with
Transco that enable  PSNC's gas to flow to Transco and through  Transco to PSNC.
PSNC  contracts  to take gas at  specific  pooling  points on the  Transco  line
(compressor  stations 30, 45, 62, 65 or 85).  Although  PSNC's  contracts do not
specify  or  require  that the gas  originate  from any  particular  basins,  it
believes that the vast majority of these supplies come from commonly used basins
along the Gulf Coast, including basins in Texas, Louisiana, Mississippi, Alabama
and the adjacent  offshore  areas.  Because  PSNC obtains its gas supplies  from
common basins and uses Transco to coordinate  transportation  of that gas to its
three  service  areas,  PSNC  operates an  integrated  gas utility  company that
satisfies  the  requirements  of Section  2(a)(29)(B).  See  NIPSCO  Industries,
Holding Co. Act Release No. 26975 (Feb. 10, 1999);  Sempra  Energy,  Holding Co.
Act  Release No.  26971 (Feb.  1,  1999);  Pennzoil  Co., 43 S.E.C.  709 (1968);
American Natural Gas Co., 43 S.E.C. 203 (1966).

     On a combined  basis SCANA's and PSNC's gas utility  systems will also meet
the  definition  of Section  (2)(a)(29)(B)  of the Act.  Although  their service
territories  do not overlap,  there can be little  question that the  Carolinas,
specifically, and the southeastern United States, generally, constitute a single
area or region.  Indeed, by definition,  The Southern Company,  a large electric
registered  holding  company  operating  in  four  southeastern   states  is  an
integrated system and operates in the same single region.

     The Commission has also looked to coordination of gas supply and common gas
supply sources such as common  pipeline  suppliers and supply coming from common
hubs, pooling points or gas basins as an indication of an integrated gas utility
system. See NIPSCO Industries,

                                      -43-



<PAGE>



Holding Co. Act Release No. 26975 (Feb. 10, 1999) (finding  integration  between
gas utility  companies in Indiana and  Massachusetts  based on  coordinated  gas
supply  departments,  obtaining gas from common basins and using trading  hubs).
The gas  utility  companies  at  issue  here  are also  integrated  using  these
criteria.  SCANA and PSNC's combined gas system will satisfy Section 2(a)(29)(B)
of the Act  because it will take gas from a common  source of  supply.  As noted
above,  PSNC  believes  that the vast  majority of its gas comes from Gulf Coast
production  areas and SCANA  also  takes 98% of its gas  supply  from Gulf Coast
areas.  More  importantly,  both  SCANA  and PSNC  are  connected  to  Transco's
transportation  systems,  contract  to  obtain  gas at many of the same  pooling
points  and the  combined  company  will be able to use  Transco,  to the extent
permitted by  Transco's  tariff and their  respective  service  agreements  with
Transco, to transfer this gas among service areas and provide flexibility in its
operations. SCANA also has connections with Southern Natural, which is connected
to  Transco's  transportation  system  and will  allow the  combined  company to
coordinate gas transportation  services between Southern Natural and Transco and
access all gas supplies  connected to either  pipeline.  Because  SCANA and PSNC
purchase  substantial  quantities  of gas from the same pooling  points and have
sufficient   transportation  capacity  to  ensure  delivery  of  said  gas,  the
companies'  combined gas utility  systems will be integrated for purposes of the
Act. See NIPSCO  Industries,  Inc.  Holding Co. Act Release No. 265975 (Feb. 10,
1999)  ("relevant  inquiry  today  is  whether  the  system  utilities  purchase
substantial  quantities  of gas  produced in the same supply  basins and whether
there is sufficient  transportation  capacity  available in the  marketplace  to
assure delivery on an economical and reliable basis").

                                      -44-



<PAGE>



     Following the Mergers,  the gas supply  function for the combined SCANA and
PSNC gas systems will be managed by a single  service  company,  SCANA  Services
Company ("SCANA  Services"),  which will be able to coordinate the taking of its
gas supply.  SCE&G's gas supply  functions are  currently  performed by Pipeline
Corporation  under  tariffs  approved  by  the  South  Carolina  Public  Service
Commission (the "SCPSC").  SCE&G, through Pipeline  Corporation8,  and PSNC will
enter into  agreements  with SCANA  Services for SCANA Services to manage and be
agent for each as to upstream interstate pipeline capacity, gas storage, and gas
supply.  SCANA  Services will contract on behalf of each as to those  functions.
The service agreements will state that the management services provided by SCANA
Services will be conducted to achieve the reliability and prudence  standards as
set by the SCPSC and the NCUC.

     As described above, both SCE&G and PSNC are served by Transco, and SCE&G is
also  served by  Southern  Natural.  SCANA  Services  will  directly  manage the
combined  capacity  and  entitlements  of PSNC and SCE&G on  Transco,  including
storage, to achieve optimal efficiency and reduced costs. Gas portfolios for gas
delivered to Transco  will be managed to achieve  optimal  reliability  and cost
minimization.  The arrangement of gas deliveries for Transco will be coordinated
with SNG delivery and storage entitlements of SCE&G to enhance the total benefit
to PSNC and  SCE&G  via the  passthrough  mechanism  approved  by the  SCPSC for
Pipeline Corporation. The SCPSC has approved a specific price management program
for SCE&G,  which will be administered  by SCANA Services.  The benefits of this
program will be

--------
     8 Throughout  the remainder of the  discussion  of SCANA  Services on pages
44-45 herein and its coordination of the combined company's gas supply function,
references to SCE&G imply that SCE&G's is acting through Pipeline Corporation in
terms of its gas supply activities.

                                      -45-



<PAGE>



extended  to  PSNC  in  cooperation  with  the  NCUC.  Contract  administration,
accounting  functions,  scheduling and  nomination of gas, the  dispatching on a
daily and intraday basis, and regulatory functions will be administered by SCANA
Services.

     Additional enhanced reliability will be achieved by coordinated  management
of critical LNG facilities on Pipeline  Corporation's system at Salley and Bushy
Park and PSNC's partial ownership of Pine Needle, a FERC regulated facility. The
coordination  of Leidy and WSS storage on Transco  added to existing  Muldon and
Bear Creek storage on the Southern  Natural  system will improve  reliability on
the system through no-notice service.

     SCANA Services'  coordination of gas supply  functions will provide greater
overall flexibility for the system while meeting prudence standards of the SCPSC
and NCUC. The coordination and centralization of gas control communications with
upstream interstate  pipelines and the dispatching  functions for SCE&G and PSNC
will result in additional economical benefits to the gas distribution  utilities
by  accelerating  the  implementation  of the  Gas  Industrial  Standards  Board
standards  for gas control  and  capacity  management.  The  economies  of scale
created by this  coordinated  gas  procurement  are  expected to  generate  cost
savings to the combined company.

     In addition to being  integrated,  the combined gas operations of SCANA and
PSNC after the Preferred Second Merger will be "economically efficient." Because
SCANA and PSNC  purchase  gas from the same Gulf  Coast  production  areas,  the
companies can  consolidate  their supply  contracts  after the Preferred  Second
Merger and  purchase  greater  quantities  of gas at a  potentially  lower cost.
Similarly, the interconnection of SCANA's and PSNC's gas transportation services
through Transco and Southern  Natural  provides a flexible system in which SCANA
and

                                      -46-



<PAGE>



PSNC can capture  economics of scale and  coordinate gas  transportation  at the
lowest possible cost.

                    iii. Section 11 Analysis - Retention of Gas Utility System

     As noted  above,  both the  electric  utility  operations  and gas  utility
operations of SCANA will be separately  integrated.  Another  potential issue is
whether the  combination  of SCANA's  electric and gas utility  businesses  with
PSNC's gas utility  business is retainable  under the standards of Section 11 of
the Act.

     Historically,  the  Commission  had  considered  the  question of whether a
registered  electric  system  could  retain a separate gas system under a strict
standard that required showing a loss of substantial  economies before retention
would be permitted.  New England Electric System,  41 S.E.C. 888 (1964).  In its
affirmation  of that  decision,  the United States Supreme Court declared that a
loss of  substantial  economies  could be  demonstrated  by the inability of the
separate  gas system to  survive  on a  stand-alone  basis.  SEC v. New  England
Electric  System,  384 U.S. 176, 181 (1966).  This rigid  interpretation  of the
requirements of Section 11(b)(1) has been explicitly  rejected by the Commission
in its most recent  decisions  under  Sections  9(a) and 10 of the Act both with
respect to exempt  holding  companies,  (TUC  Holding  Company,  Holding Co. Act
Release No. 26749 (Aug. 1, 1997) and Houston  Industries  Incorporated,  Holding
Co. Act Release No. 26744 (July 24, 1997)) and newly formed registered companies
(New Century Energies, Inc., Holding Co. Act Release No. 26748 (Aug. 1, 1997)).

     In these recent decisions,  the Commission acknowledged that as a result of
the  transformation of utilities'  status as franchised  monopolies with captive
ratepayers  to  competitors  and  also as a  result  of the  convergence  of the
electric and gas industries that was then underway

                                      -47-



<PAGE>



(and which continues  today and of which SCANA is already a prime example),  the
historical  standards of review had become outdated and that separated  electric
and gas companies might be weaker competitors than they would be together in the
same market. New Century Energies, Inc., Holding Co. Act Release No. 26748 (Aug.
1, 1997);  Houston  Industries  Incorporated,  Holding Co. Act Release No. 26744
(July 24, 1997).  Moreover,  in its registered  holding company  decisions,  the
Commission has explicitly allowed  transactions where, as is the case with SCANA
and PSNC,  the  resulting  system will be  predominantly  electric  although the
merger will combine more than one gas system owned by the  constituent  parties.
See WPL  Holdings,  Inc.,  Holding Co. Act Release No. 26856  (April 14,  1998),
aff'd sub nom.,  Madison Gas and  Electric  Company v. SEC,  168 F.3d 1337 (D.C.
Cir.  1999);  Ameren  Corporation,  Holding Co. Act Release No. 26809 (Dec.  30,
1997);  See also  Dominion  Resources,  Inc.,  Holding Co. Act Release No. 27113
(Dec. 15, 1999) (transaction allowed in which a pure electric utility and a pure
gas utility were combined in a newly registered  holding company system).  Thus,
newer  transactions,  such as SCANA's  proposed  acquisition of PSNC,  should be
evaluated  on the  basis of new  Commission  precedent  and  policy  in light of
changing  industry  standards and should not be evaluated  against criteria that
have been repudiated by recent Commission decisions.

     SCANA  believes that the  Commission  should  approve the Preferred  Second
Merger as a matter of policy and as a matter of  fairness,  and can  approve the
Preferred  Second Merger as a matter of law.  First,  the Commission has already
acknowledged  that the  electric  and gas  industries  are  converging  and that
combination  companies may be more effective  competitors in a given market. The
Commission  has  recognized  and  accepted  the  changing  nature of the  energy
industry and, in particular,  the fact that the combination of multiple electric
and gas

                                      -48-



<PAGE>



operations  in a single  company  offers  that  company a means to compete  more
effectively in the emerging  energy  services  business in which a few cents can
make the difference between economic success and economic failure. WPL Holdings,
Inc.,  et al.,  Holding Co. Act Release No.  26856 (April 14,  1998),  aff'd sub
nom., Madison Gas and Electric Company v. SEC, supra. Indeed, the Commission has
noted  that  "the  utility   industry  is  evolving   towards  a  broadly  based
energy-related  business"9 marked by "the  interchangeability of different forms
of energy,  particularly gas and  electricity."10 In the instant situation,  the
lost  economies  that would  follow from denial of  approval  for the  Preferred
Second Merger are substantial, both quantitatively and qualitatively.

     Section  10(c)(1)  does not require  that the  Commission  rigidly  enforce
Section 11(b)(1)  without  consideration of the lost economies that would result
from divestiture of additional systems in considering acquisitions under Section
9(a). As the Court of Appeals stated in Madison Gas and Electric Company v. SEC:

          By its  terms . . .,  Section  10(c)(1)  does  not  require  that  new
          acquisitions  comply to the letter with Section 11. In contrast to its
          strict  incorporation  of Section 8 . . ., with  respect to Section 11
          Section 10(c)(1)  prohibits  approval of an acquisition only if it "is
          detrimental  to the carrying out of [Section  11's]  provisions."  The
          Commission has consistently read this provision to import into Section
          10's regime not only the  integration  requirement of 11(b)(1)'s  main
          clause but also the  exceptions  to the  requirement  in the (A)(B)(C)
          clauses.11

--------
     9  Consolidated  Natural Gas  Company,  Holding  Co. Act Release No.  26512
(April 30, 1996).

     10 Id.

     11 Section  11(b)(1) states that "the Commission  shall permit a registered
holding company to continue to control one or more additional  integrated public
utility systems,  if, after notice and opportunity for hearing, it finds that --
(A) Each of such additional  systems cannot be operated as an independent system
without the loss of substantial  economies which can be secured by the retention
of control by such holding  company of such system;  (B) All of such  additional
systems are located in one state,  or in  adjoining  states,  or in a contiguous
foreign  country;  and (C) The continued  combination  of such systems under the
control of such holding  company is not so large  (considering  the state of the
art and the area or region  affected) as to impair the  advantages  of localized
management, efficient operation, or the effectiveness of regulation."

                                      -49-



<PAGE>



                  The economies and benefits that would be lost upon divestiture
if SCANA were eventually  forced to divest the post-merger  combined gas systems
of SCANA and PSNC are difficult to quantify  because such economies have not yet
been realized;  however, the combination of the gas operations of PSNC and SCANA
into the SCANA system is  presently  expected to result in  significant  revenue
enhancement opportunities.  Although no assurances can be given, SCANA currently
expects  that in each of the next five years,  the  combined  gas  company  will
realize  increases  in  operating  revenue of  approximately  $15  million,  $16
million, $18 million, $19 million and $21 million, respectively. If the combined
gas system was to be divorced from SCANA's existing  electric system,  the stand
alone gas company  would have  greater  operating  costs and a smaller  base for
sharing those costs and would therefore realize a lesser amount of any increased
revenue on its bottom line.12

     Divestiture of the combined gas operations  would also cause a significant,
although difficult to quantify,  amount of damages to SCANA's ability to compete
in the

--------
     12 The Commission has recently  approved a similar lost economies  analysis
in a situation where a registered  holding  company  acquired a pure gas utility
company and the application examined the lost revenue enhancement  opportunities
that would occur if the acquiror was forced to divest any of its newly  acquired
gas utility  operations.  See Northeast  Utilities,  Holding Co. Act Release No.
27127 (Feb. 1, 2000).

                                      -50-



<PAGE>



marketplace  as well as costs to  SCANA's  customers  and  regulators.  As noted
above,  the gas and electric  industries  are  converging  nationwide and in the
southeastern  region in  particular,  and in these  circumstances  separation of
electric and gas  businesses  would likely  cause the  separated  entities to be
weaker competitors than they would be together.  As competition has developed in
the utility  industry,  those companies in the retail energy  delivery  business
have found that they must be able to offer  customers a range of options to meet
their energy needs.  Potential non- quantifiable  costs to customers which would
result from  divestiture of the combined gas  operations  involve the additional
expenses of doing business with two public utility  companies instead of one and
the costs  associated  with making  multiple  companies  supply  information  to
shareholders  and publish  reports  required  by the  Exchange  Act.  Similarly,
regulatory costs would involve additional duties for the staff of the SCPSC as a
result of dealing with an additional  public utility  company.  These additional
duties would largely be the result of  duplicating  existing  functions  such as
separate  requests for approvals of financing.  Additional  lost  economies that
would  result if SCANA were forced to divest any of the combined  company's  gas
systems are the economies and benefits (i.e., revenue enhancement opportunities)
that are expected to result over time following the Preferred  Second Merger but
would not be realized if the Preferred Second Merger were not approved.

     For all of the  foregoing  reasons,  the  Commission  should  hold that the
combination  of electric  and gas  operations  under  SCANA's  newly  registered
holding  company  is  lawful  under  the  provisions  of  Section  8 and  is not
detrimental to the carrying out of the provisions of Section 11.

                                      -51-



<PAGE>



                    iv.  Section 11 Analysis - Retention of Non-Utility
                         Businesses

     As a result of the Preferred Second Merger, the non-utility  businesses and
interests of PSNC described above will become businesses and interests of SCANA.
SCANA seeks to retain both its current  non-utility  businesses  and those which
SCANA will acquire from PSNC. All of these businesses  satisfy the standards for
retention of non-utility  businesses set forth under Section 11(b)(1) of the Act
and the cases interpreting the foregoing.

     Section 11(b)(1) limits the non-utility  interests of a registered  holding
company to those that are "reasonably  incidental,  or economically necessary or
appropriate to the operations of such integrated  public-utility  system",  on a
finding by the  Commission  that such interests are "necessary or appropriate in
the public  interest or for the  protection  of investors  or consumers  and not
detrimental to the proper  functioning" of the integrated system. The Commission
has interpreted these provisions to require (i) the existence of an operating or
functional relationship between the utility operations of the registered holding
company and the non-utility activities sought to be retained13 and (ii) that the
retention  is in the public  interest.14  The  non-utility  business may also be
retained if the  business  evolved out of the  system's  utility  business,  the
investment  is not  significant  in relation  to the  system's  total  financial
resources and the investment has the potential to produce benefits for investors
and/or consumers.15 In addition, the

--------
     13 See  generally  Michigan  Consolidated  Gas Co.,  44 S.E.C.  361 (1970),
aff'd, 444 F.2d 913 (D.C. Cir. 1971).

     14 See, e.g., id. (quoting General Public  Utilities Corp., 32 S.E.C.  807,
839 (1951)); United Light and Railways Co., 35 S.E.C. 516, 519 (1954).

     15 CSW Credit,  Inc.,  Holding Co., Act Release No.  25995  (1994);  Jersey
Central Power and Light Co., Holding Co. Act Release No. 24348 (March 18, 1987).

                                      -52-



<PAGE>



Commission has stated that  "retainable  non-utility  interests  should occupy a
clearly  subordinate  position to the integrated system constituting the primary
business of the registered holding company."16 With respect to new acquisitions,
the Commission  has  interpreted  Section  10(c)(1) of the Act to mean that "any
property whose  disposition  would be required under Section 11(b)(1) may not be
acquired." 17

     Rule 58 of the Act provides additional evidence of the types of permissible
non-utility  activities  retainable  by  registered  systems as it exempts  from
Section 9(a) of the Act  acquisitions  by  registered  holding  companies of the
securities of an energy related company provided that after such an acquisition,
the holding company's  aggregate  investment in such energy related company does
not  exceed  $50  million  or  15%  of the  consolidated  capitalization  of the
registered  holding  company.18 Rule 58 defines  'energy  related  company' as a
company that, directly or indirectly,  derives substantially all of its revenues
from certain  enumerated  activities.  Clearly,  if Rule 58 permits  acquisition
without SEC approval, then the types of businesses being acquired are retainable
under the Act. Several of the non-utility businesses which SCANA seeks to retain
after the Mergers are specifically enumerated activities under Rule 58, and will
be discussed  individually.  Similarly,  the Act also allows registered  holding
companies to acquire and maintain  interests in the following  exempt  entities:
exempt telecommunications companies

--------
     16 United Light and Railways Co., 35 S.E.C. at 519.

     17 Texas  Utilities  Co., 21 S.E.C.  827, 829 (1946)  (denying  approval to
acquisition of transportation company by registered holding company).

     18 Rule 58(a)(1)(i)-(ii).

                                      -53-



<PAGE>



(Section  34),  foreign  utility  companies  (Section  33) and exempt  wholesale
generators (Section 32).

     As set forth below, all of SCANA's and PSNC's  non-utility  businesses meet
the retention standards set out by the Commission, fall within the exemption for
energy-related   activities  in  Rule  58,  are  otherwise  exempt  entities  or
constitute a de minimis activity in the utility's local service territory.19 The
material  non-utility  businesses currently relate to, evolved out of or support
the operation of SCANA's or PSNC's utility  businesses by being activities which
have operating or functional  relationships with the utility businesses of each.
The retention of these  non-utility  businesses  will also produce  benefits for
SCANA's  present  and future  customers  and  shareholders,  and  therefore  the
retention of all the non-utility businesses should be permitted.

          1.   Pipeline Corporation, PSNC Cardinal Pipeline Company and Cardinal
               Pipeline Company, LLC:

     Pipeline  Corporation is engaged in the purchase,  transmission and sale of
natural  gas  on a  wholesale  basis,  through  the  ownership  of  transmission
pipelines and LNG plants. Pipeline Corporation also supplies the natural gas for
SCE&G's  gas  distribution  system.  This  supply of natural gas for the utility
operations of SCANA is clearly  functionally related to such utility operations.
See SEI Holdings, Inc., Holding Co. Act Release No. 26581 (Sept. 26, 1996) ("The
Commission has approved the  acquisition or construction of physical assets that
are reasonably  necessary in the day-to-day  conduct of marketing  operations.")
See  also  New  Century  Energies,   Inc.  Release  No.  26748  (Aug.  1,  1997)
(authorizing retention of interest in Texas Ohio

--------
     19 This discussion does not cover the two existing SCANA  subsidiaries that
are currently in liquidation and not of issue under the Act.

                                      -54-



<PAGE>



Pipeline,  Inc.).  PSNC Cardinal Pipeline Company and Cardinal Pipeline Company,
LLC are also engaged in the  construction and operation of natural gas pipelines
that  provide  essential  transportation  services  to PSNC  and  are  therefore
similarly  retainable by SCANA following the Mergers.  Moreover,  registered gas
holding  companies  have been  authorized  to retain  pipelines as  functionally
related.  See, e.g., CNG Transmission  Corporation,  Holding Co. Act Release No.
25239  (Jan.  9, 1991)  (and since  SCANA is both an  electric  and gas  holding
company  system,  these  operations  are also  functionally  related for SCANA).
Consequently,  the  Commission's  decisions  support the  retainability of these
pipelines  and  transmission   interests.   SCANA  and  PSNC  believe  that  the
Commission's  approval  hereunder  of their  request  to  retain  PSNC's  33.21%
interest in Cardinal Pipeline Company, LLC is sufficient to meet the criteria of
Rule 16(a)(4) and Cardinal Pipeline Company, LLC meets the remaining criteria to
be exempt from any  obligations  as a  subsidiary  or  affiliate of a registered
holding  company  under the Act.  Thus,  following  consummation  of the Merger,
Cardinal Pipeline Company, LLC will be treated as a Rule 16 company with respect
to its status under the Act.

          2.   South Carolina Fuel:  South  Carolina  Fuel  acquires,  owns  and
provides  financing  for  SCE&G's  fuel,  fossil  and  sulfur  dioxide  emission
allowances.  Rule 58 provides  that a company  that  engages in the  "ownership,
operation and servicing of fuel procurement . . ." is an energy related company,
and  may be  retained  by a  registered  holding  company.20  In  addition,  the
Commission has found that fuel management services are acceptable

--------
     20 Rule 58(b)(1)(ix).

                                      -55-



<PAGE>



interests to be held by a registered holding company. See WPL Holdings,  Release
No. 26856 (April 14, 1998).

          3.   Energy Marketing, Energy Trading and Sonat Public Service: Energy

Marketing and Energy  Trading  market  electricity,  natural gas and other light
hydrocarbons,  and also  provide  energy-related  risk  management  services  to
producers  and  consumers.  Sonat  Public  Service is  engaged in gas  brokering
activities  and also provides  non-  regulated  energy  products and services to
industrial and commercial accounts.  Rule 58 explicitly authorizes the retention
of companies  engaged in the  "brokering  and  marketing of energy  commodities,
including . . . electricity  [and] natural  gas."21 In addition,  the Commission
has previously  authorized the  acquisition or retention of entities  engaged in
marketing and brokering as well as related risk management  operations.  See New
Century  Energies,  Inc.,  Holding  Co. Act Release  No.  26748  (Aug.  1, 1997)
(retention  of e  prime  which  engages  in  "purchasing  and  selling  gas  and
electricity at negotiated  rates  reflecting  market  conditions" and "employ[s]
risk management  strategies such as swaps,  futures and option contracts").  See
also SEI Holdings,  Holding Co. Act Release No. 26581 (Sept.  26,  1996);  Until
Corp.,  Holding Co. Act Release No. 26527 (May 31, 1996);  New England  Electric
System, Holding Co. Act Release No. 26520 (May 23, 1996).

          4.   SCANA  Propane  Gas and  SCANA Propane  Storage:  In  the  fourth
quarter of 1999,  SCANA sold its  interest in the assets held by these  entities
relating to purchasing,  delivering and selling propane within the  southeastern
United States, and owning and operating an

--------
     21 Rule 58(2)(b)(v)

                                      -56-



<PAGE>



underground  propane  storage  facility and leasing storage space to industries,
utilities and others to Suburban Propane. Currently, SCANA Propane Gas and SCANA
Propane Storage remain as inactive subsidiaries of SCANA.

          5.   SCI, SCANA Communications Holdings and FRC: SCI owns and operates
a fiber optics  telecommunications  network and a radio service  network  within
South Carolina, and also provides tower site construction, management and rental
services in South  Carolina and Georgia.  SCANA  Communications  Holdings  holds
investments for SCI. FRC, a subsidiary of SCI,  constructs,  owns and operates a
fiber optic line from Charleston, South Carolina to Raleigh, North Carolina. SCI
has   applied   to  the  FCC  for  a   determination   that  it  is  an  "exempt
telecommunications company" within the meaning of Section 33 of the Act.

          6.   ServiceCare:  ServiceCare is  engaged in providing energy-related
products and services beyond the energy meter,  providing customers with service
contracts  on  their  home  appliances,  and is also  engaged  in home  security
monitoring.  A number of registered  holding  companies have been  authorized to
service  home  appliances  and provide  related  warranties  either  directly or
through subsidiary companies.  (See Ameren Corporation,  Holding Co. Act Release
No. 26809 (Dec. 30, 1997); New Century Energies,  Inc.,  Holding Co. Act Release
No. 26748 (Aug. 1, 1997); and Cinergy  Corporation,  Holding Co. Act Release No.
26662  (Feb.  7,  1997))  as well as to  engage  in  energy  consulting  and the
provision of a range of energy  related  products to customers  (See Central and
South West Corp., Holding Co. Act Release No. 26367 (Sept. 1995); Entergy Corp.,
Holding Co. Act Release No. 26342 (July 27, 1995)).  Finally, the retention of a
home security service has been allowed by the Commission

                                      -57-



<PAGE>



pursuant to Section  11(b)(1) of the 1935 Act. See Conectiv,  Inc.,  Release No.
26832 (Feb. 25, 1998).

          7.   Primesouth and Palmark:  Primesouth and  Palmark  are engaged  in
power  plant  management  and  maintenance  services.  Primesouth  is  currently
considering  acquiring a 40% membership  interest in a limited liability company
that is engaged in synthetic fuel-related operations involving the processing of
coal fines. Companies engaged in such activities are specifically  enumerated as
retainable  under Rule  58(b)(1)(vii)  and Rule  58(b)(1)(x),  which exempt from
Section  (9)(a)(2)  of the Act those  companies  which  engage  in  "[the]  sale
of...management,  and other similar kinds of expertise,  developed in the course
of utility operations in such areas as . . . maintenance and operation . . . "22
and "the  development  and  commercialization  of technologies or processes that
utilize coal waste  by-products as an integral  component of such  technology or
process".23 The  Commission's  decisions have  consistently  held that a holding
company may engage in such activities.  See, e.g., New Century  Energies,  Inc.,
Holding Co. Act  Release No.  26748 (Aug.  1, 1997)  (authorizing  retention  of
subsidiary  engaged in plant  engineering,  design,  operation and maintenance);
Central and South West Corporation,  Holding Co. Act Release No. 26280 (Apr. 26,
1995)  (authorizing  the  engineering  and  construction  department  to provide
services to third  parties);  Entergy  Corporation,  Holding Co. Act Release No.
26322 (June 30, 1995)  (approval  for  engaging in  maintenance  and  management
services);  General Public  Utilities  Corporation,  Holding Co. Act Release No.
25108 (June 26, 1990)

--------
     22 Rule 58(b)(1)(vii).

     23 Rule58(b)(1)(x).

                                      -58-

2/8/00 10:50 AM


<PAGE>



(authorizing management services); Entergy Corporation,  Holding Co. Act Release
No. 25848 (July 8, 1993)  (authorizing  the  development of  alternative  energy
including synthetic fuels). Primesouth is therefore retainable by SCANA.

          8.   SCANA  Resources:  SCANA  Resources' function  is  to  provide  a
structural  vehicle for the development of innovative  business ideas related to
the energy  industry.  The types of lines of business that are currently  within
SCANA  Resources  include:  the  development  of remote  electric  and gas meter
reading  technology;  the  development  of  efficient  gas  heating  and cooling
equipment;  the offerings via  e-commerce of gas and  electricity  to commercial
customers in selected  markets;  the offering of  commercial,  energy  efficient
lighting installation; and the installation and maintenance of standby, electric
generators for fiber optic systems.  Past Commission  decisions have held that a
holding company may be engaged in such energy-related investment activities. See
Ameren  Corporation,  Holding  Co. Act Release No.  26809  (December  30, 1997 )
(approval  of   retention  of  CIPSCO   Energy   Company,   a  vehicle   seeking
energy-related investment opportunities).

          9.   Clean Energy:  Clean  Energy  is  engaged  in  the  conversion of
vehicles to allow their  operation  on natural gas or other  alternative  fuels.
Clean Energy also advises customers on the installation and operation of natural
gas fueling stations, and also operates such stations. Rule 58 also specifically
allows a registered holding company to own an interest in such a company.  Under
Section  (b)(iii),  a  company  engaged  in  the  "ownership,  operation,  sale,
installation and servicing of refueling, recharging and conversion equipment and

                                      -59-



<PAGE>



facilities  relating to electric  and  compressed  natural  gas  vehicles"24  is
exempted from the provisions of Section 9(a)(2) of the Act.  Consequently,  Rule
58  explicitly  allows  for the  retention  of Clean  Energy by SCANA,  and,  in
addition,  such  activities  have  also  been  held  to  be  retainable  by  the
Commission.  See New Century Energies,  Inc., Release No. 26748 (August 1, 1997)
(retention  of company  selling  products and  services  related to electric and
natural  gas-powered  vehicles,   and  in  developing  fueling  sites  for  such
vehicles).  See also  Consolidated  Natural Gas Co., Holding Co. Act Release No.
25615 (Aug. 27, 1992);  Central Power and Light Co., Holding Co. Act Release No.
26160 (Nov. 18, 1994).

          10.  Pine Needle and Blue Ridge:  Pine Needle is  a joint venture with
other third  parties  formed to own and operate a liquefied  natural gas storage
facility. Blue Ridge is a PSNC subsidiary used to hold PSNC's equity interest in
Pine Needle.

     The  Commission  has held  that the  storage  of  natural  gas for use in a
distribution business is functionally related to the operations of a gas utility
under  Section  11(b)(1) of the 1935 Act. See Conectiv,  Inc.  Release No. 26832
(February 25, 1998).  Therefore,  Blue Ridge, and consequently Pine Needle,  are
interests  which are  retainable  by  SCANA.  SCANA  and PSNC  believe  that the
Commission's  approval  hereunder of their request to retain PSNC's 17% interest
in Pine Needle is  sufficient  to meet the  criteria of Rule  16(a)(4)  and Pine
Needle  meets the  remaining  criteria  to be exempt from any  obligations  as a
subsidiary or affiliate of a registered  holding  company  under the Act.  Thus,
following  consummation of the Merger,  Pine Needle will be treated as a Rule 16
company with respect to its status under the Act.

--------
     24 Rule 58(b)(iii).

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<PAGE>



          11.  Cogen:  Cogen  builds  and  operates  boilers and  turbines at  a
cogeneration   facility  at  Westvaco's  Kraft  Division  Paper  Mill  in  North
Charleston,  South Carolina.  Steam produced by the Cogen facility is then sold,
in turn, to Westvaco.  The Commission has previously  approved  transactions  in
which a newly registered  holding company acquired a steam producing  subsidiary
that sold steam produced by boilers. See New Century Energies, Inc., Holding Co.
Act Release No. 26748 (August 1, 1997).

          12.  Palmetto:  SCANA owns  a 49%  membership interest in Palmetto,  a
subsidiary  engaged in the sale of lime.  20% of  Palmetto's  sales are to SCANA
utility  subsidiaries  which  use the lime  for  environmental  remediation  and
energy-related activities.  Palmetto is an energy-related company whose sales of
lime to SCANA's  utility  subsidiaries  support  the  environmental  remediation
aspect of SCANA's utility operations.  SCANA hereby requests that the Commission
reserve jurisdiction over the retention of Palmetto.

     13.  SCE&G's Bus Transit  Services:  SCE&G operates a bus service (the "Bus
Service") which provides transportation throughout Columbia, South Carolina. The
Bus  Service  does not fall  within  the  bounds of the Rule 40  exemption  from
Section 9 because it is  operated  by a public  utility  subsidiary  company and
SCANA  recognizes  that  retention  of the Bus  Service is not  consistent  with
Section 11 of the Act under the  majority of  Commission  precedent.  See Cities
Service Power & Light Co., 14 S.E.C.  28 (1943);  Commonwealth & Southern Corp.,
26 S.E.C. 464 (1947); Philadelphia Co., 28 S.E.C. 35 (1948); contra Middle South
Utilities,  Inc., 35 S.E.C. 1 (1953). SCANA hereby requests,  however,  that the
Commission  authorize  SCANA to retain its  interest  in the Bus  Service  for a
period of 2 years  following  completion of the Preferred  Second Merger and the
registration of SCANA under the Act to allow for an orderly disposition of these
assets consistent with the objectives of the Act within that 2 year period.

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<PAGE>



          14.  Utility Ownership of Buildings and Property:  Both SCE&G and PSNC
own buildings and property used in connection with their utility operations. The
Commission  has allowed  retention  of such  buildings  and  property for use in
utility operations.  See New Century Energies, Inc., Holding Co. Act Release No.
26748  (August 1, 1997);  UNTIL Corp.,  Holding Co. Act Release No. 25524 (April
24,  1992);  American  Electric  Power Co.,  Holding Co. Act  Release No.  21898
(January 27, 1981).

     With  the  exception  of the  Bus  Service,  all of  the  current  material
non-utility  businesses  of  SCANA  and  PSNC  will  bear  a  strong  functional
relationship  to the  utility  business  of SCANA  following  the  Mergers.  The
Commission has consistently  stated in previous  releases that interests similar
to those enumerated above are retainable by registered  holding  companies,  and
furthermore,  Rule 58 now  specifically  allows  retention  of some of the above
interests.  Due to these factors,  the Commission should permit the retention of
all of SCANA's and PSNC's current non-utility businesses. Moreover, it should be
noted that in its recent orders approving mergers that create registered holding
companies,  the Commission has held that  investments  made by a merging holding
company  while  that  company  was exempt  from the Act do not count  toward the
safe-harbor  limit  under  Rule  58  that  no  more  than  15%  of  consolidated
capitalization  be  invested  in  energy-related   companies.  See  New  Century
Energies, Inc., Release No. 26748 (August 1, 1997).

               b.   Section 10(c)(2)

     Section  10(c)(2)  requires the  Commission  to examine  whether a proposed
acquisition will serve the public interest by tending towards the economical and
efficient  development of an integrated  public utility  system.  For all of the
foregoing reasons, the

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<PAGE>



acquisition  of PSNC by SCANA in the Preferred  Second Merger meets the criteria
of  Section  10(c)(2).  SCANA's  acquisition  of  PSNC  will  produce  long-term
benefits, both quantitative and qualitative economies and efficiencies, and will
result in the  creation  of an  economically  integrated  and  efficient  energy
company consistent with modern notions of "integration".

     SCANA's acquisition of PSNC will produce long-term benefits.  Although some
of the anticipated  economies and efficiencies  will be fully realizable only in
the longer  term,  they are  properly  considered  in  determining  whether  the
standards of Section 10(c)(2) have been met. See American Electric Power Co., 46
S.E.C. 1299, 1320-1321 (1978). Further, the Commission has recognized that while
some potential benefits cannot be precisely estimated, nevertheless they too are
entitled to be considered:  "[S]pecific  dollar  forecasts of future savings are
not necessarily  required;  a demonstrated  potential for economies will suffice
even when these are not precisely quantifiable." Centerior Energy Corp., Holding
Co. Act Release No. 24073 (April 29, 1986) (citation  omitted).  See Energy East
Corporation,  Holding Co. Act Release No.  26976 (Feb.  12,  1999)  (authorizing
acquisition   based  on  strategic   benefits  and   potential   but   presently
unquantifiable savings.)

     SCANA's  acquisition of PSNC will also produce a number of quantitative and
qualitative  benefits.  SCANA  expects  to be able  to  achieve  synergies  from
corporate and operations labor costs of $20 million over five years.  SCANA also
expects to be able to reach gas supply cost  savings of $5 million per year with
4 years after  completion of the Mergers,  and under the existing order from the
NCUC,  benefits  from  gas  supply  savings  will  accrue  to  ratepayers.   The
acquisition  of PSNC will also provide SCANA with the  opportunity to extend its
service area into some of the fastest  growing  markets in North  Carolina while
increasing SCANA's domestic

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<PAGE>



retail customer base to approximately  1.3 million customers in the southeastern
region.  SCANA and its shareholders and employees will be able to participate in
these  growing  markets  through  PSNC, a company with which  customers in North
Carolina are familiar. In turn, as previously described herein, SCANA expects to
increase its annual  revenues  substantially,  which should  result in increased
cash flow for  reinvestment  and  growth in the  energy  and  services  delivery
businesses.  The  integration  of PSNC into the SCANA system is also expected to
provide   opportunities   for  margin   improvement   and  cost  savings  though
consolidation  of duplicate  functions and greater  efficiencies  in operations,
business processes and purchasing.  SCANA's  acquisition of PSNC will also allow
SCANA to offer customers access to more comprehensive products and services than
either  company  alone  could  offer.  The retail  natural  gas  experience  and
expertise   of  PSNC  will   complement   the   electricity,   natural  gas  and
telecommunications  experience  and expertise of SCANA,  thus offering  improved
capabilities  in the delivery of a more complete  range of products and services
for all customers.

     For these reasons,  the  acquisition of PSNC by SCANA will serve the public
interest by tending  towards the  economical  and  efficient  development  of an
integrated public utility system.

          3.   Section 10(f)

     Section 10(f) prohibits the Commission from approving an acquisition unless
the  Commission  is  satisfied  that  the  acquisition  will  be  undertaken  in
compliance  with  applicable  state  laws.  As  described  in  Item  4  of  this
Application-Declaration,  SCANA's  acquisition of PSNC pursuant to the Preferred
Second Merger will be consummated in compliance with all applicable state laws.

                                      -64-



<PAGE>



Item 4. Regulatory Approvals

          1.   The NCUC

     The  Preferred  Second Merger is subject to the  jurisdiction  of the NCUC.
Such  regulation  is  governed  by  North  Carolina  General  Statute,   Section
62-111(a),  which states that "any merger or  combination  affecting  any public
utility"  shall require  application to and written  approval by the NCUC".  The
standard  for  evaluating  a public  utility  merger  under this North  Carolina
statute is whether the  transaction is "justified by the public  convenience and
necessity."  On May 3, 1999,  SCANA and PSNC filed an  application  for approval
with the NCUC and on  December 7, 1999 the NCUC  issued an order  approving  the
Preferred  Second Merger. A motion to appeal the order was dismissed by the NCUC
on  January  11,  2000.  A copy of the order of the NCUC is  attached  hereto as
Exhibit D-1.2.

     The order of the NCUC requires that SCANA and PSNC advise the Commission of
certain  conditions and make certain  requests of the Commission as set forth in
the NCUC order. These conditions and requests are as follows:

     1.   With respect to any  transaction  that is subject to Section 13 of the
          Act, the following procedures shall apply:

          a.   PSNC  shall not  engage  in any such  transaction  without  first
               obtaining from the NCUC such authority as is required under North
               Carolina law  accepting  the contract  that  memorializes  such a
               transaction  and  authorizing the payment of compensation or fees
               pursuant thereto.  Proposed  contracts must first be submitted to
               the Public  Staff for  informal  review at least ten days  before
               filing with the NCUC.

          b.   Any such contract shall provide that PSNC:

               i.   may not  make or  incur a charge  under  any  such  contract
                    except in accordance  with North Carolina law and the rules,
                    regulations,  and orders of the NCUC promulgated thereunder;
                    and

                                      -65-



<PAGE>



               ii.  may not seek to  reflect  in  rates  any  cost  incurred  or
                    revenue  level earned under an agreement  subject to the Act
                    to the extent disallowed by the NCUC.

          c.   The  Commission  shall  have  found  that  such  contract  is not
               inconsistent  with the Act  except  that no such  finding  by the
               Commission  shall be required if no  Commission  approval of such
               contract is required under the Act.

     2.   Neither PSNC,  SCANA,  nor any  affiliate  thereof shall assert in any
          forum,  with respect to any  transaction to which PSNC is involved and
          which is subject  to  Section  13 of the Act,  that the Act in any way
          preempts the NCUC from reviewing the  reasonableness of any commitment
          entered  into  by PSNC  and  from  disallowing  costs  of or  imputing
          revenues to PSNC.  Should any other entity so assert,  PSNC, SCANA, or
          other affiliates shall not support any such assertion and shall,  upon
          learning of such  assertion,  so advise and consult  with the NCUC and
          the Public Staff regarding such assertion.

     3.   PSNC and SCANA shall request the SEC to include the following language
          in any order issued approving SCANA's acquisition of PSNC:

               Approval  of  this  application  in no way  precludes  the  North
               Carolina  Utilities  Commission from scrutinizing and disallowing
               charges  incurred  or made or  allowing  or  imputing a different
               level of such charges when setting rates for services rendered to
               customers of affiliated public utilities in North Carolina.

     4.   PSNC shall not take any service from an affiliate under  circumstances
          where its costs incurred for that service (whether directly or through
          allocation) exceed fair market value.

     5.   With  respect  to the  voluntary  transfer  by PSNC  or any  affiliate
          thereof  to  nonjurisdictional  operations,  an  affiliate,  and/or  a
          nonaffiliate  of the  control  or  ownership  of any asset or  portion
          thereof used for the transmission, distribution, or other provision of
          natural gas service to customers in North Carolina.

          a.   SCANA and PSNC  shall not  commit to or carry out such a transfer
               except in  accordance  with  North  Carolina  law and the  rules,
               regulations and orders of the NCUC promulgated thereunder; and

          b.   PSNC may not  reflect  in rates  the  value of any such  transfer
               subject to the Act except as allowed by the NCUC.


                                      -66-



<PAGE>



     6.   SCANA and PSNC shall include in their  application for approval of the
          acquisition  filed with the SEC pursuant to the Act the commitment set
          forth in paragraph 5 above.

     7.   SCANA and PSNC shall include in their  application for approval of the
          acquisition  filed with the SEC pursuant to the Act a request that the
          SEC include the following statement in its approval order(s):

               SCANA and PSNC  recognize  that the NCUC wishes to  preserve  its
               state law  authority,  under  present  or future  state  law,  to
               require  approval of  transfers  of control or  ownership  of any
               asset  or  portion  thereof  from  PSNC  or  one or  more  of its
               affiliates  to  nonjurisdictional   operations,   affiliates,  or
               nonaffiliates.  Without  conceding their right to assert that the
               NCUC does not and should not have such authority,  SCANA and PSNC
               request  the SEC to state,  in its order  approving  the  instant
               acquisition,  that the SEC does not  intend its  approval  of the
               acquisition to preclude a future state commission order mandating
               or otherwise  exercising  state authority over such a transfer of
               assets.

     8.   Any filing with the SEC in connection with asset  transfers  involving
          PSNC shall request that the SEC include the following  language in its
          approval order(s):

               Approval  of  this  application  in no way  precludes  the  North
               Carolina Utilities  Commission from scrutinizing and establishing
               the value of the asset transfer for purposes of  determining  the
               rates for services rendered to PSNC's customers.  It is the SEC's
               intention that the North Carolina Utilities Commission retain the
               right to review and  determine  the value of such asset  transfer
               for purposes of determining rates.

     9.   Neither PSNC,  SCANA,  nor any  affiliate  thereof shall assert in any
          forum, with respect to any asset transfer transaction to which PSNC is
          involved  and  which is  subject  to the Act,  that the Act in any way
          preempts the NCUC from (a)  exercising  such  authority as it may have
          under North Carolina law to mandate,  approve, or otherwise regulate a
          transfer of assets by or to PSNC, or (b) scrutinizing and establishing
          the value of the asset transfers for purposes of determining the rates
          for services rendered to PSNC's customers.  Should any other entity so
          assert,  PSNC,  SCANA, or other  affiliates shall not support any such
          assertion and shall,  upon learning of such  assertion,  so advise and
          consult with the NCUC and the Public Staff regarding such assertion.


                                      -67-



<PAGE>



     10.  With respect to any  financing  transaction  entered into between PSNC
          and  SCANA  or  among  PSNC  and/or  any  one or  more  of  its  other
          affiliates,  any contract memorializing such transaction shall provide
          that PSNC:

          a.   may not  enter  into any such  financing  transaction  except  in
               accordance  with North  Carolina law and the rules,  regulations,
               and orders of the NCUC promulgated thereunder; and

          b.   may not reflect in rates the effect of any capital  structure  or
               debt and/or equity costs except as allowed by the NCUC.

     11.  PSNC and SCANA shall include in their  application for approval of the
          acquisition  filed with the  Commission  pursuant to the Act a request
          that the  Commission  include the following  statement in its approval
          order(s):

               The SEC further  finds that its approval of this  acquisition  or
               future financing arrangements does not preclude the NCUC or other
               regulatory  authority  from setting rates based on the assumption
               of a capital  structure,  a  corporate  structure,  debt costs or
               equity  costs  that  varies  from  the  structure(s)  or  cost(s)
               approved in this Order.

     12.  Neither PSNC,  SCANA, nor any other affiliate  thereof shall assert in
          any forum,  with respect to any financing  transaction with which PSNC
          is involved  and which is subject to the Act,  that the Act in any way
          preempts  the NCUC from  exercising  any lawful  authority it may have
          over such  financings or that the NCUC is precluded from setting rates
          based on the capital structure,  corporate  structure,  debt costs, or
          equity costs that it finds to be appropriate for ratemaking  purposes.
          Should any other entity so assert,  PSNC,  SCANA, or other  affiliates
          shall not support any such assertion and shall,  upon learning of such
          assertion,  so advise and consult  with the NCUC and the Public  Staff
          regarding such assertion.

     13.  With  respect to the  above-described  affiliate  transactions,  asset
          transfers,  and financings,  PSNC,  SCANA,  and their affiliates shall
          bear the full risk of any preemptive  effects of the Act. The previous
          sentence  includes,  but is not limited to, agreement by PSNC,  SCANA,
          and their  affiliates  to take all such  actions as may be  reasonably
          necessary and appropriate to hold North Carolina  ratepayers  harmless
          from rate increases,  foregone  opportunities  for rate decreases,  or
          other effects of such preemption.  Such actions  include,  but are not
          limited to, filing with and obtaining  approval from the Commission of
          such  commitments  as the NCUC deems  reasonably  necessary to prevent
          such preemptive effects.

     14.  If the Act is amended or replaced by future  legislation,  the parties
          shall  meet  promptly  after  the  passage  of  such  legislation  and
          negotiate in good faith whether

                                      -68-



<PAGE>



          and how these  conditions  have been affected by such  legislation and
          whether  they should be revised or  removed.  In the event the parties
          are unable to reach  agreement  within a reasonable time after passage
          of such  legislation,  the unresolved issues shall be submitted to the
          NCUC for resolution.

          2.   HSR

     The  Preferred  Second  Merger  is also  subject  to the  notification  and
reporting requirements of the HSR Act, and on September 26, 1999, the applicable
waiting period under the HSR Act expired.  In addition,  the transfer of certain
licenses  held by PSNC must be  approved  by the FCC.  No other state or federal
commission has jurisdiction over the Preferred Second Merger.

Item 5. Procedure

     The Commission has issued and published the requisite  notice under Rule 23
with respect to the filing of this Application on August 31, 1999, and specified
September 27, 1999 as the date by which comments must be entered and the date on
which an order of the  Commission  granting and permitting  this  Application to
become  effective may be entered.  On September 24, 1999,  an  intervention  was
filed with the  Commission  by Paul S. Davis;  however,  this  intervention  was
withdrawn by Mr. Davis on December 15, 1999.

     It  is  submitted  that  a  recommended  decision  by a  hearing  or  other
responsible officer of the Commission is not needed for approval of the proposed
acquisition. The Division of Investment Management may assist in the preparation
of the  Commission's  decision.  There should be no waiting  period  between the
issuance  of the  Commission's  order  and the  date on  which  it is to  become
effective.

                                      -69-



<PAGE>



Item 6. Exhibits and Financial Statements

     A.   Exhibits

         A-1.1 Restated  Articles of  Incorporation of SCANA as adopted on April
               26,  1989  (Filed as Exhibit 3-A to  Registration  Statement  No.
               33-49145 and incorporated by reference herein).

         A-1.2 Articles of  Amendment  of SCANA,  dated April 27, 1995 (Filed as
               Exhibit  4-B  to   Registration   Statement   No.   33-62421  and
               incorporated by reference herein).

         A-2   Copy of By-Laws of SCANA as revised and  amended on December  17,
               1997  (Filed  as  Exhibit  3-C to Form  10-K for the  year  ended
               December 31, 1997 and incorporated by reference herein).

         A-3   Amended and  Restated  Charter of PSNC,  dated  February 1, 1991.
               (Filed as Exhibit 3-A-4 to PSNC's 1992 Form 10-K and incorporated
               by reference herein).

         A-4   By-laws of PSNC,  as amended  to date.  (Filed as Exhibit  3-I to
               PSNC's  Form  10-Q  for the  quarter  ended  March  31,  1994 and
               incorporated by reference herein).

         B-1   Amended and Restated  Agreement  and Plan of Merger,  dated as of
               February 16, 1999 and amended and restated as of May 10, 1999, by
               and  among  PSNC,  SCANA,  New Sub I, Inc.  and New Sub II,  Inc.
               (included in Exhibit C-1 hereto).

         C-1   Registration  Statement on Form S-4 of SCANA for the shareholders
               meeting to be held in connection with the Mergers (filed with the
               Commission on May 11, 1999 (File No.  333-78227) and incorporated
               by reference herein).

                                      -70-



<PAGE>



         C-2   Joint  Proxy  Statement/Prospectus  of  SCANA  and  PSNC  for the
               special meeting of shareholders to be held in connection with the
               Mergers (included in Exhibit C-1).

         D-1.1 Application of PSNC before the NCUC. (previously filed)

         D-1.2 Order of the NCUC.

         E-1   Map of  service  territory  of SCANA  (previously  filed in paper
               format on Form SE).

         E-2   Map of  service  territory  of PSNC  (previously  filed  in paper
               format on Form SE).

         E-3   SCANA Corporate Chart (included in Exhibit C-1).

         E-4   PSNC Corporate Chart (included in Exhibit C-1).

         F-1   Opinion of Counsel (previously filed).

         F-2   Past tense opinion of counsel (to be filed by amendment).

         G-1   Opinion  of Morgan  Stanley  and Co.  Incorporated  (included  in
               Exhibit C-1).

         G-2   Opinion of PaineWebber Incorporated (included in Exhibit C-1).

         H-1   Annual  Report of PSNC on Form 10-K for the year ended  September
               30,  1999  (filed with the  Commission  on December  23, 1999 and
               incorporated by reference herein).

         H-2   Annual  Report of SCANA on Form 10-K for the year ended  December
               31, 1998 (filed with the Commission on March 18, 1999 and amended
               on April 27, 1999, and incorporated by reference herein).

                                      -71-



<PAGE>



         H-3   Annual  Report of PSNC on Form 10-K for the year ended  September
               30,  1998  (filed with the  Commission  on December  21, 1998 and
               incorporated by reference herein).

         H-4   Quarterly  Report  on Form 10-Q of SCANA  for the  quarter  ended
               September  30, 1999 (filed with the  Commission  on November  15,
               1999 and incorporated by reference herein).

         H-5   Quarterly Report on Form 10-Q of SCANA for the quarter ended June
               30,  1999  (filed  with the  Commission  on August  13,  1999 and
               incorporated by reference herein).

         H-6   Quarterly  Report on Form 10-Q of PSNC for the quarter ended June
               30,  1999  (filed  with the  Commission  on August  13,  1999 and
               incorporated by reference herein).

         H-7   Quarterly  Report  on Form 10-Q of SCANA  for the  quarter  ended
               March 31,  1999 (filed  with the  Commission  on May 17, 1999 and
               incorporated by reference herein).

         H-8   Quarterly Report on Form 10-Q of PSNC for the quarter ended March
               31,  1999  (filed  with  the  Commission  on  May  14,  1999  and
               incorporated by reference herein).

         H-9   Quarterly  Report  on Form  10-Q of PSNC  for the  quarter  ended
               December 31, 1998 (filed with the Commission on February 12, 1999
               and incorporated by reference herein).

                                      -72-



<PAGE>



         H-10  Form U-3A-2 of SCANA for the year ended  December 31, 1998 (filed
               with the  Commission  on February  26, 1999 and  incorporated  by
               reference herein).

         I-1   Proposed Form of Notice (previously filed).

         J-1   Withdrawn.

         J-2   Withdrawn.

         J-3   Credit Agreement by and between SCANA, First Union National Bank,
               The  Bank of New  York,  Bank of  America  N.A.,  Suntrust  Bank,
               Atlanta and  Wachovia  Bank,  N.A.,  dated  December 1, 1999.  B.
               Financial Statements

         FS-1  SCANA  Unaudited Pro Forma Condensed  Consolidated  Balance Sheet
               (included in Exhibit C-1).

         FS-2  SCANA  Unaudited Pro Forma  Condensed  Consolidated  Statement of
               Income (included in Exhibit C-1).

         FS-3  Notes  to  SCANA  Unaudited  Pro  Forma  Condensed   Consolidated
               Financial Statements (included in Exhibit C-1).

         FS-4  SCANA  Consolidated  Balance  Sheet as of September  30, 1999 (as
               included in Exhibit H-4).

         FS-5  SCANA Consolidated Statement of Income for the three months ended
               September 30, 1999 (as included in Exhibit H-4).

         FS-6  PSNC  Consolidated   Balance  Sheet  as  of  September  30,  1999
               (included in Exhibit H-1).

                                      -73-



<PAGE>



         FS-7  PSNC  Consolidated  Statement of Income for the fiscal year ended
               September 30, 1999 (included in Exhibit H-1).

Item 7. Information as to Environmental Effects

     The proposed  transaction  involves  neither a "major  federal  action" nor
"significantly  affects the quality of the human environment" as those terms are
used in Section  102(2)(C) of the National  Environmental  Policy Act, 42 U.S.C.
Sec.  4321 et seq.  No  federal  agency is  preparing  an  environmental  impact
statement with respect to this matter.

                                      -74-



<PAGE>



                                    SIGNATURE

     Pursuant to the  requirements  of the Public Utility Holding Company Act of
1935,  the Applicant has duly caused this  Pre-Effective  Amendment No. 2 to the
Application/Declaration  to be signed on its behalf by the undersigned thereunto
duly authorized.

Date:  February 9, 2000                         SCANA CORPORATION

                                                /s/ H. Thomas Arthur
                                                -------------------------------
                                                Name:  H. Thomas Arthur
                                                Title:    Senior Vice President
                                                         and General Counsel

                                      -75-


