
                                AGENCY AGREEMENT

                                     BETWEEN

                      SOUTH CAROLINA ELECTRIC & GAS COMPANY
                        AND SCANA ENERGY MARKETING, INC.

     This Agency  Agreement (the  "agreement") is entered into as of the 1st day
of July, 1997 between South Carolina  Electric & Gas Company ("SCE&G") and SCANA
Energy Marketing, Inc. ("SEMI").

     WHEREAS, SCE&G and SEMI are affiliated companies,  both of which are wholly
owned by SCANA Corporation; and

     WHEREAS, SEMI is an electric power marketer,  which is permitted to perform
brokering services for affiliated and unaffiliated electric power utilities, and
SCE&G  is a  public  utility,  which  purchases  and  sells  electric  power  in
transactions with other electric  utilities and which provides  unbundled,  open
access  transmission  service,  all  subject to the  regulatory  policies of the
Federal Energy Regulatory Commission ("FERC");

     NOW, THEREFORE, SCE&G and SEMI (the "parties") agree as follows:

1. AGENCY

     A. Except to the extent expressly provided  otherwise,  SEMI is designated,
in accordance with the terms of this agreement,  to be a non-exclusive  agent or
broker for SCE&G with respect to all of SCE&G's wholesale electric purchases and
sales,  except for SCE&G's  sales of ancillary  services that are required to be
provided by SCE&G pursuant to SCE&G's  FERC-regulated  open access  transmission
service  tariff in  conjunction  with the provision of open access  transmission
service under such tariff by SCE&G. In its capacity as agent or broker, SEMI, in
accordance with SCE&G's instructions, shall arrange for, negotiate the terms of,
and schedule  transactions  covered by this  agreement.  SEMI shall not make any
electric  power  purchases  from SCE&G or sell any electric power to SCE&G under
this agreement.

     B. To the extent performance of this agreement involves activities that are
subject  to  regulation  by  FERC,  SCE&G  and SEMI  agree  to  abide by  FERC's
standards,  precedents and policies,  including but not limited to the terms and
conditions  ordered by FERC in South  Carolina  Electric & Gas Company and SCANA
Energy  Marketing,  Inc., 75 FERC P. 61,151 (May 13, 1996),  and FERC Order Nos.
888 and 888-A, as such orders may be modified in the future.  The parties hereby
express



<PAGE>



their understanding that this agreement does not prohibit SCE&G from using other
agents or brokers to provide  identical  services and that FERC policy currently
requires that this agency  agreement shall be  non-exclusive of other agreements
SCE&G, upon request,  may make with non-affiliated  electric power marketers and
brokers.

2. COMPENSATION

     A.  SCE&G  shall  reimburse  SEMI  for all  out of  pocket  costs  directly
assignable to, and a portion of SEMI's fixed costs properly allocable to, SEMI's
provision  of  services  under this  agreement.  However,  unless and until FERC
policy  permits  SCE&G to pay SEMI a profit  margin for the  provision  of these
services,  SEMI shall not receive from SCE&G,  SCANA  Corporation or any company
owned by SCANA  Corporation,  any margin  above  SEMI's  actual  costs to render
services under this agreement to SCE&G.  Further,  in the event the market value
of the  services  provided by SEMI  pursuant to this  agreement is less than the
costs SEMI incurs to provide such services,  then SEMI's  compensation  for such
services shall not exceed their market value.

     B. SEMI shall  tender a bill to SCE&G for services  provided in  accordance
with this  paragraph on or before the 20th day of the month  following the close
of any month in which  services  pursuant to this  agreement are  provided,  and
SCE&G shall pay such bill within thirty (30) days thereafter.

3. PROCEDURES

     A.  Purchases:  The SCE&G System  Operator will advise SEMI when hourly and
current day MWHs purchases are required.  For longer term purchases SEMI will be
notified by the System  Operation  Control or its  designee.  For both short and
long term purchases the MWH quantity,  duration, and a recommended not to exceed
price will be provided.  B. Sales:  The SCE&G System  Operator  will advise SEMI
when hourly and current  day MWHs are  available.  On all longer term sales SEMI
will  be  notified  by the  System  Operation  Control  or its  designee  of MWH
availability.  For both short and long term sales the MWH  quantity and duration
will be  specified.  In all cases the System  Operation  Control or its designee
will control all MW capacity sales.

4. CONFIDENTIALITY

     SEMI  agrees  that,  except  as may be  required  by law,  all  information
provided  to it by SCE&G  shall be used by SEMI  solely for the  purpose of this
agreement, that such information shall not be

                                       -2-


<PAGE>



used in any manner that is or could be detrimental to SCE&G and its  ratepayers,
and that such information shall be kept confidential,  except to the extent SEMI
must disclose such  information to  prospective  customers in order to carry out
its responsibilities under this agreement.

5. PERFORMANCE STANDARD

     SEMI will perform  services  under this agreement as if SEMI were SCE&G and
as if SEMI were  subject to the same public  service  obligation  that SCE&G has
toward its ratepayers and customers.

6. ENTIRE AGREEMENT AND MODIFICATIONS

     This agreement is the entire agreement  between the parties with respect to
the matters  expressly  covered;  and this  agreement  may be  modified  only by
written additions or deletions.

7. TERM

     This agreement shall commence at 12:01 a.m. July 1, 1997 and shall continue
until terminated by either party.

         IN WITNESS  WHEREOF,  the  parties  have caused  this  Agreement  to be
executed as of the date first written above.

WITNESSES:                            SOUTH CAROLINA ELECTRIC & GAS
                                         COMPANY

                                      By:
-------------------------------
                                      Its:
-------------------------------
                                      SCANA ENERGY MARKETING, INC.

-------------------------------       By:

-------------------------------       Its:



                                       -3-


