EMPLOYEE BENEFIT PLANS AND EQUITY COMPENSATION PLAN

Pension and Other Postretirement Benefit Plans

SCANA sponsors a noncontributory defined benefit pension plan covering regular, full-time employees hired before January 1, 2014. SCE&G participates in SCANA's pension plan. SCANA’s policy has been to fund the plan as permitted by applicable federal income tax regulations, as determined by an independent actuary.

The pension plan provides benefits under a cash balance formula for employees hired before January 1, 2000 who elected that option and all eligible employees hired subsequently. Under the cash balance formula, benefits accumulate as a result of compensation credits and interest credits. Employees hired before January 1, 2000 who elected to remain under the final average pay formula earn benefits based on years of credited service and the employee’s average annual base earnings received during the last three years of employment. Benefits under the cash balance formula will continue to accrue through December 31, 2020, after which date no benefits will be accrued except that participants under the cash balance formula will continue to earn interest credits. Benefits under the final average pay formula will continue to accrue through December 31, 2023, after which date no benefits will be accrued. Once the benefits under SCANA's pension plan no longer accrue, eligible participants will accrue benefits under a cash balance plan sponsored by Dominion Energy.

In addition to pension benefits, SCANA provides certain unfunded postretirement health care and life insurance benefits to certain active and retired employees. SCE&G participates in these programs. Retirees hired before January 1, 2011 share in a portion of their medical care cost, while employees hired subsequently are responsible for the full cost of retiree medical benefits elected by them. The costs of postretirement benefits other than pensions are accrued during the years the employees render the services necessary to be eligible for these benefits.

The same benefit formula applies to all SCANA subsidiaries participating in the parent sponsored plans and, with regard to the pension plan, there are no legally separate asset pools. The postretirement benefit plans are accounted for as multiple employer plans.

Changes in Benefit Obligations

The measurement date used to determine pension and other postretirement benefit obligations is December 31. Data related to the changes in the projected benefit obligation for pension benefits and the accumulated benefit obligation for other postretirement benefits are presented below.



	The Company												Consolidated SCE&G
	Pension Benefits						Other Postretirement Benefits						Pension Benefits						Other Postretirement Benefits
Millions of dollars	2018			2017			2018			2017			2018			2017			2018			2017
Benefit obligation, January 1	$	933.2		$	904.3		$	289.2		$	274.7		$	793.0		$	768.4		$	216.6		$	207.2
Service cost	21.0			21.7			4.6			4.5			17.1			18.1			3.6			3.7
Interest cost	34.1			37.4			10.1			11.5			29.0			31.9			8.0			9.5
Plan participants’ contributions	—			—			1.4			1.3			—			—			1.1			1.1
Actuarial (gain) loss	(53.1		)	42.2			(38.4		)	9.7			(45.5		)	36.6			(30.7		)	6.8
Benefits paid	(71.7		)	(72.4		)	(13.2		)	(12.5		)	(61.3		)	(62.0		)	(10.4		)	(10.3		)
Amounts funded to parent	n/a			n/a			n/a			n/a			—			—			(0.8		)	(1.4		)
Benefit obligation, December 31	$	863.5		$	933.2		$	253.7		$	289.2		$	732.3		$	793.0		$	187.4		$	216.6

The accumulated benefit obligation for pension benefits for the Company was $842.4 million at the end of 2018 and $905.8 million at the end of 2017. The accumulated benefit obligation for pension benefits for Consolidated SCE&G was $714.3 million at the end of 2018 and $769.7 million at the end of 2017. The accumulated pension benefit obligation differs from the projected pension benefit obligation above in that it reflects no assumptions about future compensation levels.

Significant assumptions used to determine the above benefit obligations are as follows:



	Pension Benefits				Other Postretirement Benefits
	2018		2017		2018		2017
Annual discount rate used to determine benefit obligation	4.35	%	3.71	%	4.38	%	3.74	%
Assumed annual rate of future salary increases for projected benefit obligation	3.00	%	3.00	%	3.00	%	3.00	%

A 6.6% annual rate of increase in the per capita cost of covered health care benefits was assumed for 2018. The rate was assumed to decrease gradually to 5.0% for 2023 and to remain at that level thereafter.

A one percent increase in the assumed health care cost trend rate for the Company would increase the postretirement benefit obligation by $0.7 million at December 31, 2018 and by $1.6 million at December 31, 2017. A one percent decrease in the assumed health care cost trend rate for the Company would decrease the postretirement benefit obligation by $0.6 million at December 31, 2018 and by $1.4 million at December 31, 2017. A one percent increase in the assumed health care cost trend rate for Consolidated SCE&G would increase the postretirement benefit obligation by $0.6 million at December 31, 2018 and by $1.3 million at December 31, 2017. A one percent decrease in the assumed health care cost trend rate for Consolidated SCE&G would decrease the postretirement benefit obligation by $0.5 million at December 31, 2018 and by $1.1 million at December 31, 2017.

Funded Status



	The Company												Consolidated SCE&G
Millions of Dollars	Pension Benefits						Other Postretirement Benefits						Pension Benefits						Other Postretirement Benefits
December 31,	2018			2017			2018			2017			2018			2017			2018			2017
Fair value of plan assets	$	727.3		$	849.6		—			—			$	676.7		$	781.3		—			—
Benefit obligation	863.5			933.2			$	253.7		$	289.2		732.3			793.0			$	187.4		$	216.6
Funded status	$	(136.2	)	$	(83.6	)	$	(253.7	)	$	(289.2	)	$	(55.6	)	$	(11.7	)	$	(187.4	)	$	(216.6	)

Amounts recognized on the consolidated balance sheets were as follows:



	The Company												Consolidated SCE&G
Millions of Dollars	Pension Benefits						Other Postretirement Benefits						Pension Benefits						Other Postretirement Benefits
December 31,	2018			2017			2018			2017			2018			2017			2018			2017
Current liability	—			—			$	(13.3	)	$	(13.5	)	—			—			$	(10.5	)	$	(10.8	)
Noncurrent liability	$	(136.2	)	$	(83.6	)	(240.4		)	(275.7		)	$	(55.6	)	$	(11.7	)	(176.9		)	(205.8		)

Amounts recognized in accumulated other comprehensive loss were as follows:



	The Company								Consolidated SCE&G
Millions of Dollars	Pension Benefits				Other Postretirement Benefits				Pension Benefits				Other Postretirement Benefits
December 31,	2018		2017		2018		2017		2018		2017		2018		2017
Net actuarial loss	$	12.8	$	8.8	$	1.1	$	3.5	$	3.4	$	2.1	$	0.5	$	1.5
Prior service cost	0.1		0.1		—		—		—		—		—		—
Total	$	12.9	$	8.9	$	1.1	$	3.5	$	3.4	$	2.1	$	0.5	$	1.5

Amounts recognized in regulatory assets were as follows:



	The Company								Consolidated SCE&G
Millions of Dollars	Pension Benefits				Other Postretirement Benefits				Pension Benefits				Other Postretirement Benefits
December 31,	2018		2017		2018		2017		2018		2017		2018		2017
Net actuarial loss	$	230.4	$	194.8	$	10.9	$	43.3	$	202.4	$	171.4	$	9.0	$	35.9
Prior service cost	0.7		1.2		—		—		0.6		1.0		—		—
Total	$	231.1	$	196.0	$	10.9	$	43.3	$	203.0	$	172.4	$	9.0	$	35.9

In connection with the joint ownership of Summer Station, costs related to the pension benefit obligation attributable to Santee Cooper as of December 31, 2018 and 2017 totaled $24.9 million and $21.4 million, respectively, and were recorded within deferred debits. The unfunded postretirement benefit obligation attributable to Santee Cooper as of December 31, 2018 and 2017 totaled $12.4 million and $14.7 million, respectively, and was recorded within deferred debits.

Changes in Fair Value of Plan Assets



Pension Benefits	The Company						Consolidated SCE&G
Millions of dollars	2018			2017			2018			2017
Fair value of plan assets, January 1	$	849.6		$	793.6		$	781.3		$	732.9
Actual return (loss) on plan assets	(50.6		)	128.4			(43.3		)	110.4
Benefits paid	(71.7		)	(72.4		)	(61.3		)	(62.0		)
Fair value of plan assets, December 31	$	727.3		$	849.6		$	676.7		$	781.3

Investment Policies and Strategies

The assets of the pension plan are invested in accordance with the objectives of (1) fully funding the obligations of the pension plan, (2) overseeing the plan's investments in an asset-liability framework that considers the funding surplus (or deficit) between assets and liabilities, and overall risk associated with assets as compared to liabilities, and (3) maintaining sufficient liquidity to meet benefit payment obligations on a timely basis. SCANA uses a dynamic investment strategy for the management of the pension plan assets. This strategy will lead to a reduction in equities and an increase in long duration fixed income allocations over time with the intention of reducing volatility of funded status and pension costs.

The pension plan operates with several risk and control procedures, including ongoing reviews of liabilities, investment objectives, levels of diversification, investment managers and performance expectations. The total portfolio is constructed and maintained to provide prudent diversification with regard to the concentration of holdings in individual issues, corporations, or industries.

Transactions involving certain types of investments are prohibited. These include, except where utilized by a hedge fund manager, any form of private equity; commodities or commodity contracts (except for unleveraged stock or bond index futures and currency futures and options); ownership of real estate in any form other than publicly traded securities; short sales, warrants or margin transactions, or any leveraged investments; and natural resource properties. Investments made for the purpose of engaging in speculative trading are also prohibited.

The pension plan asset allocation at December 31, 2018 and 2017 and the target allocation for 2019 are as follows:



	Percentage of Plan Assets
	Target Allocation		December 31,
Asset Category	2019		2018		2017
Equity Securities	58	%	55	%	58	%
Fixed Income	33	%	34	%	31	%
Hedge Funds	9	%	11	%	11	%

For 2019, the expected long-term rate of return on assets will be 7%. In developing the expected long-term rate of return assumptions, management evaluates the pension plan’s historical cumulative actual returns over several periods, considers the expected active and passive returns across various asset classes and assumes the target allocation is achieved. Management regularly reviews such allocations and periodically rebalances the portfolio when considered appropriate. Additional rebalancing may occur subject to funded status improvements as part of the dynamic investment strategy described previously.

Fair Value Measurements

Assets held by the pension plan are measured at fair value and are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. At December 31, 2018 and 2017, fair value measurements, and the level within the fair value hierarchy in which the measurements fall, were as follows:



	The Company				Consolidated SCE&G
Millions of dollars	2018		2017		2018		2017
Investments with fair value measure at Level 2:
Mutual funds	$	107	$	120	$	99	$	110
Short-term investment vehicles	20		17		19		16
US Treasury securities	7		15		7		14
Corporate debt instruments	92		91		86		84
Government and other debt instruments	18		17		16		15
Total assets in the fair value hierarchy	244		260		227		239

Investments at net asset value:
Common collective trust	400		498		373		458
Joint venture interests	83		92		77		84
Total investments at fair value	$	727	$	850	$	677	$	781

For all periods presented, assets with fair value measurements classified as Level 1 were insignificant, and there were no assets with fair value measurements classified as Level 3. There were no transfers of fair value amounts into or out of Levels 1, 2 or 3 during 2018 or 2017.

Mutual funds held by the plan are open-end mutual funds registered with the SEC. The price of the mutual funds' shares is based on its NAV, which is determined by dividing the total value of portfolio investments, less any liabilities, by the total number of shares outstanding. For purposes of calculating NAV, portfolio securities and other assets for which market quotes are readily available are valued at market value. Short-term investment vehicles are funds that invest in short-term fixed income instruments and are valued using observable prices of the underlying fund assets based on trade data for identical or similar securities. US Treasury securities are valued using quoted market prices or based on models using observable inputs from market sources such as external prices or spreads or benchmarked thereto. Corporate debt instruments and government and other debt instruments are valued based on recently executed transactions, using quoted market prices, or based on models using observable inputs from market sources such as external prices or spreads or benchmarked thereto. Common collective trust assets and limited partnerships are valued at NAV, which has been determined based on the unit values of the trust funds. Unit values are determined by the organization sponsoring such trust funds by dividing the trust funds’ net assets at fair value by the units outstanding at each valuation date. Joint venture interests are invested in a hedge fund of funds partnership that invests directly in multiple hedge fund strategies that are not traded on exchanges and not traded on a daily basis. The valuation of such multi-strategy hedge fund of funds is estimated based on the NAV of the underlying hedge fund strategies using consistent valuation guidelines that account for variations that may influence their fair value.

Expected Cash Flows

Total benefits expected to be paid from the pension plan or company assets for the other postretirement benefits plan (net of participant contributions), respectively, are as follows:

Expected Benefit Payments



	The Company				Consolidated SCE&G
Millions of dollars	Pension Benefits		Other Postretirement Benefits		Pension Benefits		Other Postretirement Benefits
2019	$	71.5	$	13.6	$	71.5	$	10.8
2020	62.4		14.3		62.4		11.4
2021	65.6		14.9		65.6		11.8
2022	69.6		15.4		69.6		12.2
2023	66.6		15.8		66.6		12.6
2024-2028	284.9		82.3		284.9		65.4

Pension Plan Contributions

The pension trust is adequately funded under current regulations. No contributions have been required since 1997, and as a result of closing the plan to new entrants and freezing benefit accruals at the end of 2023, no significant contributions to the pension trust are expected for the foreseeable future based on current market conditions and assumptions, nor is a limitation on benefit payments expected to apply.

Net Periodic Benefit Cost

Net periodic benefit cost is recorded utilizing beginning of the year assumptions. Disclosures required for these plans are set forth in the following tables.

Components of Net Periodic Benefit Cost



The Company	Pension Benefits									Other Postretirement Benefits
Millions of dollars	2018			2017			2016			2018		2017		2016
Service cost	$	21.0		$	21.7		$	20.7		$	4.6	$	4.5	$	4.4
Interest cost	34.1			37.4			39.4			10.1		11.5		12.1
Expected return on assets	(56.7		)	(54.7		)	(55.9		)	n/a		n/a		n/a
Prior service cost amortization	0.5			1.6			3.9			—		—		0.3
Amortization of actuarial losses	12.8			16.3			14.8			0.7		1.0		0.5
Net periodic benefit cost	$	11.7		$	22.3		$	22.9		$	15.4	$	17.0	$	17.3



Consolidated SCE&G	Pension Benefits									Other Postretirement Benefits
Millions of dollars	2018			2017			2016			2018		2017		2016
Service cost	$	17.1		$	18.1		$	16.9		$	3.6	$	3.7	$	3.6
Interest cost	29.0			31.9			33.4			8.0		9.5		9.9
Expected return on assets	(48.1		)	(46.7		)	(47.4		)	n/a		n/a		n/a
Prior service cost amortization	0.4			1.4			3.4			—		—		0.3
Amortization of actuarial losses	10.9			13.9			12.5			0.6		0.8		0.4
Net periodic benefit cost	$	9.3		$	18.6		$	18.8		$	12.2	$	14.0	$	14.2

In connection with regulatory orders, SCE&G recovers current pension costs through a rate rider that may be adjusted annually for retail electric operations or through cost of service rates for gas operations. PSNC Energy recovers pension costs through cost of service rates. For retail electric operations, current pension expense is recognized based on amounts collected through a rate rider, and differences between actual pension expense and amounts recognized pursuant to the rider are deferred as a regulatory asset (for under-collections) or regulatory liability (for over-collections) as applicable. In addition, SCE&G amortizes certain previously deferred pension costs. See Note 2.

Other changes in plan assets and benefit obligations recognized in OCI (net of tax) were as follows:



The Company	Pension Benefits									Other Postretirement Benefits
Millions of dollars	2018			2017			2016			2018			2017			2016
Current year actuarial (gain) loss	$	4.5		$	(1.0	)	$	0.6		$	(2.4	)	$	1.1		$	0.8
Amortization of actuarial losses	(0.5		)	(0.6		)	(0.6		)	—			(0.1		)	—
Amortization of prior service cost	—			—			(0.1		)	—			—			—
Total recognized in OCI	$	4.0		$	(1.6	)	$	(0.1	)	$	(2.4	)	$	1.0		$	0.8



Consolidated SCE&G	Pension Benefits									Other Postretirement Benefits
Millions of dollars	2018			2017			2016			2018			2017		2016
Current year actuarial loss	$	1.4		$	0.3		—			$	(1.0	)	$	0.5	$	0.3
Amortization of actuarial losses	(0.1		)	(0.1		)	$	(0.1	)	—			—		—
Total recognized in OCI	$	1.3		$	0.2		$	(0.1	)	$	(1.0	)	$	0.5	$	0.3

Other changes in plan assets and benefit obligations recognized in regulatory assets were as follows:



The Company	Pension Benefits									Other Postretirement Benefits
Millions of dollars	2018			2017			2016			2018			2017			2016
Current year actuarial (gain) loss	$	46.7		$	(27.1	)	$	29.4		$	(31.8	)	$	9.4		$	11.1
Amortization of actuarial losses	(11.1		)	(14.1		)	(12.7		)	(0.6		)	(0.8		)	(0.4		)
Amortization of prior service cost	(0.5		)	(1.4		)	(3.4		)	—			—			(0.3		)
Total recognized in regulatory assets	$	35.1		$	(42.6	)	$	13.3		$	(32.4	)	$	8.6		$	10.4



Consolidated SCE&G	Pension Benefits									Other Postretirement Benefits
Millions of dollars	2018			2017			2016			2018			2017			2016
Current year actuarial (gain) loss	$	40.7		$	(24.8	)	$	26.3		$	(26.4	)	$	7.3		$	9.2
Amortization of actuarial losses	(9.7		)	(12.5		)	(11.2		)	(0.5		)	(0.7		)	(0.3		)
Amortization of prior service cost	(0.4		)	(1.3		)	(3.0		)	—			—			(0.2		)
Total recognized in regulatory assets	$	30.6		$	(38.6	)	$	12.1		$	(26.9	)	$	6.6		$	8.7

Significant Assumptions Used in Determining Net Periodic Benefit Cost



	Pension Benefits						Other Postretirement Benefits
	2018		2017		2016		2018		2017		2016
Discount rate	3.71	%	4.22	%	4.68	%	3.74	%	4.30	%	4.78	%
Expected return on plan assets	7.00	%	7.25	%	7.50	%	n/a		n/a		n/a
Rate of compensation increase	3.00	%	3.00	%	3.00	%	3.00	%	3.00	%	3.00	%
Health care cost trend rate	n/a		n/a		n/a		7.00	%	6.60	%	7.00	%
Ultimate health care cost trend rate	n/a		n/a		n/a		5.00	%	5.00	%	5.00	%
Year achieved	n/a		n/a		n/a		2023		2021		2021

The estimated amounts to be amortized from accumulated other comprehensive loss into net periodic benefit cost in 2019 are as follows for the Company. For Consolidated SCE&G such amounts are insignificant:



Millions of Dollars	Pension Benefits		Other Postretirement Benefits
Actuarial loss	$	0.8	—

The estimated amounts to be amortized from regulatory assets into net periodic benefit cost in 2019 are as follows:



	The Company			Consolidated SCE&G
Millions of Dollars	Pension Benefits		Other Postretirement Benefits	Pension Benefits		Other Postretirement Benefits
Actuarial loss	$	14.7	—	$	12.9	—
Prior service cost	0.3		—	0.3		—
Total	$	15.0	—	$	13.2	—

Other postretirement benefit costs are subject to annual per capita limits pursuant to the plan's design. As a result, the effect of a one-percent increase or decrease in the assumed health care cost trend rate on total service and interest cost is not significant.

401(k) Retirement Savings Plan

SCANA sponsors a defined contribution plan in which eligible employees may defer up to 75% of eligible earnings subject to certain limits and may diversify their investments. SCE&G participates in this plan. Contributions are matched 100% up to 6% of an employee’s eligible earnings. Such matching contributions made by the Company totaled $24.1 million in 2018, $27.9 million in 2017 and $27.5 million in 2016. These matching contributions included those made by Consolidated SCE&G, which totaled $19.6 million in 2018, $23.4 million in 2017 and $22.9 million in 2016. Employee deferrals, matching contributions, and earnings on all contributions are fully vested and non-forfeitable at all times.