Participation Accord
Between
South Carolina Electric & Gas Company
and the
United States Department of Energy
Regarding Climate Challenge

This Participation Accord describes the commitments that South Carolina Electric & Gas Company (SCE&G) and the U.S. Department of Energy (DOE) have made to participate in the Climate Challenge Program in pursuit of the President's goal for reducing greenhouse gas (ghg) emissions. The Climate Challenge Program is a joint, voluntary effort of DOE and the electric utility industry to reduce, avoid or sequester greenhouse gas emissions. The framework of the Climate Challenge Program was established in the Climate Challenge Program Memorandum of Understanding and exhibits thereto dated April 20, 1994 (the Climate Challenge Program MOU) (see Attachment A to this Participation Accord).

SCE&G Commitments

A. 1. Consistent with paragraph II.B.l.d of the Climate Challenge Program MOU, SCE&G will reduce its C0₂ emissions by 2.0 million tons from SCE&G's otherwise projected emissions in 2000. SCE&G's assumptions and calculations underlying this commitment are described in Attachment B.

In order to achieve the commitments), SCE&G:

a) will continue to operate and evaluate the following demand side management (DSM) technologies to reduce generation requirements by a net amount of 1,630,000 megawatthours by the year 2000, equivalent to 1,585,000 tons of C0₂annual reductions. Our DSM programs are described as follows:

i. Rate 1 - discounted residential rate for Good Cents homes.

ii. Rate 6 - discounted residential rate for homes that meet specific energy efficiency standards but do not qualify for Rate 1.

iii. Home Energy Check - program to provide residential energy audits and encourage efficiency upgrades.

iv. High Efficiency Heat Pumps - program to encourage the installation of high efficiency heat pumps.

v. Fluorescent Ballasts - program to encourage the installation of electronic ballasts.

vi. High Efficiency Motors program to encourage the installation of high efficiency motors.

vii. Variable Speed Drives - program to encourage the installation of variable speed drives.

viii. Commercial HVAC - program to encourage the installation of high efficiency HVAC equipment in the non-residential market.

ix.  Standby Generators - program to encourage customers to contract the capacity available on their generators to the utility.

x. Interruptible - program to encourage customers to allow blocks of  their load to be interrupted.

xi. High Efficiency Chillers - program to encourage the installation of high efficiency chillers.

xii. High Efficiency Lighting - program to encourage the installation of high efficiency lighting products.

xiii. Thermal Storage - program to encourage the use of thermal energy storage technology.

xiv. Replacement Water Heaters - program to promote the replacement of old, inefficient electric water heaters with new water heaters.

xv. Rate 5 - residential rate encouraging customer to shift load to off-peak times.

xvi. Rates 1 6, 21, and 24 - non-residential rates designed to encourage customers to shift load off-peak times.

xvii. Real Time Pricing - non-residential rate designed to encourage customers to discontinue usage during specific times.

xviii. Electrotechnologies - program to promote the use of high efficiency electric technologies to replace 2 other fuels, chemicals, and physical or chemical processes.

xviii.  Fuel Switching - program to encourage the use of natural gas over liquid hydrocarbons.

b. upgraded in 1994 its Summer Nuclear Power Station by increasing gross power from 943 MW to 990 MW. Two thirds of the Summer Station is owned by SCE&G, therefore, the 31.3 MW [(990-943) (D.6667)] increase at a 90% capacity factor (the approximate amount of average capacity factor considering outage and non-outage years) equates to a replacement annually of approximately 247,000 megawatt-hours of fossil-fired generation, equivalent to a reduction of 241,000 tons annually of C0₂.

c. has and will plant according to the Company's forest management plan, a minimum of 1 00,000 to 225,000 tree seedlings annually beginning in 1993 and will continue to manage the 6,000,000 trees already planted on company timberlands situated generally near or adjacent to its fossil and hydro electric generating plants. This timberland will be managed for forest sustainability using sound conservation practices so long as these corporate land holdings are under the company's ownership.

d. has completed and will research additional efficiency improvements in its Fossil Plants.

i. Coal-fired Wateree Station heat rate improvements, completed in 1991, will result in a reduction in C02 emissions of 28,480 tons annually.

ii. Improvements in 1991 in the coal-fired Williams Station low pressure turbine resulting in a reduction of C02 emissions of 46,000 tons annually.

iii. Several other projects that improve plant efficiencies that have been completed include: Urquhart igniter additions, Urquhart soot blower upgrade, Canadys vacuum pumps, Canadys Unit #3 condenser upgrade, Canadys soot blower upgrade on all units, McMeekin variable speed drive on the ID fans on both units. Williams cooling tower upgrade, Williams controls upgrade, Williams- soot blower upgrade, and the Williams burner tilt drives. Future efficiency projects to be completed by 2000 include a new high pressure rotor and condenser retubing at Williams Station.

e) evaluate a program to increase fly ash use in cement manufacturing. Carbon dioxide is a byproduct of the calcination process and is also emitted from the combustion of fossil fuels used to create heat to drive the process. For each ton ' of fly ash used to replace cement, .95 tons of carbon dioxide are not created because the calcination and combustion processes have been avoided. If this program is successful, a reduction of 241,000 tons per year in carbon dioxide emissions will be realized due to increased utilization of the fly ash.

2. Consistent with paragraph II.B.l.f of the Climate Challenge Program MOU, above and beyond SCE&G's emissions commitment, SCE&G will now contribute to the following initiatives:

a. "Trees Please," a tree seedling giveaway program -- SCE&G has given and will continue to give away thousands of seedlings annually in this program, which encourages their planting in support of C02 sequestration. This program has the additional benefit of providing public awareness about sequestration.

b. "Project Share," a program that helps low income families pay energy bills and makes homes more energy efficient. SCE&G's stockholders, employees, retirees and customers have contributed, and barring adverse public policy changes, will continue to contribute approximately $550,000 annually to this program which is administered by the Governor's Office of South Carolina. Of the $550,000 of total contributions, $175,000 is used to improve the energy efficiency of individual residences.

c. A joint research partnership exists between SCE&G, Clemson University Department of Forestry and the National Audubon Society on the management of a black water river bottomland hardwood forest. SCE&G already has contributed in excess of $30,000 during 1995 and 1996 toward this research project and has budgeted $10,000 per year for the next two years for graduate research. The Company also has furnished manpower necessary to continue this joint effort. The goal of this project is to explore new sylvicultural prescriptions that can improve and offer alternatives to conventional methods of harvesting timber on these wetland forest sites. Since the organic content of forest soils is critical to carbon storage, this research is especially important in achieving long-term carbon sequestration on these type forest lands while at the same time promoting forest sustainability.

d. The reclamation of a 90-acre borrow site (used historically to "borrow" existing soil material to be used elsewhere) situated upstream and adjacent to the Biedler Forest Four Hole Swamp Reserve located near Holly Hill, South Carolina will prevent further stream siltation and enhance both the wetlands and adjacent uplands acreage with emphasis on improving this site's carbon sequestration, water quality and endangered species habitat. This project is a cooperative effort with the National Audubon Society.

3. Consistent with paragraph II.B.l.f of the Climate Challenge Program MOU, SCE&G

a. is and will continue participating in the Utility Forest and Carbon Management Program (UFCMP). SCE&G has contributed $5,000 and plans to continue as a member in good standing for UFCMP.

b. has sponsored UtiliTree Carbon Company in the amount of $ 1 0,000 for 1 996 and will evaluate on a year-to-year basis its continued support or additional participation.

B. SCE&G will report annually on activities and achievements under the Climate Challenge Program. Results achieved during each year shall be reported in a clear and understandable manner that is consistent with the guidelines adopted pursuant to subsection 1 605(b) Energy Policy Act and the Climate Challenge accounting protocols in Exhibit B of the Climate Challenge Program MOU. The first such report may include a description of the activities and achievements of SCE&G prior to its becoming a participant in the Program, expressed on an annual basis to the extent possible.

C. SCE&G will confer with DOE on or before December 31, 1998 to evaluate jointly the progress of SCE&G in achieving its Climate Challenge Program goals and to discuss possible adjustments to its voluntary commitments.

D. The Climate Challenge Program representative for SCE&G will be J.W. Preston, Jr., SCE&G, Mail Code 175, Columbia, South Carolina 29218 at telephone 803-748-3849. SCE&G agrees to notify DOE prior to or, in any event, no later than 30 days after any change in liaison responsibilities or personnel.

DOE Commitments

A. DOE's commitments to SCE&G are those set out in section III of the Climate Challenge Program MOU, which are hereby incorporated in this Participation Accord by reference.

B. DOE will consider SCE&G requests to intervene in regulatory proceedings of federal, state and local commissions and boards on issues pertinent to the Climate Challenge Program. Before DOE intervenes in regulatory and other proceedings pertaining to SCE&G for purposes of addressing Climate Challenge Program issues, it will provide notice to SCE&G.

C. DOE will provide a periodic report to SCE&G describing the actions that it has taken to fulfill its commitments under section III and Exhibit C of the Climate Challenge Program MOU and the results of those actions.

D. The Climate Challenge Program representative for DOE, who will serve as liaison to SCE&G, will be Larry Mansueti, Director, Climate Challenge Program, Office of Utility Technologies (EE-10), U.S. Department of Energy, 1000 Independence Ave., SW, Washington, DC 20585, 202586-2588. DOE agrees to notify SCE&G prior to or, in any event, no later than 30 days after any change in liaison responsibilities or personnel.

General Provision

A. Use of DOE-developed material by SCE&G will be governed by the provisions of section IV of the Climate Challenge Program MOU, which are hereby incorporated in this Participation Accord by reference.

B. In addition to the foregoing provisions, DOE and SCE&G agree to act in accordance with the principles set out in section I of the Climate Challenge Program MOU and the general provisions set out in subsections V.A.-V.D., V.F. and V.G. of the Climate Challenge Program MOU, which are hereby incorporated by reference.

C. Either party may withdraw from this Participation Accord or any of its activities under the Climate Challenge Program without penalty and without being subject to remedies at law or equity.

SOUTH CAROLINA ELECTRIC & GAS COMPANY

By:

John L. Skolds
President and Chief Operating Officer

Date:

Federico Pena, Secretary
United States Department of Energy

Date:

This attachment describes the reference case for defining the commitment of South Carolina Electric and Gas Company ("SCE&G" or "the Company") to reduce C0₂ emissions.. As outlined in the Company's Accord, but for the programs described, C0₂ emissions are projected to have been more than two million tons higher in 2000 than they are now projected to be. This reduction, an avoidance of C0₂ emissions, was determined as set forth below.

1) SCE&G emitted approximately 11.4 million tons of C0₂ in 1990, the baseline year. This estimate is based upon Company fuel consumption data for that year to which was applied the DOE-approved emission factors. If the Company relied upon the same mix of generation resources in 2000 to meet projected load (without taking demand side management programs into account) annual emissions in that year would be approximately 17.2 million tons. As a result of the activities described in the Accord, C02 emissions now are projected to be approximately 15.2 million tons in 2000.

2) The Company calculated the amount of fossil generation avoided as a result of the programs undertaken and expressed the avoided generation in megawatt-hours. As outlined in the Accord, the actions include, among others, demand side management programs, nuclear power upgrades, and fossil plant efficiency projects. The generation avoided is fossil generation in keeping with expected generation dispatch patterns.

Pursuant to the Climate Challenge Memorandum of Understanding, for purposes of these commitments, "reduce" means reduce, avoid or sequester greenhouse gas emissions such as C0₂.

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Please send comments to:
Lawrence.Mansueti@hq.doe.gov