SCANA's CEO Hosts Analyst Day Meeting Conference (Transcript)

SCANA Corporation (SCG)

Analyst Day Meeting Conference Call

June 05, 2012 08:00 am ET


Kevin Marsh - Chairman & CEO

Ric Pérez - President & COO, Westinghouse Electric Company

Rusty Harris - President & COO, PSNC

Kenny Jackson - VP, Rates & Regulatory Services

Jimmy Addison - EVP & CFO

Jeff Archie - SVP, SCANA Corporation, SVP & Chief Nuclear Officer, SCE&G

Steve Byrne - President & COO, Generation and Transmission, SCE&G & SVP, SCANA



Kevin Marsh

Great to have everybody here today; I appreciate those of you who showed up in person as well as those of you who are joining us on the webcast. We are excited about sharing our story with you today at the analyst presentation and you'll certainly have a chance to ask questions from our team when we get through.

As we get started, I want to make sure I make my attorneys happy right out of the box and I am not going to read the Safe Harbor statement. I think you've seen this before. But I need to say we may make some forward-looking statements today and if we do, we talk about the factors in the statement could have an impact on that, but I also encourage you to look at our filings with the SEC and all the information we provided you there.

I assumed my new responsibility as a CEO last December from Bill Timmerman, and I think most of you know that the transition just completed and what I tell people is I have ridden down the SCANA road with Bill and the Board for many years and late last year we pulled the SCANA breadth into the rest area and they gave me the wheel and set me and my team and back out on to the road on highway and I have to tell you that we’ve gotten on the interstate and we shifted into the fast lanes and were moving comfortably down the road. So I think we got the transition complete and we filled all of our internal positions as a result of the change that we made internally; and we weren’t required to go outside to fill those positions. We have a lot of good folks inside; I think that’s a great lot of planning to do in some forward-looking events that we knew were coming and I made sure we made that a smooth transition.

What I want to tell you today first of all is we have a plan, not just for today, but into the future. And our plan today is to share with you parts of that plan, some of the most critical components of that plan to give you a chance to ask us questions later about those. But I would say first of all that our strategic plan from a broader perspective is to talk about our mission and our vision to provide energy and related products to retail markets in the Southeast and that we are a company that's focused on working together professionally to serve our customers reliably and shareholders profitably.

More specifically, our plan is underwritten with our goal to be an industry leader in safety, system reliability, customer service, cost effective operations, competitive rates, environmental stewardship, new nuclear construction, human resources and shareholder return and that list may seem a little bit long, but our view is these attributes are essential for both our short-term and long-term success. And I am confident in our ability to deliver on our plan, because we have a strong diverse and experienced team.

Over the past few years we focused our presentations to you primarily on new nuclear activities and our related financings. And you won’t be disappointed this year; we’re also going to talk about those things.

This is my area – the focus area, I’ll kind of slip onto next slide. Okay; you are going to hear a lot from other people today. We are going to talk about nuclear activities including comments from Ric Pérez who is with us today, the President and COO of Westinghouse. And then after the break, we are going to shift gears and talk a little bit more about some of the other operations in the company. And you’ll hear from Rusty Harris who is President of PSNC Energy, our natural gas subsidiary in North Carolina. You’ll get an overview from SCANA’s Rates & Regulatory Services Group from Kenny Jackson and then we will close with comments from Jimmy Addison our CFO.

Through these presentations we plan to continue our practice of providing transparency of our operations and an effort to provide predictability of our results. So I appreciate your attention this morning and before we get into the formal presentations, we are going to start with a short video of our Success In 2011.

[Commercial Video]

Jeff Archie

Good morning. Can you hear me? Alright, sounds good. My name is Jeff Archie; I am the Chief Nuclear Officer for SCE&G. So it’s a pleasure to be in New York. I was here last year speaking to you, had a good time then and hopefully we’ll have a good time today and for the rest of the week that I plan to spend here on vacation here in New York, I like the city. So I am going to spend some extra time here.

I have worked for the company this month for 34 years. So I notice I didn't have a cake in the back for me, but 34 years this month. I started as a college intern when I was at the University of South Carolina, in Engineering Program. I have enjoyed my work at V.C. Summer; I have spent my whole career with SCE&G at the V.C. Summer plant. We lead a very, very well qualified very professional group there at V.C. Summer and Kevin made a note of the fact that we are going to talk about new nuclear, but really and truly at the end of the day we put a lot of focus on all of our nuclear business.

So I want to talk to you this morning about the existing plant. And some of the things that we are doing there, I will tell you just cliff note version is that things are going very, very good. We have been in the commercial operation since 1984. We have always done well operationally and we are continuing to do well operationally. So I will share some points with you about that.

And finally, I just want to say thank you for the team back home. We have an excellent team at V.C. Summer Unit 1. Dan Gatlin is our site Vice President at Unit 1, doing a superb job, has a very, very strong team there. So again, we enjoy what we do. I enjoy what I do and we are passionate about making sure that we are industry leaders and we are passionate about the work we do day-in and day-out. So again, a pleasure to be here with you and then we’ll go on with the presentation.

If you were here last time, you’ll remember I started talking about safety and I tell you that safety was the most important thing that we do; the number one priority for our organization and that continues; safety is our number one priority. We don’t just like to talk about it, we like to demonstrate it. Anybody can talk about things, but we like to demonstrate what we are doing and we like to demonstrate good performance, excellent performance in the safety area.

One thing that’s key for me is that the behavior set we demonstrate in safety really mimic the behaviors that we expect to see in all things that we do from a business standpoint as it relates to the operations of our plant. But we’ve done well in safety. We have a holistic view of safety. We look at industrial safety, where logical safety as well as nuclear safety, so we call it three legged stool, all parts of that are very, very important. And I am going to start off by giving you a few insights on industrial safety and how we are doing in that area.

Industrial safety, OSHA recordable injuries, those are some of the things that we track. OSHA recordable injuries, those injuries that require some medical attention perhaps assignment of prescription drugs; we have had no OSHA recordable injuries in the last year. We had one injury last year in 2011; that injury occurred in the May timeframe, so it’s been a complete 12 month, really 13 month almost period now that we’ve not had an OSHA recordable. And that’s good and that’s a big deal.

But even bigger than that, we have not had a loss time or work restricted injury since 2005. So what that says is that those injuries that may be aren’t so significant that are OSHA recordable’s we’re doing well in that area, but those injuries also that create situations where folks miss work or folks come to work and they can’t perform all the activities that they would typically perform in their job haven’t had an injury of that type since 2005. We think that’s a big deal and that is a sign to all SCE&G employees.

We have had a few relatively minor injuries with some of our contract work force. Our contract work force looks like security at our plant. We have some craft work force out of contract. So again, we have had a couple what I would call shots on goal in that area where we are working really hard to improve the performance, because we won’t have excellent performance not just with our existing employees, our permanent employees, but also excellent performance with our contract employees as well.

And speaking of no loss time or restricted work cases, we are so proud of that that we have this clock that’s placed on a prominent area in our plant where everybody has to walk past it when they come in. We call it our safe work hours’ clock and basically it accumulates all the hours that our folks are working without a loss time or restricted work case. And when we took the shot obviously you can see there, it was 8.9 million safe work hours. We have exceeded now 9 million safe work hours, so everyday is a new record for us, so we are doing excellent in that area.

We were talking just now about industrial safety; I want to talk a little bit about radiological safety. Radiological safety is also an area that gives an extreme amount of focus and oversight from us. With this chart, I just want to point out that number one, we track it. We have goals; we’ve set goals for the amount of dose that our employees are coming and contract employees, the dose that they pick up in a given year.

So we’ve set goals for that. We talk about it everyday. We have leadership meetings every morning. Sometimes, also in the afternoon and in those leadership meetings, we talk about how we’re doing in this area. We track our performance; we coach our employees on our performance. We make sure that if we have gaps in performance that we’re out being engaged and making sure we’re closing those gaps to make sure that not only we meet our goals, but then also, most importantly that we keep our employees safe from a radiological standpoint.

Our goal this year is 4.1 Rem. Last year, we actually picked up, our employees picked up 3.74 Rem; 1 Rem is 1000 mRem, so that’s 3,740 mRem and that’s kind of put that in perspective. We had approximately 1,103 employees that enter what we call the radiation control area last year and if you do an even distribution of that, 3,740 mRem across those 1,103 employees, you get about 3.5 mRem per employee. 3.5 mRem per employee is about 1% of what we normally pick up as individuals in the environment. So we normally just from natural occurrences of radiation, we normally pick up about 300 to 310 or so mRem a year and 3.4 or 3.5 Rem per employee from an occupational standpoint is outstanding.

And since we’re talking about performance, I will tell you in this area, we are the third lowest dose plant in the country, so our employees have picked up the third lowest dose of any nuclear plant anywhere in the US, so again we are very, very proud of that and we are going to continue to work on those kind of things for very large scale protection; it’s very, very important to our business also.

We are also passionate about protecting the environment, as part of our mission protecting health and safety of the public, also protect our environment. We monitor a lot in fact we are monitoring and taking samples around the site before even starting operation and we have 1,300 locations, 1,300 samples that we annually collect and analyze each year. We got about 19 locations on the site proper that we monitor and then over 40 locations off the site that we monitor and we do this on an annual basis.

We have never picked up any thing on site or offsite that exceeds NRC or EPA standards and limits, so again we are doing excellent in this area. And our program and the instruments that we use are very sensitive, obviously the tragic events in Japan last year in March and the accident there at Fukushima, we were able to pick up the radiation that was seen from that accident, we were able to pick it up on our monitor just well as the number of other plants obviously in the US were able to see that. We were able to pick up, real isotopes from the accident in Chernobyl. So again, our instrumentation is very, very sensitive and we monitor our site; we monitor the community on a continual basis.

We do things like we test livestock at the farms and locations of our neighbors around the plant. We test their gardens. We even grow our own gardens. We have a couple of gardens on site, those gardens are strategically located downwind of the site where the prevailing winds but traditionally blow but we test vegetables, make sure that we are monitoring anything that maybe a parent there and again we've never picked up anything beyond EPA or NRC levels.

So, again a very good story. We test drinking water. Any major water source that has an interface or an impact with the plant, we test that water. So Columbia, South Carolina the capital of the state is about 25 miles south of the site. We test their drinking water because their drinking water is taken out from Broad River and Broad River is near our plant site and the potentials there of any discharges that come from our plant going to the Broad River. So we test the drinking water in Columbia and we also test the drinking water there in Jenkinsville and the local community were I grew up by the way I don't think I mentioned that I grew up in the community there where the site is.

So we test the drinking water in Jenkinsville and again no issues noted. And we make sure we are being very compliant in our behaviors when we do that.

And finally, I want to talk a little bit about nuclear safety. We have talked about industrial safety, ecological safety, nuclear safety. I really think that when we talk about the nuclear industry and what contributes the most to nuclear safety is our people and making sure that we have good people, making sure that we have a strong nuclear culture in our plants and making sure that our folks are qualified.

And I guess the best indicator of how we are doing in that area is what other folks say about us. We have a lot of inspections, a lot of benchmarking trips, a lot of peer visits, folks that come to our plants to monitor what we do. And when they come to V.C. Summer they say things like V.C. Summer nurtures and sustains in environment where employees are comfortable in identifying issues to management.

Bottom line is if you tell us about issues then we can go off and we can do something about those issues. So we want our employees to be very transparent and those things that they identify letting us know what those issues are so we can out and address it.

Employees feel safe to challenge decisions. I have been challenged by our employees when they didn’t think that maybe we were headed in the right direction or maybe they heard that I was going to go off and do something or when our site V.P. was deciding to go off and implement an operational decision and they had some questions about it so they challenged those kinds of things and that’s a healthy culture. We want to see those kinds of things.

We also want to know that our leadership and our employees are very aligned. I want folks come into our plant and they talked to our employees, our employees tell them things like safety is the number one priority. Almost to a person they will hear that from our employees. Other important parts of our business that we make sure that our employees are aware of and they support us on, our employees speak to those things so when outside peers come in they know that our organization is very, very aligned and I think that contributes greatly to a strong nuclear safe culture.

And finally we want our folks to be qualified and well trained. So we do value training and not only the training that we do on our sites but we also value the training that’s done by the local colleges and universities that support our employee pipelines. We have a number of very healthy programs in the state to provide qualified employees to us. In areas like operations we have established operator training program, non-licensed operator training program at Midlands Tech College two-year institution there in Colombia, Aiken Technical College down in Aiken. It's done a tremendous job for us in producing Rad Protection Specialist. We hired a number of those folks and brought those folks into our plant.

And for Calhoun Tech has produced instrument and control technicians for us, really assisting in the mid-90s. If you go to my ISE shop today, most of my technicians there came from this program at Orangeburg-Calhoun Tech. University of South Carolina now I also want to make note of Clemson University as well. We have a lot of engineers that work at our plant from both those very fine universities. We have great partnerships there.

The University of South Carolina has a Masters program in Nuclear Engineering. So that’s been very beneficial to us from a pipeline perspective. So again, great relationships with the colleges and universities, and last but not least, South Carolina State University.

We believe diversity is important. South Carolina State University is a (inaudible) received. So it provides us a very, very good pipeline to be able to recruit and hire minority engineers to come into our workplace and they’ll contribute to our operation day in and day out. So a lot of good relationships, a lot of good partnerships and I think that is one of the key things that contributes to nuclear safety and our nuclear power plants having good qualified people and having the right culture.

Okay, we talked about safety. Also important to our business is availability and reliability. At the end of the day, you can be very, very safe that we also want to make electricity. That’s also very important. So we want to be reliable. We want to have good equipment reliability and just a couple of bullets here to demonstrate the performance that we’ve had in this area V.C. Summer set a power generation record of 8.8 million gross megawatt hours in 2010. That was again a record for us. It was very good.

Also V.C. Summer's capability factor is 91%. If you look at our performance over the last three years, we produced about on average about 90%, we produce a 100% of what we are capable of producing 90% of the time and when we you look at our history over the last three years its kind of hard to get that out initially.

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