UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q


              (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                      For the Quarter Ended March 31, 1999 

                                       OR

              ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                       For the Transition Period from to 

Commission            Registrant, State of Incorporation,       I.R.S. Employer
File Number             Address  and  Telephone Number        Identification No.


1-8809                SCANA Corporation                             57-0784499
                      (A South Carolina Corporation)
                      1426 Main Street
                      Columbia, South Carolina  29201
                      (803)  217-9000

1-3375                South Carolina Electric & Gas Company         57-0248695
                      (A South Carolina Corporation)
                      1426 Main Street
                      Columbia, South Carolina  29201
                      (803)  217-9000

         Indicate  by check mark  whether  the  registrants:  (1) have filed all
reports  required to be filed by Section 13 or 15(d) of the Securities  Exchange
Act of 1934 during the preceding 12 months (or for such shorter  period that the
registrants  were required to file such  reports),  and (2) have been subject to
such filing requirements for the past 90 days. Yes X No

                            Description of              Shares Outstanding
Registrant                   Common Stock               at April 30, 1999

 SCANA Corporation         Without Par Value                103,572,623

South Carolina Electric   Par Value $4.50 Per Share          40,296,147 1
  & Gas Company

1Held,  beneficially and of record, by SCANA Corporation.

         This combined Form 10-Q is separately  filed by SCANA  Corporation  and
South Carolina Electric & Gas Company.  Information contained herein relating to
SCANA Corporation or any of its direct or indirect subsidiaries other than South
Carolina  Electric & Gas Company is  provided  solely by SCANA  Corporation  and
shall be deemed not included in the Form 10-Q of South  Carolina  Electric & Gas
Company.




<PAGE>



                                      INDEX

                                                                         Page
PART 1.  FINANCIAL INFORMATION

SCANA Corporation Financial Section.....................................  3

Item 1.  Financial Statements

         Consolidated Balance Sheets as of March 31, 1999 and 
           December 31, 1998 ...........................................  4

         Consolidated Statements of Income and Retained Earnings for 
           the Periods Ended March 31, 1999 and 1998....................  6

         Consolidated Statements of Cash Flows for the Periods Ended
           March 31, 1999 and 1998......................................  7

         Notes to Consolidated Financial Statements.....................  8

Item 2.  Management's Discussion and Analysis of Financial Condition and 
         Results of Operations.......................................... 13

Item 3.  Quantitative and Qualitative Disclosure About Market Risk...... 21

South Carolina Electric & Gas Company Financial Section................. 22

Item 1.  Financial Statements

         Consolidated Balance Sheets as of March 31, 1999 and
           December 31, 1998 ........................................... 23

         Consolidated Statements of Income and Retained Earnings for
           the Periods Ended March 31, 1999 and 1998.................... 25

         Consolidated Statements of Cash Flows for the Periods Ended 
           March 31, 1999 and 1998...................................... 26

         Notes to Consolidated Financial Statements..................... 27

Item 2.  Management's Discussion and Analysis of Financial Condition and 
          Results of Operations......................................... 30

Item 3.  Quantitative and Qualitative Disclosure About Market Risk...... 35


PART II.  OTHER INFORMATION

    Item 1.  Legal Proceedings.......................................... 36

    Item 6.  Exhibits and Reports on Form 8-K........................... 36

    Signatures.......................................................... 37

    Exhibit Index....................................................... 39






2


<PAGE>





















                                SCANA CORPORATION
                                FINANCIAL SECTION


























3

                          PART I. FINANCIAL INFORMATION


Item 1.  Financial Statements.


<TABLE>

<CAPTION>
                                SCANA CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                   As of March 31, 1999 and December 31, 1998

<S>                                                                   <C>            <C> 



                                                                       March 31,   December 31,
----------------------------------------------------------------------------- ------ ---------
                                                                          1999      1998
---------------------------------------------------------------------------- ------ ----------
ASSETS                                                                (Millions of Dollars)
Utility Plant:
    Electric                                                          $4,408       $4,406
    Gas                                                                  604          604
    Other                                                                175          175
----------------------------------------------------------------------------- ----------------
        Total                                                          5,187        5,185
    Less accumulated depreciation and amortization                     1,765        1,728
----------------------------------------------------------------------------- ----------------
        Total                                                          3,422        3,457
    Construction work in progress                                        296          251
    Nuclear fuel, net of accumulated amortization                         56           56
    Acquisition adjustment-gas, net of accumulated amortization           23           23
----------------------------------------------------------------------------- ----------------
            Utility Plant, Net                                         3,797        3,787
----------------------------------------------------------------------------- ----------------

Nonutility Property and Investments (net of  accumulated
     depreciation)                                                       531          493
----------------------------------------------------------------------------- ----------------

Current Assets:
    Cash and temporary cash investments                                   71           62
    Receivables                                                          265          276
    Inventories (at average cost):
        Fuel                                                              69           63
        Materials and supplies                                            60           56
    Prepayments                                                           28           22
    Deferred income taxes                                                 20           22
----------------------------------------------------------------------------- ------- --------
            Total Current Assets                                         513          501
----------------------------------------------------------------------------- ----------------

Deferred Debits:
    Emission allowances                                                   31           31
    Environmental                                                         22           22
    Nuclear plant decommissioning fund                                    58           56
    Pension asset, net                                                   121          115
    Other                                                                270          276
----------------------------------------------------------------------------- ----------------
            Total Deferred Debits                                        502          500
----------------------------------------------------------------------------- ----------------
                Total                                                 $5,343        $5,281
============================================================================= ================





4

<PAGE>



                                SCANA CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                   As of March 31, 1999 and December 31, 1998
                                   (Unaudited)


                                                                   March 31,      December 31,
------------------------------------------------------------------------------- --------------------
                                                                    1999            1998
------------------------------------------------------------------------------- --------------------
CAPITALIZATION AND LIABILITIES 
(Millions of Dollars) 
Stockholders' Investment:
<S>                                                                 <C>             <C>   
    Common Equity                                                   $1,762          $1,746
    Preferred stock (not subject to purchase or sinking funds)         106             106
---------------------------------------------------------------------------------- -----------------
        Total Stockholders' Investment                               1,868           1,852
Preferred Stock, Net (subject to purchase or sinking funds)             11              11
SCE&G-Obligated   Mandatorily   Redeemable   Preferred  
    Securities  of  SCE&G's Subsidiary Trust, SCE&G Trust I,
    Holding solely $50 million principal amount of the 7.55%
    Junior Subordinated Debentures of SCE&G, due 2027                   50              50
Long-Term Debt, net                                                  1,736           1,623
---------------------------------------------------------------------------------- -----------------
          Total Capitalization                                       3,665           3,536
---------------------------------------------------------------------------------- -----------------

Current Liabilities:
    Short-term borrowings                                              174             195
    Current portion of long-term debt                                  107             107
    Accounts payable                                                   196             219
    Customer deposits                                                   18              18
    Taxes accrued                                                       12              72
    Interest accrued                                                    39              28
    Dividends declared                                                  42              42
    Other                                                               14              13
---------------------------------------------------------------------------------- -----------------
          Total Current Liabilities                                    602             694
---------------------------------------------------------------------------------- -----------------

Deferred Credits:
    Deferred income taxes                                              661             628
    Deferred investment tax credits                                    106             108
    Reserve for nuclear plant decommissioning                           58              56
    Postretirement benefits                                             90              87
    Other                                                              161             172
---------------------------------------------------------------------------------- -----------------
          Total Deferred Credits                                     1,076           1,051
---------------------------------------------------------------------------------- -----------------
                Total                                               $5,343          $5,281
================================================================================== =================

See Notes to Consolidated Financial Statements.





5



<PAGE>


                                SCANA CORPORATION
             CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
                  For the Periods Ended March 31, 1999 and 1998
                                   (Unaudited)

                                                                       Three Months Ended
                                                                            March 31,
-------------------------------------------------------------------------------- -------------
                                                                        1999         1998
-------------------------------------------------------------------------------- -------------
                                                                      (Millions of Dollars
                                                                    Except Per Share Amounts)
OPERATING REVENUES:
<S>                                                                    <C>          <C>  
    Electric                                                           $ 266        $ 269
    Gas                                                                  130          137
    Transit                                                                1            -
-------------------------------------------------------------------------------- -------------
        Total Operating Revenues                                         397          406
-------------------------------------------------------------------------------- -------------
Operating Expenses:
    Fuel used in electric generation                                      61           59
    Purchased power                                                        4            2
    Gas purchased for resale                                              81           83
    Other operation                                                       58           60
    Maintenance                                                           18           19
    Depreciation and amortization                                         42           30
    Income taxes                                                          28           36
    Other taxes                                                           27           26
-------------------------------------------------------------------------------- -------------
        Total Operating Expenses                                         319          315
-------------------------------------------------------------------------------- -------------

OPERATING INCOME                                                          78           91
-------------------------------------------------------------------------------- -------------

OTHER INCOME:
Allowance for equity funds used during construction                        1            2
Other income (loss), net of income taxes                                  (5)           3
-------------------------------------------------------------------------------- -------------
        Total Other Income (Loss)                                         (4)           5
-------------------------------------------------------------------------------- -------------

INCOME BEFORE INTEREST CHARGES AND PREFERRED STOCK DIVIDENDS              74            96
-------------------------------------------------------------------------------- -------------

INTEREST CHARGES (CREDITS):
    Interest expense on long-term debt                                    31            29
    Other interest expense                                                 4             2
    Allowance for borrowed funds used during construction                 (1)           (2)
-------------------------------------------------------------------------------- -------------
        Total Interest Charges, Net                                       34            29
-------------------------------------------------------------------------------- -------------

INCOME BEFORE PREFERRED DIVIDEND REQUIREMENTS
    ON MANDATORILY REDEEMABLE PREFERRED SECURITIES                        40            67
PREFERRED DIVIDEND REQUIREMENT OF SCE&G - OBLIGATED MANDATORILY
    REDEEMABLE PREFERRED SECURITIES                                        1             1
-------------------------------------------------------------------------------- -------------
INCOME BEFORE PREFERRED STOCK CASH DIVIDENDS OF SUBSIDIARY                39            66
PREFERRED STOCK CASH DIVIDENDS OF SUBSIDIARY (At stated rates)             2             2
-------------------------------------------------------------------------------- -------------
NET INCOME                                                                37            64
RETAINED EARNINGS AT BEGINNING OF PERIOD                                 678           617
COMMON STOCK CASH DIVIDENDS DECLARED                                     (40)          (41)
================================================================================ =============
RETAINED EARNINGS AT END OF PERIOD                                     $ 675         $ 640
================================================================================ =============

NET INCOME                                                              $ 37          $ 64
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING (MILLIONS)        103.6         107.3
EARNINGS PER WEIGHTED AVERAGE SHARE OF COMMON STOCK  (BASIC AND
   DILUTED)                                                            $ .36         $ .60
CASH DIVIDENDS DECLARED PER SHARE OF COMMON STOCK                      $.385         $.385
================================================================================ =============

See Notes to Consolidated Financial Statements.

 6

</TABLE>

<PAGE>


                                SCANA CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  For the Periods Ended March 31, 1999 and 1998
                                   (Unaudited)

                                                             Three Months Ended
                                                                   March 31,
--------------------------------------------------------------------------------
                                                                 1999    1998
---------------------------------------------------------------------- ---------

                              (Millions of Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                      $37     $ 64
  Adjustments to reconcile net income to net cash provided 
    from operating activities:
      Depreciation and amortization                                44       32
      Amortization of nuclear fuel                                  5        5
      Deferred income taxes, net                                    3       23
      Pension asset                                                (6)      (1)
      Post-retirement benefits                                      3        3
      Allowance for funds used during construction                 (3)      (4)
      Over (under) collections, fuel adjustment clauses             9       16
      Changes in certain current assets and liabilities:
          (Increase) decrease in receivables                       11      (10)
          (Increase) decrease in inventories                      (10)       4
          Increase (decrease) in accounts payable                 (23)      15
          Increase (decrease) in taxes accrued                    (60)     (34)
      Other, net                                                   11      (17)
--------------------------------------------------------------------------------
Net Cash Provided From Operating Activities                        21       96
--------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Utility property additions and construction expenditures,
    net of AFC                                                    (50)     (51)
  Increase in other property and investments                      (13)      (7)
  Sale of subsidiary assets                                         3        -
--------------------------------------------------------------------------------
Net Cash Used For Investing Activities                            (60)     (58)
--------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds:
      Issuance of  First Mortgage Bonds                            99        -
      Issuance of notes and loans                                   -       60
  Repayments:
      Notes and loans                                               -      (60)
      Other long-term debt                                         (1)       -
      Repurchase of common stock                                    -       (3)
  Dividend payments:                                                    
      Common stock                                                (40)     (40)
      Preferred stock of subsidiary                                (2)      (2)
  Short-term borrowings, net                                      (21)      (1)
  Fuel and emission allowance financings, net                      13       (2)
--------------------------------------------------------------------------------
Net Cash Provided From (Used For) Financing Activities             48      (48)
--------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS      9      (10)
CASH AND TEMPORARY CASH INVESTMENTS AT JANUARY 1                   62       60
--------------------------------------------------------------------------------
CASH AND TEMPORARY CASH INVESTMENTS AT MARCH 31                   $71     $ 50
================================================================================

SUPPLEMENTAL CASH FLOW INFORMATION:
    Cash paid for - Interest (includes capitalized interest 
                      of $1 for 1999 and  $2 for 1998)            $24     $ 24
                           - Income taxes                           5       (3)
    Noncash investing activities
                           - Unrealized gain  on securities
                               available for sale (net of          18       31
tax)

See Notes to Consolidated Financial Statements.

 7


<PAGE>


                                SCANA CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 1999
                                   (Unaudited)

         The  following  notes should be read in  conjunction  with the Notes to
Consolidated Financial Statements appearing in SCANA Corporation's (the Company)
Annual  Report on Form 10-K for the year  ended  December  31,  1998.  These are
interim  financial  statements,  and the amounts  reported  in the  Consolidated
Statements of Income are not necessarily  indicative of amounts expected for the
year. In the opinion of management,  the information  furnished  herein reflects
all adjustments, all of a normal recurring nature except as described in Note 2,
which are necessary for a fair statement of the results for the interim  periods
reported.

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

        A.  Basis of Accounting

        The Company accounts for its regulated  utility  operations,  assets and
        liabilities in accordance  with the provisions of Statement of Financial
        Accounting  Standards No. 71 (SFAS 71). The accounting standard requires
        cost-based  rate-regulated  utilities to  recognize  in their  financial
        statements  revenues  and  expenses in  different  time  periods than do
        enterprises  that are not  rate-regulated.  As a result the  Company has
        recorded,  as of March 31,  1999,  approximately  $203  million  and $75
        million of regulatory  assets and liabilities,  respectively,  including
        amounts  recorded  for  deferred  income tax assets and  liabilities  of
        approximately $130 million and $56 million,  respectively.  The electric
        and gas  regulatory  assets  (excluding  deferred  income tax assets) of
        approximately  $43  million  and $27  million,  respectively,  are being
        recovered  through  rates,  and the Public  Service  Commission of South
        Carolina (PSC) has approved  accelerated  recovery of approximately  $12
        million of the electric regulatory assets. In the future, as a result of
        deregulation or other changes in the regulatory environment, the Company
        may no longer meet the criteria for continued application of SFAS 71 and
        could be required to write off its  regulatory  assets and  liabilities.
        Such an event  could have a  material  adverse  effect on the  Company's
        results of operations in the period that a write-off  would be required,
        but it is not expected  that cash flows or financial  position  would be
        materially affected.

        B.  Comprehensive Income

        Comprehensive income includes net income and all other changes in equity
        except  those  resulting  from  investments  by  and   distributions  to
        stockholders.  Comprehensive  income of the Company  totaled $56 million
        and $95  million  for the three  months  ended  March 31, 1999 and 1998,
        respectively.  For each period, comprehensive income included net income
        and unrealized gains/losses on securities available for sale.

        C.  Reclassifications

        Certain  amounts from prior  periods have been  reclassified  to conform
with the 1999 presentation.

2.      RATE MATTERS

         On December 11, 1998, the PSC issued an order  requiring South Carolina
        Electric  & Gas  Company  (SCE&G),  a  wholly  owned  subsidiary  of the
        Company, to reduce retail electric rates on a prospective basis. The PSC
        acted in  response  to SCE&G  reporting  that it earned a 13.04  percent
        return on common  equity  for its  retail  electric  operations  for the
        twelve  months ended  September  30, 1998.  This return on common equity
        exceeded SCE&G's  authorized return of 12.0 percent by 1.04 percent,  or
        $22.7 million,  primarily as a result of record heat experienced  during
        the summer.  The order  required  prospective  rate  reductions on a per
        kilowatt-hour  basis, based on actual retail sales for the twelve months
        ended September 30, 1998. This action will reduce future reported return
        on common equity to the  PSC-authorized  level if SCE&G  experiences the
        same  weather  effect and other  business  results as that of the twelve
        months ended  September  30, 1998.  On December 21, 1998,  SCE&G filed a
        motion for  reconsideration  with the PSC. On January 12, 1999,  the PSC
        denied SCE&G's motion for  reconsideration and reaffirmed SCE&G's return
        on equity of 12.0 percent.  The rate  reductions were placed into effect
        with the first billing cycle of January 1999.

8

3.      RETAINED EARNINGS:

        The Restated  Articles of  Incorporation of the Company do not limit the
        dividends that may be payable on its common stock. However, the Restated
        Articles of  Incorporation  of SCE&G and the  Indenture  underlying  its
        First and  Refunding  Mortgage  Bonds  contain  provisions  that,  under
        certain circumstances,  could limit the payment of cash dividends on its
        common stock. In addition,  with respect to hydroelectric  projects, the
        Federal  Power Act  requires the  appropriation  of a portion of certain
        earnings  therefrom.  At March 31, 1999  approximately  $26.0 million of
        retained  earnings were restricted by this  requirement as to payment of
        cash dividends on SCE&G's common stock.

4.      INVESTMENTS IN EQUITY SECURITIES:

     At March 31, 1999,  SCANA  Communications,  Inc.  (SCI) held the  following
investments in ITC Holding Company, Inc.(ITC) and its affiliates:



     o    Powertel,  Inc.  (Powertel) is a publicly traded company that owns and
          operates  personal  communications  services  (PCS) systems in several
          major Southeastern  markets. SCI owns approximately 4.7 million common
          shares of Powertel.  SCI's  investment in Powertel's  common shares of
          approximately  $69.2  million had a market  value of $67.1  million at
          March 31, 1999, resulting in a pre-tax unrealized holding loss of $2.1
          million.  The after-tax amount of such loss is included in the balance
          sheet as a component  of "Common  Equity." In  addition,  SCI owns the
          following non-voting  convertible preferred shares, at the approximate
          cost noted:  100,000  shares series B ($75.1  million);  50,000 shares
          series D ($22.5  million);  and, 50,000 series E 6.5% ($75.0 million).
          Preferred  series  B  shares  are  convertible  in  March  2002  at  a
          conversion  price of $16.50  per  common  share or  approximately  4.5
          million common shares.  Preferred  series D shares are  convertible in
          March  2002 at a  conversion  price  of  $12.75  per  common  share or
          approximately 1.7 million common shares. Preferred series E shares are
          convertible  in June 2003 at a  conversion  price of $22.01 per common
          share or approximately 3.4 million common shares.  The market value of
          the   convertible   preferred   shares  of  Powertel  is  not  readily
          determinable.  However,  on an as converted basis, the market value of
          the   underlying   common   shares  for  the   preferred   shares  was
          approximately  $138.5  million  at March  31,  1999,  resulting  in an
          unrecorded pre-tax holding loss of $34.1 million.


     o    ITC  Delta^Com,  Inc.  (ITCD)  is  a  fiber  optic  telecommunications
          provider.  SCI owns  approximately  4.1 million common shares of ITCD.
          SCI's  investment  in  ITCD's  common  shares of  approximately  $16.2
          million  had a market  value  of $88.4  million  at  March  31,  1999,
          resulting in a pre-tax unrealized  holding gain of $72.2 million.  The
          after-tax  amount of such gain is included  in the balance  sheet as a
          component of "Common  Equity." In addition,  SCI owns 1,480,771 shares
          of series A preferred stock of ITCD at a cost of  approximately  $11.3
          million.  Series A preferred shares are convertible in March 2002 into
          ITCD common shares on a two for one basis.  The market value of series
          A preferred stock of ITCD is not readily determinable.  However, on an
          as converted basis the market value of the underlying common stock for
          the series A preferred stock was approximately  $64.6 million at March
          31, 1999,  resulting in an  unrecorded  pre-tax  holding gain of $53.3
          million.

     o    Knology Holdings,  Inc.  (Knology) is a broad-band service provider of
          cable,  television,  telephone and internet services.  SCI owns 71,050
          units of Knology.  Each unit consists of one 11.875%  Senior  Discount
          Note due 2007 and one warrant entitling the holder to purchase .003734
          shares of preferred stock of Knology.  The cost of this investment was
          approximately  $40 million.  SCI also owns an additional  753 warrants
          which entitles it to purchase 753 shares of preferred  stock at $1,500
          per share.
9


<PAGE>



o            ITC   has   an   ownership   interest   in   several   Southeastern
             communications companies. SCI owns approximately 3.1 million common
             shares,  645,153 series A convertible preferred shares, and 133,664
             series B convertible  preferred  shares of ITC.  These  investments
             cost  approximately $7.1 million,  $8.9 million,  and $5.0 million,
             respectively.   Series  A  and  series  B   preferred   shares  are
             convertible  in March 2002 into ITC common  shares at a  conversion
             price of $13.45 and $43.56, respectively,  on a four for one basis.
             The market value of these investments is not readily determinable.

5.      CONTINGENCIES:

        With respect to commitments at March 31, 1999, reference is made to Note
        10 of  Notes  to  Consolidated  Financial  Statements  appearing  in the
        Company's  Annual  Report on Form 10-K for the year ended  December  31,
        1998.
        Contingencies at March 31, 1999 are as follows:

        A.  Nuclear Insurance

        The  Price-Anderson   Indemnification   Act,  which  deals  with  public
        liability for a nuclear  incident,  currently  establishes the liability
        limit for third-party  claims  associated  with any nuclear  incident at
        $9.7 billion.  Each reactor licensee is currently liable for up to $88.1
        million per reactor  owned for each  nuclear  incident  occurring at any
        reactor in the United States,  provided that not more than $10.0 million
        of the liability per reactor would be assessed per year. SCE&G's maximum
        assessment,  based on its  two-thirds  ownership of V. C. Summer Nuclear
        Station  (Summer  Station),  would be  approximately  $58.7  million per
        incident, but not more than $6.7 million per year.

        SCE&G currently  maintains  policies (for itself and on behalf of Santee
        Cooper)  with Nuclear  Electric  Insurance  Limited  (NEIL) and American
        Nuclear Insurers (ANI) providing  combined property and  decontamination
        insurance  coverage of $2.0  billion  for any losses at Summer  Station.
        SCE&G  pays  annual  premiums  and,  in  addition,  could be  assessed a
        retroactive  premium not to exceed five times its annual  premium in the
        event of property damage loss to any nuclear generating facility covered
        under  the NEIL  program.  Based on the  current  annual  premium,  this
        retroactive premium assessment would not exceed $6.1 million.

        To   the   extent   that   insurable   claims   for   property   damage,
        decontamination,  repair and  replacement  and other costs and  expenses
        arising  from a nuclear  incident  at Summer  Station  exceed the policy
        limits of insurance, or to the extent such insurance becomes unavailable
        in the future,  and to the extent that  SCE&G's  rates would not recover
        the cost of any purchased  replacement power, SCE&G will retain the risk
        of loss as a  self-insurer.  SCE&G has no reason to anticipate a serious
        nuclear  incident at Summer Station.  If such an incident were to occur,
        it could  have a material  adverse  impact on the  Company's  results of
        operations, cash flows and financial position.

        B.  Environmental

        The  Company has an  environmental  assessment  program to identify  and
        assess   current  and  former   operations   sites  that  could  require
        environmental cleanup. As site assessments are initiated,  estimates are
        made of the  expenditures,  if any, deemed  necessary to investigate and
        clean  up  each  site.   These   estimates  are  refined  as  additional
        information  becomes  available;  therefore,  actual  expenditures could
        differ significantly from the original estimates.  Amounts estimated and
        accrued to date for site  assessments  and cleanup  relate  primarily to
        regulated  operations.  Such  amounts are deferred  and  amortized  with
        recovery provided through rates. The Company has also recovered portions
        of  its  environmental  liabilities  through  settlements  with  various
        insurance  carriers.  The Company has recovered  all amounts  previously
        deferred for its electric operations. The Company expects to recover all
        deferred  amounts  related  to its  gas  operations  by  December  2002.
        Deferred  amounts,  net of amounts recovered through rates and insurance
        settlements,  totaled  $20.8  million at March 31,  1999.  The  deferral
        includes the estimated costs associated with the following matters .


10

<PAGE>



     o    In September 1992, the Environmental  Protection Agency (EPA) notified
          SCE&G, the City of Charleston and the Charleston  Housing Authority of
          their  potential  liability for the  investigation  and cleanup of the
          Calhoun  Park  area  site in  Charleston,  South  Carolina.  This site
          encompasses  approximately 30 acres and includes properties which were
          locations  for  industrial  operations,  including  a wood  preserving
          (creosote)  plant,  one of  SCE&G's  decommissioned  manufactured  gas
          plants,  properties owned by the National Park Service and the City of
          Charleston,  and private  properties.  The site has not been placed on
          the  National  Priorities  List,  but may be added in the future.  The
          Potentially    Responsible   Parties   (PRPs)   have   negotiated   an
          administrative  order  by  consent  for  the  conduct  of  a  Remedial
          Investigation/Feasibility  Study  and a  corresponding  Scope of Work.
          Field work began in  November  1993,  and the EPA  approved a Remedial
          Investigation  Report in February 1997 and a Feasibility  Study Report
          in June 1998. In July 1998,  the EPA approved  SCE&G's  Removal Action
          Work  Plan for  soil  excavation.  SCE&G  completed  Phase  One of the
          Removal Action in 1998 at a cost of approximately $1.5 million.  Phase
          Two will include  excavation  and  installation  of several  permanent
          barriers to  mitigate  coal tar  seepage.  Phase Two began in November
          1998, and is expected to cost approximately $2.2 million. On September
          30, 1998 a Record of Decision  was issued  which sets forth EPA's view
          of the extent of each PRP's  responsibility for site contamination and
          the level to which the site must be  remediated.  On January  13, 1999
          the EPA issued a Unilateral  Administrative  Order for Remedial Design
          and Remedial Action  directing SCE&G to design and carry out a plan of
          remediation for the Calhoun Park site. The Order is temporarily stayed
          pending further negotiations between SCE&G and the EPA.



          In October 1996 the City of   Charleston   and  SCE&G   settled  all
          environmental claims the City may have had against SCE&G involving the
          Calhoun  Park  area for a  payment  of $26  million  over  four  years
          (1996-1999)  by SCE&G to the City.  SCE&G is recovering  the amount of
          the  settlement,  which does not encompass site assessment and cleanup
          costs,  through rates in the same manner as other amounts  accrued for
          site  assessments  and  cleanup  as  discussed  above.  As part of the
          environmental settlement, SCE&G has agreed to construct an 1,100 space
          parking  garage on the Calhoun  Park site and to transfer the facility
          to the  City in  exchange  for a  20-year  municipal  bond  backed  by
          revenues from the parking garage and a mortgage on the parking garage.
          The  total  amount  of the bond is not to exceed  $16.9  million,  the
          maximum  expected  project cost. The parking garage is currently under
          construction and is scheduled for completion in the spring of the year
          2000.

     o    SCE&G owns three  other  decommissioned  manufactured  gas plant sites
          which contain residues of by-product  chemicals.  For the site located
          in Sumter, South Carolina, effective September 15, 1998, SCE&G entered
          into  a  Remedial   Action  Plan  Contract  with  the  South  Carolina
          Department  of Health and  Environmental  Control  (DHEC)  pursuant to
          which it agreed to undertake a full site investigation and remediation
          under the oversight of DHEC. Site  investigation and  characterization
          are  proceeding  according to schedule.  Upon selection and successful
          implementation of a site remedy, DHEC will give SCE&G a Certificate of
          Completion  and  a  covenant  not  to  sue.  SCE&G  is  continuing  to
          investigate  the other two  sites,  and is  monitoring  the nature and
          extent of residual contamination.


11

<PAGE>


6.  SEGMENT OF BUSINESS INFORMATION:


The Company's reportable segments are listed in the following table. The Company
uses operating income to measure  profitability for its Electric  Operations and
Gas  Distribution  segments.  Therefore,  net income is not  allocated  to these
segments.  The Company uses net income to measure  profitability  for its Energy
Marketing  segment,  which  includes  the  Company's  unregulated  gas  sales in
Georgia.  Affiliate  revenue is derived  from  transactions  between  reportable
segments  as well as  transactions  between  separate  legal  entities  that are
combined into the same reportable segment.
Assets for the period did not change significantly.

        Disclosure and Reconciliation of Reportable Segments
                          (unaudited)

                            Three Months Ended           Three Months Ended
                              March 31, 1999              March 31, 1998
------------ --------------------------------- ---------------------------------
                             Net         Operating         Net       Operating
                           Income         Income         Income       Income
                                           (Millions of Dollars)

Electric Operations         n/a             $62            n/a         $73
Gas Distribution            n/a              14            n/a          16
Gas Transmission           $ 3                4           $ 5            5
Energy Marketing           (13)             n/a            (1)         n/a
----------- ---------------- ---------------- ---------------- ----------------

Total Reportable Segments (10)              80              4           94
Elimination of Affiliates   -               (1)             -           (1)
Non-reportable Segments     -               (1)             1           (1)
Unallocated                47                -             59           (1)
---------------------------- ---------------- ---------------- ----------------
Consolidated Totals       $37              $78            $64          $91
============================ ================ ================ ================

                      External         Affiliate        External      Affiliate
                      Revenue          Revenue          Revenue       Revenue
                                        (Millions of Dollars)

Electric Operations   $266             $ 68             $269           $ 67
Gas Distribution        86                -               88              -
Gas Transmission        44               49               49             49
Energy Marketing       142                -               93              -
-----------  ---------------- ---------------- ---------------- ----------------
Total Reportable 
  Segments            $538             $117             $499           $116
============ ================ ================ ================ ================



12


<PAGE>


Item 2.  Management's Discussion and Analysis of Financial Condition and 
           Results of Operations

                                SCANA CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion should be read in conjunction with Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of  Operations
appearing in SCANA  Corporation's  (the Company)  Annual Report on Form 10-K for
the year ended December 31, 1998.

        Statements  included in this  discussion  and analysis (or  elsewhere in
this quarterly  report) which are not statements of historical fact are intended
to be, and are hereby identified as,  "forward-looking  statements" for purposes
of the safe harbor  provided by Section 27A of the  Securities  Act of 1933,  as
amended,  and Section 21E of the  Securities  Exchange Act of 1934,  as amended.
Readers  are  cautioned  that  any  such  forward-looking   statements  are  not
guarantees   of  future   performance   and   involve  a  number  of  risks  and
uncertainties,  and that  actual  results  could  differ  materially  from those
indicated by such forward-looking statements. Important factors that could cause
actual results to differ materially from those indicated by such forward-looking
statements  include,  but are not  limited  to,  the  following:  (1)  that  the
information  is of a  preliminary  nature and may be  subject to further  and/or
continuing  review  and  adjustment,  (2)  changes  in  the  utility  regulatory
environment,  including  the pace of  deregulation  of  retail  natural  gas and
electricity  markets in the United States,  (3) changes in the economy,  (4) the
impact of  competition  from other energy  suppliers,  (5) the management of the
Company's operations, (6) variations in prices of natural gas and fuels used for
electric  generation,  (7) growth  opportunities for the Company's regulated and
non-regulated subsidiaries, (8) the results of financing efforts, (9) changes in
the Company's  accounting  policies,  (10) weather conditions in areas served by
the Company's utility subsidiaries,  (11) performance of the  telecommunications
companies in which the Company has made significant investments, (12) inflation,
(13)  exposure  to  environmental  issues  and  liabilities,   (14)  changes  in
environmental regulation, (15) unsuccessful correction of any material Year 2000
problem or, alternatively,  unsuccessful implementation of a contingency plan by
the Company and any critical third party suppliers, and (16) the other risks and
uncertainties  described  from time to time in the  Company's  periodic  reports
filed with the Securities  and Exchange  Commission.  The Company  disclaims any
obligation to update any forward-looking statements.

               MATERIAL CHANGES IN CAPITAL RESOURCES AND LIQUIDITY
                             SINCE DECEMBER 31, 1998

COMPETITION

North Carolina Acquisition

        On February 17, 1999,  the Company and Public  Service  Company of North
Carolina,  Inc. (PSNC) announced a definitive agreement whereby the Company will
acquire PSNC in a transaction  valued at approximately  $900 million,  including
the assumption of debt. The transaction will be accounted for as a purchase.  It
is anticipated  that PSNC will be operated as a  wholly-owned  subsidiary of the
Company.  Completion  of the  transaction  is  subject  to the  approval  of the
shareholders  of both  companies  and  applicable  regulatory  approvals.  It is
anticipated that the approval process can be completed by the end of 1999.

Georgia Retail Gas Market

         SCANA Energy Marketing (Energy Marketing), a wholly-owned subsidiary of
the  Company,  continues  to  exceed  projections  for  acquiring  customers  in
Georgia's   natural  gas  market.  At  March  31,  1999,  Energy  Marketing  had
approximately 236,000 customers compared to approximately 72,000 at December 31,
1998. Energy  Marketing's  success has resulted in expenses being  significantly
higher  than  expected.  For the  three  months  ended  March 31,  1999,  Energy
Marketing  incurred  losses  (net of  taxes)  of  approximately  $12.5  million,
including startup costs which were expensed as incurred.  A substantial  portion
of those costs came from a $50 per customer  promotional  sign-up  offer,  which
expired April 15, 1999. In March 1999, the Georgia  legislature  approved a bill
that resulted in Georgia's natural gas market being declared  competitive.  As a
result, customers who have not chosen a new gas supplier by August 11, 1999 will
be randomly  assigned to a new supplier  based on market  share.  At the current
rate of expansion,  Energy Marketing could have approximately  600,000 customers
after the random assignment process is completed.  As a result, Energy Marketing
anticipates incurring significant losses through the

13

<PAGE>


rest of 1999. The level of future revenues and  expenditures,  including startup
cost, is dependent on several factors that cannot be reasonably predicted. These
factors  include how rapidly Energy  Marketing  gains  additional  customers and
market  share,  the  intensity of  competition  as it continues to develop,  the
margin Energy  Marketing is able to achieve on gas sales and its ability to find
industrial interruptible customers to purchase available capacity.

Proposed Interstate Natural Gas Pipeline

        On April 14, 1999, South Carolina Pipeline  Corporation,  a wholly-owned
subsidiary of the Company,  announced plans to develop an interstate natural gas
pipeline to ensure  adequate  supplies to growing gas markets in South  Carolina
and North  Carolina.  Details of the proposal,  which is competing  with another
similar proposed project, are being finalized.  Construction of the project will
require approval by the Federal Energy  Regulatory  Commission and other federal
and state agencies.

LIQUIDITY AND CAPITAL RESOURCES

        On December 11, 1998,  the Public  Service  Commission of South Carolina
(PSC) issued an order requiring South Carolina Electric & Gas Company (SCE&G), a
wholly owned  subsidiary of the Company,  to reduce retail  electric  rates on a
prospective basis. The PSC acted in response to SCE&G reporting that it earned a
13.04 percent return on common equity for its retail electric operations for the
twelve months ended  September 30, 1998.  This return on common equity  exceeded
SCE&G's  authorized  return of 12.0 percent by 1.04 percent,  or $22.7  million,
primarily as a result of record-breaking heat experienced during the summer. The
order required  prospective rate reductions on a per kilowatt-hour  basis, based
on actual  retail sales for the twelve  months ended  September  30, 1998.  This
action will reduce future reported return on common equity to the PSC-authorized
level if SCE&G experiences the same weather effect and other business results as
that of the twelve months ended September 30, 1998. On December 21, 1998,  SCE&G
filed a motion for  reconsideration  with the PSC. On January 12, 1999,  the PSC
denied  SCE&G's  motion for  reconsideration  and  reaffirmed  SCE&G's return on
equity of 12.0  percent.  The rate  reductions  were placed into effect with the
first billing cycle of January 1999.

        The  following  table  summarizes  how the Company  generated  funds for
property additions and construction  expenditures  during the three months ended
March 31, 1999 and 1998:

Three Months Ended March 31,                         1999             1998
--------------------------------------------------------------- --------------
                                                      (Millions of Dollars)

Net cash provided from operating activities         $ 21              $ 96
Net cash provided (used) for financing activities     48               (48)
Cash provided from sale of subsidiary assets           3                 -
--------------------------------------------------------------- --------------
Cash and temporary cash investments available 
  at the beginning of the period                      62                60
=============================================================== ==============
Net cash available for  property additions                       
    and construction expenditures                   $134              $108
=============================================================== ==============

Funds used for utility property additions and 
  construction expenditures, net of noncash 
  allowance for funds used during construction     $ 50               $ 51
=============================================================== ==============

Funds used for nonutility property additions        $13             $    7
=============================================================== ==============

       On March 9, 1999,  SCE&G  issued  $100  million of First  Mortgage  Bonds
having an annual  interest  rate of 6 1/8% and maturing on March 1, 2009.  These
funds were used to reduce short-term debt.

       The Company  anticipates that the remainder of its 1999 cash requirements
will be met through internally generated funds, and the incurrence of additional
short-term  and  long-term  indebtedness.   The  Company  anticipates  incurring
short-term  and  long-term  debt to fund  the cash  consideration  to be paid to
shareholders related to the Company's acquisition of PSNC. The timing and amount
of such  financings  will depend upon market  conditions and other factors.  The
Company expects that it has or can obtain adequate  sources of financing to meet
its  projected  cash  requirements  for  the  next  twelve  months  and  for the
foreseeable future. The ratio of earnings to fixed charges for the twelve months
ended March 31, 1999 was 3.29.


14


<PAGE>



Investments in Equity Securities

        At March 31, 1999,  SCANA  Communications,  Inc.  (SCI),  a wholly owned
subsidiary  of the  Company,  held  the  following  investments  in ITC  Holding
Company, Inc. (ITC) and its affiliates:

     o    Powertel,  Inc.  (Powertel) is a publicly traded company that owns and
          operates  personal  communications  services  (PCS) systems in several
          major Southeastern  markets. SCI owns approximately 4.7 million common
          shares of Powertel.  SCI's  investment in Powertel's  common shares of
          approximately  $69.2  million had a market  value of $67.1  million at
          March 31, 1999, resulting in a pre-tax unrealized holding loss of $2.1
          million.  The after-tax amount of such loss is included in the balance
          sheet as a component  of "Common  Equity." In  addition,  SCI owns the
          following non-voting  convertible preferred shares, at the approximate
          cost noted:  100,000  shares series B ($75.1  million);  50,000 shares
          series D ($22.5  million);  and, 50,000 series E 6.5% ($75.0 million).
          Preferred  series  B  shares  are  convertible  in  March  2002  at  a
          conversion  price of $16.50  per  common  share or  approximately  4.5
          million common shares.  Preferred  series D shares are  convertible in
          March  2002 at a  conversion  price  of  $12.75  per  common  share or
          approximately 1.7 million common shares. Preferred series E shares are
          convertible  in June 2003 at a  conversion  price of $22.01 per common
          share or approximately 3.4 million common shares.  The market value of
          the   convertible   preferred   shares  of  Powertel  is  not  readily
          determinable.  However,  on an as converted basis, the market value of
          the   underlying   common   shares  for  the   preferred   shares  was
          approximately  $138.5  million  at March  31,  1999,  resulting  in an
          unrecorded pre-tax holding loss of $34.1 million.

     o    ITC  Delta^Com,  Inc.  (ITCD)  is  a  fiber  optic  telecommunications
          provider.  SCI owns  approximately  4.1 million common shares of ITCD.
          SCI's  investment  in  ITCD's  common  shares of  approximately  $16.2
          million  had a market  value  of $88.4  million  at  March  31,  1999,
          resulting in a pre-tax unrealized  holding gain of $72.2 million.  The
          after-tax  amount of such gain is included  in the balance  sheet as a
          component of "Common  Equity." In addition,  SCI owns 1,480,771 shares
          of series A preferred stock of ITCD at a cost of  approximately  $11.3
          million.  Series A preferred shares are convertible in March 2002 into
          ITCD common shares on a two for one basis.  The market value of series
          A preferred stock of ITCD is not readily determinable.  However, on an
          as converted basis the market value of the underlying common stock for
          the series A preferred stock was approximately  $64.6 million at March
          31, 1999,  resulting in an  unrecorded  pre-tax  holding gain of $53.3
          million.

     o    Knology Holdings,  Inc.  (Knology) is a broad-band service provider of
          cable,  television,  telephone and internet services.  SCI owns 71,050
          units of Knology.  Each unit consists of one 11.875%  Senior  Discount
          Note due 2007 and one warrant entitling the holder to purchase .003734
          shares of preferred stock of Knology.  The cost of this investment was
          approximately  $40 million.  SCI also owns an additional  753 warrants
          which entitles it to purchase 753 shares of preferred  stock at $1,500
          per share.

     o    ITC has an ownership interest in several  Southeastern  communications
          companies.  SCI owns approximately 3.1 million common shares,  645,153
          series  A  convertible   preferred   shares,   and  133,664  series  B
          convertible   preferred   shares  of  ITC.  These   investments   cost
          approximately   $7.1  million,   $8.9   million,   and  $5.0  million,
          respectively.  Series A and series B preferred  shares are convertible
          in March 2002 into ITC common  shares at a conversion  price of $13.45
          and $43.56, respectively, on a four for one basis. The market value of
          these investments is not readily determinable.
15


<PAGE>


Year 2000 Issue

        The Year 2000 is an issue because many computers,  embedded  systems and
software were originally  programmed using two digits rather than four digits to
identify the applicable  year. This may prevent them from accurately  processing
information  with dates  beyond  1999.  Because the Year 2000 issue could have a
material impact on the operations of the Company if not addressed, the Company's
goal is to be Year 2000 ready.  This means that  before the year 2000,  critical
systems,  equipment,  applications  and  business  relationships  will have been
evaluated  and should be suitable to continue  into and beyond the year 2000 and
that applicable contingency plans are in place.

        In 1993,  SCANA began the first of several  projects to replace  many of
its  business  application  systems to provide  increased  functionality  and to
improve access to business information.  Accordingly,  SCANA has implemented new
general ledger,  purchasing,  materials  inventory and accounts payable systems,
and is  currently  implementing  a new  customer  information  system.  The  new
customer  information  system is being phased into  production  by  geographical
area,  and  should be fully  implemented  in the first  half of 1999.  These new
systems,  which comprise a significant portion of SCANA's applications software,
are designed to be Year 2000 compliant, and therefore mitigate overall Year 2000
exposure.

        In 1997, SCANA established a Corporate Year 2000 Project Office (Project
Office) to direct Year 2000 efforts throughout the Company. A Steering Committee
was formed to direct the efforts of the Project Office.  The Steering  Committee
reports to the senior  officers  of SCANA and to the board of  directors.  It is
chaired by the chief  financial  officer of SCANA and is  comprised  of officers
representing  all operational  areas. The Project Office is staffed by nine full
time project  managers and extensive  support  personnel.  The Project Office is
responsible  for  addressing  Year 2000  issues and  coordinating  the  required
assessment and remediation efforts.

        SCANA's Year 2000 efforts encompass three projects, all reporting to the
Steering Committee.  The Information Technology Project covers all mainframe and
client server application software,  infrastructure  hardware,  system software,
desktop computers and network equipment. The Embedded Systems Project covers all
microprocessors,  instruments and control devices, monitoring equipment on power
lines and in substations,  security and control devices,  telephone  systems and
certain types of meters.  The Procedures and External  Interfaces Project covers
Year 2000  procedures,  documentation  and  communications  with key  suppliers,
vendors, customers, financial institutions and governmental agencies.

        SCANA's  Year  2000  project  approach   involves  the  following:   (1)
inventorying all Year 2000 internal and external items and entities and updating
the Year 2000 Inventory  Database;  (2)  performing  risk analysis and corporate
prioritization of all inventory entries;  (3) performing detailed assessments of
all  inventory  entries to determine  Year 2000  readiness  and  establishing  a
remediation  action plan where necessary;  (4) remediating all inventory entries
assessed  as  non-compliant,   including  repairing,   replacing  or  developing
acceptable  work-arounds;  (5) testing through date simulation and comprehensive
test data;  (6)  implementation  of all  converted  systems and  equipment  into
production operations; and (7) contingency planning.

        Detailed  project plans exist for each of the Year 2000 projects.  These
project plans,  work schedules and resource  requirements are reviewed weekly by
the  project  managers  and  monthly by the  Steering  Committee.  The Year 2000
projects,  which will  address  the  Company's  critical  systems  and  business
relationships,  are  appropriately  staffed and are  currently on schedule to be
completed by July 1999. As reported to the North American  Electric  Reliability
Council  (NERC) in March  1999,  the Company was 100%  complete  with  inventory
tasks,  78%  complete  with  detailed  assessment  tasks and 70%  complete  with
remediation tasks.

        The Information Technology Project Team has completed the assessment and
initial code remediation for all application software.  Many of the applications
have been tested in an isolated Year 2000 testing  environment  and the rest are
being tested according to the project schedule. Independent vendor verifications
of remediated code for selected  applications are planned for the second quarter
of 1999. The assessment of the technical  infrastructure  and desktop  computing
environment is complete and required  remediation is in process.  Testing of all
network  equipment  is  in  process.  An  Information  Technology  Audit  Review
Committee has been  established to review all assessments  for mission  critical
applications  and technical  infrastructure  items.  The Information  Technology
Project was approximately 65% complete through March 1999.

16


<PAGE>

        The Embedded  Systems  Project Team,  which  includes  approximately  20
engineers with prior  experience  with  microprocessors  was formed and detailed
assessment,  remediation and testing  procedures  were  developed.  This team is
currently  working  closely with each of SCANA's  business units to complete the
assessments   of  critical   systems  and  equipment   based  on  the  corporate
prioritization  process. An Embedded Systems Audit Review Committee continues to
review all assessments for critical systems.  As assessments are completed,  any
required  remediation efforts are evaluated and implemented.  Independent vendor
verifications for selected completed assessments were completed during the first
quarter of 1999 and confirmed the Company's previous  conclusions.  The Embedded
Systems Project was approximately 75% complete through March 1999.

        The  Procedures  and  External  Interfaces  Project  Team has  developed
written  documentation  and  procedures  for Year  2000  compliance  definition,
document control, inventory,  prioritization,  assessment,  remediation,  change
control,  business  continuity  planning,  and  vendor,  customer  and  supplier
communications.  This team is coordinating  communications  with all significant
vendors and suppliers in an attempt to determine the extent to which the Company
may be vulnerable to their failure to remediate their own Year 2000 issues.  The
Company has completed an initial  survey of vendors and is currently  evaluating
the responses to the survey and conducting additional inquiries where necessary.
The Company is also in the process of  evaluating  critical  third party service
providers  to ascertain  their Year 2000  readiness.  The Company has  developed
communications  materials  explaining  its year 2000  efforts and is  continuing
communications  with significant  customers and external  groups,  including the
South  Carolina and Georgia  Public  Service  Commissions.  The  Procedures  and
External Interfaces Project was approximately 60% complete through March 1999.

        The  Company's  projected  total cost of its Year 2000  efforts  and the
anticipated timing and breakdown of those expenditures is as follows:

     ------------------- -------------- ------------------ ----------------
                           Internal      Out of Pocket     Total
     ------------------- -------------- ------------------ ----------------
                                     (Millions of  Dollars)
     Project To Date       $ 2            $  9             $11
     1999                    3               6               9
                          -----           -------          -----
     Total                 $ 5            $15              $20
    ------------------- -------------- ------------------ ----------------

        The cost of the project is based on management's  best estimates,  which
are based on assumptions  regarding  future events.  These future events include
continued availability of key resources,  third parties' Year 2000 readiness and
other factors. The cost of the project is not expected to have a material impact
on the results of operations or on the financial position or cash flows of SCANA
or  SCE&G.  The  costs of  implementing  the new  business  application  systems
referred to earlier are not included in these cost estimates.

        A failure to correct a material Year 2000 problem by the Company or by a
critical third party supplier could result in an  interruption  in, or a failure
of the Company's  ability to provide energy services.  At this time, the Company
believes  its most  reasonably  likely  worst  case  scenario  is that Year 2000
failures could lead to temporarily  reduced generating capacity on the Company's
electrical grid,  temporary  intermittent  interruptions in  communications  and
temporary intermittent  interruptions in gas supply from interstate suppliers or
producers.  A Year  2000  problem  of this  nature  could  result  in  temporary
interruptions  in  electric  or gas  service to  customers.  The  Company has no
historical experience with interruptions caused by this scenario. However, these
temporary  interruptions in service, if any, might be similar to weather-related
outages that the Company  encounters  from time to time in its  business  today.
Although the Company does not believe that this scenario will occur, the Company
is enhancing existing  contingency plans to ensure  preparedness and to mitigate
the long term  effect of such a  scenario.  Since  the  expected  impact of this
scenario on the Company's operations, cash flow and financial position cannot be
determined, there is no assurance that it would not be material.



17


<PAGE>



        The Company has  established  eight  business  continuity  planning task
groups to develop Year 2000 business  continuity  plans.  These task groups have
developed  initial  draft  plans to cover the  Company's  Corporate  Operations,
Customer Service Operations, Electric Generation,  Transmission and Distribution
Operations,   Gas  Delivery   Operations,   Telecommunications   and   Emergency
Preparedness, Information Technology and Procurement. Detailed contingency plans
that were already in place to cover weather-related  outages,  computer failures
and generation  outages were used and/or referenced as the basis for the initial
draft  Year  2000  business  continuity  plans.  The  initial  draft  plans  are
continuing to be enhanced,  and where necessary,  new plans will be developed to
include  mitigation  strategies and emergency  response  action plans to address
potential Year 2000 scenarios and critical system failures. The final plans will
also include mitigation strategies to address reliance on critical suppliers.

        NERC is coordinating  Year 2000 efforts of the electric utility industry
in the United  States and  contingency  planning  within the  regional  electric
reliability councils. Coordination in SCE&G's region is through the Southeastern
Electric Reliability Council (SERC). SCE&G's contingency planning efforts are in
compliance with the SERC and NERC contingency planning guidelines which required
draft  contingency  plans to be complete by December  31, 1998 and will  require
final contingency plans to be complete by June 30, 1999.

        On April 9,  1999,  the  Company  participated  in the first of two NERC
required   contingency   planning  drills  that  are  intended  to  test  backup
communications  systems and the  Company's  ability to operate the electric grid
with  manually  read data instead of  computerized  systems.  The  Company's gas
transmission and distribution  operations areas also  participated in the drill.
The drills were  successful  and no major  problems  with the  Company's  backup
procedures were found.

        In addition to NERC and SERC,  SCE&G is working with the Electric  Power
Research  Institute  to  address  the  issue of  overall  grid  reliability  and
protection.  To ensure that all Year 2000 issues at its Summer  Station  nuclear
plant are addressed,  SCE&G is closely  cooperating with other utility companies
that own nuclear power plants. The utilities are sharing technical nuclear plant
operating and monitoring systems  information to ensure the prompt and effective
resolution of the Year 2000 issue.


18



<PAGE>



                              RESULTS OF OPERATIONS
                    FOR THE THREE MONTHS ENDED MARCH 31, 1999
                 AS COMPARED TO THE CORRESPONDING PERIOD IN 1998

Earnings and Dividends

        Net  income  for  the  three  months  ended  March  31,  1999  decreased
approximately  $27.2 million when compared to the corresponding  period in 1998.
Lower  electric  margins,  the impact of a rate  reduction,  and losses from the
Company's entry into the Georgia retail gas market were only partially offset by
reduced other operation and maintenance  expenses.  In addition,  net income for
the three months ended March 31, 1998 includes a one-time,  after-tax  reduction
to  depreciation  expense of  approximately  $5.5 million related to a change in
depreciation  rates  retroactive to February 1996.  This change in  depreciation
rates  resulted  from the  reversal  of a $257  million  shift  of  depreciation
reserves  from  electric   transmission  and  distribution   assets  to  nuclear
production assets, previously approved in a PSC rate order in January 1996.

        Allowance  for  funds  used  during  construction  (AFC)  is  a  utility
accounting  practice  whereby a portion of the cost of both equity and  borrowed
funds  used to  finance  construction  (which is shown on the  balance  sheet as
construction  work in  progress)  is  capitalized.  Both the equity and the debt
portions of AFC are noncash items of  nonoperating  income which have the effect
of increasing  reported net income.  AFC represented  approximately 5% and 4% of
income  before  income taxes for the three months ended March 31, 1999 and 1998,
respectively.

        The  Company's  Board of  Directors  declared  the  following  quarterly
dividends on common stock:

------------------- ---------------- ------------------ -------------------
Declaration         Dividend         Record             Payment
Date                Per Share        Date               Date
------------------- ---------------- ------------------ -------------------
February 7, 1999    38 1/2 cents     March 9, 1999      April 1, 1999
April 22, 1999      38 1/2 cents     June 9, 1999       July 1, 1999
------------------- ---------------- ------------------ -------------------

        On February 17, 1999, the Board of Directors announced the adoption of a
new common stock dividend  policy to bring the Company's  dividend  payout ratio
more in line with that of growth-oriented  utilities.  Under the new policy, the
board  anticipated  declaring  the current  dividend  of $0.385  cents per share
payable July 1, 1999 and  reducing  the dividend to $0.275 per share,  effective
with the dividend to be paid  thereafter.  This action would make the  Company's
indicated annual dividend rate on common stock $1.10 per share.

Electric Operations

        Electric   operations  sales  margins   (including   transactions   with
affiliates) for the three months ended March 31, 1999 and 1998 were as follows:

Three Months Ended March 31,    1999            1998      Change    % Change
------------------------------- --------------- --------- --------- ------------
                                (Million of Dollars)

Electric operating revenue      $334.3          $336.2    $  (1.9)       (0.6%)
Less:  Fuel used in generation   103.8           100.3        3.5         3.5%
           Purchased power        28.1            26.3        1.8         6.8%
------------------------------- --------------- --------- --------- ------------
Margin                          $202.4          $209.6    $  (7.2)      (3.4%)
=============================== =============== ========= ========= ============

        The  electric  operations  sales margin  decreased  for the three months
ended March 31, 1999 when compared to the corresponding period in 1998 primarily
as a result of milder weather in the first quarter of 1999 and implementation in
January 1999 of a $22.7 million  annual rate  reduction  ordered by the PSC. See
LIQUIDITY AND CAPITAL RESOURCES.








19

<PAGE>


Gas Distribution

        Gas distribution sales margins for the three months ended March 31, 1999
and 1998, were as follows:

Three Months Ended March 31,        1999         1998      Change    % Change
------------------------------------------------ ---------- -------------------
                                              (Million of Dollars)

Gas distribution operating revenue  $86.1       $88.2      $(2.1)      (2.4%)
Less:  Gas purchased for resale      49.1        48.9        0.2        0.4%
-------------------------------------------------------------------------------
Margin                              $37.0       $39.3      $(2.3)      (5.9%)
===============================================================================

        The gas  distribution  sales margin for the three months ended March 31,
1999   decreased   from  1998  levels   primarily   as  a  result  of  increased
competitiveness of alternative fuels and milder weather.

Gas Transmission

        Gas transmission sales margins (including  transactions with affiliates)
for the three months ended March 31, 1999 and 1998 were as follows:

Three Months Ended March 31,         1999     1998      Change     % Change
--------------------------------------------- ----------------- ---------------
                                              (Million of Dollars)

Gas transmission operating revenue  $92.8     $97.2     $(4.4)      (4.5%)
Less:  Gas purchased for resale      80.5      83.0     (2.5)       (3.0%)
-------------------------------------------------------------------------------
Margin                              $12.3     $14.2     $(1.9)     (13.4%)
===============================================================================

        The gas  transmission  sales margin for the three months ended March 31,
1999   decreased   from  1998  levels   primarily   as  a  result  of  increased
competitiveness of alternate fuels.

Energy Marketing

        Energy Marketing sales margins for the three months ended March 31, 1999
and 1998 were as follows:

Three Months Ended March 31,              1999       1998      Change  % Change
---------------------------------------------------------------- ---------------
                                                       (Million of Dollars)

Gas and electric sales revenue           $149.4      $92.5      $56.9     61.5%
Less:  Gas and electricity purchased 
        for resale                        147.8      92.2        55.6     60.3%
--------------------------------------------------------------------------------
Margin                                    $ 1.6      $ .3       $ 1.3     433.3%
================================================================================

        The energy  marketing  sales margin for the three months ended March 31,
1999  increased  from 1998  levels  primarily  as a result of  positive  margins
achieved in the Georgia retail natural gas market.

Other Operating Expenses

        Other operating  expenses,  including  taxes, for the three months ended
March 31, 1999 and 1998 were as follows:

Three Months Ended March 31,        1999        1998      Change     % Change
--------------------------------------------- --------------- ------------- ---
                                           (Million of Dollars)

Other operation and maintenance   $ 76.2       $ 79.2    $ (3.0)        (3.8%)
Depreciation and amortization       41.8         29.9      11.9         39.8%
Income taxes                        28.3         36.6      (8.3)       (22.8%)
Other taxes                         27.2         26.0       1.2          4.6%
-------------------------------------------------------------------------------
Total                             $173.5       $171.7     $ 1.8          1.0%
===============================================================================




20

<PAGE>


        Other  operation  and  maintenance  expenses  for the three months ended
March 31, 1999  decreased  from 1998 levels  primarily  as a result of decreased
maintenance  costs for electric  generation  and  distribution  facilities.  The
increase in depreciation  and  amortization  expenses for the three months ended
March 31, 1999 reflects the non-recurring  adjustment to depreciation expense in
1998 discussed  under "Earnings and Dividends." The change in income tax expense
primarily  reflects the change in operating income.  The increase in other taxes
for the periods primarily results from increases in property taxes.

Other Income

        Other income,  net of income taxes, for the three months ended March 31,
1999 decreased  approximately  $8.7 million,  when compared to the corresponding
period of 1998.  This decrease was primarily  attributable to losses from energy
marketing activities as a result of startup costs in new markets.

Interest Expense

        Interest  expense,  excluding  the debt  component of AFC, for the three
months ended March 31, 1999 increased  approximately $4.4 million, when compared
to the  corresponding  period in 1998.  The  increase was  primarily  due to the
issuance of  medium-term  notes in the third  quarter of 1998,  the  issuance of
First  Mortgage  Bonds in the first quarter of 1999 and increased  borrowings of
short-term debt.


Item 3.   Quantitative and Qualitative Disclosure About Market Risk

     All financial  instruments held by the Company described below are held for
purposes other than trading.

     Interest  rate  risk - The  table  below  provides  information  about  the
Company's financial instruments that are sensitive to changes in interest rates.
For debt  obligations,  the table  presents  principal  cash  flows and  related
weighted average interest rates by expected maturity dates.

<TABLE>
                           March 31, 1999
                                                            Expected Maturity Date
                      -------------- ------------------ ------------------------------- --------- --------------------
                                                            (Millions of Dollars)
                                                                                     There-                   Fair
Liabilities              1999          2000       2001        2002        2003       After       Total       Value
                      -------------- --------- ----------- ----------- ----------- ----------- ----------- -----------

Long-Term Debt
<S>        <C>          <C>           <C>         <C>         <C>        <C>        <C>         <C>         <C>    
Fixed Rate ($)          106.5         213.5       27.5        27.5       284.4      1,265.8     1,925.3     1,969.1
Average Interest Rate     6.86          5.93      6.87        6.87         6.29         7.35        6.99
</TABLE>


     While a decrease in interest  rates would  increase the fair value of debt,
it is unlikely that events which would result in a realized loss will occur.

     In  addition,  the Company has  invested  in a  telecommunications  company
approximately  $40 million for 11.875% senior  discount notes due 2007. The fair
value of these notes  approximates  cost. An increase in market  interest  rates
would  result in a  decrease  in fair value of these  notes and a  corresponding
adjustment, net of tax, to other comprehensive income.

     Equity price risk - Investments in telecommunications companies' marketable
equity  securities  are carried at their market value of $375.1  million.  A ten
percent  decline in market  value would result in a $37.5  million  reduction in
fair value and a  corresponding  adjustment,  net of tax effect,  to the related
equity account for unrealized  gains/losses,  a component of other comprehensive
income.










21


<PAGE>























                      SOUTH CAROLINA ELECTRIC & GAS COMPANY
                                FINANCIAL SECTION

































22


<PAGE>


Item 1.  Financial Statements

                      SOUTH CAROLINA ELECTRIC & GAS COMPANY
                           CONSOLIDATED BALANCE SHEETS
                   As of March 31, 1999 and December 31, 1998
                                   (Unaudited)




                                                         March 31,  December 31,
----------------------------------------------------------------------- --------
                                                           1999          1998
----------------------------------------------------------------------- --------
ASSETS                                                   (Millions of Dollars)
Utility Plant:
    Electric                                                $4,135      $4,133
    Gas                                                        366         366
    Other                                                      175         175
--------------------------------------------------------------------------------
        Total                                                4,676       4,674
    Less accumulated depreciation and amortization           1,552       1,517
--------------------------------------------------------------------------------
        Total                                                3,124       3,157
    Construction work in progress                              262         219
    Nuclear fuel, net of accumulated amortization               56          56
--------------------------------------------------------------------------------
            Utility Plant, Net                               3,442       3,432
--------------------------------------------------------------------------------

Nonutility Property and Investments, net of accumulated
    depreciation                                               17           16
--------------------------------------------------------------------------------

Current Assets:
    Cash and temporary cash investments                        46           36
    Receivables                                               164          178
    Inventories (at average cost):
        Fuel                                                   47           32
        Materials and supplies                                 47           47
    Prepayments                                                11            8
    Deferred income taxes                                      21           21
--------------------------------------------------------------------------------
            Total Current Assets                              336          322
--------------------------------------------------------------------------------

Deferred Debits:
    Emission allowances                                        31           31
    Environmental                                              22           22
    Nuclear plant decommissioning fund                         58           56
    Pension asset, net                                        121          115
    Other                                                     251          252
--------------------------------------------------------------------------------
            Total Deferred Debits                             483          476
--------------------------------------------------------------------------------
                Total                                      $4,278       $4,246
================================================================================










23

<PAGE>

<TABLE>
<CAPTION>

                                                SOUTH CAROLINA ELECTRIC & GAS COMPANY
                                                     CONSOLIDATED BALANCE SHEETS
                                                As of March 1999 and December 31, 1998
                                                             (Unaudited)


                                                                March 31,     December 31,
------------------------------------------------------------------------------- -----------
                                                                  1999           1998
-------------------------------------------------------------------------------------------
CAPITALIZATION AND LIABILITIES 
(Millions of Dollars) 
Stockholders' Investment:
<S>                                                              <C>             <C>   
    Common Equity                                                $1,510          $1,499
    Preferred stock (not subject to purchase or sinking funds)      106             106
-------------------------------------------------------------------------------------------
        Total Stockholders' Investment                            1,616           1,605
Preferred Stock, Net (subject to purchase or sinking funds)          11              11
SCE&G-Obligated   Mandatorily   Redeemable   Preferred  
    Securities  of  SCE&G's Subsidiary Trust, SCE&G Trust I, 
    holding solely $50 million principal amount of the 7.55%
    Junior Subordinated Debentures of SCE&G, due 2027                50             50
Long-Term Debt, net                                               1,318          1,206
-------------------------------------------------------------------------------------------
          Total Capitalization                                    2,995          2,872
-------------------------------------------------------------------------------------------

Current Liabilities: 
    Short-term borrowings                                            78            125
    Current portion of long-term debt                                29             29
    Accounts payable                                                 81             97
    Accounts payable - affiliated companies                          27             23
    Customer deposits                                                17             17
    Taxes accrued                                                    26             75
    Interest accrued                                                 25             21
    Dividends declared                                               38             38
    Other                                                            10             10
-------------------------------------------------------------------------------------------
          Total Current Liabilities                                 331            435
------------------------------------------------------------------------------- -----------

Deferred Credits:
    Deferred income taxes                                           570            549
    Deferred investment tax credits                                  99            100
    Reserve for nuclear plant decommissioning                        58             56
    Postretirement benefits                                          90             87
    Other                                                           135            147
-------------------------------------------------------------------------------------------
          Total Deferred Credits                                    952            939
-------------------------------------------------------------------------------------------
                Total                                            $4,278         $4,246
===========================================================================================

See Notes to Consolidated Financial Statements.



</TABLE>
24


<PAGE>


                      SOUTH CAROLINA ELECTRIC & GAS COMPANY
             CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
                  For the Periods Ended March 31, 1999 and 1998
                                   (Unaudited)

                                                              Three Months Ended
                                                                   March 31,
--------------------------------------------------------------------------------
                                                                1999     1998
--------------------------------------------------------------------------------
                              (Millions of Dollars)
OPERATING REVENUES:
    Electric                                                     $266    $270
    Gas                                                            86      88
    Transit                                                         1       -
--------------------------------------------------------------------------------
        Total Operating Revenues                                  353     358
--------------------------------------------------------------------------------
Operating Expenses:
    Fuel used in electric generation                               45      43
    Purchased power (including affiliated purchases)               28      26
    Gas purchased from affiliate  for resale                       49      49
    Other operation                                                53      56
    Maintenance                                                    17      18
    Depreciation and amortization                                  38      26
    Income taxes                                                   26      33
    Other taxes                                                    25      24
--------------------------------------------------------------------------------
        Total Operating Expenses                                  281     275
--------------------------------------------------------------------------------

OPERATING INCOME                                                   72      83
--------------------------------------------------------------------------------

OTHER INCOME:
Allowance for equity funds used during construction                 1       2
Other income                                                        1       -
--------------------------------------------------------------------------------
        Total Other Income                                          2       2
--------------------------------------------------------------------------------

INCOME BEFORE INTEREST CHARGES                                     74      85
--------------------------------------------------------------------------------

INTEREST CHARGES (CREDITS):
    Interest expense on long-term debt                             23      24
    Other interest expense                                          3       2
    Allowance for borrowed funds used during construction          (1)     (2)
--------------------------------------------------------------------------------
        Total Interest Charges, Net                                25      24
--------------------------------------------------------------------------------

INCOME BEFORE PREFERRED DIVIDEND REQUIREMENTS
    ON MANDATORILY REDEEMABLE PREFERRED SECURITIES                 49      61
PREFERRED DIVIDEND REQUIREMENT OF SCE&G - OBLIGATED MANDATORILY
    REDEEMABLE PREFERRED SECURITIES                                 1       1
--------------------------------------------------------------------------------

NET INCOME                                                         48      60
Preferred Stock Cash Dividends (At stated rates)                   (2)     (2)
--------------------------------------------------------------------------------
Earnings Available for Common Stock                                46      58
Retained Earnings at Beginning of Period                          491     438
Common Stock Cash Dividends Declared                              (36)    (37)
================================================================================
Retained Earnings at End of Period                               $501    $459
================================================================================

See Notes to Consolidated Financial Statements.



25


<PAGE>


                      SOUTH CAROLINA ELECTRIC & GAS COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                  For the Periods Ended March 31, 1999 and 1998
                                   (Unaudited)


                                                           Three Months Ended
                                                                March 31,
-------------------------------------------------------------------- -----------
                                                             1999         1998
-------------------------------------------------------------------- -----------

                              (Millions of Dollars)
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                               $ 48          $ 60
   Adjustments to reconcile net income to net 
    cash provided from operating activities:
       Depreciation and amortization                          38            26
       Amortization of nuclear fuel                            5             5
       Deferred income taxes, net                             22            20
       Pension asset                                          (7)           (1)
       Post retirement benefits                                3             3
       Allowance for funds used during construction           (2)           (4)
       Over (under) collections, fuel adjustment clauses       9            16
       Changes in certain current assets and liabilities:
           (Increase) decrease in receivables                 14             1
           (Increase) decrease in inventories                (15)           (5)
           Increase (decrease) in accounts payable           (12)           (9)
           Increase (decrease) in taxes accrued              (49)          (15)
       Other, net                                            (22)          (21)
-------------------------------------------------------------------- -----------
Net Cash Provided From Operating Activities                   32            76
-------------------------------------------------------------------- -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Utility property additions and construction expenditures,
    net of AFC                                               (48)          (46)
-------------------------------------------------------------------- -----------
Net Cash Used For Investing Activities                       (48)          (46)
-------------------------------------------------------------------- -----------

CASH FLOWS FROM FINANCING ACTIVITIES:                                 
  Proceeds:
      Issuance of First Mortgage Bonds                        99             -
  Dividend payments:                                                  
      Common stock                                           (36)         (56)
      Preferred stock                                         (2)          (2)
  Short-term borrowings, net                                 (48)          44
  Fuel and emission allowance financings, net                 13           (2)
-------------------------------------------------------------------- -----------
Net Cash Provided From (Used For) Financing Activities        26          (16)
-------------------------------------------------------------------- -----------

NET INCREASE IN CASH AND TEMPORARY CASH INVESTMENTS           10           14
CASH AND TEMPORARY CASH INVESTMENTS AT JANUARY 1              36            6
==================================================================== ===========
CASH AND TEMPORARY CASH INVESTMENTS AT MARCH 31             $ 46         $ 20
==================================================================== ===========

SUPPLEMENTAL CASH FLOW INFORMATION:
    Cash paid for - Interest (includes capitalized interest
                     of $1 for 1999 and $2 for 1998)        $ 21         $ 21
                           - Income taxes                      4          (20)

See Notes to Consolidated Financial Statements.

 26


<PAGE>


                      SOUTH CAROLINA ELECTRIC & GAS COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 March 31, 1999
                                   (Unaudited)

         The  following  notes should be read in  conjunction  with the Notes to
Consolidated  Financial  Statements  appearing in South Carolina  Electric & Gas
Company's  (the Company)  Annual Report on Form 10-K for the year ended December
31, 1998. These are interim  financial  statements,  and the amounts reported in
the Consolidated  Statements of Income are not necessarily indicative of amounts
expected for the year. In the opinion of management,  the information  furnished
herein  reflects all  adjustments,  all of a normal  recurring  nature except as
described in Note 2, which are necessary for a fair statement of the results for
the interim periods reported.

1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

       A.  Basis of Accounting

       The Company  accounts for its regulated  utility  operations,  assets and
       liabilities  in accordance  with the provisions of Statement of Financial
       Accounting  Standards No. 71 (SFAS 71). The accounting  standard requires
       cost-based  rate-regulated  utilities  to  recognize  in their  financial
       statements  revenues  and  expenses in  different  time  periods  than do
       enterprises  that are not  rate-regulated.  As a result the  Company  has
       recorded,  as of March  31,  1999,  approximately  $195  million  and $69
       million of regulatory  assets and  liabilities,  respectively,  including
       amounts  recorded  for  deferred  income tax assets  and  liabilities  of
       approximately  $123 million and $51 million,  respectively.  The electric
       and gas  regulatory  assets  (excluding  deferred  income tax  assets) of
       approximately  $43  million  and $27  million,  respectively,  are  being
       recovered  through  rates,  and the Public  Service  Commission  of South
       Carolina (PSC) has approved  accelerated  recovery of  approximately  $12
       million of the electric  regulatory assets. In the future, as a result of
       deregulation or other changes in the regulatory environment,  the Company
       may no longer meet the criteria for continued  application of SFAS 71 and
       could be required  to write off its  regulatory  assets and  liabilities.
       Such an event  could  have a  material  adverse  effect on the  Company's
       results of operations  in the period that a write-off  would be required,
       but it is not  expected  that cash flows or financial  position  would be
       materially affected.

       B.  Reclassifications

       Certain amounts from prior periods have been reclassified to conform with
the 1999 presentation.

2.     RATE MATTERS

       On December 11, 1998,  the PSC issued an order  requiring  the Company to
       reduce retail  electric  rates on a prospective  basis.  The PSC acted in
       response to the Company  reporting  that it earned a 13.04 percent return
       on common equity for its retail electric operations for the twelve months
       ended  September  30,  1998.  This return on common  equity  exceeded the
       Company's  authorized  return of 12  percent  by 1.04  percent,  or $22.7
       million,  primarily  as a result of record  heat  experienced  during the
       summer.  The  order  required   prospective  rate  reductions  on  a  per
       kilowatt-hour  basis,  based on actual retail sales for the twelve months
       ended  September 30, 1998. This action will reduce future reported return
       on common equity to the PSC-authorized  level if the Company  experiences
       the same weather effect and other business  results as that of the twelve
       months ended  September 30, 1998. On December 21, 1998, the Company filed
       a motion for  reconsideration  with the PSC. On January 12, 1999, the PSC
       denied the Company's  motion for  reconsideration,  ruled that no further
       rate action was required,  and reaffirmed the Company's  return on equity
       of 12 percent. The rate reductions were placed into effect with the first
       billing cycle of January 1999.

3.  RETAINED EARNINGS:

       The Restated  Articles of  Incorporation of the Company and the Indenture
       underlying  its First and Refunding  Mortgage  Bonds  contain  provisions
       that,  under  certain  circumstances,  could  limit the  payment  of cash
       dividends on its common stock. In addition, with respect to hydroelectric
       projects,  the Federal Power Act requires the  appropriation of a portion
       of certain earnings  therefrom.  At March 31, 1999,  approximately  $26.0
       million of retained  earnings were  restricted by this  requirement as to
       payment of cash dividends on common stock.


27


<PAGE>


4.   CONTINGENCIES:

       With respect to commitments at March 31, 1999,  reference is made to Note
       10 of  Notes  to  Consolidated  Financial  Statements  appearing  in  the
       Company's  Annual  Report on Form 10-K for the year  ended  December  31,
       1998.
       Contingencies at March 31, 1999 are as follows:

       A. Nuclear Insurance

       The Price-Anderson Indemnification Act, which deals with public liability
       for a nuclear  incident,  currently  establishes  the liability limit for
       third-party  claims associated with any nuclear incident at $9.7 billion.
       Each  reactor  licensee is currently  liable for up to $88.1  million per
       reactor owned for each nuclear  incident  occurring at any reactor in the
       United  States,  provided that not more than $10 million of the liability
       per reactor would be assessed per year. The Company's maximum assessment,
       based on its  two-thirds  ownership of the V. C. Summer  Nuclear  Station
       (Summer Station),  would be approximately $58.7 million per incident, but
       not more than $6.7 million per year.

        The Company  currently  maintains  policies (for itself and on behalf of
        Santee  Cooper)  with  Nuclear  Electric  Insurance  Limited  (NEIL) and
        American  Nuclear  Insurers  (ANI)  providing   combined   property  and
        decontamination  insurance  coverage  of $2.0  billion for any losses at
        Summer Station. The Company pays annual premiums and, in addition, could
        be  assessed a  retroactive  premium not to exceed five times its annual
        premium in the event of property  damage loss to any nuclear  generating
        facility  covered  under the NEIL program.  Based on the current  annual
        premium,  this  retroactive  premium  assessment  would not exceed  $6.1
        million.

           To  the  extent   that   insurable   claims  for   property   damage,
        decontamination,  repair and  replacement  and other costs and  expenses
        arising  from a nuclear  incident  at Summer  Station  exceed the policy
        limits of insurance, or to the extent such insurance becomes unavailable
        in the  future,  and to the extent  that the  Company's  rates would not
        recover the cost of any purchased  replacement  power,  the Company will
        retain the risk of loss as a self-insurer.  The Company has no reason to
        anticipate  a serious  nuclear  incident at Summer  Station.  If such an
        incident were to occur,  it could have a material  adverse impact on the
        Company's results of operations, cash flows and financial position.

        B.  Environmental

        The  Company has an  environmental  assessment  program to identify  and
        assess   current  and  former   operations   sites  that  could  require
        environmental cleanup. As site assessments are initiated,  estimates are
        made of the  expenditures,  if any, deemed  necessary to investigate and
        clean  up  each  site.   These   estimates  are  refined  as  additional
        information  becomes  available;  therefore,  actual  expenditures could
        differ significantly from the original estimates.  Amounts estimated and
        accrued to date for site  assessments  and cleanup  relate  primarily to
        regulated  operations.  Such  amounts are deferred  and  amortized  with
        recovery provided through rates. The Company has also recovered portions
        of  its  environmental  liabilities  through  settlements  with  various
        insurance  carriers.  The Company has recovered  all amounts  previously
        deferred for its electric operations. The Company expects to recover all
        deferred  amounts  related  to its  gas  operations  by  December  2002.
        Deferred  amounts,  net of amounts recovered through rates and insurance
        settlements,  totaled  $20.8  million at March 31,  1999.  The  deferral
        includes the estimated costs associated with the following matters.

     o    In  September  1992,  the  EPA  notified  the  Company,  the  City  of
          Charleston and the  Charleston  Housing  Authority of their  potential
          liability for the  investigation  and cleanup of the Calhoun Park area
          site  in   Charleston,   South   Carolina.   This   site   encompasses
          approximately  30 acres and includes  properties  which were locations
          for  industrial  operations,  including a wood  preserving  (creosote)
          plant,  one of the Company's  decommissioned  manufactured gas plants,
          properties  owned  by the  National  Park  Service  and  the  City  of
          Charleston,  and private  properties.  The site has not been placed on
          the  National  Priorities  List,  but may be added in the future.  The
          Potentially    Responsible   Parties   (PRPs)   have   negotiated   an
          administrative  order  by  consent  for  the  conduct  of  a  Remedial
          Investigation/Feasibility  Study  and a  corresponding  Scope of Work.
          Field work began in  November  1993,  and the EPA  approved a Remedial
          Investigation  Report in February 1997 and a Feasibility  Study Report
          in June 1998.  In July 1998,  the EPA approved the  Company's  Removal
          Action Work Plan for soil excavation.  The Company completed Phase One
          of the Removal Action in 1998 at a cost of approximately $1.5 million.
          Phase  Two  will  include   excavation  and  installation  of  several
          permanent  barriers to mitigate  coal tar seepage.  Phase Two began in
          November 1998, and is expected to cost approximately
28


<PAGE>




       $2.2 million. On September 30, 1998 a Record of Decision was issued which
       sets forth EPA's view of the extent of each PRP's responsibility for site
       contamination  and the  level to which the site  must be  remediated.  On
       January 13,  1999 the EPA issued a  Unilateral  Administrative  Order for
       Remedial Design and Remedial  Action  directing the Company to design and
       carry out a plan of  remediation  for the Calhoun Park site. The Order is
       temporarily stayed pending further  negotiations  between the Company and
       the EPA.

       In  October  1996 the City of  Charleston  and the  Company  settled  all
       environmental  claims the City may have had against  SCE&G  involving the
       Calhoun  Park  area  for  a  payment  of  $26  million  over  four  years
       (1996-1999) by SCE&G to the City. The Company is recovering the amount of
       the  settlement,  which does not encompass  site  assessment  and cleanup
       costs, through rates in the same manner as other amounts accrued for site
       assessments and cleanup as discussed above. As part of the  environmental
       settlement,  SCE&G has agreed to construct an 1,100 space parking  garage
       on the  Calhoun  Park site and to  transfer  the  facility to the City in
       exchange for a 20-year municipal bond backed by revenues from the parking
       garage and a mortgage on the parking garage. The total amount of the bond
       is not to exceed $16.9 million,  the maximum  expected  project cost. The
       parking  garage is currently  under  construction  and is  scheduled  for
       completion in the spring of the year 2000.

     o    The Company  owns three other  decommissioned  manufactured  gas plant
          sites which  contain  residues of by-product  chemicals.  For the site
          located in Sumter,  South Carolina,  effective September 15, 1998, the
          Company  entered into a Remedial  Action Plan  Contract with the South
          Carolina  Department  of  Health  and  Environmental   Control  (DHEC)
          pursuant to which it agreed to undertake a full site investigation and
          remediation  under  the  oversight  of DHEC.  Site  investigation  and
          characterization are proceeding according to schedule.  Upon selection
          and  successful  implementation  of a site remedy,  DHEC will give the
          Company a  Certificate  of  Completion  and a covenant not to sue. The
          Company is  continuing  to  investigate  the other two  sites,  and is
          monitoring the nature and extent of residual contamination.

5.       SEGMENT OF BUSINESS INFORMATION:



The Company's reportable segments are listed in the following table. The Company
uses operating income to measure  profitability for its Electric  Operations and
Gas  Distribution  segments.  Therefore,  net income is not  allocated  to these
segments.  Affiliate  revenue is derived from  transactions  between  reportable
segments  as well as  transactions  between  separate  legal  entities  that are
combined into the same reportable segment.  Assets for the period did not change
significantly.

               Disclosure and Reconciliation of Reportable Segments
                                   (unaudited)

                            Three Months Ended            Three Months Ended
                              March 31, 1999               March 31, 1998
--------------------------------------------------------------------- ----------

                       Operating External Affiliate Operating External Affiliate
                         Income  Revenue  Revenue    Income   Revenue  Revenue
                                                 (Millions of Dollars)

Electric Operations        $60     $266       $44        $69     $269       $42
Gas Distribution            14       86          -        16       88         -
--------------------------------------------------------------------------------
Total Reportable Segments  74      $352       $44         85     $357       $42
                                   ====       ===                ====       ===
Elimination of Affiliates   (1)                           (1)
Non-reportable Segments     (1)                           (1)
--------------------------------------------------------------------------------
Consolidated Totals        $72                                    $83
                           ===                                    ===





        29


<PAGE>



Item 2.  Management's Discussion and Analysis of Financial Condition 
           and Results of Operations


                      SOUTH CAROLINA ELECTRIC & GAS COMPANY
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

        The following discussion should be read in conjunction with Management's
Discussion  and  Analysis  of  Financial  Condition  and  Results of  Operations
appearing in SCE&G's  Annual Report on Form 10-K for the year ended December 31,
1998.

        Statements  included in this  discussion  and analysis (or  elsewhere in
this quarterly  report) which are not statements of historical fact are intended
to be, and are hereby  identified as, "forward looking  statements" for purposes
of the safe harbor  provided by Section 27A of the  Securities  Act of 1933,  as
amended,  and Section 21E of the  Securities  Exchange Act of 1934,  as amended.
Readers  are  cautioned  that  any  such  forward-looking   statements  are  not
guarantees   of  future   performance   and   involve  a  number  of  risks  and
uncertainties,  and that  actual  results  could  differ  materially  from those
indicated by such forward-looking statements. Important factors that could cause
actual results to differ materially from those indicated by such forward-looking
statements  include,  but are not  limited  to,  the  following:  (1)  that  the
information  is of a  preliminary  nature and may be  subject to further  and/or
continuing  review  and  adjustment,  (2)  changes  in  the  utility  regulatory
environment,  including  the pace of  deregulation  of  retail  natural  gas and
electricity  markets in the United States,  (3) changes in the economy,  (4) the
impact of competition from other energy suppliers, (5) the management of SCE&G's
operations,  (6) variations in prices of natural gas and fuels used for electric
generation, (7) growth opportunities,  (8) the results of financing efforts, (9)
changes in SCE&G's accounting policies,  (10) weather conditions in areas served
by SCE&G, (11) inflation, (12) exposure to environmental issues and liabilities,
(13) changes in environmental  regulation,  (14) unsuccessful  correction of any
material Year 2000 problem or, alternatively,  unsuccessful  implementation of a
contingency  plan by SCE&G and any critical  third party  suppliers and (15) the
other risks and  uncertainties  described from time to time in SCE&G's  periodic
reports  filed  with the SEC.  SCE&G  disclaims  any  obligation  to update  any
forward-looking statements.

               MATERIAL CHANGES IN CAPITAL RESOURCES AND LIQUIDITY
                             SINCE DECEMBER 31, 1998

LIQUIDITY AND CAPITAL RESOURCES

       On December 11, 1998, the South Carolina Public Service  Commission (PSC)
issued an order requiring SCE&G to reduce retail electric rates on a prospective
basis.  The PSC acted in  response  to SCE&G  reporting  that it earned a 13.04%
return on common equity for its retail electric operations for the twelve months
ended  September  30,  1998.  This  return on  common  equity  exceeded  SCE&G's
authorized return of 12.0% by 1.04%, or $22.7 million,  primarily as a result of
record-breaking   heat  experienced   during  the  summer.  The  order  required
prospective rate reductions on a per kilowatt-hour basis, based on actual retail
sales for the twelve months ended  September  30, 1998.  This action will reduce
future  reported  return on common equity to the  PSC-authorized  level if SCE&G
experiences  the same weather effect and other  business  results as that of the
twelve  months ended  September  30, 1998.  On December 21, 1998,  SCE&G filed a
motion for  reconsideration  with the PSC. On January 12,  1999,  the PSC denied
SCE&G's motion for  reconsideration  and reaffirmed  SCE&G's return on equity of
12.0%.  The rate reductions were placed into effect with the first billing cycle
of January 1999.










30


<PAGE>



        The following table summarizes how SCE&G generated funds for its utility
property additions and construction  expenditures  during the three months ended
March 31, 1999 and 1998:

Three Months Ended March 31,                           1999     1998
-----------------------------------------------------------------------------
                                                       (Millions of Dollars)

Net cash provided for operating activities             $32       $76
Net cash provided from (used for) financing 
  activities                                            26       (16)
Cash and temporary cash investments available 
  at the beginning of the period                        36         6
----------------------------------------------------------------------------
Net cash available for utility property additions 
  and construction expenditures                        $94       $66
============================================================================
Funds used for utility property additions and 
 construction expenditures, net of noncash            
 allowance for funds used during construction          $48       $ 46
============================================================================

        On March 9, 1999,  SCE&G  issued $100  million of First  Mortgage  Bonds
having an annual  interest  rate of 6 1/8% and maturing on March 1, 2009.  These
funds were used to reduce short-term debt.

        SCE&G  anticipates that the remainder of its 1998 cash requirements will
be met through  internally  generated  funds and the  incurrence  of  additional
short-term and long-term indebtedness.  The timing and amount of such financings
will depend upon market conditions and other factors.  SCE&G expects that it has
or can  obtain  adequate  sources  of  financing  to  meet  its  projected  cash
requirements  for the next twelve  months and for the  foreseeable  future.  The
ratio of earnings to fixed  charges for the twelve  months  ended March 31, 1999
was 4.21.

Year 2000 Issue

       The Year 2000 is an issue because many  computers,  embedded  systems and
software were originally  programmed using two digits rather than four digits to
identify the applicable  year. This may prevent them from accurately  processing
information  with dates  beyond  1999.  Because the Year 2000 issue could have a
material impact on the operations of SCE&G if not addressed,  SCE&G's goal is to
be Year 2000  ready.  This means that  before the year 2000,  critical  systems,
equipment,  applications and business relationships will have been evaluated and
should be suitable to continue into and beyond the year 2000 and that applicable
contingency plans are in place.

        In 1993,  SCE&G began the first of several  projects to replace  many of
its  business  application  systems to provide  increased  functionality  and to
improve access to business information.  Accordingly,  SCE&G has implemented new
general ledger,  purchasing,  materials  inventory and accounts payable systems,
and is  currently  implementing  a new  customer  information  system.  The  new
customer  information  system is being phased into  production  by  geographical
area,  and  should be fully  implemented  in the first  half of 1999.  These new
systems,  which comprise a significant portion of SCE&G's application  software,
are designed to be Year 2000 compliant, and therefore mitigate overall Year 2000
exposure.

        In 1997, SCANA Corporation (SCANA), SCE&G's parent company,  established
a  Corporate  Year 2000  Project  Office  (Project  Office) to direct  Year 2000
efforts for itself and each of its  subsidiaries,  including  SCE&G.  A Steering
Committee was formed to direct the efforts of the Project  Office.  The Steering
Committee reports to the senior officers of SCANA and its board of directors. It
is chaired by SCANA's  chief  financial  officer,  and is  comprised of officers
representing  all operational  areas. The Project Office is staffed by nine full
time project  managers and extensive  support  personnel.  The Project Office is
responsible  for  addressing  Year 2000  issues and  coordinating  the  required
assessment and remediation efforts.

        SCANA's Year 2000 efforts encompass three projects, all reporting to the
Steering Committee.  The Information Technology Project covers all mainframe and
client server application software,  infrastructure  hardware,  system software,
desktop computers and network equipment. The Embedded Systems Project covers all
microprocessors,  instrument and control devices,  monitoring equipment on power
lines and in substations,  security and control devices,  telephone  systems and
certain types of meters.  The Procedures and External  Interfaces Project covers
Year 2000  procedures,  documentation  and  communications  with key  suppliers,
vendors, customers, financial institutions and governmental agencies.

31


<PAGE>


        SCANA's  Year  2000  project  approach   involves  the  following:   (1)
inventorying all Year 2000 internal and external items and entities and updating
the Year 2000 Inventory  Database;  (2)  performing  risk analysis and corporate
prioritization of all inventory entries;  (3) performing detailed assessments of
all  inventory  entries to determine  Year 2000  readiness  and  establishing  a
remediation  action plan where necessary;  (4) remediating all inventory entries
assessed  as  non-compliant,   including  repairing,   replacing  or  developing
acceptable  work-arounds;  (5) testing through date simulation and comprehensive
test  data (6)  implementation  of all  converted  systems  and  equipment  into
production operations; and (7) contingency planning.

        Detailed  project plans exist for each of the Year 2000 projects.  These
project plans,  work schedules and resource  requirements are reviewed weekly by
the  project  managers  and  monthly by the  Steering  Committee.  The Year 2000
projects,   which  will   address   SCE&G's   critical   systems  and   business
relationships,  are  appropriately  staffed and are  currently on schedule to be
completed by July 1999. As reported to the North American  Electric  Reliability
Council (NERC) in March 1999,  SCE&G was 100% complete with inventory tasks, 78%
complete with detailed assessment tasks and 70% complete with remediation tasks.

        The Information Technology Project Team has completed the assessment and
initial code remediation for all application software.  Many of the applications
have been  tested in an  isolated  Year 2000  testing  environment  and the rest
continue to be tested  according  to the project  schedule.  Independent  vendor
verifications  of remediated code for selected  applications are planned for the
second  quarter of 1999.  The  assessment  of the technical  infrastructure  and
desktop  computing  environment  is  complete  and  required  remediation  is in
process.  Testing  of  all  network  equipment  is in  process.  An  Information
Technology Audit Review Committee has been established to review all assessments
for mission  critical  applications  and  technical  infrastructure  items.  The
Information  Technology  Project was  approximately  65% complete  through March
1999.

        The Embedded  Systems  Project Team,  which  includes  approximately  20
engineers with prior  experience with  microprocessors,  was formed and detailed
assessment,  remediation and testing  procedures  were  developed.  This team is
currently  working  closely with each of SCE&G's  business units to complete the
assessments   of  critical   systems  and  equipment   based  on  the  corporate
prioritization  process. An Embedded Systems Audit Review Committee continues to
review all assessments for critical systems.  As assessments are completed,  any
required  remediation efforts are evaluated and implemented.  Independent vendor
verifications for selected completed assessments were completed during the first
quarter of 1999 and confirmed SCE&G's previous conclusions. The Embedded Systems
Project was approximately 75% complete through March 1999.

        The  Procedures  and  External  Interfaces  Project  Team has  developed
written  documentation  and  procedures  for Year  2000  compliance  definition,
document control, inventory,  prioritization,  assessment,  remediation,  change
control,  business  continuity  planning,  and  vendor,  customer  and  supplier
communications.  This team is coordinating  communications  with all significant
vendors and  suppliers in an attempt to determine  the extent to which SCE&G may
be vulnerable to their  failure to remediate  their own Year 2000 issues.  SCE&G
has  completed  an initial  survey of vendors and is  currently  evaluating  the
responses to the survey and conducting  additional  inquiries  where  necessary.
SCE&G  is also  in the  process  of  evaluating  critical  third  party  service
providers  to ascertain  their Year 2000  readiness.  The Company has  developed
communications  materials  explaining  its year 2000  efforts and is  continuing
communications  with significant  customers and external  groups,  including the
South Carolina Public Service Commission. The Procedures and External Interfaces
Project was approximately 60% complete through March 1999.

        SCE&G's   projected  total  cost  of  its  Year  2000  efforts  and  the
anticipated timing and breakdown of these expenditures is a follows:

----------------------------------------------------------------------------
                    Internal        Out of Pocket          Total
----------------------------------------------------------------------------
Project To Date        $ 2               $ 8               $ 10
1999                     3                 6                 9
                         -                 -                 -
Total                  $ 5              $ 14                $19
----------------------------------------------------------------------------




32


<PAGE>



        The cost of the project is based on management's  best estimates,  which
are based on assumptions  regarding  future events.  These future events include
continued availability of key resources,  third parties' Year 2000 readiness and
other factors. The cost of the project is not expected to have a material impact
on the  results of  operations  or on the  financial  position  or cash flows of
SCE&G. The costs of implementing the new business  application  systems referred
to earlier are not included in these cost estimates.

        A failure  to  correct a  material  Year 2000  problem  by SCE&G or by a
critical third party supplier could result in an  interruption  in, or a failure
of SCE&G's ability to provide energy services.  At this time, SCE&G believes its
most reasonably likely worst case scenario is that Year 2000 failures could lead
to temporarily reduced generating capacity on SCE&G's electrical grid, temporary
intermittent   interruptions  in  communications   and  temporary   intermittent
interruptions in gas supply from interstate suppliers or producers.  A Year 2000
problem of this nature could result in  temporary  interruptions  in electric or
gas  service  to  our  customers.   SCE&G  has  no  historical  experience  with
interruptions caused by this scenario. However, these temporary interruptions in
service,  if any,  might  be  similar  to  weather-related  outages  that  SCE&G
encounters  from time to time in its  business  today.  Although  SCE&G does not
believe that this scenario will occur, SCE&G is enhancing  existing  contingency
plans to ensure  preparedness  and to  mitigate  the long term  effect of such a
scenario. Since the expected impact of this scenario on SCE&G's operations, cash
flow and financial position cannot be determined,  there is no assurance that it
would not be material.

        SCE&G has established eight business  continuity planning task groups to
develop Year 2000 business  continuity  plans.  These task groups have developed
initial  draft plans to cover SCE&G's  Corporate  Operations,  Customer  Service
Operations,  Electric Generation,  Transmission and Distribution Operations, Gas
Delivery Operations,  Telecommunications and Emergency Preparedness, Information
Technology  and  Procurement.  Detailed  contingency  plans that were already in
place to cover weather-related outages, computer failures and generation outages
were  used  and/or  referenced  as the  basis for the  initial  draft  Year 2000
business  continuity  plans.  The  initial  draft  plans  are  continuing  to be
enhanced,  and  where  necessary,  new  plans are  being  developed  to  include
mitigation  strategies and emergency  response action plans to address potential
Year 2000  scenarios  and critical  system  failures.  The final plans will also
include mitigation strategies to address reliance on critical suppliers.

        NERC is coordinating  Year 2000 efforts of the electric utility industry
in the United  States and  contingency  planning  within the  regional  electric
reliability councils. Coordination in SCE&G's region is through the Southeastern
Electric Reliability Council (SERC). SCE&G's contingency planning efforts are in
compliance with the SERC and NERC contingency planning guidelines which required
draft  contingency  plans to be complete by December  31, 1998 and will  require
final contingency plans to be complete by June 30, 1999.

        On April 9, 1999,  SCE&G  participated in the first of two NERC required
contingency  planning  drills that are  intended  to test backup  communications
systems and the  Company's  ability to operate the electric  grid with  manually
read data instead of computerized systems.  SCE&G's gas distribution  operations
also participated in the drill. The drills were successful and no major problems
with the Company's backup procedures were found.

       In addition to NERC and SERC,  SCE&G is working with the  Electric  Power
Research  Institute  to  address  the  issue of  overall  grid  reliability  and
protection.  To ensure that all Year 2000 issues at its Summer  Station  nuclear
plant are addressed,  SCE&G is closely  cooperating with other utility companies
that own nuclear power plants. The utilities are sharing technical nuclear plant
operating and monitoring systems  information to ensure the prompt and effective
resolution of the Year 2000 issue.












33


<PAGE>



                              RESULTS OF OPERATIONS
                    FOR THE THREE MONTHS ENDED MARCH 31, 1999
                 AS COMPARED TO THE CORRESPONDING PERIOD IN 1998

Earnings and Dividends

           Net  income  for the three  months  ended  March 31,  1999  decreased
approximately $11.7 million when compared to the corresponding  periods in 1998.
Lower  electric  margins and the impact of a rate  reduction were only partially
offset by reduced other operation and  maintenance  expenses.  In addition,  net
income for the three months  ended March 31, 1998 include a one-time,  after-tax
reduction to  depreciation  expense of  approximately  $5.5 million related to a
change in  depreciation  rates  retroactive  to  February  1996.  This change in
depreciation  rates  resulted  from  the  reversal  of a $257  million  shift of
depreciation  reserves from electric  transmission  and  distribution  assets to
nuclear  production assets,  previously  approved in a PSC rate order in January
1996.

           Allowance  for  funds  used  during  construction  (AFC) is a utility
accounting  practice  whereby a portion of the cost of both equity and  borrowed
funds  used to  finance  construction  (which is shown on the  balance  sheet as
construction  work in  progress)  is  capitalized.  Both the equity and the debt
portions of AFC are noncash items of  nonoperating  income which have the effect
of increasing  reported net income.  AFC represented  approximately 3% and 4% of
income  before  income taxes for the three months ended March 31, 1999 and 1998,
respectively.

           SCE&G's Board of Directors  authorized payment of dividends on common
stock held by SCANA, as follows:

-------------------- ----------------- ----------------- -----------------
Declaration          Dividend          Quarter           Payment
Date                 Amount            Ended             Date
-------------------- ----------------- ----------------- -----------------
February 17, 1999    $35.8 million     March 31, 1999    April 1, 1999
April 22, 1999       $35.8 million     June 30, 1999     July 1, 1999
-------------------- ----------------- ----------------- -----------------

Electric Operations

           Electric  operations  sales  margins  (including   transactions  with
affiliates) for the three months ended March 31, 1999 and 1998 were as follows:

Three Months Ended March 31,       1999         1998     Change      % Change
--------------------------------------------------------------------------------
                                   (Million of Dollars)

Electric operating revenue        $309.8       $311.6      $(1.8)      (0.6%)
Less:  Fuel used in generation      87.3         84.0      3.3        3.9%
           Purchased power          28.1         26.3      1.8        6.8%
--------------------------------------------------------------------------------
Margin                            $194.4       $201.3     $(6.9)       (3.4%)
================================================================================

           The electric  operations  sales margin decreased for the three months
ended March 31, 1999 when compared to the corresponding period in 1998 primarily
as a result of milder weather in the first quarter of 1999 and implementation in
January  1999 of a $22.7  million  annual  rate  reduction  ordered by the South
Carolina Public Service Commission. See LIQUIDITY AND CAPITAL RESOURCES.

Gas Distribution

           Gas  distribution  sales margins for the three months ended March 31,
1999 and 1998 were as follows:

Three Months Ended March 31,       1999         1998       Change    % Change
--------------------------------------------------------------------------------
                                   (Million of Dollars)

Gas operating revenue             $86.1        $88.2       $(2.1)     (2.3%)
Less:  Gas purchased for resale    49.1         48.9         0.2       0.3%
--------------------------------------------------------------------------------
Margin                            $37.0        $39.3       $(2.3)     (5.6%)
================================================================================



34


<PAGE>


     The gas distribution sales margin for the three months ended March 31, 1999
decreased from 1998 levels primarily as a result of increased competitiveness of
alternative fuels and milder weather.

 Other Operating Expenses

     Changes in other operating expenses,  including taxes, for the three months
ended March 31, 1999 when compared to the corresponding periods in 1998, were as
follows:

Three Months Ended March 31,     1999      1998       Change     % Change
-------------------------------------------------------------------------------
                                (Million of Dollars)

Other operation and maintenance $ 70.2    $ 73.9       $(3.7)      (5.0%)
Depreciation and amortization     38.2      26.2        12.0       45.8%
Income taxes                      26.1      33.5        (7.4)     (22.1%)
Other taxes                       24.6      23.5         1.1        4.7%
-------------------------------------------------------------------------------
Margin                          $159.1    $157.1       $ 2.0        1.3%
===============================================================================

     Other operation and  maintenance  expenses for the three months ended March
31,  1999  decreased  from  1998  levels  primarily  as a  result  of  decreased
maintenance  costs for electric  generation  and  distribution  facilities.  The
increase in depreciation  and  amortization  expenses for the three months ended
March 31, 1999 reflects the  non-recurring  adjustment to  depreciation  expense
discussed  under  "Earnings  and  Dividends."  The change in income tax  expense
primarily  reflects the change in operating income.  The increase in other taxes
for the period primarily results from increases in property taxes.

Other Income

     Other  income,  net of income  taxes,  for the three months ended March 31,
1999 increased approximately $0.8 million and is not material.


Item 3.    Quantitative and Qualitative Disclosure About Market Risk

     All  financial  instruments  held by  SCE&G  described  below  are held for
purposes other than trading.

     Interest  rate risk - The table below  provides  information  about SCE&G's
financial  instruments that are sensitive to changes in interest rates. For debt
obligations,  the table  presents  principal  cash  flows and  related  weighted
average interest rates by expected maturity dates.

<TABLE>
<CAPTION>


                           March 31, 1999
                                                                    Expected Maturity Date
                      -------------- ------------------ ------------------------------- --------- --------------------
                                                            (Millions of Dollars)
                                                                                     There-                   Fair
Liabilities              1999          2000       2001        2002        2003       After       Total       Value
                      -------------- --------- ----------- ----------- ----------- ----------- ----------- -----------

Long-Term Debt
<S>        <C>           <C>          <C>         <C>         <C>        <C>        <C>         <C>         <C>    
Fixed Rate ($)           29.1         188.6       22.6        22.6       124.5      1,043.4     1,437.1     1,456.4
Average Interest Rate    6.56           5.89      6.72        6.72         7.56         7.55        7.28

</TABLE>
     While a decrease in interest  rates would  increase the fair value of debt,
it is unlikely that events which would result in a realized loss will occur.



35

<PAGE>



                           PART II. OTHER INFORMATION

Item 1.   Legal Proceedings

         SCANA Corporation:

         For information  regarding legal proceedings see Note 2 "Rate Matters,"
         appearing  in the  Company's  Annual  Report  on Form 10-K for the year
         ended  December  31,  1998,  and  Note 5  "Contingencies"  of  Notes to
         Consolidated Financial Statements appearing in this Quarterly Report on
         Form 10-Q.

         South Carolina Electric  & Gas Company:

         For information  regarding legal proceeding see Note 2 "Rate Matters, "
         appearing in South Carolina  Electric & Gas Company's  Annual Report on
         Form  10-K  for  the  year  ended   December  31,  1998,   and  Note  4
         "Contingencies" of Notes to Consolidated Financial Statements appearing
         in this Quarterly Report on Form 10-Q.

Items 2, 3, 4 and 5 are not applicable  for SCANA  Corporation or South Carolina
Electric & Gas Company.


Item 6.    Exhibits and Reports  on Form 8-K

         SCANA Corporation and South Carolina Electric & Gas Company:

         A.  Exhibits

                Exhibits  filed  with  this  Quarterly  Report  on Form 10-Q are
                listed in the following Exhibit Index.  Certain of such exhibits
                which  have  heretofore  been  filed  with  the  Securities  and
                Exchange  Commission  and which are  designated  by reference to
                their exhibit  numbers in prior filings are hereby  incorporated
                herein by reference and made a part hereof.

         B. Reports on Form 8-K during the first quarter 1999 were as follows:

         SCANA filed a current report on Form 8-K:
         Date of report:   February 16, 1999
         Items reported:  Item 5 and Item 7

         SCE&G filed a current report on Form 8-K:
         Date of report:  February 16, 1999
         Items reported:  Item 5 and Item 7




36


<PAGE>



                                SCANA CORPORATION


                                   SIGNATURES

       Pursuant to the requirements of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




                                        SCANA CORPORATION
                                         (Registrant)




May 17, 1999                   By: s/K. B. Marsh      
                                   -------------------
                                    K. B. Marsh,Senior Vice President -Finance,
                                    Chief Financial Officer and Controller
                                    (Principal financial officer)


37


<PAGE>




                      SOUTH CAROLINA ELECTRIC & GAS COMPANY

                                   SIGNATURES

       Pursuant to the requirements of the Securities  Exchange Act of 1934, the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                           SOUTH CAROLINA ELECTRIC & GAS COMPANY
                                      (Registrant)




May 17,  1999                 By:    s/Jimmy E. Addison            
                                     Jimmy E. Addison
                                     Vice President and Controller
                                    (Principal accounting officer)




38


<PAGE>



                                  EXHIBIT INDEX

       Applicable to
       Form 10-Q of
Exhibit
No.  SCANA SCE&G Description                                  

 2.01   X     X  Agreement and Plan of Merger, dated as of February 16, 1999 as
                 amended and restated as of May 10, 1999, by and among Public 
                 Service Company of North Carolina, Incorporated, SCANA
                 Corporation , New Sub I, Inc. and New Sub II, Inc. (Filed as 
                 Exhibit 2.1 to SCANA Form S-4 on May 11, 1999)

3.01    X        Restated Articles of Incorporation of SCANA as adopted on 
                 April 26, 1989 (Filed as Exhibit 3-A to Registration Statement 
                 No. 33-49145)

3.02             X Restated Articles of Incorporation of SCE&G, as
                 adopted on  December  15,  1993 (Filed as Exhibit
                 3-A to Form 10-Q for the  quarter  ended June 30,
                 1994, File No. 1-3375)

3.03    X        Articles of Amendment of SCANA, dated April 27, 1995 (Filed as 
                 Exhibit 4-B to Registration Statement No. 33-62421)

3.04          X  Articles of Amendment of SCE&G, dated June 7, 1994 filed 
                 June 9, 1994  (Filed as Exhibit 3-B to Form 10-Q for the 
                 quarter ended June 30, 1994, File No.  1-3375)

3.05          X  Articles of Amendment of SCE&G, dated November 9, 1994 (Filed 
                 as Exhibit 3-C to Form 10-K for the year ended December 31, 
                 1994, File No. 1-3375)

3.06          X  Articles of Amendment of SCE&G, dated December 9, 1994 (Filed 
                 as Exhibit 3-D to Form 10-K for the year ended December 31, 
                 1994, File No. 1-3375)

3.07          X  Articles of Correction of SCE&G, dated January 17, 1995 (Filed 
                 as Exhibit 3-E to From 10-K for the year ended December 31, 
                 1994, File No. 1-3375)

3.08          X  Articles of Amendment of SCE&G, dated January  13, 1995 and 
                 filed January 17, 1995 (Filed as Exhibit 3-F to Form 10-K for 
                 the year ended December 31, 1994, File No. 1-3375)

3.09          X  Articles of Amendment of SCE&G, dated March 31, 1995 (Filed as 
                 Exhibit 3-G to Form 10-Q for the quarter ended March 31, 1995, 
                 File No. 1-3375)

3.10          X  Articles of Correction of SCE&G - Amendment to Statement filed 
                 March 31, 1995, dated December 12, 1995 (Filed as Exhibit 3-H 
                 to Form 10-K for the year ended December 31, 1995,
                 Filed No. 1-3375)

3.11          X  Articles of Amendment of SCE&G, dated December 13, 1995 (Filed
                 as Exhibit 3-I to Form 10-K for the year ended December 31, 
                 1995, File No. 1-3375)

3.12          X  Articles of Amendment of SCE&G, dated February 18, 1997 (Filed
                 as Exhibit 3-L to Registration Statement No. 333-24919)

3.13          X  Articles of Amendment of SCE&G, dated February 21, 1997 (Filed
                 as Exhibit 3-L to Form 10-Q for the quarter ended 
                 March 31, 1997)

3.14          X  Articles of Amendment of SCE&G, dated April 22, 1997 (Filed as
                 Exhibit 3-M to Form 10-Q for the quarter ended June 30, 1997)

3.15          X  Articles of Amendment of SCE&G, dated April 9, 1998 (Filed 
                 herewith on page 43)

3.16    X        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)


39

<PAGE>


       Applicable to
       Form 10-Q of
Exhibit
No.  SCANA SCE&G Description

3.17      X      By-Laws of SCE&G as revised and amended on  December 17, 1997 
                 (Filed as Exhibit 3-J to Form 10-K for the year ended 
                  December 31, 1997)


4.01  X          Articles of Exchange of South Carolina Electric and Gas Company
                 and SCANA Corporation (Filed as Exhibit 4-A to Post-Effective 
                 Amendment No. 1 to Registration Statement No. 2-90438)

4.02  X          Indenture dated as of November 1, 1989 to The Bank of New York,
                 Trustee (Filed as Exhibit 4-A to Registration Statement No. 
                 33-32107)

4.03  X   X      Indenture dated as of January 1, 1945, from the South Carolina
                 Power Company (the "Power Company") to Central Hanover Bank and
                 Trust Company, as Trustee, as supplemented by three 
                 Supplemental Indentures dated respectively as of May 1, 1946,
                 May 1, 1947 and July 1, 1949 (Filed as Exhibit 2-B to 
                 Registration Statement No. 2-26459)

4.04  X   X      Fourth Supplemental Indenture dated as of April 1, 1950, to
                 Indenture referred to in Exhibit 4.03, pursuant to which SCE&G 
                 assumed said Indenture (Filed as Exhibit 2-C to Registration
                 Statement No. 2-26459)

4.05  X   X      Fifth through Fifty-second Supplemental Indenture referred to 
                 in Exhibit 4.03 dated as of the dates indicated below and filed
                 as exhibits to the Registration Statements and 1934 Act
                 reports whose file numbers are set forth below:

                December 1, 1950   Exhibit 2-D     to Registration No. 2-26459
                July 1, 1951       Exhibit 2-E     to Registration No. 2-26459
                June 1, 1953       Exhibit 2-F     to Registration No. 2-26459
                June 1, 1955       Exhibit 2-G     to Registration No. 2-26459
                November 1, 1957   Exhibit 2-H     to Registration No. 2-26459
                September 1, 1958  Exhibit 2-I     to Registration No. 2-26489
                September 1, 1960  Exhibit 2-J     to Registration No. 2-26459
                June 1, 1961       Exhibit 2-K     to Registration No. 2-26459
                December 1, 1965   Exhibit 2-L     to Registration No. 2-26459
                June 1, 1966       Exhibit 2-M     to Registration No. 2-26459
                June 1, 1967       Exhibit 2-N     to Registration No. 2-29693
                September 1, 1968  Exhibit 4-O     to Registration No. 2-31569
                June 1, 1969       Exhibit 4-C     to Registration No. 33-38580
                December 1, 1969   Exhibit 4-O     to Registration No. 2-35388
                June 1, 1970       Exhibit 4-R     to Registration No. 2-37363
                March 1, 1971      Exhibit 2-B-17  to Registration No. 2-40324
                January 1, 1972    Exhibit 2-B     to Registration No. 33-38580
                July 1, 1974       Exhibit 2-A-19  to Registration No. 2-51291
                May 1, 1975        Exhibit 4-C     to Registration No. 33-38580
                July 1, 1975       Exhibit 2-B-21  to Registration No. 2-53908
                February 1, 1976   Exhibit 2-B-22  to Registration No. 2-55304
                December 1, 1976   Exhibit 2-B-23  to Registration No. 2-57936
                March 1, 1977      Exhibit 2-B-24  to Registration No. 2-58662
40

<PAGE>


    Applicable to
     Form 10-Q of
Exhibit
No. SCANA SCE&G Description


              May 1, 1977         Exhibit 4-C      to Registration No. 33-38580
              February 1, 1978    Exhibit 4-C      to Registration No. 33-38580
              June 1, 1978        Exhibit 2-A-3    to Registration No. 2-61653
              April 1, 1979       Exhibit 4-C      to Registration No. 33-38580
              June 1, 1979        Exhibit 2-A-3    to Registration No. 33-38580
              April 1, 1980       Exhibit 4-C      to Registration No. 33-38580
              June 1, 1980        Exhibit 4-C      to Registration No. 33-38580
              December 1, 1980    Exhibit 4-C      to Registration No. 33-38580
              April 1, 1981       Exhibit 4-D      to Registration No. 33-49421
              June 1, 1981        Exhibit 4-D      to Registration No. 2-73321
              March 1, 1982       Exhibit 4-D      to Registration No. 33-49421
              April 15, 1982      Exhibit 4-D      to Registration No. 33-49421
              May 1, 1982         Exhibit 4-D      to Registration No. 33-49421
              December 1, 1984    Exhibit 4-D      to Registration No. 33-49421
              December 1, 1985    Exhibit 4-D      to Registration No. 33-49421
              June 1, 1986        Exhibit 4-D      to Registration No. 33-49421
              February 1, 1987    Exhibit 4-D      to Registration No. 33-49421
              September  1, 1987  Exhibit 4-D      to Registration No. 33-49421
              January 1, 1989     Exhibit 4-D      to Registration No. 33-49421
              January 1, 1991     Exhibit 4-D      to Registration No. 33-49421
              February 1, 1991    Exhibit 4-D      to Registration No. 33-49421
              July 15, 1991       Exhibit 4-D      to Registration No. 33-49421
              August 15, 1991     Exhibit 4-D      to Registration No. 33-49421
              April 1, 1993       Exhibit 4-E      to Registration No. 33-49421
              July 1, 1993        Exhibit 4-D      to Registration No. 33-57955

4.06  X   X   Fifty-Third Supplemental Indenture, dated May 1, 1999, to 
              Indenture referred to in Exhibit 4.03 (Filed herewith on page 45)

4.07  X   X   Indenture dated as of April 1, 1993 from South Carolina Electric 
              & Gas Company to NationsBank of Georgia, National Association 
              (Filed as Exhibit 4.07 to Registration Statement No. 33-49421)

4.08  X   X   First Supplemental Indenture to Indenture  referred to in Exhibit
              4.07 dated as of June 1, 1993 (Filed as Exhibit 4-G to 
              Registration Statement No. 33-49421)

4.09  X   X   Second Supplemental Indenture to Indenture referred to in Exhibit
              4.07 dated as of June 15, 1993 (Filed as Exhibit 4-G to
              Registration Statement No. 33-57955)

4.10  X   X   Trust Agreement for SCE&G Trust I (Filed as Exhibit 4-G to SCE&G 
              Form 10-K for the year ended December 31, 1997)

4.11  X   X   Certificate of Trust for SCE&G Trust I (Filed as  Exhibit 4-H to 
              SCE&G Form 10-K for the year ended December 31, 1997)

4.12  X   X   Junior Subordinated Indenture for SCE&G Trust I (Filed as Exhibit
              4-I to SCE&G Form 10-K for the year ended December 31, 1997)

4.13  X   X   Guarantee Agreement for SCE&G Trust I (Filed as Exhibit 4-J to 
              SCE&G Form 10-K for the year ended December 31, 1997)

41



<PAGE>

    Applicable to
     Form 10-Q of
Exhibit
No.  SCANA SCE&G  Description
4.14    X   X    Amended and Restated Trust Agreement for SCE&G Trust I (Filed
                 as Exhibit 4-K to SCE&G Form 10-K for the year ended December
                 31, 1997)

10.01   X        SCANA Voluntary Deferral Plan as amended through October 21, 
                 1997 (Filed as Exhibit 10.01 to SCANA Form 10-K for the year
                 ended December 31, 1998)

10.02   X   X    Supplemental Executive Retirement Plan (Filed as Exhibit 10-A 
                 to SCE&G Form 10-K for the year ended December 31, 1997)


10.03   X        SCANA Supplementary Voluntary Deferral Plan as amended and 
                 restated through October 21, 1997 (Filed as Exhibit 10-B to 
                 SCANA Form 10-K for the year ended  December 31, 1997)

10.04   X        SCANA Key Executive Severance Benefits Plan as amended and 
                 restated effective as of October 21, 1997 (Filed as Exhibit
                 10-C to SCANA Form 10-K for the year ended December 31, 1997)

10.05   X        SCANA Supplementary Key Executive Severance Benefit Plan as
                 amended and restated effective October 21, 1997 (Filed as 
                 Exhibit 10.06 to SCANA Form 10-K for the year ended December
                 31, 1998)

10.06   X        SCANA Performance Share Plan as amended and restated effective
                 January 1, 1998  (Filed as Exhibit 10.07 to SCANA Form 10-K for
                 the year ended December 31, 1998)

10.07   X        SCANA Key Employee Retention Plan as amended and restated 
                 effective as of October 21, 1997 (Filed as Exhibit 10-E to 
                 SCANA Form 10-K for the year ended December 31, 1997)

10.08   X        Description of SCANA Whole Life Option (Filed as Exhibit 10-F 
                 to SCANA Form 10-K for the year ended December 31, 1991, under 
                 cover of Form SE, File No. 1-8809)

10.9             X  Description  of  SCANA  Corporation   Annual
                 Incentive  Plan (Filed as Exhibit 10-G to SCANA
                 Form 10-K for the year ended December 31, 1991,
                 under cover of Form SE, File No. 1-8809)

27.01   X        Financial Data Schedule (Filed herewith)

27.02       X    Financial Data Schedule (Filed herewith)



42