Exhibit 12.1
Dominion Resources Inc. and Subsidiaries
Computation of Ratio of Earnings to Fixed Charges
(millions of dollars)
Years Ended December, 31 | ||||||||||||||||||||||||||||
Nine Months Ended September 30, 2012 (a) | Twelve Months Ended September 30, 2012 (b) | 2011 (c) | 2010 (d) | 2009(e) | 2008(f) | 2007(g) | ||||||||||||||||||||||
Earnings, as defined: | ||||||||||||||||||||||||||||
Income from continuing operations including noncontrolling interest before income taxes, extraordinary item and cumulative effect of change in accounting principle | $ | 1,555 | $ | 1,785 | $ | 2,205 | $ | 5,195 | $ | 1,900 | $ | 2,539 | $ | 4,666 | ||||||||||||||
Distributed income from unconsolidated investees, less equity in earnings | (17 | ) | (24 | ) | (23 | ) | (30 | ) | (30 | ) | (39 | ) | (20 | ) | ||||||||||||||
Fixed charges, as defined | 760 | 964 | 1,003 | 971 | 1,022 | 989 | 1,325 | |||||||||||||||||||||
Capitalized interest | (27 | ) | (35 | ) | (37 | ) | (27 | ) | (18 | ) | (44 | ) | (73 | ) | ||||||||||||||
Preference security dividend requirement of consolidated subsidiary | (19 | ) | (24 | ) | (25 | ) | (28 | ) | (24 | ) | (26 | ) | (26 | ) | ||||||||||||||
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Total earnings, as defined | $ | 2,252 | $ | 2,666 | $ | 3,123 | $ | 6,081 | $ | 2,850 | $ | 3,419 | $ | 5,872 | ||||||||||||||
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Fixed charges, as defined: | ||||||||||||||||||||||||||||
Interest charges | $ | 714 | $ | 907 | $ | 928 | $ | 886 | $ | 941 | $ | 910 | $ | 1,238 | ||||||||||||||
Preference security dividend requirement of consolidated subsidiary | 19 | 24 | 25 | 28 | 24 | 26 | 26 | |||||||||||||||||||||
Rental interest factor | 27 | 33 | 50 | 57 | 57 | 53 | 61 | |||||||||||||||||||||
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Total fixed charges, as defined | $ | 760 | $ | 964 | $ | 1,003 | $ | 971 | $ | 1,022 | $ | 989 | $ | 1,325 | ||||||||||||||
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Ratio of Earnings to Fixed Charges | 2.96 | 2.77 | 3.11 | 6.26 | 2.79 | 3.46 | 4.43 |
(a) | Earnings for the nine months ended September 30, 2012 include $435 million of impairment and other charges resulting from the shut-down of our Kewaunee nuclear merchant power station; $69 million of restoration costs associated with summer storms that occurred in late June throughout the Dominion Virginia Power and Dominion North Carolina service territories; partially offset by a $27 million net gain related to our investments in nuclear decommissioning trust funds. Excluding these items from the calculation would result in a higher ratio of earnings to fixed charges for the nine months ended September 30, 2012. |
(b) | Earnings for the twelve months ended September 30, 2012 include $435 million of impairment and other charges resulting from the shut-down of our Kewaunee nuclear merchant power station; $228 million of impairment charges related to electric utility generation assets; $69 million of restoration costs associated with summer storms that occurred in late June throughout the Dominion Virginia Power and Dominion North Carolina service territories; $31 million net charge in connection with the |
Virginia Commission’s final ruling associated with its biennial review of Virginia Power’s base rates for 2009 and 2010 test years (Biennial Review Order); partially offset by a $35 million net gain related to our investments in nuclear decommissioning trust funds and $9 million net benefit related to other items. Fixed charges for the twelve months ended September 30, 2012 include $50 million recognition of hedging gains in interest expense that had previously been deferred as regulatory liabilities as a result of the Biennial Review Order. Excluding these items from the calculation would result in a higher ratio of earnings to fixed charges for the twelve months ended September 30, 2012. |
(c) | Earnings for the twelve months ended December 31, 2011 include $228 million of impairment charges related to electric utility generation assets; $96 million of restoration costs associated with Hurricane Irene; $57 million impairment of excess emission allowances resulting from a new EPA Air Pollution Rule; $31 million net charge in connection with the Virginia Commission’s final ruling associated with its biennial review of Virginia Power’s base rates for 2009 and 2010 test years; $21 million of earthquake related costs, largely related to inspections following the safe shutdown of reactors at our North Anna nuclear power station; and $45 million net charge related to other items; partially offset by $24 million benefit related to litigation with the Department of Energy for spent nuclear fuel-related costs at our Millstone nuclear power station. Excluding these items from the calculation would result in a higher ratio of earnings to fixed charges for the twelve months ended December 31, 2011. |
(d) | Earnings for the twelve months ended December 31, 2010 include $2.4 billion benefit resulting from the sale of our Appalachian E&P operations - primarily reflecting the gain on the sale partially offset by certain transaction costs and other related charges. Earnings for the period also include $331 million charge related to the workforce reduction program primarily reflecting severance pay and other benefits to affected employees and $1 million net charge related to other items. Excluding these items from the calculation would result in a lower ratio of earnings to fixed charges for the twelve months ended December 31, 2010. |
(e) | Earnings for the twelve months ended December 31, 2009 include $712 million charge for a partial refund of 2008 earnings and other amounts in connection with the settlement of Virginia Power’s 2009 rate case proceeding; $455 million impairment charge as a result of the quarterly ceiling test performed on our gas and oil properties under the full cost method of accounting; $31 million impairment charge related to an equity method investment; and $10 million net charge related to other items. Earnings for the period also include $103 million reduction in other operation and maintenance expense due to a downward revision in the nuclear decommissioning asset retirement obligation for a power station that is no longer in service. Excluding these items from the calculation would result in a higher ratio of earnings to fixed charges for the twelve months ended December 31, 2009. |
(f) | Earnings for the twelve months ended December 31, 2008 include $180 million of impairment charges reflecting other-than-temporary declines in the fair value of securities held in nuclear decommissioning trust funds; $59 million of impairment charges related to Dominion Capital, Inc. (DCI) assets; $42 million reduction in the gain recognized in 2007 from the sale of the majority of our U.S. exploration and production (E&P) businesses as a result of post-closing adjustments; and $30 million net charge related to other items. Excluding these items from the calculation would result in a higher ratio of earnings to fixed charges for the twelve months ended December 31, 2008. |
(g) | Earnings for the twelve months ended December 31, 2007 include $3.6 billion gain from the disposition of the majority of our U.S. E&P operations; partially offset by $1 billion of charges related to the disposition which are comprised of $541 million related to the discontinuance of hedge accounting for certain gas and oil derivatives and subsequent changes in the fair value of these derivatives, $171 million primarily related to the settlement of volumetric production payment agreements, $242 million of charges related to the early retirement of debt, and $91 million of employee-related expenses. Fixed charges for the twelve months ended December 31, 2007 include $234 million of costs related to the early retirement of debt associated with our debt tender offer completed in July 2007. Earnings for the period also include $387 million charge related to the impairment of the partially-completed Dresden generation facility; $88 million of impairment charges related to DCI assets; $48 million of charges related to litigation reserves; and $70 million of charges related to other items. Excluding these items from the calculation would result in a lower ratio of earnings to fixed charges for the twelve months ended December 31, 2007. |