Dominion Energy (D) 10-Q 29 Apr 10 2010 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information
	3 Months Ended Mar. 31, 2010	Mar. 31, 2010
Document Type	10-Q
Amendment Flag	false
Document Period End Date	2010-03-31
Document Fiscal Year Focus	2,010
Document Fiscal Period Focus	Q1
Trading Symbol	D
Entity Registrant Name	DOMINION RESOURCES INC /VA/
Entity Central Index Key	0000715957
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		596,053,590

CONSOLIDATED STATEMENTS OF INCO

CONSOLIDATED STATEMENTS OF INCOME (USD $)
In Millions, except Per Share data	3 Months Ended Mar. 31, 2010		3 Months Ended Mar. 31, 2009
Operating Revenue	$4,168		$4,586
Operating Expenses
Electric fuel and other energy-related purchases	1,028		1,141
Purchased electric capacity	108		108
Purchased gas	792		1,007
Other operations and maintenance	1,068		1,234
Depreciation, depletion and amortization	269		279
Other taxes	169		153
Total operating expenses	3,434		3,922
Income from operations	734		664
Other income (loss)	71		(61)
Interest and related charges	183		219
Income from continuing operations including noncontrolling interests before income tax expense	622		384
Income tax expense	295		141
Income from continuing operations including noncontrolling interests	327		243
Income (loss) from discontinued operations	(149)	[1]	9	[1]
Net Income Including Noncontrolling Interests	178		252
Noncontrolling Interests	4		4
Net Income Attributable to Dominion	174		248
Amounts Attributable to Dominion:
Income from continuing operations, net of tax	323		239
Income (loss) from discontinued operations, net of tax	(149)		9
Net Income Attributable to Dominion	$174		$248
Earnings Per Common Share - Basic and Diluted
Income from continuing operations	0.54		0.41
Income (loss) from discontinued operations	-0.25		0.01
Net income attributable to Dominion	0.29		0.42
Dividends paid per common share	0.4575		0.4375
[1]Includes income tax expense of $12 million and $26 million for the three months ended March 31, 2010 and 2009, respectively.

1_CONSOLIDATED STATEMENTS OF IN

CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) (USD $)
In Millions	3 Months Ended Mar. 31, 2010	3 Months Ended Mar. 31, 2009
Income (loss) from discontinued operations, income tax expense	$12	$26

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)
In Millions	3 Months Ended Mar. 31, 2010		12 Months Ended Dec. 31, 2009
Current Assets
Cash and cash equivalents	$85		$48	[1]
Customer receivables (less allowance for doubtful accounts of $31 at both dates)	1,955		2,050	[1]
Other receivables (less allowance for doubtful accounts of $14 at both dates)	105		130	[1]
Inventories	984		1,185	[1]
Derivative assets	1,638		1,128	[1]
Assets held for sale			1,018	[1]
Prepayments	147		405	[1]
Other	1,119		853	[1]
Total current assets	6,033		6,817	[1]
Investments
Nuclear decommissioning trust funds	2,735		2,625	[1]
Investment in equity method affiliates	601		595	[1]
Other	276		272	[1]
Total investments	3,612		3,492	[1]
Property, Plant and Equipment
Property, plant and equipment	39,729		39,036	[1]
Accumulated depreciation, depletion and amortization	(13,691)		(13,444)	[1]
Total property, plant and equipment, net	26,038		25,592	[1]
Deferred Charges and Other Assets
Goodwill	3,275		3,354	[1]
Regulatory assets	1,240		1,390	[1]
Other	1,965		1,909	[1]
Total deferred charges and other assets	6,480		6,653	[1]
Total assets	42,163		42,554	[1]
Current Liabilities
Securities due within one year	1,254		1,137	[1]
Short-term debt	295		1,295	[1]
Accounts payable	1,324		1,401	[1]
Accrued interest, payroll and taxes	772		676	[1]
Derivative liabilities	1,126		679	[1]
Liabilities held for sale			428	[1]
Regulatory liabilities	598		536	[1]
Other	1,123		681	[1]
Total current liabilities	6,492		6,833	[1]
Long-Term Debt
Long-term debt	13,613		13,730	[1]
Junior subordinated notes payable to affiliates	268		268	[1]
Enhanced junior subordinated notes	1,483		1,483	[1]
Total long-term debt	15,364		15,481	[1]
Deferred Credits and Other Liabilities
Deferred income taxes and investment tax credits	4,251		4,244	[1]
Asset retirement obligations	1,625		1,605	[1]
Pension and other postretirement benefit liabilities	1,385		1,260	[1]
Regulatory liabilities	1,244		1,215	[1]
Other	494		474	[1]
Total deferred credits and other liabilities	8,999		8,798	[1]
Total liabilities	30,855		31,112	[1]
Commitments and Contingencies (see Note 15)				[1]
Subsidiary Preferred Stock Not Subject to Mandatory Redemption	257		257	[1]
Common Shareholders' Equity
Common stock - no par	6,369	[2]	6,525	[1],[2]
Other paid-in capital	138		185	[1]
Retained earnings	4,585		4,686	[1]
Accumulated other comprehensive loss	(41)		(211)	[1]
Total common shareholders' equity	11,051		11,185	[1]
Total liabilities and shareholders' equity	$42,163		$42,554	[1]
[1]Dominion's Consolidated Balance Sheet at December 31, 2009 has been derived from the audited Consolidated Financial Statements at that date.
[2]1 billion shares authorized; 596 million and 599 million shares outstanding at March 31, 2010 and December 31, 2009, respectively.

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Millions, except Share data	Mar. 31, 2010	Dec. 31, 2009
Customer receivables, allowance for doubtful accounts	$31	$31	[1]
Other receivables, allowance for doubtful accounts	$14	$14	[1]
Common stock, shares authorized	1,000,000,000	1,000,000,000	[1]
Common stock, shares outstanding	596,000,000	599,000,000	[1]
[1]Dominion's Consolidated Balance Sheet at December 31, 2009 has been derived from the audited Consolidated Financial Statements at that date.

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions	3 Months Ended Mar. 31, 2010		3 Months Ended Mar. 31, 2009
Operating Activities
Net income including noncontrolling interests	$178		$252
Adjustments to reconcile net income including noncontrolling interests to net cash from operating activities:
Charges related to workforce reduction program	338
Loss from sale of Peoples	117
Impairment of gas and oil properties	21		455
Net change in realized and unrealized derivative (gains) losses	87		(45)
Depreciation, depletion and amortization	320		325
Deferred income taxes and investment tax credits	(173)		(365)
Other adjustments	(10)		93
Changes in:
Accounts receivable	126		95
Inventories	213		271
Deferred fuel and purchased gas costs	(7)		226
Accounts payable	(90)		(264)
Accrued interest, payroll and taxes	89		223
Margin deposit assets and liabilities	114		(21)
Prepayments	260		35
Other operating assets and liabilities	67		201
Net cash provided by operating activities	1,650		1,481
Investing Activities
Plant construction and other property additions	(877)		(796)
Additions to gas and oil properties	(27)		(41)
Proceeds from the sale of Peoples	737
Proceeds from sale of securities	513		289
Purchases of securities	(539)		(289)
Other	22		(37)
Net cash used in investing activities	(171)		(874)
Financing Activities
Repayment of short-term debt, net	(1,000)		(411)
Repayment of long-term debt	(4)		(4)
Issuance of common stock	27		147
Repurchase of common stock	(191)
Common dividend payments	(275)		(257)
Subsidiary preferred dividend payments	(4)		(4)
Other	3		(2)
Net cash used in financing activities	(1,444)		(531)
Increase in cash and cash equivalents	35		76
Cash and cash equivalents at beginning of period	50	[1]	71	[1]
Cash and cash equivalents at end of period	85	[2]	147	[2]
Significant Noncash Investing and Financing Activities
Accrued capital expenditures	166		186
Debt for equity exchange			$56
[1]2010 and 2009 amounts include $2 million and $5 million, respectively, of cash classified as held for sale in Dominion's Consolidated Balance Sheets.
[2]2009 amount includes $6 million of cash classified as held for sale in Dominion's Consolidated Balance Sheet.

2_CONSOLIDATED STATEMENTS OF CA

CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $)
In Millions	3 Months Ended Mar. 31, 2010 Beginning of Period [Member]	3 Months Ended Mar. 31, 2009 Beginning of Period [Member]
Beginning of Period [Member]
Cash classified as held for sale in Dominion's Consolidated Balance Sheet	$2	$5
End of Period [Member]
Cash classified as held for sale in Dominion's Consolidated Balance Sheet	$0	$6

Nature of Operations

Nature of Operations
	3 Months Ended Mar. 31, 2010
Nature of Operations	Note 1.Nature of Operations Dominion, headquartered in Richmond, Virginia, is one of the nations largest producers and transporters of energy. Dominions operations are conducted through various subsidiaries, including Virginia Power, a regulated public utility that generates, transmits and distributes electricity for sale in Virginia and northeastern North Carolina. As discussed in Note 3, Dominion completed the sale of its Pennsylvania gas distribution operations in February 2010 and in March 2010 entered into an agreement to sell substantially all of its Appalachian EP operations.

Significant Accounting Policies

Significant Accounting Policies
	3 Months Ended Mar. 31, 2010
Significant Accounting Policies	Note 2.Significant Accounting Policies As permitted by the rules and regulations of the SEC, Dominions and Virginia Powers accompanying unaudited Consolidated Financial Statements contain certain condensed financial information and exclude certain footnote disclosures normally included in annual audited consolidated financial statements prepared in accordance with GAAP. These unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes in Dominions and Virginia Powers Annual Report on Form 10-K for the year ended December31, 2009. In Dominions and Virginia Powers opinion, the accompanying unaudited Consolidated Financial Statements contain all adjustments necessary to present fairly their financial position as of March31, 2010 and their results of operations and cash flows for the three months ended March31, 2010 and 2009. Such adjustments are normal and recurring in nature unless otherwise noted. The Companies make certain estimates and assumptions in preparing their Consolidated Financial Statements in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods presented. Actual results may differ from those estimates. Dominions and Virginia Powers accompanying unaudited Consolidated Financial Statements include, after eliminating intercompany transactions and balances, their accounts and those of their respective majority-owned subsidiaries. The results of operations for interim periods are not necessarily indicative of the results expected for the full year. Information for quarterly periods is affected by seasonal variations in sales, rate changes, electric fuel and other energy-related purchases, purchased gas expenses and other factors. Certain amounts in Dominions and Virginia Powers 2009 Consolidated Financial Statements and Notes have been recast to conform to the 2010 presentation. Amounts disclosed for Dominion are inclusive of Virginia Power, where applicable.

Dispositions

Dispositions
	3 Months Ended Mar. 31, 2010
Dispositions	Note 3.Dispositions Sale of Appalachian EP Operations In March 2010, Dominion entered into an agreement to sell substantially all of its Appalachian EP operations to a newly-formed subsidiary of CONSOL Energy for approximately $3.5 billion, subject to adjustments pursuant to terms of the agreement. Also in March 2010, the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice granted early termination of the mandatory waiting period for the transaction under the Hart-Scott-Rodino Antitrust Improvements Act. The transaction is expected to close by April30, 2010, subject to customary closing conditions. The transaction includes the rights to approximately 491,000 acres in the Marcellus Shale formation. Dominion is retaining certain oil and natural gas wells located on or near its natural gas storage fields. Dominion expects the transaction to generate after-tax proceeds of approximately $2.3 billion and result in an after-tax gain of approximately $1.4 billion. Proceeds from the sale will be used to offset Dominions equity needs for 2010 and 2011, repurchase common stock, fund a contribution to Dominions employee benefit plans and offset the impact of Virginia Powers rate case settlement. The results of operations for Dominions Appalachian EP business are not reported as discontinued operations in the Consolidated Statements of Income since Dominion did not sell its entire U.S. cost pool, which includes the retained Appalachian assets located on or near its natural gas storage fields. Due to the announced sale, hedge accounting was discontinued for certain cash flow hedges since it became probable that the forecasted sales of gas would not occur. In connection with the discontinuance of hedge accounting for these contracts, Dominion recognized a $42 million ($25 million after-tax) benefit, recorded in operating revenue in its Consolidated Statement of Income, reflecting the reclassification of gains from AOCI to earnings for these contracts in the three months ended March31, 2010. Sale of Peoples In February 2010, Dominion completed the sale of Peoples to PNG Companies LLC and netted after-tax proceeds of approximately $542 million. The sale resulted in an after-tax loss of approximately $134 million, which included a $79 million write-off of goodwill. The sale also resulted in after-tax expenses of approximately $27 million, including transaction and benefit-related costs. In addition, Peoples had income from operations of $12 million after-tax for the three months ended March31, 2010. Dominion did not previously report Peoples as discontinued operations since it expected to have significant continuing cash flows related primarily to the sale to Peoples of natural gas production from its Appalachian EP business. Due to the pending sale of its Appalachian EP business, Dominion no longer expects to have significant continuing cash flows with Peoples; therefore, the results of Peoples were reclassified to discontinued operations in the Consolidated Statements of Income for all periods presented. The carrying amounts of the major classes of assets and liabilities classified as held for sale in Do

Ceiling Test

Ceiling Test
	3 Months Ended Mar. 31, 2010
Ceiling Test	Note 4.Ceiling Test Dominion follows the full cost method of accounting for its gas and oil EP activities, which subjects capitalized costs to a quarterly ceiling test using hedge-adjusted prices. At March31, 2010, Dominion recorded a ceiling test impairment charge of $21 million ($13 million after-tax) in other operations and maintenance expense in its Consolidated Statement of Income primarily due to a decline in hedge-adjusted prices reflecting the discontinuance of hedge accounting for certain cash flow hedges, as discussed in Note 3. In March 2009, Dominion recorded a ceiling test impairment charge of $455 million ($272 million after-tax) in other operations and maintenance expense in its Consolidated Statement of Income. Excluding the effects of hedge-adjusted prices in calculating the ceiling limitation, the impairment would have been $631 million ($378 million after-tax).

Operating Revenue

Operating Revenue
	3 Months Ended Mar. 31, 2010
Operating Revenue	Note 5.Operating Revenue The Companies operating revenue consists of the following: ThreeMonthsEnded March 31, 2010 2009 (millions) Dominion Electric sales: Regulated $ 1,717 $ 1,825 Nonregulated 945 994 Gas sales: Regulated 145 330 Nonregulated 782 931 Gas transportation and storage 465 393 Other 114 113 Total operating revenue $ 4,168 $ 4,586 Virginia Power Regulated electric sales $ 1,717 $ 1,825 Other 22 34 Total operating revenue $ 1,739 $ 1,859

Income Taxes

Income Taxes
	3 Months Ended Mar. 31, 2010
Income Taxes	Note 6.Income Taxes Continuing Operations For continuing operations, including noncontrolling interests, the statutory U.S. federal income tax rate reconciles to Dominions and Virginia Powers effective income tax rate as follows: Dominion VirginiaPower Three Months Ended March31, 2010 2009 2010 2009 U.S. statutory rate 35.0 % 35.0 % 35.0 % 35.0 % Increases (reductions) resulting from: Legislative changes 8.8 0.3 8.7 State taxes, net of federal benefit 3.8 3.3 4.1 3.8 Domestic production activities deduction (0.5 ) (0.5 ) (1.0 ) (0.5 ) Investment and production tax credits (0.3 ) (1.0 ) 0.1 Amortization of investment tax credits (0.1 ) (0.2 ) (0.1 ) Other, net 0.6 (0.3 ) 0.7 (1.2 ) Effective tax rate 47.4 % 36.7 % 47.3 % 37.1 % Dominions and Virginia Powers effective tax rates in 2010 reflect a reduction of deferred tax assets resulting from the enactment of the Patient Protection and Affordable Care Act and the Health Care and Education Affordability Reconciliation Act of 2010 which eliminated the employers deduction, beginning in 2013, for that portion of its retiree prescription drug coverage cost that is being reimbursed by the Medicare Part D subsidy. As of March31, 2010, there have been no material changes in Dominions and Virginia Powers unrecognized tax benefits. See Note 6 to the Consolidated Financial Statements in Dominions and Virginia Powers Annual Report on Form 10-K for the year ended December31, 2009, for a discussion of these unrecognized tax benefits, including reasonably possible changes that could occur during the next twelve months. Discontinued Operations Income tax expense in 2010 for Dominions discontinued operations primarily reflects the impact of goodwill written off in the sale of Peoples that is not deductible for tax purposes and the reversal of deferred taxes for which the benefit was offset by the reversal of income tax-related regulatory assets. Income tax expense in 2009 for Dominions discontinued operations also reflects the impact of these items. Since the sale of Peoples was expected to occur later in 2009, the tax effects related to the sale were included in the determination of Dominions estimated annual effective tax rate in 2009.

Earnings Per Share

Earnings Per Share
	3 Months Ended Mar. 31, 2010
Earnings Per Share	Note 7.Earnings Per Share The following table presents the calculation of Dominions basic and diluted EPS: ThreeMonthsEnded March31, 2010 2009 (millions, except EPS) Net income attributable to Dominion $ 174 $ 248 Average shares of common stock outstanding Basic 599.9 585.3 Net effect of potentially dilutive securities(1) 1.0 0.4 Average shares of common stock outstanding Diluted 600.9 585.7 Earnings Per Common Share Basic and Diluted $ 0.29 $ 0.42 (1) Potentially dilutive securities consist of options, goal-based stock and contingently convertible senior notes. Potentially dilutive securities with the right to acquire approximately 1.6million common shares for the three months ended March31, 2009, were not included in the periods calculation of diluted EPS because the exercise or purchase prices of those instruments were greater than the average market price of Dominions common shares. There were no potentially dilutive securities excluded from the calculation of diluted EPS for the three months ended March31, 2010.

Comprehensive Income

Comprehensive Income
	3 Months Ended Mar. 31, 2010
Comprehensive Income	Note 8.Comprehensive Income The following table presents Dominions total comprehensive income: ThreeMonthsEnded March31, 2010 2009 (millions) Net income including noncontrolling interests $ 178 $ 252 Other comprehensive income: Net other comprehensive income associated with effective portion of changes in fair value of derivatives designated as cash flow hedges, net of taxes and amounts reclassified to earnings 106 151 Other, net of tax 64 24 Other comprehensive income 170 175 Comprehensive income including noncontrolling interests 348 427 Noncontrolling interests 4 4 Total comprehensive income attributable to Dominion $ 344 $ 423 The following table presents Virginia Powers total comprehensive income: ThreeMonthsEnded March 31, 2010 2009 (millions) Net income $ 95 $ 204 Other comprehensive income (loss): Net other comprehensive income (loss) associated with effective portion of changes in fair value of derivatives designated as cash flow hedges, net of taxes and amounts reclassified to earnings (5 ) Other, net of tax 2 3 Other comprehensive income (loss) (3 ) 3 Total comprehensive income $ 92 $ 207

Fair Value Measurements

Fair Value Measurements
	3 Months Ended Mar. 31, 2010
Fair Value Measurements	Note 9.Fair Value Measurements Dominions and Virginia Powers fair value measurements are made in accordance with the policies discussed in Note 7 to the Consolidated Financial Statements in their Annual Report on Form 10-K for the year ended December31, 2009. See Note 10 in this report for further information about their derivatives and hedge accounting activities. Fair values are based on inputs and assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations. The inputs and assumptions include the following: For commodity and foreign currency derivative contracts: Forward commodity prices Forward foreign currency prices Price volatility Volumes Commodity location Interest rates Credit quality of counterparties and Dominion and Virginia Power Credit enhancements Time value For interest rate derivative contracts: Interest rate curves Credit quality of counterparties and Dominion and Virginia Power Credit enhancements Time value For investments: Quoted securities prices Securities trades information including volume and restrictions Maturity Interest rates Credit quality Net asset value (only for investments in partnerships) Dominion and Virginia Power regularly evaluate and validate the inputs used to estimate fair value by a number of methods, including various market price verification procedures such as the use of pricing services and multiple broker quotes to support the market price of the various commodities in which the Companies transact, as well as review and verification of models. For derivative contracts, Dominion and Virginia Power recognize transfers between Levels based on fair values as of the first day of the month in which the transfer occurs. Transfers out of Level3 represent assets and liabilities that were previously classified as Level3 for which the inputs became observable based on the criteria discussed in Note 7 to the Consolidated Financial Statements in Dominions and Virginia Powers Annual Report on Form 10-K for the year ended December31, 2009 for classification in either Level1 or Level2. Because the activity and liquidity of commodity markets vary substantially between regions and time periods, the availability of observable inputs for substantially the full term and value of the Companies over-the-counter derivative contracts is subject to change. At March31, 2010, Dominions and Virginia Powers net balance of commodity derivatives categorized as Level 3 fair value measurements was a net liability of $60 million and $15 million, respectively. A hypothetical 10% increase in commodity prices would increase Dominions and Virginia Powers net liability by $29 million and $1 million, respectively. A hypothetical 10% decrease in commodity prices would decrease Dominions and Virginia Powers net liability by $28 million and $1 million, respectively. During the first

Derivatives and Hedge Accountin

Derivatives and Hedge Accounting Activities
	3 Months Ended Mar. 31, 2010
Derivatives and Hedge Accounting Activities	Note 10.Derivatives and Hedge Accounting Activities Dominions and Virginia Powers accounting policies and objectives and strategies for using derivative instruments are discussed in Note 2 to the Consolidated Financial Statements in their Annual Report on Form 10-K for the year ended December31, 2009. See Note 9 in this report for further information about fair value measurements and associated valuation methods for derivatives. Dominion The following table presents the volume of Dominions derivative activity as of March31, 2010. These volumes are based on open derivative positions and represent the combined absolute value of their long and short positions, except in the case of offsetting deals, for which they represent the absolute value of the net volume of their long and short positions. Current Noncurrent Natural Gas (bcf): Fixed price(1) 637.6 150.9 Basis 1,259.8 494.7 Electricity (MWh): Fixed price( 1) 20,459,482 9,515,954 FTRs 20,005,587 3,056,425 Capacity (MW) 1,394,432 4,821,200 Liquids (gallons)( 2) 152,964,000 103,152,000 Interest rate $ 1,100,000,000 $ 825,000,000 Foreign currency (euros) 4,000,000 (1) Includes options. (2) Includes NGL and oil derivatives. For the three months ended March31, 2010 and 2009, gains or losses on hedging instruments determined to be ineffective were not material. Amounts excluded from the assessment of effectiveness include gains or losses attributable to changes in the time value of options and changes in the differences between spot prices and forward prices and were not material for the three months ended March31, 2010 and 2009. The following table presents selected information related to gains (losses) on cash flow hedges included in AOCI in Dominions Consolidated Balance Sheet at March31, 2010: AOCI After-Tax AmountsExpectedto beReclassifiedtoEarnings during the next 12 Months After-Tax MaximumTerm (millions) Commodities: Gas $ (19 ) $ (11 ) 39months Electricity 326 266 38 months Other 4 62 months Interest rate 76 (3 ) 369months Total $ 387 $ 252 The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., anticipated sales) in earnings, thereby achieving the realization of prices contemplated by the underlying risk management strategies and will vary from the expected amounts presented above as a result of changes in market prices, interest rates and foreign exchange rates. The sale of the majority of Dominions remaining EP operations resulted in the discontinuance of hedge accounting for certain cash flow hedges, as discussed in Note 3. In addition, changes to Dominions financing needs resulted in the discontinuance of hedge accounting for certain cash flow hedges since it became probable that forecasted interest payments would not occur. In connection with the

Investments

Investments
	3 Months Ended Mar. 31, 2010
Investments	Note 11.Investments Dominion Rabbi Trust Securities Marketable equity and debt securities and cash equivalents held in Dominions rabbi trusts and classified as trading totaled $95 million and $96 million at March31, 2010 and December31, 2009, respectively. Cost method investments held in Dominions rabbi trusts totaled $18 million and $17 million at March31, 2010 and December31, 2009, respectively. Decommissioning Trust Securities Dominion holds marketable equity and debt securities and cash equivalents (classified as available-for-sale) and cost method investments in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Dominions decommissioning trust funds are summarized below. Amortized Cost Total Unrealized Gains(1) Total Unrealized Losses(1) Fair Value (millions) March31, 2010 Marketable equity securities $ 1,224 $ 390 $ $ 1,614 Marketable debt securities: Corporate bonds 335 20 (1 ) 354 U.S. Treasury securities and agency debentures 426 13 (1 ) 438 State and municipal 158 9 (2 ) 165 Other 14 14 Cost method investments 100 100 Cash equivalents and other(2) 50 50 Total $ 2,307 $ 432 $ (4 )(3) $ 2,735 December31, 2009 Marketable equity securities $ 1,191 $ 338 $ $ 1,529 Marketable debt securities: Corporate bonds 241 13 (1 ) 253 U.S. Treasury securities and agency debentures 281 13 (1 ) 293 State and municipal 371 21 (3 ) 389 Other 4 4 Cost method investments 97 97 Cash equivalents and other(2) 60 60 Total $ 2,245 $ 385 $ (5 )(3) $ 2,625 (1) Included in AOCI and the decommissioning trust regulatory liability. (2) At March31, 2010 and December31, 2009, reflects ($59) million and $11 million, respectively, related to net pending sales and purchases of securities. (3) The fair value of securities in an unrealized loss position was $275 million and $169 million at March31, 2010 and December31, 2009, respectively. The fair value of Dominions marketable debt securities (classified as available for sale) at March31, 2010 by contractual maturity is as follows: Amount (millions) Due in one year or less $ 86 Due after one year through five years 340 Due after five years through ten years 244 Due after ten years 301 Total $ 971 Presented below is selected information regarding Dominions marketable equity and debt securities. ThreeMonthsEnded March 31, 2010 2009 (millions) Trading securities: Net unrealized gain (loss) $ 2 $ (4 ) Available-for-sale securities:

Regulatory Matters

Regulatory Matters
	3 Months Ended Mar. 31, 2010
Regulatory Matters	Note 12.Regulatory Matters Other than the following matters, there have been no significant developments regarding the pending regulatory matters disclosed in Note 14 to the Consolidated Financial Statements in Dominions and Virginia Powers Annual Report on Form 10-K for the year ended December31, 2009. Approval of Virginia Power Rate Settlement In February 2010, Virginia Power filed a revised Stipulation and Recommendation with the Virginia Commission, which had the support of all of the interested parties, including the Staff of the Virginia Commission. The Companies fourth quarter 2009 results included a charge reflecting their best estimate of the probable outcome of this matter. In March 2010, the Virginia Commission approved the revised Stipulation and Addendum (Settlement Approval Order) that concluded Virginia Powers base rate review and resolved open issues relating to Virginia Powers fuel factor and Rider T. An ROE issue relating to Riders R, S, C1 and C2 was also resolved. The Settlement Approval Order includes the following provisions: Credits from 2008 Revenues Credits to customers of $400 million from Virginia Powers 2008 revenues to be applied against base rates and rider charges. Base Rates No change in Virginia Powers base rates in existence prior to September1, 2009 until December1, 2013 (unless emergency rate relief is warranted by statute); Refund increased revenues collected under the interim base rates since September1, 2009; and An ROE of 11.9% (inclusive of a performance incentive of 60 basis points) for use in the Virginia Commissions assessment in the 2011 biennial rate review of Virginia Powers earnings in 2009 and 2010. FTR Credits Credits to customers of $129 million, inclusive of any carrying charge, relating to revenues from FTRs for the period July1, 2007 through June30, 2009. Generation Riders R and S An ROE of 12.3% (inclusive of a 100 basis point statutory enhancement) for the 2010 rate year. Transmission Rider T Waiver of recovery, effective January1, 2011, of deferred RTO start-up and administrative costs in the amount of $197 million (including carrying charges) that were previously approved for recovery through Rider T. DSM Riders C1 and C2 An ROE of 11.3% for the 2010 rate year pending approval of the riders. Approval of DSM Programs Riders C1 and C2 Virginia Power previously filed with the Virginia Commission an application for approval and cost recovery of eleven DSM programs, including one peak-shaving program and ten energy efficiency programs. In March 2010, the Virginia Commission approved the recovery of approximately $28 million for five of the DSM programs through initiation of Riders C1 and C2, effective May1, 2010. The riders will increase the typical 1,000 kWh Virginia jurisdictional residential customers bill by approximately $0.53 per month. With respect to the other six DSM programs for which approval was sought, the Virginia Commission made a finding that they were not in the public interest at this time, but allowed Virginia Power the opportunity for further evaluation of

Variable Interest Entities

Variable Interest Entities
	3 Months Ended Mar. 31, 2010
Variable Interest Entities	Note 13.Variable Interest Entities As discussed in Note 16 to the Consolidated Financial Statements in Dominions and Virginia Powers Annual Report on Form 10-K for the year ended December31, 2009, certain variable pricing terms in some of the Companies long-term power and capacity contracts cause them to be considered variable interests in the counterparties. Virginia Power has long-term power and capacity contracts with four non-utility generators with an aggregate generation capacity of approximately 940 MW. These contracts contain certain variable pricing mechanisms in the form of partial fuel reimbursement that Virginia Power considers to be variable interests. After an evaluation of the information provided by these entities, Virginia Power was unable to determine whether they were VIEs. However, the information they provided, as well as Virginia Powers knowledge of generation facilities in Virginia, enabled Virginia Power to conclude that, if they were VIEs, it would not be the primary beneficiary. This conclusion reflects Virginia Powers determination that its variable interests do not convey the power to direct the most significant activities that impact the economic performance of the entity during the remaining terms of Virginia Powers contracts and for the years the entities are expected to operate after its contractual relationships expire. The contracts expire at various dates ranging from 2015 to 2021. Virginia Power is not subject to any risk of loss from these potential VIEs other than its remaining purchase commitments which totaled $1.7 billion as of March31, 2010. Virginia Power paid $54 million and $53 million for electric capacity to these entities for the three months ended March31, 2010 and 2009, respectively. Virginia Power paid $41 million for electric energy to these entities in both the three months ended March31, 2010 and 2009. Virginia Power purchased shared services from DRS, an affiliated VIE, of approximately $141 million and $100 million for the three months ended March31, 2010 and 2009, respectively. Virginia Power determined that it is not the most closely associated entity with DRS and therefore not the primary beneficiary. DRS provides accounting, legal, finance and certain administrative and technical services to all Dominion subsidiaries, including Virginia Power. Virginia Power has no obligation to absorb more than its allocated share of DRS costs.

Significant Financing Transacti

Significant Financing Transactions
	3 Months Ended Mar. 31, 2010
Significant Financing Transactions	Note 14.Significant Financing Transactions Credit Facilities and Short-Term Debt Dominion and Virginia Power use short-term debt to fund working capital requirements, as a bridge to long-term debt financing and as bridge financing for acquisitions, if applicable. The levels of borrowing may vary significantly during the course of the year, depending upon the timing and amount of cash requirements not satisfied by cash from operations. In addition, Dominion utilizes cash and letters of credit to fund collateral requirements under its commodities hedging program. Collateral requirements are impacted by commodity prices, hedging levels, Dominions credit quality and the credit quality of its counterparties. At March31, 2010, commercial paper, bank loans, and letters of credit outstanding, as well as capacity available under credit facilities were as follows: Facility Limit Outstanding Commercial Paper Outstanding Bank Borrowings Outstanding Letters of Credit Facility Capacity Available (millions) Five-year joint revolving credit facility(1) $ 2,872 $ $ $ 163 $ 2,709 Five-year Dominion credit facility(2) 1,700 295 8 1,397 Five-year Dominion bilateral facility(3) 200 35 165 Totals $ 4,772 $ 295 $ $ 206 $ 4,271 (1) This credit facility was entered into in February 2006 and terminates in February 2011. This credit facility can be used to support bank borrowings and the issuance of commercial paper, as well as to support up to $1.5 billion of letters of credit. (2) This credit facility was entered into in August 2005 and terminates in August 2010. This credit facility can be used to support bank borrowings, commercial paper and letter of credit issuances. (3) This facility was entered into in December 2005 and terminates in December 2010. This facility can be used to support bank borrowings, commercial paper and letter of credit issuances. In addition to the credit facility commitments disclosed above, Virginia Power also has a five-year $120 million credit facility that terminates in February 2011, which supports certain of its tax-exempt financings. Dominion and Virginia Power plan to replace their existing credit facilities during the third quarter of 2010. They expect to operate with credit facilities ranging from $3.0 to $3.5 billion. The Companies do not expect the reduction in the size of their credit facilities to negatively impact their ability to fund their operations. Convertible Securities At March31, 2010, Dominion had $202 million of outstanding contingent convertible senior notes that are convertible by holders into a combination of cash and shares of Dominions common stock under certain circumstances. The conversion feature requires that the principal amount of each note be repaid in cash, while amounts payable in excess of the principal amount will be paid in common stock. The conversion rate is subject to adjustment upon certain events such as subdivisions, splits, combinations of common stoc

Commitments and Contingencies

Commitments and Contingencies
	3 Months Ended Mar. 31, 2010
Commitments and Contingencies	Note 15.Commitments and Contingencies Other than the following matters, there have been no significant developments regarding the commitments and contingencies disclosed in Note 23 to the Consolidated Financial Statements in Dominions and Virginia Powers Annual Report on Form 10-K for the year ended December31, 2009. Workforce Reduction Program In the first quarter of 2010, Dominion and Virginia Power announced a workforce reduction program that is expected to reduce their total workforces by approximately 9% and 11%, respectively, during 2010. The goal of the workforce reduction program is to reduce operations and maintenance expense growth and further improve the efficiency of the Companies. Dominion and Virginia Power did not eliminate positions that would compromise safety, reliability or their ability to comply with applicable laws and regulations. In the first quarter of 2010, Dominion recorded a $338 million ($206 million after-tax) charge, including $202 million ($123 million after-tax) at Virginia Power, primarily reflected in other operations and maintenance expense in their Consolidated Statements of Income due to severance pay and other benefits related to the workforce reduction program. Guarantees Dominion At March31, 2010, Dominion had issued $127 million of guarantees to support third parties and equity method investees (issued guarantees).No significant amounts related to these guarantees have been recorded. During the first quarter of 2010, Dominions $165 million limited-scope guarantee and indemnification for one-half of NedPowers project-level financing relating to litigation seeking to halt the NedPower wind farm was formally terminated with the consent of NedPowers lenders as a result of the dismissal by the applicable court of such litigation pursuant to an agreed dismissal order. Issued guarantees include $57 million of guarantees to support Dominions investment in a joint venture with BP to develop Fowler Ridge. As of March31, 2010, Dominions exposure under these guarantees was $22 million, primarily related to certain reserve requirements associated with Fowler Ridges non-recourse financing. BP has provided identical guarantees for the other one-half of these joint venture commitments. Dominion also enters into guarantee arrangements on behalf of its consolidated subsidiaries, primarily to facilitate their commercial transactions with third parties. To the extent that a liability subject to a guarantee has been incurred by one of Dominions consolidated subsidiaries, that liability is included in Dominions Consolidated Financial Statements. Dominion is not required to recognize liabilities for guarantees issued on behalf of its subsidiaries unless it becomes probable that it will have to perform under the guarantees. Dominion currently believes it is unlikely that it would be required to perform or otherwise incur any losses associated with guarantees of its subsidiaries obligations. At March31, 2010, Dominion had issued the following subsidiary guarantees: StatedLimit Value(1) (millions) Subsidiary debt(2) $ 126 $ 126 Commodity transactions(3) 2,915

Credit Risk

Credit Risk
	3 Months Ended Mar. 31, 2010
Credit Risk	Note 16.Credit Risk Credit risk is the risk of financial loss if counterparties fail to perform their contractual obligations. In order to minimize overall credit risk, credit policies are maintained, including the evaluation of counterparty financial condition, collateral requirements and the use of standardized agreements that facilitate the netting of cash flows associated with a single counterparty. In addition, counterparties may make available collateral, including letters of credit or cash held as margin deposits, as a result of exceeding agreed-upon credit limits, or may be required to prepay the transaction. Dominion and Virginia Power maintain a provision for credit losses based on factors surrounding the credit risk of their customers, historical trends and other information. Management believes, based on credit policies and the provision for credit losses, that it is unlikely that a material adverse effect on financial position, results of operations or cash flows would occur as a result of counterparty nonperformance. Dominion As a diversified energy company, Dominion transacts primarily with major companies in the energy industry and with commercial and residential energy consumers. These transactions principally occur in the Northeast, mid-Atlantic and Midwest regions of the U.S. and Texas. Dominion does not believe that this geographic concentration contributes significantly to its overall exposure to credit risk. In addition, as a result of its large and diverse customer base, Dominion is not exposed to a significant concentration of credit risk for receivables arising from electric and gas utility operations. Dominions exposure to credit risk is concentrated primarily within its energy marketing and price risk management activities, as Dominion transacts with a smaller, less diverse group of counterparties and transactions may involve large notional volumes and potentially volatile commodity prices. Energy marketing and price risk management activities include trading of energy-related commodities, marketing of merchant generation output, structured transactions and the use of financial contracts for enterprise-wide hedging purposes. Gross credit exposure for each counterparty is calculated as outstanding receivables plus any unrealized on- or off-balance sheet exposure, taking into account contractual netting rights. Gross credit exposure is calculated prior to the application of collateral. At March31, 2010, Dominions gross credit exposure totaled $1 billion. After the application of collateral, credit exposure is reduced to $851 million. Of this amount, investment grade counterparties, including those internally rated, represented 92%. Two counterparty exposures are greater than 10% of Dominions total exposure, one representing 13% and the other 12%, both of which are large financial institutions rated investment grade. The majority of Dominions derivative instruments contain credit-related contingent provisions. These provisions require Dominion to provide collateral upon the occurrence of specific events, primarily a credit downgrade. If the credit-related contingent features underlying these instruments tha

Related Party Transactions

Related Party Transactions
	3 Months Ended Mar. 31, 2010
Related Party Transactions	Note 17.Related Party Transactions Virginia Power engages in related party transactions primarily with other Dominion subsidiaries (affiliates). Virginia Powers receivable and payable balances with affiliates are settled based on contractual terms or on a monthly basis, depending on the nature of the underlying transactions. Virginia Power is included in Dominions consolidated federal income tax return and participates in certain Dominion benefit plans. A discussion of other significant related party transactions follows. Transactions with Affiliates Virginia Power transacts with affiliates for certain quantities of natural gas and other commodities in the ordinary course of business. Virginia Power also enters into certain commodity derivative contracts with affiliates. Virginia Power uses these contracts, which are principally comprised of commodity derivatives, to manage commodity price risks associated with purchases of natural gas. Virginia Power designates the majority of these contracts as cash flow hedges for accounting purposes. DRS provides accounting, legal, finance and certain administrative and technical services to Virginia Power. In addition, Virginia Power provides certain services to affiliates, including facilities and equipment usage. Presented below are significant Virginia Power transactions with DRS and other affiliates: ThreeMonthsEnded March 31, 2010 2009 (millions) Commodity purchases from affiliates $ 67 $ 99 Services provided by affiliates 141 101 In March 2010, Virginia Power issued 14,600 shares of its common stock to Dominion reflecting the conversion of approximately $433 million of short-term borrowings from Dominion to equity.

Employee Benefit Plans

Employee Benefit Plans
	3 Months Ended Mar. 31, 2010
Employee Benefit Plans	Note 18.Employee Benefit Plans The components of the provision for net periodic benefit cost (credit) were as follows: PensionBenefits OtherPostretirement Benefits Three Months Ended March31, 2010 2009 2010 2009 (millions) Service cost $ 27 $ 26 $ 14 $ 15 Interest cost 66 63 25 25 Expected return on plan assets (99 ) (101 ) (17 ) (14 ) Amortization of prior service cost (credit) 1 1 (2 ) (2 ) Amortization of net loss 15 9 3 7 Settlements and curtailments(1) 84 38 Special termination benefits(2) 9 1 Net periodic benefit cost (credit) $ 103 $ (2 ) $ 62 $ 31 (1) Relates to the sale of Peoples and a workforce reduction program. (2) Represents a one-time special termination benefit for certain employees in connection with a workforce reduction program. Employer Contributions Dominion made no contributions to its defined benefit pension plans or other postretirement benefit plans during the three months ended March31, 2010. Dominion expects to contribute approximately $250 million to its pension plans during the second quarter of 2010 and $56 million to its other postretirement benefit plans through Voluntary Employees Beneficiary Associations during the remainder of 2010.

Operating Segments

Operating Segments
	3 Months Ended Mar. 31, 2010
Operating Segments	Note 19.Operating Segments Dominion and Virginia Power are organized primarily on the basis of products and services sold in the U.S. A description of the operations included in the Companies primary operating segments is as follows: Primary OperatingSegment Description ofOperations Dominion VirginiaPower DVP Regulated electric distribution X X Regulated electric transmission X X Nonregulated retail energy marketing (electric and gas) X DominionGeneration Regulated electric fleet X X Merchant electric fleet X Dominion Energy Gas transmission and storage X Gas distribution X LNG import and storage X Appalachian gas exploration and production X Producer services X In addition to the operating segments above, the Companies also report a Corporate and Other segment. The Corporate and Other Segment of Dominion includes its corporate, service company and other functions (including unallocated debt) and certain specific items that are not included in profit measures evaluated by executive management in assessing segment performance or allocating resources among the segments. In the three months ended March31, 2010, Dominion reported after-tax net expenses of $402 million for specific items in the Corporate and Other segment, with $215 million of these net expenses attributable to its operating segments. In the three months ended March31, 2009, Dominion reported after-tax net expenses of $326 million for specific items in the Corporate and Other segment, with $335 million of these net expenses attributable to its operating segments. The net expenses for specific items in 2010 primarily related to the impact of the following items: A $338 million ($206 million after-tax) charge primarily reflecting severance pay and other benefits related to a workforce reduction program, attributable to: DVP ($67 million after-tax); Dominion Energy ($24 million after-tax); and Dominion Generation ($115 million after-tax); and A $137 million ($149 million after-tax) loss from the discontinued operations of Peoples primarily reflecting a net loss on the sale. The net expenses for specific items in 2009 primarily related to the impact of the following items: A $455 million ($272 million after-tax) ceiling test impairment charge related to the carrying value of Dominions EP properties, attributable to Dominion Energy; and An $83 million ($50 million after-tax) net loss on investments held in nuclear decommissioning trust funds, attributable to Dominion Generation. The Corporate and Other Segment of Virginia Power primarily includes certain specific items that are not included in profit measures evaluated by executive management in assessing segments performance or allocating resources among the segments. In the three months ended March31, 2010 and 2009, Virginia Power reported after-tax net expenses of $140 million and $7 million, respectively, for specific items attributable to its operating segments in the Corporate and Other segment. The