Dominion Power 2000 Annual Report Download - page 54

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Notes to Consolidated Financial Statements (continued)
Note 10 Collateralized Debt Obligation Investments
Until September 20, 2000, Dominion managed financial assets held
in three collateralized debt obligations (CDO). That business was
sold as part of Dominion’s strategy to divest its non-core opera-
tions. Dominion continues to hold an investment in the subordi-
nated debt of each CDO. The total investment in the CDOs was $159
million and $58 million at December 31, 2000 and 1999, respectively.
Note 11 Investment Securities
Securities classified as available-for-sale as of December 31 follow:
Gross Gross
Unrealized Unrealized Aggregate
(millions) Security Type Cost Gains Losses Fair Value
2000
Equity $132 $1 $15 $118
Debt 175 1 174
Total $307 $1 $16 $292
1999
Equity $134 $2 $10 $126
Debt 396 10 386
Total $530 $2 $20 $512
Debt securities held at December 31, 2000 do not have stated
contractual maturities because borrowers have the right to call or
repay obligations with or without call or prepayment penalties.
For the years ended December 31, 2000 and 1999, the proceeds
from the sales of available-for-sale securities were $3 million and
$35 million, respectively. The gross realized gains were $1 million
and $5 million for 2000 and 1999, respectively. The gross realized
loss for 1998 was $1 million. The basis on which the cost of these
securities was determined is specific identification. The changes
in net unrealized holding gains and losses on available-for-sale
securities have resulted in an increase of $7 million, net of tax, in
accumulated other comprehensive income during the year ended
December 31, 2000. During the twelve months ended December 31,
1999, the changes in net unrealized holding gains and losses
resulted in a decrease of $17 million, net of tax, in accumulated
other comprehensive income. The changes in net unrealized holding
gains and losses on trading securities increased earnings during
the year 2000 by $6 million. Included in the $6 million increase was
a $14 million loss relating to the reclassification of certain avail-
able-for-sale securities to the trading category. In 1999, the change
in net unrealized holding gains and losses on trading securities
increased earnings by $1 million.
For a discussion of investment securities held in nuclear decom-
missioning trusts, see Note 14.
Note 12 Regulatory Assets and Liabilities
Regulatory assets and liabilities included the following:
(millions) At December 31, 2000 1999
Regulatory assets:
Other postretirement benefit costs $126
Income taxes recoverable through future rates 182 $57
Deferred fuel costs 98 63
Cost of decommissioning DOE uranium
enrichment facilities 49 55
Other 61 46
516 221
Unrecovered gas costs (See Note 2) 263
Total $779 $221
Regulatory liabilities:
Estimated rate contingencies and refunds $41
Income taxes refundable through future rates 18
Total $59
The incurred costs underlying these regulatory assets and regula-
tory liabilities may represent expenditures by Dominion’s rate regu-
lated electric and gas operations or may represent the recognition
of liabilities that ultimately will be settled at some time in the
future. See Note 7 for information about the write-off of regulatory
assets that resulted from 1999 deregulation legislation and the set-
tlement of Dominion’s 1998 Virginia rate proceeding.
Other postretirement benefit costs consist of the difference
between recognized costs and the amounts included in rates
charged by Dominion’s local gas distribution subsidiaries, pending
the expected recovery through future rates.
Unrecovered gas costs and deferred fuel costs represent the dif-
ference between the actual cost of purchased gas or fuel used in
electric generation and amounts recovered for such costs through
current rates.
Income taxes recoverable or refundable through future rates
resulted from the recognition of additional deferred income taxes,
not previously recorded because of past rate-making practices,
as part of the implementation of SFAS No. 109.
The costs of decommissioning the Department of Energy’s (DOE)
uranium enrichment facilities represents the unamortized portion
of Dominion’s required contributions to a fund for decommission-
ing and decontaminating DOE’s uranium enrichment facilities.
Dominion began making contributions in 1992 and will continue
over a 15-year period with escalation for inflation. These costs
are currently being recovered in fuel rates.