Dominion Power 2007 Annual Report Download - page 109

Dominion Generation includes the generation operations of our
electric utility and merchant fleet, as well as energy marketing and
price risk management activities associated with our generation
assets.
Corporate and Other includes our corporate, service company,
corporate-wide enterprise commodity risk management services
and other functions (including unallocated debt). In addition,
this segment includes the remaining assets and operations of DCI,
which are in the process of being divested, the net impact of dis-
continued operations, our non-Appalachian natural gas and oil
E&P operations that were sold and our regulated gas distribution
subsidiaries that are held for sale. In addition, the contribution to
net income by our primary operating segments is determined
based on a measure of profit that executive management believes
represents the segments’ core earnings. As a result, certain specific
items attributable to those segments are not included in profit
measures evaluated by executive management in assessing the
segments’ performance or allocating resources among the seg-
ments and are instead reported in the Corporate and Other seg-
ment. In 2007, we reported net expenses of $618 million in the
Corporate and Other segment attributable to our operating seg-
ments. The net expenses in 2007 primarily related to the impact
of the following items attributable to Dominion Generation:
‰A $387 million ($252 million after-tax) charge related to the
impairment of Dresden;
‰A $259 million ($158 million after-tax) extraordinary charge
due to the reapplication of SFAS No. 71 to the Virginia juris-
diction of our utility generation operations; and
‰A $231 million ($137 million after-tax) charge resulting from
the termination of the long-term power sales agreement asso-
ciated with State Line.
In 2006, we reported net expenses of $10 million in the
Corporate and Other segment attributable to our operating seg-
ments. The net expenses in 2006 primarily related to the impact
of the following:
‰A $21 million tax benefit from the partial reduction of pre-
viously recorded valuation allowances on certain federal and
state tax loss carryforwards (attributable to Dominion
Generation), since these carryforwards were expected to be
utilized to offset capital gain income that would have been
generated from the planned sale of Peoples and Hope;
‰A $27 million ($17 million after-tax) charge resulting from
the cancellation of a pipeline project, attributable to
Dominion Energy; and
‰A $26 million impairment ($15 million after-tax) charge
resulting from a change in our method of assessing other-
than-temporary declines in the fair value of securities held as
investments in our nuclear decommissioning trusts; attribut-
able to Dominion Generation.
In 2005, we reported net expenses of $133 million in the
Corporate and Other segment attributable to our operating seg-
ments. The net expenses in 2005 primarily related to the impact
of the following items attributable to Dominion Generation:
‰A $77 million charge ($47 million after-tax) resulting from
the termination of a long-term power purchase agreement;
and
‰A $51 million charge related to credit exposure associated
with the bankruptcy of Calpine Corporation. At December
31, 2005, we had not recognized any deferred tax benefits
related to the charge, since realization of tax benefits was not
anticipated based on our expected future tax profile at that
time.
Intersegment sales and transfers are based on underlying con-
tractual arrangements and agreements and may result in
intersegment profit or loss.
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