Dominion Power 2007 Annual Report Download - page 31

Management’s Discussion and Analysis of Financial Condition
and Results of Operations
Management’s Discussion and Analysis of Financial Condition
and Results of Operations (MD&A) discusses our results of oper-
ations and general financial condition. MD&A should be read in
conjunction with our Consolidated Financial Statements. The
terms “Dominion,” “Company,” “we,” “our” and “us” are used
throughout this report and, depending on the context of their
use, may represent any of the following: the legal entity, Domin-
ion Resources, Inc., one or more of Dominion Resources, Inc.’s
consolidated subsidiaries or operating segments or the entirety of
Dominion Resources, Inc. and its consolidated subsidiaries.
C ONTENTS OF MD&A
Our MD&A consists of the following information:
‰Forward-Looking Statements
‰Introduction
‰Accounting Matters
‰Results of Operations
‰Segment Results of Operations
‰Selected Information—Energy Trading Activities
‰Liquidity and Capital Resources
‰Future Issues and Other Matters
‰Market Risk Sensitive Instruments and Risk Management
‰Risk Factors
‰Selected Financial Data
F ORWARD -L OOKING S TATEMENTS
This report contains statements concerning our expectations,
plans, objectives, future financial performance and other state-
ments that are not historical facts. These statements are “forward-
looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. In most cases, the reader can
identify these forward-looking statements by such words as
“anticipate,” “estimate,” “forecast,” “expect,” “believe,” “should,”
“could,” “plan,” “may,” “target” or other similar words.
We make forward-looking statements with full knowledge
that risks and uncertainties exist that may cause actual results to
differ materially from predicted results. Factors that may cause
actual results to differ are often presented with the forward-
looking statements themselves. Additionally, other factors may
cause actual results to differ materially from those indicated in any
forward-looking statement. These factors include but are not lim-
ited to:
‰Unusual weather conditions and their effect on energy sales to
customers and energy commodity prices;
‰Extreme weather events, including hurricanes and winter
storms, that can cause outages and property damage to our
facilities;
‰State and federal legislative and regulatory developments and
changes to environmental and other laws and regulations,
including those related to climate change, to which we are
subject;
‰Cost of environmental compliance, including those costs
related to climate change;
‰Risks associated with the operation of nuclear facilities;
‰Fluctuations in energy-related commodity prices and the
effect these could have on our earnings, liquidity position and
the underlying value of our assets;
‰Counterparty credit risk;
‰Capital market conditions, including price risk due to market-
able securities held as investments in nuclear decommission-
ing and benefit plan trusts;
‰Fluctuations in interest rates;
‰Changes in federal and state tax laws and regulations;
‰Changes in rating agency requirements or credit ratings and
their effect on availability and cost of capital;
‰Changes in financial or regulatory accounting principles or
policies imposed by governing bodies;
‰Employee workforce factors including collective bargaining
agreements and labor negotiations with union employees;
‰The risks of operating businesses in regulated industries that
are subject to changing regulatory structures;
‰Receipt of approvals for and timing of closing dates for acquis-
itions and divestitures;
‰Changes in rules for regional transmission organizations
(RTOs) in which we participate, including changes in rate
designs and new and evolving capacity models;
‰Political and economic conditions, including the threat of
domestic terrorism, inflation and deflation;
‰The inability to complete planned construction projects
within the terms and time frames initially anticipated; and
‰Completing the divestiture of the Peoples Natural Gas
Company (Peoples) and Hope Gas, Inc. (Hope), and the
disposition of investments held by our financial services sub-
sidiary, Dominion Capital, Inc. (DCI).
Additionally, other risks that could cause actual results to dif-
fer from predicted results are set forth in Risk Factors.
Our forward-looking statements are based on our beliefs and
assumptions using information available at the time the state-
ments are made. We caution the reader not to place undue reli-
ance on our forward-looking statements because the assumptions,
beliefs, expectations and projections about future events may, and
often do, differ materially from actual results. We undertake no
obligation to update any forward-looking statement to reflect
developments occurring after the statement is made.
I NTRODUCTION
Dominion, headquartered in Richmond, Virginia, is one of the
nation’s largest producers and transporters of energy. Our strategy
is to be a leading provider of electricity, natural gas and related
services to customers primarily in the eastern region of the United
States (U.S.). Our portfolio of assets includes approximately:
‰26,500 megawatts (Mw) of generation capacity;
‰14,000 miles of interstate natural gas transmission, gathering
and storage pipeline;
‰6,000 miles of electric transmission lines;
‰55,000 miles of electric distribution lines in Virginia and
North Carolina;
‰28,000 miles of gas distribution pipeline, exclusive of service
lines of two inches in diameter or less;
‰1.1 trillion cubic feet equivalent (Tcfe) of proved gas and oil
reserves; and
‰An underground natural gas storage system with over 975 bil-
lion cubic feet (bcf) of capacity.
Prior to a fourth quarter 2007 segment realignment, we
managed our daily operations through four primary operating
Dominion 2007 Annual Report 29