Dominion Power 2007 Annual Report Download - page 43

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2006
VS
. 2005
Increase (Decrease)
Amount EPS
(millions, except EPS)
Retail energy marketing operations $ 57 $ 0.09
Interest expense(1) 10 0.01
Regulated electric sales:
Weather (34) (0.05)
Customer growth 13 0.02
Major storm damage and service restoration(2) (18) (0.03)
North Carolina rate case settlement (6) (0.01)
Other 11 0.02
Share dilution — (0.01)
Change in net income contribution $ 33 $ 0.04
(1) Principally reflects additional intercompany borrowings and higher
interest rates on those borrowings.
(2) Reflects an increase in major storm damage and service restoration
expenses including expenses associated with tropical storm Ernesto in
September 2006.
Dominion Energy
Presented below are operating statistics related to Dominion
Energy’s gas transmission and distribution operations:
Year Ended December 31, 2007 % Change 2006 % Change 2005
Gas throughput (bcf):
Gas sales
(distribution) 50 (11) 56 (33) 84
Gas transportation
(distribution) 210 9 193 2 190
Gas transportation
(transmission) 719 11 650 (18) 794
Heating degree days 5,886 12 5,274 (13) 6,037
Average gas distribution
customer accounts(1):
Gas sales 410 (15) 485 (25) 643
Gas transportation 800 9 732 27 576
bcf = billion cubic feet
(1) Thirteen-month average, in thousands.
Presented below are operating statistics related to Dominion
Energy’s Appalachian E&P operations:
Year Ended December 31, 2007
%
Change 2006
%
Change 2005
Liquids production(1) (bcfe) 57.6 47 39.1 2 38.4
Average realized prices
without hedging results:
Liquids (per mcfe) $6.55 (8) $7.11 (14) $8.31
Average realized prices with
hedging results:
Liquids (per mcfe) 6.55 33 4.93 (2) 5.05
DD&A (per mcfe) 1.68 31 1.28 17 1.09
Average production
(lifting) cost (per mcfe)(2) 1.28 8 1.19 1 1.18
bcfe = billion cubic feet equivalent
mcfe = thousand cubic feet equivalent
(1) Includes natural gas, natural gas liquids and oil.
(2) The inclusion of volumes associated with reacquired overriding royalty
interests arising from the VPP’s terminated in 2007 would have resulted
in lifting costs of $1.00 in 2007.
Presented below, on an after-tax basis, are the key factors impact-
ing Dominion Energy’s net income contribution:
2007
VS
. 2006
Increase (Decrease)
Amount EPS
(millions, except EPS)
Gas and oil—production $ 66 $ 0.10
Gas and oil—prices 33 0.05
Regulated gas sales—weather 16 0.02
Producer services(1) (33) (0.05)
DD&A—gas and oil (27) (0.04)
Salaries, wages and benefits expense (7) (0.01)
Gas transmission operations(2) (6) (0.01)
Other (2) —
Share accretion — 0.04
Change in net income contribution $ 40 $ 0.10
(1) Primarily related to lower margins reflecting reduced market volatility,
as compared to the post-2005 hurricane market conditions in 2006.
(2) Gas transmission operations decreased primarily due to a decline in
market center services, partially offset by lower system fuel costs and
higher margins on extracted products.
2006
VS
. 2005
Increase (Decrease)
Amount EPS
(millions, except EPS)
Interest expense(1) $(18) $(0.03)
Gas and oil—prices (17) (0.02)
Regulated gas sales—weather (16) (0.02)
Gas transmission rate reduction(2) (13) (0.02)
DD&A — gas and oil (5) (0.01)
Gas transmission operations(3) 31 0.04
Producer services(4) 23 0.03
Gas and oil—production 13 0.02
Other (13) (0.02)
Share dilution — (0.01)
Change in net income contribution $(15) $(0.04)
(1) Primarily reflects additional intercompany borrowings and higher inter-
est rates on those borrowings.
(2) Due to lower natural gas transportation and storage revenue as a result
of a 2005 rate settlement.
(3) Primarily due to higher margins on extracted products and market center
service opportunities.
(4) Higher income resulting from the impact of favorable price changes
related to price risk management and gas marketing activities associated
with certain transportation and storage contracts.
Included below are the volumes and weighted-average prices
associated with hedges in place for our Appalachian E&P oper-
ations and fixed-term overriding royalty interests formerly asso-
ciated with the VPP agreements as of December 31, 2007, by
applicable time period. As of December 31, 2007, we have not
hedged any of our anticipated production past 2009.
Natural Gas
Year
Hedged
production
(bcf)
Average
hedge price
(per mcf)
2008 51.2 $8.60
2009 14.6 8.25
Dominion 2007 Annual Report 41