Dominion Power 2000 Annual Report Download - page 32

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Management’s Discussion and Analysis of Financial Condition and Results of Operations
(unaudited)
Forward-Looking Information
This annual report includes certain information which contains
“forward-looking statements” as defined by the Private Securities
Litigation Reform Act of 1995, including (without limitation) discus-
sions as to expectations, beliefs, plans, objectives and future finan-
cial performance, or assumptions underlying or concerning matters
discussed in this document. These discussions, and any other dis-
cussions, including certain contingency matters (and their respec-
tive cautionary statements) discussed elsewhere in this report, that
are not historical facts, are forward-looking and, accordingly,
involve estimates, projections, goals, forecasts, assumptions and
uncertainties that could cause actual results or outcomes to differ
materially from those expressed in the forward-looking statements.
The business and financial condition of Dominion Resources,
Inc. and its subsidiaries (Dominion or the Company) are influenced
by a number of factors including political and economic risks, mar-
ket demand for energy, inflation, capital market conditions, and
other general and specific economic conditions in the Company’s
service areas, governmental policies, legislative and regulatory
actions (including those of the Federal Energy Regulatory Commis-
sion [FERC], the Securities and Exchange Commission [SEC], the
Environmental Protection Agency [EPA], the Department of Energy,
the Nuclear Regulatory Commission [NRC] and various state regula-
tory commissions), industry and rate structure, and legal and
administrative proceedings. Some other important factors that
could cause actual results or outcomes to differ materially from
those discussed in the forward-looking statements include changes
in and compliance with environmental laws and policies, weather
conditions and catastrophic weather-related damage, present or
prospective wholesale and retail competition, electric and gas
deregulation, the restructuring of the organization, operations and
financing of Dominion’s electric power business to separate gener-
ation, transmission and distribution, competition for new energy
development opportunities, pricing and transportation of commodi-
ties, operation of nuclear power facilities, competition in the
telecommunications industry, successful implementation of the
Company’s telecommunications strategy, effects and risks associ-
ated with the Company’s acquisition, generation growth and
divestiture strategies, recovery of potentially stranded costs,
including nuclear decommissioning costs, exposure to risks associ-
ated with Dominion’s portfolio of derivative commodity contracts,
counter-party credit risk and unanticipated changes in operating
expenses and capital expenditures. All such factors are difficult to
predict, contain uncertainties that may materially affect actual
results, and may be beyond the control of Dominion. New factors
emerge from time to time and it is not possible for management to
predict all such factors, nor can it assess the impact of each such
factor on Dominion.
Any forward-looking statement speaks only as of the date on
which such statement is made, and Dominion undertakes no obliga-
tion to update any forward-looking statement to reflect events or
circumstances after the date on which such statement is made.
Introduction
Management’s Discussion and Analysis of Financial Condition
and Results of Operations explain the general financial condition
and the results of operations for Dominion. “Dominion” or the
“Company” is used throughout this report and, depending on the
context of its use, may represent any of the following: the legal
entity, Dominion Resources, Inc., one of Dominion’s consolidated
subsidiaries, or the entirety of Dominion Resources, Inc. and its
consolidated subsidiaries.
Dominion is a holding company headquartered in Richmond,
Virginia. Its principal subsidiaries are Virginia Electric and Power
Company (Virginia Power) and Consolidated Natural Gas Company
(CNG), which was acquired on January 28, 2000. Dominion is sub-
ject to the Public Utility Holding Company Act of 1935 (1935 Act).
Virginia Power is a regulated public utility engaged in the gener-
ation, transmission, distribution and sale of electric energy within
a 30,000 square-mile area in Virginia and northeastern North
Carolina. Virginia Power sells electricity to approximately 2.1 million
retail customers (including governmental agencies) and to whole-
sale customers such as rural electric cooperatives, municipalities,
power marketers and other utilities. Virginia Power also engages in
off-system wholesale purchases and sales of electricity and pur-
chases and sales of natural gas beyond the geographic limits of its
retail service territory.
CNG operates in all phases of the natural gas industry in the
United States, including exploration for and production of oil and
natural gas and natural gas transmission, storage and distribution.
Its regulated retail gas distribution subsidiaries serve approxi-
mately 1.7 million residential, commercial and industrial gas sales
and transportation customers in Ohio, Pennsylvania and West Vir-
ginia. Its interstate gas transmission pipeline system services each
of its distribution subsidiaries, non-affiliated utilities and end use
customers in the Midwest, the Mid-Atlantic and the Northeast
states. CNG’s exploration and production operations are conducted
in several of the major gas and oil producing basins in the United
States, both onshore and offshore, and in Canada.
The Company’s other major subsidiaries are Dominion Energy,
Inc. (DEI) and Dominion Capital, Inc. (DCI). DEI is engaged in inde-
pendent power production and the acquisition and production of
natural gas and oil reserves. In Canada, DEI is engaged in natural
gas exploration, production and storage. DCI is Dominion’s financial
services subsidiary. DCI’s primary business is financial services
which includes commercial lending and residential mortgage lend-
ing. See Note 6 to the Consolidated Financial Statements for a dis-
cussion of management’s strategy to exit and windup DCI’s
businesses as ordered by the SEC under the 1935 Act.
Under the 1935 Act, Dominion created a subsidiary service com-
pany, Dominion Resources Services, Inc. (Services), which provides
certain services to Dominion’s operating subsidiaries. During 2000,
CNG also had a service company. Effective January 1, 2001, the two
service companies were combined into one service company.