Dominion Power 2003 Annual Report Download - page 37

35.Dominion 2003
• Expected Six Sigma benefits.
For 2005, the growth factors are expected to be partially
offset by:
• Increased interest expense and
• Inflation and other factors.
Based on these projections, Dominion estimates that cash flow
from operations will increase in 2004, as compared to 2003.
Management believes this increase, coupled with reductions in
discretionary and developmental capital expenditures previously
planned for power generation and gas and oil exploration and
production projects, will provide sufficient cash flow to maintain
or grow Dominion’s current dividend to common shareholders.
Segment Results of Operations
Dominion Generation
Dominion Generation includes the generation operations of
Dominion’s electric utility and merchant fleet.
2003 2002 2001
(millions, except EPS)
Net income contribution $ 508 $ 561 $ 511
EPS contribution $1.59 $1.98 $2.02
Electricity supplied (millions mwhrs) 105 101 95
Presented below are the key factors impacting Dominion
Generation’s operating results:
2003 vs. 2002 2002 vs. 2001
Increase Increase
(Decrease) (Decrease)
Amount EPS Amount EPS
(millions, except EPS)
Revenue reallocation $(57) $(0.20) ——
Regulated electric sales:
Weather (42) (0.15) $ 82 $ 0.32
Customer growth 23 0.08 25 0.10
Merchant generation
margins 18 0.06 (122) (0.48)
Capacity expenses 29 0.10 8 0.03
Fuel settlement (9) (0.03) ——
Utility outages (13) (0.04) 11 0.04
Other (2) — 46 0.19
Share dilution — (0.21) — (0.24)
Change in net
income contribution $(53) $(0.39) $ 50 $(0.04)
2003 vs. 2002
Dominion Generation’s net income contribution decreased
$53 million over 2002, primarily reflecting:
• A change in the allocation of electric utility base rate revenue
beginning in 2003 among Dominion Generation, Dominion
Energy and Dominion Delivery;
• A decrease in regulated electric sales due to comparably
milder summer weather, resulting in a decrease in cooling degree
days in 2003, partially offset by an increase in heating degree
days in 2003;
• An increase in regulated electric sales due to customer growth
in the electric franchise service area, primarily reflecting an
increase in new residential customers;
• Scheduled decreases in capacity expenses under certain
power purchase agreements;
• Recognition of previously deferred fuel costs in connection
with the Virginia fuel rate settlement and
• Increased utility outage expenses, reflecting the refueling
activities at the utility nuclear facilities in 2003.
2002 vs. 2001
Dominion Generation’s net income contribution rose $50 million
over 2001, primarily reflecting:
• An increase in regulated electric sales due to comparably
warmer summer weather, resulting in an increase in cooling
degree days;
• An increase in regulated electric sales due to customer growth
in the electric franchise service area, primarily reflecting an
increase in new residential customers and
• A decrease in merchant generation sales primarily as a result
of lower prices in 2002, partially offset by a full year of Millstone
operations.
Dominion Energy
Dominion Energy includes Dominion’s electric transmission, nat-
ural gas transmission pipeline and storage businesses, certain
natural gas production, as well as Clearinghouse (energy trading
and marketing) and field services (aggregation of gas supply and
related wholesale activities) operations.
2003 2002 2001
(millions, except EPS)
Net income contribution $ 350 $ 268 $ 268
EPS contribution $1.10 $0.95 $1.06
Gas transportation throughput (bcf) 612 597 553