Dominion Power 2004 Annual Report Download - page 35

D 2004/Page 33
Analysis of Consolidated Operations
Presented below are selected amounts related to Dominion’s results
of operations:
Year Ended December 31, 2004 2003 2002
(millions)
Operating Revenue
Regulated electric sales $5,180 $4,876 $4,856
Regulated gas sales 1,422 1,258 876
Nonregulated electric sales 1,249 1,130 1,017
Nonregulated gas sales 2,082 1,718 778
Gas transportation and storage 802 740 705
Gas and oil production 1,636 1,503 1,334
Other 1,601 853 652
Operating Expenses
Electric fuel and energy purchases, net 2,162 1,667 1,447
Purchased electric capacity 587 607 691
Purchased gas, net 2,927 2,175 1,159
Liquids, pipeline capacity and other purchases 1,007 468 159
Other operations and maintenance 2,748 2,908 2,190
Depreciation, depletion and amortization 1,305 1,216 1,258
Other taxes 519 476 429
Other income (loss) 186 (40) 103
Interest and related charges 939 975 945
Income tax expense 700 597 $ 681
Loss from discontinued operations, net of taxes $ (15) (642) —
Cumulative effective of changes in accounting
principles, net of taxes — $11 —
An analysis of Dominion’s results of operations for 2004 compared to
2003 and 2003 compared to 2002 follows.
2004 vs. 2003
Operating Revenue
Regulated electric sales revenue increased 6% to $5.2 billion, primarily
reflecting:
•A $231 million increase due to the impact of a comparatively higher fuel
rate on increased sales volumes. The rate increase resulted from the
settlement of a fuel rate case in December 2003. This increase in regu-
lated electric sales revenue was more than offset by an increase in
Electric fuel and energy purchases, net expense ;
•A $24 million increase associated with favorable weather;
•A $49 million increase from customer growth associated with new cus-
tomer connections; and
•An $18 million increase due to lost revenue in 2003 as a result of out-
ages caused by Hurricane Isabel.
Regulated gas sales revenue increased 13% to $1.4 billion, largely
resulting from a $198 million increase due to higher rates for regulated gas
distribution operations primarily related to the recovery of higher gas
prices and a $20 million increase resulting from the return of customers
from Energy Choice programs, partially offset by an $87 million decrease
associated with milder weather and lower industrial sales. The effect of
this net increase in regulated gas sales revenue was largely offset by a
comparable increase in Purchased gas, net expense .
Nonregulated electric sales revenue increased 11% to $1.2 billion,
primarily reflecting the combined effects of:
•A $181 million increase in revenue from nonregulated retail energy
marketing operations reflecting increased volumes ($165 million) and
higher prices ($16 million);
•A $97 million increase in revenue from merchant generation opera-
tions, largely due to the commencement of commercial operations at
the 1,096 megawatt Fairless Energy power station (Fairless) in June
2004, partially offset by decreased revenue at certain other stations
resulting from lower generation volumes;
•A $140 million decrease in revenue from energy trading and marketing
activities reflecting decreased margins in electric trading due to unfa-
vorable price movements; and
•A $19 million decrease due to the sale of CNGI’s generation assets in
December 2003.
Nonregulated gas sales revenue increased 21% to $2.1 billion, predomi-
nantly due to:
•A $279 million increase in revenue from producer services operations,
reflecting higher prices ($157 million) and increased volumes ($122 mil-
lion). This increase in nonregulated gas sales revenue was largely off-
set by a corresponding increase in
Purchased gas, net expense;
•A $131 million increase in revenue from nonregulated retail energy mar-
keting operations, reflecting increased volumes ($55 million) and higher
prices ($76 million);
•A $61 million increase in revenue from sales of gas purchased by explo-
ration and production operations to facilitate gas transportation and
satisfy other agreements. This increase in nonregulated gas sales rev-
enue was largely offset by a corresponding increase in
Purchased gas,
net expense;
partially offset by
•A $108 million decrease in revenue from energy trading and marketing
activities due to comparatively lower price volatility on natural gas
option positions.
Gas transportation and storage revenue increased 8% to $802 million,
primarily reflecting:
•A $29 million increase due to the August 2003 reactivation of the
Cove Point LNG facility, which was acquired by Dominion in September
2002; and
•A $27 million increase in revenue from gas transmission operations
primarily reflecting increased transportation, storage, gathering and
extraction revenues.
Gas and oil production revenue increased 9% to $1.6 billion as a result of:
•A $37 million increase in revenue from oil production, largely reflecting
higher volumes; and
•A $180 million increase in revenue recognized related to deliveries
under VPP transactions; partially offset by
•A $72 million decrease in revenue from gas production, primarily
reflecting the sale of mineral rights under the VPP agreements.
Other revenue increased 88% to $1.6 billion, largely due to:
•A $384 million increase in coal sales revenue resulting from higher coal
prices and increased sales volumes;
•A $120 million increase in sales of emissions credits reflecting higher
prices and increased sales volumes; and
•A $109 million increase in revenue from sales of purchased oil by explo-
ration and production operations.