Dominion Power 2004 Annual Report Download - page 39

D 2004/Page 37
Segment Results of Operations
Dominion Generation
Dominion Generation includes the generation operations of Dominion’s
electric utility and merchant fleet as well as coal and emissions trading
and marketing activities.
2004 2003 2002
(millions, except EPS)
Net income contribution $ 525 $ 512 $ 561
EPS contribution $1.59 $1.60 $1.98
Electricity supplied (millions mwhrs) 112 105 101
mwhrs = megawatt hours
Presented below, on an after-tax basis, are the key factors impacting
Dominion Generation’s operating results:
2004 vs. 2003
Increase (Decrease)
Amount EPS
(millions, except EPS)
Fuel expenses in excess of rate recovery $(115) $(0.36)
Regulated electric sales:
Weather 10 0.03
Customer growth 20 0.06
Nuclear decommissioning trust performance 38 0.12
Coal trading and marketing 31 0.10
Capacity expenses 36 0.11
Other (7) (0.02)
Share dilution — (0.05)
Change in net income contribution $ 13 $(0.01)
Dominion Generation’s net income contribution increased $13 million,
primarily reflecting:
•Higher fuel expenses incurred by the regulated utility operations due
to the elimination of fuel deferral accounting which resulted in the
recognition of fuel expenses in excess of amounts recovered in fixed
fuel rates. The increase in fuel expenses also reflects higher generation
volumes;
•Higher regulated electric sales due to customer growth in the electric
franchise service area, primarily reflecting an increase in new residen-
tial customers, comparably favorable weather, lost revenue in 2003 due
to outages associated with Hurricane Isabel, and the impact of the
economy and other factors;
•Net realized gains (including investment income) associated with
nuclear decommissioning trust fund investments as opposed to net
realized losses (including investment income) during the prior year;
•A higher contribution from coal trading and marketing primarily due to
higher coal prices and increased sales volumes; and
•Reduced purchased power capacity expenses due to the termination of
long-term power purchase agreements in connection with the purchase
of the related nonutility generating facilities.
2003 vs. 2002
Increase (Decrease)
Amount EPS
(millions, except EPS)
Revenue reallocation $(57) $(0.20)
Regulated electric sales:
Weather (42) (0.15)
Customer growth 23 0.08
Merchant generation margins 18 0.06
Capacity expenses 29 0.10
Fuel settlement (9) (0.03)
Utility outages (13) (0.04)
Other 2 0.01
Share dilution — (0.21)
Change in net income contribution $(49) $(0.38)
Dominion Generation’s net income contribution decreased $49 million,
primarily reflecting:
•A change in the allocation of electric utility base rate revenue begin-
ning in 2003 among Dominion Generation, Dominion Energy and
Dominion Delivery;
•A decrease in regulated electric sales due to comparably milder sum-
mer weather, resulting from 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;
•A higher contribution from merchant generation operations due to
fewer outage days at the Millstone Power Station in 2003 and a full
year’s contribution from gas-fired generating units placed into service
during 2002;
•Scheduled decreases in capacity expenses under certain power pur-
chase agreements;
•Recognition of previously deferred fuel costs in connection with the
2003 Virginia fuel rate settlement; and
•Increased utility outage expenses, reflecting the refueling activities at
nuclear facilities in 2003.
Dominion Energy
Dominion Energy includes Dominion’s electric transmission, natural gas
transmission pipeline and storage businesses, an LNG facility, certain nat-
ural gas production, energy trading and marketing operations and producer
services which includes aggregation of gas supply and related wholesale
activities.
2004 2003 2002
(millions, except EPS)
Net income contribution $ 190 $ 346 $ 268
EPS contribution $0.57 $1.09 $0.95
Gas transportation throughput (bcf) 704 614 597
bcf = billion cubic feet