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ANNUAL
REPORT’06
DOMINION RESOURCES, INC.2006 ANNUAL REPORT

Table of contents

  • Page 1
    DOMINION RESOURCES, INC. 2006 ANNUAL REPORT ANNUAL REPORT '06

  • Page 2
    CONTENTS 2 4 6 8 Efficient Core Assets Vibrant Economic Environment Around The Clock Reliability Giving To Our Communities 12 CEO Letter 16 Consolidated Financial Highlights and Key Measures 20 Key Businesses 28 GAAP Reconciliations and Footnotes 29 2006 Financial Presentation 10 Mindful of Our ...

  • Page 3
    ...Dominion. Nowhere do these enduring values manifest themselves more transparently than in our efficient and reliable operations in the growing economies we serve, our enthusiasm to give back to our communities and, as an energy company, the way we treat our environment. 2006 Annual Report DOMINION...

  • Page 4
    ...as one of the nation's largest integrated energy companies. Dominion produces, transmits, stores and distributes electric power and natural gas through one of the nation's most efficient networks of energy assets. Getting optimal value from these core assets and doing it safely at industry-leading...

  • Page 5
    ... Power Station's Unit 3 surpassed one year in continuous operation in 2006, when it reached its 393rd consecutive day on line. Below: Since its reactivation in 2003, Dominion's Cove Point facility has been the most active LNG terminal in the nation. CORE ASSETS 2006 Annual Report DOMINION...

  • Page 6
    VIBRANT ECONOMIC 4 DOMINION 2006 Annual Report

  • Page 7
    ...'s products and services are in demand and will be in even more demand in the future? Dominion's businesses operate in and serve the nation's vibrant mid-Atlantic, Northeast and Midwest regions- from the fast-growth Washington suburbs of Northern Virginia, to power-hungry New England, to natural gas...

  • Page 8
    ... industry requirements. Dominion has a track record of excellent operations that promote vibrant economic growth through multiple businesses and assets. Rooted in a longstanding tradition of public service, Dominion's regulated businesses take pride in providing 6 DOMINION 2006 Annual Report

  • Page 9
    ...or summer heat wave. Keeping the lights on, businesses running and homes comfortable is a big part of the Dominion culture. It motivates us to achieve the excellence that our customers demand and expect. This company mindset has formed over decades of public service stretching back to the early part...

  • Page 10
    ... of life in the communities in which they live and work. Dominion volunteers have more than two decades and thousands of service projects to their credit. Many of our customers know us as the local utility whose employees build homes for Habitat for Humanity, refurbish playgrounds at neighborhood...

  • Page 11
    ...fit honoring the passing of the young son of a Dominion lineman. Below: For 24 years, Dominion's EnergyShare program has provided fuel assistance to people who can't afford to warm their homes. In early 2007, we contributed $1 million to the program. COMMUNITIES 2006 Annual Report DOMINION 9

  • Page 12
    ... commitment goes well beyond our electric power service area. Across our utility ï¬,eet serving Virginia and North Carolina and across our merchant ï¬,eet serving the Midwest and Northeast, we are spending $3.4 billion to reduce emissions at our coal-powered units. 10 DOMINION 2006 Annual Report

  • Page 13
    ... Rick Willis collects a groundwater sample from a monitoring well at Chesterfield Power Station. Protection of groundwater resources is a high priority for Dominion. Above: We manage our environmental programs mindful of our responsibility to future generations. 2006 Annual Report DOMINION 11

  • Page 14
    ... electric power businesses. By the end of 2006, thanks to reserve growth, increasing production and rising energy prices, our natural gas and oil E&P unit contributed 34 percent of Dominion's primary operating segment earnings, or $680 million. POTENTIAL E&P SALE YIELDS COMPELLING INVESTOR BENEFIT...

  • Page 15
    ... in the nation, Dominion Virginia Power, which now serves more than 2.3 million homes and businesses, as well as a premier natural gas distribution company, Dominion East Ohio, which serves more than 1.2 million customer accounts in Ohio. â- Potential to return capital to investors in the form of...

  • Page 16
    .... In 2006, our operating earnings were in line with expectations of $5.05 to $5.25 per share. OTHER ASSET SALES ENABLE DEBT REDUCTION As a result of our increased focus on return on invested capital, we reached an agreement in 2006 to sell our two smallest natural gas distribution utilities in...

  • Page 17
    ... our employees, investors and customers that our core values of safety, ethics and excellence were the right mind-set for a company that produces energy from a platform of businesses largely regulated at the federal and state levels. Sincerely, Thomas F. Farrell II 2006 Annual Report DOMINION 15

  • Page 18
    ....5 17,400 * Based on Non-GAAP Financial Measures. See pages 28 and 29 for GAAP reconciliations. ** Prior year's operating earnings have been recast to exclude the discontinued operations of three generation plants for which an agreement to sell was executed in December 2006. CHANGING EARNINGS MIX...

  • Page 19
    ... Electrics S&P 500 A FULL PIPELINE OF OPPORTUNITIES 2 0 0 6 to 2 0 1 0 2 o t o o t o o 1 o t o t t o t o o o to t t o o t t o t o o o t t o o t o 1 to t t o o t o to o t t o t o 0 o t t t t t t o t o 1 0 6 1 0 1 0 1 0 1 1 0 Please Lift 2006 Annual Report DOMINION...

  • Page 20
    ...million electric in VA and 1.2 million natural gas in OH 0.5 million natural gas in PA and WV*** Plus 1.5 million unregulated retail energy customer accounts in 11 states * The previously announced sale of these plants is e pected to close in the first quarter of 2007. ** On ovember 1, 2006, ominion...

  • Page 21
    ... unit operates more than 19,000 miles of natural gas transmission, distribution and gathering lines in a service area covering more than 4,700 square miles. REGULATED UTILITIES SERVICE AREAS As o ecem er Electric Natural Gas (PA) and (WV)* Natural Gas (OH) Corporate Headquarters Richmond, Virginia...

  • Page 22
    ... to distribute and deliver the gas and process bills. Dominion East Ohio's authorized rate of return and earnings have not been Safety is our real bottom line. We expect our employees to look out for each other. This culture fosters the proper environment for safe service to our customers. With...

  • Page 23
    ... at our Brayton Point and Salem Harbor power stations in Massachusetts, and gas-fired units at our Manchester Street Station in Rhode Island. These lowcost generating stations provide us with a competitive advantage in a power market driven by natural gas. With strong electric load growth projected...

  • Page 24
    ... Natural Gas Nuclear il / Gas ood Kewaunee Salem Harbor Manchester Millstone Brayton Point New Generation Stations Planned/Under Development Natural Gas ind Elwood State Line Remington Troy Dresden Morgantown Fairless Energy Mt.Storm/ North Branch Yorktown Gordonsville NEDPower Bath Ladysmith...

  • Page 25
    ... of a pressing market reality: New pipelines and storage are urgently needed to bring additional supplies of natural gas to the Northeast and mid-Atlantic regions. At the same time, significant investment in electric transmission will be required to meet Virginia's energy demand. Through Dominion...

  • Page 26
    ... third-party storage and transportation services. As Americans go about their lives and commerce in cities, towns and rural areas across the mid-Atlantic and Northeast regions, Dominion Energy is reliably linking energy producers with energy users around the clock. 2006 Annual Report DOMINION 25

  • Page 27
    ... to distribution systems and storage fields and access to pipelines and processing plants, their production benefits from low transportation costs and higher-than-average market prices. Our Appalachian reserves are estimated at year-end 2006 to have more than 1 trillion cubic feet of natural gas...

  • Page 28
    ... ACREAGE WELL-POSITIONED Dominion Conventional Acreage Dominion E&P Offices Natural Gas Transmission Pipelines Natural Gas Underground Storage Pools Dominion Cove Point LNG Facility ndiana Pennsylvania Office ane Le est irginia Office Cove Point LNG Facility 2006 Annual Report DOMINION 27

  • Page 29
    ... 2006 Millions EPS Operating Earnings After-tax items: Charges related to pending sale of gas distribution subsidiaries Dominion Capital related charges Income (loss) from discontinued operations of merchant generation plants Income (loss) related to Telecom business Termination of power purchase...

  • Page 30
    ... * See Reconciliation of Operating Earnings to Reported Earnings. Reconciliation of 1997 Operating Earnings to Reported Earnings (GAAP) Operating Earnings Millions % Reported Earnings Millions % Dominion Capital Virginia Power Dominion UK* DEI-E&P DEI-Generation DRI Holding Co. Consolidated...

  • Page 31
    ... in nuclear decommissioning and benefit plan trusts; INTRODUCTION Dominion is a fully integrated gas and electric holding company headquartered in Richmond, Virginia. Our strategy is to be a leading provider of electricity, natural gas and related services to customers in the eastern region of...

  • Page 32
    ...operating costs, particularly with respect to fuel and purchased power, relative to costs used to establish capped rates, will impact our earnings. Variability in earnings provided by the merchant fleet relates to changes in market-based prices received for electricity and the demand for electricity...

  • Page 33
    ...with unique characteristics, we estimate fair value using a discounted cash flow approach deemed appropriate under the circumstances and applied consistently from period to period. If pricing information is not available from external sources, judgment is required to 32 DOMINION 2006 Annual Report

  • Page 34
    ... of quoted market prices, we estimate the fair value of our AROs using present value techniques, in which we make various assumptions including estimates of the amounts and timing of future cash flows associated with retirement activities, credit-adjusted risk free rates and cost escalation rates...

  • Page 35
    ... site-specific base year cost studies in order to estimate the nature, cost and timing of planned decommissioning activities for our utility and merchant nuclear plants. We obtained updated cost studies for all of our nuclear plants in 2006 which generally reflected increases in base year costs...

  • Page 36
    ... state cost-of-service rate regulation, regulatory practices that assign costs to accounting periods may differ from accounting methods generally applied by nonregulated companies. When it is probable that regulators will permit the recovery of current costs through future rates charged to customers...

  • Page 37
    ... impacted by increased fuel and purchased power expenses incurred by our electric utility operations primarily as a result of higher commodity prices. These negatives were partially offset by higher realized gas and oil prices for our E&P operations, gains on the sale of emissions allowances...

  • Page 38
    ... from our merchant generation business, due primarily to lower commodity prices and decreased consumption of fossil fuel, reflecting the effects of milder weather on demand, partially offset by higher replacement power costs incurred due to an increase in scheduled outage days. Purchased gas expense...

  • Page 39
    ... transmission rights (FTRs) granted by PJM to our utility generation operations. These FTRs are used to offset congestion costs associated with PJM spot market activity, which are included in Electric fuel and energy purchases expense; A $35 million increase in generation-related outage costs...

  • Page 40
    ... of a North Carolina rate case in the first quarter of 2005; and The net impact of the following items recognized in 2004: A $184 million charge related to the sale of our interest in a long-term power tolling contract in connection with our exit from certain energy trading activities; A $96...

  • Page 41
    .... 2005 VS. 2004 Increase (Decrease) Amount EPS Electricity delivered (million mwhrs)(1) Degree days (electric service area): Cooling(2) Heating(3) Average electric delivery customer accounts(4) Gas throughput (bcf): Gas sales Gas transportation Heating degree days (gas service area)(3) Average gas...

  • Page 42
    ...Merchant generation margin(1) Unrecovered Virginia fuel expenses Regulated electric sales: Customer growth Weather Other(2) Sales of emissions allowances Energy supply margin(3) Outage costs(4) Salaries, wages and benefits expense 2005 North Carolina rate case settlement Other Share dilution Change...

  • Page 43
    ... activities(1) Interest and other financing expense(2) Salaries, wages and benefits expense Merchant generation margin(3) Sales of emissions allowances Energy supply margin(4) Regulated electric sales: Weather Customer growth Purchased electric capacity expense 2005 North Carolina rate case...

  • Page 44
    ... of 5 years Source of Fair Value (millions) Total The net expenses associated with other corporate operations for 2006 increased by $28 million as compared to 2005, primarily reflecting a $37 million after-tax charge to eliminate the application of hedge accounting for certain interest rate swaps...

  • Page 45
    ... provided by the companies' operations. As discussed in Credit Ratings, our ability to borrow funds or issue securities and the return demanded by investors are affected by the issuing company's credit ratings. In addition, the raising of external capital is subject 44 DOMINION 2006 Annual Report

  • Page 46
    ... collateral required on derivative contracts used in our risk management strategies for gas and oil production operations. At December 31, 2006, we had the following letter of credit facilities: Facility Limit Outstanding Letters of Credit Facility Capacity Remaining Facility Inception Date Facility...

  • Page 47
    ... debt securities. The remainder of the shares issued and proceeds received were through Dominion Direct® (a dividend reinvestment and open enrollment direct stock purchase plan), employee savings plans and the exercise of employee stock options. From May 2006 until November 2006, we issued new...

  • Page 48
    ..., which will, in turn, significantly lower our overall business and operating risk profile. Fitch reaffirmed its credit ratings for the Dominion Companies, stating that the closing of the potential oil and gas sale would alleviate several of Fitch's primary rating concerns and increase the share of...

  • Page 49
    ...or junior to the hybrids and include distribution deferral and long-dated maturity features similar to the hybrids. For purposes of the RCCs, non-affiliates include individuals enrolled in our dividend reinvestment plan, direct stock purchase plan and employee benefit plans. We monitor the covenants...

  • Page 50
    ... from bundled cost-based rates for regulated electric service to unbundled cost-based rates for transmission and distribution services, and to market pricing for generation services, including retail choice for our customers. The 1999 Virginia Restructuring Act addressed capped base rates, RTO...

  • Page 51
    ...a limited number of nonresidential retail customers whose aggregated load would exceed 5 Mw. Also, after the end of capped rates, the Virginia Commission would set the base rates of investor-owned electric utilities under a modified cost-of-service model. Among other features, the currently proposed...

  • Page 52
    ... in southeastern Virginia. These transmission upgrades are designed to improve the reliability of service to our customers and the region. The siting and construction of these transmission lines will be subject to applicable state and federal permits and approvals. DOMINION 2006 Annual Report 51

  • Page 53
    ... the Brayton Point Power Station. The new permits contained identical conditions that in effect require the installation of cooling towers to address concerns over the withdrawal and discharge of cooling water. In November 2003, appeals were filed with the EPA Envi- 52 DOMINION 2006 Annual Report

  • Page 54
    ...shifts in prices received and paid for natural gas, oil, electricity and other commodities. We use commodity derivative contracts to manage price risk exposures for these operations. We are exposed to foreign currency exchange rate risks related to our purchases of fuel and fuel services denominated...

  • Page 55
    ...use) and differences between fuel price assumptions and actual fuel prices. Annual fuel rate adjustments, with deferred fuel accounting for over- or under-recoveries of fuel costs, will be instituted for three twelve-month periods beginning July 1, 2007. The Virginia 54 DOMINION 2006 Annual Report

  • Page 56
    ... valuation methods could affect the reported fair value of these contracts. In addition, we use derivatives to hedge future sales of our merchant generation and gas and oil production, which may limit the benefit we would otherwise receive from increases in commodity prices. These hedge arrangements...

  • Page 57
    ... our current credit ratings in light of existing or future requirements, we may find it necessary to take steps or change our business plans in ways that may adversely affect our growth and earnings per share. A reduction in Dominion's credit ratings or the credit ratings of our Virginia Power and...

  • Page 58
    ... debt(6) Preferred securities of subsidiary trusts(6) (1) Includes a $164 million after-tax impairment charge resulting from the classification of three of our natural gas-fired merchant generation peaking facilities (Peaker facilities) as held for sale and a $104 million after-tax charge resulting...

  • Page 59
    ...-Oxley Act of 2002 require our 2006 Annual Report to contain a management's report and a report of the independent registered public accounting firm regarding the effectiveness of internal control. As a basis for our report, we tested and evaluated the design and operating effectiveness of internal...

  • Page 60
    ... of America. As discussed in Note 3 to the consolidated financial statements, the Company changed its methods of accounting to adopt new accounting standards for pension and other postretirement benefit plans, share-based payments, and purchases and sales of inventory with the same counterparty in...

  • Page 61
    ... control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal...

  • Page 62
    ...1,249 Electric fuel and energy purchases Purchased electric capacity Purchased gas Other energy-related commodity purchases Other operations and maintenance Depreciation, depletion and amortization Other taxes Total operating expenses Income from operations Other income Interest and related charges...

  • Page 63
    ... fuel Gas stored Derivative assets Assets held for sale Deferred income taxes Prepayments Other Total current assets Investments Nuclear decommissioning trust funds Available-for-sale securities Loans receivable, net Other Total investments Property, Plant and Equipment Property, plant and equipment...

  • Page 64
    At December 31, (millions) 2006 2005 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Securities due within one year Short-term debt Accounts payable Accrued interest, payroll and taxes Derivative liabilities Liabilities held for sale Other Total current liabilities Long-Term Debt Long-...

  • Page 65
    ... of stock-employee and direct stock purchase plans Stock awards and stock options exercised (net of change in unearned compensation) Issuance of stock-equity-linked securities Stock repurchase and retirement Tax benefit from stock awards and stock options exercised Adjustment to initially adopt...

  • Page 66
    ... fuel and purchased gas costs, net Pension and other postretirement benefit assets Accounts payable Accrued interest, payroll and taxes Deferred revenue Margin deposit assets and liabilities Other operating assets and liabilities Net cash provided by operating activities Investing Activities Plant...

  • Page 67
    ...CNG), Dominion Energy, Inc. (DEI) and Virginia Power Energy Marketing, Inc. (VPEM). Virginia Power is a regulated public utility that generates, transmits and distributes electricity for sale in Virginia and northeastern North Carolina. Virginia Power serves approximately 2.3 million retail customer...

  • Page 68
    ... July 1, 2007 the fuel factor will be adjusted as discussed under Virginia Fuel Expenses in Note 23. Approximately 7.5% of the cost of fuel used in electric generation and energy purchases used to serve utility customers is currently subject to deferral accounting. Deferred costs associated with the...

  • Page 69
    ... held for sale. Based on the average price of gas purchased during 2006, the cost of replacing the current portion of stored gas inventory exceeded the amount stated on a LIFO basis by approximately $211 million. Stored gas inventory held by certain nonregulated gas operations is valued using the...

  • Page 70
    ... cash flow hedges of the variable price risk associated with the purchase and sale of electricity, natural gas, oil and other energy-related products. We also use foreign currency forward contracts to hedge the variability in foreign exchange rates and interest rate swaps to hedge our exposure to...

  • Page 71
    ... book value at the retirement date. Depreciation of property, plant and equipment is computed on the straight-line method based on projected service lives. Our depreciation rates on utility property, plant and equipment are as follows: 2006 (percent) 2005 2004 Generation Transmission Distribution...

  • Page 72
    ... and employee share purchase plans. We adopted SFAS No. 123R using the modified prospective application transition method. Under this transition method, compensation cost is recognized (a) based on the requirements of SFAS No. 123R for all share-based awards granted subsequent to January 1, 2006 and...

  • Page 73
    ... the reporting period based upon the average market price for the period. This change did not result in an increase to the average shares outstanding used in the 2004 calculation of our diluted EPS since the conversion price included in the notes was greater than the aver- 72 DOMINION 2006 Annual...

  • Page 74
    ... Mw Brayton Point Station in Somerset, Massachusetts; the 754 Mw Salem Harbor Station in Salem, Massachusetts; and the 432 Mw Manchester Street Station in Providence, Rhode Island. The operations of Dominion New England are included in our Dominion Generation operating segment. DOMINION 2006 Annual...

  • Page 75
    ... held for sale State taxes, net of federal benefit Preferred dividends Valuation allowances Other benefits and taxes - foreign operations Amortization of investment tax credits Employee stock ownership plan deduction Employee pension and other benefits Other, net Effective tax rate 35.0% 35...

  • Page 76
    ... 2006 is minimal. NOTE 8. HEDGE ACCOUNTING ACTIVITIES We are exposed to the impact of market fluctuations in the price of natural gas, oil, electricity and other energy-related products marketed and purchased, as well as currency exchange and interest rate risks of our business operations. We use...

  • Page 77
    ... natural gas-fired merchant generation peaking facilities (Peaker facilities). Peaking facilities are used during times of high electricity demand, generally in the summer months. The Peaker facilities are: Armstrong, a 625 Mw station in Shelocta, Pennsylvania; Troy, a 600 Mw station in Luckey, Ohio...

  • Page 78
    ... held for sale in our Consolidated Balance Sheet are as follows: At December 31, (millions) 2006 ASSETS Current Assets Cash Customer accounts receivable Unrecovered gas costs Other Total current assets Investments Property, Plant and Equipment Property, plant and equipment Accumulated depreciation...

  • Page 79
    ... dilutive securities with the right to purchase approximately 1 million, 3 million and 5 million average common shares for the years ended December 31, 2006, 2005 and 2004, respectively, were not included in the respective period's calculation of diluted EPS because the exercise or purchase prices...

  • Page 80
    ..., plant and equipment and their respective balances are: At December 31, (millions) 2006 2005 Utility: Generation Transmission Distribution Storage Nuclear fuel Gas gathering and processing General and other Plant under construction Total utility Nonutility: Exploration and production properties...

  • Page 81
    ... pension and other postretirement benefit costs(2) Customer bad debts(3) RTO start-up costs and administration fees(4) Deferred cost of fuel used in electric generation(5) Other postretirement benefit costs(6) Income taxes recoverable through future rates(7) Termination of certain power purchase...

  • Page 82
    ... the approximately 2,300 gas storage wells in our underground natural gas storage network, certain electric transmission and distribution assets located on property that we do not own, hydroelectric generation facilities and LNG processing and storage facilities. We currently do not have sufficient...

  • Page 83
    ...gas and oil exploration companies, entered into a long-term contract with an unrelated LLC whose only current activities are to design, construct, install and own the Thunder Hawk facility, a semisubmersible production facility, to be located in the deepwater Gulf of Mexico. Certain variable pricing...

  • Page 84
    ... required on derivative contracts used in our price risk management strategies for gas and oil production operations. At December 31, 2006, CNG had the following letter of credit facilities: Facility Limit (millions) Outstanding Letters of Credit Facility Capacity Remaining Facility Inception Date...

  • Page 85
    ...(4) Tax-Exempt Financing, 5.0%, due 2036 Dominion Capital, Inc.: Notes, 12.5%, due 2006 to 2008 Senior Note, Variable rate, due 2017(9) Dominion Resources Services, Inc., Secured Bank Debt, Variable rate, due 2006(4) Fair value hedge valuation(10) Amounts due within one year(11) Unamortized discount...

  • Page 86
    ... use other resources as consideration for the purchase of stock under the stock purchase contracts. In February 2006, we successfully remarketed the senior notes related to our equity-linked debt securities. The senior notes, which will mature in 2008, now carry an annual DOMINION 2006 Annual Report...

  • Page 87
    ...stock purchase contracts. Prior to conversion, we recorded the present value of the stock purchase contract payments as a liability, offset by a charge to common stock in shareholders' equity. The stock purchase contracts carried an annual interest rate of 3.00% prior to their settlement in May 2006...

  • Page 88
    ... debt securities. The remainder of the shares issued and proceeds received were through Dominion Direct® (a dividend reinvestment and open enrollment direct stock purchase plan), employee savings plans and the exercise of employee stock options. From May 2006 until November 2006, we issued new...

  • Page 89
    ... of restricted stock withheld upon vesting to satisfy tax withholding obligations. The number of shares withheld will vary for each employee depending on the vesting date fair value of Dominion stock and the applicable federal, state and local tax withholding rates. 88 DOMINION 2006 Annual Report

  • Page 90
    ...the measurement date for all of our employee benefit plans. We use the market-related value of pension plan assets to determine the expected return on pension plan assets, a component of net periodic pension cost. The marketrelated value recognizes changes in fair value on a straight-line basis over...

  • Page 91
    ... increase in the discount rate and a decrease in expected future benefit claims. The following table summarizes the overfunded and underfunded status of our benefit plans recognized in our Consolidated Balance Sheet at December 31, 2006: Pension Benefits Other Postretirement Benefits Funded status...

  • Page 92
    ... provision for net periodic benefit cost were as follows: Pension Benefits Year Ended December 31, (millions) 2006 2005 2004 Other Postretirement Benefits 2006 2005 2004 Service cost Interest cost Expected return on plan assets Amortization of prior service cost (credit) Amortization of transition...

  • Page 93
    ...of Income were as follows, on a weighted-average basis: Pension Benefits Year Ended December 31, 2006 2005 2004 Other Postretirement Benefits 2006 2005 2004 Discount rate Expected return on plan assets Rate of increase for compensation Medical cost trend rate(1) 5.60% 8.75% 4.70% 6.00% 8.75% 4.70...

  • Page 94
    ...full cost method of accounting for gas and oil E&P activities. We have an agreement to lease the Fairless Energy power station in Pennsylvania (Fairless), which began commercial operations in June 2004. During construction, we acted as the construction agent for the lessor, controlled the design and...

  • Page 95
    ...available to NEIL. The current policy period's maximum assessment is $34 million. Old Dominion Electric Cooperative, a part owner of North Anna Power Station, and Massachusetts Municipal Wholesale Electric Company and Central Vermont Public Service Corporation, part owners of Millstone's Unit 3, are...

  • Page 96
    ...our nuclear insurance programs and guarantees for Virginia Power's commitment to buy nuclear fuel. In addition to the guarantees listed above, we have also agreed to provide up to $150 million and $60 million to two DEI subsidiaries, to pay operating expenses of Millstone and Kewaunee power stations...

  • Page 97
    ...a limited number of nonresidential retail customers whose aggregated load would exceed 5 Mw. Also, after the end of capped rates, the Virginia Commission would set the base rates of investor-owned electric utilities under a modified cost-of-service model. Among other features, the currently proposed...

  • Page 98
    ... customer base, we are not exposed to a significant concentration of credit risk for receivables arising from electric and gas utility operations, including transmission services and retail energy sales. Our exposure to credit risk is concentrated primarily within our sales of gas and oil production...

  • Page 99
    ...) NOTE 27. DOMINION CAPITAL, INC. Our Consolidated Balance Sheets reflect the following DCI assets: At December 31, (millions) 2006 2005 Current assets(1) Loans receivable, net Available-for-sale securities Other investments Property, plant and equipment, net Deferred charges and other assets...

  • Page 100
    ... unless such asset is required on each payment date to pay in cash a spread of at least the LIBOR plus 2.50%. The CDO entity's loans receivable balance at December 31, 2006 is summarized as follows: Performing (millions) Non-performing Total Loan origination fees and costs are deferred and recorded...

  • Page 101
    ...-tax) resulting from the termination of three long-term power purchase agreements, attributable to Dominion Generation. Intersegment sales and transfers are based on underlying contractual arrangements and agreements and may result in intersegment profit or loss. 100 DOMINION 2006 Annual Report

  • Page 102
    ...Generation Dominion E&P Corporate Adjustments & Eliminations Consolidated Total 2006 Total revenue from external customers Intersegment revenue Total operating revenue Depreciation, depletion and amortization Equity in earnings of equity method investees Interest income Interest and related charges...

  • Page 103
    ...U.S. Canada Total 2004 U.S. Canada Revenue (net of royalties) from: Sales to nonaffiliated companies Transfers to other operations Total Less: Production (lifting) costs Depreciation, depletion and amortization Income tax expense Results of operations $1,883 253 2,136 552 801 285 $ 498 $1,749 253...

  • Page 104
    ... Canada Proved developed and undeveloped reserves-Gas At January 1 Changes in reserves: Extensions, discoveries and other additions Revisions of previous estimates(1) Production Purchases of gas in place Sales of gas in place At December 31 Proved developed reserves-Gas At January 1 At December 31...

  • Page 105
    ... shown are based on estimates of proved reserve quantities and future production schedules which are inherently imprecise and subject to revision, and the 10% discount rate is arbitrary. In addition, costs and prices as of the measurement date are used in the determinations, and no value may be...

  • Page 106
    ...periods may fluctuate as a result of weather conditions, changes in rates and other factors. As described in Note 9, we reported the operations of the Peaker facilities as discontinued operations beginning in the fourth quarter of 2006. Prior quarters for 2006 and 2005 have been recast to conform to...

  • Page 107
    ... to establish an allowance related to credit exposure associated with the bankruptcy of Calpine Corporation and a $77 million after-tax benefit reflecting the impact of a decrease in gas and oil prices on hedges that were de-designated following the 2005 hurricanes. 106 DOMINION 2006 Annual Report

  • Page 108
    ... Executive Officer, Dominion Generation Duane C. Radtke, 58 Executive Vice President President and Chief Executive Officer, Dominion Exploration & Production David A. Christian, 52 Senior Vice President (Dominion Resources Services), Nuclear Operations and Chief Nuclear Officer Mary C. Doswell...

  • Page 109
    .... Direct Stock Purchase Plan You may buy Dominion common stock through Dominion Direct ®. Please contact Shareholder Services for a prospectus and enrollment form or visit www.dom.com and click on "Investors." Common Stock Listing New York Stock Exchange Trading symbol: D Common Stock Price Range...

  • Page 110
    Corporate Street Address Dominion Resources, Inc. 120 Tredegar Street Richmond, Virginia 23219 Mailing Address Dominion Resources, Inc. P.O. Box 26532 Richmond, Virginia 23261-6532 Web Site www.dom.com Independent Registered Public Accounting Firm Deloitte & Touche LLP Richmond, Virginia Shareholder...

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    Dominion Resources, Inc. P.O. Box 26532 Richmond, Virginia 23261-6532 www.dom.com