Dominion Power 2006 Annual Report Download - page 17

2006 Annual ReportDOMINION 15
of about $970 million, before adjustments for capital
expenditures and changes in working capital. We will use
the after-tax proceeds to reduce debt.
Late last year we also reached an agreement to sell
three natural gas-fired peaking units in Pennsylvania,
West Virginia and Ohio.That transaction is expected to
close in the first quarter of 2007, and the proceeds also
will be used to reduce debt.
Reducing debt to maintain and possibly improve our
credit ratings is essential to our long-term success. Thanks
to several factors, our credit metrics improved materially
during 2006. Our solid financial performance helped, as
did changes in the market value of our hedge portfolio,
the receipt of $330 million in proceeds from the conver-
sion of equity-linked debt securities and the issuance of
about $95 million of new equity to satisfy demand for
direct investment in our stock. In addition, in 2006 we
issued two hybrid securities totaling $800 million that
received significant equity treatment by Fitch, Moody’s
and Standard & Poor’s credit rating agencies.
We have made excellent progress since we set out in
early 2006 to strengthen our balance sheet and stabilize
our ratings. At year-end, our company’s adjusted debt as a
percentage of capital stood at about 54.5 percent, com-
pared with 58.1 percent in 2005. A chart showing our
debt ratios under GAAP appears on page 28. At year-end,
Fitch rated our bonds at BBB+, Moody’s at Baa2, and
S&P at BBB. Given the strength of our financial plan, we
expect to demonstrate continued improvements.
SAFETY, ETHICS, EXCELLENCE AND ONE DOMINION
When I assumed the position of CEO more than one
year ago, I told 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.
I also stressed the importance of teamwork under a
guiding principle that I call “One Dominion.” Everything
else will fall into place, I said, if we adhere to the One
Dominion standard. One year into this challenge, I have
seen overwhelming evidence to support my belief. If we
do our jobs safely, adhere strictly to all laws and regula-
tions, and execute strongly as one team, we will reward
investors seeking a solid core utility holding.
Employees across all of our businesses have served cus-
tomers, vendors, regulators and the communities where
we live and work with spirit and dedication. They turned
in another excellent year in operations. They had a great
safety year. And they turned in high-quality work in the
areas of financial performance that we can control. As
someone from a family with strong military ties, I recog-
nize that our employees imposed upon themselves a strict
discipline, according to our basic purpose and goals, and
I am grateful.
KEEP READING
We hope you share our confidence. Growth prospects
are good for the businesses that will continue to be part
of the Dominion family after any sale of our E&P unit.
I am enthusiastic about prospects for a timely change in
our business mix, and I am proud of the drive and
professionalism that all of our employees, including those
in E&P, exhibit as they operate these businesses.
Please read about them in the coming pages. And
count on our continued commitment to build value for
you, the owners of Dominion.
Sincerely,
Thomas F. Farrell II