Dominion Power 2007 Annual Report Download - page 49

$300 million of 2006 Series A Enhanced Junior Subordinated
Notes due 2066 (June hybrids) and $500 million of 2006 Series
B Enhanced Junior Subordinated Notes due 2066 (September
hybrids), respectively. Under the terms of the RCCs, we agree not
to redeem or repurchase all or part of the June or September
hybrids prior to June 30 or September 30, 2036, respectively,
unless we issue qualifying securities to non-affiliates in a replace-
ment offering in the 180 days prior to the redemption or
repurchase date. The proceeds we receive from the replacement
offering, adjusted by a predetermined factor, must exceed the
redemption or repurchase price. Qualifying securities include
common stock, preferred stock and other securities that generally
rank equal to 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 initially designated the 8.4% Capital Securities of Domin-
ion Resources Capital Trust III as covered debt for purposes of
the RCCs. Under the terms of the RCCs, we are required under
certain circumstances to change the series of our debt designated
as covered debt under the RCCs. Due to our acquisition of most
of the designated securities in our debt tender offer in July 2007,
they ceased to be eligible as covered debt for the RCCs. In the
third quarter of 2007, we designated the September hybrids as
covered debt under the June hybrids’ RCC and designated the
June hybrids as covered debt under the September hybrids’ RCC.
We monitor the covenants on a regular basis in order to
ensure that events of default will not occur. As of December 31,
2007, there have been no events of default under our debt cove-
nants. Other than the change in covered debt for the RCCs dis-
cussed above, as of December 31, 2007, there have been no
changes to our debt covenants.
Dividend Restrictions
The Virginia Commission may prohibit any public service com-
pany, including Virginia Power, from declaring or paying a divi-
dend to an affiliate, if found to be detrimental to the public
interest. At December 31, 2007, the Virginia Commission had
not restricted the payment of dividends by Virginia Power.
Certain agreements associated with our credit facilities contain
restrictions on the ratio of our debt to total capitalization. These
limitations did not restrict our ability to pay dividends or receive
dividends from our subsidiaries at December 31, 2007.
See Note 19 to our Consolidated Financial Statements for a
description of potential restrictions on dividend payments by us
and certain of our subsidiaries in connection with the deferral of
distribution payments on trust preferred securities or deferral of
interest payments on enhanced junior subordinated notes.
Future Cash Payments for Contractual Obligations and
Planned Capital Expenditures
C ONTRACTUAL O BLIGATIONS
We are party to numerous contracts and arrangements obligating
us to make cash payments in future years. These contracts include
financing arrangements such as debt agreements and leases, as
well as contracts for the purchase of goods and services and finan-
cial derivatives. Presented below is a table summarizing cash
payments that may result from contracts to which we are a party
as of December 31, 2007. For purchase obligations and other
liabilities, amounts are based upon contract terms, including fixed
and minimum quantities to be purchased at fixed or market-based
prices. Actual cash payments will be based upon actual quantities
purchased and prices paid and will likely differ from amounts
presented below. The table excludes all amounts classified as cur-
rent liabilities in our Consolidated Balance Sheets, other than
current maturities of long-term debt, interest payable and certain
derivative instruments. The majority of our current liabilities will
be paid in cash in 2008.
2008
2009 -
2010
2011 -
2012
2013 and
thereafter Total
(millions)
Long-term debt(1) $1,478 $1,270 $1,980 $10,008 $14,736
Interest payments(2) 805 1,468 1,321 9,659 13,253
Leases 81 130 91 151 453
Purchase obligations(3):
Purchased electric
capacity for utility
operations 383 713 700 1,857 3,653
Fuel to be used for utility
operations 794 814 566 435 2,609
Fuel to be used for
nonregulated
operations 39 133 178 195 545
Pipeline transportation
and storage 151 157 84 86 478
Energy commodity
purchases for resale(4) 517 44 28 — 589
Other(5) 327 106 31 49 513
Other long-term liabilities(6):
Financial derivative-
commodities(4) 215 12 — — 227
Other contractual
obligations(7) 52 1 ——53
Total cash payments $4,842 $4,848 $4,979 $22,440 $37,109
(1) Based on stated maturity dates rather than the earlier redemption dates
that could be elected by instrument holders.
(2) Does not reflect our ability to defer distributions related to our junior
subordinated notes payable or interest payments on enhanced junior
subordinated notes.
(3) Amounts exclude open purchase orders for services that are provided on
demand, the timing of which cannot be determined.
(4) Represents the summation of settlement amounts, by contracts, due from
us if all physical or financial transactions among our counterparties and
the Company were liquidated and terminated.
(5) Includes capital and operations and maintenance commitments.
(6) Excludes regulatory liabilities, AROs and employee benefit plan obliga-
tions, which are not contractually fixed as to timing and amount. See
Notes 15, 16 and 23 to the Consolidated Financial Statements. Due to
uncertainty about the timing and amounts that will ultimately be paid,
$246 million of income taxes payable associated with unrecognized tax
benefits are excluded. Deferred income taxes are also excluded since cash
payments are based primarily on taxable income for each discrete fiscal
year. See Note 9 to our Consolidated Financial Statements.
(7) Includes interest rate swap agreements.
Dominion 2007 Annual Report 47