Dominion Power 2008 Annual Report Download - page 20

Download and view the complete annual report

Please find page 20 of the 2008 Dominion Power annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 36

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36

18 Dominion 2008
For example, we have used proceeds from a recent assignment of
Marcellus Shale drilling rights in the Appalachian region to reduce debt
balances, enabling us to issue less equity to meet our credit targets than other-
wise would be required.
The company farmed out drilling rights to more than 100,000 acres of
Marcellus Shale to Antero Resources for $347 million, pre-tax. In addition,
we will receive a 7.5 percent royalty interest on future natural gas production
from the assigned acreage.
That was only Chapter 1 of our Marcellus Shale story. Dominion has up
to 800,000 acres of the formation and continues to market additional drill-
ing rights. We have the patience and staying power to remain flexible during
sour economic times. The company will enter into similar transactions only
when the proposed price works effectively for you, our investor.
Also in 2008, we entered into an agreement to sell two natural gas
distribution utilities—Dominion Peoples, in Pennsylvania, and Dominion
Hope, in West Virginia. We expect to complete the transaction later this year
and use expected after-tax proceeds to reduce outstanding debt.
Our Regulated Plus Model. Earlier I used the term “regulated plus” to
describe how investors benefit from our business model.
As owners of an efficient electric power utility serving one of the nation’s
most economically durable regions, we hold a core competitive asset. Our
authorized returns are established under constructive state regulation by
the Virginia State Corporation Commission (SCC) and the North Carolina
Utilities Commission. I will describe Virginia regulation later.
Dominion Energy is our growing platform of natural gas production,
transmission and storage businesses serving the gas-intensive Northeast
regions. The mid-stream pipeline and storage assets generate returns set by
the Federal Energy Regulatory Commission (FERC). Dominion Energy also
operates Dominion East Ohio, a natural gas distribution utility with its own
complementary gathering, transmission and storage, regulated by the Public
Utilities Commission of Ohio.