Dominion Power 2012 Annual Report Download - page 8

Dominion Resources 2012 Summary Annual Report10
In total, both sets of storms knocked out
power to 14 million customers, requiring
assistance from nearly 100,000 utility
workers, tree-trimmers and contractors
from all parts of North America.
At Dominion Virginia Power, the
number of customers affected by these
powerful storms topped 1.3 million. More
than 11,000 line, patrol and support
personnel — including more than 4,000
from out of state— mobilized and worked
24/7 to restore service to each house
without lights. Dominion also understands
that electric service disruptions are more
than a mere inconvenience to our cus-
tomers. We thank them for their steadfast
patience while crews from all over repaired
damaged equipment and downed lines.
After we restored power in our service
area in the wake of Sandy, we sent about
1,000 Dominion Virginia Power employees
and contractors— and, for the first time,
Dominion East Ohio employees— to the
Northeast to help bring utility services
back online.
There are stories such as those of
Dwight Brown, a groundman in Norfolk,
Va., whose entire Dominion Virginia Power
crew was treated to pizza by a Lakewood
Township, N.J., resident happy to see
hardworking men and women in hardhats
In a word, 2012 was defined by
weather. Whether stormy or mild,
Mother Nature had an enormous
impact on your company.
getting the job done. And, after the
violent summer storms, many Dominion
customers excitedly posted on Twitter
and Facebook about spotting bucket
trucks from Duke Energy Carolinas,
Oncor, Gulf Power, Progress Energy
Florida, CenterPoint Energy and even
Canada’s Hydro One.
Paradoxically, storms can tear things
apart, but they can also bring utility
companies together. We thank our fellow
workers in all these companies for standing
shoulder to shoulder with us in Virginia
and North Carolina. Our response could
not have been so decisive and swift
without their essential aid.
The Year in Review
In a word, 2012 for your company was
defined by weather.
Whether stormy or mild, Mother Nature
had an enormous impact on Dominion
in 2012.
We missed on our operating earnings
targets, principally because of mild
weather. And the company’s total share-
holder return lagged that of the Dow Jones
Industrial Average and the S&P 500,
in part because of uncertainty in the
markets regarding dividend tax policy.
But Dominion also:
•Paid a strong dividend.
•Followed through on important safety
measures and goals.
•Continued progress on our long-term
growth plan.
•Refined our business model to help
meet future operating earnings targets,
increase the 2013 dividend rate and
payout ratio and achieve future return
on invested capital (ROIC) goals. And
•Contributed $21.3 million to meet
essential human needs and support
environmental stewardship, education
and community vitality in the states
where we do business.
Earnings Miss; Lower Returns;
Higher Dividend
In 2012, Dominion earned $3.05 per share
in operating earnings, up from $2.99 per
share in 2011, and below our guidance range
of $3.10 to $3.35 per share.* Earnings
under Generally Accepted Accounting
Principles (GAAP) in 2012 were $0.53 per
share, down from $2.45 per share in 2011.**
For the past few years we have told you
to expect annual 5– 6 percent growth in
operating earnings per share beginning in
2012. We believed Dominion would grow
in 2012 on rising energy demand, construc-
tion and operation of new infrastructure in
our regulated businesses and continued
control over operating expenses.
But our operating earnings per share
growth fell short of 5– 6 percent, principally
because of weather. The warm winter
and mild autumn and summer— in which
the hottest days followed storms that
disrupted electric service to more than 1
million customers, leaving them without
air-conditioning —combined to decrease
operating earnings by 22 cents per share,
compared to operating earnings expected
* Basedonnon-GAAPFinancialMeasures.Seepage22
for GAAP Reconciliations.
** The principal differences between 2012 GAAP earnings
of $0.53 per share and 2011 GAAP earnings of $2.45
per share were impairment charges related to certain
merchant generation plants that have been or are in
the process of being retired or sold.