Agreement Proposed to Defer Dominion Virginia Power's First Biennial Review Until 2012

RICHMOND, Va., Jan. 13, 2011 /PRNewswire/ -- Dominion (NYSE: D) announced today that it, the Virginia State Corporation Commission (SCC) Staff, the Office of the Attorney General of Virginia, Division of Consumer Counsel, MeadWestvaco Corp., Wal-Mart Stores East, Chaparral (VA) and Utility Professional Services, Inc. have filed an agreement that supports the deferral of the company's biennial review of rates from 2011 to 2012.  The agreement also would continue to support the authorized return on equity (ROE) for the Bear Garden Power Station and the Virginia City Hybrid Energy Center and establish base rate credits for customers associated with 2009 revenues.

Under the terms of the agreement, Dominion Virginia Power's first biennial review under current state law would be conducted in 2012 instead of 2011, as currently scheduled.  The review would cover results for 2010 and 2011 instead of 2009 and 2010.  

The SCC has the discretion to defer, or "stagger", the first biennial review for Dominion Virginia Power by one year, which would even the flow of major electricity utility rate reviews in the state.  

If the agreement is approved, base rates would not change from current levels prior to December 1, 2014.  As originally approved in Dominion Virginia Power's 2009 base rate case, the company's authorized ROE applicable to its base rates is set at 11.9 percent through at least the first biennial review in 2012, with an earnings collar and sharing mechanism established by Virginia law.

Cost recovery for several of the company's construction projects would continue to be achieved through separate rate adjustment clauses approved by the SCC.  These include the Virginia City Hybrid Energy Center and Bear Garden Power Station.  The return on equity used for the rate adjustment clauses for these two facilities would remain at 12.3 percent, as previously approved by the SCC.

The agreement, if approved, would establish a base rate credit for Virginia customers in the amount of $75 million from 2009 revenues. For a typical residential customer, who uses 1,000 kilowatt-hours (kWh) of electricity per month, the total credit will equal approximately $18.

Thomas F. Farrell II, chairman, president and chief executive officer said:

"We are pleased that these parties were able to reach agreement on staggering the biennial review and hope the Virginia State Corporation Commission will approve its terms.  The parties to this proposed agreement look to achieve an important balance.  On one hand, it helps our customers by providing them with credits to reduce bills now – an important benefit during the economic recovery – and gives more certainty about bills in the future.  At the same time, it supports the company's ability to attract capital to fund investments in new energy infrastructure – a building program that also is creating thousands of badly needed jobs."

As a result of the agreement, Dominion expects to take a charge representing its best estimate of the probable outcome of this matter resulting in a negative after-tax impact of $48 million or 8 cents per share to fourth-quarter and full-year 2010 reported earnings that will not be included in operating earnings for 2010.

A copy of the filing can be found on the company's investor information page at www.dom.com/investors.

Dominion is one of the nation's largest producers and transporters of energy, with a portfolio of approximately 27,600 megawatts of generation, 12,000 miles of natural gas transmission, gathering and storage pipeline and 6,000 miles of electric transmission lines.  Dominion operates the nation's largest natural gas storage system with 942 billion cubic feet of storage capacity and serves retail energy customers in 13 states. For more information about Dominion, visit the company's website at www.dom.com.  

This release contains certain forward-looking statements which are subject to various risks and uncertainties.  Factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations may include factors that are beyond the company's ability to control or estimate precisely, fluctuations in energy-related commodity prices, the timing of the closing dates of acquisitions or divestitures, estimates of future market conditions, access to and costs of capital, fluctuations in the value of our pension assets and assets held in our decommissioning trusts, the timing and receipt of regulatory approvals necessary for planned projects, acquisitions and divestitures, and the ability to complete planned construction or expansion projects as scheduled.  Other factors include, but are not limited to, weather conditions, including the effects of hurricanes and major storms on operations, the behavior of other market participants, state and federal legislative and regulatory developments and changes to environmental and other laws and regulations, including those related to climate change, greenhouse gases and other emissions to which we are subject, economic conditions in the company's service area, risks of operating businesses in regulated industries that are subject to changing regulatory structures, changes to regulated gas and electric rates collected by Dominion, changes to rating agency requirements and ratings, changing financial accounting standards, trading counter-party credit risks, risks related to energy trading and marketing, adverse outcomes in litigation matters, and other uncertainties.  Other risk factors are detailed from time to time in Dominion's most recent quarterly report on Form 10-Q or annual report on Form 10-K filed with the Securities and Exchange Commission.

SOURCE Dominion