What were the key strategic initiatives or acquisitions completed in 2002?

In 2002, Dominion Energy completed two significant acquisitions: Mirant State Line Ventures, Inc. for $185 million, which added a 515 MW coal-fired generation facility, and Cove Point LNG Limited Partnership for $225 million, which includes a liquefied natural gas import facility, storage, and pipeline assets.

How is Dominion managing the ongoing deregulation of the electric industry, particularly in Virginia?

Dominion has made retail choice available to all its Virginia customers as of January 1, 2003, in line with the Virginia Electric Utility Restructuring Act. The company is recovering generation-related costs through capped rates and wires charges, while also monitoring potential stranded costs and adapting its business to the evolving competitive market.

What is Dominion's exposure to the energy trading and marketing segment, and how is it managed?

Dominion Energy manages its energy trading and marketing activities through its Clearinghouse. These operations are sensitive to commodity price changes. The company uses derivative instruments (futures, forwards, options, swaps) to manage these risks. While trading activities contributed to revenue, they also involved realized and unrealized gains and losses, with net revenue from these operations decreasing in 2002 compared to 2001.

What are the company's plans regarding Regional Transmission Organizations (RTOs)?

Dominion plans to become a member of PJM Interconnection, LLC (PJM), a regional transmission organization. This involves transferring functional control of its electric transmission facilities to PJM, subject to regulatory approvals from FERC and state commissions. The company anticipates incurring integration and operating costs associated with this transition.

How did Dominion's exploration and production segment perform in 2002?

The Dominion Exploration & Production segment showed strong performance, with increased operating revenue and net income contributions. This was driven by higher overall production levels, reflecting full-year operations of acquired entities and ongoing drilling programs, although average realized gas and oil prices, including hedging effects, decreased.

D 10-K FY2002 Annual Report — Revenue, Net Income, EPS

Summary

Dominion Energy, Inc. (D) reported solid financial performance for the fiscal year ended December 31, 2002, demonstrating resilience across its diverse operating segments. The company's integrated approach to gas and electric services, spanning generation, delivery, and exploration & production, positions it for continued growth. Strategic acquisitions, such as State Line and Cove Point, were completed, enhancing the company's asset base and operational capabilities. Investor focus should remain on Dominion's adaptation to industry deregulation, particularly in Virginia's electric market, and its management of regulatory frameworks governing its gas operations. The company's ability to navigate competitive landscapes, manage operational risks (including those related to its nuclear facilities), and maintain financial flexibility through its diverse funding sources will be key drivers of future performance. Shareholders should monitor ongoing developments in environmental compliance and potential impacts of evolving energy policies.

Key Highlights

1Dominion Energy operates as a fully integrated gas and electric holding company with three primary business lines: Dominion Energy (generation, trading, pipelines), Dominion Delivery (distribution, customer service), and Dominion Exploration & Production (oil and gas exploration/production).
2The company completed significant acquisitions in 2002, including Mirant State Line Ventures, Inc. for $185 million and Cove Point LNG Limited Partnership for $225 million, bolstering its generation and natural gas infrastructure.
3Dominion is actively managing the transition to a deregulated electric industry in Virginia, with retail choice for all customers implemented as of January 1, 2003, and is adapting to capped rates and wires charges.
4The company is involved in plans to join the PJM South Region, a regional transmission organization (RTO), which will involve transferring functional control of its electric transmission facilities.
5Exploration & Production segment shows robust activity, with substantial proved gas and oil reserves and a significant increase in net wells drilled in 2002 compared to the previous two years.
6Financial performance in 2002 showed substantial improvement over 2001, with net income of $1.36 billion and diluted EPS of $4.82, largely due to fewer specific charges and positive contributions from all operating segments.
7The company's liquidity appears stable, with significant credit facilities in place, and it actively manages its capital structure through issuances of debt and equity.

DOMINION ENERGY, INC Annual Report, Year Ended Dec 31, 2002

Summary

Key Highlights

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