10-KPeriod: FY2009

DOMINION ENERGY, INC Annual Report, Year Ended Dec 31, 2009

Filed February 26, 2010For Securities:D

Summary

Dominion Energy, Inc. (D) reported a net income of $1.287 billion for the fiscal year ended December 31, 2009, a decrease from $1.834 billion in 2008. This decline was primarily attributed to a $455 million impairment charge related to its E&P properties due to lower gas and oil prices and a significant charge of $435 million related to a proposed settlement of Virginia Power's 2009 rate case proceedings. Despite these headwinds, the company saw some positive performance drivers, including improved margins in its merchant generation operations and a higher contribution from its gas transmission operations following the completion of the Cove Point expansion project. Dominion's strategy to focus on regulated businesses while maintaining upside in non-regulated segments aims to deliver earnings per share growth, a growing dividend, and stable credit ratings. The company anticipates stable growth in net income on a per share basis for 2010, benefiting from the absence of the prior year's charges and favorable operational factors. Significant capital expenditures are planned for 2010-2012, primarily focused on electric generation, natural gas transmission, and infrastructure improvements.

Financial Statements
Beta
Revenue$14.80B
Operating Expenses$12.23B
Operating Income$2.57B
Net Income$1.29B
EPS (Basic)$2.17
EPS (Diluted)$2.17
Shares Outstanding (Basic)593.30M
Shares Outstanding (Diluted)593.70M

Key Highlights

  • 1Dominion Energy reported a net income of $1.287 billion for fiscal year 2009, a decrease from $1.834 billion in 2008, impacted by an E&P impairment charge and a large provision for a rate case settlement.
  • 2The company's strategy continues to focus on regulated businesses for stable earnings growth, supplemented by non-regulated operations.
  • 3Dominion anticipates stable earnings growth in 2010, aided by the absence of significant charges from 2009 and planned capital expenditures to support future growth.
  • 4Capital expenditures for 2010-2012 are projected to be substantial, focusing on electric generation, natural gas infrastructure, and transmission/distribution system improvements.
  • 5The company's regulated electric utility, Virginia Power, is subject to ongoing rate case reviews in Virginia, which significantly impacted 2009 results due to a large provision for a settlement.
  • 6Dominion's merchant generation segment showed improved margins, contributing positively despite the overall challenging market conditions.
  • 7The company maintained a strong liquidity position with significant unused capacity under its credit facilities, crucial for funding operations and capital expenditures.

Frequently Asked Questions

Dominion's net income decreased in 2009 primarily due to a $455 million impairment charge related to its E&P properties due to declining gas and oil prices, and a significant $435 million charge stemming from a proposed settlement of Virginia Power's 2009 rate case proceedings. These were partially offset by improved margins in merchant generation and higher contributions from gas transmission operations.

Dominion's regulated segments (DVP and Dominion Energy) provided stable contributions, with DVP showing slight growth in net income and Dominion Energy benefiting from its gas transmission operations due to the Cove Point expansion. The Dominion Generation segment, which includes merchant generation, saw improved margins, contributing positively. The Corporate and Other segment experienced a net expense, largely due to the aforementioned impairment and rate case settlement charges.

Dominion anticipates stable growth in net income on a per share basis for 2010. This outlook is supported by the absence of the significant charges incurred in 2009, expected benefits from rate adjustment clauses for new projects, continued hedging strategies to mitigate commodity price exposure, and efficient cost management. The company plans substantial capital expenditures to support its growth strategy.

Virginia Power's 2009 financial results were significantly impacted by a large charge related to a proposed settlement of its 2009 rate case proceedings in Virginia. The outcome of this rate review, along with ongoing proceedings for DSM programs and fuel factor adjustments, could materially affect future results of operations, financial condition, and cash flows.