10-KPeriod: FY2011

DOMINION ENERGY, INC Annual Report, Year Ended Dec 31, 2011

Filed February 28, 2012For Securities:D

Summary

Dominion Energy, Inc. (D) filed its 2011 10-K report on February 27, 2012, detailing its financial performance and operational highlights for the year ending December 31, 2011. The company reported a net income attributable to Dominion of $1.408 billion, a decrease from $2.808 billion in 2010, largely due to the absence of a significant gain from the sale of its Appalachian E&P operations in the prior year and lower margins from merchant generation. Despite the decrease in net income, the company highlighted progress in its regulated utility businesses, with investments in transmission and distribution infrastructure to meet growing electricity demand and upgrade its network. Dominion's strategy remains focused on expanding its regulated operations to reduce earnings sensitivity to commodity prices. For Virginia Power, net income was $822 million, a slight decrease from $852 million in 2010, impacted by less favorable weather and an impairment charge related to coal-fired power stations, partially offset by higher earnings from rate adjustment clauses. The company continues to invest in its 'Powering Virginia' program, which includes developing new generation capacity and converting coal-fired stations to biomass. Both entities are navigating a complex regulatory environment, with Virginia Power actively involved in biennial rate reviews and transmission cost recovery filings.

Financial Highlights

53 data points
Beta

Revenue

$13.77B

Net Income

$1.41B

10.2% Net Margin

EPS (Diluted)

$2.45

Total Assets

$45.61B

Cash & Equivalents

$102.00M

Free Cash Flow

-$669.00M

Financial Statements
Beta
Revenue$13.77B
Operating Expenses$10.88B
Operating Income$2.88B
Net Income$1.41B
EPS (Basic)$2.46
EPS (Diluted)$2.45
Shares Outstanding (Basic)573.10M
Shares Outstanding (Diluted)574.60M

Key Highlights

  • 1Net income attributable to Dominion was $1.408 billion in 2011, down from $2.808 billion in 2010, primarily due to the absence of a significant gain from the sale of E&P operations in the prior year.
  • 2Virginia Power reported net income of $822 million, a slight decrease from $852 million in 2010, affected by weather and an impairment charge, but supported by rate adjustment clauses.
  • 3Dominion's strategy emphasizes growth in regulated electric generation, transmission, and distribution, and regulated natural gas infrastructure to reduce earnings volatility.
  • 4Virginia Power announced a five-year investment plan of approximately $4 billion to upgrade transmission and distribution lines to meet growing electricity demand and maintain reliability.
  • 5The company is undertaking several key generation projects, including the Virginia City Hybrid Energy Center and the Warren County power station, and plans to convert three coal-fired stations to biomass.
  • 6Merchant generation operations faced lower margins due to decreased commodity prices and the retirement of certain coal units.
  • 7Dominion actively manages price risks in its merchant fleet through hedging strategies, including derivative instruments and long-term power sales agreements.
  • 8The company is focused on environmental compliance and continues to invest in initiatives such as renewable generation development and demand-side management programs.

Frequently Asked Questions

Dominion reported net income attributable to Dominion of $1.408 billion, or $2.45 per diluted share, in 2011. This represents a decrease from $2.808 billion, or $4.76 per diluted share, in 2010. The decrease was primarily driven by the absence of a significant gain from the sale of its Appalachian E&P operations in 2010, lower margins from merchant generation, and unfavorable weather impacts. However, the company also benefited from the absence of certain charges incurred in 2010 and higher earnings from rate adjustment clauses.

Dominion's core strategy is to expand its investment in regulated electric generation, transmission, and distribution, as well as regulated natural gas transmission and distribution infrastructure. This focus aims to increase earnings contribution from regulated operations and reduce sensitivity to commodity price fluctuations. The company is also committed to meeting anticipated increases in electricity demand within its service territory, driven by population growth and increased consumption.

Virginia Power, a key subsidiary, has a $4 billion five-year investment plan (2012-2016) for transmission and distribution upgrades. Major generation projects include the nearly completed Virginia City Hybrid Energy Center, the planned Warren County power station, and the conversion of three coal-fired stations to biomass. Dominion Energy is also investing in natural gas infrastructure to support increased production from shale formations.

Dominion's merchant generation operations experienced lower margins in 2011 compared to 2010, primarily due to a decrease in realized prices and lower generation volumes. The company manages this price volatility through hedging strategies, including derivative instruments and long-term power sales agreements. Despite these challenges, Dominion continues to operate its merchant fleet within functioning RTOs.

Virginia Power's electric retail service is regulated by the Virginia and North Carolina Commissions, and transmission rates by FERC. The company was subject to the 2011 Biennial Review in Virginia, which resulted in a refund to customers and a revised authorized ROE. Virginia Power also filed for base rate increases in North Carolina and continues to manage various transmission and DSM rate adjustment clauses, subject to regulatory approvals.