10-QPeriod: Q1 FY2005

DOMINION ENERGY, INC Quarterly Report for Q1 Ended Mar 31, 2005

Filed May 4, 2005For Securities:D

Summary

Dominion Energy, Inc. reported a net income of $429 million ($1.25 per diluted share) for the first quarter of 2005, a slight decrease from the $437 million ($1.34 per diluted share) reported in the same period of 2004. This decrease was primarily due to higher operating expenses, particularly in fuel and energy purchases, as well as specific charges related to the termination of a power purchase agreement and a tolling contract. The company experienced significant growth in non-regulated electric sales, largely driven by the acquisition of new power plants and increased revenue from energy trading and marketing activities. However, this was partially offset by challenges in regulated electric generation, impacted by fuel expenses exceeding rate recovery and milder weather. The Exploration & Production segment saw a decrease in net income, influenced by higher operating costs, a reduction in gas production due to asset sales, and the discontinuance of hedge accounting for certain oil hedges.

Key Highlights

  • 1Net income for Q1 2005 was $429 million, or $1.25 per diluted share, down from $437 million, or $1.34 per diluted share, in Q1 2004.
  • 2Total operating revenue increased significantly to $4.73 billion from $3.88 billion in the prior year quarter, driven by strong growth in non-regulated electric and gas sales.
  • 3The acquisition of three USGen power plants for $642 million in January 2005 contributed to the increase in generation capacity and revenue.
  • 4The company incurred a $77 million charge ($47 million after-tax) related to the termination of a power purchase agreement for the Panda-Rosemary LP facility.
  • 5Dominion repurchased approximately 3.3 million shares of its common stock for $247 million in March 2005.
  • 6Total assets grew to $47.1 billion as of March 31, 2005, from $45.4 billion at the end of 2004.
  • 7The company successfully settled a North Carolina rate matter, resulting in a prospective $12 million annual reduction in base rates and a five-year rate moratorium.

Frequently Asked Questions

The significant increase in operating revenue to $4.73 billion was primarily driven by a substantial rise in non-regulated electric sales, fueled by the acquisition of new power plants and increased activity in energy trading and marketing. Non-regulated gas sales also contributed positively, along with growth in regulated electric and gas sales.

Dominion recorded a $77 million charge ($47 million after-tax) related to the termination of a power purchase agreement for the Panda-Rosemary LP facility. Additionally, there was a $6 million after-tax charge related to the valuation of an interest in a long-term power tolling contract as the company exited certain energy trading activities. These items, along with increased operating expenses, contributed to the slight decrease in net income compared to the prior year.

Dominion actively managed its capital by repurchasing approximately 3.3 million shares of its common stock for $247 million in March 2005, under a Board-authorized program. The company also continued its dividend payments, with quarterly dividends paid out during the period. Total assets increased, and the company maintained significant available capacity under its credit facilities.

The company settled a rate matter in North Carolina, which will result in a prospective $12 million annual reduction in base rates and a five-year base rate moratorium. While this impacts future revenue, the settlement also involved establishing regulatory assets for previously incurred costs. The company also expanded its integration into the PJM Interconnection, LLC for its electric transmission assets.