Dominion Resources, Inc. (Dominion), incorporated in 1983, is a producer and transporter of energy, with a portfolio of approximately 27,600 megawatts of generation, 11,000 miles of natural gas transmission, gathering and storage pipeline and 6,100 miles of electric transmission lines. The Company operates the natural gas storage system with 947 billion cubic feet of storage capacity and serves retail energy customers in 14 states. The Company operates in three business segments: Dominion Virginia Power (DVP), Dominion Energy and Dominion Generation.
Dominion’s operations are conducted through various subsidiaries, including Virginia Electric and Power Company (Virginia Power). In April 2010, Dominion completed the sale of all of its Appalachian E&P operations, including its rights to associated Marcellus acreage, to a newly formed subsidiary of CONSOL Energy, Inc. (CONSOL). In February 2010, Dominion completed the sale of The Peoples Natural Gas Company (Peoples) to PNG Companies LLC.
Virginia Electric and Power Company
Virginia Power is a Virginia public service company and a regulated public utility that generates, transmits and distributes electricity for sale in Virginia and North Carolina. In Virginia, Virginia Power conducts business under the name Dominion Virginia Power. In North Carolina, it conducts business under the name Dominion North Carolina Power and serves retail customers located in the northeastern region of the state, excluding certain municipalities. In addition, Virginia Power sells electricity at wholesale prices to rural electric cooperatives, municipalities and into wholesale electricity markets.
Dominion Virginia Power
The DVP Operating Segment of Virginia Power includes Virginia Power’s regulated electric transmission and distribution, including customer service, operations, which serve residential, commercial, industrial and governmental customers in Virginia and North Carolina. In December 2010, Virginia Power announced its five-year investment plan. The retail customer base is diversified across three product lines-natural gas, electricity and home warranty services. Virginia Power has approximately 6,100 miles of electric transmission lines of 69 kilovolt or more located in the states of North Carolina, Virginia and West Virginia. In addition, Virginia Power’s electric distribution network includes approximately 56,800 miles of distribution lines, of service level lines, in Virginia and North Carolina. The supply of electricity to serve Dominion’s retail energy marketing customers is procured through market wholesalers and Regional transmission organization (RTO) or Independent system operator (ISO) transactions.
Dominion Generation
The Dominion Generation segment of Virginia Power includes the generation operations of the Virginia Power regulated electric utility and its related energy supply operations. Virginia Power’s utility generation operations primarily serve the supply requirements for the DVP segment’s utility customers. The generation mix is diversified and includes coal, nuclear, gas, oil and renewables. The generation facilities of Virginia Power’s electric utility fleet are located in Virginia, West Virginia and North Carolina. Earnings for the Generation operating segment of Virginia Power primarily result from the sale of electricity generated by its utility fleet. The Dominion Generation Operating Segment of Dominion includes Virginia Power’s generation facilities and its related energy supply operations, as well as the generation operations of Dominion’s merchant fleet and energy marketing and price risk management activities for these assets.
The generation facilities of Dominion’s merchant fleet are located in Connecticut, Illinois, Indiana, Massachusetts, Pennsylvania, Rhode Island, West Virginia and Wisconsin. The Generation segment of Dominion derives its earnings primarily from the sale of electricity generated by Virginia Power’s utility and Dominion’s merchant generation assets, as well as associated capacity from Dominion’s merchant generation assets. As of December 31, 2010, Dominion was a 50% owner with BP of the first phase of Fowler Ridge. Its source of supply includes nuclear fuel, fossil fuel and power purchase agreements. Virginia Power has a total of four licensed, operating nuclear reactors at Surry and North Anna in Virginia.
Dominion Energy
The Dominion Energy includes its regulated natural gas distribution companies, regulated gas transmission pipeline and storage operations, natural gas gathering and by-products extraction activities and regulated liquid natural gas (LNG) operations. Dominion Energy also includes producer services, which aggregates natural gas supply, engages in natural gas trading and marketing activities and natural gas supply management and provides price risk management services to Dominion affiliates. The gas transmission pipeline and storage business serves gas distribution businesses and other customers in the Northeast, mid-Atlantic and Midwest. Included in Dominion’s gas transmission pipeline and storage business is its gas gathering and extraction activity. The Company's gas distribution operations serve residential, commercial and industrial gas sales and transportation customers.
Dominion Energy’s gas distribution network is located in the states of Ohio and West Virginia. This network includes approximately 21,800 miles of pipe. It has approximately 11,000 miles of gas transmission, gathering and storage pipelines located in the states of Maryland, New York, Ohio, Pennsylvania, Virginia and West Virginia. Dominion Energy operates 20 underground gas storage fields located in New York, Ohio, Pennsylvania and West Virginia, with almost 2,000 storage wells and approximately 262,000 acres of operated leaseholds. The total designed capacity of the underground storage fields operated by Dominion Energy is approximately 947 billion cubic feet. Dominion Energy also has about 15 billion cubic feet of above-ground storage capacity at Cove Point. It has about 123 compressor stations with more than 768,000 installed compressor horsepower. In March 2010, it commenced construction of the Cove Point Pier Reinforcement Project.
Dominion Energy’s natural gas supply is obtained from various sources, including purchases from independent producers in the Mid-Continent and Gulf Coast regions, local producers in the Appalachian area and gas marketers. Dominion’s underground natural gas storage network and the location of its pipeline system are a link between the country’s interstate gas pipelines, including the Rockies Express East pipeline, and large markets in the Northeast and mid-Atlantic regions. Dominion’s pipelines are part of an interconnected gas transmission system, which provides access to supplies nationwide for local distribution companies, marketers, power generators and industrial and commercial customers. The Company’s underground storage facilities serve the Northeast, mid-Atlantic and Midwest regions.
DRI entered northern Virginia in 1986, acquiring the retail territory of the Potomac Electric Power Company. The company formed a third subsidiary in 1987, Dominion Energy, a developer of power plants to perform in this open market. DRI sold its retail territory in West Virginia that year, to UtiliCorp United, Inc.
At Berry's side during these years was Jack Ferguson, president of Virginia Power since DRI was formed in 1983. Berry was the financial expert; Ferguson handled operations. Thomas E. Capps, executive vice-president of Virginia Power, who succeeded Berry as DRI's president and CEO in 1990, was responsible for external social, legal, and political tasks.
Berry's response to industry changes was called "cagey and controversial" by Forbes in May 1988. DRI had taken a "regulatory sidestep," was engaged in "regulatory arbitrage," buying power at the low price that prevailed in Virginia and selling power at higher prices elsewhere. DRI was investing in 13 new plants out of state to produce power for other, nearby utilities. It was earning 20 percent to 25 percent return on its equity in these new units, in contrast to 13.25 percent on its Virginia plants.
DRI was thus expanding its unregulated business, which contributed only 4.4 percent of net earnings in fiscal 1987, while putting limits on its regulated business. Percentages of net earnings from unregulated business rose to 6 percent in 1988, 7 percent in 1989, and 8 percent in 1990.
Federal law had forced utilities to buy at a high fixed price from cogenerators, with a view to encouraging cogeneration, an energy-saving tactic, but Berry had pushed successfully for a bidding process in Virginia, and the idea began to gain momentum nationwide. It was a privatizing of generation sources, with investors building stations so as to sell power to the local utility. DRI through its Dominion Energy subsidiary went to West Virginia, California, and even South America for power.
In 1988 DRI bought half of Enron Cogeneration from Enron Corporation of Houston. It sold its natural gas operation in 1990, while its subsidiary Dominion Energy became involved in joint ventures to acquire and develop natural gas reserves.
In 1990 DRI prepared to make better use of its generating facilities. Nuclear units reached more than 80 percent of capacity compared to the 67 percent average for U.S. nuclear plants. Every change in the economy showed in business volume. During the Gulf War, for instance, when fewer naval vessels docked in Virginia ports, business suffered, because an aircraft carrier in port used a great deal of electricity. DRI was serving fast-growing areas, and plans for the 1990s were to increase capacity to meet rising demand, but with less construction, less borrowing, and more cash on hand.
With Thomas E. Capp's ascension to CEO in 1990 and chairman of the board of directors in 1992, Dominion began to focus on strategies to shore itself up in anticipation of the sharp increase in competition that would accompany the fast-approaching, nationwide deregulation of electric utilities.
One of these strategies was to intensify Dominion's diversification away from its core utilities operations. In 1992, Dominion Capital, the subsidiary devoted to bringing in revenue through investment activities, created a mutual fund that invested in utility stocks. With its "America's Utility Fund," Dominion became the first utility in the nation to offer an investment opportunity of this kind to the public--anticipating investor interest keenly, as it attracted $27 million from its customers and other investors in less than a year. In another move to diversify, Dominion launched its first venture into the national commercial lending business in 1994, when it joined forces with a Chicago-area lending firm called Household International, Inc. The venture was created with a $150 million investment from each side to meet mid-size companies' increasing demand for loans to pay for expansions, recapitalizations, and buyouts. In 1995, Dominion bought three natural gas companies to expand its interest in this non-utility arena, and in 1998, it bought the Kincaide Power Station from Commonwealth Edison Co. of Chicago, more than doubling the output of its generating plants outside Virginia.
Another way of preparing the company for the impact of deregulation was to consolidate management and aggressively cut costs. Between 1989 and 1994, Virginia Power reduced its workforce by 21 percent, eliminating almost 3,000 positions at the company. A protracted boardroom dispute was sparked in June 1994 when Dominion tried to increase its authority over Virginia Power, which was then accounting for more than 90 percent of DRI's total revenue, by changing the make-up of the board. Dominion presented the change as an efficiency move, similar to efforts it had made in recent years to consolidate the financial and legal functions of Virginia Power into its own--efforts Virginia Power viewed as offensive and threatening. The fight was characterized not only as a turf war but also a personality clash between Thomas E. Capps, the CEO of Dominion, and James T. Rhodes, the CEO of Virginia Power. Relations became so strained that regulators from the Virginia State Corporation Commission had to intervene to protect the public interest. A tenuous truce was eventually reached in September 1995.
Dominion gained valuable experience in the competitive power market during its brief ownership of East Midlands Electricity, the third largest electricity company in England and Wales. DRI purchased East Midlands for $2.2 billion in November 1996 and, frustrated by unsuccessful efforts to grow the business, sold it again for $3.2 billion in June 1998.
With Virginia deregulation scheduled to go into effect in 2002, Dominion began to restructure its business in April 1999. The reorganization divided DRI's electricity business, Virginia Power, into two subsidiaries, an electricity generating company and a separate transmission and distribution company. The transmission and distribution company remained under state regulation and kept the name Virginia Power; the nuclear, hydroelectric, and fossil fuel operations that generated electricity were combined with the various generation plants of Dominion Energy and given a new name, Dominion Generation. This separation of operations, also known as "unbundling," was part of the state requirement under deregulation.
Shortly after the reorganization, Dominion Resources made a dramatic leap in size when it bought Consolidated Natural Gas (CNG), a Pittsburgh, Pennsylvania-based company. The DRI-CNG merger, which was complete by March 2000, boosted DRI's customer base to four million in five states across the Mid-Atlantic, Northeast, and Midwest, effectively transforming Dominion into one of the largest gas and electric utilities in the United States. Further, as CNG was a natural gas company, involved in generating electricity, the merger gave DRI significantly more competitive muscle for the upcoming deregulation.
In August 2000, DRI announced that it would do business from then forward under the simplified name of Dominion. Though the company's legal name would remain Dominion Resources, Inc., branding research had led the company to conclude that "Dominion" would be more recognizable and more unifying for all of the company's different ventures. Thus, to make the new branding effort comprehensive, the names of Dominion's main subsidiaries were also changed by adding "Dominion" as a prefix to their existing names.
In the wake of the power crisis that swept California in 2000-01 and the scandalous collapse of Enron Corporation in Texas, Dominion's CEO Thomas E. Capps made efforts to reassure Dominion's customers and shareholders of the overall strength and stability of his company. In a January 11, 2001 interview with Jack Cafferty of CNNfn, Capps critiqued the regulators' and the industry's poor handling of deregulation in California by contrast to the prudent, proactive, and visionary measures taken by Dominion. Capps distanced Dominion from Enron at the annual shareholders meeting in 2002, characterizing the business practices of the now bankrupt Texas company as "fast and loose," and emphasizing the built-in security for Dominion of owning a broad range of assets and maintaining a level of available cash in excess of its book earnings. Indeed, despite turbulence in the market, Dominion looked strong in 2002: the company had tripled its stock price in the past ten years and issued dividends to its stockholders for 297 consecutive quarters. With the strength and flexibility Dominion had won through expansion and diversification, the company's bullish outlook for the East Coast energy business appeared justified.
Principal Subsidiaries: Dominion Virginia Power; Dominion East Ohio; Dominion Peoples; Dominion Hope; Dominion Capital, Inc.; Dominion Energy, Inc.; Dominion Land Management Co.; Dominion Transmission, Inc.; Dominion Exploration and Prod.; Dominion Retail; Dominion Telecom; Dominion Evantage; Saxon Mortgage, Inc.
Principal Competitors: Allegheny Energy, Inc.; American Electric Power Company, Inc.; NiSource Inc.
OVERALL
Beta: 0.57
Market Cap (Mil.): $26,907.02
Shares Outstanding (Mil.): 575.80
Annual Dividend: 1.97
Yield (%): 4.22
FINANCIALS
D.N Industry Sector
P/E (TTM): 8.81 15.13 21.65
EPS (TTM): 135.31 -- --
ROI: 8.48 7.86 1.26
ROE: 27.13 20.51 2.82
Statistics:
Public Company
Incorporated: 1909 as Virginia Railway and Power Company
Employees: 17,100
Sales: $10.21 billion (2002)
Stock Exchanges: New York
Ticker Symbol: D
NAIC: 221112 Fossil Fuel Electric Power Generation; 221121 Electric Bulk Power Transmission and Control; 221122 Electric Power Distribution; 221210 Natural Gas Distribution
Key Dates:
1795: Upper Appomattox Company is formed.
1888: Upper Appomattox introduces its first steam power facility.
1909: Virginia Railway and Power (VR&P; the original name of Vepco) is incorporated.
1925: VR&P is purchased by a syndicate headed by Stone & Webster, Inc., a New York engineering and consulting company, and is renamed Virginia Power and Electric Company.
1940: Vepco merges with the Virginia Public Service Company, more than doubling Vepco's service area and making it one of the largest U.S. electric utilities.
1943: Standard Oil creates Consolidated Natural Gas.
1947: Under pressure from the SEC, Vepco owner, Engineers Public Service, dissolves itself and Vepco becomes independent with 450,000 gas and electric customers.
1956: Erwin H. Will becomes president of Vepco and leads the company to become one of the nation's frontrunners in nuclear energy.
1980: William W. Berry becomes president of Vepco and begins to champion electric competition.
1983: Dominion Resources, Inc. (DRI) is organized as a holding company for Vepco.
1985: Vepco is divided into Virginia Power, North Carolina Power, and West Virginia Power.
1990: Thomas E. Capps succeeds Berry as CEO of DRI.
1999: DRI reorganizes in anticipation of energy deregulation, separating power generation from transmission, distribution, and retail.
2000: Following its transformative merger with Consolidated Natural Gas, DRI begins doing business under the abbreviated name "Dominion."
Name Age Since Current Position
Farrell, Thomas 56 2007 Chairman of the Board, President, Chief Executive Officer
McGettrick, Mark 53 2009 Chief Financial Officer, Executive Vice President of the Company and VP
Christian, David 56 2009 President and Chief Operating Officer of Virginia Power
Sypolt, Gary 57 2009 President of Dominion Transmission, Inc.
Heacock, David 53 2009 President and Chief Nuclear Officer of Virginia Power
Koonce, Paul 51 2009 Executive Vice President, President and COO of Virginia Power
Rogers, Steven 49 2007 SVP, Chief Administrative Officer; President and Chief Administrative Officer of DRS
Blue, Robert 43 2011 Senior Vice President - Law, Public Policy & Environment
Sawhney, Ashwini 61 2010 Vice President - Accounting, Chief Accounting Officer, Controller
Weekley, Daniel 2011 Vice President - Government Affairs
Harris, John 63 1999 Director
Wollard, David 72 1999 Director
Davidson, George 71 2000 Director
McKenna, Margaret 64 2000 Director
Royal, Frank 71 1994 Director
Brown, Peter 68 2002 Director
Jepson, Robert 67 2003 Director
Kington, Mark 50 2005 Director
Barr, William 60 2009 Director
Spilman, Robert 54 2009 Director
Dragas, Helen 49 2010 Director
Address:
120 Tredegar Street
Richmond, Virginia 23219
U.S.A.
Dominion’s operations are conducted through various subsidiaries, including Virginia Electric and Power Company (Virginia Power). In April 2010, Dominion completed the sale of all of its Appalachian E&P operations, including its rights to associated Marcellus acreage, to a newly formed subsidiary of CONSOL Energy, Inc. (CONSOL). In February 2010, Dominion completed the sale of The Peoples Natural Gas Company (Peoples) to PNG Companies LLC.
Virginia Electric and Power Company
Virginia Power is a Virginia public service company and a regulated public utility that generates, transmits and distributes electricity for sale in Virginia and North Carolina. In Virginia, Virginia Power conducts business under the name Dominion Virginia Power. In North Carolina, it conducts business under the name Dominion North Carolina Power and serves retail customers located in the northeastern region of the state, excluding certain municipalities. In addition, Virginia Power sells electricity at wholesale prices to rural electric cooperatives, municipalities and into wholesale electricity markets.
Dominion Virginia Power
The DVP Operating Segment of Virginia Power includes Virginia Power’s regulated electric transmission and distribution, including customer service, operations, which serve residential, commercial, industrial and governmental customers in Virginia and North Carolina. In December 2010, Virginia Power announced its five-year investment plan. The retail customer base is diversified across three product lines-natural gas, electricity and home warranty services. Virginia Power has approximately 6,100 miles of electric transmission lines of 69 kilovolt or more located in the states of North Carolina, Virginia and West Virginia. In addition, Virginia Power’s electric distribution network includes approximately 56,800 miles of distribution lines, of service level lines, in Virginia and North Carolina. The supply of electricity to serve Dominion’s retail energy marketing customers is procured through market wholesalers and Regional transmission organization (RTO) or Independent system operator (ISO) transactions.
Dominion Generation
The Dominion Generation segment of Virginia Power includes the generation operations of the Virginia Power regulated electric utility and its related energy supply operations. Virginia Power’s utility generation operations primarily serve the supply requirements for the DVP segment’s utility customers. The generation mix is diversified and includes coal, nuclear, gas, oil and renewables. The generation facilities of Virginia Power’s electric utility fleet are located in Virginia, West Virginia and North Carolina. Earnings for the Generation operating segment of Virginia Power primarily result from the sale of electricity generated by its utility fleet. The Dominion Generation Operating Segment of Dominion includes Virginia Power’s generation facilities and its related energy supply operations, as well as the generation operations of Dominion’s merchant fleet and energy marketing and price risk management activities for these assets.
The generation facilities of Dominion’s merchant fleet are located in Connecticut, Illinois, Indiana, Massachusetts, Pennsylvania, Rhode Island, West Virginia and Wisconsin. The Generation segment of Dominion derives its earnings primarily from the sale of electricity generated by Virginia Power’s utility and Dominion’s merchant generation assets, as well as associated capacity from Dominion’s merchant generation assets. As of December 31, 2010, Dominion was a 50% owner with BP of the first phase of Fowler Ridge. Its source of supply includes nuclear fuel, fossil fuel and power purchase agreements. Virginia Power has a total of four licensed, operating nuclear reactors at Surry and North Anna in Virginia.
Dominion Energy
The Dominion Energy includes its regulated natural gas distribution companies, regulated gas transmission pipeline and storage operations, natural gas gathering and by-products extraction activities and regulated liquid natural gas (LNG) operations. Dominion Energy also includes producer services, which aggregates natural gas supply, engages in natural gas trading and marketing activities and natural gas supply management and provides price risk management services to Dominion affiliates. The gas transmission pipeline and storage business serves gas distribution businesses and other customers in the Northeast, mid-Atlantic and Midwest. Included in Dominion’s gas transmission pipeline and storage business is its gas gathering and extraction activity. The Company's gas distribution operations serve residential, commercial and industrial gas sales and transportation customers.
Dominion Energy’s gas distribution network is located in the states of Ohio and West Virginia. This network includes approximately 21,800 miles of pipe. It has approximately 11,000 miles of gas transmission, gathering and storage pipelines located in the states of Maryland, New York, Ohio, Pennsylvania, Virginia and West Virginia. Dominion Energy operates 20 underground gas storage fields located in New York, Ohio, Pennsylvania and West Virginia, with almost 2,000 storage wells and approximately 262,000 acres of operated leaseholds. The total designed capacity of the underground storage fields operated by Dominion Energy is approximately 947 billion cubic feet. Dominion Energy also has about 15 billion cubic feet of above-ground storage capacity at Cove Point. It has about 123 compressor stations with more than 768,000 installed compressor horsepower. In March 2010, it commenced construction of the Cove Point Pier Reinforcement Project.
Dominion Energy’s natural gas supply is obtained from various sources, including purchases from independent producers in the Mid-Continent and Gulf Coast regions, local producers in the Appalachian area and gas marketers. Dominion’s underground natural gas storage network and the location of its pipeline system are a link between the country’s interstate gas pipelines, including the Rockies Express East pipeline, and large markets in the Northeast and mid-Atlantic regions. Dominion’s pipelines are part of an interconnected gas transmission system, which provides access to supplies nationwide for local distribution companies, marketers, power generators and industrial and commercial customers. The Company’s underground storage facilities serve the Northeast, mid-Atlantic and Midwest regions.
DRI entered northern Virginia in 1986, acquiring the retail territory of the Potomac Electric Power Company. The company formed a third subsidiary in 1987, Dominion Energy, a developer of power plants to perform in this open market. DRI sold its retail territory in West Virginia that year, to UtiliCorp United, Inc.
At Berry's side during these years was Jack Ferguson, president of Virginia Power since DRI was formed in 1983. Berry was the financial expert; Ferguson handled operations. Thomas E. Capps, executive vice-president of Virginia Power, who succeeded Berry as DRI's president and CEO in 1990, was responsible for external social, legal, and political tasks.
Berry's response to industry changes was called "cagey and controversial" by Forbes in May 1988. DRI had taken a "regulatory sidestep," was engaged in "regulatory arbitrage," buying power at the low price that prevailed in Virginia and selling power at higher prices elsewhere. DRI was investing in 13 new plants out of state to produce power for other, nearby utilities. It was earning 20 percent to 25 percent return on its equity in these new units, in contrast to 13.25 percent on its Virginia plants.
DRI was thus expanding its unregulated business, which contributed only 4.4 percent of net earnings in fiscal 1987, while putting limits on its regulated business. Percentages of net earnings from unregulated business rose to 6 percent in 1988, 7 percent in 1989, and 8 percent in 1990.
Federal law had forced utilities to buy at a high fixed price from cogenerators, with a view to encouraging cogeneration, an energy-saving tactic, but Berry had pushed successfully for a bidding process in Virginia, and the idea began to gain momentum nationwide. It was a privatizing of generation sources, with investors building stations so as to sell power to the local utility. DRI through its Dominion Energy subsidiary went to West Virginia, California, and even South America for power.
In 1988 DRI bought half of Enron Cogeneration from Enron Corporation of Houston. It sold its natural gas operation in 1990, while its subsidiary Dominion Energy became involved in joint ventures to acquire and develop natural gas reserves.
In 1990 DRI prepared to make better use of its generating facilities. Nuclear units reached more than 80 percent of capacity compared to the 67 percent average for U.S. nuclear plants. Every change in the economy showed in business volume. During the Gulf War, for instance, when fewer naval vessels docked in Virginia ports, business suffered, because an aircraft carrier in port used a great deal of electricity. DRI was serving fast-growing areas, and plans for the 1990s were to increase capacity to meet rising demand, but with less construction, less borrowing, and more cash on hand.
With Thomas E. Capp's ascension to CEO in 1990 and chairman of the board of directors in 1992, Dominion began to focus on strategies to shore itself up in anticipation of the sharp increase in competition that would accompany the fast-approaching, nationwide deregulation of electric utilities.
One of these strategies was to intensify Dominion's diversification away from its core utilities operations. In 1992, Dominion Capital, the subsidiary devoted to bringing in revenue through investment activities, created a mutual fund that invested in utility stocks. With its "America's Utility Fund," Dominion became the first utility in the nation to offer an investment opportunity of this kind to the public--anticipating investor interest keenly, as it attracted $27 million from its customers and other investors in less than a year. In another move to diversify, Dominion launched its first venture into the national commercial lending business in 1994, when it joined forces with a Chicago-area lending firm called Household International, Inc. The venture was created with a $150 million investment from each side to meet mid-size companies' increasing demand for loans to pay for expansions, recapitalizations, and buyouts. In 1995, Dominion bought three natural gas companies to expand its interest in this non-utility arena, and in 1998, it bought the Kincaide Power Station from Commonwealth Edison Co. of Chicago, more than doubling the output of its generating plants outside Virginia.
Another way of preparing the company for the impact of deregulation was to consolidate management and aggressively cut costs. Between 1989 and 1994, Virginia Power reduced its workforce by 21 percent, eliminating almost 3,000 positions at the company. A protracted boardroom dispute was sparked in June 1994 when Dominion tried to increase its authority over Virginia Power, which was then accounting for more than 90 percent of DRI's total revenue, by changing the make-up of the board. Dominion presented the change as an efficiency move, similar to efforts it had made in recent years to consolidate the financial and legal functions of Virginia Power into its own--efforts Virginia Power viewed as offensive and threatening. The fight was characterized not only as a turf war but also a personality clash between Thomas E. Capps, the CEO of Dominion, and James T. Rhodes, the CEO of Virginia Power. Relations became so strained that regulators from the Virginia State Corporation Commission had to intervene to protect the public interest. A tenuous truce was eventually reached in September 1995.
Dominion gained valuable experience in the competitive power market during its brief ownership of East Midlands Electricity, the third largest electricity company in England and Wales. DRI purchased East Midlands for $2.2 billion in November 1996 and, frustrated by unsuccessful efforts to grow the business, sold it again for $3.2 billion in June 1998.
With Virginia deregulation scheduled to go into effect in 2002, Dominion began to restructure its business in April 1999. The reorganization divided DRI's electricity business, Virginia Power, into two subsidiaries, an electricity generating company and a separate transmission and distribution company. The transmission and distribution company remained under state regulation and kept the name Virginia Power; the nuclear, hydroelectric, and fossil fuel operations that generated electricity were combined with the various generation plants of Dominion Energy and given a new name, Dominion Generation. This separation of operations, also known as "unbundling," was part of the state requirement under deregulation.
Shortly after the reorganization, Dominion Resources made a dramatic leap in size when it bought Consolidated Natural Gas (CNG), a Pittsburgh, Pennsylvania-based company. The DRI-CNG merger, which was complete by March 2000, boosted DRI's customer base to four million in five states across the Mid-Atlantic, Northeast, and Midwest, effectively transforming Dominion into one of the largest gas and electric utilities in the United States. Further, as CNG was a natural gas company, involved in generating electricity, the merger gave DRI significantly more competitive muscle for the upcoming deregulation.
In August 2000, DRI announced that it would do business from then forward under the simplified name of Dominion. Though the company's legal name would remain Dominion Resources, Inc., branding research had led the company to conclude that "Dominion" would be more recognizable and more unifying for all of the company's different ventures. Thus, to make the new branding effort comprehensive, the names of Dominion's main subsidiaries were also changed by adding "Dominion" as a prefix to their existing names.
In the wake of the power crisis that swept California in 2000-01 and the scandalous collapse of Enron Corporation in Texas, Dominion's CEO Thomas E. Capps made efforts to reassure Dominion's customers and shareholders of the overall strength and stability of his company. In a January 11, 2001 interview with Jack Cafferty of CNNfn, Capps critiqued the regulators' and the industry's poor handling of deregulation in California by contrast to the prudent, proactive, and visionary measures taken by Dominion. Capps distanced Dominion from Enron at the annual shareholders meeting in 2002, characterizing the business practices of the now bankrupt Texas company as "fast and loose," and emphasizing the built-in security for Dominion of owning a broad range of assets and maintaining a level of available cash in excess of its book earnings. Indeed, despite turbulence in the market, Dominion looked strong in 2002: the company had tripled its stock price in the past ten years and issued dividends to its stockholders for 297 consecutive quarters. With the strength and flexibility Dominion had won through expansion and diversification, the company's bullish outlook for the East Coast energy business appeared justified.
Principal Subsidiaries: Dominion Virginia Power; Dominion East Ohio; Dominion Peoples; Dominion Hope; Dominion Capital, Inc.; Dominion Energy, Inc.; Dominion Land Management Co.; Dominion Transmission, Inc.; Dominion Exploration and Prod.; Dominion Retail; Dominion Telecom; Dominion Evantage; Saxon Mortgage, Inc.
Principal Competitors: Allegheny Energy, Inc.; American Electric Power Company, Inc.; NiSource Inc.
OVERALL
Beta: 0.57
Market Cap (Mil.): $26,907.02
Shares Outstanding (Mil.): 575.80
Annual Dividend: 1.97
Yield (%): 4.22
FINANCIALS
D.N Industry Sector
P/E (TTM): 8.81 15.13 21.65
EPS (TTM): 135.31 -- --
ROI: 8.48 7.86 1.26
ROE: 27.13 20.51 2.82
Statistics:
Public Company
Incorporated: 1909 as Virginia Railway and Power Company
Employees: 17,100
Sales: $10.21 billion (2002)
Stock Exchanges: New York
Ticker Symbol: D
NAIC: 221112 Fossil Fuel Electric Power Generation; 221121 Electric Bulk Power Transmission and Control; 221122 Electric Power Distribution; 221210 Natural Gas Distribution
Key Dates:
1795: Upper Appomattox Company is formed.
1888: Upper Appomattox introduces its first steam power facility.
1909: Virginia Railway and Power (VR&P; the original name of Vepco) is incorporated.
1925: VR&P is purchased by a syndicate headed by Stone & Webster, Inc., a New York engineering and consulting company, and is renamed Virginia Power and Electric Company.
1940: Vepco merges with the Virginia Public Service Company, more than doubling Vepco's service area and making it one of the largest U.S. electric utilities.
1943: Standard Oil creates Consolidated Natural Gas.
1947: Under pressure from the SEC, Vepco owner, Engineers Public Service, dissolves itself and Vepco becomes independent with 450,000 gas and electric customers.
1956: Erwin H. Will becomes president of Vepco and leads the company to become one of the nation's frontrunners in nuclear energy.
1980: William W. Berry becomes president of Vepco and begins to champion electric competition.
1983: Dominion Resources, Inc. (DRI) is organized as a holding company for Vepco.
1985: Vepco is divided into Virginia Power, North Carolina Power, and West Virginia Power.
1990: Thomas E. Capps succeeds Berry as CEO of DRI.
1999: DRI reorganizes in anticipation of energy deregulation, separating power generation from transmission, distribution, and retail.
2000: Following its transformative merger with Consolidated Natural Gas, DRI begins doing business under the abbreviated name "Dominion."
Name Age Since Current Position
Farrell, Thomas 56 2007 Chairman of the Board, President, Chief Executive Officer
McGettrick, Mark 53 2009 Chief Financial Officer, Executive Vice President of the Company and VP
Christian, David 56 2009 President and Chief Operating Officer of Virginia Power
Sypolt, Gary 57 2009 President of Dominion Transmission, Inc.
Heacock, David 53 2009 President and Chief Nuclear Officer of Virginia Power
Koonce, Paul 51 2009 Executive Vice President, President and COO of Virginia Power
Rogers, Steven 49 2007 SVP, Chief Administrative Officer; President and Chief Administrative Officer of DRS
Blue, Robert 43 2011 Senior Vice President - Law, Public Policy & Environment
Sawhney, Ashwini 61 2010 Vice President - Accounting, Chief Accounting Officer, Controller
Weekley, Daniel 2011 Vice President - Government Affairs
Harris, John 63 1999 Director
Wollard, David 72 1999 Director
Davidson, George 71 2000 Director
McKenna, Margaret 64 2000 Director
Royal, Frank 71 1994 Director
Brown, Peter 68 2002 Director
Jepson, Robert 67 2003 Director
Kington, Mark 50 2005 Director
Barr, William 60 2009 Director
Spilman, Robert 54 2009 Director
Dragas, Helen 49 2010 Director
Address:
120 Tredegar Street
Richmond, Virginia 23219
U.S.A.