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dominion resources CEO Letter
1. Thomas F. Farrell II Chairman, President and Chief Executive Officer
4 Dominion 2007 Annual Report
2. Dear Shareholders
ih for strong earnings growth. We
ave always admired Thomas REFOCUSING C O M PA N Y
THE
expect operating earnings per share
Last year we told you we would
Jefferson, a fellow Virginian. While
to increase by 6 percent or more
reposition the company by refocusing
many people rightly honor Jefferson
annually for the foreseeable future.
on our regulated energy sales, trans-
as the author of the Declaration of
portation and delivery businesses and
Independence, his foresight and skills
R E A L I Z I N G C O N C R E T E R E S U LT S :
on electric generation. By selling
in the acquisition of the Louisiana
A DIVIDEND INCREASE;
substantially all of our natural gas
Purchase also continue to impress O P P O RT U N I T Y F O R M O R E
and oil exploration and production
me. At a critical juncture in our Shareholders realized some of the
(E&P) assets, we would reduce
nation’s history, he seized a great fruits of Dominion’s refocusing after
Dominion’s exposure to swings in gas
opportunity and transformed the the Board of Directors approved an
and oil prices and most likely
nation through decisive action. 11 percent increase in the common
improve the total return to our
Dominion now stands at a critical stock dividend in November 2007.
shareholders.
juncture in its own long and remark- Such a significant increase would not
We carried through. E&P asset
able history, facing challenges that have been prudent under Dominion’s
sales raised nearly $14 billion. We
seem, at times, contradictory. Meet former business structure. The board
used after-tax proceeds to reduce
rising demand for energy while coupled your dividend increase with
maintaining reliability and affordable a 2-for-1 stock split.
THE REPOSITIONED
prices. Utilize something environ- At the same time it adopted a
COMPANY HAS A LOWER RISK
mentally agreeable but not intrusive. policy that should create the oppor-
PROFILE YET RETAINS
Be a conservationist, but not at the tunity for similar dividend increases
PROSPECTS FOR STRONG
expense of economic growth. Provide in 2009 and 2010. In light of the
EARNINGS GROWTH.
shareholders with a competitive company’s lower risk profile and solid
return during a period of economic earnings potential, the board set a
outstanding debt by $3.3 billion and
uncertainty. Fulfill all regulatory goal of raising the dividend payout
repurchase more than $5.8 billion
requirements. Never fail the interests ratio to 55 percent of operating
of stock, or more than 18 percent
of your employees and communities. earnings by 2010, putting us in line
of the total shares outstanding as of
Translating challenges into oppor- with our utility peers. The policy is
December 31, 2006.
tunities—fulfilling a vision—requires not a guarantee, but its successful
The repositioned company has a
decisive action. implementation would mean a nearly
lower risk profile yet retains prospects
37 percent increase in your dividend
over three years.
By the end of 2007 investors had
Targeted ~55%
Dividend Increase Payout Ratio*
realized higher share prices and
Recent increase puts
1.58
targeted 2010 payout ratio of
improving total shareholder returns.
1.46
1.38
55% in reach. 1.34
1.30
Combined with the dividend, your
Dollars per Share
shares produced a total return of
* All dividend declarations
17.0 percent in 2007. That compares
subject to Board of Directors
approval.
with a 5.5 percent total return for
All per share figures
reflect the November 2007 ’08* ’09* ’10*
’04 ’05 ’06 ’07
2-for-1 stock split.
Dominion 2007 Annual Report 5
3. Total Return
Comparison
179.7
1 200
1
108.7
82.8
78.3
78.0
55.6
31.8 28.1
23.1
17.0
Source: Bloombe 8.9 5.5
Dominion DJIA S&P Electric S&P 500
DOMINION The timely upgrade came as we tric utilities in Virginia—to provide
IS EXTREMELY
embark on “Powering Virginia,” our us with the way and the means.
FORTUNATE TO PROVIDE
plan to responsibly meet rising We also can continue our substan-
VITAL ENERGY AND ENERGY
demand from our electric power dis- tial investments in environmental
SERVICES IN STRONG
tribution customers, who also benefit improvements—about $4 billion in
MARKETS IN THE
from our repositioning. Subject to air and water emissions controls—
MIDWEST
MID-ATLANTIC,
regulatory approval, the plan will be further improving one of the nation’s
NORTHEAST.
AND
built on a foundation of conservation cleanest electric generating fleets.
the Standard & Poor’s 500, and an and efficiency; a balanced portfolio And Dominion’s commitment to
8.9 percent total return for the Dow of new electric generation fueled by our communities and employees is as
Jones Industrial Average. In 2006 we renewable resources, advanced-tech- strong as ever.
lagged those key indices. By year-end nology coal, natural gas and nuclear
S E I Z I N G O P P O RT U N I T Y
2007 we still trailed the S&P 500 power; and investments in the IN
CHALLENGE
Electric Utilities Index, which pro- infrastructure delivering that energy.
The challenges that we now face
duced a total shareholder return of Like the dividend increase,
present real opportunities.
23.1 percent. We want to improve our “Powering Virginia” might not have
They include:
share valuations relative to our peers. been possible as Dominion stood one
• Responsibly meeting energy needs
Dominion debt-holders also year ago. Our plan will require the
in growing markets.
gained from our decision to refocus largest capital investment and build-
• Protecting the environment and
the business model. Late last year ing program in Dominion’s history—
building on business opportunities
Standard & Poor’s raised the corpo- estimated at $11.8 billion for growth
presented by climate change
rate credit rating for Dominion and and maintenance from 2008 through
concerns.
its Virginia Electric and Power 2010 alone, including about $7 bil-
• Keeping rates low while earning
Company (Virginia Power) subsidiary lion for Virginia. It took our new
competitive rates of return in
by two notches, to A- from BBB. structure—and forward-looking new
regulated and unregulated markets.
This demonstrates improvement of laws governing the regulation of elec-
• Acting as profitable and respon-
our risk profile and strengthens our
sible stewards of your capital.
ability to raise needed debt to sup-
• Living our core corporate values
port future growth.
and giving back to our communities.
6 Dominion 2007 Annual Report
4. the Appalachian Basin, where the gas C O S T- E F F E C T I V E E N E R G Y
Responsibly Meeting C O N S E RVAT I O N A N D
feeds into our pipeline and storage LOA D M A N A G E M E N T E F F O RT S
Energy Needs in Growing system from a near-perfect location. First, Dominion continues to expand
Markets The geology of the region also lends its cost-effective energy conservation
Consider the superb location of our itself to low-cost, low-risk drilling and efficiency efforts. Our attempts
existing businesses, and you will see and long-lived production. to encourage wise energy use began
our growth opportunities. Explaining the foundation of our long ago, but we have substantially
Dominion is extremely fortunate expected growth—and how our stepped up the pace.
to provide vital energy and energy shareholders and customers profit In the fall of 2007 we launched
services in strong markets in the from that growth—has a logical a program to provide discounts
mid-Atlantic, Midwest and starting point in Virginia, among the on energy-saving compact fluorescent
Northeast. Each market has a need fastest growing of the many strong light bulbs (CFLs). It was a hit.
for more energy and expanded energy markets that we serve. About two- Customers snatched up nearly
infrastructure. And each operates thirds of our electric generation 600,000 bulbs in about three months
under starkly different rules. serves our electric utility customer and we have raised our target to
We serve regulated electric base of nearly 2.4 million homes and
OUR ATTEMPTS TO ENCOUR-
markets in fast-growing Virginia and businesses in Virginia and northeast-
regulated retail natural gas markets AGE WISE ENERGY USE BEGAN
ern North Carolina.
in Ohio, Pennsylvania and West LONG AGO, BUT WE HAVE
RISING DEMAND V I RG I N I A
Virginia. We also supply retail IN SUBSTANTIALLY STEPPED UP
Over the next decade the demand
customers in selected local markets THE PACE.
for electric generation in Virginia is
that successfully developed retail
5 million CFLs by the end of 2009.
projected to grow by approximately
competition.
Achieving this target would result in
4,000 megawatts—enough to
In addition to the electric generat-
a conservation-driven carbon
provide power for 1 million homes.
ing facilities dedicated to serving our
reduction equivalent to the removal
Growing demand already strains
utility customers, we own and operate
of almost 270,000 cars from the
the electric grid, with usage expand-
a well-positioned “merchant” fleet that
road for one year.
ing faster than expected.
has access to deregulated wholesale
This year, to keep expanding the
Moreover, Virginia relies on import-
markets in New England and the
effort, we plan to initiate nine
ed power from other states to help meet
Midwest. Equally well positioned is
energy conservation pilot programs.
current demand, making it the nation’s
our expanding base of natural gas
second largest net importer of electric
transmission and storage facilities
N E W G E N E R AT I O N I S N E C E S S A RY
power, behind only California. We can-
providing services to the largest gas-
Conservation and load management
not, however, continue to rely on these
consuming markets in the country.
will reduce the rate of demand
imports. While demand grows in
The portion of the E&P business
growth, but they cannot eliminate it.
other regions, little new low-cost gen-
that we kept—about 1.1 trillion
Investing in new generation capacity
eration is scheduled to come on line.
cubic feet equivalent of proved natu-
is imperative.
How can we meet Virginia’s rising
ral gas and oil reserves—resides in
demand?
Dominion 2007 Annual Report 7
5. Using a balanced portfolio of Serving customer demand also of expected economic growth in the
generating fuels and technologies, means adding new transmission lines. mid-Atlantic and Northeast, we plan
we plan to meet Virginia’s need We are investing nearly $1 billion over to invest $1.2 billion through 2010
for nearly 4,000 megawatts of new the next three years to expand and on new transportation and storage.
generation over the next decade. improve our 6,000-mile network of Dominion Cove Point, our
The single largest potential project transmission lines at critical locations. liquefied natural gas import and
involves emissions-free nuclear. In storage facility on the Chesapeake
S E RV I N G T H E N O RT H E A S T ’ S
late 2007 we filed for a combined Bay in Maryland, lies at the heart of
ELECTRICITY NEEDS
construction and operating license our natural gas strategy. By late
Dominion is the largest power
with the U.S. Nuclear Regulatory 2008 we expect to have doubled its
producer in the New England portion
Commission for a third nuclear storage and send-out capacity.
of the Northeast, supplying about
reactor—one that would produce In another innovative project,
20 percent of its power in 2007.
about 1,500 megawatts—at our we plan to leach salt from under-
We are boosting the capacity of
North Anna Power Station in Central
ACHIEVING
two existing generating facilities OUR
Virginia.* By moving ahead in the
in the Northeast this year. If approved, ENERGY-SAVING LIGHT BULB
regulatory approval arena, we will
capacity at our 1,951-megawatt TARGET WOULD RESULT IN A
keep this option available without
Millstone Power Station in CARBON REDUCTION EQUIVA-
yet committing to it.
Connecticut will grow by nearly LENT TO THE REMOVAL OF
We also filed with the Virginia
4 percent. Our 1,076-megawatt natu-
270,000
ALMOST CARS FROM
State Corporation Commission for
ral gas-fired Fairless Power Station,
THE ROAD FOR ONE YEAR.
permission to build the 585-
which serves high-demand load cen-
megawatt Virginia City Hybrid
ground formations in Pennsylvania
ters in and around Philadelphia, will
Energy Center. This clean-coal,
and create caverns where natural gas
increase its capacity by 11 percent.
carbon capture-compatible facility
can be stored and withdrawn quickly.
will be able to burn coal, waste coal I N V E S T I N G I N N AT U R A L G A S Construction of the first phase of
and biomass. In addition, we entered INFRASTRUCTURE
the 20-billion-cubic-foot facility
into an agreement to purchase a Our natural gas pipeline and storage
should begin in 2009. We already
power station development project system is well positioned in the
are talking with companies that are
that will add about 600 megawatts in mid-Atlantic to serve growing
interested in reserving space.
Buckingham, Va., using natural gas. Northeast markets. Further expan-
In addition, we have proposed new
The two projects together will provide sions are necessary.
gathering lines and processing facili-
electricity to nearly 300,000 typical In an age in which utilities rely
ties to bring more natural gas into
Virginia homes and businesses. increasingly on natural gas to gener-
Maryland and Northern Virginia.
ate electricity, two peak-load periods
* Dominion’s ownership share would be about
1,300 megawatts. for gas now exist: a winter peak to
heat homes and places of business,
and a summer peak for power gener-
ation to meet air-conditioning load.
Because of the two peaks and because
8 Dominion 2007 Annual Report
6. To gain more insight into the Although much remains unknown
Protecting the
separation process, we are hosting a about evolving climate change rules
Environment & Building large-scale, coal-to-natural-gas and technology, one fact has become
on Business Opportunities demonstration project at our Brayton clear to stakeholders: Nuclear
Presented by Climate Point Power Station in Massachusetts. energy can and must play a role in
Change Concerns Project owner GreatPoint Energy of reducing carbon emissions.
Cambridge, Mass., will demonstrate
Our customers depend on us to keep
FIRM COMMITMENT TO
its technology to convert biomass,
their lights on, make them comfort-
R E N E WA B L E E N E R G Y
coal and petroleum coke into sepa-
able and power their businesses. We
Renewable energy also has an impor-
rate streams of natural gas and
aim to minimize the environmental
tant role. Dominion plans to achieve
sequestration-ready carbon dioxide.
impact while serving their needs.
Virginia’s goal of 12 percent of
As for the second challenge, a
We understand that generating
base-year electricity sales coming
$500,000 Dominion investment in
electricity with fossil fuels can pollute
from cost-effective renewable energy
a Virginia Tech endeavor will study
the air we breathe.
sources by 2022. We also plan to
sequestration of carbon dioxide
So we are taking the lead in
achieve North Carolina’s goal of
in unminable coal seams. This has
policymaking and in creating pro-
CLIMATE
the added benefit of making
grams that benefit the environment. CHANGE DOMINATES
more natural gas available that can THE DIALOGUE IN THE
TECHNOLOGY LEADERSHIP be captured for use as fuel. WE
POLITICAL REALM.
Climate change dominates the As the industry’s body of scientific RECOGNIZE, HOWEVER, THAT
dialogue in the political realm. We and technical knowledge matures, WHILE WE ARE NOT
recognize, however, that while and as rules and regulations evolve,
CLIMATOLOGISTS, REGULA-
we are not climatologists, regulation your company plans to look aggres-
TION OF CARBON EMISSIONS
of carbon emissions is coming. sively for positive ways to contribute
DOMINION
IS COMING. IS
Dominion is taking action. and to find business opportunities.
TAKING ACTION.
Scientists cite carbon dioxide as Last year we formed an internal
the principal culprit of global warm- task force—the Climate Change 12.5 percent from renewable energy
ing. When our industry develops the Initiative—to carry through. sources and energy efficiency by 2021.
technology to address carbon emis- At year-end 2007 we had more
sions, it will have crossed an impor- REDUCING OUR than 400 megawatts of generating
C A R B O N F O OT P R I N T
tant and necessary threshold. capacity from renewable sources.
When it comes to limiting green-
Scientists are not there yet, and such This included the 83-megawatt
house gas emissions, Dominion has
technology will not appear on its own. Pittsylvania Power Station in Hurt,
one of the best records in our peer
That is why Dominion is investing in Va., one of the largest biomass gener-
group, principally because we get
opportunities to limit our carbon ators on the East Coast, and 320
about 40 percent—twice the national
emissions from coal-fired power sta- megawatts of hydropower. In early
average—of our electricity from
tions—first by separating the carbon 2008 production began at a wind
carbon-free nuclear energy.
dioxide from other air emissions and farm project in West Virginia that we
then permanently storing, or jointly own with Shell WindEnergy.
“sequestering,” the carbon dioxide.
Dominion 2007 Annual Report 9
7. Low 2,500
Carbon
Intensity
2,000
Pounds CO2 per
megawatt hour
produced 1,500
1,171.5
100 largest U.S.
power producers 1,000
Source: Natural
500
Resources Defense
Council 2006 Study
0 100
Dominion
We expect the completed project to 10 years, including our possible
Maintaining Low Rates,
generate 264 megawatts of electricity. additional nuclear capacity, would
Earning
In January 2008 we acquired a further reduce our carbon dioxide
Competitive Returns
50 percent interest in 650 megawatts emissions as a percentage of total
Clean air and clean water are essen-
from the Fowler Ridge Wind Farm electric output. We already rank in
tial to our quality of life. Equally
in Indiana under development by the nation’s best third, as the graphic
important is providing affordable
Dominion and a subsidiary of pictured above illustrates.
energy that runs the necessities
BP Alternative Energy North America In the past we have worked cooper-
of modern life while earning a com-
atively with federal regulators to find
IN 2008
EARLY PRODUCTION
petitive return on investment.
ways to reduce other air emissions—
BEGAN AT A WIND FARM
nitrogen oxides, sulfur dioxide,
WEST VIRGINIA.
PROJECT IN R E R E G U L AT I O N I N V I R G I N I A
mercury and particulates—to meet
P RO V I D E S N E C E S S A RY F R A M E W O R K
environmental goals. We have spent F O R G ROW T H
Inc. The first phase is expected to
$2.2 billion to reduce these emissions As of the beginning of 2008
be completed in 2008.
at both our regulated and merchant Dominion’s residential electric rates
And our proposed station in
coal-powered units—and are planning in Virginia were about 15 percent
Southwest Virginia will be able to use
to spend another $1.3 billion by 2015. below the national average. Our
clean-coal, carbon capture-compati-
Water use at our Brayton Point industrial rates were the lowest
ble technology to burn waste coal
Power Station on Mt. Hope Bay in on the East Coast. Key reasons: great
that now contributes to acid run-off
Massachusetts is also important to us. work by dedicated employees who
in local waterways. The station also
Late last year we forged an agreement maintain efficient, economic produc-
will be able to use renewable fuels
with the U.S. Environmental tion, and price caps that were in
such as wood waste. It is an excellent
Protection Agency (EPA) to add place during a decade-long electric
candidate for Virginia Tech’s carbon
cooling towers at Brayton. The deregulation experiment in Virginia.
sequestration technology, once that
$500 million investment will reduce In 2007 the General Assembly
technology becomes commercially
the amount of water the coal adopted new rules governing electric
available.
facility uses by 90 percent and reduce utilities as it became apparent that all
The generating capacity additions
the thermal impact on the bay.
that we are considering for the next
10 Dominion 2007 Annual Report
8. of the expected benefits of competi- holder and consumer interests. The sale into spot wholesale markets as
tion would not materialize. In short, commission ultimately will make rul- opportunities arise.
lawmakers reregulated the state’s ings that will authorize the company With little new generation con-
electric utilities, employing a to earn rates of return no lower than struction anticipated in New England,
modified cost-of-service model to an average of those of a group our fleet there will become all the
set base electricity rates. of our peer utilities in the Southeast. more valuable and all the more
Deregulation provided an environ- Turning to the Midwest, our necessary to serve the region’s energy
ment in which it was too risky to Dominion East Ohio natural gas needs.
build significant baseload generation. utility serves more than 1.2 million While helping to meet the energy
The new law, on the other hand, homes and businesses. Last year needs of the region, we must comply
establishes a constructive framework we asked the Public Utilities with stringent emissions-reduction
that provides investors the opportu- Commission of Ohio for an increase standards adopted there, strive to
nity to earn competitive returns on in base rates of $73 million to recover operate these units safely and efficient-
equity. The new system allows your increased costs. This request—the ly and seek to increase their capacity.
company to apply to recover these first proposed increase since 1994—
WITH LITTLE NEW
costs as they are incurred—a critical would support a 12 percent return
GENERATION CONSTRUCTION
consideration for investors—and on equity.
NEW
ANTICIPATED IN
helps protect customers from rate
ENGLAND, OUR FLEET THERE
W E L L P O S I T I O N E D I N FAVO R A B L E
spikes.
N O RT H E A S T, M I D W E S T M A R K E T S WILL BECOME ALL THE MORE
The new rules establish environ-
Our merchant fleet operates in the
VALUABLE AND ALL THE MORE
mental-based incentives for con-
Northeast and Midwest. It comprises
NECESSARY TO SERVE
structing nuclear, advanced-technolo-
about 35 percent of our total electric
gy coal and natural gas facilities, and THE REGION’S ENERGY NEEDS.
generation. These facilities occupy
for meeting or exceeding renewable
excellent geographic locations near Unlike in New England, much
generation goals. They also reward
high-demand centers with transmis- of our electric output in the Midwest
efficient operations that reduce costs
sion infrastructure in place. We is being sold to utilities under below-
and emissions, enable cost-effective
began acquiring such facilities nearly market price contracts scheduled
power production and provide
a decade ago. Since then wholesale to expire by 2013. To begin realizing
excellent customer service.
power prices have risen substantially. some of this trapped value for
These businesses manage their shareholders, last year we paid about
R E G U L ATO RY H E A R I N G S TO
price risks by entering into power $230 million to buy out a contract
D E T E R M I N E AU T H O R I Z E D R E T U R N S
I N L I N E W I T H PE E R S
sales with creditworthy buyers. for our 515-megawatt State Line
As part of reregulation, Virginia We also maintain available power for Power Station in Hammond, Ind.,
Power in 2009 will file for a review of near Chicago.
its base rates for the first time in a
decade. As in the past, the Virginia
State Corporation Commission will
set future rates that balance share-
Dominion 2007 Annual Report 11
9. Cleaner Air in
Cleaner Air in
Virginia
New England 20
Projected
Projected
0
emissions reduction emissions reduction
Percent Percent
20
Dominion began
ownership of Dominion
0
New England (DNE)
January 1, 2005
0
0
2 100
N
ercur ’98 ’00 ’02 ’04 ’06 ’10 ’15
’98 ’00 ’02 ’04 ’06 ’10 ’15 ercur
$2.53 per share, excluding the benefit of $3.25 per share to $3.40 per share
Acting as Profitable,
from the E&P sales under GAAP, in 2009. At this time we are not able
Responsible among other items.* to project differences between GAAP
Capital Stewards Management uses operating earnings and operating earnings for
We include a popular phrase on earnings as the primary performance 2008 or 2009. As I mentioned earli-
Wall Street—“capital stewardship”— er, we expect average annual growth
WITH A MAJOR EXPANSION
among our challenges. The metrics in operating earnings of 6 percent or
PROGRAM UNDER WAY,
defining good stewardship show how more beginning in 2008.
DOMINION WILL NEED TO
well we size up investment opportuni-
MAINTAIN ITS SOLID CREDIT M A I N TA I N I N G A S T RO N G B A L A N C E
ty and whether we bring it home
S H E E T T H RO U G H I N V E S T M E N T
RATINGS TO ENSURE THAT
to investors at efficient profit levels. PE R I O D
Among many investors the first and FINANCING COSTS FOR
With a major expansion program
foremost metric is earnings per share. PROJECTS ARE AFFORDABLE. under way, Dominion will need to
Earnings per share under Generally maintain its solid credit ratings to
measurement because we believe it
Accepted Accounting Principles ensure that financing costs for proj-
provides a more meaningful represen-
(GAAP) in 2007 rose 98 percent ects are affordable. Cash generated by
tation of the company’s fundamental
over 2006 earnings thanks in large our businesses will cover the expected
earnings power. However, last year’s
part to a one-time, after-tax gain dividend payments and maintenance
corporate refocusing, E&P sales and
of $2.1 billion generated by the sale capital. Financing the planned
significant share repurchases make a
of substantially all of our E&P new infrastructure investments will
year-to-year comparison of operating
properties. As a result, we reported require us to raise a combination
earnings not particularly meaningful.
GAAP earnings of $3.88 per share in of equity and debt.
In 2008 we have set an operating
2007, compared with GAAP earnings We plan to issue between
earnings target of $3.05 per share to
of $1.96 per share in 2006, recast for $200 million and $250 million of
$3.15 per share, and have provided
the 2-for-1 stock split. equity in 2008, and about $800 mil-
an initial operating earnings outlook
Dominion recorded operating lion of equity in each of the follow-
earnings of $2.56 per share in 2007, * Based on non-GAAP financial measures. See page
ing two years. All of the equity to
26 for GAAP reconciliations.
up from 2006 operating earnings of
12 Dominion 2007 Annual Report
10. SAFETY used the combined proceeds to recent years. However, when three
HAS BEEN AND
reduce debt. We continue to seek employees died in late 2007 from
ALWAYS WILL BE OUR
buyers for our Dominion Peoples steam burns suffered in an accident
NO. 1 SAFETY
PRIORITY. IS
and Dominion Hope gas distribution at one of our power stations, the loss
A CORE VALUE.
companies. rippled throughout the company.
be issued in 2008 is expected to be These deaths are pointed and painful
through our dividend reinvestment reminders of the reasons that we
Living Our Core Values
and direct stock purchase programs. place so much emphasis on
In 2009 and 2010 look for us to con- & Giving Back to Our awareness, prevention and training.
duct small, frequent share issuances Communities We believe that one injury is too
to fund specific, accretive and many, so we are continually striving
It is easy to forget how hard
approved projects, augmented by our to work smarter and do better.
Dominion employees work to sustain
ongoing dividend reinvestment Consider these positive accomplish-
a consistent and reliable record of
and direct stock purchase programs. ments in 2007:
service. Everybody takes electricity
We also will issue new debt, • The Kewaunee Power Station
and natural gas service for granted, it
borrowing made less costly by S&P’s in Wisconsin had no U.S.
seems, until the power goes out or
upgrade last year. Occupational and Health
the furnace turns cold. We have a
Administration (OSHA) record-
long-standing history of public serv-
I M P RO V I N G R E T U R N S ON
able incidents. This marked
ice, safety and operating excellence,
I N V E S T E D C A P I TA L
a dramatic improvement from
We set stringent targets for our and a commitment to giving back to
previous years.
returns on invested capital (ROIC). our communities.
• Kewaunee joined the rest of the
In 2007 we achieved a total ROIC
Dominion nuclear fleet in becom-
D O M I N I O N ’ S LO N G - S TA N D I N G
of about 7.8 percent,* beating the
H I S T O RY O F O P E R AT I N G ing OSHA Voluntary Protection
previous year’s ROIC of about 7.4 EXCELLENCE
Program Star certified, and
percent.* This increase might seem For years my predecessors and I have
Millstone was re-certified.
small to some. But to a company reminded you how investors and
Dominion’s nuclear fleet is the
with an asset base as large as ours, the consumers have benefited from the
only one in the nation in which
increase is a significant achievement. company’s record of plant perform-
all stations are certified.
Businesses, assets or projects not ance. We operate nuclear units that
This safety record supports our
meeting our ROIC requirements are among the nation’s best in stan-
goal of reliably serving our millions
will be improved. In some instances dard industry surveys. Our facilities
of customers:
they may be offered for sale. fired by fossil fuels and our hydro-
• Millstone Unit 2 and Surry Unit 2
For example, we completed the electric generation also consistently
had no forced outages and had been
sale last year of three natural gas-fired exceed industry standards.
on line, respectively, for 469 and
peaking units and one partially Safety has been and always will be
468 consecutive days by the time we
built gas-fired generation facility. We our No. 1 priority. Safety is a core
went to press.
value. Overall, our safety perform-
* Based on non-GAAP financial measures.
See page 27 for GAAP reconciliations.
ance has improved significantly in
Dominion 2007 Annual Report 13
11. • Our generators powered by fossil $63 million to our communities. In 2007 we made the biggest
fuels and hydroelectric power We offer a matching gifts program to change this company has undertaken
were available for service 87.4 encourage employee donations. in years. We adapted a business
percent of the time, an important Dominion’s EnergyShare fuel model and structure to maximize
measurement of efficiency. assistance program, a highly success- shareholder value. We also have
• Our natural gas transmission ful public-private partnership that adapted to the realities of a
system had completed its seventh receives broad community support, marketplace that rewards excellent,
year without an unscheduled, reached a milestone with the celebra- efficient, cost-effective operations and
primary firm gas interruption to lower risk profiles. Showing flexibility
GIVING BACK TO THE
our customers. at a critical juncture in our
COMMUNITIES WHERE WE
company’s long, proud history and
LIVE AND WORK IS INTEGRAL
CONTRIBUTING in an age of economic uncertainty
TO WO RT H Y C AU S E S TO OUR CORPORATE CULTURE
has required equal parts ingenuity,
We work daily to improve the com- AS THE OWNER OF MAJOR leadership, energy, experience,
munities where we do business.
PUBLIC SERVICE UTILITIES. expertise and skill. We believe our
In 2007 Dominion volunteers
corporate restructuring and reposi-
tion of its 25th anniversary last year.
completed 21 projects to benefit
tioning will benefit shareholders
The program has raised $25 million
public parks and local outdoor facili-
and customers alike.
since 1982 and helped more than
ties in eight states.
We know that it takes trust to
135,000 households stay warm.
Giving back to the communities
place your money in a company that
We created this flexible safety net
where we live and work is integral to
invests in future long-term growth.
program to help our most vulnerable
our corporate culture as the owner of
Thank you for your continued
customers pay their heating bills. Last
major public service utilities. Many
confidence.
year we expanded the program to
of our employees devote much of
include assistance for cooling in the
their free time to helping others—
sweltering summer months common
about 100,000 hours total each year.
Sincerely,
to North Carolina and Virginia.
In 2007, through the Dominion
Foundation and other resources, your
DOMINION HAS CHANGED
company gave almost $19 million
TO B E T T E R S E RV E I N V E S T O R S ,
to all manner of worthy causes. Since C U S TO M E R S
2001 the foundation has distributed For Dominion, last year defined
change. The symbol for change is Thomas F. Farrell II
the Greek letter Δ, or “delta,” which
is equivalent to the English letter
“D”—the New York Stock
Exchange’s ticker symbol for your
company.
14 Dominion 2007 Annual Report