dominion resources CEO Letter

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dominion resources CEO Letter

  1. 1. Thomas F. Farrell II Chairman, President and Chief Executive Officer 4 Dominion 2007 Annual Report
  2. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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

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