1. Management’s Annual Report on Internal Control Over Financial Reporting
Management of Dominion Resources, Inc. (Dominion) under- public accounting firm regarding the effectiveness of internal
stands and accepts responsibility for our financial statements and control. As a basis for our report, we tested and evaluated the
related disclosures and the effectiveness of internal control over design and operating effectiveness of internal controls. Based on
financial reporting (internal control). We continuously strive to our assessment as of December 31, 2007, we make the following
identify opportunities to enhance the effectiveness and efficiency assertion:
of internal control, just as we do throughout all aspects of our Management is responsible for establishing and maintaining
business. effective internal control over financial reporting of Dominion.
We maintain a system of internal control designed to provide There are inherent limitations in the effectiveness of any
reasonable assurance, at a reasonable cost, that our assets are safe- internal control, including the possibility of human error and the
guarded against loss from unauthorized use or disposition and circumvention or overriding of controls. Accordingly, even effec-
that transactions are executed and recorded in accordance with tive internal controls can provide only reasonable assurance with
established procedures. This system includes written policies, an respect to financial statement preparation. Further, because of
organizational structure designed to ensure appropriate segrega- changes in conditions, the effectiveness of internal control may
tion of responsibilities, careful selection and training of qualified vary over time.
personnel and internal audits. We evaluated Dominion’s internal control over financial
The Audit Committee of the Board of Directors of Domin- reporting as of December 31, 2007. This assessment was based on
ion, composed entirely of independent directors, meets periodi- criteria for effective internal control over financial reporting
cally with the independent registered public accounting firm, the described in Internal Control-Integrated Framework issued by the
internal auditors and management to discuss auditing, internal Committee of Sponsoring Organizations of the Treadway Com-
control, and financial reporting matters of Dominion and to mission. Based on this assessment, we believe that Dominion
ensure that each is properly discharging its responsibilities. Both maintained effective internal control over financial reporting as of
the independent registered public accounting firm and the December 31, 2007.
internal auditors periodically meet alone with the Audit Commit- Our independent registered public accounting firm is engaged
tee and have free access to the Committee at any time. to express an opinion on our internal control over financial
SEC rules implementing Section 404 of the Sarbanes-Oxley reporting, as stated in their report which is included herein.
Act of 2002 require our 2007 Annual Report to contain a February 26, 2008
management’s report and a report of the independent registered
60 Dominion 2007 Annual Report