-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Dj8tNgH/UAVITJqgWVOQCAsTP7UbZAGzRGgZbD26VyYdfqKcuIyp9m16uz+W/c6O b68feD3ipcStHhW2v16cPQ== 0000916641-95-000050.txt : 19950613 0000916641-95-000050.hdr.sgml : 19950613 ACCESSION NUMBER: 0000916641-95-000050 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 20 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950308 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIRGINIA ELECTRIC & POWER CO CENTRAL INDEX KEY: 0000103682 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC SERVICES [4911] IRS NUMBER: 540418825 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-02255 FILM NUMBER: 95519348 BUSINESS ADDRESS: STREET 1: ONE JAMES RIVER PLAZA CITY: RICHMOND STATE: VA ZIP: 23261 BUSINESS PHONE: 8047713000 10-K 1 VIRGINIA ELECTRIC & POWER 10-K SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO COMMISSION FILE NUMBER 1-2255 VIRGINIA ELECTRIC AND POWER COMPANY (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) VIRGINIA (STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) ONE JAMES RIVER PLAZA RICHMOND, VIRGINIA (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) 54-0418825 (I.R.S. EMPLOYER IDENTIFICATION NO.) 23261-6666 (ZIP CODE) (804) 771-3000 (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE) SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED Preferred Stock (cumulative) New York Stock Exchange $100 liquidation value: $5.00 dividend $7.45 dividend $7.20 dividend SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE (TITLE OF CLASS) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (X) The aggregate market value of the voting stock held by non-affiliates of the registrant as of January 31, 1995 was zero. As of January 31, 1995, there were issued and outstanding 171,484 shares of the registrant's common stock, without par value, all of which were held, beneficially and of record, by Dominion Resources, Inc. DOCUMENTS INCORPORATED BY REFERENCE. NONE VIRGINIA ELECTRIC AND POWER COMPANY ITEM NUMBER NUMBER PART I 1. Business....................................................... 1 The Company.................................................... 1 Capital Requirements and Financing Program..................... 1 Construction and Nuclear Fuel Expenditures................... 1 Financing Program............................................ 2 Rates.......................................................... 2 Virginia..................................................... 3 County and Municipal......................................... 3 North Carolina............................................... 3 Regulation..................................................... 4 General...................................................... 4 Environmental................................................ 4 Nuclear...................................................... 5 Winter Peak.................................................. 5 Sources of Power............................................... 6 Company Generating Units..................................... 6 Net Utility Purchases........................................ 6 Non-Utility Generation....................................... 6 Sources of Energy Used and Fuel Costs.......................... 6 Nuclear Operations and Fuel Supply........................... 6 Fossil Fuel Supply........................................... 7 Purchases and Sales of Power................................. 7 Interconnections............................................... 7 Future Sources of Power........................................ 8 Company Owned Generation..................................... 8 Non-Utility Generation....................................... 9 Competition.................................................... 9 Conservation and Load Management............................... 9 2. Properties...................................................... 9 3. Legal Proceedings............................................... 10 4. Submission of Matters to a Vote of Security Holders............. 12 PART II 5. Market for the Registrant's Common Equity and Related Stockholder Matters........................................... 12 6. Selected Financial Data......................................... 12 7. Management's Discussion and Analysis of Financial Condition and Results of Operations...................................... 12 8. Financial Statements and Supplementary Data..................... 19 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure....................................... 40 PART III 10. Directors and Executive Officers of the Registrant............. 40 11. Executive Compensation......................................... 43 12. Security Ownership of Certain Beneficial Owners and Management..................................................... 46 13. Certain Relationships and Related Transactions................. 46 PART IV 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K...................................................... 47 PART I ITEM 1. BUSINESS THE COMPANY Virginia Electric and Power Company was incorporated in Virginia in 1909 and has its principal office at One James River Plaza, Richmond, Virginia 23261-6666, telephone (804) 771-3000. It is a wholly-owned subsidiary of Dominion Resources, Inc. (Dominion Resources), a Virginia corporation. Virginia Electric and Power Company is a regulated public utility engaged in the generation, transmission, distribution and sale of electric energy within a 30,000 square mile area in Virginia and northeastern North Carolina. It transacts business under the name VIRGINIA POWER in Virginia and under the name NORTH CAROLINA POWER in North Carolina. It sells electricity to retail customers (including governmental agencies) and to wholesale customers such as rural electric cooperatives and municipalities. The Virginia service area comprises about 65 percent of Virginia's total land area, but accounts for over 80 percent of its population. As used herein, the terms "Virginia Power" and the "Company" shall refer to the entirety of Virginia Electric and Power Company, including, without limitation, its Virginia and North Carolina operations. The Company has nonexclusive franchises or permits for electric operations in substantially all cities and towns now served. It also has certificates of convenience and necessity from the Virginia State Corporation Commission (the Virginia Commission) for service in all territory served at retail in Virginia. The North Carolina Utilities Commission (the North Carolina Commission) has assigned territory to the Company for substantially all of its retail service outside certain municipalities in North Carolina. The Company strives to operate its generating facilities in accordance with prudent utility industry practices and in conformity with applicable statutes, rules and regulations. Like other electric utilities, the Company's generating facilities are subject to unanticipated or extended outages for repairs, replacements or modifications of equipment or otherwise to comply with regulatory requirements. Such outages may involve significant expenditures not previously budgeted, including replacement energy costs. See NUCLEAR REGULATION under REGULATION below and NUCLEAR OPERATIONS AND FUEL SUPPLY under SOURCES OF ENERGY USED AND FUEL COSTS. The Company had 10,585 full-time employees on December 31, 1994. 3,794 of the Company's employees are represented by the International Brotherhood of Electrical Workers under a contract extending to March 31, 1995. Negotiations are presently underway to extend the contract. For additional information on significant corporate governance issues relating to the nonutility business see Item 3. LEGAL PROCEEDINGS. CAPITAL REQUIREMENTS AND FINANCING PROGRAM CONSTRUCTION AND NUCLEAR FUEL EXPENDITURES Virginia Power's estimated construction and nuclear fuel expenditures, including Allowance for Funds Used During Construction (AFC), for the three-year period 1995-1997, total $1.9 billion. It has adopted a 1995 budget for construction and nuclear fuel expenditures as set forth below: 1
ESTIMATED 1995 EXPENDITURES (MILLIONS) New Generating Facilities: Clover Unit 1 and Unit 2............................................................ $ 52 Other Production: North Anna Unit 2 steam generator replacement....................................... 70 Clean Air Act....................................................................... 25 Other............................................................................... 90 General Support Facilities............................................................ 56 Transmission.......................................................................... 59 Distribution.......................................................................... 262 Nuclear Fuel.......................................................................... 59 Total Construction Requirements and Nuclear Fuel.................................... 673 AFC.............................................................................. 11 Total Expenditures.................................................................. $684
FINANCING PROGRAM In 1994, Virginia Power obtained $539 million from the sale of securities. With a portion of the proceeds of the 1994 securities sales, the Company retired $166.5 million of securities through mandatory debt maturities and sinking fund requirements and retired an additional $167.8 million of securities through optional redemptions. Its long-term financings included $325.0 million of First and Refunding Mortgage Bonds, $100 million of unsecured Medium-Term Notes, $39.0 million of Pollution Control Revenue Bonds, and $75.0 million of Common Stock sold to Dominion Resources. See LIQUIDITY AND CAPITAL RESOURCES under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS for, among other things, a discussion of the Company's commercial paper program. Virginia Power's 1995 construction and nuclear fuel requirements, exclusive of AFC, are estimated to be $673.2 million. Of this amount, it is expected that approximately $552 million will be obtained from cash flow from operations. The remaining $121.2 million of construction and nuclear fuel requirements, as well as the $312.2 million of debt maturities, will be obtained by a combination of sales of securities and short-term borrowings. See LIQUIDITY AND CAPITAL RESOURCES under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RATES The Company was subject to rate regulation in 1994 as follows:
1994 PERCENT PERCENT OF OF REVENUES KWH SALES Virginia retail: Non-Governmental customers.................... Virginia Commission 78% 73% Governmental customers........................ Negotiated Agreements 11 12 North Carolina retail........................... North Carolina Commission 4 4 Wholesale: Requirements -- Sales for Resale.............. Federal Energy Regulatory 5 8 Commission (FERC) Non-Requirements -- Sales for Resale.......... FERC 2 3 100% 100%
Substantially all of the Company's electric sales are subject to recovery of changes in fuel costs either through fuel adjustment factors or periodic adjustments to base rates, each of which requires prior regulatory approval. Each of these jurisdictions has the authority to disallow recovery of costs it determines to be excessive or imprudently incurred. Various cost items may be reviewed on occasion, including costs of constructing or modifying facilities, on-going purchases of capacity or providing replacement power during generating unit outages. 2 The principal rate proceedings in which the Company was involved in 1994 are described below by jurisdiction. Rate relief obtained by the Company is frequently less than requested. VIRGINIA On February 3, 1994, the Virginia Commission entered its Final Order in Virginia Power's 1992 rate case, approving an increase in annual revenues of $241.9 million. Refunds of $129.2 million (representing the amount recovered under interim rates in excess of the rates finally approved, with interest) were completed by the end of April. The Commission also approved continuation of deferral accounting to recover purchased power capacity costs, allowed inclusion of salary incentive pay in the cost of service, accepted the Company's calculation of postretirement benefits other than pensions, allowed rate base to be updated to November 30, 1992, and recommended a return on equity in the range of 10.5% to 11.5% with rates to be based on 11.4% to reflect superior operating performance of the Company's generating units. The Commission disapproved proposed changes in the Company's line extension policy and a proposed increase in its summer/winter rate differential, and it disallowed from recovery through rates the gross receipts tax component of capacity payments under certain previously executed power purchase contracts. The Commission directed the Company, the Commission's Staff and other interested parties to explore the concept of expanding the generating unit performance program to include purchases of capacity and to present testimony on that issue in the Company's next rate case. The Company and several non-utility generators that will be adversely affected by the ruling that disallowed rate recovery of the gross receipts tax component of purchased power costs appealed that ruling to the Virginia Supreme Court. On January 13, 1995, the Court issued its Opinion affirming the Virginia Commission's decision. On January 23, 1995, the Company and the other appellants filed Motions of Intent to Seek Rehearing. On January 31, 1994, a hearing before a Hearing Examiner was held on Virginia Power's application requesting approval of Schedule DEF -- Dispersed Energy Facility, a rate schedule that would allow the Company to respond to the request of an industrial or commercial customer to build and operate a generating facility at its business location and to sell to that customer all of the electricity and associated steam from that facility under a long-term contract. On June 23, 1994, the Hearing Examiner recommended approval on an experimental basis (see COMPETITION below). On January 10, 1994, a hearing was held before a Hearing Examiner on Virginia Power's application to revise its Schedule 19 (rates to be paid to small qualifying facilities), which sought, among other things, approval of (a) limiting the schedule's applicability to facilities of 100 Kw or less and (b) postponing the commencement of capacity payments until the capacity is needed by the Company. On April 25, 1994, the Hearing Examiner issued his Report recommending approval of these and other features of the Company's application, and on July 1, 1994, the Commission entered its Final Order accepting the Examiner's recommendation as to these and most other issues. On September 19, 1994, Virginia Power filed with the Virginia Commission an application for a $25 million increase in the fuel factor. A hearing was held on October 28, 1994, and the Commission approved an increase of $9.9 million effective November 1, 1994. Virginia Power filed an application with the Virginia Commission on December 21, 1994, seeking approval, on an experimental basis, to implement a real time pricing (RTP) option for its industrial customers with loads in excess of 10 Mw. Under this option, all or a portion of an industrial customer's load growth would be supplied at projected incremental hourly production costs, adjusted for line losses and taxes, plus a margin of 0.6 cents per Kwh, and a marginal cost-based Generation Capacity Adder and a Transmission Capacity Adder would be applicable during those hours when the Virginia Power system is approaching its forecasted annual peak demand. Up to 20% of an industrial customer's existing load could be served on an RTP basis if the customer executes a five-year contract for such service. COUNTY AND MUNICIPAL On January 30, 1995, Virginia Power reached agreement on the terms of a three-year contract governing rates for county and municipal customers in Virginia, which will continue through June 30, 1997. This contract resulted in a decrease of $25.5 million in annual base revenue from the previous contract and became effective July 1, 1994, with base rates remaining constant through the term of the new contract. NORTH CAROLINA In Virginia Power's 1992 rate case before the North Carolina Commission, the Commission disallowed recovery of certain capacity costs paid to a cogenerator and a portion of the compensation of certain Company officers. The Company 3 appealed the Commission's Order on those issues, and on December 9, 1994, the North Carolina Supreme Court affirmed the disallowance of each by the Commission. The Company filed a Motion for Rehearing on January 13, 1995. Virginia Power filed an application with the North Carolina Commission on September 9, 1994 for a $1.5 million increase in fuel rates. A hearing was held on November 8, 1994, and the increase was approved on December 19, 1994. On December 22, 1994, Virginia Power filed an application with the North Carolina Commission for approval of Self-Generation Deferral Rates that are a part of an Energy Agreement between North Carolina Power and Weyerhaeuser. The Energy Agreement involves the use of a negotiated pricing structure which will result in the deferral of the installation of additional self-generation facilities by Weyerhaeuser. REGULATION GENERAL In a wide variety of matters in addition to rates, Virginia Power is presently subject to regulation by the Virginia Commission and the North Carolina Commission, the Environmental Protection Agency (EPA), Department of Energy (DOE), Nuclear Regulatory Commission (NRC), FERC, the Army Corps of Engineers, and other federal, state and local authorities. Compliance with numerous laws and regulations increases the Company's operating and capital costs by requiring, among other things, changes in the design and operation of existing facilities and changes or delays in the location, design, construction and operation of new facilities. The commissions regulating the Company's rates have historically permitted recovery of such costs. Virginia Power may not construct, or incur financial commitments for construction of, any substantial generating facilities or large capacity transmission lines without the prior approval of state and federal governmental agencies having jurisdiction over various aspects of its business. Such approvals relate to, among other things, the environmental impact of such activities, the relationship of such activities to the need for providing adequate utility service and the design and operation of proposed facilities. Various provisions of the Energy Policy Act of 1992 (Energy Act) that could affect the Company include those provisions encouraging the development of non-utility generation, giving FERC authority to order transmission access for wholesale transactions, requiring higher energy efficiency and alternative fuels use, restructuring of nuclear plant licensing procedures, and requiring state regulatory authorities to give full rate treatment for the effects of conservation and demand management programs, including the effects of reduced sales. While the full impact of the Energy Act on the Company cannot at this time be quantified, it is likely, over time, to be significant. See COMPETITION under BUSINESS and COMPETITION under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. ENVIRONMENTAL From time to time, the Company may be identified as a potentially responsible party (PRP) with respect to a Superfund site. EPA (or a state) can either (a) allow such a party to conduct and pay for a remedial investigation and feasibility study and remedial action or (b) conduct the remedial investigation and action and then seek reimbursement from the parties. Each party can be held jointly, severally and strictly liable for all costs, but the parties can then bring contribution actions against each other and seek reimbursement from their insurance companies. As a result of the Superfund Act or other laws or regulations regarding the remediation of waste, the Company may be required to expend amounts on remedial investigations and actions. Although the Company is not currently aware of any sites or events including those sites currently identified likely to result in significant liabilities, such amounts, in the future, could be significant. Permits under the Clean Water Act and state laws have been issued for all of the Company's steam generating stations now in operation. Such permits are subject to reissuance and continuing review. The Company is subject to the Clean Air Act (Air Act), which provides the statutory basis for ambient air quality standards. In order to maintain compliance with such standards and reduce the impact of emissions on ambient air quality, the Company may be required to incur significant additional expenditures in constructing new facilities or in modifying existing facilities. The Company has installed a scrubber at its Mt. Storm Unit 3 Power Station. The scrubber began operation on October 31, 1994. The cost of this scrubber and related equipment was $147 million. The Company is presently conducting studies leading to the compliance plan for Phase II of the Clean Air Act, which may involve the installation of two additional scrubbers, the addition of nitrogen oxide (NOx) controls and other methods for compliance. The present estimate for the total 4 capital cost for compliance, assuming the installation of three scrubbers, nitrogen oxide controls and emission monitoring instrumentation, is $481 million (1992 dollars). Annual incremental compliance costs for operation, maintenance and fuel costs are estimated to be $128 million. These cost estimates may change upon completion of the study effort now underway. See CLEAN AIR ACT COMPLIANCE under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The Company continues to work with the West Virginia Office of Air Quality concerning opacity requirements applicable to the Mt. Storm Power Station. For additional information on ENVIRONMENTAL MATTERS, see Note O to FINANCIAL STATEMENTS. NUCLEAR All aspects of the operation and maintenance of the Company's nuclear power stations are regulated by the NRC. Operating licenses issued by the NRC are subject to revocation, suspension or modification, and operation of a nuclear unit may be suspended if the NRC determines that the public interest, health or safety so requires. From time to time, the NRC adopts new requirements for the operation and maintenance of nuclear facilities. In many cases, these new regulations require changes in the design, operation and maintenance of existing nuclear facilities. If the NRC adopts such requirements in the future, it could result in substantial increases in the cost of operating and maintaining the Company's nuclear generating units. WINTER PEAK Due to record cold weather on January 19, 1994, the Company reached a record winter peak of 14,877 Mw, which exceeded the prior record of 13,478 Mw that had been established one day earlier. Similar conditions were experienced by utilities within the Pennsylvania-New Jersey-Maryland Power Pool. 5 SOURCES OF POWER COMPANY GENERATING UNITS
TYPE SUMMER YEARS OF CAPABILITY NAME OF STATION, UNITS AND LOCATION INSTALLED FUEL MW Nuclear: Surry Units 1 & 2, Surry, Va..................................................... 1972-73 Nuclear 1,562 North Anna Units 1 & 2, Mineral, Va.............................................. 1978-80 Nuclear 1,787(a) Total nuclear stations........................................................ 3,349 Fossil Fuel: Steam: Bremo Units 3 & 4, Bremo Bluff, Va............................................ 1950-58 Coal 227 Chesterfield Units 3-6, Chester, Va........................................... 1952-69 Coal 1,250 Mt. Storm Units 1-3, Mt. Storm, W. Va......................................... 1965-73 Coal 1,596 Chesapeake Units 1-4, Chesapeake, Va.......................................... 1953-62 Coal 595 Possum Point Units 3 & 4, Dumfries, Va........................................ 1955-62 Coal 322 Yorktown Units 1 & 2, Yorktown, Va............................................ 1957-59 Coal 326 Possum Point Units 1, 2, & 5, Dumfries, Va.................................... 1948-75 Oil 929 Yorktown Unit 3, Yorktown, Va................................................. 1974 Oil & Gas 720 North Branch Unit 1, Bayard, W. Va............................................ 1994(b) Waste Coal 74 Combustion Turbines: 35 units (8 locations)........................................................... 1967-90 Oil & Gas 1,019 Combined Cycle: Chesterfield Units 7 & 8, Chester, Va............................................ 1990-92 Oil & Gas 397 Total fossil stations......................................................... 7,455 Hydroelectric: Gaston Units 1-4, Roanoke Rapids, N.C............................................ 1963 Conventional 225 Roanoke Rapids Units 1-4, Roanoke Rapids, N.C.................................... 1955 Conventional 96 Other............................................................................ 1930-87 Conventional 3 Bath County Units 1-6, Warm Springs, Va.......................................... 1985 Pumped Storage 1,260(c) Total hydro stations.......................................................... 1,584 Total Company generating unit capability...................................... 12,388 NET UTILITY PURCHASES.............................................................. 830 NON-UTILITY GENERATION............................................................. 3,244 Total Capability.............................................................. 16,462
(a) Includes an undivided interest of 11.6 percent (207 Mw) owned by Old Dominion Electric Cooperative (ODEC). (b) On December 30, 1994, the Company acquired the North Branch 80 Mw (nominal rating) waste coal power station located in Bayard, West Virginia in Grant County. (c) Reflects the Company's 60 percent undivided ownership interest in the 2,100 Mw station. A 40 percent undivided interest in the facility is owned by Allegheny Generating Company, a subsidiary of Allegheny Power System, Inc. (APS). The Company's highest one-hour integrated service area summer peak demand was 13,366 Mw on July 29, 1993, and the highest one-hour integrated winter peak demand was 14,877 Mw on January 19, 1994. SOURCES OF ENERGY USED AND FUEL COSTS For information as to energy supply mix and the average fuel cost of energy supply, see RESULTS OF OPERATIONS under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. NUCLEAR OPERATIONS AND FUEL SUPPLY In 1994, the Company's four nuclear units achieved a combined capacity factor of 86.7 percent. The North Anna Unit 2 steam generator replacement project is scheduled to begin at the end of the first quarter of 1995 at a total estimated Company cost of $110 million. 6 The Company utilizes both long-term contracts and spot purchases to support its needs for nuclear fuel. Virginia Power's nuclear fuel supply and related services are expected to be adequate to support current and planned nuclear generation requirements. The Company continually evaluates worldwide market conditions in order to obtain an adequate nuclear fuel supply. Current agreements, inventories and market availability should support planned fuel cycles throughout the remainder of the 1990s. On-site spent nuclear fuel storage at the Surry Power Station is adequate for the Company's needs through 1998 when, in accordance with the Nuclear Waste Policy Act, the DOE is to begin acceptance of spent fuel for disposal. Should acceptance be delayed, incremental dry storage facilities will be added under the existing storage license. North Anna Power Station will require an interim spent fuel storage facility in the late 1990's and the Company plans to submit a license application to the NRC in 1995 for such a facility at North Anna. For details regarding nuclear insurance and certain related contingent liabilities as well as a NRC rule that requires proceeds from certain insurance policies to be used first to pay stabilization and decontamination expenses, see Note C to FINANCIAL STATEMENTS. FOSSIL FUEL SUPPLY The Company's fossil fuel mix consists of coal, oil and natural gas. In 1994, Virginia Power consumed approximately 10.0 million tons of coal. As with nuclear fuel, the Company utilizes both long-term contracts and spot purchases to support its needs. The Company presently anticipates that sufficient coal supplies at reasonable prices will be available for the remainder of the 1990s. Current projections for an adequate supply of oil remain favorable, barring unusual international events or extreme weather conditions which could affect both price and supply. The Company uses natural gas as needed throughout the year for two combined cycle units and at several combustion turbine units. For winter usage at the combined cycle sites, gas is purchased and stored during the summer and fall and consumed during the colder months when gas supplies are not available at favorable prices. The Company has firm transportation contracts for the delivery of gas to the combined cycle units. Current projections indicate gas supplies will be available for the next several years. PURCHASES AND SALES OF POWER Virginia Power relies on purchases of power to meet a portion of its capacity requirements. The Company also makes economy purchases of power from other utility systems when it is available at a cost lower than the Company's own generation costs. Under contracts effective January 1, 1985, Virginia Power agreed to purchase 400 Mw of electricity annually through 1999 from Hoosier Energy Rural Electric Cooperative, Inc. (Hoosier), and agreed to purchase 500 Mw of electricity annually during 1987-99 from certain operating subsidiaries of American Electric Power Company, Inc. (AEP). On November 26, 1991, the Company and ODEC signed an agreement whereby the Company will provide ODEC 300 Mw of firm capacity and associated energy from January 1, 1993, until the commercial operation of Clover Unit 1 (currently scheduled for April 1995) or December 31, 1995, whichever occurs first. The Company will then provide 100 Mw of firm capacity and associated energy from the commercial operation of Clover Unit 1 until the commercial operation of Clover Unit 2 (currently scheduled for April 1996) or December 31, 1996, whichever occurs first. The Company has a diversity exchange agreement with APS under which APS delivers 200 Mw to Virginia Power in the summer and Virginia Power delivers 200 Mw to APS in the winter. On June 28, 1994, FERC accepted a Power Sales Tariff filed by the Company on March 8, 1994 and revised on May 27, 1994. This tariff allows the Company to resell the 400 Mw Hoosier allotment to other eligible purchasers and also allows the Company to sell system and emergency power. Virginia Power also has 75 non-utility power purchase contracts with a combined dependable summer capacity of 3,506 Mw. Of this amount, 3,244 Mw were operational at the end of 1994 with the balance scheduled to come on-line through 1997 (see NON-UTILITY GENERATION under FUTURE SOURCES OF POWER and Note O to FINANCIAL STATEMENTS). INTERCONNECTIONS The Company maintains major interconnections with Carolina Power and Light Company, AEP, APS and the utilities in the Pennsylvania-New Jersey-Maryland Power Pool. Through this major transmission network, the Company has arrangements with these utilities for coordinated planning, operation, emergency assistance and exchanges of capacity and energy. 7 On March 23, 1990, the Company and Appalachian Power Company (Apco) (an operating unit of AEP) announced an agreement to increase the ability to exchange electricity between the two companies through the construction of major transmission facilities. The proposed construction will consist of 212 miles of new transmission lines and related substation improvements. The transmission additions will include 116 miles of 765 Kv line to be constructed by Apco and 102 miles of 500 Kv line to be constructed by the Company. Completion of the project, expected to be in service in the year 2000, will take three to four years after all final regulatory approvals have been obtained. A Hearing Examiner of the Virginia Commission has issued reports dated December 2, 1993 and January 24, 1994, recommending Commission approval of the Apco and Company lines, respectively, and both applications are before the Commission for final decision. About 79 miles of the Apco line would be located in West Virginia where regulatory approval must also be obtained. The Company has stated that it would not build its 500 Kv line unless Apco is authorized to build its 765 Kv line and unless certain other regional transmission facilities are constructed or the Company's contractual rights to use the regional transmission network are amended. FUTURE SOURCES OF POWER The Company presently anticipates that system load growth will require approximately 1,100 Mw of additional capacity during the 1990s. The Company has and will pursue capacity acquisition plans to provide that capacity and maintain a high degree of service reliability. This capacity may be built, owned and operated by others and sold to the Company under a competitive bid process pursuant to Commission rules or may be built by the Company if it determines it can build capacity at a lower overall cost. The Company also pursues conservation and demand-side management (see CONSERVATION AND LOAD MANAGEMENT below and CAPITAL REQUIREMENTS under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS). In May 1990, the Company entered into an agreement with ODEC, under which the Company purchased a 50 percent undivided ownership interest in a 782 Mw coal-fired power station to be constructed near Clover, Virginia in Halifax County. The Company will operate the Clover Power Station after it is completed. The cost of the Company's 50 percent ownership interest is expected to be approximately $533 million. The project is on schedule and the Company's share of costs incurred through December 31, 1994 amounted to $449.8 million. Construction on Unit 1 is presently 98% complete and construction on Unit 2 is 54% complete. In Virginia Power's proceeding seeking approval of the Virginia Commission for a 75 mile 500 Kv transmission line from the Clover Power Station to the Carson Substation in Dinwiddie County, Virginia, the Commission approved the line in its Order Granting Application on May 11, 1994. A protestant group has appealed that Order to the Virginia Supreme Court. Initial briefs of all parties have been filed. Oral argument is expected to be scheduled during the first quarter of 1995 and a decision of the Court is likely before mid-1995. The Company's continuing program to meet future capacity requirements is summarized in the following table: COMPANY OWNED GENERATION
SUMMER CAPABILITY EXPECTED NAME OF UNITS MW IN-SERVICE DATE Clover Power Station: Unit 1 391* April 1995 Unit 2 391* April 1996
* Includes the 50 percent undivided ownership interest of ODEC. See Note F to FINANCIAL STATEMENTS. 8 NON-UTILITY GENERATION
NUMBER OF PROJECTS MW Projects Operational 65 3,244 Projects Financed 3 241 Unfinanced Projects 7 21 Total Contracts 75 3,506
COMPETITION Competition is playing an increasingly important role in the Company's business both in terms of source of power supply available to the Company and alternative choices for customers meeting their energy needs. Both forms of competition have increased as a result of changing federal and state governmental regulations, technological developments, rising costs of constructing generating facilities and availability of alternative energy sources. The creation of exempt wholesale generators by the Energy Act and their existence in the market for electric sales may have an impact on the Company's plans for the construction or purchase of electric capacity and energy. In addition, the Energy Act gives FERC broad power to require utilities to provide transmission access to others. Exempt wholesale generators and other power suppliers may seek, and FERC may require, access to the transmission systems of investor-owned utilities, including the Company's system. Several of the Company's industrial customers are seeking means of reducing their expenses for power through self-generation and other alternatives. The Company is having discussions with these customers and has proposed a regulatory initiative in Virginia that would enable it to provide on-site generation for such customers (see VIRGINIA under RATES). The Company has undertaken cost-cutting measures to maintain its position as a low-cost producer of electricity and has pursued a strategic planning initiative, called Vision 2000, to encourage innovative approaches to serving traditional markets and to prepare appropriate methods by which to serve future markets. In furtherance of these initiatives, the Company has established its nuclear and fossil and hydroelectric operations as separate business units, has proposed innovative pricing arrangements for incremental industrial loads in Virginia and North Carolina, has executed long term contracts with key wholesale customers and intends to provide an array of energy services to its customers. Potential competition also exists for the Company's sales to its cooperative and municipal customers. Virginia Power entered into discussions in early 1993 with the City of Falls Church, Virginia, where it has approximately 4,100 customers, for the renewal of its franchise that expired on March 26, 1993. Before agreement on a new franchise, the City announced on October 12, 1994, that it would pursue the establishment of a municipal electric system or a municipal purchasing agent and passed an ordinance purporting to extend the Company's franchise until March 26, 1997. The City issued an "Informal Request for Power Supply Proposal" to other electric suppliers on October 13, 1994 to determine the interest in providing power to the City. On January 11, 1995, the City sent to the Company a formal Request for Transmission Service pursuant to Sections 211(a) and 213(a) of the Federal Power Act. The Company, consistent with the State and Federal law, will still attempt to negotiate a new long term franchise with the City while responding as required to the City's request for transmission services. See COMPETITION under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. CONSERVATION AND LOAD MANAGEMENT The Company is committed to integrated resource planning and has developed a detailed analysis procedure in which effective demand-side and supply-side options are both considered in order to determine the least cost method to satisfy the customers' needs. Demand-side programs are selected annually at Virginia Power through an integrated resource planning process which directly compares the stream of costs and benefits from supply-side and demand-side options. This process ensures the ultimate selection of a demand-side package which reduces the need for additional capacity while efficiently using the Company's existing generation facilities. ITEM 2. PROPERTIES The Company owns its principal properties in fee (except as indicated below), subject to defects and encumbrances that do not interfere materially with their use. Substantially all of its property is subject to the lien of a mortgage securing its First 9 and Refunding Mortgage Bonds. Right-of-way grants from the apparent owners of real estate have been obtained for most electric lines, but underlying titles have not been examined except for transmission lines of 69 Kv or more. Where rights of way have not been obtained, they could be acquired from private owners by condemnation if necessary. Many electric lines are on publicly owned property as to which permission for use is generally revocable. Portions of the Company's transmission lines cross national parks and forests under permits entitling the federal government to use, at specified charges, surplus capacity in the line if any exists. The Company leases certain buildings and equipment. See Note H to FINANCIAL STATEMENTS. See COMPANY GENERATING UNITS under SOURCES OF POWER under Item 1. BUSINESS. ITEM 3. LEGAL PROCEEDINGS From time to time, the Company may be in violation of or in default under orders, statutes, rules or regulations relating to protection of the environment, compliance plans imposed upon or agreed to by the Company or permits issued by various local, state and federal agencies for the construction or operation of facilities. There may be pending from time to time administrative proceedings involving violations of state or federal environmental regulations that the Company believes are not material with respect to it and for which its aggregate liability for fines or penalties will not exceed $100,000. There are no material agency enforcement actions or citizen suits pending or, to the Company's present knowledge, threatened against the Company. Virginia Power is involved in an arbitration with Smith Cogeneration of Virginia, Inc. (SCV) before the Virginia Commission concerning the terms of the purchase of power from two 158 megawatt generating units to be developed by SCV. The arbitrator has submitted his Report to the Commission recommending that the parties enter into a contract containing terms that would require Virginia Power to pay what it considers to be excessive amounts for the power to be purchased. The parities have been given until March 31, 1995 to file comments on the Arbitrator's Report. Virginia Power and Doswell Limited Partnership (Doswell) have been unable to agree on the calculation of a Fixed Fuel Transportation Charge to be paid to Doswell under a purchased power contract. Doswell filed suit in the Circuit Court of the City of Richmond alleging breach of contract and actual and constructive fraud and seeking damages of not less than $75 million. The issues of actual and constructive fraud were dismissed from the case, with prejudice, leaving only the contract claim, which reduced alleged damages to approximately $19 million. On March 2, 1995, the Court announced its verdict in favor of Virginia Power. On February 23, 1994, Virginia Power filed with the Virginia Commission a Petition for Declaratory Judgment seeking a declaration that an arrangement proposed by E.I. DuPont de Nemours & Company (DuPont) and LG&E Power, Inc. (LG&E) for a partnership between those two companies to furnish energy services to DuPont in Virginia Power's service territory is illegal under Virginia law. DuPont filed a Motion to dismiss for lack of jurisdiction, to which Virginia Power responded. Prior to any action by the Commission, DuPont and LG&E announced that they had terminated their negotiations, and the Commission has directed the parties to comment on whether the proceeding should be dismissed. On January 13, 1995, Virginia Power filed its response stating that the case should not be dismissed in the absence of a clear statement on the record by both DuPont and LG&E that each has abandoned the power partnering concept in Virginia Power's service territory. DuPont renewed its Motion to Dismiss and the Commission entered its dismissal order on January 24, 1995. A dispute over corporate governance issues between Dominion Resources and Virginia Power arose in 1994. On June 17, 1994, Dominion Resources and Virginia Power received an order from the Virginia Commission (the 1994 Order) that, among other things, initiated an investigation into the affiliate relationships and corporate governance issues between Dominion Resources and Virginia Power (the First Proceeding). The text of the 1994 Order was set forth in the Company's Current Report on Form 8-K of June 17, 1994. Between June and August 1994, Dominion Resources and Virginia Power made various filings with the Commission, and the Commission issued several procedural orders, in connection with the First Proceeding. A description of those filings and orders is set forth in the Company's Quarterly Report on Form 10-Q for the period ending June 30, 1994. On August 15, 1994, Dominion Resources, Virginia Power and their respective directors entered into a Settlement Agreement resolving certain of the disputed corporate governance issues. The terms of that settlement are summarized in the Company's Current Report on Form 8-K of August 17, 1994. Pursuant to the Settlement Agreement, Dominion Resources and Virginia Power filed a Joint Motion to Dismiss certain of the corporate governance issues from the First Proceeding. The Commission denied that Motion on August 24, 1994, continued the First Proceeding, and instituted a new proceeding (the Second Proceeding) into the holding company structure and the relationship between Dominion Resources and Virginia 10 Power. The Commission stated that the Second Proceeding would be an "investigation directed not at averting a crisis or penalizing past conduct, but toward protecting the public interest in the future." The Commission directed its Staff to conduct an investigation and file an interim report on or before December 1, 1994. On December 1, 1994, the Staff of the Virginia Commission and its consultants filed an Interim Report in the Second Proceeding. That Report is included in the Company's Current Report on Form 8-K of December 5, 1994. The Interim Report made numerous recommendations for Commission involvement in matters of corporate governance, corporate structure, affiliate service arrangements, and operating relationships between Dominion Resources and Virginia Power, and suggested certain financial constraints on Dominion Resources and new regulatory authority for the Commission. Many of these suggestions were far-reaching. On December 21, 1994, Dominion Resources and Virginia Power filed a Joint Response to the Interim Report, in which they accepted some of the recommendations and urged that the corporate governance structure established by the Settlement Agreement continue while they considered the other recommendations in the course of a strategic planning effort by Dominion Resources. On January 23, 1995, the Staff of the Virginia Commission issued a report in the Second Proceeding on its investigation of a coal transportation contract between the Company and CSX Transportation. The Staff's report concluded that Dominion Resources improperly pressured Virginia Power to renegotiate the contract, and recommended that approximately $11 million ($8.3 million Virginia jurisdictional) of the coal transportation costs incurred under the contract from 1991 through May 31, 1994 be disallowed in determining Virginia Power's rates. The Staff's report further recommended that any future transportation costs that it identified as excess be disallowed over the remainder of the contract, which expires on May 31, 2000. The Company has recorded a regulatory liability of $10.5 million at December 31, 1994. The Company currently estimates that the total amount called into question by the Virginia Commission Staff report is a net present value of $60 million ($100 million over the life of the contract). On February 1, 1995, without admitting any imprudence, fault or liability, and believing that their relationship with the Commission would be enhanced, Dominion Resources and the Company filed a motion offering to refund to the Company's customers $8.3 million in settlement of these issues regarding transportation rates. During the 1995 session of the Virginia General Assembly, the Virginia Commission caused legislation to be introduced that addressed the Commission's authority to intervene in disputes involving public utilities owned by separate holding companies. That legislation was opposed by Dominion Resources. On February 20, 1995, the proposed legislation was withdrawn and Dominion Resources, Virginia Power and the Virginia Commission Staff consented to an order that is included in Virginia Power's Current Report on Form 8-K of February 21, 1995. Under this order, which will be effective until July 2, 1996, Dominion Resources must obtain the Commission's approval before taking steps such as removing Virginia Power's board members or officers or changing Virginia Power's articles of incorporation or by-laws. Although the order imposes for a period of time significant restrictions on the ability of Dominion Resources to select the Board and management of its subsidiary, Dominion Resources and Virginia Power agreed to the order in the interest of enhancing relations with the Virginia Commission and achieving the purposes of the Settlement Agreement. Disagreements between the companies have arisen from time to time since the Settlement Agreement was executed. On February 28, 1995, upon recommendation of a Joint Committee created under the Settlement Agreement, the Boards of Dominion Resources and Virginia Power took further action to enhance cooperation between the two companies and their relationship with the Virginia Commission. Among other things, the Boards expanded the authority of the Joint Committee to act for the Boards on issues presented to it by the chief executives of the companies. Each Board directed corporate officials and employees of its company to cooperate fully with the Joint Committee in resolution of issues acted on by the Committee and to support actions taken by the Committee. In connection with these initiatives, the chief executive officers of both companies made known their intentions to retire in July 1996 and the Boards directed the development of executive succession plans for each company. Also, the Dominion Resources Board received the resignations of directors Bruce C. Gottwald and John W. Snow and the Virginia Power Board received the resignations of directors William W. Berry and Frank S. Royal, and both Boards voted to reduce their size by two members. At this time, Virginia Power is unable to predict the ultimate resolution of these matters or their effect on the Company. 11 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS All of the Company's Common Stock is owned by Dominion Resources. During 1994 and 1993, the Company paid quarterly cash dividends on its Common Stock as follows:
1ST 2ND 3RD 4TH (MILLIONS) 1994................................ $97.7 $98.2 $99.0 $100.6 1993................................ $93.3 $93.9 $94.5 $ 97.2
ITEM 6. SELECTED FINANCIAL DATA
1994 1993 1992 1991 1990 (MILLIONS, EXCEPT PERCENTAGES) Operating revenues........................ $4,170.8 $4,187.3 $3,679.6 $3,688.1 $3,461.5 Operating income.......................... 731.4 813.4 761.6 816.8 805.8 Income before cumulative effect of a change in accounting principle.......... 447.1 509.0 455.2 487.4 450.3 Cumulative effect of a change in accounting principle.................... 14.3 Net income................................ 447.1 509.0 469.5 487.4 450.3 Balance available for Common Stock........ 404.9 466.9 423.8 435.9 392.2 Total assets.............................. 11,647.9 11,520.5 11,316.7 10,205.0 10,105.4 Total net utility plant................... 9,623.4 9,459.0 9,254.7 9,064.6 8,830.8 Long-term debt, noncurrent capital lease obligations and preferred stock subject to mandatory redemption.................... 4,157.5 4,151.1 4,089.5 4,119.9 4,146.8 Utility plant expenditures (including nuclear fuel)................ 660.9 712.8 716.5 727.8 803.4 Capitalization ratios (percent): Debt.................................... 46.7 46.4 46.3 47.4 49.1 Preferred stock......................... 9.0 9.2 9.7 9.0 9.4 Common equity........................... 44.3 44.4 44.0 43.6 41.5 Embedded cost (percent): Long-term debt.......................... 7.65 7.67 7.86 8.43 8.80 Preferred stock......................... 5.47 4.88 5.38 6.54 7.40 Weighted average........................ 7.29 7.18 7.42 8.11 8.57
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES Cash flow from operating activities has accounted for, on average, 74 percent of the Company's cash requirements over the past three years. Net cash provided by operating activities decreased by $4.6 million in 1994 as compared to 1993, primarily as a result of a number of factors resulting from normal operations, partially offset by a rate refund of $129.2 million in 1994. 12 Net cash provided by operating activities decreased $152.1 million in 1993 as compared to 1992, primarily as a result of the rate refund of $188.9 million in 1993 offset in part by the recovery of previously deferred capacity expenses. Cash from (to) financing activities was as follows:
1994 1993 1992 (MILLIONS) Common stock................................................ $ 75.0 $ 50.0 $ 75.0 Preferred stock............................................. 150.0 240.0 Mortgage bonds.............................................. 325.0 1,035.0 1,125.0 Medium-term notes........................................... 100.0 60.0 Pollution control securities................................ 39.0 56.0 Repayment of long-term debt and preferred stock............. (334.3) (1,072.1) (1,315.0) Dividends................................................... (438.2) (421.1) (416.1) Other....................................................... (50.8) (89.8) (154.3) Total.................................................. $ (284.3) $ (348.0) $ (329.4)
The Company sold $325.0 million of First and Refunding Mortgage Bonds in 1994. With a portion of the proceeds, the Company refinanced $119.0 million of its higher-cost debt. The remainder of the proceeds was used to meet a portion of the Company's capital requirements. In 1994, the Company also issued $100 million of unsecured Medium-Term Notes with annual interest rates ranging from 6.15% to 7.27%, the proceeds of which were used to meet a portion of the Company's capital requirements. The Company also issued $39 million of variable and fixed rate Pollution Control Securities in 1994 to refinance $39 million of higher-cost Pollution Control Securities. In 1994, the Company issued to Dominion Resources $75 million of Common Stock. During the year, the Company retired $166.5 million of securities through mandatory debt maturities and sinking fund requirements and repurchased $7.5 million of its debt securities and $2.3 million of preferred stock. Proceeds from the sale of commercial paper are primarily used to finance working capital for operations. Borrowings under the Company's commercial paper program are limited to $200 million outstanding at any one time. At December 31, 1994, no amount was outstanding under this program. Cash from (used in) investing activities was as follows:
1994 1993 1992 (MILLIONS) Utility plant expenditures.................................. $ (580.9) $ (644.9) $ (662.2) Nuclear fuel................................................ (80.0) (67.9) (54.3) Nuclear decommissioning contributions....................... (24.5) (24.4) (24.3) Pollution control project funds............................. 6.9 32.7 (55.3) Sale of accounts receivable................................. (40.0) Other....................................................... (8.3) (13.9) (5.5) Total..................................................... $ (726.8) $ (718.4) $ (801.6)
Investing activities in 1994 resulted in a net cash outflow of $726.8 million primarily due to $580.9 million of construction expenditures and $80 million of nuclear fuel expenditures. Of the construction expenditures, approximately $67.3 million was spent on new generating facilities, $173.8 million on other production projects, and $291.3 million on transmission and distribution projects. CAPITAL REQUIREMENTS The Company presently anticipates that kilowatt-hour sales will grow approximately 2.1 percent a year through 2014. Capacity needed to support this growth will be provided through a combination of Company-constructed generating units, purchases from non-utility generators and other utility generators. Each of these options plays an important role in the Company's overall plan to meet capacity needs. The Company's construction and nuclear fuel expenditures (excluding AFC), during 1995, 1996 and 1997 are expected to aggregate $673.2 million, $600.3 million and $615.2 million, respectively. Construction continues on the 782 Mw coal- 13 fired power station near Clover, Virginia, of which the Company has a 50 percent undivided ownership interest. The Company's share of the cost of the construction is approximately $533.0 million of which $449.8 million had been incurred as of December 31, 1994. The expected in-service dates for Clover Units 1 and 2 are April 1995 and April 1996, respectively. After 1996, no base load generation is expected to be needed until the middle of the next decade. From 1999 until 2005, the Company will need to add only peaking units to meet anticipated demand. The Company will require $312.2 million to meet long-term debt maturities in 1995. The Company presently estimates that, for 1995, 82 percent of its construction expenditures, including nuclear fuel expenditures, will be met through cash flow from operations and the balance, including other capital requirements, will be obtained through a combination of sales of securities and short-term borrowings. RESULTS OF OPERATIONS The following is a discussion of results of operations for the years ended 1994 as compared to 1993, and 1993 as compared to 1992. 1994 COMPARED TO 1993 OPERATING REVENUES changed principally due to the following:
INCREASE (DECREASE) FROM PRIOR YEAR 1994 1993 (MILLIONS) Kwh sales........................... $ 22.5 $ 333.5 Change in base rates................ (35.0) 230.7 Fuel cost recovery.................. (7.9) (55.2) Other, net.......................... 3.9 (1.3) Total............................. $(16.5) $ 507.7
As detailed in the chart above, the decrease in revenues is primarily due to a decrease in base revenues. Base revenues were lower in 1994 primarily as a result of additional revenue reserves established during the year. During 1994, the Company had 46,741 new connections to its system compared to 43,014 and 39,807 in 1993 and 1992, respectively. Kilowatt-hour sales changed as follows:
INCREASE (DECREASE) FROM PRIOR YEAR 1994 1993 Residential......................... (1.0)% 9.3% Commercial.......................... 0.8 4.7 Industrial.......................... 5.4 4.5 Public authorities.................. (0.3) 5.3 Total retail sales.................. 0.7 6.4 Resale.............................. 4.1 47.3 Total sales......................... 1.1 9.6
The increase in kilowatt-hour sales in 1994 as compared to 1993 reflects the extreme weather experienced in January 1994, partially offset by lower sales during the second half of 1994, due to milder weather. The number of actual cooling degree days in 1994 was 5.7 percent above the normal number of cooling degree days and the number of actual heating degree days was 3.8 percent below the number of normal heating degree days. The increase in kilowatt-hour sales in 1993 as compared to 1992 reflects the warmer than normal summer weather in 1993 as compared to the moderate weather in 1992. The number of actual cooling degree days in 1993 was 10.0 percent above the number of normal cooling degree days and the number of actual heating degree days was 1.2 percent above the number of normal heating degree days. The increase in sales for resale in 1993 as compared to 1992 was primarily due to the sale of firm capacity and associated energy to ODEC. Under the terms of the agreement signed November 26, 1991, the Company is committed to sell up to 300 Mw of capacity to ODEC through the commercial operation date of Clover Power Station. 14 The average fuel cost of system energy output is shown below:
MILLS PER KILOWATT-HOUR 1994 1993 1992 Nuclear............................. 4.89 4.60 4.67 Coal................................ 14.61 14.69 14.87 Oil................................. 23.00 26.55 26.61 Purchased power, net................ 23.99 24.54 25.94 Other............................... 25.46 24.35 24.45 Average fuel cost................... 14.02 14.42 13.84
System energy output is shown below:
ESTIMATED ACTUAL 1995 1994 1993 1992 Nuclear(*).......................... 28% 34 % 31 % 35 % Coal................................ 42 36 39 41 Oil................................. 1 3 3 2 Purchased power, net................ 26 23 23 19 Other............................... 3 4 4 3 100% 100 % 100 % 100 %
(*) Excludes ODEC's 11.6 percent ownership interest in the North Anna Power Station (see Note F to FINANCIAL STATEMENTS). OPERATION EXPENSES-OTHER increased as compared to 1993 primarily as a result of recognition of costs associated with the Early Retirement and Voluntary Separation Programs offered by the Company in 1994. INCOME TAXES-OPERATING decreased as compared to 1993 primarily as a result of decreased pretax book income. INTEREST CHARGES-OTHER decreased in 1994 primarily as a result of a reduction of $10.6 million in the interest accrued for prior years on certain tax obligations. 1993 COMPARED TO 1992 FUEL, NET increased as compared to 1992 as a result of higher sales in 1993 and a decrease in nuclear generation due to the scheduled outages in 1993. The increased sales together with the reduced generation from the nuclear units increased the use of purchased power and resulted in higher overall fuel costs. PURCHASED POWER CAPACITY, NET resulted in an increase in 1993. In 1992, the Company implemented deferral accounting for certain capacity expenses. The increase in expense in 1993 primarily reflects the recovery of expenses deferred in 1992. OPERATION EXPENSES, OTHER increased as compared to 1992 primarily as a result of the increased expenses associated with accrual of other postretirement benefits due to the implementation of Statement of Financial Accounting Standards (SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other than Pensions" effective January 1, 1993. INCOME TAXES-OPERATING increased as compared to 1992 primarily as a result of increased pretax book income and an increase in the federal income tax rate from 34 percent to 35 percent. OTHER INCOME AND OTHER INTEREST CHARGES decreased as compared to 1992 primarily as a result of a reclassification of the imputed interest on the nuclear decommissioning obligation which was previously included in Other Interest Charges ($14.8 million) and is now included in OTHER INCOME, as approved by FERC. This increase was offset in part by a $3.1 million decrease in expenses associated with the sale of accounts receivable. CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE In 1992, the Company adopted the provisions of Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." The Company reported the implementation of the standard as a change in accounting principle with the cumulative effect on prior years of $14.3 million reported in 1992 earnings. The adoption of SFAS No. 109 15 in 1992 increased deferred income tax liabilities by $459 million and resulted in the establishment of a net regulatory asset of $459 million. For additional information, see Note A to FINANCIAL STATEMENTS. FUTURE ISSUES UTILITY RATE REGULATION Regulatory policy continues to be of fundamental importance to the Company and to its financial performance. Recently and in the near-term future, the costs of purchased capacity constitute the largest category of increased costs requiring rate relief. The Virginia Commission has authorized rates providing for the current recovery of the ongoing level of capacity payments. Moreover, the Virginia Commission has established and reaffirmed deferral accounting that is intended to ensure dollar for dollar recovery of reasonably incurred capacity costs. For additional information on the current rate proceedings, see RATES under Item 1. BUSINESS. ENVIRONMENTAL MATTERS The Company is subject to rising costs resulting from a steadily increasing number of federal, state and local laws and regulations designed to protect human health and the environment. These laws and regulations affect future planning and existing operations. They can result in increased capital, operating and other costs as a result of remediation, containment and monitoring obligations of the Company. These costs have been historically recovered through the ratemaking process; however, should material costs be incurred and not recovered through rates, the Company's results of operations and financial condition could be adversely impacted. WATER QUALITY COMPLIANCE On March 30, 1992, the Virginia Water Control Board adopted water quality standards for toxic pollutants pursuant to the Clean Water Act. The standards became effective on April 20, 1992 and will be applicable to the Company as Virginia Pollution Discharge Elimination System Permits are reissued. The Company is studying the potential impact of the standards and cannot presently determine whether or to what extent changes to facilities or operating procedures might ultimately be required but incremental compliance costs could be significant. ENVIRONMENTAL PROTECTION AND MONITORING EXPENDITURES The Company incurred $67.3 million, $72.2 million and $65.2 million (including depreciation) during 1994, 1993 and 1992, respectively, in connection with the use of environmental protection facilities and expects these expenses to be approximately $64.3 million in 1995. In addition, capital expenditures to limit or monitor hazardous substances were $4.0 million, $3.6 million and $6.6 million for 1994, 1993 and 1992, respectively. The amount estimated for 1995 for these expenditures is $33.1 million. CLEAN AIR ACT COMPLIANCE The Air Act, as amended in 1990, requires the Company to reduce its emissions of sulfur dioxide and nitrogen oxides. Beginning in 1995, the sulfur dioxide reduction program is based on the issuance of a limited number of sulfur dioxide emission allowances, each of which may be used as a permit to emit one ton of sulfur dioxide into the atmosphere or may be sold to someone else. The program is administered by the EPA. The Company is assessing the economic reasonableness of constructing two additional scrubbers at its Mt. Storm Power Station or acquiring allowances as a means of maintaining compliance with the Air Act's standards. For additional information on the Clean Air Act, see REGULATION under Item 1. BUSINESS. 16 ELECTROMAGNETIC FIELDS The possibility that exposure to electromagnetic fields emanating from power lines, household appliances and other electric sources may result in adverse health effects has been a subject of increased public, governmental and media attention. A considerable amount of scientific research has been conducted on this topic without definitive results. Research is continuing to resolve scientific uncertainties. It is too soon to tell what, if any, impact these actions may have on the Company's financial condition. NUCLEAR OPERATIONS In 1994, the Company's four nuclear units operated at a combined capacity factor of 86.7 percent, reflecting a record 31 day refueling outage at North Anna Unit 1, a 63 day refueling/ten-year in-service inspection outage at Surry Unit 1, and two scheduled steam generator chemical cleaning outages at Surry Units 1 and 2, which took 27 and 21 days respectively. Nuclear refueling outages typically occur every eighteen months and last approximately sixty days. The Company's goal is to reduce refueling outages from an average of sixty days to forty-eight days. When nuclear units are refueled, the Company replaces the power from nuclear generation with other more expensive sources. A reduction in the length of an outage should result in increased availability of low-cost nuclear generation, thereby lowering expenses. Three refueling outages are currently scheduled in 1995. The North Anna Unit 2 outage will include steam generator replacement. The Surry Unit 2 outage will include a ten year in-service inspection while the Surry Unit 1 outage will be for normal refueling. See NUCLEAR OPERATIONS AND FUEL SUPPLY, Sources of Energy Used and Fuel Costs under Item 1. BUSINESS. Stress corrosion cracking has occurred in steam generators of a certain design, including those at the Surry and North Anna Power Stations. The steam generators at Surry Units 1 and 2 were replaced in 1981 and 1979, respectively. The replacement of the North Anna Unit 1 steam generators was completed in 1993 at a cost of $106 million. Replacement of the North Anna Unit 2 steam generators is scheduled for 1995 at a total estimated Company cost of $110 million. Costs associated with the steam generator replacements at Surry are being recovered through rates. Costs associated with the steam generator replacements at North Anna Unit 1 and Unit 2 are expected to be recovered through rates. The NRC has proposed revisions to the nuclear power plant license renewal rules issued in 1991. The Company intends to work with industry groups on life extension programs, and comment on the proposed rulemaking. In addition to improving nuclear unit productivity and efficiency, the Company has completed engineering analyses and evaluations to support uprating the capability of the units. The plant modifications have been completed at the North Anna facility, and the upgraded core improvement has resulted in a 4.2% increase in the gross electrical output for each of the units. A similar project has been initiated to uprate both Surry Units 1 and 2 in 1995. Analyses and evaluations to support the uprate have been completed and a license amendment is pending before the Nuclear Regulatory Commission. For information on nuclear decommissioning, see Note C to FINANCIAL STATEMENTS. CONSERVATION AND LOAD MANAGEMENT For information, see CONSERVATION AND LOAD MANAGEMENT under Item 1. BUSINESS. COMPETITION The Company will continue to be affected by the developing competitive market in wholesale power. Under the Energy Policy Act of 1992, any participant in the wholesale market can obtain a FERC order to provide transmission services, under certain conditions. FERC has completed an industry-wide formal inquiry aimed at reforming the pricing of transmission services. The Company was an active participant in that inquiry. FERC is also encouraging the development of regional transmission groups (RTGs) in which transmission-owning utilities and transmission users would jointly plan facilities and administer the provision of transmission services. It is too early to determine what effects reformed transmission pricing and the development of RTGs could have on the Company. At present, competition for retail customers is limited. It arises primarily from the ability of certain business customers to relocate among utility service territories, to substitute other energy sources for electric power and to generate their own electricity. The Energy Policy Act bans federal orders of transmission service to ultimate customers. Broader retail competition that would allow customers to choose among electric suppliers has been the subject of intense debate in federal and state 17 forums. If such competition were to develop, it would have the potential to shift costs among customer classes and to create significant transitional costs. Certain state actions that affect retail competition may be preempted by federal law. Potential competition also exists for the Company's sales to its cooperative and municipal customers. However, nearly all of this service is under contracts with multi-year notice provisions. To date, the Company has not experienced any material loss of load, revenues or net income due to competition for its customers. The Company believes it has a strong capability to meet future competition. For additional information on competition, see COMPETITION under Item 1. BUSINESS. In accordance with SFAS No. 71, "Accounting for the Effects of Certain Types of Regulation", the Company's financial statements reflect assets and costs based on current cost-based ratemaking regulations. Continued accounting under SFAS 71 requires that the following criteria be met: a) A utility's rates for regulated services provided to its customers are established by, or are subject to approval by, an independent third-party regulator; b) The regulated rates are designed to recover specific costs of providing the regulated services or products; and c) In view of the demand for the regulated services and the level of competition, direct and indirect, it is reasonable to assume that rates set at levels that will recover a utility's costs can be charged to and collected from customers. This criterion requires consideration of anticipated changes in levels of demand or competition during the recovery period for any capitalized costs. A utility's operations or portion of operations can cease to meet these criteria for various reasons, including a change in the method of regulation or a change in the competitive environment for regulated services. A utility whose operations or portion of operations cease to meet these criteria should discontinue application of SFAS 71 and write-off any regulatory assets and liabilities for those operations that no longer meet the requirements of SFAS 71. The Company's operations currently satisfy the SFAS 71 criteria. However, if events or circumstances should change so that those criteria are no longer satisfied, Management believes that a material adverse effect on the Company's results of operations and financial position may result. COMMITMENTS AND CONTINGENCIES A dispute over corporate governance issues between Dominion Resources and Virginia Power arose in 1994. In connection with that dispute, the Virginia Commission commenced proceedings investigating these and related issues. A Settlement Agreement was entered into by the two Companies and their respective Boards with respect to these matters in August 1994. The Settlement Agreement is also described in Item 3. LEGAL PROCEEDINGS. During the 1995 session of the Virginia General Assembly, the Virginia Commission caused legislation to be introduced that addressed the Commission's authority to intervene in disputes involving public utilities owned by separate holding companies. That legislation was opposed by Dominion Resources. On February 20, 1995, the proposed legislation was withdrawn and Dominion Resources, Virginia Power and the Virginia Commission Staff consented to an order that is included in Virginia Power's Current Report on Form 8-K of February 21, 1995. Under this order, which will be effective until July 2, 1996, Dominion Resources must obtain the Commission's approval before taking steps such as removing Virginia Power's board members or officers or changing Virginia Power's articles of incorporation or by-laws. Although the order imposes for a period of time significant restrictions on the ability of Dominion Resources to select the Board and management of its subsidiary, Dominion Resources and Virginia Power agreed to the order in the interest of enhancing relations with the Virginia Commission and achieving the purposes of the Settlement Agreement. Disagreements between the companies have arisen from time to time since the Settlement Agreement was executed. On February 28, 1995, upon recommendation of a Joint Committee created under the Settlement Agreement, the Boards of Dominion Resources and Virginia Power took further action to enhance cooperation between the two companies and their relationship with the Virginia Commission. Among other things, the Boards expanded the authority of the Joint Committee to act for the Boards on issues presented to it by the chief executives of the companies. Each Board directed corporate officials and employees of its company to cooperate fully with the Joint Committee in resolution of issues acted on by the Committee and to support actions taken by the Committee. In connection with these initiatives, the chief executive officers of both companies made known their intentions to retire in July 1996 and the Boards directed the development of executive succession plans for each company. Also, the Dominion Resources Board received the resignations of directors Bruce C. Gottwald and John W. Snow and the Virginia Power Board received the resignations of directors William W. Berry and Frank S. Royal, and both Boards voted to reduce their size by two members. At this time, Virginia Power is unable to predict the ultimate resolution of these matters or their effect on the Company. 18 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX
PAGE NO. Report of Management........................................................................................ 20 Report of Independent Auditors.............................................................................. 21 Statements of Income for the years ended December 31, 1994, 1993 and 1992................................... 22 Balance Sheets at December 31, 1994 and 1993................................................................ 23 Statements of Earnings Reinvested in Business for the years ended December 31, 1994, 1993 and 1992.......... 25 Statements of Cash Flows for the years ended December 31, 1994, 1993 and 1992............................... 26 Notes to Financial Statements............................................................................... 27
19 REPORT OF MANAGEMENT The Company's management is responsible for all information and representations contained in the Financial Statements and other sections of the Company's annual report on Form 10-K. The Financial Statements, which include amounts based on estimates and judgments of management, have been prepared in conformity with generally accepted accounting principles. Other financial information in the Form 10-K is consistent with that in the Financial Statements. Management maintains a system of internal accounting controls designed to provide reasonable assurance, at a reasonable cost, that the Company's assets are safeguarded against loss from unauthorized use or disposition and that transactions are executed and recorded in accordance with established procedures. Management recognizes the inherent limitations of any system of internal accounting control and, therefore cannot provide absolute assurance that the objectives of the established internal accounting controls will be met. This system includes written policies, an organizational structure designed to ensure appropriate segregation of responsibilities, careful selection and training of qualified personnel and internal audits. Management believes that during 1994 the system of internal control was adequate to accomplish the intended objective. The Financial Statements have been audited by Deloitte & Touche LLP, independent auditors, whose designation was approved by the Board of Directors. Their audits were conducted in accordance with generally accepted auditing standards and included a review of the Company's accounting systems, procedures and internal controls, and the performance of tests and other auditing procedures sufficient to provide reasonable assurance that the Financial Statements are not materially misleading and do not contain material errors. The Audit Committee of the Board of Directors, composed entirely of directors who are not officers or employees of the Company, meets periodically with the independent auditors, the internal auditors and management to discuss auditing, internal accounting control and financial reporting matters and to ensure that each is properly discharging its responsibilities. Both the independent auditors and the internal auditors periodically meet alone with the Audit Committee and have free access to the Committee at any time. Management recognizes its responsibility for fostering a strong ethical climate so that the Company's affairs are conducted according to the highest standards of personal and corporate conduct. This responsibility is characterized and reflected in the Company's Code of Ethics, which is distributed throughout the Company. The Code of Ethics addresses, among other things, the importance of ensuring open communication within the Company; potential conflicts of interest; compliance with all domestic and foreign laws, including those relating to financial disclosure; the confidentiality of proprietary information; and full disclosure of public information. VIRGINIA ELECTRIC AND POWER COMPANY J. T. Rhodes R. E. Rigsby President and Senior Vice President-Finance Chief Executive & Controller Officer
20 REPORT OF INDEPENDENT AUDITORS To the Board of Directors of Virginia Electric and Power Company: We have audited the accompanying balance sheets of Virginia Electric and Power Company (a wholly-owned subsidiary of Dominion Resources, Inc.) as of December 31, 1994 and 1993 and the related statements of income, earnings reinvested in business, and cash flows for each of the three years in the period ended December 31, 1994. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of Virginia Electric and Power Company at December 31, 1994 and 1993 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1994 in conformity with generally accepted accounting principles. The Company changed its methods of accounting for postretirement benefits other than pensions in 1993 (see Note M) and for accounting for income taxes in 1992 (see Note B) in order to conform with recently issued accounting standards. DELOITTE & TOUCHE LLP Richmond, Virginia February 6, 1995 21 VIRGINIA ELECTRIC AND POWER COMPANY STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 1994 1993 1992 (MILLIONS) Operating revenues................................................ $4,170.8 $4,187.3 $3,679.6 Operating expenses: Operation: Fuel, net.................................................... 973.0 959.5 917.9 Purchased power capacity, net................................ 669.4 646.1 348.8 Other........................................................ 577.4 525.7 477.7 Maintenance..................................................... 263.2 279.5 280.6 Depreciation and amortization................................... 446.3 426.8 399.9 Amortization of terminated construction project costs........... 34.4 36.1 37.7 Taxes -- Income................................................. 223.0 253.5 222.2 -- Other.................................................. 252.7 246.7 233.2 Total...................................................... 3,439.4 3,373.9 2,918.0 Operating income.................................................. 731.4 813.4 761.6 Other income...................................................... 10.9 11.4 19.3 Income before interest charges.................................... 742.3 824.8 780.9 Interest charges: Interest on long-term debt...................................... 291.9 300.2 300.9 Other........................................................... 7.5 19.1 29.5 Allowance for borrowed funds used during construction........... (4.2) (3.5) (4.7) Total...................................................... 295.2 315.8 325.7 Income before cumulative effect of a change in accounting principle....................................................... 447.1 509.0 455.2 Cumulative effect on prior years of changing method of accounting for income taxes................................................ 14.3 Net income........................................................ 447.1 509.0 469.5 Preferred dividends............................................... 42.2 42.1 45.7 Balance available for Common Stock................................ $ 404.9 $ 466.9 $ 423.8
The accompanying notes are an integral part of the financial statements. 22 VIRGINIA ELECTRIC AND POWER COMPANY BALANCE SHEETS ASSETS
AT DECEMBER 31, 1994 1993 (MILLIONS OF DOLLARS) UTILITY PLANT: Plant (includes plant under construction of $828.2 in 1994 and $913.1 in 1993).................................................................... $13,896.6 $13,376.1 Less accumulated depreciation............................................... 4,426.9 4,065.9 9,469.7 9,310.2 Nuclear fuel (less accumulated amortization of $663.5 in 1994 and $665.3 in 1993).................................................................... 153.7 148.8 Total net utility plant................................................ 9,623.4 9,459.0 INVESTMENTS: Nuclear decommissioning trust funds......................................... 260.9 226.4 Pollution control project funds............................................. 20.3 27.2 Other....................................................................... 21.1 21.5 Total net investments.................................................. 302.3 275.1 CURRENT ASSETS: Cash and cash equivalents................................................... 28.8 21.6 Customer accounts receivable (less allowance for doubtful accounts of $1.7 in 1994 and 1993)........................................................ 202.7 202.9 Accrued unbilled revenues................................................... 97.4 105.7 Materials and supplies at average cost or less: Plant and general........................................................ 186.7 182.0 Fossil fuel.............................................................. 122.9 121.0 Other....................................................................... 104.9 112.2 Total current assets................................................... 743.4 745.4 DEFERRED DEBITS AND OTHER ASSETS: Regulatory assets........................................................... 871.0 930.5 Unamortized debt issuance costs............................................. 22.8 23.7 Other....................................................................... 85.0 86.8 Total deferred debits and other assets................................. 978.8 1,041.0 Total assets........................................................... $11,647.9 $11,520.5
The accompanying notes are an integral part of the financial statements. 23 VIRGINIA ELECTRIC AND POWER COMPANY BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' EQUITY
AT DECEMBER 31, 1994 1993 (MILLIONS OF DOLLARS) LONG-TERM DEBT................................................................ $ 3,910.4 $ 3,899.9 PREFERRED STOCK: Preferred stock subject to mandatory redemption............................. 221.7 224.0 Preferred stock not subject to mandatory redemption......................... 594.0 594.0 COMMON STOCKHOLDER'S EQUITY: Common Stock, no par, 300,000 shares authorized, 171,484 shares outstanding at December 31, 1994 and 168,277 shares outstanding at December 31, 1993..................................................................... 2,737.4 2,662.4 Other paid-in capital....................................................... 20.4 20.3 Earnings reinvested in business............................................. 1,277.8 1,269.3 Total common stockholder's equity...................................... 4,035.6 3,952.0 CURRENT LIABILITIES: Securities due within one year.............................................. 312.2 167.3 Short-term debt............................................................. 43.0 Accounts payable, trade..................................................... 318.3 297.2 Customer deposits........................................................... 55.0 53.9 Payrolls accrued............................................................ 59.5 68.3 Provision for rate refunds.................................................. 12.2 101.7 Interest accrued............................................................ 96.2 101.7 Other....................................................................... 95.7 86.0 Total current liabilities.............................................. 949.1 919.1 DEFERRED CREDITS AND OTHER LIABILITIES: Accumulated deferred income taxes........................................... 1,466.7 1,449.7 Deferred investment tax credits............................................. 289.2 306.3 Deferred fuel expenses...................................................... 51.5 54.1 Other....................................................................... 129.7 121.4 Total deferred credits and other liabilities........................... 1,937.1 1,931.5 COMMITMENTS AND CONTINGENCIES (See Note O) Total liabilities and shareholders' equity............................. $11,647.9 $11,520.5
The accompanying notes are an integral part of the financial statements. 24 VIRGINIA ELECTRIC AND POWER COMPANY STATEMENTS OF EARNINGS REINVESTED IN BUSINESS
FOR THE YEARS ENDED DECEMBER 31, 1994 1993 1992 (MILLIONS) Balance at beginning of year...................................... $1,269.3 $1,182.7 $1,132.9 Net income........................................................ 447.1 509.0 469.5 Total...................................................... 1,716.4 1,691.7 1,602.4 Cash dividends: Preferred stock subject to mandatory redemption................. 14.4 17.2 22.4 Preferred stock not subject to mandatory redemption............. 28.3 25.0 23.9 Common Stock.................................................... 395.5 378.9 369.8 Total dividends............................................ 438.2 421.1 416.1 Other deductions, net............................................. 0.4 1.3 3.6 Balance at end of year............................................ $1,277.8 $1,269.3 $1,182.7
The accompanying notes are an integral part of the financial statements. 25 VIRGINIA ELECTRIC AND POWER COMPANY STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994 1993 1992 (MILLIONS) Cash Flow From Operating Activities: Net income............................................................... $ 447.1 $ 509.0 $ 469.5 Adjustments to reconcile net income to net cash provided by operating activities: Cumulative effect of change in method of accounting for income taxes............................................................ (14.3) Depreciation and amortization....................................... 558.3 546.6 547.9 Allowance for other funds used during construction.................. (6.4) (5.1) (4.8) Deferred income taxes............................................... 56.7 (6.7) 105.1 Deferred investment tax credits..................................... (17.1) (19.2) (19.4) Noncash return of terminated construction project costs-pretax...... (10.3) (11.9) (13.7) Deferred fuel expenses, net......................................... (2.6) (36.1) 45.2 Deferred capacity expenses.......................................... 26.5 72.9 (102.7) Changes in: Accounts receivable.............................................. 36.5 (33.6) (34.1) Accrued unbilled revenues........................................ 11.9 (6.3) 2.8 Materials and supplies........................................... (6.5) 27.5 (33.8) Accounts payable, trade.......................................... 21.1 18.4 79.2 Accrued expenses................................................. (29.0) 28.2 (26.7) Provision for rate refunds....................................... (89.5) (87.6) 161.9 Other............................................................... 21.6 26.8 12.9 Net Cash Flow From Operating Activities.................................... 1,018.3 1,022.9 1,175.0 Cash Flow From (To) Financing Activities: Issuance of Common Stock................................................. 75.0 50.0 75.0 Issuance of preferred stock.............................................. 150.0 240.0 Issuance of long-term debt............................................... 464.0 1,035.0 1,241.0 Repayment of short-term debt............................................. (43.0) (6.5) (55.4) Inter-company credit agreement........................................... (32.5) Repayment of long-term debt and preferred stock.......................... (334.3) (1,072.1) (1,315.0) Common Stock dividend payments........................................... (395.5) (378.9) (369.8) Preferred stock dividend payments........................................ (42.7) (42.2) (46.3) Other.................................................................... (7.8) (83.3) (66.4) Net Cash Flow From (To) Financing Activities............................... (284.3) (348.0) (329.4) Cash Flow From (Used In) Investing Activities: Utility plant expenditures (excluding AFC-other funds)................... (580.9) (644.9) (662.2) Nuclear fuel (excluding AFC-other funds)................................. (80.0) (68.1) (54.3) Pollution control project funds.......................................... 6.9 32.7 (55.3) Nuclear decommissioning contributions.................................... (24.5) (24.4) (24.3) Sale of accounts receivable.............................................. (40.0) Other.................................................................... (8.3) (13.7) (5.5) Net Cash Flow From (Used In) Investing Activities.......................... (726.8) (718.4) (801.6) Increase (Decrease) in cash and cash equivalents........................... 7.2 (43.5) 44.0 Cash and cash equivalents at beginning of year............................. 21.6 65.1 21.1 Cash and cash equivalents at end of year................................... $ 28.8 $ 21.6 $ 65.1 Cash paid during the year for: Interest (reduced for the cost of borrowed funds capitalized as AFC)..... $ 302.9 $ 324.8 $ 325.3 Income taxes............................................................. 190.5 268.1 163.8 Non-cash transactions for financing and investing activities: Assumption of obligations................................................ 26.3 Acquisition of utility property.......................................... 26.3
The accompanying notes are an integral part of the financial statements. 26 VIRGINIA ELECTRIC AND POWER COMPANY NOTES TO FINANCIAL STATEMENTS A. SIGNIFICANT ACCOUNTING POLICIES: GENERAL The Company's accounting practices are generally prescribed by the Uniform System of Accounts promulgated by the regulatory commissions having jurisdiction and are in accordance with generally accepted accounting principles applicable to regulated enterprises. The Company is a wholly-owned subsidiary of Dominion Resources, Inc., a Virginia corporation. REVENUES Operating revenues are recorded on the basis of service rendered. PROPERTY, PLANT AND EQUIPMENT Utility plant is recorded at original cost which includes labor, materials, services, AFC, where permitted by regulators, and other indirect costs. The cost of maintenance and repairs is charged to the appropriate operating expense and clearing accounts. The cost of additions and replacements is charged to the appropriate utility plant account, except that the cost of minor additions and replacements, as provided in the Uniform System of Accounts, is charged to maintenance expense. DEPRECIATION AND AMORTIZATION Depreciation of utility plant (other than nuclear fuel) is computed on the straight-line method based on projected useful service lives. The cost of depreciable utility plant retired and the cost of removal, less salvage, are charged to accumulated depreciation. The provision for depreciation is based on weighted average depreciable plant using a rate of 3.2 percent for 1994, 1993 and 1992. Operating expenses include amortization of nuclear fuel, which is provided on a unit of production basis sufficient to fully amortize, over the estimated service life, the cost of the fuel plus permanent storage and disposal costs. FEDERAL INCOME TAXES The Company adopted SFAS No. 109, "Accounting for Income Taxes" (SFAS No. 109) in 1992. This standard requires companies to measure and record deferred tax assets and liabilities for all temporary differences. The regulatory treatment of temporary differences can differ from the requirements of SFAS No. 109. Accordingly, the Company recognizes a regulatory asset if it is probable that future revenues will be provided for the payment of those deferred tax liabilities. Similarly, in the event a deferred tax liability is reduced to reflect changes in tax rates, a regulatory liability is established if it is probable that a future reduction in revenue will result. Prior to 1992, the Company recorded deferred taxes for timing differences between book income and taxable income to the extent such differences were permitted by regulatory commissions for ratemaking purposes. The Company files a consolidated federal income tax return with Dominion Resources. Accumulated investment tax credits are being amortized over the service lives of the property giving rise to such credits. ALLOWANCE FOR FUNDS USED DURING CONSTRUCTION The applicable regulatory Uniform System of Accounts defines AFC as the cost during the construction period of borrowed funds used for construction purposes and a reasonable rate on other funds when so used. The pretax AFC rates for 1994, 1993 and 1992 were 8.9, 9.4 and 10.3 percent, respectively. Approximately 83 percent of the Company's construction work in progress is now included in rate base, and a cash return is collected currently thereon. DEFERRED CAPACITY AND FUEL EXPENSE In 1992, the Company began to defer certain capacity expenses based on an order of the Virginia Commission. Approximately 80 percent of capacity expenses and 90 percent of fuel expenses are subject to deferral accounting. The difference 27 between reasonably incurred actual expenses and the level of expenses included in current rates is deferred and matched against future revenues. AMORTIZATION OF DEBT ISSUANCE COSTS The Company defers and amortizes any expenses incurred in the issuance of long-term debt, including premiums and discounts associated with such debt over the lives of the respective issues. Any gains or losses resulting from the refinancing of debt are also deferred and amortized over the lives of the new issues of long-term debt as permitted by the appropriate regulatory jurisdictions. Gains or losses resulting from the redemption of debt without refinancing are amortized over the remaining lives of the redeemed issues. CASH AND OTHER INVESTMENTS Current banking arrangements generally do not require checks to be funded until actually presented for payment. At December 31, 1994 and 1993, the Company's accounts payable included the net effect of checks outstanding but not yet presented for payment of $66.8 million and $72.5 million, respectively. For purposes of the Statement of Cash Flows, the Company considers cash and cash equivalents to include cash on hand and temporary investments purchased with an initial maturity of three months or less. RECLASSIFICATION Certain amounts in the 1993 and 1992 financial statements have been reclassified to conform to the 1994 presentation. B. INCOME TAXES: Details of income tax expense are as follows:
YEARS 1994 1993 1992 (MILLIONS) Current expense: Federal............................................................ $ 185.6 $ 283.0 $ 142.9 State.............................................................. 2.1 (0.3) 3.0 187.7 282.7 145.9 Deferred expense: Plant related items................................................ 39.0 45.0 53.3 Deferred fuel and capacity......................................... (8.2) (12.9) 19.5 Debt issuance costs................................................ 3.7 8.3 15.4 Customer accounts reserve.......................................... 36.8 (34.9) 7.5 Terminated construction project costs.............................. (7.3) (7.7) (7.9) Other.............................................................. (11.6) (7.8) 7.9 52.4 (10.0) 95.7 Net deferred investment tax credits-amortization..................... (17.1) (19.2) (19.4) Income tax expense-operating income.................................. 223.0 253.5 222.2 Income tax expense associated with nonoperating income: Current expense: Federal............................................................ (1.7) (0.2) (6.1) State.............................................................. 0.1 (1.7) (0.2) (6.0) Deferred expense..................................................... 4.3 3.9 9.4 Income tax expense-nonoperating income............................... 2.6 3.7 3.4 Total income tax expense............................................. $ 225.6 $ 257.2 $ 225.6
28 Total federal income tax expense differs from the amount computed by applying the statutory federal income tax rate to pretax income for the following reasons:
YEARS 1994 1993 1992 (MILLIONS, EXCEPT PERCENTAGES) Federal income tax expense at statutory rate of 35% (34% in 1992)............................................... $234.4 $266.5 $230.4 Increases (decreases) resulting from: Utility plant differences.............................. (1.8) (6.2) 4.6 Ratable amortization of investment tax credits......... (17.1) (16.1) (15.2) Terminated construction project costs.................. 5.0 5.2 5.0 Other, net............................................. 2.1 3.0 (2.2) (11.8) (14.1) (7.8) Total federal income tax expense......................... $222.6 $252.4 $222.6 Effective tax rate....................................... 33.2% 33.1% 32.8%
In 1992, the Company adopted the provisions of SFAS No. 109. The Company reported the implementation of the standard as a change in accounting principle with the cumulative effect on prior years of $14.3 million reported in 1992 earnings. The adoption of SFAS No. 109 increased deferred income tax liabilities by $459.0 million and resulted in the establishment of a net regulatory asset of $459.0 million. For additional information see FEDERAL INCOME TAXES under Note A to FINANCIAL STATEMENTS. The Company's net accumulated deferred income taxes consist of the following:
YEARS 1994 1993 (MILLIONS) Deferred income tax assets: Investment tax credits................................................... $ 102.4 $ 108.5 Deferred income tax liabilities: Plant-Method and basis differences....................................... 1,338.2 1,299.3 Terminated construction project costs.................................... 23.9 27.6 Income taxes recoverable through future rates............................ 172.9 176.3 Other.................................................................... 34.1 55.0 Total deferred income tax liabilities...................................... 1,569.1 1,558.2 Total net accumulated deferred income taxes................................ $1,466.7 $1,449.7
C. NUCLEAR OPERATIONS: DECOMMISSIONING Nuclear plant decommissioning costs are accrued and recovered through rates over the expected service lives of the Company's nuclear generating units. The amounts collected from customers are being placed in trusts, which, with the accumulated earnings thereon, will be utilized solely to fund future decommissioning obligations. Approximately every four years, site-specific studies are prepared to determine the decommissioning cost estimate for the Company's four nuclear units. The current cost estimate is based on the DECON method, which assumes the decontamination or prompt removal of radioactive contaminants so that the property may be released for unrestricted use shortly after cessation of operations. The Company currently estimates that decommissioning will begin at the expiration date of each unit's operating license, which will occur in 2012, 2013, 2018 and 2020 for the Surry Units 1 & 2 and North Anna Units 1 & 2, respectively. Based on the Company's latest decommissioning study completed in 1994, total decommissioning costs, including reclamation costs, are estimated to be $1.0 billion in 1994 dollars. The accumulated provision for decommissioning of $260.9 million and $226.4 million is included in Utility Plant Accumulated Depreciation at December 31, 1994 and 1993, respectively. Provisions for decommissioning of $24.5 million, $24.4 million and $24.3 million applicable to 1994, 1993 and 1992, respectively, are included in Depreciation and Amortization Expense. The balance in the Company's Nuclear Decommissioning trust funds was $260.9 million and $226.4 million at December 31, 1994 and 1993, respectively. The net unrealized loss of $5.2 million at December 31, 1994 is included in the accumulated provision for decommissioning. 29 Earnings of the trust funds were $15.2 million, $16.3 million and $9.1 million for 1994, 1993 and 1992, respectively, and are included in Other Income in the Company's Statements of Income. In 1994 and 1993, the accretion of the accumulated provision for decommissioning, equal to the earnings of the trust funds, was recorded in Other Income. See MISCELLANEOUS, NET under RESULTS OF OPERATIONS, Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Such amounts in 1992 were recorded in Interest Charges, Other. The Financial Accounting Standards Board (FASB) is reviewing the accounting for nuclear plant decommissioning. If current electric utility industry practices for such decommissioning are changed, annual provisions for decommissioning could increase. FASB may ultimately determine that the estimated cost of decommissioning should be reported as a liability rather than as accumulated depreciation and that a substantial portion of the decommissioning obligation should be recognized earlier in the operating life of the nuclear plant. INSURANCE The Price-Anderson Act limits the public liability of an owner of a nuclear power plant to $8.9 billion for a single nuclear incident. The Price-Anderson Amendments Act of 1988 allows for an inflationary provision adjustment every five years. The Company has purchased $200 million of coverage from the commercial insurance pools with the remainder provided through a mandatory industry risk sharing program. In the event of a nuclear incident at any licensed nuclear reactor in the United States, the Company could be assessed up to $81.7 million (including a 3 percent insurance premium tax for Virginia) for each of its four licensed reactors not to exceed $10.3 million (including a 3 percent insurance premium tax for Virginia) per year per reactor. There is no limit to the number of incidents for which this retrospective premium can be assessed. Nuclear liability coverage for claims made by nuclear workers first hired on or after January 1, 1988, except those arising out of an extraordinary nuclear occurrence, is provided under the Master Worker insurance program. (Those first hired into the nuclear industry prior to January 1, 1988, are covered by the policy discussed above.) The aggregate limit of coverage for the industry is $400 million ($200 million policy limit with automatic reinstatements of an additional $200 million). The Company's maximum retrospective assessment is approximately $12.7 million (including a 3 percent insurance premium tax for Virginia). The Company's current level of property insurance coverage ($2.55 billion for North Anna and $2.40 billion for Surry) exceeds the NRC's minimum requirement for nuclear power plant licensees of $1.06 billion per reactor site and includes coverage for premature decommissioning and functional total loss. The NRC requires that the proceeds from this insurance be used first to return the reactor to and maintain it in a safe and stable condition and second to decontaminate the reactor and station site in accordance with a plan approved by the NRC. The property insurance coverage provided to the Company is subject to retrospective premium assessments, in any policy year in which losses exceed the funds available to these insurance companies. The maximum assessment at the first incident of the current policy period is $45.4 million and the maximum assessment related to a second incident is an additional $15.1 million. Based on the severity of the incident, the Board of Directors of the Company's nuclear insurers has the discretion to lower the maximum retrospective premium assessment or eliminate either or both completely. For any losses that exceed the limits or for which insurance proceeds are not available because they must first be used for stabilization and decontamination, the Company has the financial responsibility for these losses. The Company purchases insurance from Nuclear Electric Insurance Limited (NEIL) to cover the cost of replacement power during the prolonged outage of a nuclear unit due to direct physical damage of the unit. Under this program, Virginia Power is subject to a retrospective premium assessment for any policy year in which losses exceed funds available to NEIL. The current policy period's maximum assessment is $9.2 million. As part owner of the North Anna Power Station, ODEC is responsible for its proportionate share (11.6 percent) of the insurance premiums applicable to that station, including any retrospective premium assessments and any losses not covered by insurance. D. SALE OF RECEIVABLES: The Company has an agreement to sell, with limited recourse, certain accounts receivable including unbilled amounts, up to a maximum of $200 million. Additional receivables are continually sold, at the Company's discretion, to replace those collected up to the limit. At December 31, 1994 and 1993, $160 million and $200 million, respectively, of receivables had been sold and were outstanding under this agreement. The limited recourse is provided by the Company's assignment of an 30 additional undivided interest in accounts receivable to cover any potential losses to the purchaser due to uncollectible accounts. The Company has provided for the estimated amount of such losses in its accounts. E. UTILITY PLANT: Utility plant at December 31, consisted of the following:
YEAR 1994 1993 (MILLIONS) Production.......................................................................................... $ 6,916.6 $ 6,659.0 Transmission........................................................................................ 1,301.2 1,248.4 Distribution........................................................................................ 3,989.8 3,761.0 Other............................................................................................... 860.8 794.6 13,068.4 12,463.0 Construction work in progress....................................................................... 828.2 913.1 Total........................................................................................ $13,896.6 $13.376.1
F. JOINTLY OWNED PLANTS: The following information relates to the Company's proportionate share of jointly owned plants at December 31, 1994:
NORTH BATH COUNTY ANNA CLOVER PUMPED STORAGE POWER POWER STATION STATION STATION Ownership interest............................................. 60.0% 88.4% 50.0% (MILLIONS) Utility plant in service....................................... $1,078.3 $1,774.5 Accumulated depreciation....................................... 173.3 598.4 Nuclear fuel................................................... 409.8 Accumulated amortization of nuclear fuel....................... 382.0 Construction work in progress.................................. 0.6 163.6 $449.8
The co-owners are obligated to pay their share of all future construction expenditures and operating costs of the jointly owned facilities in the same proportion as their respective ownership interest. The Company's share of operating costs is classified in the appropriate operating expense (fuel, maintenance, depreciation, taxes, etc.) in the Statements of Income. G. REGULATORY ASSETS: Certain expenses normally reflected in income are deferred on the balance sheet as regulatory assets and are recognized in income as the related amounts are included in rates and recovered from customers. The Company's regulatory assets included the following:
AT DECEMBER 31, 1994 1993 (MILLIONS) Income taxes recoverable through future rates.............................................................. $488.2 $497.8 Cost of decommissioning DOE uranium enrichment facilities.................................................. 83.7 85.2 Deferred losses or gains on reacquired debt................................................................ 107.0 103.6 North Anna Unit 3 project termination costs................................................................ 128.5 153.3 Other...................................................................................................... 63.6 90.6 Total............................................................................................... $871.0 $930.5
Income taxes recoverable through future rates represent principally the tax effect of depreciation differences not normalized. These amounts are amortized as the related temporary differences reverse. 31 The costs of decommissioning the Department of Energy's (DOE) uranium enrichment facilities have been deferred and represents the unamortized portion of Virginia Power's required contributions to a fund for decommissioning and decontaminating the DOE's uranium enrichment facilities. Virginia Power is making such contributions over a fifteen-year period with escalation for inflation. These costs are being recovered in fuel rates. Deferred losses or gains on reacquired debt are deferred and amortized over the lives of the new issues of long-term debt. Gains or losses resulting from the redemption of debt without refinancing are amortized over the remaining lives of the redeemed issues. The construction of North Anna Unit 3 was terminated in November 1982. All retail jurisdictions have permitted recovery of the incurred costs. The amounts deferred are being amortized over a fifteen-year period for Virginia and FERC jurisdictional customers. H. LEASES: Plant and property under capital leases included the following:
1994 1993 (MILLIONS) Office buildings (*)....................................................... $34.4 $35.7 Data processing equipment.................................................. 5.8 6.9 Total plant and property under capital leases....................... 40.2 42.6 Less accumulated amortization.............................................. 12.5 12.8 Net plant and property under capital leases................................ $27.7 $29.8
(*) The Company leases its principal office building from its parent, Dominion Resources. The capitalized cost of the property under that lease, net of accumulated amortization, represented $25.0 million and $26.0 million at December 31, 1994 and 1993, respectively. Rental payments for such lease were $3.0 million for each of the three years ended December 31, 1994, 1993 and 1992. The Company is responsible for expenses in connection with the leases noted above, including maintenance. Future minimum lease payments under noncancellable capital leases and for operating leases that have initial or remaining lease terms in excess of one year as of December 31, 1994, are as follows:
CAPITAL OPERATING LEASES LEASES (MILLIONS) 1995....................................................................... $ 4.4 $ 6.3 1996....................................................................... 3.8 5.6 1997....................................................................... 3.6 4.7 1998....................................................................... 3.2 3.0 1999....................................................................... 3.0 2.7 After 1999................................................................. 25.7 29.4 Total future minimum lease payments........................................ 43.7 $51.7 Less interest element included above....................................... 16.0 Present value of future minimum lease payments............................. $27.7
Rents on leases, which have been charged to other operation expenses, were $9.6 million, $11.2 million and $10.6 million for 1994, 1993 and 1992, respectively. 32 I. LONG-TERM DEBT: Long-term debt included the following:
AT DECEMBER 31, 1994 1993 (MILLIONS) First and Refunding Mortgage Bonds (1): 1987 Series B, 9.375%, due 1994......................................................... $ 100.0 1992 Series A, 6.375%, due 1995......................................................... $ 180.0 180.0 Series T, 4.5%, due 1995................................................................ 56.6 56.6 Series U, 5.125%, due 1997.............................................................. 49.3 49.3 1992 Series B, 7.25%, due 1997.......................................................... 250.0 250.0 1988 Series A, 9.375%, due 1998......................................................... 150.0 150.0 1992 Series F, 6.25%, due 1998.......................................................... 75.0 75.0 1989 Series B, 8.875%, due 1999......................................................... 100.0 100.0 Various series, 5.875-8%, due 2000-2004................................................. 940.0 940.0 Various series, 6.75-7.625%, due 2005-2009.............................................. 215.0 234.5 Various series, 9.75%, due 2014-2019.................................................... 119.0 Various series, 5.45-8.75%, due 2020-2024............................................... 944.5 600.0 Total First and Refunding Mortgage Bonds........................................... 2,960.4 2,854.4 Other long-term debt: Bank loans, notes and term loans: Fixed interest rate, 6.15%-10.8%, due 1994-2003...................................... 798.2 770.8 Pollution control financings (2): Fixed interest rate, 5.625%, due 2002................................................ 19.5 Money Market Municipals, due 2008-2027 (3)........................................... 488.6 444.6 Total other long-term debt......................................................... 1,286.8 1,234.9 4,247.2 4,089.3 Less amounts due within one year: First and Refunding Mortgage Bonds...................................................... 236.6 100.0 Bank loans, notes and term loans........................................................ 75.6 65.0 Sinking fund obligations................................................................ 0.8 Total amount due within one year................................................... 312.2 165.8 Less unamortized discount, net of premium................................................. 24.6 23.6 Total long-term debt............................................................... $ 3,910.4 $ 3,899.9
(1) Substantially all of the Company's property is subject to the lien of its mortgage, securing its First and Refunding Mortgage Bonds. (2) Certain pollution control facilities at the Company's generating facilities have been pledged or conveyed to secure the financings. (3) Interest rates vary based on short-term, tax-exempt market rates. The weighted average daily interest rates were 2.96% and 2.53% for 1994 and 1993, respectively. Pollution control bonds subject to remarketing within one year are classified as long-term debt to the extent that the Company's intention to maintain the debt is supported by long-term bank commitments. Under the terms of an Inter-Company Credit Agreement, the Company may borrow funds from Dominion Resources on a daily basis and repay all or part of the loan at any time. Borrowings under the Agreement are limited to $300 million outstanding at any one time, less amounts outstanding under the commercial paper program. At December 31, 1994, there were no amounts outstanding under the Agreement and no amounts were borrowed during 1994. With a portion of the proceeds from the sale of $200 million First and Refunding Mortgage Bonds of 1993, Series G, the Company in 1993 irrevocably placed $138.2 million in a trust to defease $119.1 million 1990 Series A Bonds. As a result, the 33 1990 Series A Bonds were considered to be extinguished for financial reporting purposes and were excluded from the balance sheet at December 31, 1994 and 1993. The cost of $19.1 million was deferred and is being amortized over the life of the new issue. Maturities through 1999 are as follows (millions): 1995 -- $312.2; 1996 -- $259.6; 1997 -- $311.3; 1998 -- $293.5; and 1999 -- $261.0. J. PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION: Preferred stock subject to mandatory redemption, $100 liquidation preference, at December 31, 1994, was as follows:
ANNUAL ENTITLED PER SHARE UPON REDEMPTION SINKING FUND ISSUED AND AND THEREAFTER TO REQUIREMENTS OUTSTANDING AMOUNTS DECLINING AT $100 PER SHARE DIVIDEND SHARES AMOUNT THROUGH IN STEPS TO SHARES $5.58............. 400,000 (a) (b) 6.35............. 1,400,000 (a) (c) 7.30............. 417,319 $105.84 4/14/95 $100.00 after 4/14/02 15,000(d) Total...... 2,217,319
(a) Shares are non-callable prior to redemption. (b) All shares to be redeemed on 3/1/2000. (c) All shares to be redeemed on 9/1/2000. (d) The 1995 and a portion of the 1996 sinking fund requirements were satisfied by the 1994 open market purchase. Maturities are $0.7 million for 1996 and $1.5 million for each of the years 1997-1999. During the years 1992 through 1994, the following shares were redeemed:
YEAR DIVIDEND SHARES 1994......................................... $7.30 37,681 1993......................................... 7.30 30,000 1993......................................... 7.58 480,000 1993......................................... 7.325 400,419 1992......................................... 8.20 330,000 1992......................................... 8.40 512,000 1992......................................... 8.60 228,764 1992......................................... 8.625 203,500 1992......................................... 8.925 164,500
The total number of authorized shares for all preferred stock is 10,000,000 shares. Upon involuntary liquidation, all presently outstanding preferred stock is entitled to receive $100 per share plus accrued dividends. Dividends are cumulative. 34 K. PREFERRED STOCK NOT SUBJECT TO MANDATORY REDEMPTION: Preferred stock not subject to mandatory redemption, $100 liquidation preference, at December 31, 1994, was as follows:
ENTITLED PER SHARE UPON LIQUIDATION ISSUED AND AND THEREAFTER TO OUTSTANDING AMOUNTS DECLINING DIVIDEND SHARES AMOUNT THROUGH IN STEPS TO $5.00............................................................ 106,677 $ 112.50 4.04............................................................ 12,926 102.27 4.20............................................................ 14,797 102.50 4.12............................................................ 32,534 103.73 4.80............................................................ 73,206 101.00 7.45............................................................ 400,000 101.00 7.20............................................................ 450,000 101.00 7.05............................................................ 500,000 105.00 7/31/03 $100.00 after 7/31/13 6.98............................................................ 600,000 105.00 8/31/03 $100.00 after 8/31/13 MMP 1/87 (*)..................................................... 500,000 100.00 MMP 6/87 (*)..................................................... 750,000 100.00 MMP 10/88 (*).................................................... 750,000 100.00 MMP 6/89 (*)..................................................... 750,000 100.00 MMP 9/92A (*).................................................... 500,000 100.00 MMP 9/92B (*).................................................... 500,000 100.00 Total............................................................ 5,940,140
(*) Money Market Preferred (MMP) dividend rates are variable and are set every 49 days via an auction process. The combined weighted average rates for these series in 1994, 1993 and 1992, including fees for broker/dealer agreements, were 3.75 percent, 3.01 percent and 3.43 percent, respectively. In 1993, 350,000 and 500,000 shares of the $7.72 and the $7.72 (1972 Series) Dividend Preferred Stock, respectively, were redeemed. L. COMMON STOCK: During the years 1992 through 1994 the following changes in Common Stock occurred:
YEARS 1994 1993 1992 SHARES SHARES SHARES OUTSTANDING AMOUNT OUTSTANDING AMOUNT OUTSTANDING AMOUNT (MILLIONS, EXCEPT SHARES) Balance at January 1............ 168,277 $ 2,662.4 166,109 $ 2,612.4 162,741 $ 2,549.1 Transfer from (to) Other Paid-in Capital....................... (11.7) Issuance to Dominion Resources..................... 3,207 75.0 2,168 50.0 3,368 75.0 Balance at December 31.......... 171,484 $ 2,737.4 168,277 $ 2,662.4 166,109 $ 2,612.4
M. RETIREMENT PLAN AND POSTRETIREMENT BENEFITS: The Company participates in the Dominion Resources, Inc. Retirement Plan (the Retirement Plan), a defined benefit pension plan. The Retirement Plan covers virtually all employees of Dominion Resources and its subsidiaries, including the Company. The benefits are based on years of service and average base compensation over the consecutive 60-month period in which pay is highest. Pension plan expenses were $19.3 million, $15.9 million and $13.1 million for 1994, 1993 and 1992, respectively and the amounts funded were $42.7 million, $16.0 million and $12.3 million in 1994, 1993 and 1992, respectively. 35 The Company adopted the provisions of Statement of Financial Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than Pensions" effective January 1, 1993. This standard requires the accrual of the cost of providing other postretirement benefits (OPEB), including medical and life insurance coverage, during the active service of the employee. Prior to 1993, the Company recognized expense on a pay-as-you-go basis. The Company recognized as expense $10.5 million for these benefits in 1992. Under the terms of its benefit plans, the Company reserves the right to change, modify or terminate the plans. From time to time in the past, benefits have changed, and some of these changes have reduced benefits. Net periodic postretirement benefit expense for 1994 and 1993 was as follows:
YEAR ENDING DECEMBER 31, 1994 1993 (MILLIONS) Service cost............................................................ $11.0 $ 9.7 Interest cost........................................................... 21.6 20.6 Return on plan assets................................................... 0.9 (2.0) Amortization of transition obligation................................... 12.1 12.0 Net amortization and deferral........................................... (4.1) 0.7 Net periodic postretirement benefit expense............................. $41.5 $41.0
The following table sets forth the funded status of the plan:
AT DECEMBER 31, 1994 1993 (MILLIONS) Fair value of plan assets.................................................. $ 59.7 $ 28.4 Accumulated postretirement benefit obligation: Retirees................................................................. $208.4 $142.4 Active plan participants................................................. 91.7 110.0 Accumulated postretirement benefit obligation......................... 300.1 252.4 Accumulated postretirement benefit obligation in excess of plan assets.............................................................. (240.4) (224.0) Unrecognized transition obligation......................................... 216.9 229.0 Unrecognized net experience (gain)/loss.................................... 16.6 (9.2) Accrued postretirement benefit cost........................................ $ (6.9) $ (4.2)
A one percent increase in the health care cost trend rate would result in an increase of $4.8 million in the service and interest cost components and a $26.9 million increase in the accumulated postretirement benefit obligation. Significant assumptions used in determining the postretirement benefit obligation were:
1994 1993 Discount rates.............................................................. 8.25% 7.75% Assumed return on plan assets............................................... 9.0% 9.0% Medical cost trend rate..................................................... 10% for 1st year 11% for 1st year 9% for 2nd year 10% for 2nd year Scaling down to Scaling down to 4.75% beginning 4.75% beginning in the year 2001 in the year 2001
The Company is recovering these costs in rates on an accrual basis in all material respects, in all jurisdictions. Current and future recoveries of OPEB accruals are expected to collect sufficient amounts to provide for the unfunded accumulated postretirement obligation over time. The funds being collected for OPEB accruals in rates, in excess of OPEB benefits actually paid during the year, are contributed to external benefit trusts under the Company's current funding policy. N. EARLY RETIREMENT AND VOLUNTARY SEPARATION PROGRAMS: During the first quarter of 1994, the Company offered an early retirement program to employees aged 50 or older and offered a voluntary separation program to all regular full-time employees. The offers under the program expired September 1, 36 1994. Approximately 1,400 employees accepted offers under these programs. The costs associated with these programs were $90.1 million. The Company capitalized $25.9 million based upon prior regulatory precedent and expensed $64.2 million. O. COMMITMENTS AND CONTINGENCIES: The Company is involved in legal, tax and regulatory proceedings before various courts, regulatory commissions and governmental agencies regarding matters arising in the ordinary course of business, some of which involve substantial amounts. Management is of the opinion that the final disposition of these proceedings will not have a material adverse effect on the results of operations or the financial position of the Company. RATE MATTERS For information on the principal rate proceedings in which the Company was involved in 1994, see RATES under Item 1. BUSINESS. For information on the effect of rate changes see Results of Operations under Item 7. MANAGEMENT's DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RETROSPECTIVE PREMIUM ASSESSMENTS Under several of the Company's nuclear insurance policies, the Company is subject to retrospective premium assessments in any policy year in which losses exceed the funds available to these insurance companies. For additional information, see Note C to FINANCIAL STATEMENTS. CONSTRUCTION PROGRAM The Company has made substantial commitments in connection with its construction program and nuclear fuel expenditures. Those expenditures are estimated to total $673.2 million (excluding AFC) for 1995. Additional financing is contemplated in connection with this program. For more information see CAPITAL REQUIREMENTS under MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. PURCHASED POWER CONTRACTS Since 1984, the Company has entered into contracts for the long-term purchases of capacity and energy from other utilities, qualifying facilities and independent power producers. The Company has 75 non-utility purchase contracts with a combined dependable summer capacity of 3,506 Mw. Of these, 65 projects (aggregating 3,244 Mw) were operational as of the end of 1994 with the balance to become operational at various dates before 1997. The table below reflects the Company's minimum commitments as of December 31, 1994, for power purchases from utility and non-utility suppliers that are currently operating or have obtained construction financing.
COMMITMENT YEAR CAPACITY OTHER (MILLIONS) 1995......................................... $ 735.5 $ 198.6 1996......................................... 750.8 203.9 1997......................................... 796.9 210.5 1998......................................... 800.4 216.8 1999......................................... 803.5 217.9 Later years.................................. 12,186.3 2,839.0 Total...................................... $16,073.4 $ 3,886.7 Present value of the total................... $ 7,104.7 $ 1,602.4
In addition to the minimum purchase commitments in the table above, under some of these contracts the Company may purchase, at its option, additional power as needed. Actual payments for purchased power (including economy, emergency, limited term, short-term and long-term purchases) for the years 1994, 1993 and 1992 were $1,025.0 million, $958.0 million and $766.0 million, respectively. 37 FUEL PURCHASE COMMITMENTS The Company's estimated fuel purchase commitments for the next five years for system generation are as follows (millions): 1995 -- $351; 1996 -- $266; 1997 -- $153; 1998 -- $33; and 1999 -- $32. SALE OF POWER For information on the Company's commitment to sell power, see PURCHASES AND SALES OF POWER under SOURCES OF ENERGY USED AND FUEL COSTS, Item 1. BUSINESS. ENVIRONMENTAL MATTERS The Company is subject to rising costs resulting from a steadily increasing number of federal, state and local laws and regulations designed to protect human health and the environment. These laws and regulations affect future planning and existing operations. These laws and regulations can result in increased capital, operating and other costs as a result of remediation, containment and monitoring obligations of the Company. These costs have been historically recovered through the ratemaking process; however, should material costs be incurred and not recovered through rates, the Company's results of operations and financial condition could be adversely impacted. For additional information on environmental matters, see FUTURE ISSUES under Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. SITE REMEDIATION The EPA has identified the Company and several other entities as Potentially Responsible Parties (PRPs) at two Superfund sites located in Kentucky and Pennsylvania. The estimated future remediation costs for the sites are in the range of $46.5 million to $134.6 million. The Company's proportionate share of the cost is expected to be in the range of $0.5 million to $6.7 million, based upon allocation formulas and the volume of waste shipped to the sites. As of December 31, 1994, the Company had provided for $1.4 million to meet its obligations at these two sites. Based on a financial assessment of the PRPs involved at these sites, the Company has determined that it is probable that the PRPs will fully pay the costs apportioned to them. The Company and Dominion Resources along with Consolidated Natural Gas have remedial action responsibilities remaining at two coal tar sites. The Company provided a $2 million reserve to meet its estimated liability based on site studies and investigations performed at these sites. The Company generally seeks to recover its costs associated with environmental remediation from third party insurers. At December 31, 1994 any pending or possible claims were not recognized as an asset or offset against recorded obligations of the Company. WEST VIRGINIA AIR ACT For information see REGULATION under Item 1. BUSINESS. LEGAL PROCEEDINGS For information on legal proceedings see Item 3. LEGAL PROCEEDINGS. P. FAIR VALUE OF FINANCIAL INSTRUMENTS: The Company used available market information and appropriate valuation methodologies to estimate the fair value of each class of financial instrument for which it is practicable to estimate fair value. These estimates are not necessarily indicative of the amounts the Company could realize in a market exchange. In addition, the use of different market assumptions may have a material effect on the estimated fair value amounts. 38
DECEMBER 31, 1994 1993 CARRYING FAIR CARRYING FAIR AMOUNT VALUE AMOUNT VALUE (MILLIONS) Assets: Cash and cash equivalents.................................... $ 28.8 $ 28.8 $ 21.6 $ 21.6 Nuclear decommissioning trust funds.......................... 260.9 260.9 226.4 243.8 Pollution control project funds.............................. 20.3 20.3 27.2 27.2 Liabilities and capitalization: Short-term debt.............................................. 43.0 43.0 Long-term debt: First and refunding mortgage bonds........................ 2,960.4 2,763.2 2,854.4 2,996.0 Medium-term notes......................................... 798.2 807.2 770.8 856.3 Pollution control bonds................................... 19.5 18.4 Money Market Municipal pollution control notes............ 488.6 488.6 444.6 444.6 Preferred stock subject to mandatory redemption.............. 221.7 201.2 225.5 251.8
Cash and cash equivalents, pollution control project funds and short-term debt: The carrying amount of these items approximates fair value because of their short maturity. Nuclear decommissioning trust funds: The fair value is based on available market information and generally is the average of bid and asked price. First and refunding mortgage bonds and pollution control bonds: Fair value is based on market quotations. Medium-term notes: These notes were valued by discounting the remaining cash flows at a rate estimated for each issue. A yield curve rate was estimated to relate Treasury Bond rates for specific issues to the corresponding maturities. Money market municipal pollution control notes: These notes have variable interest rates which are set so that fair value approximates carrying value. Preferred stock subject to mandatory redemption: The fair value is based on market quotations or is estimated by discounting the dividend and principal payments for a representative issue of each series over the average remaining life of the series. Q. QUARTERLY FINANCIAL DATA (UNAUDITED): The following amounts reflect all adjustments, consisting of only normal recurring accruals (except as discussed below), necessary in the opinion of the management for a fair statement of the results for the interim periods.
BALANCE AVAILABLE OPERATING OPERATING NET FOR COMMON QUARTER REVENUES INCOME INCOME STOCK (MILLIONS) 1994 1st..................... $1,102.1 $ 207.1 $133.4 $ 123.4 2nd..................... 990.2 175.2 102.1 91.7 3rd..................... 1,151.2 241.0 165.9 155.2 4th..................... 927.3 108.1 45.7 34.6 1993 1st..................... $1,060.6 $ 194.4 $119.8 $ 108.8 2nd..................... 950.8 175.9 101.4 90.9 3rd..................... 1,212.1 271.7 193.9 183.3 4th..................... 963.8 171.4 93.9 83.9
Results for interim periods may fluctuate as a result of weather conditions, rate relief and other factors. During the first quarter of 1994, the Company offered an early retirement program to employees aged 50 or older and offered a voluntary separation program to all regular full-time employees. The offers under the programs expired September 1, 1994. Approximately 1,400 employees accepted offers under these programs. The costs associated with these programs were $90.1 million. The Company capitalized $25.9 million based upon prior regulatory precedent and expensed $2.8 million, $10.4 million and $51 million during the second, third and fourth quarters, respectively. The impact of the write-off was to reduce Balance Available for Common Stock by $1.8 million, $6.7 million and $33.1 million for the second, third and fourth quarters, respectively. 39 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE NONE PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (a) Information concerning directors of Virginia Electric and Power Company is as follows:
YEAR FIRST PRINCIPAL OCCUPATION FOR LAST 5 YEARS, ELECTED A NAME AND AGE DIRECTORSHIPS IN PUBLIC CORPORATIONS DIRECTOR John B. Adams, Jr. (50) President and Chief Executive Officer of A. Smith Bowman 1987 Distillery, Inc., Fredericksburg, Virginia, a manufacturer and bottler of alcohol beverages and Chairman of the Board of Directors and a Director of Virginia Electric and Power Company. He is a Director of Dominion Resources. James T. Rhodes (53) President and Chief Executive Officer of Virginia Electric and 1989 Power Company. He is a Director of NationsBank of Virginia, N.A. Tyndall L. Baucom (53) President and Chief Operating Officer of Dominion Resources, 1994 Inc. (prior to August 16, 1994, Senior Vice President of Dominion Resources). He is a Director of Dominion Resources. William W. Berry (62) Retired Chairman of the Board of Directors of Virginia 1980 Electric and Power Company and Dominion Resources (from May 1, 1990 to December 30, 1992, Chairman of the Board of Directors of Virginia Electric and Power Company and Dominion Resources; prior to May 1, 1990, Chairman of the Board of Directors of Virginia Electric and Power Company and Dominion Resources and Chief Executive Officer of Dominion Resources). He is a Director of Ethyl Corporation, Scott & Stringfellow Financial, Inc. and Universal Corporation. James F. Betts (62) Management Consultant, Richmond, Virginia (from April 15, 1994 1978 to July 15, 1994, Vice Chairman of the Board of Directors of Dominion Resources, Inc.; prior to April 15, 1994, Director of Dominion Resources). He is a Director of Central Fidelity Bank, Inc. Benjamin J. Lambert, III (58) Optometrist, Richmond, Virginia. He is a Director of 1992 Consolidated Bank and Trust Company and Dominion Resources. Richard L. Leatherwood (55) Retired, Baltimore, Maryland (prior to December 1, 1991, 1994 President and Chief Executive Officer, CSX Equipment, an operating unit of CSX Transportation, Inc.). He is a Director of Dominion Resources. Harvey L. Lindsay, Jr. (65) Chairman and Chief Executive Officer of Harvey Lindsay 1986 Commercial Real Estate, Norfolk, Virginia, a commercial real estate firm. He is a Director of Dominion Resources. William T. Roos (67) Retired, Hampton, Virginia (prior to December 31, 1993, 1975 President of Penn Luggage, Inc., retail specialty stores). He is a Director of Dominion Resources. Frank S. Royal (55) Physician, Richmond, Virginia. He is a Director of 1994 Columbia/HCA Healthcare Corporation, Crestar Financial Corporation, Chesapeake Corporation, CSX Corporation and Dominion Resources.
40 Richard L. Sharp (47) Chairman, President and Chief Executive Officer and a Director 1994 of Circuit City Stores, Inc., Richmond, Virginia, retail consumer electronics and appliances stores. He is a Director of S&K Famous Brands, Inc., Flextronics International, Ltd. and Dominion Resources. Robert H. Spilman (67) Chairman, President, Chief Executive Officer and a Director of 1994 Bassett Furniture Industries, Inc., Bassett, Virginia. He is Chairman of the Board and a Director of Jefferson-Pilot Corp., Greensboro, North Carolina. He is a Director of NationsBank Corporation, TRINOVA Corporation, The Pittston Company and Dominion Resources. William G. Thomas (55) President of Hazel & Thomas, Alexandria, Virginia, a law firm. 1987
Each Director holds office until the next Annual Meeting of Shareholders or until his successor is duly elected. 41 (b) Information concerning the executive officers of Virginia Electric and Power Company is as follows:
NAME AND AGE BUSINESS EXPERIENCE PAST FIVE YEARS James T. Rhodes (53) President and Chief Executive Officer. John A. Ahladas (52) Senior Vice President-Corporate Services. Larry W. Ellis (54) Senior Vice President-Power Operations and Planning. Robert F. Hill (59) Senior Vice President-Commercial Operations. James P. O'Hanlon (51) Senior Vice President-Nuclear, June 1, 1994 to date; Vice President-Nuclear Operations, January 1, 1992 to June 1, 1994; Vice President-Nuclear Services prior to January 1, 1992. Robert E. Rigsby (45) Senior Vice President-Finance and Controller, January 1, 1995 to date; Vice President-Human Resources, October 1, 1991 to January 1, 1995; Vice President- Information Systems prior to October 1, 1991. Charles A. Brown (52) Vice President-Central Division, September 1, 1992 to date; Vice President-Procurement prior to September 1, 1992. William R. Cartwright (52) Vice President-Fossil and Hydro. Thomas L. Caviness, Jr. (49) Vice President-Eastern Division. J. Kennerly Davis, Jr. (49) Vice President, Treasurer and Corporate Secretary, October 1, 1994 to date; Vice President and Corporate Secretary of Dominion Resources prior to October 1, 1994. James T. Earwood, Jr. (51) Vice President-Division Services. Larry M. Girvin (51) Vice President-Human Resources, January 1, 1995 to date; Vice President-Nuclear Services, September 1, 1992 to January 1, 1995; Vice President-Central Division, January 1, 1991 to September 1, 1992; District Manager Richmond, prior to January 1, 1991. E. Wayne Harrell (48) Vice President-Nuclear Engineering Services, September 1, 1992 to date; Vice President-Nuclear Services, January 1, 1992 to September 1, 1992; Vice President- Nuclear Operations, prior to January 1, 1992. Thomas A. Hyman, Jr. (43) Vice President-Southern Division, June 1, 1994 to date; Station Manager-Bremo Power Station, September 1, 1992 to June 1, 1994; Assistant Controller Financial Services, March 1, 1990 to September 1, 1992; District Manager-Roanoke prior to March 1, 1990. Michael R. Kansler (40) Vice President-Nuclear Services, January 1, 1995 to date; Manager-Nuclear Operations Support, September 1, 1994 to January 1, 1995; Station Manager-Surry Nuclear Power Station prior to September 1, 1994. F. Kenneth Moore (53) Vice President-Procurement, September 1, 1992 to date; Vice President-Nuclear Engineering Services prior to September 1, 1992. Thomas J. O'Neil (52) Vice President-Energy Efficiency, September 1, 1992 to date; Vice President-Regulation, prior to September 1, 1992. Edgar M. Roach, Jr. (46) Vice President-Regulation and General Counsel, January 1, 1995 to date; Vice President-Regulation, February 1, 1994 to January 1, 1995; Partner in the law firm of Hunton & Williams, Raleigh, North Carolina prior to February 1, 1994. Johnny V. Shenal (49) Vice President-Northern and Western Divisions, June 1, 1994 to date; Vice President- Western Division, prior to June 1, 1994. Eva S. Teig (50) Vice President-Public Affairs, September 7, 1990 to date; Vice President-Government Affairs, prior to September 7, 1990. Robert F. Saunders (51) Vice President-Nuclear Operations, June 1, 1994 to date; Assistant Vice President-Nuclear Operations, November 1, 1990 to June 1, 1994; Manager, Nuclear Licensing and Programs, prior to November 1, 1990.
There is no family relationship between any of the persons named in response to Item 10. 42 ITEM 11. EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The Summary Table below includes compensation paid by the Company for services rendered in 1994, 1993 and 1992 for the Chief Executive Officer and the four other most highly compensated executive officers (as of December 31, 1994) as determined by total salary and incentive payments for 1994. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION ALL ANNUAL COMPENSATION LTIP OTHER NAME & PRINCIPAL POSITION YEAR SALARY INCENTIVES(1) PAYOUTS COMPENSATION ($) ($) ($) ($) James T. Rhodes 1994 $384,575 $ 193,830 $ 69,709 $ 14,558(8) President & CEO 1993 $356,000 $ 202,202 $ 97,657(2) $ 17,133(3) 1992 $340,000 $ 188,752 $ 52,833(4) $ 16,924(5) John A. Ahladas 1994 $192,385 $ 86,100 $ 29,096 $ 4,500(6) Senior Vice President- 1993 $183,150 $ 90,954 $ 44,677 $ 5,495 Corporate Services 1992 $176,525 $ 72,474 $ 24,334 $ 5,296 Robert F. Hill 1994 $219,526 $ 74,550 $ 29,096 $ 4,500(6) Senior Vice President- 1993 $210,350 $ 85,086 $ 44,677 $ 6,311(6) Commercial Operations 1992 $204,900 $ 71,703 $ 24,334 $ 6,147(6) Larry W. Ellis 1994 $181,160 $ 82,950 $ 29,096 $ 4,500(6) Senior Vice President- 1993 $174,000 $ 81,174 $ 44,667 $ 5,220 Power Operations and Planning 1992 $168,750 $ 70,161 $ 24,334 $ 5,063 Bill D. Johnson (7) 1994 $213,860 $ 86,100 $ 29,096 $161,360(9) Senior Vice President 1993 $204,875 $ 90,954 $ 44,677 $ 6,146(6) and Controller 1992 $199,250 $ 72,474 $ 25,167 $ 5,978(6)
(1) The Company does not maintain "bonus" plans which are used by some companies to supplement salaries based on the success of the company without regard to individual performance. However, the Company has in place various incentive plans that compensate officers and employees for achieving pre-determined specified performance goals. (2) Includes 1,118 shares of Restricted Stock and $51,540 in cash awarded on February 18, 1994 at the end of a three-year performance period. Dividends are paid on Restricted Stock. Restrictions on the shares of stock will lapse six months from the date of grant. As of December 31, 1993 no shares of Restricted Stock were held. (3) Company match on savings plan contribution ($7,075) and insurance premium to Directors Charitable Contribution Program ($10,058). (4) Includes 788 shares of Restricted Stock and $20,254 in cash awarded on February 19, 1993 at the end of a three-year performance period. Dividends are paid on Restricted Stock. Restrictions on the shares of stock lapsed six months from the date of grant. (5) Company match on savings plan contribution ($6,866) and insurance premium for Directors Charitable Contribution Program ($10,058). (6) Company match on savings plan contribution. (7) Retired December 31, 1994. (8) Company match on savings plan contribution ($4,500) and insurance premium to Directors Charitable Contribution Program ($10,058). (9) Company match on savings plan contribution ($4,500) retirement payment as provided by Company's Early Retirement and Voluntary Separation Program ($112,000) and payment at retirement for accrued vacation ($44,860). 43 LONG-TERM INCENTIVE COMPENSATION Long-term incentive awards made during 1994 are shown in the following table. LONG-TERM INCENTIVE PLANS -- AWARDS IN THE LAST FISCAL YEAR 1994-1996 PERFORMANCE ACHIEVEMENT PLAN
PERFORMANCE OR ESTIMATED FUTURE PAYOUTS NUMBER OF OTHER PERIOD UNDER NON-STOCK PRICE BASED PLANS SHARES, UNITS UNTIL MATURATION THRESHOLD TARGET MAXIMUM NAME OR OTHER RIGHTS(1) OR PAYOUT (#) (#) (#) James T. Rhodes 3,449 3 years 1 (2) 3,449(2) 5,174 (2) John A. Ahladas 1,185 3 years 1 (2) 1,185(2) 1,778 (2) Robert F. Hill 1,185 3 years 1 (2) 1,185(2) 1,778 (2) Larry W. Ellis 1,185 3 years 1 (2) 1,185(2) 1,778 (2) Bill D. Johnson 1,185 3 years 1 (2) 1,185(2) 1,778 (2)
(1) Performance shares representing Dominion Resources Common Stock to be awarded at the end of Performance period. (2) Except for James T. Rhodes, payout of awards are tied to achieving levels of Virginia Power's return on equity (ROE) (50%) and meeting a cost per kilowatt-hour goal (50%). The threshold award will be earned if 81% of the ROE goal or 75% of the costs per kilowatt-hour goal is achieved. The target awards will be earned if the goals are fully achieved. The maximum award will be earned at 110% or more of the ROE goal and 112% of the cost goal. Targets and goals for James T. Rhodes were approved by the Dominion Resources Organization and Compensation Committee under the Dominion Resources Long-Term Incentive Plan. The award for James T. Rhodes will be paid out in shares of restricted stock based on the achievement of three specified goals over a three-year performance period (1994-1996), weighted as follows: a total return to Dominion Resources Shareholders superior to that of the S&P Utility Index (50%), utility return on equity equal to the average ROE achieved by a group of comparable utilities (25%), and restraint of utility costs to a growth rate less than that of the Consumer Price Index (25%). The target number of shares will be earned if all goals are fully achieved. The threshold amount will be earned if at least 71% of the total return goal, 81% of the ROE goal, and 75% of the cost control goal are achieved. The maximum amount will be earned if at least 114% of the total return goal, 110% of the ROE goal, and 112% of the cost control goal are achieved. RETIREMENT PLANS The table below sets forth the estimated annual straight life benefit that would be paid following retirement under the Dominion Resources, Inc. Retirement Plan's (the Retirement Plan) benefit formula.
ESTIMATED ANNUAL BENEFITS PAYABLE UPON RETIREMENT CREDITED YEARS OF SERVICE FINAL AVERAGE EARNINGS 15 20 25 30 15$0,000 $ 41,134 $ 54,845 $ 68,556 $ 82,267 175,000 48,709 64,945 81,181 97,417 200,000 56,284 75,045 93,806 112,567 225,000 63,859 85,145 106,431 127,717 250,000 71,434 95,245 119,056 142,867 300,000 86,584 115,445 144,306 173,167 350,000 101,734 135,645 169,556 203,467 400,000 116,884 155,845 194,806 233,767 450,000 132,034 176,045 220,056 264,067 500,000 147,184 192,245 245,306 294,367 550,000 162,334 216,445 270,556 324,667 600,000 177,484 236,645 295,806 354,967 650,000 192,634 256,845 321,056 385,267
Benefits under the Retirement Plan are based on (i) average base compensation over the consecutive 60-month period in which pay is highest, (ii) years of credited service, (iii) age at retirement, and (iv) the offset of Social Security Benefits. 44 Certain officers have entered into retirement agreements that give additional credited years of service for retirement and retirement life insurance purposes, contingent upon the officer reaching a specified age and remaining in the employ of the Company. For purposes of the above table, based on 1994 compensation, credited years of service (including any additional years earned in connection with the retirement agreements) for each of the individuals named in the cash compensation table would be as follows: James T. Rhodes: 23; John A. Ahladas: 29; Robert F. Hill: 30; Larry W. Ellis: 30 and Bill D. Johnson: 30. The Internal Revenue Code limits the annual retirement benefit that may be paid from a qualified retirement plan and the amount of compensation that may be recognized by the Retirement Plan. To the extent that benefits determined under the Retirement Plan's benefit formula exceed the limitations imposed by the Internal Revenue Code, they will be paid under the Dominion Resources, Inc. Benefit Restoration Plan. The Company also provides an Executive Supplemental Retirement Plan (the Supplemental Plan) to its elected officers designated to participate by the Board of Directors. The Supplemental Plan provides an annual retirement benefit equal to 25 percent of a participant's final compensation (base pay plus annual incentive plan payments). The normal form of benefit is payable in equal monthly installments for 120 months to a participant with 60 months of service, who (i) retires at or after age 55 from the employ of the Company, (ii) has become permanently disabled, or (iii) dies. If a participant dies while employed, the normal form of benefit will be paid to a designated beneficiary. If a participant dies while retired, but before receiving all benefit payments, the remaining installments will be paid to a designated beneficiary. In order to be entitled to benefits under the Supplemental Plan, an employee must be employed as an elected officer of the Company until death, disability or retirement. Based on 1994 compensation, the estimated annual retirement benefit for each of the executive officers under the Supplemental Plan would be as follows: James T. Rhodes: $160,290; John A. Ahladas: $72,500; Robert F. Hill: $79,025; Larry W. Ellis: $69,650; and Bill D. Johnson: $77,650. EMPLOYMENT AGREEMENTS The Company has entered into employment agreements (the Agreements) with its key management executives, including James T. Rhodes, John A. Ahladas, Robert F. Hill, Larry W. Ellis and Bill D. Johnson. Each Agreement has a three-year term and thereafter is automatically extended on its anniversary date for an additional year unless notified that the Agreement will not be extended by the Company. If, following a change in control (as defined in the Agreements) of Dominion Resources or the Company, an executive's employment is terminated by the Company without cause, or voluntarily by the executive within sixty days after a material reduction in the executive's compensation, benefits or responsibilities, the Company will be obligated to pay to the executive continued compensation equaling the average base salary and cash incentive bonuses for the thirty-six full month period of employment preceding the change in control or employment termination. In addition, the terminated executive will continue to be entitled to any benefits due under any stock or benefit plans. The Agreements do not alter the compensation and benefits available to an executive whose employment with the Company continues for the full term of the executive's Agreement. The amount of benefits provided under each executive's Agreement will be reduced by any compensation earned by the executive from comparable employment by another employer during the thirty-six months following termination of employment with the Company. An executive shall not be entitled to the above benefits in the event termination is for cause. James T. Rhodes has an employment agreement with Virginia Power, for a three-year period ending April 21, 1997. During the term of the agreement, if James T. Rhodes' employment as an officer of Virginia Power is terminated for any reason other than cause, James T. Rhodes will receive the amount that he would have otherwise received in base salary and incentive compensation. He will also receive a benefit equal to his then annual base salary or, at his election, the retirement and other benefits that he would have received as a participant in Virginia Power's 1994 early retirement program. Virginia Power's 1994 early retirement program provided five additional years of service and age credit for purposes of retirement benefits, a severance benefit equal to six months' salary, and continuation of certain benefits for a period of time. If James T. Rhodes remains in the employ of Virginia Power through April 21, 1997, he will receive a benefit when he later retires or otherwise terminates employment equal to his then annual base salary or, at his election, the retirement and other benefits that he would have received as a participant in Virginia Power's 1994 early retirement program. The payments under this agreement are provided in addition to any payments under James T. Rhodes' employment continuity agreement. Other officers (including Messrs. Ahladas, Hill, Ellis and Johnson) have similar agreements for a period ending June 21, 1997. In addition to the foregoing agreement, the Settlement Agreement dated as of August 15, 1994, among Dominion Resources, Virginia Power and the members of their Boards of Directors, provides that Virginia Power will make available to James T. Rhodes Virginia Power's 1994 Early Retirement Program for the three-year period beginning on August 24, 1994. Messrs. 45 Hill and Johnson had available to them agreements which provided for the Early Retirement Program if they continued employment to December 31, 1994. COMPENSATION OF DIRECTORS The non-employee members of the Board receive an annual retainer of $19,000 and a fee of $900 for each Board or committee meeting attended. Committee chairmen receive an additional annual retainer of $3,000. These Directors may elect to defer their annual retainer and/or their meeting fees under the Deferred Compensation Plan until they retire from the Board or otherwise direct. The deferred fees are credited, for bookkeeping purposes, with earnings and losses as if they were invested in either an interest bearing account or Dominion Resources Common Stock, depending on the Director's election. In addition, the Company makes payments to non-employee Directors or their designated beneficiaries upon those Directors' retirement, death or disability. Payments to a retired Director, including one who becomes disabled after retirement, are made for a period of four years, or for a period of years equal to the Director's service on the Board of the Company or one of its subsidiaries, whichever is longer. If a non-employee Director becomes disabled prior to retirement, these payments are made for four years. Each year, these payments equal the annual retainer in effect at the time the payments begin. Upon the death of a non-employee Director, the unpaid portion of these payments, up to a maximum of four times the annual amount due, is paid in a lump sum to the Director's designated beneficiary. DIRECTORS CHARITABLE CONTRIBUTION PROGRAM Dominion Resources administers a Directors' Charitable Contribution Program (the Program) for all its subsidiaries, including the Company, as part of its overall program of charitable giving. Beginning at the death of a Director a donation in an aggregate amount of $50,000 per year for 10 years will be made to one or more qualifying charitable organizations recommended by the individual Director. Life insurance policies have been purchased on the lives of the Directors in connection with the Program. These policies are owned by Dominion Resources, which is also the beneficiary. The Directors derive no financial or tax benefits from the Program. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The table below sets forth as of January 31, 1995, except as noted, the number of shares of Common Stock of Dominion Resources owned by Directors and four other more highly compensated executive officers of Virginia Electric and Power Company.
SHARES OF COMMON STOCK DEFERRED COMPENSATION NAME BENEFICIALLY OWNED PLAN ACCOUNT (A) James T. Rhodes.............................. 8,970 John A. Ahladas.............................. 4,025 Robert F. Hill............................... 4,664 Larry W. Ellis............................... 9,684 Bill D. Johnson.............................. 10,754 John B. Adams, Jr............................ 3,111 Tyndall L. Baucom............................ 5,965 William W. Berry............................. 11,806 James F. Betts............................... 7,603 Benjamin J. Lambert, III..................... 0 402 Richard L. Leatherwood....................... 1,000 1,727 Harvey L. Lindsay, Jr........................ 400 William T. Roos.............................. 10,957(b) 2,542 Frank S. Royal............................... 0 500 Richard L. Sharp............................. 1,000 Robert H. Spilman............................ 1,017 William G. Thomas............................ 0 2,857
(a) Represents shares the Directors have accumulated under the Deferred Compensation Plan. (b) Members of Mr. Roos' family are beneficiaries of trusts that own 3,818 shares of Common Stock for which he disclaims beneficial ownership. All Directors and executive officers as a group (34 persons) beneficially own, in the aggregate, 171,218 shares of Common Stock of Dominion Resources which includes 3,585 shares represented by options awarded and exercisable under Dominion Resources' Long-Term Incentive Plan. Beneficial ownership of 3,818 shares of the total are disclaimed. No shares of the Company's Preferred Stock are owned by the Directors or executive officers as a group. 46 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS In October 1994, in connection with the Settlement Agreement that is summarized in the Company's Current Report on Form 8-K of August 17, 1994, Dominion Resources and Virginia Power paid $77,646 and $76,530, respectively, to a law firm that represented the following persons in connection with the corporate governance dispute that led to the execution of the Settlement Agreement: William W. Berry, James F. Betts, Bruce C. Gottwald, T. Justin Moore, Jr. and James T. Rhodes. Messrs. Berry and Betts and Dr. Rhodes were directors of Virginia Power at the time the legal expenses were incurred, and all of these persons were directors of Dominion Resources at that time. Dr. Rhodes is also President and Chief Executive Officer of Virginia Power. 47 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this Form 10-K: 1. FINANCIAL STATEMENTS See Index on page 19. 2. EXHIBITS 3(i) -- Restated Articles of Incorporation, as amended, as in effect on September 12, 1994 (Exhibit 3(i), Form 8-K, dated October 19, 1994, File No. 1-2255, incorporated by reference). 3(ii) -- Bylaws, as amended, as in effect on December 31, 1994 (filed herewith). 4(i) -- See Exhibit 3(i) above. 4(ii) -- Indenture of Mortgage of the Company, dated November 1, 1935, as supplemented and modified by fifty-eight Supplemental Indentures (Exhibit 4(ii), Form 10-K for the fiscal year ended December 31, 1985, File No. 1-2255, incorporated by reference); Fifty-Ninth Supplemental Indenture (Exhibit 4(ii), Form 10-Q for the quarter ended March 31, 1986, File No. 1-2255, incorporated by reference); Sixtieth Supplemental Indenture (Exhibit 4(ii), Form 10-Q for the quarter ended September 30, 1986, File No. 1-2255, incorporated by reference); Sixty-First Supplemental Indenture (Exhibit 4(ii), Form 10-Q for the quarter ended June 30, 1987, File No. 1-2255, incorporated by reference); Sixty-Second Supplemental Indenture (Exhibit 4(ii), Form 8-K, dated November 3, 1987, File No. 1-2255, incorporated by reference); Sixty-Third Supplemental Indenture (Exhibit 4(i), Form 8-K, dated June 8, 1988, File No. 1-2255, incorporated by reference); Sixty-Fourth Supplemental Indenture (Exhibit 4(i), Form 8-K, dated February 8, 1989, File No. 1-2255, incorporated by reference); Sixty-Fifth Supplemental Indenture (Exhibit 4(i), Form 8-K, dated June 22, 1989, File No. 1-2255, incorporated by reference); Sixty-Sixth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated February 27, 1990, File No. 1-2255, incorporated by reference); Sixty-Seventh Supplemental Indenture (Exhibit 4(i), Form 8-K, dated April 2, 1991, File No. 1-2255, incorporated by reference); Sixty-Eighth Supplemental Indenture, (Exhibit 4(i)), Sixty-Ninth Supplemental Indenture, (Exhibit 4(ii)) and Seventieth Supplemental Indenture, (Exhibit 4(iii), Form 8-K, dated February 25, 1992, File No. 1-2255, incorporated by reference); Seventy-First Supplemental Indenture (Exhibit 4(i)) and Seventy-Second Supplemental Indenture, (Exhibit 4(ii), Form 8-K, dated July 7, 1992, File No. 1-2255, incorporated by reference); Seventy-Third Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated August 6, 1992, File No. 1-2255, incorporated by reference); Seventy-Fourth Supplemental Indenture (Exhibit 4(i), Form 8-K, dated February 10, 1993, File No. 1-2255, incorporated by reference); Seventy-Fifth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated April 6, 1993, File No. 1-2255, incorporated by reference); Seventy-Sixth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated April 21, 1993, File No. 1-2255, incorporated by reference); Seventy-Seventh Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated June 8, 1993, File No. 1-2255, incorporated by reference); Seventy-Eighth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated August 10, 1993, File No. 1-2255, incorporated by reference); Seventy-Ninth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated August 10, 1993, File No. 1-2255, incorporated by reference); Eightieth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated October 12, 1993, File No. 1-2255, incorporated by reference); Eighty-First Supplemental Indenture, (Exhibit 4(iii), Form 10-K for the fiscal year ended December 31, 1993, File No. 1-2255, incorporated by reference); Eighty-Second Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated January 18, 1994, File No. 1-2255, incorporated by reference) and Eighty-Third Supplemental Indenture (Exhibit 4(i), Form 8-K, dated October 19, 1994, File No. 1-2255, incorporated by reference). 4(iii) -- Indenture, dated April 1, 1985, between Virginia Electric and Power Company and Crestar Bank (formerly United Virginia Bank) (Exhibit 4(iv), Form 10-K for the fiscal year ended December 31, 1993, File No. 1-2255, incorporated by reference). 4(iv) -- Indenture, dated as of June 1, 1986, between Virginia Electric and Power Company and Chemical Bank (Exhibit 4(v), Form 10-K for the fiscal year ended December 31, 1993, File No. 1-2255, incorporated by reference). 4(v) -- Indenture, dated April 1, 1988, between Virginia Electric and Power Company and Chemical Bank, as supplemented and modified by a First Supplemental Indenture, dated August 1, 1989, (Exhibit 4(vi), Form 10-K for the fiscal year ended December 31, 1993, File No. 1-2255, incorporated by reference). 48 4(vi) -- Virginia Electric and Power Company agrees to furnish to the Commission upon request any other instrument with respect to long-term debt as to which the total amount of securities authorized thereunder does not exceed 10 percent of Virginia Electric and Power Company's total assets. 10(i) -- Operating Agreement, dated June 17, 1981, between Virginia Electric and Power Company and Monongahela Power Company, the Potomac Edison Company, West Penn Power Company, and Allegheny Generating Company (Exhibit 10(vi), Form 10-K for the fiscal year ended December 31, 1983, File No. 1-8489, incorporated by reference). 10(ii) -- Purchase, Construction and Ownership Agreement, dated as of December 28, 1982 but amended and restated on October 17, 1983, between Virginia Electric and Power Company and Old Dominion Electric Cooperative (Exhibit 10(viii), Form 10-K for the fiscal year ended December 31, 1983, File No. 1-8489, incorporated by reference). 10(iii) -- Interconnection and Operating Agreement, dated as of December 28, 1982 as amended and restated on October 17, 1983, between Virginia Electric and Power Company and Old Dominion Electric Cooperative (Exhibit 10(ix), Form 10-K for the fiscal year ended December 31, 1983, File No. 1-8489, incorporated by reference). 10(iv) -- Nuclear Fuel Agreement, dated as of December 28, 1982 as amended and restated on October 17, 1983, between Virginia Electric and Power Company and Old Dominion Electric Cooperative (Exhibit 10(x), Form 10-K for the fiscal year ended December 31, 1983, File No. 1-8489, incorporated by reference). 10(v) -- Inter-Company Credit Agreement, dated July 1, 1986, as amended and restated December 31, 1992 between Dominion Resources and Virginia Electric and Power Company (Exhibit 10(v), Form 10-K for the fiscal year ended December 3, 1993, File No. 1-2255, incorporated by reference). 10(vi) -- Credit Agreement, dated December 1, 1985, between Virginia Electric and Power Company and Old Dominion Electric Cooperative (Exhibit 10(xix), Form 10-K for the fiscal year ended December 31, 1985, File No. 1-8489, incorporated by reference). 10(vii) -- Agreement for Northern Virginia Services, dated as of November 1, 1985, between Potomac Electric Power Company and Virginia Electric and Power Company (Exhibit 10(xxi), Form 10-K for the fiscal year ended December 31, 1985, File No. 1-8489, incorporated by reference). 10(viii) -- Purchase, Construction and Ownership Agreement, dated May 31, 1990, between Virginia Electric and Power Company and Old Dominion Electric Cooperative (Exhibit 10(xi), Form 10-K for the fiscal year ended December 31, 1990, File No. 1-2255, incorporated by reference). 10(ix) -- Operating Agreement, dated May 31, 1990, between Virginia Electric and Power Company and Old Dominion Electric Cooperative (Exhibit 10(xii), Form 10-K for the fiscal year ended December 31, 1990, File No. 1-2255, incorporated by reference). 10(x) -- Coal-Fired Unit Turnkey Contract (Volume 1), dated April 6, 1989, and the Unit 2 Amendment (Volume 1), dated May 31, 1990 between Virginia Electric and Power Company and Old Dominion Electric Cooperative, Westinghouse, Black & Veatch, Combustion Engineering and H. B. Zachry (Volumes 2-11 contain technical specifications) (Exhibit 10(xiii), Form 10-K for the fiscal year ended December 31, 1990, File No. 1-2255, incorporated by reference). 10(xi) -- Receivables Purchase Agreement, dated as of December 11, 1991, between Virginia Electric and Power Company and Dynamic Funding Corporation (Exhibit 10(xv), Form 10-K for the fiscal year ended December 31, 1991, File No. 1-2255, incorporated by reference). 10(xxi)* -- Description of arrangements with certain officers regarding additional credited years of service for retirement purposes (Exhibit 10(xii), Form 10-K for the fiscal year ended December 31, 1992, File No. 1-2255, incorporated by reference). 10(xxii)* -- Dominion Resources, Inc. Directors' Deferred Compensation Plan, effective July 1, 1986 (filed herewith). 10(xxiii)* -- Dominion Resources, Inc. Performance Achievement Plan, effective January 1, 1986, as amended and restated effective February 19, 1988 (filed herewith). 10(xxiv)* -- Dominion Resources, Inc. Executive Supplemental Retirement Plan, effective January 1, 1981 as amended and restated effective October 22, 1988 and as amended and restated June 15, 1990 (filed herewith). 10(xxv)* -- Dominion Resources, Inc.'s Cash Incentive Plan as adopted December 20, 1991 (filed herewith). 10(xxvi)* -- Dominion Resources, Inc. Long-Term Incentive Plan, effective April 17, 1987 (filed herewith). 10(xxvii)* -- Employment Continuity Agreement for James T. Rhodes of Virginia Power (filed herewith). 10(xxviii)* -- Dominion Resources, Inc. Retirement Benefit Funding Plan, effective June 29, 1990 (filed herewith). 10(xxix)* -- Dominion Resources, Inc. Retirement Benefit Restoration Plan as adopted effective January 1, 1991 (filed herewith). 10(xxx)* -- Dominion Resources, Inc. Executives' Deferred Compensation Plan, effective January 1, 1994 (filed herewith). 49 10(xxxi)* -- Employment Agreement dated June 30, 1994 between Virginia Power and James T. Rhodes (filed herewith). 10(xxxii)* -- Employment Agreement dated June 23, 1994 between Virginia Power and B.D. Johnson (filed herewith). 10(xxxiii)* -- Employment Agreement dated June 23, 1994 between Virginia Power and R.F. Hill (filed herewith). 10(xxxiv)* -- Employment Agreement dated June 23, 1994 between Virginia Power and L.W. Ellis (filed herewith). 10(xxxv)* -- Employment Agreement dated June 23, 1994 between Virginia Power and J.A. Ahladas (filed herewith). 23(i) -- Consent of Hunton & Williams (filed herewith). 23(ii) -- Consent of Jackson & Kelly (filed herewith). 23(iii) -- Consent of Deloitte & Touche LLP (filed herewith). 27 -- Financial Data Schedule (filed herewith).
*Indicates management contract or compensatory plan or arrangement (b) Reports of Form 8-K Virginia Power filed a report on Form 8-K, dated December 5, 1994, reporting the release by the Staff of the Virginia State Corporation Commission (the Staff) of a report filed December 1, 1994 entitled "Staff Investigation of Corporate Relationships, Affiliate Arrangements, and Financial and Diversification Issues of Dominion Resources, Inc. and Virginia Power." Virginia Power filed a report on Form 8-K dated February 21, 1995, reporting the entry of a Consent Order by the Virginia State Corporation Commission (the Commission) on the joint motion of Dominion Resources, Virginia Power and the Staff and the withdrawal by Delegate Clinton Miller of certain legislation introduced by Delegate Miller in the 1995 Virginia General Assembly at the request of the Commission. 50 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. VIRGINIA ELECTRIC AND POWER COMPANY Date: March 8, 1995 By JOHN B. ADAMS, JR. (JOHN B. ADAMS, JR., CHAIRMAN OF THE BOARD OF DIRECTORS) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on March 8, 1995.
SIGNATURE TITLE JOHN B. ADAMS, JR. Chairman of the Board of Directors and Director JOHN B. ADAMS, JR. TYNDALL L. BAUCOM Director TYNDALL L. BAUCOM Director WILLIAM W. BERRY JAMES F. BETTS Director JAMES F. BETTS Director BENJAMIN J. LAMBERT, III RICHARD L. LEATHERWOOD Director RICHARD L. LEATHERWOOD HARVEY L. LINDSAY, JR. Director HARVEY L. LINDSAY, JR. J. T. RHODES President (Chief Executive Officer) and Director J. T. RHODES WILLIAM T. ROOS Director WILLIAM T. ROOS FRANK S. ROYAL Director FRANK S. ROYAL Director RICHARD L. SHARP 51 ROBERT H. SPILMAN Director ROBERT H. SPILMAN WILLIAM G. THOMAS Director WILLIAM G. THOMAS R. E. RIGSBY Senior Vice President-Finance and Controller (Principal Accounting Officer R. E. RIGSBY and Chief Financial Officer)
52 EX-3 2 EXHIBIT 3.2 BYLAWS OF VIRGINIA ELECTRIC AND POWER COMPANY As amended and in effect on December 31, 1994 TABLE OF CONTENTS Article Page I Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 II Shareholders' Meetings . . . . . . . . . . . . . . . . . . . . .1 III Annual Meeting . . . . . . . . . . . . . . . . . . . . . . . . .1 IV Special Meetings . . . . . . . . . . . . . . . . . . . . . . . .1 V Notice of Shareholders' Meetings and Voting Lists. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 VI Waiver of Notice . . . . . . . . . . . . . . . . . . . . . . . .3 VII Quorum . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 VIII Proxy and Voting . . . . . . . . . . . . . . . . . . . . . . . .4 IX Board of Directors . . . . . . . . . . . . . . . . . . . . . . .4 X Powers of Directors. . . . . . . . . . . . . . . . . . . . . . .4 XI Executive and Other Committees . . . . . . . . . . . . . . . . .5 XII Meetings of Directors and Quorum . . . . . . . . . . . . . . . .5 XIII Action Without a Meeting . . . . . . . . . . . . . . . . . . . .7 XIV Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 XV Eligibility of Officers. . . . . . . . . . . . . . . . . . . . .7 XVI Chairman of the Board of Directors and President. . . . . . . . . . . . . . . . . . . . . . . . . . . .8 XVII Vice Presidents. . . . . . . . . . . . . . . . . . . . . . . . .8 XVIII Corporate Secretary. . . . . . . . . . . . . . . . . . . . . . .9 XIX Treasurer. . . . . . . . . . . . . . . . . . . . . . . . . . . .9 XX Controller . . . . . . . . . . . . . . . . . . . . . . . . . . 10 XXI Resignations and Removals. . . . . . . . . . . . . . . . . . . 10 XXII Vacancies. . . . . . . . . . . . . . . . . . . . . . . . . . . 10 XXIII Certificates for Shares. . . . . . . . . . . . . . . . . . . . 11 XXIV Transfer of Shares . . . . . . . . . . . . . . . . . . . . . . 11 XXV Record Date. . . . . . . . . . . . . . . . . . . . . . . . . . 12 XXVI Voting of Shares Held. . . . . . . . . . . . . . . . . . . . . 12 XXVII Bonds, Debentures and Notes Issued Under an Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . . 13 XXVIII Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . 13 XXIX Emergency Bylaws . . . . . . . . . . . . . . . . . . . . . . . 13 BYLAWS OF VIRGINIA ELECTRIC AND POWER COMPANY ARTICLE I. Name. The name of the Corporation is Virginia Electric and Power Company. ARTICLE II. Shareholders' Meetings. All meetings of the Shareholders shall be held at such place, within or without of the Commonwealth, as provided in the notice of the meeting given pursuant to Article V. If the Chairman of the Board of Directors determines that the holding of any meeting at the place named in the notice might be hazardous, he may cause it to be held at some other place deemed by him suitable and convenient, upon arranging notice to Shareholders who attend at the first place and reasonable opportunity for them to proceed to the new place. ARTICLE III. Annual Meeting. The Annual Meeting of the Shareholders shall be held on the third Friday in April in each year if not a legal holiday, and if a legal holiday then on the next succeeding Friday not a legal holiday. In the event that such Annual Meeting is omitted by oversight or otherwise on the date herein provided for, the Board of Directors shall cause a meeting in lieu thereof to be held as soon thereafter as conveniently may be, and any business transacted or elections held at such meeting shall be as valid as if transacted or held at the Annual Meeting. Such subsequent meeting shall be called in the same manner as provided for Special Shareholders' Meetings. ARTICLE IV. Special Meetings. Special Meetings of the Shareholders shall be held whenever called by the Chairman of the Board of Directors, the President, or a majority of the Directors or in accordance with the provisions of Article III of the Articles of Incorporation. Special Meetings of the Shareholders shall also be held following the accrual or termination of voting rights of the Preferred Stock, whenever requested to be called in the manner provided in Article III of the Articles of Incorporation. ARTICLE V. Notice of Shareholders' Meetings and Voting Lists. Written notice stating the place, day and hour of each Shareholders' Meeting and the purpose or purposes for which the meeting is called shall be given not less than 10 nor more than 60 days before the date of the meeting, or such longer period as is specified below, by, or at the direction of, the Board of Directors or its Chairman, the President or any Vice President or the Corporate Secretary or any Assistant Corporate Secretary, by hand or by mail, to each Shareholder of record entitled to vote at the meeting, at his or her registered address and the person giving such notice shall make affidavit in relation thereto. Such notice shall be deemed to be given when deposited in the United States mails addressed to the Shareholder at his address as it appears on the stock transfer books, with postage thereon prepaid or when hand delivered at said address. Notice of a Shareholders' Meeting to act on an amendment of the Articles of Incorporation, on a plan of merger or share exchange, on a proposed dissolution of the Corporation or on a proposed sale, lease or exchange, or other disposition, of all, or substantially all, of the property of the Corporation otherwise than in the usual and regular course of business, shall be given in the manner provided above, not less than 25 nor more than 60 days before the date of the meeting. Any notice of a Shareholders' Meeting to act on an amendment of the Articles of Incorporation, a plan of merger or share exchange or a proposed sale, lease or exchange, or other disposition of all, or substantially all, of the property of the Corporation otherwise than in the usual and regular course of business shall be accompanied by a copy of the proposed amendment, plan of merger or exchange or agreement effecting the disposition of assets. Any meeting at which all Shareholders having voting power in respect of the business to be transacted thereat are present, either in person or by proxy, or of which those not present waive notice in writing, whether before or after the meeting, shall be a legal meeting for the transaction of business notwithstanding that notice has not been given as hereinbefore provided. The officer or agent having charge of the share transfer books of the Corporation shall make, at least 10 days before each meeting of Shareholders, a complete list of the Shareholders entitled to vote at such meeting or any adjournment thereof, with the address of and number of shares held by each. The list shall be arranged by voting group and within each voting group by class or series of shares. Such list, for a period of 10 days prior to such meeting, shall be kept on file at the principal office of the Corporation. Any person who shall have been a Shareholder of record for at least 6 months immediately preceding his demand or who shall be the holder of record of at least 5% of all the outstanding shares of the Corporation, upon demand stating with reasonable particularity the purpose thereof, shall have the right to inspect such list, in person, for any proper purpose if such list is directly connected with such purpose, during usual business hours within the period of 10 days prior to the meeting. Such list shall also be produced at the time and place of the meeting and shall be subject to the inspection of any Shareholder during the whole time of the meeting for the purposes thereof. ARTICLE VI. Waiver of Notice. Notice of any Shareholders' Meeting may be waived by any Shareholder, whether before or after the date of the meeting. Such waiver of notice shall be in writing, signed by the Shareholder and delivered to the Corporate Secretary. Any Shareholder who attends a meeting shall be deemed to have waived objection to lack of notice or defective notice of the meeting, unless the Shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting and shall be deemed to have waived objection to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the Shareholder objects to considering the matter when it is presented. ARTICLE VII. Quorum. At any meeting of the Shareholders, a majority in number of votes of all the shares issued and outstanding having voting power in respect of the business to be transacted thereat, represented by such Shareholders of record in person or by proxy, shall constitute a quorum, but a lesser interest may adjourn any meeting from time to time and the meeting may be held as adjourned without further notice. When a quorum is present at any meeting, a majority vote represented thereat shall decide any question brought before such meeting, unless the question is one upon which by express provision of law or of the Articles of Incorporation or of these Bylaws a larger or different vote is required, in which case such express provision shall govern and control the decision of such question. The provisions of this Article are, however, subject to the provisions of Article III of the Articles of Incorporation. ARTICLE VIII. Proxy and Voting. Shareholders of record entitled to vote may vote at any meeting held, in person or by proxy executed in writing by the Shareholder or by his duly authorized attorney-in-fact, which shall be filed with the Corporate Secretary of the meeting before being voted. A proxy shall designate only one person as proxy, except that proxies executed pursuant to a general solicitation of proxies may designate one or more persons as proxies. Proxies shall entitle the holders thereof to vote at any adjournment of the meeting, but shall not be valid after the final adjournment thereof. No proxy shall be valid after 11 months from its date unless the appointment form expressly provides for a longer period of validity. Shareholders entitled to vote may also be represented by an agent personally present, duly designated by power of attorney, with or without power of substitution, and such power of attorney shall be produced at the meeting on request. Each holder of record of stock of any class shall, as to all matters in respect of which stock of any class has voting power, be entitled to one vote for each share of stock of such class standing in his name on the books. ARTICLE IX. Board of Directors. A Board of Directors shall be chosen by ballot at the Annual Meeting of the Shareholders or at any meeting held in lieu thereof as herein before provided in Article III. The number of Directors may be fixed from time to time by resolution of the Board of Directors but shall not be less than six nor more than thirteen. Except as otherwise provided in Article XXI hereof, each Director shall serve until the next Annual Meeting of Shareholders and until his successor is duly elected and qualified or until the number of Directors is decreased. The foregoing provisions are, however, subject to Article III of the Articles of Incorporation, if and whenever the same may become applicable by the accrual of voting rights to the Preferred Stock. ARTICLE X. Powers of Directors. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, the Board of Directors, subject to any limitation set forth in the Articles of Incorporation and so far as this delegation of authority is not inconsistent with the laws of the Commonwealth of Virginia, with the Articles of Incorporation or with these Bylaws. ARTICLE XI. Executive and Other Committees. The Board of Directors, by resolution passed by a majority of the whole Board, may designate two or more of its number to constitute an Executive Committee. If a quorum is present, the Committee may act upon the affirmative vote of a majority of the Committee members present. When the Board of Directors is not in session, the Executive Committee shall have and may exercise all of the authority of the Board of Directors except that the Executive Committee shall not (i) approve or recommend to Shareholders action that Virginia law requires to be approved by Shareholders; (ii) fill vacancies on the Board of Directors or any of its Committees or elect officers; (iii) Amend Articles of Incorporation other than as permitted by statute; (iv) adopt, amend or repeal these Bylaws; (v) approve a plan of merger not requiring Shareholder approval; (vi) authorize or approve a distribution, except according to a general formula or method prescribed by the Board of Directors; or (vii) authorize or approve the issuance or sale or contract for sale of shares, or determine the designation and relative rights, preferences, and limitations of a class or series of shares, except that the Board of Directors may authorize the Executive Committee to do so within limits specifically prescribed by the Board of Directors. If the Executive Committee is created for any designated purpose, its authority shall be limited to such purpose. The Executive Committee shall report its action to the Board of Directors. Regular and special meetings of the Executive Committee may be called and held subject to the same requirements with respect to time, place and notice as are specified in these Bylaws for regular and special meetings of the Board of Directors. Members of the Executive Committee shall receive such compensation for attendance at meetings as may be fixed by the Board of Directors. The Board of Directors, by resolution passed by a majority of the whole board, may designate four of its number to constitute a Nominating Committee to nominate future members of the Board of Directors. Such Nominating Committee shall act to ensure that a majority of the membership of the boards of directors of the Corporation and Dominion Resources, Inc. will be comprised of directors of bothe corporations. The Board of Directors likewise may appoint from their number other Committees from time to time, the number composing such Committees and the power conferred upon the same to be subject to the foregoing exceptions for an Executive Committee but otherwise as determined by vote of the Board of Directors. ARTICLE XII. Meetings of Directors and Quorum. Regular Meetings of the Board of Directors may be held at such places within or without the Commonwealth of Virginia and at such times as the Board by vote may determine from time to time, and if so determined no notice thereof need be given. Special Meetings of the Board of Directors may be held at any time or place either within or without the Commonwealth of Virginia, whenever called by the Chairman of the Board of Directors, the President, any Vice President, the Corporate Secretary, or three or more Directors, notice thereof being given to each Director by the Corporate Secretary or an Assistant Corporate Secretary, the Directors or the officer calling the meeting, or at any time without formal notice provided all the Directors are present or those not present waive notice thereof. Notice of Special Meetings, stating the time and place thereof, shall be given by mailing the same to each Director at his residence or business address at least two days before the meeting, or by delivering the same to him personally or telephoning the same to him at his residence or business address at least one day before the meeting, unless, in case of exigency, the Chairmanof the Board of Directors or the President shall prescribe a shorter notice to be given personally or by telephoning each Director at his residence or business address. A written waiver of notice signed by the Director entitled to such notice, whether before or after the date of the meeting, shall be equivalent to the giving of such notice. A Director who attends or participates in a meeting shall be deemed to have waived timely and proper notice of the meeting unless the Director, at the beginning of the meeting or promptly upon his arrival, objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting. A majority of the number of Directors fixed at the time in accordance with the Bylaws shall constitute a quorum for the transaction of business, but a lesser number may adjourn any meeting from time to time, and the meeting may be held without further notice. The foregoing provision is, however, subject to Article III of the Articles of Incorporation. When a quorum is present at any meeting, a majority of the members present thereat shall decide any question brought before such meeting, except as otherwise provided by law, by the Articles of Incorporation or by these Bylaws. ARTICLE XIII. Action Without a Meeting. Any action required to be taken at a meeting of the Directors, or any action which may be taken at a meeting of the Directors or of a Committee, may be taken without a meeting if a consent in writing (which may be in any number of counterparts), setting forth the action so to be taken, shall be signed by all of the Directors, or all of the members of the Committee, as the case may be, either before or after such action is taken. Such consent shall have the same force and effect as a unanimous vote. ARTICLE XIV. Officers. The officers of the Corporation shall be a President, one or more Vice Presidents, a Corporate Secretary, a Treasurer and a Controller. The Chairman of the Board of Directors and the Vice Chairman shall also be an officer unless they are not a full-time employee of the Corporation. The officers, the Chairman of the Board of Directors and the Vice Chairman of the Board of Directors shall be elected or appointed by the Board of Directors after each election of Directors by the Shareholders, and a meeting of the Board of Directors may be held without notice for the purpose of electing officers following the Annual Meeting of the Shareholders. The Board of Directors, in its discretion, may appoint one or more Assistant Corporate Secretaries, one or more Assistant Treasurers, one or more Assistant Controllers, and such other officers or agents as it may deem advisable, and prescribe their duties. ARTICLE XV. Eligibility of Officers. The Chairman of the Board of Directors, the Vice Chairman of the Board of Directors and the President shall be Directors. Any person may hold more than one office provided, however, that neither the Corporate Secretary, the Treasurer nor the Controller shall at the same time hold the office of Chairman of the Board of Directors or President. ARTICLE XVI. Chairman of the Board of Directors and President. The Chairman of the Board of Directors shall preside at the meetings of the Board of Directors. He may call meetings of the Board of Directors and of any Committee thereof whenever he deems it necessary. He shall call to order, and act as chairman of, all meetings of the Shareholders and prescribe rules of procedure therefor. He shall perform the duties commonly incident to his office and such other duties as the Board of Directors shall designate from time to time. The Board of Directors may designate the Chief Executive Officer of the Corporation. In the absence of the Chairman of the Board of Directors, the Vice Chairman of the Board of Directors shall perform his duties. The Vice Chairman of the Board of Directors shall perform the duties commonly incident to his office and such other duties as the Board of Directors shall designate from time to time. In the absence of the Vice Chairman of the Board of Directors, the President shall perform his duties. The President shall perform the duties commonly incident to his office and such other duties as the Board of Directors shall designate from time to time. The Chief Executive Officer, the President and each Vice President shall have authority to sign deeds and contracts and to delegate such authority in such manner as may be approved by the Chief Executive Officer or the President. ARTICLE XVII. Vice Presidents. Except as otherwise provided by the Board of Directors, each Vice President shall have the power to sign all certificates of stock, bonds, deeds and contracts. Each Vice President shall perform such other duties and have such other powers as the Board of Directors shall designate from time to time. In the event of the absence or disability of the President, the duties and powers of the President shall be performed and exercised by the Vice President designated to so act by the line of succession provided by the Board of Directors, or if not so provided by the Board of Directors, in accordance with the following order of priority: (a) The Executive Vice Presidents in order of their seniority of first election to such office, or if two or more shall have been first elected to such office on the same day, in order of their seniority in age; (b) The Senior Vice Presidents in order of their seniority of first election to such office, or if two or more shall have been first elected to such office on the same day, in order of their seniority in age; (c) All other Vice Presidents at the principal office of the Corporation in the order of their seniority of first election to such office or if two or more shall have been first elected to such office on the same day, the order of their seniority in age; and (d) Any other persons that are designated on a list that shall have been approved by the Board of Directors, such persons to be taken in such order of priority and subject to such conditions as may be provided in the resolution approving the list. ARTICLE XVIII. Corporate Secretary. The Corporate Secretary shall keep accurate minutes of all meetings of the Shareholders, the Board of Directors and the Executive Committee, shall perform the duties commonly incident to his office, and shall perform such other duties and have such other powers as the Board of Directors shall designate from time to time. The Corporate Secretary shall have power, together with the President or a Vice President, to sign certificates for shares of stock. In his absence an Assistant Corporate Secretary shall perform his duties. ARTICLE XIX. Treasurer. The Treasurer, subject to the order of the Board of Directors, shall have the care and custody of the money, funds and securities of the Corporation and shall have and exercise under the supervision of the Board of Directors, all the powers and duties commonly incident to his office. He shall deposit all funds of the Corporation in such bank or banks, trust company or trust companies or with such firm or firms doing a banking business, as the Directors shall designate. He may endorse for deposit or collection all checks, notes, et cetera, payable to the Corporation or to its order, may accept drafts on behalf of the Corporation, and, together with the President or a Vice President, may sign certificates for shares of stock. All checks, drafts, notes and other obligations for the payment of money except bonds, debentures and notes issued under an Indenture shall be signed either manually or, if and to the extent authorized by the Board of Directors, through facsimile, by the Treasurer or an Assistant Treasurer or such other officer or agent as the Board of Directors shall authorize. Checks for the total amount of any payroll may be drawn in accordance with the foregoing provisions and deposited in a special fund. Checks upon this fund may be drawn by such person as the Treasurer shall designate. ARTICLE XX. Controller. The Controller shall keep accurate books of account of the Corporation's transactions and shall perform such other duties and have such other powers as the Board of Directors shall designate from time to time. ARTICLE XXI. Resignation and Removals. Any Director may resign at any time by giving written notice to the Board of Directors, to the Chairman of the Board of Directors, to the President or to the Corporate Secretary, and any member of any Committee may resign by giving written notice either as aforesaid or to the Committee of which he is a member or the chairman thereof. Any officer may resign at any time by delivering notice to the Corporation. Any such resignation shall take effect at the time specified therein or, if the time be not specified, upon receipt thereof; and, unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective. The Shareholders, at any meeting called for the purpose, by vote of a majority of the stock having voting power issued and outstanding, may remove any Director from office with or without cause and elect his successor; but this provision is subject to Article III of the Articles of Incorporation, if and whenever the same may become applicable by the accrual of voting rights to the Preferred Stock. The Board of Directors, by vote of a majority of the entire Board, may remove any officer, agent or member of any Committees elected or appointed by them, with or without cause, from office. ARTICLE XXII. Vacancies. If the office of any officer or agent, one or more, becomes vacant by reason of death, disability, resignation, removal, disqualification or otherwise, the Directors at the time in office, may, by a majority vote at a meeting at which a quorum is present, choose a successor or successors who shall hold office for the unexpired term or until his successor is duly elected and qualified or his position is eliminated. ARTICLE XXIII. Certificates for Shares. Every Shareholder shall be entitled to a certificate or certificates for shares of record owned by him in such form as may be prescribed by the Board of Directors,duly numbered and setting forth the number and kind of shares to which such Shareholder is entitled. Such certificates shall be signed by the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Corporate Secretary or an Assistant Corporate Secretary. The Board of Directors may also appoint one or more Transfer Agents and/or Registrars for its stock of any class or classes and may require stock certificates to be countersigned and/or registered by one or more of such Transfer Agents and/or Registrars. If certificates for shares are signed by a Transfer Agent or by a Registrar, the signatures thereon of the President or a Vice President and the Treasurer or an Assistant Treasurer or the Corporate Secretary or an Assistant Corporate Secretary may be facsimiles, engraved or printed. Any provisions of these Bylaws with reference to the signing of stock certificates shall include, in cases above permitted, such facsimiles. In case any officer or officers who shall have signed, or whose facsimile signature or signatures shall have been used on, any such certificate or certificates shall cease to be such officer or officers of the Corporation, whether because of death, resignation or otherwise, before such certificate or certificates shall have been delivered by the Corporation, such certificate or certificates may nevertheless be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures shall have been used thereon had not ceased to be such officer or officers of the Corporation. Notwithstanding the foregoing, the Board of Directors may authorize the issue of some or all of the shares of any or all of its classes or series without certificates. Within a reasonable time after the issue or transfer of shares without certificates, the Corporation shall send the Shareholder a written statement of the information required on certificates by the Virginia Stock Corporation Act or other applicable law. ARTICLE XXIV. Transfer of Shares. Shares may be transferred by delivery of the certificate accompanied either by an assignment in writing on the back of the certificate or by a written power of attorney to sell, assign and transfer the same on the books of the Corporation, signed by the person appearing by the certificate to be the owner of the shares represented thereby, and shall be transferable on the books of the Corporation upon surrender thereof so assigned or endorsed. The person registered on the books of the Corporation as the owner of any shares shall be entitled exclusively as the owner of such shares to receive dividends and to vote in respect thereof. It shall be the duty of every Shareholder to notify the Corporation of his address. ARTICLE XXV. Record Date. For the purpose of determining the Shareholders entitled to notice of or to vote at any meeting of Shareholders, or any adjournment thereof, or entitled to receive payment of any dividend, or in order to make a determination of Shareholders for any other proper purpose, the Board of Directors may fix in advance a date as the record date for any such determination of Shareholders, provided that such date shall not in any case be more than 70 days prior to the date on which the particular action, requiring such determination of Shareholders, is to be taken. If no record date shall be fixed for the determination of Shareholders entitled to notice of or to vote at a meeting of Shareholders, or for the determination of the Shareholders entitled to receive payment of a dividend, the date on which notice of the meeting is mailed or the date on which the resolution of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of Shareholders in such cases. A determination of Shareholders entitled to notice of or to vote at a Shareholders' meeting is effective for any adjournment of the meeting unless the Board of Directors fixes a new record date, which it shall do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. ARTICLE XXVI. Voting of Shares Held. Unless the Board of Directors shall otherwise provide, the Chairman of the Board of Directors, the President any Vice President, or the Corporate Secretary may from time to time appoint one or more attorneys-in-fact or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes that the Corporation may be entitled to cast as a shareholder or otherwise in any other corporation, any of whose stock or securities of which may be held by the Corporation, at meetings of the holders of any such other corporations, or to consent in writing to any action by any such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed on behalf of the Corporation such written proxies, consents, waivers or other instruments as he may deem necessary or proper in the premises; or either the Chairman of the Board of Directors, the President or the Corporate Secretary may himself attend any meeting of the shareholders of any such other corporation and there at vote or exercise any or all other powers of the Corporation as the shareholder of such other corporation. ARTICLE XXVII. Bonds, Debentures and Notes Issued Under an Indenture. All bonds, debentures and notes issued under an Indenture shall be signed by the President or any Vice President or such other officer or agent as the Board of Directors shall authorize and by the Corporate Secretary or any Assistant Corporate Secretary or by the Treasurer or any Assistant Treasurer or such other officer or agent as the Board of Directors shall authorize. The signature of any authorized officer of the Corporation on bonds and debentures authenticated by a corporate trustee may be made manually or by facsimile. ARTICLE XXVIII. Amendments. All Bylaws shall be subject to alteration or repeal, and new Bylaws may be made by the affirmative vote of a majority of the Directors. The Shareholders entitled to vote, however, shall have the power to rescind, amend, alter or repeal the Bylaws and to enact Bylaws which, if expressly so provided, may not be amended, altered or repealed by the Board of Directors. ARTICLE XXIX. Emergency Bylaws. The Emergency Bylaws provided in this Article XXIX shall be operative during any emergency notwithstanding any different provision in the preceding Articles of the Bylaws or in the Articles of Incorporation of the Corporation or in the Virginia Stock Corporation Act. An emergency exists if a quorum of the Corporation's Board of Directors cannot readily be assembled because of some catastrophic event. To the extent not inconsistent with these Emergency Bylaws, the Bylaws provided in the preceding Articles shall remain in effect during such emergency and upon the termination of such emergency the Emergency Bylaws shall cease to be operative unless and until another such emergency shall occur. During any such emergency: (a) Any meeting of the Board of Directors may be called by any officer of the Corporation or by any Director. Notice shall be given by the person calling the meeting. The notice shall specify the place of the meeting, which shall be the principal office of the Corporation at the time if feasible, but otherwise shall be any other place specified in the notice. The notice shall also specify the time of the meeting. Notice may be given only to such of the Directors as it may be feasible to reach at the time and by such means as may be feasible at the time, including publication or radio. If given by mail, messenger or telephone, the notice shall be addressed to the Director's address or such other place as the person giving the notice shall deem most suitable. Notice shall be similarly given, to the extent feasible, to the other persons referred to in (b) below. Notice shall be given at least two days before the meeting if feasible in the judgment of the person giving the notice, but otherwise shall be given any time before the meeting as the person giving the notice shall deem necessary. (b) At any meeting of the Board of Directors, a quorum shall consist of a majority of the number of Directors fixed at the time by Article IX of the Bylaws. If the Directors present at any particular meeting shall be fewer than the number required for such quorum, other persons present, as determined by the following provisions and in the following order of priority, up to the number necessary to make up such quorum, shall be deemed Directors for such particular meeting: (i) The Executive Vice Presidents; (ii) The Senior Vice Presidents in the order of their seniority of first election to such office, or if two or more shall have been first elected to such office on the same day, in the order of their seniority in age; (iii) All other Vice Presidents at the principal office of the Corporation in the order of their seniority of first election to such office, or if two or more shall have been first elected to such office on the same day, in the order of their seniority in age; and (iv) Any other persons that are designated on a list that shall have been approved by the Board of Directors before the emergency, such persons to be taken in such order of priority and subject to such conditions as may be provided in the resolution approving the list. (c) The Board of Directors, during as well as before any such emergency, may provide, and from time to time modify, lines of succession in the event that during such an emergency any or all officers or agents of the Corporation for any reason shall be rendered incapable of discharging their duties. (d) The Board of Directors, before and during any such emergency, may, effective in the emergency, change the principal office or designate several alternative principal offices or regional offices, or authorize the officers so to do. No officer, Director or employee shall be liable for any action taken in good faith in accordance with these Emergency Bylaws. These Emergency Bylaws shall be subject to repeal or change by further action of the Board of Directors or by action of the Shareholders, except that no such repeal or change shall modify the provisions of the next preceding paragraph with regard to action or inaction prior to the time of such repeal or change. Any such amendment of these Emergency Bylaws may make any further or different provision that may be practical and necessary for the circumstances of the emergency. EX-10 3 EXHIBIT 10.22 Exhibit 10(xxii) DOMINION RESOURCES, INC. DIRECTORS' DEFERRED COMPENSATION PLAN As Amended and Restated Effective July 1, 1986 For the Directors of: Dominion Resources, Inc. Virginia Electric and Power Company Virginia Natural Gas, Inc. TABLE OF CONTENTS Section Page 1. Purpose 1 2. Definitions 1 3. Participation 3 4. Deferral Election 3 5. Effect of No Election 5 6. Deferred Cash Benefits 5 7. Deferred Stock Benefits 6 8. Distributions 7 9. Hardship Distributions 9 10. Company's Obligation 9 11. Control by Participant 10 12. Claims Against Participant's Deferred Benefits 10 13. Amendment or Termination 10 14. Notices 11 15. Waiver 11 16. Construction 12 17. Corporate and Committee Actions and Responsibilities 12 1. PURPOSE. The Dominion Resources, Inc. Directors' Deferred Compensation Plan (the "Plan"), is intended to constitute a deferred compensation plan for corporate directors' fees in accordance with Revenue Ruling 71-419, 1971-2 C.B. 220. 2. DEFINITIONS. The following definitions apply to this Plan and to the Deferral Election Forms. (a) Beneficiary or Beneficiaries means a person or persons or other entity designated on a Beneficiary Designation Form by a Participant as allowed in subsection 8(c) of this Plan to receive Deferred Benefit payments. If there is no valid designation by the Participant, or if the designated Beneficiary or Beneficiaries fail to survive the Participant or otherwise fail to take the Benefit, the Participant's Beneficiary is the first of the following who survives the Participant: a Participant's spouse (the person legally married to the Participant when the Participant dies); the Participant's children in equal shares; the Participant's other surviving issue, per stirpes; the Participant's parents; and the Participant's estate. (b) Beneficiary Designation Form means a form acceptable to the Chairman of the Committee or his designee used by a Participant according to this Plan to name his Beneficiary or Beneficiaries who will receive all Deferred Benefit payments under this Plan if he dies. (c) Board means the board of directors of the Company, according to law and to each entity's governing documents. (d) Committee means the Organization and Compensation Committee of Dominion Resources, Inc. (e) Company means Dominion Resources, Inc.; Virginia Electric and Power Company; and any of their affiliates that with approval of the board of directors of Dominion Resources, Inc. adopt or have adopted this Plan; any successor business by merger, purchase, or otherwise that maintains the Plan; or any predecessor business or employer that has maintained the Plan. (f) Compensation means a Member's Meeting Fees and Retainer Fees for the Deferral Year. (g) Deferral Election Form means a document governed by the provisions of section 4 of this Plan, including the portion that is the Distribution Election Form and the related Beneficiary Designation Form that applies to all of that Participant's Deferred Benefits under the Plan. (h) Deferral Year means a calendar year for which a Member has an operative Deferral Election Form. (i) Deferred Benefit means either a Deferred Cash Benefit or a Deferred Stock Benefit under the Plan for a Member who has submitted an operative Deferral Election Form pursuant to section 4 of this Plan. (j) Deferred Cash Account means that bookkeeping record established for each Participant who elects a Deferred Cash Benefit under this Plan. A Deferred Cash Account is established only for purposes of measuring a Deferred Cash Benefit and not to segregate assets or to identify assets that may or must be used to satisfy a Deferred Cash Benefit. A Deferred Cash Account will be credited with the Participant's Compensation deferred as a Deferred Cash Benefit according to a Deferral Election Form and according to section 6 of this Plan. A Deferred Cash Account will be credited periodically with amounts based upon interest rates established by the Committee under sub- section 6(b) of this Plan. (k) Deferred Cash Benefit means the Deferred Benefit elected by a Participant under section 4 that results in payments governed by sections 6 and 8. (l) Deferred Stock Account means that bookkeeping record established for each Participant who elects a Deferred Stock Benefit under this Plan. A Deferred Stock Account is established only for purposes of measuring a Deferred Stock Benefit and not to segregate assets or to identify assets that may or must be used to satisfy a Deferred Stock Benefit. A Deferred Stock Account will be credited with the Participant's Compensation deferred as a Deferred Stock Benefit according to a Deferral Election Form and according to section 7 of this Plan. A Deferred Stock Account will be credited periodically with amounts determined by the Committee under subsection 7(b) of this Plan. (m) Deferred Stock Benefit means the Deferred Benefit elected by a Participant under section 4 that results in payments governed by sections 7 and 8. (n) Directors means those duly named members of the Board. (o) Distribution Election Form means that part of a Deferral Election Form used by a Participant according to this Plan to establish the duration of deferral and the frequency of payments of a Deferred Benefit. If a Deferred Benefit has no Distribution Election Form that is operative according to section 4, distribution of that Deferred Benefit is governed by section 8. (p) Dominion means Dominion Resources, Inc. (q) Election Date means the date established by this Plan as the date before which a Member must submit a valid Deferral Election Form to the Committee. For each Deferral Year, the Election Date is December 31 of the preceding calendar year. However, for an individual who becomes a Member during a Deferral Year, the Election Date is the thirtieth day following the date that he becomes a Member. Despite the two preceding sentences, the Committee may set an earlier date as the Election Date for any Deferral Year. (r) Meeting Fees means the portion of a Director's Compensation that is based upon his attendance at Board meetings and meetings of the Company's committees, according to the Company's established rules and procedures for compensating Directors. (s) Member means a Director of a Company who is eligible to participate in this Plan according to criteria which may from time to time be adopted by that Company. (t) Participant, with respect to any Deferral Year, means a Member whose Deferral Election Form is operative for that Deferral Year according to section 4 of this Plan. (u) Plan means the Dominion Resources, Inc. Directors' Deferred Compensation Plan. (v) Retainer Fee means that portion of a Director's Compensation that is fixed and paid without regard to his attendance at meetings. (w) Terminate, Terminating, or Termination, with respect to a Participant, mean cessation of his relationship with the Company as a Director whether by death, disability or severance for any other reason. Unless the Committee determines otherwise in its sole discretion, Terminate, Terminating, or Termination do not include situations where the Participant continues to be employed by a Company or a Director on the board of a Company. 3. PARTICIPATION. A Member becomes a Participant for any Deferral Year by filing a valid Deferral Election Form according to section 4 on or before the Election Date for that Deferral Year, but only if his Deferral Election Form is operative according to section 4. 4. DEFERRAL ELECTION. A deferral election is valid when a Deferral Election Form is completed, signed by the electing Member, and received by the Committee Chairman. Deferral elections are governed by the provisions of this section. (a) A Participant may elect a Deferred Benefit for any Deferral Year if he is a Member at the beginning of that Deferral Year or becomes a Member during that Deferral Year. (b) Before each Deferral Year's Election Date, each Member will be provided with Deferral Election Forms and a Beneficiary Designation Form. Under one or both Deferral Election Forms for a single Deferral Year, a Member may elect on or before the Election Date to defer the receipt of his entire Retainer Fee or all of his Meeting Fees or all of his Compensation for the Deferral Year. Each Distribution Election Form must provide for the deferral of its covered Deferred Benefit at least until after the Member is 65 or until he Terminates, if that is before he is 65. (c) A Member may complete a Deferral Election Form for either a Deferred Cash Benefit or a Deferred Stock Benefit for his Retainer Fee and a different Deferral Election Form for his Meeting Fees, or he may complete a single Deferral Election Form for his entire Compensation. A Member may not divide his Retainer Fee between Deferral Election Forms, and he may not divide his Meeting Fees between Deferral Election Forms. (d) A Deferral Election Form that covers a Member's Meeting Fees must cover his entire Meeting Fees for the Deferral Year. A Deferral Election Form that covers a Member's Retainer Fee must cover his entire Retainer Fee for the Deferral Year. If a Participant is a Director for more than one Company, his Deferral Election Form shall apply to all his Meeting Fees, Retainer Fees, or Compensation (which ever is indicated by the Participant on the Deferral Election Form) payable to him as a Member; provided that the Participant may, with the permission of the Committee, complete a separate Deferral Election Form covering such fees payable to him as a Member from each such Company. (e) Except as provided in this subsection and in the situation described in Plan subsection 13(b), a Participant may not elect to convert a Deferred Cash Benefit to a Deferred Stock Benefit or to convert a Deferred Stock Benefit to a Deferred Cash Benefit. If a Participant's election of a Deferred Stock Benefit is subject to the contingency described in Plan subsection 13(b), the Participant may file a Deferred Cash Benefit/Deferred Stock Benefit Election Form for the affected Deferral Year (or part thereof) on or before the designated Election Date and elect to convert a Deferred Cash Benefit into a Deferred Stock Benefit as of the effective date of the Plan provisions relating to Deferred Stock Benefits, determined under section 13(b). (f) Each Distribution Election Form is part of the Deferral Election Form on which it appears or to which it states that it is related. The Committee may allow a Participant to file one Distribution Election Form for all of his Deferred Cash Benefits and one for all of his Deferred Stock Benefits. The provisions of subsection 2(o) apply to any Deferred Benefit under this Plan if there is no operative Distribution Election Form for that Deferred Benefit. (g) If it does so before the last business day of the Deferral Year, the Committee may reject any Deferral Election Form or any Distribution Election Form or both, and the Committee is not required to state a reason for any rejection. The Committee may modify any Distribution Election Form at any time to the extent necessary to comply with any federal securities laws or regulations. However, the Committee's rejection of any Deferral Election Form or any Distribution Election Form or the Committee's modification of any Distribution Election Form must be based upon action taken without regard to any vote of the Member whose Deferral Election Form or Distribution Election Form is under consideration, and the Committee's rejections must be made on a uniform basis with respect to similarly situated Members. If the Committee rejects a Deferral Election Form, the Member must be paid the amounts he would then have been entitled to receive if he had not submitted the rejected Deferral Election Form. (h) A Member may not revoke a Deferral Election Form or a Distribution Election Form after the Deferral Year begins. Any revocation before the beginning of the Deferral Year is the same as a failure to submit a Deferral Election Form or a Distribution Election Form. Any writing signed by a Member expressing an intention to revoke his Deferral Election Form or a related Distribution Election Form and delivered to a member of the Committee before the close of business on the relevant Election Date is a revocation. 5. EFFECT OF NO ELECTION. A Member who has not submitted a valid Deferral Election Form to the Committee on or before the relevant Election Date may not defer his Compensation for the Deferral Year under this Plan. The Deferred Benefit of a Member who submits a valid Deferral Election Form but fails to submit a valid Distribution Election Form for that Deferred Benefit before the relevant Election Date or who otherwise has no valid Distribution Election Form for that Deferred Benefit is governed by section 2(o). 6. DEFERRED CASH BENEFITS. (a) Deferred Cash Benefits will be set up in a Deferred Cash Account for each Participant and credited with interest at rates determined by the Committee. Deferred Cash Benefits are credited to the applicable Participant's Deferred Cash Account as of the day they would have been paid but for the deferral. Interest is credited on the first day of each month based on the Deferred Cash Account balance at the end of the preceding day. (b) Interest will be credited to Deferred Cash Accounts based on average three-month United States Treasury Bill rates (equivalent yield, not discount yield) as published by the Federal Reserve Board. The applicable rate for each month will be determined on the last business day of the previous month. Those interest rates will apply prospectively for all current and future Deferred Cash Account balances until the basis on which interest is determined is changed by the Committee. Interest credits are accrued monthly on accumulated Deferred Cash Accounts. Interest is accrued through the end of the month preceding the month of distribution of a Deferred Cash Benefit. (c) If a Participant elects under section 4(e) to convert a Deferred Cash Benefit into a Deferred Stock Benefit, the Participant's Deferred Cash Account will be converted to a Deferred Stock Account governed by section 7 as of the date the Plan's provisions relating to Deferred Stock Benefits become effective for purposes of the Participant's election. 7. DEFERRED STOCK BENEFITS. Subject to section 13(b), electing Participants' Deferred Stock Benefits are governed by this section. (a) Deferred Stock Benefits will be set up in a Deferred Stock Account for each electing Participant and credited with earnings at rates determined by the Committee. A Deferred Stock Benefit attributable to a Retainer Fee is credited to the Participant's Deferred Stock Account on the last day of each calendar quarter of the Deferral Year. A Deferred Stock Benefit attributable to a Meeting Fee is credited to the Participant's Deferred Stock Account on the last day of the month in which a meeting occurs. (b) Rates established by the Committee as the basis for additional credits to Deferred Stock Accounts will be variable rates equal to the value of dividends paid on Dominion common stock when the additional credit is made. The value of a Deferred Stock Account at any relevant time equals the value of the shares of Dominion common stock as if the Compensation deferred by the Participant under the Plan and any additional credits under this subsection had been used to purchase Dominion common stock on the date those amounts were credited to the Deferred Stock Account. Additional credits are credited on the last day of each calendar quarter on accumulated Deferred Stock Accounts. Additional credits are accrued through the end of the year preceding the year of distribution of a Deferred Stock Benefit. (c) If a trust is established under Plan sections 10(b) and 13(c), an electing Participant may instruct the trustee under the governing trust agreement how to vote shares of Dominion common stock allocated to that Participant's separate account under the trust according to this subsection and provisions of the governing trust agreement. Before each annual or special meeting of the Dominion shareholders, the trustee under the governing trust agreement must furnish each Participant with a copy of the proxy solicitation and other relevant material for the meeting as furnished to the trustee by Dominion, and a form addressed to the trustee requesting the Participant's confidential instructions on how to vote shares of Dominion common stock allocated to his account as of the valuation date established under the governing trust agreement preceding the record date. Upon receipt of those instructions, the trustee under the governing trust agreement must vote such stock as instructed. 8. DISTRIBUTIONS. (a) According to a Participant's Distribution Election Form, but subject to Plan section 4(g), a Deferred Cash Benefit must be distributed in cash. According to a Participant's Distribution Election Form, but subject to Plan section 4(g), a Deferred Stock Benefit must be distributed in shares of Dominion common stock equal in value to the value of the Participant's Deferred Stock Account on the last day of the month preceding the month of distribution. However, cash must be paid in lieu of fractional shares of Dominion common stock otherwise distributable. According to the procedures of Plan section 4(g), the Committee may modify any Participant's Distribution Election Form to prevent any distribution of Dominion common stock to pay a Deferred Stock Benefit if the total number of shares of such stock distributed under this Plan after such distribution would exceed 100,000 shares times the number of Participants in the Plan on the relevant date. (b) Except for distributions triggered by a Participant's disability, Deferred Benefits will be paid in a lump sum unless the Participant's Distribution Election Form specifies installment payments over 10 years. For a Deferred Cash Benefit payable in installments, interest credits under section 6(b) continue to accrue on the unpaid balance of a Deferred Cash Account. For a Deferred Stock Benefit payable in installments, additional credits under section 7(b) do not accrue on the unpaid balance of a Deferred Stock Account after the year preceding the year in which payments begin. Instead, any additional credits that would have been credited to a Deferred Stock Account are payable to the applicable Participant in cash on the date that would otherwise have been credited. If a Participant Terminates as a result of his disability, Deferred Benefits will be paid to such Participant in installment payments over a period of 10 years commencing on the date his disability is certified by the Committee unless the Committee, in its sole discretion, approves a longer or shorter payment period. If, after his Termination as a result of disability, such Participant recovers before the balance of his Deferred Cash and Deferred Stock Accounts under the Plan are exhausted, his distributions will be discontinued and any remaining Deferred Benefits under the Plan will be governed by the provisions of this section and his Distribution Election Forms. Unless otherwise specified in a Participant's Distribution Election Form, any lumpsum payment will be paid or installment payments will begin to be paid on the February 15 of the year after the Participant's sixty-fifth birthday or on the February 15 of the year after the Participant's Termination, if earlier. For distributions that would automatically be caused under the preceding sentence by a Participant's Termination (other than by death or disability) or for distributions that would otherwise automatically begin because a Participant reaches age 65, the Participant may elect on his Distribution Election Form that payments are to begin: (i) on the February 15 following his Termination, without regard to his age; or (ii) on the February 15 following his Termination and his attainment of a specified age; or (iii) even if the Participant does not Terminate, on the February 15 following a specified age. For purposes of these distribution election alternatives, the specified age must be not less than the Participant's age two years from the Election Date pertaining to the applicable Deferral Year and not greater than the age at which there are no earnings limitations in order to receive full social security benefits (currently age 70). (c) Deferred Benefits may not be assigned by a Participant or Beneficiary. A Participant may use only one Beneficiary Designation Form to designate one or more Beneficiaries for all of his Deferred Benefits under the Plan; such designations are revocable. Each Beneficiary will receive his portion of the Participant's Deferred Cash Account and Deferred Stock Account on February 15 of the year following the Participant's death unless the Beneficiary's request for accelerated payment is approved at the Committee's discretion under section 9 or unless the Beneficiary's request for a different distribution schedule is received before distributions begin and is approved at the Committee's discretion. The Committee may insist that multiple Beneficiaries agree upon a single distribution method. (d) Any Dominion common stock distributed pursuant to the Plan shall have been acquired by an "agent independent of the issuer" (i.e., the Company) within the meaning of 17 CFR section 240.10b-18, as such regulation is in effect on April 19, 1985. Such acquisitions may be effected in all cases on the open market or, in the event that the Company makes available newly issued common stock, directly from the Company, provided that such common stock has been registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended, or any successor thereto at the time such purchase is made or an exemption from such registration requirement is, in the opinion of counsel to the Company, available. 9. HARDSHIP DISTRIBUTIONS. (a) At its sole discretion and at the request of a Participant before or after the Participant's Termination, or at the request of any of the Participant's Beneficiaries after the Participant's death, the Committee may accelerate and pay all or part of any amount attributable to a Participant's Deferred Benefits under this Plan. Accelerated distributions may be allowed only in the event of a financial emergency beyond the Participant's or Beneficiary's control and only if disallowance of a distribution would create a severe hardship for the Participant or Beneficiary. An accelerated distribution must be limited to the amount determined by the Committee to be necessary to satisfy the financial emergency. (b) For purposes of an accelerated distribution of a Deferred Stock Benefit under this section, the Deferred Stock Benefit's value is determined by the value of the Deferred Stock Account at the time of the distribution. (c) Only cash distributions are permitted under this section. Distributions under this section must first be made from the Participant's Deferred Cash Account before accelerating the distribution of any amount attributable to a Deferred Stock Benefit. (d) A distribution under this section is in lieu of that portion of the Deferred Benefit that would have been paid otherwise. A Deferred Cash Benefit is adjusted for a distribution under this section by reducing the Participant's Deferred Cash Account balance by the amount of the distribution. A Deferred Stock Benefit is adjusted for a distribution under this section by reducing the value of the Participant's Deferred Stock Account by the amount of the distribution. 10. COMPANY'S OBLIGATION. (a) The Plan is unfunded. A Deferred Benefit is at all times a mere contractual obligation of the Company. A Participant and his Beneficiaries have no right, title, or interest in the Deferred Benefits or any claim against them. Except according to sections 10(b) and 13(c), the Company will not segregate any funds or assets for Deferred Benefits nor issue any notes or security for the payment of any Deferred Benefit. (b) Subject to section 13(c), the Company may establish a grantor trust and transfer to that trust shares of Dominion common stock or other assets. Trust assets must be invested primarily in Dominion common stock for the purpose of measuring the value of Deferred Stock Accounts under the Plan to be distributed as Deferred Stock Benefits in the form of Dominion common stock, plus cash in lieu of fractional shares. The governing trust agreement must require a separate account to be established for each electing Participant. The governing trust agreement must also require that all Company assets held in trust remain at all times subject to the Company's judgment creditors. 11. CONTROL BY PARTICIPANT. A Participant has no control over Deferred Benefits except according to his Deferral Election Forms, his Distribution Election Forms, and his Beneficiary Designation Form. 12. CLAIMS AGAINST PARTICIPANT'S DEFERRED BENEFITS. A Deferred Cash Account and Deferred Stock Account relating to a Participant under this Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to do so is void. A Deferred Benefit is not subject to attachment or legal process for a Participant's debts or other obligations. Nothing contained in this Plan gives any Participant any interest, lien, or claim against any specific asset of the Company. A Participant or his Beneficiary has no rights other than as a general creditor. 13. AMENDMENT OR TERMINATION. Except as otherwise provided in this section, this Plan may be altered, amended, suspended, or terminated at any time as to Dominion, Virginia Electric and Power Company, or any Company that has adopted the Plan (pursuant to Plan section 2(e)) by that entity's board. (a) The Plan shall be operated according to its terms (as amended periodically) and as directed by the Committee until it is effective. Once the Plan is effective, the board of Dominion, Virginia Electric and Power Company, or any Company that has adopted the Plan (pursuant to Plan section 2(e)) may alter, amend, suspend, or terminate this Plan at any time as it relates to its directors. However, except for a termination of the Plan caused by the determination of the applicable board that the laws upon which the Plan is based have changed in a manner that negates the Plan's objectives, that board may not alter, amend, suspend, or terminate this Plan without the majority consent of all Directors who are Participants if that action would result either in a distribution of all Deferred Benefits in any manner other than as provided in this Plan or that would result in immediate taxation of Deferred Benefits to Participants. Notwithstanding the preceding sentence, if any amendment to the Plan, subsequent to the date the Plan became effective, adversely affects Deferred Benefits elected hereunder, after the effective date of any such amendment, and the Internal Revenue Service declines to rule favorably on any such amendment or to rule favorably only if the applicable board makes amendments to the Plan not acceptable to such board, the board of each Company, in its sole discretion, may accelerate the distribution of part or all amounts attributable to affected Deferred Benefits due its Members hereunder. (b) This subsection applies if shareholder approval is required for any or all elections by a Company's participating Directors of Deferred Stock Benefits under the Plan. Despite section 13(a), section 10(b) and all provisions of this Plan relating to Deferred Stock Benefits as to a designated Participant are effective only on the first day of the month following the month in which (i) a sufficient majority of the appropriate entity's shareholders, determined under applicable federal and state laws, approves those Plan provisions as to that designated Participant; or (ii) counsel selected by the Company determines that such approval is unnecessary. (c) The Company may only contribute to a trustee under a trust agreement by transferring cash or assets with a fair-market value equal to the value (determined at the nearest month end) of the related Deferred Stock Accounts if the trust agreement contains provisions sufficient (in the opinion of either the Internal Revenue Service or counsel selected by the Company) to allow the Participants to defer income taxation on their Deferred Stock Benefits until they are distributed according to this Plan and provisions sufficient (in the opinion of counsel selected by the Company) to exempt the Plan and the trust from sections 10(b) and 16(b) of the Securities Exchange Act of 1934 and applicable rules and regulations. If the Internal Revenue Service refuses to give the required opinion on such a trust, and if counsel selected by the Company is of the opinion that no such trust can be created, Plan section 10(b) and all provisions of this Plan relating to Deferred Stock Benefits will not become effective. 14. NOTICES. Notices and elections under this Plan must be in writing. A notice or election is deemed delivered if it is delivered personally or if it is mailed by registered or certified mail to the person at his last known business address. 15. WAIVER. The waiver of a breach of any provision in this Plan does not operate as and may not be construed as a waiver of any later breach. 16. CONSTRUCTION. This Plan is created, adopted, and maintained according to the laws of Virginia (except its choice-of-law rules). It is governed by those laws in all respects. Headings and captions are only for convenience; they do not have substantive meaning. If a provision of this Plan is not valid or not enforceable, that fact in no way affects the validity or enforceability of any other provision. Use of the one gender includes all, and the singular and plural include each other. 17. CORPORATE AND COMMITTEE ACTIONS AND RESPONSIBILITIES. Each Company shall be solely responsible for the Plan as it relates to its directors. The Committee has delegated, to the Vice-President--Human Resources and the Manager of Corporate Compensation Services, certain administrative determinations under the Plan that do not affect individuals' participation or awards. EX-10 4 EXHIBIT 10.23 Exhibit 10(xxii) DOMINION RESOURCES, INC. DIRECTORS' DEFERRED COMPENSATION PLAN As Amended and Restated Effective July 1, 1986 For the Directors of: Dominion Resources, Inc. Virginia Electric and Power Company Virginia Natural Gas, Inc. TABLE OF CONTENTS Section Page 1. Purpose 1 2. Definitions 1 3. Participation 3 4. Deferral Election 3 5. Effect of No Election 5 6. Deferred Cash Benefits 5 7. Deferred Stock Benefits 6 8. Distributions 7 9. Hardship Distributions 9 10. Company's Obligation 9 11. Control by Participant 10 12. Claims Against Participant's Deferred Benefits 10 13. Amendment or Termination 10 14. Notices 11 15. Waiver 11 16. Construction 12 17. Corporate and Committee Actions and Responsibilities 12 1. PURPOSE. The Dominion Resources, Inc. Directors' Deferred Compensation Plan (the "Plan"), is intended to constitute a deferred compensation plan for corporate directors' fees in accordance with Revenue Ruling 71-419, 1971-2 C.B. 220. 2. DEFINITIONS. The following definitions apply to this Plan and to the Deferral Election Forms. (a) Beneficiary or Beneficiaries means a person or persons or other entity designated on a Beneficiary Designation Form by a Participant as allowed in subsection 8(c) of this Plan to receive Deferred Benefit payments. If there is no valid designation by the Participant, or if the designated Beneficiary or Beneficiaries fail to survive the Participant or otherwise fail to take the Benefit, the Participant's Beneficiary is the first of the following who survives the Participant: a Participant's spouse (the person legally married to the Participant when the Participant dies); the Participant's children in equal shares; the Participant's other surviving issue, per stirpes; the Participant's parents; and the Participant's estate. (b) Beneficiary Designation Form means a form acceptable to the Chairman of the Committee or his designee used by a Participant according to this Plan to name his Beneficiary or Beneficiaries who will receive all Deferred Benefit payments under this Plan if he dies. (c) Board means the board of directors of the Company, according to law and to each entity's governing documents. (d) Committee means the Organization and Compensation Committee of Dominion Resources, Inc. (e) Company means Dominion Resources, Inc.; Virginia Electric and Power Company; and any of their affiliates that with approval of the board of directors of Dominion Resources, Inc. adopt or have adopted this Plan; any successor business by merger, purchase, or otherwise that maintains the Plan; or any predecessor business or employer that has maintained the Plan. (f) Compensation means a Member's Meeting Fees and Retainer Fees for the Deferral Year. (g) Deferral Election Form means a document governed by the provisions of section 4 of this Plan, including the portion that is the Distribution Election Form and the related Beneficiary Designation Form that applies to all of that Participant's Deferred Benefits under the Plan. (h) Deferral Year means a calendar year for which a Member has an operative Deferral Election Form. (i) Deferred Benefit means either a Deferred Cash Benefit or a Deferred Stock Benefit under the Plan for a Member who has submitted an operative Deferral Election Form pursuant to section 4 of this Plan. (j) Deferred Cash Account means that bookkeeping record established for each Participant who elects a Deferred Cash Benefit under this Plan. A Deferred Cash Account is established only for purposes of measuring a Deferred Cash Benefit and not to segregate assets or to identify assets that may or must be used to satisfy a Deferred Cash Benefit. A Deferred Cash Account will be credited with the Participant's Compensation deferred as a Deferred Cash Benefit according to a Deferral Election Form and according to section 6 of this Plan. A Deferred Cash Account will be credited periodically with amounts based upon interest rates established by the Committee under sub- section 6(b) of this Plan. (k) Deferred Cash Benefit means the Deferred Benefit elected by a Participant under section 4 that results in payments governed by sections 6 and 8. (l) Deferred Stock Account means that bookkeeping record established for each Participant who elects a Deferred Stock Benefit under this Plan. A Deferred Stock Account is established only for purposes of measuring a Deferred Stock Benefit and not to segregate assets or to identify assets that may or must be used to satisfy a Deferred Stock Benefit. A Deferred Stock Account will be credited with the Participant's Compensation deferred as a Deferred Stock Benefit according to a Deferral Election Form and according to section 7 of this Plan. A Deferred Stock Account will be credited periodically with amounts determined by the Committee under subsection 7(b) of this Plan. (m) Deferred Stock Benefit means the Deferred Benefit elected by a Participant under section 4 that results in payments governed by sections 7 and 8. (n) Directors means those duly named members of the Board. (o) Distribution Election Form means that part of a Deferral Election Form used by a Participant according to this Plan to establish the duration of deferral and the frequency of payments of a Deferred Benefit. If a Deferred Benefit has no Distribution Election Form that is operative according to section 4, distribution of that Deferred Benefit is governed by section 8. (p) Dominion means Dominion Resources, Inc. (q) Election Date means the date established by this Plan as the date before which a Member must submit a valid Deferral Election Form to the Committee. For each Deferral Year, the Election Date is December 31 of the preceding calendar year. However, for an individual who becomes a Member during a Deferral Year, the Election Date is the thirtieth day following the date that he becomes a Member. Despite the two preceding sentences, the Committee may set an earlier date as the Election Date for any Deferral Year. (r) Meeting Fees means the portion of a Director's Compensation that is based upon his attendance at Board meetings and meetings of the Company's committees, according to the Company's established rules and procedures for compensating Directors. (s) Member means a Director of a Company who is eligible to participate in this Plan according to criteria which may from time to time be adopted by that Company. (t) Participant, with respect to any Deferral Year, means a Member whose Deferral Election Form is operative for that Deferral Year according to section 4 of this Plan. (u) Plan means the Dominion Resources, Inc. Directors' Deferred Compensation Plan. (v) Retainer Fee means that portion of a Director's Compensation that is fixed and paid without regard to his attendance at meetings. (w) Terminate, Terminating, or Termination, with respect to a Participant, mean cessation of his relationship with the Company as a Director whether by death, disability or severance for any other reason. Unless the Committee determines otherwise in its sole discretion, Terminate, Terminating, or Termination do not include situations where the Participant continues to be employed by a Company or a Director on the board of a Company. 3. PARTICIPATION. A Member becomes a Participant for any Deferral Year by filing a valid Deferral Election Form according to section 4 on or before the Election Date for that Deferral Year, but only if his Deferral Election Form is operative according to section 4. 4. DEFERRAL ELECTION. A deferral election is valid when a Deferral Election Form is completed, signed by the electing Member, and received by the Committee Chairman. Deferral elections are governed by the provisions of this section. (a) A Participant may elect a Deferred Benefit for any Deferral Year if he is a Member at the beginning of that Deferral Year or becomes a Member during that Deferral Year. (b) Before each Deferral Year's Election Date, each Member will be provided with Deferral Election Forms and a Beneficiary Designation Form. Under one or both Deferral Election Forms for a single Deferral Year, a Member may elect on or before the Election Date to defer the receipt of his entire Retainer Fee or all of his Meeting Fees or all of his Compensation for the Deferral Year. Each Distribution Election Form must provide for the deferral of its covered Deferred Benefit at least until after the Member is 65 or until he Terminates, if that is before he is 65. (c) A Member may complete a Deferral Election Form for either a Deferred Cash Benefit or a Deferred Stock Benefit for his Retainer Fee and a different Deferral Election Form for his Meeting Fees, or he may complete a single Deferral Election Form for his entire Compensation. A Member may not divide his Retainer Fee between Deferral Election Forms, and he may not divide his Meeting Fees between Deferral Election Forms. (d) A Deferral Election Form that covers a Member's Meeting Fees must cover his entire Meeting Fees for the Deferral Year. A Deferral Election Form that covers a Member's Retainer Fee must cover his entire Retainer Fee for the Deferral Year. If a Participant is a Director for more than one Company, his Deferral Election Form shall apply to all his Meeting Fees, Retainer Fees, or Compensation (which ever is indicated by the Participant on the Deferral Election Form) payable to him as a Member; provided that the Participant may, with the permission of the Committee, complete a separate Deferral Election Form covering such fees payable to him as a Member from each such Company. (e) Except as provided in this subsection and in the situation described in Plan subsection 13(b), a Participant may not elect to convert a Deferred Cash Benefit to a Deferred Stock Benefit or to convert a Deferred Stock Benefit to a Deferred Cash Benefit. If a Participant's election of a Deferred Stock Benefit is subject to the contingency described in Plan subsection 13(b), the Participant may file a Deferred Cash Benefit/Deferred Stock Benefit Election Form for the affected Deferral Year (or part thereof) on or before the designated Election Date and elect to convert a Deferred Cash Benefit into a Deferred Stock Benefit as of the effective date of the Plan provisions relating to Deferred Stock Benefits, determined under section 13(b). (f) Each Distribution Election Form is part of the Deferral Election Form on which it appears or to which it states that it is related. The Committee may allow a Participant to file one Distribution Election Form for all of his Deferred Cash Benefits and one for all of his Deferred Stock Benefits. The provisions of subsection 2(o) apply to any Deferred Benefit under this Plan if there is no operative Distribution Election Form for that Deferred Benefit. (g) If it does so before the last business day of the Deferral Year, the Committee may reject any Deferral Election Form or any Distribution Election Form or both, and the Committee is not required to state a reason for any rejection. The Committee may modify any Distribution Election Form at any time to the extent necessary to comply with any federal securities laws or regulations. However, the Committee's rejection of any Deferral Election Form or any Distribution Election Form or the Committee's modification of any Distribution Election Form must be based upon action taken without regard to any vote of the Member whose Deferral Election Form or Distribution Election Form is under consideration, and the Committee's rejections must be made on a uniform basis with respect to similarly situated Members. If the Committee rejects a Deferral Election Form, the Member must be paid the amounts he would then have been entitled to receive if he had not submitted the rejected Deferral Election Form. (h) A Member may not revoke a Deferral Election Form or a Distribution Election Form after the Deferral Year begins. Any revocation before the beginning of the Deferral Year is the same as a failure to submit a Deferral Election Form or a Distribution Election Form. Any writing signed by a Member expressing an intention to revoke his Deferral Election Form or a related Distribution Election Form and delivered to a member of the Committee before the close of business on the relevant Election Date is a revocation. 5. EFFECT OF NO ELECTION. A Member who has not submitted a valid Deferral Election Form to the Committee on or before the relevant Election Date may not defer his Compensation for the Deferral Year under this Plan. The Deferred Benefit of a Member who submits a valid Deferral Election Form but fails to submit a valid Distribution Election Form for that Deferred Benefit before the relevant Election Date or who otherwise has no valid Distribution Election Form for that Deferred Benefit is governed by section 2(o). 6. DEFERRED CASH BENEFITS. (a) Deferred Cash Benefits will be set up in a Deferred Cash Account for each Participant and credited with interest at rates determined by the Committee. Deferred Cash Benefits are credited to the applicable Participant's Deferred Cash Account as of the day they would have been paid but for the deferral. Interest is credited on the first day of each month based on the Deferred Cash Account balance at the end of the preceding day. (b) Interest will be credited to Deferred Cash Accounts based on average three-month United States Treasury Bill rates (equivalent yield, not discount yield) as published by the Federal Reserve Board. The applicable rate for each month will be determined on the last business day of the previous month. Those interest rates will apply prospectively for all current and future Deferred Cash Account balances until the basis on which interest is determined is changed by the Committee. Interest credits are accrued monthly on accumulated Deferred Cash Accounts. Interest is accrued through the end of the month preceding the month of distribution of a Deferred Cash Benefit. (c) If a Participant elects under section 4(e) to convert a Deferred Cash Benefit into a Deferred Stock Benefit, the Participant's Deferred Cash Account will be converted to a Deferred Stock Account governed by section 7 as of the date the Plan's provisions relating to Deferred Stock Benefits become effective for purposes of the Participant's election. 7. DEFERRED STOCK BENEFITS. Subject to section 13(b), electing Participants' Deferred Stock Benefits are governed by this section. (a) Deferred Stock Benefits will be set up in a Deferred Stock Account for each electing Participant and credited with earnings at rates determined by the Committee. A Deferred Stock Benefit attributable to a Retainer Fee is credited to the Participant's Deferred Stock Account on the last day of each calendar quarter of the Deferral Year. A Deferred Stock Benefit attributable to a Meeting Fee is credited to the Participant's Deferred Stock Account on the last day of the month in which a meeting occurs. (b) Rates established by the Committee as the basis for additional credits to Deferred Stock Accounts will be variable rates equal to the value of dividends paid on Dominion common stock when the additional credit is made. The value of a Deferred Stock Account at any relevant time equals the value of the shares of Dominion common stock as if the Compensation deferred by the Participant under the Plan and any additional credits under this subsection had been used to purchase Dominion common stock on the date those amounts were credited to the Deferred Stock Account. Additional credits are credited on the last day of each calendar quarter on accumulated Deferred Stock Accounts. Additional credits are accrued through the end of the year preceding the year of distribution of a Deferred Stock Benefit. (c) If a trust is established under Plan sections 10(b) and 13(c), an electing Participant may instruct the trustee under the governing trust agreement how to vote shares of Dominion common stock allocated to that Participant's separate account under the trust according to this subsection and provisions of the governing trust agreement. Before each annual or special meeting of the Dominion shareholders, the trustee under the governing trust agreement must furnish each Participant with a copy of the proxy solicitation and other relevant material for the meeting as furnished to the trustee by Dominion, and a form addressed to the trustee requesting the Participant's confidential instructions on how to vote shares of Dominion common stock allocated to his account as of the valuation date established under the governing trust agreement preceding the record date. Upon receipt of those instructions, the trustee under the governing trust agreement must vote such stock as instructed. 8. DISTRIBUTIONS. (a) According to a Participant's Distribution Election Form, but subject to Plan section 4(g), a Deferred Cash Benefit must be distributed in cash. According to a Participant's Distribution Election Form, but subject to Plan section 4(g), a Deferred Stock Benefit must be distributed in shares of Dominion common stock equal in value to the value of the Participant's Deferred Stock Account on the last day of the month preceding the month of distribution. However, cash must be paid in lieu of fractional shares of Dominion common stock otherwise distributable. According to the procedures of Plan section 4(g), the Committee may modify any Participant's Distribution Election Form to prevent any distribution of Dominion common stock to pay a Deferred Stock Benefit if the total number of shares of such stock distributed under this Plan after such distribution would exceed 100,000 shares times the number of Participants in the Plan on the relevant date. (b) Except for distributions triggered by a Participant's disability, Deferred Benefits will be paid in a lump sum unless the Participant's Distribution Election Form specifies installment payments over 10 years. For a Deferred Cash Benefit payable in installments, interest credits under section 6(b) continue to accrue on the unpaid balance of a Deferred Cash Account. For a Deferred Stock Benefit payable in installments, additional credits under section 7(b) do not accrue on the unpaid balance of a Deferred Stock Account after the year preceding the year in which payments begin. Instead, any additional credits that would have been credited to a Deferred Stock Account are payable to the applicable Participant in cash on the date that would otherwise have been credited. If a Participant Terminates as a result of his disability, Deferred Benefits will be paid to such Participant in installment payments over a period of 10 years commencing on the date his disability is certified by the Committee unless the Committee, in its sole discretion, approves a longer or shorter payment period. If, after his Termination as a result of disability, such Participant recovers before the balance of his Deferred Cash and Deferred Stock Accounts under the Plan are exhausted, his distributions will be discontinued and any remaining Deferred Benefits under the Plan will be governed by the provisions of this section and his Distribution Election Forms. Unless otherwise specified in a Participant's Distribution Election Form, any lumpsum payment will be paid or installment payments will begin to be paid on the February 15 of the year after the Participant's sixty-fifth birthday or on the February 15 of the year after the Participant's Termination, if earlier. For distributions that would automatically be caused under the preceding sentence by a Participant's Termination (other than by death or disability) or for distributions that would otherwise automatically begin because a Participant reaches age 65, the Participant may elect on his Distribution Election Form that payments are to begin: (i) on the February 15 following his Termination, without regard to his age; or (ii) on the February 15 following his Termination and his attainment of a specified age; or (iii) even if the Participant does not Terminate, on the February 15 following a specified age. For purposes of these distribution election alternatives, the specified age must be not less than the Participant's age two years from the Election Date pertaining to the applicable Deferral Year and not greater than the age at which there are no earnings limitations in order to receive full social security benefits (currently age 70). (c) Deferred Benefits may not be assigned by a Participant or Beneficiary. A Participant may use only one Beneficiary Designation Form to designate one or more Beneficiaries for all of his Deferred Benefits under the Plan; such designations are revocable. Each Beneficiary will receive his portion of the Participant's Deferred Cash Account and Deferred Stock Account on February 15 of the year following the Participant's death unless the Beneficiary's request for accelerated payment is approved at the Committee's discretion under section 9 or unless the Beneficiary's request for a different distribution schedule is received before distributions begin and is approved at the Committee's discretion. The Committee may insist that multiple Beneficiaries agree upon a single distribution method. (d) Any Dominion common stock distributed pursuant to the Plan shall have been acquired by an "agent independent of the issuer" (i.e., the Company) within the meaning of 17 CFR section 240.10b-18, as such regulation is in effect on April 19, 1985. Such acquisitions may be effected in all cases on the open market or, in the event that the Company makes available newly issued common stock, directly from the Company, provided that such common stock has been registered with the Securities and Exchange Commission under the Securities Act of 1933, as amended, or any successor thereto at the time such purchase is made or an exemption from such registration requirement is, in the opinion of counsel to the Company, available. 9. HARDSHIP DISTRIBUTIONS. (a) At its sole discretion and at the request of a Participant before or after the Participant's Termination, or at the request of any of the Participant's Beneficiaries after the Participant's death, the Committee may accelerate and pay all or part of any amount attributable to a Participant's Deferred Benefits under this Plan. Accelerated distributions may be allowed only in the event of a financial emergency beyond the Participant's or Beneficiary's control and only if disallowance of a distribution would create a severe hardship for the Participant or Beneficiary. An accelerated distribution must be limited to the amount determined by the Committee to be necessary to satisfy the financial emergency. (b) For purposes of an accelerated distribution of a Deferred Stock Benefit under this section, the Deferred Stock Benefit's value is determined by the value of the Deferred Stock Account at the time of the distribution. (c) Only cash distributions are permitted under this section. Distributions under this section must first be made from the Participant's Deferred Cash Account before accelerating the distribution of any amount attributable to a Deferred Stock Benefit. (d) A distribution under this section is in lieu of that portion of the Deferred Benefit that would have been paid otherwise. A Deferred Cash Benefit is adjusted for a distribution under this section by reducing the Participant's Deferred Cash Account balance by the amount of the distribution. A Deferred Stock Benefit is adjusted for a distribution under this section by reducing the value of the Participant's Deferred Stock Account by the amount of the distribution. 10. COMPANY'S OBLIGATION. (a) The Plan is unfunded. A Deferred Benefit is at all times a mere contractual obligation of the Company. A Participant and his Beneficiaries have no right, title, or interest in the Deferred Benefits or any claim against them. Except according to sections 10(b) and 13(c), the Company will not segregate any funds or assets for Deferred Benefits nor issue any notes or security for the payment of any Deferred Benefit. (b) Subject to section 13(c), the Company may establish a grantor trust and transfer to that trust shares of Dominion common stock or other assets. Trust assets must be invested primarily in Dominion common stock for the purpose of measuring the value of Deferred Stock Accounts under the Plan to be distributed as Deferred Stock Benefits in the form of Dominion common stock, plus cash in lieu of fractional shares. The governing trust agreement must require a separate account to be established for each electing Participant. The governing trust agreement must also require that all Company assets held in trust remain at all times subject to the Company's judgment creditors. 11. CONTROL BY PARTICIPANT. A Participant has no control over Deferred Benefits except according to his Deferral Election Forms, his Distribution Election Forms, and his Beneficiary Designation Form. 12. CLAIMS AGAINST PARTICIPANT'S DEFERRED BENEFITS. A Deferred Cash Account and Deferred Stock Account relating to a Participant under this Plan are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to do so is void. A Deferred Benefit is not subject to attachment or legal process for a Participant's debts or other obligations. Nothing contained in this Plan gives any Participant any interest, lien, or claim against any specific asset of the Company. A Participant or his Beneficiary has no rights other than as a general creditor. 13. AMENDMENT OR TERMINATION. Except as otherwise provided in this section, this Plan may be altered, amended, suspended, or terminated at any time as to Dominion, Virginia Electric and Power Company, or any Company that has adopted the Plan (pursuant to Plan section 2(e)) by that entity's board. (a) The Plan shall be operated according to its terms (as amended periodically) and as directed by the Committee until it is effective. Once the Plan is effective, the board of Dominion, Virginia Electric and Power Company, or any Company that has adopted the Plan (pursuant to Plan section 2(e)) may alter, amend, suspend, or terminate this Plan at any time as it relates to its directors. However, except for a termination of the Plan caused by the determination of the applicable board that the laws upon which the Plan is based have changed in a manner that negates the Plan's objectives, that board may not alter, amend, suspend, or terminate this Plan without the majority consent of all Directors who are Participants if that action would result either in a distribution of all Deferred Benefits in any manner other than as provided in this Plan or that would result in immediate taxation of Deferred Benefits to Participants. Notwithstanding the preceding sentence, if any amendment to the Plan, subsequent to the date the Plan became effective, adversely affects Deferred Benefits elected hereunder, after the effective date of any such amendment, and the Internal Revenue Service declines to rule favorably on any such amendment or to rule favorably only if the applicable board makes amendments to the Plan not acceptable to such board, the board of each Company, in its sole discretion, may accelerate the distribution of part or all amounts attributable to affected Deferred Benefits due its Members hereunder. (b) This subsection applies if shareholder approval is required for any or all elections by a Company's participating Directors of Deferred Stock Benefits under the Plan. Despite section 13(a), section 10(b) and all provisions of this Plan relating to Deferred Stock Benefits as to a designated Participant are effective only on the first day of the month following the month in which (i) a sufficient majority of the appropriate entity's shareholders, determined under applicable federal and state laws, approves those Plan provisions as to that designated Participant; or (ii) counsel selected by the Company determines that such approval is unnecessary. (c) The Company may only contribute to a trustee under a trust agreement by transferring cash or assets with a fair-market value equal to the value (determined at the nearest month end) of the related Deferred Stock Accounts if the trust agreement contains provisions sufficient (in the opinion of either the Internal Revenue Service or counsel selected by the Company) to allow the Participants to defer income taxation on their Deferred Stock Benefits until they are distributed according to this Plan and provisions sufficient (in the opinion of counsel selected by the Company) to exempt the Plan and the trust from sections 10(b) and 16(b) of the Securities Exchange Act of 1934 and applicable rules and regulations. If the Internal Revenue Service refuses to give the required opinion on such a trust, and if counsel selected by the Company is of the opinion that no such trust can be created, Plan section 10(b) and all provisions of this Plan relating to Deferred Stock Benefits will not become effective. 14. NOTICES. Notices and elections under this Plan must be in writing. A notice or election is deemed delivered if it is delivered personally or if it is mailed by registered or certified mail to the person at his last known business address. 15. WAIVER. The waiver of a breach of any provision in this Plan does not operate as and may not be construed as a waiver of any later breach. 16. CONSTRUCTION. This Plan is created, adopted, and maintained according to the laws of Virginia (except its choice-of-law rules). It is governed by those laws in all respects. Headings and captions are only for convenience; they do not have substantive meaning. If a provision of this Plan is not valid or not enforceable, that fact in no way affects the validity or enforceability of any other provision. Use of the one gender includes all, and the singular and plural include each other. 17. CORPORATE AND COMMITTEE ACTIONS AND RESPONSIBILITIES. Each Company shall be solely responsible for the Plan as it relates to its directors. The Committee has delegated, to the Vice-President--Human Resources and the Manager of Corporate Compensation Services, certain administrative determinations under the Plan that do not affect individuals' participation or awards. EX-10 5 EXHIBIT 10.24 Exhibit 10(xxiv) DOMINION RESOURCES, INC. EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN As Amended and Restated June 15, 1990 DOMINION RESOURCES, INC. EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN PURPOSE The Board of Directors of Virginia Electric and Power Company determined that adoption of the Executive Supplemental Retirement Plan would assist it in attracting and retaining those employees whose judgment, abilities and experience will contribute to its continued progress. On May 19, 1983, Virginia Electric and Power Company became a wholly-owned subsidiary of Dominion Resources, Inc. The Plan was amended to reflect the reorganization of Virginia Electric and Power Company and the Plan was adopted by Dominion Resources, Inc. The Plan was amended further, effective as of October 21, 1983, to require sixty (60) months of service to be eligible for retirement benefits and to assure Participants who have attained age fifty-five (55) and who have sixty (60) months of service with the Company, or who die or become Totally and Permanently Disabled of their benefits, so long as they remain elected officers at the time of their separation from service. ARTICLE I DEFINITIONS As defined herein, the following phrases or terms shall have the indicated meanings: 1.1. "Affiliate" means any entity that is (i) a member of a controlled group of corporations as defined in section 1563(a) of the Internal Revenue Code of 1986, as amended (the "Code"), determined without regard to Code sections 1563(a)(4) and 1563(e)(3)(c), of which Dominion Resources, Inc. is a member according to Code section 414(b); (ii) an unincorporated trade or business that is under common control with Dominion Resources, Inc., as determined according to Code section 414(c); or (iii) a member of an affiliated service group of which Dominion Resources, Inc. is a member according to Code section 414(m). 1.2. "Beneficiary" means the person, persons, entity, entities or the estate of a Participant which, in accordance with the provisions of Article V, is entitled to receive benefits, if any, upon the Participant's death. 1.3. "Change in Control" means the occurrence of any of the following events: (i) any person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934 becomes the owner or beneficial owner of Dominion Resources, Inc. securities having 20% or more of the combined voting power of the then outstanding Dominion Resources, Inc. securities that may be cast for the election of Dominion Resources, Inc.'s directors (other than as a result of an issuance of securities initiated by Dominion Resources, Inc., or open market purchases approved by Dominion Resources, Inc.'s Board of Directors, as long as the majority of Dominion Resources, Inc.'s Board of Directors approving the purchases is also the majority at the time the purchases are made); (ii) as the direct or indirect result of, or in connection with, a cash tender or exchange offer, a merger or other business combination, a sale of assets, a contested election, or any combination of these transactions, the persons who were directors of Dominion Resources, Inc. before such transactions cease to constitute a majority of Dominion Resources, Inc.'s Board of Directors, or any successor's board, within two years of the last of such transactions; or (iii) with respect to a particular Participant, an event occurs with respect to the Company that employs that Participant such that, after the event, the employing Company is no longer an Affiliate of Dominion Resources, Inc. 1.4. "Committee" means the Administrative Benefit Committee appointed to manage and administer the Plan in accordance with the provisions of Article X hereof. 1.5. "Company" means Dominion Resources, Inc., its predecessor, a subsidiary or an Affiliate of either. 1.6. "Control Change Date" means the date on which a Change in Control event occurs. If a Change in Control occurs on account of a series of transactions, the Control Change Date is the date of the last of such transactions. 1.7. "ESRP Account" means the ESRP Account established under the Funding Plan on behalf of a Participant who also participates in the Funding Plan. 1.8. "Final Compensation", with respect to a Participant, means, as of any date, the sum of (i) the Participant's annual base salary, (ii) the Participant's annual retainer fee and meeting fees (for Board or any Board committee meetings), and (iii) the Participant's Incentive Compensation Amount. For purposes of this section, all components of Final Compensation are calculated without regard to any elections by the Participant to defer any amount that otherwise would have been paid to the Participant for the relevant period. 1.9. "Funding Plan" means the Dominion Resources, Inc. Retirement Benefit Funding Plan. 1.10. "Incentive Compensation Amount", with respect to a Participant, is an amount based on the Participant's incentive compensation award on account of participation in the Dominion Resources, Inc., Management Incentive Plan (the "MIP"), the Dominion Resources, Inc., Short-Term Incentive Plan (the "STIP"), or both. (a) For an MIP award, a Participant's Incentive Compensation Amount is eighty percent (80%) of the Participant's most recently approved MIP "Target Award". For purposes of the preceding sentence, a Participant's MIP award is determined without regard to any election to defer the receipt of that award. (b) For an STIP award, a Participant's Incentive Compensation Amount is of the Participant's most recently approved STIP "Target Award". For purposes of the preceding sentence, a Participant's STIP award is determined without regard to any election to defer the receipt of that award. (c) If a Participant participates in both the MIP and the STIP, the Participant's Incentive Compensation Amount is the greater of the amounts determined under the preceding Subsection (a) or (b). 1.11. "Participant" means an elected officer of Dominion Resources Inc., Virginia Electric and Power Company, Dominion Resource Services, Inc. and such other subsidiaries or affiliates of Dominion Resources, Inc. that are designated by the Board of Directors of Dominion Resources, Inc. An individual shall remain a Participant only so long as the individual remains an elected officer of one or more of such designated entities. 1.12. "Plan" means the Dominion Resources, Inc. Executive Supplemental Retirement Plan. 1.13. "Retirement" and "Retire" mean severance from employment with the Company at or after the attainment of fifty-five (55) years of age and the completion of sixty (60) months of service with the Company; except as provided in Article VI of the Plan. 1.14. "Totally and Permanently Disabled" means a condition, determined on the basis of medical evidence satisfactory to a physician designated by the Committee, rendering a Participant, due to bodily injury or disease, unable to perform services as follows: (i) during the first two years of such disability (measured from the commencement of such disability rather than the commencement of benefit payments) such Participant is unable to perform any and every duty pertaining to his employment with the Company; and (ii) thereafter, such Participant is unable to engage in any occupation or perform any work for compensation or profit for which he is or may become reasonably fitted by education, training or experience. In no event shall such condition be deemed to exist during any period that the Participant is not under the regular care and attendance of a legally qualified physician during any period that he engages in any occupation or performs any work for compensation or profit. ARTICLE II PARTICIPATION All elected officers of Dominion Resources, Inc., Virginia Electric and Power Company, Dominion Resource Services, Inc. and such other subsidiaries and Affiliates of Dominion Resources, Inc. as may be designated by the Board of Directors of Dominion Resources, Inc. on, and subsequent to, January 1, 1981, will become Participants in the Plan. An individual shall remain a Participant only so long as the individual remains an elected officer of one or more of such designated entities. The Board may change its designation of any such subsidiary or Affiliate at any time. ARTICLE III BENEFITS Except as provided in Article IV and subject to the limitations set forth in Articles VII and VIII, the benefits of a Participant and his Beneficiary shall be as follows: 3.1. (a) If a Participant continues in the employ of the Company or an Affiliate beyond age fifty-five (55) and after completing sixty (60) months of service, upon Retirement he shall be entitled to an annual Retirement benefit equal to twenty-five percent (25%) of his Final Compensation, payable in equal monthly installments for a period of one hundred twenty (120) months. (b) In the event a Participant becomes Totally and Permanently Disabled prior to Retirement, regardless of his age or months of service, he shall be entitled to receive a benefit equal to the amount described in Subsection 3.1(a). (c) If a Participant dies prior to the commencement of his Retirement benefit, regardless of his age or months of service, his Beneficiary will receive a benefit equal to the amount described in Subsection 3.1(a). If a Participant dies after Retirement or disability benefits have commenced under Subsection (a) or (b) but before he has received one hundred twenty (120) payments, the remainder of such payments will be made monthly to the Participant's Beneficiary in accordance with Article V. 3.2. In lieu of the benefits described in Subsections 3.1(a) and 3.1(b), a Participant may elect to receive an actuarial equivalent of said benefit over a period certain. The Participant must make the election under this Subsection prior to the commencement of the receipt of benefits. A Participant who participates in the Funding Plan may not make an election under this Subsection unless he elects to have his Funding Plan benefit paid in the same manner as his election under this Subsection. A Participant may not elect to receive an actuarial equivalent which is payable over a period of time which is less than ten (10) years or greater than sixteen (16) years. The actuarial equivalent of the benefit provided under the Subsection 3.1(a) or 3.1(b) shall be computed using an interest rate equal to the yield of that certain nondiscount, noncall U.S. Treasury obligations which on the date benefits are to commence have a maturity date closest to the date such payments are scheduled to cease. In the event a Participant makes the election provided for in this Section and if the Participant dies prior to receiving the total actuarial equivalent of the benefits described in Subsection 3.1(a) or 3.1(b), the balance of such actuarial equivalent shall be paid monthly to the Participant's Beneficiary in accordance with Article V. 3.3. A Beneficiary receiving benefits described in Section 3.1 or Section 3.2 may designate a beneficiary who will be entitled to receive the remaining benefits due the Beneficiary after his death; provided, however, that if the Beneficiary is entitled to receive any benefits under the Funding Plan, the beneficiary designated by the Beneficiary must be the same person or entity appointed by the Beneficiary under the Funding Plan. Such designation shall be in accordance with Article V of the Plan. 3.4. Payment of the benefits described in Sections 3.1 and 3.2 shall commence on the first day of the month next following the Retirement or death of the Participant, whichever is applicable; provided, however, that payment of the benefit described in Subsection 3.1(d) shall commence on the first day of the month next following the Committee's determination of the Participant's Total and Permanent Disability. ARTICLE IV COORDINATION OF BENEFITS The amount payable in any month to a Participant, a Beneficiary, or the beneficiary of a Beneficiary under the Plan shall be reduced, but not below zero, by the sum of (i) and, to the extent applicable, (ii) below where: (i) is the amount payable for the month in question from the Participant's ESRP Account in the Funding Plan; and (ii) is the sum of the amounts previously paid to the Participant from his ESRP Account pursuant to Section 6.01 of the Funding Plan multiplied by a fraction. The numerator of the fraction is one (1) and the denominator of the fraction is the number of months for which benefits are payable under the Plan. If a Participant receives a distribution under Section 6.01 of the Funding Plan after a benefit becomes payable under the Plan, the amount described in this item (ii) with respect to subsequent payments under the Plan shall include the product of the amount of each such distribution multiplied by a fraction. The numerator of that fraction is one (1) and the denominator is the number of months for which a benefit under the Plan remains payable. Item (ii) shall not apply (and the amount payable under the Plan shall not be reduced on account of the amounts described in item (ii) above), to the extent that the application of item (ii) would result in the payment of an after-tax benefit under the Plan and the ESRP Account of the Funding Plan that is less than the benefit otherwise payable under Article III on an after-tax basis. In determining the amount payable under the Plan and from the ESRP Account of the Funding Plan on an after-tax basis, the Committee shall follow the policy or guidelines adopted by the appropriate Organization and Compensation Committee for purposes of section 6.01 of the Funding Plan and, in the absence of such policy or guidelines, the Committee shall make its determination using the maximum rates of federal, state, and local income taxes that are applicable to the Participant, Beneficiary, or beneficiary of a Beneficiary. ARTICLE V DESIGNATION OF BENEFICIARY 5.1. (a) The Beneficiary of a Participant who participates in the Funding Plan shall be the person or entity that is entitled to receive the benefit, if any, payable under the Funding Plan following the Participant's death. (b) A Participant who is not a participant in the Funding Plan may designate a Beneficiary to receive benefits due under the Plan, if any, upon the Participant's death. Designation of a Beneficiary may be made by execution of the form attached hereto as Exhibit I which must be witnessed by the Director-Employee Benefits of Virginia Electric and Power Company (or his successor) or his designee. A Participant may also designate his Beneficiary on a form which differs from Exhibit I and such designation shall be effective upon its execution in accordance with the preceding sentence. In the absence of an effective Beneficiary designation, a Participant's surviving spouse, if any, his children, if any, per stirpes, and if none, the Participant's estate, will be the Beneficiary. 5.2. A Participant may change a prior Beneficiary designation under Subsection 5.1(b) by a subsequent execution of a Beneficiary designation form. The change in Beneficiary will be effective if, and at such time as, it is witnessed by the Director-Employee Benefits of Virginia Electric and Power Company (or his successor) or his designee. 5.3. A beneficiary designation or a change in beneficiary designation by a Beneficiary pursuant to Section 3.3 shall be governed by Sections 5.1 and 5.2 as if "Beneficiary" was substituted for "Participant" and "beneficiary" was substituted for "Beneficiary" therein. ARTICLE VI GUARANTEES Dominion Resources, Inc. has only a contractual obligation to make payments of the benefits described in Article III. All benefits are to be satisfied solely out of the general corporate assets of Dominion Resources, Inc. which shall remain subject to the claims of its creditors. No assets of Dominion Resources, Inc. will be segregated or committed to the satisfaction of its obligations to any Participant or Beneficiary under this Plan. If Dominion Resources, Inc., in its sole discretion, elects to purchase life insurance on the life of a Participant in connection with the Plan, the Participant must submit to a physical examination, if required by the insurer, and otherwise cooperate in the issuance of such policy or his rights under the Plan will be forfeited. ARTICLE VII TERMINATION OF EMPLOYMENT 7.1. The Plan does not in any way limit the right of the Company at any time and for any reason to terminate the Participant's employment or such Participant's status as an officer of the Company. In no event shall the Plan, by its terms or by implication, constitute an employment contract of any nature whatsoever between the Company and a Participant. 7.2. A Participant who is removed or not reelected as an officer or whose employment with the Company is terminated either with or without cause, for reasons other than death, Retirement or Total and Permanent Disability shall immediately cease to be a Participant under this Plan and shall forfeit all rights under this Plan. Further, in no event shall an individual who was a Participant but is not an officer of a designated employer at the time of such individual's death, Retirement or Total and Permanent Disability, be entitled to any benefit under the Plan. A Participant on authorized leave of absence from the Company shall not be deemed to have terminated employment for the duration of such leave of absence. 7.3. Notwithstanding any contrary Plan provision, in the event the employment of a Participant who is in the employ of a Company on a Control Change Date relating to that Company is terminated (for reasons other than death Retirement, Total and Permanent Disability, or as a result of acts of theft, embezzlement, fraud, or moral turpitude) before the end of the period commencing on the Control Change Date and ending on the earlier of the third anniversary of such date or the Participant's attainment of age fifty-five (55) and completion of sixty (60) months of service and whether or not he is an elected officer of the Company at such time, he shall be fully vested in a benefit payable at age fifty-five (55) based on his Final Compensation as of his date of termination and assuming he had attained age fifty-five (55) and completed sixty (60) months of service as of the date his employment is terminated. During this same period, a participant who voluntarily terminates employment within sixty (60) days after (i) he does not receive salary increases, bonuses, and incentive awards comparable to the increases, bonuses and awards that he received in prior years or that other executives in comparable positions receive in the current year; or (ii) his compensation or employment-related benefits are reduced; or (iii) his status, title(s), offices, places of employment, working conditions, or management responsibilities are diminished (other than changes in reporting or management responsibilities to reflect sound practices commonly followed by enterprises comparable to the Company employing Participant or required by applicable federal or state law) or within sixty days after the last in a series of such events will be deemed to have terminated under circumstances requiring full vesting under this Section 7.3. ARTICLE VIII TERMINATION, AMENDMENT OR MODIFICATION OF PLAN 8.1. Except as otherwise specifically provided, Dominion Resources, Inc. reserves the right to terminate, amend or modify this Plan, wholly or partially, at any time and from time to time. Such right to terminate, amend or modify the Plan shall be exercised for Dominion Resources, Inc. by its Board of Directors. Notwithstanding the preceding, with respect to an affected Participant, the Plan and Section 7.3 may not be amended, modified or terminated after a Control Change Date before the end of the period specified in that section unless the affected Participant agrees to such amendment, modification or termination in writing. 8.2. Section 8.1 notwithstanding, no action to terminate the Plan shall be taken except upon written notice to each Participant to be affected thereby, which notice shall be given not less than thirty (30) days prior to such action. 8.3. Any notice which shall be or may be given under the Plan shall be in writing and shall be mailed by United States mail, postage prepaid. If notice is to be given to Dominion Resources, Inc., such notice shall be addressed to it at Post Office Box 26532, Richmond, Virginia 23261; addressed to the attention of the Corporate Secretary. If notice is to be given to a Participant, such notice shall be addressed to the Participant's last known address. 8.4. The rights of Dominion Resources, Inc. set forth in Section 8.1 are subject to the condition that its Board of Directors shall take no action to terminate the Plan or decrease the benefit that would become payable or is payable, as the case may be, with respect to a Participant who has attained age fifty-five (55) and completed sixty (60) months of service with the Company, so long as such individual remains an elected officer of a designated employer or a Participant or Beneficiary following the date such Participant or Beneficiary commences receiving benefits described in Article III. 8.5. Except as provided in Sections 7.3, 8.1, and 8.4, upon the termination of this Plan by the Board of Directors, the Plan shall no longer be of any further force or effect, and neither Dominion Resources, Inc. nor the Participant shall have any further obligation or right under this Plan. Likewise, the rights of any individual who was a Participant and who is removed or not reelected as an officer of a designated employer shall cease upon such action. ARTICLE IX OTHER BENEFITS AND AGREEMENTS Except as provided in Article IV, the benefits provided for a Participant and his Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program of the Company for its employees, and, except as may otherwise be expressly provided for, the Plan shall supplement and shall not supersede, modify or amend any other plan or program of the Company in which a Participant is participating. ARTICLE X RESTRICTIONS ON TRANSFER OF BENEFITS No right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to do so shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the person entitled to such benefit. If any Participant or Beneficiary under the Plan should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right to a benefit hereunder, then such right or benefit, in the discretion of the Committee, shall cease and terminate, and, in such event, the Committee may hold or apply the same or any part thereof for the benefit of such Participant or Beneficiary, his or her spouse, children, or other dependents, or any of them, in such manner and in such portion as the Committee may deem proper. ARTICLE XI ADMINISTRATION OF THE PLAN 11.1. The Plan shall be administered by the Committee. Subject to the provisions of the Plan, the Committee may adopt such rules and regulations as may be necessary to carry out the purposes hereof. The Committee's interpretation and construction of any provision of the Plan shall be final and conclusive. 11.2. Dominion Resources, Inc. shall indemnify and save harmless each member of the Committee against any and all expenses and liabilities arising out of his membership on the Committee, excepting only expenses and liabilities arising out of his own willful misconduct. Expenses against which a member of the Committee shall be indemnified hereunder shall include without limitation, the amount of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted, or a proceeding brought or settlement thereof. The foregoing right of indemnification shall be in addition to any other rights to which any such member may be entitled 11.3. In addition to the powers hereinabove specified, the Committee shall have the power to compute and certify the amount and kind of benefits from time to time payable to Participants and their Beneficiaries under the Plan, to authorize all disbursements for such purposes, and to determine whether a Participant is entitled to the benefit provided in Subsection 3.1(b). 11.4. To enable the Committee to perform its functions, the Company shall supply full and timely information to the Committee on all matters relating to the compensation of all Participants, their retirement, death or other cause for termination of employment, and such other pertinent facts as the Committee may require. ARTICLE XII MISCELLANEOUS 12.1. The Plan shall be binding upon Dominion Resources, Inc. and its successors and assigns; subject to the powers set forth in Article VIII, and upon a Participant, his Beneficiary, and either of their assigns, heirs, executors and administrators. 12.2. To the extent not preempted by federal law, the Plan shall be governed and construed under the laws of the Commonwealth of Virginia as in effect at the time of their adoption and execution, respectively. 12.3. Masculine pronouns wherever used shall include feminine pronouns and the use of the singular shall include the plural. EXHIBIT I DOMINION RESOURCES, INC. EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN DESIGNATION OF BENEFICIARY I hereby designate _______________________ as the primary Beneficiary of any benefits which become payable under the Dominion Resources, Inc. Executive Supplemental Retirement Plan as a result of my death. If the person named above predeceases me (or, if a trust, such trust is not in existence at the time of my death), I designate ________________ as the contingent Beneficiary of any benefits which become payable under such Plan as a result of my death. If a designated Beneficiary should survive me but die (or, if a trust, terminate) before all benefits have been paid to the Beneficiary, the remainder of the payments shall be made as the Beneficiary may designate or, absent a properly executed Beneficiary designation, to the Beneficiary's estate or, if a trust, to the Beneficiaries in distribution of the trust. This designation revokes and rescinds any prior Beneficiary designation made by me. Dated this ______ day of ____________, 19__. ____________________________ Witness: _____________________________ DOMINION RESOURCES, INC. EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN RESOLVED, that the Dominion Resources, Inc. Executive Supplemental Retirement Plan, as amended and restated effective June 15, 1990, is further amended, effective June 19, 1992, in the following respects: FIRST: By adding a new Section 1.3 to read as follows: "Cash Incentive Plan" means the Dominion Resources, Inc. Cash Incentive Plan as in effect from time to time and any successor thereto. SECOND: By redesignating current Sections 1.3 through 1.6 as Sections 1.4 through 1.7, respectively. THIRD: By adding a new Section 1.8 to read as follows: "DRI Participant" means a Participant who is an elected officer of the Company, Dominion Capital, Inc., Dominion Energy, Inc., Dominion Lands, Inc. and any other corporation (i) in which the Company owns stock possessing at least 50 percent of the combined voting power of all classes of stock and (ii) which is not subject to regulation as a public service corporation by the State Corporation Commission of Virginia. FOURTH: By redesignating current Sections 1.7 through 1.10 as Sections 1.9 through 1.12, respectively. FIFTH: By amending current Section 1.10 (redesignated as Section 1.12) to read as follows: "Incentive Compensation Amount" means the amount that may be paid under the Success Sharing Plan or the Cash Incentive Plan and that the O&C Committee (at the time each year that the goals and other criteria for such plans are established), determines should be taken into account under the Plan. If a Participant participates in both the Success Sharing Plan and the Cash Incentive Plan during a year, his "Incentive Compensation Amount" is the greater of the amounts designated by the O&C Committee under the two plans for that year. SIXTH: By adding a new Section 1.13 to read as follows: "O&C Committee" means (i) the Organization and Compensation Committee of the Company with respect to DRI Participants and (ii) the Organization and Compensation Committee of Virginia Electric and Power Company with respect to Virginia Power Participants. SEVENTH: By redesignating current Sections 1.11 through 1.13 as Sections 1.14 through 1.17, respectively. EIGHTH: By adding a new Section 1.18 to read as follows: "Success Sharing Plan" means the Success Sharing Plan of Virginia Electric and Power Company as in effect from time to time and any successor thereto. NINTH: By redesignating current Section 1.14 as Section 1.19. TENTH: By adding a new Section 1.20 to read as follows: "Virginia Power Participant" means a Participant who is an elected officer of Virginia Electric and Power Company. EX-10 6 EXHIBIT 10.25 Exhibit 10(xxv) DOMINION RESOURCES, INC. CASH INCENTIVE PLAN Article I DEFINITIONS 1.01. Affiliate means any "subsidiary corporation" or "parent corporation" (within the meaning of Section 424 of the Internal Revenue Code of 1986, as amended) of the Company. 1.02. Board means the Board of Directors of the Company. 1.03. Bonus Award means a bonus awarded under this Plan and which, subject to such terms and conditions as may be prescribed by the Committee, entitles the recipient to receive a cash payment from the Company. 1.04. Committee means the Organization and Compensation Committee of the Board. 1.05. Company means Dominion Resources, Inc. 1.06. Plan means this Dominion Resources, Inc. Cash Incentive Plan. Article II PURPOSES This Plan is intended to provide incentive and reward to employees who contribute to the success of the Company and its Affiliates by their invention, ability, industry, loyalty or exceptional service. It is further intended that this Plan assist the Company and its Affiliates in recruiting employees who will contribute to its success in the manner described in the preceding sentence. Article III ADMINISTRATION This Plan shall be administered by the Committee. The Committee shall have full authority and discretion with respect to the determination of, and the terms and conditions of, each Bonus Award consistent with the terms of the Plan. The Committee shall have full authority to interpret all provisions of the Plan; to adopt, amend, and rescind rules and regulations pertaining to the administration of the Plan; and to make all other determinations necessary or advisable for the administration of the Plan. The express grant in the Plan of any specific power to the committee shall not be construed as limiting any power or authority of the Committee. Any decision made, or action taken by the Committee in or in connection with the administration of the Plan shall be final and conclusive. No member of the Committee shall be liable for any act done in good faith with respect to the Plan. All expenses of administering the Plan shall be borne by the Company. Article IV ELIGIBILITY Each employee of the Company or of any Affiliate shall be eligible for consideration for a Bonus Award under such rules as may be established by the Committee. Membership on the Board or on a committee of the Board shall not by itself render a person eligible for a Bonus Award. Membership on the Committee shall render a person ineligible for a Bonus Award. Article V BONUS AWARDS 5.01. Awards. The Committee shall designate employees to whom Bonus Awards are made. Recommendations for Bonus Awards may be made to the Committee by the person discharging the duties of chief executive officer of the Company under such procedure as may from time to time be established by the Committee. All Bonus Awards shall be finally determined exclusively by the Committee under the procedures established by the Committee. A Bonus Award may specify that the recipient shall, upon satisfaction of any requirements or conditions established by the Committee, receive an amount of cash. Alternatively, a Bonus Award may state that the recipient shall, upon satisfaction of any requirements or conditions established by the Committee, receive an amount of cash, the amount of which is determined in a manner prescribed by the Committee. 5.02. Terms and Conditions. The Committee, at the time a Bonus Award is made, shall specify the terms and conditions which govern the award. Such terms and conditions may include, by way of example and not of limitation, requirements that the recipient complete a specified period of employment with the Company or an Affiliate or that the Company, an Affiliate, or the recipient attain stated objectives or goals as a prerequisite to payment under a Bonus Award. The Committee, at the time a Bonus Award is made, shall also specify when amounts shall be payable under the Bonus Award. Article VI GENERAL PROVISIONS 6.01. Effect on Employment. Neither the adoption of this Plan, its operation, nor any documents describing or referring to this Plan (or any part thereof) shall confer upon any employee any right to continue in the employ of the Company or in any way affect any right and power of the Company or an Affiliate to terminate the employment of any employee at any time without assigning a reason therefor. 6.02. Unfunded Plan. This Plan, insofar as it provides for Bonus Awards, shall be unfunded, and the Company shall not be required to segregate any assets that may at any time be represented by Bonus Awards under the Plan. Any liability of the Company to any person with respect to any Bonus Awards under this Plan shall be based solely upon any contractual obligations which may be created pursuant to this Plan. No such obligation of the Company shall be deemed to be secured by any pledge of, or other encumbrance on, any property of the Company. 6.03. Rules of Construction. Headings are given to the articles and sections of this Plan solely as a convenience to facilitate reference. The reference to any statute, regulation or other provision of law shall be construed to refer to any amendment to or successor of such provision of law. Article VII AMENDMENT The Board may amend or terminate this Plan from time to time; provided, however, that no amendment shall, without an employee's consent, adversely affect any rights of such employee under any Bonus Award outstanding at the time such amendment is made. Article VIII EFFECTIVE DATE AND DURATION OF PLAN Bonus Awards may be made under this Plan upon its adoption by the Board. Bonus Awards may be made from time to time or at such times thereafter until the Plan is terminated by the Board. Bonus Awards made before the termination of the Plan shall remain valid in accordance with their terms. EX-10 7 EXHIBIT 10.26 Exhibit 10(xxvi) DOMINION RESOURCES, INC. LONG-TERM INCENTIVE PLAN ARTICLE I DEFINITIONS 1.01 Affiliate means any entity that is (I) a member of a controlled group of corporations as defined in code section 1563(a), determined without regard to Code sections 1563(a)(4) and 1563(e)(3)(C), of which the Company is a member according to Code section 414(b); (ii) an unincorporated trade or business that is under common control with the Company, as determined according to Code section 414(c); or (iii) a member of an affiliated service group of which the Company is a member according to Code section 414(m). 1.02 Agreement means a written agreement (including any amendment or supplement thereto) between the Company and a Participant specifying the terms and conditions of an Option or Restricted Stock award granted to such Participant. 1.03 Board means the Board of Directors of the Company. 1.04 Code means the Internal Revenue Code of 1986 and any amendments thereto. 1.05 Committee means the Organization and Compensation Committee of the Board. 1.06 Common Stock means the Common Stock of the Company. 1.07 Company means Dominion Resources, Inc. 1.08 Fair Market Value means, on any given date, the closing price of a share of Common Stock as reported on the New York Stock Exchange composite tape on such day or, if the Common Stock was not traded on the New York Stock Exchange on such day, then on the next preceding day that the Common Stock was traded on such exchange, all as reported by such source as the Committee may elect. 1.09 Option means a stock option that entitles the holder to purchase from the Company a stated number of shares of Common Stock at the price set forth in an Agreement. 1.10 Participant means an employee of the Company or of an Affiliate, including an employee who is a member of the Board, who satisfies the requirements of Article IV and is selected by the Committee to receive an Option, a Restricted Stock award, or both. 1.11 Plan means the Dominion Resources, Inc. Long-Term Incentive Plan. 1.12 Restricted Stock means shares of Common Stock awarded to a Participant under Article IX. Shares of Common Stock shall cease to be Restricted Stock when, in accordance with the terms of the applicable agreement, they become transferable and free of substantial risks of forfeiture. ARTICLE II PURPOSES The Plan is intended to foster and promote the long-term growth and financial success of the Company and its Affiliates by assisting the Company in recruiting and retaining key employees with ability and initiative by enabling employees who contribute significantly to the Company or an Affiliate to participate in its future success and to associate their interests with those of the Company. The proceeds received by the Company from the sale of Common Stock pursuant to this Plan shall be used for general corporate purposes. ARTICLE III ADMINISTRATION The Plan shall be administered by the Committee. The Committee shall have authority to grant Options and award Restricted Stock upon such terms (not inconsistent with the provisions of this Plan) as the Committee may consider appropriate. Such terms may include conditions (in addition to those contained in this Plan) on the exercisability of all or any part of an Option or on the transferability or forfeitability of Restricted Stock. In addition, the Committee shall have complete authority to interpret all provisions of this plan; to prescribe the form of Agreements; to adopt, amend, and rescind rules and regulations pertaining to the administration of the Plan; and to make all other determinations necessary or advisable for the administration of this Plan. The express grant in the Plan of any specific power to the Committee shall not be construed as limiting any power or authority of the Committee. Any decision made, or action taken, by the Committee or in connection with the administration of this Plan shall be final and conclusive. No member of the Committee shall be liable for any act done in good faith with respect to this Plan or any Agreement, Option, or Restricted Stock award. All expenses of administering this Plan shall be borne by the Company. ARTICLE IV ELIGIBILITY 4.01 General. Any employee of the Company or of any Affiliate (including any corporation that becomes an Affiliate after the adoption of this Plan) who, in the judgment of the Committee, has contributed significantly or can be expected to contribute significantly to the profits or growth of the Company or an Affiliate may receive one or more Options, Restricted Stock awards, or both. Directors of the Company who are employees are eligible to participate in this Plan. A person who is a member of the Committee may not be granted Options and may not be awarded shares of Restricted Stock under this Plan while he is a member of the Committee. 4.02 Grants. The Committee will designate individuals to whom Options and Restricted Stock awards are to be granted and will specify the number of shares of Common Stock subject to each grant. All Options and Restricted Stock awards granted under this Plan shall be evidenced by Agreements which shall be subject to applicable provisions of this Plan and to such other provisions as the Committee may adopt. ARTICLE V SHARES SUBJECT TO PLAN Upon the exercise of any Option or the award of Restricted Stock, the Company may deliver to the Participant authorized but unissued Common Stock. The maximum aggregate number of shares of Common Stock that may be issued pursuant to the exercise of Options and the award of Restricted Stock under this Plan is 2,500,000, subject to adjustment as provided in Article XI. If an Option is terminated, in whole or in part, for any reason other than its exercise, the number of shares of Common Stock allocated to the Option or portion thereof may be reallocated to other Options and Restricted Stock awards to be granted under this Plan. Any shares of Restricted Stock that are forfeited may be reallocated to other Options or Restricted Stock awards to be granted under this Plan. ARTICLE VI OPTION PRICE The price per share of Common Stock purchased on the exercise of an Option shall be determined by the Committee on the date of grant. ARTICLE VII EXERCISE OF OPTIONS 7.01 Maximum Option Period. No Option shall be exercisable after the expiration of ten years from the date the Option was granted. The Committee, at the time of grant, may direct that an Option be exercisable for a period less than such maximum period. 7.02 Nontransferability. Any Option granted under this Plan shall be nontransferable except by will or by the laws of descent and distribution. During the lifetime of the Participant to whom the Option is granted, the Option may be exercised only by the Participant. No right or interest of a Participant in any Option shall be liable for, or subject to, any lien, obligation, or liability of such Participant. 7.03 Employee Status. In the event that the terms of any Option provide that it may be exercised only during employment or within a specified period of time after termination of employment, the Committee may decide in each case to what extent leaves of absence for governmental or military service, illness, temporary disability, or other reasons shall not be deemed interruptions of continuous employment. ARTICLE VIII METHOD OF EXERCISE OF OPTIONS 8.01 Exercise. Subject to the provisions of Articles VII and XII, an Option may be exercised in whole at any time or in part from time to time at such times and in compliance with such requirements as the Committee shall determine. An Option granted under this Plan may be exercised with respect to any number of whole shares less than the full number for which the Option could be exercised. Such partial exercise of an Option shall not affect the right to exercise the Option from time to time in accordance with this Plan with respect to remaining shares subject to the Option. 8.02 Payment. Unless otherwise provided by the Agreement, payment of the Option price shall be made in cash or a cash equivalent acceptable to the Committee. If the Agreement provides, payment of all or part of the Option price may be made by surrendering shares of Common Stock to the Company. If Common Stock is used to pay all or part of the Option price, the shares surrendered must have a Fair Market Value (determined as of the day preceding the date of exercise) that is not less than such price or part thereof. 8.03 Shareholder Rights. No Participant shall, as a result of receiving any Option, have any rights as a shareholder until the date he exercises such Option. ARTICLE IX RESTRICTED STOCK 9.01 Award. In accordance with the provisions of Article IV, the Committee will designate individuals to whom an award of Restricted Stock is to be made and will specify the number of shares of Common Stock covered by the award. 9.02 Vesting. The Committee, on the date of the award, may prescribe that the Participant's rights in the Restricted Stock shall be forfeitable or otherwise restricted for a period of time set forth in the Agreement. By way of example and not limitation, the restrictions may postpone transferability of the shares or may provide that the shares will be forfeited if the Participant separates from the service of the Company and its Affiliates before the expiration of a stated term. 9.03 Shareholder Rights. Prior to their forfeiture in accordance with the terms of the Agreement and while the shares are Restricted Stock, a Participant will have all rights of a shareholder with respect to Restricted Stock, including the right to receive dividends and vote the shares; provided, however, that (i) a Participant may not sell, transfer, pledge, exchange, hypothecate, or otherwise dispose of Restricted Stock, (ii) Dominion Resources, Inc. shall retain custody of the certificates evidencing shares of Restricted Stock, and (iii) the Participant will deliver to Dominion Resources, Inc. a stock power, endorsed in blank, with respect to each award of Restricted Stock. The limitations set forth in the preceding sentence shall not apply after the shares cease to be Restricted Stock. ARTICLE X CHANGE IN CONTROL 10.01 Options. Each Option that is outstanding on a Change in Control Date shall be exercisable in whole or in part on that date and thereafter during the remainder of the option period stated in the Agreement. In lieu of exercising an Option, a Participant may elect, by written notice to the Company within sixty days after the Change in Control Date, to receive, in exchange for the cancellation of the Option or any portion thereof, a cash payment equal to the difference between the Fair Market Value of the number of shares for which the Option is cancelled and the aggregate option price of those shares. 10.02 Restricted Stock. A Participant's interest in Restricted Stock shall be nonforfeitable and transferable as of a Change in Control Date. A Participant may elect, by written notice to the Company within sixty days after the Change in Control Date, to receive, in exchange for shares that were Restricted Stock immediately before the Change in Control, a cash payment equal to the Fair Market Value of the shares surrendered. 10.03 Change in Control. A Change in Control occurs if, after the date of the Agreement, (i) any person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the owner or beneficial owner of Company securities having 20% or more of the combined voting power of the then outstanding Company securities that may be cast for the election of the Company's directors (other than as a result of an issuance of securities initiated by the Company, or open market purchases approved by the Board, as long as the majority of the Board approving the purchases is the majority at the time the purchases are made); or (ii) as the direct or indirect result of, or in connection with, a cash tender or exchange offer, a merger or other business combination, a sale of assets, a contested election, or any combination of these transactions, the persons who were directors of the Company before such transactions cease to constitute a majority of the Company's Board, or any successor's board, within two years of the last of such transactions; or (iii) with respect to a Participant employed by an Affiliate, and event occurs with respect to the employer such that, after the event, the employer is no longer an Affiliate and the Participant is no longer employed by the Company or an Affiliate. For purposes of this Agreement, the Control Change Date is the date on which an event described in (i), (ii), or (iii) occurs. If a Change in Control occurs on account of a series of transactions, the Control Change Date is the date of the last of such transactions. ARTICLE XI ADJUSTMENT UPON CHANGE IN COMMON STOCK Should the Company effect one or more stock dividends, stock split-ups, subdivisions or consolidations of shares or other similar changes in capitalization, then the maximum number of shares as to which Options and Restricted Stock awards may be granted under this Plan shall be proportionately adjusted and the terms of Options and Restricted Stock awards shall be adjusted as the Committee shall determine to be equitably required. Any determination made under this Article XI by the Committee shall be final and conclusive. The issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property or for labor or services, either upon direct sales or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, Options or Restricted Stock awards. ARTICLE XII COMPLIANCE WITH LAW AND APPROVAL OF REGULATORY BODIES No Option shall be exercisable, no Common Stock shall be issued, no certificates for shares of Common Stock shall be delivered, and no payment shall be made under this Plan except in compliance with all applicable federal and state laws and regulations (including, without limitation, withholding tax requirements) and the rules of all domestic stock exchanges on which the Company's share may be listed. The Company shall have the right to rely on an option of its counsel as to such compliance. Any share certificate issued to evidence Common Stock for which an Option is exercised or Restricted Stock awarded may bear such legends and statements as the Committee may deem advisable to assure compliance with federal and state laws and regulations. No Option shall be exercisable, no Common Stock shall be issued, no certificate for shares shall be delivered, and no payment shall be made under this Plan until the Company has obtained such consent or approval as the Committee may deem advisable from regulatory bodies having jurisdiction over such matters. ARTICLE XIII GENERAL PROVISIONS 13.01 Effect on Employment. Neither the adoption of this Plan, its operation, nor any documents describing or referring to this Plan (or any part thereof) shall confer upon any employee any right to continue in the employ of the Company or an Affiliate or in any way affect any right and power of the Company or an Affiliate to terminate the employment of any employee at any time with or without assigning a reason therefor. 13.02 Unfunded Plan. The Plan, insofar as it provides for grants, shall be unfunded, and neither the Company nor any Affiliate shall be required to segregate any assets that may at any time be represented by grants under this Plan. Any liability of the company or an Affiliate to any person with respect to any grant under this Plan shall be based solely upon any contractual obligations that may be created pursuant to this Plan. No such obligation of the Company or an Affiliate shall be deemed to be secured by any pledge of, or other encumbrance on, any property of the Company or an Affiliate. 13.03 Rules of Construction. Headings are given to the articles and sections of this Plan solely as a convenience to facilitate reference. The reference to any statute, regulation, or other provision of law shall be construed to refer to any amendment to or successor of such provision law. ARTICLE XIV AMENDMENT The Board may amend or terminate this Plan from time to time; provided, however, that no amendment may become effective until shareholder approval is obtained if the amendment (i) materially increases the aggregate number of shares that may be issued pursuant to Options and Restricted Stock awards, (ii) materially increases the benefits accruing to Participants under the Plan, or (iii) materially changes the class of employees eligible to become Participants. No amendment shall, without a Participant's consent, adversely affect any rights of such Participant under any Option or Restricted Stock award outstanding at the time such amendment is made. ARTICLE XV DURATION OF PLAN No Option or Restricted Stock award may be granted under this Plan after January 15, 1997. Options and Restricted Stock awards granted before that date shall remain valid in accordance with their terms. EX-10 8 EXHIBIT 10.27 Exhibit 10(xxvii) VIRGINIA ELECTRIC AND POWER COMPANY EMPLOYMENT CONTINUITY AGREEMENT THIS AGREEMENT is between Virginia Electric and Power Company, a Virginia Corporation (the "Employer"), and Dr. James T. Rhodes (the "Executive"). Dominion Resources, Inc. (the "Company"), is the parent company of a group of affiliated corporations that includes Employer. The Company's Board of Directors (the "Board") acknowledges that Executive's contributions to the past and future growth and success of Employer and the Company have been and will continue to be substantial. The Board recognizes that there exists a possibility of a change in control in the Company and of a change in control in Employer such that Employer would no longer be a member of the Company's group of affiliated corporations. The Board also recognizes that the possibility of either such change may contribute to uncertainty on the part of Employer's senior management and may result in the departure or distraction of Employer's senior management from operating responsibilities. Outstanding management of Employer is always essential to advancing the best interest of the Company and its shareholders. In the event of a threat or occurrence of a bid to acquire or change control of the Employer or the Company or to effect a business combination such that Employer would no longer be a member of the Company's group of affiliated corporations, it is particularly important that Employer's business be continued with a minimum of disruption. The Board believes that the objective of securing and retaining outstanding management will be achieved if Employer's key management employees are given assurances of employment security so they will not be distracted by personal uncertainties and risks created by such circumstances. The Board believes that such assurances will secure the continued services of Employer's key operational and management executives in the performance of both their regular duties and such extra duties as may be required of them during such periods of uncertainty, enable the Company to rely on such executives to manage Employer's affairs during any such period with less concern for their personal risks, and enhance Employer's ability to attract new key executives as needed. The Organization and Compensation Committee of the Board has recommended, and the Board has approved, entering into employment agreements with Employer's key management executives in order to achieve the foregoing objectives; and Executive is a key management executive of Employer. Under this authority, Employer and Executive enter into this Agreement to induce Executive to remain an employee of Employer and to continue to devote his full energy to Employer's affairs. 1. Employment. (a) Employer and Executive hereby agree that Executive's employment will continue after this Agreement is effective on the same terms and conditions of employment as are in effect on such date. (b) Employer further agrees that if Executive is in the employ of Employer on a Control Change Date, Employer will continue to employ Executive and Executive will remain in the employ of Employer for the period commencing on the Control Change Date and ending on the earlier of the third anniversary of such date or Executive's Normal Retirement Date (as defined under the Dominion Resources, Inc. Retirement Plan) (the "Employment Period"), and that Executive will continue to exercise such authority and perform such executive duties as are commensurate with the authority being exercised and duties being performed by the Executive immediately before the Control Change Date. Executive's services will be performed at the location where Executive was employed immediately before the Control Change Date. If Employer consents, however, Executive may elect to change the location of his employment without affecting any of his rights under this Agreement. (c) For purposes of this Agreement, a Change in Control occurs if, after the date of the Agreement, (i) any person, including a "group" as defined in Section 13(d)(3) of the Securities Exchange Act of 1934, becomes the owner or beneficial owner of Company securities having 20% or more of the combined voting power of the then outstanding Company securities that may be cast for the election of the Company's directors (other than as a result of an issuance of securities initiated by the Company, or open market purchases approved by the Board, as long as the majority of the Board approving the purchases is the majority at the time the purchases are made); (ii) as the direct or indirect result of, or in connection with, a cash tender or exchange offer, a merger or other business combination, a sale of assets, a contested election, or any combination of these transactions, the persons who were directors of the Company before such transactions cease to constitute a majority of the Company's Board, or any successor's board, within two years of the last of such transactions; or (iii) an event occurs with respect to Employer such that, after the event, Employer is no longer an Affiliate of the Company. For purposes of this Agreement, the Control Change Date is the date on which an event described in (i), (ii), or (iii) occurs. If a Change in Control occurs on account of a series of transactions, the Control Change Date is the date of the last of such transactions. (d) For purposes of this Agreement, as to the Company, an Affiliate is any entity that is (i) a member of a controlled group of corporations as defined in section 1563(a) of the Internal Revenue Code of 1986, as amended (the "Code"), determined without regard to Code sections 1563(a)(4) and 1563(e)(3)(c), of which the Company is a member according to Code section 414(b); (ii) an unincorporated trade or business that is under common control with the Company, as determined according to Code section 414(c); or a member of an affiliated service group of which the Company is a member according to Code section 414(m). 2. Compensation and Benefits. During the Employment Period, Employer will (i) continue to pay Executive a salary not less than the salary applicable to Executive on the Control Change Date, (ii) pay Executive bonuses in amounts not less in amount than those paid to Executive during the twelve-month period preceding the Control Change Date, and (iii) continue employee benefit programs as to Executive at levels in effect on the Control Change Date (but subject to such reductions as may be required to maintain such plans in compliance with applicable federal laws regulating employee benefit programs). 3. Termination of Employment. (a) Executive is entitled to receive Continued Compensation according to the remaining provisions of this section if Executive's employment with Employer terminates during the Employment Period because of an event described in section 3(b) or 3(c), but subject to sections 3(f) and 3(g). If Executive's employment terminates during the Employment Period and an event described in 3(b) or 3(c) has not occurred, this Agreement terminates. (b) Executive is entitled to receive Continued Compensation if Executive's employment is terminated by Employer without cause (cause being limited to Executive's acts of theft, embezzlement, fraud, or moral turpitude). (c) Executive is entitled to receive Continued Compensation if Executive voluntarily terminates employment after (i) Executive does not receive salary increases, bonuses, and incentive awards comparable to the salary increases, bonuses, and incentive awards that Executive received in prior years or, if greater, that other executives in comparable positions receive in the current year; or (ii) Executive's compensation or employment related benefits are reduced; or (iii) Executive's status, title(s), offices, places of employment, working conditions, or management responsibilities are diminished (other than changes in reporting or management responsibilities to reflect sound practices commonly followed by enterprises comparable to Employer or required by applicable federal or state law). Executive's voluntary termination under this section must occur within sixty days after an event described in (i), (ii), or (iii), or within sixty days after the last in a series of such events. (d) Continued Compensation must be paid in a lump sum payment. If Executive requests and Employer (in its sole discretion) consents, however, Executive may receive Continued Compensation in thirty-six equal monthly installments. If Continued Compensation is paid in monthly installments, total Continued Compensation payments must equal three times Executive's Base Period Income. If Continued Compensation is paid in a lump sum, Continued Compensation equals the present value of the total payments that would be due under the preceding sentence, using the interest rate prescribed in Code section 280G(d)(4). Continued Compensation is due and payable to Executive on the later of the fifteenth business day after Executive's employment termination or the first day of the month following his employment termination. At Employer's sole discretion, however, a Continued Compensation payment may be made on an earlier date. Continued Compensation is subject to reduction according to sections 3(f) and 3(g). (e) Executive's Base Period Income equals the greater of (i) his average annual base salary and cash incentive bonuses for the thirty-six full month period (or actual period, if shorter) of employment preceding the Control Change Date; or (ii) his average annual base salary and cash incentive bonuses for the thirty-six full month period (or actual period if shorter) of employment preceding Executive's employment termination. For purposes of the preceding sentence, cash amounts received under the Dominion Resources, Inc. Performance Achievement Plan are not considered cash incentive bonuses. Amounts of salary and bonus that Executive has elected to defer during the relevant period are included in Base Period Income. (f) If, within thirty-six months after Executive becomes entitled to receive Continued Compensation, Executive obtains employment that is comparable to Executive's former employment with Employer, Continued Compensation must be reduced by amounts earned by Executive from his subsequent employer. For purposes of this Agreement, employment is comparable if such employment entitles Executive to the same total compensation (including employment related benefits) and similar status, title(s), offices, and management responsibilities. If Continued Compensation must be reduced under this subsection, either (i) Employer must reduce installment payments of Continued Compensation by amounts earned by Executive from such comparable employment; or (ii) within ninety days after Executive obtains such comparable employment, Executive must refund to Employer the amount required so that Executive retains a total amount of Continued Compensation equal to the present value (using the same interest rate prescribed by section 3(d)) of the amount he would retain if installment payments were reduced under this sentence. To prevent hardship, repayment of Continued Compensation under this subsection may be made by Executive in installments, determined at Employer's sole discretion; but a repayment arrangement may not be used as a disguised loan. (g) Except as provided in sections 3(h) and 4, if any payments which the Executive has the right to receive from Employer (including Continued Compensation payments), the Company, or an Affiliate or any payments or benefits under any plan maintained by the Company or an Affiliate would constitute a "parachute payment" (as defined in Code section 280G and not governed by terms defined in this Agreement), all such payments must be reduced to the largest amount that will result in no portion of any such payments being subject to the excise tax imposed by Code section 4999. The determination of any reduction pursuant to this subsection must be made by Employer in good faith, before any such payments are due and payable to Executive. (h) In addition to any other payments provided under this Agreement or any other arrangement between Employer and Executive, Executive is entitled to (i) any benefits that become vested under the accelerated vesting provisions of the Dominion Resources, Inc. Executive Supplemental Retirement Plan and any benefits due him under the Dominion Resources, Inc. Performance Achievement Plan or as a result of the exercise of a stock option granted or a restricted stock award made under the Dominion Resources, Inc. Long- Term Incentive Plan, and (ii) any payments or benefits due him that are not "parachute payments" (as defined in Code section 280G), including amounts that Executive is entitled to receive under Employer's qualified plans and health-care coverage under Employer's welfare plans for which Executive pays the cost. 4. Indemnification. Employer must pay all legal fees and expenses, if any, incurred by Executive in seeking to obtain or enforce any right or benefit provided by this Agreement, whether successful or not. In addition, if the excise tax imposed under Code section 4999 on "excess parachute payments," as defined in Code section 280G, is provoked by (i) any amount paid or payable to or for the benefit of Executive under this section as legal fees and expenses, or (ii) any benefits that become vested under the accelerated vesting provisions of the Dominion Resources, Inc. Executive Supplemental Retirement Plan and any benefits due Executive under Dominion Resources, Inc. Performance Achievement Plan or as a result of the exercise of a stock option granted or a restricted stock award made under the Dominion Resources, Inc. Long-Term Incentive Plan, Employer must indemnify Executive and hold him harmless against all claims, losses, damages, penalties, expenses, and excise taxes. 5. Governing Law. This Agreement is construed according to the laws of the Commonwealth of Virginia. 6. Amendment. This Agreement may not be amended except by the written agreement of the parties. 7. Binding Effect. The parties agree that this Agreement is enforceable under the laws of the Commonwealth of Virginia. This Agreement is binding on Employer, its successors, and assigns and on Executive and his personal representatives. If Employer is consolidated or merged with or into another corporation, or if another entity purchases all or substantially all of Employer's assets, the surviving or acquiring corporation succeeds to the rights and obligations of Employer under this Agreement. This Agreement inures to the benefit of and is enforceable by Executive's personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, and legatees. If Executive dies while any amounts are payable under this Agreement, all such amounts, unless otherwise provided, shall be paid in accordance with the terms of this Agreement to Executive's spouse, or if none, to his devisee, legatee, or other designee or, if there be no such designee, to his estate. 8. Notice. For purposes of this Agreement, notices and all other communications must be in writing and are effective when delivered or mailed by United States registered mail, return receipt requested, postage prepaid, addressed to Executive or his personal representative at his last known address. All notices to Employer must be directed to the attention of the Chairman of the Board. Such other addresses may be used as either party has furnished to the other in writing. Notices of change of address are effective only upon receipt. 9. Miscellaneous. No provisions of this Agreement may be modified, waived, or discharged unless such waiver, modification, or discharge is agreed to in writing signed by Executive and Employer. A waiver of any breach of or compliance with any provision or condition of this Agreement is not a waiver of similar or dissimilar provisions or conditions. The invalidity or unenforceability of any provision of this Agreement does not affect the validity or enforceability of any other provision of this Agreement, which remains in full force and effect. 10. No Assignment. Executive may not assign, alienate, anticipate, or otherwise encumber any rights, duties, or amounts which he might be entitled to receive under this Agreement. 11. Term. This Agreement is effective from the date of its execution by Employer. Employer may not terminate this Agreement for thirty-six months after it becomes effective. The Agreement automatically continues in effect from year to year thereafter unless the Employer notifies Executive in writing thirty days before the end of the initial thirty-six-month period or any anniversary of its execution that the Agreement will terminate as of that date. The parties have executed this Agreement dated this 12 day of February, 1987. VIRGINIA ELECTRIC AND POWER COMPANY By /s/ Jack H. Ferguson ________________________ Jack H. Ferguson President and Chief Executive Officer _________________________ Dr. James T. Rhodes AMENDMENT TO THE VIRGINIA ELECTRIC AND POWER COMPANY EMPLOYMENT CONTINUITY AGREEMENT (the "Agreement") The second sentence of Section 3(e) of the Agreement is amended to read as follows: For purposes of the preceding sentence, cash amounts received under the Dominion Resources, Inc. Performance Achievement Plan are not considered cash incentive bonuses; however, annual base salary includes the annualized Retainer Fee and any Board or Committee meeting fees payable by virtue of membership on the Board of Directors of Dominion Resources, Inc., or of any of its subsidiaries or affiliates. VIRGINIA ELECTRIC AND POWER COMPANY By /s/ Jack H. Ferguson _________________________________ Jack H. Ferguson President Date: 6/4/87 _____________________________ /s/ James R. Rhodes ___________________________________ Dr. James T. Rhodes EX-10 9 EXHIBIT 10.28 Exhibit 10(xxviii) DOMINION RESOURCES, INC. RETIREMENT BENEFIT FUNDING PLAN Effective June 29, 1990 TABLE OF CONTENTS Article Page INTRODUCTION ARTICLE I DEFINITIONS 1.01. Account................................................ 1 1.02. Administrative Benefit Committee....................... 1 1.03. Administrative and Investment Benefit Committee........ 1 1.04. Affiliate.............................................. 1 1.05. Alternate Payee........................................ 1 1.06. Beneficiary............................................ 1 1.07. Code................................................... 2 1.08. DRI.................................................... 2 1.09. DRI Board.............................................. 2 1.10. DRI Committee.......................................... 2 1.11. DRI Participant........................................ 2 1.12. Employer............................................... 2 1.13. ERISA.................................................. 2 1.14. Investment Manager..................................... 2 1.15. Nonregulated Subsidiary................................ 2 1.16. Participant............................................ 3 1.17. Plan................................................... 3 1.18. Plan Administrator..................................... 3 1.19. Plan Year.............................................. 3 1.20. Qualified Domestic Relations Order..................... 3 1.21. Special Trust.......................................... 3 1.22. Trust.................................................. 3 1.23. Trustee................................................ 3 1.24. Trust Fund............................................. 3 1.25. Valuation Date......................................... 3 1.26. Virginia Power......................................... 3 1.27. Virginia Power Board................................... 3 1.28. Virginia Power Committee............................... 3 1.29. Virginia Power Participant............................. 3 ARTICLE II PARTICIPATION.................................... 4 ARTICLE III CONTRIBUTIONS 3.01. Employer Contributions................................. 4 3.02. Transfer Contributions................................. 4 3.03. General Provisions on Contributions.................... 5 ARTICLE IV ALLOCATIONS 4.01. Participants' Accounts................................. 5 4.02. Allocation of Contributions and Transfers.............. 6 4.03. Schedule of Contributions.............................. 6 4.04. Other Allocations...................................... 6 4.05. Subaccount Recordkeeping............................... 7 ARTICLE V VESTING........................................... 7 ARTICLE VI DISTRIBUTIONS 6.01. Periodic Distributions................................. 7 6.02. Separation from Service................................ 8 6.03. Participants in Pay Status............................. 10 6.04. Death Benefits......................................... 10 ARTICLE VII APPOINTMENTS AND ALLOCATION OF FIDUCIARY RESPONSIBILITY 7.01. Sponsor, Named Fiduciary............................... 11 7.02. Accountant............................................. 11 7.03. Insurer................................................ 11 7.04. Investment Manager..................................... 12 7.05. Trustee................................................ 12 7.06. Allocation of Responsibility........................... 12 7.07. General................................................ 13 7.08. Fiduciary Discretion................................... 13 ARTICLE VIII COMMITTEES 8.01. General................................................ 13 8.02. Members................................................ 14 8.03. Voting................................................. 14 8.04. Delegation of Responsibilities......................... 14 8.05. Duties................................................. 15 8.06. Action Affecting Committee Member...................... 15 8.07. Agents................................................. 15 8.08. Officers............................................... 15 8.09. Rules.................................................. 16 ARTICLE IX ADMINISTRATION OF THE PLAN 9.01. Duties of Participants and Beneficiaries............... 16 9.02. General................................................ 16 9.03. Disclosure............................................. 17 9.04. Annual Accountings..................................... 17 9.05. Expenses - Compensation................................ 18 9.06. Directions to Trustee, Insurers and Investment Managers............................................ 18 9.07. Claims Procedure....................................... 19 ARTICLE X OBLIGATIONS OF EMPLOYER 10.01. No Contract or Inducement.............................. 20 10.02. No Right to Employment................................. 20 10.03. Obligation for Benefits................................ 20 ARTICLE XI AMENDMENT AND TERMINATION OF PLAN 11.01. Amendment of the Plan.................................. 21 11.02. Termination of the Plan................................ 21 ARTICLE XII GENERAL PROVISIONS 12.01. Interpretation......................................... 21 12.02. Merger, Consolidation and Transfers of Assets or Liabilities...................................... 22 12.03. Limitation on Assignment............................... 22 12.04. Discharge of Liability................................. 22 12.05. Payments to Minors and Incompetents.................... 23 12.06. Unclaimed Benefits..................................... 23 12.07. Headings and Subheadings............................... 23 12.08. Use of Masculine and Feminine, Singular and Plural..... 23 12.09. Governing Law.......................................... 23 12.10. Errors and Omissions................................... 23 EXECUTION..................................................... 24 INTRODUCTION Dominion Resources, Inc. and its Affiliates have made various benefit promises and commitments to certain of their current and former elected officers. The Board of Directors of Dominion Resources, Inc. and the Board of Directors of Virginia Electric and Power Company determined that the adoption of the Dominion Resources, Inc. Retirement Benefit Funding Plan, which is designed to permit the funding of certain benefits promised to Participants, would assist them in attracting and retaining those employees whose judgment, abilities, and experience will contribute to the continued success of Dominion Resources, Inc. and its Affiliates. The Plan is intended to be an employee pension benefit plan within the meaning of Section 3(2) of ERISA. The Trust that has been established in conjunction with the Plan is intended to be a "grantor trust" under Code sections 671 through 679 such that the income of the Trust Fund will be includible in income by the Employers. The Plan and Trust shall be administered and interpreted in accordance with these intentions. ARTICLE I DEFINITIONS 1.01. Account means the separate account that is established for each Participant. A Participant's Account is comprised of three subaccounts: the ESRP Account, the Benefit Restoration Account, and the Credited Service Account. 1.02. Administrative Benefit Committee means the committee comprised of the individuals appointed by the Administrative and Investment Benefit Committee in accordance with Section 8.01. 1.03. Administrative and Investment Benefit Committee means the committee comprised of the individuals appointed by the Virginia Power Board in accordance with Section 8.01. 1.04. Affiliate means an employer, whether or not incorporated, which with Virginia Power is treated as a single employer under section 414(b), 414(c), 414(m) or 414(n) of the Code as determined before the application of the provisions of section 414(r) of the Code. 1.05. Alternate Payee means a Participant's spouse, former spouse, child or other dependent who is recognized in a Qualified Domestic Relations Order as having, or who is assigned, a right to receive all or a portion of the benefit payable to a Participant under the Plan. 1.06. Beneficiary means an individual or entity that is entitled to receive any benefits that may be payable under the Plan on or after a Participant's death. The Participant's Beneficiary shall be determined in accordance with the following subsections. (a) The Beneficiary shall be the Participant's surviving spouse unless such spouse has consented in writing to the Participant's designation of a different Beneficiary. The surviving spouse's consent must be in writing, must acknowledge the effect of the Participant's election, and must be witnessed by a Plan representative or notary public. With the consent of the surviving spouse, the provisions of subsection (b) are effective for that Participant. The provisions of subsection (b) also shall be effective with respect to a Participant if the Plan Administrator is satisfied that the consent of the surviving spouse cannot be obtained because the Participant has no spouse, because the spouse cannot be located, or because of such other circumstances as applicable regulations may provide. (b) Except as provided in subsections (a) and (c), the Beneficiary shall be the individual or entity designated by the Participant. In the absence of an effective designation and if subsections (a) and (c) are not applicable, the Beneficiary shall be the surviving spouse, if any, the Participant's children, per stirpes, and if none, the Participant's estate. (c) To the extent provided in a Qualified Domestic Relations Order, the Beneficiary shall be the Alternate Payee recognized by the order as having a right to receive all or a portion of the benefits payable under the Plan on behalf of the Participant following the Participant's death. 1.07. Code means the Internal Revenue Code of 1986, as amended. 1.08. DRI means Dominion Resources, Inc. 1.09. DRI Board means the Board of Directors of DRI. 1.10. DRI Committee means the Organization and Compensation Committee of the DRI Board. 1.11. DRI Participant means an individual who is or was an elected officer of DRI or a Nonregulated Subsidiary and who has been designated to participate in the Plan in accordance with Article II. 1.12. Employer means Virginia Power and each Affiliate that, with the approval of the Virginia Power Board, has elected to contribute to the Plan on behalf of one or more employees. 1.13. ERISA means the Employee Retirement Income Security Act of 1974, as amended. 1.14. Investment Manager means a fiduciary who satisfies the requirements of ERISA section 3(38) and who is appointed by the Administrative Benefits Committee to manage, acquire, or dispose of Trust Fund assets. 1.15. Nonregulated Subsidiary means Dominion Capital, Inc., Dominion Energy, Inc., Dominion Lands, Inc. or another corporation (i) in which DRI owns stock possessing at least 50 percent of the combined voting power of all classes of stock and (ii) which is not subject to regulation as a public service corporation by the State Corporation Commission of Virginia. 1.16. Participant means an individual who satisfies the requirements of Article II and includes the DRI Participants and the Virginia Power Participants. 1.17. Plan means the Dominion Resources, Inc. Retirement Benefit Funding Plan. 1.18. Plan Administrator means Virginia Power. 1.19. Plan Year means the calendar year. 1.20. Qualified Domestic Relations Order means a judgment, decree, order, or approval of a property settlement that satisfies the requirements of ERISA section 206(d)(3)(B). 1.21. Special Trust means the Dominion Resources, Inc. Special Trust Agreement between DRI and Mellon Bank, N.A. and effective as of December 1, 1986. 1.22. Trust means the entity created pursuant to the agreement between Virginia Power and the Trustee relating to the Plan. 1.23. Trustee means Mellon Bank, N.A. 1.24. Trust Fund means the assets of the Plan that are held in the Trust. 1.25. Valuation Date means the last business day of each calendar quarter. 1.26. Virginia Power means Virginia Electric and Power Company. 1.27. Virginia Power Board means the Board of Directors of Virginia Power. 1.28. Virginia Power Committee means the Organization and Compensation Committee of the Virginia Power Board. 1.29. Virginia Power Participant means an individual who is or was an elected officer of Virginia Power and who has been designated to participate in the Plan in accordance with Article II. ARTICLE II PARTICIPATION An individual who is or was an elected officer of Virginia Power and who is designated by the Virginia Power Board to participate in the Plan shall be a Participant. An individual who is or was an elected officer of DRI or a Nonregulated Subsidiary and who is designated by the DRI Board to participate in the Plan shall be a Participant. The Plan Administrator shall notify each individual upon his qualification to become a Participant in the Plan. Participation in the Plan ceases when a Participant's entire Account in the Plan has been distributed. ARTICLE III CONTRIBUTIONS 3.01. Employer Contributions. In each Plan Year, each Employer shall contribute to the Trust Fund the amount, if any, that the Employer determines in its discretion to be its contribution for the Plan Year. An Employer's contribution shall be made only from its current or accumulated profits, as determined on the basis of its financial statements and in accordance with its standard and customary accounting practices for financial reporting. If an Employer is prevented from making a contribution for any Plan Year because it lacks sufficient current or accumulated profits, that Employer's contribution may be made, but is not required to be made, by one or more other Employers. Notwithstanding the foregoing, all Employer contributions on behalf of Virginia Power Participants are subject to the approval of the Virginia Power Board and all contributions on behalf of DRI Participants are subject to the approval of the DRI Board. 3.02. Transfer Contributions. In lieu of or in addition to a contribution pursuant to Section 3.01, an Employer may direct that an amount be transferred to the Trust from the Special Trust. All such transfers on behalf of Virginia Power Participants shall be subject to the approval of the Virginia Power Board and all such transfers on behalf of DRI Participants shall be subject to the approval of the DRI Board. In addition, all such transfers shall be in accordance with the terms of the Special Trust. 3.03. General Provisions on Contributions. (a) The Trustee is not required to collect Employer contributions or transfer contributions pursuant to Section 3.02 and is reponsible only for assets received in its capacity as Trustee. Subject to the approval of the Virginia Power Committee (with respect to Virginia Power Participants) or the DRI Committee (in the case of DRI Participants), an Employer may cause each Plan Year's Employer contributions or transfers pursuant to Section 3.02 to be paid to the Trust in installments and on the dates that it selects. (b) Unless allocated as of an earlier date, any contributions made to the Plan by an Employer or transferred pursuant to Section 3.02 after the first day of a Plan Year may be held by the Trustee and invested as a segregated account, commingled with the Trust Fund, and allocated to Participants' Accounts as of the last day of the Plan Year. The Trustee shall maintain such records as may be necessary to assure that such contributions and amounts attributable to such contributions are allocated to the proper Participants' Accounts as otherwise provided by the Plan. ARTICLE IV ALLOCATIONS 4.01. Participants' Accounts. The Plan Administrator shall cause an Account to be established and maintained in the name of each Participant. Each Participant's Account shall be comprised of three subaccounts: an ESRP Account, a Benefit Restoration Account, and a Credited Service Account. Each Participant's Account shall be credited with the Participant's share of amounts contributed or transferred to the Trust pursuant to Article III, as well as a proportionate share of the net earnings, gains, or losses of the Trust Fund and any distributions from the Account. 4.02. Allocation of Contributions and Transfers. Amounts contributed or transferred to the Trust pursuant to Article III, if any, shall be allocated among Participants' Accounts as of the date specified by the Virginia Power Committee (in the case of Virginia Power Participants) or the DRI Committee (in the case of DRI Participants) or, if no date is specified, the last day of the Plan Year. 4.03. Schedule of Contributions. At least annually, the Plan Administrator shall furnish the Trustee a schedule showing as to each Participant the amount, if any, of contributions or transfers pursuant to Article III to be allocated to each Participant's Account. The Plan Administrator also shall provide to the Trustee a schedule showing the amount of any such contribution or transfer that is to be allocated to the ESRP Account, the Benefit Restoration Account, and the Credited Service Account of each Participant. 4.04. Other Allocations. (a) As of each Valuation Date, before crediting any amounts allocated to a Participant's Account under Section 4.02, the Trustee shall revalue the net assets of the Trust Fund at their then current market value to reflect any increase or decrease in the value of the investments of the Trust Fund as of that date as compared with the total value of the Trust Fund on the last preceding Valuation Date. (b) As of each Valuation Date, after revaluing the assets of the Trust Fund as provided in subsection (a) and before crediting any amounts allocated to a Participant's Account under Section 4.02, the Trustee shall apportion among the separate Accounts of all Participants the net income or loss earned by the Trust Fund during the period following the preceding Valuation Date. Such income or loss shall be apportioned on the basis of the Account balances of the Participants as of the beginning of such Plan Year. (c) If any interim contributions or transfers have been held in a segregated account as provided in Section 3.03(b), any income attributable to such contributions shall be allocated to the appropriate Account of each Participant to whom such contributions or transfers are allocated. 4.05. Subaccount Recordkeeping. Allocations to a Participant's Account pursuant to Sections 4.02 and 4.04 shall be further allocated between each Participant's ESRP Account, Benefit Restoration Account, and Credited Service Account. The further allocation of amounts allocated pursuant to Section 4.02 shall be made on the basis of the Employer's direction, as approved by the Virginia Power Committee (in the case of Virginia Power Participants) or the DRI Committee (in the case of DRI Participants), and as reflected in the schedule described in Section 4.03. The further allocation of amounts allocated pursuant to Section 4.04 shall be made on the basis of the relative value of the Participant's ESRP Account, the Benefit Restoration Account, and the Credited Service Account as of the immediately preceding Valuation Date. ARTICLE V VESTING Each Participant shall at all times have a fully vested and nonforfeitable interest in his Account. ARTICLE VI DISTRIBUTIONS 6.01. Periodic Distributions. As soon as practicable after an amount is allocated to a Participant's Account under Section 4.02, but in any event before the April 15 of the Plan Year following the Plan Year in which the allocation was made, a distribution shall be made from the Account of each Participant as provided in the following sentences. The amount to be distributed shall be the amount that the Virginia Power Committee (in the case of Virginia Power Participants) or the DRI Committee (in the case of DRI Participants) determines is required by the Participant to satisfy the federal, state, and local income tax liability attributable to the allocation. The amount distributed pursuant to this Section shall be charged to the Participant's ESRP Account, Benefit Restoration Account, and Credited Service Account in proportion to the contributions or transfers allocated to such subaccounts for the Plan Year. 6.02. Separation from Service. (a) A Participant who separates from the service of Virginia Power and its Affiliates after June , 1990, shall be entitled to the benefits that may be provided by his Account balance as of the Valuation Date coincident with or immediately preceding such date, plus any amounts that are subsequently allocated to his Account pursuant to Article IV. Benefits shall be distributed to the Participant in accordance with the following subsection (b) or (c). (b) The value of the Participant's Account, as of the applicable Valuation Date, may be segregated and, by way of example and not of limitation, may be invested in a savings account, money market fund, or other interest- bearing investment medium. The Plan Administrator shall determine the projected Trust Fund earnings allocable to the Participant's Account (based on the value of the Account as of the applicable Valuation Date) during the period beginning with the Participant's separation from service and ending one hundred and twenty months thereafter. The amount payable to the Participant each month shall be the amount that, based on the Plan Administrator's determination of projected earnings, will provide one hundred twenty substantially equal payments to the Participant. Notwithstanding the foregoing, the amount distributable from the Participant's ESRP Account shall not be greater than the amount required to fully satisfy the obligation of Virginia Power and DRI to the Participant under the Dominion Resources, Inc. Executive Supplemental Retirement Plan and the amount distributable from the Participant's Credited Service Account shall not be greater than the amount required to fully satisfy the obligation of Virginia Power and DRI to the Participant under any contractual agreement related to the Participant's years of credited service for employee benefit plan purposes. The payments to the Participant shall end when the entire value of his Account has been distributed and the final payment to the Participant shall equal his remaining balance in his Account. Distributions under this Section 6.02(b) shall begin with the first day of the month next following the day that the Participant separates from the service of Virginia Power and its Affiliates. (c) In lieu of the benefit described in subsection (b), and with the consent of the Administrative Benefit Committee, a Participant may elect to receive his benefit under the Plan during a period that is more than ten years but less than the lesser of (i) sixteen years or (ii) the remaining period of the Participant's life expectancy. A Participant's election under this subsection must provide for benefit payments under the Plan on the same basis as his benefit payments under the Dominion Resources, Inc. Executive Supplemental Retirement Plan. If a Participant makes the election described in this subsection, the value of the Participant's Account, as of the applicable Valuation Date, may be segregated and, by way of example and not of limitation, may be invested in a savings account, money market fund, or other interest-bearing investment medium. If a Participant makes the election described in this subsection, the Plan Administrator shall determine the projected Trust Fund earnings allocable to the Participant's Account (based on the value of the Account as of the applicable Valuation Date) during the period beginning with the Participant's separation from service and ending with the last month of the distribution period selected by the Participant. The amount payable to the Participant each month shall be the amount that, based on the Plan Administrator's determination of projected earnings, will provide substantially equal payments to the Participant during the distribution period selected by the Participant. Notwithstanding the foregoing, the amount distributable from the Participant's ESRP Account shall not be greater than the amount required to fully satisfy the obligation of Virginia Power and DRI to the Participant under the Dominion Resources, Inc. Supplemental Retirement Plan and the amount distributable from the Participant's Credited Service Account shall not be greater than the amount required to fully satisfy the obligation of Virginia Power and DRI to the Participant under any contractual agreement related to the Participant's years of credited service for employee benefit plan purposes. The payments to the Participant shall end when the entire value of his Account has been distributed and the final payment to the Participant shall equal his remaining balance in his Account. Distributions under this subsection shall begin with the first day of the month next following the day that the Participant separates from the service of Virginia Power and its Affiliates. An election under this subsection shall be made in writing and delivered to the Plan Administrator, and shall take effect as of the date that benefits are to commence being paid to the Participant. An election may be altered, amended, or revoked by the Participant prior to the date on which the first benefit payment is scheduled to be paid. After the date that the first benefit payment is scheduled to be paid, no further elections or adjustments will be permitted. 6.03. Participants in Pay Status. A Participant who separated from the service of Virginia Power and its Affiliates on or before June __, 1990, shall be entitled to receive his benefits as provided in the following sentences. The value of the Account of a Participant described in the preceding sentence may be segregated and, by way of example and not of limitation, may be invested in a savings account, money market fund, or other interest-bearing investment medium. The Plan Administrator shall determine the projected Trust Fund earnings allocable to the Participant's Account (based on the value of the Account as of the applicable Valuation Date) during the period beginning with the Participant's selection as a Participant and ending with the last month for which a benefit is payable to the Participant under the Dominion Resources, Inc. Executive Supplement Retirement Plan. The amount payable to the Participant each month shall be the amount that, based on the Plan Administrator's determination of projected earnings, will provide equal monthly payments to the Participant during the period described in the preceding sentence. Notwithstanding the foregoing, the amount distributable from the Participant's ESRP Account shall not be greater than the amount required to fully satisfy the obligation of Virginia Power and DRI to the Participant under the Dominion Resources, Inc. Executive Supplemental Retirement Plan and the amount distributable from the Participant's Credited Service Account shall not be greater than the amount required to fully satisfy the obligation of Virginia Power and DRI to the Participant under any contractual agreement related to the Participant's years of credited service for employee benefit plan purposes. The payments to the Participant shall end when the entire value of his Account has been distributed and the final payment to the Participant shall equal his remaining balance in his Account. The payments under this Section shall begin on the first day of the month next following the day that the Participant is selected to participate in the Plan. 6.04. Death Benefits. (a) If a Participant dies after the commencement of benefit payments under Section 6.02 or 6.03 but before he has received his entire interest in his Account, the remainder of the Participant's interest in his Account shall be paid to the Participant's Beneficiary in the same manner that the Participant was receiving benefits before his death. (b) If a Participant dies before the commencement of benefit payments under Section 6.02 or 6.03, the value of his Account shall be paid to his Beneficiary in the manner described in Section 6.02(b) or 6.03, as applicable. (c) A Beneficiary who is receiving benefits under this Section may designate a beneficiary who will be entitled to receive any benefits that remain to be paid to the Beneficiary after the Beneficiary's death. Such designation shall be made in the same manner as the Participant's designation of a Beneficiary. ARTICLE VII APPOINTMENTS AND ALLOCATION OF FIDUCIARY RESPONSIBILITY 7.01. Sponsor, Named Fiduciary. Virginia Power is hereby designated and appointed the sponsor and named fiduciary of the Plan. 7.02. Accountant. To the extent required by law, the Administrative Benefit Committee shall designate as accountant for the Plan a person recognized by the Secretary of Labor as an independent qualified public accountant or a firm which maintains on its staff at least one such person. Such entity shall be engaged by the Administrator to perform (to the extent required by law) in accordance with generally accepted accounting principles the examination of the financial statements and other books and records of the Plan that are necessary to enable it to form and render an opinion as to whether the financial statements and schedules required by law to be included in the annual report of the Plan are presented fairly and in conformity with generally accepted accounting principles applied on a basis consistent with that of the preceding year and to render such other opinions and perform such other services with regard to the Plan as may be necessary or desirable. 7.03. Insurer. The Administrative Benefit Committee may designate one or more insurance companies licensed to do business in Virginia to invest or insure part or all of the assets of the Plan. 7.04. Investment Manager. The Administrative Benefit Committee, acting as a named fiduciary for this purpose, may appoint an Investment Manager to manage all or a designated part of the assets of the Trust Fund. An Investment Manager shall have complete control and authority over all matters concerning the investment of assets under its direction and control, including brokerage transactions. When an Investment Manager has been appointed and has accepted its fiduciary responsibility to the Plan in writing, the Trustee shall be under no obligation to invest the portion of the Trust Fund under the control of the Investment Manager and shall not incur any liability with respect to that portion of the Trust Fund unless it shall knowingly participate in or knowingly conceal another party's breach of its fiduciary responsibilities with respect to that portion of the Trust Fund. Nothing herein, however, shall relieve the Trustee of responsibility for its acts or omissions as Trustee. 7.05. Trustee. The Virginia Power Board must appoint a Trustee. A Trustee may resign at any time upon 60 days' written notice to Virginia Power or such other period as may be agreed upon in writing by Virginia Power and the Trustee. The Virginia Power Board may remove a Trustee at any time upon like notice to the Trustee. In either event, the Virginia Power Board may appoint a successor Trustee or Trustees. Any successor Trustee shall become vested with all the estate, rights, powers, discretion and duties of a Trustee hereunder. 7.06. Allocation of Responsibility. The Virginia Power Board, through this document, has delegated certain fiduciary responsibilities to various committees. The Virginia Power Board (or any committee to which it has delegated a function hereunder) shall have the power to further allocate fiduciary responsibilities among other fiduciaries and to designate fiduciaries and nonfiduciaries to carry out other responsibilities in order to provide for the orderly operation and administration of the Plan. Any allocation, delegation, or other assignment of duties with regard to the Plan shall continue until it is revoked, modified, or altered. To the extent allowed by law, each fiduciary's responsibility is limited to the duties allocated or assigned to the fiduciary. Fiduciaries serving under the Plan may serve in more than one fiduciary capacity. 7.07. General. A person or entity serving in a fiduciary capacity to the Plan may employ one or more persons to render advice as to his or its responsibilities hereunder. Any person serving under the Plan without compensation may, with the approval of the Virginia Power Committee, have his reasonable expenses incurred in serving hereunder reimbursed from the Fund. 7.08. Fiduciary Discretion. In discharging the duties assigned to it under the Plan, each fiduciary has the discretion to interpret the Plan; adopt, amend, and rescind rules and regulations pertaining to his or its duties under the Plan; and to make all other determinations necessary or advisable for the discharge of his or its duties under the Plan. Each fiduciaries' discretionary authority is absolute and exclusive if exercised in a uniform and nondiscriminatory manner with respect to all similarly situated individuals. The express grant in the Plan of any specific power to a fiduciary with respect to any duty assigned to him or it under the Plan must not be construed as limiting any power or authority of the fiduciary to discharge him or its duties. ARTICLE VIII COMMITTEES 8.01. General. One or more committees may be established to carry out various functions relating to the Plan. The committees currently constituted, how they are appointed and their specific responsibilities are as follows: (a) Virginia Power Committee. The Virginia Power Committee is a committee of and appointed by the Virginia Power Board. It is responsible for recommending to the Virginia Power Board: contributions or transfers pursuant to Article III on behalf of Virginia Power Participants, allocations to Virginia Power Participants' Accounts; and amendments to the Plan or the Trust. The Virginia Power Committee is also responsible for establishing a funding policy for the Plan with respect to Virginia Power Participants. (b) DRI Committee. The DRI Committee is a committee of and appointed by the DRI Board. It is responsible for recommending to the DRI Board: contributions or transfers pursuant to Article III on behalf of DRI Participants and allocations to DRI Participants' Accounts. The DRI Committee is also responsible for establishing a funding policy for the Plan with respect to DRI Participants. (c) Administrative and Investment Benefit Committee. The Administrative and Investment Benefit Committee is appointed by the Virginia Power Board. This committee is responsible for establishing an investment policy for the Plan. This committee also appoints the Administrative Benefit Committee. (d) Administrative Benefit Committee. This committee is responsible for: selecting an accountant and Investment Managers; communicating the Plan's investment policy (established by the Administrative and Investment Benefit Committee) to the Trustee and any Investment Manager; the review of the Trust Fund's investment performance; assuring that established investment policies are carried out; supervising administration; determining benefits; and maintaining records. 8.02. Members. Each committee shall consist of not less than 3 nor more than 7 persons. Any member of a committee may be removed at any time and for any reason by the entity which appointed him. Any member of a committee may resign at any time by giving notice to the appointing entity. 8.03. Voting. Except as otherwise specifically provided herein, all acts and decisions of a committee shall be on the concurrence of a majority of the members. Any decision of a committee shall be evidenced in writing. 8.04. Delegation of Responsibilities. Each committee may delegate to any of its members or to the secretary of the committee authority to sign any documents on its behalf, or to perform solely ministerial acts, but such person shall not exercise any discretion over matters delegated to him without obtaining the concurrence of a majority of the members. If at any time there is less than 3 members of a committee, the remaining members shall have authority to act as a committee. All acts and determinations of a committee shall be duly recorded by the secretary thereof and all such records, together with such other documents as may be necessary, shall be preserved by the secretary. 8.05. Duties. Each committee shall have control of the duties set out in Section 8.01 or specifically allocated to it under Article VII or which are delegated to it by the Virginia Power Board or the DRI Board, as applicable, and shall have all necessary powers to carry out its duties. Any delegation of authority by the Virginia Power Board or the DRI Board to a committee shall be made in writing and specify the nature and scope of such delegation. In exercising its duties hereunder, each committee shall at all times act in a uniform, equitable and nondiscriminatory manner. Notwithstanding its powers granted hereunder, no committee shall have the power to modify any provision of the Plan in any way. 8.06. Action Affecting Committee Member. A member of a committee who is also a Participant shall abstain from any action which directly affects him as a Participant and which does not also similarly affect all similarly situated Participants. In the event of an abstention, such matter shall be decided by the remaining members of the committee. Nothing herein shall prevent any member of a committee who is also a Participant or Beneficiary from receiving any benefit to which he may be entitled, so long as the benefit is computed and paid on a basis that is consistently applied to all other Participants and Beneficiaries. 8.07. Agents. Each committee may engage agents to assist it in its duties, and may consult with counsel, who may be counsel for Virginia Power, with respect to the meaning or construction of this document and its obligations hereunder, or with respect to any action, proceeding, or question of law related thereto. 8.08. Officers. Each committee shall choose a chairman from its members and may appoint a secretary, who is not required to be a member of the committee, to keep such records of the acts of the committee as may be necessary. The secretary may perform any and all purely ministerial acts which may be delegated to him by the committee. 8.09. Rules. Each committee may formulate any rules and regulations not inconsistent with the purposes and provisions of the Plan as it may deem necessary to enable it to carry out its duties hereunder. ARTICLE IX ADMINISTRATION OF THE PLAN 9.01. Duties of Participants and Beneficiaries. Each Participant and Beneficiary shall furnish to the Administrator any information or proof requested of him and reasonably required to administer the Plan. 9.02. General. (a) The Plan Administrator, or such persons as it may designate, shall be responsible for the operation and administration of the Plan, except to the extent its duties are allocated to or assumed by other persons or entities hereunder. (b) The Administrative Benefit Committee shall establish rules and procedures to be followed by the Participants and Beneficiaries in filing applications for benefits and for furnishing and verifying proofs necessary to establish any matters required in order to establish their rights to benefits under the terms of the Plan. (c) The Plan Administrator shall supply such full and timely information on all matters relating to the Plan as (1) the Trustee, (2) the accountant, (3) any insurance company and (4) any Investment Manager may require for the effective discharge of their respective duties and responsibilities. (d) It shall be the duty of the Plan Administrator to handle the day-to-day operations of the Plan, including distributing booklets, notices and other information regarding the Plan; maintaining Beneficiary designation forms; explaining the optional form of benefit payout which, with the consent of the Administrative Benefit Committee, may be elected by a Participant under the Plan; and communicating all other matters relating to participation and entitlement to benefits to (1) the Trustee and (2) the accountant as may be necessary to enable them to discharge their duties and responsibilities. The Plan Administrator shall carry out these duties in a uniform, equitable and nondiscriminatory manner with regard to all Participants and Beneficiaries under similar circumstances. 9.03. Disclosure. (a) The Plan Administrator shall see that descriptions of the Plan are prepared as necessary for filing with the Department of Labor and shall make available to Participants and Beneficiaries receiving benefits under the Plan a summary of the Plan at such place and at such times as may be required by federal statutes and regulations issued thereunder. (b) The Plan Administrator shall arrange for the preparation and filing of such annual reports, including financial statements of the Plan's assets and liabilities, schedules, receipts and disbursements and changes in financial position in such form, at such place and at such times as may be required by federal statutes and regulations. The Plan Administrator shall furnish annually as required by law to all Participants and Beneficiaries receiving benefits under the Plan a copy of a summary of the financial statement of the Plan's assets and liabilities and schedules of receipts and disbursements and such other material as is necessary to fairly summarize the latest annual report at such times as may be required by federal statutes and regulations. (c) The Plan Administrator shall make available copies of the Plan, copies of any contracts relating to the Plan, descriptions of the Plan, and annual reports at its principal office for examination by any Participant and any Beneficiary receiving benefits under the Plan. (d) Upon written request of any Participant or any Beneficiary receiving benefits under the Plan, the Plan Administrator shall furnish him a copy of the latest updated summary plan description, plan description, latest annual report and a copy of the Plan. The Plan Administrator may make a reasonable charge for the costs of furnishing such copies. 9.04. Annual Accountings. To the extent required by law, the Plan Administrator shall engage, on behalf of all Participants, the independent qualified public accountant selected by the Administrative Benefit Committee, to certify and render an opinion that the financial statements and schedules prepared in conjunction with the Plan are presented fairly and are in conformity with generally accepted accounting principles consistently applied; provided, however, that where assets are held under a contract with an insurance company or in trust by a bank supervised and subject to periodic examination by a state or federal agency and such insurance company or bank prepares statements concerning such assets and certifies that such statements are accurate and the statements are made a part of the annual report, the accountant may rely on such statements as accurate. 9.05. Expenses - Compensation. As permitted by ERISA, the reasonable expenses incurred in the administration of the Plan may be paid by the Trustee or an insurance company out of the Trust Fund. By way of example and not of limitation, the following expenses may be paid out of the Trust Fund: the compensation of the Trustee and any Investment Manager, fees for actuarial and accounting services, and financial statement preparation and benefit processing fees. Any expenses that are paid out of the Trust Fund shall be charged to the Account of each Participant in the same proportion that the value of each Account bears to the total value of the Trust Fund. To the extent that such expenses are not paid by the Trustee or an insurance company, they shall be paid by Virginia Power (to the extent that the expenses are attributable or allocable to Virginia Power Participants) and DRI (to the extent that the expenses are attributable or allocable to DRI Participants). Notwithstanding the foregoing, no employee of Virginia Power or an Affiliate shall be entitled to compensation from the Trust Fund for services rendered to the Plan. 9.06. Directions to Trustee, Insurers and Investment Managers. All directions from Virginia Power or a committee to the Trustee, an insurer or an Investment Manager shall be in writing from the chief executive officer, the secretary or chairman of a committee, or such person or persons as such individuals may designate in writing. Any Trustee, insurer or Investment Manager may rely on directions from such persons and shall act in accordance therewith, unless it knows or should know that the directions constitute a breach of such person's or its own obligations under the Plan. 9.07. Claims Procedure. (a) All claims for benefits under the Plan shall be submitted to the Administrative Benefit Committee, who shall have the initial responsibility for determining the eligibility of any Participant or Beneficiary for benefits. All claims for benefits shall be made in writing and shall set forth the facts which such Participant or Beneficiary believes to be sufficient to entitle him to the benefit claimed. If a claim for benefits is denied in whole or in part, the Administrative Benefit Committee shall give the claimant written notice of the decision within 90 days of the date the claim was submitted. Such written notice shall set forth in a manner calculated to be understood by the claimant (1) the specific reason or reasons for the denial; (2) specific reference to pertinent Plan provisions on which the denial is based; (3) a description of any additional material or information necessary for the claimant to perfect the claim, along with an explanation of why such material or information is necessary; and (4) appropriate information about the steps to be taken if the claimant wishes to submit the claim for review of the denial. If special circumstances require an extension of time for processing the initial claim, a written notice of the extension and the reason therefor shall be furnished to the claimant before the end of the initial ninety-day period. In no event shall such extension exceed 90 days. (b) If the initial claim for benefits is denied in whole or in part, or if the claimant has had no response to such claim within 90 days of its submission (in which case the claim for benefits shall be deemed to be denied), the claimant or his duly authorized respresentative, at the claimant's sole expense, may appeal the denial to the Virginia Power Committee (if the claim is related to the participation of a Virginia Power Participant) or the DRI Committee (if the claim is related to the participation of a DRI Participant). Notice of the appeal must be received by the appropriate committee within 60 days of receipt of written notice of the denial of the claim or 60 days from the date such claim is deemed to be denied. In pursuing his appeal, the claimant or his duly authorized represetative: (1) may request in writing that the Committee review the denial; (2) may review pertinent documents; and (3) may submit issues and comments in writing. The decision on review shall be made within 60 days of receipt of the request for review, unless special circumstances require an extension of time for processing, in which case a decision shall be rendered as soon as possible, but not later than 120 days after receipt of the request for review. If such an extension of time is required, written notice of the extension shall be furnished to the claimant before the end of the original 60-day period. The decision on review shall be made in writing, shall be written in a manner calculated to be understood by the claimant, and shall include specific references to the provisions of the Plan on which the denial is based. If the decision on review is not furnished within the time specified above, the claim shall be deemed denied on review. ARTICLE X OBLIGATIONS OF EMPLOYER 10.01. No Contract or Inducement. The Plan shall not be deemed to be a contract between Virginia Power or any Affiliate and any Participant or Beneficiary or to be a consideration or an inducement for the employment of any Participant. 10.02. No Right to Employment. Nothing contained in this Plan shall be deemed to give any Participant the right to be retained in employment by Virginia Power or any Affiliate or to interfere with the right of Virginia Power or any Affiliate to discharge, layoff, or suspend any Participant at any time without regard to the effect which such discharge, layoff, or suspension shall have upon his rights or the rights of any Beneficiary under this Plan. 10.03. Obligation for Benefits. The Trust Fund shall be the sole source of benefits under this Plan, and each Participant and Beneficiary shall be entitled to look only to the Trust Fund for payment of benefits. Neither Virginia Power nor any Affiliate shall have any liability to make or continue from its own funds the payment of any benefit under the Plan. ARTICLE XI AMENDMENT AND TERMINATION OF PLAN 11.01. Amendment of the Plan. Virginia Power shall have the right by action of the Virginia Power Board to modify, alter or amend the Plan in whole or in part; provided that the duties, powers and liabilities of a Trustee, insurance company or Investment Manager shall not be increased without its written consent; and provided further that any such action shall not, in any way, affect adversely the rights of Participants with respect to amounts credited to their Accounts as of the date the Plan is amended. No amendment, modification or alteration shall have the effect of revesting in Virginia Power or any Affiliate any part of the principal or income of the Trust Fund. Notwithstanding the above, nothing herein shall prevent the Virginia Power Board from modifying or eliminating any form of benefit, subsidy, or payment option to the extent allowed by law so long as the benefit provided as a result of such amendment or alteration is an actuarial equivalent of the benefit otherwise payable to the Participant or Beneficiary determined as of the effective date of such amendment or alteration. 11.02. Termination of the Plan. While Virginia Power expects to continue the Plan indefinitely, the continuance of the Plan is not assumed as a contractual obligation. Virginia Power reserves the right to discontinue its contributions and to terminate the Plan at any time by action of the Virginia Power Board. In the event of a termination of the Plan, no further contributions may be made to the Plan. ARTICLE XII GENERAL PROVISIONS 12.01. Interpretation. This Plan has been created for the exclusive purpose of providing benefits to Participants and their Beneficiaries and defraying reasonable expenses of administering the Plan. The Plan shall be interpreted in a manner consistent with applicable provisions of ERISA and as in effect from time to time. Under no circumstances shall any funds contributed or transferred to this Plan, any assets attributable to this Plan or income relating to such assets, revert to Virginia Power or any Affiliate, nor shall any such funds, assets or income ever be used or diverted to purposes other than the exclusive benefit of the Participants and their Beneficiaries. 12.02. Merger, Consolidation and Transfers of Assets or Liabilities. No merger or consolidation with, or transfer of assets or liabilities to this Plan or from this Plan to any other plan shall be made, unless each Participant would receive immediately after such event a benefit which is equal to or greater than the benefit he would have been entitled to receive under the Plan immediately before such event had the Plan terminated at that time. 12.03. Limitation on Assignment. Except as allowed by ERISA section 206 with respect to Qualified Domestic Relations Orders, Plan benefits may not be anticipated, assigned (either at law or in equity), alienated, or be subject to attachment, garnishment, levy, execution, or other legal or equitable process. If a Participant dies before the date that a Qualified Domestic Relations Order directs that payments begin to an Alternate Payee, the Alternate Payee shall be entitled to a payment from the Plan only if the Qualified Domestic Relations Order requires the payment of such benefits. The Plan Administrator shall establish reasonable written procedures for determining the qualified status of a domestic relations order and for administering distributions to an Alternate Payee. The Plan Administrator must promptly notify the Participant and each Alternate Payee of the receipt of a domestic relations order and of the procedures for determining its qualified status. 12.04. Discharge of Liability. Any payment to a person or entity entitled to payment under the Plan, or to the representative of such person or entity, shall be, to the extent of the payment, in full satisfaction of all claims under the Plan against the Trustee, the Plan Administrator, and the Employers. As a prerequisite to the receipt of any such payment, the Trustee, the Plan Administrator, and any Employer may require that such person execute a receipt and release in such form as shall be determined by the Trustee, Plan Administrator, or an Employer, as the case may be. 12.05. Payments to Minors and Incompetents. If any Plan benefit is payable to a Participant or Beneficiary who is a minor or who, in the opinion of the Plan Administrator, is not legally capable of giving valid receipt and discharge for such payments, that payment may be made for the benefit of the Participant or Beneficiary to such person as the Plan Administrator, in its discretion, designates. Such payments, to the extent made, shall be deemed a complete discharge of any liability for such payment under the Plan, and the Trustee may make the payment without obligation to require bond or to see to the further application of the payments. 12.06. Unclaimed Benefits. If the Trustee cannot make payments of any amount to a Participant or Beneficiary within seven years after the amount becomes payable because the person's identity or whereabouts cannot be determined by the end of the seven year period, all amounts that would have been payable to that Participant or Beneficiary must be segregated and dealt with by the Trustee in accordance with the applicable state law pertaining to abandoned intangible personal property held in a fiduciary capacity. 12.07. Headings and Subheadings. The headings and subheadings in this Plan have been inserted for convenience of reference only and are to be ignored in any construction of the provisions hereof. 12.08. Use of Masculine and Feminine, Singular and Plural. In the construction of the Plan, the masculine shall include the feminine and the singular the plural in all cases where such meanings are indicated by the context. 12.09. Governing Law. Except as otherwise may be required by the controlling law of the United States, the Plan shall be construed, administered, and enforced in accordance with the laws of the Commonwealth of Virginia. 12.10. Errors and Omissions. It shall be the responsibility of those individuals and entities charged with the administration of the Plan to see that it is administered in accordance with its terms so long as it is not in conflict with ERISA. If an innocent error or omission is discovered in the Plan's operation or administration which is not correctable under normal administrative procedures, and the Plan Administrator determines that it would cost more to correct the error than is warranted, and if the Plan Administrator determines that the error did not cause an excise tax problem, then the Plan Administrator may authorize any equitable adjustment it deems necessary or desirable to correct the error or omission, including but not limited to the authorization (with the approval of the Virginia Power Board or the DRI Board, as appropriate), of additional Employer contributions designed, in a manner consistent with the goodwill intended to be engendered by the Plan, to put Participants or their Beneficiaries in the same relative position they would have been in but for such error or omission. Any contribution made pursuant to this section is an additional discretionary contribution. EXECUTION IN WITNESS WHEREOF, this instrument has been executed this 7 day of July, 1990. VIRGINIA ELECTRIC AND POWER COMPANY By EX-10 10 EXHIBIT 10.29 Exhibit 10(xxix) DOMINION RESOURCES, INC. RETIREMENT BENEFIT RESTORATION PLAN As adopted Effective January 1, 1991 DOMINION RESOURCES, INC. RETIREMENT BENEFIT RESTORATION PLAN PURPOSE The Board of Directors of Dominion Resources, Inc. determined that the adoption of the Retirement Benefit Restoration Plan will assist it in attracting and retaining those employees whose judgment, abilities and experience will contribute to its continued progress. The Plan is intended to be a plan that is unfunded and maintained primarily for the purpose of providing deferred compensation for a "select group of management or highly compensated employees" (as such phrase is used in the Employee Retirement Income Security Act of 1974). The Plan must be administered and construed in a manner that is consistent with that intent. ARTICLE I Definitions As defined herein, the following phrases or terms shall have the indicated meanings: 1.1. "Administrator" means the Administrative Benefit Committee appointed to manage and administer the Plan in accordance with the provisions of Article X. 1.2. "Affiliate" means any entity that is (i) a member of a controlled group of corporations as defined in section 1563(a) of the Internal Revenue Code of 1986, as amended (the "Code"), determined without regard to Code sections 1563(a)(4) and 1563(e)(3)(c), of which Dominion Resources, Inc. is a member according to Code section 414(b); (ii) an unincorporated trade or business that is under common control with Dominion Resources, Inc., as determined according to Code section 414(c); or (iii) a member of an affiliated service group of which Dominion Resources, Inc. is a member according to Code section 414(m). 1.3. "Beneficiary" means the person, persons, entity, entities or the estate of a Participant which, in accordance with the provisions of the Retirement Plan, is entitled to receive a benefit under the Retirement Plan on account of the Participant's death. 1.4. "Benefit Restoration Account" means the Benefit Restoration Account established under the Funding Plan on behalf of a Participant who also participates in the Funding Plan. 1.5. "Change in Control" means the occurrence of any of the following events: (i) any person, including a "group" as defined in Section 13(d) (3) of the Securities Exchange Act of 1934 becomes the owner or beneficial owner of Dominion Resources, Inc. securities having 20% or more of the combined voting power of the then outstanding Dominion Resources, Inc. securities that may be cast for the election of Dominion Resources, Inc.'s directors (other than as a result of an issuance of securities initiated by Dominion Resources, Inc., or open market purchases approved by Dominion Resources, Inc.'s Board of Directors, as long as the majority of Dominion Resources, Inc.'s Board of Directors approving the purchases is also the majority at the time the purchases are made); (ii) as the direct or indirect result of, or in connection with, a cash tender or exchange offer, a merger or other business combination, a sale of assets, a contested election, or any combination of these transactions, the persons who were directors of Dominion Resources, Inc. before such transactions cease to constitute a majority of Dominion Resources, Inc.'s Board of Directors, or any successor's board, within two years of the last of such transactions; or (iii) with respect to a particular Participant, an event occurs with respect to the Company that employs that Participant such that, after the event, the employing Company is no longer an Affiliate of Dominion Resources, Inc. 1.6. "Code" means the Internal Revenue Code of 1986, as amended. 1.7. "Committee" means (i) the Organization and Compensation Committee of the Board of Directors of Dominion Resources, Inc. with respect to an Eligible Employee who is employed by Dominion Resources, Inc., Dominion Capital, Inc., Dominion Lands, Inc. or Dominion Energy, Inc. and (ii) the Organization and Compensation Committee of the Board of Directors of Virginia Electric and Power Company with respect to an Eligible Employee who is employed by Virginia Electric and Power Company. 1.8. "Company" means Dominion Resources, Inc., its predecessor, a subsidiary or an Affiliate or either. 1.9. "Control Change Date" means the date on which a Change in Control event occurs. If a Change in Control occurs on account of a series of transactions, the Control Change Date is the date of the last of such transactions. 1.10. "Eligible Employee" means an individual (i) who is employed by Dominion Resources, Inc. or an Affiliate, (ii) who is a member of management or a highly compensated employee, and (iii) whose Retirement Plan benefit is reduced or limited by Code section 401(a)(17), Code section 415, or both. 1.11. "Funding Plan" means the Dominion Resources, Inc. Retirement Benefit Funding Plan. 1.12. "Participant" means an Eligible Employee who is designated by the Committee. An individual shall remain a Participant only so long as the individual remains an Eligible Employee and his designation as a Participant has not been revoked or rescinded. 1.13. "Plan" means the Dominion Resources, Inc. Retirement Benefit Restoration Plan. 1.14. "Retirement" and "Retire" mean severance from employment with the Company on or after attaining a vested or nonforfeitable interest in the portion of his Retirement Plan benefit attributable to Company contributions; except as provided in Article VI of the Plan. 1.15. "Retirement Plan" means the Dominion Resources, Inc. Retirement Plan. 1.16. "Totally and Permanently Disabled" means a condition, determined on the basis of medical evidence satisfactory to a physician designated by the Administrator, rendering a Participant, due to bodily injury or disease, unable to perform services as follows: (i) during the first two years of such disability (measured from the commencement of such disability rather than the commencement of benefit payments) such Participant is unable to perform any and every duty pertaining to his employment with the Company; and (ii) thereafter, such Participant is unable to engage in any occupation or perform any work for compensation or profit for which he is or may become reasonably fitted by education, training or experience. In no event shall such condition be deemed to exist during any period that the Participant is not under the regular care and attendance of a legally qualified physician during any period that he engages in any occupation or performs any work for compensation or profit. ARTICLE II PARTICIPATION An Eligible Employee who is designated to participate in the Plan by the Committee shall become a Participant in the Plan as of the date specified by the Committee. A Participant shall continue to participate in the Plan until such date as the Committee may declare that he is no longer a Participant or until the date that he is no longer an Eligible Employee. ARTICLE III BENEFITS Except as provided in Article IV and subject to the limitations set forth in Articles VI and VII, the benefits of a Participant and his Beneficiary shall be as follows: 3.1. Upon Retirement a Participant shall be entitled to a monthly Retirement benefit equal to the difference between (a) and (b) below where: (a) = the monthly benefit that would have been payable to the Participant under the Retirement Plan but for the application of the limits set forth in Sections 401(a)(17) and 415 of the Code; and (b) = the monthly benefit that the Participant is entitled to receive under the Retirement Plan. The payment of the benefit under this Section 3.1 shall begin as of the same date that the Participant's retirement benefit under the Retirement Plan is scheduled to commence. The benefit payable under this Section 3.1 also shall be determined as of the date that the Participant's retirement benefit under the Retirement Plan is scheduled to commence. The benefit payable under this Section 3.1 shall be computed and paid in the same form as the Participant's retirement benefit under the Retirement Plan; provided, however, that upon the Participant's death no further benefit shall be payable under this Plan except as provided in Section 3.3. 3.2. If a Participant becomes Totally and Permanently Disabled prior to his Retirement and during his employment with the Company or an Affiliate, he shall be entitled to receive a benefit calculated and paid in the manner set forth in Section 3.1. 3.3. If a Beneficiary is entitled to a Retirement Plan benefit on account of the Participant's death (regardless of whether the Participant's death occurs before Retirement or the commencement of his Retirement Plan benefit), the Beneficiary shall be entitled to a monthly benefit under this Plan equal to the difference between (a) and (b) where: (a) = the monthly benefit that would have been payable to the Beneficiary but for the application of Sections 401(a)(17) and 415 of the Code in the calculation of the Participant's accrued benefit under the Retirement Plan; and (b) = the monthly benefit that the Beneficiary is entitled to receive under the Retirement Plan. The payment of the benefit under this Section 3.3 shall begin as of the same date that the Beneficiary's benefit under the Retirement Plan is scheduled to commence. The amount payable under this Section 3.3 also shall be determined as of the date that the Beneficiary's benefit under the Retirement Plan is scheduled to commence. The benefit payable under this Section 3.3 shall be computed and paid in the same form as the benefit payable to the Beneficiary under the Retirement Plan. ARTICLE IV COORDINATION OF BENEFITS The amount payable in any month to a Participant and a Beneficiary under the Plan shall be reduced, but not below zero, by the sum of (a) and, to the extent applicable, (b) below where: (a) = the amount payable for the month in question from the Participant's Benefit Restoration Account; and (b) = the sum of the amounts previously paid to the Participant from his Benefit Funding Account pursuant to Section 6.01 of the Funding Plan multiplied by a fraction. The numerator of the fraction is one (1) and the denominator of the fraction is the number of months for which benefits are payable from the Benefit Restoration Account. If a Participant receives a distribution from his Benefit Restoration Account under Section 6.01 of the Funding Plan after a benefit becomes payable under the Plan, the amount described in this item (b) with respect to subsequent payments under the Plan shall include the product of the amount of each such distribution multiplied by a fraction. The numerator of that fraction is one (1) and the denominator is the number of months for which a benefit from the Benefit Restoration Account remains payable. Item (b) shall not apply (and the amount payable under the Plan shall not be reduced on account of the amounts described in item (b) above), to the extent that the application of item (b) would result in the payment of an after-tax benefit under the Plan and the Benefit Restoration Account of the Funding Plan that is less than the benefit otherwise payable under Article III on an after-tax basis. In determining the amount payable under the Plan and from the Benefit Restoration Account on an after-tax basis, the Administrator shall follow the policy or guidelines adopted for purposes of Section 6.01 of the Funding Plan and, in the absence of such policy or guidelines, shall make its determination using the maximum rates of federal, state and local income taxes that are applicable to the Participant or Beneficiary. ARTICLE V GUARANTEES Dominion Resources, Inc. has only a contractual obligation to make payments of the benefits described in Article III. All benefits are to be satisfied solely out of the general corporate assets of Dominion Resources, Inc. which shall remain subject to the claims of its creditors. No assets of Dominion Resources, Inc. will be segregated or committed to the satisfaction of its obligations to any Participant or Beneficiary under the Plan. If Dominion Resources, Inc., in its sole discretion, elects to purchase life insurance on the life of a Participant in connection with the Plan, the Participant must submit to a physical examination, if required by the insurer, and otherwise cooperate in the issuance of such policy or his rights under the Plan will be forfeited. Article VI TERMINATION OF EMPLOYMENT 6.1. The Plan does not in any way limit the right of the Company at any time and for any reason to terminate the Participant's employment or such Participant's status as an Eligible Employee. In no event shall the Plan, by its terms or by implication, constitute an employment contract of any nature whatsoever between the Company and a Participant. 6.2. A Participant who ceases to be an Eligible Employee or whose employment with the Company is terminated either with or without cause, for reasons other than death, Retirement or Total and Permanent Disability shall immediately cease to be a Participant under this Plan and shall forfeit all rights under this Plan. Further, in no event shall an individual who was a Participant but is not a Participant at the time of such individual's death, Retirement or Total and Permanent Disability, be entitled to any benefit under the Plan. A Participant on authorized leave of absence from the Company shall not be deemed to have terminated employment or lost his status as an Eligible Employee for the duration of such leave of absence. 6.3. Notwithstanding any contrary Plan provision, in the event the employment of a Participant who is in the employ of a Company on a Control Change Date relating to that Company is terminated (for reasons other than death, Retirement, Total and Permanent Disability, or as a result of acts of theft, embezzlement, fraud, or moral turpitude) before the end of the period commencing on the Control Change Date and ending on the third anniversary of such date, and whether or not he is a Participant at such time, he shall be fully vested in a benefit payable under Article III as of the date his employment is terminated. During this same period, a Participant who voluntarily terminates employment within sixty (60) days after (i) he does not receive salary increases, bonuses, and incentive awards comparable to the increases, bonuses, and awards that he received in prior years or that other executives in comparable positions receive in the current year; or (ii) his compensation or employment-related benefits are reduced; or (iii) his status, titles(s), offices, places of employment, working conditions, or management responsibilities are diminished (other than changes in reporting or management responsibilities to reflect sound practices commonly followed by enterprises comparable to the Company employing Participant or required by applicable federal or state law) or within sixty days after the last in a series of such events will be deemed to have terminated under circumstances requiring full vesting under this Section 6.3. 6.4. A Participant who ceases to be an employee of the Company and who is subsequently reemployed by the Company shall not accrue any additional benefits on account of such later service for periods in which he is not a Participant. ARTICLE VII TERMINATION, AMENDMENT OR MODIFICATION OF PLAN 7.1. Except as otherwise specifically provided, Dominion Resources, Inc. reserves the right to terminate, amend or modify this Plan, wholly or partially, at any time and from time to time. Such right to terminate, amend or modify the Plan shall be exercised for Dominion Resources, Inc. by its Board of Directors. Notwithstanding the preceding, with respect to an affected Participant, the Plan and Section 6.3 may not be amended, modified or terminated after a Control Change Date before the end of the period specified in that section unless the affected Participant agrees to such amendment, modification or termination in writing. 7.2. Section 7.1 notwithstanding, no action to terminate the Plan shall be taken except upon written notice to each Participant to be affected thereby, which notice shall be given not less than thirty (30) days prior to such action. 7.3. Any notice which shall be or may be given under the Plan shall be in writing and shall be mailed by United States mail, postage prepaid. If notice is to be given to Dominion Resources, Inc., such notice shall be addressed to it at Post Office Box 26532, Richmond, Virginia 23261; addressed to the attention of the Corporate Secretary. If notice is to be given to a Participant, such notice shall be addressed to the Participant's last known address. 7.4. The rights of Dominion Resources, Inc. set forth in Section 7.1 are subject to the condition that its Board of Directors shall take no action to terminate the Plan or decrease the benefit that would become payable or is payable, as the case may be, with respect to a Participant who has earned a vested or nonforfeitable interest in the portion of his Retirement Plan benefit attributable to Company contributions. 7.5. Except as provided in Sections 6.3, 7.1, and 7.4, upon the termination of this Plan by the Board of Directors, the Plan shall no longer be of any further force or effect, and neither Dominion Resources, Inc. nor any Participant shall have any further obligation or right under this Plan. Likewise, the rights of any individual who was a Participant and whose designation as a Participant is revoked or rescinded by the Committee shall cease upon such action. ARTICLE VIII OTHER BENEFITS AND AGREEMENTS Except as provided in Article IV, the benefits provided for a Participant and his Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program of the Company for its employees, and, except as may otherwise be expressly provided for, the Plan shall supplement and shall not supersede, modify or amend any other plan or program of the Company in which a Participant is participating. ARTICLE IX RESTRICTIONS ON TRANSFER OF BENEFITS No right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to do so shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the person entitled to such benefit. If any Participant or Beneficiary under the Plan should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right to a benefit hereunder, then such right or benefit, in the discretion of the Committee, shall cease and terminate, and, in such event, the Committee may hold or apply the same or any part thereof for the benefit of such Participant or Beneficiary, his or her spouse, children, or other dependents, or any of them, in such manner and in such portion as the Committee may deem proper. ARTICLE X ADMINISTRATION OF THE PLAN 10.1. The Plan shall be administered by the Administrator. Subject to the provisions of the Plan, the Administrator may adopt such rules and regulations as may be necessary to carry out the purposes hereof. The Administrator's interpretation and construction of any provision of the Plan shall be final and conclusive. 10.2. Dominion Resources, Inc. shall indemnify and save harmless each member of the Committee and the Administrator against any and all expenses and liabilities arising out of his membership on the Committee or the Administrator, excepting only expenses and liabilities arising out of his own willful misconduct. Expenses against which a member of the Committee or the Administrator shall be indemnified hereunder shall include without limitation, the amount of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted, or a proceeding brought or settlement thereof. The foregoing right of indemnification shall be in addition to any other rights to which any such member may be entitled. 10.3. In addition to the powers hereinabove specified, the Administrator shall have the power to compute and certify the amount and kind of benefits from time to time payable to Participants and their Beneficiaries under the Plan, to authorize all disbursements for such purposes, and to determine whether a Participant is entitled to a benefit under Section 3.2. 10.4. To enable the Administrator to perform his functions, the Company shall supply full and timely information to the Administrator on all matters relating to the compensation of all Participants, their retirement, death or other cause for termination of employment, and such other pertinent facts as the Committee may require. ARTICLE XI MISCELLANEOUS 11.1 The Plan shall be binding upon Dominion Resources, Inc. and its successors and assigns; subject to the powers set forth in Article VII, and upon a Participant, his Beneficiary, and either of their assigns, heirs, executors and administrators. 11.2. To the extent not preempted by federal law, the Plan shall be governed and construed under the laws of the Commonwealth of Virginia as in effect at the time of their adoption and execution, respectively. 11.3. Masculine pronouns wherever used shall include feminine pronouns and the use of the singular shall include the plural. EX-10 11 EXHIBIT 10.30 Exhibit 10(xxx) DOMINION RESOURCES, INC EXECUTIVES' DEFERRED COMPENSATION PLAN Effective January 1, 1994 For the Executives of: Dominion Resources, Inc. Virginia Electric and Power Company TABLE OF CONTENTS Section Page 1. DEFINITIONS..........................................................1 2. PURPOSE..............................................................3 3. PARTICIPATION........................................................3 4. DEFERRAL ELECTION....................................................3 5. EFFECT OF NO ELECTION................................................4 6. DEFERRED CASH BENEFITS...............................................4 7. DEFERRED STOCK BENEFITS..............................................5 8. DISTRIBUTIONS........................................................5 9. HARDSHIP DISTRIBUTIONS...............................................7 10. COMPANY'S OBLIGATION.................................................7 11. CONTROL BY PARTICIPANT...............................................8 12. CLAIMS AGAINST PARTICIPANT'S DEFERRED BENEFITS.......................8 13. AMENDMENT OR TERMINATION.............................................8 14. NOTICES..............................................................8 15. WAIVER...............................................................8 16. CONSTRUCTION.........................................................8 1. DEFINITIONS. The following definitions apply to this Plan and to the Deferral Election Forms. (a) BENEFICIARY or BENEFICIARIES means a person or persons or other entity that a Participant designates on a Beneficiary Designation Form to receive Deferred Benefit payments pursuant to Plan Section 8(c). If a Participant does not execute a valid Beneficiary Designation Form, or if the designated Beneficiary or Beneficiaries fail to survive the Participant or otherwise fail to take the Deferred Benefit, the Participant's Beneficiary of Beneficiaries shall be the first of the following persons who survive the Participant: a Participant's spouse (the person legally married to the Participant when the Participant dies); the Participant's children in equal shares and the Participant's estate. (b) BENEFICIARY DESIGNATION FORM means the form that a Participant uses to name his Beneficiary or Beneficiaries. (c) COMPANY means Dominion Resources, Inc., Virginia Electric and Power Company, and any of their affiliates that, with approval of the DRI Board of Directors, adopt or have adopted this Plan; any successor business by merger, purchase, or otherwise that maintains the Plan. (d) COMPENSATION means a Participant's base salary, cash incentive pay and other cash compensation from the Company. (e) DEFERRAL ELECTION FORM means the form that a Participant uses to elect to receive a Deferred Benefit pursuant to Plan Section 4. A Participant's Distribution Election Form and Beneficiary Designation Form are part of the Participant's Deferral Election Form. (f) DEFERRAL YEAR means a calendar year for which an Executive's Compensation is reduced pursuant to a valid Deferral Election Form. (g) DEFERRED BENEFIT means either a Deferred Cash Benefit or a Deferred Stock Benefit available to an Executive who has executed a valid Deferral Election Form. (h) DEFERRED CASH ACCOUNT means a bookkeeping record established for each Participant who elects to receive a Deferred Cash Benefit. A Deferred Cash Account shall be established only for purposes of measuring a Deferred Cash Benefit and not to segregate assets or to identify assets that may be used to satisfy a Deferred Cash Benefit. A Deferred Cash Account shall be credited with that amount of a Participant's Compensation deferred as a Deferred Cash Benefit according to a Participant's Deferral Election Form. A Deferred Cash Account also shall be credited periodically with interest under Plan Section 6(b). (i) DEFERRED CASH BENEFIT means the Deferred Benefit elected by a Participant that results in payments governed by Plan Sections 6 and 8. (j) DEFERRED STOCK ACCOUNT means a bookkeeping record established for each Participant who elects to receive a Deferred Stock Benefit. A Deferred Stock Account shall be established only for purposes of measuring a Deferred Stock Benefit and not to segregate assets or to identify assets that may be used to satisfy a Deferred Stock Benefit. A Deferred Stock Account shall be credited with that amount of a Participant's Compensation deferred as a Deferred Stock Benefit according to a Deferral Election Form. A Deferred Stock Account also shall be credited periodically with dividends under Plan Section 7(b). (k) DEFERRED STOCK BENEFIT means the Deferred Benefit elected by a Participant that results in payments governed by Plan Sections 7 and 8. (l) DISTRIBUTION ELECTION FORM means that part of a Deferral Election Form which a Participant uses to establish the duration of the deferral of Compensation and the frequency of payments of a Deferred Benefit. If a Participant does not execute a valid Distribution Election Form, the distribution of a Deferred Benefit shall be governed by Plan Section 8. (m) DRI means Dominion Resources, Inc. (n) DRI COMMITTEE means the Organization and Compensation Committee of DRI's Board. (o) ELECTION DATE means the date by which an Executive must submit a valid Deferral Election Form. For each Deferral Year, the Election Date shall be the preceding December 31. However, if an individual becomes an Executive during a Deferral Year, his Election Date shall be a date that is within thirty days after such individual becomes an Executive. Notwithstanding the preceding sentences, the Committee may set an earlier Election Date for any Deferral Year. (p) EXECUTIVE means an individual who is employed by the Company and who is a "highly-compensated employee" or a member of a "select group of management" as those terms are used under Title I of the Employee Retirement Income Security Act of 1974, as amended and who the DRI Committee (in the case of an individual who is employed by DRI or one of its nonutility subsidiaries) or the Virginia Power Committee (in the case of an individual employed by Virginia Power), designates as being eligible to participate in this Plan. (q) PARTICIPANT, with respect to any Deferral Year, means an Executive who has executed a valid Deferral Election Form for that Deferral Year. (r) PLAN means the Dominion Resources, Inc. Executives' Deferred Compensation Plan. (s) TERMINATE, TERMINATING, or TERMINATION, with respect to a Participant, mean the cessation of his employment with the Company on account of death, disability, severance or any other reason. (t) VIRGINIA POWER means Virginia Electric and Power Company. (u) Virginia Power Committee means the Organization and Compensation Committee of Virginia Power's Board of Directors. 2. PURPOSE. The Plan is intended to permit Executives to defer all or a portion of their Compensation. 3. PARTICIPATION. The DRI Committee shall select the DRI Executives who are eligible to participate in the Plan. The Virginia Power Committee shall select the Virginia Power Executives who are eligible to participate in the Plan. An Executive becomes a Participant for any Deferral Year by filing a valid Deferral Election Form according to Plan Section 4 on or before the Election Date for that Deferral Year. 4. DEFERRAL ELECTION. A deferral election shall be valid when the Deferral Election Form is completed, signed by the electing Executive, and received by DRI's Corporate Secretary on or before the Election Date for that Deferral Year. The following provisions apply to deferral elections. (a) A Participant may elect a Deferred Benefit for any Deferral Year if he is an Executive at the beginning of that Deferral Year or becomes an Executive during that Deferral Year. (b) Before each Deferral Year's Election Date, each Executive shall be provided with a Deferral Election Form. Using the Deferral Election Form, an Executive may elect on or before the Election Date to defer the receipt of all or part of his Compensation for the Deferral Year. An Executive may not defer more than $1,000,000 of Compensation for any Deferral Year. (c) An Executive must complete a Deferral Election Form for either a Deferred Cash Benefit or a Deferred Stock Benefit for all amounts deferred from his Compensation. The Compensation deferred under a Deferral Election Form shall be allocated among a Deferred Cash Benefit and a Deferred Stock Benefit in 10% multiples. (d) A Distribution Election Form shall constitute part of a Deferral Election Form. The Committee may allow a Participant to file one Distribution Election Form for all of his Deferred Cash Benefits and one for all of his Deferred Stock Benefits. (e) If he does so before the last business day of the Deferral Year, DRI's Corporate Secretary may reject any Deferral Election Form or any Distribution Election Form or both that does not conform to the provisions of the Plan. DRI's Corporate Secretary may modify any Distribution Election Form at any time to the extent necessary to comply with any federal securities laws or regulations. DRI's Corporate Secretary's rejection or modification must be made on a uniform basis with respect to similarly-situated Executives. If DRI's Corporate Secretary rejects a Deferral Election Form, the Executive shall be paid the amounts he would have been entitled to receive if the Executive had not submitted the rejected Deferral Election Form. (f) An Executive may not revoke a Deferral Election Form or a Distribution Election Form after the Deferral Year begins. Any revocation before the beginning of the Deferral Year has the same effect as a failure to submit a Deferral Election Form or a Distribution Election Form. Any writing signed by an Executive expressing an intention to revoke his Deferral Election Form and delivered to DRI's Corporate Secretary before the close of business on the relevant Election Date shall be a revocation. 5. EFFECT OF NO ELECTION. An Executive who has not submitted a valid Deferral Election Form to DRI's Corporate Secretary on or before the relevant Election Date may not defer any part of his Compensation for the Deferral Year. The Deferred Benefit of an Executive who submits a valid Deferral Election Form but fails to submit a valid Distribution Election Form (either as to the form or commencement of payment) before the relevant Election Date shall be distributed in a lump sum on the February 15 following his Termination. 6. DEFERRED CASH BENEFITS. (a) Deferred Cash Benefits shall be credited to a Deferred Cash Account as of the last day of the month in which the deferred Compensation would have been paid and shall be credited with interest on the first day of each month thereafter at rates set by the DRI Committee. Interest shall accrue monthly on the balance in a Deferred Cash Account on the last day of each month, until the end of the month prior to the month of distribution. (b) Unless the DRI Committee changes the basis on which interest shall be determined, interest credited to a Deferred Cash Account shall be based on the average three-month United States Treasury Bill Rates Auction Average (Investment), as published by the Federal Reserve Board for the month immediately preceding the day the interest is credited. 7. DEFERRED STOCK BENEFITS. The following provisions apply to a Deferred Stock Benefit. (a) Deferred Stock Benefits shall be credited to a Deferred Stock Account as of the first day of the month following the month in which the Compensation would have been paid. A Deferred Stock Account shall be credited with the number of whole and fractional shares of DRI common stock that a Participant could have purchased with amounts deferred from his Compensation based on the closing price of DRI common stock on the New York Stock Exchange on the last trading day of the month in which the deferred Compensation would have been paid. The value of a Deferred Stock Account on any date shall be the value of the DRI common stock (whole and fractional shares) credited to the account based on the immediately preceding closing price of DRI common stock on the New York Stock Exchange. (b) A Deferred Stock Account also shall be credited with dividends on the last day of each calendar quarter. A Deferred Stock Account shall be credited with the number of whole and fractional shares of DRI common stock that a Participant could have purchased with such dividends based on the closing price of the DRI common stock on the day before such dividends are credited to the account. 8. DISTRIBUTIONS. (a) All Deferred Cash Benefits and all Deferred Stock Benefits, less withholding for applicable income and employment taxes, shall be paid in cash on the date specified in the Participant's Distribution Election Form (but subject to Plan Section 4(f)). A Deferred Stock Benefit shall be distributed in cash equal to the value of the Participant's Deferred Stock Account on the last day of the month preceding the month of distribution. Except in the event of Termination, a Participant may only receive a distribution on a date which is at least six months after the date on which his most recent Deferral Election Form is valid. (b) Except for distributions triggered by a Participant's disability, Deferred Benefits shall be paid in a lump sum unless the Participant's Distribution Election Form specifies annual installment payments over a period of up to ten years. Installment payments will be made in approximately equal amounts during each year of the installment period. For a Deferred Cash Benefit payable in installments, interest under Plan Section 6(b) shall continue to accrue on the unpaid balance of a Deferred Cash Account. For a Deferred Stock Benefit payable in installments, the unpaid balance of a Deferred Stock Account shall accrue dividends under Plan Section 7(b). If a Participant Terminates as a result of his disability, begins to receive Deferred Benefits and thereafter recovers before the balance of his Deferred Cash Account and Deferred Stock Account are exhausted, distributions shall cease and any remaining Deferred Benefits under the Plan shall be governed by this Plan Section 8 and his Distribution Election Form. Unless otherwise specified in a Participant's Distribution Election Form, any lump sum payment shall be paid or installment payments shall begin on February 15 of the year after the Participant's Termination. For distributions that would automatically begin because of a Participant's Termination (other than by death), the Participant may elect on his Distribution Election Form to begin payments (i) on the February 15 following his Termination, without regard to his age; or (ii) on the February 15 following his Termination and his attainment of a specified age; or (iii) even if the Participant does not Terminate, on the February 15 following a specified age. However, except in the event of payments on account of Termination, no Participant may elect to receive payments sooner than six months after the date on which his most recent Deferral Election Form is valid. (c) Notwithstanding any other provision of this Plan or a Participant's Distribution Election Form, the DRI Committee (in the case of an individual employed by DRI or one of its nonutility subsidiaries) or the Virginia Power Committee (in the case of an individual employed by Virginia Power) in its sole discretion may postpone the distribution of all or part of a Deferred Benefit to the extent that the payment would not be deductible under Section 162(m) of the Internal Revenue Code of 1986, as amended (the Code) or any successor thereto. A Deferred Benefit distribution that is postponed pursuant to the preceding sentence shall be paid as soon as it is possible to do so within the deduction limitations of Section 162(m) of the Code. (d) A Participant or Beneficiary may not assign Deferred Benefits. A Participant may use only one Beneficiary Designation Form to designate one or more Beneficiaries for all of his Deferred Benefits under the Plan. Such designations are revocable. Each Beneficiary shall receive his portion of the Participant's Deferred Cash Account and Deferred Stock Account on February 15 of the year following the Participant's death. However, the DRI Committee (in the case of an individual who is employed by DRI or one of its nonutility subsidiaries) or the Virginia Power Committee (in the case of an individual employed by Virginia Power), at its discretion, may approve a Beneficiary's request for accelerated payment under Plan Section 9. The DRI Committee (in the case of an individual who is employed by DRI or one of its nonutility subsidiaries) or the Virginia Power Committee (in the case of an individual employed by Virginia Power) may insist that multiple Beneficiaries agree upon a single distribution method. 9. HARDSHIP DISTRIBUTIONS. (a) At its sole discretion and at the request of a Participant before or after his Termination, or at the request of any of the Participant's Beneficiaries after the Participant's death, the DRI Committee (in the case of an individual who is employed by DRI or one of its nonutility subsidiaries) or the Virginia Power Committee (in the case of an individual employed by Virginia Power) may accelerate and pay all or part of any amount attributable to a Participant's Deferred Benefits. The DRI Committee (in the case of an individual who is employed by DRI or one of its nonutility subsidiaries) or the Virginia Power Committee (in the case of an individual employed by Virginia Power) may accelerate distributions only in the event of a financial emergency beyond the Participant's or Beneficiary's control and only if disallowance of a distribution request would create a severe hardship for the Participant or Beneficiary. An accelerated distribution under this Plan Section 9 shall be limited to the amount necessary to satisfy the financial emergency. (b) For purposes of an accelerated distribution of a Deferred Stock Benefit, the Deferred Stock Benefit's value shall be determined by the value of the Deferred Stock Account on the last day of the month prior to the month of distribution. (c) Distributions under this section shall be made in cash, shall first be made from the Participant's Deferred Stock Account before accelerating the distribution of any amount attributable to a Deferred Cash Benefit, and shall be limited to amounts attributable to Compensation deferred under a Deferral Election Form that was effective at least six months before the distribution. (d) A distribution under this section shall be in lieu of that portion of a Participant's Deferred Benefit that would have been paid otherwise. A Deferred Cash Benefit shall be adjusted by reducing the Participant's Deferred Cash Account balance by the amount of the distribution. A Deferred Stock Benefit shall be adjusted by reducing the value of the Participant's Deferred Stock Account by the amount of the distribution. 10. COMPANY'S OBLIGATION. The Plan shall be unfunded. The Company shall not be required to segregate any assets that at any time may represent a Deferred Benefit. Any liability of the Company to a Participant or Beneficiary under this Plan shall be based solely on any contractual obligations that may be created pursuant to this Plan. No such obligation of the Company shall be deemed to be secured by any pledge of, or other encumbrance on, any property of the Company. 11. CONTROL BY PARTICIPANT. A Participant shall have no control over Deferred Benefits except according to his Deferral Election Forms, his Distribution Election Forms and his Beneficiary Designation Form. 12. CLAIMS AGAINST PARTICIPANT'S DEFERRED BENEFITS. A Deferred Cash Account and Deferred Stock Account shall not be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, or charge, and any attempt to do so shall be void. A Deferred Benefit shall not be subject to attachment or legal process for a Participant's debts or other obligations. Nothing contained in this Plan shall give any Participant any interest, lien, or claim against any specific asset of the Company. A Participant or his Beneficiary shall have no rights other than as a general creditor of the Company. 13. AMENDMENT OR TERMINATION. Except as otherwise provided, this Plan may be altered, amended, suspended, or terminated at any time by DRI's Board of Directors. DRI's Board of Directors may not alter, amend, suspend, or terminate this Plan as to any Participant without the consent of that Participant if such action would result either in (i) a distribution of the Participant's Deferred Benefit in any manner not provided in the Plan or (ii) immediate taxation of a Deferred Benefit to a Participant. Notwithstanding the preceding sentence, if any amendment to the Plan after the Plan's effective date adversely affects a Deferred Benefit and the Internal Revenue Service declines to rule favorably on the amendment, DRI's Board of Directors, in its sole discretion, may accelerate the distribution of any amounts attributable to an affected Deferred Benefit. 14. NOTICES. All notices or election required under the Plan must be in writing. A notice or election shall be deemed delivered if it is delivered personally or sent registered or certified mail to the person at his last known business address. 15. WAIVER. The waiver of a breach of any provision in this Plan does not operate as and may not be construed as a waiver of any later breach. 16. CONSTRUCTION. This Plan shall be adopted and maintained according to the laws of the Commonwealth of Virginia (except its choice-of-laws rules). Headings and captions are only for convenience; they do not have substantive meaning. If a provision of this Plan is not valid or enforceable, the validity or enforceability or any other provision shall not be affected. Use of one gender includes all, and the singular and plural include each other. EX-10 12 EXHIBIT 10.31 Exhibit 10(xxxi) June 30, 1994 Dr. J. T. Rhodes President & CEO Virginia Power Dear Jim: As you know, the Board of Directors of Virginia Electric and Power Company (the Company) voted on June 3, 1994, to ratify the letter agreement you and james F. Betts reached in April regarding your employment with the Company. paragraphs (1), (2) and (3) below memorialize those modifications to the terms of your employment with the Company. Additionally, the Special Committee of the Board of Directors on June 29, 1994, approved certain additional terms for your continued employment with the Company. Set forth in paragraphs (4) and (5) below are those additional provisions, which are comparable to those the Special Committee determined to be appropriate for all other officers of the Company. (1) You will report to James F. Betts in his capacity as Vice-Chairman of Dominion Resources, Inc. (DRI). (2) The DRI and Virginia Power Boards will give serious consideration to electing you Chairman of the Virginia Power Board in October. (3) You have agreed to remain at Virginia Power as President and Chief executive Officer for at least three years (until April 21, 1997). However, if Tom Capps does not retire at age 60 or by the end of 1995, you will be free to retire at any time after April 21, 1996. In either event, you will be able to retire with benefits at least equal to those that were available to you under the 1994 Early Retirement Program> (4) Should you be terminated prior to April 21, 1997, for any reason other than cause (after a good faith determination by the Board of Directors of Virginia Power), then the Company will pay to you the amount (as detailed in Attachment A) that you would have otherwise received in base salary and incentive compensation through April 21, 1997, as if you had remained employed until that date. In the event of your termination without cause, the Company will also pay to you a special severance benefit equal to (i) your then annual base salary, or at your election (ii) the retirement and other severance benefits you would have been eligible to receive as a participant in the 1994 Early Retirement Program. (5) if you continue in the employment of the Company until April 21, 1997, you shall be entitled to receive on the date you retire or leave the employment of the Company for any reason after April 21, 1997, a special severance benefit equal to (i) your then annual base salary, or at your option (ii) the retirement and other severance benefits you would have been eligible to receive as a participant in the 1994 Early Retirement program. This special severance benefit shall be paid in addition to and shall not diminish any rights that you may be entitled to receive under the benefit plans of Dominion Resources, Inc. or the Company. Please acknowledge by signing a copy of this letter and returning it to me. We will then make this document a part of your permanent file. If you have any questions, please let me know. Sincerely, /s/John B. Adams, Jr. John B. Adams, Jr. Chairman, O&C Committee Virginia Power Board of Directors Attachment Acknowledged: /s/ J. T. Rhodes J. T. Rhodes Date: 6/30/94 (signed fax 6/30/94) ATTACHMENT A If you are terminated for any reason other than for cause, the company will pay you the following: 1. Base salary which you would have earned from the date of termination until April 21, 1997. This number will be computed by dividing the annual base salary at time of termination by 12 and multiplying by the number of whole or partial months between the date of termination and April 21, 1997. The base salary used in this calculation shall not be less than your highest base salary on or after April 21, 1994. 2. Potential annual incentive award from date of termination until April 21, 1997. This number will be computed by dividing the Success Sharing target award in effect for you at time of termination by 12 and multiplying by the number of whole or partial months between the end of the most recently completed plan year and April 21, 1997. Payment of this amount shall cancel your rights to any other Success Sharing payments for the same time period. The target award used in this calculation shall not be less than the highest target award in effect for you on or after April 21, 1994. 3. Potential long term incentive award until April 21, 1997. The total number of hypothetical shares (at 100% goal accomplishment) of Dominion Resources, Inc. stock granted in all cycles of the Performance Achievement Plan which were active on the date of termination will be multiplied by the closing price of the stock on the day of termination. This amount will be paid to you in dollars. Payment of this amount will cancel your rights to any additional payments in cash or stock from these active cycles. EX-10 13 EXHIBIT 10.32 Exhibit 10(xxxii) June 23, 1994 Mr. B.D. Johnson Senior Vice President Controller, Treasurer & Secretary Dear Bill: A Special Committee of the Board of Directors of Virginia Electric and Power Company (the Company) was established on Monday, June 20, to act on behalf of the Board in matters relating to the recent Order of the State Corporation Commission calling for an investigation of the relationship between Dominion Resources, Inc. and the Company. One of the matters that the Special Committee addressed was the importance of preserving the stability and continuity of the senior management personnel of the Company. The Board wants the officers of the Company to remain in place and to carry out their assigned jobs to the best of their abilities. To that end, the Special Committee has approved a resolution intended to promote your continuing employment relationship with the Company. The resolution provides that, if at any time prior to June 21, 1997, your employment as an officer of the Company should be terminated for any reason other than cause (after a good faith determination by the President of the Company or the Board of Directors that such cause exists), then the Company will pay to you the amount (as detailed in Attachment A) that you would have otherwise received in base salary and incentive compensation through June 21, 1997, as if you had remained employed until that date. In addition, the Company will pay to you a special severance benefit equal to (i) your then annual base salary, or at your election (ii) the retirement or other severance benefits that you would have been eligible to receive as a participant in the 1994 Early Retirement Program. If you continue as an employee of the Company until June 21, 1997, you shall be entitled to receive on the date you retire or leave the employment of the Company for any reason after June 21, 1997, a special severance benefit equal to (i) your then annual base salary, or at your election (ii) the retirement and other severance benefits that you would have been eligible to receive as a participant in the 1994 Early Retirement Program. This special severance benefit shall be paid in addition to and shall not diminish any rights that you may have based on your individual employment agreement or any other benefits that you may be entitled to receive under the benefit plans of Dominion Resources, Inc. or the Company. Please acknowledge by signing a copy of this letter and returning it to me. We will then make this document a part of your permanent file. If you have any questions, please let me know. Sincerely, /s/ J. T. Rhodes J. T. Rhodes Attachment Acknowledged: /s/ B. D. Johnson Date: 6/23/94 ATTACHMENT A If you are terminated for any reason other than for cause, the company will pay you the following: 1. Base salary which you would have earned from the date of termination until June 21, 1997. This number will be computed by dividing the annual base salary at time of termination by 12 and multiplying by the number of whole or partial months between the date of termination and June 21, 1997. The base salary used in this calculation shall not be less than your highest base salary on or after June 21, 1994. 2. Potential annual incentive award from date of termination until June 21, 1997. This number will be computed by dividing the Success Sharing target award in effect for you at time of termination by 12 and multiplying by the number of whole or partial months between the end of the most recently completed plan year and June 21, 1997. Payment of this amount shall cancel your rights to any other Success Sharing payments for the same time period. The target award used in this calculation shall not be less than the highest target award in effect for you on or after June 21, 1994. 3. Potential long term incentive award until June 21, 1997. The total number of hypothetical shares (at 100% goal accomplishment) of Dominion Resources, Inc. stock granted in all cycles of the Performance Achievement Plan which were active on the date of termination will be multiplied by the closing price of the stock on the day of termination. This amount will be paid to you in dollars. Payment of this amount will cancel your rights to any additional payments in cash or stock from these active cycles. EX-10 14 EXHIBIT 10.33 Exhibit 10(xxxiii) June 23, 1994 Mr. R.F. Hill Senior Vice President Commercial Operations Dear Bob: A Special Committee of the Board of Directors of Virginia Electric and Power Company (the Company) was established on Monday, June 20, to act on behalf of the Board in matters relating to the recent Order of the State Corporation Commission calling for an investigation of the relationship between Dominion Resources, Inc. and the Company. One of the matters that the Special Committee addressed was the importance of preserving the stability and continuity of the senior management personnel of the Company. The Board wants the officers of the Company to remain in place and to carry out their assigned jobs to the best of their abilities. To that end, the Special Committee has approved a resolution intended to promote your continuing employment relationship with the Company. The resolution provides that, if at any time prior to June 21, 1997, your employment as an officer of the Company should be terminated for any reason other than cause (after a good faith determination by the President of the Company or the Board of Directors that such cause exists), then the Company will pay to you the amount (as detailed in Attachment A) that you would have otherwise received in base salary and incentive compensation through June 21, 1997, as if you had remained employed until that date. In addition, the Company will pay to you a special severance benefit equal to (i) your then annual base salary, or at your election (ii) the retirement or other severance benefits that you would have been eligible to receive as a participant in the 1994 Early Retirement Program. If you continue as an employee of the Company until June 21, 1997, you shall be entitled to receive on the date you retire or leave the employment of the Company for any reason after June 21, 1997, a special severance benefit equal to (i) your then annual base salary, or at your election (ii) the retirement and other severance benefits that you would have been eligible to receive as a participant in the 1994 Early Retirement Program. This special severance benefit shall be paid in addition to and shall not diminish any rights that you may have based on your individual employment agreement or any other benefits that you may be entitled to receive under the benefit plans of Dominion Resources, Inc. or the Company. Please acknowledge by signing a copy of this letter and returning it to me. We will then make this document a part of your permanent file. If you have any questions, please let me know. Sincerely, /s/ J. T. Rhodes J. T. Rhodes Attachment Acknowledged: /s/ Robert F. Hill Date: 6/23/94 ATTACHMENT A If you are terminated for any reason other than for cause, the company will pay you the following: 1. Base salary which you would have earned from the date of termination until June 21, 1997. This number will be computed by dividing the annual base salary at time of termination by 12 and multiplying by the number of whole or partial months between the date of termination and June 21, 1997. The base salary used in this calculation shall not be less than your highest base salary on or after June 21, 1994. 2. Potential annual incentive award from date of termination until June 21, 1997. This number will be computed by dividing the Success Sharing target award in effect for you at time of termination by 12 and multiplying by the number of whole or partial months between the end of the most recently completed plan year and June 21, 1997. Payment of this amount shall cancel your rights to any other Success Sharing payments for the same time period. The target award used in this calculation shall not be less than the highest target award in effect for you on or after June 21, 1994. 3. Potential long term incentive award until June 21, 1997. The total number of hypothetical shares (at 100% goal accomplishment) of Dominion Resources, Inc. stock granted in all cycles of the Performance Achievement Plan which were active on the date of termination will be multiplied by the closing price of the stock on the day of termination. This amount will be paid to you in dollars. Payment of this amount will cancel your rights to any additional payments in cash or stock from these active cycles. EX-10 15 EXHIBIT 10.34 Exhibit 10(xxxiv) June 23, 1994 Mr. L.W. Ellis Senior Vice President Power Operations & Planning Dear Larry: A Special Committee of the Board of Directors of Virginia Electric and Power Company (the Company) was established on Monday, June 20, to act on behalf of the Board in matters relating to the recent Order of the State Corporation Commission calling for an investigation of the relationship between Dominion Resources, Inc. and the Company. One of the matters that the Special Committee addressed was the importance of preserving the stability and continuity of the senior management personnel of the Company. The Board wants the officers of the Company to remain in place and to carry out their assigned jobs to the best of their abilities. To that end, the Special Committee has approved a resolution intended to promote your continuing employment relationship with the Company. The resolution provides that, if at any time prior to June 21, 1997, your employment as an officer of the Company should be terminated for any reason other than cause (after a good faith determination by the President of the Company or the Board of Directors that such cause exists), then the Company will pay to you the amount (as detailed in Attachment A) that you would have otherwise received in base salary and incentive compensation through June 21, 1997, as if you had remained employed until that date. In addition, the Company will pay to you a special severance benefit equal to (i) your then annual base salary, or at your election (ii) the retirement or other severance benefits that you would have been eligible to receive as a participant in the 1994 Early Retirement Program. If you continue as an employee of the Company until June 21, 1997, you shall be entitled to receive on the date you retire or leave the employment of the Company for any reason after June 21, 1997, a special severance benefit equal to (i) your then annual base salary, or at your election (ii) the retirement and other severance benefits that you would have been eligible to receive as a participant in the 1994 Early Retirement Program. This special severance benefit shall be paid in addition to and shall not diminish any rights that you may have based on your individual employment agreement or any other benefits that you may be entitled to receive under the benefit plans of Dominion Resources, Inc. or the Company. Please acknowledge by signing a copy of this letter and returning it to me. We will then make this document a part of your permanent file. If you have any questions, please let me know. Sincerely, /s/ J. T. Rhodes J. T. Rhodes Attachment Acknowledged: /s/ L. W. Ellis Date: 6/23/94 ATTACHMENT A If you are terminated for any reason other than for cause, the company will pay you the following: 1. Base salary which you would have earned from the date of termination until June 21, 1997. This number will be computed by dividing the annual base salary at time of termination by 12 and multiplying by the number of whole or partial months between the date of termination and June 21, 1997. The base salary used in this calculation shall not be less than your highest base salary on or after June 21, 1994. 2. Potential annual incentive award from date of termination until June 21, 1997. This number will be computed by dividing the Success Sharing target award in effect for you at time of termination by 12 and multiplying by the number of whole or partial months between the end of the most recently completed plan year and June 21, 1997. Payment of this amount shall cancel your rights to any other Success Sharing payments for the same time period. The target award used in this calculation shall not be less than the highest target award in effect for you on or after June 21, 1994. 3. Potential long term incentive award until June 21, 1997. The total number of hypothetical shares (at 100% goal accomplishment) of Dominion Resources, Inc. stock granted in all cycles of the Performance Achievement Plan which were active on the date of termination will be multiplied by the closing price of the stock on the day of termination. This amount will be paid to you in dollars. Payment of this amount will cancel your rights to any additional payments in cash or stock from these active cycles. EX-10 16 EXHIBIT 10.35 Exhibit 10(xxxv) June 23, 1994 Mr. J.A. Ahladas Senior Vice President Corporate Services Dear John: A Special Committee of the Board of Directors of Virginia Electric and Power Company (the Company) was established on Monday, June 20, to act on behalf of the Board in matters relating to the recent Order of the State Corporation Commission calling for an investigation of the relationship between Dominion Resources, Inc. and the Company. One of the matters that the Special Committee addressed was the importance of preserving the stability and continuity of the senior management personnel of the Company. The Board wants the officers of the Company to remain in place and to carry out their assigned jobs to the best of their abilities. To that end, the Special Committee has approved a resolution intended to promote your continuing employment relationship with the Company. The resolution provides that, if at any time prior to June 21, 1997, your employment as an officer of the Company should be terminated for any reason other than cause (after a good faith determination by the President of the Company or the Board of Directors that such cause exists), then the Company will pay to you the amount (as detailed in Attachment A) that you would have otherwise received in base salary and incentive compensation through June 21, 1997, as if you had remained employed until that date. In addition, the Company will pay to you a special severance benefit equal to (i) your then annual base salary, or at your election (ii) the retirement or other severance benefits that you would have been eligible to receive as a participant in the 1994 Early Retirement Program. If you continue as an employee of the Company until June 21, 1997, you shall be entitled to receive on the date you retire or leave the employment of the Company for any reason after June 21, 1997, a special severance benefit equal to (i) your then annual base salary, or at your election (ii) the retirement and other severance benefits that you would have been eligible to receive as a participant in the 1994 Early Retirement Program. This special severance benefit shall be paid in addition to and shall not diminish any rights that you may have based on your individual employment agreement or any other benefits that you may be entitled to receive under the benefit plans of Dominion Resources, Inc. or the Company. Please acknowledge by signing a copy of this letter and returning it to me. We will then make this document a part of your permanent file. If you have any questions, please let me know. Sincerely, /s/ J. T. Rhodes J. T. Rhodes Attachment Acknowledged: /s/ John Ahladas Date: 6/23/94 ATTACHMENT A If you are terminated for any reason other than for cause, the company will pay you the following: 1. Base salary which you would have earned from the date of termination until June 21, 1997. This number will be computed by dividing the annual base salary at time of termination by 12 and multiplying by the number of whole or partial months between the date of termination and June 21, 1997. The base salary used in this calculation shall not be less than your highest base salary on or after June 21, 1994. 2. Potential annual incentive award from date of termination until June 21, 1997. This number will be computed by dividing the Success Sharing target award in effect for you at time of termination by 12 and multiplying by the number of whole or partial months between the end of the most recently completed plan year and June 21, 1997. Payment of this amount shall cancel your rights to any other Success Sharing payments for the same time period. The target award used in this calculation shall not be less than the highest target award in effect for you on or after June 21, 1994. 3. Potential long term incentive award until June 21, 1997. The total number of hypothetical shares (at 100% goal accomplishment) of Dominion Resources, Inc. stock granted in all cycles of the Performance Achievement Plan which were active on the date of termination will be multiplied by the closing price of the stock on the day of termination. This amount will be paid to you in dollars. Payment of this amount will cancel your rights to any additional payments in cash or stock from these active cycles. EX-23 17 EXHIBIT 23.1 EXHIBIT 23(i) Hunton & Williams Riverfront Plaza, East Tower 951 East Byrd Street Richmond, Virginia 23219-4074 Telephone (804) 788-8200 Facsimile (804) 788-8218 March 8, 1995 Virginia Electric and Power Company Richmond, Virginia 23261 Virginia Electric and Power Company Form 10-K Gentlemen: We consent to the incorporation by reference into the registration statements of Virginia Electric and Power Company on Form S-3 (File No. 33-44437, File No. 33-50423, and File No. 33-50425) of the statements, included in this Annual Report on Form 10-K, made in regard to our firm that relate to franchises, title to properties, limitations upon the issuance of bonds and preferred stock, rate, environmental and other regulatory matters, and litigation. Sincerely yours, HUNTON & WILLIAMS EX-23 18 EXHIBIT 23.2 EXHIBIT 23(ii) Jackson & Kelly Attorneys at Law 1600 Laidley Tower P. O. Box 553 Charleston, West Virginia 25322 Telephone 304-340-1000 Telecopier 304-340-1130 March 8, 1995 Virginia Electric and Power Company Richmond, Virginia 23261 Re: Virginia Electric and Power Company Form 10-K Gentlemen: We consent to the incorporation by reference into the registration statements of Virginia Electric and Power Company on Form S-3 (File No. 33-44437; File No. 33-50423; and File No. 33-50425) of the statements, included in this Annual Report on Form 10-K, made in regard to our firm that are governed by the laws of West Virginia and that relate to franchises, title to properties, limitations upon the issuance of bonds and preferred stock, rate, and other regulatory matters, and litigation. Sincerely yours, JACKSON & KELLY EX-23 19 EXHIBIT 23.3 EXHIBIT 23(iii) CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in Registration Statements File No. 33-50425, File No. 33-50423 and File No. 33-44437 of Virginia Electric and Power Company on Forms S-3 of our report dated February 6, 1995, appearing in the Annual Report on Form 10-K of Virginia Electric and Power Company for the year ended December 31, 1994. DELOITTE & TOUCHE LLP Richmond, Virginia March 8, 1995 EX-27 20 EXHIBIT 27--FINANCIAL DATA SCHEDULE
UT 1,000,000 12-MOS DEC-31-1994 DEC-31-1994 PER-BOOK 9,623 302 743 979 0 11,648 2,737 20 1,278 4,036 222 594 3,910 0 0 0 312 0 0 0 2,574 11,648 4,171 223 3,216 3,439 731 11 742 295 447 42 405 396 223 1,018 0 0
-----END PRIVACY-ENHANCED MESSAGE-----