INVESTMENTS
DOMINION
Equity and Debt Securities
RABBI TRUST SECURITIES
Marketable equity and debt securities and cash equivalents held in Dominion's rabbi trusts and classified as trading totaled $90 million and $93 million at December 31, 2011 and 2010, respectively. Net unrealized losses on trading securities totaled less than $1 million in 2011. Net unrealized gains on trading securities totaled $5 million and $11 million in 2010 and 2009, respectively. Cost-method investments held in Dominion's rabbi trusts totaled $17 million and $18 million at December 31, 2011 and 2010, respectively.
DECOMMISSIONING TRUST SECURITIES
Dominion holds marketable equity and debt securities (classified as available-for-sale), cash equivalents and cost method investments in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Dominion's decommissioning trust funds are summarized below.
|
| | | | | | | | | | | | | |
| Amortized Cost |
| Total Unrealized Gains (1) |
| Total Unrealized Losses (1) |
| | Fair Value |
|
(millions) | | | | | |
2011 | | | | | |
Marketable equity securities: | | | | | |
U.S.: | | | | | |
Large Cap | $ | 1,152 |
| $ | 537 |
| $ | — |
| | $ | 1,689 |
|
Other | 36 |
| 10 |
| — |
| | 46 |
|
Marketable debt securities: | |
| |
| |
| | |
|
Corporate debt instruments | 314 |
| 19 |
| (1 | ) | | 332 |
|
U.S. Treasury securities and agency debentures | 437 |
| 20 |
| (1 | ) | | 456 |
|
State and municipal | 264 |
| 24 |
| — |
| | 288 |
|
Other | 23 |
| 1 |
| — |
| | 24 |
|
Cost method investments | 118 |
| — |
| — |
| | 118 |
|
Cash equivalents and other(2) | 46 |
| — |
| — |
| | 46 |
|
Total | $ | 2,390 |
| $ | 611 |
| $ | (2 | ) | (3) | $ | 2,999 |
|
2010 | |
| |
| |
| | |
|
Marketable equity securities: | |
| |
| |
| | |
|
U.S.: | |
| |
| |
| | |
|
Large Cap | $ | 1,161 |
| $ | 515 |
| $ | — |
| | $ | 1,676 |
|
Other | 39 |
| 11 |
| — |
| | 50 |
|
Marketable debt securities: | |
| |
| |
| | |
|
Corporate debt instruments | 310 |
| 18 |
| (1 | ) | | 327 |
|
U.S. Treasury securities and agency debentures | 380 |
| 12 |
| (1 | ) | | 391 |
|
State and municipal | 244 |
| 7 |
| (4 | ) | | 247 |
|
Other | 19 |
| — |
| — |
| | 19 |
|
Cost method investments | 108 |
| — |
| — |
| | 108 |
|
Cash equivalents and other(2) | 79 |
| — |
| — |
| | 79 |
|
Total | $ | 2,340 |
| $ | 563 |
| $ | (6 | ) | (3) | $ | 2,897 |
|
| |
(1) | Included in AOCI and the decommissioning trust regulatory liability as discussed in Note 2. |
| |
(2) | Includes pending purchases of securities of $11 million and $43 million at December 31, 2011 and 2010, respectively. |
| |
(3) | The fair value of securities in an unrealized loss position was $164 million and $252 million at December 31, 2011 and 2010, respectively. |
The fair value of Dominion's marketable debt securities held in nuclear decommissioning trust funds at December 31, 2011 by contractual maturity is as follows:
|
| | | |
| Amount |
|
(millions) | |
Due in one year or less | $ | 99 |
|
Due after one year through five years | 292 |
|
Due after five years through ten years | 332 |
|
Due after ten years | 377 |
|
Total | $ | 1,100 |
|
Presented below is selected information regarding Dominion's marketable equity and debt securities held in nuclear decommissioning trust funds.
|
| | | | | | | | | | |
Year Ended December 31, | 2011 |
| 2010 |
| | 2009 |
|
(millions) | | | | |
Proceeds from sales | $ | 1,757 |
| $ | 1,814 |
| (1) | $ | 1,478 |
|
Realized gains(2) | 79 |
| 111 |
| | 215 |
|
Realized losses(2) | 92 |
| 63 |
| | 211 |
|
| |
(1) | The increase in proceeds primarily reflects the replacement of commingled funds with actively managed portfolios. Does not include $1 billion of proceeds reflected in Dominion's Consolidated Statement of Cash Flows from the sale of temporary investments consisting of time deposits and Treasury Bills, purchased following the sale of substantially all of Dominion's Appalachian E&P operations. |
| |
(2) | Includes realized gains and losses recorded to the decommissioning trust regulatory liability as discussed in Note 2. |
Dominion recorded other-than-temporary impairment losses on investments held in nuclear decommissioning trust funds as follows:
|
| | | | | | | | | |
Year Ended December 31, | 2011 |
| 2010 |
| 2009 |
|
(millions) | | | |
Total other-than-temporary impairment losses(1) | $ | 75 |
| $ | 59 |
| $ | 175 |
|
Losses recorded to decommissioning trust regulatory liability | (24 | ) | (21 | ) | (80 | ) |
Losses recognized in other comprehensive income (before taxes) | (3 | ) | (3 | ) | (3 | ) |
Net impairment losses recognized in earnings | $ | 48 |
| $ | 35 |
| $ | 92 |
|
| |
(1) | Amounts include other-than-temporary impairment losses for debt securities of $6 million, $10 million and $13 million at December 31, 2011, 2010 and 2009, respectively. |
Equity Method Investments
Investments that Dominion accounts for under the equity method of accounting are as follows:
|
| | | | | | | | | |
Company | Ownership% |
| Investment Balance | | Description |
As of December 31, | | 2011 |
| 2010 |
| |
(millions) | |
| |
| |
| |
Fowler I Holdings LLC | 50 | % | $ | 166 |
| $ | 180 |
| Wind-powered merchant generation facility |
NedPower Mount Storm LLC | 50 | % | 146 |
| 149 |
| Wind-powered merchant generation facility |
Elwood Energy LLC | 50 | % | 108 |
| 98 |
| Natural gas-fired merchant generation peaking facility |
Iroquois Gas Transmission System, LP | 24.72 | % | 104 |
| 106 |
| Gas transmission system |
Other | various |
| 29 |
| 38 |
| |
Total | | $ | 553 |
| $ | 571 |
| |
Dominion's equity earnings on these investments totaled $35 million in 2011 and $42 million in 2010 and 2009. Excluding a $123 million distribution in 2009 from Fowler Ridge, Dominion received distributions from these investments of $55 million, $60 million and $63 million in 2011, 2010, and 2009, respectively. As of December 31, 2011 and 2010, the carrying amount of Dominion's investments exceeded Dominion's share of underlying equity in net assets by approximately $32 million and $7 million, respectively. The differences relate to Dominion's investments in wind projects and primarily reflect its capitalized interest during construction and the excess of its cash contributions over the book value of development assets contributed by Dominion's partners for these projects. The differences are generally being amortized over the useful lives of the underlying assets.
VIRGINIA POWER
Virginia Power holds marketable equity and debt securities (classified as available-for-sale), cash equivalents and cost method investments in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Virginia Power's decommissioning trust funds are summarized below.
|
| | | | | | | | | | | | | |
| Amortized Cost |
| Total Unrealized Gains (1) |
| Total Unrealized Losses (1) |
| | Fair Value |
|
(millions) | | | | | |
2011 | | | | | |
Marketable equity securities: | | | | | |
U.S.: | | | | | |
Large Cap | $ | 460 |
| $ | 218 |
| $ | — |
| | $ | 678 |
|
Other | 18 |
| 5 |
| — |
| | 23 |
|
Marketable debt securities: | |
| |
| |
| | |
|
Corporate debt instruments | 204 |
| 11 |
| (1 | ) | | 214 |
|
U.S. Treasury securities and agency debentures | 166 |
| 4 |
| — |
| | 170 |
|
State and municipal | 114 |
| 10 |
| — |
| | 124 |
|
Other | 16 |
| 1 |
| (1 | ) | | 16 |
|
Cost method investments | 118 |
| — |
| — |
| | 118 |
|
Cash equivalents and other(2) | 27 |
| — |
| — |
| | 27 |
|
Total | $ | 1,123 |
| $ | 249 |
| $ | (2 | ) | (3) | $ | 1,370 |
|
2010 | |
| |
| |
| | |
|
Marketable equity securities: | |
| |
| |
| | |
|
U.S.: | |
| |
| |
| | |
|
Large Cap | $ | 469 |
| $ | 207 |
| $ | — |
| | $ | 676 |
|
Other | 20 |
| 5 |
| — |
| | 25 |
|
Marketable debt securities: | |
| |
| |
| | |
|
Corporate debt instruments | 205 |
| 10 |
| — |
| | 215 |
|
U.S. Treasury securities and agency debentures | 141 |
| 2 |
| — |
| | 143 |
|
State and municipal | 103 |
| 1 |
| (2 | ) | | 102 |
|
Other | 15 |
| — |
| — |
| | 15 |
|
Cost method investments | 108 |
| — |
| — |
| | 108 |
|
Cash equivalents and other(2) | 35 |
| — |
| — |
| | 35 |
|
Total | $ | 1,096 |
| $ | 225 |
| $ | (2 | ) | (3) | $ | 1,319 |
|
| |
(1) | Included in AOCI and the decommissioning trust regulatory liability as discussed in Note 2. |
| |
(2) | Includes pending purchases of securities of $13 million and $35 million at December 31, 2011 and 2010, respectively. |
| |
(3) | The fair value of securities in an unrealized loss position was $99 million and $159 million at December 31, 2011 and 2010, respectively. |
The fair value of Virginia Power's debt securities at December 31, 2011, by contractual maturity is as follows:
|
| | | |
| Amount |
|
(millions) | |
Due in one year or less | $ | 16 |
|
Due after one year through five years | 155 |
|
Due after five years through ten years | 205 |
|
Due after ten years | 148 |
|
Total | $ | 524 |
|
Presented below is selected information regarding Virginia Power's marketable equity and debt securities.
|
| | | | | | | | | | |
Year Ended December 31, | 2011 |
| 2010 |
| | 2009 |
|
(millions) | | | | |
Proceeds from sales | $ | 1,030 |
| $ | 1,192 |
| (1) | $ | 715 |
|
Realized gains(2) | 34 |
| 52 |
| | 104 |
|
Realized losses(2) | 34 |
| 23 |
| | 99 |
|
| |
(1) | The increase in proceeds primarily reflects the replacement of commingled funds with actively managed portfolios. |
| |
(2) | Includes realized gains and losses recorded to the decommissioning trust regulatory liability as discussed in Note 2. |
Virginia Power recorded other-than-temporary impairment losses on investments as follows:
|
| | | | | | | | | |
Year Ended December 31, | 2011 |
| 2010 |
| 2009 |
|
(millions) | | | |
Total other-than-temporary impairment losses(1) | $ | 29 |
| $ | 25 |
| $ | 94 |
|
Losses recorded to decommissioning trust regulatory liability | (24 | ) | (21 | ) | (80 | ) |
Losses recorded in other comprehensive income (before taxes) | (1 | ) | (1 | ) | — |
|
Net impairment losses recognized in earnings | $ | 4 |
| $ | 3 |
| $ | 14 |
|
| |
(1) | Amounts include other-than-temporary impairment losses for debt securities of $4 million, $6 million and $7 million at December 31, 2011, 2010 and 2009, respectively. |
OTHER INVESTMENTS
Dominion and Virginia Power hold restricted cash and cash equivalent balances that primarily consist of money market fund investments held in trust for the purpose of funding certain qualifying construction projects. At December 31, 2011 and 2010, Dominion had $147 million and $415 million, respectively, and Virginia Power had $32 million and $169 million, respectively, of restricted cash and cash equivalents. These balances are presented in Other Current Assets and Investments in the Consolidated Balance Sheets.