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 $109 million and $107 million at September 30, 2014 and December 31, 2013, respectively. Cost method investments held in Dominion’s rabbi trusts totaled $7 million and $10 million at September 30, 2014 and December 31, 2013, 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)
September 30, 2014
Marketable equity securities:
U.S. Large cap	$	1,252	$	1,276	$	—			$	2,528
Marketable debt securities:
Corporate bonds	402		18		(1		)		419
U.S. Treasury securities and agency debentures	620		9		(5		)		624
State and municipal	305		22		—				327
Other	6		—		—				6
Cost method investments	86		—		—				86
Cash equivalents and other⁽²⁾	135		—		—				135
Total	$	2,806	$	1,325	$	(6	)	⁽³⁾	$	4,125
December 31, 2013
Marketable equity securities:
U.S.:
Large cap	$	1,183	$	1,194	$	—			$	2,377
Other	49		23		—				72
Marketable debt securities:
Corporate bonds	332		16		(3		)		345
U.S. Treasury securities and agency debentures	589		8		(10		)		587
State and municipal	297		11		(5		)		303
Other	3		—		—				3
Cost method investments	106		—		—				106
Cash equivalents and other⁽²⁾	110		—		—				110
Total	$	2,669	$	1,252	$	(18	)	⁽³⁾	$	3,903


(1)	Included in AOCI and the decommissioning trust regulatory liability.


(2)	Includes pending sales of securities of $8 million and $11 million at September 30, 2014 and December 31, 2013, respectively.


(3)	The fair value of securities in an unrealized loss position was $463 million and $604 million at September 30, 2014 and December 31, 2013, respectively.

The fair value of Dominion’s marketable debt securities held in nuclear decommissioning trust funds at September 30, 2014 by contractual maturity is as follows:



	Amount
(millions)
Due in one year or less	$	108
Due after one year through five years	415
Due after five years through ten years	402
Due after ten years	451
Total	$	1,376

Presented below is selected information regarding Dominion’s marketable equity and debt securities held in nuclear decommissioning trust funds.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
(millions)
Proceeds from sales	$	838	$	398	$	1,524	$	1,260
Realized gains⁽¹⁾	57		29		120		121
Realized losses⁽¹⁾	7		13		20		29


(1)	Includes realized gains and losses recorded to the decommissioning trust regulatory liability.

Other-than-temporary impairment losses on investments held in nuclear decommissioning trust funds for Dominion were not material for the three and nine months ended September 30, 2014 and 2013.

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)
September 30, 2014
Marketable equity securities:
U.S. Large cap	$	543	$	557	$	—			$	1,100
Marketable debt securities:
Corporate bonds	221		9		(1		)		229
U.S. Treasury securities and agency debentures	226		2		(1		)		227
State and municipal	173		12		—				185
Cost method investments	86		—		—				86
Cash equivalents and other⁽²⁾	45		—		—				45
Total	$	1,294	$	580	$	(2	)	⁽³⁾	$	1,872
December 31, 2013
Marketable equity securities:
U.S.:
Large cap	$	506	$	514	$	—			$	1,020
Other	25		11		—				36
Marketable debt securities:
Corporate bonds	185		8		(2		)		191
U.S. Treasury securities and agency debentures	214		1		(3		)		212
State and municipal	163		4		(4		)		163
Cost method investments	106		—		—				106
Cash equivalents and other⁽²⁾	37		—		—				37
Total	$	1,236	$	538	$	(9	)	⁽³⁾	$	1,765


(1)	Included in AOCI and the decommissioning trust regulatory liability.


(2)	Includes pending sales of securities of $2 million and $6 million at September 30, 2014 and December 31, 2013, respectively.


(3)	The fair value of securities in an unrealized loss position was $201 million and $299 million at September 30, 2014 and December 31, 2013, respectively.

The fair value of Virginia Power’s marketable debt securities at September 30, 2014 by contractual maturity is as follows:



	Amount
(millions)
Due in one year or less	$	19
Due after one year through five years	193
Due after five years through ten years	231
Due after ten years	198
Total	$	641

Presented below is selected information regarding Virginia Power’s marketable equity and debt securities.



	Three Months Ended September 30,				Nine Months Ended September 30,
	2014		2013		2014		2013
(millions)
Proceeds from sales	$	116	$	140	$	415	$	464
Realized gains⁽¹⁾	22		8		51		34
Realized losses⁽¹⁾	2		5		8		13


(1)	Includes realized gains and losses recorded to the decommissioning trust regulatory liability.

Other-than-temporary impairment losses on investments held in nuclear decommissioning trust funds for Virginia Power were not material for the three and nine months ended September 30, 2014 and 2013.

Equity Method Investments

Dominion Gas

Dominion Gas accounts for the following investment under the equity method of accounting:



Company	Ownership%		Investment Balance				Description
			September 30, 2014		December 31, 2013
(millions)
Iroquois	24.72	%	$	112	$	105	Gas transmission system
Total			$	112	$	105

Dominion Gas' equity earnings on this investment totaled $17 million and $16 million for the nine months ended September 30, 2014 and 2013, respectively. Dominion Gas received distributions from this investment of $10 million and $12 million for the nine months ended September 30, 2014 and 2013, respectively. As of September 30, 2014 and December 31, 2013, the carrying amount of Dominion Gas' investment exceeded its share of underlying equity in net assets by approximately $9 million and $8 million, respectively. The differences reflect equity method goodwill and are not being amortized.

Dominion

Atlantic Coast Pipeline

In September 2014, Dominion, along with Duke Energy Corporation, Piedmont Natural Gas Company, Inc. and AGL Resources Inc., announced the formation of Atlantic Coast Pipeline. Subsidiaries of the members will hold the following membership interests: Dominion, 45%; Duke Energy Corporation, 40%; Piedmont Natural Gas Company, Inc., 10%; and AGL Resources Inc., 5%. Atlantic Coast Pipeline is focused on constructing an approximately 550-mile natural gas pipeline running from West Virginia through Virginia to North Carolina, which has an expected cost of $4.5 billion to $5.0 billion, excluding financing costs. Subsidiaries and affiliates of all four members plan to be customers of the pipeline under 20-year contracts, pending regulatory approvals. PSNC Energy also plans to be a customer of the pipeline under a 20-year contract, pending regulatory approvals. Atlantic Coast Pipeline is considered an equity method investment as Dominion has the ability to exercise significant influence, but not control, over the investee.

In October 2014, Atlantic Coast Pipeline requested approval from FERC to utilize the pre-filing process under which environmental review for the natural gas pipeline project will commence. It expects to file its FERC application in the third quarter of 2015, receive the FERC certificate in the summer of 2016, and begin construction shortly thereafter. The project is subject to FERC, state and other federal approvals.

Dominion and Dominion Gas

Blue Racer

In December 2012, Dominion formed Blue Racer with Caiman to provide midstream services to natural gas producers operating in the Utica Shale region in Ohio and portions of Pennsylvania. Blue Racer is an equal partnership between Dominion and Caiman, with Dominion contributing midstream assets and Caiman contributing private equity capital.

In March 2013, Dominion Gas sold Line TL-404 to an affiliate, that subsequently sold Line TL-404 to Blue Racer for cash proceeds of approximately $47 million. The sale resulted in a gain of approximately $25 million ($14 million after-tax) net of a $2 million write-off of goodwill, and is included in other operations and maintenance expense in both Dominion Gas' and Dominion's Consolidated Statements of Income.

Phase 1 of Natrium was completed in the second quarter of 2013 and was contributed to Blue Racer in the third quarter of 2013, resulting in an increased equity method investment in Blue Racer of $473 million. Also in the third quarter of 2013, Dominion Gas sold Line TPL-2A to an affiliate, that subsequently sold Line TPL-2A to Blue Racer, and sold Line TL-388 to Blue Racer and received approximately $83 million in cash proceeds. The sales resulted in an approximately $75 million ($42 million after-tax) gain which is included in other operations and maintenance expense in both Dominion Gas' and Dominion's Consolidated Statements of Income.

Dominion NGL Pipelines, LLC was contributed in January 2014 by Dominion to Blue Racer, prior to commencement of service, resulting in an increased equity method investment of $155 million, including $6 million of goodwill allocated from Dominion's goodwill balance to its equity method investment in Blue Racer.

In March 2014, Dominion Gas sold the Northern System to an affiliate, that subsequently sold the Northern System to Blue Racer for consideration of approximately $84 million. Dominion Gas' consideration consisted of $17 million in cash proceeds and the extinguishment of affiliated current borrowings of $67 million and Dominion's consideration consisted of cash proceeds of approximately $84 million. The sale resulted in a gain of approximately $59 million ($35 million after-tax for Dominion Gas and $34 million after-tax for Dominion) net of a $3 million write-off of goodwill, and is included in other operations and maintenance expense in both Dominion Gas' and Dominion's Consolidated Statements of Income.