Operating Segments

9 Months Ended

Sep. 30, 2011

Operating Segments

Operating Segments

Dominion and Virginia Power are organized primarily on the basis of products and services sold in the U.S. A description of the operations included in the Companies’ primary operating segments is as follows:

Primary Operating Segment	Description of Operations	Dominion	Virginia Power
DVP	Regulated electric distribution	X	X
	Regulated electric transmission	X	X
	Nonregulated retail energy marketing (electric and gas)	X
Dominion Generation	Regulated electric fleet	X	X
	Merchant electric fleet	X
Dominion Energy	Gas transmission and storage	X
	Gas distribution	X
	LNG import and storage	X
	Producer services	X

In addition to the operating segments above, the Companies also report a Corporate and Other segment.

The Corporate and Other Segment of Dominion includes its corporate, service company and other functions (including unallocated debt) and certain specific items that are not included in profit measures evaluated by executive management in assessing segment performance or allocating resources among the segments.

In the nine months ended September 30, 2011, Dominion reported after-tax net expenses of $213 million for specific items in the Corporate and Other segment, with $217 million of these net expenses attributable to its operating segments. In the nine months ended September 30, 2010, Dominion reported after-tax net benefits of $905 million for specific items in the Corporate and Other segment, with $1.1 billion of these net benefits attributable to its operating segments.

The net expenses for specific items in 2011 primarily related to the impact of the following items:

• A $121 million ($74 million after-tax) charge reflecting restoration costs associated with damage caused by Hurricane Irene, primarily attributable to DVP;

• A $55 million ($39 million after-tax) impairment charge related to State Line, attributable to Dominion Generation;

• A $57 million ($34 million after-tax) charge related to the impairment of SO₂ emissions allowances not expected to be consumed due to CSAPR, attributable to Dominion Generation; and

• A $56 million ($32 million after-tax) loss from the operations of Kewaunee, attributable to Dominion Generation.  Kewaunee's results of operations have been reflected in the Corporate and Other segment due to Dominion's decision in the first quarter of 2011 to pursue the sale of Kewaunee.

The net benefits for specific items in 2010 primarily related to the impact of the following items:

• A $2.5 billion ($1.4 billion after-tax) benefit resulting from the gain on the sale of substantially all of Dominion's Appalachian E&P operations net of charges related to the divestiture, attributable to Dominion Energy; partially offset by

• A $338 million ($206 million after-tax) charge primarily reflecting severance pay and other benefits related to a workforce reduction program, attributable to:

• DVP ($67 million after-tax);

• Dominion Energy ($24 million after-tax); and

• Dominion Generation ($115 million after-tax);

• A $134 million ($147 million after-tax) loss from the discontinued operations of Peoples primarily reflecting a net loss on the sale, attributable to the Corporate and Other segment; and

• A $163 million ($95 million after-tax) impairment charge related to State Line, attributable to Dominion Generation.

The Corporate and Other Segment of Virginia Power primarily includes certain specific items that are not included in profit measures evaluated by executive management in assessing segment performance or allocating resources among the segments. In the nine months ended September 30, 2011 and 2010, Virginia Power reported after-tax net expenses of $126 million and $149 million, respectively, for specific items attributable to its operating segments in the Corporate and Other segment.

The net expenses for specific items in 2011 primarily related to the impact of the following:

• A $121 million ($74 million after-tax) charge reflecting restoration costs associated with damage caused by Hurricane Irene, primarily attributable to DVP; and

• A $43 million ($26 million after-tax) charge related to the impairment of SO₂ emissions allowances not expected to be consumed due to CSAPR, attributable to Dominion Generation.

The net expenses for specific items in 2010 primarily related to the impact of the following:

• A $202 million ($123 million after-tax) charge primarily reflecting severance pay and other benefits related to a workforce reduction program, attributable to:

• DVP ($63 million after-tax); and

• Dominion Generation ($60 million after-tax).

The following table presents segment information pertaining to Dominion’s operations:

	DVP		Dominion Generation		Dominion Energy		Corporate and Other			Adjustments/Eliminations			Consolidated Total
(millions)
Three Months Ended September 30,
2011
Total revenue from external customers	$	922	$	2,142	$	290	$	23		$	426		$	3,803
Intersegment revenue	21		114		341		149			(625		)	—
Total operating revenue	943		2,256		631		172			(199		)	3,803
Net income (loss) attributable to Dominion	125		394		95		(222		)	—			392
2010
Total revenue from external customers	$	907	$	2,312	$	367	$	(6	)	$	370		$	3,950
Intersegment revenue	16		114		339		172			(641		)	—
Total operating revenue	923		2,426		706		166			(271		)	3,950
Net income (loss) attributable to Dominion	107		487		92		(111		)	—			575
Nine Months Ended September 30,
2011
Total revenue from external customers	$	2,801	$	5,765	$	1,503	$	96		$	1,036		$	11,201
Intersegment revenue	134		271		843		443			(1,691		)	—
Total operating revenue	2,935		6,036		2,346		539			(655		)	11,201
Net income (loss) attributable to Dominion	389		886		368		(436		)	—			1,207
2010
Total revenue from external customers	$	2,697	$	6,121	$	1,667	$	28		$	938		$	11,451
Intersegment revenue	123		324		906		571			(1,924		)	—
Total operating revenue	2,820		6,445		2,573		599			(986		)	11,451
Loss from discontinued operations, net of tax	—		—		—		(147		)	—			(147		)
Net income attributable to Dominion	333		1,088		353		736			—			2,510

Intersegment sales and transfers for Dominion are based on contractual arrangements and may result in intersegment profit or loss that is eliminated in consolidation.

The following table presents segment information pertaining to Virginia Power’s operations:

	DVP		Dominion Generation		Corporate and Other			Consolidated Total
(millions)
Three Months Ended September 30,
2011
Operating revenue	$	484	$	1,704	$	(11	)	$	2,177
Net income (loss)	127		289		(119		)	297
2010
Operating revenue	$	453	$	1,658	$	—		$	2,111
Net income (loss)	102		286		(8		)	380
Nine Months Ended September 30,
2011
Operating revenue	$	1,367	$	4,336	$	(12	)	$	5,691
Net income (loss)	342		598		(124		)	816
2010
Operating revenue	$	1,253	$	4,308	$	—		$	5,561
Net income (loss)	300		589		(147		)	742