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 $95 million and $90 million at December 31, 2012 and 2011, respectively. Cost-method investments held in Dominion's rabbi trusts totaled $14 million and $17 million at December 31, 2012 and 2011, 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)
2012
Marketable equity securities:
U.S.:
Large Cap	$	1,210	$	732	$	—			$	1,942
Other	40		13		—				53
Marketable debt securities:
Corporate debt instruments	295		30		—				325
U.S. Treasury securities and agency debentures	523		19		(2		)		540
State and municipal	248		26		—				274
Other	6		1		—				7
Cost method investments	117		—		—				117
Cash equivalents and other⁽²⁾	72		—		—				72
Total	$	2,511	$	821	$	(2	)	⁽³⁾	$	3,330
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


(1)	Included in AOCI and the decommissioning trust regulatory liability as discussed in Note 2.


(2)	Includes pending purchases of securities of $6 million and $11 million at December 31, 2012 and 2011, respectively.


(3)	The fair value of securities in an unrealized loss position was $195 million and $164 million at December 31, 2012 and 2011, respectively.

The fair value of Dominion's marketable debt securities held in nuclear decommissioning trust funds at December 31, 2012 by contractual maturity is as follows:



	Amount
(millions)
Due in one year or less	$	116
Due after one year through five years	304
Due after five years through ten years	357
Due after ten years	369
Total	$	1,146

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



Year Ended December 31,	2012		2011		2010
(millions)
Proceeds from sales	$	1,356	$	1,757	$	1,814	⁽¹⁾
Realized gains⁽²⁾	98		79		111
Realized losses⁽²⁾	33		92		63


(1)	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,	2012			2011			2010
(millions)
Total other-than-temporary impairment losses⁽¹⁾	$	26		$	75		$	59
Losses recorded to decommissioning trust regulatory liability	(10		)	(24		)	(21		)
Losses recognized in other comprehensive income (before taxes)	(2		)	(3		)	(3		)
Net impairment losses recognized in earnings	$	14		$	48		$	35


(1)	Amounts include other-than-temporary impairment losses for debt securities of $4 million, $6 million and $10 million at December 31, 2012, 2011 and 2010, 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,			2012		2011
(millions)
Fowler I Holdings LLC	50	%	$	158	$	166	Wind-powered merchant generation facility
NedPower Mount Storm LLC	50	%	137		146		Wind-powered merchant generation facility
Elwood Energy LLC	50	%	117		108		Natural gas-fired merchant generation peaking facility
Iroquois Gas Transmission System, LP	24.72	%	102		104		Gas transmission system
Blue Racer Midstream LLC	50	%	39		—		Midstream gas and related services
Other⁽¹⁾	various		5		29
Total			$	558	$	553

(1) Dominion has a $50 million commitment to invest in clean power and technology businesses through 2018.

Dominion's equity earnings on these investments totaled $25 million, $35 million and $42 million in 2012, 2011 and 2010, respectively. Dominion received distributions from these investments of $58 million, $55 million and $60 million in 2012, 2011, and 2010, respectively. As of December 31, 2012 and 2011, the carrying amount of Dominion's investments exceeded Dominion's share of underlying equity in net assets by approximately $30 million and $32 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.

BLUE RACER

In December 2012, Dominion formed a joint venture with Caiman to provide midstream services to natural gas producers operating in the Utica Shale region in Ohio and portions of Pennsylvania. The joint venture, Blue Racer, is an equal partnership between Dominion and Caiman, with Dominion contributing midstream assets and Caiman contributing private equity capital. In return for its December 2012 contribution of assets to the joint venture, Dominion received a 50% interest in Blue Racer and received $115 million in cash proceeds, resulting in a gain of $72 million ($43 million after-tax), net of transaction fees of $9 million, which is recorded in other operations and maintenance expense in Dominion's Consolidated Statement of Income. The joint venture will leverage Dominion's existing presence in the Utica region with significant additional new capacity designed to meet producer needs as the Utica Shale acreage is developed. Midstream services offered will include gathering, processing, fractionation, and NGL transportation and marketing. In addition to the assets already contributed, Dominion expects to contribute additional gathering assets, the Natrium extraction plant and related NGL pipeline, and a DTI pipeline connecting East Ohio's gathering system to Natrium.

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)
2012
Marketable equity securities:
U.S.:
Large Cap	$	481	$	298	$	—			$	779
Other	20		7		—				27
Marketable debt securities:
Corporate debt instruments	179		17		—				196
U.S. Treasury securities and agency debentures	231		4		(1		)		234
State and municipal	106		11		—				117
Other	1		—		—				1
Cost method investments	117		—		—				117
Cash equivalents and other⁽²⁾	44		—		—				44
Total	$	1,179	$	337	$	(1	)	⁽³⁾	$	1,515
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


(1)	Included in AOCI and the decommissioning trust regulatory liability as discussed in Note 2.


(2)	Includes pending sales of securities of $6 million and pending purchases of securities of $13 million at December 31, 2012 and 2011, respectively.


(3)	The fair value of securities in an unrealized loss position was $104 million and $99 million at December 31, 2012 and 2011, respectively.

The fair value of Virginia Power's debt securities at December 31, 2012, by contractual maturity is as follows:



	Amount
(millions)
Due in one year or less	$	18
Due after one year through five years	156
Due after five years through ten years	217
Due after ten years	157
Total	$	548

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



Year Ended December 31,	2012		2011		2010
(millions)
Proceeds from sales	$	626	$	1,030	$	1,192
Realized gains⁽¹⁾	42		34		52
Realized losses⁽¹⁾	11		34		23


(1)	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,	2012			2011			2010
(millions)
Total other-than-temporary impairment losses⁽¹⁾	$	11		$	29		$	25
Losses recorded to decommissioning trust regulatory liability	(10		)	(24		)	(21		)
Losses recorded in other comprehensive income (before taxes)	—			(1		)	(1		)
Net impairment losses recognized in earnings	$	1		$	4		$	3


(1)	Amounts include other-than-temporary impairment losses for debt securities of $2 million, $4 million and $6 million at December 31, 2012, 2011 and 2010, 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, 2012 and 2011, Dominion had $37 million and $147 million, respectively, and Virginia Power had $10 million and $32 million, respectively, of restricted cash and cash equivalents. These balances are presented in Other Current Assets and Investments in the Consolidated Balance Sheets.