Regulatory Matters	12 Months Ended
Dec. 31, 2012
Regulatory Matters [Abstract]
Regulatory Matters	REGULATORY MATTERS Regulatory Matters Involving Potential Loss Contingencies As a result of issues generated in the ordinary course of business, Dominion and Virginia Power are involved in various regulatory matters. Certain regulatory matters may ultimately result in a loss; however, such matters are in an initial procedural phase, involve uncertainty as to the outcome of pending reviews or orders, or involve significant factual issues that need to be resolved, such that it is not possible for the Companies to estimate a range of possible loss. For such matters that the Companies cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the regulatory process such that the Companies are able to estimate a range of possible loss. For regulatory matters for which the Companies are able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. This estimated range is based on currently available information and involves elements of judgment and significant uncertainties. This estimated range of possible loss does not represent the Companies' maximum possible loss exposure. The circumstances of such regulatory matters will change from time to time and actual results may vary significantly from the current estimate. For current matters not specifically reported below, management does not anticipate that the outcome from such matters would have a material effect on Dominion's or Virginia Power's financial position, liquidity or results of operations. The following is a discussion of Dominion's and Virginia Power's material pending and recent regulatory matters. FERC - Electric Under the Federal Power Act, FERC regulates wholesale sales and transmission of electricity in interstate commerce by public utilities. Virginia Power purchases and sells electricity in the PJM wholesale market and Dominion's merchant generators sell electricity in the PJM, MISO and ISO-NE wholesale markets under Dominion's market-based sales tariffs authorized by FERC. In addition, Virginia Power has FERC approval of a tariff to sell wholesale power at capped rates based on its embedded cost of generation. This cost-based sales tariff could be used to sell to loads within or outside Virginia Power's service territory. Any such sales would be voluntary. Rates In April 2008, FERC granted an application for Virginia Power's electric transmission operations to establish a forward-looking formula rate mechanism that updates transmission rates on an annual basis and approved an ROE of 11.4%, effective as of January 1, 2008. The formula rate is designed to recover the expected revenue requirement for each calendar year and is updated based on actual costs. The FERC-approved formula method, which is based on projected costs, allows Virginia Power to earn a current return on its growing investment in electric transmission infrastructure. In July 2008, Virginia Power filed an application with FERC requesting a revision to its revenue requirement to reflect an additional ROE incentive adder for eleven electric transmission enhancement projects. Under the proposal, the cost of transmission service would increase to include an ROE incentive adder for each of the eleven projects, beginning the date each project enters commercial operation (but not before January 1, 2009). Virginia Power proposed an incentive of 1.5% for four of the projects (including the Meadow Brook-to-Loudoun and Carson-to-Suffolk lines, which were completed in 2011) and an incentive of 1.25% for the other seven projects. In August 2008, FERC approved the proposal, effective September 1, 2008, the incentives were included in the PJM Tariff, and billing for the incentives was made accordingly. In 2012, PJM canceled one of the eleven projects with an estimated cost of $7 million. The total cost for the other ten projects included in Virginia Power's formula rate for 2013 is $852 million and the remaining projects were completed in 2012. Numerous parties sought rehearing of the FERC order in August 2008, and in May 2012 FERC denied rehearing. In July 2012, the North Carolina Commission filed an appeal of the FERC orders granting the incentives with the Fourth Circuit Court of Appeals. Although Virginia Power cannot predict the outcome of the appeal, it is not expected to have a material effect on results of operations. In March 2010, ODEC and NCEMC filed a complaint with FERC against Virginia Power claiming that approximately $223 million in transmission costs related to specific projects were unjust, unreasonable and unduly discriminatory or preferential and should be excluded from Virginia Power's transmission formula rate. ODEC and NCEMC requested that FERC establish procedures to determine the amount of costs for each applicable project that should be excluded from Virginia Power's rates. In October 2010, FERC issued an order dismissing the complaint in part and established hearings and settlement procedures on the remaining part of the complaint. In February 2012, Virginia Power submitted to FERC a settlement agreement to resolve all issues set for hearing. All transmission customer parties to the proceeding joined the settlement. The Virginia Commission, North Carolina Commission and Public Staff of the North Carolina Commission, while not parties to the settlement, have agreed to not oppose the settlement. The settlement was accepted by FERC in May 2012 and provides for payment by Virginia Power to the transmission customer parties collectively of $250,000 per year for ten years and resolves all matters other than allocation of the incremental cost of certain underground transmission facilities, which has been briefed pursuant to FERC's May 2012 order and awaits FERC action. While Virginia Power cannot predict the outcome of the briefing, it is not expected to have a material effect on results of operations. PJM In November 2011, PJM issued a formal notification that it would recalculate certain ancillary service revenues that had previously been paid during 2009, 2010 and 2011. Also in November 2011, PJM requested FERC permission to suspend its rebilling and repayment obligations associated with the recalculation of such revenues and petitioned FERC to establish a proceeding to determine the appropriate recalculations for the revenues during this period. In December 2011, FERC permitted the suspension of rebilling and repayment by PJM, subject to the outcome of FERC's proceedings to determine the appropriate revenue recalculation. In April 2012, FERC issued an Order Establishing Hearing and Settlement Judge Procedures to address the appropriate recalculation of the ancillary service credits PJM will be required to collect from Virginia Power. In August 2012, PJM filed a settlement on behalf of itself, Virginia Power and the PJM Market Monitor. In November 2012, FERC approved the settlement resolving all issues in the proceeding. As of September 30, 2012, Virginia Power had accrued a liability of $33 million, and in January 2013, Virginia Power paid PJM approximately $33 million, resolving the matter. Other Regulatory Matters Electric Regulation in Virginia The enactment of the Regulation Act in 2007 significantly changed electric service regulation in Virginia by instituting a modified cost-of-service rate model. With respect to most classes of customers, the Regulation Act ended Virginia's planned transition to retail competition for its electric supply service. The Regulation Act authorizes stand-alone rate adjustment clauses for recovery of costs for new generation projects, FERC-approved transmission costs, environmental compliance, conservation and energy efficiency programs and renewable energy programs. It provides for enhanced returns on capital expenditures on specific new generation projects, including but not limited to combined cycle gas generation, nuclear generation, clean coal/carbon capture compatible generation, and renewable generation projects. The Regulation Act also continues statutory provisions directing Virginia Power to file annual fuel cost recovery cases with the Virginia Commission. Legislation was enacted in February 2013 that amends the Regulation Act prospectively. See Future Issues and Other Matters in Item 7. MD&A for a discussion of this legislation. If the Virginia Commission's future rate decisions, including actions relating to Virginia Power's rate adjustment clause filings, differ materially from Virginia Power's expectations, it may adversely affect its results of operations, financial condition and cash flows. 2011 Biennial Review Pursuant to the Regulation Act and the Virginia Settlement Approval Order, in March 2011, Virginia Power submitted its base rate filing and accompanying schedules in support of the first biennial review of its base rates, terms and conditions, as well as of its earnings for the 2009 and 2010 test period. The biennial review included a determination of whether Virginia Power's earnings for the 2009 and 2010 combined test years were within 50 basis points of the authorized ROE of 11.9% established in the Virginia Settlement Approval Order, as well as authorization of an ROE which will be applicable to base rates and rate adjustment clauses and which will be used to measure base rate earnings during the 2013 biennial review proceeding. As a result of the Virginia Settlement Approval Order and the Regulation Act, Virginia Power's base rates are not subject to change based on the 2011 biennial review. In November 2011, the Virginia Commission issued the Biennial Review Order. In the Biennial Review Order, the Virginia Commission declined to award a performance incentive for generating plant performance, customer service or operating efficiency in connection with the 2009-2010 biennial review. Instead, in March 2012, the Virginia Commission issued an order initiating a rulemaking proceeding to develop specific performance metrics and nationally recognized standards for determining positive or negative performance incentives for electric utilities. Such incentive criteria would be applied in future biennial review proceedings. In September 2012, the Virginia Commission issued an Order for Notice and Hearing in the separate rulemaking proceeding to develop specific performance standards based on nationally recognized standards for the Virginia Commission's consideration in determining positive or negative performance incentives for electric utilities. The Virginia Commission modified the proposed rules and regulations for performance incentives filed by the Staff of the Virginia Commission, allowed for further comments by November 2012 on the proposed rules and regulations as modified, and held a public hearing in November 2012. In January 2013, the Virginia Commission issued its order adopting revised Performance Incentive rules and regulations effective February 1, 2013. Base ROE The Virginia Commission determined that Virginia Power's new authorized ROE is 10.9%, inclusive of a performance incentive of 50 basis points for meeting certain RPS targets. As discussed below, this ROE will serve as the ROE against which Virginia Power's earned return will be compared for the test periods in the 2013 biennial review proceeding. The Virginia Commission ordered that the 50 basis point RPS performance incentive will not be included in the ROE applicable to any rate adjustment clauses. In December 2011, Virginia Power filed a petition with the Virginia Commission seeking rehearing or reconsideration of the Biennial Review Order, to confirm the effective date of the newly authorized 10.9% base ROE. Virginia Power's petition requested the Virginia Commission to confirm that the 10.9% ROE authorized in the Biennial Review Order would apply prospectively, effective following the date of the Biennial Review Order on November 30, 2011, and that Virginia Power's previously-approved 11.9% base ROE authorized in the Virginia Settlement Approval Order would be used to measure base rate earnings for the period January 1, 2011 through November 30, 2011. In March 2012, the Virginia Commission issued an order denying Virginia Power's petition seeking rehearing or reconsideration. Contrary to Virginia Power's position, the Virginia Commission ruled that the new 10.9% ROE will be used to measure earnings for the entire 2011-2012 test period in the next biennial review in 2013, which is expected to be filed in March 2013. Also in March 2012, Virginia Power filed Petitions for Appeal with the Supreme Court of Virginia regarding the Biennial Review Order and the March 2012 Order. In May 2012, the Supreme Court of Virginia granted review of Virginia Power's appeals from the Biennial Review Order and the March 2012 Order denying Virginia Power's petition seeking rehearing or reconsideration, and heard oral argument on both appeals in September 2012. In November 2012, the Supreme Court of Virginia affirmed the Biennial Review Order and the March 2012 Order denying Virginia Power's petition seeking rehearing or reconsideration. ROE Applicable to Riders C1, C2, R, and S Effective December 1, 2011, the ROE applicable to Riders C1 and C2 is 10.4%. For Riders R and S, effective December 1, 2011, the ROE is 11.4%, inclusive of a statutory enhancement of 100 basis points. Earned Return for 2009 and 2010 The Virginia Commission determined that Virginia Power earned an ROE of approximately 13.3% during the 2009 and 2010 combined test years, which exceeded the authorized ROE earnings band of 11.4% to 12.4% established in the Virginia Settlement Approval Order. Based on the determination that Virginia Power had excess earnings, the Virginia Commission ordered Virginia Power to refund 60% of earnings above the upper end of the authorized ROE earnings band, or approximately $78 million, to its customers, which was provided in the form of credits to customers' bills amortized over a six-month period during 2012. A charge for the refund was recognized in operating revenues in the 2011 Consolidated Statement of Income. The actual aggregate refund amount totaled approximately $81 million, taking into account refunds to be paid to certain non-jurisdictional customers pursuant to their customer contracts. Base Rates and Existing Riders T, C1, and C2 As a result of the Virginia Commission's determination that credits will be applied to customers' bills, the Virginia Commission, as required by the Regulation Act, directed Virginia Power to combine its existing Riders T, C1, and C2 with Virginia Power's base costs, revenues and investments, and to file revised tariffs reflecting such combination pursuant to the Biennial Review Order. These Riders will thereafter be considered part of Virginia Power's base costs, revenues and investments for purposes of future biennial review proceedings. In April 2012, the Virginia Commission held that Riders C1 and C2 are now to be combined in Virginia Power's base rates and are to be considered as part of its future biennial reviews. The Virginia Commission rejected Virginia Power's requests to identify and separately track the revenues for these existing riders in base rates, and to preserve deferral accounting for these revenues in base rates, stating that such deferral accounting ceased December 1, 2011 for existing Riders C1 and C2. In August 2012, the Virginia Commission confirmed that existing Rider T had been combined in base rates, and ruled that transmission costs would continue to be tracked separately to permit deferral accounting and dollar-for-dollar recovery of costs through Rider T and through Rider T1, a new increment/decrement rate adjustment clause to recover the difference in the revenue requirement for rate year costs and the revenues collected under Rider T. Earnings Test Adjustments The Virginia Commission ruled on numerous contested proposals to adjust Virginia Power's earnings for the 2009 and 2010 combined test periods. Among other adjustments, the Virginia Commission approved Virginia Power's ratemaking treatment of fuel inventories held by its wholly-owned subsidiaries. As a result of this finding, Virginia Power included in rate base approximately $188 million in fuel inventory costs for 2010. The Virginia Commission also adopted Virginia Power's treatment that includes, for regulatory earnings purposes, its AIP and LTIP expenses up to a 100% payout ratio. The Virginia Commission excluded from expense approximately $21 million in incentive plan costs that exceeded a payout ratio of 100%, allowing a net recovery of approximately $95 million of incentive compensation expense for the biennial review period. The Virginia Commission denied Virginia Power's ratemaking treatment that expensed the entire cost of its 2010 voluntary separation plan in 2010, ruling instead to amortize the cost through the end of 2011. This matched the costs of the plan with the period of realization of savings, which reduced 2010 operating costs (and in turn, increased 2011 operating costs) by approximately $103 million for purposes of the earnings test. Other than influencing the amount earned above the authorized ROE earnings band, the earnings test adjustments above did not have an impact to the Consolidated Financial Statements. In addition, the Virginia Commission required Virginia Power to recognize a gain, for purposes of the earnings test, of approximately $44 million on the settlement of certain interest rate hedging contracts in 2010, as opposed to amortizing the gains over the forecasted term of planned debt instruments that were not issued. Virginia Power determined that it was no longer probable that these derivative gains would be included in future base rates as the Virginia Commission would not allow the amortization of these amounts in future periods. As a result, Virginia Power removed approximately $50 million in December 2011 from regulatory liabilities and recognized the deferred derivative settlement gains in interest and related charges in the Consolidated Statements of Income. Virginia Fuel Expenses In May 2012, Virginia Power submitted its annual fuel factor filing to the Virginia Commission, proposing a decrease of approximately $389 million in fuel revenue for the rate year beginning July 1, 2012. In September 2012, after a public hearing, the Virginia Commission issued an order approving Virginia Power's filing. Generation Riders R and S In connection with the Bear Garden and Virginia City Hybrid Energy Center projects, in March 2011, the Virginia Commission approved annual updates for Riders R and S with revenue requirements of $78 million and $199 million, respectively, for the April 1, 2011 to March 31, 2012 rate year, utilizing the 12.3% placeholder ROE (inclusive of a 100 basis point statutory enhancement) pending the Virginia Commission's ROE determination in the 2011 biennial review. In March 2012, the Virginia Commission approved annual updates for Riders R and S for the April 1, 2012 to March 31, 2013 rate year, utilizing an 11.4% ROE (inclusive of a 100 basis point statutory enhancement) consistent with the base ROE authorized in the Biennial Review Order. The Virginia Commission's approvals authorized an approximately $74 million revenue requirement for Rider R, and an approximately $226 million revenue requirement for Rider S, comprised of approximately $52 million for the pre-commercial operation period and approximately $174 million for the commercial operation period. In June 2012, Virginia Power requested Virginia Commission approval of its annual updates for Riders R and S for the next two consecutive rate years, utilizing an 11.4% ROE (inclusive of a 100 basis point statutory enhancement) consistent with the base ROE authorized in the Biennial Review Order and subject to true-up based on changes in the authorized ROE in future biennial review proceedings. For Rider R, Virginia Power proposed an approximately $81 million revenue requirement for the rate year beginning April 1, 2013 and an approximately $75 million revenue requirement for the rate year beginning April 1, 2014. For Rider S, an approximately $249 million revenue requirement was proposed for the rate year beginning April 1, 2013 and an approximately $229 million revenue requirement was proposed for the rate year beginning April 1, 2014. Virginia Power has agreed to certain adjustments supported by Virginia Commission Staff reducing the Rider R revenue requirements to approximately $78 million for the rate year beginning April 1, 2013, and approximately $72 million for the rate year beginning April 1, 2014. In February 2013, the Virginia Commission approved these cost recovery periods and amounts for Rider R, as well as a multi-year approach in which Virginia Power would file its next update filing for Rider R in 2014. In January 2013, Virginia Power filed a proposed stipulation agreement reached with the Virginia Commission Staff supporting a revised revenue requirement for Rider S of approximately $248 million for the rate year beginning April 1, 2013. Virginia Power and the Staff of the Virginia Commission also agreed that Virginia Power would file a Rider S case in 2013 instead of a multi-year approach. The Rider S update proceeding is pending. Construction of the Virginia City Hybrid Energy Center was completed and the facility commenced commercial operations in July 2012. DSM Riders C1A and C2A In April 2012, the Virginia Commission approved a revenue requirement of $5 million for Rider C1A and $17 million for Rider C2A. This approval incorporated four new energy efficiency DSM programs as a bundle for residential customers for a five-year period starting June 1, 2012, subject to a total $90 million cost cap. The Virginia Commission also approved two new energy efficiency DSM programs as a bundle for commercial customers for the same five-year period, subject to a total $45 million cost cap, as well as a new peak-shaving DSM program for commercial customers for the same five-year period, subject to an approximately $14 million cost cap. In August 2012, Virginia Power requested extension of two DSM programs (the Residential Air Conditioner Cycling Program and the Residential Low Income Program) by five years and two years, respectively, beyond their current April 30, 2013 termination date, as well as approval of a process whereby the Staff could administratively approve limited modifications to the designs of previously approved DSM programs. Virginia Power's proposed revenue requirements for Riders C1A and C2A for the May 1, 2013 to April 30, 2014 rate year are $4 million and $23 million, respectively. This case is pending. Transmission Riders T and T1 In May 2011, Virginia Power filed its annual update to Rider T with the Virginia Commission. The proposed $481 million annual revenue requirement, effective September 1, 2011, represented an increase of approximately $144 million over the revenue requirement associated with the Rider T customer rates previously in effect. In July 2011, the Virginia Commission issued an order approving a revenue requirement of $466 million for the September 1, 2011 to August 31, 2012 rate year. As discussed above, previously implemented Rider T will be considered part of Virginia Power's base costs, revenues and investments for purposes of future biennial review proceedings. The Virginia Commission has initiated a proceeding to address further implementation of this directive. In May 2012, Virginia Power filed Rider T1 with the Virginia Commission to recover costs of transmission service and demand response programs for the September 1, 2012 to August 31, 2013 rate year. The proposed Rider T1 reduction of approximately $100 million produces a total annual revenue requirement of approximately $373 million when netted with the revenue requirement of approximately $473 million associated with the Rider T customer rates currently in effect, and now combined in Virginia Power's base rates. Virginia Power's filing stated that Rider T costs combined in base rates should be identified and separately tracked, with the continuation of deferral accounting and dollar-for-dollar recovery for these costs. Virginia Power's proposed revenue requirement was supported by the Staff of the Virginia Commission, although the Staff concurrently proposed an alternative methodology for the Rider T1 revenue requirement which would represent an increase of approximately $18 million from the current Rider T customer rates. The Staff's alternative methodology would have precluded deferral accounting and dollar-for-dollar recovery for Rider T in future periods. In August 2012, the Virginia Commission approved Virginia Power's proposed Rider T1 to recover costs of transmission service and demand response programs for the September 1, 2012 to August 31, 2013 rate year, ordering a Rider T1 reduction of approximately $100 million versus the Rider T customer rates currently in effect, and now combined in Virginia Power's base rates. The Virginia Commission agreed with the approach recommended by Virginia Power and supported by the Staff of the Virginia Commission in this case. Rider T, which is now combined in base rates, along with Rider T1, and is being tracked separately to permit deferral accounting and dollar-for-dollar recovery. Generation Rider W In May 2011, Virginia Power requested approval from the Virginia Commission to construct and operate Warren County, as well as approval of Rider W. In February 2012, the Virginia Commission approved Certificates of Public Convenience and Necessity for Warren County and related transmission facilities. The Virginia Commission also approved a revenue requirement of $34 million for the April 1, 2012 to March 31, 2013 rate year, reflecting an ROE of 11.4%, inclusive of a statutory enhancement of 100 basis points for Rider W, consistent with the Biennial Review Order. In addition, the Virginia Commission approved an ROE enhancement of 100 basis points for Rider W for a period of 10 years following commercial operations. The facility is expected to start commercial operations in late 2014. In June 2012, Virginia Power requested Virginia Commission approval of its annual update for Rider W for the April 1, 2013 to March 31, 2014 rate year. Virginia Power proposed an approximately $86 million revenue requirement, utilizing an 11.4% ROE (inclusive of a 100 basis point statutory enhancement) also consistent with the base ROE authorized in the Biennial Review Order. In December, 2012, Virginia Power filed a proposed partial stipulation agreement reached with the Virginia Commission Staff supporting a revised revenue requirement for Rider W of approximately $83 million for the rate year commencing April 1, 2013. In February 2013, the Virginia Commission approved this revised revenue requirement. Generation Rider B In June 2011, Virginia Power filed applications with the Virginia Commission seeking regulatory approval to convert three of its coal-fired power stations to biomass. The applications included a request for approval of Rider B. To qualify for federal production tax credits associated with renewable energy generation, the power stations must commence operation as biomass generation facilities by December 31, 2013. Virginia Power requested Virginia Commission approval of the biomass conversions on a schedule that will enable qualification for these tax credits. In March 2012, the Virginia Commission approved the conversion of the Altavista, Hopewell, and Southampton power stations to biomass. These conversions will increase Dominion's renewable generation by more than 150 MW and are expected to be completed by the end of 2013. As part of its approval, the Virginia Commission also approved Rider B. The approved revenue requirement for Rider B is approximately $6 million for the April 1, 2012 to March 31, 2013 rate year, utilizing a 12.4% ROE (inclusive of a 200 basis point statutory enhancement) consistent with the base ROE authorized in the Biennial Review Order. The renewable generating unit statutory enhancement of 200 basis points will apply during construction and the first five years of the service lives of the converted facilities. In June 2012, Virginia Power requested Virginia Commission approval of its annual update for Rider B for the April 1, 2013 to March 31, 2014 rate year. Virginia Power proposed an approximately $12 million revenue requirement, utilizing a 12.4% ROE (inclusive of a 200 basis point statutory enhancement) consistent with the base ROE authorized in the Biennial Review Order. In January 2013, Virginia Power filed a proposed stipulation agreement reached with the Virginia Commission Staff supporting approval of a revenue requirement for the pre-commercial operations date period and the post-commercial operations date period, resulting in an average recovery amount of approximately $12 million for the rate year commencing April 1, 2013. This case is pending. Brunswick County Power Station and Generation Rider BW In November 2012, Virginia Power requested approval from the Virginia Commission to construct and operate Brunswick County. The application included a request for approval of associated transmission facilities and Rider BW. Virginia Power's proposed revenue requirement for Rider BW is approximately $45 million for the September 1, 2013 to August 31, 2014 rate year, reflecting an ROE of 11.4%, inclusive of a statutory enhancement of 100 basis points for Rider BW, consistent with the Biennial Review Order. Virginia Power requested an ROE enhancement of 100 basis points for Rider BW for a period of 15 years following commercial operations. The facility is expected to begin commercial operations in spring 2016. This case is pending. Bremo Power Station In August 2012, Virginia Power requested approval from the Virginia Commission of an amended and reissued Certificate of Public Convenience and Necessity that would allow Virginia Power to convert Bremo Units 3 and 4 from coal to natural gas as their fuel source. The proposed conversion would preserve 227 MW (net) of existing capacity and is expected to be complete in 2014. Cost recovery would occur through base rates, and not through a rate adjustment clause. This case is pending. Solar Distributed Generation Demonstration Program In October 2011, Virginia Power filed with the Virginia Commission an application to conduct a solar distributed generation demonstration program, consisting of up to a combined 30 MW of Company-owned solar distributed generation facilities to be located at selected commercial, industrial and community locations throughout its Virginia service territory. Virginia Power proposed to construct and operate the Company-owned facilities in two phases, with Phase I (up to 10 MW) from the date of approval through the end of 2013 and Phase II (up to 20 MW) from the beginning of 2014 to the end of 2015. Virginia Power did not seek a rate adjustment clause for Phase I facilities with this filing; Phase I costs will be recovered as part of base rates in a future biennial review. Virginia Power indicated that it may seek a rate adjustment clause at a future time for Phase II costs. In November 2012, the Virginia Commission approved the voluntary solar distributed generation demonstration program for Company-owned solar distributed generation facilities subject to a total cost cap of $80 million (including capital, financing, and operation and maintenance costs) which can be increased subject to future application based upon program experience, results, and data. In May 2012, Virginia Power filed with the Virginia Commission a petition to implement a special tariff for a combined 3 MW of customer-owned solar distributed generation facilities. Under the proposed tariff, Rate Schedule SP, Virginia Power would purchase 100% of the energy output from these facilities, including all environmental attributes and associated renewable energy credits, at a fixed price of $0.15 per kWh for five years. As proposed, the costs of the purchases under Rate Schedule SP would not be recovered from all customers. Following comments, the Virginia Commission issued an order in November 2012 setting this matter for public hearing in February 2013. This case is pending. Electric Transmission Projects Portions of the Mt. Storm-to-Doubs line and certain associated facilities are approaching the end of their expected service lives and require replacement with new facilities to maintain reliable service. Virginia Power owns, and has been designated by PJM to rebuild, 96 miles of the line in West Virginia and Virginia, and The Potomac Edison Company owns, and has been designated by PJM to rebuild, the remaining three miles of the line in Maryland. In September 2011, the Virginia Commission approved Virginia Power's application to rebuild its portion of the Mt. Storm-to-Doubs line. The approval of the West Virginia Commission was not required. Subject to applicable state and federal regulatory approvals, Virginia Power's portion of the rebuild project is expected to be completed by June 2015. In June 2010, the Virginia Commission authorized the construction of the Hayes-to-Yorktown line along the proposed eight-mile route utilizing existing easements and property previously acquired for the transmission line right-of-way. The Hayes-to-Yorktown line was placed in service in December 2012. In July 2010, the Virginia Commission authorized Virginia Power to construct the Radnor Heights Project. The Virginia Commission stated that these lines and substation must be constructed and in service by June 30, 2012, and that Virginia Power could apply to extend this date for good cause shown. In October 2012, the Virginia Commission issued an order extending this construction and the in-service date to July 31, 2013. In January 2012, the Virginia Commission authorized the replacement at higher voltage of approximately 43 miles of existing transmission lines between the Dooms and Bremo substations. The Dooms-to-Bremo line is expected to be completed by May 2014. In December 2011, Virginia Power submitted an application to the Virginia Commission for approval of the Waxpool-Brambleton-BECO line. This project is required to provide requested service to a new data center campus in Loudoun County, Virginia. In December 2012, PJM authorized the Waxpool-Brambleton-BECO line as part of the 2012 RTEP and the Virginia Commission authorized construction of the line. In January 2013, a notice of appeal was filed with the Supreme Court of Virginia by a private party regarding the December 2012 Order. Subject to the receipt of applicable state and federal regulatory approvals, the Waxpool-Brambleton-BECO line is expected to be completed by November 2013. In June 2012, Virginia Power requested Virginia Commission approval of the Surry-to-Skiffes Creek-to-Whealton lines. Subject to the receipt of applicable state and federal regulatory approvals, the Surry-to-Skiffes Creek-to-Whealton lines are expected to be completed by May 2015. Virginia Power also presented for the Virginia Commission's consideration an approximately 37 mile alternate route for the 500 kV line from Virginia Power's existing Chickahominy Substation to the proposed Skiffes Creek Switching Station. In August 2012, Virginia Power requested Virginia Commission approval of the Harrisonburg-to-Endless Caverns line. In December 2012, the Virginia Commission authorized construction of the new line. Subject to the receipt of applicable state and federal regulatory approvals, the Harrisonburg-to-Endless Caverns line is expected to be completed by May 2015. In November 2012, Virginia Power submitted an application to the Virginia Commission for approval to rebuild the Dooms-to-Lexington line in Virginia. Portions of the Dooms-to-Lexington line and certain associated facilities are approaching the end of their expected service lives and require replacement with new facilities to maintain reliable service. Virginia Power owns and has been designated by PJM as part of the 2012 RTEP to rebuild the 39 mile line in Rockbridge and Augusta Counties, Virginia. Subject to applicable state and federal regulatory approvals, the rebuild project is expected to be completed by May 2016. North Anna Power Station Virginia Power is considering the construction of a third nuclear unit at a site located at North Anna. However, Virginia Power has not yet committed to building a new nuclear unit at North Anna and continues to evaluate its options regarding a new nuclear unit. If Virginia Power decides to build a new unit, it must first receive a COL from the NRC, the approval of the Virginia Commission and certain environmental permits and other approvals. Virginia Power has applied for and continues to pursue the COL from the NRC. Based on the current NRC schedule, the COL is expected no earlier than late 2015. Virginia Power also continues to pursue engineering and preliminary site development work, in addition to holding an Early Site Permit. In December 2011, Virginia Power acquired ODEC's interest in the project, thereby terminating ODEC's involvement in the development of a potential third unit at North Anna. In January 2013, the NRC approved the transfer of ODEC's interest in the Early Site Permit to Virginia Power. The NRC is required to conduct a hearing in all COL proceedings. In August 2008, the ASLB of the NRC permitted BREDL to intervene in the proceeding. In April 2011, BREDL's then last remaining contention was dismissed by the ASLB, and following a decision by the NRC in June 2012, subsequently resulted in termination of the contested portion of the proceeding. In September 2011, BREDL submitted a new proposed contention seeking to litigate issues related to the August 2011 Mineral, Virginia earthquake. In October 2011, the ASLB granted a motion filed by Virginia Power, with the consent of BREDL and the NRC staff to hold any ruling on this proposed contention in abeyance until Virginia Power completes an assessment of this earthquake. The NRC's June 2012 decision referred this new proposed contention to the ASLB to consider whether the contested portion of the proceeding should be reopened. In July 2012, the ASLB granted BREDL a period of 60 days to submit a motion to reopen the proceeding from the time Virginia Power informs the NRC and parties that its seismic assessment is complete. In addition, in June 2012, BREDL filed a petition with the NRC seeking to suspend the COL proceeding based on a June 2012 ruling of the U.S. Court of Appeals for the District of Columbia Circuit reversing and remanding a 2010 NRC rulemaking that generically assessed the environmental impacts of spent fuel storage. Virginia Power opposed the petition. In July 2012, BREDL filed a motion with the NRC to reopen the contested portion of the COL proceeding to admit a contention pertaining to the same subject. Substantially identical suspension petitions and contentions were filed by various intervenor groups in other licensing proceedings pending before the NRC. In August 2012, the NRC issued a memorandum and order applicable to all pending licensing proceedings, including the North Anna COL proceeding. The NRC indicated that final licenses would not be issued until the issues raised in the court's decision had been addressed. The NRC indicated that this determination extends only to final license issuance and that all licensing reviews and proceedings should continue to move forward. The NRC also directed that pending contentions on the topic be held in abeyance pending further NRC order. The NRC's August 2012 decision is not expected to affect the schedule for issuance of the COL. No other persons have sought to intervene in the proceeding. If a new contention is not admitted, the mandatory NRC hearing will be uncontested with respect to other issues. Virginia Power continues to pursue various environmental permits that would be needed to support future construction and operation of a third nuclear unit at North Anna. North Carolina Regulation In December 2011, the North Carolina Commission issued an order approving a settlement agreement among Virginia Power, the Public Staff of the North Carolina Commission and other interested parties in Virginia Power's fuel case for its North Carolina service territory. The settlement agreement provided for a $36 million increase in Virginia Power's fuel revenues for one year, effective January 1, 2012, including approximately $13 million in under recovery of fuel expenses for the previous fuel period. In March 2012, Virginia Power filed an application with the North Carolina Commission to increase base non-fuel revenues by approximately $64 million, with January 1, 2013 as the proposed effective date for the permanent rate revision. In August 2012, Virginia Power filed its annual fuel expense recovery application and testimony with the North Carolina Commission requesting a total annual fuel revenue decrease of approximately $27 million from the fuel and fuel-related costs currently in effect. Virginia Power's filing also sought to implement a temporary voluntary rider, Rider A1, effective November 1, 2012 to December 31, 2012, to reduce projected over-collection of fuel expense in the second half of 2012. In August 2012 and October 2012, Virginia Power filed supplemental testimony in the base rate proceeding which had the cumulative effect of updating Virginia Power's requested overall base non-fuel revenue increase to $53 million. In September 2012, the North Carolina Commission staff filed testimony recommending a non-fuel revenue increase of $24 million. In October 2012, the North Carolina Commission issued a public notice stating that Virginia Power would begin billing under its proposed rates beginning November 1, 2012 on an interim basis, subject to refund with interest. In December 2012, the North Carolina Commission approved a $36 million increase in Virginia Power's annual non-fuel base revenues, based on an authorized ROE of 10.2%, and a $14 million decrease in annual base fuel revenues for a combined total base revenue increase of $22 million. These rate changes became effective on January 1, 2013 and are being appealed to the North Carolina Supreme Court by multiple parties. In December 2012, Virginia Power established net regulatory assets of $17 million to be recovered over five to ten years in connection with these new rates. Also, in December 2012, the North Carolina Commission approved a $17 million decrease in Virginia Power's annual non-base fuel Experience Modification Factor revenues. The rate decrease is the result of the Commission's approval of the Fuel-Related Stipulation of Settlement between the Public Staff and Virginia Power. The rate change was approved by the Commission after review of Virginia Power's fuel expenses during the 12-month period ended June 30, 2012, and represents changes experienced by Virginia Power with respect to its reasonable costs of fuel and fuel component of purchased power. Ohio Regulation PIR Program In March 2011, East Ohio filed a request with the Ohio Commission to accelerate the PIR program by nearly doubling its PIR spending to more than $200 million annually. East Ohio identified 1,450 miles of pipeline that need to be replaced, in addition to the pipeline originally identified in the PIR project scope. East Ohio plans to accelerate the pace of the program by investing more resources in its infrastructure in the near term, in an effort to promote ongoing public safety and reduce operating costs over the longer term. In August 2011, the Ohio Commission approved the stipulation by East Ohio, the Staff of the Ohio Commission and other interested parties in East Ohio's accelerated PIR proceeding. The stipulation provides for an increase in annual PIR capital investment from the current level of approximately $120 million stepping up to approximately $160 million by 2013. In addition, the stipulation provides for cost recovery over a five-year period commencing upon the approval of the Ohio Commission. In February 2012, East Ohio submitted an application with the Ohio Commission to adjust the cost recovery charge for costs associated with PIR investments for the six months ended December 31, 2011. The filing was made in accordance with changes to the PIR program approved by the Ohio Commission in August 2011 and effects a transition from a fiscal year ending June 30 to a calendar year for annual filings thereafter. The application includes total gross plant investment for the six-month July 1-December 31, 2011 transition period of $73 million, cumulative gross plant investment of $362 million, and a revenue requirement of $47 million. A stipulation was submitted by East Ohio, the Staff of the Ohio Commission and the Ohio Consumers' Counsel that supports the rates filed by East Ohio. The Ohio Commission issued an order approving the stipulation in April 2012. In November 2012, East Ohio filed a notice to adjust the PIR Cost Recovery Charge for 2012 costs. East Ohio expects to file its application to adjust the PIR Recovery Charge in the first quarter of 2013. PIPP Plus Program Under the Ohio PIPP Plus program, eligible customers can receive energy assistance based on their ability to pay their bill. The difference between the customer's total bill and the PIPP plan payment amount is deferred and collected under the PIPP rider in accordance with the rules of the Ohio Commission. The PIPP Plus program sets the customer's monthly payments at 6% of household income and provides for forgiveness credits to the customer's balance when required payments are received in full by the due date. Such credits may result in the elimination of the customer's arrearage balance over 24 months. In July 2012, the Ohio Commission approved East Ohio's annual update of the PIPP Rider, which reflects the refund of an over-recovery of accumulated arrearages of approximately $70 million over the next two years and recovery of projected deferred program costs of approximately $104 million for the 12-month period from April 2012 to March 2013. UEX Rider East Ohio files an annual UEX Rider with the Ohio Commission, pursuant to which it seeks recovery of the bad debt expense of most customers not participating in the PIPP Plus Program. The UEX Rider is adjusted annually to achieve dollar-for-dollar recovery of East Ohio's actual write-offs of uncollectable amounts. In July 2012, the Ohio Commission approved East Ohio's annual update of the UEX Rider, which reflects the elimination of accumulated unrecovered bad debt expense of approximately $1 million as of March 31, 2012, and recovery of prospective bad debt expense projected to total approximately $23 million for the 12-month period from April 2012 to March 2013. House Bill 95 Ohio enacted utility reform legislation under House Bill 95, which became effective in September 2011. This law updates natural gas legislation by enabling gas companies to include more up-to-date cost levels when filing rate cases. It also allows gas companies to seek approval of capital expenditure plans under which gas companies can recognize carrying costs on associated capital investments placed in service and can defer the carrying costs plus depreciation and property tax expenses for recovery from ratepayers in the future. In December 2011, East Ohio filed an application requesting authority to implement a capital expenditure program under the new law, which, if approved, would enable East Ohio to defer as a regulatory asset carrying costs, depreciation and property tax associated with approximately $95 million in capital expenditures incurred between October 2011 and December 2012 for assets placed in service but not yet reflected in rates. The Ohio Commission approved East Ohio's application in December 2012. In December 2012, East Ohio filed an application requesting authority to implement a capital expenditure program for 2013 capital expenditures totaling $93 million, subject to the provisions approved for the initial application. This case is pending. Federal Regulation FERC - Gas FERC regulates the transportation and sale for resale of natural gas in interstate commerce under the Natural Gas Act of 1938 and the Natural Gas Policy Act of 1978, as amended. Under the Natural Gas Act, FERC has authority over rates, terms and conditions of services performed by Dominion's interstate natural gas company subsidiaries, including DTI and Cove Point. FERC also has jurisdiction over siting, construction and operation of natural gas import facilities and interstate natural gas pipeline facilities. In May 2011, Cove Point filed a general rate case for its FERC-jurisdictional services, with proposed rates to be effective July 1, 2011. In June 2011, FERC accepted a July 1, 2011 effective date for all proposed rates but two, for which the effective date was suspended from July 1 to December 1, 2011. In April 2012, Cove Point filed a stipulation and agreement among Cove Point, FERC trial staff and the other active parties in the rate case resolving all issues set for hearing by FERC and establishing the mechanism for operational purchases of LNG. In July 2012, FERC issued an order approving the stipulation and agreement, including the settlement rates that are effective April 1, 2012. The settlement was considered final in August 2012. Pursuant to the terms of the settlement, future operational purchases of LNG are not expected to affect Cove Point's net results of operations. Cove Point and settling customers will be subject to a rate moratorium through December 31, 2016. Cove Point is required to file its next rate case in 2016 with rates to be effective January 1, 2017.

REGULATORY MATTERS

Regulatory Matters Involving Potential Loss Contingencies

As a result of issues generated in the ordinary course of business, Dominion and Virginia Power are involved in various regulatory matters. Certain regulatory matters may ultimately result in a loss; however, such matters are in an initial procedural phase, involve uncertainty as to the outcome of pending reviews or orders, or involve significant factual issues that need to be resolved, such that it is not possible for the Companies to estimate a range of possible loss. For such matters that the Companies cannot estimate, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the regulatory process such that the Companies are able to estimate a range of possible loss. For regulatory matters for which the Companies are able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. This estimated range is based on currently available information and involves elements of judgment and significant uncertainties. This estimated range of possible loss does not represent the Companies' maximum possible loss exposure. The circumstances of such regulatory matters will change from time to time and actual results may vary significantly from the current estimate. For current matters not specifically reported below, management does not anticipate that the outcome from such matters would have a material effect on Dominion's or Virginia Power's financial position, liquidity or results of operations. The following is a discussion of Dominion's and Virginia Power's material pending and recent regulatory matters.

FERC - Electric

Under the Federal Power Act, FERC regulates wholesale sales and transmission of electricity in interstate commerce by public utilities. Virginia Power purchases and sells electricity in the PJM wholesale market and Dominion's merchant generators sell electricity in the PJM, MISO and ISO-NE wholesale markets under Dominion's market-based sales tariffs authorized by FERC. In addition, Virginia Power has FERC approval of a tariff to sell wholesale power at capped rates based on its embedded cost of generation. This cost-based sales tariff could be used to sell to loads within or outside Virginia Power's service territory. Any such sales would be voluntary.

Rates

In April 2008, FERC granted an application for Virginia Power's electric transmission operations to establish a forward-looking formula rate mechanism that updates transmission rates on an annual basis and approved an ROE of 11.4%, effective as of January 1, 2008. The formula rate is designed to recover the expected revenue requirement for each calendar year and is updated based on actual costs. The FERC-approved formula method, which is based on projected costs, allows Virginia Power to earn a current return on its growing investment in electric transmission infrastructure.

In July 2008, Virginia Power filed an application with FERC requesting a revision to its revenue requirement to reflect an additional ROE incentive adder for eleven electric transmission enhancement projects. Under the proposal, the cost of transmission service would increase to include an ROE incentive adder for each of the eleven projects, beginning the date each project enters commercial operation (but not before January 1, 2009). Virginia Power proposed an incentive of 1.5% for four of the projects (including the Meadow Brook-to-Loudoun and Carson-to-Suffolk lines, which were completed in 2011) and an incentive of 1.25% for the other seven projects. In August 2008, FERC approved the proposal, effective September 1, 2008, the incentives were included in the PJM Tariff, and billing for the incentives was made accordingly. In 2012, PJM canceled one of the eleven projects with an estimated cost of $7 million. The total cost for the other ten projects included in Virginia Power's formula rate for 2013 is $852 million and the remaining projects were completed in 2012. Numerous parties sought rehearing of the FERC order in August 2008, and in May 2012 FERC denied rehearing. In July 2012, the North Carolina Commission filed an appeal of the FERC orders granting the incentives with the Fourth Circuit Court of Appeals. Although Virginia Power cannot predict the outcome of the appeal, it is not expected to have a material effect on results of operations.

In March 2010, ODEC and NCEMC filed a complaint with FERC against Virginia Power claiming that approximately $223 million in transmission costs related to specific projects were unjust, unreasonable and unduly discriminatory or preferential and should be excluded from Virginia Power's transmission formula rate. ODEC and NCEMC requested that FERC establish procedures to determine the amount of costs for each applicable project that should be excluded from Virginia Power's rates. In October 2010, FERC issued an order dismissing the complaint in part and established hearings and settlement procedures on the remaining part of the complaint. In February 2012, Virginia Power submitted to FERC a settlement agreement to resolve all issues set for hearing. All transmission customer parties to the proceeding joined the settlement. The Virginia Commission, North Carolina Commission and Public Staff of the North Carolina Commission, while not parties to the settlement, have agreed to not oppose the settlement. The settlement was accepted by FERC in May 2012 and provides for payment by Virginia Power to the transmission customer parties collectively of $250,000 per year for ten years and resolves all matters other than allocation of the incremental cost of certain underground transmission facilities, which has been briefed pursuant to FERC's May 2012 order and awaits FERC action. While Virginia Power cannot predict the outcome of the briefing, it is not expected to have a material effect on results of operations.

PJM

In November 2011, PJM issued a formal notification that it would recalculate certain ancillary service revenues that had previously been paid during 2009, 2010 and 2011. Also in November 2011, PJM requested FERC permission to suspend its rebilling and repayment obligations associated with the recalculation of such revenues and petitioned FERC to establish a proceeding to determine the appropriate recalculations for the revenues during this period. In December 2011, FERC permitted the suspension of rebilling and repayment by PJM, subject to the outcome of FERC's proceedings to determine the appropriate revenue recalculation. In April 2012, FERC issued an Order Establishing Hearing and Settlement Judge Procedures to address the appropriate recalculation of the ancillary service credits PJM will be required to collect from Virginia Power. In August 2012, PJM filed a settlement on behalf of itself, Virginia Power and the PJM Market Monitor. In November 2012, FERC approved the settlement resolving all issues in the proceeding. As of September 30, 2012, Virginia Power had accrued a liability of $33 million, and in January 2013, Virginia Power paid PJM approximately $33 million, resolving the matter.

Other Regulatory Matters

Electric Regulation in Virginia

The enactment of the Regulation Act in 2007 significantly changed electric service regulation in Virginia by instituting a modified cost-of-service rate model. With respect to most classes of customers, the Regulation Act ended Virginia's planned transition to retail competition for its electric supply service.

The Regulation Act authorizes stand-alone rate adjustment clauses for recovery of costs for new generation projects, FERC-approved transmission costs, environmental compliance, conservation and energy efficiency programs and renewable energy programs. It provides for enhanced returns on capital expenditures on specific new generation projects, including but not limited to combined cycle gas generation, nuclear generation, clean coal/carbon capture compatible generation, and renewable generation projects. The Regulation Act also continues statutory provisions directing Virginia Power to file annual fuel cost recovery cases with the Virginia Commission. Legislation was enacted in February 2013 that amends the Regulation Act prospectively. See Future Issues and Other Matters in Item 7. MD&A for a discussion of this legislation.

If the Virginia Commission's future rate decisions, including actions relating to Virginia Power's rate adjustment clause filings, differ materially from Virginia Power's expectations, it may adversely affect its results of operations, financial condition and cash flows.

2011 Biennial Review

Pursuant to the Regulation Act and the Virginia Settlement Approval Order, in March 2011, Virginia Power submitted its base rate filing and accompanying schedules in support of the first biennial review of its base rates, terms and conditions, as well as of its earnings for the 2009 and 2010 test period. The biennial review included a determination of whether Virginia Power's

earnings for the 2009 and 2010 combined test years were within 50 basis points of the authorized ROE of 11.9% established in the Virginia Settlement Approval Order, as well as authorization of an ROE which will be applicable to base rates and rate adjustment clauses and which will be used to measure base rate earnings during the 2013 biennial review proceeding. As a result of the Virginia Settlement Approval Order and the Regulation Act, Virginia Power's base rates are not subject to change based on the 2011 biennial review. In November 2011, the Virginia Commission issued the Biennial Review Order.

In the Biennial Review Order, the Virginia Commission declined to award a performance incentive for generating plant performance, customer service or operating efficiency in connection with the 2009-2010 biennial review. Instead, in March 2012, the Virginia Commission issued an order initiating a rulemaking proceeding to develop specific performance metrics and nationally recognized standards for determining positive or negative performance incentives for electric utilities. Such incentive criteria would be applied in future biennial review proceedings.

In September 2012, the Virginia Commission issued an Order for Notice and Hearing in the separate rulemaking proceeding to develop specific performance standards based on nationally recognized standards for the Virginia Commission's consideration in determining positive or negative performance incentives for electric utilities. The Virginia Commission modified the proposed rules and regulations for performance incentives filed by the Staff of the Virginia Commission, allowed for further comments by November 2012 on the proposed rules and regulations as modified, and held a public hearing in November 2012. In January 2013, the Virginia Commission issued its order adopting revised Performance Incentive rules and regulations effective February 1, 2013.

Base ROE

The Virginia Commission determined that Virginia Power's new authorized ROE is 10.9%, inclusive of a performance incentive of 50 basis points for meeting certain RPS targets. As discussed below, this ROE will serve as the ROE against which Virginia Power's earned return will be compared for the test periods in the 2013 biennial review proceeding. The Virginia Commission ordered that the 50 basis point RPS performance incentive will not be included in the ROE applicable to any rate adjustment clauses.

In December 2011, Virginia Power filed a petition with the Virginia Commission seeking rehearing or reconsideration of the Biennial Review Order, to confirm the effective date of the newly authorized 10.9% base ROE. Virginia Power's petition requested the Virginia Commission to confirm that the 10.9% ROE authorized in the Biennial Review Order would apply prospectively, effective following the date of the Biennial Review Order on November 30, 2011, and that Virginia Power's previously-approved 11.9% base ROE authorized in the Virginia Settlement Approval Order would be used to measure base rate earnings for the period January 1, 2011 through November 30, 2011. In March 2012, the Virginia Commission issued an order denying Virginia Power's petition seeking rehearing or reconsideration. Contrary to Virginia Power's position, the Virginia Commission ruled that the new 10.9% ROE will be used to measure earnings for the entire 2011-2012 test period in the next biennial review in 2013, which is expected to be filed in March 2013.

Also in March 2012, Virginia Power filed Petitions for Appeal with the Supreme Court of Virginia regarding the Biennial Review Order and the March 2012 Order. In May 2012, the Supreme Court of Virginia granted review of Virginia Power's appeals from the Biennial Review Order and the March 2012 Order denying Virginia Power's petition seeking rehearing or reconsideration, and heard oral argument on both appeals in September 2012. In November 2012, the Supreme Court of Virginia affirmed the Biennial Review Order and the March 2012 Order denying Virginia Power's petition seeking rehearing or reconsideration.

ROE Applicable to Riders C1, C2, R, and S

Effective December 1, 2011, the ROE applicable to Riders C1 and C2 is 10.4%. For Riders R and S, effective December 1, 2011, the ROE is 11.4%, inclusive of a statutory enhancement of 100 basis points.

Earned Return for 2009 and 2010

The Virginia Commission determined that Virginia Power earned an ROE of approximately 13.3% during the 2009 and 2010 combined test years, which exceeded the authorized ROE earnings band of 11.4% to 12.4% established in the Virginia Settlement Approval Order. Based on the determination that Virginia Power had excess earnings, the Virginia Commission ordered Virginia Power to refund 60% of earnings above the upper end of the authorized ROE earnings band, or approximately $78 million, to its customers, which was provided in the form of credits to customers' bills amortized over a six-month period during 2012. A charge for the refund was recognized in operating revenues in the 2011 Consolidated Statement of Income. The actual aggregate refund amount totaled approximately $81 million, taking into account refunds to be paid to certain non-jurisdictional customers pursuant to their customer contracts.

Base Rates and Existing Riders T, C1, and C2

As a result of the Virginia Commission's determination that credits will be applied to customers' bills, the Virginia Commission, as required by the Regulation Act, directed Virginia Power to combine its existing Riders T, C1, and C2 with Virginia Power's base costs, revenues and investments, and to file revised tariffs reflecting such combination pursuant to the Biennial Review Order. These Riders will thereafter be considered part of Virginia Power's base costs, revenues and investments for purposes of future biennial review proceedings.

In April 2012, the Virginia Commission held that Riders C1 and C2 are now to be combined in Virginia Power's base rates and are to be considered as part of its future biennial reviews. The Virginia Commission rejected Virginia Power's requests to identify and separately track the revenues for these existing riders in base rates, and to preserve deferral accounting for these revenues in base rates, stating that such deferral accounting ceased December 1, 2011 for existing Riders C1 and C2.

In August 2012, the Virginia Commission confirmed that existing Rider T had been combined in base rates, and ruled that transmission costs would continue to be tracked separately to permit deferral accounting and dollar-for-dollar recovery of costs through Rider T and through Rider T1, a new increment/decrement rate adjustment clause to recover the difference in the revenue requirement for rate year costs and the revenues collected under Rider T.

Earnings Test Adjustments

The Virginia Commission ruled on numerous contested proposals to adjust Virginia Power's earnings for the 2009 and 2010 combined test periods. Among other adjustments, the Virginia Commission approved Virginia Power's ratemaking treatment of fuel inventories held by its wholly-owned subsidiaries. As a result of this finding, Virginia Power included in rate base approximately $188 million in fuel inventory costs for 2010. The Virginia Commission also adopted Virginia Power's treatment that includes, for regulatory earnings purposes, its AIP and LTIP expenses up to a 100% payout ratio. The Virginia Commission excluded from expense approximately $21 million in incentive plan costs that exceeded a payout ratio of 100%, allowing a net recovery of approximately $95 million of incentive compensation expense for the biennial review period. The Virginia Commission denied Virginia Power's ratemaking treatment that expensed the entire cost of its 2010 voluntary separation plan in 2010, ruling instead to amortize the cost through the end of 2011. This matched the costs of the plan with the period of realization of savings, which reduced 2010 operating costs (and in turn, increased 2011 operating costs) by approximately $103 million for purposes of the earnings test. Other than influencing the amount earned above the authorized ROE earnings band, the earnings test adjustments above did not have an impact to the Consolidated Financial Statements.

In addition, the Virginia Commission required Virginia Power to recognize a gain, for purposes of the earnings test, of approximately $44 million on the settlement of certain interest rate hedging contracts in 2010, as opposed to amortizing the gains over the forecasted term of planned debt instruments that were not issued. Virginia Power determined that it was no longer probable that these derivative gains would be included in future base rates as the Virginia Commission would not allow the amortization of these amounts in future periods. As a result, Virginia Power removed approximately $50 million in December 2011 from regulatory liabilities and recognized the deferred derivative settlement gains in interest and related charges in the Consolidated Statements of Income.

Virginia Fuel Expenses

In May 2012, Virginia Power submitted its annual fuel factor filing to the Virginia Commission, proposing a decrease of approximately $389 million in fuel revenue for the rate year beginning July 1, 2012. In September 2012, after a public hearing, the Virginia Commission issued an order approving Virginia Power's filing.

Generation Riders R and S

In connection with the Bear Garden and Virginia City Hybrid Energy Center projects, in March 2011, the Virginia Commission approved annual updates for Riders R and S with revenue requirements of $78 million and $199 million, respectively, for the April 1, 2011 to March 31, 2012 rate year, utilizing the 12.3% placeholder ROE (inclusive of a 100 basis point statutory enhancement) pending the Virginia Commission's ROE determination in the 2011 biennial review.

In March 2012, the Virginia Commission approved annual updates for Riders R and S for the April 1, 2012 to March 31, 2013 rate year, utilizing an 11.4% ROE (inclusive of a 100 basis point statutory enhancement) consistent with the base ROE authorized in the Biennial Review Order. The Virginia Commission's approvals authorized an approximately $74 million revenue requirement for Rider R, and an approximately $226 million revenue requirement for Rider S, comprised of approximately $52 million for the pre-commercial operation period and approximately $174 million for the commercial operation period.

In June 2012, Virginia Power requested Virginia Commission approval of its annual updates for Riders R and S for the next two consecutive rate years, utilizing an 11.4% ROE (inclusive of a 100 basis point statutory enhancement) consistent with the base ROE authorized in the Biennial Review Order and subject to true-up based on changes in the authorized ROE in future biennial review proceedings. For Rider R, Virginia Power proposed an approximately $81 million revenue requirement for the rate year beginning April 1, 2013 and an approximately $75 million revenue requirement for the rate year beginning April 1, 2014. For Rider S, an approximately $249 million revenue requirement was proposed for the rate year beginning April 1, 2013 and an approximately $229 million revenue requirement was proposed for the rate year beginning April 1, 2014. Virginia Power has agreed to certain adjustments supported by Virginia Commission Staff reducing the Rider R revenue requirements to approximately $78 million for the rate year beginning April 1, 2013, and approximately $72 million for the rate year beginning April 1, 2014. In February 2013, the Virginia Commission approved these cost recovery periods and amounts for Rider R, as well as a multi-year approach in which Virginia Power would file its next update filing for Rider R in 2014. In January 2013, Virginia Power filed a proposed stipulation agreement reached with the Virginia Commission Staff supporting a revised revenue requirement for Rider S of approximately $248 million for the rate year beginning April 1, 2013. Virginia Power and the Staff of the Virginia Commission also agreed that Virginia Power would file a Rider S case in 2013 instead of a multi-year approach. The Rider S update proceeding is pending. Construction of the Virginia City Hybrid Energy Center was completed and the facility commenced commercial operations in July 2012.

DSM Riders C1A and C2A

In April 2012, the Virginia Commission approved a revenue requirement of $5 million for Rider C1A and $17 million for Rider C2A. This approval incorporated four new energy efficiency DSM programs as a bundle for residential customers for a five-year period starting June 1, 2012, subject to a total $90 million cost cap. The Virginia Commission also approved two new energy efficiency DSM programs as a bundle for commercial customers for the same five-year period, subject to a total $45 million cost cap, as well as a new peak-shaving DSM program for commercial customers for the same five-year period, subject to an approximately $14 million cost cap.

In August 2012, Virginia Power requested extension of two DSM programs (the Residential Air Conditioner Cycling Program and the Residential Low Income Program) by five years and two years, respectively, beyond their current April 30, 2013 termination date, as well as approval of a process whereby the Staff could administratively approve limited modifications to the designs of previously approved DSM programs. Virginia Power's proposed revenue requirements for Riders C1A and C2A for the May 1, 2013 to April 30, 2014 rate year are $4 million and $23 million, respectively. This case is pending.

Transmission Riders T and T1

In May 2011, Virginia Power filed its annual update to Rider T with the Virginia Commission. The proposed $481 million annual revenue requirement, effective September 1, 2011, represented an increase of approximately $144 million over the revenue requirement associated with the Rider T customer rates previously in effect. In July 2011, the Virginia Commission issued an order approving a revenue requirement of $466 million for the September 1, 2011 to August 31, 2012 rate year. As discussed above, previously implemented Rider T will be considered part of Virginia Power's base costs, revenues and investments for purposes of future biennial review proceedings. The Virginia Commission has initiated a proceeding to address further implementation of this directive.

In May 2012, Virginia Power filed Rider T1 with the Virginia Commission to recover costs of transmission service and demand response programs for the September 1, 2012 to August 31, 2013 rate year. The proposed Rider T1 reduction of approximately $100 million produces a total annual revenue requirement of approximately $373 million when netted with the revenue requirement of approximately $473 million associated with the Rider T customer rates currently in effect, and now combined in Virginia Power's base rates. Virginia Power's filing stated that Rider T costs combined in base rates should be identified and separately tracked, with the continuation of deferral accounting and dollar-for-dollar recovery for these costs. Virginia Power's proposed revenue requirement was supported by the Staff of the Virginia Commission, although the Staff concurrently proposed an alternative methodology for the Rider T1 revenue requirement which would represent an increase of approximately $18 million from the current Rider T customer rates. The Staff's alternative methodology would have precluded deferral accounting and dollar-for-dollar recovery for Rider T in future periods.

In August 2012, the Virginia Commission approved Virginia Power's proposed Rider T1 to recover costs of transmission service and demand response programs for the September 1, 2012 to August 31, 2013 rate year, ordering a Rider T1 reduction of approximately $100 million versus the Rider T customer rates currently in effect, and now combined in Virginia Power's base rates. The Virginia Commission agreed with the approach recommended by Virginia Power and supported by the Staff of the Virginia Commission in this case. Rider T, which is now combined in base rates, along with Rider T1, and is being tracked separately to permit deferral accounting and dollar-for-dollar recovery.

Generation Rider W

In May 2011, Virginia Power requested approval from the Virginia Commission to construct and operate Warren County, as well as approval of Rider W. In February 2012, the Virginia Commission approved Certificates of Public Convenience and Necessity for Warren County and related transmission facilities. The Virginia Commission also approved a revenue requirement of $34 million for the April 1, 2012 to March 31, 2013 rate year, reflecting an ROE of 11.4%, inclusive of a statutory enhancement of 100 basis points for Rider W, consistent with the Biennial Review Order. In addition, the Virginia Commission approved an ROE enhancement of 100 basis points for Rider W for a period of 10 years following commercial operations. The facility is expected to start commercial operations in late 2014.

In June 2012, Virginia Power requested Virginia Commission approval of its annual update for Rider W for the April 1, 2013 to March 31, 2014 rate year. Virginia Power proposed an approximately $86 million revenue requirement, utilizing an 11.4% ROE (inclusive of a 100 basis point statutory enhancement) also consistent with the base ROE authorized in the Biennial Review Order. In December, 2012, Virginia Power filed a proposed partial stipulation agreement reached with the Virginia Commission Staff supporting a revised revenue requirement for Rider W of approximately $83 million for the rate year commencing April 1, 2013. In February 2013, the Virginia Commission approved this revised revenue requirement.

Generation Rider B

In June 2011, Virginia Power filed applications with the Virginia Commission seeking regulatory approval to convert three of its coal-fired power stations to biomass. The applications included a request for approval of Rider B. To qualify for federal production tax credits associated with renewable energy generation, the power stations must commence operation as biomass generation facilities by December 31, 2013. Virginia Power requested Virginia Commission approval of the biomass conversions on a schedule that will enable qualification for these tax credits.

In March 2012, the Virginia Commission approved the conversion of the Altavista, Hopewell, and Southampton power stations to biomass. These conversions will increase Dominion's renewable generation by more than 150 MW and are expected to be completed by the end of 2013.

As part of its approval, the Virginia Commission also approved Rider B. The approved revenue requirement for Rider B is approximately $6 million for the April 1, 2012 to March 31, 2013 rate year, utilizing a 12.4% ROE (inclusive of a 200 basis point statutory enhancement) consistent with the base ROE authorized in the Biennial Review Order. The renewable generating unit statutory enhancement of 200 basis points will apply during construction and the first five years of the service lives of the converted facilities.

In June 2012, Virginia Power requested Virginia Commission approval of its annual update for Rider B for the April 1, 2013 to March 31, 2014 rate year. Virginia Power proposed an approximately $12 million revenue requirement, utilizing a 12.4% ROE (inclusive of a 200 basis point statutory enhancement) consistent with the base ROE authorized in the Biennial Review Order. In January 2013, Virginia Power filed a proposed stipulation agreement reached with the Virginia Commission Staff supporting approval of a revenue requirement for the pre-commercial operations date period and the post-commercial operations date period, resulting in an average recovery amount of approximately $12 million for the rate year commencing April 1, 2013. This case is pending.

Brunswick County Power Station and Generation Rider BW

In November 2012, Virginia Power requested approval from the Virginia Commission to construct and operate Brunswick County. The application included a request for approval of associated transmission facilities and Rider BW. Virginia Power's proposed revenue requirement for Rider BW is approximately $45 million for the September 1, 2013 to August 31, 2014 rate year, reflecting an ROE of 11.4%, inclusive of a statutory enhancement of 100 basis points for Rider BW, consistent with the Biennial Review Order. Virginia Power requested an ROE enhancement of 100 basis points for Rider BW for a period of 15 years following commercial operations. The facility is expected to begin commercial operations in spring 2016. This case is pending.

Bremo Power Station

In August 2012, Virginia Power requested approval from the Virginia Commission of an amended and reissued Certificate of Public Convenience and Necessity that would allow Virginia Power to convert Bremo Units 3 and 4 from coal to natural gas as their fuel source. The proposed conversion would preserve 227 MW (net) of existing capacity and is expected to be complete in 2014. Cost recovery would occur through base rates, and not through a rate adjustment clause. This case is pending.

Solar Distributed Generation Demonstration Program

In October 2011, Virginia Power filed with the Virginia Commission an application to conduct a solar distributed generation demonstration program, consisting of up to a combined 30 MW of Company-owned solar distributed generation facilities to be located at selected commercial, industrial and community locations throughout its Virginia service territory. Virginia Power proposed to construct and operate the Company-owned facilities in two phases, with Phase I (up to 10 MW) from the date of approval through the end of 2013 and Phase II (up to 20 MW) from the beginning of 2014 to the end of 2015. Virginia Power did not seek a rate adjustment clause for Phase I facilities with this filing; Phase I costs will be recovered as part of base rates in a future biennial review. Virginia Power indicated that it may seek a rate adjustment clause at a future time for Phase II costs.

In November 2012, the Virginia Commission approved the voluntary solar distributed generation demonstration program for Company-owned solar distributed generation facilities subject to a total cost cap of $80 million (including capital, financing, and operation and maintenance costs) which can be increased subject to future application based upon program experience, results, and data.

In May 2012, Virginia Power filed with the Virginia Commission a petition to implement a special tariff for a combined 3 MW of customer-owned solar distributed generation facilities. Under the proposed tariff, Rate Schedule SP, Virginia Power would purchase 100% of the energy output from these facilities, including all environmental attributes and associated renewable energy credits, at a fixed price of $0.15 per kWh for five years. As proposed, the costs of the purchases under Rate Schedule SP would not be recovered from all customers. Following comments, the Virginia Commission issued an order in November 2012 setting this matter for public hearing in February 2013. This case is pending.

Electric Transmission Projects

Portions of the Mt. Storm-to-Doubs line and certain associated facilities are approaching the end of their expected service lives and require replacement with new facilities to maintain reliable service. Virginia Power owns, and has been designated by PJM to rebuild, 96 miles of the line in West Virginia and Virginia, and The Potomac Edison Company owns, and has been designated by PJM to rebuild, the remaining three miles of the line in Maryland. In September 2011, the Virginia Commission approved Virginia Power's application to rebuild its portion of the Mt. Storm-to-Doubs line. The approval of the West Virginia Commission was not required. Subject to applicable state and federal regulatory approvals, Virginia Power's portion of the rebuild project is expected to be completed by June 2015.

In June 2010, the Virginia Commission authorized the construction of the Hayes-to-Yorktown line along the proposed eight-mile route utilizing existing easements and property previously acquired for the transmission line right-of-way. The Hayes-to-Yorktown line was placed in service in December 2012.

In July 2010, the Virginia Commission authorized Virginia Power to construct the Radnor Heights Project. The Virginia Commission stated that these lines and substation must be constructed and in service by June 30, 2012, and that Virginia Power could apply to extend this date for good cause shown. In October 2012, the Virginia Commission issued an order extending this construction and the in-service date to July 31, 2013.

In January 2012, the Virginia Commission authorized the replacement at higher voltage of approximately 43 miles of existing transmission lines between the Dooms and Bremo substations. The Dooms-to-Bremo line is expected to be completed by May 2014.

In December 2011, Virginia Power submitted an application to the Virginia Commission for approval of the Waxpool-Brambleton-BECO line. This project is required to provide requested service to a new data center campus in Loudoun County, Virginia. In December 2012, PJM authorized the Waxpool-Brambleton-BECO line as part of the 2012 RTEP and the Virginia Commission authorized construction of the line. In January 2013, a notice of appeal was filed with the Supreme Court of Virginia by a private party regarding the December 2012 Order. Subject to the receipt of applicable state and federal regulatory approvals, the Waxpool-Brambleton-BECO line is expected to be completed by November 2013.

In June 2012, Virginia Power requested Virginia Commission approval of the Surry-to-Skiffes Creek-to-Whealton lines. Subject to the receipt of applicable state and federal regulatory approvals, the Surry-to-Skiffes Creek-to-Whealton lines are expected to be completed by May 2015. Virginia Power also presented for the Virginia Commission's consideration an approximately 37 mile alternate route for the 500 kV line from Virginia Power's existing Chickahominy Substation to the proposed Skiffes Creek Switching Station.

In August 2012, Virginia Power requested Virginia Commission approval of the Harrisonburg-to-Endless Caverns line. In December 2012, the Virginia Commission authorized construction of the new line. Subject to the receipt of applicable state and federal regulatory approvals, the Harrisonburg-to-Endless Caverns line is expected to be completed by May 2015.

In November 2012, Virginia Power submitted an application to the Virginia Commission for approval to rebuild the Dooms-to-Lexington line in Virginia. Portions of the Dooms-to-Lexington line and certain associated facilities are approaching the end of their expected service lives and require replacement with new facilities to maintain reliable service. Virginia Power owns and has been designated by PJM as part of the 2012 RTEP to rebuild the 39 mile line in Rockbridge and Augusta Counties, Virginia. Subject to applicable state and federal regulatory approvals, the rebuild project is expected to be completed by May 2016.

North Anna Power Station

Virginia Power is considering the construction of a third nuclear unit at a site located at North Anna. However, Virginia Power has not yet committed to building a new nuclear unit at North Anna and continues to evaluate its options regarding a new nuclear unit.

If Virginia Power decides to build a new unit, it must first receive a COL from the NRC, the approval of the Virginia Commission and certain environmental permits and other approvals. Virginia Power has applied for and continues to pursue the COL from the NRC. Based on the current NRC schedule, the COL is expected no earlier than late 2015. Virginia Power also continues to pursue engineering and preliminary site development work, in addition to holding an Early Site Permit. In December 2011, Virginia Power acquired ODEC's interest in the project, thereby terminating ODEC's involvement in the development of a potential third unit at North Anna. In January 2013, the NRC approved the transfer of ODEC's interest in the Early Site Permit to Virginia Power.

The NRC is required to conduct a hearing in all COL proceedings. In August 2008, the ASLB of the NRC permitted BREDL to intervene in the proceeding. In April 2011, BREDL's then last remaining contention was dismissed by the ASLB, and following a decision by the NRC in June 2012, subsequently resulted in termination of the contested portion of the proceeding. In September 2011, BREDL submitted a new proposed contention seeking to litigate issues related to the August 2011 Mineral, Virginia earthquake. In October 2011, the ASLB granted a motion filed by Virginia Power, with the consent of BREDL and the NRC staff to hold any ruling on this proposed contention in abeyance until Virginia Power completes an assessment of this earthquake. The NRC's June 2012 decision referred this new proposed contention to the ASLB to consider whether the contested portion of the proceeding should be reopened. In July 2012, the ASLB granted BREDL a period of 60 days to submit a motion to reopen the proceeding from the time Virginia Power informs the NRC and parties that its seismic assessment is complete.

In addition, in June 2012, BREDL filed a petition with the NRC seeking to suspend the COL proceeding based on a June 2012 ruling of the U.S. Court of Appeals for the District of Columbia Circuit reversing and remanding a 2010 NRC rulemaking that generically assessed the environmental impacts of spent fuel storage. Virginia Power opposed the petition. In July 2012, BREDL filed a motion with the NRC to reopen the contested portion of the COL proceeding to admit a contention pertaining to the same subject. Substantially identical suspension petitions and contentions were filed by various intervenor groups in other licensing proceedings pending before the NRC. In August 2012, the NRC issued a memorandum and order applicable to all pending licensing proceedings, including the North Anna COL proceeding. The NRC indicated that final licenses would not be issued until the issues raised in the court's decision had been addressed. The NRC indicated that this determination extends only to final license issuance and that all licensing reviews and proceedings should continue to move forward. The NRC also directed that pending contentions on the topic be held in abeyance pending further NRC order. The NRC's August 2012 decision is not expected to affect the schedule for issuance of the COL.

No other persons have sought to intervene in the proceeding. If a new contention is not admitted, the mandatory NRC hearing will be uncontested with respect to other issues. Virginia Power continues to pursue various environmental permits that would be needed to support future construction and operation of a third nuclear unit at North Anna.

North Carolina Regulation

In December 2011, the North Carolina Commission issued an order approving a settlement agreement among Virginia Power, the Public Staff of the North Carolina Commission and other interested parties in Virginia Power's fuel case for its North Carolina service territory. The settlement agreement provided for a $36 million increase in Virginia Power's fuel revenues for one year, effective January 1, 2012, including approximately $13 million in under recovery of fuel expenses for the previous fuel period.

In March 2012, Virginia Power filed an application with the North Carolina Commission to increase base non-fuel revenues by approximately $64 million, with January 1, 2013 as the proposed effective date for the permanent rate revision.

In August 2012, Virginia Power filed its annual fuel expense recovery application and testimony with the North Carolina Commission requesting a total annual fuel revenue decrease of approximately $27 million from the fuel and fuel-related costs currently in effect. Virginia Power's filing also sought to implement a temporary voluntary rider, Rider A1, effective November 1, 2012 to December 31, 2012, to reduce projected over-collection of fuel expense in the second half of 2012.

In August 2012 and October 2012, Virginia Power filed supplemental testimony in the base rate proceeding which had the cumulative effect of updating Virginia Power's requested overall base non-fuel revenue increase to $53 million. In September 2012, the North Carolina Commission staff filed testimony recommending a non-fuel revenue increase of $24 million. In October 2012, the North Carolina Commission issued a public notice stating that Virginia Power would begin billing under its proposed rates beginning November 1, 2012 on an interim basis, subject to refund with interest.

In December 2012, the North Carolina Commission approved a $36 million increase in Virginia Power's annual non-fuel base revenues, based on an authorized ROE of 10.2%, and a $14 million decrease in annual base fuel revenues for a combined total base revenue increase of $22 million. These rate changes became effective on January 1, 2013 and are being appealed to the North Carolina Supreme Court by multiple parties. In December 2012, Virginia Power established net regulatory assets of $17 million to be recovered over five to ten years in connection with these new rates.

Also, in December 2012, the North Carolina Commission approved a $17 million decrease in Virginia Power's annual non-base fuel Experience Modification Factor revenues. The rate decrease is the result of the Commission's approval of the Fuel-Related Stipulation of Settlement between the Public Staff and Virginia Power. The rate change was approved by the Commission after review of Virginia Power's fuel expenses during the 12-month period ended June 30, 2012, and represents changes experienced by Virginia Power with respect to its reasonable costs of fuel and fuel component of purchased power.

Ohio Regulation

PIR Program

In March 2011, East Ohio filed a request with the Ohio Commission to accelerate the PIR program by nearly doubling its PIR spending to more than $200 million annually. East Ohio identified 1,450 miles of pipeline that need to be replaced, in addition to the pipeline originally identified in the PIR project scope. East Ohio plans to accelerate the pace of the program by investing more resources in its infrastructure in the near term, in an effort to promote ongoing public safety and reduce operating costs over the longer term. In August 2011, the Ohio Commission approved the stipulation by East Ohio, the Staff of the Ohio Commission and other interested parties in East Ohio's accelerated PIR proceeding. The stipulation provides for an increase in annual PIR capital investment from the current level of approximately $120 million stepping up to approximately $160 million by 2013. In addition, the stipulation provides for cost recovery over a five-year period commencing upon the approval of the Ohio Commission.

In February 2012, East Ohio submitted an application with the Ohio Commission to adjust the cost recovery charge for costs associated with PIR investments for the six months ended December 31, 2011. The filing was made in accordance with changes to the PIR program approved by the Ohio Commission in August 2011 and effects a transition from a fiscal year ending June 30 to a calendar year for annual filings thereafter. The application includes total gross plant investment for the six-month July 1-December 31, 2011 transition period of $73 million, cumulative gross plant investment of $362 million, and a revenue requirement of $47 million. A stipulation was submitted by East Ohio, the Staff of the Ohio Commission and the Ohio Consumers' Counsel that supports the rates filed by East Ohio. The Ohio Commission issued an order approving the stipulation in April 2012.

In November 2012, East Ohio filed a notice to adjust the PIR Cost Recovery Charge for 2012 costs. East Ohio expects to file its application to adjust the PIR Recovery Charge in the first quarter of 2013.

PIPP Plus Program

Under the Ohio PIPP Plus program, eligible customers can receive energy assistance based on their ability to pay their bill. The difference between the customer's total bill and the PIPP plan payment amount is deferred and collected under the PIPP rider in accordance with the rules of the Ohio Commission. The PIPP Plus program sets the customer's monthly payments at 6% of household income and provides for forgiveness credits to the customer's balance when required payments are received in full by the due date. Such credits may result in the elimination of the customer's arrearage balance over 24 months.

In July 2012, the Ohio Commission approved East Ohio's annual update of the PIPP Rider, which reflects the refund of an over-recovery of accumulated arrearages of approximately $70 million over the next two years and recovery of projected deferred program costs of approximately $104 million for the 12-month period from April 2012 to March 2013.

UEX Rider

East Ohio files an annual UEX Rider with the Ohio Commission, pursuant to which it seeks recovery of the bad debt expense of most customers not participating in the PIPP Plus Program. The UEX Rider is adjusted annually to achieve dollar-for-dollar recovery of East Ohio's actual write-offs of uncollectable amounts.

In July 2012, the Ohio Commission approved East Ohio's annual update of the UEX Rider, which reflects the elimination of accumulated unrecovered bad debt expense of approximately $1 million as of March 31, 2012, and recovery of prospective bad debt expense projected to total approximately $23 million for the 12-month period from April 2012 to March 2013.

House Bill 95

Ohio enacted utility reform legislation under House Bill 95, which became effective in September 2011. This law updates natural gas legislation by enabling gas companies to include more up-to-date cost levels when filing rate cases. It also allows gas companies to seek approval of capital expenditure plans under which gas companies can recognize carrying costs on associated capital investments placed in service and can defer the carrying costs plus depreciation and property tax expenses for recovery from ratepayers in the future. In December 2011, East Ohio filed an application requesting authority to implement a capital expenditure program under the new law, which, if approved, would enable East Ohio to defer as a regulatory asset carrying costs, depreciation and property tax associated with approximately $95 million in capital expenditures incurred between October 2011 and December 2012 for assets placed in service but not yet reflected in rates. The Ohio Commission approved East Ohio's application in December 2012.

In December 2012, East Ohio filed an application requesting authority to implement a capital expenditure program for 2013 capital expenditures totaling $93 million, subject to the provisions approved for the initial application. This case is pending.

Federal Regulation

FERC - Gas

FERC regulates the transportation and sale for resale of natural gas in interstate commerce under the Natural Gas Act of 1938 and the Natural Gas Policy Act of 1978, as amended. Under the Natural Gas Act, FERC has authority over rates, terms and conditions of services performed by Dominion's interstate natural gas company subsidiaries, including DTI and Cove Point. FERC also has jurisdiction over siting, construction and operation of natural gas import facilities and interstate natural gas pipeline facilities.

In May 2011, Cove Point filed a general rate case for its FERC-jurisdictional services, with proposed rates to be effective July 1, 2011. In June 2011, FERC accepted a July 1, 2011 effective date for all proposed rates but two, for which the effective date was suspended from July 1 to December 1, 2011. In April 2012, Cove Point filed a stipulation and agreement among Cove Point, FERC trial staff and the other active parties in the rate case resolving all issues set for hearing by FERC and establishing the mechanism for operational purchases of LNG. In July 2012, FERC issued an order approving the stipulation and agreement, including the settlement rates that are effective April 1, 2012. The settlement was considered final in August 2012. Pursuant to the terms of the settlement, future operational purchases of LNG are not expected to affect Cove Point's net results of operations. Cove Point and settling customers will be subject to a rate moratorium through December 31, 2016. Cove Point is required to file its next rate case in 2016 with rates to be effective January 1, 2017.