Investments

Dominion

Equity and Debt Securities

Rabbi Trust Securities

Marketable equity and debt securities and cash equivalents held in Dominion’s rabbi trusts and classified as trading totaled $109 million and $107 million at June 30, 2014 and December 31, 2013, respectively. Cost method investments held in Dominion’s rabbi trusts totaled $8 million and $10 million at June 30, 2014 and December 31, 2013, respectively.

Decommissioning Trust Securities

Dominion holds marketable equity and debt securities (classified as available-for-sale), cash equivalents and cost method investments in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Dominion’s decommissioning trust funds are summarized below:



	Amortized Cost		Total Unrealized Gains⁽¹⁾		Total Unrealized Losses ⁽¹⁾				Fair Value
(millions)
June 30, 2014
Marketable equity securities:
U.S. Large cap	$	1,236	$	1,313	$	—			$	2,549
Marketable debt securities:
Corporate bonds	389		21		(1		)		409
U.S. Treasury securities and agency debentures	618		12		(3		)		627
State and municipal	307		20		(1		)		326
Other	7		—		—				7
Cost method investments	92		—		—				92
Cash equivalents and other⁽²⁾	93		—		—				93
Total	$	2,742	$	1,366	$	(5	)	⁽³⁾	$	4,103
December 31, 2013
Marketable equity securities:
U.S.:
Large cap	$	1,183	$	1,194	$	—			$	2,377
Other	49		23		—				72
Marketable debt securities:
Corporate bonds	332		16		(3		)		345
U.S. Treasury securities and agency debentures	589		8		(10		)		587
State and municipal	297		11		(5		)		303
Other	3		—		—				3
Cost method investments	106		—		—				106
Cash equivalents and other⁽²⁾	110		—		—				110
Total	$	2,669	$	1,252	$	(18	)	⁽³⁾	$	3,903


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


(2)	Includes pending sales of securities of $6 million and $11 million at June 30, 2014 and December 31, 2013, respectively.


(3)	The fair value of securities in an unrealized loss position was $275 million and $604 million at June 30, 2014 and December 31, 2013, respectively.

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



	Amount
(millions)
Due in one year or less	$	133
Due after one year through five years	407
Due after five years through ten years	384
Due after ten years	445
Total	$	1,369

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



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
(millions)
Proceeds from sales	$	244	$	308	$	686	$	862
Realized gains⁽¹⁾	25		29		63		92
Realized losses⁽¹⁾	7		10		13		16


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

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

Virginia Power

Virginia Power holds marketable equity and debt securities (classified as available-for-sale), cash equivalents and cost method investments in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Virginia Power’s decommissioning trust funds are summarized below:



	Amortized Cost		Total Unrealized Gains⁽¹⁾		Total Unrealized Losses⁽¹⁾				Fair Value
(millions)
June 30, 2014
Marketable equity securities:
U.S. Large cap	$	530	$	567	$	—			$	1,097
Marketable debt securities:
Corporate bonds	211		10		—				221
U.S. Treasury securities and agency debentures	226		3		(1		)		228
State and municipal	174		11		—				185
Cost method investments	92		—		—				92
Cash equivalents and other⁽²⁾	34		—		—				34
Total	$	1,267	$	591	$	(1	)	⁽³⁾	$	1,857
December 31, 2013
Marketable equity securities:
U.S.:
Large cap	$	506	$	514	$	—			$	1,020
Other	25		11		—				36
Marketable debt securities:
Corporate bonds	185		8		(2		)		191
U.S. Treasury securities and agency debentures	214		1		(3		)		212
State and municipal	163		4		(4		)		163
Cost method investments	106		—		—				106
Cash equivalents and other⁽²⁾	37		—		—				37
Total	$	1,236	$	538	$	(9	)	⁽³⁾	$	1,765


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


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


(3)	The fair value of securities in an unrealized loss position was $114 million and $299 million at June 30, 2014 and December 31, 2013, respectively.

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



	Amount
(millions)
Due in one year or less	$	39
Due after one year through five years	199
Due after five years through ten years	206
Due after ten years	190
Total	$	634

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



	Three Months Ended June 30,				Six Months Ended June 30,
	2014		2013		2014		2013
(millions)
Proceeds from sales	$	95	$	135	$	299	$	324
Realized gains⁽¹⁾	10		10		29		26
Realized losses⁽¹⁾	3		5		6		8


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

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

Dominion Gas

Equity Method Investment

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



Company	Ownership%		Investment Balance				Description
			June 30, 2014		December 31, 2013
(millions)
Iroquois	24.72	%	$	113	$	105	Gas transmission system
Total			$	113	$	105

Dominion Gas' equity earnings on this investment totaled $13 million for both the six months ended June 30, 2014 and 2013. Dominion Gas received distributions from this investment of $5 million for both the six months ended June 30, 2014 and 2013. As of June 30, 2014 and December 31, 2013, the carrying amount of Dominion Gas' investment exceeded its share of underlying equity in net assets by approximately $9 million and $8 million, respectively. The differences reflect equity method goodwill and are not being amortized.

Dominion and Dominion Gas

Blue Racer

In December 2012, Dominion formed Blue Racer with Caiman to provide midstream services to natural gas producers operating in the Utica Shale region in Ohio and portions of Pennsylvania. Blue Racer is an equal partnership between Dominion and Caiman, with Dominion contributing midstream assets and Caiman contributing private equity capital. In June 2014, Blue Racer achieved equalization.

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

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

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