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 $110 million and $107 million at December 31, 2014 and 2013, respectively. Cost-method investments held in Dominion's rabbi trusts totaled $6 million and $10 million at December 31, 2014 and 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)
2014
Marketable equity securities:
U.S. large cap	$	1,273	$	1,353	$	—			$	2,626
Marketable debt securities:
Corporate debt instruments	424		19		(2		)		441
U.S. Treasury securities and agency debentures	597		13		(4		)		606
State and municipal	332		23		—				355
Other	66		—		—				66
Cost method investments	86		—		—				86
Cash equivalents and other⁽²⁾	16		—		—				16
Total	$	2,794	$	1,408	$	(6	)	⁽³⁾	$	4,196
2013
Marketable equity securities:
U.S.:
Large Cap	$	1,183	$	1,194	$	—			$	2,377
Other	49		23		—				72
Marketable debt securities:
Corporate debt instruments	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 nuclear decommissioning trust regulatory liability as discussed in Note 2.


(2)	Includes pending sales of securities of $3 million and $11 million at December 31, 2014 and 2013, respectively.


(3)	The fair value of securities in an unrealized loss position was $379 million and $604 million at December 31, 2014 and 2013, respectively.

The fair value of Dominion's marketable debt securities held in nuclear decommissioning trust funds at December 31, 2014 by contractual maturity is as follows:



	Amount
(millions)
Due in one year or less	$	169
Due after one year through five years	390
Due after five years through ten years	426
Due after ten years	483
Total	$	1,468

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



Year Ended December 31,	2014		2013		2012
(millions)
Proceeds from sales	$	1,235	$	1,476	$	1,356
Realized gains⁽¹⁾	171		157		98
Realized losses⁽¹⁾	30		33		33


(1)	Includes realized gains and losses recorded to the nuclear decommissioning trust regulatory liability as discussed in Note 2.

Dominion recorded other-than-temporary impairment losses on investments held in nuclear decommissioning trust funds as follows:



Year Ended December 31,	2014			2013			2012
(millions)
Total other-than-temporary impairment losses⁽¹⁾	$	21		$	31		$	26
Losses recorded to decommissioning trust regulatory liability	(5		)	(13		)	(10		)
Losses recognized in other comprehensive income (before taxes)	(3		)	(10		)	(2		)
Net impairment losses recognized in earnings	$	13		$	8		$	14


(1)	Amounts include other-than-temporary impairment losses for debt securities of $3 million, $18 million and $4 million at December 31, 2014, 2013 and 2012, respectively.

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)
2014
Marketable equity securities:
U.S. large cap	$	563	$	594	$	—			$	1,157
Marketable debt securities:
Corporate debt instruments	242		9		(1		)		250
U.S. Treasury securities and agency debentures	197		3		(2		)		198
State and municipal	197		13		—				210
Other	23		—		—				23
Cost method investments	86		—		—				86
Cash equivalents and other⁽²⁾	6		—		—				6
Total	$	1,314	$	619	$	(3	)	⁽³⁾	$	1,930
2013
Marketable equity securities:
U.S.:
Large Cap	$	506	$	514	$	—			$	1,020
Other	25		11		—				36
Marketable debt securities:
Corporate debt instruments	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 nuclear decommissioning trust regulatory liability as discussed in Note 2.


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


(3)	The fair value of securities in an unrealized loss position was $170 million and $299 million at December 31, 2014 and 2013, respectively.

The fair value of Virginia Power's marketable debt securities at December 31, 2014, by contractual maturity is as follows:



	Amount
(millions)
Due in one year or less	$	40
Due after one year through five years	180
Due after five years through ten years	242
Due after ten years	219
Total	$	681

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



Year Ended December 31,	2014		2013		2012
(millions)
Proceeds from sales	$	549	$	572	$	626
Realized gains⁽¹⁾	73		52		42
Realized losses⁽¹⁾	12		14		11


(1)	Includes realized gains and losses recorded to the nuclear decommissioning trust regulatory liability as discussed in Note 2.

Virginia Power recorded other-than-temporary impairment losses on investments as follows:



Year Ended December 31,	2014			2013			2012
(millions)
Total other-than-temporary impairment losses⁽¹⁾	$	8		$	15		$	11
Losses recorded to decommissioning trust regulatory liability	(4		)	(13		)	(10		)
Losses recorded in other comprehensive income (before taxes)	(2		)	(1		)	—
Net impairment losses recognized in earnings	$	2		$	1		$	1


(1)	Amounts include other-than-temporary impairment losses for debt securities of $2 million, $9 million and $2 million at December 31, 2014, 2013 and 2012, respectively.

Equity Method Investments

Dominion and Dominion Gas

Investments that Dominion and Dominion Gas account for under the equity method of accounting are as follows:



Company	Ownership%		Investment Balance				Description
As of December 31,			2014		2013
(millions)
Dominion
Blue Racer Midstream, LLC	50	%	$	671	$	510	Midstream gas and related services
Fowler I Holdings LLC	50	%	134		149		Wind-powered merchant generation facility
NedPower Mount Storm LLC	50	%	128		131		Wind-powered merchant generation facility
Iroquois Gas Transmission System, LP	24.72	%	107		105		Gas transmission system
Other⁽¹⁾	various		41		21
Total			$	1,081	$	916
Dominion Gas
Iroquois Gas Transmission System, LP	24.72	%	$	107	$	105	Gas transmission system
Total			$	107	$	105

(1) Dominion has a $50 million commitment to invest in clean power and technology businesses through 2018. Includes Dominion's investment in Atlantic Coast Pipeline. See Note 15 for more information.

Dominion's equity earnings on its investments totaled $46 million, $14 million and $25 million in 2014, 2013 and 2012, respectively. Dominion received distributions from these investments of $60 million, $33 million and $58 million in 2014, 2013, and 2012, respectively. As of December 31, 2014 and 2013, the carrying amount of Dominion's investments exceeded its share of underlying equity in net assets by approximately $126 million and $36 million, respectively. $87 million of the differences relate to basis differences from Dominion's investments in Blue Racer and wind projects, which are being amortized over the useful lives of the underlying assets. The remaining $39 million of differences reflect equity method goodwill and are not being amortized.

Dominion Gas' equity earnings on its investment totaled $21 million, $22 million and $23 million in 2014, 2013 and 2012, respectively. Dominion Gas received distributions from its investment of $20 million, $19 million and $25 million in 2014, 2013, and 2012, respectively. As of December 31, 2014 and 2013, the carrying amount of Dominion Gas' investment exceeded its share of underlying equity in net assets by approximately $8 million. The differences reflect equity method goodwill and are not being amortized.

Equity earnings are recorded in other income in Dominion's and Dominion Gas' Consolidated Statements of Income.

Blue Racer

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

In December 2012, East Ohio sold two pipeline systems to an affiliate who then contributed those systems to Blue Racer. East Ohio received consideration of $248 million, consisting of $61 million in cash proceeds and the extinguishment of affiliated long term debt of $187 million. The transaction resulted in a gain of approximately $176 million ($110 million after-tax) that is recognized in other operations and maintenance expense in Dominion Gas' Consolidated Statements of Income. Dominion recorded a 50% interest in Blue Racer and cash proceeds of $115 million for the contribution of the assets to the joint venture. Dominion recognized a gain of $72 million ($43 million after-tax), net of transaction fees of $9 million, which is recorded in other operations and maintenance expense in Dominion's Consolidated Statements of Income.

In March 2013, DTI 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.

Phase 1 of Natrium was completed in the second quarter of 2013 and was contributed by Dominion to Blue Racer in the third quarter of 2013, resulting in an increased equity method investment in Blue Racer of $473 million. Also in the third quarter of 2013, DTI sold Line TPL-2A to an affiliate, that subsequently sold Line TPL-2A to Blue Racer, and sold Line TL-388 to Blue Racer and received approximately $78 million in cash proceeds. The sales resulted in an approximately $74 million ($41 million after-tax) gain which is included in other operations and maintenance expense in both Dominion Gas' and Dominion’s Consolidated Statements of Income.

In the fourth quarter of 2013, DTI sold the Western System to an affiliate, that subsequently sold the Western System to Blue Racer for cash proceeds of approximately $30 million. The sale resulted in a gain of approximately $3 million ($2 million after-tax) for DTI and $4 million ($2 million after-tax) for Dominion 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 Statements of Income.

Dominion

Atlantic Coast Pipeline

In September 2014, Dominion, along with Duke Energy Corporation, Piedmont Natural Gas Company, Inc. and AGL Resources Inc., announced the formation of Atlantic Coast Pipeline. The members, which are subsidiaries of the above-referenced parent companies, hold the following membership interests: Dominion, 45%; Duke Energy Corporation, 40%; Piedmont Natural Gas Company, Inc., 10%; and AGL Resources Inc., 5%. Atlantic Coast Pipeline is focused on constructing an approximately 550-mile natural gas pipeline running from West Virginia through Virginia to North Carolina. Subsidiaries and affiliates of all four members plan to be customers of the pipeline under 20-year contracts, pending regulatory approvals. PSNC Energy also plans to be a customer of the pipeline under a 20-year contract, pending regulatory approvals. Atlantic Coast Pipeline is considered an equity method investment as Dominion has the ability to exercise significant influence, but not control, over the investee. See Note 15 for more information.