EMPLOYEE BENEFIT PLANS

Dominion and Dominion Gas - Defined Benefit Plans

Dominion provides certain retirement benefits to eligible active employees, retirees and qualifying dependents. Dominion Gas participates in a number of the Dominion-sponsored retirement plans. Under the terms of its benefit plans, Dominion reserves the right to change, modify or terminate the plans. From time to time in the past, benefits have changed, and some of these changes have reduced benefits.

Dominion maintains qualified noncontributory defined benefit pension plans covering virtually all employees. Retirement benefits are based primarily on years of service, age and the employee's compensation. Dominion's funding policy is to contribute annually an amount that is in accordance with the provisions of ERISA. The pension program also provides benefits to certain retired executives under a company-sponsored nonqualified employee benefit plan. The nonqualified plan is funded through contributions to a grantor trust. Dominion also provides retiree healthcare and life insurance benefits with annual employee premiums based on several factors such as age, retirement date and years of service.

Pension benefits for Dominion Gas employees not represented by collective bargaining units are covered by the Dominion Pension Plan, a defined benefit pension plan sponsored by Dominion that provides benefits to multiple Dominion subsidiaries. Pension benefits for Dominion Gas employees represented by collective bargaining units are covered by separate pension plans for East Ohio and, for DTI, a plan that provides benefits to employees of both DTI and Hope. Employee compensation is the basis for allocating pension costs and obligations between DTI and Hope and determining East Ohio's share of total pension costs.

Retiree healthcare and life insurance benefits for Dominion Gas employees not represented by collective bargaining units are covered by the Dominion Retiree Health and Welfare Plan, a plan sponsored by Dominion that provides certain retiree healthcare and life insurance benefits to multiple Dominion subsidiaries. Retiree healthcare and life insurance benefits for Dominion Gas employees represented by collective bargaining units are covered by separate other postretirement benefit plans for East Ohio and, for DTI, a plan that provides benefits to both DTI and Hope. Employee headcount is the basis for allocating other postretirement benefit costs and obligations between DTI and Hope and determining East Ohio's share of total other postretirement benefit costs.

Pension and other postretirement benefit costs are affected by employee demographics (including age, compensation levels and years of service), the level of contributions made to the plans and earnings on plan assets. These costs may also be affected by changes in key assumptions, including expected long-term rates of return on plan assets, discount rates, healthcare cost trend rates, mortality rates and the rate of compensation increases.

Dominion uses December 31 as the measurement date for all of its employee benefit plans, including those in which Dominion Gas participates. Dominion uses the market-related value of pension plan assets to determine the expected return on plan assets, a component of net periodic pension cost, for all pension plans, including those in which Dominion Gas participates. The market-related value recognizes changes in fair value on a straight-line basis over a four-year period, which reduces year-to-year volatility. Changes in fair value are measured as the difference between the expected and actual plan asset returns, including dividends, interest and realized and unrealized investment gains and losses. Since the market-related value recognizes changes in fair value over a four-year period, the future market-related value of pension plan assets will be impacted as previously unrecognized changes in fair value are recognized.

Dominion's pension and other postretirement benefit plans hold investments in trusts to fund employee benefit payments. Aggregate actual returns for Dominion's pension and other postretirement plan assets were $706 million in 2014 and $959 million in 2013, versus expected returns of $610 million and $554 million, respectively. Aggregate actual returns for pension and other postretirement benefit plan assets for Dominion Gas employees represented by collective bargaining units were $157 million in 2014 and $214 million in 2013, versus expected returns of $138 million and $125 million, respectively. Differences between actual and expected returns on plan assets are accumulated and amortized during future periods. As such, any investment-related declines in these trusts will result in future increases in the net periodic cost recognized for such employee benefit plans and will be included in the determination of the amount of cash to be contributed to the employee benefit plans.

The Medicare Act introduced a federal subsidy to sponsors of retiree healthcare benefit plans that provide a prescription drug benefit that is at least actuarially equivalent to Medicare Part D. Dominion determined that the prescription drug benefit offered under its other postretirement benefit plans is at least actuarially equivalent to Medicare Part D. Dominion received a federal subsidy of $4 million and $5 million for 2014 and 2013, respectively. Dominion Gas received a federal subsidy of $1 million for each of 2014 and 2013. Effective January 1, 2013, Dominion changed its method of receiving the subsidy under Medicare Part D for retiree prescription drug coverage from the Retiree Drug Subsidy to the EGWP. This change reduced other postretirement benefit costs by approximately $20 million annually beginning in 2012. As a result of the adoption of the EGWP, Dominion will begin to receive an increased level of Medicare Part D subsidies, in the form of reduced costs rather than a direct reimbursement, over the next few years.

In October 2014, the Society of Actuaries published new mortality tables and mortality improvement scales. Such tables and scales are used to develop mortality assumptions for use in determining pension and other postretirement benefit liabilities and expense. Following evaluation of the new tables, Dominion changed its assumption for mortality rates to reflect a generational improvement scale. As a result of this change in assumption, at December 31, 2014 Dominion and Dominion Gas (for employees represented by collective bargaining units) increased their pension benefit obligations by $131 million and $10 million, respectively, and increased their accumulated postretirement benefit obligations by $32 million and $7 million, respectively. This change is expected to increase net periodic benefit cost for Dominion and Dominion Gas (for employees represented by collective bargaining units) by approximately $25 million and $3 million, respectively, for 2015.

Dominion remeasured all of its pension and other postretirement benefit plans in the second quarter of 2013. The remeasurement resulted in a reduction in the pension benefit obligation of approximately $354 million and a reduction in the accumulated postretirement benefit obligation of approximately $78 million. For Dominion Gas employees represented by collective bargaining units, the remeasurement resulted in a reduction in the pension benefit obligation of approximately $28 million and a reduction in the accumulated postretirement benefit obligation of approximately $9 million. The impact of the remeasurement on net periodic benefit (credit) cost was recognized prospectively from the remeasurement date and reduced net periodic benefit cost for 2013 by approximately $36 million, excluding the impacts of curtailments, and for Dominion Gas employees represented by collective bargaining units by approximately $2 million. The discount rate used for the remeasurement was 4.80% for the pension plans and 4.70% for the other postretirement benefit plans. All other assumptions used for the remeasurement were consistent with the measurement as of December 31, 2012.

In the fourth quarter of 2013, Dominion remeasured its other postretirement benefit plans as a result of a plan amendment that changed medical coverage for certain Medicare-eligible retirees effective April 2014. The remeasurement resulted in a reduction in the accumulated postretirement benefit obligation of approximately $220 million. The impact of the remeasurement on net periodic benefit (credit) cost was recognized prospectively from the remeasurement date and reduced net periodic benefit cost for 2013 by approximately $8 million. The amendment is expected to reduce net periodic benefit cost by $40 million to $60 million for each of the next five years. The discount rate used for the remeasurement was 4.80%. All other assumptions used for the remeasurement were consistent with the measurement as of December 31, 2012.

In the third quarter of 2014, East Ohio remeasured its other postretirement benefit plan as a result of an amendment that changed medical coverage upon the attainment of age 65 for certain future retirees effective January 1, 2016. For employees represented by collective bargaining units, the remeasurement resulted in an increase in the accumulated postretirement benefit obligation of approximately $22 million. The impact of the remeasurement on net periodic benefit credit was recognized prospectively from the remeasurement date and reduced net periodic benefit credit for 2014, for employees represented by collective bargaining units, by less than $1 million. The discount rate used for the remeasurement was 4.20% and the expected long-term rate of return used was 8.50%. All other assumptions used for the remeasurement were consistent with the measurement as of December 31, 2013.

Funded Status

The following table summarizes the changes in pension plan and other postretirement benefit plan obligations and plan assets and includes a statement of the plans' funded status for Dominion and Dominion Gas (for employees represented by collective bargaining units):



	Pension Benefits						Other Postretirement Benefits
Year Ended December 31,	2014			2013			2014			2013
(millions, except percentages)
DOMINION
Changes in benefit obligation:
Benefit obligation at beginning of year	$	5,625		$	6,125		$	1,360		$	1,719
Service cost	114			131			32			43
Interest cost	290			271			67			73
Benefits paid	(236		)	(229		)	(78		)	(75		)
Actuarial (gains) losses during the year	887			(650		)	177			(170		)
Plan amendments⁽¹⁾	—			1			9			(220		)
Settlements and curtailments⁽²⁾	(13		)	(24		)	—			(16		)
Special termination benefits	—			—			—			1
Medicare Part D reimbursement	—			—			4			5
Benefit obligation at end of year	$	6,667		$	5,625		$	1,571		$	1,360
Changes in fair value of plan assets:
Fair value of plan assets at beginning of year	$	6,113		$	5,553		$	1,315		$	1,156
Actual return on plan assets	601			781			105			178
Employer contributions	15			8			12			12
Benefits paid	(236		)	(229		)	(30		)	(31		)
Settlements⁽²⁾	(13		)	—			—			—
Fair value of plan assets at end of year	$	6,480		$	6,113		$	1,402		$	1,315
Funded status at end of year	$	(187	)	$	488		$	(169	)	$	(45	)
Amounts recognized in the Consolidated Balance Sheets at December 31:
Noncurrent pension and other postretirement benefit assets	$	946		$	913		$	10		$	29
Other current liabilities	(13		)	(15		)	(3		)	(3		)
Noncurrent pension and other postretirement benefit liabilities	(1,120		)	(410		)	(176		)	(71		)
Net amount recognized	$	(187	)	$	488		$	(169	)	$	(45	)
Significant assumptions used to determine benefit obligations as of December 31:
Discount rate⁽³⁾	4.40		%	5.20%/5.30%			4.40		%	5.00%/5.10%
Weighted average rate of increase for compensation	4.22		%	4.21		%	4.22		%	4.22		%
Expected long-term rate of return on plan assets	8.75		%	8.50		%	8.50		%	7.75		%

DOMINION GAS
Changes in benefit obligation:
Benefit obligation at beginning of year	$	563		$	607		$	269		$	287
Service cost	12			13			6			7
Interest cost	28			27			13			12
Benefits paid	(29		)	(27		)	(16		)	(17		)
Actuarial (gains) losses during the year	64			(57		)	38			(21		)
Plan amendments	—			—			9			—
Medicare Part D reimbursement	—			—			1			1
Benefit obligation at end of year	$	638		$	563		$	320		$	269
Changes in fair value of plan assets:
Fair value of plan assets at beginning of year	$	1,403		$	1,254		$	273		$	242
Actual return on plan assets	136			176			21			38
Employer contributions	—			—			10			10
Benefits paid	(29		)	(27		)	(16		)	(17		)
Fair value of plan assets at end of year	$	1,510		$	1,403		$	288		$	273
Funded status at end of year	$	872		$	840		$	(32	)	$	4
Amounts recognized in the Consolidated Balance Sheets at December 31:
Noncurrent pension and other postretirement benefit assets	$	872		$	840		$	—		$	19
Noncurrent pension and other postretirement benefit liabilities⁽⁴⁾	—			—			(32		)	(15		)
Net amount recognized	$	872		$	840		$	(32	)	$	4
Significant assumptions used to determine benefit obligations as of December 31:
Discount rate	4.40		%	5.20		%	4.40		%	5.00		%
Weighted average rate of increase for compensation	3.93		%	3.93		%	3.93		%	3.93		%
Expected long-term rate of return on plan assets	8.75		%	8.50		%	8.50		%	7.75		%


(1)	2013 other postretirement benefits amount relates to a plan amendment that changed medical coverage for certain Medicare-eligible retirees.


(2)	2014 amounts relate primarily to a settlement charge for certain executives. 2013 amounts relate primarily to the decommissioning of Kewaunee.


(3)	2013 pension and other postretirement benefits discount rates: 5.20% and 5.00% for the gas union plans and 5.30% and 5.10% for the nonunion and other union plans, respectively.


(4)	Reflected in other deferred credits and other liabilities in Dominion Gas' Consolidated Balance Sheets.

The ABO for all of Dominion's defined benefit pension plans was $6.0 billion and $5.1 billion at December 31, 2014 and 2013, respectively. The ABO for the defined benefit pension plans covering Dominion Gas employees represented by collective bargaining units was $604 million and $534 million at December 31, 2014 and 2013, respectively.

Under its funding policies, Dominion evaluates plan funding requirements annually, usually in the fourth quarter after receiving updated plan information from its actuary. Based on the funded status of each plan and other factors, Dominion determines the amount of contributions for the current year, if any, at that time. During 2014, Dominion and Dominion Gas made no contributions to the qualified defined benefit pension plans and no contributions are currently expected in 2015. In July 2012, the MAP 21 Act was signed into law. This Act includes an increase in the interest rates used to determine plan sponsors' pension contributions for required funding purposes. In 2014, the HATFA of 2014 was signed into law. Similar to the MAP 21 Act, the HATFA of 2014 adjusts the rules for calculating interest rates used in determining funding obligations. It is estimated that the new interest rates will reduce required pension contributions through 2019. Dominion believes that required pension contributions will rise subsequent to 2019, resulting in an estimated $200 million reduction in net cumulative required contributions over a 10-year period.

Certain regulatory authorities have held that amounts recovered in utility customers' rates for other postretirement benefits, in excess of benefits actually paid during the year, must be deposited in trust funds dedicated for the sole purpose of paying such benefits. Accordingly, certain of Dominion's subsidiaries, including Dominion Gas, fund other postretirement benefit costs through VEBAs. Dominion's remaining subsidiaries do not prefund other postretirement benefit costs but instead pay claims as presented. Dominion’s contributions to VEBAs, all of which pertained to Dominion Gas employees, totaled $12 million for both 2014 and 2013, and Dominion expects to contribute approximately $12 million to the Dominion VEBAs in 2015, all of which pertains to Dominion Gas employees.

Dominion and Dominion Gas do not expect any pension or other postretirement plan assets to be returned during 2015.

The following table provides information on the benefit obligations and fair value of plan assets for plans with a benefit obligation in excess of plan assets for Dominion and Dominion Gas (for employees represented by collective bargaining units):



	Pension Benefits				Other Postretirement Benefits
As of December 31,	2014		2013		2014		2013
(millions)
DOMINION
Benefit obligation	$	5,970	$	4,978	$	1,564	$	1,233
Fair value of plan assets	4,838		4,553		1,385		1,158

DOMINION GAS
Benefit obligation	$	—	$	—	$	320	$	147
Fair value of plan assets	—		—		288		132

The following table provides information on the ABO and fair value of plan assets for Dominion’s pension plans with an ABO in excess of plan assets:

The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid for Dominion’s and Dominion Gas’ (for employees represented by collective bargaining units) plans:



	Estimated Future Benefit Payments
	Pension Benefits		Other Postretirement Benefits
(millions)
DOMINION
2015	$	272	$	91
2016	284		94
2017	300		98
2018	320		101
2019	333		102
2020-2024	1,925		523

DOMINON GAS
2015	$	34	$	18
2016	35		19
2017	37		20
2018	38		21
2019	39		22
2020-2024	204		111

Plan Assets

Dominion's overall objective for investing its pension and other postretirement plan assets is to achieve appropriate long-term rates of return commensurate with prudent levels of risk. As a participating employer in various pension plans sponsored by Dominion, Dominion Gas is subject to Dominion's investment policies for such plans. To minimize risk, funds are broadly diversified among asset classes, investment strategies and investment advisors. The strategic target asset allocations for Dominion's pension funds are 28% U.S. equity, 18% non-U.S. equity, 33% fixed income, 3% real estate and 18% other alternative investments. U.S. equity includes investments in large-cap, mid-cap and small-cap companies located in the United States. Non-U.S. equity includes investments in large-cap and small-cap companies located outside of the United States including both developed and emerging markets. Fixed income includes corporate debt instruments of companies from diversified industries and U.S. Treasuries. The U.S. equity, non-U.S. equity and fixed income investments are in individual securities as well as mutual funds. Real estate includes equity REITs and investments in partnerships. Other alternative investments include partnership investments in private equity, debt and hedge funds that follow several different strategies.

Dominion also utilizes common/collective trust funds as an investment vehicle for its defined benefit plans. A common/collective trust fund is a pooled fund operated by a bank or trust company for investment of the assets of various organizations and individuals in a well-diversified portfolio. Common/collective trust funds are funds of grouped assets that follow various investment strategies.

Strategic investment policies are established for Dominion's prefunded benefit plans based upon periodic asset/liability studies. Factors considered in setting the investment policy include employee demographics, liability growth rates, future discount rates, the funded status of the plans and the expected long-term rate of return on plan assets. Deviations from the plans' strategic allocation are a function of Dominion's assessments regarding short-term risk and reward opportunities in the capital markets and/or short-term market movements which result in the plans' actual asset allocations varying from the strategic target asset allocations. Through periodic rebalancing, actual allocations are brought back in line with the target. Future asset/liability studies will focus on strategies to further reduce pension and other postretirement plan risk, while still achieving attractive levels of returns. Financial derivatives may be used to obtain or manage market exposures and to hedge assets and liabilities.

For fair value measurement policies and procedures related to pension and other postretirement benefit plan assets, see Note 6.

The fair values of Dominion's and Dominion Gas’ (for employees represented by collective bargaining units) pension plan assets by asset category are as follows:



	Fair Value Measurements
	Pension Plans
At December 31,	2014								2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
(millions)
DOMINION
Cash equivalents	$	13	$	25	$	—	$	38	$	53	$	126	$	—	$	179
U.S. equity:
Large Cap	1,313		—		—		1,313		1,220		—		—		1,220
Other	530		—		—		530		514		—		—		514
Non-U.S. equity:
Large Cap	234		—		—		234		308		—		—		308
Other	403		—		—		403		391		—		—		391
Common/collective trust funds⁽¹⁾	—		1,595		—		1,595		—		1,387		—		1,387
Fixed income:
Corporate debt instruments	45		666		—		711		43		451		—		494
U.S. Treasury securities and agency debentures	74		342		—		416		2		229		—		231
State and municipal	10		60		—		70		69		107		—		176
Other securities	6		80		—		86		7		50		—		57
Real estate:
REITs	40		—		—		40		32		—		—		32
Partnerships	—		—		209		209		—		—		227		227
Other alternative investments:
Private equity	—		—		518		518		—		—		530		530
Debt	—		—		144		144		—		—		180		180
Hedge funds	—		—		162		162		—		—		187		187
Total⁽²⁾	$	2,668	$	2,768	$	1,033	$	6,469	$	2,639	$	2,350	$	1,124	$	6,113

DOMINION GAS
Cash equivalents	$	3	$	6	$	—	$	9	$	12	$	29	$	—	$	41
U.S. equity:
Large Cap	306		—		—		306		280		—		—		280
Other	124		—		—		124		118		—		—		118
Non-U.S. equity:
Large Cap	54		—		—		54		72		—		—		72
Other	94		—		—		94		90		—		—		90
Common/collective trust funds⁽³⁾	—		372		—		372		—		318		—		318
Fixed income:
Corporate debt instruments	11		155		—		166		10		103		—		113
U.S. Treasury securities and agency debentures	17		80		—		97		1		52		—		53
State and municipal	2		14		—		16		16		24		—		40
Other securities	1		19		—		20		2		11		—		13
Real estate:
REITs	9		—		—		9		7		—		—		7
Partnerships	—		—		48		48		—		—		52		52
Other alternative investments:
Private equity	—		—		121		121		—		—		122		122
Debt	—		—		34		34		—		—		41		41
Hedge funds	—		—		38		38		—		—		43		43
Total⁽⁴⁾	$	621	$	646	$	241	$	1,508	$	608	$	537	$	258	$	1,403


(1)	Common/Collective Trust Funds include $360 million and $560 million of John Hancock insurance contracts held at December 31, 2014 and 2013, respectively. See below for a description of the individual investments included within this line item, and the nature and risk of each respective fund.


(2)	Includes net assets related to pending sales of securities of $31 million, net accrued income of $18 million, and excludes net assets related to pending purchases of securities of $38 million at December 31, 2014.


(3)	See below for a description of the individual investments included within this line item, and the nature and risk of each respective fund.


(4)	Includes net assets related to pending sales of securities of $7 million, net accrued income of $4 million, and excludes net assets related to pending purchases of securities of $9 million at December 31, 2014.

The fair values of Dominion's and Dominion Gas’ (for employees represented by collective bargaining units) other postretirement plan assets by asset category are as follows:



	Fair Value Measurements
	Other Postretirement Plans
At December 31,	2014								2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
(millions)
DOMINION
Cash equivalents	$	1	$	7	$	—	$	8	$	3	$	14	$	—	$	17
U.S. equity:
Large Cap	514		—		—		514		472		—		—		472
Other	28		—		—		28		26		—		—		26
Non-U.S. equity:
Large Cap	102		—		—		102		111		—		—		111
Other	21		—		—		21		20		—		—		20
Common/collective trust funds⁽¹⁾	—		555		—		555		—		502		—		502
Fixed income:
Corporate debt instruments	3		35		—		38		2		23		—		25
U.S. Treasury securities and agency debentures	4		18		—		22		—		12		—		12
State and municipal	1		3		—		4		4		5		—		9
Other securities	—		4		—		4		—		3		—		3
Real estate:
REITs	2		—		—		2		2		—		—		2
Partnerships	—		—		19		19		—		—		19		19
Other alternative investments:
Private equity	—		—		58		58		—		—		60		60
Debt	—		—		18		18		—		—		27		27
Hedge funds	—		—		9		9		—		—		10		10
Total	$	676	$	622	$	104	$	1,402	$	640	$	559	$	116	$	1,315

DOMINION GAS
Cash equivalents	$	—	$	2	$	—	$	2	$	—	$	3	$	—	$	3
U.S. equity-Large Cap	113		—		—		113		104		—		—		104
Non-U.S. equity-Large Cap	26		—		—		26		26		—		—		26
Common/collective trust funds⁽²⁾	—		129		—		129		—		119		—		119
Real estate - partnerships	—		—		2		2		—		—		2		2
Other alternative investments:
Private equity	—		—		12		12		—		—		12		12
Debt	—		—		4		4		—		—		7		7
Total	$	139	$	131	$	18	$	288	$	130	$	122	$	21	$	273

(1) Common/Collective Trust Funds include $19 million and $29 million of John Hancock insurance contracts held at December 31, 2014 and 2013, respectively. See below for a description of the individual investments included within this line item, and the nature and risk of each respective fund.


(2)	See below for a description of the individual investments included within this line item, and the nature and risk of each respective fund.

The following table presents the changes in pension and other postretirement plan assets that are measured at fair value and included in the Level 3 fair value category for Dominion and Dominion Gas (for employees represented by collective bargaining units):



	Fair Value Measurements using Significant Unobservable Inputs (Level 3)
	Pension Plans															Other Postretirement Plans
	Real Estate			Private Equity			Debt			Hedge Funds			Total			Real Estate			Private Equity			Debt			Hedge Funds			Total
DOMINION
Balance at December 31, 2011	$	304		$	448		$	243		$	290		$	1,285		$	24		$	63		$	36		$	14		$	137
Actual return on plan assets:
Relating to assets still held at the reporting date	21			46			17			21			105			1			3			4			1			9
Relating to assets sold during the period	(8		)	(41		)	(11		)	(2		)	(62		)	—			(1		)	—			—			(1		)
Purchases	35			79			15			—			129			2			6			1			—			9
Sales	(31		)	(76		)	(72		)	(88		)	(267		)	(3		)	(13		)	(10		)	(4		)	(30		)
Balance at December 31, 2012	$	321		$	456		$	192		$	221		$	1,190		$	24		$	58		$	31		$	11		$	124
Actual return on plan assets:
Relating to assets still held at the reporting date	15			98			32			21			166			(2		)	6			3			1			8
Relating to assets sold during the period	(36		)	(48		)	(34		)	(4		)	(122		)	1			3			—			1			5
Purchases	6			115			32			—			153			1			7			2			—			10
Sales	(79		)	(91		)	(42		)	(51		)	(263		)	(5		)	(14		)	(9		)	(3		)	(31		)
Balance at December 31, 2013	$	227		$	530		$	180		$	187		$	1,124		$	19		$	60		$	27		$	10		$	116
Actual return on plan assets:
Relating to assets still held at the reporting date	40			70			12			4			126			4			7			2			—			13
Relating to assets sold during the period	(18		)	(67		)	(26		)	(4		)	(115		)	(1		)	(7		)	(3		)	—			(11		)
Purchases	—			135			10			—			145			—			13			1			—			14
Sales	(40		)	(150		)	(32		)	(25		)	(247		)	(3		)	(15		)	(9		)	(1		)	(28		)
Balance at December 31, 2014	$	209		$	518		$	144		$	162		$	1,033		$	19		$	58		$	18		$	9		$	104
DOMINION GAS
Balance at December 31, 2011	$	68		$	99		$	54		$	64		$	285		$	3		$	15		$	10		$	—		$	28
Actual return on plan assets:
Relating to assets still held at the reporting date	6			12			4			4			26			—			(1		)	(1		)	—			(2		)
Relating to assets sold during the period	(2		)	(9		)	(2		)	—			(13		)	—			2			1			—			3
Purchases	7			17			3			—			27			—			1			—			—			1
Sales	(7		)	(16		)	(16		)	(18		)	(57		)	—			(4		)	(2		)	—			(6		)
Balance at December 31, 2012	$	72		$	103		$	43		$	50		$	268		$	3		$	13		$	8		$	—		$	24
Actual return on plan assets:
Relating to assets still held at the reporting date	4			24			7			5			40			(1		)	2			1			—			2
Relating to assets sold during the period	(8		)	(10		)	(7		)	(1		)	(26		)	—			—			—			—			—
Purchases	1			25			7			—			33			—			1			—			—			1
Sales	(17		)	(20		)	(9		)	(11		)	(57		)	—			(4		)	(2		)	—			(6		)
Balance at December 31, 2013	$	52		$	122		$	41		$	43		$	258		$	2		$	12		$	7		$	—		$	21
Actual return on plan assets:
Relating to assets still held at the reporting date	9			17			4			1			31			—			2			1			—			3
Relating to assets sold during the period	(4		)	(15		)	(6		)	(1		)	(26		)	—			(1		)	(1		)	—			(2		)
Purchases	—			30			2			—			32			—			2			—			—			2
Sales	(9		)	(33		)	(7		)	(5		)	(54		)	—			(3		)	(3		)	—			(6		)
Balance at December 31, 2014	$	48		$	121		$	34		$	38		$	241		$	2		$	12		$	4		$	—		$	18

Investments in Common/Collective Trust Funds in Dominion’s pension and other postretirement plans, including those in which Dominion Gas participates, are stated at fair value as determined by the issuer of the Common/Collective Trust Funds based on the fair value of the underlying investments. The Common/Collective Trusts do not have any unfunded commitments, and do not have any applicable liquidation periods or defined terms/periods to be held. The majority of the Common/Collective Trust Funds have limited withdrawal or redemption rights during the term of the investment. Strategies of the Common/Collective Trust Funds are as follows:

Dominion and Dominion Gas

•

Wells Fargo Closed End Bond Trust-The Fund invests in stocks, bonds or a combination of both. Shares of the Fund are traded on a stock exchange and are subject to market risk like stocks, bonds and mutual funds. The Fund may invest in a less liquid portfolio of stocks and bonds because the fund does not need to sell securities to meet shareholder redemptions as mutual funds in order to keep a percentage of its portfolio in cash to pay back investors who withdraw shares.


•	JPMorgan Core Bond Trust-The Fund seeks to maximize total return by investing primarily in a diversified portfolio of intermediate- and long-term debt securities. The Fund invests primarily in investment-grade bonds; it generally maintains an average weighted maturity between four and 12 years. It may shorten its average weighted maturity if deemed appropriate for temporary defensive purposes.

•

SSgA Russell 2000 Value Index Common Trust-The Fund measures the performance of the small-cap value segment of the U.S. equity universe. The Russell 2000 Value Index is constructed to provide a comprehensive and unbiased barometer for the small-cap value segment. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set and that the represented companies continue to reflect value characteristics.

•

NT Common Short-Term Investment Fund-The Fund seeks to maximize current income on cash reserves to the extent consistent with principal preservation and maintenance of liquidity from a portfolio of approved money market instruments with short maturities. Liquidity is emphasized to provide for redemption of units at par on any business day. Principal preservation is a primary objective. Within quality, maturity, and sector diversification guidelines, investments are made in those securities with the most attractive yields.

Dominion

•

SSgA Daily MSCI Emerging Markets Index Non-Lending Fund-The Fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of the MSCI Emerging Markets Index over the long term. The Fund may invest directly or indirectly in securities and other instruments, including in other pooled investment vehicles sponsored or managed by, or otherwise affiliated with the Trustee (State Street Bank and Trust Company).

•

SSgA Daily MSCI ACWI Ex-USA Index Non-Lending Fund-The Fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of the MSCI ACWI Ex-USA Index over the long term. The Fund may invest directly or indirectly in securities and other instruments, including in other pooled investment vehicles sponsored or managed by, or otherwise affiliated with the Trustee (State Street Bank and Trust Company).

•

SSgA S&P 400 MidCap Index - The Fund seeks an investment return that approximates as closely as practicable, before expenses, the performance of its benchmark index (the Index) over the long term. The S&P MidCap 400 is comprised of approximately 400 U.S. mid-cap securities and accounts for approximately 7% coverage of the U.S. stock market capitalization. SSgA will typically attempt to invest in the equity securities comprising the Index, in approximately the same proportions as they are represented in the Index.


•	JPMorgan Chase Bank U.S. Active Core Plus Equity Fund-The Fund seeks to outperform the S&P 500 Index (the Benchmark), gross of fees, over a market cycle. The Fund invests primarily in a portfolio of long and short positions in equity securities of large and mid capitalization U.S. companies with characteristics similar to those of the Benchmark.


•	Mondrian International Small Cap Equity Fund-The Fund’s investment objective is long-term total return. The Fund primarily invests in equity securities of non-U.S. small capitalization companies that, in the investment manager’s opinion, are undervalued at the time of purchase based on fundamental value analysis employed by the investment manager.


•	NT Collective Russell 2000 Growth Index - The Fund seeks an investment return that approximates the overall performance of the common stocks included in the Russell 2000 Growth Index. The Fund primarily invests in common stocks of one or more companies that are deemed to be representative of the industry diversification of the entire Russell 2000 Growth Index.

•

NT Collective Short-Term Investment Fund - The Fund is composed of high-grade money market instruments with short-term maturities. The Fund's objective is to provide an investment vehicle for cash reserves while offering a competitive rate of return. Liquidity is emphasized to provide for redemption of units on any business day. Principal preservation is also a prime objective. Admissions and withdrawals are made daily. Interest is accrued daily and distributed monthly.

Investments in Group Insurance Annuity Contracts with John Hancock were entered into after 1992 and are stated at fair value based on the fair value of the underlying securities as provided by the managers and include investments in U.S. government securities, corporate debt instruments, and state and municipal debt securities.

Net Periodic Benefit (Credit) Cost

Net periodic benefit (credit) cost is reflected in other operations and maintenance expense in the Consolidated Statements of Income. The components of the provision for net periodic benefit (credit) cost and amounts recognized in other comprehensive income and regulatory assets and liabilities for Dominion’s and Dominion Gas’ (for employees represented by collective bargaining units) plans are as follows:



	Pension Benefits									Other Postretirement Benefits
Year Ended December 31,	2014			2013			2012			2014			2013			2012
(millions, except percentages)
DOMINION
Service cost	$	114		$	131		$	116		$	32		$	43		$	44
Interest cost	290			271			268			67			73			79
Expected return on plan assets	(499		)	(462		)	(430		)	(111		)	(92		)	(79		)
Amortization of prior service (credit) cost	3			3			3			(28		)	(15		)	(13		)
Amortization of net actuarial loss	111			165			132			2			7			6
Settlements and curtailments⁽¹⁾	1			(2		)	—			—			(15		)	(4		)
Special termination benefits	—			—			—			—			1			—
Net periodic benefit (credit) cost	$	20		$	106		$	89		$	(38	)	$	2		$	33
Changes in plan assets and benefit obligations recognized in other comprehensive income and regulatory assets and liabilities:
Current year net actuarial (gain) loss	$	784		$	(968	)	$	786		$	183		$	(255	)	$	139
Prior service (credit) cost	—			1			—			9			(215		)	1
Settlements and curtailments⁽¹⁾	(1		)	(22		)	—			—			(7		)	(2		)
Less amounts included in net periodic benefit cost:
Amortization of net actuarial loss	(111		)	(165		)	(132		)	(2		)	(7		)	(6		)
Amortization of prior service credit (cost)	(3		)	(3		)	(3		)	28			15			13
Total recognized in other comprehensive income and regulatory assets and liabilities	$	669		$	(1,157	)	$	651		$	218		$	(469	)	$	145
Significant assumptions used to determine periodic cost:
Discount rate	5.20% - 5.30%			4.40% - 4.80%			5.50		%	4.20% - 5.10%			4.40% - 4.80%			5.50		%
Expected long-term rate of return on plan assets	8.75		%	8.50		%	8.50		%	8.50		%	7.75		%	7.75		%
Weighted average rate of increase for compensation	4.21		%	4.21		%	4.21		%	4.22		%	4.22		%	4.22		%
Healthcare cost trend rate⁽²⁾										7.00		%	7.00		%	7.00		%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)⁽²⁾										5.00		%	4.60		%	4.60		%
Year that the rate reaches the ultimate trend rate⁽²⁾⁽³⁾										2018			2062			2061
DOMINION GAS
Service cost	$	12		$	13		$	11		$	6		$	7		$	7
Interest cost	28			27			28			13			12			14
Expected return on plan assets	(115		)	(106		)	(96		)	(23		)	(19		)	(16		)
Amortization of prior service (credit) cost	1			1			1			(1		)	(3		)	(4		)
Amortization of net actuarial loss	19			26			26			—			2			1
Net periodic benefit (credit) cost	$	(55	)	$	(39	)	$	(30	)	$	(5	)	$	(1	)	$	2
Changes in plan assets and benefit obligations recognized in other comprehensive income and regulatory assets and liabilities:
Current year net actuarial (gain) loss	$	43		$	(127	)	$	35		$	40		$	(40	)	$	12
Prior service cost	—			—			—			10			—			—
Less amounts included in net periodic benefit cost:
Amortization of net actuarial loss	(19		)	(26		)	(26		)	—			(2		)	(1		)
Amortization of prior service credit (cost)	(1		)	(1		)	(1		)	1			3			4
Total recognized in other comprehensive income and regulatory assets and liabilities	$	23		$	(154	)	$	8		$	51		$	(39	)	$	15
Significant assumptions used to determine periodic cost:
Discount rate	5.20		%	4.40% - 4.80%			5.50		%	4.20% - 5.00%			4.40% - 4.70%			5.50		%
Expected long-term rate of return on plan assets	8.75		%	8.50		%	8.50		%	8.50		%	7.75		%	7.75		%
Weighted average rate of increase for compensation	3.93		%	3.93		%	3.93		%	3.93		%	3.93		%	3.93		%
Healthcare cost trend rate⁽²⁾										7.00		%	7.00		%	7.00		%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)⁽²⁾										5.00		%	4.60		%	4.60		%
Year that the rate reaches the ultimate trend rate⁽²⁾⁽³⁾										2018			2062			2061


(1)	2013 amounts relate primarily to the decommissioning of Kewaunee.


(2)	Assumptions used to determine net periodic cost for the following year.


(3)	The Society of Actuaries model used to determine healthcare cost trend rates was updated in 2014. The new model converges to the ultimate trend rate much more quickly than previous models.

The components of AOCI and regulatory assets and liabilities for Dominion’s and Dominion Gas’ (for employees represented by collective bargaining units) plans that have not been recognized as components of net periodic benefit (credit) cost are as follows:



	Pension Benefits				Other Postretirement Benefits
At December 31,	2014		2013		2014			2013
(millions)
DOMINION
Net actuarial (gain) loss	$	2,382	$	1,709	$	139		$	(40	)
Prior service (credit) cost	7		10		(233		)	(271		)
Total⁽¹⁾	$	2,389	$	1,719	$	(94	)	$	(311	)
DOMINION GAS
Net actuarial loss	$	303	$	279	$	43		$	3
Prior service (credit) cost	1		2		7			(4		)
Total⁽²⁾	$	304	$	281	$	50		$	(1	)

(1)

As of December 31, 2014, of the $2.4 billion and $(94) million related to pension benefits and other postretirement benefits, $1.4 billion and $(81) million, respectively, are included in AOCI, with the remainder included in regulatory assets and liabilities. As of December 31, 2013, of the $1.7 billion and $(311) million related to pension benefits and other postretirement benefits, $1.0 billion and $(156) million, respectively, are included in AOCI, with the remainder included in regulatory assets and liabilities.

(2)

As of December 31, 2014, of the $304 million related to pension benefits, $112 million is included in AOCI, with the remainder included in regulatory assets and liabilities; the $50 million related to other postretirement benefits is included entirely in regulatory assets and liabilities. As of December 31, 2013, of the $281 million related to pension benefits, $104 million is included in AOCI, with the remainder included in regulatory assets and liabilities; the $(1) million related to other postretirement benefits is included entirely in regulatory assets and liabilities.

The following table provides the components of AOCI and regulatory assets and liabilities for Dominion’s and Dominion Gas’ (for employees represented by collective bargaining units) plans as of December 31, 2014 that are expected to be amortized as components of net periodic benefit (credit) cost in 2015:



	Pension Benefits		Other Postretirement Benefits
(millions)
DOMINION
Net actuarial loss	$	160	$	6
Prior service (credit) cost	2		(27		)
DOMINION GAS
Net actuarial loss	$	20	$	2
Prior service cost	1		—

The expected long-term rates of return on plan assets, discount rates, healthcare cost trend rates and mortality are critical assumptions in determining net periodic benefit (credit) cost. Dominion develops assumptions, which are then compared to the forecasts of an independent investment advisor (except for the expected long-term rates of return) to ensure reasonableness. An internal committee selects the final assumptions used for Dominion's pension and other postretirement plans, including those in which Dominion Gas participates, including discount rates, expected long-term rates of return, healthcare cost trend rates and mortality rates.

Dominion determines the expected long-term rates of return on plan assets for its pension plans and other postretirement benefit plans, including those in which Dominion Gas participates, by using a combination of:


•	Expected inflation and risk-free interest rate assumptions;


•	Historical return analysis to determine long term historic returns as well as historic risk premiums for various asset classes;


•	Expected future risk premiums, asset volatilities and correlations;


•	Forecasts of an independent investment advisor;


•	Forward-looking return expectations derived from the yield on long-term bonds and the expected long-term returns of major stock market indices; and


•	Investment allocation of plan assets.

Dominion determines discount rates from analyses of AA/Aa rated bonds with cash flows matching the expected payments to be made under its plans, including those in which Dominion Gas participates.

Dominion develops its mortality assumption using plan-specific studies and projects mortality improvement using scales developed by the Society of Actuaries for all its plans, including those in which Dominion Gas participates.

Assumed healthcare cost trend rates have a significant effect on the amounts reported for Dominion's retiree healthcare plans, including those in which Dominion Gas participates. A one percentage point change in assumed healthcare cost trend rates would have had the following effects for Dominion’s and Dominion Gas’ (for employees represented by collective bargaining units) other postretirement benefit plans:



	Other Postretirement Benefits
	One percentage point increase		One percentage point decrease
(millions)
DOMINION
Effect on net periodic cost for 2015	$	26	$	(16	)
Effect on other postretirement benefit obligation at December 31, 2014	186		(152		)
DOMINION GAS
Effect on net periodic cost for 2015	$	5	$	(4	)
Effect on other postretirement benefit obligation at December 31, 2014	40		(30		)

Dominion Gas (Employees Not Represented by Collective Bargaining Units) and Virginia Power - Participation in Defined Benefit Plans

Virginia Power employees and Dominion Gas employees not represented by collective bargaining units are covered by the Dominion Pension Plan described above. As participating employers, Virginia Power and Dominion Gas are subject to Dominion's funding policy, which is to contribute annually an amount that is in accordance with ERISA. During 2014, Virginia Power and Dominion Gas made no contributions to the Dominion Pension Plan, and no contributions to this plan are currently expected in 2015. Virginia Power's net periodic pension cost related to this plan was $75 million, $96 million and $72 million in 2014, 2013 and 2012, respectively. Dominion Gas' net periodic pension credit related to this plan was $(37) million, $(27) million and $(25) million in 2014, 2013 and 2012, respectively. Net periodic pension (credit) cost is reflected in other operations and maintenance expense in their respective Consolidated Statements of Income. The funded status of various Dominion subsidiary groups and employee compensation are the basis for determining the share of total pension costs for participating Dominion subsidiaries. See Note 24 for Virginia Power and Dominion Gas amounts due to/from Dominion related to this plan.

Retiree healthcare and life insurance benefits, for Virginia Power employees and for Dominion Gas employees not represented by collective bargaining units, are covered by the Dominion Retiree Health and Welfare Plan described above. Virginia Power's net periodic benefit (credit) cost related to this plan was $(18) million, $5 million and $13 million in 2014, 2013 and 2012, respectively. Dominion Gas' net periodic benefit (credit) cost related to this plan was $(5) million, less than $1 million and $3 million for 2014, 2013 and 2012, respectively. Net periodic benefit (credit) cost is reflected in other operations and maintenance expenses in their respective Consolidated Statements of Income. Employee headcount is the basis for determining the share of total other postretirement benefit costs for participating Dominion subsidiaries. See Note 24 for Virginia Power and Dominion Gas amounts due to/from Dominion related to this plan.

Dominion holds investments in trusts to fund employee benefit payments for the pension and other postretirement benefit plans in which Virginia Power and Dominion Gas' employees participate. Any investment-related declines in these trusts will result in future increases in the net periodic cost recognized for such employee benefit plans and will be included in the determination of the amount of cash that Virginia Power and Dominion Gas will provide to Dominion for their shares of employee benefit plan contributions.

Certain regulatory authorities have held that amounts recovered in rates for other postretirement benefits, in excess of benefits actually paid during the year, must be deposited in trust funds dedicated for the sole purpose of paying such benefits. Accordingly, Virginia Power and Dominion Gas fund other postretirement benefit costs through VEBAs. During 2014 and 2013, Virginia Power made no contributions to the VEBA and does not expect to contribute to the VEBA in 2015. Dominion Gas' contributions to VEBAs for employees not represented by collective bargaining units were $1 million and $2 million for 2014 and 2013, respectively.

Defined Contribution Plans

Dominion also sponsors defined contribution employee savings plans that cover substantially all employees. During 2014, 2013 and 2012, Dominion recognized $41 million, $40 million and $40 million, respectively, as employer matching contributions to these plans. Dominion Gas participates in these employee savings plans, both specific to Dominion Gas and that cover multiple Dominion subsidiaries. During 2014, 2013 and 2012, Dominion Gas recognized $7 million, $7 million and $6 million, respectively, as employer matching contributions to these plans. Virginia Power also participates in these employee savings plans. During 2014, 2013 and 2012, Virgina Power recognized $17 million, $16 million and $15 million, respectively, as employer matching contributions to these plans.

As of December 31,

(millions)

Accumulated benefit obligation

Fair value of plan assets