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 $96 million and $110 million at September 30, 2015 and December 31, 2014, respectively. Cost method investments held in Dominion’s rabbi trusts totaled $4 million and $6 million at September 30, 2015 and December 31, 2014, 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)
At September 30, 2015
Marketable equity securities:
U.S. large cap	$	1,260	$	1,106	$	—			$	2,366
REIT	59		—		—				59
Marketable debt securities:
Corporate bonds	454		15		(6		)		463
U.S. Treasury securities and agency debentures	602		13		(3		)		612
State and municipal	338		20		(1		)		357
Other	95		—		—				95
Cost method investments	72		—		—				72
Cash equivalents and other⁽²⁾	9		—		—				9
Total	$	2,889	$	1,154	$	(10	)	⁽³⁾	$	4,033
At December 31, 2014
Marketable equity securities:
U.S. large cap	$	1,273	$	1,353	$	—			$	2,626
Marketable debt securities:
Corporate bonds	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


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


(2)	Includes pending sales of securities of $5 million and $3 million at September 30, 2015 and December 31, 2014, respectively.


(3)	The fair value of securities in an unrealized loss position was $411 million and $379 million at September 30, 2015 and December 31, 2014, respectively.

The fair value of Dominion’s marketable debt securities held in nuclear decommissioning trust funds at September 30, 2015 by contractual maturity is as follows:



	Amount
(millions)
Due in one year or less	$	209
Due after one year through five years	402
Due after five years through ten years	422
Due after ten years	494
Total	$	1,527

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
(millions)
Proceeds from sales	$	357	$	838	$	937	$	1,524
Realized gains⁽¹⁾	65		57		165		120
Realized losses⁽¹⁾	40		7		69		20


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

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



	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
(millions)
Total other-than-temporary impairment losses ⁽¹⁾	$	29		$	6		$	55		$	21
Losses recorded to nuclear decommissioning trust regulatory liability	(10		)	(1		)	(21		)	(5		)
Losses recognized in other comprehensive income (before taxes)	(3		)	(1		)	(7		)	(3		)
Net impairment losses recognized in earnings	$	16		$	4		$	27		$	13

(1)Amounts include other-than-temporary impairment losses for debt securities of $3 million and $1 million for the three months ended September 31, 2015 and 2014, respectively, and $7 million and $3 million for the nine months ended September 31, 2015 and 2014, 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)
At September 30, 2015
Marketable equity securities:
U.S. large cap	$	558	$	478	$	—			$	1,036
REIT	59		—		—				59
Marketable debt securities:
Corporate bonds	249		7		(4		)		252
U.S. Treasury securities and agency debentures	224		2		(1		)		225
State and municipal	187		11		—				198
Other	30		—		—				30
Cost method investments	72		—		—				72
Cash equivalents and other⁽²⁾	3		—		—				3
Total	$	1,382	$	498	$	(5	)	⁽³⁾	$	1,875
At December 31, 2014
Marketable equity securities:
U.S. large cap	$	563	$	594	$	—			$	1,157
Marketable debt securities:
Corporate bonds	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


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


(2)	Includes pending sales of securities of $3 million at September 30, 2015 and $6 million at December 31, 2014.


(3)	The fair value of securities in an unrealized loss position was $209 million and $170 million at September 30, 2015 and December 31, 2014, respectively.

The fair value of Virginia Power’s marketable debt securities held in nuclear decommissioning trust funds at September 30, 2015 by contractual maturity is as follows:



	Amount
(millions)
Due in one year or less	$	63
Due after one year through five years	181
Due after five years through ten years	236
Due after ten years	225
Total	$	705

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



	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
(millions)
Proceeds from sales	$	198	$	116	$	407	$	415
Realized gains⁽¹⁾	45		22		82		51
Realized losses⁽¹⁾	18		2		33		8


(1)	Includes realized gains and losses recorded to the nuclear 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 nine months ended September 30, 2015 and 2014.

Equity Method Investments

Dominion and Dominion Gas

Iroquois

At September 30, 2015, Dominion Midstream used the equity method to account for its 25.93% noncontrolling partnership interest in Iroquois. At September 30, 2015, the carrying amount of Dominion Midstream's investment of $216 million exceeded its share of underlying equity in net assets by approximately $122 million. The difference reflects equity method goodwill and is not being amortized.

Dominion Gas' equity earnings on its 24.72% non-controlling partnership interest totaled $17 million for both the nine months ended September 30, 2015 and 2014. Dominion Gas received distributions from this investment of $26 million and $10 million for the nine months ended September 30, 2015 and 2014, respectively. At September 30, 2015 and December 31, 2014, the carrying amount of Dominion Gas' investment of $98 million and $107 million, respectively, exceeded its share of underlying equity in net assets by approximately $8 million at both dates. The difference reflects equity method goodwill and is not being amortized.

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.

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 long-term debt 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.