RELATED-PARTY TRANSACTIONS

Virginia Power and Dominion Gas engage in related party transactions primarily with other Dominion subsidiaries (affiliates). Virginia Power's and Dominion Gas' receivable and payable balances with affiliates are settled based on contractual terms or on a monthly basis, depending on the nature of the underlying transactions. Virginia Power and Dominion Gas are included in Dominion's consolidated federal income tax return and, where applicable, combined income tax returns for Dominion are filed in various states. See Note 2 for further information. Dominion's transactions with equity method investments are described in Note 9. A discussion of significant related party transactions follows.

Virginia Power

Transactions with Affiliates

Virginia Power transacts with affiliates for certain quantities of natural gas and other commodities in the ordinary course of business. Virginia Power also enters into certain commodity derivative contracts with affiliates. Virginia Power uses these contracts, which are principally comprised of commodity swaps, to manage commodity price risks associated with purchases of natural gas. See Notes 7 and 19 for more information. As of December 31, 2016, Virginia Power's derivative assets and liabilities with affiliates were $41 million and $8 million, respectively. As of December 31, 2015, Virginia Power's derivative assets and liabilities with affiliates were $13 million and $22 million, respectively.

Virginia Power participates in certain Dominion benefit plans as described in Note 21. At December 31, 2016 and 2015, Virginia Power's amounts due to Dominion associated with the Dominion Pension Plan and reflected in noncurrent pension and other postretirement benefit liabilities in the Consolidated Balance Sheets were $396 million and $316 million, respectively. At December 31, 2016 and 2015, Virginia Power's amounts due from Dominion associated with the Dominion Retiree Health and Welfare Plan and reflected in noncurrent pension and other postretirement benefit assets in the Consolidated Balance Sheets were $130 million and $77 million, respectively.

The financial statements for all years presented include costs for certain general, administrative and corporate expenses assigned by DRS to Virginia Power on the basis of direct and allocated methods in accordance with Virginia Power’s services agreements with DRS. Where costs incurred cannot be determined by specific identification, the costs are allocated based on the proportional level of effort devoted by DRS resources that is attributable to the entity, determined by reference to number of employees, salaries and wages and other similar measures for the relevant DRS service. Management believes the assumptions and methodologies underlying the allocation of general corporate overhead expenses are reasonable.

DRS and other affiliates provide accounting, legal, finance and certain administrative and technical services to Virginia Power. In addition, Virginia Power provides certain services to affiliates, including charges for facilities and equipment usage.

Presented below are significant transactions with DRS and other affiliates:



Year Ended December 31,	2016		2015		2014
(millions)
Commodity purchases from affiliates	$	571	$	555	$	543
Services provided by affiliates⁽¹⁾	454		422		432
Services provided to affiliates	22		22		22

(1) Includes capitalized expenditures of $144 million, $143 million and $146 million for the year ended December 31, 2016, 2015, and 2014, respectively.

Virginia Power has borrowed funds from Dominion under short-term borrowing arrangements. There were $262 million and $376 million in short-term demand note borrowings from Dominion as of December 31, 2016 and 2015, respectively. The weighted-average interest rate of these borrowings was 0.97% and 0.60% at December 31, 2016 and 2015, respectively. Virginia Power had no outstanding borrowings, net of repayments under the Dominion money pool for its nonregulated subsidiaries as of December 31, 2016 and 2015. Interest charges related to Virginia Power's borrowings from Dominion were immaterial for the years ended December 31, 2016, 2015 and 2014.

There were no issuances of Virginia Power's common stock to Dominion in 2016, 2015 or 2014.

Dominion Gas

Transactions with Related Parties

Dominion Gas transacts with affiliates for certain quantities of natural gas and other commodities at market prices in the ordinary course of business. Additionally, Dominion Gas provides transportation and storage services to affiliates. Dominion Gas also enters into certain other contracts with affiliates, which are presented separately from contracts involving commodities or services. As of December 31, 2016 and 2015, all of Dominion Gas' commodity derivatives were with affiliates. See Notes 7 and 19 for more information. See Note 9 for information regarding transactions with an affiliate.

Dominion Gas participates in certain Dominion benefit plans as described in Note 21. At December 31, 2016 and 2015, Dominion Gas' amounts due from Dominion associated with the Dominion Pension Plan and reflected in noncurrent pension and other postretirement benefit assets in the Consolidated Balance Sheets were $697 million and $652 million, respectively. At December 31, 2016 and 2015, Dominion Gas’ amounts due from Dominion and liabilities due to Dominion associated with the Dominion Retiree Health and Welfare Plan were immaterial.

DRS and other affiliates provide accounting, legal, finance and certain administrative and technical services to Dominion Gas. Dominion Gas provides certain services to related parties, including technical services.

The financial statements for all years presented include costs for certain general, administrative and corporate expenses assigned by DRS to Dominion Gas on the basis of direct and allocated methods in accordance with Dominion Gas’ services agreements with DRS. Where costs incurred cannot be determined by specific identification, the costs are allocated based on the proportional level of effort devoted by DRS resources that is attributable to the entity, determined by reference to number of employees, salaries and wages and other similar measures for the relevant DRS service. Management believes the assumptions and methodologies underlying the allocation of general corporate overhead expenses are reasonable. The costs of these services follow:



Year Ended December 31,	2016		2015		2014
(millions)
Purchases of natural gas and transportation and storage services from affiliates	$	9	$	10	$	34
Sales of natural gas and transportation and storage services to affiliates	69		69		84
Services provided by related parties⁽¹⁾	141		133		106
Services provided to related parties⁽²⁾	128		101		17

(1) Includes capitalized expenditures of $49 million, $57 million and $49 million for the year ended December 31, 2016, 2015, and 2014, respectively.

(2) Amounts primarily attributable to Atlantic Coast Pipeline.

The following table presents affiliated and related party balances reflected in Dominion Gas' Consolidated Balance Sheets:



At December 31,	2016		2015
(millions)
Other receivables⁽¹⁾	$	10	$	7
Customer receivables from related parties	1		4
Imbalances receivable from affiliates	2		1
Imbalances payable to affiliates⁽²⁾	4		—
Affiliated notes receivable⁽³⁾	18		14


(1)	Represents amounts due from Atlantic Coast Pipeline, a related party VIE.


(2)	Amounts are presented in other current liabilities in Dominion Gas' Consolidated Balance Sheets.

(3) Amounts are presented in other deferred charges and other assets in Dominion Gas' Consolidated Balance Sheets.

Dominion Gas' borrowings under the IRCA with Dominion totaled $118 million and $95 million as of December 31, 2016 and 2015, respectively. The weighted-average interest rate of these borrowings was 1.08% and 0.65% at December 31, 2016 and 2015, respectively. Interest charges related to Dominion Gas' total borrowings from Dominion were immaterial for the years ended December 31, 2016 and 2015 and $4 million for the year ended December 31, 2014.