Note 19. Operating Segments

The Companies are organized primarily on the basis of products and services sold in the U.S. In connection with its corporate rebranding, the Companies changed the names of their principal operating segments to Power Delivery, Power Generation and Gas Infrastructure from Dominion Virginia Power, Dominion Generation and Dominion Energy, respectively. A description of the operations included in the Companies’ primary operating segments is as follows:

Primary Operating Segment	Description of Operations	Dominion Energy	Virginia Power	Dominion Energy Gas
Power Delivery	Regulated electric distribution	X	X
	Regulated electric transmission	X	X
Power Generation	Regulated electric fleet	X	X
	Merchant electric fleet	X
Gas Infrastructure	Gas transmission and storage	X		X
	Gas distribution and storage	X		X
	Gas gathering and processing	X		X
	LNG import and storage	X
	Nonregulated retail energy marketing	X

In addition to the operating segments above, the Companies also report a Corporate and Other segment.

Dominion Energy

The Corporate and Other Segment of Dominion Energy includes its corporate, service company and other functions (including unallocated debt) and the net impact of operations that are discontinued or sold. In addition, Corporate and Other includes specific items attributable to Dominion Energy's operating segments that are not included in profit measures evaluated by executive management in assessing the segments' performance or in allocating resources.

In the six months ended June 30, 2017, Dominion Energy reported after-tax net expenses of $10 million for specific items in the Corporate and Other segment, with $1 million of net expenses attributable to its operating segments. In the six months ended June 30, 2016, Dominion Energy reported after-tax net expenses of $37 million for specific items in the Corporate and Other segment, with $26 million of these net expenses attributable to its operating segments.

The net expense for specific items attributable to Dominion Energy's operating segments in 2016 primarily related to the impact of the following item:

•	A $59 million ($36 million after-tax) charge related to an organizational design initiative, attributable to:

•

Power Delivery ($5 million after-tax);

•

Gas Infrastructure ($12 million after-tax); and

•

Power Generation ($19 million after-tax).

The following table presents segment information pertaining to Dominion Energy’s operations:

	Power Delivery		Power Generation		Gas Infrastructure		Corporate and Other			Adjustments/ Eliminations			Consolidated Total
(millions)
Three Months Ended June 30, 2017
Total revenue from external customers	$	530	$	1,507	$	589	$	6		$	181		$	2,813
Intersegment revenue		7		2		175		149			(333	)		—
Total operating revenue		537		1,509		764		155			(152	)		2,813
Net income (loss) attributable to Dominion Energy		127		240		163		(140	)		—			390
Three Months Ended June 30, 2016
Total revenue from external customers	$	512	$	1,564	$	391	$	3		$	128		$	2,598
Intersegment revenue		6		2		124		133			(265	)		—
Total operating revenue		518		1,566		515		136			(137	)		2,598
Net income attributable to Dominion Energy		104		171		162		15			—			452
Six Months Ended June 30, 2017
Total revenue from external customers	$	1,084	$	3,160	$	1,490	$	9		$	454		$	6,197
Intersegment revenue		12		5		441		301			(759	)		—
Total operating revenue		1,096		3,165		1,931		310			(305	)		6,197
Net income (loss) attributable to Dominion Energy		252		501		426		(157	)		—			1,022
Six Months Ended June 30, 2016
Total revenue from external customers	$	1,068	$	3,257	$	876	$	6		$	312		$	5,519
Intersegment revenue		11		5		302		325			(643	)		—
Total operating revenue		1,079		3,262		1,178		331			(331	)		5,519
Net income (loss) attributable to Dominion Energy		224		416		348		(12	)		—			976

Intersegment sales and transfers for Dominion Energy are based on contractual arrangements and may result in intersegment profit or loss that is eliminated in consolidation.

Virginia Power

The Corporate and Other Segment of Virginia Power primarily includes specific items attributable to its operating segments that are not included in profit measures evaluated by executive management in assessing the segments' performance or in allocating resources.

In the six months ended June 30, 2017, Virginia Power reported after-tax net expenses of $7 million for specific items in the Corporate and Other segment, all of which was attributable to its operating segments. In the six months ended June 30, 2016, Virginia Power reported an after-tax net expense of $19 million for specific items in the Corporate and Other segment, all of which was attributable to its operating segments.

The net expense for specific items attributable to Virginia Power's operating segments in 2017 primarily related to the impact of the following item which was attributable to Power Delivery:

•	A $16 million ($10 million after-tax) charge arising from a proposed customer settlement.

The net expense for specific items attributable to Virginia Power’s operating segments in 2016 primarily related to the impact of the following item:

•	A $33 million ($20 million after-tax) charge related to an organizational design initiative, attributable to:

•

Power Delivery ($5 million after-tax); and

•

Power Generation ($15 million after-tax).

The following table presents segment information pertaining to Virginia Power’s operations:

	Power Delivery		Power Generation		Corporate and Other			Consolidated Total
(millions)
Three Months Ended June 30, 2017
Operating revenue	$	533	$	1,214	$	—		$	1,747
Net income (loss)		125		198		(5	)		318
Three Months Ended June 30, 2016
Operating revenue	$	512	$	1,264	$	—		$	1,776
Net income		104		174		2			280
Six Months Ended June 30, 2017
Operating revenue	$	1,090	$	2,488	$	—		$	3,578
Net income		250		421		3			674
Six Months Ended June 30, 2016
Operating revenue	$	1,069	$	2,597	$	—		$	3,666
Net income (loss)		222		340		(19	)		543

Dominion Energy Gas

The Corporate and Other Segment of Dominion Energy Gas primarily includes specific items attributable to Dominion Energy Gas' operating segment that are not included in profit measures evaluated by executive management in assessing the segment's performance or in allocating resources and the effect of certain items recorded at Dominion Energy Gas as a result of Dominion Energy's basis in the net assets contributed.

In the six months ended June 30, 2017, Dominion Energy Gas reported after-tax net expenses of $9 million for specific items in the Corporate and Other segment, all of which was attributable to its operating segment. In the six months ended June 30, 2016, Dominion Energy Gas reported an after-tax net expense of $2 million for specific items in the Corporate and Other segment, all of which was attributable to its operating segment.

The net expense for specific items in 2017 was due to a $15 million ($9 million after-tax) charge to write-off the balance of a regulatory asset no longer considered probable of recovery at June 30, 2017.

The net expense for specific items in 2016 primarily related to an $8 million ($5 million after-tax) charge related to an organizational design initiative.

The following table presents segment information pertaining to Dominion Energy Gas' operations:

	Gas Infrastructure		Corporate and Other			Consolidated Total
(millions)
Three Months Ended June 30, 2017
Operating revenue	$	422	$	—		$	422
Net income (loss)		88		(11	)		77
Three Months Ended June 30, 2016
Operating revenue	$	368	$	—		$	368
Net income (loss)		108		(3	)		105
Six Months Ended June 30, 2017
Operating revenue	$	912	$	—		$	912
Net income (loss)		197		(12	)		185
Six Months Ended June 30, 2016
Operating revenue	$	799	$	—		$	799
Net income (loss)		211		(8	)		203