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 nine months ended September 30, 2017, Dominion Energy reported after-tax net expenses of $17 million for specific items in the Corporate and Other segment, with $1 million of net expenses attributable to its operating segments. In the nine months ended September 30, 2016, Dominion Energy reported after-tax net expenses of $63 million for specific items in the Corporate and Other segment, with $22 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).

•	A $29 million ($18 million after-tax) net gain on investments held in nuclear decommissioning trust funds, attributable to Dominion Generation

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 September 30, 2017
Total revenue from external customers	$	580	$	1,931	$	459	$	3		$	206		$	3,179
Intersegment revenue		4		3		204		150			(361	)		—
Total operating revenue		584		1,934		663		153			(155	)		3,179
Net income (loss) attributable to Dominion Energy		138		369		187		(29	)		—			665
Three Months Ended September 30, 2016
Total revenue from external customers	$	614	$	1,947	$	359	$	2		$	210		$	3,132
Intersegment revenue		6		2		205		144			(357	)		—
Total operating revenue		620		1,949		564		146			(147	)		3,132
Net income (loss) attributable to Dominion Energy		139		650		135		(234	)		—			690
Nine Months Ended September 30, 2017
Total revenue from external customers	$	1,664	$	5,091	$	1,949	$	12		$	660		$	9,376
Intersegment revenue		16		8		645		451			(1,120	)		—
Total operating revenue		1,680		5,099		2,594		463			(460	)		9,376
Net income (loss) attributable to Dominion Energy		390		870		613		(186	)		—			1,687
Nine Months Ended September 30, 2016
Total revenue from external customers	$	1,682	$	5,204	$	1,235	$	8		$	522		$	8,651
Intersegment revenue		17		7		507		469			(1,000	)		—
Total operating revenue		1,699		5,211		1,742		477			(478	)		8,651
Net income (loss) attributable to Dominion Energy		363		1,066		483		(246	)		—			1,666

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 nine months ended September 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 nine months ended September 30, 2016, Virginia Power reported an after-tax net expense of $18 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 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 September 30, 2017
Operating revenue	$	580	$	1,574	$	—		$	2,154
Net income		137		314		8			459
Three Months Ended September 30, 2016
Operating revenue	$	617	$	1,594	$	—		$	2,211
Net income		140		359		4			503
Nine Months Ended September 30, 2017
Operating revenue	$	1,670	$	4,062	$	—		$	5,732
Net income		387		735		11			1,133
Nine Months Ended September 30, 2016
Operating revenue	$	1,686	$	4,191	$	—		$	5,877
Net income (loss)		362		699		(15	)		1,046

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 nine months ended September 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 nine months ended September 30, 2016, Dominion Energy Gas reported an after-tax net benefit of $5 million for specific items in the Corporate and Other segment, with after-tax net expense of $7 million 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.

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 September 30, 2017
Operating revenue	$	401	$	—		$	401
Net income (loss)		121		(4	)		117
Three Months Ended September 30, 2016
Operating revenue	$	382	$	—		$	382
Net income		77		6			83
Nine Months Ended September 30, 2017
Operating revenue	$	1,313	$	—		$	1,313
Net income (loss)		318		(16	)		302
Nine Months Ended September 30, 2016
Operating revenue	$	1,181	$	—		$	1,181
Net income (loss)		288		(2	)		286