Note 9. Derivatives and Hedge Accounting Activities

The Companies’ accounting policies, objectives and strategies for using derivative instruments are discussed in Note 2 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2017, as updated in Current Report on Form 8-K, filed June 6, 2018. See Note 8 in this report for further information about fair value measurements and associated valuation methods for derivatives.

Derivative assets and liabilities are presented gross on the Companies’ Consolidated Balance Sheets. Dominion Energy’s derivative contracts include both over-the-counter transactions and those that are executed on an exchange or other trading platform (exchange contracts) and centrally cleared. Virginia Power and Dominion Energy Gas’ derivative contracts include over-the-counter transactions. Over-the-counter contracts are bilateral contracts that are transacted directly with a third party. Exchange contracts utilize a financial intermediary, exchange, or clearinghouse to enter, execute, or clear the transactions. Certain over-the-counter and exchange contracts contain contractual rights of setoff through master netting arrangements, derivative clearing agreements, and contract default provisions. In addition, the contracts are subject to conditional rights of setoff through counterparty nonperformance, insolvency, or other conditions.

In general, most over-the-counter transactions and all exchange contracts are subject to collateral requirements. Types of collateral for over-the-counter and exchange contracts include cash, letters of credit, and in some cases other forms of security, none of which are subject to restrictions. Cash collateral is used in the table below to offset derivative assets and liabilities. Certain accounts receivable and accounts payable recognized on the Companies’ Consolidated Balance Sheets, as well as letters of credit and other forms of security, all of which are not included in the tables below, are subject to offset under master netting or similar arrangements and would reduce the net exposure. See Note 17 for further information regarding credit-related contingent features for the Companies’ derivative instruments.

Dominion Energy

Balance Sheet Presentation

The tables below present Dominion Energy’s derivative asset and liability balances by type of financial instrument, before and after the effects of offsetting:

	June 30, 2018						December 31, 2017
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Assets Presented in the Consolidated Balance Sheet		Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Assets Presented in the Consolidated Balance Sheet
(millions)
Commodity contracts:
Over-the-counter	$	130	$	—	$	130	$	174	$	—	$	174
Exchange		21		—		21		80		—		80
Interest rate contracts:
Over-the-counter		58		—		58		17		—		17
Foreign currency contracts:
Over-the-counter		33		—		33		32		—		32
Total derivatives, subject to a master netting or similar arrangement		242		—		242		303		—		303
Total derivatives, not subject to a master netting or similar arrangement		8		—		8		4		—		4
Total	$	250	$	—	$	250	$	307	$	—	$	307

			June 30, 2018									December 31, 2017
			Gross Amounts Not Offset in the Consolidated Balance Sheet										Gross Amounts Not Offset in the Consolidated Balance Sheet
	Net Amounts of Assets Presented in the Consolidated Balance Sheet			Financial Instruments		Cash Collateral Received		Net Amounts		Net Amounts of Assets Presented in the Consolidated Balance Sheet			Financial Instruments		Cash Collateral Received		Net Amounts
(millions)
Commodity contracts:
Over-the-counter	$	130		$	7	$	—	$	123	$	174		$	9	$	—	$	165
Exchange		21			21		—		—		80			80		—		—
Interest rate contracts:
Over-the-counter		58			9		—		49		17			8		—		9
Foreign currency contracts:
Over-the-counter		33			5		—		28		32			2		—		30
Total	$	242		$	42	$	—	$	200	$	303		$	99	$	—	$	204

	June 30, 2018						December 31, 2017
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Liabilities Presented in the Consolidated Balance Sheet		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Liabilities Presented in the Consolidated Balance Sheet
(millions)
Commodity contracts:
Over-the-counter	$	23	$	—	$	23	$	76	$	—	$	76
Exchange		32		—		32		120		—		120
Interest rate contracts:
Over-the-counter		58		—		58		85		—		85
Foreign currency contracts:
Over-the-counter		5		—		5		2		—		2
Total derivatives, subject to a master netting or similar arrangement		118		—		118		283		—		283
Total derivatives, not subject to a master netting or similar arrangement		—		—		—		1		—		1
Total	$	118	$	—	$	118	$	284	$	—	$	284

			June 30, 2018									December 31, 2017
			Gross Amounts Not Offset in the Consolidated Balance Sheet									Gross Amounts Not Offset in the Consolidated Balance Sheet
	Net Amounts of Liabilities Presented in the Consolidated Balance Sheet			Financial Instruments		Cash Collateral Paid		Net Amounts		Net Amounts of Liabilities Presented in the Consolidated Balance Sheet		Financial Instruments		Cash Collateral Paid		Net Amounts
(millions)
Commodity contracts:
Over-the-counter	$	23		$	7	$	—	$	16	$	76	$	9	$	6	$	61
Exchange		32			21		11		—		120		80		40		—
Interest rate contracts:
Over-the-counter		58			9		—		49		85		8		—		77
Foreign currency contracts:
Over-the-counter		5			5		—		—		2		2		—		—
Total	$	118		$	42	$	11	$	65	$	283	$	99	$	46	$	138

Volumes

The following table presents the volume of Dominion Energy’s derivative activity at June 30, 2018. These volumes are based on open derivative positions and represent the combined absolute value of their long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of its long and short positions.

	Current		Noncurrent
Natural Gas (bcf):
Fixed price⁽¹⁾		75		24
Basis		214		600
Electricity (MWh):
Fixed price⁽¹⁾		10,566,074		677,760
FTRs		102,797,191		—
Liquids (Gal)⁽²⁾		51,019,800		—
Interest rate⁽³⁾	$	600,000,000	$	5,433,632,652
Foreign currency⁽³⁾⁽⁴⁾	$	—	$	280,000,000

(1)	Includes options.

(2)	Includes NGLs and oil.

(3)	Maturity is determined based on final settlement period.

(4)	Euro equivalent volumes are €250,000,000.

Ineffectiveness and AOCI

For the three and six months ended June 30, 2018 and 2017, gains or losses on hedging instruments determined to be ineffective and amounts excluded from the assessment of effectiveness were not material. Amounts excluded from the assessment of effectiveness include changes in the differences between spot prices and forward prices.

The following table presents selected information related to gains (losses) on cash flow hedges included in AOCI in Dominion Energy’s Consolidated Balance Sheet at June 30, 2018:

	AOCI After-Tax			Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax			Maximum Term
(millions)
Commodities:
Gas	$	—		$	1		37 months
Electricity		(9	)		(9	)	18 months
Other		(5	)		(5	)	9 months
Interest rate		(246	)		(9	)	378 months
Foreign currency		12			(4	)	96 months
Total	$	(248	)	$	(26	)

The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., anticipated sales) in earnings, thereby achieving the realization of prices contemplated by the underlying risk management strategies and will vary from the expected amounts presented above as a result of changes in market prices, interest rates and foreign currency exchange rates.

Fair Value and Gains and Losses on Derivative Instruments

The following table presents the fair values of Dominion Energy’s derivatives and where they are presented in its Consolidated Balance Sheets:

	Fair Value – Derivatives under Hedge Accounting		Fair Value – Derivatives not under Hedge Accounting		Total Fair Value
(millions)
June 30, 2018
ASSETS
Current Assets
Commodity	$	10	$	67	$	77
Interest rate		12		—		12
Total current derivative assets⁽¹⁾		22		67		89
Noncurrent Assets
Commodity		1		81		82
Interest rate		46		—		46
Foreign currency		33		—		33
Total noncurrent derivative assets⁽²⁾		80		81		161
Total derivative assets	$	102	$	148	$	250
LIABILITIES
Current Liabilities
Commodity	$	30	$	22	$	52
Interest rate		12		—		12
Foreign currency		5		—		5
Total current derivative liabilities⁽³⁾		47		22		69
Noncurrent Liabilities
Commodity		2		1		3
Interest rate		46		—		46
Total noncurrent derivative liabilities⁽⁴⁾		48		1		49
Total derivative liabilities	$	95	$	23	$	118
December 31, 2017
ASSETS
Current Assets
Commodity	$	5	$	158	$	163
Interest rate		6		—		6
Total current derivative assets⁽¹⁾		11		158		169
Noncurrent Assets
Commodity		—		95		95
Interest rate		11		—		11
Foreign currency		32		—		32
Total noncurrent derivative assets⁽²⁾		43		95		138
Total derivative assets	$	54	$	253	$	307
LIABILITIES
Current Liabilities
Commodity	$	103	$	92	$	195
Interest rate		53		—		53
Foreign currency		2		—		2
Total current derivative liabilities⁽³⁾		158		92		250
Noncurrent Liabilities
Commodity		1		1		2
Interest rate		32		—		32
Total noncurrent derivative liabilities⁽⁴⁾		33		1		34
Total derivative liabilities	$	191	$	93	$	284

(1)	Current derivative assets are presented in other current assets in Dominion Energy’s Consolidated Balance Sheets.

(2)	Noncurrent derivative assets are presented in other deferred charges and other assets in Dominion Energy’s Consolidated Balance Sheets.

(3)	Current derivative liabilities are presented in other current liabilities in Dominion Energy’s Consolidated Balance Sheets.

(4)	Noncurrent derivative liabilities are presented in other deferred credits and other liabilities in Dominion Energy’s Consolidated Balance Sheets.

The following tables present the gains and losses on Dominion Energy’s derivatives, as well as where the associated activity is presented in its Consolidated Balance Sheets and Statements of Income:

Derivatives in cash flow hedging relationships	Amount of Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion)⁽¹⁾			Amount of Gain (Loss) Reclassified From AOCI to Income			Increase (Decrease) in Derivatives Subject to Regulatory Treatment⁽²⁾
(millions)
Three Months Ended June 30, 2018
Derivative type and location of gains (losses):
Commodity:
Operating revenue				$	(16	)
Total commodity	$	(39	)	$	(16	)	$	—
Interest rate⁽³⁾		9			(12	)		25
Foreign currency⁽⁴⁾		(14	)		(16	)		—
Total	$	(44	)	$	(44	)	$	25
Three Months Ended June 30, 2017
Derivative type and location of gains (losses):
Commodity:
Operating revenue				$	19
Electric fuel and other energy-related purchases					2
Total commodity	$	44		$	21		$	—
Interest rate⁽³⁾		(15	)		(11	)		(42	)
Foreign currency⁽⁴⁾		16			19			—
Total	$	45		$	29		$	(42	)
Six Months Ended June 30, 2018
Derivative type and location of gains (losses):
Commodity:
Operating revenue				$	(28	)
Purchased gas					(2	)
Electric fuel and other energy-related purchases					7
Total commodity	$	58		$	(23	)	$	—
Interest rate⁽³⁾		47			(24	)		93
Foreign currency⁽⁴⁾		(1	)		(8	)		—
Total	$	104		$	(55	)	$	93
Six Months Ended June 30, 2017
Derivative type and location of gains (losses):
Commodity:
Operating revenue				$	81
Electric fuel and other energy-related purchases					2
Total commodity	$	131		$	83		$	—
Interest rate⁽³⁾		(14	)		(23	)		(34	)
Foreign currency⁽⁴⁾		(2	)		6			—
Total	$	115		$	66		$	(34	)

(1)	Amounts deferred into AOCI have no associated effect in Dominion Energy’s Consolidated Statements of Income.

(2)	Represents net derivative activity deferred into and amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Dominion Energy’s Consolidated Statements of Income.

(3)	Amounts recorded in Dominion Energy’s Consolidated Statements of Income are classified in interest and related charges.

(4)	Amounts recorded in Dominion Energy’s Consolidated Statements of Income are classified in other income.

Derivatives not designated as hedging instruments	Amount of Gain (Loss) Recognized in Income on Derivatives⁽¹⁾
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
(millions)
Derivative type and location of gains (losses):
Commodity:
Operating revenue	$	(9	)	$	10		$	(3	)	$	14
Purchased gas		4			(8	)		4			8
Electric fuel and other energy-related purchases		(3	)		(8	)		(16	)		(32	)
Other operations & maintenance		—			(1	)		—			(1	)
Total	$	(8	)	$	(7	)	$	(15	)	$	(11	)

(1)	Includes derivative activity amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Dominion Energy’s Consolidated Statements of Income.

Virginia Power

Balance Sheet Presentation

The tables below present Virginia Power’s derivative asset and liability balances by type of financial instrument, before and after the effects of offsetting:

	June 30, 2018						December 31, 2017
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Assets Presented in the Consolidated Balance Sheet		Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Assets Presented in the Consolidated Balance Sheet
(millions)
Commodity contracts:
Over-the-counter	$	117	$	—	$	117	$	155	$	—	$	155
Interest rate contracts:
Over-the-counter		21		—		21		—		—		—
Total derivatives, subject to a master netting or similar arrangement		138		—		138		155		—		155
Total derivatives, not subject to a master netting or similar arrangement		9		—		9		11		—		11
Total	$	147	$	—	$	147	$	166	$	—	$	166

			June 30, 2018								December 31, 2017
			Gross Amounts Not Offset in the Consolidated Balance Sheet								Gross Amounts Not Offset in the Consolidated Balance Sheet
	Net Amounts of Assets Presented in the Consolidated Balance Sheet		Financial Instruments		Cash Collateral Received		Net Amounts		Net Amounts of Assets Presented in the Consolidated Balance Sheet		Financial Instruments		Cash Collateral Received		Net Amounts
(millions)
Commodity contracts:
Over-the-counter	$	117	$	3	$	—	$	114	$	155	$	4	$	—	$	151
Interest rate contracts:
Over-the-counter		21		3		—		18		—		—		—		—
Total	$	138	$	6	$	—	$	132	$	155	$	4	$	—	$	151

	June 30, 2018						December 31, 2017
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Liabilities Presented in the Consolidated Balance Sheet		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Liabilities Presented in the Consolidated Balance Sheet
(millions)
Commodity contracts:
Over-the-counter	$	3	$	—	$	3	$	4	$	—	$	4
Interest rate contracts:
Over-the-counter		6		—		6		57		—		57
Total derivatives, subject to a master netting or similar arrangement		9		—		9		61		—		61
Total derivatives, not subject to a master netting or similar arrangement		5		—		5		5		—		5
Total	$	14	$	—	$	14	$	66	$	—	$	66

			June 30, 2018								December 31, 2017
			Gross Amounts Not Offset in the Consolidated Balance Sheet								Gross Amounts Not Offset in the Consolidated Balance Sheet
	Net Amounts of Liabilities Presented in the Consolidated Balance Sheet		Financial Instruments		Cash Collateral Paid		Net Amounts		Net Amounts of Liabilities Presented in the Consolidated Balance Sheet		Financial Instruments		Cash Collateral Paid		Net Amounts
(millions)
Commodity contracts:
Over-the-counter	$	3	$	3	$	—	$	—	$	4	$	4	$	—	$	—
Interest rate contracts:
Over-the-counter		6		3		—		3		57		—		—		57
Total	$	9	$	6	$	—	$	3	$	61	$	4	$	—	$	57

Volumes

The following table presents the volume of Virginia Power’s derivative activity at June 30, 2018. These volumes are based on open derivative positions and represent the combined absolute value of their long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of its long and short positions.

	Current		Noncurrent
Natural Gas (bcf):
Fixed price⁽¹⁾		27		4
Basis		112		514
Electricity (MWh):
Fixed price⁽¹⁾		1,061,191		—
FTRs		101,284,984		—
Interest rate⁽²⁾	$	600,000,000	$	1,000,000,000

(1)	Includes options.

(2)	Maturity is determined based on final settlement period.

Ineffectiveness and AOCI

For the three and six months ended June 30, 2018 and 2017, gains or losses on hedging instruments determined to be ineffective were not material.

The following table presents selected information related to losses on cash flow hedges included in AOCI in Virginia Power’s Consolidated Balance Sheet at June 30, 2018:

	AOCI After-Tax			Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax			Maximum Term
(millions)
Interest rate	$	(8	)	$	(1	)	378 months
Total	$	(8	)	$	(1	)

The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., interest payments) in earnings, thereby achieving the realization of interest rates contemplated by the underlying risk management strategies and will vary from the expected amounts presented above as a result of changes in interest rates.

Fair Value and Gains and Losses on Derivative Instruments

The following table presents the fair values of Virginia Power’s derivatives and where they are presented in its Consolidated Balance Sheets:

	Fair Value – Derivatives under Hedge Accounting		Fair Value – Derivatives not under Hedge Accounting		Total Fair Value
(millions)
June 30, 2018
ASSETS
Current Assets
Commodity	$	—	$	49	$	49
Interest rate		8		—		8
Total current derivative assets⁽¹⁾		8		49		57
Noncurrent Assets
Commodity		—		77		77
Interest rate		13		—		13
Total noncurrent derivative assets⁽²⁾		13		77		90
Total derivative assets	$	21	$	126	$	147
LIABILITIES
Current Liabilities
Commodity	$	—	$	8	$	8
Interest rate		4		—		4
Total current derivative liabilities⁽³⁾		4		8		12
Noncurrent Liabilities
Interest rate		2		—		2
Total noncurrent derivatives liabilities ⁽⁴⁾		2		—		2
Total derivative liabilities	$	6	$	8	$	14
December 31, 2017
ASSETS
Current Assets
Commodity	$	—	$	75	$	75
Total current derivative assets⁽¹⁾		—		75		75
Noncurrent Assets
Commodity		—		91		91
Total noncurrent derivative assets⁽²⁾		—		91		91
Total derivative assets	$	—	$	166	$	166
LIABILITIES
Current Liabilities
Commodity	$	—	$	9	$	9
Interest rate		44		—		44
Total current derivative liabilities⁽³⁾		44		9		53
Noncurrent Liabilities
Interest rate		13		—		13
Total noncurrent derivatives liabilities ⁽⁴⁾		13		—		13
Total derivative liabilities	$	57	$	9	$	66

(1)	Current derivative assets are presented in other current assets in Virginia Power’s Consolidated Balance Sheets.

(2)	Noncurrent derivative assets are presented in other deferred charges and other assets in Virginia Power’s Consolidated Balance Sheets.

(3)	Current derivative liabilities are presented in other current liabilities in Virginia Power’s Consolidated Balance Sheets.

(4)	Noncurrent derivative liabilities are presented in other deferred credits and other liabilities in Virginia Power’s Consolidated Balance Sheets.

The following tables present the gains and losses on Virginia Power’s derivatives, as well as where the associated activity is presented in its Consolidated Balance Sheets and Statements of Income:

Derivatives in cash flow hedging relationships	Amount of Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion)⁽¹⁾			Amount of Gain (Loss) Reclassified From AOCI to Income			Increase (Decrease) in Derivatives Subject to Regulatory Treatment⁽²⁾
(millions)
Three Months Ended June 30, 2018
Derivative type and location of gains (losses):
Interest rate⁽³⁾	$	2		$	—		$	25
Total	$	2		$	—		$	25
Three Months Ended June 30, 2017
Derivative type and location of gains (losses):
Interest rate⁽³⁾	$	(5	)	$	(1	)	$	(42	)
Total	$	(5	)	$	(1	)	$	(42	)
Six Months Ended June 30, 2018
Derivative type and location of gains (losses):
Interest rate⁽³⁾	$	9		$	—		$	93
Total	$	9		$	—		$	93
Six Months Ended June 30, 2017
Derivative type and location of gains (losses):
Interest rate⁽³⁾	$	(5	)	$	(1	)	$	(34	)
Total	$	(5	)	$	(1	)	$	(34	)

(1)	Amounts deferred into AOCI have no associated effect in Virginia Power’s Consolidated Statements of Income.

(2)	Represents net derivative activity deferred into and amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Virginia Power’s Consolidated Statements of Income.

(3)	Amounts recorded in Virginia Power’s Consolidated Statements of Income are classified in interest and related charges.

Derivatives not designated as hedging instruments	Amount of Gain (Loss) Recognized in Income on Derivatives⁽¹⁾
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2018			2017			2018			2017
(millions)
Derivative type and location of gains (losses):
Commodity⁽²⁾	$	(3	)	$	(7	)	$	(3	)	$	(24	)
Total	$	(3	)	$	(7	)	$	(3	)	$	(24	)

(1)	Includes derivative activity amortized out of regulatory assets/liabilities. Amounts deferred into regulatory assets/liabilities have no associated effect in Virginia Power’s Consolidated Statements of Income.

(2)	Amounts recorded in Virginia Power’s Consolidated Statements of Income are classified in electric fuel and other energy-related purchases.

Dominion Energy Gas

Balance Sheet Presentation

The tables below present Dominion Energy Gas’ derivative asset and liability balances by type of financial instrument, before and after the effects of offsetting.

	June 30, 2018						December 31, 2017
	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Assets Presented in the Consolidated Balance Sheet		Gross Amounts of Recognized Assets		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Assets Presented in the Consolidated Balance Sheet
(millions)
Interest rate contracts:
Over-the-counter	$	1	$	—	$	1	$	—	$	—	$	—
Foreign currency contracts:
Over-the-counter		33		—		33		32		—		32
Total derivatives, subject to a master netting or similar arrangement	$	34	$	—	$	34	$	32	$	—	$	32

			June 30, 2018									December 31, 2017
			Gross Amounts Not Offset in the Consolidated Balance Sheet									Gross Amounts Not Offset in the Consolidated Balance Sheet
	Net Amounts of Assets Presented in the Consolidated Balance Sheet			Financial Instruments		Cash Collateral Received		Net Amounts		Net Amounts of Assets Presented in the Consolidated Balance Sheet		Financial Instruments		Cash Collateral Received		Net Amounts
(millions)
Interest rate contracts:
Over-the-counter	$	1		$	1	$	—	$	—	$	—	$	—	$	—	$	—
Foreign currency contracts:
Over-the-counter		33			5		—		28		32		2		—		30
Total	$	34		$	6	$	—	$	28	$	32	$	2	$	—	$	30

	June 30, 2018						December 31, 2017
	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Liabilities Presented in the Consolidated Balance Sheet		Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Consolidated Balance Sheet		Net Amounts of Liabilities Presented in the Consolidated Balance Sheet
(millions)
Commodity contracts:
Over-the-counter	$	7	$	—	$	7	$	6	$	—	$	6
Interest rate contracts:
Over-the-counter		4		—		4		—		—		—
Foreign currency contracts:
Over-the-counter		5		—		5		2		—		2
Total derivatives, subject to a master netting or similar arrangement	$	16	$	—	$	16	$	8	$	—	$	8

			June 30, 2018								December 31, 2017
			Gross Amounts Not Offset in the Consolidated Balance Sheet								Gross Amounts Not Offset in the Consolidated Balance Sheet
	Net Amounts of Liabilities Presented in the Consolidated Balance Sheet		Financial Instruments		Cash Collateral Paid		Net Amounts		Net Amounts of Liabilities Presented in the Consolidated Balance Sheet		Financial Instruments		Cash Collateral Paid		Net Amounts
(millions)
Commodity contracts
Over-the-counter	$	7	$	—	$	—	$	7	$	6	$	—	$	—	$	6
Interest rate contracts:
Over-the-counter		4		1		—		3		—		—		—		—
Foreign currency contracts:
Over-the-counter		5		5		—		—		2		2		—		—
Total	$	16	$	6	$	—	$	10	$	8	$	2	$	—	$	6

Volumes

The following table presents the volume of Dominion Energy Gas’ derivative activity at June 30, 2018. These volumes are based on open derivative positions and represent the combined absolute value of their long and short positions, except in the case of offsetting transactions, for which they represent the absolute value of the net volume of its long and short positions.

	Current		Noncurrent
Natural Gas (bcf):
Basis		1		—
NGLs (Gal)		45,643,800		—
Interest rate⁽¹⁾	$	—	$	1,050,000,000
Foreign currency⁽¹⁾⁽²⁾	$	—	$	280,000,000

(1)	Maturity is based on final settlement period.

(2)	Euro equivalent volumes are €250,000,000.

Ineffectiveness and AOCI

For the three and six months ended June 30, 2018 and 2017, gains or losses on hedging instruments determined to be ineffective were not material.

The following table presents selected information related to gains (losses) on cash flow hedges included in AOCI in Dominion Energy Gas’ Consolidated Balance Sheet at June 30, 2018:

	AOCI After-Tax			Amounts Expected to be Reclassified to Earnings During the Next 12 Months After-Tax			Maximum Term
(millions)
Commodities:
NGLs	$	(5	)	$	(5	)	9 months
Interest rate		(31	)		(4	)	318 months
Foreign currency		12			(4	)	96 months
Total	$	(24	)	$	(13	)

The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., interest payments) in earnings, thereby achieving the realization of prices contemplated by the underlying risk management strategies and will vary from the expected amounts presented above as a result of changes in market prices, interest rates and foreign currency exchange rates.

Fair Value and Gains and Losses on Derivative Instruments

The following tables present the fair values of Dominion Energy Gas’ derivatives and where they are presented in its Consolidated Balance Sheets:

	Fair Value-Derivatives Under Hedge Accounting		Fair Value-Derivatives Not Under Hedge Accounting		Total Fair Value
(millions)
June 30, 2018
ASSETS
Noncurrent Assets
Interest rate	$	1	$	—	$	1
Foreign currency		33		—		33
Total noncurrent derivative assets⁽¹⁾		34		—		34
Total derivative assets	$	34	$	—	$	34
LIABILITIES
Current Liabilities
Commodity	$	7	$	—	$	7
Interest rate		1		—		1
Foreign currency		5		—		5
Total current derivative liabilities⁽²⁾		13		—		13
Noncurrent Liabilities
Interest rate		3		—		3
Total noncurrent derivative liabilities⁽³⁾		3		—		3
Total derivative liabilities	$	16	$	—	$	16
December 31, 2017
ASSETS
Noncurrent Assets
Foreign currency	$	32	$	—	$	32
Total noncurrent derivative assets⁽¹⁾		32		—		32
Total derivative assets	$	32	$	—	$	32
LIABILITIES
Current Liabilities
Commodity	$	6	$	—	$	6
Foreign currency		2		—		2
Total current derivative liabilities⁽²⁾		8		—		8
Total derivative liabilities	$	8	$	—	$	8

(1)	Noncurrent derivatives assets are presented in other deferred charges and other assets in Dominion Energy Gas’ Consolidated Balance Sheets.

(2)	Current derivative liabilities are presented in other current liabilities in Dominion Energy Gas’ Consolidated Balance Sheets.

(3)	Noncurrent derivative liabilities are presented in other deferred credits and other liabilities in Dominion Energy Gas’ Consolidated Balance Sheets.

The following table presents the gains and losses on Dominion Energy Gas’ derivatives, as well as where the associated activity is presented in its Consolidated Balance Sheets and Statements of Income:

Derivatives in cash flow hedging relationships	Amount of Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion)⁽¹⁾			Amount of Gain (Loss) Reclassified From AOCI to Income
(millions)
Three Months Ended June 30, 2018
Derivative Type and Location of Gains (Losses):
Commodity:
Operating revenue				$	(2	)
Total commodity	$	(10	)	$	(2	)
Interest rate⁽²⁾		(3	)		(1	)
Foreign currency⁽³⁾		(14	)		(16	)
Total	$	(27	)	$	(19	)
Three Months Ended June 30, 2017
Derivative Type and Location of Gains (Losses):
Commodity:
Operating revenue				$	1
Total commodity	$	2		$	1
Interest rate⁽²⁾		—			(1	)
Foreign currency⁽³⁾		16			19
Total	$	18		$	19
Six Months Ended June 30, 2018
Derivative Type and Location of Gains (Losses):
Commodity:
Operating revenue				$	(5	)
Total commodity	$	(6	)	$	(5	)
Interest rate⁽²⁾		(3	)		(2	)
Foreign currency⁽³⁾		(1	)		(8	)
Total	$	(10	)	$	(15	)
Six Months Ended June 30, 2017
Derivative Type and Location of Gains (Losses):
Commodity:
Operating revenue				$	(3	)
Total commodity	$	4		$	(3	)
Interest rate⁽²⁾		—			(2	)
Foreign currency⁽³⁾		(1	)		6
Total	$	3		$	1

(1)	Amounts deferred into AOCI have no associated effect in Dominion Energy Gas’ Consolidated Statements of Income.

(2)	Amounts recorded in Dominion Energy Gas’ Consolidated Statements of Income are classified in interest and related charges.

(3)	Amounts recorded in Dominion Energy Gas’ Consolidated Statements of Income are classified in other income.