Edgar Filing: DOMINION RESOURCES INC /VA/

Large accelerated filer

Accelerated filer

Non-accelerated filer

¨ (Do not check if a smaller reporting company)

Smaller reporting company

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to


Commission File Number	Exact name of registrants as specified in their charters, address of principal executive offices and registrants’ telephone number	I.R.S. Employer Identification Number
001-08489	DOMINION RESOURCES, INC.	54-1229715
000-55337	VIRGINIA ELECTRIC AND POWER COMPANY	54-0418825
000-55338	DOMINION GAS HOLDINGS, LLC	46-3639580

120 Tredegar Street

Richmond, Virginia 23219

(804) 819-2000

State or other jurisdiction of incorporation or organization of the registrants: Virginia

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.


Dominion Resources, Inc. Yes x No ¨		Virginia Electric and Power Company Yes x No ¨
Dominion Gas Holdings, LLC Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).


Dominion Resources, Inc. Yes x No ¨		Virginia Electric and Power Company Yes x No ¨
Dominion Gas Holdings, LLC Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Dominion Resources, Inc.

Virginia Electric and Power Company

Dominion Gas Holdings, LLC

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).


Dominion Resources, Inc. Yes ¨ No x		Virginia Electric and Power Company Yes ¨ No x
Dominion Gas Holdings, LLC Yes ¨ No x

At March 31, 2015, the latest practicable date for determination, Dominion Resources, Inc. had 589,330,633 shares of common stock outstanding and Virginia Electric and Power Company had 274,723 shares of common stock outstanding. Dominion Resources, Inc. is the sole holder of Virginia Electric and Power Company’s common stock. Dominion Resources, Inc. holds all of the membership interests of Dominion Gas Holdings, LLC.

This combined Form 10-Q represents separate filings by Dominion Resources, Inc., Virginia Electric and Power Company and Dominion Gas Holdings, LLC. Information contained herein relating to an individual registrant is filed by that registrant on its own behalf. Virginia Electric and Power Company and Dominion Gas Holdings, LLC make no representations as to the information relating to Dominion Resources, Inc.’s other operations.

VIRGINIA ELECTRIC AND POWER COMPANY AND DOMINION GAS HOLDINGS, LLC MEET THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a) AND (b) OF FORM 10-Q AND ARE FILING THIS FORM 10-Q UNDER THE REDUCED DISCLOSURE FORMAT.

COMBINED INDEX


		Page Number
	Glossary of Terms		3

	PART I. Financial Information

Item 1.	Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		70
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		80
Item 4.	Controls and Procedures		82

	PART II. Other Information

Item 1.	Legal Proceedings		83
Item 1A.	Risk Factors		83
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		83
Item 6.	Exhibits		84

GLOSSARY OF TERMS

The following abbreviations or acronyms used in this Form 10-Q are defined below:


Abbreviation or Acronym		Definition

2013 Biennial Review Order		Order issued by the Virginia Commission in November 2013 concluding the 2011-2012 biennial review of Virginia Power’s base rates, terms and conditions

2013 Equity Units		Dominion’s 2013 Series A Equity Units and 2013 Series B Equity Units issued in June 2013

2014 Equity Units		Dominion’s 2014 Series A Equity Units issued in July 2014

AFUDC		Allowance for funds used during construction

AOCI		Accumulated other comprehensive income (loss)

AROs		Asset retirement obligations

ARP		Acid Rain Program, a market-based initiative for emissions allowance trading, established pursuant to Title IV of the CAA

ATEX line		Appalachia to Texas Express ethane line

Atlantic Coast Pipeline		Atlantic Coast Pipeline, LLC, a limited liability company owned by Dominion, Duke Energy Corporation, Piedmont Natural Gas Company, Inc. and AGL Resources Inc.

BACT		Best available control technology

bcf		Billion cubic feet

Bear Garden		A 590 MW combined cycle, natural gas-fired power station in Buckingham County, Virginia

Blue Racer		Blue Racer Midstream, LLC, a joint venture between Dominion and Caiman

BOD		Board of Directors

BP		BP Wind Energy North America Inc.

BREDL		Blue Ridge Environmental Defense League

Bremo		Bremo power station

Brunswick County		A 1,358 MW combined cycle, natural gas-fired power station under construction in Brunswick County, Virginia

CAA		Clean Air Act

Caiman		Caiman Energy II, LLC

CAIR		Clean Air Interstate Rule

CCR		Coal combustion residual

CEO		Chief Executive Officer

CERCLA		Comprehensive Environmental Response, Compensation and Liability Act of 1980, also known as Superfund

CFO		Chief Financial Officer

Chesapeake		Chesapeake power station

CO₂		Carbon dioxide

COL		Combined Construction Permit and Operating License

Companies		Dominion, Virginia Power and Dominion Gas, collectively

Cooling degree days		Units measuring the extent to which the average daily temperature is greater than 65 degrees Fahrenheit, calculated as the difference between 65 degrees and the average temperature for that day

Cove Point		Dominion Cove Point LNG, LP

CPCN		Certificate of Public Convenience and Necessity

CSAPR		Cross State Air Pollution Rule

CWA		Clean Water Act

D.C.		District of Columbia

DCGT		Dominion Carolina Gas Transmission, LLC (successor by statutory conversion to and formerly known as Carolina Gas Transmission Corporation)

DEI		Dominion Energy, Inc.

Dominion		The legal entity, Dominion Resources, Inc., one or more of its consolidated subsidiaries (other than Virginia Power and Dominion Gas) or operating segments or the entirety of Dominion Resources, Inc. and its consolidated subsidiaries

Dominion Gas		The legal entity, Dominion Gas Holdings, LLC, one or more of its consolidated subsidiaries or operating segment, or the entirety of Dominion Gas Holdings, LLC and its consolidated subsidiaries

Dominion Iroquois		Dominion Iroquois, Inc., which holds a 24.72% general partnership interest in Iroquois


Abbreviation or Acronym		Definition

Dominion Midstream		The legal entity, Dominion Midstream Partners, LP, its consolidated subsidiary Cove Point Holdings, or the entirety of Dominion Midstream Partners, LP, and its consolidated subsidiary

Dominion NGL Pipelines, LLC		The initial owner of the 58-mile G-150 pipeline project, which is designed to transport approximately 27,000 barrels per day of NGLs from Natrium to an interconnect with the ATEX line of Enterprise near Follansbee, West Virginia

DRS		Dominion Resources Services, Inc.

DSM		Demand-side management

Dth		Dekatherm

DTI		Dominion Transmission, Inc.

DVP		Dominion Virginia Power operating segment

East Ohio		The East Ohio Gas Company, doing business as Dominion East Ohio

Enterprise		Enterprise Product Partners, L.P.

EPA		Environmental Protection Agency

EPC		Engineering, procurement and construction

EPS		Earnings per share

FERC		Federal Energy Regulatory Commission

Fowler Ridge		A wind-turbine facility joint venture between Dominion and BP in Benton County, Indiana

FTRs		Financial transmission rights

GAAP		U.S. generally accepted accounting principles

Gal		Gallon

GHG		Greenhouse gas

Heating degree days		Units measuring the extent to which the average daily temperature is less than 65 degrees Fahrenheit, calculated as the difference between 65 degrees and the average temperature for that day

INPO		Institute of Nuclear Power Operations

IRCA		Intercompany revolving credit agreement

Iroquois		Iroquois Gas Transmission System L.P.

ISO		Independent system operator

ISO-NE		ISO New England

Kewaunee		Kewaunee nuclear power station

kV		Kilovolt

Liquefaction Project		A natural gas export/liquefaction facility currently under development by Cove Point

LNG		Liquefied natural gas

Maryland Commission		Public Service Commission of Maryland

MATS		Utility Mercury and Air Toxics Standard Rule

MD&A		Management’s Discussion and Analysis of Financial Condition and Results of Operations

MGD		Million gallons a day

Millstone		Millstone nuclear power station

MISO		Midcontinent Independent Transmission System Operator, Inc.

Moody’s		Moody’s Investors Service

MW		Megawatt

MWh		Megawatt hour

Natrium		A natural gas and fractionation facility located in Natrium, West Virginia, owned by Blue Racer

NCEMC		North Carolina Electric Membership Corporation

NedPower		A wind-turbine facility joint venture between Dominion and Shell in Grant County, West Virginia

NGLs		Natural gas liquids

North Anna		North Anna nuclear power station

Northern System		Collection of approximately 131 miles of various diameter natural gas pipelines in Ohio

NO_x		Nitrogen oxide

NPDES		National Pollutant Discharge Elimination System

NRC		Nuclear Regulatory Commission

NSPS		New Source Performance Standards

NYSE		New York Stock Exchange


Abbreviation or Acronym		Definition

ODEC		Old Dominion Electric Cooperative

Ohio Commission		Public Utilities Commission of Ohio

Order 1000		Order issued by FERC adopting new requirements for electric transmission planning, cost allocation and development

PIPP		Percentage of Income Payment Plan deployed by East Ohio

PIR		Pipeline Infrastructure Replacement Program deployed by East Ohio

PJM		PJM Interconnection, L.L.C.

Possum Point		Possum Point power station

ppb		Parts-per-billion

PSD		Prevention of Significant Deterioration

Rider B		A rate adjustment clause associated with the recovery of costs related to the conversion of three of Virginia Power’s coal-fired power stations to biomass

Rider BW		A rate adjustment clause associated with the recovery of costs related to Brunswick County

Rider R		A rate adjustment clause associated with the recovery of costs related to Bear Garden

Rider S		A rate adjustment clause associated with the recovery of costs related to the Virginia City Hybrid Energy Center

Riders C1A and C2A		Rate adjustment clauses associated with the recovery of costs related to certain DSM programs approved in DSM cases

ROE		Return on equity

RTO		Regional transmission organization

SEC		Securities and Exchange Commission

SELC		Southern Environmental Law Center

Shell		Shell WindEnergy, Inc.

SO₂		Sulfur dioxide

Standard & Poor’s		Standard & Poor’s Ratings Services, a division of McGraw Hill Financial, Inc.

U.S.		United States of America

UAO		Unilateral Administrative Order

VDEQ		Virginia Department of Environmental Quality

VEBA		Voluntary Employees’ Beneficiary Association

VIE		Variable interest entity

Virginia City Hybrid Energy Center		A 600 MW baseload carbon-capture compatible, clean coal powered electric generation facility in Wise County, Virginia

Virginia Commission		Virginia State Corporation Commission

Virginia Power		The legal entity, Virginia Electric and Power Company, one or more of its consolidated subsidiaries or operating segments or the entirety of Virginia Power and its consolidated subsidiaries

WVDEP		West Virginia Department of Environmental Protection

Yorktown		Yorktown power station

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DOMINION RESOURCES, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended March 31,
	2015		2014
(millions, except per share amounts)
Operating Revenue	$	3,409	$	3,630

Operating Expenses
Electric fuel and other energy-related purchases		953		1,334
Purchased electric capacity		94		88
Purchased gas		250		540
Other operations and maintenance		602		425
Depreciation, depletion and amortization		343		308
Other taxes		165		167

Total operating expenses		2,407		2,862

Income from operations		1,002		768

Other income		60		40
Interest and related charges		223		237

Income from continuing operations including noncontrolling interests before income tax expense		839		571
Income tax expense		299		186

Net Income Including Noncontrolling Interests		540		385
Noncontrolling Interests		4		6

Net Income Attributable to Dominion	$	536	$	379

Earnings Per Common Share - Basic and Diluted
Net income attributable to Dominion	$	0.91	$	0.65

Dividends declared per common share	$	0.6475	$	0.6000

The accompanying notes are an integral part of Dominion’s Consolidated Financial Statements.

DOMINION RESOURCES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
	2015			2014
(millions)
Net income including noncontrolling interests	$	540		$	385
Other comprehensive income (loss), net of taxes:
Net deferred losses on derivatives-hedging activities⁽¹⁾		(58	)		(150	)
Changes in unrealized net gains on investment securities⁽²⁾		15			29
Changes in unrecognized pension and other postretirement benefit costs⁽³⁾		—			(4	)
Amounts reclassified to net income:
Net derivative losses-hedging activities⁽⁴⁾		59			160
Net realized gains on investment securities⁽⁵⁾		(21	)		(11	)
Net pension and other postretirement benefit costs⁽⁶⁾		13			8
Changes in other comprehensive loss from equity method investees		(1	)		(7	)

Total other comprehensive income		7			25

Comprehensive income including noncontrolling interests		547			410
Comprehensive income attributable to noncontrolling interests		4			6

Comprehensive income attributable to Dominion	$	543		$	404

(1)	Net of $41 million and $80 million tax for the three months ended March 31, 2015 and 2014, respectively.

(2)	Net of $(11) million and $(1) million tax for the three months ended March 31, 2015 and 2014, respectively.

(3)	Net of $ million and $(4) million tax for the three months ended March 31, 2015 and 2014, respectively.

(4)	Net of $(39) million and $(100) million tax for the three months ended March 31, 2015 and 2014, respectively.

(5)	Net of $12 million and $7 million tax for the three months ended March 31, 2015 and 2014, respectively

(6)	Net of $(9) million and $(6) million tax for the three months ended March 31, 2015 and 2014, respectively.

The accompanying notes are an integral part of Dominion’s Consolidated Financial Statements.

DOMINION RESOURCES, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	March 31, 2015			December 31, 2014⁽¹⁾
(millions)
ASSETS
Current Assets
Cash and cash equivalents	$	275		$	318
Customer receivables (less allowance for doubtful accounts of $34 at both dates)		1,589			1,514
Other receivables (less allowance for doubtful accounts of $2 and $3)		113			119
Inventories		1,227			1,410
Prepayments		163			167
Deferred income taxes		673			800
Other		1,013			1,287

Total current assets		5,053			5,615

Investments
Nuclear decommissioning trust funds		4,244			4,196
Investment in equity method affiliates		1,085			1,081
Other		288			284

Total investments		5,617			5,561

Property, Plant and Equipment
Property, plant and equipment		52,720			51,406
Accumulated depreciation, depletion and amortization		(15,494	)		(15,136	)

Total property, plant and equipment, net		37,226			36,270

Deferred Charges and Other Assets
Goodwill		3,294			3,044
Pension and other postretirement benefit assets		979			956
Regulatory assets		1,665			1,642
Other		1,322			1,239

Total deferred charges and other assets		7,260			6,881

Total assets	$	55,156		$	54,327

(1)	Dominion’s Consolidated Balance Sheet at December 31, 2014 has been derived from the audited Consolidated Financial Statements at that date.

The accompanying notes are an integral part of Dominion’s Consolidated Financial Statements.

DOMINION RESOURCES, INC.

CONSOLIDATED BALANCE SHEETS—(Continued)

(Unaudited)


	March 31, 2015			December 31, 2014⁽¹⁾
(millions)
LIABILITIES AND EQUITY
Current Liabilities
Securities due within one year	$	1,822		$	1,375
Short-term debt		3,200			2,775
Accounts payable		945			952
Derivative liabilities		600			591
Other		1,454			1,505

Total current liabilities		8,021			7,198

Long-Term Debt
Long-term debt		17,896			18,348
Junior subordinated notes		1,373			1,374
Remarketable subordinated notes		2,084			2,083

Total long-term debt		21,353			21,805

Deferred Credits and Other Liabilities
Deferred income taxes and investment tax credits		7,577			7,444
Asset retirement obligations		1,645			1,633
Regulatory liabilities		2,119			1,991
Other		2,025			2,299

Total deferred credits and other liabilities		13,366			13,367

Total liabilities		42,740			42,370

Commitments and Contingencies (see Note 15)

Equity
Common stock – no par⁽²⁾		6,170			5,876
Retained earnings		6,250			6,095
Accumulated other comprehensive loss		(409	)		(416	)

Total common shareholders’ equity		12,011			11,555

Noncontrolling interests		405			402

Total equity		12,416			11,957

Total liabilities and equity	$	55,156		$	54,327

(1)	Dominion’s Consolidated Balance Sheet at December 31, 2014 has been derived from the audited Consolidated Financial Statements at that date.

(2)	1 billion shares authorized; 589 million shares and 585 million shares outstanding at March 31, 2015 and December 31, 2014, respectively.

The accompanying notes are an integral part of Dominion’s Consolidated Financial Statements.

DOMINION RESOURCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


Three Months Ended March 31,	2015			2014
(millions)
Operating Activities
Net income including noncontrolling interests	$	540		$	385
Adjustments to reconcile net income including noncontrolling interests to net cash provided by operating activities:
Depreciation, depletion and amortization (including nuclear fuel)		414			378
Deferred income taxes and investment tax credits		277			232
Gains on the sale of assets and businesses		(70	)		(159	)
Other adjustments		(40	)		(34	)
Changes in:
Accounts receivable		(65	)		(183	)
Inventories		148			163
Deferred fuel and purchased gas costs, net		(33	)		(304	)
Accounts payable		(85	)		53
Accrued interest, payroll and taxes		(15	)		(55	)
Margin deposit assets and liabilities		111			105
Other operating assets and liabilities		(51	)		172

Net cash provided by operating activities		1,131			753

Investing Activities
Plant construction and other property additions (including nuclear fuel)		(1,014	)		(1,120	)
Acquisition of solar development projects		—			(47	)
Acquisition of DCGT		(495	)		—
Proceeds from sales of securities		337			442
Purchases of securities		(304	)		(441	)
Proceeds from the sale of electric retail energy marketing business		—			187
Proceeds from the sale of assets to Blue Racer		—			84
Proceeds from assignments of Marcellus acreage		27			—
Other		(50	)		(24	)

Net cash used in investing activities		(1,499	)		(919	)

Financing Activities
Issuance of short-term debt, net		425			45
Issuance of long-term debt		—			1,150
Repayment and repurchase of long-term debt		(3	)		(608	)
Subsidiary preferred stock redemption		—			(125	)
Issuance of common stock		295			—
Common dividend payments		(381	)		(349	)
Distributions to Dominion Midstream public unitholders		(3	)		—
Subsidiary preferred dividend payments		—			(4	)
Other		(8	)		(31	)

Net cash provided by financing activities		325			78

Decrease in cash and cash equivalents		(43	)		(88	)
Cash and cash equivalents at beginning of period		318			316

Cash and cash equivalents at end of period	$	275		$	228

Supplemental Cash Flow Information
Significant noncash investing activities:
Accrued capital expenditures	$	353		$	261

The accompanying notes are an integral part of Dominion’s Consolidated Financial Statements.

VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended March 31,
	2015		2014
(millions)
Operating Revenue⁽¹⁾	$	2,137	$	1,983
Operating Expenses
Electric fuel and other energy-related purchases⁽¹⁾		810		650
Purchased electric capacity		94		88
Other operations and maintenance:
Affiliated suppliers		75		71
Other		321		270
Depreciation and amortization		238		218
Other taxes		74		73

Total operating expenses		1,612		1,370

Income from operations		525		613

Other income		15		15
Interest and related charges		108		107

Income before income tax expense		432		521
Income tax expense		163		197

Net Income		269		324
Preferred dividends		—		6

Balance available for common stock	$	269	$	318

(1)	See Note 17 for amounts attributable to affiliates.

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.

VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
	2015			2014
(millions)
Net income	$	269		$	324
Other comprehensive income (loss), net of taxes:
Net deferred gains (losses) on derivatives-hedging activities⁽¹⁾		(4	)		2
Changes in unrealized net gains on nuclear decommissioning trust funds⁽²⁾		1			2
Amounts reclassified to net income:
Net derivative (gains) losses-hedging activities⁽³⁾		1			(3	)
Net realized gains on nuclear decommissioning trust funds⁽⁴⁾		(1	)		(2	)

Other comprehensive loss		(3	)		(1	)

Comprehensive income	$	266		$	323

(1)	Net of $2 million and $(1) million tax for the three months ended March 31, 2015 and 2014, respectively.

(2)	Net of $(1) million and $(2) million tax for the three months ended March 31, 2015 and 2014, respectively.

(3)	Net of $ million and $2 million tax for the three months ended March 31, 2015 and 2014, respectively.

(4)	Net of $ million and $1 million tax for the three months ended March 31, 2015 and 2014, respectively.

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.

VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	March 31, 2015			December 31, 2014⁽¹⁾
(millions)
ASSETS
Current Assets
Cash and cash equivalents	$	16		$	15
Customer receivables (less allowance for doubtful accounts of $25 at both dates)		1,018			986
Other receivables (less allowance for doubtful accounts of $1 at both dates)		53			65
Inventories (average cost method)		768			853
Prepayments		38			252
Regulatory assets		339			298
Other⁽²⁾		32			82

Total current assets		2,264			2,551

Investments
Nuclear decommissioning trust funds		1,950			1,930
Other		4			4

Total investments		1,954			1,934

Property, Plant and Equipment
Property, plant and equipment		35,684			35,180
Accumulated depreciation and amortization		(11,255	)		(11,080	)

Total property, plant and equipment, net		24,429			24,100

Deferred Charges and Other Assets
Regulatory assets		464			439
Other⁽²⁾		525			485

Total deferred charges and other assets		989			924

Total assets	$	29,636		$	29,509

(1)	Virginia Power’s Consolidated Balance Sheet at December 31, 2014 has been derived from the audited Consolidated Financial Statements at that date.

(2)	See Note 17 for amounts attributable to affiliates.

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.


	March 31, 2015		December 31, 2014⁽¹⁾
(millions)
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities
Securities due within one year	$	661	$	211
Short-term debt		1,588		1,361
Accounts payable		456		458
Payables to affiliates		72		92
Affiliated current borrowings		10		427
Accrued interest, payroll and taxes		315		199
Other		505		528

Total current liabilities		3,607		3,276

Long-Term Debt		8,275		8,726

Deferred Credits and Other Liabilities
Deferred income taxes and investment tax credits		4,435		4,415
Asset retirement obligations		854		848
Regulatory liabilities		1,769		1,683
Other⁽²⁾		523		506

Total deferred credits and other liabilities		7,581		7,452

Total liabilities		19,463		19,454

Commitments and Contingencies (see Note 15)
Common Shareholder’s Equity
Common stock – no par⁽³⁾		5,738		5,738
Other paid-in capital		1,113		1,113
Retained earnings		3,275		3,154
Accumulated other comprehensive income		47		50

Total common shareholder’s equity		10,173		10,055

Total liabilities and shareholder’s equity	$	29,636	$	29,509

(1)	Virginia Power’s Consolidated Balance Sheet at December 31, 2014 has been derived from the audited Consolidated Financial Statements at that date.

(2)	See Note 17 for amounts attributable to affiliates.

(3)	500,000 shares authorized; 274,723 shares outstanding at March 31, 2015 and December 31, 2014.

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.

VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


Three Months Ended March 31,	2015			2014
(millions)
Operating Activities
Net income	$	269		$	324
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization (including nuclear fuel)		281			263
Deferred income taxes and investment tax credits		67			203
Other adjustments		(7	)		(12	)
Changes in:
Accounts receivable		(20	)		(9	)
Inventories		85			91
Prepayments		214			(15	)
Deferred fuel expenses, net (including write-off)		(54	)		(328	)
Accounts payable		3			34
Accrued interest, payroll and taxes		116			10
Other operating assets and liabilities		7			39

Net cash provided by operating activities		961			600

Investing Activities
Plant construction and other property additions		(583	)		(691	)
Purchases of nuclear fuel		(23	)		(68	)
Purchases of securities		(138	)		(215	)
Proceeds from sales of securities		133			204
Other		(11	)		(6	)

Net cash used in investing activities		(622	)		(776	)

Financing Activities
Issuance (repayment) of short-term debt, net		227			(339	)
Issuance (repayment) of affiliated current borrowings, net		(417	)		62
Issuance of long-term debt		—			750
Preferred stock redemption		—			(125	)
Common dividend payments		(149	)		(149	)
Preferred dividend payments		—			(4	)
Other		1			(11	)

Net cash provided by (used in) financing activities		(338	)		184

Increase in cash and cash equivalents		1			8
Cash and cash equivalents at beginning of period		15			16

Cash and cash equivalents at end of period	$	16		$	24

Supplemental Cash Flow Information
Significant noncash investing activities:
Accrued capital expenditures	$	139		$	203

The accompanying notes are an integral part of Virginia Power’s Consolidated Financial Statements.

DOMINION GAS HOLDINGS, LLC

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended March 31,
	2015		2014
(millions)
Operating Revenue⁽¹⁾	$	531	$	569

Operating Expenses
Purchased gas⁽¹⁾		74		137
Other energy-related purchases		6		16
Other operations and maintenance:
Affiliated suppliers		21		21
Other⁽²⁾		53		32
Depreciation and amortization		51		47
Other taxes		55		51

Total operating expenses		260		304

Income from operations		271		265

Other income		9		8
Interest and related charges		17		6

Income from operations before income taxes		263		267
Income tax expense		102		103

Net Income	$	161	$	164

(1)	See Note 17 for amounts attributable to related parties.

(2)	Includes gains on the sales of assets to related parties of $59 million in 2014. See Note 10 for more information.

The accompanying notes are an integral part of Dominion Gas’ Consolidated Financial Statements.

DOMINION GAS HOLDINGS, LLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended March 31,
	2015			2014
(millions)
Net income	$	161		$	164
Other comprehensive income (loss), net of taxes:
Net deferred losses on derivatives-hedging activities⁽¹⁾		(4	)		(8	)
Amounts reclassified to net income:
Net derivative losses-hedging activities⁽²⁾		—			5
Net pension and other postretirement benefit costs⁽³⁾		1			1

Other comprehensive loss		(3	)		(2	)

Comprehensive income	$	158		$	162

(1)	Net of $2 million and $5 million tax for the three months ended March 31, 2015 and 2014, respectively.

(2)	Net of $ million and $(3) million tax for the three months ended March 31, 2015 and 2014, respectively.

(3)	Net of $(1) million tax for both the three months ended March 31, 2015 and 2014.

The accompanying notes are an integral part of Dominion Gas’ Consolidated Financial Statements.

DOMINION GAS HOLDINGS, LLC

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	March 31, 2015			December 31, 2014⁽¹⁾
(millions)
ASSETS
Current Assets
Cash and cash equivalents	$	19		$	9
Customer receivables (less allowance for doubtful accounts of $4 at both dates)⁽²⁾		350			322
Other receivables (less allowance for doubtful accounts of $1 at both dates)		15			19
Affiliated receivables		5			12
Inventories		67			65
Prepayments		64			166
Other⁽²⁾		198			217

Total current assets		718			810

Investments		104			108

Property, Plant and Equipment
Property, plant and equipment		8,993			8,902
Accumulated depreciation and amortization		(2,568	)		(2,538	)

Total property, plant and equipment, net		6,425			6,364

Deferred Charges and Other Assets
Goodwill		542			542
Intangible assets, net		83			79
Regulatory assets		390			379
Pension and other postretirement benefit assets⁽²⁾		1,516			1,486
Other⁽²⁾		81			80

Total deferred charges and other assets		2,612			2,566

Total assets	$	9,859		$	9,848

(1)	Dominion Gas’ Consolidated Balance Sheet at December 31, 2014 has been derived from the audited Consolidated Financial Statements at that date.

(2)	See Note 17 for amounts attributable to related parties.

The accompanying notes are an integral part of Dominion Gas’ Consolidated Financial Statements.

DOMINION GAS HOLDINGS, LLC

CONSOLIDATED BALANCE SHEETS—(Continued)

(Unaudited)


	March 31, 2015			December 31, 2014⁽¹⁾
(millions)
LIABILITIES AND EQUITY
Current Liabilities
Short-term debt	$	280		$	—
Accounts payable		209			247
Payables to affiliates		40			41
Affiliated current borrowings		39			384
Accrued interest, payroll and taxes		243			194
Other⁽²⁾		163			172

Total current liabilities		974			1,038

Long-Term Debt		2,594			2,594

Deferred Credits and Other Liabilities
Deferred income taxes and investment tax credits		2,197			2,158
Other⁽²⁾		465			492

Total deferred credits and other liabilities		2,662			2,650

Total liabilities		6,230			6,282

Commitments and Contingencies (see Note 15)
Equity
Membership interests		3,718			3,652
Accumulated other comprehensive loss⁽²⁾		(89	)		(86	)

Total equity		3,629			3,566

Total liabilities and equity	$	9,859		$	9,848

(1)	Dominion Gas’ Consolidated Balance Sheet at December 31, 2014 has been derived from the audited Consolidated Financial Statements at that date.

(2)	See Note 17 for amounts attributable to related parties.

The accompanying notes are an integral part of Dominion Gas’ Consolidated Financial Statements.

DOMINION GAS HOLDINGS, LLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


Three Months Ended March 31,	2015			2014
(millions)
Operating Activities
Net income	$	161		$	164
Adjustments to reconcile net income to net cash provided by operating activities:
Gains on sales of assets		(70	)		(59	)
Depreciation and amortization		51			47
Deferred income taxes and investment tax credits		36			27
Other adjustments		3			(2	)
Changes in:
Accounts receivable		(24	)		(154	)
Deferred purchased gas costs, net		16			29
Prepayments		102			10
Accounts payable		(33	)		(16	)
Accrued interest, payroll and taxes		49			73
Other operating assets and liabilities		(18	)		(6	)

Net cash provided by operating activities		273			113

Investing Activities
Plant construction and other property additions		(128	)		(107	)
Proceeds from sale of assets to an affiliate		—			30
Proceeds from assignments of Marcellus acreage		27			—
Other		(1	)		(2	)

Net cash used in investing activities		(102	)		(79	)

Financing Activities
Issuance of short-term debt, net		280			—
Issuance (repayment) of affiliated current borrowings, net		(345	)		51
Distribution payments		(95	)		(78	)
Other		(1	)		(1	)

Net cash used in financing activities		(161	)		(28	)

Increase in cash and cash equivalents		10			6
Cash and cash equivalents at beginning of period		9			8

Cash and cash equivalents at end of period	$	19		$	14

Supplemental Cash Flow Information
Significant noncash investing and financing activities:
Accrued capital expenditures	$	22		$	24
Proceeds from sale of assets to affiliate not yet received		—			17
Extinguishment of affiliated long-term debt in exchange for assets sold to affiliate		—			67

The accompanying notes are an integral part of Dominion Gas’ Consolidated Financial Statements.

COMBINED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Nature of Operations

Dominion, headquartered in Richmond, Virginia, is one of the nation’s largest producers and transporters of energy. Dominion’s operations are conducted through various subsidiaries, including Virginia Power and Dominion Gas. Virginia Power is a regulated public utility that generates, transmits and distributes electricity for sale in Virginia and northeastern North Carolina. Dominion Gas is a holding company that conducts business activities through a regulated interstate natural gas transmission pipeline and underground storage system in the Northeast, mid-Atlantic and Midwest states, regulated gas transportation and distribution operations in Ohio, and gas gathering and processing activities primarily in West Virginia, Ohio and Pennsylvania. Dominion Gas’ wholly-owned subsidiaries are DTI, East Ohio and Dominion Iroquois.

Note 2. Significant Accounting Policies

As permitted by the rules and regulations of the SEC, the Companies’ accompanying unaudited Consolidated Financial Statements contain certain condensed financial information and exclude certain footnote disclosures normally included in annual audited consolidated financial statements prepared in accordance with GAAP. These unaudited Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and Notes in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014.

In the Companies’ opinion, the accompanying unaudited Consolidated Financial Statements contain all adjustments necessary to present fairly their financial position as of March 31, 2015 and their results of operations and cash flows for the three months ended March 31, 2015 and 2014. Such adjustments are normal and recurring in nature unless otherwise noted.

The Companies make certain estimates and assumptions in preparing their Consolidated Financial Statements in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods presented. Actual results may differ from those estimates.

The Companies’ accompanying unaudited Consolidated Financial Statements include, after eliminating intercompany transactions and balances, their accounts and those of their respective majority-owned subsidiaries. As of March 31, 2015, Dominion owns the general partner and 68.5% of the limited partner interests in Dominion Midstream, which owns a preferred equity interest and the general partner interest in Cove Point. The public’s ownership interest in Dominion Midstream is reflected as non-controlling interest in Dominion’s Consolidated Financial Statements.

The results of operations for interim periods are not necessarily indicative of the results expected for the full year. Information for quarterly periods is affected by seasonal variations in sales, rate changes, electric fuel and other energy-related purchases, purchased gas expenses and other factors.

Certain amounts in the Companies’ 2014 Consolidated Financial Statements and Notes have been reclassified to conform to the 2015 presentation for comparative purposes. The reclassifications did not affect the Companies’ net income, total assets, liabilities, equity or cash flows.

Amounts disclosed for Dominion are inclusive of Virginia Power and/or Dominion Gas, where applicable.

Note 3. Acquisitions and Dispositions

Dominion

Acquisition of Solar Projects

In March 2014, Dominion completed the acquisition of 100% of the equity interests of six solar development projects in California from Recurrent Energy Development Holdings, LLC for approximately $50 million in cash. The projects cost approximately $446 million to construct, including the initial acquisition cost. The facilities, which began commercial operations in the fourth quarter of 2014, generate approximately 139 MW.

The purchase price for this acquisition was allocated to Property, Plant and Equipment.

In April 2015, Dominion completed the acquisition of 100% of the equity interests of a solar project in California from EC&R NA Solar PV, LLC for approximately $66 million in cash. The project is expected to cost approximately $69 million once constructed, including the initial acquisition cost. Upon completion, the facility is expected to generate approximately 20 MW.

In April 2015, Dominion also completed the acquisition of 100% of the equity interests of a solar project in California from EDF Renewable Development, Inc. for approximately $106 million in cash. The projects owned by the acquired company are expected to cost approximately $111 million once constructed, including the initial acquisition cost. Upon completion, the facilities are expected to generate approximately 24 MW.

The allocation of the purchase price to individual assets for these investments is under evaluation by management and has not been finalized.

Long-term power purchase, interconnection and operation and maintenance agreements have been executed for each of the projects. Dominion expects to claim federal investment tax credits on the projects.

Acquisition of DCGT

In January 2015, Dominion completed the acquisition of 100% of the equity interests of DCGT from SCANA Corporation for approximately $495 million in cash, subject to final working capital adjustments. DCGT owns and operates nearly 1,500 miles of FERC-regulated interstate natural gas pipeline in South Carolina and southeastern Georgia. This acquisition supports Dominion’s natural gas expansion into the Southeast. The allocation of the purchase price is currently being evaluated and has preliminarily resulted in approximately $277 million of net property, plant and equipment, $250 million of goodwill, of which approximately $225 million is expected to be deductible for income tax purposes, and approximately $38 million of regulatory liabilities. The goodwill reflects the value associated with enhancing Dominion’s regulated gas position, economic value attributable to future expansion projects as well as increased opportunities for synergies. The acquired assets of DCGT are included in the Dominion Energy operating segment.

On March 24, 2015, DCGT converted to a limited liability company under the laws of South Carolina and changed its name from Carolina Gas Transmission Corporation to DCGT. On April 1, 2015, Dominion contributed 100% of the issued and outstanding membership interests of DCGT to Dominion Midstream in exchange for total consideration of $495 million, subject to final working capital adjustments. Total consideration to Dominion consisted of the issuance of a two-year, approximately $295 million senior unsecured promissory note payable by Dominion Midstream at an annual interest rate of 0.6%, and 5,112,139 common units, valued at $200 million, representing limited partner interests in Dominion Midstream. The amount of the promissory note is subject to change to correspond with any working capital adjustments. The number of units was based on the volume weighted average trading price of Dominion Midstream’s common units for the ten trading days prior to April 1, 2015, or $39.12 per unit. Since Dominion consolidates Dominion Midstream for financial reporting purposes, this transaction was eliminated upon consolidation and did not impact Dominion’s financial position or cash flow.

Sale of Electric Retail Energy Marketing Business

In March 2014, Dominion completed the sale of its electric retail energy marketing business. The proceeds were approximately $187 million, net of transaction costs. The sale resulted in a gain, subject to post-closing adjustments, of approximately $100 million ($57 million after-tax) net of a $31 million write-off of goodwill, and is included in other operations and maintenance expense in Dominion’s Consolidated Statements of Income. The sale of the electric retail energy marketing business did not qualify for discontinued operations classification.

Dominion Gas

Assignments of Marcellus Acreage

In December 2013, DTI closed an agreement with a natural gas producer to convey over time approximately 79,000 acres of Marcellus Shale development rights underneath one of its natural gas storage fields. The agreement provided for payments to DTI, subject to customary adjustments, of up to approximately $200 million over a period of nine years, and an overriding royalty interest in gas produced from the acreage. In 2013, DTI received approximately $82 million in cash proceeds. During the twelve months ended December 31, 2014, DTI received $16 million in additional cash proceeds resulting from post-closing adjustments. At December 31, 2014, deferred revenue totaled approximately $85 million. In March 2015, DTI and the natural gas producer closed on an amendment to the agreement, which included the immediate conveyance of approximately 9,000 acres of Marcellus Shale development rights and a two year extension of the term of the original agreement. The conveyance of development rights resulted in the recognition of $43 million ($27 million after-tax) of previously deferred revenue to operations and maintenance expense in Dominion Gas’ Consolidated Statements of Income. At March 31, 2015, deferred revenue totaled approximately $40 million, which is expected to be recognized over the remaining term of the agreement.

In March 2015, DTI closed an agreement with a natural gas producer to convey approximately 11,000 acres of Marcellus Shale development rights underneath one of its natural gas storage fields. The agreement provided for a payment to DTI, subject to customary adjustments, of approximately $27 million, and an overriding royalty interest in gas produced from the acreage. In March 2015, DTI received proceeds of $27 million associated with the conveyance of the acreage, resulting in a $27 million ($16 million after-tax) gain, included in other operations and maintenance expense in Dominion Gas’ Consolidated Statements of Income.

Dominion and Dominion Gas

Blue Racer

See Note 10 for a discussion of transactions related to Blue Racer.

Note 4. Operating Revenue

The Companies’ operating revenue consists of the following:


	Three Months Ended March 31,
	2015		2014
(millions)
Dominion
Electric sales:
Regulated	$	2,112	$	1,951
Nonregulated		406		854
Gas sales:
Regulated		116		147
Nonregulated		208		117
Gas transportation and storage		471		444
Other		96		117

Total operating revenue	$	3,409	$	3,630

Virginia Power
Regulated electric sales	$	2,112	$	1,951
Other		25		32

Total operating revenue	$	2,137	$	1,983

Dominion Gas
Gas sales:
Regulated	$	57	$	83
Nonregulated		3		9
Gas transportation and storage		412		396
NGL revenue		29		57
Other		30		24

Total operating revenue	$	531	$	569

Note 5. Income Taxes

For continuing operations, including noncontrolling interests, the statutory U.S. federal income tax rate reconciles to the Companies’ effective income tax rate as follows:


	Dominion						Virginia Power						Dominion Gas
Three Months Ended March 31,	2015			2014			2015			2014			2015			2014
U.S. statutory rate		35.0	%		35.0	%		35.0	%		35.0	%		35.0	%		35.0	%
Increases (reductions) resulting from:
State taxes, net of federal benefit		2.9			2.7			3.8			3.8			4.0			3.4
Investment tax credits		(0.8	)		(3.6	)		—			—			—			—
Production tax credits		(0.8	)		(0.6	)		(0.4	)		(0.8	)		—			—
Other, net		(0.6	)		(0.8	)		(0.7	)		(0.2	)		(0.1	)		0.3

Effective tax rate		35.7	%		32.7	%		37.7	%		37.8	%		38.9	%		38.7	%

As of March 31, 2015, there have been no material changes in the Companies’ unrecognized tax benefits or possible changes that could reasonably be expected to occur during the next twelve months. See Note 5 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014 for a discussion of these unrecognized tax benefits.

Note 6. Earnings Per Share

The following table presents the calculation of Dominion’s basic and diluted EPS:


	Three Months Ended March 31,
	2015		2014
(millions, except EPS)
Net income attributable to Dominion	$	536	$	379

Average shares of common stock outstanding – Basic		587.9		581.6
Net effect of dilutive securities⁽¹⁾		2.0		1.3

Average shares of common stock outstanding – Diluted		589.9		582.9

Earnings Per Common Share – Basic and Diluted	$	0.91	$	0.65

(1)

Dilutive securities consist primarily of the 2013 Equity Units for 2015 and contingently convertible senior notes and the 2013 Equity Units for 2014. See Note 14 in this report and Note 17 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014 for more information.

The 2014 Equity Units are potentially dilutive securities but were excluded from the calculation of diluted EPS for the three months ended March 31, 2015, as the dilutive stock price threshold was not met. There were no potentially dilutive securities excluded from the calculation of diluted EPS for the three months ended March 31, 2014.

Note 7. Accumulated Other Comprehensive Income

Dominion

The following table presents Dominion’s changes in AOCI by component, net of tax:


	Deferred gains and losses on derivatives- hedging activities			Unrealized gains and losses on investment securities			Unrecognized pension and other postretirement benefit costs			Other comprehensive income (loss) from equity method investee			Total
(millions)
Three Months Ended March 31, 2015
Beginning balance	$	(178	)	$	548		$	(782	)	$	(4	)	$	(416	)
Other comprehensive income before reclassifications: gains (losses)		(58	)		15			—			(1	)		(44	)
Amounts reclassified from AOCI⁽¹⁾: (gains) losses		59			(21	)		13			—			51

Net current-period other comprehensive income (loss)		1			(6	)		13			(1	)		7

Ending balance	$	(177	)	$	542		$	(769	)	$	(5	)	$	(409	)

Three Months Ended March 31, 2014
Beginning balance	$	(288	)	$	474		$	(510	)	$	—		$	(324	)
Other comprehensive income before reclassifications: gains (losses)		(150	)		29			(4	)		(7	)		(132	)
Amounts reclassified from AOCI⁽¹⁾: (gains) losses		160			(11	)		8			—			157

Net current-period other comprehensive income (loss)		10			18			4			(7	)		25

Ending balance	$	(278	)	$	492		$	(506	)	$	(7	)	$	(299	)

(1)	See table below for details about these reclassifications.

The following table presents Dominion’s reclassifications out of AOCI by component:


Details about AOCI components	Amounts reclassified from AOCI			Affected line item in the Consolidated Statements of Income
(millions)
Three Months Ended March 31, 2015
Deferred (gains) and losses on derivatives-hedging activities:
Commodity contracts	$	92		Operating revenue
		5		Purchased gas
		(1	)	Electric fuel and other energy-related purchases
Interest rate contracts		2		Interest and related charges

		98
Tax		(39	)	Income tax expense

	$	59

Unrealized (gains) and losses on investment securities:
Realized (gain) loss on sale of securities	$	(39	)	Other income
Impairment		6		Other income

		(33	)
Tax		12		Income tax expense

	$	(21	)

Unrecognized pension and other postretirement benefit costs:
Prior service (credit) costs	$	(3	)	Other operations and maintenance
Actuarial (gains) losses		25		Other operations and maintenance

		22
Tax		(9	)	Income tax expense

	$	13

Three Months Ended March 31, 2014
Deferred (gains) and losses on derivatives-hedging activities:
Commodity contracts	$	269		Operating revenue
		1		Purchased gas
		(13	)	Electric fuel and other energy-related purchases
Interest rate contracts		3		Interest and related charges

		260
Tax		(100	)	Income tax expense

	$	160

Unrealized (gains) and losses on investment securities:
Realized (gain) loss on sale of securities	$	(20	)	Other income
Impairment		2		Other income

		(18	)
Tax		7		Income tax expense

	$	(11	)

Unrecognized pension and other postretirement benefit costs:
Prior service (credit) costs	$	(3	)	Other operations and maintenance
Actuarial (gains) losses		17		Other operations and maintenance

		14
Tax		(6	)	Income tax expense

	$	8

Dominion Gas

The following table presents Dominion Gas’ changes in AOCI by component, net of tax:


	Deferred gains and losses on derivatives- hedging activities			Unrecognized pension and other postretirement benefit costs			Total
(millions)
Three Months Ended March 31, 2015
Beginning balance	$	(20	)	$	(66	)	$	(86	)
Other comprehensive income before reclassifications: gains (losses)		(4	)		—			(4	)
Amounts reclassified from AOCI⁽¹⁾: (gains) losses		—			1			1

Net current-period other comprehensive income (loss)		(4	)		1			(3	)

Ending balance	$	(24	)	$	(65	)	$	(89	)

Three Months Ended March 31, 2014
Beginning balance	$	3		$	(61	)	$	(58	)
Other comprehensive income before reclassifications: gains (losses)		(8	)		—			(8	)
Amounts reclassified from AOCI⁽¹⁾: (gains) losses		5			1			6

Net current-period other comprehensive income (loss)		(3	)		1			(2	)

Ending balance	$	—		$	(60	)	$	(60	)

(1)	See table below for details about these reclassifications.

The following table presents Dominion Gas’ reclassifications out of AOCI by component:


Details about AOCI components	Amounts reclassified from AOCI			Affected line item in the Consolidated Statements of Income
(millions)
Three Months Ended March 31, 2015
Unrecognized pension and other postretirement benefit costs:
Actuarial (gains) losses	$	2		Other operations and maintenance

		2
Tax		(1	)	Income tax expense

	$	1

Three Months Ended March 31, 2014
Deferred (gains) and losses on derivatives-hedging activities:
Commodity contracts	$	6		Operating revenue
		2		Purchased gas

		8
Tax		(3	)	Income tax expense

	$	5

Unrecognized pension and other postretirement benefit costs:
Actuarial (gains) losses	$	2		Other operations and maintenance

		2
Tax		(1	)	Income tax expense

	$	1

Note 8. Fair Value Measurements

The Companies’ fair value measurements are made in accordance with the policies discussed in Note 6 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014. See Note 9 in this report for further information about the Companies’ derivatives and hedge accounting activities.

The Companies enter into certain physical and financial forwards, futures, options and swaps, which are considered Level 3 as they have one or more inputs that are not observable and are significant to the valuation. The discounted cash flow method is used to value Level 3 physical and financial forwards and futures contracts. An option model is used to value Level 3 physical and financial options. The discounted cash flow model for forwards and futures calculates mark-to-market valuations based on forward market prices, original transaction prices, volumes, risk-free rate of return, and credit spreads. The option model calculates mark-to-market valuations using variations of the Black-Scholes option model. The inputs into the models are the forward market prices, implied price volatilities, risk-free rate of return, the option expiration dates, the option strike prices, the original sales prices, and volumes. For Level 3 fair value measurements, forward market prices, credit spreads and implied price volatilities are considered unobservable. The unobservable inputs are developed and substantiated using historical information, available market data, third-party data, and statistical analysis. Periodically, inputs to valuation models are reviewed and revised as needed, based on historical information, updated market data, market liquidity and relationships, and changes in third-party pricing sources.

The following table presents Dominion’s quantitative information about Level 3 fair value measurements at March 31, 2015. The range and weighted average are presented in dollars for market price inputs and percentages for credit spreads and price volatility.


	Fair Value (millions)		Valuation Techniques	Unobservable Input	Range		Weighted Average⁽¹⁾
Assets:
Physical and Financial Forwards and Futures:
Natural Gas⁽²⁾	$	85	Discounted Cash Flow	Market Price (per Dth)⁽³⁾		(2) - 6		(1	)
				Credit spread⁽⁴⁾		1% - 5%		2	%
FTRs		4	Discounted Cash Flow	Market Price (per MWh)⁽³⁾		(5) - 7		1
Physical and Financial Options:
Natural Gas		5	Option Model	Market Price (per Dth)⁽³⁾		2 - 4		3
				Price Volatility⁽⁵⁾		21% - 76%		32	%

Total assets	$	94

Liabilities:
Physical and Financial Forwards and Futures:
Natural Gas⁽²⁾	$	12	Discounted Cash Flow	Market Price (per Dth)⁽³⁾		(2) - 4		2
FTRs		4	Discounted Cash Flow	Market Price (per MWh)⁽³⁾		(2) - 5		1
Physical and Financial Options:
Natural Gas		2	Option Model	Market Price (per Dth)⁽³⁾		2 - 4		3
				Price Volatility⁽⁵⁾		21% - 76%		32	%

Total liabilities	$	18

(1)	Averages weighted by volume.

(2)	Includes basis.

(3)	Represents market prices beyond defined terms for Levels 1 and 2.

(4)	Represents credit spreads unrepresented in published markets.

(5)	Represents volatilities unrepresented in published markets.

Sensitivity of the fair value measurements to changes in the significant unobservable inputs is as follows:


Significant Unobservable Inputs	Position	Change to Input	Impact on Fair Value Measurement
Market Price	Buy	Increase (decrease)	Gain (loss)
Market Price	Sell	Increase (decrease)	Loss (gain)
Price Volatility	Buy	Increase (decrease)	Gain (loss)
Price Volatility	Sell	Increase (decrease)	Loss (gain)
Credit spread	Asset	Increase (decrease)	Loss (gain)

Recurring Fair Value Measurements

Dominion

The following table presents Dominion’s assets and liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions:


	Level 1		Level 2		Level 3		Total
(millions)
At March 31, 2015
Assets:
Derivatives:
Commodity	$	3	$	564	$	94	$	661
Interest rate		—		18		—		18
Investments⁽¹⁾:
Equity securities:
U.S.:
Large cap		2,647		—		—		2,647
Other		7		—		—		7
Non-U.S.:
Large cap		12		—		—		12
Fixed income:
Corporate debt instruments		—		462		—		462
U.S. Treasury securities and agency debentures		407		187		—		594
State and municipal		—		423		—		423
Other		—		130		—		130
Cash equivalents and other		1		4		—		5

Total assets	$	3,077	$	1,788	$	94	$	4,959

Liabilities:
Derivatives:
Commodity	$	3	$	437	$	18	$	458
Interest rate		—		307		—		307

Total liabilities	$	3	$	744	$	18	$	765

At December 31, 2014
Assets:
Derivatives:
Commodity	$	3	$	567	$	125	$	695
Interest rate		—		24		—		24
Investments⁽¹⁾:
Equity securities:
U.S.:
Large cap		2,669		—		—		2,669
Other		6		—		—		6
Non-U.S.:
Large cap		12		—		—		12
Fixed income:
Corporate debt instruments		—		441		—		441
U.S. Treasury securities and agency debentures		419		190		—		609
State and municipal		—		395		—		395
Other		—		74		—		74
Cash equivalents and other		3		10		—		13

Total assets	$	3,112	$	1,701	$	125	$	4,938

Liabilities:
Derivatives:
Commodity	$	3	$	571	$	18	$	592
Interest rate		—		202		—		202

Total liabilities	$	3	$	773	$	18	$	794

(1)	Includes investments held in the nuclear decommissioning and rabbi trusts.

The following table presents the net change in Dominion’s assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category:


	Three Months Ended March 31,
	2015			2014
(millions)
Beginning balance	$	107		$	(16	)
Total realized and unrealized gains (losses):
Included in earnings		15			110
Included in other comprehensive income (loss)		(11	)		4
Included in regulatory assets/liabilities		(24	)		17
Settlements		(14	)		(108	)
Transfers out of Level 3⁽¹⁾		3			1

Ending balance	$	76		$	8

The amount of gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets/liabilities still held at the reporting date	$	—		$	1

(1)	In March 2015, Dominion changed the classification of NGL derivatives from Level 3 to Level 2 due to an increase in liquidity in financial forward markets. At March 31, 2015, $9 million of the transfers out of Level 3 relate to NGLs.

The following table presents Dominion’s classification of gains and losses included in earnings in the Level 3 fair value category:


	Operating revenue			Electric fuel and other energy- related purchases		Total
(millions)
Three Months Ended March 31, 2015
Total gains (losses) included in earnings	$	2		$	13	$	15
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets/liabilities still held at the reporting date		—			—		—

Three Months Ended March 31, 2014
Total gains (losses) included in earnings	$	(10	)	$	120	$	110
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets/liabilities still held at the reporting date		1			—		1

Virginia Power

The following table presents Virginia Power’s quantitative information about Level 3 fair value measurements at March 31, 2015. The range and weighted average are presented in dollars for market price inputs and percentages for credit spreads.


	Fair Value (millions)		Valuation Techniques	Unobservable Input	Range			Weighted Average⁽¹⁾
Assets:
Physical and Financial Forwards and Futures:
FTRs	$	4	Discounted Cash Flow	Market Price (per MWh)⁽³⁾		(5) - 7			1
Natural Gas⁽²⁾		78	Discounted Cash Flow	Market Price (per Dth)⁽³⁾		(2) - 3			(1	)
				Credit spread⁽⁴⁾		1% - 5	%		2	%

Total assets	$	82

Liabilities:
Physical and Financial Forwards and Futures:
FTRs	$	4	Discounted Cash Flow	Market Price (per MWh)⁽³⁾		(2) - 5			1

Total liabilities	$	4

(1)	Averages weighted by volume.

(2)	Includes basis.

(3)	Represents market prices beyond defined terms for Levels 1 and 2.

(4)	Represents credit spreads unrepresented in published markets.

Sensitivity of the fair value measurements to changes in the significant unobservable inputs is as follows:


Significant Unobservable Inputs	Position	Change to Input	Impact on Fair Value Measurement
Market Price	Buy	Increase (decrease)	Gain (loss)
Market Price	Sell	Increase (decrease)	Loss (gain)
Credit spread	Asset	Increase (decrease)	Loss (gain)

The following table presents Virginia Power’s assets and liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions:


	Level 1		Level 2		Level 3		Total
(millions)
At March 31, 2015
Assets:
Derivatives:
Commodity	$	—	$	24	$	82	$	106
Investments⁽¹⁾:
Equity securities:
U.S. large cap		1,166		—		—		1,166
Fixed income:
Corporate debt instruments		—		258		—		258
U.S. Treasury securities and agency debentures		129		63		—		192
State and municipal		—		224		—		224
Other		—		31		—		31

Total assets	$	1,295	$	600	$	82	$	1,977

Liabilities:
Derivatives:
Commodity	$	—	$	7	$	4	$	11
Interest rate		—		128		—		128

Total liabilities	$	—	$	135	$	4	$	139

At December 31, 2014
Assets:
Derivatives:
Commodity	$	—	$	7	$	106	$	113
Investments⁽¹⁾:
Equity securities:
U.S. large cap		1,157		—		—		1,157
Fixed income:
Corporate debt instruments		—		250		—		250
U.S. Treasury securities and agency debentures		137		61		—		198
State and municipal		—		211		—		211
Other		—		23		—		23

Total assets	$	1,294	$	552	$	106	$	1,952

Liabilities:
Derivatives:
Commodity	$	—	$	11	$	4	$	15
Interest rate		—		72		—		72

Total liabilities	$	—	$	83	$	4	$	87

(1)	Includes investments held in the nuclear decommissioning and rabbi trusts.

The following table presents the net change in Virginia Power’s assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category:


	Three Months Ended March 31,
	2015			2014
(millions)
Beginning balance	$	102		$	(7	)
Total realized and unrealized gains (losses):
Included in earnings		14			120
Included in regulatory assets/liabilities		(24	)		17
Settlements		(14	)		(120	)

Ending balance	$	78		$	10

The gains and losses included in earnings in the Level 3 fair value category were classified in electric fuel and other energy-related purchases in Virginia Power’s Consolidated Statements of Income for the three months ended March 31, 2015 and 2014. There were no unrealized gains or losses included in earnings in the Level 3 fair value category relating to assets/liabilities still held at the reporting date for the three months ended March 31, 2015 and 2014.

Dominion Gas

The following table presents Dominion Gas’ assets and liabilities for derivatives that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions:


	Level 1		Level 2		Level 3		Total
(millions)
At March 31, 2015
Assets:
Commodity	$	—	$	3	$	—	$	3

Total Assets	$	—	$	3	$	—	$	3
Liabilities:
Commodity	$	—	$	3	$	—	$	3
Interest rate		—		13		—		13

Total liabilities	$	—	$	16	$	—	$	16

At December 31, 2014
Assets:
Commodity	$	—	$	—	$	2	$	2

Total Assets	$	—	$	—	$	2	$	2
Liabilities:
Interest rate	$	—	$	9	$	—	$	9

Total liabilities	$	—	$	9	$	—	$	9

The following table presents the net change in Dominion Gas’ assets and liabilities for derivatives measured at fair value on a recurring basis and included in the Level 3 fair value category:


	Three Months Ended March 31,
	2015			2014
(millions)
Beginning balance	$	2		$	(6	)
Total realized and unrealized gains (losses):
Included in earnings		1			(5	)
Included in other comprehensive income (loss)		(11	)		4
Settlements		(1	)		5
Transfers out of Level 3⁽¹⁾		9			—

Ending balance	$	—		$	(2	)

(1)	In March 2015, Dominion changed the classification of NGL derivatives from Level 3 to Level 2 due to an increase in liquidity in financial forward markets. At March 31, 2015, $9 million of the transfers out of Level 3 relate to NGLs.

The gains and losses included in earnings in the Level 3 fair value category were classified in operating revenue in Dominion Gas’ Consolidated Statements of Income for the three months ended March 31, 2015 and 2014. There were no unrealized gains or losses included in earnings in the Level 3 fair value category relating to assets/liabilities still held at the reporting date for the three months ended March 31, 2015 and 2014.

Fair Value of Financial Instruments

Substantially all of the Companies’ financial instruments are recorded at fair value, with the exception of the instruments described below, which are reported at historical cost. Estimated fair values have been determined using available market information and valuation methodologies considered appropriate by management. The carrying amount of cash and cash equivalents, restricted cash (which is recorded in other current assets) customer and other receivables, short-term debt, affiliated current borrowings, payables to affiliates and accounts payable are representative of fair value because of the short-term nature of these instruments. For the Companies’ financial instruments that are not recorded at fair value, the carrying amounts and estimated fair values are as follows:


	March 31, 2015				December 31, 2014
	Carrying Amount		Estimated Fair Value⁽¹⁾		Carrying Amount		Estimated Fair Value⁽¹⁾
(millions)
Dominion
Long-term debt, including securities due within one year⁽²⁾⁽³⁾	$	19,718	$	22,197	$	19,723	$	21,881
Junior subordinated notes⁽³⁾		1,373		1,405		1,374		1,396
Remarketable subordinated notes⁽³⁾		2,084		2,206		2,083		2,362

Virginia Power
Long-term debt, including securities due within one year⁽³⁾	$	8,936	$	10,441	$	8,937	$	10,293

Dominion Gas
Long-term debt⁽³⁾	$	2,594	$	2,720	$	2,594	$	2,672

(1)

Fair value is estimated using market prices, where available, and interest rates currently available for issuance of debt with similar terms and remaining maturities. All fair value measurements are classified as Level 2. The carrying amount of debt issues with short-term maturities and variable rates refinanced at current market rates is a reasonable estimate of their fair value.

(2)	At March 31, 2015 and December 31, 2014, includes the valuation of certain fair value hedges associated with fixed rate debt of approximately $15 million and $19 million, respectively.

(3)	Carrying amount includes amounts which represent the unamortized discount and/or premium.

Note 9. Derivatives and Hedge Accounting Activities

The Companies’ accounting policies and 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, 2014. 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’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. Dominion Gas’ and Virginia Power’s derivative contracts consist of over-the-counter transactions. Over-the-counter contracts are bilateral contracts that are transacted directly with a counterparty. 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.

Dominion

Balance Sheet Presentation

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


	March 31, 2015						December 31, 2014
	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	$	18	$	—	$	18	$	24	$	—	$	24
Commodity contracts:
Over-the-counter		323		—		323		382		—		382
Exchange		326		—		326		298		—		298

Total derivatives, subject to a master netting or similar arrangement		667		—		667		704		—		704
Total derivatives, not subject to a master netting or similar arrangement		12		—		12		15		—		15

Total	$	679	$	—	$	679	$	719	$	—	$	719


	Net Amounts of Assets Presented in the Consolidated Balance Sheet		March 31, 2015						Net Amounts of Assets Presented in the Consolidated Balance Sheet		December 31, 2014
			Gross Amounts Not Offset in the Consolidated Balance Sheet								Gross Amounts Not Offset in the Consolidated Balance Sheet
			Financial Instruments		Cash Collateral Received		Net Amounts				Financial Instruments		Cash Collateral Received		Net Amounts
(millions)
Interest rate contracts:
Over-the-counter	$	18	$	18	$	—	$	—	$	24	$	16	$	—	$	8
Commodity contracts:
Over-the-counter		323		45		—		278		382		34		34		314
Exchange		326		326		—		—		298		298		—		—

Total	$	667	$	389	$	—	$	278	$	704	$	348	$	34	$	322


	March 31, 2015						December 31, 2014
	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)
Interest rate contracts:
Over-the-counter	$	307	$	—	$	307	$	202	$	—	$	202
Commodity contracts:
Over-the-counter		83		—		83		87		—		87
Exchange		364		—		364		493		—		493

Total derivatives, subject to a master netting or similar arrangement		754		—		754		782		—		782
Total derivatives, not subject to a master netting or similar arrangement		11		—		11		12		—		12

Total	$	765	$	—	$	765	$	794	$	—	$	794


	Net Amounts of Liabilities Presented in the Consolidated Balance Sheet		March 31, 2015						Net Amounts of Liabilities Presented in the Consolidated Balance Sheet		December 31, 2014
			Gross Amounts Not Offset in the Consolidated Balance Sheet								Gross Amounts Not Offset in the Consolidated Balance Sheet
			Financial Instruments		Cash Collateral Paid		Net Amounts				Financial Instruments		Cash Collateral Paid		Net Amounts
(millions)
Interest rate contracts:
Over-the-counter	$	307	$	18	$	—	$	289	$	202	$	16	$	—	$	186
Commodity contracts:
Over-the-counter		83		45		—		38		87		34		1		52
Exchange		364		326		38		—		493		298		195		—

Total	$	754	$	389	$	38	$	327	$	782	$	348	$	196	$	238

Volumes

The following table presents the volume of Dominion’s derivative activity as of March 31, 2015. 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 their long and short positions.


	Current		Noncurrent
Natural Gas (bcf):
Fixed price⁽¹⁾		55		10
Basis		224		558
Electricity (MWh):
Fixed price		13,610,507		7,505,325
FTRs		14,994,541		—
Capacity (MW)		15,250		3,050
Liquids (Gal)⁽²⁾		77,280,000		2,016,000
Interest rate	$	2,550,000,000	$	4,000,000,000

(1)	Includes options.

(2)	Includes NGLs and oil.

Ineffectiveness and AOCI

For the three months ended March 31, 2015 and 2014, 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 gains or losses attributable to changes in the time value of options and 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’s Consolidated Balance Sheet at March 31, 2015:


	AOCI After- Tax			Amounts Expected to be Reclassified to Earnings during the next 12 Months After- Tax			Maximum Term
(millions)
Commodities:
Gas	$	(5	)	$	(5	)		25 months
Electricity		89			32			21 months
Other		—			(1	)		14 months
Interest rate		(261	)		(6	)		393 months

Total	$	(177	)	$	20

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 and interest rates.

Fair Value and Gains and Losses on Derivative Instruments

The following table presents the fair values of Dominion’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)
At March 31, 2015
ASSETS
Current Assets
Commodity	$	298	$	109	$	407
Interest rate		13		—		13

Total current derivative assets⁽¹⁾		311		109		420

Noncurrent Assets
Commodity		140		114		254
Interest rate		5		—		5

Total noncurrent derivative assets⁽²⁾		145		114		259

Total derivative assets	$	456	$	223	$	679

LIABILITIES
Current Liabilities
Commodity	$	253	$	118	$	371
Interest rate		229		—		229

Total current derivative liabilities		482		118		600

Noncurrent Liabilities
Commodity		48		39		87
Interest Rate		78		—		78

Total noncurrent derivative liabilities⁽³⁾		126		39		165

Total derivative liabilities	$	608	$	157	$	765

At December 31, 2014
ASSETS
Current Assets
Commodity	$	281	$	242	$	523
Interest rate		13		—		13

Total current derivative assets⁽¹⁾		294		242		536

Noncurrent Assets
Commodity		71		101		172
Interest rate		11		—		11

Total noncurrent derivative assets⁽²⁾		82		101		183

Total derivative assets	$	376	$	343	$	719

LIABILITIES
Current Liabilities
Commodity	$	224	$	267	$	491
Interest rate		100		—		100

Total current derivative liabilities		324		267		591

Noncurrent Liabilities
Commodity		55		46		101
Interest rate		102		—		102

Total noncurrent derivative liabilities⁽³⁾		157		46		203

Total derivative liabilities	$	481	$	313	$	794

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

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

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

The following tables present the gains and losses on Dominion’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 March 31, 2015
Derivative Type and Location of Gains (Losses)
Commodity:
Operating revenue				$	(92	)
Purchased gas					(5	)
Electric fuel and other energy-related purchases					1

Total commodity	$	(41	)	$	(96	)	$	3

Interest rate⁽³⁾		(58	)		(2	)		(49	)

Total	$	(99	)	$	(98	)	$	(46	)

Three Months Ended March 31, 2014
Derivative Type and Location of Gains (Losses)
Commodity:
Operating revenue				$	(269	)
Purchased gas					(1	)
Electric fuel and other energy-related purchases					13

Total commodity	$	(183	)	$	(257	)	$	2

Interest rate⁽³⁾		(47	)		(3	)		(23	)

Total	$	(230	)	$	(260	)	$	(21	)

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

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


	Amount of Gain (Loss) Recognized in Income on Derivatives⁽¹⁾
	Three Months Ended March 31,
Derivatives not designated as hedging instruments	2015			2014
(millions)
Derivative Type and Location of Gains (Losses)
Commodity
Operating revenue	$	3		$	(361	)
Purchased gas		(2	)		7
Electric fuel and other energy-related purchases		6			133

Total	$	7		$	(221	)

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


	March 31, 2015						December 31, 2014
	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	$	82	$	—	$	82	$	106	$	—	$	106

Total derivatives, subject to a master netting or similar arrangement		82		—		82		106		—		106
Total derivatives, not subject to a master netting or similar arrangement		24		—		24		7		—		7

Total	$	106	$	—	$	106	$	113	$	—	$	113


	March 31, 2015								December 31, 2014
			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	$	82	$	4	$	—	$	78	$	106	$	4	$	—	$	102

Total	$	82	$	4	$	—	$	78	$	106	$	4	$	—	$	102


	March 31, 2015						December 31, 2014
	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)
Interest rate contracts:
Over-the-counter	$	128	$	—	$	128	$	72	$	—	$	72
Commodity contracts:
Over-the-counter		5		—		5		8		—		8

Total derivatives, subject to a master netting or similar arrangement		133		—		133		80		—		80
Total derivatives, not subject to a master netting or similar arrangement		6		—		6		7		—		7

Total	$	139	$	—	$	139	$	87	$	—	$	87


			March 31, 2015 Gross Amounts Not Offset in the Consolidated Balance Sheet								December 31, 2014 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)
Interest rate contracts:
Over-the-counter	$	128	$	—	$	—	$	128	$	72	$	—	$	—	$	72
Commodity contracts:
Over-the-counter		5		4		—		1		8		4		—		4

Total	$	133	$	4	$	—	$	129	$	80	$	4	$	—	$	76

Volumes

The following table presents the volume of Virginia Power’s derivative activity as of March 31, 2015. 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 their long and short positions.


	Current		Noncurrent
Natural Gas (bcf):
Fixed price⁽¹⁾		12		—
Basis		84		493
Electricity (MWh):
FTRs		13,486,569		—
Capacity (MW)		15,250		3,050
Interest rate	$	1,000,000,000	$	750,000,000

(1)	Includes options.

Ineffectiveness

For the three months ended March 31, 2015 and 2014, gains or losses on hedging instruments determined to be ineffective were not material.

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)
At March 31, 2015
ASSETS
Current Assets
Commodity	$	—	$	28	$	28

Total current derivative assets⁽¹⁾		—		28		28

Noncurrent Assets
Commodity		—		78		78

Total noncurrent derivative assets⁽²⁾		—		78		78

Total derivative assets	$	—	$	106	$	106

LIABILITIES
Current Liabilities
Commodity	$	1	$	10	$	11
Interest rate		96		—		96

Total current derivative liabilities⁽³⁾		97		10		107

Noncurrent Liabilities
Interest rate		32		—		32

Total noncurrent derivatives liabilities⁽⁴⁾		32		—		32

Total derivative liabilities	$	129	$	10	$	139

December 31, 2014
ASSETS
Current Assets
Commodity	$	—	$	51	$	51

Total current derivative assets⁽¹⁾		—		51		51

Noncurrent Assets
Commodity		—		62		62

Total noncurrent derivative assets⁽²⁾		—		62		62

Total derivative assets	$	—	$	113	$	113

LIABILITIES
Current Liabilities
Commodity	$	3	$	12	$	15
Interest rate		45		—		45

Total current derivative liabilities⁽³⁾		48		12		60

Noncurrent Liabilities
Interest rate		27		—		27

Total noncurrent derivative liabilities⁽⁴⁾		27		—		27

Total derivative liabilities	$	75	$	12	$	87

(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 March 31, 2015
Derivative Type and Location of Gains (Losses)
Commodity:
Electric fuel and other energy-related purchases				$	(1	)

Total commodity	$	—		$	(1	)	$	3

Interest rate⁽³⁾		(6	)		—			(49	)

Total	$	(6	)	$	(1	)	$	(46	)

Three Months Ended March 31, 2014
Derivative Type and Location of Gains (Losses)
Commodity:
Electric fuel and other energy-related purchases				$	5

Total commodity	$	6		$	5		$	2

Interest rate⁽³⁾		(3	)		—			(23	)

Total	$	3		$	5		$	(21	)

(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.


	Amount of Gain (Loss) Recognized in Income on Derivatives⁽¹⁾
	Three Months Ended March 31,
Derivatives not designated as hedging instruments	2015		2014
(millions)
Derivative Type and Location of Gains (Losses)
Commodity⁽²⁾	$	7	$	119

Total	$	7	$	119

(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 Gas

Balance Sheet Presentation

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


	March 31, 2015						December 31, 2014
	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	$	3	$	—	$	3	$	2	$	—	$	2

Total derivatives, subject to a master netting or similar arrangement	$	3	$	—	$	3	$	2	$	—	$	2


			March 31, 2015								December 31, 2014
			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	$	3	$	3	$	—	$	—	$	2	$	—	$	—	$	2

Total	$	3	$	3	$	—	$	—	$	2	$	—	$	—	$	2


	March 31, 2015						December 31, 2014
	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)
Interest rate contracts:
Over-the-counter	$	13	$	—	$	13	$	9	$	—	$	9
Commodity contracts:
Over-the-counter		3		—		3		—		—		—

Total derivatives, subject to a master netting or similar arrangement	$	16	$	—	$	16	$	9	$	—	$	9


			March 31, 2015								December 31, 2014
			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)
Interest rate contracts:
Over-the-counter	$	13	$	—	$	—	$	13	$	9	$	—	$	—	$	9
Commodity contracts:
Over-the-counter		3		3		—		—		—		—		—		—

Total	$	16	$	3	$	—	$	13	$	9	$	—	$	—	$	9

Volumes

The following table presents the volume of Dominion Gas’ derivative activity as of March 31, 2015. 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 their long and short positions.


	Current		Noncurrent
Natural Gas (bcf):
Fixed price		7		—
Basis		8		—
NGLs (Gal)		72,912,000		—
Interest rate	$	—	$	250,000,000

Ineffectiveness and AOCI

For the three months ended March 31, 2015 and 2014, 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 Dominion Gas’ Consolidated Balance Sheet at March 31, 2015:


	AOCI After-Tax			Amounts Expected to be Reclassified to Earnings during the next 12 Months After-Tax		Maximum Term
(millions)
Commodities:
NGLs	$	(1	)	$	—		12 months
Interest rate		(23	)		—		357 months

Total	$	(24	)	$	—

Fair Value and Gains and Losses on Derivative Instruments

The following tables present the fair values of Dominion Gas’ commodity and interest rate 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)
At March 31, 2015
ASSETS
Current Assets
Commodity	$	2	$	1	$	3

Total current derivative assets⁽¹⁾		2		1		3

Total derivative assets	$	2	$	1	$	3

LIABILITIES
Current Liabilities
Commodity	$	3	$	—	$	3

Total current derivative liabilities⁽²⁾		3		—		3

Noncurrent Liabilities
Interest rate		13		—		13

Total noncurrent derivative liabilities⁽³⁾		13		—		13

Total derivative liabilities	$	16	$	—	$	16

At December 31, 2014
ASSETS
Current Assets
Commodity	$	2	$	—	$	2

Total current derivative assets⁽¹⁾		2		—		2

Total derivative assets	$	2	$	—	$	2

LIABILITIES
Noncurrent Liabilities
Interest rate	$	9	$	—	$	9

Total noncurrent derivative liabilities⁽³⁾		9		—		9

Total derivative liabilities	$	9	$	—	$	9

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

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

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

The following table presents the gains and losses on Dominion 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 March 31, 2015
Derivative Type and Location of Gains (Losses)
Commodity
Operating revenue				$	—

Total commodity	$	(2	)	$	—

Interest rate⁽²⁾		(4	)		—

Total	$	(6	)	$	—

Three Months Ended March 31, 2014
Derivative Type and Location of Gains (Losses)
Commodity
Operating revenue				$	(6	)
Purchased gas					(2	)

Total commodity	$	1		$	(8	)

Interest rate⁽²⁾		(14	)		—

Total	$	(13	)	$	(8	)

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

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

Note 10. 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 $116 million and $110 million at March 31, 2015 and December 31, 2014, respectively. Cost method investments held in Dominion’s rabbi trusts totaled $6 million at both March 31, 2015 and December 31, 2014.

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)
March 31, 2015
Marketable equity securities:
U.S. large cap	$	1,265	$	1,338	$	—		$	2,603
Marketable debt securities:
Corporate bonds		440		23		(1	)		462
U.S. Treasury securities and agency debentures		576		17		(1	)		592
State and municipal		356		24		—			380
Other		122		—		—			122
Cost method investments		77		—		—			77
Cash equivalents and other⁽²⁾		8		—		—			8

Total	$	2,844	$	1,402	$	(2	)⁽³⁾	$	4,244

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 $3 million at both March 31, 2015 and December 31, 2014.

(3)	The fair value of securities in an unrealized loss position was $239 million and $379 million at March 31, 2015 and December 31, 2014, respectively.

The fair value of Dominion’s marketable debt securities held in nuclear decommissioning trust funds at March 31, 2015 by contractual maturity is as follows:


	Amount
(millions)
Due in one year or less	$	233
Due after one year through five years		383
Due after five years through ten years		435
Due after ten years		505

Total	$	1,556

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


	Three Months Ended March 31,
	2015		2014
(millions)
Proceeds from sales	$	337	$	442
Realized gains⁽¹⁾		56		38
Realized losses⁽¹⁾		17		6

(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 Dominion were not material for the three months ended March 31, 2015 and 2014.

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)
March 31, 2015
Marketable equity securities:
U.S. large cap	$	573	$	592	$	—		$	1,165
Marketable debt securities:
Corporate bonds		247		11		—			258
U.S. Treasury securities and agency debentures		190		3		(1	)		192
State and municipal		209		14		—			223
Other		31		—		—			31
Cost method investments		77		—		—			77
Cash equivalents and other⁽²⁾		4		—		—			4

Total	$	1,331	$	620	$	(1	)⁽³⁾	$	1,950

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 $4 million and $6 million at March 31, 2015 and December 31, 2014, respectively.

(3)	The fair value of securities in an unrealized loss position was $120 million and $170 million at March 31, 2015 and December 31, 2014, respectively.

The fair value of Virginia Power’s marketable debt securities at March 31, 2015 by contractual maturity is as follows:


	Amount
(millions)
Due in one year or less	$	51
Due after one year through five years		168
Due after five years through ten years		245
Due after ten years		240

Total	$	704

Presented below is selected information regarding Virginia Power’s marketable equity and debt securities.


	Three Months Ended March 31,
	2015		2014
(millions)
Proceeds from sales	$	133	$	204
Realized gains⁽¹⁾		18		19
Realized losses⁽¹⁾		11		3

(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 months ended March 31, 2015 and 2014.

Equity Method Investments

Dominion Gas

Dominion Gas accounts for the following investment under the equity method of accounting:


Company	Ownership%			Investment Balance				Description
				March 31, 2015		December 31, 2014
(millions)
Iroquois		24.72	%	$	103	$	107	Gas transmission system

Total				$	103	$	107

Dominion Gas’ equity earnings on this investment totaled $8 million for both the three months ended March 31, 2015 and 2014. Dominion Gas received distributions from this investment of $12 million and $5 million for the three months ended March 31, 2015 and 2014, respectively. As of March 31, 2015 and December 31, 2014, the carrying amount of Dominion Gas’ investment exceeded its share of underlying equity in net assets by approximately $8 million. The differences reflect equity method goodwill and are not being amortized.

Dominion and Dominion Gas

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.

Note 11. Regulatory Assets and Liabilities

Regulatory assets and liabilities include the following:


	March 31, 2015		December 31, 2014
(millions)
Dominion
Regulatory assets:
Deferred cost of fuel used in electric generation⁽¹⁾	$	122	$	79


Deferred rate adjustment clause costs⁽²⁾		108		124
Deferred nuclear refueling outage costs⁽³⁾		57		44
Unrecovered gas costs⁽⁴⁾		16		36
Other		59		64

Regulatory assets-current⁽⁵⁾		362		347

Unrecognized pension and other postretirement benefit costs⁽⁶⁾		1,034		1,050
Deferred rate adjustment clause costs⁽²⁾		216		250
Derivatives⁽⁷⁾		150		101
Income taxes recoverable through future rates⁽⁸⁾		136		133
Other		129		108

Regulatory assets-non-current		1,665		1,642

Total regulatory assets	$	2,027	$	1,989

Regulatory liabilities:
PIPP⁽⁹⁾	$	63	$	71
Other		43		99

Regulatory liabilities-current⁽¹⁰⁾		106		170

Provision for future cost of removal and AROs⁽¹¹⁾		1,100		1,072
Nuclear decommissioning trust⁽¹²⁾		822		815
Other		197		104

Regulatory liabilities-non-current		2,119		1,991

Total regulatory liabilities	$	2,225	$	2,161

Virginia Power
Regulatory assets:
Deferred cost of fuel used in electric generation⁽¹⁾	$	122	$	79
Deferred rate adjustment clause costs⁽²⁾		106		117
Deferred nuclear refueling outage costs⁽³⁾		57		44
Other		54		58

Regulatory assets-current		339		298

Deferred rate adjustment clause costs⁽²⁾		141		179
Derivatives⁽⁷⁾		150		101
Income taxes recoverable through future rates⁽⁸⁾		103		100
Other		70		59

Regulatory assets-non-current		464		439

Total regulatory assets	$	803	$	737

Regulatory liabilities:
Other	$	23	$	90

Regulatory liabilities-current⁽¹⁰⁾		23		90

Provision for future cost of removal⁽¹¹⁾		864		852
Nuclear decommissioning trust⁽¹²⁾		822		815
Other		83		16

Regulatory liabilities-non-current		1,769		1,683

Total regulatory liabilities	$	1,792	$	1,773

Dominion Gas
Regulatory assets:
Unrecovered gas costs⁽⁴⁾	$	13	$	29
Deferred rate adjustment clause costs⁽²⁾		2		7
Other		1		2


Regulatory assets-current⁽⁵⁾		16		38

Unrecognized pension and other postretirement benefit costs⁽⁶⁾		239		242
Deferred rate adjustment clause costs⁽²⁾		75		71
Income taxes recoverable through future rates⁽⁸⁾		24		24
Other		52		42

Regulatory assets-non-current		390		379

Total regulatory assets	$	406	$	417

Regulatory liabilities:
PIPP⁽⁹⁾	$	63	$	71
Other		16		4

Regulatory liabilities-current⁽¹⁰⁾		79		75

Provision for future cost of removal and AROs⁽¹¹⁾		172		172
Other		26		20

Regulatory liabilities-non-current⁽¹³⁾		198		192

Total regulatory liabilities	$	277	$	267

(1)	Primarily reflects deferred fuel expenses for the Virginia jurisdiction of Virginia Power’s generation operations. See Note 12 for more information.

(2)

Reflects deferrals under the electric transmission FERC formula rate and the deferral of costs associated with certain current and prospective rider projects for Virginia Power. Reflects deferrals of costs associated with certain current and prospective rider projects for Dominion Gas. See Note 12 for more information.

(3)	Legislation enacted in Virginia in April 2014 requires Virginia Power to defer operation and maintenance costs incurred in connection with the refueling of any nuclear-powered generating plant. These deferred costs will be amortized over the refueling cycle, not to exceed 18 months.

(4)	Reflects unrecovered gas costs at regulated gas operations, which are recovered through filings with the applicable regulatory authority.

(5)	Current regulatory assets are presented in other current assets in Dominion’s and Dominion Gas’ Consolidated Balance Sheets.

(6)	Represents unrecognized pension and other postretirement employee benefit costs expected to be recovered through future rates generally over the expected remaining service period of plan participants by certain of Dominion’s and Dominion Gas’ rate-regulated subsidiaries.

(7)	For jurisdictions subject to cost-based rate regulation, changes in the fair value of derivative instruments result in the recognition of regulatory assets or regulatory liabilities as they are expected to be recovered from or refunded to customers.

(8)

Amounts to be recovered through future rates to pay income taxes that become payable when rate revenue is provided to recover AFUDC-equity and depreciation of property, plant and equipment for which deferred income taxes were not recognized for ratemaking purposes, including amounts attributable to tax rate changes.

(9)	Under PIPP, eligible customers can make reduced payments based on their ability to pay. The difference between the customer’s total bill and the PIPP plan amount is deferred and collected or returned annually under the PIPP rider according to East Ohio tariff provisions.

(10)	Current regulatory liabilities are presented in other current liabilities in the Companies’ Consolidated Balance Sheets.

(11)	Rates charged to customers by the Companies’ regulated businesses include a provision for the cost of future activities to remove assets that are expected to be incurred at the time of retirement.

(12)

Primarily reflects a regulatory liability representing amounts collected from Virginia jurisdictional customers and placed in external trusts (including income, losses and changes in fair value thereon) for the future decommissioning of Virginia Power’s utility nuclear generation stations, in excess of the related AROs.

(13)	Noncurrent regulatory liabilities are presented in other deferred credits and other liabilities in Dominion Gas’ Consolidated Balance Sheets.

At March 31, 2015, approximately $129 million of Dominion’s, $97 million of Virginia Power’s and $30 million of Dominion Gas’ regulatory assets represented past expenditures on which they do not currently earn a return. These expenditures are expected to be recovered within the next two years.

Note 12. Regulatory Matters

Regulatory Matters Involving Potential Loss Contingencies

As a result of issues generated in the ordinary course of business, the Companies are involved in various regulatory matters. Certain regulatory matters may ultimately result in a loss; however, as such matters are in an initial procedural phase, involve uncertainty as to the outcome of pending reviews or orders, and/or involve significant factual issues that need to be resolved, it is not possible for the Companies to estimate a range of possible loss. For matters for which the Companies cannot estimate a range of possible loss, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the regulatory process such that the Companies are able to estimate a range of possible loss. For regulatory matters for which the Companies are able to reasonably estimate a range of possible losses, an estimated range of possible loss

is provided, in excess of the accrued liability (if any) for such matters. Any estimated range is based on currently available information, involves elements of judgment and significant uncertainties and may not represent the Companies’ maximum possible loss exposure. The circumstances of such regulatory matters will change from time to time and actual results may vary significantly from the current estimate. For current matters not specifically reported below, management does not anticipate that the outcome from such matters would have a material effect on the Companies’ financial position, liquidity or results of operations.

FERC - Electric

Under the Federal Power Act, FERC regulates wholesale sales and transmission of electricity in interstate commerce by public utilities. Dominion’s merchant generators sell electricity in the PJM, MISO and ISO-NE wholesale markets under Dominion’s market-based sales tariffs authorized by FERC. Virginia Power purchases and, under its FERC market-based rate authority, sells electricity in the wholesale market. In addition, Virginia Power has FERC approval of a tariff to sell wholesale power at capped rates based on its embedded cost of generation. This cost-based sales tariff could be used to sell to loads within or outside Virginia Power’s service territory. Any such sales would be voluntary.

Rates

In April 2008, FERC granted an application for Virginia Power’s electric transmission operations to establish a forward-looking formula rate mechanism that updates transmission rates on an annual basis and approved an ROE of 11.4%, effective as of January 1, 2008. The formula rate is designed to recover the expected revenue requirement for each calendar year and is updated based on actual costs. The FERC-approved formula method, which is based on projected costs, allows Virginia Power to earn a current return on its growing investment in electric transmission infrastructure.

In March 2010, ODEC and NCEMC filed a complaint with FERC against Virginia Power claiming that approximately $223 million in transmission costs related to specific projects were unjust, unreasonable and unduly discriminatory or preferential and should be excluded from Virginia Power’s transmission formula rate. In October 2010, FERC issued an order dismissing the complaint in part and established hearings and settlement procedures on the remaining part of the complaint. In February 2012, Virginia Power submitted to FERC a settlement agreement to resolve all issues set for hearing. The settlement was accepted by FERC in May 2012 and provides for payment by Virginia Power to the transmission customer parties collectively of $250,000 per year for ten years and resolves all matters other than allocation of the incremental cost of certain underground transmission facilities.

In March 2014, FERC issued an order excluding from Virginia Power’s transmission rates for wholesale transmission customers located outside Virginia the incremental costs of undergrounding certain transmission line projects. FERC found it is not just and reasonable for non-Virginia wholesale transmission customers to be allocated the incremental costs of undergrounding the facilities because the projects are a direct result of Virginia legislation and Virginia Commission pilot programs intended to benefit the citizens of Virginia. The order is retroactively effective as of March 2010 and will cause the reallocation of the costs charged to wholesale transmission customers with loads outside Virginia to wholesale transmission customers with loads in Virginia. FERC determined that there was not sufficient evidence on the record to determine the magnitude of the underground increment and ordered a hearing to determine the appropriate amount of undergrounding cost to be allocated to each wholesale transmission customer in Virginia. While Virginia Power cannot predict the outcome of the hearing, it is not expected to have a material effect on results of operations.

Other Regulatory Matters

Other than the following matters, there have been no significant developments regarding the pending regulatory matters disclosed in Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014.

Virginia Regulation

2015 Biennial Review

In March 2015, Virginia Power filed its base rate case and schedules for the Virginia Commission’s 2015 biennial review of Virginia Power’s rates, terms and conditions. Per legislation enacted in February 2015, this biennial review is limited to reviewing Virginia Power’s earnings on rates for generation and distribution services for the combined 2013 and 2014 test period, and determining whether credits are due to customers in the event Virginia Power’s earnings exceeded the earnings band determined in the 2013 Biennial Review Order. Virginia Power’s filing demonstrated a 10.13% ROE for the combined test periods, which is within the earnings band. This case is pending.

Virginia Fuel Expenses

In February 2015, Virginia Power submitted its annual fuel factor filing to the Virginia Commission to recover an estimated $1.6 billion in Virginia jurisdictional projected fuel expenses for the rate year beginning July 1, 2015. Virginia Power’s new

fuel rate, approved on an interim basis effective April 1, 2015, represents a fuel revenue decrease of approximately $512 million when applied to projected kilowatt-hour sales for the period April 1, 2015 to June 30, 2016. This case is pending. As a result of the legislation enacted in February 2015, Virginia Power recognized a charge of $85 million ($52 million after-tax) in electric fuel and other energy-related purchases in its Consolidated Statements of Income to write off 50% of its December 31, 2014 deferred fuel costs attributable to customers in Virginia.

Rate Adjustment Clauses

Below is a discussion of significant riders associated with various Virginia Power projects:

•

The Virginia Commission previously approved Rider S in conjunction with the Virginia City Hybrid Energy Center. In March 2015, the Virginia Commission approved an approximately $245 million revenue requirement for the rate year beginning April 1, 2015.

•

The Virginia Commission previously approved Rider BW in conjunction with Brunswick County. In April 2015, the Virginia Commission approved an approximately $111 million total revenue requirement for the rate year beginning September 1, 2015.

•

The Virginia Commission previously approved Rider R in conjunction with Bear Garden. In March 2015, the Virginia Commission approved an approximately $84 million revenue requirement for the rate year beginning April 1, 2015.

•

The Virginia Commission previously approved Riders C1A and C2A in connection with cost recovery for DSM programs. In April 2015, the Virginia Commission approved an approximately $37 million revenue requirement for the rate year beginning May 1, 2015. The Virginia Commission approved two new energy efficiency programs for a three-year period with a combined cost cap of approximately $20 million, and reduced Virginia Power’s annual base rate revenues by approximately $7 million to remove the costs of a discontinued energy efficiency program no longer combined in Virginia Power’s base rates effective May 1, 2015.

•

The Virginia Commission previously approved Rider B in conjunction with the conversion of three power stations to biomass. In March 2015, the Virginia Commission approved an approximately $9 million revenue requirement for the rate year beginning April 1, 2015.

Electric Transmission Project

In April 2015, the Supreme Court of Virginia issued its opinion in the consolidated appeals of the Virginia Commission’s order granting a CPCN for the Skiffes Creek transmission line and related facilities. The Supreme Court of Virginia unanimously affirmed on all but one of the alleged grounds for appeal. The court approved the proposed project including the proposed route for a 500 kV overhead transmission line from Surry Power Station to the Skiffes Creek Switching Station site. The court reversed and remanded the Virginia Commission’s determination in one set of appeals that the Skiffes Creek Switching Station was a transmission line for purposes of statutory exemption from local zoning ordinances. On April 27, 2015, Virginia Power and the Virginia Commission each filed a Notice of Intent to Apply for Rehearing with the Supreme Court of Virginia relating to the ruling on the switching station. This matter is pending.

North Anna

Virginia Power is considering the construction of a third nuclear unit at a site located at North Anna. If Virginia Power decides to build a new unit, it must first receive a COL from the NRC, approval of the Virginia Commission and certain environmental permits and other approvals. The COL is expected in 2016. Virginia Power has not yet committed to building a new nuclear unit at North Anna.

In September 2014, BREDL filed a petition with the NRC again seeking suspension of final decision making in the COL proceeding, along with motions to reopen and file a new contention. BREDL asserted that the NRC must make a safety finding on the feasibility and capacity of geologic disposal of spent fuel prior to the issuance of a license. BREDL also alleged that because these safety findings are no longer made as part of the NRC’s new continued storage rule, such findings must now be made in individual licensing proceedings. In January 2015, BREDL filed another petition asking the NRC to supplement the final environmental impact statement for North Anna 3 to incorporate the NRC’s generic assessment of the impacts of continued spent fuel storage, which would allow BREDL to then challenge that assessment.

The NRC denied the September 2014 petition and motions filed by BREDL in February 2015 and the January 2015 petition filed by BREDL in April 2015. In April 2015, BREDL filed a new motion and petition seeking to object to the NRC’s reliance on the continued storage rule in licensing proceedings. The BREDL filings are substantially the same as those filed in other COL proceedings in which final environmental impact statements were issued prior to promulgation of the continued storage rule, like North Anna 3. Resolution of these filings is not expected to affect the schedule for issuance of the COL.

Ohio Regulation

PIR Program

In March 2015, East Ohio filed an application with the Ohio Commission requesting approval to extend the PIR program for an additional five years and to increase the annual capital investment, with corresponding increases in the annual rate-increase caps. In its application, East Ohio proposed that PIR investments for 2016 should fall under the existing authorization and that the new five-year period should include investment through December 31, 2021. East Ohio also proposed that the PIR investment should be increased by $20 million in 2017 and another $20 million in 2018, bringing the total annual investment to $200 million. Thereafter, East Ohio proposed capital investment increases of 3% per year for 2019 through 2021 to mitigate inflation and other cost pressures experienced to date, which will continue into the future. This case is pending.

In February 2015, East Ohio filed an application to adjust the PIR cost recovery for 2014 costs. The filing reflects gross plant investment for 2014 of $155 million, cumulative gross plant investment of $829 million and a revenue requirement of $108 million. This application was approved by the Ohio Commission in April 2015.

AMR Program

In February 2015, East Ohio filed its application with the Ohio Commission to adjust its AMR cost recovery charge to recover costs for calendar year 2014 associated with AMR deployment, which was completed in 2012. The filing reflects a projected revenue requirement of approximately $8 million. This application was approved by the Ohio Commission in April 2015.

Note 13. Variable Interest Entities

As discussed in Note 15 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014, certain variable pricing terms in some of the Companies’ contracts cause them to be considered variable interests in the counterparties.

Virginia Power

Virginia Power has long-term power and capacity contracts with five non-utility generators with an aggregate summer generation capacity of approximately 870 MW. These contracts contain certain variable pricing mechanisms in the form of partial fuel reimbursement that Virginia Power considers to be variable interests. After an evaluation of the information provided by these entities, Virginia Power was unable to determine whether they were VIEs. However, the information they provided, as well as Virginia Power’s knowledge of generation facilities in Virginia, enabled Virginia Power to conclude that, if they were VIEs, it would not be the primary beneficiary. This conclusion reflects Virginia Power’s determination that its variable interests do not convey the power to direct the most significant activities that impact the economic performance of the entities during the remaining terms of Virginia Power’s contracts and for the years the entities are expected to operate after its contractual relationships expire. The contracts expire at various dates ranging from 2015 to 2021. Virginia Power is not subject to any risk of loss from these potential VIEs other than its remaining purchase commitments which totaled $585 million as of March 31, 2015. Virginia Power paid $53 million and $56 million for electric capacity and $37 million and $54 million for electric energy to these entities in the three months ended March 31, 2015 and 2014, respectively.

Virginia Power and Dominion Gas

Virginia Power and Dominion Gas purchased shared services from DRS, an affiliated VIE, of approximately $83 million and $28 million, and $83 million and $26 million for the three months ended March 31, 2015 and 2014, respectively. Virginia Power and Dominion Gas determined that each is not the most closely associated entity with DRS and therefore neither is the primary beneficiary. DRS provides accounting, legal, finance and certain administrative and technical services to all Dominion subsidiaries, including Virginia Power and Dominion Gas. Virginia Power and Dominion Gas have no obligation to absorb more than their allocated shares of DRS costs.

Note 14. Significant Financing Transactions

Credit Facilities and Short-term Debt

The Companies use short-term debt to fund working capital requirements and as a bridge to long-term debt financings. The levels of borrowing may vary significantly during the course of the year, depending upon the timing and amount of cash requirements not satisfied by cash from operations. In addition, Dominion utilizes cash and letters of credit to fund collateral requirements. Collateral requirements are impacted by commodity prices, hedging levels, Dominion’s credit ratings and the credit quality of its counterparties.

Dominion

At March 31, 2015, Dominion’s commercial paper and letters of credit outstanding, as well as its capacity available under credit facilities, were as follows:


	Facility Limit		Outstanding Commercial Paper		Outstanding Letters of Credit		Facility Capacity Available
(millions)
Joint revolving credit facility⁽¹⁾	$	4,000	$	3,112	$	—	$	888
Joint revolving credit facility⁽²⁾		500		88		48		364

Total	$	4,500	$	3,200	$	48	$	1,252

(1)	This credit facility has a maturity date of April 2019, and can be used to support bank borrowings and the issuance of commercial paper, as well as to support up to $1.5 billion of letters of credit.

(2)	This credit facility has a maturity date of April 2019, and can be used to support bank borrowings, commercial paper and letter of credit issuances.

Virginia Power

Virginia Power’s short-term financing is supported by two joint revolving credit facilities with Dominion and Dominion Gas. These credit facilities are being used for working capital, as support for the combined commercial paper programs of the Companies and for other general corporate purposes.

At March 31, 2015, Virginia Power’s share of commercial paper and letters of credit outstanding, as well as its capacity available under its joint credit facilities with Dominion and Dominion Gas, were as follows:


	Facility Sub-limit		Outstanding Commercial Paper		Outstanding Letters of Credit		Facility Sub-limit Capacity Available
(millions)
Joint revolving credit facility⁽¹⁾	$	1,500	$	1,500	$	—	$	—
Joint revolving credit facility⁽²⁾		250		88		—		162

Total	$	1,750	$	1,588	$	—	$	162

(1)

This credit facility has a maturity date of April 2019, and can be used to support bank borrowings and the issuance of commercial paper, as well as to support up to $1.5 billion (or the sub-limit, whichever is less) of letters of credit. Virginia Power’s current sub-limit under this credit facility can be increased or decreased multiple times per year. In January 2015, Virginia Power increased its sub-limit from $1.25 billion to $1.50 billion.

(2)	This credit facility has a maturity date of April 2019, and can be used to support bank borrowings, commercial paper and letter of credit issuances. Virginia Power’s current sub-limit under this credit facility can be increased or decreased multiple times per year.

In addition to the credit facility commitments mentioned above, Virginia Power also has a $120 million credit facility with a maturity date of April 2019. As of March 31, 2015, this facility supports approximately $119 million of certain variable rate tax-exempt financings of Virginia Power.

Dominion Gas

Dominion Gas’ short-term financing is supported by the two joint revolving credit facilities discussed above with Dominion and Virginia Power, to which Dominion Gas was added as a borrower in May 2014. In December 2014, Dominion Gas entered into a commercial paper program pursuant to which it began accessing the commercial paper markets in January 2015.

At March 31, 2015, Dominion Gas’ share of commercial paper and letters of credit outstanding, as well as its capacity available under its joint credit facilities with Dominion and Virginia Power were as follows:

Facility
Sub-limit

Outstanding
Commercial
Paper

Outstanding
Letters of
Credit

Facility
Sub-limit
Capacity
Available

(millions)

Joint revolving credit facility⁽¹⁾

500

280

—

220

Joint revolving credit facility⁽²⁾

—

Total

500

280

—

220

(1)

This credit facility has a maturity date of April 2019, and can be used to support bank borrowings and the issuance of commercial paper, as well as to support up to $1.5 billion (or the sub-limit, whichever is less) of letters of credit. Dominion Gas’ current sub-limit under this credit facility can be increased or decreased multiple times per year, up to a maximum of $1.0 billion.

(2)	This credit facility has a maturity date of April 2019, and can be used to support bank borrowings, commercial paper and letter of credit issuances. Dominion Gas’ current sub-limit under this credit facility can be increased or decreased multiple times per year.

Issuance of Common Stock

Dominion maintains Dominion Direct^® and a number of employee savings plans through which contributions may be invested in Dominion’s common stock. These shares may either be newly issued or purchased on the open market with proceeds contributed to these plans. In January 2014, Dominion began purchasing its common stock on the open market for these plans. In April 2014, Dominion began issuing new common shares for these direct stock purchase plans.

In December 2014, Dominion filed an SEC shelf registration for the sale of debt and equity securities including the ability to sell common stock through an at-the-market program. Also in December 2014, Dominion entered into four separate sales agency agreements to effect sales under the program and pursuant to which it may offer from time to time up to $500 million aggregate amount of its common stock. Sales of common stock can be made by means of privately negotiated transactions, as transactions on the NYSE at market prices or in such other transactions as are agreed upon by Dominion and the sales agents and in conformance with applicable securities laws. During the first quarter of 2015, Dominion provided sales instructions to two of the sales agents and issued 2.9 million shares through at-the-market issuances and received cash proceeds of approximately $219 million, net of fees and commissions paid of approximately $2 million. In April 2015, Dominion issued approximately 600 thousand shares through at-the-market issuances and received cash proceeds of approximately $43 million, net of fees and commissions paid of less than $1 million. Following these issuances, Dominion has the ability to issue up to approximately $235 million of stock under the 2014 sales agency agreements.

Note 15. Commitments and Contingencies

As a result of issues generated in the ordinary course of business, the Companies are involved in legal proceedings before various courts and are periodically subject to governmental examinations (including by regulatory authorities), inquiries and investigations. Certain legal proceedings and governmental examinations involve demands for unspecified amounts of damages, are in an initial procedural phase, involve uncertainty as to the outcome of pending appeals or motions, or involve significant factual issues that need to be resolved, such that it is not possible for the Companies to estimate a range of possible loss. For such matters for which the Companies cannot estimate a range of possible loss, a statement to this effect is made in the description of the matter. Other matters may have progressed sufficiently through the litigation or investigative processes such that the Companies are able to estimate a range of possible loss. For legal proceedings and governmental examinations for which the Companies are able to reasonably estimate a range of possible losses, an estimated range of possible loss is provided, in excess of the accrued liability (if any) for such matters. Any accrued liability is recorded on a gross basis with a receivable also recorded for any probable insurance recoveries. Estimated ranges of loss are inclusive of legal fees and net of any anticipated insurance recoveries. Any estimated range is based on currently available information and involves elements of judgment and significant uncertainties. Any estimated range of possible loss may not represent the Companies’ maximum possible loss exposure. The circumstances of such legal proceedings and governmental examinations will change from time to time and actual results may vary significantly from the current estimate. For current proceedings not specifically reported below, management does not anticipate that the liabilities, if any, arising from such proceedings would have a material effect on the financial position, liquidity or results of operations of the Companies.

Environmental Matters

The Companies are subject to costs resulting from a number of federal, state and local laws and regulations designed to protect human health and the environment. These laws and regulations affect future planning and existing operations. They can result in increased capital, operating and other costs as a result of compliance, remediation, containment and monitoring obligations.

Air

The CAA, as amended, is a comprehensive program utilizing a broad range of regulatory tools to protect and preserve the nation’s air quality. At a minimum, states are required to establish regulatory programs to address all requirements of the CAA. However, states may choose to develop regulatory programs that are more restrictive. Many of the Companies’ facilities are subject to the CAA’s permitting and other requirements.

In December 2011, the EPA issued MATS for coal and oil-fired electric utility steam generating units. The rule establishes strict emission limits for mercury, particulate matter as a surrogate for toxic metals and hydrogen chloride as a surrogate for acid gases. The rule includes a limited use provision for oil-fired units with annual capacity factors under 8% that provides an exemption from emission limits, and allows compliance with operational work practice standards. Compliance was required by April 16, 2015, with certain limited exceptions. However, in June 2014, the VDEQ granted a one-year MATS compliance extension for two coal-fired units at Yorktown to defer planned retirements and allow for continued operation of the units to address reliability concerns while necessary electric transmission upgrades are being completed. Due to delays in transmission upgrades needed to maintain electric reliability, these coal units will need to continue operating until early 2017. Therefore, Virginia Power plans to request from the EPA an additional one year compliance extension under an EPA Administrative Order.

The EPA established CAIR with the intent to require significant reductions in SO₂ and NO_x emissions from electric generating facilities. In July 2008, the U.S. Court of Appeals for the D.C. Circuit issued a ruling vacating CAIR. In December 2008, the Court denied rehearing, but also issued a decision to remand CAIR to the EPA. In July 2011, the EPA issued a replacement rule for CAIR, called CSAPR, that required 28 states to reduce power plant emissions that cross state lines. CSAPR established new SO₂ and NO_x emissions cap and trade programs that were completely independent of the current ARP. Specifically, CSAPR required reductions in SO₂ and NO_x emissions from fossil fuel-fired electric generating units of 25 MW or more through annual NO_x emissions caps, NO_x emissions caps during the ozone season (May 1 through September 30) and annual SO₂ emission caps with differing requirements for two groups of affected states.

Following numerous petitions by industry participants for review and a successful motion for stay, in October 2014, the U.S. Court of Appeals for the D.C. Circuit ordered that the EPA’s motion to lift the stay of CSAPR be granted. Further, the Court granted the EPA’s request to shift the CSAPR compliance deadlines by three years, so that Phase 1 emissions budgets (which would have gone into effect in 2012 and 2013) will apply in 2015 and 2016, and Phase 2 emissions budgets will apply in 2017 and beyond. CSAPR replaced CAIR beginning in January 2015. The cost to comply is not expected to be material to the Consolidated Financial Statements. Future outcomes of any additional litigation and/or any action to issue a revised rule could affect the assessment regarding cost of compliance.

In May 2012, the EPA issued final designations for the 75-ppb ozone air quality standard. A number of the Companies’ facilities are located in areas impacted by this standard. As part of the standard, states will be required to develop and implement plans to address sources emitting pollutants which contribute to the formation of ozone. In November 2014, the EPA issued a new proposal to revise the ozone standard and expects to finalize the rule in October 2015. The EPA is not expected to complete attainment designations for a new standard until 2017 and states will have until 2020 to develop plans to address the new standard. Until the states have developed implementation plans, the Companies are unable to predict whether or to what extent the new rules will ultimately require additional controls. However, if significant expenditures are required to implement additional controls, it could adversely affect the Companies’ results of operations and cash flows.

In August 2010, the EPA issued revised National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines. The rule was amended in March 2011 and January 2013. The rule establishes emission standards for control of hazardous air pollutants for engines at smaller facilities, known as area sources. As a result of these regulations, Dominion Gas installed emissions controls on several compressor engines. Dominion Gas has spent approximately $2 million to date and is evaluating further expenditures. Dominion Gas is unable to estimate the additional potential impacts on results of operations, financial condition and/or cash flows related to this matter.

In August 2012, the EPA issued the first NSPS impacting the natural gas production and gathering sectors and made revisions to the NSPS for natural gas processing and transmission facilities. These rules establish equipment performance specifications and emissions standards for control of volatile organic compound emissions for natural gas production wells, tanks, pneumatic controllers, and compressors in the upstream sector. Compliance with these rules is required for installations and wells constructed or reconstructed after August 23, 2011. The cost to comply with the NSPS will depend on the number of new wells and new equipment installations subject to the rule; therefore, Dominion Gas is unable to estimate the potential impacts on results of operations, financial condition and/or cash flows related to this matter.

Water

The CWA, as amended, is a comprehensive program requiring a broad range of regulatory tools including a permit program to authorize and regulate discharges to surface waters with strong enforcement mechanisms. The Companies must comply with applicable aspects of the CWA programs at their operating facilities.

In October 2014, the final regulations under Section 316(b) of the CWA that govern existing facilities and new units at existing facilities that employ a cooling water intake structure and that have flow levels exceeding a minimum threshold became effective. The rule establishes a national standard for impingement based on seven compliance options, but forgoes the creation of a single technology standard for entrainment. Instead, the EPA has delegated entrainment technology decisions to state regulators. State regulators are to make case-by-case entrainment technology determinations after an examination of five mandatory facility-specific factors, including a social cost-benefit test, and six optional facility-specific factors. The rule governs all electric generating stations with water withdrawals above two MGD, with a heightened entrainment analysis for those facilities over 125 MGD. Dominion and Virginia Power have 14 and 11 facilities, respectively, that may be subject to the final regulations. Dominion anticipates that it will have to install impingement control technologies at many of these stations that have once-through cooling systems. Dominion and Virginia Power are currently evaluating the need or potential for

entrainment controls under the final rule as these decisions will be made on a case-by-case basis after a thorough review of detailed biological, technology, cost and benefit studies. While the impacts of this rule could be material to Dominion’s and Virginia Power’s results of operations, financial condition and/or cash flows, the existing regulatory framework in Virginia provides rate recovery mechanisms that could substantially mitigate any such impacts for Virginia Power.

In September 2010, Millstone’s NPDES permit was reissued under the CWA. The conditions of the permit require an evaluation of control technologies that could result in additional expenditures in the future. The report summarizing the results of the evaluation was submitted in August 2012 and is under review by the Connecticut Department of Energy and Environmental Protection. Dominion cannot currently predict the outcome of this review. In October 2010, the permit issuance was appealed to the state court by a private plaintiff. The permit is expected to remain in effect during the appeal. In February 2015, the NPDES permit renewal application was submitted to the Connecticut Department of Energy and Environmental Protection along with a schedule to update the evaluation of control technologies consistent with the new federal 316(b) rule. Dominion is currently unable to make an estimate of the potential financial statement impacts related to this matter.

Solid and Hazardous Waste

The CERCLA, as amended, provides for immediate response and removal actions coordinated by the EPA in the event of threatened releases of hazardous substances into the environment and authorizes the U.S. government either to clean up sites at which hazardous substances have created actual or potential environmental hazards or to order persons responsible for the situation to do so. Under the CERCLA, as amended, generators and transporters of hazardous substances, as well as past and present owners and operators of contaminated sites, can be jointly, severally and strictly liable for the cost of cleanup. These potentially responsible parties can be ordered to perform a cleanup, be sued for costs associated with an EPA-directed cleanup, voluntarily settle with the U.S. government concerning their liability for cleanup costs, or voluntarily begin a site investigation and site remediation under state oversight.

From time to time, Dominion, Virginia Power, or Dominion Gas may be identified as a potentially responsible party to a Superfund site. The EPA (or a state) can either allow such a party to conduct and pay for a remedial investigation, feasibility study and remedial action or conduct the remedial investigation and action itself and then seek reimbursement from the potentially responsible parties. Each party can be held jointly, severally and strictly liable for the cleanup costs. These parties can also bring contribution actions against each other and seek reimbursement from their insurance companies. As a result, Dominion, Virginia Power, or Dominion Gas may be responsible for the costs of remedial investigation and actions under the Superfund law or other laws or regulations regarding the remediation of waste. Except as noted below, the Companies do not believe this will have a material effect on results of operations, financial condition and/or cash flows.

In September 2011, the EPA issued a UAO to Virginia Power and 22 other parties, ordering specific remedial action of certain areas at the Ward Transformer Superfund site located in Raleigh, North Carolina. Virginia Power does not believe it is a liable party under CERCLA based on its alleged connection to the site. In November 2011, Virginia Power and a number of other parties notified the EPA that they are declining to undertake the work set forth in the UAO.

The EPA may seek to enforce a UAO in court pursuant to its enforcement authority under CERCLA, and may seek recovery of its costs in undertaking removal or remedial action. If the court determines that a respondent failed to comply with the UAO without sufficient cause, the EPA may also seek civil penalties of up to $37,500 per day for the violation and punitive damages of up to three times the costs incurred by the EPA as a result of the party’s failure to comply with the UAO. Virginia Power is currently unable to make an estimate of the potential financial statement impacts related to the Ward Transformer matter.

Dominion has determined that it is associated with 17 former manufactured gas plant sites, three of which pertain to Virginia Power and 12 of which pertain to Dominion Gas. Studies conducted by other utilities at their former manufactured gas plant sites have indicated that those sites contain coal tar and other potentially harmful materials. None of the former sites with which the Companies are associated is under investigation by any state or federal environmental agency. At one of the former sites, Dominion is conducting a state-approved post-closure groundwater monitoring program and an environmental land use restriction has been recorded. Another site has been accepted into a state-based voluntary remediation program. Virginia Power is currently evaluating the nature and extent of the contamination from this site as well as potential remedial options. Preliminary costs for options under evaluation for the site range from $1 million to $22 million. Due to the uncertainty surrounding the other sites, the Companies are unable to make an estimate of the potential financial statement impacts.

In April 2015, the EPA’s final rule regulating the management of CCRs stored in impoundments (ash ponds) and landfills was published in the Federal Register. The final rule regulates CCR landfills, existing ash ponds that still receive and manage CCRs, and inactive ash ponds that do not receive, but still store CCRs. Virginia Power currently operates inactive ash ponds, existing ash ponds, and CCR landfills subject to the final rule at eight different facilities and is also evaluating other features at its

facilities for potential applicability under the final CCR rule. The enactment of the final rule in April 2015 creates a legal obligation for Virginia Power to retrofit or close all of its inactive and existing ash ponds over a certain period of time, as well as perform required monitoring, corrective action, and post-closure care activities as necessary. Virginia Power is evaluating the cost and timing of compliance under the final rule in order to establish applicable ARO balances in the second quarter of 2015, which could have a material impact to its financial position and cash flows. Virginia Power does not expect these AROs to have a significant impact on overall results of operations taking into consideration the ash pond related liability established in 2014 as described below, as well as the potential for mitigation through rate recovery mechanisms under the existing regulatory framework in Virginia.

Climate Change Legislation and Regulation

In October 2013, the U.S. Supreme Court granted petitions filed by several industry groups, states, and the U.S. Chamber of Commerce seeking review of the D.C. Circuit Court’s June 2012 decision upholding the EPA’s regulation of GHG emissions from stationary sources under the CAA’s permitting programs. In June 2014, the U.S. Supreme Court ruled that the EPA lacked the authority under the CAA to require PSD or Title V permits for stationary sources based solely on GHG emissions. However, the Court upheld the EPA’s ability to require BACT for GHG for sources that are otherwise subject to PSD or Title V permitting for conventional pollutants. In July 2014, the EPA issued a memorandum specifying that it will no longer apply or enforce federal regulations or EPA-approved PSD state implementation plan provisions that require new and modified stationary sources to obtain a PSD permit when GHGs are the only pollutant that would be emitted at levels that exceed the permitting thresholds. In addition, the EPA stated that it will continue to use the existing thresholds to apply to sources that are otherwise subject to PSD for conventional pollutants until it completes a new rulemaking either justifying and upholding those thresholds or setting new ones. Some states have issued interim guidance that follows the EPA guidance. Due to uncertainty regarding what additional actions states may take to amend their existing regulations and what action the EPA ultimately takes to address the court ruling under a new rulemaking, the Companies cannot predict the impact to their financial statements at this time.

In July 2011, the EPA signed a final rule deferring the need for PSD and Title V permitting for CO₂ emissions for biomass projects. This rule temporarily deferred for a period of up to three years the consideration of CO₂ emissions from biomass projects when determining whether a stationary source meets the PSD and Title V applicability thresholds, including those for the application of BACT. The deferral policy expired in July 2014. In July 2013, the U.S. Court of Appeals for the D.C. Circuit vacated this rule; however, a mandate making this decision effective has not been issued. Virginia Power converted three coal-fired generating stations, Altavista, Hopewell and Southampton, to biomass during the CO₂ deferral period. It is unclear how the court’s decision or the EPA’s final policy regarding the treatment of specific feedstock will affect biomass sources that were permitted during the deferral period; however, the expenditures to comply with any new requirements could be material to Dominion’s and Virginia Power’s financial statements.

Other Legal Matters

The Companies are defendants in a number of lawsuits and claims involving unrelated incidents of property damage and personal injury. Due to the uncertainty surrounding these matters, the Companies are unable to make an estimate of the potential financial statement impacts; however, they could have a material impact on results of operations, financial condition and/or cash flows.

Appalachian Gateway

Following the completion of the Appalachian Gateway Project in 2012, DTI received multiple change order requests and other claims for additional payments from a pipeline contractor for the project. In July 2013, DTI filed a complaint in U.S. District Court, Eastern District of Virginia for breach of contract as well as accounting and declaratory relief. The contractor filed a motion to dismiss, or in the alternative, a motion to transfer venue to Pennsylvania and/or West Virginia, where the pipelines were constructed. DTI filed an opposition to the contractor’s motion in August 2013. In November 2013, the court granted the contractor’s motion on the basis that DTI must first comply with the dispute resolution process. Pursuant to the ruling, DTI intends to mediate the matter. This case is pending. DTI has accrued a liability of approximately $6 million for this matter. Dominion Gas cannot currently estimate additional financial statement impacts, but there could be a material impact to its financial condition and/or cash flows.

Ash Pond Closure Costs

In September 2014, Virginia Power received a notice from the SELC on behalf of the Potomac Riverkeeper and Sierra Club alleging CWA violations at Possum Point. The notice alleges unpermitted discharges to surface water and groundwater from Possum Point’s historical and active ash storage facilities. A similar notice from the SELC on behalf of the Sierra Club was subsequently received related to Chesapeake. In December 2014, Virginia Power offered to close all of its coal ash ponds and landfills at Possum Point, Chesapeake and Bremo as settlement of the potential litigation. While the issue is open to potential further negotiations, the SELC declined the offer as presented in January 2015 and, in March 2015, filed a lawsuit related to its

claims of the alleged CWA violations at Chesapeake. As a result of the settlement offer, Virginia Power recognized a charge of $121 million in other operations and maintenance expense in its Consolidated Statements of Income in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014. Virginia Power expects to reverse this contingent liability and recognize the ARO in the second quarter of 2015 as described above, as the legal obligations created by the final CCR rule represent substantially the same activities contemplated by this settlement offer with respect to Possum Point, Chesapeake and Bremo. Any difference in measurement is not expected to be material to Virginia Power’s results of operations.

Nuclear Matters

In March 2011, a magnitude 9.0 earthquake and subsequent tsunami caused significant damage at the Fukushima Daiichi nuclear power station in northeast Japan. These events have resulted in significant nuclear safety reviews required by the NRC and industry groups such as INPO. Like other U.S. nuclear operators, Dominion has been gathering supporting data and participating in industry initiatives focused on the ability to respond to and mitigate the consequences of design-basis and beyond-design-basis events at its stations.

In July 2011, an NRC task force provided initial recommendations based on its review of the Fukushima Daiichi accident and in October 2011, the NRC staff prioritized these recommendations into Tiers 1, 2 and 3, with the Tier 1 recommendations consisting of actions which the staff determined should be started without unnecessary delay. In December 2011, the NRC Commissioners approved the agency staff’s prioritization and recommendations, and that same month an appropriations act directed the NRC to require reevaluation of external hazards (not limited to seismic and flooding hazards) as soon as possible.

Based on the prioritized recommendations, in March 2012, the NRC issued orders and information requests requiring specific reviews and actions to all operating reactors, construction permit holders and combined license holders based on the lessons learned from the Fukushima Daiichi event. The orders applicable to Dominion require implementation of safety enhancements related to mitigation strategies to respond to extreme natural events resulting in the loss of power at plants, and enhancing spent fuel pool instrumentation. The orders require prompt implementation of the safety enhancements and completion of implementation within two refueling outages or by December 31, 2016, whichever comes first. Implementation of these enhancements is currently in progress. The information requests issued by the NRC request each reactor to reevaluate the seismic and flooding hazards at their site using present-day methods and information, conduct walkdowns of their facilities to ensure protection against the hazards in their current design basis, and to reevaluate their emergency communications systems and staffing levels. Dominion and Virginia Power do not currently expect that compliance with the NRC’s March 2012 orders and information requests will materially impact their financial position, results of operations or cash flows during the approximately four-year implementation period. The NRC staff is evaluating the implementation of the longer-term Tier 2 and Tier 3 recommendations. Dominion and Virginia Power are currently unable to estimate the potential financial impacts related to compliance with Tier 2 and Tier 3 recommendations.

Guarantees, Surety Bonds and Letters of Credit

Dominion

At March 31, 2015, Dominion had issued $74 million of guarantees, primarily to support equity method investees. No significant amounts related to these guarantees have been recorded. As of March 31, 2015, Dominion’s exposure under these guarantees was $39 million, primarily related to certain reserve requirements associated with non-recourse financing.

Dominion also enters into guarantee arrangements on behalf of its consolidated subsidiaries, primarily to facilitate their commercial transactions with third parties. To the extent that a liability subject to a guarantee has been incurred by one of Dominion’s consolidated subsidiaries, that liability is included in the Consolidated Financial Statements. Dominion is not required to recognize liabilities for guarantees issued on behalf of its subsidiaries unless it becomes probable that it will have to perform under the guarantees. Terms of the guarantees typically end once obligations have been paid. Dominion currently believes it is unlikely that it would be required to perform or otherwise incur any losses associated with guarantees of its subsidiaries’ obligations.

At March 31, 2015, Dominion had issued the following subsidiary guarantees:


	Stated Limit		Value⁽¹⁾
(millions)
Subsidiary debt⁽²⁾	$	27	$	27
Commodity transactions⁽³⁾		2,816		1,075
Nuclear obligations⁽⁴⁾		199		79
Cove Point⁽⁵⁾		1,910		—
Solar⁽⁶⁾		531		171
Other⁽⁷⁾		528		36

Total	$	6,011	$	1,388

(1)

Represents the estimated portion of the guarantee’s stated limit that is utilized as of March 31, 2015 based upon prevailing economic conditions and fact patterns specific to each guarantee arrangement. For those guarantees related to obligations that are recorded as liabilities by Dominion’s subsidiaries, the value includes the recorded amount.

(2)	Guarantee of debt of a DEI subsidiary. In the event of default by the subsidiary, Dominion would be obligated to repay such amounts.

(3)

Guarantees related to commodity commitments of certain subsidiaries, including subsidiaries of Virginia Power, Dominion Gas and DEI. These guarantees were provided to counterparties in order to facilitate physical and financial transactions in gas, oil, electricity, pipeline capacity, transportation and related commodities and services. If any of these subsidiaries fail to perform or pay under the contracts and the counterparties seek performance or payment, Dominion would be obligated to satisfy such obligation. Dominion and its subsidiaries receive similar guarantees as collateral for credit extended to others. The value provided includes certain guarantees that do not have stated limits.

(4)

Guarantees related to certain DEI subsidiaries’ potential retrospective premiums that could be assessed if there is a nuclear incident under Dominion’s nuclear insurance programs and guarantees for a DEI subsidiary’s and Virginia Power’s commitment to buy nuclear fuel. Excludes Dominion’s agreement to provide up to $150 million and $60 million to two DEI subsidiaries to pay the operating expenses of Millstone (in the event of a prolonged outage) and Kewaunee, respectively, as part of satisfying certain NRC requirements concerned with ensuring adequate funding for the operations of nuclear power stations. The agreement for Kewaunee also provides for funds through the completion of decommissioning.

(5)	Guarantees related to Cove Point, in support of terminal services, transportation and construction. Two of the guarantees have no stated limit, one guarantee has a $150 million limit, and one guarantee has a $1.75 billion aggregate limit with an annual draw limit of $175 million.

(6)

Includes guarantees to facilitate the development of solar projects including guarantees to support the issuance of full notice to proceed under EPC agreements. Includes certain guarantees that do not have stated limits. Also includes guarantees entered into by DEI on behalf of certain subsidiaries to facilitate the acquisition and development of solar projects.

(7)

Guarantees related to other miscellaneous contractual obligations such as leases, environmental obligations and construction projects. Also includes guarantees related to certain DEI subsidiaries’ obligations for equity capital contributions and energy generation associated with Fowler Ridge and NedPower. As of March 31, 2015, Dominion’s maximum remaining cumulative exposure under these equity funding agreements is $63 million through 2019 and its maximum annual future contributions could range from approximately $4 million to $19 million. The value provided includes certain guarantees that do not have stated limits.

Additionally, at March 31, 2015, Dominion had purchased $134 million of surety bonds, including $65 million at Virginia Power and $30 million at Dominion Gas, and authorized the issuance of letters of credit by financial institutions of $48 million to facilitate commercial transactions by its subsidiaries with third parties. Under the terms of surety bonds, the Companies are obligated to indemnify the respective surety bond company for any amounts paid.

Note 16. Credit Risk

The Companies’ accounting policies for credit risk are discussed in Note 23 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014.

At March 31, 2015, Dominion’s credit exposure totaled $356 million. Of this amount, investment grade counterparties, including those internally rated, represented 89%. No single counterparty, whether investment grade or non-investment grade, exceeded $46 million of exposure.

Credit-Related Contingent Provisions

The majority of Dominion’s derivative instruments contain credit-related contingent provisions. These provisions require Dominion to provide collateral upon the occurrence of specific events, primarily a credit rating downgrade. If the credit-related contingent features underlying these instruments that are in a liability position and not fully collateralized with cash were fully triggered as of March 31, 2015 and December 31, 2014, Dominion would have been required to post an additional $16 million and $20 million, respectively, of collateral to its counterparties. The collateral that would be required to be posted includes the impacts of any offsetting asset positions and any amounts already posted for derivatives, non-derivative contracts and derivatives elected under the normal purchases and normal sales exception, per contractual terms. Dominion had posted approximately $96 million and $1 million in collateral at March 31, 2015 and December 31, 2014, respectively, related to

derivatives with credit-related contingent provisions that are in a liability position and not fully collateralized with cash. The collateral posted includes any amounts paid related to non-derivative contracts and derivatives elected under the normal purchases and normal sales exception, per contractual terms. The aggregate fair value of all derivative instruments with credit-related contingent provisions that are in a liability position and not fully collateralized with cash as of March 31, 2015 and December 31, 2014 was $40 million and $49 million, respectively, which does not include the impact of any offsetting asset positions. Credit-related contingent provisions for Virginia Power and Dominion Gas were not material as of March 31, 2015 and December 31, 2014. See Note 9 for further information about derivative instruments.

Dominion Gas

In the first quarter of 2015, DTI provided service to 248 customers with approximately 94% of its storage and transportation revenue being provided through firm services. The ten largest customers provided approximately 42% of the total storage and transportation revenue of approximately $201 million and the thirty largest provided approximately 73% of total storage and transportation revenue. Approximately 98% of the transmission capacity under contract on DTI’s pipeline is subscribed with long-term contracts (two years or greater). The remaining 2% is contracted on a year-to-year basis. Less than 1% of firm transportation capacity is currently unsubscribed. All storage services are subscribed under long-term contracts.

East Ohio distributes natural gas to residential, commercial and industrial customers in Ohio using rates established by the Ohio Commission. Approximately 99% of East Ohio revenues are derived from its jurisdictional gas services. East Ohio’s bad debt risk is mitigated by the regulatory framework established by the Ohio Commission.

Note 17. 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. 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. As of March 31, 2015, Virginia Power’s derivative assets and liabilities with affiliates were $24 million and $7 million, respectively. As of December 31, 2014, Virginia Power’s derivative assets and liabilities with affiliates were not material. See Notes 7 and 9 for more information.

Virginia Power participates in certain Dominion benefit plans described in Note 18. In Virginia Power’s Consolidated Balance Sheets at March 31, 2015 and December 31, 2014, amounts due to Dominion associated with these benefit plans included in other deferred credits and other liabilities were $243 million and $219 million, respectively, and amounts due from Dominion at March 31, 2015 included in other deferred charges and other assets were $46 million.

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 Virginia Power’s significant transactions with DRS and other affiliates:


	Three Months Ended March 31,
	2015		2014
(millions)
Commodity purchases from affiliates	$	252	$	202
Services provided by affiliates⁽¹⁾		110		108
Services provided to affiliates		5		5

(1)	Includes capitalized expenditures.

Virginia Power has borrowed funds from Dominion under short-term borrowing arrangements. There were $10 million and $427 million in short-term demand note borrowings from Dominion as of March 31, 2015 and December 31, 2014, respectively. Virginia Power had no outstanding borrowings, net of repayments under the Dominion money pool for its nonregulated subsidiaries as of March 31, 2015 and December 31, 2014. Interest charges related to Virginia Power’s borrowings from Dominion were immaterial for the three months ended March 31, 2015 and 2014.

There were no issuances of Virginia Power’s common stock to Dominion for the three months ended March 31, 2015 and 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 March 31, 2015 and December 31, 2014, all of Dominion Gas’ commodity derivatives were with affiliates. See Notes 7 and 9 for more information. See Note 10 for information regarding sales of assets to an affiliate.

Dominion Gas participates in certain Dominion benefit plans as described in Note 18.

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 costs of these services follow:


	Three Months Ended March 31,
	2015		2014
(millions)
Purchases of natural gas and transportation and storage services from affiliates	$	2	$	18
Sales of natural gas and transportation and storage services to affiliates		18		21
Services provided by related parties⁽¹⁾		34		28
Services provided to related parties		20		13

(1)	Includes capitalized expenditures.

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


	March 31, 2015		December 31, 2014
(millions)
Customer receivables from related parties⁽¹⁾	$	11	$	22
Imbalances receivable from affiliates⁽²⁾		4		3
Affiliated notes receivable⁽³⁾		10		9

(1)	Includes $5 million and $17 million due from Atlantic Coast Pipeline, a related party VIE, at March 31, 2015 and December 31, 2014, respectively.

(2)	Amounts are presented in other current assets 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 $39 million as of March 31, 2015 and $384 million as of December 31, 2014. Interest charges related to Dominion Gas’ total borrowings from Dominion were immaterial for the three months ended March 31, 2015 and 2014.

Note 18. Employee Benefit Plans

Dominion

The components of Dominion’s provision for net periodic benefit cost (credit) were as follows:


	Pension Benefits						Other Postretirement Benefits
	2015			2014			2015			2014
(millions)
Three Months Ended March 31,
Service cost	$	32		$	29		$	10		$	8
Interest cost		72			72			17			17
Expected return on plan assets		(133	)		(125	)		(29	)		(28	)
Amortization of prior service cost (credit)		—			1			(7	)		(7	)
Amortization of net actuarial loss		40			28			1			—

Net periodic benefit cost (credit)	$	11		$	5		$	(8	)	$	(10	)

Employer Contributions

During the three months ended March 31, 2015, Dominion made no contributions to its defined benefit pension plans or other postretirement benefit plans. Dominion expects to contribute approximately $12 million to its other postretirement benefit plans through VEBAs during the remainder of 2015.

Dominion Gas

Dominion Gas participates in certain Dominion benefit plans as described in Note 21 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014. At March 31, 2015 and December 31, 2014, 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 $623 million and $614 million, respectively. At March 31, 2015 and December 31, 2014, Dominion Gas’ amounts due to Dominion associated with the Dominion Retiree Health and Welfare Plan and reflected in other deferred credits and other liabilities in the Consolidated Balance Sheets were $6 million and $7 million, respectively.

The components of Dominion Gas’ provision for net periodic benefit credit for employees represented by collective bargaining units were as follows:


	Pension Benefits						Other Postretirement Benefits
	2015			2014			2015			2014
(millions)
Three Months Ended March 31,
Service cost	$	3		$	3		$	2		$	1
Interest cost		7			7			3			3
Expected return on plan assets		(31	)		(29	)		(6	)		(5	)
Amortization of net actuarial loss		5			5			1			—

Net periodic benefit credit	$	(16	)	$	(14	)	$	—		$	(1	)

Employer Contributions

During the three months ended March 31, 2015, Dominion Gas made no contributions to its defined benefit pension plans or other postretirement benefit plans. Dominion Gas expects to contribute approximately $12 million to its other postretirement benefit plans through VEBAs, for both employees represented by collective bargaining units and employees not represented by collective bargaining units, during the remainder of 2015.

Note 19. Operating Segments

The Companies are organized primarily on the basis of products and services sold in the U.S. A description of the operations included in the Companies’ primary operating segments is as follows:

Primary Operating Segment

Description of Operations

Dominion

Virginia
Power

Dominion
Gas

DVP

Regulated electric distribution

Regulated electric transmission

Dominion Generation

Regulated electric fleet

Merchant electric fleet

Nonregulated retail energy marketing

Dominion Energy

Gas transmission and storage⁽¹⁾

Gas distribution and storage

Gas gathering and processing

LNG import and storage

(1)	Includes remaining producer services activities for Dominion.

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

Dominion

The Corporate and Other Segment of Dominion 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’s operating segments that are not included in profit measures evaluated by executive management in assessing the segments’ performance or allocating resources among the segments.

In January 2014, Dominion announced it would exit the electric retail energy marketing business. Dominion completed the sale in March 2014. As a result, the earnings impact from the electric retail energy marketing business has been included in the Corporate and Other Segment of Dominion for 2014 first quarter results of operations.

In the second quarter of 2013, Dominion commenced a repositioning of its producer services business, which aggregates natural gas supply, engages in natural gas trading and marketing activities and natural gas supply management and provides price risk management services to Dominion affiliates. The repositioning was completed in the first quarter of 2014 and resulted in the termination of natural gas trading and certain energy marketing activities. As a result, the earnings impact from natural gas trading and certain energy marketing activities has been included in the Corporate and Other Segment of Dominion for 2014.

In the three months ended March 31, 2015, Dominion reported an after-tax net expense of $48 million for specific items in the Corporate and Other segment, with $45 million of these net expenses attributable to its operating segments. In the three months ended March 31, 2014, Dominion reported an after-tax net expense of $228 million for specific items in the Corporate and Other segment, with $217 million of these net expenses attributable to its operating segments.

The net expense for specific items in 2015 primarily related to the impact of the following items:

•

An $85 million ($52 million after-tax) write-off of deferred fuel costs associated with Virginia legislation enacted in February 2015, attributable to Dominion Generation; and

•

A $17 million ($10 million after-tax) billing adjustment related to PJM, attributable to Dominion Generation; partially offset by

•

A $27 million ($17 million after-tax) net gain on investments held in nuclear decommissioning trust funds, attributable to Dominion Generation.

The net expense for specific items in 2014 primarily related to the impact of the following items:

•

A $319 million ($193 million after-tax) net loss related to the producer services business discussed above, attributable to Dominion Energy; and

•

A $47 million ($33 million after-tax) net loss related to the electric retail energy marketing business discussed above, including a $147 million ($90 million after-tax) loss from normal operations, partially offset by a $100 million ($57 million after-tax) gain on sale, net of a $31 million write-off of goodwill, attributable to Dominion Generation.

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


	DVP		Dominion Generation		Dominion Energy		Corporate and Other			Adjustments/ Eliminations			Consolidated Total
(millions)
Three Months Ended March 31, 2015
Total revenue from external customers	$	564	$	2,122	$	379	$	(13	)	$	357		$	3,409
Intersegment revenue		5		26		360		142			(533	)		—

Total operating revenue		569		2,148		739		129			(176	)		3,409
Net income (loss) attributable to Dominion		140		282		207		(93	)		—			536

Three Months Ended March 31, 2014
Total revenue from external customers	$	502	$	2,260	$	362	$	(2	)	$	508		$	3,630
Intersegment revenue		2		24		489		147			(662	)		—

Total operating revenue		504		2,284		851		145			(154	)		3,630
Net income (loss) attributable to Dominion		131		309		208		(269	)		—			379

Intersegment sales and transfers for Dominion 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 allocating resources among the segments.

In the three months ended March 31, 2015, Virginia Power reported an after-tax net expense of $61 million for specific items in the Corporate and Other segment, all of which was attributable to its operating segments. There were no material net benefit or expense items in the Corporate and Other segment in the three months ended March 31, 2014.

The net expense for specific items in 2015 primarily related to the impact of the following items:

•

An $85 million ($52 million after-tax) write-off of deferred fuel costs associated with Virginia legislation enacted in February 2015, attributable to Dominion Generation; and

•

A $15 million ($9 million after-tax) billing adjustment related to PJM, attributable to Dominion Generation.

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


	DVP		Dominion Generation		Corporate and Other			Consolidated Total
(millions)
Three Months Ended March 31, 2015
Operating revenue	$	567	$	1,585	$	(15	)	$	2,137
Net income (loss)		140		190		(61	)		269
Three Months Ended March 31, 2014
Operating revenue	$	502	$	1,481	$	—		$	1,983
Net income		134		189		1			324

Dominion Gas

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

In the three months ended March 31, 2015 and 2014, Dominion Gas reported no amounts for specific items in the Corporate and Other segment.

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


	Dominion Energy		Corporate and Other			Consolidated Total
(millions)
Three Months Ended March 31, 2015
Operating revenue	$	531	$	—		$	531
Net income (loss)		164		(3	)		161
Three Months Ended March 31, 2014
Operating revenue	$	569	$	—		$	569
Net income (loss)		166		(2	)		164

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MD&A discusses Dominion’s results of operations and general financial condition and Virginia Power’s and Dominion Gas’ results of operations. MD&A should be read in conjunction with the Companies’ Consolidated Financial Statements. Virginia Power and Dominion Gas meet the conditions to file under the reduced disclosure format, and therefore have omitted certain sections of MD&A.

Contents of MD&A

MD&A consists of the following information:

•

Forward-Looking Statements

•

Accounting Matters - Dominion

•

Dominion

•

Results of Operations

•

Segment Results of Operations

•

Virginia Power

•

Results of Operations

•

Dominion Gas

•

Results of Operations

•

Liquidity and Capital Resources - Dominion

•

Future Issues and Other Matters - Dominion

Forward-Looking Statements

This report contains statements concerning the Companies’ expectations, plans, objectives, future financial performance and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In most cases, the reader can identify these forward-looking statements by such words as “anticipate,” “estimate,” “forecast,” “expect,” “believe,” “should,” “could,” “plan,” “may,” “continue,” “target” or other similar words.

The Companies make forward-looking statements with full knowledge that risks and uncertainties exist that may cause actual results to differ materially from predicted results. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Additionally, other factors may cause actual results to differ materially from those indicated in any forward-looking statement. These factors include but are not limited to:

•

Unusual weather conditions and their effect on energy sales to customers and energy commodity prices;

•

Extreme weather events and other natural disasters, including hurricanes, high winds, severe storms, earthquakes, flooding and changes in water temperatures and availability that can cause outages and property damage to facilities;

•

Federal, state and local legislative and regulatory developments, including changes in federal and state tax laws and regulations;

•

Changes to federal, state and local environmental laws and regulations, including those related to climate change, the tightening of emission or discharge limits for GHGs and other emissions, more extensive permitting requirements and the regulation of additional substances;

•

Cost of environmental compliance, including those costs related to climate change;

•

Changes in enforcement practices of regulators relating to environmental standards and litigation exposure for remedial activities;

•

Changes in regulator implementation of environmental standards and litigation exposure for remedial activities;

•

Difficulty in anticipating mitigation requirements associated with environmental and other regulatory approvals;

•

Risks associated with the operation of nuclear facilities, including costs associated with the disposal of spent nuclear fuel, decommissioning, plant maintenance and changes in existing regulations governing such facilities;

•

Unplanned outages at facilities in which the Companies have an ownership interest;

•

Fluctuations in energy-related commodity prices and the effect these could have on Dominion’s and Dominion Gas’ earnings and the Companies’ liquidity position and the underlying value of their assets;

•

Counterparty credit and performance risk;

•

Capital market conditions, including the availability of credit and the ability to obtain financing on reasonable terms;

•

Risks associated with Virginia Power’s membership and participation in PJM, including risks related to obligations created by the default of other participants;

•

Fluctuations in the value of investments held in nuclear decommissioning trusts by Dominion and Virginia Power and in benefit plan trusts by Dominion and Dominion Gas;

•

Fluctuations in interest rates;

•

Changes in rating agency requirements or credit ratings and their effect on availability and cost of capital;

•

Changes in financial or regulatory accounting principles or policies imposed by governing bodies;

•

Employee workforce factors including collective bargaining agreements and labor negotiations with union employees;

•

Risks of operating businesses in regulated industries that are subject to changing regulatory structures;

•

Impacts of acquisitions, divestitures, transfers of assets to joint ventures or Dominion Midstream, and retirements of assets based on asset portfolio reviews;

•

Receipt of approvals for, and timing of, closing dates for acquisitions and divestitures;

•

The timing and execution of Dominion Midstream’s growth strategy;

•

Changes in rules for RTOs and ISOs in which Dominion and Virginia Power participate, including changes in rate designs, changes in FERC’s interpretation of market rules and new and evolving capacity models;

•

Political and economic conditions, including inflation and deflation;

•

Domestic terrorism and other threats to the Companies’ physical and intangible assets, as well as threats to cybersecurity;

•

Changes in demand for the Companies’ services, including industrial, commercial and residential growth or decline in the Companies’ service areas, changes in supplies of natural gas delivered to Dominion Gas’ pipeline and processing systems, failure to maintain or replace customer contracts on favorable terms, changes in customer growth or usage patterns, including as a result of energy conservation programs, the availability of energy efficient devices and the use of distributed generation methods;

•

Additional competition in industries in which the Companies operate, including in electric markets in which Dominion’s merchant generation facilities operate, and competition in the development, construction and ownership of certain electric transmission facilities in Virginia Power’s service territory in connection with FERC Order 1000;

•

Changes in technology, particularly with respect to new, developing or alternative sources of generation and smart grid technologies;

•

Changes to regulated electric rates collected by Virginia Power and regulated gas distribution, transportation and storage rates, including LNG storage, collected by Dominion and Dominion Gas;

•

Changes in operating, maintenance and construction costs;

•

Timing and receipt of regulatory approvals necessary for planned construction or expansion projects and compliance with conditions associated with such regulatory approvals;

•

The inability to complete planned construction, conversion or expansion projects at all, or with the outcomes or within the terms and time frames initially anticipated;

•

Adverse outcomes in litigation matters or regulatory proceedings; and

•

The impact of operational hazards, including adverse developments with respect to pipeline and plant safety or integrity, equipment loss, malfunction or failure, operator error, and other catastrophic events.

Additionally, other risks that could cause actual results to differ from predicted results are set forth in Item 1A. Risk Factors in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014.

The Companies’ forward-looking statements are based on beliefs and assumptions using information available at the time the statements are made. The Companies caution the reader not to place undue reliance on their forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. The Companies undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.

Accounting Matters

Critical Accounting Policies and Estimates

As of March 31, 2015 there have been no significant changes with regard to the critical accounting policies and estimates disclosed in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014. The policies disclosed included the accounting for regulated operations, AROs, income taxes, derivative contracts and other instruments at fair value, goodwill and long-lived asset impairment testing and employee benefit plans.

Dominion

Results of Operations

Presented below is a summary of Dominion’s consolidated results:


	2015		2014		$ Change
(millions, except EPS)
First Quarter
Net income attributable to Dominion	$	536	$	379	$	157
Diluted EPS		0.91		0.65		0.26

Overview

First Quarter 2015 vs. 2014

Net income attributable to Dominion increased 41% primarily due to the absence of losses related to the repositioning of Dominion’s producer services business, which was completed in the first quarter of 2014, partially offset by the write-off of deferred fuel costs associated with Virginia legislation enacted in February 2015.

Analysis of Consolidated Operations

Presented below are selected amounts related to Dominion’s results of operations:


	First Quarter
	2015		2014		$ Change
(millions)
Operating revenue	$	3,409	$	3,630	$	(221	)
Electric fuel and other energy-related purchases		953		1,334		(381	)
Purchased electric capacity		94		88		6
Purchased gas		250		540		(290	)

Net revenue		2,112		1,668		444

Other operations and maintenance		602		425		177
Depreciation, depletion and amortization		343		308		35
Other taxes		165		167		(2	)
Other income		60		40		20
Interest and related charges		223		237		(14	)
Income tax expense		299		186		113

An analysis of Dominion’s results of operations follows:

First Quarter 2015 vs. 2014

Net revenue increased 27%, primarily reflecting:

•

The absence of losses related to the repositioning of Dominion’s producer services business in the first quarter of 2014, reflecting the termination of natural gas trading and certain energy marketing activities ($315 million);

•

The absence of losses related to the retail electric energy marketing business which was sold in the first quarter of 2014 ($130 million); and

•

A $24 million increase in rider revenue related to regulated natural gas distribution low income assistance programs.

These increases were partially offset by:

•

A $32 million decrease in merchant generation margins, primarily due to lower realized prices; and

•

A $12 million decrease from electric utility operations, primarily reflecting:

•

An $85 million write-off of deferred fuel costs associated with Virginia legislation enacted in February 2015;

•

A decrease in PJM ancillary revenues ($32 million); partially offset by

•

An increase from rate adjustment clauses ($76 million);

•

An increase in sales to customers due to the effect of favorable economic conditions on customer usage and other factors ($24 million); and

•

An increase in sales to retail customers, primarily due to an increase in heating degree days ($4 million).

Other operations and maintenance increased 42%, primarily reflecting:

•

The absence of a gain on the sale of Dominion’s electric retail energy marketing business in March 2014 ($100 million), net of a $31 million write-off of goodwill;

•

The absence of gains on the sale of assets to Blue Racer ($59 million);

•

A $32 million increase in certain electric transmission-related expenditures. These expenses are primarily recovered through state and FERC rates and do not impact net income;

•

A $24 million increase in bad debt expense at regulated natural gas distribution operations primarily related to low income assistance programs. These bad debt expenses are recovered through rates and do not impact net income; and

•

A $13 million increase in utility nuclear refueling outage costs primarily due to the amortization of outage costs that were previously deferred pursuant to Virginia legislation enacted in April 2014.

These increases were partially offset by:

•

A $70 million gain from agreements to convey Marcellus Shale development rights underneath several natural gas storage fields.

Depreciation, depletion and amortization increased 11%, primarily due to property additions.

Other income increased 50%, primarily due to higher realized gains (including investment income) on nuclear decommissioning trust funds ($12 million) and an increase in earnings from equity method investments ($4 million).

Income tax expense increased 61%, primarily reflecting higher pre-tax income. In 2015, Dominion expects its effective tax rate for the entire year to be in the range of 32% to 34%, as compared to the 35.7% reported in the first quarter of 2015. Beginning in the second quarter of 2015, the investment tax credits to be claimed on merchant solar projects acquired during that period will be reflected in the annual effective tax rate.

Segment Results of Operations

Segment results include the impact of intersegment revenues and expenses, which may result in intersegment profit and loss. Presented below is a summary of contributions by Dominion’s operating segments to net income attributable to Dominion:


	Net Income attributable to Dominion									Diluted EPS
	2015			2014			$ Change			2015			2014			$ Change
(millions, except EPS)
First Quarter
DVP	$	140		$	131		$	9		$	0.24		$	0.22		$	0.02
Dominion Generation		282			309			(27	)		0.48			0.53			(0.05	)
Dominion Energy		207			208			(1	)		0.35			0.36			(0.01	)

Primary operating segments		629			648			(19	)		1.07			1.11			(0.04	)
Corporate and Other		(93	)		(269	)		176			(0.16	)		(0.46	)		0.30

Consolidated	$	536		$	379		$	157		$	0.91		$	0.65		$	0.26

DVP

Presented below are selected operating statistics related to DVP’s operations:


	First Quarter
	2015		2014		% Change
Electricity delivered (million MWh)		22.9		22.4		2	%
Degree days (electric distribution service area):
Cooling		—		—		—
Heating		2,364		2,294		3
Average electric distribution customer accounts (thousands)⁽¹⁾		2,518		2,492		1

(1)	Period average.

Presented below, on an after-tax basis, are the key factors impacting DVP’s net income contribution:


	First Quarter 2015 vs. 2014 Increase (Decrease)
	Amount			EPS
(millions, except EPS)
Regulated electric sales:
Weather	$	1		$	—
Other		6			0.01
FERC transmission equity return		12			0.02
Storm damage and service restoration		(1	)		—
Depreciation and amortization		(2	)		—
Other		(7	)		(0.01	)

Change in net income contribution	$	9		$	0.02

Dominion Generation

Presented below are selected operating statistics related to Dominion Generation’s operations:


	First Quarter
	2015		2014		% Change
Electricity supplied (million MWh):
Utility		22.9		22.5		2	%
Merchant		6.4		6.4		—
Degree days (electric utility service area):
Cooling		—		—		—
Heating		2,364		2,294		3
Average retail energy marketing customer accounts (thousands)⁽¹⁾⁽²⁾		1,250		1,445		(13	)

(1)	Period average.

(2)	2014 excludes 511 thousand average retail electric energy marketing customer accounts due to the sale of this business in March 2014.

Presented below, on an after-tax basis, are the key factors impacting Dominion Generation’s net income contribution:


	First Quarter 2015 vs. 2014 Increase (Decrease)
	Amount			EPS
(millions, except EPS)
Merchant generation margin	$	(15	)	$	(0.03	)
Regulated electric sales:
Weather		2			—
Other		9			0.02
PJM ancillary services		(12	)		(0.02	)
Rate adjustment clause equity return		11			0.02
Depreciation and amortization		(6	)		(0.01	)
Outage costs		(6	)		(0.01	)
Other		(10	)		(0.02	)

Change in net income contribution	$	(27	)	$	(0.05	)

Dominion Energy

Presented below are selected operating statistics related to Dominion Energy’s operations:


	First Quarter
	2015		2014		% Change
Gas distribution throughput (bcf):
Sales		16		17		(6	)%
Transportation		162		128		27
Heating degree days (gas distribution service area)		3,575		3,513		2
Average gas distribution customer accounts (thousands)⁽¹⁾:
Sales		245		246		—
Transportation		1,063		1,062		—

(1)	Period average.

Presented below, on an after-tax basis, are the key factors impacting Dominion Energy’s net income contribution:


	First Quarter 2015 vs. 2014 Increase (Decrease)
	Amount			EPS
(millions, except EPS)
Blue Racer⁽¹⁾	$	(35	)	$	(0.06	)
Assignment of Marcellus acreage		43			0.07
Depreciation and amortization		(5	)		(0.01	)
Gas distribution margin:
Weather		1			—
Rate adjustment clauses		4			0.01
Other		1			—
Other		(10	)		(0.02	)

Change in net income contribution	$	(1	)	$	(0.01	)

(1)	Primarily represents absence of gains from the sale of assets.

Corporate and Other

Presented below are the Corporate and Other segment’s after-tax results:


	First Quarter
	2015			2014			$ Change
(millions, except EPS)
Specific items attributable to operating segments	$	(45	)	$	(217	)	$	172
Specific items attributable to corporate operations		(3	)		(11	)		8

Total specific items		(48	)		(228	)		180
Other corporate operations		(45	)		(41	)		(4	)

Total net expense	$	(93	)	$	(269	)	$	176
EPS impact	$	(0.16	)	$	(0.46	)	$	0.30

Total Specific Items

Corporate and Other includes specific items attributable to Dominion’s primary operating segments that are not included in profit measures evaluated by executive management in assessing those segments’ performance or in allocating resources among the segments. See Note 19 to the Consolidated Financial Statements in this report for discussion of these items in more detail.

Virginia Power

Results of Operations

Presented below is a summary of Virginia Power’s consolidated results:


	First Quarter
	2015		2014		$ Change
(millions)
Net income	$	269	$	324	$	(55	)

Overview

First Quarter 2015 vs. 2014

Net income decreased by 17% primarily due to the write-off of deferred fuel costs associated with Virginia legislation enacted in February 2015.

Analysis of Consolidated Operations

Presented below are selected amounts related to Virginia Power’s results of operations:


	First Quarter
	2015		2014		$ Change
(millions)
Operating revenue	$	2,137	$	1,983	$	154
Electric fuel and other energy-related purchases		810		650		160
Purchased electric capacity		94		88		6

Net revenue		1,233		1,245		(12	)

Other operations and maintenance		396		341		55
Depreciation and amortization		238		218		20
Other taxes		74		73		1
Other income		15		15		—
Interest and related charges		108		107		1
Income tax expense		163		197		(34	)

An analysis of Virginia Power’s results of operations follows:

First Quarter 2015 vs. 2014

Other operations and maintenance increased 16%, primarily reflecting:

•

A $32 million increase in certain electric transmission-related expenditures. These expenses are primarily recovered through state and FERC rates and do not impact net income; and

•

A $13 million increase in nuclear refueling outage costs primarily due to the amortization of outage costs that were previously deferred pursuant to Virginia legislation enacted in April 2014.

Income tax expense decreased 17%, primarily reflecting lower pre-tax income.

Dominion Gas

Results of Operations

Presented below is a summary of Dominion Gas’ consolidated results:


	First Quarter
	2015		2014		$ Change
(millions)
Net income	$	161	$	164	$	(3	)

Overview

First Quarter 2015 vs. 2014

Net income decreased by 2% reflecting decreased gains on sales of pipeline systems, partially offset by increased gains from agreements to convey Marcellus Shale development rights underneath several natural gas storage fields.

Analysis of Consolidated Operations

Presented below are selected amounts related to Dominion Gas’ results of operations:


	First Quarter
	2015		2014		$ Change
(millions)
Operating revenue	$	531	$	569	$	(38	)
Purchased gas		74		137		(63	)
Other energy-related purchases		6		16		(10	)

Net revenue		451		416		35

Other operations and maintenance		74		53		21
Depreciation and amortization		51		47		4
Other taxes		55		51		4
Other income		9		8		1
Interest and related charges		17		6		11
Income tax expense		102		103		(1	)

An analysis of Dominion Gas’ results of operations follows:

First Quarter 2015 vs. 2014

Other operations and maintenance increased 40%, primarily reflecting:

•

The absence of gains on the sales of pipeline systems ($59 million);

•

Increased cost due to services performed for Blue Racer and Atlantic Coast Pipeline ($10 million). These expenses are offset in revenues and do not impact net income; partially offset by

•

A $70 million gain from agreements to convey Marcellus Shale development rights underneath several natural gas storage fields.

Interest and related charges increased $11 million, primarily due to higher long-term debt interest expense resulting from debt issuances in December 2014.

Liquidity and Capital Resources

Dominion depends on both internal and external sources of liquidity to provide working capital and as a bridge to long-term debt financings. Short-term cash requirements not met by cash provided by operations are generally satisfied with proceeds from short-term borrowings. Long-term cash needs are met through issuances of debt and/or equity securities.

At March 31, 2015, Dominion had $1.3 billion of unused capacity under its credit facilities.

A summary of Dominion’s cash flows is presented below:


	2015			2014
(millions)
Cash and cash equivalents at January 1	$	318		$	316
Cash flows provided by (used in):
Operating activities		1,131			753
Investing activities		(1,499	)		(919	)
Financing activities		325			78

Net decrease in cash and cash equivalents		(43	)		(88	)

Cash and cash equivalents at March 31	$	275		$	228

Operating Cash Flows

Net cash provided by Dominion’s operating activities increased by $378 million, primarily due to the absence of losses related to the repositioning of Dominion’s producer services business in 2014 and higher deferred fuel cost recoveries in its Virginia jurisdiction. The increase was partially offset by changes in other working capital items.

Dominion believes that its operations provide a stable source of cash flow to contribute to planned levels of capital expenditures and maintain or grow the dividend on common shares.

Dominion’s operations are subject to risks and uncertainties that may negatively impact the timing or amounts of operating cash flows, which are discussed in Item 1A. Risk Factors in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014.

Credit Risk

Dominion’s exposure to potential concentrations of credit risk results primarily from its energy marketing and price risk management activities. Presented below is a summary of Dominion’s credit exposure as of March 31, 2015 for these activities. Gross credit exposure for each counterparty is calculated prior to the application of collateral and represents outstanding receivables plus any unrealized on- or off-balance sheet exposure, taking into account contractual netting rights.


	Gross Credit Exposure		Credit Collateral		Net Credit Exposure
(millions)
Investment grade⁽¹⁾	$	221	$	89	$	132
Non-investment grade⁽²⁾		1		—		1
No external ratings:
Internally rated—investment grade⁽³⁾		96		—		96
Internally rated—non-investment grade⁽⁴⁾		38		—		38

Total	$	356	$	89	$	267

(1)	Designations as investment grade are based upon minimum credit ratings assigned by Moody’s and Standard & Poor’s. The five largest counterparty exposures, combined, for this category represented approximately 42% of the total net credit exposure.

(2)	The five largest counterparty exposures, combined, for this category represented less than 1% of the total net credit exposure.

(3)	The five largest counterparty exposures, combined, for this category represented approximately 35% of the total net credit exposure.

(4)	The five largest counterparty exposures, combined, for this category represented approximately 10% of the total net credit exposure.

Investing Cash Flows

Net cash used in Dominion’s investing activities increased by $580 million, primarily due to Dominion’s acquisition of DCGT in 2015.

Financing Cash Flows and Liquidity

Dominion relies on capital markets as significant sources of funding for capital requirements not satisfied by cash provided by its operations. As discussed further in Credit Ratings and Debt Covenants in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014, the ability to borrow funds or issue securities and the return demanded by investors are affected by credit ratings. In addition, the raising of external capital is subject to certain regulatory requirements, including registration with the SEC for certain issuances.

Dominion currently meets the definition of a well-known seasoned issuer under SEC rules governing the registration, communications and offering processes under the Securities Act of 1933, as amended. The rules provide for a streamlined shelf registration process to provide registrants with timely access to capital. This allows Dominion to use automatic shelf registration statements to register any offering of securities, other than those for exchange offers or business combination transactions.

In 2015, net cash provided by Dominion’s financing activities increased by $247 million, primarily reflecting the issuance of common stock through an at-the-market program and the absence of subsidiary preferred stock redemptions, which were completed in 2014. These increases were partially offset by lower net debt issuances.

See Note 14 to the Consolidated Financial Statements in this report for further information regarding Dominion’s credit facilities, liquidity and significant financing transactions.

Credit Ratings

Credit ratings are intended to provide banks and capital market participants with a framework for comparing the credit quality of securities and are not a recommendation to buy, sell or hold securities. In the Credit Ratings section of MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014, there is a discussion on the use of capital markets by Dominion as well as the impact of credit ratings on the accessibility and costs of using these markets. As of March 31, 2015, there have been no changes in Dominion’s credit ratings.

Debt Covenants

In the Debt Covenants section of MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014, there is a discussion on the various covenants present in the enabling agreements underlying Dominion’s debt. As of March 31, 2015, there have been no material changes to debt covenants, nor any events of default under Dominion’s debt covenants.

Future Cash Payments for Contractual Obligations and Planned Capital Expenditures

As of March 31, 2015, there have been no material changes outside the ordinary course of business to Dominion’s contractual obligations nor any material changes to planned capital expenditures as disclosed in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014.

Use of Off-Balance Sheet Arrangements

As of March 31, 2015, there have been no material changes in the off-balance sheet arrangements disclosed in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014.

Future Issues and Other Matters

The following discussion of future issues and other information includes current developments of previously disclosed matters and new issues arising during the period covered by, and subsequent to, the dates of Dominion’s Consolidated Financial Statements that may impact future results of operations, financial condition and/or cash flows. This section should be read in conjunction with Item 1. Business and Future Issues and Other Matters in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014.

Environmental Matters

Dominion is subject to costs resulting from a number of federal, state and local laws and regulations designed to protect human health and the environment. These laws and regulations affect future planning and existing operations. They can result in increased capital, operating and other costs as a result of compliance, remediation, containment and monitoring obligations. See Note 22 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014 and Note 15 to the Consolidated Financial Statements in this report for additional information on various environmental matters.

Legal Matters

See Item 3. Legal Proceedings in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014, and Notes 12 and 15 to the Consolidated Financial Statements and Item 1. Legal Proceedings in this report for additional information on various legal matters.

Regulatory Matters

See Note 13 to the Consolidated Financial Statements in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014 and Note 12 in this report for additional information on various regulatory matters.

ITEM 3.

QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

The matters discussed in this Item may contain “forward-looking statements” as described in the introductory paragraphs under Part I, Item 2. MD&A in this report. The reader’s attention is directed to those paragraphs for discussion of various risks and uncertainties that may impact the Companies.

Market Risk Sensitive Instruments and Risk Management

The Companies’ financial instruments, commodity contracts and related financial derivative instruments are exposed to potential losses due to adverse changes in commodity prices, interest rates and equity security prices as described below. Commodity price risk is present in Dominion’s and Virginia Power’s electric operations and Dominion’s and Dominion Gas’ natural gas procurement and marketing operations due to the exposure to market shifts in prices received and paid for electricity, natural gas and other commodities. The Companies use commodity derivative contracts to manage price risk exposures for these operations. Interest rate risk is generally related to their outstanding debt and future issuances of debt. In addition, the Companies are exposed to investment price risk through various portfolios of equity and debt securities.

The following sensitivity analysis estimates the potential loss of future earnings or fair value from market risk sensitive instruments over a selected time period due to a 10% unfavorable change in commodity prices or interest rates.

Commodity Price Risk

To manage price risk, Dominion and Virginia Power primarily hold commodity-based financial derivative instruments held for non-trading purposes associated with purchases and sales of electricity, natural gas and other energy-related products and Dominion Gas primarily holds commodity-based financial derivative instruments held for non-trading purposes associated with purchases and sales of natural gas and other energy-related products.

The derivatives used to manage commodity price risk are executed within established policies and procedures and may include instruments such as futures, forwards, swaps, options and FTRs that are sensitive to changes in the related commodity prices. For sensitivity analysis purposes, the hypothetical change in market prices of commodity-based financial derivative instruments is determined based on models that consider the market prices of commodities in future periods, the volatility of the market prices in each period, as well as the time value factors of the derivative instruments. Prices and volatility are principally determined based on observable market prices.

A hypothetical 10% unfavorable change in commodity prices of Dominion’s commodity-based financial derivative instruments would have resulted in an increase in fair value of approximately $90 million and $101 million as of March 31, 2015 and December 31, 2014, respectively. The decline in sensitivity is largely due to decreased commodity derivative activity and lower commodity prices.

A hypothetical 10% unfavorable change in commodity prices would not have resulted in a material change in the fair value of Virginia Power’s commodity-based financial derivatives as of March 31, 2015 or December 31, 2014.

A hypothetical 10% unfavorable change in commodity prices of Dominion Gas’ commodity-based financial derivative instruments would have resulted in an increase in fair value of approximately $8 million and $2 million as of March 31, 2015 and December 31, 2014, respectively. The rise in sensitivity is largely due to increased commodity derivative activity.

The impact of a change in energy commodity prices on the Companies’ commodity-based financial derivative instruments at a point in time is not necessarily representative of the results that will be realized when the contracts are ultimately settled. Net losses from commodity derivative instruments used for hedging purposes, to the extent realized, will generally be offset by recognition of the hedged transaction, such as revenue from physical sales of the commodity.

Interest Rate Risk

The Companies manage their interest rate risk exposure predominantly by maintaining a balance of fixed and variable rate debt. They also enter into interest rate sensitive derivatives, including interest rate swaps and interest rate lock agreements. For variable rate debt and interest rate swaps designated under fair value hedging and outstanding for the Companies, a hypothetical 10% increase in market interest rates would not have resulted in a material change in earnings at March 31, 2015 or December 31, 2014.

The Companies may also use forward-starting interest rate swaps and interest rate lock agreements as anticipatory hedges.

As of March 31, 2015 Dominion, Virginia Power and Dominion Gas had $4.9 billion, $1.8 billion and $250 million, respectively, in aggregate notional amounts of these interest rate derivatives outstanding. A hypothetical 10% decrease in market interest rates would have resulted in a decrease of approximately $54 million, $34 million and $2 million, respectively, in the fair value of Dominion’s, Virginia Power’s and Dominioni Gas’ interest rate derivatives at March 31, 2015. As of December 31, 2014, Dominion, Virginia Power and Dominion Gas had $4.1 billion, $1.5 billion and $250 million, respectively, in aggregate notional amounts of these interest rate derivatives outstanding. A hypothetical 10% decrease in market interest rates would have resulted in a decrease of approximately $46 million, $25 million and $2 million, respectively, in the fair value of Dominion’s, Virginia Power’s and Dominion Gas’ interest rate derivatives at December 31, 2014.

The impact of a change in interest rates on the Companies’ interest rate-based financial derivative instruments at a point in time is not necessarily representative of the results that will be realized when the contracts are ultimately settled. Net gains and/or losses from interest rate derivative instruments used for hedging purposes, to the extent realized, will generally be offset by recognition of the hedged transaction.

Investment Price Risk

Dominion and Virginia Power are subject to investment price risk due to securities held as investments in nuclear decommissioning and rabbi trust funds that are managed by third-party investment managers. These trust funds primarily hold marketable securities that are reported in Dominion’s and Virginia Power’s Consolidated Balance Sheets at fair value.

Dominion recognized net realized gains (including investment income) on nuclear decommissioning and rabbi trust investments of $60 million, $47 million and $176 million for the three months ended March 31, 2015 and 2014 and for the year ended December 31, 2014, respectively. Net realized gains and losses include gains and losses from the sale of investments as well as any other-than-temporary declines in fair value. Dominion recorded, in AOCI and regulatory liabilities, a net decrease in unrealized gains on these investments of $3 million for the three months ended March 31, 2015, and a net increase in unrealized gains on these investments of $18 million and $172 million for the three months ended March 31, 2014 and for the year ended December 31, 2014, respectively.

Virginia Power recognized net realized gains (including investment income) on nuclear decommissioning trust investments of $17 million, $23 million and $77 million for the three months ended March 31, 2015 and 2014 and for the year ended December 31, 2014, respectively. Net realized gains and losses include gains and losses from the sale of investments as well as any other-than-temporary declines in fair value. Virginia Power recorded, in AOCI and regulatory liabilities, a net increase in unrealized gains on these investments of $3 million, $8 million and $87 million for the three months ended March 31, 2015 and 2014 and for the year ended December 31, 2014, respectively.

Dominion sponsors pension and other postretirement employee benefit plans that hold investments in trusts to fund employee benefit payments. Virginia Power and Dominion Gas employees participate in these plans. Differences between actual and expected returns on plan assets are accumulated and amortized during future periods. As such, any investment-related declines in these trusts will result in future increases in the net periodic cost recognized for employee benefit plans and will be included in the determination of the amount of cash to be contributed to the employee benefit plans.

ITEM 4. CONTROLS AND PROCEDURES

Senior management of each of Dominion, Virginia Power, and Dominion Gas, including Dominion’s, Virginia Power’s, and Dominion Gas’ CEO and CFO, evaluated the effectiveness of each of their respective Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation process, each of Dominion’s, Virginia Power’s, and Dominion Gas’ CEO and CFO have concluded that each of their respective Company’s disclosure controls and procedures are effective.

There were no changes in Dominion’s, Virginia Power’s, or Dominion Gas’ internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Companies’ internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, the Companies are alleged to be in violation or in default under orders, statutes, rules or regulations relating to the environment, compliance plans imposed upon or agreed to by the Companies, or permits issued by various local, state and/or federal agencies for the construction or operation of facilities. Administrative proceedings may also be pending on these matters. In addition, in the ordinary course of business, the Companies and their subsidiaries are involved in various legal proceedings.

In March 2015, DTI received a draft compliance order from the WVDEP in connection with a permit determination relating to emission sources at the Galmish loading and storage facilities. The draft compliance order includes a proposed penalty of $162,000. DTI is working with WVDEP to resolve this matter. The ultimate resolution of this compliance order is not expected to have a material effect on Dominion Gas.

See the following for discussions on various environmental and other regulatory proceedings to which the Companies are a party:

•

Notes 13 and 22 to the Consolidated Financial Statements and Future Issues and Other Matters in MD&A in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014, which information is incorporated herein by reference, for discussion of various environmental and other regulatory proceedings to which the Companies are a party.

•

Notes 12 and 15 in this report.

ITEM 1A. RISK FACTORS

The Companies businesses are influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond the Companies’ control. A number of these risk factors have been identified in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014, which should be taken into consideration when reviewing the information contained in this report. There have been no material changes with regard to the risk factors previously disclosed in the Companies’ Annual Report on Form 10-K for the year ended December 31, 2014. For other factors that may cause actual results to differ materially from those indicated in any forward-looking statement or projection contained in this report, see Forward-Looking Statements in MD&A.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Dominion

ISSUER PURCHASES OF EQUITY SECURITIES


Period	Total Number of Shares (or Units) Purchased⁽¹⁾		Average Price Paid per Share (or Unit)⁽²⁾		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased under the Plans or Programs⁽³⁾
1/1/15-1/31/15		2,418	$	76.90		—	19,629,059 shares/ $1.18 billion
2/1/15-2/28/15		89,183		76.93		—	19,629,059 shares/ $1.18 billion
3/1/15-3/31/15		—		—		—	19,629,059 shares/ $1.18 billion

Total		91,601	$	76.93		—	19,629,059 shares/ $1.18 billion

(1)	In January and February 2015, 2,418 shares and 89,183 shares, respectively, were tendered by employees to satisfy tax withholding obligations on vested restricted stock.

(2)	Represents the weighted-average price paid per share.

(3)

The remaining repurchase authorization is pursuant to repurchase authority granted by the Dominion BOD in February 2005, as modified in June 2007. The aggregate authorization granted by the Dominion BOD was 86 million shares (as adjusted to reflect a two-for-one stock split distributed in November 2007) not to exceed $4 billion.

ITEM 6. EXHIBITS

Exhibit

Number

Description

Dominion

Virginia
Power

Dominion
Gas

3.1.a

Dominion Resources, Inc. Articles of Incorporation as amended and restated, effective May 20, 2010 (Exhibit 3.1, Form 8-K filed May 20, 2010, File No. 1-8489).

3.1.b

Virginia Electric and Power Company Amended and Restated Articles of Incorporation, as in effect on October 30, 2014 (Exhibit 3.1.b, Form 10-Q filed November 3, 2014, File No. 1-2255).

3.1.c

Articles of Organization of Dominion Gas Holdings, LLC (Exhibit 3.1, Form S-4 filed April 4, 2014, File No. 333-195066).

3.2.a

Dominion Resources, Inc. Amended and Restated Bylaws, effective May 3, 2013 (Exhibit 3.1, Form 8-K filed May 3, 2013, File No. 1-8489).

3.2.b

Virginia Electric and Power Company Amended and Restated Bylaws, effective June 1, 2009 (Exhibit 3.1, Form 8-K filed June 3, 2009, File No. 1-2255).

3.2.c

Operating Agreement of Dominion Gas Holdings, LLC dated as of September 12, 2013 (Exhibit 3.2, Form S-4 filed April 4, 2014, File No. 333-195066).

Dominion Resources, Inc., Virginia Electric and Power Company and Dominion Gas Holdings, LLC agree to furnish to the Securities and Exchange Commission upon request any other instrument with respect to long-term debt as to which the total amount of securities authorized does not exceed 10% of either of their total consolidated assets.

10.1*

2015 Performance Grant Plan under 2015 Long-Term Incentive Program approved January 22, 2015 (Exhibit 10.42, Form 10-K for the fiscal year ended December 31, 2014, File No. 1-8489).

10.2*

Form of Restricted Stock Award Agreement under the 2015 Long-term Incentive Program approved January 22, 2015 (Exhibit 10.43, Form 10-K for the fiscal year ended December 31, 2014, File No. 1-8489).

12.1

Ratio of earnings to fixed charges for Dominion Resources, Inc. (filed herewith).

12.2

Ratio of earnings to fixed charges for Virginia Electric and Power Company (filed herewith).

12.3

Ratio of earnings to fixed charges for Dominion Gas Holdings, LLC (filed herewith).

31.a

Certification by Chief Executive Officer of Dominion Resources, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.b

Certification by Chief Financial Officer of Dominion Resources, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.c

Certification by Chief Executive Officer of Virginia Electric and Power Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.d

Certification by Chief Financial Officer of Virginia Electric and Power Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.e

Certification by Chief Executive Officer of Dominion Gas Holdings, LLC pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.f

Certification by Chief Financial Officer of Dominion Gas Holdings, LLC pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32.a

Certification to the Securities and Exchange Commission by Chief Executive Officer and Chief Financial Officer of Dominion Resources, Inc. as required by Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

32.b

Certification to the Securities and Exchange Commission by Chief Executive Officer and Chief Financial Officer of Virginia Electric and Power Company as required by Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

32.c

Certification to the Securities and Exchange Commission by Chief Executive Officer and Chief Financial Officer of Dominion Gas Holdings, LLC as required by Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

Condensed consolidated earnings statements (filed herewith).

101

The following financial statements from Dominion Resources, Inc.’s, Virginia Electric and Power Company’s and Dominion Gas Holdings, LLC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed on May 5, 2015, formatted in XBRL: (i) Consolidated Statements of Income, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Comprehensive Income (iv) Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements.

*	Indicates management contract or compensatory plan or arrangement.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		DOMINION RESOURCES, INC. Registrant

May 5, 2015		/s/ Michele L. Cardiff
		Michele L. Cardiff Vice President, Controller and Chief Accounting Officer

		VIRGINIA ELECTRIC AND POWER COMPANY Registrant

May 5, 2015		/s/ Michele L. Cardiff
		Michele L. Cardiff Vice President, Controller and Chief Accounting Officer

		DOMINION GAS HOLDINGS, LLC Registrant

May 5, 2015		/s/ Michele L. Cardiff
		Michele L. Cardiff Vice President, Controller and Chief Accounting Officer

EXHIBIT INDEX


Exhibit Number	Description	Dominion	Virginia Power	Dominion Gas

3.1.a	Dominion Resources, Inc. Articles of Incorporation as amended and restated, effective May 20, 2010 (Exhibit 3.1, Form 8-K filed May 20, 2010, File No. 1-8489).	X

3.1.b	Virginia Electric and Power Company Amended and Restated Articles of Incorporation, as in effect on October 30, 2014 (Exhibit 3.1.b, Form 10-Q filed November 3, 2014, File No. 1-2255).		X

3.1.c	Articles of Organization of Dominion Gas Holdings, LLC (Exhibit 3.1, Form S-4 filed April 4, 2014, File No. 333-195066).			X

3.2.a	Dominion Resources, Inc. Amended and Restated Bylaws, effective May 3, 2013 (Exhibit 3.1, Form 8-K filed May 3, 2013, File No. 1-8489).	X

3.2.b	Virginia Electric and Power Company Amended and Restated Bylaws, effective June 1, 2009 (Exhibit 3.1, Form 8-K filed June 3, 2009, File No. 1-2255).		X

3.2.c	Operating Agreement of Dominion Gas Holdings, LLC dated as of September 12, 2013 (Exhibit 3.2, Form S-4 filed April 4, 2014, File No. 333-195066).			X

4	Dominion Resources, Inc., Virginia Electric and Power Company and Dominion Gas Holdings, LLC agree to furnish to the Securities and Exchange Commission upon request any other instrument with respect to long-term debt as to which the total amount of securities authorized does not exceed 10% of either of their total consolidated assets.	X	X	X

10.1*	2015 Performance Grant Plan under 2015 Long-Term Incentive Program approved January 22, 2015 (Exhibit 10.42, Form 10-K for the fiscal year ended December 31, 2014, File No. 1-8489).	X	X	X

10.2*	Form of Restricted Stock Award Agreement under the 2015 Long-term Incentive Program approved January 22, 2015 (Exhibit 10.43, Form 10-K for the fiscal year ended December 31, 2014, File No. 1-8489).	X	X	X

12.1	Ratio of earnings to fixed charges for Dominion Resources, Inc. (filed herewith).	X

12.2	Ratio of earnings to fixed charges for Virginia Electric and Power Company (filed herewith).		X

12.3	Ratio of earnings to fixed charges for Dominion Gas Holdings, LLC (filed herewith).			X

31.a	Certification by Chief Executive Officer of Dominion Resources, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).	X

31.b	Certification by Chief Financial Officer of Dominion Resources, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).	X

31.c	Certification by Chief Executive Officer of Virginia Electric and Power Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).		X

31.d	Certification by Chief Financial Officer of Virginia Electric and Power Company pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).		X

31.e	Certification by Chief Executive Officer of Dominion Gas Holdings, LLC pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).			X

31.f	Certification by Chief Financial Officer of Dominion Gas Holdings, LLC pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).			X

32.a	Certification to the Securities and Exchange Commission by Chief Executive Officer and Chief Financial Officer of Dominion Resources, Inc. as required by Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).	X



32.b	Certification to the Securities and Exchange Commission by Chief Executive Officer and Chief Financial Officer of Virginia Electric and Power Company as required by Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).		X

32.c	Certification to the Securities and Exchange Commission by Chief Executive Officer and Chief Financial Officer of Dominion Gas Holdings, LLC as required by Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).			X

99	Condensed consolidated earnings statements (filed herewith).	X	X

101	The following financial statements from Dominion Resources, Inc.’s, Virginia Electric and Power Company’s and Dominion Gas Holdings, LLC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed on May 5, 2015, formatted in XBRL: (i) Consolidated Statements of Income, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Comprehensive Income (iv) Consolidated Statements of Cash Flows, and (v) the Notes to Consolidated Financial Statements.	X	X	X

*	Indicates management contract or compensatory plan or arrangement.