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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form 10-K
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(Mark One)
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
or
( ) 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 1-8489
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Dominion Resources, Inc.
(Exact name of registrant as specified in its charter)
VIRGINIA 54-1229715
(State or other jurisdiction of (IRS employer identification no.)
incorporation or organization)
901 East Byrd Street
Suite 1700
Richmond, Virginia 23219-6111
(Address of principal executive offices) (Zip Code)
(804) 775-5700
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
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Common Stock, no par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
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 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. Yes x No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
The aggregate market value of voting stock held by nonaffiliates of the
registrant was $7,767,853,323 at February 27, 1998, based on the closing price
of the Common Stock on such date, as reported on the composite tape by The Wall
Street Journal.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
Class Outstanding at February 28, 1998
Common Stock, no par value 194,805,099
DOCUMENTS INCORPORATED BY REFERENCE:
(a) Portions of the 1997 Annual Report to Shareholders for the fiscal year
ended December 31, 1997 are incorporated by reference in Parts I, II and
IV hereof.
(b) Portions of the 1998 Proxy Statement, dated March 11, 1998, are
incorporated by reference in Part III hereof.
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DOMINION RESOURCES, INC.
Item Page
Number Number
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PART I
1. Business
The Company .............................................................................. 1
Dominion Capital .......................................................................... 1
Dominion Energy ........................................................................... 1
East Midlands ............................................................................. 1
Distribution Business ..................................................................... 2
Supply Business ........................................................................... 3
Competition ............................................................................... 3
Environmental Regulation .................................................................. 4
Virginia Power ............................................................................ 4
Competition and Strategic Initiatives ..................................................... 4
Regulation ................................................................................ 5
Rates ..................................................................................... 7
Sources of Power .......................................................................... 10
Interconnections .......................................................................... 12
Capital Requirements and Financing Program ............................................... 14
2. Properties ................................................................................ 14
3. Legal Proceedings ......................................................................... 14
4. Submission of Matters to a Vote of Security Holders ....................................... 14
Executive Officers of the Registrant ...................................................... 14
PART II
5. Market for the Registrant's Common Equity and Related Stockholder Matters ................. 15
6. Selected Financial Data ................................................................... 15
7. Management's Discussion and Analysis of Financial Condition and Results of Operations ..... 16
7A. Quantitative and Qualitative Disclosures About Market Risk ................................ 16
8. Financial Statements and Supplementary Data ............................................... 16
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...... 16
PART III
10. Directors and Executive Officers of the Registrant ........................................ 16
11. Executive Compensation .................................................................... 16
12. Security Ownership of Certain Beneficial Owners and Management ............................ 16
13. Certain Relationships and Related Transactions ............................................ 16
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K .......................... 17
PART I
ITEM 1. BUSINESS
THE COMPANY
Dominion Resources, Inc. (Dominion Resources), organized in 1983, has its
principal office at 901 East Byrd Street, Richmond, Virginia 23219-4072,
telephone (804) 775-5700. The principal assets of Dominion Resources are its
investments in its subsidiaries.
At December 31, 1997, Dominion Resources owned directly or indirectly all
of the outstanding common stock of its subsidiaries: Dominion Capital, Inc.
(Dominion Capital); Dominion Energy, Inc. (Dominion Energy); East Midlands
Electricity plc (East Midlands); and Virginia Electric and Power Company
(Virginia Power), its largest subsidiary. Dominion Resources is currently
exempt from registration as a holding company under the Public Utility Holding
Company Act of 1935 (the 1935 Act).
Dominion Resources and its subsidiaries had 15,458 full-time employees as
of December 31, 1997.
Dominion Capital
Dominion Capital, established as a subsidiary of Dominion Resources in
1985, is a diversified investment and financial services company. The principal
assets of Dominion Capital are First Source Financial, LLP, a middle market
commercial lender; Saxon Mortgage, Inc. and its affiliates, subsidiaries
engaged in the origination, servicing and securitization of residential
mortgages; Cambrian Capital Partners, LP, a merchant banking enterprise for
emerging independent oil and natural gas producers; First Dominion Capital LLC,
an integrated merchant bank and asset management business; a 50% limited
partnership interest in a Louisiana hydroelectric project; investments in
marketable securities and fixed income instruments; OptaCor Financial Services
Company, a consumer lender and Rincon Securities, Inc., a subsidiary which
holds a diversified portfolio of preferred stocks. Dominion Capital also has
subsidiaries involved in planned community real estate development and
management, a commercial real estate management company and investments in
affordable housing.
Dominion Energy
Dominion Energy, established as a subsidiary of Dominion Resources in
1987, is active in the nonutility electric power generation businesses outside
the territory served by Virginia Power and the development, exploration and
operation of oil and natural gas reserves. Dominion Energy is involved in power
projects in six states, Argentina, Bolivia, Belize and Peru, which total
approximately 2,561 Mw. Domestic power projects in operation throughout 1997 in
which Dominion Energy has an interest include three gas-fueled projects in
Texas; two geothermal projects, two gas-fueled projects and one solar project
in California; four small hydroelectric projects in New York; a waste
coal-fueled project in West Virginia and a waste wood- and coal-fueled project
in Maine. International power projects in operation throughout 1997 in which
Dominion Energy has an interest include one hydroelectric and one gas-fired
project in Argentina, two hydroelectric projects in Bolivia, a run-of-river
hydroelectric project in Belize and two hydroelectric projects and six diesel
oil-fueled projects in Peru. Dominion Energy is involved in oil and natural gas
development and exploration in the Appalachian Basin, the Michigan Basin, the
Illinois Basin, the Black Warrior Basin, the Uinta Basin, the Powder River
Basin, the Gulf Coast and the Mid-Continent, and owns net proved oil and
natural gas reserves in such areas totaling approximately 461 billion cubic
feet (BCFE). In 1997, Dominion Energy added approximately 119 BCFE of natural
gas reserves. Production from Dominion Energy's reserve holdings in 1997
totaled approximately 59 BCFE.
On March 29, 1996, a subsidiary of Dominion Energy, Kincaid Generation,
L.L.C. (LLC) entered into an asset sale agreement with Commonwealth Edison
Company (ComEd) to purchase ComEd's 1,108 Mw coal-fired Kincaid Power Station
in Central Illinois and entered into a power purchase agreement with ComEd to
sell, upon closing under the asset sale agreement, capacity and energy back to
ComEd for a period of 15 years. The sale was completed on February 27, 1998.
On August 1, 1997, Dominion Energy sold to Chilgener S.A. 49% of its
interest in Inversiones Dominion Peru S.A., a Peruvian company which holds a
60% interest in EGENOR S.A., a 405 megawatt electric generation business in
which Dominion Energy had invested in Peru.
East Midlands
Dominion Resources purchased East Midlands, the principal operating
subsidiary of our UK holding company, Dominion UK Holding, Inc. (Dominion UK)
in the first quarter of 1997. East Midlands' principal businesses are the
distribution
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of electricity and the supply of electricity to approximately 2.3 million
customers in the East Midlands region of the United Kingdom. East Midlands'
primary business is its distribution business which is a regulated monopoly and
its electricity supply business. Together these businesses produced
substantially all of East Midlands' consolidated operating income. East
Midlands is also focused on taking advantage of the opportunity in the domestic
gas supply business.
East Midlands' Franchise Area (or service area) has a resident population
of over five million and covers approximately 6,200 square miles extending from
Coventry to the Lincolnshire coast and from Milton Keynes to Chesterfield of
which the southernmost part is less than 60 miles from London
Dominion UK, through wholly-owned subsidiaries, holds an 80% interest in
Corby Power Limited (Corby), a 350 MW gas-fired power station. Corby was
commissioned in 1994 and is one of the earliest UK independent power generation
projects in the deregulated UK.
Distribution Business
East Midlands owns, manages and operates the electricity distribution
network within its Franchise Area. The primary activity of the distribution
business is the receipt of electricity from the national grid transmission
system and its distribution to end users connected to East Midlands' power
lines. Because East Midlands is the exclusive holder of a Public Electricity
Supply (PES) license for its Franchise Area, virtually all electricity supplied
(whether by East Midland's supply business or by other suppliers) to consumers
in East Midland's Franchise Area is transported through East Midlands'
distribution network. As a holder of a PES license, East Midlands is subject to
a price control regulatory framework that retains economic incentives to
increase the number of units of electricity distributed and to operate in a
more cost-efficient manner.
In addition to the network division, East Midlands' distribution business
also includes construction and metering divisions. The construction division
provides construction, standby and maintenance services to the network as well
as performing similar services for certain third-parties. East Midlands'
metering division focuses on the ownership and management of metering and
related assets as well as data collection and transmission service. While
portions of construction and metering businesses are gradually opening to
competition, the network division, which generates over 80% of the distribution
business' profits, is expected to remain a regulated monopoly subject to price
regulation.
Distribution Facilities
Electricity is transported across the national grid transmission system
(the high voltage transmission system in UK that carries the generated
electricity in bulk from power stations to regional and local distribution
systems) at 400kv or 275kv to 14 grid supply points within East Midlands'
distribution network, where East Midlands transforms the voltage to 132kv
for entry into East Midlands' distribution system. Electricity is also
transported to one national grid supply point located in a neighboring
Regional Electric Companies (REC) franchise area, which is connected to
East Midlands' distribution system by overhead lines and underground
cables. Substantially all electricity which enters East Midlands' system is
received at these 15 grid supply points.
East Midlands' distribution facilities also include approximately:
Number
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Transformers:
132 kv/lower voltages ............................... 183
33 kv/ll kv or 6/6 kv ............................... 675
ll kv or 6.6 kv/lower voltages (including 22,165 pole
mounted transformers) ............................. 37,913
Substations:
132 kv/33 kv ........................................ 85
33 kv/ll kv or 6.6 kv ............................... 368
ll kv or 6.6 kv/415 v or 240 v ...................... 15,689
Substantially all substations are owned and the balance are leased under
arrangements which will not expire for 10 years.
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Supply Business
East Midlands' supply business consists of selling electricity to end
users, purchasing electricity primarily from the Pool and arranging for its
distribution to those end users. The Pool is the wholesale trading market that
was established at the time of privatization (1990) for bulk trading of
electricity in UK between generators and suppliers. Basically all electricity
generated in UK must be sold and purchased through the Pool. The Pool does not
buy or sell electricity. East Midlands' supply business supplies Franchise
Supply Customers and Non-Franchise Supply Customers and is further developing
its gas business to supply domestic and business customers. East Midlands
currently supplies gas to approximately 6,000 customers and has contracted to
supply gas to more than 80,000 customers.
Franchise Supply Market
East Midlands holds a PES License under which it currently has the
exclusive right to supply electricity to Franchise Supply Customers, who
have a peak demand of less than 100kW, within its Franchise Area. At the
time that the electricity industry was privatized, "Franchise Supply
Customers" included all customers whose supply peak demand was less than
1MW. The 1MW threshold was reduced to 100 kW on April 1, 1994. The
exclusive right to supply Franchise Supply Customers is currently scheduled
to be phased in over a 6 month period beginning June 1998 and ending in
December 1998. On completion of this phase-in period, there will be no
Franchise Supply Customers and all supply customers will have the ability
to choose their electricity supplier. Supply prices of electricity from
Franchise Supply Customers are based on the Supply Price Control Formula,
whereby certain limits are placed on East Midlands as to the prices it can
charge customers for the supply of electricity.
From April 1, 1998 there will be a revised Supply Price Control Formula
in the form of price caps for all residential customers and small business
customers.
Following the Supply Price Control Review in 1997, the supply prices to
franchise customers will reduce by 6.4% from April 1998 and an additional
3% from April 1999.
Non-Franchise Supply Market
Non-Franchise Supply Customers are currently defined as customers whose
peak demand equals or exceeds 100kW. In addition to competing for
Non-Franchise Supply Customers in its Franchise Area, East Midlands holds a
second tier license to compete with the RECs and other suppliers to provide
electricity to Non-Franchise Supply Customers outside its Franchise Area.
The market to supply Non-Franchise Supply Customers is fully competitive,
with the principal competitors being other RECs and major generators.
Non-Franchise Supply Customers are typically supplied through individual
12-month contracts with competitively bid or negotiated prices.
Power Purchasing and Risk Management
In order to manage its power purchasing risks, the supply business enters
into arrangements such as contracts for differences (CFDs) to hedge against
Pool price volatility. CFDs are contracts predominantly entered into
between generators and suppliers to fix the price of a contracted quantity
of electricity over a specific period. Differences between the actual
prices set by the Pool and the agreed prices give rise to difference
payments between the parties to the particular CFD. At the present time,
East Midlands' forecast franchise supply market demand for fiscal 1998 is
substantially hedged through various types of agreements, including CFDs.
The most common contracts for supply to Non-Franchise Supply customers
are for a twelve-month term and contain fixed rates. East Midlands is
exposed to two principal-risks associated with such contracts: (a)
purchasing price risk (East Midlands' cost of purchased electricity
relative to the price East Midlands receives from the supply customer) and
(b) load shape risk (the risk associated with a shift in the customer's
usage pattern, including absolute amounts demanded and timing of amounts
demanded). East Midlands seeks to hedge purchasing price risk through a
variety of risk management tools, including management of its supply
contract portfolio, CFDs, option arrangements and other means which
mitigate risk of future Pool price volatility. Load shape risk is mitigated
by paying detailed attention to forecasting demand.
Competition
The UK electricity industry has changed significantly since 1994, as the
UK government has privatized and deregulated the industry. As a result, East
Midlands' distribution and supply businesses are subject to varying degrees of
competition.
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On the distribution side of the business, East Midlands' network
distribution division is currently a regulated monopoly that does not face
direct competition. This division contributes 80% of the distribution business'
profits, but could face indirect competition from alternative energy sources
such as gas. In addition, the distribution business' metering division faces
full competition by the year 2000 and the construction division's work is open
to competition from a number of firms.
East Midlands' supply business has Franchise and Non-Franchise markets.
East Midlands' exclusive right to supply electricity to its Franchise customers
is currently scheduled to end over a 6-month phase-in period beginning December
1, 1998. At that time, East Midlands will compete directly with electricity
generators and other suppliers of electricity, primarily other PES license
holders. The Non-Franchise portion of the business currently competes with
those generators and suppliers.
Beginning March 27, 1998, the residential gas market will be open to
competition in the East Midlands franchise region.
Environmental Regulation
East Midlands' businesses are subject to numerous regulatory requirements
with respect to the protection of the environment. The Electricity Act of 1989
obligates the UK Secretary of State for Trade and Industry to take into account
the effect of electricity generation, transmission and supply activities upon
the environment in approving applications for the construction of generating
facilities and the location of overhead power lines. The Electricity Act
requires East Midlands to adhere to such guidelines when it formulates
proposals for development. East Midlands is required to mitigate any effect its
proposals may have on the environment and may be required to carry out an
environmental assessment when it intends to construct overhead lines. East
Midlands also has produced an Environmental Policy Statement which sets out the
manner in which it intends to comply with its obligations under the Electricity
Act.
The Environmental Protection Act 1990 addresses waste management issues
and imposes certain obligations and duties on companies which handle and
dispose of waste. Some of East Midlands' distribution activities produce waste,
but Dominion Resources believes East Midlands is in compliance with applicable
standards.
Virginia Power
Virginia Electric and Power Company is a regulated public utility engaged
in the generation, transmission, distribution and sale of electric energy
within a 30,000 square-mile area in Virginia and northeastern North Carolina.
It transacts business under the name Virginia Power in Virginia and under the
name North Carolina Power in North Carolina. Virginia Power has retail
customers (including governmental agencies) and wholesale customers such as
rural electric cooperatives, power marketers and municipalities and serves more
than 80% of Virginia's population. Virginia Power has certificates of
convenience and necessity from the State Corporation Commission of Virginia
(the Virginia Commission) for service in all territories served at retail in
Virginia. The North Carolina Utilities Commission (the North Carolina
Commission) has assigned territory to Virginia Power for substantially all of
its retail service outside certain municipalities in North Carolina.
The electric utility industry in the United States is undergoing an
evolutionary change toward less regulation and more competition. To meet the
challenges of this new competitive environment, Virginia Power has developed a
broad array of "non-traditional" product and service offerings from its
operating business units and subsidiaries:
o Energy Services -- offering electric energy and capacity in the emerging
wholesale market as well as natural gas and other energy-related products
and services;
o Fossil & Hydro -- targeting process type industries, such as chemical,
paper, plastics and petroleum to become a service provider of
instrumentation equipment;
o Nuclear Services -- offering management and operations services to other
electric utilities;
o Commercial Operations -- providing power distribution related services,
including transmission and distribution, engineering and metering services
to other gas, water and electric utilities; and
o Telecommunications -- offering telecommunications services through the
Company's existing fiber-optic network.
Competition and Strategic Initiatives
A number of developments in the United States are causing a trend toward
less regulation and more competition in the electric utility industry. This is
evidenced by legislative and regulatory action at both the federal and state
levels. To the extent that competition is either authorized or mandated and
regulation is eliminated or relaxed, electric utilities may no
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longer be guaranteed an opportunity to recover all of their prudently incurred
costs, and utilities with costs that exceed the market prices established by
the competitive market will run the risk of suffering losses, which may be
substantial.
Virginia Power has responded to these trends by undertaking cost-cutting
measures, engaging in re-engineering efforts, restructuring its core business
processes, and pursuing a strategic planning initiative to encourage innovative
approaches to serving traditional markets. Virginia Power has established
separate business units, as discussed above, to fully execute these strategies.
Virginia Power also is vigorously participating in the state and federal
legislative actions currently underway to bring about competition in the
electric utility industry, in an effort to ensure an orderly transition from a
regulated environment.
Virginia Power's non-traditional businesses face competition from a
variety of utility and non-utility entities.
For a full discussion of the regulatory and legislative issues related to
competition, read the Future Issues section of MANAGEMENT DISCUSSION AND
ANALYSIS OF OPERATIONS (MD&A) on pages 26 through 30 of the 1997 Annual Report
to Shareholders.
Regulation
General
In a wide variety of matters in addition to rates, Virginia Power is
presently subject to regulation by the Virginia Commission and the North
Carolina Commission, the Environmental Protection Agency (EPA), Department
of Energy (DOE), Nuclear Regulatory Commission (NRC), the Federal Energy
Regulatory Commission (FERC), the Army Corps of Engineers, and other
federal, state and local authorities. Compliance with numerous laws and
regulations increases Virginia Power's operating and capital costs by
requiring, among other things, changes in the design and operation of
existing facilities and changes or delays in the location, design,
construction and operation of new facilities. The commissions regulating
Virginia Power's rates have historically permitted recovery of such costs.
Virginia Power may not construct, or incur financial commitments for
construction of, any substantial generating facilities or large capacity
transmission lines without the prior approval of various state and federal
governmental agencies. Such approvals relate to, among other things, the
environmental impact of such activities, the relationship of such
activities to the need for providing adequate utility service and the
design and operation of proposed facilities.
Both federal and state legislative bodies have been studying competition
and restructuring in the electric utility industry. See Future Issues --
Competition -- Legislative Initiatives section of MD&A on page 27 of the
1997 Annual Report to Shareholders.
Virginia
In 1995, the Virginia Commission instituted an ongoing generic
investigation on electric industry restructuring, resulting in a number of
reports by its Staff covering such issues as retail wheeling experiments
and the status of wholesale power markets. The Staff also submitted a
report to the General Assembly calling for a cautious, two-phase, five-year
period to address restructuring issues. The report acknowledged the need
for direction from the Virginia legislature concerning policy issues
surrounding competition in the electric industry.
In November 1996, the Virginia Commission instituted a proceeding
concerning Virginia Power's cost of service and possible restructuring of
the electric utility industry as it might relate to Virginia Power. On
March 24, 1997, Virginia Power filed in that proceeding a calculation of
its cost of service for 1996 and a proposed Alternative Regulatory Plan
(ARP). Subsequently, the Commission consolidated this proceeding with the
proceeding concerning Virginia
Power's 1995 Annual Informational Filing, in which Virginia Power's base
rates were made interim and subject to refund as of March 1, 1997. Please
carefully read the Future Issues -- Competition -- Legislative Initiatives
and Regulatory Initiatives sections of MD&A on page 27 of the 1997 Annual
Report to Shareholders and Rates--Virginia, below for details concerning
the ARP, its current status and related legislative developments.
In December 1995, Virginia Power applied to the Virginia Commission for
approval of arrangements with Chesapeake Paper Products Company (CPPC),
under which Virginia Power would facilitate the design, construction and
financing of a cogeneration plant to meet CPPC's energy requirements for
its industrial processes at its plant in West Point, Virginia. On August
13, 1997, the Virginia Commission approved, in substantial part, the
proposed transactions
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between Virginia Power and CPPC's successor in ownership, St. Laurent Paper
Products Co. St. Laurent later determined that the current design of the
facility was no longer compatible with its long-term business strategies
and terminated its contractual arrangement with Virginia Power. The
Virginia Commission dismissed the proceeding on January 15, 1998.
In June 1997, the Virginia Commission granted Virginia Power's request to
implement a monitoring program that requires certain non-utility generators
to provide certain information sufficient to determine continued compliance
with the "Qualifying Facility" (QF) requirements of the Public Utility
Regulatory Policies Act of 1978 (PURPA).
On August 8, 1997, the Virginia Commission granted Virginia Power's
request to provide interchange telecommunications services and approved the
proposed affiliate agreements between Virginia Power and our wholly-owned
subsidiary, VPS Communications, Inc. (VPSC). Under the authority granted,
VPSC will provide a range of telecommunications services, including private
line and special access services and high-capacity fiberoptic services.
On September 3, 1997, the Virginia Commission granted Virginia Power's
request to provide services to our wholly-owned subsidiary, Virginia Power
Services, Inc. (VPS), which would enable Virginia Power Nuclear Services
Company (VPN), a VPS subsidiary, to furnish nuclear management and
operation services to electric utilities seeking assistance in the
management and operation of their nuclear generating facilities. VPN
currently provides such services to Northeast Utilities at its Millstone
Unit 2 nuclear plant.
FERC
In April 1996, FERC issued final rules in Order Nos. 888 and 889
addressing open access transmission service, stranded costs, standards of
conduct and open access same-time information systems (OASIS). In July
1996, Virginia Power filed an open access transmission service tariff in
compliance with FERC's Order No. 888. In compliance with FERC's directive,
Virginia Power's OASIS became operational on January 3, 1997. Also, on that
date the standards of conduct requiring separation of transmission
operations/reliability functions from wholesale merchant/marketing
functions became effective. Virginia Power also made filings to comply with
FERC's directive that, effective January 1, 1997, utilities could no longer
make bundled sales of transmission and generation services in economy
energy transactions. In certain of those filings, Virginia Power canceled
or committed not to use the economy energy rate schedules contained in
interconnection agreements with neighboring utilities. On March 4, 1997,
FERC issued Order Nos. 888-A and 889-A, which addressed requests for
rehearing of Order Nos. 888 and 889. Orders No. 888-A and 889-A essentially
reaffirm the basic principles of 888 and 889 and clarify and make limited
modifications to those orders. On December 17, 1997, FERC issued Order Nos.
888-B and 889-B. FERC rejected all requests for rehearing filed with
respect to Order Nos. 888-A and 889-A and clarified and made limited
modifications to those orders. Several parties have appealed the 888 orders
to the United States Court of Appeals for the District of Columbia Circuit.
For a discussion of the status of Virginia Power's Open Access
Transmission Tariff filing, see Rates -- FERC below.
For additional discussion of open access issues see Future Issues --
Competition under MD&A on pages 26 through 28 of the 1997 Annual Report to
Shareholders.
LG&E Westmoreland Southampton owns a cogeneration facility in Franklin,
Virginia, and sells its output to Virginia Power. Southampton has sought a
waiver of FERC operating requirements for Qualifying Facilities (QF's)
under PURPA, however FERC refused to grant such a waiver. On March 31,
1997, the United States Court of Appeals for the District of Columbia
Circuit granted FERC's motion to dismiss Southampton's Petition for Review.
Environmental
From time to time, Virginia Power may be designated by the EPA as a
potentially responsible party (PRP) with respect to a Superfund site. As a
result of that designation or other regulations regarding the remediation
of waste, we may become obligated to fund remedial investigations or
actions. We do not believe that any currently identified sites will result
in significant liabilities. For a discussion of Virginia Power's site
remediation efforts, see Note Q to the CONSOLIDATED FINANCIAL STATEMENTS on
page 53 of the 1997 Annual Report to Shareholders.
Permits under the Clean Water Act and state laws have been issued for all
of Virginia Power's steam generating stations now in operation. These
permits are subject to reissuance and continuing review. The Clean Air Act,
as amended in 1990, requires Virginia Power to reduce its emissions of
sulfur dioxide (SO2) and nitrogen oxides (NOx). Beginning in 1995, the SO2
reduction program is based on the issuance of a limited number of SO2
emission allowances, each of
6
which may be used as a permit to emit one ton of SO2 into the atmosphere or
may be sold to someone else. The program is administered by the EPA.
For additional information on Environmental Matters and related issues
see Future Issues -- Environmental Matters section of MD&A on pages 28 and
29 of the 1997 Annual Report to Shareholders.
Nuclear
All aspects of the operation and maintenance of Virginia Power's nuclear
power stations are regulated by the NRC. Operating licenses issued by the
NRC are subject to revocation, suspension or modification, and operation of
a nuclear unit may be suspended if the NRC determines that the public
interest, health or safety so requires.
From time to time, the NRC adopts new requirements for the operation and
maintenance of nuclear facilities. In many cases, these new regulations
require changes in the design, operation and maintenance of existing
nuclear facilities. If the NRC adopts such requirements in the future, it
could result in substantial increases in the cost of operating and
maintaining Virginia Power's nuclear generating units.
In July 1995, the Virginia Commission instituted an investigation
regarding spent nuclear fuel disposal. As directed, Virginia Power and
others filed comments on legal and public policy issues related to spent
nuclear fuel storage and disposal. In February 1996, the Commission Staff
filed its Report recommending that adoption of a definitive policy on spent
nuclear fuel disposal issues be delayed pending the outcome of litigation
against the Department of Energy concerning spent nuclear fuel acceptance,
the outcome of proposed federal legislation concerning development of an
interim storage facility, and development of a vision of the likely outcome
of the electric utility industry's restructuring efforts. The Virginia
Commission consolidated the proceeding with Virginia Power's pending fuel
cost recovery proceeding in October 1996. On March 20, 1997, the Virginia
Commission returned the spent nuclear fuel disposal issue to a separate
proceeding.
On January 31, 1997, Virginia Power joined thirty-five other electric
utilities in filing a petition in the United States Court of Appeals for
the District of Columbia Circuit, seeking to compel DOE to comply with its
obligation to begin accepting the utilities' spent nuclear fuel for
disposal by January 31, 1998, the date imposed by the Nuclear Waste Policy
Act. Additional utilities have joined since the original filing. On
November 14, 1997, the Court issued an Order finding that DOE's obligation
to begin accepting spent nuclear fuel by the deadline is unconditional, and
that DOE may not excuse its delay on the grounds that it has not prepared a
permanent repository or interim storage facility. The Court found that
DOE's spent fuel disposal contracts with the utilities offer a potentially
adequate remedy for DOE's failure to meet its obligation. DOE filed a
petition for rehearing on December 29, 1997.
Rates
Virginia Power electric service sales were subject to rate regulation in
1997 as follows:
1997
-----------------------
Percent Percent
of of
Revenues Kwh Sales
---------- ----------
Virginia retail:
Non-Governmental customers ........... Virginia Commission 81% 76%
Governmental customers ............... Negotiated Agreements 10 12
North Carolina retail ................. North Carolina Commission 5 5
Wholesale--Sales for Resale* .......... FERC 4 7
-- --
100% 100%
=== ===
- ---------
* Excludes wholesale power marketing sales subject to FERC regulation.
Substantially all of Virginia Power's electric service sales are subject
to recovery of changes in fuel costs either through fuel adjustment factors or
periodic adjustments to base rates, each of which requires prior regulatory
approval.
Each of these jurisdictions has the authority to disallow recovery of
costs it determines to be excessive or imprudently incurred. Various cost items
may be reviewed on occasion, including costs of constructing or modifying
facilities, on-going purchases of capacity or providing replacement power
during generating unit outages.
7
FERC
In compliance with FERC's Order No. 888, Virginia Power filed an open
access transmission service tariff, which became effective on July 9, 1996.
In October 1996, FERC issued a procedural order, scheduling a hearing for
April 28, 1997. Virginia Power and all parties reached a settlement of
issues raised in the proceeding, and on March 20, 1997, those parties
jointly filed with FERC the Settlement Agreement and Motion to Certify the
Settlement Agreement. On April 23, 1997 the presiding Administrative Law
Judge certified the Settlement Agreement to the FERC and on June 11, 1997,
the FERC approved the settlement.
In compliance with FERC's Order No. 889, on January 3, 1997, Virginia
Power filed its Procedures For Standards of Conduct for Unbundled
Transmissions and Wholesale Merchant Function (Standards of Conduct)
effective on that date. On July 1, 1997, Virginia Power filed an amendment
to the Standards of Conduct in Compliance with FERC's Order No. 889-A. On
July 16, 1997, Virginia Power filed another amendment in response to a FERC
Staff request. Virginia Power is awaiting FERC action on the filing.
On September 11, 1997, FERC authorized Virginia Power to sell power at
market-based rates but set for hearing the issue of the impact of any
transmission constraints on Virginia Power's ability to exercise generation
market power in localized areas within its service territory. If FERC finds
that transmission constraints give Virginia Power generation dominance, it
could either revoke or limit the scope of the market-based rate authority.
The hearing is scheduled to commence June 2, 1998.
On October 31, 1997, Virginia Power filed at FERC three agreements with
Old Dominion Electric Cooperative (ODEC) to amend the parties'
Interconnection and Operating Agreement (I&O Agreement) and to unbundle
transmission services provided to ODEC under the I&O Agreement. On December
22, 1997, FERC issued a deficiency letter with respect to the filing
directing Virginia Power to provide additional information. On January 21,
1998, Virginia Power provided the requested information. FERC accepted the
agreements on March 12, 1998.
Virginia
In March 1997, the Virginia Commission issued an order that Virginia
Power's base rates be made interim and subject to refund as of March 1,
1997. This order was the result of the Commission Staff's report on its
review of Virginia Power's 1995 Annual Informational Filing, which
concluded that Virginia Power's present rates would cause Virginia Power to
earn in excess of its authorized return on equity. The Staff found that,
for purposes of establishing rates prospectively, a rate reduction of $95.6
million (including a one-time adjustment of $29.7 million to Virginia
Power's deferred capacity balance at December 31, 1996) may be necessary in
order to realign rates to the authorized level. Virginia Power filed its
Alternative Regulatory Plan (ARP) in March 1997, based on 1996 financial
information. Subsequently, the Commission consolidated the proceeding
concerned with the 1995 Annual Informational Filing with the proceeding
that includes the ARP proposed by Virginia Power.
In December 1997, Virginia Power sought to withdraw its ARP, having
concluded that resolution of the cost recovery issues raised by the ARP was
unlikely without General Assembly action. The Commission has agreed that
Virginia Power may withdraw its support of the ARP but has reserved the
right to continue consideration of the ARP as well as other regulatory
alternatives. In addition, the Commission will continue to consider the
issues arising out of the 1995 Annual Informational Filing. The
Commission's Staff is scheduled to file its testimony on March 24, 1998;
Virginia Power's rebuttal is to be filed by April 27, 1998; and the reply
testimony is to be filed by May 11, 1998. A public hearing is scheduled to
commence on May 19, 1998.
Virginia Power's previous filings in this proceeding support maintaining
Virginia Power's rates at current levels; however, opposing parties have
made filings recommending rate reductions in excess of $200 million. At
this time, management cannot predict the ultimate outcome of the proceeding
and its impact on Virginia Power's results of operations, cash flows or
financial position.
In July 1996, Virginia Power proposed to substantially reduce the rates
paid under Schedule 19 to cogenerators and small power producers of 100 kW
or less. The rates became effective on an interim basis on January 1, 1997.
On January 21, 1998, the Virginia Commission approved revised Schedule 19
rates. The approved rates do not differ in any significant way from the
rates originally proposed by Virginia Power.
8
In October 1996, Virginia Power filed an application with the Virginia
Commission to increase its fuel factor from 1.299 cents per kWh to 1.322
cents per kWh, reflecting a fuel factor annual revenue increase of
approximately $48.2 million. The increase became effective on an interim
basis on December 1, 1996. On June 11, 1997, the Commission entered an
Order Establishing Fuel Factor approving the requested increase.
On October 31, 1997, Virginia Power filed with the Virginia Commission
its application for a reduction of $45.6 million in its fuel cost recovery
factor for the period December 1, 1997 through November 30, 1998. The
reduction became effective on an interim basis on December 1, 1997.
Subsequently, as a result of amendments to two non-utility power purchase
contracts, the Company proposed two additional reductions of approximately
$30.2 million and $18 million for the same period, bringing the total
proposed fuel factor reduction to $93.8 million. Both additional reductions
were approved on an interim basis, effective March 1, 1998. A hearing is
scheduled for April 9, 1998.
North Carolina
On November 4, 1996, Virginia Power filed for approval of a new Schedule
19 which governs purchases from cogenerators and small power producers.
Virginia Power proposed rates substantially lower than those previously
specified. It also proposed to reduce the applicability threshold to 100 kW
and shorten the maximum term of contracts under Schedule 19 to five years.
On June 19, 1997, the North Carolina Commission issued an Order requiring
Virginia Power to offer long-term (5-, 10- and 15-year) levelized capacity
payments to hydroelectric and certain landfill and waste facilities
contracting for up to 5 MW; a 5-year levelized rate option to other QFs
contracting for up to 100 kW; and optional long-term levelized energy
payments for QFs rated at 100 kW or less capacity.
9
Sources Of Power
Virginia Power Generating Units
Type Summer
Years of Capability
Name of Station, Units and Location Installed Fuel MW
----------------------------------- --------- ---- ----------
Nuclear:
Surry Units 1 & 2, Surry, Va ............................. 1972-73 Nuclear 1,602
North Anna Units 1 & 2, Mineral, Va ...................... 1978-80 Nuclear 1,790 (a)
--------
Total nuclear stations .................................. 3,392
--------
Fossil Fuel:
Steam:
Bremo Units 3 & 4, Bremo Bluff, Va. ..................... 1950-58 Coal 227
Chesterfield Units 3-6, Chester, Va. .................... 1952-69 Coal 1,250
Clover Units 1 & 2, Clover, Va. ......................... 1995-96 Coal 882 (b)
Mt. Storm Units 1-3, Mt. Storm, W. Va. .................. 1965-73 Coal 1,587
Chesapeake Units 1-4, Chesapeake, Va. ................... 1953-62 Coal 595
Possum Point Units 3 & 4, Dumfries, Va. ................. 1955-62 Coal 322
Yorktown Units 1 & 2, Yorktown, Va. ..................... 1957-59 Coal 326
Possum Point Units 1, 2, & 5, Dumfries, Va. ............. 1948-75 Oil 929
Yorktown Unit 3, Yorktown, Va. .......................... 1974 Oil & Gas 818
North Branch Unit 1, Bayard, W. Va. ..................... 1994 Waste Coal 74 (c)
Combustion Turbines:
35 units (8 locations) ................................... 1967-90 Oil & Gas 1,019
Combined Cycle:
Bellmeade, Richmond, Va. ................................. 1991 Oil & Gas 230
Chesterfield Units 7 & 8, Chester, Va. ................... 1990-92 Oil & Gas 397
Total fossil stations ................................... 8,656
--------
Hydroelectric:
Gaston Units 1-4, Roanoke Rapids, N.C. ................... 1963 Conventional 225
Roanoke Rapids Units 1-4, Roanoke Rapids, N.C. ........... 1955 Conventional 99
Other .................................................... 1930-87 Conventional 3
Bath County Units 1-6, Warm Springs, Va. ................. 1985 Pumped Storage 1,260 (d)
--------
Total hydro stations .................................... 1,587
--------
Total Virginia Power generating unit capability ......... 13,635
Net Purchases ............................................. 1,480
Non-Utility Generation .................................... 3,277
--------
Total Capability ........................................ 18,392
========
---------
(a) Includes an undivided interest of 11.6 percent (208 MW) owned by ODEC.
(b) Includes an undivided interest of 50 percent (441 MW) owned by ODEC.
(c) Effective January 25, 1996, this unit was placed in a cold reserve
status.
(d) Reflects Virginia Power's 60 percent undivided ownership interest in
the 2,100 MW station. A 40 percent undivided interest in the facility
is owned by Allegheny Generating Company, a subsidiary of Allegheny
Energy, Inc (AE).
Virginia Power's highest one-hour integrated service area summer peak
demand was 14,537 MW on July 28, 1997, and an all-time high one-hour
integrated winter peak demand of 14,910 MW was reached on February 5, 1996.
10
Energy Used And Fuel Costs
System energy output by energy source and the average fuel cost for each
are shown below. Fuel cost is presented in mills (one tenth of one cent)
per kilowatt hour.
1997 1996 1995
-------------------- -------------------- --------------------
Source Cost Source Cost Source Cost
-------- --------- -------- --------- -------- ---------
Nuclear (*) .................. 34% 4.52 32% 4.48 32% 4.92
Coal (**) .................... 40 13.54 38 14.32 39 14.44
Oil .......................... 1 26.32 1 27.75 1 25.11
Purchased power, net ......... 23 21.54 27 21.99 25 22.50
Other ........................ 2 30.65 2 26.98 3 23.82
-- -- --
Total ....................... 100% 100% 100%
=== === ===
Average fuel cost ........... 12.67 13.47 13.73
---------
(*) Excludes ODEC's 11.6 percent ownership interest in the North Anna
Power Station.
(**) Excludes ODEC's 50 percent ownership interest in the Clover Power
Station.
Nuclear Operations and Fuel Supply
In 1997, Virginia Power's four nuclear units achieved a combined capacity
factor of 91.1 percent.
Virginia Power utilizes both long-term contracts and spot purchases to
support its needs for nuclear fuel. Virginia Power continually evaluates
worldwide market conditions in order to ensure a range of supply options at
reasonable prices. Current agreements, inventories and spot market
availability will support Virginia Power's current and planned fuel supply
needs for fuel cycles throughout the remainder of the 1990's and into the
early 2000's. Beyond that period, additional fuel will be purchased as
required to ensure optimum cost and inventory levels.
The DOE is not expected to begin the acceptance of spent fuel in 1998 as
specified in Virginia Power's contract with the DOE. However, on-site spent
nuclear fuel storage at the Surry Power Station (spent fuel pool and dry
cask storage) is expected to be adequate for Virginia Power's needs until
the DOE begins accepting spent fuel. The North Anna Power Station will
require additional spent fuel storage capacity in 1998. Virginia Power
submitted a license application to the NRC in May 1995 for a dry cask
facility at North Anna. Virginia Power anticipates that this application
will be approved in mid-1998.
For details on the issues of decommissioning and nuclear insurance, see
Note Q to the CONSOLIDATED FINANCIAL STATEMENTS on page 54 of the 1997
Annual Report to Shareholders.
Fossil Operations and Fuel Supply
Virginia Power's fossil fuel mix consists of coal, oil and natural gas.
In 1997, Virginia Power consumed approximately 13 million tons of coal. As
with nuclear fuel, Virginia Power utilizes both long-term contracts and
spot purchases to support its needs. Virginia Power presently anticipates
that sufficient coal supplies at reasonable prices will be available for
the remainder of the 1990's. Current projections for an adequate supply of
oil remain favorable, barring unusual international events or extreme
weather conditions which could affect both price and supply.
Virginia Power uses natural gas as needed throughout the year for two
combined cycle units and at several combustion turbine units. For winter
usage at the combined cycle sites, gas is purchased and stored during the
summer and fall and consumed during the colder months when gas supplies are
not available at favorable prices. Virginia Power has firm transportation
contracts for the delivery of gas to the combined cycle units. Current
projections indicate gas supplies will be available for the next several
years.
Purchases and Sales of Energy
Virginia Power relies on purchases of power to meet a portion of its
capacity requirements. Virginia Power also makes economy purchases of power
from other utility systems when it is available at a cost lower than
Virginia Power's own generation costs.
11
Under contracts effective January 1, 1985, Virginia Power agreed to
purchase 400 MW of electricity annually through 1999 from Hoosier Energy
Rural Electric Cooperative, Inc. (Hoosier), and agreed to purchase 500 MW
of electricity annually during 1987-99 from certain operating units of
American Electric Power Company, Inc. (AEP).
Virginia Power has a diversity exchange agreement with AE under which AE
delivers 200 MW to Virginia Power in the summer and Virginia Power delivers
200 MW to AE in the winter.
Virginia Power also has 57 non-utility power purchase contracts with a
combined dependable summer capacity of 3,277 MW (for information on the
financial obligations under these agreements see Note Q to the CONSOLIDATED
FINANCIAL STATEMENTS on page 53 of the 1997 Annual Report to Shareholders).
In a continuing effort to mitigate its exposure to above-market long-term
purchased power contracts, Virginia Power is evaluating its long-term
purchased power contracts and negotiating modifications to their terms,
including cancellations, where it is determined to be economically
advantageous to do so.
Virginia Power's wholesale power group actively participates in the
purchase and sale of wholesale electric power and natural gas in the open
market. The wholesale power group has expanded Virginia Power's trading
range beyond the geographic limits of the Virginia Power service territory,
and has developed trading relationships with energy buyers and sellers on a
nationwide basis.
In July 1997, Virginia Power executed three agreements with Old Dominion
Electric Cooperative (ODEC) which provide for the amendment of the parties'
Interconnection and Operating Agreement (I&O Agreement). The first
agreement provides for the transition from cost-based rates for capacity
and energy purchases by ODEC to market-based rates by 2002. The second two
agreements are the Service and Operating Agreements for Network Integration
Transmission Service, which unbundled the transmission services provided to
ODEC under the I&O Agreement.
As reported above, both the Hoosier 400 MW long-term purchase and the AEP
500 MW long-term purchase will expire on December 31, 1999. Virginia Power
presently anticipates adding peaking capacity beginning in the year 2000 to
meet its anticipated load growth. Virginia Power has and will pursue
capacity acquisition plans to provide that capacity and maintain a high
degree of service reliability. This capacity may be owned and operated by
others and sold to Virginia Power or may be built by Virginia Power if it
determines it can build capacity at a lower overall cost. Virginia Power
also pursues conservation and demand-side management. No Virginia Power
owned generation is currently in the planning or construction stages.
For additional information, see Note Q to the CONSOLIDATED FINANCIAL
STATEMENTS on page 53 of the 1997 Annual Report to Shareholders.
Interconnections
Virginia Power maintains major interconnections with Carolina Power and
Light Company, AEP, AE and the utilities in the Pennsylvania-New
Jersey-Maryland Power Pool. Through this major transmission network, Virginia
Power has arrangements with these utilities for coordinated planning,
operation, emergency assistance and exchanges of capacity and energy.
In December 1996, Virginia Power joined with Allegheny Power Service
Corporation, Cleveland Electric Illuminating Company, Toledo Edison Company,
Ohio Edison Company, Pennsylvania Power Company and Southern Company Services,
Inc. (the Transmission Alliance) to file a contract with the FERC entitled the
GAPP Experiment Participation Agreement (GAPP Agreement). The Transmission
Alliance and the GAPP Agreement were established to promote fair and equitable
use of the transmission systems based on the General Agreement on Parallel
Paths (GAPP) model for coordinating the flow of bulk supplies of electricity
among utilities. GAPP principles allow electric companies to determine where
electricity actually flows in bulk power transactions, as opposed to the
"contract" paths that are based on power purchase and transmission agreements
among buying, selling and transmitting utilities.
Compensation for transmission services has historically been based on
contract paths. The GAPP Agreement was designed to determine the physical path
electricity actually takes through the system and allocate open access
transmission revenues among the parties. The GAPP Agreement was designed as an
experiment to test the GAPP methods and procedures for a period of two years.
The FERC accepted the contract on March 25, 1997. Virginia Power and the
Transmission Alliance implemented the GAPP Agreement on April 2, 1997.
On November 14, 1997, in accordance with the FERC order accepting the GAPP
Agreement, the Transmission Alliance issued a report detailing the results of
the first six months of the experiment. The preliminary results of the
experiment indicate that it is technically possible to monitor and predict the
physical flow of electricity over multiple systems and that
12
transmission revenues reallocated according to actual use of the system differ
significantly from collections under a contract path approach. In October 1997,
Virginia Power gave notice to the Transmission Alliance that, effective January
1, 1998, it was exercising its option under the GAPP Agreement to terminate its
involvement in the experiment.
On December 9, 1997, Virginia Power, the Transmission Alliance and other
utilities agreed to study the creation of an independent regional transmission
entity. The memorandum of understanding to initiate this study was signed by
eleven investor-owned electric companies, including Virginia Power, Consumers
Energy, Detroit Edison, Duquesne Light Company, The Illuminating Company, Ohio
Edison Company, Pennsylvania Power Company, Toledo Edison Company, and the
Allegheny Energy Companies (Monongahela Power Company, The Potomac Edison
Company, and West Penn Power Company). This group is an outgrowth of the GAPP
Agreement and its key goals are to maintain the long-term reliability and
security of the utilities' interconnected transmission systems; ensure the most
efficient use of resources; eliminate pancaking of rates within and between
transmission entities; avoid duplication of costs and achieve transmission cost
savings; and, strike an appropriate balance among the diverse interests of
energy suppliers, customers, and shareholders. The group will also explore
cooperative agreements designed to achieve these goals while ensuring
nondiscriminatory and comparable access to all users of the group's
transmission system. The companies intend to be responsive to industry changes,
especially with the introduction of retail competition in some of the areas
served by the signatories and as some other industry participants consider
creation of independent transmission operating companies or separate
transmission companies. Further, the companies will have the flexibility to
continue to investigate and pursue other opportunities and arrangements that
could develop regarding independent system operators or independent
transmission companies.
Virginia Power and Appalachian Power Company (AEP-Virginia), an operating
unit of AEP, each sought approval from the SCC in 1991 to construct certain
interconnecting transmission facilities. These applications resulted from a
joint planning effort of Virginia Power and AEP to meet the requirements of
their customers. At the time of Virginia Power's application, particularly
during the summer of 1992, constraints were being experienced on transfers of
power into the Virginia Power service territory from the west. On November 7,
1997, the SCC issued an Order directing Virginia Power to report to the
Commission on the continued need for certain new interconnected transmission
facilities, on the relationship between Virginia Power's application to build
the new facilities and certain other pending proceedings, and on Virginia
Power's construction plans, if the SCC grants Virginia Power's application.
On December 15, 1997, Virginia Power filed a report in compliance with the
SCC Order stating that since the filing of Virginia Power's application, the
constraints have been less frequent, due in part to less severe summer weather,
and actual power requirements have been less than originally forecasted. In
addition, generating resources within the Virginia Power service area have been
increased by the higher performance level of the nuclear units, as well as the
completion of the Clover Station. Completion of the AEP project is a
prerequisite for the Virginia Power project to go forward. The proposed
Virginia Power project would not fulfill its intended purpose without the AEP
line being built. AEP has withdrawn its original application and has instituted
a new proceeding before the Commission in which different routing is proposed.
Virginia Power continues to monitor closely the progress of AEP in this
proceeding with respect to its new proposal, but until more is known about
these proceedings, Virginia Power cannot predict what its construction plans
will be.
13
CAPITAL REQUIREMENTS AND FINANCING PROGRAM
See MANAGEMENT'S DISCUSSION AND ANALYSIS OF CASH FLOWS AND FINANCIAL
CONDITION on pages 37 through 40 of the 1997 Annual Report to Shareholders.
ITEM 2. PROPERTIES
Dominion Resources owns the building at One James River Plaza, Richmond,
Virginia, in which Virginia Power has its principal offices. Dominion
Resources' other assets consist primarily of its investments in its
subsidiaries, which invest various enterprises and assets, as described in THE
COMPANY under Item 1. BUSINESS above. See also Virginia Power Generating Units
under Item 1. BUSINESS above.
ITEM 3. LEGAL PROCEEDINGS
From time to time, Dominion Resources and its subsidiaries 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
them, or permits issued by various local, state and federal agencies for the
construction or operation of facilities. From time to time, there may be
administrative proceedings on these matters pending. In addition, in the normal
course of business, Dominion Resources and its subsidiaries are in involved in
various legal proceedings. Management believes that the ultimate resolution of
these proceedings will not have a material adverse effect on the company's
financial position, liquidity or results of operations.
In reference to the lawsuit filed by Dominion Energy and Dominion Cogen
D.C., Inc. against the District of Columbia and the District's counterclaims to
the lawsuit, the parties settled all claims and dismissed the lawsuit and
related counterclaims on August 20, 1997.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
EXECUTIVE OFFICERS OF THE REGISTRANT
Name and Age Business Experience Past Five Years
------------ -----------------------------------
Chairman of the Board of Directors, President and Chief Executive
Thos. E. Capps (62) Officer of Dominion Resources from September 1, 1995 to date;
Chairman of the Board of Directors and Chief Executive Officer of
Dominion Resources from August 15, 1994 to September 1, 1995;
Chairman of the Board of Directors, President and Chief Executive
Officer of Dominion Resources prior to August 15, 1994.
Norman B.M. Askew (55) Executive Vice President of Dominion Resources and President and
Chief Executive Officer of Virginia Electric and Power Company
from August 1, 1997 to date; Executive Vice President of Dominion
Resources and Chief Executive of East Midlands from February 21,
1997 to August 1, 1997; Chief Executive of East Midlands from
April 1, 1994 to February 21, 1997; Managing Director prior to
April 1, 1994.
Thomas N. Chewning (52) Executive Vice President of Dominion Resources from January 1,
1997 to date and President of Dominion Energy; Senior Vice
President of Dominion Resources from October 1, 1994 to January 1,
1997; Vice President of Dominion Resources prior to October 1,
1994.
David L. Heavenridge (51) Executive Vice President of Dominion Resources from January 1,
1997 to date and President of Dominion Capital; Senior Vice
President of Dominion Resources from March 1, 1994 to January 1,
1997; Senior Vice President and Controller of Dominion Resources
prior to March 1, 1994.
14
Edgar M. Roach, Jr. (49) Executive Vice President of Dominion Resources from September
15, 1997 to date; Senior Vice President-Finance, Regulation and
General Counsel of Virginia Electric and Power Company January 1,
1996 to September 15, 1997; Vice President-Regulation and General
Counsel, January 1, 1995 to January 1, 1996; Vice President-
Regulation, February 1, 1994 to January 1, 1995; Partner in the law
firm of Hunton & Williams, Raleigh, North Carolina prior to
February 1, 1994.
Robert J. Davies (49) Chief Executive of East Midlands from August 1, 1997 to date;
Finance Director February 1, 1994 to August 1, 1997; Finance
Director of Ferranti International plc prior to February 1, 1994.
Mr. Davies was the Finance Director and Manager of the Board of
Ferranti International plc and four of its subsidiaries which entered
insolvency proceedings in the UK in December 1993.
Thomas F. Farrell, II (43) Senior Vice President-Corporate Affairs of Dominion Resources and
Executive Vice President of Virginia Electric and Power Company
from September 1, 1997 to date; Senior Vice President-Corporate and
General Counsel of Dominion Resources from January 1, 1997 to
September 1, 1997; Vice President and General Counsel of Dominion
Resources from July 1, 1995 to January 1, 1997; Partner in the law
firm of McGuire, Woods, Battle & Boothe LLP prior to July 1, 1995.
Donald T. Herrick, Jr (54) Vice President of Dominion Resources
G. Scott Hetzer (41) Vice President and Treasurer of Dominion Resources from October 1,
1997 to date; Managing Director of Wheat First Butcher Singer prior
to October 1, 1997.
William S. Mistr (50) Vice President of Dominion Resources from February 20, 1998 to
date and Vice President-Information Technology of Virginia Electric
and Power Company from January 1, 1996 to to date; Vice President
and Treasurer, Dominion Energy, Inc., October 1, 1994 to January 1,
1996; Assistant Treasurer, Dominion Resources prior to October 1,
1994.
James F. Stutts (53) Vice President and General Counsel of Dominion Resources from
September 15, 1997 to date; Partner in the law firm of McGuire,
Woods, Battle & Boothe LLP prior to September 15, 1997.
James L. Trueheart (46) Vice President and Controller of Dominion Resources from March 1,
1994 to date; Assistant Controller of Dominion Resources prior to
March 1, 1994.
Patricia A. Wilkerson (42) Corporate Secretary of Dominion Resources from January 1, 1997 to
date; Assistant Corporate Secretary prior to January 1, 1997.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
Dominion Resources common stock is listed on the New York Stock Exchange
and at December 31, 1997 there were 215,685 registered common shareholders of
record. Quarterly information concerning stock prices and dividends contained
on page 56 of the 1997 Annual Report to Shareholders for the fiscal year ended
December 31, 1997 in Note U to CONSOLIDATED FINANCIAL STATEMENTS which is filed
herein as Exhibit 13, is hereby incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA
This information contained under the caption "Selected Consolidated
Financial Data" on page 60 of the 1997 Annual Report to Shareholders for the
fiscal year ended December 31, 1997 filed herein as Exhibit 13, is hereby
incorporated herein by reference.
15
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This information contained under the caption MANAGEMENT'S DISCUSSION AND
ANALYSIS OF OPERATIONS on pages 22 through 33 and MANAGEMENT'S DISCUSSION AND
ANALYSIS OF CASH FLOWS AND FINANCIAL CONDITION on pages 37 through 40 of the
1997 Annual Report to Shareholders for the fiscal year ended December 31, 1997,
filed herein as Exhibit 13, is hereby incorporated herein by reference.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This information contained under the caption MANAGEMENT'S DISCUSSION AND
ANALYSIS OF OPERATIONS on pages 30 through 33 of the 1997 Annual to
Shareholders for the fiscal year ended December 31, 1997, filed herein as
Exhibit 13, is hereby incorporated herein by reference.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
This information contained in the CONSOLIDATED FINANCIAL STATEMENTS on
pages 21, 34 through 36, NOTES TO CONSOLIDATED FINANCIAL STATEMENTS on pages 37
through 56 and related report thereon of Deloitte & Touche LLP, independent
auditors, appearing on page 57 of the 1997 Annual Report to Shareholders for
the fiscal year ended December 31, 1997, filed herein as Exhibit 13, is hereby
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding the Directors of Dominion Resources contained on
pages 6 through 8 of the 1998 Proxy Statement, File No. 1-8489, dated March 11,
1998 is hereby incorporated herein by reference. The information concerning the
executive officers of Dominion Resources required by this Item is set forth in
Part I, under the section EXECUTIVE OFFICERS OF THE REGISTRANT. Information
regarding Section 16(a) Beneficial Ownership Reporting Compliance is contained
on page 26 of the 1998 Proxy Statement, dated March 11, 1998, which is
incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information regarding executive and director compensation contained on
pages 6 through 19 of the 1998 Proxy Statement is hereby incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information concerning stock ownership by directors and executive
officers contained on page 12 of the 1998 Proxy Statement is hereby
incorporated herein by reference. There is no person known by Dominion
Resources to be the beneficial owner of more than five percent of Dominion
Resources common stock.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None
16
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
A. Certain documents are filed as part of this Form 10-K and are
incorporated herein by reference and found on the pages noted.
1. Financial Statements
1997
Annual Report
to Shareholders
(Page)
------
Report of Independent Auditors .................................... 57
Report of Management .............................................. 57
Consolidated Statements of Income and Retained Earnings
for the years ended December 31, 1997, 1996 and 1995 ............ 21
Consolidated Balance Sheets at December 31, 1997 and 1996 ......... 34-35
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995 ................................ 36
Notes to Consolidated Financial Statements ........................ 41-56
17
2. Exhibits
3(i) - Articles of Incorporation as in effect May 4, 1987 (Exhibit 3(i), Form 10-K for the fiscal year ended
December 31, 1993, File No. 1-8489, incorporated by reference).
3(ii) - Bylaws as in effect on September 21, 1994 (Exhibit 3(ii), Form 10-K for the fiscal year ended
December 31, 1994, File No. 1-8489, incorporated by reference).
4(i) - See Exhibit 3(i) above.
4(ii) - Indenture of Mortgage of Virginia Electric and Power Company, dated November 1, 1935, as
supplemented and modified by fifty-eight Supplemental Indentures (Exhibit 4(ii), Form 10-K for the
fiscal year ended December 31, 1985, File No. 1-2255, incorporated by reference); Fifty-Ninth
Supplemental Indenture (Exhibit 4(ii), Form 10-Q for the quarter ended March 31, 1986, File
No. 1-2255, incorporated by reference); Sixtieth Supplemental Indenture (Exhibit 4(ii), Form 10-Q for
the quarter ended September 30, 1986, File No. 1-2255, incorporated by reference); Sixty-First
Supplemental Indenture (Exhibit 4(ii), Form 10-Q for the quarter ended June 30, 1987, File No. 1-2255,
incorporated by reference); Sixty-Second Supplemental Indenture (Exhibit 4(ii), Form 8-K, dated
November 3, 1987, File No. 1-2255, incorporated by reference); Sixty-Third Supplemental Indenture
(Exhibit 4(i), Form 8-K, dated June 8, 1988, File No. 1-2255, incorporated by reference); Sixty-Fourth
Supplemental Indenture (Exhibit 4(i), Form 8-K, dated February 8, 1989, File No. 1-2255, incorporated
by reference); Sixty-Fifth Supplemental Indenture (Exhibit 4(i), Form 8-K, dated June 22, 1989, File
No. 1-2255, incorporated by reference); Sixty-Sixth Supplemental Indenture, (Exhibit 4(i), Form 8-K,
dated February 27, 1990, File No. 1 -2255, incorporated by reference); Sixty-Seventh Supplemental
Indenture (Exhibit 4(i), Form 8-K, dated April 2, 1991, File No. 1-2255, incorporated by reference);
Sixty-Eighth Supplemental Indenture, (Exhibit 4(i)), Sixty-Ninth Supplemental Indenture, (Exhibit 4(ii))
and Seventieth Supplemental Indenture, (Exhibit 4(iii), Form 8-K, dated February 25, 1992, File
No. 1-2255, incorporated by reference); Seventy-First Supplemental Indenture (Exhibit 4(i)) and
Seventy-Second Supplemental Indenture, (Exhibit 4(ii), Form 8-K, dated July 7, 1992, File No. 1-2255,
incorporated by reference); Seventy-Third Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated
August 6, 1992, File No. 1-2255, incorporated by reference); Seventy-Fourth Supplemental Indenture
(Exhibit 4(i), Form 8-K, dated February 10, 1993, File No. 1-2255, incorporated by reference);
Seventy-Fifth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated April 6, 1993, File No. 1-2255,
incorporated by reference); Seventy-Sixth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated
April 21, 1993, File No. 1 -2255, incorporated by reference); Seventy-Seventh Supplemental Indenture,
(Exhibit 4(i), Form 8-K, dated June 8, 1993, File No. 1-2255, incorporated by reference);
Seventy-Eighth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated August 10, 1993, File
No. 1-2255, incorporated by reference); Seventy-Ninth Supplemental Indenture, (Exhibit 4(i), Form 8-K,
dated August 10, 1993, File No. 1-2255, incorporated by reference); Eightieth Supplemental Indenture,
(Exhibit 4(i), Form 8-K, dated October 12, 1993, File No. 1-2255, incorporated by reference);
Eighty-First Supplemental Indenture, (Exhibit 4(iii), Form 10-K for the fiscal year ended December 31,
1993, File No. 1-2255, incorporated by reference); Eighty-Second Supplemental Indenture, (Exhibit 4(i),
Form 8-K, dated January 18, 1994, File No. 1-2255, incorporated by reference); Eighty-Third
Supplemental Indenture (Exhibit 4(i), Form 8-K, dated October 19, 1994, File No. 1-2255, incorporated
by reference); Eighty-Fourth Supplemental Indenture (Exhibit 4(i), Form 8-K, dated March 23, 1995,
File No. 1-2255, incorporated by reference, and Eighty-Fifth Supplemental Indenture (Exhibit 4(i), Form
8-K, dated February 20, 1997, File No. 1-2255, incorporated by reference).
4(iii) - Indenture, dated April 1, 1985, between Virginia Electric and Power Company and Crestar Bank
(formerly United Virginia Bank) (Exhibit 4(iv), Form 10-K for the fiscal year ended December 31, 1993,
File No. 1-2255, incorporated by reference).
4(iv) - Indenture, dated as of June 1, 1986, between Virginia Electric and Power Company and The Chase
Manhattan Bank (formerly Chemical Bank) (Exhibit 4(v), Form 10-K for the fiscal year ended
December 31, 1993, File No. 1-2255, incorporated by reference).
4(v) - Indenture, dated April 1, 1988, between Virginia Electric and Power Company and The Chase
Manhattan Bank (formerly Chemical Bank), as supplemented and modified by a First Supplemental
Indenture, dated August 1, 1989, (Exhibit 4(vi), Form 10-K for the fiscal year ended December 31,
1993, File No. 1-2255, incorporated by reference).
4(vi) - Subordinated Note Indenture, dated as of August 1, 1995 between Virginia Electric and Power Company
and The Chase Manhattan Bank (formerly Chemical Bank), as Trustee, as supplemented (Exhibit 4(a),
Form S-3 Registration Statement File No. 333-20561 as filed on January 28, 1997, incorporated by
reference).
4(vii) - Dominion Resources agrees to furnish to the Commission upon request any other instrument with
respect to long-term debt as to which the total amount of securities authorized thereunder does not
exceed 10% of Dominion Resources' total assets.
18
10(i) - Operating Agreement, dated June 17, 1981, between Virginia Electric and Power Company and
Monongahela Power Company, the Potomac Edison Company, West Penn Power Company, and
Allegheny Generating Company (Exhibit 10(vi), Form 10-K for the fiscal year ended December 31,
1983, File No. 1-8489, incorporated by reference).
10(ii) - Purchase, Construction and Ownership Agreement, dated as of December 28, 1982 but amended and
restated on October 17, 1983, between Virginia Electric and Power Company and Old Dominion Electric
Cooperative (Exhibit 10(viii), Form 10-K for the fiscal year ended December 31, 1983, File No. 1-8489,
incorporated by reference).
10(iii) - Interconnection and Operating Agreement, dated as of December 28, 1982 as amended and restated on
October 17, 1983, between Virginia Electric and Power Company and Old Dominion Electric
Cooperative (Exhibit 10(ix), Form 10-K for the fiscal year ended December 31, 1983, File No. 1-8489,
incorporated by reference).
10(iv) - Nuclear Fuel Agreement, dated as of December 28, 1982 as amended and restated on October 17, 1983,
between Virginia Electric and Power Company and Old Dominion Electric Cooperative (Exhibit 10(x),
Form 10-K for the fiscal year ended December 31, 1983, File No. 1-8489, incorporated by reference).
10(v) - Amended and Restated Interconnection and Operating Agreement, dated as of July 29, 1997 between
Virginia Electric and Power Company and Old Dominion Electric Cooperative (filed herewith).
10(vi) - Credit Agreements, dated as of June 7, 1996, between The Chase Manhattan Bank (formerly Chemical
Bank) and Virginia Electric and Power Company (Exhibit 10(i) and Exhibit 10(ii), Form 10-Q for the
period ended June 30, 1996. File No. 1-2255, incorporated by reference).
10(vii) - Inter-Company Credit Agreement, dated December 20, 1985, as modified on August 21, 1987, between
Dominion Resources and Dominion Capital, Inc. (Exhibit 10(vi), Form 10-K for the fiscal year ended
December 31, 1993, File No. 1-8489, incorporated by reference).
10(viii) - Inter-Company Credit Agreement, dated October 1, 1987 as amended and restated as of May 1, 1988
between Dominion Resources and Dominion Energy, Inc. (Exhibit 10(vii), Form 10-K for the fiscal year
ended December 31, 1993, File No. 1-8489, incorporated by reference).
10(ix) - Inter-Company Credit Agreement, dated as of September 1, 1988 between Dominion Resources and
Dominion Lands, Inc. (Exhibit 10(viii), Form 10-K for the fiscal year ended December 31, 1993, File
No. 1-8489, incorporated by reference).
10(x) - Form of Amended and Restated Articles of Partnership in Commendam of Catalyst Old River
Hydroelectric Limited Partnership, by and between Catalyst Vidalia Corporation and Dominion Capital,
Inc. effective as of August 24, 1990 (Exhibit 10(xii) Form 10-K for the fiscal year ended December 31,
1990, File No. 1-8489, incorporated by reference).
10(xi) - Supplemental Funding Agreement, dated as of August 24, 1990, by and among Dominion Capital, Inc.,
Catalyst Old River Hydroelectric Limited Partnership and First National Bank of Commerce (Exhibit
10(xiii) Form 10-K for the fiscal year ended December 31, 1990, File No. 1-8489, incorporated by
reference).
10(xii) - Credit Agreement, dated December 1, 1985, between Virginia Electric and Power Company and Old
Dominion Electric Cooperative (Exhibit 10(xix), Form 10-K for the fiscal year ended December 31,
1985, File No. 1-8489, incorporated by reference).
10(xiii) - Agreement for Northern Virginia Services, dated as of November 1, 1985, between Potomac Electric
Power Company and Virginia Electric and Power Company (Exhibit 10(xxi), Form 10-K for the fiscal
year ended December 31, 1985, File No. 1-8489, incorporated by reference).
10(xiv) - Purchase, Construction and Ownership Agreement, dated May 31, 1990, between Virginia Electric and
Power Company and Old Dominion Electric Cooperative (Exhibit 10(xi), Form 10-K for the fiscal year
ended December 31, 1990, File No. 1 -2255, incorporated by reference).
10(xv) - Operating Agreement, dated May 31, 1990, between Virginia Electric and Power Company and Old
Dominion Electric Cooperative (Exhibit 10(xii), Form 10-K for the fiscal year ended December 31,
1990, File No. 1-2255, incorporated by reference).
10(xvi) - Coal-Fired Unit Turnkey Contract (Volume 1), dated April 6, 1989, and the United 2 Amendment
(Volume 1), dated May 31, 1990 between Virginia Electric and Power Company and Old Dominion
Electric Cooperative, Westinghouse, Black & Veatch, Combustion Engineering and H. B. Zachry
(Volumes 2-11 contain technical specifications) (Exhibit 10(xiii), Form 10-K for the fiscal year ended
December 31, 1990, File No. 1-2255, incorporated by reference).
10(xvii) - Trust Agreement of Dominion Resources Black Warrior Trust, dated May 31, 1994, among Dominion
Black Warrior Basin, Inc., Dominion Resources, Inc., Mellon Bank (DE) National Association and
Nationsbank of Texas, N.A. (Exhibit 3.1, Amendment No. 1 to Registration Statement, File No.
33-53513, filed June 1, 1994, incorporated by reference).
10(xviii) - First Amendment of Trust Agreement of Dominion Resources Black Warrior Trust, dated June 27, 1994,
among Dominion Black Warrior Basin, Inc., Dominion Resources, Inc., Mellon Bank (DE) National
Association and Nationsbank of Texas, N.A. (Exhibit 10(ii), Form 10-Q for the quarter ended June 30,
1994, File No. 1-8489, incorporated by reference).
19
10(xix)* Dominion Resources, Inc. Directors' Deferred Compensation Plan, effective July 1, 1986, as amended
and restated effective January 1, 1996 (Exhibit 10(xviii), Form 10-K for the fiscal year ended
December 31, 1996, File No.1-8489, incorporated by reference).
10(xx)* Dominion Resources, Inc. Performance Achievement Plan, effective January 1, 1986, as amended and
restated effective February 19, 1988 (Exhibit 10(xxi), Form 10-K for the fiscal year ended December 31,
1988, File No. 1-8489, incorporated by reference).
10(xxi)* Dominion Resources, Inc. Executive Supplemental Retirement Plan, effective January 1, 1981 as
amended and restated September 1, 1996 (Exhibit 10(iv), Form 10-Q for the quarter ended June 30,
1997, File No. 1-8489, incorporated by reference) and as amended June 20, 1997 and as amended
March 3, 1998 (filed herewith).
10(xxii)* Arrangements with certain executive officers regarding additional credited years of service for retirement
and retirement life insurance purposes (filed herewith).
10(xxiii)* Dominion Resources, Inc.'s Cash Incentive Plan as adopted December 20, 1991 (Exhibit 10(xxii), Form
10-K for the fiscal year ended December 31, 1991, File No. 1-8489, incorporated by reference).
10(xxiv) Dominion Resources, Inc. Incentive Compensation Plan, effective April 22, 1997 (Exhibit 99, Form S-8
Registration Statement, File No 333-25587, incorporated by reference).
10(xxv)* Form of Employment Continuity Agreement for certain officers of Dominion Resources (Exhibit (xxvi),
Form 10-K for the fiscal year ended December 31, 1994, File No. 1-8489, incorporated by reference).
10(xxvi)* Dominion Resources, Inc. Retirement Benefit Funding Plan, effective June 29, 1990 as amended and
restated September 1, 1996 (Exhibit 10(iii), Form 10-Q for the quarter ended June 30, 1997, File
No. 1-8489, incorporated by reference).
10(xxvii)* Dominion Resources, Inc. Retirement Benefit Restoration Plan as adopted effective January 1, 1991 as
amended and restated September 1, 1996 (Exhibit 10(ii), Form 10-Q for the quarter ended June 30,
1997, File No. 1-8489, incorporated by reference).
10(xxviii)* Dominion Resources, Inc. Executives' Deferred Compensation Plan, effective January 1, 1994 and as
amended and restated January 1, 1997 (Exhibit 10 (xxvi), Form 10-K for the fiscal year ended
December 31, 1996, incorporated by reference).
10(xxix)* Employment Agreement dated June 20, 1997 between Dominion Resources and Thos. E. Capps (Exhibit
10(i), Form 10-Q for the quarter ended June 30, 1997, File No. 1-8489, incorporated by reference).
10(xxx)* Form of three year Employment Agreement between Dominion Resources and Thomas N. Chewning
and certain other executive officers of Dominion Resources (filed herewith).
10(xxxi)* Dominion Resources, Inc. Stock Accumulation Plan for Outside Directors, effective April 23, 1996
(Exhibit 10, Form 10-Q for the quarter ended March 31, 1996, File No. 1-8489, incorporated by
reference).
10(xxxii)* Employment Agreement dated February 21, 1997 between Dominion Resources and Norman Askew.
(Exhibit 10(xxxi), Form 10-K for the fiscal year ended December 31, 1996, File No. 1-8489,
incorporated by reference).
10(xxxiii)* Service Agreement, dated February 17, 1994 as amended through December 2, 1995 between East
Midlands and Robert J. Davies (filed herewith).
10(xxxiv)* Employment Agreement, dated September 12, 1997 between Dominion Resources and Edgar M. Roach,
Jr. (filed herewith).
10(xxxv)* Employment Agreement, dated January 1, 1998 between Dominion Resources and William S. Mistr
(filed herewith).
11 Computation of Earnings Per Share of Common Stock Assuming Full Dilution (filed herewith).
13 Portions of the 1997 Annual Report to Shareholders for the fiscal year ended December 31, 1997
(filed herewith).
21 Subsidiaries of the Registrant (filed herewith).
23 Consent of Deloitte & Touche LLP (filed herewith).
27 Financial Data Schedule (filed herewith).
- ---------
* Indicates management contract or compensatory plan or arrangement.
B. Reports on Form 8-K
Dominion Resources filed a report on Form 8-K, dated December 11, 1997,
reporting the issuance of 250,000 7.83% Capital Securities (liquidation amount
$1,000 per security) through its Dominion Resources Capital Trust I, a Delaware
business trust.
Dominion Resources filed a report on Form 8-K, dated January 15, 1998,
reporting the issuance of 6,500,000 shares of Common Stock.
20
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
By: THOS. E. CAPPS
------------------------------------------------------
(Thos. E. Capps, Chairman of the Board of Directors,
President and Chief Executive Officer)
Date: MARCH 20, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated and on the 20th day of March, 1998.
Signature Title
--------- -----
JOHN B. ADAMS, JR. Director
------------------------------
John B. Adams, Jr.
JOHN B. BERNHARDT Director
------------------------------
John B. Bernhardt
THOS. E. CAPPS Chairman of the Board of Directors, President
------------------------------ (Chief Executive Officer) and Director
Thos. E. Capps Director
BENJAMIN J. LAMBERT, III
------------------------------
Benjamin J. Lambert, III
RICHARD L. LEATHERWOOD Director
------------------------------
Richard L. Leatherwood
HARVEY L. LINDSAY, JR. Director
------------------------------
Harvey L. Lindsay, Jr.
K. A. RANDALL Director
------------------------------
K. A. Randall
WILLIAM T. ROOS Director
------------------------------
William T. Roos
FRANK S. ROYAL Director
------------------------------
Frank S. Royal
21
Signature Title
- ------------------------------------ -------------------------------
JUDITH B. SACK Director
------------------------------
Judith B. Sack
S. DALLAS SIMMONS Director
------------------------------
S. Dallas Simmons
ROBERT H. SPILMAN Director
------------------------------
Robert H. Spilman
EDGAR M. ROACH, JR. Executive Vice President
------------------------------ (Chief Financial Officer)
Edgar M. Roach, Jr.
J.L. TRUEHEART Vice President and Controller
------------------------------ (Principal Accounting Officer)
J.L. Trueheart
22
DOMINION RESOURCES, INC.
PORTIONS
OF THE
1997
ANNUAL REPORT
TO
SHAREHOLDERS
(Incorporated by Reference)