Business Context and Reporting Period
This Form 10-K covers Dominion Resources, Inc. for the fiscal year ended December 31, 1994. The company is a holding company organized in 1983, with principal assets consisting of investments in its subsidiaries. The largest subsidiary is Virginia Electric and Power Company (Virginia Power), a regulated public utility serving Virginia and northeastern North Carolina. Other key subsidiaries include Dominion Energy, Inc. (nonutility power generation and natural gas reserves) and Dominion Capital, Inc. (financial services and real estate). As of December 31, 1994, the company employed 10,789 people.
Key Financial Metrics
The provided text incorporates the 1994 Annual Report to Shareholders by reference for specific financial statements (Income, Balance Sheet, Cash Flows). Consequently, specific values for revenue, net profit, cash flow, and debt totals are not explicitly stated in this filing text. However, the following financial data points are available:
- Market Value: The aggregate market value of voting stock held by nonaffiliates was $6,558,572,914 as of January 31, 1995.
- Shares Outstanding: 172,028,142 shares of Common Stock as of January 31, 1995.
- Capital Expenditures (1995 Budget): Estimated total construction and nuclear fuel expenditures for 1995 are $684 million (including $11 million Allowance for Funds Used During Construction).
- Specific Project Costs:
- Clover Power Station (50% interest): $450 million incurred through Dec 31, 1994; total expected cost ~$533 million.
- Mt. Storm Scrubber: $147 million (operational Oct 1994).
- North Anna Unit 2 Steam Generator Replacement: Estimated $110 million (scheduled Q1 1995).
- Regulatory Liability: Virginia Power recorded a regulatory liability of $10.5 million related to coal transportation costs.
- Rate Adjustments: Virginia Power received approval for a $241.9 million annual revenue increase in its 1992 rate case (effective 1994), though refunds of $129.2 million were required for interim over-recovery.
Material Changes and Operational Highlights
- Generation Capacity: Total company generating unit capability reached 12,388 Mw, with total capability including net utility purchases and non-utility generation at 16,462 Mw.
- Peak Demand: Record winter peak demand of 14,877 Mw was reached on January 19, 1994, due to record cold weather.
- Acquisitions: Acquired the North Branch 80 Mw waste coal power station in West Virginia on December 30, 1994.
- Nonutility Growth: Dominion Energy added 82 billion cubic feet (BCFE) of natural gas reserves in 1994 and held 325 BCFE at year-end. It also sold 63 BCFE to establish the Dominion Resources Black Warrior Trust.
- Environmental Compliance: Installed a $147 million scrubber at Mt. Storm Unit 3. Estimated future capital costs for Clean Air Act Phase II compliance are $481 million (1992 dollars).
Guidance, Risks, and Contingencies
Regulatory and Legal Risks
- Corporate Governance Investigation: The Virginia State Corporation Commission (Staff) issued a report concluding Dominion Resources improperly pressured Virginia Power to renegotiate a coal transportation contract. The Staff recommended disallowing approximately $11 million in costs (with a potential net present value impact of $60 million). Dominion Resources offered to refund $8.3 million to settle this issue.
- Consent Order: A Consent Order effective until July 2, 1996, requires Dominion Resources to obtain Commission approval before removing Virginia Power board members or changing its articles of incorporation.
- Litigation:
- Doswell Limited Partnership: Virginia Power won a verdict on a contract dispute; alleged damages were reduced from $75 million to ~$19 million before the verdict.
- Georgetown Cogeneration: Dominion Energy is suing the District of Columbia for $80 million in damages regarding a denied building permit.
- Smith Cogeneration: Arbitration pending regarding power purchase terms for two 158 Mw units.
Operational and Market Risks
- Competition: Increasing competition from exempt wholesale generators and self-generation by industrial customers. The City of Falls Church, Virginia, is pursuing a municipal electric system, potentially challenging Virginia Power's franchise.
- Environmental Liability: Potential Superfund liabilities and significant future costs for Clean Air Act compliance (estimated $128 million annual incremental costs).
- Nuclear Regulation: Operations are subject to NRC regulations which may require substantial design changes or cost increases.
Investor Verification Checklist
- Financial Statements: Verify exact revenue, net income, and debt figures in the 1994 Annual Report to Shareholders (incorporated by reference), as they are not detailed in this 10-K text.
- Regulatory Settlement: Confirm the final status of the $8.3 million refund offer regarding the coal transportation contract and the long-term impact of the Consent Order on corporate governance.
- Capital Projects: Monitor the completion and cost overruns of the Clover Power Station (Units 1 & 2) and the North Anna steam generator replacement.
- Legal Outcomes: Track the resolution of the Georgetown Cogeneration lawsuit ($80 million claim) and the Smith Cogeneration arbitration.
- Environmental Costs: Review the final compliance plan for Clean Air Act Phase II to validate the $481 million capital cost estimate.