Dominion 2012 Income Drops (USA)

Dominion announced unaudited reported earnings determined in accordance with Generally Accepted Accounting Principles (GAAP) for the 12 months ended Dec. 31, 2012, of $581 million ($1.01 per share), compared with reported earnings of $1.41 billion ($2.45 per share) for the same period in 2011.  

Operating earnings for the 12 months ended Dec. 31, 2012, amounted to $1.75 billion ($3.05 per share), compared to originally reported operating earnings of $1.75 billion ($3.05 per share) for the same period in 2011.  Operating earnings are defined as reported (GAAP) earnings adjusted for certain items.

Dominion uses operating earnings as the primary performance measurement of its earnings guidance and results for public communications with analysts and investors.  Dominion also uses operating earnings internally for budgeting, for reporting to the Board of Directors, for the company’s incentive compensation plans and for its targeted dividend payouts and other purposes. Dominion management believes operating earnings provide a more meaningful representation of the company’s fundamental earnings power.

The principal difference between GAAP earnings and operating earnings for fourth-quarter 2012 was an impairment charge of $731 million related to the Brayton Point merchant generating station, which is in the process of being sold.

Business segment results and detailed descriptions of items included in 2012 and 2011 reported earnings but excluded from operating earnings can be found on Schedules 1, 2 and 3 of this release.

Thomas F. Farrell II, chairman, president and chief executive officer, said:

“2012 was a year of significant accomplishments for Dominion.  Several major capital projects were completed, significant progress was made on others and we worked to advance the next round of infrastructure growth.

“In our Generation segment last year, the 585-megawatt Virginia City Hybrid Energy Center was placed into commercial operation on schedule and on budget after four years of construction. Construction continues on schedule for the 1,329-megawatt, gas-fired power station in Warren County, Va.  The approximately $1.1 billion project is scheduled for completion in late 2014.  Progress continues on the development of a similar-sized combined-cycle facility, the Brunswick County Power Station.  We recently filed for regulatory approval with the Virginia State Corporation Commission and, pending approval, expect commercial operation in 2016.  The coal-to-biomass conversions of Altavista, Southampton, and Hopewell are proceeding on schedule and are projected to come online by the end of this year. Also, we recently filed an application for a coal-to-natural gas conversion of our 227-megawatt Bremo Power Station.  Commercial operation is expected in 2014, pending regulatory approval.

“At our Energy segment, the Appalachian Gateway Project, which transports natural gas produced in West Virginia and Pennsylvania was placed into service on time and within budget.  Also entering service last year were two major projects providing transportation services of Marcellus Shale volumes, the Ellisburg to Craigs and the Northeast Expansion. Construction on Phase 1 of the Natrium natural gas processing and fractionation plant is nearing completion and scheduled for operation this quarter.  And, we entered into a joint venture, Blue Racer Midstream, LLC, to provide gathering and processing to producers in the Utica shale region.

“Dominion Virginia Power placed into service approximately $400 million of new electric transmission assets and completed phase 2 of the Mount Storm-to-Doubs modernization project.  Also, new customer connects increased 28% versus prior year and weather-normalized kilowatt-hour sales growth was 1.5% over 2011.

“We expect 2013 operating earnings in the range of $3.20 to $3.50 per share.  Incorporated in this guidance, compared to 2012, are a return to normal weather in our regulated service territory, anticipated benefits of higher revenues from our rider and energy growth projects, and sales growth in our electric service area, primarily offset by higher depreciation and operations and maintenance expenses, financing costs and a higher effective income tax rate.

“In December, our Board of Directors set a new goal to achieve a 65 percent to 70 percent dividend payout ratio.  The new policy recognizes the company’s continued shift toward regulated earnings.  The board also set a 2013 dividend rate of $2.25 per share of common stock, up from $2.11 per share in 2012, or a 6.6 percent increase.  The board recently declared a first-quarter dividend of 56.25 cents per share of common stock.  All dividend declarations are subject to Board of Directors’ approval.”

[mappress]
LNG World News Staff, January 31, 2013