Dominion Resources, Inc. (D)

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Dominion Resources (D)

Q4 2012 Earnings Call

January 31, 2013 10:00 am ET


Thomas Hamlin

Thomas F. Farrell - Executive Chairman, Chief Executive Officer, President, Chairman of Virginia Electric & Power Company, Chief Executive Officer of Dominion Energy and Chief Executive Officer of Virginia Electric

Mark F. McGettrick - Chief Financial Officer and Executive Vice President

Paul D. Koonce - Executive Vice President and Chief Executive Officer of Dominion Virginia Power

Gary L. Sypolt - Executive Vice President and Chief Executive Officer of Dominion Energy

David A. Christian - Executive Vice President and Chief Executive Officer of Dominion Generation

G. Scott Hetzer - Senior Vice President of Tax and Treasurer


Greg Gordon - ISI Group Inc., Research Division

Paul B. Fremont - Jefferies & Company, Inc., Research Division

Dan Eggers - Crédit Suisse AG, Research Division

Paul Patterson - Glenrock Associates LLC

Paul T. Ridzon - KeyBanc Capital Markets Inc., Research Division

Jonathan P. Arnold - Deutsche Bank AG, Research Division

Stephen Byrd - Morgan Stanley, Research Division

Michael J. Lapides - Goldman Sachs Group Inc., Research Division



Good morning, and welcome to Dominion's fourth quarter earnings conference call. On the call today, we have Tom Farrell, CEO; Mark McGettrick, CFO; and other members of senior management. [Operator Instructions] I would now like to turn the call over to Tom Hamlin, Vice President of Investor Relations and Financial Analysis, for the Safe Harbor statement.

Thomas Hamlin

Good morning, and welcome to Dominion's fourth quarter 2012 earnings conference call. During this call, we will refer to certain schedules included in this morning's earnings release and pages from our earnings release kit. Schedules in the earnings release kit are intended to answer the more detailed questions pertaining to operating statistics and accounting. Investor Relations will be available after the call for any clarification on these schedules. If you have not done so, I encourage you to visit our website, register for e-mail alerts and view our fourth quarter 2012 earnings documents. Our website address is In addition to the earnings release kit, we have included a slide presentation on our website that will guide this morning's discussion.

And now for the usual cautionary language. The earnings release and other matters that will be discussed on the call today may contain forward-looking statements and estimates that are subject to various risks and uncertainties. Please refer to our SEC filings, including our most recent annual report on Form 10-K and our quarterly report on Form 10-Q for a discussion of factors that may cause results to differ from management's projections, forecasts, estimates and expectations. Also on this call, we will discuss some measures of our company's performance that differ from those recognized by GAAP. Those measures include our fourth quarter and full year 2012 operating earnings and our operating earnings guidance for the first quarter and full year 2013, as well as our operating earnings before interest and tax, commonly referred to as EBIT. Reconciliation of such measures to the most directly comparable GAAP financial measures we're able to calculate and report are contained on Schedules 2 and 3 in Pages 8 and 9 in our earnings release kit.

Joining us on the call this morning are our CEO, Tom Farrell; our CFO, Mark McGettrick; and other members of our management team. Mark will discuss our earnings results as well as our guidance for the first quarter of 2013. Tom will review the progress we've made on our growth plan in 2012. As you may already know, we will host a meeting for analysts and investors at the Essex House in New York on March 4. At that time, we intend to provide a more detailed discussion of our growth plans and other items of interest to investors. Topics for this morning's call will be limited to our operating and financial results for 2012 and our earnings guidance for 2013. Our earnings guidance kit will be published later today and Investor Relations will be available afterwards to answer your questions. I will now turn the call over to Tom Farrell.

Thomas F. Farrell

Good morning. For Dominion, 2012 was a year of significant accomplishments. To begin, it was the best safety year in the company's history. Our OSHA recordable incident rate was only 0.74, which is 20% below the rate for 2011 and a little more than half the rate in 2007. Safety is a core value at Dominion, and I commend our employees for their achievement. In 2012, we completed several major capital projects in our strategic growth plan and made significant progress in the construction of several others. We also work to advance the next round of projects that should sustain our growth plan through the rest of the decade. We delivered operating earnings which, when adjusted for the extraordinarily mild weather, were consistent with our 5% to 6% growth target despite a sluggish economy and the collapse of market power prices. 2012 was a year of progress for Dominion Generation. The Virginia City Hybrid Energy Center began commercial operations in July. That $1.8 billion project was completed on budget and on time, following 4 years of construction. Virginia City is one of the cleanest, if not the cleanest, coal burning plant in the United States and maybe one of the last built by our industry.

Construction of the 1329-megawatt Warren County three-on-one combined cycle plant began in March of 2012. All of the major components have been delivered and 2 of the 3 combustion turbines have been installed on their foundations. The $1.1 billion project located near Front Royal, Virginia is scheduled to be online in late 2014. It is on time and on budget. We also made considerable progress on the development of the Brunswick County Power Station, another three-on-one combined cycle plant similar in size and design to Warren County. The gas and steam turbines have been procured, the agreements with the gas transportation supplier have been signed and permitting is underway. In July, we executed the EPC contract with Fluor and issued a limited notice to proceed. A CPCN and rider application was filed with the State Corporation Commission in November. A hearing date has been set for April 24 and a decision is expected some time this summer. Commercial operation of the plant is scheduled for 2016.

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