Dominion VA Power Credit Risk Management October 20, 2010 Pam Kemper Utility Payment Conference

Dominion Virginia Power Profile 2.4 million customers (VA & NC) 35,000 to 55,000 new connects annually Phone centers handling 12 million customer contacts per year Approximately 30% of customer contacts are now self-service Customers are being served by –6,000+ miles of electric transmission lines –56,000+ miles of electric distribution lines Electric peak demand –Summer 19,688 MW (8/8/07) –Winter 18,079 MW (2/6/07 )

Agenda Dominion’s Commercial Profile Risk Analysis – Analyzing financial stability and exposure, determining your highest risk industries Security Options – goal is to offer customer options while managing risk

Commercial Profile  Although Commercial/Industrial make up less than 11% of our customer count they make up 42% of the Revenues  Arrears balances are generally low if any at all – security is critical

Risk Analysis:  Tools for Analysis: Standard & Poor’s Rating (Warning at B, Request B negative) or Moody's equivalent Adverse News Frisk 2 score Altman Z score Industry news Hoovers D & B reports Other

Monitoring deposits on hand What deposits and security do you already have (Industries, sectors, franchises) Are any set to expire? Monitor expirations 3 months prior expiration to allow for adequate time to review pay history and financial standing. 6

Commercial Deposit Requests Deposit Requests with Trend Line Previous Twelve Months Industries Represented: Retail Outlets Shipping and Packaging Restaurants Textiles & Manufacturing Hotels and Lodging Commercial Real Estate Prepayment savings in 2009 over $4 million Secured accounts in 2010 are more than $10 million

Security Options  Two month deposit (standard offer)  Cash  ILOC  Surety Bond  One month deposit and accelerated pay  Parental Guarantee (only when parent has assets in US)  Negotiation  Prepayment

What is Prepayment?  In lieu of deposit request  Payment for usage not yet consumed  Not subject to preference in bankruptcy  Benefit to customer over standard deposit and minimizes Dominion’s risk 26

Why Prepayment Works

Example Prepayment 27  Customer must pay for all usage billed & unbilled before beginning prepayment plan  Budgeted amount true up quarterly  Separate prepayment bill issued

Next Steps:  Long term options for large customers  Automation in CIS systems  Expand to small commercial and residential customers

Contact Information Pam Kemper Director, Customer Billing & Payment Service Office 13