Mark McGettrick - Chief Financial Officer and Executive Vice President G. Scott Hetzer - Sr. VP, Treasurer of DRI and VP Thomas 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 Gregory Snyder -

Dan Eggers - Crédit Suisse AG Michael Lapides - Goldman Sachs Group Inc. Paul Ridzon - KeyBanc Capital Markets Inc. Hugh Wynne - Bernstein Research

Good morning, and welcome to Dominion's Third Quarter Earnings Conference Call. On the call today, we have Tom Farrell, CEO, and other members of senior management. [Operator Instructions] I would now like to turn the conference over to Greg Snyder, Director of Investor Relations for Safe Harbor Statement.

Good morning, and welcome to Dominion's Third Quarter Earnings Conference Call. During this call, we will refer to certain schedules included in this morning's earnings release and pages from our third quarter 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 of these schedules. If you've not done so, I encourage you to visit our website, register for email alerts and view our third quarter 2010 earnings documents. Our website address is www.dom.com/investors. In addition to the earnings release kit, we have included a slide presentation on our website that will guide this morning's discussions. 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 the call, we will discuss some measures of our company's performance that differ from those recognized by GAAP. Those measures include our third quarter operating earnings and our operating earnings guidance for the fourth quarter and full year 2010 and 2011, as well as operating earnings before interest and tax, commonly referred to as EBIT. Reconciliation of such measures to the most directly comparable GAAP financial measures we are able to calculate and report are contained in our earnings release kit. I will now turn the call over to our Chief Financial Officer, Mark McGettrick.

Thank you, Greg, and good morning, everyone. Joining me on the call this morning is our CEO, Tom Farrell, and other members of our management team. On today's call, I will discuss the earnings results for the third quarter, our outlook for the fourth quarter, full year 2010 and full year 2011. Tom will briefly update you on regulatory proceedings and operational activities. We will then take your questions. Dominion had a very strong third quarter. Our operating earnings were $1.03 per share, which was near the top of our earnings guidance range of $0.99 to $1.04 per share. As we referenced on last quarter's call, our third quarter guidance already reflected the above-normal weather for July, but warmer-than-normal weather for August and September added $0.04 per share relative to our guidance range. The impact from weather was partially offset by major storm expense and reliability investments in Virginia. When comparing our results to the third quarter of 2009, our operating earnings were $0.04 per share higher. Higher revenues from rate adjustment clauses, favorable weather in our electric service territory and higher PJM ancillary service revenues were offset by reduced merchant generation margins, higher storm damage expenses and the absence of earnings from our Appalachian E&P business. GAAP earnings were $0.98 per share for the third quarter. The principal difference between GAAP and operating earnings is an adjustment to the interim tax provisions in accordance with FIN 18. A summary and a reconciliation of GAAP to operating earnings can be found on Schedules 2 and 3 of the earnings release kit. Now moving to results by operating segment. At Dominion Virginia Power, third quarter EBIT was $217 million, which was slightly below the $224 million to $244 million range included in our guidance. Favorable weather was offset by higher storm and restoration costs in our distribution operations. EBIT for Dominion Energy in the third quarter was $165 million, which was well above the third quarter guidance range. The strong results were primarily driven by lower fuel costs in the Gas Transmission business and better-than-expected supply aggregation activities at producer services. Third quarter EBIT from Dominion Generation was $826 million, which was in the upper half of the third quarter guidance range of $761 million to $850 million. Favorable weather and higher PJM ancillary services revenue helped offset lower merchant generation margins. Overall, we are very pleased with all of our operating segment results. We have prepared a number of supplemental schedules that can be found on our website following the conclusion of our earnings call. These supplemental schedules show EBIT for the legal entity, Virginia Power, which includes utility generation, electric transmission and distribution operations, as well as quarterly EBIT for our regulated gas businesses, merchant generation and Dominion Retail. Moving to cash flow and Treasury activities. At our May 7 Investor Meeting, we outlined our plans for the proceeds from the sale of our Appalachian E&P business, including approximately $900 million for share repurchases. We completed our share buyback for 2010 in August. And in total, approximately 21.4 million shares were repurchased at an average cost of $42.09 per share. Our cash position continues to be very strong this year. And as a result, we have almost no outstanding commercial paper, and our overall amount of floating rate debt remains well below our targeted levels. During the third quarter, we issued term debt of $300 million at Virginia Power at an attractive coupon rate of 3.45%. After taking into account the benefit of Treasury hedges put in place for our 2010 issuances, the effective rate on this issue is less than 3%. Also, we issued $250 million of parent company debt, due in 2015, for a coupon of 2.25%. The effective yield on this parent debt after incorporating the benefit of Treasury hedges is approximately 2.2%. I wanted to give you a brief update on our 2011 financing plans. We do not plan to issue new equity in 2011. We have said in the past that we could issue new shares to our Dividend Reinvestment Plan, which typically amounts to $250 million per year. As we have been finalizing our plans for 2011, we have decided not to issue new shares for our DRIP plan and will instead use market purchases. Liquidity was very strong at $4.4 billion on September 30. For statements of cash flow and liquidity, please see Pages 16 and 43 of the Earnings Release Kit. During the third quarter, we also replaced our expiring credit facilities with two new three-year credit facilities totaling $3.5 billion. We appreciate the support of our banking partners in securing this new capacity. Now the fourth quarter and full year 2010 guidance. Dominion expects fourth quarter 2010 operating earnings in a range of $0.59 to $0.69 per share compared to operating earnings of $0.63 per share in the fourth quarter of 2009. Positive factors for the fourth quarter of 2010 compared to the prior year include a return-to-normal weather, higher rider revenues and lower planned nuclear outage expenses due to the absence of a refueling outage at Millstone. Factors offsetting these positives include lower merchant generation margins, higher fossil and hydro plant outage expenses, the absence of earnings from our E&P business and higher income taxes. Remember that in the fourth quarter of 2009, our effective income tax rate was approximately 22%, which was primarily driven by the manufacturing tax deduction. We were also making a number of investments to maintain and improve the reliability of our electric system, which resulted in higher operating expenses in the third quarter and will lead to higher expenses for the fourth quarter. Finally, we're advancing some work originally planned to be done during a 2011 outage at our Brayton Point Power Station, which will now be done in the fourth quarter of this year to improve the station's reliability. Moving to 2010 full year guidance. We are raising the bottom of our operating guidance range to $3.30 per share from $3.25 per share. We are leaving the top end of our range unchanged at $3.40 per share. The operating earnings forecast for 2011 remains unchanged at $3 to $3.30 per share. Please refer to our GAAP reconciliation schedules for corresponding GAAP estimates. As to hedges, we've added to our hedge position for Millstone, increasing hedge levels to 90% for 2011 and 30% for 2012. At our New England coal units, we increased our hedge position to 50% for 2011. We also increased our hedge position at Stateline to 73% for 2011 and 61% for 2012. Our sensitivity in 2011 to a $5 change in New England power prices is now approximately $0.025 per share. In addition, we have nearly reached our maximum hedge position for frac spreads for each year through 2013 at levels that support our growth projections. The update of our hedge positions can be found on Page 33 of our Earnings Release Kit. Please note that our power hedge prices for 2011 to 2012 in NEPOOL are fairly flat. This, coupled with current market prices in our regulated growth plan, support our 5% to 6% earnings growth beginning in 2012. I will now turn the call over to Tom Farrell.

Good morning, everyone, and thank you for joining us. Our operating and safety performance continued to be strong during the third quarter. We finished the quarter again as the top-rated company in the Southeast in employee safety performance. The fossil and hydro utility fleet achieved a year-to-date equivalent forced outage rate of 2.7% through September, which is its best on record. Our nuclear fleet achieved a third quarter capacity factor of 97%, excluding refueling outages. Our Kewaunee Nuclear power station in Wisconsin won the American Nuclear Society 2010 Utility Achievement Award for Outstanding Performance in Plant Operations. Kewaunee was recognized for demonstrating outstanding performance in operations as the top-performing plant and as the plant showing the most improved and sustainable performance in overall operations. We are pleased with our 2011 to 2015 regulated infrastructure growth plan we laid out in early September. Our five-year plan identifies over $2 billion in growth capital investments from across all of our regulated businesses. Our plan continues to develop on schedule and on budget. The Bear Garden combined cycle plant was 85% complete at the end of the third quarter. All major equipment is in place and construction continues per plan, with about 550 workers on site. Assembly of the gas turbine is complete with commissioning progressing to support a first fire later this year. The 580-megawatt combined cycle plant is scheduled for commercial operation in the spring of next year. Virginia City Hybrid Energy Center was 74% complete at the end of the third quarter. The 585-megawatt project is proceeding according to plan with over 2,000 workers on site. The steam turbine generator and the main transformer were delivered and placed under foundations, which represents the last of the major engineered equipment deliveries. The plant is scheduled for commercial operation in 2012. We have had no delays or cost overrun on either of these projects, which in total represent over $2.4 billion of capital investment. We continue to make significant progress on our Warren County project, a three-on-one combined cycle facility, with projected capacity of up to 1,300 megawatts. The local county has approved the revised conditional use permit. Dominion held its required air permit informational briefing in May, and the draft air permit was issued for public comment earlier this month. We expect the final air permit in December. We have completed the steam turbine and gas turbine selection process, as well as executed the natural gas transportation receive agreement to supply fuel to the power station. We plan to file for approval of this plant with the Virginia State Corporation Commission early next year. With respect to North Anna 3, we have concluded that the capital required for other new generation, pending environmental compliance and electric transmission upgrades, requires us to slow development of the third reactor at that facility. Dominion will continue to work toward obtaining a combined operating license for North Anna Unit 3 incorporating the US-APWR design by Mitsubishi Heavy Industries. We and MHI will also continue our engineering and preliminary site development work. We intend to reassess the schedule for construction of the unit as we approach the issuance of the COL, which we expect to obtain in early 2013. We look forward to continuing work on this important project for Virginia. Our $10.2 billion five-year growth plan is unaffected by this decision. Our two major electric transmission projects are also on schedule to be fully in-service by next summer. Two phases of the 500kV Meadow Brook-to-Loudoun line are complete and in operation, while work continues on the remaining phase. Work on the 500kV Carson-to-Suffolk line is about 50% complete. Yesterday, we energized our Pleasant View-to-Hamilton 230kV line in Northern Virginia. The project was on time and on budget. Also, yesterday, PJM announced its intention to recommend to the PJM Board the reconductoring of our Mt. Storm-to-Doubs line as part of the 2010 Regional Transmission Expansion Plan. We anticipate formal PJM approval in December, in line with our expectations since we first announced this project at our May financial conference. Dominion Energy continues to take advantage of its strategic location in the Marcellus Shale region. For example, recently, DTI signed a new 15-year firm transportation agreement to move 100,000 dekatherms per day of Marcellus Shale volumes. This is our third Marcellus-related project announcement in as many months. The Marcellus 404 project also continues to move forward. We have been meeting with producers to gauge interest and have further investigated the front-end engineering and design. Our two major energy construction projects, Gathering Enhancement and the Cove Point Pier Expansion, remain on schedule and on budget. Now a few minutes on the progress in our regulatory proceedings. In September, parties to the base rate case in North Carolina filed a settlement agreement with the North Carolina Utilities Commission. The stipulating parties agreed that non-fuel based revenues will increase by $7.7 million, our first base rate increase in North Carolina since 1993. Also, a significantly greater percentage of future purchased power expenses will now be recovered through the fuel clause rather than base rates, reducing risk for the company. The settlement, if approved by the Commission, would resolve all outstanding issues in the current base and fuel cases in North Carolina. We expect the decision in that proceeding before the end of the year. It is worth noting that our customer rates in both Virginia and North Carolina are well below the averages for the region, as well as the nation as a whole. On June 30, we filed our annual update to the riders for the Virginia City and Bear Garden Power Stations. These filings cover the financing costs for both projects for 2011, as well as the operating and maintenance costs for Bear Garden once it goes into commercial operation in the spring of next year. If approved by the State Corporation Commission, the change in rates will be effective on April 1. I want to cover a few upcoming events for the fourth quarter. We expect to complete a 60-megawatt upgrade at our Surry Nuclear Power Station and to have a successful first firing at the Bear Garden Power Station. We expect a final air permit for our Warren County project in December. We also expect PJM approval of the Mt. Storm-Doubs line in December. On the regulatory front, we look forward to the North Carolina Commission's consideration of the settlement agreement. Finally, we will submit for approval, by our Board of Directors, our recommendation of a 60% to 65% target dividend payout ratio, including a 7.7% increase in the dividend rate for 2011 over 2010. Overall, we are pleased with results for the third quarter. Our infrastructure growth program continues to provide the foundation for sustained earnings growth in the future. Thank you, and we are now ready for your questions.

[Operator Instructions] Our first question comes from Paul Ridzon with KeyBanc. Paul Ridzon - KeyBanc Capital Markets Inc.: Can you discuss how much capital and kind of the timing around the Mt. Storm-Doubs?

The Mt. Storm-Doubs line is included in the $10.2 billion program we've previously announced, and that will run around $350 million to $400 million. Paul Ridzon - KeyBanc Capital Markets Inc.: You can start that when sale is done, is that the constraint?

We'll have to obviously get permission from -- first, it has to be included in the PJM plan, then we'll seek permission here in Virginia.

Our next question comes from Hugh Wynne with Sanford Bernstein. Hugh Wynne - Bernstein Research: A couple of questions. First was on Page 12, Schedule 4, the reconciliation of Q3 '10 earnings to Q3 '09 earnings. When I back out the favorable impact of weather, it seems that earnings for the quarter are down $0.10 relative to last year. And it appears -- this is what I wanted to sort of get your view on. It appears that basically what we're seeing is good organic growth at the regulated operations offset to a considerable degree by the erosion of the generation gross margin. Kind of a pattern, I think, that we've seen over the last several quarters. I just wanted to get your view as to whether that's a fair characterization or not?

Hugh, this is Mark. Just a couple of comments around that. One, as you look out quarter-to-quarter, make sure you take into consideration, too, that we had E&P earnings in the third quarter of last year, and we have no E&P earnings. Hugh Wynne - Bernstein Research: That's the $0.03 of gas and oil disposed operations?

That's correct. We also had an unusual storm restoration period in the third quarter of this year; we did not last year. So adjusting for those two. More specifically to your comment, we've said for some time that our regulated growth business has strong trajectory going forward and that we're bottoming out in terms of a decline in our merchant generation business from '10 to '11 into '12. So I think the way you look at it is correct, but we see the merchant generation business reaching a bottom. And based on current forwards, we should see some recovery going forward on the merchant business. Hugh Wynne - Bernstein Research: And that bottom is a 2011 bottom in your view or...

Could you repeat that? Hugh Wynne - Bernstein Research: In 2011, do you see it bottoming out or...

I think we'd see it bottoming out in '11. Hugh Wynne - Bernstein Research: And then the second question, I was just looking at Page 16, your consolidated statement of cash flows. Cash provided by operating activities is down by about $1.1 billion or slightly more than a third. I wonder if you could just shed some light on what are the big drivers of that drop?

I'm going to let Scott Hetzer answer that. G. Scott Hetzer: A few drivers. One, deferred fuel was a big source of cash in '09 and is not in '10. Also, we had a $259 million contribution to the pension plan in '10. We also had the impact of the rate settlement this year. But importantly, don't forget that we took in over $4 billion in proceeds from the sale of E&P and Peoples, which doesn't get picked up in the operating activities. Yet, you see the $2.5 billion reduction in cash flow from the gain on the sale of E&P. So the benefit of that is down in investing activities, the hurt up in operating activities. Overall, we're very pleased with cash flow, and cash position of the company remains very strong. Hugh Wynne - Bernstein Research: And then this rate settlement number, that is the -- can you explain that? G. Scott Hetzer: That's just the cash that's gone out as a result of the rate settlement earlier. Hugh Wynne - Bernstein Research: These are the rate increases that you're booking to the revenue line of the income statement, but what you're not actually collecting from customers or... G. Scott Hetzer: These were part of the refunds that we agreed upon. Hugh Wynne - Bernstein Research: Refunds that you're giving, right, exactly.

Our next question comes from Michael Lapides, Goldman Sachs. Michael Lapides - Goldman Sachs Group Inc.: Question on terms of hedging of the coal generation fleet. At what point do you just have to basically say, "I'm not going to hedge," meaning kind of which year, based on the uncertainty around environmental regulations and whether -- which plants or which units are operating or not operating? Where do you have to kind of pull back and say, "I literally can't risk layering on hedges and then having to buy myself out of them"?

Michael, this is Mark. We don't have a specific time frame where we say we're not going to do it or not. We're very focused on the power markets and what the impact of the new environmental rules may have, particularly CATR [Clean Air Transport Rule], in '11 and 12 as we look at those. And we're in the market every day for coal. So obviously, the dark spreads are compressed on coal units right now, and we're more cautiously hedging than we have in the past. But we don't have, really, a line at saying that, at this point or at this level, we stay away. We anticipate what our runtime capacity is going to be every day at each going forward, and if we see the spreads being attractive, we'll go ahead and hedge and continue to average in. Michael Lapides - Goldman Sachs Group Inc.: By not hedging the New England coal for 2012 at all, are you basically making a price call, meaning that it's your point of view that, that market, that regional pricing levels are too low versus your fundamental view, versus your State Line coal hedging where you've hedged a decent amount at 2012?

The markets are totally different, both the coal markets and the power markets. The spreads have been more attractive to us in the Midwest going out based on the price of PRB coal and the power prices. And in the Northeast, central App and Columbian coal, which is essentially what we burn there, they've been carrying a fairly high price. So we believe chances are better they will come down as opposed to go up. And so we think we'll take a more conservative and have taken a more conservative approach in NEPOOL versus what we do at State Line.

Our next question comes from Daniel Eggers, Credit Suisse. Dan Eggers - Crédit Suisse AG: Going back to kind of the dividend increase for next year, and I know you guys have been talking about this for awhile, but can you just help frame what you think the growth rate is going to be as you look out over the next couple of years? It seems like expectations are '12 is going to look relatively flat, up a little bit, but flat to '11. Are going to leave room that the payout ratio could go up so you could have a more meaningful dividend growth on a sustained basis and then kind of normalize back down into the midpoint of the payout ratio beyond '12? Or how are you guys presenting that to the board as you guys look for an increase?

First off, I think one of the things you said was incorrect from our viewpoint. We believe that '12 will be 5% to 6% growth over '11. So when we had been talking about the dividend payout ratio recommendation -- let's go back in time a little bit. In 2007, when we announced the sale of the E&P business and our legislature re-regulated in Virginia, we thought we could sustain a 55% payout ratio. Under those circumstance, we would work our way to that by 2010, which we achieved this year. As we decided to sell the rest of our E&P business, reducing the commodity exposure by an additional 20%, and looking out with what our regulated growth plans were, the way the PJM markets were looking at -- the PJM was looking at the Virginia growth rate, et cetera, we believed that the appropriate target for our earnings mix was closer to 75% to 80% regulated. And that the peer group there was more of a 65% dividend payout ratio. So the target became, by '12, 65%. 2011, as we've said since May, and as Mark just reiterated, it's going to be -- we expect lower earnings next year than this year because of the decline in the merchant business margins. That's exacerbated by the five large outages we have in our merchant fleet in '11, three nuclear refueling outages. As you can see from our hedging program in New England, '12, it's flat to '11. So the decline in the merchant margins should -- well, it's going to be greatly reduced, if not eliminated, in '12. And the underlying 7% to 8% growth in the regulated businesses will no longer be dampened by the decline in the merchant margins. Looking at all of those pieces combined and along with our decision to slow down the development in North Anna, allows us to pay a 65% dividend payout. We're looking through '11 because we know the plans are there. And so '11 should be about a 62.5% payout over the midpoint of this $3, $3.30 range, which will allow continued growth in the dividend payout in '12. And then we expect 5% and 6% growth ongoing, '13 through '15, based on the $10.2 billion worth of growth capital that we've explained starting earlier this call. Dan Eggers - Crédit Suisse AG: Are you seeing any kind of volumes coming through Cove Point at this point in time? And just remind us on the confidence that nobody goes back and reconsiders those contracts, given how low U.S. gas prices are?

We don't ever discuss, really, the volumes through Cove Point. That's our customers' business. And we have contracts. We expect them to be adhered, too. But we have customers, we listen to our customers. But we don't really discuss the volumes through Cove Point. Dan Eggers - Crédit Suisse AG: Clearly the elections will reconfigure Washington to some varying degree for next year. But are you hearing any talk or what talk are you hearing from your people as far as looking to address both the dividend policy for next year, as well as anything as far as trying to preempt EPA action?

Well, I'm not sure I have any better information than anybody else on that. But I think most people believe that President Obama's recommendation on the dividend taxation policy will be adopted, whether it's done in the lame duck session or early next year. As far as what goes on with the EPA, just I don't really have a comment on that at this point. EEI has been working very hard on that. We'll be talking about that at the financial conference next week.

Ladies and gentlemen, we have reached the end of our allotted time. Mr. McGettrick, do you have any closing remarks?

Yes, thank you. Just a reminder that Our Form 10-Q is expected to be filed with the SEC later today, and our year end 2010 quarterly earnings release is scheduled for January 28. Thank you for joining us this morning.

Thank you. This does conclude this morning's teleconference. You may disconnect your lines and enjoy your day.