Dominion News Releases

March 3, 2000

Dominion Puts New Corporate Structure in Place

Richmond,Va.; -- Dominion Resources Inc. (NYSE: D) today announced a new corporate structure that will integrate the assets of Consolidated Natural Gas Co. and streamline operations, positioning the new company for long-term growth in the competitive energy marketplace.

The two companies completed their merger January 28, creating the nation's largest fully integrated natural gas and electric power company. The new company has adopted the operating name Dominion, with the trading symbol remaining D on the New York Stock Exchange.

Under the new structure, Dominion will operate as three business units:

• Electricity generation;
• Gas and electric delivery; and
• Oil and gas exploration and production.

Support services will be provided to each business unit by a centralized services company.

Thos. E. Capps, president and chief executive officer, said:

"The new structure effectively aligns our many strengths as a merged company and positions us to build on our leadership role as the nation's premier energy provider. With this new organization in place, we have an exceptionally strong foundation for growth in the most energy-intensive region of the country.

"This organization will help us boost our stature as a major competitor at each point in the energy delivery chain, from wellhead production to lighting and heating homes. And our strategy to cross sell electricity and natural gas and provide energy products to all customer classes will be carried out in a coordinated, efficient and cost-effective manner that enhances customer service."

Capps said the company also has begun a major initiative to consolidate systems, eliminate overlap, adopt best business practices, and reduce the size of the workforce to streamline the merged company's operations. The initiative will help Dominion focus resources on programs and services critical to the company and its customers.

"The merger gives us a good opportunity to take a comprehensive look at our whole company," Capps said. "Our integration teams have already done an excellent job of identifying improved efficiencies and cost controls. But this review will go much farther. We want to make sure we're doing everything we need to do both to enhance our financial strength and help us maintain and improve customer service."

Dominion serves 4 million retail natural gas and electric customers in five states. The company has an energy portfolio of almost 20,000 megawatts of electric generation, 6,000 miles of electric transmission lines, 7,600 miles of natural gas pipelines, and 2.8 trillion cubic feet equivalent of oil and natural gas reserves.

The company will focus on serving the rapidly deregulating and energy-intensive regions of the Northeast and Midwest, areas with a potential market of 50 million customers and the nation's highest energy costs.

The generation business unit will be located in Richmond. Thomas F. Farrell II will be chief executive officer. James P. O'Hanlon will be president and chief operating officer, and will be the company's chief nuclear officer. Both Farrell and O'Hanlon held similar positions prior to the merger.

The unit, which will operate as Dominion Energy, will manage Dominion's existing portfolio of 85 regulated and unregulated generating units and supervise the acquisition and construction of new generating facilities. It also will manage the wholesale sales of electricity and gas and oversee the company's gas pipeline and storage operations, which will be headquartered in Clarksburg, W.Va.

The delivery business unit will manage and direct all local electric and gas distribution systems, as well as customer service and electric transmission. Operations under the business unit include Virginia Power, North Carolina Power, Peoples Natural Gas, Hope Gas, East Ohio Gas and Virginia Natural Gas (VNG). VNG will be part of the business unit until it is either sold or spun off under the terms of a 1999 agreement with the Virginia State Corporation Commission. VPS Communications, Dominion's telecommunications subsidiary, also will be part of the delivery business unit.

Edgar M. Roach Jr. will serve as chief executive officer of the business unit, which will be called Dominion Delivery. He will be based in Pittsburgh but spend significant amounts of time in other delivery business unit locations in Pennsylvania, Ohio, West Virginia, Virginia and North Carolina. Robert E. Rigsby will serve as president and chief operating officer of the delivery business unit. Rigsby will be based in Richmond but will also spend significant amounts of time in other delivery business unit locations. Roach will continue to serve as chief executive officer of Dominion's Virginia Power subsidiary and Rigsby as president and chief operating officer of Virginia Power.

The exploration and production business unit, which will operate as Dominion Exploration & Production, will be located in Houston and New Orleans. It will manage Dominion's onshore and offshore oil and gas exploration and production activities. The unit's chief executive officer will be H. Patrick Riley, who previously was president of Consolidated's CNG Producing Co.

Capps said: "While the supply of energy will be increasingly competitive, the distribution function is likely to remain highly regulated for years to come. The structure announced today will position us for new opportunities, but it also will help us continue the outstanding management of our delivery systems. This is a critical element of our business, and the new structure gives us the focus and flexibility to maintain and enhance our longstanding commitment to superior customer service."

Dominion also has formed a centralized services company, Dominion Resources Services Inc., to support the business units. James L. Trueheart will head the services company and direct its administrative services functions, including information technology, telecommunications, human resources, transactions processing, procurement, fleet management, employee travel services and facilities management.

Four other groups also are included in Dominion Resources Services, with their officers reporting directly to Dominion's Office of the Chief Executive. These include:

• The financial group, headed by Thomas N. Chewning;
• The external affairs and corporate communications group, headed by Eva S. Teig;
• The legal group, headed by James L. Sanderlin; and
• The retail group, headed by Philip E. Riley.

The retail unit will be headquartered in Pittsburgh and be responsible for developing marketing strategy for retail customers throughout Dominion's multi-state region.

A major focus of the effort to streamline operations and boost efficiency is enhancing customer service. The initiative will identify opportunities to assist customers and streamline the company by increasing the use of technology and consolidating various business functions across all Dominion subsidiaries.

Virginia Power's ongoing $100 million initiative to improve customer service through technological and distribution system upgrades will not be affected by any cost-reduction initiatives. For example, Virginia Power is hiring an additional 140 workers to assist in the maintenance and repair of the electric distribution system. Dominion also is committed to a recruitment program that will help the company keep pace with the changing skills required by a competitive environment. The program will add about 50 recent college graduates to Dominion's workforce this year.

The effort to improve efficiency and streamline operations will result in reductions in the company's 17,000-member workforce. The company will utilize attrition, voluntary early retirement, and voluntary and involuntary severance programs to accomplish the reductions.

Dominion will offer an early retirement program to salaried, nonunion personnel who meet age and service requirements. The program generally will add three years of age and three years of credited service to the calculation of an eligible employee's retirement benefits. To accept early retirement, employees must notify the company during the period from April 3 through May 17.

Dominion also has announced an expanded preference program to allow salaried, nonunion employees in designated departments to express a preference to leave the company voluntarily. The program will provide one month of severance pay for each year of service, up to a maximum of 12 months of severance pay, and other benefits to participating employees. Applications will be accepted from April 3 until June 30.

The company is not yet able to specify how many reductions will ultimately be carried out, when they will occur, or in which divisions, units and departments. Most reductions will be made among redundant staff and corporate support positions. The cuts will not adversely affect company operations, including critical customer service functions such as storm repair, distribution system maintenance and improvement, billing and new connections.

The company said reduced spending levels also will be achieved in part by standardizing procedures and eliminating duplicate functions. For example, Dominion has already achieved significant savings through consolidated procurement practices.

The company also is conducting a comprehensive analysis of its business processes and expenses. Those reviews will focus on improving operating efficiencies as competition in all energy markets intensifies.

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This press release contains forward-looking statements. The company wishes to caution readers that the assumptions which form the basis for forward-looking statements with respect to or that may impact earnings for fiscal 2000, or thereafter, include many factors that are beyond the company's ability to control or estimate precisely, such as estimates of future market conditions and the behavior of other market participants. Other factors include, but are not limited to, weather conditions, economic conditions in the company's service territories, fluctuations in energy-related commodity prices, conversion activity, other marketing efforts and other uncertainties.

CONTACTS:
Media: Mark Lazenby; 804-819-2042
Analysts: Tom Wohlfarth; 804-819-2150