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December 19, 2005
Dominion Comments On S&P Downgrade To
BBB Rating
- Company will not issue equity in response
RICHMOND, Va. – Dominion (NYSE: D) today issued the
following statement by President and Chief Operating Officer Tom Farrell, following
a decision by Standard & Poor’s (S&P) to revise Dominion’s
investment grade rating from BBB+ negative outlook to BBB stable outlook.
"Clearly we are disappointed in the action taken by S&P.
While we have experienced temporary negative effects of hurricanes and rising
commodity prices on our financial position, the successful execution of our
business plan, including the 2007 reset of the Virginia fuel factor, is expected
to deliver cash flow growth resulting in continued strengthening of our credit
metrics. We remain committed to protecting the investments of our debt-holders
while continuing to grow shareholder value.
"Dominion will not issue additional equity to address
concerns cited in the S&P report. We feel that the business risk profile
assigned by S&P to Dominion overstates the true underlying risks inherent
in the Company. We believe that recognition of the true risk profile, combined
with the equity issuance already planned for May 2006 through the conversion
of equity-linked debt securities, along with the improved results expected in
2007 and beyond, will reflect credit metrics consistent with a high BBB rating."
Dominion estimates the impact of this action on annual financing
costs to be approximately one-cent per share.
Dominion is one of the nation's largest producers of energy,
with a portfolio of about 28,100 megawatts of generation, about 6 trillion cubic
feet equivalent of proved natural gas reserves and 7,900 miles of natural gas
transmission pipeline. Dominion also operates the nation's largest underground
natural gas storage system with more than 965 billion cubic feet of storage
capacity and serves retail energy customers in nine states. For more information
about Dominion, visit the company's Web site at www.dom.com.
This release contains forward-looking statements that
are subject to various risks and uncertainties. Factors that could cause actual
results to differ materially from management's projections, forecasts, estimates
and expectations may include factors that are beyond the company's ability to
control or estimate precisely, such as the timing of the closing dates of acquisitions,
realization of and timing of the receipt of expected business interruption insurance
proceeds, estimates of future market conditions, estimates of proved and unproved
reserves, the company’s ability to meet its production forecasts, the
behavior of other market participants, and the effects of hurricanes on our
operations, oil and gas production and commodity prices. Other factors include,
but are not limited to, weather conditions, governmental regulations, economic
conditions in the company's service area, fluctuations in energy-related commodity
prices, including changes in the cost of fuel for our regulated electric business,
risks of operating businesses in regulated industries that are subject to changing
regulatory structures, changes to regulated gas and electric rates recoverable
by Dominion, the transfer of control over electric transmission facilities to
a regional transmission organization, changes to rating agency requirements
and ratings, changing financial accounting standards, trading counter-party
credit risks, risks related to energy trading and marketing, and other uncertainties.
Other risk factors are detailed from time to time in Dominion’s most recent
quarterly report on Form 10-Q or annual report on Form 10-K filed with the Securities
& Exchange Commission.
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