Gas News Release

September 26, 2001

Dominion East Ohio Sales Customers To See 25-Percent Gas Cost Decrease From Year-Ago Levels

CLEVELAND, OH - Dominion East Ohio sales customers will pay 25 percent less for natural gas in November and December of this year, and in January 2002, than they paid during the same period a year ago, under a gas cost recovery (GCR) decrease filed today with the Public Utilities Commission of Ohio (PUCO). Beginning October 26, Dominion East Ohio sales customers will pay $5.38 per thousand cubic feet (MCF), down 12.8 percent from the current $6.17 per MCF and down 25 percent from the $7.18 per MCF they paid during the same quarter last year.

Company officials note that the GCR reduction reflects a significant decline in national natural gas market prices since the first quarter of this year. Including today’s filing, Dominion East Ohio has reduced its GCR by 38.1 percent since prices peaked at the historically high level of $8.70 per MCF in February 2001. Nationally, an increase in drilling for new gas supplies, coupled with an economic slowdown, has resulted in sharply lower national market prices.

The gas cost reduction will affect 640,000 Dominion East Ohio customers, who buy natural gas from the company at rates regulated by the PUCO.

The GCR represents Dominion East Ohio’s actual cost of securing natural gas supplies for sales customers. Under state law, Dominion East Ohio does not make a profit on the GCR, which accounts for more than two-thirds of a customer’s bill. State law does allow the company to recover its gas costs on a dollar-for-dollar basis through the GCR mechanism. The company adjusts its GCR quarterly, passing along gas costs decreases or increases, depending on national market prices and other factors. Dominion East Ohio can earn a profit only on the delivery, or transportation, of natural gas to customers’ homes and businesses.

“Dominion East Ohio is pleased to pass along the benefits of lower natural gas prices to its sales customers,” said Edgar M. Roach Jr., Dominion East Ohio chief executive officer. “We are also gratified that customers continue to receive tremendous benefits from our Energy Choice program. Our customers have saved $87 million since the program expanded last year, and many have locked in favorable long-term prices that will provide much needed stability during a time when natural gas prices continue to be quite volatile.

“Dominion East Ohio urges its customers to make informed decisions regarding their choice of gas suppliers under Energy Choice and to comply with the terms and conditions of the natural gas contracts into which they enter,” Roach said.

About 550,000 Dominion East Ohio customers, or 46 percent of the company’s 1.2 million customers, buy gas from competitive suppliers at market-based rates through the Energy Choice program.

Energy Choice customers, regardless of supplier, would see the Unrecovered Gas Cost portion of the Dominion East Ohio transportation charge fall from 47.5 cents per MCF to 27.5 cents per MCF. The Unrecovered Gas Cost portion of the transportation charge reimburses Dominion East Ohio for costs incurred in buying gas for customers before they joined the Energy Choice program. This Unrecovered Gas Cost portion fluctuates quarterly with the GCR and only applies to Energy Choice customers for the first 12 months they are enrolled in the program.

Cleveland-based Dominion East Ohio is the largest natural gas distribution subsidiary of Dominion, headquartered in Richmond, Va. Dominion is one of the nation’s largest producers of energy, with a production capability of 2.7 trillion British Thermal Units (BTUs) of energy per day. The company has a power generation portfolio of more than 21,000 megawatts, which is expected to grow to approximately 28,000 megawatts by 2005.

Dominion is also one of the largest independent oil and natural gas exploration and production companies in North America, with 2.8 trillion cubic feet equivalent of natural gas reserves, with an annual production capability of over 300 billion cubic feet equivalent of natural gas. The company has 7,600 miles of interstate natural gas pipeline with a delivery capability of 6.3 billion cubic feet per day.

In addition, the company operates the nation’s largest underground natural gas storage system, with more than 950 billion cubic feet of storage capacity. Dominion also serves 3.8 million retail natural gas and electric customers, and owns a managing equity interest in Dominion Fiber Ventures LLC, owner of Dominion Telecom. Dominion Telecom is expanding its fiber-optic network from its current 35,000 fiber miles (3,600 route miles) to more than 800,000 planned fiber miles (9,000 route miles). For more information about Dominion, visit the company's website at www.dom.com.