May 4, 2005

RICHMOND, Va. - Dominion (NYSE: D) announced today unaudited net income determined in accordance with Generally Accepted Accounting Principles (GAAP) for the three months ended March 31, 2005, of $429 million ($1.25 per share) compared to net income of $437 million ($1.34 per share) for the same period last year.

Operating earnings, which are defined as GAAP earnings adjusted for certain items, were $492 million ($1.44 per share) for the three months ended March 31, 2005, compared to operating earnings of $448 million ($1.37 per share) for the same period in 2004.

Dominion uses operating earnings as the primary performance measurement of its earnings outlook and results for public communications with analysts and investors. Dominion also uses operating earnings internally for budgeting, reporting to the board of directors and for the company’s annual incentive plan. Dominion management believes operating earnings provide a more meaningful representation of the company’s fundamental earnings power.

Business segment results and detailed descriptions of items included in 2005 and 2004 GAAP earnings but excluded from operating earnings can be found on Schedules 1, 2 and 3 of this release.

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

“The first quarter was the latest witness to the strength in diversity of our assets. We were able to absorb the impact of some production delays with improved performance in other areas. We are pleased to have delivered operating earnings in the upper end of our guidance and reaffirm full-year operating earnings guidance of $5.00 to $5.10 per share as we continue our focus on delivering on 2005 expectations one quarter at a time.”

In providing operating earnings guidance, Dominion management is not aware of differences between expected 2005 operating earnings and GAAP earnings beyond those recorded in the first quarter. The corresponding GAAP equivalent for 2005 earnings per share guidance is $4.81 to $4.91 per share.

 
First-quarter 2005 operating earnings compared to guidance

Dominion’s operating earnings of $1.44 per share came in near the top of the company’s operating earnings guidance range of $1.35 to $1.45 per share. Key drivers were the earlier-than-planned closing on the Dominion New England asset acquisition; the positive effect of establishing regulatory assets in connection with the North Carolina rate case settlement; higher contributions from the company’s Producer Services business; higher-than-expected sales in our franchise service areas due to cooler-than-normal weather, and the benefit of higher-than-forecasted oil prices at Dominion Exploration & Production (E&P). These positive effects were partially offset by production delays in the Gulf of Mexico and the resulting impact from the discontinuance of hedge accounting on the delayed volumes; higher-than-planned unrecoverable fuel expenses at Dominion Virginia Power; and the write-off of certain start-up and integration costs associated with joining the PJM regional transmission organization.

Complete details of first-quarter 2005 results compared to company guidance can be found on Schedule 4 of this release.
 

First-quarter 2005 operating earnings compared to 2004

First-quarter 2005 operating earnings of $1.44 per share compares to $1.37 per share in the first quarter of 2004. The increase is primarily attributable to the acquisition of Dominion New England; higher natural gas and oil prices at E&P; higher contributions from the company’s Producer Services business as well as Dominion Retail; the favorable impact of the North Carolina rate case settlement; and lower purchased-power capacity expenses. These positives were partially offset by higher expenses at E&P, primarily due to the discontinuance of hedge accounting for certain oil hedges, including subsequent changes in fair value of those hedges; and an increase in unrecoverable fuel expenses at Dominion Virginia Power.

Complete details of first-quarter 2005 operating earnings compared to 2004 can be found on Schedule 5 of this release.
 

Second-quarter 2005 operating earnings guidance

Dominion expects second-quarter 2005 operating earnings in the range of 73 cents to 85 cents per share. This compares to 81 cents per share in the second quarter of 2004. Drivers that compare favorably to 2004 include contributions from Dominion New England; higher commodity prices at E&P; higher margins from the company’s Producer Services business; customer growth; and the effect of the second-quarter 2004 write-off of Virginia fuel expenses incurred in the first quarter of 2004 that had been deferred. Expected offsets include a return to normal weather; the effects of favorable second-quarter 2004 items at E&P not expected to recur in the second quarter of 2005, such as gains on oil options and a positive tax adjustment; higher expenses at E&P; and the effect of an unplanned outage at the Millstone power station.

In providing second-quarter 2005 operating earnings guidance, Dominion management is not aware of differences between operating earnings and GAAP earnings. Therefore the corresponding GAAP equivalent for second-quarter 2005 earnings per share guidance also is 73 cents to 85 cents per share.

Complete details of Dominion’s second-quarter 2005 guidance can be found on the company’s Web site at www.dom.com/investors/.
 

May 4 earnings conference call

Dominion will host a conference call at 10:00 a.m. EDT today, when management will discuss details of first-quarter 2005 earnings, preliminary earnings estimates for 2006 through 2008, and other issues of interest to the financial community. Members of the media also are invited to listen.

Domestic callers who wish to participate in the conference call should dial 888-243-3836. International callers should dial 973-935-2096. Participants should dial in 10 to 15 minutes prior to the scheduled start time.

A live Web cast of the conference call will be available on the company’s Web site at www.dom.com/investors/.

A replay of the conference call will be available from approximately 1 p.m. EDT, May 4, until 11 p.m. EDT, May 11. Domestic investors may access the recording by dialing 877-519-4471. International callers should dial 973-341-3080 to access the recording. The PIN for the conference call replay is 5958467. Additionally, a replay of the Web cast will be available on the company’s investor information page by the end of the day May 4.

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 including our expectations for 2005 earnings and for future growth that are subject to various risks and uncertainties. Discussion of 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 receipt of approvals for and timing of the closing dates of pending acquisitions, realization of expected business interruption insurance proceeds, estimates of future market conditions, estimates of proved and unproved reserves and the behavior of other market participants. 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 including future recovery of fuel costs, 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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• Financial schedules that accompany the news release (PDF document, requires the free Adobe Acrobat Reader)