DOMINION RESOURCES INC /VA/ (Form: 10-Q, Received: 10/30/2008 16:02:50)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark one)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2008

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-08489

LOGO

DOMINION RESOURCES, INC.

(Exact name of registrant as specified in its charter)

VIRGINIA

54-1229715

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

120 TREDEGAR STREET

RICHMOND, VIRGINIA

23219

(Address of principal executive offices)

(Zip Code)

(804) 819-2000

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer x	Accelerated filer ¨	Non-accelerated filer ¨	Smaller reporting company ¨
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ¨ No x

At September 30, 2008, the latest practicable date for determination, 581,341,316 shares of common stock, without par value, of the registrant were outstanding.

DOMINION RESOURCES, INC.

INDEX


		Page Number
	Glossary of Terms	3

	PART I. Financial Information

Item 1.	Consolidated Financial Statements

	Consolidated Statements of Income – Three and Nine Months Ended September 30, 2008 and 2007	5

	Consolidated Balance Sheets – September 30, 2008 and December 31, 2007	6

	Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2008 and 2007	8

	Notes to Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	33

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52

Item 4.	Controls and Procedures	53

	PART II. Other Information

Item 1.	Legal Proceedings	54

Item 1A.	Risk Factors	54

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

Item 6.	Exhibits	55

PAGE 2

GLOSSARY OF TERMS

The following abbreviations or acronyms used in this Form 10-Q are defined below:


Abbreviation or Acronym		Definition
AOCI		Accumulated other comprehensive income (loss)
BBIFNA		A subsidiary of Babcock & Brown Infrastructure Fund North America
bcf		Billion cubic feet
bcfe		Billion cubic feet equivalent
CDO		Collateralized debt obligation
CEO		Chief Executive Officer
CFO		Chief Financial Officer
Dallastown		Dallastown Realty
DCI		Dominion Capital, Inc.
DD&A		Depreciation, depletion and amortization expense
DEI		Dominion Energy, Inc.
DEPI		Dominion Exploration & Production, Inc.
DOE		Department of Energy
Dominion Direct ^®		A dividend reinvestment and open enrollment direct stock purchase plan
Dominion East Ohio		The East Ohio Gas Company
Dominion Retail		Dominion Retail, Inc.
Dresden		Partially-completed merchant generation facility sold in 2007
DTI		Dominion Transmission, Inc.
DVP		Dominion Virginia Power operating segment
E&P		Exploration & production
EITF		Emerging Issues Task Force
EPA		Environmental Protection Agency
EPS		Earnings per share
Equitable		Equitable Resources, Inc.
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
FIN		FASB Interpretation No.
FSP		FASB Staff Position
FTRs		Financial transmission rights
GAAP		U.S. generally accepted accounting principles
Gichner		Gichner, LLC
Hope		Hope Gas, Inc.
kWh		Kilowatt-hour
LNG		Liquefied natural gas
mcf		Thousand cubic feet
mcfe		Thousand cubic feet equivalent
MD&A		Management’s Discussion and Analysis of Financial Condition and Results of Operations
Moody’s		Moody’s Investors Services
Mw		Megawatt
mwhrs		Megawatt hours
North Anna		North Anna power station
NRC		Nuclear Regulatory Commission
ODEC		Old Dominion Electric Cooperative
Ohio Commission		Public Utilities Commission of Ohio
Peaker facilities		Collectively, the three natural gas-fired merchant generation peaking facilities sold in March 2007
Pennsylvania Commission		Pennsylvania Public Utility Commission
Peoples		The Peoples Natural Gas Company
PJM		PJM Interconnection, LLC
RTO		Regional transmission organization
SEC		Securities and Exchange Commission
SFAS		Statement of Financial Accounting Standards

PAGE 3


Abbreviation or Acronym		Definition
State Line		State Line power station
U.S.		United States of America
VIEs		Variable interest entities
Virginia Commission		Virginia State Corporation Commission
Virginia Power		Virginia Electric and Power Company
VPEM		Virginia Power Energy Marketing, Inc.
VPP		Volumetric production payment
West Virginia Commission		Public Service Commission of West Virginia

PAGE 4

DOMINION RESOURCES, INC.

PART I. FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)


	Three Months Ended September 30,					Nine Months Ended September 30,
	2008		2007			2008			2007
(millions, except per share amounts)
Operating Revenue	$	4,231	$	3,589		$	12,072		$	11,980

Operating Expenses
Electric fuel and energy purchases		1,370		914			3,006			2,742
Purchased electric capacity		102		111			306			339
Purchased gas		593		346			2,469			2,024
Other energy-related commodity purchases		9		64			43			184
Other operations and maintenance		689		1,159			2,236			3,906
Gain on sale of U.S. non-Appalachian E&P business		42		(3,617	)		42			(3,602	)
Depreciation, depletion and amortization		259		284			770			1,116
Other taxes		112		113			375			436

Total operating expenses		3,176		(626	)		9,247			7,145

Income from operations		1,055		4,215			2,825			4,835

Other income		14		33			10			125
Interest and related charges:
Interest expense		195		403			566			862
Interest expense – junior subordinated notes payable ⁽¹⁾		18		30			68			100
Subsidiary preferred dividends		4		4			12			12

Total interest and related charges		217		437			646			974

Income from continuing operations before income taxes, minority interest and extraordinary item		852		3,811			2,189			3,986
Income tax expense		344		1,498			701			1,576
Minority interest expense (income)		—		(7	)		—			7

Income from continuing operations before extraordinary item		508		2,320			1,488			2,403
Extraordinary item ⁽²⁾		—		—			—			(158	)
Loss from discontinued operations ⁽³⁾		—		(3	)		(2	)		(5	)

Net Income	$	508	$	2,317		$	1,486		$	2,240

Earnings Per Common Share - Basic
Income from continuing operations before extraordinary item	$	0.88	$	3.65		$	2.58		$	3.55
Extraordinary item		—		—			—			(0.23	)
Loss from discontinued operations		—		(0.01	)		—			(0.01	)

Net income	$	0.88	$	3.64		$	2.58		$	3.31

Earnings Per Common Share - Diluted
Income from continuing operations before extraordinary item	$	0.87	$	3.63		$	2.56		$	3.53
Extraordinary item		—		—			—			(0.23	)
Loss from discontinued operations		—		(0.01	)		—			(0.01	)

Net income	$	0.87	$	3.62		$	2.56		$	3.29

Dividends paid per common share	$	0.395	$	0.355		$	1.185		$	1.065

(1)	Includes affiliated interest expense of $5 million and $17 million for the three months ended September 30, 2008 and 2007, respectively, and $28 million and $61 million for the nine months ended September 30, 2008 and 2007, respectively.

(2)	Reflects a $259 million ($158 million after-tax) extraordinary charge in connection with the reapplication of SFAS No. 71, Accounting for the Effects of Certain Types of Regulation , to the Virginia jurisdiction of our generation operations.

(3)

Net of income tax benefit of $3 million for the nine months ended September 30, 2008. Includes income tax expense of $3 million and $116 million for the three and nine months ended September 30, 2007, respectively. For the nine months ended September 30, 2007, the expense includes $76 million and $56 million for U.S. federal and Canadian taxes, respectively, related to the gain on the sale of our Canadian E&P operations.

The accompanying notes are an integral part of our Consolidated Financial Statements.

PAGE 5

DOMINION RESOURCES, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2008			December 31, 2007 ⁽¹⁾
(millions)
ASSETS
Current Assets
Cash and cash equivalents	$	88		$	283
Customer receivables (less allowance for doubtful accounts of $29 and $37)		2,085			2,130
Other receivables (less allowance for doubtful accounts of $7 and $10)		149			226
Inventories		1,231			1,045
Derivative assets		1,301			775
Assets held for sale		1,388			1,160
Other		1,091			1,051

Total current assets		7,333			6,670

Investments
Nuclear decommissioning trust funds		2,539			2,888
Other		943			992

Total investments		3,482			3,880

Property, Plant and Equipment
Property, plant and equipment		34,744			33,331
Accumulated depreciation, depletion and amortization		(12,148	)		(11,979	)

Total property, plant and equipment, net		22,596			21,352

Deferred Charges and Other Assets
Goodwill		3,503			3,496
Pension and other postretirement benefit assets		1,514			1,565
Regulatory assets		1,578			957
Other		1,373			1,219

Total deferred charges and other assets		7,968			7,237

Total assets	$	41,379		$	39,139

(1)

Our Consolidated Balance Sheet at December 31, 2007 has been derived from the audited Consolidated Financial Statements at that date and includes the impact of adopting FSP FIN 39-1, Amendment of FASB Interpretation No. 39, Offsetting of Amounts Related to Certain Contracts , as discussed in Note 3.

The accompanying notes are an integral part of our Consolidated Financial Statements.

PAGE 6

DOMINION RESOURCES, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2008		December 31, 2007 ⁽¹⁾
(millions)
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Securities due within one year	$	754	$	1,477
Short-term debt		2,451		1,757
Accounts payable		1,507		1,734
Accrued interest, payroll and taxes		702		934
Derivative liabilities		1,275		694
Liabilities held for sale		617		492
Other		665		672

Total current liabilities		7,971		7,760

Long-Term Debt
Long-term debt		13,051		11,759
Junior subordinated notes payable:
Affiliates		268		678
Other		798		798

Total long-term debt		14,117		13,235

Deferred Credits and Other Liabilities
Deferred income taxes and investment tax credits		4,490		4,253
Asset retirement obligations		1,783		1,722
Regulatory liabilities		1,106		1,223
Other		1,190		1,255

Total deferred credits and other liabilities		8,569		8,453

Total liabilities		30,657		29,448

Commitments and Contingencies (see Note 17)

Minority Interest		—		28

Subsidiary Preferred Stock Not Subject to Mandatory Redemption		257		257

Common Shareholders’ Equity
Common stock - no par ⁽²⁾		5,922		5,733
Other paid-in capital		187		175
Retained earnings		4,307		3,510
Accumulated other comprehensive income (loss)		49		(12	)

Total common shareholders’ equity		10,465		9,406

Total liabilities and shareholders’ equity	$	41,379	$	39,139

(1)	Our Consolidated Balance Sheet at December 31, 2007 has been derived from the audited Consolidated Financial Statements at that date and includes the impact of adopting FSP FIN 39-1, as discussed in Note 3.

(2)	1 billion shares authorized; 581 million shares outstanding at September 30, 2008 and 577 million shares outstanding at December 31, 2007.

The accompanying notes are an integral part of our Consolidated Financial Statements.

PAGE 7

DOMINION RESOURCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


Nine Months Ended September 30,	2008			2007
(millions)
Operating Activities
Net income	$	1,486		$	2,240
Adjustments to reconcile net income to net cash provided by operating activities:
Dominion Capital, Inc. (DCI) impairment losses		62			86
Dresden impairment loss		—			387
Costs associated with early retirement of debt		—			242
Gain on sale of non-Appalachian E&P business		42			(3,796	)
Extraordinary item, net of income taxes		—			158
Charges related to termination of volumetric production payment (VPP) agreements		—			139
Net realized and unrealized derivative losses		177			373
Depreciation, depletion and amortization		888			1,244
Deferred income taxes and investment tax credits, net		351			(1,670	)
Changes in:
Accounts receivable		187			766
Inventories		(244	)		(15	)
Prepayments		(22	)		129
Deferred fuel and purchased gas costs, net		(636	)		(164	)
Accounts payable		(289	)		(631	)
Accrued interest, payroll and taxes		(232	)		2,880
Margin deposit assets and liabilities		(249	)		(79	)
Other operating assets and liabilities		(106	)		(6	)

Net cash provided by operating activities		1,415			2,283

Investing Activities
Plant construction and other property additions		(2,307	)		(1,449	)
Additions to gas and oil properties, including acquisitions		(166	)		(1,788	)
Proceeds from assignment of natural gas drilling rights		343			—
Proceeds from sale of merchant generation peaking facilities		—			339
Proceeds from sale of non-Appalachian E&P business		(21	)		13,706
Proceeds from sales of securities and loan receivable collections and payoffs		1,058			968
Purchases of securities and loan receivable originations		(1,035	)		(1,030	)
Investments in affiliates		(337	)		(70	)
Other		144			138

Net cash provided by (used in) investing activities		(2,321	)		10,814

Financing Activities
Issuance (repayment) of short-term debt, net		695			(2,332	)
Issuance of long-term debt		1,830			1,235
Repayment of long-term debt, including redemption premiums		(889	)		(4,984	)
Repayment of affiliated notes payable		(412	)		(440	)
Issuance of common stock		178			193
Repurchase of common stock		—			(5,763	)
Common dividend payments		(686	)		(704	)
Other		(7	)		27

Net cash provided by (used in) financing activities		709			(12,768	)

Increase (decrease) in cash and cash equivalents		(197	)		329
Cash and cash equivalents at beginning of period ⁽¹⁾		287			142

Cash and cash equivalents at end of period ⁽²⁾	$	90		$	471

Significant Noncash Investing and Financing Activities:
Accrued capital expenditures	$	60		$	56
Proceeds held in escrow from sale of Canadian E&P operations		—			156

(1)	2008 and 2007 amounts include $4 million of cash classified as held for sale in our Consolidated Balance Sheets.

(2)	2008 and 2007 amounts include $2 million of cash classified as held for sale in our Consolidated Balance Sheets.

The accompanying notes are an integral part of our Consolidated Financial Statements.

PAGE 8

DOMINION RESOURCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Nature of Operations

Dominion Resources, Inc., headquartered in Richmond, Virginia, is one of the nation’s largest producers and transporters of energy. Our principal subsidiaries are Virginia Power, Dominion Energy, Inc. (DEI), Dominion Transmission, Inc. (DTI), Virginia Power Energy Marketing, Inc. (VPEM), Dominion Exploration & Production, Inc. (DEPI), Dominion East Ohio and Dominion Retail, Inc. (Dominion Retail).

Virginia Power is a regulated public utility that generates, transmits and distributes electricity for sale in Virginia and northeastern North Carolina. As of September 30, 2008, Virginia Power served approximately 2.4 million retail customer accounts, including governmental agencies, as well as wholesale customers such as rural electric cooperatives and municipalities. Virginia Power is a member of PJM, a regional transmission organization (RTO), and its electric transmission facilities are integrated into the PJM wholesale electricity markets.

DEI engages in merchant generation, energy marketing and price risk management activities and natural gas exploration and production in the Appalachian basin of the U.S.

DTI operates a regulated interstate natural gas transmission pipeline and underground storage system in the Northeast, mid-Atlantic and Midwest states and is engaged in the production, gathering and extraction of natural gas in the Appalachian basin.

VPEM provides fuel, gas supply management, and price risk management services to other Dominion affiliates and engages in energy trading and marketing activities.

DEPI explores for, develops and produces natural gas liquids and oil in the Appalachian basin.

Dominion Retail markets gas, electricity and related products and services to residential and small commercial customers. As of September 30, 2008, our nonregulated retail energy marketing operations served approximately 1.7 million residential and small commercial customer accounts in the Northeast, mid-Atlantic and Midwest regions of the U.S and Texas.

As of September 30, 2008, our regulated gas distribution subsidiaries, Dominion East Ohio, Peoples and Hope, served approximately 1.7 million residential, commercial and industrial gas sales and transportation customer accounts in Ohio, Pennsylvania and West Virginia. Approximately 500,000 of these customers are served by Peoples and Hope, which are classified as held for sale, as discussed in Note 5. We also operate a liquefied natural gas (LNG) import and storage facility in Maryland. Our producer services operations involve the aggregation of natural gas supply and related marketing activities.

We manage our daily operations through three primary operating segments: Dominion Virginia Power (DVP), Dominion Energy and Dominion Generation. In addition, we also report a Corporate and Other segment that includes our service company functions, as well as the net impact of certain operations disposed of or to be disposed of, as discussed in Note 5. Our assets remain wholly owned by us and our legal subsidiaries.

The terms “Dominion,” “Company,” “we,” “our” and “us” are used throughout this report and, depending on the context of their use, may represent any of the following: the legal entity, Dominion Resources, Inc., one or more of Dominion Resources, Inc.’s consolidated subsidiaries or operating segments, or the entirety of Dominion Resources, Inc. and its consolidated subsidiaries.

Note 2. Significant Accounting Policies

As permitted by the rules and regulations of the SEC, our accompanying unaudited Consolidated Financial Statements contain certain condensed financial information and exclude certain footnote disclosures normally included in annual audited consolidated financial statements prepared in accordance with GAAP. These unaudited Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements and Notes in our Annual Report on Form 10-K for the year ended December 31, 2007 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008.

PAGE 9

In our opinion, the accompanying unaudited Consolidated Financial Statements contain all adjustments, including normal recurring accruals, necessary to present fairly our financial position as of September 30, 2008, our results of operations for the three and nine months ended September 30, 2008 and 2007 and our cash flows for the nine months ended September 30, 2008 and 2007.

We make certain estimates and assumptions in preparing our Consolidated Financial Statements in accordance with GAAP. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses for the periods presented. Actual results may differ from those estimates.

Our accompanying unaudited Consolidated Financial Statements include, after eliminating intercompany transactions and balances, our accounts and those of our majority-owned subsidiaries.

In accordance with GAAP, we report certain contracts and instruments at fair value. See Note 11 for further information on fair value measurements in accordance with SFAS No. 157, Fair Value Measurements .

The results of operations for interim periods are not necessarily indicative of the results expected for the full year. Information for quarterly periods is affected by seasonal variations in sales, rate changes, electric fuel and energy purchases, purchased gas expenses and other factors.

Certain amounts in our 2007 Consolidated Financial Statements and Notes have been recast to conform to the 2008 presentation. See Note 3 for discussion of certain 2007 amounts that have been recast due to the adoption of FSP FIN 39-1, Amendment of FASB Interpretation No. 39, Offsetting of Amounts Related to Certain Contracts .

The reapplication of SFAS No. 71 to the Virginia jurisdiction of our utility generation operations in April 2007 resulted in a $259 million ($158 million after-tax) extraordinary charge and the reclassification of $195 million ($119 million after-tax) of unrealized gains from AOCI, related to nuclear decommissioning trust funds. This established a $454 million long-term regulatory liability for amounts previously collected from Virginia jurisdictional customers and placed in external trusts (including income, losses and changes in fair value thereon) for the future decommissioning of our utility nuclear generation stations, in excess of amounts recorded pursuant to SFAS No. 143, Accounting for Asset Retirement Obligations .

Note 3. Newly Adopted Accounting Standards

SFAS No. 157

We adopted the provisions of SFAS No. 157, effective January 1, 2008. SFAS No. 157 defines fair value, establishes a framework for measuring fair value and expands disclosures related to fair value measurements. SFAS No. 157 applies broadly to financial and non-financial assets and liabilities that are measured at fair value under other authoritative accounting pronouncements, but does not expand the application of fair value accounting to any new circumstances.

Generally, the provisions of this statement are applied prospectively. Certain situations, however, require retrospective application as of the beginning of the year of adoption through the recognition of a cumulative effect of accounting change. Such retrospective application is required for financial instruments, including derivatives and certain hybrid instruments with limitations on initial gains or losses under EITF Issue No. 02-3, Issues Involved in Accounting for Derivative Contracts Held for Trading Purposes and Contracts Involved in Energy Trading and Risk Management Activities , and SFAS No. 155, Accounting for Certain Hybrid Financial Instruments . Retrospective application resulted in an immaterial amount recognized through a cumulative effect of accounting change adjustment to retained earnings as of January 1, 2008.

In February 2008, the FASB issued FSP FAS No. 157-1, Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13 , which excludes leasing transactions from the scope of SFAS No. 157. However, the exclusion does not apply to fair value measurements of assets and liabilities recorded as a result of a lease transaction but measured pursuant to other pronouncements within the scope of SFAS No. 157.

PAGE 10

In February 2008, the FASB issued FSP FAS No. 157-2, Effective Date of FASB Statement No. 157 , which delays the effective date of SFAS No. 157 by one year (to January 1, 2009) for non-financial assets and liabilities, except those that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). This delays the effective date of SFAS No. 157 primarily for goodwill, intangibles, property, plant and equipment and asset retirement obligations.

In October 2008, the FASB issued FSP FAS 157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active, which clarifies the application of SFAS No. 157 to financial assets in a market that is not active. This FSP was effective for the third quarter of 2008 and confirms that SFAS No. 157 allows for the use of unobservable inputs in determining the fair value of a financial asset when relevant observable inputs do not exist or when observable inputs require significant adjustment based on unobservable data. This may be the case, for example, in an inactive or distressed market. This FSP did not have an impact on our results of operations or financial condition.

See Note 11 for further information on fair value measurements in accordance with SFAS No. 157.

SFAS No. 159

The provisions of SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities , became effective for us beginning January 1, 2008. SFAS No. 159 provides an entity with the option, at specified election dates, to measure certain financial assets and liabilities and other items at fair value, with changes in fair value recognized in earnings as those changes occur. SFAS No. 159 also establishes presentation and disclosure requirements that include displaying the fair value of those assets and liabilities for which the entity elected the fair value option on the face of the balance sheet and providing management’s reasons for electing the fair value option for each eligible item. As of September 30, 2008, we had not elected the fair value option for any eligible items. Therefore, the provisions of SFAS No. 159 have not impacted our results of operations or financial condition.

FSP FIN 39-1

The provisions of FSP FIN 39-1 became effective for us beginning January 1, 2008. FSP FIN 39-1 amends FIN 39 to permit the offsetting of amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral against amounts recognized for derivative instruments executed with the same counterparty under the same master netting arrangement that have been offset. Upon our adoption of FSP FIN 39-1, we revised our accounting policy to no longer offset fair value amounts recognized for certain derivative instruments and recast our prior year Consolidated Balance Sheet in order to retrospectively apply the standard. The adoption of FSP FIN 39-1 resulted in an increase in Derivative assets of $14 million, Other deferred charges and other assets of $2 million, Derivative liabilities of $14 million and Other deferred credits and other liabilities of $2 million as of December 31, 2007. The adoption of FSP FIN 39-1 had no impact on our results of operations or cash flows.

EITF 06-4

The provisions of EITF Issue No. 06-4, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements , became effective for us beginning January 1, 2008. EITF 06-4 specifies that if an employer provides a benefit to an employee under an endorsement split-dollar life insurance arrangement that extends to postretirement periods, it should recognize a liability for future benefits in accordance with SFAS No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions (if, in substance, a postretirement benefit plan exists) or APB Opinion No. 12, Deferred Compensation Contracts (if the arrangement is, in substance, an individual deferred compensation contract) based on the substantive agreement with the employee. The adoption of EITF 06-4 resulted in an immaterial amount recognized through a cumulative effect of accounting change adjustment to retained earnings as of January 1, 2008.

EITF 06-11

The provisions of EITF Issue No. 06-11, Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards , became effective for us beginning January 1, 2008. EITF 06-11 addresses the recognition of income tax benefits realized from dividends or dividend equivalents that are charged to retained earnings and are paid to employees for nonvested share-based payment awards that are classified as equity. Effective January 1, 2008, we began recognizing such income tax benefits as an increase to additional paid-in capital rather than as a reduction to income tax expense. Our adoption of EITF 06-11 did not have a material impact on our results of operations or financial condition.

PAGE 11

Note 4. Recently Issued Accounting Standards

SFAS No. 141R

In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations . SFAS No. 141R requires an acquirer to recognize the assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree at their acquisition-date fair values. SFAS No. 141R also requires disclosure of information necessary for investors and other users to evaluate and understand the nature and financial effect of the business combination. Additionally, SFAS No. 141R requires that acquisition-related costs be expensed as incurred. The provisions of SFAS No. 141R will become effective for acquisitions completed on or after January 1, 2009; however, the income tax provisions of SFAS No. 141R will become effective as of that date for all acquisitions, regardless of the acquisition date. SFAS No. 141R amends SFAS No. 109, Accounting for Income Taxes , to require the acquirer to recognize changes in the amount of its deferred tax benefits recognizable due to a business combination either in income from continuing operations in the period of the combination or directly in contributed capital, depending on the circumstances. SFAS No. 141R further amends SFAS No. 109 and FIN 48, Accounting for Uncertainty in Income Taxes , to require, subsequent to a prescribed measurement period, changes to acquisition-date income tax uncertainties and acquiree deferred tax benefits to be reported in income from continuing operations or directly in contributed capital, depending on the circumstances. For acquisitions completed on or before September 30, 2008, we do not expect these SFAS No. 141R provisions to have a material impact on our future results of operations or financial condition.

SFAS No. 160

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements. SFAS No. 160 requires that noncontrolling (minority) interests be reported as a component of equity, net income attributable to the parent and to the non-controlling interest be separately identified in the income statement, changes in a parent’s ownership interest while the parent retains its controlling interest be accounted for as equity transactions, and any retained noncontrolling equity investment upon the deconsolidation of a subsidiary be initially measured at fair value. The provisions of SFAS No. 160 will become effective for us beginning January 1, 2009. We do not expect the provisions of SFAS No. 160 to have an impact on our results of operations or financial condition.

SFAS No. 161

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities . SFAS No. 161 requires enhancements to disclosures regarding derivative instruments and hedging activities accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities . The enhancements include additional disclosures regarding the reasons derivative instruments are used, how they are used, how these instruments and their related hedged items are accounted for under SFAS No. 133, as well as the impact of these derivative instruments on an entity’s results of operations, financial condition and cash flows. In addition, SFAS No. 161 requires the disclosure of the fair values of derivative instruments and associated gains and losses in a tabular format and information about derivative features that are credit-risk related. The provisions of SFAS No. 161 will become effective for us beginning January 1, 2009, and will have no impact on our results of operations or financial condition.

FSP EITF 03-6-1

In June 2008, the FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities . This FSP addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting and, therefore, need to be included in the earnings allocation in computing earnings per share under the two-class method as described in SFAS No. 128, Earnings per Share . Under the guidance in FSP EITF 03-6-1, unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method. The provisions of FSP EITF 03-6-1 will become effective for us beginning January 1, 2009 and are to be applied retrospectively. We do not expect FSP EITF 03-6-1 to have a material impact on our earnings per share.

FSP APB 14-1

In May 2008, the FASB issued FSP APB 14-1, Accounting for Convertible Debt Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash Settlement). FSP APB 14-1 clarifies that convertible debt instruments that may be settled in cash upon conversion (including partial cash settlement) are not addressed by paragraph 12 of Accounting Principles Board Opinion No. 14, Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants. The FSP specifies that issuers of convertible debt instruments should separately account for the liability and equity components in a manner that will reflect the entity’s nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. The provisions of FSP APB 14-1 will become effective for us beginning January 1, 2009 and will be applied retrospectively.

PAGE 12

We have determined that the provisions of FSP APB 14-1 will be applicable to $220 million of our 2.125% unsecured convertible senior notes due in 2023. We do not expect the adoption of FSP APB 14-1 to have a material impact on our results of operations or financial position and its adoption will have no impact on our consolidated cash flows.

EITF 07-5

In June 2008, the FASB ratified the consensus on EITF 07-5, Determining Whether an Instrument (or an Embedded Feature) Is Indexed to an Entity’s Own Stock . This issue addresses whether an instrument (or an embedded feature) is indexed to an entity’s own stock, which is the first part of the scope exception in paragraph 11(a) of SFAS No. 133, for purposes of determining whether the instrument should be classified as an equity instrument or accounted for as a derivative instrument. The provisions of EITF 07-5 will become effective for us beginning January 1, 2009 and will be applied retrospectively through a cumulative effect adjustment to retained earnings should we have outstanding instruments within its scope as of that date. We do not expect EITF 07-5 to have a material impact on our results of operations or financial condition.

Note 5. Dispositions

Sale of Non-Appalachian Natural Gas and Oil E&P Operations and Assets

In 2007, we completed the sale of our non-Appalachian natural gas and oil E&P operations and assets for approximately $13.9 billion. The results of operations for our U.S. non-Appalachian E&P operations were not reported as discontinued operations in our Consolidated Statements of Income since we did not sell our entire U.S. cost pool, which includes the retained Appalachian assets. Due to the sale of our entire Canadian cost pool, the results of operations for our Canadian E&P operations are reported as discontinued operations in our 2007 Consolidated Statement of Income. For the nine months ended September 30, 2007, our Canadian E&P operations reported $82 million of operating revenue and $149 million of income before income taxes, including a pre-tax gain of $194 million recognized on the sale.

Costs Associated with Disposal of Non-Appalachian E&P Operations

The sale of our U.S. non-Appalachian E&P operations resulted in the discontinuance of hedge accounting for certain cash flow hedges since it became probable that the forecasted sales of gas and oil would not occur. In connection with the discontinuance of hedge accounting for these contracts, we recognized charges, recorded in other operations and maintenance expense in our Consolidated Statement of Income, predominantly reflecting the reclassification of losses from AOCI to earnings and subsequent changes in fair value of these contracts of $544 million ($347 million after-tax) for the nine months ended September 30, 2007. We recognized a similar charge of $15 million ($9 million after-tax) for the nine months ended September 30, 2007 related to our Canadian operations, which is reflected in discontinued operations in our Consolidated Statement of Income.

During the nine months ended September 30, 2007, we also recorded a charge of approximately $171 million ($108 million after-tax) for the recognition of certain forward gas contracts that previously qualified for the normal purchase and sales exemption under SFAS No. 133. The $171 million charge includes $139 million associated with VPP agreements to which we were a party. We paid $250 million to terminate the VPP agreements and retained the repurchased fixed-term overriding royalty interests formerly associated with these agreements.

Additionally, we recognized expenses for employee severance, retention and other costs of $77 million ($48 million after-tax) for the nine months ended September 30, 2007, related to the sale of our U.S. non-Appalachian E&P business, which are reflected in other operations and maintenance expense in our Consolidated Statement of Income. We also recognized expenses for employee severance, retention, legal, investment banking and other costs of $30 million ($18 million after-tax) for the nine months ended September 30, 2007 related to the sale of our Canadian E&P operations, which are reflected in discontinued operations in our Consolidated Statement of Income.

In 2007, we recognized a gain of approximately $3.6 billion ($2.1 billion after-tax) from the disposition of our U.S. non-Appalachian E&P operations. This gain was net of expenses related to the disposition plan for transaction costs, including audit, legal, investment banking and other costs of $47 million ($29 million after-tax), but excludes severance and retention costs and costs associated with the discontinuance of hedge accounting and recognition of forward gas contracts. In 2008, post-closing adjustments resulted in a $42 million ($26 million after-tax) reduction to the gain recognized in 2007.

PAGE 13

For the nine months ended September 2007, we recognized charges of $242 million ($148 million after-tax) associated with the completion of a debt tender offer using a portion of the proceeds from the sale. Of this amount, $234 million ($143 million after-tax) was recorded in interest and related charges in our Consolidated Statements of Income.

The total impact on net income from the sale of our Canadian and U.S. non-Appalachian E&P operations for the three and nine months ended September 30, 2007, was a benefit of $1.9 billion and $1.5 billion, respectively. This benefit was net of expenses for transaction costs, severance and retention costs, costs associated with the discontinuance of hedge accounting and recognition of forward gas contracts, and costs associated with our debt tender offer completed in July 2007 using a portion of the proceeds received from the sale.

Disposition of Partially Completed Generation Facility

In September 2007, we completed the sale of the partially-completed Dresden Energy merchant generation facility (Dresden) to AEP Generating Company (AEP) for $85 million. During the second quarter 2007, we recorded a $387 million ($252 million after-tax) impairment charge in other operations and maintenance expense to reduce Dresden’s carrying amount to its estimated fair value based on AEP’s purchase price.

Sale of Merchant Generation Facilities

In March 2007, we sold the Peaker facilities for net cash proceeds of $254 million. The results of operations of the Peaker facilities are reported as discontinued operations in our 2007 Consolidated Statement of Income. For the nine months ended September 30, 2007, the Peaker facilities recorded $5 million of operating revenue and a $31 million loss before income taxes. The loss before income taxes included a pre-tax loss of $25 million recognized on the sale.

Sale of Certain DCI Operations

In August 2007, we completed the sale of Gichner, LLC (Gichner), all of the issued and outstanding shares of the capital stock of Gichner, Inc. (an affiliate of Gichner) and Dallastown Realty (Dallastown) for approximately $30 million. The results of operations of Gichner and Dallastown are reported as discontinued operations in our Consolidated Statements of Income. For the three and nine months ended September 30, 2007, Gichner and Dallastown recorded $7 million and $29 million of operating revenue and $1 million and $7 million of losses before income taxes, respectively. The sale resulted in an after-tax loss of $4 million.

In April 2008, we sold our remaining interest in the subordinated notes of a third-party collateralized debt obligation (CDO) entity held as an investment by DCI and received proceeds of $54 million, including accrued interest. In connection with the sale of the subordinated notes, we recognized impairment losses of $62 million ($38 million after-tax) for the nine months ended September 30, 2008. As discussed in Note 14, we deconsolidated the CDO entity as of March 31, 2008.

Planned Sale of Regulated Gas Distribution Subsidiaries

In March 2006, we entered into an agreement with Equitable for the sale of Peoples and Hope. In January 2008, Dominion and Equitable announced the termination of that agreement, primarily due to the continued delays in achieving final regulatory approvals. We continued to seek other offers for the purchase of these utilities.

In July 2008, we announced that we entered into an agreement with a subsidiary of Babcock & Brown Infrastructure Fund North America (BBIFNA) to sell Peoples and Hope for approximately $910 million, subject to adjustments to reflect levels of capital expenditures and changes in working capital. The transaction is expected to close in 2009, subject to regulatory approvals in Pennsylvania and West Virginia as well as clearance under the Exon-Florio provision of the Omnibus Trade and Competitiveness Act.

PAGE 14

The carrying amounts of the major classes of assets and liabilities associated with the planned sale of Peoples and Hope and classified as held for sale in our Consolidated Balance Sheets are as follows:


	September 30, 2008			December 31, 2007
(millions)
ASSETS
Current Assets
Customer receivables	$	80		$	147
Other		221			109

Total current assets		301			256

Property, Plant and Equipment
Property, plant and equipment		1,188			1,160
Accumulated depreciation, depletion and amortization		(360	)		(367	)

Total property, plant and equipment, net		828			793

Deferred Charges and Other Assets
Regulatory assets		159			109
Other		100			2

Total deferred charges and other assets		259			111

Assets held for sale	$	1,388		$	1,160

LIABILITIES
Current Liabilities	$	196		$	210
Deferred Credits and Other Liabilities
Deferred income taxes ⁽¹⁾		322			203
Other		99			79

Total deferred credits and other liabilities		421			282

Liabilities held for sale	$	617		$	492

(1)	Represents net deferred tax liabilities that relate to, and are being reported with, the subsidiaries’ assets and liabilities held for sale and that, based on the form of the dispositions, will reverse upon closing.

The following table presents selected information regarding the results of operations of Peoples and Hope:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2008		2007			2008		2007
(millions)
Operating revenue	$	74	$	62		$	480	$	479
Income (loss) before income taxes ⁽¹⁾		—		(6	)		100		49

(1)	Income before income taxes for the nine months ended September 30, 2008 includes a $47 million benefit related to the re-establishment of a regulatory asset in connection with the pending sale of Peoples and Hope to BBIFNA.

Note 6. Operating Revenue

Our operating revenue consists of the following:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2008		2007		2008		2007
(millions)
Operating Revenue
Electric sales:
Regulated	$	2,143	$	1,796	$	5,153	$	4,593
Nonregulated		1,010		839		2,657		2,299
Gas sales:
Regulated		107		86		898		829
Nonregulated		676		471		2,207		2,584
Other energy-related commodity sales		58		142		213		722
Gas transportation and storage		189		181		799		742
Other		48		74		145		211

Total operating revenue	$	4,231	$	3,589	$	12,072	$	11,980

PAGE 15

Note 7. Income Taxes

A reconciliation of income taxes at the U.S. statutory federal rate as compared to the income tax expense recorded for continuing operations in our Consolidated Statements of Income is presented below:


	Nine Months Ended September 30,
	2008		2007
U.S. statutory rate	35.0	%	35.0	%
Increases (reductions) resulting from:
State taxes, net of federal benefit	3.9		3.4
Reversal of deferred taxes – stock of subsidiaries held for sale	(6.2	)	(0.2	)
Changes in valuation allowances	0.7		(2.6	)
Goodwill	—		5.2
Other, net	(1.3	)	(1.3	)

Effective tax rate	32.1	%	39.5	%

The change in our effective tax rate for the nine months ended September 30, 2008, is primarily attributable to the reversal of deferred tax liabilities, recognized in 2006, associated with the excess of our financial reporting basis over the tax basis in the stock of Peoples and Hope, in accordance with EITF Issue No. 93-17, Recognition of Deferred Tax Assets for a Parent Company’s Excess Tax Basis in the Stock of a Subsidiary that is Accounted for as a Discontinued Operation. Although these subsidiaries are not classified as discontinued operations, EITF 93-17 requires that the deferred tax impact of the excess of the financial reporting basis over the tax basis of a parent’s investment in a subsidiary be recognized when it is apparent that this difference will reverse in the foreseeable future. In 2006, based on the intended form of the sale to Equitable, we recognized these deferred tax liabilities as such difference was expected to reverse upon closing of the sale.

In January 2008, Dominion and Equitable agreed to terminate the agreement for the sale of Peoples and Hope. At that time, based on our expectation that the form of the ultimate disposal of these subsidiaries could be structured so that the taxable gain would instead be determined by reference to the basis in the subsidiaries’ underlying assets, we reversed those deferred tax liabilities recognized in 2006. As discussed in Note 5, we have executed a new agreement to sell Peoples and Hope. We will determine our taxable gain by reference to the basis in the subsidiaries’ underlying assets.

As the result of West Virginia income tax rate reductions enacted in March 2008, to be phased in during the period 2009 through 2014, we reduced our net deferred tax liabilities by $12 million. In addition, we recognized $11 million of additional deferred tax expense to reflect Massachusetts legislation enacted in July 2008 that requires combined reporting and provides for tax rate reductions during the period 2010 through 2012.

Our 2007 effective tax rate reflects the effects of the sale of the majority of our U.S. E&P operations. The effects included the impact of goodwill, not recognized for tax purposes, that was deducted in the determination of book gain on the sale and the recognition of additional deferred tax expense to reflect changes in our state income tax profile. Those effects were partially offset by tax benefits related to the elimination of valuation allowances on federal loss carryforwards that would be utilized to offset gains generated from the sale.

At September 30, 2008, unrecognized tax benefits related to current year tax positions were $43 million. During the nine months ended September 30, 2008, unrecognized tax benefits related to prior year uncertain tax positions increased by $40 million and decreased by $67 million, reflecting reductions to uncertain tax positions for amounts that would otherwise be deductible in 2008, settlement negotiations and payments to tax authorities.

We are currently engaged in settlement negotiations with tax authorities regarding certain adjustments proposed during the examination of tax years 2002, 2003 and 2004. We believe that it is reasonably possible, based on settlement negotiations and risks of litigation, that unrecognized tax benefits could decrease by up to $95 million over the next twelve months with no material impact on our results of operations.

PAGE 16

Note 8. Earnings Per Share

The following table presents the calculation of our basic and diluted EPS:


	Three Months Ended September 30,					Nine Months Ended September 30,
	2008		2007			2008			2007
(millions, except EPS)
Income from continuing operations before extraordinary item	$	508	$	2,320		$	1,488		$	2,403
Extraordinary item, net of tax		—		—			—			(158	)
Loss from discontinued operations, net of tax		—		(3	)		(2	)		(5	)

Net income	$	508	$	2,317		$	1,486		$	2,240

Basic EPS
Average shares of common stock outstanding – basic		578.6		635.6			577.0			676.7
Income from continuing operations before extraordinary item	$	0.88	$	3.65		$	2.58		$	3.55
Extraordinary item		—		—			—			(0.23	)
Loss from discontinued operations		—		(0.01	)		—			(0.01	)

Net income	$	0.88	$	3.64		$	2.58		$	3.31

Diluted EPS
Average shares of common stock outstanding		578.6		635.6			577.0			676.7
Net effect of potentially dilutive securities ⁽¹⁾		3.4		4.0			3.3			4.5

Average shares of common stock outstanding – diluted		582.0		639.6			580.3			681.2

Income from continuing operations before extraordinary item	$	0.87	$	3.63		$	2.56		$	3.53
Extraordinary item		—		—			—			(0.23	)
Loss from discontinued operations		—		(0.01	)		—			(0.01	)

Net income	$	0.87	$	3.62		$	2.56		$	3.29

(1)	Potentially dilutive securities consist of stock options, restricted stock and contingently convertible senior notes.

There were no anti-dilutive securities outstanding during the three or nine months ended September 30, 2008 or 2007.

Note 9. Property, Plant and Equipment

Marcellus Shale

We previously entered into an agreement with Antero Resources (Antero) to assign natural gas drilling rights on approximately 205,000 Appalachian Basin net acres for approximately $552 million; however, due to Antero’s difficulty in obtaining follow-on financing, the amount assigned was reduced. On September 30, 2008, we completed a transaction with Antero to assign drilling rights to approximately 114,000 acres in the Marcellus Shale formation located in West Virginia and Pennsylvania. We received approximately $347 million and recognized $4 million of associated closing costs. Under the agreement, we will receive a 7.5% overriding royalty interest on future natural gas production from the assigned acreage. We will retain the drilling rights in traditional formations both above and below the Marcellus Shale interval and will continue our conventional drilling program on the acreage. The transaction is subject to post-closing title adjustments; however, any such adjustments would be settled through acreage substitution.

We follow the full cost method of accounting for gas and oil E&P activities as prescribed by the SEC. Under the full cost method of accounting, gains or losses on the sale or other disposition of gas and oil properties are not recognized, unless the gain or loss would significantly alter the relationship between the capitalized costs and proved reserves of natural gas and oil. We initially expected to recognize a pre-tax gain based on the terms of the initial agreement with Antero, however, due to the reduced size of the final transaction no material alteration occurred and the net proceeds were credited to the full cost pool, reducing property, plant and equipment in our Consolidated Balance Sheet. After-tax proceeds of $205 million will be used initially to reduce outstanding short-term debt.

PAGE 17

Note 10. Comprehensive Income

The following table presents total comprehensive income:

Three Months Ended
September 30,

Nine Months Ended
September 30,

2008

2007

2008

2007

(millions)

Net income

508

2,317

1,486

2,240

Other comprehensive income (loss):

Net other comprehensive income associated with effective portion of changes in fair value of derivatives designated as cash flow hedges, net of taxes and amounts reclassified to earnings

1,263

⁽¹⁾

104

140

⁽¹⁾

428

⁽²⁾

Other, net of tax

(19

) ⁽³⁾

⁽⁴⁾

(79

) ⁽³⁾

(52

) ⁽⁵⁾

Other comprehensive income

1,244

122

376

Total comprehensive income

1,752

2,439

1,547

2,616

(1)	For the quarter, principally due to the impact of a decrease in commodity prices. For the year-to-date period, reflects a decrease in commodity prices in the third quarter, partially offset by an increase in commodity prices through the first six months of the year.

(2)	Principally due to the de-designation of certain E&P cash flow hedges in connection with the sale of our non-Appalachian E&P operations.

(3)	Primarily represents a reduction in unrealized gains on investments held in merchant nuclear decommissioning trusts.

(4)	Primarily reflects the recognition of certain pension-related amounts as a component of net periodic benefit cost that were previously deferred in AOCI.

(5)

Primarily reflects the impact of foreign currency translation adjustments due to the sale of our Canadian E&P operations and the reclassification of pension-related amounts and gross unrealized gains on investments held in nuclear decommissioning trusts, both associated with the Virginia jurisdiction of our utility generation operations. As a result of the reapplication of SFAS No. 71, Accounting for the Effects of Certain Types of Regulation , to those operations, those amounts previously recorded in AOCI are now recorded in regulatory assets and regulatory liabilities.

Note 11. Fair Value Measurements

As described in Note 3, we adopted SFAS No. 157 effective January 1, 2008. SFAS No. 157 defines fair value as the price that would be received to sell an asset or paid to transfer a liability (exit price) in an orderly transaction between market participants at the measurement date. However, SFAS No. 157 permits the use of a mid-market pricing convention (the mid-point between bid and ask prices). SFAS No. 157 clarifies that fair value should be based on assumptions that market participants would use when pricing an asset or liability, including assumptions about risk and the risks inherent in valuation techniques and the inputs to valuations. This includes not only the credit standing of counterparties involved and the impact of credit enhancements but also the impact of our own nonperformance risk on our liabilities. SFAS No. 157 also requires fair value measurements to assume that the transaction occurs in the principal market for the asset or liability (the market with the most volume and activity for the asset or liability from the perspective of the reporting entity), or in the absence of a principal market, the most advantageous market for the asset or liability (the market in which the reporting entity would be able to maximize the amount received or minimize the amount paid). We apply fair value measurements to certain assets and liabilities including commodity and interest rate derivative instruments, and nuclear decommissioning trust and other investments in accordance with the requirements described above. We apply credit adjustments to our derivative fair values in accordance with the requirements described above. These credit adjustments are not material to the derivative fair values.

In accordance with SFAS No. 157, we maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Fair value is based on actively-quoted market prices, if available. In the absence of actively-quoted market prices, we seek price information from external sources, including broker quotes and industry publications. If pricing information from external sources is not available, or if we believe that observable pricing is not indicative of fair value, judgment is required to develop the estimates of fair value. In those cases we must estimate prices based on available historical and near-term future price information and certain statistical methods, including regression analysis, that reflect our market assumptions.

PAGE 18

For options and contracts with option-like characteristics where observable pricing information is not available from external sources, we generally use a modified Black-Scholes Model that considers time value, the volatility of the underlying commodities and other relevant assumptions when estimating fair value. We use other option models under special circumstances, including a Spread Approximation Model, when contracts include different commodities or commodity locations and a Swing Option Model, when contracts allow either the buyer or seller the ability to exercise within a range of quantities. For contracts with unique characteristics, we may estimate fair value using a discounted cash flow approach deemed appropriate in the circumstances and applied consistently from period to period. If pricing information is not available from external sources, judgment is required to develop the estimates of fair value. For individual contracts, the use of different valuation models or assumptions could have a material effect on the contract’s estimated fair value.

We also utilize the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value, into three broad levels:

•

Level 1 – Quoted prices (unadjusted) in active markets for identical assets and liabilities that we have the ability to access at the measurement date. Instruments categorized in Level 1 primarily consist of financial instruments such as the majority of exchange-traded derivatives, listed equities and Treasury securities.

•

Level 2 – Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived from observable market data by correlation or other means. Instruments categorized in Level 2 include non-exchange traded derivatives such as over-the-counter forwards and swaps, interest rate swaps, foreign currency forwards and options and municipal bonds held in nuclear decommissioning and rabbi trust funds.

•

Level 3 – Unobservable inputs for the asset or liability, including situations where there is little, if any, market activity for the asset or liability. Instruments categorized in Level 3 consist of long-dated commodity derivatives, natural gas liquids contracts (NGLs), natural gas peaking options, financial transmission rights (FTRs) and other modeled commodity derivatives.

The fair value hierarchy gives the highest priority to quoted prices in active markets (Level 1) and the lowest priority to unobservable data (Level 3). In some cases, the inputs used to measure fair value might fall in different levels of the fair value hierarchy. The lowest level input that is significant to a fair value measurement in its entirety determines the applicable level in the fair value hierarchy. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the asset or liability.

Fair value measurements are categorized as Level 3 when a significant amount of price and other inputs that are considered to be unobservable are used in their valuations. Long-dated commodity derivatives are based on unobservable inputs due to the length of time to settlement and are therefore categorized as Level 3. For NGLs, market illiquidity requires a valuation based on proxy markets that do not always correlate to the actual instrument, therefore they are also categorized as Level 3. For the same illiquidity reason, natural gas peaking options at non-Henry Hub locations are valued using Henry Hub volatilities, which may or may not be identical to the volatilities at transacted locations, and are therefore considered to be unobservable inputs. FTRs are categorized as Level 3 fair value measurements because the only relevant pricing available comes from independent system operator auctions, which is accurate for day-one valuation, but generally is not considered to be representative of the ultimate settlement values. Other modeled commodity derivatives have unobservable inputs in their valuation, mostly due to non-transparent and illiquid markets.

As of September 30, 2008, our net balance of commodity derivatives categorized as Level 3 fair value measurements was a liability of $102 million. A hypothetical 10% increase in commodity prices would increase the liability by $95 million, while a hypothetical 10% decrease in commodity prices would decrease the liability by $97 million.

PAGE 19

SFAS No. 157 requires fair value measurements to be separately disclosed by level within the fair value hierarchy and requires a separate reconciliation of fair value measurements categorized as Level 3. The following table presents our assets and liabilities that are measured at fair value on a recurring basis for each hierarchy level, including both current and noncurrent portions as of September 30, 2008:


(millions)	Level 1		Level 2		Level 3		Total
Assets:
Derivatives	$	57	$	1,366	$	116	$	1,539
Investments		897		1,624		—		2,521

Total assets		954		2,990		116		4,060
Liabilities:
Derivatives	$	24	$	1,202	$	218	$	1,444

The following table presents the net change in the assets and liabilities measured at fair value on a recurring basis and included in the Level 3 fair value category for the three and nine months ended September 30, 2008:


(millions)	Derivatives ⁽¹⁾
Three Months Ended September 30, 2008
Balance at July 1, 2008	$	(191	)
Total realized and unrealized gains or (losses):
Included in earnings		(9	)
Included in other comprehensive income (loss)		357
Included in regulatory and other assets/liabilities		(249	)
Purchases, issuances and settlements		(15	)
Transfers out of Level 3		5

Balance at September 30, 2008	$	(102	)

The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains/losses relating to assets still held at the reporting date	$	(35	)

Nine Months Ended September 30, 2008
Balance at January 1, 2008	$	(61	)
Total realized and unrealized gains or (losses):
Included in earnings		53
Included in other comprehensive income (loss)		(19	)
Included in regulatory and other assets/liabilities		(49	)
Purchases, issuances and settlements		(27	)
Transfers out of Level 3		1

Balance at September 30, 2008	$	(102	)

The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains/losses relating to assets still held at the reporting date	$	(3	)

(1)	Derivative assets and liabilities are presented on a net basis.

PAGE 20

The following table presents gains and losses included in earnings in the Level 3 fair value category for the three and nine months ended September 30, 2008:


(millions)	Operating Revenue			Electric Fuel and Energy Purchases		Other Operations and Maintenance			Total
Three Months Ended September 30, 2008
Total gains or (losses) included in earnings	$	—		$	13	$	(22	)	$	(9	)
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains/losses relating to assets still held at the reporting date		(4	)		—		(31	)		(35	)
Nine Months Ended September 30, 2008
Total gains or (losses) included in earnings	$	(40	)	$	54	$	39		$	53
The amount of total gains (losses) for the period included in earnings attributable to the change in unrealized gains/losses relating to assets still held at the reporting date		—			—		(3	)		(3	)

Note 12. Hedge Accounting Activities

We are exposed to the impact of market fluctuations in the price of electricity, natural gas and other energy-related products marketed and purchased, as well as currency exchange and interest rate risks of our business operations. We use derivative instruments to manage our exposure to these risks and designate certain derivative instruments as fair value or cash flow hedges for accounting purposes as allowed by SFAS No. 133. As discussed in Note 2 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2007, for certain jurisdictions subject to cost-based regulation, changes in the fair value of derivatives designated as hedges are deferred as regulatory assets or regulatory liabilities until the related transactions impact earnings. Selected information about our hedge accounting activities follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2008		2007		2008		2007
(millions)
Portion of gains on hedging instruments determined to be ineffective and included in net income:
Fair value hedges	$	9	$	3	$	3	$	5
Cash flow hedges		—		4		1		47

Net ineffectiveness	$	9	$	7	$	4	$	52

For the three and nine months ended September 30, 2008 and 2007, amounts excluded from the measurement of effectiveness did not have a significant impact on net income.

See Note 5 for a discussion of the discontinuance of hedge accounting for gas and oil hedges in 2007.

In the third quarter of 2007, as a result of the expected termination of the long-term power sales agreement associated with our 515 Mw State Line power station (State Line), we discontinued applying the normal purchase and normal sale exemption allowed under SFAS No. 133 to this agreement and recorded a $236 million ($140 million after-tax) charge in other operations and maintenance expense in our Consolidated Statement of Income. During the fourth quarter of 2007, we paid approximately $229 million primarily in exchange for the termination of the power sales agreement, acquisition of coal inventory and assignment of certain coal supply, transportation and railcar lease contracts.

PAGE 21

The following table presents selected information related to cash flow hedges included in AOCI in our Consolidated Balance Sheet at September 30, 2008:


	AOCI After-Tax			Amounts Expected to be Reclassified to Earnings during the next 12 Months After-Tax			Maximum Term
(millions)
Commodities:
Gas	$	36		$	31		39 months
Electricity		76			44		39 months
Natural gas liquids		(31	)		(10	)	39 months
Other		8			4		80 months
Interest rate		7			(2	)	363 months
Foreign currency		2			1		48 months

Total	$	98		$	68

The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., anticipated sales) in earnings, thereby achieving the realization of prices contemplated by the underlying risk management strategies and will vary from the expected amounts presented above as a result of changes in market prices, interest rates and foreign exchange rates.

Note 13. Ceiling Test

We follow the full cost method of accounting for gas and oil E&P activities prescribed by the SEC. Under the full cost method, capitalized costs are subject to a quarterly ceiling test. Under the ceiling test, amounts capitalized are limited to the present value of estimated future net revenues to be derived from the anticipated production of proved gas and oil reserves, discounted at 10%, assuming period-end hedge-adjusted prices.

Approximately 5% of our anticipated production, from our remaining E&P operations and fixed-term overriding royalty interests formerly associated with VPP agreements terminated in conjunction with the 2007 sale of the majority of our U.S. E&P operations, is hedged by qualifying cash flow hedges, for which hedge-adjusted prices were used to calculate estimated future net revenue. Whether period-end market prices or hedge-adjusted prices were used for the portion of production that is hedged, there was no ceiling test impairment as of September 30, 2008.

Note 14. Variable Interest Entities

As discussed in Note 17 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2007, certain variable pricing terms in some of our long-term power and capacity contracts cause them to be considered variable interests in the counterparties in accordance with FIN 46 (revised December 2003), Consolidation of Variable Interest Entities .

We have long-term power and capacity contracts with four variable interest entities (VIEs), which contain certain variable pricing mechanisms to the counterparty in the form of partial fuel reimbursement. We have concluded that we are not the primary beneficiary of any of these VIEs. The contracts expire at various dates ranging from 2015 to 2021. We are not subject to any risk of loss from these VIEs other than our remaining purchase commitments which totaled $2 billion as of September 30, 2008. We paid $50 million and $51 million for electric capacity and $60 million and $50 million for electric energy to these entities for the three months ended September 30, 2008 and 2007, respectively. We paid $152 million and $160 million for electric capacity and $153 million and $128 million for electric energy to these entities for the nine months ended September 30, 2008 and 2007, respectively.

PAGE 22

As discussed in Note 28 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2007, DCI held an investment in the subordinated notes of a third-party CDO entity. The CDO entity’s primary focus is the purchase and origination of middle market senior secured first and second lien commercial and industrial loans in both the primary and secondary loan markets. We concluded previously that the CDO entity was a VIE and that DCI was the primary beneficiary of the CDO entity and therefore we consolidated the CDO entity in accordance with FIN 46R at December 31, 2007. Due to the consolidation of the CDO entity at December 31, 2007, our consolidated balance sheet included $460 million of notes payable, which were nonrecourse to us, and the following assets that served as collateral for its obligations:


	Amount
(millions)
Other current assets ⁽¹⁾	$	257
Loans held for sale		323
Other investments		32

Total assets	$	612

(1)	Includes $30 million of loans held for resale.

In March 2008, we entered into an agreement to sell our remaining interest in the subordinated notes effectively eliminating the variability of our interest, and therefore deconsolidated the CDO entity as of March 31, 2008.

Note 15. Significant Financing Transactions

Credit Facilities and Short-Term Debt

We use short-term debt, primarily commercial paper, to fund working capital requirements, as a bridge to long-term debt financing and as bridge financing for acquisitions, if applicable. The levels of our borrowings may vary significantly during the course of the year, depending upon the timing and amount of cash requirements not satisfied by cash from operations. In addition, we utilize cash and letters of credit to fund collateral requirements under our commodities hedging program. Collateral requirements are impacted by commodity prices, hedging levels and our credit quality and the credit quality of our counterparties. At September 30, 2008, we had committed lines of credit totaling $5.4 billion. These lines of credit support commercial paper borrowings and letter of credit issuances. At September 30, 2008, we had the following commercial paper, bank loans and letters of credit outstanding and capacity available under our credit facilities:


	Facility Limit		Outstanding Commercial Paper		Outstanding Bank Borrowings		Outstanding Letters of Credit		Facility Capacity Available
(millions)
Five-year joint revolving credit facility ⁽¹⁾	$	3,000	$	664	$	—	$	239	$	2,097
Five-year Dominion credit facility ⁽²⁾		1,700		1,041		600		59		—
Five-year Dominion bilateral facility ⁽³⁾		200		146		—		—		54
364-day Dominion credit facility ⁽⁴⁾		500		—				—		500

Totals	$	5,400	$	1,851	$	600	$	298	$	2,651

(1)	The $3.0 billion five-year credit facility was entered into in February 2006 and terminates in February 2011. This credit facility can be used to support bank borrowings and the issuance of commercial paper, as well as to support up to $1.5 billion of letters of credit.

(2)	The amended and restated $1.7 billion five-year credit facility is dated February 2006 and terminates in August 2010. This facility can be used to support bank borrowings, commercial paper and letter of credit issuances.

(3)	The $200 million five-year facility was entered into in December 2005 and terminates in December 2010. This bilateral credit facility can be used to support bank borrowings, commercial paper and letter of credit issuances.

(4)	The $500 million 364-day credit facility was entered into in July 2008 and terminates in July 2009. This credit facility can be used to support bank borrowings and the issuance of commercial paper.

PAGE 23

In addition to the credit facility commitments of $5.4 billion disclosed above, we also have a $200 million five-year credit facility that supports certain Virginia Power tax-exempt financings. Our aggregate credit facility commitments of $5.6 billion are with a large consortium of banks, including Lehman Brothers Holdings Inc. (Lehman). In September 2008, Lehman filed for protection under Chapter 11 of the federal Bankruptcy Code in the United States Bankruptcy Court in the Southern District of New York. As of September 30, 2008, Lehman’s total commitment to these credit facilities was less than five percent of the aggregate commitment from the consortium of banks. We do not believe that the potential reduction in available capacity under these credit facilities that could result from Lehman’s bankruptcy will have a significant impact on our liquidity.

Long-Term Debt

In January 2008, Virginia Power borrowed $30 million in connection with the Economic Development Authority of the City of Chesapeake Pollution Control Refunding Revenue Bonds, Series 2008 A, which mature in 2032 and bear an initial coupon rate of 3.6% for the first five years, after which they will bear interest at a market rate to be determined at that time. The proceeds were used to refund the principal amount of the Industrial Development Authority of the City of Chesapeake Money Market Municipals Pollution Control Revenue Bonds, Series 1985 that would otherwise have matured in February 2008.

In April 2008, Virginia Power issued $600 million of 5.4% senior notes that mature in 2018. The proceeds were used for general corporate purposes, including the repayment of short-term debt and the redemption of all 16 million units of the $400 million 7.375% Virginia Power Capital Trust II preferred securities (including the related $412 million 7.375% unsecured Junior Subordinated Notes) due July 30, 2042. These securities were called for redemption in April 2008 and redeemed in May 2008 at a price of $25 per preferred security plus accrued and unpaid distributions.

In June 2008, Dominion issued $500 million of 6.4% senior notes that mature in 2018, $400 million of 7.0% senior notes that mature in 2038 and $300 million of floating rate senior notes that mature in 2010 and bear interest at the three-month London Interbank Offered Rate (LIBOR) plus 1.05%, reset quarterly. We used the proceeds for general corporate purposes, including the repayment of short-term debt.

Including the amounts discussed above, we repaid $1.3 billion of long-term debt and notes payable during the nine months ended September 30, 2008.

Convertible Securities

In December 2003, we issued $220 million of contingent convertible senior notes that are convertible by holders into a combination of cash and shares of our common stock under certain circumstances. In 2004 and 2005, we entered into exchange transactions with respect to these contingent convertible senior notes in contemplation of EITF Issue No. 04-8, The Effect of Contingently Convertible Instruments on Diluted Earnings per Share . We exchanged the outstanding notes for new notes with a conversion feature that requires that the principal amount of each note be repaid in cash. Amounts payable in excess of the principal amount will be paid in common stock. The conversion rate is subject to adjustment upon certain events such as subdivisions, splits, combinations of common stock or the issuance to all common stock holders of certain common stock rights, warrants or options and certain dividend increases. As of September 30, 2008, the conversion rate has been adjusted to 27.6703 shares of common stock per $1,000 principal amount of senior notes, primarily due to individual dividend payments above the level paid at issuance, which represents a conversion price of $36.14.

The new notes have been included in the diluted EPS calculation using the method described in EITF 04-8 when appropriate. Under this method, the number of shares included in the denominator of the diluted EPS calculation is calculated as the net shares issuable for the reporting period based upon the average market price for the period. This results in an increase in the average shares outstanding used in the calculation of our diluted EPS when the conversion price is lower than the average market price of our common stock over the period, and no adjustment when the conversion price exceeds the average market price.

As of December 31, 2007, the closing price of our common stock was equal to $44.16 per share (the applicable contingent conversion price) or higher for at least 20 out of the last 30 consecutive trading days. Therefore, the senior notes were eligible for conversion during the first quarter of 2008. During the first quarter, less than $1 million of the contingent convertible senior notes were converted by shareholders. At March 31, 2008, the applicable contingent conversion price of the notes was $43.51 per share and none of the conditions for conversion had been met, therefore the senior notes were not eligible for conversion during the second quarter of 2008. As of June 30, 2008, the closing price of our common stock was equal to $43.44 (the applicable contingent conversion price) per

PAGE 24

share or higher for at least 20 out of the last 30 consecutive trading days. Therefore the senior notes were eligible for conversion during the third quarter of 2008. In late September 2008, approximately $17 million of the contingent convertible senior notes were surrendered for conversion. In October 2008, we paid approximately $17 million and issued 62,452 shares in connection with this conversion. As of September 30, 2008, the applicable contingent conversion price of the notes was $43.37 per share and none of the conditions for conversion had been met, therefore the senior notes are not eligible for conversion during the fourth quarter of 2008.

Issuance of Common Stock

During the nine months ended September 30, 2008, we issued 4.4 million shares and received cash proceeds of $178 million, through Dominion Direct ^® , employee savings plans and the exercise of employee stock options.

Note 16. Stock-Based Awards

Our results for the three months ended September 30, 2008 and 2007 include $10 million and $14 million, respectively, of compensation costs and $4 million and $5 million, respectively, of income tax benefits related to our stock-based compensation arrangements. Our results for the nine months ended September 30, 2008 and 2007 include $29 million and $38 million, respectively, of compensation costs and $11 million and $14 million, respectively, of income tax benefits related to our stock-based compensation arrangements. Stock-based compensation cost is reported in other operations and maintenance expense in our Consolidated Statements of Income. SFAS No. 123R, Share-Based Payment , requires the benefits of tax deductions in excess of the compensation cost recognized for stock-based compensation (excess tax benefits) to be classified as a financing cash flow. Approximately $9 million and $37 million of excess tax benefits were realized for the nine months ended September 30, 2008 and 2007, respectively.

Stock Options

The following table provides a summary of changes in amounts of stock options outstanding as of and for the nine months ended September 30, 2008:


	Shares		Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life	Aggregated Intrinsic Value ⁽¹⁾
	(thousands)				(years)	(millions)
Outstanding and exercisable at January 1, 2008	7,021		$	30.46
Exercised	(976	)		29.98		$	14
Forfeited/expired	(4	)		30.58

Outstanding and exercisable at September 30, 2008	6,041		$	30.54	2.25	$	74

(1)	Intrinsic value represents the difference between the exercise price of the option and the market value of our stock.

We issue new shares to satisfy stock option exercises. We received cash proceeds from the exercise of stock options of approximately $30 million and $193 million in the nine months ended September 30, 2008 and 2007, respectively.

Restricted Stock

The fair value of our restricted stock awards is equal to the market price of our stock on the date of grant. These awards generally vest over a three-year service period and are settled by issuing new shares. The following table provides a summary of restricted stock activity for the nine months ended September 30, 2008:


	Shares		Weighted-Average Grant Date Fair Value
	(thousands)
Nonvested at January 1, 2008	2,014		$	35.31
Granted	535			40.95
Vested	(882	)		31.59
Cancelled and forfeited	(67	)		39.81
Transferred from goal-based stock to restricted stock	200			34.77

Nonvested at September 30, 2008	1,800		$	38.58

PAGE 25

As of September 30, 2008, unrecognized compensation cost related to nonvested restricted stock awards totaled approximately $32 million and is expected to be recognized over a weighted-average period of 1.6 years.

Goal-Based Stock

Goal-based stock awards are generally granted to key non-officer employees on an annual basis. The issuance of awards is based on the achievement of multiple performance metrics during a two-year period, including return on invested capital, book value per share and total shareholder return relative to that of a peer group of companies. Goal-based stock awards are also granted in lieu of cash-based performance grants to certain officers who had not achieved a certain level of share ownership. Current outstanding goal-based shares include awards granted in April 2007 and April 2008.

After the performance period for the April 2006 grants ended on December 31, 2007, the Compensation, Governance and Nominating Committee determined the actual performance against metrics established for those awards, and 130 thousand shares of the outstanding goal-based stock awards granted in April 2006 were converted to 200 thousand shares and transferred to restricted stock for the remaining term of the vesting period.

For remaining stock-based awards, at September 30, 2008, the targeted number of shares to be issued is 315 thousand, but the actual number of shares issued will vary between zero and 200% of targeted shares depending on the level of performance metrics achieved. The fair value of goal-based stock is equal to the market price of our stock on the date of grant. These awards generally vest over a three-year service period and are settled by issuing new shares. The following table provides a summary of goal-based stock activity for the nine months ended September 30, 2008:


	Targeted Number of Shares		Weighted-Average Grant Date Fair Value
	(thousands)
Nonvested at January 1, 2008	289		$	39.16
Granted	164			40.97
Vested	(1	)		43.78
Cancelled and forfeited	(7	)		43.37
Transferred from goal-based stock to restricted stock	(130	)		34.77

Nonvested at September 30, 2008	315		$	42.56

At September 30, 2008, unrecognized compensation cost related to nonvested goal-based stock awards totaled $8 million and is expected to be recognized over a weighted-average period of 1.6 years.

Cash-Based Performance Grant

The targeted amount of the cash-based performance grant made to officers in April 2006 was $13 million, but the actual payout of the award in February 2008 determined by the Compensation, Governance and Nominating Committee was $18 million, based on the level of performance metrics achieved.

In April 2007, a cash-based performance grant was made to officers. Payout of the performance grant will occur by March 15, 2009 and is based on the achievement of two performance metrics during 2007 and 2008, return on invested capital and total shareholder return relative to that of a peer group of companies. At September 30, 2008, the targeted amount of the grant is $14 million, but actual payout will vary between zero and 200% of the targeted amount depending on the level of performance metrics achieved.

In April 2008, a cash-based performance grant was made to officers. Payout of the performance grant will occur by March 15, 2010 and is based on the achievement of three performance metrics during 2008 and 2009, return on invested capital, book value per share and total shareholder return relative to that of a peer group of companies. At September 30, 2008, the targeted amount of the grant is $13 million, but actual payout will vary between zero and 200% of the targeted amount depending on the level of performance metrics achieved.

At September 30, 2008, a liability of $13 million has been accrued for these awards.

PAGE 26

Note 17. Commitments and Contingencies

Other than the following matters, there have been no significant developments regarding the commitments and contingencies disclosed in Note 24 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2007, or Note 16 to our Consolidated Financial Statements in our Quarterly Report on Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008, nor have any significant new matters arisen during the three months ended September 30, 2008.

Guarantees

At September 30, 2008, we had issued $413 million of guarantees to support third parties and equity method investees (issued guarantees). This includes $200 million of guarantees to support our investment in a joint venture with Shell WindEnergy Inc. (Shell) to develop a wind-turbine facility in Grant County, West Virginia (NedPower). These NedPower guarantees are primarily comprised of limited-scope guarantees and indemnifications for one-half of the project-level financing for phases one and two of the NedPower wind farm, which would require us to repay one-half of NedPower’s debt, only if it is unable to do so, as a direct result of an unfavorable ruling associated with current litigation seeking to halt the project. These litigation-related guarantees will terminate when a final non-appealable ruling in favor of the project is received. We do not expect an unfavorable ruling and no significant amounts have been recorded. Our exposure under these litigation-related guarantees totaled $141 million as of September 30, 2008 and will increase to $166 million during the remainder of 2008 based upon NedPower’s future expected borrowings to complete phase two. Shell has provided an identical guarantee for the other one-half of NedPower’s borrowings.

Issued guarantees also include $163 million of guarantees to support our investment in a joint venture with BP Alternative Energy Inc. (BP) to develop a wind-turbine facility in Benton County, Indiana, referred to as the Fowler Ridge wind farm. The guarantees primarily relate to payments for wind turbines and construction costs. Our exposure under these guarantees was $57 million as of September 30, 2008 and will largely decline during the remainder of 2008, as the joint venture makes the underlying payments covered by these guarantees. BP has provided identical guarantees for the other one-half of these joint venture commitments.

PAGE 27

We also enter into guarantee arrangements on behalf of our consolidated subsidiaries primarily to facilitate their commercial transactions with third parties. To the extent that a liability subject to a guarantee has been incurred by one of our consolidated subsidiaries, that liability is included in our Consolidated Financial Statements. We are not required to recognize liabilities for guarantees issued on behalf of our subsidiaries unless it becomes probable that we will have to perform under the guarantees. We believe it is unlikely that we would be required to perform or otherwise incur any losses associated with guarantees of our subsidiaries’ obligations. At September 30, 2008, we had issued the following subsidiary guarantees:


	Stated Limit		Value ⁽¹⁾
(millions)
Subsidiary debt ⁽²⁾	$	74	$	74
Commodity transactions ⁽³⁾		3,133		441
Lease obligation for power generation facility ⁽⁴⁾		891		891
Nuclear obligations ⁽⁵⁾		413		302
Cove Point LNG facility ⁽⁶⁾		770		717
Other		263		161

Total	$	5,544	$	2,586

(1)

Represents the estimated portion of the guarantee’s stated limit that is utilized as of September 30, 2008, based upon prevailing economic conditions and fact patterns specific to each guarantee arrangement. For those guarantees related to obligations that are recorded as liabilities by our subsidiaries, the value includes the recorded amount.

(2)	Guarantees of debt of certain DEI subsidiaries. In the event of default by the subsidiaries, we would be obligated to repay such amount.

(3)

Guarantees related to energy trading and marketing activities and other commodity commitments of certain subsidiaries, including subsidiaries of Virginia Power and DEI. These guarantees were provided to counterparties in order to facilitate physical and financial transactions in gas, oil, electricity, pipeline capacity, transportation and related commodities and services. If these subsidiaries fail to perform or pay under the contracts and the counterparties seek performance or payment, we would be obligated to satisfy such obligation. We and our subsidiaries receive similar guarantees as collateral for credit extended to others. The value provided includes certain guarantees that do not have stated limits.

(4)	Guarantee of a DEI subsidiary’s leasing obligation for the Fairless Energy power station.

(5)

Guarantees related to certain DEI subsidiaries’ potential retrospective premiums that could be assessed if there is a nuclear incident under our nuclear insurance programs and guarantees for a DEI subsidiary’s and Virginia Power’s commitment to buy nuclear fuel. In addition to the guarantees listed above, we have also agreed to provide up to $150 million and $60 million to two DEI subsidiaries, to pay the operating expenses of the Millstone and Kewaunee power stations, respectively, in the event of a prolonged outage, as part of satisfying certain Nuclear Regulatory Commission (NRC) requirements concerned with ensuring adequate funding for the operations of nuclear power stations.

(6)	Includes a $700 million payment and performance guarantee related to the expansion of our Cove Point LNG facility.

Surety Bonds and Letters of Credit

As of September 30, 2008, we had purchased $163 million of surety bonds and authorized the issuance of standby letters of credit by financial institutions of $298 million to facilitate commercial transactions by our subsidiaries with third parties.

Litigation

In 2006, Gary P. Jones and others filed suit against DTI, DEPI and Dominion Resources Services, Inc. (DRS). The plaintiffs are royalty owners, seeking to recover damages as a result of the Dominion defendants allegedly underpaying royalties by improperly deducting post-production costs and not paying fair market value for the gas produced from their leases. The plaintiffs seek class action status on behalf of all West Virginia residents and others who are parties to, or beneficiaries of, oil and gas leases with the Dominion defendants. DRS is erroneously named as a defendant, as the parent company of DTI and DEPI. During 2007, we established a litigation reserve representing our best estimate of the probable loss related to this matter. We do not believe that the final resolution of this matter will have a material adverse effect on our results of operations or financial condition. By order dated July 16, 2008, the Court preliminarily approved settlement of the class action and conditionally certified a temporary settlement class. The Court also dismissed DRS and added Dominion Appalachian Development LLC as a defendant for the sole purpose of settling the class claims. Following preliminary approval by the Court, settlement notices were sent out to potential class members. Class members have until November 1, 2008 to opt out of the class. A final fairness hearing is scheduled for January 21, 2009.

PAGE 28

Spent Nuclear Fuel

Under provisions of the Nuclear Waste Policy Act of 1982, we have entered into contracts with the Department of Energy (DOE) for the disposal of spent nuclear fuel. The DOE failed to begin accepting the spent fuel on January 31, 1998, the date provided by the Nuclear Waste Policy Act and by our contracts with the DOE. In January 2004, we and certain of our direct and indirect subsidiaries filed lawsuits in the U.S. Court of Federal Claims against the DOE requesting damages in connection with its failure to commence accepting spent nuclear fuel. A trial occurred in May 2008 and post-trial briefing and argument concluded in July 2008. On October 15, 2008, the Court issued an opinion and order for us in the amount of approximately $155 million for our spent fuel-related costs through June 30, 2006. The DOE has 60 days from the entry of a judgment to file an appeal and is expected to appeal the decision. We cannot predict the outcome of this matter, however, in the event that we recover damages, such recovery, including amounts attributable to joint owners, is not expected to have a material impact on our results of operations. We will continue to manage our spent fuel until it is accepted by the DOE.

Note 18. Credit Risk

Credit risk is our risk of financial loss if counterparties fail to perform their contractual obligations. In order to minimize overall credit risk, we maintain credit policies, including the evaluation of counterparty financial condition, collateral requirements and the use of standardized agreements that facilitate the netting of cash flows associated with a single counterparty. We maintain a provision for credit losses based on factors surrounding the credit risk of our customers, historical trends and other information. We believe, based on our credit policies and our September 30, 2008 provision for credit losses, that it is unlikely a material adverse effect on our financial position, results of operations or cash flows would occur as a result of counterparty nonperformance.

As a diversified energy company, we transact primarily with major companies in the energy industry and with commercial and residential energy consumers. These transactions principally occur in the Northeast, mid-Atlantic and Midwest regions of the U.S. and Texas. We do not believe that this geographic concentration contributes significantly to our overall exposure to credit risk. In addition, as a result of our large and diverse customer base, we are not exposed to a significant concentration of credit risk for receivables arising from electric and gas utility operations, including transmission services and retail energy sales.

Our exposure to credit risk is concentrated primarily within our energy marketing and price risk management activities, as we transact with a smaller, less diverse group of counterparties and transactions may involve large notional volumes and potentially volatile commodity prices. Energy marketing and price risk management activities include trading of energy-related commodities, marketing of merchant generation output, structured transactions and the use of financial contracts for enterprise-wide hedging purposes. Gross credit exposure for each counterparty is calculated as outstanding receivables plus any unrealized on or off-balance sheet exposure, taking into account contractual netting rights. Gross credit exposure is calculated prior to the application of collateral. At September 30, 2008, our gross credit exposure totaled $863 million. After the application of collateral, our credit exposure was reduced to approximately $827 million. Of this amount, investment grade counterparties, including those internally rated, represented 94% and no single counterparty exceeded 14%.

PAGE 29

Note 19. Employee Benefit Plans

The components of the provision for net periodic benefit cost (credit) were as follows:


	Pension Benefits						Other Postretirement Benefits
	2008			2007			2008			2007
(millions)
Three Months Ended September 30,
Service cost	$	25		$	36		$	13		$	13
Interest cost		57			70			19			20
Expected return on plan assets		(99	)		(124	)		(14	)		(17	)
Amortization of prior service cost (credit)		1			—			(1	)		(1	)
Amortization of net loss		1			12			1			2
Settlements and curtailments ⁽¹⁾		—			—			—			(1	)

Net periodic benefit cost (credit)	$	(15	)	$	(6	)	$	18		$	16

Nine Months Ended September 30,
Service cost	$	77		$	89		$	43		$	41
Interest cost		178			172			66			58
Expected return on plan assets		(310	)		(305	)		(52	)		(53	)
Amortization of prior service cost (credit)		3			2			(4	)		(4	)
Amortization of transition obligation		—			—			—			2
Amortization of net loss		5			30			5			5
Benefit enhancement ⁽²⁾		—			3			—			9
Settlements and curtailments ⁽¹⁾		—			7			—			(1	)

Net periodic benefit cost (credit)	$	(47	)	$	(2	)	$	58		$	57

(1)	Relates to the then-pending sale of Peoples and Hope and the sale of our non-Appalachian E&P operations.

(2)	Reflects a one-time benefit enhancement for certain employees in connection with the disposition of our non-Appalachian E&P operations.

Employer Contributions

Under our funding policies, we evaluate pension and other postretirement benefit plan funding requirements annually, usually in the second half of the year after receiving updated plan information from our actuary. Based on the funded status of each plan and other factors, the amount of additional contributions to be made each year is determined at that time. We made no contributions to our defined benefit pension plans or other postretirement benefit plans during the nine months ended September 30, 2008. We do not expect to make any contributions to our pension plans in 2008, but we do expect to contribute approximately $36 million to our other postretirement benefit plans during the fourth quarter of 2008.

Note 20. Operating Segments

We are organized primarily on the basis of the products and services we sell. We manage our daily operations through the following segments.

DVP includes our regulated electric transmission, distribution and customer service operations, as well as our nonregulated retail energy marketing operations.

Dominion Energy includes our Ohio regulated natural gas distribution company, regulated gas transmission pipeline and storage operations, including gathering and extraction activities, regulated LNG operations and our remaining E&P operations. Dominion Energy also includes producer services, which aggregates gas supply, engages in gas trading and marketing activities, provides market-based services related to fuel and gas supply management, and supplies price risk management services to Dominion affiliates.

Dominion Generation includes the electric generation operations of our utility and merchant fleet, as well as energy marketing and price risk management activities associated with our generation assets.

Corporate and Other includes our corporate, service company and other functions (including unallocated debt), the remaining assets and operations of DCI, the net impact of discontinued operations, our divested U.S. E&P operations, and Peoples and Hope. In addition, the contribution to net income by our primary operating segments is determined based on a measure of profit that executive management believes represents the segments’ core earnings.

PAGE 30

As a result, certain specific items attributable to those segments are not included in profit measures evaluated by executive management in assessing the segment’s performance or allocating resources among the segments and are instead reported in the Corporate and Other segment. In the nine months ended September 30, 2008 and 2007, our Corporate and Other segment included $54 million and $616 million, respectively, of after-tax expenses attributable to our operating segments:

•

The expenses in 2008 primarily reflect $83 million ($50 million after-tax) of impairment charges resulting from other-than-temporary declines in the fair value of securities held in merchant nuclear decommissioning trust funds, attributable to Dominion Generation.

•

The expenses in 2007 largely resulted from the following items attributable to Dominion Generation:

•

A $387 million ($252 million after-tax) charge related to the impairment of Dresden;

•

A $259 million ($158 million after-tax) extraordinary charge in connection with the reapplication of SFAS No. 71 to the Virginia jurisdiction of our utility generation operations; and

•

A $236 million ($140 million after-tax) charge in connection with the termination of a long-term power sales agreement at State Line.

Intersegment sales and transfers are based on contractual arrangements and may result in intersegment profit or loss that is eliminated in consolidation.

PAGE 31

The following table presents segment information pertaining to our operations:


	DVP		Dominion Energy		Dominion Generation		Corporate and Other			Adjustments/ Eliminations			Consolidated Total
(millions)
Three Months Ended September 30,
2008
Total revenue from external customers	$	595	$	334	$	2,693	$	37		$	572		$	4,231
Intersegment revenue		18		624		17		198			(857	)		—

Total operating revenue		613		958		2,710		235			(285	)		4,231
Net income (loss)		84		81		449		(106	)		—			508

2007
Total revenue from external customers	$	579	$	209	$	2,229	$	220		$	352		$	3,589
Intersegment revenue		12		455		31		143			(641	)		—

Total operating revenue		591		664		2,260		363			(289	)		3,589
Loss from discontinued operations, net of tax		—		—		—		(3	)		—			(3	)
Net income		103		66		403		1,745			—			2,317

Nine Months Ended September 30,

2008
Total revenue from external customers	$	2,129	$	1,639	$	6,507	$	461		$	1,336		$	12,072
Intersegment revenue		109		1,497		63		509			(2,178	)		—

Total operating revenue		2,238		3,136		6,570		970			(842	)		12,072
Loss from discontinued operations, net of tax		—		—		—		(2	)		—			(2	)
Net income (loss)		278		333		991		(116	)		—			1,486

2007
Total revenue from external customers	$	2,057	$	1,340	$	5,745	$	1,905		$	933		$	11,980
Intersegment revenue		84		1,171		98		412			(1,765	)		—

Total operating revenue		2,141		2,511		5,843		2,317			(832	)		11,980
Extraordinary item, net of tax		—		—		—		(158	)		—			(158	)
Loss from discontinued operations, net of tax		—		—		—		(5	)		—			(5	)
Net income		333		274		623		1,010			—			2,240

PAGE 32

DOMINION RESOURCES, INC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MD&A discusses our results of operations and general financial condition. MD&A should be read in conjunction with our Consolidated Financial Statements. The terms “Dominion,” “Company,” “we,” “our” and “us” are used throughout this report and, depending on the context of their use, may represent any of the following: the legal entity, Dominion Resources, Inc., one or more of Dominion Resources, Inc.’s consolidated subsidiaries or operating segments or the entirety of Dominion Resources, Inc. and its consolidated subsidiaries.

Contents of MD&A

Our MD&A consists of the following information:

•

Forward-Looking Statements

•

Accounting Matters

•

Results of Operations

•

Segment Results of Operations

•

Selected Information — Energy Trading Activities

•

Liquidity and Capital Resources

•

Future Issues and Other Matters

Forward-Looking Statements

This report contains statements concerning our expectations, plans, objectives, future financial performance and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In most cases, the reader can identify these forward-looking statements by such words as “anticipate,” “estimate,” “forecast,” “expect,” “believe,” “should,” “could,” “plan,” “may,” “target” or other similar words.

We make forward-looking statements with full knowledge that risks and uncertainties exist that may cause actual results to differ materially from predicted results. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Additionally, other factors may cause actual results to differ materially from those indicated in any forward-looking statement. These factors include but are not limited to:

•

Unusual weather conditions and their effect on energy sales to customers and energy commodity prices;

•

Extreme weather events, including hurricanes and severe storms, that can cause outages and property damage to our facilities;

•

State and federal legislative and regulatory developments and changes to environmental and other laws and regulations, including those related to climate change, greenhouse gases and other emissions, to which we are subject;

•

Cost of environmental compliance, including those costs related to climate change;

•

Risks associated with the operation of nuclear facilities;

•

Fluctuations in energy-related commodity prices and the effect these could have on our earnings, liquidity position and the underlying value of our assets;

•

Counterparty credit risk;

•

Risks associated with our membership and participation in RTOs related to obligations created by the default of other participants;

•

Capital market conditions, including the availability of credit and our ability to obtain financing on reasonable terms;

•

Price risk due to securities held as investments in nuclear decommissioning and benefit plan trusts;

•

Fluctuations in interest rates;

•

Changes in federal and state tax laws and regulations;

•

Changes to benefit plan assumptions such as discount rates and the expected rate of return on plan assets;

•

Changes in rating agency requirements or credit ratings and their effect on availability and cost of capital;

•

Changes in financial or regulatory accounting principles or policies imposed by governing bodies;

•

Employee workforce factors including collective bargaining agreements and labor negotiations with union employees;

•

The risks of operating businesses in regulated industries that are subject to changing regulatory structures;

•

Changes to the regulated gas and electric rates we collect and the timing of such collection as it relates to fuel costs;

PAGE 33

•

Receipt of approvals for and timing of closing dates for acquisitions and divestitures;

•

Changes in rules for RTOs in which we participate, including changes in rate designs and capacity models;

•

Adverse outcomes in litigation matters;

•

Political and economic conditions, including the threat of domestic terrorism, inflation and deflation;

•

Timing and receipt of regulatory approvals necessary for planned construction or expansion projects;

•

The inability to complete planned construction or expansion projects within the terms and time frames initially anticipated; and

•

Completing the divestiture of Peoples and Hope.

Additionally, other risks that could cause actual results to differ from predicted results are set forth in Item 1A. Risk Factors in this report, in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008, and in our Annual Report on Form 10-K for the year ended December 31, 2007.

Our forward-looking statements are based on our beliefs and assumptions using information available at the time the statements are made. We caution the reader not to place undue reliance on our forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. We undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.

Accounting Matters

Critical Accounting Policies and Estimates

As of September 30, 2008, there have been no significant changes with regard to the critical accounting policies and estimates disclosed in MD&A in our Annual Report on Form 10-K for the year ended December 31, 2007. The policies disclosed included the accounting for derivative contracts at fair value, goodwill and long-lived asset impairment testing, regulated operations, asset retirement obligations, employee benefit plans, gas and oil operations, and income taxes.

Other

See Notes 3 and 4 to our Consolidated Financial Statements for a discussion of newly adopted and recently issued accounting standards. See Note 11 to our Consolidated Financial Statements for information on our fair value measurements.

Results of Operations

Presented below is a summary of our consolidated results for the quarter and year-to-date periods ended September 30, 2008 and 2007:


	2008		2007		$ Change
(millions, except EPS)
Third Quarter
Net income	$	508	$	2,317	$	(1,809	)
Diluted EPS		0.87		3.62		(2.75	)

Year-To-Date
Net income	$	1,486	$	2,240	$	(754	)
Diluted EPS		2.56		3.29		(0.73	)

Overview

Third Quarter 2008 vs. 2007

Net income decreased by 78% to $508 million. The decrease primarily reflects the absence of a $2.1 billion after-tax gain on the sale of our U.S. non-Appalachian E&P business, partially offset by the absence of charges related to the early extinguishment of outstanding debt associated with our debt tender offer completed in July 2007 and the termination of a long-term power sales agreement at State Line in 2007 and higher contributions from our merchant generation operations in 2008. Diluted EPS decreased to $0.87 and includes $0.08 of share accretion resulting from the repurchase of shares in 2007 with proceeds received from the sale of the majority of our E&P operations.

PAGE 34

Year-to-Date 2008 vs. 2007

Net income decreased by 34% to $1.5 billion. Unfavorable drivers include the absence of a $2.1 billion after-tax gain on the sale of our U.S. non-Appalachian E&P business and the absence of ongoing earnings from this business due to the sale. Favorable drivers include the absence of the following 2007 items:

•

Charges related to the sale of the majority of our E&P operations;

•

An impairment charge related to the sale of Dresden;

•

An extraordinary charge in connection with the reapplication of SFAS No. 71 to the Virginia jurisdiction of our utility generation operations; and

•

A charge in connection with the termination of a long-term power sales agreement at State Line.

Additional favorable drivers include the reinstatement of annual fuel rate adjustments for the Virginia jurisdiction of our utility generation operations effective July 1, 2007, a higher contribution from our merchant generation operations and the reversal of deferred tax liabilities associated with the planned sale of Peoples and Hope. Diluted EPS decreased to $2.56 and includes $0.38 of share accretion resulting from the repurchase of shares in 2007 with proceeds received from the sale of the majority of our E&P operations.

Analysis of Consolidated Operations

Presented below are selected amounts related to our results of operations.


	Third Quarter								Year-To-Date
	2008		2007			$ Change			2008		2007			$ Change
(millions)
Operating Revenue	$	4,231	$	3,589		$	642		$	12,072	$	11,980		$	92
Operating Expenses
Electric fuel and energy purchases		1,370		914			456			3,006		2,742			264
Purchased electric capacity		102		111			(9	)		306		339			(33	)
Purchased gas		593		346			247			2,469		2,024			445
Other energy-related commodity purchases		9		64			(55	)		43		184			(141	)
Other operations and maintenance		689		1,159			(470	)		2,236		3,906			(1,670	)
Gain on sale of U.S. non-Appalachian E&P business		42		(3,617	)		3,659			42		(3,602	)		3,644
Depreciation, depletion and amortization		259		284			(25	)		770		1,116			(346	)
Other taxes		112		113			(1	)		375		436			(61	)
Other income		14		33			(19	)		10		125			(115	)
Interest and related charges		217		437			(220	)		646		974			(328	)
Income tax expense		344		1,498			(1,154	)		701		1,576			(875	)
Extraordinary item, net of tax		—		—			—			—		(158	)		158

An analysis of our results of operations for the third quarter and year-to-date periods of 2008 as compared to 2007 follows:

Third Quarter 2008 vs. 2007

Operating Revenue increased 18% to $4.2 billion, primarily reflecting:

•

A $347 million increase in revenue from our electric utility operations resulting primarily from an increase in fuel revenue largely due to the impact of a comparatively higher fuel rate in certain customer jurisdictions that was offset by a corresponding increase in Electric fuel and energy purchases expense ;

•

A $178 million increase in our producer services business primarily as a result of an increase in prices realized for gas aggregation activities and favorable price changes associated with gas trading activities;

•

A $157 million increase for merchant generation operations primarily reflecting higher realized prices for nuclear and fossil operations; and

•

An $89 million increase in gas sales by our gas distribution operations, primarily due to the sale of gas inventory by Dominion East Ohio related to its plan to exit the gas merchant function in Ohio and have all customers select an alternate gas supplier.

These increases were partially offset by:

•

A $136 million decrease due to the sale of the majority of our U.S. E&P operations; and

•

A $51 million decrease in nonutility coal sales related to exiting this activity.

PAGE 35

Operating Expenses and Other Items

Electric fuel and energy purchases expense increased 50% to $1.4 billion, primarily reflecting the combined effects of:

•

A $367 million increase for our utility generation operations primarily reflecting a comparatively higher fuel rate in certain customer jurisdictions, as discussed in Operating Revenue ; and

•

A $60 million increase for our merchant generation operations primarily reflecting increased consumption ($43 million) and higher commodity prices ($13 million) at certain fossil generation facilities.

Purchased gas expense increased 71% to $593 million, principally resulting from the following factors:

•

A $126 million increase in our producer services business primarily as a result of an increase in prices ($103 million) and volumes ($23 million) associated with gas aggregation and marketing activities; and

•

A $92 million increase in the cost of gas sold by our gas distribution operations, primarily due to the sale of gas inventory by Dominion East Ohio related to its plan to exit the gas merchant function in Ohio and have all customers select an alternate gas supplier.

Other energy-related commodity purchases expense decreased 86% to $9 million, primarily due to a $53 million decrease in the cost of nonutility coal sales related to exiting this activity.

Other operations and maintenance expense decreased 41% to $689 million, primarily reflecting the combined effects of:

•

The absence of a $236 million charge in connection with the termination of a long-term power sales agreement at State Line in 2007;

•

A $106 million decrease reflecting the sale of the majority of our U.S. E&P operations, including the absence of charges incurred in 2007 in connection with the sale; and

•

The absence of $86 million of impairment charges in 2007 related to DCI investments.

Gain on sale of U.S. non-Appalachian E&P business primarily reflects the absence of the gain of $3.6 billion resulting from the completion of the sale of our U.S. non-Appalachian E&P business in 2007.

DD&A decreased 9% to $259 million, principally due to decreased gas and oil production resulting from the sale of the majority of our U.S. E&P operations, partially offset by property additions and an increase in depreciation rates for our utility generation assets.

Other income decreased by 58% to $14 million, primarily due to higher other-than-temporary impairments for merchant nuclear decommissioning trust investments.

Interest and related charges decreased 50% to $217 million resulting principally from the absence of charges related to the early extinguishment of outstanding debt associated with our debt tender offer completed in July 2007.

Income tax expense decreased by 77% to $344 million, primarily due to lower pre-tax income in 2008 largely reflecting the absence of the gain realized in 2007 from the sale of our U.S. non-Appalachian E&P business.

Year-To-Date 2008 vs. 2007

Operating Revenue increased 1% to $12.1 billion, primarily reflecting:

•

A $561 million increase in revenue from our electric utility operations resulting primarily from an increase in fuel revenue largely due to the impact of a comparatively higher fuel rate in certain customer jurisdictions;

•

A $365 million increase for merchant generation operations, primarily reflecting higher realized prices for nuclear and fossil operations ($430 million), partially offset by lower overall volumes due to outages at certain fossil generating facilities ($65 million);

•

A $254 million increase in our producer services business primarily as a result of an increase in prices realized for gas aggregation activities and favorable price changes associated with gas trading activities;

•

A $164 million increase in sales of gas production from our remaining E&P operations, primarily due to:

•

An $89 million increase in sales from our Appalachian properties due to higher prices ($66 million) and increased production ($23 million); and

•

Increased production associated with reacquired overriding royalty interests arising from the VPPs terminated in 2007 ($71 million).

PAGE 36

•

A $90 million increase in nonregulated gas sales by our gas distribution operations, primarily due to the sale of gas inventory by Dominion East Ohio related to its plan to exit the gas merchant function in Ohio and have all customers select an alternate gas supplier;

•

A $69 million increase in regulated gas sales attributable to our gas distribution operations primarily resulting from the net impact of higher prices ($94 million) partially offset by lower volumes and changes in customer usage patterns and other factors ($25 million);

•

A $57 million increase in gas transportation and storage revenue primarily due to a $32 million increase in revenue from our gas distribution operations due to higher prices and a $27 million increase attributable to our gas transmission operations primarily reflecting increased rates for certain storage activities and gathering and extraction services; and

•

A $47 million increase in sales of extracted products from our gas transmission operations as a result of higher realized prices.

These increases were partially offset by:

•

A $1.4 billion decrease due to the sale of the majority of our U.S. E&P operations; and

•

A $141 million decrease in nonutility coal sales related to exiting this activity.

Operating Expenses and Other Items

Electric fuel and energy purchases expense increased 10% to $3.0 billion, primarily reflecting the combined effects of:

•

A $109 million increase for our utility generation operations. This increase was largely due to a $470 million increase in fuel costs, primarily as a result of higher commodity prices, including purchased power. The increase in fuel costs was partially offset by the deferral of fuel expenses that were in excess of the current period fuel rate recovery ($361 million); and

•

A $103 million increase for our merchant generation operations primarily reflecting the impact of higher commodity prices ($59 million) and increased consumption ($44 million) at certain fossil generation facilities.

Purchased gas expense increased 22% to $2.5 billion, primarily due to the following factors:

•

A $241 million increase for our producer services business primarily as a result of an increase in prices associated with gas aggregation and marketing activities; and

•

A $145 million increase in the cost of gas sold by our gas distribution operations primarily reflecting the combined effects of the following:

•

A $103 million increase due to higher prices; and

•

A $42 million increase in volumes due to the net impact of the sale of gas inventory by Dominion East Ohio related to its plan to exit the gas merchant function in Ohio and have all customers select an alternate gas supplier partially offset by lower sales for our regulated gas distribution operations.

Other energy-related commodity purchases expense decreased 77% to $43 million, primarily due to a $140 million decrease in the cost of nonutility coal sales volumes related to exiting this activity.

Other operations and maintenance expense decreased 43% to $2.2 billion, primarily reflecting the combined effects of:

•

A $1.1 billion decrease reflecting the sale of the majority of our U.S. E&P operations, including the absence of charges incurred in 2007 in connection with the sale;

•

The absence of a $387 million impairment charge in 2007 related to the sale of Dresden; and

•

The absence of a $236 million charge in connection with the termination of a long-term power sales agreement at State Line in 2007; partially offset by

•

A $73 million increase in outage costs primarily reflecting an increase in scheduled merchant nuclear and fossil outages, partially offset by fewer scheduled utility generation outages.

DD&A decreased 31% to $770 million, principally due to decreased gas and oil production resulting from the sale of the majority of our U.S. E&P operations in 2007, partially offset by an increase in production from our remaining E&P operations, property additions and an increase in depreciation rates for our utility generation assets.

Other taxes decreased 14% to $375 million primarily due to lower severance and property taxes resulting from the sale of the majority of our U.S. E&P operations in 2007.

PAGE 37

Other income decreased by 92% to $10 million, primarily due to higher other-than-temporary impairments for merchant nuclear decommissioning trust investments.

Interest and related charges decreased 34% to $646 million, resulting principally from the absence of charges related to the early extinguishment of outstanding debt associated with our debt tender offer completed in July 2007.

Income tax expense decreased by 56% to $701 million, primarily due to lower pre-tax income in 2008 largely reflecting the absence of the gain realized in 2007 from the sale of our U.S. non-Appalachian E&P business.

Extraordinary item reflects the absence of a $158 million after-tax charge in 2007 in connection with the reapplication of SFAS No. 71 to the Virginia jurisdiction of our utility generation operations.

Segment Results of Operations

Segment results include the impact of intersegment revenues and expenses, which may result in intersegment profit and loss. Presented below is a summary of contributions by our operating segments to net income for the quarter and year-to-date periods ended September 30, 2008 and 2007:


	Net Income								Diluted EPS
Third Quarter	2008			2007		$ Change			2008			2007		$ Change
(millions, except EPS)
DVP	$	84		$	103	$	(19	)	$	0.15		$	0.16	$	(0.01	)
Dominion Energy		81			66		15			0.14			0.10		0.04
Dominion Generation		449			403		46			0.77			0.63		0.14

Primary operating segments		614			572		42			1.06			0.89		0.17
Corporate and Other		(106	)		1,745		(1,851	)		(0.19	)		2.73		(2.92	)

Consolidated	$	508		$	2,317	$	(1,809	)	$	0.87		$	3.62	$	(2.75	)

Year-To-Date
(millions, except EPS)
DVP	$	278		$	333	$	(55	)	$	0.48		$	0.49	$	(0.01	)
Dominion Energy		333			274		59			0.57			0.40		0.17
Dominion Generation		991			623		368			1.71			0.91		0.80

Primary operating segments		1,602			1,230		372			2.76			1.80		0.96
Corporate and Other		(116	)		1,010		(1,126	)		(0.20	)		1.49		(1.69	)

Consolidated	$	1,486		$	2,240	$	(754	)	$	2.56		$	3.29	$	(0.73	)

PAGE 38

DVP

Presented below are operating statistics related to DVP’s operations:


	Third Quarter				Year-To-Date
	2008	2007	% Change		2008	2007	% Change
Electricity delivered (million mwhrs)	23.4	23.7	(1	)%	64.2	64.7	(1	)%
Degree days (electric distribution service area):
Cooling ⁽¹⁾	1,083	1,150	(6	)	1,587	1,643	(3	)
Heating ⁽²⁾	2	5	(60	)	2,074	2,365	(12	)
Average electric distribution customer accounts ⁽³⁾	2,387	2,364	1		2,383	2,357	1
Average retail energy marketing customer accounts ⁽³⁾	1,617	1,566	3		1,601	1,529	5

mwhrs = megawatt hours

(1)	Cooling degree days (CDDs) are units measuring the extent to which the average daily temperature is greater than 65 degrees. CDDs are calculated as the difference between the average temperature for each day and 65 degrees.

(2)	Heating degree days (HDDs) are units measuring the extent to which the average daily temperature is less than 65 degrees. HDDs are calculated as the difference between the average temperature for each day and 65 degrees.

(3)	Period average, in thousands.

Presented below, on an after-tax basis, are the key factors impacting DVP’s net income contribution:


	Third Quarter 2008 vs. 2007 Increase (Decrease)						Year-To-Date 2008 vs. 2007 Increase (Decrease)
	Amount			EPS			Amount			EPS
(millions, except EPS)
Regulated electric sales:
Weather	$	(7	)	$	(0.01	)	$	(15	)	$	(0.02	)
Customer growth		2			—			7			0.01
Other		(3	)		—			(1	)		—
Retail energy marketing operations		(6	)		(0.01	)		4			0.01
Interest expense		(2	)		—			(11	)		(0.02	)
Depreciation and amortization		(2	)		—			(5	)		(0.01	)
Storm damage and service restoration – distribution operations		—			—			(11	)		(0.02	)
Operations and maintenance ⁽¹⁾		4			0.01			(13	)		(0.02	)
Other		(5	)		(0.01	)		(10	)		(0.01	)
Share accretion		—			0.01			—			0.07

Change in net income contribution	$	(19	)	$	(0.01	)	$	(55	)	$	(0.01	)

(1)	For the year-to-date period, primarily reflects increases in salaries, wages and benefits, outside contractor services and general administrative costs.

PAGE 39

Dominion Energy

Presented below are operating statistics related to our Dominion Energy operations:


	Third Quarter						Year-To-Date
	2008		2007		% Change		2008		2007		% Change
Gas distribution throughput (bcf):
Sales		3		3	—	%		35		36	(3	)%
Transportation		28		26	8			156		152	3
HDDs (gas distribution service area)		54		72	(25	)		3,929		3,964	(1	)
Average gas distribution customer accounts ⁽¹⁾
Sales		384		406	(5	)		396		412	(4	)
Transportation		802		791	1			807		799	1
Production ⁽²⁾ (bcfe)		15.2		17.2	(12	)		49.2		39.6	24
Average realized prices without hedging results (per mcfe)	$	9.94	$	5.83	70		$	9.39	$	6.48	45
Average realized prices with hedging results (per mcfe)		8.54		6.61	29			8.61		6.37	35
DD&A (unit of production rate per mcfe)		2.06		1.63	26			1.98		1.58	25
Average production (lifting) cost ⁽³⁾ (per mcfe)		1.51		1.33	14			1.35		1.30	4

bcf = billion cubic feet

bcfe = billion cubic feet equivalent

mcfe = thousand cubic feet equivalent

(1)	Period average, in thousands.

(2)

Includes natural gas, natural gas liquids and oil. Production includes 3.5 bcfe and 14.4 bcfe for the quarter and year-to-date periods ended September 30, 2008, respectively, and 6.7 bcfe and 9.0 bcfe for the quarter and year-to-date periods ended September 30, 2007, respectively, associated with reacquired overriding royalty interests arising from the VPPs terminated in 2007.

(3)

The inclusion of volumes associated with reacquired overriding royalty interests arising from the VPPs terminated in 2007 would have resulted in lifting costs of $1.26 and $1.07 for the quarter and year-to-date periods ended September 30, 2008, respectively, and $0.86 and $1.03 for the quarter and year-to-date periods ended September 30, 2007, respectively.

Presented below, on an after-tax basis, are the key factors impacting Dominion Energy’s net income contribution:


	Third Quarter 2008 vs. 2007 Increase (Decrease)						Year-To-Date 2008 vs. 2007 Increase (Decrease)
	Amount			EPS			Amount			EPS
(millions, except EPS)
Producer services ⁽¹⁾	$	15		$	0.03		$	(6	)	$	(0.01	)
Gas and oil – prices		14			0.02			48			0.07
Gas and oil – production ⁽²⁾		(6	)		(0.01	)		43			0.06
DD&A – gas and oil		(2	)		—			(21	)		(0.03	)
Other		(6	)		(0.01	)		(5	)		(0.01	)
Share accretion		—			0.01			—			0.09

Change in net income contribution	$	15		$	0.04		$	59		$	0.17

(1)	For the quarter, increase is primarily due to higher income related to the impact of favorable price changes associated with gas trading, storage and affiliated price risk management services, partially offset by losses associated with physical gas transportation margins.

(2)	For the year-to-date period, increase primarily reflects the inclusion of volumes associated with reacquired overriding royalty interests arising from the VPPs terminated in 2007.

PAGE 40

Included below are the volumes and weighted-average prices associated with hedges in place for our E&P operations and fixed-term overriding royalty interests formerly associated with VPP agreements as of September 30, 2008, by applicable time period:


	Natural Gas
Year	Hedged Production (bcf)	Average Hedge Price (per mcf)
2008	13.6	$	8.94
2009	31.7		9.08
2010	12.7		8.60

mcf = thousand cubic feet

Dominion Generation

Presented below are operating statistics related to our Dominion Generation operations:


	Third Quarter				Year-To-Date
	2008	2007	% Change		2008	2007	% Change
Electricity supplied (million mwhrs)
Utility	23.4	23.7	(1	)%	64.2	64.7	(1	)%
Merchant	12.4	12.7	(2	)	33.4	34.2	(2	)
Degree days (electric utility service area):
Cooling	1,083	1,150	(6	)	1,587	1,643	(3	)
Heating	2	5	(60	)	2,074	2,365	(12	)

Presented below, on an after-tax basis, are the key factors impacting Dominion Generation’s net income contribution:


	Third Quarter 2008 vs. 2007 Increase (Decrease)						Year-To-Date 2008 vs. 2007 Increase (Decrease)
	Amount			EPS			Amount			EPS
(millions, except EPS)
Merchant generation margin ⁽¹⁾	$	67		$	0.10		$	154		$	0.22
Regulated electric sales:
Customer growth		5			0.01			13			0.02
Weather		(16	)		(0.03	)		(29	)		(0.04	)
Other		4			0.01			34			0.05
Virginia fuel expenses ⁽²⁾		—			—			243			0.36
Sales of emissions allowances		—			—			18			0.03
Depreciation and amortization		(8	)		(0.01	)		(28	)		(0.04	)
Outage costs		(2	)		—			(50	)		(0.07	)
Other		(4	)		(0.01	)		13			0.02
Share accretion		—			0.07			—			0.25

Change in net income contribution	$	46		$	0.14		$	368		$	0.80

(1)	Primarily reflects higher realized prices, partially offset by higher fuel prices and lower volumes at certain generation facilities due to outages.

(2)	For the year-to-date period, primarily reflects the reapplication of deferred fuel accounting effective July 1, 2007 for the Virginia jurisdiction of our utility generation operations.

PAGE 41

Corporate and Other

Presented below are the Corporate and Other segment’s after-tax results:


	Third Quarter									Year-To-Date
	2008			2007			$ Change			2008			2007			$ Change
(millions, except EPS)
Specific items attributable to operating segments	$	(27	)	$	(178	)	$	151		$	(54	)	$	(616	)	$	562
Discontinued operations		—			(3	)		3			(2	)		(5	)		3
Sale of U.S. E&P business		(26	)		1,946			(1,972	)		(26	)		1,415			(1,441	)
Divested U.S. E&P operations		—			4			(4	)		—			257			(257	)
Peoples and Hope		2			(3	)		5			63			30			33
Other corporate operations		(55	)		(21	)		(34	)		(97	)		(71	)		(26	)

Total net benefit (expense)	$	(106	)	$	1,745		$	(1,851	)	$	(116	)	$	1,010		$	(1,126	)

EPS impact	$	(0.19	)	$	2.73		$	(2.92	)	$	(0.20	)	$	1.49		$	(1.69	)

Specific Items Attributable to Operating Segments

Corporate includes specific items attributable to our operating segments that have been excluded from profit measures evaluated by management, either in assessing segment performance or in allocating resources among the segments. See Note 20 to our Consolidated Financial Statements for discussion of these items.

Sale of U.S. E&P business

The sale of our U.S. non-Appalachian E&P business for the 2007 quarter and year-to-date periods primarily reflects the $2.1 billion after-tax gain recognized in 2007 on the sale, partially offset by charges related to the divestitures as well as charges associated with the early retirement of debt with proceeds from the sale. The 2008 quarter and year-to-date amounts reflect post-closing adjustments to the gain on the sale.

Divested U.S. E&P operations

Year-to-date 2008 vs. 2007

The decrease is due to the disposition of these operations in the third quarter of 2007.

Peoples and Hope

Year-to-date 2008 vs. 2007

The net benefit related to Peoples and Hope increased primarily due to the re-establishment of a regulatory asset in connection with the agreement to sell these subsidiaries to BBIFNA.

Other Corporate Operations

Third Quarter 2008 vs. 2007

Net expenses increased $34 million, primarily due to higher income tax benefits in 2007 related to the interim impact of changes in our estimated annual effective tax rate and the impact of Massachusetts tax legislation enacted in July 2008. The increase in net expenses also reflects the absence of interest income earned on the proceeds from the sale of our non-Appalachian E&P business in the third quarter of 2007. These increases were partially offset by the absence of an $86 million ($55 million after-tax) impairment charge in 2007 related to certain DCI investments and the impact of favorable changes in the fair value of a gas contract for which we discontinued hedge accounting as a result of the sale of our U.S. non-Appalachian E&P business in 2007.

Year-to-date 2008 vs. 2007

Net expenses increased $26 million, primarily reflecting a decrease in tax benefits and the absence of interest income earned on the proceeds received from the sale of our non-Appalachian E&P business in 2007. The decrease in tax benefits primarily reflects the net impact of the following items:

•

A decrease in state tax benefits, including the impact of Massachusetts tax legislation enacted in July 2008; and

•

The absence of tax benefits from the elimination of valuation allowances on federal and state tax loss carryforwards in 2007, partially offset by

•

An increase in tax benefits due to the reversal of deferred tax liabilities associated with Peoples and Hope in the first quarter of 2008.

The increase in net expenses was partially offset by the impact of lower impairment charges in 2008 related to the disposition of certain DCI investments.

PAGE 42

Selected Information—Energy Trading Activities

See Selected Information-Energy Trading Activities in MD&A included in our Annual Report on Form 10-K for the year ended December 31, 2007 for a discussion of our energy trading, hedging and marketing activities and related accounting policies. For additional discussion of trading activities, see Market Risk Sensitive Instruments and Risk Management in Item 3 .

A summary of the changes in unrealized gains and losses recognized for our energy-related derivative instruments held for trading purposes during the nine months ended September 30, 2008 follows:


	Amount
(millions)
Net unrealized gain at December 31, 2007	$	52
Contracts realized or otherwise settled during the period		(34	)
Net unrealized gain at inception of contracts initiated during the period		—
Changes in valuation techniques		—
Other changes in fair value		16

Net unrealized gain at September 30, 2008	$	34

The fair values summarized below were determined in accordance with the requirements of SFAS No. 157, which we adopted effective January 1, 2008. In addition, we aligned the categories below with the Level 1, 2, and 3 fair value measurements as defined by SFAS No. 157. The balance of net unrealized gains and losses recognized for our energy-related derivative instruments held for trading purposes at September 30, 2008, is summarized in the following table based on the inputs used to determine fair value:


	Maturity Based on Contract Settlement or Delivery Date(s)
Source of Fair Value	Less than 1 year		1-2 years		2-3 years			3-5 years		In excess of 5 years		Total
(millions)
Actively quoted – Level 1 ⁽¹⁾	$	1	$	—	$	—		$	—	$	—	$	1
Other external sources – Level 2 ⁽²⁾		18		2		(1	)		—		—		19
Models and other valuation methods – Level 3 ⁽³⁾		5		4		3			2		—		14

Total	$	24	$	6	$	2		$	2	$	—	$	34

(1)	Values represent observable unadjusted quoted prices for traded instruments in active markets.

(2)	Values with inputs that are observable directly or indirectly for the instrument, but do not qualify for Level 1.

(3)	Values with a significant amount of inputs that are not observable for the instrument.

Liquidity and Capital Resources

We depend on both internal and external sources of liquidity to provide working capital and to fund capital requirements. Short-term cash requirements not met by cash provided by operations are generally satisfied with proceeds from short-term borrowings. Long-term cash needs are met through issuances of debt and/or equity securities.

Impact of Recent Credit Market Events

Despite recent disruptions in the credit markets, we have sufficient access to liquidity for our daily operations through our credit facilities discussed in Note 15 to our Consolidated Financial Statements. While we continue to issue commercial paper, in October 2008 we borrowed $870 million from our credit facilities to reduce our exposure to the commercial paper market. We expect our operations to provide sufficient cash flow to fund maintenance capital expenditures and maintain or grow our dividend; however we expect to access the capital markets to fund growth capital expenditures. If necessary, we have the flexibility to mitigate the need for future debt financings and equity issuances, by postponing or cancelling certain planned capital expenditures without significantly impacting our earnings per share growth plans over the next several years. However, a material reduction or delay in growth projects would likely reduce our earnings per share growth rate longer term.

At September 30, 2008, we had $2.7 billion of unused capacity under our credit facilities.

PAGE 43

A summary of our cash flows for the nine months ended September 30, 2008 and 2007 is presented below:


	2008			2007
(millions)
Cash and cash equivalents at January 1, ⁽¹⁾	$	287		$	142
Cash flows provided by (used in):
Operating activities		1,415			2,283
Investing activities		(2,321	)		10,814
Financing activities		709			(12,768	)

Net decrease in cash and cash equivalents		(197	)		329

Cash and cash equivalents at September 30, ⁽²⁾	$	90		$	471

(1)	2008 and 2007 amounts include $4 million of cash classified as held for sale on our Consolidated Balance Sheets.

(2)	2008 and 2007 amounts include $2 million of cash classified as held for sale on our Consolidated Balance Sheets.

Operating Cash Flows

For the nine months ended September 30, 2008, net cash provided by operating activities decreased by $868 million as compared to the nine months ended September 30, 2007. The decrease was primarily due to a reduction in cash flow resulting from the disposition of the majority of our E&P operations in the third quarter of 2007 and higher collateral requirements related to our commodity hedging transactions, partially offset by a higher contribution from our merchant generation business. Our operations are subject to risks and uncertainties that may negatively impact the timing or amounts of operating cash flows which are discussed in Item 1A. Risk Factors in this report, our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008 and in our Annual Report on Form 10-K for the year-ended December 31, 2007.

Credit Risk

Our exposure to potential concentrations of credit risk results primarily from our energy marketing and price risk management activities. Presented below is a summary of our gross credit exposure as of September 30, 2008, for these activities. Our gross credit exposure for each counterparty is calculated as outstanding receivables plus any unrealized on or off-balance sheet exposure, taking into account contractual netting rights.


	Gross Credit Exposure		Credit Collateral		Net Credit Exposure
(millions)
Investment grade ⁽¹⁾	$	528	$	28	$	500
Non-investment grade ⁽²⁾		16		—		16
No external ratings:
Internally rated—investment grade ⁽³⁾		287		8		279
Internally rated—non-investment grade ⁽⁴⁾		32		—		32

Total	$	863	$	36	$	827

(1)	Designations as investment grade are based upon minimum credit ratings assigned by Moody’s and Standard & Poor’s. The five largest counterparty exposures, combined, for this category represented approximately 31% of the total net credit exposure.

(2)	The five largest counterparty exposures, combined, for this category represented less than 2% of the total net credit exposure.

(3)	The five largest counterparty exposures, combined, for this category represented approximately 26% of the total net credit exposure.

(4)	The five largest counterparty exposures, combined, for this category represented approximately 3% of the total net credit exposure.

Investing Cash Flows

For the nine months ended September 30, 2008, net cash used in investing activities was $2.3 billion as compared to net cash provided by investing activities of $10.8 billion for the nine months ended September 30, 2007. This change is primarily due to the absence of the proceeds received in 2007 from the sales of our non-Appalachian E&P business and Peaker facilities, a reduction in capital expenditures as a result of the disposition of the majority of our E&P operations, and proceeds received from the assignment of drilling rights in the Marcellus Shale formation to Antero, partially offset by an increase in capital expenditures primarily related to our electric utility operations and our investment in wind farm facilities.

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Financing Cash Flows and Liquidity

We rely on banks and capital markets as significant sources of funding for capital requirements not satisfied by cash provided by the companies’ operations. As discussed further in the Credit Ratings and Debt Covenants section, our ability to borrow funds or issue securities and the return demanded by investors are affected by the issuing company’s credit ratings. In addition, the raising of external capital is subject to meeting certain regulatory requirements, including registration with the SEC and in the case of Virginia Power, approval by the Virginia Commission.

For the nine months ended September 30, 2008, net cash provided by financing activities was $709 million as compared to net cash used in financing activities of $12.8 billion for the nine months ended September 30, 2007. This change is primarily due to net issuances of common stock and short-term and long-term debt in 2008 as compared to net repurchases and repayments in 2007 reflecting the use of proceeds received in 2007 from the sale of the majority of our E&P business.

See Note 15 to our Consolidated Financial Statements for further information regarding our credit facilities, liquidity and significant financing transactions.

Credit Ratings and Debt Covenants

Credit ratings are intended to provide banks and capital market participants with a framework for comparing the credit quality of securities and are not a recommendation to buy, sell or hold securities. In the Credit Ratings and Debt Covenants sections of MD&A in our Annual Report on Form 10-K for the year ended December 31, 2007, we discussed the use of capital markets by Dominion and Virginia Power, as well as the impact of credit ratings on the accessibility and costs of using these markets. In addition, these sections of MD&A discussed various covenants present in the enabling agreements underlying Dominion and Virginia Power’s debt. As of September 30, 2008, there have been no changes in our credit ratings, other than the matters discussed in MD&A in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, nor have there been any changes to or events of default under our debt covenants.

Future Cash Payments for Contractual Obligations and Planned Capital Expenditures

As of September 30, 2008, there have been no material changes outside the ordinary course of business to our contractual obligations nor any material changes to our planned capital expenditures disclosed in MD&A in our Annual Report on Form 10-K for the year ended December 31, 2007.

Use of Off-Balance Sheet Arrangements

As of September 30, 2008, there have been no material changes in the off-balance sheet arrangements disclosed in MD&A in our Annual Report on Form 10-K for the year ended December 31, 2007, other than the third-party guarantees discussed in Note 17 to our Consolidated Financial Statements.

Future Issues and Other Matters

The following discussion of future issues and other information includes current developments of previously disclosed matters and new issues arising during the period covered by and subsequent to our Consolidated Financial Statements. This section should be read in conjunction with Future Issues and Other Matters in our Annual Report on Form 10-K for the year ended December 31, 2007 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008.

Marcellus Shale

PAGE 45

recognized, unless the gain or loss would significantly alter the relationship between the capitalized costs and proved reserves of natural gas and oil. We initially expected to recognize a pre-tax gain based on the terms of the initial agreement with Antero, however, due to the reduced size of the final transaction no material alteration occurred and the net proceeds were credited to the full cost pool, reducing property, plant and equipment in our Consolidated Balance Sheet. After-tax proceeds of $205 million will be used initially to reduce outstanding short-term debt.

We control drilling rights on substantial acreage in the Marcellus Shale formation. We continue to receive indications of interest in our remaining Marcellus Shale acreage and expect to pursue similar transactions.

In addition, we have announced the proposed development of the Dominion Keystone Project, an expansion of the DTI system that would transport new natural gas supplies from the Appalachian Basin to markets throughout the eastern U.S. As part of the drilling rights agreement, Antero will join DEPI as anchor tenants of the Dominion Keystone Project. DTI is negotiating binding precedent agreements with other customers interested in the new Keystone capacity following an open season that concluded in August 2008. Project timing is subject to producer drilling plans in the basin, as well as, customer demand throughout the mid-Atlantic and Northeast regions.

Regulatory Approval of Sale of Peoples and Hope

In September 2008, Peoples and BBIFNA filed a joint petition with the Pennsylvania Commission seeking approval of the purchase by BBIFNA of all of the stock of Peoples. In October 2008, Hope and BBIFNA filed a joint petition seeking West Virginia Commission approval of the purchase by BBIFNA of all of the stock of Hope. In September 2008, Dominion and BBIFNA each filed a Premerger Notification and Report Form with the U.S. Department of Justice and the Federal Trade Commission under the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act). In October 2008, the waiting period under the HSR Act related to the proposed sale of Peoples and Hope to BBIFNA expired. The transaction is expected to close in 2009, subject to state regulatory approvals in Pennsylvania and West Virginia as well as clearance under the Exon-Florio provision of the Omnibus Trade and Competitiveness Act.

Cove Point Expansion

In 2006, FERC approved the proposed expansion of our Cove Point terminal and DTI pipeline and the commencement of construction of such project. Such expansion included the installation of two new LNG storage tanks at our Cove Point terminal, each capable of storing 160,000 cubic meters of LNG and expansion of our Cove Point pipeline to approximately 1,800,000 dekatherms per day. In addition, our DTI gas pipeline and storage system would be expanded by building 81 miles of pipeline, two compressor stations in Pennsylvania and other upgrades. We have commenced construction and anticipate that these projects will be placed into service in late 2008.

In 2007, Washington Gas Light Company (WGL) petitioned the U.S. Court of Appeals for the District of Columbia (D.C. Appeals Court) for review of FERC’s orders. Prior to FERC’s final order approving the Cove Point expansion, WGL had asked FERC to delay its approval based on its assertion that leaks on its system were caused by the composition of gas received from the Cove Point pipeline. FERC rejected WGL’s claims, concluding that the leaks were a result of other defects in WGL’s system, not the composition of the LNG received from Cove Point. In July 2008, the D.C. Appeals Court affirmed FERC’s rulings on a number of important issues, including FERC’s findings that the leaks were the result of defects on WGL’s system and that we are not responsible for repairs. However, the court vacated FERC’s orders to the extent that these orders approved the expansion and remanded the case back to FERC so that FERC could more fully explain whether the expansion could go forward without causing unsafe leakage on WGL’s system.

In an order on remand issued in October 2008, FERC responded to the D.C. Appeals Court by reissuing authorizations for the construction and operation of the Cove Point and DTI facilities. FERC also capped deliveries from the Cove Point pipeline into Columbia Gas Transmission Corporation (Columbia) at currently authorized levels. FERC took this step to ensure that WGL would not be exposed to greater deliveries of regasified LNG via Columbia than it can currently receive. This limitation on deliveries to Columbia will have no impact on Cove Point’s firm service obligations.

PAGE 46

DTI Appalachian Basin Expansion

DTI has announced the proposed development of a gas pipeline project, known as the Appalachian Gateway Project, which is designed to transport gas on a firm basis out of the Appalachian Basin in West Virginia and southwestern Pennsylvania to DTI’s interconnect with Texas Eastern Transmission Corporation at Oakford, Pennsylvania. An open season for the project concluded in September 2008 and DTI is in the process of finalizing binding precedent agreements. Project timing is uncertain.

DTI is also evaluating other investments in gathering and processing facilities for “wet” natural gas, as a result of increased production in the region. Wet natural gas includes methane and heavier hydrocarbons such as propane, butane, isobutane and natural gasoline.

Collective Bargaining Agreements

We are currently negotiating with the International Union of Operating Engineers, Local 310 (Local 310). Local 310 represents approximately 170 employees at Kewaunee Power Station. The current labor contract, which was extended in 2007, has an effective date through October 21, 2008.

Kewaunee Power Station Operating License

In August 2008, we filed an application with the NRC to renew the Kewaunee Power Station operating license. Kewaunee is currently licensed to operate through December 21, 2013. A renewal would permit Kewaunee to operate through December 21, 2033. The NRC docketed the application in October 2008 and has begun its review. Interested persons have 60 days from the date of docketing to request a hearing, and there are other opportunities for public input as the NRC conducts its review of the application. The NRC’s schedule contemplates completion of the proceeding in June 2010 if there is no hearing, and in February 2011 if a hearing is granted.

Dominion East Ohio Rate Case

In August 2007, Dominion East Ohio filed an application to increase base rates. In this rate case, Dominion East Ohio requested approval of an increase in operating revenues of approximately $73 million and proposed an increase in demand-side management spending. Subsequently, Dominion East Ohio also requested that the Ohio Commission consolidate its review of the rate case application with Dominion East Ohio’s application, filed in February 2008, for approval to recover costs related to a 25-year program to replace 19% of its 21,000-mile pipeline system, which is expected to cost approximately $2.6 billion. In August 2008, Dominion East Ohio reached an agreement with intervening parties on all issues in the base rate case except for one related to rate design (Settlement Agreement).

In October 2008, the Ohio Commission issued its Opinion and Order in this case, in which the Ohio Commission approved the majority of the Settlement Agreement, but modified the allowed return on rate base from the 8.49% agreed upon in the Settlement Agreement to 8.29%. The resulting annual revenue increase approved by the Ohio Commission is approximately $37.5 million, which will be reflected in base rates commencing October 16, 2008. The Ohio Commission also approved the modified rate design supported by Ohio Commission staff and Dominion East Ohio for certain rate schedules, as well as the other terms of the Settlement Agreement, including a cost recovery mechanism for the implementation of automated meter reading equipment and a cost recovery mechanism for an initial five-year period of the pipeline replacement program. In addition, the Settlement Agreement requires Dominion East Ohio to increase its annual spending for energy conservation programs to a total of $9.5 million and to make grants totaling $1.2 million to several organizations to provide payment assistance and energy efficiency education to low-income customers. The Ohio Commission also ordered Dominion East Ohio to work in consultation with Commission staff and other parties to the case to develop a low-income pilot program under which a total of 5,000 eligible low-income, low-usage customers would receive a $4.00 reduction in their monthly service charge, as a result of implementing the new rate design.

Hope Rate Case

In October 2008, Hope filed a request with the West Virginia Commission for an increase in the base rates it charges for natural gas service. The requested new base rates would increase Hope’s revenues by $34.4 million and would increase the monthly bill of the average residential customer using six mcf per month by 21 percent. The average monthly bill would increase 12 percent for commercial customers, 32.6 percent for industrial customers and 14 percent for resale customers. We expect the West Virginia Commission to hold public hearings in the near future, and then issue a decision that would affect bills next summer.

Utility Generation Expansion

Based on available generation capacity and current estimates of growth in customer demand in our utility service

PAGE 47

area, we will need additional generation capacity over the next ten years. We have announced a comprehensive generation growth program, referred to as Powering Virginia , which involves the development, financing, construction and operation of new multi-fuel, multi-technology generation capacity to meet the growing demand in our core market in Virginia. Our Annual Report on Form 10-K for the year ended December 31, 2007 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008 provide a description of these projects, which are in various stages of development. The following is a discussion of certain significant developments related to such projects.

We are considering the construction of a third nuclear unit at a site located at North Anna which we own along with Old Dominion Electric Cooperative (ODEC). In November 2007, the NRC issued an Early Site Permit (ESP) to our subsidiary, Dominion Nuclear North Anna, LLC (DNNA), for a site located at North Anna. Also in November 2007, Virginia Power, along with ODEC filed an application with the NRC for a Combined Construction Permit and Operating License (COL), which would allow us to build and operate a new nuclear unit at North Anna. In January 2008, the NRC accepted our application for the COL and deemed it complete. The NRC is required to conduct a hearing in all COL proceedings. In August 2008, the Atomic Safety and Licensing Board of the NRC granted a request for a hearing on one of eight contentions filed by the Blue Ridge Environmental Defense League. The mandatory NRC hearing will be uncontested with respect to other issues. We have not yet committed to building a new nuclear unit.

In April 2008, we and DNNA filed applications with the Virginia Commission and the North Carolina Utilities Commission, seeking approval to merge DNNA into Virginia Power. The Virginia application was approved in July 2008, and the North Carolina application was approved in September 2008. Also in April 2008, we filed an application with the NRC to transfer the ESP from DNNA to us and ODEC. This application remains under consideration with the NRC, and we expect a decision in the fourth quarter of 2008.

In June 2008, the DOE issued a solicitation announcement inviting the submission of applications for loan guarantees from the DOE under its Loan Guarantee Program in support of debt financing for nuclear power facility projects in the U.S. (the Solicitation). The Solicitation is specifically designed to provide loan guarantees to support those projects that employ new or significantly improved nuclear power facility technologies. Any loan guarantee which may be issued by the DOE pursuant to the Solicitation would be backed by the full faith and credit of the U.S. government, and would provide credit enhancement for all or a portion of the debt financing an applicant would incur with respect to such a project. In August 2008, we submitted to the DOE Part I of the application, including a high-level description of the proposed nuclear unit, project eligibility, financing strategy and progress to date related to critical path schedules. We expect to submit to the DOE a Part II application by the required filing date of December 19, 2008.

North Carolina Fuel Factor

In September 2008, our electric utility subsidiary filed an application to revise our fuel factor with the North Carolina Utilities Commission, requesting an annual increase in our North Carolina fuel factor from 2.221 cents per kWh to 3.825 cents per kWh to be effective January 1, 2009. The proposal would result in an annual increase in fuel revenue of approximately $69 million for the North Carolina jurisdiction. An evidentiary hearing is scheduled for November 14, 2008.

Regional Transmission Expansion Plan

In June 2006, PJM authorized construction of numerous electric transmission upgrades through 2011. We are involved in two of the major construction projects, which are designed to improve the reliability of service to our customers and the region, and are subject to applicable state and federal permits and approvals.

The first project is an approximately 270-mile 500-kilovolt (kV) transmission line that begins in southwestern Pennsylvania, crosses West Virginia, and terminates in northern Virginia, of which we will construct approximately 65 miles in Virginia (the Meadow Brook-to-Loudoun line) and a subsidiary of Allegheny Energy, Inc. (Trans-Allegheny Interstate Line Company) will construct the remainder. In April 2007, we, along with Trans-Allegheny Interstate Line Company (Trans-Allegheny), filed an application with the Virginia Commission requesting approval of the proposed construction of the 65-mile transmission line in northern Virginia. In October 2008, the Virginia Commission authorized construction of the Meadow Brook-to-Loudoun line and affirmed the 65-mile route we proposed for the line which is adjacent to, or within, existing transmission line right-of-ways.

The Virginia Commission’s approval of the Meadow Brook-to-Loudoun line is conditioned on the respective state

PAGE 48

commission approvals of both the West Virginia and Pennsylvania portions of the transmission line. The West Virginia Commission approved Trans-Allegheny’s application in August 2008. Trans-Allegheny’s application remains pending before the Pennsylvania Commission. The Meadow Brook-to-Loudoun line is expected to cost approximately $255 million and, subject to the receipt of all regulatory approvals, is expected to be completed in June 2011.

The second project is an approximately 60-mile 500-kV transmission line that we will construct in southeastern Virginia (Carson-to-Suffolk line). This project is estimated to cost $224 million and is expected to be completed in June 2011. In May 2007, we filed an application with the Virginia Commission requesting approval of the proposed construction of the Carson-to-Suffolk line. Evidentiary hearings on the application commenced in February 2008. In May 2008 the hearing examiner filed a report finding need for and recommending approval of the line.

Application for Enhanced ROE for Electric Transmission Projects

In July 2008, we filed an application with FERC requesting a revision to our cost of service to reflect an additional return on equity (ROE) for eleven electric transmission enhancement projects. Under the proposal, our cost of transmission service would increase to include an ROE incentive adder for each of the eleven projects, beginning the date each project enters commercial operation (but not before January 1, 2009). We proposed an incentive of 150 basis points or 1.5% for four of the projects (including the Meadow Brook-to-Loudoun line and Carson-to-Suffolk line) and an incentive of 125 basis points or 1.25% for the other seven projects. In August 2008, FERC approved our proposal, effective September 1, 2008. The total cost for all eleven projects is estimated at $877 million, and all projects are currently expected to be completed by 2012.

PJM Capacity Auction Complaint

In May 2008, the Maryland Public Service Commission, Delaware Public Service Commission, Pennsylvania Commission, New Jersey Board of Public Utilities, the American Forest & Paper Association, the Portland Cement Association and several other organizations representing consumers in the PJM region (the RPM Buyers) filed a complaint at FERC claiming that PJM’s Reliability Pricing Model’s transitional auctions have produced unjust and unreasonable capacity prices. The RPM Buyers requested that a refund effective date of June 1, 2008 be established and that FERC provide appropriate relief from unjust and unreasonable capacity charges within 15 months. In September 2008, FERC dismissed the complaint.

RTO Start-up Costs and Administration Fees

In September 2008, we filed a Deferral Recovery Charge (DRC) request with FERC to recover approximately $153 million of RTO costs that we have been unable to recover due to a statutory rate cap established under Virginia law. The RTO costs include:

(i)

costs incurred in development of Alliance RTO on and after this rate cap became effective on July 1, 1999;

(ii)

costs incurred to start up our participation in PJM; and

(iii)

PJM administrative fees billed by PJM from the date that we joined PJM as a transmission owner.

If the DRC is approved by FERC, then recovery of RTO costs through the DRC will not commence until the date established by the Virginia Commission permitting us to implement such recovery.

Environmental Matters

We are subject to costs resulting from a number of federal, state and local laws and regulations designed to protect human health and the environment. These laws and regulations affect future planning and existing operations. They can result in increased capital, operating and other costs as a result of compliance, remediation, containment and monitoring obligations.

To the extent that environmental costs are incurred in connection with operations regulated by the Virginia Commission during the period ending December 31, 2008, in excess of the level currently included in Virginia jurisdictional rates, our results of operations could decrease. After that date, we are allowed to seek recovery through rates.

PAGE 49

Clean Air Act Compliance

In February 2008, the D.C. Appeals Court issued a ruling that vacates the Clean Air Mercury Rule (CAMR) as promulgated by the EPA. In May 2008, the EPA’s appeal of this decision with the D.C. Appeals Court was denied. In September 2008, the Utility Air Regulatory Group filed a petition requesting that the U.S. Supreme Court overturn the D.C. Appeals Court decision to vacate the EPA rules. In October 2008, the Solicitor General, on behalf of the EPA, also filed a petition with the U.S. Supreme Court. We cannot predict how the EPA and the states that adopted CAMR-based mercury emissions reduction rules may alter their approach to reducing mercury emissions. Given this regulatory uncertainty, we cannot estimate at this time the impact of the ruling on our future capital and operational expenditures. It should be noted that we continue to be governed by individual state mercury emission reduction regulations in Massachusetts and Illinois that were largely unaffected by the CAMR ruling.

In July 2008, the D.C. Appeals Court issued a ruling that vacates the Clean Air Interstate Rule (CAIR) as promulgated by the EPA. The primary effects of the Court’s decision are the elimination of the CAIR requirement to surrender sulfur dioxide (SO ₂ ) allowances under the Acid Rain Program at a 2:1 ratio starting in 2010 and a 2.86:1 ratio starting in 2015, and the emission reduction targets and timetables for nitrogen oxides (NO _X ) that were beyond those reductions already required under the Clean Air Act’s Acid Rain Program. The CAIR annual NO _X emissions allowance cap and trade program is also eliminated. Remaining in effect is the EPA NO _X State Implementation Plan Call regulation applicable to summertime NO _X emissions under a cap and trade program and the Acid Rain Program for SO ₂ reductions. A number of parties, including the EPA, filed petitions for a D.C. Appeals Court rehearing of the decision. The CAIR ruling remains deferred until the D.C. Appeals Court rules on the petitions for rehearing.

We do not expect to recognize any loss in connection with the elimination of the annual NO _X program as all of our annual NO _X allowances were allocated to us and were not assigned a cost value. The Court’s decision has resulted in a decline in the market value of SO ₂ allowances which may impact our ability to monetize the value of these allowances in the future. We tested our SO ₂ allowances for impairment and concluded that no impairment adjustment was required for SO ₂ allowances during the third quarter of 2008, as a result of this decline in market value.

Regulation of Greenhouse Gas Emissions

We operate two coal/oil-fired generating power stations in Massachusetts that are already subject to the implementation of carbon dioxide (CO ₂ ) emission regulations issued by the Massachusetts Department of Environmental Protection (MADEP). Additionally, Massachusetts and Rhode Island have joined the Regional Greenhouse Gas Initiative (RGGI), a multi-state effort to reduce CO ₂ emissions in the Northeast to be implemented through state specific regulations which are currently in development in these states. We own and operate a gas/oil-fired electric generating facility in Rhode Island that is subject to RGGI, in addition to the two coal/oil-fired stations in Massachusetts. The cost of complying with the RGGI requirements for the period 2009 to 2011 could adversely affect our results of operations. However, because of the price volatility that may occur in the early stages of this emerging market, we cannot provide a reasonable estimate of such cost until the RGGI CO ₂ allowance market more fully matures. We participated in the first RGGI auction in September 2008. Any such costs of compliance could potentially be mitigated by increases in power prices impacting our affected facilities in the Northeast.

Clean Water Act Compliance

In July 2004, the EPA published regulations under the Clean Water Act Section 316b that govern existing utilities that employ a cooling water intake structure and that have flow levels exceeding a minimum threshold. The EPA’s rule presented several compliance options. However, in January 2007, the U.S. Court of Appeals for the Second Circuit issued a decision on an appeal of the regulations, remanding the rule to the EPA. In July 2007, the EPA suspended the regulations pending further rulemaking, consistent with the decision issued by the U.S. Court of Appeals for the Second Circuit. In November 2007, a number of industries appealed the lower court decision to the U.S. Supreme Court. In April 2008, the U.S. Supreme Court granted the industry request to review the question of whether Section 316b of the Clean Water Act authorizes EPA to compare costs with benefits in determining the best technology available for minimizing “adverse environmental impact” at cooling water intake structures. Oral arguments before the U.S. Supreme Court are scheduled for December 2, 2008 with a decision expected in 2009. We have sixteen facilities that are likely to be subject to these regulations. We cannot predict the outcome of the judicial or EPA regulatory processes, nor can we determine with any certainty what specific controls may be required.

In August 2006, the Connecticut Department of Environmental Protection (CTDEP) issued a notice of a Tentative Determination to renew our Millstone power station’s National Pollutant Discharge Elimination System (NPDES) permit, which included a draft copy of the revised permit. In October 2007, CTDEP issued a report to the hearing officer for the tentative determination stating the agency’s intent to further revise the draft permit. In December

PAGE 50

2007, the CTDEP issued a new draft permit. An administrative hearing on the draft permit is scheduled to begin in January 2009, with a Final Determination expected to be issued by the CTDEP during 2009. Until the final permit is reissued, it is not possible to predict the financial impact that may result.

PAGE 51

ITEM 3. QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

The matters discussed in this Item may contain “forward-looking statements” as described in the introductory paragraphs under Part I, Item 2. MD&A of this Form 10-Q. The reader’s attention is directed to those paragraphs for discussion of various risks and uncertainties that may affect our future.

Market Risk Sensitive Instruments and Risk Management

Our financial instruments, commodity contracts and related financial derivative instruments are exposed to potential losses due to adverse changes in commodity prices, interest rates and equity security prices. Commodity price risk is present in our electric operations, gas production and procurement operations, and energy marketing and trading operations due to the exposure to market shifts in prices received and paid for electricity, natural gas and other commodities. We use commodity derivative contracts to manage price risk exposures for these operations. Interest rate risk is generally related to our outstanding debt. In addition, we are exposed to equity price risk through various portfolios of equity securities.

The following sensitivity analysis estimates the potential loss of future earnings or fair value from market risk sensitive instruments over a selected time period due to a 10% unfavorable change in commodity prices and interest rates.

Commodity Price Risk

To manage price risk, we primarily hold commodity-based financial derivative instruments for non-trading purposes associated with purchases and sales of electricity, natural gas and other energy-related products. As part of our strategy to market energy and to manage related risks, we also hold commodity-based financial derivative instruments for trading purposes.

The derivatives used to manage our commodity price risk are executed within established policies and procedures and may include instruments such as futures, forwards, swaps, options and FTRs that are sensitive to changes in the related commodity prices. For sensitivity analysis purposes, the hypothetical change in market prices of commodity-based financial derivative instruments is determined based on models that consider the market prices of commodities in future periods, the volatility of the market prices in each period, as well as the time value factors of the derivative instruments. Prices and volatility are principally determined based on observable market prices.

A hypothetical 10% unfavorable change in market prices of our non-trading commodity-based financial derivative instruments would have resulted in a decrease in fair value of approximately $325 million and $338 million as of September 30, 2008 and December 31, 2007, respectively. A hypothetical 10% unfavorable change in commodity prices would have resulted in a decrease of approximately $12 million and $8 million in the fair value of our commodity-based financial derivative instruments held for trading purposes as of September 30, 2008 and December 31, 2007, respectively.

The impact of a change in energy commodity prices on our non-trading commodity-based financial derivative instruments at a point in time is not necessarily representative of the results that will be realized when such contracts are ultimately settled. Net losses from commodity derivative instruments used for hedging purposes, to the extent realized, will generally be offset by recognition of the hedged transaction, such as revenue from sales.

Interest Rate Risk

We manage our interest rate risk exposure predominantly by maintaining a balance of fixed and variable rate debt. We also enter into interest rate sensitive derivatives, including interest rate swaps and interest rate lock agreements. For financial instruments outstanding at September 30, 2008, a hypothetical 10% increase in market interest rates would have resulted in a decrease in annual earnings of approximately $10 million. A hypothetical 10% increase in market interest rates, as determined at December 31, 2007, would have resulted in a decrease in annual earnings of approximately $11 million.

Investment Price Risk

We are subject to investment price risk due to securities held as investments in nuclear decommissioning trust funds that are managed by third-party investment managers. These trust funds primarily hold marketable securities that are reported in our Consolidated Balance Sheets at fair value.

PAGE 52

Following the reapplication of SFAS No. 71, to the Virginia jurisdiction of our utility generation operations in April 2007, gains or losses on those nuclear decommissioning trust investments are recorded to regulatory liabilities.

We recognized net realized losses (net of investment income) on nuclear decommissioning trust investments of $91 million for the nine months ended September 30, 2008 and net realized gains (including investment income) of $44 million and $43 million for the nine months ended September 30, 2007 and for the year ended December 31, 2007, respectively. For the nine months ended September 30, 2008, we recorded, in AOCI and regulatory liabilities, a reduction in unrealized gains on these investments of $259 million. For the nine months ended September 30, 2007, we recorded, in AOCI and regulatory liabilities, an increase in unrealized gains on these investments of $104 million. For the year ended December 31, 2007, we recorded, in AOCI and regulatory liabilities, an increase in unrealized gains on these investments of $52 million.

We sponsor employee pension and other postretirement benefit plans, in which our employees participate, that hold investments in trusts to fund benefit payments. Declines in the values of investments held in these trusts, such as those experienced during 2008, will result in future increases in the periodic cost recognized for such employee benefit plans and the amount of cash to be contributed to the employee benefit plans.

ITEM 4. CONTROLS AND PROCEDURES

Senior management, including our CEO and CFO, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation process, the CEO and CFO have concluded that our disclosure controls and procedures are effective.

There were no changes in our internal control over financial reporting that occurred during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PAGE 53

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we are alleged to be in violation or in default under orders, statutes, rules or regulations relating to the environment, compliance plans imposed upon or agreed to by us, or permits issued by various local, state and federal agencies for the construction or operation of facilities. Administrative proceedings may also be pending on these matters. In addition, in the ordinary course of business, we are involved in various legal proceedings. We believe that the ultimate resolution of these proceedings will not have a material adverse effect on our financial position, liquidity or results of operations. See Future Issues and Other Matters in MD&A for discussions on various environmental and other regulatory proceedings to which we are a party.

In December 2006 and January 2007, we submitted self-disclosure notifications to EPA Region 8 regarding three E&P facilities in Utah that potentially violated Clean Air Act (CAA) permitting requirements. In July 2007, a third party purchased our E&P assets in Utah, including these facilities. In September 2008, we received a draft Consent Decree related to the potential CAA infractions, which imposes obligations on our subsidiary, DEPI and the purchaser, including payment of a civil penalty to the U.S. Department of Justice (DOJ) in the amount of $250,000. We expect the Consent Decree will be executed during the fourth quarter of 2008 after which it will be posted for public notice and comment for a period of not less than thirty days. Following the execution of the Consent Decree and the expiration of the 30-day public notice and comment period, the DOJ may request the federal judge in this proceeding to enter a final Consent Decree. Per our asset purchase agreement, the third-party purchaser assumed responsibility for the resolution of any enforcement action or Consent Decree, including penalties.

ITEM 1A. RISK FACTORS

Our business is influenced by many factors that are difficult to predict, involve uncertainties that may materially affect actual results and are often beyond our control. We have identified a number of these risk factors in our Annual Report on Form 10-K for the year ended December 31, 2007 and our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008, which should be taken into consideration when reviewing the information contained in this report. There have been no material changes with regard to the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2007 or our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008. For other factors that may cause actual results to differ materially from those indicated in any forward-looking statement or projection contained in this report, see Forward-Looking Statements in MD&A.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The table below provides certain information with respect to our purchases of our common stock:

ISSUER PURCHASES OF EQUITY SECURITIES


Period	(a) Total Number of Shares (or Units) Purchased ⁽¹⁾	(b) Average Price Paid per Share (or Unit)		(c) Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs	(d) Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased under the Plans or Programs
7/1/08-7/31/08	1,991	$	47.49	N/A	53,971,148 shares/ $2.68 billion
8/1/08-8/31/08	768		44.18	N/A	53,971,148 shares/ $2.68 billion
9/1/08-9/30/08	5,697		43.53	N/A	53,971,148 shares/ $2.68 billion
Total	8,456	$	44.52	N/A	53,971,148 shares/ $2.68 billion

(1)	Amount represents registered shares tendered by employees to satisfy tax withholding obligations on vested restricted stock.

PAGE 54

Item 6. EXHIBITS

(a) Exhibits:


3.1		Articles of Incorporation as in effect August 9, 1999, as amended March 12, 2001 (Exhibit 3.1, Form 10-K for the year ended December 31, 2002, File No. 1-8489, incorporated by reference), as amended November 9, 2007 (Exhibit 3, Form 8-K, filed November 9, 2007, File No. 1-8489, incorporated by reference).

3.2		Amended and Restated Bylaws effective on June 20, 2007 (Exhibit 3.1, Form 8-K filed June 22, 2007, File No. 1-8489, incorporated by reference).

4		Dominion Resources, Inc. agrees to furnish to the SEC upon request any other instrument with respect to long-term debt as to which the total amount of securities authorized does not exceed 10% of its total consolidated assets.

10.1		$500 million 364-Day Revolving Credit Agreement dated July 30, 2008 among Dominion Resources, Inc., The Royal Bank of Scotland PLC, as Administrative Agent, Barclays Bank PLC and Morgan Stanley Bank, as Co-Syndication Agents, Citibank N.A. and The Bank of Nova Scotia, as Co-Documentation Agents and other lenders named therein (filed herewith).

10.2		Form of Advancement of Expenses for certain directors and officers of Dominion, approved by the Board of Directors on October 24, 2008 (filed herewith).

10.3		New Executive Supplemental Retirement Plan, as amended and restated, effective January 1, 2009 (filed herewith).

10.4		New Retirement Benefit Restoration Plan, as amended and restated, effective January 1, 2009 (filed herewith).

12		Ratio of earnings to fixed charges (filed herewith).

31.1		Certification by Registrant’s CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

31.2		Certification by Registrant’s CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).

32		Certification to the SEC by Registrant’s CEO and CFO, as required by Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

99		Condensed consolidated earnings statements (unaudited) (filed herewith).

PAGE 55

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		DOMINION RESOURCES, INC.
		Registrant

October 30, 2008		/s/ Thomas P. Wohlfarth
		Thomas P. Wohlfarth
		Senior Vice President and Chief Accounting Officer

PAGE 56

Exhibit 10.1

EXECUTION VERSION

$500,000,000

364-DAY REVOLVING CREDIT AGREEMENT

among

DOMINION RESOURCES, INC.,

The Several Lenders from Time to Time Parties Hereto,

THE ROYAL BANK OF SCOTLAND PLC,

as Administrative Agent,

BARCLAYS BANK PLC AND MORGAN STANLEY BANK,

as Co-Syndication Agents,

CITIBANK N.A. AND THE BANK OF NOVA SCOTIA ,

as Co-Documentation Agents

RBS SECURITIES CORPORATION D/B/A RBS GREENWICH CAPITAL,

as Lead Arranger and Bookrunner

Dated as of July 30, 2008

Table of Contents


		Page
SECTION 1. DEFINITIONS AND ACCOUNTING TERMS		1

	1.1 Definitions	1
	1.2 Computation of Time Periods; Other Definitional Provisions	12
	1.3 Accounting Terms	13
	1.4 Time	13

SECTION 2. LOANS		13

	2.1 Revolving Loan Commitment	13
	2.2 Method of Borrowing for Revolving Loans	13
	2.3 Funding of Revolving Loans	14
	2.4 Minimum Amounts of Revolving Loans	15
	2.5 Reductions of Revolving Loan Commitment	15
	2.6 RESERVED	15
	2.7 Notes	15
	2.8 RESERVED	16

SECTION 3. PAYMENTS		16

	3.1 Interest	16
	3.2 Prepayments	16
	3.3 Payment in Full at Maturity	17
	3.4 Fees	17
	3.5 Place and Manner of Payments	17
	3.6 Pro Rata Treatment	18
	3.7 Computations of Interest and Fees	18
	3.8 Sharing of Payments	18
	3.9 Evidence of Debt	19

SECTION 4. ADDITIONAL PROVISIONS REGARDING LOANS		20

	4.1 Eurodollar Revolving Loan Provisions	20
	4.2 Capital Adequacy	21
	4.3 Compensation	21
	4.4 Taxes	22
	4.5 Mitigation; Mandatory Assignment	24

SECTION 5. RESERVED		24

SECTION 6. CONDITIONS PRECEDENT		24

	6.1 Closing Conditions	24
	6.2 Conditions to Loans	26



SECTION 7. REPRESENTATIONS AND WARRANTIES		27

	7.1 Organization and Good Standing	27
	7.2 Due Authorization	27
	7.3 No Conflicts	27
	7.4 Consents	28
	7.5 Enforceable Obligations	28
	7.6 Financial Condition	28
	7.7 No Default	28
	7.8 Indebtedness	28
	7.9 Litigation	28
	7.10 Taxes	29
	7.11 Compliance with Law	29
	7.12 ERISA	29
	7.13 Government Regulation	29
	7.14 Solvency	29

SECTION 8. AFFIRMATIVE COVENANTS		29

	8.1 Information Covenants	30
	8.2 Preservation of Existence and Franchises	31
	8.3 Books and Records	31
	8.4 Compliance with Law	31
	8.5 Payment of Taxes	31
	8.6 Insurance	32
	8.7 Performance of Obligations	32
	8.8 ERISA	32
	8.9 Use of Proceeds	32
	8.10 Audits/Inspections	33
	8.11 Total Funded Debt to Capitalization	33

SECTION 9. NEGATIVE COVENANTS		33

	9.1 Nature of Business	33
	9.2 Consolidation and Merger	33
	9.3 Sale or Lease of Assets	34
	9.4 Limitation on Liens	34
	9.5 Fiscal Year	34

SECTION 10. EVENTS OF DEFAULT		35

	10.1 Events of Default	35
	10.2 Acceleration; Remedies	37
	10.3 Allocation of Payments After Event of Default	37



SECTION 11. AGENCY PROVISIONS		38

	11.1 Appointment	38
	11.2 Delegation of Duties	39
	11.3 Exculpatory Provisions	39
	11.4 Reliance on Communications	39
	11.5 Notice of Default	40
	11.6 Non-Reliance on Administrative Agent and Other Lenders	40
	11.7 Indemnification	41
	11.8 Administrative Agent in Its Individual Capacity	41
	11.9 Successor Administrative Agent	41

SECTION 12. MISCELLANEOUS		42

	12.1 Notices	42
	12.2 Right of Set-Off; Adjustments	43
	12.3 Benefit of Agreement	43
	12.4 No Waiver; Remedies Cumulative	46
	12.5 Payment of Expenses, etc.	46
	12.6 Amendments, Waivers and Consents	47
	12.7 Counterparts; Telecopy	48
	12.8 Headings	48
	12.9 Defaulting Lender	48
	12.10 Survival of Indemnification and Representations and Warranties	48
	12.11 GOVERNING LAW	48
	12.12 WAIVER OF JURY TRIAL	49
	12.13 Severability	49
	12.14 Entirety	49
	12.15 Binding Effect	49
	12.16 Submission to Jurisdiction	49
	12.17 Confidentiality	50
	12.18 Designation of SPVs	50
	12.19 USA Patriot Act	51

iii

SCHEDULES


Schedule 1.1		Commitment Percentages
Schedule 7.8		Indebtedness
Schedule 7.9		Litigation
Schedule 12.1		Notices

EXHIBITS


Exhibit 2.2(a)		Form of Notice of Borrowing
Exhibit 2.2(c)		Form of Notice of Conversion/Continuation
Exhibit 2.7(a)		Form of Revolving Loan Note
Exhibit 6.1(c)		Form of Closing Certificate
Exhibit 6.1(e)		Form of Legal Opinion
Exhibit 8.1(c)		Form of Officer’s Certificate
Exhibit 12.3		Form of Assignment Agreement

364-DAY REVOLVING

CREDIT AGREEMENT

364-DAY REVOLVING CREDIT AGREEMENT (this “ Credit Agreement ”), dated as of July 30, 2008 among DOMINION RESOURCES, INC., a Virginia corporation (together with its permitted successors and assigns, the “ Borrower ”), the several banks and other financial institutions from time to time parties to this Credit Agreement (each a “ Lender ” and, collectively, the “Lenders”), THE ROYAL BANK OF SCOTLAND PLC, a public limited company incorporated in the United Kingdom and registered under the laws of Scotland, as administrative agent for the Lenders hereunder (in such capacity, the “ Administrative Agent ”), BARCLAYS BANK PLC and MORGAN STANLEY BANK, as Co-Syndication Agents and, CITIBANK N.A. and THE BANK OF NOVA SCOTIA, as Co-Documentation Agents.

The parties hereto hereby agree as follows:

SECTION 1. DEFINITIONS AND ACCOUNTING TERMS

1.1 Definitions .

As used herein, the following terms shall have the meanings herein specified unless the context otherwise requires. Defined terms herein shall include in the singular number the plural and in the plural the singular:

“ Adjusted Base Rate ” means the Base Rate plus the Applicable Percentage for Base Rate Loans.

“ Adjusted Eurodollar Rate ” means the Eurodollar Rate plus the Applicable Percentage for Eurodollar Revolving Loans.

“ Administrative Agent ” means The Royal Bank of Scotland plc and any successors and assigns in such capacity.

“ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling (including but not limited to all directors and officers of such Person), controlled by or under direct or indirect common control with such Person. A Person shall be deemed to control a corporation or other entity if such Person possesses, directly or indirectly, the power (i) to vote 20% or more of the securities having ordinary voting power for the election of directors or other managing persons of such corporation or other entity or (ii) to direct or cause direction of the management and policies of such corporation or other entity, whether through the ownership of voting securities, by contract or otherwise.

“ Applicable Percentage ” means, for (x) Eurodollar Revolving Loans, the LIBOR Market Rate Spread in effect from time to time, and (y) all other Revolving Loans made to the Borrower, 0%. Any adjustment in the Applicable Percentages shall be applicable to all existing Loans as well as any new Loans.

“ Available Revolving Loan Commitment ” means, as of any date of determination, the Revolving Loan Commitment as of such date minus the aggregate principal amount of all Loans outstanding as of such date.

“ Bankruptcy Code ” means the Bankruptcy Code in Title 11 of the United States Code, as amended, modified, succeeded or replaced from time to time.

“ Base Rate ” means, for any day, a simple rate per annum equal to the greater of (a) the Prime Rate for such day or (b) the sum of one-half of one percent (.50%) plus the Federal Funds Rate for such day.

“ Base Rate Loan ” means a Loan that bears interest at an Adjusted Base Rate.

“ Borrower ” has the meaning set forth in the preamble hereof.

“ Business Day ” means any day other than a Saturday, a Sunday, a legal holiday or a day on which banking institutions are authorized or required by law or other governmental action to close in New York, New York; provided that in the case of Eurodollar Revolving Loans, such day is also a day on which dealings between banks are carried on in Dollar deposits in the London interbank market.

“ Capital Stock ” means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing.

“ Capitalization ” means the sum of (a) Total Funded Debt plus (b) Net Worth.

“ Change of Control ” means (i) the direct or indirect acquisition by any person (as such term is defined in Section 13(d) of the Securities and Exchange Act of 1934, as amended) of beneficial ownership of more than 50% of the outstanding shares of the capital stock of the Borrower entitled to vote generally for the election of directors of the Borrower or (ii) VaPower shall cease to be a Subsidiary of the Borrower; provided , however , that should VaPower cease to be a Subsidiary of the Borrower by virtue of its merger with or into the Borrower, or with or into any other Subsidiary of the Borrower, such merger will not constitute a Change of Control.

“ Closing Date ” means the date hereof.

“ Code ” means the Internal Revenue Code of 1986, as amended from time to time.

“ Commitment ” means, with respect to each Lender, such Lender’s share of the Revolving Loan Commitment based upon such Lender’s Commitment Percentage.

“ Commitment Fees ” has the meaning set forth in Section 3.4(a).

“ Commitment Fee Margin ” means Commitment Fees payable by the Borrower, the appropriate applicable percentages, in each case, corresponding to the Rating of the Borrower in effect from time to time as shown below:


Pricing Level	Long-Term Senior Unsecured Non-Credit Enhanced Debt Rating of Borrower	Applicable Percentage for Commitment Fees
I.	³ A from S&P or	.07	%
	³ A2 from Moody’s or ³ A from Fitch

II.	A- from S&P or	.08	%
	A3 from Moody’s or A- from Fitch

III.	BBB+ from S&P or	.10	%
	Baa1 from Moody’s or BBB+ from Fitch

IV.	BBB from S&P or	.125	%
	Baa2 from Moody’s or BBB from Fitch

V.	BBB- from S&P or	.15	%
	Baa3 from Moody’s or BBB- from Fitch

VI.	BB+ from S&P or	.20	%
	Ba1 from Moody’s or BB+ from Fitch

VII.	< BB+ from S&P or	.25	%
	< Ba1 from Moody’s or < BB+ from Fitch

Notwithstanding the above, if at any time there is a split in Ratings among S&P, Moody’s and Fitch and (i) two Ratings are equal and higher than the third, the higher Rating will apply, (ii) two Ratings are equal and lower than the third, the lower Rating will apply or (iii) no Ratings are equal, the intermediate Rating will apply. In the event that the Borrower shall maintain Ratings from only two of S&P, Moody’s and Fitch and the Borrower is split-rated and (x) the Ratings differential is one level, the higher Rating will apply and (y) the Ratings differential is two levels or more, the level one level lower than the higher Rating will apply.

The Commitment Fee Margin shall be determined and adjusted on the date of any applicable change in the Rating of the Borrower.

The Commitment Fee Margin payable by the Borrower shall be the appropriate applicable percentages from time to time, as shown above, calculated based on the Ratings of the Borrower at such time.

These Ratings shall be determined based upon the Rating for the Borrower in effect on such day as published by S&P, Moody’s and Fitch; it being understood that the initial Commitment Fee Margin is based on Pricing Level III (as shown above) and shall remain at Pricing Level III until a change in the Ratings of the Borrower. The Borrower shall at all times maintain a Rating from at least two of S&P, Moody’s and Fitch. If at any time the Borrower does not have a Rating from at least two of S&P, Moody’s and Fitch, the Commitment Fee Margin shall be set at Pricing Level VII.

The Borrower shall promptly deliver to the Administrative Agent, at the address set forth on Schedule 12.1 , information regarding any change in the Rating of the Borrower that would change the existing Pricing Level (as set forth in the chart above) and/or the Commitment Fees.

“ Commitment Percentage ” means, for each Lender, the percentage identified as its Commitment Percentage opposite such Lender’s name on Schedule 1.1 attached hereto, as such percentage may be modified in accordance with the terms of this Credit Agreement.

“ Commitment Period ” means the period from the Closing Date to the Maturity Date.

“ Consolidated Subsidiary ” means, as to any Person, each Subsidiary of such Person (whether now existing or hereafter created or acquired), the financial statements of which are consolidated with the financial statements of such Person in accordance with GAAP, including principles of consolidation.

“ Controlled Group ” means (i) the controlled group of corporations as defined in Section 414(b) of the Code and the applicable regulations thereunder or (ii) the group of trades or businesses under common control as defined in Section 414(c) of the Code and the applicable regulations thereunder, of which the Borrower is a part or may become a part.

“ Credit Documents ” means this Credit Agreement, the Notes (if any), and all other related agreements and documents issued or delivered hereunder or thereunder or pursuant hereto or thereto.

“ Credit Exposure ” has the meaning set forth in the definition of “Required Lenders” below.

“ Default ” means any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.

“ Defaulting Lender ” means, at any time, any Lender that, at such time (a) has failed to make a Loan required pursuant to the terms of this Credit Agreement, (b) has failed to pay to the Administrative Agent or any Lender an amount owed by such Lender pursuant to the terms of this Credit Agreement or (c) has been deemed insolvent or has become subject to a bankruptcy or insolvency proceeding or to a receiver, trustee or similar official.

“ Dollar ”, “ dollar ” and “ $ ” means lawful currency of the United States.

“ Effective Date ” has the meaning set forth in Section 12.15 hereof.

“ Eligible Assignee ” means (a) any Lender or Affiliate or Subsidiary of a Lender and (b) any other commercial bank, financial institution or “accredited investor” (as defined in Regulation D) that is either a bank organized or licensed under the laws of the United States of America or any State thereof or that has agreed to provide the information listed in Section 4.4(d) to the extent that it may lawfully do so and that is approved by the Administrative Agent and the Borrower (such approval not to be unreasonably withheld or delayed); provided that (i) the Borrower’s consent is not required pursuant to clause (a) or, with respect to clause (b), during the existence and continuation of a Default or an Event of Default and (ii) neither the Borrower nor any Affiliate or Subsidiary of the Borrower shall qualify as an Eligible Assignee.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and the rulings issued thereunder.

“ ERISA Affiliate ” means each person (as defined in Section 3(9) of ERISA) which together with the Borrower or any Subsidiary of the Borrower would be deemed to be a member of the same “controlled group” within the meaning of Section 414(b), (c), (m) and (o) of the Code.

“ Eurodollar Rate ” means with respect to any Eurodollar Revolving Loan, for the Interest Period applicable thereto, a rate per annum determined pursuant to the following formula:


“ Eurodollar Rate ”	=	Interbank Offered Rate
		1 - Eurodollar Reserve Percentage

“ Eurodollar Reserve Percentage ” means, for any day, that percentage (expressed as a decimal) which is in effect from time to time under Regulation D, as such regulation may be amended from time to time or any successor regulation, as the maximum reserve requirement (including, without limitation, any basic, supplemental, emergency, special, or marginal reserves) applicable with respect to Eurocurrency liabilities as that term is defined in Regulation D (or against any other category of liabilities that includes deposits by reference to which the interest rate of Eurodollar Revolving Loans is determined), whether or not any Lender has any Eurocurrency liabilities subject to such reserve requirement at that time. Eurodollar Revolving Loans shall be deemed to constitute Eurocurrency liabilities and as such shall be deemed subject to reserve requirements without benefits of credits for proration, exceptions or offsets that may be available from time to time to a Lender. The Eurodollar Rate shall be adjusted automatically on and as of the effective date of any change in the Eurodollar Reserve Percentage.

“ Eurodollar Revolving Loan ” means a Revolving Loan bearing interest at a rate of interest determined by reference to the Eurodollar Rate.

“ Event of Default ” has the meaning specified in Section 10.1.

“ Exchange Act ” means the Securities and Exchange Act of 1934, as amended.

“ Existing DRI Credit Agreement ” means that certain $3,000,000,000 Five-Year Revolving Credit Agreement, dated as of February 28, 2006 among the Borrower, VaPower and Consolidated Natural Gas Company, as borrowers, the financial institutions parties thereto as lenders, and JPMorgan Chase Bank, N.A., as administrative agent, as amended from time to time.

“ Federal Funds Rate ” means for any day the rate per annum (rounded upward to the nearest 1/100th of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the immediately preceding Business Day and (b) if no such rate is so published on such next succeeding Business Day, the Federal Funds Rate for such day shall be the average rate quoted to the Administrative Agent on such day on such transactions as determined by the Administrative Agent.

“ Fee Payment Date ” shall mean (a) the first Business Day of each January, April, July and October and (b) the Maturity Date.

“ Fitch ” means Fitch Ratings Ltd., or any successor or assignee of the business of such company in the business of rating securities.

“ Funded Debt ” means, as to any Person, without duplication: (a) all Indebtedness of such Person for borrowed money or which has been incurred in connection with the acquisition of assets (excluding letters of credit, bankers’ acceptances, Non-Recourse Debt, Mandatorily Convertible Securities, Trust Preferred Securities and Hybrid Equity Securities), (b) all capital lease obligations (including Synthetic Lease Obligations) of such Person and (c) all Guaranty Obligations of Funded Debt of other Persons.

“ GAAP ” means generally accepted accounting principles in the United States applied on a consistent basis and subject to Section 1.3.

“ Governmental Authority ” means any Federal, state, local or foreign court or governmental agency, authority, instrumentality or regulatory body.

“ Granting Lender ” has the meaning set forth in Section 12.18 hereof.

“ Guaranty Obligations ” means, in respect of any Person, any obligation, contingent or otherwise, of such Person directly or indirectly guaranteeing any Indebtedness of another Person, including, without limitation, any obligation (a) to purchase or pay, or advance or supply funds for the purchase or payment of, such Indebtedness or (b) entered into primarily for the purpose of assuring the owner of such Indebtedness of the payment thereof (such as, for example, but without limitation, an agreement to advance or provide funds or other support for the payment or purchase of such Indebtedness or to maintain working capital, solvency or other balance sheet conditions of such other Person, including, without limitation, maintenance agreements, comfort letters or similar agreements or arrangements, or to lease or purchase property, securities or services) if such obligation would constitute an indirect guarantee of indebtedness of others, the disclosure of which would be required in such Person’s financial statements under GAAP; provided , however , that the term Guaranty Obligations shall not include (i) endorsements for deposit or collection in the ordinary course of business, (ii) obligations under purchased power contracts or (iii) obligations of such Person otherwise constituting Guaranty Obligations under this definition to provide contingent equity support, to keep well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise in respect of any Subsidiary or Affiliate of such Person in connection with the non-utility non-recourse financing activities of such Subsidiary or Affiliate.

“ Hybrid Equity Securities ” means any securities issued by the Borrower or a financing vehicle of the Borrower that (i) are classified as possessing a minimum of at least “intermediate equity content” by S&P, at least Basket C equity credit by Moody’s, and at least 50% equity credit by Fitch and (ii) require no repayments or prepayments and no mandatory redemptions or repurchases, in each case, prior to at least 91 days after the later of the termination of the Commitments and the repayment in full of the Revolving Loans and all other amounts due under this Credit Agreement.

“ Indebtedness ” means, as to any Person, without duplication: (a) all obligations of such Person for borrowed money or evidenced by bonds, debentures, notes or similar instruments; (b) all obligations of such Person for the deferred purchase price of property or services (except trade accounts payable arising in the ordinary course of business, customer deposits, provisions for rate refunds, deferred fuel expenses and obligations in respect of pensions and other post-retirement benefits); (c) all capital lease obligations of such Person; (d) all Indebtedness of others secured by a Lien on any properties, assets or revenues of such Person (other than stock, partnership interests or other equity interests of the Borrower or any of its Subsidiaries in other entities) to the extent of the lesser of the value of the property subject to such Lien or the amount of such Indebtedness; (e) all Guaranty Obligations; and (f) all non-contingent obligations of such Person under any letters of credit or bankers’ acceptances.

“ Interbank Offered Rate ” means, for any Eurodollar Revolving Loan for any Interest Period therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on any service selected by the Administrative Agent which has been nominated by the British Bankers’ Association as an authorized information vendor for the purpose of displaying the London interbank offered rate for deposits in Dollars (such as the applicable Reuters’ screen) at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period.

“ Interest Payment Date ” means (a) as to Base Rate Loans, the last day of each fiscal quarter and the Maturity Date, and (b) as to Eurodollar Revolving Loans, the last day of each applicable Interest Period and the Maturity Date. If an Interest Payment Date falls on a date which is not a Business Day, such Interest Payment Date shall be deemed to be the next succeeding Business Day, except that in the case of Eurodollar Revolving Loans where the next succeeding Business Day falls in the next succeeding calendar month, then such Interest Payment Date shall be deemed to be the immediately preceding Business Day.

“ Interest Period ” means, as to Eurodollar Revolving Loans, a period of 14 days (in the case of new money borrowings) and one, two or three months’ duration, as the Borrower may elect, commencing, in each case, on the date of the borrowing (including continuations and conversions of Eurodollar Revolving Loans); provided , however , (i) if any Interest Period would end on a day which is not a Business Day, such Interest Period shall be extended to the next succeeding Business Day (except that where the next succeeding Business Day falls in the next succeeding calendar month, then such Interest Period shall end on the next preceding Business Day), (ii) no Interest Period shall extend beyond the Maturity Date and (iii) with respect to Eurodollar Revolving Loans, where an Interest Period begins on a day for which there is no numerically corresponding day in the calendar month in which the Interest Period is to end, such Interest Period shall end on the last Business Day of such calendar month.

“ Lead Arranger ” means RBS Securities Corporation d/b/a RBS Greenwich Capital.

“ Lenders ” means those banks and other financial institutions identified as such on the signature pages hereto and such other institutions that may become Lenders pursuant to Section 12.3(b).

“ LIBOR Market Rate Spread ” means, at any time for any Eurodollar Revolving Loan for any Interest Period, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to (x) 110% multiplied by (y) the Borrower’s 1-year credit default swap mid-rate spread (as provided by Markit Group Limited or any successor thereto (the “ Quotation Agency ”)) for the one-year period beginning on the Rate Set Date (as defined below), appearing on the Quotation Agency’s website at approximately 11:00 a.m. (London time) two Business Days prior to the first day of such Interest Period (the “ Rate Set Date ”); provided , that the LIBOR Market Rate Spread shall in no event be less than 0.50% or greater than 1.00%; provided , further that in the event that the LIBOR Market Rate Spread is not available from the Quotation Agency on the Rate Set Date for any Interest Period, the LIBOR Market Rate Spread shall be 1.00% for such Interest Period.

“ Lien ” means any mortgage, pledge, hypothecation, assignment, deposit arrangement, security interest, encumbrance, lien (statutory or otherwise), preference, priority or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any financing or similar statement or notice filed under the Uniform Commercial Code as adopted and in effect in the relevant jurisdiction or other similar recording or notice statute, and any lease in the nature thereof).

“ Loan ” means any loan made by any Lender pursuant to this Credit Agreement.

“ Mandatorily Convertible Securities ” means any mandatorily convertible equity-linked securities issued by the Borrower, so long as the terms of such securities require no repayments or prepayments and no mandatory redemptions or repurchases, in each case prior to at least 91 days after the later of the termination of the Commitments and the repayment in full of the Loans and all other amounts due under this Credit Agreement.

“ Material Adverse Effect ” means a material adverse effect, after taking into account applicable insurance, if any, on (a) the operations, financial condition or business of the Borrower, (b) the ability of the Borrower to perform its obligations under this Credit Agreement or (c) the validity or enforceability of this Credit Agreement or any of the other Credit Documents against the Borrower, or the rights and remedies of the Lenders against the Borrower hereunder or thereunder; provided , however , that a transfer of assets permitted under and in compliance with Section 9.3 shall not be considered to have a Material Adverse Effect.

“ Material Subsidiary ” shall mean a Subsidiary of the Borrower whose total assets (as determined in accordance with GAAP) represent at least 20% of the total assets of the Borrower, on a consolidated basis.

“ Maturity Date ” means July 28, 2009.

“ Moody’s ” means Moody’s Investors Service, Inc., or any successor or assignee of the business of such company in the business of rating securities.

“ Multiemployer Plan ” means at any time an employee pension benefit plan within the meaning of Section 4001(a)(3) of ERISA to which any member of the Controlled Group is then making or accruing an obligation to make contributions or has within the preceding five plan years made contributions, including for these purposes any Person which ceased to be a member of the Controlled Group during such five year period but only with respect to the period during which such Person was a member of the Controlled Group.

“ Net Worth ” means as of any date, the shareholders’ equity or net worth of the Borrower and its Consolidated Subsidiaries (including, but not limited to, the face amount of any Mandatorily Convertible Securities, Trust Preferred Securities, Hybrid Equity Securities and Preferred Stock; but, excluding the accumulated other comprehensive income or loss component of shareholders’ equity), on a consolidated basis, as determined in accordance with GAAP.

“ Non-Recourse Debt ” means Indebtedness (a) as to which the Borrower (i) does not provide credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness), (ii) is not directly or indirectly liable as a guarantor or otherwise, or (iii) is not the lender; (b) no default with respect to which would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the Loans or the Notes) of the Borrower to declare a default on such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its stated maturity; and (c) as to which the lenders will not have any recourse to the stock or assets of the Borrower (other than the specific assets pledged to secure such Indebtedness) and the relevant legal documents so provide.

“ Non-Regulated Assets ” means with respect to the Borrower, the operations that are not regulated by a Governmental Authority (i.e. merchant generation, exploration and production, producer services or retail supply assets of the Borrower).

“ Notes ” means the collective reference to the Revolving Loan Notes of the Borrower.

“ Notice of Borrowing ” means a request by the Borrower for a Loan in the form of Exhibit 2.2(a) .

“ Notice of Continuation/Conversion ” means a request by the Borrower for the continuation or conversion of a Loan in the form of Exhibit 2.2(c) .

“ Other Taxes ” has the meaning set forth in Section 4.4(b) hereof.

“ PBGC ” means the Pension Benefit Guaranty Corporation established under ERISA and any successor thereto.

“ Pension Plans ” has the meaning set forth in Section 8.8 hereof.

“ Person ” means any individual, partnership, joint venture, firm, corporation, limited liability company, association, trust or other enterprise (whether or not incorporated), or any government or political subdivision or any agency, department or instrumentality thereof.

“ Plan ” means any single-employer plan as defined in Section 4001 of ERISA, which is maintained, or at any time during the five calendar years preceding the date of this Credit Agreement was maintained, for employees of the Borrower, any Subsidiary of the Borrower or any ERISA Affiliate of the Borrower.

“ Preferred Stock ” means any Capital Stock issued by the Borrower that is entitled to preference or priority over any other Capital Stock of the Borrower in respect of the payment of dividends or distribution of assets upon liquidation, or both.

“ Prime Rate ” means the per annum rate of interest as notified to the Borrower by the Administrative Agent from time to time as its Prime Rate. Any change in the interest rate resulting from a change in the Prime Rate shall become effective as of 12:01 a.m. of the Business Day on which each change in the Prime Rate is announced by the Administrative Agent. The Prime Rate is a reference rate used by the Administrative Agent in determining interest rates on certain loans and is not intended to be the lowest rate of interest charged on any extension of credit to any debtor.

“ Rating ” means the rating assigned by S&P, Moody’s or Fitch to the Borrower based on the Borrower’s senior, unsecured, non-credit-enhanced obligations.

“ RBS ” means The Royal Bank of Scotland plc.

“ Register ” has the meaning set forth in Section 12.3(c).

“ Regulation A, D, T, U or X ” means Regulation A, D, T, U or X, respectively, of the Board of Governors of the Federal Reserve System as from time to time in effect and any successor to all or a portion thereof.

“ Reportable Event ” means a “reportable event” as defined in Section 4043 of ERISA with respect to which the notice requirements to the PBGC have not been waived.

“ Required Lenders ” means Lenders whose aggregate Credit Exposure (as hereinafter defined) constitutes more than 50% of the aggregate Credit Exposure of all Lenders at such time; provided , however , that if any Lender shall be a Defaulting Lender at such time then there shall be excluded from the determination of Required Lenders the aggregate principal amount of Credit Exposure of such Lender at such time. For purposes of the preceding sentence, the term “ Credit Exposure ” as applied to each Lender shall mean (a) at any time prior to the termination of the Commitments, the Commitment Percentage of such Lender multiplied by the Revolving Loan Commitment and (b) at any time after the termination of the Commitments, the outstanding amount of Loans owed to such Lender.

“ Revolving Loan ” means a Loan made by the Lenders to the Borrower pursuant to Section 2.1(a) hereof.

“ Revolving Loan Commitment ” means Five Hundred Million Dollars ($500,000,000), as such amount may be otherwise reduced in accordance with Section 2.5.

“ Revolving Loan Notes ” means the promissory notes of the Borrower in favor of each Lender evidencing the Revolving Loans made to the Borrower and substantially in the form of Exhibit 2.7(a) , as such promissory notes may be amended, modified, supplemented or replaced from time to time.

“ S&P ” means Standard & Poor’s Ratings Group, a division of McGraw Hill, Inc., or any successor or assignee of the business of such division in the business of rating securities.

“ Solvent ” means, with respect to any Person as of a particular date, that on such date (a) the fair saleable value (on a going concern basis) of such Person’s assets exceeds its liabilities, contingent or otherwise, fairly valued, (b) such Person will be able to pay its debts as they become due, (c) such Person does not have unreasonably small capital with which to satisfy all of its current and reasonably anticipated obligations and (d) such Person does not intend to incur nor does it reasonably anticipate that it will incur debts beyond its ability to pay as such debts become due.

“ SPV ” has the meaning set forth in Section 12.18 hereof.

“ Subsidiary ” means, as to any Person, (a) any corporation more than 50% of whose stock of any class or classes having by the terms thereof ordinary voting power to elect a majority of the directors of such corporation (irrespective of whether or not at the time, any class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) is at the time owned by such Person directly or indirectly through Subsidiaries and (b) any partnership, association, joint venture or other entity in which such Person directly or indirectly through Subsidiaries has more than 50% equity interest at any time.

“ Synthetic Lease ” means each arrangement, however described, under which the obligor accounts for its interest in the property covered thereby under GAAP as lessee of a lease which is not a capital lease under GAAP and accounts for its interest in the property covered thereby for federal income tax purposes as the owner.

“ Synthetic Lease Obligation ” means, as to any Person with respect to any Synthetic Lease at any time of determination, the amount of the liability of such Person in respect of such Synthetic Lease that would (if such lease was required to be classified and accounted for as a capital lease on a balance sheet of such Person in accordance with GAAP) be required to be capitalized on the balance sheet of such Person at such time.

“ Taxes ” has the meaning set forth in Section 4.4(a).

“ Total Funded Debt ” means all Funded Debt of the Borrower and its Consolidated Subsidiaries, on a consolidated basis, as determined in accordance with GAAP.

“ Trust Preferred Securities ” means the trust preferred securities issued by a subsidiary capital trust established by the Borrower outstanding on the date hereof and reflected as junior subordinated notes in the financial statements of the Borrower for the fiscal year ended December 31, 2007, and any additional trust preferred securities that are substantially similar thereto, along with the junior subordinated debt obligations of the Borrower, so long as (a) the terms thereof require no repayments or prepayments and no mandatory redemptions or repurchases, in each case prior to at least 91 days after the later of the termination of the Commitments and the repayment in full of the Loans and all other amounts due under this Credit Agreement, (b) such securities are subordinated and junior in right of payment to all obligations of the Borrower for or in respect of borrowed money and (c) the obligors in respect of such preferred securities and subordinated debt have the right to defer interest and dividend payments, in each case to substantially the same extent as such currently outstanding preferred securities or on similar terms customary for trust preferred securities and not materially less favorable to the interests of the Borrower or the Lenders.

“ VaPower ” means Virginia Electric and Power Company, a Virginia corporation and its successors and assigns.

“ VaPower Indenture ” means the first mortgage bond indenture, dated November 1, 1935, by and between VaPower and The Chase Manhattan Bank, as supplemented and amended.

“ Wholly Owned Subsidiary ” means, as to any Person, any other Person all of the Capital Stock of which (other than de minimis directors’ qualifying shares or local ownership shares required by law and outstanding publicly owned Preferred Stock of VaPower) is owned by such Person directly and/or through other Wholly Owned Subsidiaries.

1.2 Computation of Time Periods; Other Definitional Provisions .

For purposes of computation of periods of time hereunder, the word “from” means “from and including” and the words “to” and “until” each mean “to but excluding.” References in this Credit Agreement to “Sections”, “Schedules” and “Exhibits” shall be to Sections, Schedules or Exhibits of or to this Credit Agreement unless otherwise specified.

1.3 Accounting Terms .

Except as otherwise expressly provided herein, all accounting terms used herein shall be interpreted, and all financial statements and certificates and reports as to financial matters required to be delivered to the Lenders hereunder shall be prepared, in accordance with GAAP applied on a consistent basis. All calculations made for the purposes of determining compliance with this Credit Agreement shall (except as otherwise expressly provided herein) be made by application of GAAP applied on a basis consistent with the most recent annual or quarterly financial statements delivered pursuant to Section 8.1 (or, prior to the delivery of the first financial statements pursuant to Section 8.1, consistent with the financial statements described in Section 6.1(f)); provided , however , if (a) the Borrower shall object to determining such compliance on such basis at the time of delivery of such financial statements due to any change in GAAP or the rules promulgated with respect thereto or (b) the Administrative Agent or the Required Lenders shall so object in writing within 30 days after delivery of such financial statements, then such calculations shall be made on a basis consistent with the most recent financial statements delivered by the Borrower to the Lenders as to which no such objection shall have been made.

1.4 Time .

All references to time herein shall be references to Eastern Standard Time or Eastern Daylight time, as the case may be, unless specified otherwise.

SECTION 2. LOANS

2.1 Revolving Loan Commitment .

(a) Revolving Loans . Subject to the terms and conditions set forth herein, each Lender severally agrees to make revolving loans to the Borrower in Dollars, at any time and from time to time, during the Commitment Period (each a “ Revolving Loan ” and collectively the “ Revolving Loans ”); provided that (i) the aggregate amount of Revolving Loans outstanding to the Borrower on any day shall not exceed the Revolving Loan Commitment and (ii) with respect to each individual Lender, the Lender’s pro rata share of outstanding Revolving Loans then outstanding on any day shall not exceed such Lender’s Commitment Percentage of the Revolving Loan Commitment. Subject to the terms and conditions of this Credit Agreement, the Borrower may borrow, repay and reborrow the amount of the Revolving Loan Commitment made to it.

(b) Intentionally Omitted .

2.2 Method of Borrowing for Revolving Loans .

(a) Base Rate Loans . By no later than 11:00 a.m. on the Business Day of the Borrower’s request for a Base Rate Loan (or for the conversion of Eurodollar Revolving Loans to Base Rate Loans), the Borrower shall submit a Notice of Borrowing to the Administrative Agent setting forth (i) the amount requested, (ii) the desire to have such Revolving Loans accrue interest at the Base Rate and (iii) except in the case of conversions of Eurodollar Revolving Loans to Base Rate Loans, complying in all respects with Section 6.2 hereof.

(b) Eurodollar Revolving Loans . By no later than 11:00 a.m. three Business Days prior to the date of the Borrower’s request for a Eurodollar Revolving Loan (or for the conversion of Base Rate Loans to Eurodollar Revolving Loans or the continuation of existing Eurodollar Revolving Loans), the Borrower shall submit a Notice of Borrowing to the Administrative Agent setting forth (i) the amount requested, (ii) the desire to have such Revolving Loans accrue interest at the Adjusted Eurodollar Rate, (iii) the Interest Period applicable thereto, and (iv) except in the case of conversions of Base Rate Loans to Eurodollar Revolving Loans or the continuation of existing Eurodollar Revolving Loans, complying in all respects with Section 6.2 hereof.

(c) Continuation and Conversion . The Borrower shall have the option, on any Business Day, to continue existing Eurodollar Revolving Loans made to it for a subsequent Interest Period, to convert Base Rate Loans made to it into Eurodollar Revolving Loans or to convert Eurodollar Revolving Loans made to it into Base Rate Loans. By no later than 11:00 a.m. (a) on the date of the requested conversion of a Eurodollar Revolving Loan to a Base Rate Loan or (b) three Business Days prior to the date for a requested continuation of a Eurodollar Revolving Loan or conversion of a Base Rate Loan to a Eurodollar Revolving Loan, the Borrower shall provide telephonic notice to the Administrative Agent, followed promptly by a written Notice of Continuation/Conversion, setting forth (i) whether the Borrower wishes to continue or convert such Loans and (ii) if the request is to continue a Eurodollar Revolving Loan or convert a Base Rate Loan to a Eurodollar Revolving Loan, the Interest Period applicable thereto. Notwithstanding anything herein to the contrary, (i) except as provided in Section 4.1 hereof, Eurodollar Revolving Loans may be converted to Base Rate Loans only on the last day of an Interest Period applicable thereto; (ii) Eurodollar Revolving Loans may be continued and Base Rate Loans may be converted to Eurodollar Revolving Loans only if no Default or Event of Default with respect to the Borrower is in existence on the date of such extension or conversion; (iii) any continuation or conversion must comply with Sections 2.2(a) or 2.2(b) hereof, as applicable; and (iv) failure by the Borrower to properly continue Eurodollar Revolving Loans at the end of an Interest Period shall be deemed a conversion to Base Rate Loans.

2.3 Funding of Revolving Loans .

Upon receipt of a Notice of Borrowing, the Administrative Agent shall promptly inform the Lenders as to the terms thereof. Each Lender will make its pro rata share of the Revolving Loans available to the Administrative Agent by 1:00 p.m. on the date specified in the Notice of Borrowing by deposit (in Dollars) of immediately available funds at the office of the Administrative Agent, or at such other address as the Administrative Agent may designate in writing. All Revolving Loans shall be made by the Lenders pro rata on the basis of each Lender’s Commitment Percentage.

No Lender shall be responsible for the failure or delay by any other Lender in its obligation to make Loans hereunder; provided , however , that the failure of any Lender to fulfill its obligations hereunder shall not relieve any other Lender of its obligations hereunder. Unless the Administrative Agent shall have been notified by any Lender prior to the time of any such Loan

that such Lender does not intend to make available to the Administrative Agent its portion of the Loans to be made on such date, the Administrative Agent may assume that such Lender has made such amount available to the Administrative Agent on the date of such Loans, and the Administrative Agent in reliance upon such assumption, may (in its sole discretion without any obligation to do so) make available to the Borrower a corresponding amount. If such corresponding amount is not in fact made available to the Administrative Agent, the Administrative Agent shall be able to recover such corresponding amount from such Lender. If such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand therefor, the Administrative Agent will promptly notify the Borrower and the Borrower shall immediately pay such corresponding amount to the Administrative Agent. The Administrative Agent shall also be entitled to recover from the Lender or the Borrower, as the case may be, interest on such corresponding amount in respect of each day from the date such corresponding amount was made available by the Administrative Agent to the Borrower to the date such corresponding amount is recovered by the Administrative Agent at a per annum rate equal to (a) the applicable rate for such Loan pursuant to the Notice of Borrowing, if recovered from the Borrower, and (b) the Federal Funds Rate, if recovered from a Lender.

2.4 Minimum Amounts of Revolving Loans .

Each request for Revolving Loans shall be, in the case of Eurodollar Revolving Loans, in an aggregate principal amount that is not less than the lesser of $10,000,000 or the remaining amount available to be borrowed and, in the case of Base Rate Loans, in an aggregate principal amount that is not less than the lesser of $5,000,000 or the remaining amount available to be borrowed. Any Revolving Loan requested shall be in an integral multiple of $1,000,000 unless the request is for all of the remaining amount available to be borrowed.

2.5 Reductions of Revolving Loan Commitment .

Upon at least three Business Days’ notice, the Borrower shall have the right to permanently terminate or reduce the aggregate unused amount of the Revolving Loan Commitment available to it at any time or from time to time; provided that (a) each partial reduction shall be in an aggregate amount at least equal to $10,000,000 and in integral multiples of $1,000,000 above such amount and (b) no reduction shall be made which would reduce the Revolving Loan Commitment to an amount less than the then outstanding Revolving Loans. Any reduction in (or termination of) the Revolving Loan Commitment shall be permanent and may not be reinstated.

2.6 RESERVED .

2.7 Notes .

(a) Revolving Loan Notes . The Revolving Loans made by the Lenders to the Borrower shall be evidenced, upon request by any Lender, by a promissory note of the Borrower payable to each Lender in substantially the form of Exhibit 2.7(a) hereto (the “ Revolving Loan Notes ”) and in a principal amount equal to the amount of such Lender’s Commitment Percentage of the Revolving Loan Commitment as originally in effect.

(b) Intentionally Omitted .

The date, amount, type, interest rate and duration of Interest Period (if applicable) of each Loan made by each Lender to the Borrower, and each payment made on account of the principal thereof, shall be recorded by such Lender on its books; provided that the failure of such Lender to make any such recordation or endorsement shall not affect the obligations of the Borrower to make a payment when due of any amount owing hereunder or under any Note in respect of the Loans to be evidenced by such Note, and each such recordation or endorsement shall be conclusive and binding absent manifest error.

2.8 RESERVED

SECTION 3. PAYMENTS

3.1 Interest .

(a) Interest Rate .

(i) All Base Rate Loans made to the Borrower shall accrue interest at the Adjusted Base Rate.

(ii) All Eurodollar Revolving Loans made to the Borrower shall accrue interest at the Adjusted Eurodollar Rate applicable to such Eurodollar Revolving Loan.

(b) Default Rate of Interest . Upon the occurrence, and during the continuance, of an Event of Default, the principal of and, to the extent permitted by law, interest on the Loans outstanding to the Borrower and any other amounts owing by the Borrower hereunder or under the other Credit Documents shall bear interest, payable on demand, at a per annum rate equal to 2% plus the rate which would otherwise be applicable (or if no rate is applicable, then the rate for Loans outstanding to the Borrower that are Base Rate Loans plus 2% per annum).

(c) Interest Payments . Except as otherwise provided in subsection (b) above, interest on Loans shall be due and payable in arrears on each Interest Payment Date.

3.2 Prepayments .

(a) Voluntary Prepayments . The Borrower shall have the right to prepay Loans in whole or in part from time to time without premium or penalty; provided, however, that (i) Eurodollar Revolving Loans may only be prepaid on three Business Days’ prior written notice to the Administrative Agent and any prepayment of Eurodollar Revolving Loans will be subject to Section 4.3 hereof and (ii) each such partial prepayment of Loans shall be in the minimum principal amount of $10,000,000. Amounts prepaid hereunder shall be applied as the Borrower may elect; provided that if the Borrower fails to specify the application of a voluntary prepayment then such prepayment shall be applied in each case first to Base Rate Loans of the Borrower and then to Eurodollar Revolving Loans of the Borrower in direct order of Interest Period maturities.

(b) Mandatory Prepayments . If at any time the amount of Revolving Loans outstanding exceeds the Revolving Loan Commitment, the Borrower shall immediately make a principal payment to the Administrative Agent in the manner and in an amount necessary to be in compliance with Section 2.1 hereof. Any payments made under this Section 3.2(b) shall be subject to Section 4.3 hereof and shall be applied first to Base Rate Loans, then to Eurodollar Revolving Loans in direct order of Interest Period maturities.

3.3 Payment in Full at Maturity .

On the Maturity Date, the entire outstanding principal balance of all Loans, together with accrued but unpaid interest and all other sums owing under this Credit Agreement, shall be due and payable in full, unless accelerated sooner pursuant to Section 10 hereof.

3.4 Fees .

(a) Commitment Fees .

(i) In consideration of the Revolving Loan Commitment being made available by the Lenders hereunder, the Borrower agrees to pay to the Administrative Agent, for the pro rata benefit of each Lender, a per annum fee equal to the Commitment Fee Margin multiplied by the daily average Available Revolving Loan Commitment (the “ Commitment Fees ”).

(ii) The accrued Commitment Fees shall be due and payable in arrears on each Fee Payment Date (as well as on any date that the Revolving Loan Commitment is reduced) for the immediately preceding fiscal quarter (or portion thereof), beginning with the first of such dates to occur after the Closing Date.

(b) Intentionally Omitted.

(c) Administrative Fees . The Borrower agrees to pay to the Administrative Agent an annual fee as agreed to between the Borrower and the Administrative Agent.

3.5 Place and Manner of Payments .

All payments of principal, interest, fees, expenses and other amounts to be made by the Borrower under this Credit Agreement shall be received not later than 2:00 p.m. on the date when due in Dollars and in immediately available funds, without setoff, deduction, counterclaim or withholding of any kind, by the Administrative Agent at its offices in Connecticut. The Borrower shall, at the time it makes any payment under this Credit Agreement, specify to the Administrative Agent, the Loans, fees or other amounts payable by the Borrower hereunder to which such payment is to be applied (and in the event that it fails to specify, or if such application would be inconsistent with the terms hereof, the Administrative Agent, shall distribute such payment to the Lenders in such manner as it reasonably determines in its sole discretion).

3.6 Pro Rata Treatment .

Except to the extent otherwise provided herein, all Revolving Loans, each payment or prepayment of principal of any Revolving Loan, each payment of interest on the Revolving Loans, each payment of Commitment Fees, each reduction of the Revolving Loan Commitment, and each conversion or continuation of any Revolving Loans, shall be allocated pro rata among the Lenders in accordance with the respective Commitment Percentages.

3.7 Computations of Interest and Fees .

(a) Except for Base Rate Loans calculated using the Prime Rate, on which interest shall be computed on the basis of a 365 or 366 day year as the case may be, all computations of interest and fees hereunder shall be made on the basis of the actual number of days elapsed over a year of 360 days.

(b) It is the intent of the Lenders and the Borrower to conform to and contract in strict compliance with applicable usury law from time to time in effect. All agreements between the Lenders and the Borrower are hereby limited by the provisions of this paragraph which shall override and control all such agreements, whether now existing or hereafter arising and whether written or oral. In no way, nor in any event or contingency (including but not limited to prepayment or acceleration of the maturity of any obligation), shall the interest taken, reserved, contracted for, charged, or received under this Credit Agreement, under the Notes or otherwise, exceed the maximum non-usurious amount permissible under applicable law. If, from any possible construction of any of the Credit Documents or any other document, interest would otherwise be payable in excess of the maximum non-usurious amount, any such construction shall be subject to the provisions of this paragraph and such documents shall be automatically reduced to the maximum non-usurious amount permitted under applicable law, without the necessity of execution of any amendment or new document. If any Lender shall ever receive anything of value which is characterized as interest on the Loans under applicable law and which would, apart from this provision, be in excess of the maximum lawful amount, an amount equal to the amount which would have been excessive interest shall, without penalty, be applied to the reduction of the principal amount owing on the Loans and not to the payment of interest, or refunded to the Borrower or the other payor thereof if and to the extent such amount which would have been excessive exceeds such unpaid principal amount of the Loans. The right to demand payment of the Loans of the Borrower or any other indebtedness evidenced by any of the Credit Documents does not include the right to receive any interest which has not otherwise accrued on the date of such demand, and the Lenders do not intend to charge or receive any unearned interest in the event of such demand. All interest paid or agreed to be paid to the Lenders with respect to the Loans shall, to the extent permitted by applicable law, be amortized, prorated, allocated, and spread throughout the full stated term (including any renewal or extension) of the Loans so that the amount of interest on account of such indebtedness does not exceed the maximum non-usurious amount permitted by applicable law.

3.8 Sharing of Payments .

Each Lender agrees that, in the event that any Lender shall obtain payment in respect of any Revolving Loan owing to such Lender under this Credit Agreement through the exercise of a right of set-off, banker’s lien, counterclaim or otherwise (including, but not limited to, pursuant to the Bankruptcy Code) in excess of its pro rata share as provided for in this Credit Agreement, such

Lender shall promptly purchase from the other Lenders a participation in such Loans, in such amounts and with such other adjustments from time to time, as shall be equitable in order that all Lenders share such payment in accordance with their respective ratable shares as provided for in this Credit Agreement. Each Lender further agrees that if a payment to a Lender (which is obtained by such Lender through the exercise of a right of set-off, banker’s lien, counterclaim or otherwise) shall be rescinded or must otherwise be restored, each Lender which shall have shared the benefit of such payment shall, by repurchase of a participation theretofore sold, return its share of that benefit to each Lender whose payment shall have been rescinded or otherwise restored. The Borrower agrees that any Lender so purchasing such a participation in Loans made to the Borrower may, to the fullest extent permitted by law, exercise all rights of payment, including set-off, banker’s lien or counterclaim, with respect to such participation as fully as if such Lender were a holder of such Loan or other obligation in the amount of such participation. Except as otherwise expressly provided in this Credit Agreement, if any Lender shall fail to remit to the Administrative Agent or any other Lender an amount payable by such Lender to the Administrative Agent or such other Lender pursuant to this Credit Agreement on the date when such amount is due, such payments shall accrue interest thereon, for each day from the date such amount is due until the day such amount is paid to the Administrative Agent or such other Lender, at a rate per annum equal to the Federal Funds Rate.

3.9 Evidence of Debt .

(a) Each Lender shall maintain an account or accounts evidencing each Loan made by such Lender to the Borrower from time to time, including the amounts of principal and interest payable and paid to such Lender by or for the account of the Borrower from time to time under this Credit Agreement. Each Lender will make reasonable efforts to maintain the accuracy of its account or accounts and to promptly update its account or accounts from time to time, as necessary.

(b) The Administrative Agent shall maintain the Register for the Borrower pursuant to Section 12.3(c), and a subaccount for each Lender, in which Registers and subaccounts (taken together) shall be recorded (i) the amount, type and Interest Period of each such Loan hereunder, (ii) the amount of any principal or interest due and payable or to become due and payable to each Lender hereunder and (iii) the amount of any sum received by the Administrative Agent hereunder from or for the account of the Borrower and each Lender’s share thereof. The Administrative Agent will make reasonable efforts to maintain the accuracy of the subaccounts referred to in the preceding sentence and to promptly update such subaccounts from time to time, as necessary.

(c) The entries made in the accounts, Registers and subaccounts maintained pursuant to subsection (b) of this Section 3.9 (and, if consistent with the entries of the Administrative Agent, subsection (a)) shall be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided , however, that the failure of any Lender or the Administrative Agent to maintain any such account, such Registers or such subaccounts, as applicable, or any error therein, shall not in any manner affect the obligation of the Borrower to repay the Loans made by such Lender to the Borrower in accordance with the terms hereof.

SECTION 4. ADDITIONAL PROVISIONS REGARDING LOANS

4.1 Eurodollar Revolving Loan Provisions .

(a) Unavailability . In the event that the Administrative Agent shall have determined in good faith (i) that U.S. dollar deposits in the principal amounts requested with respect to a Eurodollar Revolving Loan are not generally available in the London interbank Eurodollar market or (ii) that reasonable means do not exist for ascertaining the Eurodollar Rate, the Administrative Agent shall, as soon as practicable thereafter, give notice of such determination to the Borrower and the Lenders. In the event of any such determination under clauses (i) or (ii) above, until the Administrative Agent shall have advised the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (A) any request by the Borrower for Eurodollar Revolving Loans shall be deemed to be a request for Base Rate Loans, and (B) any request by the Borrower for conversion into or continuation of Eurodollar Revolving Loans shall be deemed to be a request for conversion into or continuation of Base Rate Loans.

(b) Change in Legality .

(i) Notwithstanding any other provision herein, if any change in any law or regulation or in the interpretation thereof by any Governmental Authority charged with the administration or interpretation thereof shall make it unlawful for any Lender to make or maintain any Eurodollar Revolving Loan or to give effect to its obligations as contemplated hereby with respect to any Eurodollar Revolving Loan, then, by written notice to the Borrower and to the Administrative Agent, such Lender may:

(A) declare that Eurodollar Revolving Loans, and conversions to or continuations of Eurodollar Revolving Loans, will not thereafter be made by such Lender to the Borrower hereunder, whereupon any request by the Borrower for, or for conversion into or continuation of, Eurodollar Revolving Loans shall, as to such Lender only, be deemed a request for, or for conversion into or continuation of, Base Rate Loans, unless such declaration shall be subsequently withdrawn; and

(B) require that all outstanding Eurodollar Revolving Loans made by it to the Borrower be converted to Base Rate Loans in which event all such Eurodollar Revolving Loans shall be automatically converted to Base Rate Loans.

In the event any Lender shall exercise its rights under clause (A) or (B) above, all payments and prepayments of principal which would otherwise have been applied to repay the Eurodollar Revolving Loans that would have been made by such Lender to the Borrower or the converted Eurodollar Revolving Loans of such Lender to the Borrower shall instead be applied to repay the Base Rate Loans made by such Lender to the Borrower in lieu of, or resulting from the conversion of, such Eurodollar Revolving Loans.

(c) Increased Costs . If at any time a Lender shall incur increased costs or reductions in the amounts received or receivable hereunder with respect to the making, the commitment to make or the maintaining of any Eurodollar Revolving Loan because of (i) any change since the date of this Credit Agreement in any applicable law, governmental rule, regulation, guideline or order (or in the interpretation or administration thereof and including the introduction of any new law or governmental rule, regulation,

guideline or such order) including, without limitation, the imposition, modification or deemed applicability of any reserves, deposits or similar requirements (such as, for example, but not limited to, a change in official reserve requirements, but, in all events, excluding reserves required under Regulation D to the extent included in the computation of the Adjusted Eurodollar Rate) or (ii) other circumstances affecting the London interbank Eurodollar market; then the Borrower shall pay to such Lender promptly upon written demand therefor, such additional amounts (in the form of an increased rate of, or a different method of calculating, interest or otherwise as such Lender may determine in its sole discretion) as may be required to compensate such Lender for such increased costs or reductions in amounts receivable hereunder.

Each determination and calculation made by a Lender under this Section 4.1 shall, absent manifest error, be binding and conclusive on the parties hereto.

4.2 Capital Adequacy .

If, after the date hereof, any Lender has determined that the adoption or effectiveness of any applicable law, rule or regulation regarding capital adequacy, or any change therein, or any change in the interpretation or administration thereof by any Governmental Authority, central bank or comparable agency charged with the interpretation or administration thereof, or compliance by such Lender (or its parent corporation) with any request or directive regarding capital adequacy (whether or not having the force of law) of any such authority, central bank or comparable agency, has or would have the effect of reducing the rate of return on such Lender’s (or parent corporation’s) capital or assets as a consequence of its commitments or obligations hereunder to the Borrower to a level below that which such Lender (or its parent corporation) could have achieved but for such adoption, effectiveness, change or compliance (taking into consideration such Lender’s (or parent corporation’s) policies with respect to capital adequacy), then, upon notice from such Lender, the Borrower shall pay to such Lender such additional amount or amounts as will compensate such Lender (or its parent corporation) for such reduction. Each determination by any such Lender of amounts owing under this Section 4.2 shall, absent manifest error, be conclusive and binding on the parties hereto.

4.3 Compensation .

The Borrower shall compensate each Lender, upon its written request, for all reasonable losses, expenses and liabilities (including, without limitation, any loss, expense or liability incurred by reason of the liquidation or reemployment of deposits or other funds required by the Lender to fund its Eurodollar Revolving Loans to the Borrower) which such Lender may sustain:

(a) if for any reason (other than a default by such Lender or the Administrative Agent) a borrowing of Eurodollar Revolving Loans does not occur on a date specified therefor in a Notice of Borrowing for such Eurodollar Revolving Loan, as the case may be;

(b) if any repayment, continuation or conversion of any Eurodollar Revolving Loan by the Borrower occurs on a date which is not the last day of an Interest Period applicable thereto, including, without limitation, in connection with any demand, acceleration, mandatory prepayment or otherwise (including any demand under this Section 4);

(c) if the Borrower fails to repay the Eurodollar Revolving Loans when required by the terms of this Credit Agreement; or

(d) upon its assignment of any Eurodollar Revolving Loan other than on the last day of the Interest Period or maturity date applicable thereto as a result of a request by the Borrower pursuant to Section 4.5.

Calculation of all amounts payable to a Lender under this Section 4.3 shall be made as though the Lender has actually funded its relevant Eurodollar Revolving Loan through the purchase of a Eurodollar deposit bearing interest at the Eurodollar Rate in an amount equal to the amount of that Loan, having a maturity comparable to the relevant Interest Period and through the transfer of such Eurodollar deposit from an offshore office of that Lender to a domestic office of that Lender in the United States of America; provided , however , that each Lender may fund each of its Eurodollar Revolving Loans in any manner it sees fit and the foregoing assumption shall be utilized only for the calculation of amounts payable under this Section 4.3.

4.4 Taxes .

(a) Tax Liabilities Imposed on a Lender . Any and all payments by the Borrower hereunder or under any of the Credit Documents shall be made, in accordance with the terms hereof and thereof, free and clear of and without deduction for any and all present or future taxes, levies, imposts, deductions, charges or withholdings, and all liabilities with respect thereto, excluding taxes measured by net income and franchise taxes imposed on any Lender by the jurisdiction under the laws of which such Lender is organized or transacting business or any political subdivision thereof (all such non-excluded taxes, being hereinafter referred to as “Taxes”). If the Borrower shall be required by law to deduct any Taxes from or in respect of any sum payable hereunder to any Lender, (i) the sum payable shall be increased as may be necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section 4.4) such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) the Borrower shall make such deductions, (iii) the Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law, and (iv) the Borrower shall deliver to such Lender evidence of such payment to the relevant Governmental Authority.

(b) Other Taxes . In addition, the Borrower agrees to pay, upon notice from a Lender and prior to the date when penalties attach thereto, all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies of the United States or any state or political subdivision thereof or any applicable foreign jurisdiction that arise from any payment made hereunder by the Borrower or from the execution, delivery or registration of, or otherwise from the Borrower’s participation with respect to, this Credit Agreement (collectively, the “ Other Taxes ”).

(c) Refunds . If a Lender or the Administrative Agent (as the case may be) shall become aware that it is entitled to claim a refund (or a refund in the form of a credit) (each, a “ Refund ”) from a Governmental Authority (as a result of any error in the amount of Taxes or Other Taxes paid to such Governmental Authority or otherwise) of Taxes or Other Taxes which the Borrower has paid, or with respect to which the Borrower has paid additional amounts, pursuant to this Section 4.4, it shall promptly notify the Borrower of the availability of such Refund and shall, within 30 days after receipt of written notice by the Borrower, make a claim to such Governmental Authority for such Refund at the Borrower’s expense if, in the judgment of such Lender or the Administrative Agent (as the case may be), the making of such claim will not be otherwise disadvantageous to it; provided that nothing in this subsection (c) shall be construed to require any Lender or the Administrative Agent to institute any administrative proceeding (other than the filing of a claim for any such Refund) or judicial proceeding to obtain such Refund.

If a Lender or the Administrative Agent (as the case may be) receives a Refund from a Governmental Authority (as a result of any error in the amount of Taxes or Other Taxes paid to such Governmental Authority or otherwise) of any Taxes or Other Taxes which have been paid by the Borrower, or with respect to which the Borrower has paid additional amounts pursuant to this Section 4.4, it shall promptly pay to the Borrower the amount so received (but only to the extent of payments made, or additional amounts paid, by the Borrower under this Section 4.4 with respect to Taxes or Other Taxes giving rise to such Refund), net of all reasonable out-of-pocket expenses (including the net amount of taxes, if any, imposed on such Lender or the Administrative Agent with respect to such Refund) of such Lender or Administrative Agent, and without interest (other than interest paid by the relevant Governmental Authority with respect to such Refund); provided , however , that the Borrower, upon the request of Lender or the Administrative Agent, agrees to repay the amount paid over to the Borrower (plus penalties, interest or other charges) to such Lender or the Administrative Agent in the event such Lender or the Administrative Agent is required to repay such Refund to such Governmental Authority. Nothing contained in this Section 4.4(c) shall require any Lender or the Administrative Agent to make available any of its tax returns (or any other information that it deems to be confidential or proprietary).

(d) Foreign Lender . Each Lender (which, for purposes of this Section 4.4, shall include any Affiliate of a Lender that makes any Eurodollar Revolving Loan pursuant to the terms of this Credit Agreement) that is not a “United States person” (as such term is defined in Section 7701(a)(30) of the Code) shall submit to the Borrower and the Administrative Agent on or before the Closing Date (or, in the case of a Person that becomes a Lender after the Closing Date by assignment, promptly upon such assignment), two duly completed and signed copies of (A) either (1) Form W-8BEN, or any applicable successor form, of the United States Internal Revenue Service entitling such Lender to a complete exemption from withholding on all amounts to be received by such Lender pursuant to this Credit Agreement and/or the Notes or (2) Form W-8ECI, or any applicable successor form, of the United States Internal Revenue Service relating to all amounts to be received by such Lender pursuant to this Credit Agreement and/or the Notes and, if applicable, (B) an Internal Revenue Service Form W-8BEN or W-9 entitling such Lender to receive a complete exemption from United States backup withholding tax. Each such Lender shall, from time to time after submitting either such form, submit to the Borrower and the Administrative Agent such additional duly completed and signed copies of such forms (or such

successor forms or other documents as shall be adopted from time to time by the relevant United States taxing authorities) as may be (1) reasonably requested in writing by the Borrower or the Administrative Agent and (2) appropriate under then current United States laws or regulations. Upon the reasonable request of the Borrower or the Administrative Agent, each Lender that has not provided the forms or other documents, as provided above, on the basis of being a United States person shall submit to the Borrower and the Administrative Agent a certificate to the effect that it is such a “United States person.”

4.5 Mitigation; Mandatory Assignment .

The Administrative Agent and each Lender shall use reasonable efforts to avoid or mitigate any increased cost or suspension of the availability of an interest rate under Sections 4.1 through 4.4 above to the greatest extent practicable (including transferring the Loans to another lending office or Affiliate of a Lender) unless, in the opinion of the Administrative Agent or such Lender, such efforts would be likely to have an adverse effect upon it. In the event a Lender makes a request to the Borrower for additional payments in accordance with Section 4.1, 4.2 or 4.4, then, provided that no Default or Event of Default has occurred and is continuing at such time, the Borrower may, at its own expense (such expense to include any transfer fee payable to the Administrative Agent under Section 12.3(b) and any expense pursuant to Section 4 hereof) and in its sole discretion, require such Lender to transfer and assign in whole (but not in part), without recourse (in accordance with and subject to the terms and conditions of Section 12.3(b)), all of its interests, rights and obligations under this Credit Agreement to an Eligible Assignee which shall assume such assigned obligations (which Eligible Assignee may be another Lender, if a Lender accepts such assignment); provided that (a) such assignment shall not conflict with any law, rule or regulation or order of any court or other Governmental Authority and (b) the Borrower or such Eligible Assignee shall have paid to the assigning Lender in immediately available funds the principal of and interest accrued to the date of such payment on the portion of the Loans hereunder held by such assigning Lender and all other amounts owed to such assigning Lender hereunder, including amounts owed pursuant to Sections 4.1 through 4.4 hereof.

SECTION 5. RESERVED

SECTION 6. CONDITIONS PRECEDENT

6.1 Closing Conditions .

The obligation of the Lenders to enter into the Credit Documents is subject to satisfaction of the following conditions (all documents described below to be in form and substance acceptable to the Lenders), on or before August 15, 2008:

(a) Credit Documents . Receipt by the Administrative Agent of duly executed copies of: (i) this Credit Agreement and (ii) the other Credit Documents.

(b) Corporate Documents . Receipt by the Administrative Agent of the following:

(i) Charter Documents . Copies of the articles of incorporation or other charter documents of the Borrower certified to be true and complete as of a recent date by the appropriate Governmental Authority of the state or other jurisdiction of its incorporation and certified by a secretary or assistant secretary of the Borrower to be true and correct as of the Closing Date.

(ii) Bylaws . A copy of the bylaws of the Borrower certified by a secretary or assistant secretary of the Borrower to be true and correct as of the Closing Date.

(iii) Resolutions . Copies of resolutions of the Board of Directors of the Borrower approving and adopting the Credit Documents, the transactions contemplated herein and therein and authorizing execution and delivery thereof, certified by a secretary or assistant secretary of the Borrower to be true and correct and in force and effect as of the Closing Date.

(iv) Good Standing . Copies of (a) certificates of good standing, existence or its equivalent with respect to the Borrower certified as of a recent date by the appropriate Governmental Authorities of its jurisdiction of incorporation and (b) to the extent available, a certificate indicating payment of all corporate franchise taxes certified as of a recent date by the appropriate Governmental Authorities of the Borrower’s jurisdiction of incorporation.

(v) Additional Certificates. Copies of incumbency certificates of officers of the Borrower as the Administrative Agent may reasonably require evidencing the identity, authority and capacity of each officer thereof authorized to act in connection with this Agreement and the other Credit Documents to which the Borrower is a party or is to be a party on the Closing Date.

(c) Closing Certificate . Receipt by the Administrative Agent of a certificate of the Borrower, dated the Closing Date, substantially in the form of Exhibit 6.1(c) , executed by any Assistant Treasurer and the Secretary or any Assistant Secretary of the Borrower, and attaching the documents referred to in subsections 6.1(b).

(d) Fees . The Lenders and the Administrative Agent shall have received all fees required to be paid, and all expenses for which invoices have been presented.

(e) Opinion of Counsel . Receipt by the Administrative Agent of an opinion, or opinions, satisfactory in form and content to the Administrative Agent and the Lenders, addressed to the Administrative Agent and each of the Lenders and dated as of the Closing Date, substantially in the form of Exhibit 6.1(e) , from McGuireWoods LLP, legal counsel to the Borrower.

(f) Financial Statements . Receipt and approval by the Administrative Agent and the Lenders of the audited financial statements of the Borrower and its Consolidated Subsidiaries for each of the fiscal years ended as of December 31, 2006 and December 31, 2007 and the unaudited financial statements of the Borrower and its Consolidated Subsidiaries dated as of March 31, 2008.

(g) Consents . Receipt by the Administrative Agent of a written representation from the Borrower that (i) all governmental, shareholder and third party consents and approvals necessary or, in the reasonable opinion of the Administrative Agent, advisable

in connection with the transactions contemplated hereby have been received and are in full force and effect and (ii) no condition or requirement of law exists which could reasonably be likely to restrain, prevent or impose any material adverse condition on the transactions contemplated hereby, and receipt by the Administrative Agent of copies of any required orders of the Virginia State Corporation Commission or any other state utilities commission approving the Borrower’s execution, delivery and performance of this Credit Agreement and the borrowings hereunder.

(h) No Default; Representations and Warranties . As of the Closing Date (i) there shall exist no Default or Event of Default by the Borrower and (ii) all representations and warranties contained herein and in the other Credit Documents shall be true and correct in all material respects.

(i) Material Adverse Effect . No event or condition shall have occurred since the dates of the financial statements delivered pursuant to Section 6.1(f) above that has or would be likely to have a Material Adverse Effect on the Borrower.

(j) Other . Receipt by the Lenders of such other documents, instruments, agreements or information as reasonably requested by any Lender.

The Administrative Agent shall provide written notice to the Borrower and the Lenders upon the occurrence of the Effective Date (as defined in Section 12.15).

6.2 Conditions to Loans .

In addition to the conditions precedent stated elsewhere herein, the Lenders shall not be obligated to make new Loans to the Borrower (including the initial Loans to be made hereunder) unless:

(a) Request . The Borrower shall have timely delivered a duly executed and completed Notice of Borrowing in conformance with all the terms and conditions of this Credit Agreement.

(b) Representations and Warranties . The representations and warranties made by the Borrower in or pursuant to the Credit Documents are true and correct in all material respects at and as if made as of the date of the funding of the Loans or, if any such representation and warranty was made as of a specific date, such representation and warranty was true and correct in all material respects as of such date; provided , however , that the representation and warranty set forth in clause (ii) of the second paragraph of Section 7.6 hereof need not be true and correct as a condition to the making of any Loans made after the Closing Date.

(c) No Default . On the date of the funding of the Loans, no Default or Event of Default has occurred and is continuing or would be caused by making the Loans.

(d) Availability . Immediately after giving effect to the making of a Loan (and the application of the proceeds thereof), the sum of Loans outstanding shall not exceed the Revolving Loan Commitment.

The delivery of each Notice of Borrowing shall constitute a representation and warranty by the Borrower of the correctness of the matters specified in subsections (b), (c) and (d) above.

SECTION 7. REPRESENTATIONS AND WARRANTIES

The Borrower hereby represents and warrants to each Lender that:

7.1 Organization and Good Standing .

The Borrower and each Material Subsidiary of the Borrower (other than any Material Subsidiary that is not a corporation) (a) is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation, (b) is duly qualified and in good standing as a foreign corporation authorized to do business in every jurisdiction where the failure to so qualify would have a Material Adverse Effect on the Borrower and (c) has the requisite corporate power and authority to own its properties and to carry on its business as now conducted and as proposed to be conducted. Each Material Subsidiary of the Borrower that is not a corporation (a) is a legal entity duly organized, existing and in good standing under the laws of its jurisdiction of organization, (b) is registered or qualified as an entity authorized to do business in every jurisdiction where the failure to be so registered or qualified would have a Material Adverse Effect on the Borrower and (c) has the requisite power and authority to own its properties and to carry on its business as now conducted and as proposed to be conducted.

7.2 Due Authorization .

The Borrower (a) has the requisite corporate power and authority to execute, deliver and perform this Credit Agreement and the other Credit Documents and to incur the obligations herein and therein provided for and (b) is duly authorized to, and has been authorized by all necessary corporate action, to execute, deliver and perform this Credit Agreement and the other Credit Documents.

7.3 No Conflicts .

Neither the execution and delivery of the Credit Documents and the consummation of the transactions contemplated therein, nor the performance of and compliance with the terms and provisions thereof by the Borrower will (a) violate or conflict with any provision of its articles of incorporation or bylaws, (b) violate, contravene or materially conflict with any law, regulation (including without limitation, Regulation U or Regulation X), order, writ, judgment, injunction, decree or permit applicable to it, (c) violate, contravene or materially conflict with contractual provisions of, or cause an event of default under, any indenture, loan agreement, mortgage, deed of trust, contract or other agreement or instrument to which it is a party or by which it may be bound, the violation of which could have a Material Adverse Effect on the Borrower or (d) result in or require the creation of any Lien upon or with respect to its properties.

7.4 Consents .

No consent, approval, authorization or order of, or filing, registration or qualification with, any court or Governmental Authority or third party is required to be obtained or made by the Borrower in connection with the Borrower’s execution, delivery or performance of this Credit Agreement or any of the other Credit Documents that has not been obtained or made, other than any filings with the Securities and Exchange Commission and other Governmental Authorities that may be required to be made after the date hereof.

7.5 Enforceable Obligations .

This Credit Agreement and the other Credit Documents have been duly executed and delivered and constitute legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms, except as may be limited by bankruptcy or insolvency laws or similar laws affecting creditors’ rights generally or by general equitable principles.

7.6 Financial Condition .

The financial statements provided to the Lenders pursuant to Section 6.1(f) and pursuant to Section 8.1(a) and (b) present fairly the financial condition, results of operations and cash flows of the Borrower and its Consolidated Subsidiaries as of the dates stated therein.

In addition, (i) such financial statements were prepared in accordance with GAAP and (ii) since the latest date of such financial statements, there have occurred no changes or circumstances which have had or would be reasonably expected to have a Material Adverse Effect on the Borrower.

7.7 No Default .

Neither the Borrower nor any of its Material Subsidiaries is in default in any respect under any contract, lease, loan agreement, indenture, mortgage, security agreement or other agreement or obligation to which it is a party or by which any of its properties is bound which default would have or would be reasonably expected to have a Material Adverse Effect on the Borrower.

7.8 Indebtednes s.

As of the Closing Date, the Borrower has no Indebtedness except as disclosed in the financial statements referenced in Section 6.1(f) and on Schedule 7.8 .

7.9 Litigation .

Except as disclosed in the Borrower’s Annual Report on Form 10-K for the year ended December 31, 2007 and the Borrower’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 or on Schedule 7.9 , there are no actions, suits or legal, equitable, arbitration or administrative proceedings, pending or, to the knowledge of the Borrower, threatened against the Borrower or a Material Subsidiary of the Borrower in which there is a reasonable possibility of an adverse decision which would have or would reasonably be expected to have a Material Adverse Effect on the Borrower.

7.10 Taxes .

The Borrower and each Material Subsidiary of the Borrower has filed, or caused to be filed, all material tax returns (federal, state, local and foreign) required to be filed by it and paid all amounts of taxes shown thereon to be due (including interest and penalties) and has paid all other material taxes, fees, assessments and other governmental charges (including mortgage recording taxes, documentary stamp taxes and intangibles taxes) owing by it, except for such taxes which are not yet delinquent or that are being contested in good faith and by proper proceedings, and against which adequate reserves are being maintained in accordance with GAAP.

7.11 Compliance with Law .

Except as disclosed in the Borrower’s Annual Report on Form 10-K for the year ended December 31, 2007 and the Borrower’s Quarterly Report for the quarter ended March 31, 2008, the Borrower and each Material Subsidiary of the Borrower is in compliance with all laws, rules, regulations, orders and decrees applicable to it, or to its properties, unless such failure to comply would not have a Material Adverse Effect on the Borrower.

7.12 ERISA .

(a) No Reportable Event has occurred and is continuing with respect to any Plan of the Borrower; (b) no Plan of the Borrower has an accumulated funding deficiency determined under Section 412 of the Code; (c) no proceedings have been instituted, or, to the knowledge of the Borrower, planned to terminate any Plan of the Borrower; (d) neither the Borrower, nor any member of a Controlled Group including the Borrower, nor any duly-appointed administrator of a Plan of the Borrower has instituted or intends to institute proceedings to withdraw from any Multiemployer Pension Plan (as defined in Section 3(37) of ERISA); and (e) each Plan of the Borrower has been maintained and funded in all material respects in accordance with its terms and with the provisions of ERISA applicable thereto.

7.13 Government Regulation .

The Borrower is not an “investment company” registered or required to be registered under the Investment Company Act of 1940, as amended (the “ Investment Company Act ”), and is not controlled by such a company, nor is otherwise subject to regulation under the Investment Company Act.

7.14 Solvency .

The Borrower is and, after the consummation of the transactions contemplated by this Credit Agreement and the other Credit Documents, will be Solvent.

SECTION 8. AFFIRMATIVE COVENANTS

The Borrower hereby covenants and agrees that so long as this Credit Agreement is in effect and until the Loans made to it, together with interest, fees and other obligations hereunder, have been paid in full and the Commitments hereunder shall have terminated:

8.1 Information Covenants .

The Borrower will furnish, or cause to be furnished, to the Administrative Agent and each Lender:

(a) Annual Financial Statements . As soon as available, and in any event within 120 days after the close of each fiscal year of the Borrower, a Form 10-K as required to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, and the Exchange Act, which includes financial information required by such Form 10-K, such financial information to be in reasonable form and detail and audited by Deloitte & Touche or another independent registered public accounting firm of recognized national standing reasonably acceptable to the Administrative Agent and whose opinion shall be to the effect that such financial statements have been prepared in accordance with GAAP (except for changes with which such accountants concur) and shall not be limited as to the scope of the audit or qualified in any respect.

(b) Quarterly Financial Statements . As soon as available, and in any event within 60 days after the close of each of the first three fiscal quarters of the Borrower, a Form 10-Q as required to be filed with the Securities and Exchange Commission under the Securities Act of 1933, as amended, and the Exchange Act, which includes the financial information required by such Form 10-Q, such financial information to be in reasonable form and detail and accompanied by a certificate of the chief financial officer or treasurer of the Borrower to the effect that such quarterly financial statements fairly present in all material respects the financial condition of the Borrower and have been prepared in accordance with GAAP, subject to changes resulting from audit and normal year-end audit adjustments.

(c) Officer’s Certificate . At the time of delivery of the financial statements provided for in Sections 8.1(a) and 8.1(b) above, a certificate of the chief financial officer, treasurer or assistant treasurer of the Borrower, substantially in the form of Exhibit 8.1(c) , (i) demonstrating compliance with the financial covenant contained in Section 8.11 by calculation thereof as of the end of each such fiscal period and (ii) stating that no Default or Event of Default by the Borrower exists, or if any such Default or Event of Default does exist, specifying the nature and extent thereof and what action the Borrower proposes to take with respect thereto.

(d) Reports . Promptly upon transmission or receipt thereof, copies of any filings and registrations with, and reports to or from, the Securities and Exchange Commission, or any successor agency, and copies of all financial statements, proxy statements, notices and reports as the Borrower shall send to its shareholders.

(e) Notices . Upon the Borrower obtaining knowledge thereof, the Borrower will give written notice to the Administrative Agent immediately of (i) the occurrence of an event or condition consisting of a Default or Event of Default, specifying the nature and existence thereof and what action the Borrower proposes to take with respect thereto and (ii) the occurrence of any of the following: (A) the pendency or commencement of any litigation, arbitral or governmental proceeding against the Borrower or a Material Subsidiary of the Borrower which, if adversely determined, is likely to have a Material Adverse Effect, (B) the institution of any proceedings against the Borrower or a Material Subsidiary of the Borrower with respect to, or the receipt of notice by such Person

of potential liability or responsibility for violation, or alleged violation of any federal, state or local law, rule or regulation, the violation of which would likely have a Material Adverse Effect on the Borrower or (C) any notice or determination concerning the imposition of any withdrawal liability by a Multiemployer Plan against the Borrower or any of its ERISA Affiliates, the determination that a Multiemployer Plan is, or is expected to be, in reorganization within the meaning of Title IV of ERISA or the termination of any Plan of the Borrower.

(f) Other Information . With reasonable promptness upon any such request, such other information regarding the business, properties or financial condition of the Borrower as the Administrative Agent or the Required Lenders may reasonably request.

In lieu of furnishing the Lenders the items referred to in this Section 8.1, the Borrower may make available such items on the Borrower’s corporate website, any Securities and Exchange Commission website or any such other publicly available website as notified to the Administrative Agent and the Lenders.

8.2 Preservation of Existence and Franchises .

The Borrower will do (and will cause each of its Material Subsidiaries to do) all things necessary to preserve and keep in full force and effect its (i) existence and (ii) to the extent material to the conduct of the business of the Borrower or any of its Material Subsidiaries, its rights, franchises and authority; provided that nothing in this Section 8.2 shall prevent any transaction otherwise permitted under Section 9.2 or Section 9.3 or any change in the form of organization (by merger or otherwise) of any Material Subsidiary of the Borrower so long as such change shall not have an adverse effect on the Borrower’s ability to perform its obligations hereunder.

8.3 Books and Records .

The Borrower will keep (and will cause each of its Material Subsidiaries to keep) complete and accurate books and records of its transactions in accordance with good accounting practices on the basis of GAAP (including the establishment and maintenance of appropriate reserves).

8.4 Compliance with Law .

The Borrower will comply (and will cause each of its Material Subsidiaries to comply) with all laws, rules, regulations and orders, and all applicable restrictions imposed by all Governmental Authorities, applicable to it and its property if noncompliance with any such law, rule, regulation, order or restriction would be reasonably expected to have a Material Adverse Effect on the Borrower.

8.5 Payment of Taxes .

The Borrower will pay and discharge all material taxes, assessments and governmental charges or levies imposed upon it, or upon its income or profits, or upon any of its properties, before they shall become delinquent; provided , however , that the Borrower shall not be required to pay any such tax, assessment, charge, levy, or claim which is being contested in good faith by appropriate proceedings and as to which adequate reserves therefor have been established in accordance with GAAP.

8.6 Insurance .

The Borrower will at all times maintain in full force and effect insurance (including worker’s compensation insurance, liability insurance and casualty insurance) in such amounts, covering such risks and liabilities and with such deductibles or self-insurance retentions as are in accordance with normal industry practice.

8.7 Performance of Obligations .

The Borrower will perform (and will cause each of its Material Subsidiaries to perform) in all material respects all of its obligations under the terms of all agreements that are material to the conduct of the business of the Borrower or any of its Material Subsidiaries and all indentures, mortgages, security agreements or other debt instruments to which it is a party or by which it is bound.

8.8 ERISA .

The Borrower and each of its ERISA Affiliates will (a) at all times make prompt payment of all contributions (i) required under all employee pension benefit plans (as defined in Section 3(2) of ERISA) (“ Pension Plans ”) and (ii) required to meet the minimum funding standard set forth in ERISA with respect to each of its Plans; (b) promptly upon request, furnish the Administrative Agent and the Lenders copies of each annual report/return (Form 5500 Series), as well as all schedules and attachments required to be filed with the Department of Labor and/or the Internal Revenue Service pursuant to ERISA, and the regulations promulgated thereunder, in connection with each of its Pension Plans for each Plan Year (as defined in ERISA); (c) notify the Administrative Agent immediately of any fact, including, but not limited to, any Reportable Event arising in connection with any of its Plans, which might constitute grounds for termination thereof by the PBGC or for the appointment by the appropriate United States District Court of a trustee to administer such Plan, together with a statement, if requested by the Administrative Agent, as to the reason therefor and the action, if any, proposed to be taken in respect thereof; and (d) furnish to the Administrative Agent, upon its request, such additional information concerning any of its Plans as may be reasonably requested. The Borrower will not nor will it permit any of its ERISA Affiliates to (A) terminate a Plan if any such termination would have a Material Adverse Effect on the Borrower or (B) cause or permit to exist any Reportable Event under ERISA or other event or condition which presents a material risk of termination at the request of the PBGC if such termination would have a Material Adverse Effects.

8.9 Use of Proceeds .

The proceeds of the Loans made to the Borrower hereunder may be used solely (a) to provide credit support for the Borrower’s commercial paper, (b) for working capital of the Borrower and its Subsidiaries and (c) for other general corporate purposes.

None of the proceeds of the Loans made to the Borrower hereunder will be used for the purpose of purchasing or carrying any “margin stock” which violates Regulation U or Regulation X or for the purpose of reducing or retiring in violation of Regulation U or Regulation X any Indebtedness which was originally incurred to purchase or carry “margin stock” or for any other purpose which might constitute this transaction a “purpose credit” in violation of Regulation U or Regulation X.

8.10 Audits/Inspections .

Upon reasonable notice, during normal business hours and in compliance with the reasonable security procedures of the Borrower, the Borrower will permit representatives appointed by the Administrative Agent or the Required Lenders (or, upon a Default or Event of Default, any Lender), including, without limitation, independent accountants, agents, attorneys, and appraisers to visit and inspect the Borrower’s property, including its books and records, its accounts receivable and inventory, the Borrower’s facilities and its other business assets, and to make photocopies or photographs thereof and to write down and record any information such representative obtains and shall permit the Required Lenders (or, upon a Default or Event of Default, any Lender) or the Administrative Agent or its representatives to investigate and verify the accuracy of information provided to the Lenders and to discuss all such matters with the officers, employees and representatives of the Borrower.

8.11 Total Funded Debt to Capitalization .

The ratio of (a) Total Funded Debt to (b) Capitalization for the Borrower shall at all times be less than or equal to .65 to 1.00 (each on a consolidated basis).

SECTION 9. NEGATIVE COVENANTS

The Borrower hereby covenants and agrees that so long as this Credit Agreement is in effect and until the Loans, together with interest, fees and other obligations hereunder, have been paid in full and the Commitments hereunder shall have terminated:

9.1 Nature of Business .

The Borrower will not alter the character of its business from that conducted as of the Closing Date and activities reasonably related thereto and similar and related businesses; provided , however , that the Borrower may transfer Non-Regulated Assets to one or more Wholly-Owned Subsidiaries of the Borrower to the extent permitted under Section 9.3.

9.2 Consolidation and Merger .

The Borrower will not enter into any transaction of merger or consolidation or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution); provided that notwithstanding the foregoing provisions of this Section 9.2, the following actions may be taken if, after giving effect thereto, no Default or Event of Default by the Borrower exists:

(a) a Subsidiary of the Borrower may be merged or consolidated with or into the Borrower; provided that the Borrower shall be the continuing or surviving entity; and

(b) the Borrower may merge or consolidate with any other Person if either (i) the Borrower shall be the continuing or surviving entity or (ii) the Borrower shall not be the continuing or surviving entity and the entity so continuing or surviving (A) is an entity organized and duly existing under the law of any state of the United States and (B) executes and delivers to the Administrative Agent and the Lenders an instrument in form satisfactory to the Required Lenders pursuant to which it expressly assumes the Loans of the Borrower and all of the other obligations of the Borrower under the Credit Documents and procures for the Administrative Agent and each Lender an opinion in form satisfactory to the Required Lenders and from counsel satisfactory to the Required Lenders in respect of the due authorization, execution, delivery and enforceability of such instrument and covering such other matters as the Required Lenders may reasonably request.

9.3 Sale or Lease of Assets .

The Borrower will not convey, sell, lease, transfer or otherwise dispose of, in one transaction or a series of transactions, all or substantially all of its business or assets whether now owned or hereafter acquired, it being understood and agreed that the Borrower (or any Subsidiary of the Borrower) may transfer Non-Regulated Assets to one or more Wholly-Owned Subsidiaries of the Borrower, provided that (i) each such Wholly-Owned Subsidiary remains at all times a Wholly-Owned Subsidiary of the Borrower and (ii) the Ratings of the Borrower will not be lowered to less than BBB by S&P, Baa2 by Moody’s or BBB by Fitch in connection with or as a result of such transfer.

9.4 Limitation on Liens .

In the case of VaPower, VaPower shall not, nor shall it permit any of its Material Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for (i) Liens permitted by the VaPower Indenture and (ii) Liens created in the ordinary course of business.

If the Borrower shall pledge as security for any indebtedness or obligations, or permit any Lien as security for Indebtedness or obligations upon, any capital stock owned by it on the date hereof or thereafter acquired, of any of its Material Subsidiaries, the Borrower will secure the outstanding Loans ratably with the indebtedness or obligations secured by such pledge, except for Liens incurred or otherwise arising in the ordinary course of business.

9.5 Fiscal Year .

The Borrower will not change its fiscal year without prior notification to the Lenders.

SECTION 10. EVENTS OF DEFAULT

10.1 Events of Default .

An Event of Default shall exist upon the occurrence and continuation of any of the following specified events (each an “ Event of Default ”):

(a) Payment . The Borrower shall:

(i) default in the payment when due of any principal of any of the Loans; or

(ii) default, and such default shall continue for five or more Business Days, in the payment when due of any interest on the Loans or of any fees or other amounts owing hereunder, under any of the other Credit Documents or in connection herewith.

(b) Representations . Any representation, warranty or statement made or deemed to be made by the Borrower herein, in any of the other Credit Documents, or in any statement or certificate delivered or required to be delivered pursuant hereto or thereto shall prove untrue in any material respect on the date as of which it was deemed to have been made.

(i) default in the due performance or observance of any term, covenant or agreement contained in Sections 8.2, 8.9, 8.11 or 9.1 through 9.5, inclusive; or

(ii) default in the due performance or observance by it of any term, covenant or agreement contained in Section 8.1(a), (b), (c) or (e) and such default shall continue unremedied for a period of five Business Days after the earlier of the Borrower becoming aware of such default or notice thereof given by the Administrative Agent; or

(iii) default in the due performance or observance by it of any term, covenant or agreement (other than those referred to in subsections (a), (b), (c)(i), or (c)(ii) of this Section 10.1) contained in this Credit Agreement or any other Credit Document and such default shall continue unremedied for a period of at least 30 days after the earlier of the Borrower becoming aware of such default or notice thereof given by the Administrative Agent.

(d) Credit Documents . Any Credit Document shall fail to be in full force and effect in all material respects or to give the Administrative Agent and/or the Lenders all material security interests, liens, rights, powers and privileges purported to be created thereby and relating to the Borrower.

(e) Bankruptcy, etc. The occurrence of any of the following with respect to the Borrower or a Material Subsidiary of the Borrower (i) a court or governmental agency having jurisdiction in the premises shall enter a decree or order for relief in respect of the Borrower or a Material Subsidiary of the Borrower in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appoint a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Borrower or a Material Subsidiary of the Borrower or for any substantial part of its property or ordering the winding up or liquidation of its affairs; or (ii) an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect is commenced against the Borrower or a Material Subsidiary of the Borrower and such petition remains unstayed and in effect for a period of 60 consecutive days; or (iii) the Borrower or a Material Subsidiary of the Borrower shall commence a

voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of such Person or any substantial part of its property or make any general assignment for the benefit of creditors; or (iv) the Borrower or a Material Subsidiary of the Borrower shall admit in writing its inability to pay its debts generally as they become due or any action shall be taken by such Person in furtherance of any of the aforesaid purposes.

(f) Defaults under Other Agreements . With respect to any Indebtedness (other than Indebtedness of the Borrower outstanding under this Credit Agreement) of the Borrower or a Material Subsidiary of the Borrower in a principal amount in excess of $35,000,000, (i) the Borrower or a Material Subsidiary of the Borrower shall (A) default in any payment (beyond the applicable grace period with respect thereto, if any) with respect to any such Indebtedness, or (B) default (after giving effect to any applicable grace period) in the observance or performance of any covenant or agreement relating to such Indebtedness or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event or condition shall occur or condition exist, the effect of which default or other event or condition is to cause, or permit, the holder or holders of such Indebtedness (or trustee or agent on behalf of such holders) to cause any such Indebtedness to become due prior to its stated maturity; or (ii) any such Indebtedness shall be declared due and payable, or required to be prepaid other than by a regularly scheduled required prepayment, prior to the stated maturity thereof; or (iii) any such Indebtedness matures and is not paid at maturity.

(g) Judgments . One or more judgments, orders, or decrees shall be entered against the Borrower or a Material Subsidiary of the Borrower involving a liability of $35,000,000 or more, in the aggregate, (to the extent not paid or covered by insurance provided by a carrier who has acknowledged coverage) and such judgments, orders or decrees shall continue unsatisfied, undischarged and unstayed for a period ending on the first to occur of (i) the last day on which such judgment, order or decree becomes final and unappealable and, where applicable, with the status of a judicial lien or (ii) 30 days.

(h) ERISA . (i) The Borrower, or a Material Subsidiary of the Borrower or any member of the Controlled Group including the Borrower shall fail to pay when due an amount or amounts aggregating in excess of $35,000,000 which it shall have become liable to pay under Title IV of ERISA; or (ii) notice of intent to terminate a Plan or Plans of the Borrower which in the aggregate have unfunded liabilities in excess of $35,000,000 (individually and collectively, a “Material Plan”) shall be filed under Title IV of ERISA by the Borrower or any member of the Controlled Group including the Borrower, any plan administrator or any combination of the foregoing; or (iii) the PBGC shall institute proceedings under Title IV of ERISA to terminate, to impose liability (other than for premiums under Section 4007 of ERISA) in respect of, or to cause a trustee to be appointed to administer any Material Plan of the Borrower; or (iv) a condition shall exist by reason of which the PBGC would be entitled to obtain a decree adjudicating that any Material Plan of the Borrower must be terminated; or (v) there shall occur a complete or partial withdrawal from, or a default, within the meaning of Section 4219(c)(5) of ERISA, with respect to, one or more Multiemployer Plans which could cause one or more members of the Controlled Group including the Borrower to incur a current payment obligation in excess of $35,000,000.

(i) Change of Control . The occurrence of any Change of Control.

(j) Existing DRI Credit Agreement . The occurrence of any “Event of Default” under (and as defined in) the Existing DRI Credit Agreement.

10.2 Acceleration; Remedies .

(a) Upon the occurrence of an Event of Default, and at any time thereafter unless and until such Event of Default has been waived by the Required Lenders or cured to the satisfaction of the Required Lenders, the Administrative Agent may with the consent of the Required Lenders, and shall, upon the request and direction of the Required Lenders, by written notice to the Borrower take any of the following actions without prejudice to the rights of the Administrative Agent or any Lender to enforce its claims against the Borrower, except as otherwise specifically provided for herein:

(i) Termination of Commitments . Declare the Commitments terminated whereupon the Commitments shall be immediately terminated.

(ii) Acceleration of Loans . Declare the unpaid principal of and any accrued interest in respect of all Loans made to the Borrower and any and all other indebtedness or obligations of any and every kind owing by the Borrower to any of the Lenders or the Administrative Agent hereunder to be due whereupon the same shall be immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower.

(iii) Enforcement of Rights . Enforce any and all rights and interests created and existing under the Credit Documents, including, without limitation, all rights of set-off, as against the Borrower.

(b) Notwithstanding the foregoing, if an Event of Default specified in Section 10.1(e) shall occur, then the Commitments shall automatically terminate and all Loans made to the Borrower, all accrued interest in respect thereof, all accrued and unpaid fees and other indebtedness or obligations owing by the Borrower to the Lenders and the Administrative Agent hereunder shall immediately become due and payable without the giving of any notice or other action by the Administrative Agent or the Lenders.

10.3 Allocation of Payments After Event of Default .

Notwithstanding any other provisions of this Credit Agreement, after the occurrence and during the continuance of an Event of Default, all amounts collected from the Borrower or received by the Administrative Agent or any Lender on account of amounts outstanding under any of the Credit Documents shall be paid over or delivered as follows:

FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including without limitation reasonable outside attorneys’ fees other than the fees of in-house counsel) of the Administrative Agent or any of the Lenders in connection with enforcing the rights of the Lenders under the Credit Documents against the Borrower and any protective advances made by the Administrative Agent or any of the Lenders, pro rata as set forth below;

SECOND, to payment of any fees owed to the Administrative Agent or any Lender by the Borrower, pro rata as set forth below;

THIRD, to the payment of all accrued interest payable to the Lenders by the Borrower hereunder, pro rata as set forth below;

FOURTH, to the payment of the outstanding principal amount of the Loans outstanding of the Borrower, pro rata as set forth below;

FIFTH, to all other obligations which shall have become due and payable of the Borrower under the Credit Documents and not repaid pursuant to clauses “FIRST” through “FOURTH” above; and

SIXTH, the payment of the surplus, if any, to whoever may be lawfully entitled to receive such surplus.

In carrying out the foregoing, (a) amounts received shall be applied in the numerical order provided until exhausted prior to application to the next succeeding category and (b) each of the Lenders shall receive an amount equal to its pro rata share (based on each Lender’s Commitment Percentages) of amounts available to be applied.

SECTION 11. AGENCY PROVISIONS

11.1 Appointment .

Each Lender hereby designates and appoints RBS as administrative agent of such Lender to act as specified herein and the other Credit Documents, and each such Lender hereby authorizes the Administrative Agent, as the agent for such Lender, to take such action on its behalf under the provisions of this Credit Agreement and the other Credit Documents and to exercise such powers and perform such duties as are expressly delegated by the terms hereof and of the other Credit Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere herein and in the other Credit Documents, the Administrative Agent shall not have any duties or responsibilities, except those expressly set forth herein and therein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Credit Agreement or any of the other Credit Documents, or shall otherwise exist against the Administrative Agent. The provisions of this Section are solely for the benefit of the Administrative Agent and the Lenders and the Borrower shall have no rights as a third party beneficiary of the provisions hereof. In performing its functions and duties under this Credit Agreement and the other Credit Documents, the Administrative Agent shall act solely as agent of the Lenders, and does not assume and shall not be deemed to have assumed any obligation or relationship of agency or trust with or for the Borrower.

11.2 Delegation of Duties .

The Administrative Agent may execute any of its duties hereunder or under the other Credit Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

11.3 Exculpatory Provisions .

Neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection herewith or in connection with any of the other Credit Documents (except for its or such Person’s own gross negligence or willful misconduct), or responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower contained herein or in any of the other Credit Documents or in any certificate, report, statement or other document referred to or provided for in, or received by the Administrative Agent under or in connection herewith or in connection with the other Credit Documents, or enforceability or sufficiency therefor of any of the other Credit Documents, or for any failure of the Borrower to perform its obligations hereunder or thereunder. The Administrative Agent shall not be responsible to any Lender for the effectiveness, genuineness, validity, enforceability, collectibility or sufficiency of this Credit Agreement, or any of the other Credit Documents or for any representations, warranties, recitals or statements made herein or therein or made by the Borrower in any written or oral statement or in any financial or other statements, instruments, reports, certificates or any other documents in connection herewith or therewith furnished or made by the Administrative Agent to the Lenders or by or on behalf of the Borrower to the Administrative Agent or any Lender or be required to ascertain or inquire as to the performance or observance of any of the terms, conditions, provisions, covenants or agreements contained herein or therein or as to the use of the proceeds of the Loans or of the existence or possible existence of any Default or Event of Default or to inspect the properties, books or records of the Borrower. The Administrative Agent is not a trustee for the Lenders and owes no fiduciary duty to the Lenders. None of the Lenders identified on the facing page or signature pages of this Credit Agreement as “Syndication Agent” or “Co-Documentation Agents” shall have any right, power, obligation, liability, responsibility or duty under this Credit Agreement other than those applicable to all Lenders as such, nor shall they have or be deemed to have any fiduciary relationship with any Lender.

11.4 Reliance on Communications .

The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or conversation reasonably believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower,

independent accountants and other experts selected by the Administrative Agent with reasonable care). The Administrative Agent may deem and treat the Lenders as the owner of its interests hereunder for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Administrative Agent in accordance with Section 12.3(b). The Administrative Agent shall be fully justified in failing or refusing to take any action under this Credit Agreement or under any of the other Credit Documents unless it shall first receive such advice or concurrence of the Required Lenders (or to the extent specifically provided in Section 12.6, all the Lenders) as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, hereunder or under any of the other Credit Documents in accordance with a request of the Required Lenders (or to the extent specifically provided in Section 12.6, all the Lenders) and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders (including their successors and assigns).

11.5 Notice of Default .

The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Administrative Agent has received notice from a Lender or the Borrower referring to the Credit Document, describing such Default or Event of Default and stating that such notice is a “notice of default.” In the event that the Administrative Agent receives such a notice, the Administrative Agent shall give prompt notice thereof to the Lenders. The Administrative Agent shall take such action with respect to such Default or Event of Default as shall be directed by the Required Lenders (or, to the extent specifically provided in Section 12.6, all the Lenders).

11.6 Non-Reliance on Administrative Agent and Other Lenders .

Each Lender expressly acknowledges that neither the Administrative Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or affiliates has made any representations or warranties to it and that no act by the Administrative Agent or any affiliate thereof hereinafter taken, including any review of the affairs of the Borrower, shall be deemed to constitute any representation or warranty by the Administrative Agent to any Lender. Each Lender represents to the Administrative Agent that it has, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrower and made its own decision to make its Loans hereunder and enter into this Credit Agreement. Each Lender also represents that it will, independently and without reliance upon the Administrative Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Credit Agreement, and to make such investigation as it deems necessary to inform itself as to the business, assets, operations, property, financial and other conditions, prospects and creditworthiness of the Borrower. Except for (i) delivery of the Credit Documents and (ii) notices, reports and other documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder, the Administrative

Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, assets, property, financial or other conditions, prospects or creditworthiness of the Borrower which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.

11.7 Indemnification .

Each Lender agrees to indemnify the Administrative Agent in its capacity as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to its Revolving Loan Commitment, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including without limitation at any time following the payment of the Loans) be imposed on, incurred by or asserted against the Administrative Agent in its capacity as such in any way relating to or arising out of this Credit Agreement or the other Credit Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Administrative Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from the gross negligence or willful misconduct of the Administrative Agent as proven by the non-appealable judgment of a court of competent jurisdiction. If any indemnity furnished to the Administrative Agent for any purpose shall, in the opinion of the Administrative Agent, be insufficient or become impaired, the Administrative Agent may call for additional indemnity and cease, or not commence, to do the acts indemnified against until such additional indemnity is furnished. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder and under the other Credit Documents.

11.8 Administrative Agent in Its Individual Capacity .

The Administrative Agent and its Affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrower as though the Administrative Agent were not Administrative Agent hereunder. With respect to the Loans made by it, the Administrative Agent shall have the same rights and powers under this Credit Agreement as any Lender and may exercise the same as though they were not Administrative Agent, and the terms “Lender” and “Lenders” shall include the Administrative Agent in its individual capacity.

11.9 Successor Administrative Agent .

The Administrative Agent may, at any time, resign upon 30 days written notice to the Lenders. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Administrative Agent. If no successor Administrative Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment, within 30 days after the notice of resignation, then the retiring Administrative Agent shall select a successor Administrative Agent provided such successor is an Eligible Assignee (or if no Eligible Assignee shall have been so appointed by the retiring Administrative Agent and shall have accepted such appointment, then the retiring Administrative Agent’s resignation shall be effective and the Lenders shall perform

all obligations of the retiring Administrative Agent until such time, if any, as a successor Administrative Agent shall have been so appointed and shall have accepted such appointment as provided for above). Upon the acceptance of any appointment as Administrative Agent hereunder by a successor, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations as Administrative Agent, as appropriate, under this Credit Agreement and the other Credit Documents and the provisions of this Section 11.9 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Credit Agreement.

SECTION 12. MISCELLANEOUS

12.1 Notices .

Except as otherwise expressly provided herein, all notices and other communications shall have been duly given and shall be effective (a) when delivered, (b) when transmitted via telecopy (or other facsimile device) if receipt is confirmed, (c) the Business Day following the day on which the same has been delivered prepaid (or pursuant to an invoice arrangement) to a reputable national overnight air courier service, or (d) the third Business Day following the day on which the same is sent by certified or registered mail, postage prepaid, in each case to the respective parties at the address or telecopy numbers set forth on Schedule 12.1 , or at such other address as such party may specify by written notice to the other parties hereto.

Notices and other communications to any Lender hereunder may be delivered or furnished by electronic communications pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices pursuant to Section 2 unless otherwise agreed by the Administrative Agent and the applicable Lender. The Administrative Agent or the Borrower may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications.

Unless the Administrative Agent otherwise prescribes, notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement); provided that notices or communications posted to an internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address of notification that such notice or communication is available and identifying the website address therefor.

In any event described above, if receipt is not made during the normal business hours of the recipient, then receipt will be deemed to occur upon the opening of the recipient’s next Business Day.

12.2 Right of Set-Off; Adjustments .

In addition to any rights now or hereafter granted under applicable law or otherwise, and not by way of limitation of any such rights, upon the occurrence of an Event of Default and the commencement of remedies described in Section 10.2, each Lender is authorized at any time and from time to time, without presentment, demand, protest or other notice of any kind (all of which rights being hereby expressly waived), to set-off and to appropriate and apply any and all deposits (general or special) and any other indebtedness at any time held or owing by such Lender (including, without limitation branches, agencies or Affiliates of such Lender wherever located) to or for the credit or the account of the Borrower against obligations and liabilities of the Borrower to the Lenders hereunder, under the Notes, the other Credit Documents or otherwise, irrespective of whether the Administrative Agent or the Lenders shall have made any demand hereunder and although such obligations, liabilities or claims, or any of them, may be contingent or unmatured, and any such set-off shall be deemed to have been made immediately upon the occurrence of an Event of Default even though such charge is made or entered on the books of such Lender subsequent thereto. The Borrower hereby agrees that any Person purchasing a participation in the Loans and Commitments to it hereunder pursuant to Section 11.3(c) may exercise all rights of set-off with respect to its participation interest as fully as if such Person were a Lender hereunder.

Except to the extent that this Credit Agreement expressly provides for payments to be allocated to a particular Lender, if any Lender (a “ Benefitted Lender ”) shall receive any payment of all or part of the obligations owing to it by the Borrower under this Credit Agreement, receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 10.1(e), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of the obligations owing to such other Lender by the Borrower under this Credit Agreement, such Benefitted Lender shall purchase for cash from the other Lenders a participating interest in such portion of the obligations owing to each such other Lender, or shall provide such other Lenders with the benefits of any such collateral, as shall be necessary to cause such Benefitted Lender to share the excess payment or benefits of such collateral ratably with each of the Lenders; provided , however , that if all or any portion of such excess payment or benefits is thereafter recovered from such Benefitted Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest.

12.3 Benefit of Agreement .

(a) Generally . This Credit Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto; provided that the Borrower may not assign and transfer any of its interests hereunder (except as permitted by Section 9.2) without prior written consent of the Lenders; and provided further that the rights of each Lender to transfer, assign or grant participations in its rights and/or obligations hereunder shall be limited as set forth in this Section 12.3.

(b) Assignments . Each Lender may assign all or a portion of its rights and obligations under this Credit Agreement (including, without limitation, all or a portion of its Loans, its Notes, and its Commitment); provided , however , that:

(i) each such assignment shall be to an Eligible Assignee;

(ii) any such partial assignment shall be in an amount at least equal to $5,000,000 (or, if less, the remaining amount of the Commitment being assigned by such Lender) or an integral multiple of $5,000,000 in excess thereof;

(iii) each such assignment by a Lender shall be of a constant, and not varying, percentage of all of its rights and obligations under this Credit Agreement and the Notes; and

(iv) the parties to such assignment shall execute and deliver to the Administrative Agent for its acceptance an Assignment Agreement in substantially the form of Exhibit 12.3 , together with a processing fee from the assignor of $4,000.

Upon execution, delivery, and acceptance of such Assignment Agreement, the assignee thereunder shall be a party hereto and, to the extent of such assignment, have the obligations, rights, and benefits of a Lender hereunder and the assigning Lender shall, to the extent of such assignment, relinquish its rights and be released from its obligations under this Credit Agreement. Upon the consummation of any assignment pursuant to this Section 12.3(b), the assignor, the Administrative Agent and the Borrower shall make appropriate arrangements so that, if required, new Notes are issued to the assignee. If the assignee is not incorporated under the laws of the United States of America or a State thereof, it shall deliver to the Borrower and the Administrative Agent certification as to exemption from deduction or withholding of taxes in accordance with Section 4.4.

By executing and delivering an assignment agreement in accordance with this Section 12.3(b), the assigning Lender thereunder and the assignee thereunder shall be deemed to confirm to and agree with each other and the other parties hereto as follows: (A) such assigning Lender warrants that it is the legal and beneficial owner of the interest being assigned thereby free and clear of any adverse claim and the assignee warrants that it is an Eligible Assignee; (B) except as set forth in clause (A) above, such assigning Lender makes no representation or warranty and assumes no responsibility with respect to any statements, warranties or representations made in or in connection with this Credit Agreement, any of the other Credit Documents or any other instrument or document furnished pursuant hereto or thereto, or the execution, legality, validity, enforceability, genuineness, sufficiency or value of this Credit Agreement, any of the other Credit Documents or any other instrument or document furnished pursuant hereto or thereto or the financial condition of the Borrower or the performance or observance by the Borrower of any of its obligations under this Credit Agreement, any of the other Credit Documents or any other instrument or document furnished pursuant hereto or thereto; (C) such assignee represents and warrants that it is legally authorized to enter into such assignment agreement; (D) such assignee confirms that it has received a copy of this Credit Agreement, the other Credit Documents and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into such assignment agreement; (E) such assignee will independently and without reliance upon the Administrative Agent, such assigning Lender or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Credit Agreement and the other Credit Documents; (F) such assignee appoints and authorizes the Administrative Agent to take such action on its behalf and to exercise such powers under this Credit Agreement or any other Credit Document as are delegated to the Administrative Agent by the terms hereof or thereof, together with such powers as are reasonably

incidental thereto; and (G) such assignee agrees that it will perform in accordance with their terms all the obligations which by the terms of this Credit Agreement and the other Credit Documents are required to be performed by it as a Lender.

For avoidance of doubt, the parties to this Credit Agreement acknowledge that the provisions of this Section 12.3 concerning assignments relate only to absolute assignments and that such provisions do not prohibit assignments creating security interests, including any pledge or assignment by a Lender to any Federal Reserve Bank in accordance with applicable law.

(c) Register . The Administrative Agent shall maintain a copy of each Assignment Agreement delivered to and accepted by it and a register for the recordation of the names and addresses of the Lenders and the Commitment of, and principal amount of the Loans owing to, each Lender from time to time by the Borrower (collectively, the “ Registers ”). The entries in the Registers shall be conclusive and binding for all purposes, absent manifest error, and the Borrower, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the relevant Register as a Lender hereunder for all purposes of this Credit Agreement. The Registers shall be available for inspection by the Borrower or any Lender, only as to its commitment, at any reasonable time and from time to time upon reasonable prior notice.

(d) Acceptance . Upon its receipt of an assignment agreement executed by the parties thereto, together with any Note subject to such assignment and payment of the processing fee, the Administrative Agent shall, if such Assignment Agreement has been completed and is in substantially the form of Exhibit 12.3 , (i) accept such assignment agreement, (ii) record the information contained therein in the Register, (iii) give prompt notice thereof to the parties thereto and (iv) maintain an updated Schedule 1.1 giving effect to such assignment (including the then effective Commitment Percentage of each Lender).

(e) Participations . Each Lender may sell, transfer, grant or assign participations in all or any part of such Lender’s interests and obligations hereunder; provided that (i) such selling Lender shall remain a “Lender” for all purposes under this Credit Agreement (such selling Lender’s obligations under the Credit Documents remaining unchanged) and the participant shall not constitute a Lender hereunder, (ii) no such participant shall have, or be granted, rights to approve any amendment or waiver relating to this Credit Agreement or the other Credit Documents except to the extent any such amendment or waiver would (A) reduce the principal of or rate of interest on or fees in respect of any Loans in which the participant is participating, or (B) postpone the date fixed for any payment of principal (including extension of the Maturity Date or the date of any mandatory prepayment), interest or fees in respect of any Loans in which the participant is participating and (iii) sub-participations by the participant (except to an Affiliate, parent company or Affiliate of a parent company of the participant) shall be permitted with the consent of the Borrower (which, in each case, shall not be unreasonably withheld or delayed and shall not be required during the existence of a Default or Event of Default). In the case of any such participation, the participant shall not have any rights under this Credit Agreement or the other Credit Documents (the participant’s rights against the selling Lender in respect of such participation to be those set forth in the participation agreement with such Lender creating such participation) and all amounts payable by the Borrower hereunder shall be determined as if such Lender had not sold such participation; provided , however, that such participant shall be entitled to receive additional amounts under Section 4 to the same extent that the Lender from which such participant acquired its participation would be entitled to the benefit of such cost protection provisions.

(f) Payments . No Eligible Assignee, participant or other transferee of any Lender’s rights shall be entitled to receive any greater payment under Section 4 than such Lender would have been entitled to receive with respect to the rights transferred, unless such transfer is made with the Borrower’s written consent.

(g) Nonrestricted Assignments . Notwithstanding any other provision set forth in this Credit Agreement, any Lender may at any time assign and pledge all or any portion of its Loans and its Notes to any Federal Reserve Bank as collateral security pursuant to Regulation A and any operating circular issued by such Federal Reserve Bank. No such assignment shall release the assigning Lender from its obligations hereunder.

(h) Information . Any Lender may furnish any information concerning the Borrower or any of its Subsidiaries in the possession of such Lender from time to time to assignees and participants (including prospective assignees and participants) who is notified of the confidential nature of the information and agrees to use its reasonable best efforts to keep confidential all non-public information from time to time supplied to it.

12.4 No Waiver; Remedies Cumulative .

No failure or delay on the part of the Administrative Agent or any Lender in exercising any right, power or privilege hereunder or under any other Credit Document and no course of dealing between the Borrower and the Administrative Agent or any Lender shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or under any other Credit Document preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder or thereunder. The rights and remedies provided herein are cumulative and not exclusive of any rights or remedies which the Administrative Agent or any Lender would otherwise have. No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Administrative Agent or the Lenders to any other or further action in any circumstances without notice or demand.

12.5 Payment of Expenses, etc .

The Borrower agrees to: (a) pay all reasonable out-of-pocket costs and expenses of (i) the Administrative Agent in connection with the negotiation, preparation, execution and delivery and administration of this Credit Agreement and the other Credit Documents and the documents and instruments referred to therein (including, without limitation, the reasonable fees and expenses of outside legal counsel to the Administrative Agent) and any amendment, waiver or consent relating hereto and thereto including, but not limited to, any such amendments, waivers or consents resulting from or related to any work-out, renegotiation or restructure relating to the performance by the Borrower under this Credit Agreement and (ii) of the Administrative Agent and the Lenders in connection with enforcement of the Credit Documents and the documents and instruments referred to therein (including, without limitation, in connection with any such enforcement, the reasonable fees and disbursements of outside counsel for the

Administrative Agent and each of the Lenders) against the Borrower; and (b) indemnify the Administrative Agent and each Lender and its Affiliates, their respective officers, directors, employees, representatives and agents from and hold each of them harmless against any and all losses, liabilities, claims, damages or expenses incurred by any of them as a result of, or arising out of, or in any way related to, or by reason of, any investigation, litigation or other proceeding (whether or not the Administrative Agent or any Lender or its Affiliates is a party thereto) related to the entering into and/or performance of any Credit Document or the use of proceeds of any Loans (including other extensions of credit) hereunder or the consummation of any other transactions contemplated in any Credit Document, including, without limitation, the reasonable fees and disbursements of counsel incurred in connection with any such investigation, litigation or other proceeding (but excluding any such losses, liabilities, claims, damages or expenses to the extent incurred by reason of gross negligence or willful misconduct on the part of the Person to be indemnified).

12.6 Amendments, Waivers and Consents .

Neither this Credit Agreement nor any other Credit Document nor any of the terms hereof or thereof may be amended, changed, waived, discharged or terminated unless such amendment, change, waiver, discharge or termination is in writing and signed by the Required Lenders and the Borrower; provided that no such amendment, change, waiver, discharge or termination shall without the consent of each Lender affected thereby:

(a) extend the Maturity Date;

(b) reduce the rate or extend the time of payment of interest (other than as a result of waiving the applicability of any post-default increase in interest rates) thereon or fees hereunder;

(d) increase or extend the Commitment of a Lender over the amount thereof in effect (it being understood and agreed that a waiver of any Default or Event of Default or a waiver of any mandatory reduction in the Commitments shall not constitute a change in the terms of any Commitment of any Lender);

(e) release the Borrower from its obligations under the Credit Documents or consent to the transfer or assignment of such obligations;

(f) amend, modify or waive any provision of this Section or Section 3.6, 3.8, 10.1(a), 11.7, 12.2, 12.3 or 12.5; or

(g) reduce any percentage specified in, or otherwise modify, the definition of Required Lenders.

Notwithstanding the above, no provisions of Section 11 may be amended or modified without the consent of the Administrative Agent and no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent without the prior written consent of the Administrative Agent.

Notwithstanding the fact that the consent of all the Lenders is required in certain circumstances as set forth above, each Lender is entitled to vote as such Lender sees fit on any reorganization plan that affects the Loans, and each Lender acknowledges that the provisions of Section 1126(c) of the Bankruptcy Code supersede the unanimous consent provisions set forth herein.

12.7 Counterparts; Telecopy .

This Credit Agreement may be executed in any number of counterparts, each of which where so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Credit Agreement to produce or account for more than one such counterpart. Delivery of executed counterparts by facsimile shall be effective as an original and shall constitute a representation that an original will be delivered.

12.8 Headings .

The headings of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Credit Agreement.

12.9 Defaulting Lender .

Each Lender understands and agrees that if such Lender is a Defaulting Lender then it shall not be entitled to vote on any matter requiring the consent of the Required Lenders or to object to any matter requiring the consent of all the Lenders; provided , however , that all other benefits and obligations under the Credit Documents shall apply to such Defaulting Lender.

12.10 Survival of Indemnification and Representations and Warranties .

All indemnities set forth herein and all representations and warranties made herein shall survive the execution and delivery of this Credit Agreement, the making of the Loans, and the repayment of the Loans and other obligations and the termination of the Commitments hereunder.

12.11 GOVERNING LAW .

THIS CREDIT AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. The Borrower irrevocably consents to the service of process out of any competent court in any action or proceeding brought in connection with this Credit Agreement by the mailing of copies thereof by registered or certified mail, postage prepaid, to it at its address for notices pursuant to Section 12.1, such service to become effective 30 days after such mailing. Nothing herein shall affect the right of a Lender to serve process in any other manner permitted by law.

12.12 WAIVER OF JURY TRIAL .

EACH OF THE PARTIES TO THIS CREDIT AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS CREDIT AGREEMENT, ANY OF THE OTHER CREDIT DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.

12.13 Severability .

If any provision of any of the Credit Documents is determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or unenforceable provisions.

12.14 Entirety .

This Credit Agreement together with the other Credit Documents represent the entire agreement of the parties hereto and thereto, and supersede all prior agreements and understandings, oral or written, if any, including any commitment letters or correspondence relating to the Credit Documents or the transactions contemplated herein and therein.

12.15 Binding Effect .

This Credit Agreement shall become effective at such time (the “ Effective Date ”) when all of the conditions set forth in Section 6.1 have been satisfied or waived by the Lenders and this Credit Agreement shall have been executed by the Borrower and the Administrative Agent, and the Administrative Agent shall have received copies (telefaxed or otherwise) which, when taken together, bear the signatures of each Lender, and thereafter this Credit Agreement shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent and each Lender and their respective successors and permitted assigns.

12.16 Submission to Jurisdiction .

The Borrower hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Credit Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Credit Agreement shall affect any right that the Administrative Agent or any Lender may otherwise have to bring

any action or proceeding relating to this Credit Agreement against the Borrower or its properties in the courts of any jurisdiction. The Borrower hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Credit Agreement in any court referred to above. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. The Borrower also hereby irrevocably and unconditionally waives any right it may have to claim or recover in any legal action or proceeding referred to in this Section any special, exemplary, punitive or consequential damages.

12.17 Confidentiality . Each of the Administrative Agent and each Lender agrees to keep confidential all non-public information provided to it by the Borrower pursuant to this Credit Agreement that is designated by the Borrower as confidential; provided that nothing herein shall prevent the Administrative Agent or any Lender from disclosing any such information (a) to the Administrative Agent, any other Lender or any of its Affiliates, (b) subject to an agreement to comply with the provisions of this Section or other provisions at least as restrictive as this Section, (i) to any actual or prospective Assignee or participant or (ii) to any direct or indirect contractual counterparties (or the professional advisors thereto) to any swap or derivative transaction relating to the Borrower and its obligations, (c) to its employees, directors, agents, attorneys and accountants or those of any of its affiliates, (d) upon the request or demand of any Governmental Authority, (e) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any requirement of law, (f) if required to do so in connection with any litigation or similar proceeding, (g) that has been publicly disclosed, (h) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender’s investment portfolio in connection with ratings issued with respect to such Lender, or (i) in connection with the exercise of any remedy hereunder or under any other Credit Document.

12.18 Designation of SPVs .

Notwithstanding anything to the contrary contained herein, any Lender, (a “ Granting Lender ”) may grant to a special purpose funding vehicle (an “ SPV ”), identified as such in writing from time to time by such Granting Lender to the Administrative Agent and the Borrower, the option to fund all or any part of any Loan that such Granting Lender would otherwise be obligated to fund pursuant to this Credit Agreement; provided that (i) nothing herein shall constitute a commitment by any SPV to fund any Loan, (ii) if an SPV elects not to exercise such option or otherwise fails to fund all or any part of such Loan, the Granting Lender shall be obligated to fund such Loan pursuant to the terms hereof, (iii) no SPV shall have any voting rights pursuant to Section 12.6 and (iv) with respect to notices, payments and other matters hereunder, the Borrower, the Administrative Agent and the Lenders shall not be obligated to deal with an SPV, but may limit their communications and other dealings relevant to such SPV to the applicable Granting Lender. The funding of a Loan by an SPV hereunder shall utilize the Revolving Loan Commitment of the Granting Lender to the same extent that, and as if, such Loan were funded by such Granting Lender.

As to any Loans or portion thereof made by it, each SPV shall have all the rights that its applicable Granting Lender making such Loans or portion thereof would have had under this Credit Agreement; provided , however, that each SPV shall have granted to its Granting Lender an irrevocable power of attorney, to deliver and receive all communications and notices under this Credit Agreement (and any related documents) and to exercise on such SPV’s behalf, all of such SPV’s voting rights under this Credit Agreement. No additional Note shall be required to evidence the Loans or portion thereof made by an SPV; and the related Granting Lender shall be deemed to hold its Note as agent for such SPV to the extent of the Loans or portion thereof funded by such SPV. In addition, any payments for the account of any SPV shall be paid to its Granting Lender as agent for such SPV.

Each party hereto hereby agrees that no SPV shall be liable for any indemnity or payment under this Credit Agreement for which a Lender would otherwise be liable for so long as, and to the extent, the Granting Lender provides such indemnity or makes such payment. In furtherance of the foregoing, each party hereto hereby agrees (which agreements shall survive the termination of this Credit Agreement) that, prior to the date that is one year and one day after the payment in full of all outstanding commercial paper or other senior indebtedness of any SPV, it will not institute against, or join any other person in instituting against, such SPV any bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings under the laws of the United States or any State thereof.

In addition, notwithstanding anything to the contrary contained in this Credit Agreement, any SPV may (i) at any time and without paying any processing fee therefor, assign or participate all or a portion of its interest in any Loans to the Granting Lender or to any financial institutions providing liquidity and/or credit support to or for the account of such SPV to support the funding or maintenance of Loans and (ii) disclose on a confidential basis any non-public information relating to its Loans to any rating agency, commercial paper dealer or provider of any surety, guarantee or credit or liquidity enhancements to such SPV. This Section 12.17 may not be amended without the written consent of any Granting Lender affected thereby.

12.19 USA Patriot Act . Each Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Act.

12.20 No Fiduciary Duty . The Administrative Agent, each Lender and their Affiliates (collectively, solely for purposes of this paragraph, the “Lender Parties”), may have economic interests that conflict with those of the Borrower. The Borrower agrees that nothing in the Credit Documents or otherwise will be deemed to create an advisory, fiduciary or agency relationship or fiduciary or other implied duty between the Lender Parties and the Borrower, its stockholders or its affiliates.

[Remainder of Page Intentionally Left Blank]

Each of the parties hereto has caused a counterpart of this Credit Agreement to be duly executed and delivered as of the date first above written.


DOMINION RESOURCES, INC., as the Borrower

By:		/s/ James P. Carney
Title:		Vice President and Assistant Treasurer


THE ROYAL BANK OF SCOTLAND plc, as Administrative Agent and as a Lender

By:		/s/ Emily Freedman
Title:		Vice President


BARCLAYS BANK PLC, as Syndication Agent and as a Lender

By:		/s/ Nicholas A. Bell
Title:		Director


MORGAN STANLEY BANK, as Syndication Agent and as a Lender

By:		/s/ Daniel Twenge
Title:		Authorized Signatory


CITIBANK N.A., as Co-Documentation Agent and as a Lender

By:		/s/ Amit Vasani
Title:		Vice President


THE BANK OF NOVA SCOTIA, as Co-Documentation Agent and as a Lender

By:		/s/ Frank F. Sandler
Title:		Managing Director

[Dominion Resources 364-Day Credit Agreement Signature Page]


BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH, as a Lender

By:		/s/ Ken Hamilton
Title:		Director

By:		/s/ Shannon Batchman
Title:		Director


CREDIT SUISSE, CAYMAN ISLAND BRANCH, as a Lender

By:		/s/ Brian Caldwell
Title:		Director

By:		/s/ Morenikeji Ajayi
Title:		Associate


JPMORGAN CHASE BANK, N.A., as a Lender

By:		/s/ Michael J. DeForge
Title:		Executive Director


LEHMAN BROTHERS COMMERCIAL BANK, as a Lender

By:		/s/ Brian Halbeisen
Title:		Vice President


MERRILL LYNCH BANK USA, as a Lender

By:		/s/ David Millett
Title:		Vice President


The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as a Lender

By:		/s/ Nicholas R. Battista
Title:		Authorized Signatory

[Dominion Resources 364-Day Credit Agreement Signature Page]


U.S. BANK NATIONAL ASSOCIATION, as a Lender

By:		/s/ Felicia LaForgia
Title:		Senior Vice President

UBS LOAN FINANCE LLC, as a Lender

By:		/s/ Irja R. Otsa
Title:		Associate Director Banking Products Services, US

By:		/s/ Mary E. Evans
Title:		Associate Director Banking Products Services, US

WILLIAM STREET COMMITMENT CORPORATION,

By:		/s/ Mark Walton
Title:		Authorized Signatory


GOLDMAN SACHS CREDIT PARTNERS

By:		/s/ Mark Walton
Title:		Authorized Signatory

[Dominion Resources 364-Day Credit Agreement Signature Page]

Exhibit 10.2

AGREEMENT

THIS AGREEMENT is entered into, effective as of , between DOMINION RESOURCES, INC., a Virginia corporation (the “Company”), and (the “Indemnitee”).

WHEREAS , it is essential to the Company to retain and attract highly qualified persons as directors and officers;

WHEREAS , the Indemnitee is a director or officer of the Company;

WHEREAS, the Company’s restated Articles of Incorporation, as amended (the “Articles of Incorporation”), set forth the general indemnification provisions applicable to directors and officers of the Company;

WHEREAS, both the Company and the Indemnitee recognize the increased risk of litigation and other legal proceedings currently facing directors and officers of corporations, the related exposure of directors and officers to liability for expenses associated with such litigation and other legal proceedings, and the desirability for mandatory advancement of such expenses, subject to certain conditions; and

WHEREAS , in recognition that it is in the best interest of the Company to provide protection against personal liability for expenses in such circumstances in order to enhance the Indemnitee’s continued and effective service to the Company, and to induce the Indemnitee to provide continued services to the Company as a director or officer, the Company wishes to provide in this Agreement for the mandatory advancement of reasonable expenses to the Indemnitee in such circumstances, as permitted by Sections 13.1-697, 13.1-702 and 13.1-704 of the Virginia Stock Corporation Act (“VSCA”) and Article VI, Section 2 of the Company’s Articles of Incorporation, and as set forth in this Agreement.

NOW, THEREFORE, in consideration of the above premises and mutual covenants recited herein, the parties agree as follows:

1. Certain Definitions :

(a) Board : The Board of Directors of the Company.

(b) Expenses : Any reasonable expense, including without limitation, reasonable counsel fees incurred in connection with preparing for or defending against or serving as a witness in any Proceeding (including all appeals thereof). All such Expenses shall be deemed ordinary and necessary to the Indemnitee’s continued and effective service to the Company, and no such Expense shall be considered an extraordinary payment.

(c) Proceeding : Any threatened, pending, or completed action, suit, or proceeding whether civil, criminal, administrative, or investigative and whether formal or informal (including a proceeding brought by or in the right of the Company) brought by reason of

the fact that the Indemnitee is or was a director or officer of the Company or serving at the request of the Company as a director, trustee, partner, officer or employee of another corporation, affiliated corporation, partnership, joint venture, trust, employee benefit plan or other enterprise.

(d) Business Day : Any day other than a Saturday, a Sunday or a day on which banking institutions located in the Commonwealth of Virginia or the State of New York are authorized or obligated by law or executive order to close.

2. Agreement to Advance Expenses .

(a) Advancement of Expenses . The Company shall pay for or reimburse the Expenses incurred by the Indemnitee in advance of final disposition of a Proceeding or the making of any determination of eligibility for indemnification pursuant to the Company’s Articles of Incorporation (an “Expense Advance”), if so requested by the Indemnitee, provided that the Company shall not make an Expense Advance to the Indemnitee unless and until it shall have received, substantially in the form attached hereto as Exhibit A , a request for such Expense Advance, which request shall include: (i) a written statement, executed personally by the Indemnitee, of the Indemnitee’s good faith belief that, in his or her conduct relevant to the Proceeding, he or she (A) conducted himself or herself in good faith; (B) believed (x) in the case of conduct in his or her capacity as a director or officer, that his or her conduct was in the Company’s best interests and (y) in all other cases, that his or her conduct was at least not opposed to the Company’s best interests; and (C) in the case of any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful ((A), (B) and (C), collectively being referred to herein as the “Standard of Conduct”) and (ii) a written undertaking, executed personally by the Indemnitee, to repay the Expense Advance if (A) the Indemnitee does not entirely prevail in the defense of the Proceeding and (B) it is ultimately determined by a court of relevant jurisdiction that (x) with respect to a Proceeding by or in the right of the Company, that he or she is not entitled to indemnification, considering all the relevant circumstances, or (y) with respect to any other Proceedings, he or she did not meet the Standard of Conduct. The Company shall pay an Expense Advance promptly after receipt by the Company of the Indemnitee’s completed request for such Expense Advance and a determination of reasonableness of the Expenses for which such Expense Advance is sought in the manner provided in Section 13.1-699(C) of the VSCA or Article VI, Section 5 of the Company’s Articles of Incorporation, as applicable. The Indemnitee shall be obligated to repay any Expense Advance promptly following a written notice to the Indemnitee by the Company of a final determination (after exhaustion or waiver by the Indemnitee of all rights of appeal) as described in clauses (ii)(B)(x) or (y) above. Any request for an Expense Advance shall be accompanied by an itemization, in reasonable detail, of the Expenses for which an Expense Advance is sought. The undertaking required by this Section 2(a) shall be an unlimited general obligation of the Indemnitee but need not be secured.

(b) Indemnification and Advancement for Expenses Incurred in Enforcing Rights . The Company shall indemnify the Indemnitee for Expenses that are incurred by the Indemnitee in connection with any successful action brought by the Indemnitee for enforcement of this Agreement. Determinations regarding the reasonableness of such Expenses shall be made in the manner provided in Section 13.1-699(C) of the VSCA or Article VI, Section 5 of the Company’s Articles of Incorporation, as applicable.

(c) Exception to Obligation to Advance Expenses . Notwithstanding anything in this Agreement to the contrary, the Indemnitee shall not be entitled to advancement of Expenses pursuant to this Agreement in connection with any Proceeding:

(i) initiated by the Indemnitee against the Company or any director or officer of the Company, unless the Company has joined in or the Board has consented to the initiation of such Proceeding, or the Proceeding is one to enforce indemnification or advancement rights under Section 2(b); or

(ii) initiated by or on behalf of the Company against the Indemnitee, if the Board has consented to the initiation of such Proceeding.

3. Non-Exclusivity . The rights of the Indemnitee hereunder shall be in addition to any other rights the Indemnitee may have under the laws of the Commonwealth of Virginia, the Company’s Articles of Incorporation, the Company’s Amended and Restated By-laws, applicable law, or otherwise.

4. Amendment of this Agreement . No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall operate as a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided herein, no failure to exercise or any delay in exercising any right or remedy hereunder shall constitute a waiver thereof.

5 . No Duplication of Payments . The Company shall not be required under this Agreement to make any Expense Advance to the Indemnitee to the extent the underlying Expense has previously been paid or reimbursed, whether under the Company’s Articles of Incorporation, the Company’s Amended and Restated By-laws, any insurance policy, by law, or otherwise (the “Other Payment”). To the extent the Indemnitee receives the Other Payment for the underlying Expense after the Expense Advance has been made by the Company to the Indemnitee under this Agreement, the Indemnitee shall promptly reimburse the Company for the Expense Advance after receipt by the Indemnitee of such Other Payment.

6. Binding Effect . This Agreement shall be binding upon, and inure to the benefit of and be enforceable by, the parties hereto and their respective successors, assigns (including any direct or indirect successor of the Company by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of the Company), as well as spouses, heirs, and personal and legal representatives. This Agreement shall continue in effect regardless of whether the Indemnitee continues to serve as a director or officer of the Company or a director, trustee, partner, officer, or employee of another corporation, an affiliated corporation, partnership, joint venture, trust, employee benefit plan, or other enterprise at the Company’s request.

7. Severability . Any provision (or any portion thereof) of this Agreement shall not be effective if and to the extent that it is determined to be contrary to the Company’s Articles of Incorporation or applicable laws of the Commonwealth of Virginia, but the other provisions of this Agreement shall not be affected by such determination.

8. Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia (other than the laws regarding choice of laws and conflicts of laws) as to all matters, including matters of validity, construction, effect, performance and remedies.

9. Notices . All requests pursuant to Section 2(a) hereof and notices or other communications hereunder (collectively, “Notices”) shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by cable, telegram, facsimile, electronic mail or other standard form of telecommunications (provided confirmation is delivered to the recipient the next Business Day in the case of facsimile, electronic mail or other standard form of telecommunications) or by registered or certified mail, postage prepaid, return receipt requested, addressed as follows:


to the Company at:

100 Tredegar Street
Richmond, Virginia 23219
Attn: Corporate Secretary
Facsimile: 804-819-2232
Email: Carter.Reid@Dom.com and to the Indemnitee at:

Notice of change of address shall be effective only when given in accordance with this Section.

* * *

IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day first above written.


COMPANY:	DOMINION RESOURCES, INC.,
	a Virginia corporation

	By:
	Name:	Carter M. Reid
	Title:	Vice President - Governance and Corporate Secretary

INDEMNITEE:

	By:

Exhibit A

REQUEST, STATEMENT OF CONDUCT AND UNDERTAKING

Dominion Resources, Inc.

100 Tredegar Street

Richmond, Virginia 23219

facsimile: 804-819-2232

email: Carter.Reid@dom.com

Attn: Corporate Secretary

To Whom It May Concern:

I request, pursuant to Section 2 of the Agreement, dated as of (the “ Agreement”) , between Dominion Resources, Inc. (the “ Company ”) and me, that the Company advance Expenses (as such term is defined in the Agreement) incurred in connection with [describe Proceeding] (the “ Proceeding ”).

I believe, in good faith, that my conduct that is relevant to the Proceeding met the Standard of Conduct as defined in and required by Section 2(a)(i).

I undertake and agree to repay to the Company any funds advanced to me or paid on my behalf if any of the conditions set forth in Section 2(a)(ii) requiring such repayment shall occur. I will make such repayment promptly following written notice to me by the Company that such repayment is required under the Agreement.

I agree that payment by the Company of my Expenses in connection with the Proceeding in advance of the final disposition thereof shall not be deemed an admission by the Company that it shall ultimately be determined that I am entitled to indemnification.


By:
		[Name]

Date:

Exhibit 10.3

DOMINION RESOURCES, INC.

NEW EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN

Effective January 1, 2005

And

Amended and Restated Effective January 1, 2009

DOMINION RESOURCES, INC.

NEW EXECUTIVE SUPPLEMENTAL RETIREMENT PLAN

As Amended and Restated Effective January 1, 2009

Purpose

The Board of Directors of Dominion Resources, Inc. determined that the adoption of the New Executive Supplemental Retirement Plan effective January 1, 2005 would assist it in attracting and retaining those employees whose judgment, abilities and experience would contribute to its continued progress. The Plan is intended to be a plan that is unfunded and maintained primarily for the purpose of providing deferred compensation for a “select group of management or highly compensated employees” (as such phrase is used in the Employee Retirement Income Security Act of 1974).

The Plan is intended to qualify under the provisions of Code Section 409A and any regulations and other guidance under that section. The Plan shall be interpreted to qualify under Code Section 409A.

Article I

Definitions

As defined herein, the following phrases or terms shall have the indicated meanings:

1.1 “Administrative Benefit Committee” means the Administrative Benefit Committee of Dominion Resources, Inc. which shall manage and administer the Plan in accordance with the provisions of Article XI.

1.2 “Affiliate” means any entity that is (i) a member of a controlled group of corporations as defined in Section 1563(a) of the Code, determined without regard to Code Sections 1563(a)(4) and 1563(e)(3)(C), of which Dominion Resources, Inc. is a member according to Code Section 414(b); (ii) an unincorporated trade or business that is under common control with Dominion Resources, Inc., as determined according to Code Section 414(c); or (iii) a member of an affiliated service group of which Dominion Resources, Inc. is a member according to Code Section 414(m).

1.3 “Annual Benefit” means the annual amount determined under Section 3.1(a) or Section 3.1(b), as applicable, used for purposes of calculating the Lump Sum Equivalent.

1.4 “Beneficiary” means the individual, individuals, entity, entities or the estate of a Participant which, in accordance with the provisions of Article V, is entitled to receive the benefits payable under the Plan, if any, upon the Participant’s death.

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1.5 “Benefit Agreement” means any agreement between the Company and a Participant or any declaration by the Company under which a Participant is to be provided deemed age and/or service for purposes of the Plan.

1.6 “Cash Incentive Plan” means any short-term incentive plan of Dominion Resources, Inc. or an Affiliate that the CGN Committee determines should be taken into account for purposes of this Plan.

1.7 “CGN Committee” means the Compensation, Governance and Nominating Committee of the Board of Directors of Dominion Resources, Inc.

1.8 “Change in Control” means with regard to each Participant at any time an event that constitutes a “Change in Control” for purposes of the Employment Continuity Agreement between the Participant and Dominion Resources, Inc. as in effect at that time, if any.

1.9 “Code” means the Internal Revenue Code of 1986, as amended.

1.10 “Company” means Dominion Resources, Inc., its predecessor, a subsidiary or an Affiliate.

1.11 “Eligibility Conditions”:

(a) For any Participant who becomes a Participant on or after December 1, 2006, “Eligibility Conditions” means either reaching age fifty-five (55) and completing sixty (60) months of Participant Service, or being deemed to have reached age fifty-five (55) and have completed sixty (60) months of Participant Service due to a Benefit Agreement.

(b) For any Participant who became a Participant on or before November 30, 2006, “Eligibility Conditions” means either reaching age fifty-five (55) and completing sixty (60) months of service, or being deemed to have reached age fifty-five (55) and have completed sixty (60) months of service due to a Benefit Agreement.

1.12 “Final Compensation” means, with respect to a specified Participant as of a specified date, the sum of (i) the Participant’s annual base salary rate then in effect and (ii) the Participant’s Incentive Compensation Amount. For purposes of this definition, all components of Final Compensation are calculated without regard to any elections by the Participant to defer any amount that otherwise would have been paid to the Participant for the relevant period.

1.13 “Incentive Compensation Amount” means the target amount that may be paid to a Participant under the Cash Incentive Plan with regard to the year as of which the determination is being made. If a Participant participates in more than one Cash Incentive Plan during a year, the Participant’s “Incentive Compensation Amount” will be the greatest of the target amounts designated under any plan for that year.

1.14 “Installment Payments” mean a series of monthly payments in an amount equal to one-twelfth of the Annual Benefit.

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1.15 “Life Participant” means any Participant who is specifically designated by the CGN Committee to receive benefits determined under Section 3.1(b).

1.16 “Lump Sum Equivalent” means a single lump sum payment that is actuarially determined as the amount required to provide an after-tax monthly payment equal to one-twelfth of the after-tax amount of the Annual Benefit. Effective for distributions occurring on or after January 1, 2007 and on or before December 31, 2009, unless otherwise determined by the Administrative Benefit Committee, the actuarial discount rate for determinations of the Lump Sum Equivalent shall be 4 percent (4%). Beginning January 1, 2010, the actuarial discount rate shall be determined by the Administrative Benefit Committee. The actuarial determination shall be computed using any other actuarial or other factors as determined by the Administrative Benefit Committee. The after-tax amounts shall be based on Federal income and FICA tax rates and the state income tax rate for the residence of the Participant at the date of the payment, as determined by the Administrative Benefit Committee.

1.17 “Participant” means an elected officer of Dominion Resources, Inc. or an Affiliate who is designated by the CGN Committee to participate in the Plan in accordance with Article II. Participant includes a Regular Participant and a Life Participant.

1.18 “Participant Service” means service with the Company while a Participant in the Plan. Service with the Company while an individual is not a Participant in the Plan is disregarded for purposes of calculating Participant Service.

1.19 “Plan” means the Dominion Resources, Inc. New Executive Supplemental Retirement Plan.

1.20 “Potential Change in Control” means with regard to each Participant at any time an event that constitutes a “Potential Change in Control” for purposes of the Employment Continuity Agreement between the Participant and Dominion Resources, Inc. as in effect at that time, if any.

1.21 “Regular Participant” means any Participant who is not specifically designated as a Life Participant and who is entitled to benefits under Section 3.1(a).

1.22 “Retirement” and “Retire” mean Separation from Service at or after the attainment of fifty-five (55) years of age (actually or deemed under a Benefit Agreement) and the completion of sixty (60) months of service with the Company (actually or deemed under a Benefit Agreement).

1.23 “Separation from Service” means a termination of employment with the Participant’s employer (Dominion Resources, Inc. or any Affiliate, as the case may be) and all other persons that would be treated as a single employer with the Participant’s employer under Code sections 414(b) or (c) (applying a 50% rather than an 80% ownership test), within the meaning of Treasury Regulation Section 1.409A-1(h).

1.24 “Single Life Annuity” means an annuity with payments equal to one-twelfth of the Annual Benefit payable in monthly installments for the Participant’s lifetime with no survivor benefits except as provided in Section 3.5(d).

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1.25 “Totally and Permanently Disabled” means a condition that renders a Participant disabled for purposes of Code Section 409A(a)(2)(C).

Article II

Participation

An elected officer of Dominion Resources, Inc. or an Affiliate will become a Participant in the Plan upon his or her designation as a Participant by the CGN Committee. The individual shall remain a Participant until (a) the individual ceases to be an elected officer, or (b) the CGN Committee revokes its designation of any individual officer as a Participant, which may be done at its discretion at any time. Any Affiliate that is the employer of a Participant will be a designated employer under the Plan.

Article III

Benefits

Subject to the provisions of Articles VII and VIII, a Participant (or the Participant’s Beneficiary, if applicable) shall be entitled to benefits under this Plan as follows:

3.1 (a) If a Regular Participant meets the Eligibility Conditions while in the employ of the Company, a Regular Participant shall upon Retirement be entitled to an Annual Benefit calculated as follows:

(i) an annual amount equal to Twenty-Five Percent (25%) of the Regular Participant’s Final Compensation, payable in equal monthly installments for a period of one hundred twenty (120) months, minus

(ii) if applicable, the annual amount payable to the Regular Participant under the Dominion Resources, Inc. Executive Supplemental Retirement Plan frozen as of December 31, 2004.

(b) If a Life Participant meets the Eligibility Conditions while in the employ of the Company, a Life Participant shall upon Retirement be entitled to an Annual Benefit calculated as follows:

(i) an annual amount equal to Twenty-Five Percent (25%) of the Life Participant’s Final Compensation, payable in equal monthly installments for the life of the Participant, minus

(ii) if applicable, the annual amount payable to the Life Participant under the Dominion Resources, Inc. Executive Supplemental Retirement Plan frozen as of December 31, 2004.

(c) If a Regular Participant or Life Participant subject to the Eligibility Conditions in Section 1.11(a) has completed sixty (60) months of Participant Service (actually or deemed under a Benefits Agreement), or if a Regular Participant or Life Participant

- 4 -

subject to the Eligibility Conditions in Section 1.11(b) has completed sixty (60) months of service with the Company (actually or deemed under a Benefits Agreement), then, in either case, upon his severance from employment with the Company before the attainment of fifty-five (55) years of age (actually or deemed under a Benefits Agreement), the Participant shall be entitled to an Annual Benefit equal to the benefit computed under Section 3.1(a) or Section 3.1(b), as applicable, multiplied by the following fraction (not greater than one):

Participant’s completed months of

Participant Service (if subject to Section 1.11(a)) or

service with the Company (if subject to Section 1.11(b))

Total months from the date on which the individual became a Participant to the

Participant’s attainment of fifty-five (55) years of age

(actually or deemed under a Benefits Agreement).

For purposes of the above calculation, partial months shall be disregarded. The actuarial equivalent of the benefit under this Section 3.1(c) shall be paid in the form of the Lump Sum Equivalent subject to Sections 3.3 and 3.4 below.

3.2 Unless a Regular Participant makes an election under Section 3.3 to receive Installment Payments or a Life Participant makes an election under Section 3.4 to receive a Single Life Annuity prior to January 1, 2009, the Annual Benefit payable to a Participant under the Plan shall be paid in the form of the Lump Sum Equivalent. The Annual Benefit payable to any elected officer who becomes a Participant after December 31, 2008 shall be paid only in the form of the Lump Sum Equivalent.

3.3 This Section 3.3 shall only apply to Regular Participants who became Participants before January 1, 2009. In lieu of the Lump Sum Equivalent, a Regular Participant may elect to receive Installment Payments under the provisions of this Section 3.3.

(a) The Installment Payments shall be made in 120 monthly installments. Each installment shall be one-twelfth of the Annual Benefit.

(b) To receive Installment Payments, a Participant must make an irrevocable election within the first 30 days after the Participant becomes a Participant.

3.4 This Section 3.4 shall only apply to Life Participants who became Participants before January 1, 2009. In lieu of the Lump Sum Equivalent, a Life Participant may elect to receive a Single Life Annuity under the provisions of this Section 3.4. To receive a Single Life Annuity, a Participant must make an irrevocable election within the first 30 days after the Participant becomes a Participant.

3.5 (a) If a Participant becomes Totally and Permanently Disabled prior to Retirement, regardless of such Participant’s age or months of service, the Participant shall be entitled to an Annual Benefit equal to the amount described in Section 3.1(a) or 3.1(b), as

- 5 -

applicable. The Annual Benefit shall be payable as a Lump Sum Equivalent unless the Participant has made an election to receive Installment Payments under Section 3.3 or a Single Life Annuity under Section 3.4. If the Participant has elected to receive Installment Payments or a Single Life Annuity, the Monthly Benefit shall be payable as Installment Payments to a Regular Participant and as a Single Life Annuity to a Life Participant.

(b) If a Participant dies while still employed by the Company, regardless of such Participant’s age or months of service, the Participant’s Beneficiary shall be entitled to the Lump Sum Equivalent that would have been payable to the Participant under Section 3.1(a) or Section 3.1(b), as applicable, if the Participant had a Separation from Service on his or her date of death. The amount payable shall be determined as of the date of the Participant’s death.

(c) If a Regular Participant dies after Installment Payments have commenced, but before receiving 120 Installment Payments, the remainder of such payments will be made to the Participant’s Beneficiary on the same schedule as the amounts would have been payable to the Participant.

(d) If a Life Participant dies after payments have commenced under a Single Life Annuity, but before receiving 120 monthly payments, additional monthly payments will be made to the Participant’s Beneficiary on the same schedule as the amounts would have been payable to the Participant until the Participant and the Beneficiary have received a combined total of 120 monthly payments. After a combined total of 120 monthly payments have been made, payments to the Beneficiary shall cease and the Plan shall have no further obligation to the Beneficiary.

(e) A Beneficiary receiving Installment Payments after the Participant’s death under Section 3.5(c) or a continuation of monthly payments under Section 3.5(d) may designate a beneficiary who will be entitled to receive the remaining benefits due the Beneficiary after the Beneficiary’s death. Designation of a beneficiary shall be made in accordance with Article V of the Plan.

(f) If the Participant has received a Lump Sum Equivalent or if the Participant has commenced payments under a Single Life Annuity under this Plan, the Participant’s Beneficiary shall not be entitled to receive any benefit under this Plan after the Participant’s death except as provided in Section 3.5(d).

3.6 Payments under the Plan shall be made at the times provided in this Section 3.6:

(a) The Lump Sum Equivalent payable pursuant to Section 3.1(c) or 3.2 shall be distributed to the Participant as soon as administratively practicable, but not later than 90 days, after the date which is six months after the Participant’s Retirement. The Lump Sum Equivalent payable pursuant to Section 3.5(b) shall be distributed to the Participant’s Beneficiary or Beneficiaries as soon as administratively practicable, but not later than 90 days, after the date of the Participant’s death.

(b) The Installment Payments payable pursuant to Section 3.3 shall commence on the first of the month concurrent with or immediately following the date which is six months after the Participant’s Retirement. All future Installment Payments shall be made on the first of each succeeding month.

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(c) The Single Life Annuity payable pursuant to Section 3.4 shall commence on the first of the month concurrent with or immediately following the date which is six months after the Participant’s Retirement. All future payments shall be made on the first of each succeeding month.

(d) Payment of the benefit described in Section 3.5(a) shall be paid or shall commence to be paid on (or as soon as practicable, but not later than 90 days, after) the first day of the month next following the Administrative Benefit Committee’s determination of the Participant’s Total and Permanent Disability.

3.7 It is not intended that a Participant or Beneficiary receive duplicate benefits under this Plan. Anything herein to the contrary notwithstanding, therefore, the following provisions shall apply after a Participant has received a payment of any benefits under this Plan:

(a) If a Participant ceases to be employed by the Company, receives a distribution of part or all of the benefits payable under this Plan, and is subsequently reemployed by the Company, the amount of any benefit subsequently payable to the Participant from this Plan shall be appropriately adjusted to reflect the earlier distribution.

(b) Any adjustment under this Section 3.6 shall be made in accordance with rules established by the Administrative Benefit Committee and applied in a uniform and nondiscriminatory manner.

3.8 All payments under the Plan shall be subject to any applicable payroll and withholding taxes.

Article IV

Coordination of Benefit Payments

Any amount payable to a Participant or a Beneficiary under the Plan may be paid in part or in whole from any trust which is maintained by or on behalf of Dominion Resources, Inc. or an Affiliate or to which Dominion Resources, Inc or an Affiliate contributes, including without limitation any so-called “rabbi” or “secular” trust established from time to time. Dominion Resources, Inc. shall have the complete discretion to determine the source of any payment due under the Plan to any Participant or Beneficiary.

Article V

Designation of Beneficiary

5.1 A Participant may designate a Beneficiary to receive benefits due under the Plan, if any, upon the Participant’s death. Designation of a Beneficiary shall be made by execution of a form approved or accepted by the Administrative Benefit Committee. In the absence of an effective Beneficiary designation, a Participant’s surviving spouse, if any, and if none, the Participant’s estate, shall be the Beneficiary.

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5.2 A Participant may change a prior Beneficiary designation made under Section 5.1 by a subsequent execution of a new Beneficiary designation form. The change in Beneficiary will be effective upon receipt by the Administrative Benefit Committee or its designee.

5.3 A beneficiary designation or a change in beneficiary designation by a Beneficiary pursuant to Section 3.4(d) shall be governed by Sections 5.1 and 5.2 as if “Beneficiary” were substituted for “Participant” and “beneficiary” were substituted for “Beneficiary” therein.

Article VI

Guarantees

The Company has only a contractual obligation to make payments of the benefits described in Article III. All benefits paid by the Company are to be satisfied solely out of the general corporate assets of the Company, which assets shall remain subject at all times to the claims of its creditors. No assets of the Company will be segregated or committed to the satisfaction of its obligations to any Participant or Beneficiary under this Plan.

Article VII

Termination of Employment

7.1 The Plan does not in any way limit the right of the Company at any time and for any reason to terminate either a Participant’s employment or a Participant’s status as an officer. In no event shall the Plan, by its terms or by implication, constitute an employment contract of any nature whatsoever between the Company and a Participant.

7.2 Except as otherwise provided in Section 7.3, a Participant (a) who is removed or not reelected as an officer or (b) who has a Separation from Service for any reason other than death or Total and Permanent Disability before the Participant has completed sixty (60) months of either (i) Participant Service (actually or deemed under a Benefits Agreement) if the Participant is subject to the Eligibility Conditions in Section 1.11(a), or (ii) service with the Company (actually or deemed under a Benefits Agreement) if the Participant is subject to the Eligibility Conditions in Section 1.11(b), shall in either case immediately cease to be a Participant under this Plan and shall forfeit all rights under this Plan.

7.3 Anything herein to the contrary notwithstanding, if a Participant is in the employ of the Company on the date of a Change in Control or a Potential Change in Control relating to that Company, the provisions of the Employment Continuity Agreement between the Participant and Dominion Resources, Inc., if any, shall control (a) the Participant’s subsequent participation in this Plan and (b) the eligibility for, computation of, and payment of any benefits under this Plan to the Participant.

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7.4 A Participant who ceases to be an employee of the Company and who is subsequently reemployed by the Company shall not accrue any additional benefits for periods during which he or she is not a Participant.

Article VIII

Termination, Amendment or Modification of Plan

8.1 Except as otherwise specifically provided, Dominion Resources, Inc. reserves the right to amend, modify or terminate this Plan, wholly or partially, at any time and from time to time by action of its Board of Directors or its delegate; provided, however, except for an amendment required to comply with Code Section 409A, that:

(a) no such amendment, modification or termination may decrease the benefit of a Participant (or Beneficiary, if applicable) where (i) the Participant has already Retired at a time when a benefit is payable under the Plan or (ii) the Participant has already completed sixty (60) months of service with the Company as of the date of the change and remains an elected officer of a designated employer; and

(b) further provided that with respect to a Participant who is in the employ of a Company on the date of a Change in Control or a Potential Change in Control relating to that Company, the provisions of the Employment Continuity Agreement between the Participant and Dominion Resources, Inc., if any, shall apply to limit the ability of Dominion Resources, Inc. to amend, modify or terminate this Plan with regard to the affected Participant unless the Participant agrees to such amendment, modification or termination in writing.

8.2 Section 8.1 notwithstanding, no action to terminate the Plan shall be taken except upon written notice to each Participant to be affected thereby, which notice shall be given not less than thirty (30) days prior to such action.

8.3 Any notice which shall be or may be given under the Plan shall be in writing and shall be mailed by United States mail, postage prepaid. If notice is to be given to Dominion Resources, Inc., such notice shall be addressed to the corporate offices and sent to the attention of the Corporate Secretary. If notice is to be given to a Participant, such notice shall be addressed to the Participant’s last known address.

8.4 Except as otherwise provided in Sections 7.3 and 8.1, upon the termination of this Plan, the Plan shall no longer be of any further force or effect and neither Dominion Resources, Inc. nor any Participant or Beneficiary shall have any further obligation or right under this Plan.

8.5 Unless such action is prohibited by Section 8.1(b), the CGN Committee may revoke or rescind the designation of an individual as a Participant at its discretion. The rights of any individual who was a Participant and whose designation as a Participant is revoked or rescinded by the CGN Committee shall cease upon such action.

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Article IX

Other Benefits and Agreements

Except as provided in Section 3.1 and Article IV with regard to the coordination of benefit payments, the benefits provided for a Participant and the Participant’s Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program of the Company for its employees, and, except as may otherwise be expressly provided for, the Plan shall supplement and shall not supersede, modify or amend any other plan or program of the Company in which a Participant is participating.

Article X

Restrictions on Transfer of Benefits

No right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to do so shall be void. No right or benefit hereunder shall in any manner be liable for or subject to the debts, contracts, liabilities, or torts of the person entitled to such benefit. If any Participant or Beneficiary under the Plan should become bankrupt or attempt to anticipate, alienate, sell, assign, pledge, encumber or charge any right to a benefit hereunder, then such right or benefit, in the discretion of the CGN Committee, shall cease and terminate, and, in such event, the CGN Committee may hold or apply the same or any part thereof for the benefit of such Participant or Beneficiary, his or her spouse, children, or other dependents, or any of them, in such manner and in such portion as the CGN Committee may deem proper.

Article XI

Administration of the Plan

11.1 The Plan shall be administered by the Administrative Benefit Committee, which shall have the discretionary authority to interpret the terms of the Plan and to decide factual and other questions relating to the Participant and the Participant’s benefits, including without limitation questions relating to eligibility for, calculation of, and payment of benefits under the Plan. Subject to the provisions of the Plan, the Administrative Benefit Committee may adopt such rules and regulations as it may deem necessary or desirable to carry out the purposes of the Plan. The Administrative Benefit Committee’s interpretation and construction of any provision of the Plan shall be final, conclusive and binding upon the Company and upon Participants and their Beneficiaries.

11.2 Dominion Resources, Inc. shall indemnify and save harmless each member of the Administrative Benefit Committee and each member of the CGN Committee against any and all expenses and liabilities arising out of membership on the respective Committee, excepting only expenses and liabilities arising out of the member’s own willful misconduct. Expenses against which a member of the CGN Committee or the Administrative Benefit Committee shall be indemnified hereunder shall include without limitation, the amount of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted, or a proceeding brought or settlement thereof. The foregoing right of indemnification shall be in addition to any other rights to which any such member may be entitled.

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11.3 In addition to the powers specified in Section 11.1 and other provisions of this Plan, the Administrative Benefit Committee shall have the specific discretionary authority to compute and certify the amount and kind of benefits from time to time payable to Participants and their Beneficiaries under the Plan, to authorize all disbursements for such purposes, and to determine whether a Participant is Totally and Permanently Disabled so as to be entitled to a benefit under Section 3.5(a).

11.4 To enable the Administrative Benefit Committee to perform its functions, the Company shall supply full and timely information to the Administrative Benefit Committee on all matters relating to the compensation of all Participants, their retirement, death or other cause for Separation from Service, and such other pertinent facts as the Administrative Benefit Committee may require.

11.5 Any responsibility or authority given under this Plan to either the Administrative Benefit Committee or the CGN Committee may be delegated by the respective committee. Any such delegation shall be in writing and shall be prospectively revocable at any time.

11.6 (a) Every Participant, retired Participant, or Beneficiary of a Participant shall be entitled to file with the Administrative Benefit Committee a claim for benefits under the Plan. The claim is required to be in writing. For purposes of this section, any action required or authorized to be taken by the claimant may be taken by a representative authorized in writing by the claimant to represent the claimant.

(b) If the claim is denied by the Administrative Benefit Committee, in whole or in part, the claimant shall be furnished written notice of the denial of the claim within ninety (90) days after the Administrative Benefit Committee’s receipt of the claim or within one hundred eighty (180) days after such receipt if special circumstances require an extension of time. If special circumstances require an extension of time, the claimant shall be furnished written notice prior to the termination of the initial ninety-day period explaining the special circumstances that require an extension of time and the date by which the Administrative Benefit Committee expects to render the benefit determination.

(c) Within sixty (60) days following the date the claimant receives written notice of the denial of the claim, the claimant may request the CGN Committee to review the denial. For purposes of this section, any action required or authorized to be taken by the claimant may be taken by a representative authorized in writing by the claimant to represent the claimant.

(d) The CGN Committee shall afford the claimant a full and fair review of the decision denying the claim and shall:

(i) Provide, upon request and free of charge, reasonable access to and copies of all documents, records and other information relevant to the claim;

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(ii) Permit the claimant to submit written comments, documents, records and other information relating to the claim; and

(iii) Provide a review that takes into account all comments, documents, records and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered in the initial determination.

(e) The decision on review by the CGN Committee shall be in writing and shall be issued within sixty (60) days following receipt of the request for review. The period for decision may be extended to a date not later than one hundred twenty (120) days after such receipt if the Committee determines that special circumstances require extension. If special circumstances require an extension of time, the claimant shall be furnished written notice prior to the termination of the initial sixty-day period explaining the special circumstances that require an extension of time and the date by which the Committee expects to render its decision on review.

Article XII

Confidentiality and Noncompetition Provisions

12.1 By receiving a benefit under this Plan, a Participant agrees never directly or indirectly to disclose to any third party or use for such Participant’s own personal benefit any confidential information or trade secret of the Company except and to the extent (a) disclosure is ordered by a court of competent jurisdiction or (b) the information otherwise becomes public through no action of the Participant.

12.2 By receiving a benefit under this Plan, a Participant further agrees that for a period of one (1) year following Separation from Service for any reason, the Participant will not, without the specific written permission of the Company, be directly employed in, or otherwise provide services in any capacity to, any business or enterprise (including but not limited to the Participant’s own business or enterprise) that engages in direct competition with the Company in any state in which the Company is at the time of the Participant’s Separation from Service either carrying on business or actively negotiating to enter business.

12.3 The CGN Committee (or its delegate) in its sole discretion has the authority to interpret and administer this Article XII and to determine whether a business is in competition with the Company as described in Section 12.2. In addition, a terminated Participant may request the CGN Committee (or its delegate) to determine in advance whether a specific contemplated business or enterprise would be in competition with the Company for purposes of Section 12.2, and a response shall be provided to the Participant within a reasonable time after all relevant information is provided to enable the CGN Committee (or its delegate) to make its determination.

12.4 If the CGN Committee (or its delegate) determines that a terminated Participant who is receiving or has received benefits under this Plan is, within one (1) year following Separation from Service and without the specific written permission of the Company, directly employed in, or otherwise providing services in any capacity to, a business or enterprise that engages in direct competition

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with the Company in any state in which the Company is at the time of the Participant’s Separation from Service either carrying on business or actively negotiating to enter business, then (a) all payments to the Participant under this Plan shall cease, (b) the Participant and his or her Beneficiaries shall forfeit all rights to any further payments under the Plan, and (c) the Participant shall be responsible for repaying to the Plan any payments already made to the Participant that represent (i) amounts paid or payable with regard to any period for which the Participant was in competition with the Company as described herein and/or (ii) any amounts already paid that are in excess of the amount that would have been paid before the period of competition began as Installment Payments to a Regular Participant or as a Single Life Annuity to a Life Participant.

12.5 As a condition to receiving payments under the Plan, the CGN Committee may require that Participant to enter into a separate confidentiality and/or noncompetition agreement in a form acceptable to the Company.

Article XIII

Restoration Match

13.1 The Restoration Match is a replacement for a portion of the Dominion Resources, Inc. Executives’ Deferred Compensation Plan that was frozen as of December 31, 2004 (the “Deferred Compensation Plan”). The Match Program under the frozen Deferred Compensation Plan provided a benefit restoration for certain executives who had base salary in excess of Internal Revenue Code limits that apply to the Savings Plan. Because the Deferred Compensation Plan was frozen, the Restoration Match is intended to provide the same benefit restoration but not to provide for the deferral of any compensation that might be subject to Code section 409A.

13.2 With respect to each Match Year, the Company will pay a Restoration Match (as defined in Section 14.3 below) to each eligible Match Participant.

13.3 The amount of the Restoration Match will be calculated under the following formula: Excess Compensation times Deferral Percentage times Match Percentage. The terms in the formula have the following meanings.

(a)

Excess Compensation is the amount of the Match Participant’s base salary for the Match Year in excess of the dollar limit for the Match Year under Code section 401(a)(17).

(b)

Deferral Percentage is the total of the Match Participant’s salary deferrals to the Savings Plan for the Match Year divided by the lesser of (i) the dollar limit for the Match Year under Code section 401(a)(17), or (ii) the Match Participant’s base salary for the Match Year reduced by deferrals under the Savings Plan. The Deferral Percentage may not exceed the maximum percentage of compensation on which the Match Participant would be eligible to receive a match by making a deferral under the Savings Plan for the Match Year.

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(c)

Match Percentage is the percentage of company match made with respect to salary deferrals to the Savings Plan for the Match Year.

13.4 The Restoration Match will be paid in cash by the Company or its designee, less withholding for applicable income and employment taxes. Payment will be made with the regular payroll for January of the calendar year following the Match Year or, for a Match Participant who Terminated during the Match Year, at the same time as the first regular payroll for January of the calendar year following the Match Year, but not later than March 15 of that year.

13.5 The following definitions apply for purposes of this Article XIV.

(a)

Disability means, with respect to a Match Participant, that the Match Participant is entitled to benefits under the long-term disability plan of the Company.

(b)

Match Participant means an individual who meets the following requirements:

is an officer of Dominion Resources, Inc. or a subsidiary during the Match Year;

ii.

is employed on December 31 of the Match Year or has Terminated during the Match Year due to retirement or early retirement (as defined by the Savings Plan), death or Disability;

iii.

has made salary deferrals to the Savings Plan for the Match Year; and

iv.

has base salary for the Match Year in excess of the dollar limit for the Match Year under Code section 401(a)(17).

(c)

Match Year means a calendar year. The first Match Year is 2005.

(d)

Savings Plan means the Dominion Resources, Inc. Employee Savings Plan.

(e)

Terminate means the cessation of the Match Participant’s employment with the Company on account of death, Disability, severance or any other reason.

Article XIV

Miscellaneous

14.1 The Plan shall inure to the benefit of, and shall be binding upon, Dominion Resources, Inc. and its successors and assigns, and upon a Participant, a Beneficiary, and either of their assigns, heirs, executors and administrators.

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14.2 To the extent not preempted by federal law, the Plan shall be governed and construed under the laws of the Commonwealth of Virginia, without regard to its choice of law provisions.

14.3 Masculine pronouns wherever used shall include feminine pronouns and the use of the singular shall include the plural.

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Exhibit 10.4

DOMINION RESOURCES, INC.

NEW RETIREMENT BENEFIT RESTORATION PLAN

Effective January 1, 2005

And

Amended and Restated Effective January 1, 2009

DOMINION RESOURCES, INC.

NEW RETIREMENT BENEFIT RESTORATION PLAN

As Amended and Restated Effective January 1, 2009

Purpose

The Board of Directors of Dominion Resources, Inc. determined that the adoption of the New Retirement Benefit Restoration Plan effective January 1, 2005 would assist it in attracting and retaining those employees whose judgment, abilities and experience would contribute to its continued progress. The Plan is intended to be a plan that is unfunded and maintained primarily for the purpose of providing deferred compensation for a “select group of management or highly compensated employees” (as such phrase is used in the Employee Retirement Income Security Act of 1974).

The Company has amended the Dominion Pension Plan to add a cash balance feature to the Retirement Plan for employees hired or rehired on or after January 1, 2008. In order to allow newly hired or rehired employees to benefit under the Plan, it is necessary to amend the Plan to reflect the Dominion Pension Plan amendment.

The Plan is intended to qualify under the provisions of Code Section 409A and any regulations and other guidance under that section. The Plan shall be interpreted to qualify under Code Section 409A.

Article I

Definitions

As defined herein, the following phrases or terms shall have the indicated meanings:

1.1 “Account” means the Participant’s Account as defined under the Cash Balance Supplement.

1.2 “Account Balance” means the balance in the Participant’s Account under the Cash Balance Supplement.

1.3 “Administrative Benefit Committee” means the Administrative Benefit Committee of Dominion Resources, Inc., which shall manage and administer the Plan in accordance with the provisions of Article XII.

1.4 “Affiliate” means any entity that is (i) a member of a controlled group of corporations as defined in Section 1563(a) of the Code, determined without regard to Code Sections 1563(a)(4) and 1563(e)(3)(C), of which Dominion Resources, Inc. is a member according to Code Section 414(b); (ii) an unincorporated trade or business that is under common control with Dominion Resources, Inc., as determined according to Code Section 414(c); or (iii) a member of an affiliated service group of which Dominion Resources, Inc. is a member according to Code Section 414(m).

1.5 “Annuity” means either a Single Life Annuity or a Joint and Survivor Annuity.

1.6 “Beneficiary” means the individual, individuals, entity, entities or the estate of a Participant which, in accordance with the provisions of Article VI, is entitled to receive the benefits payable under the Plan, if any, upon the Participant’s death.

1.7 “Benefit Agreement” means any agreement between the Company and a Participant or any declaration by the Company under which a Participant is to be provided one or more Benefit Enhancements.

1.8 “Benefit Enhancement” means the crediting of deemed additional years of age or service, the use of a different definition of any factor used to calculate benefits, different eligibility provisions, or any other provision that enhances the benefit that would otherwise be payable under the Retirement Plan as provided in a Benefit Agreement.

1.9 “Cash Balance Benefit” means the lump sum amount determined under Article IV.

1.10 “Cash Balance Supplement” means the Dominion Pension Plan Cash Balance Supplement, effective January 1, 2008, as amended from time to time.

1.11 “CGN Committee” means the Compensation, Governance and Nominating Committee of the Board of Directors of Dominion Resources, Inc.

1.12 “Change in Control” means with regard to each Participant at any time an event that constitutes a “Change in Control” for purposes of the Employment Continuity Agreement between the Participant and Dominion Resources, Inc. as in effect at that time, if any.

1.13 “Code” means the Internal Revenue Code of 1986, as amended.

1.14 “Company” means Dominion Resources, Inc., its predecessor, a subsidiary or an Affiliate.

1.15 “Eligible Employee” means an individual (i) who is employed by Dominion Resources, Inc. or an Affiliate, (ii) who is a member of management or a highly compensated employee, and (iii) whose Retirement Plan benefit accrued after December 31, 2004 is or has been reduced or limited by Code Section 401(a)(17), Code Section 415, or both.

1.16 “Joint and Survivor Annuity” means an annuity which is the actuarial equivalent of the Monthly Benefit under which an amount is payable for the lifetime of the Participant with a survivor annuity for the lifetime of his surviving Spouse. A 50% Joint and Survivor Annuity provides a benefit to the surviving Spouse that is equal to 50% of the amount payable during the joint lives of the Participant and the Spouse. A 100% Joint and Survivor Annuity provides a benefit to the surviving Spouse that is equal to 100% of the amount payable during the joint lives of the Participant and the Spouse.

1.17 “Lump Sum Equivalent” means a single lump sum payment that is actuarially determined as the amount required to provide an after-tax monthly payment equal to the after-tax amount of the Monthly Benefit payable for the period determined under

Section 3.1(b). Effective for distributions occurring on or after January 1, 2007 and on or before December 31, 2009, unless otherwise determined by the Administrative Benefit Committee, the actuarial discount rate for determinations of the Lump Sum Equivalent shall be 4 percent (4%). Beginning January 1, 2010, the actuarial discount rate shall be determined by the Administrative Benefit Committee. The actuarial determination shall be computed using actuarial and other factors as determined by the Administrative Benefit Committee. The after-tax amounts shall be based on Federal income and FICA tax rates and the state income tax rate for the residence of the Participant at the date of the payment, as determined by the Administrative Benefit Committee.

1.18 “Monthly Benefit” means the monthly amount determined under Section 3.1(a) used for purposes of calculating the Lump Sum Equivalent.

1.19 “Participant” means an Eligible Employee who is designated by the CGN Committee to participate in the Plan.

1.20 “Plan” means the Dominion Resources, Inc. New Retirement Benefit Restoration Plan.

1.21 “Potential Change in Control” means with regard to each Participant at any time an event that constitutes a “Potential Change in Control” for purposes of the Employment Continuity Agreement between the Participant and Dominion Resources, Inc. as in effect at that time, if any.

1.22 “Retirement” and “Retire” mean a Participant’s Separation from Service with the Company at a time when the Participant is entitled to begin receiving an immediate annuity benefit under the Retirement Plan (regardless of whether the Participant actually elects to begin receiving an immediate annuity benefit), or would be entitled to begin receiving an immediate annuity if any Benefit Enhancement were applied under the Retirement Plan.

1.23 “Retirement Plan” means with regard to each Participant a defined benefit pension plan that is qualified under Code Section 401(a), that is maintained by Dominion Resources, Inc. or an Affiliate, and in which the Participant participates.

1.24 “Separation from Service” means a termination of employment with the Participant’s employer (Dominion Resources, Inc. or any Affiliate, as the case may be) and all other persons that would be treated as a single employer with the Participant’s employer under Code sections 414(b) or (c) (applying a 50% rather than an 80% ownership test), within the meaning of Treasury Regulation Section 1.409A-1(h).

1.25 “Single Life Annuity” means an annuity of the Monthly Benefit payable in monthly installments for the Participant’s lifetime with no survivor benefits.

1.26 “Spouse” means the person to whom a Participant is legally married at the date on which a Joint and Survivor Annuity commences.

1.27 “Totally and Permanently Disabled” means a condition that renders a Participant disabled for purposes of Code Section 409A(a)(2)(C).

Article II

Participation

An Eligible Employee who is designated to participate in the Plan by the CGN Committee shall become a Participant in the Plan as of the date specified by the CGN Committee on or after January 1, 2005. A Participant who remains an employee of the Company shall continue to participate in the Plan until (a) the CGN Committee declares that he or she is no longer a Participant or (b) he or she is no longer an Eligible Employee, including by Separation from Service other than Retirement. Except as otherwise specifically provided in the Plan, a Participant who cease to participate in the Plan shall forfeit all rights to any benefits under the Plan.

Article III

Basic Benefits

This Article III shall apply to all Participants except for Participants to whom Article IV is applicable. Subject to the provisions of Articles VIII and IX, a Participant (or the Participant’s Beneficiary, if applicable) who is subject to this Article III shall be entitled to benefits under this Plan as follows:

3.1 (a) The Monthly Benefit of a Participant who Retires shall be a monthly amount equal to (x) minus (y) minus (z) below where:


(x) =		the benefit that would have been payable monthly to the Participant under the Retirement Plan but for the application of the limits set forth in Code Sections 401(a)(17) and 415 and after the application of any Benefit Enhancements;

(y) =		the benefit that the Participant is entitled to receive monthly under the Retirement Plan; and

(z) =		if applicable, the benefit payable to the Participant under the Dominion Resources, Inc. Retirement Benefit Restoration Plan frozen as of December 31, 2004 expressed as a monthly benefit for the life of the Participant.

(b) Except as otherwise specifically provided, the Monthly Benefit under Section 3.1(a) shall be computed based on the same annuity form as the Participant’s annuity benefit is determined under the Retirement Plan.

3.2 Unless the Participant makes an election to receive an Annuity under Section 3.3 prior to January 1, 2009, the Monthly Benefit payable to a Participant under the Plan shall be paid in the form of the Lump Sum Equivalent.

3.3 This Section 3.3 shall only apply to Participants who become Participants before January 1, 2009. In lieu of the Lump Sum Equivalent, a Participant may elect to receive an Annuity under the provisions of this Section 3.3.

(a) The Participant may elect to receive either a Single Life Annuity, a 50% Joint and Survivor Annuity, or a 100% Joint and Survivor Annuity.

(b) If a Participant elects a Joint and Survivor Annuity and the Participant does not have a Spouse when the Participant Retires, the Participant’s Annuity shall be paid in the form of a Single Life Annuity.

(c) To receive an Annuity, a Participant must make an irrevocable election within the first 30 days after the Participant became a Participant. The election must include the form of Annuity that will be paid. If a Participant does not make an irrevocable election to receive an Annuity within the first 30 days after becoming a Participant, the Participant shall receive the Lump Sum Equivalent.

3.4 (a) If a Participant becomes Totally and Permanently Disabled prior to Retirement, the Participant shall be entitled to a Monthly Benefit equal to the amount described in Section 3.1. The Monthly Benefit shall be payable as a Lump Sum Equivalent unless the Participant has made an election to receive an Annuity under Section 3.3. If the Participant has elected to receive an Annuity, the Monthly Benefit shall be payable in the form of Annuity chosen by the Participant.

(b) If a Participant dies before the commencement of benefit payments under this Plan, the Participant’s Beneficiary shall be entitled to the Lump Sum Equivalent that would have been payable to the Participant under Section 3.1 if the Participant had Retired on his or her date of death. The amount payable shall be determined as of the date of the Participant’s death.

(c) If a Participant dies after the commencement of a Joint and Survivor Annuity under this Plan and is survived by the Participant’s Spouse, the Participant’s Spouse shall receive the survivor portion of the Joint and Survivor Annuity for the life of the Spouse. The payment to the Spouse shall begin with the first Annuity payment due after the date of the Participant’s death.

(d) If the Participant has received a Lump Sum Equivalent or if the Participant has commenced payments under a Single Life Annuity under this Plan, the Participant’s Beneficiary shall not be entitled to receive any benefit under this Plan after the Participant’s death.

3.5 Payments under Article III shall be made at the times provided in this Section 3.5.

(a) The Lump Sum Equivalent shall be distributed to the Participant as soon as administratively practicable, but not later than 90 days, after the date which is six months after the Participant’s Retirement. The Lump Sum Equivalent shall be distributed to the Participant’s Beneficiary or Beneficiaries as soon as administratively practicable, but not later than 90 days, after the date of the Participant’s death.

(b) If a Participant makes an election to receive an Annuity, the Annuity shall commence on the first of the month concurrent with or immediately following the date which is six months after the Participant’s Retirement. All future Annuity payments shall be made on the first of each succeeding month.

(c) Payment of the benefit described in Section 3.4(a) shall commence on (or as soon as practicable, but not later than 90 days, after) the first day of the month next following the Administrative Benefit Committee’s determination of the Participant’s Total and Permanent Disability.

3.6 It is not intended that a Participant or Beneficiary receive duplicate benefits under this Plan. Anything herein to the contrary notwithstanding, therefore, the following provisions shall apply after a Participant has received a payment of any benefits under this Plan:

(b) Any adjustment under this Section 3.6 shall be made in accordance with rules established by the Administrative Benefit Committee and applied in a uniform and nondiscriminatory manner.

Article IV

Cash Balance Benefits

This Article IV is effective as of January 1, 2008. This Article IV shall apply only to those Participants who are covered by the Cash Balance Supplement. Subject to the provisions of Articles VIII and IX, a Participant (or the Participant’s Beneficiary, if applicable) who is subject to this Article IV shall be entitled to benefits under this Plan as follows:

4.1 (a) The Cash Balance Benefit of a Participant who Retires shall be a lump sum equal to (x) minus (y) below where:


(x) =		the Participant’s Account Balance that would have accrued but for the application of the limits set forth in Code Sections 401(a)(17) and 415 and after the application of any Benefit Enhancements;

(y) =		the Participant’s actual Account Balance.

(b) In all cases, the Cash Balance Benefit under Section 4.1(a) shall be computed based on the same crediting factors as in the Cash Balance Supplement.

4.2 The Cash Balance Benefit payable to a Participant under the Plan shall be paid in the form of a lump sum.

4.3 (a) If a Participant becomes Totally and Permanently Disabled prior to Retirement, the Participant shall be entitled to a Cash Balance Benefit equal to the amount described in Section 4.1. The Cash Balance Benefit shall be payable as a lump sum.

(b) If a Participant dies before the commencement of benefit payments under this Plan, the Participant’s Beneficiary shall be entitled to the lump sum that would have been payable to the Participant under Section 4.1 if the Participant had Retired on his or her date of death. The amount payable shall be determined as of the date of the Participant’s death.

(c) If the Participant has received a lump sum of the Cash Balance Benefit, the Participant’s Beneficiary shall not be entitled to receive any benefit under this Plan after the Participant’s death.

4.4 Payments under Article IV shall be made at the times provided in this Section 4.4.

(a) The Cash Balance Benefit shall be distributed to the Participant as soon as administratively practicable, but not later than 90 days, after the date which is six months after the Participant’s Retirement. The Cash Balance Benefit shall be distributed to the Participant’s Beneficiary or Beneficiaries as soon as administratively practicable, but not later than 90 days, after the date of the Participant’s death.

(b) Payment of the benefit described in Section 4.3(a) shall commence on (or as soon as practicable, but not later than 90 days, after) the first day of the month next following the Administrative Benefit Committee’s determination of the Participant’s Total and Permanent Disability.

4.5 It is not intended that a Participant or Beneficiary receive duplicate benefits under this Plan. Anything herein to the contrary notwithstanding, therefore, the following provisions shall apply after a Participant has received a payment of any benefits under this Plan:

(b) Any adjustment under this Section 4.5 shall be made in accordance with rules established by the Administrative Benefit Committee and applied in a uniform and nondiscriminatory manner.

4.6 All payments under Article IV shall be subject to any applicable payroll and withholding taxes.

Article V

Coordination of Benefit Payments

Article VI

Designation of Beneficiary

6.1 A Participant may designate a Beneficiary to receive benefits due under the Plan, if any, upon the Participant’s death. Designation of a Beneficiary shall be made by execution of a form approved or accepted by the Administrative Benefit Committee. In the absence of an effective Beneficiary designation, a Participant’s surviving spouse, if any, and if none, the Participant’s estate, shall be the Beneficiary.

6.2 A Participant may change a prior Beneficiary designation made under Section 6.1 by a subsequent execution of a new Beneficiary designation form. The change in Beneficiary will be effective upon receipt by the Administrative Benefit Committee or its designee.

Article VII

Guarantees

The Company has only a contractual obligation to make payments of the benefits described in Article III and Article IV. All benefits paid by the Company are to be satisfied solely out of the general corporate assets of the Company, which assets shall remain subject at all times to the claims of its creditors. No assets of the Company will be segregated or committed to the satisfaction of its obligations to any Participant or Beneficiary under this Plan.

Article VIII

Termination of Employment

8.1 The Plan does not in any way limit the right of the Company at any time and for any reason to terminate either a Participant’s employment or a Participant’s status as an Eligible Employee. In no event shall the Plan, by its terms or by implication, constitute an employment contract of any nature whatsoever between the Company and a Participant.

8.2 Except as otherwise provided in Section 8.3, a Participant (a) who ceases to be an Eligible Employee while remaining employed by the Company or (b) who has a Separation from Service for any reason other than death, Retirement, or Total and Permanent Disability, shall in either case immediately cease to be a Participant under this Plan and shall forfeit all rights under this Plan. In no event shall an individual who was a Participant but who is not a Participant at the time of such individual’s death, Retirement, or Total and Permanent Disability, be entitled to any benefit under the Plan. A Participant on authorized leave of absence from the Company for up to six months shall not be deemed to have had a Separation from Service or to lose the status of an Eligible Employee solely as a result of such leave of absence.

8.3 Anything herein to the contrary notwithstanding, if a Participant is in the employ of a Company on the date of a Change in Control or a Potential Change in Control relating to that Company, the provisions of the Employment Continuity Agreement between the Participant and Dominion Resources, Inc., if any, shall control (a) the Participant’s subsequent participation in this Plan and (b) the eligibility for, computation of, and payment of any benefits under this Plan to the Participant.

Article IX

Termination, Amendment or Modification of Plan

9.1 Except as otherwise specifically provided, Dominion Resources, Inc. reserves the right to amend, modify or terminate this Plan, wholly or partially, at any time and from time to time by action of its Board of Directors or its delegate; provided, however, that:

(a) No such amendment, modification or termination may decrease the benefit that has already been earned by a Participant as of the date of the change, except for an amendment required to comply with Code Section 409A; and

(b) If a Participant is in the employ of a Company on the date of a Change in Control or a Potential Change in Control relating to that Company, the provisions of the Employment Continuity Agreement between the Participant and Dominion Resources, Inc., if any, shall apply to limit the ability of Dominion Resources, Inc. to amend, modify or terminate this Plan with regard to the affected Participant unless the Participant agrees to such amendment, modification or termination in writing.

9.2 Section 9.1 notwithstanding, no action to terminate the Plan shall be taken except upon written notice to each Participant to be affected thereby, which notice shall be given not less than thirty (30) days prior to such action.

9.3 Any notice which shall be or may be given under the Plan shall be in writing and shall be mailed by United States mail, postage prepaid. If notice is to be given to Dominion Resources, Inc., such notice shall be addressed to the corporate offices and sent to the attention of the Corporate Secretary. If notice is to be given to a Participant, such notice shall be addressed to the Participant’s last known address.

9.4 Except as otherwise provided in Sections 8.3 and 9.1, upon the termination of this Plan, the Plan shall no longer be of any further force or effect and neither Dominion Resources, Inc. nor any Participant or Beneficiary shall have any further obligation or right under this Plan.

9.5 Unless such action is prohibited by Section 9.1(b), the CGN Committee may revoke or rescind the designation of an individual as a Participant at its discretion. The rights of any individual who was a Participant and whose designation as a Participant is revoked or rescinded by the CGN Committee shall cease upon such action.

Article X

Other Benefits and Agreements

Except as provided in Section 3.1, Section 4.1 and Article V with regard to the coordination of benefit payments, the benefits provided for a Participant and the Participant’s Beneficiary under the Plan are in addition to any other benefits available to such Participant under any other plan or program of the Company for its employees, and, except as may otherwise be expressly provided for, the Plan shall supplement and shall not supersede, modify or amend any other plan or program of the Company in which a Participant is participating.

Article XI

Restrictions on Transfer of Benefits

Article XII

Administration of the Plan

12.1 The Plan shall be administered by the Administrative Benefit Committee, which shall have the discretionary authority to interpret the terms of the Plan and to decide factual and other questions relating to the Participant and the Participant’s benefits, including without limitation questions relating to eligibility for, calculation of, and payment of benefits under the Plan. Subject to the provisions of the Plan, the Administrative Benefit Committee may adopt such rules and regulations as it may deem necessary or desirable to carry out the purposes of the Plan. The Administrative Benefit Committee’s interpretation and construction of any provision of the Plan shall be final, conclusive and binding upon the Company and upon Participants and their Beneficiaries.

12.2 Dominion Resources, Inc. shall indemnify and save harmless each member of the Administrative Benefit Committee and each member of the CGN Committee against any and all expenses and liabilities arising out of membership on the respective Committee, excepting only expenses and liabilities arising out of the member’s own willful misconduct. Expenses against which a member of the CGN Committee or the Administrative Benefit Committee shall be indemnified hereunder shall include without limitation, the amount of any settlement or judgment, costs, counsel fees, and related charges reasonably incurred in connection with a claim asserted, or a proceeding brought or settlement thereof. The foregoing right of indemnification shall be in addition to any other rights to which any such member may be entitled.

12.3 In addition to the powers specified in Section 12.1 and other provisions of this Plan, the Administrative Benefit Committee shall have the specific discretionary authority to compute and certify the amount and kind of benefits from time to time payable to Participants and their Beneficiaries under the Plan, to authorize all disbursements for such purposes, and to determine whether a Participant is Totally and Permanently Disabled so as to be entitled to a benefit under Section 3.4(a) or Section 4.3(a).

12.4 To enable the Administrative Benefit Committee to perform its functions, the Company shall supply full and timely information to the Administrative Benefit Committee on all matters relating to the compensation of all Participants, their retirement, death or other cause for Separation from Service, and such other pertinent facts as the Administrative Benefit Committee may require.

12.5 Any responsibility or authority given under this Plan to either the Administrative Benefit Committee or the CGN Committee may be delegated by the respective committee. Any such delegation shall be in writing and shall be prospectively revocable at any time.

12.6 (a) Every Participant, retired Participant, or Beneficiary of a Participant shall be entitled to file with the Administrative Benefit Committee a claim for benefits under the Plan. The claim is required to be in writing. For purposes of this section, any action required or authorized to be taken by the claimant may be taken by a representative authorized in writing by the claimant to represent the claimant.

(d) The CGN Committee shall afford the claimant a full and fair review of the decision denying the claim and shall:

(i) Provide, upon request and free of charge, reasonable access to and copies of all documents, records and other information relevant to the claim;

(ii) Permit the claimant to submit written comments, documents, records and other information relating to the claim; and

of time, the claimant shall be furnished written notice prior to the termination of the initial sixty-day period explaining the special circumstances that require an extension of time and the date by which the Committee expects to render its decision on review.

Article XIII

Confidentiality and Noncompetition Provisions

13.1 By receiving a benefit under this Plan, a Participant agrees never directly or indirectly to disclose to any third party or use for such Participant’s own personal benefit any confidential information or trade secret of the Company except and to the extent (a) disclosure is ordered by a court of competent jurisdiction or (b) the information otherwise becomes public through no action of the Participant.

13.2 By receiving a benefit under this Plan, a Participant further agrees that for a period of one (1) year following Separation from Service with the Company for any reason, the Participant will not, without the specific written permission of the Company, be directly employed in, or otherwise provide services in any capacity to, any business or enterprise (including but not limited to the Participant’s own business or enterprise) that engages in direct competition with the Company in any state in which the Company is at the time of the Participant’s Separation from Service either carrying on business or actively negotiating to enter business.

13.3 The CGN Committee (or its delegate) in its sole discretion has the authority to interpret and administer this Article XIII and to determine whether a business is in competition with the Company as described in Section 13.2. In addition, a terminated Participant may request the CGN Committee (or its delegate) to determine in advance whether a specific contemplated business or enterprise would be in competition with the Company for purposes of Section 13.2, and a response shall be provided to the Participant within a reasonable time after all relevant information is provided to enable the CGN Committee (or its delegate) to make its determination.

13.4 If the CGN Committee (or its delegate) determines that a terminated Participant who is receiving or has received benefits under this Plan is, within one (1) year following Separation from Service and without the specific written permission of the Company, directly employed in, or otherwise providing services in any capacity to, a business or enterprise that engages in direct competition with the Company in any state in which the Company is at the time of the Participant’s Separation from Service either carrying on business or actively negotiating to enter business, then (a) all payments to the Participant under this Plan shall cease, (b) the Participant and his or her Beneficiaries shall forfeit all rights to any further payments under the Plan, and (c) the Participant shall be responsible for repaying to the Plan any payments already made to the Participant that represent (i) amounts paid or payable with regard to any period for which the Participant was in competition with the Company as described herein and/or (ii) any amounts already paid that are in excess of the amount that would have been paid before the period of competition began as a Single Life Annuity to a Participant.

13.5 As a condition to receiving payments under the Plan, the CGN Committee may require that Participant to enter into a separate confidentiality and/or noncompetition agreement in a form acceptable to the Company.

Article XIV

Miscellaneous

14.2 To the extent not preempted by federal law, the Plan shall be governed and construed under the laws of the Commonwealth of Virginia, without regard to its choice of law provisions.

14.3 Masculine pronouns wherever used shall include feminine pronouns and the use of the singular shall include the plural.

Exhibit 12

Dominion Resources Inc. and Subsidiaries

Computation of Ratio of Earnings to Fixed Charges

(millions of dollars)


	Nine Months Ended September 30, 2008 (a)			Twelve Months Ended September 30, 2008 (b)			Years Ended December 31,
	Nine Months Ended September 30, 2008 (a)			Twelve Months Ended September 30, 2008 (b)			2007 (c)			2006(d)			2005(e)			2004(f)		2003(g)
Earnings, as defined:
Earnings from continuing operations before income taxes and minority interests in consolidated subsidiaries	$	2,189		$	2,697		$	4,494		$	2,463		$	1,606		$	1,951	$	1,494

Distributed income from unconsolidated investees, less equity in earnings		(35	)		(34	)		(20	)		(16	)		(15	)		3		(5	)

Fixed charges included in the determination of net income		714			935			1,254			1,095			999			951		991

Total earnings, as defined	$	2,868		$	3,598		$	5,728		$	3,542		$	2,590		$	2,905	$	2,480

Fixed charges, as defined:
Interest charges	$	712		$	930		$	1,275		$	1,164		$	1,052		$	986	$	1,067
Rental interest factor		40			55			62			58			53			40		27

Total fixed charges, as defined	$	752		$	985		$	1,337		$	1,222		$	1,105		$	1,026	$	1,094

Ratio of Earnings to Fixed Charges		3.81			3.65			4.28			2.90			2.34			2.83		2.27

(a)

Earnings for the nine months ended September 30, 2008 include $83 million of impairment charges reflecting other-than-temporary declines in the fair value of securities held in merchant nuclear decommissioning trust funds, $59 million of impairment charges related to Dominion Capital, Inc. (DCI) assets, and a $42 million reduction in the gain recognized in 2007 from the sale of the majority of our U.S. exploration and production (E&P) businesses as a result of post-closing adjustments. Earnings for the period also include a $46 million benefit related to the planned sale of two natural gas distribution utilities, The Peoples Natural Gas Company (Peoples) and Hope Gas, Inc. (Hope), and a $7 million benefit related to other items. Excluding these items from the calculation would result in a higher ratio of earnings to fixed charges for the nine months ended September 30, 2008.

(b)

Earnings for the twelve months ended September 30, 2008 include $99 million of impairment charges reflecting other-than-temporary declines in the fair value of securities held in nuclear decommissioning trust funds, $61 million of impairment charges related to DCI assets, a $46 million benefit related to the planned sale of Peoples and Hope, and $2 million of charges related to other items. Excluding these items from the calculation would result in a higher ratio of earnings to fixed charges for the twelve months ended September 30, 2008.

(c)

Earnings for the twelve months ended December 31, 2007 include a $3.6 billion gain from the disposition of the majority of our U.S. E&P operations, partially offset by $1 billion of charges related to the disposition which are comprised of $541 million related to the discontinuance of hedge accounting for certain gas and oil derivatives and subsequent changes in the fair value of these derivatives, $171 million primarily related to the settlement of volumetric production payment agreements, $242 million of charges related to the early retirement of debt, and $91 million of employee-related expenses. Earnings for the period also include a $387 million charge related to the impairment of the partially-completed Dresden generation facility; a $231 million charge due to the termination of a power sales agreement at our State Line generating facility; $88 million of impairment charges related to DCI assets; $48 million of charges related to litigation reserves, and $70 million of charges related to other items. Fixed charges for the twelve months ended December 31, 2007 include $234 million of costs related to the early retirement of debt associated with our debt tender offer completed in July 2007. Excluding these items from the calculation would result in a lower ratio of earnings to fixed charges for the twelve months ended December 31, 2007.

(d)

Earnings for the twelve months ended December 31, 2006 include $189 million of charges related to the planned sale of two natural gas distribution utilities, Peoples and Hope, including $166 million resulting from the write-off of certain regulatory assets, $90 million of impairment charges related to DCI assets, a $60 million charge due to an adjustment eliminating the application of hedge accounting related to certain interest rate swaps associated with our junior subordinated notes payable to affiliated trusts, a $27 million charge resulting from the termination of a pipeline project in West Virginia, a $26 million impairment charge resulting from a change in method of assessing other-than-temporary decline in the fair value of certain securities, $17 million of incremental charges related to hurricanes Katrina and Rita, and $9 million of net charges related to other items. Excluding these items from the calculation would result in a higher ratio of earnings to fixed charges for the twelve months ended December 31, 2006.

(e)

Earnings for the twelve months ended December 31, 2005 include a $423 million charge reflecting the de-designation of hedge contracts resulting from the delay of natural gas and oil production following Hurricanes Katrina and Rita, $73 million in charges resulting from the termination of certain long-term power purchase contracts, $21 million in net charges related to trading activities discontinued in 2004, including the Batesville long-term power-tolling contract divested in the second quarter of 2005 and other activities, $35 million of impairment charges related to DCI assets, a $76 million charge related to miscellaneous asset impairments, a $28 million charge related to expenses following Hurricanes Katrina and Rita and $5 million of charges related to other items. Excluding these items from the calculation would result in a higher ratio of earnings to fixed charges for the twelve months ended December 31, 2005.

(f)

Earnings for the twelve months ended December 31, 2004 include $76 million of impairment charges related to Dominion’s investment in and planned divestiture of DCI, a $23 million benefit associated with the disposition of certain assets held for sale, an $18 million benefit from the reduction of accrued expenses associated with Hurricane Isabel restoration activities, $96 million of losses related to the discontinuance of hedge accounting for certain oil hedges and subsequent changes in the fair value of those hedges during the third quarter following Hurricane Ivan, $71 million in charges resulting from the termination of certain long-term power purchase contracts, a $184 million charge related to the Batesville long-term power-tolling contract divested in the second quarter of 2005, and $22 million of charges related to net legal settlements and other items. Excluding these items from the calculation would result in a higher ratio of earnings to fixed charges for the twelve months ended December 31, 2004.

(g)

Earnings for the twelve months ended December 31, 2003 include a $134 million impairment of DCI assets, $28 million for severance costs related to workforce reductions, an $84 million impairment of certain assets held for sale, $197 million for restoration expenses related to Hurricane Isabel, a $105 million charge related to the termination of a power purchase contract, $64 million in charges for the restructuring and termination of certain electric sales contracts and a $144 million charge related to our investment in Dominion Telecom including impairments, the cost of refinancing, and reallocation of equity losses. Excluding these items from the calculation would result in a higher ratio of earnings to fixed charges for the twelve months ended December 31, 2003.

Exhibit 31.1

I, Thomas F. Farrell, II, certify that:

1.	I have reviewed this report on Form 10-Q of Dominion Resources, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: October 30, 2008				/s/ Thomas F. Farrell, II
				Thomas F. Farrell, II
				President and Chief Executive Officer

Exhibit 31.2

I, Thomas N. Chewning, certify that:

1.	I have reviewed this report on Form 10-Q of Dominion Resources, Inc.;

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: October 30, 2008				/s/ Thomas N. Chewning
				Thomas N. Chewning
				Executive Vice President and Chief Financial Officer

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned officers of Dominion Resources, Inc. (the Company), certify that:

1.	the Quarterly Report on Form 10-Q for the quarter ended September 30, 2008 (the “Report”) of the Company to which this certification is an exhibit fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)).

2.	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of September 30, 2008 and for the period then ended.

/s/ Thomas F. Farrell, II

Thomas F. Farrell, II

President and Chief Executive Officer

October 30, 2008

/s/ Thomas N. Chewning

Thomas N. Chewning

Executive Vice President and Chief Financial Officer

October 30, 2008

Exhibit 99

DOMINION RESOURCES, INC.

CONDENSED CONSOLIDATED EARNINGS STATEMENT

(Unaudited)


(millions, except per share amounts)	Twelve Months Ended September 30, 2008
Operating Revenue	$	15,766

Operating Expenses		12,209

Income from operations		3,557

Other income		(13	)

Interest and related charges		847

Income before income tax expense	$	2,697

Income tax expense		909

Minority interest		(1	)

Income from continuing operations		1,789

Loss from discontinued operations (net of income tax benefit of $5)		(4	)

Net Income	$	1,785

Earnings Per Common Share - Basic
Income from continuing operations	$	3.11
Loss from discontinued operations		(0.01	)

Net income	$	3.10

Earnings Per Common Share - Diluted
Income from continuing operations	$	3.09
Loss from discontinued operations		(0.01	)

Net income	$	3.08