VIRGINIA ELECTRIC & POWER CO (Form: 10-Q, Received: 10/30/2008 16:05:06)

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 001-02255

VIRGINIA ELECTRIC AND POWER COMPANY

(Exact name of registrant as specified in its charter)


VIRGINIA		54-0418825
*(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 ¨

Accelerated filer ¨

Non-accelerated filer x

Smaller reporting company ¨

(Do not check if a smaller

reporting company)

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

At September 30, 2008, the latest practicable date for determination, 198,047 shares of common stock, without par value, of the registrant were outstanding.

VIRGINIA ELECTRIC AND POWER COMPANY

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	4

	Consolidated Balance Sheets – September 30, 2008 and December 31, 2007	5

	Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2008 and 2007	7

	Notes to Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28

Item 4.	Controls and Procedures	29

	PART II. Other Information

Item 1.	Legal Proceedings	30

Item 1A.	Risk Factors	30

Item 6.	Exhibits	31

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)
affiliates		Other Dominion subsidiaries
CEO		Chief Executive Officer
CFO		Chief Financial Officer
DOE		Department of Energy
Dominion		Dominion Resources, Inc.
DRS		Dominion Resources Services, Inc., a subsidiary of Dominion
DVP		Dominion Virginia Power operating segment
EITF		Emerging Issues Task Force
EPA		Environmental Protection Agency
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
kWh		Kilowatt-hour
MD&A		Management’s Discussion and Analysis of Financial Condition and Results of Operations
mwhrs		Megawatt hours
North Anna		North Anna power station
North Carolina Commission		North Carolina Utilities Commission
NRC		Nuclear Regulatory Commission
ODEC		Old Dominion Electric Cooperative
Pennsylvania Commission		Pennsylvania Public Utility Commission
PJM		PJM Interconnection, LLC
RTO		Regional transmission organization
SEC		Securities and Exchange Commission
SFAS		Statement of Financial Accounting Standards
U.S.		United States of America
VIEs		Variable interest entities
Virginia Commission		Virginia State Corporation Commission
West Virginia Commission		Public Service Commission of West Virginia

PAGE 3

VIRGINIA ELECTRIC AND POWER COMPANY

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)
Operating Revenue	$	2,177	$	1,833	$	5,247	$	4,700

Operating Expenses
Electric fuel and energy purchases		982		609		2,062		1,945
Purchased electric capacity		102		107		305		330
Other energy-related commodity purchases		4		8		11		24
Other operations and maintenance:
Affiliated suppliers		98		83		274		239
Other		230		255		633		657
Depreciation and amortization		154		146		453		420
Other taxes		46		43		140		131

Total operating expenses		1,616		1,251		3,878		3,746

Income from operations		561		582		1,369		954

Other income		6		18		24		58
Interest and related charges:
Interest expense		82		77		227		206
Interest expense—junior subordinated notes payable to affiliated trust		—		8		12		23

Total interest and related charges		82		85		239		229

Income before income tax expense		485		515		1,154		783
Income tax expense		182		193		429		293

Income before extraordinary item		303		322		725		490
Extraordinary item ⁽¹⁾		—		—		—		(158	)

Net Income		303		322		725		332
Preferred dividends		4		4		12		12

Balance available for common stock	$	299	$	318	$	713	$	320

(1)	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.

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

PAGE 4

VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	September 30, 2008			December 31, 2007 ⁽¹⁾
(millions)
ASSETS
Current Assets
Cash and cash equivalents	$	27		$	49
Customer accounts receivable (less allowance for doubtful accounts of $8 at both dates)		928			763
Affiliated receivables		1			53
Other receivables (less allowance for doubtful accounts of $7 and $9)		52			58
Inventories (average cost method)		559			520
Prepayments		27			165
Other		154			92

Total current assets		1,748			1,700

Investments
Nuclear decommissioning trust funds		1,187			1,339
Other		3			16

Total investments		1,190			1,355

Property, Plant and Equipment
Property, plant and equipment		23,056			21,838
Accumulated depreciation and amortization		(8,973	)		(8,702	)

Total property, plant and equipment, net		14,083			13,136

Deferred Charges and Other Assets
Regulatory assets		1,194			564
Other		357			308

Total deferred charges and other assets		1,551			872

Total assets	$	18,572		$	17,063

(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 5

VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED BALANCE SHEETS—(Continued)

(Unaudited)


	September 30, 2008		December 31, 2007 ⁽¹⁾
(millions)
LIABILITIES AND SHAREHOLDER’S EQUITY
Current Liabilities
Securities due within one year	$	307	$	286
Short-term debt		664		257
Accounts payable		477		573
Payables to affiliates		89		80
Affiliated current borrowings		340		114
Accrued interest, payroll and taxes		301		234
Other		349		239

Total current liabilities		2,527		1,783

Long-Term Debt
Long-term debt		5,452		4,904
Junior subordinated notes payable to affiliated trust		—		412

Total long-term debt		5,452		5,316

Deferred Credits and Other Liabilities
Deferred income taxes and investment tax credits		2,540		2,237
Regulatory liabilities		894		1,009
Asset retirement obligations		705		678
Other		316		242

Total deferred credits and other liabilities		4,455		4,166

Total liabilities		12,434		11,265

Commitments and Contingencies (see Note 10)
Preferred Stock Not Subject to Mandatory Redemption		257		257

Common Shareholder’s Equity
Common stock—no par, 300,000 shares authorized; 198,047 shares outstanding		3,388		3,388
Other paid-in capital		1,110		1,109
Retained earnings		1,367		1,015
Accumulated other comprehensive income		16		29

Total common shareholder’s equity		5,881		5,541

Total liabilities and shareholder’s equity	$	18,572	$	17,063

(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.

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

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VIRGINIA ELECTRIC AND POWER COMPANY

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended September 30,
	2008			2007
(millions)
Operating Activities
Net income	$	725		$	332
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		524			485
Deferred income taxes and investment tax credits, net		305			99
Extraordinary item, net of income taxes		—			158
Other adjustments to income, net		(37	)		(31	)
Changes in:
Accounts receivable		(173	)		(178	)
Affiliated accounts receivable and payable		61			46
Inventories		(38	)		21
Deferred fuel expenses, net		(514	)		(152	)
Accounts payable		(84	)		(9	)
Accrued interest, payroll and taxes		66			5
Prepayments		138			89
Other operating assets and liabilities		(28	)		93

Net cash provided by operating activities		945			958

Investing Activities
Plant construction and other property additions		(1,330	)		(680	)
Purchases of nuclear fuel		(88	)		(88	)
Purchases of securities		(345	)		(427	)
Proceeds from sales of securities		303			391
Other		84			29

Net cash used in investing activities		(1,376	)		(775	)

Financing Activities
Issuance (repayment) of short-term debt, net		407			(618	)
Issuance of affiliated current borrowings, net		226			914
Repayment of affiliated notes payable		(412	)		—
Issuance of long-term debt		630			1,200
Repayment of long-term debt		(62	)		(1,313	)
Common dividend payments		(361	)		(338	)
Preferred dividend payments		(12	)		(12	)
Other		(7	)		(13	)

Net cash provided by (used in) financing activities		409			(180	)

Increase (decrease) in cash and cash equivalents		(22	)		3
Cash and cash equivalents at beginning of period		49			18

Cash and cash equivalents at end of period	$	27		$	21

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

PAGE 7

VIRGINIA ELECTRIC AND POWER COMPANY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Nature of Operations

Virginia Electric and Power Company is a regulated public utility that generates, transmits and distributes electricity for sale in Virginia and northeastern North Carolina. As of September 30, 2008, we served approximately 2.4 million retail customer accounts, including governmental agencies, as well as wholesale customers such as rural electric cooperatives and municipalities. We are a member of PJM, a regional transmission organization (RTO), and our electric transmission facilities are integrated into the PJM wholesale electricity markets. All of our common stock is owned by our parent company, Dominion Resources, Inc. (Dominion).

We manage our daily operations through two primary operating segments: Dominion Virginia Power (DVP) and Generation. In addition, we also report a Corporate and Other segment that primarily includes specific items attributable to our operating segments that are not included in profit measures evaluated by executive management in assessing the segments’ performance or allocating resources among the segments. Our assets remain wholly owned by us and our legal subsidiaries.

The terms “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, Virginia Electric and Power Company, one or more of its consolidated subsidiaries or operating segments or the entirety of Virginia Electric and Power Company, including our Virginia and North Carolina operations and our 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.

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 revenue 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 6 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, electric fuel and energy purchases 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 .

PAGE 8

Reapplication of SFAS No. 71

The reapplication of SFAS No. 71 to the Virginia jurisdiction of our 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 nuclear generation stations, in excess of amounts recorded pursuant to SFAS No. 143, Accounting for Asset Retirement Obligations.

Income Taxes

We are currently engaged in settlement negotiations with tax authorities regarding certain income tax 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 $85 million over the next twelve months with no material impact on our results of operations.

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 did not result in a cumulative effect of accounting change in 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.

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). For the Company, this delays the effective date of SFAS No. 157 primarily for 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 6 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

PAGE 9

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 a $6 million increase in both Other current assets and Other current liabilities as of December 31, 2007. The adoption of FSP FIN 39-1 had no impact on our results of operations or cash flows.

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 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. 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.

PAGE 10

Note 5. 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	$	303		$	322		$	725		$	332
Other comprehensive loss:
Net other comprehensive income (loss) associated with effective portion of changes in fair value of derivatives designated as cash flow hedges, net of taxes and amounts reclassified to earnings		(2	)		6			(1	)		(6	)
Other, net of tax		(4	)		(8	)		(12	)		(125	) ⁽¹⁾

Other comprehensive loss		(6	)		(2	)		(13	)		(131	)

Total comprehensive income	$	297		$	320		$	712		$	201

(1)

Amount primarily reflects the impact of the reclassification of unrealized gains on investments held in nuclear decommissioning trusts associated with the Virginia jurisdiction of our generation operations. As a result of the reapplication of SFAS No. 71, Accounting for the Effects of Certain Types of Regulation , those amounts, previously recorded in AOCI, are now recorded in regulatory liabilities.

Note 6. 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 reflects our market assumptions.

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.

PAGE 11

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 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, 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. FTRs are categorized as Level 3 fair value measurements because the only relevant pricing available comes from PJM 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 $59 million. A hypothetical 10% increase in commodity prices would decrease the liability by $6 million, while a hypothetical 10% decrease in commodity prices would increase the liability by $5 million.

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	$	—	$	73	$	30	$	103
Investments		279		793		—		1,072

Total assets	$	279	$	866	$	30	$	1,175
Liabilities:
Derivatives	$	—	$	24	$	89	$	113

PAGE 12

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	$	210
Total realized and unrealized gains or (losses):
Included in earnings		17
Included in other comprehensive income (loss)		—
Included in regulatory and other assets/liabilities		(249	)
Purchases, issuances and settlements		(37	)
Transfers out of Level 3		—

Balance at September 30, 2008	$	(59	)

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	$	(19	)

Nine Months Ended September 30, 2008
Balance at January 1, 2008	$	(4	)
Total realized and unrealized gains or (losses):
Included in earnings		106
Included in other comprehensive income (loss)		—
Included in regulatory and other assets/liabilities		(49	)
Purchases, issuances and settlements		(112	)
Transfers out of Level 3		—

Balance at September 30, 2008	$	(59	)

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	)

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

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)	Electric Fuel and Energy Purchases		Other Operations and Maintenance			Total
Three Months Ended September 30, 2008
Total gains or (losses) included in earnings	$	13	$	4		$	17
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		—		(19	)		(19	)
Nine Months Ended September 30, 2008
Total gains or (losses) included in earnings	$	54	$	52		$	106
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	)		(4	)

PAGE 13

Note 7. Hedge Accounting Activities

We are exposed to the impact of market fluctuations in the price of electricity, natural gas and other energy-related products, as well as foreign currency exchange and interest rate risks of our business operations. We use derivative instruments to manage our exposure to these risks and designate 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.

For the three and nine months ended September 30, 2008 and 2007, gains or losses on hedging instruments excluded from the measurement of effectiveness or determined to be ineffective were not material.

The following table presents selected information, for jurisdictions that are not subject to cost-based regulation, 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)
Electric capacity	$	6		$	3		44 months
Natural gas		(2	)		(2	)	6 months
Other		2			1		363 months

Total	$	6		$	2

The amounts that will be reclassified from AOCI to earnings will generally be offset by the recognition of the hedged transactions (e.g., anticipated purchases) 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 8. Variable Interest Entities

As discussed in Note 14 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.

We purchased shared services from Dominion Resources Services, Inc. (DRS), an affiliated VIE of which we are not the primary beneficiary, of approximately $98 million and $82 million during the three months ended September 30, 2008 and 2007, respectively, and $273 million and $238 million during the nine months ended September 30, 2008 and 2007, respectively.

Note 9. Significant Financing Transactions

Joint Credit Facilities and Short-term Debt

We use short-term debt, primarily commercial paper, to fund working capital requirements and as a bridge to long-term debt financing. The level 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. Short-term financing is supported by a $3.0 billion five-year joint revolving credit facility with Dominion dated February 2006, which is scheduled to terminate in February 2011. This credit facility is being used for working capital, as support for the combined commercial paper programs of Dominion and us and for other general corporate purposes. This credit facility can also be used to support up to $1.5 billion of letters of credit.

PAGE 14

In addition to the credit facility commitments of $3.0 billion disclosed above, we also have a $200 million five-year credit facility that supports certain of our tax-exempt financings. Our aggregate credit facility commitments of $3.2 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 six 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.

At September 30, 2008, total outstanding commercial paper supported by the joint credit facility was $664 million, of which our borrowings were $664 million, and the total amount of letter of credit issuances was $239 million, of which $67 million were issued on our behalf.

At September 30, 2008, capacity available under the joint credit facility was $2.1 billion.

Long-Term Debt

In January 2008, we 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, we 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.

Including the amounts discussed above, we repaid $474 million of long-term debt and notes payable during the nine months ended September 30, 2008.

Note 10. Commitments and Contingencies

Other than the following matters, there have been no significant developments regarding the commitments and contingencies disclosed in Note 21 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2007, or Note 11 and Note 10 to our Consolidated Financial Statements in our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2008 and June 30, 2008, respectively, nor have any significant new matters arisen during the three months ended September 30, 2008.

Guarantees and Surety Bonds

As of September 30, 2008, we had issued $16 million of guarantees primarily to support tax exempt debt issued through various state and local authorities. We had also purchased $106 million of surety bonds for various purposes, including providing workers’ compensation coverage. Under the terms of surety bonds, we are obligated to indemnify the respective surety bond company for any amounts paid.

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 filed a lawsuit 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 the Company in the amount of approximately $112 million for its spent-fuel related costs through June 30, 2006. The DOE has 60 days from the entry of 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.

PAGE 15

Note 11. Credit Risk

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.

We sell electricity and provide distribution and transmission services to customers in Virginia and northeastern North Carolina. Management believes that this geographic concentration risk is mitigated by the diversity of our customer base, which includes residential, commercial and industrial customers, as well as rural electric cooperatives and municipalities. Credit risk associated with trade accounts receivable from energy consumers is limited due to the large number of customers.

Our exposure to potential concentrations of credit risk results primarily from sales to wholesale customers. 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 $102 million. After the application of collateral, our credit exposure is reduced to $83 million. Of this amount, 33% related to a single counterparty; however, 84% of the balance is with investment grade entities, including those internally rated.

Note 12. Related Party Transactions

We engage in related-party transactions primarily with other Dominion subsidiaries (affiliates). Our receivable and payable balances with affiliates are settled based on contractual terms or on a monthly basis, depending on the nature of the underlying transactions. We are included in Dominion’s consolidated federal income tax return and participate in certain Dominion benefit plans. A discussion of significant related party transactions follows.

Transactions with Affiliates

We transact with affiliates for certain quantities of natural gas and other commodities in the ordinary course of business. We also enter into certain commodity derivative contracts with affiliates. We use these contracts, which are principally comprised of commodity swaps and options, to manage commodity price risks associated with purchases of natural gas. We designate the majority of these contracts as cash flow hedges for accounting purposes.

DRS provides accounting, legal and certain administrative and technical services to us. In addition, we provide certain services to affiliates, including charges for facilities and equipment usage.

At September 30, 2008, our Consolidated Balance Sheet includes derivative liabilities with affiliates of $13 million. Derivative liabilities with affiliates at December 31, 2007 were not material. Unrealized gains or losses, representing the effective portion of the changes in fair value of those derivative contracts that have been designated as cash flow hedges, are included in AOCI on our Consolidated Balance Sheets.

Presented below are significant transactions with DRS and other affiliates:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2008		2007		2008		2007
(millions)
Commodity purchases from affiliates	$	255	$	154	$	441	$	281
Services provided by affiliates		98		83		274		239

In September 2008, we purchased a gas-fired turbine from an affiliate for $36 million as part of an expansion project at our Ladysmith power station (Unit 5) to supply electricity during periods of peak demand.

We have borrowed funds from Dominion under short-term borrowing arrangements. At September 30, 2008 and December 31, 2007, our outstanding borrowings, net of repayments, under the Dominion money pool for our nonregulated subsidiaries totaled $253 million and $114 million, respectively. Our short-term demand note borrowings from Dominion were $87 million at September 30, 2008. There were no short-term demand note borrowings at December 31, 2007. Net interest charges incurred by us related to our borrowings from Dominion were $1 million and $12 million for the three months ended September 30, 2008 and 2007, respectively, and $2 million and $16 million for the nine months ended September 30, 2008 and 2007, respectively. As compared to the prior year, this reflects a decrease in average intercompany borrowings.

PAGE 16

Lehman Brothers Inc. (LBI), a Lehman subsidiary, formerly acted as a remarketing agent for $153 million of our variable rate tax-exempt pollution control bonds. Due to several unsuccessful remarketing auctions of our variable rate tax-exempt pollution control bonds following the Lehman bankruptcy, Dominion repurchased $14 million of these bonds in September 2008. We also repurchased $20 million of these bonds. These variable rate tax-exempt financings are supported by a stand-alone $200 million five-year credit facility that terminates in February 2011; however, we chose to repurchase the bonds rather than utilize this facility. In late September, Barclays Capital, Inc. became the successor remarketing agent for these series of bonds, and there have been no unsuccessful remarketing auctions since September 30, 2008.

Note 13. Operating Segments

We are organized primarily on the basis of the products and services we sell. The majority of our revenue is provided through tariff rates. Generally, such revenue is allocated for management reporting based on an unbundled rate methodology among our DVP and Generation segments. We manage our daily operations through the following segments:

DVP includes our electric transmission, distribution and customer service operations.

Generation includes our generation and energy supply operations.

Corporate and Other primarily includes specific items attributable to our operating segments. The contribution to net income by our primary operating segments is determined based on a measure of profit that management believes represents the segments’ core earnings. As a result, certain specific items attributable to those segments are not included in profit measures evaluated by executive management, either in assessing the segment’s performance or in 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 $7 million and $166 million, respectively, of after-tax expenses attributable to our Generation segment. The net expenses in 2007 largely resulted from a $259 million ($158 million after-tax) extraordinary charge in connection with the reapplication of SFAS No. 71 to the Virginia jurisdiction of our generation operations.

The following table presents segment information pertaining to our operations:


	DVP		Generation		Corporate and Other			Consolidated Total
(millions)
Three Months Ended September 30, 2008
Operating revenue	$	374	$	1,797	$	6		$	2,177
Net income (loss)		83		227		(7	)		303

Three Months Ended September 30, 2007
Operating revenue	$	389	$	1,443	$	1		$	1,833
Net income		96		226		—			322

Nine Months Ended September 30, 2008
Operating revenue	$	1,092	$	4,143	$	12		$	5,247
Net income (loss)		226		509		(10	)		725

Nine Months Ended September 30, 2007
Operating revenue	$	1,111	$	3,585	$	4		$	4,700
Extraordinary item, net of tax		—		—		(158	)		(158	)
Net income (loss)		283		218		(169	)		332

PAGE 17

VIRGINIA ELECTRIC AND POWER COMPANY

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 “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, Virginia Electric and Power Company, one or more of its consolidated subsidiaries or operating segments, or the entirety of Virginia Electric and Power Company and its consolidated subsidiaries. All of our common stock is owned by our parent company, Dominion.

Contents of MD&A

Our MD&A consists of the following information:

•

Forward-Looking Statements

•

Accounting Matters

•

Results of Operations

•

Segment Results of Operations

•

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;

•

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

•

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

•

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

•

Fluctuations in interest rates;

•

Changes in federal and state tax laws and regulations;

•

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 regulated electric rates collected by the Company and the timing of such collection as it relates to fuel costs;

•

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;

PAGE 18

•

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

•

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

•

Adverse outcomes in litigation matters.

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 regulated operations, asset retirement obligations, unbilled revenue 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 6 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:


	Third Quarter							Year-To-Date
	2008		2007		$ Change			2008		2007		$ Change
(millions)
Net income	$	303	$	322	$	(19	)	$	725	$	332	$	393

Overview

Year-To-Date 2008 vs. 2007

Net income was higher than the prior year primarily due to the reinstatement of annual fuel rate adjustments for the Virginia jurisdiction of our generation operations effective July 1, 2007, with deferred fuel accounting for over- or under-recoveries of fuel costs, and the absence of an extraordinary charge incurred in 2007 in connection with the reapplication of SFAS No. 71 to the Virginia jurisdiction of our generation operations.

PAGE 19

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	$	2,177	$	1,833	$	344		$	5,247	$	4,700		$	547
Operating Expenses
Electric fuel and energy purchases		982		609		373			2,062		1,945			117
Purchased electric capacity		102		107		(5	)		305		330			(25	)
Other energy-related commodity purchases		4		8		(4	)		11		24			(13	)
Other operations and maintenance		328		338		(10	)		907		896			11
Depreciation and amortization		154		146		8			453		420			33
Other taxes		46		43		3			140		131			9
Other income		6		18		(12	)		24		58			(34	)
Interest and related charges		82		85		(3	)		239		229			10
Income tax expense		182		193		(11	)		429		293			136
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 19% to $2.2 billion, reflecting the combined effects of:

•

A $349 million increase in fuel revenue primarily 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 ; and

•

A $47 million increase associated with sales to wholesale customers; partially offset by

•

A $52 million decrease in sales to retail customers due to a 6% decrease in cooling degree days.

Operating Expenses and Other Items

Electric fuel and energy purchases expense increased 61% to $982 million, primarily reflecting a comparatively higher fuel rate in certain customer jurisdictions, as discussed in Operating Revenue .

Income tax expense decreased 6% to $182 million, reflecting lower pre-tax income in 2008.

Year-To-Date 2008 vs. 2007

Operating Revenue increased 12% to $5.2 billion, reflecting the combined effects of:

•

A $506 million increase in fuel revenue primarily due to the impact of a comparatively higher fuel rate in certain customer jurisdictions;

•

An $80 million increase associated with sales to wholesale customers; and

•

A $45 million increase in new retail customer connections primarily in our residential and commercial customer classes; partially offset by

•

A $100 million decrease in sales to retail customers due to a 9% decrease in heating and cooling degree days.

Operating Expenses and Other Items

Electric fuel and energy purchases expense increased 6% to $2.1 billion, 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 cost was partially offset by a $361 million deferral of fuel expenses that were in excess of the current period fuel rate recovery.

Purchased electric capacity expense decreased 8% to $305 million, primarily due to reductions of capacity expense under certain long-term power purchase contracts.

PAGE 20

Other operations and maintenance expense increased 1% to $907 million, primarily reflecting:

•

A $60 million increase resulting from higher salaries, wages and other benefits expenses and other general and administrative costs; and

•

A $19 million increase related to storm damage and service restoration costs associated with our distribution operations; partially offset by

•

A $29 million increase in gains from the sale of emissions allowances held for consumption;

•

A $19 million decrease in outage costs resulting from a reduction in scheduled outages at certain of our electric generating facilities;

•

A $12 million decrease in administrative charges related to PJM; and

•

A $10 million decrease primarily reflecting an increase in net benefit from higher FTR settlements.

Depreciation and amortization expense increased 8% to $453 million, primarily due to an increase in depreciation rates for our generation assets ($27 million), and property additions ($17 million), partially offset by an $11 million decrease in amortization expense primarily associated with lower consumption of emissions allowances.

Other income decreased 59% to $24 million, resulting primarily from the deferral in 2008 of nuclear decommissioning trust earnings due to the reapplication of SFAS No. 71, in April 2007, to the Virginia jurisdiction of our generation operations ($17 million), and a decrease in interest income ($6 million).

Income tax expense increased 46% to $429 million, reflecting higher pre-tax income in 2008.

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 generation operations.

Segment Results of Operations

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:


	Third Quarter								Year-To-Date
	2008			2007		$ Change			2008			2007			$ Change
(millions)
DVP	$	83		$	96	$	(13	)	$	226		$	283		$	(57	)
Generation		227			226		1			509			218			291

Primary operating segments		310			322		(12	)		735			501			234
Corporate and Other		(7	)		—		(7	)		(10	)		(169	)		159

Consolidated	$	303		$	322	$	(19	)	$	725		$	332		$	393

DVP

Presented below are operating statistics related to our DVP operations:


	Third Quarter				Year-To-Date
	2008	2007	% Change		2008	2007	% Change
Electricity delivered (million mwhrs) ⁽¹⁾	23.4	23.7	(1	)%	64.2	64.7	(1	)%
Degree days:
Cooling ⁽²⁾	1,083	1,150	(6	)	1,587	1,643	(3	)
Heating ⁽³⁾	2	5	(60	)	2,074	2,365	(12	)
Average electric distribution customer accounts ⁽⁴⁾	2,387	2,364	1		2,383	2,357	1

mwhrs = megawatt hours

(1)	Includes electricity delivered through the retail choice program for our Virginia jurisdictional electric customers.

(2)	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.

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

(4)	Period average, in thousands.

PAGE 21

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)
(millions)
Regulated electric sales:
Weather	$	(7	)	$	(15	)
Customer growth		2			7
Other		(3	)		(1	)
Storm damage and service restoration – distribution operations		—			(11	)
Interest expense ⁽¹⁾		(1	)		(9	)
Operations and maintenance		4			(17	)
Depreciation expense		(2	)		(5	)
Other		(6	)		(6	)

Change in net income contribution	$	(13	)	$	(57	)

(1)	Primarily due to additional borrowings.

Generation

Presented below are operating statistics related to our Generation operations:


	Third Quarter				Year-To-Date
	2008	2007	% Change		2008	2007	% Change
Electricity supplied (million mwhrs)	23.4	23.7	(1	)%	64.2	64.7	(1	)%
Degree days:
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 Generation’s net income contribution:


	Third Quarter 2008 vs. 2007 Increase (Decrease)			Year-To-Date 2008 vs. 2007 Increase (Decrease)
(millions)
Regulated electric sales:
Weather	$	(16	)	$	(29	)
Customer growth		5			13
Other		4			34
Outage costs		2			12
Virginia fuel expenses ⁽¹⁾		—			243
Sale of emissions allowances		—			18
Depreciation expense		(6	)		(23	)
Other		12			23

Change in net income contribution	$	1		$	291

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

PAGE 22

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)
Specific items attributable to operating segments	$	(7	)	$	(2	)	$	(5	)	$	(7	)	$	(166	)	$	159
Other corporate operations		—			2			(2	)		(3	)		(3	)		—

Total net expense	$	(7	)	$	—		$	(7	)	$	(10	)	$	(169	)	$	159

Specific Items Attributable to Operating Segments

Corporate and Other includes specific items attributable to our primary operating segments that are not included in profit measures evaluated by executive management in assessing the segments’ performance or allocating resources between the segments. See Note 13 to our Consolidated Financial Statements for a discussion of these items.

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 from Dominion.

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 9 to our Consolidated Financial Statements. We expect our operations to provide sufficient cash flow to fund maintenance capital expenditures and maintain or grow our dividend to Dominion; 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.

At September 30, 2008, we had $2.1 billion of unused capacity under our joint credit facility.

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,	$	49		$	18
Cash flows provided by (used in)
Operating activities		945			958
Investing activities		(1,376	)		(775	)
Financing activities		409			(180	)

Net increase (decrease) in cash and cash equivalents		(22	)		3

Cash and cash equivalents at September 30,	$	27		$	21

Operating Cash Flows

For the nine months ended September 30, 2008, net cash provided by operating activities decreased by $13 million as compared to the nine months ended September 30, 2007. The decrease is primarily due to the negative impact of milder weather on retail sales and unfavorable changes in working capital, partially offset by lower income tax payments. We believe that our operations provide a stable source of cash flow to contribute to planned levels of capital expenditures and provide dividends to Dominion. However, 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, 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.

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Credit Risk

Our exposure to potential concentrations of credit risk results primarily from sales to wholesale customers. 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⁾	$	50	$	19	$	31
Non-investment grade ⁽²⁾		14		—		14
No external ratings:
Internally rated—investment grade ⁽³⁾		38		—		38
Internally rated—non-investment grade		—		—		—

Total	$	102	$	19	$	83

(1)	Designations as investment grade are based on minimum credit ratings assigned by Moody’s and Standard & Poor’s. The five largest counterparty exposures, combined, for this category represented approximately 33% of the total net credit exposure.

(2)	The only counterparty exposure for this category represented 16% of the total net credit exposure.

(3)	The only two counterparty exposures, combined, for this category represented 46% of the total net credit exposure.

Investing Cash Flows

For the nine months ended September 30, 2008, net cash used in investing activities increased by $601 million as compared to 2007, primarily reflecting an increase in capital expenditures for construction projects related to our Generation segment.

Financing Cash Flows and Liquidity

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

For the nine months ended September 30, 2008, net cash provided by financing activities was $409 million as compared to net cash used in financing activities of $180 million in 2007. This change is due to net issuances of short-term and long-term debt in 2008 versus net repayments in 2007, partially offset by the repayment of affiliated notes payable and lower issuance of affiliated current borrowings.

See Note 9 to our Consolidated Financial Statements for further information regarding our credit facilities, liquidity and significant financing transactions. Also, see Note 12 to our Consolidated Financial Statements for further information regarding our borrowings from Dominion.

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 Credit Ratings and Debt Covenants 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 and the impact of credit ratings on the accessibility and costs of using these markets, as well as various covenants present in the enabling agreements underlying our 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.

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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.

Generation Expansion

Based on available generation capacity and current estimates of growth in customer demand in our utility service 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 Nuclear Regulatory Commission (NRC) issued an Early Site Permit (ESP) to our affiliate, Dominion Nuclear North Anna, LLC (DNNA), for a site located at North Anna. Also in November 2007, we 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, Dominion filed applications with the Virginia Commission and the North Carolina Commission, seeking approval to merge DNNA into the Company. The Virginia application was approved in July 2008, and the North Carolina application was approved in September 2008. Also in April 2008, Dominion 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, we filed an application to revise our fuel factor with the North Carolina 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-

PAGE 25

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 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 Administrative 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.

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Clean Air Act Compliance

In February 2008, the U.S. Court of Appeals for the District of Columbia (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.

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.

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 eight 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.

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VIRGINIA ELECTRIC AND POWER COMPANY

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 due to our exposure to market shifts for prices paid for electricity, natural gas, and other commodities. 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 hold commodity-based financial derivative instruments for non-trading purposes associated with purchases of electricity, natural gas and other energy-related products. 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 commodity prices would have resulted in a decrease of approximately $35 million and $27 million in the fair value of our non-trading commodity-based financial derivatives 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. For example, our expenses for purchased power, when combined with the settlement of commodity derivative instruments used for hedging purposes, will generally result in a range of prices for those purchases contemplated by the risk management strategy.

Interest Rate Risk

Our interest rate risk exposure at September 30, 2008 has not changed materially as compared with December 31, 2007.

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.

Following the reapplication of SFAS No. 71 to the Virginia jurisdiction of our 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 $27 million for the nine months ended September 30, 2008, and net realized gains (including investment income) of $24 million and $28 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 $129 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 $41 million. For the year ended December 31, 2007, we recorded, in AOCI and regulatory liabilities, an increase in unrealized gains on these investments of $13 million.

PAGE 28

Dominion sponsors 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 determination of the amount of cash that we will provide to Dominion, representing our share of employee benefit plan contributions.

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 29

VIRGINIA ELECTRIC AND POWER COMPANY

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.

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.

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ITEM 6. EXHIBITS

(a) Exhibits:


3.1		Restated Articles of Incorporation, as in effect on October 28, 2003 (Exhibit 3.1, Form 10-Q for the quarter ended September 30, 2003, File No. 1-2255, incorporated by reference).

3.2		Bylaws, as amended, as in effect on April 28, 2000 (Exhibit 3, Form 10-Q for the quarter ended March 31, 2000, File No. 1-2255, incorporated by reference).

4.1		Virginia Electric and Power Company 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		New Executive Supplemental Retirement Plan, as amended and restated, effective January 1, 2009 (filed herewith).

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

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

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

12.2		Ratio of earnings to fixed charges and preferred dividends (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 Principal Financial Officer 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).

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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.


		VIRGINIA ELECTRIC AND POWER COMPANY
		Registrant

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

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Exhibit 10.1

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.

- 2 -

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

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Service (actually or deemed under a Benefits Agreement), or if a Regular Participant or Life Participant 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

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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

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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.

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

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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 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 10.2

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

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 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

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 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 10.3

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:	/s/ Carter M. Reid
	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 12.1

Virginia Electric and Power Company

Computation of Ratio of Earnings to Fixed Charges

(millions of dollars)


	Nine Months Ended September 30, 2008		Twelve Months Ended September 30, 2008		Years Ended December 31,
	Nine Months Ended September 30, 2008		Twelve Months Ended September 30, 2008		2007		2006		2005		2004		2003
Earnings, as defined:
Earnings from continuing operations before income taxes and minority interests in consolidated subsidiaries	$	1,154	$	1,348	$	977	$	762	$	754	$	929	$	875
Fixed charges included in the determination of net income		264		347		328		313		333		258		309

Total earnings, as defined	$	1,418	$	1,695	$	1,305	$	1,075	$	1,087	$	1,187	$	1,184

Fixed charges, as defined:
Interest charges	$	254	$	333	$	320	$	311	$	329	$	256	$	318
Rental interest factor		10		14		12		11		10		9		10

Total fixed charges, as defined	$	264	$	347	$	332	$	322	$	339	$	265	$	328

Ratio of Earnings to Fixed Charges		5.37		4.88		3.93		3.34		3.21		4.48		3.61

Exhibit 12.2

Virginia Electric and Power Company

Computation of Ratio of Earnings to Fixed Charges and Preferred Dividends

(millions of dollars)


	Nine Months Ended September 30, 2008		Twelve Months Ended September 30, 2008		Years Ended December 31,
	Nine Months Ended September 30, 2008		Twelve Months Ended September 30, 2008		2007		2006		2005		2004		2003
Earnings, as defined:
Earnings from continuing operations before income taxes and minority interests in consolidated subsidiaries	$	1,154	$	1,348	$	977	$	762	$	754	$	929	$	875
Fixed charges included in the determination of net income		264		347		328		313		333		258		309

Total earnings, as defined	$	1,418	$	1,695	$	1,305	$	1,075	$	1,087	$	1,187	$	1,184

Fixed charges, as defined:
Interest charges	$	254	$	333	$	320	$	311	$	329	$	256	$	318
Preference security dividend requirements of consolidated subsidiaries		20		26		25		25		25		25		25
Rental interest factor		10		14		12		11		10		9		10

Total fixed charges, as defined	$	284	$	373	$	357	$	347	$	364	$	290	$	353

Ratio of Earnings to Fixed Charges and Preferred Dividends		4.99		4.54		3.66		3.10		2.99		4.09		3.35

Exhibit 31.1

I, Thomas F. Farrell, II, certify that:

1.	I have reviewed this report on Form 10-Q of Virginia Electric and Power Company;

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;

4.	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)) 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) 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

(c) 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
				Chief Executive Officer

Exhibit 31.2

I, Thomas N. Chewning, certify that:

1.	I have reviewed this report on Form 10-Q of Virginia Electric and Power Company;

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;

4.	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)) for the registrant and have:

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 Virginia Electric and Power Company (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

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

VIRGINIA ELECTRIC AND POWER COMPANY

CONDENSED CONSOLIDATED EARNINGS STATEMENT

(Unaudited)


(millions)	Twelve Months Ended September 30, 2008
Operating Revenue	$	6,728
Operating Expenses		5,088

Income from operations		1,640
Other income		22
Interest and related charges		315

Income before income tax expense		1,347
Income tax expense		506

Net Income		841
Preferred dividends		17

Balance available for common stock	$	824

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