Third Quarter 2015 Earnings Call November 2, 2015
Important Note to Investors This presentation contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding Dominion and Dominion Midstream. The statements relate to, among other things, expectations, estimates and projections concerning the business and operations of Dominion and Dominion Midstream. We have used the words "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", “outlook”, "predict", "project", “should”, “strategy”, “target”, "will“, “potential” and similar terms and phrases to identify forward -looking statements in this presentation. As outlined in our SEC filings, factors that could cause actual results to differ include, but are not limited to: unusual weather conditions and their effect on energy sales to customers and energy commodity prices; extreme weather events and other natural disasters; federal, state and local legislative and regulatory developments; changes to federal, state and local environmental laws and regulations, including proposed carbon regulations; cost of environmental compliance; changes in enforcement practices of regulators relating to environmental standards and litigation exposure for remedial activities; capital market conditions, including the availability of credit and the ability to obtain financing on reasonable terms; fluctuations in interest rates; changes in rating agency requirements or credit ratings and their effect on availability and cost of capital; impacts of acquisitions, divestitures, transfers of assets by Dominion to joint ventures or to Dominion Midstream, and retirements of assets based on asset portfolio reviews; receipt of approvals for, and timing of, closing dates for acquisitions; the execution of Dominion Mids tream’s growth strategy; changes in demand for Dominion’s services; additional competition in Dominion’s industries; changes to regulated rates collected by Domi nion; changes in operating, maintenance and construction costs; timing and receipt of regulatory approvals necessary for planned construction or expansion projects and compliance with conditions associated with such regulatory approvals; the inability to complete planned construction projects within time frames initially anticipated; and the ability of Dominion Midstream to negotiate and consummate acquisitions from Dominion and third-parties, and the impacts of such acquisitions. Other risk factors are detailed from time to time in Dominion’s and Dominion Midstream’s quarterly reports on Form 10 -Q or most recent annual report on Form 10-K filed with the Securities and Exchange Commission. The information in this presentation was prepared as of November 2, 2015. Dominion and Dominion Midstream undertake no obligation to update any forward-looking information statement to reflect developments after the statement is made. Projections or forecasts shown in this document are based on the assumptions listed in this document and are subject to change at any time. In addition, certain information presented in this document incorporates planned capital expenditures reviewed and endorsed by Dominion’s Board of Directors in late 2014. Dominion undertakes no obligation to update such planned expendit ures to reflect plan or project-specific developments, including regulatory developments, or other updates until the following annual update for the plans. Actual capital expenditures may be subject to regulatory and/or Board of Directors’ approval and may vary from these estimates. This presentation shall not constitute an offer to sell or the solicitation of an offer to buy securities. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with the requirements of the Securities Act of 1933, as amended. This presentation has been prepared primarily for security analysts and investors in the hope that it will serve as a convenient and useful reference document. The format of this document may change in the future as we continue to try to meet the needs of security analysts and investors. This document is not intended for use in connection with any sale, offer to sell, or solicitation of any offer to buy securities. This presentation includes various estimates of EBITDA which is a non-GAAP financial measure. Please see the third quarter 2015 Dominion Midstream Press Release for a reconciliation to GAAP. Please continue to regularly check Dominion’s website at www.dom.com/investors and Dominion Midstream’s website at www.dommidstream.com/investors. Third Quarter 2015 2
Operating Earnings Summary Third Quarter 2015 Versus Guidance $ 1.10 $1.03 3 rd Quarter Drivers $0.95 Higher merchant margins Lower operating expenses Delay in strategic undergrounding Guidance Actual Range Operating EPS* *See page 30 of the third quarter 2015 Earnings Release Kit for a reconciliation to GAAP. Please refer to page 2 for risks and uncertainties related to projections and forward looking statements. Third Quarter 2015 3
Operating EBITDA Summary Third Quarter 2015 Versus Guidance (in $millions) Operating Guidance Actual Drivers Segment EBITDA EBITDA Dominion Virginia Delay in Strategic $390 - $410 $388 Power Undergrounding Dominion Higher merchant margins $755 - $820 $796 Generation Lower operating expenses Higher distribution margins Dominion Energy $310 - $335 $332 Lower operating expenses *See page 34 of the third quarter 2015 Earnings Release Kit for a reconciliation to GAAP. Please refer to page 2 for risks and uncertainties related to projections and forward looking statements. Third Quarter 2015 4
Dominion Midstream Partners (DM) Third Quarter 2015 Earnings and Distribution – Financial Results in line with Management expectations • Net Income $18.0 million • Adjusted EBITDA $20.3 million* • Distributable Cash Flow $19.8 million* – Distribution Results • Board declared 3Q 2015 cash distribution of $0.20 per unit 7% increase above second-quarter – Key DM Updates • Acquired 25.93% interest in Iroquois Pipeline • No asset drops or equity needed in 2016 to support 22% growth • D initiated $50mm DM unit market purchase program *See the third quarter 2015 Dominion Midstream Press Release for a reconciliation to GAAP. Please refer to page 2 for risks and uncertainties related to projections and forward looking statements. Third Quarter 2015 5
Cash Flow and Financing Activities Third Quarter 2015 – Cash Flow & Liquidity • $3.4 billion in funds from operations for the first 9 months of the year • $2.6 billion in commercial paper and letters of credit outstanding • $4.5 billion of credit facilities • $2.0 billion of liquidity – Equity Financing • No additional public equity issuances needed this decade to fund growth projects – Debt Financing • DRI issued $650 million of ten-year notes in September • Expect Dominion Gas debt issuance in fourth quarter Please refer to page 2 for risks and uncertainties related to projections and forward looking statements. Third Quarter 2015 6
Operating Earnings Guidance Fourth Quarter 2015 $0.95 4 th Quarter Drivers $0.85 $0.84 Growth projects Higher merchant margins Lower capacity payments Lower farmout earnings Share dilution 4Q 2014 4Q 2015 EPS* Guidance* *See page 36 and 37 of the third quarter 2015 Earnings Release Kit for a reconciliation to GAAP. Please refer to page 2 for risks and uncertainties related to projections and forward looking statements. Third Quarter 2015 7
Hedged Power Update Millstone Hedge Position 99% Hedged 83% Hedged $65.06 $56.98 $52.43 $51.93 $46.59 $45.52 2014 2015 2016 NEPOOL Baseload Avg Hedge Position NEPOOL ATC Power Price 2015-2016 forward curves as of October 21, 2015. Please refer to page 2 for risks and uncertainties related to projections and forward looking statements. Third Quarter 2015 8
Dominion Generation Growth Projects Update – Brunswick County – Greensville County • ~90% complete – On Time, On Budget • Construction of a ~1,588 MW natural gas fired plant • Expect in service mid-2016 • Estimated Costs of $1.3 billion • Filed CPCN/Rider July 2015 • Hearing scheduled for Jan 2016 • Expect in service Dec 2018 Subject to SCC approval Brunswick Please refer to page 2 for risks and uncertainties related to projections and forward looking statements. Third Quarter 2015 9
Contracted Solar Strategy Recycle Capital through Joint Venture – Joint Venture Announced in September • Agreement to sell 33% ownership in 425 MW from ‘13, ‘14, & ‘15 projects • ~$300M consideration from SunEdison – Benefits: Immediately accretive to Dominion ITCs preserved Maintain flexibility to monetize remaining 67% stake Reduces financial and operational risk exposure Proceeds will be used to reduce DRI debt Please refer to page 2 for risks and uncertainties related to projections and forward looking statements. Third Quarter 2015 10
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