Dominion (NYSE: D) announced unaudited reported earnings determined in accordance with Generally Accepted Accounting Principles (GAAP) for the three months ended March 31, 2012, of $494 million ($0.86 per share), compared with reported earnings of $479 million ($0.82 per share) for the same period in 2011.
Operating earnings for the three months ended March 31, 2012, amounted to $487 million ($0.85 per share), compared to operating earnings of $541 million ($0.93 per share) for the same period in 2011. Operating earnings are defined as reported (GAAP) earnings adjusted for certain items.
Dominion uses operating earnings as the primary performance measurement of its earnings guidance and results for public communications with analysts and investors. Dominion also uses operating earnings internally for budgeting, for reporting to the board of directors, for the company’s incentive compensation plans and for its targeted dividend payouts and other purposes. Dominion management believes operating earnings provide a more meaningful representation of the company’s fundamental earnings power.
Business segment results and detailed descriptions of items included in 2012 and 2011 reported earnings but excluded from operating earnings can be found on Schedules 1, 2 and 3 of this release.
Thomas F. Farrell II, chairman, president and chief executive officer, said: “Our core businesses continued to deliver strong operating earnings results this quarter despite the effects of the warmest first quarter weather in more than 100 years in our electric service territory. We maintain our focus on meeting the growing infrastructure needs of customers in the energy markets we serve and are very pleased with the progress being made on projects in our infrastructure growth plan.
“In Dominion Generation, the 585-megawatt Virginia City Hybrid Energy is more than 98 percent complete and on schedule for operation in the middle of this year. Construction is proceeding on the 1,329-megawatt, gas-fired power station in Warren County, Va., following approval of the Virginia State Corporation Commission (SCC) and is scheduled for commercial operation in late 2014. Moreover, we announced that Brunswick County, Va., has been selected as the site for our next gas-fired generating facility, another 3-on-1 combined cycle plant. We expect to file regulatory applications later this year to build the station, which is expected to produce more than 1,300 megawatts of electricity.
“At Dominion Energy, construction of our Appalachian Gateway Project is on track to be in service by September of this year. It is designed to transport natural gas produced in West Virginia and Pennsylvania. Two other major projects serving the Marcellus and Utica shale regions also are expected to be in service by the end of the year. They are the Northeast Expansion Project, designed to provide 200,000 dekatherms per day of firm transportation services, and the first phase of the Natrium natural gas processing and fractionation plant, with an expected capacity to process 200 million cubic feet of natural gas per day and fractionate 36,000 barrels of natural gas liquids per day.
“We are pleased to announce that we are moving forward with our Cove Point Liquefaction project. At the end of March, we signed binding precedent agreements with two companies, one of which is Sumitomo Corporation, a major Japanese corporation with significant global energy operations. Between the two shippers, the planned project capacity is fully subscribed. We are continuing to negotiate binding terminal service agreements with the parties and expect to complete them later this summer. Pending execution of these agreements and receipt of necessary approvals, Dominion would provide liquefaction, storage and loading services, but would not own or directly export the LNG.
“The modernization project for Dominion Virginia Power’s Mount Storm-to-Doubs transmission line, a major 500-kilovolt line serving Virginia, West Virginia and Maryland, is well under way. Completion of that project is now expected by the end of 2014.”
First-quarter 2012 operating earnings compared to 2011
The decrease in first-quarter 2012 operating earnings per share as compared to first-quarter 2011 operating earnings per share is primarily attributable to warmer-than-normal weather in the regulated electric service territory and lower merchant generation margins. Offsetting these negatives were lower operations and maintenance expenses, higher contributions from unregulated retail energy marketing operations and a lower effective tax rate.
Complete details of first-quarter 2012 operating earnings as compared to 2011 can be found on Schedule 4 of this release.
Second-quarter and full-year 2012 operating earnings guidance
Dominion expects second-quarter 2012 operating earnings in the range of 55 cents per share to 65 cents per share as compared to second-quarter 2011 operating earnings of 59 cents per share. Positive factors for the second-quarter of 2012 compared to the same period of the prior year include anticipated higher rate adjustment clause earnings and growth in our electric service territory, as well as cost-control initiatives. Negative factors for the quarter include lower merchant generation margins. GAAP earnings for the second quarter of 2011 were 58 cents per share. Operating earnings guidance for the full year remains at $3.10 to $3.35 per share.