Fitch Rates Dominion Resources' Junior Subordinated Notes 'BBB-'

  Fitch Rates Dominion Resources' Junior Subordinated Notes 'BBB-'

Business Wire

NEW YORK -- June 5, 2013

Fitch Ratings has assigned a 'BBB-' rating to Dominion Resources, Inc.'s (DRI)
new $500 million issuance of 1.07%, Series A Junior Subordinated Notes (Series
A Notes), which are a component of DRI's equity units. The equity units
consist of the Series A Notes due April 1, 2021 and a forward purchase
contract obligating the holder to purchase, no later than April 1, 2016, DRI
common stock.

The Series A Notes will be pledged as security for the holders obligation to
purchase the DRI common stock by April 1, 2016. The securities will be
remarketed in 2016 as junior subordinated obligations of DRI and will remain
outstanding until maturity in 2021. The Series A Notes will initially pay an
annual fixed 1.07% rate of interest, payable through April 1, 2016. Holders of
the equity units will also receive annual contract payments of 5.055% on the
forward purchase contract.

Fitch has also assigned a 'BBB-' rating to DRI's new $500 million issuance of
1.18%, Series B Junior Subordinated Notes (Series B Notes) which are a
component of DRI's equity units. The equity units consist of the Series B
Notes due July 1, 2019 and a forward purchase contract obligating the holder
to purchase, no later than July 1, 2016, DRI common stock.

The Series B Notes will be pledged as security for the holders obligation to
purchase the DRI common stock by July 1, 2016. The securities will be
remarketed in 2016 as junior subordinated obligations of DRI and will remain
outstanding until maturity in 2019. The Series B Notes will initially pay an
annual fixed 1.18% rate of interest, payable through July 1, 2016. Holders of
the equity units will also receive annual contract payments of 4.82% on the
forward purchase contract.

Prior to respective remarketing dates in 2016, DRI will have the right to
defer interest on the securities one or more times for one or more consecutive
interest periods without giving rise to an event of default.

Under Fitch's criteria, the junior subordinated notes will receive no equity
credit.

Net proceeds of the equity units will be used to fund capital expenditures,
including the Cove Point liquefaction project, and repay short-term debt
outstanding.

The Rating Outlook for DRI is Stable.

KEY RATING DRIVERS

--Higher level of parent debt

--Aggressive capital Investment plan

--Balanced utility regulation

--Sufficient liquidity

--Manageable debt re-financings

Credit Profile: DRI's ratings and Stable Outlook are supported by cash flows
from a large and diverse subsidiary asset base, including an integrated
electric utility, two gas distribution companies, pipeline transmission and
distribution operations, natural gas gathering and processing assets, and a
merchant generation fleet. DRI's low-risk regulated operations deliver
predictable cash flow metrics, due in large part to balanced regulatory
treatment.

Parent level debt is high, at over $11 billion as of March 31, 2013. Total
consolidated debt remains above $19 billion. DRI finances all operations,
excluding Virginia Electric & Power Co. (VEPCo, Issuer-Defalt Rating 'BBB+'
with a Stable Outlook by Ficth), at the parent level. Fitch expects debt
levels to remain high due largely to the company's elevated capital spending.
Fitch also notes earnings pressure from unregulated operations, including
lower merchant generation margins. In 2012 DRI announced its plan to divest
three fossil-fueled merchant assets and close the Kewaunee nuclear plant,
effectively reducing commodity price sensitivity and business risk.

Capex: Consolidated capital spending will be elevated for several years as DRI
executes a large capital investment plan focused on investments in new utility
generation and natural gas gathering and processing infrastructure assets. The
utility growth plan is supported by positive demographic trends within the
utility service territory. Fitch considers successful execution of the plan as
material to maintaining rating stability, and the rating assessment assumes a
balanced combination of debt and equity issuance to fund internal cash flow
deficits during this capital-intensive period, as well as continued regulatory
support.

Utility Regulation: The inclusion in VEPCo's rate plan of mechanisms for the
timely recovery of fuel and non-fuel costs mitigates regulatory lag, and the
inclusion of riders and incentive returns on equity on approved projects (up
to and including Brunswick County) is viewed favorably by Fitch.

Sufficient Liquidity: The consolidated liquidity position at March 31, 2013
was $1.5 billion, including $35 million in cash on hand. The company had $2
billion in outstanding commercial paper as of March 31, 2013. Total bank
credit capacity is $3.5 billion, with facilities expiring in September 2017.

Manageable Debt Re-financings: Debt maturities include $1,425 million due in
2013; $1,064 million due in 2014; $960.6 million due in 2015; and, $1,370
million due in 2016. Fitch considers the re-financing risk as low and views
access to the capital markets as unrestricted.

RATING SENSITIVITIES

--Execution and funding of a large capital investment plan limits positive
rating action at this time

--A material change in DRI's business profile toward investments in higher
risk, unregulated commodity sensitive operations, in addition to a material
increase in parent level debt due to the financing of such higher risk
investments, could adversely affect the company's credit profile

--Less supportive regulatory treatment that could limit the ability to earn an
adequate and timely return on investments could adversely affect the utility's
credit profile

Additional information is available at 'www.fitchratings.com'.

Applicable Criteria and Related Research:

--'Corporate Rating Methodology' (Aug. 8, 2012);

--'Rating North American Utilities, Gas and Water Companies' (May 16, 2011);

--'Recovery Ratings and Notching Criteria for Utilities' (Nov. 13, 2012);

--Treatment and Notching of Hybrids in Nonfinancial Corporate and REIT Credit
Analysis'

(Dec. 13, 2012);

--'Parent and Subsidiary Rating Linkage' (Aug 8, 2012).

Applicable Criteria and Related Research:

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=684460

Rating North American Utilities, Power, Gas, and Water Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=625129

Recovery Ratings and Notching Criteria for Utilities

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=693750

Treatment and Notching of Hybrids in Nonfinancial Corporate and REIT Credit
Analysis

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=696670

Parent and Subsidiary Rating Linkage

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=685552

Additional Disclosure

Solicitation Status

http://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=792936

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Contact:

Fitch Ratings
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Lindsay Minneman
Director
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or
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