Good morning Ladies and gentlemen and welcome to Dominion’s Second Quarter Earnings Call. We now have Mr. Tom Chewning, Dominion’s Chief Financial Officer in conference. Please be aware that each of your lines is in a listen-only mode. At the conclusion of Mr. Chewning’s prepared remarks we will open the floor for questions. At that time, instructions will be given as the procedure to follow should you want to ask a question. Before introducing Tom Chewning, I will turn the call over to Joe O'Hare, Director of Investor Relations.

Good morning and welcome to Dominion’s second quarter earnings conference call. Before we begin, I would like to highlight our enhanced Investor Relations website that we launched several weeks ago. Key features of the new website include the reorganization and relabeling of navigation, to provide more direct access to information, SEC filings in multiple formats and importantly a new email alert function that will notify you of when we add key publications to our website. During this call, we will refer to certain schedules included in this morning's earnings release or to pages from our second quarter 2007 earnings release kit. If you have not done so I encourage you to visit our website, register for email alerts and give our second quarter 2007 earnings documents. Our website address is www.dom.com/investors. Now for the usual cautionary language. The earnings release and other matters that will be discussed on the call today may contain forward-looking statements and estimates that are subject to various risks and uncertainties. Please refer to our SEC filings including our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q for a discussion of factors that may cause results to differ from management's projections, forecasts, estimates, and expectations. Also on this call, we will discuss some measures about our company’s performance that differs from those recognized by GAAP. You can find the reconciliation of these non-GAAP measures to GAAP on our investor relations website under GAAP reconciliation. I will now turn the call over to our CFO, Tom Chewning. Tom?

Thank you Joe and good morning. Joining me this morning is our Chairman, President and CEO, Tom Farrell and other members of our management team. This morning, I will review how our second quarter earnings results continue to reflect the strength of our ongoing businesses, explain significant items that are excluded from operating earnings. I will discuss briefly our cash flow liquidity and hedge positions and update you on a status of our actions already taken to reduce debt and repurchase common stock plus other measures that we expect to undertake to complete our recapitalization five year's in. Tom Farrell will then comment on operational achievements in our business units. Update you on legislative and regulatory matters, including our application of the State Corporation Commission to construct electric generation in Southwest Virginia and the approval of our application to adjust the Virginia jurisdictional fuel factor, an upcoming base rate case for Dominion East Ohio and our outlook regarding the pending sales of our people then hope they will be seized. Dominion produced operating earnings of $0.89 per share in the second quarter of 2007 compared to $0.80 per share in last year's second quarter. Our average realized prices at E&P were a significance benefit quarter-over-quarter performance. However, a closer look at our non-E&P businesses reveals positive results as well. Operating earnings per share from our delivery, energy and generation businesses grew to only 10% quarter-over-quarter primarily as a result of customer growth, same from utility and strong contributions from our American generation and producer services businesses. Normalizing each period for the effects of weather and un-recovered Virginia fuel expense, operating earnings per share at these remaining core businesses grew nearly 14% quarter-over-quarter, affirming the fundamental positive outlook for Dominion’s future performance. On the GAAP basis, we reported a loss of…

Good morning. I would like to begin with a few words about Dominion’s operations and our ongoing expansion plans. First the Dominion Generation, our new utility continued with excellent operations with a capacity factor excluding planned refueling of 99.4%. Our Braden Point coal units achieved their best quarterly performance since we purchased the facility and we are banking on its history with an equivalent availability factor in excess of 95%. OSHA has granted voluntary protection programs as far as that to our Kewaunee plant and renewed the status for Millstone, making Dominion's nuclear fleet the only one in the industry to be 100% star certified. Star status represents the highest level of certification in the program, which promotes work-site based safety and health. Yesterday, Dominion and Shell WindEnergy announced a second phase to our wind energy project currently under construction in West Virginia. The second phase will consist of 50 turbines producing 100 megawatts for enough electricity for 25,000 homes. It is expected to go into operation in 2008, subject to receiving necessary permits. This adds to phase one, consisting of 82 turbines producing 164 megawatts which is presently under construction and will be completed next spring. Following up on announcements during our last earnings call, we have confirmed our Fairless Works upgrade at 120 megawatts with an online date of summer 2008 and our Braden unit three upgrade at 15 megawatts with an online date of summer 2012. The Millstone unit three upgrade will be 75 megawatts and is expected to be online by the end of 2008. Our Ladysmith plant expansion in Virginia received air with 300 megawatts of new gas for our peaking capacity, it should be in operation in late summer of 2008. Last month we filed an application with Virginia State Corporation Commission seeking approval…

Thank you. At this time, we will open the floor for questions. (Operator Instructions) Our first question comes from Dan Eggers with Credit Suisse. Sir, please go ahead.

Hi, good morning.

Good morning.

Good morning.

Just on the gas, business since there has been a lot of activity in the gas market lately and you guys are seeing opportunity to expand your gas storage system, can you just give a little comment -- the open season sounded good, but with the inventories getting full is there any risk to your system from [Maxwell] over the couple of years as far as damaging? And have you guys seen any basis differential profit opportunities like we saw last year?

Dan, this is Paul Koonce with Dominion Energy. Our storage operation is very solid. Our customers have specific requirements that they are expected to live up to with both withdrawal and injunction rights. So they cannot exceed to protect the integrity of those facilities. With respect to market tender service revenues, which are largely parking and loaning opportunities in the industry, we've seen some of those opportunities. And especially around weather events, we see opportunities to park gas on our system or to loan gas office system. But that's been on the MCS program and is really unrelated to our storage.

How does that look this year versus last year, because last year was a pretty good for [one of our number]?

Yeah, last year was a good year for us. We actually last year placed some storage facilities in the service earlier than the customer expected. So we had some extra flexibility that we are able to bring to market, but that storage is now under a 20-year contract. So those opportunities specifically related to that don't exist.

Okay. With the decline in the natural gas prices, I guess since when the E&P deals were first come into announcement, is that going to have any impact on the unwinding of hedges or the loss in your earnings today, does that correctly reflect your full closure on all those optimizations?

Dan, this is Tom Chewning. It reflects that we closed positions or have taken alternative positions and there won't be any movement, no opportunities or downsizing.

Okay. By way of share repurchases, the clean up after the tender, those shares can be repurchased a few days after the tender ends. Is that when you guys move back in the market?

We don't want to say that, but certainly with the deal in the open market, we contributed and accelerated repurchase program. So, we don't have a specific daily math and certainly a review will occur after the results of the general script, what course we take and how quickly we are about to launch.

Okay. Thank you, guys.

Thank you for your question, sir. Our next question comes from Greg Gordon with Citigroup. Sir, please go ahead.

Thanks. Two questions, move on now in both questions, I apologize if you answered this in your comments. The $0.12 quarter-over-quarter apparent drag, what is that related to again?

This is Steve Rogers. Primarily, that's really more keeping than anything else and it's related to taxes. There are certain tax adjustments quarter-to-quarter that we just keep at the corporate level rather than pushing around to the various segments. In last year some of those adjustments were positive to us and we didn't have that positive this year. And then in addition, this year we had some state tax items that were negatives that resulted from our consolidated state tax profile versus this tax profile on our segments and we just kept that at the corporate. But the key there is just looking at our effective tax rate on an overall basis and we expect that that is around 38%, we expected to stay around 38% for the year. So it's just where we thought those expenses versus spreading them around.

Thanks. Next, sort of the big picture question. Not sure if you can answer it on the fly here. But when we look at the pro forma company, the $6 plus base of earnings for next year, by my math roughly 70% of their earnings should come from your regulated or regulated like businesses and 30% should come from your more power-centric or gas- and oil-centric businesses, your merchant businesses. So when I think about this 4% to 6%, earnings growth aspiration, can you give me a sense of what you are actually embedding as a growth aspiration for your sort of more power and gas centric operations, versus what you are embedding for your more stable regulated or regulated like businesses?

Yeah Greg, we expect the Generation business to grow between 5% and 6% and Dominion Energy to grow between 5% and 6% and Delivery business to grow between 2% and 3%.

For Generation business, by definition is the way that you report is sort of becoming sort of difficult process to use because Generation includes WEBCO which is regulated and then New England operations which is completely emerging. So, I guess what I am asking is when you bifurcate it between sort of regulated and merchant or are you expecting a much higher growth rate from merchant and a lower growth rate from regulated or is there such -- are they stepping up capital investment opportunities in the regulated businesses that does sort of an above the average growth rate? If you are capable of answering that on the call?

Well I will give you what our thinking is. And we will have a lot more information on this in the fall. And you mentioned New England which I appreciate but I think folks tend to forget about the fact that we have a very significant Midwest basically as well. Not only in Kewaunee but in [Kingsgate] state line and in Elwood all of which are under contract that will be expiring in about five years. Almost all of them are going to be at the same time. The best side of that, what you should expect is that in the near-term maybe in the next couple of years that primarily the growth in Generation will come from the non-Virginia power side and as we move into our building program, which will give more detail on in the future. In Virginia, to meet the requirements of our customers here in this very fast growing state you will see more uplift, more earnings growth coming from the regulated generation side. Without getting into words of magnitude that’s directionally what you should see.

Now Greg, it's Tom Chewning, we are here, I mean you and others that the need to excellent bifurcation of our Generation activities, few merchants, and regulated etcetera. And we intend when we come out in 2008 guidance to have more directional information, so that you can see where our growth is coming from and see where we are making money, and we certainly are not doing that in 2007 as you know, but we will be improving our disclosure in that regard in 2008.

Thank you gentlemen.

Thank you for your question. Our next question comes from Paul Patterson with Glenrock Associates. Please go ahead sir.

Good morning.

Hi Paul, good morning.

I wanted to touch basically on the hedging in New England, it looks that you guys have hedged a lot more of your coal, and I am just wondering when you are looking at coal prices '07 versus '08 what should we think about the trend there or what could you give us in terms of little bit of flavor?

Paul its Mark McGettrick. As you know we lock a coal when we are also locking our energy prices at same time. So you saw since the last call we locked in about 40% more coal, we locked in the margin at the same time on footprints on energy price. I would say year-over-year, I would not look for any significant difference on the coal price piece if it at all.

Okay. And with the Millstone Energy hedge pricing you give it for '07, you don't really give it for a way I am just wondering now that you have hedged a lot more of that, is there any for '08 if you could give us more flavor on that?

I think we’ll probably come out later this year and give an average hit price for the region for our fleet as we have done years passed, but the hedging there is again about 82% as work really will hedge, but I think it both will begin in '08, we will go ahead and give a number out later this year.

Okay, and then Dresden, what has been the impact so far on -- I mean, how much cash are you expecting to get for I guess, and what has been the EPS impact of Dresden outside of this write-down? What has it been percolating a long, I guess on an operating basis, have you guys been expensing depreciation with it or could you give us a little flavor on that?

We haven’t depreciated that investment at this point, but it's not complete. We do certainly have some debt associated with the capital we spend that will be in our operating segment at this point. Some of that will remain depending upon the difference between what we get from a date of that expanding. And of course we do have some, we expect it to be a loss for tax purposes we will recover some of that loss to offset in capital gains. But I can’t tell you how much we are going to get for, we certainly are marketing it, we think we will get with the market fix date should be for plant they still has a lot of work to do to come into commercial operations.

Okay, what was the book-value of the plant before coming down I guess?

Can you give us a call later?

Okay thanks a lot guys.

Thank you for your question, sir. Our next question comes from Daniele Seitz with Dahlman Rose, ma'am please go ahead.

Thank you. I just had a little detailed question in the Dominion Generation, you had a tremendous increase in O&M. And is this special to the first half of this year, O&M was up 30%, or is it because you have some special programs, or is it the type of growth rate you are anticipating?

No, Danielle, this is Joe O'Hare. The increase in generation in O&M relates largely to hedge activities associated with our merchant generation assets and it's actually offset with the corresponding increase in operating revenue and that just connect to something that we are working out through overtime.

Okay. So, as the normal numbers that you should be looking for the year or that should be declining?

I would say the net between what's in O&M and what's in revenue is largely offsetting, in order to normalize that number I need to go back and research that, maybe we can talk about that later.

Okay, great. Thanks a lot. I was just wondering also, Dominion Energy basically regulated, what type of ROE is it providing at this time on a 12-month basis?

Yes, Danielle, this is Paul Koonce. About the Cove Point and Dominion gas transmission, we have recently entered into rate case settlement with our customers, which we think could give us an attractive return. But those settlements did not speculate an actual return on equity. But I’m surprised to say that what we are pleased with, the settlements and they remain in place until 2010 and 2011. Dominion electric transmission will probably be filing a rate case in the in the next two years, eighteen months consistent with the investments we are making on reliability on the transmission side. There are publications out there where people go into platform to use and try to get in and understand what pipeline returns are [out of goods]. We have been ranked at the top of the pipeline segment in terms of returns. Let's say in the high-teens, low 20s.

And in terms of growth rates of that particular section you are looking at. I mean this seems to be like high returns, given the fact that you are expanding and you are getting rate increases. Do you feel that the next twelve to eighteen months should prove to be, to show a little bit more of a growth than what you are anticipating on a normalized basis?

Well, since the CNG Dominion merger, we've been able to double the rate base at the pipeline over the last six years. So, we have made significant investments. We believe over the next six to seven years we can double that rate base again by investments in pipeline and storage and electric transmission. So the growth rate that Tom Farrell decided earlier 5% to 6% for energy that we certainly think is achievable.

Great, thanks a lot.

Thank you for questions ma'am. (Operator Instructions) Our next question comes from Hugh Wynne with Sanford Bernstein. Sir, please go ahead.

Good morning. Joe, in your write-up of the quarter results and in your commentary on this call you had portrayed the earnings of the remaining utility businesses, excluding E&P as fairly robust. And yet it doesn't seem to square with my calculations. I just wanted to understand the difference and perspective. When I take your operating earnings and I back out E&P, the remaining businesses are earning $0.47, and that's down from $0.54 last year which is a decline of $0.13, a lot of that is due to this build up in corporate. Why is this in your view a good quarter as opposed to a bad quarter? If there is something in this corporate expense, it's going to go away, this is non-reoccurring and therefore should be discounted at, I don't understand the discounts.

Right, Hugh. This is Joe. In the computation of those statements what we thought were the three business segments, delivery, energy, and generation that normalized them for weather and fuel and even without with that with rate grew nearly 10%.

But why exclude corporate as it's staying with you, isn't it?

That's right. It does exclude corporate for a few reasons, one reason that Steve Rogers mentioned regarding how we thought kind of non-referring tax impact at corporate. So that they are sustained at the business unit level. But also there is a lot of interest expense at corporate that really is going to go away with a divestiture being paid. So we felt that inappropriate and just kind of include corporate in that reconciliation.

But comparing it to last year, we’re dealing with the same level of interest expense, what is the [amounts] of taxes that merits for exclusion?

Hugh, this is Steve again. I would say that the taxes are really just things to get our rate to where it is on an overall basis. And I think we will have an ongoing rate of around 38%. So, I think you will see these variances probably declining over time or maybe we will just push him out in the future, so they don't stick out, but they just get to our 38% rate.

Isn’t your rate this quarter on 37%?

Yeah around 38%, I think it’s 37.7% something like that.

Can you all give me some clarity on the likely timing of the sale of Peoples and Hope and what are the remaining hurdles?

We have extended the agreement with Equitable to September 1 for the stipulation that we’d negotiate from there with the possibility of extending it to November 1. We expect the Federal Court proceedings in Pennsylvania to clear the sale of People’s either late in the third quarter or during the fourth quarter. And with respect to the Hope we expect that to come out of the regulatory commission within the next few months. For Q1 Pennsylvania Commission has approved the sale of People's. They have a trade commission objects to that, we won that in the District Court, we expect to win that in the federal Appellate Court. In West Virginia we are still awaiting the West Virginia Public Utility Commissions approval.

So, is your hope to sell them both this year as previously or you extending that schedule?

Yes, we think to close both this year.

Alright, thank you very much.

Thank you for your question, sir. Your next question comes from Steve Fleischman with Catapult Partners. Sir, please go ahead.

Yes hi, you guys have talked about potentially reviewing your dividend policy once the E&P sales were complete. We’ve looked to a higher payout, could you touch on where you are on that and when you’d likely look at potentially raising the payout?

As we said before we want to get the share account down to where it belongs through once we finish the dispositions in the tender and whatever left is what to do after the tender. We expect to have a dividend rate that is more comparable payouts where dividends of payouts rates are comparable with our peers. And as we have said in the past that would give us room from perhaps 10% increase in the dividend. We will review that with our Board in the call with an expectation that something will happen after that, it may not be this fall, maybe next year, we will have to see how that work equates through. I want to get the share count where it belongs first. But that's all shifted for this year at all will occur this year.

Yeah, one question on the share count. I think you provided your guidance for '08 at the time the stock was about $88, should we assume that you would have used at least that or something higher than that when you gave your guidance for '08?

Yeah. I don’t think the share price is going to change our outlook, the share price does not create too much sensitivity of earnings one way or the other. I think $30 in buyback price our earnings moves 1 in $12.25 for '08 and we certainly we didn’t use artificially low numbers to think about where we thought we would make.

Okay thanks guys.

Thank you, Steve.

Thank you for your question. Our next question comes from Paul Fremont with Jefferies. Sir, please go ahead.

Two quick things, one is the second half under or over-recovery on fuels, does that work out to be like $24 million based on the first quarter being down like $145 million, or is that incorrect?

The fuel under-recovery, Paul?

Right, for the second quarter?

The fuel under-recovery on an after tax basis was $118 million.

Just for the quarter?

Yes. I compared this. In the first quarter, it was $125 million and the total is $243 million for the first two quarter as Tom Farrell mentioned in his prepared remarks. We actually added the schedule to our website this morning under supplemental schedules and it provides the history of the un-recovered fuel expenses by quarter and by year on a pre-and after-tax basis. So, I think you can take a look at that.

Great. And then the second question would be with respect to rate case as at PEPCO. If you file a general rate case, let's say sometime in the first half of 2009, would it be reasonable to assume that a new rate following the filing of a general rate case would probably not go into effect until sometime in 2010?

I think the legislation calls were to go into effect in the latter part of '09. I will have to check that for you, but I believe that is the case.

Okay. So with the legislation, would have new rates in effect by the time 2010 begins?

Yeah.

Thank you.

Thank you for your questions, sir. Ladies and gentlemen, we have reached the end of our allotted time. Mr. Chewning, do you have any closing remarks?

Thank you, Lindsay. Due to the fact that we must include several pro forma statements in our 10-Q related to our E&P divestitures, we will be filing our 10-Q on or before Thursday, August 9th. Our third quarter earnings release is scheduled for Thursday, November 1st, 2007. We would like to thank everyone for joining us this morning and we look forward to talking with you in November. Good day.

Thank you. That does conclude today's teleconference. You may now disconnect your lines. Please have a wonderful day. Thank you.