Good morning, ladies and gentlemen, and welcome to Dominion's Third Quarter Earnings Conference Call. We now have Mr. Tom Farrell, Dominion's Chief Executive Officer, and other members of management in conference. Please be aware that each of your lines is in a listen-only mode. At the conclusion of management'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. I will now turn the call over to Laura Kottkamp, Director of Investor Relations.

Thanks, Lindy. Good morning, and welcome to Dominion's third earnings conference call. During this call, we will refer to certain schedules included in this morning's earnings release and pages from our third quarter 2008 earnings release kit. Schedules in the earnings release kit are intended to answer the more detailed discrete questions pertaining to operating statistics and accounting. Investor Relations will be available after the call for any clarification of these schedules. While we encourage you to call in with questions in the time permitted after our prepared remarks, we ask that you, you use the time to address questions of a strategic nature or those related to fourth quarter 2008 guidance. If you have not done so, I encourage you to visit our website, register for email alerts and view our third quarter 2008 earnings documents. Our website address is www.dom.com/investors. 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 differ from those recognized by GAAP. Those measures include operating earnings before interest and tax commonly referred to as EBIT. Reconciliations of such measures to the most directly comparable GAAP financial measures we're able to calculate and report are contained in our earnings release kit. I will now turn the call over to our CFO Tom Chewning, Tom.

Thank you, Laura, and good morning everyone. We will begin our call today by reviewing third quarter results and fourth quarter operating earnings guidance. Each of our business unit heads will then review their third quarter performance and discuss what they've foresee for the fourth quarter. Our CEO Tom Farrell will conclude with updates on several strategic projects and regulatory matters as well as other timely items. We will be happy then to answer your questions following our remarks. Dominion recorded the operating earnings of $0.94 per share for the third quarter. $0.02 above the top end of our guidance range of $0.87 to 0.92 per share. GAAP earnings were $0.87 per share. A reconciliation of GAAP to operating earnings can be found under Schedule II of our earnings release kit. As we've done to the first two quarters of 2008, we made adjustments of such items as weather and non-recurring tax items. These adjustments provide a clear comparison of actual performance to our quarterly guidance. As seen on our schedule of these adjustments on Dominion's Investor Relations website under supplemental schedules, unfavorable electric utility weather cost us $0.01 per share in earnings while the actual tax rate compared to guidance helped us by $0.01 per share. Had we experienced utility weather and taxes as we expected for the third quarter, operating earnings would still have been $0.94 per share. For the fourth quarter, we expect operating earnings of $0.67 to $0.72 per share, a minimum increase of 25% in earnings per share over the fourth quarter of 2007. Drivers expected to compare favorably to 2007 include higher contributions from our merchant generation business, lower outage expenses at the utility generation business, higher contributions from the Company's gas distribution and gas transmission businesses, and higher margins from the Company's remaining…

Thank you, Tom. Dominion Virginia Power produced third quarter EBIT of $179 million, which fell in the guidance range of $173 million to $189 million, as shown on page 33 of our earnings release kit. Weather-normalized EBIT for the quarter was in the upper half of the guidance range. This was despite enduring tropical Storm Hanna in early September. In our electric distribution and transmission businesses, we continued to see improvement on safety performance in the third quarter of 2008 as compared to 2007. Year-to-date OSHA recordable incident rates are down from 2.4 to 2.1. This is the number of incidents per 100 employees per year. We are very proud of this accomplishment, given the adverse conditions we faced in providing mutual aid in Texas and Ohio related to Hurricane Ike. We deployed 200 internal resources and 500 line and tree contractors to support Entergy, AEP, and CenterPoint in their restoration efforts. Despite the slowing economy in our regulated service territories, Dominion should continue to experience growth during our period of national economic downturn. Federal and military load remains strong and continues to grow. You should also recall that Northern Virginia is a national center for Internet activity. We have recently confirmed that a number of significant projects are proceeding that will add to our load group. In addition, we are still foreseeing approximately 40,000 gross new connects for 2008. Given the economy, we are keeping an eye on bad debt. Year-to-date bad debt charge offs to revenue are at 0.28%, the same level as one year ago. We are seeing some precursors that would indicate future upward pressure on bad debt, such as increasing number of bankruptcies and more customers in arrears. We will continue to monitor and analyze our arrears and bad debt and develop new strategies to help our customers proactively manage their accounts. We do not expect this to have any material impact. Looking to fourth quarter guidance, shown on page 40 of our earnings release kit, we expect to produce EBIT in the range of $192 million to $208 million. Our expectation, based on normal weather and storm activity, is higher than EBIT produced in the fourth quarter last year, primarily due to lower O&M expenses in our regulated transmission and distribution businesses. I'll now turn the call over Paul Koonce. Paul?

Thanks, Dave. Energy's third quarter EBIT of $170 million was well above the high end of our guidance range of $128 million to $158 million, driven by improved margins across all of the energy segments. Dominion E&P was helped by strong prices, while Dominion Transmission and Dominion East Ohio experienced higher gathered volumes and strong natural gas liquid sales. Producer services performed better than forecast, due to opportunities that arose around our storage and transport positions, resulting from Hurricane Ike. And all segments exercised good O&M cost control. Also during the quarter we undertook several steps to improve our safety performance. We engaged DuPont safety systems to assess our safety culture, with a goal of achieving world class safety management. At our gas distribution operations, Dominion East Ohio Peoples and Hope, the number of OSHA incidents dropped to 15 versus 24 for the same quarter last year. Dominion Transmission reduced the number of incidents by 50% compared to last year's third quarter, and on a year-to-date basis our OSHA incident rate for all of energy is now at 2.46 versus 2.7 at the end of the second quarter. Operationally, we experienced a 9% quarter-over-quarter increase of industrial throughput at Dominion East Ohio, due to increased steel and refining operations in our service territory. We're also on pace to install over 350,000 automated meters by year-end. When this program is complete, it will significantly enhance customer service by eliminating the need for monthly estimated bills. We began installation last year and we've had excellent implementation to date. In fact, we installed over 51,000 units this quarter versus 25,000 third quarter last year. And during these challenging economic times, it's worth noting that since 2003, Dominion East Ohio has had in place a bad debt tracker that allows for 100% of uncollectible…

Thank you, Paul. Dominion Generation produced strong third quarter results with EBIT of $799 million. These results were in the upper range of our guidance range, and $62 million above the third quarter of 2007. The major drivers of growth were stronger wholesale utility margins and higher margins at our Millstone, State Line, and Fairless power stations. These results were achieved despite lower sales due to milder than normal weather in our regulated business. Supporting these financial results were excellent operating performances by a regulated utility fossil fleet with an equivalent forced outage rate of 3%, the best on record, and a nuclear fleet capacity factor excluding planned refueling outages of 99.5%. In addition to our financial results, there were a number of other key items at Dominion Generation for the quarter. First, Generation's safety performance continues to be exceptional. Our OSHA reportable incident rate for our nuclear, and fossil and hydro operations came in at 0.35 and 0.70 respectively for the quarter. Second, we continued to make good progress on our wind expansion in the West Virginia, with an incremental 50 megawatts coming outline this fall, and our Indiana wind project, which will add 150 megawatts by early next year. Third, we participated in the first RGGI auction in September, and we're very pleased with the results. Although we do not plan on disclosing the number of allowances we received, the auction pricing results were consistent with our projections, towards the low end of the range, at approximately $3 per allowance. Finally, with regard to future coal prices, they continue to see a dramatic fall from summer highs, as we have been projecting. Today, forward Colombian coal prices for calendar year 2009, and 2010, are in the low to mid $80 per ton range, off a high of around…

Good morning, and thank you for joining us. I am thankful that in the midst of the seemingly endless unpleasant economic new we have all heard this quarter, Dominion achieved the positive resolution of a number of outstanding issues we discussed on our last call, and that we again met our operational and financial goals. Positive outcomes on pending cases and continued progress on specific projects at each of our business units will contribute to our short term earnings, and have positioned us for long-term growth. In Virginia, we continue to move forward on generating and transporting power into constrained areas. Notably this quarter, we received approval from FERC for premium returns on 11 vital transmission projects that total nearly $900 million. On four of those projects, including both our Meadow Brook-to-Loudoun and Carson-to-Suffolk lines, we will receive 150 basis point premium adder to our approved 11.4% return on equity. We will also receive 125 basis point premium to the allowed 11.4 return on equity on seven other projects. Both of the 500 kV Lines, which cost approximately $250 million each, are expected to be in service in the spring of 2011. Earlier this month, the State Corporation Commission gave its final approval to the Meadow Brook line, contingent upon approval by the commissions of West Virginia and Pennsylvania of segments in those states. West Virginia has already done so, and we expect a resolution in Pennsylvania soon. We are also awaiting final approval for our 580 megawatt Bear Garden combined-cycle facility, which will cost approximately $600 million. We expect the final order approving the plant early in 2009. We completed the evidentiary hearing and have already begun site preparation work. As specified by Virginia law, this plant qualifies for a 100 basic point premium adder to the return. On…

Yes sir, thank you. At this time, we will open the floor for questions. [Operator Instructions]. And our first question comes from Carrie St. Louis [ph] with Fidelity. Please go ahead.

Hi, good morning.

Hi, Carrie.

I just wanted to ask a couple questions on the decision to draw on the bank line. I'm just curious. Obviously, the balance was high at the end of September. Was it an issue of pricing, just comfort with the market, how long do you intend to have the bank line drawn?

Carrie, good morning. This is Scott Hetzer. It was not a decision on pricing and it was not a decision based on not being able to sell CP. As Tom said, we have been successful selling commercial paper every day that we've been in the market selling it. It was in... and 1.8 billion, our balance at the end of third quarter is a balance that we're normally comfortable with, but certainly in these markets, following Lehman's bankruptcy and everything behind that, that was a number that we were not as comfortable with. So we made the decision early October to go ahead and draw and reduce the balances by about 50%, just to take some of that risk off the table. And that bank borrowing continues until we decide to pay it back, and we'll decide to pay it back when we feel comfortable with the markets.

You do have these maturities coming up, and I know you talked about wanting to access the markets when you thought there was a good window. Is your view that some of this draw might have been a bridge for that, or if you decided to not go into the term debt markets, would that mean that you either draw more on the bank line or use more CP?

Well, we've got the opportunity to do both, and certainly the CP markets feel much better today and than they did even at the beginning of October. We see them returning to nearly normal. So we do have that opportunity to ramp up CP, but we also expect to access the markets when they're available, if they are. As Tom said, if they're absolutely closed through the balance of the year, our alternative would be to draw on the bank lines.

Okay. Two quick last questions, I just wanted to understand... you talked about CapEx reductions. If you go ahead and cut CapEx, what I'm hoping you're going to say is that that wouldn't mean that you just don't issue equity, that if you cut your CapEx, you'll still issue equity, and you'll just reduce the amount of debt and equity financing needed by a consistent amount.

That is correct. If we cut CapEx, it would cut needs for all capital-raising.

Okay, with the current credit situation, have you guys at all thought about... because you have been large CP users, and I expect you continue. Have you started to think about the fact that maybe a stronger balance sheet, kind of getting back to Tier I CP access would be a longer term goal or things haven't caused you to revisit that yet?

We, Carrie, we think what's going on the markets now is relatively temporary and have not adjusted our targeted credit ratings. We feel very good about the long-term access to the markets, both the long-term debt markets and the commercial paper markets, and our targeted credit ratios should position us well for that. We do not expect to get to a Tier I CP level.

Thank you.

Thank you, Carrie.

Thank you for your questions, Miss Saint Louis. Our next question comes from Samuel Brothwell with Wachovia Capital Markets. Please go ahead, sir.

Hi. Good morning, everybody.

Good morning, Sam.

Just a question on your '09 guidance range, actually a couple. With respect to anticipated equity issuance next year, does your guidance incorporate that across the year, more towards backend loaded, towards the end of the year, the front of the year?

Sam, we will never answer a question as to the timing of an equity offering.

But you... I'm sorry.

We'll never give any answer to when we're going to issue equity, other than it'll be during 2009, but I think the sensitivity of when we issue it is not significant to our earnings range, because of the large number of shares that we already have outstanding.

Okay, I appreciate that. The other thing I wanted ask to you is, given your hedge position on all your commodity exposure, how material a move in commodity prices... and I'm speaking specifically about natural gas... would it take to move you either up or down off your guidance range? Can you give us any sense of that?

The sensitivity to a dollar movement, natural gas at this point is about $0.05 per share up or down.

Okay. Okay, thank you very much.

Okay. Thanks, Sam.

Thank you for your questions, sir. Our next question comes from Paul Patterson [ph] with Glenrock Associates. Please go ahead, sir.

Good morning, guys.

Hey Paul, how are you?

All right. Just a couple quick questions. First question I have is with respect to the impairment on, the $50 million of impairment at the nuclear. What's causing that, and just elaborate a little bit more on that?

Well, I'm going to give you the broad picture. The nuclear decommissioning trust, I believe, is what you're referring to. It's a cumulative number of 50 million for the year; it's 19 million for the quarter. We mark any unrealized gains and losses as special items in our nuclear fleet outside of regulation. The values of the securities held in those nuclear decommissioning trusts, specifically at Millstone and Kewaunee, went down. And so we marked it to that level. On any decline in market value or increase in market value in the nuclear decommissioning trust in Virginia, that is handled through a regulatory liability account, which exists now because that plan's so over-funded that we consider that to be an asset of the Virginia rate payer eventually. So that is the, they are not realized losses; it's a mark-to-market of the decommissioning trust at that time.

I get that. I guess what I'm wondering is, is that the term, the description is a permanent or non-temporary impairment?

Accounting phrase that, and it goes back... we can have a discussion offline about it, but it's a matter of if it was a temporary market blip, it's one thing, but in a condition where you've had such consecutive quarters of bad stock market performance, they can take a look at a security and fairly subjectively say this is not going to come back. So it's really a mark-to-market and the wording shouldn't distract you too much. It is really what the value decline was in the third quarter of those trusts that were outside regulation.

Okay fair enough; that's all I was wondering. The second question I have is bigger picture. We're seeing some activity on the M&A front potentially here and I was wondering whether or not your stock has in some ways outperformed others out there with merchant generation exposure, the same kind of profile. Any thought about what you're seeing out there or potential opportunities or big picture idea about the change in the landscape and how... whether there any opportunities that might be coming up there, or...?

Paul, excuse me. This is Tom Farrell. I appreciate your asking that question. When I became CEO, 2.5 years ago, I adopted a policy that we wouldn't comment on M&A in any manner or form, including how it's gone in the industry or what we may be thinking about or not thinking about. So, I understand the interest, but we have long had a policy of simply saying you'll have to ask some other CEO that question.

Okay, thanks a lot.

Thank you.

Thank you for your questions, Mr. Patterson. Our next question comes from Hugh Wynne with Sanford Bernstein. Please go ahead.

Good morning, and congratulations on the good quarter, and actually a good set of quarters since divesting the E&P business.

Thank you very much.

Thanks, Hugh.

I had a question for Thomas Chewning, regarding the outlook for '09. You had mentioned, if I remember right, that it may be harder to achieve the upper end of your guidance range due to increased pension and interest expense. And if my notes serve me well, I believe you mentioned that perhaps a $0.06 increase in pension expense is a possibility in '09. Did you quantify what the potential increase in interest expense might be relative to the level on which you had based your guidance?

Hugh, first I'd said that it's hard to achieve the upper half, whether in -

Yeah. The upper half, correct.

And that is a distinction I'm sure somebody is going to pick up, so I'll reinforce it, anyway, but I am going to ask Scott Hetzer to answer the question on interest rates, specifically.

And Hugh, we haven't disclosed publicly what the impact might be to earnings, but I did scan your note this morning, and clearly we think that the impact is less than what you've estimated in your note this morning. We do expect, of course, what we've modeled in for the balance of 2008 and 2009 reflects current market conditions, and it still allows us to affirm guidance range for '09. Importantly, that which is funding our regulated businesses will be eventually recovered in rates, of course.

One other point that come up in the research that led to the note we published this morning was the fact that Dominion, while it has a very strong pension position, has relatively weaker leverage and cash flow coverage ratios than other hybrid utilities of its size, and even many other regulated utilities. I guess my follow-on question would be, is that a situation that may have to change in the current credit environment, if you're to maintain the ratings that you have today? Will S&P and Moody's be putting pressure on you, perhaps, to strengthen the leverage ratios and cash flow coverage ratios under these conditions?

Well, a couple of things pertaining to that question: first off, we have met with all three rating agencies within the last 30 days, and all three seem very comfortable with where we are. Also, again, not having had the time to go through your note in great detail, but just scanning it, it looks like of course you were picking up second quarter debt balances, and our GAAP debt dropped almost four percentage points in this third quarter, driven by two things. One is an increase, a nice increase in retained earnings, and secondly, a dramatic change in the AOCI balance of 1.2 billion, strengthening the equity account. Also I suspect when you... if you're looking at weak credit ratios, I suspect you're picking up trailing 12 months and if you get... if you're picking up the quarter... in the last quarter of 2007, which had lot of accounting entries pertaining to the divestiture of the E&P operations, it really makes the analysis fairly meaningless. As we look at the cash that we produced for the first three quarters, which is over $3 billion, using funds from operations, we look at that as very strong, and puts us well on our way to achieve our targets for FFO for the year, and then as we model in three quarters of actual in the fourth quarter of pro forma, we see us very comfortable with where we'll be on our credit ratios at the end of the year.

Great, so no correction here in the capital structure of the company, in your view, is required?

No, we are well on our way to achieving goals that we had set a year ago.

All right.

Not only achieving those goals, but those goals are higher than the standards that the regulating agencies might even hold us to, so I don't want you to think that we are adopting a different standard here. Our coverage ratios are well over 4%, 4 times, and cash flow is good. And I appreciate your interest in that because that, indeed, is the real key factor, is FFO to interest and FFO debt, and we are doing quite well as we clear out some of the confusion of the sale last year. But as we look forward, and as this year has gone on, our coverages are excellent.

Great, thank you very much.

Thanks, Hugh.

Thank you for your questions, sir. Our next question comes from Steve Fleishman, with Catapult Capital Management. Please go ahead.

Hi, guys.

Good morning, Steve.

Hi, just wanted to clarify a couple things. First in, when you guys are giving your guidance, are you incorporating in there any expectation for additional Marcellus sales or not? That would be something that would be additive?

Yes, Steve, you've asked me this question couple times. And I think you tell me I have given you a different answer each time.

Yeah.

But may be the third time I'll get it straight. We do not have any Marcellus extra... additional Marcellus sales in the low end of our guidance range for next year. However, if we were to achieve the upper half of that range, there would certainly have to be some other Marcellus sales.

Okay. And then on the Peoples and Hope sale, what is the... is there any risk in that sale, in terms of the buyer having sufficient capital to close?

The buyer does have both sufficient commitments secured for both equity and debt.

So they already have their equity and debt commitments secured?

Yes.

Okay. And just so I understand your comments on your long term guidance, you are reiterating your 6% plus growth. You're saying there are some headwinds but you're developing plans to offset those headwinds?

That's correct.

And that's what we'll hear in January, is that -?

That's correct.

Kind of the summary?

That's it.

Okay. Great, thank you.

Thank you, Steve.

Thanks for your questions, sir. Our next question comes from Danielle Sites [ph] with Sites Research. Please go ahead.

Thank you. Good morning. I was wondering about the level of uncollectible accounts, and I was wondering at what level is that, and is it recoverable through regulatory channels?

I believe your question is about accounts receivable... l

Yes.

..whether they are recoverable. Dave Heacock and Paul Koonce?

Good morning. This is Dave Heacock. The number for the electric utility in Virginia is 0.28% of revenue; it's pretty much flat year-over-year. So we're not seeing a big change in that number as of yet. And right now, it's going to go into our future rate cases and will be recoverable as spreads it's socialized essentially over all our customers in the future.

This is Paul Koonce, on the gas distribution side. At Dominion East Ohio, we have a tracker that recovers bad debt expense, and at Peoples have Hope, it's not material.

Great. Thanks a lot.

Thank you, Danielle.

Thank you for your question, Miss Sites. Our next question comes from Paul Ridzon with KeyBanc. Please go ahead, sir.

Good morning. You gave a sensitivity of a dollar moving nat gas as about a nickel of annual earnings. Is that contemplating your hedge position, or is that if you were naked?

No, that's contemplating, that's a 2009 number with our hedge position.

Since you first gave '09 guidance, nat gas has come off. What have been the offsets?

Paul, there's all sort of offsets. I don't think we match one factor, negative with another positive, but we're so highly hedged that the movement has been very, very small. And that number has been updated to current numbers. So we're using current numbers, and if you take a look at the sensitivity, it hasn't really moved a whole lot since we originally gave that forecast. It's moved a lot up and then a lot down. But it's actually coming back very much close to where it was when we originally gave guidance.

I understand. Thank you very much.

Thank you.

Thank you for your question, Mr. Ridzon. Our next question comes from John Kiani with Deutsche Bank. Please go ahead.

Good morning.

Hey, John.

You recently acquired Cirro, a smaller retail electric provider in Texas. I was wondering if you could provide a little bit more color around just the strategy there, and how you think about or what you like about the retail electric provider business in Texas. And then more particularly, do you see Cirro as a platform for growth in that business in Texas and in general?

John, the retail business at Dominion has grown over the last five years from $5 million in earnings to over $80 million in earnings, and it has largely been handled through very conservative hedging programs and low customer acquisition costs. And it has been concentrated in the Mid-Atlantic, Northeast, and Midwest. The largest electric retail market in the United States, and somebody told me it's in the world... I don't know if that's right or wrong... is in Texas. So we waited, and we've been watching Texas for that market for a long time and we waited until we saw some dislocation in it, and bought a small-ish company to put our toe in the water in that market. And will see how it goes. We are not in any hurry to expand it, but opportunities may present themselves over time, but that's not something we're going to concentrate on at the moment. We have plenty of other things on our plate.

Okay. Thank you.

Thanks, John.

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

Yes, I do, Lindsay, thank you. Just a reminder that our Forms 10-Q will be filed with the SEC later today. And our fourth quarter earnings release is scheduled for Thursday, January 29, 2009. I'd like to thank everyone for joining this morning and wish you a pleasant, cool fall. Good bye.

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time. And please have a wonderful day. .