Good morning, and welcome to Dominion's Second Quarter Earnings Conference Call. On the call today, we have Tom Farrell, CEO; Mark McGettrick, CFO; and other members of senior management. [Operator Instructions] It is now my pleasure to turn the call over to Corynne Arnett, Director of Investor Relations for Safe Harbor statement.

Good morning, and welcome to Dominion Second Quarter 2012 Earnings Conference Call. During this call, we will refer to certain schedules included in this morning's earnings release and pages from our earnings release kit. Schedules in the earnings release kit are intended to answer the more detailed questions pertaining to operating statistics and accounting. Investor relations will be available after the call for any clarification of these schedules. If you have not done so, I encourage you to visit our website, register for e-mail alerts and view our second quarter 2012 earnings documents. Our website address is dom.com/investors. In addition to the earnings release kit, we have included a slide presentation on our website that will guide this morning's discussion. And 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 our recently -- and our 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 of our company's performance that differ from those recognized by GAAP. Those measures include our second quarter 2012 operating earnings and our operating earnings guidance for the third quarter and full year 2012, as well as operating earnings before interest and tax, commonly referred to as EBIT. Reconciliations of such measures to the most directly comparable GAAP financial measures we are able to calculate and report are contained on Schedules 2 and 3 in Pages 34 to 41 in our earnings release kit. Joining us on the call this morning are our CEO, Tom Farrell; our CFO, Mark McGettrick; and other members of our management team. Mark will discuss our earnings results for the second quarter, as well as our guidance for the third quarter of 2012. Tom will update our operating and regulatory activities, as well as review the progress we have made on our growth plan. I will now turn the call over to Mark McGettrick.

Good morning. Dominion's 2012 second quarter operating earnings were $0.59 per share, just below the midpoint of our guidance range of $0.55 to $0.65 per share. Mild weather in our Virginia service territory during the quarter reduced earnings by $0.05 per share when compared to normal. Recall that in the first quarter, mild weather reduced operating earnings by $0.11 per share; so for the first 6 months of 2012, mild weather has reduced our earnings by a total of $92 million or $0.16 per share compared to normal. There are 2 other items I would like to highlight in our second quarter operating earnings. First, our unregulated retail business had a very strong quarter, with results about $0.05 better than expectations. This was driven by $0.02 of better margins and a $0.03 gain on some mark-to-market contracts that will roll off largely over the next 12 months. Secondly, we've excluded $74 million from pretax operating earnings from major storm costs related to the late June storm activity that resulted in over 1 million of our customers being without power. While restoration activity continued into July, we recognized the entire estimated cost to restore service in the second quarter, consistent with our accounting for past major storm events. Tom will provide more operating details on the storm later in the call. GAAP earnings were $0.45 per share in the second quarter. The principal differences between GAAP earnings and operating earnings for the quarter were the costs related to the late June storm activity and charges related to some of our merchant generation plants, which have been or are in the process of being sold. A reconciliation of 2012 operating earnings to reported earnings can be found on Schedule 2 of the earnings release kit. Now moving to results by operating segment.…

Good morning. What has been a particularly mild weather year in Virginia changed quickly in late June when a series of powerful storms with winds in excess of 80 miles per hour moved through the state and Northeastern North Carolina. More than 1 million of our customers lost power, making it the third largest storm event in the company's history behind only Hurricanes Isabel and Irene. Our employees with help from utilities as far away as Florida and Quebec conducted a multi-day restoration effort in 100-plus degree weather. On behalf of our customers and our shareholders, I offer them thanks, and I also thank our customers for their patience and understanding. Each of our business units delivered strong operating performance in the second quarter and in every case, with improving safety performance. Year-to-date net capacity factor of the 7 Dominion nuclear units, excluding refueling outages, was 100%. Including the 3 refueling outages, the net capacity factor for the first half of the year was an impressive 93%. State Line Power Station was shutdown in late March. On June 26, we sold the plant to BTU Solutions, a company that provides demolition services for generation facilities. On June 29, we executed an agreement to sell the Salem Harbor Power Station to Footprint Power who will operate the station until it is removed from service in June of 2014. Footprint is planning to re-purpose the site including the potential development of a natural-gas-fired power station. Virginia City Hybrid Energy Center was declared commercial on July 10. The $1.8 billion project was completed safely, on budget and on schedule, following 4 years of construction. Virginia City is one of the cleanest, if not, the cleanest coal-fired power stations in the country, and it may well be one of the last to be built…

[Operator Instructions] Our first question comes from Dan Eggers with Credit Suisse. Dan Eggers - Crédit Suisse AG, Research Division: I guess just on the earned ROEs at VEPCO, I mean, last time through the commission, seemed to make some discretionary decisions away from the GAAP accounting to get to a different ROE. Is there anything, when you look at the 18 months so far, where you think there would be some level of discretion for them to change that? Or is it -- I mean, it seems like the below the range ROE seems pretty set at this point.

The -- first off, the weather has been below normal. That's not a discretionary issue. Those earnings are what they are. What Virginia Power earns is what it is. I think what you're referring to probably from the last review was the early retirement program where they carried it over and part of it, over into the second biennial review. That was not completely out of line with prior precedent. They've matched it to the retirement, actual retirements, but the effect of that, of course, was to bring over $100 million of that VSP into the second biennial review. And that's -- there won't be any discretionary issues around that. That cost is there according to the commission's own rulings. So I think when you take a look at what we've been dealing with, I think all of these costs are appropriately included in the biennial review period. They're expensed, as they have been according to all commission -- prior to commission precedent, and I expect we'll see -- of course, we don't know what we'll earn. We'll see how it'll go over the next 2 quarters, but that's where we stand today. Dan Eggers - Crédit Suisse AG, Research Division: Okay. And I guess just on guidance for the year, the other $0.16 of below normal weather, well, I guess, will put you below the range, so it's going to take a little better weather than normal to get above the bottom of the range. Is that the right way to interpret what you said, Mark?

Dan, this is Mark. If you look at history here in Virginia, we picked up $0.06 to weather last year. We picked up $0.08 to weather the year before. This is all in the third quarter. So if you do the math of it, we need a little bit of weather help between July 1 and the end of the year, but again, if you look at the history here, I think we're well within the bounds of the $3.10 to $3.30, assuming we get a little bit of weather help the rest of the year. Dan Eggers - Crédit Suisse AG, Research Division: Okay. And then for the fourth quarter, so you think it's going to be made up perspectively in the third quarter or fourth quarter, so there's just a bit of watch factor. When I think about the growth rate, the 5% to 6% since your weather was closer to normal on '11, we should be able to grow the '11 number by 5% to 6% for '12 and then 5% to 6% for '13, to figure where we should expect '13 to be?

That is exactly right, and it's a question we've had from a lot of folks. And we built this plan on normal weather, and so weather -- if normal -- if weather's extreme or right, you should always go back to the midpoint of our range, which is based on 5% to 6% weather normalized growth, and that's what you should expect us to have in 2013 as we start talking about guidance.

Our next question comes from Stephen Byrd with Morgan Stanley.

As we think about the 2014 earnings outlook, the -- I saw on the merchant power side, the hedge level remained the same as the prior quarter, and so as we think about the headwind from the roll-off of hedges there, can you help us think about the offsets to achieve the earnings growth and how you feel about those offsets rolling out from here?

Well, Stephen, this is Mark. First, if you look at our hedge slide, I think it's on Page 9 in the deck, if you go back just one quarter and reference what '14 look like, I believe the hedge market position at that point was about $40 and some change. We show $42 here just in 3 months. If you look at the market forward price for '14 as of yesterday, it was almost $43. So this price has moved up in just 3 to 4 months by 6% or 7%, and we're well over 1.5 years away from a '14 midpoint number. So first of all, we think there's certainly a very good chance that prices will continue to improve '14 and beyond. But in addition to that, we will continue to look at, as we did in '13, in interest rate environment where we can protect ourselves with low interest rates through hedges in the out years to give us some help versus what we might be thinking about today. We're also continuing to look at expenses, which a lot of folks asked us early in the year whether we could offset the commodity headwinds in '12 with reduced O&M expenses. I think if you look at the first 2 quarters and what we expect the rest of the year, we've been able to do that. So we have a number of things that we're looking at for '14 and beyond, but again, if you look at power prices alone, they've improved dramatically just in several months, and we would hope they continue to improve.

Our next question comes from Jonathan Arnold with Deutsche Bank.

Quick question on Kewaunee, could -- is there any update there on how you're getting on with the potential sale? And then can you also remind us how much longer you can keep excluding it from continuing operations? What's the accounting task for that?

Well, I think, the easy answer to that question, Jonathan, is we expect to have a resolution on Kewaunee this year. And we will certainly not carry it as a nonoperating expense beyond the end of this year, and we hope to have the auction complete and results announced by year end.

Okay. So where is that in the process today? Is there -- you kind of you have bids? Or you're shortly to have put it out there?

I would say midpoint in the process, data rooms open and bidders are evaluating information.

And then, Mark, I think I missed it. How much of the $0.05 increase in retail in the quarter was due to these mark-to-market gains that you expect to reverse? How much was to kind of margin expansion?

$0.02 was margin expansion, and $0.03 were mark-to-market gains, which the vast majority will roll off this year.

Okay. And you -- so you -- and are you -- net of that mark to market, I guess you were like -- you're $50-odd million ahead on the year so far at retail, of which maybe $30 million or so is this mark to market. Is the remaining $20 million of uplift more or less in line with what you were baking into guidance? Or are you doing better at retail than you thought you would be doing?

I'd say we're doing better in retail than we thought we'd be doing. Our margins particularly in our last reports have been better than expected, so we've been very, very pleased with the retail results so far.

Okay. And so we'd looked at that as a driver going into Q4 as well?

Well, we'll have to wait and see, but if the first and second quarter are reflective of the third and fourth quarter, then we would expect retail to have strong performance.

Okay. Could I just clarify one other thing? On weather, from what you've been saying, it's as though kind of weather was going to be a headwind in the back half of the year, but looking at your kind of Q4 '11 disclosures, it looks like it was a net hurt between being having been a benefit versus normal but a big drag in, but you're Q4, but you're benefiting Q3 but a bigger drag in Q4. Am I looking at the numbers right? So you should -- normal weather, you should actually have a help in the second half?

Yes. To compare it to last year, we had $0.08 drag in 2011 in the fourth quarter due to weather. So year-over-year, we would expect normal weather to be a pickup for us.

For the second half as a whole.

That's right.

Our next question comes from Paul Patterson with Glenrock Associates.

Just wanted to understand the weather a little bit more. It looks like the cooling degrees were actually higher than normal. Is it -- what's -- is it the heating degree days that are doing it? Or is it the storms that are making it weather adjusted more mild than normal? I'm just sort of not completely clear on exactly what's driving that.

Paul, there were a couple of things. One, cooling degree days were actually 4% off from norm, but humidity in the second quarter was very, very mild. So we got no extremes, and we're very close to norm for the whole period. And particularly, Virginia in the month of June, humidity drives increased sales for us, and we did not see that. So that was the main difference from a strictly degree day view.

Okay. And then with respect to the outlook for weather normalized sales growth being less than what you guys have previously thought, just a little elaboration on why that is. You brought it down, I think, right? You guys had a higher number before. Now you guys think it's going to be a little bit more lower.

We talking about for 2011, 2012?

2012.

Paul Koonce will take that.

Yes. We have been looking at the megawatt hour sales. One of the drivers really is the actual consumption that we're seeing by the commercial sector. I think that's just part of the overall economic situation in the country, a little bit lighter megawatt hour sales to data centers, but we're protected revenue wise there because they enter into contract minimum demand. So we don't see it really having a material impact on us financially.

Okay, great. And then the Q2 -- I mean, Q3 we're seeing a lot of hot weather. I mean, I know you guys are a big -- you guys are in a very wide geographic area, but PJM has seen some very, very hot weather in general, as I think New England. And we haven't really seen all-time peaks, and I was wondering whether or not you guys were seeing anything on the demand response side, specifically sort of we have a new revenue tariff now on PJM with respect to the energy market and the ability to get paid there has changed. Just wondering whether or not you guys are seeing anything or if you got expectations in terms of outside of Virginia, just in PJM in general. Do you guys see anything happening there? Or I was just was wondering if you had any thoughts on that.

Paul?

We've been -- we have a number of customers on our system that are participating in the PJM demand response programs. We have seen PJM call on customers as part of that program. One of the things that we see happening is PJM really tightening up who participates in those programs, so that for the industry, we can really confirm that when it's called on that they're actually performing. Though we're really not seeing anything out of the ordinary other than we continue to see PJM really tighten down on who can participate, and we think that's a good thing because it's going to become more reliable over time.

Our next question comes from Paul Fremont with Jefferies. Paul B. Fremont - Jefferies & Company, Inc., Research Division: I was just hoping to get a sense from you guys given all of the adjustments for interest expense this year and given the fact that you've pretty much, I think, locked down the future rates on borrowings for 2013. Can you give us a sense of how much incremental interest expense we should expect '13 versus '12.

Paul, we're not in position today to do that. We'll talk more about that this fall as we put out guidance for '13 and beyond. But as you referenced, we've been quite aggressive with interest expense. We also have a lot of maturities, probably more than many companies this year and next, which should provide benefits for us. We called in some hybrids earlier. So Scott Hetzer and his treasury group are doing a lot of things. But we're not in a position today to give any tighter guidance on interest for '13.

Our next question comes from Steve Fleishman with Bank of America.

Couple questions on the Cove Point project. I guess first, when do you think you will hear more on the -- this court case that -- with the Sierra Club? And then also, do you have any kind of latest color on what you expect from the DOE and administration's kind of overall view on LNG export.

First, with respect to the court case. First thing I would do is encourage anybody who really has any interest in it to read all of the briefs that have been submitted. They're all there on public file in the Calvert County, Maryland Circuit Court, and I think that you can draw your own conclusions about what the most likely outcome of the case is. Both parties have said the court has all the information -- all the parties have said the court has all the information it needs to decide the case. Lawyers would call it, these cross-motions for summary judgment. The hearing is in the fall. We would expect the decision from the court by the end of the year. And I think the documents are pretty clear that we can do liquefaction and that we can transport gas in and out of the site by pipeline. So -- but like I said, if you, people question that judgment, read the briefs yourselves and draw your own conclusions. Now with respect to the DOE, we -- I think most of the signals -- all the signals have been coming out of the administration, indicate that they do not intend to stand in the way of exporting this product. We should have some indication, hopefully by the end of the summer, from some of these outside studies that have been done, and I expect the DOE will move forth fairly rapidly with its permitting as soon as those are issued. So we're looking for this with our permit by the end of the year, and I have every expectation that we will receive one.

Great. I guess, one other question just on the remaining kind of gas projects that, I guess, the unidentified billion dollars or so that you might do. Just we've had, obviously, high gas price, low gas price. Now gas price back up. There's, I guess, been some pullback in drilling. Just how do you feel about being able to execute on that remaining billion dollars?

Well, first, remember the billion dollars is not actually in the plan. It's not in the growth plan. The growth plan is predicated on the projects that are identified. That said, we are working -- there's a lot of activity in Ohio. There's less activity in Pennsylvania and West Virginia, but there's still a tremendous amount of activity in Ohio. As I said, I think, during the call, well permits are up 50% just above last quarter's number. So drilling is still going on. We're working with a lot of drillers, producers on the gathering, primarily in gathering. We mentioned we've done an open season on a more of a larger pipeline project. So how much of the billion dollars? I don't know at this point, but we're working -- chipping away at that, and we'll have more information about that as we go through the course of the end of this year.

Our next question comes from Julien Dumoulin-Smith with UBS.

So maybe following up on the last question to start off with. With respect to Natrium 2, perhaps if you can comment on timeline there, just be curious how confident do you guys feel about getting that done in the first half of the decade. And on -- I'll follow up with a second here in a second.

If you'd -- by the first half of the decade, you're talking about through some time between now and 2015.

Yes, exactly.

That timeframe should work for Natrium 2, but we don't have any announcements to make affirmatively, one way or another on Natrium 2. We're still working with producers on that project.

Okay, great. And then secondly, when it comes to asset sales. Broadly speaking, I know you mentioned Kewaunee earlier, just on the merchant generation side, how do you feel after Salem Harbor of late about the balance of your portfolio? Any other processes ongoing?

There -- I would say -- there are -- we don't have any processes ongoing, but let me just mention on asset evaluation. Said this for -- since I've been CEO of the company, which is nearing 7 years now, we are constantly evaluating our assets. If they face headwinds that we think cannot be overcomed in a -- overcome -- in a reasonable period of time, then we will evaluate whether we should sell the asset or shut the asset down. And it's not something we do on an intellectual basis. We have sold all of our power plants in South America. We sold a utility in the U.K. We sold a power plant in the U.K. We sold peakers in Ohio and Pennsylvania. We have shut down and we sold 1/3 of our company in our -- when we sold E&P business, so my point about all of this, we're constantly evaluating these assets. And if we don't think we can overcome the headwinds, then we'll -- we will act on it. But I don't have anything to announce on that.

And then maybe just a last quick follow-up here to a prior question on LNG, how confident are you guys in moving forward with the financing proposal later this year? I mean, how is that progressing if you can?

Julien, this is Mark. We're well down the road on how we plan on financing this project, but we'd really like to wait to talk about that until we have firmer cost numbers, until we have all of the service contracts locked down. But we spend a lot of time to what's optimal for shareholders in terms financing, and we hope to be in a position later this year or early next year to talk about Cove Point as a package, of which financing will be part of that.

Our next question comes from Michael Lapides with Goldman Sachs.

Can you revisit a little bit what's happening more of what you're seeing with demand in Virginia? And the only reason why I ask is that your commentary about new connect levels year-over-year is very bullish. Your commentary about raw demand -- weather normalized demand levels, meaning coming in below your original expectation, less bullish. It implies either some kind of lag in usage or it implies some weakness in kind of usage per customer. Can you just talk about what you're seeing and touch on the individual -- on the 3 main customer segments and where differences are showing up?

Yes. This is Paul. We're seeing very strong new connects as compared to last year. We've had over about 15,000 new connects this year versus a little over 12,000 last year, year to date, so that's very positive. I think that shows us that developers and homebuilders are getting back out. They're turning dirt, and we're starting to see that activity in the form of new connects. Now it does take some time for new connect demand growth to really show up in our numbers, but that's a good early indicator. Generally speaking, the industrial loads are all looking strong. We've had some consolidations of industrial customers here in our service territory, but the overall economic strength is very good. I would say if you look for where there's some softness in our numbers, it's probably widely distributed among kind of the commercial sector. And I don't think that is coming as any real surprise given the overall economy throughout the country. But it's really distributed among a lot of various types of commercial accounts, whether it's laundromats or whether it's welding shops, those type of places. But we expect when the economy strengthens that, that's going to come back very well. So seeing good early strong indicators, industrial growth, the data centers still connecting. Just attended grand opening of a new data center yesterday. We plan to connect 9 this year. That's still on pace, so as I look at things going forward, we have a strong economy. It's widely distributed, and all the areas are really doing pretty well.

Okay. And just a follow-up on the industrial side because when I look at the data in the operating stats portion of your earnings release, year-over-year, 3 months, 6 months your customer account for industrial is actually down, and your demand number for the quarter is actually down 4%, 5%, and for the year-to-date, it's basically flat. And I kind of thought just from a weather perspective, industrial tends to be far less weather sensitive than any of the other categories. So just I'm trying to kind of true up your comments versus some of the data that's in the operating stats.

Yes. As I indicated earlier, we've downed about 17 industrial accounts. That's what's on the schedule. That's principally a couple of consolidations with pharmaceuticals as one. Smurfit-Stone was acquired by Rock-Tenn. That's another. So there are some consolidations happening among of our industrial accounts. And again, in terms of sales year-over-year, I think it's a -- just a couple of different isolated areas where perhaps a few customers had stronger quarters last year but not anything really concerning.

Our next question comes from Brian Chin with Citi.

My question was asked and answered.

Ladies and gentlemen, we have reached the end of our call. Ms. Arnett, do you have any closing remarks?

Yes, thank you. Just a reminder that our third quarter earnings release is scheduled for October 25.

Thank you. This does conclude this morning's teleconference. You may disconnect your lines, and enjoy your day.