Fitch Rates Virginia Electric and Power's $300MM 3.45% Notes 'A-'; Outlook Stable

NEW YORK--(BUSINESS WIRE)--Fitch Ratings assigns an 'A-' rating to the 3.45% senior unsecured notes issued by Virginia Electric and Power Company, (VEPCO). The maturity of the new notes is Sept. 1, 2022. The proceeds from the offering will be used for general corporate purposes, including the pre-funding of fourth quarter 2010 capital needs and the repayment of short-term debt, including inter-company debt owed to parent company, Dominion Resources, Inc. (IDR rated 'BBB+' by Fitch). The Rating Outlook is Stable.

VEPCO's ratings are underpinned by constructive state regulation that facilitates timely recovery of generation and transmission investments and a relatively robust economy in the service territory that has resulted in above average load growth. VEPCO is reducing reliance on purchased power by investing in new generation. The capital costs for the Bear Garden combined cycle unit, the Virginia City Hybrid Energy Center and various transmission projects are recoverable through riders that are re-set annually based on projected construction costs. VEPCO has base rate certainty through December 2013 assuming the earned return on equity remains within the band authorized by the March 2010 Stipulation and Settlement. A slowdown in load growth or rising operating costs could make this a challenge, particularly in the later years of the settlement period and VEPCO requires continued regulatory support for timely and full recovery of its significant capital investment plans.

Liquidity is considered strong. Dominion and VEPCO recently completed the primary syndication of new credit facilities totaling $3.5 billion, which include a joint $3 billion three-year revolving facility. The new facilities are expected to close on or before Sept. 30, 2010.

Additional information is available at www.fitchratings.com.

Applicable criteria available on Fitch's web site at 'www.fitchratings.com' include:

--'Corporate Rating Methodology', Aug. 16, 2010;

--'Credit Rating Guidelines for Regulated Utility Companies' July 31, 2007;

--'U.S. Power and Gas Comparative Operating Risk (COR) Evaluation and Financial Guidelines' Aug. 22, 2007;

--'Utilities Sector Notching and Recovery Ratings', March 16, 2010.

Related Research:

Credit Rating Guidelines for Regulated Utility Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=334652

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=546646

U.S. Power and Gas Comparative Operating Risk (COR) Evaluation and Financial Guidelines

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=338030

Utilities Sector Notching and Recovery Ratings

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=504546

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