Dominion VA Power Credit Risk Management October 20, 2010 Pam Kemper Utility Payment Conference
Dominion Virginia Power Profile • 2. 4 million customers (VA & NC) • 35, 000 to 55, 000 new connects annually • Phone centers handling 12 million customer contacts per year • Approximately 30% of customer contacts are now self-service Customers are being served by – 6, 000+ miles of electric transmission lines – 56, 000+ miles of electric distribution lines • Electric peak demand – Summer 19, 688 MW (8/8/07) – Winter 18, 079 MW (2/6/07)
Agenda • Dominion’s Commercial Profile • Risk Analysis – Analyzing financial stability and exposure, determining your highest risk industries • Security Options – goal is to offer customer options while managing risk
Commercial Profile v Although Commercial/Industrial make up less than 11% of our customer count they make up 42% of the Revenues v Arrears balances are generally low if any at all – security is critical
Risk Analysis: v Tools for Analysis: ü Standard & Poor’s Rating (Warning at B, Request B negative) or Moody's equivalent ü Adverse News ü Frisk 2 score ü Altman Z score ü Industry news ü Hoovers ü D & B reports ü Other
Monitoring deposits on hand • What deposits and security do you already have (Industries, sectors, franchises) • Are any set to expire? • Monitor expirations 3 months prior expiration to allow for adequate time to review pay history and financial standing. 6
Commercial Deposit Requests with Trend Line Previous Twelve Months Industries Represented: Retail Outlets Shipping and Packaging Restaurants Textiles & Manufacturing Hotels and Lodging Commercial Real Estate Prepayment savings in 2009 over $4 million Secured accounts in 2010 are more than $10 million
Security Options v Two month deposit (standard offer) Ø Cash Ø ILOC Ø Surety Bond v One month deposit and accelerated pay v Parental Guarantee (only when parent has assets in US) v Negotiation v Prepayment
What is Prepayment? v In lieu of deposit request v Payment for usage not yet consumed v Not subject to preference in bankruptcy v Benefit to customer over standard deposit and minimizes Dominion’s risk 26
Why Prepayment Works
Example Prepayment v Customer must pay for all usage billed & unbilled before beginning prepayment plan v Budgeted amount true up quarterly v Separate prepayment bill issued 27
Next Steps: v Long term options for large customers v Automation in CIS systems v Expand to small commercial and residential customers
Contact Information Pam Kemper Director, Customer Billing & Payment Service 804 -771 -4443 Office Pam. Kemper@dom. com 13
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