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Dominion VA Power Credit Risk Management

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

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Dominion VA Power Credit Risk Management

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  1. Dominion VA PowerCredit Risk Management October 20, 2010 Pam Kemper Utility Payment Conference

  2. 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-serviceCustomers 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)

  3. 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

  4. Commercial Profile • Although Commercial/Industrial make up less than 11% of our customer count they make up 42% of the Revenues • Arrears balances are generally low if any at all – security is critical

  5. Risk Analysis: • Tools for Analysis: • Standard & Poor’s Rating (Warning at B, Request B negative) or Moody's equivalent • Adverse News • Frisk 2 score • Altman Z score • Industry news • Hoovers • D & B reports • Other

  6. 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.

  7. Commercial Deposit Requests 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

  8. Security Options • Two month deposit (standard offer) • Cash • ILOC • Surety Bond • One month deposit and accelerated pay • Parental Guarantee (only when parent has assets in US) • Negotiation • Prepayment

  9. What is Prepayment? • In lieu of deposit request • Payment for usage not yet consumed • Not subject to preference in bankruptcy • Benefit to customer over standard deposit and minimizes Dominion’s risk 26

  10. Why Prepayment Works

  11. Example Prepayment • Customer must pay for all usage billed & unbilled before beginning prepayment plan • Budgeted amount true up quarterly • Separate prepayment bill issued 27

  12. Next Steps: • Long term options for large customers • Automation in CIS systems • Expand to small commercial and residential customers

  13. Contact Information Pam Kemper Director, Customer Billing & Payment Service 804-771-4443 Office Pam.Kemper@dom.com

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