MD&A discusses our results of operations and general financial condition. MD&A should be read in conjunction with our Consolidated Financial Statements. The terms "Dominion," "Company," "we," "our" and "us" are used throughout this report and, depending on the context of their use, may represent any of the following: the legal entity, Dominion Resources, Inc., one or more of Dominion Resources, Inc.'s consolidated subsidiaries or operating segments or the entirety of Dominion Resources, Inc. and its consolidated subsidiaries.

Contents of MD&A

Our MD&A consists of the following information:

• Forward-Looking Statements

• Accounting Matters

• Results of Operations

• Segment Results of Operations

• Selected Information - Energy Trading Activities

• Liquidity and Capital Resources

• Future Issues and Other Matters

Forward-Looking Statements

This report contains statements concerning our expectations, plans, objectives, future financial performance and other statements that are not historical facts. These statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. In most cases, the reader can identify these forward-looking statements by such words as "anticipate," "estimate," "forecast," "expect," "believe," "should," "could," "plan," "may," "target" or other similar words.

We make forward-looking statements with full knowledge that risks and uncertainties exist that may cause actual results to differ materially from predicted results. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Additionally, other factors may cause actual results to differ materially from those indicated in any forward-looking statement. These factors include but are not limited to:

• Unusual weather conditions and their effect on energy sales to customers and energy commodity prices;

• Extreme weather events, including hurricanes, high winds and severe storms, that can cause outages and property damage to our facilities;

• Federal, state and local legislative and regulatory developments;

• Changes to federal, state and local environmental laws and regulations, including those related to climate change, the tightening of emission or discharge limits for greenhouse gases and other emissions, more extensive permitting requirements and the regulation of additional substances;

• Cost of environmental compliance, including those costs related to climate change;

• Risks associated with the operation of nuclear facilities;

• Fluctuations in energy-related commodity prices and the effect these could have on our earnings, liquidity position and the underlying value of our assets;

• Counterparty credit risk;

• Capital market conditions, including the availability of credit and our ability to obtain financing on reasonable terms;

• Risks associated with our regulated electric utility's membership and participation in PJM related to obligations created by the default of other participants;

• Price risk due to marketable securities held as investments in nuclear decommissioning and benefit plan trusts;

• Fluctuations in interest rates;

• Changes in federal and state tax laws and regulations;

• Changes in rating agency requirements or credit ratings and their effect on availability and cost of capital;

• Changes in financial or regulatory accounting principles or policies imposed by governing bodies;

• Employee workforce factors including collective bargaining agreements and labor negotiations with union employees;

• The risks of operating businesses in regulated industries that are subject to changing regulatory structures;

• Receipt of approvals for and timing of closing dates for acquisitions and divestitures;

• Changes in rules for RTOs in which we participate, including changes in rate designs and new and evolving capacity models;

• Changes to rates for our regulated electric utility operations, including the outcome of our 2009 rate filings;

• Timing and receipt of regulatory approvals necessary for planned construction or expansion projects;

• The inability to complete planned construction or expansion projects within the terms and time frames initially anticipated;

• Completing the divestiture of Peoples and Hope; and

• Adverse outcomes in litigation matters.

Additionally, other risks that could cause actual results to differ from predicted results are set forth in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2008.

Our forward-looking statements are based on our beliefs and assumptions using information available at the time the statements are made. We caution the reader not to place undue reliance on our forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, differ materially from actual results. We undertake no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.

Accounting Matters

Critical Accounting Policies and Estimates

As of September 30, 2009, there have been no significant changes with regard to the critical accounting policies and estimates disclosed in MD&A in our Annual Report on Form 10-K for the year ended December 31, 2008, other than the impact of updated nuclear decommissioning cost studies on our AROs as discussed in Note 13 to our Consolidated Financial Statements. The policies disclosed included the accounting for derivative contracts and other instruments at fair value, goodwill and long-lived asset impairment testing, regulated operations, asset retirement obligations, employee benefit plans, gas and oil operations, and income taxes.

Other

See Note 3 to our Consolidated Financial Statements for a discussion of newly adopted accounting standards. See Note 9 to our Consolidated Financial Statements for information on our fair value measurements.

Results of Operations

Presented below is a summary of our consolidated results:



                                                2009      2008      $ Change
         (millions, except EPS)
         Third Quarter
         Net income attributable to Dominion   $   594   $   508   $       86
         Diluted EPS                              1.00      0.87         0.13

         Year-to-Date
         Net income attributable to Dominion   $ 1,296   $ 1,486   $     (190 )
         Diluted EPS                              2.19      2.56        (0.37 )

Overview

Third Quarter 2009 vs. 2008

Net income attributable to Dominion increased by 17%. Favorable drivers include a higher contribution from our gas transmission operations due to the completion of the Cove Point expansion project, the impact of net realized gains (including investment income) for our merchant nuclear decommissioning trust funds in 2009 as compared to net realized losses (net of investment income) in 2008, the absence of post-closing adjustments to the gain on the sale of the U.S. E&P business recorded in 2008 and a higher contribution from our retail energy marketing operations. Unfavorable drivers include a lower contribution from our producer services business and lower margins in our merchant generation operations.

Year-to-Date 2009 vs. 2008

Net income attributable to Dominion decreased by 13%. Unfavorable drivers include an impairment charge related to the carrying value of our E&P properties due to declines in gas and oil prices, the absence of benefits recognized in 2008 from the reversal of deferred tax liabilities and re-establishment of a regulatory asset associated with the planned sale of Peoples and Hope and a decrease in sales of gas and oil production from our E&P operations primarily reflecting the expiration of fixed-term overriding royalty interests associated with our former volumetric production payment agreements (VPP royalty interests). Favorable drivers include higher margins in our merchant generation operations, a higher contribution from our gas transmission operations due to the completion of the Cove Point expansion project, a benefit from a downward revision in the nuclear decommissioning ARO for a power station unit that is no longer in service, fewer scheduled outages at certain nuclear and fossil generating facilities and the impact of net realized gains (including investment income) for our merchant nuclear decommissioning trust funds in 2009 as compared to net realized losses (net of investment income) in 2008.