Dominion Customers to Receive 29 Percent Decrease in Gas Costs; Innovative Plan to Freeze Rates Through April 2002.

Business Editors

CLEVELAND--(BUSINESS WIRE)--June 29, 2001

Dominion East Ohio sales customers will pay 29 percent less for natural gas than they now do under a new rate that will be frozen through April 29, 2002, according to an innovative gas cost recovery (GCR) filing made with the Public Utilities Commission of Ohio (PUCO).

About 580,000 of Dominion East Ohio's total 1.2 million customers will be affected by the change because they buy natural gas from the company at rates regulated by the PUCO. Other customers buy gas from competitive suppliers under market-based rates.

Under the new plan, which was developed jointly by the company and the PUCO, Dominion East Ohio sales customers will pay $6.17 per thousand cubic feet (Mcf), effective July 30. That represents a 29 percent savings from the current GCR of $8.70 per Mcf. The typical residential customer would save more than $280, or an average of $31 a month, over the next nine months, under the new GCR.

"Not only will our sales customers experience a 29 percent gas cost decrease, they also will enjoy stable rates throughout the winter heating season," said Edgar M. Roach Jr., Dominion East Ohio chief executive officer. "We worked closely with the PUCO and its staff to develop this innovative proposal, which will provide stable gas costs and remove the price volatility that customers experienced last winter."

Historically, the company adjusts gas costs quarterly, but under the new GCR proposal those costs would remain fixed at $6.17 per Mcf through April 29, 2002. The recent drop in national natural gas market prices has allowed Dominion East Ohio to use innovative gas purchasing methods. Dominion East Ohio will lock in current lower market prices with a combination of longer-term gas purchase contracts and other hedging techniques to stabilize winter gas costs for its customers.

Dominion East Ohio does not earn a profit on the GCR, which represents the cost of securing natural gas supplies for sales customers. The GCR accounts for more than two-thirds of a customer's monthly bill. The company is allowed only to earn a profit on the delivery or transportation portion of the bill. That rate, also known as the base rate, has remained stable since 1994.

Cleveland-based Dominion East Ohio is the largest natural gas distribution subsidiary of Dominion, headquartered in Richmond, Va. Dominion is one of the nation's largest producers of energy, with a production capability of 2.7 trillion British Thermal Units (BTUs) of energy per day. The company has a power generation portfolio of more than 21,000 megawatts, which is expected to grow to approximately 28,000 megawatts by 2005. Dominion is also one of the largest independent oil and natural gas exploration and production companies in North America, with 2.8 trillion cubic feet equivalent of natural gas reserves, with an annual production capability of over 300 billion cubic feet equivalent of natural gas. The company has 7,600 miles of interstate natural gas pipeline with a delivery capability of 6.3 billion cubic feet per day. In addition, the company operates the nation's largest underground natural gas storage system, with more than 950 billion cubic feet of storage capacity. Dominion also serves 3.8 million retail natural gas and electric customers, and owns a managing equity interest in Dominion Fiber Ventures LLC, owner of Dominion Telecom. Dominion Telecom is expanding its fiber-optic network from its current 35,000 fiber miles (3,600 route miles) to more than 800,000 planned fiber miles (9,000 route miles). For more information about Dominion, visit the company's website at www.dom.com.