Fitch Affirms Dominion Resources & Subsidiaries; Outlook Stable.

NEW YORK -- Fitch Ratings has affirmed the 'BBB+' Issuer Default Ratings (IDRs) of Dominion Resources, Inc. (Dominion), Virginia Electric and Power Company, (VEPCO) and Consolidated Natural Gas Company (CNG). The Rating Outlook for all three issuers is Stable. The full list of ratings affirmed is below.

Dominion's 'BBB+' rating reflects the strong cash flow generation potential of the core power and exploration and production assets, as well as a clear path to restoration of credit ratios to levels appropriate for the rating category and degree of business risk. Persistent under-recovery of fuel costs at VEPCO and the growth of exploration and production operations without a decrease in debt to cash flow ratios remain primary credit concerns. Dominion's ratio of funds from operations plus interest to interest was 3.7 times (x) at the end of 2005 as cash flow was adversely affected from temporary shut-ins of Gulf oil and gas production, under-recovered fuel costs at VEPCO, and below-market power and gas hedges. Fitch forecasts improvement in the ratio of FFO interest coverage to approximately 4.3x in 2006. An improvement in FFO should result from the receipt of business interruption insurance proceeds relating to the hurricanes, higher oil and gas production volumes and prices and improving price realizations from New England power generation. Dominion, Consolidated Natural Gas and VEPCO have the same Issuer Default Ratings (IDR) due to rating linkages created by the internal hedging and integrated capital management strategy of the group.

The Stable Outlook reflects Fitch's expectation that Dominion will improve cash flow generation and fund the 2006 internal cash flow shortfall in a manner that does not lead to higher leverage, including potential alternatives such as issuing common equity through the DRIP, new issuances of hybrid securities and using proceeds from the sales of local gas distribution companies (LDCs) or other asset rationalizations. Management has stated an intention to use at least half of the approximately $1 billion of proceeds from the sales of the LDCs for debt reduction at CNG. Cash flow generation should increase after the fuel re-set in 2007 and as below-market power and gas hedges expire, which will also lead to reduced liquidity needs. The Stable Rating Outlook for all three entities also incorporates Fitch's expectations that the 2007 fuel factor re-set at VEPCO will proceed routinely, oil and gas production will meet management's forecast of approximately 450 billion cubic feet equivalent in 2006 and generation assets will continue to be operated well. The ratings could be negatively affected if riskier non-regulated operations, (exploration and production) grow more quickly than regulated operations without a commensurate reduction in debt to cash flow.

VEPCO's 'BBB+' rating reflects the sound operating track record of a mostly coal and nuclear generation fleet and credit ratios that are appropriate for the rating category, as well as rating concerns regarding the capped base rates (through 2010) and frozen fuel factor. Rating linkage to higher-risk affiliates is an additional concern. The FFO interest coverage ratio was approximately 4.1x in 2005. The reset of fuel rates in mid-2007 should eliminate the significant under-recoveries, but there is a risk of another round of under-recovery after the reset if fuel prices significantly over the projections that will be incorporated in the fuel factor from July 2007 to the end of 2010.

CNG's ratings reflect the stability of cash flow generated by the gas distribution and transmission operations and benefits from ownership of 6,300 bcfe of oil and gas reserves, 84% of which are located on-shore. Saleable natural gas reserves provide an alternative source of liquidity. The ratings also consider the cyclical and capital-intensive nature of CNG's sizable exploration and production operations and the significant linkages among the issuers in the Dominion group.

Fitch affirms the following ratings with a Stable Outlook:

Dominion Resources, Inc:

-- Issuer Default Rating (IDR) 'BBB+'

-- Senior unsecured debt 'BBB+';

-- Trust preferred securities issued through various capital trusts and related junior subordinated notes 'BBB';

-- Commercial Paper 'F2'.

Virginia Electric and Power Company:

-- Issuer Default Rating (IDR) 'BBB+'

-- First mortgage bonds and other secured debt 'A';

-- Senior unsecured debt 'BBB+';

-- Trust preferred securities and related junior subordinated note 'BBB' (Trust preferred issued via Virginia Power Capital Trust II);

-- Preferred securities 'BBB';

-- Commercial paper 'F2'.

Consolidated Natural Gas Company:

-- Issuer Default Rating (IDR) 'BBB+'

-- Senior unsecured debt 'BBB+';

-- Trust preferred securities issued through Dominion CNG Capital Trust I and related junior subordinated notes 'BBB';

-- Commercial Paper 'F2'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, 'www.fitchratings.com'. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.