Fitch Affirms Ratings of Dominion & Subs on E&P Divestiture Announcement.

NEW YORK -- Fitch affirms the ratings of Dominion Resources, Inc. (Dominion) following today's announcement that it intends to pursue the sale of most of its exploration and production assets. The assets identified for sale are 5.5 trillion cubic feet equivalent (tcfe) of proved exploration and production (E&P) reserves.

The ratings of Dominion subsidiaries, Consolidated Natural Gas Company (CNG) and Virginia Electric and Power Company (VEPCO) are also affirmed. The Rating Outlooks of Dominion, CNG and VEPCO remain Stable. The full list of ratings affected by today's rating action is below.

The Stable Outlook incorporates Fitch's expectation that management will redeploy the proceeds from any sale of E&P assets in a manner that improves credit metrics. Management announced it intends to use the proceeds from any sale to first reduce debt and also to repurchase common shares and invest in electric generation and energy distribution, transmission, storage and retail businesses. Going forward, Dominion's ratings could be affected depending on the success of the divestiture process and the actual allocation of proceeds.

Closing of the announced E&P sale would alleviate several of Fitch's primary rating concerns and increase the share of consolidated cash flows from more stable businesses. Fitch has noted in prior rating action commentary that Dominion's growing investment in higher risk E&P operations with no decrease in debt to cash flow ratios could result in negative rating action. In addition, Fitch has in the past expressed concern that E&P operations entail relatively greater business and commodity price risks than most of Dominion's other activities. Dominion 's existing capital structure is suitable for regulated utility and pipeline businesses at current rating levels and these businesses would contribute a significantly larger share of consolidated cash flow following the planned divestiture of E&P assets.

Dominion plans to retain its long-lived, relatively low-risk Appalachian Basin E&P properties because of their strategic value to its pipeline, storage and gathering businesses. The Appalachian properties account for approximately 17% of Dominion's proved reserves and 8% of average daily production as of September 30, 2006. Closure of the announced sale would reduce the share of consolidated operating earnings from E&P activities to approximately 5% from its current 36% contribution.

Dominion expects to begin the formal sales process in mid-February 2007 after the reserve audit for 2006 is completed. Closing is targeted to occur by mid-2007. Based on the current forward strip and recent transactions, Fitch believes the sales price would be well in excess of the $10.5 billion book value of the E&P assets. The April 2006 passage of legislation in Virginia that reinstates a fuel adjustment mechanism for VEPCO beginning in July 2007 (SB 262) eliminates the need for continuing ownership of E&P assets to serve as an internal hedge against commodity price changes after mid-2007.

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 'BBB';

--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.