NEW YORK (Standard&Poor's) March 7, 2005--Standard&Poor's Rating Services said today that Dominion Resources Inc.'s (BBB+/Negative/A-2) decision to enter into a $424 million volumetric production payment (VPP) transaction with UBS Investment Bank does not affect its ratings or outlook on the company. Although Standard&Poor's adds back VPP proceeds as a debt equivalent, the deal is credit neutral from a financial standpoint as proceeds are being used for debt reduction. From an economic perspective, Dominion is mitigating counterparty risk by selling natural gas to a 'AA+' rated counterparty and eliminates liquidity requirements from collateral calls tied to gas prices. However, this is Dominion's third VPP transaction. Should the company increase these types of transactions, the quality
