The ratings on Dominion Resources Inc. reflect the relative cash flow stability and supportive regulatory environment for its utility subsidiary, combined with riskier oil and gas exploration and production (E&P) operations and a growing portfolio of unregulated power generation. Credit strengths are offset by fuel factor losses at Virginia Electric&Power Co. (Virginia Power; BBB/Stable/A-2) and delayed production at Dominion E&P, which have caused deterioration in Dominion's financial performance during the past 12 months. In nearly all of its businesses, Dominion faces a high level of commodity price risk, which it actively manages by hedging its exposure. Despite very high oil and gas prices, the company has limited upside relative to many of its E&P peers. The company's business
