- The Washington Times - Tuesday, September 17, 2002

Shares of Dominion Resources, Virginia's largest utility, plummeted yesterday after the company said profits for 2003 would be far less than forecasted.
Shares fell $5.67, or 9.7 percent, to $52.33 on the New York Stock Exchange yesterday.
The Richmond-based firm said it would begin selling stock in order to satisfy credit-rating agencies who have been clamoring for reductions in corporate debt.
The company said the amount of equity to be released had not yet been determined, but that it would result in lower earnings forecasts for 2003.
Dominion said profits for 2003 would be between "flat" and 4 percent increase, compared with a 7 percent increase that had been forecasted. Earnings per share would be about 17 cents less than earlier projections of as much as $5.29.
Heavy costs of security for Dominion's six nuclear-power plants and a host of other "negative factors" would also hurt next year's profits, said the company's chairman and CEO, Thomas E. Capps, in a conference call yesterday.
He said there was an unprecedented number of events that will hurt Dominion's profits next year, including rising costs of security at nuclear-power plants, increasing pension costs and expenses stemming from new accounting rules.
Dominion is also faced with increased financial commitments to its employees; it just ratified a new contract with its electrical workers calling for a 14.8 percent wage increase over the next five years.
"In my 30 years of experience with this industry, I can't recall until this year so many negative factors emerging at one time to adversely affect companies," Mr. Capps said.
Investors yesterday responded to the news of a new issuance of stock by selling early in the day. Shares of Dominion fell as low as $51.10 before rebounding slightly in the afternoon.
"Anytime an equity offering is announced, it puts pressure on the stock because people think they can sell now and buy cheaper later," Larry Alberts, an American Express utilities fund manager told Bloomberg News. Mr. Alberts helps manage $1.3 billion in equity, including shares of Dominion.
Dominion said the sale of new stock will help reduce its ratio of debt to total capital from 62 percent to 55 percent. The company has stable outlooks from both Standard & Poor's and Moody's Investors Services.
The debt ratings by both companies are three levels above "junk."
Higher oil and gas prices along with solid revenues from recent acquisitions, including the State Line power station and Cove Point, a natural-gas provider, might help offset some losses next year, Dominion said.
The company also said it would save money on inspections by replacing reactor heads at two Virginia power plants, and might delay or even cancel some larger pipeline and power-plant projects.


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