Operator: Good morning and welcome to Dominion's First Quarter Earnings Conference Call. On the call today we have Tom Farrell, CEO; Mark McGettrick, CFO and other members of senior management. At this time, each of your lines is in a listen-only mode. At the conclusion of today's presentation, we will open the floor for questions. At that time, instructions will be given as to the procedure to follow if you would like to ask a question.
I would now like to turn the call over to Tom Harlin, Vice President of Investor Relations and Financial Analysis for the Safe Harbor statement.
Thomas E. Harlin - VP, Financial Analysis and IR: Good morning. Welcome to Dominion's first quarter 2013 earnings conference call. During this call, we will refer to certain schedules included in this morning's earnings release and pages from our earnings release kit. Schedules in the earnings release kit are intended to answer the more detailed questions pertaining to operating statistics and accounting. Investor Relations will be available after the call for any clarification of these schedules.
If you have not done so, I encourage you to visit our website, register for email alerts and view our first quarter 2013 earnings documents. Our website address is www.dom.com/investors. In addition to the earnings release kit, we have included a slide presentation on our website that will guide this morning's discussion.
Now, for the usual cautionary language; the earnings release and other matters that will be discussed on the call today may contain forward-looking statements and estimates that are subject to various risks and uncertainties. Please refer to our SEC filings, including our most recent Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for a discussion of factors that may cause results to differ from management's projections, forecasts, estimates, and expectations.
Also on this call, we will discuss some measures of our Company's performance that differ from those recognized by GAAP. Those measures include our first quarter 2013 operating earnings and our operating earnings guidance for the second quarter and full year 2013, as well as operating earnings before interest and tax commonly referred to as EBIT. Reconciliation of such measures to the most directly comparable GAAP financial measures, we are able to calculate and report are contained on Schedules 2 and 3 and Pages 8 and 9 in our earnings release kit.
Joining us on the call this morning are our CEO, Tom Farrell; our CFO, Mark McGettrick, and other members of our management team. Mark will discuss our earnings results for the first quarter of 2013 and our guidance for the second quarter. Tom will review our operating and regulatory activities for the quarter and review the progress we've made on our growth plans.
I will now turn the call over to Mark McGettrick.
Mark F. McGettrick - EVP and CFO: Good morning. Dominion's operating earnings of $0.83 per share for the first quarter were within but below the midpoint of our guidance range of $0.80 to $0.95 per share. Earnings for the quarter were impacted by higher than normal storm and service restoration activity in Virginia, the delay of our Natrium processing plant coming online, lower margins at Millstone due to transmission congestion in February, and lower electric sales than planned. GAAP earnings were $0.86 per share for the quarter. The principal difference between first quarter GAAP and operating earnings was a net gain from our investment in our nuclear decommissioning trust. A reconciliation of operating earnings to reported earnings can be found on Schedule 2 of the earnings release kit.
Before moving to operating segment results, let me spend a minute on sales and actions we are taking to protect against any sales growth that may fall below our estimate of 2%. In the first quarter, weather-normalized sales grew by about 1%. Thus far, we have seen strong growth in commercial activity this year, but residential sales have lagged. It is far too early in the year to draw any definitive conclusions on changes to our estimates, but you should note that we expect to reduce our 2013 operating expenses by about $100 million from originally planned levels to offset the higher storm and margin events in the first quarter and protect against any potential shortfall in our sales expectations.
As we have previously stated, a 1% change in sales equates to about $0.04 to $0.05 per share in earnings. We believe this early action reinforces our plans to grow operating earnings by our annual target of 5% to 6%.
Finally, as we explained at our March 4 Analyst Meeting, you should expect most of our growth to occur in the third and fourth quarters as outlined on Slide 4.
Now moving to results by operating segment, at Dominion Virginia Power, the EBIT for the first quarter was $278 million, which was below its guidance range. Kilowatt hour sales were below expectations and major storm and service restoration cost due to several major snow events were higher than expected.
EBIT for Dominion Energy was $301 million, which was above the top of its guidance range. During the quarter, the TL-404 pipeline was contributed to the Blue Racer Midstream joint venture adding $25 million to first quarter EBIT. This was originally scheduled to be dropped in the second quarter and was therefore not included in our first quarter earnings guidance. The shortfall in earnings from the delay in Natrium operations was offset by lower fuel costs and lower operating expenses.
Dominion Generation produced EBIT of $415 million in the first quarter which was below the bottom of its guidance range. Lower than expected kilowatt hour sales and lower ancillary service revenues at Virginia Power were the principal factors driving the results for the regulated generated business. EBIT from merchant generation was below the midpoint of its guidance range. A February snowstorm which brought nearly 2 feet of snow in the Boston area led to congestion in the New England transmission system which prevented us from realizing expected margins at Millstone for several days. On a consolidated basis, both interest expenses and income taxes were in line with our estimates.
Moving to cash flow and treasury activities, funds from operations were $1.1 billion for the first quarter. Regarding liquidity, we have $3.5 billion of credit facilities. Commercial paper and letter of credit outstanding at the end of the quarter were $2 billion, resulting in available liquidity of $1.5 billion. For statements of cash flow and liquidity, please see pages 14 and 27 of the earnings release kit.
Now, moving to our financing plans; we issued $750 million of Virginia Power debt in January and another $500 million in March. We were pleased with the market's response to our offering and thank those of you who participated. We updated our 2013 financing plans at our March 4 Analyst Meeting to reflect the inclusion of a Cove Point liquefaction project in our growth plan. In addition to the $300 million of common equity we expect to raise through a dividend reinvestment and other stock plans, we expect to issue between $500 million and $1 billion of mandatory convertible securities sometime this year.
Now to earnings guidance, we estimate operating earnings for the second quarter of 2013 within a range of $0.60 to $0.70 per share. This compares with original operating earnings of $0.59 per share for the second quarter of 2012.
Compared to the second quarter of last year, positive drivers for the quarter include; a return to normal weather, earnings from our newly completed growth projects at Dominion Energy, sales growth at Virginia Power, and higher rider related revenues. In addition, you should expect a reduction to our originally planned operating expenses due to the program I discussed earlier.
Negative drivers for the quarter include a refueling outage at Millstone Unit 3 and lower contributions from Dominion retail.
Our operating earnings guidance for 2013 remains $3.20 to $3.50 per share. The middle of this range corresponds to a 5% to 6% increase over the middle of our guidance range for 2012.
As to hedging, you can find our hedge positions on Page 29 of the earnings release kit. Since our last update on March 4, we have made no changes to our Millstone hedges. Our sensitivity to a $5 move in New England power prices is only about $0.01 per share in 2013 and $0.03 per share for 2014.
So let me summarize my financial review. Operating earnings were $0.83 per share for the first quarter, below the midpoint of our guidance range. Kilowatt hour sales of Virginia Power were less than expected and we have taken steps to reduce operating expenses to offset any potential impact of lower sales as well as the impact of storms and the delay at Natrium in the first quarter.
Our operating earnings guidance for the second quarter of 2013 is $0.60 to $0.70 per share. A return to normal weather, earnings from our growth projects, sales growth at Virginia Power, and reduced operating expenses, should drive these results.
Finally, our operating earnings guidance for 2013 remains $3.20 to $3.50 per share. The middle of this range assumes normal weather and corresponds to a 5% to 6% increase over the middle of our guidance range for 2012.
I will now turn the call over to Tom Farrell.
Thomas F. Farrell II - Chairman, President and CEO: Good morning. At our March 4th Analyst Meeting in New York, I highlighted our improved safety performance by showing that our OSHA incident rate had been reduced by over two-thirds over the last seven years. That trend continued in the first quarter of this year as well, with each of our business units achieving year-over-year improvements in safety.
We achieved record-setting operating performance from our generating fleet in the first quarter as well. The first quarter net capacity factor of the seven new Dominion nuclear units was 100%. In fact, up until the April 14 shutdown of North Anna Unit 2 for its scheduled refueling outage, all seven nuclear units operated continuously for 125 days.
Millstone Unit 3 achieved a breaker-to-breaker continuous run of over 500 days. Our merchant fleet established equivalent availability records for the combined cycle fleet as whole and for the Fairless Works power station in particular.
We continue to move forward on our growth plan. Construction of the 1329 megawatt Warren County combined cycle plant is progressing on schedule and on budget for a late 2014 commercial cooperation date. All three combustion turbines and generators have been installed on their foundations. The air-cooled condenser and three heat recovery steam generators are being erected. Over 900 people are presently employed at the site.
Development of the proposed Brunswick County power station continues. Last November, we filed a CPCN and rider applications with the State Corporation Commission. The public hearing began yesterday and we expect a ruling from the Commission later this summer. On March 15, the Virginia Department of Environmental Quality issued the unit's air permit. The 1358 megawatt three-on-one combined cycle facility is expected to be in service in 2016.
The conversion of the AltaVista, Southampton and Hopewell plants from coal to biomass are progressing on schedule and on budget. Engineering and procurement of all major equipment have been completed and delivered to the sites. The first biomass fuel deliveries arrived at AltaVista in March, which will allow testing to proceed this quarter. All three projects are expected to be operational later this year.
We have a number of electric transmission projects at various stages of regulatory approval and construction. Our growth plan includes new investments of over $500 million per year in growth and reliability projects, including the systematic rebuild of the 500 kb (loop) that is the backbone of our State's transmission network.
Progress in our growth plan for Dominion Energy continues. The Natrium processing and fractionation plant was originally scheduled to be in service at the end of last year. We have experienced a nearly four-month delay in completing this 20-month project for a number of reasons, but we are pleased to say, we have begun commissioning activities and we'll be fully operational in May. We have assessed the reasons for the delay and have taken steps that we believe will improve our future midstream construction performance.
The Utica region continues to be very active. Through April 13, a total of 605 horizontal Utica permits have been issued and 297 wells have been drilled, an increase of 93 wells permitted and 74 wells drilled since just the middle of February.
The management team at Blue Racer is actively marketing gathering and processing services to the producers in the Utica region. A 200 million cubic feet per day processing plant has been ordered and will be delivered to the Natrium site this summer. This facility will provide the service we had originally planned to fund ourselves that we had called Natrium II. Blue Racer has also ordered a second 200 million cubic feet per day processing plant that will be delivered to the Berne, Ohio site this fall.
In February, Dominion East Ohio signed a gathering agreement with BP, including investment of $24 million related to the installation of gathering pipe and compression for BP shale wells, we drilled in Trumbull County. We are evaluating this and other assets for potential contributions to the Blue Racer joint venture.
This morning Dominion Transmission announced a non-binding open season to solicit interest in incremental firm transportation capacity to serve our traditional markets in New York State. The project contemplates access to the growing supplies in the northern portion of DTI system and delivering it to the Iroquois Gas Transmission System and to the Niagara Mohawk distribution service – system, serving Albany. The new gas supply and market dynamics have created an opportunity to provide expanded natural gas service to meet existing and growing loads in the Northeast market area. Dominion Transmission, Dominion East Ohio, and Blue Racer are all providing the midstream growth we anticipated.
We are pleased that our Board made its final investment decision to go forward with the Cove Point liquefaction project. On April 1, we announced that the capacity of the project is fully subscribed with 20-year terminal service agreements with Sumitomo and GAIL, each contracting for half of the capacity. Sumitomo in turn has commitments for its capacity to serve Tokyo Gas and Kansai Electric.
We also announced the signing of an EPC contract for the liquefaction facilities with IHI/Kiewit Cove Point and have already placed orders for some of the major equipment. We have filed an air permit in CPCN applications in Maryland. Also, on April 1, we filed the 12,000-page FERC certificate application. We expect to receive our export license from the Department of Energy sometime this year. Subject to FERC approval, we expect to commence construction next year, with commercial operation expected in late 2017.
Before we open the call for questions, I want to give an update on our regulatory activities. On March 28, Virginia Power filed its 2013 biennial rate review application, demonstrating that the Company earned a return on equity of 10.11% for the 2011 and 2012 test periods. This falls below the authorized earnings band of 10.4% to 11.4%. If the State Corporation Commission concludes that the Company's earnings did not exceed the top of the earnings band, then rates cannot be lowered until December of 2017 at the earliest. A decision from the Commission is due by the end of November.
Finally, on March 22, the State Corporation Commission approved a solar purchase program that offers customers who own solar generation installations a special rate option. The program has a cap of up to 3 megawatts of customer-owned installations. These customers of solar generation will now have the option to purchase all of their electricity from Virginia Power on our current rate schedule and sell their solar generation, including renewable energy credits back to the Company. We continue to offer innovative solutions designed to satisfy our customers' needs.
So, to summarize, the Company achieved record-setting operating and safety performance in the first quarter. We continue to make progress on our infrastructure growth plans at Virginia Power. The Natrium processing and fractionation plant was a few months behind schedule, but is currently being commissioned. Blue Racer is providing the earnings growth we anticipated. We have secured terminal service agreements for the full capacity at Cove Point, signed an EPC contract, and submitted our filing to FERC, all of which support the earnings profile we provided at our March Analyst Meeting. We look forward to beginning construction in 2014. And finally, we have submitted our biennial review filing with the Virginia State Corporation Commission showing that we did not exceed the authorized earnings band in 2011 and 2012, which should keep our base rates stable through at least 2017.
Thank you and we are ready for your questions.
Operator: Dan Eggers, Credit Suisse.
Dan Eggers - Credit Suisse: Listen, on the load growth walk, it seems it is a little more caution maybe or tone in what you guys said today maybe from the Analyst Day. Can you maybe just shed a little more light on what you're seeing and are we seeing the impact of sequestration or other things in the area that's having more variant on the outlook this year?
Mark F. McGettrick - EVP and CFO: Dan, it was hard to hear you, but this is Mark. I think I got your question and see if I can address it with a little more depth. January and February for us were pretty close to expectations in terms of load growth, but March dropped off significantly for us. And so sales for the quarter were only up about 1%. We were very pleased with commercial sales. They were up about 3%. Industrial sales, which is a small item for us, but they were up by 1%, but our residential sales were fairly flat. We don't have an answer for this for you today; it's something we're monitoring closely, and we'll talk more about as we go through the year. But the reason – one of the principal reasons to announce the expense reduction program today is to safeguard ourselves from any potential sale shortfall if that were to occur. If that doesn't occur, then some of those expenses will be put back into operating budgets later in the year. But we want to make sure we got out in front of this and we safeguard ourselves so we have a better picture on what sales might look at like this year.
Dan Eggers - Credit Suisse: I guess just on the – (with) kind of leading the next question which is on the cost-cutting, can you explain what all is going into that? Are these kind of period-specific costs that will be caught up in future periods, or are these some structural changes that are bringing more costs out of the system as you reevaluate the business?
Mark F. McGettrick - EVP and CFO: It's going to be a combination of both. Some will be structural changes. Some will be timing changes that we'll redeploy for future periods. We're finalizing those plans now and should have that in place by the end of April. We will tell you one of the first steps we took in the first quarter was to significantly restrict new staffing for the Company, which typically is in the range of 300 to 400 new employees every year, as a way to give us a running start on this. It's being managed very closely. And so based on that, we think we're in good shape as we implement other changes throughout the Company. And again, as I mentioned previously, some of them will be time-based; some of them will be permanent.
Dan Eggers - Credit Suisse: And so we should assume that the O&M costs for '13 are now going to be down almost noticeably versus 2012 with this program as well?
Mark F. McGettrick - EVP and CFO: Actually, I think with the $100 million item, you should see expenses '12 to '13 to be very flat.
Dan Eggers - Credit Suisse: And then I guess just one last question on the biennial review. Given where your earned ROEs are in the (mid legislation) came through in Virginia this spring. Do you guys see the opportunity potentially to settle with parties and kind of get everybody passed this and focus back on the business full time or is this going to be a fully litigated process.
Thomas F. Farrell II - Chairman, President and CEO: Dan, we're always happy to talk to the parties about settlement. I think you have to let the process run its course at least for some period of time before people are willing to talk about that. I do think the issues are pretty limited. In this case, I'm sure people will want to talk about the going forward earnings band. For example that won't affect base rates, but we'll have its impact in some regard in what the earnings test is for '13 and '14 and the little increment of that appears in the riders. So, I think that will obviously be an area for discussion, but the accounting issues are not very complex.
Operator: Steve Fleishman, Wolfe Trahan.
Steve Fleishman - Wolfe Trahan: Just first question on the biennial. Where do the peer group ROEs come out in your filing, the three-year rolling?
Thomas F. Farrell II - Chairman, President and CEO: Steve, I don't have that sitting here in front of me. I apologize. We'll get it – we'll make sure it's posted on the website. It's in the testimony. It's all out there in the public domain. The average of the – if you use all 11, the average is 10.74%.
Steve Fleishman - Wolfe Trahan: And then on the retail business, I know you had a tough comp; last year you did very well, but could you just go into any dynamics you're seeing in the retail business so far this year?
Mark F. McGettrick - EVP and CFO: Steve, let me just mention the comparable to last year first and then I'll turn it over to Paul to go into more depth on it. If you look at the reconciliation on the Schedule 4, just Page 10, I think of the kit, it shows a $0.07 quarter-over-quarter change from '13 to '12, and that was driven by two items. I talked about this at the Analyst Meeting on March 4 to expect this. We took a $0.05 of one-time mark-to-market gain in the first quarter of last year based on some commercial and industrial contracts that were deemed to be derivatives. So that was $0.05 of the difference. The remaining $0.02 is just the normal roll-off of those contracts that occurred beginning in the second quarter last year and will continue through the rest of this year. So those are the two high-level drivers. But in terms of the dynamics in retail, let me ask Paul to comment on that.
Paul D. Koonce - EVP, Dominion Resources, Inc.; CEO, Energy Infrastructure Group; and CEO, Dominion Virginia Power: Yeah, Steve, good morning. The dynamics; when you look at the ABS, it's going to be published here in just a few minutes. You'll see that retail actually had a strong quarter. They hit albeit at the low end of the guidance range, but when you look at customer counts in the kit, you see that customer counts were up; you can see that volumes were up, but it is a competitive business. So, when you compare it to guidance, it's kind of what we expected, but it's less than last year.
Steve Fleishman - Wolfe Trahan: One other question just on the issue with Millstone on the basis – I guess the congestion in February. Is this something we should worry about just with all the different gas dynamics into New England that could have any ongoing issue or is it just very driven by that storm and the like and transmission issues from that?
Mark F. McGettrick - EVP and CFO: Steve, let me have Dave Christian answer that for you?
David A. Christian - EVP, Dominion Resources, Inc.; and CEO, Dominion Generation Group: Yeah, it looks like that was a predominantly concentrated in one week in February and wouldn't expect to see a lot of that throughout the rest of the year.
Operator: Jonathan Arnold, Deutsche Bank.
Jonathan Arnold - Deutsche Bank: I was going to ask about retail, so I will ask my other one instead. On the Natrium, you talked about the delay and that you're going to change some of your operating practices or whatever to help reduce risk going forward. Can you just give us a bit more insight into what exactly caused this delay and what you're going to do differently to fix?
Thomas F. Farrell II - Chairman, President and CEO: There were a variety of reasons, Jonathan. Some I attribute to our management of the project; many of which I can attribute to the contractor and the subcontractors, but we've done a – we have over the last at least five years delivered every single project, whether it was in construction of generation plants, upgrades to plants, electric transmission lines, midstream projects, pipeline projects, Cove Point's expansion, the pier construction; every single one of those projects has delivered on time and on budget. It's kind of a mantra around here, and this time we didn't do it. And so, we've taken a hard look at the whole process we went through with the bids on that project; our management of it, the contractor's management of it, and we've made a variety of internal changes that we think will make sure that that does not happen again. Fortunately, plant looks to be very well constructed. It's gone through its final commissioning really as we speak, it has been doing it over the last week, 10 days, and it should be running pretty close to full middle to late May, so we're going through the last pieces of it now. But we've made some significant changes. We have some – a lot of future projects coming.
Jonathan Arnold - Deutsche Bank: So I'm just still speaking in a very generic terms, I mean, was it one major issue or just a host of issues?
Thomas F. Farrell II - Chairman, President and CEO: I wish I could tell you it's one issue that we can solve that we point one finger at, but it was a variety of issues across our management of it and the contractor's management of it. But it is – I consider to be a one-off experience; we've made the changes we need to make and we'll be in better shape going forward.
Jonathan Arnold - Deutsche Bank: And on similar topic, could you just comment on the sort of contracting status of Natrium II and the Berne facility?
Thomas F. Farrell II - Chairman, President and CEO: Of course, Natrium; that will be handled by Blue Racer, those are their projects. Remember, the way it works, they have to contribute all the capital to the joint venture until our capital accounts are equal which has ways to go, so they'll be putting up all the cash, for example, to purchase those processing plants. There is a tremendous amount of interest in those two locations which is why they picked them to move these processing facilities too. They are well into negotiations with a variety of producers and we will have to leave announcements about that up to the Blue Racer management team as they come along.
Operator: Paul Fremont, Jefferies.
Paul Fremont - Jefferies & Company: If I take the retail decline in the first quarter and assume sort of a $12 million decrement each quarter between now and the end of the year, that would seem to put you on the low-end of your retail guidance for the year, is that a fair assumption?
Paul D. Koonce - EVP, Dominion Resources, Inc.; CEO, Energy Infrastructure Group; and CEO, Dominion Virginia Power: Paul, this is Paul Koonce. We did have a very strong first and second quarter last year. We've guided full year and we have not seen any reason to change that.
Paul Fremont - Jefferies & Company: And I guess my other question would be, on the new processing facilities, can you give us a sense of what the capital spend is associated with each of those processing facilities?
Thomas F. Farrell II - Chairman, President and CEO: We'll have to get back to you on that Paul. It's Blue Racer's capital spend; it's not ours.
Paul Fremont - Jefferies & Company: Understood. But I'm just trying to figure out what…?
Thomas F. Farrell II - Chairman, President and CEO: Actually Cayman's capital spend; not even the joint venture's capital spend.
Mark F. McGettrick - EVP and CFO: Paul, I would say that if you're making a comparison to Natrium I, the facility that we're going to put into a joint venture, these processing facilities are significantly different than (Nat) and at a significantly reduced costs from that.
Paul Fremont - Jefferies & Company: Right, because they have no fractionation, right?
Thomas F. Farrell II - Chairman, President and CEO: Right.
Mark F. McGettrick - EVP and CFO: No fractionation. And so, again, without Cayman management allowing us to release that, we are not in a position to tell you the exact cost of plants, but I certainly can guide you that it will be dramatically lower than what Natrium I cost.
Paul Fremont - Jefferies & Company: And is there a schedule in the biennial proceeding that's available?
Thomas F. Farrell II - Chairman, President and CEO: Actually, I think they just issued the schedule. The hearings are supposed to be in the first or second week of September. And the statute requires mandates if they issued a final order before the end of November.
Paul Fremont - Jefferies & Company: And staff and intervener filings are due when?
Thomas F. Farrell II - Chairman, President and CEO: August. But there is – Paul and everyone else listening, there is a posted order that we'll make sure we get on our website for you. It's on the State Corporation Commission's website now.
Operator: (Paul Patterson, Glenrock Associates).
Paul Patterson - Glenrock Associates: Just wanted to touch base with you on weather versus normal. On Page 24 it looks like it was a hurt and on Page 21 it looks like you guys had higher heating degrees actual versus normal. Could you reconcile that for me?
Mark F. McGettrick - EVP and CFO: Yeah, weather was actually a hurt to normal for us of about $0.015 for the quarter. Heating degree days were up, but based on when those occur during the day it didn't gave us the full benefit of that. It gave us most of it, but again, weather normalized for us hurt us about $0.015 which quite honestly Paul we're pretty happy with compared to the quarters over the last two years where we've really been hurt by weather.
Paul Patterson - Glenrock Associates: And the reason why the heating degrees don't have as big an impact even though they are greater than normal is because, I missed it, what was that?
Mark F. McGettrick - EVP and CFO: Paul, you want to take that?
Paul D. Koonce - EVP, Dominion Resources, Inc.; CEO, Energy Infrastructure Group; and CEO, Dominion Virginia Power: The heating degree days, it had really occurred in March and the March heating degree days are not as significant as the heating degree days that we lost in January, that's the reason.
Paul Patterson - Glenrock Associates: And then on the mark-to-market gains from last year, are there any other gains that happened? I noticed that you guys are seeing some decrease in the second quarter as well on the retail business, just any other mark-to-market benefits that we should be thinking about?
Mark F. McGettrick - EVP and CFO: I think if I recall, in the second quarter of 2012, there was a $0.035 mark-to-market gain in retail which we don't expect that in the second quarter of this year.
Paul Patterson - Glenrock Associates: And then just finally on the Blue Racer drop in that happened sooner than you guys had previously expected. What led it to come in sooner, what was the reason for that?
Mark F. McGettrick - EVP and CFO: Well, we were ready to drop in – we wanted to drop it earlier. The Blue Racer team is very excited to get these assets in place as quick as they can. We had a little bit of work to do on this pipe and we dropped it a month earlier based on their request and us being ready.
Operator: Michael Lapides, Goldman Sachs.
Michael Lapides - Goldman Sachs: On Virginia Power and then one on the remaining merchant generation facilities. On Virginia Power, what do you see is kind of the biggest issues for the general rate case process? And then on the – what's remaining of your merchant generation fleet meaning Millstone, Fairless Works, you've made a concerted effort over the last few years to shrink relative to the broader Dominion the size and exposure to merchant generation almost to the point where it doesn't move the needle in either direction. How do you think about these assets versus being kind of part of your core long-term strategic goals or intent?
Thomas F. Farrell II - Chairman, President and CEO: As far as the biennial review goes, because of – I mean this is now the second of the biennial reviews. We've been through the process; everybody has been through the process, everybody now knows pretty much what the rules of the road are. The legislature passed some language; it sort of clarifies that period expenses are period expenses and our shareholders have to bear the cost of those period expenses in the period in which they are incurred; storms, natural disasters, write-offs of significant plant. In this particular case, our Chesapeake and York County facilities because of the mercury rules that EPA finalized during the period. Legislature made it clear that's our shareholders' responsibility and can't be spread out and have the customers pay for them. Now that also has the impact of ensuring that they are accounted for as period expenses in the period in which they've incurred. So, the accounting issues, everybody has an imagination. I expect, we'll see some interesting arguments; I don't know, but I think the Commission's precedent is pretty clear on all these things. So, I think the main issues will not revolve around over-earnings; they'll revolve around what the going-forward return on equity is that is taken into account for the riders going forward and what will be the basis for the 2013 and '14 biennial review. They also – the statute also made it clear that the Commission should only utilize performance standards that they had used in the past in their prior precedent which was the last time they've done any of that was in the late 1990s, and which to the focus is on generation plant performance, because you can see its direct benefit to customers from better nuclear performance, better coal performance, because it reduces the cost of fuel for the customers. We set records on our power plant performance during this period. So, that's it on the biennial review. As far as merchant plants go, we have Millstone Power Station, Manchester Street Station and Fairless Works in Pennsylvania. As I think I said at our March Analyst Meeting, you should expect to see the end of the shrinking through the closing or selling of assets by Dominion Resources. The assets we have, we think fit well within our strategic plan. We want to maintain a stable, strong, relatively small merchant power fleet in a localized region, still nearly 4,000 megawatts, the lowest-cost unit in all of New England, in the Millstone Power Station. And so we're contained with those assets, and what we are going to concentrate on is building out the Midstream business, building out Virginia Power and the regulated generation businesses, continuing to build our retail business, and build the Cove Point liquefaction facility.
Michael Lapides - Goldman Sachs: I guess to follow up on the Virginia Power item, I also was under the impression you've filed your full-blown general rate case outside of the biennial review and while the ROE doesn't get debated in the rate case process, kind of all the general line items, meaning O&M, et cetera, will kind of be up for debate in the GRC process. Just trying to make sure I have my hands around what you think some of the bigger issues in the GRC not really the biennial review process will be?
Thomas F. Farrell II - Chairman, President and CEO: I think the issues will be the same. We are filing demonstrates that we are entitled a base rate increase of about I think is a $128 million. We did not ask the Commission to grant us a base rate increase. We intend to move forward and try to hit the allowed earnings based upon customer growth and our own actions here. So, we have not asked for a rate increase. Unless we're found in the biennial review to have over-earned, there cannot be a review for rate decrease until 2017. So, that's why I do actually think the interest will be in the biennial review and the earnings test, which I think would be highly unlikely, we will have been found to all above the top the earnings range.
Operator: Steven Byrd, Morgan Stanley.
Stephen Byrd - Morgan Stanley: Most of my questions have been answered. I just wanted to follow up on one Dan had asked about the cost cutting, the $100 million in expense reductions. Mark, you mentioned there is a mix of types of productions, but as we're thinking about sort of the structural cost reductions, could you just talk just broadly about what kind of broader long-term cost reductions you had envisioned just in broad stokes in terms of categories? As I think about sort of the delays apparent, that sounds more like a delay than a permanent change, but just love to understand the cost cutting better?
Thomas F. Farrell II - Chairman, President and CEO: I'd like to give you a broader answer on this Steven. But again, we're still in a process of finalizing some of that. I think what you should expect for 2013 is a temporary reduction in expenses and have us evaluate here over the second quarter how many those can become permanent over time? That's why I emphasized the staffing. We can certainly address new hires very quickly from previous employment levels. So we anticipate it as a quick savings mechanism for us. But I'll try to give more color on that in the next call or the third quarter call as you start to see some of those expenses materialize. But I don't want to get in front of the process. We're still discussing internally with the businesses on what's appropriate, but we are very focused that on the level that I discussed to ensure that we can meet our growth rates should sales fall short and ask them to make up for the first quarter shortfalls.
Operator: Julien Smith, UBS.
Julien Dumoulin-Smith - UBS: First question, you alluded to the sequestration. I'd be curious if you can just kind of dig into that a little bit more. What precisely was the contribution of sequester to 1Q results and secondly, what are your expectations through the balance of the year in that regard?
Mark F. McGettrick - EVP and CFO: Julien, this is Mark. One is, right now, I'm not comfortable saying any of it is associated with the sequester. As I mentioned, the first two months of the year were fairly close to expectation for us and March for whatever reason which we're still evaluating, came in short. So, I think we have to go through the year to figure out just what are the drivers of any change, if there is any change. And so we're taking a cautious approach here. But at this point in time, we have no basis to say that any of the shortfall is associated with the sequester activity.
Julien Dumoulin-Smith - UBS: Second question here on New England, I'd be curious why not take up your hedges here given pricing, I'd be just curious – I've recognized first quarter you hedged up largely, you didn't realize it but broader thought process there.
Thomas F. Farrell II - Chairman, President and CEO: We established our hedging program years ago and if you look back over the last five years I think you'll see that over that period of time our hedging strategy has delivered more value to our shareholders than if we had not had a hedging program. Actually every year of those years, I believe. So we will evaluate it going forward, but we don't hedge – we don't play in the market. Our idea with the hedging program is to give earnings guidance. We want those assets to produce their share of the earnings guidance. So that's why we've hedged in these windows and roll-in over time. We're going to continue to do that. We evaluate everything. If we think that's not the way to go about in the future, then we will certainly look at that. But for now, we're content with the way we do it.
Mark F. McGettrick - EVP and CFO: Julien, if you look at what we did in the first quarter, we actually did a significant amount of hedging. We talked about it on March 4. Now, we haven't done any since March 4. But if you look at the hedge price and what we were able to lock in in the first quarter and the movement from the end of the year, it's pretty significant and it was a good lift price-wise for us.
Julien Dumoulin-Smith - UBS: And then lastly, just curious here; open season you kind of alluded to, is this New York opportunity kind of linked back to New England reliability, is that – just kind of getting a sense to the size and scale of any potential investment there, kind of thinking more broadly here? Is this part of a broader effort here?
Gary L. Sypolt - EVP and CEO, Dominion Energy: I would say – this is Gary Sypolt, Julien, and I would say the open season is really more a traditional LDC market – is where we think that's headed, and not necessarily power plants at all, but traditional LDC market. That's really looking for access to few shale-type gas out of the Appalachian region.
Operator: Thank you. This does conclude this morning's teleconference. You may disconnect your lines and enjoy your day.