Why regulated business is Dominion’s strength

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Operating segments

Dominion Resources (D) operates in three primary segments—Dominion Virginia Power, Dominion Energy, and Dominion Generation. More than 60% of Dominion’s revenue comes from Dominion Generation. Dominion Virginia Power and Dominion Energy account for nearly 24% and 16% of Dominion’s revenue, respectively.

Segments

Dominion Virginia Power

It’s involved in the regulated transmission and distribution business across Virginia and North Carolina. It serves electricity to ~2.5 million people in these states.

Dominion Energy

This segment is involved in natural gas storage, transmission, and distribution. Its transmission pipelines are spread across six states. It serves 1.3 million homes in Ohio and West Virginia. Under this segment, Dominion also provides liquefied natural gas (or LNG) services in Maryland.

Dominion Generation

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Dominion Generation is involved in electricity production. It’s the most dominant of all the business segments. It generates most of Dominion’s revenues. It has a capacity of 19,600 megawatts (or MW) to deliver regulated electricity. It has a capacity of 4,000 MW to supply electricity in unregulated markets.

The basic difference between regulated and unregulated markets is electricity prices. In regulated markets, electricity prices are fixed by government regulators. The prices are based on the cost of electricity production. In unregulated markets, electricity prices depend on the market. The prices fluctuate with a supply and demand mismatch.

Some of the Dominion’s top competitors include Duke Energy (DUK), Southern Company (SO), and NextEra Energy (NEE). These companies form the top three holdings in the Utilities Select Sector SPDR (XLU).

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