Analyzing Dominion Resources’ Return on Equity in Q2

Dominion Resources’ (D) adjusted ROE (return on equity) fell to near-15% levels in 2Q16. Dominion obtains relatively higher ROE due to the healthy regulatory environment in Virginia.

As for peers, Duke Energy (DUK) obtained ~8% ROE last year. Californian utilities like Sempra Energy (SRE) and PG&E (PCG) also have ROEs near 11x due to the healthy regulatory environment in the state.

ROE is the only part of revenue requirements that utilities keep as profit.