Note 20. Operating Segments

The Companies are organized primarily on the basis of products and services sold in the U.S. A description of the operations included in the Companies’ primary operating segments is as follows:

Primary Operating Segment	Description of Operations	Dominion Energy	Virginia Power	Dominion Energy Gas
Power Delivery	Regulated electric distribution	X	X
	Regulated electric transmission	X	X
Power Generation	Regulated electric fleet	X	X
	Merchant electric fleet	X
Gas Infrastructure	Gas transmission and storage	X		X
	Gas distribution and storage	X		X
	Gas gathering and processing	X		X
	LNG terminalling and storage	X
	Nonregulated retail energy marketing	X

In addition to the operating segments above, the Companies also report a Corporate and Other segment.

Dominion Energy

The Corporate and Other Segment of Dominion Energy includes its corporate, service company and other functions (including unallocated debt). In addition, Corporate and Other includes specific items attributable to Dominion Energy's operating segments that are not included in profit measures evaluated by executive management in assessing the segments' performance or in allocating resources.

In the three months ended March 31, 2018, Dominion Energy reported after-tax net expenses of $238 million for specific items in the Corporate and Other segment, with $218 million of net expenses attributable to its operating segments. In the three months ended March 31, 2017, Dominion Energy reported after-tax net income of $21 million for specific items in the Corporate and Other segment, all of which was attributable to its operating segments.

The net expense for specific items attributable to Dominion Energy’s operating segments in 2018 primarily related to the impact of the following items:

•

A $215 million ($160 million after-tax) charge associated with Virginia legislation enacted in March 2018 that requires one-time rate credits of certain amounts to utility customers, attributable to:

•

Power Generation ($109 million after-tax); and

•

Power Delivery ($51 million after-tax).

•

A $43 million ($32 million after-tax) loss on investments held in nuclear decommissioning trust funds, attributable to Power Generation.

The net income for specific items attributable to Dominion Energy's operating segments in 2017 primarily related to the impact of the following item, which was attributable to Power Generation:

•

A $34 million ($21 million after-tax) net gain on investments held in nuclear decommissioning trust funds.

The following table presents segment information pertaining to Dominion Energy’s operations:

	Power Delivery		Power Generation		Gas Infrastructure		Corporate and Other			Adjustments/ Eliminations			Consolidated Total
(millions)
Three Months Ended March 31, 2018
Total revenue from external customers	$	563	$	1,860	$	1,222	$	(207	)	$	28		$	3,466
Intersegment revenue		6		2		6		175			(189	)		—
Total operating revenue		569		1,862		1,228		(32	)		(161	)		3,466
Net income (loss) attributable to Dominion Energy		156		348		327		(328	)		—			503
Three Months Ended March 31, 2017
Total revenue from external customers	$	554	$	1,653	$	901	$	3		$	273		$	3,384
Intersegment revenue		5		3		266		152			(426	)		—
Total operating revenue		559		1,656		1,167		155			(153	)		3,384
Net income (loss) attributable to Dominion Energy		125		261		263		(17	)		—			632

Intersegment sales and transfers for Dominion Energy are based on contractual arrangements and may result in intersegment profit or loss that is eliminated in consolidation.

Virginia Power

The Corporate and Other Segment of Virginia Power primarily includes specific items attributable to its operating segments that are not included in profit measures evaluated by executive management in assessing the segments' performance or in allocating resources.

In the three months ended March 31, 2018, Virginia Power reported after-tax net expenses of $197 million for specific items in the Corporate and Other segment, with $189 million of net expenses attributable to its operating segments. In the three months ended March 31, 2017, Virginia Power reported after-tax net income of $2 million for specific items in the Corporate and Other segment, all of which was attributable to its operating segments.

The net expense for specific items attributable to Virginia Power’s operating segments in 2018 primarily related to the impact of the following items:

•

A $215 million ($160 million after-tax) charge associated with Virginia legislation enacted in March 2018 that requires one-time rate credits of certain amounts to utility customers, attributable to:

•

Power Generation ($109 million after-tax); and

•

Power Delivery ($51 million after-tax).

•

A $31 million ($23 million after-tax) charge for storm damage and service restoration costs associated with Winter Storm Riley affecting its Virginia service territory, attributable to Power Delivery.

The following table presents segment information pertaining to Virginia Power’s operations:

	Power Delivery		Power Generation		Corporate and Other			Consolidated Total
(millions)
Three Months Ended March 31, 2018
Operating revenue	$	563	$	1,400	$	(215	)	$	1,748
Net income (loss)		154		222		(192	)		184
Three Months Ended March 31, 2017
Operating revenue	$	557	$	1,274	$	—		$	1,831
Net income		125		223		8			356

Dominion Energy Gas

The Corporate and Other Segment of Dominion Energy Gas primarily includes specific items attributable to Dominion Energy Gas' operating segment that are not included in profit measures evaluated by executive management in assessing the segment's performance or in allocating resources and the effect of certain items recorded at Dominion Energy Gas as a result of Dominion Energy's basis in the net assets contributed.

In both the three months ended March 31, 2018 and 2017, Dominion Energy Gas reported no specific items in the Corporate and Other segment.

The following table presents segment information pertaining to Dominion Energy Gas' operations:

	Gas Infrastructure		Corporate and Other			Consolidated Total
(millions)
Three Months Ended March 31, 2018
Operating revenue	$	526	$	—		$	526
Net income (loss)		167		(1	)		166
Three Months Ended March 31, 2017
Operating revenue	$	490	$	—		$	490
Net income (loss)		109		(1	)		108