By Ted Caddell

Dominion, a company that has made some dramatic shifts in direction in the past year, announced a significant drop in reported earnings for the fourth quarter of 2014.

Fourth-quarter earnings were about $243 million in 2014, compared to $431 million in 2013. Full-year earnings saw a similar dip at $1.31 billion ($2.24/share) compared to $1.7 billion ($2.93/share) for 2013.

According to Dominion’s earnings report and an analyst presentation made last week, much of the dip shows a company preparing for its future as it pushed a lot of costs into 2014. Its operating earnings were about twice its reported earnings for Q4 and about 50% higher for the year.

The results reflected its decision to pay down debt and take a number of charges in the year. Costs excluded from operating earnings included:

• A $248 million charge associated with Virginia legislation enacted in April that permits Dominion Virginia Power to recover 70% of the costs previously deferred or capitalized through Dec. 31, 2013, for development of a third North Anna nuclear unit and offshore wind facilities as part of its 2013 and 2014 base rates;
• A $193 million net charge from the termination of natural gas trading and some energy marketing activities;
• A $74 million charge related to future ash pond closure costs; and
• A $31 million goodwill write-off related to the company’s exit from the unregulated electric retail energy business (sold to NRG Energy).

While earnings took a hit, CEO Thomas F. Farrell II said it is investing in its future, and its leadership is betting on a bright one. “Our management team owns the highest percentage of stock [of] any … company in the sector,” he told analysts last week.

Dominion issued a successful IPO for its natural gas export business, Dominion Midstream. It gained the final permit from the Federal Energy Regulatory Commission for its Cove Point LNG export facility, and construction started the same day. The facility is expected to go into service in 2017, he said.

It bought a pipeline company, Carolina Gas Transmission, from Scana Corp. for $429.9 million, acquiring 1,500 miles of interstate natural gas pipeline in the deal.

Dominion is also a major partner in the Atlantic Coast Pipeline project, a planned 550-mile natural gas pipeline that would bring Marcellus and Utica shale gas to Virginia and North Carolina.

Farrell said the company plans to invest $700 million in solar in the coming years. And while the company has sliced its merchant generation fleet from about 11,000 MW three years ago down to 3,643 MW now, it is boosting its regulated generation fleet.

It put one new $1.1 billion gas-fired, combined-cycle plant, the 1,342-MW Warren plant, in operation in December. It is building a second, a 1,358-MW plant in Brunswick, representing another $1.2 billion investment. Farrell said on the call that the company is planning a third, which at 1,600 MW would be the largest gas-fired plant in the U.S. It would be built in Greenville County, Va., east of Brunswick.

Chief Financial Officer Mark McGettrick said the company plans a total of about $20 billion in capital investments over the next six years.

“2014 was a year of significant accomplishments for Dominion as we completed several major capital projects and made significant progress to advance the next round of infrastructure growth,” Farrell said.