Dominion Energy
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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

---------------
FORM 10-K
---------------
(MARK ONE)
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

OR

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM --------- TO ---------

COMMISSION FILE NUMBER 1-8489
-------------------------
DOMINION RESOURCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


<TABLE>
<CAPTION>
<S> <C>
VIRGINIA 54-1229715
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)

120 TREDEGAR STREET
RICHMOND, VIRGINIA 23219
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>

(804) 819-2000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:



<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- ------------------------------ ------------------------------------------
<S> <C>
Common Stock, no par value New York Stock Exchange
</TABLE>

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
NONE

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]

The aggregate market value of voting stock held by nonaffiliates of the
registrant was $8,679,803,841 based on the closing price of our Common Stock on
January 29, 1999, as reported on the composite tape by The Wall Street Journal.


Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.



<TABLE>
<CAPTION>
CLASS OUTSTANDING AT JANUARY 31, 1999
<S> <C>
Common Stock, no par value 193,962,097
</TABLE>

DOCUMENTS INCORPORATED BY REFERENCE:


(a) Portions of the 1998 Annual Report to Shareholders for the fiscal year
ended December 31, 1998 are incorporated by reference in Parts I, II and
IV hereof.

(b) Portions of the 1999 Proxy Statement, dated March 1999, are
incorporated by reference in Part III hereof.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
DOMINION RESOURCES, INC.



<TABLE>
<CAPTION>
ITEM PAGE
NUMBER NUMBER
- ---------- -------
<S> <C> <C>
PART I
1. Business
The Company ............................................................................... 1
Dominion Capital .......................................................................... 1
Dominion Energy ........................................................................... 1
Virginia Power ............................................................................ 2
Competition ............................................................................... 2
Regulation ................................................................................ 3
Rates ..................................................................................... 5
Sources of Power .......................................................................... 7
Interconnections .......................................................................... 9
Capital Requirements and Financing Program ................................................ 10
2. Properties ................................................................................ 10
3. Legal Proceedings ......................................................................... 10
4. Submission of Matters to a Vote of Security Holders ....................................... 10
Executive Officers of the Registrant ...................................................... 11
PART II
5. Market for the Registrant's Common Equity and Related Stockholder Matters ................. 11
6. Selected Financial Data ................................................................... 12
7. Management's Discussion and Analysis of Financial Condition and Results of Operations ..... 12
7A. Quantitative and Qualitative Disclosures About Market Risk ................................ 12
8. Financial Statements and Supplementary Data ............................................... 12
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...... 12
PART III
10. Directors and Executive Officers of the Registrant ........................................ 12
11. Executive Compensation .................................................................... 12
12. Security Ownership of Certain Beneficial Owners and Management ............................ 12
13. Certain Relationships and Related Transactions ............................................ 13
PART IV
14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K .......................... 13
</TABLE>
PART I


ITEM 1. BUSINESS
THE COMPANY

Dominion Resources, Inc. (Dominion Resources), a diversified utility
holding company, has its principal office at 120 Tredegar Street, Richmond,
Virginia 23219, telephone (804) 819-2000. Its principal subsidiary is Virginia
Electric and Power Company, a regulated public utility engaged in the
generation, transmission, distribution and sale of electric energy in Virginia
and northeastern North Carolina. Its other major subsidiaries are Dominion
Capital, Inc., its diversified financial services company, and Dominion Energy,
Inc., its independent power and natural gas subsidiary.

Dominion Resources was incorporated in 1983 as a Virginia corporation.
Dominion Resources and its subsidiaries had 11,033 full-time employees as of
December 31, 1998. Dominion Resources is currently exempt from registration as
a holding company under the Public Utility Holding Company Act of 1935.

Dominion Resources also owns and operates a 365 Mw natural gas fired
generating facility in the United Kingdom.


RECENT DEVELOPMENTS

On February 19, 1999, Dominion Resources and Consolidated Natural Gas
Company (CNG) entered into an Agreement and Plan of Merger whereby CNG will
merge into Dominion Resources, with Dominion Resources being the surviving
corporation. The CNG shareholder will receive 1.52 shares of Dominion Resources
common stock for each CNG share. At signing, the transaction was valued at $6.3
billion. Headquarters will remain in Richmond, Virginia. Each company's Board
of Directors has approved the merger; however, the following remaining
approvals must be obtained: shareholder approval by each company; various
federal and state regulatory approvals; opinions of counsel on the tax-free
nature of the merger and letters of independent certified public accountants
that the merger will qualify as a pooling of interests for accounting purposes.
The companies anticipate the transaction can be completed in about twelve
months. For a more detailed description of the merger, see: (1) the Agreement
and Plan of Merger, attached as Exhibit 2(ii) and (2) the Press Release,
attached as Exhibit 99, each exhibit filed as a part of this 1998 Form 10-K.

On July 27, 1998, Dominion Resources sold East Midlands Electricity plc,
the principal operating subsidiary of Dominion Resources' United Kingdom
holding company, Dominion U.K. Holding, Inc. East Midlands is principally an
electricity supply and distribution company serving more than 2.3 million homes
and businesses in the East Midlands region of the United Kingdom. PowerGen plc
acquired East Midlands in a transaction valued at $3.2 billion. Dominion
Resources recorded an after-tax gain on the sale of $200.7 million in the third
quarter of 1998.


DOMINION CAPITAL

Dominion Capital is a diversified financial services company with several
operating subsidiaries in the commercial lending, merchant banking and
residential lending business. Its principal subsidiaries are First Source
Financial, LLP, First Dominion Capital LLC and Saxon Mortgage, Inc. Dominion
Capital also owns a 46 percent interest in Cambrian Capital LLP.

First Source Financial provides cash-flow and asset-based financing to
middle-market companies seeking to expand, recapitalize or undertake buyouts.
First Dominion Capital is an integrated merchant banking and asset management
business located in New York. Saxon Mortgage and its affiliates originate and
securitize home equity and mortgage loans to individuals. Cambrian Capital
provides financing to small and mid-sized independent oil and natural gas
producers undertaking acquisitions, refinancings and expansions.

For information regarding a future competitive market, see Future Issues
- -- DOMINION CAPITAL under MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATION
(MD&A) on page 31 of the 1998 Annual Report to Shareholders.


DOMINION ENERGY

Dominion Energy is active in the competitive electric power generation
business and in the development, exploration and operation of oil and natural
gas reserves. Dominion Energy is involved in power projects in five states,
Argentina, Bolivia, Belize and Peru. Domestic power projects include the
Kincaid Power Station, a 1,108 Mw coal fired station in Central Illinois; a 600
Mw gas fired peaking facility under construction in Central Illinois; two
geothermal projects and one solar project


1
in California; four small hydroelectric projects in New York; a waste
coal-fueled project in West Virginia and a waste wood- and coal-fueled project
in Maine. International power projects include one hydroelectric and one
gas-fired project in Argentina, two hydroelectric projects in Bolivia, a
run-of-river hydroelectric project in Belize and two hydroelectric projects and
six diesel oil-fueled projects in Peru. Dominion Energy is also involved in oil
and natural gas development and exploration in Canada, the Appalachian Basin,
the Michigan Basin, the Illinois Basin, the Black Warrior Basin, the Uinta
Basin, the Gulf Coast and the Mid-Continent, and owns net proved oil and
natural gas reserves in key regions of the United States and Canada.

For information regarding a future competitive market, see Future Issues
- -- DOMINION ENERGY under MD&A on page 31 of the 1998 Annual Report to
Shareholders. For information regarding nitrogen oxide requirements, see
Dominion Energy -- CAPITAL REQUIREMENTS under MANAGEMENT'S DISCUSSION AND
ANALYSIS OF CASH FLOWS AND FINANCIAL CONDITION on page 38 of the 1998 Annual
Report to Shareholders.


VIRGINIA POWER

Virginia Electric and Power Company is a public utility engaged in the
generation, transmission, distribution and sale of electric energy within a
30,000 square-mile area in Virginia and northeastern North Carolina. Virginia
Power supplies energy at retail to approximately two million customers and
sells electricity at wholesale to rural electric cooperatives, power marketers
and certain municipalities. The term "Virginia Power" refers to the entirety of
Virginia Electric and Power Company, including its Virginia and North Carolina
operations and all of its subsidiaries.

In Virginia it trades under the name "Virginia Power." The Virginia
service area comprises about 65 percent of Virginia's total land area, but
accounts for over 80 percent of its population. In North Carolina it trades
under the name "North Carolina Power" and serves retail customers located in
the northeastern region of the state, excluding certain municipalities.
Virginia Power also engages in off-system wholesale purchases and sales of
electricity and purchases and sales of natural gas, and is developing trading
relationships beyond the geographic limits of its retail service territory.
Electric operations principal regulators are the Federal Energy Regulatory
Commission (FERC), the State Corporation Commission of Virginia (the Virginia
Commission) and the North Carolina Utilities Commission (the North Carolina
Commission).

Various factors are currently affecting the electric utility industry in
general, including increasing competition and related regulatory changes, costs
to comply with environmental regulations, and the potential for new business
opportunities outside of traditional rate-regulated operations. To meet the
challenges of this new competitive environment, Virginia Power continues to
consider new business opportunities, particularly those which allow it to use
the expertise and resources developed through its regulated utility experience.
Over the past several years Virginia Power has developed a broad array of
"non-traditional" products and services. Examples of non-traditional services
include wholesale power marketing and telecommunications. Virginia Power also
markets services to other utilities in areas such as nuclear consulting and
management and power distribution (i.e., transmission, distribution,
engineering and metering services). Virginia Power is continuing to focus on
new and existing programs to enhance customer satisfaction and energy
efficiency.


COMPETITION

For most of this century, the structure of the electric industry in
Virginia Power's service territory and throughout the United States has been
relatively stable. Recently, however, there have been both federal and state
developments toward less regulation and increased competition. Electric
utilities have been required to open up their transmission systems for non-
discriminatory use by potential wholesale competitors. In addition, non-utility
power marketers now compete with electric utilities in the wholesale generation
market. At the federal level, retail competition is under consideration. Some
states, including Virginia, have enacted legislation requiring retail
competition.

Currently, as in the past, there is no general retail competition in
Virginia Power's principal service area. Today Virginia Power's only
competition for retail sales is if certain of Virginia Power's business
customers move into another utility service territory, use other energy sources
instead of electric power, or generate their own electricity. However, Virginia
has adopted legislation requiring retail competition beginning in 2002 and
North Carolina is considering implementing retail competition. To the extent
that competition is permitted, Virginia Power's ability to sell power at prices
that will allow it to recover prudently incurred costs may be an issue.

The Virginia General Assembly is actively considering in its current
session, legislative proposals that would address more specifically the
timetable for retail competition in the state; deregulation of the generation
of electricity; transfer of management and control of transmission systems to a
regional transmission entity; recovery of prudently incurred stranded


2
costs and consumer protection issues. Additionally, Virginia Power is in the
process of developing a retail access pilot program for implementation in
Virginia.

Virginia Power continues to participate actively in both the legislative
and regulatory processes relating to industry restructuring in an effort to
ensure an orderly transition from a regulated environment. Virginia Power has
also responded to the trends toward competition by cutting costs,
re-engineering its core business processes and pursuing innovative approaches
to servicing traditional and future markets. In addition, Virginia Power is
developing certain "non-traditional" products and services as described above
in an effort to provide growth in future earnings.

For a further review of Virginia Power's changing industry see Future
Issues -- VIRGINIA POWER under MD&A on pages 28 through 31 of the 1998 Annual
Report to Shareholders.


REGULATION

GENERAL

The Virginia Commission and the North Carolina Commission regulate
Virginia Power's rates for retail electric sales within their respective
states. FERC approves Virginia Power's rates for electric sales to wholesale
customers. A discussion of rate related matters is in the section below
entitled RATES.

In addition to rates, many other aspects of Virginia Power's business are
presently subject to regulation by the Virginia Commission, the North Carolina
Commission, FERC, the Environmental Protection Agency (EPA), the Department of
Energy (DOE), the Nuclear Regulatory Commission (NRC), the Army Corps of
Engineers and other federal, state and local authorities.

Virginia Power holds certificates of public convenience and necessity
issued by the Virginia Commission and the North Carolina Commission authorizing
it to construct and operate the electric facilities now in operation for which
certificates are required, and to sell electricity to retail customers.
However, Virginia Power may not construct, or incur financial commitments for
construction of, any substantial generating facilities or large capacity
transmission lines without the prior approval of various state and federal
governmental agencies.

The following sections discuss various regulatory proceedings in which
Virginia Power is or has recently been involved. Rate specific proceedings are
discussed separately in the section below entitled RATES.


VIRGINIA

Virginia Power is subject to the jurisdiction of the Virginia Commission,
which has broad powers of supervision and regulation over public utilities,
including rates, service regulations and sales of securities. Specific recent
proceedings include the following.

On March 21, 1998, the Virginia Commission issued an Order Establishing
Investigation with regard to independent system operators (ISO's), regional
power exchanges (RPX's) and retail access pilot programs. The Order directed
all investor-owned electric utilities to begin work, in conjunction with the
Virginia Commission Staff and other interested stakeholders, to develop one or
more ISO's and RPX's to serve the public interest in Virginia. In addition, the
Order instructed Virginia Power and AEP-Virginia, as the Commonwealth's two
largest investor-owned utilities, each to design and file a retail access pilot
program. In response to the Order, Virginia Power filed a report describing the
details, objectives and characteristics of its proposed retail access pilot.
For more details on the proposed retail access pilot program, see Future Issues
- -- COMPETITION -- REGULATORY INITIATIVES under MD&A on page 29 of the 1998
Annual Report to Shareholders.

Virginia Power has sought approval from the Virginia Commission for the
construction of four gas fired turbine generators in Virginia and are
soliciting bids in accordance with the Virginia Commission's Order dated
January 14, 1999. Virginia Power has obtained the applicable zoning permits for
the construction of the generators and has applied for other required
environmental permits.

On January 28, 1999, the Virginia Commission issued an order approving the
addition of two wholly-owned subsidiaries of Virginia Power Services, Inc.,
namely Virginia Power Services Energy Corp., Inc. (VPSE) and Virginia Power
Energy Marketing, Inc. (VPEM), to the Affiliate Services Agreement approved by
the Virginia Commission in its Order dated September 3, 1997. In connection
with the organization of VPSE and VPEM, the Virginia Commission issued two
related orders approving transfer of certain contracts relating to the storage,
transportation, procurement and management of Virginia Power's natural gas and
oil inventory to these subsidiaries.


3
FERC

The Federal Power Act subjects Virginia Power to regulation by FERC as a
company engaged in the transmission or sale of wholesale electric energy in
interstate commerce. The Energy Policy Act of 1992 (EPACT) and FERC's
subsequent rulemaking activities allow FERC to order access for third parties
to transmission facilities owned by another entity. This authority is limited,
however, and does not permit FERC to issue orders requiring transmission access
to retail customers. FERC has issued orders for third-party transmission
service. FERC also issued a number of rules of general applicability, including
Orders 888 and 889.

Pursuant to FERC's final rules, Virginia Power established an open access
same-time information system (OASIS) which became operational in January 1997.
In addition, in July 1997 Virginia Power filed amendments to its existing rate
tariff with FERC so that Virginia Power could make wholesale power sales at
market-based rates. Under a FERC order conditionally accepting Virginia Power's
market-based rate schedule, Virginia Power began making market-based sales of
wholesale power in 1997. FERC set for hearing the issue of whether transmission
constraints limiting the transfer of power into Virginia Power's service
territory would provide Virginia Power with generation dominance in local
markets. This issue was resolved through FERC's acceptance of an offer of
settlement in which Virginia Power agreed to refrain from making sales under
its market-based tariff to loads located within its service territory. This
settlement did not preclude Virginia Power from requesting FERC authorization
of such sales in the future, but until such authorization has been granted by
FERC, agreements by Virginia Power to sell wholesale power to loads located
within its service territory are to be at cost-based rates accepted by FERC.

On November 6, 1998, Virginia Power, along with American Electric Power
(AEP), First Energy Corp. and Consumers Energy announced their agreement to
move forward on a proposal to prepare a FERC filing to establish a regional
transmission organization. For more detail on this proposal, see the
INTERCONNECTIONS section below.

LG&E Westmoreland Southhampton (Southhampton) has requested waivers of
FERC operating requirements with respect to its cogeneration facility in
Franklin, Virginia. Virginia Power has previously reported the existence and
history of this proceeding. The parties have reached a settlement, which was
accepted by FERC in December 1998.


ENVIRONMENTAL

Virginia Power faces substantial regulation and compliance costs with
respect to environmental matters. For a discussion of significant aspects of
these matters, including planned capital expenditures in 1999 relating to
environmental compliance, see Future Issues -- ENVIRONMENTAL MATTERS and GLOBAL
CLIMATE CHANGE under MD&A on pages 30 and 31 of the 1998 Annual Report to
Shareholders.

From time to time Virginia Power may be identified as a potentially
responsible party (PRP) with respect to a superfund site. EPA (or a state) can
either (a) allow such a party to conduct and pay for a remedial investigation,
feasibility study and remedial action or (b) conduct the remedial investigation
and action and then seek reimbursement from the parties. Each party can be held
jointly, severally and strictly liable for all costs, but the parties can then
bring contribution actions against each other and seek reimbursement from their
insurance companies. As a result of the Superfund Act or other laws or
regulations regarding the remediation of waste, Virginia Power may be required
to expend amounts on remedial investigations and actions. Virginia Power does
not believe that any currently identified sites will result in significant
liabilities. For a discussion of certain remediation efforts see ENVIRONMENTAL
MATTERS under Note T to NOTES TO CONSOLIDATED FINANCIAL STATEMENTS on page 52
of the 1998 Annual Report to Shareholders.

In accordance with applicable Federal and state environmental laws, we
have applied for or obtained the necessary environmental permits material to
the operation of our generating stations. Many of these permits are subject to
re-issuance and continuing review.


NUCLEAR

All aspects of the operation and maintenance of Virginia Power's nuclear
power stations are regulated by the NRC. Operating licenses issued by the NRC
are subject to revocation, suspension or modification, and operation of a
nuclear unit may be suspended if the NRC determines that the public interest,
health or safety so requires.

From time to time, the NRC adopts new requirements for the operation and
maintenance of nuclear facilities. In many cases, these new regulations require
changes in the design, operation and maintenance of existing nuclear
facilities. If the NRC adopts such requirements in the future, it could result
in substantial increases in the cost of operating and maintaining Virginia
Power's nuclear generating units.


4
One of the issues associated with operation and decommissioning of nuclear
facilities is disposal of spent nuclear fuel. The Nuclear Waste Policy Act of
1982 required the Federal Government to make available by January 31, 1998 a
permanent repository for high-level rediocative waste and spent fuel. To date,
no such repository is available.

In July 1995, the Virginia Commission instituted an investigation
regarding spent nuclear fuel disposal. As directed, Virginia Power and others
filed comments on legal and public policy issues related to spent nuclear fuel
storage and disposal. In February 1996, the Commission Staff filed its Report
recommending that adoption of a definitive policy on spent nuclear fuel
disposal issues be delayed pending the outcome of litigation against DOE
concerning spent nuclear fuel acceptance, the outcome of proposed federal
legislation concerning development of an interim storage facility and
development of a vision of the likely outcome of the electric utility
industry's restructuring efforts. The Virginia Commission consolidated the
proceeding with Virginia Power's pending fuel cost recovery proceeding in
October 1996. On March 20, 1997, the Virginia Commission returned the spent
nuclear fuel disposal issue to a separate proceeding. No procedural order has
been issued, but the proceeding is pending.

In response to DOE's insufficient progress towards a permanent repository
for spent nuclear fuel, in January 1997, Virginia Power and numerous other
electric utilities requested the United States Court of Appeals for the
District of Columbia Circuit (the DC Circuit) to order DOE to begin accepting
the utilities' spent nuclear fuel for disposal by January 31, 1998. In November
1997, the DC Circuit found that DOE's obligation to begin accepting spent
nuclear fuel by the deadline is "unconditional" and that DOE may not excuse its
delay on the grounds that delays were unavoidable. In February 1998, Virginia
Power and other electric utilities requested the DC Circuit to require DOE to
begin moving spent nuclear fuel, prohibit DOE from using the Nuclear Waste Fund
to pay damages and relieve utilities of their obligation to pay Nuclear Waste
Fund fees unless and until DOE complies with its obligations. In May 1998, the
DC Circuit refused to require DOE to begin moving spent nuclear fuel and found
that utilities should pursue their remedies under their spent nuclear fuel
contracts with DOE. In November 1998, the U.S. Supreme Court denied DOE's
request for review of the DC Circuit's decisions.

When Virginia Power's nuclear units cease to operate, Virginia Power will
be obligated to decontaminate the facilities. This process is referred to as
decommissioning and Virginia Power is required by the NRC to prepare for it
financially. For information on compliance with NRC financial assurance
requirements, see Future Issues -- NRC NUCLEAR DECOMMISSIONING RULE under MD&A
and Note B to NOTES TO CONSOLIDATED FINANCIAL STATEMENTS on pages 31 and 40 of
the 1998 Annual Report to Shareholders.


RATES

Virginia Power electric service sales for 1998 included 64.3 million
megawatt-hours of retail sales and 4.5 million megawatt-hours of sales to
wholesale requirement contract customers were:



<TABLE>
<CAPTION>
1998
---------------------
PERCENT PERCENT
OF OF
REVENUES KWH SALES
---------- ----------
<S> <C> <C> <C>
Virginia retail:
Non-Governmental customers ......... Virginia Commission 81% 77%
Governmental customers ............. Negotiated Agreements 10 13
North Carolina retail ............... North Carolina Commission 5 5
Wholesale * ......................... FERC 4 5
-- --
100% 100%
=== ===
</TABLE>

- ---------
* Excludes power marketing sales which are also subject to FERC regulation.

Substantially all of Virginia Power's electric service sales are currently
subject to recovery of changes in fuel costs either through fuel adjustment
factors or periodic adjustments to base rates, each of which requires prior
regulatory approval.

Where cost-based rates are in effect, each of these jurisdictions has the
authority to disallow recovery of costs it determines to be excessive or
imprudently incurred. Various cost items may be reviewed on occasion, including
costs of constructing or modifying facilities, on-going purchases of capacity
or providing replacement power during generating unit outages.


FERC

Recent FERC proceedings relating to Virginia Power rates include:

5
o In compliance with FERC's Order 889, on January 3, 1997, Virginia Power
filed its Procedures For Standards of Conduct for Unbundled Transmissions and
Wholesale Merchant Function (Standards of Conduct) effective on that date. In
July 1997, Virginia Power filed several amendments to the Standards of Conduct
in compliance with FERC's Order 889-A. On September 29, 1998, FERC accepted
Virginia Power's revised Standards of Conduct with only some minor
modifications.

o On September 11, 1997, FERC authorized Virginia Power to make wholesale
power sales under its Market-Based Sales Tariff, but set a hearing to consider
the effect of transmission constraints on its ability to exercise generation
market power in localized areas within its service territory. Based upon a
settlement in principle reached by the participants, the hearing schedule was
suspended and Virginia Power was directed to file a formal Offer of Settlement
by May 11, 1998. The participants subsequently filed a formal Offer of
Settlement that was accepted by FERC in January 1999. Under the Offer of
Settlement, Virginia Power agreed to refrain from wholesale power sales under
its Market-Based Sales Tariff to loads located within its service territory.
This settlement did not preclude Virginia Power from requesting FERC
authorization of such sales in the future, but until such authorization has
been granted by FERC, agreements by Virginia Power to sell wholesale power to
loads located within its service territory must be at cost-based rates accepted
by FERC.


VIRGINIA

Recent Virginia proceedings related to Virginia Power rates include:

o On June 8, 1998, Virginia Power, the Staff of the Virginia Commission,
the office of the Virginia Attorney General, the Virginia Committee for Fair
Utility Rates and the Apartment and Office Building Association of Metropolitan
Washington agreed to settle pending rate proceedings before the Virginia
Commission. The Virginia Commission, by Order dated August 7, 1998, approved
the settlement with only a minor redistribution of the agreed rate reduction
among customer classes. The settlement defines a new regulatory framework for
Virginia Power's transition to retail competition. For provisions of the
settlement, see Note R to NOTES TO CONSOLIDATED FINANCIAL STATEMENTS on page 50
of the 1998 Annual Report to Shareholders.

o On October 31, 1997, Virginia Power filed with the Virginia Commission
an application for a reduction of $45.6 million in fuel cost recovery factor
for the period December 1, 1997 through November 30, 1998. The reduction became
effective on an interim basis on December 1, 1997. Subsequently, as a result of
amendments to two non-utility power purchase contracts, Virginia Power proposed
two additional reductions of approximately $30.2 million and $18 million for
the same period, bringing the total proposed fuel factor reduction to $93.8
million. Both additional reductions were approved on an interim basis,
effective March 1, 1998. On April 24, 1998, the Virginia Commission approved
the decrease in the fuel factor effective May 1, 1998.

o On September 11, 1998, Virginia Power filed an application with the
Virginia Commission to modify cogeneration and small power production rates
under Schedule 19. An evidentiary hearing was held on this matter February 24,
1999.

o On October 19, 1998, Virginia Power filed an application with the
Virginia Commission for an increase of $55 million in fuel rates. The increase
was approved effective December 1, 1998.


NORTH CAROLINA

Recent North Carolina proceedings related to its rates include:

o On November 6, 1998, Virginia Power filed for approval of a new Schedule
19 which governs purchases from cogenerators and small power producers.
Virginia Power proposed shortening the maximum term of contracts under Schedule
19 to three years. A public hearing took place on February 2, 1999. All
proposed orders will be filed by March 12, 1999.

o On September 11, 1998, Virginia Power filed an application with the
North Carolina Commission for a $1.4 million increase in fuel rates. On
December 23, 1998, the North Carolina Commission approved the request for a
Fuel Charge Adjustment. This increased the annual fuel rates and charges paid
by the retail customers of North Carolina Power effective January 1, 1999.


6
SOURCES OF POWER

VIRGINIA POWER GENERATING UNITS



<TABLE>
<CAPTION>
TYPE SUMMER
YEARS OF CAPABILITY
NAME OF STATION, UNITS AND LOCATION INSTALLED FUEL MW
- -------------------------------------------------------- ----------- ---------------- -------------
<S> <C> <C> <C>
Nuclear:
Surry Units 1 & 2, Surry, Va .......................... 1972-73 Nuclear 1,602
North Anna Units 1 & 2, Mineral, Va ................... 1978-80 Nuclear 1,790 (a)
---------
Total nuclear stations .............................. 3,392
---------
Fossil Fuel:
Steam:
Bremo Units 3 & 4, Bremo Bluff, Va .................. 1950-58 Coal 227
Chesterfield Units 3-6, Chester, Va ................. 1952-69 Coal 1,250
Clover Units 1 & 2, Clover, Va ...................... 1995-96 Coal 882 (b)
Mt. Storm Units 1-3, Mt. Storm, W. Va ............... 1965-73 Coal 1,587
Chesapeake Units 1-4, Chesapeake, Va ................ 1953-62 Coal 595
Possum Point Units 3 & 4, Dumfries, Va .............. 1955-62 Coal 322
Yorktown Units 1 & 2, Yorktown, Va .................. 1957-59 Coal 326
Possum Point Units 1, 2, & 5, Dumfries, Va .......... 1948-75 Oil 929
Yorktown Unit 3, Yorktown, Va ....................... 1974 Oil & Gas 818
North Branch Unit 1, Bayard, W. Va .................. 1994 Waste Coal 74 (c)
Combustion Turbines:
35 units (8 locations) ................................ 1967-90 Oil & Gas 1,019
Combined Cycle:
Bellmeade, Richmond, Va ............................... 1991 Oil & Gas 230
Chesterfield Units 7 & 8, Chester, Va ................. 1990-92 Oil & Gas 397
---------
Total fossil stations ............................... 8,656
---------
Hydroelectric:
Gaston Units 1-4, Roanoke Rapids, N.C ................. 1963 Conventional 225
Roanoke Rapids Units 1-4, Roanoke Rapids, N.C ......... 1955 Conventional 99
Other ................................................. 1930-87 Conventional 3
Bath County Units 1-6, Warm Springs, Va ............... 1985 Pumped Storage 1,260 (d)
---------
Total hydro stations ................................ 1,587
---------
Total generating unit capability .................... 13,635
Net Purchases .......................................... 1,230
Non-Utility Generation ................................. 3,285
---------
Total Capability .................................... 18,150
=========
</TABLE>

- ---------
(a) Includes an undivided interest of 11.6 percent (208 Mw) owned by ODEC.

(b) Includes an undivided interest of 50 percent (441 Mw) owned by ODEC.

(c) This unit was placed in cold reserve status January 25, 1996.

(d) Reflects the Virginia Power's 60 percent undivided ownership interest in
the 2,100 Mw station. A 40 percent undivided interest in the facility is
owned by Allegheny Generating Company, a subsidiary of Allegheny Energy,
Inc (AE).

Virginia Power's highest one-hour integrated service area summer peak
demand was 15,399 Mw on July 22, 1998, and an all-time high one-hour integrated
winter peak demand of 14,910 Mw was reached on February 5, 1996.


7
ENERGY USED AND FUEL COSTS

System energy output by energy source and the average fuel cost for each
are shown below. Fuel cost is presented in mills (one tenth of one cent) per
kilowatt hour.



<TABLE>
<CAPTION>
1998 1997 1996
-------------------- -------------------- --------------------
SOURCE COST SOURCE COST SOURCE COST
-------- --------- -------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Nuclear (*) .................. 33% 4.71 34% 4.52 32% 4.48
Coal (**) .................... 42 13.21 40 13.54 38 14.32
Oil .......................... 3 22.52 1 26.32 1 27.75
Purchased power, net ......... 19 21.85 23 21.54 27 21.99
Other ........................ 3 27.27 2 30.65 2 26.98
-- -- --
Total ...................... 100% 100% 100%
=== === ===
Average fuel cost .......... 12.71 12.67 13.47
</TABLE>

- ---------
(*) Excludes ODEC's 11.6 percent ownership interest in the North Anna Power
Station.

(**) Excludes ODEC's 50 percent ownership interest in the Clover Power
Station.


NUCLEAR OPERATIONS AND FUEL SUPPLY

In 1998, Virginia Power's four nuclear units achieved a combined capacity
factor of 91.7 percent.

Virginia Power utilizes both long-term contracts and spot purchases to
support its needs for nuclear fuel. Virginia Power continually evaluates
worldwide market conditions in order to ensure a range of supply options at
reasonable prices. Current agreements, inventories and spot market availability
will support current and planned fuel supply needs for fuel cycles into the
early 2000's. Beyond that period, additional fuel will be purchased as required
to ensure optimum cost and inventory levels.

DOE did not begin the acceptance of spent fuel in 1998 as specified in
Virginia Power's contract with DOE. However, on-site spent nuclear fuel pool
and dry container storage at the Surry and North Anna Power Stations spent fuel
pool and dry container storage is expected to be adequate for Virginia Power's
needs until DOE begins accepting spent fuel.

For details on NUCLEAR INSURANCE, see Note T to NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS on page 52 of the 1998 Annual Report to Shareholders.


FOSSIL OPERATIONS AND FUEL SUPPLY

Virginia Power's fuel mix consists of coal, oil and natural gas. During
1998, Virginia Power burned approximately 14 million tons of coal. Virginia
Power utilizes both long-term contracts and spot purchases to support its coal
needs. Virginia Power presently anticipates sufficient supplies of coal will be
available at reasonable prices for the next 5 to 10 years. A sufficient supply
of oil and natural gas is expected over the same period with stable prices.

Virginia Power uses natural gas as needed throughout the year for three
combined-cycle units and at several combustion turbine units. For winter usage
at the combined cycle sites, gas is purchased and stored during the summer and
fall and consumed during the colder months when gas supplies may not be
available. Virginia Power has firm transportation contracts for the delivery of
gas to these combined cycle units.


PURCHASES AND SALES OF ENERGY

Virginia Power purchases electricity under long-term contracts with other
suppliers to meet a portion of its own system capacity requirements, as well as
for short-term sales transactions in the eastern United States. In addition to
wholesale electric power transactions, it also actively participates in the
purchase and sale of natural gas in the open market.

From the mid-1980's until the start of the 1990's, Virginia Power entered
into a number of long-term purchase contracts for electricity with both utility
and non-utility generators. At the end of 1999, 900 Mw of these purchases from
other utilities will end, and by the first quarter of 2000, an additional 200
Mw of diversity exchange transactions will be suspended. However, Virginia
Power continues to have contracts with 55 non-utility generators with a
combined dependable summer capacity of 3,285 Mw. During 1998, Virginia Power
entered into a long-term agreement to purchase 560 Mw of electricity for sale
to the wholesale market from two of three generating units at a plant being
constructed in Mississippi.


8
For information on the financial obligations under these agreements see Note T
to NOTES TO CONSOLIDATED FINANCIAL STATEMENTS on pages 51 and 52 of the 1998
Annual Report to Shareholders.

Long-term purchase contracts at fixed prices may be subject to market
fluctuations in electric prices. In a continuing effort to mitigate exposure to
above-market long-term purchased power contracts, Virginia Power is evaluating
its long-term purchased power contracts and negotiating modifications to their
terms, including cancellations, where it is determined to be economically
advantageous to do so.

In 1997, Virginia Power executed three agreements with Old Dominion
Electric Cooperative (ODEC) which provide for the amendment of the parties'
Interconnection and Operating Agreement (I&O Agreement). The first agreement
provides for the transition from cost-based rates for capacity and energy
purchases by ODEC to market-based rates by 2002. The second two agreements are
the Service and Operating Agreements for Network Integration Transmission
Service, which unbundled the transmission services provided to ODEC under the
I&O Agreement.

As reported earlier, both the Hoosier 400 Mw long-term purchase contract
and the AEP 500 Mw long-term purchase contract will expire on December 31,
1999. Virginia Power presently anticipates adding peaking capacity beginning in
the year 2000 to meet anticipated load growth. In addition, work is being done
to return Virginia Power's North Branch unit, which is presently in cold
reserve status, to full operational capacity in the year 2000.

On August 11, 1998, Virginia Power filed an application with the Virginia
Commission for a Certificate of Public Convenience and Necessity to construct
five gas-fired combustion turbine units in Virginia. On October 21, 1998,
Virginia Power modified its application to seek approval for one additional
unit and expressed its intention to build four units in Fauquier County for
operation in July 2000 and to build the remaining two units in Caroline County
for operation in July 2001. On December 23, 1998, Virginia Power further
modified its application, withdrawing the pending request to construct the two
combustion turbine units in Caroline County and seeking approval only for the
four units to be constructed in Fauquier County for a total of 600 Mw. Virginia
Power proposed to seek the additional capacity from the wholesale market.

A hearing before the Virginia Commission was held in January 1999 and the
Virginia Commission determined that the Rules Governing the Use of Bidding
Programs to Purchase Electricity from Other Power Suppliers were applicable to
the proposed transaction. The Virginia Commission issued an Order directing
Virginia Power to issue a Request for Proposals (RFP) for this capacity. The
Order further provided for the Virginia Commission Staff to review the
solicitation process and set an expedited schedule that requires bidders to
submit responses to Virginia Power's RFP no later than March 26, 1999. Virginia
Power's proposed build option will be considered as the benchmark for assessing
the bid responses and, if its option represents the successful bid, Virginia
Power will be permitted to construct the four units proposed in its modified
application. Virginia Power has obtained the applicable zoning permits for
construction of the combustion turbine units in Fauquier County and has applied
for other required permits including applicable environmental permits.

Conservation and load management programs are evaluated in conjunction
with Virginia Power's annual resource planning process. This process supports a
conservation and load management portfolio, which contributes to the selection
of low-cost resources to meet the future electricity needs of its customers.

Events in the evolving electric power marketplace and regulatory and
legislative environment continue to impact utility-sponsored conservation and
load management programs. Virginia Power continues to anticipate a greater
reliance on price signals to convey information to its customers regarding
energy-related costs, resulting in more efficient purchase decisions.


INTERCONNECTIONS

Virginia Power maintains major interconnections with Carolina Power and
Light Company, AEP, AE and the utilities in the Pennsylvania-New
Jersey-Maryland Power Pool. Through this major transmission network, Virginia
Power has arrangements with these utilities for coordinated planning,
operation, emergency assistance and exchanges of capacity and energy.

On November 6, 1998, Virginia Power, AEP, FirstEnergy Corp., and Consumers
Energy announced their agreement to move forward on a proposal to prepare a
FERC filing to establish a regional transmission organization. The proposed
organization would operate the transmission systems of the companies, ensure
transmission reliability and provide non-discriminatory access to the
transmission grid. These companies have established a target date of Spring
1999 to prepare the filing.

As proposed, the governance and organization structures of the regional
transmission organization will enable the formation of an ISO or a regional
transmission company (TransCo). It will detail the mechanisms needed to
transition from an ISO to a TransCo in the event the organization does not
initially operate as a TransCo. It will be designed to meet the goals


9
of reducing transmission costs that result from pancaked rates (accumulated
transmission access fees resulting from transferring power over several
transmission systems). It will also address transmission tariff, congestion
management, operations and planning issues, as well as assisting in the
development of a market approach to providing ancillary services.

While the companies are drafting the proposal and will be responsible to
seek appropriate regulatory approval, the companies will continue to utilize
the Alliance transmission development process established in December 1997.
This is an open and cooperative effort, involving regular meetings and
discussions with representatives from other investor-owned utilities,
regulatory staff members, transmission customers, public power companies,
municipal systems and rural electric cooperatives. This process provides input
from diverse sources to assist in the formation of the organization.


CAPITAL REQUIREMENTS AND FINANCING PROGRAM

See MANAGEMENT'S DISCUSSION AND ANALYSIS OF CASH FLOWS AND FINANCIAL
CONDITION on pages 36 through 38 of the 1998 Annual Report to Shareholders.


ITEM 2. PROPERTIES

Dominion Resources owns Virginia Power's principal executive office
building. Dominion Resources' other assets consist primarily of its investments
in its subsidiaries, the principal properties of which are described in THE
COMPANY under Item 1. BUSINESS above. See also VIRGINIA POWER GENERATING UNITS
under Item 1. BUSINESS above.


ITEM 3. LEGAL PROCEEDINGS

From time to time, Dominion Resources and its subsidiaries are alleged to
be in violation or in default under orders, statutes, rules or regulations
relating to the environment, compliance plans imposed upon or agreed to by
them, or permits issued by various local, state and federal agencies for the
construction or operation of facilities. From time to time, there may be
administrative proceedings on these matters pending. In addition, in the normal
course of business, Dominion Resources and its subsidiaries are in involved in
various legal proceedings. Management believes that the ultimate resolution of
these proceedings will not have a material adverse effect on the company's
financial position, liquidity or results of operations.

See REGULATION and RATES under VIRGINIA POWER under Item 1. BUSINESS for
information on various regulatory proceedings.

In December 1995, two civil actions were filed in the Virginia Circuit
Court of the City of Norfolk against the City of Norfolk and Virginia Power,
one for $15 million and one for $3 million. These matters have been resolved
through settlement by the parties. On April 2, 1997, Doswell Limited
Partnership (Doswell) filed a motion for judgment against Virginia Power in the
Circuit Court of the City of Richmond. On the same date, Doswell also filed a
complaint against Virginia Power in the United States District Court for the
Eastern District of Virginia. These matters have been settled and the suits
dismissed.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

10
EXECUTIVE OFFICERS OF THE REGISTRANT



<TABLE>
<CAPTION>
NAME AND AGE BUSINESS EXPERIENCE PAST FIVE YEARS
- ---------------------------- ---------------------------------------------------------------------------------------
<S> <C>
Chairman of the Board of Directors, President and Chief Executive Officer of
Thos. E. Capps (63)
Dominion Resources from September 1, 1995 to date; Chairman of the Board of
Directors and Chief Executive Officer of Dominion Resources prior to September 1,
1995.
Norman B. Askew (56) Executive Vice President of Dominion Resources and President and Chief Executive
Officer of Virginia Electric and Power Company from August 1, 1997 to date;
Executive Vice President of Dominion Resources and Chief Executive of East
Midlands from February 21, 1997 to August 1, 1997; Chief Executive of East
Midlands prior to February 21, 1997.
Thomas N. Chewning (53) Executive Vice President of Dominion Resources from January 1, 1997 to date and
President of Dominion Energy; Senior Vice President of Dominion Resources prior to
January 1, 1997.
David L. Heavenridge (52) Executive Vice President of Dominion Resources from January 1, 1997 to date and
President of Dominion Capital; Senior Vice President of Dominion Resources prior to
January 1, 1997.
Edgar M. Roach, Jr. (50) Executive Vice President of Dominion Resources from September 15, 1997 to date;
Senior Vice President-Finance, Regulation and General Counsel of Virginia Electric
and Power Company from January 1, 1996 to September 15, 1997; Vice President-
Regulation and General Counsel, prior to January 1, 1996.
Thomas F. Farrell, II (44) Senior Vice President-Corporate Affairs of Dominion Resources and Executive Vice
President of Virginia Electric and Power Company from September 1, 1997 to date;
Senior Vice President-Corporate and General Counsel of Dominion Resources from
January 1, 1997 to September 1, 1997; Vice President and General Counsel of
Dominion Resources from July 1, 1995 to January 1, 1997; Partner in the law firm of
McGuire, Woods, Battle & Boothe LLP prior to July 1, 1995.
James L. Trueheart (47) Senior Vice President and Controller of Dominion Resources from November 1, 1998
to date; Vice President and Controller prior to November 1, 1998.
G. Scott Hetzer (42) Vice President and Treasurer of Dominion Resources from October 1, 1997 to date;
Managing Director of Wheat First Butcher Singer prior to October 1, 1997.
William S. Mistr (51) Vice President of Dominion Resources from February 20, 1998 to date and Vice
President-Information Technology of Virginia Electric and Power Company from
January 1, 1996 to date; Vice President and Treasurer, Dominion Energy, Inc., prior to
January 1, 1996.
James F. Stutts (54) Vice President and General Counsel of Dominion Resources from September 15, 1997
to date; Partner in the law firm of McGuire, Woods, Battle & Boothe LLP prior to
September 15, 1997.
Patricia A. Wilkerson (43) Corporate Secretary of Dominion Resources from January 1, 1997 to date; Assistant
Corporate Secretary prior to January 1, 1997.
</TABLE>

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS

Dominion Resources common stock is listed on the New York Stock Exchange
and at December 31, 1998 there were 201,553 registered common shareholders of
record. Quarterly information concerning stock prices and dividends contained
on page 54 of the 1998 Annual Report to Shareholders for the fiscal year ended
December 31, 1998 in Note Y to NOTES TO CONSOLIDATED FINANCIAL STATEMENTS which
is filed herein as Exhibit 13, is hereby incorporated herein by reference.


11
ITEM 6. SELECTED FINANCIAL DATA

This information contained under the caption "Selected Consolidated
Financial Data" on page 58 of the 1998 Annual Report to Shareholders for the
fiscal year ended December 31, 1998 filed herein as Exhibit 13, is hereby
incorporated herein by reference.


ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This information contained under the caption MANAGEMENT'S DISCUSSION AND
ANALYSIS OF OPERATIONS on pages 24 through 35 and MANAGEMENT'S DISCUSSION AND
ANALYSIS OF CASH FLOWS AND FINANCIAL CONDITION on pages 36 through 38 of the
1998 Annual Report to Shareholders for the fiscal year ended December 31, 1998,
filed herein as Exhibit 13, is hereby incorporated herein by reference.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

This information contained under the caption MANAGEMENT'S DISCUSSION AND
ANALYSIS OF OPERATIONS on pages 33 through 35 of the 1998 Annual to
Shareholders for the fiscal year ended December 31, 1998, filed herein as
Exhibit 13, is hereby incorporated herein by reference.


ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

This information contained in the CONSOLIDATED FINANCIAL STATEMENTS on
pages 19 through 23, NOTES TO CONSOLIDATED FINANCIAL STATEMENTS on pages 39
through 55 and related report thereon of Deloitte & Touche LLP, independent
auditors, appearing on page 56 of the 1998 Annual Report to Shareholders for
the fiscal year ended December 31, 1998, filed herein as Exhibit 13, is hereby
incorporated herein by reference.


ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

None.


PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding the directors of Dominion Resources contained in the
1999 Proxy Statement, under the heading THE BOARD, File No. 1-8489, dated March
1999, is hereby incorporated herein by reference. The information concerning
the executive officers of Dominion Resources required by this item is contained
in Part I, under the section EXECUTIVE OFFICERS OF THE REGISTRANT.


ITEM 11. EXECUTIVE COMPENSATION

The information regarding executive compensation is contained under the
heading EXECUTIVE COMPENSATION and the information regarding director
compensation is contained under the heading THE BOARD -- COMPENSATION AND OTHER
PROGRAMS in the 1999 Proxy Statement, is hereby incorporated herein by
reference.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information concerning stock ownership by directors and executive
officers is contained under the heading THE BOARD -- SHARE OWNERSHIP TABLE in
the 1999 Proxy Statement, is hereby incorporated herein by reference. There is
no person known by Dominion Resources to be the beneficial owner of more than
five percent of Dominion Resources common stock.


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None

12
PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a) Certain documents are filed as part of this Form 10-K and are
incorporated herein by reference and found on the pages noted.


1. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
1998
ANNUAL REPORT
TO SHAREHOLDERS
(PAGE)
----------------
<S> <C>
Report of Independent Auditors .................................... 56
Report of Management .............................................. 56
Consolidated Statements of Income for the years ended
December 31, 1998, 1997 and 1996 ................................ 19
Consolidated Balance Sheets at December 31, 1998 and 1997 ......... 20 and 21
Consolidated Statements of Shareholders'
Equity and Consolidated Statements of Comprehensive Income
for the years ended December 31, 1998, 1997 and 1996 ............ 22
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996 ................................ 23
Notes to Consolidated Financial Statements ........................ 39 - 55
</TABLE>


13
2. EXHIBITS

<TABLE>
<S> <C> <C>
2(i) - Agreement, dated June 26, 1998, relating to the sale and purchase of East Midlands Electricity plc by
PowerGen plc (Exhibit 2, Form 10-Q for the quarter ended June 30, 1998, File No. 1-8489, incorporated
by reference).
2(ii) - Agreement and Plan of Merger, dated as of February 19, 1999, by and between Dominion Resources,
Inc. and Consolidated Natural Gas Company (filed herewith).
3(i) - Articles of Incorporation as in effect May 4, 1987 (Exhibit 3(i), Form 10-K for the fiscal year ended
December 31, 1993, File No. 1-8489, incorporated by reference).
3(ii) - Bylaws as in effect on September 21, 1994 (Exhibit 3(ii), Form 10-K for the fiscal year ended
December 31, 1994, File No. 1-8489, incorporated by reference).
4(i) - See Exhibit 3(i) above.
4(ii) - Indenture of Mortgage of Virginia Electric and Power Company, dated November 1, 1935, as
supplemented and modified by fifty-eight Supplemental Indentures (Exhibit 4(ii), Form 10-K for the
fiscal year ended December 31, 1985, File No. 1-2255, incorporated by reference); Fifty-Ninth
Supplemental Indenture (Exhibit 4(ii), Form 10-Q for the quarter ended March 31, 1986, File
No. 1-2255, incorporated by reference); Sixtieth Supplemental Indenture (Exhibit 4(ii), Form 10-Q for
the quarter ended September 30, 1986, File No. 1-2255, incorporated by reference); Sixty-First
Supplemental Indenture (Exhibit 4(ii), Form 10-Q for the quarter ended June 30, 1987, File No. 1-2255,
incorporated by reference); Sixty-Second Supplemental Indenture (Exhibit 4(ii), Form 8-K, dated
November 3, 1987, File No. 1-2255, incorporated by reference); Sixty-Third Supplemental Indenture
(Exhibit 4(i), Form 8-K, dated June 8, 1988, File No. 1-2255, incorporated by reference); Sixty-Fourth
Supplemental Indenture (Exhibit 4(i), Form 8-K, dated February 8, 1989, File No. 1-2255, incorporated
by reference); Sixty-Fifth Supplemental Indenture (Exhibit 4(i), Form 8-K, dated June 22, 1989, File
No. 1-2255, incorporated by reference); Sixty-Sixth Supplemental Indenture, (Exhibit 4(i), Form 8-K,
dated February 27, 1990, File No. 1 -2255, incorporated by reference); Sixty-Seventh Supplemental
Indenture (Exhibit 4(i), Form 8-K, dated April 2, 1991, File No. 1-2255, incorporated by reference);
Sixty-Eighth Supplemental Indenture, (Exhibit 4(i)), Sixty-Ninth Supplemental Indenture, (Exhibit 4(ii))
and Seventieth Supplemental Indenture, (Exhibit 4(iii), Form 8-K, dated February 25, 1992, File
No. 1-2255, incorporated by reference); Seventy-First Supplemental Indenture (Exhibit 4(i)) and
Seventy-Second Supplemental Indenture, (Exhibit 4(ii), Form 8-K, dated July 7, 1992, File No. 1-2255,
incorporated by reference); Seventy-Third Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated
August 6, 1992, File No. 1-2255, incorporated by reference); Seventy-Fourth Supplemental Indenture
(Exhibit 4(i), Form 8-K, dated February 10, 1993, File No. 1-2255, incorporated by reference);
Seventy-Fifth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated April 6, 1993, File No. 1-2255,
incorporated by reference); Seventy-Sixth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated
April 21, 1993, File No. 1 -2255, incorporated by reference); Seventy-Seventh Supplemental Indenture,
(Exhibit 4(i), Form 8-K, dated June 8, 1993, File No. 1-2255, incorporated by reference);
Seventy-Eighth Supplemental Indenture, (Exhibit 4(i), Form 8-K, dated August 10, 1993, File
No. 1-2255, incorporated by reference); Seventy-Ninth Supplemental Indenture, (Exhibit 4(i), Form 8-K,
dated August 10, 1993, File No. 1-2255, incorporated by reference); Eightieth Supplemental Indenture,
(Exhibit 4(i), Form 8-K, dated October 12, 1993, File No. 1-2255, incorporated by reference);
Eighty-First Supplemental Indenture, (Exhibit 4(iii), Form 10-K for the fiscal year ended December 31,
1993, File No. 1-2255, incorporated by reference); Eighty-Second Supplemental Indenture, (Exhibit 4(i),
Form 8-K, dated January 18, 1994, File No. 1-2255, incorporated by reference); Eighty-Third
Supplemental Indenture (Exhibit 4(i), Form 8-K, dated October 19, 1994, File No. 1-2255, incorporated
by reference); Eighty-Fourth Supplemental Indenture (Exhibit 4(i), Form 8-K, dated March 23, 1995,
File No. 1-2255, incorporated by reference, and Eighty-Fifth Supplemental Indenture (Exhibit 4(i), Form
8-K, dated February 20, 1997, File No. 1-2255, incorporated by reference).
4(iii) - Indenture, dated April 1, 1985, between Virginia Electric and Power Company and Crestar Bank
(formerly United Virginia Bank) (Exhibit 4(iv), Form 10-K for the fiscal year ended December 31, 1993,
File No. 1-2255, incorporated by reference).
4(iv) - Indenture, dated as of June 1, 1986, between Virginia Electric and Power Company and The Chase
Manhattan Bank (formerly Chemical Bank) (Exhibit 4(v), Form 10-K for the fiscal year ended
December 31, 1993, File No. 1-2255, incorporated by reference).
4(v) - Indenture, dated April 1, 1988, between Virginia Electric and Power Company and The Chase
Manhattan Bank (formerly Chemical Bank), as supplemented and modified by a First Supplemental
Indenture, dated August 1, 1989, (Exhibit 4(vi), Form 10-K for the fiscal year ended December 31,
1993, File No. 1-2255, incorporated by reference).
4(vi) - Subordinated Note Indenture, dated as of August 1, 1995 between Virginia Electric and Power Company
and The Chase Manhattan Bank (formerly Chemical Bank), as Trustee, as supplemented (Exhibit 4(a),
Form S-3 Registration Statement File No. 333-20561 as filed on January 28, 1997, incorporated by
reference).
</TABLE>

14
<TABLE>
<S> <C> <C>
4(vii) - Form of Senior Indenture dated as of June 1, 1998, as supplemented by the First Supplemental
Indenture to the Senior Indenture, dated June 1, 1998, between Virginia Electric and Power Company
and The Chase Manhattan Bank (Exhibit 4.2, Form 8-K dated June 12, 1998 File No. 1-2255
incorporated by reference).
4(viii) - Indenture, Junior Subordinated Debentures, dated December 1, 1997, between Dominion Resources, Inc.
and The Chase Manhattan Bank as supplemented by a First Supplemental Indenture, dated December 1,
1997 (Exhibit 4.1 and Exhibit 4.2 to Form S-4 Registration Statement, File No. 333-50653, as filed on
April 21, 1998, incorporated by reference).
4(ix) - Dominion Resources agrees to furnish to the Commission upon request any other instrument with
respect to long-term debt as to which the total amount of securities authorized thereunder does not
exceed 10% of Dominion Resources' total assets.
10(i) - Operating Agreement, dated June 17, 1981, between Virginia Electric and Power Company and
Monongahela Power Company, the Potomac Edison Company, West Penn Power Company, and
Allegheny Generating Company (Exhibit 10(vi), Form 10-K for the fiscal year ended December 31,
1983, File No. 1-8489, incorporated by reference).
10(ii) - Purchase, Construction and Ownership Agreement, dated as of December 28, 1982 but amended and
restated on October 17, 1983, between Virginia Electric and Power Company and Old Dominion Electric
Cooperative (Exhibit 10(viii), Form 10-K for the fiscal year ended December 31, 1983, File No. 1-8489,
incorporated by reference).
10(iii) - Interconnection and Operating Agreement, dated as of December 28, 1982 as amended and restated on
October 17, 1983, between Virginia Electric and Power Company and Old Dominion Electric
Cooperative (Exhibit 10(ix), Form 10-K for the fiscal year ended December 31, 1983, File No. 1-8489,
incorporated by reference).
10(iv) - Nuclear Fuel Agreement, dated as of December 28, 1982 as amended and restated on October 17, 1983,
between Virginia Electric and Power Company and Old Dominion Electric Cooperative (Exhibit 10(x),
Form 10-K for the fiscal year ended December 31, 1983, File No. 1-8489, incorporated by reference).
10(v) - Amended and Restated Interconnection and Operating Agreement, dated as of July 29, 1997 between
Virginia Electric and Power Company and Old Dominion Electric Cooperative (Exhibit 10(v), Form
10-K for the fiscal year ended December 31, 1997 File No. 1-8489, incorporated by reference).
10(vi) - Credit Agreements, dated as of June 7, 1996, between The Chase Manhattan Bank (formerly Chemical
Bank) and Virginia Electric and Power Company (Exhibit 10(i) and Exhibit 10(ii), Form 10-Q for the
period ended June 30, 1996. File No. 1-2255, incorporated by reference).
10(vii) - Inter-Company Credit Agreement, dated December 20, 1985, as modified on August 21, 1987, between
Dominion Resources and Dominion Capital, Inc. (Exhibit 10(vi), Form 10-K for the fiscal year ended
December 31, 1993, File No. 1-8489, incorporated by reference).
10(viii) - Inter-Company Credit Agreement, dated October 1, 1987 as amended and restated as of May 1, 1988
between Dominion Resources and Dominion Energy, Inc. (Exhibit 10(vii), Form 10-K for the fiscal year
ended December 31, 1993, File No. 1-8489, incorporated by reference).
10(ix) - Inter-Company Credit Agreement, dated as of September 1, 1988 between Dominion Resources and
Dominion Lands, Inc. (Exhibit 10(viii), Form 10-K for the fiscal year ended December 31, 1993, File
No. 1-8489, incorporated by reference).
10(x) - Form of Amended and Restated Articles of Partnership in Commendam of Catalyst Old River
Hydroelectric Limited Partnership, by and between Catalyst Vidalia Corporation and Dominion Capital,
Inc. effective as of August 24, 1990 (Exhibit 10(xii) Form 10-K for the fiscal year ended December 31,
1990, File No. 1-8489, incorporated by reference).
10(xi) - Supplemental Funding Agreement, dated as of August 24, 1990, by and among Dominion Capital, Inc.,
Catalyst Old River Hydroelectric Limited Partnership and First National Bank of Commerce (Exhibit
10(xiii) Form 10-K for the fiscal year ended December 31, 1990, File No. 1-8489, incorporated by
reference).
10(xii) - Credit Agreement, dated December 1, 1985, between Virginia Electric and Power Company and Old
Dominion Electric Cooperative (Exhibit 10(xix), Form 10-K for the fiscal year ended December 31,
1985, File No. 1-8489, incorporated by reference).
10(xiii) - Agreement for Northern Virginia Services, dated as of November 1, 1985, between Potomac Electric
Power Company and Virginia Electric and Power Company (Exhibit 10(xxi), Form 10-K for the fiscal
year ended December 31, 1985, File No. 1-8489, incorporated by reference).
10(xiv) - Purchase, Construction and Ownership Agreement, dated May 31, 1990, between Virginia Electric and
Power Company and Old Dominion Electric Cooperative (Exhibit 10(xi), Form 10-K for the fiscal year
ended December 31, 1990, File No. 1 -2255, incorporated by reference).
10(xv) - Operating Agreement, dated May 31, 1990, between Virginia Electric and Power Company and Old
Dominion Electric Cooperative (Exhibit 10(xii), Form 10-K for the fiscal year ended December 31,
1990, File No. 1-2255, incorporated by reference).
10(xvi) - Trust Agreement of Dominion Resources Black Warrior Trust, dated May 31, 1994, among Dominion
Black Warrior Basin, Inc., Dominion Resources, Inc., Mellon Bank (DE) National Association and
Nationsbank of Texas, N.A. (Exhibit 3.1, Amendment No. 1 to Registration Statement, File No.
33-53513, filed June 1, 1994, incorporated by reference).
</TABLE>

15
<TABLE>
<S> <C>
10(xvii) - First Amendment of Trust Agreement of Dominion Resources Black Warrior Trust, dated June 27, 1994,
among Dominion Black Warrior Basin, Inc., Dominion Resources, Inc., Mellon Bank (DE) National
Association and Nationsbank of Texas, N.A. (Exhibit 10(ii), Form 10-Q for the quarter ended June 30,
1994, File No. 1-8489, incorporated by reference).
10(xviii)* - Dominion Resources, Inc. Executive Supplemental Retirement Plan, effective January 1, 1981 as
amended and restated September 1, 1996 (Exhibit 10(iv), Form 10-Q for the quarter ended June 30,
1997, File No. 1-8489, incorporated by reference) and as amended June 20, 1997 and as amended
March 3, 1998 (Exhibit 10(xxi), Form 10-K for the fiscal year ended December 31, 1997, File No.
1-8489, incorporated by reference).
10(xix)* Arrangements with certain executive officers regarding additional credited years of service for retirement
and retirement life insurance purposes (Exhibit 10(xxii), Form 10-K for the fiscal year ended
December 31, 1997, File No. 1-8489, incorporated by reference).
10(xx)* - Dominion Resources, Inc.'s Cash Incentive Plan as adopted December 20, 1991 (Exhibit 10(xxii), Form
10-K for the fiscal year ended December 31, 1991, File No. 1-8489, incorporated by reference).
10(xxi) - Dominion Resources, Inc. Incentive Compensation Plan, effective April 22, 1997 (Exhibit 99, Form S-8
Registration Statement, File No 333-25587, incorporated by reference).
10(xxii)* - Form of Employment Continuity Agreement for certain officers of Dominion Resources (Exhibit (xxvi),
Form 10-K for the fiscal year ended December 31, 1994, File No. 1-8489, incorporated by reference).
10(xxiii)* - Dominion Resources, Inc. Retirement Benefit Funding Plan, effective June 29, 1990 as amended and
restated September 1, 1996 (Exhibit 10(iii), Form 10-Q for the quarter ended June 30, 1997, File
No. 1-8489, incorporated by reference).
10(xxiv)* - Dominion Resources, Inc. Retirement Benefit Restoration Plan as adopted effective January 1, 1991 as
amended and restated September 1, 1996 (Exhibit 10(ii), Form 10-Q for the quarter ended June 30,
1997, File No. 1-8489, incorporated by reference).
10(xxv)* - Dominion Resources, Inc. Executives' Deferred Compensation Plan, effective January 1, 1994 and as
amended and restated January 1, 1997 (Exhibit 10 (xxvi), Form 10-K for the fiscal year ended
December 31, 1996, incorporated by reference).
10(xxvi)* - Employment Agreement dated June 20, 1997 between Dominion Resources and Thos. E. Capps
(Exhibit 10(i), Form 10-Q for the quarter ended June 30, 1997, File No. 1-8489, incorporated by
reference).
10(xxvii)* - Form of Employment Agreement between Dominion Resources certain executive officers including
Thomas N. Chewning and David L. Heavenridge (Exhibit 10 (xxx), Form 10-K for the fiscal year ended
December 31, 1997, File No. 1-8489, incorporated by reference and Exhibit 10(ii), Form 10-Q for the
quarter ended March 31, 1998, File No. 1-8489, incorporated by reference).
10(xxviii)* - Dominion Resources, Inc. Stock Accumulation Plan for Outside Directors, effective April 23, 1996
(Exhibit 10, Form 10-Q for the quarter ended March 31, 1996, File No. 1-8489, incorporated by
reference).
10(xxix)* - Dominion Resources, Inc. Directors Stock Compensation Plan, effective April 9, 1998 (Exhibit 99, Form
S-8 Registration Statement, File No. 333-49725, incorporated by reference).
10(xxx)* - Dominion Resources, Inc. Directors Deferred Cash Compensation Plan, effective December 21, 1998
(Exhibit 99, Form S-8 Registration Statement, File No. 333-69305, incorporated by reference).
10(xxxi)* - Employment Agreement dated February 21, 1997 between Dominion Resources and Norman Askew
(Exhibit 10(xxxi), Form 10-K for the fiscal year ended December 31, 1996, File No. 1-8489,
incorporated by reference).
10(xxxii)* - Employment Agreement, dated September 12, 1997 between Dominion Resources and Edgar M.
Roach, Jr. (Exhibit 10(xxxiv), Form 10-K for the fiscal year ended December 31, 1997, File No. 1-8489,
incorporated by reference).
10(xxxiii)* - Employment Agreement dated September 12, 1997 between Dominion Resources and Thomas F. Farrell,
II (filed herewith).
11 - Computation of Earnings Per Share of Common Stock Assuming Full Dilution (filed herewith).
13 - Portions of the 1998 Annual Report to Shareholders for the fiscal year ended December 31, 1998
(filed herewith).
21 - Subsidiaries of the Registrant (filed herewith).
23 - Consent of Deloitte & Touche LLP (filed herewith).
27 - Financial Data Schedule (filed herewith).
99 - Joint Press Release, dated February 22, 1999, of Dominion Resources, Inc. and Consolidated Natural
Gas Company (filed herewith).
</TABLE>

- ---------
* Indicates management contract or compensatory plan or arrangement.

(b) Reports on Form 8-K

None.

16
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.


DOMINION RESOURCES, INC.

By: THOS. E. CAPPS
------------------------------
(Thos. E. Capps, Chairman of the Board of Directors,
President and Chief Executive Officer)


Date: March 1, 1999

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated and on the 1st day of March, 1999.


<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------ ----------------------------------------------
<S> <C>
JOHN B. ADAMS, JR. Director
------------------------------
John B. Adams, Jr.

JOHN B. BERNHARDT Director
------------------------------
John B. Bernhardt

THOS. E. CAPPS Chairman of the Board of Directors, President
------------------------------ (Chief Executive Officer)
Thos. E. Capps

BENJAMIN J. LAMBERT, III Director
------------------------------
Benjamin J. Lambert, III

RICHARD L. LEATHERWOOD Director
------------------------------
Richard L. Leatherwood

HARVEY L. LINDSAY, JR. Director
------------------------------
Harvey L. Lindsay, Jr.

K. A. RANDALL Director
------------------------------
K. A. Randall

WILLIAM T. ROOS Director
------------------------------
William T. Roos

FRANK S. ROYAL Director
------------------------------
Frank S. Royal
</TABLE>

17
<TABLE>
<CAPTION>
SIGNATURE TITLE
- ------------------------------------ -------------------------------------
<S> <C>
S. DALLAS SIMMONS Director
------------------------------
S. Dallas Simmons

ROBERT H. SPILMAN Director
------------------------------
Robert H. Spilman

JUDITH B. WARRICK Director
------------------------------
Judith B. Warrick


EDGAR M. ROACH, JR. Executive Vice President
------------------------------ (Chief Financial Officer)
Edgar M. Roach, Jr.

J.L. TRUEHEART Senior Vice President and Controller
------------------------------ (Principal Accounting Officer)
J.L. Trueheart
</TABLE>


18
DOMINION RESOURCES, INC.




PORTIONS
OF THE
1998
ANNUAL REPORT
TO
SHAREHOLDERS
(Incorporated by Reference)