Fitch affirms Dominion, ups some Vepco debt

Fitch said it affirmed Dominion Resources, Inc.'s issuer default rating at BBB+, senior unsecured notes and bonds at BBB+, preferred and junior subordinated debt at BBB, short-term issuer default rating at F2 and commercial paper at F2.

The agency also upgraded Virginia Electric and Power Co.'s (Vepco) senior unsecured notes and bonds to A- from BBB+ as well as its preferred and trust preferred securities, and junior subordinated debt to BBB+ from BBB.

The agency affirmed the BBB+ issuer default rating, secured debt rating at A, short-term issuer default rating at F2 and commercial paper at F2.

Vepco's unsecured debt and preferred securities ratings were removed from Rating Watch positive, where they were placed on April 16.

The outlook is stable.

Ratings of Dominion are supported by cash flows from a large and diverse asset base, strong operating performance and liquidity, and tightening energy and capacity markets in the Northeastern United States., the agency said.

Concerns include the execution risks associated with Dominion's significant capital spending plan, upward pressure on operating and fuel costs, and less-than-expected debt reduction in 2007, Fitch said.

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