INVESTMENTS

Dominion

Equity and Debt Securities

Rabbi Trust Securities

Marketable equity and debt securities and cash equivalents held in Dominion's rabbi trusts and classified as trading totaled $104 million and $100 million at December 31, 2016 and 2015, respectively.

Decommissioning Trust Securities

Dominion holds marketable equity and debt securities (classified as available-for-sale), cash equivalents and cost method investments in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Dominion's decommissioning trust funds are summarized below:



	Amortized Cost		Total Unrealized Gains ⁽¹⁾		Total Unrealized Losses ⁽¹⁾				Fair Value
(millions)
At December 31, 2016
Marketable equity securities:
U.S.	$	1,449	$	1,408	$	—			$	2,857
Fixed income:
Corporate debt instruments	478		13		(4		)		487
Government securities	978		22		(8		)		992
Common/collective trust funds	67		—		—				67
Cost method investments	69		—		—				69
Cash equivalents and other⁽²⁾	12		—		—				12
Total	$	3,053	$	1,443	$	(12	)	⁽³⁾	$	4,484
At December 31, 2015
Marketable equity securities:
U.S.	$	1,354	$	1,217	$	—			$	2,571
Fixed income:
Corporate debt instruments	436		11		(7		)		440
Government securities	962		30		(4		)		988
Common/collective trust funds	100		—		—				100
Cost method investments	70		—		—				70
Cash equivalents and other⁽²⁾	14		—		—				14
Total	$	2,936	$	1,258	$	(11	)	⁽³⁾	$	4,183


(1)	Included in AOCI and the nuclear decommissioning trust regulatory liability as discussed in Note 2.


(2)	Includes pending sales of securities of $9 million and $12 million at December 31, 2016 and 2015, respectively.


(3)	The fair value of securities in an unrealized loss position was $576 million and $592 million at December 31, 2016 and 2015, respectively.

The fair value of Dominion's marketable debt securities held in nuclear decommissioning trust funds at December 31, 2016

by contractual maturity is as follows:



	Amount
(millions)
Due in one year or less	$	192
Due after one year through five years	418
Due after five years through ten years	368
Due after ten years	568
Total	$	1,546

Presented below is selected information regarding Dominion's marketable equity and debt securities held in nuclear decommissioning trust funds:



Year Ended December 31,	2016		2015		2014
(millions)
Proceeds from sales	$	1,422	$	1,340	$	1,235
Realized gains⁽¹⁾	128		219		171
Realized losses⁽¹⁾	55		84		30


(1)	Includes realized gains and losses recorded to the nuclear decommissioning trust regulatory liability as discussed in Note 2.

Dominion recorded other-than-temporary impairment losses on investments held in nuclear decommissioning trust funds as follows:



Year Ended December 31,	2016			2015			2014
(millions)
Total other-than-temporary impairment losses⁽¹⁾	$	51		$	66		$	21
Losses recorded to nuclear decommissioning trust regulatory liability	(16		)	(26		)	(5		)
Losses recognized in other comprehensive income (before taxes)	(12		)	(9		)	(3		)
Net impairment losses recognized in earnings	$	23		$	31		$	13


(1)	Amounts include other-than-temporary impairment losses for debt securities of $13 million, $9 million and $3 million at December 31, 2016, 2015 and 2014, respectively.

Virginia Power

Virginia Power holds marketable equity and debt securities (classified as available-for-sale), cash equivalents and cost method investments in nuclear decommissioning trust funds to fund future decommissioning costs for its nuclear plants. Virginia Power's decommissioning trust funds are summarized below:



	Amortized Cost		Total Unrealized Gains ⁽¹⁾		Total Unrealized Losses ⁽¹⁾				Fair Value
(millions)
At December 31, 2016
Marketable equity securities:
U.S.	$	677	$	624	$	—			$	1,301
Fixed income:
Corporate debt instruments	274		6		(4		)		276
Government securities	420		9		(2		)		427
Common/collective trust funds	26		—		—				26
Cost method investments	69		—		—				69
Cash equivalents and other⁽²⁾	7		—		—				7
Total	$	1,473	$	639	$	(6	)	⁽³⁾	$	2,106
At December 31, 2015
Marketable equity securities:
U.S.	$	633	$	528	$	—			$	1,161
Fixed income:
Corporate debt instruments	238		5		(5		)		238
Government securities	421		15		(2		)		434
Common/collective trust funds	34		—		—				34
Cost method investments	70		—		—				70
Cash equivalents and other⁽²⁾	8		—		—				8
Total	$	1,404	$	548	$	(7	)	⁽³⁾	$	1,945


(1)	Included in AOCI and the nuclear decommissioning trust regulatory liability as discussed in Note 2.


(2)	Includes pending sales of securities of $7 million and $8 million at December 31, 2016 and 2015, respectively.


(3)	The fair value of securities in an unrealized loss position was $287 million and $281 million at December 31, 2016 and 2015, respectively.

The fair value of Virginia Power's marketable debt securities at December 31, 2016, by contractual maturity is as follows:



	Amount
(millions)
Due in one year or less	$	55
Due after one year through five years	181
Due after five years through ten years	208
Due after ten years	285
Total	$	729

Presented below is selected information regarding Virginia Power's marketable equity and debt securities held in nuclear decommissioning trust funds.



Year Ended December 31,	2016		2015		2014
(millions)
Proceeds from sales	$	733	$	639	$	549
Realized gains⁽¹⁾	63		110		73
Realized losses⁽¹⁾	27		43		12


(1)	Includes realized gains and losses recorded to the nuclear decommissioning trust regulatory liability as discussed in Note 2.

Virginia Power recorded other-than-temporary impairment losses on investments held in nuclear decommissioning trust funds as follows:



Year Ended December 31,	2016			2015			2014
(millions)
Total other-than-temporary impairment losses⁽¹⁾	$	26		$	36		$	8
Losses recorded to nuclear decommissioning trust regulatory liability	(16		)	(26		)	(4		)
Losses recorded in other comprehensive income (before taxes)	(7		)	(6		)	(2		)
Net impairment losses recognized in earnings	$	3		$	4		$	2


(1)	Amounts include other-than-temporary impairment losses for debt securities of $8 million, $6 million and $2 million at December 31, 2016, 2015 and 2014, respectively.

Equity Method Investments

Dominion and Dominion Gas

Investments that Dominion and Dominion Gas account for under the equity method of accounting are as follows:



Company	Ownership%			Investment Balance				Description
As of December 31,				2016		2015
(millions)
Dominion
Blue Racer	50	%		$	677	$	661	Midstream gas and related services
Atlantic Coast Pipeline	48	%		256		59		Gas transmission system
Iroquois	50	%	⁽¹⁾	316		324		Gas transmission system
Fowler Ridge	50	%		116		125		Wind-powered merchant generation facility
NedPower	50	%		112		119		Wind-powered merchant generation facility
Other	various			84		32
Total				$	1,561	$	1,320
Dominion Gas
Iroquois	24.07	%		$	98	$	102	Gas transmission system
Total				$	98	$	102


(1)	Comprised of Dominion Midstream's interest of 25.93% and Dominion Gas' interest of 24.07%. See Note 15 for more information.

Dominion's equity earnings on its investments totaled $111 million, $56 million and $46 million in 2016, 2015 and 2014, respectively. Dominion received distributions from these investments of $104 million, $83 million and $60 million in 2016, 2015, and 2014, respectively. As of December 31, 2016 and 2015, the carrying amount of Dominion's investments exceeded its share of underlying equity in net assets by $260 million and $234 million, respectively. These differences are comprised at December 31, 2016 and 2015, of $84 million and $72 million, respectively, related to basis differences from Dominion's investments in Blue Racer and wind projects, which are being amortized over the useful lives of the underlying assets, and $176 million and $162 million, respectively, reflecting equity method goodwill that is not being amortized.

Dominion Gas' equity earnings on its investment totaled $21 million, $23 million and $21 million in 2016, 2015 and 2014, respectively. Dominion Gas received distributions from its investment of $22 million, $28 million and $20 million in 2016, 2015, and 2014, respectively. As of December 31, 2016 and 2015, the carrying amount of Dominion Gas' investment exceeded its share of underlying equity in net assets by $8 million. The difference reflects equity method goodwill and is not being amortized. In May 2016, Dominion Gas sold 0.65% of the noncontrolling partnership interest in Iroquois to TransCanada for approximately $7 million, which resulted in a $5 million ($3 million after-tax) gain, included in other income in Dominion Gas' Consolidated Statements of Income.

Equity earnings are recorded in other income in Dominion's and Dominion Gas' Consolidated Statements of Income.

Blue Racer

In December 2012, Dominion formed a joint venture with Caiman to provide midstream services to natural gas producers operating in the Utica Shale region in Ohio and portions of Pennsylvania. Blue Racer is an equal partnership between Dominion and Caiman, with Dominion contributing midstream assets and Caiman contributing private equity capital.

In March 2014, Dominion Gas sold the Northern System to an affiliate, that subsequently sold the Northern System to Blue Racer for consideration of $84 million. Dominion Gas' consideration consisted of $17 million in cash proceeds and the extinguishment of affiliated current borrowings of $67 million and Dominion's consideration consisted of cash proceeds of $84 million. The sale resulted in a gain of $59 million ($35 million after-tax for Dominion Gas and $34 million after-tax for Dominion) net of a $3 million write-off of goodwill, and is included in other operations and maintenance expense in both Dominion Gas' and Dominion's Consolidated Statements of Income.

In December 2016, Dominion Gas repurchased a portion of the Western System from Blue Racer for $10 million, which is included in property, plant and equipment in Dominion Gas’ Consolidated Balance Sheets.

Dominion

Atlantic Coast Pipeline

In September 2014, Dominion, along with Duke and Southern Company Gas (formerly known as AGL Resources Inc.), announced the formation of Atlantic Coast Pipeline. The Atlantic Coast Pipeline partnership agreement includes provisions to allow Dominion an option to purchase additional ownership interest in Atlantic Coast Pipeline to maintain a leading ownership percentage. In October 2016, Dominion purchased an additional 3% membership interest in Atlantic Coast Pipeline from Duke for $14 million. The members, which are subsidiaries of the above-referenced parent companies, hold the following membership interests: Dominion, 48%; Duke, 47%; and Southern Company Gas (formerly known as AGL Resources Inc.), 5%.

Atlantic Coast Pipeline is focused on constructing an approximately 600-mile natural gas pipeline running from West Virginia through Virginia to North Carolina. Subsidiaries and affiliates of all three members plan to be customers of the pipeline under 20-year contracts. Public Service Company of North Carolina, Inc. also plans to be a customer of the pipeline under a 20-year contract. Atlantic Coast Pipeline is considered an equity method investment as Dominion has the ability to exercise significant influence, but not control, over the investee. See Note 15 for more information.