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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2002

OR

For the transition period from                to

Commission File Number 1-2255

VIRGINIA ELECTRIC AND POWER COMPANY

(Exact name of registrant as specified in its charter)

(804) 819-2000

(Registrant’s telephone number)

Securities registered pursuant to Section 12(b) of the Act:

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 Exchange 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.  ¨

Indicate by check mark whether the registrant is an accelerated filer.  Yes  ¨  No  x

The aggregate market value of the voting stock held by non-affiliates as of February 28, 2003, was zero.

As of February 28, 2003, there were issued and outstanding 177,932 shares of the registrant’s common stock, without par value, all of which were held, beneficially and of record, by Dominion Resources, Inc.

DOCUMENTS INCORPORATED BY REFERENCE.

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Virginia Electric and Power Company.

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Part I

The Company

Virginia Electric and Power Company (the Company) is a regulated public utility that generates, transmits and distributes power for sale in Virginia and northeastern North Carolina. In Virginia, the Company conducts business under the name “Dominion 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, the Company conducts business under the name “Dominion North Carolina Power” and serves retail customers located in the northeastern region of the state, excluding certain municipalities. In addition, the Company sells electricity at wholesale to rural electric cooperatives, power marketers, municipalities and other utilities. Within this document, “the Company” refers to the entirety of Virginia Electric and Power Company, including our Virginia and North Carolina operations and all of its subsidiaries.

All of the Company’s common stock is owned by its parent company, Dominion Resources, Inc. (Dominion), a fully integrated gas and electric holding company.

Operating Segments

The Company manages its business through two principal segments: Energy and Delivery.

Energy—Energy manages the Company’s portfolio of generating facilities and power purchase agreements and its energy trading and marketing, hedging and arbitrage activities. Effective January 1, 2003, the Company’s electric transmission operations became a part of the Energy segment.

Delivery—Delivery manages the Company’s electric distribution and transmission systems as well as customer service. Effective January 1, 2003, the Company’s electric transmission operations became a part of the Energy segment.

The majority of the Company’s revenue is provided through bundled rate tariffs. This revenue is allocated between the Energy and Delivery segments for internal reporting purposes and discussion in this document. While the Company manages its daily operations as described above, its assets remain wholly owned and operated by the Company. For additional financial information on business segments, see Note 26 to the Consolidated Financial Statements.

As of December 31, 2002, the Company had approximately 7,600 full-time employees. Approximately 3,600 employees are subject to collective bargaining agreements.

Virginia Electric and Power Company was incorporated in 1909 as a Virginia public service corporation. Its principal office is located at 701 East Cary Street, Richmond, Virginia 23219-3932. The telephone number is (804) 819-2000.

Seasonality

Sales of electricity in the Delivery segment typically vary seasonally based on increased demand for electricity by residential and commercial customers for cooling and heating use based on changes in temperature. The Energy segment is also impacted by seasonal changes in the prices of commodities, primarily electricity and natural gas, that it actively markets and trades.

Competition

Various factors are currently affecting the electric utility industry, 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, the Company continues to consider new business opportunities, particularly those which allow the Company to use its existing expertise and resources.

The Virginia Electric Utility Restructuring Act (the Virginia Restructuring Act) was enacted in 1999 and established a plan to restructure Virginia’s electric utility industry and provide for the phase-in of choice for retail customers from January 1, 2002 through January 1, 2004. As ordered by the Virginia State Corporation Commission (Virginia Commission), the Company made retail choice available for all of its Virginia regulated electric customers as of January 1, 2003.

Under the Virginia Restructuring Act, the generation portion of the Company’s Virginia jurisdictional operations is no longer subject to cost-based rate regulation effective January 1, 2002. Base rates (excluding fuel costs and certain other allowable adjustments) are capped and will remain unchanged until July 2007, unless modified or terminated sooner,

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as provided by the Virginia Restructuring Act. Under the Virginia Restructuring Act, the Company may request a termination of the capped rates at any time after January 1, 2004, and the Virginia Commission may grant the Company’s request to terminate capped rates, if it finds that a competitive generation services market exists in the Company’s service area. Recovery of generation-related costs will continue to be provided through capped rates and a wires charge. A wires charge, where applicable, will be assessed to those customers opting for alternative suppliers. The Virginia Restructuring Act also requires the Company to join or establish a regional transmission organization (RTO), phase-in retail choice beginning January 1, 2002, and functionally separate its electric generation from its electric transmission and distribution operations.

Recently, the Virginia Commission recommended that state policymakers decide promptly whether to proceed with or delay implementation of the Virginia Restructuring Act, in light of recent developments impacting electric industry restructuring in Virginia, including the Federal Energy Regulatory Commission’s (FERC) issuance of a notice of proposed rule making on Standard Market Design. Legislation that would delay entry into a RTO until on or after July 1, 2004 was approved by the Virginia General Assembly in February 2003 and is now awaiting action by the Governor. The proposed legislation also would require the Company to file an application with the Virginia Commission by July 1, 2003 to join a RTO. Subject to Virginia Commission approval, the Company would be required to transfer management and control of its transmission assets to a RTO by January 1, 2005.

For additional information on electric deregulation in Virginia, see Electric Deregulation Legislation in Future Issues and Outlook in Item 7. Management’s Discussion and Analysis and Results of Operations (MD&A).

In North Carolina, regulators and legislators continue to explore the issues related to electric industry restructuring, the development of a competitive, wholesale market and retail competition. However, to date, there has been no significant activity.

The Company plans to continue to participate actively in both the legislative and regulatory processes to ensure an orderly transition from a regulated environment.

Regulation

General

The Company is subject to regulation by the Virginia Commission, the North Carolina Utilities Commission (North Carolina Commission), Securities and Exchange Commission (SEC), FERC, the Environmental Protection Agency (EPA), Department of Energy (DOE), the Nuclear Regulatory Commission (NRC), the Army Corps of Engineers, and other federal, state and local authorities.

State Regulation

In Virginia, the Company’s retail service is subject to regulation by the Virginia Commission. The Virginia Commission approved a Virginia fuel factor of 1.613 cents per kWh in effect through December 31, 2003.

In North Carolina, retail service is subject to cost of service regulation by the North Carolina Commission. In connection with the North Carolina Commission approval of Dominion’s acquisition of Consolidated Natural Gas Company (CNG), the Company agreed not to request an increase in North Carolina retail electric base rates until 2006, except for certain events that would have a significant financial impact on the Company. Fuel rates are still subject to change under the annual fuel cost adjustment proceedings. The North Carolina Commission has approved a fuel factor of 1.402 cents per kWh, effective January 1, 2003.

The Company holds certificates of public convenience and necessity authorizing it to construct and operate its electric facilities now in operation and to sell electricity to customers. However, it 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 government agencies.

In August 2002, the Virginia Commission adopted rules relating to competitive electric metering services and consolidated billing by competitive suppliers. The Company must provide its Virginia electric customers with access to meter functionality and interval meter data beginning January 1, 2003 and implement consolidated billing by competitive suppliers no later than July 1, 2003.

For additional information on deregulation in the electric industry, the Virginia Restructuring Act and current rate matters, see above in Competition and Future Issues and Outlook in MD&A.

Public Utility Holding Company Act of 1935  

When Dominion completed the acquisition of CNG in January 2000, it became a registered public utility

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holding company under the 1935 Act. The 1935 Act and related regulations issued by the SEC govern the activities of Dominion and its subsidiaries, including the Company, with respect to the issuance and acquisition of securities, acquisition and sale of utility assets, certain transactions among affiliates engaging in business activities not directly related to the utility or energy business and other matters. The Company’s activities in these areas may also be regulated at the state level by the Virginia Commission and the North Carolina Commission. In some cases, the SEC’s rules under the 1935 Act provide that the obtaining of state approvals will suffice for the 1935 Act purposes also, subject to the fulfillment of certain post-transaction reporting requirements.

Federal Energy Regulatory Commission

Under the Federal Power Act, FERC regulates wholesale sales of electricity and transmission of electricity in interstate commerce by public utilities. The Company sells electricity in the wholesale market under its market-based sales tariff authorized by FERC but has agreed not to make wholesale power sales under this tariff to loads located within its service territory. For additional discussion on this matter, see Wholesale Competition in Future Issues and Outlook in MD&A.

The Virginia Restructuring Act requires that the Company join a RTO, and FERC encourages RTO formation as a means to foster wholesale market formation. FERC Order No. 2000 requires each public utility that owns or operates transmission facilities to make certain filings with respect to RTO formation, but will rely on voluntary formation of RTOs to advance its energy policies. By joining a RTO, the Company would transfer operational control of its transmission assets to a RTO, a third party.

In September 2002, the Company and PJM Interconnection, LLC (PJM) entered into the PJM South Implementation Agreement. The agreement provides that, subject to regulatory approval and certain provisions, the Company will become a member of PJM, transfer functional control of its electric transmission facilities to PJM for inclusion in a new PJM South Region, integrate its control area into the PJM energy markets and otherwise facilitate the establishment and operation of PJM as the RTO with respect to the Company’s transmission facilities. The agreement also contemplates additional agreements and transmission tariff provisions to be negotiated by the parties and allocates costs of implementation of the agreement among the parties.

The Company intends to file for FERC approval to join PJM in the future. The Company will also seek authorization from the Virginia Commission and the North Carolina Commission to become a member of PJM at that time. The Company will incur integration and operating costs associated with joining a RTO. The Company has deferred certain of those costs for future recovery and is giving further consideration to seeking regulatory approval to defer the balance of such costs.

For additional discussion on this matter, see Regional Transmission Organization in Future Issues and Outlook in MD&A.

Legislation that would delay entry into a RTO until on or after July 1, 2004 was approved by the Virginia General Assembly in February 2003 and is now awaiting action by the Governor. The proposed legislation also would require the Company to file an application with the Virginia Commission by July 1, 2003 to join a RTO. Subject to Virginia Commission approval, the Company would be required to transfer management and control of its transmission assets to a RTO by January 1, 2005.

In the spring of 2003, FERC expects to issue new rules governing standards of conduct between interstate electric transmission, gas transportation and storage providers and their energy related affiliates. One goal of FERC is to eliminate the separate code of conduct regulations for natural gas pipelines and electric transmission utilities and replace these requirements with uniform standards applicable to interstate “Transmission Providers” of both natural gas and electricity. For additional discussion on this matter, see FERC Policy Developments in Future Issues and Outlook in MD&A.

Environmental Matters

Each operating segment of the Company faces substantial regulation and compliance costs with respect to environmental matters. For discussion of significant aspects of these matters, including current and planned capital expenditures relating to environmental compliance, see Environmental Matters in Future Issues and Outlook in MD&A. Additional information can also be found in Item 3. Legal Proceedings and Note 21 to the Consolidated Financial Statements.

From time to time the Company may be identified as a potentially responsible party to a Superfund site. The 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

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investigation and action and then seek reimbursement from the parties. Each party can be held jointly, severally and strictly liable for all costs. These parties can also bring contribution actions against each other and seek reimbursement from their insurance companies. As a result, the Company may be responsible for the costs of remedial investigation and actions under the Superfund Act or other laws or regulations regarding the remediation of waste. The Company does not believe that any currently identified sites will result in significant liabilities.

The EPA amended its oil pollution prevention regulations in July 2002. The total projected cost of compliance with the new regulations is estimated to range from $10 to $15 million, representing primarily capital expenditures.

The EPA is also considering issuing new regulations that govern existing utilities that employ a cooling water intake structure, and whose flow levels exceed a minimum threshold. As currently written, EPA’s proposed rule presents several control options under consideration for the final rule. The Company is evaluating facility information from Bremo, Chesapeake, Chesterfield, Mt. Storm, North Anna, Possum Point, Surry, and Yorktown Power Stations. Given the uncertainties of future action by EPA on this issue, the Company cannot predict the future impact on its operations at this time.

The Company has applied for or obtained the necessary environmental permits material to the operation of its electric generating stations. Many of these permits are subject to re-issuance and continuing review.

Nuclear Regulatory Commission

All aspects of the operation and maintenance of the Company’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.

The Company filed applications for a 20 year life-extension for the North Anna and Surry units in May 2001. The NRC has completed its review of the applications and the Company expects to receive a renewed license for these units in 2003. For more information on this matter, see Note 8 to the Consolidated Financial Statements.

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 the Company’s nuclear generating units.

The NRC also requires the Company to decontaminate nuclear facilities once operations cease. This process is referred to as decommissioning, and the Company is required by the NRC to prepare for it financially. For information on compliance with the NRC financial assurance requirements, see Note 8 to the Consolidated Financial Statements.

Disposal of spent nuclear fuel is a significant issue associated with the operation and decommissioning of nuclear facilities. The Nuclear Waste Policy Act (NWPA) of 1982 requires a permanent, federal repository for high-level radioactive waste and spent nuclear fuel to be made available by January 31, 1998. In February 2002, the Secretary of Energy recommended that Yucca Mountain located in the state of Nevada be developed as the permanent repository. Final congressional approval was received in July 2002. The DOE is currently in the process of seeking approval of a NRC license to begin construction of the repository.

The Company and other utilities have petitioned the U.S. Court of Appeals for the 11th Circuit to review a matter involving the DOE and PECO Energy Company (PECO). The petitioners challenged the DOE’s action that allowed PECO to take credits against payments PECO would have been making into the Nuclear Waste Fund (NWF). The credits are part of the DOE’s settlement of PECO’s claim regarding the DOE’s failure to provide a permanent repository for spent nuclear fuel as required by the NWPA. The petition stated that the credits violated the NWPA by depleting the NWF and releasing PECO from a portion of its NWF obligation. The petition also sought injunction of the DOE’s settlement agreement with PECO and as well as an injunction against DOE entering into similar agreements. In September 2002, the court issued its decision on the matter declaring the fee adjustment aspect of the settlement between PECO and DOE “null and void.” The decision does not prevent DOE from settling claims related to DOE’s breach of its contractual obligation to begin disposing of spent nuclear fuel, but precludes DOE from using the NWF to compensate utilities for damages incurred by utilities owing to DOE’s breach of its NWF obligation to dispose of spent nuclear fuel.

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Interconnections

The Company maintains major interconnections with Progress Energy, American Electric Power Company, Inc., Allegheny Energy, Inc., PJM–West and PJM. Through this major transmission network, the Company has arrangements with these entities for coordinated planning, operation, emergency assistance and exchanges of capacity and energy. See also Regional Transmission Organization in Future Issues and Outlook in MD&A.

Capital Requirements and Financing Program

See Liquidity and Capital Resources in MD&A for details about the Company’s capital requirements and financing program including material estimated capital expenditures for environmental control facilities.

Sources of Energy

Virginia Electric and Power Company’s Power Generation

Note: (CT) denotes combustion turbine and (CC) denotes combined cycle

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Power Purchase Contracts

The Company purchases electricity under contracts with other suppliers to meet a portion of its system capacity requirements. As of December 31, 2002, the Company has 42 power purchase contracts with a combined dependable summer capacity of 3,758 Mw. For information on the financial obligations under these agreements, see Note 21 to the Consolidated Financial Statements.

Fuel for Electric Generation

The Company uses a variety of fuels to power its electric generation. These include a mix of both nuclear fuel and fossil fuel as described further below.

Nuclear Fuel Supply

The Company utilizes both long-term contracts and short-term purchases to support its nuclear fuel requirements. Worldwide market conditions are continuously evaluated to ensure a range of supply options at reasonable prices. Current agreements, inventories and spot market availability are expected to support current and planned fuel supply needs. Additional fuel is purchased as required to ensure optimum cost and inventory levels.

Fossil Fuel Supply

The Company utilizes coal, oil and natural gas in its fossil fuel operations. The Company’s coal supply is obtained through long-term contracts and spot purchases. Oil and oil-fired generation are used primarily to support heavier system generation loads during very cold or very hot weather periods. System requirements are purchased mainly under short-term spot agreements.

Firm natural gas transportation contracts (capacity) exist that allow delivery of gas to our facilities. The Company’s capacity portfolio allows flexible natural gas deliveries to its gas turbine fleet, while minimizing costs.

The Company owns its principal properties in fee (except as indicated below), subject to defects and encumbrances that do not interfere materially with their use. Substantially all of the Company’s property is subject to the lien of the mortgage securing its First and Refunding Mortgage Bonds.

The Delivery segment has approximately 6,000 miles of electric transmission lines. Portions of transmission lines cross national parks and forests under permits entitling the federal government to use, at specified charges, surplus capacity in the line if any exists.

The Delivery segment has obtained right-of-way grants from the apparent owners of real estate for most of the Company’s electric lines, but underlying titles have not been examined except for transmission lines of 69 Kv or more. Where rights-of-way have not been obtained, they could be acquired from private owners by condemnation, if necessary. Many electric lines are on publicly owned property, where permission to operate can be revoked.

The Company leases its headquarters facility from Dominion. In addition, the Energy and Delivery segments share certain leased buildings and equipment.

See Virginia Electric and Power Company’s Power Generation under Item 1. Business for a list of the principal facilities utilized by the Energy segment.

From time to time, the Company is alleged to be in violation or in default under orders, statutes, rules or regulations relating to the environment, compliance plans 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 ordinary course of business, the Company is 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 under Item 1. Business, Rate Matters in Future Issues and Outlook in MD&A and Note 21 to the Consolidated Financial Statements for additional information on rate matters and various regulatory proceedings to which the Company is a party.

During 2000, the Company received a Notice of Violation from the EPA, alleging that the Company failed to obtain New Source Review permits under the Clean Air Act prior to undertaking specified construction projects at the Mt. Storm Power Station in West Virginia. The Attorney General of New York filed a suit against the Company alleging similar violations of the Clean Air Act at the Mt. Storm Power

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Station. The Company also received notices from the Attorneys General of Connecticut and New Jersey of their intentions to file suit for similar violations. In December 2002, the Attorney General of Connecticut filed a motion to intervene as a plaintiff in the action filed by the New York State Attorney General. This action has been stayed. Management believes that the Company has obtained the necessary permits for its generating facilities. The Company has reached an agreement in principle with the federal government and the state of New York to resolve this situation. The agreement in principle includes payment of a $5 million civil penalty, a commitment of $14 million for environmental projects in Virginia, West Virginia, Connecticut, New Jersey and New York, and a 12-year, $1.2 billion capital investment program for environmental improvements at the Company’s coal-fired generating stations in Virginia and West Virginia. The Company had already committed to a substantial portion of the $1.2 billion expenditures for sulfur dioxide and nitrogen oxide emissions controls. The negotiations over the terms of a binding settlement have expanded beyond the basic agreement in principle and are ongoing. As of December 31, 2002, the Company has recorded, on a discounted basis, $18 million for the civil penalty and environmental projects.

In June 2002, Wiley Fisher, Jr. and John Fisher filed a purported class action lawsuit against the Company and Dominion Telecom, Inc. (Dominion Telecom) in the U.S. District Court in Richmond, Virginia. The plaintiffs claim that the Company and Dominion Telecom strung fiber-optic cable across their land, along the Company’s electric transmission corridor without paying compensation. The plaintiffs are seeking damages for trespass and “unjust enrichment” as well as punitive damages from the defendants. The named plaintiffs purport to “represent a class . . . consisting of all owners of land in North Carolina and Virginia, other than public streets or highways, that underlies the Company’s electric transmission lines and on or in which fiber optic cable has been installed.” The named plaintiffs have asked that the court allow the lawsuit to proceed as a class action. Discovery has begun and the court has granted a motion to add additional plaintiffs, Harmon T. Tomlinson, Jr. and Linda D. Tomlinson. The outcome of the proceeding, including an estimate as to any potential loss, cannot be predicted at this time.

None.

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Part II

Dominion Resources, Inc. (Dominion) owns all of the Company’s common stock.

The Company paid quarterly cash dividends on its common stock as follows: