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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2003

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.  x

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 June 30, 2003 and February 27, 2004, was zero.

As of February 2, 2004, 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.

None

Virginia Electric and Power Company.

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Part 1

Item 1. Business

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 operations through three primary operating segments. These segments, and their composition, reflect changes made to the Company’s management structure during the fourth quarter of 2003.

Delivery manages the Company’s electric distribution systems and customer service operations.

Energy manages the Company’s electric transmission and energy trading, hedging and arbitrage activities.

Generation manages the Company’s portfolio of electric generating facilities and power purchase contracts.

The majority of the Company’s revenue is provided through bundled rate tariffs. This revenue is allocated between the Delivery, Energy and Generation 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 24 to the Consolidated Financial Statements.

As of December 31, 2003, the Company had approximately 7,300 full-time employees. Approximately 3,400 employees are subject to collective bargaining agreements.

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

Seasonality

Sales of electricity in the Delivery and Generation segments typically vary seasonally based on increased demand for electricity by residential and commercial customers for cooling and heating use due to 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. See Risk Factors and Cautionary Statements That May Affect Future Results in Item 7. Management’s Discussion and Analysis of Results of Operations (MD&A) for additional information on how weather may affect the Company’s results of operations.

Regulation

The Company is subject to regulation by the Securities and Exchange Commission (SEC), Federal Energy Regulatory Commission (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 Regulatory Matters

The Company is subject to regulation by the Virginia State Corporation Commission (Virginia Commission) and the North Carolina Utilities Commission (North Carolina Commission).

The Company holds certificates of public convenience and necessity authorizing it to maintain 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.

Status of Electric Deregulation in Virginia

The Virginia Electric Utility Restructuring Act (Virginia Restructuring Act) was enacted in 1999 and established a plan to restructure the electric utility industry in Virginia. The Virginia Restructuring Act addressed among other things: capped base rates, regional transmission organization (RTO) participation, retail choice, the recovery of stranded costs and the functional separation of a utility’s electric generation from its electric transmission and distribution operations.

Retail choice has been available to all of the Company’s Virginia regulated electric customers since January 1, 2003. The Company has also separated its generation, distribution and transmission functions through the creation of divisions. Virginia codes of conduct ensure that Virginia Power’s generation and other divisions operate independently and prevent cross-subsidies between the generation and other divisions.

Since the passage of the Virginia Restructuring Act, the competitive environment has not developed in Virginia as

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anticipated. In January 2004, legislation supported by the offices of the Governor and the Attorney General of Virginia was submitted to the Virginia General Assembly that would extend the capped base rates by three and one-half years, through December 31, 2010. The bill was supported by the Company and was approved by the Virginia Senate in late January 2004. In addition to extending capped rates, the bill would:

n Lock in the Company’s fuel factor until the earlier of July 1, 2007 or the termination of capped rates through Virginia Commission order;

n Provide for a one-time adjustment of the Company’s fuel factor, effective July 1, 2007 through December 31, 2010, with no adjustment for previously incurred over-recovery or under-recovery of fuel costs, and thus would eliminate deferred fuel accounting; and

n End wires charges on the earlier of July 1, 2007, or the termination of capped rates, consistent with the Virginia Restructuring Act’s original timetable.

Other bills were introduced in the Virginia House of Delegates that would repeal the Virginia Restructuring Act, suspend most of the Virginia Restructuring Act, suspend customer choice, and re-impose “cost of service” rate making. Legislation calling for suspension of the Virginia Restructuring Act’s key provisions and a return to the cost-of-service regulatory methodology was defeated in a House committee in early February. Other measures have been deferred to 2005 by a House Committee. Until the legislative process is concluded, no assessment can be made concerning future developments.

See Status of Deregulation in Virginia in Future Issues and Other Matters in MD&A for additional information on capped base rates, stranded costs and RTO participation.

Retail Access Pilot Programs

In September 2003, the Virginia Commission approved the Company’s application for three proposed electric retail access pilot programs. The programs were proposed by the Company to stimulate the development of retail electric competition in Virginia. The pilot programs are to run through the remainder of the capped rate period and will make available to competitive service providers up to 500 megawatts of load, with expected participation of more than 65,000 customers from a variety of customer classes. The programs were scheduled to begin in February 2004. However in January 2004, the Company asked the Virginia Commission for an extension in the start of the programs by 60 days so that it may address deregulation legislation under consideration by the Virginia General Assembly, increased market prices for electricity due to colder weather and reevaluate the size and design of the programs due to the large number of volunteers. In February 2004, the Virginia Commission granted the 60-day extension.

Rate Matters

Virginia—In December 2003, the Virginia Commission approved the Company’s proposed settlement of its 2004 fuel factor increase of $386 million. The settlement includes a recovery period for the under-recovery balance over three and a half years. Approximately $171 million of the $386 million would be recovered in 2004, $85 million in 2005, $87 million in 2006 and $43 million in the first six months of 2007.

Under current Virginia law, the Company is permitted to request adjustments to its fuel rates, subject to the Virginia Restructuring Act. The Company is generally permitted to pass the cost of recoverable fuel and certain purchased power costs to its customers through a fuel factor, to the extent the Virginia Commission determines after hearing that such costs are prudently incurred. Certain proposed modifications to the timing and scope of fuel adjustments are the subject of proposed legislation in the Virginia General Assembly which is discussed in Status of Electric Deregulation in Virginia.

North Carolina—In connection with the North Carolina Commission’s approval of the Consolidated Natural Gas Company (CNG) acquisition, the Company agreed not to request an increase in North Carolina retail electric base rates before 2006, except for certain events that would have a significant financial impact on the Company’s electric utility operations. Fuel rates are still subject to change under the annual fuel cost adjustment proceedings. In January 2004, the North Carolina Public Staff requested that the North Carolina Commission initiate an investigation into the Company’s North Carolina base rates and sought a decrease in base rates. The Company believes that its base rates are reasonable and intends to respond to the filing; however, the Company cannot predict the outcome of this matter at this time.

Public Utility Holding Company Act of 1935 (1935 Act)

Dominion is a registered holding company under the 1935 Act. The 1935 Act and related regulations issued by the SEC govern 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 also suffice for 1935 Act purposes, 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 does not make wholesale power sales under this tariff to loads located within its service territory. In February 2002, the Company received FERC approval of a tariff to sell wholesale power at capped rates based on its embedded cost

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of generation. This cost-based sales tariff could be used to sell to loads within or outside its service territory. Any such sales would be voluntary. The Company’s sales of natural gas, liquid hydrocarbon by-products and oil in wholesale markets are not regulated by FERC.

The Virginia Restructuring Act requires that the Company join an RTO, and FERC encourages RTO formation as a means to foster wholesale market formation. The Company and PJM Interconnection, LLC (PJM) entered into an agreement in September 2002 that provides that, subject to regulatory approval and certain provisions, the Company will become a member of PJM and transfer functional control of its electric transmission facilities to PJM for inclusion in a new PJM South Region. However, in April 2003, Virginia enacted legislation that required the Company to file an application with the Virginia Commission by July 1, 2003 to an RTO and delayed entry into an RTO until on or after July 1, 2004. Subject to Virginia Commission approval, the Company would be required to transfer management and control of its electric transmission assets to an RTO by January 1, 2005. See RTO in Future Issues and Other Matters in MD&A for additional information on this matter.

In November 2003, FERC issued new Standards of Conduct governing conduct between interstate transmission gas and electricity providers and their marketing function or their energy related affiliates. The new rule redefines the scope of the affiliates covered by the standards and is designed to prevent transmission providers from giving their marketing function or affiliates undue preferences. All transmission providers must be in compliance by June 2004. The Company has adopted an implementation plan and will train the appropriate personnel to ensure compliance with the new rules.

Environmental Regulations

Each operating segment 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 Other Matters in MD&A. Additional information can also be found in Item 3. Legal Proceedings and Note 20 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 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.

In December 2003, the EPA announced plans to propose additional regulations addressing pollution transport from electric generating plants as well as the regulation of mercury and nickel emissions. These regulatory actions, in addition to revised regulations expected to be issued in 2004 to address regional haze, could require additional reductions in emissions from the Company’s fossil fuel-fired generating facilities. If these new emission reduction requirements are imposed, additional significant expenditures may be required.

The United States Congress is considering various legislative proposals that would require generating facilities to comply with more stringent air emissions standards. Emission reduction requirements under consideration would be phased in under a variety of periods of up to 16 years. If these new proposals are adopted, additional significant expenditures may be required.

The EPA has announced the publication of new regulations that govern existing utilities that employ a cooling water intake structure, and whose flow levels exceed a minimum threshold. As announced, the EPA’s rule presents several control options. The Company is evaluating facility information from certain of its power stations. The Company cannot predict the future impact on its operations at this time.

The Company has applied for or obtained the necessary environmental permits for the operation of its regulated facilities. 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, which are part of the Generation segment, are regulated by the NRC. Operating licenses issued by the NRC are subject to revocation, suspension or modification, and the 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 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 be financially prepared. For information on the Company’s decommissioning trusts, see Note 8 to the Consolidated Financial Statements.

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Interconnections

The Company maintains major interconnections with Progress Energy, American Electric Power Company, 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 RTO in Future Issues and Other Matters in MD&A.

Competition

Deregulation and restructuring in the electric industry continue to create issues that affect or will likely affect the markets where the Company does business, and govern the way the Company and its competitors operate. The electric power industry continues to evolve into a competitive marketplace where energy companies will compete to provide energy and energy services to a broad range of customers.

As noted earlier, the Company has made retail choice available for all of its Virginia regulated electric customers since January 1, 2003. For additional information on electric deregulation in Virginia, see Status of Electric Deregulation in Virginia in Future Issues and Other Matters in MD&A.

In North Carolina, regulators and legislators have explored 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.

Availability of 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

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

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.

Item 2. Properties

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 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 Energy segment has approximately 6,000 miles of electric transmission lines. Portions of the electric 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 Company leases its headquarters facility from Dominion. In addition, the Delivery, Energy and Generation segments share certain leased buildings and equipment.

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The Generation segment provides electricity for use on a wholesale and a retail level. The Generation segment can supply electricity demand either from its generation facilities in Virginia, North Carolina and West Virginia or through purchased power contracts when needed. The following table lists the Company’s generating units and capability.

Virginia Electric and Power Company’s Power Generation

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Nuclear Decommissioning

The Company has four licensed, operating nuclear reactors at its Surry and North Anna plants in Virginia that serve customers of the Company’s regulated electric utility operations. Decommissioning represents the decontamination and removal of radioactive contaminants from a nuclear power plant, once operations have ceased, in accordance with standards estab-lished by the NRC. Through July 2007, amounts are being collected from ratepayers and placed in trusts and invested to fund the expected costs of decommissioning the Surry and North Anna units.

The total estimated cost to decommission the Company’s four nuclear units is $1.5 billion based upon site-specific studies completed in 2002. The Company expects to perform new cost studies in 2006. The cost estimate assumes that the method of completing decommissioning activities is prompt dismantlement. During 2003, the NRC approved the Company’s application for a 20-year life extension for the Surry and North Anna units. The Company expects to decommission the units during the period 2032 to 2045.

Item 3. Legal Proceedings

From time to time, the Company is alleged to be in violation of 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. Administrative proceedings may also be pending on these matters. 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 in Item 1. Business and Note 20 to the Consolidated Financial Statements for additional information on rate matters and various regulatory proceedings to which the Company is a party.

In connection with a Notice of Violation received by Virginia Power in 2000 from the EPA and related proceedings, the Virginia federal district court entered the final Consent Decree in October 2003 involving Virginia Power, the U.S. Department of Justice, the EPA and five states. Under the settlement, Virginia Power paid a $5 million civil penalty, agreed to fund $14 million for environmental projects and committed to improve air quality under the Consent Decree estimated to involve expenditures of $1.2 billion. The Company has already incurred certain capital expenditures for environmental improvements at its coal-fired stations in Virginia and West Virginia and has committed to additional measures in its current financial plans and capital budget to satisfy the requirements of the Consent Decree. As of December 31, 2003, the Company had recognized a provision for the funding of the environmental projects, substantially all of which was recorded in 2000.

In June 2002, Wiley Fisher, Jr. and John Fisher filed a purported class action lawsuit against Virginia Power 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 Virginia Power’s electric transmission lines and on or in which fiber optic cable has been installed.” Discovery has begun and the court has granted a motion to add additional plaintiffs, Harmon T. Tomlinson, Jr. and Linda D. Tomlinson. In August 2003, the federal district court issued an order granting the plaintiff’s motion for class certification. The U.S. Court of Appeals for the Fourth Circuit denied the Company’s petitions for appeal on the class certification issue. The outcome of the proceeding, including an estimate as to any potential loss, cannot be predicted at this time.

Item 4. Submission of Matters to a Vote of Security Holders

None.

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Part II

Item 5. Market for the Registrant’s Common Equity and Related Stockholder Matters

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

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

Item 6. Selected Financial Data

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) discusses the results of operations and general financial condition of Virginia Electric and Power Company. MD&A should be read in conjunction with the Consolidated Financial Statements. The “Company” is used throughout MD&A and, depending on the context of its use, may represent any of the following: the legal entity, Virginia Electric and Power Company, one of Virginia Electric and Power Company’s consolidated subsidiaries or the entirety of Virginia Electric and Power Company and its consolidated subsidiaries. The Company is a wholly-owned subsidiary of Dominion Resources, Inc. (Dominion).

Contents of MD&A

The reader will find the following information in this MD&A:

n Forward-Looking Statements

n Introduction

n Accounting Matters

n Results of Operations

n Segment Results of Operations

n Sources and Uses of Cash

n Future Issues and Other Matters

n Risk Factors and Cautionary Statements That May Affect Future Results

Forward-Looking Statements

This report contains statements concerning the Company’s expectations, plans, objectives, future financial performance and other statements that are not historical facts. These statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. In most cases, the reader can identify these forward-looking statements by words such as “anticipate,” “estimate,” “forecast,” “expect,” “believe,” “should,” “could,” “plan,” “may” or other similar words.

9

The Company makes forward-looking statements with full knowledge that risks and uncertainties exist that may cause actual results to be materially different from predicted results. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Additionally, other risks that may cause actual results to differ from predicted results are set forth in Risk Factors and Cautionary Statements That May Affect Future Results.

The Company bases its forward-looking statements on management’s beliefs and assumptions using information available at the time the statements are made. The Company cautions the reader not to place undue reliance on its forward-looking statements because the assumptions, beliefs, expectations and projections about future events may, and often do, materially differ from actual results. The Company undertakes no obligation to update any forward-looking statement to reflect developments occurring after the statement is made.

Introduction

Virginia Electric and Power Company (the Company), a Virginia public service company, is a wholly-owned subsidiary of Dominion. The Company is a regulated public utility that generates, transmits and distributes electric energy within a 30,000 square-mile area in Virginia and northeastern North Carolina. It sells electricity to approximately 2.2 million retail customers, including governmental agencies, and to wholesale customers such as rural electric cooperatives, municipalities, power marketers and other utilities. The Virginia service area comprises about 65% of Virginia’s total land area, but accounts for over 80% of its population. The Company has trading relationships beyond the geographic limits of its retail service territory where it buys and sells wholesale electricity, natural gas and other energy commodities.

Maintaining and improving the Company’s financial condition and flexibility is of paramount importance to its management. Important measures of an entity’s financial strength and creditworthiness are the credit ratings