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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2004

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 (as defined in Exchange Act Rule 12b-2). Yes  ¨    No  x

The aggregate market value of the voting stock held by non-affiliates as of the last business day of the registrant’s most recently completed second fiscal quarter was zero.

As of February 1, 2005, there were issued and outstanding 198,047 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

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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.” 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 its 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.

As of December 31, 2004, the Company had approximately 7,100 full-time employees. Approximately 3,300 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.

Operating Segments

The Company manages its operations through three primary operating segments: Delivery, Energy and Generation. The Company also reports Corporate and Other functions as a segment. While the Company manages its daily operations as described below, its assets remain wholly-owned by it and its legal subsidiaries. For additional financial information on business segments and geographic areas, see Notes 1 and 23 to the Consolidated Financial Statements.

Delivery

Delivery includes the Company’s electric distribution system and customer service operations. Electric distribution operations serve residential, commercial, industrial and governmental customers in Virginia and northeastern North Carolina.

Competition

Within Delivery’s certificated service territory in Virginia and North Carolina, there is no competition for electric distribution service.

Regulation

Delivery’s electric retail service, including the rates it may charge to customers, is subject to regulation by the Virginia State Corporation Commission (Virginia Commission) and the North Carolina Utilities Commission (North Carolina Commission). See Regulation – State Regulations for additional information.

Properties

The Delivery segment electric distribution network includes approximately 54,000 miles of distribution lines, exclusive of service level lines in Virginia and North Carolina. The right-of-way grants for most of the Company’s electric lines have been obtained from the apparent owner of real estate, but underlying titles have not been examined except for transmission lines of 69kV 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.

Sources of Fuel Supply

Delivery’s supply of electricity to serve its retail customers is primarily provided by the Generation segment. See Generation for additional information.

Seasonality

Delivery’s business typically varies seasonally based on demand for electricity by residential and commercial customers for cooling and heating use due to changes in temperature.

Energy

Energy includes a regulated electric transmission system located in Virginia and northeastern North Carolina and the Company’s Clearinghouse operations, which is responsible for energy trading (exclusive of marketing excess utility generation), marketing and risk management activities.

During the fourth quarter of 2004, the Company performed an evaluation of its Clearinghouse trading and marketing operations, which resulted in a decision to exit certain energy trading activities and instead focus on the optimization of company assets. Beginning in 2005, all revenue and expenses from the Clearinghouse’s optimization of Company assets will be reported as part of the results of the business segments operating the related assets. As a result of these changes, 2004 and 2003 results now reflect revenue and expenses associated with coal trading and marketing activities in the Generation segment rather than the Energy segment.

Competition

Energy’s electric transmission business is not subject to competition for transmission service to loads served within its Virginia and North Carolina service territories. In connection with transmission service to loads outside of its electric service territory, the Company’s electric transmission business competes with other electric transmission providers, primarily on the basis of rates and availability of service.

Regulation

Energy’s electric transmission operations are subject to regulation by the Federal Energy Regulatory Commission (FERC), the Virginia Commission and the North Carolina Commission. See State Regulations and Federal Regulations in Regulation for additional information.

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Properties

The Energy segment has approximately 6,000 miles of electric transmission lines located in the states of North Carolina, Virginia and West Virginia. 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 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 Regional Transmission Organization (RTO) in Future Issues and Other Matters in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A).

Seasonality

The Energy segment is affected by seasonal changes in the prices of commodities that it markets and trades.

Generation

Generation includes the Company’s electric generation operations. The Company’s strategy for its electric generation operations focuses on serving customers in Virginia and northeastern North Carolina.

As a result of the reorganization of the Company’s Clearinghouse operations, Generation’s 2004 and 2003 results now reflect revenue and expenses associated with coal trading and marketing activities performed by the Clearinghouse that were previously reported in the Energy segment.

In February 2005, the Company paid $42 million in cash and assumed $62 million in debt in connection with the termination of a long-term power purchase agreement and acquisition of the related generating facility used by Panda-Rosemary, LP, a non-utility generator, to provide electricity to the Company. See Restructuring of Contract with Non-Utility Generator in Future Issues and Other Matters in MD&A for additional information.

Competition

For the Company’s electric generation operations, retail choice has been available for all of the Company’s Virginia electric customers since January 1, 2003; however, to date, competition in Virginia has not developed to the extent originally anticipated. See Regulation-State Regulations. Currently, North Carolina does not offer retail choice to electric customers.

Regulation

In Virginia and North Carolina, the Company’s electric utility generation facilities, along with power purchases, are used to serve its utility service area obligations. Due to 2004 deregulation legislation, revenues for serving Virginia jurisdictional retail load are based on capped rates through 2010 and the related fuel costs for the generating fleet, including power purchases, are subject to a fixed rate recovery through July 1, 2007 when a one-time prospective adjustment will be considered. During this transition period, the risk of fuel factor-related cost recovery shortfalls may adversely impact the Company’s cost structure. Conversely, the Company may experience a positive economic impact to the extent it can reduce its fuel factor-related costs. Subject to market conditions, any generation remaining after meeting utility system needs is sold outside the Company’s service area. See Regulation-State Regulations and Regulation-Federal Regulations-Environmental Regulations for additional information.

Properties

For a listing of the Company’s generation facilities, see Item 2. Properties.

Sources of Fuel Supply

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

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

Seasonality

Sales of electricity for the Generation segment vary seasonally based on demand for electricity by residential and commercial customers for cooling and heating use due to seasonal changes in temperature.

Nuclear Decommissioning

Generation 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 established by the Nuclear Regulatory Commission (NRC). Amounts collected from ratepayers and placed in trusts are being invested to fund the expected future 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

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Company expects to decommission the units during the period 2032 to 2045.

Corporate and Other

The Company also has a Corporate and Other segment. Corporate and Other represents the Company’s corporate and other functions and specific items attributable to the Company’s operating segments that are reported in Corporate and Other.

Regulation

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

State Regulations

The Company is subject to regulation by the Virginia Commission and the 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, 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. 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 anticipated. In April 2004, the Governor of Virginia signed into law amendments to the Virginia Restructuring Act and the Virginia fuel factor statute. The amendments extend capped base rates to December 31, 2010, unless modified or terminated earlier under the Virginia Restructuring Act. In addition to extending capped rates, the amendments:

The risk of fuel factor-related cost recovery shortfalls may adversely impact the Company’s cost structure during the transition period and it could realize the negative economic impact of any such adverse event. Conversely, the Company may experience a positive economic impact to the extent that it can reduce its fuel factor-related costs for its electric utility generation-related operations.

Other amendments to the Virginia Restructuring Act were also enacted with respect to a minimum stay exemption program, a wires charge exemption program and allowing the development of a coal-fired generating plant in southwest Virginia for serving default service needs. Under the minimum stay exemption program, large customers with a load of 500 kW or greater would be exempt from the twelve-month minimum stay obligation under capped rates if they return to supply service from the incumbent utility at market-based pricing after they have switched to supply service with a competitive service provider.

The wires charge exemption program would allow large industrial and commercial customers, as well as aggregated customers in all rate classes, to avoid paying wires charges when selecting supply service from a competitive service provider by agreeing to market-based pricing upon return to the incumbent electric utility. Customers electing this option would waive the right to return to capped rate service from the incumbent electric utility. The program is limited to the first 1,000 Mw of load or eight percent of the utility’s prior year Virginia adjusted peak load in the first 18 months of the program.

In January 2005, the Company filed compliance plans and the required market-based pricing methodology for both programs with the Virginia Commission. To encourage a successful program and the development of retail competition, the Company has proposed that customers that enroll with a competitive service provider in the wires charge exemption program in 2005 be allowed to return to service with the Company at capped rates after October 2007 instead of market-based pricing. The Virginia Commission must approve these proposals prior to implementation.

In December 2004, the Company filed its annual market prices/wires charges compliance plan with the Virginia Commission. Calculation of the 2005 wires charges in accordance with the formula approved by the Virginia Commission produced zero wires charges for 2005 for all but a few smaller rate classes. As a result,

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the Company voluntarily agreed to forego the collection of any wires charges during 2005. The Company’s decision to forego wires charges in 2005 is not intended to set a precedent for subsequent periods. The Company intends to collect wires charges in future periods should the Virginia Commission-approved methodology determine that wires charges are applicable.

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

The three retail access pilot programs, approved by the Virginia Commission in 2003, continue to be available to customers. These 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 potential participation of more than 65,000 customers from a variety of customer classes.

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 was recovered in 2004 with $85 million to be recovered in 2005, $87 million in 2006 and $43 million in the first six months of 2007.

As a result of amendments to the Virginia Restructuring Act in 2004, the Company’s capped based rates were extended to December 31, 2010. In addition, the Company’s fuel factor provisions were frozen until July 1, 2007, after which they can be only adjusted once more through December 31, 2010. See Status of Electric Deregulation in Virginia above for additional information regarding the Virginia Restructuring Act amendments.

North Carolina—In connection with the North Carolina Commission’s 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 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. However in April 2004, the North Carolina Commission commenced an investigation into the Company’s North Carolina base rates and subsequently ordered the Company to file a general rate case to show cause why its North Carolina base rates should not be reduced. The rate case was filed in September 2004 and in February 2005, the Company reached a tentative settlement with parties in the case that is subject to North Carolina Commission approval before becoming effective.

Federal Regulations

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 addition, the Company has FERC approval of a tariff to sell wholesale power at capped rates based on its embedded cost 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 for, subject to regulatory approval and certain provisions, the Company to become a member of PJM and transfer functional control of its electric transmission facilities to PJM for inclusion in a new PJM South Region. In October 2004, FERC issued an order conditionally approving the Company’s application to join PJM, and in November 2004, the Virginia Commission approved the Company’s application to join PJM subject to certain terms and conditions. The North Carolina Commission evidentiary hearing was held in January 2005. The Company cannot predict the outcome of this matter at this time.

In a separate order issued in September 2004, FERC granted authority to the Company and its affiliates with market based rate authority to charge market based rates for sales of electric energy and capacity to loads located within the Company’s service territory upon its integration into PJM. For additional information, see RTO in Future Issues and Other Matters in MD&A.

The Company is also subject to FERC’s Standards of Conduct that govern conduct between interstate transmission gas and electricity providers and their marketing function or their energy related affiliates. The rule defines the scope of the affiliates

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covered by the standards and is designed to prevent transmission providers from giving their marketing functions or affiliates undue preferences.

In June 2004, FERC approved the Company’s filing to provide optional backup supply service to competitive service providers serving retail customers, including the retail pilot programs, in the Company’s service territory in Virginia. The filing addressed competitive service providers’ concerns with the availability of transmission capacity to move energy into Virginia. The backup supply service will allow competitive service providers to continue to serve their customers in the Company’s service area in Virginia during periods of supply interruption. This is an interim solution until the Company is integrated into PJM.

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 19 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 January 2004, the EPA proposed 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 to address regional haze, are expected to be finalized in 2005 and 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.

In March 2004, the State of North Carolina filed a petition under Section 126 of the Clean Air Act seeking the EPA to impose additional nitrogen oxide (NO_x) and sulfur dioxide (SO₂) reductions from electrical generating units in thirteen states, claiming emissions from the electrical generating units in those states are contributing to air quality problems in North Carolina. The Company has electrical generating units in two of the states. The issues raised by North Carolina are already being addressed by the EPA in current regulatory initiatives. The EPA is expected to respond to the petition in 2005. Given the highly uncertain outcome and timing of future action, if any, by the EPA on this issue, the Company cannot predict the financial impact, if any, on its operations at this time.

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 15 years. If these new proposals are adopted, additional significant expenditures may be required.

In July 2004, the EPA published new regulations that govern existing utilities that employ a cooling water intake structure, and whose flow levels exceed a minimum threshold. The EPA’s rule presents several compliance options. The Company is evaluating information from certain of its power stations and expects to spend approximately $14 million over the next four years conducting studies and technical evaluations. The Company cannot predict the outcome of the EPA regulatory process or state with any certainty what specific controls may be required.

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 Generation—Nuclear Decommissioning and Note 8 to the Consolidated Financial Statements.

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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 Company leases its headquarters facility from Dominion. In addition, the Delivery, Energy and Generation segments share certain leased buildings and equipment. See Item 1. Properties for additional information for each segment’s principal properties.

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

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

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Item 3. Legal Proceedings

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 imposed upon or agreed to by the Company, 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, Future Issues and Other Matters in MD&A and Note 19 to the Consolidated Financial Statements for additional information on rate matters and various regulatory proceedings to which the Company is a party.

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:

Restrictions on the payment of dividends by the Company are discussed in Note 17 to the Consolidated Financial Statements.

Item 6. Selected Financial Data